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Open Access
Article
Publication date: 2 December 2019

Conglai Fan and Gao Jiechao

In recent years, with the gradual differentiation of economic and financial cycles, it has been increasingly difficult for monetary policies to remain balanced in stabilizing both…

1094

Abstract

Purpose

In recent years, with the gradual differentiation of economic and financial cycles, it has been increasingly difficult for monetary policies to remain balanced in stabilizing both economy and finance. Taking the period of 1999–2017 as a sample, the purpose of this paper is to find whether the synergy between the growth cycle and the price cycle is constantly improving in the economic cycle is more appropriate.

Design/methodology/approach

The key to stabilizing the economic cycle lies in the monetary policy and it should abandon the goal of boosting growth in a timely manner and turn into the goal of maintaining steady growth. At present, quantitative monetary policy is still more effective than price-oriented monetary policy in smoothing the economic cycle.

Findings

The impact of quantitative regulation on the financial cycle is more neutral, whereas price regulation will increase the volatility of price and financial cycles in the course of smoothing the growth cycle. In view of the continuous differentiation between the economic and financial cycles, it is realistic and reasonable to accelerate the establishment of a sound dual-pillar regulatory framework of “monetary policy and macro-prudential policy.”

Originality/value

The macro-prudential policy is specially used to smooth the financial cycle, so as to reduce the burden and increase the efficiency of the monetary policy on regulating economic cycle. Moreover, the transformation of monetary policy to price-oriented regulation must keep pace with the construction of the dual-pillar regulation framework and complement each other to prevent undesirable consequences in the financial sector. On the other hand, monetary policy still needs to rely on quantitative regulation in the future. The research in this paper also provides a new perspective for understanding the internal and external reform of China’s monetary policy in recent years.

Details

China Political Economy, vol. 2 no. 2
Type: Research Article
ISSN: 2516-1652

Keywords

Content available
Article
Publication date: 28 March 2018

Claudio Ferrari, Malvina Marchese and Alessio Tei

Economic studies have always underlined the cyclical trends of many industries and their different relations to the macro-economic cycles. Shipping is one of those industries and…

3052

Abstract

Purpose

Economic studies have always underlined the cyclical trends of many industries and their different relations to the macro-economic cycles. Shipping is one of those industries and it has been often characterised by peaks that have influenced both the trade patterns and industry investment structure (e.g. fleet, shipyard activity, freight rates). One of the main issues related with the cycles is the effect on overcapacity and prices for newbuilding and how the understanding of these patterns can help in preventing short-hand strategies. The purpose of this paper is to evaluate different effects of business elements on shipbuilding activity, in relation to different economic-cycle phases.

Design/methodology/approach

This paper proposes a non-linear econometric model to identify the relations between shipbuilding and economic cycles over the past 30 years. The research focuses on identifying the cycle characteristics and understanding the asymmetrical effect of economic- and business-related variables on its development.

Findings

The study underlines the presence of an asymmetric effect of several business variables on the shipbuilding productions, depending on the cyclical phases (i.e. market expansion or economic slowdown). Moreover, lagged effects seem to be stronger than contemporaneous variables.

Originality/value

The paper is a first attempt of using non-linear modelling to shipbuilding cycles, giving indications that could be included in relevant investment policies.

Details

Maritime Business Review, vol. 3 no. 2
Type: Research Article
ISSN: 2397-3757

Keywords

Open Access
Article
Publication date: 8 December 2022

Germana Giombini, Francesca Grassetti and Edgar Sanchez Carrera

The authors analyse a growth model to explain how economic fluctuations are primarily driven by productive capacities (i.e. capacity utilization driven by innovations and…

1375

Abstract

Purpose

The authors analyse a growth model to explain how economic fluctuations are primarily driven by productive capacities (i.e. capacity utilization driven by innovations and know-how) and productive inefficiencies.

Design/methodology/approach

This study’s methodology consists of the combination of the economic growth model, à la Solow–Swan, with a sigmoidal production function (in capital), which may explain growth, poverty traps or fluctuations depending on the relative levels of inefficiencies, productive capacities or lack of know-how.

Findings

The authors show that economies may experience economic growth, poverty traps and/or fluctuations (i.e. cycles). Economic growth is reached when an economy experiences both a low level of inefficiencies and a high level of productive capacities while an economy falls into a poverty trap when there is a high level of inefficiencies in production. Instead, the economy gets in cycles when there is a large level of the lack of know-how and low levels of productive capacity.

Originality/value

The authors conclude that more capital per capita (greater savings and investment) and greater productive capacity (with less lack of know-how) are the economic policy keys for an economy being on the path of sustained economic growth.

