Real GDP Growth Rate Research Articles

Demand Deficiency and Inflation in the G7 Countries

In this paper, we analyze the relationship between nominal and real GDP growth for G7 countries for the period 1971 – 2018. A visual inspection of the data indicates the presence of a threshold, above which the structure of the relationship between nominal and real GDP growth rates changes from a positive one to a flat one. Moreover, the volatility of real growth is observed to be higher at high rates of nominal GDP growth. We first test for the presence of a two regime non-linearity by using the Sup F test of Andrews (1993). Due to the presence of heteroskedasticity we also apply the Sup MZ test of Ahmed et al. (2017). Both tests operate under an unknown change point and the latter also allows for
 heteroskedasticity. The results of the tests point to the presence of a ‘demand deficiency ’regime for low nominal demand growth rates and to a ‘harmful inflation ’regime for higher nominal GDP growth rates, these results have strong implications for guiding recent policy discussions on nominal GDP targeting.

Exploring the Impact of Electronic Commerce on Employment Rate: Panel Data Evidence from European Union Countries

The objective of this study is to explore the impact of electronic commerce on employment rate for a sample covering the whole 27 Member States of the European Union (EU-27), from 2010 to 2019. Moreover, this research explores the clusters of nations with reference to electronic commerce adoption and employment rate dynamics. The outcomes of cluster analysis show that Western Europe reveals the most developed e-commerce marketplace in EU-27, shown by Internet accessibility and high penetration rate of digital tools, and the lowest figures are registered in the Eastern part of Europe. Furthermore, the empirical findings of the panel data fixed-effects and the generalized least squares regressions suggest that electronic commerce influences employment rate positively. By including country-level control variables (real GDP growth rate, research and development expenditure, employed ICT specialists, enterprises with Internet access), the outcomes reveal that one percentage change in enterprises’ total turnover from e-commerce sales, enterprises’ turnover from web sales, and enterprises with e-commerce sales of at least 1% turnover will increase employment rate by 0.205, 0.258, and 0.350 percentage points. Furthermore, the econometric evidence from the method of moments quantile regression models with fixed effects reinforces our findings. Enterprises’ total turnover from e-commerce sales and the percentage of enterprises with e-commerce sales of at least 1% turnover positively influence employment rate for all quintiles, but in the case of enterprises’ turnover from web sales, the effect is positive only for the quintiles ranging from 0.5–0.8.

Evaluation on the Effect of Regional Development Policy: The Case of Guizhou Province’s Catching-up Strategy in China

China has been facing the dangerous dilemma of unbalanced regional development as the world does. With the coming of the two centenary goals, facing the peculiar difficulties and present conditions in Guizhou province, the central government of the People’s Republic of China made and implemented the catching-up strategy in Guizhou province in 2012. This paper regards implementing catching-up strategy in Guizhou province as a social quasi experiment, chooses 15 middle and western provinces or municipalities to compose control group, applies provincial panel data from 1998 to 2017, and uses synthetic control method to acquire a synthetic Guizhou province which is specified as a counterfactual condition of Guizhou after 2011 to study the economic effects of catching-up strategy quantitatively. The conclusion of positive econometric analysis indicates: from 2011 onward when implementing catching-up strategy, Guizhou Province’s growth rate of real GDP is higher than ‘the synthetic Guizhou’ by 1.4 percent to 3.4 percent. The paper asserts that in comparison with the universal strategy of regional development, practicing targeted catching-up strategy aiming at special region could realize surpassing speedily.

The Impact of Foreign Direct Investment on the Economic Growth of South Caucasus Countries

This paper focuses on the effects of foreign direct investment inflows on the economic growth in a panel of three South Caucasus countries using data from 1996-2019 periods. In this study, we applied the following control variables; trade openness, investment, real exchange rate, and population growth. Classical linear regression model was employed in this paper. Ordinary least squares methods are used for estimation. Empirical results revealed that there is no significant effect of FDI inflows on economic growth. The results show that inward FDI stock-to-GDP ratio and real GDP growth rate are positively correlated.

