GDP Investment Research Articles

Growth Acceleration Determinants in East Asia and MENA: Empirical Evidence from Mixed Effect Models

This study is aimed at studying the main factors that determine the process of accelerating economic growth in countries located in East Asia, the Middle East and North Africa between 1996 and 2019. The sample of countries included: Algeria; Bahrain; China; Egypt, Arab Republic; Hong Kong; Indonesia; Iraq; Japan; Jordan; Korea, Republic of; Kuwait; Malaysia; Mauritania; Morocco; Philippines; Qatar; Saudi Arabia; Singapore; Sudan; Thailand; Tunisia; United Arab Emirates; Yemen. The research is based on the methodology of Haussmann, Pritchett and Rodrik (2005), according to which 3 criteria of accelerated economic growth are used: 1) to characterize the process of acceleration itself growth of GDP per capita by 2%; 2) to characterize cases of rapid growth – annual growth rates for eight years are more than 3.5%; 3) to characterize the achievement of sustainable acceleration GDP per capita is greater than the highest level after the onset of the acceleration phase. As the main determinants of accelerated economic growth, the characteristics of institutional quality (the rule of law, control of corruption and the quality of regulation), factors of accumulation (the share of gross accumulation of fixed capital in GDP and characteristics of human capital through the measurement of the duration of education and the profitability of education), the openness of trade ( share of trade to GDP) and natural resources (share of revenues from natural resources to GDP). The research was carried out using Probit, Logit and Tobit models. Logit and Probit modeling made it possible to assess the impact on the acceleration of economic growth: changes in human capital as insignificantly positive; trade openness – as a minor positive, changes in natural resources as a significant positive, increase in the share of investment in GDP – as the largest positive. An increase in institutional quality does not lead to an increase in the chances of the studied countries (the rule of law index has a slight positive effect, the corruption control index has a slight negative effect, the only positive effect that deserves attention concerns the regulation quality index). The results of Tobit modeling demonstrate a statistically significant positive impact of institutional quality, regulatory quality, rule of law, investment and natural resources on the acceleration of economic growth. Thus, the acceleration of economic growth observed in the countries of East Asia, the Middle East and North Africa is a direct result of successful policies aimed at improving institutional quality, promoting investment and harnessing the positive impact of natural resources.

Trends and Patterns of Human Capital Development and Economic Growth in Selected Sub-Saharan African Countries

The study analyses the trends and patterns of human capital development in the selected Sub- Saharan African countries during the period 1981-2020. The study variables were economic growth rate; human capital development - proxied by Human Development Index (HDI), physical infrastructure – proxied by Physical Infrastructure Index (PII), technology – proxied by Research and Development (R&D), growth of labour force, share of private investment in GDP, trade openness, financial openness and share of total government expenditure. The result indicates that the trends and patterns over the year for human capital development in SSA countries proxied

Dynamic Evaluation of Water Resources Management Performance in the Yangtze River Economic Belt

The evaluation of water resources management performance (WRMP) can provide guidance for water resources management. This paper constructs a scientific WRMP evaluation index system based on “water resources–water environment–water ecology”. Secondly, the game variable weight matter–element extension model is appropriately introduced to dynamically evaluate the WRMP level of the provinces (cities) in the YREB from 2012 to 2021, and Arcgis is used to analyze the spatial and temporal variations in the performance level of each sub-system. Lastly, a geographical detector model is used to explore the main factors influencing the WRMP in the Yangtze River Economic Balt (YREB). The main findings are as follows: (1) The overall provincial WRMP level in the YREB has been improving from 2012 to 2021, and the performance of water resource utilization (WRU) and water environment treatment (WET) are high in the east and low in the west, while the performance of water ecological protection (WEP) shows a trend of continuous improvement. (2) Compared with the model without variable weight modification, the game variable weight matter–element extension model can reflect the influence of the measured value of the index on the evaluation result as much as possible. (3) The top eight factors that have a greater impact on the WRMP level are the industrial water conservation rate, water resource development and utilization rate, water resource sustainability index, sewage diameter ratio, urban water penetration rate, industrial wastewater treatment completion rate, ecological construction and protection of the year to complete the investment in GDP, and the water ecological carrying capacity growth rate. The interaction types of each influence factor are nonlinear enhancement and two-factor enhancement.

