Showing papers on "Real gross domestic product published in 2005"

Exogenous Oil Supply Shocks: How Big are They and How Much Do They Matter for the Us Economy?

Abstract: Since the oil crises of the 1970s there has been strong interest in the question of how oil production shortfalls caused by wars and other exogenous political events in OPEC countries affect oil prices, US real GDP growth and US CPI inflation. This study focuses on the modern OPEC period since 1973. The results differ along a number of dimensions from the conventional wisdom. First, it is shown that under reasonable assumptions the timing, magnitude and even the sign of exogenous oil supply shocks may differ greatly from current state-of-the-art estimates. Second, the common view that the case for the exogeneity of at least the major oil price shocks is strong is supported by the data for the 1980/81 and 1990/91 oil price shocks, but not for other oil price shocks. Notably, statistical measures of the net oil price increase relative to the recent past do not represent the exogenous component of oil prices. In fact, only a small fraction of the observed oil price increases during crisis periods can be attributed to exogenous oil production disruptions. Third, compared to previous indirect estimates of the effects of exogenous supply disruptions on real GDP growth that treated major oil price increases as exogenous, the direct estimates obtained in this paper suggest a sharp drop after five quarters rather than an immediate and sustained reduction in economic growth for a year. They also suggest a spike in CPI inflation three quarters after the exogenous oil supply shock rather than a sustained increase in inflation, as is sometimes conjectured. Finally, the results of this paper put into perspective the importance of exogenous oil production shortfalls in the Middle East. It is shown that exogenous oil supply shocks made remarkably little difference overall for the evolution of US real GDP growth and CPI inflation since the 1970s, although they did matter for some historical episodes.

Oil price shocks and real GDP growth: empirical evidence for some OECD countries

Abstract: This study assesses empirically the effects of oil price shocks on the real economic activity of the main industrialized countries. Multivariate VAR analysis is carried out using both linear and non-linear models. The latter category includes three approaches employed in the literature, namely, the asymmetric, scaled and net specifications. Evidence of a non-linear impact of oil prices on real GDP is found. In particular, oil price increases are found to have an impact on GDP growth of a larger magnitude than that of oil price declines, with the latter being statistically insignificant in most cases. Among oil importing countries, oil price increases are found to have a negative impact on economic activity in all cases but Japan. Moreover, the effect of oil shocks on GDP growth differs between the two oil exporting countries in the sample, with the UK being negatively affected by an oil price increase and Norway benefiting from it.

Economic Fundamentals Of the Knowledge Society

Abstract: This article provides an introduction to fundamental issues in the development of new knowledge-based economies. After placing their emergence in historical perspective and proposing a theoretical framework that distinguishes knowledge from information, the authors characterize the specific nature of such economies. They go on to deal with some of the major issues concerning the new skills and abilities required for integration into the knowledge-based economy; the new geography that is taking shape (where physical distance ceases to be such an influential constraint); the conditions governing access to both information and knowledge, not least for developing countries; the uneven development of scientific, technological (including organizational) knowledge across different sectors of activity; problems concerning intellectual property rights and the privatization of knowledge; and the issues of trust, memory and the fragmentation of knowledge. This monograph is concerned with the nature of the process of macroeconomic growth that has characterized the U. S. experience, and manifested itself in the changing pace and sources of the continuing rise real output per capita over the course of the past two hundred years. A key observation that emerges from the long-term quantitative economic record is that the proximate sources of increases in real GDP per head in the century between 1889 and 1999 were quite different from those which obtained during the first hundred years of American national experience. Baldly put, the economy's ascent to a position of twentieth century global industrial leadership entailed a transition from growth based upon the interdependent development and extensive exploitation of its natural resources and the substitution of tangible capital for labor, towards a the maintenance of an productivity leadership through rising rates of intangible investment in the formation and exploitation of technological and organizational knowledge.

The united republic of tanzania

Abstract: Since the 1990s, the per capita GDP in Tanzania has been increasing and Tanzania’s growth trend has been impressive. The annual GDP growth has averaged 6.4 percent between 2000 and 2004 and exceeded seven percent in 2002 and 2003 (Figure 2, Real GDP Growth). Tanzania’s growth rate of 6.3 percent in 2004 was well above the rate achieved in South Africa (3.7 percent). This strong growth performance reflects the fruits of responsible monetary and fiscal policy, concerted reforms, rapid export growth, and significant debt relief.

