Real GDP Growth Research Articles

The impact of the COVID-19 pandemic on global GDP growth

This paper describes one of the first attempts to gauge the effect of the COVID-19 pandemic on the global trajectory of real GDP over the course of 2020 and 2021. It is also among the first efforts to distinguish between the role of domestic variables and global trade in transmitting the economic effects of COVID-19. We estimate panel data regressions of the quarterly growth in real GDP on pandemic variables for 90 countries over the period 2020 Q1 through 2021 Q4. We find that readings on the number of COVID-19 deaths had a very small effect in our aggregate sample. On the other hand, changes in the stringency of the lockdown measures taken by governments to restrict the spread of the virus were an important influence on GDP. The economic effects of the pandemic differed between rich and poor countries: COVID-19 deaths exerted a somewhat greater drag on GDP in advanced economies, although this difference was not statistically significant, whereas lockdown restrictions were more injurious to economic activity in emerging and developing economies. In addition to these domestic pandemic effects, global trade represented a significant channel through which the economic effects of the pandemic spilled across national borders. This finding underscores how globalization makes each country vulnerable not only to medical contagion from the COVID-19 pandemic, but to economic contagion as well.

Impact of monetary policy on the macroeconomy under dollarization: evidence from the Lao PDR

PurposeThis study empirically aims to analyze the transmission of monetary policy in consideration of asymmetry based on the Bank of the Lao PDR (BOL)'s monetary policy tools and real and financial variables in the domestic market.Design/methodology/approachThis study adopts two approaches, conventional vector autoregression (VAR) and asymmetric VAR, to investigate the impact of monetary policy on macroeconomic variables including inflation and real GDP growth in the Lao PDR.FindingsUnder a highly dollarized monetary regime, the policy rate change plays a weaker role compared with M0, which exerts significantly positive effects on real GDP growth and inflation. The results of the asymmetric VAR model further substantiate that the real economy responds to a positive M0 shock (easing monetary policy) rather than a negative shock (tightening monetary policy).Practical implicationsOverall estimation results suggest that the effectiveness of monetary policy is limited in Laos, which would take priority over efforts to strengthen the development of the short-term financial market and de-dollarization.Originality/valueThis study can fill the gap in the literature in which the discussions on the transmission mechanism of monetary policy in the BOL's monetary policy are still little known.

Modern Pandemics: Recession and Recovery

Abstract We examine the immediate and bounce-back effects from six modern health crises that preceded Covid-19. Time-series models for a large cross-section of economies indicate that real GDP growth falls by around 2 percentage points in affected economies relative to unaffected economies in the year of the outbreak. Bounce-back in GDP growth is rapid and strong, especially when compared to non-health crises. Unemployment for less educated workers is higher and exhibits more persistence, and there is significantly greater persistence in female unemployment than male. Moreover, the negative initial effects of pandemics and bounce-back are economically contagious through international trade. The negative effects on GDP and unemployment are felt less in economies with larger first-year responses in government spending, especially on health care. Our estimates imply that the impact effect of the Covid-19 shock on world GDP growth is approximately four standard deviations worse than the average past pandemic.

Macroeconomic News in Asset Pricing and Reality

ABSTRACTRevisions in successive Greenbook forecasts of quarterly real GDP growth proxy for news of current and expected future economic growth. In the sample 1975 through 2015, news of future growth is slightly negatively related to contemporaneous changes in Treasury bond yields, while news of current growth is strongly positively related to changes in these yields. Both results are difficult to reconcile with a representative agent's bondholding first‐order condition. A continuous‐time dynamic model of output attributes almost all of the covariation with yields to martingale innovations in log output and a minimal amount to innovations in the conditional drift of log output.

