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1 – 10 of 198Cleomar Gomes da Silva and Fábio Augusto Reis Gomes
The purpose of this paper is to contribute to the teaching of undergraduate macroeconomics.
Abstract
Purpose
The purpose of this paper is to contribute to the teaching of undergraduate macroeconomics.
Design/methodology/approach
To suggest a roadmap, based on a consumption function, to be used by instructors willing to teach the Lucas Critique subject.
Findings
Therefore, this paper proposes a lesson, which consists of three parts, to help undergraduates better understand the subject: (1) a grading exercise to bring the topic closer to students’ lives; (2) a Keynesian and an optimal consumption function, followed by an example based on an unemployment insurance policy; and (3) two optional topics consisting of extensions of the optimal consumption function and some empirical results related to the Lucas Critique.
Originality/value
The Lucas Critique influenced the evolution of research in macroeconomics, but it is not easily grasped in a classroom.
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Many developing countries are pursuing policies that foster international financial integration after decades of financial repression. Greater access to foreign financial markets…
Abstract
Purpose
Many developing countries are pursuing policies that foster international financial integration after decades of financial repression. Greater access to foreign financial markets may have both positive and negative impact on the performance of the economy. One of the concerns of international financial integration is macroeconomic volatility which may affect both monetary and real sectors. Zimbabwe has chosen to pursue a financial liberalization strategy in the form of imperfect financial integration following periods of excessive domestic shocks. An upsurge of capital flows since the epic of economic crisis in the 2000s has been observed with varying macroeconomic impacts. This study empirically examines the impact of partial international financial integration on the volatility of macroeconomic variables.
Design/methodology/approach
The study utilized an ARDL Model suggested by Pesaran et al., (2003) which is appropriate for short time periods.
Findings
The results show that financial integration has a negative effect on output volatility while insignificant on consumption volatility.
Practical implications
The study recommends that the country should gradually liberalize the capital account and properly sequence financial development reforms in order to minimize losses from global financial integration.
Originality/value
The study used time series for Zimbabwe during a period of external imbalance, repeated economic cycles, sudden stops in capital flows and limited scope of imperfect financial integration. Findings in such an economy will be a referral for policymakers in other economies that would want to pursue international financial integration.
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Zhan Wang, Xiangzheng Deng and Gang Liu
The purpose of this paper is to show that the environmental income drives economic growth of a large open country.
Abstract
Purpose
The purpose of this paper is to show that the environmental income drives economic growth of a large open country.
Design/methodology/approach
The authors detect that the relative environmental income has double effect of “conspicuous consumption” on the international renewable resource stock changes when a new social norm shapes to environmental-friendly behaviors by using normal macroeconomic approaches.
Findings
Every unit of extra demand for renewable resource consumption increases the net premium of domestic capital asset. Even if the technology spillovers are inefficient to the substitution of capital to labor force in a real business cycle, the relative income with scale effect increases drives savings to investment. In this case, the renewable resource consumption promotes both the reproduction to a higher level and saving the potential cost of environmental improvement. Even if without scale effects, the loss of technology inefficient can be compensated by net positive consumption externality for economic growth in a sustainable manner.
Research limitations/implications
It implies how to earn the environment income determines the future pathway of China’s rural conversion to the era of eco-urbanization.
Originality/value
We test the tax incidence to demonstrate an experimental taxation for environmental improvement ultimately burdens on international consumption side.
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Kamrul Hassan, Ruhul Salim and Harry Bloch
This article examines the impact of population age structure on the real exchange rate. Data on a panel of 22 OECD (Organization of Economic Cooperation and Development) countries…
Abstract
This article examines the impact of population age structure on the real exchange rate. Data on a panel of 22 OECD (Organization of Economic Cooperation and Development) countries over 1980–2015 period are used to estimate the empirical model. Using fixed effect model the paper finds that different age cohorts have a significant influence on the real exchange rates in the sample countries. The results are mostly consistent with the theoretical framework discussed in the paper and also with the findings of previous studies in this area. These results have important policy implications given the fact that the population is ageing in almost all the OECD economies these days.
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Sami Zaki Alabdulwahab and Ahmed Sabry Abou-Zaid
This paper aims to empirically investigate the sources of real exchange rate fluctuations in Egypt using structural vector autoregression (SVAR). The data covers the period…
Abstract
Purpose
This paper aims to empirically investigate the sources of real exchange rate fluctuations in Egypt using structural vector autoregression (SVAR). The data covers the period between 1980 and 2016, where exchange regime has been changed more than once.
