Investment Expenditures Research Articles

The Paradox of Thrift: A Case Study of United States of America

Vermann (2012) and Thies (1996)’s papers indicate that the paradox of thrift is no longer in vogue in United States of America (USA). This paper argues that the paradox of thrift is still applicable to USA even though she is operating with sufficient demand. The main objective of this paper is to determine whether the paradox of thrift is applicable to USA after the Great Depression. In doing this, a vector error correction model was estimated using annual data of gross national income, gross domestic saving, gross domestic investment and final consumption expenditure from 1971 to 2020. The results of the investigation showed that final consumption expenditure and gross domestic saving increase when gross national income increases. Gross national income falls and current saving is unchanged when previous saving rises. The paradox of thrift is applicable to USA after the Great Depression. The target of economic policy should be gross national income and not gross domestic saving because naturally both final consumption expenditure and gross domestic saving will increase if gross national income increases in USA.

Organisational restructuring of Indian Railways

Strategic drift of Indian Railways is due to the stagnant network capacity, declining freight share, project overrun, inefficient operating ratio, and, lack of autonomy. We propose two constructs to mitigate sectoral competition and augment investor credibility of IR for the period (2022–27). The first construct is a meta-competency framework in its strategic thinking of constituent skills. The second construct is the top-down empowerment by the government in collaborating freight segment of railways, highways, and the inland waterways for creating a strategic business unit under surface transport ministries. This study tests the hypotheses and discusses its implications of strategic drift, loss of freight share to road sector, ownership of monetisation of land rights & ancillary services by zonal railways, and, potential security & sabotage threats. Thus, this study expects to serve as a policy recommendation in creating an ecosystem for foreign direct investment and corporate restructuring of select subsidiaries of the Ministry of Railways in the four pillars of strategy architecture: Ease of doing business and transparency; Deregulation of capital expenditure investment; Cold supply chain capacity; Capitalize land rights and Right-of-Way. Hence, this IR strategic architecture discourse is prioritising economic value over social obligation of cross-subsidisation.

A Dependent Economy Model of Employment, Real Exchange Rate and Debt Dynamics: Towards an Understanding of Pandemic Crisis

Given the unforeseen and uncertain circumstances during the pandemic, the role of government expenditure becomes extremely relevant in sustaining lives and livelihoods of the masses. This brings forth public sector deficit as a key issue of macroeconomic policy debate. This article aims at investigating the effects of an unanticipated adverse shock like COVID-19, on the real value of public debt, in a small open economy, consisting of traded and non-traded sectors, along with proposed management of such crisis with fiscal and monetary expansion. The results of policy-induced and exogenous shocks depend on the difference in the speeds of adjustments in real exchange rate, interest rate and real value of debt, and the associated multitudes of cross effects. While an unanticipated adverse shock like COVID-19 causes contraction of both traded and non-traded sectors and reduces consumption expenditure, investment expenditure and level of employment and real value of aggregate income in the short run, fiscal expansion causes higher real value of debt and lower real exchange rate. JEL Codes: E12, E62, H63

Modelling of cost indicators for wind turbines of multimegawatt class in various sizes

The choice of wind turbines to fit various specific wind conditions for the purpose of ensuring maximum generation of electric power at least investment expenditures is among the wind power sector overarching challenges. Solving this task involves the evaluation of cost indices for wind turbines of various sizes. A well-known and rather popular with investigators model, made by the National Renewable Energy Laboratory (USA) has been improved for the first time with the aim of determining the cost of wind turbines of various sizes on the basis of their main parameters (rated power, rotor diameter, hub height) for current conditions of application. The established correlation relationships between the cost of wind turbine and its main parameters made possible the transformation of a well-known complex model into a model with linear equations and minimization of computations. Based on the research studies of the evolution of wind turbines main parameters and an average (global) cost of 1 MW of their power, the authors have suggested the first-ever original linear mathematical models that enable evaluating the wind turbine cost for any year of research. In illustration of application of the first ever developed technique, we have made the assessment of operating efficiency of the US wind farms from 2010 to 2019. The results obtained convincingly indicate the high quality of the developed model.

