Aggregate Demand For Goods Research Articles

The Asymmetric Effects of Oil Price Shocks on Aggregate Demand for Goods and Services in Ghana

Procyclicality has been discovered in crude oil price shocks on aggregate demand. Most studies have used linear estimation techniques, resulting in the loss of asymmetric correlations. We disaggregate the impact of changes in oil prices into positive and negative shocks on aggregate demand and its components from 1970 to 2015 using the nonlinear ARDL framework. The results show that oil price shocks in Ghana have a long-term beneficial asymmetric impact on aggregate demand and its components. Specifically, a positive change in oil price (0.230) has a greater positive effect on the aggregate demand than a negative effect (-0.009) emanating from a negative change in the oil price shock. Further, the same result was obtained for the components of the aggregate demand with the impact on investment expenditures (0.662) being the greatest. Policymakers should diversify energy demand according to our recommendations. Instead of exporting crude oil, officials should encourage its refinement and consumption. Lastly, we suggest that policymakers hedge and use price-smoothing strategies to reduce oil price volatility.

Financial Support on SMEs Impact of the Covid 19 Pandemic

The purpose of this literature review is to reveal the role of financial support for MSMEs as a result of the Covid-19 pandemic. This paper is sourced from secondary data with a review approach from the previous article. Several articles from various countries have produced that finance has a very important role in the sustainability of MSMEs. Restrictions on community activities as an effort to prevent exposure to Covid-19 impact the decline of the economy in various countries, which results in a decline in the performance of MSMEs. The decline in people's purchasing power impacts the decline in aggregate demand for goods and services, causing a decrease in income for MSME actors. Under these conditions, MSMEs need financial support from various parties for their business continuity. With financial support (capital strengthening or financing), it is hoped that MSME actors can continue their business amidst the economic crisis due to the Covid-19 pandemic. It can be concluded that financial support provides strength for MSMEs to cover operational costs and survive in conditions of economic crisis. Financial support can be in the form of disbursing stimulus funds in cash or credit, tax reductions, credit interest relief, deferral of tax payments, reduced rental fees, exemption from administrative costs to open access to financing or capital. Apart from financial support, it is also carried out to accelerate the digitization of MSMEs to open access to market expansion. Also, the women's business empowerment program (Puspa) from the East Java provincial government to increase family income.

Research on the Multisectoral Impact of Infectious Diseases on the Economy

The purpose of the work is to consider the features of the multidimensional impact of the consequences of the spread of infectious diseases on the economic development of countries. The author concludes that the process of public health exposure to regional or global new and endemic infectious diseases may have broader socio-economic consequences that are often not taken into account when assessing risk or impact. With the spread of international travel and trade, such events can cause economic shocks that go far beyond the traditional health sectors and the original geographical range of the pathogen.
 Intensive economic specialization and a broader division of labor, accompanied by expanding markets and increasing economic globalization, increase the risk of people coming into contact with sources that contribute to highly contagious diseases such as influenza and COVID-19. The adverse economic consequences of new forms or types of these diseases can be serious, taking into account the high degree of interdependence of economic activities in the modern economy. For example, the absence of workers from work due to such infections or the risks of these infections can disrupt production at the workplace level. Also, supply chains can be disrupted or disrupted by these pandemics, and in addition, they usually have a negative impact on aggregate demand for goods. This is evidenced by the COVID-19 outbreak, which led to a serious global economic depression. The occurrence and consequences of epidemics and pandemics depend on the nature and stages of economic development. The economic and social structure of modern society contributes to the transmission of diseases that depend on human contact or presence, especially those that are caused by airborne microbes or persist on commonly used surfaces.
 The study concluded that public and private stakeholders at the local, national and international levels should work together to address the economic consequences of infectious diseases, to provide informed systems and risk and impact analysis, and to promote cost-sharing strategies for prevention and preparedness where possible, and to evaluate optimal intervention strategies when necessary. Developments related to infectious diseases in today's globalized world require increased responsibility for preserving people's health and economic security.

The Causal Relationship between Unemployment and Inflation in G6 Countries

Unemployment and inflation are major problems in macroeconomics. While solving the unemployment problem is a priority for some governments, for others it is bringing inflation under control. Unemployment and inflation surface are two undesirable problems for economies. Governments of countries implement monetary and fiscal policies suited to their aims to solve these problems. The Group 6 (G6) states are countries that have influence in steering the policies of international institutions. In this regard, this study investigated whether there is a relationship between the inflation rate and unemployment in nine randomly selected G6 countries (Australia, Brazil, Canada, France, Germany, Italy, the Russian Federation, Turkey, and the United Kingdom), using data from the period 2009–2017 and applying a panel causality test. According to the Granger causality test, there is a unidirectional causality from inflation rate to unemployment rate. According to the results of the research, bringing inflation under control in these countries is becoming a prior goal. As a result of the policies to bring the inflation under control, the demand for goods and services in the economy decreases. As the aggregate demand for goods and services in the economy decreases, the demand for the workforce decreases as well. In macroeconomic policies there is a relationship between inflation and unemployment. While unemployment increases inflation decreases and while unemployment decreases inflation increases. Our research results also support this. When inflation is intended to be brought under control, it causes unemployment in the economy.

