Understanding the Relationship between Inflation and Growth: A Wavelet Transformation Approach in the Case of Bangladesh

This paper re‐examines the relationship between inflation and economic growth in developing countries. Both the theoretical and the empirical literature are extremely divided on this issue. We apply a relatively new empirical technique – the continuous wavelet transform – to Bangladesh. Bangladesh is of interest because of its remarkable economic growth and poverty reduction during the last 30 years in combination with, for a developing country, a controlled inflation. The wavelet analysis is a contribution because it displays how the correlation and the lead–lag structure between variables change over timescales, taking into account that growth and inflation can follow several different cycles. Comovements between variables are generally studied in the time domain. Results from studies in the time‐domain study can be sensitive to the frequency of observations. On the other hand, studies in the frequency domain are not easily translated into time domains that can be associated with economic policies. The wavelet methodology finds a balance between time and frequency domains. Our study finds that growth Granger causes inflation at all frequency scales, starting from the short run to the very long run. Inflation, on the other hand, Granger causes growth in the long run but not in the short run. This result has implications for Bangladesh, and as such for similar developing countries, where some policymakers believe that inflation must be kept at very low levels for sustained economic growth.     

What does ‘solidarity economy’ mean? Contours and feasibility of a theoretical and political project

The market relationships are being contested. This can be seen in the increasing number of alternative social experiments in the ‘North’ and the ‘South’ which propose to think out the present market relationships in a different way, in particular in establishing exchange value and in facilitating access to trade. These practical alternatives are supported by trends in academic circles that over the past three decades have opposed neoliberal capitalism and individualism in today's commercialised society. Calling for greater solidarity and social justice in economic relationships, in particular, partisans of social and solidarity economics (SSE), identifying with these trends, demand new forms of exchange. The objective of this article is to re‐examine these demands. What exactly do the SSE mean by ‘solidarity’ and ‘solidarity‐based economy'? We would like to trace the contours of this theoretical and political project and to assess the practicability of the proposed alternative to neoliberal capitalism.     

Incorporating risk in the economic analysis of agronomic trials: fertilizer use on barley in Syria

In the drier areas of Syria yields of barley, the principal crop, are low. Due to the variability in rainfall, fertilizer use is perceived as risky. Barley-fertilizer trials have been conducted on farmer's fields over a period of four years to investigate whether the large yield response to fertilizer observed on research sites could be achieved under farmers' conditions. Data were pooled across years and sites and response functions estimated. Simple optimization analysis shows that economic optimum fertilizer rates vary considerably with rainfall and relative prices. Historical rainfall data are combined with the estimated response functions, and stochastic dominance analysis is used to compare the riskiness of fertilizer treatments in terms of net benefits and benefit-cost ratios. Results show that, given the estimated expected rainfall in barley producing areas, fertilizer use, especially at low levels, may not be as risky as has been believed. Extensions of the methodology to include other environmental variables, or to target recommendations, are discussed.     

Combatant recruitment and the outcome of war

What determines who wins a civil war? We propose a simple model in which the power of each armed group depends on the number of combatants it is able to recruit. This is in turn a function of the relative ‘distance’ between the group leadership and potential recruits. We emphasize the moral hazard problem of recruitment: fighting is costly and risky so combatants have the incentive to defect from their task. They can also desert altogether and join the enemy. This incentive is stronger the farther away the fighter is from the principal, since monitoring becomes increasingly costly. Bigger armies have more power but less monitoring capacity to prevent defection and desertion. This general framework allows a variety of interpretations of what type of proximity matters for building strong cohesive armies ranging from ethnic distance to geographic dispersion. Different assumptions about the distribution of potential fighters along the relevant dimension of conflict lead to different equilibria. We characterize these, discuss the implied outcome in terms of who wins the war, and illustrate with historical and contemporaneous case studies.     

Supplier selection-order allocation: A two-stage multiple criteria dynamic programming approach

This paper proposes a two-stage multiple criteria dynamic programming approach for two of the most critical tasks in supply chain management, namely, supplier selection and order allocation. In the first stage, to address multiple decision criteria in supplier ranking, the analytic hierarchy process (AHP) is employed. In the second stage, supplier ranks are fed into an order allocation model that aims at maximizing a utility function for the firm as well as minimizing the total supply chain costs, subject to constraints on demand, capacity, and inventory levels. A dynamic programming approach is crafted to solve the proposed bi-objective model.     

The Development of Accounting and Reporting in Ghana

In this paper, we examine the economic, political, and legal systems as well as the institutional factors that influence the accounting and disclosure practices in Ghana. The impact of International Financial Reporting Standards (IFRS) on disclosure is also investigated, as Ghana has recently completed full adoption. We find that the accounting and reporting practices are significantly influenced by legal, political, institutional, and economic factors and that the regulatory environment is neither effective nor efficient due to the weak monitoring and enforcement of compliance. Although there has been some recent progress, the Companies' Code, which is the corporate legal framework of Ghana, must be updated to reflect the dynamic nature of world operations. This study advances the course of standards setters, regulators, accounting practitioners, and policymakers to improve the corporate reporting and accounting practices. Urgent measures need to be undertaken to reform and build the capacities of institutions charged with the responsibility of regulating and monitoring Ghanaian accounting and reporting practices to ensure best practices and build investors' confidence.     

Is the efficient market hypothesis day-of-the-week dependent? Evidence from the banking sector

In this article, we propose a new hypothesis: that the efficient market hypothesis is day-of-the-week-dependent. We apply the test to firms belonging to the banking sector and listed on the NYSE. We find significant evidence that the efficient market hypothesis is day-of-the-week-dependent. Overall, for only 62% of firms, the unit root null hypothesis is rejected on all the five trading days. We also discover that when investors do not account for unit root properties in devising trading strategies, they obtain spurious profits.     

The Relationship between Behavioral and Attitudinal Trust: A Cross-cultural Study

We study the relationship between trust in an experiment and trust measured by means of popular survey items in different countries. Students from Chile, Colombia, India, Mexico and Sweden participate in a public goods game experiment and answer a set of standard attitudinal survey questions about trust. We find that behavioral trust and attitudinal trust significantly differ among countries. Behavioral trust is highest in Sweden, followed by Latin America, and lowest in India. Attitudinal trust is highest in Chile and Sweden, followed by India and Mexico, and lowest in Colombia. Further, the predictive power of survey items also differs among countries. Trust measured by survey items is significantly related to behavioral trust in some but not in all societies. No single survey item predicts actual trust across all countries. Plausible explanations of the inconsistent relationship between behavioral and attitudinal trust across countries are discussed.     

EQUITY CAPITAL, PROFIT SHARING CONTRACTS, AND INVESTMENT: THEORY AND EVIDENCE

The potential effect of financial variables on the level of investment is among the key issues in contemporary financial economics. Some researchers have claimed that there is an inherent risk in the Islamic profit-and-loss sharing scheme that replaces the western fixed-interest rate system. This paper argues that such concerns are baseless. In an Islamic framework, equity capital (i.e., strong financial position) and the profit-sharing ratio are primary determinants of investment. It is shown that both factors could enhance the firm's business reputation and its investment activities. The paper, in so doing, constructs a two-period equilibrium model of profit-sharing contracts. An optimal solution for the investment function is derived for the banking firm. Besides equity capital and the profit-sharing ratio, other relevant determinants of investment are also considered, including depreciation and expected inflation. Moreover, unlike most previous research in this area, the resultant investment (and profitsharing ratio) functions are subjected to empirical testing using data from a representative Islamic bank.