Showing papers on "Real gross domestic product published in 2008"
TL;DR: This paper applied the most recently developed panel unit root, heterogeneous panel cointegration and panel-based error correction models to re-investigate co-movement and the causal relationship between energy consumption and real GDP within a multivariate framework that includes capital stock and labor input for 16 Asian countries during the 1971-2002 period.
722 citations
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TL;DR: This paper found that if the foreign aid over Gross Domestic Product (GDP) that a country receives over a period of five years reaches the 75th percentile in the sample, then a 10-point index of democracy is reduced between 0.5 and almost one point, a large effect.
Abstract: Foreign aid provides a windfall of resources to recipient countries and may result in the same rent seeking behavior as documented in the 'curse of natural resources' literature. In this paper the author discusses this effect and documents its magnitude. Using panel data for 108 recipient countries in the period 1960 to 1999, the author found that foreign aid has a negative impact on institutions. In particular, if the foreign aid over Gross Domestic Product (GDP) that a country receives over a period of five years reaches the 75th percentile in the sample, then a 10-point index of democracy is reduced between 0.5 and almost one point, a large effect. For comparison, we also measure the effect of oil rents on political institutions. The author found that aid is a bigger curse than oil.
703 citations
TL;DR: This article examined the relationship between capital formation, energy consumption and real GDP in a panel of G7 countries using panel unit root, panel cointegration, Granger causality and long-run structural estimation.
694 citations
TL;DR: The authors found no evidence that deficits help reelection in any group of countries - developed and less developed, new and old democracies, countries with different government or electoral systems, and countries with varying levels of democracy.
Abstract: Conventional wisdom is that good economic conditions and expansionary fiscal policy help incumbents get reelected, but this has not been tested in a large cross-section of countries. We test these arguments in a sample of 74 countries over the period 1960-2003. We find no evidence that deficits help reelection in any group of countries - developed and less developed, new and old democracies, countries with different government or electoral systems, and countries with different levels of democracy. In developed countries and in old democracies, election-year deficits actually reduce the probability that a leader is reelected, with similar, although smaller, negative electoral effects of deficits in the earlier years of an incumbent's term in office. Higher growth rates of real GDP per-capita raise the probability of reelection only in the less developed countries and in new democracies, but voters are affected by growth over the leader's term in office rather than in the election year itself and apparently only by growth not attributed to global growth. Low inflation is rewarded by voters only in the developed countries. The effects we find are not only statistically significant, but also quite substantial quantitatively. We also suggest how the absence of a positive electoral effect of deficits can be consistent with the political deficit cycle found in new democracies.
467 citations
TL;DR: A comparison of the effects of exogenous shocks to global crude oil production on seven major industrialized economies suggests a fair degree of similarity in the real growth responses as discussed by the authors, which is consistent with a monetary explanation of the inflation of the 1970s.
Abstract: A comparison of the effects of exogenous shocks to global crude oil production on seven major industrialized economies suggests a fair degree of similarity in the real growth responses. An exogenous oil supply disruption typically causes a temporary reduction in real GDP growth that is concentrated in the second year after the shock. Inflation responses are more varied. The median CPI inflation response peaks after three to four quarters. Exogenous oil supply disruptions need not generate sustained inflation or stagflation. Typical responses include a fall in the real wage, higher short-term interest rates, and a depreciating currency with respect to the dollar. Despite many qualitative similarities, there is strong statistical evidence that the responses to exogenous oil supply disruptions differ across G7 countries. For suitable subsets of countries, homogeneity cannot be ruled out. A counterfactual historical exercise suggests that the evolution of CPI inflation in the G7 countries would have been similar overall to the actual path even in the absence of exogenous shocks to oil production, consistent with a monetary explanation of the inflation of the 1970s. There is no evidence that the 1973–1974 and 2002–2003 oil supply shocks had a substantial impact on real growth in any G7 country, whereas the 1978–1979, 1980, and 1990–1991 shocks contributed to lower growth in at least some G7 countries. (JEL: E31, E32, Q43)
372 citations
TL;DR: In this article, the authors examine any causal effects between electricity consumption and real GDP for 30 OECD countries using a bootstrapped causality testing approach and unravel evidence in favour of electricity consumption causing real GDP in Australia, Iceland, Italy, the Slovak Republic, Czech Republic, Korea, Portugal, and the UK.
362 citations
TL;DR: In this paper, the effects of government purchases of goods and services on private GDP, inflation and the long-term interest rate in Italy were studied using a structural vector autoregression model.
