Real Interest Research Articles

Does real interest rate reduce income inequality in India? Evidence from multivariate framework analysis.

This study empirically examines the impact of real interest rate on income inequality in India within a Kuznets Curve framework considering the role of economic growth, trade openness and technological innovation as the control variables. This study employs the ARDL bounds test for validating the long-run relationship over the annual data period 1995 to 2019. The results reveal the long-run relationship between the series in India. The findings suggest that the initial increase in interest rate significantly reduces income inequality. But, in a later stage, a threshold exists for such an increased interest rate to revert the prior beneficial impact. This finding further shows that Kuznets’ inverted U-shaped hypothesis is not valid for the relationship between income inequality and real interest rate in India. It shows that the real interest rate impedes income distribution in the long run. These findings are also found to be robust using FMOLS and DOLS estimators. We find that economic growth significantly reduces income inequality, whereas trade openness promotes it. Surprisingly, technological innovation enhances income inequality, but this effect vanishes in the long-run. However, these findings suggest that policymakers in India should not ignore the impeding role of real interest rates while aiming at achieving effective income distribution between haves and have-nots in the long run.

Simultaneous Equations System vis-aviz Classical Regression Estimators on Impacts of Some Economic Indicators in Nigeria

The choice of models for analyzing the relationship between Total Debt Services (TDS), Real Interest Rate (RIR), Inflation Consumer Price (ICP) and Gross Domestic Product (GDP) variables using recursive models, though produces non-spurious results since the coefficient of determination (R2) is strictly less than the Durbin Watson (DW) statistic. However, the recursive model did not give a good fit for the relationship between TDS and GDP, since macroeconomic variables are usually prone to endogeneity, first order serial correlation, autocorrelation problems among others. This research work x-rays the TDS-GDP relationship on one hand and TDS versus GDP, RIR and ICP indices on the other hand in Nigeria. The TDS, GDP and RIR are endogenous variables, while the ICP, TRA, and are exogenous variables. Pre-tests analyses using time series datasets extracted from the repository of World Governance Index showed level stationary series I (0) and a causal relationship between TDS and GDP variables. Furthermore, the results from the estimation techniques showed that the Three-Stage Least Square (3SLS) and Seemingly Unrelated Regression (SUR) outperformed the Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) estimators when applied to both the exactly and over-identified structural equations in the simultaneous equation system (SES).

Determinants of bilateral current account balance between the Eurozone and the United States

Long- and short-run current account balance (CAB) determinants of the nineteen Eurozone (EZ) member states vis-a-vis the United States (US) are examined. Particularly, the competitiveness of the EZ vs the US, the relationship between the current account deficit and the budget deficit (twin deficit), and other factors determining the current account balance are studied. Quarterly data was used in a sample of the nineteen EZ member states with the US as a trading partner over the period 2008 - 2018. It is found that the CAB in the long run has a positive relationship with the real interest rate, real exchange rate, Gross Domestic Product (GDP) per capita, and exchange rate volatility, but a negative relationship with the fiscal balance. In the short run, it is notable that only the real exchange rate affects the current account balance. Finally, policy implications are discussed regarding the determinants of the current account.

Monetary Conditions Index and Economic Activity in Dollarized Zimbabwe

Purpose: Zimbabwe has experienced a chronic inflationary crisis whose roots can be traced back to 1997. Various macroeconomic instruments have been suggested to stabilize the country’s prices and foster economic growth but evidence on how they interplay to influence policy is lacking. This study developed a monetary conditions index (MCI) for Zimbabwe during the 10-year dollarization period, 2009 to 2018, and measured its correlation with economic activity. The aim of the MCI is to inform monetary policy making in Zimbabwe. Design/methodology/approach: Using monthly time series data, the MCI series from 2009 to 2018 was calculated using real interest rates and exchange rates. The relationship between the MCI, GDP, inflation, money supply and private sector credit was analysed using the Auto Regressive Distributed Lag (ARDL) model for the long-term relationship and Granger causality for the short term. Findings: Results showed MCI weights of 1:1.54 implying that exchange rates dominate the interest rate in Zimbabwe’s monetary policy. A long run relationship between the MCI and economic variables was statistically significant while short term relationships were established for private sector credit, GDP, and foreign interest rates. Research implications: The study concludes that the MCI is a useful indicator of the central bank’s monetary policy positionfor economic analysts while the central bank can also adopt it for inflation and growth targeting. Originality/value: Unlike previous research which has proffered monetary solutions based on specific variables, this study took into consideration the interplay between interest rates and exchange rates in determining economic activity in Zimbabwe. The constructed MCI captured the interplay between these two key variables and the study established its relationship with economic activity. On this basis, the study recommends the adoption of the MCI in guiding monetary policy in Zimbabwe.

