Growth Rate Of GNP Research Articles

Determination of factors affecting the profitability variables by panel data analysis in the islamic banks: the case of Turkey

Islamic banks, which operate on the profit and loss sharing basis, have an important role in the financial system in terms of the collected funds bringing into the real economy. Therefore, for a strong economic structure, the market share of Islamic banks in the financial system needs to increase. The profitability level of banks is one of the most important financial performance indicators. Determining the factors that affect profitability indicates which issues are vital. The aim of this paper is to determine the factors that affect the profitability of participation banks operating in Turkey. In this context, panel data estimation methods were applied by using the data obtained from the financial statements (2006-2019) of three participation banks (Kuveyt Türk, Albaraka ve Türkiye Finans) and various macroeconomic indicators of the country. The most appropriate model was tried to be determined. In this study, the effect of capital adequacy ratio, bank size, credit risk, operational risk, operating effectiveness, inflation and GNP growth rate on return on assets (ROA) and return on equity (ROE) was analyzed. According to the results of the analysis, bank size, credit risk, operating effectiveness and inflation rates has an effect on ROA. Also, the effect of credit risk, operational risk, operating effectiveness and inflation rates on ROE is determined. Independent variables that do not have an impact on the profitability of banks are determined as capital adequacy ratio and growth. Also, according to the results of the analysis, it is possible to express that banks’ specific variables are more effective on the profitability of participation banks than macroeconomic indicators.

Misunderstanding of FDI in the Western Balkans: Cart before the Horse and Wheels without Suspension

ABSTRACTOne of the key characteristics of the world economy in the last few decades has been the rise of foreign direct investments (FDI), which represent the major and most desirable form of capital flows from developed to developing and transition countries. The aim of this paper is to investigate specificities of FDI inflow to six small open transition economies of the western Balkans over the 2004–2014 period. Formal econometric tests carried out in the paper imply that—contrary to widespread ideology—FDI inflows exhibit at best no impact whatsoever or indeed a statistically significant negative impact on both GDP and GNP (cumulative) growth rates in the western Balkans. After exploring stylized facts and contrasting them with theoretical predictions, the article goes on to debunk several misconceptions in regard to motives, modes of operation and economic effects of FDI confronted with inconsistent, partial or outright detrimental government policies. The authors therefore call for a considerably different attitude towards FDI and the growth-generating concept in the Balkans.

Are there asymmetries in fiscal policy shocks?

Purpose– The purpose of this paper is to test the effects of unanticipated fiscal policy shocks on the growth rate and the cyclical component of real private output and reveal different types of asymmetries in fiscal policy implementation.Design/methodology/approach– The authors use two alternative vector autoregressive systems in order to construct the fiscal policy shocks: one with the simple sum monetary aggregate MZM and one with the alternative CFS Divisia MZM aggregate. From each one of these systems we extracted four types of shocks: a negative and a positive government spending shock and a negative and a positive government revenue shock. These eight different types of unanticipated fiscal shocks were used next to empirically examine their effects on the growth rate and cyclical component of real private GNP in two sets of regressions: one that assumes only contemporaneous effects of the shocks on output and one that is augmented with four lags of each fiscal shock.Findings– The authors come up with three key findings: first, all fiscal multipliers are below unity but with signs as predicted by Keynesian theory. Second, government expenditures have a larger impact as compared to the tax policy and finally, positive government spending shocks are more significant than negative spending shocks. All these results are in line with previous studies and are robust through many tests using structural identification proposed by Blanchard and Perotti (2002).Practical implications– The empirical findings in this manuscript can be used for conducting a more efficient fiscal policy. The importance of government spending shocks is empirically verified along with the asymmetries related to price stickiness predicted by Keynesian theory. According to the results an efficient fiscal policy would: in terms of an expansionary policy, use government spending as a means to stimulate the economy instead of tax cuts and in the case of a contractionary policy use government revenue (higher taxes) so that the costs of this policy in terms of output lost are lower.Originality/value– In this study the authors introduce three main innovations: first, to the best of our knowledge the Divisia monetary aggregates have not yet been used to previous research pertaining to fiscal policy. Second, following Cover’s (1992) procedure of identifying monetary policy shocks we extract the unanticipated fiscal policy shocks on government spending and revenue. Finally, the authors explicitly test for the asymmetric effects on the growth rate and the cyclical component of real private GNP of a contractionary and expansionary fiscal policy.

