Asian Journal of Economic Modelling

Published by: Production and Hosting by Pak Publishing Group on behalf of Asian Economic and Social Society 
Online ISSN: 2312-3656
Print ISSN: 2313-2884
Total Citation: 46

No. 1

Is Export-Led Growth Hypothesis Exist in Saudi Arabia? Evidence from an ARDL Bounds Testing Approach

Pages: 110-117
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Is Export-Led Growth Hypothesis Exist in Saudi Arabia? Evidence from an ARDL Bounds Testing Approach

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DOI: 10.18488/journal.8/2017.5.1/8.1.110.117

Faisal FAISAL , Turgut TURSOY , Nil GUNSEL RESATOGLU

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(2017). Is Export-Led Growth Hypothesis Exist in Saudi Arabia? Evidence from an ARDL Bounds Testing Approach. Asian Journal of Economic Modelling, 5(1): 110-117. DOI: 10.18488/journal.8/2017.5.1/8.1.110.117
The study investigates the relationship between economic growth, imports and export for Saudi Arabia by using the time series data from 1968-2014. The study employs the recently developed ARDL-bounds testing approach. The estimations of the ARDL-bounds testing approach indicated that imports, export and GDP are strongly co-integrated. The finding of the study further indicated that exports have positive impact on the economic growth in the long run. This specifies that if exports are increased by one percent the economic growth is increased by 3.39%, implying the validity of export-led growth hypothesis. The parameter of error correction term is 2.89% that represents the speed of adjustment. This implies that economic growth converges to its long run equilibrium position by 2.89% speed of adjustments via channel of imports and Exports. As the speed of adjustment is very low and it would take time to return back to the equilibrium level, that confirms the stability of the system. The reliability and validity of the estimations results are confirmed by the diagnostics tests both in short and long run. Finally, the results of the granger causality suggest, a uni-directional causality running from export to GDP, suggesting the validity of export led growth hypothesis. While another uni-directional causality has been found from imports to exports. Being the member of OPEC, Saudi Arabia exports mainly comprises of oil that exposes the economy of country to external shocks. The study suggested that Saudi Arabia needs to invest more in the non-oil sector and diversify their investment by attracting more FDI. This will cause the economic growth to increase and also be more flexible to any external shocks. 
Contribution/ Originality
This study contributes to the existing literature of OPEC countries by using ARDL to analyze the impact of exports and imports in Saudi Arabia covering the crisis period. This study is of its first kind to use Pair-wise granger causality that is applicable to the cointegrated series in case of Saudi Arabia.

Households Preferences and Willingness to Pay for Watershed Services Attributes in North Selangor Peat Swamp Forest Malaysia

Pages: 98-109
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Households Preferences and Willingness to Pay for Watershed Services Attributes in North Selangor Peat Swamp Forest Malaysia

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DOI: 10.18488/journal.8/2017.5.1/8.1.98.109

Buhari Abdulkarim , Mohd Rusli Yacob , Ahmad Makmom Abdullah , Alias Radam

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(2017). Households Preferences and Willingness to Pay for Watershed Services Attributes in North Selangor Peat Swamp Forest Malaysia. Asian Journal of Economic Modelling, 5(1): 98-109. DOI: 10.18488/journal.8/2017.5.1/8.1.98.109
Realising the objective of payment for ecological services (PES) schemes depends on adequate demand for these services and sustainable funding. We examine the viability of using locally financed payments as additional conservation funds to protect forest watershed services. The study employed choice experiment method to estimate the willingness to pay for watershed conservation in communities along Sungai Karang and Raja Musa forest reserve in Selangor Malaysia. A Multinomial logit (MNL) model was developed to derive the marginal value and mean willingness to pay (WTP) of the respondents on the non-market values of the forest reserve. The trade-off between four different forest watershed attributes showed that improvement in water quantity is the most preferred attributes. The total conservation value is estimated at RM12, 706.347.78. This indicates households are willing to pay for watershed conservation to ensure sustainable water supply. Thus proposing PES as an alternative source of fund for conservation of Sungai Karang and Raja Musa forest reserve.
Contribution/ Originality
This study contributes to the existing literature by using the choice experiment approach to analyze willingness to pay for forest watershed conservation. It is also one of very few studies which have investigated Households' Preferences and Willingness to Pay for Watershed Services attributes in the forest reserve.

