Macroeconomic Approach Research Articles

Hybrids, Political Economy, and Macroeconomics

In this piece I comment on Nancy’s Folbre’s David Gordon Memorial Lecture for the 2012 Allied Social Science Associations meetings, focusing on the strengths of how she combines Marxian sensibilities with neoclasscial analytical tools, the advantages of her proposed definition of political economy, and extending her call for developing a macroeconomic approach to human capital. JEL codes: B50; E11; E24

ANÁLISE SOBRE VARIAÇÃO DA TAXA REFERENCIAL DA ECONOMIA NACIONAL <br><strong>DOI:10.7444/fsrj.v4i1.99</strong>

O propósito central deste estudo é analisar um modelo econométrico para fins preditivos acerca da taxa de juros utilizada como referência na economia brasileira, a qual consiste na taxa Selic-Efetiva, a fim de atestar a viabilidade em efetuar previsões sobre variações desta taxa no curto prazo.
 Desta forma, são detalhadas as principais variáveis macroeconômicas que afetam a taxa Selic-Efetiva, como as variações sobre preços de commodities agrícolas e de energia, nível de produção industrial nacional, taxa de câmbio e dívida líquida do setor público.
 A abordagem macroeconômica moderna descreve a importância do Banco Central na consecução de suas metas para manutenção da estabilidade econômica, dentre estas, convergir a taxa de juros verificada com a meta estabelecida pelo Comitê de Política Monetária (COPOM) para a taxa Selic.
 Ademais, o presente trabalho visa explanar a relevância em se prever, com razoável grau de acuracidade, a taxa de juros referencial da economia brasileira, podendo o modelo proposto ser utilizado no suporte para tomada de decisão para estratégias de investimentos e ferramenta adicional no monitoramento acerca da consecução dos objetivos de políticas macroeconômicas.

ANÁLISE SOBRE VARIAÇÃO DA TAXA REFERENCIAL DA ECONOMIA NACIONAL

This study’s main objective is to analyse an econometric model for forecasting purposes concerning the interest rate which is adopted as standard reference within the Brazilian economy, namely, the Actual-Selic rate, so as to verify the feasibility of performing short term predictions as to its variations. Thus the major variables that impact the Actual-Selic rate, such as price variations of agricultural and power commodities, national industrial production level, exchange rate and public sector net debt, are detailed. The modern macroeconomic approach describes the relevance of the Central Bank upon achievement of its goals so as to maintain the economic stability, amongst which lies the convergence of verified interest rates with the Selic rate target, as set forth by the Monetary Policy Committee (COPOM). Furthermore, this study poses to explain the relevance in forecasting, with a reasonable level of accuracy, the benchmark interest rate of Brazilian economy. The proposed model may be used to support decision making concerning investment strategies and as an additional tool for the monitoring of the achievement of macroeconomic policy objectives.

Micro and Macroeconomic Approaches Regarding Foreign Direct Investments Throughout Offshore Entities

Offshore companies represent a key-link of the current operations of the multinationals, banking institutions and, even, of the small and medium enterprises (SME) and are able to perform complicated tasks in a special business environment. These jurisdictional entities offer, mainly, fiscal benefits, comparative with other types of jurisdictional entities. The advantages are targeting the enterprises or companies which establish their social headquater, or to individuals who are resident in these territories. The final scope is represented by attracting the expanding companies, by attracting capital and stimulating the rise of the necessary activities to ensure economic and social balance, so desirable in the economic games of win-win type. Therefore, we are in the presence of fine plaition of micro approach with macroeconomic one. On the first side, the desire of transnationals to obtain profits with less efforts and investments and, on the other hand, globalization (influenced by these entities) pursuit the shrinkage of all markets and businesses all around the world, inclusive using the offshores centers (or ,,fiscal paradises”). These institutions of free market are actioning both on the developed and developing countries. The last ones are affected by the imposibility of tax collect to the national budget and in the infrastructure investments. At the same time, using offshore companies in offshore zones, the multinationals gain neloial competitive advantages over the other companies, unable to spread theirs economic power and influence. We may speak about a sound offshore industry , which has turned into global business and range of activities. We try to underline the importance of the general development process in the actual world and, first of all, the direct connection beteen investments and offshore activities, in the benefit of either parties. It is an organic liaison between investments and offshore entities, including transitional hard developing countries as Romania.

