scholarly journals Capitalizing on Economic Function of the Institution of Zakāt in Modern Economy

2018 ◽  
Vol 3 (4) ◽  
pp. 33-49
Author(s):  
Salman Ahmed Shaikh
Keyword(s):  
Business Cycles ◽  
Poverty Alleviation ◽  
Aggregate Demand ◽  
Accounting Standards ◽  
Economic Potential ◽  
Welfare Programs ◽  
Modern Economy ◽  
Automatic Stabilizer ◽  
Implementation Level ◽  
Economic Function

This study analyzes the economic potential of the institution of Zakāt on income redistribution, poverty and aggregate demand. Through a mathematical exposition, we show that if a person keeps idle investible wealth, then Zakāt will deplete the idle wealth over time. On the macroeconomic front, proportional Zakāt linked with income will act as an automatic stabilizer. If an economy is in disequilibrium and policies fail to immediately recover and boost incomes, wealth Zakāt will enable the distributive allocation that works independently of the business cycles and will help in stabilizing the extremes of the business cycles. In this way, wealth Zakāt will act as a permanent stabilizer. We discuss that Zakāt is an important tool for redistributing income and it can also increase aggregate spending. The redistribution from people with lower MPC to people with higher MPC will boost aggregate spending even with the same level of aggregate income. Finally, we recommend certain steps at the policy and implementation level so that the institution of Zakāt can be effectively utilized to contribute in poverty alleviation. We recommend that it is appropriate to disburse Zakāt at the federal level. This way, the regional disparities can be reduced more effectively. To gain the trust and the confidence of people, it is vital to improve the governance and transparency. In this regard, we recommend that the Zakāt collection and disbursement details shall be reported in a standard way periodically. We also highlight the importance of creating synergies between Zakāt and other welfare programs. We also draw attention towards modifying the accounting standards to achieve transparent computation, assessment and collection.

scholarly journals Business Cycles in Algerian Economy: A Bayesian DSGE Approach

2018 ◽  
Vol 2 (1) ◽  
pp. 72-100
Author(s):  
Abdelsalam BOUKHEROUFA
Keyword(s):  
Time Series ◽  
Business Cycles ◽  
Business Cycle ◽  
Equilibrium Model ◽  
Government Spending ◽  
Aggregate Demand ◽  
Dynamic Stochastic General Equilibrium ◽  
Business Cycle Fluctuations ◽  
Output Fluctuations ◽  
Dynamic Stochastic

The main objective of this paper is to highlight the most important shocks that drives the business cycles in the Algerian economy. Using Bayesian estimation techniques, we estimate a dynamic stochastic general equilibrium model (DSGE) using four time series of the Algerian macroeconomics. Through this estimated model, which succeeded in capturing the dynamics of the Algerian economy data, we found three main results: First, the main causes of business cycle fluctuations in the Algerian economy are aggregate demand shocks. Second, the of government spending shock play the most important role in output fluctuations. Third, empirical results show evidences of procyclical in government spending policies.

scholarly journals The Aggregate Implications of Regional Business Cycles

Econometrica ◽  
2019 ◽  
Vol 87 (6) ◽  
pp. 1789-1833 ◽  
Author(s):  
Martin Beraja ◽  
Erik Hurst ◽  
Juan Ospina
Keyword(s):  
Business Cycles ◽  
Great Recession ◽  
Aggregate Demand ◽  
Strong Relationship ◽  
Aggregate Data ◽  
New Keynesian ◽  
Aggregate Fluctuations ◽  
Wage Dynamics ◽  
The Great Recession ◽  
Wage Stickiness

Making inferences about aggregate business cycles from regional variation alone is difficult because of economic channels and shocks that differ between regional and aggregate economies. However, we argue that regional business cycles contain valuable information that can help discipline models of aggregate fluctuations. We begin by documenting a strong relationship across U.S. states between local employment and wage growth during the Great Recession. This relationship is much weaker in U.S. aggregates. Then, we present a methodology that combines such regional and aggregate data in order to estimate a medium‐scale New Keynesian DSGE model. We find that aggregate demand shocks were important drivers of aggregate employment during the Great Recession, but the wage stickiness necessary for them to account for the slow employment recovery and the modest fall in aggregate wages is inconsistent with the flexibility of wages we observe across U.S. states. Finally, we show that our methodology yields different conclusions about the causes of aggregate employment and wage dynamics between 2007 and 2014 than either estimating our model with aggregate data alone or performing back‐of‐the‐envelope calculations that directly extrapolate from well‐identified regional elasticities.

