Macroeconomic Approach Research Articles

Macroeconomic determinants of wine prices

PurposeThe purpose of this paper is to identify the macroeconomic determinants of fine-wine prices and estimate their impacts.Design/methodology/approachThe author models the Liv-ex fine-wine price indices with the macroeconomic variables of emerging and developed markets on a monthly basis from 1996 to 2015.FindingsThe demand from emerging markets plays a key role in fine-wine pricing and, more precisely, in the price fluctuation of prestige Bordeaux wines. Furthermore, the continuous weakening of the US dollar in real terms favors an increase in fine-wine prices. Since 2011, the slowdown in economic growth in emerging markets, followed by the depreciation of national currencies, has negatively affected the luxury wine market. Along with the process of financialization in the fine-wine market, prices have become more volatile. Factors such as money supply, real interest rates and the growth of investment funds have started to show their influence on fine-wine pricing.Originality/valueComplementary to the hedonic price modeling, this research can provide an analysis to wine-price modeling and forecasting within the macroeconomic approach.

Urban Economic Openness and IPO Underpricing

This paper represents a first attempt to employ a macroeconomic approach to explain the high and varying IPO underpricing within a single emerging market. We examine the empirical impact of trade openness on the short-run underpricing of initial public offerings (IPOs) using city-level data. Particularly, we argue that urban economic openness (UEO) has a significant impact on the productivity and on prices of both direct and indirect real estate due to productivity gains of companies in more open areas. This in turn positively affects the firm’s profitability, enhancing the confidence in local real estate markets and future company performance, hence decreasing the uncertainty of the IPO valuation. As a result, issuers have less incentive to underprice IPO shares. We use a sample of Chinese real estate IPOs, which offer a suitable laboratory thanks to their strong geographic investment patterns focused locally and a country with a highly heterogeneous openness across regions. Controlling for traditional firm- and issuing-specific characteristics of IPOs that are used for developed markets and Chinese-related features (i.e. listing location and state ownership), we find the evidence that companies investing in economically more open areas experience less IPO underpricing. Our results show great explanatory power and are robust to different specifications.

Generalized Matching Functions and Resource Utilization Indices for the Labor Market

In the U.S. labor market, unemployed individuals who are actively looking for work are more than three times as likely to become employed than those individuals who are not actively looking for work and are considered to be out of the labor force (OLF). Yet, on average, every month twice as many people make the transition from OLF to employment than make the transition from unemployment to employment. Based on these observations, we have argued in Hornstein, Kudlyak, and Lange (2014) for an alternative measure of resource utilization in the labor market, a nonemployment index (NEI), that is more comprehensive than the standard unemployment rate. In this article, we show how the NEI fits into recent extensions of the matching function (which is a standard macroeconomic approach to model labor markets with frictions), how it affects estimates of the extent of labor market frictions, and how these frictions have changed in the Great Recession.

Adoption of mobile money and financial inclusion: a macroeconomic approach through cluster analysis

ABSTRACTThis paper investigates the patterns of adoption of mobile money in emerging and developing countries. Mobile money is a mobile-based service, which provides access to low-cost financial services for people excluded from the banking system. It is designed to overcome the difficulties related to entering the banking system and the unavailability of banking infrastructure. Drawing on macroeconomic comparative and case study analysis conducted by practitioner experts, this study takes a wide macroeconomic approach to the adoption of mobile money adoption in 2011 and 2014, based on the alternative strategy of cluster analysis. We exploit the new technology diffusion frameworks to evaluate dissimilarity among groups of countries with similar levels of adoption of mobile money. We investigate whether adoption of mobile money services are highest in countries where access to formal banking services is lowest. Our analytical results support the predictions in the technology diffusion literature and nuance the potential of mobile money as a tool to counter banking exclusion.

Konkurencyjność zamówień publicznych w Polsce na tle innych krajów Unii Europejskiej

Competitiveness of public procurement market is rarely subject of scientific economic investigations. The Polish public procurement law takes into account mechanisms of competing economic units, however the main goal of contracting authorities is to conduct a public procurement procedure in the way to enable a realization of public contract. The work analyses legal framework for public procurement in relation to the Polish market using data coming from sources: published by the Bulletin of Public Procurement (values less than the EU thresholds) and Tenders Electronic Daily (contracts with values higher than the EU thresholds) according to three groups of contracts: supplies, construction works and services in the time periods 2000–2014 and 2010–2013, respectively. Empirical results, based mainly on the average number of bids for each tender, prove that Poland is still at the end of rank list of the EU countries. Macroeconomic approach to the subject of competitiveness of public procurement market may be misleading because the public procurements play not only economic function, but mainly social and environmental ones.

