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The primary purpose of this paper is to reconcile the previous findings of discount rate endogeneity with the presence of discount rate announcement effects in securities markets. The crux of this reconciliation is the distinction between "technical" discount rate changes that are endogenous and "nontechnical" changes which contain some informative policy implications. In essence, we attempt to separate expected discount rate changes from unexpected changes, or equivalently, the expected component of discount rate changes from the unexpected component. If markets are efficient, the former should have no announcement effects while the latter may be associated with an announcement effect. Accordingly, the focus of the empirical analysis is on the interaction between discount rate exogeneity, the specific monetary policy regime, and announcement effects. In addition, we examine whether the behavior of these markets in the postannouncement period is consistent with the rapid price adjustment implied by market efficiency. [ABSTRACT FROM AUTHOR]

ABSTRACT This paper presents a model to predict French gross domestic product (GDP) quarterly growth rate. The model is designed to be used on a monthly basis by integrating monthly economic information through bridge models, for both supply and demand sides, allowing thus economic interpretations. For each GDP component, bridge equations are specified by using a general-to-specific approach implemented in an automated way by Hoover and Perez and improved by Krolzig and Hendry. This approach allows to select explanatory variables among a large data set of hard and soft data. A rolling forecast study is carried out to assess the forecasting performance in the prediction of aggregated GDP, by taking publication lags into account in order to run pseudo real-time forecasts. It turns out that the model outperforms benchmark models. The results show that changing the set of equations over the quarter is superior to keeping the same equations over time. In addition, GDP growth seems to be more precisely predicted from a supply-side approach rather than a demand-side approach. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to shed light on the controversial issue of regional development incentives. Although extensive research has been conducted, a review of the literature gives an inconclusive answer to whether economic incentives are effective. Why do researchers arrive at different conclusions, even after analysing the same programmes? Among the problems that we find, for example, is the fact that for some researchers ‘effective’ means the significant location of new firms in targeted areas, while for others the creation of jobs regardless of whether new firms are arriving in a significant fashion. Furthermore, as we elaborate, the selection of an econometric model will have a significant impact on expected results. Different models, with different limitations, will lead researchers to evaluate the same incentive programme but arrive at different conclusions regarding its effectiveness. The contribution of the paper is to inform policymakers about the potential opportunities and pitfalls when designing incentive strategies. This is particularly relevant, given that both the US and Europe have been promoting incentives as a tool for regional economic development. [ABSTRACT FROM AUTHOR]

A random walk with drift is a good univariate representation of US GDP. This paper shows, however, that US economic downturns have been associated with predictable short-term recoveries and with changes in long-term GDP forecasts that are substantially smaller than the initial drop. To detect these predictable changes, it is important to use a multivariate time series model. We discuss reasons why univariate representations can miss key characteristics of the underlying variable such as predictability, especially during recessions. [ABSTRACT FROM AUTHOR]

Abstract: This paper examines the ability of financial variables to predict future economic growth above and beyond past economic activity in a small open economy in the euro area. We aim to clarify potential differences in forecasting economic activity during different economic circumstances. Our results from Finland suggest that the proper choice of forecasting variables is related to general economic conditions. During steady economic growth, the preferred choice for a financial indicator is the short-term interest rate combined with past values of output growth. However, during economic turbulence, the traditional term spread and stock returns are more important in forecasting GDP growth. The time-varying predictive content of the financial variables may be utilized by applying regime-switching nonlinear forecasting models. We propose a novel application using the negative term spread and observed recession as signals to switch between regimes. This procedure yields a significant improvement in forecasting performance at the one-year forecast horizon. [Copyright &y& Elsevier]

This paper studies the relation between changes in financial investment opportunities and changes in the macroeconomy. States variables such as the lagged production growth rate, the default premium, the term premium, the short-term interest rate and the market dividend-price ratio are shown to be indicators of recent and future economic growth. Further, the market excess return is negatively correlated with recent economic growth and positively correlated with expected future economic growth. These results offer straightforward interpretations of recent evidence on the forecasts of the market excess return by state variable via their forecasts on the macroeconomy. [ABSTRACT FROM AUTHOR]

The article discusses a financial framework for economic growth in the United States. The article presents a unified financial counterpart to a long-term economic projection. Based on assumptions of varying rates of growth, a set of projections of economic activity in 1970 is presented. A "judgment" model will be selected based on the results of the projections. The article then introduces a theoretical framework that links levels of economic and financial activity. By using the "judgment" model as a reference, the pattern of relationships will be applied to a projection of assets and liabilities for the individual components of the financial network.

