Turkish Economic Review
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What determines the growth of services sector in Pakistan? A comparison of ARDL bound testing and time varying parametric estimation with general to specific approach
No full textAbstract. This empirical study followed time varying parametric approach (Kalman Filter) and auto regression distributed lag (ARDL) with general to specific approach to find out relevant macroeconomic determinants of Pakistan’s services sector’s growth. To our best of knowledge, no author has made such study that employed these estimation techniques to find out determinants of services sector growth in Pakistan while employing general to specific approach. Current study bridges this gap. Annual data was taken from World Development Indicators (2014) during period 1976-2014. Main findings of the study are that rolling regression estimates of explanatory variables justify the use of Kalman filtering approach. Results show that inflation has negative effect on services sector output growth in case of TVP approach. This result does match with ARDL results. Net foreign direct investment has positive and significant effect on services sector output growth in both techniques of estimation. Gross national expenditures with positive effect are the relevant significant determinants of services sector output growth at five percent significance level in case of TVP approach while relationship was insignificant in case of ARDL estimation. Impact of remittances received on services sector growth is negative in case of time varying parametric approach. This result is different from ARDL results where relationship is positive and significant at five percent level of significance. All the one step ahead state vectors confirmed the stability of models in case of time varying parametric approach. Cumulative sum of recursive residuals (CUSUM) and cumulative sum of recursive residuals square (CUSUMQ) also confirmed the stability of results of auto regression distributed lag. Based on these empirical findings, we conclude that government should focus on service sector growth augmenting factors while formulating any policy relevant to the concerned sector. Keywords. Services sector, Kalman filter, Rolling regression.JEL. C22, O11, O40
The Institutional Fundamentals of Turkey's Economic Performance: A New Institutional Perspective
No full textAbstract. In this thesis, the effect of Turkey's institutional structure on economic performance is analyzed by using transaction cost and credible commitment which are contributed by New Institutional Economics. According to this school, neoclassical economics ignores transaction cost, bounded rationality, incomplete contracts and property rights. So these models will not represent the real world. But it's known that the transaction cost is always positive in the real world. According to this reality, to begin with the institutions containing the New Institutional Economics are investigated and the relationship between institutions and economic performance is explained. Afterwards defining, measuring and effects of transaction cost topics are mentioned. Soon after we handled the political transaction cost. In the next chapter, the policymaking process and credible commitment are explained. The role of institutions on formation of institutional policies and the 3 determiner legislative-executive-judiciary and the seperation of powers are discussed and credible commitment is clarified in this context. By giving the theoretical framework of this issues, Turkey's progress is reviewed. The important contribution of this thesis is by following New Institutional Economics perspective, first defining the political transaction cost and credible commitment and after showing the effects Turkey's institutional structure to economic performance by using time series analysis with structral breaks. Findings indicate that the transaction cost and credible commitment determined by institutional structure are highly important on investment decisions and national income. Anahtar Kelimeler: New Institutional Economics, Transaction Cost, Credible Commitment, Institutional Structure, Structral Breaks, Co-integration.Keywords. New Institutional Economics, Transaction Cost, CredibleCommitment, Institutional Structure, Structral Breaks, Co-integration.JEL. B15, B25, B52, D23, L14. Highlights* Türkiye’de kurumsal yapının ekonomik performans üzerine etkisi incelenmiştir.* Kurumlar, işlem maliyeti, politik süreç ve güvenilir taahhüde ilişkin literatür taranmıştır.* ICRG’den temin edilen verilerle eş-anlı ve yapısal kırılmalı eşbütünleşme analizi uygulanmıştır.* Sonuç olarak Türkiye’de kurumsal yapı, ekonomik performans üzerinde önemli derecede etkilidir
Tax Losses due to Shadow Economy Activities in OECD Countries from 2011 to 2013: A preliminary calculation
