INVESTIGATING THE EFFECT OF FINANCIAL INNOVATIONS ON THE DEMAND FOR MONEY IN AUSTRALIA USING DOLS AND FMOLS AND COMPARING THEIR PREDICTIVE POWERS

Payam MOHAMMAD ALIHA

Ph.D candidate, Universiti Kebangsaan Malaysia (UKM), Malaysia

payammaliha@gmail.com

Tamat SARMIDI

Associate Professor Dr. at Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), Malaysia

tamat@ukm.edu.my

Fathin FAIZAH SAID

Dr. at Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), Malaysia

fatin@ukm.edu.my

Abstract

In this paper we apply two different estimation methods, namely DOLS and FMOLS to estimate real demand for money in Australia with the inclusion of financial innovations. We use a conventional money demand function that was enriched with a proxy for financial innovations. This sum of the number of cheques, credit cards, charge cards, ATM and direct entry payment was included in the regression model to proxy the effect of financial innovations on the money demand. The results indicate that the estimated coefficient of TPI using DOLS is not significant yet it is highly significant using FMOLS and it bears positive sign so that 1 percent increase in TPI leads to the increase of money demand by 0.24 percent. Also, using “Root Mean Squared Error” as the benchmark for predictive power, we conclude that FMOLS is superior to DOLD when it comes to forecasting.

Keywords: financial innovations, money demand, dynamic OLS, fully modified OLS, forecast

JEL classification: E41, E42, E52

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EFFECTS OF FISCAL CONSOLIDATION ON REGIONAL ECONOMICS RESILIENCE: INSTITUTIONAL DESIGN METTERS?

Christophe FEDER

Professor, University of Aosta Valley, Str. Cappuccini, 2, Aosta, Italy

c.feder1@univda.it

Vinko MUŠTRA

Assistant professor, Faculty of economics, business and tourism, University of Split, Cvite Fiskovića 5, Split, Croatia

vmustra@efst.hr

Abstract

After the Great Recession, in the European Union (EU) emerges an heterogenous level of both national fiscal consolidation and regional economics resilience. The paper uses the EUROSTAT database of EU-27 at NUTS 2 level over the period 2000-2009 to test how fiscal consolidation affects the regional economics resilience. We find that the fiscal consolidation and regional economic resilience are negatively correlated. Moreover, we show that the negative effect of taxation is higher than the positive effect of public spending.

Keywords: Regional economic resilience, Fiscal consolidation, Institutions, European Union

JEL classification: R12, E62, H23, H72
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ANALYSIS OF GROWTH AND CONVERGENCE OF CO2 EMISSIONS IN BRICS NATIONS

Ramesh CHANDRA DAS

Department of Economics, Katwa College, West Bengal, India-713130, Phone No. +919474783455

ramesh051073@gmail.com

Abstract

The developmental gap among the countries or regions sometimes depends on the narrowing of the gap between carbon emissions as the latter leads to more industrial growth. The present study endeavors to test whether the BRICS nations are converging in terms of per capita CO2 emission over time for the period 1992-2014. We have applied the Barro and Sala-i-Martin’s (2004) unconditional and conditional β convergence definitions, and σ convergence definition on the data of the World Bank for the said period. The results show that there were no signs of cross country convergence in terms of β convergence definition (or the catching up process) but the countries were converging in line with the σ convergence definition for three different time durations indicating pre entry to and post entry of the BRICS Group. Attempting to a set of conditional variables like fuel consumption, energy intensity, per capita growth rate, FDI flow, trade openness, population, import share to GDP, etc. we did not find any such variable explaining whether there were any sort of conditional convergence. The cross country convergence in income in the group can also be attributable to this CO2 convergence.

Keywords: Per capita CO2 emission, β convergence, σ convergence, BRICS

JEL classification:

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