A study on the public attention in the Belt and Road Initiative

This paper constructs residents’ attentiveness index of the Belt and Road Initiative by big data, and combines social and economic factors to study the spatial and temporal distribution of initiative attentiveness, we can find that (1) the attentiveness of the initiative will be greatly affected by large government conferences, and there is a mismatch between the areas covered by the initiative and the areas. (2) both per capita GDP and the proportion of fiscal investment in GDP have a significantly positive impact on the initiative attentiveness of residents, while CPI has a significantly negative Population size and unemployment rates do not have a significant impact on the initiative’s attentiveness. (3) the impact of initiative attentiveness has obvious regional differences. This paper breaks the habitual cognition of the attention of the initiative, and combines the social and economic conditions, and puts forward some suggestions, such as expanding the boundary of the Belt and Road, taking multiple measures to mobilize the social forces to build the Belt and Road, and treating the different policies.

The Link between Regional Trade of Kenya, Uganda and Tanzania and Sustainability of the Countries

Purpose: The purpose of this study was to investigate the link between regional trade of Kenya, Uganda and Tanzania and sustainability of the countries.
 Methodology: The study utilized a nonexperimental panel study. Panel data analysis was adopted in this study because of the sample size and the data used is cross-sectional. To test for autocorrelation, two common tests were used. That is the Baltagi and Wu’s LBI test or the Durbin Watson modified test. These tests are able to handle all sorts of panel data with minimal bias and great efficiency.
 Results: The region recorded an average 26.02% GDP investment rate. There was an average 41.99 percent and 2.03 percent growth in extra regional and intraregional trade respectively. This clearly showed that the EAC countries (Kenya, Tanzania and Uganda) have participated more in trade with other non-EAC member states than with EAC member states.
 Conclusion: From the empirical findings, this study concludes that sustainability and trade in the Kenya, Uganda and Tanzania have a relationship that varies across countries. Kenya has a significant unidirectional relationship between intra-regional trade and the growth of GDP per capita while all the other countries reveal that such a relationship does not exist.
 Recommendation: Policy recommendations suggested that Kenya, Uganda, and Tanzania presidents should implement strategies that enhance cooperation and integration. This is the case because empirical results indicate intra-regional trade contributes a huge chunk with respect to economic growth in the EAC countries.

Attracting private capital for development: Are poorer countries less efficient?

According to common measures of private capital mobilization, such as the shares of foreign direct and portfolio investment in GDP, many low-income countries perform poorly in attracting private capital flows. However, these indicators do not account for differences in economic characteristics across countries, and thus cannot provide insights on countries’ performance relative to their potential levels of private capital flows as determined by their domestic economic structure and constraints. This paper addresses this gap by using nonparametric data envelopment analysis (DEA) to empirically calculate the efficient frontier for private capital mobilization as a function of countries’ domestic enabling environment, and then assess each country’s performance relative to that of other countries featuring similar domestic conditions. Our results reveal that many low-income countries, particularly in Africa and South Asia, which do not rank high according to achieved levels of private capital flows, are in fact performing on or very close to the efficient frontier. This indicates that these countries are good performers given the limited resources available to them. Tracking the performance of countries and regions over time, we furthermore find that sub-Saharan Africa experienced the strongest increases in DEA efficiency scores between 2007 and 2018, indicating that various countries in this region were catching up with the frontier.

