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This paper deploys the Johansen cointegration approach to investigate the presence of a long-run broad money demand relationship in Australia, using annual data for the period 1970-2008. The empirical results suggest the presence of a long-run relationship between real broad money balances, real output, the yield on Australian Government long-term bonds, yield on the US Government Treasury bills and the nominal effective exchange rate of the Australian dollar. Although the coefficients on these variables bear their expected signs, only the coefficients on real output and the yield on Australian Government long-term bonds are found statistically significant over multiple subsample periods. The stability test results suggest that the broad money demand relationship was unstable during the early 1990s but has gained stability since then. The paper also draws implications of the findings on the design and conduct of monetary policy. [ABSTRACT FROM AUTHOR] more...

This paper employs an eclectic and extended gravity model of trade to assess the most important determinants of trade in services of the US. The dataset covers the US and its 33 trading partners over the period 1999 to 2013. The estimation method takes into account certain unobservable characteristics of trading partners. The results recommend that distance adversely affects the US real export of services, but has no influence on real import. Also, the higher the volume of trade in goods, the greater outward foreign direct investment, and the bigger trading partners' market size, the more the exports of services of the US. [ABSTRACT FROM AUTHOR] more...

One of the well-studied areas in development economics is the relationship between Foreign Direct Investment (FDI) and economic growth. Recently, a renewed interest has been observed in growth determinants and externality-led growth, with the advent of endogenous growth theories (Barro, 1991; and Barro and Sala-i-Martin, 1995). Under this framework, it is more plausible to include FDI as one of the determinants of long-run economic growth. The present paper investigates the relationship (long run and short run) between economic growth, FDI and exports for the US economy. To achieve this objective, Johansen maximum likelihood procedure is used. The results show the presence of one cointegrating vector. Further, the results of Bai-Perron test reveal two structural breaks, and that of block exogeneity Wald test show causality running from exports to GDP and FDI, and also from GDP to FDI. [ABSTRACT FROM AUTHOR] more...

This paper analyzes the dynamics of the US inflation time series using two classes of models: structural change models and long memory processes. For the first class, the Markov Switching Autoregressive (MS-AR) model of Hamilton (1989) and the Structural Change-Autoregressive (SCH-AR) model developed by Bai and Perron (1998 and 2003) are used. For the second class, the Autoregressive Fractionally Integrated Moving Average (ARFIMA) process developed by Granger and Joyeux (1980) is used. Moreover, the nature (true or spurious) of the observed long memory behavior is also investigated. The empirical results provide evidence for changes in mean. Break dates coincide with some economic and financial events, such as the Vietnam War and the two oil price shocks. Moreover, the results reveal that the observed long memory behavior is spurious and is due to the presence of breaks in the data. [ABSTRACT FROM AUTHOR] more...

The present world economy has, increasingly, been interconnected in terms of small units such as industries, regions and national economies as discontinuous systems. Changes in these systems have varied impact across the world economies. This paper tries to trace out various triggers, trails and travails of the present crisis, with a view to suggest solutions or treatments for the global financial crisis of 2008-09. For instance, one of the triggers identified is the prolonged implementation of low interest rate policy. This, coupled with the savings glut in the world economy has led to sub-prime lending in the US, as it was used to finance the US mortgage debts. The author indicates that some new lessons have been learnt from the current financial crisis, the most important of them being the need for retooling the finance and economics models. Further, globalization, along with its bestowed benefits, brings in increased frequency and spread of financial and economic crises. [ABSTRACT FROM AUTHOR] more...