scholarly journals Can the AD-AS Model Explain the Presence and Persistence of the Underground Economy? Evidence from Italy

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 170
Author(s):  
Gaetano Lisi
Keyword(s):  
Aggregate Demand ◽  
Underground Economy ◽  
Supply Side ◽  
Negative Effects ◽  
Basic Model ◽  
Macroeconomic Analysis ◽  
Short Run ◽  
Widespread Phenomenon ◽  
Positive Shock ◽  
First Time

The underground economy crucially affects growth and unemployment in both developed and developing countries. Nevertheless, this widespread phenomenon does not appear in the basic model for macroeconomic analysis, namely the Aggregate Demand-Aggregate Supply (or simply AD-AS) model. Therefore, this paper introduces–for the first time, to the best of our knowledge–the underground sector of the economy into the popular AD-AS model, with the aim of increasing its descriptive power. Indeed, the present theoretical extension of the AD-AS model shows that the underground economy –despite its negative effects on aggregate demand and growth– can trigger a supply-side positive shock that mitigates, at least in the short run, the problem of high unemployment. Empirical evidence from Italy is also provided.

scholarly journals The Secular Stagnation of Productivity Growth

2019 ◽  
pp. 1-27 ◽  
Author(s):  
Servaas Storm
Keyword(s):  
Empirical Evidence ◽  
Productivity Growth ◽  
Aggregate Demand ◽  
Supply Side ◽  
Potential Growth ◽  
Secular Stagnation ◽  
Long Run ◽  
Structural Weakness ◽  
Short Run ◽  
The U.S

The concern that an economy could experience persistent stagnation, caused by a structural weakness of aggregate demand, goes back to Alvin Hansen’s (1939) thesis of ‘secular stagnation’. Hansen’s thesis has been revived in recent times, when it became clear that productivity and potential growth in the OECD countries have been declining for decades. However, in line with deep-rooted theoretical beliefs, that inadequate demand can only affect growth in the short run, secular stagnation (of potential growth) is treated as an exclusively supply-side problem, the root of which is a worrying steady decline in productivity growth. This paper argues that it is a mistake to dismiss secular demand stagnation as main cause of declining potential growth in the OECD. We argue that the theoretical case for demand-caused secular stagnation is strong and empirical evidence that it has affected the U.S. economy after the mid-1970s is entirely convincing. Demand is leading supply, also in the long run. Hansen had it right, after all.

scholarly journals From a Recession to the COVID-19 Pandemic: Inflation–Unemployment Comparison between the UK and India

Economies ◽  
2021 ◽  
Vol 9 (2) ◽  
pp. 73
Author(s):  
Vijay Victor ◽  
Joshy Joseph Karakunnel ◽  
Swetha Loganathan ◽  
Daniel Francois Meyer
Keyword(s):  
Generalized Additive Model ◽  
Aggregate Demand ◽  
Additive Model ◽  
Supply Side ◽  
Fiscal Stimulus ◽  
Policy Initiatives ◽  
Short Run ◽  
Severe Recession ◽  
The Uk ◽  
The Right

The recession in India and the UK peaked in 2017 due to the implications of new policy initiatives. The outbreak of the COVID-19 pandemic at the beginning of 2020 intensified the crisis, causing a drastic decline in aggregate demand and output. India and the UK have resorted to monetary and fiscal stimulus packages to face the economic crisis. This study investigated the inflation–unemployment dynamics during the recession and COVID-19 times in India and the UK. Using a generalized additive model (GAM), the results of this study revealed that the recession had given way to stagflation in India. In contrast, in the UK, it has led to a more severe recession in the short-run. During the downturn, policy initiatives aggravate the recession and eventually turn to stagflation in India due to inflation caused by the weak supply side. However, in the UK, the policy initiatives during this downturn pushed the economy into a deeper recession due to reduced demand. The outbreak of the COVID-19 pandemic has had a similar recessionary impact on both economies. A time horizon based recovery plan is suggested to help the economies recover from stagflation and even deeper recession. This framework could enable policymakers to choose the right path of recovery within the shortest possible time.