Business and default cycles for credit risk

Abstract: Various economic theories are available to explain the existence ofcredit and default cycles. There remains empirical ambiguity, how-ever, as to whether these cycles coincide. Recent papers suggest bytheir empirical research set-up that they do, or at least that defaultsand credit spreads tend to co-move with macro-economic variables. Iftrue, this is important for credit risk management as well as for regu-lation and systemic risk management. In this paper, we use 1933–1997U.S. data on real GDP, credit spreads, and business failure rates toshed new light on the empirical evidence. We use a multivariate un-observed components framework to disentangle credit and businesscycles. We distinguish two types of cycles in the data, correspond-ing to periods of around 6 and 11-16 years, respectively. Cyclicalco-movements between GDP and business failures mainly arise at thelonger frequency. At the higher frequency of 6 years, co-cyclicalityis less clear-cut. We also show that spreads reveal a positive andnegative co-cyclicality with failure rates and GDP, respectively. Thispattern disappears, however, if we concentrate on the post World WarII period. We comment on the implications of our findings for creditrisk management.Key words: credit cycles; business cycles; defaults; credit risk; pro-cyclicality; multivariate unobserved component models.JEL Codes: C19; G21.

Commentary: Economic growth is the basis of mortality rate decline in the 20th century—experience of the United States 1901–2000

Abstract: Background The hypothesis that economic growth has been the principal source of mortality decline during the 20th century in the United States is investigated. This hypothesis is consistent with the large epidemiological literature showing socioeconomic status to be inversely related to health status and unemployment associated with elevated morbidity and mortality rates. Despite evidence over many years showing economic growth, over at least a decade, to be fundamental to mortality rate declines and unemployment rates showing lagged, cumulative effects on mortality rate increases, a recent paper argues that the impact of economic growth is to increase the mortality rate. Methods This study utilizes age-adjusted mortality rates over 1901‐2000 in the United States as the outcome measure, while independent variables include real GDP per capita in purchasing power parity, the unemployment rate, and the employment to population ratio. A basic interaction model is constructed whereby (i) real GDP per capita, (ii) the unemployment rate, and (iii) the multiplicative interaction between real GDP per capita and the unemployment rate are analysed in relation to age-adjusted mortality rates. The Shiller procedure is used to estimate the distributed lag relations over at least a decade for variables (i), (ii), and (iii). The error correction method is used to examine these relations for both levels and annual changes in independent and dependent variables. Results While GDP per capita, over the medium- to long-term, is strongly inversely related to mortality rates during 1901‐2000, in the very short term—i.e. within the first few months—rapid economic growth is occasionally associated with increased mortality rates estimated in annual changes. With respect to the unemployment rate, the first year (without lag) will frequently be associated with a decrease in mortality, but thereafter, and at least for the following decade, the effect is to increase the mortality rate. Thus, the net effect of increased unemployment is a substantial increase in mortality. This is also reflected in the entirely negative relation between the cumulative effects of the employment to population ratio and mortality rates over a decade. Conclusions Economic growth, cumulatively over at least a decade, has been the central factor in mortality rate decline in the US over the 20th century. The volatility of rapid economic growth as it departs from its major trend, has a very short-term effect (within a year) to increase mortality—partly owing to adaptation to new technology and the adjustment of the formerly unemployed to new jobs, social status, and organizational structures.

China’s Economic Growth 1978-2025: What We Know Today about China’s Economic Growth Tomorrow

Abstract: Views of the future China vary widely. While some believe that the collapse of China is inevitable, others see the emergence of a new superpower that increasingly poses a threat to the U.S. This paper examines the economic growth prospects of China over the next two decades. Extrapolating past real GDP growth rates into the future, the size of the Chinese economy surpasses that of the U.S. in purchasing power terms between 2012 and 2015; by 2025, China is likely to be the world's largest economic power by almost any measure. The extrapolations are supported by two types of considerations. First, China’s growth patterns of the past 25 years since the beginning of economic reforms match well those identified by standard economic development and trade theories (structural change, catching up, and factor price equalization). Second, decomposing China’s GDP growth into growth of labor and other variables, the near-certain information available today about the quantity and quality of Chinese laborers through 2015, if not several years after, allows inferences about future GDP growth. Short of some cataclysmic event, demographics alone suggests China’s continued economic rise. If talent is randomly distributed in the world population and if agglomeration of talent is important, then the odds are strongly in China’s favor.

