Output Expansion Research Articles

Determinants of Trade Balance in Ethiopia

Ethiopia like other developing countries is highly dependent up on earnings from the sales of primary commodities and concentrating on small range of export commodities and market outlays to finance much needed capital goods imported. Thus, the country’s exports have failed to finance its import demand this makes the country to record frequent trade deficit in international trade. So that, investigation on trade balance, its structure, volume and value and the factor that affect it is necessary. The research therefore, aims at dealing mainly with determinant of trade balance in Ethiopia and investigating the structure, value, volume and direction of export and import in Ethiopia. This study uses unit root test, co-integration techniques, Engel-Granger test, and Error correction model.The main finding of this paper are FEA shows a long run negative relationship with trade balance .on the other hand lag trade balance and REER shows a long run positive relationship with trade balance .However , Real GDP is insignificant in the long run. (2) REER shows a short run negative relationship with trade balance. On the other hand Real GDP, lag trade balance, FEA and trade liberalization are insignificant in the short run estimation.The study recommends appropriate attention to be provided for boosting export sector and encouragement of domestic output expansion coupled with using technology in the production of output for domestic as well as international market. Keywords: trade balance , export promotion , economic growth DOI : 10.7176/RJFA/10-3-06

Tourist Arrivals, Energy Consumption and Pollutant Emissions in a Developing Economy - Implications for Sustainable Tourism

Sustainable tourism management policies should aim at maximising economic benefits from tourist arrivals while minimizing associated adverse impacts on the environment. This study assesses the short-run and long-run relationships between tourist arrivals, per capita economic output, emissions, energy consumption and capital formation, citing Nepal as a specific case study. We developed four hypotheses and tested them using time-series econometrics based on the autoregressive distributed lag model and Granger causality tests. The results provide strong evidence of an economy driven tourism sector where expansion in economic output leads to expansion in tourist arrivals. More tourist arrivals, in turn, generate positive impacts on gross capital formation. Energy consumption negatively affects tourist arrivals, calling for increased attention towards improving energy efficiency and energy diversity. We conclude that national policies to increase tourist arrivals should be integrated with national energy and environmental policies in order to facilitate the transition towards a sustainable tourism sector.

Tourist arrivals, energy consumption and pollutant emissions in a developing economy–implications for sustainable tourism

Sustainable tourism management policies should aim at maximising economic benefits from tourist arrivals while minimising associated adverse impacts on the environment. This study assesses the short-run and long-run relationships between tourist arrivals, per capita economic output, emissions, energy consumption and capital formation, citing Nepal as a specific case study. We developed four hypotheses and tested them using time-series econometrics based on the autoregressive distributed lag model and Granger causality tests. The results provide strong evidence of an economy driven tourism sector where expansion in economic output leads to expansion in tourist arrivals. More tourist arrivals, in turn, generate positive impacts on gross capital formation. Energy consumption negatively affects tourist arrivals, calling for increased attention towards improving energy efficiency and energy diversity. We conclude that national policies to increase tourist arrivals should be integrated with national energy and environmental policies in order to facilitate the transition towards a sustainable tourism sector.

Effects of the Chinese arable land fallow system and land-use change on agricultural production and on the economy

This study focuses on economic effects of arable land fallow system and land-use change in China using a dynamic single-country, multi-regional computable general equilibrium model. Land supply is adjusted endogenously in our model. Land use in each of 31 provinces is tracked by a land-use change module, which is calibrated with satellite data. Our results reveal that the expansion of real output can be attributed to the increase in capital stock as a result of the growth of investment due to the imposition of the arable land fallow system in China. And the growth of investment is caused by the release of labor from agriculture The reduced supply of arable land in agricultural land contraction regions is partially offset by the increasing arable land in agricultural land expansion regions. Rural households benefit more than urban households from the arable land fallow policy due to relatively higher income and lower rural CPI.

