Search results

Provides an evaluation of the reality of the German economy after unification, also answers to some of the questions that the post‐unification era has raised, analyzes aggregate and sectoral data of the former GDR and the Federal Republic of Germany over the period 1970‐1989. The results characterize the former GDR with a steeper supply curve. While the central plan assumed a steady growth of real output over time, it eliminated producers’ incentives to vary capacity utilization in response to demand pressures. Demand pressures proved inflationary without determining conditions in the labor market. In contrast, the market‐oriented plan in West Germany tied output expansion and contraction with demand fluctuations. Consequently, inflationary effects of demand fluctuations appeared moderate in West Germany and real output growth was not sustained at a high level over time. Demand fluctuations determined employment changes in West Germany. Implications of these differences are analyzed in light of the reality of the post‐unification in Germany.

Using quarterly data for a sample of 17 industrial countries, the purpose of this paper is to study asymmetry in the face of monetary shocks compared to government spending shocks.

The paper outlines demand and supply channels determining the asymmetric effects of monetary and fiscal policies. The time‐series model is presented and an analysis of the difference in the asymmetric effects of monetary and fiscal shocks within countries is presented. There then follows an investigation of the relevance of demand and supply conditions to the asymmetric effects of monetary and fiscal shocks. The implications of asymmetry are contrasted across countries.

Fluctuations in real output growth, price inflation, wage inflation, and real wage growth vary with respect to anticipated and unanticipated shifts to the money supply, government spending, and the energy price. The asymmetric flexibility of prices appears a major factor in differentiating the expansionary and contractionary effects of fiscal and monetary shocks. Higher price inflation, relative to deflation, exacerbates output contraction, relative to expansion, in the face of monetary shocks. In contrast, larger price deflation, relative to inflation, moderates output contraction, relative to expansion in the face of government spending shocks. The growth of output and the real wage decreases, on average, in the face of monetary variability in many countries. Moreover, the growth of real output and the real wage increases, on average, in the face of government spending variability in many countries. Asymmetry differentiates the effects of monetary and government spending shocks within and across countries. The degree and direction of asymmetry provide a new dimension to differentiate between monetary and fiscal tools in the design of stabilization policies.

The paper's evidence sheds light on the validity of theoretical models explaining asymmetry in the effects of demand‐side stabilization policies. Moreover, the evidence should alert policy makers to the need to relax structural and institutional constraints to maximize the benefits of stabilization policies and minimize the adverse effects on economic variables.

This study focuses on the relationship between foreign direct investment (FDI) and economic growth of the formal sector comprising all foreign and domestic registered enterprises engaged in production of goods and services.

This study uses a balanced longitudinal data set for the period from 2006 to 2014 from secondary sources in 63 provinces/cities of Vietnam. The generalized method of moments (GMM) estimation for a dynamic panel data model is applied.

The greater the share of FDI in capital resource, the more favorable the output growth in the whole formal sector. The FDI enterprises are more productive than domestic formal firms, and the output growth of FDI firms creates a positive spillover effect on the output growth of domestic firms.

The effect of FDI on economic growth is investigated at subnational level for the whole formal economic sector as well as the formal domestic firms. The domestic and foreign industrial agglomerations and the business environment are also examined.

The purpose of this paper is to examine the causal relationships between inflation, output growth and their uncertainties in Malaysia.

The modeling approach allows for structural breaks to avoid the masking of specific impacts.

Based on the asymmetric Generalized Autoregressive Conditional Heteroskedasticity model, the paper found strong evidence favoring a positive effect of a change in the inflation uncertainty as predicted by the Friedman-Ball hypothesis. In addition, inflation (inflation uncertainty) has direct (indirect) negative effect on the output growth. The results are consistent with the Taylor effect – increases in inflation uncertainty decreases output uncertainty. The analysis also reveals that economic uncertainty lowers the growth rate of output, complying with Bernanke's idea.

