Exogenous information and input-output updating: An evaluation

Input-output coefficients' intertemporal instability, costs, and time lags involved in the construction of survey-based tables necessitate employment of nonsurvey updating techniques. Analysts, however, may want to include exogenous information in the updating process. The issue, then, is whether this inclusion ameliorates or aggravates the results. This paper attempts to assess the wisdom of incorporating exogenous information into the updating procedure. First, using the naive, RAS, and LaGrangian techniques, the 1966 table of the former Soviet Union was updated to 1972. Next, treating the top 10 percent largest 1972 coefficients as exogenous estimates, the remaining coefficients were updated via the same three methods. Comparison of the results indicates that exogenous determination of the largest coefficients does not change the methods' rankings while yielding substantial improvements in the forecasts. This paper was presented at the Forty-Sixth International Atlantic Economic Conference, Boston, MA, October 8–11, 1998.     

Was the recent downturn in US real GDP predictable?

This article uses a small set of variables – real GDP, the inflation rate and the short-term interest rate – and a rich set of models – atheoretical (time series) and theoretical (structural), linear and nonlinear, as well as classical and Bayesian models – to consider whether we could have predicted the recent downturn of the US real GDP. Comparing the performance of the models to the benchmark random-walk model by root mean-square errors, the two structural (theoretical) models, especially the nonlinear model, perform well on average across all forecast horizons in our ex post, out-of-sample forecasts, although at specific forecast horizons certain nonlinear atheoretical models perform the best. The nonlinear theoretical model also dominates in our ex ante, out-of-sample forecast of the Great Recession, suggesting that developing forward-looking, microfounded, nonlinear, dynamic stochastic general equilibrium models of the economy may prove crucial in forecasting turning points.     

Interactions between real economic and financial sides of the US economy in a regime-switching environment

This objective of this study is to examine the linkages between real (economic) and financial variables in the United States in a regime-switching environment that accounts explicitly for high volatility in the stock market and high stress in financial markets. Since the linearity test shows that the linear model should be rejected, we employ the Markov-switching VECM to examine the same objective using the Bayesian Markov-chain Monte Carlo method. The regime-dependent impulse response function (RDIRF) highlights the increasing importance of the financial sector of the economy during stress periods. The responses and their fluctuations are significantly greater in the high-volatility regime than in the low-volatility regime.     

Portfolio flows and the US dollar–yen exchange rate

This paper investigates the effects of portfolio flows on the US dollar–Japanese yen exchange rate changes over the period 1988:01–2011:04. Using a time-varying transition probability Markov-switching framework, the results suggest that the impact of portfolio flows on the dollar–yen exchange rate changes is state-dependent. In particular, the results show that portfolio inflows from Japan toward the US, more than monetary variables, strengthen the probability of remaining in the dollar–yen appreciation (low volatility) state. Therefore, credit controls on the flows can be used as a policy tool to pursue economic and financial stability.     

Understanding the determinants of e-wallet continuance usage intention in Malaysia

Quality & Quantity - The present research aims to investigate the determinants of e-wallet continuance usage intention in Malaysia using extending Technology Continuance Theory (TCT) via...     

Corporate mergers and union wage premiums

Corporate mergers possibly enhance the labor negotiation advantage of employers. This study investigates the association between wage levels and merger activity to test the employer bargaining strength hypothesis. The results indicate significantly lower union wages as a consequence of merging. Merger activity, however, does not influence wage levels of non-union workers. These findings are supportive of the employer bargaining strength hypothesis.     

Random coefficients models of arms imports

This paper uses a large panel of data with up to 19 time-series observations for almost 150 countries to estimate models of arms imports. Qualitative evidence suggests a non-linear relationship. As income and military expenditure grow, the propensity to import first rises and then falls as a domestic arms industry develops. We face the difficulty that there is virtually no data on domestic arms procurement or production capability. We respond to this difficulty by adopting a random coefficient approach in order to identify any systematic influences on import propensity, through the impact of military expenditure, size of the armed forces or income on unobserved domestic production capability. While a clear non-linear pattern is apparent in the cross-section relationship, once one allows for parameter heterogeneity such a pattern is not apparent in the time-series.     

Institutional Quality and Public Debt Accumulation: An Empirical Analysis

The question of public debt management for both developed and developing economies has generated an enormous amount of political as well as academic interest. This study examines how governance affects public debt accumulation in the MENA countries during the 1996–2015 period. The six Worldwide Governance indicators (voice and accountability, political stability and the absence of violence/terrorism, government effectiveness, regulatory quality, rule of law and control of corruption) were used to measure the quality of governance in these countries. The results show that only three governance indicators support well the hypothesis that poor governance leads to higher accumulation of MENA public debt. Moreover, the estimates suggest a significant indirect impact of bad governance operating via decreased GDP growth. These findings have important implications for policy makers of these countries, which are currently facing major fiscal and external imbalances due to the high cost of war and terrorist attacks, low oil prices and a decline in trade. Sound public debt management represents an urgent task especially that public debt management problems often find their origins in the lack of attention paid by policymakers to the costs of bad governance and weak macroeconomic management.     

A fuzzy goal programming approach to analyse sustainable development goals of India

Energy policy, environmental planning and economic development play a key role in sustainable development. Sustainable development requires suitable and strategic policies satisfying multiple and conflicting objectives. Fuzzy goal programming (FGP) is a well-known approach in multi-criteria decision-making for its practical application. In this article, a FGP approach is proposed to analyse environmental, energy and sustainability goals of India by the year 2030 with reference to the key economic sectors of India. The presented model analyses the improvement opportunities, requirement of efforts and implementation of the sustainable development plans. Numerical illustration is also provided for validation and application of the proposed model.     

Institutions for private sector development and pro‐poor growth: Evidence from Vietnam

Using the Vietnam Household Living Standards Survey 2008, we explore the differences in pro‐poor growth performance in provinces in Vietnam according to the quality of the provinces’ institutions that support private sector activity. We exploit the localized and varying effect of French colonial legacy across Vietnamese provinces to address the endogeneity of institutions. We find strong and robust evidence of a positive effect of good‐quality institutions that support private sector activity on pro‐poor growth and that enhanced working hours and hourly wage and extended income from non‐farm self‐employment play critical roles in this outcome.