Unit Roots, Level Shifts and Trend Breaks in Per Capita Output: A Robust Evaluation

In this study, we use the co-movements approach to examine the role of permanent (common trend) and temporary (common cycle) shocks on per capita output, per capita consumption, and per capita investment in Peru, a small open commodity-based economy. Using quarterly data from 1993: Q1 to 2019: Q1, the effects of the temporary shocks are short-lived, and, on average, are a minor source of the variations of macro time series, over 10 quarters. This evidence suggests that the main source of per capita output and per capita consumption variations is the common trend shock which must be related to the 1990s reforms. Moreover, per capita output and per capita consumption are less responsive to unfavorable (favorable) common cycle shocks than per capita investment is. This outcome indicates that per capita investment has a much more volatile cycle than per capita private output and per capita consumption which is consistent with a previous empirical work.

Download Full-text

Economic Development

10.31227/osf.io/peuxt ◽

2019 ◽

Author(s):

Dhina Vadyza

Keyword(s):

Economic Growth ◽

Economic Development ◽

Income Distribution ◽

Urban Areas ◽

Gini Index ◽

Production Factor ◽

Real Economy ◽

Long Run ◽

Per Capita ◽

Capita Output

Economic growth is a process of increasing per capita output that occurs continuously in the long run. Economic growth is one indicator of the success of development. Increasingly increasing economic growth usually increases people's welfare. While economic development is an effort to increase per capita income by processing potential economic forces into the real economy through investment, increasing knowledge, increasing skills, using technology, adding management skills and organizing.Economic growth is also related to the increase in "per capita output". The theory must include theories about GDP growth and theories about population growth. Then the third aspect is economic growth in a long-term perspective, that is, if for a long period of time the per capita output shows an increasing tendency.The distribution of income distribution in Indonesia is increasingly uneven. This can be seen from the increasing Indonesian Gini Index. As is known, the Gini index measures the income distribution of a country. The size of the Gini index Between 0 (zero) to 1 (one), the Gini index Equal to 0 (zero) indicates the index that the income distribution is perfectly equal, while the Gini index is 1 (one ) shows that the income distribution is totally uneven. Based on the data, the Indonesian Gini index continues to increase from year to year.The state of income distribution in Indonesia since 1970 can be said not to improve, this is caused by many factors, including the First production factor market (input market) which is the increase in labor supply which results in excess labor, low labor wages and limited employment opportunities in urban areas resulting in unemployment and urban slums.Second, land ownership. Land distribution is the main determinant of the extent of poverty and income distribution.

Download Full-text

Demographic Cycles and Economic Growth: The Long Swing Reconsidered

The Journal of Economic History ◽

10.1017/s0022050700071928 ◽

1969 ◽

Vol 29 (4) ◽

pp. 633-656 ◽

Cited By ~ 10

Author(s):

Allen C. Kelley

Keyword(s):

Economic Growth ◽

Growth Rates ◽

Secular Trend ◽

Equal Distribution ◽

Aggregate Production ◽

Price Series ◽

History Of ◽

Per Capita ◽

The Business Cycle ◽

Capita Output

For many Western countries the history of the last two centuries reveals both a sustained rise in per capita output and a tendency toward a more equal distribution of the economic product. The experience has been characterized, however, by repetitive fluctuations in the levels and growth rates of aggregate production and its components. The length of the shorter of these fluctuations, the business cycle, ranges from the 40- to 45-month inventory cycle to the so-called Juglar of seven to ten years. Two other classes of interruptions in the secular trend have also been singled out for study by economic historians. The first is the Kondratieff cycle, a movement of roughly fifty years which has been primarily identified in price series. The second is the Kuznets cycle, or “long swing,” which in length is between the Juglar and the Kondratieff. The long swing constitutes the primary theme of this study.

