Bridging the Gap between the Short and the Long Run in Macroeconomics: Outline of the GSMS-SS Model of Economic Growth and the Business Cycle

2014 ◽  
Author(s):  
Antony P. Mueller
Keyword(s):  
Economic Growth ◽  
Business Cycle ◽  
Long Run ◽  
The Business Cycle

Introduction

2021 ◽  
pp. 1-6
Author(s):  
Jesper Rangvid
Keyword(s):  
Economic Growth ◽  
Business Cycle ◽  
Stock Returns ◽  
Economic Activity ◽  
Final Part ◽  
Stylized Facts ◽  
Long Run ◽  
Key Concepts ◽  
The Business Cycle

Chapter 1 contains an overview of the book. Part I introduces key concepts, definitions, and stylized facts regarding long–run economic growth and stock returns.Part II analyses the relation between economic growth and stock returns in the long run. Part III examines the shorter-horizon relation between economic growth and stock returns: the relation over the business cycle. Part IV explains how to make reasonable projections for economic activity, both for the short and the long run. Part V deals with expected future stock returns. The final part, a short one including one chapter only, explains how one can use the insights from the book when making investments.

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.

Government spending shocks and economic growth: additional evidence from cyclical behavior of fiscal policy

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olumide Olusegun Olaoye ◽  
Ukafor Ukafor Okorie ◽  
Oluwatosin Odunayo Eluwole ◽  
Mahmood Butt Fawwad
Keyword(s):  
Economic Growth ◽  
Business Cycle ◽  
Government Spending ◽  
Generalized Method Of Moments ◽  
The State ◽  
Fiscal Policies ◽  
Asymmetric Effect ◽  
Content Type ◽  
Spending Shocks ◽  
The Business Cycle

PurposeThis study examines the asymmetric effect of government spending on economic growth in Nigeria over the period 1980–2017. Specifically, this study investigates whether the response of economic growth to government spending shocks differs according to the nature of shocks on them. In addition, the authors examine whether the stabilizing effects of fiscal policies are dependent on the state of the business cycle.Design/methodology/approachThe study adopts the linear fiscal reaction function in addition to the nonlinear regression model of Hatemi-J (2011, 2012), Granger and Yoon (2002), which allows us to separate negative shocks from positive shocks to government spending. Similarly, the authors adopt the generalized method of moments (GMM) techniques of Hansen (1982) to account for simultaneity and endogeneity problems inherent in dynamic model.FindingsThe authors’ findings reveal that there is evidence of asymmetry in the government spending–economic growth nexus in Nigeria over the period of study. Specifically, the authors find that the response of economic growth to government spending shocks differs according to the nature of shocks on them. More specifically, the study established that the stabilizing effects of fiscal policies are dependent on the state of the business cycle.Originality/valueUnlike the traditional method of modeling asymmetry, which adopts the simple inclusion of a squared government spending term or by the inclusion of a cubic government spending term, the model adopted in this study allows us to model shocks and show how the responses of economic growth to government expenditure differ according to the nature of shocks on them.

From Main Street to Wall Street

2021 ◽  
Author(s):  
Jesper Rangvid
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Business Cycle ◽  
Financial Markets ◽  
Stock Returns ◽  
Economic Activity ◽  
Wall Street ◽  
Business Cycle Fluctuations ◽  
Main Street ◽  
Long Run

From Main Street to Wall Street examines the relation between the economy and the stock market. It discusses the academic theories and empirical facts, and guides readers through the fascinating interaction between economic activity and financial markets. Itexamines what causes long-run economic growth and shorter-term business-cycle fluctuations and analyses their impact on stock markets. From Main Street to Wall Street also discusses how investors can use knowledge of economic activity and financial markets to formulate expectations to future stock returns. The book relies on data, and figures and tables illustrate arguments and theories in intuitive ways.In the end, From Main Street to Wall Street helps academic scholars and practitioners navigate financial markets by understanding the economy.

The Association Between Bank Credit Terms and Conditions and the Business Cycle in the Euro Area

2019 ◽  
Vol 65 (4) ◽  
pp. 247-256
Author(s):  
Dimitrios Anastasiou ◽  
Konstantinos Drakos
Keyword(s):  
Business Cycle ◽  
Euro Area ◽  
Bank Loan ◽  
Bank Credit ◽  
Monetary Policies ◽  
Policy Makers ◽  
Long Run ◽  
Loan Terms ◽  
Short Run ◽  
The Business Cycle

Abstract We explored the trajectory of bank loan terms and conditions over the business cycle, where the latter was decomposed into its long-run (trend) and short-run (cyclical) components. We found that deterioration of each business cycle component leads to a significant tightening of credit terms and conditions. We found mixed results concerning the symmetry of impacts of the short and long run components. Symmetry was found between the terms and conditions on loans for small vs. large enterprises. Our findings provide very useful information to policy makers and should be taken into consideration when monetary policies are designed.

scholarly journals BUSINESS CYCLE – GROWTH NEXUS: A REVIEW

2015 ◽  
Vol 21 (3) ◽  
pp. 519-538
Author(s):  
Marinko ŠKARE ◽  
Daniel TOMIĆ
Keyword(s):  
Economic Growth ◽  
Business Cycles ◽  
Business Cycle ◽  
Economic Policies ◽  
Empirical Testing ◽  
Long Run ◽  
Cycle Growth ◽  
Complex Process ◽  
Theoretical Reasoning

Frequent reversals in business cycles pose the question whether country can achieve macroeconomic stability and/or economic growth by coordinating its economic policies. Thus, what is the role of economic policy within the short/long run in amplifying or dampening shocks? Business cycle – economic growth relationship is rather ambiguous and has, thus, attracted controversy. In this sense the (dis)belief that there indeed exists a relationship between the economic growth and business cycle, and their long-run convergence brings us to three important hypotheses that: (1) the evaluation of cycle-growth bond is inconclusive, (2) empirical testing of cycle synchronization is exaggerated and (3) the hypothesis of coupling/decoupling is ambiguous and can be misleading. Economic growth is a complex process and cannot be attributed to a single factor of observance hence this essay is just a tool of theoretical reasoning with firm grip on empirical circumstances that lead us to consider some issues that dwell the “growth economists” these days. Our study suggests a conclusion that discussions on the cycle-growth nexus are far from over, revealing us some remarkable confrontations within empirical domain.

