This paper attempts to estimate trends in the levels of economic surplus, public and private investment, and national government surpluses and deficits from accumulated capital income, taxation, and rents estimated by different economic historians for England and the UK. The data support historical accounts that income per capita growth begins to increase around the 1600s in Britain perhaps due to the level of capital, tax, and land income achieving an adequate threshold amount. According to some historians, this would also be about the time of capitalism’s ascent as the dominant economic system in England. Even then, dramatic increases in investment and economic growth do not appear until the late 18th Century when investment and deficits reach even higher levels. The data developed in this research note are offered as additional macroeconomic data supplements to works created by other authors and researchers.
{"title":"Conjectures of English and UK Economic Surplus, Investment, Tax Revenues and Deficit Amounts from the 13th to the 19th Century","authors":"T. Lambert","doi":"10.2139/ssrn.3900660","DOIUrl":"https://doi.org/10.2139/ssrn.3900660","url":null,"abstract":"This paper attempts to estimate trends in the levels of economic surplus, public and private investment, and national government surpluses and deficits from accumulated capital income, taxation, and rents estimated by different economic historians for England and the UK. The data support historical accounts that income per capita growth begins to increase around the 1600s in Britain perhaps due to the level of capital, tax, and land income achieving an adequate threshold amount. According to some historians, this would also be about the time of capitalism’s ascent as the dominant economic system in England. Even then, dramatic increases in investment and economic growth do not appear until the late 18th Century when investment and deficits reach even higher levels. The data developed in this research note are offered as additional macroeconomic data supplements to works created by other authors and researchers.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-08-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114200184","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}
Pub Date : 2020-09-01DOI: 10.5709/ce.1897-9254.405
A. Nurudeen, Awadh Ahmed Mohammed Gamal
Nigeria has not been able to generate adequate revenue to match her expenditure over the years. It is not surprising therefore, that the country frequently operates deficit budget with its negative consequences on the current account balance. This study investigates the twin deficits hypothesis (that is, budget deficits and current account deficits relationship) for Nigeria over the 1981-2017 period using the Autoregressive Distributed Lag (ARDL) and Dynamic Ordinary Least Squares (DOLS) estimation techniques. The result of the cointegration test indicates that there is a long-run relationship between budget deficits and current account deficits (along with oil prices and interest rate). The estimation results show that increases in budget deficits lead to increases in current account deficits in Nigeria in the short-run and the long-run. This finding validates the Keynesian assertion, but refutes the Ricardian Equivalence Hypothesis with respect to the relationship between the two deficits in Nigeria. The result of causality test using the Toda and Yamamoto (1995) approach illustrates the existence of a one-way causality from current account deficits to budget deficits. Based on this empirical evidence, this study recommends policies to reduce both deficits in Nigeria.
{"title":"An Empirical Investigation of the Twin Deficits Hypothesis in Nigeria: Evidence from Cointegration Techniques","authors":"A. Nurudeen, Awadh Ahmed Mohammed Gamal","doi":"10.5709/ce.1897-9254.405","DOIUrl":"https://doi.org/10.5709/ce.1897-9254.405","url":null,"abstract":"Nigeria has not been able to generate adequate revenue to match her expenditure over the years. It is not surprising therefore, that the country frequently operates deficit budget with its negative consequences on the current account balance. This study investigates the twin deficits hypothesis (that is, budget deficits and current account deficits relationship) for Nigeria over the 1981-2017 period using the Autoregressive Distributed Lag (ARDL) and Dynamic Ordinary Least Squares (DOLS) estimation techniques. The result of the cointegration test indicates that there is a long-run relationship between budget deficits and current account deficits (along with oil prices and interest rate). The estimation results show that increases in budget deficits lead to increases in current account deficits in Nigeria in the short-run and the long-run. This finding validates the Keynesian assertion, but refutes the Ricardian Equivalence Hypothesis with respect to the relationship between the two deficits in Nigeria. The result of causality test using the Toda and Yamamoto (1995) approach illustrates the existence of a one-way causality from current account deficits to budget deficits. Based on this empirical evidence, this study recommends policies to reduce both deficits in Nigeria.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128485409","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}
To rein in fiscal deficits, policymakers traditionally raise taxes or cut public spending. However, many economists worry that those policies can slow down the economy. By contrast, faster economic growth — without changing taxes or spending — reduces the deficit on two fronts, by raising revenue and by reducing demand for safety-net public spending. In this policy brief, we argue that boosting economic activity by reducing the regulatory burden works indirectly as a deficit-reducing policy.
