Cyclical Factors Research Articles

Identifying Factors behind the Decline in the U.S. Labor Force Participation Rate

The analysis in this paper finds that the dramatic decline in labor force participation during the Great Recession is more than explained by deteriorating labor market conditions (cyclical factors).Behavior adjusted over this time period to boost labor force participation so that it was higher in 2012 than would have been predicted by the model. Depending on the strength of the labor market going forward, we project anywhere from a further decline in the labor force participation rate of 0.8pp to an increase of 0.35pp by 2017.

Inflation Differentials in the GCC

This paper uses a pairwise approach to investigate the main factors that have been driving inflation differentials in the Gulf Cooperation Council (GCC) region for the past two decades. The results suggest that inflation differentials in the GCC are largely influenced by the oil cycle, mainly through the credit and fiscal channels. This implies that in order for the proposed monetary union to be successful, closer coordination of fiscal policies will be critical. The results also indicate that after controlling for cyclical factors, convergence increased even during the recent oil boom.

Labor Force Participation and Monetary Policy in the Wake of the Great Recession

In this paper, we provide compelling evidence that cyclical factors account for the bulk of thepost-2007 decline in the U.S. labor force participation rate. We then proceed to formulate astylized New Keynesian model in which labor force participation is essentially acyclical during“normal times” (that is, in response to small or transitory shocks) but drops markedly in the wakeof a large and persistent aggregate demand shock. Finally, we show that these considerations canhave potentially crucial implications for the design of monetary policy, especially undercircumstances in which adjustments to the short-term interest rate are constrained by the zerolower bound.

Labor Force Participation and Monetary Policy in the Wake of the Great Recession

In this paper, we provide compelling evidence that cyclical factors account for the bulk of the post-2007 decline in the U.S. labor force participation rate. We then proceed to formulate a stylized New Keynesian model in which labor force participation is essentially acyclical during “normal times” (that is, in response to small or transitory shocks) but drops markedly in the wake of a large and persistent aggregate demand shock. Finally, we show that these considerations can have potentially crucial implications for the design of monetary policy, especially under circumstances in which adjustments to the short-term interest rate are constrained by the zero lower bound.

Entrepreneurial Activities, Innovation and Economic Growth: The Role of Cyclical Factors - Evidence from OECD Countries for the Period 2001-2009

This article examines the relationship between entrepreneurship and economic growth for 19 OECD countries from 2001 to 2009. We used two measures for entrepreneurship: the level of entrepreneurial activities and potential innovation. We estimated a growth function using techniques of panel data. The results show a significant and positive impact of the variables used to measure entrepreneurship on economic growth. The results also show that the impact of innovation becomes more potential significant and higher in the presence of a favorable institutional framework. These results have strong implications for economic policy. The government will further promote entrepreneurial activities, especially which generate innovation, by providing a favorable institutional framework.

Gênese e ontogênese do ritmo de sono/vigília em humanos

Living organisms undergo changes over time, which can be seen along years, one day or several hours. Biological rhythms are understood as cyclical fluctuations observed in the living matter and present an endogenous component which is influenced by the environment. The expression of these rhythms and its relation to the environment also changes along the individual’s life, as we observe with sleep/wake patterns. In this article we present a review about the development of sleep/wake rhythm throughout life, describing the consolidation process of a synchronized circadian rhythm along childhood, the phase changes of sleep/wake cycle along adolescence and, afterwards, its phase and amplitude modifications in the elderly, focusing the interaction with environmental cyclical factors

Drivers of private equity investment activity: are buyout and venture investors really so different?

This paper investigates the drivers of private equity activity by undertaking a panel data study for 17 European countries. Activity is affected by both cyclical and structural factors. We control for the cyclical factors and examine structural drivers of investment in private equity. We examine whether these drivers are different for venture capital and buyout investors, and find that indeed there is a strong distinction between the factors influencing investment in these two groups of investors. Based on our results, we consider policy options for governments to attract more investment.

A Search and Matching Approach to Labor Markets: Did the Natural Rate of Unemployment Rise?

The U.S. unemployment rate has remained stubbornly high since the 2007–2009 recession, leading some observers to conclude that structural rather than cyclical factors are to blame. Relying on a standard job search and matching framework and empirical evidence from a wide array of labor market indicators, we examine whether the natural rate of unemployment has increased since the recession began, and if so, whether the underlying causes are transitory or persistent. Our preferred estimate indicates an increase in the natural rate of unemployment of about one percentage point during the recession and its immediate aftermath, putting the current natural rate at around 6 percent. An assessment of the underlying factors responsible for this increase, including labor market mismatch, extended unemployment benefits, and uncertainty about overall economic conditions, implies that only a small fraction is likely to be persistent.

