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Abstract: In this paper, we reassess the traditional import demand function and an augmented version that includes volatility of external reserves and oil revenue inflows as explanatory variables. In each version, we examine the role of regime shifts on the stability of Nigeria’s import demand function which has been ignored in previous studies. Our findings suggest the existence of a long-run relationship between import demand and its determinants. We also present evidence of one-way causality running from changes in relative prices, oil revenue inflows and volatility of international reserves to import demand in Nigeria. However, when structural breaks were introduced, bi-directional causality is observed; indicating the critical role of regime shifts in determining the stability of Nigeria’s import demand. The results make a case for diversifying Nigeria’s revenue inflows in a bid to dampen the effect of contemporaneous shocks that affect external reserve accumulation thereby weakening its import financing capacity. Keywords: Import, Structural Breaks, Cointegration, Causality, Nigeria.Download Full Article |
Abstract - Whose Governance? IMF Austerities in a Small Island State: The Case of Jamaica
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Abstract: The International Monetary Fund and the World Bank have for a long time embarked on what can be described as a ‘trustee’ relationship with countries in the Commonwealth Caribbean. From the latter half of the 1970s, countries such as Trinidad and Tobago, Guyana, Barbados as well as Grenada were ‘forced’ because of their chronic need for ‘hard’ currency loans to approach the IMF and the World Bank. These loans were accompanied by structural adjustment measures. This paper attempts, for the first time, to evaluate, in the case of Jamaica, whether the measures introduced by the Lending Agencies resulted in some measure of economic growth in the countries under review. The paper then examines the new agreements entered into by these countries and the measures that accompanied them. The overarching argument is that the forces of globalization as well as austerity measures introduced by lending agencies such the IMF and the World Bank prevents rather than encourages small island governments1 to embark on ‘national’ development plans and programs. In other words, the primary argument of this paper is that these countries are constrained in their ability to ‘govern’ themselves; rather their economic decisions are largely crafted by the forces of globalization and further reinforced by international lending agencies such as the World Bank and the International Monetary Fund. Keywords: International Monetary Fund (IMF), World Bank (WB), Jamaica, Globalization, National Development, Structural Adjustment, Agreements.Download Full Article |
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Abstract: In this paper the influence of inflation on capital cost and capitalizationof the company within modern theory of capital cost and capital structure – Brusov–Filatova–Orekhova theory (BFO theory) (Brusov et al. 2011, 2013; Filatova et al., 2008)and within its perpetuity limit – Modigliani – Miller theory is investigated. By direct incorporation of inflation into both theories, it is shown for the first time that inflation not only increases the equity cost and the weighted average cost of capital, but as well it changes their dependence on leverage.In particular, it increases growing rate of equity cost with leverage. Capitalizationof the companyis decreasedunder accounting of inflation. Keywords: Brusov–Filatova–Orekhova theory, Modigliani – Miller theory, inflation. |
Abstract - The Natural Cycle: WHY Economic Fluctuations are Inevitable. A Schumpeterian Extension of the Austrian Business Cycle Theory
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Abstract: The conventional version of Austrian business cycle theory focuses on a temporary imbalance between natural and monetary rates of interest. When, because of the role of monetary authorities in defining the monetary rate, the two values are in a situation of imbalance, the resulting expansion stage is followed by a recession. On the other hand, if instead the expansive phase arises without any interference by monetary authorities but through re-adaptation of the productive structure to a modified structure of temporal preferences, a period of sustainable growth begins that will not be followed by a crisis. The purpose of this essay is to demonstrate, on the other hand, that because of profit-expectations and the combined action of Schumpeterian elements (imitations-speculations and the ‘creation of money’ by banks), even a so-called ‘sustainable’ boom will be affected by a liquidation and settling crisis. What distinguishes the latter situation from the conventional case of imbalance between monetary and natural rates is not the onset or otherwise of a crisis but, rather, its intensity and duration. We will define as natural an economic cycle characterised by a stage of expansion considered to be ‘sustainable’ in the Austrian theory but followed by an inevitable readjustment crisis. Keywords: Austrian Economics, Hayek, Schumpeter, Business Cycles, Expectations, Innovation.Download Full Article |
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Abstract: This study examined the real estate markets of Europe, North America, and Asia using daily continental real estate indices. It applied a multivariate stochastic volatility model to analyze the behavior of volatility trends in these markets. The results showed comovements in volatilities, especially between Europe and North America, as indicated by high degrees of correlation of their respective stochastic trend components. However, the impact of this common trend varies in these markets, especially for the early period of the sample. For the later period of the sample, the derived volatility trend indicated volatility convergence among them. It might imply that the role of emerging market such as Asia in diversifying real estate investment risk was not as significant as showed in early studies and is diminishing overtime. Keywords: Real Estate Investment, Volatility, Stochastic Variance. |