Details

Journal of Economic Studies, vol. 50 no. 7
Type: Research Article
ISSN: 0144-3585

Keywords

Open Access
Article
Publication date: 31 December 2004

Shucheng Liu

In the second half of 2003 and the first half of 2004, the Chinese Government adopted a moderately tight macroeconomic policy, which aroused widespread attention from home and…

Abstract

In the second half of 2003 and the first half of 2004, the Chinese Government adopted a moderately tight macroeconomic policy, which aroused widespread attention from home and abroad. This is because China's deepening of reform and openness has led to its increasing economic links with the outside world. Starting from analysing the characteristics of the Chinese economy in 2003, this article discusses the issue of contractive macroeconomic regulation. The article highlights that the growth of the Chinese economy in 2003 has two features. One is that China 's per capita gross domestic product (GDP) exceeded US$1 ,000, which indicates the Chinese economy may possibly maintain the momentum for rapid growth for a fairly long period. The second is that its year-to-year GDP growth reached 9.3 per cent, putting an end to the continual sliding trend of the economy between 1993 and 1999. It also put a stop to the Chinese economy's continual sluggish growth of between 7 and 8 per cent between 1998 and 2002, in the wake of the Asian financial crisis. The Chinese economy has embarked on a fast track in the new round of the economic cycle. However, in the third and fourth quarter of 2003 and the first quarter of 2004, China's GDP growth was as high as 9.6, 9.9 and 9.8 per cent, respectively, sparking a supply crisis in the coal, power, fuel and transportation sectors. As a result, important raw materials, such as steel and cement, faced a supply bottleneck and price inflation pressures intensified, Consequently, the Chinese Government, in a timely move, has adopted a moderately contractive macroeconomic policy to prevent the economy from fluctuating drastically and to avoid serious inflation to ensure a rapid, stable and sustainable economic growth. This is not only conducive to the growth of the country's economy itself, but also favorable for the development of the international trade and foreign investment in China.

Details

Journal of International Logistics and Trade, vol. 2 no. 2
Type: Research Article
ISSN: 1738-2122

Keywords

Open Access
Article
Publication date: 11 April 2023

Keanu Telles

In the early 1930s, Nicholas Kaldor could be classified as an Austrian economist. The author reconstructs the intertwined paths of Kaldor and Friedrich A. Hayek to disequilibrium…

2014

Abstract

Purpose

In the early 1930s, Nicholas Kaldor could be classified as an Austrian economist. The author reconstructs the intertwined paths of Kaldor and Friedrich A. Hayek to disequilibrium economics through the theoretical deficiencies exposed by the Austrian theory of capital and its consequences on equilibrium analysis.

Design/methodology/approach

The author approaches the discussion using a theoretical and historical reconstruction based on published and unpublished materials.

Findings

The integration of capital theory into a business cycle theory by the Austrians and its shortcomings – e.g. criticized by Piero Sraffa and Gunnar Myrdal – called attention to the limitation of the theoretical apparatus of equilibrium analysis in dynamic contexts. This was a central element to Kaldor’s emancipation in 1934 and his subsequent conversion to John Maynard Keynes’ The General Theory of Employment, Interest, and Money (1936). In addition, it was pivotal to Hayek’s reformulation of equilibrium as a social coordination problem in “Economics and Knowledge” (1937). It also had implications for Kaldor’s mature developments, such as the construction of the post-Keynesian models of growth and distribution, the Cambridge capital controversy, and his critique of neoclassical equilibrium economics.

Originality/value

The close encounter between Kaldor and Hayek in the early 1930s, the developments during that decade and its mature consequences are unexplored in the secondary literature. The author attempts to construct a coherent historical narrative that integrates many intertwined elements and personas (e.g. the reception of Knut Wicksell in the English-speaking world; Piero Sraffa’s critique of Hayek; Gunnar Myrdal’s critique of Wicksell, Hayek, and Keynes; the Hayek-Knight-Kaldor debate; the Kaldor-Hayek debate, etc.) that were not connected until now by previous commentators.

Open Access
Article
Publication date: 11 November 2019

Laxmi Koju, Ram Koju and Shouyang Wang

The purpose of this paper is to empirically assess the significant indicators of macroeconomic environment that influence credit risk in high-income countries.

8452

Abstract

Purpose

The purpose of this paper is to empirically assess the significant indicators of macroeconomic environment that influence credit risk in high-income countries.

Design/methodology/approach

The study employs the system generalized method of moments estimator to avoid the dynamic panel bias and endogeneity issues. Different indices of economic growth are used in each model in order to find the most significant proxy of the economic cycle that influences problem loans. The analysis is carried out using a sample of 49 developed countries covering a 16-year period (2000–2015).

Findings

The overall empirical results highlight that the development of industrial sectors and exports are the main drivers of loan performance in high-income countries. The findings specifically recommend adopting an expansionary fiscal policy to boost per capita income and potential productivity for the safety of the banking system.

Practical implications

The findings have direct practical applicability for stabilizing the financial system. The study recommends the government to increase the productivity of export-oriented industries in order to boost employment and increase the payment obligations of individuals and business firms. More importantly, it highlights the essentiality of perfect economic policy to control default risks.

Originality/value

To the best of the authors’ knowledge, this is the first empirical study that compares the relative effect of three alternative proxies of the economic cycle on credit risk and identifies the most significant proxy. The current study also empirically shows that industrial development could be one of the crucial factors to improve financial health in developed countries.