INTRODUCTION: DYNAMIC STOCHASTIC GENERAL EQUILIBRIUM MODELLING AND THE STUDY OF ASIA‐PACIFIC ECONOMIES

INTRODUCTION: DYNAMIC STOCHASTIC GENERAL EQUILIBRIUM MODELLING AND THE STUDY OF ASIA‐PACIFIC ECONOMIES

A macroeconomic approach to the income-tax work-effort relationship

In this paper, we analyse the dynamic relationship between hours worked per employee (per self-employed) and marginal income tax-rate shocks in terms of both a comparative-dynamics model and a stochastic general equilibrium econometric model. The econometric model is estimated for Germany, UK and USA over the post-1960 period using the GMM estimation technique. Estimates in both models show that increases in the marginal income-tax rate exert negative effects on hours worked by both employees and the self-employed, but the response of the employees who are subject to tax withholding is stronger than the response of the self-employed.

SOME MONETARY LESSONS FROM THE GERMAN ECONOMISTS OF THE PAST:LIGHTS AND SHADOWS IN THE COLLECTIVE MEMORY

What is stopping Governments from establishing a new economic order? What are the principal stages on the way to a truly international payment system? Would an international currency unit, to be issued by a “Central Bank of Central Banks”, remove or cure many instances of disorders? furthermore, what advice have Germanophone economists of the past centuries provided to help us avert a crisis? How can their recommendations be reformulated and/or revived? The paper deals with these concerns among others and mostly adopts a Quantum theoretical macroeconomic approach to analyze the (forgotten) contribution of the German economists in this respect. In addition, there is enough evidence to claim that ignorance of the findings of economic thought and history has led to unbelievable mistakes in the structure of the modern international payment system.

Electricity saving potential of the power generation industry in China

This paper analyzes the electricity saving potential of China’s power generation industry using the macroeconomic approach. In order to forecast future electricity saving potential, we apply cointegration techniques combined with risk analysis model to estimate future (APRauxiliary power ratio) of the national power plant. It is found that power structure, technology and AUH (annual utilization hours) of power equipment are all important macro-factors that affect APR. The high proportion of thermal power is the main reason for the high APR. However, the improvements in technology and AUH help to reduce the APR. Therefore, implementation of the “Replacing Small Units with Large ones” policy and promotion of large-capacity high-parameter units have contributed to electricity conservation in China’s power generation industry. With constraints of relevant energy policies, the scenario analysis concludes that electricity saving potential at the power generation side appears more significant and could reach over 40 TWh (terawatt hour) in 2020. Finally, using the results of the scenario analysis, future policy priorities for energy conservation in China’s power industry are assessed in this paper.