Abstract: This paper studies the effects of fiscal policy on private GDP, inflation and the long-term interest rate in Italy using a structural vector autoregression model. To this end, a database of quarterly cash data for selected fiscal variables for the period 1982:1-2004:4 is constructed, largely relying on the information contained in the Italian Treasury Quarterly Reports. The main results of the study can be summarized as follows. A shock to government purchases of goods and services has a sizeable and robust effect on economic activity: an exogenous one per cent (in terms of private GDP) shock increases private real GDP by 0.6 per cent after 3 quarters. The response goes to zero after two years, reflecting with a lag the low persistence of the shock. The effects on employment, private consumption and investment are also positive. The response of inflation is positive but small and short-lived. In contrast, public wages, which in many studies are lumped together with purchases, have no significant effect on output, while the effects on employment turn negative after two quarters. Shocks to net revenue have negligible effects on all the variables.
330 citations
TL;DR: The authors used a 42-country model of production and trade to assess the implications of eliminating current account imbalances for relative wages, relative GDPs, real wages, and real absorption.
Abstract: This paper uses a 42-country model of production and trade to assess the implications of eliminating current account imbalances for relative wages, relative GDPs, real wages, and real absorption. How much relative GDPs need to change depends on flexibility of two forms: factor mobility and adjustment in sourcing of imports, with more flexibility requiring less change. At the extreme, U.S. GDP falls by 30 percent relative to the world's. Because of the pervasiveness of nontraded goods, however, most domestic prices move in parallel with relative GDP, so that changes in real GDP are small.
312 citations
TL;DR: In this paper, the determinants of FDI for Malaysia were examined using annual time series data for the period 1960-2005, and the results suggest that increases in the level of financial development, infrastructure development, and trade openness promote FDI.
294 citations
TL;DR: The authors used the Maddison GDP data to assemble international time series from before 1914 on real per capita personal consumer expenditure, C. The average fractional decline in C exceeds that in GDP during wartime crises but is similar for non-war crises.
Abstract: We build on the Maddison GDP data to assemble international time series from before 1914 on real per capita personal consumer expenditure, C. We also improve the GDP data in many cases. The C variable comes closer than GDP to the consumption concept that enters into usual asset-pricing equations. We have essentially full annual data on C for 24 countries and GDP for 36 countries. For samples that start as early as 1870, we apply a peak-to-trough method for each country to isolate economic crises, defined as cumulative declines in C or GDP by at least 10%. The principal world economic crises ranked by importance are World War II, World War I and the Great Depression, the early 1920s (possibly reflecting the influenza epidemic of 1918-20), and post-World War II events such as the Latin-American debt crisis and the Asian financial crisis. We find 95 crises for C and 152 for GDP, implying disaster probabilities around 3-1/2% per year. The disaster size has a mean of 21-22% and an average duration of 3-1/2 years. A comparison of C and GDP declines shows roughly coincident timing. The average fractional decline in C exceeds that in GDP during wartime crises but is similar for non-war crises. We simulate a Lucas-tree model with i.i.d. growth shocks and Epstein-Zin-Weil preferences. This simulation accords with the observed average equity premium of around 7% on levered equity, using a “reasonable” coefficient of relative risk aversion of 3.5. This result is robust to a number of perturbations, except for limiting the sample to non-war crises, a selection that eliminates most of the largest declines in C and GDP.
287 citations
TL;DR: The authors used a Bayesian time-varying parameters structural VAR with stochastic volatility for GDP deflator inflation, real GDP growth, a 3-month nominal rate, and the rate of growth of M4 to investigate the underlying causes of the Great Moderation in the United Kingdom.
Abstract: We use a Bayesian time-varying parameters structural VAR with stochastic volatility for GDP deflator inflation, real GDP growth, a 3-month nominal rate, and the rate of growth of M4 to investigate the underlying causes of the Great Moderation in the United Kingdom. Our evidence points toward a dominant role played by good luck in fostering the more stable macroeconomic environment of the last two decades. Results from counterfactual simulations, in particular, show that (i) “bringing the Monetary Policy Committee back in time” would only have had a limited impact on the Great Inflation episode, at the cost of lower output growth; (ii) imposing the 1970s monetary rule over the entire sample period would have made almost no difference in terms of inflation and output growth outcomes; and (iii) the Great Inflation was due, to a dominant extent, to large demand non-policy shocks, and to a lesser extent—especially in 1973 and 1979—to supply shocks.
TL;DR: The outlook for national health spending calls for continued steady growth, with the health share of gross domestic product (GDP) expected to increase to 16.3 percent in 2007 and then rise throughout the projection period, reaching 19.5 percent of GDP by 2017.