Historical evolution of modified technology in silk-reeling industry during the early Meiji era: case of Gifu

We empirically confirm the performance and diffusion of technology introduced from developed countries, and then, modified in developing countries. Using plant-level panel data, we focus on the machine-reeling segment with modified technology in Hida and Mino in Gifu prefecture, Japan in the early Meiji period to measure total factor productivity (TFP) growth and estimate production function. The TFP growth of Gifu prefecture’s machine-reeling industry in this era was relatively larger than that in the later Meiji era. This growth was achieved by rapid output expansion observed in Gifu prefecture, especially in Mino. In the estimation results of the production function, estimated parameters of deepening of the joint work; generation of steam, instead of a power source, for boiling cocoons; use of water wheel; and participation in the regional silk-reeling association in Hida are significantly positive as explanatory factors of the TFP. Factors, such as competitive environment and regional production share of cocoon, also have a significantly positive impact on TFP. Due to the flux in a fierce competitive market condition among small-scale plants, the estimated parameter of operational months is insignificant. In the measurement results of technical efficiency using the stochastic frontier model, no difference is found between the production efficiency of modified technologies used in Mino and Hida. In the early stage of industrialization, the private segment improved these modified technologies using region-specific resources through the local government’s indirect support, thus realizing their proliferation.

Growth, resource allocation and welfare in an asymmetric general equilibrium model of trade

This work is an extension of the existing literature on growth of factors of production, output expansions and welfare of a nation involved in international trade. It used to be an accepted notion that growth augments welfare without a question until Jagdish Bhagwati, and later Harry Johnson provides the contrarian views on the issues under specified conditions. Here, in this paper, an attempt is made to generalize the 2 × 2 × 2 models of Bhagwati and Johnson on factor growth, resource allocation, and welfare to 2 × 4 × 2 model. The effects of growth on output changes and conditions for immiserizing growth are enunciated in this modified general equilibrium framework involving nontraded and intermediate goods. Here, it should be noted, the existing literature from 1944 to the very recent past has been surveyed and integrated into this work.

Does federal contracting spur development? Federal contracts, income, output, and jobs in US cities

Firms and governments alike frequently court federal government contracts to generate more jobs and trigger economic growth. However, the employment and output impact of government contracts remains controversial. We use georeferenced data on United States (US) federal contracts, distinguishing between the location of the recipient and the location of the activity, for the years 2005–2014 in order to assess the employment and output impacts of federal contracting in metropolitan areas of the US. We resort to a shift-share instrument and precise location-specific fixed effects to estimate the causal impact of spending. Cities that receive more contract expenditure witness an expansion in output – with contracts generating $1.4 per dollar spent – but experience only modest increases in employment. The impact is also constrained geographically and short-lived. The results suggest that, on average, the effects of federal contracting on local economies are modest, meaning that attracting federal contracts may not be an effective urban development strategy.

Environment, Effective Demand, and Cyclical Growth in Surplus Labor Economies

The study presents a simple extension of a Harrodian model, that explores, the relationship between the environment and economic growth in a hypothetical dual low-income economy with relatively low levels of environmental quality. It is supposed that the rise in effective demand increases the flow of negative externalities on the environment, which, in turn, would affect output expansion negatively in the capitalist sector through the occurrence of environmental adjustment costs. From such conflictual dynamics, the model shows that perpetual vicious circles may characterize the pattern of fluctuations in economic activity in this economy.

Environment, Effective Demand, and Cyclical Growth in Surplus Labor Economies

The study presents a simple extension of a Harrodian model, that explores, the relationship between the environment and economic growth in a hypothetical dual low-income economy with relatively low levels of environmental quality. It is supposed that the rise in effective demand increases the flow of negative externalities on the environment, which, in turn, would affect output expansion negatively in the capitalist sector through the occurrence of environmental adjustment costs. From such conflictual dynamics, the model shows that perpetual vicious circles may characterize the pattern of fluctuations in economic activity in this economy. JEL codes : O11, O44, Q50

Effects of fiscal consolidation on business confidence in the Euro Area

We employ a factor-augmented VAR (FAVAR) covering both domestic and international developments to examine the confidence effects of a fiscal shock, using a sample of six euro area countries. The results indicate that following a shock in total government expenditure, responses are country-specific, while a weak geographical pattern, i.e. a distinction between core and periphery countries can be observed. Overall, the confidence response is short-lived and returns to zero after a few quarters. Heterogeneity in country responses also indicates that the Bachmann and Sims (2012) conclusion suggesting the endogenous response of confidence explaining almost all of the fiscal-driven output expansion in recessions, may hold only in country-specific cases.

