Macroeconomic Perspective Research Articles

Pro-Environmental Behaviour in the European Union Countries

The purpose of the presented research is to assess pro-environmental behaviour (PEB) in European Union countries in 2009 and 2019. The study used a synthetic measure developed using the TOPSIS (Technique for Order Preference by Similarity to an Ideal Solution) benchmark method. This method enables distinguishing classes and ranks of countries depending on the adopted characteristics. Basic measures of descriptive statistics, i.e., average, standard deviation and the coefficient of variation, were used in the analysis of the data set. The main research question addressed in this study concerns the relationship between the level of PEB and economic, demographic, and educational factors—not only on a micro scale but also from the macroeconomic perspective. The research has revealed a wide variety throughout the European Union (EU-27) countries in terms of pro-environmental behaviour. Sweden, Finland, and Denmark top the ranking, while Malta, Greece, Spain, and Romania are at the bottom of it. Northern European countries can therefore be identified as a group that represents a positive benchmark in terms of PEB across the European Union (EU-27). The correlation between PEB and selected economic, demographic, and education-related variables was also investigated. Country-level PEB is correlated with demographic and economic variables, but it is not correlated with education-related variables.

RELATIONS BETWEEN INFRASTRUCTURE INNOVATIONS AND TOURISM SPENDING IN DEVELOPED COUNTRIES: A MACROECONOMIC PERSPECTIVE

Tourism spending as well as innovations are characterized by great economic value, which emphasizes the need for their research from a macroeconomic perspective. The objective of the research was to assess the significance of the relations between infrastructure innovations and tourism spending in a sample of developed countries. The analytical processes included macroeconomic indicators expressing tourism spending and innovations. The research sample consisted of 36 countries of the Organization for Economic Co-operation and Development (OECD) (2010–2019). The analytical processes were primarily performed using robust panel regression and cluster analysis. One of the most important findings is that innovations in information and communication technologies (ICTs) were dominant in terms of the effects on tourism visitors' spending. The results showed that innovations in other areas of infrastructure (general infrastructure, ecological sustainability) should not be neglected either. The significant effects of selected innovation indicators showed positive trajectories. As a result, with the strengthening of innovation activities, an increase in tourism spending is expected, which may lead to economic development. It can be assumed that innovation efforts in countries such as Mexico, the Slovak Republic and Turkey could have great potential for improvement. Based on the results, innovations should be considered a part of tourism development strategies, while ICTs play an important role in this issue. It is desirable to support effective tools to increase the number of innovations in tourism. These innovation efforts at the national level may translate into higher tourism spending, which appears to be economically beneficial.

Determinants of Unemployment in the Large and Medium Industrial Sector in Indonesia

As a country with the second-highest unemployment rate, Indonesian policymakers should worry about this condition. Based on the macroeconomic perspective, unemployment is affected by the firms' labour demand. It highlights that the firm's profit or loss highly determines the labour force demand. Using the Fixed Effect Model, this study results show that the labour force significantly affects industrial output, and the changes of industrial output highly increase the labour demand in the market. However, foreign and domestic capital neither significantly reduce unemployment rate in Indonesia nor stimulate the large and medium industries to absorb labour in the market. The Government should utilize foreign and domestic capital efficiently as possible to reduce unemployment rate.

The Effect of Education and R D on Tourism Spending in OECD Countries: An Empirical Study

The aim of the presented study was to evaluate the effects of education and research and development (R&D) on tourism spending in a sample of OECD countries. The analyses were performed on the basis of data on tourism spending and data on education and R&D. The research included 36 OECD countries, which were analysed for the period 2010-2019. Robust estimation was used in the panel data models. The results revealed the effect of R&D on leisure tourism spending (R&D›LTS) and the effect of R&D on visitor exports (foreign spending) (R&D›VEFS) with positive coefficients. On this basis, it can be concluded that improvements in R&D can lead to increased leisure tourism spending as well as foreign spending. The countries such as Latvia, Chile, the Slovak Republic, Mexico, Lithuania, Turkey, Poland, Greece, Estonia, and Hungary have a great potential for an improvement in R&D, which may also result in a growth of tourism spending. The research was focused on the macroeconomic perspective of education and R&D and their effect on tourism spending as key economic indicators. The study provides interesting findings that are useful for policy makers in revitalizing the tourism sector through the effective implementation of policies and strategies aimed at increasing tourism spending. The study also enriches and contributes to the knowledge about the relationships between economic development and the development of the tourism sector.

