Fluctuations In Economic Activity Research Articles

Editorial

Editorial

The influence of globalization processes on the innovative development of the food industry of Ukraine in the phases of business cycles

Aim. One of the important problems in the development of the food industry in Ukraine is the infl uence of globalization processes, accompanied by cyclical development of the economy. The cycles are manifested in periodic ups and downs of the business climate, taking into account the infl uence of various factors (climate change, risks in agricultural production, legislative changes, etc.), i.e. when the economy seeks to fi nd equilibrium. Therefore, the identifi cation of fl uctuations in economic activity and, accordingly, changes in market conditions that arise as a reaction to the action of well-defi ned, predictable factors of the market environment are relevant and necessary. The purpose of the article is to reveal the infl uence of globalization processes and economic cyclicality on the innovative development of the food industry in Ukraine, to identify the phases of business cycles, to determine the criteria for the effective functioning of individual food industry sectors during periods of crisis and depression in order to develop effective tools for leveling and smoothing their consequences at different levels of management. Methods. Based on the application of classical and modern methods for assessing economic cycles, we developed a methodological approach to justifying the phases of the business cycle and identifying the development specifi cities of individual sectors of the food industry of Ukraine (meat processing, milk processing, baking, sugar production) in these phases. In the authors’ algorithm, at the appropriate stages of the study, the following methods were applied: factor analysis  to calculate the indicator of the business climate; smoothing time series  to identify individual phases of the business cycle; average values of growth rates  to summarize the characteristics of the phases of the business cycle and identify the characteristics of the development of food industry sectors of Ukraine in these phases. The primary data for the calculations were the data of global and national statistics. Results. It has been established that the consequences of the impact of globalization on the development of the food industry of Ukraine since the beginning of the new millennium are: changes in the industrial structure; its formation under the infl uence of an external market, where raw materials and primary processing products are most in demand; accelerated growth in consumer prices for food products, which does not correlate with real incomes of the population; expanding the monopolization of food markets; the imbalance of supply and demand, which leads to differences in the development of economic phenomena, in particular  in the innovative development of the food industry, etc. The study showed that the development of individual sectors of the food industry is affected by the cyclical development of the national economy. The periods of the business cycle phases for the Ukrainian economy (from 2002 to mid-2019) and their impact on the activity of the food industry are determined. It was established that during this period the Ukrainian economy went through 4 business cycles with fi ve major downturns and peaks in economic activity. It was revealed that a sign of its development is the presence of separate business cycles in which there is no depression phase. Conclusions. The assessment of the intensity of the development of the food industry sectors during the phases of business cycles gives grounds for the justifi cation of their slower innovative development. The main reasons for this phenomenon in the food industry are as follows: imbalance in supply and demand for goods; low purchasing power of the population; investing signifi cant amounts of fi nances in increasing production volumes, and not in innovative development, ineffi cient pricing policy. The methodological approach proposed in the article, based on the identifi ed signs of the phases of the business cycle, makes it possible to justify the problem periods of the food industry in the short term, as current problems signifi cantly affect the implementation of long-term plans. This confi rms the feasibility of applying the proposed methodological approach in further research.

Determinants of Migration Following the EU Enlargement: A Panel Data Analysis

Abstract The Eastern enlargements of the European Union (EU) since the early 2000s have included post-transitional economies at a lower level of development than the existing member states and thus, have significantly affected the East-West migration flows and labour markets on both sides. This has provided a distinctive opportunity to study the effects of liberalisation and to identify economic factors leading to migration flows with the purpose of enabling better estimations of future migration trends. In this research, a panel data analysis with pair of country fixed effects and time fixed effects is used to explore several pull and push factors of the East-West EU migration flows in the period from 2000 to 2017. Results indicate that emigration rate responds rather quickly to the changes in GDP per capita and unemployment rate of the youth population in immigration country, with statistically significant elasticity coefficients, suggesting that international migration contributes significantly to adjusting the labour supply to fluctuations in economic activity.

Measuring Economic Uncertainty in China

This study develops a new economic uncertainty (EU) index based on Chinese newspapers to address the media coverage bias of existing measures. We investigate how EU affects China’s macroeconomy. Our results suggest that EU reduces aggregate output. We find that uncertainty predicts fluctuations in economic activity and actual economic activity also predicts EU, but nonlinearly. Furthermore, we show that uncertainty in the United States leads to uncertainty in China, implying that negative EU on the Chinese economy is coming from the U.S. Finally, we conduct some asset pricing tests, showing that EU can predict stock returns and commands risk premium. Our results are helpful for both researchers and policymakers to stabilize the economy and financial markets in China.

