Capita Real Gross Domestic Product Research Articles

Is Per Capita Real GDP Stationary in G-7 Countries? New Evidence from A Fourier Panel Unit Root Test

The stability of macroeconomic variables and whether the impact of a shock on these variables is permanent or temporary is important for policy-makers and researchers. As an indicator of growth and prosperity, gross domestic product (GDP) is among the important macroeconomic variables. After all, due to the advantages of current panel data analysis techniques over conventional methods, it is important to use the aforementioned methods in analyzing the existence of unit-root for GDP. Accordingly, the aim of this study is to investigate whether per capita real GDP in G-7 countries followed a stationary process between 1970-2019 with a stronger unit-root test (BCIPS) that takes into consideration cross-section dependence, multi-factor structure, and structural changes. Empirical results reveal that per capita real GDP for G-7 countries has a stationary structure. In this context, it has been determined that the impact of a shock on per capita real GDP is temporary in G-7 countries, therefore, by means of monetary or fiscal policy instruments, it is not necessary to intervene in fluctuations occurring the output level.

The economic effects of clean development mechanism afforestation and reforestation project: evidence from China

PurposeForestry carbon sink (FCS) is not only an important measure to deal with the current global climate change but also an effective way to build an ecological civilization. As an important form of implementation of FCS, the afforestation and reforestation projects under the clean development mechanism (CDM A/R) have important functions such as ecological protection and economic growth. This paper aims to evaluate the short-term and long-term impact of CDM on the county economy and its impact mechanism.Design/methodology/approachThis paper first uses propensity score matching to match the county (treatment group). Second, this paper uses difference in difference to estimate the net effect of CDM A/R project on county economic development to reduce estimation error. Finally, the impact mechanism of implementing CDM A/R project on county economic development was tested.FindingsThe CDM A/R project has significantly promoted the development of real gross domestic product (GDP) and per capita real GDP in the region. Because of the long project cycle, this promotion is not immediate in the short term and has an obvious hysteresis effect. The longer the implementation time, the greater the promotion of the local economy will develop. The results are robust after the robustness test that uses the single-difference method. The CDM A/R project has promoted local economic growth by optimizing the local industrial structure, increasing the regional capital stock and raising the regional government’s fiscal revenue and expenditure.Originality/valueThis paper provides a critical overview of the relationship between clean development mechanism and local economic development.

The relation between an ageing population and economic growth in Bangladesh: Evidence from an endogenous growth model

This paper examines the short-run and long-run relationships between an ageing population and economic growth in Bangladesh using time series data for the period between 1972–2015. We employed a bivariate endogenous growth model to investigate the relationship between the population aged 65 years and above and per capita gross domestic product (GDP). The study found that there is a long-run positive relationship between the ageing population and per capita real GDP. The relationship runs from an ageing population to per capita real GDP, given that there is an increasing capital formation process in the economy. Therefore, the elderly population is not a matter of concern for Bangladesh as long as per capita capital formation has been greater than that of per capita ageing population.

Impact of unemployment and income on entrepreneurship in post-apartheid South Africa: 1994–2015

Background: South Africa has made significant progress since the dawn of democracy in 1994. It registered positive economic growth rates and its real gross domestic product (GDP) per capita increased from R42 849 in 1994 to over R56 000 in 2015. However, employment growth lagged behind GDP growth, resulting in rising unemployment. Aim and setting: Entrepreneurship brings together labour and capital in generating income, output and employment. According to South Africa’s National Development Plan, employment growth would come mainly from small-firm entrepreneurship and economic growth. Accordingly, this article investigates the impact unemployment and per capita income have on early stage total entrepreneurship activity (TEA) in South Africa, using data covering the 1994–2015 period. Methods: The methodology used is the dynamic least squares regression. The article tests the assertion that economic growth, proxied by real per capita GDP income, promotes entrepreneurship and that high unemployment forces necessity entrepreneurship. Results: The regression results indicate that per capita real GDP, which increases with economic growth, has a highly significant, positive impact on entrepreneurial activity, while unemployment has a weaker effect. A 1% rise in real per capita GDP results in a 0.16% rise in TEA entrepreneurship, and a 1% rise in unemployment is associated with a 0.25% rise in TEA. Conclusion: There seems to be a strong pull factor, from income growth to entrepreneurship and a reasonable push from unemployment to entrepreneurship, as individuals without employment are forced to self-employment as a necessity, survival mechanism. Overall, a long-run co-integrating relationship seems plausible between unemployment, income and entrepreneurship in South Africa.

