Development Of Real Sector Research Articles

A Large Bayesian Vector Autoregression Model for Russia

We apply an econometric approach developed specifically to address the ‘curse of dimensionality’ in Russian data and estimate a Bayesian vector autoregression model comprising 14 major domestic real, price and monetary macroeconomic indicators as well as external sector variables. We conduct several types of exercise to validate our model: impulse response analysis, recursive forecasting and counter factual simulation. Our results demonstrate that the employed methodology is highly appropriate for economic modelling in Russia. We also show that post-crisis real sector developments in Russia could be accurately forecast if conditioned on the oil price and EU GDP (but not if conditioned on the oil price alone). Publication keywords: Bayesian vector autoregression, forecasting, Russia

A Large Bayesian Vector Autoregression Model for Russia

We apply an econometric approach developed specifically to address the ‘curse of dimensionality’ in Russian data and estimate a Bayesian vector autoregression model comprising 14 major domestic real, price and monetary macroeconomic indicators as well as external sector variables. We conduct several types of exercise to validate our model: impulse response analysis, recursive forecasting and counter factual simulation. Our results demonstrate that the employed methodology is highly appropriate for economic modelling in Russia. We also show that post-crisis real sector developments in Russia could be accurately forecast if conditioned on the oil price and EU GDP (but not if conditioned on the oil price alone). Publication keywords: Bayesian vector autoregression, forecasting, Russia

Analisis Pembiayaan Sektor Konstruksi pada Perbankan Syariah di Indonesia

The construction sector is an important sector in supporting development projects in Indonesia. The development of the construction sector requires the role of the banking sector to provide access of capital through credit. This study aims to analyze the relationship among factors of banking performance, monetary instruments, macroeconomic condition and rate of return towards construction financing in Islamic banking industry. This study uses Vector Error Correction model with monthly data from 2006 until 2012 as its method of analysis. The study finds that the ratio of construction financing responds positively to the shock of Financing to Deposit Ratio (FDR), the interest rate of SBI (SBI), Industrial Production Index (IPI), inflation rate (INF), and equivalent rate of financing (ERP). While shocks of the Third Party Funds (DPK), lending rates (SBK), non performing financing (NPF), fee of SBIS (BSBIS), and the placement of funds in PUAS (PUAS) variables are responded negatively. Islamic bank should be able to be more focused on construction financing as it will contribute to the development of real sector and national income. In addition, Islamic bank should have more concern on assesment criteria to choose borrowers in order to reduce the amount of non performing financing.

Stock market development and economic growth in Ghana: an ARDL-bounds testing approach

This article examines the relationship between stock market development and sustainable economic growth in Ghana. The study employs the recently developed ARDL-bounds testing approach and multidimensional stock market development proxies to examine this linkage. The article finds that in the long run, stock market developments and capital account liberalization policies have no positive effect on economic growth in Ghana. This finding supports the numerous past studies, which have reported negative or inconclusive results on the effects of stock market development on economic growth. The article, therefore, concludes that it is the increase in credit to the private sector, rather than stock market development that drives the real sector development in Ghana.

Macroeconomic News and the DM/$ Exchange Rate

Empirical confirmation that the effect of macroeconomic fundamentals on exchange rates is economically important has been scarce. This paper employs a general GARCH specification with asymmetric responses to investigate the effect of 35 U.S. and German macroeconomic news announcements on the daily DM/$ exchange rate over the 1980-1998 period. We conclude that FX rates are strongly connected to real and nominal sector developments in both countries, and that real sector announcements influence the exchange rate more strongly than money or inflation announcements. We find that surprisingly high real growth appreciates the exchange rate and raises yields.

The Impact Of Economic Reforms On Growth: A Case Study Of Bangladesh

This study makes a brief assessment of the consequences of economic reforms that included a series of liberalization measures on Bangladesh's growth process by analyzing the 1974-2007 data with the help of cointegration, error correction, and Granger causality tests. The results suggest that long-run economic growth in Bangladesh is largely explained by investments in both physical and human capital, trade openness, and financial as well as capital account liberalization. While the causality runs in both ways between capital account liberalization and economic growth, it runs only in one direction from physical capital and financial liberalization to economic growth in the short-run. Interestingly, growth is not affected by trade openness in the short-run. While trade liberalization and capital account liberalization have had significant positive impacts on economic growth in the long-run, the effects of financial liberalization were found to be significantly negative. This emphasizes the need for ensuring real sector development as a prerequisite for the success of financial liberalization.

Pʼinansuri Bazrebisa da Ekonomikuri Suverenitetis Tʼavsebadobis Zogiertʼi Sakitʼxi Globalizacʼiis Pirobebši (Financial Market and Economic Sovereignty Compatibility Issues Under Globalization)