Debt and the U.S. Economy

Publicly held debt to GDP ratio in the U.S. has reached 68% in 2011 and is expected to continue rising. Many proposals regarding the ways to curb the government deficit and the resulting debt are being discussed. In this paper, we use the standard neoclassical growth model to examine the implications of some of these policy proposals on the future path of the budget deficit and debt in the U.S. economy. The experiments we conduct reveal how difficult it will be for the U.S. debt to GNP ratio to return back to its average level of 40%. In fact, unless there is a significant increase in the growth rate of GNP, debt to GNP ratios above 100% are more likely to continue into the future.

Empirical Issues And Examples: Growth Theory

This paper deals with the growth literature. In particular our fundamental concern in this paper will be the empirical studies which are held nowadays. For this purpose, we will mainly base our study on a recent paper called as The New Growth Evidence which was written out by J. Temple (2000) who gives a very detailed discussion of the empirical issues concerning the growth literature. In this work we will not only be giving his papers brief summary but also will be pointing out the borders of growth theory with a number of specific examples of empirical studies in growth literature. In this respect, we will organize three types of empirical analysis which are achieved by different estimation procedures. In the first example, we will deal with cross country evidence in which we aim to point out the growth differences between developed and underdeveloped countries. In order to show these differences we will gather data about fifty countries and make cross section analysis in between. We will then use Chow methodology to pinpoint the structural break between developed and underdeveloped countries. In the second example, we will provide a time series analysis of one country, in which we intend to find out whether a countrys productivity level does or does not affect the GNP growth rate. Last and the third example will be given from a panel data analysis, in which we will take the same sample countries as of the cross section analysis. The rationale will be to pool all the countries at first and observe the existence of any regularity and later to apply panel data analysis to each group of country -namely developed and underdeveloped- by the help of cross section analysis. The purpose of this empirical study is to show robustness of the empirical regularities in the homogeneous type countries. In conclusion, the paper will give brief summaries of theoretical and empirical issues which will be covering the boundaries of discussions and more importantly covering all the main types of empirical studies.

A bootstrap test for time series linearity

A bootstrap algorithm is proposed for testing Gaussianity and linearity in stationary time series, and consistency of the relevant bootstrap approximations is proven rigorously for the first time. Subba Rao and Gabr (1980) and Hinich (1982) have formulated some well-known nonparametric tests for Gaussianity and linearity based on the asymptotic distribution of the normalized bispectrum. The proposed bootstrap procedure gives an alternative way to approximate the finite-sample null distribution of such test statistics. We revisit a modified form of Hinich's test utilizing kernel smoothing, and compare its performance to the bootstrap test on several simulated data sets and two real data sets—the S&P 500 returns and the quarterly US real GNP growth rate. Interestingly, Hinich's test and the proposed bootstrapped version yield substantially different results when testing Gaussianity and linearity of the GNP data.

An Empirical Analysis of Consanguineous Marriages on Economic Development

In our study, development experiences towards economic development are investigated to provide an alternative analysis of economic development, human capital and genetic inheritance in light of consanguineous marriages. The countries analyzed in the study are discussed in accordance with consanguineous marriages and classified by their GDP per capita increase. Countries analyzed in the study represent a wide range of countries. Among these countries, Arab countries that experienced high rates of growth in their gross national income during the 20th century but failed to fulfill adequate development measures followed by the growth in national income; part of the transition countries from socialism to democracy; African countries that experience important complications in the process of development; have important differences in the process of economic development. It is shown that the countries that reached high average development within the context of GNP growth rates, had overcome consanguineous marriages and taken the steps accordingly. The countries that reached the highest development levels banned consanguineous marriages in 19th Century. The prohibition of consanguineous marriages supported the foundation of the labor class during the transition to capitalism and industrialization. According to our opinion, consanguineous marriage is a significant impediment to economic development.

THE EFFECT OF DEFENSE SPENDING ON US OUTPUT: A FACTOR AUGMENTED VECTOR AUTOREGRESSION (FAVAR) APPROACH

Empirical evidence on the effect of defense spending on US output is at best mixed. Against this backdrop, this paper assesses the impact of a positive defense spending shock on the growth rate of real GNP using a Factor Augmented Vector Autoregressive (FAVAR) model estimated with 116 variables spanning the quarterly period of 1976:01 to 2005:02. Overall, the results show that a positive shock to the growth rate of the real defense spending translates to a positive short‐run effect on the growth rate of real GNP lasting up to ten quarters, but the effect is significant only for two quarters. Beyond the tenth quarter, the effect becomes negative and shows signs of slow reversal at around the 17th quarter. Our results tend to indicate that the mixed empirical evidence, based on small‐scale Vector Autoregressive (VAR) and Vector Error Correction (VEC) models, could be a result of a small information set not capturing the true theoretical relationships between the two variables of interest.

