The Implications of the Comprehensive Spending Review for the Long-Run Growth Rate: a View From the Literature

2000 ◽  
Vol 171 ◽  
pp. 94-105 ◽  
Author(s):  
Richard Kneller
Keyword(s):  
Growth Rate ◽  
Quantitative Assessment ◽  
Growth Potential ◽  
Empirical Literature ◽  
Long Run ◽  
Capital Spending ◽  
The Government ◽  
Upside Risk ◽  
Empirical Growth ◽  
Trend Growth

In 1998 the Government set out its expenditure plans for the remainder of the current Parliament in the Comprehensive Spending Review. Announced within this were large increases in expenditure on education, health and capital spending with the objective of meeting the Government‘s manifesto pledges. Yet as the recent report by the Treasury on the UK's trend rate of growth states, the expenditure plans of the CSR may also help to raise the growth potential of the economy, although no quantitative assessment of this was made. Using evidence from the empirical growth literature, this article examines the possible effects of these policies on the long-run growth rate of the economy. In general the results from the empirical literature are non-robust, but by conducting a very different style of review we are able to identify several studies from which to determine what these effects might be. Using a stylised version of the CSR we estimate that it may raise the long-run growth rate by as much as 0.1 of a percentage point per annum, although there is some sensitivity to the underlying assumptions. This appears to confirm the likelihood of modest upside risk to the Treasury's estimate of trend growth.

scholarly journals Estimating Time-Varying Long-Run Growth Rate of Russian GDP in the ARX Model with Oil Prices

2020 ◽  
Vol 15 (1) ◽  
pp. 40-63 ◽  
Keyword(s):  
Growth Rate ◽  
Growth Rates ◽  
Oil Prices ◽  
Likelihood Method ◽  
Time Varying ◽  
Arx Model ◽  
Long Run ◽  
Unobserved Components Model ◽  
The Impact ◽  
Trend Growth

The paper estimates the path of trend growth rates for Russian GDP based on an autoregressive model with exogenous variables and with a time-varying parameter of trend growth, which, by assumption, is described by a random walk process. In conditions of a high dependence of the Russian economy on commodity exports, terms of trade are used as a control exogenous variable for GDP dynamics. For the purpose of econometric estimation, the ARX model is presented as an unobserved components model and estimated using the maximum likelihood method with the Kalman filter applied. It is shown that in the first half of the 2000s the trend growth rate was at 4%, which can be interpreted as recovery growth after a transformational recession. The higher growth rates actually achieved during this period are explained by the intensive growth of world oil prices. Later, the potential for recovery growth was exhausted, and after the crisis of 2008 the rates of trend growth were remaining at the level of 2% per year for a long period of time. However, following the 2014 crisis, trend growth rates began to decline steadily, and had reached about 1% per year by the beginning of 2019, which can be interpreted as the impact of sanctions and geopolitical uncertainty on the economic development of the Russian Federation. The results of an econometric analysis of the model on household consumption and investment data also suggest that the trend growth rate is approximately 1% per year at present.

scholarly journals Reconnoitering the Sustainable Relationship Between Revenue Income and GDP: A Comparative Study of Asymmetric Countries in the World

2021 ◽  
Vol 4 (2) ◽  
Author(s):  
Aoulad Hosen
Keyword(s):  
Growth Rate ◽  
Percent Level ◽  
Unit Root Test ◽  
Gdp Growth ◽  
Middle Income ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Short Run ◽  
Asymmetric Countries ◽  
The Government

This paper applies panel unit root test, country Pedroni cointegration test (PCT), Phillips-Peron cross section test (PPCST), vector error correction test and Johansen normalized cointegrating test (JNCT) for estimates the coefficients in the short-run and in the long-run to examine the inter-temporal relationship between the government revenues income and GDP. The paper took into account fifteen asymmetric countries with three income groups over the period of 2001 to 2016. The study justified the long run relationship between the articulated variables by the country PCT and the test results unearthed that four statistics out of seven on different indexes exhibited one percent level of significance. In the upper middle income country category, other than Brazil and Sri Lanka, rest of three countries showed long run relationship, i.e. the study outcome reconnoitered the existence of long run relationship between the two articulated variables. Decisively, the outcome of JNCT suggests that in the long run if the government revenue upsurge one percentage point then GDP growth rate will rise 0.037 and 0.28 percentage point for the countries that belongs to high income and the upper middle income respectively. Meanwhile, the test find negative result that allied to lower middle income nations, GDP growth rate will plummet 0.039 percent point due to one percent rise in revenue income. 

scholarly journals Are subsidies for Polish enterprises effective: empirical results based on panel data

