Applied Economics Letters

Bjørnland, Hilde Christiane

doi: 10.1080/135048599353483pmid: N/A

This paper analyses the dynamic properties of several macroeconomic variables in Norway, using different unit root tests and measures of persistence. For none of the variables can we reject the hypothesis of a unit root in favour of a deterministic linear trend alternative. However, when allowing for a structural break in the trend alternative, we can reject the hypothesis of a unit root for unemployment, government consumption, investment and real wage. Most of the Norwegian time series display little persistence. However, for those series that show a high degree of persistence, adjusting for the break in the trend, persistence falls considerably.

ROSSER, MIKE

doi: 10.1080/135048599353492pmid: N/A

During the early 1990s the number of UK graduates increased substantially while the number of young first time home buyers was diminishing and student loans began to replace maintenance grants. In the light of these changes, this paper examines the influences on home ownership based on a sample of 1991–95 Coventry University graduates. Significant explanatory variables are years of work since leaving university, household income, living with a partner, children and a lump sum inheritance or gift. Student loans, age, gender, house prices and relative buy/rent costs do not significantly affect the probability of home ownership.

CHOE, CHONGWOO; MOOSA, IMAD A.

doi: 10.1080/135048599353500pmid: N/A

This note addresses some theoretical and econometric aspects of modelling addictive consumption. We show that the solution to the optimization problem leads to a specification of the reduced form equation which is different from what has been estimated in the literature. We also demonstrate that it is valid to apply OLS to estimate this reduced form equation and those used in the literature although the underlying variables are integrated.

DOGANLAR, MURAT

doi: 10.1080/135048599353519pmid: N/A

This study presents an empirical analysis of purchasing power parity for five developing Asian countries, namely India, Indonesia, Pakistan, Philippines and Turkey. This is done by using cointegration technique. Time series properties of nominal exchange rate and price series show that they are nonstationary. The exchange rate and relative price series do not appear to be cointegrated for most of the countries. We reject the validity of purchasing power parity for India, Indonesia, Pakistan, Philippines, but we can accept it for Turkey.

DRIFFIELD, NIGEL

doi: 10.1080/135048599353528pmid: N/A

This paper examines the extent to which foreign entry and exit in the UK is related to domestic industry characteristics. The units of analysis are firm numbers, and thus entry and exit at the industry level are treated as being generated by Poisson processes. This therefore uses quasimaximum likelihood estimation, to estimate entry and exit functions simultaneously. The results demonstrate that foreign entry is attracted by industry level profitability and performance, but that firm specific ‘ownership’ advantages are also impor2 tant. The results also demonstrate that inward investors that are motivated by the desire to exploit firm-specific assets, are unlikely to be more transient than domestic firms. This however, cannot be said of those foreign entrants who are attracted to the UK by location advantage or investment incentives.

OXLEY, LES; GREASLEY, DAVID

doi: 10.1080/135048599353537pmid: N/A

Tests of the Convergence Hypothesis, or the tendency for per capita income levels to narrow over time, have generally utilized cross-sectional data from a wide range of disparate coun7 tries and resulted in conflicting evidence. Using modern time series tests we find evidence of a Nordic Convergence Club comprising Sweden, Denmark and Finland. It excludes Norway which overtakes Sweden in the 1970s showing no tendency to reversion.

CLARK, DON P.; CHARLES SAWYER, W.; SPRINKLE, RICHARD L.

doi: 10.1080/135048599353546pmid: N/A

This paper investigates the relationship between trade policy orientation and industrialization. Growth rates of manufacturing value added, rather than output growth rates, are related to index of real exchange rate distortion to establish the superiority of outward-oriented strategies in fostering industrial development. Results suggest developing countries will industrialize faster by adopting outward-oriented trade strategies than by using import substitution industrialization policies.

JENKINS, MICHAEL A.

doi: 10.1080/135048599353555pmid: N/A

Many of the empirical studies on purchasing power parity (PPP) have relied on unit root tests of the real exchange rate. With stationarity of the real exchange rate as a necessary condition for PPP, failure to reject the unit root null is taken as evidence against the PPP hypothesis. Finding a unit root in real exchange rates is consistent with a class of theoretical models with nominal price rigidities such as menu costs. These models suggest that a hysteresis effect should be found in real exchange rates. The failure to reject the unit root null is often interpreted as evidence of hysteresis. This study asks whether nominal exchange rate volatility is a contributing factor for the observed hysteresis effect. Using data from EU countries we do not find nominal exchange rate volatility as a significant determinant of hysteresis in real exchange rates.

SHAN, JORDAN; SUN, FIONA

doi: 10.1080/135048599353564pmid: N/A

The export-led growth hypothesis is tested using quarterly time series data for the US economy using the Granger no-causality procedure, developed by Toda and Yamamoto (Journal of Economics, 66, 1995), in a six-variable vector autoregression (VAR) model. Moreover, we follow Riezman, Whiteman and Summers (Empirical Economics, 21, 1996) to test the export-led growth hypothesis while controlling for the growth of imports to avoid producing a spurious causality result; and finally, the empirical results are tested for the robustness using different lag structures. The findings in the paper indicate a two-way Granger causality between output and exports, a result from earlier export-growth studies on the US economy.

SANCHEZ-FUNG, JOSE R.

doi: 10.1080/135048599353573pmid: N/A

Efficiency of the black market for foreign exchange in a developing country can be assessed by testing whether that market complies with the ‘relative’ version of the purchasing power parity hypothesis. This paper applies nonstationarity and cointegration to investigate this hypothesis for the Dominican Republic. Both the Engle-Granger and Johansen techniques support cointegration, so the black market for foreign exchange in the Dominican Republic is efficient.