Local Support Mechanisms for Entrepreneurship: The Approach of Local Development and Innovation Institutions

Purpose: The growth potential of SMEs entrepreneurship is examined at regional and local level, initially on a Global scale and then for the case of Greece. Additionally, the possibility of an economic development policy beyond the macroeconomic approach is examined, focusing on business growth and competitiveness in the light of meso and micro-economic policy approach. Design/methodology/approach: This research leads to the proposal of building knowledge mechanisms and direct and efficient systematic development and innovation at the local level, particularity during a time of economic crisis. The establishment of Institutes of Local Development and Innovation (ITAK) is primarily geared towards promoting innovative entrepreneurship and extroversion of locally installed businesses. As part of the proposal for the establishment of ITAK, a questionnaire was developed - a tool to initially measure companies' opinions on the need for outside help in the macro, meso and micro environment, in order to demonstrate that ITAK local-level structures could be developed. Findings: The survey results were accrued via the analysis of questionnaires distributed to companies. The results of the questionnaires in the micro-environment in relation to those in the macro-environment shows a lower tendency to change business, which may be because managers perceive economics several times more in macroeconomic terms rather than in meso and micro economic (terms). Research limitations/implications: The restrictions of this particular research are the small sample of study of businesses in one country (Greece); this is because the approach of study, which is quantitative-qualitative, limits analysis to small data sets in the current phase. Originality/value: The results in the micro-environment, in relation to those at macro-environmental, shows a lower tendency to change business, something which may be because managers perceive economics several times more in macroeconomic terms, rather than in meso and micro economic (terms).

The effects of employee and country characteristics on employment commitment in Europe

ABSTRACTThis article aims to explain variation in employment commitment among employees in Europe with individual- and country-level factors. Country-level factors refer to cultural, institutional and macroeconomic factors, while individual-level factors refer to characteristics of employees and their current jobs. The cultural, institutional and macroeconomic approaches have rarely been taken account of when studying the employment commitment of employees. The data are based on Round 5 of the European Social Survey, collected in 2010 (N = 26 countries and N = 18,064 employees) and analyzed by means of a multilevel regression analysis. Results indicate that being female, having a higher tertiary education, displaying a high level of job discretion, perceiving low job insecurity and perceiving one’s pay as adequate increased employment commitment. Of the country-level factors only the economic prosperity of a country, measured by Gross National Income (GNI) per capita, positively affected employment commitment. The GNI seemed to explain the relationship between country-level self-transcendence values and employment commitment.

Generalized Matching Functions and Resource Utilization Indices for the Labor Market

In the U.S. labor market unemployed individuals that are actively looking for work are more than three times as likely to become employed as those individuals that are not actively looking for work and are considered to be out of the labor force (OLF). Yet, on average, every month twice as many people make the transition from OLF to employment than do from unemployment. Based on these observations we have argued in Hornstein, Kudlyak, and Lange (2014) for an alternative measure of resource utilization in the labor market, a non-employment index, which is more comprehensive than the standard unemployment rate. In this article we show how the NEI fits into recent extensions of the matching function which is a standard macroeconomic approach to model labor markets with frictions, how it affects estimates of the extent of labor market frictions, and how these frictions have changed in the Great Recession.

Generalized Matching Functions and Resource Utilization Indices for the Labor Market

In the U.S. labor market unemployed individuals that are actively looking for work are more than three times as likely to become employed as those individuals that are not actively looking for work and are considered to be out of the labor force (OLF). Yet, on average, every month twice as many people make the transition from OLF to employment than do from unemployment. Based on these observations we have argued in Hornstein, Kudlyak, and Lange (2014) for an alternative measure of resource utilization in the labor market, a non-employment index, which is more comprehensive than the standard unemployment rate. In this article we show how the NEI fits into recent extensions of the matching function which is a standard macroeconomic approach to model labor markets with frictions, how it affects estimates of the extent of labor market frictions, and how these frictions have changed in the Great Recession.

Leaning against the Wind Policies on Vietnam’s Economy with DSGE Model

The global financial crisis of 2007–2008 had a negative impact on many countries, including Vietnam. Many policies have been applied to stabilize the macro-economic indicators. However, most of them are based on old qualitative models, which do not help policy makers understand deeply how each one affects the economy. In this paper, we investigate a quantitative macro-economic approach and use leaning against the wind policies with the Dynamic Stochastic General Equilibrium model (DSGE) to find a better way to understand how policies stabilize the Vietnamese economy. Based on the framework of Gerali et al., we calibrate the hyper-parameter for Vietnam financial data and do the comparison between the standard Taylor rule and the cases in which we add asset price and credit elements. The results show that the credit-augmented Taylor rule is better than the asset-price-augmented one under the technology shock and contrary to the cost-push shock. Moreover, the extended simulation result shows that combining both asset-price and credit rules on the model is not useful for Vietnam’s economy in both types of shock.

