A Dynamic Analysis of Child Labor with a Variable Rate of Discount: Some Policy Implications

2006 ◽  
Vol 5 (1) ◽  
Author(s):  
Satya P Das ◽  
Rajat Deb
Keyword(s):  
Discount Rate ◽  
Child Labor ◽  
Time Preference ◽  
Infinite Horizon ◽  
Policy Implications ◽  
Poverty Trap ◽  
Variable Rate ◽  
Lump Sum ◽  
Long Run ◽  
Short Run

AbstractThis paper analyzes the problem of child labor in an infinite-horizon dynamic model with a variable rate of time preference and credit constraints. The variability in the rate of time preference leads to the possibility of multiple steady states and a poverty trap. The paper considers the long-run and short-run effects of an array of policies like enrollment subsidy, improvement in primary education infrastructure, lump-sum subsidy, and variations in loan market parameters. We distinguish between policies that reduce child labor in the long run only in the presence of a variable discount rate and other policies which work whether or not the discount rate is variable. Credit-related policies belong to the former group. Policies that reduce child labor and increase family consumption in the long run may have an adverse effect of lowering consumption in the short run.

Fish Exports and Economic Growth: The Pakistan’s Experience

2019 ◽  
Vol 20 (2) ◽  
pp. 279-296 ◽  
Author(s):  
Syed Tehseen Jawaid ◽  
Mohammad Haris Siddiqui ◽  
Zeeshan Atiq ◽  
Usman Azhar
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Positive Impact ◽  
Impulse Response Function ◽  
Policy Implications ◽  
Sensitivity Analyses ◽  
Series Data ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

This study attempts to explore first time ever the relationship between fish exports and economic growth of Pakistan by employing annual time series data for the period 1974–2013. Autoregressive distributed lag and Johansen and Juselius cointegration results confirm the existence of a positive long-run relationship among the variables. Further, the error correction model reveals that no immediate or short-run relationship exists between fish exports and economic growth. Different sensitivity analyses indicate that initial results are robust. Rolling window analysis has been applied to identify the yearly behaviour of fish exports, and it remains negative from 1979 to 1982, 1984 to 1988, 1993 to 1999, 2004 and from 2010 to 2013, and it shows positive impact from 1989 to 1992, 2000 to 2003 and from 2005 to 2009. Furthermore, the variance decomposition method and impulse response function suggest the bidirectional causal relationship between fish exports and economic growth. The findings are beneficial for policymakers in the area of export planning. This study also provides some policy implications in the final section.

scholarly journals Do FDI and Public Investment Crowd in/out Domestic Private Investment in the SADC Region

2021 ◽  
Vol 19 (1) ◽  
pp. 3-25
Author(s):  
Eslon Ngeendepi ◽  
Andrew Phiri
Keyword(s):  
Capital Expenditure ◽  
Public Investment ◽  
Trade Openness ◽  
Government Expenditure ◽  
Private Investment ◽  
Policy Implications ◽  
Domestic Investment ◽  
Government Investment ◽  
Long Run ◽  
Short Run

Our study examines the crowding-in/out effect of foreign direct investment and government expenditure on private domestic investment for 15 members of the Southern African Development Community (SADC) for the period 1991–2019. The study employed the panel Pool Mean Group (PMG)/ARDL technique in estimating the short-run and long-run cointegration relationships between FDI, government capital expenditure and domestic private investment and adds three more variables for control purposes (interest rate, GDP growth rate and trade openness). For the full sample, FDI crowds-in domestic investment whilst government crowds-out domestic investment. However, in performing a sensitivity analysis, in which the sample was segregated into low and high income economies, both FDI and government investment crowd-in domestic investment whilst government expenditure crowds-out domestic investment in lower income SADC countries with no effect of FDI on domestic investment. Policy implications are discussed.

