Aggregate Economy Research Articles

Unconventional monetary and fiscal policy

We build a tractable New Keynesian model to jointly study four types of monetary and fiscal policy. We find quantitative easing (QE) and tax-financed fiscal transfers or government spending have similar effects on the aggregate economy. Compared with these three policies, conventional monetary policy is more inflationary. QE and transfers have redistribution consequences, whereas others do not. Ricardian equivalence breaks: tax-financed fiscal policy is more stimulative than debt-financed policy. Finally, we study optimal policy coordination and find that adjusting two types of policy instruments can stabilize three targets simultaneously: inflation, the aggregate output gap, and cross-sectional consumption dispersion.

Research on Vocational Regional to Development by Vocational Education

Zhejiang province of China has a large economic aggregate, optimized industrial structure, balanced regional development pattern, transformation and upgrading of industrial layout, along with excellent business environment and urban-rural integrated development. For decades, through the training of technical talents which directly meets the needs of regional economic development; deepens the cooperation between schools and enterprises, provides skilled personnel support for economic and social development, and promotes regional cooperation and foreign cooperation. Taking Zhejiang Province as an example, this paper discusses how vocational education promotes the regional economy, and analyzes the existing problems and future prospects.

Monetary Policy and Government Debt

AbstractWe study how the level of government debt affects the effectiveness of monetary policy, that is, the elasticity of economic aggregates to interest rate changes. We build a New Keynesian model where fiscal policy is non‐Ricardian and government debt is risk‐free. Wealth effects generated by government bonds weaken the transmission of monetary policy to output. Using data on private ownership of U.S. public debt, we find that when the debt‐to‐GDP ratio is one standard deviation above its mean, the response of industrial production and unemployment to a monetary shock decreases by 0.75pp and 0.1pp, respectively, out to a 3‐year horizon.

Analysis of spatial and temporal evolution and driving factors of carbon emission in Shandong Province: based on the perspective of land use

Land use/cover change is the second major contributor to carbon emissions, following energy emissions. Studying provincial land-use carbon emissions is crucial for achieving the “double carbon” goal. This study selects 16 prefecture-level cities in Shandong Province as the research object. It analyzes the spatial and temporal distribution pattern of carbon emissions in Shandong Province based on land-use data and energy consumption. In terms of net carbon emissions, this study utilizes the standard deviation ellipse and kernel density estimation to analyze net carbon emissions change from the municipal and regional perspectives. In terms of carbon ecological carrying capacity, not only the carbon ecological carrying capacity of forest and grassland was considered, but also the carbon ecological carrying capacity of crops in Shandong Province, which is a large grain province. Using the geographic detector to explore the drivers. Research findings indicate that carbon sources and sinks show a clear spatial and temporal distribution pattern, with the center of gravity of net carbon emissions extending to the northeast. Areas with high carbon ecological carrying capacity have high forest coverage, grassland coverage, and crop yields. Regarding driving factors, the urbanization rate, economic aggregate, and technological progress demonstrate significant explanatory power through single and interaction tests, suggesting that these factors are critical drivers of land-use carbon emissions within Shandong Province. Based on the spatiotemporal pattern analysis of land-use carbon emissions in Shandong Province, each city's growth rate and spatial distribution characteristics can be clarified, providing a scientific basis for the local government to formulate regional and differentiated emission-reduction policies. In addition, by exploring the driving factors of land-use carbon emissions in Shandong Province, the influence level of factors on carbon emissions can be revealed to provide references for formulating regional sustainable development strategies.

Macroeconomic effects of monetary policy in Japan: an analysis using interest rate futures surprises

AbstractWe estimate the effects of monetary policy on the aggregate economy in Japan during the last three decades when the effective lower bound (ELB) on interest rates was occasionally binding. We use monetary policy surprises from the interest rate futures market as the external instrument to identify monetary policy shocks in the vector autoregressive model. We find that monetary policy has been effective in Japan during the last three decades, and the effect was more persistent in the ELB regime than in the non-ELB regime. In a simulation exercise, we further show that a New Keynesian model with forward guidance can replicate our empirical finding.

The Technical Default Spread

Abstract We study the quantitative impact of lender control rights on corporate investment, asset prices, and the aggregate economy. We build a general equilibrium model in which the breaching of a loan covenant (technical default) entails a switch in investment control rights from borrowers to lenders. Lenders optimally choose low-risk projects, thus mitigating borrowers’ risk-taking incentives and lowering the cost of equity. This mechanism generates strong macroeconomic effects and mitigates the financial accelerator. Consistent with our model, proximity to technical default in the data is associated with 4.12% lower returns and lower exposure to systematic risk.

