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Explaining Financial Crises in Emerging Markets: A logit model on the Turkish data (1984-2001)
Mete Feridun
Published:Jan - June 2005
This article aims at explaining the financial crises Turkey experienced in the last decade through a random effects logit model which incorporates 26 macroeconomic, political, and financial sector variables. Evidence emerges that the only significant variables are current account/GDP, fiscal balance/GDP, GDP per capita, national savings growth, foreign exchange reserves, terms of trade, stock prices, and import growth. Results indicate that all variables have expected signs with the exception of import growth.
KEYWORDS:
Logit models, financial crises, currency crises, emerging markets.
JEL:
N/A.
Demand and Supply of Exports in Pakistan __ A Disequilibrium Model
Mohammad Afzal
Published:Jan - June 2005
Both single-equation models [Houthakar and Magee (1969), Naqvi
et al (1983), Bahmani-Oskooee (1986)] and simultaneous equation models
[Khan (1974), Goldstein and Khan (1978), Arize (1986), Balassa et al (1989),
Anwar (1985) Khan and Saqib (1993) and Afzal (2001)] have been used to
study export behavior in developed and underdeveloped countries. Goldstein
and Khan [(1978)] have investigated the price responsiveness of export
demand and export supply of eight industrial countries for the period 1955-
70 using both equilibrium and disequilibrium models. The studies on the
behavior of Pakistan’s exports [Naqvi et al (1983), Anwar (1985), Khan and
Saqib (1993) and Afzal (2001)] have not investigated the disequilibrium
aspect of exports’ response
KEYWORDS:
Export demand, equilibrium model, disequilibrium model, export behaviour, Pakistan, trade liberalization.
JEL:
N/A.
Determinants of Poverty in Pakistan: A Multinomial Logit Approach
Umer Khalid, Lubna Shahnaz and Hajira Bibi
Published:Jan - June 2005
According to the World Development Report 2000-2001 almost
half of the world’s population – 2.8 billion out of 6 billion live on less
than $2 a day; while a fifth, i.e., 1.2 billion live on less than $1 a day with
44 per cent of them living in South Asia.1
The Pakistan Economic Survey
2000-2001 reports that about 33 per cent of the country’s population is
living below the food poverty line.2
Food poverty trends since 1990-91
shows that food poverty has been on the rise since 1990-91, with a higher
increase being observed in rural areas where food poverty increased from a
low of 22.5 per cent in 1992-93 to a high of 34.8 per cent in 1998-99
(Table-1).
In Pakistan, a large share of the household budget is spent on food.
Approximately half of the household consumption expenditure is used to
meet the nutritional requirements of the household at the national level. In
rural areas this proportion is about 54 per cent, while in urban areas it is 41
per cent3
(see Appendix Table-1). Despite such high proportions of
consumption expenditure on food, the incidence of food poverty remained
high, about one-third of households were living below the food poverty line
and were not meeting their nutritional requirements
KEYWORDS:
Pakistan, poverty, determinants, household consumption expenditure.
JEL:
N/A.
The Knowledge Divide: Education Inequality in Pakistan
Haroon Jamal and Amir Jahan Khan
Published:Jan - June 2005
As economic activity becomes increasingly knowledge based,
disparities in educational opportunity play a more important role in
determining the distribution of income and poverty. A greater equity in the
distribution of educational opportunities enables the poor to capture a
larger share of the benefits of economic growth, and in turn contributes to
higher growth rates. In contrast, large-scale exclusion from educational
opportunities results in lower economic growth and persistent income
inequality. This research appraises education inequalities in Pakistan at the
district level. To summarize district performance in terms of education, a
District Education Index (DEI) is prepared. Further, it explores the
socioeconomic inequalities in education by linking DEI with the level of
district economic development.
KEYWORDS:
Pakistan, education inequality.
JEL:
N/A.
