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1 – 8 of 8The past two decades of economic activity in the U.S. have been characterized by both high inflation and interest rates in comparison to previous periods of stability. The…
Abstract
The past two decades of economic activity in the U.S. have been characterized by both high inflation and interest rates in comparison to previous periods of stability. The importance of these two variables to our economic welfare and to the effectiveness of economic policy have led to renewed interest in the Fisher Effect. This is the hypothesis put forth by Irving Fisher describing the relationship between these two variables. It usually takes the form R = re + pe + repe (1) in which R is the nominal rate of interest, re is the expected real rate of interest, and pe is the expected rate of change of prices. The term repe is usually considered insignificant and is dropped, giving R = re + pe. (2) Although this equation can be readily quantified on an ex post basis using actual rather than expected values, the fact that expectation of r and p are not directly observable have always made it difficult to derive an ex ante measure of the real rate.
Goncalo Monteiro and Stephen J. Turnovsky
Recent research supports the role of productive government spending as an important determinant of economic growth. Previous analyses have focused on the separate effects of…
Abstract
Purpose
Recent research supports the role of productive government spending as an important determinant of economic growth. Previous analyses have focused on the separate effects of public investment in infrastructure and on investment in education. This paper aims to introduce both types of public investment simultaneously, enabling the authors to address the trade‐offs that resource constraints may impose on their choice.
Design/methodology/approach
The authors employ a two‐sector endogenous growth model, with physical and human capital. Physical capital is produced in the final output sector, using human capital, physical capital, and government spending on infrastructure. Human capital is produced in the education sector using human capital, physical capital, and government spending on public education. The introduction of productive government spending in both sectors yields an important structural difference from the traditional two‐sector growth models in that the relative price of human to physical capital dynamics does not evolve independently of the quantity dynamics.
Findings
The model yields both a long‐run growth‐maximizing and welfare‐maximizing expenditure rate and allocation of expenditure on productive capital. The welfare‐maximizing rate of expenditure is less than the growth‐maximizing rate, with the opposite being the case with regard to their allocation. Moreover, the growth‐maximizing value of the expenditure rate is independent of the composition of government spending, and vice versa. Because of the complexity of the model, the analysis of its dynamics requires the use of numerical simulations the specific shocks analyzed being productivity increases. During the transition, the growth rates of the two forms of capital approach their common equilibrium from opposite directions, this depending upon both the sector in which the shock occurs and the relative sectoral capital intensities.
Research limitations/implications
These findings confirm that the form in which the government carries out its productive expenditures is important. The authors have retained the simpler, but widely employed, assumption that government expenditure influences private productivity as a flow. But given the importance of public investment suggests that extending this analysis to focus on public capital would be useful.
Originality/value
Two‐sector models of economic growth have proven to be a powerful tool for analyzing a wide range of issues in economic growth. The originality of this paper is to consider the relative impact of government spending on infrastructure and government spending on human capital and the trade‐offs that they entail, both in the long run and over time.
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Several tests have been conducted to determine which valuation model best fits stock price data. Given very little success, those studies suggest the need for a clear…
Abstract
Several tests have been conducted to determine which valuation model best fits stock price data. Given very little success, those studies suggest the need for a clear understanding of the market process of stock price determination. This paper advances the concepts of product costing and product pricing, which pertain to financial accounting valuation and the stock market price determination, respectively. This research effort presents a workable hypothesis of stock price determination.
The purpose of this paper is to make a case for an international clearing house.
Abstract
Purpose
The purpose of this paper is to make a case for an international clearing house.
Design/methodology/approach
The systems postulate is used: the whole is greater than the sum of the parts. Specifically, the 2007 Godley‐Lavoie model is exploited.
Findings
Domestic banking arrangements are institutionally fragile; they import stability from their central banks. In like manner, relations between central banks must be conducted under a common metric, a world money.
Originality/value
The paper shows that a technical argument for a multilateral clearing house will not be found. The author teases “implicit dynamics” (Stephen Turnovsky) out of national income identities.
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Ching‐chong Lai and Wen‐ya Chang
Analyses how the status of balance of payments follows se\ill\fulfilling expectations of currency devaluation. It is found that beforea currency devaluation, whether the economy…
Abstract
Analyses how the status of balance of payments follows se\ill\ fulfilling expectations of currency devaluation. It is found that before a currency devaluation, whether the economy w\ill\ experience a balance‐of‐payments surplus or deficit crucial depends on the degree of capital mobility.
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The purpose of this paper is to investigate the relationship between income inequality and economic growth, both in linear and non‐linear specifications.
Abstract
Purpose
The purpose of this paper is to investigate the relationship between income inequality and economic growth, both in linear and non‐linear specifications.
Design/methodology/approach
The paper has employed annual time series data over the period of 1971 up to 2005. Autoregressive distributed lag model (ARDL) bounds testing approach has been used for cointegration and error correction model for short run behavior. Unit root problem is handled by the use of augmented Dickey‐Fuller unit root test.
Findings
The analysis findings are sharply contrasted to the significant association between income inequality and economic growth found in 1994 by Alesina and Roderick and by Persson and Tabellini. The empirical evidence provides support for the existence of Kuznets inverted‐U as well as inverted S‐shaped curve in Pakistan.
Practical implications
This paper opens up new directions for policy‐making authorities to equalize income distribution in the case of a small transition economy like Pakistan.
Originality/value
This paper convincingly argues that there is a need for case‐by‐case study on such a project in view of each country's unique characteristics. This paper makes a unique contribution to the literature with reference to Pakistan, being a pioneering attempt that employs ARDL cointegration approach.
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The purpose of this paper is to appraise the transition from bank‐based systems to universal banking.
Abstract
Purpose
The purpose of this paper is to appraise the transition from bank‐based systems to universal banking.
Design/methodology/approach
The Wynne Godley and Francis Cripps macroeconomic framework is used to structure the argument.
Findings
It is shown that the activity of oligopolistic firms leads, through their build‐up of inventories, to an unstable system. However, the industrial structure of an economy might be embedded in a network of inter‐bank linkages. The coupling of real and credit activities delivers a weak stability.
Research limitations/implications
The paper is an attempt to marry a structural cycle model with the institutional transformations. The cyclical model could be made more complex and the institutional analysis richer, thereby generating a thicker set of connections between the two.
Practical implications
The conclusion is that firewalls should be reconstructed between the traditional functions of banks as a conduit in the production of goods and services, and other financial entities involved in financial innovations.
Originality/value
Schools of political economy that theorise the transformation of the regime of accumulation of yesteryear are synthesised into financialisation and potential instability.
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Clem Tisdell is one of Australia’s pre‐eminent economists who has made decisive contributions in several areas of economics, perhaps most notably development economics…
Abstract
Clem Tisdell is one of Australia’s pre‐eminent economists who has made decisive contributions in several areas of economics, perhaps most notably development economics, environmental economics and natural resource economics. Tisdell is presently Professor of Economics at the University of Queensland in Brisbane, Australia, and is also a long‐standing member of the editorial advisory board of the International Journal of Social Economics. This interview, which falls in the tradition of Klamer, was recorded in his Brisbane home in November 1995 and seeks to explore Tisdell’s extraordinary career, the development of his thinking about economics in general and his prodigious research output in particular. Tisdell answered the questions in his customary quietly‐spoken and good‐humoured manner.
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