I. Hakan Yetkiner

An endogenous growth model with embodied energy-saving technical change

In this short paper we add a non-renewable resource sector to van Zon and Yetkiner (2003) that extended Romer (1990) by including energy consumption of intermediate goods in a context of endogenous and embodied technical change. Van Zon and Yetkiner (2003) showed that the growth rate depends negatively on the growth of exogenous real energy prices. In this paper, we endogenise the growth rate of real energy prices by introducing a non-renewable resource sector into the model. This allows us to study the comparative statics of the model. We show that changes in technology parameters promote growth, while others disfavour growth.

The Granger-causality between health care expenditure and output: a panel data approach

This study investigates the Granger-causality relationship between real per capita GDP and real per capita health care expenditure by employing a large macro panel data set with a VAR representation. The findings verify that the dominant type of Granger-causality is bidirectional. In instances that we found one-way causality, the pattern is not homogenous: Our analyses show that one-way causality generally runs from income to health in low- and middle-income countries whereas the reverse holds for high-income countries. Accordingly, care must be paid in defining the dependent and independent variables when specifying the determinants of health care expenditure.

Adaptation to Five Metres of Sea Level Rise

There is an unknown but probably small probability that the West‐Antarctic Ice Sheet (WAIS) will collapse because of anthropogenic climate change. A WAIS collapse could cause a 5–6 metre global sea level rise within centuries. In three case studies, we investigate the response of society to the most extreme yet not implausible scenario, a five‐metre sea level rise within a century, starting in 2030. The case studies combine a series of interviews with experts and stakeholders with a gaming workshop. In the Rhone delta, the most likely option would be retreat, with economic losses, perhaps social losses, and maybe ecological gains. In the Thames estuary, the probable outcome is less clear, but would probably be a mix of protection, accommodation and retreat, with parts of the city centre turned into a Venice of London. A massive downstream barrier is an alternative response. In the Rhine delta (the Netherlands), the initial response would be protection, followed by retreat from the economically less important parts of the country and, probably, from Amsterdam–Rotterdam metropolitan region as well. These impacts are large compared to other climate change impacts, but probably small compared to the impacts of the same scenario in other parts of the world. This suggests that the possibility of a anthropogenic‐climate‐change‐induced WAIS collapse would strengthen the case for greenhouse gas emission reduction.

A comparative analysis of inter-industry wage differentials: industrialized versus developing countries

This study aims to compare the available evidence on inter-industry wage structure for industrialized and developing countries and to find whether the industry wage differentials are consistent and stable independent of time and space. Moreover, it tries to clarify some of the determinants of industry wage differentials. International evidence supports the wage differential regularity across countries, and the factors underlying inter-industry wage differentials are found to be more or less the same for both industrialized and developing countries.

Endogenous Determination of FDI Growth and Economic Growth:The OECD Case

This paper tests the endogenous relationship between Foreign Direct Investment (FDI) growth and economic growth using a panel data set for 23 Organisation for Economic Co-operation and Development (OECD) countries for the period 1975-2004. In particular we estimate a two-equation simultaneous equation system with the Generalised Methods of Moments (GMM) that treat economic growth and FDI growth as endogenous variables. We find that FDI growth and economic growth are significant determinants of each other. We also find that export growth rate and human capital are statistically significant determinants of both FDI growth and economic growth. Our findings lead us to conclude that FDI growth and economic growth have an endogenous relationship.

A Market Mechanism for Scientific Communication: A Proposal

No abstract available.

Determination of Optimal Hedging Strategy for Index Futures: Evidence from Turkey

This paper aims to determine optimal hedge strategy for the Istanbul Stock Exchange (ISE)-30 stock index futures in Turkey by comparing hedging performance of constant and time-varying hedge ratios under mean-variance utility criteria. We employ standard regression and bivariate GARCH frameworks to estimate constant and time-varying hedge ratios respectively. The Turkish case is particularly challenging since Turkey has one of the most volatile stock markets among emerging economies and the turnover ratio as a measure of liquidity is very high for the market. These facts can be considered to highlight the great risk and, therefore, the extra need for hedging in the Istanbul Stock Exchange (ISE). The empirical results from the study reveal that the dynamic hedge strategy outperforms the static and the traditional strategies.

LPPLS bubble indicators over two centuries of the S&P 500 index

The aim of this paper is to present novel tests for the early causal diagnostic of positive and negative bubbles in the S&P 500 index and the detection of End-of-Bubble signals with their corresponding confidence levels. We use monthly S&P 500 data covering the period from August 1791 to August 2014. This study is the first work in the literature showing the possibility to develop reliable ex-ante diagnostics of the frequent regime shifts over two centuries of data. We show that the DS LPPLS (log-periodic power law singularity) approach successfully diagnoses positive and negative bubbles, constructs efficient End-of-Bubble signals for all of the well-documented bubbles, and obtains for the first time new statistical evidence of bubbles for some other events. We also compare the DS LPPLS method to the exponential curve fitting and the generalized sup ADF test approaches and find that DS LPPLS system is more accurate in identifying well-known bubble events, with significantly smaller numbers of false negatives and false positives.

Guest Editors' Introduction: Crises and Recovery in Emerging Markets

The Society for the Study of Emerging Markets (SSEM) held its EuroConference 2011 in collaboration with the Izmir University of Economics (IUE). The conference provided participants with a unique opportunity to share research on the issue of emerging markets, especially during and after crises. Submissions were solicited on a wide variety of topics relevant to emerging markets, from global crises and their effects to regulatory, monetary, and financial issues, employment, and related topics. The papers included in this supplementary issue were selected from the papers presented at the IUE-SSEM EuroConference 2011: Crises and Recovery in Emerging Markets, held in Izmir, Turkey, June 27–30, 2011.1 As mentioned below, the recent global financial crisis (GFC) has seriously raised the awareness of policy makers, financial decision makers, and related parties with regard to the risks inherent in the global financial landscape. The response of these parties to the global financial crisis has been in harmony, but problems have continued to arise despite the measures taken. The sovereign debt crisis and Greek default coincided with the conference. Since these unexpected events occurred, the most prominent questions have been the fate of emerging markets and challenges posed by the GFC. Although the crisis emerged in early 2007, the landmark moment was September 15, 2008, when the investment bank Lehman Brothers filed for bankruptcy. While it is widely believed that the developed world will overcome difficulties posed by the crisis easily, emerging markets were considered potential future victims. However, the recent episode of the crisis proved the opposite. The crisis eventually became an opportunity for emerging economies, while it has worsened daily in the European Union and the neighboring states. Among the better-performing emerging economies are the so-called BRIC countries (Brazil, Russia, India, and China) and, of course, Turkey. They are now in a position to contribute to the stabilization of the world economy. Nevertheless, the GFC severely affected the advanced economies and quickly spilled over to the emerging market economies. Emerging market economies have recovered within a reasonable time, while sovereign debt problems within the European Union exacerbated the crisis there, resulting in the quasi-bankruptcy of Greece and making Italy, Portugal, and Spain more vulnerable to further shocks. This situation was reflected in credit default swap rates, which are considered a quick and up-to-date indicator of sovereign risk in financial markets. Both the Federal Reserve in the United States and the European Central Bank took action to improve the worsening conditions by launching quantitative easing programs. The International Monetary Fund (IMF) has also contributed to the recovery efforts of individual countries and the European Union by providing liquidity assistance.