Expectations play a crucial role in modern macroeconomic models. We consider a New Keynesian framework under a behavioral model of expectation formation and under rational expectations. Contrary to ...the rational model, the behavioral model predicts that inflation volatility can be lowered if the central bank reacts to the output gap in addition to inflation. We test the opposing theoretical predictions in a learning-to-forecast experiment. In line with the behavioral model, the results support the claim that output stabilization can lead to less volatile inflation.
The economics of degrowth Kallis, Giorgos; Kerschner, Christian; Martinez-Alier, Joan
Ecological economics,
12/2012, Letnik:
84
Journal Article
Recenzirano
Economic degrowth is ecologically desirable, and possibly inevitable; but under what conditions can it become socially sustainable? How can we have full employment and economic stability without ...growth? What will happen to public spending and to public debt? How would production be organised in a degrowing economy? And under what plausible socio-political conditions could such grand changes happen? Standard economic theories and models ignore these questions. For them economic growth is an axiomatic necessity. This article reviews recent contributions in the economics of degrowth and identifies research avenues for ecological economists.
► The case for degrowth. ► Institutional and policy options. ► The politics of degrowth.
In an environment of economic policy uncertainty (EPU), how to improve efficiency and optimize the scale of firm investment is an important topic worthy of attention. This paper examines the impact ...of EPU on firms' investment decisions, using Chinese A-share listed companies from 2007 to 2019 as a research sample. The study finds that macro EPU inhibits the increase of firms' investment scale and efficiency while exacerbating the risk of overinvestment or underinvestment. Local EPU enhances a firm's investment scale but simultaneously exacerbates the risk of over- or underinvestment, which in turn inhibits investment efficiency. The mechanism test shows that, first, macro EPU promotes firms' R&D investment but inhibits their green investment. In contrast, local EPU inhibits R&D investment and promotes green investment. Second, macro EPU has a significant negative effect on firms' business performance, while local EPU has a smaller effect. Therefore, in an uncertain environment, the government should actively stabilize the macroeconomic environment, and firms should actively optimize investment structures and improve their risk prevention mechanisms.
•This paper examines the impact of economic policy uncertainty (EPU) on firms' investment decisions.•Macro EPU inhibits firms' investment scale and efficiency while exacerbating the risk of over- or under-investment.•Local EPU enhances firms' investment scale but exacerbates the risk of over- or under-investment.•Macro EPU promotes firms' R&D investment while local EPU promotes green investment.•Macro EPU has a significant negative effect on firms' business performance, while local EPU has a smaller effect.
Abstract
Exploiting the exogenous and regional nature of the Great East Japan Earthquake of 2011, this article provides a quantification of the role of input-output linkages as a mechanism for the ...propagation and amplification of shocks. We document that the disruption caused by the disaster propagated upstream and downstream along supply chains, affecting the direct and indirect suppliers and customers of disaster-stricken firms. Using a general equilibrium model of production networks, we then obtain an estimate for the overall macroeconomic impact of the disaster by taking these propagation effects into account. We find that the earthquake and its aftermaths resulted in a 0.47 percentage point decline in Japan’s real GDP growth in the year following the disaster.
We investigate the hypothesis that macroeconomic fluctuations are primitively the results of many microeconomic shocks. We define fundamental volatility as the volatility that would arise from an ...economy made entirely of idiosyncratic sectoral or firm-level shocks. Fundamental volatility accounts for the swings in macroeconomic volatility in the major world economies in the past half-century. It accounts for the "great moderation" and its undoing. The initial great moderation is due to a decreasing share of manufacturing between 1975 and 1985. The recent rise of macroeconomic volatility is chiefly due to the growth of the financial sector.
High levels of economic policy uncertainty (EPU) in various parts of the world revamped the debate about its impact on economic activity. Employing heterogeneous panel structural vector ...autoregressions, we test for EPU spillovers on other countries’ economic activity. EPU reduces growth in real output, private consumption, and private investment, with spillovers from abroad accounting for about two‐thirds of the effect. Using local projections, we show that EPU surges in the United States, Europe, and China reduce economic activity in the rest of the world, with the effects being mostly felt in Europe and the Western Hemisphere.
Aligning to the 2030 United Nations Sustainable Development Goal (SDGs) 12, we investigate the role of renewable energy in achieving sustainable consumption and production pattern in Africa. This ...study addresses the question: whether the use of renewable energy helps achieve production and consumption patterns free from environmental degradation? We use panel data on 14 African countries from 2002 to 2014 and a robust econometric approach such as panel corrected standard error (PSCE), instrumental generalized method of moment (IV-GMM), and quantile regressions. We find that (1) renewable energy consumption helped to achieve a consumption and production pattern that is free from environmental degradation; (2) there is a significant positive heterogeneous effect of renewable energy consumption on sustainable consumption and production pattern, but the impact level dropped in the long-run. In light of this, we recommend that African countries invest in green energy to achieve sustainable production and consumption patterns.
•Role of renewable energy in achieving sustainable consumption and production pattern.•PCSE, IV-GMM and quantile regression are employed.•Renewable energy positively affect the consumption and production pattern.•The impact is heterogeneous across quantiles.
What Happened Gertler, Mark; Gilchrist, Simon
The Journal of economic perspectives,
07/2018, Letnik:
32, Številka:
3
Journal Article
Recenzirano
Odprti dostop
At the onset of the recent global financial crisis, the workhorse macroeconomic models assumed frictionless financial markets. These frameworks were thus not able to anticipate the crisis, nor to ...analyze how the disruption of credit markets changed what initially appeared like a mild downturn into the Great Recession. Since that time, an explosion of both theoretical and empirical research has investigated how the financial crisis emerged and how it was transmitted to the real sector. The goal of this paper is to describe what we have learned from this new research and how it can be used to understand what happened during the Great Recession. In the process, we also present some new empirical work. We argue that a complete description of the Great Recession must take account of the financial distress facing both households and banks and, as the crisis unfolded, nonfinancial firms as well. Exploiting both panel data and time series methods, we analyze the contribution of the house price decline, versus the banking distress indicator, to the overall decline in employment during the Great Recession. We confirm a common finding in the literature that the household balance sheet channel is important for regional variation in employment. However, we also find that the disruption in banking was central to the overall employment contraction.
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