scholarly journals Investment Sustained by Consumption: A Linear and Nonlinear Time Series Analysis

2019 ◽  
Vol 11 (16) ◽  
pp. 4381 ◽  
Author(s):  
Jose Perez-Montiel ◽  
Carles Manera Erbina
Keyword(s):  
Causal Relationship ◽  
Private Consumption ◽  
Public Expenditure ◽  
Empirical Studies ◽  
Aggregate Demand ◽  
Government Expenditure ◽  
Investment Decisions ◽  
The United States ◽  
The European Union ◽  
Long Run

This paper studies the dynamic relationship between consumption and investment in the United States between 1947 and 2018. Our findings support the postulates of Keynesian economics—while they are contrary to the theoretic background on which the numerous empirical studies on the saving-investment nexus are based. We find a long-run nexus between consumption and investment, and positive linear Granger-causality running unidirectionally from consumption to investment. Therefore, investment is sustained by consumption. Further, we find that the variables have nonlinear structures and, thus, we apply nonlinear causality tests. We provide evidence of nonlinear causality running unidirectionally from consumption to investment. Nevertheless, after controlling for Government Expenditure, this nonlinear causal relationship disappears, indicating that Government Expenditure drives the nonlinear causal relationship between private consumption and investment. We argue that this finding is consistent with the notion that investment decisions are guided by permanent aggregate demand, because public expenditure allows private consumption to have a sufficiently permanent trajectory to be considered as a guide for investment decisions. Our results do not support the austerity and deflation measures implemented in the last years (especially in the European Union). On the other hand, our findings call for the incentive of final public expenditure, since it favours the long-run link between the private decisions to consume and invest.

scholarly journals Determinants of Indonesia’s National Income: An Auto-Regressive Distributed Lag Analysis

2020 ◽  
Vol 9 (2) ◽  
pp. 207-218
Author(s):  
Prihartini Budi Astuti ◽  
Nur Khasanah
Keyword(s):  
Economic Growth ◽  
Aggregate Demand ◽  
Government Expenditure ◽  
National Income ◽  
The United States ◽  
Jel Classification ◽  
Distributed Lag ◽  
Long Run ◽  
Auto Regressive ◽  
The Government

At the end of 2019, most countries experienced an economic slowdown due to a trade war between the United States and China. According to macroeconomic theory, aggregate demand is one of the factors that influence economic growth. This study aims to add the debate and fill the gap by studying the relationship between aggregate demand and economic growth in the case of Indonesia. Using an Auto-Regressive Distributed Lag analysis, the results indicate that in the long-run, household consumption and investment had a positive effect on Indonesia's national income in 2010-2019. It means that the government must continue to make policies to maintain the purchasing power of Indonesian consumers, so that public consumption remains high, and maintaining the investment climate to be more conducive. On the other hand, government expenditure and net exports variables have no impact on Indonesia's national income in 2010-2019.JEL Classification: E01, E12, O47How to Cite:Astuti, P. B., & Khasanah, N. (2020). Determinants of Indonesia’s National Income: An Auto-Regressive Distributed Lag Analysis. Signifikan: Jurnal Ilmu Ekonomi, 9(2), 207-218. https://doi.org/10.15408/sjie.v9i2.14469.

scholarly journals Testing the Existence of the Ricardian Equivalence in Ghana in this 21st Century

1970 ◽  
Vol 2 (2) ◽  
pp. 16-27
Author(s):  
Okwan Frank ◽  
Kovacs Peter
Keyword(s):  
Time Series Data ◽  
Aggregate Demand ◽  
Government Expenditure ◽  
Gdp Per Capita ◽  
Series Data ◽  
Ricardian Equivalence ◽  
Consumption Expenditure ◽  
Model Framework ◽  
Long Run ◽  
Per Capita

