Theoretical Economics Letters

Journal Information
ISSN / EISSN : 2162-2078 / 2162-2086
Current Publisher: Scientific Research Publishing, Inc. (10.4236)
Total articles ≅ 1,193
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Latest articles in this journal

Ulrich Jeanin Aymar Ganga Zandzou, Olga Euphrasie Ngakala Akylangongo, Roland Frédéric Didier Bany
Theoretical Economics Letters, Volume 11, pp 63-73; doi:10.4236/tel.2021.111005

The purpose of this article is to determine the extent of agricultural risk in terms of sectoral risk in the Congo. By applying information asymmetry theory to the banking industry, we postulate that the risk associated with the agricultural sector is not the highest of sectoral risks. The application of the IRISK method produces results that show that, in the Congo, the agricultural sector is indeed not the riskiest of the economic sectors; rather, it is the “wholesale and retail trade, restaurants and hotels” and then “transport, activities of transport auxiliaries and telecommunications” sectors that are the most risky. These results, which are in line with theoretical predictions, imply that it is still possible to consistently finance agriculture provided that Congolese banks change their “negative” perception of this sector.
Muhammad Saiful Hakim, Chih Liang Liu, Aang Kunaifi
Theoretical Economics Letters, Volume 11, pp 47-55; doi:10.4236/tel.2021.111003

The restrictions of a shariah-compliant index could have consequences for corporate finance. This research investigates the difference in cash holding policies between shariah-compliant and conventional firms in the Indonesia capital market. Our empirical results suggest that a shariah-compliant firm holds significantly less cash compared to a conventional firm. The empirical finding still maintains after excluding top performers in the market and after controlling for other proxies of cash holdings and shariah-compliant firms. Our results suggest that the reputation benefit from a shariah-compliant index could outpace the cost of restrictions under a lenient shariah regulation environment.
David Lu
Theoretical Economics Letters, Volume 11, pp 74-83; doi:10.4236/tel.2021.111006

Favoritism towards a relatively weaker competitor is widely adopted as an effective instrument to enhance productive effort provision in asymmetric competitions. In this paper, we investigate the effort-maximizing favoritism rule in asymmetric two-player contests with all-pay auction technology, while accommodating fully flexible (nonlinear) favoritism rules. We assume that the players’ competencies (measured by their values of winning the competition, or marginal effort costs) are public information. We find that at the optimum, the weaker player is extremely favored; however his/her winning chance converges to zero. This finding illustrates that the effort-maximizing extreme favoritism rule perversely decreases winner diversity.
Xiaohuang Zhu, Wei Sun, Xin Cai
Theoretical Economics Letters, Volume 11, pp 21-46; doi:10.4236/tel.2021.111002

Based on the consideration of the impact of current and local economic activities on the future and whole society, this paper takes factors such as time, space, opportunity and equity into analysis framework, and establishes a new equilibrium system-multidimensional equilibrium. Then, combining the theory of multidimensional equilibrium and revenue-cost analysis, a multidimensional equilibrium model is constructed. This model provides a tool for evaluating the social and economic activities more intuitive and scientific. Finally, in order to verify the effectiveness and universality of the multidimensional equilibrium theory and model, this paper selects three representative examples of economic activities from the macro level, the medium level and the micro level respectively, and applies the multidimensional equilibrium theory to evaluate the economic activities at different levels through the actual data. This study shows that, considering the future total revenue and total cost of economic activities from the dimension of time and space, with time goes on, most of the social total revenue of economic activities and the ratio of total cost increase after decreasing first. This tells that in the short-term future, the total revenue of some economic activities may be greater than the total cost, while in the long-term future, the total revenue is less than the total cost. Therefore, from the perspective of the long-term development, the development planning of a country should give more consideration to the multidimensional equilibrium, especially taking account of the future risks.
Pierre Ghislain Batila Ngouala Kombo
Theoretical Economics Letters, Volume 11, pp 100-115; doi:10.4236/tel.2021.111008

This article analyzes the microeconomic factors that explain the phenomenon of the financial inclusion of the population in Congo. The estimates are based on data from the Survey on Financial Inclusion in the Republic of Congo carried out in 2015 by the National Economic and Financial Council and the Bank of Central African States. The results obtained show that the requirement of low collateral is an incentive factor for inclusion and that individual characteristics (income, age group, level of education and marital status) are determining factors for financial inclusion in the Republic of Congo. These results help determine the economic policy implications of improving the population’s access to financial services for financial inclusion.
Maixent Loubassou Nganga
Theoretical Economics Letters, Volume 11, pp 84-99; doi:10.4236/tel.2021.111007

