Using the Recurrent Event Binary States to Examine Economic Modeling Issues

Author(s):  
Don Harding ◽  
Adrian Pagan

This chapter looks at using the binary states describing the recurrent events to help in either constructing economic models of time series or evaluating the fit of such models. The chapter provides a general discussion of the issues that come up when using the binary states in regressions. It then turns to the analysis of complete economic models. In these it is very common to see variance decompositions computed and used to draw conclusions about which shocks are responsible for the recurrent events. It is shown that this methodology is flawed when it comes to shedding light on what causes the business cycle. What can be done is investigated in the chapter, which illustrates how to determine which shocks are important to a matching of the business cycle features discussed in Chapter 5. The discussion moves on to some economic models that have been constructed in the wake of the global financial crisis and which aim to highlight the role of financial shocks.

Author(s):  
Nauro F. Campos ◽  
Paul De Grauwe ◽  
Yuemei Ji

Structural reform policies move like the business cycle. There are moments when these are implemented with great fervour and others when they are put on the back burner or even dismantled. After the global financial crisis, and in particular the sovereign debt crisis in Europe, many countries were forced by creditor countries or were self-imposed to apply deep reforms to their product markets and especially to their labour markets. Now that Europe is recovering, the pressure to implement structural reforms has abated....


2020 ◽  
Vol 253 ◽  
pp. R18-R28
Author(s):  
Marianne Sensier ◽  
Fiona Devine

We investigate economic resilience of UK regions before, during and after the 2007/8 global financial crisis. We date business cycle turning points in real output, employment and productivity to assess the resilience dimensions of resistance, recovery and renewal and rank the economic resilience of regions in a resilience scorecard. Our empirical results reveal that the business cycle in productivity has not returned to its pre-recession peak level for Yorkshire and the Humber and the employment level has not recovered in Scotland. The resilience scorecard ranks the South East as the most resilient region with Northern Ireland the least resilient.


Equilibrium ◽  
2019 ◽  
Vol 14 (4) ◽  
pp. 631-676 ◽  
Author(s):  
Aleksander Jakimowicz ◽  
Daniel Rzeczkowski

Research background: There is no doubt that innovation is an important source of economic growth. In the assessment of the innovative activity of Polish industrial processing enterprises, two opposing views can be found. The first indicates the exogenous shock resulting from the global financial crisis and the associated innovation crisis and the subsequent period of innovative pessimism. The second shows the Polish economy as the European Green Island due to strong and uninterrupted economic growth over the past 27 years, controlled inflation, and reduction of unemployment as well as increase of the citizens’ well-being. In these conditions, an interesting research gap appeared, which is worth filling, at the centre of which there are factors determining the innovative activity of enterprises, and in particular the role and importance of innovation barriers in various phases of the business cycle. Purpose of the article: The aim of the research is to determine the impact of innovation barriers and degrees of their importance on the innovation activity of Polish industrial processing enterprises during the business cycle. The time frame of the analysis covers three phases of the cycle: the prosperity period of 2004–2006, the global financial crisis of 2008–2010 and the recovery from 2012–2014. Methods: Pearson’s χ2 independence test and correspondence analysis were used for data analysis. The research results are presented in a graphical form of biplots that describe the coexistence of three types of variables: (1) types of enterprises and ownership sectors, (2) effects or objectives of innovative activity, and (3) innovation barriers and reasons for the lack of innovation. The basis of calculations were three databases covering the mentioned periods. Findings & Value added: High resistance of innovative activity of Polish industrial processing enterprises to economic fluctuations has been demonstrated. Innovation barriers and degrees of their importance had little impact on the operations of enterprises in the first of the analysed periods, when prosperity was booming. The impact of the global financial crisis on innovation activities proved to be counterintuitive, as enterprises have continuously achieved their goals and the importance of innovation barriers has diminished even more. In the third period, innovation barriers no longer had any significance for the innovation activities of enterprises. The phenomenon of a gradual decline in the importance of innovation barriers, regardless of the phases of the business cycle, was called the Polish Green Island Effect. The relationship found is a peculiarity which is probably unprecedented in recent world economic history.


2019 ◽  
Vol 10 (4) ◽  
pp. 689-741 ◽  
Author(s):  
Aleksander Jakimowicz ◽  
Daniel Rzeczkowski

