Macroeconomic Impact Research Articles

The Effects of Military Expenditures on Economic Growth and Inflation: Evidence from Turkey

Abstract The hypothesis that military spending affects economic growth and other aspects of the economy has been under scrutiny over the last decades. However, the macroeconomic impact of defense outlays is still an open question for researchers and policymakers. Aiming to contribute to the existing debate, this paper combines Keynesian with monetary theory and develops a discrete-time model that allows for potential fiscal-monetary coordination for financing the military sector in order to examine the effects of defense outlays on income and inflation. Τhe theoretical analysis suggests that military budget expansions can only have temporary effects on income, as in the long run, their impact on the economy is solely inflationary. However, the empirical findings associated with the economy of Turkey are not fully consistent with the theoretical conclusions of the specified model.

Pandemics and protectionism: evidence from the \u201cSpanish\u201d flu

The impact of COVID-19 on recent tendencies towards international isolationism has been much speculated on but remains to be seen. We suggest that valuable evidence can be gleaned from the “Spanish” flu of 1918–20. It is well-known that the world fell into a protectionist spiral following the First World War, but scholars have almost exclusively ignored the impact of the pandemic. We employ a difference-in-differences strategy and find that the flu had a significant impact on trade policy, independent of the war. In our preferred specification, a one standard deviation increase in excess deaths during the outbreak implied 0.022 percentage points higher tariffs subsequently, corresponding to an increase of one third of a standard deviation in tariffs. Health policy should aim to avoid the experience of the interwar period and consider the international macroeconomic impact of measures (not) taken.

Socio-Economic Impact of Covid-19 Pandemic and Strategies for Reviving Nigeria’s Economy

This study provides multi-disciplinary assessment of coronavirus pandemic transmission in Nigeria, magnitude of confirmed cases, recoveries, deaths, and inventory of infected person with recovery lags. It applied the statistical outcomes in predicting spilling over to subsequent periods. It identifies economic sectors worst hit by COVID-19 triggered recession, simulate the estimates of potential fiscal and other macroeconomic impact of the pandemic in the country in short run alongside synthesis of restoration and sustainability strategies. Secondary data relating to coronavirus infection cases, spreads, recoveries and fatalities were assessed, using the susceptible-infected-recovered” (SIR) model in absence of mass testing and probable cessation from health crisis management. It identified economic sectors/activities being devastated by COVID-19 induced recession, provides interim estimates adverse impact based on economic peak and down-turn cycle method. The study also measured the magnitude of macroeconomic shocks in Nigeria’s economy using a standard global computable general equilibrium model and exploration of sustainability strategies based on synthesis of extant reports were employed. These data-sets were obtained from the Nigerian sources and partly from global sources. Furthermore, it utilized trend analysis derived from empirical data of extant daily confirmed cases, discharges and hospitalized person together with tentative projection of additional confirmed cases as from July–September, 2020. Results revealed that confirmed cases in Nigeria will increase steadily from 25694 (in June) to around 74825 by the end September and expected to reach 121000 by end of year 2020. This suggests that the pandemic is likely to persist up to the second quarter of 2021. Education, transport (aviation), hospitality, tourism and sports businesses; trade (informal sector) in the services sector; petroleum exploration in mining sub-sector are most severely contracting activities industries in the economy. Given the prevailing intensity of recession, the result indicates that a reduction of about 5-to-7% in GDP will be recorded in 2020. Result of variance analysis of fiscal budget estimates indicates adverse increase of -2% or more in overall fiscal deficit balances during the periods, which may aggravate debt burden with decline of about -5.7 percent and up to -7 percent in nominal GDP. Health, education, agriculture, petroleum exploration; petroleum refining and petrochemical industries, manufacturing (particularly pharmaceuticals), energy and power generation should be given priority in the sustainability programme.

