Macroeconomic Policy Changes Research Articles

Structural Change in Turkey’s Foreign Trade: 1990-2014 Period

The macroeconomic policy change which Turkey imposed after 1980 has caused significant structural changes in foreign trade. After this fundamental change in the policy, “Import-Substitute Economic Policy” came to an end and Turkey switched to the new policy called Export-Oriented Industrialization. This Strategy foresaw a structural transformation in many areas of the Turkish economy, especially in foreign trade. The period from 1980 to 1990 has been a period of adapting to these policy changes. During this period, macroeconomic policies of Turkey have been tried to be harmonized with global economic policies. After this period, foreign trade oriented policies have been developed. The aim of this study is to determine whether a structural transformation has taken place in Turkey's foreign trade between the years 1990 and 2014 over a period of 25 years. This is the first study that evaluates the structural transformation of Turkey's foreign trade using the new formula for the Constant Market Share (CMS) analysis method. For the analysis, we used Turkey’s foreign trade data with 23 countries which have the largest part among Turkey’s trade partners. World Integrated Trade Solution (WITS) data has been used for the analysis and the data compiled by the United Nations (UN) Classification of Broad Economic Groups. According to the results, there are some significant positive developments in Turkey's foreign trade in 1990-2004 area. However, these developments are not unique, purely country-based and independent of trends in the world. To sum up, there is no structural transformation in Turkey's export performance in the context of product, technological composition and geographical market diversity.

A behavioral analysis of the volatility of interbank interest rates in developed and emerging countries

Purpose This paper aims to analyse the volatility of the fixed income market from 11 countries (Brazil, Russia, India, China, South Africa, Argentina, Chile, Mexico, USA, Germany and Japan) from January 2000 to December 2011 by examining the interbank interest rates from each market. Design/methodology/approach To the volatility of interest rates returns, the study used models of auto-regressive conditional heteroscedasticity, autoregressive conditional heteroscedasticity (ARCH), generalized autoregressive conditional heteroscedasticity (GARCH), exponential generalized autoregressive conditional heteroscedasticity (EGARCH), threshold generalized autoregressive conditional heteroscedasticity (TGARCH) and periodic generalized autoregressive conditional heteroscedasticity (PGARCH), and a combination of these with autoregressive integrated moving average (ARIMA) models, checking which of these processes were more efficient in capturing volatility of interest rates of each of the sample countries. Findings The results suggest that for most markets, studied volatility is best modelled by asymmetric GARCH processes – in this case the EGARCH – demonstrating that bad news leads to a higher increase in the volatility of these markets than good news. In addition, the causes of increased volatility seem to be more associated with events occurring internally in each country, as changes in macroeconomic policies, than the overall external events. Originality/value It is expected that this study has contributed to a better understanding of the volatility of interest rates and the main factors affecting this market.

Heterogeneous Consumers and Fiscal Policy Shocks

This paper studies empirical facts regarding the effects of unexpected changes in aggregate macroeconomic fiscal policies on consumers that differ depending on individual characteristics. We use data from the Consumption Expenditure Survey to estimate individual‐level responses and multipliers for government spending. We find that unexpected fiscal shocks have substantially different effects on consumers depending on their income and age levels: the wealthiest individuals tend to behave according to predictions of standard Real Business Cycle (RBC) models, whereas the poorest ones behave according to standard IS–LM (non‐Ricardian) models, most likely due to credit constraints. Furthermore, government spending policy shocks tend to decrease consumption inequality.

Introduction: Policy Responses to Ageing and the Extension of Working Lives

Since the beginning of the twenty-first century, the relationship between work and ageing has become increasingly visible as a policy issue. It is both reflected in and influenced by changes in macro-economic policy, life-opportunities and social attitudes associated with growing older, as a combination of falling birth rates and increased longevity, and has put pressure on the traditional parameters of the working age. The idea of retiring at a fixed point in the life-course, to enjoy a period of rest or leisure at the end of a working life, emerged in many advanced economies during the 1900s and evolved into policies that encouraged early retirement as the baby-boomers entered the jobs market in the 1960s and 1970s (Phillipson and Smith, 2005). Early retirement, itself a relatively recent development, gave rise to the possibility of a ‘third age’ of leisure and active ageing (Laslett, 1987), but as demographic and economic changes make themselves felt, it is again becoming an uncertain prospect for many older workers (Biggs and McGann, 2015).

