Inflation in China during the economic reforms of the 1980s: causes and effects

2021 ◽  
Vol 2021 (3) ◽  
pp. 114-128
Author(s):  
Dmytro KHOKHYCH ◽  
Keyword(s):  
Income Distribution ◽  
Public Investment ◽  
Capital Investments ◽  
Budget Deficits ◽  
Money Illusion ◽  
Desirable Outcome ◽  
Public Sector Reforms ◽  
Inflation Rates ◽  
Macroeconomic Indicators ◽  
Economic Growth Rates

The article studies the development of inflationary processes in China in the period of 1979-1989, their causes and effects. In particular, based on the analysis of statistical data, it is established that inflation in China is manifested in price and non-price forms, and also has a pronounced directive nature. This means that even excessive public investment can cause inflation. Two ways of reforming the fixed price system are considered: 1) simultaneous weakening of all prices 2) gradual weakening of prices, their slow adjustment towards the market. The relationship between inflation and macroeconomic indicators, including capital investments, wages and economic growth rates, is given. The inflation transmission mechanism of excess demand in China manifests itself due to overinvestment of state-owned enterprises, which leads to budget deficits and surplus issuance of the Yuan and causes inflation. Three phases of the Chinese phenomenon of "money illusion" are considered: the illusion of strong money without inflationary expectations (1979-1984); weakening of money illusion with some inflationary expectations (1985-1986); the formation of expectations without money illusion (since 1988). The method of using inflation to regulate the distribution of income is analyzed.. With the reform, income distribution became more uneven. To some extent, this is a desirable outcome, but the intensification of the public sector reforms resulted in not just inequality but injustice. Thus, the problem to be solved immediately is whether China can use inflation to regulate income distribution. Statistics show that per capita consumption in China in the late 1980s was only 640 Yuan. The proposed reduction in inflationary pressures views monetary policy as regulating the money supply and curbing inflation. Setting an inflation target is considered an effective tool to achieve the planned inflation rates.

Income distribution and macroeconomics in Colombia

2007 ◽  
pp. 6
Author(s):  
Javier A. Birchenall
Keyword(s):  
Income Distribution ◽  
Cross Section ◽  
Economic Variables ◽  
Aggregate Shocks ◽  
Macroeconomic Variables ◽  
Inflation Rates ◽  
Negative Effect ◽  
The Cross ◽  
Education Groups ◽  
Distribution Of Income

This paper studies the relation between macroeconomic variables and the distribution of income in Colombia. We relate the dynamics of aggregate economic variables with the cross-section of disaggregate income to determine the transmission and propagation mechanisms of aggregate shocks. The most important finding is a strong negative effect of inflation rates on the distribution of income by education groups and productive sectors.

scholarly journals The Global Crisis and Its Legal Impact on the Growth of Albanian Economy

2017 ◽  
Vol 8 (1) ◽  
pp. 184-191
Author(s):  
Ervin Bacaj ◽  
Evis Çelo ◽  
Alba Robert Dumi
Keyword(s):  
Aggregate Demand ◽  
Commodity Prices ◽  
Budget Deficits ◽  
International Expansion ◽  
Global Challenge ◽  
Market Expansion ◽  
Political Risks ◽  
Macroeconomic Indicators ◽  
Global Coordination ◽  
Political Spectrum

Abstract We started as a crisis of high commodity prices, she quickly clarified the extent of the banking crisis and rapidly accelerated the financial crisis which culminated with the economic crisis, social and global, perhaps it was the heaviest one after the Second World - War. The consequences of this crisis was widely reflected in the deterioration of macroeconomic indicators of the budget, it appeared a significant decline in economic growth, a drop in revenues, an increase in unemployment and the fast increase of budget expenditures. The budget deficit and public debt grew at high rates, the cost and sources of financing of the economy became the most difficult and the most expensive. To stop the deterioration, the governments of many countries, regardless of their political spectrum supported the growth of aggregate demand, this process in many countries aggravated budget deficits. The primary task to overcome the crisis was a strategy that would ensure the sustainability of public finances in the countries affected by the crisis. The main difficulty faced was the global coordination such a global challenge. Researches can improve the profits of a company because of the potential capabilities of diversification with innovation performance or some have argued that the returns are increasing but this diversification has a very big risk. International expansion is very difficult to manage because there are a risk. Chief among them are economic and political risks because due to these risks by diversification of large firms are accustomed to the conditions of a market in competitive situations. The risk policy has to do with a government concentration creating much problem. The economic risk concerns exchange rates and market expansion line.

scholarly journals Macroeconomic Dynamics of the Total Factor Productivity of the Russian Economy

2021 ◽  
Vol 17 (3) ◽  
pp. 799-813
Author(s):  
Sergey A. Mitsek
Keyword(s):  
Total Factor Productivity ◽  
Public Investment ◽  
Labour Productivity ◽  
Aggregate Demand ◽  
Factor Productivity ◽  
Export Prices ◽  
Russian Economy ◽  
Economic Trends ◽  
Total Productivity ◽  
Economic Growth Rates