The Ricardian Equivalence Hypothesis formulated by a classical British economist David Ricardo argues that a reduced tax now is a tax increase in the future, the substitution of debt for current taxes has no effect on aggregate demand. The main objective of this paper is to examine empirically the existence of the Ricardian equivalency in Ghana by using time series data running from 1990 to 2017 and ARDL bound testing approach to cointegration and Error Correction Model framework developed by Pesaran and Shin (1995,1999). We examined the long run relationship between the dependent variable household final consumption expenditure and independent variables government expenditure, deficit, GDP per capita and gross debt. The long run results showed a positive and significant relationship between GDP per capita and household consumption expenditure. The result of analysis supports the Keynesian conventional theory and found strong evidence against the existence of the Ricardian Equivalency Hypothesis in Ghana.

scholarly journals Impact of Public Debt, Deficit and Debt Financing on Private Investment in a Large Country: Evidence from the United States

2020 ◽  
Vol 6 (2) ◽  
pp. 139-161
Author(s):  
Amir Kia
Keyword(s):  
Public Debt ◽  
Public Investment ◽  
Government Expenditure ◽  
Private Investment ◽  
Adjustment Costs ◽  
The United States ◽  
Direct Impact ◽  
Large Country ◽  
Long Run ◽  
Short Run

This paper analyses the direct impact of fiscal variables on private investment. The current literature ignores one or more fiscal variables and, in many cases, the foreign financing of debt. In this paper, an aggregate investment function for an economy in which firms incur adjustment costs in their investment process is developed. The developed model incorporates the direct impact of government expenditure, public debt and investment, deficits and foreign-financed debt on private investment. The model is tested on US data. It is found that public investment does not have any impact on private investment, but government expenditure, deficit, debt and foreign-financed debt crowd out private investment over the long run. However, deficit crowds in the private investment over the short run.

scholarly journals Assessment of Biotechnology Policies and International Trade in Key Markets for U.S. Agriculture

2005 ◽  
Vol 37 (2) ◽  
pp. 379-391 ◽  
Author(s):  
Mary A. Marchant ◽  
Baohui Song
Keyword(s):  
United States ◽  
The United States ◽  
International Markets ◽  
The European Union ◽  
Department Of Agriculture ◽  
Agricultural Exports ◽  
Biotechnology Research ◽  
Long Run ◽  
The World ◽  
The Eu

The United States leads the world in agricultural biotechnology research, adoption, commercialization, and exports. Our biotech commodities are highly dependent on international markets. Thus, any biotech policy changes by key importing countries may affect U.S. agricultural biotech product exports. This article identifies key markets for U.S. agricultural exports including biotech commodities and discusses current and proposed biotech policies in key markets for U.S. agricultural exports focusing on Canada, Mexico, Japan, the European Union (EU), and China. Among these markets, labeling of biotech products is voluntary in Canada and Mexico but is mandatory in Japan, the EU, and, most recently, in China. For the EU, U.S. corn exports were almost completely shut out, while U.S. soybean exports also declined because of the EU's biotech policies. The World Trade Organization dispute filed by the United States has yet to be finalized. China's biotech regulations raised concern by U.S. agricultural exporters. However, through U.S. Department of Agriculture education programs, U.S.–China negotiations, and China's domestic soybean shortage, China's biotech regulations do not appear to have had long-run impacts on U.S. soybean exports to China.

Electoral Cycles, Budget Controls and Public Expenditure

1981 ◽  
Vol 1 (1) ◽  
pp. 37-59 ◽  
Author(s):  
James Alt ◽  
K. Alec Chrystal
Keyword(s):  
United States Of America ◽  
Public Expenditure ◽  
Government Expenditure ◽  
National Income ◽  
The United States ◽  
Stabilization Policy ◽  
Policy Models ◽  
Income Model ◽  
Economic Stabilization ◽  
Rates Of Growth

ABSTRACTThis paper presents the results of tests of a number of models of public expenditure growth which have achieved wide currency. The main types of models examined are a permanent income model, electoral cycle models, and stabilization policy models. The models are tested with data from Britain and the United States of America and the results are compared with evidence from other countries. The paper concludes that government expenditure grows in proportion to national income because politicians find it convenient to plan that way; electoral-cyclical factors are relatively unimportant in determining public expenditure; there appears to be a limited role for public expenditure in economic stabilization policy; in a comparative context institutions of expenditure control are important in determining relative rates of growth of public sector consumption expenditure.

