scholarly journals Optimistically biased economic growth forecasts and negatively skewed annual variation

2020 ◽  
Author(s):  
Matthew G. Burgess ◽  
Ryan E. Langendorf ◽  
Tara Ippolito ◽  
Roger Pielke
Keyword(s):  
Economic Growth ◽  
Growth Rates ◽  
Time Windows ◽  
Gdp Growth ◽  
Average Growth ◽  
Per Capita Gdp ◽  
Negative Skewness ◽  
Per Capita ◽  
Growth Volatility ◽  
Growth Forecasts

Authoritative economic growth forecasts are often optimistically biased. Negatively skewed variation--negative shocks being larger than positive shocks--could contribute to bias by making long-run average growth smaller than typical-year (median) growth. This positively biases forecasts based on typical years. We compare medians and means in real per-capita GDP growth across countries, regions, and time windows from 1820-2016. Over decadal periods, we find mean growth rates <1%/y smaller than median growth rates in most countries and regions (median 0.23%/y across countries). Surprisingly, we find both large- and medium-magnitude shocks contribute to these differences, rather than only large ‘black swan’ events. We find negative skewness correlated with high levels and slow growth of per-capita GDP and population, and high per-capita GDP growth volatility, building on previous studies. We find negative skewness alone insufficient to explain recent growth over-projections by the International Monetary Fund (IMF) and the U.S. Congressional Budget Office (CBO).

scholarly journals Examining GDP Growth and Its Volatility: An Episodic Approach

Entropy ◽  
2021 ◽  
Vol 23 (7) ◽  
pp. 890
Author(s):  
Jakub Bartak ◽  
Łukasz Jabłoński ◽  
Agnieszka Jastrzębska
Keyword(s):  
Economic Growth ◽  
Genetic Algorithm ◽  
Time Series ◽  
Human Capital ◽  
Growth Rates ◽  
Structural Breaks ◽  
Negative Relationship ◽  
Gdp Per Capita ◽  
Gdp Growth ◽  
Per Capita

In this paper, we study economic growth and its volatility from an episodic perspective. We first demonstrate the ability of the genetic algorithm to detect shifts in the volatility and levels of a given time series. Having shown that it works well, we then use it to detect structural breaks that segment the GDP per capita time series into episodes characterized by different means and volatility of growth rates. We further investigate whether a volatile economy is likely to grow more slowly and analyze the determinants of high/low growth with high/low volatility patterns. The main results indicate a negative relationship between volatility and growth. Moreover, the results suggest that international trade simultaneously promotes growth and increases volatility, human capital promotes growth and stability, and financial development reduces volatility and negatively correlates with growth.

A Comparison of the Economic Growth of the Baltic States between the Two World Wars

2016 ◽  
Vol 12 (1) ◽  
pp. 1-23 ◽  
Author(s):  
Zenonas Norkus
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Growth Rates ◽  
Gdp Per Capita ◽  
Gdp Growth ◽  
Economic Output ◽  
Measurement Units ◽  
Per Capita ◽  
Cross Country ◽  
The Baltic

AbstractThis paper contributes to cliometric research on the economic output of Finland, Estonia, Lithuania and Latvia between 1913 and 1938. For Finland, gross domestic product (GDP) values from Maddison project dataset are accepted. For Estonia, Arno Köörna’s and Jaak Valge’s estimates are endorsed with reservations for 1923–1924. According to an optimistic estimate, Lithuania’s GDP per capita was below all-Russian mean in 1913, but was not less than USSR level in 1938, while Gediminas Vaskela’s pessimistic estimate of the 1938 Lithuanian GDP implies its GDP growth underperformance. Using new sources, the first estimates of Latvia’s output for the 1913–1938 period in cross-country and cross-temporally comparable measurement units (1990 Geary Khamis international $) are substantiated. Under optimistic estimates of Lithuanian GDP growth, this country was on par with Finland in terms of annual growth rates, with Latvia following next and Estonia displaying the weakest growth performance.

