Macroeconomic Policy Changes Research Articles

Exit–entry, productivity growth and structural change in response to changes in macroeconomic policy: evidence from Argentina

This article highlights the macro-to-micro interactions in Argentine industrial sector by examining the response of different manufacturing industries to changes in macroeconomic policies in the early 2000s. It is argued that as a result of the macroeconomic policy changes like the abandonment of currency board regime, i.e., the dollarization of the economy, the structure of industry underwent changes and so did the labour productivity and the competitive capability of different industries. Our results show that a combination of a higher real exchange rate and the expansion of domestic markets coexisted with an increase in the net entry rate in manufacturing activities in 2003–2006, compensating for the high exit rate that prevailed between 1999 and 2002. Above average productivity gains were reported in low and medium tech industries. On the contrary (medium) high tech industries – which were much behind international productivity standards – failed to invest in product and process innovations and could not face the challenge of foreign competition. Our approach throughout the monograph is ‘appreciative’ and descriptive, rather than formal and econometric. We still find considerable richness in studying development processes as from this perspective, much in the ‘pin factory’ tradition.

Global Competency Development Efforts by Indian B-Schools

Mounting rapidity of globalization across the world including India requires professionals who have a global mindset. This attitudinal attribute needs to be complemented with a rigorous understanding of how globalization impacts every area of corporate operations, in addition to the macro-economic shifts and policy changes consequent to global developments. In this regard, very recently Global Competency has become the buzzword in the higher education sector for preparing students to sustain and perform in rapidly changing and interdependent world. Western management institutes are adapting to this change and top Indian B-schools already started following the league. But the question arises how far the Indian B-schools following a holistic approach while responding to global competency development needs. This paper, first examines, the key forces driving the need for global competency and around the context, analyzes the approaches adopted by selected top Indian B-schools and finally discusses few relevant strategic imperatives for the Indian management education to acquire or retain its leadership position.

Calculating and interpreting multipliers in the presence of non-Stationary time series: The case of U.S. federal infrastructure spending

In this analysis, we discuss two measures that have been used by economists to measure longrun changes in macroeconomic policies: the dynamic multiplier and the impulse response function. In the presence of (1) I variables, if the multipliers/impulse responses are generated from a VAR model, there can be substantial biases at both the long and short-run horizons. In this paper, the influence that infrastructure spending will have on U.S. economy from 2009 to 2010 is examined by modeling selected macroeconomic variables as a Vector Error Correction (VEC) model. The impulse response function will then be used to generate government spending multipliers and bootstrapped confidence intervals. Findings indicate a Federal infrastructure spending multiplier of 3.33 at the end of a two year period.

The 2007 crisis and countercyclical policy

PurposeThe purpose of the paper is to outline the global financial and economic crisis that began in 2007, together with the macroeconomic policy changes that were put in place as a result.Design/methodology/approachThe content is partly descriptive and partly analytical.FindingsThe paper sets out the history of the financial and economic crisis to date.Originality/valueThis is determined by the subject matter, and consists mainly in the manner in which the material is presented.

Price response of herd off-take under market liberalization in a developing cattle sector: panel analysis applied to Kenya's ranching

ABSTRACTThe influence of price, in view of macro-economic policy change and a set of other factors, on herd off-take rates from ranches in Kenya over a period of 17 years was assessed. An AR(1) equation, based on Nerlove's classical dynamic supply model, was derived and fitted to panel data using the Cochrane–Orcutt procedure. Pooling of data was done to circumvent data insufficiency, thereby improving the statistical power of the analysis. Results indicate that price change has had a significant effect on ranch herd off-take, and climatic factors also account for long-run off-take levels.

Macroeconomic Policy Change: Ireland in Comparative Perspective

Abstract This paper sets out to develop an improved framework for examining critical junctures. This a priori framework is a significant improvement over existing critical juncture frameworks that lack any predictive element. It is an advance for historical institutionalism in particular, and political science in general. After the new framework is set out in detail here, it is tested. The framework is used to examine a number of potential critical junctures in macroeconomic policy, drawn from Ireland, Sweden, Britain, and America in the latter half of the twentieth century.