Southern Europe in crisis: industrial policy lessons from Italy and Portugal

Italy and Portugal have characteristics in common and some relevant differences, both of which provide useful inputs for a comparative analysis. Lucchese et al. (Industrial policy and technology in Italy, 2016) argue that deindustrialization in Italy stems partially from the shortcomings of industrial policy, which has been unable to promote the development of more knowledge-intensive activities. In contrast, our assessment of industrial policy in Portugal indicates that the absence of structural change towards more knowledge-intensive activities does not seem to result from the absence of adequate industrial policy measures. Even though most of the policy instruments that have been put in place in Portugal being of a ‘horizontal’ nature, support has been unevenly distributed across industries, often being concentrated in more technology-intensive industries. We conclude that despite existing room for improvements in the industrial policies, overcoming the current crisis in the Southern belt of the euro zone will require decisive changes in macroeconomic policies.

Convergence, Crisis and Unemployment in Europe: The Need for Innovative Policies

The paper reviews the double crisis that affected the euro area in the recent period. The focal point is that the austerity measures that have been undertaken in the area, especially in the peripheral countries hurt by the sovereign debt crisis, have not only caused a deep recession but are likely to lead to stagnation and persistent unemployment. In the first part of the paper, original weaknesses in the construction of the monetary union are examined, the emphasis being placed on nominal convergence criteria without taking into account the need for real convergence. This analysis is corroborated by some econometric investigations based on sigma and beta convergence for different macroeconomic variables, distinguishing between the pre-crisis period, 1999-2007, and the recent 2008-2013 period. The empirical section continues with a discussion of recent macroeconomic trends focusing on unemployment: it stresses that the deep and prolonged recession can be defeated only by adequate demand management policies. The next section explains how the excessive austerity policies recently carried out have also been caused by wrong assumptions about the size of the fiscal multipliers. The final policy section emphasizes three aspects: (i) the radical reforms, at the European level, necessary if the monetary union is to survive; (ii) the changes in macroeconomic policies required to put an end to the present stagnation; (iii) the different and innovative policies needed to fight the high level of unemployment (especially youth unemployment).

Government Spending on Health in India

The macroeconomic and health policy changes in India have generated some hopes, fear and complexity in public health spending. Health policies turned ineffective even to meet the required level of resources for providing basic health facilities. Fund allocation towards rural area (with missing health facility), preventive services, medicines and equipments was recorded to be noticeably low and inadequate with a declining trend. After the National Rural Health Mission (NRHM, 2005), public funds in health somewhat increased but remained lower than ambitious commitment of 2–3 per cent of gross domestic product (GDP). Central fund transfer to state, which was (before NRHM) passing through state budget, now bypasses the state budget. This has resulted in discontinuation of some of the health programmes/schemes running in the states and also made the centre–state finance relation more complex. Adverse macroeconomic conditions, conditional central fund allocation criteria, inadequate absorptive capacity and priority of state are further slowing down the effective policy implementation and progress in health outcomes.

La arquitectura de la eurozona y la crisis de su periferia

This research analyses the underlying causes of the Eurozone periphery's economic crisis and suggests an economic policy package not only to restore short-term economic growth, but also to make it sustainable in the long term. Policy recommendations to strengthen economic growth and speed up structural reforms are based on an in-depth examination of the vulnerabilities created by the Eurozone's institutional design and aggravated by the recent US financial crisis. As shall be shown, the inconsistency between the Eurozone's architecture and the economic features of some participating nations was responsible for the noticeable fiscal imbalances and international competitiveness differentials within the region. The difficulties to bring down the public debt value and to improve the fiscal performance in the Eurozone's periphery, in addition to the undergoing deflationary process, have also resulted from the introduction of the common currency and the macroeconomic policy changes brought about by it. In this perspective, important changes are suggested to the Eurozone's institutional framework in order to positively affect international competitiveness, government finances and the health of financial institutions.

