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21 – 30 of 154J.E. Boscá, R. Doménech, J. Ferri, J.R. García and C. Ulloa
This paper aims to analyse the stabilizing macroeconomic effects of economic policies during the COVID-19 crisis in Spain.
Abstract
Purpose
This paper aims to analyse the stabilizing macroeconomic effects of economic policies during the COVID-19 crisis in Spain.
Design/methodology/approach
The contribution of the structural shocks that explain the behaviour of the main macroeconomic aggregates during 2020 are estimated, and the effects of economic policies are simulated using a dynamic stochastic general equilibrium (DSGE) model estimated for the Spanish economy.
Findings
The results highlight the importance of supply and demand shocks in explaining the COVID-19 crisis. The annual fall in gross domestic product (GDP) moderates at least by 7.6 points in the most intense period of the crisis, thanks to these stabilizing policies. Finally, the potential effects of Next Generation EU in the Spanish economy are estimated. Assuming that Spain may receive from the EU between 1.5 and 2.25 percentage points (pp) of GDP, activity could increase to between 2 and 3 pp in 2024.
Originality/value
To the best of the authors’ knowledge, the exercises and findings are original. All these results show the usefulness of a DSGE model, such as the estimated rational expectation model for Spain, as a practical tool for the applied economic analysis, the macroeconomic assessment of economic policies and the understanding of the Spanish economy.
The purpose of this paper is to show that states where corruption is greater also have higher levels of inflation.
Abstract
Purpose
The purpose of this paper is to show that states where corruption is greater also have higher levels of inflation.
Design/methodology/approach
Using a sample of all US states through the period 1992-2007 and various factors common across states that could impact the level of corruption or inflation, multiple regression techniques are used to determine corruption impact to inflation.
Findings
The study finds that corruption contributes, along with aid transfer, positively to inflation in the US states. The results are robust even after scaling the corruption variable to different determinants.
Originality/value
While there is some evidence on the relationship between corruption and inflation in cross-country dataset, there is no such evidence on it within country dataset. This paper, however, provides evidence on the relationship between corruption and inflation using state-level data of the US states.
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Opeoluwa Adeniyi Adeosun, Olumide Steven Ayodele and Olajide Clement Jongbo
This study examines and compares different specifications of the fiscal policy rule in the fiscal sustainability analysis of Nigeria.
Abstract
Purpose
This study examines and compares different specifications of the fiscal policy rule in the fiscal sustainability analysis of Nigeria.
Design/methodology/approach
This is methodologically achieved by estimating the baseline constant-parameter and Markov regime switching fiscal models. The asymmetric autoregressive distributed lag fiscal model is also employed to substantiate the differential responses of fiscal authorities to public debt.
Findings
The baseline constant-parameter fiscal model provides mixed results of sustainable and unsustainable fiscal policy. The inconclusiveness is adduced to instability in primary fiscal balance–public debt dynamics. This makes it necessary to capture regime switches in the fiscal policy rule. The Markov switching estimations show a protracted fiscal unsustainable regime that is inconsistent with the intertemporal budget constraint (IBC). The no-Ponzi game and debt stabilizing results of the Markov switching fiscal model further revealed that the transversality and debt stability conditions were not satisfied. Additional findings from the asymmetric autoregressive model estimation show that fiscal consolidation responses vary with contraction and expansion in output and spending, coupled with downturns and upturns in public debt dynamics in both the long and short run. These findings thus confirm the presence of asymmetries in the fiscal policy authorities' reactions to public debt. Further, additional evidences show the violation of the IBC which is exacerbated by the deleterious effect of the pro-cyclical fiscal policy response in boom on the improvement of the primary fiscal balance.
Originality/value
This study deviates from the extant literature by accommodating time variation, periodic switches and fiscal policy asymmetries in the fiscal sustainability analysis of Nigeria.
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Jose Perez-Montiel and Carles Manera
The authors estimate the multiplier effect of government public infrastructure investment in Spain. This paper aims to use annual data of the 17 Spanish autonomous communities for…
Abstract
Purpose
The authors estimate the multiplier effect of government public infrastructure investment in Spain. This paper aims to use annual data of the 17 Spanish autonomous communities for the 1980–2016 period.
