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1 – 10 of 619
Article
Publication date: 8 November 2011

Richard C.K. Burdekin, King Banaian, Mark Hallerberg and Pierre L. Siklos

The latest generation of research into macroeconomic policy has turned from more technical aspects of optimal control and expectations formation to consideration of the

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Abstract

Purpose

The latest generation of research into macroeconomic policy has turned from more technical aspects of optimal control and expectations formation to consideration of the policymaking institutions themselves. More and more countries have moved towards greater degrees of central bank independence, including many developing economies as well the member countries of the European Central Bank. What still is not generally settled among economists is how to measure the stance of policy and the institutional features of the policymaking process. The purpose of this paper is to assess prevailing monetary and fiscal policies.

Design/methodology/approach

The paper takes the form of a review encompassing many different measurements of policy stance and policymaking processes. The authors begin with monetary policy followed by an analysis of central bank institutions. The next sections turn to fiscal policy and the need to adjust budget balance for the state of the business cycle. There is then a brief concluding section.

Findings

The authors show in this review that fiscal and monetary rules, and economists' understanding of them, have changed substantially over the years. While on one level there is greater consensus, there have been new questions raised in the process that leave plenty of room for further ongoing research in these key policy areas as well as the optimal design of the design of the monetary and fiscal institutions concerned.

Originality/value

The paper provides a review of the existing literature updated and applied with reference to recent events, including the global financial crisis.

Details

Journal of Financial Economic Policy, vol. 3 no. 4
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 24 October 2021

John Kwaku Mensah Mawutor, Freeman Christian Gborse, Ernest Sogah and Barbara Deladem Mensah

The purpose of this paper is to investigate the effect of financial development on the Doing Business and capital flight contagion. And further, this study determines the

Abstract

Purpose

The purpose of this paper is to investigate the effect of financial development on the Doing Business and capital flight contagion. And further, this study determines the threshold beyond which financial development reduces capital flight.

Design/methodology/approach

A two-step system generalized methods of moment empirical model with linear interaction between Doing Business and financial development was estimated. This study used data on 26 countries over 12 years (2004–2015).

Findings

The main results indicated that, although Doing Business had a significant positive effect on capital flight, the interactive term had a significant adverse effect on capital flight. This outcome suggests that to reduce capital flight, a well-reformed and efficient business environment should be embedded with an efficient, stable and well-developed financial sector. In addition, the authors found only South Africa has a robust financial framework beyond the threshold of 0.383, whereas Congo, Rep., Rwanda, Malawi, Sierra Leone and Congo, Dem. Rep. had the weakest financial system and sector in Sub-Saharan Africa.

Research limitations/implications

This study recommends that policymakers should initiate policies that would enhance financial development.

Originality/value

This study’s main contributions are that the authors estimated the threshold beyond which financial development helps the business environment reduce the rate of capital flight. Further, the authors have shown that financial development is a catalyst to propel the deterioration powers of the business environment against capital flight. Also, the authors have estimated the long-run effect of the variables of interest on capital flight.

Article
Publication date: 3 May 2016

Marshall L. Stocker

Crisis events are windows of opportunity during which a country’s leaders may implement economic policy adjustments which change that country’s level of economic freedom…

Abstract

Purpose

Crisis events are windows of opportunity during which a country’s leaders may implement economic policy adjustments which change that country’s level of economic freedom and affect the local capital market. This paper aims to investigate the relationship between annual changes in an economic freedom index, six types of crises and equity market returns.

Design/methodology/approach

The author uses fixed-effects regressions on annual panel data for 69 countries during the period 2000-2010.

Findings

Banking, domestic debt and inflation crises decrease economic freedom, and an external debt crisis weakly relates to increases in economic freedom. Only banking crises relate to a change in economic freedom in the following year, suggesting that crisis-driven changes in economic freedom happen quickly. Gains in economic freedom are more likely to occur during periods of positive local and global equity returns. Preceding and contemporaneous to increases in economic freedom, a country’s equity market outperforms a global equity index, offering observers a leading indicator for economic policy change.

Originality/value

The author finds that crises coincide with decreases in economic freedom, while gains in economic freedom happen during periods of positive capital market sentiment. The absence of a relationship between one-year lagged crisis events and changes in economic freedom suggests prior research relating gains in economic freedom to a crisis occurring 5 or 10 years earlier is a relationship which is more complex, non-linear and specific to the selected data period or spurious. Furthermore, relative equity market returns are related to changes in economic freedom, suggesting that equity markets identify which countries have increased economic freedom, long before popular economic freedom indexes are published.

