Explaining the gaps in labour productivity in some developed countries

Modern economic theories explain differences in productivity and economic growth by differences in political and economic institutions, and differences in culture, geographical location, policies, and laws. Another new strand of the literature explains productivity and economic growth differentials by gaps in general purpose technology and information and communication technology, while another literature cites real exchange rate depreciations as the main explanatory variable. These gaps might explain differences in economic performances between developed and developing countries, but they are too small to explain differences between developed industrial economies such as New Zealand and Australia or Canada and the United States. In this paper, more than eighty percent of labour productivity gaps between New Zealand and Australia and Canada and the United States are explained by endogenous technology shocks (TFP) and capital intensities.Productivity, nontradable prices, real exchange rate

On The dynamic of search, matching and productivity in New Zealand and Australia

As far as we know there has been no, or very little, empirical examination of search models and unemployment – vacancy relationship in New Zealand. We empirically examine dynamic matching functions in the New Zealand labor market over the period 1986-2006. Further, it is well documented that although New Zealand and Australia embarked on similar wide economic reforms almost 25 years ago, the level of New Zealand’s labor productivity is still lower than that of Australia (Razzak, 2007) and lower than the US productivity level (Prescott, 2002). It is has been argued that among the main explanatory variable is the low level of capital intensity – capital per hour worked - Razzak (2007) and Hall and Scobie (2005). However, there has been no formal explanation for the low level of capital intensity. This paper explains why capital investments are relatively lower in New Zealand. We do this by examining the dynamics of the labor markets in New Zealand and Australia.Matching Function, Beveridge curve, Labor Productivity

On the GCC Currency Union

Essentially, the impact of the currency union on member countries depends on whether the common currency area is optimal in the sense that the effect of the asymmetric shocks is small, Mundell (1961). Typically, researchers use VAR of different types to analyze the data. For robustness, we use different methodologies. First, we use different estimators to estimate a small textbook model for the panel of the Gulf Cooperation Council countries (GCC) from 1970 to 2006, where the short-run equilibrium real output and the real exchange rate are determined by the intersection of the assets and goods markets equilibrium schedules. And the central bank fixes the exchange rate by keeping the money supply at a level where the domestic interest rate is equal to the foreign interest rate. Then we test for symmetry using the nonparametric Triples test, Randles et al. (1980). Third, we introduce a nonparametric multivariate statistic to test whether the variances of the shocks (the conditional variance) are equal across countries.Optimum Currency Area, asymmetrical shocks and conditional variance

An Empirical Glimpse on MSEs Four MENA Countries

The Economic Research Forum (ERF) produced a one-off survey of micro & small private enterprises (MSE) in a number of Middle East and North African countries (MENA). It contains sufficient information to fit a production function and additional information about the owner’s education type; the scope of the market; and the type of technology. Further, it provides information about perceived constraints to production. We test the effect of these factors on technical progress. We believe that empirical research of policy issues can help promote the making of ‘evidence-based policies’ in the MENA countries.Micro-small private enterprise; production function; stochastic dominance.

Predicting Instability

Unanticipated shocks could lead to instability, which is reflected in statistically significant changes in distributions of independent Gaussian random variables. Changes in the conditional moments of stationary variables are predictable. We provide a framework based on a statistic for the Sample Generalized Variance, which is useful for interrogating real time data and to predicting statistically significant sudden and large shifts in the conditional variance of a vector of correlated macroeconomic variables. Central banks can incorporate the framework in the policy making process.Sample Generalized Variance, Conditional Variance, Sudden and Large Shifts in the Moments

An Empirical Glimpse on MSEs Four MENA Countries

The Economic Research Forum (ERF) produced a one-off survey of micro & small private enterprises (MSE) in a number of Middle East and North African countries (MENA). It contains sufficient information to fit a production function and additional information about the owner’s education type; the scope of the market; and the type of technology. Further, it provides information about perceived constraints to production. We test the effect of these factors on technical progress. We believe that empirical research of policy issues can help promote the making of ‘evidence-based policies’ in the MENA countries.Micro-small Private Enterprise; Production Function; Stochastic Dominance.

Explaining the gaps in labour productivity in some developed countries

Modern economic theories explain differences in productivity and economic growth across countries by differences in political and economic institutions, and differences in culture, geographical location, policies, and laws. The success of any of these theories in explaining the gap in productivity between any two countries depends on the countries in the sample. We argue in this paper that differences in the above variables might explain gaps in economic performance between developed and developing countries, but are too small to explain the productivity gaps between developed countries. We test this hypothesis for two pairs of developed neighbouring countries: New Zealand and Australia and Canada and the United States, hence New Zealand – Australia and Canada – United States. In this paper, more than eighty percent of labour productivity gaps between New Zealand and Australia and Canada and the United States are explained by endogenous technology shocks (TFP) and capital intensities.Labour Productivity; TFP; Real exchange rate

Iraq: Private ownership of oil and the quest for democracy revisited

In Razzak (2006), I argued that the state-ownership and the state-management of oil (on behalf of the Iraqi people) is not conducive to democracy and economic development. Iraqis have had dictators for decades. They were only able to maintain power by controlling the oil. The events of 2019 uprising confirmed that. I also argued that it could impoverish the average Iraqi citizen. This has become clear to everyone now. The statistics demonstrate that the average Iraqi is poor. The new political establishment has failed to develop the economy and squandered Iraq’s oil wealth. In 2006, I proposed a change to the Iraqi constitution regarding oil and provided a strategy of a gradual transfer oil wealth to the Iraqi people. In this paper, I revise my idea based on the new information that became available from the recent uprising of the Iraqi people in 2019, and argue for an immediate transfer of oil wealth to the Iraqi people