Showing papers on "Real gross domestic product published in 2014"

The impact of economic growth, industrial structure and urbanization on carbon emission intensity in China

Abstract: China’s macroeconomic policy framework has been determined to ensure steady growth, adjust the industrial structure and advance the socioeconomic reforms in recent years. And urbanization is supposed to be one of the most important socioeconomic reform directions. Meanwhile, China also committed to reduce carbon emissions intensity by 2020, then it should be noted that what kind of impact of these policy orientations on carbon emission intensity. Therefore, based on the historical data from 1978 to 2011, this paper quantitatively studies the impact of China’s economic growth, industrial structure and urbanization on carbon emission intensity. The results indicate that, first, there is long-term cointegrating relationship between carbon emission intensity and other factors. And the increase in the share of tertiary industry [i.e., the ratio of tertiary industry value added to gross domestic product (GDP)] and economic growth (here we use the real GDP per capita) play significant roles in curbing carbon emission intensity, while the promotion of population urbanization (i.e., the share of population living in the urban regions of total population) may lead to carbon emission intensity growth. Second, there exists significant one-way causality running from the urbanization rate and economic growth to carbon emission intensity, respectively. Third, among the three drivers, economic growth proves the main influencing factor of carbon emission intensity changes during the sample period.

Democracy Does Cause Growth

Abstract: We provide evidence that democracy has a significant and robust positive effect on GDP. Our empirical strategy relies on a dichotomous measure of democracy coded from several sources to reduce measurement error and controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy on economic growth. Our baseline results use a linear model for GDP dynamics estimated using either a standard within estimator or various different Generalized Method of Moments estimators, and show that democratizations increase GDP per capita by about 20% in the long run. These results are confirmed when we use a semiparametric propensity score matching estimator to control for GDP dynamics. We also obtain similar results using regional waves of democratizations and reversals to instrument for country democracy. Our results suggest that democracy increases future GDP by encouraging investment, increasing schooling, inducing economic reforms, improving public good provision, and reducing social unrest. We find little support for the view that democracy is a constraint on economic growth for less developed economies.

The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections

Abstract: The United States achieved a 2.0 percent average annual growth rate of real GDP per capita between 1891 and 2007. This paper predicts that growth in the 25 to 40 years after 2007 will be much slower, particularly for the great majority of the population. Future growth will be 1.3 percent per annum for labor productivity in the total economy, 0.9 percent for output per capita, 0.4 percent for real income per capita of the bottom 99 percent of the income distribution, and 0.2 percent for the real disposable income of that group. The primary cause of this growth slowdown is a set of four headwinds, all of them widely recognized and uncontroversial. Demographic shifts will reduce hours worked per capita, due not just to the retirement of the baby boom generation but also as a result of an exit from the labor force both of youth and prime-age adults. Educational attainment, a central driver of growth over the past century, stagnates at a plateau as the U.S. sinks lower in the world league tables of high school and college completion rates. Inequality continues to increase, resulting in real income growth for the bottom 99 percent of the income distribution that is fully half a point per year below the average growth of all incomes. A projected long-term increase in the ratio of debt to GDP at all levels of government will inevitably lead to more rapid growth in tax revenues and/or slower growth in transfer payments at some point within the next several decades.There is no need to forecast any slowdown in the pace of future innovation for this gloomy forecast to come true, because that slowdown already occurred four decades ago. In the eight decades before 1972 labor productivity grew at an average rate 0.8 percent per year faster than in the four decades since 1972. While no forecast of a future slowdown of innovation is needed, skepticism is offered here, particularly about the techno-optimists who currently believe that we are at a point of inflection leading to faster technological change. The paper offers several historical examples showing that the future of technology can be forecast 50 or even 100 years in advance and assesses widely discussed innovations anticipated to occur over the next few decades, including medical research, small robots, 3-D printing, big data, driverless vehicles, and oil-gas fracking.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