This brief offers a pragmatic road-map for reducing the budget deficit through cutting red tape. First, we highlight how boosting productivity performance is critical to achieving faster economic growth. Second, we discuss how economic growth impacts the deficit. We conclude by offering evidence that regulation tends to worsen productivity, especially in product and labor markets, and that regulatory reform that results in productivity-enhancing growth could be a powerful way to improve the dire budget outlook for the United States.
{"title":"Cutting Red Tape to Cut the Deficit: An Innovative Approach to Balancing the Budget","authors":"James Broughel, J. Salmon","doi":"10.2139/ssrn.3690522","DOIUrl":"https://doi.org/10.2139/ssrn.3690522","url":null,"abstract":"To rein in fiscal deficits, policymakers traditionally raise taxes or cut public spending. However, many economists worry that those policies can slow down the economy. By contrast, faster economic growth — without changing taxes or spending — reduces the deficit on two fronts, by raising revenue and by reducing demand for safety-net public spending. In this policy brief, we argue that boosting economic activity by reducing the regulatory burden works indirectly as a deficit-reducing policy.<br><br>This brief offers a pragmatic road-map for reducing the budget deficit through cutting red tape. First, we highlight how boosting productivity performance is critical to achieving faster economic growth. Second, we discuss how economic growth impacts the deficit. We conclude by offering evidence that regulation tends to worsen productivity, especially in product and labor markets, and that regulatory reform that results in productivity-enhancing growth could be a powerful way to improve the dire budget outlook for the United States.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128540112","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 foreign exchange rate exposures of US companies and how they are linked to foreign macroeconomic determinants. I use US trade-weighted macroeconomic indices of foreign countries to explain the variation in foreign exchange rate exposures, measured as the sensitivities of stock returns to exchange rate returns of US non-financial companies over the period 1995 to 2017. I find strong evidence that the after-hedging exposures of potential exporters are affected by their expectations of foreign market gross domestic products, current account balances, consumer price indices, term spreads, unit labor costs as well as government expenditures.
{"title":"Macroeconomic Determinants of Foreign Exchange Rate Exposure","authors":"Fabian U. Fuchs","doi":"10.2139/ssrn.3439239","DOIUrl":"https://doi.org/10.2139/ssrn.3439239","url":null,"abstract":"This paper examines the foreign exchange rate exposures of US companies and how they are linked to foreign macroeconomic determinants. I use US trade-weighted macroeconomic indices of foreign countries to explain the variation in foreign exchange rate exposures, measured as the sensitivities of stock returns to exchange rate returns of US non-financial companies over the period 1995 to 2017. I find strong evidence that the after-hedging exposures of potential exporters are affected by their expectations of foreign market gross domestic products, current account balances, consumer price indices, term spreads, unit labor costs as well as government expenditures.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"333 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115978188","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}
Japanese version (original): https://ssrn.com/abstract=3429565 Fiscal Theory of the Price Level (FTPL) derives the budget constraint formula of the integrated government which integrates balance sheets of the government and the central bank, and it is a theory that price level fluctuates so that real government debt satisfies budget constraint. This model does not specify the cause of price level fluctuations. Then, this paper proposes a model which clarifies the relation between the mechanism of the fluctuation of the price level and the finance by constructing the mathematical model of tax money theory and endogenous money supply theory which are the basis of Modern Monetary Theory (MMT), and constructing the macro-economic model.
{"title":"Monetary Theory of the Price Level (物価水準の貨幣理論)","authors":"Y. Kimura","doi":"10.2139/ssrn.3431596","DOIUrl":"https://doi.org/10.2139/ssrn.3431596","url":null,"abstract":"Japanese version (original): \u0000https://ssrn.com/abstract=3429565 \u0000 \u0000Fiscal Theory of the Price Level (FTPL) derives the budget constraint formula of the integrated government which integrates balance sheets of the government and the central bank, and it is a theory that price level fluctuates so that real government debt satisfies budget constraint. This model does not specify the cause of price level fluctuations. \u0000Then, this paper proposes a model which clarifies the relation between the mechanism of the fluctuation of the price level and the finance by constructing the mathematical model of tax money theory and endogenous money supply theory which are the basis of Modern Monetary Theory (MMT), and constructing the macro-economic model.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"129 Pt 1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-08-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131200215","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 revisits the period of substantial widening of external imbalances in advanced economies in the run-up to the global financial crisis and their adjustment since then. We take a granular look at these imbalances through the lens of their domestic counterpart: the net financial balance of the household sector, the government, non-financial corporations, and financial corporations. Our findings challenge the often-claimed view that the household sector lies behind most of the dynamics of the current account. In fact, we show that it is the non-financial corporation and the government sectors that account for the bulk of: (i) the co-movement with the standard set of fundamental covariates of the current account; (ii) the external adjustment and expenditure reduction in the aftermath of the global financial crisis; and (iii) the diverging dynamics during large and persistent current account imbalances. These results emphasize that analyzing domestic sectoral balances can lead to a better empirical and theoretical understanding of global imbalances.
