GNP Growth Research Articles

Understanding dynamics of intellectual capital of nations

PurposeThe paper aims at creating understanding on the dynamics of intellectual capital (IC), which has emerged recently as one of the major issues on the research agenda. The theme is studied from a national point of view.Design/methodology/approachThe analysis has been conducted using data from the IMD Competitiveness Report covering the data of 51 countries from the years 2000‐2005. Data analysis is aimed at analysing time dependent relationships between intellectual capital and GNP growth. The research provides parameters of four types of effects for a nation's GNP growth: sustaining effects, boosting effects, linear growth potential and exponential growth potential. Based on the developmental stage of the countries they were grouped to: developing; transitional; and developed countries, and the effects of IC was studied within and between these groups.FindingsThe analysis specifies the types of IC factors that have important effects on economic growth on different level of economics. The analysis also provides an analytical framework for designing the context in which IC of nations can be adequately considered in the mid‐long term perspective.Research limitations/implicationsThe research has to be considered as exploratory. It has been conducted using only one database with certain limitations. Further research is needed especially by integrating other components of intellectual capital, e.g. reputation, decision‐making processes, and cultural dimension.Practical implicationsFrom a practical perspective the findings also provide important guidelines and framework for policy makers.Originality/valueThis paper provides a new view on the dynamics of IC at national level by relating IC ingredients to economic performance and specifying under which circumstances IC has important effects on national GNP growth.

Possibly Ill-Behaved Posteriors in Econometric Models

textabstractHighly non-elliptical posterior distributions may occur in several econometric models, in particular, when the likelihood information is allowed to dominate and data information is weak. We explain the issue of highly non-elliptical posteriors in a model for the effect of education on income using data from the well-known Angrist and Krueger (1991) study and discuss how a so-called Information Matrix or Jeffreys' prior may be used as a `regularization prior' that in combination with the likelihood yields posteriors with desirable properties. We further consider an 8-dimensional bimodal posterior distribution in a 2-regime mixture model for the real US GNP growth. In order to perform a Bayesian posterior analysis using indirect sampling methods in these models, one has to find a good candidate density. In a recent paper - Hoogerheide, Kaashoek and Van Dijk (2007) - a class of neural network functions was introduced as candidate densities in case of non-elliptical posteriors. In the present paper, the connection between canonical model structures, non-elliptical credible sets, and more sophisticated neural network simulation techniques is explored. In all examples considered in this paper – a bimodal distribution of Gelman and Meng (1991) and posteriors in IV and mixture models - the mixture of Student's t distributions is clearly a much better candidate than a Student's t candidate, yielding far more precise estimates of posterior means after the same amount of computing time, whereas the Student's t candidate almost completely misses substantial parts of the parameter space.

Understanding Economic and Social Developments in the Periphery: Bulgarian National Income 1892–1924

This article aims at a reconstruction of reliable estimates of Bulgarian GNP growth. The main methodological point of reference is a work published in the 1940s by a contemporary Bulgarian economist, Asen Chakalov. Given the sophistication of Chakalov’s estimates and the desirability of chaining new data onto his estimate for 1924, the article’s methodology consists in the first instance in replicating his figure for 1924 on the basis of original sources and then using these same sources to create a series of properly documented estimates for the years between 1892 and 1924. To provide a meaningful comparison over the long run between 1892 and 1945, we must allow for price changes, population change, and the impact of territorial redistribution in the course of the Balkan Wars and World War I. The results are striking. For 1924 a reassuring match with Chakalov’s estimate is achieved. The new GNP series indicates that the Bulgarian economy did not achieve staggering results during the period in review—an average of 0.93% on a yearly basis. True, there were sub-periods in which the GNP was growing a bit faster (2.76% between 1899 and 1905, and 2.16% during 1905-1911); however, this is both a misleading (due to the low base of the crisis of 1899) and an unsustainable conclusion. Inserting the population factor into the picture makes the situation even more dismal. In per capita terms Bulgaria achieved a negative growth rate of –0.32% annually. The economy fell behind the population increase, which turned out to be a serious obstacle for switching over to a higher gear.

Comment on “The uncertain unit root in real GNP: A re-examination”

With the objective to settle the often conflicting and inconclusive extant debate on whether the observed secular growth can be characterized by a deterministic or stochastic trend, Darné comes up with an alternative method – the outlier detection methodology and studies the persistence properties of US real GNP for the period 1869–1993. Given that the presence of outliers in a time series – unless detected and adjusted – often render wrong impression on the persistence properties and their implications for long-run growth, Darné’s contribution in this regard is significant. Outliers of varied types assume varying persistence profiles, therefore detection of them in the GNP growth is a pre-requisite for characterizing the series in a stochastic or deterministic setting. To further intuition on the exact nature of persistence, I applied fractional integration test of the four real GNP series and found that outlier adjusted GNP series are mean-reverting and are more persistent than original. The rate of convergence of stochastic shocks to long-run mean have important implications for growth dynamics.

