Participation and productivity will drive long run GDP

2018 ◽  
Keyword(s):  
Interest Rates ◽  
Developed Countries ◽  
Living Standards ◽  
Lower Growth ◽  
Secular Stagnation ◽  
Content Type ◽  
Long Run ◽  
Advanced Economies ◽  
Labour Participation

Subject OECD long-run growth projections are predicated on the 'secular stagnation' argument. Significance The OECD has sharply reduced its outlook for long-term rich-world growth with interest rates rising commensurately slower. Moreover, the International Labour Organization projects even weaker workforce growth than the OECD in the advanced economies in the 2020s. Impacts Trade among developing countries accounts for near 30% of all trade (from 10% in 1995) and will soon top trade among developed countries. Efforts to raise labour participation, quality and productivity are key to raising living standards. Lower growth makes it harder to stabilise debt-to-GDP ratios, just as ageing rich-world populations raise pension and health costs.

Large US household balance sheets pose macro risks

2021 ◽  
Keyword(s):  
Interest Rates ◽  
Health Costs ◽  
Gdp Growth ◽  
Lower Growth ◽  
Content Type ◽  
Balance Sheets ◽  
Trade Growth ◽  
Productivity Gains ◽  
Macroeconomic Risks

Significance An examination of the factors behind the expansion indicates that outsized balance sheets will persist and will pose a number of macroeconomic risks. Impacts Slower workforce growth will pressure GDP growth, trade growth and long-term interest rates, unless productivity gains can offset this. A record number of US business deaths and births in 2020 will affect productivity and have unpredictable impacts on the economy. Lower growth makes it harder to stabilise debt-to-GDP ratios, just as pension and health costs rise as populations age in major economies.

Working from home and long-term housing wealth inequality in large cities of advanced economies

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Reza Tajaddini ◽  
Hassan F. Gholipour ◽  
Amir Arjomandi
Keyword(s):  
Wealth Inequality ◽  
Developed Countries ◽  
Housing Demand ◽  
Working Environment ◽  
Housing Wealth ◽  
Content Type ◽  
Large Cities ◽  
Working From Home ◽  
Advanced Economies

Purpose The purpose of this study is to explain the potential long-term impacts of working from home on housing wealth inequality in large cities of advanced economies. Design/methodology/approach This study is descriptive research and It supports the arguments by providing some emerging evidence from property markets in developed countries. Findings The authors argue that due to the unique nature of the COVID-19 crisis, it will have a different and long-term impact on housing wealth inequality. Changes in the working arrangements of many professionals will change the housing demand dynamic across different suburbs and may lead to a reduction of the housing wealth gap in the long term. In this paper, the authors propose five mechanisms that may impact housing wealth inequality. Research limitations/implications Long-term data is required to test the proposed conceptual model in this study and the effect of the COVID-19 pandemic on housing wealth across and within suburbs of large cities. Practical implications Policymakers and regulators may benefit from the discussions and suggestions provided in this study and consider the proposed avenues on how new changes in the working environment (remote working) may result in a reduction of housing wealth inequality. Originality/value This study presents a new perspective about the potential long-term impacts of working from home that is posed by the COVID-19 pandemic on housing wealth inequality in large cities of developed economies.

High house prices may be global systemic risk

2016 ◽  
Keyword(s):  
Interest Rates ◽  
Household Income ◽  
House Prices ◽  
House Price ◽  
Content Type ◽  
Price Boom ◽  
Advanced Economies ◽  
The Us ◽  
Property Markets

Subject The rise in global house prices. Significance In the first quarter of 2015, the global house price index, aggregating prices in 52 countries, was at about the same level as in early 2007, according to IMF data. This recovery has occurred in a period of wage gains in most emerging markets (EMs), but little or no growth in household income across most advanced economies. Living costs excluding housing have stagnated and interest rates have been exceptionally low. Yet US interest rates are rising now and global prices are unlikely to keep falling beyond 2016, while many EMs have slumped into recession. As households are hit by more adverse trends, property markets and the related sectors will be affected. Impacts The EM house price boom will be curbed by slowing income growth and weaker economic prospects. High house-prices-to-household-income ratios and household debt might require the introduction of macroprudential tools. The US housing market will stay affordable compared to its long-term average and to Europe's.