Health Technology Assessment. Literature Review.

2020 ◽  
Author(s):  
Jana ROZMARINOVÁ
Keyword(s):  
Health Technology Assessment ◽  
Technology Assessment ◽  
Public Expenditure ◽  
Empirical Studies ◽  
Health Technology ◽  
The United States ◽  
Complex Process ◽  
The Us ◽  
Healthcare Interventions ◽  
Almost All

Health Technology Assessment (HTA) is one of the tools that can be used to support rational and objective decision-making in healthcare in the endeavour to contain public expenditure while maintaining the availability of healthcare interventions. The complex process of HTA often struggles to find its place in public policies and faces pressure from various stakeholders. HTA has existed since the 1970s and as a formal process has its roots in the United States. During the 1980s, HTA began to spread outside the US and over the next twenty years, reached almost all European countries, including some countries in Central Europe. The rise of HTA brought about an exponential increase in the empirical studies of HTA available in academic databases. This study reviews the available literature to analyse the development and research topics and the potential pitfalls of HTA implementation.

Comment: On “Long-Run Growth of Nondefense Government Expenditures in the United States”

1975 ◽  
Vol 3 (4) ◽  
pp. 411-414 ◽  
Author(s):  
Jack Wiseman ◽  
Jack Diamond
Keyword(s):  
Cold War ◽  
Public Expenditure ◽  
Public Spending ◽  
The United States ◽  
Relative Prices ◽  
Explanatory Variables ◽  
Long Run ◽  
Operational Theory ◽  
The Cold War ◽  
Baumol's Disease

The paper by Tussing and Henning (1974), which recently appeared in this journal, falls into two parts. One reviews the “determinants” literature: the other presents the authors' own empirical results. The first part properly emphasises the need for a comprehensive approach to the determinants of public expenditure, although some causal influences (e.g., political considerations) appear to be neglected. This emphasis is a welcome recognition that in this field of research we are still concerned essentially with hypothesis formulation: attention needs to be directed primarily to the identification of the important explanatory variables. Unfortunately, despite the breadth of their perspective, Tussing and Henning appear overly ambitious in interpreting their own results. Causal interpretation requires a preconceived idea of what the significant determining variables are, which is difficult in the absence of an operational theory of the fiscal decisionmaking process. In place of this they have adopted a market analogue, which leads to a demand interpretation of expenditure growth. The growth in public spending is thus a function of income, of relative prices (“Baumol's disease”), and of numerous other specific demands (e.g., urbanization, the collectivization of social security, transportation technology, the cold war).

scholarly journals Does National Debt Matter? -Analysis Based on The Economic Theories

2021 ◽  
Vol 9 (3) ◽  
pp. 100-103
Author(s):  
Alex Han
Keyword(s):  
Global Financial Crisis ◽  
Government Expenditure ◽  
The United States ◽  
Order Theory ◽  
National Debt ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Long Run ◽  
Retained Earnings ◽  
A Company

The national debt has been increasing at a higher percentage than the GDP of the United States. Since the 2008 Global Financial Crisis, national increased dramatically since the country borrowed to finance its expenditures. Moreover, with the onset of the Covid-19 pandemic, national debt increased to 105% of the GDP. There have been worries about whether the national debt is a matter of concern, and many theories have been developed to explain national debt. The classical economists advocated for a     balanced budget where taxes finance government expenditure. Keynes argued that governments should borrow to finance their spending to avoid a decrease in demand. The pecking order theory argued that when businesses use all their retained earnings, they should prefer debts to equity to finance their    expenditures. Trade-off theory advocated for financing through debt because it is cheaper. Debt     payments of a company are deductible through tax, and less risk is involved when taking debt than    equity. Finally, the neoclassical economists assumed that government debt has a one-time maturity and pays the current interest rate. Using the concepts of these theories, it is clear that national debt should not be a matter of concern because it is cheaper to pay debt than equity and debt benefits a country in the long run.