Research background: The innovation activity of Polish industrial processing enterprises is examined in a broader time context than typical business cycle frames, which makes it possible to look at the investigated problems from the perspective of Kondratieff waves. Purpose of the article: The aim of the research is to describe the combined effect of mutual interactions between the ownership and size of Polish industrial processing enterprises on the goals of innovative activity and their degree of importance for the further development of the innovativeness of those firms. These relations are examined in various phases of the business cycle. Additionally, taking secular changes into account made it possible to lend credence to the claim that the global financial crisis is a typical phenomenon for the breakthrough period between two Kondratieff waves. Methods: A characteristic feature of the applied method is the focus on the combined effect of the enterprise type and ownership structure on firms’ innovation over three periods: prosperity 2004–2006, crisis 2008–2010 and recovery 2012–2014. As regards statistical techniques, the Pearson’s χ^2 independence test and correspondence analysis were applied. The results of the research are presented in a graphic form in three- and two-dimensional correspondence maps, which indicate the co-occurrence of (1) ownership sectors and enterprise types taken together, and (2) effects (goals) of the innovative activity of enterprises, together with the degree of their influence (importance) for further innovative activity. Mutual interactions between ownership sectors and enterprise types were visually analysed, indicating significant features of the triangles representing them. Findings & Value added: A significant combined effect of the ownership sectors and enterprise types on firms’ innovative activity was found. There was a certain type of dynamic equilibrium between those variables, which changes depending on the business cycle phase. In the global financial crisis of 2008–2010, a surprising phenomenon was found, consisting of the growth of innovative activity in most enterprises as compared to the period of prosperity in 2004–2006. The enterprises achieved the goals assumed, and the degree of their importance proved the significant influence on further innovative activity of those firms. Additionally, it was demonstrated that in the period of recovery (2012–2014) mutual interactions between ownership and size eliminated the relationship between those variables and the goals of innovative activity, and eco-innovations proved to be directly subordinated to traditional types of innovations, mainly product and process innovations. Changes occurring in the last of the examined periods are related to the near-zero inertia of the entire industrial processing section, which allows to interpret the global financial crisis as a typical phenomenon for a breakthrough marking the end of one Kondratieff wave and the beginning of the next. Moreover, 2015 is identified as the year of breakthrough, ending the Fifth and beginning the Sixth Kondratieff Wave, which was related to the transition from the information and telecommunications revolution to the biomedical-hydrogen revolution. The calculations presented in this paper are consistent with those forecasts.


Forecasting ◽  
2021 ◽  
Vol 3 (3) ◽  
pp. 498-500
Author(s):  
Alessia Paccagnini

The global financial crisis of 2007–2009 and the COVID-19 pandemic have heightened uncertainty in financial markets and the business cycle [...]


Author(s):  
Irene Spagna

This chapter analyzes the growth of OTC derivatives before the global financial crisis of 2008 and the role of credit default swaps, in particular, in the near collapse of the global economy. It begins by exploring the basic characteristics of derivatives used as risk management instruments by investors to hedge against or exploit the volatility of asset prices. The analysis further reveals that the pre-crisis period was characterized by a broad-based consensus favoring deregulated markets and globally designed private rules. While not always unanimously supported, permissive public regulatory choices were often encouraged by interest group lobbying, the market-friendly views of many domestic authorities, and concerns about regulatory uncertainty and international competitiveness.


2021 ◽  
Author(s):  
Наталия Александровна Иванова

Актуальность исследования для экономики усиливается такими явлениями, как влияние мирового финансового кризиса, усложнение отраслевой и территориальной структуры производства, усиление интеграции всех сфер общественной жизни, возрастание значения экологических, социальных и политических факторов развития общества, повышение трансакционных издержек принятия решений в сфере управления. Изучение литературы о территориях дает основание определить понятие региональной системы России как элемент, подсистему некоторой иерархической системы, в роли которой выступает национальная экономика. Процессы глобализации коренным образом изменяют роль регионов в национальной экономике. Регион постепенно становится не только отдельным экономическим агентом, но также вступает в мировые конкурентные процессы. Положение территориально-организованных систем оказывается зависимым не только от макроэкономических условий или возможностей самих регионов, но также от расстановки конкурентных сил, механизмов взаимодействия регионов с другими субъектами. В этой связи возникает необходимость системных исследований с целью выработки комплекса мер, которые будут способствовать повышению конкурентоспособности экономики в целом, ее регионов в частности. Существующий инструментарий региональной экономики является уже недостаточным для анализа такого рода проблем, а традиционный конкурентный анализ не рассматривает регионы в качестве субъектов конкуренции. Требуется расширение и применение новых теоретических подходов к анализу региональных экономических систем и эффективности их развития, формированию целостной концепции развития территориальной организации хозяйства, что обусловило актуальность данного исследования. The relevance of the study for the economy is enhanced by such phenomena as the impact of the global financial crisis, the complication of the sectoral and territorial structure of production, the strengthening of integration of all spheres of public life, the increasing importance of environmental, social and political factors in the development of society, the increase in transaction costs of decision-making in the field of management. The study of the literature on territories gives grounds to define the concept of the regional system of Russia as an element, a subsystem of some hierarchical system, in the role of which the national economy acts. The processes of globalization are fundamentally changing the role of regions in the national economy. The region is gradually becoming not only a separate economic agent, but also enters into global competitive processes. The position of geographically organized systems turns out to depend not only on the macroeconomic conditions or the capabilities of the regions themselves, but also on the alignment of competitive forces, the mechanisms of interaction of regions with other entities. In this regard, there is a need for systematic research in order to develop a set of measures that will contribute to improving the competitiveness of the economy as a whole, its regions in particular. The existing tools of the regional economy are no longer sufficient to analyze such problems, and traditional competitive analysis does not consider regions as subjects of competition. It requires the expansion and application of new theoretical approaches to the analysis of regional economic systems and the effectiveness of their development, the formation of an integral concept of the development of the territorial organization of the economy, which determined the relevance of this study.


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