Dr. Yaya Sissoko, Department of Economics, presented two research papers titled "Role of Monetary Policy in Economic Instability" and “Wagner’s Law Revisited: An Econometric Analysis,” co-authored with IUP alumnus Dr. Mete Feridun, at the thirty-third Northeast Association of Business, Economics, and Technology (NABET) Annual Conference held in State College, Pa., October 19 and 20, 2010.
The first study aims at examining the relationship between public expenditure (i.e. public goods) and income using vector error-correction (VEC) approach on annual data spanning the period between 1993 and 2006. Under this view suggested by Adolph Wagner (1877), a growing economy generates additional tax revenue and creates opportunities for policy makers to increase popular public sector expenditures and government subsidies. Such an increase in public sector activity continues to flourish even in times of recession. Our results provide no support for Wagner's hypothesis for Slovakian economy.
The second article aims at revealing the effectiveness of Turkish monetary policy in controlling the inflation rate and the stability of exchange rate using the rational expectations framework that incorporates the fiscal role of exchange rate. This study affirms that the effort of the Turkish monetary policy at influencing the finance of government fiscal deficit through the determination of the inflation-tax rate, to some extent, affects both the rate of inflation and the real exchange rate, thereby causing volatility in their rates. Moderate evidence emerges that inflation affects volatility of its own rate as well as the rate of real exchange in Turkey.