Macroeconomic Management Research Articles

Investigating the Pass-Through Effect of Global Oil Price Shock on Domestic Inflation in Selected African Countries

The large-scale war between Russia and Ukraine has increased global oil prices, signaling a new era of macroeconomic shock management for both developed and developing countries. Consequently, this study investigates the passthrough effect of oil prices on domestic inflation in selected African countries in a single estimation framework using the global vector autoregressive (GVAR) estimation technique. To achieve the objective of this study, country-specific data were gathered from twenty-one African countries and four foreign countries selected based on trade relations. The results from our estimation demonstrate that the domestic general price level in African countries responds to global oil price shocks. Also, like any other part of the world, a disparity-like response is observable for African countries. This is tightly connected to whether the country is a metal-resource-rich, non-rich resource, or oil-rich country. The study thus concludes that positive shocks in the global price of crude oil will worsen the delicate position of the domestic general price level in non-oil-producing African countries. Efforts to minimize the impact of international oil shocks in these countries should center around investment in renewable energy and stabilization of the economy’s supply side through proactive and effective macroeconomic management.

How to Coordinate the Roles of Fiscal Policy and Monetary Policy

Fiscal policy and monetary policy are two critical tools in macroeconomic management. Their coordination and synergy are essential for achieving economic stability, growth, and resilience against risks. This paper explores the fundamental characteristics and roles of fiscal and monetary policies, analyzes their interactions and common conflicts across different economic phases, and discusses pathways for coordination through consistent goal setting and robust implementation mechanisms. By examining domestic and international case studies, the paper identifies key factors for effective synergy and provides recommendations tailored to China’s economic context. These insights aim to offer both theoretical support and practical guidance for achieving more efficient macroeconomic governance.

Effects of unemployment and inflation on the economy of Nepal

This is a longitudinal study for the period of 2010-2019 which examines the effect of inflation and unemployment on growth rate of Nepal. The economy of Nepal suffers from inflation and unemployment. In this paper, the impact of inflation and unemployment on growth rate in the two short-run and long-run phases was investigated and examined using Karl Pearson`s Co-efficient and Phillips Curve. The results of this model showed the significance and positive effect of inflation and unemployment on economic growth in short-run and negative effect on long-run. This paper found that policy maker should conscientiously focus on strategies to reduce and control inflation and unemployment. The planner could attempt to reduce and control over unemployment and inflation to get desired economic growth of Nepalese economy. From 2010 to 2019, Nepal's economy faced significant challenges and transformations. Understanding the interplay between inflation and unemployment during this period highlights the complexity of macroeconomic management in a developing country. Policy responses need to be multifaceted, considering both immediate economic pressures and long-term structural changes.

Impact of financial inclusion, financial stability, bank nonperforming loans, inflation, macroeconomic management quality and unemployment on economic growth in Nigeria

PurposeThe study investigates the impact of financial inclusion, financial stability, bank nonperforming loans, inflation, macroeconomic management quality and the unemployment rate on economic growth in Nigeria.Design/methodology/approachThe data are analyzed using the ordinary least squares regression, generalized linear model regression, robust least squares regression and the quantile regression methods. The sample period is from 2007 to 2022.FindingsFinancial inclusion, inflation rate and macroeconomic management quality are significant determinants of economic growth in Nigeria. Bank nonperforming loans, unemployment rate, international trade and climate change have an insignificant effect on economic growth in Nigeria. Also, financial inclusion, inflation rate, financial stability, macroeconomic management quality and the unemployment rate are significant determinants of economic growth in good economic years in Nigeria.Practical implicationsThe well-known catalysts of economic growth, such as financial inclusion and financial stability, are not positive catalysts of economic growth in Nigeria during good economic years. Therefore, it is recommended that policymakers should find the right level of financial inclusion, financial stability and unemployment that stimulate economic growth in Nigeria.Originality/valueThis study examines some determinants of economic growth in Nigeria which have not been examined in the existing literature.

