scholarly journals Determinants of Energy Inflation in Pakistan: An Empirical Analysis

2014 ◽  
Vol 53 (4II) ◽  
pp. 491-504
Author(s):  
Adnan Haider ◽  
Qazi Masood Ahmed ◽  
Zohaib Jawed
Keyword(s):  
High Energy ◽  
Productive Capacity ◽  
Energy Prices ◽  
Price Inflation ◽  
Us Economy ◽  
Long Run ◽  
Demand Pull ◽  
The Us ◽  
History Of ◽  
Energy Products

Energy inflation has remained a significant topic in macroeconomic policy for the past few decades. This is due to several reasons pertaining to both demand and supply sides. In addition, the history of energy prices has also been characterised by extreme volatilities, Hamilton (2008). This makes forecasting and modelling of energy prices difficult, nevertheless it is important to model and forecast energy prices in all economies. In this paper we have tried to identify the determinants of energy inflation in Pakistan. Energy products are a critical component in any economy, serving as a core input, particularly in manufacturing industries. Moreover, the demand for energy and fuel comes from households fuelling cars and kitchens for which other alternatives are not easily available. This renders the demand inelastic compared to any other good [Edelstein and Kilian (2009)], making economies vulnerable to supply and price shocks. The energy price inflation therefore through cost push inflation and demand-pull inflation has a major impact on core inflation itself, thereby playing a significant role in macroeconomic health of a country. As predicted by Ben Bernanke for the US in 2006, “in the long run energy prices can reduce the productive capacity of US economy if high energy costs make businesses less willing to invest new capital”. The nature of the energy market itself creates a major gap between the oil consumers and oil producers. Whilst demand is inelastic everywhere, supply is limited and is difficult to increase, and confined to certain regions on Earth. This is true particularly for two of the most common energy types: oil and gasoline. The supply of oil is controlled by a few countries, and supply shocks therefore lead to an immediate surge in prices.

scholarly journals Varieties of capitalism, increasing income inequality and the sustainability of long-run growth

2020 ◽  
Vol 44 (3) ◽  
pp. 559-582
Author(s):  
Mark Setterfield ◽  
Yun K Kim
Keyword(s):  
Varieties Of Capitalism ◽  
Financial Fragility ◽  
Debt Accumulation ◽  
Us Economy ◽  
Long Run ◽  
The Social ◽  
The Us ◽  
Debt Dynamics ◽  
Social Wage ◽  
Household Borrowing

Abstract We model US household debt accumulation during the neoliberal boom (1990–2007) as a response to emulation effects and the decline of the social wage, which has ‘privatised’ an increasing share of the costs of providing for services such as health and education. The debt dynamics of the US economy are then studied under alternative assumptions about the configuration of distributional variables, which is shown to differ across varieties of capitalism that have ‘neoliberalised’ to different degrees. A key result is that distributional change alone will not make contemporary US capitalism financially sustainable due, in part, to the paradoxical nature of inequality as a spur to household borrowing, and hence a source of both demand-formation and financial fragility. Achieving sustainability requires, instead, more wide-ranging reform.

scholarly journals Whitewashing Capitalism: Mainstream Economics’ Resounding Silence on Race and Racism

2019 ◽  
Vol 51 (4) ◽  
pp. 562-571
Author(s):  
Tim Koechlin
Keyword(s):  
Racial Inequality ◽  
Jel Classification ◽  
Economic Science ◽  
Race And Racism ◽  
Mainstream Economics ◽  
Us Economy ◽  
Economic Practices ◽  
The Us ◽  
The Usa ◽  
History Of

