Economic Growth Regimes Research Articles

Comparative evaluation of post-Keynesian interest rate rules, income distribution and firms' debts for macroeconomic performance

This article investigates the macroeconomic effects of firms’ debts and income distribution on economic growth and inflation under three different post-Keynesian interest rate rules (the Kansas City rule, the Smithin rule, and the Pasinetti rule) by setting up a dynamic post-Keynesian model. After reviewing debates on the post-Keynesian interest rate policies, this article evaluates the relative merits of the three rules in their relationship with economic growth regimes and inflation dynamics. Accordingly, this article explicitly shows that (i) a policy rule works effectively under some economic growth and inflation patterns but not necessarily under other patterns, (ii) a policy rule contributing to high economic growth may not always be compatible with stabilisation of economic growth, and (iii) the macroeconomic effects of debt and income distribution on economic growth and inflation are closely related to the choice of interest rate rule.

On the short-run relationship between the income distribution-growth and debt-growth regimes

This paper examines the short-run relationship between the income distribution-growth and debt-growth regimes using a simple, post-Keynesian, demand-driven model. While mechanisms of wage-led and profit-led growth have been revealed, their relationship with debt-led and debt-burdened growth is yet to be clarified, because arguments on these growth regimes were developed separately. This paper shows that the growth regimes transform as the regime-switching parameters in the IS balance change. By way of theoretical analysis, this paper presents some important implications for (i) the possibility of the combination of growth regimes; (ii) the features of post-Keynesian economic analysis of income distribution, debt, and demand-led growth, which sharply contrast with the basic neo-classical theory; and (iii) theoretical validation of recent empirical results. Moreover, this paper also suggests some policy implications or lessons for the combination of economic growth regimes.

Addressing the policy challenges and opportunities of “Big data”

Addressing the policy challenges and opportunities of “Big data”

Modelling the nonlinear relationship between CO2 emissions from oil and economic growth

The purpose of this paper is to examine the relationship between carbon dioxide (CO2) emissions from oil and GDP, using panel data from 1971 to 2007 of 98 countries. Previous studies have discussed the environmental Kuznets curve (EKC) hypothesis, but little attention has been paid to the existence of a nonlinear relationship between these two variables. We argue that there exists a threshold effect between the two variables: different levels of economic growth bear different impacts on oil CO2 emissions. Our empirical results do not support the EKC hypothesis. Additionally, the results of short-term analyses of static and dynamic panel threshold estimations suggest the efficacy of a double-threshold (three-regime) model. In the low economic growth regime, economic growth negatively affects oil CO2 emissions growth; in the medium economic growth regime, however, economic growth positively impacts oil CO2 emissions growth; and in the high economic growth regime, the impact of economic growth is insignificant.

A DYNAMIC ANALYSIS OF DEBT‐LED AND DEBT‐BURDENED GROWTH REGIMES WITH MINSKIAN FINANCIAL STRUCTURE

ABSTRACTIn this paper, we formally derive a version of the Minskian taxonomy of the firms' financial structure (hedge, speculative and Ponzi types), under the economic growth context in the long run. As for the economic growth, we formalize the mechanism of debt‐led (debt‐burdened) growth where the economy expands as the debt variables increase (decrease). By explicitly introducing the relationship between the finance growth regime and Minskian taxonomy in a dynamic model, the model in this paper enables us to evaluate whether or not the economic growth regime is sounded in terms of the firms' financial positions.

Intellectual Property Crime: The Urgent Need for Global Attention

In the last couple of months I have spent considerable time with police officials in India. I am worried, very worried about the conversations I have had with them which were largely centred around the state of the informal economy, in which Intellectual Property (IP) crime plays a huge part. The most unsettling linkage is the one between the proceeds of IP crimes and terrorist activities. A senior police officer with whom I have had extensive discussions on the subject acknowledged some recent reports that many terrorist organisations now source their funding through IP crimes. According to him the terrorist outfits or organised criminal networks do not operate in a vacuum but very much in the real world. They need an interface with real commerce in order to fund their nefarious activities. These organisations are becoming increasingly sophisticated and are beginning to control the majority of IP crimes that are taking place, particularly in developing countries. The officer claims that in his state alone (India has 28 states) rampant music piracy results in a massive loss to the economy. He estimates that the size of the informal music sector is at least 12 times the size of legitimate industry. He does not stop there and quotes many more examples from fake designer goods to more serious instances, such as counterfeit drugs, food products and adulterated petrol, which have major health and safety implications. This analysis of the situation in India also applies to other high-growth countries as well as some Organisation for Economic Cooperation and Development (OECD) countries. Most global surveys however frequently cite the BRIC (Brazil, Russia, India and China) nations as the worst IP offenders. The BRIC economies are playing a major role in global economic growth and weak IP regimes in these countries are a cause of major concern for companies that sell products into these markets.

The welfare state, thresholds, and economic growth

Can a growing welfare state induce a regime switch in the growth rate of an economy? This paper constructs a dynamic political economy model of economic growth and the welfare state in which both variables are nonlinearly related and jointly endogenous. Using a Markov switching framework over the period 1950–2001, we find that the structural decline in growth rates that several welfare state economies experienced during 1970–1975 is preceded by movements to a high welfare state regime. This suggests that expanding welfare state regimes are associated with low economic growth regimes, while contracting welfare state regimes are associated with high growth regimes. However, we also find that the structural decline in growth rates leads to a downward structural break in the welfare state for many welfare state economies. This suggests that declining growth regimes are associated with contracting welfare state regimes, as lower growth forces politicians to cut the size of the welfare state. We also report strong evidence that both expansion and contractions in the welfare state affects growth nonlinearly. These results are able to characterize a predictable and general pattern of welfare state-growth evolution.

Economic Growth and Political Regimes

The absence of continuous regime type measures that focus on institutions rather than outcomes besets studies on whether democratic or authoritarian regimes grow faster. Additional shortcomings include the failure to consider development stages and the erroneous endogenous specification of regimes. Given panel data on 105 countries from 1960 to 1989, the effective party/constitutional framework measure does not correlate with growth or investment in the total sample. But considering development levels, some evidence indicates that discretion decreases growth in advanced areas, and, contrary to theory, inhibits investment in poorer countries. Also, single-party dictatorships have higher investment ratios but do not grow faster than party-less regimes.