Economic Development and Environmental Change with Endogenous Birth and Mortality Rates

Pages: 77-97
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Economic Development and Environmental Change with Endogenous Birth and Mortality Rates

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DOI: 10.18488/journal.8/2017.5.1/8.1.77.97

Wei-Bin Zhang

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(2017). Economic Development and Environmental Change with Endogenous Birth and Mortality Rates. Asian Journal of Economic Modelling, 5(1): 77-97. DOI: 10.18488/journal.8/2017.5.1/8.1.77.97
This paper deals with interactions between population growth, wealth accumulation, and environmental change. Wealth accumulation is built on the Solow growth model with Zhang’s alternative approach to household behavior with endogenous time distribution between work time, leisure time and time of children fostering. Population dynamics is influenced by the Haavelmo and the Barro-Becker models. Environmental change is modelled on the basis of some growth models with environmental change. The two-sector model describes a complicated interdependence between population change, wealth accumulation, and environmental change with endogenous time distribution in a perfectly competitive market. We simulate the model to demonstrate existence of equilibrium points and motion of the dynamic system. We also examine effects of changes in some parameters on the motion of the economic system.
Contribution/ Originality
This study makes a unique approach to dynamic relationship between economic growth and population growth with time distribution, number of children and saving as endogenous variables. The general equilibrium dynamic approach makes it possible to examine the effects of changes in the preference and technology on micro- and macro-economic variables.

Discrimination and Inequality in an Integrated Walrasian-General-Equilibrium and Neoclassical-Growth Theory

Pages: 57-76
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Discrimination and Inequality in an Integrated Walrasian-General-Equilibrium and Neoclassical-Growth Theory

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DOI: 10.18488/journal.8/2017.5.1/8.1.57.76

Wei-Bin Zhang

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(2017). Discrimination and Inequality in an Integrated Walrasian-General-Equilibrium and Neoclassical-Growth Theory. Asian Journal of Economic Modelling, 5(1): 57-76. DOI: 10.18488/journal.8/2017.5.1/8.1.57.76
The purpose of this study is to examine dynamic interdependence between economic development, wealth and income distributions, and discrimination in an integrated Walrasian-general-equilibrium and neoclassical-growth theory. We build a dynamic economy with one consumer goods sector, one capital goods sector, and heterogeneous households. We build a model in which wealth accumulation, income and wealth distribution, time distribution and division of labor interact with each other under a fixed pattern of discrimination. For illustration, we simulate the motion of the economic system with three groups, called the discriminator, the neutral group (neither discriminating nor being discriminated), and the discriminated group. We identify the existence of a unique stable equilibrium point. Our comparative dynamic analyses with regard to different discrimination rates provide some insights. For instance, we show that when the discriminator strengthens its discrimination against the discriminated group and the discriminated group ?positively? reacts the strengthened discrimination, we have the following effects: the national output, the national wealth, the total labor supply, and the output levels and the input factors of the two sectors are increased; the lump sum transfer from the discriminated group to the discriminator is increased; the discriminated group?s wage rate is augmented and the other two groups? wage rates are slightly affected; the discriminator?s work time is reduced, the discriminated group?s work time is increased, and the neutral group?s work time is slightly affected; the discriminated group?s and the discriminator?s consumption and wealth levels are increased, and the neutral group?s consumption and wealth levels are slightly affected.
Contribution/ Originality
This study makes a unique approach to relationship between economic growth and discrimination in an integrated Walrasian general equilibrium and neoclassical growth theory. The general equilibrium dynamic approach makes it possible to examine all the effects of discrimination on different people over time.