Development of Russian Economy in Conditions of Globalization and Investment Policy

Theoretical issues of Russian economy development in the context of globalization, internal and external factors, forming tendencies of structural changes of national production are considered in the article. The situation on the Russian market of exported goods, and its impact on the financial system of Russia are considered. Conditions for investment business are analyzed, the role of state finance, taxation and monetary policies on the performance of business in Russia are explored. A comparative analysis of investment conditions in Russia and in Western developed countries is made. Possible changes in macroeconomic policies, aimed at improving the conditions for investments in Russia, are determined. DOI: 10.5901/mjss.2015.v6n3p700

Examining Critical Junctures in Macroeconomic Policy in Nondemocratic States:Algeria andJordan in Comparative Perspective

AbstractThe article uses the critical junctures framework in examining changes in macroeconomic policy inAlgeria andJordan during the late 1980s to determine if these policy changes constituted critical junctures. Both cases are significantly different from those studied previously using the framework, as neither state was a liberal democracy. The absence of democracy, and as a consequence of accountability, is a factor with which the critical junctures framework has not previously had to contend. This study will also enable us determine if the framework is sufficiently robust to be applied to the examination of macroeconomic policy changes in nondemocratic states. The findings show that in both countries political liberalization did not follow upon economic liberalization, giving lie to the often expressed assumption that economic liberalization and democratization go hand in hand. Instead, as the ruling elites in both countries sought to revive their economies, while maintaining their own positions in society, economic policy reforms required a gesture toward democratization but little else.

A Partial Equilibrium Model of the Malawi Maize Commodity Market

This paper presents a model of the Malawi maize commodity market that is developed for use as a policy analysis tool. The model captures national and local maize market dynamics and the linkages existing within the maize market in the country. This research has been undertaken in order to provide policy makers with a robust tool which can be used to simulate the impact of policy changes on markets and households. Such a tool ensures the availability of evidence for informing food and agricultural policies. The model is a multiequation partial equilibrium model of the national maize market in Malawi. It is developed and linked in a top-down unidirectional manner to the local maize economy via a price linkage equation. A nonbehavioral arithmetic microaccounting approach is used to estimate rural household incomes that are linked to the local economy, through which macroeconomic-level maize price changes transmit. The model can be used as a tool for analyzing the impacts of macroeconomic and agricultural policy changes on the maize industry as well as on rural households that rely on maize. The novelty of the model is that it takes into account the interrelationships between farm/household, local-economy, and national maize market prices, as well as economic theory and existing empirical evidence, to build a framework that is capable of linking to the macroeconomy rural subsistence households that are traditionally deemed to have few or no backward and forward linkages.

A bright future can be ours! Macroeconomic policy for non-eurozone Western countries

Radical changes in macroeconomic policy could produce a brighter future. The neoclassical myth that a free-market economy inevitably moves to an equilibrium position determined solely by supply-side factors must be rejected and replaced by the insight that the position of an economy in the longer term is path dependent. Fiscal policy in recessions should be biased towards increasing physical and human capital, which will improve the productivity of an economy and raise living standards and hence taxable capacity, thus enabling future public debt to be reduced if this is desirable. Monetary policy should play a very minor role in aggregate demand policy, with interest rate settings largely used to help achieve long-term income distribution goals. All this is fundamental to Geoff Harcourt’s vision of macroeconomic policy, and this paper spells out how this vision can be implemented in 2012 in Western countries not hamstrung by eurozone rules and regulations.

Skilled Immigration and Innovation: Evidence from Enrolment Fluctuations in us Doctoral Programmes

We study the contribution of foreign science and engineering talent to the creation of new knowledge in the U.S. economy using panel data on 2300 science and engineering (S&E) departments at 100 large American universities from 1973 to 1998. We use macroeconomic shocks and policy changes in source countries that differentially affect enrollments across fields and universities to isolate exogenous variation in the supply of students at specific departments. Both foreign and domestic graduate students are central inputs into knowledge creation, and the marginal foreign student contributes more to the production of scientific publications and citations. A 10% decrease in the foreign share of doctoral students lowers S&E research output at U.S. universities by 5-6%. A theoretical model of university admissions and scholarships helps us infer the productivity effects of student quality, and econometric results indicate that any visa restrictions limiting entry of highquality foreign students is most costly for U.S. innovation. Increased diversity appears to be the primary mechanism by which foreign students improve research outcomes. The impact of more restrictive immigration policies depends on how they affect the quality margin and diversity of incoming foreigners.