The impact of uncertainty on the number of businesses

Theoretical results based on the asymmetric-information driven credit-market channel, and the real-options mechanism, imply that greater uncertainty is expected to affect entry, exit, and the number of businesses. In this paper we empirically examine the impact of uncertainty on the number of businesses, and whether firm size plays an important role in the magnitude of this effect. Our results indicate that greater uncertainty has a negative and quantitatively meaningful impact on the number of businesses, and the effects are primarily concentrated on the relatively smaller businesses. Our findings point to uncertainty being a potentially important channel which may cause the differential churning rates of smaller and larger businesses, thereby contributing to our understanding of industry and market dynamics, and the potential framing of policy during fluctuations in economic activity.

Trade Exposure and the Evolution of Inflation Dynamics

The diminished sensitivity of inflation to changes in resource utilization that has been observed in many advanced economies over the past several decades is frequently linked to the increase in global economic integration. In this paper, we examine this "globalization" hypothesis using both aggregate U.S. data on measures of inflation and economic slack and a rich panel data set containing producer prices, wages, output, and employment at a narrowly defined industry level. Our results indicate that the rising exposure of the U.S. economy to international trade can indeed help explain a significant fraction of the overall decline in responsiveness of aggregate inflation to fluctuations in economic activity. This flattening of the U.S. Phillips curve is supported strongly by our cross-sectional evidence, which shows that increased trade exposure significantly attenuates the response of inflation to fluctuations in output across industries. Our estimates indicate that the inflation-output tradeoff is about three times larger for low-trade intensity industries compared with their high-trade intensity counterparts.

Effect of macroeconomic business environment on the development of corporate social responsibility in Baltic Countries and Slovakia

Research background: Fluctuations in economic activity forced companies to change the traditional methods of organization and management and to search for new tools, knowledge, resources and competences in order to strengthen their positions. This has particularly intensified debates on corporate social responsibility (CSR) not only between business people, but also between pieces of research, industry leaders and government representatives. The ongoing global ecologic crisis quickened discussions about how the alternation of macroeconomic business environment influences the development of CSR.
 Purpose of the article: The aim of this paper is to investigate how the changes in macroeconomic business environment influence the development of socially responsible activities in Baltic Countries and Slovakia.
 Methods: A statistical analysis of secondary data was used in order to reanalyse the data for the purpose of gaining new insights. The objectives of statistical analysis in this paper were twofold: firstly, to identify the challenges in macroeconomic business environment; secondly, to explore the development of socially responsible activities in different countries. The research period covered the years 2006?2016. The choice of this period is determined by data availability.
 Findings & Value added: The authors found that economic conditions may diversely affect the development of different dimensions of CSR. Even in unfavourable macroeconomic conditions companies continue to be involved in socially responsible actions because of long-run CSR benefits. The analysis is useful at an international level because it justified the development of socially responsible businesses in Estonia, Latvia, Lithuania and Slovakia, and has provided an opportunity to assess the tendencies of CSR development during the different period of economic cycle.

The Malthusian Origins of the General Theory: Or How Keynes Came to Write a Book About Say’s Law and Effective Demand

It was because Keynes read Malthus’s letters to Ricardo in late 1932 that he eventually focused on effective demand in the General Theory. Because of his reading of Malthus, Keynes attacked Say’s Law and wrote the General Theory to establish variations in effective demand as the major cause of fluctuations in economic activity. If these conclusions are right, the story of how the General Theory came to be written cannot be understood in isolation from Malthus’s role nor is it possible to understand the General Theory itself without seeing it in relation to Keynes’s interpretation of Malthus. The continuing focus on aggregate demand by macro and business cycle theorists is due to the insights gained by Keynes from his reading of the Malthus side of the Malthus-Ricardo correspondence during the months of October and November, 1932.

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

Impact of government balance and exchange rate regime on current account during the economic cycle: evidence from CEE countries

The key goal of this research is to empirically determine whether the fiscal policy and the choice of exchange rate regime played significant role in current account determination in 16 CEE countries, with respect to large cyclical fluctuations of economic activity in the period 1999 – 2012. The methodology is based on the panel estimation of the impact of exchange rate regimes and government balance, being the key explanatory variables, on current account balance. The main results show that contrary to the “twin deficit” hypothesis government balance had nonsignificant and negative association with current account. On the other hand, fixed exchange rate regime contributed to the accumulation of current deficits, especially during the boom years. The results of the estimation are robust to the different model specifications and estimation methods applied. It is indicated that divergence between current and government balance is associated with the fluctuations of the economic activity, since the increase in government revenues during the good years reduced deficits despite pro-cyclical fiscal policy. Also, it has been argued that in the period prior to the crisis, in the countries pursuing fixed regimes current deficit was accumulated at higher pace when compared to countries with floating regimes, despite appreciation pressures deriving from the large inflow of foreign capital. Based on the results of empirical analysis, the recommendations on benefits of floating regimes are given to policy makers in CEE countries.

