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An Asymmetric Study of J-curve Effect in the Turkish Service Trade
No full textThere is a new strand of the literature in which researchers try to test the J-curve phenomenon using trade data in services. This literature is in its infancy, and any new addition must be welcomed. We add to this literature by testing the phenomenon using quarterly data over the 2005Q1-2022Q4 period from eight Turkish service industries. The symmetric and asymmetric impacts of exchange rate changes on each service trade balance are estimated empirically by employing linear and nonlinear autoregressive distributed lag approaches to cointegration methods. Considering the two approaches to be complementary, we find support for the J-curve effect in four service industries, i.e., in insurance and pensions, transport, travel industries, and intellectual property. Thus, lira depreciation will improve the trade balance of these four industries in the long run, while short-run effects oscillate
Does aging matter in the impact of the minimum wage on inflation?
No full textWe examine how demographic changes impact the transmission of minimum wage increases to inflation. The minimum wage growth can raise the prices of goods and services and accelerate inflationary processes. At the same time, a shrinking workforce and changes in its structure could lead to changes in the impact of minimum wage increases on the economy. We use the minimum wage augmented Phillips curve framework extended with the demographic variables. We employ the sample of 21 European Union countries in 2003-2023 and panel data techniques.
Our study proves that the strength of the minimum wage pass-through effects on inflation depends on demographic factors. Aging of the workforce and shrinking workforce size weakens the impact of minimum wage increase on inflation. Contrary, a lower proportion of the less educated working-age population strengthens the minimum wage pass-through effects on inflation. Our results have important implications for macroeconomic, minimum wage, and education policies
The Effect of Market Information on Market Prices
No full textEmpirical studies on the effect of internet on market prices report that market prices have not always reduced in response to increased competition that is induced by the easily and relatively costlessly available market information.
In this paper, we provide an explanation for why prices of all goods may not reduce, and in fact, price of some goods may even increase in presence of more market information. Market information not only induces stiffer competition amongst sellers but also makes for better matches between consumers and producers. While the former feature has a tendency to reduce prices, the latter feature may in fact cause prices to rise. The direction in which prices change as more information becomes available depends on the balance of these forces. We analyse this in context of a differentiated market, and characterise how prices change in response to freely available market information
Revisiting Central Bank Independence in the World: An Extended Dataset
No full textHow has central bank independence (CBI) changed over time and across countries? This paper introduces the most comprehensive dataset on de jure CBI, including country-year observations covering 192 countries between 1970 and 2023. The dataset identifies statutory reforms affecting CBI, their direction, and codes four dimensions of CBI (personnel independence, central bank’s objectives, policy formulation, and limits on lending). It includes two CBI indices and a regional diffusion variable. The broader coverage of this dataset has important implications. First, although this dataset coding decisions are generally consistent with previous research, countries included only in this dataset tend to have lower CBI and differ in other dimensions with those previously coded. This suggests that systematically missing data in other data sources may have effects on inferences. Second, extended temporal coverage allows analyzing the evolution of central bank governance for more than a decade since the Global Financial Crisis. Finally, the data show that although there is a global tendency towards more CBI, there is significant variance across and within regions, including numerous reforms reducing CBI in the past two decades. This data contribution is important for research beyond the study of monetary institutions and their effects
Impact of Trump 2.0 on Sub-Saharan Africa
No full textAs Trump takes aim at global norms and institutions, the question of what parts of the post-Cold War order can be saved, and for whom, needs urgent attention. Moving away from these positions will require major changes. Trump 2.0 has generated optimism in Africa. South Africa, in particular, was initially optimistic. But later, bilateral relations with South Africa deteriorated as the Trump administration, including his economic advisor, South African-born Elon Musk, openly sided with the white SA establishment, at least for the next four years. Prospects for democratic transitions were also dashed, as Trump did not care about democratizing sub-Saharan Africa (SSA),but rather supported African autocracies, such as in Biya's Cameroon, Gnassingbé's Togo, and the Central African Republic and Ivory Coast. Trump's intention to dismantle USAid threw all its contractors into disarray. Fear, pain and hunger were the terrible consequences of US funding cuts,for example in Kenya and war-torn Sudan. The US was the largest ODA donor in SSA. In fiscal year 2023/2024, the US had donated nearly $3.7 billion. Jihadism in the Sahel, the Horn of Africa and beyond is likely to intensify and spread. The isolationist US Africa policy under Trump could further reduce Western influence. Trump's trade policies, particularly the imposition of tariffs and withdrawal from multilateral agreements such as the Trans-Pacific Partnership (TPP), have affected developing countries' access to the US market. This is particularly true in SSA, which relies heavily on exports of commodities, textiles and manufactured goods to the US market. The imposition of tariffs on steel, aluminium and other manufactured goods further increased the cost of exports from these countries, leading to reduced competitiveness and a decline in trade volumes. African countries benefiting from the African Growth and Opportunity Act (AGOA) have seen their benefits diminish, as the Trump administration has de-prioritised AGOA
COVID-19 restrictions and workplace mobility: Synthetic control analysis using Google data
