Bank of Valletta has just published the thirty-sixth edition of the Bank of Valletta Review.

This booklet comprises a number of interesting studies on different economic issues. This issue features four papers.

The first paper, entitled “The Relationship between the Stock Market and the Economy: Experience from International Financial Markets”, has been authored by Gevit Duca.

The author argues how a casual inspection of stock market prices and GDP in developed market economies reveals that these tend to move together over time. The focus of the paper is on long-term trends and the evidence presented is garnered from five of the top ten stock markets in the world in terms of market capitalisation.

The second paper is entitled “Perceived inflation and the introduction of the euro currency in Malta”, and was drawn up by Romina Lauri. The author looks at the 2002 euro changeover in 12 EU members states and the various changes in consumer prices, perceptions and behaviour that were observed. These changes were mainly explained by the prospect theory, the money illusion theory, the attractive pricing hypothesis and collusive behaviour. By referring to these major theories and hypotheses, an empirical exercise was carried out with regard to consumer perceptions in Malta.

Mary Anne Zerafa prepared the third paper entitled “Unemployment benefits and incentives to seek employment in Malta”. The aim of this paper is to analyse unemployment benefit programmes in Malta over the period 1992-2005. It also examines the difference between in-work and out-of-work benefits to determine whether the tax-benefit system is financially rewarding. One of the paper’s conclusions is that a welfare-to-work strategy should be implemented in order to tackle the problem of unemployment benefit dependency among certain groups of benefit recipients.

The fourth paper entitled “The importance of institution building in small island states” is sourced by Nadia Farrugia. This paper argues that the need for institutional capacity-building for development is essential for small island states. Given that small island states tend to depend heavily on international trade, an appropriate institutional set-up for such states would need to promote competitiveness. The paper also recognises that weaknesses in institutional capacities are a common constraint shared by small island states.

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. For more information or to obtain a hard copy of the BOV Review, kindly contact Victoria Azzopardi of Strategy at Bank of Valletta on telephone number 2275-5779 or by e-mail to victoria. [email protected].