Abstract: Economies is entering its third year of existence and an impressive amount of high-quality research has already been published. It is fair to say that Economies has already established itself as an international, peer-reviewed, open access journal. [...]
Abstract: The welfare costs of inflation and inflation uncertainty are well documented in the literature and empirical evidence on the link between the two is sparse in the case of Egypt. This paper investigates the causal relationship between inflation and inflation uncertainty in Egypt using monthly time series data during the period January 1974–April 2015. To endogenously control for any potential structural breaks in the inflation time series, Zivot and Andrews (2002) and Clemente–Montanes–Reyes (1998) unit root tests are used. The inflation–inflation uncertainty relation is modeled by the standard two-step approach as well as simultaneously using various versions of the GARCH-M model to control for any potential feedback effects. The analyses explicitly control for the effect of the Economic Reform and Structural Adjustment Program (ERSAP) undertaken by the Egyptian government in the early 1990s, which affected inflation rate and its associated volatility. Results show a high degree of inflation–volatility persistence in the response to inflationary shocks. Granger-causality test along with symmetric and asymmetric GARCH-M models indicate a statistically significant bi-directional positive relationship between inflation and inflation uncertainty, supporting both the Friedman–Ball and the Cukierman–Meltzer hypotheses. The findings are robust to the various estimation methods and model specifications. The findings of this paper support the view of adopting inflation-targeting policy in Egypt, after fulfilling its preconditions, to reduce the welfare cost of inflation and its related uncertainties. Monetary authorities in Egypt should enhance the credibility of monetary policy and attempt to reduce inflation uncertainty, which will help lower inflation rates.
Abstract: In this paper, we study the cultural geography of the Veneto Region on the basis of a pseudo-diffusion approach to the analysis of the inherent semantic spatial data. We find somewhat surprising results, and, in particular, that Venice, indisputably the Region’s cultural hub in terms of concentration of activities and facilities, global visibility and attraction of resources, plays a marginal role in determining the momentum of cultural initiative at the regional level as of 2007 data. The areas with the greater momentum are relatively marginal ones but characterized by a strong presence of design-oriented companies that are actively engaging in culture-driven innovation in a context of gradually horizontally-integrated clusters. Our findings call for a revision of the traditional policy approaches that identify centralities in terms of concentration of activities and facilities based on past dynamics, and to design policies accordingly. We argue in favour of a more forward-looking, evidence-based approach.
Abstract: While most of the offshoring literature focuses on the effects on relative wages, other implications do not receive the necessary attention. This paper investigates the effects on the industries’ skill ratio. It summarizes the empirical literature, discusses theoretical findings, and provides empirical evidence for Germany. As results show, effects are mainly driven by the industry where offshoring takes place. If offshoring takes place in high-skill intensive industries, the high-skill labor ratio increases (vice versa if offshoring takes place in low-skill intensive industries). Results are in line with other empirical findings, however, they seem to contradict theoretical causalities. Thus, we additionally discuss possible explanations.
Abstract: Given limited research on monetary policy rules in emerging markets, this paper challenges the applicability of a nonlinear Taylor rule in characterizing the monetary policy behavior of the Brazilian Central Bank. It also investigates whether and how the process of setting interest rates has been developed in response to contingencies and special events. We extend the linear Taylor rule to a regime-switching framework, where the transition from one regime to another occurs in a smooth way, using a Logistic Smooth Transition Regression (LSTR) approach. In this sense, we empirically analyze the movement of the nominal short term interest rate of the Brazilian Central Bank using quarterly data, covering the period 1994.Q4–2012.Q2. We find that the nonlinear Taylor rule provides a better description of the Brazilian interest rate setting and is consistent with historical macroeconomic events. In particular, our results show that adopting a nonlinear specification, instead of the linear, leads to a costs reduction in terms of ﬁt: 190 basis points in 1995 and 140 basis points in the mid-2002 presidential election campaign in Brazil. Moreover, the Brazilian monetary policy exhibits nonlinear patterns that better captures special events and may contain relevant information rendering it applicable to unusual conditions, i.e., a financial crisis, which require disconnection from the automatic pilot rule and use of judgement to make decision.