Template-Type: ReDIF-Article 1.0 Author-Name: Arthur Chopkeng Awounang Author-Name: Maxime Niee Foning Title: Macroeconomic Volatility and Physical Capital Accumulation in Sub-Saharan Africa Abstract: The aim of this work is to study the influence of macroeconomic volatility on physical capital accumulation in Sub-Saharan economies. To do this, we relied on a panel of 18 countries in the region, covering the period 1980-2010. In addition, our measures of volatility are obtained after estimating a GARCH (Generalized autoregressive conditional heteroskedasticity) model on four macroeconomics indicators that are the terms of trade, the real effective exchange rate, the GDP’s growth and the inflation rate. After using the LSDV estimator (least square dummy variables), we obtain the following results: (1) a one unit increase in the conditional standard deviation of the real effective exchange rate leads to a decrease of 0.011 percentage point of growth in the stock of physical capital per capita; However, greater trade and financial integration may cancel this effect. (2) With respect to GDP growth, one more unit in his standard deviation raises the growth of physical capital stock per capita of 0.0002 percentage point. And (3), there is no significant effect from the volatility of terms of trade and inflation rate, although with negative signs. Therefore, Governments should implement policies to enhance economic diversification and so, reduce vulnerability and volatility; we also need to promote the establishment of mitigation measures by financial and trade integration. Keywords: volatility, physical capital, Sub-Saharan Africa, GARCH, Panel data, NA Classification-JEL: D81, E32, F21, O5 Pages: 01-19 Volume: 2014 Issue: 2 Year: 2014 File-URL: http://www.vse.cz/ijes/10 File-Format: text/html Handle: RePEc:prg:jnljes:v:2014:y:2014:i:2:id:10:p:01-19 X-File-Ref: http://www.vse.cz/RePEc/prg/jnljes/references/10 Template-Type: ReDIF-Article 1.0 Author-Name: Luis F. Dumlao Title: The relationship between dynamic price and dynamic unemployment: the case of the Central European-3 and the Baltic Tigers Abstract: Convention specifies the relationship between price and unemployment in terms of the Phillips curve (PC) where inflation and the rate of unemployment are correlated. This paper uses a variant of the PC that is more consistent with the relationship between price and output as depicted in the aggregate supply (AS) curve. The relationship between price and unemployment using convention and its variant is tested on Poland, the Czech Republic, Hungary, Estonia, Latvia, Lithuania and the pooled data. The Expectations Augmented (EA) is able to track a negative relation between inflation and unemployment better than the New Keynesian (NK) is able. Within the EA runs, the convention is able to track the same negative relation better than the variant, but one has to be cautious given the implied results. Keywords: NA, employment, unemployment, inflation, incomes policy, price policy, Phillips curve, Central Europe, Baltic Tigers Classification-JEL: E24, E31, E64 Pages: 20-42 Volume: 2014 Issue: 2 Year: 2014 File-URL: http://www.vse.cz/ijes/11 File-Format: text/html Handle: RePEc:prg:jnljes:v:2014:y:2014:i:2:id:11:p:20-42 X-File-Ref: http://www.vse.cz/RePEc/prg/jnljes/references/11 Template-Type: ReDIF-Article 1.0 Author-Name: Himayatullah Khan Title: An Empirical Investigation of Consumption Function under Relative Income Hypothesis: Evidence from Farm Households in Northern Pakistan Abstract: The main objective of this research was to empirically investigate the relationship between income and consumption of farm households in District Peshawar, Khyber Pakhtunkhwa province of Pakistan. For this purpose, a household level survey was conducted in summer 2012 in two selected villages, namely Tarnab and Akbarpura. Out of the total 3244 households, a sample of 300 households was randomly selected. The study found that household current level of income, family size, education of household head, and social status were the significant determinants contributing positively to household consumption. Only age of household head was negatively related to household consumption. The results of the study confirms that farm households follow Dusenberry’s relative income hypothesis and that household consumption is not only affected by household current level of income but by the highest level of income previously attained as well as the consumption patterns of other households. Keywords: NA, Consumption function, relative income hypothesis, farm households, Pakistan Pages: 43-52 Volume: 2014 Issue: 2 Year: 2014 File-URL: http://www.vse.cz/ijes/12 File-Format: text/html Handle: RePEc:prg:jnljes:v:2014:y:2014:i:2:id:12:p:43-52 X-File-Ref: http://www.vse.cz/RePEc/prg/jnljes/references/12 Template-Type: ReDIF-Article 1.0 Author-Name: Daniela Milučká Title: Inflation dynamics in the Czech Republic: Estimation of the New Keynesian Phillips curve Abstract: This paper challenges previous empirical evidence on output-inflation trade-off described in the hybrid New Keynesian Phillips curve. I estimate key coefficients of the hybrid gap-based New Keynesian Phillips curve, with both the forward- and backward-looking inflation components, in the Czech Republic for the periods 2000Q1 - 2012Q4 using Kalman filtration. My findings come to surprising conclusions that (i) output gap has a (statistically) significant impact on Czech inflation dynamics (ii) there is a reversal in behavior of Czech agents, where share of forward-looking agents predominates over backward-looking ones in the Czech Republic and (iii) Czech inflation might be significantly driven by change in import prices. In addition, all my results come statistically significant and correctly sign-oriented, which contradicts majority of existing empirical evidence on output-inflation trade-off in the Czech Republic. Keywords: NA, inflation, output-inflation trade-off, inflation expectations, Kalman filtration, state space model Classification-JEL: C32, C51, E17, E31, E37, E58 Pages: 53-70 Volume: 2014 Issue: 2 Year: 2014 File-URL: http://www.vse.cz/ijes/13 File-Format: text/html Handle: RePEc:prg:jnljes:v:2014:y:2014:i:2:id:13:p:53-70 X-File-Ref: http://www.vse.cz/RePEc/prg/jnljes/references/13 Template-Type: ReDIF-Article 1.0 Author-Name: Erkan Özata Title: Sustainability of current account deficit with high oil prices: Evidence from Turkey Abstract: Current account deficit as a ratio of GDP is a commonly used measure that determines the sustainability of current account deficits. But other factors such as the composition of the current account deficit, the methods which are used to finance it, exchange rate policy, macroeconomic condition and global economic outlook may also have important implications about the future of current account deficits. The current account deficit in Turkey is regarded as structural because of the dependence of Turkish production and exports on imported intermediate goods. Another factor affecting the current account deficit is the changing oil prices which is a cyclical component. Turkey’s reliance on energy imports is a major factor behind its bloated current account deficit. The traditional approach to investigate the improvement of the external imbalance is based on the import and export functions. Different from this approach in this study a Structural Vector-Autoregression (SVAR) model will be applied to investigate the effects of fuel imports and foreign exchange policy on Turkey’s current account deficit and economic growth. This model will allow us for simultaneous examination of the link between real oil imports, real effective exchange rate, domestic income and the current account. Keywords: NA, Current Account deficit, Sustainability, oil price, exchange rate, SVAR Classification-JEL: C32, E10, F21, F41 Pages: 71-88 Volume: 2014 Issue: 2 Year: 2014 File-URL: http://www.vse.cz/ijes/14 File-Format: text/html Handle: RePEc:prg:jnljes:v:2014:y:2014:i:2:id:14:p:71-88 X-File-Ref: http://www.vse.cz/RePEc/prg/jnljes/references/14