The force of globalization reshaping the local institutions: evidence from the Organization of Islamic Cooperation member countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nahla Samargandi ◽  
Kazi Sohag ◽  
Ali Kutan ◽  
Maha Alandejani
Keyword(s):  
Government Expenditure ◽  
Policy Implications ◽  
Institutional Setting ◽  
Cross Sectional ◽  
Policy Makers ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
Nonlinear Relation ◽  
Political Globalization

PurposeThe authors reinforce the existing literature on the effect of overall globalization on institutional quality (IQ), while incorporating the effects of economic, political and social aspects of globalization, human capital, government expenditure and population growth. To this end, the authors estimate panel data models for a sample of 36 member countries of the Organization of Islamic Cooperation (OIC) during 1984–2016.Design/methodology/approachThe authors employ the cross-sectional autoregressive distributed lags (CS-ARDL) approach.FindingsThe study’s investigation affirms the presence of an inverted U-shaped (nonlinear) relation between overall globalization and IQ indexes for the sample countries, which suggests no additional room for improvement in IQ. It also underpins the existence of an inverted-U-shaped (nonlinear) relation between political globalization and IQ. In contrast, economic and social globalizations have a U-shaped relation with IQ, implying more scope for improvement.Research limitations/implicationsThe findings have key policy implications. First, policy makers should consider a long-run approach for improving IQ and globalization over time. Second, quick reforms in the short run may not improve IQ.Practical implicationsThe results suggest that policy makers should approach the globalization process from a long-run perspective as well by designing appropriate strategies to provide a continuous but gradual increase in globalization so as to systematically monitor the threshold limits to IQ from improving globalizationOriginality/valueTo the best of the authors’ knowledge, this work is the first to empirically investigate the overall role of globalization in promoting IQ under the conditions of short-run heterogeneity and long-run homogeneity. The authors focus on the member countries of the OIC, many of which are ruled by authoritarian regimes and suffer from a poor domestic institutional setting.

scholarly journals New empirics of monetary policy dynamics: evidence from the CFA franc zones

2016 ◽  
Vol 7 (2) ◽  
pp. 164-204 ◽  
Author(s):  
Simplice Asongu
Keyword(s):  
Monetary Policy ◽  
Granger Causality ◽  
Money Supply ◽  
Monetary Union ◽  
Policy Implications ◽  
Content Type ◽  
Long Run ◽  
Wide Range ◽  
Short Run ◽  
Cfa Franc

Purpose – A major lesson of the European Monetary Union crisis is that serious disequilibria in a monetary union result from arrangements not designed to be robust to a variety of shocks. With the specter of this crisis looming substantially and scarring existing monetary zones, the purpose of this paper is to complement existing literature by analyzing the effects of monetary policy on economic activity (output and prices) in the CEMAC and UEMOA CFA franc zones. Design/methodology/approach – VARs within the frameworks of Vector Error-Correction Models and Granger causality models are used to estimate the long- and short-run effects, respectively. Impulse response functions are further used to assess the tendencies of significant Granger causality findings. A battery of robustness checks are also employed to ensure consistency in the specifications and results. Findings –H1. monetary policy variables affect prices in the long-run but not in the short-run in the CFA zones (broadly untrue). This invalidity is more pronounced in CEMAC (relative to all monetary policy variables) than in UEMOA (with regard to financial dynamics of activity and size). H2. monetary policy variables influence output in the short-term but not in the long-run in the CFA zones. First, the absence of cointegration among real output and the monetary policy variables in both zones confirm the neutrality of money in the long term. With the exception of overall money supply, the significant effect of money on output in the short-run is more relevant in the UEMOA zone, than in the CEMAC zone in which only financial system efficiency and financial activity are significant. Practical implications – First, compared to the CEMAC region, the UEMOA zone’s monetary authority has more policy instruments for offsetting output shocks but fewer instruments for the management of short-run inflation. Second, the CEMAC region is more inclined to non-traditional policy regimes while the UEMOA zone dances more to the tune of traditional discretionary monetary policy arrangements. A wide range of policy implications are discussed. Inter alia: implications for the long-run neutrality of money and business cycles; implications for credit expansions and inflationary tendencies; implications of the findings to the ongoing debate; country-specific implications and measures of fighting surplus liquidity. Originality/value – The paper’s originality is reflected by the use of monetary policy variables, notably money supply, bank and financial credits, which have not been previously used, to investigate their impact on the outputs of economic activities, namely, real GDP output and inflation, in developing country monetary unions.