Child Immunization in Pakistan: Socio-Institutional and Regional Aspects

Pages: 49-56
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Child Immunization in Pakistan: Socio-Institutional and Regional Aspects

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DOI: 10.18488/journal.8/2017.5.1/8.1.49.56

Rana Ejaz Ali Khan , Iqra Aslam

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(2017). Child Immunization in Pakistan: Socio-Institutional and Regional Aspects. Asian Journal of Economic Modelling, 5(1): 49-56. DOI: 10.18488/journal.8/2017.5.1/8.1.49.56
This paper attempted to examine the socioeconomic determinants of preventive measures of child health, i.e. child immunization, particularly focusing on the factors of social institutions and regional diversity in Pakistan economy. For the purpose micro data having 8731 observations from Pakistan Demographic Health Survey (PDHS) 2006-2007 has been utilized. Binary logistic regression is employed to determine the association between complete immunization of children (in the age group of 12 months to 5 years) and explanatory variables. The ethnicity of the households has been taken as proxy of social institution and provinces of Pakistan as regional diversity. Complete immunization of children is captured by basic vaccinations, i.e. BCG, Measles, DPT and Polio. A child is assumed as completely immunized if he/she has received all the twelve vaccinations. The results have shown that social institution represented by ethnicity of household has significant impact on the probability of immunization of children. The children of Urdu, Sindhi, Pashtu and Barohi speaking families are less likely to be immunized as compared to those of Punjabi speaking families. The children from Pashto speaking families are least likely to be immunized as compared to children from Punjabi speaking families. The children living in Sindh and Balochistan are least likely to have complete immunization as compared to those living in Punjab. The results have further shown that male children and children born in hospitals are more likely to be immunized. The probability of complete immunization of children increases with increase in educational level of mother. The children of working mothers are less likely to be completely immunized as compared to their counterparts of mothers who are not working.
Contribution/ Originality
The study contributes in literature the role of social institutions in and regional diversity in health-care of children in Pakistan. In the health economics they are rarely analyzed. Public sector policy for social development may be proposed for social institutional development and declining the regional diversity. 

Compare Value at Risk and Return of Assets Portfolio Stock, Gold, REIT, U.S. & Iran Market Indices

Pages: 44-48
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Compare Value at Risk and Return of Assets Portfolio Stock, Gold, REIT, U.S. & Iran Market Indices

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DOI: 10.18488/journal.8/2017.5.1/8.1.44.48

Felor Ghorashi , Roya Darabi

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(2017). Compare Value at Risk and Return of Assets Portfolio Stock, Gold, REIT, U.S. & Iran Market Indices. Asian Journal of Economic Modelling, 5(1): 44-48. DOI: 10.18488/journal.8/2017.5.1/8.1.44.48
Nowadays investors follow investment in asset like, stocks, gold, and real-estate investment trusts in the world. This study surveys three types of main assets portfolio of stock, gold, and REIT. This article use from S&P500, Gold price, S&P United States REIT of U.S as a development and Iran stock market, Gold price as an emerging country. Samples are collected from 2004 to2014 daily index U.S market and Iran market for 10 years. In this case, we use GARCH model for estimating return and variance with conditional variation. Then use Mont carol simulation for determination Value at Risk with three likelihood. Then calculate correlation of portfolios with multiple regression. Finally, compared Value at Risk and return and correlation for each portfolio (four types of portfolios). Then compare different type of portfolio and select best portfolio via R-Sharp criteria.
Contribution/ Originality
This study contributes in new approach of assessment and comparing investment’s risk and return in different countries.

Revisiting the Causal Nexus between Defense Expenditure and Economic Growth: Time Series Analysis for Saudi Arabia

Pages: 35-43
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Revisiting the Causal Nexus between Defense Expenditure and Economic Growth: Time Series Analysis for Saudi Arabia

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DOI: 10.18488/journal.8/2017.5.1/8.1.35.43

Guo Ping , Alotaish Mohammed Saud M.