{"title":"Revisiting External Imbalances: Insights from Sectoral Accounts","authors":"Cian Allen","doi":"10.2139/ssrn.3160163","DOIUrl":"https://doi.org/10.2139/ssrn.3160163","url":null,"abstract":"This paper revisits the period of substantial widening of external imbalances in advanced economies in the run-up to the global financial crisis and their adjustment since then. We take a granular look at these imbalances through the lens of their domestic counterpart: the net financial balance of the household sector, the government, non-financial corporations, and financial corporations. Our findings challenge the often-claimed view that the household sector lies behind most of the dynamics of the current account. In fact, we show that it is the non-financial corporation and the government sectors that account for the bulk of: (i) the co-movement with the standard set of fundamental covariates of the current account; (ii) the external adjustment and expenditure reduction in the aftermath of the global financial crisis; and (iii) the diverging dynamics during large and persistent current account imbalances. These results emphasize that analyzing domestic sectoral balances can lead to a better empirical and theoretical understanding of global imbalances.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125858411","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}
Korean Abstract: 본 연구는 인도 경상수지의 장단기 요인과 결정요인을 분석하였다. 먼저 인도의 거시경제 지표와 경상수지 관련 데이터를 살펴보면, 인도의 경상수지 적자는 특히 인도경제의 활황기인 2000년대 중반 이후 증가하여 GDP 대비 –5%대를 하회했으며, 특히 상품수지 적자는 –10% 이하를 기록하였다. BRICS 국가들과 우리나라를 포함한 주요 선진국들과 비교해 봐도 인도는 미국을 제외하면 가장 오랜 기간 동안 경상수지 적자를 지속적으로 기록한 국가이다. 하지만 안정적 저축율과 함께 증가한 투자의 증가가 두드러지므로 인도의 경상수지 적자는 개도국이 경제성장을 위해 어쩔 수 없이 경험하는 과정으로 해석할 수도 있다. 본고는 인도 경상수지 적자의 단기요인을 분석하였는데 환율, 유가, 재정수지, 성장률 중 유가만이 경상수지 적자에 영향을 주는 것으로 나타났다. 하지만 유가의 영향은 오랫동안 지속되지는 않는 것으로 보이며, 상품수지는 성장률에도 반응하는 것으로 나타났는데 이는 상품수지가 경상수지보다 경기에 더 민감함을 보여준다. 이외에도 실증분석 결과에 따르면 경상수지 적자가 단기적 요인보다 중장기적 요인에 더욱 의존함을 알 수 있다. 경상수지의 결정요인 분석 결과에서 경상수지와 순해외자산과의 음(-)의 관계는 인도의 순해외자산이 증가가 해외소득 증가를 통해 본원소득수지를 증가시켜 경상수지를 개선시키는 전달경로보다, 해외소득 증가에 따른 소비여력의 증가로 수입이 증가해 경상수지의 적자가 발생한다는 경로가 보다 설득력 있음을 의미한다. 단기요인 분석과 마찬가지로 재정수지는 경상수지에 별다른 영향이 없었으며, 금융심화에 따라 경상수지 적자가 발생한다는 결과는 저축에 따른 경상수지 개선보다, 금융 발전에 따른 소비여력의 증가가 인도의 상황임을 암시한다. 성장과 경상수지의 음(-)의 관계는 역시 소비증가에 따른 수입소비 증가가 인도 경상수지 적자에 영향을 미쳤음을 보여준다. 경상수지와 개방도 간 음(-)의 관계는 인도 개방에 따른 해외투자 유입이 경상수지 적자에 일정정도 기여했을 가능성을 나타낸다. (후략).English Abstract: This paper examines the short and long-term causes of current account deficit in India. This paper also investigates key determinants of current account for India.The findings from impulse response functions show that oil price has effect on current account only and the effects of other factors, such as exchange rate, growth, and fiscal balance, are minimal. An analysis of forecasting error variance decomposition suggests that the problem of current account deficit in India be systemic rather than short-term.The results from an empirical investigation of determinants of current account provide that current account in India is negatively correlated with real GDP, openness and net foreign assets. In accordance with the analysis of short-term effect, no relationship between fiscal balance and current account is detected. In a long-term perspective, long lasting current account deficit in India looks structural phenomenon. It is an outcome of greater domestic demand than production. Greater amount of outflow of foreign investment than inflow has also contributed to current account deficit. Moreover, structural change in population toward higher proportion of working age population is one of the key factors to give rise to current account deficit in this country and it is inevitable for a fairly long time.