Spatiotemporal variation and obstacle factor diagnosis of resource and environment carrying capacity of Lanzhou-Xining urban agglomeration in the upper Yellow River, Nothwest China

Based on the PSR model, we built an evaluation system for resource and environment carrying capacity. We used the entropy weight method, the comprehensive index model and the spatial analysis function of GIS to explore the spatial-temporal dynamic of the resource and environment carrying capacity of the Lanzhou-Xining urban agglomeration, and used the obstacle degree model to identify the obstacle factors. The results showed that resource and environment carrying capacity of the Lanzhou-Xining urban agglomeration from 2005 to 2018 showed a fluctuating upward trend, which was generally at good condition. The coefficient of variation of resource and environment carrying capacity had a fluctuating upward trend, while regional differences were gradually expanding. Spatially, resource and environment carrying capacity presented a "dual-core" structure centered on the main urban areas of Lanzhou and Xining. The high-level areas were mainly concentrated in the Hehuang Valley with Lanzhou and Xining as the center and some surrounding counties, while the low-level areas were distributed in the central and southern regions of the urban agglomeration. Among them, there were spatiotemporal variations of the subsystem index. The pressure index showed a fluctuating and decreasing trend, and spatially showed a decreasing distribution characteristic from Lanzhou and Xining urban areas to the peripheral areas. The state index showed a fluctuating upward trend, and spatially showed the evolution characteristics of high in the east and west wings and low in the middle. The response index showed an upward trend, and spatially showed distribution patterns high in the east and middle, and low in the west and outside. The urbanization rate, per capita industrial wastewater discharge, domestic waste harmless treatment rate, water consumption index, and the proportion of environmental protection investment in GDP are the main obstacles restricting the improvement of resource and environment carrying capacity of Lanhzhou-Xining urban agglomeration.

BRICS: The 2008 financial crisis and economic performance

The 2008 global financial crisis (GFC) resulted in a deterioration of the economic condition in developing countries with lower growth of per capita GDP, a decline in the share of exports of goods and services in GDP, and a worsening of the external balance. After a limited initial impact, growth rates declined in all the economies and were substantially lower in all the BRICS countries in the period 2015–2019 than before the crisis. Two of them, Brazil and South Africa, experienced a drop in per capita GDP during 2015–1019. Export performance suffered and the external balance worsened for all BRICS countries. The BRICS share of world GDP increased mainly because of the rapid growth in China and to a lesser extent in India. The relative size of per capita GDP in Brazil, Russia and South Africa decreased between 2001–2007 and 2015–2019. Furthermore, the average per capita GDP in Brazil and South Africa decreased compared to that of the world. BRICS, however, fared better in trade. Both their share of world trade and the share of trade in their GDP increased. The BRICS countries have strong trade links with other developing countries and have become more stable after the GFC, thereby contributing to the performance of the global economy. There are strong growth linkages among the member countries. Trade relations are dominated by China. BRICS, however, failed to comply with G20 commitment made at the 2014 Brisbane summit to raise the rate of growth by 2% by 2018. The authors undertook a time series analysis to investigate the relationship between growth of per capita income, the share of gross fixed investment in GDP, the share of exports of goods and services in GDP, and the share of external balance in GDP. We found out that usually, but not for all BRICS countries, capital formation had a positive effect on growth, while the external deficit had a negative effect.

China’s high-tech exports in 2000—2020

The article examines the trends of China’s high-tech exports in 2000—2020, and identifies the main channels of technology acquisition by the Chinese economy. The main factors affecting China’s high-tech exports are high-tech imports, foreign direct investment in China, the country’s gross domestic expenditure on R&D, and the exchange rate. Meanwhile, technology imports, incoming foreign direct investment and China’s gross domestic expenditures on R&D are the channels of technology acquisition for the Chinese economy. Statistically significant correlation coefficients with the growth rate of the share of high-tech goods in PRC exports were obtained for the following indicators: the growth rate of the share of gross domestic expenditures on R&D in GDP, the growth rate of the share of high-tech goods in imports and the growth rate of the share of foreign direct investment in GDP. The important role of gross domestic expenditures on R&D in the development of China’s innovations should be recognized. R&D is actively applied in China in situations where it is difficult or impossible to access the necessary knowledge as part of participation in international technology exchange.