Ensemble analysis of complex network properties—an MCMC approach

What do generic networks that have certain properties look like? We use relative canonical network ensembles as the ensembles that realize a property R while being as indistinguishable as possible from a background network ensemble. This allows us to study the most generic features of the networks giving rise to the property under investigation. To test the approach we apply it to study properties thought to characterize ‘small-world networks’. We consider two different defining properties, the ‘small-world-ness’ of Humphries and Gurney, as well as a geometric variant. Studying them in the context of Erdős-Rényi and Watts–Strogatz ensembles we find that all ensembles studied exhibit phase transitions to systems with large hubs and in some cases cliques. Such features are not present in common examples of small-world networks, indicating that these properties do not robustly capture the notion of small-world networks. We expect the overall approach to have wide applicability for understanding network properties of real world interest, such as optimal ride-sharing designs, the vulnerability of networks to cascades, the performance of communication topologies in coordinating fluctuation response or the ability of social distancing measures to suppress disease spreading.

Analysis of the Relationship Between COVID-19 Infections and Web-Based Housing Searches

Abstract The study used Google search query data on real estate interest for several countries in the Baltic area. The dynamics of public interest in housing have been compared to the dynamics of the COVID-19 infections in Lithuania, Latvia, Poland, and Sweden. This study uses the Vector autoregressive (VAR) model to forecast such time series. VAR is a multivariate linear time series model in which the endogenous variables in the system are lagged functions of the values of all endogenous variables. The increase in COVID-19 infections negatively affected society’s interest in housing. The study used Google Trends and R software.

A tractable overlapping generations structure for quantitative DSGE models

This paper develops a novel tractable overlapping generations (OLG) structure whose aggregate equations resemble a model of an infinitely lived representative agent, except that there are no aggregate transversality conditions in the OLG economy. The main assumptions are complete markets and time-invariant (but age-dependent) consumption shares of age-groups. The tractability of the OLG structure here distinguishes it from conventional OLG models – the present structure is suitable for quantitative dynamic stochastic general equilibrium (DSGE) macro models. Importantly, the OLG structure here maintains key predictions of standard OLG models, namely the possibility of low real interest rates and of equilibrium indeterminacy. • This paper develops a novel tractable overlapping generations (OLG) structure. • Aggregate equations resemble a model of an infinitely lived representative agent. • However, there are no aggregate transversality conditions in the OLG economy. • The OLG structure here is much more tractable than conventional OLG models. • Thus, the present OLG structure is suitable for quantitative DSGE macro models.

The Importance of Scientific Research in Canon Law Today

Abstract The practitioners of canon law claim that ecclesial law and civil law are in a relation of analogy, so that both of these juridical systems have common features but differ in aspects of specificity of matter and essence. In this way, civil law becomes a point of reference for the study of ecclesial law and the statement is true as well the other way round However, one can note a modality of identification only for the features of canon law which are equivalent to the features of civil law, canon law constituting a coherent system similarly to the civil law system. Consequently, canon law is a well-deffined juridical system, delimited by its own juridical norms and which regulates both the internal life of the Church and her external life, in relation to other civil and religious institutions. Therefore, by the topic approached in the present article we join this contemporary ‘juridical trend’, which relies on comparative law in order to know and harmonize the international legislation among all the law systems, the basis of dialogue revolving around the guaranteeing of man’s fundamental rights and freedoms. Actually, the Church respects and participates in the fight for guaranteeing man’s fundamental rights and freedoms because the Church carries in her being and mission the seal of the universal. Recently, the modern scientific juridical research has shown a real interest in the importance of canon law, the main empirical directions referring to the historical highlighting of canon law, the study of the methods dealing with the relations between the State and the Church, the organisms of ecclesial authority, especially those related to the system of justice, the comparative analysis of canon law, the existence and functionality of the canon law system in various religions of the world.