Exchange rate determination and structural changes in response to monetary policies

PurposeThe purpose of this article is to analyse methods for determination of exchange rates in response to fundamental economic variables and changes in monetary policies.Design/methodology/approachThe paper undertakes empirical examination of exchange rate movements and their structural changes in response to changes in macroeconomic variables and monetary policies in the USA, the Euro area, and Japan.FindingsExchange rates have been influenced by macroeconomic fundamentals and have been impacted by the conduct of monetary policies in some cases. Some structural changes in exchange rates have coincided with implementation of drastic monetary policies but not in others. The Japanese quantitative easing policy has had an effect on exchange rates.Originality/valueMonetary policy has been often examined; however, few studies have examined the response of exchange rate movements to monetary policies. Moreover, structural changes in exchange rates are examined in comparison with domestic monetary policies in the USA, the Euro Area, and Japan.

Readings in the Economic Impacts of Recent Changes in Macroeconomic Policies in Sudan (2)

This is the second part of an economic analysis conducted about the current situation in Sudan. The secession of Southern Sudan from the mother nation of Sudan was a direct result of political agreement known as the Comprehensive Peace Agreement (CPA). It was expected by the totalitarian government of Northern Sudan that it can contain the civil war between the Sudan Popular Liberation Army (SPLA) and the Islamized Ingaz totalitarian regime of Khartoum. However, the impacts of an important economic factor was not properly calculated which is that more than 75% of oil produced in unified Sudan is produced from fields that originate in its south. After secession, the Northern country was deprived of that resource while its other real economic sectors, agriculture and industry were in stagnant conditions due to long period of negligence by the state authorities and scavenging by its taxation. The case was typical of applied Dutch Disease of dependency on one natural resource. The country's economic conditions quickly deteriorated from worse to worst. That instigated the government to seek solutions which were by increasing taxation, floating or drastically its domestic currency prices. The results were catastrophic manifested in increasing the inflation from minimal to galloping and rife. Recession that have hovered around its economy since 2008 with the Global Financial Crises effects combined with inflation to manifest in a classical case of strong stagflation. I am not proud to be right of predicting those signs for the past six years. However, I just record it for history with another vision that solutions to Sudan economic crisis will not be solved without reaching political solutions for its current dominating regime. The instigated policies have repercussions whereas people of the country felt with high rates of poverty and absolute destitutions that the imposed economic reforms were like adding insult to injury. The insults were manifested of deceptive lying that economic conditions may improve and injuries of high taxations and no austerity measures or policies imposed on the governmental body, army or its gigantic, centipedes like National and Intelligence Security Service. Their expenditure increased to over 75% of the country's total GNP. The behaviors of the concerned departments' manifest that they never listen to scientific recommendations neither to wise advices. Unless there are true and physical changes in the whole regime, comprehensive restructuring and monetary infusions from outside the country, all of the imagined Four Horsemen of the Apocalypse are expected.

Readings in the Economic Impacts of Recent Changes in Macroeconomic Policies in Sudan (1)