Georgian Abstract: გლობალიზაციასთან დაკავშირებულ საკითხთა შორის ერთ-ერთი მნიშვნელოვანი საკითხი არის ეროვნულ სახელმწიფოთა სუვერენიტეტისადმი გამოძახილი. თანამედროვე ეტაპზე დღის წესრიგში დგება გლობალიზაციის პირობებში ფინანსური ბაზრებისა და სახელმწიფოთა ეკონომიკური სუვერენიტეტის თავსებადობის პრობლემა, რომელიც, თავის მხრივ, ორგანულადაა დაკავშირებული დამოუკიდებელ სახელმწიფოთა ეკონომიკურ უსაფრთხოებასთან. ეს უკანასკენელი კი ქვეყნის ეროვნული უშიშროების ერთ-ერთი საკვანძო შემადგენელი ნაწილია. გლობალიზაციის პოზიტიური და ნეგატიური შედეგების დაბალანსების მიზნით, მიზანშეწონილია საერთაშორისო საფინანსო-ეკონომიკური ინსტიტუტებისა და მსხვილი ტრანსნაციონალური კომპანიების საქმიანობის ისეთნაირი ტრანსფორმაცია, რომ მათი ეკონომიკური ინტერესები შეეთანაწყოს სუვერენულ სახელმწიფოთა საშინაო ეკონომიკურ პოლიტიკას. მეორე მხრივ, სუვერენულმა სახელმწიფოებმა, რომლებსაც გლობალიზაციის შედეგად ემუქრებათ ეკონომიკური უსაფრთხოების შესუსტება, უნდა გაატარონ შემდეგი ეკონომიკური ღონისძიებები: მკაცრი საბაჟო პოლიტიკა, იმპორტის შემცვლელი საქონლისა და მომსახურების წარმოების ზრდა, უცხოური ინვესტიციების გამოყენება ეროვნული ინტერესებიდან გამომდინარე, უცხოური კრედიტების მიმართვა ეროვნული რეალური სექტორის განვითარებისთვის, მეცნიერებატევადი წარმოების ზრდა, საექსპორტო პროდუქციის წარმოების სტიმულირება, ეკონომიკის გახსნილობის რეგულირება, იმ საქონლისა და მომსახურების წარმოების მოცულობის ზრდა, რომლებიც კონკურენციას გაუწევს გლობალიზაციის მეთაური ქვეყნებიდან მათ იმპორტირებას. English Abstract: One of the issues related to globalization - the most important issue is the sovereignty of national states and resonance. The stage is on the agenda of globalization in financial markets and economic sovereignty of the interoperability problem, which, in turn, organically linked to the economic security of Independent States. This is one of the country's national security - a key component. In order to balance the positive and negative consequences of globalization, it is recommended by international financial - economic institutions and activities of large transnational companies Such a manner transformation of their economic interests According to sovereign state's domestic economic policies. On the other hand, sovereign states, with globalization in the face of economic security, mitigate, we must take the following economic activities: the strict customs policy, import substitute goods and service industry growth, foreign investment in the national interest of the foreign credits to the real sector development, production growth , stimulate the production of export products, the openness of the economy to regulate the volume of production of goods and services increase, which will compete with the global head of states from their importation.

Balance of Payments Consistent Unreported Flows

The paper develops a Balance of Payments (BOP)-consistent procedure for estimating unreported flows. Using data between 1990 and 2007, total unreported flows of selected Asian countries is estimated at $4.7 trillion, or more than 80% of the countries’ 2007 total gross domestic product. Results reveal that unreported flows increase with reported and accumulated unreported flows. Financial depth and governance of the real sector decrease unreported flows, whereas economic growth and weakness in the governance of reported flows increase unreported flows. Results also reveal that unbalanced financial and real sector development contributes to the unreported flows. Lastly, the paper argues that there is an opportunity to reverse the situation through a judicious application of capital flow and trade flow management techniques and development and improvement in capacity, including governance, to internalize resources and converting them into desired outcomes.

From Hard Currency Policy to Monetary Union

In the wake of monetary integration in Europe, Austria abandoned the tested hard currency policy (HCP) for joining EMU as a member. The final target of monetary policy and real sector adjustment needs are similar in both regimes, and the HCP may therefore be viewed as a convenient, training camp, for later EMU accession. Georg Winckler devoted a number of essays on the critique, but also on the analytical foundation, of the HCP. The current paper takes up some of the strands developed by him, and reviews the implications on Austria's monetary strategy of the changeover to EMU. At EMU level it was required to newly establish credibility and accountability of the monetary authorities. Towards this end, the ECB emitted harsh signals to be committed to its primary task of maintaining price stability, and it was therefore held accountable for neglecting real sector developments as well as potential threats of deflation. This is unjustified, given the circumstances the ECB has been faced with since its inception, including the marked swings in the dollar value of the euro. The ECB could be blamed, however, for the lack of transparency with regard to its monetary strategy (which it declines to be, inflation targeting): it resorts to a rather vaguely defined final monetary target, it does not observe an intermediate target, and it is by no means clear what purpose the reference value for money growth does serve. The paper concludes that in Europe there is no immediate danger that the goal of price stability could unintentionally end up in deflation.

POST-REFORM DEVELOPMENT IN THE ZHUJIANG DELTA: GROWING EQUALITY OR POLARIZATION?

After the Open Policy, increasing polarization in the Zhujiang Delta when measured by real national income, retail sales, savings and rural income per capita has concealed much about the increasing equality in terms of real average wage, industrialization, export-orientation, urbanization and tertiary sector development. The co-existence of these “opposing” forces towards regional divergence and convergence highlights the pitfalls of looking at one dimension of development only, albeit an important one, in judging whether there has been increasing spatial equality or polarization. When all major aspects of development are taken together, there was a moderate trend of growing intra-regional disparity in the Zhujiang Delta under the Open Policy. By the 1990s, a relatively stable regional hierarchy with Shenzhen, Baoan and Zhuhai at the top and Gaoyao, Conghua and Guangning at the bottom has been formed.