scholarly journals Are PIIGS so different? An empirical analysis of demand and supply shocks

2017 ◽  
Vol 64 (2) ◽  
pp. 189-222 ◽  
Author(s):  
Irina Syssoyeva-Masson ◽  
Andrade Sousa
Keyword(s):  
Supply And Demand ◽  
Parametric Representation ◽  
Structural Vector Autoregression ◽  
Demand And Supply ◽  
Demand Shocks ◽  
Supply Shocks ◽  
Supply And Demand Shocks ◽  
Long Run ◽  
Svar Model ◽  
The Usa

This paper analyses responses to supply and demand shocks in PIIGS countries. We compare the results obtained for PIIGS with those of Germany and the USA, and also with those of France, which despite its government?s efforts demonstrate relatively poor recent economic performance. The main objective of this paper is to establish whether it is still reasonable to consider PIIGS as a group apart. Our methodological strategy is based on the Okun Law (OL) which is incorporated in a Structural Vector Autoregression (SVAR) model with Blanchard-Quah (BQ) restrictions. We address two drawbacks that usually present in the OL: the interdependency problem and the non-stationarity problem. By using a non-parametric representation of OL, we identify the heterogeneity between countries. We build stable VAR models for each of the economies and use the BQ SVAR impulses to analyse the importance of contemporary and long-run effects of supply and demand shocks. The main conclusion of this paper is that it does not make any sense today to identify PIIGS as a separate group. Additionally, a country that stands out from our analysis is France. The question can thus be posed that if ?PIIGS? signifies ?countries with poor economic performances? then should not France also belong to this group?

scholarly journals An Evaluation of Selected Economic Areas according to Similarity of Supply and Demand Shocks

2015 ◽  
Vol 15 (2) ◽  
pp. 221-240
Author(s):  
Stanislav Kappel
Keyword(s):  
Monetary Union ◽  
Euro Area ◽  
Supply And Demand ◽  
Correlation Coefficients ◽  
The United States ◽  
Structural Vector Autoregression ◽  
Demand And Supply ◽  
Demand Shocks ◽  
Supply Shocks ◽  
Supply And Demand Shocks

Abstract The Euro Area remains a well-known monetary union in the World. But the possibilities of creation of new monetary unions are discussed. It is spoken about NAFTA (Canada, Mexico and the United States) or MERCOSUR (Argentina, Brazil, Paraguay, Uruguay and Venezuela). The aim of this paper is to assess the similarity of demand and supply shocks in the countries of NAFTA and MERCOSUR, and to compare it with the countries of the Euro Area. For these aims, correlation and structural vector autoregression methods are used. Methods are based on Blanchard and Quah (1989) and Bayoumi and Eichengreen (1993). We confirm the existence of core states and periphery states in the Euro Area with some exceptions. If we compare supply and demand shocks, we find more similarity in the case of supply shocks in the countries of the Euro Area. According to the results, the countries of NAFTA are more appropriate for the creation of monetary union than the countries of MERCOSUR. The countries of NAFTA achieve high correlation coefficients of supply and demand shocks (except Mexico for supply shocks).

scholarly journals 150 YEARS OF BOOM AND BUST: WHAT DRIVES MINERAL COMMODITY PRICES?

2016 ◽  
Vol 22 (3) ◽  
pp. 702-717 ◽  
Author(s):  
Martin Stuermer
Keyword(s):  
Supply And Demand ◽  
Commodity Prices ◽  
Data Set ◽  
Demand Shocks ◽  
Supply Shocks ◽  
Supply And Demand Shocks ◽  
Novel Approach ◽  
Long Run ◽  
Mineral Commodity ◽  
Boom And Bust

This paper provides long-run evidence on the dynamic effects of supply and demand shocks on commodity prices. I assemble and analyze a new data set of price and production levels of copper, lead, tin, and zinc from 1840 to 2014. Using a novel approach to identification, I show that price fluctuations are primarily driven by demand, rather than supply shocks. Demand shocks affect the price for up to 15 years, whereas the effect of mineral supply shocks persists for up to 5 years. Price surges caused by rapid industrialization are a recurrent phenomenon throughout history. Mineral commodity prices return to their declining or stable trends in the long run.

The effect of supply and demand shocks on the non-market valuation of local public goods

1999 ◽  
Vol 4 (4) ◽  
pp. 471-492 ◽  
Author(s):  
J.R. DESHAZO
Keyword(s):  
Public Goods ◽  
Transition Period ◽  
Supply And Demand ◽  
Local Public Goods ◽  
Cross Sectional ◽  
Demand Shocks ◽  
Supply And Demand Shocks ◽  
Long Run ◽  
Non Market Valuation ◽  
Spatial Arbitrage

For local public goods, supply or demand shocks may create periods during which it is welfare enhancing for households to undertake spatial arbitrage by relocating residentially. We point out that the magnitude and direction of the average benefit estimate obtained during such a transition period is likely to vary systematically depending upon the magnitude of the shock, the level of transaction costs and the extent to which other affected goods are substitutes or complements. We test a subset of our model's predictions using cross-sectional data on household demand for improved municipal services in post-socialist Romania. Our preliminary empirical analysis suggests that there have been substantial gains in welfare resulting from spatial adjustment following the opening up of housing markets. Furthermore, our results indicate that benefit estimates for improved water services during the transition may be substantially higher than long-run estimates. This limited evidence supports our concern that economists may recommend non-optimal levels of long-run investment, regulation, or user fees if they are unaware of the implications of future readjustment to supply or demand shocks.

