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Article
Publication date: 4 December 2019

Saji Thazhugal Govindan Nair

This paper, using the model suggested by Cantor and Pecker (1996), aims to explore the relations between sovereign ratings and bond yield spreads in emerging markets.

Abstract

Purpose

This paper, using the model suggested by Cantor and Pecker (1996), aims to explore the relations between sovereign ratings and bond yield spreads in emerging markets.

Design/methodology/approach

The ordinary least square regression procedure administered on the most recent sovereign ratings of 46 countries demonstrates how the macroeconomic information embody in the sovereign rating scores predict their bond yield spreads relative to the yield on US Treasury bond.

Findings

The research finds that the assigned rating scores do not herald the complete elites of the macroeconomic conditions in emerging markets, and there is more incremental information in the publicly available macroeconomic variables, which is much useful in predicting bond yield spreads than that embedded into the sovereign ratings.

Practical implications

The outcomes of the research have strategic implications for global investors and policymakers. The use of credit rating scores along with the macroeconomic fundamentals in emerging economies produces better predictions than the benchmark predictions solely based on the rating scores suggested by the previous research.

Originality/value

This study is the first one to address the issues related to sovereign ratings and bond yield spread in developing and emerging markets using the most recent ratings during the period of the economic recoveries, following the global financial crisis of 2008.

Details

Journal of Financial Economic Policy, vol. 12 no. 2
Type: Research Article
ISSN: 1757-6385

Keywords

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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

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Article
Publication date: 11 April 2016

Kyle Bruce

This paper explores the “proto-Keynesian” ideas of progressive members of the scientific management community with regard to micro- and macroeconomic planning/management.

Abstract

Purpose

This paper explores the “proto-Keynesian” ideas of progressive members of the scientific management community with regard to micro- and macroeconomic planning/management.

Design/methodology/approach

Based on a systematic exegetical analysis of articles published in a largely unexplored primary/archival source, the Bulletin of the Taylor Society between 1915 and 1934.

Findings

This paper surfaces a latent “proto-Keynesian” bedrock among progressive segments of the US management community that provides a more cogent explanation for the wholehearted reception, as well as the decisive impact, of Keynes’ ideas on US macroeconomic policy than do extant explanations in the history of economic thought. Further, it reveals that most of these progressive managers with views as to both cause of and solution for the 1930’s Depression were members of the Taylor Society, an epistemic community devoted to the ideas of Frederick Winslow Taylor, the father of scientific management.

Originality/value

The paper adds to the small but growing corpus of revisionist management history that seeks to problematize the received wisdom about scientific management or Taylorism. Few, if any, management historians appreciate that F. W. Taylor provided the basic planning tools which if developed, could enhance humanity’s control over anarchic market forces and aid the construction of a society based on democratic and effective planning.

Details

Journal of Management History, vol. 22 no. 2
Type: Research Article
ISSN: 1751-1348

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Book part
Publication date: 16 December 2017

Masazumi Wakatabe

This chapter investigates the nature of the transformation of macroeconomics by focusing on the impact of the Great Depression on economic doctrines. There is no doubt…

Abstract

This chapter investigates the nature of the transformation of macroeconomics by focusing on the impact of the Great Depression on economic doctrines. There is no doubt that the Great Depression exerted an enormous influence on economic thought, but the exact nature of its impact should be examined more carefully. In this chapter, I examine the transformation from a perspective which emphasizes the interaction between economic ideas and economic events, and the interaction between theory and policy rather than the development of economic theory. More specifically, I examine the evolution of what became known as macroeconomics after the Depression in terms of an ongoing debate among the “stabilizers” and their critics. I further suggest using four perspectives, or schools of thought, as measures to locate the evolution and transformation; the gold standard mentality, liquidationism, the Treasury view, and the real-bills doctrine. By highlighting these four economic ideas, I argue that what happened during the Great Depression was the retreat of the gold standard mentality, the complete demise of liquidationism and the Treasury view, and the strange survival of the real-bills doctrine. Each of those transformations happened not in response to internal debates in the discipline, but in response to government policies and real-world events.

Details

Including a Symposium on New Directions in Sraffa Scholarship
Type: Book
ISBN: 978-1-78714-539-9

Keywords

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Article
Publication date: 18 May 2021

Ansgar Belke and Pascal Goemans

The purpose of this paper is to investigate whether the macroeconomic effects of government spending shocks vary with the degree of macroeconomic uncertainty.

Abstract

Purpose

The purpose of this paper is to investigate whether the macroeconomic effects of government spending shocks vary with the degree of macroeconomic uncertainty.

Design/methodology/approach

The authors use quarterly US data from 1960 to 2017 and employ the Self-Exciting Interacted VAR (SEIVAR) to compute nonlinear generalized impulse response functions (GIRFs) to an orthogonalized government spending shock during tranquil and in uncertain times. The parsimonious design of the SEIVAR enables us to focus on extreme deciles of the uncertainty distribution and to control for the financing side of the government budget, monetary policy, financial frictions and consumer confidence.

Findings

Fiscal spending has positive output effects in tranquil times, but is contractionary during times of heightened macroeconomic uncertainty. The results indicate an important role of the endogenous response of macroeconomic uncertainty. Investigating different government spending purposes, only increases in research and development expenditures reduce uncertainty and boost output during uncertain times.

Originality/value

The authors contribute to the literature in using a method which allows to control for a large set of confounding factors and accounts for the uncertainty response.

