Elasticities of Turkish Exports and Imports

The Turkish current account has been exploding in the last few years leading to concerns of a crisis. One of the primary factors identified in the rising deficits is the appreciating lira. In addition, income elasticity of exports and imports can also shed light on continuing trade deficits. In this paper we analyze exchange rate and income elasticity of Turkish imports and exports. We find a significant gap between domestic and foreign income elasticities (for exports and imports respectively) which points to a threat of growing trade deficits. In addition we also find that the exchange rate elasticity is negative for both Turkish exports and imports. This indicates that depreciation of the Turkish lira will have a negative effect on both imports and exports.Cointegration; current account deficits; exchange rate and income elasticity, Turkey

Intertemporal solvency of Turkey’s current account

We test for sustainability of Turkey’s current account position between 1992 and 2007 using the intertemporal solvency model of Hakkio and Rush (1991) and Husted (1992). This approach examines the relationship between exports and imports+ (which include imports, net interest and unilateral transfer payments). Cointegration between inflows and outflows implies that the intertemporal budget constraint is satisfied. We use the Johansen and the Gregory and Hansen (1996) cointegration tests to determine linkages between exports and imports+ in Turkey. Using the Johansen test we find no cointegration and thus reject intertemporal solvency of the current account for this period. If we allow for a structural break in the cointegrating relation using the Gregory Hansen procedure we do find evidence of cointegration between the two series. This result can be used to estimate the long-run relationship between exports and imports+ using dynamic OLS and test for weak and strong sustainability of the current account position. We find evidence for weak sustainability but reject strong sustainability of the Turkish current account position in recent years.Current account sustainability, intertemporal budget constraint, Turkey, cointegration

Analyzing the Present Sustainability of Turkey’s Current Account Position

In this paper we assess the present sustainability of Turkey’s current account position using the framework provided by Milesi-Ferretti and Razin (1996) based on the ability-to-pay and willingness-to-lend model. This framework allows us to assess the structural features and macroeconomic policy indicators. We extend this framework by considering global sustainability indicators as well. Using data for three periods, 1991-1993, 1998-2000 and 2004-2006 we evaluate the present sustainability in light of the prior two crises (1994, 2001). Based on our analysis of these factors in the extended framework, we conclude that Turkey’s internal structure and macroeconomic conditions (such as exports and the fiscal position) have improved that are allowing Turkey to continue having large and increasing current account deficits. However, there is vulnerability from global factors namely the impending U.S. recession and a potential global slowdown. This might require some adjustments in policy to continue accumulating large deficits.Current account sustainability, predictors of crisis, Turkey

An Intertemporal Benchmark Model for Turkey’s Current Account

In this paper, we analyze the Turkish current account between 1992 and 2004 within an intertemporal benchmark model. Increasingly larger current account deficits in the Turkish economy have caused a great level of discussion of the current account but it has mainly focused on the real exchange rate and short-term international competitiveness. However, changes in the fundamentals of the Turkish economy warrant a longer term approach in the analysis. This paper computes the optimal consumption smoothing current account using the intertemporal benchmark model (IBM) and tests for intertemporal solvency of the current account. We find consumption tilting dynamics are in effect. As expected of borrowing developing countries, Turkey tilts consumption to the present. We find support for one of the implications of the IBM, that the current account Granger-causes future changes in national cash flow as implied by the intertemporal benchmark model. However, we also find that the actual consumption smoothing current account is considerably more volatile than the optimal consumption smoothing current account suggesting that speculative forces have driven capital movements during the sample period. From the trends in data and the model and testable implications we believe that although Turkey breached the intertemporal solvency condition in the 1990s, this is not true for Turkey in the period following the 2001 crisis. Therefore, we conclude that changed fundamentals in Turkey have made the high current account deficits sustainable.Current account sustainability, intertemporal benchmark model, Turkey

Intertemporal Solvency of Turkey’s Current Account

We test for sustainability of Turkey’s current account position between 1987 and 2009 using the intertemporal solvency model of Craig S. Hakkio and Mark Rush (1991) and Steven Husted (1992). According to this approach, the intertemporal budget constraint is satisfied if there is cointegration between exports and imports+ (which include imports, net interest income and unilateral transfer payments). We test for, and find evidence of, cointegration using the standard Johansen test as well as the Allan W. Gregory and Bruce Hansen (1996) test. The latter allows for a structural break in the cointegrating relation. Further, dynamic GLS estimation shows a statistically significant relation between exports and imports+, although, we reject strong current account sustainability. Our evidence suggests that Turkey remains vulnerable to reversals in capital flows, but we believe this vulnerability will diminish as the service component of trade increases.Cointegration, Current account sustainability, Dynamic GLS, Intertemporal budget constraint, Turkey

Foreign Aid Effectiveness in Ghana

Ghana has been the recipient of large levels of aid since the 1980s. This coincides with significant improvements in the country including increased growth and poverty reduction. We analyze the role of foreign aid in Ghana’s success. Using annual data from 1961 to 2012, we employ an error correction model to estimate the long-run relationship between aid and conditional aid in Ghana’s economic growth. We find that conditional aid has a positive and statistically significant impact on growth. Through an examination of Ghana over three phases with varying aid and conditionality, we conclude that Ghana’s success with conditional aid is related to the country’s ownership of reforms

Would an India-US trade agreement be beneficial for India?