Trade Liberalization and Economic Growth in Fiji. An Empirical Assessment Using the ARDL Approach

Abstract: This study investigates the effect of trade liberalization on economic performance in Fiji using a Cobb–Douglas production function, which is expanded to take into account political instability and trade liberalization. The long run results conform to theoretical expectations, except for the contribution of labour force, which is negatively related to real Gross Domestic Product. We attribute this to the rapid and consistent emigration of skilled labour following the 1987 coups. While human capital was found to be the most influential variable, exports and investment were found to be weakly related to Gross Domestic Product. The key finding is that the dummy variable for signing the IMF agreement in 1984 had a statistically significant positive effect on real Gross Domestic Product in the long run, but the short run effects of signing the agreement as well as the short run and long run effects of implementing the agreement in 1986 were statistically insignificant.

An empirical assessment of the comparative advantage gains from trade : Evidence from Japan

Abstract: We provide an empirical assessment of the comparative advantage gains from trade argument. We use Japan's nineteenth-century opening up to world commerce as a natural experiment to answer the following counterfactual: "Byhow much would real income have had to increase in Japan during its final autarky years of 1851-1853 to afford the consumption bundle the economy could have obtained if it were engaged in international trade during that period?" Using detailed historical data on trade flows, autarky prices, and Japan's real GDP, we obtain upper bounds on the gains from trade of about 8 to 9 percent of Japan's GDP.

An indicator of monthly gdp and an early estimate of quarterly gdp growth

Abstract: A range of monthly series are currently available giving indications of short-term movements in output in the UK. The main aim of this paper is to suggest a formal and coherent procedure for grossing these monthly data up to represent the whole of GDP. Although the resultant estimates of GDP would be worse than those obtained by direct measurement, they should be more satisfactory than simply making an informal inference from whatever monthly data are available. Our examination of the efficacy of the method for estimation of the state of economic activity indicates a rather satisfactory outcome. Macroeconomic policy making in real time faces the perennial problem of uncovering what is actually happening to the economy. Movements of seasonally adjusted real GDP (referred to subsequently simply as GDP) and related estimates of the output gap are widely regarded as important predictors of future inflation and thus are relevant to the problem of inflation targeting. Estimates of GDP are typically produced quarterly with the first estimates in the UK available about 25 days after the end of the quarter to which they relate. 1 In many countries

Regulation and macroeconomic performance

Abstract: Regulation is purportedly enacted to serve specific social purposes. In reality, however, it follows a more complex political economy process, where legitimate social goals are mixed with the objectives of particular interest groups. Whatever its justification and objectives, regulation can have potentially significant macroeconomic consequences, by helping or hampering the dynamics of economic restructuring and resource reallocation that underlie the growth process. This paper provides an empirical analysis of the macroeconomic impact of regulation. It first characterizes the stylized facts on regulation across the world, using a set of newly constructed, comprehensive indicators of regulation in a large number of countries in the 1990s. Using these indicators, the paper studies the effects of regulation on economic growth and macroeconomic volatility employing cross-country regression analysis. In particular, the paper considers whether the effects of regulation are affected by the country's level of institutional development. Finally, the analysis controls for the likely endogeneity of regulation with respect to macroeconomic performance. The paper concludes that a heavier regulatory burden reduces growth and increases volatility, although these effects are smaller the higher the quality of the overall institutional framework.