Aligning Compensation with Business Cycle: Exploring Economics of HR

In current times of globalization, changes in business cycle and economic variables are very rapid which result in change in organization strategy as a response to change in business environment. Understanding the behavior of costs and their relevance to specific decisions is of vital importance to organizations. One of the key factors in the organizational success is human factor and is also has cost associated in form of compensation. Market oriented economies cannot escape fluctuations in economic activity; therefore it is important for success of organization that their compensation and reward strategy be aligned with the changes in business cycle. The primary aim of the paper is to study and analyze the impact of business cycles on compensation in terms of re-formulating compensation strategies during different phases of economic cycles as combination of variable and fixed cost in compensation. In this paper attempt has also been made to identify the components of compensation during phases of economic cycles and thus creating a conceptual framework for economics of compensation.

Aggregate labor productivity

Aggregate labor productivity is a central indicator of an economy’s economic development and a wellspring of living standards. Somewhat controversially, many macroeconomists see productivity as a primary driver of fluctuations in economic activity along the business cycle. In some countries, the cyclical behavior of labor productivity seems to have changed. In the past 20–30 years, the US has become markedly less procyclical, while the rest of the OECD has not changed or productivity has become even more procyclical. Finding a cogent and coherent explanation of these developments is challenging.

Dinâmica recente da inflação brasileira em ambientes distintos de expectativas forward-looking

RESUMO Este estudo analisa como a inflação brasileira recente responde aos ciclos econômicos e ao seu componente inercial considerando ambientes distintos de expectativas forward-looking no arcabouço da Curva de Phillips Novo-Keynesiana Híbrida (CPNKH). Para tal, faz-se uso de informações mensais entre janeiro de 2002 e agosto de 2015 e estimações de GMM-HAC da CPNKH. Os resultados sugerem que a inflação brasileira ainda possui um forte componente inercial e que, em um ambiente de menor previsibilidade dos agentes, a inflação se mostra mais sensível às oscilações cíclicas da atividade econômica. Por fim, observou-se um repasse cambial positivo e significante para a inflação brasileira.

ANALISIS KERJA ARUS KAS PERBANKAN DAN PENGARUHNYA TERHADAP FINANCIAL DISTRESS PERBANKAN BUMN YANG TERDAFTAR DIBURSA EFEK INDONESIA TAHUN 2011-2013

The development of business activities from time to time to know whether the company is progressing or to deterioration, and it is known financial situation at any given moment. Such information can be obtained from the financial statements. The financial statements can also be to be able to assess the results achieved by the company during the future. The existence of the global economic crisis that occurred in the year 2011-2013 is an event in which all sectors of the world market economy collapse or degresi and affect other sectors around the world. the fluctuations in economic activity in Indonesia prior to the increase and decrease of fuel oil (BBM) and the warming of the political conditions, fluctuations in the Composite Stock Price Index (CSPI), exchange rate fluctuations, can result in a decrease of interest in investing in Indonesia can identify less controlled economy, the special the banking company that is more sensitive than a manufacturing company, then the risks of changes in social and political dynamics can result in losses. Therefore, the authors are interested in doing research on the description above, and therefore the study authors mentuangkan under the heading Flow Analysis in Banking and Its Effect on Financial Distress Listed on the Stock Exchange Year 2011-2013. From the results, the following results That. In Asymp column sig (2-tailed) was 0.042, the probability obtained at 0.042 0.05), then Ho is accepted. Thus, the performance of the operating cash flow does not have a significant effect on the occurrence of financial distress banking companies (SOEs) in the Year 2011 to the Year 2013. Keywords: Cash Flow and financial distress

Examining relationship between composite leading indicators and Borsa Istanbul sector indices

The prediction of fluctuations in economic activity has become even more important, especially after the crises experienced in recent years. In order to make such a prediction, economic and financial indicators are needed. The Composite Leading Indicators (BONC) published by Central Bank of the Republic of Turkey is useful in predicting the macroeconomic contraction or expansion. In this study, it is tested whether there is a relationship between Composite Leading Indicators Index and 12 Borsa Istanbul sector indices returns. Unit root test results show that sector indices are stationary at the first differences and the BONC is at level. Thus long term relationship between each sector indices and the BONC is examined by Boundary Test. The findings show that there is a long term and relationship between BONC and all the sector indices in the study. Also it has been determined that positive change in the BONC has a statistically significant and positive effect on XUTEK and XGMYO in the long term. The short term relationship is also found between all sector indices and BONC. In addition, it is determined that increase in BONC affects all sector indices positively in the short term. These results indicated that investors take into account the BONC without distinguishing the sector when investing to stocks and that BONC is an important indicator for stock returns.