The secession of Southern Sudan from the mother nation of Sudan was a direct result of political agreement known as the Comprehensive Peace Agreement (CPA). It was expected by the totalitarian government of Northern Sudan that it can contain the civil war between the Sudan Popular Liberation Army (SPLA) and the Islamized Ingaz totalitarian regime of Khartoum. However, the impacts of an important economic factor was not properly calculated which is that more than 75% of oil produced in unified Sudan is produced from fields that originate in its south. After secession, the Northern country was deprived of that resource while its other real economic sectors, agriculture and industry were in stagnant conditions due to long period of negligence by the state authorities and scavenging by its taxation. The case was typical of applied Dutch Disease of dependency on one natural resource. The country's economic conditions quickly deteriorated from worse to worst. That instigated the government to seek solutions which were by increasing taxation, floating or drastically its domestic currency prices. The results were catastrophic manifested in increasing the inflation from minimal to galloping and rife. Recession that have hovered around its economy since 2008 with the Global Financial Crises effects combined with inflation to manifest in a classical case of strong stagflation. I am not proud to be right of predicting those signs for the past six years. However, I just record it for history with another vision that solutions to Sudan economic crisis will not be solved without reaching political solutions for its current dominating regime. The behaviors of the concerned departments' manifest that they never listen to scientific recommendations neither to wise advices. Unless there are true and physical changes in the whole regime, comprehensive restructuring and monetary infusions from outside the country, all of the imagined Four Horsemen of the Apocalypse are expected.

A Bright Future Can Be Ours!: Macroeconomic Policy for Non-Euro-Zone Western Countries

Radical changes in macroeconomic policy could produce a brighter future. The neoclassical myth that a free-market economy inevitably moves to an equilibrium position determined solely by supply-side factors must be rejected and replaced by the insight that the position of an economy in the longer-run is path-dependent. Fiscal policy in recessions should be biased towards increasing physical and human capital which will improve the productivity of an economy, raising living standards and hence taxable capacity, thus enabling future public debt to be reduced if this is desirable. Monetary policy should play a very minor role in aggregate demand policy, with interest rate settings largely used to help achieve long-term income distribution goals. All this is fundamental to Geoff Harcourt’s vision of macroeconomic policy and this paper spells out how this vision can be implemented in 2012 in Western countries not hamstrung by Euro-zone rules and regulations.

Understanding Policy Change Using a Critical Junctures Theory in Comparative Context: The Cases of Ireland and Sweden

Utilizing a new theory for examining critical junctures, we seek to better understand the nature of industrial policy change in Ireland during the 1950s and macroeconomic policy change in Sweden in the 1980s. Did these policy changes constitute critical junctures, or something less, and if so why? The theory consists of three elements—economic crisis, ideational change, and the nature of the policy change—that must be identified for us to be able to declare with some certainty if a policy change constitutes a critical juncture. Herein, we will be examining the roles of a variety of change agents including the media, central banks, and politicians. Our findings will help explain why Irish industrial policy was transformed in the late 1950s, while Swedish macroeconomic policy underwent only minor change in the early 1980s.

Understanding Policy Change Using a Critical Junctures Theory in Comparative Context: The Cases of Ireland and Sweden

Utilizing a new theory for examining critical junctures, we seek to better understand the nature of industrial policy change in Ireland during the 1950s and macroeconomic policy change in Sweden in the 1980s. Did these policy changes constitute critical junctures, or something less, and if so why? The theory consists of three elements—economic crisis, ideational change, and the nature of the policy change—that must be identified for us to be able to declare with some certainty if a policy change constitutes a critical juncture. Herein, we will be examining the roles of a variety of change agents including the media, central banks, and politicians. Our findings will help explain why Irish industrial policy was transformed in the late 1950s, while Swedish macroeconomic policy underwent only minor change in the early 1980s.

Changes in Macroeconomic Policies and Volatility of Chinese Stock Market

Based on a comprehensive investigation on Chinese Stock Market and macroeconomic policies, analyzing samples of the SSE Composite Index and relevant monetary and fiscal policies during the period from January 2000 to June 2008, this paper uses GARCH-type models and EVIEWS5.1 software to study effects of changes in macroeconomic policy on conditional volatility of Chinese Stock Market and analyzes the economic significance and reasonability of empirical results. The results show that, when the government adopts the compound policies of money supply, interest rate, stamp duty and fiscal expenditure to regulate the stock market, changes in monetary policies (including money supply and interest rate) have significant effects on the conditional volatility of Chinese Stock Market, while effects of changes in fiscal policies (including stamp duty and fiscal expenditure) on the conditional volatility of Chinese Stock Market are not statistically significant. This finding, to a certain extent, verifies the fund-pulled features and weak-form efficient features of Chinese Stock Market.