Global health in 2012: development to sustainability

In 2012 there will be a major strategic shift in global health, away from development and towards sustainability. Since 2000, the Millennium Development Goals (MDGs), driven by a macroeconomic diagnosis of global poverty, have focused on investment in a small number of diseases as the most effective approach to decrease poverty. Institutions such as the Global Fund to Fight AIDS, Tuberculosis and Malaria, Roll Back Malaria, and GAVI have been created to respond to that diagnosis. But this approach is now delivering diminishing returns. The AIDS epidemic has peaked, both in terms of deaths and new infections, non-communicable diseases (NCDs) are increasing, and the climate change crisis is an ever present threat. India is a good example of a country facing these new challenges. It has an NCD epidemic and yet still endures the highest number of maternal and child deaths in the world. The old macroeconomic approach to solving poverty-related disease is simply insufficient to meet the demand of countries. At the same time, institutional tensions are growing—the Global Fund is in difficulty and WHO is facing a financial emergency. And there are new concepts forcing their way into global health agendas—such as integration and accountability. There is a view among some development experts that health has had its decade. It is time now for other sectors to take centre stage, such as agriculture or energy. All these issues will come into sharp focus later this year at Rio+20, the UN Conference on Sustainable Development in Rio de Janeiro, Brazil (June 20–22). The summit marks the 20th anniversary of the 1992 UN Conference on Environment and Development and the tenth anniversary of the 2002 World Summit on Sustainable Development. World leaders, stakeholders from the public and private sectors, as well as representatives from environment and development communities will convene to define a new roadmap towards economic growth, social equity, and environmental protection. The objectives of Rio+20 will be to review progress on sustainable development from previous summits, identify gaps in implementation, renew political commitment on past action plans, and find ways to safeguard the planet from future destruction from emerging threats. The two core themes will be a move towards a green economy (in the context of sustainable development and poverty eradication) and strengthening the institutional framework for sustainable development, which to date has not fulfilled its potential because of a lack of coordination and coherence. The zero draft outcome document published last week lists seven priority areas for Rio+20. They are: job creation, food security, water, energy, sustainable cities, oceans, and disasters. There will be ten new sustainable development goals to be decided by governments just before the meeting—and introduced in 2015 as part of the post-2015 UN development agenda. There will be no legally binding agreements and countries will set their own targets, working voluntarily towards them. Disappointingly, health is hardly mentioned in this draft. It is vital that this major shift from development to sustainability is governed by a clear set of principles and values. One report to draw from is The Lancet's 2010 Commission titled: The Millennium Development Goals: a cross-sectoral analysis and principles for goal setting after 2015. The authors of this multidisciplinary analysis represent many different sectors, and explain that much more could have been achieved if the MDGs were better integrated. They conclude that future goals should be built on a shared vision of development across the lifecourse, and suggest five principles: holism, equity, sustainability, ownership, and global obligation. Their report exemplifies the positive contribution the health community can make to sustainability after 2015. The health sector has a vital part to play during the next 12 months. We need to make a strong case for health as part of sustainable development and future sustainable development goals—to protect the gains of the past decade and ensure that the unfinished agenda of the past decade is continued. However, we also need to embrace a new and emerging health agenda—one that includes NCDs and climate change. And we must sharpen our advocacy for health as we rightly integrate other sectors into this broader vision. We have an extraordinary opportunity to re-vivify global health. But we are unprepared to do so. We must identify the lessons learned from the MDGs, as well as bringing to the fore evidence for new threats and emerging challenges. The Lancet plans to be a strong partner in shaping this future health and sustainability agenda—towards finding equitable solutions to improve the health and lives of people worldwide.

Randomizing world trade. II. A weighted network analysis

Based on the misleading expectation that weighted network properties always offer a more complete description than purely topological ones, current economic models of the International Trade Network (ITN) generally aim at explaining local weighted properties, not local binary ones. Here we complement our analysis of the binary projections of the ITN by considering its weighted representations. We show that, unlike the binary case, all possible weighted representations of the ITN (directed and undirected, aggregated and disaggregated) cannot be traced back to local country-specific properties, which are therefore of limited informativeness. Our two papers show that traditional macroeconomic approaches systematically fail to capture the key properties of the ITN. In the binary case, they do not focus on the degree sequence and hence cannot characterize or replicate higher-order properties. In the weighted case, they generally focus on the strength sequence, but the knowledge of the latter is not enough in order to understand or reproduce indirect effects.

Las ventajas de llegar tarde : tecnología avanzada en países en desarrollo

In the present work is upheld the hypothesis that "being late" to technological development would be an advantage for underdeveloped countries, since they would have the opportunity to transform their backwardness into a positive factor by being able to avoid the mistakes made by their predecessors, facilitating thus its modernization. To achieve this, advanced technology in these nations should be at the same time "appropriate technology", that is, technically and economically effective and socially acceptable in a given socioeconomic and ecological context. Two fundamental aspects are technology transfer, focused on its relationship with society, and the diffusion process, in which a macroeconomic approach that incorporates the possibility of technological "leap" is important. In conclusion, it is emphasized that the transfer does not necessarily imply dependence, since the advanced technology created in the developed ones can be used without necessarily following their same paradigms.