R&D and Employment Relation: Differences in Low and High-Skilled Employment in Developing Economies

This paper attempts to investigate the effect of technology on employment based on skill groups in developing countries using data from 23 countries between 1990 and 2019. We use the macroeconomic framework to split employment in developing countries into high-skilled and low-skilled and examine how these two groups are affected by progress in technology. Pedroni’s (1999, 2004) and Kao’s (1999) cointegration methods reveal the statistically significant relationship among variables in the long run. Coefficients estimated in cointegration highlight that technology is among the factors that increase unemployment in developing countries. In addition, our baseline models document that inflation and real interest rates have a positive impact on unemployment. Finally, both high-skilled and lowskilled employment in developing countries are negatively affected by technology, and the negative impact is greater on low-skill employment.

HOW DO THE MACROECONOMIC DETERMINANTS UNDERPIN THE CAPITAL MARKET DEVELOPMENT IN NORTH MACEDONIA?

The capital market plays a vital role in economic growth since it is an important source of financing the business sector’s investments. Hence, a developed capital market enables efficient financial resource allocation by channeling domestic savings to those that need capital, which in turn leads to increased investment directed towards innovation and supports sustainable growth. The main objective of this research is to examine the impact of macroeconomic determinants on the capital market development in the Republic of North Macedonia. The focus has been put on the investigation of two dependent variables, stock market turnover to GDP ratio and stock market turnover to market capitalization ratio (Turnover Ratio) as parameters resembling the liquidity (depth) of the capital market, and how they depend on the economic growth, macroeconomic stability, trade openness and gross investments to GDP ratio. The empirical study is based on a time-series data analysis based on relevant secondary data sources, based on the utilization of the Johansen Test of Cointegration and the development of a corresponding Vector Error Correction Model (VECM) to estimate the relationship, the impact, the magnitude, and the significance of the determinants that support, and influence the liquidity of the stock market in North Macedonia during the period from 2008:Q1 to 2021:Q4. The analysis shows the existence of a significant long-run relationship between the observed macroeconomic factors and the stock market liquidity. The findings indicate that imports and real interest rates have a negative, yet statistically significant impact on the stock market turnover to GDP ratio. The gross domestic product rate, exports, and inflation rate have all a positive and statistically significant impact on the stock market turnover to GDP ratio. Gross investments also positively affect the stock market turnover to GDP ratio, but not significantly. On the other hand, the analysis shows that gross investments and exports have a positive, yet statistically significant impact on the stock market turnover to market capitalization ratio. The gross domestic product, imports, and inflation rate have all a negative and statistically significant impact, whilst the impact of the interest rates is negative but insignificant.

Targeted Partial Arthroscopic Trapeziectomy and Distraction: Surgical Technique

Basal joint osteoarthritis is a real public health problem, yet there is no consensus on its treatment. Although total trapeziectomy, as well as arthroplasty, provides long-lasting efficacy, it does not seem to be adapted to a young population with complications that are often very difficult to manage. In the era of minimally invasive surgery, there is a real interest in finding conservative therapeutic alternatives for young subjects that allow them to “pass a painful milestone” and, thus, postpone the least conservative interventions. This article details the surgical technique of an arthroscopic and conservative technique: The Targeted Partial Arthroscopic Trapeziectomy and Distraction based on two goals: targeted resection of painful arthritic lesions and distraction of the joint to restore ligament tension and hopefully regrow fibrocartilage on resected lesions.

