Template-Type: ReDIF-Article 1.0 Title: Comparing Optimal Monetary Policy Rules, Does Wage Inflation Matters? Author-Name: Wissem BOUKRAINE Author-Name: Hella Guerchi MEHRI Author-Workplace-Name: University of Tunis El Manar Author-Workplace-Name: University of Tunis El Manar Author-Email: boukrainewissem@gmail.com Author-Email: hella.guerchi-mehri@fsegt.utm.tn Classification-JEL: E24, E47. Keywords: Wage Inflation; Unemployment; Optimal Monetary Policy; Rules; DSGE; Tunisia. Abstract: The aim of this paper is to determine the optimal monetary policy for the Tunisian economy by comparing different targeting rules in terms of welfare loss. Our approach is conducted through simulated scenarios from a small open economy DSGE model, with frictions in the labor market. We are motivated by the fact that the Tunisian economy suffers from inflation, unemployment and a continuous depreciation of its currency which put pressure on production costs. In addition, with underdeveloped financial market attention is given to exchange rate volatility. Recent literature focuses on wage inflation to reduce production costs and unemployment caused by terms of trade fluctuations rather than reacting to the exchange rate. Our main result is the superiority of the wage inflation rule in reducing welfare losses. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 1 Pages: 1-16 DOI: 10.1991/jefa.v5i1.a38 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/59/71 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0042 Template-Type: ReDIF-Article 1.0 Title: Social Influence and Saving Behavior among small business owners in Uganda: The mediating role of Financial Literacy Author-Name: Eva MPAATA Author-Name: Naomy KOSKEI Author-Name: Ernest SAINA Author-Workplace-Name: Moi University Author-Workplace-Name: Moi University Author-Workplace-Name: Moi University Author-Email: evahmpaata56@gmail.com Author-Email: naomikoskei@gmail.com Author-Email: ernestsaina2017@gmail.com Classification-JEL: A13, G41. Keywords: Social Influence; Financial Literacy; Saving Behavior. Abstract: The aim of this study was to examine the direct and indirect effect of social influence and financial literacy on saving behavior Explanatory research design and systematic sampling technique was used to collect data with the aid of a questionnaire from a sample size of 430 micro and small enterprise owners in Kampala, Uganda. Reliability test of the research instrument was done by the use of Cronbach alpha. In order to test the hypothesis, and the mediation effect, bootstrapping procedure was followed by testing the direct and indirect effect. The findings show that the connection between social impact and saving behavior is mediated by financial literacy, thus providing new information in research literature on emerging economies where social influence does not encourage saving behavior, hence a need for these economies to adopt financial literacy. Finance scholars have to recognize the central role of financial literacy through financial workshops/seminars, trainings in order to nurture individuals into appropriate saving instruments. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 1 Pages: 17-41 DOI: 10.1991/jefa.v5i1.a39 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/60/72 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0043 Template-Type: ReDIF-Article 1.0 Title: Real Gross Domestic Product as Value Added Tax Base: Evidence from Ghana Author-Name: Michael Safo OFORI Author-Workplace-Name: Blue Crest University College Author-Email: michael.ofori@bluecrest.edu.gh Classification-JEL: C02, H20. Keywords: Valued Added Tax (VAT); Real Gross Domestic Product; VAT Base; Elasticity; Private Consumption Expenditure; Correlation. Abstract: Total Private Consumption is the ideal Valued Added Tax base for Valued Added Tax revenue modelling and forecasting. However, data on private consumption expenditure is not available in most developing countries. With this reason, this study aims to study the appropriateness of real Gross Domestic Product as a Valued Added Tax base by testing the correlation between Valued Added Tax Revenue and Real Gross Domestic Product. It further examines the elasticity of Valued Added Tax revenue to changes in real Gross Domestic Product of Ghana. It is realized from the study that a one percent increase in real Gross Domestic Product results in a 3.7337 percent increase in Total Valued Added Tax revenue. Also, a, high correlation of 0.9365 is realized between real Gross Domestic Product and Total Valued Added Tax revenue. Since monthly and/or quarterly data on private consumption expenditure is not available in Ghana, real Gross Domestic Product can be used as VAT base (especially in VAT revenue modelling and forecasting) because of the high correlation and elasticity between Value Added Tax revenue and real Gross Domestic Product. Sequel to these, the study recommends that the government of Ghana implements supply-side policies that will boost investment and production, reduce imports and encourage import substitution, and also demand-side policies that will increase aggregate demand. These policies will expedite rapid economic growth, and an increase in Value Added Tax revenue will be a consequent result. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 1 Pages: 43-63 DOI: 10.1991/jefa.v5i1.a40 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/61/73 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0044 Template-Type: ReDIF-Article 1.0 Title: Determinants of Corporate Risk Management: Does Board Size and Tenure Matter? Panel Data Approach from Kenyan Publicly Listed Firms Author-Name: Thomas Kiptanui TARUS Author-Workplace-Name: University of Kigali Author-Email: tarus9116@gmail.com Classification-JEL: G20, G30, G32. Keywords: Corporate Risk Management; Board Size; Board Tenure; Modern Portfolio Theory. Abstract: The investors' weakening confidence towards corporate risk management particularly after the crisis has made corporate governance a top priority for the board. The awareness of risk is growing and firm practices have increasingly become organized around risk. The purpose of this paper is to investigate determinants of corporate risk management by taking into consideration board size and board tenure. The study was informed by Modern Portfolio Theory while panel approach was deemed to be appropriate. Based on inclusion-exclusion criteria, 49 firms were sample from 2013-2019 giving a total of 343 firm-year observations. The findings revealed that board size had a positive and insignificant effect while board tenure was significant and positively related to corporate risk management. The longer the experience of managers, the more knowledgeable they become thus more capable of managing corporate risk. This study contributes by providing additional empirical evidence regarding determinants of corporate risk management. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 1 Pages: 65-79 DOI: 10.1991/jefa.v5i1.a41 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/62/74 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0045 Template-Type: ReDIF-Article 1.0 Title: Capital Structure and Value of Nigerian Manufacturing Companies Author-Name: Kamilu Adio SAKA Author-Name: Olukunle Ibukun FATOGUN Author-Workplace-Name: The Federal Polytechnic Ilaro Author-Workplace-Name: The Federal Polytechnic Ilaro Author-Email: kamilu.saka@federalpolyilaro.edu.ng Author-Email: olukunle.fatogun@federalpolyilaro.edu.ng Classification-JEL: G30, G32, C20, C23. Keywords: Capital Structure; Debt; Equity; Value; Tobin’s Q; Fixed Effect Model; Random Effect Model. Abstract: This study provides current evidence on long term controversies surrounding the relevance of capital structure to the value of firms as desideratum for effective debt policy decisions by corporate organisations. Ex-post Facto design was employed for random selection of 10 manufacturing firms across 6 real sectors of Nigerian manufacturing industry. The study estimated balanced panel data with Panel (OLS) Regression techniques using 180 observations. From findings, the results of preferred Random Effect estimation at 5% level of significance show that measures of capital structure such as debt-to-equity and debt-to-total assets have insignificant effects on value of firms when proxy by Tobin’s Q. Thus, the study re-affirms the claim of M-M Approach that capital structure does not matter when it comes to firm’s performance in term of stock market efficiency. In practice, therefore, management should consider the use of debt as last option for financing profitable projects. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 1 Pages: 81-95 DOI: 10.1991/jefa.v5i1.a42 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/63/75 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0046 Template-Type: ReDIF-Article 1.0 Title: Real Exchange Rate Dynamics and Trade Balance in WAEMU Countries: Evidence from Panel Nonlinear ARDL Approach Author-Name: Yaya KEHO Author-Workplace-Name: Ecole Nationale Superieure de Statistique et d'Economie Appliquee Author-Email: yayakeho@yahoo.fr Classification-JEL: C23, F10, F31, O55. Keywords: Nonlinear ARDL; Asymmetry; Trade Balance; Real Exchange Rate; WAEMU. Abstract: This study estimates the impact of real exchange rate on the trade balance of seven countries of the West African Economic and Monetary Union (WAEMU). In examining this issue, most previous studies assume the