Design/methodology/approach
The authors use dynamic acyclic graphs and the heterogeneous panel structural vector autoregressive (P-SVAR) method of Pedroni (2013). This method is robust to cross-sectional heterogeneity and dependence, which are present in the data.
Findings
The findings suggest that an increase in the level of government public infrastructure investment generates a positive and persistent effect on the level of output. Five years after the fiscal expansion, the multiplier effects of government public infrastructure investment reach values above one. This confirms that government public infrastructure investment expansions have Keynesian effects. The authors also find that the multiplier effects differ between autonomous communities with above-average and below-average GDP per capita.
Originality/value
To the best of the authors’ knowledge, no research uses dynamic acyclic graphs and heterogeneous P-SVAR techniques to estimate fiscal multipliers of government public investment in Spain by using subnational data.
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This study aims to explain the Indian taxpayers’ harassment saga in the name of revenue collections by the taxmen.
Abstract
Purpose
This study aims to explain the Indian taxpayers’ harassment saga in the name of revenue collections by the taxmen.
Design/methodology/approach
The study gas adopted descriptive viewpoints supported by empirical evidence.
Findings
Pursuant to the recent amendments in the Act, a good number of Sections such as 132(1), 132(1 A) and 153 A have empowered the tax officials to conduct raids without explaining the reasons, call for papers for reopening assessments of cases of a decade old and has increased the quantum of penalty for the default period substantially.
Originality/value
The paper is an original one and free from plagiarism.
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Nazneen Ahmad and Sandeep Kumar Rangaraju
The purpose of this paper is to investigate the impact of a consumer confidence shock on GDP and different types of consumer spending during a slack state as well as a non-slack…
Abstract
Purpose
The purpose of this paper is to investigate the impact of a consumer confidence shock on GDP and different types of consumer spending during a slack state as well as a non-slack state of an economy.
Design/methodology/approach
The authors use the US quarterly data from 1960Q1 to 2014Q4 and apply Jorda’s (2005) local projection method to compute the impulse responses of macroeconomic variables to a consumer confidence shock. The local projection method allows us to include non-linearities in the response function.
Findings
In general, the response of output, following a consumer confidence shock, is similar in slack and non-slack states and indicate that an unfavorable confidence shock is contractionary. However, the intensity and duration of impact of a confidence shock on different components of spending are state dependent. Overall, a negative confidence shock appears to have a stronger impact on non-slack time than on a slack time.
Practical implications
Policy makers should be careful about undertaking a policy action that may affect consumer confidence adversely, particularly during an economic good time. An adverse confidence shock can trigger a downfall in a well-functioning economy and the dampening effect may last for several quarters before the economy rebounds.
Originality/value
US economy is subject to fluctuations; however, the literature on the impact of confidence shock in different economic states is limited. The incremental contribution of this paper is that it investigates how the consumers respond to the confidence shock in a state-dependent model. Furthermore, the authors use a more robust and alternative estimation method that tackles any non-linear problems.
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Ijaz Hussain Shah and Kinza Aish
Many studies of corruption and money laundering (ML) have been conducted throughout the previous few decades. The impact of corruption and ML on economic growth, banking…
Abstract
Purpose
Many studies of corruption and money laundering (ML) have been conducted throughout the previous few decades. The impact of corruption and ML on economic growth, banking performance and corporate financial performance has been the focus of various research. The present study aims to investigate the relationship between ML, corruption and inflation.
Design/methodology/approach
This study used the panel data of five South Asian countries from 2013 to 2019 (Pakistan, India, Bangladesh, Sri Lanka and Nepal). Further, fixed effect (FE) and random effect (RE) econometric regression models are used to analyze the data. Additionally, generalized methods of moment (GMM) technique is used to check the results robustness.
Findings
This study discovered that corruption and ML have a significant and positive link with inflation in five South Asian nations using the corruption perception index and the anti-money laundering (AML) index.
Practical implications
This research advises that government authorities strengthen anti-corruption and AML laws enforcement.
Originality/value
To the best of the authors’ knowledge, this is the first paper that explains the linkage between corruption, ML and inflation in five south Asian nations.
