scholarly journals Okuns Law Revisited: Evidence From OECD Countries

2011 ◽  
Vol 8 (8) ◽  
Author(s):  
B. Moazzami ◽  
B. Dadgostar
Keyword(s):  
Growth Rate ◽  
Error Correction ◽  
Inverse Relationship ◽  
Oecd Countries ◽  
Real Output ◽  
Quarterly Data ◽  
Modelling Framework ◽  
Long Run ◽  
Short Run ◽  
The Relationship

Okuns law is one of the most enduring stylistic facts in macroeconomics. The inverse relationship between the unemployment rate and the growth rate of real output, known as Okuns law, has important implications for macroeconomic policy, particularly in determining the optimal and desirable growth rate of output. This paper examines this relationship within an error correction modelling framework which tests the relationship as a long-run relationship while allowing short-run deviations from long-run equilibrium to take place. Using quarterly data for 13 OECD countries covering the period from 1988.I to 2007:IV, we find overwhelming support for Okuns law.

scholarly journals The Relationship between Current Account Deficits and Growth in Montenegro: ARDL Bounds Testing Approach

2018 ◽  
Vol 7 (3) ◽  
pp. 5-24 ◽  
Author(s):  
Mustafa Özer ◽  
Jovana Žugić ◽  
Sonja Tomaš-Miskin
Keyword(s):  
Growth Rate ◽  
Current Account ◽  
Current Account Deficit ◽  
Gdp Growth ◽  
Bounds Testing ◽  
Current Account Deficits ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Short Run ◽  
The Relationship

Abstract In this study, we investigate the relationship between current account deficits and growth in Montenegro by applying the bounds testing (ARDL) approach to co-integration for the period from the third quarter of 2011 to the last quarter of 2016. The bounds tests suggest that the variables of interest are bound together in the long run when growth is the dependent variable. The results also confirm a bidirectional long run and short run causal relationship between current account deficits and growth. The short run results mostly indicate a negative relationship between changes in the current account deficit GDP ratio and the GDP growth rate. This means that any increase of the value of independent variable (current account deficit GDP ratio) will result in decrease of the rate of GDP growth and vice versa. The long-run effect of the current account deficit to GDP ratio on GDP growth is positive. The constant (β0) is positive but also the (β1), meaning that with the increase of CAD GDP ratio of 1 measuring unit, the GDP growth rate would grow by 0,5459. This positive and tight correlation could be explained by overlapping structure of the constituents of CAD and the drivers of GDP growth (such as tourism, energy sector, agriculture etc.). The results offer new perspectives and insights for new policy aiming for sustainable economic growth of Montenegro.

scholarly journals Dynamic Analysis for Measuring the Impact of Remittance Inflows on Inflation: Evidence From Georgia

2021 ◽  
Vol 12 (1) ◽  
pp. 339
Author(s):  
Azer Dilanchiev ◽  
Aligul Aghayev ◽  
Md. Hasanur Rahman ◽  
Jannatul Ferdaus ◽  
Araz Baghirli
Keyword(s):  
Policy Making ◽  
Inflation Rate ◽  
Explanatory Variable ◽  
Critical Role ◽  
Quarterly Data ◽  
Independent Variables ◽  
Long Run ◽  
Short Run ◽  
The Impact ◽  
The Relationship

Remittance plays a critical role for small economies like Georgia as an unusual means of financing. In policy-making decisions, an understanding of the essence of the relationship between the amount of money exchanged and inflation is important. The paper studies the impact of remittance inflows, using quarterly data spanning a period (2000-2018), on the inflation rate in Georgia. The paper revealed that all independent variables have an effect on the long-run inflation rate; long-run inflation is positively associated with the leading explanatory variable remittance, and no relation is found in the short-run between remittance and inflation. The paper found that inflation's adjustment level to its equilibrium is 12% annually.

scholarly journals Education composition and growth: A pooled mean group analysis of OECD countries

2011 ◽  
Vol 58 (4) ◽  
pp. 455-471 ◽  
Author(s):  
Marta Simões
Keyword(s):  
Group Analysis ◽  
Oecd Countries ◽  
Usual Estimator ◽  
Pooled Mean Group ◽  
Long Run ◽  
Parameter Heterogeneity ◽  
Short Run ◽  
Empirical Growth ◽  
The Relationship ◽  
Different Levels

This paper uses the pooled mean group (PMG) estimator and a dataset restricted to OECD countries to examine the relationship between different levels of education, i.e. between education composition and growth. The PMG estimator allows a greater degree of parameter heterogeneity than the usual estimator procedures used in empirical growth studies by imposing common long run relationships across countries while allowing for heterogeneity in the short run responses and intercepts. Results point to a significant longterm relationship not only between higher education and growth but also between lower schooling levels and growth. This indicates that public spending on education in OECD countries should be spread across the different levels of education in a balanced way.

