Weak Economic Growth Research Articles

The Lost Decade of Nesiritide

The concept of the “lost decade” is typically attributed to the Japanese economy in the 1990s, when there was exceptionally little or weak economic growth, amid unprofitable zombie firms and liquidity traps.1 With the financial collapse in the United States in 2008, some economists have forecast the potential for a similar circumstance in this country.2 But there are other places to find lost decades.Unfortunately, the “lost decade” can now also be applied to the deficient clinical development of certain pharmaceutical agents. In this issue of the Journal, O'Connor and colleagues3 report the results of a large, randomized, placebo-controlled trial . . .

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The relations between the welfare state and development are frequently portrayed as problematic and even dilemmatic. For example, it is claimed that the welfare state is only possible in developed countries, or that typical welfare state redistribution is necessarily accompanied by weaker economic growth. The main purpose of this article is to systematize the arguments and evidence against these assumptions, featuring the functionality of the welfare state for development in both economic and non-economic terms.

Die Bedeutung monetärer Größen für die deutsche Wachstumsschwäche 1995–2005

Summary Between 1995 and 2005, the German economy has experienced a phase of weak economic growth. We analyze whether this weak growth performance can be attributed to the stance of monetary conditions during that period. We show that the real effective exchange rate did have almost no dampening effects on growth. On the contrary, the introduction of the euro and the single monetary policy for the euro area seem to have contributed significantly to the low trend growth rate in Germany between 1999 and 2005.

The right sweeps the board

The Italian general elections of 13–14 April 2008 probably marked a decisive shift in Italian politics. The clear victory gained by the centre–right was accompanied by the re-emergence of the Lega Nord, while the Democratic Party saw it support increase only marginally and the communists will no longer be present in the forthcoming parliament. The most pressing issues facing the new government include poor–weak economic growth, the tensions between liberalism and protectionism and Italy's relations with Europe.

Public Spending and Real Exchange Rate Instabilities and Growth in Africa : Evidence from Panel Data

The paper investigates the causes of Africai¯s poor growth performance. It therefore focuses on the strand of literature that highlights the role of policy instability and uses the dependent economy model as the main theoretical framework. Results from the empirical work indicate that public spending instability increases real exchange rate instability, which in turn exerts a negative impact on both investment and total factor productivity. Further, the empirical investigation suggests partially that real exchange rate appreciation contributes to the decline of sectors with important positive externalities, thereby leading to persistent productivity losses and weak economic growth.

Asymmetries in the conditional relation of government expenditure and economic growth

Previous studies on the relationship between government expenditure and economic growth have, invariably, aggregated periods of strong and weak GDP growth and reported a single government expenditure response coefficient estimate. We argue that traditional test specifications of this relationship suffer from aggregation (or omitted variables) biases by failing to distinguish between diverse economic growth experiences and their impact on government expenditure. We reexamine the evidence concerning Wagner's Law using a proposed conditional test specification that is capable of: (a) separating periods of strong and weak economic growth, (b) accommodating possible asymmetries in the marginal responses of government expenditure to variations in economic growth and (c) distinguishing between positive and negative asymmetries in such responses. We present evidence showing that: (a) the majority of government expenditure responses tend to occur during periods of an economic slowdown characterized by GDP growth that is below trend-growth; and (b) there is little evidence suggesting that government expenditure increases markedly during periods of an economic expansion when GDP growth is at/above trend-growth. Results from several tests of hypotheses also corroborate these findings. When we aggregate response coefficients across periods of above trend-growth and below trend-growth, we obtain an elastic aggregate response coefficient for OECD countries in line with Wagner's proposition. However, the evidence seems less forthcoming for EU economies. Nonetheless, the estimated cumulative response coefficient from our conditional asymmetric specification exceeds the estimated response coefficient from a traditional symmetric test specification which appears biased against finding support for Wagner's proposition due to omission of important directional asymmetry variables from the estimating equation.

Кризис роста и «погоня за улучшениями»: вызовы для инноваций и маркетинга

Многим развитым экономикам, отраслям и компаниям приходится вести борьбу с последствиями слабого экономического роста, перенасыщения рынков и перепроизводства, возникающими вне временных границ экономических циклов. Панацею от вялого роста принято искать в сферах новых технологий, инноваций и в экономических изменениях. Уязвимое место подобного привычного подхода в том, что он упускает из виду значимость и трансформирующее влияние культурных перемен как двигателя экономического роста. Внимательный взгляд с позиций социокультуры на будущее инноваций и экономического роста открывает противоречивые перспективы как для компаний, так и для рынков и общества в целом. хорошая новость: погоня за улучшениями и ростом будет продолжаться. Плохая новость: погоня за улучшениями и соответствующие ей пути роста постепенно ведут нас в зону более медленного прогресса. Нужды потребителей постоянно меняются, а поиск все более совершенных продуктов и услуг сопровождается растущим стремлением к качественной жизни, обогащением индивидуального опыта и проектированием личных эмоциональных миров. Такое смещение акцентов в запросах потребителей следует учитывать в инновационных и маркетинговых стратегиях.