Albert Aftalion's Macrodynamic Theory of Endogenous Business Cycles

1997 ◽  
Vol 19 (1) ◽  
pp. 71-92 ◽  
Author(s):  
Cecile Dangel ◽  
Alain Raybaut
Keyword(s):  
Business Cycles ◽  
Scientific Community ◽  
Aggregate Demand ◽  
Cyclical Fluctuations ◽  
Endogenous Business Cycles ◽  
Careful Specification ◽  
The Law ◽  
The Business Cycle ◽  
Monetary Business Cycles ◽  
Desperate Attempt

Albert Aftalion is certainly one of the best known French economists of the first half of the twentieth century. The influence he exerted during his lifetime over the scientific community of his homeland was considerable, and he was promptly acknowledged abroad to be one of the leading theorists of the business cycle. While he is best known as one of the inventors of the acceleration principle (Haberler 1937), we will focus on Aftalion's endogenous explanation of non-monetary business cycles and, more specifically, on the theoretical framework supporting Les crises périodiques de surproduction. Though this work can be seen as a mere “(desperate) attempt” to reconcile the law of markets with general overproduction (Abraham-Frois 1987), we argue instead that Aftalion's failure to construct an equilibrium theory of aggregate overproduction can be traced back to his inadequate treatment of aggregate demand. According to him, long roundabout processes are what generate cyclical fluctuations within a setting in which commodities produced and brought to the market always find an outlet. In other words, the law of markets implies market clearing where declines in prices instead of involuntary stock-building occur in the event of a crisis. How demand behaves in such a setting requires careful specification, which is precisely what is lacking in Aftalion's model.

scholarly journals A Theory of Demand Shocks

2009 ◽  
Vol 99 (5) ◽  
pp. 2050-2084 ◽  
Author(s):  
Guido Lorenzoni
Keyword(s):  
Business Cycles ◽  
Aggregate Demand ◽  
Aggregate Productivity ◽  
Productivity Shocks ◽  
Demand Shocks ◽  
The Public ◽  
Long Run ◽  
Short Run ◽  
Public Signal ◽  
Heterogeneous Productivity

This paper presents a model of business cycles driven by shocks to consumer expectations regarding aggregate productivity. Agents are hit by heterogeneous productivity shocks, they observe their own productivity and a noisy public signal regarding aggregate productivity. The public signal gives rise to “noise shocks,” which have the features of aggregate demand shocks: they increase output, employment, and inflation in the short run and have no effects in the long run. Numerical examples suggest that the model can generate sizable amounts of noise-driven volatility. (JEL D83, D84, E21, E23, E32)

scholarly journals The return to keynesianism in overcoming cyclical fluctuations?

2008 ◽  
Vol 53 (177) ◽  
pp. 30-58
Author(s):  
Aleksandra Prascevic
Keyword(s):  
Economic Policy ◽  
Business Cycles ◽  
Business Cycle ◽  
Demand Management ◽  
Aggregate Demand ◽  
Economic Recession ◽  
Economic Science ◽  
Business Cycle Theory ◽  
Cyclical Fluctuations ◽  
The Usa

