Volume 42, Issue 1, 2012

Download Issue 1: rar (rar 4.56MB) zip (zip 4.77MB)

Articles:

I POLICY DEBATES AND CONTROVERSIES
  • For the Sake of a Credible Climate Change Policy in Australia - Revisiting the Nuclear Energy Option
    (Colin Hunt)
II TWENTY-FIRST COLIN CLARK MEMORIAL LECTURE
  • Competition Regulation in Australia: A Report Card (Steven P. King)
III RECENT TRENDS IN ECONOMIC RESEARCH
  • Components of Inflation Uncertainty and Interest Rates: Evidence from Australia and New Zealand (Ramaprasad Bhar and Girijasankar Mallik)
  • Corruption: Democracy, Autocracy, and Political Stability (Kanybek Nur-tegin and Hans J. Czap)
  • Green TFP Intensity Impact on Sustainable East Asian Productivity Growth (Elsadig M. Ahmed)
  • Study of Discrete Choice Models and Adaptive Neuro-Fuzzy Inference System in the Prediction of Economic Crisis Periods in USA (Eleftherios Giovanis)
  • Impacts of Macroeconomic Forces and External Shocks on Real Output for Indonesia (Yu Hsing)
  • Foreign Direct Investment, Economic Growth and Financial Sector Development in Small Open Developing Economies (Oluwatosin Adeniyi, Festus O. Egwaikhide, Abimbola Oyinlola, Olusegun Omisakin)

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For the Sake of a Credible Climate Change Policy in
Australia - Revisiting the Nuclear Energy Option

Colin Hunt

Pages: 5-14

Abstract: This article models the impact on the costs of introducing nuclear power into Australia’s energy mix. Energy from nuclear plants progressively replaces that from coal and a proportion of energy from gas by 2050. Cost savings are found to be substantial by reducing the need to purchase overseas abatement and by reducing carbon taxes. The analysis is presented in the belief that sound policy-making requires that all energy options should be on the table, notwithstanding the fact that there are many other considerations, apart from cost, in the adoption of nuclear energy in Australia.

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Twenty-first Colin Clark Lecture: November 2011
Competition Regulation in Australia: A Report Card

Stephen P. King

Pages: 17-35

Abstract: In this paper I present a ’report card’ on the current state of Australia’s competition laws, focusing on antitrust laws. I consider the three core antitrust provisions in the Australian Competition and Consumer Act (2010) – the laws against cartels, abuse of market power and anticompetitive mergers. In each of these areas, particularly cartels, I find that Australia’s laws could be significantly improved. I also consider more innovative reforms to Australia’s competition regulations, to improve the transparency of pricing and to reduce customer switching costs. I note that these reforms have been broadly successful.

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Components of Inflation Uncertainty and Interest Rates:
Evidence from Australia and New Zealand

Ramaprasad Bhar and Girijasankar Mallik

Pages: 39-49

Abstract: This paper tests an enhanced version of the Fisher hypothesis for Australia and New Zealand. This is achieved by extracting three components (structural, impulse and steady state) of inflation uncertainty using a structural time series model of inflation that includes an output gap as well. In general, there is a positive association between impulse uncertainty and nominal interest rates and a negative association between structural uncertainty and interest rates. However, the long run effect of inflation on interest rates is less than one and this indicates that Central Banks have some flexibility in their inflation-targeting strategies.

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Corruption: Democracy, Autocracy, and Political Stability

Kanybek Nur-tegin and Hans J. Czap

Pages: 51-66

Abstract: The recent empirical literature on corruption has identified a long list of variables that correlate significantly with corruption but only five were distinguished by Leamer’s Extreme Bounds Analysis as robust to various samples, measures of corruption, and regression specifications. Among these five factors that were found to reduce corruption are decades-long tradition of democracy and political stability. In today’s world, however, there are many countries that combine one of these two robust determinants of corruption with the opposite of the other: politically stable autocracies or newly formed and unstable democracies. The central question raised in this paper is: Is it worth, in terms of corruption, for a country to trade stability with autocratic rule for political freedoms but with transitional instability? We find that the answer to this question is in the affirmative - the level of corruption is indeed lower in unstable democracies than in stable dictatorships. Our results are robust to various measures of corruption, alternative regressor indices, and regression specifications.