What are the Macroeconomic Effects of Asset Purchases

Abstract: We examine the impact of large-scale asset purchases of government bonds on real GDP and the CPI in the United Kingdom and the United States with a Bayesian VAR, estimated on monthly data from 2009 M3 to 2013 M5. We identify an asset purchase shock with sign and zero restrictions. In contrast to the impulse response analysis in previous work, the reactions of real GDP and CPI are left unrestricted, so as formally to test whether these variables are affected by asset purchases. We then explore the transmission channels to the domestic economy and emerging markets. Our results suggest that asset purchases have a statistically significant effect on real GDP with a purchase of 1% of GDP leading to a .36% (.18%) rise in real GDP and a .38% (.3%) rise in CPI for the United States (United Kingdom). In the United States, this policy lowers yields on long-term government bonds and the real exchange rate. In the United Kingdom, on other hand, interest rate futures and measures of financial market uncertainty are more affected. There is also some evidence that emerging market sovereign bond and corporate bond spreads decline, with industrial production rising in response a positive asset purchase shock in either country.

Renewable Energy and Economic Growth: Evidence from the Sign of Panel Long-Run Causality

Abstract: Unlike previous renewable energy-growth studies, this study examines for the first time the relationship between renewable energy and economic growth for 80 countries under the Canning and Pedroni (2008) long-run causality test, which indicates that there is long-run positive causality running from renewable energy to real GDP for the total sample as well as across regions. The empirical findings provide strong evidence that the interdependence between renewable energy consumption and economic growth indicates that renewable energy is important for economic growth and likewise economic growth encourages the use of more renewable energy source. The presence of causality provides an avenue to continue the use of government policies that enhance the development of the renewable energy sector. Keywords: Renewable energy; Economic growth; Sign test; Panel countries JEL Classifications: C33; E23; Q20

Tourist arrivals and macroeconomic determinants of CO2 emissions in Malaysia

Abstract: This paper investigates the determinants of carbon dioxide emission with special emphasis on tourism development in Malaysia. Within a multivariate framework, which includes real GDP, energy consumption, financial development, and urbanization, cointegration and causality tests were applied to determine the relationship in the variables. The results reveal long-run relationships between the series and a positive unidirectional long-run causality running from tourist arrivals and the other series to pollution. The study fails to establish any causal relationship between tourism and economic growth in the long-run. These findings suggest that tourist arrivals are active contributors to pollution, but arrivals do not translate into sufficient upsurge in GDP. It is recommended that policy-makers should entrench cleaner energy programmes in their tourism development policies.

Fiscal Stimulus in Times of High Debt: Reconsidering Multipliers and Twin Deficits

Abstract: We investigate the impact of fiscal stimuli at different levels of the government debt-to-GDP ratio for a sample of 17 European countries from 1970 to 2010. This is implemented in an interacted panel VAR framework in which all coefficient parameters are allowed to change continuously with the debt-to-GDP ratio. We find that responses to government spending shocks exhibit strong nonlinear behavior. While the overall cumulative effect of a spending shock on real GDP is positive and significant at moderate debt-to-GDP ratios, this effect turns negative as the ratio increases. The total cumulative effect on the trade balance as a share of GDP is negative at first but switches sign at higher levels of debt. Consequently, depending on the degree of public indebtedness, our results accommodate long-run fiscal multipliers that are greater and smaller than one or even negative as well as twin deficit and twin divergence behavior within one sample and time period. From a policy perspective, these results lend additional support to increased prudence at high public debt ratios because the effectiveness of fiscal stimuli to boost economic activity or resolve external imbalances may not be guaranteed.

