This paper describes a dynamic one‐sector macroeconomic model that draws on both post‐Keynesian and classical/neo‐Marxian themes. The model features an equilibrium in which Harrod’s actual, warranted, and natural growth rates coincide. Dynamic processes unfolding over both short and long time scales lead the economy to exhibit both business cycles and long waves. The Keynesian stability condition is assumed not to hold, so the model features short‐run instability, which is bounded from above by a utilization ceiling. Labor constraints affect distribution through conflict pricing. In contrast to other Kaleckian–Harrodian models, we do not assume an exogenous source of demand. Instead, short‐run instability is bounded from below by firms’ expectations that the downturn will eventually reverse.
{"title":"Convergence of Actual, Warranted, and Natural Growth Rates in a Kaleckian–Harrodian‐Classical Model","authors":"E. Kemp-Benedict","doi":"10.1111/meca.12305","DOIUrl":"https://doi.org/10.1111/meca.12305","url":null,"abstract":"This paper describes a dynamic one‐sector macroeconomic model that draws on both post‐Keynesian and classical/neo‐Marxian themes. The model features an equilibrium in which Harrod’s actual, warranted, and natural growth rates coincide. Dynamic processes unfolding over both short and long time scales lead the economy to exhibit both business cycles and long waves. The Keynesian stability condition is assumed not to hold, so the model features short‐run instability, which is bounded from above by a utilization ceiling. Labor constraints affect distribution through conflict pricing. In contrast to other Kaleckian–Harrodian models, we do not assume an exogenous source of demand. Instead, short‐run instability is bounded from below by firms’ expectations that the downturn will eventually reverse.","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"95 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"119105133","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ben Charoenwong, R. Morck, Yupana Wiwattanakantang
From January 2011 through March 2018, the Bank of Japan purchased equity index exchange-traded funds (ETFs) worth about 3.5% of GDP. Identification of the effect of central bank ETF purchases on stock valuations and corporate responses is via differently-weighted and changing stock indices. BOJ purchases lift valuations, increase share issuances, and increase total assets. On average, the latter increase is due to cash and short-term securities rather than capital investment. However, firms with worse corporate governance do increase capital investment. These findings suggest central bank equity purchases are a problematic tool for stimulating economic growth through high broad-based private-sector corporate investment.
{"title":"Bank of Japan Equity Purchases: The (Non-)Effects of Extreme Quantitative Easing","authors":"Ben Charoenwong, R. Morck, Yupana Wiwattanakantang","doi":"10.2139/ssrn.3310561","DOIUrl":"https://doi.org/10.2139/ssrn.3310561","url":null,"abstract":"\u0000 From January 2011 through March 2018, the Bank of Japan purchased equity index exchange-traded funds (ETFs) worth about 3.5% of GDP. Identification of the effect of central bank ETF purchases on stock valuations and corporate responses is via differently-weighted and changing stock indices. BOJ purchases lift valuations, increase share issuances, and increase total assets. On average, the latter increase is due to cash and short-term securities rather than capital investment. However, firms with worse corporate governance do increase capital investment. These findings suggest central bank equity purchases are a problematic tool for stimulating economic growth through high broad-based private-sector corporate investment.","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"8 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114122604","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Comments on "Has the Split-Share Reform Influenced Corporate Behaviour? Chinese Firms’ Fixed Capital Investment 2002-2016".