VALUE DRIVERS OF BANK EQUITY MARKET PRICE

The Indian banking sector has shown robustness and resilience in the face of challenges on account of rising non-performing assets and economic upheavals. The market value of bank equity is a reflection of the financial performance of banks and macroeconomic factors. 22 bank-specific variables and 5 macroeconomic factors representing profit management, capital management, shareholder value management and risk and leverage management, India’s Real GDP Growth Rates (Factor Cost), Money Supply growth, Bank Credit growth, Deposit growth rate and Inflation are used in this study. 19440 observations are examined from the financial data of 40 commercial banks (private and public sector banks for a period of eighteen years. The data is analyzed using panel regression. Hausman and Pagan's test was conducted to find the best-fit model. The results show that Finance Charge Coverage (FCCR), Advance Loan funds, Current Ratio, Beta and Asset Turnover have a negative impact on bank equity value and Activity Mix, Revenue Efficiency, Earnings Retention, and Cost Management shows a positive significant relationship with equity value. Factors like FCCR affects the market values of public sector banks and private sector banks differently Growth in GDP, Inflation shows a positive relationship with the market value of bank equity. Growth in Money Supply has a differential impact on the market value of private sector banks and public sector banks. The results provide useful insights to understand the determinants of the market value of bank equity. It can help bankers frame strategies to maintain and enhance the market value of their equity.

Global economic consequences of the military-political crisis in Ukraine

Introduction. Economic growth will slow down significantly. The global industrial sector will be affected by worsening economic forecasts and sharp changes in energy prices. However, global supply chain issues are expected to ease, helping to ease the global manufacturing sector. Problem. Companies will face a volatile and challenging business environment given the various economic challenges. High inflation and economic instability will hold back consumer spending. The aim of the article is to install the impact of the global economic environment on economies, cities, businesses, and consumers. Methods. The methodological basis is general and special methods, including systematic approach, statistical and economic-logical methods. Results. In 2022, the world economy experienced another serious shock – Russia's large-scale invasion of Ukraine. In addition to the global impact of the COVID-19 pandemic, the war has led to severe disruptions in energy and food supplies, causing a global spike in inflation. This has led not only to a worsening of the outlook, with global real GDP growth expected to slow, but also to an entirely new economic reality that businesses and consumers will face, characterized by a host of challenges, risks, and crises that will lead to uncertainty. Conclusions. The war in Ukraine and broader geopolitical tensions pose a key risk to economic growth in 2023. The world economy is facing a new reality amid conflict, high inflation, and rising interest rates; the labor market remains tight; pressure on commodity prices will ease, but risks of increased volatility and supply disruptions remain; global supply chains are expected to recover in 2023 despite existing risks.

National culture and international business cycle co-movements

ABSTRACT We investigate the relationship between national culture and international business cycle co-movements. We first characterize international business cycle co-movements with a dynamic latent factor model that decomposes 101 countries’ real GDP growth rates into world, regional and country-specific factors and estimate the proportion of real GDP growth rate variance explained by the world, regional and country factors for each country. We then regress these proportions on each of the five dimensions of Hofstede’s national culture with a set of control variables. We find that four dimensions (except for power distance) are significantly related to business cycle co-movements, and they have different impacts. In countries with masculinity, uncertainty avoidance and long-term orientation preferences, the global factor explains a larger real GDP growth rate variance. Individualism weakens a country’s business cycle co-movement with the global business cycle. Countries with similar cultural values have similar economic structures and similar exposures to global shocks, which lead to business cycle co-movements. Our results are robust after addressing the issue of endogeneity and subsample analyses.

Real‐Time Perceptions of Historical GDP Data Uncertainty*

AbstractGDP is measured with error. But data uncertainty is rarely communicated quantitatively in real‐time. An exception are the fan charts for historical real GDP growth published by the Bank of England. To assess how well data uncertainty is understood, we first evaluate the accuracy of the historical fan charts. We find that data uncertainties can be accurately quantified, even without judgement, using past revisions data. Secondly, we conduct an online survey to gauge perceptions of GDP data uncertainty across a wider set of experts. Our results call for greater communication of data uncertainties to anchor experts' dispersed expectations.

From Economics to Earnings: A Macro-Based Equity Earnings Growth Forecasting Model

Earnings growth measures the change in a company’s reported net income through time. It is arguably the most widely observed measure of the growth and the profitability of a business, and a critical driver of equity returns. Though many practitioners have relied on historical averages to inform earnings growth expectations, research has found a relationship between earnings growth and prevailing economic growth. Building on prior research that connects earnings growth with real GDP growth, the authors split the earnings growth into two parts—revenue growth and changes in profit margins—and identifies multiple macroeconomic factors that have historical relationships separately with each. The authors find that revenue growth can historically be explained by world GDP growth, US GDP growth and payout ratios, and changes in profit margins can be explained by labor costs trade intensity. Upon conducting the out of sample test, this article offers a robust solution on predicting future earnings growth with macroeconomic factors and provides an important framework for understanding a key component of equity returns.

Hinterlands, City Formation and Growth: Evidence from the U.S. Westward Expansion

Abstract I study how geography shaped city formation and aggregate development in the U.S. prior to the Civil War. To guide my analysis, I present a conjecture that cities’ farm hinterlands fostered both city development and aggregate growth: the hinterland hypothesis. The hinterland hypothesis has rich implications on how various elements of U.S. geography—railroads, changes in U.S. political borders, and international trade—affected city formation and U.S. growth. To evaluate the hinterland hypothesis and its implications, I assemble a novel historical dataset on population, trading routes, and agricultural productivity at a high spatial resolution. I combine the data with a dynamic quantitative model of economic geography that yields the hinterland hypothesis as a prediction. I find evidence for the hinterland hypothesis by showing that the model can replicate the key patterns of U.S. urbanization and city formation. Finally, I conduct a series of counterfactuals in the model to quantify the effect of geography on cities and growth, guided by the implications of the hinterland hypothesis. Results indicate that railroads were responsible for 1.8% of urban population in 1860 and for 25% of real GDP growth between 1830 and 1860. The effect of international trade was similar in magnitude, while the effect of political border changes was small during the period.

Determinants of Jordanian Current Account during the Period (1995-2018)

Objectives: The study aims to analyze the Jordanian current account determinants during the period of 1995-2018 and demonstrate their importance in affecting the Jordanian current account balance to draw policies and find ways to help reduce the deficit in the current account balance in Jordan.
 Methods: The analytical-qualitative and the econometric methods were adopted in addition to the Autoregressive Distributed Lag (ARDL) approach to examine the relationship between the current account deficit and the economic factors affecting it.
 Results: The study revealed that there are long-term effects between the study variables, mainly general budget deficit, private savings, trade exposure rate, effective real exchange rate, international exchange rate, gross investment, GDP growth rate, and current account balance. The results also indicated a negative impact of the general budget deficit, private savings, and trade exposure rate on the current account balance and a positive impact of the effective real exchange rate, gross investment, and GDP growth rate on the current account balance. The study shows that Jordan has a deficit in the current account balance, and this is mainly due to the impact of the negative budget deficit and the deficit of its trade balance.
 Conclusions: The study recommends implementing some strategies to stabilize the current account deficit, the most important of which are supporting and promoting Jordanian exports, focusing on controlling public expenditure, reducing external debt, and stimulating and diversifying productive sectors.

The performance of OECD's composite leading indicator

AbstractThis paper evaluated the performance of OECD's Composite Leading Indicator using the Continuous Wavelet Transform. We used various wavelet tools ‐ wavelet coherency, wavelet phase and wavelet phase difference ‐ to assess the co‐movement between the Composite Leading Indicator and three macroeconomic variables ‐ Industrial Production Index, unemployment rate, and real GDP Growth ‐ at each frequency and moment. We also explored the lead–lag relationship between each pair of variables across time and frequency. We concluded that OECD's Composite Leading Indicator is a useful leading indicator of the Industrial Production Index and can be suited for forecasting the unemployment rate. However, it exhibited poor performance regarding GDP growth.

THE ROLE OF INVESTMENTS IN THE ENERGY SECTOR

The paper presents statistical data on electricity generation and consumption in Georgia in 2015-2020. Also the investments made in the same years, both separately in the electricity generation activity and in the electricity sector as a whole. In addition, the consequences of the unbalanced development of the economy and energy are discussed and the close relationship between electricity consumption and real GDP growth is shown. According to the authors, in order to reduce tariffs and improve technical economic indicators, it is necessary to implement scientific, technological and managerial progress faster than the volume of investments. Keywords: electricity generation, electricity consumption, tariffs, investments, scientific technological progress, managerial progress.

Post-pandemic Economics, Reality, Real Prospects

In 2020, the spread of the COVID-19 pandemic caused huge social and economic upheavals around the world, at a time when the global economy has not yet fully recovered from the economic shocks caused by the effects of the 2008-2009 global financial crisis. Existing fundamental structural weaknesses have made the countries of Central Asia particularly vulnerable. The pandemic and the upheavals it caused have been catastrophic: many businesses have closed, global trade has been threatened, transportation and logistics have been disrupted, and more. The article describes the results of post-pandemic economic research, such as: changes in real GDP growth and its impact on economic growth, economic activity, balance of payments, unemployment, and more. analyzed the depth and severity of the problems caused by economic stagnation. The barriers that act as a kind of obstacles to the policy of resuscitation of the economy are identified. Effective ways of solving existing problems are proposed. Important conclusions and recommendations are presented. Keywords: Post-pandemic, pandemic economy.

MODELING THE RA STATE DEBT USING THE VAR AUTOREGRESSION MODEL

It is necessary to carry out the process of modeling the public debt through a multi-faceted analysis. There is a need to evaluate it through different models: deterministic, stochastic and also alternative approaches. Most often, these approaches do not replace, but complement each other. In particular, stochastic and alternative approaches complement the results of deterministic analysis, considering them as an additional toolkit for risk assessment. In this article, the degree of interaction between the public debt and the factors forming it was evaluated using the vector autoregression VAR model. Taking into account the peculiarities of the factors affecting the RA state debt, Real GDP growth, real interest rate, real effective exchange rate, and primary balance were considered as debt-forming factors. According to the obtained results, the change in the debt/GDP ratio mainly depends on the real GDP growth, the primary balance and also the exchange rate. The similar result was also obtained as a result of assessing debt sustainnability using the MAC DSA model. Unlike the deterministic model, in this case the effect of the exchange rate on the debt/GDP ratio is not so great.

Do non-cash payments affect economic growth? Empirical evidence from EU countries

Purpose: to assess the impact of traditional forms of non-cash payments on economic growth measured by real GDP per capita in Central and Eastern Europe (CEE) and Western Europe. Design/methodology/approach: the following research hypothesis was formulated: the impact of non-cash payments on economic growth is stronger in Central and Eastern European countries than in Western European countries. The research hypothesis was verified based on empirical analysis of panel data for the years 2005-2018 for the CEE and Western European countries. The following 10 CEECs participated in the research: Slovakia, Bulgaria, Poland, Czech Republic, Hungary, Romania, Lithuania, Latvia, Estonia, Slovenia and eight countries from Western Europe: France, Austria, Belgium, Germany, Netherlands, Luxembourg, Ireland, the United Kingdom. Findings: in CEECs the value of transactions with payment cards had the largest impact on economic growth – an increase in the value of transactions using this payment instrument by one percentage point causes real GDP per capita increase by 0,23 percentage point. On the other hand, an increase in the value of transactions using credit transfers by one percentage point increased real GDP per capita by 0,10 percentage point. the direct debit transactions had a positive impact on the explained variable in the CEE countries – real GDP growth by 0,06 percentage point. Research limitations/implications: The results of the empirical study, likewise in literature, indicated a significant, positive impact of non-cash payments on real GDP per capita growth. The impact on real GDP per capita is only effective for the CEE countries. In Western European countries the level of non-cash transactions reached a certain level of saturation. That was a proved by ineffective iterations performed on various functional forms of the econometric model on panel data. In the group of CEE countries, the value of transactions with payment cards has the greatest impact on real GDP per capita. Originality/value: analysis of current literature on the impact of non-cash payments on economic growth and an empirical analysis. Keywords: household financial management, non-cash turnover, economic growth, real GDP per capita, public management. Category of the paper: Research paper.

Does Monetary Policy Solely Correct Disequilibrium in the Balance of Payment? Evidence From the Developing World

Abstract Monetary policy and balance of payments (BoP) are the key parameters in any country’s economy performance. This study is an attempt to re-explore the impact of domestic credit provided by the financial sector, real interest rate, real GDP growth, inflation rate, and exchange rate on the balance of payments by net foreign assets (NFA) in 17 developing countries over 1982–2019. The most appropriate empirical strategy has been implemented to obtain robust empirical results. The results indicate that domestic credit, interest rate, inflation and exchange rate have a significantly negative, while real GDP growth has a significantly positive impact on NFA. The results of Granger causality test reveals a bidirectional causality between domestic credit and NFA, between exchange rate and NFA. Furthermore, in the case of individual country analysis, overall empirical estimates of three estimators are acceptable for 17 individual countries although some dissimilarities are found between the countries in the magnitude of estimated coefficients of variables and level of significance. Empirical findings suggest that to correct the disequilibrium in BoP, central banks (monetary authorities) need to give equal consideration to other policy measures along with the monetary instruments to accomplish stability in a country’s BoP account.

Fundamentals and Misalignment of the Real Effective Exchange Rate in the Democratic Republic of Congo

This study aims to assess the determinants of the real exchange rate and to study the impact of exchange rate misalignment on economic growth in the DRC over the period from 1980 to 2020. This article uses a dual methodology to achieve its objective, first the BEER (Behavioral Equilibrium Exchange Rate) approach of Clark and Mc Donald to determine the fundamentals of TCER, then the approach of Lawson to assess the impact of misalignment of the exchange rate on economic growth based on the augmented Solow endogenous growth model. In view of the results obtained using econometric modeling (Cointegration, VCEM and ARDL), it has been observed that there is a long relationship between the real effective exchange rate (REER) and its fundamentals. In addition, the results of the REER fundamentals (relative productivity, term of trade, public expenditure and foreign exchange reserves) verify the Balassa-Samuelson effect in the DRC. In addition, the misalignment of the exchange rate exerts a negative impact on real GDP growth in the DRC. However, a disaggregation of the REER misalignment shows that exchange rate depreciation strengthens economic activity while an appreciation constrains economic growth in the DRC.

Analyzing factors influencing global precious metal markets: A feature selection study

Precious metals are valuable commodities providing superior protection against risky financial exposure. Identifying factors influencing the market is crucial for anticipating changes. Forecast applications utilize stochastic models capable of learning from historical data to project future values. The dataset is a vital component for prediction tools since all estimations begin with constructing the appropriate information. Detecting the association between input and output is essential to filter data, as including unrelated variables could destabilize the response. Feature selection considers removing uncorrelated attributes before incorporating them as inputs to the predictor. This study employs three regression-based algorithms to examine 58 precious assets from gold, silver, platinum, and palladium markets against several variables cited in the literature. Relationships were detected using regressive feature selection methods, known as least absolute shrinkage and selection operator (LASSO), ridge, and elastic net (EN). Results demonstrate that the proposed algorithms achieved satisfactory performance on 42 assets, justified through a reliable fit and acceptable error. The remaining 16 assets exhibited large deviations with considerably poor regression quality, indicating considerable nonlinearity. Attributes were selected with a detailed emphasis on those exerting the most substantial impact on a particular metal. Based on computational analysis, most investments are susceptible to macroeconomic factors. Some assets may present hedging capabilities towards key features, including stock index, exchange rates, and bond yield. An assessment of common variables among each metal revealed that real GDP growth and interest rates are vital indicators for the precious metal market. Overall, the simulation outcomes show no consistent commonalities amongst attributes within the same asset class in a country. Feature selection from this research offers necessary information regarding time-series dynamics, serving as a basis to project trends. The filtered dataset is expected to enhance the reliability of nonlinear predictive algorithms by removing inaccurate correlations to lower computational load. Furthermore, the outcome provides information regarding correlations affecting global precious metal investments over five-year period. These discussions are necessary for investors considering such commodities as potential portfolio diversifiers.

Republic of Kosovo

The increase in energy and food prices after Russia’s war in Ukraine is weighing on private demand, activity, and inflation. Real GDP growth has decelerated to 2–3 percent in 2022, after recovering by 10.7 percent in 2021, and inflation increased to more than 11 percent. Growth is projected to moderately pick up to 3.5 percent in 2023, and inflation to decline to 5 percent, though these forecasts crucially depend on the assumption that international commodity prices will ease. Uncertainty remains high, with risks to the downside for growth and to the upside for inflation.