This paper examines the potential impact of an India-U.S. FTA on India’s trade. We use two approaches to estimate trade effects, compound annual growth analysis and Gravity model estimation. Our sample spans the period from 1992 to 2019 and consists of seven bilateral trade agreements and three multilateral trade agreements which include 24 countries as our treatment group. In both cases we compare the impact on India’s trade following a trade agreement with a control group which we create by including those countries whose trade share exceeds one percent of India’s total trade (in 2019). Our CAGR analysis shows that trade (after an agreement) with the treatment group outperforms the control group although the results are not symmetric for imports and exports. The Gravity estimation confirms the results. We find that participation in a trade agreement is associated with a 42 percent jump in imports compared with a 28 percent increase in exports. The results show that following a trade agreement with the U.S., India is likely to experience a worsening trade balance. However, increased exports, especially manufacturing exports, to the U.S. is likely to benefit the Indian economy. Thus, an India-U.S. trade agreement may be beneficial to India

The neurotrophin receptor p75NTR mediates early anti-inflammatory effects of estrogen in the forebrain of young adult rats

BACKGROUND: Estrogen suppresses microglial activation and extravasation of circulating monocytes in young animals, supporting an anti-inflammatory role for this hormone. However, the mechanisms underlying estrogen's anti-inflammatory effects, especially in vivo, are not well understood. The present study tests the hypothesis that anti-inflammatory effects of estrogen are mediated by the pan-neurotrophin receptor p75NTR. Previously, we reported that estrogen attenuated local increases of interleukin(IL)-1β in the NMDA-lesioned olfactory bulb, while further increasing NGF expression. RESULTS: The present studies show that this lesion enhances expression of the neurotrophin receptor p75NTR at the lesion site, and p75NTR expression is further enhanced by estrogen treatment to lesioned animals. Specifically, estrogen stimulates p75NTR expression in cells of microvessels adjacent to the lesion site. To determine the role of this receptor in mediating estrogen's anti-inflammatory effects, a p75NTR neutralizing antibody was administered at the same time the lesion was created (by stereotaxic injections of NMDA) and specific markers of the inflammatory cascade were measured. Olfactory bulb injections of NMDA+vehicle (preimmune serum) increased IL-1β and activated the signaling molecule c-jun terminal kinase (JNK)-2 at 6 h. At 24 h, the lesion significantly increased matrix metalloproteinase (MMP)-9 and prostaglandin (PG)E(2), a COX-2 mediated metabolite of arachadonic acid. All of these markers were significantly attenuated by estrogen in a time-dependent manner. However, estrogen's effects on all these markers were abolished in animals that received anti-p75NTR. CONCLUSION: These data support the hypothesis that estrogen's anti-inflammatory effects may be, in part, mediated by this neurotrophin receptor. In view of the novel estrogen-dependent expression of p75NTR in cells associated with microvessels, these data also suggest that the blood brain barrier is a critical locus of estrogen's neuro-immune effects

Section 3(d) and Pharmaceutical Patents in India

65-73In 2005, India amended its Patent Law to bring the country into compliance with the WTO TRIPS Agreement. Criticisms have arisen over a flexibility in the law, Section 3(d), which attempts to reduce evergreening by granting patents to only those inventions that enhance the drug’s known efficacy. The lack of a clear definition in the law has raised worldwide concerns over its misuse which was exacerbated by the 2013 Supreme Court denial of Novartis’s Appeal of Section 3(d)-based patent rejection for the cancer treatment drug, Glivec. To analyze the importance of Section 3(d) and this ruling on patent decisions in India, a database of 500 pharmaceutical patent cases between 2005 and 2016 was created. The determinants of patent decisions were estimated using a binomial logit regression and conducted a statistical analysis to identify their confounding factors. The results show that if a patent application has Section 3(d) objection, the odds of the case being rejected and/or abandoned more than double. Also, although the odds of patent rejections have fallen since the 2013 Supreme Court ruling, this result is driven by non-Section 3(d) cases. Thus, it was concluded that Section 3(d) will play an increasingly important role in patent rejections

Section 3(d) and Pharmaceutical Patents in India

In 2005, India amended its Patent Law to bring the country into compliance with the WTO TRIPS Agreement. Criticisms have arisen over a flexibility in the law, Section 3(d), which attempts to reduce evergreening by granting patents to only those inventions that enhance the drug’s known efficacy. The lack of a clear definition in the law has raised worldwide concerns over its misuse which was exacerbated by the 2013 Supreme Court denial of Novartis’s Appeal of Section 3(d)-based patent rejection for the cancer treatment drug, Glivec. To analyze the importance of Section 3(d) and this ruling on patent decisions in India, a database of 500 pharmaceutical patent cases between 2005 and 2016 was created. The determinants of patent decisions were estimated using a binomial logit regression and conducted a statistical analysis to identify their confounding factors. The results show that if a patent application has Section 3(d) objection, the odds of the case being rejected and/or abandoned more than double. Also, although the odds of patent rejections have fallen since the 2013 Supreme Court ruling, this result is driven by non-Section 3(d) cases. Thus, it was concluded that Section 3(d) will play an increasingly important role in patent rejections