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1 – 10 of 140Credit is an essential element in the production process in agriculture. There are two sources from which farm households can access credit: institutional sources and…
Abstract
Purpose
Credit is an essential element in the production process in agriculture. There are two sources from which farm households can access credit: institutional sources and non-institutional or informal sources of credit. The informal sources of credit, such as moneylenders, charge exorbitant rates of interest, which further puts a financial burden on the farmers. Hence, to increase the flow of credit from institutional sources, a policy known as the interest subvention scheme (ISS) was introduced in the year 2006. This paper aims to find the effect of the ISS on the behaviour of farm households.
Design/methodology/approach
The author has used difference-in-difference analysis for estimation. In the analysis, the author has taken Madhya Pradesh as the treatment state and Andhra Pradesh as the controlled state. The author has used the Village Dynamics in South Asia (VDSA) dataset of ICRISAT for analysis. The author has used data from 2009 to 2014 for the two states.
Findings
The author has found that the difference between the average interest rate of Andhra Pradesh and Madhya Pradesh is significant for both pre-treatment and post-treatment periods and this gap has increased after the intervention period. The results suggest that the share of informal sector borrowings has reduced in the treatment group (Madhya Pradesh) as compared to the control group (Andhra Pradesh) in the post-treatment period.
Originality/value
This paper is particularly important because of the dearth of literature on the impact of this scheme in India and may shed light on the much-needed policy implications of this particular policy.
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This paper aims to examine the dynamics of house prices in metropolitan cities in an emerging economy. The purpose of this study is to characterise the house price dynamics and…
Abstract
Purpose
This paper aims to examine the dynamics of house prices in metropolitan cities in an emerging economy. The purpose of this study is to characterise the house price dynamics and the spatial heterogeneity in the dynamics.
Design/methodology/approach
The author explores spatial heterogeneity in house price dynamics, using data for 35 Indian cities with a million-plus population. The research methodology uses panel econometrics allowing for spatial heterogeneity, cross-sectional dependence and non-stationary data. The author tests for spatial differences and analyses the income elasticity of prices, the role of construction costs and lending to the real estate industry by commercial banks.
Findings
Long-term fundamentals drive the Indian housing markets, where wealth parameters are stronger than supply-side parameters such as construction costs or availability of financing for housing projects. The long-term elasticity of house prices to aggregate household deposits (wealth proxy) varies considerably across cities. However, the elasticity estimated at 0.39 is low. The highest coefficient is for Ludhiana (1.14), followed by Bhubaneswar (0.78). The short-term dynamics are robust and show spatial heterogeneity. Short-term momentum (lagged housing price changes) has a parameter value of 0.307. The momentum factor is the crucial dynamic in the short term. The second driver, the reversion rate to long-term equilibrium (estimated at −0.18), is higher than rates reported from developed markets.
Research limitations/implications
This research applies to markets that require some home equity contributions from buyers of housing services.
Practical implications
Stakeholders can characterise stable housing markets based on long-term fundamental value and short-run house price dynamics. Because stable housing markets benefit all stakeholders, weak or non-existent mean reversion dynamics may prompt the intervention of policymakers. The role of urban planners, and local and regional governance, is essential to remove the bottlenecks from the demand side or supply side factors that can lead to runaway prices.
Originality/value
Existing literature is concerned about the risk of a housing bubble due to relaxed credit norms. To prevent housing market bubbles, some regulators require higher contributions from home buyers in the form of equity. The dynamics of house prices in markets with higher owner equity requirements vary from high-leverage markets. The influence of wealth effects is examined using novel data sets. This research, documents in an emerging market context, the observations cited in low-leverage developed markets such as Germany and Japan.
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Hai Le and Phuong Nguyen
This study examines the importance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand. To this end, the authors construct a small open…
Abstract
Purpose
This study examines the importance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand. To this end, the authors construct a small open economy New Keynesian dynamic stochastic general equilibrium (DSGE) model. The model encompasses several essential characteristics, including incomplete financial markets, incomplete exchange rate pass-through, deviations from the law of one price and a banking sector. The authors consider generalized Taylor rules, in which policymakers adjust policy rates in response to output, inflation, credit growth and exchange rate fluctuations. The marginal likelihoods are then employed to investigate whether the central bank responds to fluctuations in the exchange rate and credit growth.
Design/methodology/approach
This study constructs a small open economy DSGE model and then estimates the model using Bayesian methods.
Findings
The authors demonstrate that the monetary authority does target exchange rates, whereas there is no evidence in favor of incorporating credit growth into the policy rules. These findings survive various robustness checks. Furthermore, the authors demonstrate that domestic shocks contribute significantly to domestic business cycles. Although the terms of trade shock plays a minor role in business cycles, it explains the most significant proportion of exchange rate fluctuations, followed by the country risk premium shock.
Originality/value
This study is the first attempt at exploring the relevance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand.
