Search results for "business cycle"
showing 10 items of 90 documents
Long-Run Growth and Volatility: Which Source Really Matters
2010
The aim of the article is to analyse the relationship between long-run growth and business cycle volatility. In particular, the main purpose of this article is to identify which source of volatility is most detrimental to growth. Using cross-country data from 1970 to 2000, and several indicators of volatility (such as inflation, exchange rate, government expenditure, output and investment volatility) this article shows that although, all these measures of volatility are remarkably harmful for growth, business cycle investment volatility is the main source that hampers long-run growth. This relation is robust to different measures of business cycle, and to different sub-samples of countries.
EMU enlargement, stabilization costs and insurance mechanisms
2008
This paper considers the determinants of the macroeconomic costs of joining EMU for the new EU Member Sates, and compares them with those of the EMU members. Specifically, we investigate the business cycle correlation between the candidate's economy and that of the euro area as a whole, and the ability of insurance mechanisms and fiscal policies to smooth income fluctuations. The results suggest that EMU membership would not be costly for some countries (Cyprus, Hungary and Malta) but for other countries it could have relevant costs, at least in the short-run. For some of these countries, business cycles are not yet well synchronized with the euro area's business cycle, and risk-sharing mec…
MACROECONOMIC SYNCHRONIZATION BETWEEN G3 COUNTRIES
2002
This paper studies the existence of a world business cycle by examining quarterly and annual comovements in production, prices, and interest rates in the three main world economies: Germany, Japan and the U.S. In accordance with earlier studies, contemporaneous relationships clearly dominate short-term dynamics. The evidence indicates that, in the last four decades, these comovements are clearly significant in all the variables, with the possible exception of short-term interest rates, and they are stronger for long-term interest rates; nevertheless, they are rather unstable over time. Este artículo estudia la existencia de un ciclo económico mundial mediante elexamen de movimientos comunes…
Business Cycle Affiliations in the Context of European Integration
2007
We study affiliations for the countries of the European Economic and Monetary Union (EMU) with Germany and the USA, using various business cycle measures derived from quarterly real GDP. These measures are Hodrick-Prescott and Baxter-King filtered series and annual growth rates. By using rolling contemporaneous and maximum (over a short lead/lag interval) correlations, we document increasing correlations of EMU countries with Germany, with these typically being largest during the 1990s. We also document a strong leading role for the USA in relation to these countries in the period since 1993, thereby correcting the fallacy that the European business cycle was disjointed from the USA for mos…
Fiscal Convergence, Business Cycle Volatility and Growth
2009
This paper analyzes the effects of fiscal convergence on business cycle volatility and growth. Using a panel 21 OECD countries (including 11 EMU countries) and 40 years of data, we find that countries with similar government budget positions tend to have smoother business cycles. That is, fiscal convergence (in the form of persistently similar ratios of government surplus/deficit to GDP) is systematically associated with smoother business cycles. We also find evidence that reduced business cycle volatility through higher fiscal convergence stimulates growth. Our empirical results are economically and statistically significant and robust.
The Stabilizing Role of Government Size
2007
This paper presents an analysis of how alternative models of the business cycle can replicate the stylized fact that large governments are associated with less volatile economies. Our analysis shows that adding nominal rigidities and costs of capital adjustment to an otherwise standard RBC model can generate a negative correlation between government size and the volatility of output. However, in the model, we find that the stabilizing effect is only due to a composition effect and it is not present when we look at the volatility of private output. Given that empirically we also observe a negative correlation between government size and the volatility of consumption, we modify the model by i…
Determinants of migratory flow in Europe: A fuzzy-set approach
2018
Abstract This article examines the variables that explain immigrants' decisions to remain in 18 European countries at three key stages of the European economic cycle: 2006 (economic boom), 2009 (the height of the economic and financial crisis), and 2014 (beginning of recovery). Population variables, environmental and health service variables, and economic variables were considered. Fuzzy-set qualitative comparative analysis (fsQCA) was used to conduct the analysis. The findings indicate that immigration behavior differs according to the stage of the economic cycle. When the economic cycle is in a favorable stage (boom and economic recovery), the GDP growth and land surface area of the recei…
The Determinants of Migrants’ Remittance Inflows in the MENA Region: A Macroeconomic Approach
2014
Macroeconomic studies on the determinants of remittance flows have traditionally reviewed the role that economic conditions of host and home countries of migrants play in this process. New contributions have enlarged that setting by dealing with socio-political (demographics, institutions) and individual (education) dimensions influencing migrants’ behaviour when they remit money back home. In this investigation, we test for the role of all these variables in a general framework when analysing the case of the MENA (Middle East and North of Africa) region. Results indicate that the state of the business cycle, the characteristics of households (fertility, income per capita), and those of the…
Effects of external imbalances on GDP recovery patterns
2021
Abstract A decade after the beginning of the Great Recession, flow external imbalances, measured by the current account (CA) have narrowed markedly. However, stock or net foreign assets (NFA) imbalances have kept increasing and have created challenges for future macroeconomic and financial stability. To date, early warning systems (scoreboards) have focused more on flow than on stock variables. To approach this problem, in this paper we analyze expansions using two complementary sets of indicators proposed by Harding and Pagan (2002) and Gadea et al. (2017) for the period 1950–2016. After controlling for a large set of explanatory variables, we find that the effect of CA imbalances is limit…
Sustainability of Public Pension Systems
2020
The aim of this chapter is to review the main instruments and indicators used to measure the sustainability of PAYG pension systems. It will distinguish between defined contribution and defined benefit systems, due to the various implications that each of them has. It will also be necessary to review the different types of sustainability instruments, for example, those based on cash criteria, financial criteria set by the economic cycle and actuarial criteria. For the actuarial criteria, we will review the criteria of the internal rate of return (IRR) and the actuarial balance. Subsequently, we will review which countries publish official pension system sustainability data and what kind of …