Universal Basic Income and Inclusive Capitalism: Consequences for Sustainability

Over the past forty years, income growth for the middle and lower classes has stagnated, while the economy (and with it, economic inequality) has grown significantly. Early automation, the decline of labor unions, changes in corporate taxation, the financialization and globalization of the economy, deindustrialization in the U.S. and many OECD countries, and trade have contributed to these trends. However, the transformative roles of more recent automation and digital technologies/artificial intelligence (AI) are now considered by many as additional and potentially more potent forces undermining the ability of workers to maintain their foothold in the economy. These drivers of change are intensifying the extent to which advancing technology imbedded in increasingly productive real capital is driving productivity. To compound the problem, many solutions presented by industrialized nations to environmental problems rely on hyper-efficient technologies, which if fully implemented, could further advance the displacement of well-paid job opportunities for many. While there are numerous ways to address economic inequality, there is growing interest in using some form of universal basic income (UBI) to enhance income and provide economic stability. However, these approaches rarely consider the potential environmental impact from the likely increase in aggregate demand for goods and services or consider ways to focus this demand on more sustainable forms of consumption. Based on the premise that the problems of income distribution and environmental sustainability must be addressed in an integrated and holistic way, this paper considers how a range of approaches to financing a UBI system, and a complementary market solution based on an ownership-broadening approach to inclusive capitalism, might advance or undermine strategies to improve environmental sustainability.

Comment on partisan conflict and private investment

Private nonresidential investment contracted sharply during the Great Recession in most advanced economies and remains well below its pre-2008 trend. While weakness in business investment naturally accounts for a short term drop in the aggregate demand for goods and services, a persistent decline in new capital formation is also bound to have long lasting effects on an economy’s ability to produce.Some of the reasons behind this large and prolonged contraction in corporate investment are readily apparent. They include both a sharp tightening in credit conditions in the immediate aftermath of the 2007-08 financial crisis, and a secular decline in productivity growth. Although each of these developments was likely important on its own, even their combined effect seems insufficient to generate the observed slump in non residential investment during the last decade Gala et al. (2016).This paper explores an alternative explanation for the observed decline in investment. Specifically, it investigates the role played by rising uncertainty about future economic policy due to increased partisan conflict since around 2010. The ultimate findings are perhaps best viewed as merely suggestive. Nevertheless, by carefully developing novel measures of policy uncertainty, the paper does succeed in laying important foundations for future studies.

Effects of zero rating value added tax on government revenue in Namibia

Purpose – The Government of Namibia has traditionally used fiscal (especially tax) policy as an instrument for annual budget formulation. Marginal tax rates for profits and various income brackets have been changed back and forth in response to changes in economic conditions. However, to date, no attempt has been made to evaluate the effectiveness of these reforms in achieving the broad national economic goals, in general, and the potential effects on government revenue in the short, medium and long-run periods, in particular. The purpose of this paper is to fill this information gap by analysing the implication of the 2008 zero-rating of value added tax (VAT) on basic commodities for aggregate demand and government revenue. Design/methodology/approach – The study uses an analytical framework based on economic theory which posits that in an open economy, which trades with the rest of the world, aggregate demand for goods and services is made up of consumption demand, investment demand, government demand and net exports and that real sector equilibrium is attained when aggregate supply of goods and services is equal to aggregate demand for goods and services. Findings – Using the Namibia Household Income and Expenditure Survey results, the annual loss in government revenue attributable to this policy is, ceteris paribus, estimated to be N$310.4 million. With a marginal propensity to consume out of disposable income of 0.89, total expenditure by households on goods and services is likely to increase by N$276.3 million per annum. In the medium-to-long-run, national income will have increased by N$303.9 million per annum. Taxes which are responsive to changes in the level of national income will have increased by N$85.7 million, compensating for just over one quarter of the estimated loss in government revenue of N$310.4 million. Research limitations/implications – The study has used a partial equilibrium model as opposed to computable general equilibrium model, which provides a consistent framework that meets most of the sectoral and institutional data requirements for the simple reason that a social accounting matrix which can be used readily to connect data from different sources, such as national accounts and household surveys and would thus have been ideal model for analysing the impacts of the VAT tax reform has not been developed for Namibia. Practical implications – The paper provides a number of practical policy options available for government including, but not limited to, increasing direct taxes, VAT rate on specific (luxury) goods and services and statutory VAT rate on all other commodities not zero-rated, other taxes such as taxes; and borrowing from external sources. Social implications – It is established that zero-rating VAT on all the basic commodities in 2008 reduces the VAT paid by all Namibian households by N$310.4 million per year, which represents the annual increase in the disposable income of all households. And with a marginal propensity to consume out of disposable income of 0.89, total expenditure by households on goods and services will increase by N$276.3 million per year. Originality/value – This paper presents the first attempt at evaluating the effectiveness of tax (VAT) policy reforms in Namibia in achieving the broad national economic goals, in general, and the potential effects on government revenue in the short, medium and long-run periods, in particular.

