THE IMMEDIATE IMPACT OF EURO ON INTRA-REGIONAL TRADE: AN EVENT STUDY APPROACH

This article applies the event study approach to assess the immediate impact of Euro on intra-regional trade among the European Union (EU) members. Here, the post-Euro intra-regional trade has been compared with the pre-Euro intra-regional trade, while the implementation of Euro has been considered as the event. The results show that the trade enhancement at the immediate post-event period is 1.2 times of the immediate pre-event period for France, Germany, Italy and Spain, while immediate trade enhancement for all Euro-members is 1.14 times. The estimation has been statistically justified by using the gravity model. This study thus provides the first empirical evidence on the assessment of currency union impact on intra-regional trade by using the alternative method, the event study approach.Currency Union, Intra-Regional Trade, Event Study, Trade Deepening

Explaining the differences in firm level production capacity realization in Bangladesh food manufacturing: a panal data study

The aim of this paper is to examine the impact of a set of firm-specific and policy related variables such as size, age, ownership and effective rate of assistance on the rate of production capacity realization (PCR) of firms. This study uses a panel of 92 food manufacturing firms of Bangladesh over the periods of 1992 - 1994 and 1997 - 1999. Firm size is found to have positive impact while capital intensity and age of firm have negative impact on PCR at the firm level. The striking result is that the policy related variables such as the effective rate of assistance (ERA) and outward orientation (OPN) do not have any significant impact on PCR. These results are confirmed by the extensive test of sensitivity analysis. The insignificance of ERA and OPN may be attributed to piecemeal and partial nature of policy reforms. The results suggest the need for further reform of trade policies, in particular, focusing on reducing nominal and effective protection levels in order to enhance competition and competitiveness so than an efficient production can take a firmer root in the industrial sector of the economy

Purchasing Power Parity (PPP) of Australian Dollar: Do Test Procedures Matter?

This article aims to reexamine whether Australia’s real exchange rate is mean reverting in the long run by using quarterly trade weighted indices of real exchange rate data for the period of June 1970 to September 2009. We use the state of the art of several more recent econometric tests for this purpose. The empirical result shows that the non-stationarity of Australia’s real exchange rate cannot be rejected. Thus, our results support the PPP hypothesis in Australia. Our results are contradictory to those of Cuestas and Regis (2008), but conform to those of Darné and Hoarau (2007 & 2008).Purchasing power parity; Real exchange rate; Unit roots; Fractional integration

Is there any Link Between Commodity Price and Monetary Policy? Evidence from Australia

The aim of this paper is to examine whether the commodity prices predict inflation, unemployment and short term interest rate in Australia. Advanced time series econometric modeling such as vector autoregressive model, cointegration and granger causality are used for this purpose. The empirical results show that three commodity prices (COMRL, COMNRL and COMBSMTL) precede inflation. However, no evidence of reverse causation is found. These findings have important implication for monetary authority. Inflation targeting experience has so far been hit by positive supply shocks. In case of negative supply shock, commodity price may be useful in singling out the likely direction of inflation.Commodity price; monetary policy; Cointegration; Error correction model; Granger causality test

Estimating Production Response of Broadacre Farms in Western Australia: The Nexus of Empirics and Economics Revisited

Reliable estimates of elasticities are fundamental requirement to accurate economic forecasting and valid analyses of the impacts of changes in government policies or international events. The aim of this paper is thus, to estimate production response for broadacre farms in Western Australia by using a normalized quadratic profit function for the period 1977/78 to 2005/06. The result reflects the imposition of curvature restrictions for a normalized profit function, and estimated elasticities are found to be less elastic in the short run. The results from this exercise can be used in a number of ways, depending on the policy objective in mind, such as simulation for forecasting agricultural production.Production Response; Duality Production Theory; Nonlinear Inequality Constraints, Flexible Functional Forms.

Urbanization and Renewable and Non-renewable Energy Consumption in OECD Countries: An Empirical Analysis

This article aims to analyse the impact of urbanization on renewable and non-renewable energy consumption in OECD countries by using the STIRPAT model and data for the period of 1980 to 2011. Demographic factors including total population, urbanization and population density are found to be significant factors, particularly with respect to non-renewable energy consumption. The results also reveal that while total population and urbanization positively influence non-renewable energy consumption, population density has a negative impact on non-renewable energy consumption. From the demographic factors only total population has a significant impact on renewable energy consumption. Granger causality results indicate that there is unidirectional causality from non-renewable energy use to population density in the short run. However, no causal linkage is found between urbanization and non-renewable energy use. Likewise, no causal direction is seen between renewable energy use and any of the demographic factors

Is ASEAN trade pattern complementary to AFTA and TAc?

This paper investigates the impact of the ongoing process of ASEAN trade liberalization on trade patterns of the ASEAN members. A modified gravity model incorporating exchange rate volatility and regional integration is estimated for each of the seven major ASEAN economies for the period of 1994 to 2009. The result observes substantial amount of heterogeneity among the members’ trade pattern

The impact of crude oil price volatility on selected Asian emerging economies

This paper empirically investigates the impact of oil price volatility on six major emerging economies of Asia, namely China, India, Indonesia, Malaysia, Philippines and Thailand. Following Andersen et al. (2004) quarterly oil price volatility is measured by using the realized volatility (RV). For China, according to the VAR analysis along with the Granger causality test, generalized impulse response functions and generalized variance decompositions, it can be inferred that oil price volatility impacts output growth in the short run. For India oil price volatility impacts both GDP growth and inflation. In Philippines oil price volatility impacts inflation. For the Indonesian economy oil price volatility impacts both GDP growth and inflation before and after the Asian financial crisis. In Malaysia oil price volatility impacts GDP growth, while there is a very little feedback from the opposite side. For Thailand, oil price volatility impacts output growth for the whole studied period. However, after the Asian financial crisis the impact seems to disappear. It seems that oil subsidization of the Thai Government by introduction of the oil fund plays a significant role in improving economic performance by lessening the adverse effect of oil price volatility on macroeconomic indicators

Renewable energy consumption and unemployment: evidence from a sample of 80 countries and nonlinear estimates

This article contributes to the discussion on the dynamic nexus of renewable energy consumption and unemployment by incorporating nonlinear cointegration and causality analysis. Using a sample of 80 countries spanning the period 1990–2013 and the advanced generation of unit root, cointegration and nonlinear Granger causality methodological approaches in panel data, we obtain mixed results about the impact of renewable energy consumption on unemployment. Although the total findings document a positive impact of renewable energy consumption on unemployment, disaggregated data across specific regions, such as Asia and Latin America, highlight the favourable effect on unemployment, implying that the effect of renewable energy consumption on jobs creation depends on the cost of adopting renewable energy technologies and energy efficiencies that seem to vary across the regions under investigation