Agency, Institutions and Regional Resilience: An Approach from the Basque Region

Regional resilience, understood as the regional ability to resist, adapt to, and create new regional paths from external shocks, is one of the most explored issues in the last years in the literature of evolutionary economic geography. However, most of the literature has focused on analysing the regional responses in terms of structural economic change, underplaying the role that institutions and agency play. This chapter will deepen into the role that policy and agency play in two different types of regional resilience, namely resilience to macroeconomic fluctuations and resilience to structural changes. Specifically, it focuses on the role of institutional entrepreneurs and collective agency as mechanisms of change. This means adopting a systemic understanding of regional resilience. The chapter contributes with an historical analysis of the Basque Country region, an old industrial region that has been able to resist, recover and renew after different shocks (economic and financial crisis and structural changes) in the last forty years. The case will shed light into the different institutional and agency factors that shape different types of resilience (adaptation and adaptability capacities), which are intrinsically linked to exploration and exploitation capabilities. Indeed, the chapter focuses on the different policy responses and on the role of agency in shaping resilience, both from an ex-ante and an ex-post perspective. Even though policy denotes a high degree of publicness, the chapter highlights the role of other actors (i.e. private actors, individuals and KIOs) in regional resilience.

Lending standards, productivity, and credit crunches

We propose a macroeconomic model in which adverse selection in investment amplifies macroeconomic fluctuations, in line with the prominent role played by the credit crunch during the financial crisis. Endogenous lending standards emerge due to an informational asymmetry between borrowers and lenders about the riskiness of borrowers. By using loan approval probability as a screening device, banks ration credit following increases in lending risk, generating large endogenous movements in TFP, explaining why productivity often falls during crises. Furthermore, the mechanism implies that financial instability is heightened when interest rates are low.

Financial Frictions and Macroeconomy During Financial Crises: A Bayesian DSGE Assessment

The recent global financial crisis and the Eurozone sovereign default have rekindled the debate on the interactions between the real sector and the financial sphere. The present paper provides an assessment of the role of financial frictions on business cycles in Canada, the Euro Area, the U.K., and the U.S. during these recent financial crises using an extension of the DSGE methodology described by Merola (2015). The main goal is to examine whether and the extent to which those crises enhanced the contribution of financial frictions in driving macroeconomic fluctuations. The models’ properties are examined with posteriors distributions, variance decomposition, and historical decomposition. Posteriors distributions show that the role of real shocks in driving macroeconomic fluctuations decrease with the incorporation of financial frictions in the core DSGE model. Variance decomposition shows that financial frictions and financial shocks affect the business cycle through investment. The empirical estimates also suggest that the contribution of financial frictions and financial shocks in driving investment increases during the global financial crisis.

Structural Change and Internal Labor Migration: Evidence from the Great Depression

We analyze sectoral labor reallocation and the reversal of urbanization in the U.S. during the Great Depression. The widespread movement to farms, which serves as a form of migratory insurance during the crisis, is largely towards farms with low levels of mechanization. In contrast, the mechanized agricultural sector sheds workers, many of whom reallocate into low-productivity or subsistence farming. The crisis perverts the normal process of structural change—in which workers displaced by farm equipment are released into more productive occupations—suggesting that macroeconomic fluctuations are an important factor determining the labor market consequences of technological change.

Business Cycles Analysis in Cameroon an overview

This paper aims at conducting a thorough analysis of business cycles in Cameroon by statistically assessing their main characteristics. The analysis is carried out by considering the three dimensions of macroeconomic fluctuations. By assessing output volatility, light on the sensitivity of the economy to exogenous shocks as well as to endogenous sources of instability is shed. Likewise, analysing the co-movements of aggregate variables of interest helps in understanding the extent to which the observed fluctuations relate to other aggregates in the economy and hence, the main forces driving the dynamics of this economy. Eventually, more light could be shed on macroeconomic dynamics by analysing the timing and persistence of business cycles. Overall, such analysis is conducted using basic statistical tools commonly used in the empirical literature on business cycles. These are the standard deviation as a measure of volatility, cross-correlations as a means of analysing co-movements and auto-correlations as measures of persistence. The main limitation in this study is the linear consideration of observed data. In fact, many macroeconomic and financial time-series that are used in quantitative macroeconomic models are subject to a number of regime-switching in reality. This fact needs to be taken into account in the subsequent research

MONETARY MEASURES AND CURRENCY REGULATION DURING MACROECONOMIC INSTABILITY AND WORLD UNCERTAINTY

This study is devoted to the comparative analysis of the rules of foreign exchange regulation and control, as well as monetary measures implemented in developed counties during 2003-2020. Accordingly, the purpose is to compare currency restrictions imposed as a response to several economic, political and epidemiological situations and determine their relevance. The study consists of three main parts. The first section highlights the evolution of the monetary policies of different countries during the rapid global economic growth (2003-2007) and key monetary novation before and after the 2008-2009 great recession (macroprudential approach to monetary regulation). The second section describes the world post-crisis monetary system in terms of foreign exchange regimes. Finally, in the third section, the main focus is directed on the period of the COVID-19 crisis and, eventually, key monetary policy measures imposed in the leading economic areas as a reaction to macroeconomic instability and world uncertainty. The practical implications of this study are noteworthy to consider as the problem is outlined in three aspects: 1) evolutionary (with a step-by-step analysis of economic events from 2003 to 2020); 2) instrumental (with analysis of the tools of monetary, macroprudential and monetary policy); 3) country (in the context of world uncertainty). In most cases, the results show that countries produce shocks that transferred to the rest of the world (spillbacks effect). Also, in a financially integrated world, macroprudential policies are valuable and essential because instability becomes a key defect of the modern market system. That is why monetary policy, especially after the crisis, is critical in stabilizing macroeconomic fluctuations.

Macroeconomic Fundamentals and Budget Deficit Nexus: Evidence from a Developing Economy

The increasing budget deficit of the Nigeria’s government in the past few decades with its attendance impact on the economy is worrisome. This study examines the impacts of macroeconomic fundamentals on Nigeria’s fiscal deficit. An error correction model was specified and estimated. In terms of sign and size, the result showed that, there is an inverse relationship between budget deficit and the external reserve. This implies that an increase in the external reserve, leads to a decrease in budget deficits. A unit increase in external reserves resulted in 12.4 percent fall in budget deficit. In contrast, however, national income and interest rate showed a positive relationship with budget deficit. Increase in income expands the potential and propensity to spend. Lenders are equally more disposed to lend to the government because of the presupposed economic prosperity. The lagged value of the error correction term has the expected inverse sign of -0.42, and highly significant. The negative value of the error correction model further supports the co-integration relationship among the variables. Thus, macroeconomic variables influence budget deficits. Economic policies which minimizes macroeconomic fluctuations is paramount in curbing the negative impacts of increasing government deficit in the economy. Received: 2 May 2021 / Accepted: 15 June 2021 / Published: 8 July 2021