评《股权分置改革是否影响了企业行为?》中国企业固定资本投资:2002-2016”。
{"title":"Discussion of 'Has the Split-Share Reform Influenced Corporate Behaviour? Chinese Firms’ Fixed Capital Investment 2002-2016' (Presentation Slides)","authors":"Reuven Glick","doi":"10.2139/ssrn.3426242","DOIUrl":"https://doi.org/10.2139/ssrn.3426242","url":null,"abstract":"Comments on \"Has the Split-Share Reform Influenced Corporate Behaviour? Chinese Firms’ Fixed Capital Investment 2002-2016\".","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125066274","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Konstantinos Dellis, David Sondermann, I. Vansteenkiste
This paper investigates the role of economic structures as determinants of FDI inows. We expand on the existing literature by focusing on advanced economies, using a newly available measure of FDI which cleans the data from statistical artefacts, such as financial round tripping, and by relying on a wide variety of measures that proxy the quality of a country’s economic structures. Our results show that there is an empirical relation from the quality of a host country’s economic structures to FDI inflows. These results are robust to various economic specifications and are confirmed when restricting our sample to euro area countries only. JEL Classification: F21, F23, L51, O43
{"title":"Determinants of FDI Inflows in Advanced Economies: Does the Quality of Economic Structures Matter?","authors":"Konstantinos Dellis, David Sondermann, I. Vansteenkiste","doi":"10.2866/85838","DOIUrl":"https://doi.org/10.2866/85838","url":null,"abstract":"This paper investigates the role of economic structures as determinants of FDI inows. We expand on the existing literature by focusing on advanced economies, using a newly available measure of FDI which cleans the data from statistical artefacts, such as financial round tripping, and by relying on a wide variety of measures that proxy the quality of a country’s economic structures. Our results show that there is an empirical relation from the quality of a host country’s economic structures to FDI inflows. These results are robust to various economic specifications and are confirmed when restricting our sample to euro area countries only. JEL Classification: F21, F23, L51, O43","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114837172","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The investment-intensive growth model of the People’s Republic of China (PRC) is often viewed as state-driven and ultimately unsustainable. But largely unnoticed, a shift has taken place. This paper examines the changes in investment patterns since 2003 and the potential impact of industrial policies on these patterns. The point of view is macroeconomic, based on economy-wide data with various breakdown. Significant shifts in investment patterns across sectors and ownership forms have occurred over time, supporting a new growth model with a reduced role of the state, and these shifts appear driven more by market factors than by government policies.
{"title":"The Changing Patterns of Investment in the PRC Economy","authors":"Carsten A. Holz","doi":"10.2139/SSRN.2973707","DOIUrl":"https://doi.org/10.2139/SSRN.2973707","url":null,"abstract":"The investment-intensive growth model of the People’s Republic of China (PRC) is often viewed as state-driven and ultimately unsustainable. But largely unnoticed, a shift has taken place. This paper examines the changes in investment patterns since 2003 and the potential impact of industrial policies on these patterns. The point of view is macroeconomic, based on economy-wide data with various breakdown. Significant shifts in investment patterns across sectors and ownership forms have occurred over time, supporting a new growth model with a reduced role of the state, and these shifts appear driven more by market factors than by government policies.","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"81 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124652029","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the oil price-industrial production nexus in Thailand by using multivariate cointegration test. In addition, Granger causality is also used to examine the impact of oil price uncertainty on industrial production growth. The main focus of this paper is on one sector of the economy, i.e., manufacturing sector. Monthly data from 1993 to 2015 are utilized. Empirical results reveal that there is a stable long-run relationship between industrial production and real oil price along with other variables. Industrial production adjusts rapidly to shocks to lending rate, price level and oil price. Furthermore, there exists long-run causality running from lend rate, price level and oil price to industrial production. Furthermore, industrial production growth does not respond to oil price shock and oil price uncertainty. These findings give policy implication.
{"title":"The Response of Industrial Production to the Price of Oil: New Evidence for Thailand","authors":"Komain Jiranyakul","doi":"10.2139/ssrn.2792484","DOIUrl":"https://doi.org/10.2139/ssrn.2792484","url":null,"abstract":"This paper examines the oil price-industrial production nexus in Thailand by using multivariate cointegration test. In addition, Granger causality is also used to examine the impact of oil price uncertainty on industrial production growth. The main focus of this paper is on one sector of the economy, i.e., manufacturing sector. Monthly data from 1993 to 2015 are utilized. Empirical results reveal that there is a stable long-run relationship between industrial production and real oil price along with other variables. Industrial production adjusts rapidly to shocks to lending rate, price level and oil price. Furthermore, there exists long-run causality running from lend rate, price level and oil price to industrial production. Furthermore, industrial production growth does not respond to oil price shock and oil price uncertainty. These findings give policy implication.","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114318995","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The importance of productive capacities has been emphasized by various international organisations over the last decade. Many authors have focused their analysis on human capital and liberalisation as determinants, while often overlooking Foreign Direct Investment. We perform an analysis on Foreign Direct Investment and productive capacities using a recent dataset from Henn, Papageorgiou and Spatafora (2013) covering 35 years and 73 countries.Based on trade flows, the most complete and reliable source of data on production across countries, the dataset provides several proxies accounting for productive capacities. Our estimates, obtained from a dynamic panel analysis, suggest that FDI have a significant and positive impact on both economic diversification and sophistication, and thus that FDI lead to improved productive capacities. Estimates are consistent after running numerous robustness checks including various models and proxies.