Inflation, market structure, and innovation-driven growth with distinct cash constraints

2020 ◽  
Author(s):  
By Chien-Yu Huang ◽  
Juin-Jen Chang ◽  
Lei Ji
Keyword(s):  
Growth Rate ◽  
Monetary Policy ◽  
Numerical Analysis ◽  
Market Structure ◽  
Schumpeterian Growth ◽  
Long Run ◽  
Short Run ◽  
Endogenous Market Structure ◽  
The Relationship ◽  
D Investment

Abstract This article explores the effects of monetary policy (inflation) in a Schumpeterian growth model with an endogenous market structure and distinct cash (or cash-in-advance, CIA) constraints on consumption, production, and two types of R&D investment—quality-improving and variety-expanding R&D. We show that the relationship between inflation and growth is negative if quality-improving R&D (incumbent) is subject to the CIA constraint, but positive if variety-expanding R&D (entrant) is subject to the CIA constraint. Inflation has no effect on growth as consumption or production is subject to the CIA constraint. In addition, the firm size may either increase or decrease in response to inflation depending on which type of R&D is constrained by cash. With all CIA constraints properly imposed, a likely scenario in our numerical analysis shows that a rise in inflation leads the growth rate to exhibit a decrease in the short run but an increase in the long run. Moreover, our welfare analysis shows that Friedman’s rule, in general, is not socially optimal.

INFLATION AND UNEMPLOYMENT RELATIONSHIP: A DYNAMIC REPORT OF NIGERIA AND MEXICO IN THE PERSPECTIVE OF PHILLIPS CURVE FROM 1991-2016

2019 ◽  
Vol 10 (2) ◽  
pp. 11-30
Author(s):  
Oluwasefunmi Eunice Irewole
Keyword(s):  
Inverse Relationship ◽  
Phillips Curve ◽  
Positive Impact ◽  
Secondary Data ◽  
The World Bank ◽  
Long Run ◽  
Short Run ◽  
Simple Regression Analysis ◽  
The Government ◽  
The Relationship

This research study investigated the relationship between unemployment and inflation in Nigeria and Mexico from 1991-2016. Secondary data were used to gather data from the World Bank database, Central Bank of Nigeria and Bank of Mexico. In order to determine the set objective, OLS and simple regression analysis of the econometric model were used. The models specified inflation as function unemployment, money supply % GDP, total Gross Formation Products. Based on the above test carried out, the study finds out that: Inflation significantly has little impact on unemployment in Nigeria both in the long – run and short – run within the period under review. In Mexico, there is actually no significant relationship between unemployment and inflation because when inflation is high, unemployment in Mexico is also high. The study shows that investors have an inverse relationship with unemployment in Mexico. There is also an inverse relationship between inflation and GDP in Mexico and Nigeria. And in regard to the findings above the study recommends that the government should use discretionary policy that would reduce unemployment by boosting the level of investment and maintaining stability in the money sup-ply as it had a positive impact on Inflation in the long run. Friedman is of the view that the increase in government spending and the rate at which economy borrows, the higher the inflation.

Assessing the Role of Remittances and Financial Deepening in Growth: The Experience of Lebanon

2017 ◽  
Vol 17 (1) ◽  
pp. 20150059 ◽  
Author(s):  
Salah Abosedra ◽  
Ali Fakih
Keyword(s):  
Financial Development ◽  
Strong Support ◽  
Financial Deepening ◽  
Quarterly Data ◽  
Long Run ◽  
Short Run ◽  
Growth Volatility ◽  
The Relationship

We investigate the relationship between remittances, financial deepening and the growth of the Lebanese economy using quarterly data from 1993 to 2011. Our results provide strong support for the theoretical contention that remittances and financial development share a robust long-run relationship with growth in Lebanon. However, the results indicate that short-run effects on growth volatility are statistically insignificant from financial development but strongly significant from remittances. These results extend recent findings on the financial development, remittances and growth nexus and imply that benefits expected from remittances for addressing growth volatility in Lebanon materialize more than those associated with financial development.

Electricity consumption and economic growth in ASEAN

2017 ◽  
Vol 5 (2) ◽  
pp. 16
Author(s):  
Ahmad Ghazali Ismail ◽  
Arlinah Abd Rashid ◽  
Azlina Hanif
Keyword(s):  
Economic Growth ◽  
Energy Use ◽  
Electricity Consumption ◽  
Panel Estimation ◽  
Real Gdp ◽  
Long Run ◽  
Bidirectional Relationship ◽  
Short Run ◽  
Using Data ◽  
The Relationship

The relationship and causality direction between electricity consumption and economic growth is an important issue in the fields of energy economics and policies towards energy use. Extensive literatures has discussed the issue, but the array of findings provides anything but consensus on either the existence of relations or direction of causality between the variables. This study extends research in this area by studying the long-run and causal relations between economic growth, electricity consumption, labour and capital based on the neo-classical one sector aggregate production technology mode using data of electricity consumption and real GDP for ASEAN from the year 1983 to 2012. The analysis is conducted using advanced panel estimation approaches and found no causality in the short run while in the long-run, the results indicate that there are bidirectional relationship among variables. This study provides supplementary evidences of relationship between electricity consumption and economic growth in ASEAN.