Macroeconomic Policy Change: Ireland in Comparative Perspective

This paper sets out to develop an improved framework for examining critical junctures. This a priori framework is a significant improvement over existing critical juncture frameworks that lack any predictive element. It is an advance for historical institutionalism in particular, and political science in general. After the new framework is set out in detail here, it is tested. The framework is used to examine a number of potential critical junctures in macroeconomic policy, drawn from Ireland, Sweden, Britain, and America in the latter half of the twentieth century.

The Importance of Ideas: An A Priori Critical Juncture Framework

Abstract. This paper sets out an improved framework for examining critical junctures. This framework, while rigorous and broadly applicable and an advance on the frameworks currently employed, primarily seeks to incorporate an a priori element. Until now the frameworks utilized in examining critical junctures were entirely postdictive. Adding a predictive element to the concept will constitute a significant advance. The new framework, and its predictive element, termed the “differentiating factor,” is tested here in examining macro-economic crises and subsequent changes in macro-economic policy, in America and Sweden.Resume. Cet article propose un cadre ameliore pour analyser les conjonctures critiques. Bien que rigoureux, largement applicable et representant en soi une avance sur les modeles actuellement utilises, ce cadre cherche principalement a incorporer un element a priori. Jusqu'ici les cadres servant a l'etude des conjonctures critiques etaient entierement fondes sur la postdiction. L'ajout d'un element predictif constituera une avance notable. Cet article examine la validite du nouveau cadre et de son element predictif, appele “facteur de differenciation”, a la lumiere des crises macro-economiques en Amerique et en Suede et des changements de politique macro-economique qu'elles ont entraines dans leur sillon.

The Logic of Anticorruption Enforcement Campaigns in Contemporary China

Corruption is endemic and pervasive in contemporary China, yet serious attempts at anticorruption enforcement have been periodic in nature. What explains the timing of anticorruption campaigns? Available data, from 1981 to 1997, suggests a plausible correlation between changes in macroeconomic policy and the intensification of anticorruption enforcement. Four major anticorruption campaigns—in 1982, 1986, 1989 and 1993—coincided with the end of an inflationary peak and the beginning of a macroeconomic austerity period. This article establishes a causal link between anticorruption campaigns and economic austerity rounds, proposing that the aforementioned anticorruption campaigns have been used primarily to combat economic overheating and not corruption itself. That is, during the era of reform, anticorruption enforcement campaigns have functioned as a viable mechanism for reducing over-investment and in so doing, decreasing inflation.

U.S. macroeconomic and tax policy: impacts on U.S. farm operations

Agricultural economists have generally concluded that macroeconomic and tax policy matters regarding the financial wellbeing of U.S. farm operations. Farm operations react more quickly and with greater response to both anticipated and unanticipated macroeconomic policy changes than do the commercial business operations, sometimes resulting in overshooting in the agricultural economy. In the early 1980s, the Federal Reserve’s disinflationary policy and large federal budget deficits had disproportionately large effects on real agricultural interest rates. This paper concludes with a presentation of numerous potential researchable issues regarding macroeconomic and tax policy’s impact on farm financial well‐being.

Income diversification before and after economic shocks: evidence from urban and rural Zimbabwe

The article examines changes in income and activity diversification in Zimbabwe before and after macroeconomic policy changes and the droughts of the early 1990s. Data from two comparable national surveys straddling a period of economic volatility show that the percentage of households earning income from private and informal sources grew considerably, while income from government and formal sources declined. In general, rural households tend to have a more diversified portfolio of income than urban households, and the degree of income diversification decreases with the level of urbanisation. Following the shocks, there was a marked reduction in income diversification, notably among the poor. The findings thus strengthen the need for public provision of well-designed safety nets.

Shifting geographies of social inclusion and exclusion: Secondary education in Pietermaritzburg, South Africa

The urgency of South Africa's political transformation provides social scientists with an opportunity to monitor an encounter between idealism and reality in post-apartheid policy-making. Education policy appears to derive from political symbolism divorced from the material realities of macroeconomic policy. The extent and nature of desegregation and redistribution on the ground are investigated in 18 secondary schools in Pietermaritzburg, supplemented by interviews in the Provincial Education Department and the Pietermaritzburg Regional Office. Considerable desegregation has occurred, especially in the state sector, but only at the upper end of the traditional racial hierarchy. Provincial resources allow minimal capital spending and limited non-salary expenditure, whilst differential fees in state schools preserve apartheid inequalities of provision. Parents of all races keenly seek the best education they can afford for their children. Radical change requires changes in macroeconomic policy towards a more developmental state, but measures are proposed to encourage limited progress towards greater equity within current macroeconomic constraints.

