The impact of the financial crisis on the Euro Area

2008 ◽  
Vol 206 ◽  
pp. 90-100
Keyword(s):  
Economic Growth ◽  
Financial Markets ◽  
Euro Area ◽  
Banking Sector ◽  
Gdp Growth ◽  
Medium Term ◽  
Real Gdp ◽  
External Demand ◽  
Short Run ◽  
The Impact

This year should see a sharp downturn in the Euro Area's economic growth. After peaking at 2.6 per cent in 2007, real GDP growth is projected to slow down to around 1¼ per cent this year and fall to about ¼ per cent in 2009. We expect GDP growth in the Euro Area to remain just below 1 per cent in 2010, before returning to trend in the medium term. In 2008 the Euro Area is forecast to experience two consecutive quarters of falling output, due to declining external demand and the severe disruption of the banking sector and financial markets. Although the worst of the crisis appears to be over following concerted intervention by European governments (See Box A), the Euro Area is likely to go through a period of sustained economic weakness in the short run.

scholarly journals Taxation, government spending and economic growth: The case of Bulgaria

2021 ◽  
Vol 7 (3) ◽  
pp. 255-266
Author(s):  
G. Ganchev ◽  
◽  
I. Todorov ◽  
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Tax Revenue ◽  
Gdp Growth ◽  
Real Gdp ◽  
Long Run ◽  
Gdp Growth Rate ◽  
Short Run ◽  
The Impact

The objective of this article is to estimate the impact of three fiscal instruments (direct taxes, indirect taxes, and government expenditure) on Bulgaria’s economic growth. The study employs an autoregressive distributed lag model (ARDL) and Eurostat quarterly seasonally adjusted data for the period 1999–2020. Four control variables (the shares of gross capital formation, household consumption, and exports in GDP as well as the economic growth in the euro area) are included in the model to account for the influence of non-fiscal factors on Bulgaria’s real GDP growth rate. The empirical results indicate a long-run equilibrium relationship between Bulgaria’s economic growth and the independent variables in the ARDL. In the short term, Bulgaria’s real GDP growth rate is affected by its own past values and the previous values of the shares of direct tax revenue, exports, government consumption, and indirect tax revenue in GDP. In the long term, Bulgaria’s economic growth is influenced by its own previous values and the past values of the share of household consumption in GDP and the euro area’s real GDP growth rate. Fiscal instruments can be used to stabilize Bulgaria’s growth in the short run but they are neutral in the long run. The direct tax revenue, government consumption, and indirect tax revenue are highly effective and can be used as tools for invigorating and stabilizing Bulgaria’s economic growth in the short run. However, in the long term, the real GDP growth rate can be hastened only by encouraging domestic demand (final consumption expenditure of households) and promoting exports. This research cannot answer the question of whether flat income taxation stabilizes the economy or not, since it does not separate the impact of tax rate changes from the influence of tax base modifications.

Money Supply-Economic Growth Nexus: Evidence from a Landlocked Country

2020 ◽  
Vol 2 (1) ◽  
pp. 106-115
Author(s):  
Tilak Singh Mahara
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Correction Term ◽  
Policy Instruments ◽  
Special Role ◽  
Real Gdp ◽  
Long Run ◽  
Ardl Approach ◽  
Short Run ◽  
The Impact

Background: There is special role of money in the economy due to its astonishing importance as change in the amount of it can have a significant effect on the major macroeconomic variables. Money supply is generally considered as policy-determined phenomenon. Like in all the nations, macroeconomic stability of Nepal also depends on the variation in the quantity of money. Objective: The principle objective of the study is to examine the impact of money supply on the economic growth of Nepal. Methodology: This study applies the ARDL approach to cointegration. Bounds test (F-version) has been carried out to determine the existence of long-run relationship between variables. Results: The empirical results pointed out that there is positive and significant long-term relationship between money supply and real economic growth in Nepal. Causality result reveals that there is unidirectional causality from money supply (M2) to Real GDP. The error correction term is found negative and statistically significant suggesting a correction of short-run disequilibrium within two and a half years. Conclusions: The study concludes that increase in the money supply helps to increase the real economic growth in Nepal. So, money supply and real GDP are associated in the long-run.  Implications: The implication of the study is that, real economic growth in Nepal can be achieved if Nepal Rastra Bank emphasized on monetary policy instruments which help to increase the flow of money supply both in the short and long run.