Causality between electricity consumption and economic growth: empirical evidence from India

The present paper tries to examine the Granger causality between per capita electricity consumption and per capita gross domestic product (GDP) at 2004-2005 prices for India using annual data covering the period 1970-1971 to 2015-2016. It applies error-correction model to examine the causal relationship between these two variables. The estimated results indicate that the per capita real GDP and per capita electricity consumption are co-integrated and there is unidirectional Granger causality running from real GDP to electricity consumption but not vice-versa. In the short run, the results of the causality test show that bidirectional causality flow from economic growth to electricity consumption in India. Thus the Government of India has to face the numerous energy challenges in the future.

The Economic Costs of Separatist Terrorism in Turkey

Turkey has been suffering from separatist terrorism and the political conflict it implies since the mid-1980s, both of which are believed to have a negative impact on economic welfare. This article investigates the economic costs of Kurdistan Workers’ Party (PKK) terrorism, particularly in the Eastern and Southeastern provinces of Turkey by invoking the synthetic control method. We create a synthetic control group that mimics the socioeconomic characteristics of the provinces exposed to terrorism before the PKK terrorism emerged in the mid-1980s. We then compare the real gross domestic product (GDP) of the synthetic provinces without terrorism to the actual provinces with terrorism for the period 1975 to 2001. Causal inference is carried out by comparing the real per capita GDP gap between the synthetic and actual provinces against the intensity of PKK terrorist activity. Extended over a period of fourteen years (1988 to 2001), we find that after the emergence of terrorism, the per capita real GDP in Eastern and Southeastern Anatolia declined by about 6.6 percent relative to a comparable synthetic Eastern and Southeastern Anatolia without terrorism.

Are Real GDP Levels Stationary in African Countries?

AbstractIn this study, we apply flexible Fourier stationary unit root test proposed by Enders and Lee (2012) to assess the non‐stationary properties of the per capita real gross domestic product (GDP) for 32 African countries. We find that Fourier stationary unit root test has higher power than linear method if the true data‐generating process of per capita real GDP is in fact a stationary nonlinear process of an unknown form with structural change using the low frequency components. We investigate the stationarity of per capita real GDP from the nonlinear point of view and provide robust evidence that clearly indicates that real output is well characterised by a nonlinear, mean‐reverting process, namely Benin, Botswana, Burundi, Cameroon, Senegal, Sierra Leone and South Africa. Our evidence points that these seven countries are nonlinear stationary, implying that per capita real GDP follows a steady rate of growth, and policy innovations then have temporary effects. These results have important policy implications for African countries.

Is per capita real GDP stationary in five southeastern European countries? Fourier unit root test

This study uses the newly developed Fourier unit root test advanced by Enders and Lee (2004, 2009) to investigate the time-series properties of real GDP (Gross Domestic Product) for five Southeastern European countries for the period from 1969 to 2009. The empirical results from several conventional unit root tests indicate that the per capita real GDP for all of the countries studied are non-stationary; however, when Enders and Lee (2004, 2009) Fourier unit root tests are conducted, one rejects the unit root hypothesis of real GDP per capita in all countries under study. These results have important policy implications for these five Southeastern European countries under study.