Tests of a more comprehensive model of economic growth in lower middle-income countries

2018 ◽  
Vol 45 (1) ◽  
pp. 46-58 ◽  
Author(s):  
Minh Quang Dao
Keyword(s):  
Economic Growth ◽  
Total Population ◽  
Gdp Per Capita ◽  
Gdp Growth ◽  
Comprehensive Model ◽  
Government Consumption ◽  
Middle Income ◽  
Per Capita Gdp ◽  
Content Type ◽  
Per Capita

Purpose The purpose of this paper is to empirically test a more comprehensive model of economic growth using a sample of 28 lower middle-income developing countries. Design/methodology/approach The authors modify the conventional neoclassical growth model to account for the impact of the increase in the number of people working relative to the total population and that of the increase in the value added per worker over time. The authors then extend this model by incorporating the role of trade, government consumption, and human capital in output growth. Findings Regression results show that over three quarters of cross-lower middle-income country variations in per capita GDP growth rate can be explained by per capita growth in the share of public expenditures on education in the GDP, per capita growth in the share of government consumption in the GDP, per capita growth in the share of imports in the GDP, per capita growth in the share of manufactured exports in the GDP (not of that of total exports in the GDP), and the growth of the working population relative to the total population. Practical implications Statistical results of such empirical examination will assist governments in these countries identify policy fundamentals that are essential for economic growth. Originality/value To address the simultaneity bias, the authors develop a simultaneous equations model and are able to show that such model is more robust and helps explains cross-country variations in per capita GDP growth over the 2000-2014 period.

scholarly journals Spillover effects of economic complexity on the per capita GDP growth rates of Mexican states, 1993-2013

2020 ◽  
Vol 47 (2) ◽  
pp. 221-243
Author(s):  
Manuel Gómez-Zaldívar ◽  
Felipe J Fonseca ◽  
Marco T. Mosqueda ◽  
Fernando Gómez-Zaldívar
Keyword(s):  
Growth Rates ◽  
Spillover Effects ◽  
Gdp Growth ◽  
Per Capita Gdp ◽  
Economic Complexity ◽  
Per Capita

present state of the country's statistical and economic system, such exercises are impracticable, and we will therefore focus on the wider distributional features of teh DTYP. Also excluded is any discussion or test of the feasibility fo the DTYP targets in narrow technical terms. In keeping with our mild scepticism over the officially adopted population growth rates, we will assume a growth rate of population of 3.0 per cent per year over the period. This does not alter any of our arguments in a significant fashion. One other statistic has been altered: the growth rate for agriculture. In the DTYP, this is pegged at 4.5 per cent per annum. However, this includes the rapidly expanding export sector which carries a base-year weight of about 12 per cent, and which has a target growth rate of ten per cent per annum. This implies a growth rate of 3.5 per cent for the non-export domestic agricultural sector, and we will utilise this rate in our calculations. Let us return then to the simple analytical device used in our discussion of the inflationary process and compute the * warranted' levels, y*, n* and e*, and compare these with the targets for y, n and e. This is done in Table 12 which offers some strategic insights into the possible distributional dilemmas and implications of the DTYP. With n = 3.5 per cent, y* = 3.8 per cent, implying a warranted per capita GDP growth of under one per cent per annum, in contrast to the targeted 4.5 per cent or more. If we set y = 7.5 per cent, then n* = 5.7 per cent.

2013 ◽  
pp. 179-180
Keyword(s):  
Growth Rate ◽  
Population Growth ◽  
Growth Rates ◽  
Agricultural Sector ◽  
Gdp Growth ◽  
Per Capita Gdp ◽  
Population Growth Rates ◽  
Export Sector ◽  
Per Capita ◽  
Analytical Device

scholarly journals Property Systems and Economic Growth in Japan, 730–1874

2020 ◽  
Vol 23 (2) ◽  
pp. 147-184
Author(s):  
Masaki NAKABAYASHI ◽  
Kyoji FUKAO ◽  
Masanori TAKASHIMA ◽  
Naofumi NAKAMURA
Keyword(s):  
Economic Growth ◽  
Early Modern Period ◽  
17Th Century ◽  
Eighth Century ◽  
Gdp Growth ◽  
13Th Century ◽  
Per Capita Gdp ◽  
Annual Series ◽  
12Th Century ◽  
Per Capita

Abstract New estimates on the premodern economic growth of Japan, based on more concrete evidence, have been presented. We revise the estimates of Japan’s gross domestic product (GDP) from the mid-eighth century to the mid-19th century and its population in the 12th century and describe the institutional transformations that correspond to the output changes. The revision of output and population results in updated estimates of per capita GDP for the medieval period and extension of the growth estimates in the early modern period to the annual series for 1651–1841. This study employs the techniques of quantitative inference and descriptive interpretation of the estimated performance. The findings show that: (a) Both the GDP and population significantly declined towards the 12th century, stagnated and experienced recovery from the 13th century onwards, and then continued to grow through the 17th century; (b) GDP growth accelerated in the 18th and 19th centuries; and (c) per capita GDP growth began to rise in the 13th century after a sharp decline from the 10th to 12th centuries. It continued to rise through the 16th century but declined again in the mid-17th century and finally rose again from the late 17th century onwards.