The objective of this paper is to analyze the effects of the quality of institutions on the economic diversification of the countries of the Economic and Monetary Community of Central African States (CEMAC). The panel data used cover the period 1995-2019 and are extracted from the UNCTAD, WGI and WDI databases of the World Bank. The econometric analysis of the panel data, using the Pooled Mean Group (PMG) technique, shows that two variables are significant in the short term: corruption control for Congo and political stability for Equatorial Guinea. In the long term, corruption control has a positive impact on economic diversification, while political stability has a negative effect on economic diversification. The results imply that 1) the leaders of CEMAC countries should ensure political stability by adding a measure of good governance to improve economic diversification, and 2) through the fight against corruption, the public authorities should adopt rational frameworks that enable them to effectively strengthen economic diversification.
Trinh Bui, Thai Nguyen Quang
Theoretical Economics Letters, Volume 11, pp 56-62; doi:10.4236/tel.2021.111004

In the last few decades, the relationship between economy and environment has become the concern of many scholars, there have been many studies linking economic development and environmental pollution. Even the United Nations has introduced an economic-environmental linkage framework such as System of Environmental-Economics Accounts (SEEA) that is compatible with the System of National Accounts (SNA). This study attempts to provide a theoretical framework based on Miyazawa’s ideas on interregional model and demographic-economic model in order to improve the integration between economy and waste.
Monika Gaur, Ravi Kant
Theoretical Economics Letters, Volume 11, pp 1-20; doi:10.4236/tel.2021.111001

The opus dwells on aspects of building narrative, especially for state policies. It thoroughly examines economic narratives as a reason for the economic fluctuations and aggrandizement of resources. The present work is a watershed development while explaining the factors behind the foreplay of the economic system, engages upon a bottom-up approach, and provides a model for the impact of narrative-driven choices at the micro and macro levels contemplating the role of narrative in escalating inequality. The present research is intrigued by the fact that narratives form an inextricable role while forming and implementing state policies; moreover, non-developmental narratives can dampen the impact of desired policy and economic objectives. Importantly, since facts do not always back narratives, erratic economic and social outcomes petered out from conventional policy action. A few wealthy and resourceful people can swing the narrative and build upon by the low literacy, learning poverty, lack of rational approach, religious and caste factors. Such narratives subsequently influence people’s decisions, often their political decision, which enhances their probability of acquiring more wealth, leading to a perpetual concentration of wealth and power in few hands. The reason for the “perpetual concentration” of wealth and power lies with the existence of strong narratives that directly or indirectly reinforces aggrandizement and causes penury to the few left out underprivileged sections. Such inequality will be nothing short of being narrative-driven inequality. The research also emphasized the role of institutions, media, and technology, which unanimously plays a crucial role in creating, validating, and disseminating narratives. An overall ethical responsibility must be felt and shared for the common good and shared prosperity. The participative decision making helps dilute non-developmental narratives.
Julien Ghislain Mouanda Makonda
Theoretical Economics Letters, Volume 11, pp 125-144; doi:10.4236/tel.2021.111010

The objective of this article is to analyze the effects of forest resources on the reception of foreign direct investment in the countries of the Congo Basin. The panel data used cover the period 1996-2018 and are extracted from the World Bank’s WDI and WGI databases. The spatial autocorrelation of FDI inflows into the Congo Basin motivates the use of a Spatial Dynamic Durbin Model (SDM). The results of the estimation of this model by the maximum likelihood method show that forest resources have a significant positive effect on FDI inflows and that the spillover effects of inflows from the neighborhood (ρ) are also positive and significant. These results imply the need for: 1) the generalization of logging in forest concessions while encouraging their certification and 2) the subregional harmonization of a repressive mechanism in cases where the legal and regulatory texts regarding logging are violated.
Stefan Behringer
Theoretical Economics Letters, Volume 11, pp 116-124; doi:10.4236/tel.2021.111009

This paper investigates a Bayesian inverse problem of a price setting monopolist facing a random demand. In contrast to previous investigations an unknown true market potential of demand is distorted by two independent Gaussian errors, a zero-mean additive and a unity-mean multiplicative one. The multi-period game allows for learning from realized market demands (signals). Interestingly increasing the level of noise of a multiplicative error in this dynamic setting can actually improve the Value of Information of signals to the firm, a result that cannot hold for a single additive error or in a static context.
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