On energy consumption and GDP studies; A meta-analysis of the last two decades

Abstract: The relationship between energy consumption and GDP growth has been intensely examined in multiple frameworks set by various methods and countries. This paper is a meta-analysis of 51 studies published in the last two decades, with worldwide data since 1949, on the relationship between energy consumption and GDP growth. The aim is to systemize some of the factors that cause the variation of results in these studies. Our results yield evidence that the long run elasticity of GDP growth with respect to energy consumption is not independent of the method employed for cointegration, the data type and the inclusion of variables such as the price level or capital in the cointegration equation. Also 1% increase in capital, increases the elasticity of GDP with respect to energy consumption by 0.85%.

Balance-of-payments-constrained growth in Brazil: a test of Thirlwall's Law, 1890-1973

Abstract: The paper offers a time-series test of Thirlwall's Law for Brazil during the 1890-1973 period. The results confirm the existence of a long-run relationship between Brazilian gross domestic product (GDP), terms-of-trade, and world income, as Thirlwall's Law predicts. In addition, an error correction model is estimated, which shows that adjusting toward Thirlwall's Law equilibrium explains a substantial part of total variation of real GDP in the short run.

The causal dynamics between renewable energy, real GDP, emissions and oil prices: evidence from OECD countries

Abstract: This study extends the empirical literature on the determinants of renewable energy consumption in the case of 25 OECD countries for the period 1980–2011. Preliminary analysis suggests the presence of cross-sectional dependence within the panel data. As a result, second-generation panel unit root tests of Smith et al. (2004) and Pesaran (2007) are undertaken to find the respective variables that are integrated of order one. Panel cointegration and error correction modelling reveal that a long-run relationship exists between renewable energy consumption per capita, real GDP per capita, carbon dioxide emissions per capita and real oil prices. The long-run elasticity estimates are positive and statistically significant for real GDP per capita, carbon dioxide emissions per capita and real oil prices. The panel error correction model shows that a feedback relationship exists among the variables.

Presidents and the U.S. Economy: An Econometric Exploration

Abstract: The U.S. economy has grown faster—and scored higher on many other macroeconomic metrics-- hen the President of the United States is a Democrat rather than a Republican. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 complete presidential terms. This paper asks why. The answer is not found in technical time series matters (such as differential trends or mean reversion), nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. Many other potential explanations are examined but fail to explain the partisan growth gap.

Taking the Pulse of the Real Economy Using Financial Statement Analysis: Implications for Macro Forecasting and Stock Valuation

Abstract: In this study, we hypothesize and find that financial statement analysis of firm profitability drivers applied at the aggregate level yields timely insights that are relevant for forecasting real economic activity We first show that focusing on the 100 largest firms offers a cost-effective way to extract information embedded in accounting profitability data of the entire stock market portfolio We then show that accounting profitability data aggregated across the 100 largest firms have predictive content for subsequent real Gross Domestic Product (GDP) growth We also show that stock market returns have predictive content for future real GDP growth, while their predictive power varies with the length of the measurement window with annual stock market returns being the most powerful Importantly, we find that the predictive content of our indices of aggregate accounting profitability drivers is incremental to that of annual stock market returns An in-depth investigation of consensus survey fore

Energy Consumption and Economic Growth Nexus: Evidence from Developed Countries in Europe

Abstract: This paper analyzes the relationship between renewable and non-renewable energy consumption and economic growth for a panel of fifteen European Union countries over the period 1990-2011 within a multivariate framework. The heterogeneous panel cointegration tests present a long-run equilibrium relationship between real GDP, renewable and non-renewable energy consumption, greenhouse gas emissions and research and development. The Granger-causality results demonstrate unidirectional causality between non-renewable energy consumption and economic growth. Keywords: renewable energy consumption; non-renewable energy consumption; growth JEL Classifications: C23; O11; O13

