On the Response of Economic Aggregates to Monetary Policy Shocks

This study empirically investigates how shocks to monetary policy measures (short-term nominal interest rate and broad money supply) affect economic aggregates: output growth, price levels and nominal exchange rate. The study is carried out for Pakistan using quarterly data covering the period from 1980 to 2009. In doing this, Johansen’s (1988) co integration technique and vector error correction model are applied to explore the long-run relationship among the variables. We find significant evidence on the existence of a long-run stable relationship between our monetary measures and economic aggregates. The impulse response functions (IRFs) are computed to examine the response of each macroeconomic variable to a standard deviation shock to monetary measures. The IRF graphs reveal a price puzzle in closed as well as in open economy model. However, an initial appreciation of exchange rate is observed, indicating the overshooting hypothesis phenomenon for Pakistan.Monetary Policy, Economic Aggregates, VECM, Impulse Response Function.

Fiscal Response to Terrorism in Pakistan: The Role of Institutions

This study empirically estimates the fiscal consequences of terrorism in Pakistan by using annual time series data from 1984 to 2016. By employing the autoregressive distributed lag (ARDL) technique, the study has gauged the impact of terrorist incidents on two important facets of fiscal policy, namely, tax revenue and defense spending. The results reveal that terrorism has detrimental ramifications for fiscal policy in Pakistan. Specifically, on the one hand, an increase in terrorist incidents tends to bring a fall in tax revenue while on the other hand, they induce a rise in defense outlays, thus deteriorating both fronts of the fiscal position. Notably, the moderating role of institutional quality appears significant and indicates that institutional quality has not only a significant direct impact on fiscal policy, but it also helps in completely mitigating (reducing) the harmful impact of terrorism on defense spending (tax revenue) in Pakistan. These findings suggest that there is a need to take appropriate steps for strengthening institutional setup to control the fallouts of terrorism on fiscal behavior of the government of Pakistan. Keywords: Terrorism; Tax Revenue; Institutional Quality; ARDL JEL Classification: E62; H2; E02; H5; F3

Exchange Rate Misalignment and Economic Growth in Pakistan: The Role of Financial Development

This study endeavours to examine empirically how real exchange rate (RER) misalignment affects economic growth in Pakistan. In this regard, we have not only estimated the direct impact but also the indirect impact of misalignment on economic growth by using the financial development channel. We have used time series data ranging from 1980 to 2016 to carry out the empirical analysis. After testing the time series properties of the selected variables, we computed long run equilibrium RER later used to calculate RER misalignment. Finally, we estimated the impact of misalignment on per capita economic growth, both direct and indirect. Our results reveal an adverse impact of RER misalignment on economic growth. However, we report that financial development helps in minimising the adverse impact of RER misalignment, though not fully eliminating it. Based on the empirical findings, the study suggests that exchange rate policies need to be managed more cautiously. Moreover, the financial sector development needs to be strengthened which may help in fully alleviating the adverse impact of RER misalignment on economic growth. JEL Classification: F31, GOO, O47 Keywords: Real Exchange Rate Misalignment, Financial Development, Economic Growth, FMOL

Demographic Changes and Economic Growth in Pakistan: The Role of Capital Stock

Pakistan has experienced a decrease in population growth since the early 1990s leading to an increase in the ratio of working age population, known as demographic dividend. The demographic dividend may lead to higher savings and investments, which spurs economic growth. Given this postulation, the study is the first of its kind to analyse the impact of demographic variables on economic growth through physical capital for Pakistan from 1960 to 2014. In this regard, the demographic change is captured by taking four alternate measures, namely population growth, young age dependency ratio, old age dependency ratio and working age population ratio. In order to examine the channel effect, first the direct impact of demographic changes on physical capital is estimated. Later, the impact of demographically induced capital stock on economic growth is estimated. By using the FMOLS technique, the study concludes that the total negative impact is highest in the case of old age dependency, which means that higher old age dependency is the most threatening demographic change for economic growth. The least harmful demographic change is young age dependency. Moreover, the empirical findings highlight the importance of capital stock as the mediating channel in the demographic change and economic growth relationship. The study recommends effective long- term policies to increase youth employment and to enhance savings for maximising the benefits of demographic dividend. JEL Classification: J11; O47 Keywords: Direct and Indirect Impact, Demographic Transition, Demographic Age Structure, Capital Stock, FMOL

Foreign Capital Flows and Human Development in Developing Countries: Does Institutional Quality Matter?

