Dry bulk shipping and the evolution of maritime transport costs, 1850–2020

We provide evidence on the dynamic effects of fuel price shocks, shipping demand shocks and shipping supply shocks on real dry bulk freight rates in the long run. We first analyse a new dataset on dry bulk freight rates for the period from 1850 to 2020, finding that they followed a downward but undulating path with a cumulative decline of 79%. Next, we turn to understanding the drivers of booms and busts in the dry bulk shipping industry, finding that shipping demand shocks strongly dominate all others as drivers of real dry bulk freight rates in the long run. Furthermore, while shipping demand shocks have increased in importance over time, shipping supply shocks in particular have become less relevant.     

On the vulnerability of the oil and gas industry to oil price changes

Previous studies of oil-price economic activity relationships are dominated by macro-level examination of price effects. This study examines the effect of shocks in oil price and its volatility on the oil and gas extraction industry using a Vector Auto-Regressive (VAR) approach. The results show that, in the short-run, positive price and volatility shocks lead to significant increases in oil and gas activities. However, in the long-run, the industry behaves much like the rest of the U.S. economy—price and volatility shocks produce small or insignificant effects. An earlier version of this paper was presented at the 22 ^nd Annual North American Conference of the U.S.A. Energy Economics/International Association of Energy Economics Conference, Vancouver, British Columbia. The authors acknowledge the editorial assistance of Versa Stickle.     

Variation in the Effects of Aggregate Demand Shocks: Evidence and Implications across Industrial Countries

Over a sample of nineteen industrial countries, more variable aggregate demand and/or higher mean inflation attenuates (augments) the effect of aggregate demand shocks on real output growth (wage and price inflation) while having no effect on the response of the real wage to such shocks. In all countries examined, aggregate demand shocks are positively (negatively) correlated with nominal variables (real output). Among explanations of the business cycle based on shocks to aggregate demand, this evidence favors the new Keynesian sticky wage explanation over the sticky price and the new classical imperfect information explanations.     

China's Business Cycles: Perspectives from an AD–AS Model*

The present paper represents a first attempt to study China's business cycles using a formal analytical framework; namely, a structural VAR model. It is found that (i) demand shocks were the dominant source of macroeconomic fluctuations, but supply shocks had gained more importance over time; (ii) driving forces of demand shocks were consumption and fixed investment in the first cycle of 1985–1990, but shifted to fixed investment and world demand in the second cycle of 1991–1996 and the post‐1997 deflation period; and (c) macroeconomic policies did not play an important part either in initiating or counteracting cyclical fluctuations.     

A nonlinear ARDL model of inflation dynamics in the Philippine economy

This study investigated whether global oil price changes, exchange rate, interest rate, and economic output exert symmetric or asymmetric pass-through effects on inflation in the Philippines. A Nonlinear Autoregressive Distributed Lag (NARDL) model was fitted to the observable data using quarterly observations from 1998 to 2019. Knowledge of these relationships is important in monetary policy setting in achieving targeted inflation; the Philippines adopted inflation targeting in 2002. The finding shows that world oil price shocks are still prominent and the most important determinants of inflation variations in the country. There is prima facie evidence on the short-run asymmetry of oil price changes to inflation. Exchange rate pass-through to inflation was very minimal in the short-run, and there is no long-run effect. Evidence that interest rate and demand shocks have a long-run asymmetric effect on inflation was found. These findings imply that monetary policy setting should account for the asymmetric effects of inflation determinants. Study results provide a deeper understanding of how positive and negative changes of inflation determinants affect actual inflation, which aids policymakers in achieving targeted inflation.     

Energy price shocks,monetary policy and China's economic fluctuations

This paper develops a New Keynesian dynamic stochastic general equilibrium model with energy factors to study various channels through which China's economic fluctuations are linked to energy price shocks and to search for the optimal monetary policy to cope with energy price shocks. We conclude that there are channels through which changes in energy prices will have the following cause–effect relationships. First, a rise in energy price as a negative technology shock will raise the costs of providing capital services per unit of capital, thereby reducing output. Second, a rising energy price distorts the intertemporal choices of households and firms, creating downward pressure on the expected future return on capital. Third, an energy price shock places upward pressure on the marginal costs associated with an increase in inflation. Numerical simulation results show that a positive energy price shock has a positive effect on energy technology improvements. In addition, the effects of energy price shocks can be mitigated by nominal rigidities, and interest rate rules will determine the magnitude of those effects. Using the efficient frontier method, we also show that optimal monetary policy in China should help control energy price volatility.     

Macroeconomic effects of macroprudential policies: Evidence from LTV and DTI policies in Korea

This study investigates the effects of loan-to-value (LTV) and debt-to-income (DTI) policies on macroeconomic variables such as commodity price index (CPI) and industrial production (IP) and financial variables such as house price and household bank loan in Korea by employing a structural vector autoregression (VAR) model. We use measures of LTV and DTI regulations that properly reflect changes in regulation coverage and intensity. Empirical results show that LTV and DTI shocks have significant effects not only on house price and household bank loan but also on CPI and IP, particularly when both policies are implemented together. The effects of DTI shocks are similar to those of monetary policy shocks, but LTV and DTI shocks tend to have a slower effect on CPI and IP but a faster effect on house price and household bank loan.     