The Paradox of Thrift: Empirical Evidence in Nigeria

Vermann (2012) and Thies (1996)’s papers indicate that the paradox of thrift is no longer in vogue. This paper argues that the paradox of thrift is applicable to the developing country like Nigeria which is operating with deficient demand. The main objective of this paper is to determine whether the paradox of thrift is applicable to Nigeria. In doing this, a vector error correction model was estimated using annual data of gross national income, gross domestic saving, gross domestic investment and final consumption expenditure from 1986 to 2019. The results of the investigation showed final consumption expenditure and gross domestic saving increase when national income increases. Gross national income falls and current saving is unchanged when previous saving rises. The paradox of thrift is applicable to Nigeria. The target of economic policy should be gross national income and not gross domestic saving because naturally both final consumption expenditure and gross domestic saving will increase if gross national income increases in Nigeria.

Public Investment and Regional Resilience: Empirical Evidence from the Greek Regions

AbstractThis paper examines empirically the contribution of public investment expenditures to regional resilience. Analysis is based on a novel dataset including public investment expenditures data decomposed by sub‐categories and disaggregated at NUTS III Greek regions over the period 2000–2017. Results indicate that public investment expenditures had a positive influence on regional resilience during the period of the economic crisis. Decomposing public investment expenditures by type the analysis provides evidence that the decentralized public investment expenditures that were executed through the tiers of local government and those that were related with the secondary and tourism sectors asserted a positive and significant impact on regional resilience. These results are signifying the importance of public policy in regional resilience and could be utilized for the formulation of regional policy during recessions.

The impact of the Federal Reserve System’s interest rate channel on the components of aggregate demand

Motivation: Monetary policy decisions, through the process of transmission mechanism, affect the term structure of nominal interest rates as well as other asset prices, and thus influences aggregate demand (e.g. consumer spending and business investments) and price levels through these effects. The aspect of monetary transmission to various components of aggregate demand has been relatively little studied in the literature of the subject.
 Aim: The main aim of the study is to empirically investigate the effect of the Fed’s monetary policy on major components of aggregate demand over the past 35 years. To this aim, the scale and timing of the interest rate pass-through to economic activity have been examined.
 Results: The empirical findings showed that that between 1984 and 2019, the sensitivity of consumption and investment expenditures to interest rate impulses were different. Firstly, fixed investment spending accounted for a significant part that was responsible for the response of real GDP following an interest rate shock. Secondly, in the case of personal consumption expenditures, expenses for durable goods were more sensitive to changes in the Fed’s interest rate than spending on services and nondurable goods. In this way, the study expands the existing literature by reporting the effects of the Fed’s monetary policy on major components of aggregate demand over the past 35 years

The Effect of Profit Sharing Fund, Export Value, Capital Expenditure Investment in Economic Growth and Unemployment in East Kalimantan

Purpose: This study discusses 1 To determine the effect of Profit Sharing Funds, Export Value on Economic Growth, Capital Expenditure on Economic Growth investment on unemployment through Economic Growth in East Kalimantan
 Design/methodology/approach: This research is a quantitative research and data analysis using path analysis regression
 Findings: Profit Sharing Funds, Export Value, Capital expenditure has no effect on economic growth and investment has a significant effect on economic growth in East Kalimantan Province. : Profit Sharing Funds, Export Value, Capital expenditure and investment has no significant effect on unemployment in East Kalimantan Province. profit sharing funds, export value, capital expenditure and investment have an indirect effect on unemployment through economic growth in East Kalimantan Province.
 Research limitations/implications: There are six variables considered in this paper: Profit Sharing Funds, Export, Capital Expenditure, investment, Economic Growth unemployment
 Practical implications: partially corporate governance has no effect and macroeconomics has a negative effect.
 Originality/value: This study calculates and finds out the truth of Profit Sharing Funds, Export, Capital Expenditure, investment, Economic Growth unemployment