IMPACT OF RENEWABLE AND NON-RENEWABLE ENERGY ON FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH

This study examines the impact of renewable and non-renewable energy on foreign direct investment (FDI) and economic growth in Nigeria from 1980 to 2017. The objectives are to assess how renewable energy influences economic growth, FDI, and the interplay between renewable and non-renewable energy. Using techniques such as the Augmented Dickey-Fuller test, Co-integration, and the Auto Regressive Distributed Lag (ARDL) model, secondary data from the World Bank were analyzed, focusing on GDP, renewable energy, non-renewable energy, and FDI. The findings indicate that GDP positively influences renewable energy in the long run, while non-renewable energy has a negative effect. In the short run, non-renewable energy and GDP significantly impact renewable energy, while FDI shows no effect. Recommendations include fostering a stable political environment to attract FDI and providing incentives like subsidies and tax holidays to promote trade and investment in renewable energy. Effective macroeconomic management is essential for translating economic growth into increased renewable energy consumption in Nigeria. KEYWORDS: Renewable Energy, Non-Renewable Energy, Foreign Direct Investment and Economic Growth.

Indonesian governance: Reflections and how to reduce disparity between regencies/cities in Indonesia

Nawacita work program of Indonesian Governance aims to actualize a golden Indonesia by 2045 by accelerating development and human resources. However, the Indonesian people face several difficult problems of their own. Several strategic policies have been put into place in Indonesia to promote fair development and lessen regional differences. These policies include macroeconomic management, economic deregulation, the development of new resources economically, the maritime economy, and productivity enhancement. The Nawacita program’s reflection in addressing regional imbalances in Indonesian regencies and cities is covered in this report. This study employs quantitative and bibliographic techniques along with political economic analysis methodologies to investigate in-depth and information. The study’s findings indicate that although differences between Indonesia’s districts and cities are gradually narrowing, the country’s GDP per capita is still below the global average. Most of the strategic measures put in place by the Indonesian Governance have not resulted in the anticipated expansion of the economy. Nonetheless, in current period of government, connectivity in enhancing productivity across regions through Indonesia centric development is a primary objective to ease accessibility between areas, which has frequently been disregarded. particularly in the Papua region, which has not exactly developed and been left behind. According to the Analytical Hierarchy Process (AHP) analysis’s findings, increasing productivity is a task that needs to be finished right now to lessen regional differences in Indonesia.

An ARDL Approach to Investigate the Effectiveness of Fiscal and Monetary Policies in Making Bangladesh, A Role Model of Development

ABSTRACT: The purpose of the study is to analyze the relative efficacy of monetary and fiscal policies in fostering economic growth in Bangladesh concerning predictability, speed, and magnitude. Moreover, it aims to find the relationship between the economic boom of Bangladesh and two measures of macroeconomic management i.e., monetary and fiscal policy. The ARDL model and bound test are applied to examine the long-term link between monetary policy, fiscal policy, and economic growth. Data is obtained from the World Development Indicator (WDI) for Bangladesh for the period 1974 to 2022. Several diagnostics tests like CUSUM and CUSUMQ are used to identify both the strengths and weaknesses of the models. The findings demonstrated a long-term correlation between the two policies and economic growth. According to the calculated short-run coefficients, the short-term effect of fiscal policy is mentionable but the effect of monetary policy is negligible in the short term. But over time, the immediate effects become noteworthy. The long-term outcomes indicated that both fiscal and monetary policies have a favorable and substantial long-term impact on economic growth. The result shows fiscal policy is more effective compared to monetary policy for making Bangladesh, a role model of Bangladesh. Furthermore, all the diagnostics tests showed the stability of the estimated ARDL model. Expansionary fiscal and monetary policies lead to higher government spending and an increase in the money supply, which raises GDP levels. Conversely, if government spending and the money supply decline (contractionary fiscal and monetary policies), the GDP level falls. As a result, this study suggests using expansionary policies to boost Bangladesh’s economy.

China’s GDP-at-Risk: Real-Time Monitoring, Risk Tracing, and Macroeconomic Policy Effects

Timely monitoring GDP-at-risk and tracing economic downside risk sources can help establish effective risk warning and prevention systems. This study constructs a probability distribution for China’s economic growth with skewness determined by a multidimensional predictor information set of macro fundamentals. Such a treatment allows us to identify changing drivers of economic downside risks during monitoring GDP-at-risk’s dynamic evolutionary path. We also employ a time-varying parameter vector autoregression model with random volatility to explore the heterogeneous impacts of different macroeconomic policy instruments on economic slowdowns. Our results provide empirical support for macroeconomic management and policy formulation in emerging markets. We reach three conclusions. First, the dynamics of GDP-at-risk exhibit significant event-driven characteristics, and economic downside risk increases significantly under the influence of extreme events. Moreover, the probability distribution of economic growth is asymmetric--as the downside risk of the economy increases, its upside potential increases disproportionately. Second, the time-varying risk trace of GDP-at-risk shows that the contribution of financial conditions and local government debt to economic downside risk declines. The importance of the risk-driving role of housing price growth gradually increases, suggesting that China’s property prices can provide more valuable early warning information about future growth risk, allowing time for precise preventive measures. Nevertheless, interest rates and inflation as risk divers have consistently minimal impacts. Third, the heterogeneity impulse response function of GDP-at-risk suggests that quantity-based monetary policy and fiscal policy can manage economic downside risks in the short run. In contrast, price-based monetary policy can curb economic overheating and reduce downside risks in the medium to long term. Therefore, the effect of price-based monetary policy is more sustainable in China.

