Showing papers on "Consumer price index published in 2015"

Exports-Led Growth Hypothesis: The Econometric Evidence from Pakistan

Abstract: The study aims at investigating the Export-led growth hypothesis in Pakistan by applying Unit root test, Cointegration, Vector error model and Granger causality tests. Time series data of the selected variables (Real GDP, capital, employed labor force, exports, consumer price index and terms of trade) for the period of 1972-2012 is used for analysis. The export-led growth hypothesis claims that exports positively contribute to economic growth. The results revealed that there is a strong positive long run as well as short run relationship between exports and economic growth in Pakistan. It is recommended on the basis of findings that the government should announce export bonus, export financing and export credit guarantee schemes to encourage the exports. Export processing zones should be established. These zones will not only catch the attention of foreign investors but also provide access to international markets to Pakistani exporters.

Short Run and Long Run Saving Behavior in Pakistan: An Empirical Investigation

Abstract: The paper attempts to investigate the determinants of national savings of Pakistan in the long run as well as in the short run using time series annual data from 1972 to 2008. This paper applies the time series econometrics for short run and long run relationships. All variables are found stationary at 1st difference. The empirical results fully support the Johansen Co-integration and Vector Error Correction Model analyses. The results conclude that the consumer price index, exports, workers remittances, public loans, government spending and rate of interest turn out to be very significant factors in determining the national savings in long run. It is found that consumer price index, workers remittances, interest rate, exports and government consumption have positive impact on national savings of Pakistan while public loans influenced negatively in the long run. Speed of adjustment or error term has value 0.9664 with negative sign, shows the convergence of saving model towards long run equilibrium. Keeping in view the importance and role of national savings in macroeconomic stability, It is suggested that government should improve the level of national savings for sustainable and debit free economy by considering the significant variables from empirical analysis of this study.

The relationship between inflation and financial development in Saudi Arabia

Abstract: The improved performance of the financial sector through its process of financial intermediation between savers and investors and between lenders and borrowers as well as the guidance of the funds those are available to the optimal investments lead to achieve the desired stable economic growth. Economists generally believe that high rates of inflation cause problems to some individuals and as well as for the whole economic performance. In general, low inflation rate with financial sector development plays a crucial and essential role in achieving sustained and stable economic growth. Therefore, maintaining inflation rate at low level and improving the financial sector performance are considering themain targets for policy makers to promote sustained and stable economic growth. So, the main purpose of this paper was to investigate empirically the relationship between inflation and financial sector development in Saudi Arabia for the period of 1982-2013.This paper used the autoregressive distributed lag (ARDL) bound testing approach suggested by Perasan et al. (2001) to examine the existence of the long-run relationship between the inflation rate and financial sector development. The advantage of the bounds testing approach is in its applicability irrespective of whether the underlying variables are purely I (0), purely I (1) or mutually co-integrated.All data were tested for stationarity using Augmented Dickey-Fuller (ADF) test and the Phillip-Perron (PP) test to determine the order of integration. The variables included in this study are: The credit to the private sector as percentage of GDP was used as a proxy of financial development and inflation rate measured by the consumer price index. The study also included two more control variables: trade openness and real gross domestic product. The main findings are as follows. First, tests results of the Augmented Dickey-Fuller (ADF) and Phillips – Perron (PP) showed that consumer price index (LCPI), real gross domestic product (LGDP) and trade openness (LOPEN) did not seem to be stationary at their level but they were at first difference. Accordingly, they were integrated of order one I (1). On the other side, both tests results of financial development (LFD) seemed to be stationary at its level. Accordingly, it was integrated of order zero I (0). Second, results showed that there was a statistically significant long-and-short run negative relationship between inflation and financial development. Third, there was statistically significant positive impact of previous financial sector’s policies on financial sector development.Forth, results indicated that there was statistically significant positive impact of economic growth on financial development. Fifth, there was a statistically significant negative impact of trade openness on financial development.Accordingly, inflation and trade liberalization policy are the main obstacles facing financial sector performance. Therefore, the policy makers can reduce inflation through the use of appropriate fiscal and monetary policies.

