Standard tests of the Harrod-Balassa-Samuelson (HBS) hypothesis treat productivity levels in and across countries as fixed and observable, and offer little empirical support for the hypothesis. If productivity follows a jump-diffusion process, these standard tests will generate biased estimates, measuring productivity levels with error. This paper instead proposes an ‘errors in variables’ appro...

present paper is an attempt to estimate the impact of economic and geographic indicators in trade among islamic countries according to a bilateral trade model as gravity model, and study the relationship between economy, geography and trade in this way. fixed effect version of the panel data estimation producer with oic member country data spanning over the 2007–2012. the result of this researc...

abstract t he relationship between public sector deficits and inflation is one of the important and controversial issues in the academic literature as well as in economic policy field. on the other hand, a major objective of macroeconomic policies is to foster economic growth and to keep inflation on a low level. so keeping the price stability plays an important role in determining the growth r...

Abstract T he relationship between public sector deficits and inflation is one of the important and controversial issues in the academic literature as well as in economic policy field. On the other hand, a major objective of macroeconomic policies is to foster economic growth and to keep inflation on a low level. So keeping the price stability plays an important role in de...

This paper examines the validity of purchasing power parity (PPP) using CPI and Big Mac prices. The benchmark model, i.e., the OLS method, which does not take nonstationarity into account, rejects the hypothesis of PPP regardless of prices used. We next use the panel cointegration method to consider the nonstationary nature of variables. Estimated results for CPI are mixed. The PPP is rejected ...

Exchange rate policy has assumed an added importance in recent years due to changing global economic conditions. This paper has examined the foreign exchange reserves, real and effective exchange rate response of imports demand in Pakistan using both classical and time series econometrics approaches. The real depreciation of the exchange rate has been found to have dampening impact on import de...