China macroeconomic report 2021: China’s macroeconomy marches towards normalisation

In the year 2021, China’s economy continues to recover and moves towards policy normalisation. This report identifies features indicating the beginning of China’s macroeconomic normalisation, the internal and external pressure it faces, and the supporting policies. Due to the economic recovery and the base effect, China’s real GDP growth rate is projected to reach above 8.0% in 2021, and the quarterly growth rate will drop from 18.3% in Q1 to 5.0% in Q4, showing a declining trend. Based on qualitative assessments and statistical forecasts, this report puts forward some policy suggestions.

Germany’s Economic Growth In 1950–60 and the Problem of the Country’s Balance of Payments Sustainability

The 1950s in Germany, especially the period 1953–1958, were later recognised as the ‘golden years of the post-war period’. By the end of this period, most of the war damage had been removed and the economy was in a state of dynamic growth. In the period 1949–59, the average real GDP growth rate was about 7.4% with an average investment rate of 24.2% (in current prices). In the years (1950–53), a massive housing construction programme was carried out that was financed almost in half from public funds. Germany’s economic growth in 1950–60 mainly influenced by investment activities and the growth of exports. During this period, state expenditure did not play a major role in the growth of the West German economy (its share in national income steadily declined during the period in question). A the same time, the share of exports in national income was very high and showed a continuously increasing trend. A long-term growth of exports — affecting constantly the expansion of demand — became an important factor stimulating investment activity, which is the main lever of economic growth. At the same time, unusually strong export activity improved the balance of payments, which showed systematic surpluses. It should also be stressed that private consumption was not a factor driving economic prosperity in West Germany in this period. The share of consumption in Germany’s national income showed a declining trend in favour of investment.

Assessing the efficiency of the monetary transmission mechanism channels in Ukraine

The paper is focused on the performance features of the monetary transmission mechanism (MTM) in Ukraine as a small open economy. To assess the efficiency of monetary transmission channels, it is important to disclose their interaction, define criteria and tools for analyzing their impact on key macroeconomic parameters. The study deepens approaches to the analysis of the intensity of using monetary, credit, interest rate and exchange rate channels in Ukraine in 2005–2020 and detects violations in the functioning of the MTM. Using economic and statistical methods and regression models, the influence of the main channels of monetary transmission on real GDP growth rate and inflation in Ukraine was assessed. It was concluded that it is advisable to clarify the conditions for increasing the efficiency of MTM in Ukraine; also, the parameters of forecasting the intensification of its channels in the medium and long term are determined. The paper highlights measures to improve the formation of volume and structure of the monetary base and monetary aggregates, improve credit and investment climate, and increase the efficiency of monetary regulation. Moreover, interest rate and foreign exchange policies of the central bank to transmit impulses from the decisions of monetary authorities to market participants were substantiated.

Oil shocks and the Economic Growth: A Study for Oil-importing and Exporting Countries in the Time of Covid-19

This article discusses the effect of the oil shock on some OECD oil-importing countries such as Canada, France, Italy, China, and the United States and some OPEC oil-exporting countries such as Algeria, Iran, Kuwait, Saudi Arabia, and Venezuela. The model is estimated for the years 1976-2021. five annual variables are used for each country. The variables within the model include real oil prices, GDP growth, inflation, real wages, and real effective exchange rates. Real GDP is the main variable that shows the effects of oil prices on the economy, and the impact of oil prices on other model variables will indirectly affect economic activities. For this purpose, we estimate the vector autoregression model. Estimates obtained for different countries show that oil price shocks are one of the variables affecting economic growth. Also, in oil-exporting countries, oil shocks on economic growth are positive and negative in oil-importing countries. Also, Covid-19 is studied as an effective parameter in creating oil shocks.

The Baker Hypothesis: Stabilization, Structural Reforms, and Economic Growth

In 1985, James A. Baker III's “Program for Sustained Growth” proposed a set of economic policy reforms including, inflation stabilization, trade liberalization, greater openness to foreign investment, and privatization, that he believed would lead to faster growth in countries then known as the Third World, but now categorized as emerging and developing economies (EMDEs). A country-specific, time-series assessment of the reform process reveals three clear facts. First, in the ten-year period after stabilizing high inflation, the average growth rate of real GDP in EMDEs is 2.6 percentage points higher than in the prior ten-year period. Second, the corresponding growth increase for trade liberalization episodes is 2.66 percentage points. Third, in the decade after opening their capital markets to foreign equity investment, the spread between EMDEs average cost of equity capital and that of the US declines by 240 basis points. The impact of privatization is less straightforward to assess, but taken together, the three central facts of reform provide empirical support for the Baker Hypothesis and suggest a simple neoclassical interpretation of the unprecedented increase in growth that has taken place in EMDEs since the early 1990s.

