Template-type: ReDIF-Paper 1.0 Author-Name: Elena Andreou Author-Name: Maria Matsi Author-Name: Andreas Savvides Title: Stock and Foreign Exchange Market Linkages in Emerging Economies Keywords: Volatility Spillovers, MGARCH, Emerging Economies Abstract: This paper investigates bi-directional linkages between the stock and foreign exchange markets of a number of emerging economies. A quarto-variate VAR-GARCH model with the BEKK representation is estimated for each of twelve emerging economies to test for spillovers, both in terms of return and volatility, between the emerging stock market, foreign exchange market and global and regional stock markets. We find significant bi-directional spillovers between stock and foreign exchange markets. We also examine the effects of a country’s choice of exchange rate regime, on the one hand, and the Asian financial crisis, on the other, on the volatility spillover mechanism. Length: 41 pages Creation-Date: 2013-01 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/01-13.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:01-2013 Template-type: ReDIF-Paper 1.0 Author-Name: Louis N. Christofides Author-Name: Alexandros Polycarpou Author-Name: Konstantinos Vrachimis Title: Gender Wage Gaps, ‘Sticky Floors’ and ‘Glass Ceilings’ in Europe Keywords: Gender wage gap, Selection, Quantiles, Work-family reconciliation, Wage-setting institutions Abstract: We consider and attempt to understand the gender wage gap across 26 European countries, using 2007 data from the European Union Statistics on Income and Living Conditions. The size of the gender wage gap varies considerably across countries, definitions of the gap, and selection-correction mechanisms. Most of the gap cannot be explained by the characteristics available in this data set. Quantile regressions show that, in a number of countries, the wage gap is wider at the top (‘glass ceilings’) and/or at the bottom of the wage distribution (‘sticky floors’). We find larger mean/median gender gaps and more evidence of glass ceilings for full-time full-year employees, suggesting more female disadvantage in ‘better’ jobs. These features may be related to country-specific policies that cannot be evaluated at the individual country level, at a point in time. We use the cross-country variation in the unexplained wage gaps of this larger-than-usual sample of states to explore the influence of (i) country policies that reconcile work and family life and (ii) their wage-setting institutions. We find that country policies and institutions are related to features of their unexplained gender wage gaps in systematic, quantitatively important, ways. Length: 43 pages Creation-Date: 2013-02 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/02-13.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:02-2013 Template-type: ReDIF-Paper 1.0 Author-Name: Michael S. Michael Author-Name: Sajal Lahiri Author-Name: Panos Hatzipanayotou Title: Piecemeal Reform of Domestic Indirect Taxes toward Uniformity in the Presence of Pollution: with and without a Revenue Constraint Keywords: Indirect tax reforms, Production and consumption generated pollution, Welfare, Government tax revenues Abstract: The literature on indirect tax reforms in pollution-ridden economies is quite limited. This paper, using a general equilibrium model of a perfectly-competitive small open economy with both production and consumption generated pollution, considers the welfare implications of tax reforms that take the structure of consumption and production taxes toward uniformity. Specifically, both in the presence and absence of a binding government revenue constraint, we derive sufficient conditions for welfare improvement in the case where we implement (i) reforms in either production or consumption taxes, and (ii) reforms in both consumption and production taxes. Length: 26 pages Creation-Date: 2013-03 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/03-13.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:03-2013 Template-type: ReDIF-Paper 1.0 Author-Name: Andreas Assiotis Title: Does Democratization Spur Growth? An Examination over Time and Space Keywords: Democratization, Democracy, Economic Growth Abstract: Many studies have considered how democratization affects economic growth. We expand this work by allowing short and long run effects of democracy upon growth to differ since effects during political transitions need not coincide with those under established democracies. We also allow these short and long run effects to differ across world regions since the effects of democracy upon economic growth need not be the same across countries, either. Using annual, cross-county data from 1960 to 2010, we find that democratizations increased growth rates in sub-Saharan Africa both in the short run and in the long run but lowered them in Europe. Effects in other regions appear less strong. Our results suggest that democratizations could be most beneficial for growth in poorer, less stable regions. We also do not find any evidence of a transitional cost. Finally, some support though mixed suggests that democracy’s ability to mitigate effects of ethnic heterogeneity provides a partial explanation for the cross regional heterogeneity. Length: 43 pages Creation-Date: 2013-03 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/04-13.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:04-2013 Template-type: ReDIF-Paper 1.0 Author-Name: Andreas Assiotis Author-Name: Kevin Sylwester Title: Do Good Institutions Lower the Benefit of Democratization? Keywords: Democratization, Economic Growth, Institutions Abstract: Recent studies have reported positive associations between democratization and economic growth. They have also explored how these associations could differ across regions or income levels. However, might the effects of democratization upon growth also depend upon other factors such as institutions promoting law and order (or the lack thereof)? Using a panel specification, we employ a democratization-law and order interactive term to examine if the effects of democratization upon economic growth depend upon these other institutions. We find that the coefficient on the interaction term is negative. The positive effects of democratization diminish in countries where other institutions are strong. In fact, we find that democratization could even lower growth where the rule of law already prevails. Length: 46 pages Creation-Date: 2013-03 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/05-13.