Section III. Prospects for the European Union

2002 ◽  
Vol 181 ◽  
pp. 25-37
Keyword(s):  
European Union ◽  
Financial Markets ◽  
Euro Area ◽  
Domestic Demand ◽  
The European Union ◽  
Medium Term ◽  
Sharp Drop ◽  
External Demand ◽  
Stability Pact ◽  
Recent Developments

The outcome for growth in the Euro Area in the first quarter of 2002 was slightly weaker than our April projections. Output rose by 0.3 per cent relative to the previous quarter, following a decline of the same magnitude in the final quarter of last year. The recovery stemmed primarily from a sharp drop in imports of 0.8 per cent, rather than a pickup in domestic or external demand. The weaker outcome for the first quarter, coupled with recent developments in financial markets, dampens the outlook for the year as a whole. Industrial production rose by 0.8 per cent in March, but declined by 0.7 per cent in April and edged up by only 0.1 per cent in May, supporting our expectation that recovery will be gradual. We forecast growth of 1¼ per cent in the Euro Area this year, but anticipate a stronger improvement next year helped by a recovery of domestic demand. This will be supported by tax cuts in several countries, despite the fact that the Euro Area's three largest economies appear unlikely to meet their Stability Pact pledge of achieving a budget at or close to balance by 2004. We expect output in the Euro Area to grow by about 2½ per cent next year, and by about 2½ -2¾ per cent per annum throughout the medium-term.

scholarly journals Repercussions of COVID-19 on the Indian stock market

2021 ◽  
Vol 5 (S1) ◽  
pp. 1495-1509
Author(s):  
Dhananjay Ashri ◽  
Bibhu Prasad Sahoo ◽  
Ankita Gulati ◽  
Irfan UL Haq
Keyword(s):  
Stock Market ◽  
Financial Markets ◽  
Banking Sector ◽  
Oil And Gas ◽  
Negative Impact ◽  
Long Run ◽  
Short Run ◽  
Indian Stock Market ◽  
The Impact ◽  
Daily Returns

The present paper determines the repercussions of the coronavirus on the Indian financial markets by taking the eight sectoral indices into account. By taking the sectoral indices into account, the study deduces the impact of virus outbreak on the various sectoral indices of the Indian stock market. Employing Welch's t-test and Non-parametric Mann-Whitney U test, we empirically analysed the daily returns of eight sectoral indices: Nifty Auto, Nifty FMCG, Nifty IT, Nifty Media, Nifty Metal, Nifty Oil and Gas, Nifty Pharma, and Nifty Bank. The results unveiled that pandemic had a negative impact on the automobile, FMCG, pharmaceuticals, and oil and gas sectors in the short run. In the long run, automobile, oil and gas, metals, and the banking sector have suffered enormously. The results further unveiled that no selected indices underperformed the domestic average, except NIFTY Auto. 

scholarly journals Fiscal policy and economic development

2020 ◽  
pp. 153-164
Author(s):  
Mykola Pasichnyi
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Fiscal Policy ◽  
Budget Deficit ◽  
Weight Ratio ◽  
Policy Formation ◽  
Gdp Growth ◽  
Fiscal Consolidation ◽  
Real Gdp ◽  
The Impact