2020 ◽  
Vol 6 (53) ◽  
pp. 108-131
Author(s):  
Beata Gosk ◽  
Natalia Nehrebecka
Keyword(s):  
Growth Rate ◽  
Quantitative Assessment ◽  
Manufacturing Sector ◽  
Meta Analysis ◽  
Financial Statements ◽  
Evaluation Study ◽  
Empirical Literature ◽  
Official Journal ◽  
The Republic ◽  
Polish Economy

AbstractThe objective of this article was to identify and evaluate the effectiveness of subsidies used by companies, as well as to develop an approach to assess the effectiveness of subsidies for the manufacturing sector of Polish economy. In order to organise the results obtained by researchers dealing with the efficacy of subsidies, a meta-analysis, i.e. a quantitative assessment of empirical literature, was carried out. Based on the data from the financial statements of medium-sized and large Polish companies, published in Monitor Polski B (a former Official Journal of the Republic of Poland), an evaluation study was conducted to verify the research hypotheses. Based on the obtained results, it was found that the aid in the form of subsidies did not have a significant impact on the productivity of the subsidised companies, growth rate of assets or profitability.

scholarly journals An Empirical Analysis of the Effects of Population Growth on Economic Growth in Ethiopia using an Auto Regressive Distributive Lag (ARDL) Model Approach

2021 ◽  
Author(s):  
Alemayehu Temesgen Befikadu ◽  
Berhanu Alemu Tafa
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Population Growth ◽  
Empirical Analysis ◽  
Population Growth Rate ◽  
Total Population ◽  
Long Run ◽  
Auto Regressive ◽  
The Government ◽  
Model Approach

Abstract ObjectiveThe study examines An Empirical Analysis of the Effects of Population Growth on Economic Growth in Ethiopia using an Auto Regressive Distributive Lag (ARDL) Model Approach from the period of 1980 through 2019 with specific focus on total population, Growth Domestic Product, population growth rate, and foreign direct investment, inflow. This study investigated to understand the effects of total population on economic growth, and to analyze the short run and long run relationship of economic growth with respect to population growth.ResultsFrom the results of the study, personal remittance is stationary at level, while total population, FDI net inflows, population growth rate, rate of inflation, and gross capital formation are stationary at first difference. From the finding of long run equilibrium relationships between RGDP, population number, FDI, personal remittance, population growth rate, rate of inflation and GCF is existed since the value of F-statics is greater than the upper boundary line. Finally, to increase the economic growth of Ethiopia; the government should adopt policies that can attract the foreign investors. The government also should put a standard to guarantee that the economy grows at a larger rate than the population growth.

The UK Economy

1996 ◽  
Vol 157 ◽  
pp. 11-27 ◽  
Author(s):  
Garry Young
Keyword(s):  
Growth Rate ◽  
Output Gap ◽  
Import Prices ◽  
Inflationary Pressure ◽  
Long Run ◽  
The Uk ◽  
Trend Growth

Since the beginning of 1995 output has been growing at a quarterly rate of just under ½ per cent, slightly less than most estimates of the trend growth rate that the economy can sustain in the long run. As a consequence, there has been no progress in closing any pre-existing output gap. Over this period, there has been a lack of any domestically generated inflationary pressure. Indeed, if import prices had not risen sharply in 1995, the underlying rate of inflation would have remained below 2½ per cent.

scholarly journals The Legacy of the Reformasi: The Role of Local Government Spending on Industrial Development in a Decentralized Indonesia

2021 ◽  
Author(s):  
Bangkit A. Wiryawan ◽  
Christian Otchia
Keyword(s):  
Industrial Development ◽  
Oil And Gas ◽  
Central Government ◽  
Capital Expenditure ◽  
Local Level ◽  
Industrial Growth ◽  
Moderation Effect ◽  
Long Run ◽  
Capital Spending ◽  
The Government

Abstract Starting in 2001 the government of Indonesia employed Regional Autonomy law, providing larger fiscal role to the province and district governments. However, our understanding of its impacts on economic development of Indonesia is still limited. This paper seeks to find the relationship between increasing local government’s capital expenditure on industrial development with focus in the non-oil and gas sector. Capital spending is thought to have moderation effect on investment, the main channel for industrialization, that should contribute to industrial growth. Our System GMM result suggests that there is significant correlation between capital spending and industrial growth. However, we fail to find significance moderation effect between local spending and investment towards the industry. Decentralization progress in Indonesia has been institutionally anchored by the central government particularly with the introduction of concurrent affairs in 2004, allowing central government to take a major developmental role at the local level. In the long run this contributes to the weakening capacity building at the local level, resulting in our non-positive findings. We propose a new institutional model that promote better central-local collaboration.

scholarly journals Central Bank Independence and Inflation: the Government debt and Inflation Targeting channel