The effect of GNP announcements on fluctuations of GNP growth

This paper is an empirical study of the degree in which perceptions affect the evolution of the economy. We study the effects of the announcements that the government makes on GNP growth. These announcements are subject to a substantial degree of noise and its accuracy improves with time. A revised number is published several years after the first announcement was made public. We consider that the final revision is the “true” value of GNP growth. We show that once announcements are taken into account, the true value of GNP growth at time t has no predictive power in determining growth at any future time. All the predictive power lies in the announcements, and not in the true level of growth. Actually, we show that the variable that determines future growth is the unexpected part of the announcements. We also show that announcements affect growth via aggregate investment.

Business cycle dynamics with duration dependence and leading indicators

Durland and McCurdy [Durland, J.M., McCurdy, T.H., 1994. Duration-dependent transitions in a Markov model of US GNP growth. Journal of Business and Economic Statistics 12, 279–288] investigated the issue of duration dependence in US business cycle phases using a Markov regime-switching approach, introduced by Hamilton [Hamilton, J., 1989. A new approach to the analysis of time series and the business cycle. Econometrica 57, 357–384] and extended to the case of variable transition parameters by Filardo [Filardo, A.J., 1994. Business cycle phases and their transitional dynamics. Journal of Business and Economic Statistics 12, 299–308]. In Durland and McCurdy’s model duration alone was used as an explanatory variable of the transition probabilities. They found that recessions were duration dependent whilst expansions were not. In this paper, we explicitly incorporate the widely-accepted US business cycle phase change dates as determined by the NBER, and use a state-dependent multinomial Logit modelling framework. The model incorporates both duration and movements in two leading indexes – one designed to have a short lead (SLI) and the other designed to have a longer lead (LLI) – as potential explanatory variables. We find that doing so suggests that current duration is not only a significant determinant of transition out of recessions, but that there is some evidence that it is also weakly significant in the case of expansions. Furthermore, we find that SLI has more informational content for the termination of recessions whilst LLI does so for expansions.

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.

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.

Reassessing the Standard of Living in the Soviet Union: An Analysis Using Archival and Anthropometric Data

Both Western and Soviet estimates of GNP growth in the USSR indicate that GNP per capita grew in every decade - sometimes rapidly - from 1928 to 1985. While this measure suggests that the standard of living improved in the USSR throughout this period, it is unclear whether this economic growth translated into improved well-being for the population as a whole. This paper uses previously unpublished archival data on infant mortality and anthropometric studies of children conducted across the Soviet Union to reassess the standard of living in the USSR using these alternative measures of well-being. In the prewar period these data indicate a population extremely small in stature and sensitive to the political and economic upheavals visited upon the country by Soviet leaders and outside forces. Remarkably large and rapid improvements in infant mortality, birth weight, child height and adult stature were recorded from approximately 1940 to the late 1960s. While this period of physical growth was followed by stagnation in heights and an increase in adult male mortality, it appears that the Soviet Union avoided the sustained declines in stature that occurred in the United States and United Kingdom during industrialization in those countries.

The market and the pursuit of happiness

r l • h e market doesn't make us happy--or at least not appy enough. That, at any rate, is the complaint of the British economist Lord Richard Layard, whose Happiness: Lessons from a New Science, is only one of a number of recent contributions to the burgeoning field of "happiness economics." Taking as their point of departure the observation that self-reported happiness or "subjective well being" seems not to have appreciated markedly in the principal Western countries over the past fifty years, despite steady gains in income, Layard and company advocate infusing classical economics with a strong dose of contemporary psychology to produce happier marginal returns. "Smithian laissez-faire is not sufficient to achieve [the greatest happinessl," Layard observes, adding that "we need a fundamental reform: we have to implant the substantive findings of psychology into the framework of economics." From the new science of positive (or hedonic) psychology--the study of what makes human beings happy, not sad--Layard and others believe they can draw a relatively precise picture of what the Nobel Laureate in economics Daniel Kahneman calls "objective happiness," isolating the basic sources and indicators of positive affect or mood. With this information in hand, the task of the policymaker is apparently clear. "Happiness should become the goal of policy," Layard writes, "and the progress of national happiness should be measured and analysed as closely as the growth of GNP." What the tiny mountain kingdom of Bhutan has already adopted as its basic social indicator----GNH (Gross National Happiness), as opposed to GNP--should now be embraced by the West. The claim that happiness can be managed scientifically, of course, is hardly new. It dates back at least as far as the early eighteenth century, when the Scottish moralist Frances Hutcheson ventured an "attempt to introduce a mathematical calculation in subjects of morality." The ridicule that followed his preliminary efforts did nothing to prevent Jeremy Bentham, decades later, from speaking similarly of "applying arithmetical calculation to the elements of happiness," while proposing his infamous "felicific calculus" to crunch the numbers of social welfare. Despite his failure to solve the happiness equation--and that of many others ever since--the quest continues unabated. Layard, who, in fact, presents himself as a Neo-Benthamite, is merely the most recent in a long line of social scientists who have dreamed of legislating happincss. This long search for the philosopher's stone of objective happiness should give us pause in accepting too hastily the findings of the new economics of felicity. But at the same time, the long history of criticism of the market on the grounds of its failure to promote happiness should also make us sensitive to l,ayard's critique. For his reservations, like his quest itself, are hardly without precedent. Well before the birth of modern commercial societies in the late seventeenth and eighteenth centuries, skeptics were already decrying the unhappy consequences of market activity. Whereas Christians and neo-classicists worried about the corrupting influence of lucre and trade, classical republicans argued that luxury and commerce sapped moral virtue--with similarly destructive results. For his part, Jean-Jacques Rousseau brought together elements of both these traditions in the mid-eighteenth century to mount an innovative critique of the unhappy consequences of commercial society. "In the midst of so much industry, arts, luxury, and magnificence," he observed in the Second Discourse, the Discourse on the Origin and Foundations of Inequality Among Men (1754), "we daily deplore human miseries, and we find the burden of our existence rather hard to bear with all the ills that weigh it down." A principal source of this predicament, Rousseau argued, was the social pressure imposed on individuals in commercial society to yearn for ever more. Continually comparing ourselves to others--and striving always to outdo them--we yearned inauthentically, developing needs and desires that ranged far beyond our true sources of satisfaction. Once a society had reached that stage of development, Rousseau explained in an early draft of the Social Contract, the choice was

