Accommodation Capacity, Trade Openness and International Tourism Demand in Croatia

This paper investigates the determinants of international tourism demand in Croatia, a country whose economy is heavily dependent on tourism. A particular focus is placed on the role of accommodation capacity and trade openness, two demand drivers that have been rarely examined in combination. Using the difference GMM estimator, a dynamic panel model of international tourism demand in Croatia is estimated, employing annual data for 16 tourism generating countries from 2007 to 2019. The results show that the lagged dependent variable, income, accommodation capacity, and exchange rate have a positive effect on international tourism demand, while the impact of relative prices and trade openness prove to be irrelevant in the Croatian context.

SECTORAL LABOR MOBILITY AND OPTIMAL MONETARY POLICY

How should central banks optimally aggregate sectoral inflation rates in the presence of imperfect labor mobility across sectors? We study this issue in a two-sector New-Keynesian model and show that a lower degree of sectoral labor mobility, ceteris paribus, increases the optimal weight on inflation in a sector that would otherwise receive a lower weight. We analytically and numerically find that, with limited labor mobility, adjustment to asymmetric shocks cannot fully occur through the reallocation of labor, thus putting more pressure on wages, causing inefficient movements in relative prices, and creating scope for central bank’ s intervention. These findings challenge standard central banks’ practice of computing sectoral inflation weights based solely on sector size and unveil a significant role for the degree of sectoral labor mobility to play in the optimal computation. In an extended estimated model of the US economy, featuring customary frictions and shocks, the estimated inflation weights imply a decrease in welfare up to 10% relative to the case of optimal weights.

One or many European models of agriculture? How heterogeneity influences income creation among farms in the European Union

Agricultural structures are quite heterogeneous across the European Union (EU), and it is likely that the underlying technology also differs across regions. In this article, we claim that the heterogeneity of agriculture across the EU affects the process of income creation (i.e. the relative importance of the factors of farm income differ for different agricultural models). A panel of farms representative for 125 regions reporting to the EU Farm Accountancy Data Network (FADN) during the period from 2007 to 2018 is used. In this article, those regions are grouped into three clusters. A system generalised method of moments (GMM) panel estimator is applied to each cluster. The results showed that total factor productivity (TFP), relative prices and agricultural subsidies make different contributions to farm net value added (FNVA). In particular, the income growth of farms in regions dominated by large farms seems to react more to marginal changes of the explanatory variables.

Foreign Exchange Market and the Asset Approach

Exchange rates play a central role in international trade because they allow us to compare the prices of goods and services produced in different countries. A consumer deciding which of two American cars to buy must compare their dollar prices. Households and firms use exchange rates to translate foreign prices into domestic cur-rency terms. Once the money prices of domestic goods and imports have been expressed in terms of the same currency, households and firms can compute the relative prices that affect international trade flows. Keywords: Foreign Exchange, Exchange Rate, International Trade, Foreign Currency, FOREX Rate, Assets Approach.

TOURISM DEMAND IN INDONESIA: IMPLICATIONS IN A POST-PANDEMIC PERIOD

This study uses an autoregressive distributed lag (ARDL) model to investigate the role of incomes, relative price competitiveness, and substitution prices in tourism demand from Indonesia’s six largest countries of origin from 2007Q1 to 2019Q4. Income level, competitive prices, and substitution prices significantly impact the demand for tourism in Indonesia. Malaysia, Singapore, Australia, Japan, and India are income elastic, signaling that tourism is a luxury good, but China (normal good). Malaysia and China are price elastic while Japan, India, Singapore, and Australia are less affected by changes in relative prices. Substitute prices may drive tourist to other destinations if the change in prices is large.

