Vasile Alecsandru Strat

FDI and The Unemployment - A Causality Analysis for the Latest EU Members☆

Abstract FDI have been regarded in the last years, by the developing countries, as one of the best alternatives to fuel their economic growth. The macroeconomic stability and the labor market of an economy have been identified by the literature, as some of the main aspects that are analyzed by foreign investors before deciding for a future host country. The reverse impact is also mentioned by the researchers who provide strong evidence supporting the hypothesis that FDI bring important benefits to a host country. Consequently, studying the interdependencies between the inflow of FDI and the unemployment becomes of high importance for each country which shows increased interest in attracting foreign direct investments. The present analysis is conducted for the period 1991 – 2012, on yearly data (for the latest thirteen member states of the EU) downloaded from the web page of the World Bank. The econometrical methodology is based on the T-Y procedure which was used with the purpose of analyzing the short term causal relationship between the two variables. The main finding of the study is that there is no Granger causality relation between the variables for six countries and a one direction causal relation was idetified for the remaining ones.

Revisiting the Size of Romanian Informal Economy Using the Gutmann Approach

Abstract Since transactions between participants in unofficial sector(achived using currency) are undectable it is difficult to obtain a estimation of this sector. The currency is regarded as a superior medium of exchange for conducting underground transactions. The paper aims to estimate the size of informal economy using Gutmann approach for quarterly data covering the period 2000-2014. Thus, the study analyzes the ratio of currency to overnight deposits in order to estimate the amount of informal sector. The main idea behind this approach is that a rise in currency stocks and payments is likely a good indicator of transactions which are not reported to the government authorities. The method requires the choice of a base period where the ratio of currency in circulation to overnight deposits is minimum, and the empirical results are fairly sensitive to the choice. The empirical results pointed out that the ratio of underground economy to official economy reaches the value of 19% at the beginning of 2000 and follows a decreasing trend during the period 2000-2008.From the end of 2008, it begins to increase gradually reaching to about 13% of official GDP in first quarter of 2014.