Macroeconomic performance under evolutionary dynamics of employee profit-sharing

2020 ◽  
Vol 8 (4) ◽  
pp. 589-615
Author(s):  
Gilberto Tadeu Lima ◽  
Jaylson Jair da Silveira
Keyword(s):  
Economic Growth ◽  
Evolutionary Dynamics ◽  
Capacity Utilization ◽  
Profit Sharing ◽  
Policy Implications ◽  
Macroeconomic Performance ◽  
Employee Compensation ◽  
Long Run ◽  
Short Run ◽  
The Impact

This paper investigates the impact on capacity utilization and economic growth as variables driven by effective demand of income distribution featuring the possibility of profit-sharing with workers. Firms choose to compensate workers with either a base wage or a share of profits on top of this base wage. In accordance with robust empirical evidence, workers in sharing firms have higher productivity than workers in non-sharing firms. The distribution of employee compensation strategies and labor productivity across firms is evolutionarily time-varying. Two major results carrying relevant theoretical and policy implications are obtained. First, heterogeneity in employee compensation strategies across firms (and therefore earnings inequality across workers) may emerge as a long-run equilibrium outcome. Second, beyond the short run, a higher fraction of profit-sharing firms may result in either higher or lower rates of capacity utilization and economic growth.

Tourism, economic growth, energy consumption, and CO2 emissions in China

2020 ◽  
pp. 135481662091845 ◽  
Author(s):  
Jiekuan Zhang ◽  
Yan Zhang
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Granger Causality ◽  
Policy Implications ◽  
Long Run ◽  
Cointegration Tests ◽  
Short Run ◽  
Vecm Granger Causality ◽  
Growth Energy

In this article, we for the first time applied the vector error correction model (VECM) Granger causality approach to investigate the short-run and long-run causal relationships among tourism, economic growth, energy consumption, and carbon dioxide (CO2) emissions for 30 Chinese provinces over the period 2000–2017. The results implied that the analyzed variables became stationary at their first differences. The panel cointegration tests indicated the presence of a long-term equilibrium relationship among these four analyzed variables. Results from the VECM Granger causality tests suggested that the bidirectional short-term causalities were statistically confirmed between gross domestic product (GDP) and tourism. Additionally, we found that some unidirectional short-run causalities existed running from energy consumption to other analyzed variables and bidirectional long-run causalities existed between CO2 emissions and GDP, CO2 emissions and tourism, and GDP and tourism. Moreover, we also found the existence of unidirectional long-term causalities running from energy consumption to other analyzed variables. Based on these findings, we highlighted some key policy implications to develop China’s sustainable tourism.

scholarly journals Nonexistence of Harberger-Laursen-Metzler Effect with Endogenous Time Preference in an Imperfect Capital Market

2015 ◽  
Vol 2015 ◽  
pp. 1-10 ◽  
Author(s):  
Deng-Shan Wang ◽  
Miao Jin
Keyword(s):  
Discount Rate ◽  
Current Account ◽  
Open Economy ◽  
Capital Market ◽  
Small Open Economy ◽  
Stable State ◽  
Terms Of Trade ◽  
Stable Steady State ◽  
Long Run ◽  
Short Run

This paper investigates the spending and current-account effects of a permanent terms-of-trade change in a dynamic small open economy facing an imperfect world capital market, where the households’ subjective discount rate is a function of savings. Under the assumption that the bond holdings are measured in terms of home goods, it is shown that when the discount rate is a decreasing function of savings, there does not necessarily exist a stable state; however, when the discount rate is an increasing function of savings, a saddle-path stable steady state comes into existence and the Harberger-Laursen-Metzler effect does not exist unambiguously; that is, an unanticipated permanent terms-of-trade deterioration leads to a cut in aggregate expenditure and a current-account surplus. The short-run effects obtained by the technique by Judd (1985, 1987) and Zou (1997) are consistent with the results from the long-run analysis and diagrammatic analysis.

