World Journal of Applied Economics

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EISSN : 2459-0126
Total articles ≅ 41
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World Journal of Applied Economics, Volume 7, pp 17-33; doi:10.22440/wjae.7.1.2

Abstract:
Stock markets are developing with the economic growth of the countries in a liberal market economy. Petrochemicals is an indicator of the performance of the country's industry with high inter-industry linkage by providing input to several sectors, producing various outputs with a certain number of raw materials. The COVID-19 pandemic period has affected all markets worldwide and caused fluctuations in the index values of large firms in the petrochemical industry in Borsa Istanbul (BIST). This study analyzes the impact of the pandemic period and change in the oil prices and exchange rate on the petrochemical market in Turkey. The monthly data of petrochemical stock market index, exchange rate, oil prices are used in this time series analysis. A pandemic information index representing the COVID-19 pandemic was derived and included in the model. According to the results, it is observed that the most important determinant of the fluctuations on the BIST petrochemical index is the oil prices. While a shock in oil prices negatively affects the BIST petrochemical index, the petrochemical index responds positively to the shock in the pandemic index.
Erkam Sarı, Hakan Hotunluoğlu
World Journal of Applied Economics, Volume 7, pp 1-16; doi:10.22440/wjae.7.1.1

Abstract:
This study investigates the nexus between government size and openness by paying special attention to country classification. The main results of our empirical investigations show that (i) there are two government size trends meaning two different country groups exist; (ii) there is a positive relationship between trade openness and government size for the first country group, which validates the compensation hypothesis; (iii) a negative relationship between financial openness and government size is found for the second country group, which confirms the efficiency hypothesis; (iv) the effect of financial openness is nearly ten times higher than trade openness; (v) an endogenous country classification process yields better results to understand the linkages between openness and government size. In this regard our study incorporates both hypotheses and provides a uniform explanation.
Amir Kia
World Journal of Applied Economics, Volume 6, pp 139-161; doi:10.22440/wjae.6.2.3

Abstract:
This paper analyses the direct impact of fiscal variables on private investment. The current literature ignores one or more fiscal variables and, in many cases, the foreign financing of debt. In this paper, an aggregate investment function for an economy in which firms incur adjustment costs in their investment process is developed. The developed model incorporates the direct impact of government expenditure, public debt and investment, deficits and foreign-financed debt on private investment. The model is tested on US data. It is found that public investment does not have any impact on private investment, but government expenditure, deficit, debt and foreign-financed debt crowd out private investment over the long run. However, deficit crowds in the private investment over the short run.
World Journal of Applied Economics, Volume 6, pp 99-121; doi:10.22440/wjae.6.2.1

Abstract:
In today's world, it is increasingly important to conduct economic and financial analyzes of enterprises in all sectors to determine strengths, identify weaknesses and adopt strategies that allow them to be at the highest competitive level. In particular, the food sector plays an essential role in the economy of any country, representing a significant contribution to gross domestic product, total employment, and disposable income of households. In this work, we adopt a methodology for measuring efficiency based on the multidirectional efficiency analysis and other mathematical techniques (the calculation of the normal distribution intersection coefficient (NC value), analysis of clusters and principal components, and model fitting) in order to examine the factors that influence the performance of Portuguese enterprises in the food, beverages and tobacco industry for the period of 2006-2013. The results show a characterization of the financial structure of the sector and diagnosis through indexes that identify the strategic positioning of the enterprises in terms of efficiency scores. In addition, we also show that an analysis of the variables that must be approached differently to obtain better results regarding economic performance. Although there is an increase in credit with the acquisition of long-term debts, there is no evidence that this implies the ability of enterprises to grow faster, which affects profitability.
World Journal of Applied Economics, Volume 6, pp 123-138; doi:10.22440/wjae.6.2.2

Abstract:
This paper brings fresh empirical evidence on the relationship between tourism and economic growth for five South European countries over the period 2000Q1-2018Q4 within a multivariate framework. PVAR and panel cointegration analyses are employed to infer the causal relationship between tourism and economic growth. Heterogeneous panel cointegration test reveals a long-run relationship between real GDP, labour force, gross fixed capital formation and tourism. Granger causality validates the bidirectional and unidirectional causal relationship between tourism, labour and economic growth and physical capital and economic growth, respectively. Simultaneously, impulse-response functions of PVAR model highlight the fact that short-run innovations might have a smaller impact on economic growth against a permanent long-run augmentation of these variables. Our findings might leave ample room for government policies to stimulate strategies for higher economic growth.
World Journal of Applied Economics, Volume 6, pp 163-167; doi:10.22440/wjae.6.2.4