The present study suggests that extra efforts are required to locate the breaks in the variance in order to draw concrete evidence on link between economic uncertainty and macroeconomic performance.

The study aims to examine the export-led growth (ELG) hypothesis for Bangladesh. The direction of causality between export and output largely determines the success of export-oriented trade policies. A unidirectional causality running from export to output growth is required according to the narrow definition, while bidirectional causality is allowed for the broader definition. The study offers the causality inference, both from narrow and broader senses.

The study uses the bootstrap version of Toda and Yamamoto-modified causality tests, a recent development in time series econometrics, robust against the regularity conditions such as stationarity, properties of integration and cointegration and constancy of parameters. It uses monthly secondary data for the period of 1990-2014.

Test results suggest a unidirectional positive causal relationship from exports to output growth, meaning that the policies and strategies supporting exports are promoting output growth and thereby approve the ELG hypothesis for Bangladesh from the narrow sense. However, the absence of bidirectional causality between export and output growth, necessary to support the ELG hypothesis from the broader perspective, discards the conjecture that output growth is reinvigorated through the probable second-round effects of ELG produced from output growth to exports.

Lower investments in infrastructure, technology and education are reasons for the absence of ELG from the broader sense. Therefore, directing returns generated from exports for the development of technology, infrastructure and human capital, with regular and continuous revision of trade-liberalization policies so as to make its exports more competitive in the world market, will help Bangladesh trigger the second-round effect of ELG produced from output growth to exports.

Beyond the conventional approaches, this is the first contemporary time series econometrics causality analysis between export and output growth of Bangladesh, both from narrow and broader senses.

The paper aims to examine the effects of exchange rate fluctuations on real output, the price level, and the real value of components of aggregate demand in Egypt and Turkey.

Building on a theoretical model that decomposes movements in the exchange rate into anticipated and unanticipated components, the empirical investigation traces the effects through demand and supply channels.

In Turkey, anticipated exchange rate appreciation has significant adverse effects, contracting the growth of real output and the demand for investment and exports, while raising price inflation. Random fluctuations in Turkey have asymmetric effects that highlight the importance of unanticipated depreciation in shrinking output growth and the growth of private consumption and investment, despite an increase in export growth. In Egypt, anticipated exchange rate appreciation decreases export growth. Given asymmetry, the net effect of unanticipated exchange rate fluctuations, in Egypt, decreases real output and consumption growth and increases export growth, on average, over time.

In light of the country‐specific evidence, future research should extend the investigation using panel estimation, incorporating various demand and supply shocks along with exchange rate fluctuations, to establish the relative importance of various shocks on macroeconomic performance across MENA countries.

While adhering to a flexible exchange rate policy to boost competitiveness, managing fundamentals to reduce excessive volatility impinging on the economic system over time should top the policy agenda.

Excessive volatility in the real effective exchange rate could be detrimental to real growth, over time, as the evidence for Turkey and Egypt illustrates.

The purpose of this paper is to examine the relationship among employment, real wage, and output growth in Canada.

Using quarterly data from 1994q2 to 2012q3, this paper employs a vector autoregressive framework while allowing for the derivation of output from its historical maximum over the sample period to affect future output, employment, and real wage growth dynamics.

There are three main findings: output growth is significant in predicting employment growth and vice versa; real wage growth neither Granger causes employment growth nor output growth, but employment growth Granger causes real wage growth; and non-linear dynamics, captured by the current depth regression (CDR) effect term, through the sign as well as the magnitude of output changes, are important in characterizing the evolution of the relationship among output, employment, and real wage growth.

The findings of this research have significant implications for policy makers. Output and employment growth are important in forecasting each other in Canada. In contrast to the mainstream theory, real growth is insignificant in explaining the future dynamics of employment in Canada. Policies need to be formulated to encourage the growth of employment to ensure sustain output growth.