Public Liabilities Under Uncertainty

Vanne discusses the uncertainty surrounding generational accounting results for Finland, where economic activity is highly volatile. Estimates of the intergenerational balance of Finland have improved dramatically over the years 1995 to 2000, reflecting favourable macroeconomic circumstances, sound fiscal policies and measures taken by pension institutions. However, generational accounts depend on the long-term forecasts of a number of macroeconomic variables. To assess the underlying risks of the estimates, Vanne presents the results of simulations with stochastic population, productivity, interest rates and returns on stocks. The stochastic properties of the variables are estimated from historical data, assumed to be mutually independent. The paper highlights the relevant role that cyclical factors have on Finnish generational accounts via capital income tax revenues and the returns on assets held by the public sector.

SOUTH AFRICA'S TRANSITION TO A CONSOLIDATED BUDGET

AbstractThe size of South Africa's fiscal stimuli, whether intended or not, has helped to avert negative consequences of the global financial downturn. With the economic cycle turning again, consolidation of deficits and a reduction of the level of debt are again the focus of policymakers. These outcomes are generally achieved by either increasing tax rates or cutting spending (discretionary fiscal policy), whereas an alternative option is to allow automatic stabilisers to consolidate budgets. This study attempts to answer whether cyclical factors or discretionary policy minimise output volatility and which one of the two presents a better policy option regarding uncertainty in real economic recovery. For this purpose, a small open‐economy gap model is built using South African data, where the budget deficit is endogenised by way of a fiscal policy “rule.” Sensitivity analyses and robustness checks are carried out using a structural vector autoregression. Given the estimates of both the automatic stabilisers as well as the components of discretionary fiscal policy, we are able to obtain impact multipliers on output and conduct scenario testing for optimal fiscal policy response towards fiscal consolidation as well as debt sustainability.

Entrepreneurship in the Middle East and North Africa: Opening the Floodgates

value and jobs. It is also clear that no more critical a goal exists in the Middle East and North Africa (MENA) region than creating stability and common prosperity through the long-term employment—and positive deployment—of youth. Studies make extensive connections between entrepreneurial activity and economic development, and a 2010 report by the Kauffman Foundation makes explicit the role of start-ups in job creation. The study specifically states, “Startups are not everything when it comes to job creation. They are the only thing.” Related Kauffman studies from the U.S. (see Kane, 2010) provide conclusive evidence that start-ups account for a substantial proportion of all net job creation. Mapped onto domestic and/or regional recession, further evidence suggests that job creation in the start-up segment remains consistent in economic downturns, whereas larger businesses are more adversely affected by the cyclical economic factors typical to the boom/bust cycle. Finally, in a 2009 study by Litan and Stangler, Kauffman concludes that two-thirds of new jobs come from firms that are between one and five years old. It is clear that emerging and developing economies are impacted by similar dynamics, based on evidence from Brazil, Jordan, and other entrepreneur-centric economies (Ali et al, 2010; Castanhar, Dias, and Dias, 2008), in that entrepreneurship stimulus and growth metrics in such places supersedes even the pace of startup activity in the U.S. Mapped onto the above dynamics, it is also possible to gain insight from studies such as the Startup Genome Report (Marmer, Herrmann, & Berman, 2011) as to how and why start-ups succeed, thereby creating an effective framework to facilitate such success. Projects such as Oasis 500 in Jordan have (with some early suc-

The contemporary China resources boom*

Commodity prices are formed by the interaction of global economic growth and costs of expanding supply of commodities. They tend to be high for long periods when global average growth rates are high, and low for long periods when growth rates are low, and to fluctuate around these averages as short term demand departs from expectations. The growth of advanced developing countries is especially influential in determining global demand for resources. Exceptional growth and resource intensity of China have been the main determinants of high energy and metals prices since about 2003. Short term cyclical factors have pushed energy and metal prices higher still, because markets did not anticipate the strength of Chinese demand and supply takes time to catch up. The high resource intensity of Chinese growth has been the result of high investment rates and rapid increases in urban population and the export share of production. Strong growth is likely to continue although at slowly receding rates, but growth will become less resource intensive, leading to moderation of global commodity prices. Strong growth in China and the world are at risk if effective policies are not adopted to break the nexus between economic growth and pressure on the environment.