Dynamic implications of GDP, interest rates, taxes, income, foreign direct investments, housing prices on property NPLs

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kuen-Wei Tham ◽  
Rosli Said ◽  
Yasmin Mohd Adnan
Keyword(s):  
Interest Rates ◽  
Global Financial Crisis ◽  
Housing Prices ◽  
Economic Environment ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Long Run ◽  
First Time

Purpose The study on how macroeconomic factors affect non-performing loans (NPLs) have not been focussed on property loans, which had been amongst the largest contributor of NPLs in many countries. At the same time, whilst there are many studies that focusses on NPLs during the recession and financial crises, not many studies focus on how macroeconomic factors affect property NPLs in a recovering economic environment. The purpose of this study seeks to fill the gap by analysing the relationships between gross domestic product (GDP), interest rates, income, foreign direct investments (FDI), housing prices and taxes on property NPLs with Malaysia as a case study in which NPLs rose for the first time after declining for almost a decade since the 2008–2009 global financial crisis. This study aims to understand the dynamics and direction of causation in relationships. Design/methodology/approach The author uses the auto regressive distribution lag analysis between the independent variables of GDP, interest rates, housing prices, service taxes, percapita income and FDI affecting the dependent variable of property NPLs from 2009 to 2017, during a unique period of recovering economic environment where NPLs rose for the first time in almost a decade of decline. Findings This study found that interest rates, housing prices, income, GDP and service taxes were found to possess long cause effects and long run elasticity with NPLs. At the same time, interest rates were found to implicate property NPLs significantly in longer periods, followed by GDP, housing prices, service taxes and income. FDIs were found to be insignificantly negative in implicating property NPLs in the long run. Research limitations/implications This paper allows policymakers to understand the dynamic implications of crucial macroeconomic factors in affecting NPLs so that appropriate strategic monetary policies could be formulated towards addressing them. More focus shall be given to addressing the long term implications of these factors on NPLs. Practical implications Appropriate strategic monetary policy making can be channelled towards addressing these factors via understanding the short and long term implications of macroeconomic variables on property NPLs. Policymakers can take note of the long cause effects and long run elasticity of average interest rates, housing prices, income levels, GDP and service taxes with property NPLs so that appropriate long term policies can be addressed to control the rise of property NPLs in the country. At the same time, priority should be given towards strengthening of the GDP of the country due to its strongest impact in long term effects with reduction of NPLs in the country. Social implications The insights from the present study suggest policymakers interested in bringing stability in the real estate finance system need to account for the various macroeconomic variables found in this study. Originality/value The paper is novel on at least two dimensions. First, this study involves focussing on a unique period of recovering economic environment where NPLs rose for the first time after a decade of decline since recovering from the 2008–2009 global financial crisis. At the same time, this study focusses on property NPLs, which is unique in nature compared to general NPLs. This study had enabled policymakers to better understand the dynamic implications of several macroeconomic variables affecting property NPLs and assist them in strategic monetary policy making.

Digital currencies enhance 21st century monetary tools

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Central Banks ◽  
Content Type ◽  
The Public ◽  
Digital Currency ◽  
Advanced Economies ◽  
Severe Recession

Subject From fiat to digital currencies. Significance With the use of cash dwindling in the advanced economies, central banks are losing their only direct monetary connection to the public. At the same time, monetary policy could face meaningful limits in stimulating growth if a severe recession strikes the advanced economies as policy interest rates are already close to zero. Impacts Tech advances, combined with downgraded long-term growth, price and interest rate forecasts, draw attention to new monetary policy tools. Central bank digital currencies would have a central custodian to coordinate them, overcoming a key ‘stateless’ cryptocurrency weakness. A digital currency gives central banks a way to reflate the economy and support certain households, but there may be political obstacles.

scholarly journals Revisiting Energy Consumption-economic Growth Hypothesis: Do Slope Heterogeneity and Cross-sectional Dependence Matter?