ПРОЦЕСИ ГЛОБАЛІЗАЦІЇ ТА ПРОПОРЦІЇ РОЗВИТКУ СВІТОВОЇ ЕКОНОМІКИ

The article assesses the processes of globalization, which are accompanied by the spread of imbalances in the world economy both in the context of its individual sectors and in the context of individual regions and countries. The emergence of imbalances, especially global imbalances, are caused by numerous imbalances and trends in socio-economic, financial and information technology development. For example, in the period from 1992 to 2020, the share of developed countries in global GDP decreased from 83.6% to 59.6%. The share of gross investment in GDP for the group of developed countries is lower than the global figure by 0.1-2.5%, and for the group of developing countries – higher by 0.5-7.5%, especially since 2008 In the group of developed countries, the value of gross savings in GDP is lower than in the world as a whole, fluctuating from 23.6% to 19.1% and again to 23.0%. Instead, for developing countries. the figure exceeded the global level and reached 33.3% in 2020. Lack of savings is forcing individual governments to increase debt. In the group of developed countries this indicator had a steady upward trend and increased from 69.1% in 2001 to 102.3% in 2018. In the group of developing countries in the period 2000–2020 the maximum value of the indicator was 61 , 4% in 2005, the minimum – about 34% in 2008. The growth rate is projected to reach 54.5% in 2020. A classic example of global imbalances is the data on the dynamics of the balance of payments. During 2012–2021, there was an almost twofold increase in the negative balance for the United States and an increase in the positive balance for developing countries, especially in the region of Southeast Asia. Certain disparities in the growth of volumes are inherent in financial assets in certain sectors. In general, the non-bank financial intermediation sector increased 4.5 times in terms of assets during 2002–2020, the banking sector – 2.8 times, the assets of central banks – more than 8 times, the assets of government agencies – only 1.6 times.

Empirical Evidence on Factors Conditioning the Turning Point of the Public Debt–Growth Relationship

This paper contributes to the limited literature on the factors conditioning the turning point of the public debt–growth relationship. A decade after the global financial crisis, when the debt ratio in many countries was still above pre-crisis levels, the COVID-19 pandemic again increased the pressure on public finances. It revived the debate on the ability to promote economic recovery through debt-financed government expenditure. However, more intense government borrowing increases its costs and uncertainty about future taxation policy, thus potentially disturbing private consumption, investment, and economic growth. In this paper, we estimate the thresholds of indicators on which the expenditure multiplier depends, which may already imply a risk that public debt will dampen economic growth. We use a methodology of structural threshold regression to examine the varying effects that debt might have on growth using consumption, investment, taxes, and imports as threshold variables, as well as several other factors suggested by previous contributions. The applied methodology allows for the addressing of parameter heterogeneity and endogeneity to be accounted for at the same time. The main results suggest that a positive debt effect is more likely if the conditions for a high expenditure multiplier are met, that an increase in the public-debt-to-GDP ratio is not necessarily deleterious to growth if shares of private consumption and investment in GDP are high, while the tax-revenue-to-GDP ratio is low.

