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Vol.8 No.1
March 2020

 Page Number

 Article Information

1-15

The Middle-Income Trap from an International Overview: A Logit Panel Data Analysis

Augusto Ricardo Delgado Narro

DOI: 10.15604/ejef.2020.08.01.001

Abstract

This paper analyzes the probabilities of economies to lie into the middle-income trap by using a Logit Panel Data model. We define the trap with more encompassing criteria: average GDPs per capita relative to the US one and GDP per capita growth rates for ten-year averages in both cases. To determine those probabilities, we include two different sets of covariates. Firstly, a set of covariates that might be influenced by policymakers, e.g., inflation, exports, and education. Secondly, another set of covariates that are independent of policymakers’ influence; a trend, a dummy for the international financial crisis, growth rates of world leader economies (US and China), growth rates of continental leader economies, and dummies by continents. We find that domestic variables are essentialto determine the probability of lying into the middle-income trap. Also, the independent covariates are significant. The trend shows that the trap is a stable equilibrium where economies tend to stay for a long time. A global economic crisis can push the countries out of the trap, but the impulse makes them back to lower-income stages. Our model also finds that regional linkages with surrounding economies are essential for middle-income economies.

Keywords: Middle-Income Trap, International Economics, Logit Models, Panel Data

16-23

The Impact of Income on Household Expenditure on Dairy Products: Evidence from the United States Dairy Market

Rezgar Mohammed

DOI: 10.15604/ejef.2020.08.01.002

Abstract

This paper uses the diary portion of the 2016 Consumer Expenditure Survey to study the impact of income on dairy product expenditure in the United States using the Tobit model. Results show that the effect of income is positive and significant. However, as income increases, households introduce more dairy products into their consumption bundle. Low-income households who are eligible for the Supplemental Nutrition Assistance Program would get benefit from this program as the effect of this program on dairy product expenditure is also positive and significant. The study suggests that this information needs to be used by public sectors when formulating their health-promoting programs, and also by food retailers when making their market strategies.

Keywords: Dairy Products, Household Expenditure, Tobit Model

24-37

Tax Evasion in Bosnia and Herzegovina: Perception from Taxpayers and Tax Inspectors

Saudin TerzicMiro Dzakula, and Elvir Muminovic

DOI: 10.15604/ejef.2020.08.01.003

Abstract

Tax evasion is more of a disciplinary problem, produced by numerous, big and turbulent changes. The growing problems with tax evasion are present all over the world and they require a global solution of the problem.  Although tax evasion is a global phenomenon, this is also the issue that most developed countries in the world are dealing with, there are significant differences between individual countries, all depending on the legal order, the entire social system and it is depending from country to country, and this is especially evident among transitioning countries. The problem of tax evasion is particularly acute in Bosnia and Herzegovina (hereinafter BiH). The main research result indicates that tax evasion has multiplicative effects; by reducing tax evasion, the situation in public finances improves substantially. This article discusses tax evasion in BiH and the perception of taxpayers and tax inspectors towards tax evasion. In this line, this article presents the theoretical analysis of the phenomenon of tax evasion (which is not a goal in itself), including the empirical analysis factors that have the greatest influence on tax evasion by using logistic regression modeling method. The paper checks the main hypothesis by identifying the factors that affect tax evasion and by determining their significance and impact, it is possible to construct logit model for determining factors of tax evasion in BiH.

Keywords: Tax Evasion, Tax Rates and Penalties, Tax Burden and Taxation System, Corruption, Tax Moral and Culture, Bosnia and Herzegovina

38-53

Whether the Economic Growth of India is Trade Openness Led?

Iti Vyas

DOI: 10.15604/ejef.2020.08.01.004

Abstract

The prime aim of the paper is looming around the doubt whether the economic growth of India is trade openness led? If yes, whether the trade openness led growth could be a short term or a protracted-term phenomenon. To check this, the paper took the annual time series data on the GDP per capita income as a proxy for economic growth, and also the different standards of trade openness like the amount of exports and imports as a percentage of GDP, export and import of products and services as a percentage of GDP, and per cent of World exports and imports.  The model is grounded on the extended version of the Cobb-Douglas production function. The short-run and long- term dynamics of the connection between trade openness and economic growth is analyzed by employing Toda Yamamoto’s Granger’s non- causality test, Johansen’s Maximum Likelihood test and Fully Modified Ordinary Least Square model. The findings of the study exposed that the GDP per capita income is positively statistically explained by the trade openness, exports of goods and services as per cent of GDP, imports of goods and services as a percentage of GDP, per cent of total World exports, capital investment, and labour force participation rate. There exists a long-run equilibrium relationship between the economic growth and trade openness indicators considered within the study. The positive impact of trade openness on economic growth suggests that India should give more emphasis on the optimal allocation of domestic resources, technological progress and knowledge spillovers and encourage integration and competition among domestic and international markets.

Keywords: Trade Openness, Growth, FMOLS, Cointegration, Granger’s Non-Causality

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