ANALISIS PENGARUH EKSPOR TERHADAP PERTUMBUHAN EKONOMI INDONESIA

2017 ◽  
Vol 11 (1) ◽  
pp. 1-20
Author(s):  
Ari Mulianta Ginting
Keyword(s):  
Economic Growth ◽  
Export Performance ◽  
Descriptive Analysis ◽  
Correction Model ◽  
Administration System ◽  
Long Run ◽  
Short Run ◽  
Available Information ◽  
Increasing Trends ◽  
The Relationship

Ekspor merupakan salah satu faktor terjadinya peningkatan pertumbuhan ekonomi suatu negara, sejalan dengan hipotesis export-led growth (ELG). Penelitian ini menganalisis perkembangan ekspor dan pertumbuhan ekonomi Indonesia periode kuartal I 2001 sampai dengan kuartal IV 2015. Penelitian ini menggunakan analisis deskriptif dalam menggambarkan perkembangan pertumbuhan ekonomi serta ekspor dan analisis kuantitatif metode Error Correction Model (ECM) dalam menganalisis efek jangka panjang dan jangka pendek dari ekspor terhadap pertumbuhan ekonomi. Pada periode penelitian, data yang ada menunjukkan bahwa ekspor dan pertumbuhan ekonomi Indonesia sama-sama mengalami peningkatan. Hasil regresi ECM menunjukkan bahwa ekspor memiliki pengaruh yang positif dan signifikan secara statistik terhadap pertumbuhan ekonomi Indonesia, yang mendukung hipotesis bahwa ELG berlaku untuk Indonesia. Berdasarkan hasil penelitian ini, maka untuk mendorong pertumbuhan ekonomi Indonesia diperlukan peningkatan kinerja ekspor Indonesia. Peningkatan kinerja ekspor Indonesia dapat dilakukan dengan berbagai cara, salah satunya adalah dengan perbaikan sistem administrasi ekspor, peningkatan riset dan pengembangan produk Indonesia, peningkatan sarana dan prasarana infrastruktur, stabilitas nilai tukar dan perluasan pasar non tradisional, termasuk perbaikan struktur ekspor komoditas. Export is one of the factors behind the economic growth which is in line with the export-led growth hypotesis (ELG). This research analyzes the relationship between economic growth and export of Indonesia during first quarter of 2001 until fourth quarter of 2015. It employs descriptive analysis to describe export movement and economic growth during the study period and ECM model to analyze the long run and the short run effects of export on the economic growth. The available information indicated that, during the study period, both export and economic growth showed similar increasing trends. The result of the ECM model revealed that export had a positive and statistically significant relationship with the economic growth, supporting the hypotesis of ELG in Indonesia. Hence, to accelerate economic growth, efforts are required to boost the export performance in Indonesia. The Export performance can be increased by several way, such as improving the export administration system, increasing the research and development of Indonesian products, improving the facilities and infrastructure, exchange rate stability and the non-tradisional markets expansion, and including improvement of the export commodity structure.

A NOTE ON INFLATION, ECONOMIC GROWTH, AND INCOME INEQUALITY

2009 ◽  
Vol 13 (1) ◽  
pp. 138-147 ◽  
Author(s):  
Yi Jin
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Income Inequality ◽  
Endogenous Growth ◽  
Money Growth ◽  
Relative Importance ◽  
Long Run ◽  
Endogenous Growth Model ◽  
The Relationship ◽  
Negative Growth

This paper develops a monetary endogenous growth model with capital and skill heterogeneity to analyze the relationship among inflation, growth, and income inequality. In the model inflation, growth, and inequality are jointly determined. We show that an increase in the long-run money growth rate raises inflation and reduces growth, but its effect on income inequality depends on the relative importance of the two types of heterogeneity. Inequality shrinks with the rise of inflation when capital heterogeneity dominates and enlarges when skill heterogeneity dominates. Therefore, our model supports a negative (positive) inflation–inequality relationship and a positive (negative) growth–inequality relationship when capital (skill) heterogeneity dominates. In any event, inflation and growth are negatively related.

The relationship between financial development and economic growth in Eswatini (formerly Swaziland)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Siphe-okuhle Fakudze ◽  
Asrat Tsegaye ◽  
Kin Sibanda
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Granger Causality Test ◽  
Causality Test ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Relationship

PurposeThe paper examined the relationship between financial development and economic growth for the period 1996 to 2018 in Eswatini.Design/methodology/approachThe Autoregressive Distributed Lag bounds test (ARDL) was employed to determine the long-run and short-run dynamics of the link between the variables of interest. The Granger causality test was also performed to establish the direction of causality between financial development and economic growth.FindingsThe ARDL results revealed that there is a long-run relationship between financial development and economic growth. The Granger causality test revealed bidirectional causality between money supply and economic growth, and unidirectional causality running from economic growth to financial development. The results highlight that economic growth exerts a positive and significant influence on financial development, validating the demand following hypothesis in Eswatini.Practical implicationsPolicymakers should formulate policies that aims to engineer more economic growth. The policies should strike a balance between deploying funds necessary to stimulate investment and enhancing productivity in order to enliven economic growth in Eswatini.Originality/valueThe study investigates the finance-growth linkage using time series analysis. It determines the long-run and short-run dynamics of this relationship and examines the Granger causality outcomes.

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