Impact of macroeconomic and microeconomic variables on firm investment: Mexican service sector, 2000-2016

A large and positive relationship is found to exist in the long-run between Public Investment Expenditures and Firm Investment which shows that public investment crowds in private investment using ARDL model at macroeconomic level on the Mexican service sector over the period 2000-2016. I also use the system-GMM PVAR to analyse the impact of microeconomic variables on firm investment. Exports have a strong and positive impact while Imports have a large and negative impact on firm investment. At the microeconomic level, taxes payments slightly obstruct firm investment. Using impulse response functions, I find that long-run macroeconomic policies are more important than short-run macroeconomic policies and that macroeconomic policies are more important than microeconomic policies for firm’s investment decisions.

Fiscal Expenditure Structure, Income Level and Residents' Consumption

Under the background of building a new development pattern, it is of great theoretical and practical significance to study the dynamic relationship between fiscal expenditure structure and residents' consumption. The empirical results show that people's livelihood expenditure affects residents' consumption completely through the intermediary variable of residents' income, while non people's livelihood expenditure has direct and indirect effects; investment expenditure on people's livelihood and transfer expenditure on people's livelihood have crowding in effect on residents' consumption, and have regional heterogeneity; on the whole, people's livelihood expenditure has crowding in effect on residents' consumption, while non people's livelihood expenditure has inhibitory effect on residents' consumption.

Thermo-economic evaluation and multi-objective optimization of a waste heat driven combined cooling and power system based on a modified Kalina cycle

Due to the decisive role of combined cooling and power (CCP) systems in improving the overall system efficiency and also the ability of the Kalina cycle to recover waste heat from low-temperature heat sources, an innovative CCP system is investigated in this study. The system consists of a modified Kalina cycle and a double-effect absorption refrigeration cycle driven by the exhaust gases of an internal combustion engine. The merits of the proposed system are demonstrated through the energy and exergy analysis. In addition, using a multi-objective genetic algorithm, the system performance is optimized for maximum exergy efficiency and the minimum total cost rate. Through the exgeoeconomic analysis, the low value of the exergoeconomic factor in the boiler, Recuperator 1 and 2, and the turbine indicates that the cost of exergy destruction in these components is higher than their investment expenditures. The optimization results reveal that under the optimal conditions, the exergy efficiency of the proposed CCP system and its total cost rate are 54.37% (2.22% improvement) and 110.76 $/hr (8.16% reduction), respectively. Consequently, due to the optimal selection of the variables, the products of the proposed system are produced at lower prices. So that, the levelized cost of the generated Power (LCOP) and that of the provided cooling are decreased by 11.73% and 4.15%, respectively.

Brief Synopses of New Arabic-Language Publications

Brief Synopses of New Arabic-Language Publications

Accounting for intangible assets: suggested solutions

Current accounting practice expenses many investments in intangible assets to the income statement, confusing earnings from current revenues with investments to gain future revenues. This has led to increasing calls to book those investments to the balance sheet. Drawing on relevant research, we evaluate solutions for intangible asset accounting that contrast with balance sheet recognition, and we compare these with current practice under IFRS. Key is acknowledging that an accounting solution comes from a double-entry system, which produces both an income statement and a balance sheet, and which has features that both enable and limit the information that can be conveyed about intangible asset value. In this system, asset recognition in the balance sheet must consider the effect on measurement in the income statement, for the income statement conveys value added to investment on the balance sheet. A determining feature is uncertainty about investment outcome and how that affects the income statement, so our solutions centre on accounting under uncertainty. Two other accounting features are added: there has to be an investment expenditure for balance sheet recognition, and that expenditure must be separately identifiable from transactions. These features, rather than the tangible-intangible asset dichotomy, lead to the prescribed solutions.