The Role of Policy in the Great Recession and the Weak Recovery

Abstract: It’s been nearly five years since the recession of 2007–2009 ended. By all accounts, this very severe recession was followed by an extremely disappointing recovery. Economic growth dur ing the recovery has been far too slow to raise the employment-to-population ratio from the low levels to which it fell during the recession, or to close materially the gap between real GDP and potential GDP, in marked contrast to the rapid recovery from the previous severe recession in the early 1980s or from earlier severe recessions in US history. When you include both the periods of the recession and the slow recovery, economic instability has more than tripled according to a common measure of performance used by macroeconomists: the standard deviation of the percentage gap between real GDP and potential GDP rose from 1½ percent during 1984–2006 to 5½ percent during 2007–2012 (Taylor 2013) . In this paper I consider the role of economic policy in this poor economic performance. I. The Shift in Policy In evaluating the role of policy it is important to consider actions taken before, during, and after the financial panic in the fall of 2008. A careful look at the full decade from five years before to five years after the panic reveals that there was a significant shift in policy away from what worked reasonably well in the decades before. Broadly speaking, monetary policy, regulatory policy, and fiscal policy each became more discretionary, more interventionist, and less predictable in the years leading up to the

The Role of Natural Gas Consumption and Trade in Tunisia’s Output

Abstract: This paper examines the impact of natural gas consumption, real gross fixed capital formation and trade on the real GDP in the case of Tunisia over the period 1980-2010. We use an Autoregressive Distributed Lag (ARDL) bounds testing approach to test the existence of a longterm relationship between the variables. The Vector Error Correction Method (VECM) Granger approach is applied to test the direction of the causal relation between the series. Our findings indicate the existence of a long-term relationship among the variables. Natural gas consumption, real gross fixed capital formation and trade add in economic growth. Natural gas consumption, real gross fixed capital formation and real trade Granger-cause real GDP. These findings open up new insights for policymakers to formulate a comprehensive energy policy to sustain economic growth in the long term.

Boosting GDP growth by accounting for the environment

Abstract: Governments around the world use national income accounting to measure economic performance. However, it is widely recognized that indices that focus exclusively on market production, such as gross domestic product (GDP), are incomplete. National accounts could be extended to include many nonmarket services. This paper presents an analysis of how adjusting GDP to reflect the effects of air pollution would affect economic growth rates in the United States. Inclusion of monetized measures of environmental quality is a potentially important step in moving toward a measure that captures social welfare more accurately than GDP.

Short-term effects of the 2008 Great Recession on the health of the Italian population: an ecological study.

Abstract: To report on the effects on health that the 2008 Great Recession is producing in Italy, by comparing the consistency of Italian data with general observations reported in the scientific literature, and by pointing out consequences on the rates of all-cause mortality, cardiovascular mortality, male suicidal behaviours, daytime alcohol drinking and traffic fatalities. This is an ecological study in which MEDLINE, PsycINFO and PubMed were searched for the literature with combinations of the following keywords: economic recession, financial crisis, unemployment, health, suicide and mental health. Data from two Italian government agencies (Italian Institute of Statistics, ISTAT, and Italian Agency of Drugs, AIFA) in the years from 2000 to 2010 were obtained and analysed, by producing models of multiple linear regressions. After the recession onset, all-cause mortality remained stable, and was not associated with the economic fluctuations. Differently, cardiovascular mortality was associated with the rate of unemployment, and showed a significant increase in 2010. Alcohol consumption increased in 2009, the year with the worst real GDP decrease (−5.1 %). Though the total rate of suicide was not associated with the economic situation, male completed and attempted suicides due to financial crisis were significantly associated with the rate of unemployment and the real GDP. The increasing diffusion of antidepressants was not associated with a lowering of the rate of suicide. The data on the Italian situation here discussed are sufficiently reliable to conclude that a link exists between the ongoing economic recession and health and mental health of Italians. Further research is needed to understand more in detail and with stronger reliability such link, to support primary and secondary preventive interventions and orient the development of effective sociopolitical interventions.

