Turkish Economic Review
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Forecasting volatility of gold: Comparison of Turkish gold and equity markets’ risk profile
Get PDFAbstract. Predicting price changes of a commodity thus, forecasting volatility thereof have significant importance for the risk measurement purpose. Perception is that the highly volatile assets overreact more under stressed market conditions, cause excessive volatility and are traded with a discount. In this paper, we evaluated volatility structure of gold and equity markets in Turkey with GARCH volatility modeling methodology, an extended version of ARCH model. Comparison of volatility clustering and overall risk profile of both markets was made. The results show that persistence exists in the volatility process and current conditional volatility of gold prices is significantly impacted by its own past shocks and volatility. The results also confirms the volatility clustering that high volatilities are likely to be pursued by high ones and vice versa in both gold and equity markets. Parallel to literature finding, gold is a diversification instrument because of its low correlation with stock markets and its low risk profile feature induced with low volatilities in gold markets than equity markets.Keywords. Gold, Equity, Volatility, Risk.JEL. G10, G11, G15
Does social development increase the happiness level? Evidence from global panel data
Get PDFAbctract. This study attempts to examine the links between social development and happiness. Social development plays a very important role in increasing the level of happiness. Social development leads to better education, health and more economic growth. The analysis is captured by employing panel data of 125 countries over the period 2014-2018. The empirical analysis is based on Fixed Effects Method (FEM), Random Effects Method (REM), Instrumental Variable Fixed Effects Method (IVFE), Generalized Method of Moments (GMM) and Driscoll-Kraay Standard Errors. The empirical analysis demonstrates that social development has a positive impact on happiness. The study suggests that government should encourage such projects, which enhance the level of social development.Keywords. Happiness, Social development.JEL. D63, I30, I31
Energy subsidy reform and economic sustainability: Egypt vs. Iran
Get PDFAbstract. This paper illustrates the relationship between energy reforms and economic sustainable development in Egypt and Iran; through analyzing the relation between energy reform and four main macroeconomic variables, namely: budget deficit, energy consumption, inflation and economic growth. The methodology adopted in this paper is a comparative case study between Egypt and Iran, using qualitative descriptive analysis; focusing on the period from 2010 to 2014, as this period is characterized with active subsidy reform efforts for both countries. The paper concludes that reforming energy subsidies generally tends to relief the strain on the public budget, in case it is not accompanied with simultaneous economic difficulties which can deem the reform efforts obsolete, like in the case of Iran. In addition, the responsiveness of energy consumption of a certain fuel to the increase in its price is heavily reliant on its price elasticity of demand. This is represented in the availability of alternative energy sources. Moreover, the effect of the reforms on inflation is normally instantaneous and short-lived and could be mitigated through government intervention; that was clear in the case of Egypt. However, Iran did not show a similar trend as there was a weak correlation between subsidy reforms and inflation. Finally, there tends to be a very weak relationship between subsidy reforms and GDP growth, implying that the effect of other economic factors outweighs that of subsidy reforms.Keywords. Energy subsidy reform, MENA region, Sustainable development.JEL. E62, H23, Q01
The new models of decision in risk: A critical review of the literature
No full textAbstract. The aim of the risk decision theory is to describe the behavior of agents in the face of several random prospects. Since it is difficult to describe these preferences, we seek to represent them. The use of a representative function of preferences has been for a long time, the usual method of describing behavior in a random context. The obvious advantage of this method is that it allows including these data in a formalized model and, by extension, to understand the optimization process underlying any decision. The determination of the representative function of preferences must be based on an axiomatic basis. From these axioms, an accurate specification of the value function will be derived. The purpose of this article is to examine the history of theories that have sought to determine a satisfactory criterion for responding to the risk decision problem and to analyze the contribution of these models.Keywords. Risk aversion, Expected Utility (EU), Rank Dependent Expected Utility (RDEU), Gamble.JEL. D81, C91
An introduction to the theories of national and regional economic development
Get PDFAbstract. This conceptual paper analyses the concept of development that is a process of progressive growth that generates a transition from simple to complex system. In economics, development is a multidimensional process that generates changes in economic, political, social and institutional structures to support an accelerated growth and improvementof nations for achieving and sustaining a comprehensive wellbeing of people in society. Some theories of economic development are briefly discussed, considering national and regional economic systems. Finally, some critical contradictions of the process of economic development in society are discussed to conclude this study.Keywords. Economic development, Economic growth, Human development, Development economics, Social progress.JEL. F63, O10, O20
Modeling the impact of exports on the economic growth of Pakistan
Get PDFAbstract. This study is an empirical investigation to Export led Growth hypothesis (1971-2016) in case of Pakistan by applying cointegration analysis and dynamic error correction mechanism. The study proves that the exports are important and significant determinant of economic growth in Pakistan. The analysis also reveals that the exports along with labor force, investment and Domestic credit to private sector ratio are important for the long-run as well as short run economic growth of Pakistan. Keywords. Exports led growth, Cointegration, Dynamic error correction, Pakistan.JEL. F10, 040, B23
Clower’s Dual-Decision Hypothesis is economics
Get PDFAbstract. Though Wu (2017) has shown Clower’s Dual Decision Hypothesis leading to Keynes’ change in saving (and disequilibrium) conclusion, it is important to compare Clower’s budget constraint approach with other models, including those found in Hall’s consumption theorem and similar approach. In Clower, by assuming that, consumers may not satisfy the budget constraint, one cannot automatically assume Hall’s consumption theorem to hold. And, by showing how households need to optimize contingent on the satisfaction of their budget constraint, Clower was, in effect, creating a feedback mechanism.Keywords. Keynes, Clower, Keynesian, Disequilibrium, Dual Decision Hypothesis, Consumption, Martingale, Saving, Growth, Income, Trade, Feedback.JEL. A10, B2,B22, C20, E20, E60, F00, J00, N10
Joseph E. Stiglitz, Rewriting the Rules of the American Economy, An Agenda for Growth and Shared Prosperity
Get PDFAbstract. The rules of game are fair if they are fair for all the economic agents; but if rules favor certain segment of society more than the others, then not to change rules would be grossly unfair. The rules that exacerbate the gap between the rich and the poor and make equality of opportunities conspicuously absent are not fair at all. These unfair rules give birth to poverty and inequality and the issue of poverty and inequality is of utmost importance. For instance, in April 2013, the Board of Executive Director of the World Bank adopted two goals: end global extreme poverty and promote shared prosperity. The World Bank Group published a comprehensive report titled ‘Talking on Inequality’ in 2016.Keywords. American economy, Economic growth.JEL. A10