Banking Sector Development and Economic Growth in Nepal: Test of Cointegration

This paper examined the causal relationship between banking sector development and economic growth in Nepal using annual time series data from 1975 to 2019. The per capita real GDP growth rate is taken as the proxy of economic growth. Private sector credit is used as the indicator of banking sector development and inflation, trade openness, and government spending as control variables. Using the Johansen cointegration test and vector error correction method (VECM) in regression analysis, the study reveals that the development of the banking sector in Nepal is positively contributing to economic growth through efficient allocation of financial resources. The findings from this study conclude that there is a unidirectional causality running from banking sector development to economic growth in the long run, which supports the supply-leading hypothesis. However, this study found no support for causality running from economic growth to banking sector development neither in the long run nor in the short run. Therefore, the findings from this study recommend policies that increase the reach of the banking services to small and medium enterprises (SMEs) and individual investors, even in the rural areas of the country.

What Promotes Post-Earthquake Economic Recovery: The Role of Counterpart Assistance Policy After the Wenchuan Ms 8.0 Earthquake, China

Despite the economic statistics from recent years indicating outstanding economic recovery in disaster-affected areas after the Wenchuan Ms 8.0 Earthquake, the causes of these macro-economic changes remain ambiguous. The Chinese Government set up the counterpart assistance policy to aid post-disaster reconstruction after the Wenchuan Ms 8.0 Earthquake in 2008; however, whether the changes seen in the economic statistics can be attributed to this policy remains unclear. This article uses the difference-in-differences model to evaluate the effects of counterpart assistance on economic development in disaster areas. Thirty-nine severely affected counties were chosen as research objects and divided into a treatment group (18 recipient counties) and a control group (non-recipient counties). Empirical results indicate the counterpart assistance policy helped to significantly improve the real GDP and GDP growth rate per capita in the treatment group. Counterpart assistance influenced the real GDP principally by increasing investment in fixed assets, employment, urbanization level, and fiscal expenditure. The findings of this study deepen our understanding of counterpart assistance within the Chinese context.

Macroeconomic Trends among Visegrád Countries, EU Balkans, and the U.S., 1991-2021

The paper provides an introduction to the special issue. It shows a sense in which VisegrĂĄd and Balkan EU countries are correlated in macroeconomic performance and integrated with the global business cycles. Using inflation rate levels as a starting point to characterize when these countries began their transitions, it shows that after 1996 both real GDP growth and real interest rates move together to a significant degree both with each other and with the US. This provides a background from which to view the paths since the collapse of the Soviet Union that these transition economies have taken. In addition, comparison is made to US money and banking policy, to provide an outline of how this may impact progress in the transition region. A subsequent summary of the other articles in the issue shows an inter-relation in their themes about how Central, Eastern, and Southeast Europe have progressed since 1991, and how these paths may be affected by Western economic policy. Implications for Central European audience: The paper shows that transition regions can be impacted by international financial integration, including to possible detriment when capital markets are regulated by policy that pushes real interest rates below their natural levels. Negative real interest rate policy since the 2008-2009 financial crisis and again during the Covid crisis may hasten the rise of autocratic democracy and limit social, political, and economic freedom.

The impact of corona crisis on the economies of major metropolitan areas

The article presents the results of an operational assessment of the impact of the COVID-19 crisis on the change in the gross urban product (GUP) in 17 metropolitan areas of Russia with a population of more than 1 million people in 2020. The goal of the authors was to try to answer the most actual questions nowadays (early 2021): how deep was the fall of the largest agglomerations economies in Russia and abroad; did the corona crisis have a more negative impact on the largest metropolitan areas then on the rest of the economy? In order to answer these questions, two main tasks were: 1) to assess GUP in 17 largest metropolitan areas of Russia; 2) to consider foreign estimates of the GUP in 2020. For foreign comparisons, the authors use the first published data on changes in GDP and gross urban/regional product in the United States, Canada and Australia. The assessment of GUP in this work is carried out through the assessment of the component of employee compensation and then the transition to the GUP indicator on the assumption that such a ratio of compensation of employees to GDP in a city equals the average of the said ratios for the 17 metropolitan areas. The assessment showed that the real GDP growth rates in 2020 were negative not in all metropolitan areas, and in most of them economic losses turned out to be less than those of the Russian economy as a whole.

