Five papers make up this issue. The first one, titled Optimal Levels of Reserves and Hedging Sudden Stops Recessions for Egypt: A Stochastic Control Approach by Ahmed S. Abutaleb and Marwa G. Hamad, discusses the issue of optimal international reserves in Egypt during the period 1977-2007. The paper also presents a new approach to manage international reserves. It is proposed that part of the reserves will be held as risky assets. The risky assets are sensitive to the volatility index (VIX) of the Chicago Board Options Exchange (CBOE). The analysis reveals that the actual normalized level of reserves is in excess of the optimal one. Hence, the study recommends reducing the international reserves to the optimal level. This is almost 25% of the current levels of reserves. Moreover, the study proposes the activation of other institutions role in the society to attract long term investments, maintaining a certain limit of coordination among fiscal and monetary policies and consolidating the norms of ethical standards in the financial system.
The second paper, titled Export Instability, Income Terms of Trade Instability and Growth: Evidence from Pakistan by Faiz Bilquees and Tahir Mukhtar, explores the causal relationship among export instability, income terms of trade instability and economic growth in Pakistan. By using the cointegration analysis and vector error correction model for the period 1960 to 2008, the study demonstrates that there exists a long run equilibrium relationship among export instability, income terms of trade instability, investment and economic growth. The Granger causality test results indicate that in the short run there exists a uni-directional causality running from export instability and income terms of trade instability to economic growth. However, in the long run all the variables of the study cause one another. This finding is suggestive of closer coordination among the monetary, fiscal and trade policies in Pakistan.
The third paper, titled The Impact of Foreign Trade on the Labor Market: Evidence from Turkish Economy by Enes E. Uslu and Özgür Polat, analyzes the impact of foreign trade on labor market by using the random coefficient panel data analysis and the quarterly data of 17 sectors in manufacturing industry of Turkey according to 2 digit level of NACE Rev. 1.1 and ISIC Rev.3 classification between 1994 and 2010. Data are seasonally adjusted by TRAMO/SEATS method before data evaluation, since the data used are quarterly. The results showed that production had positive impact on labor whereas it had negative impact on wages. Furthermore it was shown that imports and exports have a significant and positive impact on labor. Thus the results of the study point out that foreign trade positively affect the economy. Sector specific estimations, which is the one of distinctive aspects of this study, derived from the random coefficient panel data analysis, are also discussed in detailed.
The fourth paper, titled Efficiency of Zakat Institutions in Malaysia: An Application of Data Envelopment Analysis by Norazlina Abd. Wahab and Abdul Rahim Abdul Rahman, measures the efficiency of zakat institutions in Malaysia during the period of 2003 to 2007. Using a Data Envelopment Analysis (DEA) technique, the results show that zakat institutions have exhibited mean technical efficiency of 80.6%. The results also suggest that pure technical inefficiency dominates the scale inefficiency effects in determining technical efficiency of zakat institutions in Malaysia. Further analysis of Spearman and Pearson correlation coefficients suggests that while higher Muslim population states tend to positively correlated to zakat collection, its correlation with efficiency score does not indicate a strong relationship, implying that it does not promise efficiency of zakat organization.
The last and fifth paper, titled Pension Reforms: A Case for Pakistan by Umaima Arif and Eatzaz Ahmed, deals with pension system reforms for the Pakistan economy and highlights the current situation and future prospects. The study presents an overview of empirical evidence on pension system reforms, the strengths and weaknesses of the pension system of Pakistan and the institutional development pertaining to pension reforms. Fully funded pension system can help to strengthen the formal channels of retirement savings and can help to get rid of problems prevailing in current pension system. If the decision to reform the pension system is not taken in time then in the near future rising pension expenditure would lead to increase in indirect taxes, reduction in development expenditure and/or increase in government borrowings. Although some efforts to reform the pension system had been made to reduce the government’s rising pension bill, yet despite realization of the problem no serious effort had been made to reform the pension system in a fundamental way.
Abstract articles of the Journal of Economic Cooperation and Development, Vol.33 No.1 (2012)