Forecasting inflation in G-7 countries: an application of artificial neural network

Abstract: Purpose – The paper aims to evaluate different artificial neural network models and to suggest a suitable model for forecasting inflation in G-7 countries. Design/methodology/approach – The study applies different combinations of neural networks with hyperbolic tangent function using backpropagation learning with the steepest gradient descent technique to monthly data on Consumer Price Index (a measure of inflation) of the USA, the UK, France, Germany, Italy, Japan and Canada. Findings – Predictions of inflation based on the Consumer Price Index for all the seven countries divulged that it is expected that the rate of inflation will decline marginally in the near future. Practical implications – The results proposed in this study will be a benchmark for policy-makers, economists and practitioners to forecast inflation and design policies accordingly. Originality/value – The paper’s findings provide strong evidence for policy-makers that while constructing models for forecasting inflation, the suggested models can be used to track the future rates of inflation and, further, they can apply that model in framing policies.

Demand System Estimation in the Absence of Price Data: an Application of Stone-Lewbel Price Indices

Abstract: This article evaluates the feasibility of estimating a system of demand equations in the absence of price information using the approach developed by Lewbel (1989). Stone-Lewbel (SL) price indices for commodity groups are constructed using information on the budget shares and the Consumer Price Indices (CPIs) of the goods comprising the commodity groups, which allows for household-level prices to be recovered. This study evaluates how susceptible are elasticities and marginal effects estimates from traditional parametric demand systems to the CPI used in the construction of the SL prices. To do this, three alternative regional CPIs are considered for the construction of the SL prices: monthly, quarterly and a constant (unity) price index. Elasticities and marginal effect estimates are computed for eight food commodity groups using the Exact Affine Stone Index (EASI) model as the parametric demand system and data from the United States Consumer Expenditure Survey. The estimates proved to be robust to the a...

Dynamic Model Averaging and CPI Inflation Forecasts: A Comparison between the Euro Area and the United States

Abstract: The paper forecasts consumer price inflation in the euro area (EA) and in the USA between 1980:Q1 and 2012:Q4 based on a large set of predictors, with dynamic model averaging (DMA) and dynamic model selection (DMS). DMA/DMS allows not solely for coefficients to change over time, but also for changes in the entire forecasting model over time. DMA/DMS provides on average the best inflation forecasts with regard to alternative approaches (such as the random walk). DMS outperforms DMA. These results are robust for different sample periods and for various forecast horizons. The paper highlights common features between the USA and the EA. First, two groups of predictors forecast inflation: temporary fundamentals that have a frequent impact on inflation but only for short time periods; and persistent fundamentals whose switches are less frequent over time. Second, the importance of some variables (particularly international food commodity prices, house prices and oil prices) as predictors for consumer price index inflation increases when such variables experience large shocks. The paper also shows that significant differences prevail in the forecasting models between the USA and the EA. Such differences can be explained by the structure of these respective economies. Copyright © 2015 John Wiley & Sons, Ltd.

Consumer Price Index and Economic Growth: A Case Study of Mauritania 1990 – 2013

Abstract: This study seeks to investigate the association between Consumer Price Index (CPI) and Gross Domestic Product (GDP) in Mauritania. An Empirical evidences are obtained from the Ordinary Least Square (OLS) and Granger Causality Test Model. The study utilizes time series data cover up the period from 1990 to 2013. Gross Domestic Product (GDP) was used as dependent variable, whereas Consumer Price Index (CPI) was used as independent variable. In order to check the stationarity of variables Augmented Dickey-Fuller Test (ADF) was employed. Result indicates that all variables found to be stationary at first difference at 5% level of significance. OLS Test revealed a positive and significant relationship between the GDP and CPI. Additional endeavour was made to verify the causal relationship between two variables by employing the Granger Causality Test. The result show unidirectional causality running from Inflation to economic growth. The most significant policy proposition of this outcome is that intensive exertion must be made by Mauritanian government to address the issues which are lead to an increase of price level (inflation) such as food and fuel crisis, exchange rate fluctuation, an increase in money supply, weak agriculture sector and so on.