Media Partisanship and Fundamental Corporate Decisions

AbstractUsing the introduction of Fox News as a natural experiment, we investigate whether partisanship in television news coverage influences fundamental corporate decisions. We find that during the George W. Bush presidency, firms led by Republican-leaning managers headquartered in regions into which Fox was introduced shift upward their total investment expenditures and financial leverage. Our findings imply that in making fundamental corporate decisions, Republican-leaning managers are swayed by the Republican slant of Fox that presents an optimistic macroeconomic outlook. The results highlight the importance of heterogeneity in media slant in understanding the role of the media in corporate decision making.

Financial expert CEOs, political intervention, and corporate investment decisions: evidence from the anti-corruption campaign

PurposeEmploying the anti-corruption campaign as an exogenous political shock, this paper examines how political intervention shapes the impact of financial expert CEOs on firm investment decisions.Design/methodology/approachThis paper uses a sample of 2,808 Chinese firms listed in the Shanghai and Shenzhen Stock Exchanges from 2003 to 2016. Panel data is used for conducting the analysis controlling for firm, industry, and year fixed effects.FindingsThe authors found that CEOs with financial expertise are sensitive to political intervention when making investment decisions. First, financial expert CEOs spend more on R&D expenditure in private-owned companies and they are associated with less R&D expenditure in state-owned enterprises (SOEs). Second, financial expert CEOs are associated with higher investment expenditure in general, but they become less likely to invest more in the post-anti-corruption period. The reduction in investment expenditure due to the anti-corruption campaign is more pronounced in SOEs than in private-owned companies. Third, the anti-corruption campaign promotes R&D investment in general, but in SOEs, expert CEOs tend to be less likely to invest more on R&D after the anti-corruption shock.Originality/valueThis paper enriches the growing literature on the impact of political intervention and the role of the anti-corruption campaign on corporate behaviour.

Determinants Comparative Advantage of Non-Oil Export 34 Provinces in Indonesia

In spite of the country’s export activities constantly increase every year, based on the latest report Indonesia still sits at number 28th in the world's top export countries, consider Indonesia as one of the most populated nations and its rich natural resources. There is so much research in the literature about this issue, but to the author’s knowledge, there is still a lack of studies that analyze the performance of non-oil export comparative advantage between provinces in Indonesia instead of between its commodities. The purpose of this research is (1st) to compare non-oil exports comparative advantage between 34 provinces in Indonesia and (2nd) to prove the effect of chosen factors which are a foreign direct investment, local direct investment, inflation, interest rate, exchange rate, population, labor, minimum wage, education, income disparity, regional GDP, government expenditure, and GDP of importing country toward provinces comparative advantage of non-oil export. This research using provinces panel data years 2010-2019. The method of this study is Revealed Comparative Advantage (RCA) index and Trade Balance Index (TBI) to unveil non-oil export comparative advantage between 34 provinces in Indonesia and panel data regression to estimate the impact of determinant factors. The result of comparative advantage index estimation shows that 24 provinces have a comparative advantage based on the RCA index approach and 32 provinces have a comparative advantage based on the TBI approach on non-oil export activities year 2010-2019. The result of panel data regression found that 9 out of 13 determinant variables had a significant effect on the RCA index namely foreign direct investment, local direct investment, exchange rate, population, labor, minimum wage, income disparity, regional GDP, and government expenditure. Then 6 out of 13 determinant variables had a significant effect on TBI which are a local direct investment, interest rate, exchange rate, education, income disparity, and regional GDP.