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(2017). Revisiting the Causal Nexus between Defense Expenditure and Economic Growth: Time Series Analysis for Saudi Arabia. Asian Journal of Economic Modelling, 5(1): 35-43. DOI: 10.18488/journal.8/2017.5.1/8.1.35.43
This time series study analyzed the effect of defense expenditure on GDP, oil GDP and non-oil GDP of Saudi Arabia. The defense expenditure is introduced as explanatory variable in production function for said purpose. This study used time series data from 1969 to 2013 and unit root test determined that variables of the study share same integration order. Long run relationship was established among variables through cointegration test. Dynamic ordinary least squares results showed that defense expenditure positively affect GDP and non-oil GDP in the long run while its impact on oil GDP is insignificantly positive. The causality analysis confirmed that defense expenditure has direct and indirect effect on GDP in Saudi Arabia as defense expenditure causes GDP, oil GDP, non-oil GDP, investment, and labor force in the long run. This study concluded that defense expenditure is as one of the factor of the economic growth in Saudi Arabia.
Contribution/ Originality
This study contributes in the existing literature as it incorporates defense expenditure in the production function along with capital and labor force to determine whether defense expenditure is a long run contributor of economic growth (GDP, oil GDP, non-oil GDP) or not in case of Saudi Arabia.

Audit in Russian Federation and the Research Toward the Determination of the Functioning of Audit Mechanism

Pages: 23-34
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Audit in Russian Federation and the Research Toward the Determination of the Functioning of Audit Mechanism

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DOI: 10.18488/journal.8/2017.5.1/8.1.23.34

Leyla Akgun , Fatma Tektufekci

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  9. Mamayeva, G.K., 2012. Impact of legislative innovations on the current state of audit services market in Russia. Bulletin of OrelGAU, 3(12): 131-135.
  10. Mаkhonina, I.N., 2012. About the state and prospects of development of the financial audit in Russia. Journal of Socio-Economic Phenomena and Processes, 9(043): 92-99.
  11. Nalyotova, I.А. and Т.Е. Slobodchikova, 2005. Аudit. Моscow: Publication of Forum Infra-М.
  12. Paramonov, А.V., 2014. Audit market in 2013 and its problems. Rating of audit companies. Journal of Auditor, 4: 32-38.
  13. Pekdemir, R.F. and V.K.L. Akgün, 1999. The development of accounting and auditing profession and accounting practices in the Russian federation. Journal of Accounting Academicians and Solidarity Foundation Accounting Science World 1(3): 61-79.
  14. Peker, A., 1996. Accountant’s overview on the Asian Turkish Republics. Bulletin of Accounting Academicians and Solidarity Foundation, 2(4): 12-13.
  15. Sheremet, А.D., 2014. A brief analysis of the current state of self-regulation institute in Russia. Journal of Auditor, 9: 24-27.
  16. Sheshukova, Т.G. and М.А. Gorolilov, 2005. Audit: Theory and practice of application of international standards. Moscow: Finance and Statistics, 2.
  17. Suyts, V.P., 2007. Audit. Moscow: Higher Education.
  18. Yudina, G.А. and М.N. Chernikh, 2005. Theoretical, organizational, legal and methodological basis of the audit. Krasnoyarsk: KrasGASA.
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(2017). Audit in Russian Federation and the Research Toward the Determination of the Functioning of Audit Mechanism. Asian Journal of Economic Modelling, 5(1): 23-34. DOI: 10.18488/journal.8/2017.5.1/8.1.23.34
Although the development of audit laws in Russia corresponds to the end of the 80s, there has been experienced significant progress in this respect in the early 2000s. Since the early 2000s, many laws have been developed and many local auditing standards have been prepared in the country by benefiting from the international experience. Since 2010, the government control over the audit activity began to decline. In this study, information about the legal regulations implemented in Russia has been provided. Subsequently, basic indicators pertaining to the audit for the years 2013-2014 such, as the number of auditors and audit firms, distribution services volume by the auditing company, the number of audited companies, the revenue structure of the audit firms and regional distribution of audit firms, has been discussed and the impact of legislation on audit activity was investigated. Data related to the audit, are based on information published by the Russian Ministry of Finance.
Contribution/ Originality
In the scope of this study, using statistical data of the Russian Ministry of Finance, main indicators pertaining to the audit of the 2013-2014 year are included. As a result of examination of the information for every two years, both positive and negative developments in the audit field have been revealed. In this context, this study, including legal developments in Russia and comparative data, will add value to the relevant literature.