This paper is about the gaping silence in mainstream economics regarding the relationship among capitalism, race, racism, and enduring racial inequality in the USA. Racial inequality is a glaring and enduring fact about the US economy. And yet mainstream economics has little to say about race or racism. Gregory Mankiw’s bestselling textbook devotes seven pages to “discrimination.” There is no discussion of racism per se. Mainstream economists and textbooks typically conflate racism and “discrimination,” and reassure the reader that “markets contain a natural remedy for employer discrimination” (Mankiw, 2008: 409). A student is likely to leave ECON 101 (or an economics major) with a sense that “economic science” has “shown” that discrimination is not that big a deal, and that the history of racist plunder and exploitation in the USA (of which there likely has been no discussion) is not relevant to “economics.” I argue here that the mainstream narrative (its assumptions, its logic, its conclusions, and its rhetorical choices and emphases) systematically obscures, dismisses, and ignores essential ways that racial inequality has been (re)produced by US capitalism. Especially striking is the resounding silence about the legacy of racist economic practices—in particular, the ways in which the enormous black/white wealth gap (and its effects) in the USA are linked to centuries of racist exclusion, violence, and plunder. The mainstream narrative thus whitewashes capitalism and exonerates “the market system.” The final section argues for a radical multidisciplinary economics. JEL classification: J15, D63

Euro-area potential GDP will stay on low trajectory

2015 ◽  
Keyword(s):  
Euro Area ◽  
Productive Capacity ◽  
Potential Growth ◽  
Average Growth ◽  
Content Type ◽  
Us Economy ◽  
Long Run ◽  
Permanent Loss ◽  
Potential Gdp ◽  
The Impact

Subject Declining potential growth trends. Significance Although the euro-area is enjoying stronger growth this year, the rebound has been modest. Real GDP growth should average 1.5-1.7% in 2015, disappointing hopes for growth closer to 2.0%. This is adding to concern about the impact of persistent investment weakness, which curbs potential growth. Over 2010-14, the US economy grew by 2.2% on average, the same as during the five years preceding the financial crisis (2004-08), although both periods are mediocre compared to the long-run average of 3.0% for the 15 years prior to 2009. The euro-area's double-dip recession depressed its 2010-14 average growth to 0.7% compared with a rate of 2.2% for both 2004-08 and the 15 years prior to 2009. Impacts Chronic lack of job opportunities can lead to a permanent loss in productive capacity, damaging consumer confidence and spending. Policymakers will need to promote investment and job creation, lowering the cost of capital and reforming labour markets. These reforms could stir political instability by fuelling social resentment and political populism.

US consumption may start to pick up

2015 ◽  
Keyword(s):  
Trade Balance ◽  
Oil Prices ◽  
Energy Prices ◽  
Trust Fund ◽  
Content Type ◽  
Consumption Expenditures ◽  
Us Economy ◽  
West Texas ◽  
Personal Consumption ◽  
The Us

Significance One of the conundrums of the US economy that will influence the Federal Reserve's timing of an interest rate rise (currently projected for September) is where the savings from low energy prices have gone. Oil prices have dropped sharply since September 2014, from 97 dollars per barrel for West Texas Intermediate in June 2014 to 60 dollars per barrel today. Yet US personal consumption expenditures (PCE) only grew by 2.7%, well below the rate of growth of personal income, 4.1%. Impacts Greater spending on petrol will help the Highway Trust Fund slightly, but not before a new funding package is due by July 31. Low oil prices will outweigh consumer savings in such producing states as Texas and North Dakota. Greater consumer spending will adversely affect the US trade balance, as imports will rise due to the strong dollar.

Does the US economy face a long run trade off between inflation and unemployment

2019 ◽  
Vol 12 (2) ◽  
pp. 118 ◽  
Author(s):  
Jamil Sayeed ◽  
Md. Deen Islam ◽  
Shanjida Yasmin
Keyword(s):  
Trade Off ◽  
Us Economy ◽  
Long Run ◽  
The Us

Path dependence, the COVID-19 crisis, and inequality in the United States

2021 ◽  
Vol 18 (2) ◽  
pp. 198-206
Author(s):  
Daniele Tavani
Keyword(s):  
Great Recession ◽  
Path Dependence ◽  
The United States ◽  
Economic Security ◽  
The Great Recession ◽  
Us Economy ◽  
Long Run ◽  
The Us ◽  
Historical Trajectory

This paper considers both secular and medium-run trends to argue that the US economy was already vulnerable to shocks before the COVID-19 crisis. Long-run trends have shown a pattern of secular stagnation and increasing inequality since the 1980s, while the economy has displayed hysteresis during the sluggish recovery from the Great Recession. The immediate policy response through the Coronavirus, Relief and Economic Security (CARES) Act highlighted the coordinating role of fiscal policy on the economy, but also showcased limits, especially with regard to the paycheck protection program. The historical trajectory of the US economy before the COVID-19 crisis cast serious doubts on recent cries of ‘overheating’ and inflationary pressures that should supposedly arise from the $1.9 trillion relief package just signed into law by President Biden. Projecting forward to the long run, redistribution policies may provide useful first steps in reversing the trends of rising inequality and declining productivity growth that the US economy has seen over the last few decades.

