Bank of Valletta plc has published the 32nd edition of the Bank of Valletta Review, featuring four interesting papers.
The first paper, entitled “Exchange rate strategies for small island developing states”, has been authored by Stephanie Vella. This paper tackles the choice of exchange rate regime being a crucial decision for any economy, with important implications for inflation and long-term economic growth. This paper uses conceptual and empirical approaches to show that relatively hard exchange rate arrangements are typically more suited to the particular circumstances of small island states.
However, this paper also argues that despite the fact that hard pegs appear to be the best regimes for small island developing States at this particular point in time, it does not necessarily mean that this line of argument should not be questioned in the future.
The second paper is entitled “The human development index and small States” by Elaine Gatt. This article attempts to examine how small States fare in terms of human development. It examines the human development index for the period 1990 to 2004 and averages the scores for five groups of countries classified according to population size.
The very small countries are those with a population of 1.5 million or less. The paper finds that these countries tend to obtain relatively high scores on the human development index. Many studies have found that these countries are also particularly economically vulnerable. The paper argues that the human development index may be failing to reflect the particular difficulties faced by small countries due to their economic vulnerability. Better consideration of vulnerability issues in the measurement of human development, may thus be warranted.
Another paper entitled “The electoral business cycle in Malta”, is presented by Jean Paul Fabri. This paper stresses that, despite the fact that theoretical research on electoral political cycles is well developed, empirical literature has found relatively weak evidence of such cycles.
This paper tries to reformulate the existing theory on two levels namely, on the empirical level, it investigates the existence of very short cycles by using monthly data; while on the theoretical level, it argues that the action taken by the incumbent government varies from election to election depending on its opinion poll standing. The main hypothesis on which this theory is based, is that the degree to which the party in government tries to manipulate the economy should be negatively correlated with the chances of being re-elected.
The fourth paper entitled “The Maltese labour market and frictional unemployment” and authored by Mirko Mallia, discusses the extent to which unemployment in Malta was caused by frictional factors rather than by the persistence of disequilibrium conditions. The author used data pertaining to the period 1990 to 2004. The paper briefly surveys the literature of theoretical and empirical unemployment models and reviews the theory of the relationship between unemployment and wage movements.
It examines the causes of unemployment from a theoretical standpoint, and provides a general description of main labour market trends in the Maltese economy. Moreover, the author presents estimation results of a model capturing the speed of adjustment towards equilibrium in this market. He concludes that unemployment in Malta was, to a large extent, caused by market frictions, notably skill mismatches; and that therefore active market policies should be given major attention in Malta.
As in previous issues, the current BOV Review provides a useful index of the articles and their respective authors as featured in past issues of the Bank of Valletta Review. Moreover, articles from Issue 26 onwards are available online on the BOV website www.bov.com. For further information or a hard copy of the BOV Review, kindly contact Victoria Azzopardi at Strategic Planning at Bank of Valletta on telephone number 2275 5779 or by e-mail to [email protected]
The 33rd edition of the Bank of Valletta Review, featuring four interesting papers, has been published.
The first paper, entitled Synergy between Consumer Policy and Competition Policy, authored by Eugene Buttigieg, argues that consumer interests should be a specific objective of competition policy and further emphasises the need of greater synergy between consumer and competition policies. It is evident that albeit the importance of competition policy, consumer interests cannot be fully safeguarded when markets fail. Thus, consumer organisations should be enabled to participate more actively in the enforcement of competition policy.
The second paper is entitled Female Labour Market Participation in Malta: A Lisbon Agenda Perspective’ by Kevin Caruana highlights the importance of a higher female labour market participation in line with the EU Lisbon Agenda which proposes that Member States should strive to increase female participation rates to targets set for 2010.
While Malta’s female labour supply increased substantially over the last twenty years, female participation in Malta fares lowest when compared to other EU countries, the author writes. This paper explains the factors that impact on the size of the female labour force. The author also elaborates on the results of his own time-series analysis of female labour market participation rates in Malta and derives several policy implications concerning female participation in the labour market.
Another paper entitled An Analysis of Stock Index distributions of Selected emerging markets, is presented by Silvio J. Camilleri. This paper delves into how the stock market data often shows pragmatic evidence of distinct characteristics commonly known as stylised facts for emerging market indices spanning over different geographic regions. The results do not show asymmetry in the tails of long return distributions in any particular direction.
Moreover, the recurrently observed characteristics that high volatility follows large negative returns, does not show up in the data. Nonetheless, when the results for the latter characteristics are grouped by geographic regions, some similarities become evident.
The fourth paper entitled Social Pacts in Europe and authored by Alexandra Pizzuto, reviews the development of social pacts in European countries since the post-war period, as conditioned by the changing economic, social and political environments. The author looks into the requirements necessary for the successful implementation of a social pact and singles out the credibility of the policies to be implemented as a major requisite to this end.
The BOV Review provides a useful index of the articles and their respective authors as featured in past issues. Furthermore, articles from Issue 23 onwards are available online on the BOV website www.bov.com.