Cyclical Economic Fluctuations Research Articles

Study on the Current Status of Regional Economic Resilience

Against the backdrop of today's increasingly frequent financial crises and cyclical economic fluctuations, economic resilience has become a hot topic in the field of regional research. This article will conduct in-depth research on the current situation of regional economic resilience development in China. This study will start from the perspective of enhancing regional economic resilience. This article constructs a relatively comprehensive evaluation index system in the research. At the same time, the author uses the entropy weighted TOPSIS method to scientifically measure the level of regional economic resilience. Based on the measurement, the development status of each province from 2012 to 2012 is comprehensively evaluated. Finally, a comprehensive analysis is conducted on the spatiotemporal dynamics of the evolution of regional economic resilience. The results of the study found that the overall level of economic resilience in China is steadily increasing. Among them, most regions have enormous potential for improvement, and regional differences are gradually narrowing.

ОЦІНКА СУЧАСНОГО СТАНУ ДЕРЖАВНИХ ФІНАНСІВ В УКРАЇНІ

The current state of public finances in Ukraine, in particular of state budget and debt burden is analyzed in the article. The relevance of the researched topic due to the need to build an effective system of the state finances that have a special value in the conditions of cyclical economic fluctuations and the decline of productive forces, decline in social living standards, decrease in competitiveness of our country and martial law. In order to perform these functions, the state finances should have an adequate and optimal resource base. The dynamics of nominal GDP for the last five years are given and also a comparative analysis of changes in GDP per capital was carried out in Ukraine and in leading European states. It was established that the nominal GDP of Ukraine in the national currency during the studied period had a tendency to increase except of key challenges and threats on the change in GDP were substantiated. The largest influence for reduction GDP in 2022 caused a full-scale invasion of the aggressor country in Ukraine, growth of external debt, a large part of a shadow economy and low investment attractiveness of Ukrainian companies. The implementation of the state budget of Ukraine analyzed in terms of income, expenses and lending. Revenues of the state budget in 2022 in creased due to the international financial help, which composed more than a quarter of all incomes of a state budget. State expenditures of budget in 2022 were on 17,1% lower than planned. It is observed the growth of a profitable part of a budget which is due to economic and political factors. The emergence of significant fluctuations and deviations in the structure of the reGDPvenue side of the state budget in the context of the budget policy of the state in modern conditions is due to the low quality of planning, which has been observed in recent years in the organization of public finances. The dynamics and structure of the state debt are given and also the dynamics of the debt burden for 2018-2022. It was grounded that the growing debt dependence of the Ukrainian government will significantly weaken the fiscal capacity of the state. In general, the stability of the public finance system, taking into account the existing challenges and threats.

Research on the Impact of Financial Innovation on Macroeconomic Volatility

Since the reform and opening up,China's economic and technological level has been significantly improved. For a long time, the Chinese economy has been in a stable and upward trend. With the arrival of the "Internet plus" era, the impact of innovation on economy and finance has risen to a new level. After the opening of the financial market, there was immediately what we are now familiar with financial risks and innovation, and financial innovation is aimed at reducing financial risks. According to the theory of economic cycle fluctuations, there are many factors that lead to macroeconomic fluctuations, including the total demand level such as consumption and investment, as well as the total supply level such as technological progress. With the continuous advancement of economic globalization, financial innovation, and financial integration, while financial markets bring economic profits, they inevitably bring systemic financial risks, which in turn affect the operation of the macro economy and seriously lead to financial crises. Only by mastering more economic operation information, having stronger judgment on future economic trends, and communicating more effectively with the market, can the efficiency of macroeconomic regulation be improved. This article studies the impact of financial innovation on macroeconomic fluctuations.