Published:Jan - June 2005
In third world countries, where the level of mechanization in
agriculture is low, livestock rearing is mainly for draught purpose. On the
other hand, the use of animals for draught purpose is low in developed
countries owing to the high level of farm mechanization and the animals are
mainly reared for the consumption of meat and milk. Milk production in
Pakistan is an important enterprise for over five million households owning
buffaloes and cattle. Supply response of livestock has been undertaken mostly
in developed countries. In developing countries livestock farming is not done
on a large scale basis. This study is an attempt to obtain the best estimates of
the response of milk producers while making a decision about production
allocation of milk in Pakistan. The main objectives of the study are: (1) to test
whether Pakistani milk producers respond to price movements (2) to estimate
the elasticities of production with respect to milk producers: (a) relative price
(b) credit and lagged production (c) to make a comparison of short-run and
long-run price elasticities with that of developed and underdeveloped countries
(d) to identify policy measures. The study is based on secondary data at the
Pakistan level and covers a period of 31 years, starting from 1971-72 to
2002-03. Marc Nerlove’s (1958) partial adjustment lagged model is used for
the study. The result of the analysis reveals that in the process of making the
production decisions for milk production, all the variables (relative price,
credit availability and lagged milk production) are equally important
KEYWORDS:
Pakistan, milk production, dairy, farm mechanization, lagged milk production.
JEL:
Q11.
Arbitrage Pricing Theory: Evidence From An Emerging Stock Market
Javed Iqbal and Aziz Haider
Published:Jan - June 2005
The development of financial equilibrium asset pricing models has
been the most important area of research in modern financial theory. These
models are extensively tested for developed markets. This paper examines the
validity of the Arbitrage Pricing Theory (APT) model on returns from 24
actively trading stocks in Karachi Stock Exchange using monthly data from
January 1997 to December 2003. Explanatory factor analysis approach
indicates two factors governing stock return. Pre-specified macro economic
approach identifies these two factors as the anticipated and unanticipated
inflation and market index and dividend yield. Some evidence of instability
is found. The overall finding of two significant priced factors at least for a
sub period supports APT for an emerging capital market.
KEYWORDS:
Financial equilibrium models, capital asset pricing model, arbitrage pricing theory.
JEL:
N/A.
Note: Intra-Model Employment Elasticities (A Case Study of Pakistan’s Small – Scale Manufacturing Sector)
Javaid Iqbal Khan
Published:Jan - June 2005
In the paper we have estimated elasticities of employment with
respect to the expansionary factors. According to our finding, in the small
scale manufacturing sector size of employment is negatively related with
wage elasticity, positively related with capital elasticity and also positively
related with value of product elasticity.
KEYWORDS:
Employment elasticities, Pakistan, small-scale manufacturing.
JEL:
N/A.
Book Review: Pakistan Under Musharraf: Economic Reform and Political Change
Miguel Loureiro
Published:Jan - June 2005
Shahrukh Rafi Khan, Pakistan Under Musharraf (1999-2002):
Economic Reform and Political Change, Vanguard Books, Lahore. Pages
178. Price: Pak Rs. 495/-.
Dedicated to Omar Asghar Khan, this book can be seen as a
continuation of the author’s previous Reforming Pakistan’s Political
Economy, published by Vanguard in 1999. Using findings from research
done by the Sustainable Development Policy Institute (SDPI), when the
author was its Executive Director, Shahrukh Rafi Khan takes us through
the political and economic reforms undertaken by the present military
government.
KEYWORDS:
Pakistan, Musharraf, political economy, reform.
JEL:
N/A.
The Effect of Education, Experience and Occupation on Earnings: Evidence from Pakistan
Hina Nazli
Published:July - Dec 2004
The theory of human capital posits a significant and positive
relationship between earnings and work experience. This theory assumes a
continuous increase in wages with employment experience at different levels of
schooling. Several studies have established that earnings rise rapidly as the level
of educational attainment improves. Similarly increase in work experience adds
to skills, makes an individual more productive and hence leads to higher
earnings. Education provides not only an initial labour market advantage, but
also cumulative benefits over the working life. Therefore, it is misleading to
assume a uniform rate of return to experience at different levels of education.
KEYWORDS:
Human capital, education, higher returns, interaction on earnings.
JEL:
N/A.
Determinants of the Argentine Financial Crisis: Can We Predict Future Crises?
Mete Feridun
Published:July - Dec 2004
This article aims at identifying the macroeconomic indicators that
account for the Argentine financial crisis. For this purpose, an early warning
system (EWS) is built based on a probit model that incorporates six monthly
variables spanning the time period between February 1991 and February
2000. The results indicate that the significant indicators are the consumer
price index and the ratio of the value of exports to the value of imports.
Results further indicate that the predictive power of the model is quite
reasonable with a correct prediction probability of 67 percent at 15 percent
cutoff level.
KEYWORDS:
Argentina, financial crises, early warning systems, EWS, multinomial probit model.
JEL:
N/A.