The research subject includes the theoretical basis and mechanisms of fiscal policy formation and realization as an instrument of economic development regulation. The aim of the study is to improve the theoretical and methodological basis of fiscal policy formation and determine the peculiarities of its impact on economic development. Methods. In order to achieve the appropriate tasks, we used a set of methods and approaches, that helped to ensure the conceptual unity of our investigation. The dialectical, systemic and structural approaches, methods of analysis and synthesis, comparison, generalization,economic and mathematical modeling, scientific abstraction are applied. Results. In this paper, we explored the main instruments of fiscal policy, which affect economic development. The experience of advanced counties in fiscal consolidation and stimulus measures during the Great Recession was systemized. Also, the author investigated the budget deficit impact on real GDP growth in OECD countries over the 1981-2017 period. Practical implications. Fiscal policy and instruments of its implementation. Conclusions. The regulation of the tax burden on labor and capital influences the conjuncture of these factors in the market. Fiscal regulation is one of the determining reasons for the migration of labor and financial capital between different regions and countries. Given the multiplicity of combinations of tax bases and rates, the government has significant potential to impact on investment and consumer demand, and real GDP growth. The impact of budget expenditures on aggregate demand should be examined considering the level (ratio to GDP) and different composition structures. It is vital to raise the weight ratio of productive expenditures in the overall structure, which leads to foster economic growth. Particularly important are the special productive expenditures that are directed towards the development of human capital; which include expenditures on education, health care, physical development, R&D. It is crucial to establish a consistent relationship between public spending and the obtained results to form an effective fiscal policy. The budget should be balanced, which requires the implementation of systematic fiscal consolidation measures, and it has been found that the growth of the budget deficit slows down economic growth. The priority of fiscal policy is to reduce the debt burden.

Linkages between Financial Development and Economic Growth in the Middle-Income Countries of South Asia: A Panel Data Investigation

2020 ◽  
Vol 24 (2) ◽  
pp. 140-150 ◽  
Author(s):  
Rajesh Sharma ◽  
Pradeep Kautish
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
South Asia ◽  
Banking Sector ◽  
Sustainable Growth ◽  
Gdp Growth ◽  
Middle Income ◽  
Middle Income Countries ◽  
Long Run ◽  
The Impact

The present study intends to investigate the impact of financial sector development on GDP growth in the four middle-income countries of South Asia over the period of 1990–2016. Using pooled mean group (PMG) estimation, this study tries to examine whether in these developing countries, GDP growth has been influenced by size of market capitalization and size of market turnover in the long run which are used as proxy for stock market development. Similarly, domestic credit to private sector is used as proxy for banking sector development while assessing its long-run impact on GDP growth. Furthermore, by incorporating a dummy variable for the global financial crisis (2007–2008), this study investigates whether these economies are vulnerable to external shocks or not. The outcomes of this study find that relatively, the impact of banking sector on GDP growth has remained low in the region. Nevertheless, the development in both sectors has positively influenced economic growth in the long run. The outcomes of this study suggest that both, i.e. stock market and banking sector, are vital determinants of long-run economic growth in the South Asian countries. Therefore, to achieve the sustainable growth, policymakers need to adopt the global approach which can be ensured by improving the quality and scope of financial services in these countries.

Foreign Direct Investment, Financial Development, and Economic Growth Nexus in Bangladesh

2020 ◽  
pp. 056943452093867
Author(s):  
Md. Noman Siddikee ◽  
Mohammad Mafizur Rahman
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Banking Sector ◽  
Negative Impact ◽  
Capital Formation ◽  
Long Run ◽  
Short Run ◽  
The Impact

This article aims to explore the short- and long-run impact of foreign direct investment (FDI), financial development (FD), capital formation, and the labor forces on the economic growth of Bangladesh. We applied the Granger causality test and Vector Error Correction Model (VECM) for this study. The World Bank data for the period of 1990–2018 are taken into account for the analysis. Our findings suggest, in the long run, capital formation has a positive impact, and in the short run, it has a negative impact on gross domestic product (GDP) implying a lack of higher efficiency is persisting in capital management. Similarly, labor forces have an insignificant impact in the short run and a negative impact in the long run on GDP, which confirms the presence of a huge number of unskilled laborers in the economy with inefficient allocation. The impact of FD is found tiny positive in the short run but large negative in the long run on GDP indicating vulnerability of banking sector. These also confirm fraudulence and inefficient use of the domestic credit supplied to the private sector. The impact of FDI is approximately null both in the short and long run, indicating Bangladesh fails to achieve the long-term benefits of FDI. Finally, this study suggests using FDI more in the capital intensive project of the public–private partnership venture than infrastructural development only and also improving the credit management policy of the banking sector. JEL Classifications: F21, F43, J21

scholarly journals Bank Versus Stock Market Development in Brazil: An ARDL Bounds Testing Approach

