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The purpose of this study is to analyze the predictability of firm level data for determining macroeconomic indicators such as unemployment.

This study uses quarterly GDP and unemployment data manually collected from the Statistical Center of Iran (SCI). Accounting numbers are also collected from the Tehran Stock Exchange library for the 2004-2015 period. Dispersion of earnings growth provides related data about labour reallocation, unemployment change and finally aggregate output. To summarize, this study attempts to examine the effect of these variables using classical and Bayesian approaches.

At a firm level, our results suggest that sectoral shift in previous years is likely to increase labour reallocation in subsequent years. At the macro level, the results reveal that dispersion of earnings growth and labour reallocation has a negative and positive impact on unemployment changes, respectively. However, the study suggests no significant relationship between stock return and unemployment changes. Consequently, we determine that the real estimates of macroeconomic indicators have predictive power because nominal estimates are not statistically associated with firm-level details. Finally, the results obtained from classical and Bayesian approaches suggest similar findings, thus confirming the robustness of our conclusions. Note that, based on Bayesian approach, the nominal reallocation has predictive power in unemployment rate.

The study is the first conducted in a developing country and the results provide important insight into current line of accounting literature.

The objective of this paper is threefold. First, it aims to empirically study whether firm-specific/idiosyncratic uncertainty, macroeconomic/aggregate uncertainty and political uncertainty have an adverse influence on firms' investment decisions in Pakistan. After establishing this, it scrutinizes whether the uncertainty effects on investment are different for firms of different sizes. Finally, it investigates whether any heterogeneity exists in the uncertainty impacts across different industries.

The empirical analysis is based on an unbalanced panel data of 468 nonfinancial firms listed at the Pakistan Stock Exchange (PSX) during the period 2000–2018. Departing from the literature, the paper builds a time-varying composite volatility/uncertainty index based on the principal component analysis (PCA) by utilizing the constructed volatility series for sales, cash flows and return on assets to gauge firm-specific uncertainty for each firm included in the analysis. Likewise, the paper develops a PCA-based composite index for macroeconomic uncertainty by using the conditional variance series of consumer price index (CPI), industrial production index (IPI), the interest rate and the exchange rate obtained by estimating the (generalized) autoregressive conditional heteroscedastic, (G)ARCH, models. Finally, political uncertainty is measured by political risk components maintained by the Political Risk Services Group. The empirical framework of the paper augments the standard investment equation by incorporating all three types of uncertainty. Firms are grouped into small, medium and large categories based on firms' total assets and the size indicators are generated. Next, the indicators are multiplied by each uncertainty measure to quantify the differential effects of uncertainty across firm size. Firms are also differentiated by sectors to explore the sector-based asymmetries in the uncertainty effects. The “robust two-step system generalized method of moments (2SYS GMM) (dynamic panel data) estimator” is applied to estimate the empirical models.

The results provide robust and strong evidence of the detrimental influence of all three types of uncertainty on investment. Yet, it is observed that the strength of the influence considerably varies across uncertainty types. In particular, compared to firm-specific uncertainty, both macroeconomic and political uncertainties have more unfavorable effects. The analysis also reveals that the effects of all three types of uncertainty are quite different at small, medium and large firms. Specifically, it is observed that although the investment of all firms is influenced adversely by magnified uncertainty, the adverse effects of all three kinds of uncertainty are quite stronger at small firms than medium and large firms. These findings support the phenomenon of size-based asymmetries in the effects of uncertainty on investment. The results also provide evidence that either type of uncertainty quite differently affects the investment policy of firms in different sectors.

The findings help different stakeholders to know how different types of uncertainty differently affect corporate firms' investments. Further, they suggest that firm size has a vital role in ascertaining the adverse effects of uncertainty on investment. The paper identifies to which type of uncertainty investors and policymakers should care more about and to which types of firms and industries they should concern more during volatile times. Firms should have more fixed assets and expand their size to mitigate the detrimental effects on investment of internal and external uncertainties. The government should enhance the political stability to induce firms for a higher level of investment, which, in turn, will result in higher growth of the economy.

The originality of the paper is credited to four aspects. First, unlike most previous studies that have utilized a single volatility measure, this paper constructs composite uncertainty indices based on the weights determined by the PCA. Second, it examines the effect of political uncertainty over and above the effects of idiosyncratic and aggregate (macroeconomic uncertainty) for an emerging economy. Third, and most important, it provides first-hand empirical evidence on the role of firm size in establishing the asymmetric effects of uncertainty on investment. Finally, it provides evidence on the industry-based heterogeneity in the uncertainty effects.

The purpose of this paper, on Portugal, is to determine the economic effects of public and private capital spending on health.