Does political risk deter FDI inflow

Abstract: Purpose – In today's increasingly globalized world, foreign direct investment (FDI) is a hotbed for discussion. Numerous studies have been undertaken regarding FDI, its determinants and benefits, but very few works provide importance to the effect of political risk on the inflow of FDI. Some papers introduce institutional or governance issues in determining FDI inflow, but a comprehensive framework in this respect is non-existent. With this end in view, the authors take 146 countries worldwide over a period of 1984-2009 and then classify countries as OECD or non-OECD members to see whether there is any difference in the nature of the effect. The study keeps other possible determinants of FDI – market size, growth rate of real GDP, trade openness, infrastructural facilities as control variables while considering the effect of underlying political risk factors in deterring the FDI. Design/methodology/approach – This paper looks at the effect of political risk on FDI by using a systematic approach of factor ...

The Zero Lower Bound and Endogenous Uncertainty

Abstract: This paper documents a strong negative correlation between macroeconomic uncertainty and real GDP growth since the Great Recession. Prior to that event the correlation was weak, even when conditioning on recessions. At the same time, many central banks reduced their policy rate to its zero lower bound (ZLB), which we contend contributed to the strong correlation between macroeconomic uncertainty and real GDP growth. To test that theory, we use a model where the ZLB occasionally binds. The model roughly matches the correlation in the data—away from the ZLB the correlation is weak but strongly negative when the ZLB binds.

Effect of Macroeconomic Factors on Commercial Banks Profitability in Kenya: Case of Equity Bank Limited

Abstract: Commercial banks appear very profitable in Sub-Saharan Africa (SSA), average returns on assets were about 2 percent over the last 10 years, significantly higher than bank returns in other parts of the world. In order to survive in the long run, it is important for a bank to find out what are the determinants of profitability so that it can take initiatives to increase its profitability. However, owing to the fact that there are few studies on the determinants of bank profitability, various studies indicate divergent views on the effect of macroeconomic factors on bank profitability. For these reasons, it is not clear whether or not macroeconomic factors affect bank profitability in Kenya. The main purpose of this study was to establish effect of macroeconomic factors on bank profitability in Kenya with Equity bank in focus to understand country and bank specific characteristics. Specific objectives were to determine, examine and evaluate effect of; economic growth (real GDP), inflation and exchange rate on bank profitability in Kenya with Equity bank in focus respectively. This study was modeled on the theory of production and based on correlation research design. Sample size consisted annual data spanning 5 years from 2008- 2012. Data was obtained from the World Development Indicators, published Equity bank documents (annual reports, investor briefings and financial statements). To accomplish this task the study used Cobb-Douglas production function transformed into natural logarithm. This study employed OLS to establish the relationship between macroeconomic factors and bank profitability. The results indicated that macroeconomic factors (real GDP, inflation and exchange rate) have insignificant effect on bank profitability in Kenya with Equity bank in focus at 5% level of significance. We concluded that macroeconomic factors do not affect bank profitability in Kenya. In view of this, it is clear that internal factors which relate to bank management significantly determine bank profitability in Kenya. The study therefore recommends that banks to adopt policies that enhance managerial efficiency for higher profits to be realized. Keywords: Macroeconomic factors, Commercial bank Profitability

Energy consumption and gdp in asean countries: bootstrap-corrected panel and time series causality tests

Abstract: This study reexamines the relationship between energy consumption per capita and real GDP per capita for Indonesia, Malaysia, the Philippines, Singapore and Thailand using both panel data causality which is taking into account cross-sectional dependence and heterogeneity among the countries and time series causality tests for the period 1971–2009. The findings indicate that taking into account cross-sectional dependence has a substantial effect on the achieved results. The conservation hypothesis is supported for Indonesia, Malaysia and the Philippines. Although a bidirectional relation is found in the case of Thailand, since there is no positive effect of energy consumption on GDP, the conservation hypothesis is supported. In the pattern of Singapore, the neutrality hypothesis is supported. In addition, the increase in investment and labor force lead to more energy consumption in Indonesia, Malaysia and Thailand.