Crises in Economic Thought, Secular Stagnation, and Future Economic Research

Crises in Economic Thought, Secular Stagnation, and Future Economic Research

Ukrainian

Ukrainian

Currency Invoicing and Trade

For many developing and emerging economies, annual inflows and outflows of trade can surpass the countries total GDP. Most of these flows are tied to contractual agreements denominated in a foreign currency. Aggregate risk from exchange rate fluctuations through this trade channel alone should be significant, especially when coupled with long delays in payments for international shipments. Papers in the literature of New Open Economy Macroeconomics approach this problem by assuming that traded goods are priced exclusively in either the destination markets prices (Local Currency Pricing or LCP) or in the producers markets (Producer Currency Pricing or PCP). This convention is helpful for modeling firm behavior, but at the country level, importers and exporters tend to choose different pricing schemes. e.g. firms in the U.S. that trade abroad tend to price all of their transactions in dollars, so that importers use LCP, and exporters use PCP. This paper accommodates the mixed-pricing that we see in the data, along with a well-documented delay in shipments between intermediate firms. These are incorporated into a standard two-country framework with incomplete markets and trade in bonds, and solved globally. We find that when all trade is denominated in one currency, (1) monetary shocks abroad are muted and (2) consumers will lend in the currency that denominates their trade, and will borrow in the one that does not. The preliminary findings are consistent with the data.

Lessons from co-impacts assessment under the Mitigation Action Plans and Scenarios (MAPS) Programme

The MAPS Programme has been active in Brazil, Chile, Colombia and Peru in supporting the development of an evidence base to inform the processes involved in climate mitigation policy-making. The programme combines detailed quantitative analysis with an extensive stakeholder engagement process to provide policy and decision makers with the information required for long-term climate mitigation planning.In recognition of the critical need to consider the developmental context and agenda in climate policy-making, the projects undertaken in these countries have experimented with various types of assessments of developmental impacts at both the macro and micro levels. These impacts have been collectively termed co-impacts to reflect the fact that these may be either positive or negative. In this article the value and challenges associated with co-impacts work for climate mitigation policy are considered. The value of including co-impacts analysis in the MAPS processes included increased stakeholder buy-in, making the case for mitigation action, informing INDCs and the prioritization of particular mitigation actions. Challenges include those associated with obtaining locally relevant data, the selection and operation of appropriate macro-economic models and analytical approaches and working with multidisciplinary teams.The article concludes by making some suggestions to optimize co-impacts work, through reference to other bodies of literature. The authors highlight that this article is situated within a dominant approach to climate mitigation policy work in developing countries, which implicitly places the non-climate benefits of any action as secondary to the primary benefit of climate change mitigation and constructs an artificial separation of policy formulation and implementation. Practitioners are encouraged to reflect on the implications of these considerations in future efforts.Policy relevanceOne of the primary challenges to advancing climate mitigation policy in developing countries is that of perceived relevance: near-term development priorities are overwhelming. Identifying, understanding and engaging with the co-impacts of mitigation actions has emerged as one way of addressing this challenge. Although still at an experimental phase, experience with co-impacts analysis in the MAPS countries provides some useful lessons in how to develop this area of work.

Factors of Growth of tax Revenues: A Macroeconomic Approach

Understanding the nature of key macroeconomic indicators and their behavior depending on the overall geo-economic background is decisive in the analysis and forecasting of tax revenues. This makes it necessary to conduct a detailed analysis of the factors determinig budget-forming tax revenues. The analysis of the tax revenues includes socio-economic, legal and tax administration factors. These factors have a differential impact on each budget-forming tax — profit tax, value added tax (VAT), mineral extraction tax (MET), personal income tax, excise taxes. The overall negative dynamics of revenues to the consolidated budget of the Russian Federation developed as a result of a serious reduction of MET, which confirms the strong resource dependence of the Russian economy. An ambiguous effect on the profit tax had the overall growth of the price level, the dynamics of industrial production and foreign trade and the ruble exchange rate. The increase in VAT revenues was achieved as a result of cumulative effects of inflation growth and increasing trade turnover in real terms. The decisive economic factor in the dynamics of such type of tax revenues as the excises is the consumer activity, but a major effect on its dynamics had a change in tax rates on excisable goods. Stable growth of tax revenues contributes to the Federal Tax Service of Russia measures aimed at combating the use of unfair methods of competition through the use of legislative gaps for tax evasion. FTS radically changed the approaches to the control procedures to reduce the interaction conflicts with taxpayers. In order to implement and improve the conciliation procedure FTS continues the development of the new mechanisms for pre-trial settlement of tax disputes, including tax monitoring. Changes of the price situation on the world markets, the weakening of external demand in key energy sources, the national currency devaluation is perceived by the tax authorities as the scenario conditions of the development of the economy, but the effective tax administration demonstrates the ability of budget to withstand financial and economic shocks

