Inescapable Role of Real Currency Convertibility

The invention of paper money created a major new problem: how to ensure its value. Historically, the most reliable means of preserving and stabilizing the value of paper currency has been for those issuing paper money to guarantee to convert their notes, on demand, into real assets, at a specified rate of exchange. The most common asset used for this has been gold, which has been effective in preserving the value of currency over a century or more, but this has not prevented serious economic fluctuations. Consequently, for more than a century, economists have argued that it would be more effective to make currency convertible on demand into a range of commodities. Unfortunately, efforts to devise a means of achieving this have not succeeded to date.

Neglected Theories of Business Cycle—Alternative Ways of Explaining Economic Fluctuations

The business cycle is a frequent topic in economic research; however, the approach based on individual strategies often remains neglected. The aspiration of this study is to prove that the behavior of individuals can originate and fuel an economic cycle. For this purpose, we are using an algorithm based on a repeated dove–hawk game. The results reveal that the sum of output in a society is affected by the ratio of individual strategies. Cyclical changes in this ratio will be translated into fluctuations of the total product of society. We present game theory modelling of a strategic behavioral approach as a valid theoretical foundation for explaining economic fluctuations. This article offers an unusual insight into the business cycle’s causes and growth theories.

Global economic fluctuations and human development: how is the impact transmitted in Egypt?

Purpose This paper aims to investigate the relationship between global economic fluctuations and human development through four transmission channels (foreign direct investment (FDI), official development aid (ODA), remittances and export earnings) in Egypt as an open developing economy, in the period 1990–2015. Design/methodology/approach The paper uses a vector autoregressive model, which implies examining the impulse response functions and variance decompositions. Findings The results indicate that human development is negatively affected by global economic fluctuations through the four channels, namely, ODA, FDI, export earnings and remittances. In addition, the most effective transmission channels are FDI in the short run and export earnings in the long run. Originality/value While a large body of literature addresses the direct impact of business cycles and economic shocks on human development, only some studies focus on the indirect impact. The contribution is to identify the indirect impact of global economic fluctuations on human development in a developing economy, considering four transmission channels and to determine the most important of these channels. Moreover, using the human development index is an addition in this paper as most previous literature depends on other human development indicators such as children’s health, employment and schooling.