Korean Abstract:本研究分析了印度经常收支的长短期因素和决定因素。首先从印度的宏观经济指标和经常项目收支相关数据来看，印度的经常项目收支逆差特别是在印度经济繁荣时期的2000年代中期以后增加，低于GDP的- 5%，特别是商品收支逆差低于- 10%。与“金砖四国”和包括韩国在内的主要发达国家相比，印度是除美国之外，长期持续出现经常收支逆差的国家。但是，稳定的储蓄率和增加的投资增加非常明显，因此，印度的经常收支逆差可以解释为发展中国家为经济增长不得不经历的过程。本报分析了印度经常项目收支逆差的短期因素，在汇率、油价、财政收支、增长率中，只有油价对经常项目收支逆差产生影响。但是，油价的影响似乎不会持续很长时间，商品收支对增长率也有反应，这表明商品收支比经常收支对景气更敏感。此外，实证分析结果显示，比起短期因素，经常收支逆差更依赖中长期因素。经常收支的决定分析结果中经常收支和纯海外资产与音(-)的关系是印度的净海外资产增加海外收入的增加,通过增加收入收支本溯源,经常收支改善传达途径相比,海外收入增加导致消费能力的增加,收入增加,可能发生经常收支的赤字的途径,意味着更有说服力的。与短期因素分析一样，财政收支对经常项目收支没有太大影响，随着金融的深化，经常项目收支出现逆差的结果暗示，比起储蓄带来的经常项目收支改善，金融发展带来的消费余力的增加是印度的状况。增长与经常项目收支“阴(-)”的关系表明，消费增加带来的进口消费增加对印度经常项目收支逆差产生了影响。经常收支和开放度之间的“阴(-)”关系显示出随着印度开放的海外投资流入对经常收支逆差做出一定程度贡献的可能性。(后略)。英语Abstract: This paper examines the short and long-term causes of current account deficit in India。This paper also investigates key determinants of current account for India。The findings from impulse response functions show that oil price has effect on current account only and The effects of other factors, such as exchange rate, growth, and fiscal balance, are minimal。An analysis of forecasting error variance decomposition suggests that the problem of current account deficit in India be systemic rather than short-term。The results from an empirical investigation of determinants of current account provide that current account in India is negatively correlated with real GDP, openness and net foreign assets。In accordance with the analysis of short-term effect, no relationship between fiscal balance and current account is detected。In a long-term perspective, long lasting current account deficit In India looks structural phenomenon。It is an outcome of greater domestic demand than production。Greater amount of outflow of foreign investment than inflow has also contributed to current account deficit。moreover,structural change in population in population of working age population is one of the key factors to give rise to current account deficit in this country and it is inevitable for a fairlylong time。
{"title":"인도 경상수지 적자의 장단기 요인과 시사점 (Short- and Long-Term Causes of Current Account Deficit in India and its Implications)","authors":"Woong Lee","doi":"10.2139/SSRN.2783572","DOIUrl":"https://doi.org/10.2139/SSRN.2783572","url":null,"abstract":"Korean Abstract: 본 연구는 인도 경상수지의 장단기 요인과 결정요인을 분석하였다. 먼저 인도의 거시경제 지표와 경상수지 관련 데이터를 살펴보면, 인도의 경상수지 적자는 특히 인도경제의 활황기인 2000년대 중반 이후 증가하여 GDP 대비 –5%대를 하회했으며, 특히 상품수지 적자는 –10% 이하를 기록하였다. BRICS 국가들과 우리나라를 포함한 주요 선진국들과 비교해 봐도 인도는 미국을 제외하면 가장 오랜 기간 동안 경상수지 적자를 지속적으로 기록한 국가이다. 하지만 안정적 저축율과 함께 증가한 투자의 증가가 두드러지므로 인도의 경상수지 적자는 개도국이 경제성장을 위해 어쩔 수 없이 경험하는 과정으로 해석할 수도 있다. 본고는 인도 경상수지 적자의 단기요인을 분석하였는데 환율, 유가, 재정수지, 성장률 중 유가만이 경상수지 적자에 영향을 주는 것으로 나타났다. 하지만 유가의 영향은 오랫동안 지속되지는 않는 것으로 보이며, 상품수지는 성장률에도 반응하는 것으로 나타났는데 이는 상품수지가 경상수지보다 경기에 더 민감함을 보여준다. 이외에도 실증분석 결과에 따르면 경상수지 적자가 단기적 요인보다 중장기적 요인에 더욱 의존함을 알 수 있다. 