Macro-Policy, Labour Markets, and Industrial Policy

2020 ◽  
pp. 450-484
Author(s):  
Servaas Storm
Keyword(s):  
Structural Change ◽  
Industrial Policy ◽  
Open Economy ◽  
Aggregate Demand ◽  
Point Of View ◽  
Policy Support ◽  
Industrial Diversification ◽  
Long Run ◽  
Industrialization Process ◽  
Labour Regulation

Debates on industrialization and industrial policy have historically had a supply-side bias: development planners focused on strengthening inter-industry linkages, mobilizing savings to finance investment, and the accumulation of technological knowledge. Aggregate demand was expected to accommodate and even facilitate the structural change brought about by the industrialization process. However, botched industrialization experiences in South East Asia, Latin America, and Africa demonstrate that failures to manage demand in ways supportive of industrial policy can slow or even derail industrialization. We use an open-economy growth model of a late industrializing economy, featuring cumulative causation and a (long-run) balance-of-payments constraint, to investigate conflicts and complementarities between macroeconomic and industrial policies. We identify key macro mechanisms that undermine industrialization processes—and highlight macro policies in support of industrial diversification, structural change, and upgrading. We close by arguing that from a macro point of view, the widely held claim that labour laws are a ‘luxury’ developing countries cannot afford, is wrong. Labour regulation and higher real wage growth, when given adequate macroeconomic policy support, can be made to further industrialization.

scholarly journals Macroeconomic policy regime in Poland

Equilibrium ◽  
2016 ◽  
Vol 11 (3) ◽  
pp. 411
Author(s):  
Milka Kazandziska Kazandziska
Keyword(s):  
Monetary Policy ◽  
Economic Policy ◽  
Industrial Policy ◽  
Open Economy ◽  
Aggregate Demand ◽  
Financial System ◽  
Value Added ◽  
Macroeconomic Policy ◽  
Wage Policy ◽  
Foreign Economic Policy

The goal of this paper is to analyse the economic development of Poland using the concept of macroeconomic policy regimes (MPRs). Six elements of a MPR will be identified: foreign economic policy, industrial policy, the financial system, wage policy, monetary policy and fiscal policy. Examining the functionality of the development of these elements applied to Poland is a further aim of this paper. The functionality of the development of the MPR elements will be analysed on the basis of the fulfilment of the objectives, as well as the use of the proposed instruments and strategy assigned to every element of MPR. Due to space limits, we are going to focus on the former in this paper. Taking into consideration that Poland is an emerging and a relatively open economy, foreign economic policy and industrial policy play very significant roles in restructuring of the economy towards production and exports of high value-added products, which would enable the country to follow a growth path consistent with an external balance. The financial needs of the manufacturing sector and particularly of the producers and/or exporters of high-end products need to be satisfied by the financial system, whose stability needs to be secured with the help of monetary policy. The latter is, moreover, in charge of providing low-cost finance and maintaining the stability of the exchange rate. Stabilising the inflation rate would be given to wage policy. Fiscal policy’s main tasks would be to correct aggregate demand shocks and reduce income inequality.

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

scholarly journals Dynamic Relationship Between Real Export, Real Import, Real Exchange Rate, Labor Force and Real Gross Domestic Product in Malaysia

2019 ◽  
Vol 10 (5) ◽  
pp. 20
Author(s):  
Emilda Hashim ◽  
Norimah Rambeli ◽  
Asmawi Hashim ◽  
Norasibah Abdul Jalil ◽  
Shahrun Nizam Abdul Aziz ◽  
...  
Keyword(s):  
Exchange Rate ◽  
Labor Force ◽  
Open Economy ◽  
Unit Root ◽  
Correction Term ◽  
Unit Root Test ◽  
Real Effective Exchange Rate ◽  
Global Changes ◽  
Real Gdp ◽  
Long Run

This study examined short run and long run relationship between endogenous and exogenous variables. Specifically, it studied the relationship between real export, real import, labor force participation and real effective exchange rate (REER) and real GDP in Malaysia from 1988 to 2017. These variables were tested in various tests, namely, unit root test, granger causality test, vector autoregressive (VAR), Johansen Juselius test and Error Correction Term (ECT). The result revealed that all variables were non-stationary at the level form and stationary at first difference in ADF unit root test. The findings also exhibited the existence of bilateral relationships between real export and real GDP, real import and real GDP, as well as labor and real GDP. Nonetheless, there were no relationship found between REER and real GDP. On the other hand, in VAR, the lag optimum was lag 10 because it indicated the smallest value of AIC. Moreover, for Johansen Juselius cointegration test, it showed two cointegrated vector at both, 5% and 1%, level in trace test. In addition, Max-Eigen value test indicated two cointegrated vector at 0.05 and one cointegrated vector at 0.01. As for the Wald test, there were long run cointegration relationship between real GDP and its determinants, namely real export, real import, labor and REER. Apparently, Malaysia, as a small open economy, has relied heavily on foreign trade. Consequently, our domestic economic performance is susceptible to the changes in international markets and exchange rate. Therefore, suitable international policy implementation is vital to ensure Malaysian economy will be able to adjust to current global changes.

