Components Of GDP Research Articles

On the Determinants and Outcomes of IMF Loans in Low- and Middle-Income Countries: Do Politics Matter?

ABSTRACT The objective of this paper is to analyze the economic and political determinants of IMF loans in low- and middle-income countries and their impact on economic growth. Our contribution is threefold. First, we use the IMF Monitoring of Fund Agreements database along with international political economy factors to analyze IMF lending determinants through a Heckman two-stage selection procedure. Second, we use the predicted values of determinants of IMF lending to explain the consequences of this lending on growth. We also investigate how the domestic political regime of the recipient country would affect the outcomes of these loans. Third, we study the dynamic effects of IMF loans on economic growth using the local projection method. Our main findings show that economic and political proximity to the IMF major shareholders matter for the likelihood of obtaining an IMF non-concessional loan. Furthermore, most of the loans exert a negative effect on the trend component of GDP, confirming that such loans can stabilize the economies in the short term without improving the long-run steady growth. The analysis of the dynamic effects of loans also confirmed these findings. Finally, democratic regimes compared to autocratic ones improve the effects of these loans on economic growth.

Nonresidential construction spending is likely not as weak as it seems

Unlike any other major component of GDP, private investment in nonresidential structures excluding drilling and mining (henceforth "NRS") has steadily declined since the start of 2020. Figure 1 shows the evolution of GDP as well as the main components of private domestic final demand since 2019.

Are German National Accounts informationally efficient?

National accounts are subject to major revisions. To improve the reliability of first release data, it is important to know whether subsequent revisions show systematic patterns. Or, in other words, whether national accounts are informationally efficient in the sense that all available information is incorporated into the data. This paper used annual data to test three dimensions of informational efficiency: weak efficiency, strong efficiency, and Nordhaus efficiency. The weak efficiency tests found GDP revisions to be noise, whereas revisions of several GDP components showed systematic patterns. Strong efficiency tests found covariations of GDP revisions with some indicators. Business survey results in particular have the potential to reduce the extent of revisions. Finally, Nordhaus efficiency tests found some indication of revision stickiness.

Empirical impact of China-Pak business cycle synchronization on environmental degradation in Pakistan

This study investigates the empirical impact of China-Pak business cycle synchronization, urbanization, foreign direct investment, exports, and imports on environmental degradation in Pakistan from 1975 to 2017. In doing so, we use the Hodrick-Prescott filter to obtain the trend component of GDP. Then the trend component is subtracted from the original series of GDP to capture the cyclical component of China and Pakistan. The business cycle synchronization index is used to estimate synchronization between the business cycles of both countries. Using the ARDL method, we investigate the existence of a long-run co-integration relationship between the variables of interest. The empirical findings indicate that all explanatory variables (except FDI) are found to be significant factors of environmental degradation in the model. Furthermore, both imports and urbanization have a positive and significant impact on environmental degradation in Pakistan. At the same time, China-Pak business cycle synchronization and exports are discovered to have negative and significant coefficients for environmental degradation in Pakistan. The negative and significant ECM value indicates model convergence and a short-run relationship. The findings of the study suggest that improvement in China-Pak business cycle synchronization may be a factor that promotes environmental sustainability in Pakistan. An increase in exports and a decrease in imports can significantly contribute to reducing environmental degradation in Pakistan. A favorable balance of payment can provide sufficient financial prosperity to take environmental preservation measures. Policymakers should create effective urban planning, which has the potential to improve the country’s environmental quality.

Infrastructure investment and urban health: Why breaking the cycle of crises is so difficult

AbstractInfrastructure and health, the theme of this journal, are responsible for a major share of GDP. However, GDP alone does not define well-being. Disaggregating the components of GDP, changes over time and variations within countries and social groups, the OECD’s 2013 Better Living Initiative focused on jobs, earning, housing and work–life balance as well as educational attainment, health status and subjective well-being. These indicators took on greater importance as evidence of growing disparities accumulated in the 2010s (OECD, 2013). Under Pressure: The Squeezed Middle Class was not the title of a popular work for the general public, but of a 2019 OECD report for policy- makers. Too often we take the positive, mutual reinforcement of policies and programmes that contribute to well-being for granted. Sectoral silos, which favoured the expansion of public services earlier in the 20th century, now interfere with their delivery [26, 28]. Better policy linkages across sectors remains the holy grail of sound, evidence-based decision-making. It remains aspirational, just out of reach.

