Considering unemployment in Ecuador during the Great Depression

The Great Depression struck Latin America through the commerce: the reduction in revenues from the external commerce spread to the rest of the economy, resulting in the continue decreasing of the monetary supply. The Ecuadorian monetary policy until 1932, based on the gold standard, faced the phenomenon of deflation, which caused real salaries to grow. Since 1932, the monetary supply increased due to the abandonment of the gold standard, which caused real wages to decreased. In the same period, from 1928 to 1935, the primary data of the central offices of eight institutions shows that public employment decreased abruptly from 1928 to 1930, from 109.4 to 83.1 points (1927=100). After 1930, there was a quick recovery until 1932, and, from this point in time, it remained relatively stable until 1935. This article constructs, for the first time in the Ecuadorian historiography, an employment index which serves to see employment as the adjustment variable of the Great Depression.

Considerations on Fractional Reserve Banking and Free-Banking

In this article, our goal is to examine a controversy very dear to Austrian economists: that of the legitimacy of the fractional reserve banking system, defined as a system in which the bankers keep in their vaults a quantity of money (narrowly defined) lower than the quantity of cash deposits granted to their clients. In the Austrian vision, the monetary supply, broadly defined (Mises, 1971), consists of money properly said, plus monetary substitutes (bank notes, cash deposits), plus credit-money, this one corresponding to any future right to a monetary sum (time deposits, promissory notes, pre-fixed derivatives). In a narrow sense, money supply consists in money properly said (fiat-money or commodity money). We must, however, clarify some aspects of the money supply. Monetary substitutes have their origin in the monetary certificates. Monetary certificates, in their turn, are tools utilized to confer information about the medium of exchange. For instance, precious metal coins mintage confers information about the metal’s purity and about the weight of the coin; bank notes and current account balances confer information about the amount, overseer and proprietor of the deposited money. So, money certificates can change the agents’ valuations concerning the particular good in question, even being able of independent valuation. Monetary certificates can be physically connected to the medium of exchange or separated from it. In the case of physically connected monetary certificates, we have what we normally call monetary substitutes. Monetary substitutes can, due to their nature, work as property titles to the very medium of exchange. Contemporaneously, monetary substitutes usually can be identified with cash deposits (current account balances) and paper checks, provided that the use of bank notes is increasingly rare. Having made those clarifications concerning monetary substitutes, we will, following Mises (1971, p. 135), call fiduciary media the quantity of monetary substitutes that exceeds the quantity of money properly said. However, before proceeding with our Investigation about the consequences of the legalization of the production of fake monetary substitutes (fiduciary media), we must explain what would be a fake monetary substitute and the nature of this counterfeiting. We must, therefore, start our argumentation establishing some differences about the nature of loan and deposit contracts [x].

Accounts receivable from the chemical enterprises: factor analysis

This research analyzes the impact of certain factors upon the accounts receivable from chemical enterprises. The subject of this article is the accounts receivable, while the object is the Russian chemical enterprises. The goal lies in building a regression model of the dependence of accounts receivable from chemical enterprises on the explanatory factors selected in the course of analysis. The internal factors include sales revenue, net profit, accounts payable, management expenses, return on total assets, etc. The external factors include gross domestic product, monetary supply, and Networked Readiness Index. The author creates an econometric model based on the financial report data for 44 enterprises, and statistical information for the period from 2015 to 2019. The result of modeling reveals a considerable impact of such indicators as monetary resources, accounts payable, and management expenses upon the size of accounts receivable. The conclusion is made on the expansion of digital components of management expenses in the context of the goal of research. The novelty of this article is substantiated from the perspective of application of the acquired results for forecasting the level of accounts receivable and more effective management of the payables policy of the enterprise. It is noted that the internal financial and economic indicators have most impact upon the size of accounts receivable from chemical enterprises.

In Turkey, The Relationship of Agricultural Sector and Economic Variables: Panel Cointegration Analysis

That agricultural sector is examined closer from every point of view and is restructured in complied with the requirements of the age has to be structured comes to our face as a reality any longer accepted by every sector of the society. The various developments experienced in the world in the recent years have directly or indirectly affected agricultural sector. In the economy of Turkey, one of the countries attracting attention with its rapidly growing, there are many theoretical studies dealing with the direct or indirect contribution of agricultural sector. However, it is necessary to increase the number of the applied studies introducing the existing situation of the sector and enabling to develop the effective policies for the sector. For, it is highly important for the theories put forward in theoretical framework to be supported by empirical analyses in terms of forming effective policy suggestions. In the study, the three sub-sectors were considered such as the subsectors of cereal, legume, and fruit-vegetable and the existing situation of the sector was analyzed by moving from the macro variables. In order to identify the effects of macroeconomic variables (inflation, exchange rate, interest, monetary supply), selected in the direction of the aim of the study, panel cointegration test was utilized. Setting off from this point, when the analysis made in the study is examined for all sectors, it was identified that the variable affecting the sector the most was interest rate. When the results of panel cointegration test between interest rate and agricultural production were examined, while there was a negative directional relationship between the production of subsector “fruit vegetable” and the variable “interest” as expected, it attracts attention that there was a positive relationship between the subsector of cereal legume and interest in contrast to this.