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Hugo Iasco-Pereira and Rafael Duregger
Our study aims to evaluate the impact of infrastructure and public investment on private investment in machinery and equipment in Brazil from 1947 to 2017. The contribution of our…
Abstract
Purpose
Our study aims to evaluate the impact of infrastructure and public investment on private investment in machinery and equipment in Brazil from 1947 to 2017. The contribution of our article to the existing literature lies in providing a more comprehensive understanding of the presence or absence of the crowding effect in the Brazilian economy by leveraging an extensive historical database. Our central argument posits that the recent decline in private capital accumulation over the last few decades can be attributed to shifts in economic policies – moving from a developmentalist orientation to nondevelopmental guidance since the early 1990s, which is reflected in the diminished levels of public investment and infrastructure since the 1980s.
Design/methodology/approach
We conducted a series of econometric regressions utilizing the autoregressive distributed lag (ARDL) model as our chosen econometric methodology.
Findings
Employing two different variables to measure public investment and infrastructure, our results – robust across various specifications – have substantiated the existence of a crowding-in effect in Brazil over the examined period. Thus, we have empirical evidence indicating that the state has influenced private capital accumulation in the Brazilian economy over the past decades.
Originality/value
Our article contributes to the existing literature by offering a more comprehensive understanding of the crowding effect in the Brazilian economy, utilizing an extensive historical database.
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Armando Urdaneta Montiel, Emmanuel Vitorio Borgucci Garcia and Segundo Camino-Mogro
This paper aims to determine causal relationships between the level of productive credit, real deposits and money demand – all of them in real terms – and Gross National Product…
Abstract
Purpose
This paper aims to determine causal relationships between the level of productive credit, real deposits and money demand – all of them in real terms – and Gross National Product between 2006 and 2020.
Design/methodology/approach
The vector autoregressive technique (VAR) was used, where data from real macroeconomic aggregates published by the Central Bank of Ecuador (BCE) are correlated, such as productive credit, gross domestic product (GDP) per capita, deposits and money demand.
Findings
The results indicate that there is no causal relationship, in the Granger sense, between GDP and financial activity, but there is between the growth rate of real money demand per capita and the growth rate of total real deposits per capita.
Originality/value
The study shows that bank credit mainly finances the operations of current assets and/or liabilities. In addition, economic agents use the banking system mainly to carry out transactional and precautionary activities.
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This paper seeks to explore the sensitivity of these parameters and their impact on fiscal policy outcomes. We use the existing literature to establish possible ranges for each…
Abstract
Purpose
This paper seeks to explore the sensitivity of these parameters and their impact on fiscal policy outcomes. We use the existing literature to establish possible ranges for each parameter, and we examine how changes within these ranges can alter the outcomes of fiscal policy. In this way, we aim to highlight the importance of these parameters in the formulation and evaluation of fiscal policy.
Design/methodology/approach
The role of fiscal policy, its effects and multipliers continues to be a subject of intense debate in macroeconomics. Despite adopting a New Keynesian approach within a macroeconomic model, the reactions of macroeconomic variables to fiscal shocks can vary across different contexts and theoretical frameworks. This paper aims to investigate these diverse reactions by conducting a sensitivity analysis of parameters. Specifically, the study examines how key variables respond to fiscal shocks under different parameter settings. By analyzing the behavioral dynamics of these variables, this research contributes to the ongoing discussion on fiscal policy. The findings offer valuable insights to enrich the understanding of the complex relationship between fiscal shocks and macroeconomic outcomes, thus facilitating informed policy debates.
Findings
This paper aims to investigate key elements of New Keynesian Dynamic Stochastic General Equilibrium (DSGE) models. The focus is on the calibration of parameters and their impact on macroeconomic variables, such as output and inflation. The study also examines how different parameter settings affect the response of monetary policy to fiscal measures. In conclusion, this study has relied on theoretical exploration and a comprehensive review of existing literature. The parameters and their relationships have been analyzed within a robust theoretical framework, offering valuable insights for further research on how these factors influence model forecasts and inform policy recommendations derived from New Keynesian DSGE models. Moving forward, it is recommended that future work includes empirical analyses to test the reliability and effectiveness of parameter calibrations in real-world conditions. This will contribute to enhancing the accuracy and relevance of DSGE models for economic policy decision-making.
Originality/value
This study is motivated by the aim to provide a deeper understanding of the roles macroeconomic model parameters play concerning responses to expansionary fiscal policies and the subsequent reactions of monetary authorities. Comprehensive reviews that encompass this breadth of relationships within a single text are rare in the literature, making this work a valuable contribution to stimulating discussions on macroeconomic policies.
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Ambrose R. Aheisibwe, Razack B. Lokina and Aloyce S. Hepelwa
This paper aims to examine the level of economic efficiency and factors that influence economic efficiency among seed potato producers in South-western Uganda.
Abstract
Purpose
This paper aims to examine the level of economic efficiency and factors that influence economic efficiency among seed potato producers in South-western Uganda.
Design/methodology/approach
The paper analyses the economic efficiency of 499 informal and 137 formal seed producers using primary data collected through a structured questionnaire. A multi-stage sampling technique was used to select the study sites and specific farmers. A one-step estimation procedure of normalized translog cost frontier and inefficiency model was employed to determine the level of economic efficiency and the influencing factors.