Structural Contradictions Between Energy Production and Consumption Along With Economic Development and Environmental Protection in China: Evidence and Policy Implications

This paper empirically describes and analyzes the structural contradictions between energy production and consumption in the Chinese local economy. Alongside rapid economic growth, energy usage in China increased gradually and exceeded energy production for a long time. For some particular energy sources such as petroleum, the gap between supply and demand is relatively larger than that of the whole energy sector in the economy. The process of turning fossil fuels into final energy products for use causes a great deal of pollution, especially emitting industrial waste gases, such as particulate matter emission, into the atmospheric environment. Increasing energy production directly and greatly to solve the gap between energy supply and demand in the economy may impact environmental quality and not meet sustainable development needs. It is difficult to coordinate energy production and consumption when considering economic development and environmental protection in economic operation. Importing energy could meet the excess energy consumption in a short period but often fluctuates from foreign energy market changes and global political events. For policy recommendations, some policies which directly lower energy consumption may impact economic development since industry is the main consumer of energy, and industrial production is an important component of GDP in China. Declining the role of the industry sector in the economy and reducing industrial product exports, including some energy-intensive products, could solve the structural contradictions between energy production and consumption under the condition of maintaining economic development and protecting the environment in China, but this is a long-term adjustment process.

Modelled approximations to the ideal filter with application to GDP and its components

This paper examines cyclical fluctuations in a comprehensive statistical application, focusing on U.S. macroeconomic indicators related to real gross domestic product (real GDP). While GDP is generally viewed as the most widespread measure of economic activity available, our dataset also encompasses the primary GDP components, such as investment, together with leading (and regularly analyzed) subcomponent series, like residential and inventory investment. Analysis of the cycles in these major sectors provides a more informative perspective on the macroeconomic state and may improve a researcher’s ability to understand and forecast cyclical movements and growth in GDP. Adaptive time series modelling is used for each time series to derive the preferred band-pass filter for computing the optimal cycle. This contrasts with the rigid use of the ideal filter, whose gain function is perfectly sharp. Regarding the ideal filter, we provide an improved implementation compared to current practice. Thus, a set of approximating filters is derived that allow for a more attractive gain profile, a better match to the targeted passband, and a direct statistical way to extract signals near the sample endpoints. Our application study demonstrates that the commonly used ideal filter can perform quite poorly on a routine basis and lead to incorrect conclusions about even the most basic questions about empirical cyclical properties. The amplitude of filtered economic activity can have major distortions and become expanded or diminished (depending on the GDP component under consideration), and many essential divergences in path may occur and affect key signals, such as expansion or contraction in growth. Statistical measures of model performance very strongly favor the adaptive parameter approach. Our statistical analysis reveals diverse dynamic behavior among the series; such results may yield worthwhile insights for output sector analysts and, even for those primarily focused on GDP, may lead to possible modelling improvements by using the finer information content in the GDP-component dynamics.

Assessment of the Role of Nearshore Marine Ecosystems to Mitigate Beach Erosion: The Case of Negril (Jamaica)

Coastal and marine ecosystems are supplying a wide range of services. With accelerated Sea Level Rise, intensification of waves and storm surge severity and increasing anthropogenic pressures, these areas are under multiple threats and society may not receive the same level of ecosystems services. This study aims at measuring the trend of beach erosion and at identifying and quantifying the role of some coastal and marine ecosystems in mitigating beach erosion in the region of Negril (Jamaica). In this location, the tourism industry provides the main source of economic revenue. Even at the national level, the two beaches are important assets linked with 5% of the national revenue as 25% of the hotel rooms are located around Negril. In Jamaica, the tourism industry is a significant component of national GDP. 25% of hotel rooms are located around the two beaches of Negril, which have lost an average of 23.4 m of width since 1968. Given the importance of Negril’s beaches to their economy, the Government of Jamaica asked UNEP to conduct a study to identify causes of beach erosion in Negril and potential solutions to address trends of beach erosion, in the context of future sea level rise scenarios induced by climate change. This paper addresses the current beach erosion status and future trends under different climate scenarios. We explain how, by using remote sensing, GIS, wave modelling and multiple regressions analysis associated with national, local and community consultations, we were able to identify and quantify the role of ecosystems for mitigating beach erosion. We show that larger widths of coral and seagrass meadows reduce beach erosion.

Tourism and Business Cycles: Does the Relationship Fade Away?

Abstract For a long time, tourism has been considered a social, economic and environmental phenomenon that provides products and services whose consumption is supposed to surge in periods of economic growth and wane in periods of slowdown, thereby acting procyclical. To examine this hypothesis, we have explored the exact behavior of tourism activity before and after the last big economic crisis – the Great Recession 2008 followed by the European Sovereign Debt Crisis. We have applied a methodology of business cycle analysis to investigate the relationship between the cyclical components of GDP and tourism nights spent by the residents of 23 EU member states in the 1996-2018 period. We report an important structural change in the relationship between tourism and business cycles. The relationship became apparently weaker over time and finally became insignificant after the end of the crisis, suggesting a smooth structural change. Our findings suggest uncertainty as to how tourism activity would restore its usual dynamics following the end of the current COVID-19 pandemic recession.

