Asian Economic and Financial Review

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Online ISSN: 2222-6737
Print ISSN: 2305-2147
Total Citation: 1219

No.12

Welfare Campaigns, Disparities, Political Survival and Fiscal Prospects for Thailand


Pages: 1693-1706
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Welfare Campaigns, Disparities, Political Survival and Fiscal Prospects for Thailand

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Euamporn Phijaisanit
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Euamporn Phijaisanit (2013). Welfare Campaigns, Disparities, Political Survival and Fiscal Prospects for Thailand. Asian Economic and Financial Review, 3(12): 1693-1706. DOI:
In fashion with the ASEAN neighbors, political parties in Thailand have been frivolously adopting populist campaigns.  Such wide spread scenario demands an extrapolation of the fiscal loopholes that enables exploitation of the system in favor of short-run political gains.  Occasional populist schemes were formerly viewed as short term ad-hoc expenditure, very unlikely to cause prolonged fiscal burdens. This paper argues from the historical perspectives that once the campaigns have started, successive governments tend to continue to offer similar or larger provisions with only a slight modification.  Constrained by budgetary gridlocks and political pressure that would impact the next election, off-budgetary expenditure tends to become very customary for all future governments owing to the country’s relatively loose legal framework for monitoring and surveillance of its usage.  This paper asserts that, with ample fiscal loopholes for political maneuvering, these populist schemes tend to continue on top of the existing fiscal burden and exacerbate the rural-urban dichotomy in Thailand.

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Volatility Mean Reversion and Stock Market Efficiency


Pages: 1681-1692
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Volatility Mean Reversion and Stock Market Efficiency

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Hojatallah Goudarzi
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Hojatallah Goudarzi (2013). Volatility Mean Reversion and Stock Market Efficiency. Asian Economic and Financial Review, 3(12): 1681-1692. DOI:
Traditional econometric models, such as the ordinary least square method, are built on the assumption of constant variance. Financial time series, unlike other economic series, usually exhibit a set of peculiar characteristics i.e. mean reversion, volatility clustering, fat tails and long memory. The main purpose of this study was to study market efficiency through modeling one stylized facts of asset returns series i.e. mean reversion in the Indian stock market. To achieve this purpose, the study used ADF test and GARCH model. The study found that the underlying series is stationary and therefore mean reverting. Therefore, based on the results the study concluded that, the Indian stock market is informationally weak-inefficient.

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Regional Integration and Foreign Investment: The Case of Asean Countries


Pages: 1670-1680
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Regional Integration and Foreign Investment: The Case of Asean Countries

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Emmanuel O. Nwosu, Anthony Orji, Nathaniel Urama, Joseph I. Amuka
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Emmanuel O. Nwosu, Anthony Orji, Nathaniel Urama, Joseph I. Amuka (2013). Regional Integration and Foreign Investment: The Case of Asean Countries. Asian Economic and Financial Review, 3(12): 1670-1680. DOI:
The importance of regional integration in stimulating foreign direct investment cannot be overemphasized. With a special focus on the ASEAN countries, this research paper investigates the role of regional integration in attracting foreign direct investment. We bring a novelty to this paper by dividing foreign direct investment into Inter-and Intra-ASEAN to see if both are determined by the same set of factors. If economic integration drives intra-ASEAN FDI we would expect such FDI to be unrelated to macroeconomic fundamentals in each country, while we would expect Extra-ASEAN FDI to be determined by macroeconomic fundamentals. We employed panel data model in the analyses and the findings show that FDI from rest of the world are determined by macroeconomic fundamentals especially market size (GDP) and exchange rate, while inter-ASEAN FDI is not significantly related to macroeconomic fundamentals but depends on previous investments in the region. This implies most investments in ASEAN from ASEAN are motivated by economic integration.

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Trade Liberalization and Formal-Informal Sector Wage Differential in Nigeria


Pages: 1651-1669
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Trade Liberalization and Formal-Informal Sector Wage Differential in Nigeria

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MATTHEW A. Oluwatoyin, AZUH Dominic
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MATTHEW A. Oluwatoyin, AZUH Dominic (2013). Trade Liberalization and Formal-Informal Sector Wage Differential in Nigeria. Asian Economic and Financial Review, 3(12): 1651-1669. DOI:
This study assessed the role of trade liberalization on the formal-informal sector of Nigeria. It examined whether or not the trade liberalization process have any effect on both the reduction in the wage differential between registered and non-registered (roughly formal and informal) workers and the decrease in the proportion of registered workers. The study used both secondary and primary data via the administration of questionnaires to discuss the channels through which trade liberalization could affect these two variables and put forward an empirical approach to test the existence of any correlation between them. The results from the study revealed that the fall in the wage gap between registered and non-registered workers in the manufacturing sector was affected by trade-related variables, particularly, by the import penetration ratio. However, the study did not find robust evidence that trade liberalization had a substantial effect on the decrease in the proportion of registered workers.