Towards a more transformative approach to climate finance

ABSTRACT Without deliberate and proactive attempts to redirect and regulate flows of public and private finance, achieving the goals of the Paris Agreement will remain elusive. Yet, despite extensive engagement with different dimensions of climate finance by academics and policy practitioners alike, the financial system continues to be fundamentally misaligned with climate goals by locking in high-carbon development pathways while inadequately resourcing climate adaptation. Moving beyond dominant discourses about mobilising and de-risking private finance, this paper seeks to identify potential alternative interventions and leverage points to align the mobilization and redirection of finance with a more transformative approach to climate finance that targets the sources of climate change in a globally unequal fossil-fuel economy. This implies making greater use of the many policy tools that governments have at their disposal with regards to taxation and regulation, often deployed to fund the welfare state or for macroeconomic management, but which constitute powerful levers for mobilising and redirecting climate finance that have been excluded thus far from conventional definitions of climate finance used by the international community. Consciously moving beyond a narrower focus on financing decarbonization, this implies greater attention to redirecting, hypothecating and regulating the whole ecosystem of global finance so that the goals and organization of the global financial system and global climate action are better aligned.

Identifying Interest Rate Transmission Mechanism under a Bayesian Network

This study examines causal relationships among various short- and long-term interest rates in the Korean financial market to identify transmission channels. Monthly time series data from January 2015 to February 2024 were used, covering nine interest rates, including call rates, commercial paper (CP) rates, bank lending rates, and Treasury bond yields of different maturities. The study employs a Bayesian network to identify an acyclic causal structure between interest rates alongside a vector error correction model (VECM) to capture long-term equilibrium relationships and short-term dynamics. The findings reconfirm the traditional call rate transmission mechanism, aligning with conventional monetary policy views, demonstrating the call rate’s significant influence on bank lending rates, which affects corporate bond spreads and CP rates. Additionally, it reveals that 10-year Treasury bond yields form an independent interest rate transmission pathway, a finding not previously identified in the literature. These results underscore the need for coordinated monetary and fiscal policies due to the distinct transmission pathways of Treasury yields for sustainable macroeconomic management and growth.

An investigation into the convergence of economic growth among Indian States and the path ahead

This study offers a comprehensive examination of economic growth and convergence in the Indian States and Union Territories (U.T.) over the period from 1991 to 2020. It investigates absolute, sigma, and conditional convergence within this diverse set of states and utilizes the augmented Solow and extended Solow models to explore conditional convergence dynamics. The empirical findings reveal several significant insights. First, there is no substantial negative correlation between the initial per capita GDP ratio and the average annual growth rate, indicating the absence of absolute convergence across the Indian States and U.T. economies during the study period. These results align with those obtained from sigma convergence analysis, reinforcing the absence of widespread convergence. However, conditional convergence is observed, as evidenced by the rate of conditional convergence (coefficient of initial GDP per capita) estimated at 0.038 among the Indian States and U.T. The presence of conditional convergence implies that while initial conditions matter, other factors, including physical and human capital, population growth, and additional variables, significantly contribute to the growth and convergence of Indian regions. The study concludes that policies aimed at promoting economic growth in the Indian States should prioritize the expansion of the labor force, investments in physical and human capital, and prudent government consumption. Furthermore, fostering an environment that encourages access to new technologies and ideas, maintaining sound macroeconomic management, and increasing investments in human capital formation are essential for sustained growth. Effective resource allocation through prudent budgetary policies and heightened investments in the health sector are recommended. Incentives to reduce fertility rates and adept monetary policy management are also identified as crucial elements for ensuring stability and sustainable growth. In summary, this research underscores the importance of adopting a holistic approach to foster economic growth and convergence in the Indian States. The suggested policy measures create a conducive environment for sustained development and prosperity in this diverse and dynamic region.

