Economics Journals| The Effect of Real Exchange Rate

This study attempts to find out the determinants of household healthcare expenditure. The analysis uses a multi-equation recursive estimation procedure to study the determinants of healthcare expenditure. First, it uses a binary logit model to estimate the probability of being ill, which is then used as an independent variable in the second stage logit model for provider choice. Ordinary Least Squares (OLS) estimates are obtained instead of Tobit estimates for the parameters of healthcare expenditure model in the third stage. This study brings out several interesting findings. First, the level of income has a significant effect on peoples' choice of healthcare provider and on the amount of healthcare expenditure. Second, people with smoking habits and less access to safe drinking water and sanitary toilets are more vulnerable to diseases. Some of the factors ordinarily believed to affect the incidence of diseases like, education level of an individual, education level of the household head, and being male member of the family have a less pronounced effect on reporting illness and healthcare expenditure.

Mineral and Non-Mineral Sector Interdependency: Empirical Evidence from Oman

--Said AlSaqri,
--Abdullahi D Ahmed

Most work on mineral dependent economies use simple and straightforward calculations to estimate the level of dependency on the mineral sector. Typical assessments by researchers on mineral dependency look at the contribution of the mineral sector to total exports, its share in GDP, or the share of mineral revenues in total government revenues. Empirical research on the inter-sectoral dependencies between the mineral and non-mineral sectors is, however, quite rare. In this paper, the inter-sectoral relationships between the mineral sector, represented by oil, and the non-mineral sectors in Oman since 1967, have been investigated using VAR and multivariate cointegration techniques and Granger causality tests. This modeling procedure will provide an understanding of the potential links between oil income and non-oil sectors growth and its impact on the overall economy. While also highlighting important policy and development strategies, the results reveal important information about sector dependency and the dynamics of the oil and non-oil sectors.

Exports and Imports Nexus: Econometric Evidence for Pakistan

--Muhammad Shahbaz,
--Muhammad Shahbaz Shabbir,
--Muhammad Sabihuddin Butt

The main idea of this present effort is to analyze the long-run relationship between Pakistan's exports and imports by employing advanced techniques like Johansen-Juselius cointegration technique, and to study the short-run dynamics through Granger causality in the VECM framework. The empirical evidence reveals that Pakistan's exports and imports show a long-run relationship. Thus, the short-run fluctuations between exports and imports will not sustain as in the long run, exports and imports will eventually converge towards an equilibrium state, but improving impact of exports on imports is less than unity in all cases. However, in the short run, causation runs from exports to imports and vice versa. The present endeavor may show a new direction to
policy-making authorities.

Foreign Aid, Policy Effectiveness and Economic Growth in Tanzania

--Chee-Keong Choong,
--Toy Jun Zheng,
--Lu Wu Tiong

Doubts have always remained in the claim of foreign aid contributing towards the economic growth of the recipients. This paper, therefore, aims to study the effects of aid on the Tanzanian economic growth, the largest aid recipient in average, through Autoregressive Distributed Lag (ARDL) modeling. The relevancy of the presence of sound policies in affecting the effectiveness of aid is also studied and an index for policies is constructed. The results show that aid contributes positively towards the Tanzanian economic growth and sound policy would enhance the effectiveness of aid, although it is not a necessity.

The Co-Movements of the Regional Stock Markets and Some Implications on Risk Diversification

--Maran Marimuthu

As risk diversification is the main concern for most investors, they tend to look into the possibility of broadening their investment activities across the countries or creating a region-based investment policy. This requires the understanding of regional and global linkages of stock markets. Specifically, this study makes an attempt to re-examine the co-movements among the Malaysian, Indian and Chinese equity markets. This study also includes the stock market linkages between Malaysia and the developed markets (the US and the UK) for a more meaningful argument with regard to the importance of market linkages among Malaysia, India and China. Statistical testing includes Johansen multivariate cointegration, Vector Error Correction Model (VECM) to a five-variable model, followed by Granger causality test. The results indicate that there is a long-run relationship among the regional markets. Malaysia and India Granger cause each other, however, this study is unable to detect China's role in the regional market. In fact, in the Asian context, shocks in one country seem to have an effect in other countries for a very short period. Finally, the US market is still the main influential factor in the Asian markets.

Price Discovery and Volatility Spillover Between Spot and Futures Markets: Evidence from India

--P Sakthivel,
--B Kamaiah

The present study investigates the role of information in price discovery function and volatility spillover in Nifty and S&P CNX Nifty futures by employing two-step TGARCH procedures. First, the study examines short and long-run relationship between S&P CNX Nifty index and Nifty index futures in near month, next month and far month prices by employing Engle-Granger cointegration and error correction model. The results of cointegration test show that there is long-run equilibrium relationship between spot and futures markets, and the spot market tends to make adjustments to re-establish the equilibrium during the next period. The results of TGARCH model reveal a bidirectional volatility spillover between spot and near, middle and far month futures.

Twin Deficits Phenomenon in Maldives: Spectral and Time Domain Analysis of Time Series

--Kanchan Datta,
--Chandan Kumar Mukhopadhyay

There has been a plethora of studies concerning the relationship between budget deficit and trade deficit. The overall findings can be classified under two broad hypotheses. One is known as the `twin deficit hypothesis', which implies that there does exist a relationship between budget deficit and trade deficit and budget deficit Granger causes trade deficit. On the other hand, there is an alternative hypothesis known as `Ricardian equivalence theorem', which negates any such relation. This study seeks to test these hypotheses and examine the nature as well as the direction of causal relation between budget deficit and trade deficit in the economy of Maldives, by using real budget deficit and trade deficit data series. This study is based on a battery of tests, such as ADF and PP unit root tests and correlogram, followed by the estimation of cointegration, VECM, Granger causality through VAR model and spectral analysis. The findings of the study support the Ricardian equivalence hypothesis for the economy of Maldives over the period of the study.

Earnings and Social Protection: An Econometric Analysis of Informal Sectors of Engineering Industry in Coimbatore, Tamil Nadu

--R Nagarajan

The paper attempts to study the nature and structure of the urban labor market in Coimbatore. It analyzes the determinants of earnings of the unorganized labor market in the engineering industry, studies the occupational mobility and its determinants, and ascertains the factors associated with social security of the workers. Two industries foundry and pumpare chosen for the study, based on the number of units and employment of very large number of people. To make the study reliable, the sample size has been restricted to 10% in case of engineering units and 30% in the case of workers on a random basis. The sample constitutes 1,022 workers, of which 537 are from the foundry industry and the remaining 485 are from the pump industry.