Does the US Economy Face a Long Run Trade Off between Inflation and Unemployment

2019 ◽  
Vol 12 (1) ◽  
pp. 1
Author(s):  
Jamil Sayeed ◽  
Shanjida Yasmin ◽  
Md. Islam ◽  
N.A. Deen
Keyword(s):  
Trade Off ◽  
Us Economy ◽  
Long Run ◽  
The Us

Optimal Inflation for the US Economy

2011 ◽  
Vol 3 (3) ◽  
pp. 29-52 ◽  
Author(s):  
Roberto M Billi
Keyword(s):  
Inflation Rate ◽  
Low Cost ◽  
Policy Instrument ◽  
New Keynesian ◽  
Worst Case ◽  
Us Economy ◽  
Keynesian Model ◽  
Long Run ◽  
The Us ◽  
The Government

This paper studies the optimal long-run inflation rate (OIR) in a small New Keynesian model, where the only policy instrument is a short-term nominal interest rate that may occasionally run against a zero lower bound (ZLB). The model allows for worst-case scenarios of misspecification. The analysis shows first, if the government optimally commits, the OIR is below 1 percent annually. Second, if the government re-optimizes each period, the OIR rises markedly to 17 percent. Third, if the government commits only to an inertial Taylor rule, the inflation bias is eliminated at very low cost in terms of welfare for the representative household. (JEL E12, E31, E43, E52, E58)

scholarly journals Global Food Prices trends behavior and Managing Food Inflation in India: Strategic policy options and key issues

2009 ◽  
Vol 5 (4) ◽  
pp. 281-298
Author(s):  
U Arabi
Keyword(s):  
Food Security ◽  
Food Prices ◽  
Food Price ◽  
Energy Prices ◽  
Price Inflation ◽  
The Poor ◽  
Long Run ◽  
Food Commodities ◽  
The Cost ◽  
Global Food

The rapid rise in food prices has been a burden on the poor in developing countries, including in India, who spend roughly half of their household incomes on food. In many countries and regions, food price inflation is higher than aggregate inflation and contributing to underlying inflationary pressures. Food grain prices have more than doubled between January 2006 and June 2008. More than 60 percent of this increase has occurred since January 2008 alone. Although the pass-through of rising global prices does not translate into an immediate and proportionate rise in domestic price levels, due to various factors such as a weakening dollar, domestic infrastructure, and price stabilization policies; increased food price volatility is expected even to continue for the presumable future and there is also possibility of further long run uncertainty due to climate change. With domestic prices rising, private consumption takes a plunge. Expectedly, global food price increases translate to higher prices in developing Asia, including in India particularly since food carries a large weight in the CPI of many of the region’s economies. In fact a number of factors have contributed to the rise in food prices in general; but the increase in energy prices and the related increases in prices of fertilizer and chemicals, which are either produced from energy or are heavy users of energy in their production process etc. are crucial. This has increased the cost of production, which ultimately gets reflected in higher food prices. Higher energy prices have also increased the cost of transportation, and increased the incentive to produce biofuels and encouraged policy support for bio-fuels production. The increase in bio fuels production has not only increased demand for food commodities, but also led to large land use changes which reduced supplies of wheat and crops that compete with food commodities used for biofuels in countries like India. Against these backdrops, this paper focus on the movements in global food price trends and its impact on management of food supply and security, the factors responsible for the rise in food prices in India and its impact on the issue of food security and sustainability of management of food economy of India. The paper concludes that in the short to medium run, the importance of safety nets to secure food for the needy is very much needed and in the long run, the notion of food security should move beyond a relatively static focus on food availability and access to one of higher productivity. Thus, as the majority of the poor in developing India live in rural areas and depend on agriculture, higher agricultural growth will provide food security by increasing supply, reducing prices, and raising incomes of poorer farm households in the near future

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