Producing an Input Price Index

Abstract: The current interest in these types of price indexes arose due over concerns that the BLS does not adequately measure shifts in prices resulting from offshoring (or its corollary, onshoring) in its industrial price programs. BLS has three indexes that cover the production of goods, the International Price Program’s Import Price Index (MPI) and Export Price Index (XPI), and the Producer Price Index (PPI). The MPI only covers goods that are being imported, the XPI only covers the export of goods, and the PPI only covers goods and services that are produced domestically. Thus, a good that had been domestically produced and repriced by the PPI, and has had its production sent overseas, will no longer be tracked in the PPI. Correspondingly, the MPI index will not begin to price that particular item until after it has become an import. Therefore neither program will directly show the price change that occurs when the item goes from domestic production to foreign (or vice versa).

The Determinant of Consumer Price Index in Malaysia.

Abstract: This study tries to notice out the significance of macroeconomic variables such as broad money, gross domestic product and household final consumption expenditure towards the consumer price index in Malaysia on long run economy. Augmented Dickey-Fuller with lag length on Schwarz Info Criterion and Phillips-Perron with Newey West Bandwidth used to test the stationarity of the data. Johansen-Juselius system co-integration test applied to find the stationary linear combination of the non-stationary variables. The Long run relationship between dependent and independent variables estimated on Vector Error Correction (VEC) model. The results show that there is a relationship within the dependent variable and its independent variables. On the long run, the broad money, export of goods and services, gross domestic product and household final consumption expenditure are significantly positively related to the consumer price index. The results show a sign of complete pass-through of household final consumption expenditure to the consumer price index. The future research shall be testing this variable to examine the pass-through factor. The findings have important implications for understanding the volatility of aggregate demand and supply of price level in a developing country and able to conclude the effectiveness of the monetary policy

Understanding the Factors Behind Current Account Deficit Problem: A Panel Logit Approach on 16 OECD Member Countries

Abstract: In this paper, we aim to empirically test the relationship between current account deficit and different macroeconomic variables by using panel logit model. For this research, we selected 16 OECD member countries over the years of 2005-2009. Our empirical results indicate that there is a significant positive relationship between the current account deficit and public expenditure. On the other hand, significant negative relationships have been obtained between consumer price index (CPI), unemployment rate and the current account deficit. These three variables not only have a direct effect on the crisis indicator, but also have an indirect effect on the economies of 16 OECD member countries by increasing the probability of a volatile regime.

Oil Price Shocks Effect on Economic Growth - OPEC versus non-OPEC Economies

Abstract: Purpose: The purpose of this thesis is to analyse how oil price shocks affect the economic growth in net-oil exporting countries. The aim is to conclude whether the economic growth in the Organisation of Petroleum Exporting Countries (OPEC) is more sensitive to oil price shocks than the economic growth in other exporting countries. Method: The data used covers the years 1980 to 2008 and includes 19 (11 OPEC and 8 non- OPEC) countries’ yearly real gross domestic products and annualised world oil price deflated by the all urban consumer price index (USD). In order to reject the presence of unit roots in the data, the Augmented Dickey-Fuller test and the Im, Pasaran and Shin test were used. The included countries were divided into two groups, OPEC and non-OPEC exporting countries, from which two separate unrestricted bivariate vector autoregressive models (VARs) were constructed. The VARs investigated the response of each group’s combined economic growth to oil price shocks. The VARs were analysed through the use of impulse response functions, variance decompositions and Granger causality tests. The calculations were made using EViews. Results: The outcomes show that a 1% increase in the change of the oil price will increase the GDP growth rate the following year with 0.145% (OPEC) versus 0.141% (non-OPEC), consequently a positive relationship was found. Moreover, 2.82% of the variation in the OPEC countries’ growth rate is explained by oil price shocks, while the responding ratio for the non-OPEC countries is 2.81%. Conclusions: OPEC and non-OPEC oil exporting countries’ economic growth illustrated nearly identical responses to oil price shocks. Through the discussion it is thereby concluded that the price setters, OPEC, appear to be just as sensitive to oil price shocks as non-OPEC countries.

