Forecasting Australia’s economic performance during the Asian crisis

During the Asian economic crisis of 1997–98, published forecasts from a Bayesian vector autoregressive (BVAR) model consistently indicated that the crisis would have little or no effect on Australia’s economic performance, despite the deterioration in the trade balance. The worsening trade deficit led many other forecasters to predict a sharp fall in Australia’s GDP growth rate, as the countries most severely affected by the crisis represent over 60 percent of Australia’s export markets. This paper argues that the more pessimistic forecasts attached too much weight to the links between Australia’s external accounts and GDP growth. In particular, I show that forecasts for the period September 1997 to December 1998, conditional on the actual path of the merchandise trade balance, predict higher inflation and interest rates than unconditional forecasts from a model without the trade balance. There does, however, appear to be useful information in the individual components of the trade deficit. Conditioning on the actual paths of both exports and imports generally produces more accurate forecasts than conditioning on net exports. In particular, conditioning on the trade balance results in the least accurate forecasts for inflation and interest rates of any of the models considered here. On the other hand, conditioning on the individual trade flows produces the most accurate forecasts for inflation, and the second-most accurate for interest rates. Taken together, the results presented here lend support to the argument that Australia’s trade flows represent the outcomes of optimizing decisions, rather than defining constraints on economic growth.     

Non-structural and structural models in productivity analysis: study of the British Isles during the 2007–2009 financial crisis

Journal of Productivity Analysis - The paper compares unrestricted and restricted reduced-form estimates of productivity and efficiency performance constructed from non-structural stochastic...     

Government support and bank performance during the 2007–2008 financial crisis

Though previous studies suggest a state participation has a negative impact on banks, this paper highlights the potential benefits of state ownership for confidence and stability in the post-crisis period that can outweigh the inefficiencies and potential for corruption of political intervention. We find that the state guarantees are valuable during the crisis. The negative (positive) relation between state ownership and bank profitability (risk) is mitigated in the post-crisis period. Financially troubled banks that receive a transfer payment or capital injection experience improved performance during the post-bailout period.     

The spatial dynamics of new firm births during an economic crisis: the case of Great Britain, 2004–2012

Abstract

Spatial variations in entrepreneurial activity have been shown to be a time persistent phenomenon in many countries. This paper analyses how these spatial variations have been affected by the recent financial crisis within the context of theories of regional resilience and adaptability. The analysis applies Exploratory Spatial Data Analysis techniques to data on firm births across Local Authority Districts of Great Britain during the period 2004–2012. The results demonstrate that, whilst the overall shape of the spatial distribution of firm births remained persistent, there is evidence of an increase in regional inequality. This is primarily associated with a divergence between London and the rest of the distribution. London, together with part of its surrounding area, appears to constitute a resilient entrepreneurial regime that has generated a dynamic, adaptive response to the crisis with high rates of new firm formation in contrast to other regions which have remained locked into lower rates of entrepreneurship. This supports the view that regional entrepreneurship is a path dependent process: entrepreneurial regions are more adaptable to the effects of an exogenous shock than less entrepreneurial regions. Accordingly, entrepreneurship is a critical factor influencing the resilience of regions in responding to an economic crisis.     

TFP change and its components for Swedish manufacturing firms during the 2008–2009 financial crisis

Journal of Productivity Analysis - A driving force of economic development is growth in total factor productivity (TFP). Manufactured goods are, to a large extent, exports, and represent an...     

Creditworthiness evaluation of Italian SMEs at the beginning of the 2007–2008 crisis: An MCDA approach

In this paper we use a Multi-Criteria Decision Analysis (MCDA) approach in order to evaluate the creditworthiness of about 40,000 Italian Small and Medium-sized Enterprises (SMEs) viewed as potential applicants for bank loans in the three-year period 2006–2008, a timespan embracing the beginning phase of the recent economic and financial crisis. This approach is able to consider simultaneously different factors affecting the firms’ solvency level. The results obtained in terms of classification into homogeneous rating classes, scoring and migration probabilities show that the proposed approach is able to unveil early signal of recession in the Italian SMEs sector. Furthermore, some comparisons between our approach and a couple of known methodologies for creditworthiness assessment show the goodness of our method.     

