An aggregate data panel is constructed for the GCC's six countries and the cointegration hypothesis among the variables of the money demand function is verified using Pedroni's heterogeneous panel cointegration tests. The idiosyncratic, panel and group-mean cointegrating vectors are then estimated using FMOLS and a modified version of FMOLS developed by Pedroni. The idiosyncratic elasticities have the expected signs in general but are significant only in the case of the scale variable. However, when the power of the test is increased, and allowance made for heterogeneous cointegrating vectors, the group-mean estimator shows a significant negative semi-elasticity of money demand with respect to interest rate.
Using data from a sample of 1,099 workers, this paper investigates the determinants of employment and wages for workers in the United Arab Emirates. The paper further examines the wage distribution and the decomposition of the wage gap between the public and the private sectors. Results of the study are consistent with the dual labour market theory and indicate that the labour market in the United Arab Emirates is segmented based on sectors (public versus private) and types of workers (nationals versus non-nationals). The study concludes with a discussion of the implication of these findings for the effectiveness of labour and economic policy. Copyright 2010 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd.
To study the elasticities of import demand function, we build a heterogeneous panel with data of 40 countries and use panel unit root tests (Im, Pesaran and Shin, 1997) and panel cointegration tests (Pedroni, 2004). We test our model with two previously used activity variables: GDP and GDP minus Export for a performance comparison.To estimate our elasticities, we make use of two modified panel version of FMOLS and DOLS developed by Pedroni (1996Pedroni ( , 2000Pedroni ( , 2001. Our tests prove that GDP outperforms GDP minus Exports as an activity variable in the cointegration context.
I INTRODUCTIONMany attempts have been made to estimate the Import Demand Function (IDF, hereafter) in different countries. The importance of this applied exercise stems from the effect of foreign trade and trade policy on the local economy. Also, devaluation in many countries is based on the negative effect it has on real exchange rate, which in turn discourages imports and improves trade balance. Thus, the value of import elasticity with respect to major macroeconomic factors reveals the degree to which the local economy is subject to foreign countries' disturbances and the effectiveness of a devaluation policy.Among the earliest papers in this field of applied research is Thursby and Thursby (1984) where the authors estimated different specifications of the IDF for five developed countries. They concluded that including lagged values of the dependent variables improves the model specification. Goldstein and Khan (1985) presented a detailed literature review on the Import and Export functions, their specifications, estimation methodologies and the problems arising from the choice of variables and simultaneity. Both papers however, are dated before the development of the cointegration literature. Cointegration technique is important in the case of IDF because of the presence of unit root in the related data series. Clarida (1994) used these econometric advances to estimate the US import elasticity of non-durable goods. Instead of an ad-hoc model, he estimated an IDF based on a simple rational expectations general equilibrium model. To tackle the problem of simultaneity, he applied a technique developed by Phillips and Loretan (1991), which consists of 4 including a lagged value of the deviation from the long run relationship. His results showed that US income and price elasticities of imports are 2.20 and -0.94 respectively. Reinhart (1995) estimated price and income elasticities of imports for 12 developing countries with 25 observations each. Her model suggested that the right scale variable is permanent income or a measure of wealth for which she used GDP as a proxy. She applied a dynamic estimator proposed by Stock and Watson (1990). Her estimates proved to be sensible. Moreover, she found evidence of Houthakker and Magee (1969) results; that is, the developing countries' income elasticity of imports is lower than developed countries' (which in her model are equal to the exports of the developing countries). Howev...
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