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Causality between Oil Consumption and Economic Growth in OPEC Countries: A Panel Cointegration Approach


Pages: 1642-1650
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Causality between Oil Consumption and Economic Growth in OPEC Countries: A Panel Cointegration Approach

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Narges Pourhoseingholi
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Narges Pourhoseingholi (2013). Causality between Oil Consumption and Economic Growth in OPEC Countries: A Panel Cointegration Approach. Asian Economic and Financial Review, 3(12): 1642-1650. DOI:
This paper examined the relationship between oil consumption and economic growth in OPEC countries within a panel cointegration and panel based error correction model by using data from 1980 – 2011. In this paper we use unit root test and cointegration test for empirical test as gross domestic production (GDP) and oil consumption according to ADF test was integrated of one, we used Granger causality test. The results indicate the presence of a long run relationship among real GDP and oil consumption. The short run results also indicate the causality running from oil consumption to economic growth and vice-versa, supporting the feedback hypothesis which asserts that energy policies oriented toward improvements in oil consumption efficiency would not adversely affect real GDP. In other words we can say that energy efficiency have not a significant effect on economic growth in long – run.  For this country there are any casualty between this variables in long-run.

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Approach to the Assessment Irregularity and Cyclic Dynamics of Territorial Development


Pages: 1620-1641
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Approach to the Assessment Irregularity and Cyclic Dynamics of Territorial Development

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Tamara Klebanova, Lidiya Guryanova, Yousef Daradkeh, Sergii Kavun
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Tamara Klebanova, Lidiya Guryanova, Yousef Daradkeh, Sergii Kavun (2013). Approach to the Assessment Irregularity and Cyclic Dynamics of Territorial Development. Asian Economic and Financial Review, 3(12): 1620-1641. DOI:
Purpose – The main purpose of this study is a modelling of assessment processes for irregularity and cyclical of dynamic regions development, which used to reduce inter-regional contrasts, disruptions and variations in a socio-economic development on base an effective regional financial policy.Design/methodology/approach – The conceptual provisions and model basis of an estimate of irregular and cyclic dynamics of the socio-economic development of any regions, which are functioning in some conditions of a high level of an uncertainty the external environment. At the same time, this external environment has a significant influence to increase of risks and losses in design making.Findings – The model basis presents as a complex of some interconnected modules: the module for estimate and analysis of the irregularity of the socio-economic development any regions; the module to form some management scenarios of the socio-economic development any regions. Targeted direction of the first module is an estimate of an interregional socio-economic differentiation, a detection of some disproportions in the regions development. Description of the second module is a forming of any management scenarios of the socio-economic development any regions which to direct to decrease of a level of the interregional differentiation while ensuring of a sustainable economic growth.Originality/value – Was formed the models complex of a differentiation of the develop regions which can provide a possibility for estimation of some sustainability for the cluster formations regions by a level of the socio-economic development and to make an analysis of their structural dynamics. Also was been developed a complex of a methodical ensuring for a system forecasting of cyclical dynamic of an economic territories growth. The main blocks of this complex are the forecasting of macroeconomic indicators considering some indicators of the cyclical development; a detection and analysis of any cyclical fluctuations indicators of the region development; a forecasting of some crisis and catastrophes in the socio-economic region development. Was been developed the model of an alignment of the socio-economic disproportions on the interregional level on base the fiscal or tax-budget state policy. For forecasting of some consequences change of fiscal policy can be used some scenario approach which realization is doing on base an imitation simulation.

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  4. Geyets, V., N. Kizim, ?. Klebanova, ?. Chernyak and others, 2006. Modeling of economic safety: State, territory, enterprise: Monograph. Kharkiv: Publishing House «INZHEK».
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  6. Kavun, S., 2007. Informational safety in business activity: Monograph. Kharkov: Publishing house KhNEU.
  7. Khalil, A. and S. Wajid, 2013. What matters for economic growth in pakistan:  Fiscal policy or its composition? Asian Economic and Financial Review, 3(2): 196-215.
  8. Klebanova, T., L. Guryanova and O. Zakharova, 2009. Forecast of macroeconomic rates on the basis of the models of cycle formation. Social and economical development of ukraine and its territories: Problems of the science and practice. Monograph. Kharkiv: Publishing House «INZHEK».
  9. Klebanova, T., L. Guryanova, T. Trunova and A. Smyrnova, 2009. Estimation and analysis of unbalanced regional development in ukraine. Actual problems of economics, 8(98): 162-167.
  10. Klebanova, T., S. Kavun and L. Guryanova, 2011. Models of assessment of inequality and skewness of social-economic systems development. International Journal of Biomedical Soft Computing and Human Sciences, 18(1): 49-55.
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The Correlation and Contagion Effect between Us Reits and Japan Reits - Based On the Armax-Gjr-Garch-Copula Model


Pages: 1609-1619
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The Correlation and Contagion Effect between Us Reits and Japan Reits - Based On the Armax-Gjr-Garch-Copula Model

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Miin-Yu Peng, Wo-Chiang Lee
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Miin-Yu Peng, Wo-Chiang Lee (2013). The Correlation and Contagion Effect between Us Reits and Japan Reits - Based On the Armax-Gjr-Garch-Copula Model. Asian Economic and Financial Review, 3(12): 1609-1619. DOI:
The article discuss the relationship between US REITs and Japan REITs. In empirical study, we apply five static ARMAX-GJR-GARCH copula models and two time-varying dynamic copula models. The results show that the kendall tau is lower before the submortgage crisis. The contagion effect test exhibits the US submortgate crisis will affect Japan REITs. Last, no matter the large, middle or small scale positive and negative shock, the contagion probability during the crisis is larger than before the submortgage crisis. 