Design/methodology/approach
This paper investigates the source of real exchange rate fluctuations for the period between 1980 and 2016 using the SVAR method. The SVAR method will incorporate real gross domestic product (GDP), real effective exchange rate (REER) and price level in a multidimensional equations system. However, impulse response function (IRF) and error variance decompositions (EVDC) will be generated by the system to have a behavioral insight of real exchange rate in response to economic shocks.
Findings
The IRF and EVDC results indicate a significant impact of demand shocks over the real exchange rate relative to supply shocks and monetary shocks in the period between 1980 and 2016. On the other hand, monetary shocks will have a negligible effect on the real exchange rate in the short run and converging to its previous level in the covering period of the study.
Originality/value
In the best of the authors' knowledge, the topic of the source of the real exchange rate fluctuations in Egypt has not been discussed in a wide range due to the lack of time series data. However, this study provides constructed data for REER for Egypt with the published method in the International Monetary Fund (IMF). Furthermore, the study involves theoretical and econometric modeling to ensure the reliability of the economic results.
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Cleyton Farias and Marcelo Silva
The authors explore the hypothesis that some movements in commodity prices are anticipated (news shocks) and can trigger aggregate fluctuations in small open emerging economies…
Abstract
Purpose
The authors explore the hypothesis that some movements in commodity prices are anticipated (news shocks) and can trigger aggregate fluctuations in small open emerging economies. This paper aims to discuss the aforementioned objective.
Design/methodology/approach
The authors build a multi-sector dynamic stochastic general equilibrium model with endogenous commodity production. There are five exogenous processes: a country-specific interest rate shock that responds to commodity price fluctuations, a productivity (TFP) shock for each sector and a commodity price shock. Both TFP and commodity price shocks are composed of unanticipated and anticipated components.
Findings
The authors show that news shocks to commodity prices lead to higher output, investment and consumption, and a countercyclical movement in the trade-balance-to-output ratio. The authors also show that commodity price news shocks explain about 24% of output aggregate fluctuations in the small open economy.
Practical implications
Given the importance of both anticipated and unanticipated commodity price shocks, policymakers should pay attention to developments in commodity markets when designing policies to attenuate the business cycles. Future research should investigate the design of optimal fiscal and monetary policies in SOE subject to news shocks in commodity prices.
Originality/value
This paper contributes to the knowledge of the sources of fluctuations in emerging economies highlighting the importance of a new source: news shocks in commodity prices.
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Françoise Okah Efogo and Boniface Ngah Epo
This paper appraises the effects of monetary policy on trade in value-added (TiVA) using a panel of 38 developing countries spanning the period 1990 to 2019. Specifically, the…
Abstract
Purpose
This paper appraises the effects of monetary policy on trade in value-added (TiVA) using a panel of 38 developing countries spanning the period 1990 to 2019. Specifically, the authors subsequently summon the theory of trade in intermediate products within the New Keynesian framework for open economies that comprises price rigidity to verify this relationship and thereon control for robustness by correcting for endogeneity and unbalanced panel effect.
Design/methodology/approach
The authors mobilize the within estimator corrected for cross sectional dependence as well as the two-stage-least squares fixed effect estimator which corrects for endogeneity. For robustness, the authors also use the Hausman–Taylor estimator to control for endogeneity and random effects in annualized data and the least squares dummy variable corrected estimator.
Findings
Results suggest that the monetary policy instruments such as inflationary gaps and anticipatory inflationary outcomes significantly affect TiVA in developing countries only in the short term with no long-term effect. In addition to contributing to the scanty empirical literature, the authors provide relevant insights on monetary policy tools that can be mobilized in fashioning a global value chain penetration and upgrading strategies.
Originality/value
The authors convoke the theory of trade in intermediate products casted into the New Keynesian framework comprising price rigidity to verify the relationship between TiVA and monetary policy (b) verify for robustness by correcting for endogeneity and unbalanced panel effect.
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Alka Gupta, Christoph Streb, Vishal K. Gupta and Erik Markin
Acting entrepreneurially in nascent industries is a complex endeavor characterized by uncertainty and ambiguity. Nevertheless, entirely new industries do emerge, often as a direct…
Abstract
Acting entrepreneurially in nascent industries is a complex endeavor characterized by uncertainty and ambiguity. Nevertheless, entirely new industries do emerge, often as a direct result of entrepreneurial behavior. We extend and apply discovery and creation approaches to study entrepreneurial behavior during industry emergence by means of qualitative analysis of a film about the personal computer (PC) industry℉s formative years. We find that discovery and creation behavior are fundamentally interrelated and share a common element: bricolage. Moreover, ideological activism is a major component of entrepreneurial behavior in a new industry℉s formative years during both creation and discovery processes. Implications for research and practice are discussed.
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Abstract
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Binh Tran-Nam, Cuong Le-Van, Van Pham-Hoang and Thai-Ha Le