{"title":"Productive Capacities in Developing Countries: Does Foreign Direct Investment Matter?","authors":"Maël Balac","doi":"10.2139/ssrn.2770054","DOIUrl":"https://doi.org/10.2139/ssrn.2770054","url":null,"abstract":"The importance of productive capacities has been emphasized by various international organisations over the last decade. Many authors have focused their analysis on human capital and liberalisation as determinants, while often overlooking Foreign Direct Investment. We perform an analysis on Foreign Direct Investment and productive capacities using a recent dataset from Henn, Papageorgiou and Spatafora (2013) covering 35 years and 73 countries.Based on trade flows, the most complete and reliable source of data on production across countries, the dataset provides several proxies accounting for productive capacities. Our estimates, obtained from a dynamic panel analysis, suggest that FDI have a significant and positive impact on both economic diversification and sophistication, and thus that FDI lead to improved productive capacities. Estimates are consistent after running numerous robustness checks including various models and proxies.","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-08-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131943748","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Norvald Instefjord, Vivekanand Nawosah, Peihong Yang
Just as it may be optimal to regulate firms that produce negative externalities, it may be optimal to provide subsidy to firms that produce positive externalities. This paper studies the optimal provision of subsidy to maximize the value of these externalities, and also whether there are policy measures that can enhance the welfare of investment subsidy. We consider both first-mover advantages in the market for subsidy (often associated with FDI subsidy) and free riding (often associated with green investment subsidy). We study the factors that influence the timing of investment subsidy, which in our model explains the activity in a given investment subsidy market. If the subsidy is offered early we expect there will be high activity, and conversely if the subsidy tends to be deferred to a later stage we expect there will be low activity. There are policy implications of the model, in particular we discuss an international "taxation" scheme which recovers welfare losses arising from too high or too low activity in the investment subsidy markets.
{"title":"Investment Subsidy","authors":"Norvald Instefjord, Vivekanand Nawosah, Peihong Yang","doi":"10.2139/ssrn.2561358","DOIUrl":"https://doi.org/10.2139/ssrn.2561358","url":null,"abstract":"Just as it may be optimal to regulate firms that produce negative externalities, it may be optimal to provide subsidy to firms that produce positive externalities. This paper studies the optimal provision of subsidy to maximize the value of these externalities, and also whether there are policy measures that can enhance the welfare of investment subsidy. We consider both first-mover advantages in the market for subsidy (often associated with FDI subsidy) and free riding (often associated with green investment subsidy). We study the factors that influence the timing of investment subsidy, which in our model explains the activity in a given investment subsidy market. If the subsidy is offered early we expect there will be high activity, and conversely if the subsidy tends to be deferred to a later stage we expect there will be low activity. There are policy implications of the model, in particular we discuss an international \"taxation\" scheme which recovers welfare losses arising from too high or too low activity in the investment subsidy markets.","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"56 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-02-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122274454","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Many economic activities are organized as partnerships. These ventures are formed with capital contributions by partnership members who obtain a share of ownership in exchange. The design of the partnership dictates how much of the profits is distributed among the mem- bers and how much is reinvested. In this paper, we study the optimal design of partnerships under the assumption that partners privately observe shocks to their liquidity needs. When the ownership share of a partner is large enough, his incentives to misreport vanish. This occurs because a fraction of the increase in his payouts after reporting high liquidity needs is financed by disinvesting in the partnership. When his ownership share is not big enough, the ownership structure of the partnership must vary over time to prevent misreporting. The limiting distri- bution of shares depends on the initial ownership structure. Under certain conditions, if the partnership starts with approximately equally distributed shares, both partners are too big to cheat and the ownership structure remains unchanged forever. Instead, if the initial ownership structure is such that one of the partners is too big to cheat but the other is not, the share of the initially larger partner ends up either reaching 100% (i.e., sole proprietorship forever) or decreasing to the point at which both partners are too big to cheat (i.e., shares are approximately equally distributed forever).