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The Validity of Okun’s Law in Nigeria: A Difference Model Approach


Pages: 1598-1608
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The Validity of Okun’s Law in Nigeria: A Difference Model Approach

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Sikiru Jimoh BABALOLA, Jimoh Olakunle SAKA, Idris Abiodun ADENUGA
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Sikiru Jimoh BABALOLA, Jimoh Olakunle SAKA, Idris Abiodun ADENUGA (2013). The Validity of Okun’s Law in Nigeria: A Difference Model Approach. Asian Economic and Financial Review, 3(12): 1598-1608. DOI:
This paper, empirically, tests the validity of Okun’s law in Nigerian economy from 1980-2012. The two versions of the difference model approach of the Okun’s law are used even though one of them is frequently used in the literature. We utilize Var-cointegration method and examine the direction of causality using the Var Granger causality/Block Exgeneity Wald test. We find that the trace test statistic demonstrates only one cointegrating vector at 5% level. Both the Var Granger causality/Block Exogeneity Wald test and error correction model provide exactly the same conclusion of a uni-directional causality from unemployment rate to real output growth. However, Okun’s coefficient estimates carry positive signs in both models and are infact contrary to unemployment–output relationship even though  unemployment rate determines the real output growth in Nigeria  but not vice versa from the causality analysis. Therefore a good policy space is needed to create an enabling environment for drastic reduction of unemployment which is a pointer to increasing aggregate demand and output growth in Nigeria in the long run.

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External and Internal Ownership Concentration and Debt Decisions in an Emerging Market: Evidence from Pakistan


Pages: 1583-1597
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External and Internal Ownership Concentration and Debt Decisions in an Emerging Market: Evidence from Pakistan

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Shahab U Din, Attiya Javid, Muhammad Imran
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Shahab U Din, Attiya Javid, Muhammad Imran (2013). External and Internal Ownership Concentration and Debt Decisions in an Emerging Market: Evidence from Pakistan. Asian Economic and Financial Review, 3(12): 1583-1597. DOI:
This study examines the effect of concentration of ownership both external block ownership and managerial share ownership on capital structure decision of Pakistani non-financial firms. The panel data is used to investigate the relationship between capital structure with external and internal ownership structure and fixed effect model gives a better explanation of the model. The relationship suggested by analysis between external ownership concentration and leverage ratio, patronage the “passive voting hypothesis” that large external shareholders select corporate managers through their voting power by ignoring the interest of the small shareholders. While large insider ownership significantly enhances the voting power and influence the corporate decisions.  Which result difficult to control managerial behavior of getting high level of debt in capital structure. The findings of joint model divulged that ownership variables, insider ownership and external block holders have positive and significant association with leverage. Our analysis also finds the relationship between external block holders and leverage fluctuates with the level of insider ownership and don’t support the “curvilinear relationship” among insiders ownership and leverage ratio. Large sized firms with more cash flows issue more debt. The profitable firms having earning volatility and non-debt tax shield and less dividend paying are less likely to choose higher debt which supports that firms follow the Pecking order theory in making financing decisions. The contribution of the present study is to give insight about capital structure and ownership structure to the investors and corporate managers and influence of ownership on corporate debt decisions. The finds of the present study will help both managers and investors in their investment decisions.. This is the first attempt to explore relation between concentration of ownership both internal and external and capital structure in case of Pakistani firms where ownership and financial structures are different relative to those in developed markets.  

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Comovements and Structural Factors of Macroeconomic Volatility in Developing and Transition Economies: A Dynamic Panel Data Approach


Pages: 1562-1582
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Comovements and Structural Factors of Macroeconomic Volatility in Developing and Transition Economies: A Dynamic Panel Data Approach

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Ichraf OUECHTATI, Amira ZAOUALI
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Ichraf OUECHTATI, Amira ZAOUALI (2013). Comovements and Structural Factors of Macroeconomic Volatility in Developing and Transition Economies: A Dynamic Panel Data Approach. Asian Economic and Financial Review, 3(12): 1562-1582. DOI:
This study examines the comovements of some economic variables and explores the structural factors of macroeconomic volatility in developing and transition economies, using dynamic panel technique. According to an analysis of variance and covariance, we conclude that macroeconomic volatilities are higher in these countries compared to developed economies and consumption volatilities exceed those of production in developing and transition economies. This finding shows that these countries don’t maintain their behaviour of consumption smoothing. This, consequently, implies a proof of failure of their financial markets. Using data for 44 countries during 1960- 2010, our GMM estimation results indicate that government expenditures, consumption and GDP volatilities are the major determinants of macroeconomic volatility. The most influential external factors on macroeconomic fluctuations are terms of trade and commercial opening volatilities.

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