Article
Publication date: 21 June 2019

Ryan H. Murphy

A large empirical literature has found positive effects of economic freedom on economic outcomes, such as output and per capita growth. However, several variables in the

Abstract

Purpose

A large empirical literature has found positive effects of economic freedom on economic outcomes, such as output and per capita growth. However, several variables in the index are very likely to decline in conjunction with recessions. The purpose of this paper is to determine whether, in the absence of these variable, whether the positive relationship between economic freedom and economic output remains.

Design/methodology/approach

This paper makes use of a dynamic panel to compare the performance of economic freedom with and without variables endogenous to business cycles, which pertain to levels of government spending, rates of inflation, government borrowing and interest rates.

Findings

Two specifications fall in their statistical significance from the 1 to the 10 per cent level when variables relating to inflation are omitted. The worst case considered finds one specification size of the effect is still 66.3 per cent of the effect size of the standard measure of economic freedom.

Practical implications

These findings are consistent with this kind of endogeneity being a minor problem with the data set when imperfect identification strategies are used, but the issue should be strongly considered when business cycles are pertinent to a research question that makes use of economic freedom data.

Originality/value

This paper contributes to the small literature focused on the robustness of the effect of economic freedom on output, while raising a specific concern that has not yet been explicitly addressed.

Details

Journal of Financial Economic Policy, vol. 12 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

Book part
Publication date: 25 July 2017

Alexander J. Field

At the time they occurred, the savings and loan insolvencies were considered the worst financial crisis since the Great Depression. Contrary to what was then believed, and

Abstract

At the time they occurred, the savings and loan insolvencies were considered the worst financial crisis since the Great Depression. Contrary to what was then believed, and in sharp contrast with 2007–2009, they in fact had little macroeconomic significance. Savings and Loan (S&L) remediation cost between 2 percent and 3 percent of Gross Domestic Product (GDP), whereas the Troubled Asset Relief Program (TARP) and the conservatorships of Fannie and Freddie actually made money for the US Treasury. But the direct cost of government remediation is largely irrelevant in judging macro significance. What matters is the cumulative output loss associated with and plausibly caused by failing financial institutions. I estimate output losses for 1981–1984, 1991–1998, and 2007–2026 (the latter utilizing forecasts and projections along with actual data through 2015) and, for a final comparison, 1929–1941. The losses associated with 2007–2009 have been truly disastrous – in the same order of magnitude as the Great Depression. The S&L failures were, in contrast, inconsequential. Macroeconomists and policy makers should reserve the word crisis for financial disturbances that threaten substantial damage to the real economy, and continue efforts to identify in advance financial institutions which are systemically important (SIFI), and those which are not.

Details

Research in Economic History
Type: Book
ISBN: 978-1-78743-120-1

Keywords

Article
Publication date: 25 July 2022

Imron Mawardi, Tika Widiastuti, Muhammad Ubaidillah Al Mustofa and Fifi Hakimi

This study aims to investigate the effects of zakat and business assistance on the growth and well-being of mustahiqs (zakat recipients). This study also investigates the

Abstract

Purpose

This study aims to investigate the effects of zakat and business assistance on the growth and well-being of mustahiqs (zakat recipients). This study also investigates the impact of macroeconomic variables on the welfare of mutahiqs.

Design/methodology/approach

The partial least squares-structural equation modelling method is used in this quantitative study, examining data from 137 mustahiqs. The data was collected from seven zakat institutions, which run effective zakat programmes to empower mustahiqs.

Findings

Zakat empowerment programmes and business assistantships positively impact the growth of mustahiqs’ businesses, beneficial to their well-being. Nevertheless, their well-being is unaffected by the proxy of the macroeconomy.

Originality/value

This study adds to the zakat literature by identifying the relationship between zakat, business growth, macroeconomic conditions and mustahiq welfare. Accordingly, this approach was made by combining primary and secondary data. This research offers a unique measure of welfare based on the concept of the Islamic objectives (Maqasid al-Shariah).

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 4 July 2016

D. Owusu-Manu, E.A. Pärn, K. Donkor-Hyiaman, D.J. Edwards and K. Blackhurst

The purpose of this study is to explore the mortgage affordability problem in Ghana, an issue that has been associated inter alia with high mortgage rates, which results…

Abstract

Purpose

The purpose of this study is to explore the mortgage affordability problem in Ghana, an issue that has been associated inter alia with high mortgage rates, which results from the high cost of capital, an unstable macroeconomy and unfavourable borrowers’ characteristics. Concurrent improvements in both the macroeconomy and borrowers’ characteristics have rendered the identification of the most problematic mortgage pricing determinant difficult, consequently making the targeting of policy interventions problematic.