The problems faced by the American economy in the second half of 2007, which intensified in 2008, have once again asked economic science, and even more so economic policy, questions relating to business cycles - the reasons for cyclical fluctuations, the character of business cycles and, naturally, economic policy measures that can be implemented to alleviate and overcome an economic recession. Since the 1970s, business cycle theories have been intensively developed - ranging from monetary theories, developed within monetarism and the first phase of New Classical Macroeconomics, to the real business cycle theory of New Classical Macroeconomics. Consequently, the triggers for the beginning of a cycle can be monetary (monetary theories) or real in the form of technological shocks (real business cycles). In essence economic policy conducted since the 1970s, has rejected the Keynesian explanations of the functioning of the economic system, and thus the policy of aggregate demand management. However, the measures that are now being implemented in the USA point to a return to Keynesianism. This refers, above all, to attempts to compensate for the inefficiency of monetary policy with fiscal expansion. All three psychological propensities (propensity to consume, propensity to invest and liquidity preference) in Keynes's theory and applied in Keynesian economic policy, are still the significant determinants of monetary and fiscal policies. The return to Keynesianism points to the depth of the crisis faced by the USA, but also confirms the vitality of Keynesian economics and affirms the view that - although Keynes wished to present his theory as being "general" - it is actually the theory of economic depression.

scholarly journals Green Economy in Hotel Business of EU Countries

2013 ◽  
pp. 254-259
Author(s):  
K. I. Shchetinina
Keyword(s):  
Poverty Alleviation ◽  
Green Economy ◽  
Economic Potential ◽  
Decent Work ◽  
Economic Sectors ◽  
Tourism Sector ◽  
Economic Paradigm ◽  
The World ◽  
Green Tourism ◽  
Green Investment

Tourism today is one of the fastest growing economic sectors in the world. The article gives a brief review of a new economic paradigm and development model: a green economy. It shows how green investment in European tourism sector can contribute to economically viable and robust growth, decent work creation and poverty alleviation, while improving resource efficiency and minimising environmental degradation. Much of the economic potential for green tourism is found in small and medium-sized enterprises (SMEs), which need better access to financing for investing in green tourism. Investments and policies of European Union government can leverage private sector actions on green tourism.

scholarly journals The Significance of Federal Taxes as Automatic Stabilizers

2000 ◽  
Vol 14 (3) ◽  
pp. 37-56 ◽  
Author(s):  
Alan J Auerbach ◽  
Daniel Feenberg
Keyword(s):  
Income Tax ◽  
Aggregate Demand ◽  
Similar Magnitude ◽  
Tax System ◽  
Automatic Stabilizer ◽  
Federal Taxes ◽  
The Many ◽  
Automatic Stabilizers

Using the TAXSIM model for the period 1962-95, we consider the federal tax system's impact as an automatic stabilizer. Despite the many changes in the tax system, there has been relatively little change in its role as an automatic stabilizer. We estimate that individual federal taxes offset perhaps as much as 8 percent of initial shocks to GDP. We also suggest that the progressive income tax may help to stabilize output via its effect on the supply of labor, an additional effect that may even be of similar magnitude to the more traditional path of stabilization through aggregate demand.

Community participation for rural poverty alleviation: A case of the Iban community in Malaysia

2017 ◽  
Vol 61 (4) ◽  
pp. 518-536 ◽  
Author(s):  
Kwok Chin Hoe ◽  
Haris Abd Wahab ◽  
Siti Hajar Abu Bakar ◽  
M Rezaul Islam
Keyword(s):  
Community Participation ◽  
Poverty Alleviation ◽  
Rural Poverty ◽  
Influential Factors ◽  
Survey Questionnaire ◽  
Policy Makers ◽  
Important Indicator ◽  
Independent Variables ◽  
Dependent Variables ◽  
Implementation Level

This study aimed to uncover the influential factors of community participation in a rural poverty alleviation programme in Malaysia. A quantitative approach was used, and data were collected through a self-administered survey questionnaire from 260 respondents of the Iban community in Malaysia. The study considered 22 influential factors (18 as independent variables and 4 as dependent variables) to measure the level of community participation in decision-making, implementation, benefits sharing and evaluation. The study explored how these influential factors interacted with participation in a rural poverty alleviation programme. The results found a diversity of interacting factors within the forms of participation at the implementation level. The article contributes a dynamic and multi-dimensional understanding of how influential factors shape community participation processes. The findings are an important indicator to policy-makers and development practitioners.

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