ARIMA and Neural Networks: An Application to the Real GNP Growth Rate and the Unemployment Rate of U.S.A.

This paper examines the estimation and forecasting performance of ARIMA models in comparison with some of the most popular and common models of neural networks. Specifically we provide the estimation results of AR-GRNN (Generalized regression neural networks) and the AR-RBF (Radial basis function). We show that neural networks models outperform the ARIMA forecasting. We found that the best model in the case of real US GNP is the AR-GRNN and for US unemployment rate is the AR-MLP.

The impact of country risk ratings on U.S. firms in large cross-border acquisitions

This study investigates the impact of country risk ratings on the wealth gains to large U.S. bidders involved in cross-border acquisitions. The findings indicate that U.S. bidders experience positive wealth gains during the merger announcements, though this is concentrated in transactions involving European targets. There are also differences in wealth gains to bidders with respect to industry classification and location of foreign targets. The country risk factors including economic, political, and financial risk ratings all play a significant role in explaining the wealth gains to bidders. Furthermore, the wealth gains are higher for the firms with acquisitions in developed countries and are significantly related to GNP growth rate.

Bayesian modelling of financial guarantee insurance

In this paper we model the claim process of financial guarantee insurance, and predict the pure premium and the required amount of risk capital. The data used are from the financial guarantee system of the Finnish statutory pension scheme. The losses in financial guarantee insurance may be devastating during an economic depression (i.e., deep recession). This indicates that the economic business cycle, and in particular depressions, must be taken into account in modelling the claim amounts in financial guarantee insurance. A Markov regime-switching model is used to predict the frequency and severity of future depression periods. The claim amounts are predicted using a transfer function model where the predicted growth rate of the real GNP is an explanatory variable. The pure premium and initial risk reserve are evaluated on the basis of the predictive distribution of claim amounts. Bayesian methods are applied throughout the modelling process. For example, estimation is based on posterior simulation with the Gibbs sampler, and model adequacy is assessed by posterior predictive checking. Simulation results show that the required amount of risk capital is high, even though depressions are an infrequent phenomenon.

DEFENCE SPENDING AND THE MACROECONOMY: THE CASE OF TURKEY

This study uses a six‐variable vector autoregressive (VAR) model and analyses the relationship between defence spending as a percentage of GNP, government budget as a percentage of GNP, total deficit as a percentage of GNP, the GNP growth rates, inflation rates, and government budget deficit as a percentage of GNP for the case of Turkey from 1933 to 2004. The impulse response functions (IRFs) are also derived and Granger causalities among the variables estimated. The results support the short‐run causality between defence spending and economic growth.

A Multi-sector Nonlinear Dynamic Input–Output Model with Human Capital

In this paper, a two-sector model of endogenous growth is extended to a multi-sector nonlinear dynamic input–output model. If the model is on its balanced growth path (where prices – but not quantities – are assumed constant over time), it can be shown that the linear dynamic Leontief model is a special case. At the same time, on its balanced growth path, our model can be interpreted as a CGE model. The model distinguishes n + 1 sectors: n sectors producing physical goods, and one sector producing new human capital. A method is given for calculating the growth rate of GNP, the profit rate, the prices of goods, and the level of production when the model is on its balanced growth path. We point out the relation between the balanced growth rate and the profit rate.

Assessing the economic performance of North Korea, 1954–1989: Estimates and growth accounting analysis

This paper adjusts the official data from North and South Korean sources, taking into account hidden inflation to estimate North Korea's GNP growth rates from 1954 to 1989. The factors of economic growth are decomposed subsequently into changes in inputs and factor productivity. Finally, a panel cointegration technique is used to assess the level of productivity in the North Korean economy in comparison with that of the former Soviet Union. We find that the average of annual growth rates of North Korean GNP and GNP per capita from 1954 to 1989 was 4.4 and 1.9%, respectively. The results from decomposition suggest that the prime cause of slow economic growth was extremely low or even negative total factor productivity. According to the panel cointegration estimation, productivity in North Korea was lower than that of the Soviet Union by 33%. Journal of Comparative Economics 35 (3) (2007) 564–582.

A quantile approach to US GNP

In this paper we fitted a quantile self-exciting threshold autoregressive (QSETAR) time series model to the growth rate of real US GNP. We also presented a forecasting method for QSETAR models. This forecasting method makes it possible to obtain the predictive quantiles and predictive distribution function of x t+ m given x t for m > 0, and hence any quantities of interest can be derived. Therefore, this new approach allows us to study the US GNP from a distribution point view, rather than from a mean point of view. The results obtained in this paper show that the method works very well in practice.