Government expenditure structure, technological progress and economic growth

PurposeThis study examines the differences in the economic stimulus effects, transmission mechanisms, and output multipliers of government consumption, government traditional investment, and government science and technology investment.Design/methodology/approachThis study constructs and estimates a New Keynesian model of endogenous technological progress embedded in the research and development (R&D) and technology transfer sectors. Using Chinese macroeconomic time series data from 1996 to 2019, this study calibrates and estimates the model and analyzes the impulse response function and a counterfactual simulation of expenditure structure adjustment.FindingsThe results show that compared with the traditional dynamic stochastic general equilibrium (DSGE) model, the endogenous process of technological progress amplifies the impact of government consumption shock and traditional government investment shock on the macroeconomy, leading to greater economic cycle fluctuations. As government investment in science and technology has positive external spillover effects on firm R&D activities and the application of innovation achievements, it can promote more sustainable economic growth than government consumption and traditional investment in the long run.Originality/valueThis study constructs an extended New Keynesian model with different types of government spending, which includes endogenous technological progress within the R&D and technology transfer sectors, thereby linking fiscal policy, business cycle fluctuations and long-term economic growth. This model can study the macroeconomic impact of fiscal expenditure structure adjustment when fiscal expansion is limited. In the Bayesian estimation of model parameters, this study not only uses macroeconomic variables but also adds a sequence of private R&D investment.

Construction of Early Warning Model for Financial Economic Cycle Using Genetic Algorithm

Economic crises occur when the economy experiences drastic fluctuations, which in turn cause heavy losses to society and the economy. Economic crises happen when there are significant losses to society and the economy as a result of the economy experiencing abrupt changes or deep recessions. The term “economic cycle early warning mechanism” refers to a collection of theories and techniques for keeping track of, assessing, forecasting, and choosing policies regarding finances in light of the particular economic phenomenon known as economic cycle fluctuations. The traditional early warning mechanism has been unable to keep up with the demands of economic cycle early warning due to the growth of economic globalisation, and the phenomenon of incomplete early warning and poor early warning accuracy frequently occurs. A genetic algorithm simulates the natural selection and genetic mechanisms of Darwin’s theory of biological evolution. It is a computational model of the biological evolution process. It is a technique for looking for the best answer by simulating the course of natural evolution. Genetic algorithms have advanced incredibly quickly in recent years. It has been widely applied in machine learning, neural networks, control system optimization, and the social sciences as an effective, useful, and reliable optimization technique. In order to optimize the early warning mechanism and increase the thoroughness and accuracy of early warning, this paper investigates the early warning mechanism of financial and economic cycles by combining genetic algorithms. A mathematical model of the economic cycle was built during the experiment and tested in accordance with the genetic algorithm’s basic operating principle. The findings demonstrate that the genetic algorithm-based early warning system for the financial economic cycle is more complete and accurate, with a 6.4% increase in accuracy.

Governance, financial development and China's outward foreign direct investment.

Deeply investigating the relationship between governance, financial development, and outward foreign direct investment (OFDI) is beneficial to formulating effective policies to accelerate Chinese firms’ pace of overseas expansion. Based on the theoretical mechanism analysis, this paper empirically analyzes the impact of Asian governance and financial development on China’s OFDI using the panel data of 37 Asian countries from 2003 to 2017. The results show that the host country governance has a negative and statistically significant impact on China’s direct investment in Asia. The conclusion remains valid even after overcoming the interference of endogenous and economic cycle fluctuations. Moreover, using the mediating effect model, we find that financial development is an important channel through which host country governance affects China’s OFDI. In further discussion, the findings suggest that with the scale of OFDI expanding, the role of governance takes an inverted "U" shape, and the "Belt and Road" initiative (BRI) weakens the negative impact of governance quality on China’s OFDI. Furthermore, governance has shown more remarkable restraint on China’s OFDI in neighboring, coastal, and low-income countries in the heterogeneity test. ​From the perspective of host country governance, this paper provides more specific guidance to formulate China’s direct investment policy in Asia.

Cyclicality of bank liquidity in Vietnam

The study sheds new light on the link between the economic cycle fluctuation and the financial market by empirically investigating the cyclical patterns of bank liquidity. To draw a comprehensive picture, we conduct our analysis based on multiple different liquidity dimensions of the current liquidity position commonly used in traditional research streams, the long-term liquidity inspired by Basel III guidelines, and the conceptual and quantitative definition to measure liquidity creation of banks. Using a dynamic panel of commercial banks from 2007 to 2019 in Vietnam, we find that long-term bank liquidity and liquidity creation are countercyclical, while the current liquidity position is procyclical. The findings support the thesis that banks take less liquidity risk during economic upturns but tend to be less risk-averse during economic downturns. The estimation results are robust across alternative versions of the generalised method of moments and bank liquidity measures.