Staatswissenschaften and the Mathematical Policy Science of Jan Tinbergen

The rise of mathematical economics is typically understood as a fundamental shift in the language and technique of economic theorizing. This article argues that an examination of Tinbergen's work demonstrates that a similar “mathematical” turn occurred in economic policy. This article contextualizes Tinbergen's professional career at the Dutch Central Bureau of Statistics and his early policy-oriented contributions as exemplified by the applied policy reports that he wrote between 1931 and 1936. His econometric work, including his seminal 1936 model of the Dutch economy and the closely related League of Nations model of the US economy, was rooted in his vision that business cycle research functioned in the service of the state. His work was aimed not at uncovering fundamental or structural relationships in the economy but at practical interventions in the economy by a state that developed control over new instruments of macroeconomic management. As such it can be and has been analyzed as an important contribution to economics as an engineering science. But this article demonstrates that Tinbergen also explicitly depicted the economy from the perspective of the policymaker and that he was attentive to the changing institutional order of the national and international economy. Tinbergen's work in this respect owed a great deal to the more political-economic tradition of German Staatswissenschaften than is typically acknowledged.

A Study of the Impact of Monetary Policies on Financial Crisis

Monetary policy stands as a pivotal instrument for macroeconomic management, pivotal in stabilizing economies, fostering growth, and mitigating inflationary pressures. In the wake of global financial upheavals, the efficacy and adaptability of monetary policy have garnered heightened scrutiny. The United States, boasting the world's largest economy, and the Federal Reserve, a stalwart among central banks, wield profound influence on global financial dynamics via their policy decisions. Each action taken by the Federal Reserve reverberates across borders, profoundly impacting numerous nations. Amidst global financial turmoil, the Federal Reserve's role assumes paramount significance. These crises inflict profound repercussions on both national economies and individual livelihoods. This paper endeavors to delve into the historical influence of United States monetary policy and the Federal Reserve on global financial crises, scrutinizing their interventions and assessing their efficacy. By tracing their impact across different epochs, this study aims to provide insights into the mechanisms through which monetary policy shapes the trajectory of global financial crises, shedding light on avenues for improvement and resilience-building measures.

South African Land Reforms Under the Auspices of the “Radical Economic Transformation”

Abstract The land question is an emotive issue across the world. At independence, erstwhile colonies adopted land reforms to address colonial imbalances in landholding. South Africa is one such country that has embarked on land reforms with the view to correcting economic imbalances created by the apartheid past. However, land reform in South Africa has not only been slow but has failed to deal with the twin challenges of poverty and inequality. Using qualitative research design and neoclassical theory, this paper investigates South Africa’s land reforms under the auspices of radical economic transformation. The paper argues that the wholesale expropriation of land without compensation does not fit into the obtaining (neoliberal) economic blueprint that has dominated the country over the years. The call for a radical transformation of landholding rights in the country without structural changes in macroeconomic management remains political rhetoric.

Governing the Economy Under Populist Rule: The Cases of Hungary and Poland

ABSTRACT Populism is principally a political phenomenon; yet, the economic implications of populist rule can be substantial, as underlined by the Polish and Hungarian cases. By operationalizing the ideational definition of populism, the article sheds light on the economic consequences of populist governance in three major domains: (1) macroeconomic management, (2) welfare policies, and (3) market regulation. The article demonstrates that while—at least until the outbreak of the COVID-19 pandemic—Hungary and Poland refrained from engaging in irresponsible macroeconomic policies such as the accumulation of public debt or external debt (typical signs of classical “economic populism”), the governments of the two countries embarked on widescale income and wealth redistribution in their respective economies. Nevertheless, these populist governments targeted different groups of people in their redistributive policies: Hungary adopted a largely selective and exclusive social policy targeting the middle class and the well off, while Poland endorsed a more inclusive strategy that benefited the poor as well. Furthermore, the two countries deliberately tilted the playing field toward their protégés: Hungary preferred the preservation of private property; whereas, Poland explicitly increased the share and role of state-owned enterprises in the economy.

Short-Term Forecasting of Pork Price Based on The ARIMA Model

China's large population requires a large and diverse amount of food, of which pork is one of the important agricultural products related to the national economy and people's livelihood. Based on the pork price data from 2010 to July 2023, this paper adopts the ARIMA time series model to forecast the pork price in the short term from August 2023 to February 2024 in order to provide a powerful reference for the macroeconomic management of the country. After testing, the ARIMA model has a certain guiding and reference value for predicting the high and low pork prices in the short term, which can provide a decision-making basis for the macroeconomic management of the country.

