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Macroeconomic Aggregates (macroeconomic + aggregate)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	100%

Selected Abstracts

EXAMINING THE ASYMMETRIC BEHAVIOUR OF MACROECONOMIC AGGREGATES IN ASIAN ECONOMIES

PACIFIC ECONOMIC REVIEW, Issue 5 2008
Paresh Kumar Narayan
Abstract., The goal of this paper is to test for asymmetric behaviour of macroeconomic aggregates for three Asian economies; namely, Malaysia, Hong Kong and Korea. Whether macroeconomic aggregates can be characterised as asymmetric has important implications for policy-making and econometric modelling including forecasting. We examine two forms of asymmetries; specifically deepness, which arises when a detrended time series contains an asymmetric distribution, and steepness, which arises when the first difference of a series contains an asymmetric distribution. Overall, our findings suggest that for all three countries, the bulk of the series display asymmetry behaviour. [source]

A Quantitative Theory of Unsecured Consumer Credit with Risk of Default

ECONOMETRICA, Issue 6 2007
Satyajit Chatterjee
We study, theoretically and quantitatively, the general equilibrium of an economy in which households smooth consumption by means of both a riskless asset and unsecured loans with the option to default. The default option resembles a bankruptcy filing under Chapter 7 of the U.S. Bankruptcy Code. Competitive financial intermediaries offer a menu of loan sizes and interest rates wherein each loan makes zero profits. We prove the existence of a steady-state equilibrium and characterize the circumstances under which a household defaults on its loans. We show that our model accounts for the main statistics regarding bankruptcy and unsecured credit while matching key macroeconomic aggregates, and the earnings and wealth distributions. We use this model to address the implications of a recent policy change that introduces a form of "means testing" for households contemplating a Chapter 7 bankruptcy filing. We find that this policy change yields large welfare gains. [source]

Fixed versus Flexible Exchange Rates: Evidence from Developing Countries

ECONOMICA, Issue 295 2007
MATHIAS HOFFMANN
This paper investigates the hypothesis that in a small open economy flexible exchange rates act as a ,shock absorber' and mitigate the effects of external shocks more effectively than fixed exchange rate regimes. Using a sample of 42 developing countries, the paper assesses whether the responses of real GDP, the trade balance and the real exchange rate to world output and world real interest rate shocks differ across exchange rate regimes. The paper shows that there are significant differences in the variability of macroeconomic aggregates under fixed and flexible exchange rate regimes. [source]

Britain, EMU and the European economy

INDUSTRIAL RELATIONS JOURNAL, Issue 4 2000
Steve Bradley
In January 1999, 11 member countries of the European Union ,irrevocably' locked the foreign exchange values of their currencies to the euro, and they committed themselves to abandon their currencies in favour of the euro in 2002. As a result, these countries ceased to operate independent monetary policies. Monetary policy for the whole euro-zone became the responsibility of the European Central Bank (ECB), whose primary objective is to maintain a low and stable rate of price inflation for the euro currency. The rules governing Economic and Monetary Union (EMU) were laid down in the treaty of Maastricht in 1992. As conditions for entry to EMU, the treaty specified ,convergence criteria' which consisted of upper limits for several macroeconomic aggregates including, notably, a 3 per cent maximum for the ratio of the public sector deficit to GDP and 60 per cent for the ratio of public debt to GDP.1 In February 1998 the 11 applicant countries submitted statistical analyses relating to their satisfaction of these conditions. Despite doubts as to whether some of them had strictly met the conditions, the European Commission deemed them all eligible, and the euro was launched.2 The British government, though more clearly eligible than most other EU countries on the basis of the convergence criteria, decided to defer its decision on entry. In this paper we consider the arguments for and against Economic and Monetary Union, and in particular whether it would be in Britain's interest to join. We begin with a brief review of the state of the European economy and an analysis of the first year performance of the new Euro currency. [source]

Keeping Capital Flowing: The Role of the IMF,

INTERNATIONAL FINANCE, Issue 3 2004
Michael D. Bordo
In this paper, we examine the role of the International Monetary Fund (IMF) in maintaining the access of emerging market economies to international capital markets. We find evidence that both macroeconomic aggregates and capital flows improve following the adoption of an IMF programme, although they may initially deteriorate somewhat. Consistent with theoretical predictions and earlier empirical findings, we find that IMF programmes are most successful in improving capital flows to countries with bad, but not very bad, fundamentals. In such countries, IMF programmes are also associated with improvements in the fundamentals themselves. [source]

EXAMINING THE ASYMMETRIC BEHAVIOUR OF MACROECONOMIC AGGREGATES IN ASIAN ECONOMIES

Macroeconomic Control in the Transforming Chinese Economy: An Analysis of the Long-Run Effect

PACIFIC ECONOMIC REVIEW, Issue 1 2001
Michael K. Y. Fung
This paper analyzes the issue of macroeconomic control in the Chinese economy where there is a dual structure (consisting of a state sector and a non-state sector) and the financial sector is still under tight control by the government. Given the dual structure and financial repression, when inflation is a severe problem, the authors investigate whether it is possible for the government to bring inflation under control without hampering long-term economic growth performance. The investigation is conducted within the context of an endogenous growth model that incorporates the two major institutional features of the transforming Chinese economy. The paper evaluates the long-run effects of changes in government monetary and fiscal policies on the major macroeconomic aggregates. The analysis suggests that increasing in the interest rate on government bonds will reduce inflation without affecting the growth rate of output; while increasing the nominal interest rate on bank deposits will exert a stagflationary effect on the economy: raising the inflation rate but reducing the growth rate of output. [source]

FORECASTING MANUFACTURING OUTPUT GROWTH USING FIRM-LEVEL SURVEY DATA

THE MANCHESTER SCHOOL, Issue 4 2005
JAMES MITCHELL
Traditionally forecasts of macroeconomic aggregates are extracted from prospective qualitative survey data by relating official data on the aggregate to both the proportion of survey respondents who are ,optimists' and the proportion who are ,pessimists'. But there is no reason to focus on these proportions to the exclusion of other possible means of aggregating and quantifying the underlying panel of respondent or firm-level survey responses. Accordingly in this paper we show how the panel of firm-level responses underlying these proportions can be exploited to derive forecasts of (aggregate) manufacturing output growth that do not lose information that may be contained in the pattern of individual responses. An application using firm-level prospective survey data from the Confederation of British Industry shows that the forecasts of manufacturing output growth derived using these ,disaggregate' methods mark an improvement over the so-called ,aggregate' methods based on use of the proportions data alone. [source]

BUSINESS FAILURES AND MACROECONOMIC FACTORS IN THE UK

BULLETIN OF ECONOMIC RESEARCH, Issue 1 2009
Jia Liu
G33; E42; P11 ABSTRACT We examine the interactions between business failures and macroeconomic aggregates, and specifically the accounts of policy-induced changes in the macroeconomy for the observed fluctuations of UK business failures in the period 1966,2003 using the vector error-correction model (VECM). The results demonstrate that macroeconomic aggregates, i.e., interest rate, credit, profits, inflation and business births, exert differential impacts on business failures both in the short run and in the long run. The study reveals that structural changes in the financial and real sectors during the examined period have made an impact on the way in which the macroeconomy affects business failures. In particular, business failures are increasingly reacting to monetary policy changes in the post-1980 period. Furthermore, the shocks to business failures can generate large fluctuations in macroeconomic aggregates, suggesting the importance of corporate balance sheets in financial stability and economic growth. The paper's findings carry policy implications that are related to the survival of firms in distress and finance-driven business cycles. [source]