Initial shares can cause Pareto improvements when markets are incomplete

The paper focuses on a single firm with constant returns to scale in a multi-period setting with incomplete markets and a single good per state. The firm can be organized as a partnership or as a corporation. In the case of a partnership, there are no initial shares and profits vanish. A corporation has initial shareholders and can sell its output at any market-clearing price. An example shows that the introduction of initial shares can cause a Pareto improvement. The firm sells its output below costs so that the net sellers of initial shares subsidize the net buyers. The initial shares are chosen such that, for each consumer, the benefits of the output expansion more than outweigh the cost increase.

PROTOCOL: Interventions to promote technology adoption in firms: a systematic review.

PROTOCOL: Interventions to promote technology adoption in firms: a systematic review.

Stochastic Collocation Applications in Computational Electromagnetics

The paper reviews the application of deterministic-stochastic models in some areas of computational electromagnetics. Namely, in certain problems there is an uncertainty in the input data set as some properties of a system are partly or entirely unknown. Thus, a simple stochastic collocation (SC) method is used to determine relevant statistics about given responses. The SC approach also provides the assessment of related confidence intervals in the set of calculated numerical results. The expansion of statistical output in terms of mean and variance over a polynomial basis, via SC method, is shown to be robust and efficient approach providing a satisfactory convergence rate. This review paper provides certain computational examples from the previous work by the authors illustrating successful application of SC technique in the areas of ground penetrating radar (GPR), human exposure to electromagnetic fields, and buried lines and grounding systems.

Business cycle synchronization of a small open EU-candidate country’s economy with the EU economy

The objectives of this paper are to empirically identify business cycles in a small open EU-candidate country such as the Republic of Macedonia and to assess the degree of synchronization of the country?s business cycle with the cycle of the EU economy. Towards the first objective, we apply linear and non-linear methods for delineating the production gap cycle in the Macedonian economy. As for the second objective, we apply autoregressive methods to assess the size and speed of cyclical adjustment of the Macedonian economy to output shocks to the Euro-zone economy. The results of our analysis suggest a high degree of synchronization of the Macedonian business cycles with the cycles of the EU economy. Also, the shocks in economic activity in the Euro-zone economy are transmitted almost instantaneously, and with a large magnitude, to the Macedonian economy. Finally, the impact of the Euro-zone output contraction is less pronounced than the impact of the Euro-zone output expansion, suggesting an impact of the country?s autonomous countercyclical economic policies.

The International Copper Cartel, 1935–1939: the good cartel?

A legacy of the pre-Great Depression period was the development of new copper capacity outside the USA. In order to avoid the utilization of this excess capacity in a competitive and possibly pyrrhic way, on March 28, 1935, the International Copper Cartel was formed. While production of cartel members was limited by the use of quotas in times of lower demand, during booms, the cartel removed all quotas in order to restrict the entry of the competitive fringe into the industry. In fact, many authors have considered the latter as a return to non-cooperative conduct. An alternative view, introduced by Montero and Guzman (J Ind Econ 58(1):106–126, 2010), is that cooperation among members in booms could have been related to output-expanding strategies with the purpose of restricting entry of the competitive fringe in the industry through their own output expansion. In this paper, a theoretical model is developed in order to differentiate between cartel behavior in the presence of a competitive fringe during booms when firms are not cooperating. It shows that the price elasticity of the cartel supply should be smaller in booms than during recessions, when a non-cooperative behavior is considered in booms, while this may or may not be the case if firms continue cooperating—through an output-expanding cooperation—during booms. The price elasticity of the International Copper Cartel supply is then estimated using an econometric model, and found to be significantly larger in booms than in recessions. This supports the conclusion that members of the cartel cooperated during both booms and recessions. This finding raises the possibility that the International Copper Cartel of 1935–1939 actually could have enhanced social welfare by reducing price volatility, while also having little effect on the secular level of prices.