2017 ◽  
Vol 12 (1) ◽  
pp. 7-21 ◽  
Author(s):  
Sheilla Nyasha ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Regression Analysis ◽  
Stock Market ◽  
Financial Development ◽  
Banking Sector ◽  
Bounds Testing ◽  
Stock Market Development ◽  
Long Run ◽  
Short Run ◽  
The Impact

AbstractThis paper examines the impact of both bank-based and market-based financial development on economic growth in Brazil during the period from 1980 to 2012. To incorporate all of the aspects of financial development into the regression analysis, the study employs a method of means-removed average to construct both bank-based and market-based financial development indices. Based on the ARDL approach, the empirical results show that there is a positive relationship between market-based financial development and economic growth in Brazil in the long run, but not in the short run. The results also show that bank-based financial development in Brazil does not have a positive effect on economic growth. This applies irrespective of whether the regression analysis is conducted in the short run, or in the long run. The study, therefore, concludes that it is the stock market, rather than banking sector development, that drives long-run economic growth in Brazil.

scholarly journals The Impact of Output Volatility on CO2 Emissions in Turkey: Testing EKC Hypothesis with Fourier Stationarity Test

2021 ◽  
Author(s):  
Murat Can Genç ◽  
Aykut Ekinci ◽  
Burchan Sakarya
Keyword(s):  
Economic Growth ◽  
Kuznets Curve ◽  
Output Volatility ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Real Gdp ◽  
Long Run ◽  
Short Run ◽  
Stationarity Test ◽  
The Impact

Abstract This study uses the environmental Kuznets curve (EKC) approach to determine the dynamic short- and long-term impacts of the volatility of economic growth (VOL) on carbon dioxide (CO2) emissions in Turkey from 1980 to 2016. The results of the Autoregressive Distributed Lag (ARDL) approach indicate that there is a long-run relationship between CO2, per capita real GDP, and VOL. The coefficients obtained from the ARDL estimation indicate that economic growth increases CO2 emissions, but VOL decreases CO2 emissions in the long run. However, the coefficients obtained from the ARDL error correction model show that VOL increases CO2 emissions in the short run. We also find that the EKC is valid in Turkey.

scholarly journals Testing the Validity of Keynesian Military Model of Fiscal Side in Case of Pakistan

2020 ◽  
Vol 6 (3) ◽  
pp. 675-686
Author(s):  
Ahmed Gulzar ◽  
Allah Ditta ◽  
Hafeez ur Rehman ◽  
Naghmana Ghafoor
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Series Data ◽  
Growth Time ◽  
Gdp Growth ◽  
Development Indicators ◽  
Long Run ◽  
Short Run ◽  
Military Expenditures ◽  
The Impact

The objective of the study was to determine the impact of national security expenditures (military expenditures) on economic growth. Time series data from 1981 to 2018 on annual frequency on GDP growth rate, military expenditures as percentage of GDP, imports as percentage of GDP, unemployment rate, FDI as percentage of GDP and percentage of population living in agglomeration cities taken from online World Development Indicators. Johansen Co-integration and VECM methodology are applied to check the long run relationship and to get the long run and short run coefficient values. The major findings of this study explain that there is found the positive and significant relationship between military expenditures and economic growth of Pakistan both in long run and in short run. It explains that military expenditures are the key driver of economic growth both in short run and in the long run. The impact of imports on GDP growth was also found to be positive and significant both in long run and in short run. The impact of FDI is found positive and significant both in the long run and in the short run. The impact of migration of population to agglomeration cities have huge impact on growth were observed. The impact of unemployment was found to be negative on economic growth in short run.

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