Comparison of the Lee-Carter and Arch in Modelling and Forecasting Mortality in Zimbabwe

Pages: 11-22
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Comparison of the Lee-Carter and Arch in Modelling and Forecasting Mortality in Zimbabwe

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DOI: 10.18488/journal.8/2017.5.1/8.1.11.22

Rodney Taruvinga , Walter Gachira , Washington Chiwanza , Dingilizwe Jacob Nkomo

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(2017). Comparison of the Lee-Carter and Arch in Modelling and Forecasting Mortality in Zimbabwe. Asian Journal of Economic Modelling, 5(1): 11-22. DOI: 10.18488/journal.8/2017.5.1/8.1.11.22
This paper aims to determine which model best fits the mortality profile of Zimbabwe. The models that being compared were the Lee-Carter and ARCH and the period under review was from 1983-2004 using mortality rates of five years age interval. The parameters of the Lee-Carter model were estimated using singular value decomposition. The box Jenkins approach was used to determine the order of lags for the ARIMA. An ARIMA (1, 1, 1) was used to forecast the overall mortality levels. To determine which model best fit the mortality profile of Zimbabwe goodness of fit using the Kolmogorov-Simonov and root mean square error was used. The result suggested that the Lee-Carter model provided a better fit as compared to ARCH. However both models failed to fit for ages between 50-59 years. Both models were used to forecast, but selecting the one that had the best fit of the two models on a particular age group interval for the period 2005-2014.This paper concludes that generally the Lee-Carter model provided a better fit for the mortality profile of Zimbabwe.
Contribution/ Originality
The study contributes to the existing literature on the best methods of modeling and forecasting mortality, interestingly with focus Zimbabwe, a developing economy. The study is the first of its kind in Zimbabwe on this branch of knowledge.

Modern Conditions of Development of Leasing Market in Russia on the Example of Rail Transport

Pages: 1-10
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Modern Conditions of Development of Leasing Market in Russia on the Example of Rail Transport

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DOI: 10.18488/journal.8/2017.5.1/8.1.1.10

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(2017). Modern Conditions of Development of Leasing Market in Russia on the Example of Rail Transport. Asian Journal of Economic Modelling, 5(1): 1-10. DOI: 10.18488/journal.8/2017.5.1/8.1.1.10
With the development of market economy in Russia, as well as improving methods and mechanisms to improve its effectiveness, the article explores different aspects of the leasing market. The essence and content of the lease relationship, the classification of types of leasing: financial and operational, in immovable and movable property, the contract net and full service lease, direct and indirect leasing, fixed-term and renewable (revolving) leasing, describes the main functions (financial or investment including obtaining tax exemptions; production; marketing) and its principal difference from the rent. Data analysis showed a steady market growth of leasing in recent years in Russia, where the major share of the leasing market is the railway, which is forecast in the coming years to double taking into account depreciation of fixed assets and increase market share in Russia's GDP to 3% (Abashina et al., 1998). On the basis of the conducted research the authors have been proposed revitalization activities of the leasing market, such as: the updating of the active part of fixed assets at the expense of new types of leasing; the introduction of activities aimed at coordination and cooperation among scientific and research organizations; provision of free access of small and medium-sized businesses to services of transportation by rail due to the growth and gradual development of the Russian leasing market; as well as the algorithm to improve the efficiency of leasing services on the railway market.

Contribution/ Originality