Implementing Alfred60AST in a clinical lab: Clinical impact on the management of septic patients and financial analysis

Sepsis is an important cause of morbidity and mortality. An accelerated microbiology diagnosis is crucial in order to reduce the time to initiate targeted antibiotic therapy. The Alfred60AST system is able to provide phenotypic Antimicrobial Susceptibility Testing (AST) results within hours. This study has two objectives: assess the clinical impact of this technology and determine its cost-effectiveness. During a ten-week period, all new enterobacterial or enterococcal bloodstream infection was analyzed with the Alfred60AST system, in parallel with routine methods. Its impact on the clinician's therapeutic strategy was studied. In order to assess the financial and practical aspects of the method, an analysis of the extracosts and a survey of the technical staff were conducted. Fifty-three cases of bacteriemia were included. For the Enterobacteriaceae bacteriemias, a clinical impact was shown in 18.9% of the cases (e.g, treatment modification). The financial analysis highlighted an increase in costs (+38% for Enterobacteriaceae, +50% for Enterococci), compared to the theoretical costs reported by the firm, due to the workflow and the volumes of samples used. Finally, results of the technical staff survey were favorable in terms of ease of use of the system. In addition to its ease of use, the Alfred60AST system is able to provide an AST in a record time. This study shows a real interest of the technique in the therapeutic management of patients with enterobacterial sepsis. However, its routine implementation requires an increase of the analyzed volumes as well as a 24/7 organization of the laboratory in order to be profitable.

The benefits and costs of billeting: soldiery, financial flexibility and local credit in Renaissance Spain. The case of Navarre

ABSTRACT During the pre-industrial period, most military personnel were billeted instead of lodged in barracks. Historiography has tended to attribute this to a lack of foresight. In reality, the crown had no real interest in investing in them. Barracks could not provide the practical advantages of private households. The royal prerogative that obliged the population to billet the king’s troops was, despite its unpopularity, a very valuable resource for both the soldiers and the crown and not simply a necessary inconvenience.

Wealth Inequality and Endogenous Growth

Advanced economies have been experiencing productivity slowdowns, rising inequality, and low consumption-to-wealth ratios in recent decades. Using an analytically tractable endogenous growth model with heterogeneous households, I emphasize a channel that connects inequality with productivity growth through aggregate consumption demand and the returns to R&D. Given realistic increases in wealth (inclusive of income) inequality, the calibrated model generates transition dynamics featuring productivity slowdowns, low aggregate demand, and low real interest rates, consistent with the empirical trends. The welfare cost of rising inequality is substantial and is nearly equally split between changes in the consumption distribution and slow growth.

On the Predictive Value of the (Shadow) Real Interest Rate for the Realized Volatility of Gold-Price Returns

We use a quasi-out-of-sample forecasting experiment to study the predictive value of a short-term real interest rate for the volatility of gold-price returns. To this end, we use monthly U.S. data for the sample period from 1990/1 to 2022/2, and we study a standard effective-federal-funds-based real interest rate as well as a shadow real interest rate, which accounts for the recent extended zero-lower-bound period. We find that the real interest rate has predictive value for the subsequent realized volatility, and this predictive value turns out to be stronger in several specifications of our forecasting experiment for the shadow real interest rate than for the standard real interest rate. We evaluate the predictive value of forecasts in terms of an asymmetric loss function. Because gold is considered as a safe-haven asset, our results provide some important implications for portfolio decisions of investors.

A Note on the Neo-Fisher Effect in the New Keynesian Model

AbstractTypically, contractionary monetary policy shocks increase the nominal and real rate of interest, which reduces both inflation and output . In contrast, the neo-Fisher effect (NFE) suggests that a transitory but persistent increase in the nominal rate of interest increases inflation in the short run. In a New Keynesian model augmented with several frictions, including the cost channel of monetary policy, real wage rigidity, habit formation in consumption, dampened expectations, and anticipated monetary policy shocks, we derive analytical conditions that give rise to (or avert) the NFE. We show that the NFE can arise due to the interplay between these frictions, and not only when the persistence of the policy shock is large, or when agents are forward-looking, as documented by the existing literature.