Analysis of the Impact of Monetary Policy on the Housing Market

Monetary policy, a pivotal tool in macroeconomic management, wields significant influence over the intricate interplay of supply and demand within the housing market. This study aims to dissect the repercussions of monetary policy on this crucial dynamic. By synthesizing insights and case studies from diverse global contexts, and employing a spectrum of analytical models, this article endeavor to elucidate the outcomes stemming from both expansive and restrictive monetary approaches. Notably, the ebb and flow of interest rates instigate distinctive effects on housing supply and demand. This research scrutinizes the intricate relationship between monetary policy and the real estate market. Under loose monetary conditions, a surge in home purchases is anticipated, paralleled by an expansion in real estate investments by astute investors. Conversely, as monetary policy tightens, the propensity to buy homes wanes, with a corresponding contraction in investment activity. This shift inevitably reverberates through the real estate sector, precipitating a discernible downturn.

Exploring the Application of Big Data Technology in Macroeconomic Management and Strategy Formulation

Abstract The initiative of macroeconomic management and regulation helps to eliminate such undesirable phenomena as unfair competition and malicious competition in the market and effectively improves the fairness and transparency of the economic market. This paper takes the importance of macroeconomic management as a guide and analyzes the value of the application of big data technology in macroeconomic management. Taking China’s macroeconomic data from 2012 to 2024 as the research object, a macroeconomic trend forecasting model is established by combining the C4.5 algorithm of time series. Combined with the FAVAR model, the SV-TVP-FAVAR model is established to study the impact of macroeconomic policy uncertainty on the macroeconomic system. The model cumulative return, trend prediction, aggregate impulse effect, and stage response characteristics are used as indexes for model evaluation. The cumulative return of the macroeconomic trend prediction model can reach up to 82.29%, the incremental GDP is only 920 million yuan lower than the actual macroeconomic value, and the great value of the impact of quantitative tools and price tools on economic growth is 0.369 and 0.359, respectively. The analytical model of macroeconomic data is constructed on the basis of big data technology, which facilitates access to the trend of the macroeconomic changes and the influencing factors and provides a reference for the optimization of the macroeconomic management strategy to provide a reference.

Impact of Selected Factors on International Trade of Bangladesh: An Empirical Analysis

International trade is a vital driver of economic development for nations worldwide, and Bangladesh, as a developing country in South Asia, strategically utilizes trade as a key element in its economic growth agenda. This paper examines the impact of internal factors on Bangladesh's international trade, employing Ordinary Least Squares (OLS) regression analysis to analyze data spanning from 2000 to 2022. The study focuses on factors such as GDP, inflation, real interest rates, unemployment rates, government expenditure, population growth, remittance inflows, government expenditure in education, macroeconomic management, and tariff rates. The results reveal a strong statistical significance between the predictors and Bangladesh's international trade volume. Notably, personal remittances, government expenditure in education, and macroeconomic management index exhibit significant influence on international trade. The findings provide valuable insights for policymakers and stakeholders to enhance Bangladesh's trade performance, contributing to its sustainable economic development.

How do macroeconomic variables and financial inclusion affect financial stability in Indonesia?

Financial stability is a crucial indicator of the financial sector's health, reflecting the system's resilience or vulnerability to crises. This study investigates the impact of macroeconomic variables and financial inclusion on financial stability in Indonesia, utilizing quarterly data from the first quarter of 2012 to the fourth quarter of 2021. Employing the Vector Error Correction Model (VECM), the research examines the influences of these factors in both the short and long term. The findings reveal that macroeconomic variables and financial inclusion significantly affect financial stability in Indonesia across both time frames. Specifically, inflation emerges as a critical factor influencing financial stability in the long term, while interest rates play a pivotal role in the short term. Moreover, financial inclusion, represented by the public's use of banking products and third-party funds relative to Gross Domestic Product (GDP), impacts financial stability both in the long and short term. Conversely, financial inclusion, measured by credit to GDP, exhibits only short-term effects on financial stability. The results underscore the importance of careful consideration by the central bank when formulating monetary policy, particularly regarding interest rate adjustments, due to their immediate impact on financial system stability. Over the long term, maintaining control over inflation rates is imperative to safeguard financial stability. Furthermore, financial institutions, in their role of fostering financial inclusion by distributing credit, must balance the quality of credit with its quantity to avoid negative impacts on the financial system's stability. This study contributes valuable insights for policymakers and financial institutions aiming to bolster Indonesia's financial stability through prudent macroeconomic management and the strategic implementation of financial inclusion initiatives.