relationship to be symmetric. In this paper, we relax this assumption by extending the nonlinear ARDL approach to panel data framework. We filter appreciations from depreciations in the real exchange rate and estimate their respective effects on the trade balance using the Pooled Mean Group (PMG) estimator. The results for the panel show that the long-run relationship between real exchange rate and trade balance is asymmetric. More precisely, the trade balance was found to respond stronger to depreciations in the real exchange rate than to appreciations in the long-run. In the short-run, however, the trade balance is not sensitive to the real exchange rate regardless of whether it appreciates or depreciates. The results for individual country estimation reveal cross-country heterogeneity in the short-run relationship between the real exchange rate and the trade balance. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 2 Pages: 1-22 DOI: 10.1991/jefa.v5i2.a43 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/65/76 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0047 Template-Type: ReDIF-Article 1.0 Title: Economic Impact of Some Determinant Factors of Nigerian Inflation Rate Author-Name: Mohammed Anono ZUBAIR Author-Name: Samuel Olorunfemi ADAMS Author-Name: Kosarahchi Sarah ANIAGOLU Author-Workplace-Name: University of Abuja Author-Workplace-Name: University of Abuja Author-Workplace-Name: University of Abuja Author-Email: m.zubairu@uniabuja.edu.ng Author-Email: samuel.adams@uniabuja.edu.ng Author-Email: sarah.aniagolu@uniabuja.edu.ng Classification-JEL: O47, E62, E31, E40. Keywords: Economic growth; Fiscal policy; Granger causality test; Gross domestic product; Inflationary rate; Interest rate. Abstract: The Nigerian Government both previous and present has introduced several policies and programmes to reduce or proffer remedial measures to militate against the negative impact of high inflationary levels on the Nigerian economy. All these measures have not led to a productive result as the inflation rate has continued to sour higher over the years. This paper aimed at examining the economic influence of the determinant factors that influence inflationary trends that are multi-dimensional and dynamic which continue to defy solutions. The data used for this work was sourced from the National Bureau of Statistics and Central Bank of Nigeria, from 1983 to 2020. The ordinary least square approach was used to analyze the data and the result shows that consumer's price index, interest rate and total export has a positive effect on Nigeria inflation, but only the Consumer's Price Index (CPI) have a statistically significant effect on the Nigeria inflation at 99% confidence interval. Result also shows that the exchange rate, foreign reserve, money supply, real GDP, real income and total imports has a negative effect though not statistically significant on the Nigeria inflation rate. The result of the Granger causality test shows exchange rate and total imports to Granger cause Nigeria inflation. It is recommended that Government should improve locally manufacture products to meet international demands to reduce total imports. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 2 Pages: 23-41 DOI: 10.1991/jefa.v5i2.a44 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/66/77 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0048 Template-Type: ReDIF-Article 1.0 Title: How Exchange Rate Changes Affect Trade Balance in Ghana Author-Name: Samuel OSEI-GYEBI Author-Workplace-Name: Kwame Nkrumah University of Science and Technology Author-Email: kwakuoseigyebi@gmail.com Classification-JEL: E17, F10, F14. Keywords: Trade Balance; Exchange Rate; VEC Model; Ghana; FDI; Inflation. Abstract: In international commerce, a steady exchange rate has been touted as a positive indicator for all economies. It increases investor trust and allows global market participants to make realistic business forecasts. Despite the adoption of multiple regimes, Ghana's exchange rate has seen significant depreciation. The literature on trade have paid particular attention to the link between trade balance and exchange rate but failed to include certain relevant variables such as FDI and inflation which this study believes can influence changes in the trade balance. This research estimated the effect of exchange rate on trade balance in Ghana by including these relevant variables that extant studies have ignored. It used yearly data from the World Bank Development Indicators from 1980 to 2019 in a Vector Error Correction (VEC) model and concludes that increases in exchange rate has a short run and long run negative effect on trade balance confirming the established fact that depreciation adversely affect the trade balance of Ghana. However, inflation and FDI were shown to have a positive and significant influence on Ghana's trade balance. The study therefore calls for improved policies and actions to earnestly reduce imports, encourage exports and strengthen the value of the cedi. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 2 Pages: 43-62 DOI: 10.1991/jefa.v5i2.a45 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/67/78 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0049 Template-Type: ReDIF-Article 1.0 Title: Country Risk Dynamics and Stock Market Volatility: Evidence from the JSE Cross-Sector Analysis Author-Name: Edson VENGESAI Author-Name: Adefemi A. OBALADE Author-Name: Paul-Francois MUZINDUTSI Author-Workplace-Name: University of Free State Author-Workplace-Name: University of KwaZulu-Natal Author-Workplace-Name: University of KwaZulu-Natal Author-Email: vengesaiE@ufs.ac.za Author-Email: obaladeA@ukzn.ac.za Author-Email: muzindutsip@ukzn.ac.za Classification-JEL: D53, E44, G1, L6, I10. Keywords: Country Risk; Stock Return; Volatility; GARCH Models; JSE, Stock Market Sectors. Abstract: The rapid integration of the global markets and financial system has increased stock market volatility due to the increased exposure to various risks. Using different GARCH family models, this study investigates the impact of country risk components shocks on stock market return volatility of the Johannesburg Stock Exchange (JSE) and its sectors for the 1996-2018 period. High positive correlations were found among the sectors, which potentially erodes diversification benefits. The research found that the South African stock market volatility is mainly driven by own/internal shocks, while the effect of county risk shocks on stock return volatility differs across the JSE sectors. We found that financial risk shocks negatively transmit to the volatility of oil and gas sector returns, leading to an increase in conditional volatility. Regarding economic risk, we found a statistically significant relationship between economic risk shocks and the entire JSE and financial and oil and gas sectors. The results show that political risk shocks negatively transmit to stock return volatility in the industrial sector, basic materials, consumer goods, financial, and the oil and gas sectors, leading to higher conditional volatility. Thus, the return volatility of most of the JSE sectors is primarily affected by political dynamics, emphasising the role of political instability in destabilising stock market volatility. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 2 Pages: 63-84 DOI: 10.1991/jefa.v5i2.a46 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/68/79 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0050 Template-Type: ReDIF-Article 1.0 Title: Stock Returns and Cash Flows: A New Asset Pricing Approach Author-Name: Sonia Di TOMASO Author-Name: Denis Marco MONTAGNA Author-Name: Antonio AMENDOLA Author-Workplace-Name: University of Pavia Author-Workplace-Name: University of Pavia Author-Workplace-Name: University of Pavia Author-Email: sonia.ditomaso01@universitadipavia.it Author-Email: dennis.montagna@unipv.it Author-Email: antonio.amendola@intermonte.it Classification-JEL: G11, G12, G14. Keywords: Asset Pricing; Volatility; Return; Quantile Regression; Cash Flow; Financial Modelling; CAPM; Fama-French Models. Abstract: This study is focused on a non-conventional profitability measure, at least in terms of assets pricing models, where dividends or profits are widely used. The attention is focused on a proxy measure of Operating Cash Flows: the "Ebitda after Capex". The relationship returns – cash flows' volatility has been examined through an empirical analysis conducted on the stocks of the S&P500 Index combining the main quantitative and statistical approach with a qualitative overview respect the macroeconomic background. Starting from a correlation rolling window approach, three different regressions techniques have been implemented; the simple Ordinary Least Squares regressions (OLS), the linear Quantile (LQR) regression and the Multiple regression model (MLR), all performed at different levels in terms of stocks (QoQ and YoY) and sectors (MoM, QoQ, YoY). The cross-sectional and time-series results support the effects of cash flow volatility on the stocks' performance and highlighted its sensitivity respect not only the different short-term and long-term horizons, but also in terms of sector' exposure. Journal: Journal of Economics and Financial Analysis Year: 2021 Volume: 5 Issue: 2 Pages: 85-120 DOI: 10.1991/jefa.v5i2.a47 File-URL: http://ojs.tripaledu.com/index.php/jefa/article/download/69/80 File-Format: application/pdf Handle: RePEc:trp:01jefa:jefa0051