An econometric model of the economy of Cyprus.
Item
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Title
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An econometric model of the economy of Cyprus.
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Identifier
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AAI9304721
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identifier
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9304721
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Creator
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Proxenos, Yiannakis Andreas.
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Contributor
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Adviser: Salih Neftci
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Date
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1992
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Language
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English
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Publisher
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City University of New York.
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Subject
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Economics, Theory | Economics, General
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Abstract
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This study has set out to construct an econometric macro model of the economy of Cyprus. The intent here, was to investigate whether or not conventional theory is applicable in the case of a small open developing economy, and what adjustments were necessary if we are to properly explain the functioning of the economy. Ultimately, the aim of the study, is to assess the effectiveness of monetary, fiscal and supply-side policies on economic stabilization and also, serve as the basis for a more indepth future sectoral analysis of the Cypriot economy.;Cyprus is a newly created nation (1960) with a very small economy. It has during its short history been torn by political instability. The ongoing ethnic strife has disrupted the economy ever since even before independence. In spite of this political situation, the economy has experienced a very notable economic rate of growth and economic transformation.;The model is comprised of 20 sets of behavioral equations and 9 identities, which though are based on conventional economic theory, were adjusted so as to account for the peculiarities of the Cypriot economy. For the statistical work I used both Ordinary Least squares (OLS) and Two-Stage Least Squares (2-SLS). These equations dealt with Aggregate demand and supply, with taxation, the demand and supply of money, the problems of potential instability of inflation and unemployment and the existence of a Phillips curve.;Some of the problems I encountered were primarily the ceiling on interest rates, the quantification of supply-side policies and also the availability as well as consistency of the data.;For the most part, the results are characterized by high coefficients of determination (R2) and acceptable t-statistics (at the five percent level). Though without any very big surprises, the results have shown the weakness of stabilization policy in the case of this small open economy and also its vulnerability to external forces.;The topic of Cyprus has indeed been a very interesting and rewarding one.
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Type
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dissertation
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Source
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PQT Legacy CUNY.xlsx
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degree
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Ph.D.