The authors use a vector autoregressive model to estimate the elasticities and marginal products of health care investments in Portugal on investment, employment and output.

Every €1m invested in health care yields significant positive spillover effects, boosting investment and GDP by €24.74 and €20.45m, respectively, creating 188 net jobs. Adversely, net exports deteriorate, as new capital goods are imported. While only 28.2 percent of the total accumulated increase in GDP occurs within a year, investment is front loaded with a corresponding 73.8 percent. Over this period, 68 workers are displaced for every €1m invested. At a disaggregated level, real estate, construction, and transportation and storage are industries where output shares increase the most. Employment shares increase the most in professional services, construction and basic metals.

This paper adds to the empirical literature, corroborating, for example, Rivera and Currais (1999a) and McDonald and Roberts (2002) in that health care spending can have a very significant effect on macroeconomic aggregates. In addition to the analysis of the tradable/non-tradable divide, it adds two further novelties by discussing industry-specific effects on economic performance and the distinction between effects on impact and those over the longer term.

As policy implications, health investments have very significant long-term economic performance effects, but are unhelpful counter cyclically. Also, they will change the industry mix: construction and professional services are the non-traded industries that will benefit the most, while the traded industries of non-metallic minerals, basic metals, and machinery and equipment benefit much less.

Given that capital spending on health boosts economic performance, especially in the long run, it ought to be a part of Portugal’s medium-to-long-term growth strategy. Also, if these projects depress economic activity in the short run, and are thus unhelpful counter cyclically, the timing of when they are launched matters. Furthermore, following a health investment, policies that boost net exports will be required to ensure trade balance.

The originality of this paper is to estimate, in a dynamic framework, the aggregate and industry-specific elasticities and marginal products on investment, employment and output, allowing the identification of effects both on impact and over the long term. Although health care investments are expected to have important macroeconomic effects, they need not be evenly distributed across industries.

The study examines how the liquid assets holdings among non-financial Indian firms vary due to tightening monetary policy and increasing macroeconomic uncertainty.

The authors analyze 5,640 firms for the period 2011–2021. The authors first estimate India’s monetary policy shocks by decomposing the exogenous shocks from the systematic component of monetary policy changes. The authors then examine the effects of the estimated monetary policy shocks and a range of macroeconomic and policy uncertainty indicators on companies’ cash and bank balances to asset ratios using two-step system generalized method of moments (GMM) estimators.

The authors find that monetary policy shocks cause the cross-sectional variances for the firms’ liquidity holdings to increase. In anticipation of macroeconomic volatility, companies respond to these shocks after taking into account all the firm-level information to minimize the opportunity costs of holding extra cash or too few cash balances that can hamper firms’ operations. Furthermore, compared to other shocks, the contribution of inflation-induced shocks is predicted to be the largest in the cross-sectional deviation of the firm’s cash holdings. The authors also find that low-growth, older and financially constrained firms observe lesser heterogeneity in their cash holdings as they tend to hold cash as a precautionary buffer.

The authors’ approach to the analysis is unique in many ways. To address potential transmission bias, the authors use nowcasts and forecasts of real gross domestic product (GDP) growth and inflation to generate a series of exogenous monetary policy shocks for identifying unanticipated changes in short-term interest rates. Subsequently, the authors estimate how these shocks affect the cross-sectional deviation of liquid assets. For estimating the effects of macroeconomic uncertainty on corporate cash demand, the authors utilize a range of proxies for uncertainty. Unlike previous attempts, the authors offer evidence for a developing and fast-emerging economy.

The research proposition of this paper is that multinational enterprises (MNEs) were important in the process of growth and divergence that took place in the world in the nineteenth and twentieth centuries. The rate of growth of GDP per capita was unprecedented, but it was coupled with an increasing gap between the developed and the developing countries. MNEs are even more important in the growth and convergence process that started at the beginning of the twenty-first century where the gap is closing. Global sourcing is the strategy that has led to closing the gap while high growth continues. The paper aims to discuss these issues.

The study is based on macroeconomics general equilibrium model in an imperfect market and on looking at the inventive process as the driving process of the development and the location of MNEs. Using a financial economics model of assets and liabilities, it is shown that MNEs affect the geopolitical distribution of income and wealth through expanding their liabilities. The methodology is a combination of applying economic model and using historical and current data to motivate the use of the model and to validate the models and the conclusions derived from them.