ДИНАМІКА І СТРУКТУРА ІНВЕСТИЦІЙ В УКРАЇНІ – «ПАСТКА ДИВЕРГЕНТНОСТІ» ТЕХНОЛОГІЧНОГО МАЙБУТНЬОГО

Глобалізована економіка входить у складний період технологічних трансформацій в умовах Четвертої промислової революції. Дослідження провідних міжнародних організацій (UNIDO, UNCTAD, WEF) щодо концептуальних напрямів технологічних перетворень і готовності різних країн світу до майбутніх змін засвідчили їх значне розшарування. Основними драйверами виробництва майбутнього є: «технології та інновації», «людський капітал», «глобальна торгівля», «інвестиції», «інституційне середовище» і «фінансові ресурси».Україну ідентифіковано як «незрілу» країну, тобто таку, що не готова до майбутніх технологічних змін і потребує підвищеної уваги до трансформації інституційного середовища, сфери технологій та інновацій, доступу до фінансів, структури промисловості тощо. «Незрілість» української економіки зумовлено кризовим станом інвестиційної діяльності у 2010–2021 рр., коли питома вага капітальних інвестицій у ВВП у середньому становила лише 15,5%. У структурі іноземних та капітальних інвестицій за видами промислової діяльності переважають інвестиції у низькотехнологічні галузі. Питома вага іноземних і капітальних інвестицій в освіту та охорону здоров’я не перевищує 1–1,5% від загального обсягу, що в середньостроковій перспективі може знівелювати якість людського капіталу. За окреслених тенденцій у середньостроковій перспективі в Україні високою є ймовірність формування «пастки дивергентності» технологічного розвитку із загальносвітовими тенденціями формування цифрової економіки та Індустрії 4.0.З огляду на це, Україна потребує активізації державного регулювання у сфері інвестування, розроблення власної унікальної стратегії майбутнього виробництва і трансформації економіки. При цьому можливий подвійний підхід: з переходом окремих галузей на новітню парадигму технологічного зростання, а інших – на модернізацію традиційних технологій.

CONCEPTUAL FOUNDATIONS OF FINANCIAL SUPPORT FOR INCREASING THE INNOVATIVE COMPONENT OF UKRAINE’S INTERNATIONAL COMPETITIVENESS

Abstract. The article describes the dynamics of Ukraine’s position in the Global Innovation Index for 2015—2019. It is revealed that the domestic economy has a high educational and scientific potential, is able to produce various innovations in the form of ideas, scientific developments, patents; the bottlenecks of Ukraine in the state of innovative development are the state of cluster development, the share of foreign direct investment in GDP, the online service of the government, the use of information and communication technologies, the availability of joint agreements on strategic alliances, the state of domestic lending to the private sector, the export of goods of the creative economy, the volume of microfinance loans, the presence of firms offering formal training, the state of cooperation between universities and production, agreements with venture capital. It is proved that the problem of improving the financial mechanism for ensuring innovation processes in the economic system of Ukraine requires a priority solution. Developments on increasing the innovative component of increasing Ukraine’s international competitiveness are impossible without adequate financial support. The article examines the foreign experience of state support for innovation activities. It is revealed that in developed countries — the world’s leading innovation leaders, public policy provides for direct funding of scientific research and through tax measures encourages private sector R&D spending. The concept of financial support for increasing the innovative component of Ukraine’s international competitiveness, which should be implemented at the strategic, tactical and operational levels, is proposed. To ensure a sustainable level of international competitiveness of the country through increasing the innovation component, it is important to implement a system of measures to monitor threats even at the stage of their origin and prevent the spread of their negative impact. Therefore, the methods and tools for implementing the proposed concept contain components of threat prevention: economic (tax incentives; transfers ;direct budget investments; grants; concessional lending; cooperation with foreign institutions, etc.), organizational (development of innovative infrastructure; consulting assistance; personnel support; creation of clusters using the potential of education, business, government, public; creation of regional clusters with innovation and industry production, etc.), institutional (techno parks, business incubators, analytical centres, etc.), regulatory (strategies, concepts, plans, programs) and social levers (conducting business trainings, implementing joint social projects, etc.). Keywords: innovation, Global Innovation Index, financial support for innovative development, international competitiveness, cluster. JEL Classification O11, O19, O16, O33, E62, F20 Formulas: 0; fig.: 2; tabl.: 2; bibl: 16.