The growth rate of Russia’s total productivity has been slowing down significantly since 2008. The majority of relevant publications either describe an economic methodology or specifically focus on labour productivity. However, economic growth rates, as well as community welfare, largely depend on total factor productivity. The paper aims to determine the reasons for the slowdown in the growth of total factor productivity after 2008. This negative dynamics was assessed using a macroeconomic econometric model and estimates for Russian regions and types of economic activity. Elasticity of dependent variables was calculated based on econometric equations as well as multipliers of exogenous variables presented in the model. Ordinary and rank correlations between the variables were also examined. The calculations revealed that the stagnation of total factor productivity was caused by the misallocation of resources across industries and regions, de crease in aggregate demand, increase in capital goods prices (primarily due to rouble devaluation) and a slowdown in digital economy development. In turn, these trends were influenced by a decline in public investment and export prices, as well as a slowdown in population growth and liquidity. Simultaneously, growth of the world economy contributed to the demand for Russian export goods, preventing a decrease in productivity. The findings can be used for forecasting Russian economic trends and developing relevant policy measures. Further research will examine the role of human capital, energy intensity, climate and institutional factors in increasing the total productivity.

scholarly journals Problems and prospects of management of investment attractiveness of subjects of business

2019 ◽  
Vol 67 ◽  
pp. 06029
Author(s):  
Lidiya Kostyrko ◽  
Ruslan Kostyrko ◽  
Olena Sereda ◽  
Eleonora Chernodubova
Keyword(s):  
Financial Regulation ◽  
Capital Formation ◽  
Fixed Capital ◽  
Capital Investments ◽  
Capital Asset ◽  
Foreign Investments ◽  
Fixed Capital Formation ◽  
Macroeconomic Indicators ◽  
Business Entities ◽  
Asset Restructuring

On the basis of the analysis of the scientific views of researchers, the essential characteristics of the category of “investment attractiveness” as an object of management are specified. According to the results of the study of macroeconomic indicators (GDP, gross fixed capital formation, financing of capital investments, financing of innovations, direct foreign investments), the current problems of investment attractiveness in the country are determined. The investment attractiveness of Ukraine is analysed in accordance with the international indices. The sequence of investment attractiveness management of business entities is proposed, where priority is given to the strategies of the financial regulation by the development of business entities. The urgency of the formation of a financial regulation strategy based on an estimation of investment attractiveness is substantiated. The priority directions of increase of investment attractiveness in the framework of realization of the strategy of financial regulation by development of the business entities, which stipulate the choice of sources of financing, optimization of the structure of capital, asset restructuring and financing of innovations are determined.

A DYNAMIC MODEL OF TAXATION, CORRUPTION, AND PUBLIC INVESTMENT IN THE DYNASTIC CYCLE: THE CASE OF IMPERIAL CHINA

2016 ◽  
Vol 20 (8) ◽  
pp. 2123-2147 ◽  
Author(s):  
Kenneth S. Chan ◽  
Jean-Pierre Laffargue
Keyword(s):  
Income Distribution ◽  
Public Investment ◽  
Public Spending ◽  
Public Capital ◽  
Central Administration ◽  
Stochastic Growth ◽  
Institutional Capital ◽  
Imperial China ◽  
Random Shocks ◽  
Dynastic Cycle

This paper develops a stochastic growth model that reproduces the main stylized facts of Imperial China's dynastic cycle—in particular, the time path of taxation, public spending, and corruption and their attendant impacts on production and income distribution. In this model, the emperor uses part of his tax income to finance the building of public capital and administrative institutions. This “institutional capital” enhances the productivity of the economy and limits extortion by the county magistrates. The dynastic cycle is driven by random shocks to the authority of the emperor and his central administration, which change the efficiency of institutional capital.

The trade-off between income distribution and the capacity of governmental public investment in Brazil

2015 ◽  
Vol 9 (1) ◽  
pp. 49
Author(s):  
Carlos Alberto Grespan Bonacim ◽  
Adriana Maria Procópio De Araujo ◽  
Antônio José Maristrello Porto
Keyword(s):  
Income Distribution ◽  
Public Investment ◽  
Trade Off

Pro-poor Growth and Policies: The Asian Experience (The Quaid-i-Azam Memorial Lecture)

2003 ◽  
Vol 42 (4I) ◽  
pp. 313-348
Author(s):  
Hafiz A. Carstens ◽  
T. Palanivel
Keyword(s):  
Poverty Reduction ◽  
Agricultural Development ◽  
Public Investment ◽  
Memorial Lecture ◽  
Asian Countries ◽  
Poor Growth ◽  
Strong Positive Relationship ◽  
Inflation Rates ◽  
Macroeconomic Determinants ◽  
The Impact

The objective of this paper is to assemble on a systematic basis the available data on Asian countries and then analyse the relationship between growth and poverty reduction in a long-term perspective, as well as the impact of different macroeconomic variables on the intensity of this relationship. The results indicate that there is not only a strong positive relationship between growth and poverty reduction, but also that this relationship is highly variable across countries and time periods. The key macroeconomic determinants of the degree of pro-poor growth appear to be the rates of employment and agricultural growth. Inflation, at least up to a certain rate, does not impact poverty negatively, while the role of exports is essentially indirect through the contribution to the overall rate of economic growth. Examination of the change in policy stance of the Asian countries during the 1990s in relation to the 1980s demonstrates that on balance the mix of policies has not been pro-poor. The apparent sacrifice of growth in pursuit of macroeconomic stability has diminished the impact on poverty reduction. Given the relatively weak trade-off between inflation and growth with regard to the impact on poverty and the fact that inflation rates are currently low in the region, it is argued that countries can be more flexible in their policy stance with regard to the adoption of more growth-oriented as opposed to stabilisation policies. In particular, a case is made for resorting to a more expansionary counter-cyclical fiscal policy, led by higher levels of public investment, supported by appropriate monetary and exchange rate policies. The paper concludes with a detailed description of the policies designed to achieve faster agricultural development and greater employment generation.

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