Domestic Investment, Foreign Direct Investment and Macroeconomic Stability in Nigeria

This study examines the relationship between the two major investment components (domestic investment and foreign direct investment) and macroeconomic stability in Nigeria. In order to capture the macroeconomic stability, some selected macroeconomic variables are presented, namely: real GDP growth rate (RGDPgr), trade openness (TOP), exchange rate (EXR), inflation rate (INFR), interest rate (INTR), private sector credit (PSC) which represent domestic variables and world oil price (WOP) which represent foreign variable. The study employs Johansen cointegration and Vector Autoregressive model as the estimation techniques. Findings from the study reveals that there is no long-run relationship between the selected macroeconomic variables and the two investment variables. The study also reveals that shocks and fluctuations from real GDP growth rate (RGDPgr), private sector credit (PSC), inflation rate (INFR), interest rate (INTR), exchange rate (EXR) and world oil price (WOP) strongly and significantly affect domestic investment in Nigeria; while the shocks and instabilities arising from real GDP growth rate (RGDPgr), inflation rate (INFR), interest rate (INTR), exchange rate (EXR), trade openness (TOP) and world oil price (WOP) majorly and significantly affect foreign direct investment in Nigeria during the period under review. The study therefore recommends that Nigerian government should provide stability measures in all the aforementioned macroeconomic indicators, as this will attract a higher level of FDI and this will create an enabling business environment for domestic investment to operate.

НЕОБХОДИМОСТЬОБЕСПЕЧЕНИЯ ИНКЛЮЗИВНОГО ЭКОНОМИЧЕСКОГО РОСТАСТРАНЫ

It is widely recognized that achieving a highly productive economy in the context of sustainable development is one of the urgent tasks of every country. This article identifies the relationship between productive employment and inclusive development. According to the concept of inclusive growth, the well-being of society is a multidimensional concept, the level of which should not be measured only by real GDP and sustainable growth rates of material income of the population. Over time, the inclusive growth index will dominate the system of indicators for assessing economic development of countries, as it includes not only the economic component of sustainable development, but also the social and environmental environment.

Public Debt Threshold in the Republic of North Macedonia

Research question: Is there a non-linear relationship between public debt and economic growth in North Macedonia, in the form of an inverted U-shape? Motivation: Government consumption plays an important role in the stability of the national economy, especially in periods of economic crisis. However, a rapidly growing public debt is a concerning issue nowadays, since it might jeopardize economic growth perspectives. Economic theory suggests that public debt has non-linear impact on economic growth in the form of an inverted U-shape. In other words, it is believed that after a certain threshold, the public debt will have deleterious impact on economic growth. Idea: Given that such threshold varies significantly across countries, the aim of this paper is to calculate the turning point of the public debt impact in the Republic of North Macedonia. Tools: For this purpose, we use non-linear multiple regression model for the real GDP growth rate as a dependent variable, general government public debt-to-GDP ratio (in nominal and squared terms) as a key independent variable, as well as several other controlling variables. Since theory also suggests reverse causality between economic growth and public debt, we use two different estimation techniques (Ordinary Least Squares and Generalized Method of Moments) to deal with potential endogeneity, and to cross-validate the results. Data: In this regard, we use annual data for the period 1998 – 2019, for 14 variables in total, obtained from several different data sources. Findings: Our results show that general government debt in the Republic of North Macedonia positively affects economic growth until it reaches around 30% of GDP, whereas further indebtedness after that turning point will most likely have a negative impact. Contribution: Given that current debt level is far above the estimated turning point, the need of urgent fiscal consolidation inevitably arises. This is especially important in the light of the ongoing COVID-19 crisis, which imposed the need for strong government intervention and pointed out the importance of the fiscal space for such matter.