Data and the Aggregate Economy

Recent data technology innovations, such as artificial intelligence and machine learning, have transformed the production of knowledge and increased the importance of data. This review explores how data—digitized information—has been modeled within classic macroeconomic frameworks. It compares the economics of data to other concepts such as ideas, patents, and learning-by-doing. This paper also shows potential ways to model applications for data, including innovation, process optimization, and matching. Because this research area is nascent, much of the article is devoted to open questions and directions for future data economy research. (JEL C80, D21, D83, E23, E24, J23)

The performance of the Martini Index in terms of aggregativity: An application on EU KLEMS data

The study of the properties of index numbers is a crucial point in the analysis of economic aggregates in order to ensure the coherence of the results obtained. In this context, the property of coherence in aggregation appears to be very important when these quantities are divided into sectors and subsectors, to ensure consistency of results at different levels of sectoral aggregation. Index numbers of expenditure ratios satisfy this property by construction; however, they often do not satisfy other properties such as factor reversibility. In this paper, the Martini index was proposed as a viable alternative for calculating Total Factor Productivity (TFP). In the proposed application on EU KLEMS data, the results obtained are very encouraging and confirm the interest in the Martini index.

Analysis of the transmission of carbon taxes using a multi-sector DSGE

Carbon tax has attracted increasing attention as a means of curbing greenhouse gas (GHG) emissions. While the implementation of carbon taxes necessarily involves consideration of the impact across different sectors and different periods, most existing studies use models which do not provide a detailed account of either sectoral interaction or the dynamic nature of the responses of households and firms. To fill this gap, we construct a New Keynesian multi-sector dynamic stochastic general equilibrium (DSGE) model with an input–output structure of intermediate inputs and an investment network calibrated to Japan’s economy. We study the impact over time of carbon tax on different sectors, on aggregate GDP, and on GHG emissions. We then consider the long-term implications through a steady-state analysis, and the short- to medium-term implications by a simulation from 2020 to 2050, under various scenarios with different tax base compositions and announcement timings. We show that the impact on the trade-off between output and GHG emissions is importantly affected by inter-sectoral interactions among firms, and by the intertemporal decisions of households and firms. For example, an orderly implementation of carbon tax may mitigate a decline in value added of the most affected industry and the aggregate economy in 2050 by about 7% and 2% points, respectively, and contain an increase in the stock of GHG in 2050 by 3% points compared with the case of disorderly implementation. Also, keeping GHG emissions constant, GDP in 2050 can vary by 0.5% points depending on tax sources.

Spatiotemporal dynamic evolution and influencing factors of land use carbon emissions: evidence from Jiangsu Province, China

Land use/cover change has an important impact on global climate change and carbon cycle, and it has become another major source of carbon emission after energy consumption. Therefore, this study focuses on the main line of “land use carbon emissions-spatial and temporal patterns-influencing factors,” and selects 13 cities in Jiangsu Province as the research object. Based on the data of land use and energy consumption, combined with the method of land use carbon emissions and ArcGIS technology, this study conducted a quantitative analysis of the spatio-temporal distribution of carbon emissions in Jiangsu Province. The factors affecting the spatial distribution of carbon emissions from land use in Jiangsu Province were discussed by using Geographic detector. The results show that: 1) Carbon emissions in Jiangsu Province showed an overall growth trend, from 16215.44 ×104tC in 2010–23597.68 ×104tC in 2020, with an average annual growth rate of 4.55%, of which the construction land and watersheds had a greater impact on carbon sources and sinks, respectively. 2) During the period, there were significant differences in carbon emission levels among different cities in Jiangsu Province, and the land use carbon emission in Jiangsu Province showed a stable spatial pattern of “northwest—southeast.” The southern part of Jiangsu is always the hot area of carbon emission, while the cold spot area is mainly distributed in the northern and central parts of Jiangsu. 3) The interaction of factors such as economic development, industrial structure, energy intensity, land use and human activities is an important reason for the spatio-temporal differences of land use carbon emissions in Jiangsu Province. Among them, the level of urbanization, population size and economic aggregate have significant effects on carbon emissions.

Research on Short Term Prediction of Electricity Demand in Hubei Province

The balance of electricity supply and demand is the basic condition for promoting the economic development of our country and improving the living standards of the people, and scientific forecasting of electricity demand is the premise of ensuring the balance of electricity supply and demand. Hubei Province is superior in geographical location, and its electricity demand and economic aggregate both rank high in the country, but due to the direct impact of the epidemic, its electricity demand has been affected. This paper uses OLS regression to obtain the linear regression equation of the three indicators of GDP and the proportion of the secondary industry structure before the epidemic from 2005 to 2018, and uses the Gray Forecast Model-assisted scenario analysis method to analyze the electricity consumption of Hubei Province under the influence of multiple factors, and predicts the electricity consumption of Hubei Province from 2019 to 2021 after removing the impact of the epidemic, and makes a short-term forecast of the electricity demand of the province from 2024 to 2029.