Financial Inclusion and Its Impact on Inclusive Growth: The Macro-Economic Perspective in Sri Lanka

The term “Financial Inclusion” means the transfer of formal financial services at a reasonable cost to the vast sections of underprivileged and low-income group of the country. Financial inclusion and inclusive growth are the two sides of the same coin. Both are interrelated and interdependent. For growth to be inclusive, all people should access and use the formal financial services. In Sri Lanka, it is apparent that the inclusive growth is hampered by financial exclusion. Mostly, banking and other financial services are not distributed adequately, especially in rural areas of the country. Therefore, there is a large part of the rural population that involve in high risky informal financial transactions thereby involving with the informal financial sector. The present study attempt to examine the contribution of financial inclusion to enhance the inclusive growth of the country. This study concerned economic growth, poverty, equality and employment as main dimensions of the inclusive growth. As per the nature of the study, secondary data were collected from literature and other accepted reports. The research employed a regression model using E-views to analyse time series data from the period of 1985 to 2019. According to the findings of the research, results revealed that there is a significant positive impact made by the financial inclusion on the inclusive growth of the country. Further, the results explained economic growth as the most significant determinant and employment as the least significant determinant which is influenced by the financial inclusion in the Sri Lankan context.

Information and Communication Technologies (ICTs) Adoption by MSMEs and Local Poverty: An Empirical Evidence from Indonesia

This paper aims to examine a relationship between the adoption of Information and Communication Technologies (ICTs) by Micro, Small, and Medium Enterprises (MSMEs) and local poverty in Indonesia. Previous literature has shown that the adoption of ICTs is a significant catalyst to increasing a nation’s productivity from a macroeconomic perspective. This has imposed a new debate among researchers whether the adoption of ICTs can contribute to a more specific economic development goal: reducing poverty. Some researchers argue that the means of a broader economic development can be obtained through the informal sectors, MSMEs. Therefore, this paper argues that in order to find a more satisfactory result, the role of ICTs adoption in reducing poverty needs to be examined from within a more specific economic agent—the MSMEs. To test the hypothesis, we run OLS regression models with province and year fixed effects on our MSMEs survey data and local poverty measures. The results show a robust, negative relationship between the adoption of ICTs by MSMEs and the number of poor populations in the corresponding region, controlling other factors. DOI : https://doi.org/10.26905/jkdp.v25i2.5343

The Macroeconomics of Financial Speculation

I review the literature on financial speculation driven by belief disagreements from a macroeconomics perspective. To highlight unifying themes, I develop a stylized macroeconomic model that embeds several mechanisms. With short-selling constraints, speculation can generate overvaluation and speculative bubbles. Leverage can substantially inflate speculative bubbles, and leverage limits depend on perceived downside risks. Shifts in beliefs about downside tail scenarios can explain the emergence and the collapse of leveraged speculative bubbles. Speculative bubbles are related to rational bubbles, but they match better the empirical evidence on the predictability of asset returns. Even without short-selling constraints, speculation induces procyclical asset valuation. When speculation affects the price of aggregate assets, it also influences macroeconomic outcomes such as aggregate consumption, investment, and output. Speculation in the boom years reduces asset prices, aggregate demand, and output in the subsequent recession. Macroprudential policies that restrict speculation in the boom can improve macroeconomic stability and social welfare.

Territorial pressure and tourism contribution to GDP: The case of Italian regions

AbstractThis article focuses on long‐run co‐movement between tourists' arrivals and per capita income with the aim of evaluating, through a macroeconomic perspective, whether its excessive increase can be detrimental to economic development. To this aim, GDP per capita in Italian NUTS2 regions is connected, through a dynamic panel cointegrating technique, to arrivals and to a measure of touristic congestion (tourism territorial pressure index). Results show that tourism contributes to the increase of per capita GDP. However, when accounting for the congestion effect, the relation appears to be nonlinear, revealing a detrimental effect on growth driven by an excessive tourism pressure on territories.

Bitcoin Under Inflation-Hedging Scrutiny - The Extended Fisher Hypothesis in Crypto

Improved access to the scarce, digital resource justifies analyzing Bitcoin from a macroeconomic perspective. Using ten years of historical monthly returns, this study examines Bitcoin’s hedging capabilities with respect to inflation measures following the Fisher hypothesis. Short-term interest rates are used to split the ex post observed inflation into an ex ante expected and unexpected part by applying autoregressive distributed lag models. Having 40 countries under scrutiny, the results show that Bitcoin has partial hedging capabilites against expected inflation in specific countries. In a cross-sectional view on expected inflation, rolling window regressions reveal a diminishing number of significant inflation betas over time.