EFFICIENCY OF CHINESE TOWNSHIP AND VILLAGE ENTERPRISES IN THE 1990s BASED ON MICRO DATA FOR WUXI CITY, 1991–97

We examine the (technical) efficiency of collective‐owned township and village enterprises (COTVEs) in Wuxi City, China, after 1990 to study whether the acknowledged success of township and village enterprises continued in the late 1990s. Our results suggest that COTVEs did not decline in relative efficiency compared with other types of enterprises in the late 1990s, but that their productivity leveled off or declined. Furthermore, we find that COTVEs faced with a more serious shortage of working capital had a lower efficiency after the mid‐1990s recession. These findings cast doubt on the view that the vaguely specified property rights of COTVEs are responsible for their declining performance problems during the period just before 1998 when massive privatization began. Privatization of COTVEs without other macroeconomic policy changes may now be insufficient to cope effectively with their declining productivity.

Economic Growth and Employment Growth in China (1978–2001)

The creation of more jobs for China's massive labor force is the foremost economic development objective for the Chinese government. This paper analyzes the relations between economic growth and employment growth, between capital growth and employment growth, and between wage growth and employment growth in China. The solution to China's unemployment problem requires not only changes in China's macroeconomic and employment policies, but also a change in the priorities of the country's economic growth model from output growth toward employment growth. Moreover, it will be necessary to handle correctly the relations between labor-intensive industries and capital-intensive industries, balance the interests of laborers and the interests of capital, and support the expansion of domestic demand and the creation of employment opportunities.

Regional Agreements and the World Trade Organization Negotiations

during the last decades has been the expansion of regional trading agreements (RTAs), particularly in the Western Hemisphere and Europe. In the Americas, total trade grew at an average of 10.2% per year between 1990 and 2000, more than double the rate of extrahemispheric trade (4.4%), and the intra-trade share jumped from 48% to 61% of the total (Inter-American Development Bank). This has been related to several reasons, such as the spread of democracy in Latin America, which opened new opportunities for dialogue and collaboration, and the important changes in trade, macroeconomic, public sector, and regulatory policies that further promoted the integration of those countries in the world economy. In particular, there were important reductions of trade barriers, which took place multilaterally (as a result of GATT/WTO negotiations), regionally (as a consequence of different trade agreements in the American continent, such as NAFTA and MERCOSUR), and unilaterally. Currently there are ongoing discussions, initiated in 1994, to create a Free Trade Area of the Americas (FTAA) by 2005, as well as a host of other initiatives, including possible links between MERCOSUR and the European Union (EU), and the accession of Chile to NAFTA. On the other side of the Atlantic, the EU, itself the result of a wide-ranging process of economic and political integration, is pursuing the enlargement of the Union while, at the same time, negotiating and participating in several other trade agreements. Ten countries (Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia) are likely to join the EU in 2004, whereas two other countries (Bulgaria and Romania) may join later in the decade. Trade agreements with these countries have been part of the Europe Agreements since 1992. In addition, the EU negotiated an FTA with South Africa in October 1999, signed the Cotonou Agreement (successor to previous Lom6 Conventions) with 77 African, Caribbean, and Pacific (ACP) countries on June, 2000, and approved the Everything but Arms (EBA) Initiative on February 26, 2001. There are also other regi nal and bilateral trade agreements or initiatives with Turkey, Mexico, Mediterranean cou tries, Balkan countries, MERCOSUR, and others.

Leadership and Institutional Reform: Engineering Macroeconomic Policy Change in Australia

This article seeks to enhance the actor perspective on major policy reforms. It builds upon the literature on “policy entrepreneurs” and addresses its explanatory vagueness by specifying five hypotheses outlining the actions that proponents of major policy change need to take in order to be effective in forging departures from existing, path‐dependent policies and to overcome entrenched opposition to reforms. These hypotheses on “reformist political leadership” (after Blondel) are applied to the four attempts to reform key aspects of macroeconomic policy in Australia under the first two Labor governments led by Robert J. Hawke.