Wages, Skills, and Skill-Biased Technical Change

The canonical supply-demand model of the wage returns to skill has been extremely influential; however, it has faced several important challenges. Several studies show that the standard approach sometimes produces theoretically wrong-signed elasticities of substitution, yields counterintuitive paths for skill-biased technical change (SBTC), and does not account for the observed deviations in college premia for younger vs. older workers. This paper shows that these failings can be explained by mis-measurement of relative skill prices and supplies (based on standard demographic composition-adjustments) and by inadequate ad hoc functional form assumptions about the path for SBTC. Improved estimates of skill prices and supplies that account for variation in skill across cohorts within narrowly defined groups help explain the observed deviation in the college premium for younger vs. older workers, even with perfect substitutability across age. Re-estimating the model with these prices and supplies produces a good fit with better out-of-sample prediction and robustly yields positive elasticities of substitution between high and low skill workers. The estimates suggest greater substitutability across skill and a more modest role for SBTC. We implement two new approaches to modelling SBTC. First, we study the extent to which recessions induce jumps or trend-adjustments in skill bias and find evidence that both features are important (but differ across recessions). Second, we link SBTC to direct measures of information technology investment expenditures and show that these measures explain the evolution of skill bias quite well. Together, these approaches suggest that the ad hoc assumptions for SBTC previously employed in the literature are too crude to fit the data well, leading to the incorrect conclusion that SBTC slowed during the early-1990s and under-estimates of the elasticity of substitution between high and low skill workers.

Outcomes of farm investment in Central and Eastern Europe: The role of financial public support and investment scale

Every economic operator must implement investments to function and develop. The particularities of agriculture are such that governments often choose to intervene with a policy for agricultural investment support. For farms in Central and Eastern European countries, which are affected by capital scarcity and structural problems, it has been particularly essential to undertake modernisation investment measures. The main objective of this paper is to assess agricultural investments while taking into consideration the importance of funds available under the EU’s Common Agricultural Policy (CAP). As the selected measures are investment-oriented, their implementation was (and continues to be) viewed as a source of a sustainable agricultural transformation. The study presented in this paper is unique in that it carries out related cross-country analysis and comparisons, and the research tasks are based on unpublished Farm Accountancy Data Network (FADN) microdata for 5839 selected Central and Eastern European farms in period 2004–2015 (which gives 70,068 cross-section observations), provided by the European Commission’s Directorate-General for Agriculture and Rural Development (DG AGRI). The use of microdata made it possible to employ accurate analytical methods, including Stochastic Frontier Analysis, which, in turn, allowed for analysis of the changes in the farms’ technical efficiency. The study uses two analytical dimensions to identify farm groups according to (i) the use of public funds to co-finance agricultural investment expenditure and (ii) the scale (comprehensiveness) of investments implemented. This study found that the initial production potential becomes a specific determinant of the right strategic decisions (in terms of scale) and of the capacity to implement comprehensive modernisation investments, including those co-financed with investment mechanisms offered under the CAP. The use of the pro-investment CAP mechanisms provided the beneficiaries with the ability to improve their efficiency at a relatively faster pace, while not encouraging them to make excessive investments (it did not result in overinvestment). Another finding is that farms that implemented comprehensive investments were the only ones that improved their technical efficiency over the period studied.

Determinants of Imports in Guinea

The objective of this paper is to examine the factors that influence Guinea's overall import demand using annual data covering the period 1980-2015. Through the Error Correction Model (ECM), we estimated the short- and long-term relationships to measure the effect of real investment expenditure, real effective exchange rate, real final consumption demand and trade policy on import demand, after testing the existence of a cointegration relationship between the different variables of the model. The results showed that in the short term as in the long term, the demand for real investment, the real demand for final consumption and the trade policy based on the adoption of the new tariff system from 2005 are the main determinants of the import request in Guinea. These results allowed us to draw some implications for economic policy.

Political Budget Cycle on The Regional Elections in Indonesia

This research aims to examine the Political Budget Cycle on The Regional Elections in Indonesia especially in Java and to give evidence related between the central government transfer and the political budget cycle authority in regions. The number of samples taken was 337 observation data during three observation periods i.e. elections years, one year before the elections, and two years before 2018, 2017, and 2015 elections. The technique of testing data used regression analysis with Eviews Software. The results of this research show that the regional elections improve grant expenditures and social aid expenditures, while investment expenditures are increased two years before the elections are held. The assumption that the incumbent candidates utilize their authority to do politicization budgets cannot be proven in this research. Besides, the relationship between the central transfer and the political budget cycle in regions cannot be proven either.