Book Review: The Changing Business of Journalism and Its Implications for Democracy

The Changing Business of Journalism and Its Implications for Democracy. David A. L. Levy and Rasmus Kleis Nielsen, eds. Oxford, UK: Reuters Institute for the Study of Journalism, 2010. 89 pp. £12 pbk.Much of what is written today, especially in the United States, about the business of journalism focuses on one of two issues: the significant decline in both audiences and revenue for traditional journalism enterprises, especially newspapers, and the role of the Internet in precipitating or exacerbating these declines. This is generally seen as a threat to the contribution that these organizations make to democratic societies-indeed, this perceived harm to democracy is the driver of much of this literature. Moreover, there is usually an implicit assumption that what is happening in the United States is also happening elsewhere or soon will.Enter now this slim new book published by the Reuters Institute for the Study of Journalism at the University of Oxford, a volume that represents the collective effort of a dozen internationally known scholars, mainly European, and part of the Reuters Institute's continuing series. The book's stated purpose is to challenge the doom and gloom that dominates much of the current narrative by offering a systematic overview of what is happening in a diverse range of countries. And it very effectively accomplishes this goal.The book's global approach adds three important elements to the current discussion about the future of the journalism business. First, it emphasizes the need to isolate the role of cyclical factors in the current crisis-in particular, the impact of the current recession-from more fundamental ones. Second, it provides an approach to distinguishing between challenges that are the result of the Internet per se and those that stem from structural characteristics of the journalism industry in a given country. Finally, by taking a neutral approach to the Internet's impact on traditional businesses and on the health of democracy, it provides a framework for considering a wide range of possible positive outcomes.The first three chapters of the book provide the conceptual and empirical foundation for the seven country studies that are the heart of this volume. This introductory section begins with the book's editors-both research fellows at the Reuters Institute- presenting a wide variety of statistics (on advertising and other media revenues, profits, public funding, newspaper circulation, and Internet usage) to make the point that the current state of media is very different across the seven countries.Then Robert Picard, the Reuters Institute research director, offers an excellent summary of the key factors underlying the current crisis in the media. In doing so, he links two important points: (1) that serious news itself has never been profitable as a business and has always required some sort of subsidization and (2) that the decline in newspaper circulation is not the result of a decline in citizen demand for (which in his view has always been limited) nor greater competition in producing it but rather an increase in competition for other types of (sports, arts and entertainment, celebrity, travel, etc. …

Cyclical Asymmetry in Fiscal Variables

In a stylised framework of fiscal policy determination that considers both structural targets and cyclical factors, we find significant cyclical asymmetry in the behaviour of fiscal variables in a sample of fourteen EU countries from 1970 to 2004, with budgetary balances (both overall and primary) deteriorating in contractions but not improving correspondingly in expansions. Analysis of budget components reveals that the asymmetry is due to expenditure, in particular transfers in cash. We find no evidence that the fiscal rules introduced in 1992 with the Treaty of Maastricht affected the cyclical behaviour of the variables examined. Numerical simulations show that cyclical asymmetry inflated average deficit levels, contributing significantly to the accumulation of debt.

Air pollutants and morbidity of cardiopulmonary diseases in a semi-urban Greek peninsula

Abstract Aim To access the relationship between the frequency of hospitalizations due to respiratory and cardiovascular diseases and air pollution. Material-method Time series study during a seven year period (2001–2007) in a semi-urban tourist Greek peninsula. Data were collected from the computerized database of Volos General Hospital and included on a daily basis all emergency admissions of adults (>14 years old) which required hospitalization due to respiratory or cardiovascular problems. Daily concentrations of ambient pollutants [particulate matter with aerodynamic diameter less than 10 mm (PM10), carbon monoxide (CO), sulfur dioxide (SO2), nitrogen oxides (NO, NO2, NOX) and ozone (O3)] were obtained from three monitoring stations. The impact of air pollutants on morbidity was studied through time series analysis. The effects of time trend, season, and other cyclical factors, temperature, and humidity were accounted for. Autocorrelation and overdispersion were corrected. Results There were significant associations between hospitalizations and all indicators of air pollution. Daily elevations in the concentrations of PM10, NO, CO and O3 increased significantly the number of hospitalizations for respiratory/cardiovascular causes both on the same day and at the next day (p Conclusion Our findings suggest a significant relationship between morbidity burden of respiratory and cardiovascular diseases and the levels of air pollution; these results underline that reinforcement of measures which target to control ambient pollution, is necessary.

