A Nonlinear Relationship: Unemployment and Economic Growth (Construction Sector) in Spain, 1995.1–2012.2

A quadratic version of the first-difference Okun’s Law model was estimated for Spain (1995.Q1-2012.Q2). An accelerationist version of Okun’s Law was obtained, which allowed us to calculate variable Okun coefficients as well as critical points in the relationship between construction sector growth and the variation in overall unemployment. The optimal economic growth rate was determined to be 7.38 %. By applying principal components, it is demonstrated that this sector led the economic process after 1995.     

Analysis of household attitudes toward the purchase of livestock products and fish in Cameroon

The need for additional information on household demand for meat and fish in Cameroon is addressed. Probit analysis involving the Heckman selectivity correction procedure is used to estimate the effects of individual and household characteristics on demand for beef, chicken, pork and fish. Results indicate that fish is a relative necessity in Cameroon and is often substituted for beef and chicken by households whose profiles include being of low income levels, having large household sizes, are of middle age and are less educated. Whereas chicken and pork substitute each other, they are each complementary to beef. The profiles of households likely to purchase beef include being married, middle age, educated and of the Muslim faith. Profiles for households most likely to increase their purchases of chicken include being of high income levels and are public sector employed. Some policy implications are provided.     

Structural breaks and GARCH models of stock return volatility: The case of South Africa

This paper investigates the empirical relevance of structural breaks in forecasting stock return volatility using both in-sample and out-of-sample tests applied to daily returns of the Johannesburg Stock Exchange (JSE) All Share Index from 07/02/1995 to 08/25/2010. We find evidence of structural breaks in the unconditional variance of the stock returns series over the period, with high levels of persistence and variability in the parameter estimates of the GARCH(1,1) model across the sub-samples defined by the structural breaks. This indicates that structural breaks are empirically relevant to stock return volatility in South Africa. However, based on the out-of-sample forecasting exercise, we find that even though there structural breaks in the volatility, there are no statistical gains from using competing models that explicitly accounts for structural breaks, relative to a GARCH(1,1) model with expanding window. This could be because of the fact that the two identified structural breaks occurred in our out-of-sample, and recursive estimation of the GARCH(1,1) model is perhaps sufficient to account for the effect of the breaks on the parameter estimates. Finally, we highlight that, given the point of the breaks, perhaps what seems more important in South Africa, is accounting for leverage effects, especially in terms of long-horizon forecasting of stock return volatility.     

Cost-Reducing Investment, Competition, and Industry Dynamics

We demonstrate the possibility of shake-out of firms and emergence of interfirm heterogeneity along the (socially optimal) dynamic equilibrium path of a competitive industry with free entry and exit, even when there is no uncertainty and all firms are ex ante identical with perfect foresight. Atomistic firms with upward-sloping marginal cost curves undertake investment in firm-specific cost reduction. They earn negative net profits in early periods, compensated later by strictly positive net profits; no entry occurs after the initial time period. Some firms may exit before others even while other firms earn positive net profits.     

Gender-responsive budgeting: The case for Botswana

Various conferences on women's rights have identified a relationship between gender, power, decision-making and resource allocation. Considering it is a given that pockets of gender inequality in many developing countries, including Botswana, the women will always be disadvantaged in resource allocation. The disadvantage manifests itself in many fronts, particularly feminised poverty and HIV infection. Since the effects of the global financial crisis are not gender-neutral, women and girls, as vulnerable groups, must be protected by gender-responsive budgeting. This paper argues that while Botswana has chalked up some successes in gender equality initiatives, sufficiently instanced by the ratification of gender conventions, public budgeting largely lacks gender responsiveness. Since literature advocating for gender-responsive budgeting in Botswana is lacking, this paper attempts to fill the gap and encourage debate. Finally, it argues that such budgeting will ensure equality in resource allocation and also empower women.     

Banking inefficiency in Central and Eastern European countries under a quadratic loss function

We employ a quadratic loss function using a forward-looking rational expectations model to estimate the dynamics of banking inefficiency scores in Central and Eastern Europe (CEE) over the period 1998–2005. Results show that there is heterogeneity in the speed of adjustment to the long run equilibrium across countries and over time, while it appears that the recent accession to the EU has not led to an increase in the speed of adjustment, as it would be expected in light of the integration process prior to the accession. Ownership asserts certain influence on the speed at which banks correct past-period inefficiency.     

Tacit collusion and capacity withholding in repeated uniform price auctions

This article analyzes tacit collusion in infinitely repeated multiunit uniform price auctions in a symmetric oligopoly with capacity‐constrained firms. Under two popular definitions of the uniform price, when each firm sets a price‐quantity pair, perfect collusion with equal sharing of profit is easier to sustain in the uniform price auction than in the corresponding discriminatory auction. Moreover, capacity withholding may be necessary to sustain this outcome. Even when firms may set bids that are arbitrary finite step functions of price‐quantity pairs, in repeated uniform price auctions maximal collusion is attained with simple price‐quantity strategies exhibiting capacity withholding.     

Agricultural exports and the agenda for accelerated development in Africa

In this article the translog cost function with non-neutral parameter shifts is used to study the import demand functions of agricultural commodities which African countries export in competition with other developing regions of the world. It is shown that there has been a systematic bias against the import of these commodities from Africa in favor of importing them from other developing regions. It is then argued that these results support the apprehensions of many African leaders regarding the adoption of a policy of agriculture-based, exportled growth to accelerate economic development on the continent. This article has benefited tremendously from valuable comments and insights by two anonymous referees, the journal editor, as well as Adesina Fadairo and Ki-Ho Kim. All remaining errors are mine.     

Costly Tax Enforcement and Financial Repression

Using an overlapping generations production‐economy model characterized by financial repression, purposeful government expenditures and cost of tax collection, we analyse whether financial repression can be explained by the cost of raising taxes. We show that with public expenditures affecting utility of the agents, modest costs of tax collection tend to result in financial repression being pursued as an optimal policy by the consolidated government. However, when public expenditures are purposeless, the above result only holds for relatively higher costs of tax collection. But, more importantly, costs of tax collection cannot produce a monotonic increase in the reserve requirements. What are critical, in this regard, are the weights the consumer assigns to the public good in the utility function and the size of the government.