On the Remitting Patterns of Immigrants: Evidence from Mexican Survey Data

Abstract: The investment in and use of information technology (IT) was undoubtedly an important contributor to the rapid growth of the U.S. economy during the 1990s. By one estimate the IT-producing sector was responsible for 1.4 percentage points of the nation’s average annual real gross domestic product (GDP) growth of 4.6 percent between 1996 and 2000 (Economics and Statistics Administration 2003). But in 2001 the situation changed dramatically as business spending on IT equipment and services declined, and in 2002 IT-producing industries contributed only an estimated 0.1 percentage points to the 2 percent real GDP growth. A recent paper by Hotchkiss, Pitts, and Robertson (2005) documents the wage outcomes for workers during and after the IT boom of the 1990s using a unique set of employer-employee matched earnings data for workers in Georgia. One of the paper’s findings is that, after controlling for individual characteristics, workers in IT-producing industries have average earnings that are much higher than those in other industries. Workers in IT service industries, in particular, accrue a relatively large wage premium. Hotchkiss, Pitts, and Robertson speculate that these different wage outcomes may be related to the types of occupations IT workers hold across industries. Unfortunately, the data used in their paper do not contain information on a worker’s occupation. This article’s main objective is to present evidence on the extent to which variation in average wages between IT-producing and non-IT industries can be accounted for by differences in wages paid to IT-related occupations. 1 If average industry wage differentials in IT-producing industries are substantially lower after controlling for IT occupation, this finding will reinforce the notion that occupation wage differentials are an important source of the observed wage premium accruing to workers in IT-producing industries. The article first describes the data used in the analysis and then discusses the various estimates of the average industry wage differentials. The sample average wage differences across industries are compared with the differences obtained after

Assessing Potential Output Growth in the Euro Area: A Growth Accounting Perspective

Abstract: For monetary policy purposes it is useful to apply a concept of potential output growth that looks through the fluctuations inherent in most model based estimates. Growth accounting can be a useful tool in this respect, given its focus on average developments in real GDP growth and supply side factors over medium to longer-term horizons. This paper describes the assumptions and measurement issues underlying the growth accounting framework and applies it to euro area data for the period 1980 to 2003. It shows that growth in measured total factor productivity has been the single most important contributor to real GDP growth over this period. However, the contribution to growth from this factor declined between the 1980s and the 1990s, while that from labour increased. Looking forward, the projected demographic developments imply a reduction in average real GDP growth in the coming decades unless compensation is achieved from other supply-side factors.

A cross-province comparison of Okun's coefficient for Canada

Abstract: This study estimates Okun's coefficients for ten Canadian provinces using real GDP and unemployment rate data across the provinces. An average estimated Okun's coefficient of −1.58 is obtained under the Hodrick-Prescott detrending method and −1.32 under the quadratic detrending method. There is relative stability of the coefficients across the two detrending methods. Generally, the cost of unemployment in terms of the loss in real GDP is higher in the bigger and more industrialized provinces ranging from −2.14 for Ontario to less than −1 for the Maritime provinces.

The Loss of Property Rights and the Collapse of Zimbabwe

Abstract: What in the world happened to Zimbabwe? Although the country certainly had its share of difficulties during the first 25 years since independence in 1980, it largely dodged the famines, civil strife, and grossly mismanaged government policies so common in other subSaharan African countries. Through the 1980s, its annual real GDP growth averaged more than 5 percent, and, unlike other African countries, agricultural yields were large enough to allow the country to export grain. In the following decade, economic growth slowed, and government policies were less than efficient, but Zimbabwe still managed to grow an average of 4.3 percent, in real terms. 1 The government also offered free education and relatively good access to medical care. Population growth was slowing, and foreign direct investment increasing. With rich mineral assets, an educated workforce, and beautiful natural wonders, Zimbabwe appeared to have the best chance to be an African success story. However, in 2000 through 2003, the Zimbabwean government initiated a land reform policy that involved forcibly taking over whiteowned commercial farms, ostensibly to redistribute this property to landless blacks. The rationale for this policy was to redress the British seizure of fertile farmland in the late 1890s, which resulted in hundreds of thousands of blacks being pushed onto lower grade communal lands. No compensation was paid to the commercial farmers, and hundreds of thousands of employed black farm workers were left without

The Economic Costs of Corruption: A Survey and New Evidence

Abstract: This paper reviews the empirical literature on the economic costs of corruption. Corruption affects economic growth, the level of GDP per capita, investment activity, international trade and price stability negatively. Additionally, it biases the composition of government expenditures. The second part of the paper estimates the effect of corruption on economic growth and GDP per capita as well as on six possible transmission channels. The results of this analysis allows to calculate the total effect of corruption: An increase of corruption by about one index point reduces GDP growth by 0.13 percentage points and GDP per capita by 425 US$.