Impact of trade freedom on per capita real GDP growth among OECD nations: recent panel data evidence

Motivated by the Organisation for Economic Co-operation and Development (OECD)’s call to nations to resist protectionism and keep markets open to competition in the midst of the current world economic crisis, this study empirically investigates the impact of trade freedom (TF) on recent per capita real Gross Domestic Product (GDP) growth among OECD nations. In addition to TF, the study controls for the impacts of Business Freedom (BF), Monetary Freedom (MF) and Property Rights (PR), along with various economic factors. The study period runs from 2005 to 2007. Panel Least-Squares (PLS) estimation finds that the natural log of per capita real Purchasing-Power-Parity (PPP)-adjusted GDP in OECD nations is in fact an increasing function of TF, as well as BF, MF and PR security. The OECD appears correct in its position on behalf of maintaining TF.

On the relationship between energy consumption, CO2 emissions and economic growth in Europe

Abstract This study examines the causal relationship between carbon dioxide emissions, energy consumption, and economic growth by using autoregressive distributed lag (ARDL) bounds testing approach of cointegration for nineteen European countries. The bounds F -test for cointegration test yields evidence of a long-run relationship between carbon emissions per capita, energy consumption per capita, real gross domestic product (GDP) per capita and the square of per capita real GDP only for Denmark, Germany, Greece, Iceland, Italy, Portugal and Switzerland. The cumulative sum and cumulative sum of squares tests also show that the estimated parameters are stable for the sample period. We found a positive long-run elasticity estimate of emissions with respect to energy consumption at 1% significant level in Denmark, Germany, Greece, Italy and Portugal. Positive long-run elasticity estimates of carbon emissions with respect to real GDP and the negative long-run elasticity estimates of carbon emissions with respect to the square of per capita real GDP at 1% significance level in Denmark and 5% significant level in Italy are also found. These results support that the validity of environmental Kuznets curve (EKC) hypothesis in Denmark and Italy. This study also explores causal relationship between the variables by using error-correction based Granger causality models.

A causal relationship between energy consumption and economic growth in Nepal

In the present paper, an attempt is made to examine the causal relationship between the per capita consumption of coal, electricity, oil and total commercial energy and the per capita real gross domestic product (GDP), using a co-integration and vector error correction model. The increase in real GDP, among other things, indicates a higher demand for a large quantity of commercial energy such as coal, oil and electricity. This implies that low infrastructure development limits the usage of commercial energy, which may also hold back economic growth. Empirical findings reveal that there is a unidirectional causality running from coal, oil and commercial energy consumption to per capita real GDP, whereas a unidirectional causality running from per capita real GDP to per capita electricity consumption is found. It is suggested that the input of per capita energy consumption stimulates enhanced economic growth in Nepal.

Canadian and U.S. Real Income Growth Pre and Post 2000: A Reversal of Fortunes

Evaluations of an economy's economic performance are often made using a measure of real gross domestic product (GDP) per capita, which represents the average remuneration (labour income plus capital services) that an economy generates through domestic production. Because real GDP is a constant dollar measure of the remuneration to capital and labour in an economy, it does not account for who owns the capital, how much of it is used up through production or how relative price shifts affect the volume of goods and services that can be purchased.Modifications can be made to traditional estimates of GDP to account for these factors. This paper examines the performance of the Canadian economy using alternate measures - gross domestic income, gross national income and net national income. The paper also examines the relative performance of the Canadian and U.S. economies using standard GDP measures and these alternate measures. The comparison spans the period from 1980 to 2006, but focuses on the 2002-to-2006 period. During these latter years, changes in commodity prices, manufactured goods prices, the exchange rate, international investment income and capital consumption have all contributed importantly to real income growth in Canada.As a result, a very different picture of relative performance of the Canadian and U.S. economies emerges when an aggregate income measure is used that accounts for relative price changes, international income flows and capital consumption than when real GDP is used. From 2002 to 2006, U.S. real GDP per capita grew 9.3% while Canadian GDP per capita rose 7.0%, making it appear that the U.S. economy was outperforming the Canadian economy. However, once changes in resource prices and the exchange rate, international investment income and capital consumption are taken into account, real income per capita in the United States increased by 8.6%, which is similar to its GDP per capita growth. However, the Canadian adjusted measure of real income per capita growth rose 15.6%, more than twice the per capita real GDP growth in Canada and nearly double the U.S. rate.In contrast, the difference between the two economies was exactly the opposite in the period from 1980 to 2000 - when commodity prices were falling, when the exchange rate was not appreciating and when outward flows of income to foreigners were increasing relative to the income paid to Canadians. During this period, when consideration is given to these factors, real income measures in Canada were falling relative to those in the United States.

