Purpose
The purpose of this paper is to determine how macroeconomic performance work with institutional quality influences divestment of foreign direct investment (FDI) in Sub-Saharan Africa, in the ...short and long run.
Design/methodology/approach
This paper investigates divestment of FDI in Sub-Saharan Africa, within the period 1980–2020. The investigation is undertaken by first comparing the trend with what is obtained in other economic regions of the world. The factors behind the divestment are subsequently investigated, using the vector error-correction model.
Findings
In the comparative analysis, Sub-Saharan Africa and other regions are observed to have witnessed sustained divestment in recent years. The estimation results of the model reveal that macroeconomic performance and institutional quality are the predominant drivers behind the divestment.
Research limitations/implications
The findings, however, do not conform to the neoclassical theory that lays emphasis on investment return as the fundamental factor influencing investment. Long-run structural stability is also established; hence, the results may be considered suitable for predicting future divestment in the region.
Practical implications
In view of the empirical findings, macroeconomic performance and institutional quality need to be improved to ameliorate FDI divestment in Sub-Saharan Africa.
Originality/value
There is paucity of research works on divestment of FDI in Sub-Saharan Africa. Again, there is paucity of works on how macroeconomic and institutional conditions work together to influence divestment. This study provides some evidence to bridge the perceived gaps.
Intangible Capital and Modern Economies Corrado, Carol; Haskel, Jonathan; Jona-Lasinio, Cecilia ...
The Journal of economic perspectives,
07/2022, Volume:
36, Issue:
3
Journal Article
Peer reviewed
Open access
The production of goods and services is central to understanding economies. The textbook description of a firm, typically in agriculture or manufacturing, focuses on its physical “tangible” capital ...(machines), labor (workers), and the state of “know-how. ” Yet real-world firms, such as Apple, Microsoft, and Google, have almost no physical capital. Instead, their main capital assets are “intangible”: software, data, design, reputation, supply-chain expertise, and R&D. We discuss investment in these knowledge-based types of capital: How to measure it; how it affects macroeconomic data on investment, rates of return, and GDP; and how it relates to growth theory and practical growth accounting. We present estimates of productivity in the US and European economies in recent decades including intangibles and discuss why, despite relatively rapid growth in intangible capital and what seems to be a modern technological revolution, productivity growth has slowed since the global financial crisis.
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CEKLJ, IZUM, KILJ, NUK, PILJ, SAZU, UL, UM, UPUK
U.S. data reveal three facts: (1) the share of goods in total expenditure declines at a constant rate over time, (2) the price of goods relative to services declines at a constant rate over time, and ...(3) poor households spend a larger fraction of their budget on goods than do rich households. I provide a macroeconomic model with non-Gorman preferences that rationalizes these facts, along with the aggregate Kaldor facts. The model is parsimonious and admits an analytical solution. Its functional form allows a decomposition of U.S. structural change into an income and substitution effect. Estimates from micro data show each of these effects to be of roughly equal importance.
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BFBNIB, FZAB, GIS, IJS, INZLJ, KILJ, NLZOH, NMLJ, NUK, OILJ, PNG, SAZU, SBCE, SBMB, UL, UM, UPUK, ZRSKP
Using the data of Chinese industrial enterprises, we examine how the incentive to reach GDP growth targets affects the local firms' capacity utilization. We find that Chinese economic growth targets ...exhibit a persistent pattern of top-down amplification along different jurisdiction levels, which is associated with a decline in local firms' capacity utilization. Moreover, the effect of amplified targets on overcapacity is more pronounced (1) when officials utilize hard-constraint vocabulary in setting the economic growth target, (2) during the National Congress of Communist Party, and (3) when the age of prefecture-level officials is close to 55. We also find officials intervene local firms' capacity decisions by increasing private communication with local entities and loosening public policies for local firms within their jurisdictions. Further results show that the amplification of economic targets is detrimental to future development of both regional economy and local firms.