Good deflation/bad deflation and Japanese economic recovery

Many economists dismiss the role of positive supply shocks as a cause of Japan’s deflation. Indeed, they sometimes attribute the long delay in Japan’s recovery to the mistaken view that Japan’s deflation reflects an acceleration of technological progress. Whatever the current situation in Japan, however, economic history certainly suggests that technological progress can go hand in hand with general deflation. Conducting a VAR analysis using very detailed information about the components of Japan’s consumer price index, this paper finds that short-run shocks to Japan’s relative price structure persist in the long run. Given this finding, it is possible to conclude that such shocks are real in origin and reflect technological change. As no effort has yet been completed to show the full extent to which technological change is driving short-run relative price change in Japan compared with other factors, and the full extent to which relative price changes are driving aggregate price change compared with other factors, the policy implications of these findings are unclear. What is clear is that it is a mistake to dismiss out of hand the possibility that technological shocks are playing an important role among other forces in Japan’s current deflation.     

Price‐Setting Behavior of Korean Firms†

This paper investigates a pattern of price revision by firms in Korea and sheds light on the cause of price stickiness by providing reliable statistical estimates for calibration of the parameters of the widely‐used macro‐models. Based on firm‐level survey data and using a probit model, we identify the firm characteristics or market conditions that discourage firms from carrying out state‐dependent price adjustment. We also estimate the factors driving firms to engage in state‐dependent adjustment rather than wait until the next scheduled revision under three different shocks: demand, general cost and exchange rate shocks. We find a few interesting features, as follows. First, price revision by Korean firms tends to be time‐dependent rather than state‐dependent, with a sizable dispersion across sectors and firm sizes. Second, the pattern of price revision in Korea is not significantly different from that in selected advanced economies. Third, the reason why firms favor time‐dependent price adjustments appears to be endogenous, accounted for by a number of market institution variables. Fourth, in response to shocks, Korean firms tend to wait until the next periodically scheduled revision rather than make a state‐dependent price adjustment, unless marginal costs are affected significantly by the shock, and state‐dependent revisions are often significantly delayed when they do occur.     

Linkages between Trade and Financial Integration and Output Growth in East Asia

The effects of trade, financial and other variables generally seen as indicative of the degree of economic integration on movements in industrial production growth among countries in East Asia are assessed using the common component of movements in industrial production growth in the ASEAN 5 + 3 countries as a business cycle benchmark for the region. The results show the dominance of trade-related variables, as well as the world price of oil, in driving regional industrial production growth. Financial variables, while important, are not as robust.     

Taxation and the Environment–Health–Poverty Trap: A Policy Experiment Perspective

Under pressures related to economic growth and environmental protection, China is facing an increasingly severe “environment–health–poverty” trap risk. Fuel taxation is generally considered an effective policy to counter such a risk. Since 2009 China has raised the fuel tax rate many times to enhance tax reform. However, the effects of this policy remain unknown. Therefore, it is vitally important to estimate the impacts of China's current fuel taxation policy on environment, public health and the national economy. As the first attempt in existing literature on China, this paper builds a general equilibrium framework with the feedback effect of public health on economy. We find that that the fuel tax policy benefits the adjustment of the economic structure and improves human health; however, it is detrimental to economic growth, public welfare and price stability. In this sense, it plays a limited role in reducing the trap risk and might not be sustainable in the long term.     

Oil price shocks and Japanese macroeconomic developments

Using quarterly data for Japan over the period 1976:I–2008:II within a modelling strategy incorporating information about structural breaks in the variables included to represent the macroeconomic transmission channels, this paper shows that oil price shocks led to a fall in industrial production and higher inflation. However, these effects are only evident in the late 1970s and early 1980s. In more recent episodes of sharp oil price increases, inflationary effects are barely visible, and there is very limited evidence of oil‐induced industrial slowdowns.     

UK shocks and Irish business cycles, 1922–79

This article examines the transmission of UK and global shocks to the Irish economy over the period 1922–79, using annual data for consumer prices and real GDP in a structural vector autoregression (SVAR) model. UK aggregate demand and supply shocks have large and significant effects on Irish CPI, but smaller effects on Irish real GDP. A historical decomposition indicates that UK aggregate supply and demand shocks played a more important role than domestic shocks in the evolution of Irish CPI. In contrast, the evolution of Irish real GDP is driven more by idiosyncratic domestic shocks than by UK shocks.     

Commodity prices and global economic activity

Commodity prices provide useful information about current and future global economic activity. First, we show that overall commodity prices indeed tend to comove with economic activity. Second, we try to extract the global demand factor(s) using many commodity prices. While commodity prices reflect both demand and supply factors, by relying on a wide variety of commodity prices, supply shocks can be filtered out as they tend to be commodity-specific idiosyncratic shocks except for widespread supply disruptions confined to a few historical periods. In this paper, we then show that factors extracted from commodity prices movement contain useful information to nowcast and forecast global GDP and industrial production.     