Details

European Journal of Management and Business Economics, vol. 29 no. 1
Type: Research Article
ISSN: 2444-8494

Keywords

Open Access
Article
Publication date: 23 December 2022

Ema Kelin, Tanja Istenič and Jože Sambt

Population ageing will bring economic challenges in the future. The purpose of this paper is to examine whether increased educational level could mitigate the consequences of…

1173

Abstract

Purpose

Population ageing will bring economic challenges in the future. The purpose of this paper is to examine whether increased educational level could mitigate the consequences of population ageing on economic sustainability, measured as the gap between labour income and consumption.

Design/methodology/approach

Using the National Transfer Accounts (NTA) methodology, the authors decompose labour income and consumption by age and educational level (low, medium and high) and compare obtained age profiles with those calculated conventionally. In addition, using the population projections by age and educational level, the authors project both profiles to 2060 for selected EU countries and assess future economic sustainability.

Findings

The results show that the highly educated have a significantly higher surplus for a longer period then those with lower and medium education. Therefore, the improved educational level of individuals will have a substantially positive impact on labour income in the future—on average by about 32% by 2060 for all EU countries included. However, as the better educated also consume more, higher production does not fully translate into improved economic sustainability, but the resulting net effect is still positive at about 19%.

Originality/value

The authors present for the first time an NTA by education for 15 EU countries and show the importance of including education in the analysis of the economic life cycle. The authors also show that increased educational level will mitigate the consequences of population ageing on economic sustainability in the future.

Details

International Journal of Manpower, vol. 44 no. 9
Type: Research Article
ISSN: 0143-7720

Keywords

Open Access
Article
Publication date: 4 June 2018

Duy-Tung Bui

The purpose of this paper is to examine the impacts of fiscal policy, namely, net tax and government expenditure on national saving and its nonlinearity. The author first…

3775

Abstract

Purpose

The purpose of this paper is to examine the impacts of fiscal policy, namely, net tax and government expenditure on national saving and its nonlinearity. The author first investigates whether the impacts of fiscal policy on national saving have changed after the global financial crisis of 2008. Then, the author tests the nonlinearity of the relationship by taking account of the economic cycle, namely, economic expansion (boom) and economic recession (bust).

Design/methodology/approach

The empirical model bases on a reduced-form equation with national saving as a dependent variable, lagged value of national saving, output gap and fiscal policy as independent variables. The two-step system GMM approach was employed to estimate the empirical model, using a panel of 23 emerging Asian economies in the period of 1990-2015.

Findings

The empirical results show that tax policy and expenditure policy follow the predictions of the overlapping generation model with finite horizon and the Keynesian view. The nonlinearity of fiscal policy is twofold. The conduct of fiscal policy in the period after 2008 seems effective, while the effect is insignificant in the period before 2008. Likewise, fiscal policy tends to have more significant effects in bust cycle. The effect of tax policy is increased during recession, while the effect of government spending is more pronounced during economic downturn.

Originality/value

The contributions of this paper are twofold. First, it is shown that fiscal policies in the region had more impacts on national saving after the global financial crisis of 2008. Second, the research confirms nonlinear impact of fiscal policy on saving behavior during economic recession and economic boom.

Details

Journal of Asian Business and Economic Studies, vol. 25 no. 1
Type: Research Article
ISSN: 2515-964X

Keywords

Open Access
Article
Publication date: 16 June 2021

Amira Mohamed Emara and Nashwa Mostafa Ali Mohamed

This paper aims to investigate the relationship between global economic fluctuations and human development through four transmission channels (foreign direct investment (FDI)…

1896

Abstract

Purpose

This paper aims to investigate the relationship between global economic fluctuations and human development through four transmission channels (foreign direct investment (FDI), official development aid (ODA), remittances and export earnings) in Egypt as an open developing economy, in the period 1990–2015.

Design/methodology/approach

The paper uses a vector autoregressive model, which implies examining the impulse response functions and variance decompositions.

Findings

The results indicate that human development is negatively affected by global economic fluctuations through the four channels, namely, ODA, FDI, export earnings and remittances. In addition, the most effective transmission channels are FDI in the short run and export earnings in the long run.

Originality/value

While a large body of literature addresses the direct impact of business cycles and economic shocks on human development, only some studies focus on the indirect impact. The contribution is to identify the indirect impact of global economic fluctuations on human development in a developing economy, considering four transmission channels and to determine the most important of these channels. Moreover, using the human development index is an addition in this paper as most previous literature depends on other human development indicators such as children’s health, employment and schooling.

Details

Review of Economics and Political Science, vol. 8 no. 4
Type: Research Article
ISSN: 2356-9980

Keywords

Content available
Book part
Publication date: 25 July 2019

Perry Warjiyo and Solikin M. Juhro

Abstract

Details

Central Bank Policy: Theory and Practice
Type: Book
ISBN: 978-1-78973-751-6

1 – 10 of over 5000