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Keywords
– The purpose of the paper is to improve policy, and also to simplify theory and policy.
Abstract
Purpose
The purpose of the paper is to improve policy, and also to simplify theory and policy.
Design/methodology/approach
Theory is used in a simple and yet powerful way. Stylized facts are used. This paper reconsiders the prevailing macroeconomic policy regime, and proposes an alternative policy regime.
Findings
The low interest rate policy of the central bank in a recession is tantamount to imposition of tax on lenders’ interest income and a subsidy for borrowers implying an implicit tax-subsidy scheme. This scheme may be replaced by a different and explicit tax-subsidy scheme. This may also be supplemented by lower consumption taxes in a recession. From the viewpoint of stabilization of aggregate demand, the prevailing policy regime and the proposed policy regime can be equivalent. However, from the viewpoint of general macroeconomic and asset price stability, the proposed policy regime is superior, though it has (additional) cost of administration.
Social implications
Macroeconomic and financial instability has large social cost. This paper can be useful in this context, as it has suggestions for improved macroeconomic policy. It also has policy implications for developing countries and highly indebted countries.
Originality/value
This paper’s innovation goes well beyond refinements to prevailing theories and policies. Also, it paves the way for further research.
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The purpose of this paper is to examine the crowding-in or crowding-out relationship between public and private investment in India.
Abstract
Purpose
The purpose of this paper is to examine the crowding-in or crowding-out relationship between public and private investment in India.
Design/methodology/approach
The autoregressive distributed lag (ARDL) bounds testing approach is used to estimate the long run relationship between public and private investment using annual data from 1971-1972 to 2009-2010.
Findings
Based on the empirical findings, it is observed that aggregate public investment has a positive effect on private investment both in the long run and the short run. In contrast to the findings of previous studies, no significant impact of public infrastructure investment on private investments is found in the long run, while non-infrastructure investment has a positive impact on private investment in the short run. Among the various categories of infrastructure sector, a positive and significant impact in the case of electricity, gas and water supply is observed. Similarly, the result indicates that public investment in machinery and equipment and construction have substantially influenced the private sector machinery and equipment in the long run and the short run. In the case of the role of macroeconomic uncertainty, the results find a negative and significant impact on private investment and the impact is higher in the short run than in the long run.
Originality/value
The present study extends the literature in three important ways: First, the study attempts to capture heterogeneity of public investment as well as disaggregate effects of two different categories of public infrastructure on private investment. The extent to which two different types of public assets impact the private investment in machinery and equipment investment is also examined. Second, ARDL model is used to examine the long-run relationship between public and private investment. Third, the study incorporates macroeconomic uncertainty into the empirical analysis to examine the role of macroeconomic volatility in determining private investment decision.
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Rexford Abaidoo and Elvis Kwame Agyapong
This study examines how specific micro-level macroeconomic indicators influence corporate performance volatility among US corporate bodies in the short run.
Abstract
Purpose
This study examines how specific micro-level macroeconomic indicators influence corporate performance volatility among US corporate bodies in the short run.
Design/methodology/approach
The study employs error correction autoregressive distributed lagged (ARDL) model (ECM) to examine how micro-level variables influence volatility associated with corporate performance in the short run.
Findings
This paper finds that disaggregated or micro-level variables examined, tend to exhibit features that are not readily apparent from the aggregate variable from which such variables are derived. For instance, reported empirical estimate suggests that, growth in expenditures on services and nondurable goods tend to lower volatility associated with corporate performance, whereas government expenditures and expenditures on durable goods rather worsens volatility associated with corporate performance, all things being equal. Additionally, presented empirical estimates further provide evidence suggesting that macroeconomic uncertainty and inflation uncertainty significantly moderate or influence the extent to which disaggregated variables impact corporate performance volatility.
Originality/value
Compared to related studies in the reviewed literature, this study rather examines volatility associated with corporate performance instead of the corporate performance indicator itself. Additionally, this paper also examines how disaggregated variable instead of aggregate variables impact such volatility. Finally, the moderating role of key macroeconomic conditions in such a relationship is also examined.
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