A Long View of the UK Business Cycle

2002 ◽  
Vol 182 ◽  
pp. 72-89 ◽  
Author(s):  
Jagjit S. Chadha ◽  
Charles Nolan
Keyword(s):  
Business Cycle ◽  
Interest Rates ◽  
Dominant Role ◽  
Real Wages ◽  
Long Run ◽  
Nominal Interest Rates ◽  
Short Run ◽  
The Business Cycle ◽  
The Uk ◽  
External Sector

We outline a number of ‘stylised’ facts on the UK business cycle obtained from analysis of the long-run UK annual dataset. The findings are to some extent standard. Consumption and investment are pro-cyclical, with productivity playing a dominant role in explaining business cycle fluctuations at all horizons. Money neutrality obtains over the long run but there is clear evidence of non-neutrality over the short run, particularly at the business cycle frequencies. Business cycle relationships with the external sector via the real exchange rate and current account are notable. Postwar, the price level is counter-cyclical and real wages are pro-cyclical, as are nominal interest rates. Modern general equilibrium macroeconomic models capture many of these patterns.

The Maquiladora Industry: Recent Downturn And Future Prospects

2011 ◽  
Vol 8 (3) ◽  
Author(s):  
Javad Gorjidooz ◽  
Bijan Vasigh
Keyword(s):  
United States ◽  
Economic Growth ◽  
Business Cycle ◽  
Labor Demand ◽  
The United States ◽  
Global Competition ◽  
Bracero Program ◽  
Major Player ◽  
The Business Cycle ◽  
The U.S

The Maquiladora industry was created in the mid-1960 as the United States terminated the Bracero program. The main objective of the Bracero program was to bring in Mexican workers to fulfill U.S. agricultural labor demand. The end of the Bracero program left thousands of unemployed farm workers in Mexican cities bordering the U.S. The Maquiladora programs intent was to subsidize foreign manufacturers that set up plants on the Mexico side of the border to create jobs for the Mexican workers. Mexico allowed plants to temporarily import supplies, parts, machinery, and equipment necessary to produce goods and services in Mexico duty-free as long as the output was exported back to the United States. U.S. firms, as well as other multinational companies, responded enthusiastically to the lure of cheap labor. Mexico experienced high economic growth and become a major player in exporting intra-industry products to the U.S. The NAFTA and other free trade agreements signed by Mexico helped the economic growth of the Maquiladora region. Maquiladora employment increased significantly since the inception of the Maquiladora industry and Maquiladora exports now account for half of Mexicos total exports. The Maquiladora industry is U.S.-demand driven since most of Mexicos Maquiladora production is destined for the U.S. market. The recent recession in the U.S. took a heavy toll on Mexicos Maquiladora industry. Another challenge to the Maquiladora industry is raising global competition, particularly from China. Therefore, the magnitude of the industrys contraction during the most recent recession suggests that there are more factors influencing the industry than just the business cycle. This paper presents the creation of the Maquiladora industry, its success following the NAFTA agreement, and its recent downturn. It also explores the answers to the following questions: How much of the Maquiladora downturn was due to the business cycle? How much was due to structural change? Is the Maquiladora industry ready to face rising global competition?

scholarly journals Cyclical Fluctuation, Growth, and Stabilization: An Empirical Investigation of Dual Policy Objectives in Bangladesh

2020 ◽  
Author(s):  
Richmond Sam Quarm ◽  
Mohamed Osman Elamin Busharads
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Business Cycle ◽  
Interest Rates ◽  
Money Supply ◽  
Macroeconomic Policy ◽  
Output Growth ◽  
Long Run ◽  
Short Run ◽  
The Business Cycle

In conventional economics, two types of macroeconomic policy i.e. fiscal policy and monetary policy are used to streamline the business cycle. This paper has examined the cyclical behavior of these variables over the business cycle of Bangladesh. The objective of this examination is to show whether policies (fiscal policy and monetary policy) in Bangladesh are taken with a motive to stabilize the economy or only to promote economic growth. In other words, it has examined whether the policies in Bangladesh are procyclical or countercyclical or acyclical. Hodrick Prescott (HP) filter has been used to separate the cyclical component of considered variables. Both correlation and regression-based analysis have provided that in Bangladesh government expenditure and interest rates behave procyclically, but money supply behaves acyclically over the business cycle. Besides, this paper has tried to identify the long-term as well as the short-term relationship between real GDP and the macroeconomic policy variables with the help of the Johansen cointegration test, vector error correction model (VECM), and block exogeneity Wald test. Through these analyses, this study has found that fiscal policy has a significant impact on GDP growth both in the short-run and long-run. In the case of monetary policy, although the interest rate has an impact on real output both in the short-run and long-run, the money supply has neither a short-run nor long-run effect on output growth.

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