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Original Article

by Paolo Savona
194 Views, 0 PDF Downloads

The Euro is the logical consequences of the European common market according to the principle ‘one market, one money’, to avoid unfair competitionchanging internal monetary parities. Anyhow it is a necessary but insufficient condition being the institutional architecture weak. The European Central Bank cannot perform as the other main central banks: cannot act as lender of last resort or intervene on the exchange market to counteract speculation; the risks on national exchange rates has been transferred to member-countries sovereign debts withouta non-deflationary solution to reenter the excesses in theagreed ratio on GDP. The Eurozone is a non-optimal currency area without a policy Mundell’s type. The suggested solutionsby the Europeans are to reform national labor markets and public bureaucracies, and by the idealists to create a political union.

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Original Article

by Hamid Sakaki
263 Views, 0 PDF Downloads

Using daily data of oil prices and exchange rates of 14 countries for the period January 1999 to November 2014, this study examines the dynamic correlation between oil prices and exchange rates by DCC-GARCH model. The results show the significant negative correlation between oil prices and exchange rates over the period. These results imply that the increase of oil price is coinciding with US dollar depreciation and vice versa.  This correlation strengthens in negative direction during financial crisis period, while it shifts to an upward trend after financial crisis period.

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Original Article

by Cândida Ferreira
221 Views, 0 PDF Downloads
This paper analyses the co-integration relationship between globalisation and economic
growth of 27 more or less developed countries across almost all Continents for the time period
1970–2013. Globalisation is
proxied by the overall globalisation index and the sub-indices
representing economic globalisation, social globalisation and political globalisation, all
provided by the Swiss Economic Institute. Economic growth is measured through the natural
logarithm of the real Gross Domestic Product, sourced from the World Development
Indicators which are provided by the World Bank. Co-integration is tested with quantile cointegration regressions. The results obtained clearly confirm the existence of non-linear cointegration relationships between the considered globalisation indices and the real economic
growth.
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Original Article

by Donatella Porrini
236 Views, 0 PDF Downloads

Climate change is likely to cause extreme weather events in the world with the consequence of an increased number of natural catastrophes. The expected damages pose serious challenges to governments in terms of policy choice and a crucial point is to define the role can be played by insurance sector, particularly as a tool to reduce potential damage, as well as to stimulate mitigation. Scientific research and good knowledge of risk are necessary in guiding policy decisions to manage the risks deriving from climate change. In this direction, the author analyses the fact that risks connected with climate change and the potential contribution of the insurance sector need to be analysed by scientific research in order to plan the correct risk management strategies in the future.

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Original Article

by Georgios Mamanis
475 Views, 0 PDF Downloads

Portfolio optimization is the problem ofsearching foran optimal allocation of wealth to put in the available assets. Since the seminalworkdoneby Markowitz, the problem is codifiedas a two-objective mean-risk optimization problem where the best trade-off solutions (portfolios) between risk (measured by variance) and mean are hunted. Complex measures of risk (e.g., value-at-risk, expected shortfall, semivariance), addedobjective functions (e.g., maximization of skewness, liquidity, dividends) and pragmatic, real-worldconstraints (e.g., cardinality constraints, quantity constraints, minimum transaction lots, class constraints) that are included in recent portfolio selection models, provide many optimization challenges. The resulting portfolio optimizationproblem becomes very hard to be tackledwith exact techniquesas it displaysnonlinearities, discontinuities and high dimensional efficient frontiers. These characteristics prompteda lot ofresearchers to explorethe use of metaheuristics, which are powerful techniquesfor discoveringnear optimal solutions (sometimes the real optimum) for hard optimization problems in acceptable computationaltime. This report provides a briefnoteon the field of portfolio optimization with metaheuristics and concludes that especially Multiobjectivemetaheuristics (MOMHs) provide a natural background for dealing with portfolio selection problems with complex measures of risk (which define non-convex, non-differential objective functions), discrete constraints and multiple objectives.

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Original Article

by Nana Kwasi Karikari
204 Views, 0 PDF Downloads

The contribution of government expenditure to the level of economic growth cannot be underestimated. Unfortunately, resources for the governmental expenditure, though limited, find their way out of the coffers. This paper tries to elaborate on the adverse effect of the existence of tax havens on government expenditure that seeks to promote economic growth in developing countries. Literature indicates that high tax rates are a fundamental reason for the proliferation of government developmental funds-taxes, being syphoned to tax havens. Corrupt officials in government are also deemed to aid the intended government tax in reaching tax havens. In the end, international integration of tax bodies within governments and economies may lead to the strengthening of tax laws and downward review of tax rates can make tax obligations conducive and compelling, for economic growth.