The Sustainable Net Domestic Product of Cambodia, 1988 2004

In the tradition of Hicks (1946), Gross Domestic Product (GDP) is an inadequate measure of national income insofar as it includes, as current income, the depletion of income-generating capital. Using an alternative measure of Hicksian national income called Sustainable Net Domestic Product (SNDP) (Daly, 1996), it is shown that, for the period 1988?2004, Cambodia's SNDP was lower than its GDP. More crucially, the disparity between the two indicators increased from 715 billion riels in 1988 to 4,186 billion riels by 2004 – effectively a six-fold increase in the gap over the study period. From a per capita perspective, there was a sharp decline in the per capita SNDP in 1995. Whereas Cambodia's per capita real GDP rose significantly between 1998 and the end of the study period, its per capita SNDP suffered a marked downturn in 2001 and 2002. Overall, the per capita GDP growth spurt between 1988 and 2004 did not genuinely equate to a similar increase in sustainable per capita income and that, relative to the early part of the study period, Cambodia's much higher per capita level of GDP after 2001 was fuelled by an increased consumption of income-generating capital, in particular, of its forestry and fishery assets.

Do Tax Havens Flourish?

Tax haven countries offer foreign investors low tax rates and other tax features designed to attract investment and thereby stimulate economic activity. Major tax havens have less than 1 percent of the world's population (outside the United States) and 2.3 percent of world gross domestic product (GDP), but they host 5.7 percent of the foreign employment and 8.4 percent of foreign property, plant, and equipment of American firms. Per capita real GDP in tax haven countries grew at an average annual rate of 3.3 percent between 1982 and 1999, which compares favorably to the world average of 1.4 percent. Tax haven governments appear to be adequately funded: their average 25 percent ratio of government to GDP exceeds the 20 percent ratio for the world as a whole, though the small populations and relative affluence of these countries would normally be associated with even larger governments. Whether the economic prosperity of tax haven countries comes at the expense of higher tax countries is unclear. Recent research suggests that tax haven activity stimulates investment in nearby high-tax countries.

Has Australia surpassed its optimal macroeconomic scale? Finding out with the aid of `benefit' and `cost' accounts and a sustainable net benefit index

The sustainable economic welfare of a nation depends largely on the sustainable net benefits the macroeconomy confers to its citizens. For this reason, an optimal macroeconomic scale can be considered one where the physical scale of the macroeconomy and the qualitative nature of the stock of wealth it comprises maximises a nation's sustainable net benefits. The corollary of this definition is thus: the physical scale of the macroeconomy should grow only if, in the process, the sustainable net benefits of a nation increase. It should cease to grow once sustainable net benefits are maximised. Whilst it is one thing to promote an optimal macroeconomic scale, it is another entirely to gain an appreciation of the sustainable net benefits yielded by the macroeconomy. Gaining such an appreciation constitutes the central aim of this paper. With the assistance of two separate `benefit' and `cost' accounts to replace gross domestic product (GDP), a sustainable net benefit index is constructed for Australia for the period 1966–1967 to 1994–1995. The index, particularly at the per capita level, indicates that economic welfare in Australia is declining (i.e. the average Australian is getting `poorer') despite per capita real GDP increasing. The index therefore suggests that the scale of the Australian macroeconomy has probably well exceeded the optimum.