경상수지의 결정요인 분석 결과에서 경상수지와 순해외자산과의 음(-)의 관계는 인도의 순해외자산이 증가가 해외소득 증가를 통해 본원소득수지를 증가시켜 경상수지를 개선시키는 전달경로보다, 해외소득 증가에 따른 소비여력의 증가로 수입이 증가해 경상수지의 적자가 발생한다는 경로가 보다 설득력 있음을 의미한다. 단기요인 분석과 마찬가지로 재정수지는 경상수지에 별다른 영향이 없었으며, 금융심화에 따라 경상수지 적자가 발생한다는 결과는 저축에 따른 경상수지 개선보다, 금융 발전에 따른 소비여력의 증가가 인도의 상황임을 암시한다. 성장과 경상수지의 음(-)의 관계는 역시 소비증가에 따른 수입소비 증가가 인도 경상수지 적자에 영향을 미쳤음을 보여준다. 경상수지와 개방도 간 음(-)의 관계는 인도 개방에 따른 해외투자 유입이 경상수지 적자에 일정정도 기여했을 가능성을 나타낸다. (후략).English Abstract: This paper examines the short and long-term causes of current account deficit in India. This paper also investigates key determinants of current account for India.The findings from impulse response functions show that oil price has effect on current account only and the effects of other factors, such as exchange rate, growth, and fiscal balance, are minimal. An analysis of forecasting error variance decomposition suggests that the problem of current account deficit in India be systemic rather than short-term.The results from an empirical investigation of determinants of current account provide that current account in India is negatively correlated with real GDP, openness and net foreign assets. In accordance with the analysis of short-term effect, no relationship between fiscal balance and current account is detected. In a long-term perspective, long lasting current account deficit in India looks structural phenomenon. It is an outcome of greater domestic demand than production. Greater amount of outflow of foreign investment than inflow has also contributed to current account deficit. Moreover, structural change in population toward higher proportion of working age population is one of the key factors to give rise to current account deficit in this country and it is inevitable for a fairly long time.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"82 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132755120","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}
Tamim A. Bayoumi, Joseph E. Gagnon, Christian Saborowski
We use a cross-country panel framework to analyze the effect of net official flows (chiefly foreign exchange intervention) on current accounts. We find that net official flows have a large but plausible effect on current account balances. The estimated effects are larger with instrumental variables (42 cents to the dollar on average compared with 24 without instruments), reflecting a possible downward bias in regressions without instruments owing to an endogenous response of net official flows to private financial flows. We consistently find larger impacts of net official flows when international capital flows are restricted and smaller impacts when capital is highly mobile. A further result is that there is an important positive effect of lagged net official flows on current accounts that we believe operates through the portfolio balance channel.