An Empirical Analysis of the Relationship Between GDP and Unemployment

Okun's law has been proven to be one of the most accepted theories in the macroeconomics field. It describes the relationship between gross domestic product (GDP) and unemployment. Arthur Okun's (1962) study was developed to help apply appropriate macroeconomic policy changes. Though the coefficient has been re‐estimated, Okun's original work states that a one‐percentage point reduction in the unemployment rate would produce approximately 3% more output. This correlation has continuously been scrutinized, its accuracy studied, and the degree of dependency these variables have on one another has been evaluated.

Law and Property Outside the West: A Few New Ideas about Fighting Poverty

In recent years, developing countries have carried out the macro-economic policy changes recommended by the West: they have balanced their budgets, cut subsidies, welcomed foreign investments and dropped their trade barriers. Yet capitalist reformers are now intellectually on the defensive, increasingly derided as apologists for the miseries and injustices that still plague the poor. We are beginning to realise that macroeconomic reforms are insufficient on their own. Capitalism requires the bedrock of the rule of law, beginning with that of property, since the property system is much more than ownership: it is the hidden architecture that organises the market economy in every Western nation, the article argues, outlining the kind of reforms that are deemed necessary for third world countries (and those of the former Soviet Union) in order to develop. The governments should be provided with the tools for reforming existing institutions, allowing them to integrate under one law all the economic stock and activities in the country, creating a formal property system that converts a previously anonymous and dispersed mass of ownerships into an interconnected system of individually identifiable and accountable business interlocutors that are able to create capital.

The Rise of Neoliberalism and Institutional Analysis

The last quarter century has been marked by the ascension of neoliberalism--market deregulation, state decentralization, and reduced political intervention in national economies. Not coincidentally, this period of dramatic institutional change has also seen the emergence of several schools of institutional analysis. Though these schools cut across disciplines, they have remained isolated from and critical of each other. This volume brings together four--rational choice, organizational, historical, and discursive institutionalism--to examine the rise of neoliberalism. In doing so, it makes tremendous methodological strides while substantively enlarging our knowledge about neoliberalism. The book comprises original empirical studies by top scholars from each school of analysis. They examine neoliberalism's rise on three continents and explore changes in macroeconomic policy, labor markets, taxation, banking, and health care. Neoliberalism appears as much more complex, diverse, and contested than is often appreciated. The authors find that there is no convergence toward a common set of neoliberal institutions; that neoliberalism does not incapacitate states; and that neoliberal reform does not necessarily yield greater efficiency than other institutional arrangements. Beyond these important empirical contributions, this book is a methodological milestone in that it compares different schools of institutionalist analysis by seeing how they tackle a common problem. It reveals a second movement within institutionalism--one toward rapprochement and cross-fertilization among paradigms--and explains how this might be furthered with benefits throughout the social sciences.

Responding to Economic Crisis in Sub-Saharan Africa: New Farmer-Developed Pest Management Strategies in Cocoa-Based Plantations in Southern Cameroon

Cocoa is a key or source of income and poverty reduction in the humid forest of Southern Cameroon. Cameroon like other African countries went through a major economic crisis in the early 1980s with a decline in international commodity prices and significant changes in macroeconomic policies. Structural adjustment reforms following the economic crisis led to removal of fertilizers and pesticides subsidies, cocoa price liberalization and the overall withdraw of Government interventions from the cocoa sub-sector. Cocoa input price increases have been compounded by the devaluation of the CFA Franc, which doubled the prices of the imported pesticides which were considered key to the control of cocoa pests. This overall economic shock led to changes in cocoa producer's production decisions as a response to minimize cost. Among the changes the use of alternatives to imported chemicals for cocoa pest control. Farmers responded to the high prices of pesticides by developing, from local botanical knowledge and pest management strategies, which include plant extracts and plant extracts mixed with pesticides at different proportions. This is a major decision given the importance of imported chemical in the cost of production of cocoa. Valuable indigenous knowledge from farmers could be used also as an effective support system for communicating and diffusing modern knowledge and technologies to farmers. The paper describes the farmer knowledge-based alternatives to chemical pesticides for pest control in cocoa fields as a response to high pest control costs. Pest management specialists are urged to take advantage of this shift in practice and assess their effectiveness for further use. Two sets of questions are posed: (1) were the conventional insecticides, with all their problems, really necessary? and (2) are the materials derived from locally grown plants effective pest management agents or are they, in some way, placebos?