May 2017

Zagreb International Review of Economics and Business
Volume XX, Number 1 (May 2017)

 

BIOGRAPHICAL NOTE

Evolution of an Economist      
Jurica Šimurina
Daniel Tomić

Note: On December 29, 2016, the Croatian Parliament has bestowed upon our esteemed emeritus professor of economics Soumitra Sharma, the highest State Prize for Life Time Achievement in Social Sciences (2015). Professor Sharma has been one-time teacher of many of us and the founding Editor-in-Chief of ZIREB. Accordingly, as a tribute, I have thought it appropriate and worthwhile to evaluate and present to the readers his lifetime achievement in economics.



ABSTRACTS 

Impact of Entertainment Motivational Drivers on User Acceptance of Online Social Network Banner Advertising: A Gratification Perspective        
Imran Anwar Mir


Abstract: Social media has phenomenally changed the communication landscape. Particularly social network sites have received enormous popularity and user acceptance globally. The business model of many social network sites is based on advertising. The survival of these social network sites depends on the user acceptance of advertising appearing on these websites. Users usually accept the advertising which is consistent with their motivations for using social network sites. The current study examines the underlying dimensions of entertainment motivation for using social network sites and their impact on user acceptance of social network advertising. Analysis of data from 450 university students show entertainment motivation for using social network sites a multidimensional (SNSs) construct consisting of enjoyment, social escapism, relaxation and pass time factors. Furthermore, the results exhibit that SNSs entertainment motivation partially impacts user acceptance of social network advertising.

Key words: Social network sites (SNSs); entertainment motivation; social network advertising (SNA); frequency, duration, attitude, ad-click behavior

JEL Classification: M37


Emissions Trading for Cleaner Production in the Old and New EU Member States?        
Irena Raguž Krištić


Abstract: This paper examines the success of the European Union Emissions Trading System (EU ETS) in inducing cleaner production in the EU based on the first two trading periods. It fills a literature gap by constructing a measure of clean production and conducting an ex-post macro-level analysis of the EU ETS impacts in EU15 compared to EU12. Results of panel regression analysis robustly show that EU ETS in both EU12 and EU15 (i) has positive impact on clean production of regulated industries, (ii) does not induce spillovers of cleaner technologies and processes to non-regulated industries, and (iii) does not affect clean production at the national level. In addition, share of renewables in energy consumption has a positive and crisis a negative impact on the clean production. Results support further tightening and broader coverage of EU ETS regulation and provision of funds from the EU ETS for development of renewable energy technologies.

Key words: EU ETS; Member States; greenhouse gas emissions; clean production; panel regression analysis

JEL Classification: Q52
 

Equity Returns and Volatilities Before and After the 2007-08 Financial Crisis       
Lidija Dedi
Burhan Faith Yavas


Abstract: This paper investigates the linkages among equity markets of four European countries (Germany, France, Italy, UK) and the USA in terms of market returns and transmission of volatilities. We use daily exchange traded funds (ETF) data from January 2002 to March 2016 and utilize both a Multivariate Autoregressive Moving Average model (MARMA) and a Generalized Autoregressive Conditional Heteroscedasticity model (GARCH). We divided the data into three separate periods: before the 2007-08 financial crisis, during the crisis and after the crisis. The results show the existence of significant co-movement of returns in all three selected periods although some important differences before and after the financial crisis are noted. Findings also include marked increases in integration of the markets and thus diminishing diversification opportunities for investors. Volatilities appear to react strongly to market movements and their shocks fade away slowly in all five countries during the crisis period. There is also strong evidence of volatility spillovers particularly during and after the crisis periods.

Key words: co-movement of returns; volatility persistence; volatility spillovers; GARCH; Exchange traded funds

JEL Classification: G11, G15, C58
 

Forecasting Capacity of ARIMA Models; A Study on Croatian Industrial Production and its Sub-sectors
Daniel Tomić
Saša Stjepanović


Abstract: As one of the most important indicator for monitoring the production in industry as well as for directing investment decisions, industrial production plays important role within growth perspectives. Not only does the composition and/or fluctuation of the goods produced indicate the course of economic activity but it also reflects the changes in cyclical development of the economy thereby providing opportunity to macro-manage with early signs of (short-term) turning-points and (long-term) trend variations. In this paper, we compare univariate autoregressive integrated moving average (ARIMA) models of the Croatian industrial production and its subsectors in order to evaluate their forecasting features within short and long-term data evolution. The aim of this study is not to forecast industrial production but to analyze the out-of-sample predictive performance of ARIMA models on aggregated and disaggregated level inside different forecasting horizons. Our results suggest that ARIMA models do perform very well over the whole rage of the prediction horizons. It is mainly because univariate models often improve the predictive ability of their single component over the short horizons. In that manner ARIMA modelling could be used at least as a benchmark for more complex forecasting methods in predicting the movements of industrial production in Croatia.

Key words: industrial production; industrial sub-sectors; cycles; ARIMA; forecasting; Croatia

JEL Classification: C22, E23, E61

The Impact of Development Aid on the International Migrations in the African, Caribbean, and Pacific Group of States
Marko Gregl
Klavdij Logožar


Abstract: Development aid, one of the most important mechanisms for the redistribution of global wealth, represents financial flows that have economic growth and social improvement as their main objective. It has also frequently been described as an instrument which is able to diminish international migrations and is used by several developed countries. Recently, much empirical evidence and several contributors have argued that connection and set out other grounds. This paper explores the interaction between development aid and migrations from developing to developed countries. We want to determine, if the amount of development aid has any impact on migrations from African, Caribbean, and the Pacific Group of States. Our results show that development aid does not have a direct effect on migrations and therefore, in terms of international migrations, is not effective. Moreover, we will argue that the donor side should use different policies and other mechanisms to manage migrations from those countries.

Key words: development aid; international migrations; ACP Group of States; aid effectiveness; international development

JEL Classification: F35, F22, F59
 

Corruption in Transition Economies: Cause or Effect?
Adisa Arapović
Craig A. Depken, II
Mirsad Hadžikadić


Abstract: This paper investigates the empirical relationship between corruption, economic growth, and government spending in fourteen transitioning economies from 1995-2013. We find strong evidence of bilateral Granger causation between economic growth and corruption for the full sample but weaker evidence of such a relationship for four former Yugoslav republics. We also find bilateral Granger causality between government spending and corruption but a weaker unidirectional Granger causality from government spending to corruption in four former Yugoslav republics. Our results recommend caution when assuming that corruption is purely exogenous in empirical models.

Key words: economic growth; government spending; public corruption; Granger causality

JEL Classification: O40, D73