MNEs and major global companies before the name MNE was used were shaped by major macroeconomic processes like the inventive process and the same time they were the prime movers of the two major economic processes of the last 200 years: growth and divergence and growth and convergence. The ideas-led growth model shows why MNEs are becoming larger. As MNEs became bigger they start to import inputs through value maximizing strategy of global sourcing. This led to transfer of value to suppliers in emerging markets that grow over time and eventually it led to new MNEs from emerging markets large countries like China and from smaller countries in Asia and elsewhere. The growth convergence process and the resulting changes in the geopolitical distribution of MNEs is assisted by rapid changes in technology that reduces transactions cost. The continuation of rapid changes in transactions costs is likely to change the current structure, strategy and the location of MNEs and may reverse the growth convergence process once more.

The study begins with aggregate macroeconomic processes and relates them to the development of MNEs and in particular to the development of MNEs from emerging markets. It highlights the importance of global value chains and global sourcing in the process of growth and divergence and the turning of the “Wheel for Fortune” toward China and India as it has been prior to the sixteenth century.

The purpose of this paper is to explain the structure of Islamic monetary transformation into 100 percent reserve requirement monetary system in terms of the foundational epistemology of the unity of divine knowledge (tawhid). This approach is a scholarly originality in the field of epistemological formalism concerning Islamic theory and perspectives in economic reasoning in comparative perspectives.

The role of micro-money pursuing projects and real economic exchange relations is shown to arise by a natural causality in the ethical social economy (SE). This results in a microeconomic perspective of the quantity theory of money with ethical and social implications. A comparative study of endogenous money in the quantity theory of money points out significant differences between the theory of endogenous money in Islam and mainstream methodologies. A formal model of micro-money and its organismic endogenous relationship with the real economy is formulated with the goal of realizing social well-being, economic stabilization, and sustainability of development regimes.

This is a conceptual paper, though with the potential for continued work in applying the theory of micro-money in the Islamic methodological perspective of unity of knowledge. This is an original contribution of this paper. Islamic economists have not been able to produce a rigorous theory of micro-money. They have also not been able to situate the study of Islamic economics with its specific contribution to the field of the nature of money in project-specific financing of Islamic projects by the money-finance-real economy inter-causal relations. Thus, the findings of this paper, though of the conceptual nature, open doors to a vast field of methodological development and its application to the problem of micro-money modeling. Such a conceptual finding arising from the methodological theory of unity of knowledge and applied to the topic of micro-money along with some examples of potentiality of these approaches constitutes a vastly original field of findings as contribution. Thereby, an analytical model is established in the Islamic social economy (ISE) perspective. The model is used to explain monetary transmission and functioning of monetary policy with instruments that avoid interest rate and comply with Islamic financing requirements. The resulting model of money, finance, and real economy (MFE) systemic interrelationship in reference to the epistemology of unity of knowledge leads into the construction of a 100 percent reserve requirement monetary system with the gold-backed micro-money as currency complementing real economic transactions.

The present paper is of a conceptual type based on the essential ontological and epistemological foundation of Islamic social and economic thought and bearing a deeply scientific implication. The conceptual part of this paper becomes a study in the foundations. The second part follows into the study of application in the real world of micro-money in terms of financing projects. Micro-money pursues projects in the Islamic economy due to its very nature of ethical and social choices. The paper shows that such a micro-money transmission is realized by the money-finance-real economy integrated model. Thereby, some real-world examples of such transformations are given. All these together substantiate the conceptual-analytical-empirical nature of the study conducted.

The development of the micro-money transmission system of generalized circular causation interrelations between MFE activities as a return to 100 percent reserve requirement monetary system with the gold standard is the profound theory that has been propounded. Its applied perspectives are implied through the MFE-model wherein micro-money pursues social projects. Furthermore, the possibility and practicality of such a conceptual model of micro-money and its transmission mechanism in the real economy are established by real-world examples of kinds of micro-money that are found to circulate or are recommended by some studies in the literature.

The conceptual part of the paper presents a model of generalized epistemological model of unity of knowledge characterizing the MFE circular causal interrelations as the organismic meaning of social ethics and evolutionary learning. The social implications are the epistemic foundations of the derived model in the midst of choices of life-fulfillment projects that micro-money finances and the economy sustain.

This is an original paper premised on the general and the specific Islamic epistemological criterion of unity of knowledge as a generalized system theory. It is now particularized to the case of money and real economy by using the Islamic perspective of creating conditions to regenerate resources continuously in SE with ethical implications. The paper is equally informative to all who like to understand the social and ethical nature of endogenous relations between money and the real economy as two great institutions of the national economy. These together bestow well-being to the society at large in the construction of SE. Specific attention in this regard is given to ISE.