Superstar Cities

2013 ◽  
Vol 5 (4) ◽  
pp. 167-199 ◽  
Author(s):  
Joseph Gyourko ◽  
Christopher Mayer ◽  
Todd Sinai
Keyword(s):  
Metropolitan Area ◽  
Metropolitan Areas ◽  
House Prices ◽  
Aggregate Demand ◽  
House Price ◽  
Lower Income ◽  
Local Factors ◽  
The Past ◽  
Long Run ◽  
Price Appreciation

We document large long-run differences in average house price appreciation across metropolitan areas over the past 50 years, and show they can be explained by an inelastic supply of land in some unique locations combined with an increasing number of highincome households nationally. The resulting high house prices and price-to-rent ratios in those “superstar” areas crowd out lower income households. The same forces generate a similar pattern among municipalities within a metropolitan area. These facts suggest that disparate local house price and income trends can be driven by aggregate demand, not just changes in local factors such as productivity or amenities. (JEL R11, R23, R31, R52)

The Public Purchase of Grain on Independent Delos

1993 ◽  
Vol 12 (2) ◽  
pp. 300-334 ◽  
Author(s):  
Gary Reger
Keyword(s):  
Local Population ◽  
Aggregate Demand ◽  
Point Of View ◽  
Third Century ◽  
The Public ◽  
Price Structure ◽  
Grain Trade ◽  
Local Supply ◽  
The Impact ◽  
Grain Prices

Earlier work has tended to view Delos as an entrepôt for the larger Hellenistic grain trade, but during the years of independence (314-167 B.C.) the island relied on the import of grain to satisfy local demand, and this was certainly the more important aspect of the trade in grain, at least from the Delians' point of view. This study explores several issues connected with the local supply of grain. From prices for grain reported in inscriptions and estimates of the local population, the aggregate annual demand for grain is estimated, and the price structure of grain derived; the ratio of wheat and barley prices on Delos is found to differ considerably from that known from Athens and Roman Egypt. The shortage of 282 B.C., assumed by earlier scholars from prices recorded for that year, is shown instead to be a period of atypically low prices. The impact of the sailing season on shipments of grain is explored, and an annual rhythm in grain prices and availability linked to the closure of the sea and the agricultural year is revealed. The Delians tried to reduce the impact of these fluctuations by the public purchase of grain on an irregular basis in the late fourth and third century, as attested through public loans; by the last quarter of the third century they had established a regular sitōnia fund to buy grain for resale at reduced prices. Comparison of funds available, grain prices, and the estimated aggregate demand suggest that the Delian sitōnia was able to cover a significant fraction of local demand; this contrasts with evidence from other cities. Some of the implications of these results for our understanding of the Hellenistic economy are briefly explored.

HABIT FORMATION AND GOVERNMENT SPENDING IN A SMALL OPEN ECONOMY

2003 ◽  
Vol 7 (3) ◽  
pp. 407-423 ◽  
Author(s):  
Cem Karayalçin
Keyword(s):  
Fiscal Policy ◽  
General Equilibrium ◽  
Current Account ◽  
Open Economy ◽  
Equilibrium Model ◽  
Government Spending ◽  
Time Preference ◽  
Small Open Economy ◽  
Long Run ◽  
Fiscal Shocks

The paper studies the effects of an expansionary fiscal policy in a general equilibrium model of a small open economy. Households are assumed to possess habit-forming, endogenous rates of time preference. In response to fiscal shocks, the model generates cyclical endogenous persistence and procyclical time paths for consumption, employment, and investment, as well as a countercyclical path for the current account. Furthermore, fiscal shocks are shown to have positive long-run effects on output and negative long-run effects on consumption.

scholarly journals Demand and Defective Growth Patterns: The Role of The Tradable and Non-Tradable Sectors in an Open Economy

2014 ◽  
Vol 104 (5) ◽  
pp. 272-277 ◽  
Author(s):  
Sandile Hlatshwayo ◽  
Michael Spence
Keyword(s):  
Open Economy ◽  
Aggregate Demand ◽  
Value Added ◽  
Growth Patterns ◽  
Structural Elements ◽  
Total Income ◽  
Us Economy ◽  
The Us ◽  
Tradable Sector

This paper examines the underlying structural elements of US growth patterns, pre- and post-crisis. Prior to the recession, the US economy exhibited a defective growth pattern driven by outsized domestic demand. As domestic aggregate demand retreats to more sustainable levels relative to total income, the tradable side of the economy is a catalyst for restoring strong growth. A structural rebalancing is already underway; although it is only a third of the economy, the tradable sector generated more than half of gross gains in value-added since the start of the recovery. However, distributional issues loom on the horizon.

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