A Study on the Correlation between International Crude Oil Price Fluctuation Cycle Measure and Economic Cycle Fluctuation

A Study on the Correlation between International Crude Oil Price Fluctuation Cycle Measure and Economic Cycle Fluctuation

The Link between International Trade and China’s Economic Cycle

<p> In the new era of the 21st century, with the vigorous development of human society, economy, and science and technology, the relationship between countries gradually tends to communicate and coexist. At present, countries all over the world have more frequent exchanges in the fields of economy, culture, politics and education. Globalization has been a new development trend of the international society, and international trade has become a key content of global resources, science and technology and cultural exchanges. At present, in the international community, globalization is not only reflected in the global economy, but also in all aspects of the regional economy. The important feature and outstanding essence of the development of international trade is the common development and mutual complement of regional economy and global economy. With the rapid development of Internet technology, the interaction between countries has become more frequent and convenient, and the orderly development of international trade has sufficient hardware support. In the current social environment, it is of practical significance to analyze and explain the relationship between international economic trade and China’s economic cycle fluctuations. Experimental research results show that since my country implemented the strategic policy of reform and opening up, my country has always developed economic development channels based on the idea of cooperating with multiple parties. Although in the international trade environment, there are many risks, but our country is moving forward under the guidance of the ideological policy of cooperation with multiple parties. It can be said that the impact of international trade on domestic economic cycle fluctuations has both positive and negative effects. It is necessary to establish a development strategy that conforms to the development of my country’s economic cycle through the study of objective conditions and actual conditions.</p>

Factors underlying the growth of hospital expenditure in Spain in a period of unexpected economic shocks: A dynamic analysis on administrative data

AimsWe sought to understand the evolution of Spanish public hospital expenditure by assessing its elasticity to volume versus price, controlling for need and case severity, from January 2003 to December 2015, a period of unexpected economic shocks. MethodObservational study of administrative data characterising hospitals in the Spanish National Health System. Public hospital expenditure was modelled using SARIMAX in a two-step approach aiming at: a) eliciting structural changes in the monthly time-series; and, b) analysing the reaction of expenditure to the behaviour of its direct underlying factors over the sub-periods identified in the first step. ResultsFrom January 2003 to December 2015, two structural changes were elicited, splitting this time-span into three sub-periods. The quantities of hospital services offered (mainly inpatient medical and surgical activity) were consistently shown as the main drivers of expenditure. Overall, hospital expenditure was inelastic to all the factors analysed, specially to quasi-prices; similar results were obtained across sub-periods of analysis. ConclusionFactors associated to quantities (as compared to quasi-prices) were the main drivers of hospital expenditure in the period analysed, particularly after the economic shock. However, hospital expenditure was inelastic to both factors giving prominence to the economic cycle fluctuations as a strong inducer of the hospital expenditure trends in Spain.

Comparative Study of Risks in Indian Banks: An Empirical Analysis Using Bank-Dependent Factors and Economic Indicators

The global financial meltdown caused by the sub-prime mortgage crisis of the USA in 2007-2008 and its consequent negative effects on the structure of the financial markets all over the world resulted in a crisis related to the management of capital. The study focuses on the Indian banking sector, and more specifically, on the factors affecting the efficiency of risk management practices in the Indian banks in light of the Basel III provisions. The objective of the study is to analyse the main components and quality of bank assets in India and subsequently identify the effect of risk-taking on banks, economic cycle fluctuations and risk management. Empirical analysis is conducted using panel regression techniques by taking a combination of time series and cross-sectional data of various bank-specific and macroeconomic factors. Capital adequacy is used as a proxy to measure the solvency level of the banks forced by capital depletion as the dependent variable and is measured by dividing regulatory capital with total risk-weighted asset. Macroeconomic indicator economic growth and inflation are found to be significant while capital adequacy of Indian banks is found to be positively associated with credit risk.