Indirect Taxation and Consumption Behaviour

Indirect taxation refers to taxation that is levied on expenditure rather than on income and is one of the most important sources of revenue for governments, particularly in middle- and low-income countries. As a result, indirect taxation is frequently included in microsimulation models. These models differ from those described thus far in that they involve the use of data that contains expenditures in addition to incomes. This chapter describes the theoretical structure of a number of different types of indirect taxation. A challenge to the simulation of indirect taxation arises in that the base datasets of microsimulation models typically do not include expenditure data. A relatively simple method for combining income and expenditure data is described. As changes in indirect taxation affect the relative prices of goods, there will either be a change in consumption patterns or a change in savings. A method to model behavioural response when modelling indirect taxation is discussed. These methods are then utilized to describe some descriptive measures for the distributional attributes of consumption and some directions for policy reform. The framework developed in this chapter is then used to model the welfare impact of changes to indirect taxation in an example simulation.

DETERMINANTS OF INDONESIA’S RESIDENCE TRAVELING ABROAD

The study aims to identify the economic variables affecting Indonesia’s residence to travel abroad. Knowledge of the variables of Indonesia’s residence to travel abroad is very important because this is one of the sources of foreign exchange leakage. The ARDL approach will be used with time series data for the period 1992-2019. The impact of changes in income, relative prices for Malaysian tourism, and flight availability will be estimated and tested. Two dummy variables are also provided to represent the economic crisis in 1997-1998 and the global financial crisis in 2008. One of the important findings of this study is the significance of the income variable with more than one elasticity, which shows the luxury nature of tourism travel. The relative price of tourism also affects Indonesians to travel abroad in the long- and short-run. The economic crisis of 1997-1998 led to a decrease in Indonesians traveling abroad.

Price Crises in Soviet Economy 1920s and Institutional Effects of the Fundamental Impossibility of Socialism

The article analyzes the impact of institutional factors on the economic system of the Soviet Russia at the period of New Economic Policy. The first group of factors is associated with the social structure of the soviet village. The specifics of agricultural business activities (in particular, long production period, a gap in the movement of cash flows, impossibility of agricultural labors during the long winter season) led to the potential for localization of the village market in the event of an increase in prices for industrial products. This has repeatedly led to a crisis in the marketing of manufactured goods and food shortages in the cities. The second group of factors concerns institutional changes in ownership. The nationalization of the means of production led to the absence of a capital and labor market and to the impossibility of forming a system of relative prices, which, in a capitalist economy, signals entrepreneurs about the directions of efficient allocation of resources. The article demonstrates that Soviet economists in the 1920s used the same arguments in discussions about economic policy tools that market advocates used in discussion on economic calculation under socialism. The NEP as a system of a mixed economy was doomed due to the inability of the planning authorities to determine the directions of capital investments corresponding to the needs, which, given the relative isolation of the countryside, inevitably led to permanent crises.

Structural Change, Balance of Payments Constraint, and Economic Growth: Evidence from Vietnam

The impact of demand-side factors and rapid structural changes have largely been ignored in explaining the economic growth of Vietnam. This paper employs the multisectoral balance-of-payments constrained economic growth model to capture the influence of structural changes on the exports and economic growth of Vietnam over the period 1997–2016. Based on the estimates for the sectoral income elasticities of demand for exports and imports obtained from autoregressive distributed lag models, this paper argues that it is not relative prices but income that has played a significant role in Vietnam’s economic growth, the income elasticities of demand for exports have grown faster than those of demand for imports, and the weight of exports has significantly moved from primary to high-technology products. JEL Classification: E12, F43, O53

An Empirical Investigation of the Disaggregated Import Demand Function: Non-linear ARDL Framework

The article estimates the disaggregated import demand function for India using annual time series data for the period 1995–2017. The empirical results reveal strong evidence of long-run stable relationship among the variables considered in the study. The disaggregated import demand function is estimated for India using linear and non-linear ARDL model. The estimated linear ARDL model shows that gross capital formation, exports and relative prices affect import demand positively and significantly, both in the short and long run. While the impact of final consumption expenditure was found to be insignificant in the short run, it affects import demand significantly and positively in the long run. On the other hand, the result of the non-linear ARDL model shows the evidence of asymmetry in the impact of relative prices (positive and negative changes) on import demand, both in the short and long run. JEL Codes: F41, B17, B41, C51