THE ASSESSMENT OF FISCAL DEFICIT ON ECONOMIC GROWTH IN TRANSITION COUNTRIES OF SOUTH-EASTERN EUROPE

The overall aim of this research is to observe the impact of fiscal deficit on economic growth in the transition economies of South-eastern Europe. The fixed-effects and dynamic linear regression were used to carry out this revision. The data used in this revision are quantitative data annually and cover the period 2005–2019. The outcomes detect that there is a confident and statistically important effect among the fiscal deficit and economic growth for the transition economies of Southeast Europe, supporting the Keynesian theory. Furthermore, the outcomes of this research show that public debt to GDP, foreign direct investment in GDP, exports, and imports in GDP have an important effect on economic growth. Findings have shown that public debt and imports have a positive influence on economic growth, unlike exports and foreign direct investment, which showed an adverse effect on economic growth. Moreover, for other additional factors, the inflation rate, the employment rate, and the real interest rate, the results of the study do not show any significant consequences on economic growth. The research also contributes in the macroeconomic aspect to the opening of discussions among the relevant stakeholders, including those coming from the policy-making area.

Investment policy of the state as a tool for economic growth of the country

The investment policy of the state is an important tool for diversifying the economy. This paper analyzes the share of capital investment in GDP, the index of fixed capital investment for 2015–2019, and assesses the investment policy determinants of the state of developed countries and emerging countries. Correlation-regression analysis methods were used to determine the relationship between real GDP, the share of industrial output in GDP, and the index of fixed capital investment in countries with economies in transformation. As a result, it was determined that in the vast majority of countries studied, the increase in investment in fixed assets contributes to the acceleration of economic growth, and the level of economic growth determines the investment potential of countries; that the heterogeneity of the impact of investment on the level of economic growth in countries with transformational economies is due to their raw material orientation, insufficient level of validity and predictability of the implemented investment policy of the state; the state’s investment policy is an important tool for ensuring macroeconomic stability and stimulating economic growth in a recession. Using the data of the panels for the period from 2015 to 2019, it is substantiated that the creation of conditions for macroeconomic balance will increase business activity of enterprises, which is the result of purposeful influence of state investment policy on economic processes by ensuring quality transformation and innovation of the national economy. The obtained results show that the level of influence of the state investment policy on the level of economic growth varies significantly depending on the level of development of financial institutions in the country and the infrastructure of the financial market.

Autonomous demand and the investment share*

This paper looks at the effect of demand shocks on the investment share of the economy. Using panel data on 20 OECD countries, we show that the rate of growth of autonomous demand (exports, public spending, and housing investment) is positively correlated with subsequent values of the share of business investment in GDP. By means of an instrumental-variables (IV) strategy, we confirm a positive effect of demand dynamics on the business investment share. We instrument autonomous demand with (i) US demand for imports interacted with exposure to trade with the US, (ii) openness to trade of a country's main export destinations, and (iii) military spending. A permanent 1-percentage-point increase in autonomous-demand growth raises the investment share by 1.5 to 1.9 percentage points of GDP in our preferred panel IV specification. Our results provide empirical support for the view that the influence of aggregate demand on capital accumulation can be a major source of hysteresis. Our results are inconsistent with the canonical New Keynesian three-equations model, the Neo-Kaleckian model with flexible equilibrium utilization, and Classical–Marxian growth models. A positive influence of autonomous demand on the investment share is instead compatible with demand-led models in which capacity adjusts to demand in the long run.

Autonomous demand and the investment share

This paper looks at the effect of demand shocks on the investment share of the economy. Using panel data on 20 OECD countries, we show that the rate of growth of autonomous demand (exports, public spending, and housing investment) is positively correlated with subsequent values of the share of business investment in GDP. By means of an instrumental-variables (IV) strategy, we confirm a positive effect of demand dynamics on the business investment share. We instrument autonomous demand with (i) US demand for imports interacted with exposure to trade with the US, (ii) openness to trade of a country's main export destinations, and (iii) military spending. A permanent 1-percentage-point increase in autonomous-demand growth raises the investment share by 1.5 to 1.9 percentage points of GDP in our preferred panel IV specification. Our results provide empirical support for the view that the influence of aggregate demand on capital accumulation can be a major source of hysteresis. Our results are inconsistent with the canonical New Keynesian three-equations model, the Neo-Kaleckian model with flexible equilibrium utilization, and Classical–Marxian growth models. A positive influence of autonomous demand on the investment share is instead compatible with demand-led models in which capacity adjusts to demand in the long run.