The Political Economy of New Zealand’s Consumers Price Index

Abstract: The structure of New Zealand’s Consumers Price Index has changed many times over its 100 year history. As New Zealand’s most influential and consequential official statistic the CPI performs political and distributional functions that affects ‘who gets what and when’. Some observers suggest that change in the structure of the CPI is merely the consequence of technological improvement which in turn alters the conduct of policy-making and politics. This study turns that assumption on its head by demonstrating that it is politics that has altered the technology known as the CPI. Through the examination and evaluation of the changing political and economic context that the index operates within, this thesis work finds that the CPI was transformed by the very political forces it was designed to contain. This thesis argues that because the index functions as political decision-making tool that supports the setting of salaries and wages, benefit levels and interest rates, change in the form of the index is a result of struggle among interests affected by these highly political decisions. This thesis makes its case through analysis of primary sources and official documentation relating to the development of the index. The first case study tracks the origins of the first official index in 1914, devised in order to learn what it cost a ‘working’ family to meet its basic needs through its transformation into a tool that set wages and measured price change in the wider economy. This is reinforced by a study of change to the index since the 1970s, focusing on the use of the CPI in the conduct of monetary policy that resulted in a politically driven change to the measurement of household inflation. These case studies are further supported by examination of the secondary literature on price indexes, monetary policy and institutional change theory. This thesis adds to the body of knowledge on theories of institutional change by presenting evidence of the conflict that has caused political change to the technology of the CPI.

Determining the asymmetric effects of oil price changes on macroeconomic variables: a case study of Turkey

Abstract: This paper aims to investigate the effects of unanticipated oil price changes on the Turkish economy using quarterly gross domestic product (GDP) and monthly consumer price index (CPI) and real exchange rate (RER) for the period 2002–2013 . While the bulk of previous studies have employed the standard methodology without true data generating process knowledge, in this study asymmetric Vector Autoregressive methodology proposed by Kilian and Vigfusson (Quant Econ 2(3): 419–453, 2011) is used to analyze the asymmetric impact of oil prices on macroeconomic aggregates. This method allows the researcher to investigate the asymmetric effects of innovations in oil prices on variables without knowing data generating process is linear or not. Empirical findings that, the oil prices changes have asymmetric effects on CPI and RER at one standard deviation shocks in different periods unlike GDP. These asymmetric effects are also statistically significant at 10 % significance level. Specifically, when oil price increases, CPI and RER increases but GDP decreases in the long term.

How to Define the Consumer Perceived Price Index? An Application to Polish Data

Abstract: Inflation perceived by consumers may differ from official statistics, particularly due to different baskets of goods and services that lay people and statisticians consider and due to consumer loss aversion to price increases. Such effects, as suggested by the prospect theory, are confirmed in many empirical studies showing that consumers’ perceptions are substantially influenced by prices of frequent purchases and that price increases are perceived more strongly than price reductions. Following those observations, alternative consumer price indices were proposed, such as the out-of-pocket price index (ECB 2003) or the index of perceived inflation (Brachinger 2006, 2008). They proved particularly useful in interpreting a jump of inflation perception in some of the Economic and Monetary Union (EMU) economies after the euro introduction. The role of price changes of frequently bought goods and services in determining consumer opinions on price changes also seems significant in Poland, as revealed especially...

Does Consumer Price Index Affect Food Security in Sub-Saharan Africa?

Abstract: Food security is a major global issue with over a billion people believed to lack sufficient dietary access while others suffer from micronutrient deficiencies In Sub-Saharan Africa, food insecurity is further exacerbated by climate change scenarios, absence of appropriate storage facilities and increase in transportation costs These deeply impact traditional farming methods and livelihoods there by restricting access to sufficient food hence leaving people in constant food crisis This paper assesses the influence of consumer price index (CPI) on food security in Sub-Saharan Africa It is based on the premise that, consumer spending of households is often influenced by price elasticity (changes in food prices) with a consequence on household incomes The study found out that, food price inflation has increased in many Sub-Saharan African countries; pushing up CPIs with ripple effects on households and on the macro economy This has a direct consequence on the already weakened household purchasing power thus exposing these households to food insecurity Therefore, the potential impacts of price elasticity in relation to CPI is a fundamental food security issue

An Assessment of the impact of Petroleum Subsidy on Consumer Price Index in Nigeria