Approaches of Enhancing Absorption Capacity for Capital Markets Development in Uganda

The paper identifies two broad approaches to enhancing absorption capacity in Uganda’s capital markets; a macroeconomic approach aimed at increasing the income levels, and the competitiveness of Uganda’s factors of production on the world market and a micro economic approach that focuses on facilitating the growth of contractual savings.

Internal consistency, price rigidity and the microfoundations of macroeconomics

Macromodels based on microfoundations represent the dominant approach in macroeconomics. These models appear to adopt a clear methodological approach, which promotes internal consistency above external consistency as a necessary condition of admissibility. This paper develops two arguments. The first is that internal consistency makes the development of microfounded macromodels dependent on the pace of theoretical innovation. This had led to an internal debate between ‘pragmatists’ who argue for limited departures from internal consistency, and ‘purists’ who claim that this would compromise methodological integrity. The second argument is directly relevant to this debate. It is that the inclusion of price rigidity into these models via short-cuts like Calvo contracts has required a key modification of the microfoundations methodology, such that internal consistency can only be claimed indirectly by appeal to theory developed elsewhere. This modification has repercussions that imply that the microfoundations project is not as unblemished as the ‘purists’ imagine.

Srovnání konvergence ekonomik ČR a vybraných zemí eurozóny na základě analýzy funkcí odezvy a nabídkových či poptávkových šoků

Our paper focuses on the analysis of supply and demand shocks and on the estimation of expected costs of introducing Euro currency into Czech Republic (CR). The analysis is based on the theory of optimal currency areas by Mundell (1961, 1973) and uses a macroeconomic approach formalized by Bayoumi (1994). VAR models and the Blanchard-Quah decomposition (Blanchard and Quah, 1989) are used in order to simulate aggregated macroeconomic impulse response dynamics and to isolate supply and demand shocks for further inspection. Based on the analysis performed we conclude that given current circumstances and persistent differences in symmetry of economic shocks in CR and selected Euro zone countries, the costs from introducing the Euro to CR (as measured by fluctuations of real macroeconomic variables) would be nonzero, however presumably not significantly different from equivalent costs experienced in Austria or Slovakia (i.e. not prohibitive or signifi cantly damaging).

Monetary Policy Rules and Business Cycle in China: Bayesian DSGE Model Simulation

In this paper, using a benchmark Bayesian Dynamic Stochastic General Equilibrium (Bayesian DSGE) model (Smets-Wouters Model) with Taylor’s rule and a modified Smets-Wouters model with a money growth rule, we have simulated China’s monetary policy transmission process and the roles of monetary variables and non monetary variables in China’s business cycle by incorporating many so-called New Keynesian Macroeconomic (NKM) approaches such as nominal stickiness and market imperfections in the model. The estimated values of the parameters in the model by Bayesian approach based on China’s quarterly time series data feature the unique characters of China’s economy compared with that in the US and the Euro area. The simulation results in terms of the Taylor’s rule and money growth rule (MacCullum Rule) highlight the monetary transmission mechanisms of China’s monetary policy and the diverse contributions of monetary shocks and non-monetary shocks to China’s business cycle.

Thomas Dallery, Le divorce rentabilité/croissance dans le capitalisme financiarisé. Changements de régimes, équilibres, instabilités et conflits

The divorce between profitability and growth that emerged since the 80s raises a paradox that has to be explained. The macroeconomic realisation of profits being determined by capitalists’ spendings, the slowdown of accumulation cannot come (theoretically) with a profitability recovery, others things being equal.After having recalled, in a first chapter, that financialisation is only the last avatar of a long trend for capitalism to escape from real economy, we show, in a second chapter, that financialisation leads, for the individual firm, to a reorientation towards shareholders’ profitability claims at the expense of managers and capital accumulation, financial (indebtedness) and real (capacity utilisation) security, and also of workers (real wage).After having faced, in a third chapter, two methodological, embarrassing questions for kaleckian models of growth and distribution (not very plausible and unstable for the most plausible ones), we use, in a fourth chapter, a second macroeconomic approach (stock-flow consistent model) where conflict impacts distribution (conflict inflation) and accumulation (growth/profit trade-off). We show that dividends distribution and share buybacks allow, within the limits permitted by indebtedness, for a stimulation of rentiers’ consumption and for the realisation of profitability claims, in spite of the slowdown of accumulation.