INVESTIGATING COLD EFFECT IN TEMPERATURE-MORTALITY ASSOCIATION STUDY

Background and Aims: Numerous epidemiological studies have been conducted on the impact of temperature to health. However, distinguishing between the seasonal and temperature effects on mortality are controversial. The objective of this study is to investigate whether these effects influence the daily mortality in major cities at South Korea. Methods: We used daily death counts and meteorological data, from 1992 to 2009, of 4 major cities in Korea; Seoul, Daegu, Busan, and Incheon. Then, we compared the local-weighted scatterplot smoothing models (Lowess/Loess) and generalized additive models (GAM) to analyse the association between the daily mean temperature and mortality. For controlling for time trends, we gave the number of observation years for degrees of freedom. We adjusted the effects of secular trends and other cyclical factors, day of the week, humidity, and air pressure. To separate the two effects: temperature and seasonal effects, we stratified the data sets by seasons, 12 months and examining the data. For our analysis, we used the R statistical software. Results: The year-controlled and crude models revealed different features. We observed a V-shaped smoothing spline curves on the crude models of the four major cities. In the year-controlled models, however, the V-shaped curves disappeared and mortality linearly increased with temperature. Seasonal stratified data in the LOESS model indicated a higher mortality during the winter. In contrast, the GAM model had no relative relationship with mortality and temperature during the winter. Monthly stratified model presented a strong positive temperature-mortality relationship in July and August. On the other hand, the curves during the winter months showed inconsistent results of the four cities. Conclusions: When we controlled the year and season, the temperature effects disappeared during the winter months. However, our month-specific analysis showed dissonant patterns in each city. We need to consider both local and regional effects for further investigation.

The International Crisis and Latin America: Growth Effects and Development Strategies

Latin America has been strongly affected by the international crisis and recession since late 2008. In comparison to historical experience, how has Latin America coped with the global crisis, which has been the role of different transmission mechanisms, and how have the region’s structural and policy conditions affected its sensitivity to foreign shocks? Moreover, what policies can protect the region better from world crises and shocks, and to which extent should it rely on a strategy of close trade and financial integration into a world economy punctuated by shocks and crises? This paper addresses the latter questions in three steps. First, by assessing empirically the sensitivity of growth in the region’s seven major economies during 1990-2009 to large number of structural and cyclical factors, based on high-frequency panel-data estimations. Second, by using the latter results to decompose the amplitude of GDP reductions in both recessions according to the individual and combined contribution of the different growth factors. Third, to derive the main implications of the results for the choice of macroeconomic regimes and development strategies.

Internal Migration in the United States

This paper examines the history of internal migration in the United States since the 1980s. By most measures, internal migration in the United States is at a 30-year low. The widespread decline in migration rates across a large number of subpopulations suggests that broad-based economic forces are likely responsible for the decrease. An obvious question is the extent to which the recent housing market contraction and the recession may have caused this downward trend in migration: after all, relocation activity often involves both housing market activity and changes in employment. However, we find relatively small roles for both of these cyclical factors. While we will suggest a few other possible explanations for the recent decrease in migration, the puzzle remains. Finally, we compare U.S. migration to other developed countries. Despite the steady decline in U.S. migration, the commonly held belief that Americans are more mobile than their European counterparts still appears to hold true.

New Evidence on Cyclical and Structural Sources of Unemployment

We provide cross-country evidence on the relative importance of cyclical and structural factors in explaining unemployment, including the sharp rise in U.S. long-term unemployment during the Great Recession of 2007-09. About 75% of the forecast error variance of unemployment is accounted for by cyclical factors--real GDP changes (Okun's law), monetary and fiscal policies, and the uncertainty effects emphasized by Bloom (2009). Structural factors, which we measure using the dispersion of industry-level stock returns, account for the remaining 25%. For U.S. long-term unemployment the split between cyclical and structural factors is closer to 60-40, including during the Great Recession.

Inflation Differentials in the GCC: Does the Oil Cycle Matter?

This paper uses a pairwise approach to investigate the main factors that have been driving inflation differentials in the Gulf Cooperation Council (GCC) region for the past two decades. The results suggest that inflation differentials in the GCC are largely influenced by the oil cycle, mainly through the credit and fiscal channels. This implies that closer coordination of fiscal policies will be key for facilitating the closer integration of the GCC economies and ahead of the move to a monetary union. The results also indicate that after controlling for cyclical factors, convergence increased even during the recent oil boom.