Influence of Structural Age Shifts of Population on Sectoral Structure of Employment

This article examines the correlation between the increase in age groups of population and branch structure of employment in the Ukrainian economy. Today, the study of human capital's impact on economic processes is an essential economic science component. The application of quantitative methods in this relationship's study provides essential information about the nature of the interconnection of individual characteristics of human capital and critical socio-economic processes in the current domestic economic reality. Applying correlation-regression analysis, modelling these interdependencies with multiple regression models, and estimating correlation and deterministic relationships, in particular, are essential means in the practical study of this macroeconomic resource impact. Economic and mathematical analysis of the interdependencies between employment in agricultural, industrial, and financial sectors and the growth of the Ukrainian population's age groups were carried out. Based on these data, conclusions were drawn about critical macroeconomic processes, which are quantitatively confirmed by the built models. The role of the age structure of the population in structural transformations of the Ukrainian economy was evaluated.

The Impact of the Corona Virus Pandemic on the Macro Economy and the Tourism Industry in the Digital Age

The purpose of this study was to investigate the macroeconomic impact of the corona virus in 3 countries in Asia, namely Indonesia, Malaysia and Thailand. With the macroeconomic impact and the tourism industry in 3 countries in Asia, it can be understood the pattern of the impact of the virus pandemic on the economy and the gap in gradual economic recovery solutions by taking into account the impact of the pandemic on human health, especially in the tourism industry. We found that each country has different economic buffer can be used as a basis for policy making to recover the economy in each country based on the economic buffer of each country.

The macroeconomic impact of extreme weather: Evidence from Jamaica

A common concern for many developing countries is effectively mitigating the economic impact of extreme weather. While these damages provide some foresight for planning, how they translate into a loss of economic output remains unclear. To add clarity to the literature and provide a basis for resilient policy making, we quantify the macroeconomic impact of extreme weather in Jamaica, one of the most environmentally vulnerable countries in the Caribbean. To achieve this, we build a quarterly dataset on weather and the most weather-susceptible productive sectors that help drive the macroeconomy. We utilise a vector autoregressive econometric model to extract the direct impact of weather and incorporate any feedback mechanisms. Our estimates reveal an immediate large negative impact of hurricanes with signs of economic recovery at least two quarters after a storm strike, a delayed negative impact of temperature which dissipates two years later and a favourable impact of rainfall. We derive implications for policy regarding sustainable productivity and recovery strategies.

Macroeconomic Impact of Pension System Upon Private Pension Funds Scheme. Empirical Evidence from Central and Eastern European Countries

Abstract The significance of retirement savings and private pension funds increased in the latest decades and gathered important amounts of capitals. The purpose of this paper is to investigate the macroeconomic effects of pension systems from an investment perspective in five Central and Eastern European countries. The analyzing process regarding several underlying macroeconomic effects of pension systems started from the premises that there is a strong connection between the structure of pension systems, the national economy and the development of the financial sector. The econometric tests were processed and applied by using pool data regression models and the method Pooled Instrumental Variables (IV) - Two-stage Least Squares (2SLS). The main conclusion highlights that the interest rate at deposits is correlated with the amount of incomes earned by population, inflation rate, severe material deprivation rate and the investment strategy of private pension funds.

Macroeconomic impact of Covid-19 on business in Morocco : Assessment and recommendations

Macroeconomic impact of Covid-19 on business in Morocco : Assessment and recommendations

Sungbae An Comments on The Global Macroeconomic Impacts of COVID-19: Seven Scenarios