scholarly journals State of Shocks Synchronization among Members of the GCC

2017 ◽  
Vol 8 (1) ◽  
pp. 15
Author(s):  
Ashraf Nakibullah
Keyword(s):  
Supply And Demand ◽  
Aggregate Demand ◽  
Oil Price ◽  
Model Specification ◽  
Structural Shocks ◽  
Demand Shocks ◽  
Gcc Countries ◽  
Aggregate Supply ◽  
Supply And Demand Shocks ◽  
Svar Model

This paper examines fluctuations of aggregate supply and demand shocks across the GCC countries. It argues that the world oil price influences aggregate demand and supply of these countries. Thus, in contrast to other studies, a SVAR model is used to identify structural shocks by including the oil price. The aggregate supply and demand shocks are then analyzed. The correlations of supply shocks among the member countries are either negative or low positive. Similarly, the correlations of demand shocks, except few pairs of countries, are also negative and low positive. Thus, shocks are not synchronized. These results are different than the results found in other similar studies probably due to the model specification. The implication of the findings is that the GCC countries would find it difficult to adjust supply and demand shocks if they form their aspired Gulf Monetary Union.

scholarly journals KARAKTERISTIK TEKANAN INFLASI DI INDONESIA: PENGARUH DINAMIS SISI PERMINTAAN-PENAWARAN DAN PROSPEK KE DEPAN

2007 ◽  
Vol 9 (3) ◽  
Author(s):  
Solikin M. Juhro
Keyword(s):  
Supply And Demand ◽  
Jel Classification ◽  
Demand Shocks ◽  
Supply Shocks ◽  
Supply And Demand Shocks ◽  
Supply Shock ◽  
Preliminary Study ◽  
Second Year ◽  
Parsimonious Model

This preliminary study is aimed to look into characteristics of inflation and sources of shocks triggering inflation pressures in Indonesia. A focus will be directed to find a better measurement about the role of supply and demand shocks. Based on parsimonious model estimation, it can be concluded that the contribution of supply shocks predominant demand shocks ‘proportionally’, implying that a prudent monetary policy is still feasible and can be implemented effectively along with the structural efforts to combat inflation in Indonesia. A further preliminary exercise shows that the prospect of inflation pressures in two year ahead will be statistically the same with the 2006 inflation pressures. However, cautious policy response should be taken in the second year as inflation pressures from supply side will be potentially greater.Keywords: Characteristics of inflation, supply shock, demand shock, inflation, Indonesia.JEL Classification:  JEL Classification: E31, P24

scholarly journals ASYMMETRIES IN RESPONSE TO SHOCKS IN PRICE SETTING: FIRM-LEVEL EVIDENCE FROM SURVEY BASED DATA

2020 ◽  
Vol V (III) ◽  
pp. 45-54
Author(s):  
Nadeem Iqbal ◽  
Amjad Amin ◽  
Danish Wadood Alam
Keyword(s):  
Supply And Demand ◽  
Raw Material ◽  
Price Setting ◽  
Firm Level ◽  
Demand Shocks ◽  
Supply Shocks ◽  
Asymmetric Response ◽  
Supply And Demand Shocks ◽  
Seasonal Factors ◽  
The Cost

The objective of the paper is to estimate the asymmetric response of firms for prices to supply and demand shocks. Firms give an asymmetric response to supply and demand shocks while setting at a price, and the prices are upward flexible and downward rigid to changes in the determinants. Asymmetric response to the cost of raw material is highest. Moreover, the seasonal factors have the lowest degree of asymmetric response. Firms give an asymmetric response to different shocks, with respect to a price increase and decrease, and across variables of demand-side and supply side. The central bank has to focus more on stabilization in response to supply shocks than to demand shocks because supply shocks are found more important than demand shocks to change the prices of firms. Measures should be taken to prevent the possible effects of adverse supply shocks.

scholarly journals Gulf Cooperation Council Monetary Union: Business Cycle Synchronization, Shocks Correlation

2012 ◽  
Vol 11 (2) ◽  
pp. 137 ◽  
Author(s):  
Nabil Ben Arfa
Keyword(s):  
Business Cycle ◽  
Supply And Demand ◽  
Gulf Cooperation Council ◽  
Output Growth ◽  
Structural Var ◽  
Business Cycle Synchronization ◽  
Demand Shocks ◽  
Gcc Countries ◽  
Supply And Demand Shocks ◽  
Long Run

In this paper we assess the readiness of the Gulf cooperation council members (Qatar, Saudi Arabia, Kuwait and Bahrain) to form a viable currency monetary area. It deals with business cycle synchronization and economic shocks correlation. To do so we employ different methods, first we extract the business cycle component of output using Hodrick-Prescott filter. Second, supply and demand shocks are recovered from an estimated structural VAR model of output growth and inflation using long run restriction (Blanchard and Quah). We then check the (A) symmetry of these shocks by calculating the correlation between GCC countries. Its appears from our investigation that there is no business cycle synchronization evidence between GCC countries, business cycle is rather divergent among them. And despite of the demand shocks symmetry, supply shocks are rather asymmetric. We therefore conclude that there is no evidence of the readiness of the GCC members to form a monetary currency union

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