The impact of foreign capital on human development has been at best ambiguous, while that of institutions is undoubtedly favorable. That said, the way foreign capital relates to human development may be affected by the quality of institutions. This paper assesses this very phenomenon in 65 developing countries over the time period 1984-2014. In this regard, this study incorporates three indicators of human development namely, per capita income (PCI), Secondary School Enrollment (SSE) and Life Expectancy (LE). Using two step system GMM estimation technique, we found that the impact of foreign capital varies with respect to the indicators of human development and the type of foreign capital being studied. Both FDI and FPI negatively affect per capita income and secondary school enrollment, while, remittances affect all the indicators of human development positively, except for life expectancy. The interaction between institutions and each type of foreign capital flow exerts a positive influence on all indicators of human development. However, this positive interaction fails to completely eliminate the adverse influence of the capital flows, which reflects inadequacy of existing institutional quality in developing countries and the need for institutional reforms

Asymmetric monetary policy rules for open economies: Evidence from four countries

This study presents an analytical framework to examine the policy reaction function of a central bank in an open economy context while allowing for asymmetric preferences. The paper then empirically examines the policy rule obtained from this framework using quarterly data for the US, Canada, Japan, and the UK. The results, based on GMM approach, provide evidence that domestic policy is affected by changes in the foreign interest rate and exchange rate. We also provide evidence of the presence of asymmetries in response to the inflation rate and output gap for all the sample countries

Asymmetric monetary policy rules for open economies: Evidence from four countries

This study presents an analytical framework to examine the policy reaction function of a central bank in an open economy context while allowing for asymmetric preferences. The paper then empirically examines the policy rule obtained from this framework using quarterly data for the US, Canada, Japan, and the UK. The results, based on GMM approach, provide evidence that domestic policy is affected by changes in the foreign interest rate and exchange rate. We also provide evidence of the presence of asymmetries in response to the inflation rate and output gap for all the sample countries

Exchange rate volatility and capital inflows: role of financial development

There is vast literature examining the impact of exchange rate volatility on various macroeconomic aggregates such as economic growth, trade flows, domestic investment, and more recently capital flows. However, these studies have ignored the role of financial development while examining the impact of exchange rate volatility on capital flows. This study aims to analyze the impact of exchange rate volatility on capital inflows towards developing countries by incorporating the role of financial development over the time period 1980–2013. In this regard, the behavior of two types of capital flows is examined: physical capital inflows measured as foreign direct investment, and financial inflows quantified through remittance inflows. The empirical investigation comprises the direct as well as indirect effect of exchange rate volatility on capital inflows. The study employs dynamic system GMM estimation technique to empirically estimate the effect of exchange rate volatility on capital inflows. The empirical results of the study identify that exchange rate volatility dampens both physical and financial inflows towards developing countries. The indirect impact of exchange rate volatility through financial development, however, turns out positive and statistically significant. This finding reflects that financial development helps in reduc- ing the harmful impact of exchange rate volatility on capital inflows. Hence, the study concludes that a developed financial system is an important channel through which developing countries may improve capital inflows in the long run.info:eu-repo/semantics/publishedVersio

Carbapenem resistance expressed by Gram-negative bacilli isolated from a cohort of Libyan patients