Wealth Effects and Macroeconomic Dynamics Evidence from Indian Economy

The wealth effects on consumption are a subject of continuing interest to economists. The conventional wisdom states that fluctuations in household wealth have caused major fluctuations in economic activity. This study analyses the macroeconomic dynamics of wealth effects in India and examines the nexus between the changes in housing wealth, financial wealth, and consumer spending. Using the quarterly data for the period 2005:1–2016:1, I estimate vector autoregression models and vector error-correction models, relating consumption to income and wealth measures. I find a statistically significant and rather large effect of housing wealth upon household consumption. The results show that (i) wealth effects are statistically significant and comparatively substantial in magnitude (ii) housing wealth effects tend to be greater while stock market wealth effects are considerable (iii) private consumption responses to the shocks to housing market wealth are relatively stronger than to the shocks in stock market wealth. There is a bidirectional causality running from private consumption to the two wealth forms and vice versa. Overall, the private consumption expenditure response to the changes in different wealth forms is observed to be substantial and significant.

Macro Determinants Of Car In Indian Banking Sector

Banks as a channel of monetary policy transmission play a very important role in facilitating the process of credit creation in an economy. It is crucial for financial stability that banks stay financially healthy. Capital Adequacy Ratio (CAR) is an important indicator of banks financial health. By nature the banking-operations and performance are subject to business cycles and fluctuations in economic activity. The global financial crisis saw the failure of financial sector giants like Lehman Brothers and banks in the U.S.A and other countries. The spread of global financial crisis worldwide attracted the interest of academicians and policy makers in banking sector and its soundness. Thus, after the financial crisis of 2008 the research on banking sector particularly CAR has gained lot of attention worldwide. Our review of extant literature highlights scanty evidence of papers examining the influence of macro-economic indicators in influencing changes in CAR of banks. We believe macro-economic variables may have a significant impact on CAR of banks as financial soundness in banks also to a large extent depends on the external factors and the state of macro-economy. Hence, this paper attempts to investigate and evaluate the impact of macroeconomic indicators on CAR for Indian banks. The study uses dynamic panel data analysis on 65 Indian commercial banks from 2007 to 2013. The findings of the study based on Generalized Method of Moments reveals that Real GDP Growth, Inflation rate, Interest rate and Exchange rate have strong impact on CAR of Indian Banks. The findings of the study suggest that the policy prescriptions that focus on the bank-specific determinants of CAR should also appropriately account for the influence of macro-economic indicators. Policy makers and regulators like Reserve Bank of India should take into consideration the effect of macroeconomic variables on CAR while framing policies on CAR and monitoring banks.

Measuring capital services by energy use: an empirical comparative study

ABSTRACTFrom an engineering perspective, the service that a capital good provides is energy conversion – that is, the physical ‘work’ done by a machine. A capital good’s service can thus be measured directly by the energy consumed in production. We show important empirical advantages of this approximation over traditional measures. The empirical application reveals that this approach avoids a number of conceptual problems of the latter. Furthermore, this measure captures the utilization of the capital stock more accurately as it is more sensitive to fluctuations in economic activity. With a growth accounting exercise, it is shown that the differences between the new and the traditional measures are important for empirical work. Using the new measure yields significantly different results. Especially in times of global recession it provides higher and more feasible total factor productivity growth rates.

On business cycle fluctuations in USA macroeconomic time series

This study employs eighteen USA macroeconomic time series variables to investigate possible existence of asymmetries in business cycle fluctuations in the series. Detection of asymmetric fluctuations in economic activity is important for policymakers since effective monetary policy relies on asymmetric business cycle fluctuations in all the series. The asymmetric deviations from the long-term growth trend in each of the series are modeled using regime switching models and artificial neural networks. The results based on nonlinear switching time series models reveal strong evidence of business cycle asymmetries in most of the series. The results based on in-sample approximations from artificial neural networks show statistically significant evidence of asymmetries in all the series. Similar results are obtained when jackknife out-of-sample approximations from artificial neural networks are used. Thus, the study results show statistically significant evidence of asymmetries in all the series which indicates that business cycle fluctuations in the series are asymmetric, thus alike. Therefore, the impact of monetary policy shocks on the output and the other macroeconomic variables can be anticipated using nonlinear models only. The results on asymmetric business cycle fluctuations in real GDP are in line with recent studies but in sharp contrast with Balke and Fomby (1994).