Socio-economic impact of closing the rural-urban gap in pre-tertiary education in Ghana: context and strategies

The Study sampled the views of 120 teachers across 30 schools in a rural school district and analysed documentary data across the school, district and national levels to investigate the socio-economic impact of the rural-urban inequality in pre-tertiary education in Ghana. The Study identified a 50 % loss in human capital or productivity annually in Ghana due to the rural-urban gap in pre-tertiary education. The Study estimates that an additional 2% of GDP investment into rural education improvement annually for 12 years will eliminate the rural-urban socio-economic gap in Ghana. However, the real GDP must grow above 8.5 %, and the additional investment must hinge on rural, equity and context-based strategies. The Study concludes that closing the gap will double Ghana's GDP within a decade, aside from the spillover benefits of improved social and health wellbeing of the people.

Forecasting of Capital Investments into the Fixed Capital in Regions Until 2024: Methods and Results of Territorial Forecast for Russia

The aim of the study is to improve the methodology of forecasting of the territorial proportions of fixed capital investments within the medium-term forecast of the social and economic development of Russia. The author proposes a method of decomposition of predicted national indicators at the regional level which takes into account the prospects of attracting private investments and implementing large investment projects with the state participation. The researcher describes the system of factors determining the interregional differences of private investors’ activity and forming the metric basis of complex estimation of the regional investment attractiveness using the official statistics. The paper presents the list and methods for estimating the indicators characterizing the production, financial, consumer, institutional, innovative, infrastructure and natural-resource components of the region’s investment potential, as well as social, environmental and technological regional investment risks. The paper shows the opportunities of using the functional relationship for the medium-term forecasting between the integral regional indicators of the investment attractiveness and activity. The national forecast has been decomposed by calculating the individual regional deviations of the forecasted national growth rate of fixed investment in Russia for 2019–2024. The developed variants of perspective territorial proportions confirm the possibility to achieve the national target of the forecast presented as a 25 percent share of the fixed investment in GDP of Russia and reflect the core perspective destinations of development for different parts of the country – the accelerated development of the Far East, the Arctic zone, the largest metropolitan areas of Russia, as well as the provision of national security in the geostrategic regions of the North Caucasus and Southern Federal Districts. The approach is designed to support the administrative decisions concerning the spatial development by linking regional and investment policy priorities.

Testing the Predictability of U.S. Housing Price Index Returns Based on an IVX-AR Model

We use ten common macroeconomic variables to test for the predictability of the quarterly growth rate of house price index (HPI) in the United States during 1975:Q1–2018:Q2. We extend the instrumental variable based Wald statistic (IVX-KMS) proposed by Kostakis, Magdalinos, and Stamatogiannis to a new instrumental variable based Wald statistic (IVX-AR) which accounts for serial correlation and heteroscedasticity in the error terms of the linear predictive regression model. Simulation results show that the proposed IVX-AR exhibits excellent size control regardless of the degree of serial correlation in the error terms and the persistency in the predictive variables, while IVX-KMS displays severe size distortions. The empirical results indicate that the percentage of residential fixed investment in GDP is fairly a robust predictor of the growth rate of HPI. However, other macroeconomic variables’ strong predictive ability detected by IVX-KMS is likely to be driven by the highly correlated error terms in the predictive regressions and thus becomes insignificant when the proposed IVX-AR method is implemented. Supplementary materials for this article, including a standardized description of the materials available for reproducing the work, are available as an online supplement.