Considerations Upon the Effects of Covid-19 Pandemic on the Romanian Economic Environment

Abstract The modern economy has faced, over time, several economic crises. They have determined changes in the behaviour of economic agents and a natural evolution towards the current entrepreneurial environment, taking into account the structural, quantitative, and qualitative dynamics of economic activity, general economic development goals, and technological progress. Starting with the first half of year 2020, most of the world was marked by a completely different situation - the health crisis generated by the SARS Cov-2 virus, with powerful and immediate negative effects at the level of both developing economies and stronger countries. The measures imposed by the Romanian government for crisis management during the state of emergency and alert generated the restriction or even suspension of the activity of diverse economic sectors. Limiting the freedom of movement of the population has led to habits change and reorientation of the consumers towards online markets. The markets had a chain reaction that generated a decrease in production capacity within the manufacturing industry, automotive industry and related, interconnected activities. The main objective of the paper is to analyse how the pandemics affected different Romanian sectors and to identify appropriate tools for market correction and orientation, based on a quantitative and qualitative analysis with the use of preliminary data available on the National Institute of Statistics and Trade Register database. The analysis reveals the pandemic’s effect on national accounts, GDP components, and the short-term impact on companies.

Changes in the Share of Consumption in GDP in Poland Between 2011 and 2020

Abstract Subject and purpose of work: Analysis of changes in the structure of consumption as a component of GDP in Poland for the period 2011-2020, comparative assessment of GDP and consumption per capita in Poland in comparison with EU countries-27 in 2011-2020. Materials and methods: For the empirical analysis EUROSTAT and CSO statistical data covering the values of the basic components of GDP and consumption/consumption levels per capita were used. Methods of dynamics and comparative analysis were applied in relation to consumption levels. The statistical structural analysis made it possible to measure the intensity and degree of differentiation of the components of GDP in Poland in dynamic terms. The index of inferential structural changes and the divergence coefficient of Clark structures were used. Results: Based on the collected empirical material, the level of consumption in Poland was assessed in comparison with all EU-27 member states for the period 2010-2020. Using a quantitative approach, the degree of diversification of the structure of basic components, including consumption in GDP in dynamic terms, was also compared. Conclusions: The level of consumption in Poland in the last decade has been systematically increasing, in terms of growth rate it reached a value above the EU average. The research confirmed the occurrence of significant differences in consumption per capita in the EU-27 countries, both in the compared years and in static terms. These differences were particularly visible between the highly developed countries of Western Europe and Southern Europe. The values of measures of similarity of structures for the components of GDP indicate that in 2015-2020 there was a significant similarity of structures in the relations consumption/accumulation/foreign trade balance, while the differentiation of these structures differed more significantly at the beginning and end of the 2011-2020 decade.

Influence of Sector-Specific Components of Growth on Economic Freedom: Evidence from Sub-Saharan Africa

Africa in general and precisely Sub-Saharan Africa (SSA) has been performing dismally in economic freedom determination parameters. This has substantially diminishes the probabilities of keeping up with other regions which have so far flourished in terms of sustainable economic and human development as highlighted through economic freedom index by the Heritage Foundation 2021. It is for this reason that this study purpose to investigate the influence of value added components of GDP on economic freedom. This is explored using a panel of 40 Sub-Saharan African (SSA) countries from 1995 to 2019. Using both conventional unit root and co-integration tests showed that all the series are stationary and co-integrated of order one I(1). Further estimations on the long-run relationship using dynamic panel econometric techniques key in accounting for panel data hiccups. Specifically, fixed effect and general method of moments which is adopted to discourse concerns of endogeneity and serial correlation commonly associated with panel data. Key significant results based on GMM indicate that both value added growth components of industry and service sectors positively and significantly influences economic freedom but the effect is negative regarding value added from agriculture sector. Inward FDI was equally found to positively influence for the overall score of economic freedom for SSA The practical implication is that for an increasing economic freedom, SSA economies or decision makers should gear for policies that improve industrial production by creating an enabling environment, encouraging the service sector through incentives and tax holidays, diversify agriculture and minimize wasteful FDI inflow. All these are critical in a bid to the realization of competitive economic freedom in SSA.