{"title":"Official Financial Flows, Capital Mobility, and Global Imbalances","authors":"Tamim A. Bayoumi, Joseph E. Gagnon, Christian Saborowski","doi":"10.2139/ssrn.2513876","DOIUrl":"https://doi.org/10.2139/ssrn.2513876","url":null,"abstract":"We use a cross-country panel framework to analyze the effect of net official flows (chiefly foreign exchange intervention) on current accounts. We find that net official flows have a large but plausible effect on current account balances. The estimated effects are larger with instrumental variables (42 cents to the dollar on average compared with 24 without instruments), reflecting a possible downward bias in regressions without instruments owing to an endogenous response of net official flows to private financial flows. We consistently find larger impacts of net official flows when international capital flows are restricted and smaller impacts when capital is highly mobile. A further result is that there is an important positive effect of lagged net official flows on current accounts that we believe operates through the portfolio balance channel.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131895342","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}
We study whether the adoption of the Euro and a single monetary policy have brought about a change in the monetary transmission mechanism and between the interactions of monetary policy, fiscal policy and financial stress in the Euro area. We find that the stylized facts of monetary transmission remain valid, but the response of output and, especially, fiscal and financial stress variables to a monetary policy shock, seems to be stronger in the post-EMU period. Regarding fiscal and financial stress shocks, the inclusion in the post-EMU period of subprime and sovereign debt crises yields, changes, not only in the scale, but also in the patterns of the responses of our model’s main variables.
{"title":"The Monetary Transmission Mechanism in the Euro Area: Has It Changed with the EMU? A VAR Approach, with Fiscal Policy and Financial Stress Considerations","authors":"António Afonso, António Jorge Esteves da Silva","doi":"10.2139/SSRN.2468349","DOIUrl":"https://doi.org/10.2139/SSRN.2468349","url":null,"abstract":"We study whether the adoption of the Euro and a single monetary policy have brought about a change in the monetary transmission mechanism and between the interactions of monetary policy, fiscal policy and financial stress in the Euro area. We find that the stylized facts of monetary transmission remain valid, but the response of output and, especially, fiscal and financial stress variables to a monetary policy shock, seems to be stronger in the post-EMU period. Regarding fiscal and financial stress shocks, the inclusion in the post-EMU period of subprime and sovereign debt crises yields, changes, not only in the scale, but also in the patterns of the responses of our model’s main variables.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-07-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121810532","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}
Global imbalance refers to the significant gap in current account surpluses and deficits amongst major countries. Between mid-1990s and mid-2000s, global imbalance moved from moderate to historically unprecedented levels. Particularly, the U.S. ran up its current account deficit from under $200 billion in 1995 to $800 billion in 2006, prior to the outbreak of the subprime mortgage crisis. At the same time, China and other Asian countries as well as oil exporters in the Middle East ran up record current account surpluses. The unprecedented nature of these numbers invited concern about whether global imbalances pose a significant risk to global economy. As shown in Figure 1, the global imbalance in the 2000s was more significant relative to previous global imbalances. The U.S. current account deficits have been mainly fueled by China, Japan, other Asian economies, and Germany’s export-led growth. However, as the world oil production approaches the peak, the pattern of global imbalances is likely to change dramatically. The center of global trade surpluses is likely to shift away from East Asia and towards the main oil exporters. In summary, global imbalance is a systematic result of global economic activities, and the large global imbalance is detrimental for both surplus and deficit countries. As the current account imbalance has reached an unprecedented level and the world economy becomes more globalized, the global imbalance will become a more importance issue.
{"title":"Global Imbalances","authors":"Ji Hong Kim","doi":"10.2139/ssrn.2380402","DOIUrl":"https://doi.org/10.2139/ssrn.2380402","url":null,"abstract":"Global imbalance refers to the significant gap in current account surpluses and deficits amongst major countries. Between mid-1990s and mid-2000s, global imbalance moved from moderate to historically unprecedented levels. Particularly, the U.S. ran up its current account deficit from under $200 billion in 1995 to $800 billion in 2006, prior to the outbreak of the subprime mortgage crisis. At the same time, China and other Asian countries as well as oil exporters in the Middle East ran up record current account surpluses. The unprecedented nature of these numbers invited concern about whether global imbalances pose a significant risk to global economy. As shown in Figure 1, the global imbalance in the 2000s was more significant relative to previous global imbalances. The U.S. current account deficits have been mainly fueled by China, Japan, other Asian economies, and Germany’s export-led growth. However, as the world oil production approaches the peak, the pattern of global imbalances is likely to change dramatically. The center of global trade surpluses is likely to shift away from East Asia and towards the main oil exporters. In summary, global imbalance is a systematic result of global economic activities, and the large global imbalance is detrimental for both surplus and deficit countries. As the current account imbalance has reached an unprecedented level and the world economy becomes more globalized, the global imbalance will become a more importance issue.","PeriodicalId":433744,"journal":{"name":"ERN: Deficit; Surplus (Topic)","volume":"72 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-01-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114835942","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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