Implied liquidity risk premium in the term structure of sovereign credit default swap and bond spreads

In this study, we focus on the dynamic properties of the risk-neutral liquidity risk premium specific to the sovereign credit default swap (CDS) and bond markets. We show that liquidity risk has a non-trivial role and participates directly to the variation over time of the term structure of sovereign CDS and bond spreads for both the pre- and crisis periods. Secondly, our results indicate that the time-varying bond and CDS liquidity risk premium move in opposite directions which imply that when bond liquidity risk is high, CDS liquidity risk is low (and vice versa), which may in turn be consistent with the substitution effect between CDS and bond markets. Finally, our Granger causality analysis reveals that, although the magnitude of bond and CDS liquidity risk is substantially different, there is a strong liquidity flow between the CDS and the bond markets, however, no market seems to consistently lead the other.     

Who Supports the ECB? Evidence from Eurobarometer Survey Data

This paper studies the determinants of the support for the European Central Bank (ECB) in the member countries of the European Monetary Union (EMU) and their evolution from 1999 to 2015. Our contribution is to examine micro‐level sociodemographic characteristics from the Eurobarometer surveys jointly with macroeconomic indicators of trust in a central bank in order to evaluate econometrically their relative importance over time. Pseudo‐panel logit estimates reveal that the former have a dynamically stable, and generally stronger influence taken altogether, when compared with the latter. Interestingly, we find that while expected inflation becomes a positive determinant of trust in the ECB after the global financial crisis (GFC), actual inflation gets no statistical significance. Having taken centre stage in the monetary policy debate in the Euro‐area post‐GFC and especially since 2013, excessive disinflation and risk of deflation attracted strong attention by the public and have consequently affected its perceptions about the ECB. Accordingly, our results emphasise forward lookingness of the EMU population with regard to ‘deflation scares’ in determining trust in the ECB, in addition to disentangling the contributions of the key individual‐level sociodemographic factors, and can duly inform ECB's communication strategy.     

Supply responses of peasant cultivators in the Sudan—a rational expectations model

Abstract

Most attempts to increase agricultural production rely on incentives to the farmer, especially regarding market prices, and a positive response by him. In this paper the latter is analysed with reference to two major oilseed export crops in the Sudan, groundnuts and sesame, under small peasant farming conditions. The methodology used to study the behaviour of farmers is based on Rational Expectations techniques and the data used are drawn from official time series material. The results obtained show that small farmers are responsive to price changes for these crops by adjusting crop areas. The implications of the results are of importance to policy makers in that peasant production can be stimulated by ensuring that the producers obtain sufficient price incentives to do so. An immediate priority is an in‐depth study of the competitiveness of the marketing system to provide adequate information on which to base remedial measures to ensure that the price mechanism transmits the appropriate signals to the farmers. A further important policy aspect is the need to change the reliance of the small peasant sector on shifting agriculture to maintain soil fertility, because of the increasing population pressure on land. In the longer term farmers should adjust to real price rises not by increasing the amount of land cultivated but by raising the productivity of their holdings in a new system of sedentary agriculture.     

APPLYING NORTH'S LAWS OF MOTION TO THE EDGE OF THE WEST

This paper uses Douglass North's theories of institutional economics to explain progress in Muslim Spain. It argues that it was efficient economic institutions in the guise of a free-market economy where the property rights of different strata of society were well protected, which ensured lasting prosperity. This paper postulates that while a population explosion could have been responsible for the initial growth in Spain, it was an efficient formal–informal institutional matrix that ensured a high level of long-term growth.     

Influence of home‐country culture and regulatory environment on corporate social responsibility perceptions: The case of Sri Lankan immigrant entrepreneurs

Drawing on the findings of semistructured interviews, this article aims to understand the meaning of the term corporate social responsibility (CSR) as perceived by Sri Lankan immigrant entrepreneurs in Australia. It also explores the influence of home‐country culture and institutional environment on their perceptions of CSR. The term CSR was found to be interpreted differently among the immigrant entrepreneurs. Findings reiterate the influence of culture and regulatory environment on the perceptions of CSR and are consistent with the findings of Hamilton, Dana, and Benfell (2008) that the immigrant entrepreneurs adjust their beliefs, values, traditions, and norms to acclimatize to the host country but at the same time also maintain links with the traditional culture. Due to the increasing number of immigrant businesses and their potential socioeconomic impact, the article has important policy implications as it leads to a better understanding of the immigrant entrepreneurs' interpretation of social responsibility and how that is being influenced by home‐country factors. © 2012 Wiley Periodicals, Inc.     

Indicators of business environment,institutional quality and foreign direct investment in Gulf Cooperation Council (GCC) countries

This paper empirically investigates the effect of five business environment indicators and four measures of institutional quality on FDI inflows in GCC countries. The empirical results reveal that the time required to start a business, the time required to enforce a contract, the time required to register a property and the time required to resolve insolvency are negatively and statistically significantly correlated with FDI inflows. Our findings also confirm that political instability and absence of democracy, in fact, encourages FDI inflows. We conclude that the business environment strongly matters for FDI inflows into the GCC countries.     

Electricity Tariff Changes and Consumer Sentiment on Household Consumption Expenditure in Malaysia

Purpose

This study investigates the impact of the current electricity tariff, represented by optimized tariff calculation, on Malaysian household’s consumption across different levels of income.

Design/methodology/approach

The input-output (IO) model has vastly been used in many energy economics literature that presented the matrix of production between various sectors in an economy. This study aggregated the 124 subsectors in IO Price Table 2015 into 12 groups of consumption of goods and services based on Household Expenditure Survey 2019 (HES 2019) to meet the study’ objectives.

Findings

This study found that in all simulations, high-income earners would be highly affected by the tariff changes. The lower the increment level in electricity tariff rate, the lower the magnitude would be on the changes of household expenditure level.

Research limitations/implications

Optimization in electricity tariff consumptions can pattern the Malaysian household’s consumption across different levels of income efficiently.

Practical implications

Useful to all consumer in the Malaysia economic business sector to predict their energy consumption up to optimum level.

Social implications

The study’s findings can benefit the society in optimiza their electricity consumption since everyone requires the energy for basic needs in their life.