Iran’s Inflationary Experience: Demand Pressures, External Shocks, and Supply Constraints

2017 ◽  
Vol 13 (2) ◽  
Author(s):  
Magda Kandil ◽  
Ida A. Mirzaie
Keyword(s):  
Iraq War ◽  
Binding Capacity ◽  
Output Growth ◽  
Policy Implications ◽  
External Shocks ◽  
Public And Private ◽  
Long Run ◽  
Oil Resources ◽  
Short Run ◽  
The Cost

AbstractThis paper studies determinants of inflation in Iran. The buildup of international reserves has accelerated during the episode of higher oil price. The associated increase in government spending has limited contribution to capacity building and pronounced inflationary pressures, which accelerated at the beginning of the Iran-Iraq war in 1980, and eased at the end of the war in 1988. Accommodating monetary stance has proven to be an important determinant of inflation, both in the long and in the short-runs. In the long-run, depreciation of the rial increases the cost of intermediate goods, increasing inflationary pressures with limited significant effect on output. In contrast, depreciation could boost competitiveness of non-energy exports, in support of higher demand and output growth in the short-run. For policy implications, priorities going forward should be in place to direct both public and private resources toward relaxing binding capacity constraints, capitalizing on oil resources in Iran and the prospects of the positive implications of lifting sanctions in the context of the recent nuclear agreement between Iran and the G5+1 countries.

scholarly journals Do Non-Traditional Income, Size, and Growth Affect the Performance of the Banks?

2019 ◽  
Vol 2 (3) ◽  
pp. 58-66 ◽  
Author(s):  
Ramzan Ali ◽  
Zahir Zahid Butt ◽  
Sami Ullah Butt
Keyword(s):  
Statistical Technique ◽  
Vital Role ◽  
Policy Implications ◽  
Annual Data ◽  
Economic Data ◽  
Return On Assets ◽  
Panel Ardl ◽  
Long Run ◽  
Short Run ◽  
The Impact

Purpose- The aim of this study is to examine the impact of non-traditional income, size and growth on the performance of the banks in big three economies of South Asia, as in the modern banking, non-traditional income plays a vital role by acting as a link between bank and its customers. Design- This study utilized the annual data over the period from 1996 to 2015, data were obtained from Federal Reserve Economic Data (FRED). This study examines the long-run as well as the short-run relationship among variables through the statistical technique of Panel ARDL. Findings- The findings of this study showed a significant and positive relationship between non-traditional income and return on assets as well as bank size and return on assets. While the association among the growth and return on assets is negative but significant. Policy Implications- Policy recommendation of this study suggests that banks should also explore new avenues of non-interest valued added services to their customers which will not only facilitate their customers also attract new customers which ultimately enhance the performance of the banks as well as the country.

scholarly journals The impact of selected macro variables on child labor in Indonesia

2017 ◽  
Vol 5 (3) ◽  
pp. 21
Author(s):  
Shafinah Rahim ◽  
Fatin Nur Nadia Bakar
Keyword(s):  
Child Labor ◽  
Family Income ◽  
Government Expenditure ◽  
Consumption Pattern ◽  
Impulse Response Functions ◽  
Vector Error Correction ◽  
Long Run ◽  
Short Run ◽  
Macro Variables ◽  
The Impact

This study investigates the impact of government expenditure, household expenditure and adult unemployment on child labour in Indonesia between 1985 and 2014. The data from the World Bank Indicators tested using Johansen &Juselius Cointegration (J&J), Vector Error Correction Model (VECM), Granger Causality, Generalized Variance Decomposition (GVDCs) and Generalized Impulse Response Functions (GIRFs) show thatthere are long run and short run relationships between the variables. Hence,the need to improve on policiesrelating to encouraging children to attend school without affecting their family income becomes critical. In addition household consumption pattern and spending decisions may require adjustment with the support of the authorities so as to assist the common man in prioritising their basic development needs, especially education.

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