The Effects of Corporate Ownership on Public Accountants' Professionalism and Ethics

2002 ◽  
Vol 16 (2) ◽  
pp. 109-124 ◽  
Author(s):  
William E. Shafer ◽  
D. Jordan Lowe ◽  
Timothy J. Fogarty
Keyword(s):  
Current Trend ◽  
Auditor Independence ◽  
Corporate Ownership ◽  
Negative Effects ◽  
Public Accounting ◽  
Corporate Acquisitions ◽  
Accounting Professionals ◽  
Research Questions ◽  
And Control ◽  
First Time

The current trend toward corporate acquisitions of CPA firms poses potential threats to the autonomy and ethical standards of public accounting professionals. This recent consolidation movement suggests that for the first time a significant number of public accounting professionals are subject to the supervision and control of nonprofessionals. In addition to acknowledging the potential threats to auditor independence and objectivity, this paper suggests that these new organizational arrangements for the provision of public accounting services have other negative effects on professionalism and ethics such as desensitizing CPAs to traditional professional values, and subverting professional institutions to the goals of corporate employers. This paper develops a framework that identifies several specific research questions related to the effects of corporate ownership on professionalism and ethics in public accounting.

scholarly journals The economic market outcomes and income distribution when capital is not homogeneous

2019 ◽  
Vol 1 (1) ◽  
pp. 38-56
Author(s):  
Ahmet Özçam
Keyword(s):  
Measurement Problem ◽  
Physical Capital ◽  
Threshold Level ◽  
Market Model ◽  
Economic Market ◽  
Constant Elasticity ◽  
Content Type ◽  
Macroeconomic Analysis ◽  
Long Run ◽  
Short Run

Purpose An aggregate production function has been used in macroeconomic analysis for a long time, even though it seems that it is conceptually confusing and problematic. The purpose of this paper is to argue that the measurement problem related to the heterogenous capital input that exists in macroeconomics is also relevant to microeconomic market situations. Design/methodology/approach The author constructed a microeconomic market model to address both the problems of the measurement of the physical capital and of substitutability between labor and capital in the short run using two types of technologies: labor neutral and labor reducing. The author proposed that labor and physical capital inputs are complementary in the short run and can become substitutes only in the long run when the technology advances. Findings The author found that even if the technology improves at a fast rate over time, there are then diminishing returns of profits to technology and an upper limit to profits. Moreover, the author showed that under the labor-reducing technology, labor class earns more initially as technology improves, but their incomes start declining after some threshold level of passage of time. Originality/value The author cautioned the applied researcher that the estimated labor and capital coefficients of generalized Cobb–Douglas and constant elasticity of substitution of types of production functions could not be interpreted as partial elasticities of labor and capital if in reality the data come from fixed-proportions types of processes.

The Effect of New Deal Policies Revisited

2020 ◽  
Author(s):  
Yangyang Ji
Keyword(s):  
New Deal ◽  
Aggregate Demand ◽  
American Economic Review ◽  
Supply Side ◽  
Natural Rate ◽  
Jel Codes ◽  
The Great Depression ◽  
Us Economy ◽  
The Us ◽  
The New Deal

Abstract Eggertsson (2012, American Economic Review, 102, 524–55) finds that when the nominal interest rate hits the zero lower bound, the aggregate demand (AD) curve becomes upward-sloping and supply-side policies that reduce the natural rate of output, such as the New Deal implemented in the 1930s, are expansionary. His analysis is restricted to a conventional equilibrium where the AD curve is steeper than the aggregate supply (AS) curve. Recent research, however, demonstrates that an alternative equilibrium arises if the AD curve is flatter than the AS curve. In that case, the same policies become contractionary. In this article, I allow for both possibilities, and let data decide which equilibrium the US economy actually resided in during the Great Depression. Following the work of Blanchard and Quah (1989, American Economic Review, 79, 655–73), I find that there is a high probability that New Deal policies were contractionary. (JEL codes: E32, E52, E62, N12).

Cooperatives: an alternative to water privatization in Greece

2014 ◽  
Vol 10 (2) ◽  
pp. 135-154 ◽  
Author(s):  
Ifigeneia Douvitsa ◽  
Demosthenis Kassavetis
Keyword(s):  
Design Methodology ◽  
Water Distribution ◽  
Water Privatization ◽  
Negative Effects ◽  
Content Type ◽  
Negative Results ◽  
Viable Solution ◽  
Water Provision ◽  
First Time ◽  
Practical Implications

Purpose – The aim of this article is to investigate the organization of water cooperatives in Greece for the first time, as promoted by a spontaneous social mobilization called Initiative 136. The above attempt appears as an alternative proposition as opposed to the state-driven full privatization of EYATH S.A. Design/methodology/approach – This article presents previous work on water cooperatives and the negative effects of water privatization worldwide, relating it to water privatization in Greek reality through the prism of the current recession. Findings – While full privatization under the pressure of the economic crisis is very likely to yield significantly negative results, a transformation into a water cooperative might provide a viable solution. Research limitations/implications – Water cooperatives provide a solution for water distribution that is friendly for the consumer, the society and the environment. Practical implications – Application of a cooperative method of water provision in Greece could be a springboard for the use of the model in other areas. Originality/value – The article evaluates the privatization and cooperativization attempt of EYATH S.A. based on previous related research and considering Greece ' s current conditions.