Book Reviews

��� This intelligent, well-written and informative book provides a fresh analysis of global environmental politics and alls a soft spot in the literature by concentrating explicitly and exclusively on its political economy. Clapp and Dauvergne use a typology of four worldviews—Market Liberals, Institutionalists, Bioenvironmentalists, and Social Greens—as a framework to examine how forces in global political economy impact the environment. Each type will seem familiar to many readers but they are rendered here in greater detail and to better effect than in other texts. Market liberals focus on economic issues, believe in the positive power of markets, and believe that poverty, weak economic growth, and poorly designed and intrusive government policies are the primary source of environmental degradation. Environmental problems that do exist can be addressed by fostering economic growth and harnessing market-based incentives to promote new technologies and corporate responsibility. Institutionalists believe that current levels of environmental degradation and underdevelopment reoect ineffective global cooperation and weak domestic and international institutions. Globalization is not a villain. A global environmental crisis could develop, however, if we do not build stronger and more effective global institutions, build state capacity, distribute technology and wealth to developing countries through appropriate channels, and effectively harness globalization so it fulalls its potential to enhance human welfare. Bioenvironmentalists focus on ecosystems and ecological carrying capacity. They believe a global environmental crisis already exists, caused by human overpopulation, over-consumption, and excessive, unnecessary, and ultimately counter-productive economic growth. These problems are augmented by globalization, which drives unsustainable levels of natural resource consumption, pollution, debt and misplaced economic activity. With the earth’s carrying capacity at or even beyond its natural limits, addressing environmental and economic problems effectively will require strong action to reform the global economy, reduce consumption, limit population growth, and respect the value of non-human life.

The Distribution of Education and Health Services in Madagascar over the 1990s: Increasing Progressivity in an Era of Low Growth

While a number of benefit incidence studies of public expenditures have been carried out for African countries, there are very few studies that look at how the incidence of such expenditures has been changing over time. We analyse three rounds of nation-wide household surveys in Madagascar over the 1990s, a period of weak economic growth but significant changes in social sector organisation and budgets. Education and health services for the most part are distributed more equally than household expenditures, hence they serve to redistribute welfare from the rich to the poor. By stricter standards of progressivity, however, public services do poorly. Few services other than primary schooling accrue disproportionately to the poor in absolute terms. When further adjusted for differences in the numbers of potential beneficiaries in different expenditure quintiles (e.g., school-age children), none of the education or health benefits considered appear to target the poor while several target the non-poor. With regard to changes over the decade, however, primary enrolments not only rose sharply but also became significantly more progressive; since the country experienced little or no growth in household incomes during the period, this appears to reflect supply rather than demand side factors. The improvement in equity in public schooling occurred in part because the enrolment growth was in effect regionally targeted: it occurred only in rural areas, which are poorer. Copyright 2006, Oxford University Press.

What Do Canadians Want in North America?