Findings
The results showed that mean economic efficiencies were 91.7 and 95.2% for informal and formal seed potato producers, respectively. Furthermore, results show significant differences between formal and informal seed potato producers in economic efficiency at a one percent level. Market information access, credit access, producers' capacity and experience increase the efficiency of informal while number of potato varieties, market information access and producers' experience increase economic efficiency for formal counterparts.
Research limitations/implications
Most seed potato producers, especially the informal ones do not keep comprehensive records of their production and marketing activities. This required more probing as answers depended on memory recall.
Practical implications
Future research could explore panel data approach involving more cropping seasons with time variant economic efficiency and individual unobservable characteristics that may influence farmers' efficiency to validate the current findings.
Social implications
The paper shows that there is more potential for seed potato producers to increase their economic efficiency given the available technology. This has a direct implication on the economy through increased investment in the production and promotion of high yielding seed potato varieties to meet the growing national demand for potatoes.
Originality/value
The paper bridges the gap in literature on economic efficiency among seed potato producers, specifically in applying the normalized translog cost frontier approach in estimating economic efficiency in the context of potato sub-sector in Uganda.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-10-2021-0641
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Cyrus A. Ramezani and James J. Ahern
As digital technologies expand access to new forms of legalized gambling, including sports betting and online gaming, it is important to assess the impact of macroeconomic and…
Abstract
Purpose
As digital technologies expand access to new forms of legalized gambling, including sports betting and online gaming, it is important to assess the impact of macroeconomic and equity market outcomes on fund flows into gambling. The authors’ findings will be of interest to policymakers and the gambling industry, as various forms of gambling, including day trading, gain broad public acceptance.
Design/methodology/approach
The authors examine the impact of macroeconomic forces, business cycles, and financial market wealth on gambling. The authors propose a nonlinear model linking aggregate gambling expenditures to macroeconomic, stock market, and gambling industry variables. The authors estimate the proposed model using nonlinear estimation procedures.
Findings
The authors find that price of wagering, incomes, and supply of gambling opportunities are the primary determinants of wagering demand. Aggregate wagering is negatively impacted by realized stock returns and market volatility, but rises during recessions.
Originality/value
To the best of the authors’ knowledge, the questions posed and addressed in this manuscript have not been addressed in prior literature.
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Rahul Arora, Nitin Arora and Sidhartha Bhattacharjee
COVID-19 has affected the economies adversely from all sides. The sudden halt in production has impacted both the supply and demand sides. It calls for analysis to quantify the…
Abstract
Purpose
COVID-19 has affected the economies adversely from all sides. The sudden halt in production has impacted both the supply and demand sides. It calls for analysis to quantify the impact of the reduction in economic activity on the economy-wide variables so that appropriate steps can be taken. This study aims to evaluate the sensitivity of various sectors of the Indian economy to this dual shock.
Design/methodology/approach
The eight-sector open economy general equilibrium Global Trade Analysis Project (GTAP) model has been simulated to evaluate the sector-specific effects of a fall in economic activity due to COVID-19. This model uses an economy-wide accounting framework to quantify the impact of a shock on the given equilibrium economy and report the post-simulation new equilibrium values.
Findings
The empirical results state that welfare for the Indian economy falls to the tune of 7.70% due to output shock. Because of demand–supply linkages, it also impacts the inter- and intra-industry flows, demand for factors of production and imports. There is a momentous fall in the demand for factor endowments from all sectors. Among those, the trade-hotel-transport and manufacturing sectors are in the first two positions from the top. The study recommends an immediate revival of the manufacturing and trade-hotel-transport sectors to get the Indian economy back on track.
Originality/value
The present study has modified the existing GTAP model accounting framework through unemployment and output closures to account for the impact of change in sectoral output due to COVID-19 on the level of employment and other macroeconomic variables.
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This article examines if the national productions of West African Economic and Monetary Union (WAEMU) countries can be substituted for the imports by testing MLRC in these…
Abstract
Purpose
This article examines if the national productions of West African Economic and Monetary Union (WAEMU) countries can be substituted for the imports by testing MLRC in these countries.
Design/methodology/approach
The Mundell–Fleming model (MMF) is the analytical framework adopted in this paper with import demand and export supply functions estimation borrowed to Thirlwall (1979). This study covers four countries in West Africa from 1990 to 2021. The estimation procedure used is an Autoregressive Distributed Lag (ARDL) approach to cointegration.
Findings
The findings reveal that there is a strong marginal propensity to import in the WAEMU countries. The hypothesis of a non-significant price effect on imports in the short-term is confirmed for several countries while only Togo satisfies the MLRC in the short and long run.
Originality/value
This study presents several originalities: (1) it evaluates MLRC with a clear analytical framework; (2) unlike other studies, this article quantifies the MLRC from a theoretical, econometric and empirical point of view; (3) this article presents the results country by country in order to reveal heterogeneity between countries; (4) this study adds to the Marshall–Lerner condition for the derivation of Robinson by considering a situation where initially the trade balance is not in equilibrium.
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