Abstract: The outlook for national health spending calls for continued steady growth. Spending growth is projected to be 6.7 percent in 2007, similar to its rate in 2006. Average annual growth over the projection period is expected to be 6.7 percent. Slower growth in private spending toward the end of the period is expected to be offset by stronger growth in public spending. The health share of gross domestic product (GDP) is expected to increase to 16.3 percent in 2007 and then rise throughout the projection period, reaching 19.5 percent of GDP by 2017.
TL;DR: A broad overview of the measurement techniques used in estimating GDP and the national accounts in the United States can be found in this article, where a framework and methods that take these economic census data and combine them using a mosaic of monthly, quarterly, and annual economic indicators to produce quarterly and annual GDP estimates are presented.
Abstract: National income and product accounts— best known by one of their principle aggregates, gross domestic product (GDP)—are produced by virtually every nation in the world. Simon Kuznets and Richard Stone, both later to become Nobel Prize winners, led the creation of the national accounts for the United States and the United Kingdom, respectively. So, what exactly does GDP measure? How is it constructed? Why do the GDP and other national accounts estimates sometimes present a different picture of the economy than other economic indicators? This article is intended to help answer these questions by providing a broad overview of the measurement techniques used in estimating GDP and the national accounts in the United States. In the United States, the GDP and the national accounts estimates are fundamentally based on detailed economic census data and other information that is available only once every five years. The challenge lies in developing a framework and methods that take these economic census data and combine them using a mosaic of monthly, quarterly, and annual economic indicators to produce quarterly and annual GDP estimates. For example, one problem is that the other economic indicators that are used to extrapolate GDP in between the five-year economic census data—such as retail sales, housing starts, and manufacturers shipments of capital goods—are often collected for purposes other than estimating GDP and
TL;DR: This article examined the relationship between finance and real GDP, capital, and total factor productivity growth in 30 Chinese provinces over the period 1989-2003, and found that traditionally used indicators of financial development and China-specific indicators measuring the level of state interventionism in finance are generally negatively associated with growth and its sources, while indicators measured the degree of market driven financing in the economy are positively associated with them.
TL;DR: In this paper, the authors examined the effect of foreign aid for economic growth in the six poorest and highly aid dependent African countries, namely the Central African Republic, Malawi, Mali, Niger, Sierra Leone and Togo.
TL;DR: Empirically investigate the co-movements and the causal relationships among real GDP, tourism development, and the real exchange rate in a multivariate model and finds the structural breakpoints.
TL;DR: In this article, the authors examine the survival of SMEs in the course of economic development and the importance of government promotion programs for SME development empirically with Indonesian data, and they show that both real gross domestic product per capita and government development expenditure have positive impacts on SME growth.
Abstract: There is an ongoing debate in the literature on the development of small and medium enterprises (SMEs) in less developed countries (LDCs) on two issues: the survival of SMEs in the course of economic development and the importance of government promotion programs for SME development. This research paper aims to examine those issues empirically with Indonesian data. For this purpose, it develops and tests a set of hypotheses. It shows that both real gross domestic product per capita and government development expenditure (especially that used to finance SME development promotion programs) have positive impacts on SME growth. With this finding, the research argues that SMEs in LDCs can survive, and even grow in the long-run, for three main reasons: (a) they create a niche market for themselves, (b) they act as a “last resort” for the poor, and (c) they will grow along with large enterprises (LEs) because of their increasingly important production linkages with LEs in the form of subcontracting.
TL;DR: In this paper, the authors derived forecasts for euro area real GDP growth based on a bottom up approach from the production side, where linear regression models in the form of bridge equations were applied.
Abstract: This paper derives forecasts for euro area real GDP growth based on a bottom up approach from the production side. That is, GDP is forecast via the forecasts of value added across the different branches of activity, which is quite new in the literature. Linear regression models in the form of bridge equations are applied. In these models earlier available monthly indicators are used to bridge the gap of missing GDP data. The process of selecting the best performing equations is accomplished as a pseudo real time forecasting exercise, i.e. due account is taken of the pattern of available monthly variables over the forecast cycle. Moreover, by applying a very systematic procedure the best performing equations are selected from a pool of thousands of test bridge equations. Our modelling approach, finally, includes a further novelty which should be of particular interest to practitioners. In practice, forecasts for a particular quarter of GDP generally spread over a prolonged period of several months. We explore whether over this forecast cycle, where GDP is repeatedly forecast, the same set of equations or different ones should be used. Changing the set of bridge equations over the forecast cycle could be superior to keeping the same set of equations, as the relative merit of the included monthly indictors may shift over time owing to differences in their data characteristics. Overall, the models derived in this forecast exercise clearly outperform the benchmark models. The variables selected in the best equations for different situations over the forecast cycle vary substantially and the achieved results confirm the conjecture that allowing the variables in the bridge equations to differ over the forecast cycle can lead to substantial improvements in the forecast accuracy.