Transmission of US financial and trade shocks to Asian economies: Implications for spillover of the 2007–2009 US financial crisis

This paper describes an investigation of the transmission of US shocks to Asian economies with consideration of financial linkages and trade linkages. Using the sign restriction vector autoregression (VAR) approach during 2000–2012, our empirical results can be summarized as follows. First, both US financial and trade linkages exert a significant impact on production in Asian economies. Second, through both financial and trade linkages, US spillover shocks account for around 50% of the production fluctuation in Asian economies. Third, during the episodes of 2007–2009 US financial crisis, the impact of financial shocks is greater than that of trade shocks. Results suggest that (i) Asian economies are not decoupled with US; and (ii) different from conventional findings, financial linkages between US and Asian economies are strong, especially for highly developed Asian economies. Therefore, investors and policymakers of Asian economies should take account of US financial conditions.     

Varieties of capitalism,neoliberalism and the economic crisis of 2008–?

This article examines the responses of national governments to the economic crisis that commenced in 2008. We argue that the current search for new bases for accumulation is leading to reforms designed to weaken the position of labour. Moreover, the tendency towards a weakening of labour's position was already evident across different ‘varieties of capitalism’ before the crisis erupted. We discuss the implications for comparative institutional analysis and stress the need for a renewed focus on the underlying dynamics of capitalist economies.     

The impact of the economic cycle on fatal injuries. The case of UK 1971–2007

The aim of this paper is to investigate the effect of the economic cycle on workplace accidents. In particular, the effect of the usual factors of the economic cycle (GDP per capita, Unemployment) is examined along with the effect of working hours (to account for flexible employment) on fatal injuries (to exclude the effect of under-reporting data) for the period 1971?C2007 in UK. Detailed multiple regression analysis is applied, which indicates a controversial and inelastic relation of GDP per capita (negative) and unemployment rate (positive), but also an elastic relation of working hours (positive) to fatal injuries. Further research in data of various countries is proposed before arriving to certain conclusions.     

Competitiveness and entrepreneurship rate in Europe during the economic recovery phase, 2012–2016

Entrepreneurship is key for regional economic development. Regions can offer conditions that promote or limit business innovation activity. As the World Economic Forum points out, promotion and entrepreneurship support have been key factors for European countries to recover lost competitiveness. This study analyzes countries’ competitiveness level during the economic recovery phase using data from the Global Entrepreneurship Monitor (GEM) and the Word Economic Forum Report for the 2012–2016 period. The sample comprises 19 countries of the European Union. The independent variable is Total Entrepreneurship Activity rate (TEA) and the dependent variables are the 12 pillars that measure competitiveness in the GEC Index. The results show that, over time, the macroeconomic environment conditions necessity entrepreneurship but, when the economy recovers, innovation determines the appearance of opportunity entrepreneurship. Differences between countries are less significant regarding entrepreneurial activity and competitiveness; however, patterns for northern and southern Europe still differ.

     

The 2007–2009 financial crisis,global imbalances and capital flows: Implications for reform

The paper discusses the currents that led to the 2007–2009 financial crisis. We discuss the crisis in a historical context and present evidence regarding the incidence and unit price of risk. Our results show that the unit price of risk prior to the subprime crisis is comparable to the price of risk prior to the great depression and similar to the price of risk at onset of the technology bubble. We then discuss global imbalances, the associated risks with regard to international optimal allocation of capital, and arrangements to minimize problems of global imbalances.     

A necessary and sufficient condition for the positivity of the growth rate in the Neumann–Gale model of economic growth

In the paper I will discuss an extension of the classical problem of the positivity of the growth rate in the Gale–Neumann model. I will show that the exploitation of the labour is a necessary and sufficient condition for the positivity of the growth rate.     

Work–family conflict and the commodification of women's employment in three Chinese airlines

In the East, where gender is mediated by different family structures, societal institutions and economic development, the work–family conflict (WFC) metaphor remains appropriate. This paper investigates Chinese women's experiences of WFC in the fastest growing commercial airline sector in the world. It finds that, in contrast to the West, work-to-family, rather than family-to-work, conflict dominates. Liberalization, competition and commercialization have also had a significant gendered impact on jobs. The latter resulting in the commodification of women's aesthetic and emotional labour, job segregation, employment insecurity, poor career opportunities and increased WFC. We explore reasons why HR policies and practices in airlines fail to address women's workplace concerns and find that occupational status and lack of organizational power, together with the prevalence of traditional gendered norms and attitudes, play important roles     

The measurement of the economic performance of the US Nonfinancial Corporate Business Sector 1946–1990: an application of the shareholder value creation concept