Housing Price and Health in Urban China

Recently many studies have found that unemployment rate, housing price fluctuation and economic crisis would have an important influence on mental and physical health. Housing price has a significant impact on the economic and social development. Since the housing reform in 1998, the rapid development of the real estate industry has become an important factor driving China’s economic cycle fluctuations. However, some scholars have found that the continuing rise in housing price has brought about a series of social and economic problems, such as reducing consumption, income inequality and so on. Therefore, does the rising housing price affect the health and welfare in urban China?Theoretically, housing price will have an effect on the health in urban China by at least three underlying mechanisms. Firstly, it would bring a positive wealth effect to the health of local residents; Secondly, the rising housing price might raise housing purchase and rental costs, and have a negative effect on residents’ physical and mental health; Thirdly, housing price is also the signal of economic vitality, regional infrastructure and the public service system, it would bring down the uncertainty of future economic development and promote the health of residents. In this paper, we use the 2010−2014 wave of China Family Panel Studies（CFPS）to investigate the effect of housing price on health and the underlying mechanism in urban China.Further, we also find that housing price has a heterogeneous effect on health, which is consistent with a wealth effect, a slave effect, and economic development in the area. The positive effect of housing price on physical health is concentrated on those with two or more housing, larger housing, higher property value, without unmarried adult sons, high-income areas or first-tier cities. The negative effect of housing price on mental health is stronger for those with no housing, smaller housing, lower property value, low-income areas or non-first-tier cities. Finally, we analyze the influence path of housing price on health, and find that the rising housing price will significantly improve residents’ health care utilization, increase the probability of physical exercise, and reduce smoking and drinking behaviors.This paper tries to make some contributions in the following aspects: Firstly, in order to solve the endogenous problem caused by omitted variables and reverse causality, we use the province-fixed effect, year-fixed effect, and individual province-fixed effect. Secondly, we use a number of subjective and objective indicators to measure their mental and physical health to extend the connotation of health. Thirdly, we compare the results of multiple groups, finding that housing price has different effects on the health of residents with different characteristics, and verify the three mechanisms of housing price to health. Fourthly, we also investigate the influence path of housing price on physical health, finding that the promoting effect of housing price on physical health can be attributed to the increase of regular exercise and medical utilization, and the decrease of smoking and drinking behaviors.

How interest rate influences a business cycle model

We study the effect of interest rate on phenomenon of business cycle in a Kaldor-Kalecki model. From the information of the People's Bank of China and the Federal Reserve System, we know the interest rate is not a constant but with remarkable periodic volatility. Therefore, we consider periodically forced interest rate in the model and study its dynamics. It is found that, both limit cycle through Hopf bifurcation in unforced system and periodic solutions generated by period doubling bifurcation or resonance in periodically forced system, can lead to cyclical economic fluctuations. Our analysis reveals that the cyclical fluctuation of interest rate is one of a key formation mechanism of business cycle, which agrees well with the pure monetary theory on business cycle. Moreover, this fluctuation can cause chaos in a business cycle system.

Characteristics of Cyclical Fluctuations in the Development of the Chinese Construction Industry

In the course of operation, the construction industry will repeat deviations and adjustments to it equilibrium state. Understanding the development fluctuations of the construction industry is critical to the formulation of a country’s sustainable development strategy. The purpose of this paper is to investigate the development trend and fluctuation periodicity of the construction industry, particularly the deviation and characteristics of the development. In this paper, based on the H-P filtering method, the residual method for measurement of macro-economic cycle fluctuation is used to divide the periodic fluctuation of the Chinese construction industry into five rounds of economic cycles since the reform and opening up. The results are tested by a random test model and a self-correlation coefficient test model. The longitudinal time-series of data investigated in this research is the constant-price, gross output values of the construction industry in China in the period of 1980–2017 for a total of 38 years based on the national annual statistics. The results of the mathematical test show that the peak or valley of the economic cycle fluctuation of the construction industry in China reappears about every seven years or so. It shows that since the reform and opening up, the peak position of the cycle fluctuation of the Chinese construction industry began to decrease gradually, the valley level began to rise gradually, the volatility showed a downward trend, and the construction industry cycle fluctuation entered a steady and smooth process. The results of this study provide new comprehension of the development trend of construction industry and build the theoretical basis for governments and enterprises to judge the future development trends when formulating the relevant policies.