No full textThe health mandated restrictions during the COVID-19 pandemic induced permanent changes in the economy and society worldwide. Transformation is mainly noticeable in economic sectors where daily tasks permit some degree of telework (e.g. call centers), and those which replaced in-person business (e.g. delivery services). COVID-19 restrictions in Europe implied a 160% increase in working from home (WFH), with a small decrease after mandated restrictions were removed. This paper employs synthetic control methods with Google data to analyze the casual impact of removing these restrictions on the workplace mobility in cities across four European countries (Spain, Italy, France and Sweden). Findings show a significant average fall of 6.3% in workplace mobility post-restriction relaxation. This result highlight associations with key factors such as COVID-19 cases, city population, sex-ratio, stringency index, and residential mobility, pointing towards a potential increase in remote work adoption. These findings underscore the intricate dynamics of workplace measures and their broader implications for evolving remote work trends
Impact of Trump 2.0 on Sub-Saharan Africa
No full textAs Trump takes aim at global norms and institutions, the question of what parts of the post-Cold War order can be saved, and for whom, needs urgent attention. Moving away from these positions will require major changes. Trump 2.0 has generated optimism in Africa. South Africa, in particular, was initially optimistic. But later, bilateral relations with South Africa deteriorated as the Trump administration, including his economic advisor, South African-born Elon Musk, openly sided with the white SA establishment, at least for the next four years. Prospects for democratic transitions were also dashed, as Trump did not care about democratizing sub-Saharan Africa (SSA),but rather supported African autocracies, such as in Biya's Cameroon, Gnassingbé's Togo, and the Central African Republic and Ivory Coast. Trump's intention to dismantle USAid threw all its contractors into disarray. Fear, pain and hunger were the terrible consequences of US funding cuts,for example in Kenya and war-torn Sudan. The US was the largest ODA donor in SSA. In fiscal year 2023/2024, the US had donated nearly $3.7 billion. Jihadism in the Sahel, the Horn of Africa and beyond is likely to intensify and spread. The isolationist US Africa policy under Trump could further reduce Western influence. Trump's trade policies, particularly the imposition of tariffs and withdrawal from multilateral agreements such as the Trans-Pacific Partnership (TPP), have affected developing countries' access to the US market. This is particularly true in SSA, which relies heavily on exports of commodities, textiles and manufactured goods to the US market. The imposition of tariffs on steel, aluminium and other manufactured goods further increased the cost of exports from these countries, leading to reduced competitiveness and a decline in trade volumes. African countries benefiting from the African Growth and Opportunity Act (AGOA) have seen their benefits diminish, as the Trump administration has de-prioritised AGOA
Sticky information and price controls: Evidence from a natural experiment
No full textWe test the predictions of the sticky information model using a survey dataset by comparing shoppers’ accuracy in recalling the prices of regulated and comparable unregulated products. Because regulated product prices are capped, they are sold more than comparable unregulated products, while their prices change less frequently and vary less across stores and between brands, than the prices of comparable unregulated products. Therefore, shoppers would be expected to recall the regulated product prices more accurately. However, we find that shoppers are better at recalling the prices of unregulated products, in line with the sticky information model which predicts that shoppers will be more attentive to prices that change more frequently
Integration, Contagion and Turmoils; Evidence from Emerging markets
No full textPurpose – Based on weekly data from 2012 to 2024, this paper aims to evaluate empirically the integration and contagion properties of some emerging stock markets from North Africa including Morocco, Tunisia and Egypt, and to deepen the understanding of the linkage between them during stable and turmoil periods (Covid 19, Ukrainian war and Gazza war).
Design/methodology/approach – Besides traditional Granger causality (GC) test (Granger, 1969), the (Shi, Hurn, & Phillips, 2020)’ time-varying (TV) GC test, the (Song & Taamouti, 2020)’ quantiles GC test, and the (Breitung-Candelon, 2006)’ frequency domain (FD) GC tests are used for the contagion (diversification) check between market volatility (returns). Then, the returns DCC- GARCH specifications are used for the integration investigations. Then, based on the returns DCC dynamic regressions, the contagion analysis between considered markets that are related to the unexpected events is done.
Findings – As the results from the standard GC, all considered tests reveal that in mean, Tunisian returns R_T and Egyptian R_E are predictable by Moroccan R_M. Only Tunisian and Egyptian return can play then the role of diversifier. Results from these causality tests detect some contagion in variance between markets, which was denied from dynamic DDC regression regressions in returns. From dynamic DCC-GARCH model, our empirical results show a weak integration between returns.
Originality/value – Via the dynamic DCC ARCH and the DCC quantile regression, the time varying GC, the quantile GC, and the spectral GC tests, this paper provides a deeper understanding of North African marginal stock market behavior and linkage.
Entrepreneurship and business cycles: Global evidence
No full textThis study examines the interplay between business cycles and entrepreneurship using data from 172 countries spanning 1990 to 2022. We employ the State Space model, panel vector autoregressive models, and the Granger non-causality tests and unravel three key insights. First, entrepreneurship exerts hysteresis, albeit with weak persistence. Second, entrepreneurship exhibits a countercyclical relationship with business cycles measured by both output and unemployment cycles, suggesting that high unemployment during global recessions may push individuals to start new businesses. These countercyclical results remain robust to structural breaks across different sub-sample periods. Third, entrepreneurship acts as a lagging indicator of business cycles, meaning changes in output and unemployment precede changes in entrepreneurial activity. Further analysis indicates that these findings are primarily driven by upper-middle and high-income countries. We conclude by discussing the policy implications of these results and outlining promising directions for future research