Is there more to trees than timber? Estimating the private amenity value of forests using a hedonic land model for combined agricultural properties

Forests offer a range of amenity values besides the production value of timber. We know from existing studies, that the trees' height and species affect the public's recreational values, but it is less clear how much the joy of owning a property with forest matters, and whether the joy depends on characteristics like tree height and species.In this paper, we estimate landowners' private amenity value of forests. We do this by estimating four hedonic land value models for different sizes of property. In the models, forests are described by the size of forest area with a canopy height above three meters, the size of forest area with a canopy height below three meters, mean canopy height, and the share of broadleaf forest.The value of an additional hectare of forest is predicted using the hedonic model and compared with the forest's expectation value based on accounting statistics for forest income, including hunting rents, discounted using an average real market interest rate of 1.7%. We find a difference of 6500–9900 EUR/ha between the estimated land value models and the production values for properties larger than 10 ha. We interpret this difference as the forest owner's willingness to pay for forest amenities in addition to the timber value. The results offer insight into the value of owning forests for the large majority of private forest owners who own small patches of land. They can be valuable in the design of land-use policies aiming to increase forest area and ecosystem service provision on private land that benefits both the public and the private owner.

Exchange rate stability in the emerging economies: does renewable energy play a role-a panel data analysis.

Due to the high and rising rates of carbon emissions, the use of renewable energy sources has been encouraged to help achieve carbon neutrality goal. However, renewable energy sources are said to be expensive than fossil fuels. Major studies have been undertaken to ascertain the association between renewable energy and many economic indicators, such as gross domestic product, employment rate, and inflation rate. The current study is aimed at investigating whether renewable energy use helps stabilize the foreign exchange rate of emerging economies, which has not been widely examined in the past, hence the study originality. Stability in the foreign exchange rate of a nation is very crucial as this helps to stabilize the inflation rate. This study employs the fully modified ordinary least and dynamic ordinary least square methods to analyze panel data of emerging economies. The findings indicate that high real interest rate and gross domestic product causes appreciation in the currency exchange of a country, while high balance of payment, inflation rate and renewable energy consumption are found to cause currency depreciation. The Pedroni and Kao cointegration tests are employed and the results show that a long-run relationship exists among the variables examined. This research recommends balance of payments and inflation rate to be minimized if exchange rate stability is to be achieved, while gross domestic product and real interest rate should be increased.

Major Macroeconomic Variables, Monetary Policy, and the Determination of the Neutral Interest Rate in Brazil

This research used ARDL methodology to explore relevant macroeconomic variables influence on the Brazilian neutral interest rate. As a non-observable variable, we used this approach to identify the determinants of neutral interest rate in the Brazilian economy not only in the short term but also in the long run. Our descriptive analysis highlights that the trend of the real interest rate in Brazil has also been decreasing in recent years. In this paper we attempt to identify which variables could have driven such a fall. We used monthly data from January/2003 to June/2021 and the macroeconomic variables investigated are described as follows: neutral real interest rate (NRI), inflation rate (INF), 3-month treasury bill rate (TB3MS), real exchange rate (EER), Economic Activity Index (IBC-Br). All data were collected from IBGE, IPEADATA and Central Bank of Brazil (BACEN). We achieve that the variables that positively influence the long-term real interest rate are the inflation rate followed by the global interest rate trajectory and the real exchange rate, respectively. On the other hand, economic growth according to its potential level has a negative and relevant impact on the real long-term interest rate.

Factors Affecting Demand and Supply in the Housing Market: A Study on Three Major Cities in Turkey

This paper aims to identify the economic factors that significantly affect the demand for and supply of housing in three major cities in Turkey, such as Istanbul, Ankara, and Izmir. This study uses monthly data ranges from January 2010 to December 2020 because of the limited housing price data from each city. For smooth measurement, the logarithm of all data except measurements of nominal interest rate, real interest rate and inflation is used. This research uses the Co-integration Analysis and Vector Error Correction Model (VECM) to investigate the macroeconomic variables’ effects on the demand and supply. Mortgage credit volume, as a dependent variable, is influenced by real per capita GDP, real house prices, projected inflation, and nominal interest rates. On the contrary, the building site is used as a dependent variable on the supply side that is determined by the real housing price, the real interest rate, and the real cost of construction. In the VECM model, the mortgage credit volume and constriction cost were dominated by error correction variables, showing the adjustment of disequilibrium towards an equilibrium point. In the case of Ankara, supply-side variables have a long-term relationship. Both housing demand and supply-related factors have a long-term impact on the housing market in Istanbul and Izmir. Given a significant p-value, the coefficient of C1 derived from system equations is negative.