2018 ◽  
Vol 1 (2) ◽  
pp. 13-33
Author(s):  
Bertrand BLANCHETON ◽  
Samuel MAVEYRAUD
Keyword(s):  
Central Bank ◽  
Inflation Targeting ◽  
Government Debt ◽  
Central Bank Independence ◽  
Empirical Literature ◽  
Panel Var ◽  
Annual Data ◽  
Long Run ◽  
Negative Effect ◽  
The Government

The paper introduces government debt and monetary strategy (Inflation Targeting - IT) into the empirical literature about the relationship between Central Bank Independence (CBI) and inflation. According to Martin’s (2014) model, CBI is not sufficient to maintain price stability in the long run and requires the adoption of IT as a monetary strategy. Using annual data from the period 1998 to 2010 we consider 87 countries (18 considered as developed and 69 as emerging). By using a panel VAR model we explicitly test a possible reciprocal influence between inflation and government debt. At a global level results show an indirect negative effect of Inflation Targeting and CBI on inflation through the government debt channel. A high level of CBI or the choice of IT as a monetary strategy has a significant negative effect on government debt and on inflation.

scholarly journals Tax burden and economic growth in Lesotho: An estimate of the optimal tax burden

Accounting ◽  
2021 ◽  
pp. 525-534 ◽  
Author(s):  
Nthabiseng Koatsa ◽  
Ch. Paramaiah ◽  
Manaka Scona
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Error Correction ◽  
Granger Causality ◽  
Causal Effect ◽  
Empirical Literature ◽  
Tax Burden ◽  
Economic Growth Rate ◽  
Optimal Tax ◽  
Long Run

Lesotho faces fiscal deficits due to high government expenditure as characterized by the huge wage bill regarded as one of the highest in the world (UNICEF, 2018). The aim of this research paper is to investigate the tax revenue impact as a share of Gross Domestic Product (GDP) on economic growth in Lesotho. This research is provoked by the theoretical postulations and empirical evidence that their relationship is positive up to a certain optimal level which is the point at which economic growth rate is maximized. The study used data from 1988 to 2017 to investigate the relationship between tax burden and economic growth in Lesotho by applying the log-linearized model of Scully’s tax optimization model transformed into an ARDL bounds testing framework. Granger causality test and error correction model was employed to investigate the long run relationship between tax burden and economic growth in Lesotho. The findings of study revealed a long-run relationship between economic growth rate and tax burden with a unidirectional causality running from economic growth to tax burden. Granger causality revealed no causal effect running from tax burden to economic growth in Lesotho despite expectation of significant causal effect following both theoretical and empirical literature from various studies. Error correction results further supported a co-integrating relationship running from economic growth to tax burden with 100 percent speed of adjustment in the short-run towards a long-run equilibrium level. An optimal tax burden could not be established as the variables of interest were negative and insignificant signifying the insignificance of tax policy in stimulating the economic performance.

Forming Sources of Long-run Growth: How to Understand Them?

2014 ◽  
pp. 4-20 ◽  
Author(s):  
G. Idrisov ◽  
S. Sinelnikov-Murylev
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Economic Policy ◽  
Business Cycle ◽  
Capital Markets ◽  
Productivity Growth ◽  
Government Spending ◽  
Long Run ◽  
Accelerate Growth ◽  
Budget Institutions

The paper analyzes the inconsequence and problems of Russian economic policy to accelerate economic growth. The authors consider three components of growth rate (potential, Russian business cycle and world business cycle components) and conclude that in order to pursue an effective economic policy to accelerate growth, it has to be addressed to the potential (long-run) growth component. The main ingredients of this policy are government spending restructuring and budget institutions reform, labor and capital markets reforms, productivity growth.

Migration and US agricultural competitiveness

2013 ◽  
Vol 10 (2) ◽  
pp. 159-179 ◽  
Author(s):  
Philip L. Martin
Keyword(s):  
Farm Workers ◽  
Easy Access ◽  
Foreign Born ◽  
Guest Workers ◽  
Long Run ◽  
Short Run ◽  
Lower Wage ◽  
The Government ◽  
The One

Agriculture has one of the highest shares of foreign-born and unauthorized workers among US industries; over three-fourths of hired farm workers were born abroad, usually in Mexico, and over half of all farm workers are unauthorized. Farm employers are among the few to openly acknowledge their dependence on migrant and unauthorized workers, and they oppose efforts to reduce unauthorized migration unless the government legalizes currently illegal farm workers or provides easy access to legal guest workers. The effects of migrants on agricultural competitiveness are mixed. On the one hand, wages held down by migrants keep labour-intensive commodities competitive in the short run, but the fact that most labour-intensive commodities are shipped long distances means that long-run US competitiveness may be eroded as US farmers have fewer incentives to develop labour-saving and productivity-improving methods of farming and production in lower-wage countries expands.

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