Factors Impacting Food Away from Home (FAFH) Spending in the United States: A Macroeconomic Perspective

Factors Impacting Food Away from Home (FAFH) Spending in the United States: A Macroeconomic Perspective

A review on the economics of artificial intelligence

AbstractThe rapid development of artificial intelligence (AI) not only represents a scientific breakthrough but also has impacts on human society and economies, as well as on the development of economics. This paper focuses on the macroeconomic perspective, reviewing recent literature in order to answer three key questions. First, what approaches are being used to represent AI in economic models? Second, will AI technology have an impact on the economy different from that of previous new technologies? Third, in which aspects will AI have an impact, and what is the empirical evidence for these effects of AI?On the first question, our review reveals that the incorporation of AI into economic models raises fundamental questions on economics and economic models. On the second question, while most empirical studies cannot deny the existence of the Solow Paradox for AI technology, some studies find that AI would have a different and broader impact than previous technologies. On the third question, studies on the labor market seem to suggest a stylized fact regarding the impact of AI on employment on different levels, and income inequality across skill levels and between developing and developed countries. The impacts of AI on international trade and education have been largely neglected and are worth further research in the future. It is also important for both theoretical and empirical studies to have a clear and accurate definition of AI so that the results are not misinterpreted.

Impacts of the COVID-19 pandemic on the policy of cultural and creative industries of Slovakia

The main aim of this paper is to identify and evaluate the impact of the COVID-19 pandemic on the cultural and creative industries from the national point of view and to assess the measures applied by the Slovak government in order to eliminate its consequences. The paper is oriented towards a microeconomic and macroeconomic perspective with special attention devoted to the financing of the cultural and creative industries, and the social impacts on the different groups of respondents. Because of the lack of data (even non-existence), this paper presents the results of original primary research conducted among representatives of these industries between November and December 2020 and through online structured interview with the representatives of the Ministry of Culture of the Slovak Republic. The last part of the paper critically evaluates the implemented support measures and their real influence on solving the unprecedented crisis caused by the COVID-19 pandemic in cultural and creative industries.

Displacement and debt – the role of debt in returning to work after displacement

PurposeThis paper aims to analyze the question of how household indebtedness impacts households’ incentives to search for and accept work after displacement.Design/methodology/approachTo analyze the relationship between household indebtedness and unemployment duration, this paper applies standard proportional hazard models. For data, this paper relies on the longitudinal US National Survey of Income and Program Participation (SIPP), covering the period between 2008 and 2012.FindingsThe findings show that a 10% increase in household debt increases the likelihood (hazard) of leaving unemployment by 0.2%–0.4% points. Independent of measuring a household's indebtedness and in light of a series of robustness tests, the results indicate that the pressure of servicing an existing debt burden forces individuals to return to work.Social implicationsFrom a policy perspective, the research findings support the notion that household indebtedness plays an important mediating role for labor market outcomes through influencing households’ incentives to return to work after displacement. This finding has important implications for the design of effective policy responses to mass layoffs during the current pandemic.Originality/valueA key innovation of the research is that we can show that household indebtedness impacts the labor supply side. From a macroeconomic perspective, this insight is important in better understanding the role of increased indebtedness (and financialization) in amplifying aggregate macroeconomic dynamics.

FTT:Heat — A simulation model for technological change in the European residential heating sector

We introduce a new bottom-up model for simulating Future Technology Transformations in the European residential heating sector, FTT:Heat. The model simulates the uptake and replacement of heating technologies by households in all individual Member States up to 2050, and allows to simulate the potential effect of real-world policy instruments aiming at an increased uptake of low-carbon technologies. It features an explicit representation of households' technology choices, based on observed preferences and non-linear diffusion dynamics. Decision-makers are modelled as individual households, which are subject to limited information and bounded rationality. Their decisions reflect behavioural factors and preferences at the micro level, and may result in sub-optimal outcomes from a macroeconomic perspective. For demonstration, we simulate policy mixes for reaching the EU's 2030 renewable heating targets in each Member State. Under current diffusion trends, some countries are estimated to continue an ongoing transition towards renewable heating, while others would hardly see any decarbonisation. For increasing the share of renewable heating by at least ten percentage points until 2030, 20 Member States need to introduce additional policies, the necessary stringency of which differs between countries. Due to the slow turnover of heating systems, resulting cost increases faced by households could persist over decades.

External imbalances from a GVAR perspective

AbstractWe study the drivers governing external disequilibria through a Global VAR (GVAR) analysis applied to a group of 24 countries during the period 1972–2017. The GVAR methodology is particularly well suited for our research question. First, it permits to measure the effects of both domestic and foreign country‐specific shocks. Second, it allows us to analyse the long‐run relationships and dynamics through generalised impulse response functions. Third, it enables us to test many hypotheses from a macroeconomic perspective and the existence of spillovers. Our results show evidence of international financial integration in terms of fulfilling the real interest rate parity. Concerning the twin deficits hypothesis, we find no conclusive results. In addition, we show how German fiscal policy has relevant spillover effects on other European countries (such as France, Spain and the Netherlands) and the United States and India. Finally, global shocks have long‐lasting effects in most countries analysed, primarily through real oil prices. These results provide clues about how to implement a more symmetrical external adjustment, especially inside the euro area.