Abstract: The partial removal of fuel subsidy in Nigeria in 2012 has generated a lot of argument in the Nigeria literature. A major policy concern on fuel subsidy reform is its adverse effects on the poor. This paper evaluates the impact of fuel subsidy reforms on consumer price index (CPI) since 1986. The study uses the co-integration and error correction model (ECM) to establish the relationship between fuel subsidy removal and CPI using data of the pump price of premium motor spirit (PMS) and CPI from 1986 to 2014. The study found that although the change in the fuel price does have short term impact on CPI, the short run impact is 12 percent. Only 0.2 percent of this distortion in CPI caused by such change is corrected within a year. This implies that fuel subsidy reforms will not lower the real household income or increase poverty, but could have permanent impact on the economy. The study opined that gradual removal of fuel subsidy is found to have little impact on the price of retail goods. Fuel subsidy reforms should be embarked upon and the fiscal savings invested in ventures that will increase the income and welfare of poor households.

The Determinants of Worker Remittance in Terms of Foreign Factors: The Case of Bangladesh

Abstract: TThe aim of this study is to investigate the determinants of worker remittance of Bangladesh. Instead of traditional approach of estimating the remittance determinants, here we propose to use foreign macroeconomic indicators as a proxy determinant to avoid endogeneity. We also used panel estimation technique in our study to incorporate country specific heterogeneity of remittance inflow of Bangladesh. According our study any changes in the number of labor force, consumer price index, export, import, government expenditure and devaluation or appreciation of host countries (origin of the remittance income) currency can significantly influence the inward remittance income of Bangladesh.

The Impact of Food Price Volatility on Consumer Welfare in Cameroon

Abstract: The objective of this paper is to analyse the welfare effects of food price volatility on Cameroonian consumers. Using data from the third Cameroonian Household Consumption Surveys, the price elasticities are obtained from a Quadratic Almost Ideal Demand

Associations Between the Macroeconomic Indicators and Suicide Rates in India: Two Ecological Studies.

Abstract: BACKGROUND: While western studies have focused on the importance of psychiatric illnesses in the complex pathways leading to suicides, several Indian studies have highlighted the important contributions by economic, social, and cultural factors. Hence, we tested the hypothesis that annual national suicide rates and suicide rates of the different states in India were associated with macroeconomic indices. MATERIALS AND METHODS: Data from the National crime records bureau, Ministry of finance, labour bureau, Government of India, population commission, and planning commission official portals, World Bank and the United Nations were accessed. We assessed the correlations of annual national and state-wise suicide rates with macroeconomic, health, and other indices using ecological study design for India, and for its different states and union territories. RESULTS: We documented statistically significant associations between the suicide rates and per capita gross domestic product, consumer price index, foreign exchange, trade balance, total health expenditure as well as literacy rates. CONCLUSIONS: As recent economic growth in India is associated with increasing suicide rates, macroeconomic policies emphasizing equitable distribution of resources may help curtailing the population suicide rates in India. Language: en

An Econometric Analysis of the Determinants of Government Health Expenditures in Nigeria

Abstract: A healthy population is an indispensable factor in the growth and sustainable development of a nation. Therefore, to achieve sustainable development, every national government cannot but devote sizeable funds to finance health services. To provide a platform for evaluating and controlling government expenditures, it is necessary to know those factors that affect government spending on health. This study therefore examined the determinants of government health expenditures in Nigeria between 1970 and 2012. Focus was on the analysis of government expenditures within the period of study, the determinants of and the direction of causality between government health expenditures and the specified independent variables. Data was sourced from various issues of Central Bank of Nigeria’s publications, National Bureau of Statistics and world bank publications. Data collected was analyzed with the aid of descriptive statistics and the Ordinary Least Square multiple regression. Other tests employed were the Augumented Dickey-Fuller (ADF) unit root test, Johansen co-integration test and the pairwise Granger Causality test. The study found that all variables were stationary at level and that long run relationship existed between government health expenditures and the determinants. Furthermore, all the variables were positively related to government health expenditures except total population of age 14 years and younger. The study found that literacy rate, share of health expenditures in total government expenditures and consumer price index were significant factors in government health expenditures within the study period. On the other hand, per capita GDP, total population of age 65 and above, total population of age 14 and younger and life expectancy rate were found to be insignificant. The causality test showed the existence of uni-directional and bi-directional causality for some variables while for some others, there was no causality. The income elasticity was found to be inelastic showing that health is a necessity. This study recommended higher budgetary allocation to health services and that higher premium be placed on the health needs of the population aged 14 years and younger. Moreover, such funds must be properly managed so as to reach the target population.