Abstract:
There is a bulk of literature in analyzing the impacts of exchange rate regimes (ERRs) on capital flows into emerging market economies. However, these studies mainly do not take into account integration and cointegration properties of variables. This paper aims to tackle this important issue by investigating whether ERRs matter for the impacts of the main push (global financial conditions, GFC) and pull (real GDP) factors on capital inflows into emerging market economies. We find that worsening GFC decreases all types of capital inflow except foreign direct investments in case of floating ERR. This impact is statistically significant only for portfolio inflows in case of managed ERR. The pull factor is often positive and statistically significant in determining capital inflows in the long-run only under floating ERRs. These results suggest that the long-run impacts of the main pull and push factors on capital inflows are often magnified under more flexible ERRs.
World Journal of Applied Economics, Volume 6, pp 169-176; doi:10.22440/wjae.6.2.5

Abstract:
After the subprime meltdown, the Federal Reserve focused its attention on US non-farm payroll data in order to pave the way for its fund rate hikes. As time went by, the Federal Reserve deemed particularly one sub-component of this data, namely the increments on average weekly wage growth as a proxy for inflation and thus a plausible explanation for raising the interest rates. In that aspect, we decide to elaborate on this issue further and examine whether this implemented strategy indeed had a reflection in the real market. For doing so, we intend to determine whether there is any causality relation in either direction between US average weekly wage increases and 10-year Treasury Bond rates. We utilize the Toda-Yamamoto causality approach and come up with a statistically significant result between wages and bond rates. For robustness, we also consider the unemployment rate and consumption expenditures as independent variables.
World Journal of Applied Economics, Volume 6, pp 73-89; doi:10.22440/wjae.6.1.5

Abstract:
Macroprudential policies (MPPs) were relatively less used around the world before the 2008 global financial crisis (GFC). In the aftermath of the GFC, they have become popular both in advanced and emerging market countries. Through time, the accumulation of new data across countries has led to a growing body of literature investigating the effectiveness of such policies. In this paper, using a data set of 30 developing and emerging market countries and panel VAR approach with GMM estimation, we contribute to this literature, first, by testing whether MPPs are effective in controlling domestic credit growth after a global liquidity shock. Second, we test whether MPPs are more effective when a combination of MPPs are used to control credit growth. Results indicate that MPPs are effective tools to limit domestic credit growth, especially during the expansion phase of the credit cycle. Second, the number of MPP tools does matter to manage the magnitude and duration of the domestic credit growth effectively. We argue that the insufficient number of MPP implementations are unable to prevent leakages in the system and reduce the effectiveness of MPPs under a global liquidity shock.
World Journal of Applied Economics, Volume 6, pp 91-98; doi:10.22440/wjae.6.1.6

Abstract:
There has been a debate about what measurement is most appropriate for measuring inequality because the classical index does not distinguish between what is fair and unfair distribution of income. In this empirical study, the "Responsibility-Sensitive Egalitarian Theory" is applied for the case of Japan. Our paper firstly tracks the historical evolution of inequalities and concludes that the Japanese accept pre-tax income inequality because they believe their socio-economic class is determined by luck. Secondly, illustrating the Unfairness Lorenz Curve by gender shows that females face more unfairness than males: the pre-tax income of middle-income males increases slightly compared to the fair-income group from 2010 to 2013. However,the opposite is true for females in the bottom and middle classes. Considering there already exists a gender wage gap in Japan, it is necessary to take action to reduce inequality.
World Journal of Applied Economics, Volume 6, pp 1-19; doi:10.22440/wjae.6.1.1

Abstract:
The purpose of this study is to deal with economic growth with labor market monopsony. The economy is composed of one sector (like in the Solow model) and two groups of households (like in the Stiglitz model). The sector uses capital and labor as inputs. Capital and output markets are perfectly competitive. The population is classified into two - discriminatory and discriminated - groups. Labor market for the discriminatory group is perfectly competitive, whereas it is characterized by monopsony for the latter group. We model the behavior of the household with the concept of disposable income and utility function developed by Zhang (2013, 2017). The model endogenously determines the prot of the rm which is equally distributed among the discriminatory population. We build the model and provide a computational procedure to quantify the response of the model economy in a comparative dynamic setting. We also compare the model outcomes with a labor market under perfect competition and under monopsony. We show that monopsony harms not only national economic growth but also the discriminatory household in the long term.
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