A Pandemic of Protectionism: How Economic Isolationism Affects the Economy

The aim of this paper is to study the economic consequences of protectionism from a macroeconomic perspective. For that purpose, we estimate the impact of tariffs on different economic variables as GDP growth, trade volume or unemployment, comparing the effects for two groups of countries: high-income and low-income. For this, we build a regression model to estimate the effects of tariff changes on each of these variables, differentiating between the two groups of countries. Tariffs contribute to increase unemployment, generate lower economic growth and reduce trade volumes, but by how much? This is very relevant in the actual pandemic environment in terms of looking for efficient public policy for economic recovery. This is complemented with an overview of protectionism and trade restrictions in the pandemic environment, and how economic nationalism could affect policymaking in the recovery phase of the actual recession. Multilateralism seems to be at risk due to these political and economic trends, with multilateral organizations having had their role as trade arbiter eroded, which could be a threat to global value chains and free-trade mechanisms. We conclude that recent tariffs have no significant effect on high-income countries, while variables as GDP growth rates or unemployment in low-income countries were more sensitive to variations of tariff rates.

TOP-DOWN PORTFOLIO IMPLICATIONS OF CLIMATE CHANGE

This paper reviews the significant progress in academic research on economic impact of climate change and explores the implications for expected returns and strategic portfolio allocation across major public asset classes. There have been numerous efforts to measure the environmental impact within a broader ESG framework with a focus on microeconomic and firm-level implications. In this paper, we assess the impact of climate change on long-term expected returns across asset classes from a top-down macroeconomic perspective. We use well-accepted climate risk scenarios to assess the potential impact of alternative climate scenarios on economic growth, inflation and asset returns for major asset classes. Finally, we design hypothetical portfolios given these top-down assumptions and explore portfolio allocation implications.

Enabling stock market development in Africa: A review of the macroeconomic drivers

Africa has underdeveloped stock markets that have failed to meet the continent’s capital needs, such as rapid economic growth. This research analyzes the key drivers of stock market development in Africa from a macroeconomic perspective. The study examines several macroeconomic variables, including credit to the private sector, foreign direct investment, external reserves, money supply, external trade, per capita GDP, inflation, and lending rate to explain stock market development in Africa. The study builds a panel data consisting of eight African countries from 1994 to 2018 and applies the pooled mean group estimation technique. The analysis shows that in the long run, credit to the private sector, external reserves, and inflation are the most important factors that influence stock market development, while in the short run, income and trade openness are significant in explaining stock market development in Africa. The study recommends that policies to develop African stock markets should center on developing the private sector through access to credit, increased per capita income, and effective foreign reserve management to boost local and foreign investors’ confidence.

The impact of financial inclusion on economic development: the mediating roles of gross savings, social empowerment and economic empowerment

PurposeThe purpose of this paper is to measure the impact of financial inclusion on economic development.Design/methodology/approachStudy 1 used World Bank Data to develop financial inclusion percentages of ownership of checking accounts, savings accounts, debit cards and loans for 179 countries among the poorest 40% of the population, from 2011–2017. Regressions established the financial inclusion, gross savings and GDP per capita growth linkage. Study 2 created and validated scales to measure social empowerment, economic empowerment and economic development, among inhabitants of Bangladesh villages. Structural equation modeling measured the mediation by social empowerment and economic empowerment of the financial inclusion and economic development linkage.FindingsTotal financial inclusion was significantly explained by gross savings, which was significantly explained by GDP per capita growth. Ownership of a checking account significantly increased gross savings, while ownership of a savings account significantly increased GDP per capita growth. Ownership of a checking account differentiated countries with the highest 5% of gross savings, while ownership of a debit card significantly differentiated countries with the GDP per capita growth. Social empowerment and economic empowerment significantly mediated the financial inclusion and economic development relationship.Originality/valueThe study is unique in examining financial inclusion from a multi country, macroeconomic perspective combined with measurement of its theoretical underpinnings through a primary data-based sample extracted from respondents in Bangladesh, a lower middle-income country in Southeast Asia.

Introduction to the special issue on “New macroeconomic perspectives on inequality, credit, and stability”

Introduction to the special issue on “New macroeconomic perspectives on inequality, credit, and stability”