Design/methodology/approach

This research sought to resolve this aforementioned difficulty by providing empirical evidence on the relative importance of mortgage pricing determinants. A data set of mortgage rates of selected Ghanaian banking financial institutions from 2003 to 2013 was examined and analysed by applying Fisher’s model of interest rates and an ex post analysis of the standard regression coefficients.

Findings

The risk premium factor emerged as the most important determinant in Ghana compared with the inflation premium and the real risk-free rate, although all are statistically significant and strongly correlated with mortgage rates.

Originality/value

This study provides an insight on the relative importance of mortgage pricing determinates and subsequent macro-economic guidance to support policy interventions which could reduce mortgage rates/enhance mortgage affordability. The paper specifically aims to engender wider debate and provide guidance to the Ghanaian Government and/or private enterprises that seek to provide affordable mortgages. Further research is proposed which could explore ways of reducing mortgage rates as a means of engendering social equality and adopt innovative international best practice that has already been tried and tested in countries such as South Africa and the USA.

Details

Journal of Engineering, Design and Technology, vol. 14 no. 3
Type: Research Article
ISSN: 1726-0531

Keywords

Article
Publication date: 15 January 2018

Peterson K. Ozili

The purpose of this paper is to investigate the non-discretionary determinants of bank loan loss provisions in Africa after controlling for macroeconomic fluctuation…

Abstract

Purpose

The purpose of this paper is to investigate the non-discretionary determinants of bank loan loss provisions in Africa after controlling for macroeconomic fluctuation, financial development and investor protection.

Design/methodology/approach

The author uses static and dynamic regression estimation to test for the determinants of bank loan loss provisions.

Findings

The author finds that non-performing loans (NPL), loan-to-asset ratio and loan growth are significant non-discretionary drivers of bank provisions in the African region. The author observes that bank provision is a positive function of NPL up to a threshold beyond which bank provisions will no longer increase as NPL increases. Also, bank loan-to-asset ratio is a significant driver of bank provisions when African banks have higher loan-to-asset ratios. The author finds that larger banks in financially developed African countries have fewer loan loss provisions while increase in bank lending leads to fewer bank provisions in countries with strong investor protection. Finally, higher bank lending is associated with higher bank provisions during economic boom.

Originality/value

This study is the first to assess the determinants of non-discretionary bank provisions in Africa as part of micro-prudential surveillance of banks in the African region.

Details

International Journal of Emerging Markets, vol. 13 no. 1
Type: Research Article
ISSN: 1746-8809

Keywords

Abstract

Details

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

Article
Publication date: 26 March 2021

Nikolaos Grigorakis, Georgios Galyfianakis and Evangelos Tsoukatos

In this paper, the authors assess the responsiveness of OOP healthcare expenditure to macro-fiscal factors, as well as to tax-based, SHI, mixed systems and voluntary PHI…

Abstract

Purpose

In this paper, the authors assess the responsiveness of OOP healthcare expenditure to macro-fiscal factors, as well as to tax-based, SHI, mixed systems and voluntary PHI financing. Although the relationship between OOP expenditure, macroeconomy, aggregate public and PHI financing is well documented in the existing empirical literature, little is known for the impact of several macro-fiscal drivers and the existing health financing arrangements associated with voluntary PHI on OOP expenditure.

Design/methodology/approach

The authors gather panel data by applying three official organizations’ databases. They elaborate static and dynamic panel data methodology to a dataset of 49 European and OECD countries from 2000 to 2015.

Findings

The authors’ findings do not indicate a considerable impact of GDP growth and general government debt as a share of GDP on OOP payments. Unemployment rate presents as a positive driver of OOP payments in all three compulsory national health systems post to the 2008 economic crisis. OOP payments are significantly influenced by countries’ fiscal capacity to increase general government expenditure to GDP in SHI and mixed health systems. Additionally, study findings present that government health financing, irrespective of the different health systems structure characteristics, and OOP healthcare payments follow different directions. Voluntary PHI financing considerably counteracts OOP payments only in tax-based health systems.

Practical implications

In the backdrop of a new economic crisis associated to the COVID-19 epidemic, health policy planners have to deal with the emerging unprecedented challenges in financing of health systems, especially for these economies that have to face the fiscal capacity constraints owing to the 2008 financial crisis and its severe recession.

Originality/value

To the best of authors’ knowledge, there is no empirical consensus on the effects of macro-fiscal parameters, different compulsory health systems financing associated with the parallel voluntary PHI institution funding on OOP expenditure, for the majority of European and OECD settings.

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