Foreign inflows and economic growth: An emiprical study of the SAARC region

The study examines and highlights the impact of selected foreign inflows (aid, trade, FDI, debt and remittances) on the economic growth of the South Asian Association for Regional Cooperation (SAARC) countries. The existent literature lacks a comprehensive analysis of the SAARC countries as countries like Afghanistan, Bhutan and the Maldives have largely been ignored due to the shorter time periods of available data. The study is empirical in nature and utilizes panel data techniques on macroeconomic data for the period 2008–2015. Foreign aid and foreign direct investment are found to impact economic growth positively. Foreign debt and trade flows are found to adversely affect economic growth. No relationship is established between the flow of remittances and the economic growth of these countries. The obtained results are robust to different proxy variables and the addition of macroeconomic variables. For the first time, the study provides policy implications based on the data of all SAARC countries. The study recommends focusing on increasing the inflows of resources in the form of aid and foreign direct investment (FDI) from the developed world to achieve higher economic growth.     

The fed model: The bad,the worse,and the ugly

The negative relationship between stock market P/E ratios and government bond yields seems to have become conventional wisdom among practitioners. However, limited empirical evidence and a misleading suggestion that the model originated in the Fed are used to support the model's plausibility. This article argues that the Fed model is flawed from a theoretical standpoint and reports evidence from 20 countries that seriously questions its empirical merits. Despite its widespread use and acceptance, the Fed model is found to be a failure both as a normative and as a positive model of equity pricing.     

An Input–Output Analysis of the Philippine BPO Industry

This paper provides a profile of the Philippine business process outsourcing (BPO) sector, makes comparisons with India and other BPO providers, and summarises the results of an input−output analysis of the Philippine BPO industry's inter-sectoral linkages and its potential impact on compensation and employment. The input−output analysis shows that the BPO industry is not a key sector in terms of stimulating production in other sectors of the Philippine economy. Growth in the sector's revenues, however, can have a significant impact on compensation and employment. If appropriate policies are enacted and human capital improved, it is estimated that the Philippine BPO sector may become an important employment-generating sector.     

The cost of equity of internet stocks: a downside risk approach

Beta as a measure of risk has been under fire for many years. Although practitioners still widely use the CAPM to estimate the cost of equity of companies, they are aware of its problems and are looking for alternatives. A possible alternative is to estimate the cost of equity based on the semideviation, a well-known and intuitively plausible measure of downside risk. Complementing evidence reported elsewhere about the ability of the semideviation to explain the cross-section of returns in emerging markets and that of industries in emerging markets, this article reports results showing that the semideviation also explains the cross-section of Internet stock returns.     

Downside Risk in Practice

Although investors associate risk with negative outcomes and downside fluctuations, modern portfolio theory does not. For investors, volatility per se is not necessarily bad; volatility below a benchmark is. A stock that magnifies the market's fluctuations is not necessarily bad; one that magnifies the market's downside swings is. Even Harry Mar‐kowitz, the father of modern portfolio theory, viewed downside risk as a better way to assess risk than the “mean‐variance” framework that he ultimately proposed and that has since become the standard. This article highlights the shortcomings of traditional measures of risk (the standard deviation and beta), introduces the concept of downside risk, and discusses two measures of it—the “semideviation” and “downside beta.” It also discusses the use of such measures in asset pricing models to estimate required returns on equity. Data from a few well‐known companies are used to illustrate that the cost of equity based on downside risk can be substantially different from that based on the CAPM. The article concludes with a brief discussion of risk‐adjusted returns and a comparison of the traditional method of calculating such returns with both the Sharpe ratio and its counterpart in a downside risk framework, the Sortino ratio. The appendix demonstrates how to calculate these risk measures in Excel.     

The Gain‐Loss Spread: A New and Intuitive Measure of Risk

The standard deviation, arguably the most widely‐used measure of risk, suffers from at least two limitations. First, the measure has little intuitive appeal (defined as it is by the square root of the average quadratic deviation from the arithmetic mean return). Second, investors tend to associate risk more with bad outcomes than with volatility per se. To overcome these limitations, this article introduces a new measure of risk, the gain‐loss spread (GLS), which takes into account the probability of a loss, the average size of the loss, and the average gain—all variables that investors consider relevant when assessing risk. The author presents evidence that the GLS is both highly correlated with the standard deviation—thus providing basically the same information about risk—and more correlated with mean returns than both the standard deviation and beta, thereby offering a tighter link between risk and return.     

Assessing the impact of crime on the economic performance: the case of central america

Crime is obviously a menace to economic growth and progress, but to acutely understand the enormity of its impact on economic performance for effective policy action, requires a credible means of measurement. Given the crime notoriety of the most of Central America and the struggling state of their economies, this article attempts to discern from econometric evaluation and analyses, the calculable economic impact of crime on the region’s economic progress. From analyses of results, we find the model to be credible and useful following its provision of a much more accurate degree to which crime affects economic performance in Central America, which we find critical to guide policy measures.     

Asia’s Middle-Income Challenge: An Overview

Developing Asia has undergone a dramatic shift over the past five decades from a region of mainly low-income economies toward one that is largely middle income. The region faces the challenge of moving further to high income particularly because, as this study shows, it takes longer for economies to move from upper middle to high income than shifting from lower middle to upper middle income. The study finds that developing Asian economies transformed more quickly than the rest of the world, whether the transition is from lower middle to upper middle income or from upper middle to high income.     

An alternative graphical modeling for economics: Econographicology

The rationale of Econographicology revolves around the efficacy of multidimensional graphs as the most effective visual tool to understand any economic phenomenon from a multidimensional view. The main motivation behind the creation of Econographicology is to evaluate multidimensional graphs evolved so far in economics and to develop new type of multidimensional graphs to facilitate the study of economics, as well as finance and business. Thereby, the mission of Econographicology is to offer academics, researchers and policy maker’s an alternative multidimensional graphical modeling approach for the research and teaching–learning process of economics, finance and business from a multidimensional perspective. Hence, this alternative multidimensional graphical modeling approach is offer a set of multi-dimensional coordinate spaces to build different types of multidimensional graphs to study any economic phenomenon. The following new types of multi-dimensional coordinate spaces are presented: the 5-dimensional coordinate space (vertical position and horizontal position), the mega-dynamic disks coordinate space (vertical position and horizontal position), and the mega-disks networks mapping.