Mohammad R. Safarzadeh

Abstract

Debate over the effect of technology and automation on job creation or job destruction has

been an ongoing debate in economics for some time. The recent developments in automation

and the speed with which machine is replacing labor in some industries has worried many

economists (Krugman, 2013, Graetz, G & G Michaels, 2015). While a number of recent

studies present evidence on the negative effect of automation on employment by occupations

(Oschinski M & R Wyonchi, 2017), none presents empirical evidence on the effect of

automation on jobs at the macroeconomics level. This study utilizes the traditional model of

the relationship between the real GDP growth and unemployment rate, estimated for US

economy in 1962 and publicized as Okun’s Law. The relationship implies that a one percent

increase in GDP growth above the normal growth of GDP results in .4 percent decrease in

unemployment rate. Although the relationship between GDP growth and unemployment rate

may be affected by other economic variables in the short-run, a variable that may result in

structural change in this relationship in the long-run is technology and its effect on

unemployment. Technological advancement may lead to substitution of capital for labor,

resulting in less response of GDP growth to unemployment rate than what Okun’s law

proposed. The main objective of this paper is to test whether such a structural change in the

relationship has occurred or not. Using data for the last sixty years for eight industrialized

countries, this paper compares the average response of unemployment rate to real GDP

growth in three decades of 1955-1985, with the recent three decades of 1986-2015.

Abstract: Monetary union plays an important role in introducing a single currency among the member states in a similar geographical region. It is therefore, necessary to analyze economic factors that lead to the establishment of monetary union in the Gulf Cooperation Council (GCC) through real exchange rate. The main aim of this study was to investigate the determinants of the Real Exchange Rate (RER) across the Gulf Cooperation Council (GCC) countries as a prerequisite for establishing a monetary union. To achieve this goal, different econometric techniques such as the Vector Error Correction (VEC) etc., were applied. Firstly, each relevant economic variable was tested according to the standard Augmented Dickey-Fuller (ADF) unit root test in order to be able to apply. Secondly, the Engle-Granger two-step co-integration method was applied to determine the appropriateness of using the VEC for each GCC country. The results indicated that the most economic variables in the study have one order of integration. The study also showed that GCC countries have different economic variables that determine the RER. The study results indicated that the estimated error correction coefficients were not significant for all the GCC countries except the state of Qatar where the growth in RER will deviate by -0.240808 in the short term. The study highlighted the various determinants of RER helpful to establish monetary union in the GCC countries.

Abstract: Analyzing the risk and return for the S&P Currency Index Arbitrage and the Merk Absolute Return Currency Fund, this study intends to find whether currency asset classes are worthwhile investments. To determine where the efficient currency portfolios lie in the risk and return spectrum, this paper compares the two portfolios to fixed income and equity asset portfolios. The results lead to a baffling conclusion that, in general, the returns to low-risk currency asset portfolios are higher than the equity asset portfolios of same risk level.

Keywords: Currency asset class; risk and return; fund allocation; efficient frontiers