Emerald | Journal of Economic Studies | Table of Contents

The effect of Labour Earnings on Post Retirement Income

Fri, 21 Sep 2012 00:00:00 +0100

Abstract

Purpose - The purpose of this paper is to investigate how changes in the distribution of pre retirement labour earnings affect post-retirement income in the UK. Design/methodology/approach - We estimate a PROBIT model and perform a counterfactual simulation to assess the effects of changes in the earnings distributions on pensions in the UK. We use data from the British Household Panel Survey.Findings - The distribution of labour earnings before retirement play a considerable role in the pension distribution of current retirees, particularly for low and medium incomes in the period 1991-2007 for the UK. Improvements in Social Security have lifted many out of poverty; however there is still a gender gap as we find that the current system of public and private schemes has not improved substantially pension income dispersion among women. On the other hand, changes in labour earning distributions have benefited more poor female pensioners than male.Originality/value - The paper uses BHPS data, which is a longitudinal panel of survey questions made to UK households between 1991 and 2007. The level of detail of such data allows us to study the complete distributions of pre and post retirement income rather than focussing only on some measures of dispersion.

Economic Uncertainty and Money Demand Stability in Turkey

literatinetwork@emeraldinsight.com (Kazim Azim Özdemir, Mesut Saygili) — Fri, 21 Sep 2012 00:00:00 +0100

Abstract

Purpose - The monetary authorities of emerging market economies tend to emphasize the studies that find instabilities in the money demand functions and use them as the main pretext for formulating monetary policy strategies in which monetary aggregates play no prominent role. In this study, however, we attempt to understand the causes of instabilities in the conventional money demand models by accounting for the effects of macroeconomic uncertainty on money holdings. Design/methodology/approach - The stability of a money demand function can be studied by testing parameter constancy of long-run money demand function. To this end, we perform Nymblom type tests in the context of the Coingtegrated VAR methodology.Findings - Our results suggest that money balances, income and interest spread are not cointegrated when the VAR system is missing a measure of economic uncertainty. Thus, we find stable long run relations and coefficients when the correct measures of uncertainty are introduced to the system.Originality/value - The empirical application of this kind of formal stability tests on cointegrated VAR money demand systems is very recent and to our knowledge there has been no application of this methodology on emerging market economies.

Economic policies, macroeconomic environment and entrepreneurs’ expectations: Evidence from Brazil

literatinetwork@emeraldinsight.com (Gabriel Montes, Julio Bastos) — Mon, 01 Oct 2012 00:00:00 +0100

Abstract

Purpose - The paper analyzes the influence of macroeconomic variables and economic policies on expectations and confidence of entrepreneurs. It provides an econometric analysis of the expectation transmission channel under inflation targeting in Brazil, emphasizing the effect of inflation targeting credibility on the business confidence of industrial entrepreneurs.Design/methodology/approach - Based on ordinary least square (OLS), generalized method of moments (GMM) and vector autoregression (VAR), the paper provides empirical evidence about the influence of inflation targeting credibility and macroeconomic policies on expectations and confidence of entrepreneurs and, as a consequence, on industrial production.Findings - The evidence for the Brazilian economy suggest that monetary and fiscal policies as well as the credibility of the monetary regime affect economic activity by their impact on expectations of entrepreneurs.Research limitations/implications - Development of macroeconomic stability is important to the expectations formed by entrepreneurs and, therefore, for industrial production. In particular, inflation targeting credibility stimulates industrial production, since it increases the confidence of entrepreneurs about the functioning of the economy and their businesses.Originality/value - The results suggest new insights about the influence of economic policies on the real side of the economy, pointing out that the conduct of economic policies in emerging countries with inflation targets are likely to affect the expectations of entrepreneurs and therefore their production decisions.

Trade performances and technology in the enlarged European Union

literatinetwork@emeraldinsight.com (Alessandro Antimiani, Valeria Costantini) — Fri, 21 Sep 2012 00:00:00 +0100

Abstract

Purpose - We analyse the role of the enlargement process of the European Union as a factor fostering international competitiveness of EU Member States. We argue that the economic integration process has reduced the technological gap between old and new EU Member States, and this pattern of technological innovation can partially explain the strong impulse on the export dynamics of European countries.Design/methodology/approach - We apply a theoretically based gravity model using a dynamic panel data estimator. Findings - The enlargement process has produced an overall larger positive impact on export flows for new members than for old ones, and more importantly that sectors with the higher technological content have received the strongest impulse. The augmented gravity model allows shaping the crucial role of technological innovation in fostering export competitiveness. This impact seems to be stronger for old EU member states than for new ones. Originality/value - We have developed an ad hoc technology-augmented gravity model, applied to manufacturing sectors classified by their technological content.

Financial Sector Consolidation and Competition in Malaysia: An Application of the Panzar-Rosse Method

literatinetwork@emeraldinsight.com (Fadzlan Sufian, Muzafar Shah Habibullah) — Fri, 21 Sep 2012 00:00:00 +0100

Abstract

Purpose - The purpose of the present study is to investigate the effect of consolidation on Malaysian banking sector’s market structure and competition.Design/methodology/approach - The paper employs the Panzar-Rosse (P-R) method to compute the H-statistics of the Malaysian banking sector.Findings - The results from the P-R method indicate positive H-statistics ranging from 0.680 - 0.747 under the TREV estimation and 0.547 - 0.714 under the TINT estimation. The Wald ?2 test statistics seem to reject the market structure of monopoly or perfect competition hypothesis. The results clearly indicate monopolistic competition behavior in the Malaysian banking sector. During the period under study, we find evidence of greater competition in the overall market segment, which is comprised of operating income from fee and commission based products compared to the traditional interest-based market.Research limitations/implications - The empirical findings from this study clearly indicate that competitive behaviour of banks may be explained by factors other than the number of banks operating in the banking sector and their levels of concentration. However, the results need to be interpreted with caution since the liberalization and deregulation of the Malaysian banking sector remains an ongoing process.Originality/value - Despite substantial studies performed to examine the impact of consolidation on banks competitive behavior, these studies have concentrated mainly on the banking sectors of the western and developed countries. On the other hand, empirical evidence on the developing countries banking sectors is relatively scarce.

Empirical Tests of the Marshall-Lerner Condition: A Literature Review

Fri, 21 Sep 2012 00:00:00 +0100

Abstract

Purpose - The purpose of this paper is twofold: first, it summarizes previous empirical studies of an important economic proposition. The "Marshall-Lerner condition" states that a devaluation or depreciation of a currency will have a beneficial effect on a country's trade balance if the sum of the absolute values of a country’s import and export price elasticities are greater than one. Secondly, our study re-evaluates previous studies' results to test whether support for the Marshall-Lerner condition is as strong as they had claimed.Design/methodology/approach - As a literature review, most of this paper is devoted to the analysis of previous papers. We do, however, conduct t-tests of previous studies' results. Finally, we apply cointegration analysis to data from a number of countries in a new contribution to the literature.Findings - We find that support for the Marshall-Lerner condition is weak. Previous studies often failed to find support for it, but in addition, some papers claimed to find evidence that is in reality not statistically significant. Our own cointegration analysis confirms this finding: Most countries also do not conform to the M-L condition.Research limitations/implications - These results show that a mainstay of the international economic literature--the well-known Marshall-Lerner Condition--is not met in the majority of cases, both past and present.Practical implications - This paper will serve as a useful guide for future research on the relationship between countries' trade flows and currency movements.Originality/value - To our knowledge, no previous study has reviewed the literature on the Marshall-Lerner condition. As a result, it will be useful for all future research on the topic.