Background and objectives: Carbapenem-resistant Enterobacteriaceae (CRE) and other Gram-negative bacteria are among the most common pathogens responsible for both community and hospital acquired infection. The global spread of cephalosporinases in Enterobacteriaceae has led to the increased use of carbapenems resulting in the emergence and rapid spread of CRE. This has become an alarming public health concern, yet the condition in Libya remains unclear. The aim of this study was to obtain a better understanding of CRE strains prevalent in Libyan patients by investigating their phenotypic characteristics and antibiograms. Methods: Gram-negative bacterial species were collected from Misrata Central Hospital, Misrata Cancer Centre and Privet Pathology Laboratories. Clinical samples and swabs were obtained from hospitalised and non-hospitalised patients and from mechanical ventilation and suction machines. Patients who had received antibiotic therapy for at least three days prior to the study were excluded. The identification and characterization of the isolated species were achieved using the growth characteristics on MacConkey and blood agar, spot tests and API 20E or API 20NE biochemical testing systems. Screening for carbapenem resistance was performed using the disk diffusion method with carbapenem 10 μg and cephalosporin 30 μg disks and minimum inhibitory concentrations (MIC) determined using the Sensititre Gram-negative Xtra plate format (GNX2F). All strains demonstrating resistance or reduced susceptibility to one of the four carbapenems were subjected to carbapenememase activity detection using the RAPIDEC CARBA NP test, Modified Hodge test and carbapenem inactivation methods. Results: A total of one hundred and forty isolates representing fourteen bacterial species were isolated from 140 non-duplicated specimens. Clinical specimens included urine samples (96/140, 68.57%), sputum (15/140, 10.71%), surgical wound swabs (18/140, 12.85%), foot swabs from diabetes mellitus (DM) patients (6/140, 4.29%), ear swabs (3/140, 2.14%) and wound swabs (2/140, 1.43%). Thirty-four (24.29%) isolates demonstrated resistance to at least one of the four carbapenems with Klebsiella pneumoniae representing 73.53% (25 isolates) of all carbapenem resistant species, followed by 8.82% for Pseudomonas aeruginosa (3 isolates), 5.88% for both Proteus mirabilis (2 isolates) and Escherichia coli (2 isolates) and 2.94% for both Citrobacter koseri (1 isolate) and Rahnella aquatilis (1 isolate). The other isolates were either susceptible or cephalosporinase producers. Conclusion: This study has revealed the high rate of carbapenem resistance amongst Libyan patients and emphasizes the crucial need for accurate screening, identification and susceptibility testing to prevent further spread of nosocomial and community acquired resistance. This may be achieved through the establishment of antibiotic stewardship programmes along with firm infection control practices.National Research Foundation of South Africa; Libyan GovernmentWeb of Scienc

Monetary Policy Rules, Total Factor Productivity Growth and Uncertainty:An Empirical Assessment

This dissertation explores how uncertainty a�ffects diff�erent facets of an economy through three empirical essays. First, we presents an analytical framework to examine the policy reaction function of a central bank in an open economy context while allowing for asymmetric preferences. This implies that the policy makers can weigh negative and positive deviations of target variables (inflation and output gap) from their corresponding targets di�fferently. We use an open economy New-Keynesian forward looking model where aggregate demand and supply depend on real exchange rate. Using quarterly data ranging from 1979q1-2007q4 for Canada, Japan, the UK and the US, the empirical evaluation is drawn through generalized methods of moments. The results strongly favor the presence of asymmetries in the response of monetary policy towards both inflation rate and output gap for all sample countries. The estimates show that central banks follow an active monetary policy. Also, there is evidence that changes in foreign interest rate and exchange rate �significantly aff�ects the domestic monetary policy formation. Second, we examine the role of various sources of uncertainty on total factor productivity growth. Specifi�cally, this essay estimates the role of of uncertainty emanating from global, country, and industry level on TFP growth in manufacturing industries of sixteen emerging economies. For this purpose, we use annual data covering the period from 1971-2008. Our fi�ndings suggest a signifi�cant impact of each source of uncertainty on TFP growth. Particularly, we observe that industry and country specifi�c uncertainty have a positive impact on TFP growth of manufacturing industries. However, global uncertainty has statistically signifi�cant and negative impact on TFP growth. We also provide evidence that the impact of industry speci�fic uncertainty strengthens as the size of industry increases whereas the reverse holds for both country specifi�c and global uncertainty. In addition, we observe that the positive impact of both industry and country speci�fic uncertainty gets stronger at higher levels of factor intensity. Third, we examine the role of of uncertainty of technology diff�usion in TFP convergence of manufacturing industries of frontier and non-frontier countries. For this purpose, we use annual data covering the time period from 1981-2008, eighteen manufacturing industries of fi�ve emerging economies. We employ superlative index number approach to compute the TFP level and growth in manufacturing industries of these countries. Our �findings suggest a signi�ficant evidence of TFP convergence in manufacturing industries of non-frontier and frontier countries. Moreover, technology diff�usion not only pertains a positive impact on TFP growth of manufacturing industries of non-frontier countries but also facilitates the process of TFP convergence. More importantly, we report a signi�ficant negative impact of uncertainty of technology diff�usion on the TFP growth