Impact of external and internal factors on China’s economic growth

Relevance. China is the dominant trading partner for many countries of the world. The new plan for the Chinese economic development in 2021–2035, based on the “double circulation” model, has become the subject of vigorous debate. Research objective. The study aims to identify China’s economic growth drivers before and during the COVID-19 pandemic and evaluate the impact of external and internal factors on China’s economic growth, taking into account future strategic changes. Data and methods. To identify the growth factors of GDP, we used a factor model based on GDP components by spending and the data provided by the State Bureau of Statistics of the PRC for 2007–2020. Results. Over the past decade, the contribution of GDP components that shape domestic demand has been steadily reduced. The decline in the share of net exports in GDP growth was replaced by the fluctuations in the external and domestic demand shares in the subsequent periods. The evaluations show that in 2020, 1% of 3.56% of China’s economic growth in GDP (in national currency) was provided by net exports and 2% of 3.56% was provided by an increase in gross capital formation. Conclusions. The increase in the contribution of net exports to GDP growth was caused not only by the growth of exports with a slowdown in the growth of imports but also by the redistribution of the shares of all factors and primarily by the sharp reduction in the share of the contribution of household expenditures to consumption. To promote domestic circulation through personal consumption, it is necessary for China to lower the savings rate, solve the problem of income inequality, and increase disposable income per capita.

THE ROLE AND FUNCTIONS OF INVESTMENTS IN CONTEMPORARY ECONOMIC SYSTEM

In this article, our goal is to identify the role and functions of investments in contemporary economic system. Both at the macro and micro level of the economy, investments are among the most important economic tools and are considered important components of the country's national income, which have a significant impact on ensuring stable and dynamic economic growth. Investment is one of the most fundamental and changing components of GDP. From an economic point of view, investments represent the allocation of capital with the aim of increasing it in the future, which should be sufficient to compensate for the temporary abandonment of the use of the invested funds, to cover the losses arising from the risks and to compensate for possible future losses due to inflation. Based on the research of different definitions, we can define investments as the allocation of capital in various sectors and branches of the economy, in entrepreneurial and other types of activity objects, with the aim of obtaining income, as well as achieving other economic or non-economic results. Investments perform a number of important functions, namely: regulatory, promoting, distributing and indicative, which ensure the sustainable development and progress of the economic system.

What should the optimal financial structure of FDI inflows to Poland be for stimulating growth processes?

The article aims to answer a question what should the optimal financial structure of FDI inflows to Poland be for stimulating growth processes. The study on the dependence between financial components of FDI inflows and GDP for Poland covers the period 2004: Q1–2019: Q4. Results of the VAR/VECM model and forecast error variance decomposition indicated that in the optimal (growth-enhancing) structure of FDI inflows the share of equities and the reinvestment of earnings should be maximised.

Potential GDP and its factors assessment

The object of the study is the reserves of economic growth in the country on the example of Ukraine. One of the problems of such studies is the calculation of potential GDP, which is not observed, but is calculated on the basis of various methods. Also problematic is the choice of method/methods of calculating potential GDP and potential values of its factors. Any estimate of the potential value of a variable is based on one or more statistical relationships and therefore contains an element of uncertainty. In order to reduce uncertainty, 2 methods were used to determine the potential values of the components of GDP – the growth rate of employment, fixed capital and TFP (total factor productivity).
 The study used the methods of one-dimensional statistical filters Hodrick-Prescott and Baxter-King to estimate the potential values of GDP and the model of the production function to calculate potential GDP based on the potential values of its factors. The main reasons for the slowdown in Ukraine's GDP have been identified, the main of which is low capital productivity due to budget constraints. The second place in this ranking was taken by labor productivity, the last third – by TFP. Weak productivity and investment growth reinforced each other. Capital has the highest growth potential in Ukraine. Therefore, measures to stimulate capital investment, including in research and innovation and human capital, are important. Other factors that affect GDP through labor productivity and TFP are population aging, emigration, and tight lending conditions. To neutralize these factors, it is necessary to create new jobs, facilitate the conditions for obtaining loans by enterprises, stimulate advanced training and lifelong learning. The proposed approach to the separate calculation of potential values of GDP factors and their analysis find reserves for GDP growth. This provides the advantages of this method over other approaches.

Financial stress and economic growth: The moderating role of trust

AbstractThe literature suggests that trust can influence the behavior of economic agents and improve access to financing for both households and corporations. Subsequently, this might have implications for the consumption of households and the investments of corporations. Therefore, trust could mitigate the negative impact of financial stress on economic growth. To test this hypothesis, we use a sample of EU countries over the period 2002–2020 and examine the interaction of trust with financial stress in shaping GDP growth. The interaction term enters the estimations with a positive and statistically significant coefficient, and it therefore mitigates the negative impact of financial stress on economic growth. Furthermore, by disaggregating the GDP into its four main components, we find that the moderating effect of trust flows through the two main components of GDP mentioned above, namely households’ consumption and firms’ investments. Additionally, we observe that the interaction effect becomes weaker in countries with a higher economic freedom and is strengthened in centre and left‐wing governments compared to right‐wing economically oriented ones.