Judith Maxwell is President and Founder of Canadian Policy Research Networks (CPRN), a new kind of think-tank based on networks of researchers and policy advisors, founded in 1995. A member of the Order of Canada and on the Board of Directors of BCE, Inc., she has been awarded honorary degrees by seven Canadian universities. With extensive experience in both public and private sector think-tanks, she is the former chair of the Economic Council of Canada, and has worked as a consultant, as Director of Policy Studies at the C.D. Howe Institute, and as a journalist.MUCH DISCUSSION AT THIS CONFERENCE has focused on trade and other economic issues. In these two aspects of life, Canada and the United States are integrating. In contrast, however, this discussion addresses socio-political issues, where the two countries are diverging. How can we converge and diverge at the same time? This is a fascinating situation, and I want to begin by reflecting briefly on the economic integration.THE ECONOMIC CONTEXTWe have come a long way since the 1980s, when Canadians were lamenting, yet again, the dreadful state of our competitiveness. As a people, we were nervous about free trade. We had a vigorous national debate on this and decided to go forward.As trade barriers fell, business on both sides of the border reorganized to take advantage of the new market access. That was a momentous change, but there were many other forces of change in the 1990s:- The US economy embarked on a raging industrial boom. For about eight years, it was the most vibrant growth economy on the planet. In other words, it was a magnet for imports. Canadian firms profited from that boom. More recently, they have experienced a slowdown due to a much more sluggish US economy;- During the 1990s, Canadian domestic policy focused on getting the economic house in order. Public sector deficits were dramatically reduced and inflation was contained, at the price of weak economic growth and depressed incomes;- Meanwhile, more than half of the population adopted the Internet as their daily tool for communicating with the rest of the world;- Immigration flows from Asia and the Middle East set new records; and- Canadian women decided to have even fewer babies.This is a phenomenal amount of change, compressed into one decade (plus a bit) and I think it shows that Canadians are a remarkably resilient people. Overall, I would say that industrial Canada is coming of age as part of a North American economy and that Canadians have adapted rather well.THE NEW SOCIAL CANADASocial Canada is also coming of age, however, and, in this case, the two countries are diverging. Some key and political values in Canada are crystallizing in a direction that is different from that of the United States. There is a new confidence about who we are as Canadians, and we are distinctive.This is demonstrated in our recent Citizens' Dialogue on Canada's Future, and in the polling evidence analyzed by Matthew Mendelsohn,(1) Michael Adams(2) and Frank Graves (each using his own data). Here are some of the findings from the Canadian Policy Research Networks' (CPRN) dialogue with randomly selected Canadians:- People are much more comfortable about participating in a market economy. They acknowledge the legitimate role of business and value what business can bring to our society in the way of jobs, opportunities and wealth. (There have been times when Canada has been in denial on that.)- Their conception of business is different from that in the United States. They still want to put brakes on market forces--in the public interest--and they also welcome what businesses can bring into their communities as one of several social partners.- Canadians are beginning to clarify what is unique about Canada--about values and principles we wish to see in the actions of individuals, institutions and businesses. …

Predictability of Discretionary Accruals from Real Economic Growth and Sequential Revenue Growth

The study shows mean discretionary accruals vary from quarter to quarter but the variation is highly predictable from real economic activity. Mean discretionary accruals tend to be negative in quarters of very strong or very weak economic growth, and positive in quarters of moderate economic growth. We also find that discretionary accruals taken by individual firms in each quarter can be explained by their operating performances as measured by sequential revenue growth. The results suggest policy makers and regulators should be more vigilant toward the integrity of financial results reported by firms under certain economic circumstances. Barring model misspecification, our results also provide fresh insights into why managers engage in earnings management as well as suggest that results of studies that use standard procedures to detect earnings management should be interpreted with caution.

A New Canadian Public Philosophy for the 21st Century

For all intents and purposes, the era in Canada has concluded. When Finance Minister Paul Martin stands up on budget night in the House of Commons in February 2000, the first budget of the new millennium may give Canadians some insight into where Canada is heading in the 21st century. Then again, if recent budgets are indicators, it will likely not. The budget - the key government statement of policy intent - will likely reflect Canadians' ambivalence about what policy approach will succeed neoconservatism. The Liberal government lacks vision and seems incapable of, or disinterested in, leading a real public debate about Canada's future direction. Public policy in Canada over the last 50 years has been framed by a series of three policy strategies. Each had a raison d&re, tactics and a flaw that led to its replacement by a new strategy - to address this flaw. The experiences of the Depression and the Second World War framed the Keynesian era (1945-1975), which focussed on maintaining employment and economic and social security via countercyclical budgeting and the construction of the welfare state. This framework was undermined by international economic developments and Keynesianism's asymmetrical character in dealing less successfully with inflation than with unemployment. The post-Keynesian era (1975-1984) focussed on containing inflation and on increasing capacity to deal with the international economy. It flirted with planning, and introduced interventionist programmes and institutions. This era exposed Canadians' ambivalence about the roles of the state and the market. Half-hearted planning respected the authority of the market, resulting in weak economic growth, low productivity gains, increased public expenditures and decreased revenues, and the era's Achilles heel - ballooning deficits. The neoconservative era (1985-1998) focussed on the deficit, which was seen to reflect the failures of the previous eras. The market's authority was elevated and the state's economic responsibilities were diminished. The deficit was eliminated, by dismantling programs, regulations and institutions. Neoconservatism has had some success within its framework, including four consecutive balanced budgets, reasonable growth, failing unemployment, and the reincarnation of a discourse of balanced budgets, sound finance and a limited government. But this discourse has been weakening. First, there has been concern that the costs of neoconservatism have been too high, particularly in areas like health care and education. Second, the economy has suffered in some dimensions: a record low dollar, poor productivity performance and a declining standard of living for many. The Achilles heel of the era has been the creation of an existential policy vacuum - a sense of aimlessness and lack of policy purpose in the globalised market environment. The deficit has been eliminated as a policy focus, but no replacement like unemployment or inflation has emerged around which to focus policy attention in the new policy era. …