Time-varying effects of international nonferrous metal price shocks on China’s industrial economy

This study aims to investigate the relationship between international nonferrous metal prices and industrial economic variables. To this end, we propose a new extended time-varying parameter structural vector autoregression with stochastic volatility (TVP-SVAR-SV) model to examine the time-varying characteristics and structural changes of shock effects for the period Q1 2001 to Q1 2018. The results show that the time-varying effects of international nonferrous metal price shocks on China’s industrial economy are different at different time horizons, and the impacts are the most significant in the short term. Additionally, the negative effects of international nonferrous metal price shocks on industrial added value has significant lag effects, which appear in medium and long-term, while the shock effects on PPI and industrial employment are positive. Variance decomposition analysis shows that international nonferrous metal price shocks are an important driving force for industrial economic cycle fluctuations, second only to neutral technology shocks. The explanatory power of international nonferrous metal price shocks for the fluctuations in China’s industrial added value, PPI, and employment significantly increases after the international financial crisis.

Synergy analysis of agricultural economic cycle fluctuation based on ant colony algorithm

Abstract The measurement of the agricultural economic cycle and its synergy analysis are of great significance for the formulation of agricultural macroeconomic policies. When the traditional methods are used to analyze the main factors affecting the synergy of agricultural economic cycle fluctuations, almost all of them use the correlation coefficient or the degree of agreement to express the degree of economic cycle synergy. It is impossible to accurately evaluate the degree of synergy of economic cycle fluctuations. To solve this problem, a quantitative calculation model of agricultural economic cycle synergy evaluation based on the ant colony algorithm is proposed. On the basis of the collected monthly data of agricultural economic operation indicators, a prosperity index that comprehensively reflects the development of agricultural economy is constructed. The law of economic prosperity cycle fluctuation is analyzed according to economic prosperity index, and HP filtering is utilized to decompose the trend fluctuations of the economic time series of various industries and obtain the fluctuation components. The ant colony algorithm is utilized to optimize the spearman correlation analysis method, and the correlation analysis of the wave components is carried out. The Fisher-z conversion is performed on the optimal Spearman correlation coefficient obtained by the optimization. The transformed results represent the degree of economic cycle synergy, considering the geographical distance, economic space spillover, fiscal policy synergy, regional income gap and geographical neighbors, a quantitative calculation model for agricultural economic cycle synergy evaluation is established. The results show that the agricultural economic cycle has a certain spatial correlation, and will expand the agricultural economic fluctuations and form the cycle synergy through the periodic space overflow.

Bank income smoothing in South Africa: role of ownership, IFRS and economic fluctuation

PurposeThe purpose of this paper is to examine the determinants of the use of loan loss provisions (LLPs) to smooth income by banks in South Africa. More specifically, the authors examine the influence of ownership, IFRS disclosure rules and economic fluctuation on the income smoothing behaviour of South African banks while controlling for the traditional determinants of bank income smoothing via LLPs.Design/methodology/approachThe study employs fixed effect regression methodology to estimate the determinants of discretionary LLPs.FindingsThe authors find that South African banks do not use LLPs to smooth income when they are: under-capitalised, have large non-performing loans and have a moderate ownership concentration. On the other hand, income smoothing is pronounced when South African banks are rather more profitable during economic boom periods, well-capitalised during boom periods and is pronounced among banks that adopt IFRS and among banks with a Big 4 auditor. The authors also find that banks use LLPs for capital management purposes, and bank provisioning is procyclical with economic fluctuations.Practical implicationsBank supervisors in South Africa should monitor the bank provisioning practices in South Africa closely to ensure that LLPs are not used as a substitute for bank capital. Banks in South Africa should not use sufficient provisioning as a substitute for sufficient bank capital. Second, the evidence for procyclical bank provisioning shows that provisioning by South African banks reinforce the current state of the economy and might compel bank supervisors in South Africa to consider the adoption of a dynamic provisioning system that is already adopted by bank supervisors in Spain, Peru, Uruguay, Colombia and Bolivia.Originality/valueBank income smoothing is an important issue because it has implications for banking stability and accounting transparency. There are few studies on bank income smoothing for emerging economies particularly in Africa where there are substantial differences in ownership and accounting rules. This is the first South African study to examine the influence of disclosure rules, ownership and economic cycle fluctuations on bank income smoothing behaviour via LLPs.