Federalism as a Theory of Regional Integration

2018 ◽  
Author(s):  
Søren Dosenrode
Keyword(s):  
European Union ◽  
Regional Integration ◽  
Central Government ◽  
Empirical Studies ◽  
The United States ◽  
Political Organization ◽  
Final Decision ◽  
The European Union ◽  
Integration Process ◽  
Cultural Elements

Federations have existed in a modern form since the constitution of the United States entered into force in 1789. Riker defines a federation as follows (1975, p. 101) “a political organization in which the activities of government are divided between regional governments and a central government in such a way that each kind of government has some activity on which it makes final decision.” The process of getting to the federation, the integration process, is best described as federalism.There is some agreement on the core of what a federation is, and some disagreement over whether to apply the term “federation” strictly to states and state-like actors or in a broader sense. Federations are concrete ways to organize government, but in many writings, they are also given positive attributes, such as enhanced democracy and efficiency, too.There are two ways to think about federalism: as a politico-ideological theory of action and as an academic theory of regional integration. The first theory is propagated by writers such as Richard Coudenhove-Kalergi, Jean Monnet, and Altiero Spinelli. This theory is of political rather than academic interest. Academic theories of regional integration are divided into two groups, following the common practice in international relations theory: liberal theories (by far the largest group) and realist theories.Federalism theory as a theory of regional integration was abandoned too early because, inter alia, it had been linked to the development of the European Community, which was in crisis from the mid-1970s till the mid-1980s. This was a mistake. Federalism theory provides the scholar with at least two tools. First, under the title “federation,” it introduces a large number of theories, methods, and empirical studies on how to analyze the European Union and other regional integration projects. Second, as a federalism theory, especially in the realist or the Riker-McKayian version, it provides a theory of how countries may unite peacefully. This approach must be developed in terms of (a) the concept of threat, which must be broadened to include economic, social, and cultural elements, and (b) the role of a basic common culture, which primarily facilitates the founding of the federation and constitutes the foundation securing the maintenance of the new federation.A brief analysis of the development of today’s European Union, following the realist approach, demonstrates that, broadly speaking, a correspondence exists between threat and the integration process: In times of threat, the process of integration and federalization advances; in periods of peace and no crisis, the integration process stagnates.

Contemporary Survey on the Empirical Literature of Islamic Finance and Economic Growth Relationship

2019 ◽  
Vol 8 (2) ◽  
pp. 14-26
Author(s):  
Ibrahim Musa Gani ◽  
Zakaria Bin Bahari
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Significant Contribution ◽  
Empirical Studies ◽  
Empirical Literature ◽  
Islamic Finance ◽  
Real Economy ◽  
The Real ◽  
Long Run ◽  
Short Run

Financial sector activities are part of the main ingredients for the growth of any economy. The financial activities that were most widely practiced are Interest-based conventional financial activities which are prohibited in Islam. Thus, non-interest Islamic financial activities were introduced and it has been accepted and practiced all around the globe. Therefore, this study surveyed, explored and analysed using library review method, the empirical studies conducted on Islamic finance and the economic growth nexus. The study revealed that the majority of the findings of the empirical studies are in support of a positive and significant contribution of Islamic finance to the growth of the real economy in short run and long run, few of the findings indicate an insignificant contribution. The causal relationship between Islamic finance and growth is mostly bi-directional as reported in many of the studies, but supply leading hypothesis also emerged in some of the few studies. It was concluded that Islamic finance is immensely contributing to the growth of the real economy.

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