The Long-run Equilibrium of the Consumer Loan Market

2009 ◽  
Vol 39 (4) ◽  
pp. 941-949
Author(s):  
Nobuhiro MORI ◽  
Makoto OKAMURA ◽  
Takao OHKAWA
Keyword(s):  
Loan Market ◽  
Long Run ◽  
Long Run Equilibrium

scholarly journals Competition in the Brazilian loan market: an empirical analysis

2010 ◽  
Vol 40 (4) ◽  
pp. 831-858 ◽  
Author(s):  
Claudio R Lucinda
Keyword(s):  
Empirical Analysis ◽  
Banking System ◽  
Institutional Setting ◽  
Loan Market ◽  
Long Run ◽  
Banking Market ◽  
Time Periods ◽  
Long Run Equilibrium

The aim of this paper is to review some of the existing tests for competition in Brazilian banking, as well as to propose an alternative. After the description of the institutional setting of the Brazilian Banking system on this period, the competition tests on the literature were reviewed, beginning with the test proposed by Panzar and Rosse (1987). The market does not seem to be in long-run equilibrium, implying only the market does not seem to find itself in collusive outcome. The next step was to try a new methodology, applied by Moreno, Martínez and Ruiz (2006) for the Spanish banking market. On this methodology, in which the assumption of equality of conduct parameters between firms and time periods is relaxed, the results indicate that, for some firms and in some time periods, a cooperative conduct in fact is present.

Exchange rates in India: current account monetarism in a nonlinear context

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Aditi Chaubal
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Polynomial Function ◽  
Mean Reversion ◽  
Smooth Transition ◽  
Monetary Model ◽  
Forecast Performance ◽  
Long Run ◽  
Nonlinear Mean Reversion ◽  
Long Run Equilibrium

AbstractThe Indian exchange rate system has evolved from a pegged system to the current managed float. The study examines the presence of a long-run equilibrium in the monthly Indian exchange rate (Rs/USD) using a current account monetary model (or flexible price monetary model) while accounting for different nonlinearities over the period January 1993 to January 2014 (pre-inflation targeting period). The nonlinear adjustment to disequilibria is modelled using a nonlinear error correction model (NLECM). The nonlinear current account monetarism (CAM) model includes nonlinear transformations of long-run dynamics in the ECM to account for different nonlinearities: multiple equilibria (cubic polynomial function), nonlinear mean reversion (rational polynomial function), and smooth and gradual regime switches (exponential smooth transition autoregressive (ESTAR) function). The NLECM-ESTAR model outperforms other alternatives based on model and forecast performance measures, implying the existence of nonlinear mean reversion and smooth transition across different periods of overvaluation and undervaluation of the exchange rate. This implies the presence of asymmetric adjustment to the movements from the long-run equilibrium, but the nature of such transitions is smooth and not abrupt. The paper also establishes the uniqueness of the long-run equilibrium. A comparison to the sticky price monetary model could not be made due to stationary exchange rate disequilibrium.

Human capital accumulation, income distribution, and economic growth: a demand-led analytical framework

2021 ◽  
Vol 9 (3) ◽  
pp. 319-336
Author(s):  
Gilberto Tadeu Lima ◽  
Laura Carvalho ◽  
Gustavo Pereira Serra
Keyword(s):  
Human Capital ◽  
Capital Accumulation ◽  
Analytical Framework ◽  
Output Growth ◽  
Human Capital Accumulation ◽  
Capital Utilization ◽  
Tax Rate ◽  
Long Run ◽  
The Impact ◽  
Long Run Equilibrium

This paper incorporates human capital accumulation through provision of universal public education by a balanced-budget government to a demand-driven analytical framework of functional distribution and growth of income. Human capital accumulation positively impacts on workers’ productivity in production and their bargaining power in wage negotiations. In the long-run equilibrium, a rise in the tax rate (which also denotes the share of output spent in human capital formation) lowers the pre- and after-tax wage share and physical capital utilization, and thus raises (lowers) the output growth rate when the latter is profit-led (wage-led). The impact of a higher tax rate on the employment rate (which also measures human capital utilization) in the long-run equilibrium is negative (ambiguous) when output growth is wage-led (profit-led). In any case, the supply of higher-skilled workers does not automatically create its own demand.