The purpose of this paper is to demonstrate empirically that corruption causes significant and sizeable macroeconomic costs to countries in terms of economic activity and economic growth. The authors modeled corruption building on the endogenous growth literature and finally estimated the baseline (bribes paid to public officials) macroeconomic cost of corruption using Argentina 2004-2015 as a case study.

The authors laid the foundations of a new methodology to account corruption losses using data from the national accounts and judiciary investigations within the framework of the Organisation for Economic Cooperation and Development (OECD) non-observed economy (NOE) instead of subjective indicators as in the earlier literature. They also suggested a new method to compute public expenditures overruns, including but not limited to public works.

The authors found the costs stand at a minimum accumulated rate of 8 per cent of gross domestic product (GDP) or 0.8 per cent yearly. These findings provided a corruption cost floor and were consistent with earlier research on world corruption losses estimated at 5 per cent by the World Economic Forum and with the losses estimated at between a yearly rate of 1.3 and 4 per cent and 2 per cent of GDP by Brazil and Peru’s corruption, respectively.

The authors would need to extend the application of their new suggested methodology to further countries. They are working on this. They would need to develop the methodology in full to compute the public works overruns input to future econometric work.

In this paper, the authors make a threefold contribution to the literature on corruption and growth: first, they laid the foundations toward a new methodology to make an accounting of the corruption costs in terms of GDP consistent with the national accounts and executed budgets; on the one hand, and the OECD NOE framework, on the other. The authors named those corruption costs as percentage of GDP the “corruption wedge.” Second, they developed an example taking corruption events and a component of their total costs, namely, the bribes paid to public officials, taking Argentina 2004-2015 as a case study. Finally, they plugged the estimated wedge back into an endogenous growth model and calibrated the growth–corruption path simulating two economies where the total factor productivity was different, at different levels of the corruption wedge.

With the global outbreak of COVID-19 that has made the economic activities standstill, countries have taken immediate measures to safeguard not only the human lives but also the economies. This study investigates empirically the lockdown impact of current pandemic on the Saudi economy.

The study employs inoperability input–output model (IIOM) on the input–output table (IOT) of Saudi Arabia for the analysis.

Findings show that with the closure of few sectors for the period of two months, the GDP declined to 6.49%. Findings also show a negative impact on consumption, investments and exports.

One limitation of current study is that it uses IOTs which lack primary and secondary income distribution that is vital for presenting complete interindustry connections in the analysis. The interindustry structures relate to the consumption structures which ultimately lead to the income distribution and affect the consumption behaviors of economic agents. Hence, the complete income circular flow is not incorporated in IIOM using IOT. The findings of current study would be well grounded if it endogenized the primary and secondary income distribution.

The practical implication of this study is the use of IIOM for anticipating the potential loss against the backdrop of catastrophes and pandemics. The IIOM has the capability to predict the economic effects of disruptive events and hence the policy-makers can better predict and devise prudent policies to avoid the likely threats to the economy.

The current situation is unprecedented, and it is challenging for governments to forecast the economic repercussions. Several economic sectors have been inoperative due to lockdown implemented by the governments. This study empirically estimated the inoperability produced by the current pandemic. The findings are consistent with other estimated statistics, thereby proving the efficacy of IIOM to anticipate the economic repercussions of natural hazards.

This paper aims to examine if the market risk premiums of the Gulf Cooperation Council (GCC) countries are particularly higher on prescheduled US monetary policy announcement days. The findings shed light on the causality relationship from the state of the global economy to the GCC equity markets as well as their integration with the rest of the world.

The author takes the standard event-study approach, following Fama et al. (1969). As the announcement days are prescheduled, the impact of the announcements on the GCC markets' risk premia allows for test of causality, while other studies address predictability and association.

The author finds that excess returns are higher, both economically and statistically, on announcement days in most individual GCC countries and the region overall. Moreover, additional compensations may not appear on the exact days of announcement in a few countries; rather, on the days right before or after announcements, possibly due to information leakage or gradual diffusion. My results show that there is a causal relationship from the state of the global economy to the GCC equity markets' risk premia. This new evidence supports integration between the Gulf region's and the world's financial markets.

The evidence of risk–return transmission from US monetary policy announcements to GCC countries' equity indices supports integration between the region's and the world's financial markets. The study results will help guide investors' and corporations' investing, capital budgeting and portfolio evaluation decisions.

This paper extends the announcement literature (Savor and Wilson 2013, 2014) by examining the responses of the GCC countries, the major players of the global oil markets. The empirical analysis documents a causal relationship from the state of the global economy, as revealed by US monetary policy announcements, to the GCC equity indices. This new evidence supports increased integration between the Gulf region and the world, a finding that investors and corporations should consider when making investing, capital budgeting and portfolio evaluation decisions.