•Chinese economic growth targets exhibit a persistent pattern of top-down amplification along different jurisdiction.•The top-down amplification of economic growth targets is associated with a decline in local firms' capacity utilization.•Officials intervene firms' capacity decisions by increasing private communication with local entities and loosening public policies for local firms.•The amplification of economic targets is detrimental to future development of both regional economy and local firms.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPUK, ZAGLJ, ZRSKP
A tractable incomplete-market model with endogenous unemployment risk, sticky prices, real wage rigidity and a fiscal side is calibrated to Euro Area countries and used to analyze the macroeconomic ...effects of lockdown policies. Modeling them as a shock to the extensive margin of labor adjustment – a rise in separations – produces large and persistent negative effects on output, unemployment and welfare, raises precautionary savings and lowers inflation, in line with early evidence about inflation dynamics. Modeling lockdowns as a shock to the intensive margin – a fall in labor utilization – produces small and short-lived macroeconomic and welfare effects, and implies a counterfactual rise in inflation. Conditional on a lockdown (separation) shock, raising public spending or extending UI benefits by large amounts is much more effective in stimulating the economy than during normal times. Quantitatively however, the ability of such policies to flatten the output and unemployment curves remains limited, even though these policies can alleviate a reasonable share of the aggregate welfare losses from the lockdown.
•We propose a model with uninsured unemployment risk to analyze lockdown shocks and policy responses.•Lockdowns have very different implications whether they affect the intensive or the extensive margin of labor.•When affecting the extensive margin, lockdowns are Keynesian supply shocks.•Government policies stimulate the economy more during lockdowns than during normal times.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPUK, ZAGLJ, ZRSKP
It is a great pleasure for me to introduce this special issue in honor of Clifford Wymer. This special issue (which has been jointly edited by Giovanni Di Bartolomeo, Daniela Federici, and Enrico ...Saltari) is a fitting tribute to a great scholar. We all know him well, so there is no need for me to eulogize him.
We document the fact that the growth forecasts made by professional forecasters in advanced economies exhibit systematic errors, and analyze how these errors depend on the business cycle state. On ...average over our full sample, forecasters overestimate GDP growth. However, this result masks considerable differences across business cycle states. Growth forecasts for recessions are subject to large negative systematic errors, while forecasts for recoveries are subject to small positive systematic errors. In contrast, forecasts for expansions do not exhibit systematic errors. Thus, there is evidence that forecasters try to issue forecasts which are unbiased conditional on being in an expansion, rather than forecasts which are unbiased overall. We also show that forecasters adjust their forecasts slowly around business cycle turning points. Furthermore, we show that cross-country differences in systematic forecast errors during expansions cannot be explained by changes in trend growth rates.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPUK, ZRSKP
This paper investigates whether and how the systematic forecast errors of the quarterly GDP announcements in China depend on the state of the economy. Our contribution is both theoretical and ...empirical. On the theoretical side, we extend the predictive threshold regression of Gonzalo and Pitarakis (J Bus Econ Stat 35:202–217, 2017) by incorporating a time-varying and state-dependent threshold, which is a function of macroeconomic variables that affect the separation of regimes. On the empirical side, we apply our model to assess the quality of China’s preliminary GDP data. Our empirical results show that there exist forecast biases in the preliminary GDP data conditional on the state of the economy. Our results also lean toward supporting that there exist behavioral biases of underestimation and over-reaction to new information during periods of relatively good state. These results suggest some scope to improve the accuracy of the preliminary GDP data based purely on econometric models.
International trade is key to boosting the economic growth and development of an economy. Hence, it becomes critical to analyze its determinants. The present study attempts to empirically analyze the ...determinants of trade exports of Pakistan with its top-5 trade partners. The prior literature suffers from biased findings due to deploying the aggregate data and ignoring the likely asymmetries in the drivers of the exports. The present study has used the monthly data of oil prices and macroeconomic uncertainty in order to empirically investigate the determinants of exports. For the purpose of analysis, several advanced econometric (quantile unit root, cointegration, and granger causality) tests and (quantile-on-quantile regression) techniques are utilized to handle the issue of asymmetries in the modeled series. The findings reveal a positive and significant relationship between oil prices in Pakistan and exports. Furthermore, macroeconomic uncertainty has a significantly negative impact on the country’s exports. Based on the results, key policy implications are provided.
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CEKLJ, EMUNI, FIS, FZAB, GEOZS, GIS, IJS, IMTLJ, KILJ, KISLJ, MFDPS, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, SBMB, SBNM, UKNU, UL, UM, UPUK, VKSCE, ZAGLJ
This article studies how systemic risk and financial market distress affect the distribution of shocks to real economic activity. We analyze how changes in 19 different measures of systemic risk skew ...the distribution of subsequent shocks to industrial production and other macroeconomic variables in the US and Europe over several decades. We also propose dimension reduction estimators for constructing systemic risk indexes from the cross section of measures and demonstrate their success in predicting future macroeconomic shocks out of sample.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPUK, ZRSKP
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