May 15 2021 Sungbae An Comments on The Global Macroeconomic Impacts of COVID-19: Seven Scenarios Author and Article Information Online ISSN: 1536-0083 Print ISSN: 1535-3516 © 2021 by the Asian Economic Panel and the Massachusetts Institute of Technology2021American Society of Health Economists and Massachusetts Institute of Technology Asian Economic Papers (2021) 20 (2): 31–33. https://doi.org/10.1162/asep_a_00817 Cite Icon Cite Permissions Share Icon Share Facebook Twitter LinkedIn MailTo Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Sungbae An Comments on The Global Macroeconomic Impacts of COVID-19: Seven Scenarios. Asian Economic Papers 2021; 20 (2): 31–33. doi: https://doi.org/10.1162/asep_a_00817 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll JournalsAsian Economic Papers Search Advanced Search Sungbae An, Korea Institute for International Economic Policy: The COVID-19 pandemic sheds unprecedented light on how to incorporate health shocks into macroeconomic models. Previous literature on diseases, as summarized in the paper, focuses largely on the economic welfare effects of long-term public health conditions and chronic illnesses linked to mortality and disability. There are a number of reasons for the dominance of these approaches. First, the evaluation of consequences is readily available through traditional labor supply channels. When a part of the labor force is affected by a disease, additional labor costs arise from the temporary loss of working hours by patients and care-givers, medical costs until recovery, and possible long-term deficiency in productivity due to mortality and disability. In this case, the epidemiological literature can estimate the impact of disease on the population and labor force, and it is introduced as an exogenous labor productivity shock to macroeconomic models.... You do not currently have access to this content.

Suresh Narayanan Comments on The Global Macroeconomic Impacts of COVID-19: Seven Scenarios

Suresh Narayanan Comments on The Global Macroeconomic Impacts of COVID-19: Seven Scenarios

Yiping Huang Comments on The Global Macroeconomic Impacts of COVID-19: Seven Scenarios

May 15 2021 Yiping Huang Comments on The Global Macroeconomic Impacts of COVID-19: Seven Scenarios Author and Article Information Online Issn: 1536-0083 Print Issn: 1535-3516 © 2021 by the Asian Economic Panel and the Massachusetts Institute of Technology2021American Society of Health Economists and Massachusetts Institute of Technology Asian Economic Papers (2021) 20 (2): 38–40. https://doi.org/10.1162/asep_a_00819 Cite Icon Cite Permissions Share Icon Share Facebook Twitter LinkedIn MailTo Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Yiping Huang Comments on The Global Macroeconomic Impacts of COVID-19: Seven Scenarios. Asian Economic Papers 2021; 20 (2): 38–40. doi: https://doi.org/10.1162/asep_a_00819 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll JournalsAsian Economic Papers Search Advanced Search Yiping Huang, Peking University: COVID-19 has dramatically changed the short-term growth trajectory of the world economy. In October 2019, the IMF predicted that the world, the United States, and the Chinese economies in 2020 would grow by 3.4 percent, 1.7 percent, and 5.8 percent respectively (IMF 2019). In June 2020, due to the COVID-19 shock, the IMF downgraded these forecasts to −4.9 percent, −8.0 percent, and 1.0 percent, respectively (IMF 2020). But the exact macroeconomic impacts of COVID-19 are still not clear. We do not yet fully understand how the virus initially emerged and how it mutates. The mechanisms through which the pandemic affects economic activities are even more complex. Taking China as an example, it was the first country to be hit by COVID-19, which quickly spread to the rest of the country. However, the Chinese economy will probably be one of the most resilient ones in... You do not currently have access to this content.

Pension Reform Disabled*

AbstractThis paper builds a quantitative life‐cycle model with endogenous retirement to study how disability insurance (DI) and old‐age pension programs interact with health and wages to determine retirement age. Individuals face uncertain future health and wages, and if in bad health, they can retire with DI before reaching the statutory retirement age. I use the model to evaluate the macroeconomic impact of pension reforms. The main contribution is that, in contrast to standard macro pension models, my model includes DI as another endogenous retirement margin. I show that it is crucial to account for program substitution when evaluating welfare reforms.