A non-radial directional distance method on classifying inputs and outputs in DEA: Application to banking industry

The original Data Envelopment Analysis (DEA) models have required an assumption that the status of all inputs and outputs be known exactly, whilst we may face a case with some flexible performance measures whose status is unknown. Some classifier approaches have been proposed in order to deal with flexible measures. This contribution develops a new classifier non-radial directional distance method with the aim of taking into account input contraction and output expansion, simultaneously, in the presence of flexible measures. To make the most appropriate decision for flexible measures, we suggest two pessimistic and optimistic approaches from both individual and summative points of view. Finally, a numerical real example in the banking system in the countries of the Visegrad Four (i.e. Czech Republic, Hungary, Poland, and Slovakia) is presented to elaborate applicability of the proposed method.

EXCHANGE RATE VOLATILITY AND TRADE FLOW TO NIGERIA: NEW EVIDENCE FROM AN AR-EGARCH AND LA-VAR MODELS

This study investigated the impact of exchange rate volatility on trade flow in Nigeria. Applying the AR(2)-EGARCH(1, 1) and LA-VAR(3) models on quarterly data for the period of 1986 – 2012, the study revealed that there is no instantaneous relationship between trade flows and exchange rate volatility in Nigeria but that exchange rate volatility explained more of the variability in trade flow and vise versa. Therefore it was recommended that policy measures be put in place to ensure exchange rate stability in Nigeria. Output expansion and export promotion should be given their pride of place.

The welfare and sectoral adjustment effects of mega-regional trade agreements on ASEAN countries

The U.S. withdrawal from the Trans-Pacific Partnership (TPP) has had an influence on the prospects of mega-regional trade agreements (MRTAs). In the Asian Pacific, negotiations for the Regional Comprehensive Economic Partnership (RCEP) might accelerate. In addition, ministers from the 11 other TPP signatories have confirmed their intention to proceed with the TPP without U.S. participation. Using a dynamic computable general equilibrium (CGE) model, we estimate welfare and sectoral output adjustment effects of alternative sequencings of MRTAs on ASEAN countries. Welfare gains for ASEAN countries under the scenario led by the RCEP, followed by RCEP+Taiwan and a Free Trade Area of the Asia-Pacific (FTAAP), are greater than or equal to those under the scenario led by TPP sans US, followed by an enlarged TPP and an FTAAP. When the two scenarios are assumed to develop at the same time, welfare gains of the RCEP and TPP-11 countries are found to be less than the sum of the gains under the first two scenarios. For a number of ASEAN countries, output expansion of textiles and apparel and/or electronic equipment is significant.

Politically induced regulatory risk and independent regulatory agencies

Uncertainty in election outcomes generates politically induced regulatory risk. For monopoly regulation, political parties’ risk attitudes towards such risk depend on a fluctuation effect that hurts both parties and an output–expansion effect that benefits at least one party. Irrespective of the parties’ risk attitudes, political parties have incentives to negotiate away regulatory risk by pre-electoral bargaining. Pareto-efficient bargaining outcomes fully eliminate regulatory risk and are attainable through institutionalizing independent regulatory agencies with a specific objective. Key aspects of the regulatory overhaul of the US Postal system in 1970 are argued to be consistent with these results.

Evolutionary dynamics of a duopoly game with strategic delegation and isoelastic demand

We analyze a model of strategic delegation in Cournot competition with isoelastic demand. We first consider the static game and then we address an evolutionary version of it. We show that the result for which under quantity competition strategic delegation entails output expansion and higher consumers’ welfare than at the standard Cournot-Nash equilibrium is not necessarily true, but depends on the price elasticity of demand. Then, we study the main welfare implications of the model in order to understand whether the prevailing long-run industry configuration provides the highest welfare. We show that this may occur when both firms provide a mixed incentive and that, in this case, the model admits feasible trajectories the long-run configuration of which yields the highest welfare. Finally, we address the robustness of our results by means of an evolutionary model with heterogeneous players.