Socio-economic dynamics of forest loss in rural agro-ecosystems

Agro-ecosystems in many of the developing economies are coming under increased pressure, especially in areas where population demands, weak economic growth, and debt burdens, are resulting in mass rural poverty and assault on environmental resources. The loss of forests is a ‘double-edge blow’ for most rural and agricultural systems. The forests provide the resource substitutes for the many manufactured products which are scarce or physically and economically inaccessible, and they also provide congenial environments which support rural food systems by way of productive agricultural land opportunities.

The FOMC in 1986: Flexible Policy for Uncertain Times

HE Federal Reserve’s monetary policy actions during 1986 were influenced by indications of weak economic growth and moderate inflation. The income velocity of money, defined as the ratio of nominal GNP to the narrowly defined money supply Ml, declined even more rapidly in 1986 than it had in the previous year.’ lnterest rates declined on balance over 1986, and the Federal Open Market Committee (het-eafter “Committee” or “FOMC”) viewed their decline and the associated rapid growth of Ml as a desirable development in light of the sluggish economy. As the year progressed, the Committee deemphasized Ml as a guide to policy while focusing on the broader monetary aggregates, M2 and M3, and several indicators of economic and financial conditions. In the uncertain economic environment that prevailed in 1986, the Comrnittee was flexible in its approach to monetary policy. This article reviews the FOMC’s monetar policy decisions during 1986. The Committee’s annual growth objectives for the monetary aggregates are discussed in the next section, and the target ranges for 1986 are compared with actual money growth during Philip A. Nuetzel is an economist at the Federal Reserve Bank of St. Louis. Laura A. Prives provided research assistance. NOTE: Citations referred to as “Record” are to the “Record of Policy Actions of the Federal Open Market Committee” found in various issues of the Federal Reserve Bulletin. Citations referred to as “Report” are to the “Monetary Policy Report to Congress,” also found in various issues of the Federal Reserve Bulletin.

The Strange Recovery of 1983-1984

Even the most sanguine of spokespeople for the business community has long been aware that the problems of the U.S. economy are more serious than the matter of recurrent recessions. Along with worries about interest rates, the international value of the dollar, the trade balance, the federal deficit, the danger of a new flareup of inflation, and the persistence of mass unemployment, there is a general awareness that what matters most is weak economic growth, for which the appropriate remedy is the revitalization of capital investment. Hence the efforts of one Washington administration after another to stimulate investment by means of a whole series of tax concessions to business (see Craig Medlen, Corporate Taxes and the Federal Deficit, MR, November 1984). Yet capital investment has continued to lag. This article can also be found at the Monthly Review website , where most recent articles are published in full. Click here to purchase a PDF version of this article at the Monthly Review website.

Problems of local capital-growth in the history of German savings-banks during the 19th century

The German savings-banks developed in the 19th century as places for the accumulation of capital by the lower- and middle-income groups. Their close links with communal guarantors made them subject to the “regional principle”, that is their areas of operations were limited to specific regions. If, as was general, they formed the sole, or at least the leading, financial institution in a district, their deposits can be considered as representative of the local accumulation of capital. Up to the 1860s the savings-banks, almost without exception, had a surplus of deposits, in that their areas of operation gave few opportunities for investment. This is an expression of the low investment quotient in the total economy, that possibly did not involve all deposits. It shows, nevertheless.that after the growth of the investment quotient and the increased demand for capital, certain regions of relatively weak economic growth were still not in the position to invest all their savings within their own bounds, but over decades had to transfer capital to other regions. As the savings-banks, after the 1880s, joined into organisational units, they formed their own exchange agencies. If the long-term release of capital by relatively backward regions with low economic growth is demonstrated, then the question arises what are the relations between the internal capital deposits of a region and the economic growth of the region. Relatively weak regions on the one hand have been able to maintain over decades their ability to accumulate capital, and on the other hand during the same periods have been unable to change their growth rate despite a surplus of public capital deposits. We must therefore ask in what ways the capital deposits of a region are in general relevant to the economic growth of the region.