Monetary Policy and House Prices: A Cross-Country Study

Abstract: This paper examines periods of pronounced rises and falls of real house prices since 1970 in eighteen major industrial countries, with particular focus on the lessons for monetary policy. We find that real house prices are pro-cyclical - co-moving with real GDP, consumption, investment, CPI inflation, budget and current account balances, and output gaps. House price booms are typically preceded by a period of easing monetary policy, but then diminishing slack and rising inflation lead monetary authorities to begin tightening policy before house prices peak. In a careful reading of official reports, speeches, and minutes, we find little evidence that foreign central banks have reacted to past episodes of rising real house prices beyond taking into account their implications for inflation and output growth. However, central bankers have expressed a range of opinions in the more recent policy debate with some willing in certain cases to raise policy rates to try to stem current and future surges in asset prices while others favor moral suasion or a hands-off approach. Finally, we characterize the risks associated with house-price reversals. Although mortgage lenders in some countries have significant exposure to house prices, the balance of evidence suggests that this exposure does not, in and of itself, pose a significant risk to financial stability. Nevertheless, the co-movement of both property prices and default rates with the business cycle means that losses on mortgage lending are likely to be higher when banks' other lines of business are also performing poorly.

Fixed versus Flexible Exchange Rates: Evidence from Developing Countries

Abstract: This paper investigates the formalisation that in a small open economy flexible exchange rates act as a 'shock absorber' and mitigate the effects of external shocks more effectively. An intertemporal small open economy model with nominal rigidities, in which real shocks generate internal imbalances under fixed and flexible exchange rates, is laid out. The role of world interest rate and world output shocks in driving output, trade imbalances and real exchange rate fluctuations is investigated. Using a sample of 38 developing countries, the paper assesses whether the responses of real GDP, the trade balance and the real exchange rate to world real interest rate and world output shocks differ across exchange rate regimes.

Asset Returns and Economic Growth

Abstract: IT IS DIFFICULT to see how real U.S. GDP growth can be as rapid in the next half-century as it has been in the last. The baby boom is long past, and no similar explosion of fertility to boost the rate of labor force growth from natural increase has occurred since or is on the horizon. The modern feminist revolution is two generations old: no reservoir of potential female labor remains to be added to the paid labor force. Immigration will doubtless continue--the United States is likely still to have only one-twentieth of the world's population late in this century and to remain vastly richer than the world on average--but can immigration proceed rapidly enough to make the labor force grow as fast in the next fifty years as it did in the past fifty? Productivity growth, the other possible source of faster GDP growth, is a wild card: although we find very attractive the arguments of Robert Gordon for rapid future productivity growth, (1) his is not the consensus view; this is shown most strikingly by the pessimistic projection of the Social Security trustees that very long run labor productivity growth will average 1.6 percent a year. (2) A slowing of the rate of real economic growth raises challenges for the financing of pay-as-you-go social insurance systems that rely on a rapidly expanding economy to provide generous benefits for the elderly at relatively low tax rates on the young. An alternative way of financing such systems is to prefund them, and for that reason projections of future rates of return on capital play an important role in today's economic policy debates. The solutions to many policy issues depend heavily on whether historical real rates of return--especially the 6.5 percent or so annual average realized rate of return on equities--are likely to persist: the higher are likely future rates of return, the more attractive become policies that, at the margin, shift some additional portion of the burden of financing social insurance onto the present and the near future, thus giving workers' contributions the power to compound over time. We believe that the argument for prefunding--that slowing economic growth creates a presumption that the burden of financing social insurance should be shifted back in time toward the present--is much shakier than many economists recognize. (3) It is our belief that if forecasts of slower real GDP growth come to pass, then it is highly likely that future real returns to capital will likewise be significantly below past historical averages. In our view the links between asset returns and economic growth are strong: the algebra of capital accumulation and the production function and the standard macrobehavioral analytical models that economists use as their finger exercises suggest this; arithmetic suggests this as well, for we cannot see any easy way to reconcile current real bond, stock dividend, and stock earnings yields with the twin assumptions that asset markets are making rational forecasts and that rationally expected real rates of return will be as high in the future as they have been in the past half-century. Our basic argument is very simple. Consider a simple chart of the supply and demand for capital in generational perspective (figure 1). The supply of capital--the amount of investable assets accumulated by savers--presumably follows a standard (if probably steeply sloped) supply curve, (4) with relative quantities of total saving and thus of capital plotted on the horizontal axis, and the price of capital--that is, its rate of return--on the vertical axis. The demand for capital by businesses will, of course, depend on the rate of return demanded by the savers who commit their capital to businesses: the higher this required rate of return, the lower will be business demand for capital--and the more eager will businesses be to substitute labor for capital in production. The demand for capital by businesses depends on many other factors as well, from which we single out two: [FIGURE 1 OMITTED] --The rate of growth of the labor force. …