How spillovers from pollution cleanup in the Ganges affect welfare in Kanpur and Varanasi

We study how spillovers from water pollution cleanup in the Ganges affect social welfare in an aggregate economy consisting of Kanpur and Varanasi, two cities through which this river flows. We view pollution cleanup in both cities as a local public good and point out that, if Kanpur cleans up pollution in the Ganges, then Varanasi obtains some spillover benefit and vice versa. In this setting, we first solve for the Nash equilibrium amounts of pollution cleanup in the two cities when decisions about how much pollution to clean up are made simultaneously; next, we determine the equilibrium welfare levels in each city. Second, on the assumption that decisions about how much pollution to clean up are centralized, we compute the amounts of pollution cleanup that maximize aggregate welfare. Finally, we describe an intercity transfer scheme that leads each city to choose noncooperatively in a Nash equilibrium the same pollution cleanup amounts as those that arise when aggregate welfare is maximized.

Unveiling the urban resilience in cities of China, a study on NO2 concentrations and COVID-19 pandemic

COVID-19 can be considered as the largest public health incident since 2019, posing disturbances to the medical, economic, and social systems. Understanding different levels of city resilience to the impact of COVID-19 on sustainable urban development is therefore essential. In this paper, we analyzed the evolution of the pandemic, the recovery of urban activities and major drivers of urban resilience to COVID-19 based on urban activity patterns derived from NO2 monitoring stations from 217 cities in China. It is observed that nearly all urban activities have been affected by the epidemic with a reduced NO2 emission, indicating a significant decline in the intensity of urban activity. The recovery patterns of human activity among different cities show that: (1) northern cities where low-resilience cities agglomerated have been severely affected. As of April 31, 2020, 12 northern cities have not recovered to pre-epidemic levels; (2) about three-quarters of the cities went through multiple stages to return to the pre-pandemic level, which related to both pandemic stress and prevention measures; (3) about 46.04% of the cities experienced increasing activity patterns that exceeded the pre-epidemic activity level. It is also observed that urban resilience can behave quite differently driven by variations in green coverage, economic aggregate, employment security, and medical system. Our study highlights the potential of an elevated urban resilience by optimizing the urban layout, improving the quantity and quality of green space, and enhancing the medical system.

Economic Welfare in Central and Southeast European Union Countries – An Econometric Approach

The importance of economic aggregates per capita: final consumption expenditure and Gross Domestic Product, for the well-being of the entire population of a country determined the analysis of the economic convergence in the countries of the Central and South-Eastern European Union (CSE). The econometric approach of convergence as a steady state of these variables was performed on panel data models with an error correction term. Establishing the long-run and short-run equations describes the convergence of welfare in the CSE region and the choice of the best model.

Can Leviathan City Governments Use Tax Policy to Attract the Creative Class?

We focus on an aggregate economy of two nearby cities A and B and study whether it is possible for the leviathan governments in these two cities to use taxes τA and τB to attract members of the so-called creative class. The creative class population is fixed and members locate either in city A or B depending on the utility from such location. In this setting, we accomplish five tasks. First, given the two taxes, we determine the value of a metric ζ that describes how the creative class population partitions into cities A and B. Second, for a given partition of the creative class population, we state the budget constraints confronting the governments in cities A and B. Third, we state and solve the decision problems of the two governments when they act as independent leviathans and maximize tax revenue. Fourth, we ascertain the efficient taxes that maximize the sum of tax revenues in the aggregate economy. Finally, we discuss the implications of our analysis for tax policy.

Capital-Skill Complementarity in Firms and in the Aggregate Economy

Capital-Skill Complementarity in Firms and in the Aggregate Economy

Clarifying Several Misjudgments regarding China’s Economic Trends

China’s economic growth rate has shown a general downward trend since 2010, and in unadjusted figures, the difference between the economic aggregates of China and the United States widened during 2022 and 2023. Consequently, misinformation concerning China’s economic trends has appeared both in China and abroad. This study aims to refute the misinformation by demonstrating that China’s economy has not fallen into a prolonged recession, and that the downward trend of China’s economic growth is not a result of suppressing private enterprises while privileging state-owned firms. The gap between the economic aggregates of the United States and China has not begun to widen, and it is wrong to suggest that China can achieve sustained high-quality development through further privatization, marketization, and liberalization.

The measurement of China's provincial physical capital stock based on the improved method and indicators.