This paper is based upon a juxtaposition of the cash flow-market value performance (alias SVC performance) and historic cost accounting (HC) performance of the US Nonfinancial Corporate Business sector 1946–90. It has two principal objectives: 1. To determine whether, judged on return and variability dimensions, the HC accounting model is an operationally acceptable surrogate for a multiperiod market-based accounting model. 2. To analyse the consequences of HC income-based distributions, i.e., corporate tax, interest and dividend payments based on conventionally-measured corporate income. Three principal conclusions are drawn: i. Notwithstanding their common cash flow component, HC performance indices are not reliable surrogates for SVC performance criteria. The former apparently do not accurately capture changes in corporate valuation and generally understate the variability of market-based returns. ii. The multiperiod HC income of a going concern characteristically overstates its coterminous multiperiod cash flows to a considerable degree. Contrary to common supposition, the former does not therefore constitute a ‘normalized’ or ‘smoothed’ version of a firm's ‘primitive’ cash flows in the sense that the cumulative (multiperiod) values of the two measures tend to converge. iii. As a consequence of ii, HC income and its near relation, taxable earnings, are dubious bases for measuring interest-paying, tax-paying and dividend-paying capacities. Corporate income-distribution decisions based on HC accruals-based profit measures frequently trigger external financing which may cause shareholder wealth losses and wealth transfers from shareholders to lenders. However, ‘fiscal drag’ appears to be the most serious consequence of HC accruals-based income distribution decisions.     

Wage inequality and the labor market impact of economic transformation: Croatia, 1970–2008

In this paper, we examine wage inequality and wage differentials in Croatia from 1970 to 2008 using two long aggregate time series on the distribution of income. We focus especially on changing income inequality related to educational and vocational attainment, changing income inequality within those groups, and how these two components of inequality were affected by the economic transformation from socialism to capitalism. We find that income inequality between groups rose moderately post-transformation, while overall inequality increased more sharply. This finding is consistent with a growing importance of individual rather than group productivity in labor market compensation, a change broadly consistent with the economic transformation of the Croatian labor market.     

The role of the public sector in the provision of housing supply in Turkey, 1950–2009

This study examines the changing role of the public sector in Turkey with regard to housing provision since 1950, and particularly since 2000, and seeks to clarify how public intervention has affected housing provision and urban development dynamics in major cities. Three periods may be identified, with central government acting as a regulator in a first period characterized by a ‘housing boom’. During the second period, from 1980 to 2000, a new mass housing law spurred construction activity, although the main beneficiaries of the housing fund tended to be the middle classes. After 2000, contrary to emerging trends in both Northern and Southern European countries, the public sector in Turkey became actively involved in housing provision. During this process, new housing estates were created on greenfield sites on the outskirts of cities, instead of efforts being made to rehabilitate, restore or renew existing housing stock in the cities. Meanwhile, the concept of ‘urban regeneration’ has been opportunistically incorporated into the planning agenda of the public sector, and — under the pretext of regenerating squatter housing areas — existing residents have been moved out, while channels for community participation have been bypassed.     

Influence of equal or unequal comparison group sample sizes on the detection of differential item functioning using the Mantel–Haenszel and logistic regression techniques

In recent decades several methods have been developed for detecting differential item functioning (DIF), and many studies have aimed to identify both the conditions under which items may or may not be adequate and the factors which affect their power and Type I error. This paper describes a Monte Carlo experiment that was carried out in order to analyse the effect of reference group sample size, focal group sample size and the interaction of the two on the power and Type I error of the Mantel–Haenszel (MH) and Logistic regression (LR) procedures. The data were generated using a three-parameter logistic model, the design was fully-crossed factorial with 12 experimental conditions arising from the crossing of the two main factors, and the dependent variables were power and the rate of false positives calculated across 100 replications. The results enabled the significant factors to be identified and the two statistics to be compared. Practical recommendations are made regarding use of the procedures by psychologists interested in the development and analysis of psychological tests.     

Health and economic growth in high-income countries revisited: evidence from an augmented production function for the period 1980–2009

This paper uses time series data for seven industrialized countries from 1980–2009 to explore the causality between health care expenditure (HCE) and economic growth. We have set up a classical Cobb–Douglas production function including HCE, labor, capital, and an augmented function additionally including the number of patent applications (as a proxy for technology and research) and the total number of tertiary education students (as a proxy for education). Our results show that there is a long-run relationship between growth and HCE. As regards causality, in the classical production function, evidence for mutual causality between GDP and HCE is noted only in France, Germany and England, causality from HCE to GDP is noted in Italy and Japan, while no causality whatsoever is evidenced in Canada and USA. However, a completely different situation is unveiled when the augmented production function is used with mutual causality being noted in all perused variables. The novelty of our study lies first in that it contributes to the health-growth nexus literature for high-income countries which has been quite controversial and second it sets off new variables whose omission might be one of the reasons of the result dichotomy. Results of this study will be very useful for high-income countries currently afflicted by the economic crisis and embark on HCE curtailments or revisions.