scholarly journals Specific features of the Russian Economic Growth Model

2018 ◽  
Vol 22 (6) ◽  
pp. 6-24
Author(s):  
I. S. Bukina ◽  
P. A. Orekhovsky
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Labor Productivity ◽  
Growth Model ◽  
Open Economy ◽  
Wage Growth ◽  
Statistical Testing ◽  
Commercial Sector ◽  
Study Objective ◽  
Domestic Interest Rate

The article presents the study of the specific features of the Russian economic growth in 1998–2017. The study objective is to substantiate the growth and decline mechanism in business activity in the Russian economy. This mechanism is determined by the gap in the growth rates of wages and labor productivity in the open economy. Four hypotheses have been formulated: 1) significant cause and effect relationship between exchange rate and economic growth in Russia; 2) wage growth outrunning productivity has a depressing effect on the profitability of the commercial sector; 3) significant differences between the Russian economic growth in 1998–2009 and in 2009–2017, determined by the connection between the excess of the domestic interest rate over the world rate and investments; 4) substantial connection between the domestic interest rate and investment in 1998–2009 which disappeared in 2009–2017. The theoretical analysis and the hypotheses have been based on neoclassical synthesis models. Statistical testing of the hypotheses has been carried out by means of statistical and correlation analysis and methods of econometric analysis of time series. A problem related to wage growth outrunning labor productivity has been identified. Probable significant changes in the Russian growth model in 2018–2020 have been forecasted. They will be caused by the infrastructure development and housing construction. The major conclusion of the study is that there will be a positive effect of the ruble depreciation on labor productivity in the medium term. However, it will be over by the end of 2019 and beginning of 2020. Domestic currency strengthening and outrunning wage growth with the slowing labor productivity reduce the profitability of the commercial sector and put brakes on the economic growth.

Interest Rate–Economic Growth Nexus Under Currency Board Operations

2021 ◽  
Vol 8 (1) ◽  
pp. 13-24
Author(s):  
Martinianus Tshimologo Tibinyane ◽  
Teresia Kaulihowa
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Impulse Response ◽  
Response Function ◽  
Open Economy ◽  
Small Open Economy ◽  
Impulse Response Function ◽  
Policy Instrument ◽  
Variance Decomposition ◽  
Currency Board

This paper analyses the effect of the prime interest rate as a monetary policy instrument to stimulate economic growth in Namibia, a small open economy that is constrained by currency board operations. A Vector Autoregressive Model (VAR) was used for the period 1980–2019. The result shows that Namibia’s prime interest rate has no significant effect on economic growth. This finding remains robust and consistent when impulse response function and variance decomposition are employed. The impulse response function indicates a shock on the prime interest rate exhibits an inverse relationship. However, this effect is insignificant in both short and long-run scenarios. The variance decomposition indicates that the prime interest rate has a strongly exogenous impact, implying it has a weak influence on GDP growth. Policy implication indicates that small open economies under currency board operations need to identify different policy responses to circumvent external shocks and addresses their development needs.

scholarly journals Education, Income, Wealth Inequality and Business Cycles in a General Equilibrium Growth Model

2020 ◽  
Vol 26 (4) ◽  
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Business Cycles ◽  
General Equilibrium ◽  
Growth Model ◽  
Open Economy ◽  
Wealth Inequality ◽  
Learning By Doing ◽  
Government Subsidy ◽  
Wealth Inequalities

The paper is concerned with the dynamic interactions between physical capital, human capital, income and wealth inequalities between different households with government subsidy to education. It generalizes the endogenous growth model of a small-open economy proposed by Zhang (2016). Zhang’s paper deals with income and wealth inequalities between heterogeneous households with government subsidy to education. The paper makes a contribution to the literature of economic growth with endogenous education by integrating Solow-Uzawa’s neoclassical growth theory, Uzawa-Lucas model, Arrow’s learning by doing, Zhang’s creative leisure, and Walrasian general equilibrium theory. The model treats endogenous capital and human capital accumulation as the main engines of economic growth. This study generalizes Zhang’s model by allowing constant coefficients to be time-dependent. We simulate the generalized model to demonstrate existence of business cycles due to various exogenous periodic shocks.

scholarly journals Monetary Policy Response on Exchange Rate Dynamics: The Case of Indonesia

2017 ◽  
Author(s):  
Ferry Syarifuddin
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Open Economy ◽  
Inflation Targeting ◽  
Exchange Rate Dynamics ◽  
Macroeconomic Indicators ◽  
The Exchange Rate ◽  
The Impact ◽  
Domestic Interest Rate ◽  
Policy Interest