Assessing the Sources of Changes in the Volatility of Real Growth

Abstract: In much of the world, growth is more stable than it once was. Looking at a sample of twentyfive countries, we find that in sixteen, real GDP growth is less volatile today than it was twenty years ago. And these declines are large, averaging more than fifty per cent. What accounts for the fact that real growth has been more stable in recent years? We survey the evidence and competing explanations and find support for the view that improved inventory management policies, coupled with financial innovation, adopting an inflation targeting scheme and increased central bank independence have all been associated with more stable real growth. Furthermore, we find weak evidence suggesting that increased commercial openness has coincided with increased output volatility.(This abstract was borrowed from another version of this item.)

What Caused the Decline in U. S. Business Cycle Volatility

Abstract: This paper investigates the sources of the widely noticed reduction in the volatility of American business cycles since the mid 1980s. Our analysis of reduced volatility emphasizes the sharp decline in the standard deviation of changes in real GDP, of the output gap, and of the inflation rate. The primary results of the paper are based on a small three-equation macro model that includes equations for the inflation rate, the nominal Federal Funds rate, and the change in the output gap. The development and analysis of the model goes beyond the previous literature in two directions. First, instead of quantifying the role of shocks-in-general, it decomposes the effect of shocks between a specific set of supply shock variables in the model’s inflation equation, and the error term in the output gap equation that is interpreted as representing 'IS' shifts or 'demand shocks'. It concludes that the reduced variance of shocks was the dominant source of reduced business-cycle volatility. Supply shocks accounted for 80 percent of the volatility of inflation before 1984 and demand shocks the remainder. The high level of output volatility before 1984 is accounted for roughly two-thirds by the output errors (demand shocks) and the remainder by supply shocks. The output errors are tied to the paper’s initial decomposition of the demand side of the economy, which concludes that three sectors residential and inventory investment and Federal government spending, account for 50 percent in the reduction in the average standard deviation of real GDP when the 1950-83 and 1984-2004 intervals are compared. The second innovation in this paper is to reinterpret the role of changes in Fed monetary policy. Previous research on Taylor rule reaction functions identifies a shift after 1979 in the Volcker era toward inflation fighting with no concern about output, and then a shift in the Greenspan era to a combination of inflation fighting along with strong countercyclical responses to positive or negative output gaps. Our results accept this characterization of the Volcker era but find that previous estimates of Greenspan-era reaction functions are plagued by positive serial correlation. Once a correction for serial correlation is applied, the Greenspan-era reaction function looks almost identical to the pre-1979 Burns reaction function! Thus the issue in assessing monetary policy regimes comes down to Volcker vs. non-Volcker. Full model simulations show that the Volcker reaction function, if applied throughout the 1965-2004 period, would have delivered substantially higher pre-1984 output volatility than the Burns-Greenspan alternative with the corresponding benefit of a permanent reduction in the inflation rate by fully five percentage points per annum. Compared to the succession of three reaction functions actually in effect, application of the Volcker reaction function prior to 1979 would have deepened the 1975 recession but made the 1982 recession milder, since by then inflation would have been partly conquered. The paper concludes by disputing the view that better monetary policies had any role in the reduced volatility of the business cycle - the Greenspan policies did not need to fight against inflation because there was no inflation, thanks to the reversal of supply shocks from an adverse to a beneficial direction, and thanks to a reduction in the size of the output errors or 'IS' shifts.

On the Determinants of Growth Volatility: a Nonparametric Approach

Abstract: We propose a model where the growth rate volatility of a country is explained by structural change and the size of the economy. We test these predictions by means of nonparametric techniques. Growth volatility appears to (i) decrease with total GDP, (ii) increase with the share of the agricultural sector on GDP. Trade openness can also play a role in conjunction with total GDP. In accordance with our model, the explanatory power of per capita GDP, a relevant variable in other empirical works, vanishes when we control for these variables.