Openness and the Effects of Fiscal and Monetary Policy Shocks on Real Output in Nigeria (1960–2003)*

Abstract: This study investigates the effects of monetary and fiscal policies on the real output growth in a small open economy. It is a country‐specific, time series study that verifies the implication of increasing economic openness on the efficacy of monetary and fiscal policy. A modified GARCH model was used to estimate the anticipated and unanticipated shocks. Two measures of fiscal and monetary shocks were combined with openness and real oil price shocks in a VECM model to assess the effects of anticipated and unanticipated policy shocks on the output equations. The empirical results showed that anticipated and unanticipated fiscal and monetary shocks had no significant positive effects on real output. This suggests that the open macroeconomic version of the policy ineffectiveness proposition was valid for both monetary and fiscal policy shocks in Nigeria. This is in consonance with earlier works in this area. Furthermore, the degree of openness and oil price shocks had a negative implication on the efficacy of macroeconomic policy in Nigeria; also in agreement with the Dutch Disease Syndrome. Finally, the policy implication of this study therefore is that trade liberalization policy should be implemented cautiously. The Nigerian economy is weak to withstand the unwholesome consequences of full economic integration.     

The path towards sustainable finance: Venture capital and air pollution in China

Financing sustainable growth has attracted global attention and discussion in recent years. This study investigates the effect of venture capital, as a potential source of sustainable finance, on air pollution in China from 2003 to 2016. Using the unique Government Guidance Fund as instrumental variable, we find that venture capital activities have significantly reduced local air pollution in cities of China. To be specific, a one standard deviation increase in the VC amount leads to 4% decrease in PM_2.5 concentration and 6% reduction in industrial SO₂ emission. The effects are insensitive to a wide range of robustness tests. Cities characterized by more rigorous environmental supervision, superior business environments, and stronger innovation incentives benefit more from venture capital activities. We further show that venture capital helps improve local air quality by boosting general and green innovation, increasing the investment of new green enterprises, as well as crowding out the investment of polluting industries.     

Oil Price Shocks and the Credit Default Swap Market

We investigate the impact of supply and demand shocks in the global crude oil market on the CDX spread, in the context of a structural VAR model based on monthly data, over the period from November 2003 to October 2015. We find that the reaction of the CDX spread to changes in the real price of crude oil differs considerably depending on the sources of shocks. In the long run, crude oil supply shocks, aggregate demand shocks, and oil-specific demand shocks together account for nearly 90% of the variation of the CDX spread.     

Why is Japan’s carbon emissions from road transportation declining?

Average fuel efficiency of vehicles improved substantially over the last three decades in Japan. Yet, the carbon emissions from on-road passenger vehicles continued to increase until 2000, and then turned to a steadily declining trend. We empirically investigate this disparity. To that end, we apply an analogue of the Copeland-Taylor decomposition, combined with an empirically estimated behavioral model of car ownership and utilization choice, to economically decompose vehicle carbon emissions into the scale, composition, and technique effects over our study period, 1990–2015. We find that exogenous demographic changes such as population size, driver’s license holdings, or labor migration across regions can only explain this disparity partially. After accounting for endogenous changes in household’s geographically-explicit transport demand by the estimated behavioral model, the predicted emissions match the time path of the observed emissions surprisingly well. Of all the factors in the behavioral model, the fuel cost per unit of driving accounts for the largest share of the total variation in the observed emissions. Our result indicates that 60% of the technique effect is offset by the perverse effect of induced transport demand due to the lower fuel cost. Importantly, the induced demand comes from both the intensive margin (driving) and the extensive margin (car ownership).     

后世博时期促进上海经济长效增长的地方税研究

文章分别从需求与产业两个视角对影响后世博时期上海经济长效增长的决定因素进行实证分析,结果表明:(1)消费需求是直接带动上海经济增长的主力军;(2)产业结构优化调整与经济增长存在长期稳定关系;(3)产业结构优化调整是促进上海经济增长的重要原因.在此实证结论的支持下,文章提出运用税收政策引导和支持新兴产业发展、加快地方税体系建设、完善和实施有利于消费结构升级的财税政策等建议,以促进上海市经济长效增长.     

The China shock and job reallocation in Japan

This study investigates the characteristics of manufacturing job reallocation in Japan induced by import shocks from China during 1996–2016. Three types of import shocks are considered: direct, upstream, and downstream. Some salient features of job reallocation include decrease in total jobs from direct import, increase in small establishments’ jobs from downstream import, and job changes mainly induced establishments’ entry and exit. The sizeable difference of implied job changes in industry-level analysis and those in region-level analysis attributes to the local reallocation and aggregate demand effects determined by regional characteristics. The total job effect of three import shocks is negative in all cases examined. The method of decomposing job changes into detailed job flows and further into industry and regional factors, proposed in this study, enabled obtaining a clearer view of job reallocation and how import shocks travel through labor market.