scholarly journals The Influence of Bisphenol A (BPA) on Neuregulin 1-Like Immunoreactive Nerve Fibers in the Wall of Porcine Uterus

2018 ◽  
Vol 19 (10) ◽  
pp. 2962 ◽  
Author(s):  
Liliana Rytel
Keyword(s):  
Bisphenol A ◽  
Nerve Fibers ◽  
Double Immunofluorescence ◽  
Negative Effects ◽  
Protective Mechanisms ◽  
Neuregulin 1 ◽  
Small Doses ◽  
The Impact ◽  
First Time

Bisphenol A (BPA), a substance commonly used in the manufacture of plastics, shows multidirectional negative effects on humans and animals. Due to similarities to estrogens, BPA initially leads to disorders in the reproductive system. On the other hand, it is known that neuregulin 1 (NRG-1) is an active substance which enhances the survivability of cells, inhibits apoptosis, and protects tissues against damaging factors. Because the influence of BPA on the nervous system has also been described, the aim of the present study was to investigate for the first time the influence of various doses of BPA on neuregulin 1-like immunoreactive (NRG-1-LI) nerves located in the porcine uterus using the routine single- and double-immunofluorescence technique. The obtained results have shown that BPA increases the number and affects the neurochemical characterization of NRG-1-LI in the uterus, and changes are visible even under the impact of small doses of this toxin. The character of observed changes depended on the dose of BPA and the part of the uterus studied. These observations suggest that NRG-1 in nerves supplying the uterus may play roles in adaptive and protective mechanisms under the impact of BPA.

scholarly journals Delayed negative effects of prosocial spending on happiness

2020 ◽  
Vol 117 (12) ◽  
pp. 6463-6468 ◽  
Author(s):  
Armin Falk ◽  
Thomas Graeber
Keyword(s):  
Prosocial Behavior ◽  
Causal Relationship ◽  
Human Life ◽  
Behavioral Experiment ◽  
Negative Effects ◽  
Apparent Absence ◽  
Prosocial Spending ◽  
Short Run ◽  
Positive Effect ◽  
Random Variation

Does prosocial behavior promote happiness? We test this longstanding hypothesis in a behavioral experiment that extends the scope of previous research. In our Saving a Life paradigm, every participant either saved one human life in expectation by triggering a targeted donation of 350 euros or received an amount of 100 euros. Using a choice paradigm between two binary lotteries with different chances of saving a life, we observed subjects’ intentions at the same time as creating random variation in prosocial outcomes. We repeatedly measured happiness at various delays. Our data weakly replicate the positive effect identified in previous research but only for the very short run. One month later, the sign of the effect reversed, and prosocial behavior led to significantly lower happiness than obtaining the money. Notably, even those subjects who chose prosocially were ultimately happier if they ended up getting the money for themselves. Our findings revealed a more nuanced causal relationship than previously suggested, providing an explanation for the apparent absence of universal prosocial behavior.

scholarly journals Technological Progress, Globalization, and Secular Stagnation

2018 ◽  
Vol 7 (1) ◽  
pp. 59-100 ◽  
Author(s):  
Milenko Popović
Keyword(s):  
World Economy ◽  
Aggregate Demand ◽  
Careful Analysis ◽  
Developed Countries ◽  
Supply Side ◽  
Critical Survey ◽  
Technological Advancement ◽  
Secular Stagnation ◽  
Dual Economy ◽  
The Usa

AbstractAfter the 2008 crisis, despite economic recovery that started in 2009, the world economy has experienced a downward shift of its growth path and a consequent decline. As shown at the beginning of this paper, this shift and growth rate stagnation are totally attributable to the economic dynamics in developed economies, the USA and the EU. Explanations of this phenomenon can be divided into two large groups: explanations that belong to the demand side and those that belong to the supply side. The aim of this paper is to give a critical survey of the most important explanations for the ongoing growth stagnation in developed countries and consequently in the entire world economy. This ongoing prolonged stagnation can only be explained by looking at both, the demand and supply sides of the explanation, and particularly by taking a closer look at the interaction between aggregate demand and aggregate supply. In other words, secular stagnation manifests itself as a problem of the limitation of long run growth of aggregate demand. However, in order to explain the causes of those demand limitations, we have to undertake a careful analysis of the supply side dynamics, especially the dynamics of innovations, which bring us to circular and cumulative causation. In order to explain the numerous consequences of this stagnation and to solve some important puzzles, like the productivity paradox for example, a special emphasis is given to the analysis of deindustrialization and the consequent strange reoccurrence of a dual economy within most developed countries during the period of the IT revolution and hyper-globalization. It will also be shown that this new dual economy presents serious limitations for further technological advancement and economic development, quite contrary to the old dualism which contributed to an acceleration of economic growth.

Sign in / Sign up

Export Citation Format

Share Document