Financial development and economic growth in Tanzania : a dynamic causality test

Abstract: This study investigates empirically the role of financial development on economic growth in Tanzania. Unlike many previous studies, the study uses three proxies of financial development against real GDP per capita (a proxy for economic growth). Using the Johansen-Juselius cointegration method and vector error-correction mechanism, the empirical results of this study, taken together, reveal a bidirectional casuality between financial development and economic growth in Tanzania - although a supply-leading response tends to predominate. When the ratio of broad money to GDP (M2/GDP) is used, a distinct supply-leading response is found to prevail. However, when the ratio of currency to narrow definition of money (CC/M1) and the ratio of bank claims on the private sector to GDP (DCP/GDP) are used, a bi-directional causality evidence seems to prevail. The study therefore recommends that the current financial development in Tanzania be developed further in order to make the economy more monetised.

Two Centuries of American Macroeconomic Growth From Exploitation of Resource Abundance to Knowledge-Driven Development

Abstract: This monograph is concerned with the nature of the process of macroeconomic growth that has characterized the U. S. experience, and manifested itself in the changing pace and sources of the continuing rise real output per capita over the course of the past two hundred years. A key observation that emerges from the long-term quantitative economic record is that the proximate sources of increases in real GDP per head in the century between 1889 and 1999 were quite different from those which obtained during the first hundred years of American national experience. Baldly put, the economy's ascent to a position of twentieth century global industrial leadership entailed a transition from growth based upon the interdependent development and extensive exploitation of its natural resources and the substitution of tangible capital for labor, towards a the maintenance of an productivity leadership through rising rates of intangible investment in the formation and exploitation of technological and organizational knowledge. The study's scope is indicated by the following:

Trade Liberalization in Bangladesh: The Process and Its Impact on Macro Variables Particularly Export Expansion

Abstract: This paper examines the process of Bangladesh's trade liberalization and its impact on the growth and structure of exports, imports, GDP and other relevant macroeconomic variables with particular emphasis on exports. It also provides an updated account of the various structural adjustment programs undertaken in Bangladesh including trade, fiscal, industrial and financial reforms, and explains how these reforms supplemented one another to promote greater market and export orientation. Various Indicators of trade liberalization show a substantial shift of the Bangladesh extemal trade regime and the resultant reduction in anti-export bias. Spearheaded by textiles and readymade garments, both total- and manufacturing exports consistently grew over the post-liberalization period. Real GDP also registered a steady growth during the post-liberalization period, particularly during the 1 990s. An empirical investigation based on a distributed lag.modeling and cointegration suggests that both anti-export bias reduction and import-GDP ratio, the latter being a proxy for imported capital, have significantly impacted on exports in the long-term.

Dimensions of well-being in eu regions: do gdp and unemployment tell us all we need to know?

Abstract: Unemployment and GDP are widely used as proxies for a broader concept of well-being in the European Union, especially at regional level. This paper asks whether such an approach is reasonable. Using data from a range of sources, it examines the association between unemployment, GDP and a number of alternative well-being indicators in five domains – material welfare, education, health, productive activity and social participation. It finds that GDP per capita is not a good proxy for wider regional well-being within a country, but that the regional unemployment rate performs reasonably well. Pooling fifteen member states together, however, regional GDP is a better predictor of a region’s well-being than unemployment. This is because national GDP tells us more about how a country is doing overall than the national unemployment rate. These findings have implications for the European Council’s decision to treat variation in the regional unemployment rates as the sole indicator of regional inequality within Member States, and for the allocation of the Structural Funds.

The Price of Gold: A Global Required Yield Theory

Abstract: A gold valuation theory based on viewing gold as a global real store of wealth shows that the real price of gold varies inversely with the stock market P/E. The price thus is a direct function of a global yield required to achieve a constant real after-tax return equal to long-term global real GDP per capita growth. Foreign exchange affects the price of gold to the extent that required yields and purchasing power parity equalizations do not take place across nations in the short run. A quarterly valuation model constructed using concurrent economic data yields prices that track real U.S. gold prices over 1979–2002 within 12% of tracking error. Prices are sometimes briefly impacted by major world events.