Measuring the Welfare Gain from Personal Computers: A Macroeconomic Approach

The welfare gain to consumers from the introduction of personal computers is estimated here. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero. This implies that the good won't be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated/estimated using standard national income and product account data. The welfare gain from the introduction of personal computers is in the range of 2 to 3 percent of consumption expenditure.

The involvement of the public and private sector - elements with influence on travel & tourism demand during the crisis period

In the context of the economic crisis, the consumers´ behavior registered changes, so tourists have become highly price sensitive and tending to economize on the duration of their holidays. Starting with the changes generated by the economic crisis, the need to achieve a new economic level is felt both in the public sector through the development and consolidation of new public policies and also in the private sector through the involvement into solid plans, with adapted initiatives. The purpose of this paper is to capture the impact of the public and private sectors involvement on the Travel& Tourism (T& T) demand during the current economic crisis, the period 2008-2010. As design, the content is divided into three main parts, as follows: the perspectives of public and private sector on T& T industry, the impact of the economic crisis on T& T, and the econometric analysis which is concentrated on the connection between the T& T demand and some potential variables with impact on it. The methodology refers mainly to the econometric analysis, constructed in concordance with the findings of the paper. In order to test the link between the variables, the author uses the macroeconomic approach, by including into analysis the European Union member countries. Regarding originality, the paper reveals the positive influence, as real growth, of the T& T Direct Industry in GDP and the capital investment in T& T on the T& T demand.

Direct Investment in Modern Economy and the Role Played by Companies to That Effect

The financial theory has taken on the increase of the present value of the shareholders’ and associates’ fortune and turned it into the essential objective of economic activity. Uncertainty does not affect only economic decisions but also our everyday life: a company must decide on the stock it acquires before knowing precisely what the demand will be; a person engaged in litigation must choose between reaching an agreement and taking the risk of going to trial; a speculative investor must decide whether to purchase an asset or not, before knowing if it can be sold for profit. This article includes a macroeconomic approach to investment, the investigation tackling the part played by the gross capital formation in Romania's economic growth after the 1989 Revolution, compared to other European countries, as well as the formation and depreciation of the capital stock, set against the background of neoclassical theories. Nevertheless, the most part of the article focuses on the role of the companies in carrying out investments as well as the integration of investment policies within the strategic management of companies. A set of rules regarding the execution of profitable strategic projects is difficult to issue. Managers must be creative and fast in detecting new chances of investment. Virtually, the projects that need to be carried out must refer to the specific competency domains so that they would sustain and improve the competitive advantage. The market niches to be pursued are the ones where there is no competition whereas the ones which are no longer efficient should be dropped.

Exploiting the Information of Stock Market to Forecast Exchange Rate Movements

The present study examines dynamic relation between stock index and exchange rate by using the daily data for India. The empirical evidence suggests that there is no long-run relationship; however, there is bidirectional causality between stock index and exchange rates. The findings of the causality tests strongly support portfolio or macroeconomic approach on the relationship between exchange rates and stock prices. An attempt is also made to forecast daily returns of INR/USD exchange rates by exploiting the information of causal relationship between exchange rates and stock index using Vector -of-sample performance is benchmarked against the traditional ARIMA model. The potential of the two models is rigorously evaluated by employing a cross-validation scheme and statistical metrics like mean absolute error, root mean square error and directional accuracy. Out-of-sample performance shows that VAR model is robust, and consistently produces superior predictions than ARIMA model.