Comparing Sentiment- and Behavioral-Based Leading Indexes for Industrial Production: When Does Each Fail?

We apply a relatively novel leading–lagging (LL) method to four leading and one lagging indexes for industrial production (IP) in Germany. We obtain three sets of results. First, we show that the sentiment-based ifo index performs best in predicting the general changes in IP (−0.596, range −1.0 to 1.0, −1.0 being best). The ZEW index is very close (−0.583). In third place comes, somewhat unexpectedly, the behavioral-based unemployment index (−0.564), and last comes order flow, OF (−0.186). Second, we applied the LL method to predefined recession and recovery time windows. The recessions were best predicted (−0.70), the recoveries worst (−0.32), and the overall prediction was intermediate (−0.48). Third, the method identifies time windows automatically, even for short time windows, where the leading indexes fail. All indexes scored low during time windows around 1997 and 2005. Both periods correspond to anomalous periods in the German economy. The 1997 period coincides with “the great moderation” in the US at the end of a minor depression in Germany. Around 2005, oil prices increased from $10 to $60 a barrel. There were few orders, and monetary supply was low. Our policy implications suggest that the ZEW index performs best (including recessions and recoveries), but unemployment and monetary supply should probably be given more weight in sentiment forecasting.

Trade-Off Phillips Curve, Inflation and Economic Implication: The Kenyan Case

This paper investigated the trade-off and inflation drivers based on the Phillips curve framework to determine the relationship and their impact between inflation, unemployment and output for Kenyan case from 2006:M1 to 2016:M12 by contrasting the 2SLS on 2 different measures of marginal cost with 3 differently instrumented shocks. Results confirmed; (1) significant trade-off that reduced inflation by 2.09% and 0.08% when unemployment and output respectively increase by 1%, while, 1% increase in output demeaned unemployment by 0.02%, (2) the forward-looking inflation and unemployment significantly drive observed inflation, and (3) unlike monetary supply, oil shocks best accounts for the observed dynamics. Although laudable policies been implemented by fiscal and macro-economic planners, they have not achieved the odds to sufficiently contain the import shocks, making both unemployment and the rational expectations to significantly drive the observed inflation. However, revisiting of the incumbent fiscal policies and their tight implementation would facilitate long term price stabilities to reduce the inflationary dynamics. To the significant import shocks, the state should foster feasible macro-economic diversifications, investments policies, modern technologies in real economic activity production, and renewable energy sourcing that would facilitate robust economic growth that would curb large revenue outflows due to commodity imports and cushioning the devaluation of the Kenyan shilling.

Relative Importance of Public Debts and Money Growth on Inflation in Nigeria

This paper investigates the relative importance of public debts and money growth on inflation in Nigeria from 1980 to 2015. Annual secondary data collected from World Development Indicators were used for the analysis. After examining the behaviour of the time series, Unrestricted Vector Autoregressive (VAR) technique of estimation is employed with a view to determining whether inflation is a monetary or fiscal phenomenon in Nigeria. The results show that, both in the short and long run, public debts accounts for a sizeable percentage in the variation of inflation rather than growth in monetary supply, making inflation a fiscal phenomenon in Nigeria. We therefore recommend that the attainment of fiscal solvency would be more effective in achieving price stability in Nigeria.

A Singaporean Study on Macroeconomic Variables Impacting Stock Returns

Stock market returns has increasingly become a leading indicator of a country’s economic performance. This explains academia’s growing interest in determining factors affecting stock returns. A majority of recent studies on Singapore’s economic performance focused centrally around policy impact or property prices, and not specifically on stock returns. This study aimed to fill this gap, by examining if, and how, historical movements in the Straits Times Index (STI) were explained by the S$NEER, Monetary Supply, CPI, Balance of Payments, Crude Oil Prices, Electricity Generated, GFCF, Industrial Production, Merchandise Trade, or Labour Cost. By utilizing a Structural Vector Auto regression (SVAR) Model, approximately 48% of the STI’s variance was collectively attributable to these ten macroeconomic variables, all of which had short-term impact on the STI. Looking forward, further research could be conducted examining the impact of said variables on individual sectoral stock indices, for greater insight on the dynamics of their relationships.