No full textAbstract. In this short paper an attempt is undertaken to calculate the tax losses which result from shadow economy activities in a country. These calculations are done for the 28 EU countries, for 3 non-EU countries and for 2 other highly-developed OECD countries. The total tax losses over all 28 EU-countries make up 450.8 billion euros or 3.6% of EU-28-GDP in 2011. In 2012 it were 457.3 billion euros or 3.5% of EU-28-GDP and in 2013 454.2 billion euros or 3.4% of EU-28-GDP. For the whole country sample used in this paper the tax losses amounted to 698.7 billion euros or 2.4% of GDP of these 33 countries in 2011. In 2012 the value of tax losses was 737.2 billion euros or 2.3% of GDP and in 2013 it was 713.1 billion euros or also 2.3% of total GDP of these 33 countries.Keywords. Tax losses, Shadow economy, Tax and social security contribution burden.JEL. E26, H26, K42, O17
The Europranization of national Foreign Policies: The Examples og germany and France within the Framework of Ukraine Crisis
No full textAbstract. This study aims to investigate the effects of foreign policy cooperation processes laid down at European Union (EU) level on national foreign policies. Vast majority of the current literature on European integration focus on the impacts of developments at EU level, supra-national institutionalization and policy-making processes on member states. However, as the domain of foreign policy, which has been included within the institutional framework of the EU with the Maastricht Treaty, is under the control of member states, it has been excluded from these investigations for a long time. Even though the foreign policy of EU has an intergovernmental character, the expansion of the foreign policy domain and the development of institutional structures after the adoption of the Maastricht Treaty have introduced considerable changes in the national foreign policies of member states. In this context, the main problematic of this study is to examine how and in what ways EU foreign policy, which was designed to be under the control of member states as a result of concerns related with sovereignty, unveil the changes in member states’ foreign policies. Providing an explanation for this problematic has become significant as national foreign policies have increasingly become the subject matter of foreign policy-making at EU level after the adoption of the Maastricht Treaty. In order to account for this problematic, the concept of Europeanization, which examines the effects of the EU integration processes and developments on member states and suggests a different approach to the European integration, was employed. Moreover, this study addressed the Ukraine crisis, which posed a considerable threat to European peace and stability in the post-Cold War era, as a case study. The changes in the national foreign policies of two prominent members of the European Union, Germany and France, towards Russia within the course of Ukraine crisis were also examined in the context of the Europeanization concept. Consequently, it is seen that constant participation of member states in the foreign policy-making processes at EU level initiates significant changes in member states’ national foreign policies, even though it cannot cause a transformation of national foreign policies. While such change assists the growth of institutional structures at EU level, it also enables more binding decisions to be made for the Europeanization of member states’ national foreign policies. Thereby, national foreign policies of member states become more likely to be influenced by the foreign policy at EU level.Keywords. European Union Foreign Policy, The Europeanization, Ukraine Crisis, National Foreign Policy.JEL. F51, F55
The Distributions in Nature and Entropy Principle
No full textAbstract. The derivation of the maximum entropy distribution of particles in boxes yields two kinds of distributions: a "bell-like" distribution and a long-tail distribution. The first one is obtained when the ratio between particles and boxes is low, and the second one - when the ratio is high. The obtained long tail distribution yields correctly the empirical Zipf law, Pareto's 20:80 rule and Benford's law. Therefore, it is concluded that the long tail and the "bell-like" distributions are outcomes of the tendency of statistical systems to maximize entropy.Keywords. Maximum Entropy, Long tail distribution, 20:80 Pareto's rule, Zipf Law, Benford's law, Bell-like distribution.JEL. C62
Paul Davidson, Post Keynesian Theory and Policy: A Realistic Analysis of the Market Oriented Capitalist Economy