scholarly journals A Short Note on Discrimination and Favoritism in the Labor Market

2017 ◽  
Vol 17 (1) ◽  
Author(s):  
Nicolas Salamanca ◽  
Jan Feld
Keyword(s):  
Labor Market ◽  
Wage Differentials ◽  
Short Note ◽  
Market Forces ◽  
Long Run ◽  
Short Run ◽  
Relative Preferences ◽  
Long Run Equilibrium

AbstractWe extend Becker’s model of discrimination by allowing firms to have discriminatory and favoring preferences simultaneously. We draw the two-preference parallel for the marginal firm, illustrate the implications for wage differentials, and consider the implied long-run equilibrium. In the short-run, wage differentials depend on relative preferences. However, in the long-run, market forces drive out discriminatory but not favoring firms.

scholarly journals Investigating Gold Investment as an Inflationary Hedge

2018 ◽  
Vol 7 (1) ◽  
pp. 30-41 ◽  
Author(s):  
Narinder Pal Singh ◽  
Navneet Joshi
Keyword(s):  
Consumer Price Index ◽  
Wald Test ◽  
Indian Culture ◽  
Vector Error Correction ◽  
Fund Managers ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
Portfolio Managers ◽  
Long Run Equilibrium

Gold and Indian culture have been sharing an age-old association. India is one of the top two consumers of gold. Gold is the most popular investment avenue because of its ability to provide liquidity. The average monthly price however has grown by 1,588 percent over the whole period from 1979 to 2017 (June). In this article, we intend to investigate gold as an investment to hedge against inflation. The sample period to study the relationship between gold and inflation is 2011–2017 (March). To analyze long-run equilibrium between gold and inflation (consumer price index [CPI]), Johansen’s cointegration approach has been used. The short- and long-run causality between gold and inflation has been studied using vector error correction model (VECM) and Wald test. The results of cointegration indicate that gold and CPI series are cointegrated and bear long-run equilibrium. Both VECM and Wald test results indicate that there is only long-run causality between CPI and gold prices. However, in short run these variables do not show any causality. Thus, we infer that gold investment can be used as hedge against Inflation. The findings of this research have got direct implications for retail investors, portfolio managers, treasury and fund managers, government, and commercial traders.

scholarly journals An application of the error correction model in analyzing the long run equilibrium between Ghana’s exports and imports

2015 ◽  
Vol 9 (3) ◽  
pp. 57-62
Author(s):  
Henry de-Graft Acquah ◽  
Joyce De-Graft Acquah
Keyword(s):  
Error Correction ◽  
Trade Deficit ◽  
Error Correction Model ◽  
Correction Coefficient ◽  
Equilibrium Relation ◽  
Macroeconomic Policies ◽  
Correction Model ◽  
Long Run ◽  
Step Procedure ◽  
Long Run Equilibrium

This study investigates the long-run relationship between Ghana’s exports and imports for the period of 1948 to 2012. Using the Engle Granger two-step procedure we find that Ghana’s exports and imports are cointegrated. However, the slope coefficients from the cointegration equations were not statistically equal to 1. Furthermore, application of the error correction model reveals that 1% increase in the imports will significantly result in 0.56% increase in exports, suggesting that the exports’ responsiveness to imports is low. The estimated error correction coefficient suggests that 32% of the deviation from the long run equilibrium relation is eliminated, leaving 68% to persist into the next period. These results suggest persistence in the trade deficit and an option of curbing the deficit is to re-order the relationship between imports and exports with a view to reducing imports demand. These results imply that though Ghana’s past macroeconomic policies have been effective in bringing its imports and exports into a long run equilibrium, it is yet to satisfy the sufficient condition for sustainability of foreign deficit.

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