Features of investment development of agricultural enterprises

Investments in agricultural enterprises affect the volume of national GDP. At the same time, the development of the investment process in agriculture can have a significant synergistic effect, as investments belong to the gross accumulation of capital, which is one of the components of GDP. Real investment inflows to enterprises in the agro-industrial complex during 2015–2019 tended to increase. In 2019, compared to 2015, the volume of total capital investment in agriculture, forestry and fisheries increased by UAH 28.975 million or 196 %, which is a favorable condition for the development of domestic agricultural enterprises. During 2015–2020, there is a positive increase in capital investment in Ukraine's economy as a whole, but the share of capital investment in agriculture tends to decline annually, especially in 2020 compared to 2019, by 17 %. The decline in investment activity in agriculture is due to unstable macroeconomic and political factors in our country, limited purchasing power, the beginning of the global economic crisis, the gradual devaluation of the national currency, low efficiency of the agricultural sector. The volume of investment averages about 10 % of the total amount of capital investment in the country is quite low, despite the fact that the agricultural sector of our country has a fairly high potential for development and significant investment attractiveness. The dynamics of the share of investment in the national GDP and gross investment in the economy of Ukraine is characterized by a positive trend towards gradual growth during 2015–2019. In 2010, the volume of investments in the agricultural sector amounted to 1.5 % of GDP of our country and 3.3 % relative to gross investment, and in 2015 these figures were 2.3 % and 3.5 %, respectively. In 2019, these figures were 1.7 % and 4.8 %. That is, we can state that during the analyzed period there is an increase in the role of investment in the agricultural sector of the economy and in the formation of sustainable economic development potential of Ukraine. According to the results of 2018, agricultural enterprises and organizations of all forms of ownership at the expense of all sources of funding mastered 64 billion UAH. capital investment, which is 127 % compared to the period of 2017 and 340 % compared to 2013. In 2014–2015, there was a decrease in investment activity in the agricultural sector due to the economic crisis in the country. In 2019–2020, the volume of capital investment in agricultural enterprises decreased by UAH 11 billion, which is a sign of deteriorating investment activity in the agricultural sector.

BANK LENDING DURING THE COVID-19 CRISIS: EVIDENCE FROM SWITZERLAND

Abstract. This paper is devoted to the analysis of the influence of bank lending on the economy in Switzerland during COVID-19 pandemic. Analysis of the main economic indicators (GDP and its components, inflation, monetary supply) before and during corona-crisis proves that the impact of corona-crisis is stronger than that of the 2008—2009 financial crisis. A sharp decline of GDP, exports and imports is underlined. The components of GDP that were most stable over the last 12 years and did not decrease during the 2008—2009 financial crisis, namely «Households Consumption Expenditures» and «Total Consumption Expenditures», had a negative trend in 2020. It outlines the non-economic nature of the crisis. The pandemic period is characterized by growth of inflation and changes of the money supply structure, such as a reduction of deposits in transaction accounts by half. The most vulnerable economic entity was the population, whose solvency decreased significantly. It led to the consumption and transactions reduction. It is underlined that in such conditions bank lending can be used to boost consumption, consumer demand, stimulate economic growth. The authors’ analysis demonstrates that the amounts of credit lines and utilisation were higher in 2020 during ongoing pandemic compared to the previous year. Loans to individuals remain the most significant in banks credit portfolio, its share was 66 % at the end of 2020. At the same time corporate loans grow faster during the crisis, which indicates businesses have higher demand for credit and use it as a crisis management tool. Contrary to the existing opinion on the negative impact of bank lending on inflation, the article proves that the increase of bank lending as part of fiscal and monetary policy measures has a positive impact on economic recovery during and after the crisis. The analysed Swiss experience can be used in Ukrainian realities. Keywords: bank loan, mortgage loan, corporate loan, lending, Switzerland, COVID-19. JEL Classification Е42, Е50, F29, G21 Formulas: 0; fig.: 7; tabl.: 2; bibl.: 17.

The Evolution of US and UK Real GDP Components in the Time-Frequency Domain: A Continuous Wavelet Analysis

The Evolution of US and UK Real GDP Components in the Time-Frequency Domain: A Continuous Wavelet Analysis