Analysis of Determinants of Private Investment in Ethiopia

To make private investment more attractive, most African countries have liberalized market and attempted to create enabling environment in recent decades. Ethiopia, like many African countries, took some steps towards liberalizing market and the macroeconomic regime as well as introducing some measures aimed at improving the investment regulatory framework. This study analyses the determinants of private investment in Ethiopia using a time series analysis over the period of 1975 to 2009. The study gave an extensive account of the theoretical explanation of private investment as well as reviewing the policy regimes, the investment regulatory framework and institutional set up in the country over the study period. It also undertakes empirical analysis to establish the determining factors of private investment in Ethiopia. Our findings show that growth rate of real GDP, availability of credit, and public investment among others, have positive impact on private investment. On the other hand, macroeconomic instability (liberalization), lending rate, and consumer price index (CPI) have negative impact on private investment. The results suggest that policies that address only some components of macroeconomic instability may not be enough to revive private investment. Thus, the findings imply that liberalization of the market and regulatory regimes, stable macroeconomic and political environment, and major improvements in infrastructure are essential to attract private investors to Ethiopia

Crowdsourcing of Economic Forecast: Combination of Combinations of Individual Forecasts Using Bayesian Model Averaging

Economic forecasts are essential in our daily lives. Accordingly, we ask the following questions: (1) Can we have an improved prediction when we additionally combine combinations of forecasts made by various institutions? (2) If we can, then what method of additional combination will be preferred? We non-linearly combine multiple linear combinations of existing forecasts to form a new forecast (“combination of combinations”), and the weights are given by Bayesian model averaging. In the case of forecasting South Korea’s real GDP growth rate, this new forecast dominates any single forecast in terms of root-mean-square prediction errors. When compared with simple linear combinations of forecasts, our method works as a “hedge” against prediction risks, avoiding the worst combination while maintaining prediction errors similar to those of the best combinations.

Newly Industrialized Countries: Is There an Alternative to the Golden Billion?

In order to identify the features of economic development and the historical fate of new industrial countries (NIC), an econometric analysis of their strategies and development dynamics since 1950 was carried out based on the parameters of real GDP growth rates and their standard deviation. 6 types of development were identified. The dynamics of development for 8 economic cycles and paired correlations between countries are estimated. 4 waves of growth rates and 5 waves of MSD were revealed. It is hypothesized that the correlation of growth rates shows the similarity of countries in their use of opportunities, and the correlation of MSD shows that of their responses to threats. Connection graphs are constructed and 3 clusters of countries with similar historical destinies are obtained as a result of the analysis. It is recorded that there are 3 groups of 11 countries with a similar development strategy. The other 10 have no development analogues. Determined: China applies import substitution and export strategies, it can become the leader of the NIC and compete with the global dominance of the OECD countries; the post-industrial development of the NIC cannot be based on a liberal, import-substituting or export strategy. As an alternative, a strategy for improving the living standards is proposed.

The Determinants of Dividend Payout: Evidence from Private Banks in Ethiopia

The main objective of this study was investigating factors that determine the dividend payout of private commercial banks in Ethiopia under the study period covering from 2009 to 2017. A balanced panel data set from national bank of Ethiopia and ten private commercial banks annual report was used and analyzed through fixed effects panel data regression technique. Dividend payout was used as a dependent variable and the independent variables covered under this study were both bank specific (profitability, leverage, liquidity, size and last year dividend payout) and macroeconomic factors (inflation rate, real GDP growth rate and foreign exchange rate). The finding shows that from bank specific factor; profitability, liquidity, bank size and last year dividend payout have statistically significant positive effect on dividend payout while leverage shows insignificant positive effect for dividend payout. From macroeconomic variables inflation rate have a positive effect, but the real GDP growth rate, and foreign exchange rate have a negative effect and foreign exchange rate is the only significant macroeconomic factor for dividend payout.The results of this study have delivered some insights on the effects of both bank specific and macroeconomic factor for dividend payout of private commercial banks in Ethiopia and managements and board of directors of those banks need to consider these variables while designing their dividend payout. In addition, government body specially financial sector should have to consider the effct of macroeconomic variables on dividend payout when they are making a policy about macroeconomic issues. Keywords : Commercial Banks, Bank Specific determinant, dividend payout and macroeconomic determinants. DOI: 10.7176/RJFA/12-3-03 Publication date: February 28 th 2021