{"title":"Too Big to Cheat: Efficiency and Investment in Partnerships","authors":"Emilio Espino, J. Kozlowski, Juan M. Sánchez","doi":"10.2139/ssrn.2196569","DOIUrl":"https://doi.org/10.2139/ssrn.2196569","url":null,"abstract":"Many economic activities are organized as partnerships. These ventures are formed with capital contributions by partnership members who obtain a share of ownership in exchange. The design of the partnership dictates how much of the profits is distributed among the mem- bers and how much is reinvested. In this paper, we study the optimal design of partnerships under the assumption that partners privately observe shocks to their liquidity needs. When the ownership share of a partner is large enough, his incentives to misreport vanish. This occurs because a fraction of the increase in his payouts after reporting high liquidity needs is financed by disinvesting in the partnership. When his ownership share is not big enough, the ownership structure of the partnership must vary over time to prevent misreporting. The limiting distri- bution of shares depends on the initial ownership structure. Under certain conditions, if the partnership starts with approximately equally distributed shares, both partners are too big to cheat and the ownership structure remains unchanged forever. Instead, if the initial ownership structure is such that one of the partners is too big to cheat but the other is not, the share of the initially larger partner ends up either reaching 100% (i.e., sole proprietorship forever) or decreasing to the point at which both partners are too big to cheat (i.e., shares are approximately equally distributed forever).","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-07-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124127056","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
R. Hausmann, César A. Hidalgo, D. Stock, Muhammed A. Yıldırım
Ricardian theories of production often take the comparative advantage of locations in different industries to be uncorrelated. They are seen as the outcome of the realization of a random extreme value distribution. These theories do not take a stance regarding the counterfactual or implied comparative advantage if the country does not make the product. Here, we find that industries in countries and cities tend to have a relative size that is systematically correlated with that of other industries. Industries also tend to have a relative size that is systematically correlated with the size of the industry in similar countries and cities. We illustrate this using export data for a large set of countries and for city-level data for the US, Chile and India. These stylized facts can be rationalized using a Ricardian framework where comparative advantage is correlated across technologically related industries. More interestingly, the deviations between actual industry intensity and the implied intensity obtained from that of related industries or related locations tend to be highly predictive of future industry growth, especially at horizons of a decade or more. This result holds both at the intensive as well as the extensive margin, indicating that future comparative advantage is already implied in todays pattern of production.
{"title":"Implied Comparative Advantage","authors":"R. Hausmann, César A. Hidalgo, D. Stock, Muhammed A. Yıldırım","doi":"10.2139/ssrn.2410427","DOIUrl":"https://doi.org/10.2139/ssrn.2410427","url":null,"abstract":"Ricardian theories of production often take the comparative advantage of locations in different industries to be uncorrelated. They are seen as the outcome of the realization of a random extreme value distribution. These theories do not take a stance regarding the counterfactual or implied comparative advantage if the country does not make the product. Here, we find that industries in countries and cities tend to have a relative size that is systematically correlated with that of other industries. Industries also tend to have a relative size that is systematically correlated with the size of the industry in similar countries and cities. We illustrate this using export data for a large set of countries and for city-level data for the US, Chile and India. These stylized facts can be rationalized using a Ricardian framework where comparative advantage is correlated across technologically related industries. More interestingly, the deviations between actual industry intensity and the implied intensity obtained from that of related industries or related locations tend to be highly predictive of future industry growth, especially at horizons of a decade or more. This result holds both at the intensive as well as the extensive margin, indicating that future comparative advantage is already implied in todays pattern of production.","PeriodicalId":288608,"journal":{"name":"ERN: Capital","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123951040","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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