This study examines empirically the real output, real wage, and employment link in Canada. This study uses the most recently revised GDP data arising from the 2012 Historical Revision of the Canadian System of National Accounts. The econometric methodology involves the standard vector autoregression (VAR) model to which the authors introduce non-linear dynamics through a term that controls for the deviation of output from its preceding historical maximum: the CDR effect.

The purpose of this paper is to perform an investigative analysis of the distribution of agricultural growth in China and the evolution of the decision mechanism.

The kernel density estimation method was used to investigate the distribution of agricultural growth in China using 1988‐2008 panel data of the 29 provinces on the mainland. A nonparametric income distribution approach was employed to decompose China's agricultural output growth into farmland accumulation, capital deepening, labor‐scale change, technical change, and efficiency change based on stochastic frontier function. A further investigation of the evolution of the decision mechanism for agricultural growth was then performed using counterfactual analysis.

The results of this analysis indicate that: from 1996, the distribution of agricultural output per worker evolved from a unimodal into a bimodal distribution; technical change is the primary impetus to distribution shift; and capital deepening and efficiency change play a dominant role in the deformation of the distribution of agricultural output per worker from a unimodal to a bimodal distribution.

The paper is an original work and its methodology makes a meaningful contribution to understanding China's agricultural growth. That is, the use of income distribution analysis method to analyze agricultural growth does not only allow a more in‐depth understanding of the gap between regional agricultural growth rates, but also makes up for the existing lack of convergence in agricultural growth in China.

The purpose of the paper is twofold: to construct and analyze a novel endogenous growth model, in which unbounded growth is possible without the need to assume increasing returns to scale, and to use the model to estimate the long-run (or dynamic) costs of recessions.

In the proposed model, endogenous technology and human capital accumulation serve as the “twin engines of growth.” Simulations are used to derive growth rates consistent with long-term experience of developed countries, to understand better the differences between balanced growth and unbounded growth and to provide an estimate of the dynamic costs of capacity utilization shocks that produce business cycle-like behavior.

Conservative calculations show that the costs of the capacity shocks can be large – about 1.5 percent of the present value of output over a 100-period horizon. The theoretical model also suggests that differences in the technology production and human capital accumulation functions, possibly due to differing institutions, may help explain diverse growth experiences.

The paper, for first time, combines two strands of the economic growth theory – endogenous technology and endogenous human capital production – into a single model. It uses the implications of the model to argue, through simulations, that the benefits of counter-cyclical policies are potentially large in the long run.

The purpose of this paper is to focus on the relationship between attitudinal data from the long-running Michigan Surveys of Consumers and US real GDP growth. One survey question asks, “Generally speaking, do you think now is a good time or a bad time to buy a house?” with the follow-up question “Why do you say so?” There are several factors for consumers to choose as reasons. Given the strong link between US housing market activity and business cycles, the authors ask whether the responses to the follow-up question explain the behavior of output growth.

The authors employ an augmented autoregressive model to investigate the relationship between output growth and the responses to the follow-up question for 1986–2007 and for 1986–2018, which includes the 2008 financial crisis. The authors follow the general-to-specific approach to obtain the final model estimates for interpretation. For a deeper analysis, the authors estimate the model using the responses of survey participants in the bottom 33 percent, middle 33 percent and upper 33 percent income categories, separately. While avoiding aggregation bias, this approach helps reveal important information embodied in the cross-sectional distribution of the data.

The follow-up question focuses on such factors as home prices, mortgage rates, houses as a good/bad investment, timing, uncertain future and affordability. The authors find that the majority of these factors chosen as reasons by consumers in the middle and upper 33 percent income categories explain the behavior of output growth. Among the factors chosen as reasons by consumers in the bottom 33 percent income category, only the mortgage rate and uncertain future explain output growth.

This study provides new insights into the usefulness of detailed consumer survey data in explaining the behavior of output growth and further underlines the usefulness of such measures across different income categories for revealing important information contained in the cross-sectional distribution of the data.