The impact of Indonesian oil price (CPI) and macroeconomics on investments in the manufacturing sector in Indonesia

Background: Indonesia consumes oil as the main energy source in the production process and as a result of the development of the manufacturing industry. Thus, investment in manufacturing stocks will be affected by oil price fluctuations and macroeconomic conditions. Changes in oil prices will affect the performance of the manufacturing sector which in turn affects manufacturing stock prices. This paper aims to examine the impact of Indonesia's oil price shocks and macroeconomic factors on stock price movements in the manufacturing sector. Methods: This study uses monthly data for the 2009-2016 period in the manufacturing sector, and 67 stocks were selected on the basis consistently available in the period of the research. The cointegration and causality technique was used in this paper; firstly we applied a unit-panel root test, Secondly, we performed a residual test to indicate whether there was cointegration among variables in the long run equilibrium, and short the short run, we used a Granger causality test. Results: The panel unit root test (both Shin and Fisher) and the Pedroni cointegration residual test show that the data is stationary at 1% level of significance, thus all variables simultaneously achieve long-run equilibrium, and in the short run, the Granger causality test shows that there is one way direction causality Conclusions: For long-term investment in manufacturing stocks, investors must consider the exchange rate, as it is also as a determining factor in influencing the movement of manufacturing stock prices, inflation, and the production index. Meanwhile, weakening of the rupiah in the short run will also determine investment conditions due to the dependency on raw materials for production from foreign sources. The price of oil as an energy source in the manufacturing sector does not have a long-term relationship with other variables.

Exploring equity in health and poverty impacts of control measures for SARS-CoV-2 in six countries

BackgroundPolicy makers need to be rapidly informed about the potential equity consequences of different COVID-19 strategies, alongside their broader health and economic impacts. While there are complex models to inform...

The Macroeconomic Impact of Social Unrest

This paper explores the macroeconomic impact of social unrest, using a novel index based on news reports. The findings are threefold. First, unrest has an adverse effect on economic activity, with GDP remaining on average 0.2 percentage points below the pre-shock baseline six quarters after a one-standard deviation increase in the unrest index. This is driven by sharp contractions in manufacturing and services (sectoral dimension), and consumption (demand dimension). Second, unrest lowers confidence and raises uncertainty; however, its adverse effect on GDP can be mitigated by strong institutions and by a country’s policy space. Third, an unrest “event”, which is captured by a large change in the unrest index, is associated with a 1 percentage point reduction in GDP six quarters after the event. Impacts differ by type of event: episodes motivated by socio-economic reasons result in sharper GDP contractions compared to those associated with politics/elections, and events triggered by a combination of both factors lead to sharpest contractions. Results are not driven by countries with adverse growth trajectories prior to unrest events or by fiscal consolidations, and are robust to instrumenting via regional unrest.

Macroeconomic Impact of the Itaipú Treaty Review for Paraguay

Macroeconomic Impact of the Itaipú Treaty Review for Paraguay

Macroeconomic evidence on the impact of mandatory IFRS adoption on FDI in the Gulf Cooperation Council (GCC) countries

PurposeThe present paper seeks to investigate the impact of International Financial Reporting Standards (IFRS) adoption on the foreign direct investment (FDI) in the Gulf Cooperation Council (GCC) region for the period 1980–2017. This study relies on the information asymmetry theory, according to which IFRS adoption, as a positive signal for investors, should attract more FDI. This research is crucial and presents an interesting framework for providing a major motivation for empirical insights since the macroeconomic evidence on the impact of IFRS adoption on FDI is still unclear in the GCC region and no empirical evidence has been provided in the existing related literature.Design/methodology/approachThe analysis was conducted based on panel data from GCC countries over the period 1980–2017 and using the autoregressive distributed lag (ARDL) modeling approach and the pooled mean group (PMG) estimation method.FindingsThe findings indicate that the decision of adopting IFRS in GCC countries has a positive impact of 3% on FDI inflows in the short run. However, the adoption of IFRS in the region leads to a decrease of 10.4 % in FDI inflows in the long run.Practical implicationsThese findings should be of a major interest to regulators and policymakers in GCC countries, practitioners and academic researchers, international investors, managers and any other interested groups about the accounting environment in GCC countries and other developing countries having an interest in the economic consequences of IFRS adoption, as a driver of FDI, in developing countries.Originality/valueThis investigation provides original empirical evidence on the effect of IFRS adoption on FDI inflows within the context of the GCC area. In fact, the current international literature is lacking empirical evidence on the effect of IFRS adoption on FDI inflows for the GCC countries as a whole. Furthermore, this study offers an original methodological contribution to the macroeconomic impact of IFRS adoption literature by using the PMG estimator since there has been no research works to date that has used this method of estimation.