TL;DR: The authors explored the connection between interest rates in major industrial countries and annual real output growth in other countries and found that high foreign interest rates have a contractionary effect on annual real GDP growth in the domestic economy, but that this effect is centered on countries with fixed exchange rates.
TL;DR: Shiu et al. as discussed by the authors studied the causal relationship between telecommunications development and economic growth in China and its regions and found that there is a unidirectional relationship running from real gross domestic product (GDP) to telecommunications development at the national level.
Abstract: Shiu A. and Lam P.-L. Causal relationship between telecommunications and economic growth in China and its regions, Regional Studies. This paper studies the causal relationship between telecommunications development and economic growth of China. Its result indicates that there is a unidirectional relationship running from real gross domestic product (GDP) to telecommunications development at the national level. Causality running from telecommunications development to real GDP is found only in the provinces in the affluent eastern region, but not in the low-income central and western provinces. The results imply that an improvement in telecommunications infrastructure alone is not sufficient for stimulating growth in the central and western provinces. It is equally important for the Chinese government to develop and enhance other complementary factors like business environments, transportation networks, education and manpower training in order to make the best use of the telecommunications systems in the ce...
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TL;DR: In this article, the effects of government purchases of goods and services on private GDP, inflation and the long-term interest rate in Italy were studied using a structural vector autoregression model.
Abstract: This paper studies the effects of fiscal policy on private GDP, inflation and the long-term interest rate in Italy using a structural vector autoregression model. To this end, a database of quarterly cash data for selected fiscal variables for the period 1982:1-2004:4 is constructed, largely relying on the information contained in the Italian Treasury Quarterly Reports. The main results of the study can be summarized as follows. A shock to government purchases of goods and services has a sizeable and robust effect on economic activity: an exogenous one per cent (in terms of private GDP) shock increases private real GDP by 0.6 per cent after 3 quarters. The response goes to zero after two years, reflecting with a lag the low persistence of the shock. The effects on employment, private consumption and investment are also positive. The response of inflation is positive but small and short-lived. In contrast, public wages, which in many studies are lumped together with purchases, have no significant effect on output, while the effects on employment turn negative after two quarters. Shocks to net revenue have negligible effects on all the variables.
TL;DR: In this paper, the authors analyzed the long-run relationship between energy consumption and real gross domestic product (GDP) in Turkey taking into account the size of unrecorded economy and found that unidirectional causality runs from official GDP to energy in both short and long runs.
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TL;DR: In this article, the authors investigated possible causal relationships among tourism expenditure, real exchange rate and economic growth by using quarterly data and confirmed the tourism-led growth hypothesis through cointegration and causality testing.
Abstract: Tourism is one of the most important factors in the productivity of Mexican economy with significant multiplier effects on economic activity. This paper investigates possible causal relationships among tourism expenditure, real exchange rate and economic growth by using quarterly data. Johansen cointegration analysis shows the existence of one cointegrated vector among real GDP, tourism expenditure and real exchange rate where the corresponding elasticities are positive. The tourism-led growth hypothesis is confirmed through cointegration and causality testing. Tourism expenditure and Real Exchange Rate (RER) are weakly exogenous to real GDP. A modified version of the Granger Causality test shows that causality goes unidirectionally from tourism expenditure and RER to real GDP. Impulse response analysis shows that a shock in tourism expenditure produces a short fall and then a positive effect on growth.
TL;DR: In this article, the authors analyzed the dependence of the Gross Domestic Product (GDP) per capita growth rates on changes in the Corruption Perceptions Index (CPI) for all countries in the world.
Abstract: We analyze the dependence of the Gross Domestic Product (GDP) per capita growth rates on changes in the Corruption Perceptions Index (CPI). For the period 1999–2004 for all countries in the world, we find on average that an increase of CPI by one unit leads to an increase of the annual GDP per capita growth rate by 1.7%. By regressing only the European countries with transition economies, we find that an increase of CPI by one unit generates an increase of the annual GDP per capita growth rate by 2.4%. We also analyze the relation between foreign direct investments received by different countries and CPI, and we find a statistically significant power-law functional dependence between foreign direct investment per capita and the country corruption level measured by the CPI. We introduce a new measure to quantify the relative corruption between countries based on their respective wealth as measured by GDP per capita.