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Green TFP Intensity Impact on Sustainable East Asian
Productivity Growth

Elsadig Musa Ahmed

Pages: 67-78

Abstract: This study aims at assessing the effect of carbon dioxide (CO2) per unit of worker (intensity) emissions growth on productivity growth on selected 5 countries of Association of Southeast Asian Nations, (ASEAN5), Malaysia, Indonesia, Philippines, Singapore and Thailand, plus 3 East Asian Countries (China, Japan and South Korea). The results show that there was difference in the contribution of labour productivity, capital deepening and CO2 intensity emissions whether CO2 intensity emissions was included or not in the model. There were, however differences in the growth rates of total factor productivity (TFP) intensity growth. Moreover, a significant decline in the growth rates of TFP intensity growth was observed during the entire period of the study and sub periods, when CO2 intensity emissions variable was internalised in the model. The CO2 intensity emissions had impacted the productivity growth through the declining contribution of green TFP intensity growth in comparison with conventionally calculated

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Study of Discrete Choice Models and Adaptive Neuro-Fuzzy Inference
System in the Prediction of Economic Crisis Periods in USA

Eleftherios Giovanis

Pages: 79-96

Abstract: In this study two approaches are applied for the prediction of the economic recession or expansion periods in USA. The first approach includes Logit and Probit models and the second is an Adaptive Neuro-Fuzzy Inference System (ANFIS) with Gaussian and Generalized Bell membership functions. The in-sample period 1950-2006 is examined and the forecasting performance of the two approaches is evaluated during the out-of sample period 2007-2010. The estimation results show that the ANFIS model outperforms the Logit and Probit model. This indicates that neuro-fuzzy model provides a better and more reliable signal on whether or not a financial crisis will take place.

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Impacts of Macroeconomic Forces and External Shocks on
Real Output for Indonesia

Yu Hsing

Pages: 97-104

Abstract: Extending Romer (2000, 2006) and Taylor (1993, 1999, 2001), this paper applies the IS-MP model to study potential impacts of selected macroeconomic variables and external shocks including crude oil prices on real GDP for Indonesia. The results show that a higher real stock price, real appreciation of the rupiah, a lower inflation rate, a higher real crude oil price, and a lower real federal funds rate are expected to increase Indonesia’s real GDP. More deficit spending as a percent of GDP would not cause real output to rise. Hence, Indonesia would not suffer declining output because of higher oil prices. Due to the insignificant coefficient of the government deficit as a percent of GDP, fiscal prudence needs to be pursued.

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Foreign Direct Investment, Economic Growth and Financial Sector
Development in Small Open Developing Economies

Oluwatosin Adeniyi, Festus O. Egwaikhide, Abimbola Oyinlola, Olusegun Omisakin

Pages: 105-127

Abstract: The present paper examines the causal linkage between foreign direct investment(FDI) and economic growth - in Cote’ d’Ivoire, Gambia, Ghana, Nigeria and Sierra Leone – with financial development accounted for over the period 1970-2005 within a trivariate framework which applies Granger causality tests in a vector error correction(VEC) setting. Three alternative measures of financial sector development - total liquid liabilities, total banking sector credit and credit to the private sector – were employed to capture different ramifications of financial intermediation. Our results support the view that the extent of financial sophistication matters for the benefits of foreign direct investment to register on economic growth in Ghana, Gambia and Sierra Leone depending on the financial indicator used. Nigeria, on the other hand, displays no evidence of any short- or long-run causal flow from FDI to growth with financial deepening accompanying. In sum, therefore, what should be of utmost urgency is concerted efforts in most of these countries, which have typically been in the throes of economic reforms, to upgrade their financial structure to better position them to reap the desirable growth promoting effects of FDI flows.

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