Impact of macroeconomic variables on performance of firms quoted in the energy and allied sector in the nairobi securities exchange

Abstract: The purpose of this study was to determine the relationship between macroeconomic variables and financial performance of firms quoted in the energy and allied sector in the Nairobi Securities Exchange. The financial performance measures of companies quoted in the energy and allied sector in the Nairobi Securities Exchange was the energy segment stock index which was regressed against the macroeconomic variables including annual exchange rate (USD/Ksh), GDP growth rate, average annual lending interest rates as computed by CBK and inflation rate measured by annual percentage changes in the consumer price index (CPI). The study used descriptive correlation research design. The population of this study comprised of all firms quoted in the energy and allied sector in the Nairobi Securities Exchange. The study employed annual secondary data which was obtained from the Central Bank of Kenya, Kenya National Bureau of Statistics and published annual financial statements from the NSE. The period of study was six years from 2009 to 2014. The data was analysed using descriptive analysis, correlation analysis and multiple regression analysis. The study revealed that indeed macro-economic factors have pronounced influence on the financial performance of firms quoted in the energy and allied sector in the Nairobi Securities Exchange. The study concludes that lagging macroeconomic indicators have a significance influence on among companies listed in Energy and petroleum segment of NSE since 20.44% of firm performance variation can be explained by inflation rate, interest rate, GDP and exchange rate jointly. 1.0 Introduction Macroeconomic indicators are statistics published regularly by government with the primary purpose of indicating the present economic status. They can be classified as either leading indicators if they can be used to future economic prospects. Leading economic indicators include: manufacturing companies activities, retail sales, inventory levels, building permits, housing markets conditions and levels of new business start-ups. Lagging macroeconomic indicators are used to measure their influence on past performance. They include: inflation rate, exchange rate, gross domestic product, levels of unemployment, consumer price index, home currency strength, balance of trade, interest rate, corporate profits as well as value of commodities in relation to US dollar (Bellalah, Levyne and Masood, 2013).

Inbound international tourism development in India: A panel data analysis on its affecting factors

Abstract: Tourism is a fast and continuous growing industry. Tourism generates new employment opportunities and it is a significant source of foreign exchange earnings for the country. Foreign exchange earnings generated through the inbound international tourism plays a significant role in the India's economic growth. This paper identifies the factors influencing the inbound tourist demand in Indian states and union territories using panel data analysis (fixed-/random effects model) technique. The paper spans over 3 years (2010 to 2012) and across 35 states and union territories. The paper indicates that literacy rate, consumer price index, number of tourist operators, and presence of domestic, international or metro airport in states has a significant impact in determining the foreign tourists demand in Indian states.

Value Added Tax and Consumption Expenditure Behaviour of Households in Nigeria: An Empirical Investigation

Abstract: In one way or the other, value added tax has been perceived to influence consumption expenditure behaviour of households as well as consumer price index. This study employed ex-post facto research design to investigate the effects of value added tax on consumption expenditure pattern and consumer price index in Nigeria. The study considered value added tax revenue, house hold consumption expenditure on durable and non-durable goods as well as consumer price index for the period 1994 - 2014. Data used for analysis were extracted from National Abstract of Statistics of the National Bureau of Statistics and the Statistical Bulletin of the Central Bank of Nigeria. The tools of analysis were multiple regression models on households' durable and non-durable goods consumption expenditures and consumer price index with lagged valued variants. Results showed that value added tax and one-period lagged consumption expenditure on durable goods significantly affected households' consumption expenditure on durable goods. Further, positive significant effects were established for value added tax in relation to households' consumption expenditures on non-durable goods; and VAT, its variants and previous spending levels did not discourage households' consumption expenditures; and value added tax did not bear significant relevance on consumer price index. Consequently, the study recommended that the current 5% value added tax rate should be maintained, since any increase would most likely affect the households negatively and escalate consumer price index to undesired levels.