Bilateral and regional trade elasticities of the EU

The traditional way of assessing the impact of currency depreciation and income on the trade balance has been to estimate the elasticity of trade volume to relative prices and income. The previous studies examine the problems associated with using aggregate data. The recent studies rely on bilateral data, yet another problem is that data for export and import prices are not available. Thus, this study proposes an alternative way of assessing the impact of currency depreciation by using the real exchange rate and the impact of income on bilateral trade. The models are applied between the EU and its major trading partners. Furthermore, the analysis includes the six major trading regions along side the eight major trading countries for 1980–2007, on the quarterly basis. This article uses the autoregressive distributive lag (ARDL) approach advocated by Pesaran and Pesaran (1997). Our results indicate a higher importance of income compared to the real exchange rate in defined bilateral export and import demand functions. In addition, the applied CUSUM and CUSUMSQ stability tests confirm the stability of estimated coefficients in most cases.     

Trade in Services: The Elasticity Approach for The Case of Turkey

This study includes the analysis of global trade in the services and service sector in Turkey, and estimates the elasticity of trade in services to real exchange rates and income. There is an increasing role of the service sector in the Turkish economy; however, a decreasing trend of trade in services is taking place. The commitments of the General Agreement on Trade in Services (GATS) were found to be ineffective, at least in the case of Turkey. The empirical findings suggest that the real exchange rate is not a significant determinant for the trade in services. We found an inelastic real exchange rate and income elasticities in trade demand functions. However, the value of income elasticity significantly exceeds the value of real exchange rate elasticity.     

Work–life balance in the EU and leave arrangements across welfare regimes

Work–life balance has been a central theme of the EU gender equality framework and has been promoted through both ‘hard’ and ‘soft’ components. Although the EU concern in promoting work–life balance has been more to increase employment and economic productivity than to promote gender equality, all Member States have now established standards in accordance with the EU regulations. Statutory leave arrangements are a key component of work–life balance policies and they vary significantly across Member States with different welfare regime traditions. This study examines the transposition of EU Directives and the implications of the European Employment Strategy for leave arrangements across the UK, Denmark, France and Spain as exemplars of four welfare regimes.     

Current account and relative prices: Are there any cointegration relationships in the presence of structural breaks in emerging economies?

The aim of this study is to examine the long-run relationship between the current account and relative prices, such as terms of trade (TOT) and real exchange rate, for the emerging economies. These variables have been exposed to large fluctuations for more than two decades in all emerging economies; therefore, structural breaks have to be taken into account in all estimations. In this article, various methodological techniques have been used to examine this long-run relationship (with and without the structural breaks). Two important results have emerged, first; when the structural changes are excluded there is a strong evidence for long-run relationship between current account and relative prices. Second; when the structural breaks are included, variables are found to be stationary. Hence, depending on the stability of the variables, the validity of the cointegration relationship has been seriously questioned. This study illustrates that the test results proving non-stationary of the series and the presence of cointegration may be spurious if there is any possibility of instability.     

The demand for money and the real exchange rate misalignments in emerging European countries: A nonlinear approach

This paper investigates the extent to which domestic and foreign money balances in emerging European countries are influenced by foreign exchange considerations. A well-specified and stable relationship between real money demand and the exchange rate can be perceived as an important part of a successful monetary policy. This study examines the long-run determinants of real exchange rates (RERs) associated with the behavioral equilibrium exchange rate (BEER) approach and identifies currency misalignments in these countries. The misalignment is later used to test the nonlinear behavior of the demand for money. The results indicate that the RER misalignments have a significant impact on domestic money demand. When the currencies are overvalued, there is a reduction in domestic money demand, and when they are undervalued, there is an increase in domestic money demand. Furthermore, it can be concluded that overvaluation causes an increase in foreign money demand indicating a shift of preference from domestic to foreign currency.