TL;DR: This article showed that changes in the terms of trade have no first-order effect on productivity when output is measured as chain-weighted real GDP, and showed that measures of real income change with the changes in trade at business cycle frequencies and during financial crises.
TL;DR: In this paper, the authors analyzed the relationship between economic growth and funding for research and showed that the level of GERD equal to 2.6 maximises the GDP per capita, moreover is important to have global maximum that GERD financed by government is less than 30% of total.
Abstract: This paper analyses the relationship between economic growth and funding for research. The econometric analysis show that Gross domestic Expenditure on R&D (GERD) as percentage of Gross Domestic Product (GDP) is a important driver of economic growth (R 2 adj = 71%) that is measured by GDP per capita. The optimisation shows that the level of GERD equal to 2.6 maximises the GDP per capita, moreover is important to have global maximum that GERD financed by government is lesser than 30% of total. The paper also discusses Lisbon Strategy and research policy of the USA, Japan and EU countries.
TL;DR: In this paper, the authors examined whether financial development has "caused" economic growth in India since 1996 and examined the dynamic interactions between the growth of real Gross Domestic Product and indicators of financial development.
Abstract: This article examines whether financial development has ‘caused’ economic growth in India since 1996. The dynamic interactions between the growth of real Gross Domestic Product and indicators of fi...
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TL;DR: This article used vector autoregressions and impulse-response functions to construct a U.S. financial conditions index (FCI), which is an accurate predictor of real GDP growth, anticipating turning points in activity with a lead time of six to nine months.
Abstract: This paper uses vector autoregressions and impulse-response functions to construct a U.S. financial conditions index (FCI). Credit availability - proxied by survey results on lending standards - is an important driver of the business cycle, accounting for over 20 percent of the typical contribution of financial factors to growth. A net tightening in lending standards of 20 percentage points reduces economic activity by ¾ percent after one year and 1¼ percent after two years. Much of the impact of monetary policy on the economy also works through its effects on credit supply, which is evidence supporting the existence of a credit channel of monetary policy. Shocks to corporate bond yields, equity prices, and real exchange rates also contribute to fluctuations in the FCI. This FCI is an accurate predictor of real GDP growth, anticipating turning points in activity with a lead time of six to nine months.
TL;DR: In this article, the authors show that the EMU has not affected historical characteristics of member countries' business cycles and their cross-correlations, and they also find that the aggregate euro area per-capita GDP growth since 1999 has been lower than what could have been predicted on the basis of historical experience and US observed developments.
Abstract: This paper shows that the EMU has not affected historical characteristics of member countries’ business cycles and their cross-correlations. Member countries which had similar levels of GDP percapita in the seventies have also experienced similar business cycles since then and no significant change associated with the EMU can be detected. For the other countries, volatility has been historically higher and this has not changed in the last ten years. We also find that the aggregate euro area per-capita GDP growth since 1999 has been lower than what could have been predicted on the basis of historical experience and US observed developments. The gap between US and euro area GDP per capita level has been 30% on average since 1970 and there is no sign of catching up or of further widening.
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TL;DR: In the wake of high and rising oil prices since 2003, the member states of the Gulf Cooperation Council (GCC) have seen dynamic economic development, enhancing their role in the global economy as investors and trade partners as discussed by the authors.
Abstract: In the wake of high and rising oil prices since 2003, the member states of the Gulf Cooperation Council (GCC) have seen dynamic economic development, enhancing their role in the global economy as investors and trade partners. Real GDP growth has been buoyant, with non-oil activity expanding faster than oil GDP. Macroeconomic developments have also been characterised by large fiscal and current account surpluses as a result of rising oil revenues, notwithstanding fiscal expansion and rapid import growth. The most significant macroeconomic challenge faced by GCC countries is rising inflation in an environment in which the contribution of monetary policy to containing inflationary pressure is constrained by the exchange rate regimes. The overall favourable macroeconomic backdrop of recent years has provided GCC countries with an opportunity to tackle long-standing structural challenges, such as the diversification of oil-centred economies and reform of the labour markets. In a global context, apart from developing into a pole of global economic growth, GCC countries - together with other oil-exporting countries - have become a major net supplier of capital in global markets, second only to East Asia. As a result, they have become part of the international policy debate on global imbalances. Furthermore, GCC countries are home to some of the world's largest sovereign wealth funds, which raises several financial stability issues. Their role as trade partners has also increased, with the European Union being the only major region in the world maintaining a significant surplus in bilateral trade with the GCC. GCC countries are also key players in global energy markets in terms of production, exports and the availability of spare capacity. Their role is likely to become even more pivotal in the future as they command vast oil and gas reserves and benefit from relatively low costs in exploiting oil reserves.