No full textAbstract. In this book Davidson develops Post Keynesian strategies for full employment policies, targeting inflation and offers solutions for the problems of globalization. Davidson´s message is clear: Markets cannot regulate by itself. Mainstream theories are all based on wrong assumptions like the neutrality of money, the predictability of the future (ergodic-axiom), the efficiency of markets, rational expectations, Say´s Law and Walrasian Theory of equilibriums. In this book Davidson rejects all these assumptions and therefore offers Post-Keynesian solutions. From the viewpoint of Davidson these misleading assumptions of mainstream theories lead to a wrong economic policy resulting in high unemployment rates. He also criticizes Samuelson´s neoclassical synthesis embedded in a Neo-Walrasian model, which Keynes clearly rejected. In an article (Neglected Prophets) written by Holt, Rosser, Wray (1998), Davidson is described as an economist who would have lost the discussion in the short run, but will win it in the long run (Holt et al., 1998:505). That sounds promising, but Davidson would not agree to this conclusion in the sense he would be a prophet. For a prophet the future is already pre-determined by the past, but in a non-ergodic world the future is open and not pre-determined. The future remains to be as not predictable.Keywords. Post Keynesian Theory, Unemployment, Economic policy.JEL. B50, B61, F62, H63
Donatella Strangio & Giuseppe Sancetta (Eds.), Italy in a European Context: Research in Business, Economics, and the Environment
No full textAbstract. .“Italy in a European context” moved from a current research project of the EuroSapienza Research Center’s. The book adopts a multidisciplinary standpoint. Each single chapter investigates the role of Italy in pursuing the EU five targets by 2020 that are: the increase both of employment level and of R&D/ innovation expenditures, the energetic measures of climate change, the reduction of school drop-out rate and the counter actions against poverty and social exclusion. This work is divided into nine chapters and two sections. The first section is based on four chapters whose objective is to investigate EU economic policies and aspects that concern political and social inequality. The second section is based on five chapters whose objective is to investigate EU economic policies and aspects concerning business and environment.Keywords. Economic History, Monetary Policy, Environmental Economics, Political Economy, Business, Management.JEL. E40, N20, O21, M20, M30
Mathematical Analysis of Historical Income Per Capita Distributions
No full textAbstract. Data describing historical growth of income per capita [Gross Domestic Product per capita (GDP/cap)] for the world economic growth and for the growth in Western Europe, Eastern Europe, Asia, former USSR, Africa and Latin America are analysed. They follow closely the linearly-modulated hyperbolic distributions represented by the ratios of hyperbolic distributions obtained by fitting the GDP and population data. Results of this analysis demonstrate that income per capita was increasing monotonically. There was no stagnation and there were no transitions from stagnation to growth. The usually postulated dramatic escapes from the Malthusian trap never happened because there was no trap in the economic growth. Unified Growth Theory is fundamentally incorrect because its central postulates are contradicted repeatedly by data, which were used but never analysed during the formulation of this theory. The large body of readily-available data opens new avenues for the economic and demographic research. They show that certain fundamental postulates revolving around the concept of Malthusian stagnation need to be replaced by the evidence-based interpretations. Within the range of analysable data, which for the growth of population extends down to 10,000 BC, growth of human population and economic growth were hyperbolic. There was no Malthusian stagnation and there were no transitions to distinctly faster trajectories. Industrial Revolution had no impact on changing growth trajectories.Keywords. Economic growth, Income per capita, Unified Growth Theory, Hyperbolic growth, Industrial Revolution, Takeoffs, Malthusian stagnationJEL. A10, C12, C20, C50, F00
Michael G. Plummer, Peter J. Morgan & GaneshanWignaraja (eds), Connecting Asia: Infrastructure for Integrating South and Southeast Asia
No full textAbstract. The recent rise in Regional Trade Agreements (RTAs) across the globe can be explained by the growing depth of intra-regional international production networks (IPNs) connecting firms across borders, slow progress of WTO negotiations under the Doha Round, among others. The upcoming RTAs, through granting of preferential tariff to partnersand introduction of trade facilitation measures including mutual recognition of standards and customs cooperation agreements, promote trade both in intermediate and final products. Intra-regional trade is increasingly taking place through multi-modal forms of transport, and ensuring seamless connectivity successfully complements the trade policy reforms.Keywords. Economic Integration, Economic infrastructure, Infrastructure development, South Asia economies, Southeast Asia economies.JEL. F15, F36, N00, N10, N20, O53