Physical capital stock is the basic indicator of macroeconomic empirical studies and also an important manifestation of macroeconomic activity capacity. When measuring China's provincial physical capital stock by the perpetual inventory method, the treatment for the depreciation rate and the initial physical capital stock in the existing literature has some defects in reflecting the economic performance. The purpose of this paper is to build the most reliable and reasonable statistical series of China's provincial physical capital stock. We establish a measurement formula in form of the variable depreciation rate and improve the treatment for the depreciation rate and the initial physical capital stock. For the depreciation rate, we measure the benchmark depreciation rate of physical capital and determine the variable depreciation rate according to the economic growth rate, which makes the variable depreciation rate reflect the economic growth. For the initial physical capital stock, we measure the initial physical capital stock according to the capital output ratio, which makes the initial physical capital stock reflect the economic aggregate. Based on these improvements, we measure China's provincial physical capital stock from 1952 to 2022 by the perpetual inventory method. Through analyzing the measurement results, we have a more distinct insight into the temporal and spatial characteristics of China's provincial physical capital stock: The growth rate of physical capital stock at the provincial level has slowed in spite of remaining high; The eastern region is much higher than the central and western regions. According to these two characteristics, it is suggested that policymakers need to improve market mechanisms and adjust investment policies to promote a benign profile of economic growth and a regional optimization of capital formation.

Secular trends of dental caries and association with nutritional status: a retrospective analysis of 16,199 Chinese students from three successive national surveys from 2010 to 2019.

The prevalence of dental caries (DC) among students in developing countries has increased at an alarming rate, and nutritional status has been shown to be associated with DC in children and adolescents with inconsistent conclusions. We aimed to understand the trends of DC prevalence in students aged 7, 9, 12, and 14 years and to explore the relationship between DC prevalence and nutritional status. We recruited 16,199 students aged 7, 9, 12, and 14 years in China by multi-stage, stratified, random sampling methods from 2010 to 2019. Permanent caries were measured using the Decay, Loss, and Filling (DMF) index and prevalence rate. Deciduous caries were measured using the decay, loss, and filling (dmf) index and prevalence rate. Nutritional status was assessed using body mass index (BMI) and hemoglobin levels. Logistic regression analysis was used to assess the association between nutritional status and the DC prevalence in children and adolescents, incorporating information concerning family-related factors. The results indicated that DC prevalence increased from 39.75% in 2010 to 53.21% in 2019 in Henan province, with deciduous teeth and permanent teeth being 45.96 and 27.18%, respectively, in 2019. The total caries rate decreased with age (p < 0.05), and the caries rate of girls was higher than that of boys in 2019 (55.75% vs. 50.67%) (p < 0.001). The prevalence of dental caries among primary and secondary school students in areas with medium economic aggregate was the highest, followed by cities with the best economic development level, and cities with low economic levels have a lower prevalence of dental caries. The dental caries prevalence was negatively correlated with body mass index. In the fully adjusted model, underweight children had a higher caries prevalence (OR = 1.10, 95%CI: 0.86-1.41). Children with anemia had a higher prevalence of dental caries (OR = 1.18, 95%CI: 0.98-1.42). The DC prevalence of students in Henan Province was high, with a tendency to increase. Females, young individuals, and those with a higher economic level showed a positive correlation with the prevalence of caries. In the process of economic development, particular attention should be paid to early childhood caries prevention. Nutritional status should be taken seriously among children and adolescents, and the oral health system should be improved to keep pace with economic development.

Research on the Impact of Digital Inclusive Finance and Rural Household Human Capital Investment on Urban-rural Income Gap

The high-quality development of an economy and society is reflected in the sustained growth of the economic aggregate and in the fruits of development being shared by the majority of residents. Therefore, a reasonable income distribution pattern is an important guarantee for sustainable economic development. However, the excessively high urban-rural income gap has become a characteristic fact in China's economy and society. In order to curb the continuous expansion of the urban-rural income gap, our country has clearly pointed out the path of " socialist rural revitalization with Chinese characteristics " . Against this background, it is important to explore the yet-to-be-clarified impact of the human capital investment of Chinese farmers on the urban-rural income gap. At the same time, the emergence of digital inclusive finance provides a new perspective for finance to help converge the urban-rural income gap. Digital inclusive finance mainly targets disadvantaged groups excluded by traditional finance. Rural residents with low incomes are naturally among its targets. Converging the income gap between urban and rural areas should also be one of the responsibilities of digital inclusive finance. This article first reviews the theories and literature related to digital inclusive finance and the urban-rural income gap. By summarizing the reasons for the formation of the urban-rural income gap and the conditions for its convergence, it analyzes the important role of finance in it and the limitations of traditional financial development. , and further deduced the impact of the development of digital inclusive finance on the urban-rural income gap. It is also recognized through public data that educational human capital and migrant human capital have greatly narrowed the urban-rural income gap in the eastern region, verifying that human capital investment has an incremental role in economic development levels and policy guidance.