The Economic Impact of the SARS-COV-2 (COVID-19) Pandemic in Spain.

Background: The COVID-19 pandemic has hit both the Spanish economy and the population’s health hard. The result is an unprecedented economic and social crisis due to uncertainty about the remedy and the socioeconomic effects on people’s lives. Methods: We performed a retrospective analysis of the macroeconomic impact of the COVID-19 pandemic in 2020 using key indicators of the Spanish economy for the 17 Autonomous Communities (ACs) of the country. National statistics were examined in the search for impacts or anomalies occurring since the beginning of the pandemic. To estimate the strength of the impact on each of the indicators analyzed, we used Bayesian structural time series. We also calculated the correlation between the rate of GDP decline during 2020 and the cumulative incidence of COVID-19 cases per 100,000 inhabitants in the ACs. Results: In 2020, the cumulative impact on the gross domestic product was of −11.41% (95% credible interval: −13.46; −9.29). The indicator for business turnover changed by −9.37% (−12.71; −6.07). The Spanish employment market was strongly affected; our estimates showed a cumulative increase of 11.9% (4.27; 19.45) in the rate of unemployment during 2020. The worst indicators were recorded in the ACs most economically dependent on the services sector. There was no statistical association between the incidence of COVID-19 in 2020 and the fall in GDP in the ACs. Conclusions: Our estimates portray a dramatic situation in Spain, where the COVID-19 crisis has had more serious economic and health consequences than in other European countries. The productive system in Spain is too dependent on sectors vulnerable to the pandemic, and it is necessary to design and implement profound changes through the European Next Generation program.

Commodity Shocks and Exchange Rate Regimes: Implications for the Caribbean Commodity Exporters

Declining commodity prices during mid-2014-2016 posed significant challenges to commodity-exporting economies. The severe terms of trade shock associated with a sharp fall in world commodity prices have raised anew questions about the viability of pegged exchange rate regimes. More recently, the COVID-19 pandemic and the measures needed to contain its spread have been associated with a significant disruption in several economic sectors, in particular, travel, tourism, and hospitality industry, adding to the downward pressure on commodity prices, a sharp fall in foreign exchange earnings, and depressed economic activity in most commodity exporters. This paper reviews country experiences with different exchange rate regimes in coping with commodity price shocks and explores the role of flexible exchange rates as a shock absorber, analyzing the macroeconomic impact of adverse term-of-trade shocks under different regimes using event study and panel vector autoregression techniques. It also analyzes, conceptually and empirically, policy and technical considerations in making exchange rate regime choices and discusses the supporting policies that should accompany a given regime choice to make that choice sustainable. It offers lessons that could be helpful to the Caribbean commodity-exporters.

What Is the Macroeconomic Impact of Higher Decarbonization Speeds? The Case of Greece

In alignment with the European Union’s legislation, Greece submitted its final 10-year National Energy and Climate Plan (NECP) in December 2019, setting more ambitious energy and climate targets than those originally proposed in the draft version of the document. Apart from higher penetration of renewable energy sources (RES), the final NECP projects also zero carbon use in power generation till 2030. Although decarbonization has long been regarded beneficial for economies that base their energy production on coal, as it is the case with Greece, the macroeconomic and societal ramifications of faster transitions to carbon-free economies remain highly unexplored. Under this context, in this paper, we soft-link energy models, namely Times-Greece and Primes, with a macroeconomic model, namely Global Trade Analysis Project (GTAP), to measure the effects of the final and draft NECPs on the Greek economy and evaluate the impact of higher decarbonization speeds. We find that the faster transition scenario displays both economic and societal merits, increasing Gross Domestic Product (GDP) and household income by about 1% and 7%, respectively.