The Implications of Ageing and Migration for the Future Population, Health, Labour Force and Households of Northern England

Northern England faces important demographic challenges over the next 25 years: population ageing, a more ethnically diverse society, moderate demographic growth but with large differences between most and least successful localities. We examine past and future demographic changes in Northern England and their effect on population health, labour force size and household numbers, drawing out implications for public policy. We use new projections for England’s local authority (LA) populations by ethnicity from 2001 to 2036. The population of Northern England will grow between 8 % and 12 %, depending on projection scenario. So, aggregate demand for goods and services in Northern England will continue to increase. The population will experience, however, rising old age dependency ratios. To maintain current ratios, pension entitlement age will need to increase to 70 by 2036 rather than the 68 planned in the 2011 Pension Act. Population ageing will impact numbers with limiting long term illness, which will increase more than the population as a whole because the age structure will become older. A decrease in the labour force will occur as the baby boomers retire, if labour force participation rates remain constant. Action needs to be taken to encourage employers to introduce flexible transitions to retirement that reward older workers who wish to continue in work. We also project the numbers of households, which increase a little faster than the population because ageing shifts the population towards older ages where households are smaller.

The Use of Unemployment and Vacancy Data in Analysing Unemployment

INTRODUCTIONUntil 1975, unemployment in the UK had remained below the 1 million mark for over 30 years. Between 1979 and 1982 it rose from under 1.5 million to over 3 million and has remained there ever since. The 1980s have certainly been a disaster as far as unemployment is concerned and a question of paramount importance to policymakers is whether the government can do anything to reduce unemployment significantly in the foreseeable future. The answer to this question depends on the causes of unemployment and whether these causes can be affected by government action. Unfortunately, the causes of current unemployment are not clearly understood and there is a startling lack of consensus amongst policymakers and their economic advisers over what can (or should) be done to tackle the unemployment problem.One of the issues about which there is substantial disagreement amongst economists is whether unemployment is currently high because of a deficiency in the aggregate demand for goods, or whether it is high for other reasons. These other reasons include : the existence of disincentives to take jobs because unemployment benefit is too high relative to net takehome pay ; a serious mismatch between labour demand and labour supply ; excessively high real wages relative to labour productivity; the sudden structural collapse of large sections of UK manufacturing industry; and a combination of these factors.

A Keynesian View of the Budget Deficit

The two instruments of macroeconomic management available to the government are fiscal policy and monetary policy. Together they determine the total dose of demand stimulus or restraint administered to the economy. In principle there are numerous mixtures of the two medicines which yield the same net stimulus or restraint of aggregate demand for goods and services. These various policy mixtures can differ significantly in their side effects. A tight budget, whose effects on aggregate demand are offset by an appropriately easy monetary policy, will bring lower interest rates than the opposite combination. Consequently, it will channel more of the nation's resources into domestic and foreign investment and relatively less into private and public consumption. The two issues—direction and size of total dose, and mix of the dose—are separable. Both are important issues today.

Can a Shorter Workweek Reduce Unemployment?

A simulation model of the West German economy is being used to evaluate alternative policies for attacking the unemployment problem by reducing normal working hours. This paper reports the analysis of five policies to assess their effect on unemployment, on finances, on inflation, and on the overall economy of the country. The model includes feedback paths that have been neglected in much of the current literature, and it has yielded many surprising results. One is that a 5% reduction of the workweek would have little effect on real aggregate demand for goods and services, whether or not workers were compensated fully for the reduction in hours. Simulation results were that such a reduction in hours increased employment 3.6% if hourly pay remained unchanged and 4.4% if workers were compensated for lost wages. Not sur prisingly, the latter alternative was the more in flationary of the two. A 2.5% annual reduction in working hours was very effective in reducing unemployment. The paper goes on to discuss deficiencies in economic theory, their relation to modeling, and practical problems in forecasting. It concludes with observa tions on the role of simulation in establishing public policy.

More on expected inflation and unemployment

Van Cott and Santoni [10] (hereafter V&S) have recently argued that the effect of expected inflation on real output and employment is ambiguous if we take into account the impact of expected inflation on both the aggregate demand for goods and services and the aggregate • supply of goods and services. This result is important not only because it challenges the standard conclusion that under expected inflation real output and employment must rise but also because it shows most traditional analyses of this topic (Bailey [1], Mundell [6]) to involve a serious asymmetry insofar as they focus on demand-side impacts only. Unfortunately, the supply-side structure through which V&S generate their conclusion is rather questionable, principally because it assumes yet another asymmetry: that while suppliers of labor respond to expected inflation, demanders of labor do not. The purpose of this note is to remove this deficiency. As we will show, under appropriate modifications, the ambiguity cited by V&S need not arise. V&S's analysis is cast in the following system: