Growth Rate Of Industrial Production Research Articles

Forecasting regional industrial production with novel high‐frequency electricity consumption data

AbstractIn this paper, we study the predictive power of electricity consumption data for regional economic activity. Using unique high‐frequency electricity consumption data from industrial firms for the second‐largest German state, the Free State of Bavaria, we conduct a pseudo out‐of‐sample forecasting experiment for the monthly growth rate of Bavarian industrial production. We find that electricity consumption is the best performing indicator in the nowcasting setup and has higher accuracy than other conventional indicators in a monthly forecasting experiment. Exploiting the high‐frequency nature of the data, we find that the weekly electricity consumption indicator also provides good predictions about industrial activity in the current month with only 2 weeks of information. Overall, our results indicate that regional electricity consumption is a promising avenue for measuring and forecasting regional economic activity.

The Dynamic Effect of Pandemics on Industrial Production Growth

Using a time-varying parameter-structural vector autoregressive (TVP-SVAR) model, this study investigates the dynamic impact of uncertainty caused by worldwide pandemics on industrial productivity growth. We discover that the coronavirus has a negative influence on industrial production growth rates across economic blocs (i.e., United States, Developed, and Emerging nations). We also discover that, since 2016, there has been a considerable rise in the comovement of industrial production growth rates. We also employ the dynamic volatility connectedness methodology and find that the industrial productivity growth of Emerging nations economic bloc, and DPUI is observed to be net transmitters of volatility, whereas the industrial productivity growth of United States and other developed nations economic blocs are found to be net recipients of volatility throughout the sample periods. Furthermore, we find that the dynamic total connectedness among the variables under study is observed to be very strong and time-varying. JEL Codes: C15, C58, G15

Sequencing the COVID‐19 Recession in the USA: What Were the Macroeconomic Drivers?

AbstractWe apply a structural vectorautoregressive analysis to decompose fluctuations in the growth rate of industrial production and inflation precipitated by the COVID‐19 pandemic in the USA into aggregate demand, aggregate supply, and uncertainty shocks. While all three types of shocks contributed to output and inflation dynamics, the surge in economic uncertainty contributed to the decline in output more strongly than aggregate demand or aggregate supply disruptions. In 2021, the decline in uncertainty and adverse aggregate supply shocks emerged to be similarly important in spurring inflation.

Domestic Borrowing and the Nigerian Economy: A Bayesian VAR Analysis

ABSTRACT: The Nigerian government has borrowed for more than three decades to fund the growing fiscal deficit based on a weak tax revenue base. After the repayment of the country's foreign loans in 2006, the borrowing structure has been dominated by domestic loans. Between 2006 and 2020, domestic borrowing has grown by more than 800 per cent. This study examines the effect of domestic borrowing on Nigeria's macroeconomic variables from 1975 to 1980. The variables examined against the effect of domestic borrowing include economic growth, financial development (broad money supply and credit to private sector), external borrowing, interest rate, inflation, industrial production, private investment, trade openness and population growth rate. The study utilised the Bayesian Vector Autoregressive (BVAR) model. The BVAR approach gives more realistic estimations than other VAR models as it considers prior information steady states during analysis. The study also adopts the Cholesky impulse response function and variance decomposition approach in the investigation. The study found a long-run equilibrium relationship between domestic borrowing and other macroeconomic variables. Also, domestic borrowing positively and significantly affected economic growth, industrial production and inflation. However, domestic borrowing negatively and significantly affects trade openness. Although the effect of domestic borrowing on the financial development variables (broad money supply and credit to the private sector) is negative, it is insignificant. The Bayesian VAR impulse response simulation demonstrates that the fiscal policy shock from domestic borrowing impacts the macroeconomic variables in line with the estimated regression results. As a follow-up, the variance decomposition results show that the decomposition of the shocks from government domestic borrowing is borne more by external borrowing, broad money supply and interest rate in the order of magnitude. The study recommends a restriction in monetary policy to benchmark and closely checkmate the aggressive spending from domestic borrowing. Also, the Nigerian government should improve investment in infrastructure to enhance private sector productivity and expand taxes revenue base to mitigate the reliance on borrowing as a source of funding for fiscal deficit. Furthermore, the country's productivity must be coordinated by the government to expand the sources of foreign exchange earnings to enhance stability in the country's external sector.

How Powerfully and Rapidly Are Developing Countries Catching Up with the Advanced Economies?

The article, based on a number of author’s calculations and models, shows that if in the advanced economies (AEs), despite their preservation of leading positions in modern technologies, due to the loss of their demographic dividend, deindustrialization and contraction in the rate of capital formation, there is a cascade slowdown in the growth rate of per capita GDP and total factor productivity (TFP), the situation in developing countries (DCs) is on the whole more optimistic. Although (a) many DCS are experiencing acute social problems, (b) AEs are pursuing a policy of detainment of the growth of a number of DCs, they on the whole, thanks to the success of China, India, other, predominantly Asian DCs that have implemented pragmatic reforms and export-oriented industrialization, have made significant progress.  In the last two decades DCs on the whole outperformed the AEs in terms of capital investment efficiency by 2.5 times, in average growth rates of industrial production and TFP - by five and two times, respectively. Their share in world GDP, which has risen by a factor of 1.5 to 3/5 over the past forty years, may, according to available forecasts, increase to ¾ by the middle of the century. In about three decades, the ratio of economic power of the countries of the East and the South and the countries of the West (in favor of the former) will quite possibly be approximately the same as it was in the planetary economy before the industrial revolution and colonial enslavement of the former by the latter. 

Possibilities of post-war economic recovery using creative industries

In recent years, a fundamentally new concept of social and economic development has been actively developing in the world, which puts creativity and cultural resources at the forefront of the modern, post-industrial economy. This innovative sector is called the creative economy. The high growth rates of the creative economy (from 3% to 17.6%) are four times higher than the growth rates of industrial production. This concept can also be used in crisis situations to achieve a rapid growth rate of economic indicators. The article highlights the possibilities of using creative industries in post-crisis situations and the post-war recovery program, outlines the signs of a "creative city". The indicators of Ukraine among countries with transition economies in the Global Index of Creativity and the Global Index of Innovation, as well as the possibility of building creative spaces on the basis of destroyed or abandoned premises, were analyzed. The subject of the research is the analysis of the place of creative industries in the post-war economy. The goal is to identify opportunities for the involvement of creative industries in the post-crisis recovery of the economy. The task: to outline the place and features of the development of creative industries in the country's economy, to analyze post-crisis recovery programs involving the creative sector, to define the main elements of a "creative city" and to classify innovative transformations of historical objects. General scientific research methods are used: analysis and synthesis, descriptive, systemic, comparative and structural analysis. During the study, the following results were obtained: the possibilities of using creative industries in post-crisis situations and post-war recovery programs were revealed. Conclusions: the expediency of involving creative industries in the post-war reconstruction of Ukraine in order to ensure sustainable development of the economy and rapid recovery from the crisis situation is substantiated.

Analysis of the impact of macroeconomic factors on real estate prices in Bosnia And Herzegovina

Abstract Economic theory and practice are not acquainted with any unique set of macroeconomic factors that affect real estate prices. The very complexity of this phenomenon relativizes any attempt to establish an unchanged list of macroeconomic factors in BiH. The aim of the research in this paper is to analyze the impact of selected macroeconomic indicators on real estate prices in BiH, in the period from 2007 to 2019. Out of numerous macroeconomic factors that affect real estate prices (real estate prices are viewed as: the value of construction works done and as the value of new dwellings - new construction), 12 macroeconomic factors were singled out: nominal gross domestic product, real GDP growth rate, industrial production growth rate, GDP per capita, average net wages, imports and exports, household deposits in commercial banks, interest rate (housing loans, annual, %), loans to households, household final consumption expenditure, gross fixed capital formation and government final consumption expenditure. Starting from the hypothesis that macroeconomic factors affect real estate prices, it has been concluded that the selected factors significantly determine real estate prices and that most of the predictor variables defined in the model are significant, in terms of impact on the movement of GDP and real estate prices in Bosnia and Herzegovina in the period analyzed. The greatest impact on real estate prices is by household final consumption expenditure, GDP per capita, nominal GDP, interest rate, household deposits and real GDP growth rate. The research used factor analysis (reduction of macroeconomic factors to the optimal number of factors that explain the analyzed phenomenon and its impact on real estate prices) and an extended multiple linear regression model with a statistical software program SPSS, version 21. Modeling the impact of macroeconomic factors on real estate prices has macroeconomic effects and benefits for the country and contributes to the growth and well-being of operators in the real estate market.

On the dynamics of expectations, uncertainty and economic growth: an empirical analysis for the case of Uruguay

PurposeFrom these data, the authors construct an uncertainty index through the use of a vector autoregressive (VAR) model to measure the impact of uncertainty on GDP, controlling for inflation, which may affect macroeconomic performance. Results indicate that uncertainty is negatively correlated with the economic cycle and the inter-annual variation of the biannual average product.Design/methodology/approachThis study empirically explores the dynamics of expectations of the Uruguayan manufacturing firms about industrial economic growth. This study explores the dynamics of the industrial economic growth expectations of Uruguayan manufacturing firms. The empirical research is based on firms' expectations data collected through a monthly survey carried out by the Chamber of Industries of Uruguay (CIU) in 2003–2018.FindingsGranger causality tests show that uncertainty Granger-causes industrial production growth and a one standard deviation shock on uncertainty generates a contraction in the industrial production growth rate. Finally, the authors use statistical and network tools to identify groups of firms with similar performance on expectations. Results show that higher uncertainty is associated with smaller, more interconnected groups of firms, and that the number of homogeneous groups and the distance between groups increases with uncertainty. These findings suggest that policies focused on the coordination of expectations can lead to the development of stable opinion groups.Originality/valueThe paper introduces new data and new methodologies to analyze the dynamics of expectations of manufacturing firms about industrial economic growth.HighlightsAn empirical approach to compare expectations of firms is introduced.The occurrence of groups of opinion is tested.Central companies in the network of expectations are detected.More uncertainty implies a higher degree of discrepancy between the overall firm’s opinions and more compact opinion groups.

Elasticity of growth of Kazakhstan industries

The problem of structural changes in the economy is still urgent for a number of post-Soviet countries, including Kazakhstan. A country with huge reserves of resources has not yet moved away from the raw material orientation of development. The share of the manufacturing industry decreased drastic during the years of high economic growth (2000-2007). Even when the state has been providing substantial support in recent years, indicators such as labor productivity and the share of investments in the manufacturing industry have been declining. Therefore, research in the field of structural changes, from our point of view, does not lose relevance. One of the indicators of structural changes is the coefficient of elasticity of the growth of industries. The goal of the article was to analyze the elasticity of the growth of manufacturing industries in Kazakhstan from 1991 to 2020. The coefficient of elasticity of the growth of industries was calculated as the ratio of the growth of industries to the growth of industry as a whole. At the same time, the growth rate of industrial production and the growth rate of the manufacturing industry of Kazakhstan as a whole was taken into account. The category "industries with zero elasticity of growth" has also been added. Eventually, five categories are proposed. The authors have used the method of formal logic, comparative and factor analysis of indicators. In our opinion, the analysis shows changes in the relative dynamics of production growth in the manufacturing industries of Kazakhstan and could be used for further research in this area.

한국의 실질금리 기간구조와 실질 기간 프리미엄

This study estimates the real term structure and real term premium of Korea. To do this, we construct an analytical real term structure and real term premium from a macro-finance affine term structure models with two macro variables. The macro factors include industrial production growth rate and inflation rate from January 2001 to August 2021. Our estimation results are based on Bayesian MCMC algorithm. We show that the real yield is downward trend after financial crisis. Compared to the nominal yield, it also exhibits relatively high persistent, less fluctuation and more stable. On the other hand, the real term premium is similar to the nominal term premium, since the inflation risk premium hardly different from zero on average. This result seems to be due to the fact that Korea inflation has maintained stable after adopting inflation targeting as a monetary policy.

MACRO FACTOR, MARKET VOLATILITY, AND STOCK-BOND CORRELATION: A DYNAMIC MIXED DATA SAMPLING FORECAST

This paper explores how macroeconomic fundamentals affect the long-run dynamics in the volatility of and correlation between the stock and bond market. We use China as a laboratory by employing the GARCH-MIDAS and DCC-MIDAS models, which possess proven ability to capture the long-run component of second-moment market performance in a rapidly-growing economy. With actual data and predictivity evaluation, the finding is that the industrial production growth rate accounts for 32.04% of variations in the total conditional volatility for Chinese stocks, and the industrial production growth volatility drives 29.63% of movements in the total conditional volatility for Chinese bonds. Our proposed model is particularly advantageous in long-run volatility forecasts. Moreover, the present study complements the literature concerning the impacts of macro factors on the time-varying correlations between China’s stock and bond markets. We find weak evidence in this regard, probably due to the absence of multi-market macro-strategy investors that prevail in more developed markets.

Impact of Growth and Development of Industrial Sector on the Economic Development of India

The industrial sector play's a significant role in boosting the overall economic growth of an economy. The small and medium scale industries set-up by the entrepreneurs in different states and Union Territories of India have contributed to the increased shares in the overall production, fixed investment, exports, employment and capacity utilization of SME's Units etc. The importance of industrial sector in providing large-scale employment is of paramount importance. The policy framework right from the First Plan has highlighted the need for the development of industrial sector keeping in view its strategic importance in the overall economic development of India. In this paper, the overall growth and performance of industrial sector has been examined in depth on the basis of the different parameters such as annual growth rates of industrial production, net capital stock in industry, industrial investment, highlights of some industries (automobiles, textiles, steel, cement, tourism, electronics&computer technology), so as to determine its impact on the overall economic development of India.

Sustainability of Water Resources in Shandong Province Based on a System Dynamics Model of Water–Economy–Society for the Lower Yellow River

The sustainability of water resources is a common issue for all human beings. In order to solve the water resource shortage problem in the lower Yellow River region of China, this paper uses a system dynamics approach from the perspective of a water–society–economy coupled model for the sustainable utilization of water resources in the lower Yellow River region in Shandong province. The model was validated using the water quantity, economic, and demographic statistics of nine prefecture-level cities in Shandong province from 2011 to 2020. Based on this model, three analysis scenarios were set up. The sustainability of water resources in the lower Yellow River region of Shandong province was analyzed by integrating and regulating indicators in the coupled model. The research shows that, with the liberalization of the population policy, water shortages will become critical. However, by appropriately reducing the water consumed for economic needs, water deficiency can be resolved. According to the forecast of scenario analysis, scenario 3 (the Sustainable development scenario) was chosen as the optimum solution. Assuming that the growth rate of agricultural and industrial production is controlled to reduce water consumption, the water deficiency rate of Shandong province will decrease year by year, and eventually the water shortage situation will gradually improve from 2022.

Analisis indikator makro ekonomi terhadap Jakarta Islamic Index

Stock price fluctuations in various sectors continue to show a decline because of the Covid-19 pandemic. This is because of its nature, which is strongly influenced by external changes or fundamental information. Here, the ability of investors to understand will influence investors' decisions to invest. This study aims to determine the effect of macroeconomic indicators on the Jakarta Islamic Index, the observation period 2015-2021, using monthly time series data. Macro indicators used in analyzing the stock of the Jakarta Islamic Index are inflation, interest rates, industrial production growth, crude oil, exchange rates, and the industry average Dow Jones as global index variables. The analysis technique used is multiple linear regression. Simultaneous test results show that the macro variable indicators and DJIA have a significant effect on JII. The results of the partial test show that inflation and DJIA have a significant positive effect on JII, while the exchange rate and crude oil have a significant positive effect on JII, for the variables of industrial production growth and interest rates have no significant effect on JII.

Fiscal policy uncertainty and its effects on the real economy: German evidence

AbstractThis article introduces a new measure of fiscal policy uncertainty (FPU) based on the disagreement among professional forecasters. We analyse different patterns of this measure for the German economy and also use Italian data for comparison. Especially, we examine the impact of the introduction of the German ‘debt brake’ on FPU. Finally, we conduct an impulse response analysis to investigate the effect of FPU on the real economy and we provide robust evidence that FPU significantly decreases the growth rate of industrial production. The corresponding effect is robust to various sensitivity checks and exceeds the impact of a general measure of economic policy uncertainty. In general, the negative effect on the real economy might be explained by lower hiring and investment by firms, higher costs of financing due to risk premia and lower consumption spending as a result of precautionary savings.

Aggregate congressional trading and stock market returns

PurposeWhat information do members of Congress (politicians) use when they trade stocks? The purpose of this paper is to attempt to answer this question by investigating the relationship between an aggregate measure of trading by members of Congress (aggregate congressional trading) and future stock market returns.Design/methodology/approachThe authors follow the empirical framework used in academic work on corporate insiders. In particular, they aggregate 61,998 common stock transactions by politicians over the 2004–2010 period and estimate time series regressions at a monthly frequency with heteroskedasticity and autocorrelation robust t-statistics.FindingsThe authors find that aggregate congressional trading predicts future stock market returns, suggesting that politicians use economy-wide (i.e. macroeconomic) information in their stock trades. The authors also present evidence that aggregate congressional trading is related to the growth rate of industrial production, suggesting that industrial production serves as a potential channel through which aggregate congressional trading predicts future stock market returns.Originality/valueTo the best of the authors’ knowledge, this study is the first to document a relationship between aggregate congressional trading and stock market returns. The media and scholarly attention on politicians’ trades have mostly focused on the question of whether politicians have superior information on individual firms. The results from this study suggest that politicians’ informational advantage may go beyond individual firms such that they potentially have superior information on the overall trajectory of the economy as well.

Economic growth vs. eco-efficiency of Russian industrial regions

The article focuses on issues of economic growth, and eco-efficiency in Russian industrial regions on the example of the Urals Federal District. The study is based on the concept of existing tensions between economic development, and eco-efficiency. The author claims that within this concept an optimum could be found. The purpose of the study is to determine the most optimal industrial growth rate within the Urals Federal District. Industrial production representing 50% of the sectoral gross value added structure is the key factor of economic growth in the researched regions. This basic hypothesis of the study is confirmed by a relatively strong correlation between industrial growth rate and Gross Regional Product growth rate in Sverdlovsk region, Tyumen region, and Chelyabinsk region. As part of the study the author made use of correlation analysis, which confirmed the basic hypothesis of the research, and paired regression analysis, where industrial production growth rate is used as a regressor to build paired regression models. Economic growth is estimated via Gross Regional Product growth rate. For every sector, where the basic hypothesis is confirmed, there is a graphical model illustrating dependence of economic growth (E1), and eco-efficiency (E2) on industrial growth rate. The study discovers optimal industrial growth rate providing development of eco-efficiency in the researched regions. The results of the study can be applied both by scientists or government structures in strategies of regional development taking into account eco-efficiency.

The Marginal Profit-to-Q Ratio: Reassessing the Cash-Flow Channel

We study a production-based present-value relation that implies that fluctuations in the marginal profit-to-marginal Q ratio (mq) are driven by variations in the expected growth of marginal profits (cash-flow channel), expected investment return changes (discount-rate channel), or both. We find that in contrast to the aggregate dividend-to-price ratio, mq strongly predicts marginal profits growth at both short and long horizons, but not investment returns. mq also predicts (negatively) the growth rates of aggregate earnings, industrial production, and non-farm payrolls. Our findings can guide modeling in which the expected growth rate of marginal profits (at multiple horizons) is time-varying.

Transmission of Financial Stress Shocks between the USA and the Euro Area During Different Business Cycle Phases

This paper examines the transmission of financial stress shocks between the USA and the euro area for recessionary and non-recessionary regimes in the shock-recipient economy. The investigated period is 1999M1–2017M11, which includes several episodes of recessionary and non-recessionary regimes, endogenously determined by the model, as well as several financial stress episodes. After testing for non-linearity, we employ a five-variable Bayesian threshold vector autoregression model using internationally compatible data for financial stress indices. Our results show significant non-linearities in the financial stress-business cycle interactions for the euro area. In comparison to the non-recessionary regime, the US financial stress shocks are more detrimental to the stability of the European financial system, output growth, and inflation in recessions. US financial stress shocks negatively affect euro area unemployment rate, but the effect is independent of the euro area industrial production growth regime. In contrast, the stability of the US financial system is not susceptible to the euro area’s financial stress shocks. However, due to trade ties, the financial stress in the euro area does lead to output contraction, while not affecting inflation and unemployment in the US. We also found that US industrial production growth and unemployment rate are susceptible to domestic financial stress shocks, more in the recessionary than non-recessionary episodes of the US economy. The results suggest a need for a careful domestic and foreign financial stress monitoring and coordination of monetary authorities. While this may profit both economic areas, this is relevant more for the European Central Bank than its US counterpart.

System Dynamics Model for Evaluating Socio-Economic Impacts of Different Water Diversion Quantity from Transboundary River Basins-A Case Study of Xinjiang.

With the rapid development of social economy and global climate warming, scarce transboundary water resources, as one of the basic resources for socio-economic development, have increasingly become the focus of basin countries. To investigate the socio-economic impacts of different water diversion quantity from transboundary river basins, we used a system dynamics (SD) model to reflect interactions between population, water resources, and socio-economic development, and applied it to a case study in Xinjiang to simulate its change tendency from 2011 to 2030 from the temporal dimension. Then, four water diversion quantity of transboundary river basins and four alternative socio-economic development patterns were designed to comprehensively evaluate these impacts of water diversion quantity change on the socio-economy of the region along the river under different socio-economic development patterns. The results indicate that (1) there was a positive correlation between water diversion quantity and the economic output value of the region along transboundary river basins, and the marginal benefit of transboundary water resources would decrease gradually; (2) considering the difficulty of water diversion from transboundary river basins and the protection of downstream water use and ecological health of transboundary river basins, we believe that increasing the transboundary water resources by 20% was more conducive to the sustainable development of Xinjiang’s socio-economy; (3) through the comparison of dynamic evolutions of socio-economic development and water impacts under four socio-economic development patterns, it is best for Xinjiang to plan its future development in the coordinated development of economic-resource scenario. Following this scenario, not only would the total output value of the socio-economy be better than other scenarios, but this also helps to alleviate the contradiction between the water supply and demand, which expected there would be a water shortage of 1.04 billion m3 in 2029 under 20% increase in water diversion quantity. Therefore, appropriate water diversion quantity, reasonable adjustment of industrial production growth rate, reduction of water consumption quotas of different industries and domestic water quota, and improvement of collection and treatment rate for sewage should be given priority in water resources management decision-making in Xinjiang or other arid regions along transboundary river basins.