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:05-2013 Template-type: ReDIF-Paper 1.0 Author-Name: Andreas Assiotis Author-Name: Kevin Sylwester Title: Do the effects of corruption upon growth differ between democracies and autocracies? Keywords: Economic Growth, Democracy, Corruption Abstract: Many studies examining whether corruption lowers economic growth do not consider if the effects of corruption differ across countries. Whether corruption produces the same effects everywhere or whether its effects are conditional on some country characteristics is an important question. We investigate the association between corruption and growth, where the marginal impact of corruption is allowed to differ across democratic and non democratic regimes. Using cross-country, annual data from 1984 to 2007, we regress growth on corruption, democracy, and their interaction. We find that decreases in corruption raise growth but more so in authoritarian regimes. Possible reasons are in autocracies corruption causes more uncertainty, is of a more pernicious nature, or is less substitutable with other forms of rent seeking. Length: 41 pages Creation-Date: 2013-03 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/06-13.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:06-2013 Template-type: ReDIF-Paper 1.0 Author-Name: Panos Pashardes Author-Name: Nicoletta Pashourtidou Author-Name: Theodoros Zachariadis Title: Estimating welfare aspects of changes in energy prices from preference heterogeneity Keywords: deadweight loss, demand system, distributional effect Abstract: The European Union's energy and climate policy package will cause an increase in end-user prices of electricity and fuels. This paper assesses the distributional effects of these price increases in Cyprus by specifying and estimating a household energy demand system with price heterogeneity between households. This novel method allows obtaining robust parameter estimates even when household expenditure surveys are limited. The empirical analysis is conducted both conditional on energy-related household characteristics and unconditionally. We then use the estimated demand system to conduct welfare analysis. We find that the rise in energy prices results in welfare losses (in 2009 prices) of EUR 31 and EUR 101 per household for 2013 and 2020 respectively, or a nationwide welfare loss of more than EUR’2009 33 million in 2020. Price increases will be regressive and will affect small and urban households more strongly than the rest of the population. Furthermore, we find that the largest proportion of welfare loss is due to loss of household’s income purchasing power caused by higher energy prices, while the changes in relative prices induce deadweight loss which is a small part of welfare loss because of the limited substitutability of energy with other goods. Length: 21 pages Creation-Date: 2013-03 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/07-13.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:07-2013 Template-type: ReDIF-Paper 1.0 Author-Name: Sofronis Clerides Author-Name: Manthos D. Delis Author-Name: Sotirios Kokas Title: A new data set on competition in national banking markets Keywords: Bank competition, Semi-parametric estimation, World sample Abstract: We estimate the degree of competition in the banking sectors of 148 countries worldwide over the period 1997-2010. We employ three methods, namely those of Lerner (1934), Koetter, Kolari and Spierdijk (2012) and Boone (2008a). For the estimation of marginal cost required under all methods, we use the semi-parametric methodology of Delis (2012) that allows increasing the flexibility of the functional form imposed on the cost function. All three indices show that the competitive conditions in banking have deteriorated on average during the period 1997-2006. This trend reverses until 2008, while in 2009 and 2010 market power again increases. Thus, we provide evidence that the competitive conditions are correlated with financial stability. The empirical results also highlight important differences between regional and income groups of countries. On average, the banking systems of Sub-Saharan Africa and subsequently of East Asia and Pacific are the least competitive, while the banking systems of Europe and Central Asia and South Asia seem to be the most competitive ones. Further, the non-OECD countries characterized by either high- or low-income levels have less competitive banking sectors, while middle-income countries have more competitive banking sectors. For the OECD countries the results of the Lerner-type indices and the method by Boone (2008a) give conflicting results. Length: 43 pages Creation-Date: 2013-03 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/08-13.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:08-2013 Template-type: ReDIF-Paper 1.0 Author-Name: Sofia N. Andreou Author-Name: Panos Pashardes Title: Consumers’ Valuation of Academic and Equality-inducing Aspects of School Performance in England Keywords: Consumer Valuation, Education Equality, School Performance, Hedonic Analysis, Contextual Value Added Abstract: This paper investigates the willingness of households to pay for academic and equality-inducing (deprivation-compensating) components of the Contextual Value Added (CVA) indicator of school quality used in England. Semi-parametric and parametric analysis shows that consumers are willing to pay for houses in the catchment area of primary and secondary schools with high academic achievement, as measured by the mean score; whereas, the component of the CVA indicating equality-inducing aspects of school performance is found to have a positive effect only on the price of houses in the catchment area of primary schools in London; its impact on the price of houses elsewhere is mostly negative. The role played by the CVA as a guide to choosing a school and the implications which our results can have for school funding are considered. Length: 25 pages Creation-Date: 2013-06 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/09-13.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:09-2013