Bank Indonesia has been implementing Enhanced Inflation Targeting Framework (EITF) since few years ago. The main monetary instrument is short term policy interest rate. The policy interest rate, in this regard, may also have significant role in driving the exchange rate to its desired level. Setting appropriate the interest rate to drive the exchange rate is important to drive the actual inflation to its official target. In order to see the response of policy interest rate to exchange rate dynamics as well as the impact of exchange-rate dynamics to macroeconomic indicators, Structural Co-integrating Vector Auto Regression (SC-VAR) in an open economy model, is implemented. Its finding shows that exchange rate dynamic of USD/IDR has significantly positive relationship with domestic interest rate. The increase of the USD/IDR (depreciation) will then push domestic interest rate to increase.

scholarly journals A chaotic economic growth model and the agricultural share of an output

2005 ◽  
Vol 50 (2) ◽  
pp. 207-216 ◽  
Author(s):  
Vesna Jablanovic
Keyword(s):  
Economic Growth ◽  
Growth Model ◽  
Open Economy ◽  
Agricultural Production ◽  
Small Open Economy ◽  
Total Output ◽  
Economic Growth Model ◽  
Stable Equilibria ◽  
Set Up ◽  
Parameter Values

The agricultural share of a total output generally declines in the process of economic growth. The major reason for this is that consumer demand for food increases only slightly with rising incomes. However, a small, open economy can overcome this constraint to the growth of agricultural production by expanding its net exports. The basic aim of this paper is to set up a chaotic growth model of the gross domestic product that is capable of generating stable equilibria, cycles, or chaos depending on parameter values.

Editorial

2015 ◽  
Vol 2 (1) ◽  
Author(s):  
Prof. K. V. Bhanu Murthy
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Growth Model ◽  
Poverty Line ◽  
Western India ◽  
Negative Binomial Regression Model ◽  
Development Effort ◽  
Inclusive Growth ◽  
Regional Pattern ◽  
Economic Growth Model

It gives me immense pleasure to bring to you another issue of Pragati. The current volume consists of six papers, a commentary and a book review. The paper on ‘The Interest Rate Channel of Monetary Transmission -The Indian experience’ by Suvojit Lahiri Chakravarty, examines the effect of the changes in the policy rate on the different segments of the financial market in India from the onset of LAF i.e., July 2000 onwards to March 2014. A VAR model comprising of interest rate, output, price and exchange rate is estimated for the same period, to study the effect of changes in the policy rate on the various macroeconomic variables. A paper on ‘Regional Pattern and Determinants of Knowledge-based Industry: Evidences from Firm-level Data of Indian Pharmaceutical Industry’ has been contributed by Tareef Husain. The empirical findings based on negative binomial regression model reveal that the group of regional factors such as, size of industry, availability of skilled labour, number of science and technology (S&T) institutions and number of patent applications attract higher number of pharmaceutical firms in respective states. There has been a shift in the regional pattern with the share of Western India declining in favour of North India. ‘Poverty Line: A Definitional Progress in India’ by Deepti Kakar, reveals that in India poverty had been traditionally looked at as insufficiency to attain subsistence and all the attempts at poverty line definitions were anchored to the Food Energy Intake method. More recently, the recommendations by the Tendulkar Committee and Rangarajan Expert Group include a shift away from the calorie norms to the cost of basic needs method which looks at basic requirements of food and non-food items. Two of the papers in this issue look at India’s growth story. The paper on ‘A Study of Trends in India’s Economic Growth since 1951: The Inclusive Growth Approach’ by Arjun. Y. Pangannavar, focuses on the saga of India’s economic growth under the ‘Nehru-Mahalanobis Economic Growth Model’ (NMEGM) and ‘Narsimhrao-Manmohan Singh Economic Growth Model’ (NMSEGM). This paper attempts to assess the growth rate trends of Indian economy by using the measuring tool called ‘Inclusive Growth’ to get a fair and true picture. Another article on ‘Inclusive Growth for Social Justice: An Imperative for India’s Development Efforts’ by Niti Bhasin argues that inclusive growth is the new paradigm that is related essentially to equality and opportunity to all for achieving a productive and meaningful life with freedom, equality and dignity. There is a lot of talk on growth with equity but it has not been dovetailed with the development effort. An immediate plan for achieving equitable development is needed and the challenge before the Government is to evolve a system in which reforms and globalisation can proceed on one track, and the poor can be protected from the ill effects of it, on the other. Local communities and markets should be reinforced to take advantage of finance, trade and investment changes flowing from the national and global levels. Investing to improve productivity in agriculture is essential for sustainable poverty reduction. In essence, therefore, there has to successful localization first to reap the benefits of globalisation.