A New Era of Monetary Policymaking in the Light of the Post-Crisis Challenges

Abstract. Within appearing the global financial crisis, standard macroeconomic approaches, in particular, monetary policies conducted prior to global recession have become targets of harsh criticism because of their weakness against these imbalances. The recession was a consequence of multiple factors including excessive private and public debt, poor financial surveillance and incapability of institutional structure to cope with potential risk sources. However, due to the nature of the recession, monetary authorities have been accused much more because of uncertainties relating to their mandates, weakness of their precautionary signaling and also time-inconsistency problems of policy transmission channels.In addition, because of limited effects of both conventional and unconventional measures, the urgent need to revise mandates of monetary authorities and totally the nature of monetary policy is the topic attracting significant attention. In this context, reassessment of cardinalshifting in monetary policies and implementation of fundamental realignments to the conventional central banking conception can be noted as challenges of post-crisis period. Keywords. Monetary policy, Central banking, Financial crisis, Unconventional measures, Financial stability. JEL. E52, E58, G01.

Energy Challenges for Sustainable Development: How to Avoid a Collapse ?

Energy makes a much more substantial contribution to economic growth than most conventional macro-economic approaches acknowledge. This issue is all the more crucial since several “weak signals” (of varying degrees) suggest that time is running out for a number of Southern countries to eradicate poverty and prepare their populations to deal with the damage done by both the depletion of natural resources and climate change. Unless a decisive shift towards circular economies occurs, the prospect that Southern societies could collapse and Northern societies could face long-term impoverishment can no longer be ruled out.JEL Classification: O13, Q01, Q54.

Macroeconomic Approach of the Determinants of Stock Price Movements in Jordan

<p>This study aimed to test the effect of macroeconomic factors on the movements of stock prices of Jordanian industrial companies listed in Amman Stock Exchange (ASE) in order to provide empirical evidence about the determinants of the movements of stock prices. To achieve this objective, all the 77 Jordanian industrial firms listed at ASE for fifteen years from 2000 to 2014 have been selected, resulting in 1054 firm-year observations. The unbalanced pooled cross-sectional time series multiple least square regression method has been used to present data analysis. while the experiential results showed significant negative effect of two of the macroeconomic factors, namely, interest and inflation rates, on the movements of the Jordanian industrial companies stock prices, results found that the effect of money supply and GDP on the movements of stock prices were significantly positive. These results are consistent with (Mukherjee and Naka, 1995, Zhao, 1999 & Udegbunam and Eriki, 2001, Al-Qenae, Li & Wearing, 2002, Dimitrios Tsoukalas, 2003 , Ibrahim 2003; Chaudhuri and Smiles, 2004)</p>

A Rationale Supporting a Decision by Pope Francis and the Arch Bishop of Canterbury to Remove All Economic Advisors from Any Advisory Role Concerning Church Proclamations on Income Inequality, Unemployment and Social Justice: 'Economics' is Not a Positive Science, But an Ethical System Based on Benthamite Utilitarianism

A Rationale Supporting a Decision by Pope Francis and the Arch Bishop of Canterbury to Remove All Economic Advisors from Any Advisory Role Concerning Church Proclamations on Income Inequality, Unemployment and Social Justice: 'Economics' is Not a Positive Science, But an Ethical System Based on Benthamite Utilitarianism

Open Economy, Institutional Quality, and Environmental Performance: A Macroeconomic Approach

As the subject of how economic development affects the quality of the natural environment has gained great momentum, this paper focuses on examining the extent to which the openness of a market economy and the quality of the institution affect environmental performance. The majority of the current studies focus on the Environmental Kuznets Curve and the level of economic growth. This paper addresses this question by relating environmental (“Environmental Performance Index”) to macroeconomic (Gross Domestic Product per capita, “Open Markets Index”) and governance indicators (“Worldwide Governance Indicators”). The sample consists of 75 countries, including all G20 and EU members, comprising “more than 90% of global trade and investment”. Findings show that the Environmental Performance Index is positively correlated to each of the (institutional) indicators, so as to confirm that the selected indices are consistent with previous studies, suggesting that environmental performance increases in line with economic development and that good governance increases a country’s levels of environmental protection. By applying factor analysis, an empirical model of the Environmental Performance Index is estimated, suggesting that there is a significant positive correlation between a country’s economic growth, the openness of an economy, high levels of effective governance, and its environmental performance.