Exports, Imports and Economic Growth:
An Empirical Analysis of Tunisia
-- Qazi Muhammad Adnan Hye and Houda Ben Haj Boubaker
The aim of this study is to investigate the export-led growth, import-led growth and foreign debt
sustainability hypotheses in the case of Tunisia by using annual time series data for the period 1960-2008.
Autoregressive Distributed Lag (ARDL) approach is employed to determine the long-run relationship or direction of
long-run causality between exports, imports and GDP, and the strength of causal relationship is examined by
using variance decomposition method. The results indicate unidirectional causality from exports to economic
growth and bidirectional relationship between imports and economic growth. Thus, both export-led growth
and import-led growth are valid for Tunisia. On the other hand, there is bidirectional association between
exports and imports. The long-run elasticity of exports with respect to imports is 1.02 and long-run elasticity of
imports with respect to exports is 0.86. Thus, foreign debt is weakly sustainable in the case of Tunisia. The
empirical findings of the study are important for policy makers of Tunisia in the formulation of trade policies.
© 2011 IUP. All Rights Reserved.
Money Supply and Inflation: A Historical Analysis
-- Rajkumar A Waingade
An analysis of the relationship between money supply and price level in the context of India reveals
that, over a long period, there exists a positive correlation between growth in money supply and price level.
The association between the two has however not been proportional. The growth in money supply has most
of the time exceeded the growth in price level. The gap between the two has been explained by the growth
in real national income. If the combined growth in price level and real national income over a long period
is considered, then it comes very close to the growth in money supply, implying a near proportional
relationship between the two. This means the impact of change in money supply gets distributed between the change
in price level and change in real national income, depending upon the state of the economy. A poor state
of the economy as implied by the poor real national income growth causes the price level to carry the
major part of the impact of change in money supply. This appears to be true in the case of India. The
discrepancy observed with regard to the growth in the broad measure of money supply (M3) and the combined
growth in WPI inflation and real national income has been found to be the result of fall in income velocity of
money for M3.
© 2011 IUP. All Rights Reserved.
Readiness of ASEAN Banking Sector Integration: Recent Development and Statistical Evidence
-- Har Wai-Mun, Lee Teck-Heang and Tam Cai-Lian
ASEAN has a vision to form a single community by 2020. Thus, ASEAN integration has been a topic of
great interest but unfortunately, attention has been over-focused on economic aspect. This paper aims to study
the specific aspect of ASEAN banking sector integration with three objectives. Firstly, the paper aims to
compare the ASEAN countries' respective commitments to its own members through ASEAN Framework
Agreement on Services (AFAS) against their commitments to the world under General Agreement on Trade in
Services (GATS). Secondly, it aims to evaluate the readiness of ASEAN for banking sector integration using
statistical approach. Thirdly, the statistical results from the second objective are utilized to construct an indicator
of readiness for ASEAN banking sector integration. The results reveal that ASEAN countries' commitments
to AFAS did not differ much from their respective commitments to GATS. Statistical evidence shows that
there are vast differences in monetary conditions between ASEAN countries, hence causing difficulties for
one-step total integration. Therefore, `paired-integration' is proposed based on the results of `readiness indicator'.
The results reveal that optimal pairing for Malaysia is Thailand, followed by Philippines and Singapore.
© 2011 IUP. All Rights Reserved.
Exchange Rate Pass-Through in the Mideast
Region: Evidence from Egypt and Israel
-- Ahmed Sabry Abou-Zaid
In the early years of exchange rate liberalization, it is expected to find close association between
exchange rate movements and domestic prices. That is, countries that move from fixed to floating exchange rate
regime will probably experience an increase in their domestic prices following the liberalization. Because of
`fear of inflation', Egypt and Israel delayed the exchange rate liberalization process despite IMF's call for it.
This paper is an attempt to investigate the impact of exchange rate movements on different prices in Egypt
and Israel using a VAR approach. It also tests the validity of the Taylor hypothesis that low inflationary
environment leads to a low exchange rate pass-through.
© 2011 IUP. All Rights Reserved.
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