2021 ◽  
Vol 8 (1) ◽  
pp. 10-24
Author(s):  
Miriam Kamah ◽  
Joshua Sunday Riti
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Panel Data ◽  
Developed Countries ◽  
Cross Sectional ◽  
Distributed Lag ◽  
Long Run ◽  
Advanced Economies ◽  
Cross Sectional Dependence

In this paper, the long-term nexus between energy consumption and economic growth is investigated using a panel data of 80 countries from World Bank data base for the period 1970 to 2017. In order to check for the issues of endogeneity, slope heterogeneity, and cross-sectional dependence present in errors of panel data, the study applied cross-sectional augmented autoregressive distributed lag (CS-ARDL) and cross-sectional augmented distributed lag (CS-DL) models to examine the long-term impact of energy consumption on economic growth. The empirical results revealed that energy consumption has a positive and significant long-run effect on economic growth and that cross-sectional dependence, slope endogeneity and heterogeneity are issues that should be on the watch when dealing with panel data of developing and developed countries’ analysis. Furthermore, the outcomes indicated that the impact of energy consumption on economic growth is stronger in less developed countries than in advanced economies. Technological progressions that give rise to the advancement of clean and efficient energy and substitution of low-quality fuels with high quality fuels are some of the possible channels that weaken the link between energy consumption and economic growth in advanced economies. Importantly, from a policy perspective, based on the study findings, energy conservation policies aimed at promoting environmental quality may worsen economic growth in developing countries, thereby adversely affecting their long-run economic growths.

PENGARUH INFRASTRUKTUR SECARA SPASIAL TERHADAP KONVERGENSI PERTUMBUHAN EKONOMI DI INDONESIA

INFO ARTHA ◽  
2017 ◽  
Vol 1 ◽  
pp. 17-28
Author(s):  
Anisa Fahmi
Keyword(s):  
Economic Growth ◽  
Regional Economics ◽  
Developed Countries ◽  
Road Infrastructure ◽  
Long Run ◽  
Catch Up ◽  
The Developed Countries ◽  
Positive Effect ◽  
Neoclassical Growth Theory

Motivated by inter-regional disparities condition that occurs persistently, this study examines the Indonesian economy in the long run in order to know whether it tends to converge or diverge. This convergence is based on the Solow Neoclassical growth theory assuming the existence of diminishing returns to capital so that when the developed countries reach steady state conditions, developing countries will continuously grow up to 'catch-up' with developed countries. Based on regional economics perspective, each region can not be treated as a stand-alone unit,therefore, this study also focuses on the influence of spatial dependency and infrastructure. Economical and political situations of a region will influence policy in that region which will also have an impact to the neighboring regions. The estimation results of spatial cross-regressive model using fixed effect method consistently confirmed that the Indonesian economy in the long term will likely converge with a speed of 8.08 percent per year. Other findings are road infrastructure has a positive effect on economic growth and investment and road infrastructure are spatially showed a positive effect on economic growth. In other words, the investment and infrastructure of a region does not only affect the economic growth of that region but also to the economy of the contiguous regions. 

scholarly journals Was the Gibson Paradox for real? A Wicksellian study of the relationship between interest rates and prices

2014 ◽  
Vol 21 (2) ◽  
pp. 139-163 ◽  
Author(s):  
Jagjit S. Chadha ◽  
Morris Perlman
Keyword(s):  
Interest Rates ◽  
Positive Relationship ◽  
Formal Model ◽  
Natural Rate ◽  
Market Rate ◽  
Long Run ◽  
Advanced Economies ◽  
The Uk ◽  
Gibson Paradox ◽  
The Relationship

We examine the relationship between prices and interest rates for seven advanced economies in the period up to 1913, emphasising the UK. There is a significant long-run positive relationship between prices and interest rates for the core commodity standard countries. Keynes ([1930] 1971) labelled this positive relationship the ‘Gibson Paradox’. A number of theories have been put forward as possible explanations of the paradox but they do not fit the long-run pattern of the relationship. We find that a formal model in the spirit of Wicksell (1907) and Keynes ([1930] 1971) offers an explanation for the paradox: where the need to stabilise the banking sector's reserve ratio, in the presence of an uncertain ‘natural’ rate, can lead to persistent deviations of the market rate of interest from its ‘natural’ level and consequently long-run swings in the price level.