DIAGNOSTICS OF THE STATE OF FINANCIAL SECURITY OF UKRAINE

Urgency of the research. The transition to the market in Ukraine led to changes in the sphere of economic relations, which are characterized by a high level of instability. Signifi-cant changes that have occurred in recent years have also created new threats to the domestic economy, necessitating the diagnosis of Ukraine's financial security. Target setting. The welfare of each state primarily de-pends on the stability of its financial system, which is provid-ed through the timely diagnosis of its threats and response to them. Actual scientific researches and issues analysis. The issues of financial security of the nation, as an economic component, the principles of the formation of a system for ensuring financial security were revealed in the works of domestic and foreign scientists, namely in the works of A. Baranovsky, V. Geyets, M. Yermoshenko, J. Zhalilo, B. Karpinsky. A. Sukhorukov, A. Shevchenko and others. Uninvestigated parts of general matters defining. In the conditions of cyclical economic fluctuations, which are characterized by a high degree of uncertainty, it is of acute necessity to diagnose the financial security as a component of the state's economic security. The research objective. The purpose of the article is to conduct a diagnosis of Ukraine's financial security and identi-fy the threats that affect it. The statement of basic materials. The article analyzes both the dynamics of integral indicators of the components of financial security by the methodology of the Ministry of Economy of Ukraine for 2013 – 2017 and the dynamics of financial security indicators by the methodology of the Na-tional Institute of International Security Problems of Ukraine from 2013 to 2017, as well as distinguishes their shortcom-ings. There is proposed a system of measures to increase the level of financial security of the enterprises in Ukraine. Conclusions. Diagnostics of the level of financial security is a complex process of identifying, analyzing, eliminating and forecasting the emergence of internal and external threats to the state. Diagnosis of the components of financial security is the basis for developing a set of measures to counter threats and improve the level of protection of Ukraine.

Development model simulation of airport transport corridor based on system dynamics algorithm

The reasonable planning of airport transport plays important role in the development of air transportation industry and the construction of urban traffic system. From the point of view of economic growth model, the system dynamics method and system simulation technology were adopted to study and analyze the change law of airport transport corridor system, under three economic growth modes, namely, sustained and rapid economic growth, economic growth slowdown and economic cycle fluctuation. Furthermore, the change low of indictors, such as, airport transport corridor capacity, airport transport corridor congestion, airport transport corridor passenger flow, following with the three modes of economic growth, were analyzed. The purpose of this study is to provide some theoretical support for the planning of airport transport corridors.

Sentiment and the U.S. business cycle

Psychological factors are commonly believed to play a role on cyclical economic fluctuations, but they are typically omitted from state-of-the-art macroeconomic models.This paper introduces “sentiment” in a medium-scale DSGE model of the U.S. economy and tests the empirical contribution of sentiment shocks to business cycle fluctuations.The assumption of rational expectations is relaxed. The paper exploits, instead, observed data on expectations in the estimation. The observed expectations are assumed to be formed from a near-rational learning model. Agents are endowed with a perceived law of motion that resembles the model solution under rational expectations, but they lack knowledge about the solution’s reduced-form coefficients. They attempt to learn those coefficients over time using available time series at each point in the sample and updating their beliefs through constant-gain learning. In each period, however, they may form expectations that fall above or below those implied by the learning model. These deviations capture excesses of optimism and pessimism, which can be quite persistent and which are defined as sentiment in the model. Different sentiment shocks are identified in the empirical analysis: waves of undue optimism and pessimism may refer to expected future consumption, future investment, or future inflationary pressures.The results show that exogenous variations in sentiment are responsible for a sizable (above forty percent) portion of historical U.S. business cycle fluctuations. Sentiment shocks related to investment decisions, which evoke Keynes’ animal spirits, play the largest role. When the model is estimated imposing the rational expectations hypothesis, instead, the role of structural investment-specific and neutral technology shocks significantly expands to capture the omitted contribution of sentiment.