The empirical assessment of multidimensional welfare, inequality and poverty: Sample weighted multivariate generalizations of the Kolmogorov–Smirnov two sample tests for stochastic dominance

Sample weighted multidimensional extensions to existing stochastic dominance, inequality and polarization comparison techniques are introduced and employed to examine whether or not ignoring multidimensional and sample weighting aspects result in misleading inferences. The techniques are employed in the context of a sample of nations, in essence each country in the sample is represented by an agent characterized by the per capita GNP of that country, the GNP growth rate of that country and the average life expectancy in that country. In essence the inequality that is being examined is that between the representative agents in these countries, intra country inequality is not being measured. The results suggest that multidimensional techniques lead to substantially different conclusions from those drawn from the use of unidimensional measures and that sample weighting also has a profound effect on the empirical outcomes.

Did Leaving the Gold Standard Tame the Business Cycle' Evidence from NBER Reference Dates & Real GNP

Cover and Pecorino (2005) demonstrate, using monthly NBER reference dates, that, the March 1933 departure from the gold standard is the most probable breakpoint ushering in an era of longer expansions, both absolutely and relative to recessions that follow. Cover and Pecorino view this finding as a challenge to real business cycle theory (RBCT). However, RBCT, along with most of recent macroeconomic research, has focused on the alternative concept of growth cycles - periods when the economy's production is above or below trend - rather than absolute increases or decreases in economic activity. Furthermore, empirical evaluation of RBCT has focused on the statistical properties of aggregate time series, rather than focusing exclusively on business cycle durations. Using HP-filtered quarterly real GNP, we demonstrate that tests of growth cycle durations still imply a most probable breakpoint close to 1933. However, we also test for structural breaks in the volatility of real GNP growth rates and deviations from HP-filter trends. These tests suggest that the most probable structural break is considerably later than 1933; perhaps as late as the 1950s. This conclusion is robust to the consideration of the alternative pre-1929 real GNP series constructed by Romer (1989) and Balke and Gordon (1989).

Can the SupLR Test Discriminate between Different Switching Regression Models: Application to the US GNP and the UK/US Exchange Rate

In recent years two classes of switching models have been proposed, the Markov switching models, Hamilton (1989) and the Threshold Auto-Regressive Models (TAR), Lim and Tong (1980). These two models have the advantage of being able to modelel and capture asymmetry, sudden changes and irreversibility time observed in many economic and financial time series. Despite these similarities and common points, these models have been envolved, in the literature, largely independently. In this paper, using the SupLR test, we study the possibility of discrimination between these two models. This approach is motivated by the fact that the majority of authors, in applications, use switching models without any statistical justification. We show that when the null hypothesis is rejected it appears that different switching models are significant. Then, using simulation experiments we show that it is very difficult to differentiate between MSAR and SETAR models specially with large samples. The power of the SupLR test seems to be sensitive to the mean, the noise variance and the delay parameter which appear in each model. Finally, we apply this methodology to the US GNP growth rate and the US/UK exchange rate.

Alternative Approaches to Long Term Care Financing: Distributive Implications and Sustainability for Italy

In the last decade, many countries have adopted tax schemes specifically aimed at financing programs for Long Term Care (LTC). These mechanisms have important distributional implications both within and across generations. Given the process of demographic ageing, the issue of inter and intra-generational fairness is deeply linked with the problem of the long-term financial equilibrium of an LTC fund. In this paper we first compare, on a microdata sample of the Italian population, the distributive effects (both on current income and across generations) of six alternative approaches to finance an LTC scheme. In particular, we consider a hypothetical LTC scheme (with a size equivalent to that of the German one) to be introduced in Italy and analyse the distributive implications of some tax options, taken from the financing mechanisms implemented or under discussion in Germany, Luxembourg, Japan and Italy. In the second part of the paper we move from a static to a dynamic perspective: we study the long-term sustainability of a hypothetical Pay as You Go (Payg) LTC scheme operating in Italy (that is, assuming the Italian projected demographic trends) under scenarios that consider alternative indexation rules, growth rates of GNP, future incidence of disability among age groups.

Missing Markets for Human Capital and Differences in Growth

Standard growth models predict that consumption and GNP growth rates should not differ among countries when international capital markets are considered. This paper introduces a generational structure which implies that the return on human capital exceeds the return on physical capital in equilibrium. Thus, when the return on human capital differs internationally, the growth rates of consumption and GNP vary across countries even when there is free capital mobility. Furthermore, GNP and GDP grow at the same rate within a country, there is positive investment in every country, and poverty traps persist in spite of international capital markets.