Long run apartment price dynamics in Swedish and German cities

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sviatlana Engerstam
Keyword(s):  
Banking Sector ◽  
Cointegration Analysis ◽  
Price Dynamics ◽  
Long Term Effects ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Price Elasticities ◽  
Long Run ◽  
German Cities

PurposeThis study examines the long term effects of macroeconomic fundamentals on apartment price dynamics in major metropolitan areas in Sweden and Germany.Design/methodology/approachThe main approach is panel cointegration analysis that allows to overcome certain data restrictions such as spatial heterogeneity, cross-sectional dependence, and non-stationary, but cointegrated data. The Swedish dataset includes three cities over a period of 23 years, while the German dataset includes seven cities for 29 years. Analysis of apartment price dynamics include population, disposable income, mortgage interest rate, and apartment stock as underlying macroeconomic variables in the model.FindingsThe empirical results indicate that apartment prices react more strongly on changes in fundamental factors in major Swedish cities than in German ones despite quite similar development of these macroeconomic variables in the long run in both countries. On one hand, overreactions in apartment price dynamics might be considered as the evidence of the price bubble building in Sweden. On the other hand, these two countries differ in institutional arrangements of the housing markets, and these differences might contribute to the size of apartment price elasticities from changes in fundamentals. These arrangements include various banking sector policies, such as mortgage financing and valuation approaches, as well as different government regulations of the housing market as, for example, rent control.Originality/valueIn distinction to the previous studies carried out on Swedish and German data for single-family houses, this study focuses on the apartment segment of the market and examines apartment price elasticities from a long term perspective. In addition, the results from this study highlight the differences between the two countries at the city level in an integrated long run equilibrium framework.

A multifractal detrended fluctuation analysis of housing market: a role of financial crises in developed economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Syed Ali Raza ◽  
Nida Shah ◽  
Muhammad Tahir Suleman ◽  
Md Al Mamun
Keyword(s):  
Financial Crisis ◽  
Housing Market ◽  
Market Efficiency ◽  
House Price ◽  
Fluctuation Analysis ◽  
Content Type ◽  
Multifractal Detrended Fluctuation Analysis ◽  
Long Run ◽  
Before And After

Purpose This study aims to examine the house price fluctuations in G7 countries by using the multifractal detrended fluctuation analysis (MF-DFA) for the years 1970–2019. The study examined the market efficiency between the short-term and long-term in the full sample period, before and after the global financial crisis period. Design/methodology/approach This study uses the MF-DFA to analyze house price fluctuations. Findings The findings confirmed that the housing market series are multifractal. Furthermore, all the markets showed long-term persistence in both the short and long-term. The USA is identified as the most persistent house market in the short run and Japan in the long run. Moreover, in terms of efficiency, Canada is identified as the most efficient house market in the long run and the UK in the short run. Finally, the result of before and after the financial crisis period is consistent with the full sample result. Originality/value The contribution of this study in the literature is fourfold. This is the first study that has examined the house prices efficiency by using the MF-DFA technique given by Kantelhardt et al. (2002). Previously, the house market prices and efficiency has been investigated using generalized Hurst exponent (Liu et al., 2019), Quantile Regression Approach (Chae and Bera, 2019; Tiwari et al., 2019) but no study to the best of the knowledge has been done that has used the MF-DFA technique on the housing market. Second, this is the first study that has focused on the house markets of G7 countries. Third, this study explores the house market efficiency by dividing the market into two periods i.e. before and after the financial crisis. The study strives to investigate if the financial crisis determines the change in the degree of market efficiency or not. Finally, the study gives valuable insights to the investors that will help them in their investment decisions.

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