Download Full-text

Breaks, trends and unit roots in commodity prices: a robust investigation

Studies in Nonlinear Dynamics & Econometrics ◽

10.1515/snde-2013-0022 ◽

2014 ◽

Vol 18 (1) ◽

Cited By ~ 5

Author(s):

Atanu Ghoshray ◽

Mohitosh Kejriwal ◽

Mark Wohar

Keyword(s):

Unit Root ◽

Structural Breaks ◽

Commodity Prices ◽

Unit Roots ◽

Commodity Price ◽

Policy Implications ◽

Price Shocks ◽

Price Series ◽

Commodity Price Shocks ◽

Trend Breaks

AbstractThis paper empirically examines the time series behavior of primary commodity prices relative to manufactures with reference to the nature of their underlying trends and the persistence of shocks driving the price processes. The direction and magnitude of the trends are assessed employing a set of econometric techniques that is robust to the nature of persistence in the commodity price shocks, thereby obviating the need for unit root pretesting. Specifically, the methods allow consistent estimation of the number and location of structural breaks in the trend function as well as facilitate the distinction between trend breaks and pure level shifts. Further, a new set of powerful unit root tests is applied to determine whether the underlying commodity price series can be characterized as difference or trend stationary processes. These tests treat breaks under the unit root null and the trend stationary alternative in a symmetric fashion thereby alleviating the procedures from spurious rejection problems and low power issues that plague most existing procedures. Relative to the extant literature, we find more evidence in favor of trend stationarity suggesting that real commodity price shocks are primarily of a transitory nature. We conclude with a discussion of the policy implications of our results.

Download Full-text

AUTOMATION, STAGNATION, AND THE IMPLICATIONS OF A ROBOT TAX

Macroeconomic Dynamics ◽

10.1017/s1365100520000139 ◽

2020 ◽

pp. 1-32 ◽

Cited By ~ 6

Author(s):

Emanuel Gasteiger ◽

Klaus Prettner

Keyword(s):

Steady State ◽

Economic Impact ◽

Technological Progress ◽

Overlapping Generations ◽

Investment Decisions ◽

Cautionary Tale ◽

Overlapping Generations Model ◽

Long Run ◽

Per Capita ◽

Capita Output

We assess the long-run growth effects of automation in the overlapping generations framework. Although automation implies constant returns to capital and, thus, an AK production side of the economy, positive long-run growth does not emerge. The reason is that automation suppresses wage income, which is the only source of investment in the overlapping generations model. Our result stands in sharp contrast to the representative agent setting with automation, where sustained long-run growth is possible even without technological progress. Our analysis therefore provides a cautionary tale that the underlying modeling structure of saving/investment decisions matters for the derived economic impact of automation. In addition, we show that a robot tax has the potential to raise per capita output and welfare at the steady state. However, it cannot induce a takeoff toward positive long-run growth.

Download Full-text

Testing for Unit Roots Under Multiple Possible Trend Breaks and Non-Stationary Volatility Using Bootstrap Minimum Dickey-Fuller Statistics

Journal of Time Series Analysis ◽

10.1111/jtsa.12067 ◽

2014 ◽

Vol 36 (5) ◽

pp. 603-629 ◽

Cited By ~ 4

Author(s):

Giuseppe Cavaliere ◽

David I. Harvey ◽

Stephen J. Leybourne ◽

A. M. Robert Taylor

Keyword(s):

Unit Roots ◽

Trend Breaks

Download Full-text

UNIT ROOTS, TREND BREAKS, AND TRANSITORY DYNAMICS: A MACROECONOMIC PERSPECTIVE

Macroeconomic Dynamics ◽

10.1017/s1365100501010094 ◽

2002 ◽

Vol 6 (5) ◽

pp. 614-632 ◽

Cited By ~ 12

Author(s):

Lutz Kilian ◽

Lee E. Ohanian

Keyword(s):

Unit Root ◽

Null Hypothesis ◽

High Probability ◽

Stationary Process ◽

Alternative Hypothesis ◽

Unit Roots ◽

Critical Values ◽

Finite Sample ◽

Potential Pitfall ◽

Trend Breaks

It is common to interpret rejections of the unit-root null hypothesis in favor of a trend stationary process with possible trend breaks as evidence that the data are better characterized as stationary about a broken trend. This interpretation is valid only if the model postulated under the alternative hypothesis is the only plausible alternative to the model postulated under the null. We argue that there are economically plausible models that are not well captured under either the null hypothesis or the alternative hypothesis of these tests. We show that applied researchers who ignore this possibility are likely to reject the unit-root null with high probability in favor of a trend stationary process with possible breaks. Our evidence shows that this potential pitfall is both economically relevant and quantitatively important. We explore the extent to which applied users may mitigate inferential errors by using finite-sample and bootstrap critical values.

Download Full-text