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Original Article

by Ralph Sonenshine
212 Views, 0 PDF Downloads

In the late 1990s, many U.S. states deregulated electric utilities, allowing for competition among power generators.   Deregulated states then adopted retail choice programs, allowing customers to choose their power provider.  In addition, a significant merger wave among large utilities ensued.  How did these events impact consumer welfare? This study examines the effects of utility deregulation and mergers, by analyzing electricity price and output changes among deregulated and regulated states.  I find that deregulation may have had a positive effect when states adopted certain measures, such as retail choice or fuel changes, that enhanced competition and lowered costs.  Mergers also affected consumer welfare, with differential impacts found between the merger of generation firms versus the merger of generation and transmission companies. 

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Original Article

by James Obadiah Bukenya
225 Views, 0 PDF Downloads
Stabilization of prices of essential agricultural commodities continues to remain an area of major concern for policy makers; given that price instability affects both producers and consumers, and has macroeconomic implications. This paper examines farm-gate price behavior in the African catfish markets in Uganda, and develops a forecasting model that adjusts for the seasonal fluctuations in the price series. The analysis utilizes monthly catfish real price series for the period January 2006 to December 2013. The model provides good in-sample and out-of-sample forecasts for the eight-year time period. The out-sample predictions based on SARIMA (1, 1, 1) (0, 1, 1)12 model suggest that the stochastic seasonal fluctuations depicted in the price series are successfully modeled, and that catfish real prices follow an upward trend. The findings can assist policy makers and major stakeholders to gain insight into more appropriate economic and sectorial policies that can lead to the development of reliable market information systems and up-to-date data on catfish supply, demand and stocks.
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Original Article

by Kazuyuki Sasakura
254 Views, 0 PDF Downloads

The Slutsky decomposition is a mathematical formula which has been used for a very long time in economics to analyze how the demand for a good changes when its price goes up. Such a change in the demand is called the price effect. Most people will expect a decrease in the demand in response to a rise in the price. In other words, they will have a downward sloping demand curve in mind. Indeed they are right in usual cases.In terms of economicsit is said that the price effect is usually negative. But why? The Slutsky decomposition gives a correct answer to this question by decomposing the price effect into the substitution effect and the income effect. It is already known that the substitution effect is always negative, while the income effect is also negative if a good under considerationis “normal.”Since the sum of the two effects equals the price effect, it can be concluded that a demand for the good decreases when its price goes up, or the demand curve is downward sloping, in a “normal” situation. The Slutsky decomposition is so elegant and powerful that there would not be any economist who studies consumer behavior without mentioning it. Then, is there other decomposition than the Slutsky? This paperintroduces a new one which decomposes the price effect into the unit-elasticity effect and the ratio effect. The unit-elasticity effect means by how much the demand decreases in response to a rise in the price with the expenditure on it as fixed. The ratio effect means by how much the demand changes due to a change in the ratio of the expenditure on it to total income. The former effect is always negative, but the latter effect may be positive even in a “normal” situation. It is shown that anew decomposition is obtained by decomposing the Slutsky decomposition.

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Original Article

by Yongsheng Guo
501 Views, 0 PDF Downloads

This paper identifies strategic concepts and practical techniques in relationship-banking andexploreshow customer value was improved and how relationship-bankingperformancewas measured and linked to relationship managers’ compensation.  Grounded theory was adopted to collect and analyse data. 25 interviews have been conducted with relationship managers and corporate banking directors in 11 case banks and case banks’ quantitative data was used to support the propositions. It was found that customer relationship was seen as a valuable asset. Relationship Orientation and Customer Focus were evaluated by undertaking internal surveys and relationship management objectives were formulated and actions were proposed to improve Customer Value to the case banks. In the case banks Customer Information was collected through multiple customer touch points and integrated and analyzed.Customer Knowledge wasaccumulated and sustainable Competitive Advantages were built.Customer Perception and Customer Loyalty were measured externally.Customer Value and Risk Adjusted Return on Asset (RAROA) wereemployed to measure relationship banking performance and reward relationship managers accordingly. The interviewees perceived that relationship-banking performance could be improved in this dynamic learning process. 

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