Book Reviews

2010 ◽  
Vol 48 (4) ◽  
pp. 1041-1043
Keyword(s):  
Economic Growth ◽  
Labor Supply ◽  
Foreign Aid ◽  
Growth Model ◽  
Open Economy ◽  
Capital Accumulation ◽  
Growth Models ◽  
Small Open Economy ◽  
Basic Model ◽  
The University

Kent P. Kimbrough of Duke University reviews “Capital Accumulation and Economic Growth in a Small Open Economy” by Stephen J. Turnovsky,. The EconLit Abstract of the reviewed work begins “Investigates the process of economic growth in a small open economy and considers whether it is sensitive to the economy’s productive structure. Discusses a basic growth model with fixed labor supply; a basic growth model with endogenous labor supply; transitional dynamics and endogenous growth in one-sector models; two-sector growth models; nonscale growth models; a basic model of foreign aid; and foreign aid, capital accumulation, and economic growth--some extensions. Turnovsky is Castor Chair of Economics at the University of Washington. Index.”

scholarly journals Capital Controls with International Reserve Accumulation: Can this Be Optimal?

2013 ◽  
Vol 5 (3) ◽  
pp. 229-262 ◽  
Author(s):  
Philippe Bacchetta ◽  
Kenza Benhima ◽  
Yannick Kalantzis
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Open Economy ◽  
Capital Mobility ◽  
Capital Controls ◽  
International Capital ◽  
Asset Accumulation ◽  
International Capital Markets ◽  
Growing Economy ◽  
Domestic Interest Rate

Motivated by the Chinese experience, we analyze an economy where the central bank has access to international capital markets, but the private sector does not. The central bank is modeled as a Ramsey planner who can choose the domestic interest rate and the level of international reserves. Consumers are credit-constrained as in Woodford (1990). We find that a rapidly growing economy has a higher welfare without capital mobility. In the Chinese context, we argue that the domestic interest rate should be temporarily above the international rate and that there should be more foreign asset accumulation than in an open economy. (JEL E58, E62, F32, F41, O19, O24, P33)

DO STATUS-SEEKING MOTIVES ENHANCE ECONOMIC GROWTH? A SMALL OPEN GROWTH MODEL

2016 ◽  
Vol 22 (2) ◽  
pp. 199-224 ◽  
Author(s):  
Juin-Jen Chang ◽  
Wei-Neng Wang ◽  
Ying-An Chen
Keyword(s):  
Economic Growth ◽  
Growth Model ◽  
Open Economy ◽  
Social Comparisons ◽  
Closed Economy ◽  
Growth Effects ◽  
Status Seeking ◽  
Endogenous Growth Model ◽  
Seeking Behavior ◽  
Open Growth

This paper explores the growth effects of both consumption- and wealth-induced social comparisons in a unified small open endogenous growth model. We analytically show that in an open economy not only do these two distinct status-seeking motives have very different growth effects, but these growth effects are also quite different from the conventional wisdom based on a closed economy. Status-seeking behavior need not favor economic growth. The asset portfolios of households and the imperfection of the international asset market both play an important role and jointly govern the growth effects of social status seeking. We also perform a quantitative experiment, showing that our analytical findings are robust and empirically plausible. Our analysis provides novel implications for social comparisons and new insights into the literature.

scholarly journals A small open economic growth model with imported goods, tourism, and terms of trade

2018 ◽  
pp. 65-86
Author(s):  
Wei-Bin Zhang
Keyword(s):  
Economic Growth ◽  
Dynamic Analysis ◽  
Growth Model ◽  
Open Economy ◽  
Service Sector ◽  
Small Open Economy ◽  
Terms Of Trade ◽  
Nonlinear Dynamic Model ◽  
Economic Growth Model ◽  
Tourism Economy

This paper constructs an economic growth model of a small open economy with tourism and imported goods in a perfectly competitive economy. The study focuses on the effects of changes in terms of trade, with a preference for imported goods, on the dynamic paths of trade balance and economic growth. The basic framework for modelling a national economy is based on the Solow-Uzawa neoclassical growth model with Zhang’s alternative approach to household behaviour. We build a nonlinear dynamic model with interdependence between economic growth, economic structure, tourism, prices, wealth and income. We provide a computational process to follow the motion of the economic system. Simulation is used to carry out a comparative dynamic analysis of the terms of trade, the propensity to consume imported goods, the rate of interest, the price elasticity of tourism, and the total productivity of the service sector. The comparative dynamic analysis provides some insights into the complexity of the tourism economy.

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