scholarly journals The Impact of Foreign Aid on Economic Growth in Ethiopia

2012 ◽  
Vol 13 (2) ◽  
pp. 87-112
Author(s):  
Mohammed Seid Hussen ◽  
Kye Woo Lee
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Positive Impact ◽  
Aid Effectiveness ◽  
Gdp Growth ◽  
Domestic Investment ◽  
Per Capita Gdp ◽  
Democratic Regimes ◽  
Per Capita ◽  
The Impact

This paper investigates the impact of foreign aid on investment and economic growth of Ethiopia for the period 1971-2010. The result indicates that foreign aid has a statistically significant positive impact on domestic investment, while aid’s positive impact on per capita GDP growth does not depend on any macroeconomic policy conditionality. Rather, aid effectiveness depends on the peculiar social, political and economic institutions of particular periods. Aid is effective during both socialist and democratic regimes. However, aid’s impact on growth was greater for socialist regimes.

scholarly journals CAPITAL MARKET DEVELOPMENT AND ECONOMIC GROWTH: AN ARDL APPROACH FOR SAUDI ARABIA, 1985–2018

2020 ◽  
Vol 0 (0) ◽  
pp. 1-22
Author(s):  
Abdulaziz Hamad Algaeed
Keyword(s):  
Economic Growth ◽  
Capital Market ◽  
Price Index ◽  
Share Price ◽  
Market Development ◽  
Gdp Growth ◽  
Index Number ◽  
Per Capita Gdp ◽  
Per Capita ◽  
The Capital Market

The aim of this paper is to analyze and test the effects of capital market development on the per-capita GDP growth in Saudi Arabian economy covering the period of 1985-2018. An ARDL, FMOLS and Johansen tests are implemented. The stock market indicators: share price index, capitalization, liquidity, number of share transactions, and number of shares are employed using a log-linear eclectic model designed to fit the availability of data. Capitalization and liquidity came up with negative signs, contrary to the findings of lots of studies in economic literature. However, the share price index, number of shares traded, and the ratio of number of share transactions had the right signs as expected a priori. The findings raise serious questions about the size of the market, the steps and efforts that have been taken to deepen the capital market and their consequences on the function and potency of capital market in fostering per-capita GDP growth. Applying Granger causality test, share price index, market capitalization and number of shares traded do not granger cause per-capita GDP. They are significant at 5 percent level. Capital market authority (CMA) should draw a road map to accelerate deepening the capital market in order to serve economic growth.

scholarly journals A panel causality analysis of the relationship between financial development and economic growth in OECD countries

2021 ◽  
Vol 9 (2) ◽  
pp. 662-672
Author(s):  
Sevilay Küçüksakarya
Keyword(s):  
Economic Growth ◽  
Private Sector ◽  
Financial Development ◽  
Gdp Growth ◽  
Causality Test ◽  
Panel Causality ◽  
Per Capita Gdp ◽  
Domestic Credit ◽  
Per Capita ◽  
The Relationship

This study examines the relationship between financial development and economic growth. Thus, this study aims to find empirical shreds of evidence for the direction of the causality between financial development proxied by domestic credit to the private sector and per capita GDP growth by using the panel granger causality test of the Dumitrescu-Hurlin Test. For this purpose, we used a panel of 16 OECD countries from 2008 to 2019 to provide evidence of whether the supply leading hypothesis or demand following hypothesis or both holds. All econometric exercises are carried out for whole countries and high-income countries, and upper-middle-income country groups in the sample. Due to cross-sectional dependence among the sample countries, we determine the degree of integration of each variable by employing the second-generation panel unit root tests of CIPS. We continue our analysis with the panel causality test developed by Dumitrescu and Hurlin (2012) to determine the direction of the causality between variables. For this purpose, we performed three sets of causality analyses. In the first one, we include all countries in the panel. We then divided the countries into two sub-groups based on the income classification and the level of financial development in these countries proxied by domestic credit to the private sector. The causality test results, including all countries in the sample, indicate that the hypothesis holds the supply leading hypothesis during the sample period. This means that even though this panel contains countries with a development level, financial development still seems to be a pre-condition for economic growth for these nations. We also obtain the same results when we include high-income countries in the sample. The study results provide compelling evidence for the relationship between economic growth and financial development since the sample includes countries with different levels of financial development with different degrees of per capita GDP growth.

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