Reassessing the Standard of Living in the Soviet Union: An Analysis Using Archival and Anthropometric Data

Both Western and Soviet estimates of GNP growth in the USSR indicate that GNP per capita grew in every decade - sometimes rapidly - from 1928 to 1985. While this measure suggests that the standard of living improved in the USSR throughout this period, it is unclear whether this economic growth translated into improved well-being for the population as a whole. This paper uses previously unpublished archival data on infant mortality and anthropometric studies of children conducted across the Soviet Union to reassess the standard of living in the USSR using these alternative measures of well-being. In the prewar period these data indicate a population extremely small in stature and sensitive to the political and economic upheavals visited upon the country by Soviet leaders and outside forces. Remarkably large and rapid improvements in infant mortality, birth weight, child height and adult stature were recorded from approximately 1940 to the late 1960s. While this period of physical growth was followed by stagnation in heights and an increase in adult male mortality, it appears that the Soviet Union avoided the sustained declines in stature that occurred in the United States and United Kingdom during industrialization in those countries.

Does the Bond Market do Better than the Stock Market in Predicting Economic Growth?

This paper compares forecasts of real economic growth from models based on the stock market and bond market data. Although both contain information relevant for predicting GNP growth, the bond market delivers more accurate predictions. The bond market predictions are compared to the forecasts of seven leading econometric forecasting services. None of these services is able to provide a lower root mean squared error than the bond market model. This is the working paper version of my 1989 Financial Analysts Journal article.

Pump market and pump production in Poland

In the second of two articles looking at new European Union countries we turn our attention to Poland. With its current levels of GNP growth and infrastructure development, Poland the largest of the recent European Union accession countries is an attractive market for capital investment items such as pumps. Piotr Switalski and Grzegorz Pakula of the Polish Pump Manufacturers Association discuss the forces that have shaped the development of the country's pump market from 1945 until the present and briefly examine the different sectors of that market. They also consider the history of pump production in Poland and outline the expertise of many of the country's major manufacturers.

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.

Swings in Fertility Limitation in Iran

The issue of demographic transition has become a principle preoccupation of demographers during the last few decades. As explained by some scholars,1 the omnipresent differentials in the trends and...

A model for ordinally constructing additive objective functions

We investigate a method for constructing piecewise-linear approximations of an additive (called also separable) objective function in n target variables from a few indifference points in two-dimensional planes. It is shown that (a) the data used by the method are ordinal, simplest, and minimal; (b) the limit ordinal preference is independent of the cardinal utility scale used in intermediate computations, since the accuracy of the approximations is estimated in the Hausdorff metric on the space of binary relations. The method is illustrated with an example of constructing an additive objective function of German economic policy in four target variables: Inflation, Unemployment, GNP Growth, and Increase in Public Debt. We provide some modifications of the model aimed at user's convenience.

Does defence expenditure deter economic growth in Turkey? A cointegration analysis

This paper investigates a series of unit root, cointegration and causality tests to ascertain the direction of causality between the growth of GNP and defence expenditure in Turkey for the years 1955–2000. The main conclusion is that there is a long‐run equilibrium relationship between GNP and defence expenditures. Furthermore, the short run causality test indicates that there is a unidirectional causality between variables, from defence expenditure to economic growth. In order to see the effect of a shock, we employed impulse response analyses. The results show that GNP decreased during the period then output finally recovered from the initial shock to defence expenditures.

Türkiye Ekonomisi ve Büyüme Oranının Sürdürülebilirliği

1950-2001 period's GNP growth rate of Turkey is explained in a time series framework. It is also explained that the GNP series shows a sort of random behaviour complying with a random walk model ; and the connection with a potential long-term stable growth rate is also discussed. The parameters belonging to sub -periods are compared and any structural differences are tested. As a conclusion, it is also explained that the growth rate of GNP has a long term trend of approximately 4,3% per annum and in cases when it is exceeded to a large extent, it fluctuated around the trend by turning the movement in the opposite direction.