Details

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

Keywords

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Article
Publication date: 1 October 2005

François Mann‐Quirici

Assesses whether the current pattern of relative wage rigidity and labour inertia in Europe is a problematic factor in the successful functioning of the European monetary…

Abstract

Purpose

Assesses whether the current pattern of relative wage rigidity and labour inertia in Europe is a problematic factor in the successful functioning of the European monetary union as viewed by many observers given the absence of interregional fiscal transfer payments.

Design/methodology/approach

Uses econometric methods to test whether the onset of monetary integration in the US and the gold standard in selected countries has increased the pro‐cyclical behaviour of real wages.

Findings

Finds suggestive empirical evidence that indeed a Lucas Critique argument applies such that credibly fixed exchange rate regimes might induce wages to carry the burden of macroeconomic adjustment in lieu of independent monetary policy and/or fiscal transfers.

Originality/value

Makes a novel contribution to the literature by attempting to test for the existence of endogenous adjustment mechanisms based on historical monetary unions analogous to EMU.

Details

Journal of Economic Studies, vol. 32 no. 5
Type: Research Article
ISSN: 0144-3585

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Book part
Publication date: 7 May 2019

Tim Barker

This chapter is a contribution to the intellectual history of the anxiety that full employment in the modern United States depended somehow on military spending. This…

Abstract

This chapter is a contribution to the intellectual history of the anxiety that full employment in the modern United States depended somehow on military spending. This discourse (conveniently abbreviated as “military Keynesianism”) is vaguely familiar, but its contours and transit still await a full study. The chapter shows the origins of the idea in the left-Keynesian milieu centered around Harvard’s Alvin Hansen in the late 1930s, with a particular focus on the diverse group that cowrote the 1938 stagnationist manifesto An Economic Program for American Democracy. After a discussion of how these young economists participated in the World War II mobilization, the chapter considers how questions of stagnation and military stimulus were marginalized during the years of the high Cold War, only to be revived by younger radicals. At the same time, it demonstrates the existence of a community of discourse that directly links the Old Left of the 1930s and 1940s with the New Left of the 1960s and 1970s, and cuts across the division between left-wing social critique and liberal statecraft.

Details

Including A Symposium on 50 Years of the Union for Radical Political Economics
Type: Book
ISBN: 978-1-78769-849-9

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Book part
Publication date: 1 November 2011

Graziella Bertocchi

This chapter investigates the determinants of the growth performance of Africa. I start by illustrating a broader research agenda that accounts not only for basic economic…

Abstract

This chapter investigates the determinants of the growth performance of Africa. I start by illustrating a broader research agenda that accounts not only for basic economic and demographic factors but also for the role of history and institutional development. After reporting results from standard growth regressions, I analyze the role of Africa's peculiar history, which has been marked by its colonization experience. Next, I discuss the potential growth impact of state fragility, a concept that reflects multiple facets of the dysfunctions that plague the continent. The last topic I address is the influence, in and out of Africa, of the slave trades. The chapter ends with critical conclusions and suggestions for further research.

Details

Economic Growth and Development
Type: Book
ISBN: 978-1-78052-397-2

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Article
Publication date: 30 September 2013

A.K.M. Waresul Karim, Kamran Ahmed and Tanweer Hasan

The purpose of this paper is to investigate the impact of audit quality and ownership structure on the degrees of accuracy and bias in earnings forecasts issued in initial…

Abstract

Purpose

The purpose of this paper is to investigate the impact of audit quality and ownership structure on the degrees of accuracy and bias in earnings forecasts issued in initial public offering (IPO) prospectuses in a frontier market, Bangladesh.

Design/methodology/approach

The paper uses both univariate and multivariate tests on the sample of 75 IPOs. The paper employs the tests to see the association between the degree of forecast bias and three corporate governance variables.

Findings

The results reveal that the magnitude of earnings forecast bias is significantly explained by issuer, auditor reputation, proportions of capital raised from domestic as well as foreign investors, and whether the IPO firm is a start-up venture. Underwriter prestige, length of the issuing firms' operating history, leverage, whether the firm went public during a stock market boom, and forecast horizon do not appear to be statistically significant in explaining the degree of forecast bias.

Originality/value

Although auditor reputation and the proportion of equity retained by pre-IPO owners have been investigated in several studies on IPO forecast accuracy and/or bias, no study has attributed them to corporate governance as a whole by combining auditor reputation, and ownership categories held by small private investors and foreign portfolio investors.

Details

Studies in Economics and Finance, vol. 30 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

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Book part
Publication date: 18 February 2004

E.K. Hunt and Allen M. Sievers

The University of Utah is located in Salt Lake City, the home of the Church of Jesus Christ of Latter Day Saints (LDS or Mormon). This conjunction has led some to believe…

Abstract

The University of Utah is located in Salt Lake City, the home of the Church of Jesus Christ of Latter Day Saints (LDS or Mormon). This conjunction has led some to believe the University is Church-run, or at least Church dominated. In fact, the University, state-financed from the beginning, has been wholly autonomous since an incident in the early 20th Century. In that incident several faculty members were discharged for their unorthodox religious and political views. This led to an uproar and subsequent protracted controversy, the resolution of which did not reinstate the discharged faculty members but did establish the complete autonomy of the University from the Church.

Details

Wisconsin "Government and Business" and the History of Heterodox Economic Thought
Type: Book
ISBN: 978-0-76231-090-6

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