This paper analyzes nonlinear growth models in which agents' expectations have a role in determining present behavior. Assuming agents have perfect foresight, we develop sufficiency conditions for the local stability of a given steady state. We then briefly discuss several examples in which stability prevails. [ABSTRACT FROM AUTHOR]

This paper develops a simple theory governing the relationship between useful energy consumption and national output that explains why the adjusted elasticities found by two economists turned out to be greater than one. The theory is quantified by reference to a wide range of countries covering the whole spectrum of economic development and is tested against the actual experience over 20 to 25 years of individual countries. Conformity to the theory was very close and the efficiency-in-use coefficients computed by economists were found to hold good for periods of 20 to 25 years. Briefly, the hypothesis states that as a country moves through the various stages of its economic development from primitive subsistence agriculture to the ultimate state of fully energy-dependent production, its useful energy elasticity steadily falls from a high value tending asymptotically to one. By itself this proposition is of little use to energy forecasters, because it simply substitutes the requirement to predict energy intensiveness of output for the requirement to predict energy consumption. If we can satisfy ourselves that real GDP per capita is a good measure of energy intensiveness, however, then the relationship derived above can be used as the basis for a mathematical model linking useful energy consumption per capita with GDP per capita.

The search for uniformities in the growth patterns of individual industries rose to a peak some 30 years ago in the explorations of economists Simon S. Kuznets and in the subsequent comprehensive work of Arthur F. Burns. Partly because of the widespread acceptance of these results and attendant explanations of their inevitability, and partly because of the compelling attractions of other economic problems, little additional work was done in this area for an extended period. Recent portents of a revival of interest stem from three sources: the growing output of long-term forecasts for individual industries, which invites a search for generalizations and efforts to reinvigorate research and theory relating to economic growth by probing the behavior of disaggregated sectors. This paper will concentrate primarily on reviewing Burns's expectations and comparing them with actual results over the following 25 years as a basis for: suggesting revisions in the interpretation of his original findings; outlining needed modifications in the theory as well as the pattern of industrial growth paths; and exploring the possibility of developing patterned expectations for the growth of individual commodities and firms.

The article discusses trends, updates, and outlook for the Australian economy. Topics explored include the gross domestic product (GDP), consumption, and unemployment rates recorded from 2017 to 2018, international economic developments in the U.S., Europe, and China which could impact Australia, and the contribution of non-mining business investments to Australian economic growth.

Overview: Forecasts steady but near-term signals mixed Our world growth forecasts are steady this month, at 2.3% for 2016 and 2.7% for 2017., One factor behind the more stable outlook is the rally in financial markets since mid-February. This rally appears to have been the result of a number of factors including a more dovish Fed and an improvement in some near-term economic indicators., The implied 12-month ahead Fed funds rate dropped around 0.5% from its January peak to mid-February and remains around 0.35% lower now. So the Fed still apparently has the capacity to boost markets with changes in communication policy., The Citigroup economic surprise indicators have also improved over recent weeks, especially for emerging markets where the indicator is back in positive territory. The G10 index nevertheless remains clearly negative., Other economic signals are mixed. The latest reading of OE's world trade indicator (based on survey evidence for March) suggests a modest improvement, although again the indicator continues to signal weak world trade growth., Meanwhile, there have been some warnings of potentially softer labour market conditions. Though payrolls gains have remained solid, a weighted sum of the employment subindices of the US ISM surveys has dropped sharply over recent months. A similar index for the Eurozone is more positive, although it has also softened from its late-2015 peaks., These mixed signals suggest limited likelihood of near-term upgrades to the world growth outlook and overall we maintain our view from last month that risks look skewed to the downside - so that further monetary policy stimulus remains a possibility., This assessment appears to be shared, to some extent at least, by global bond markets. US 10-year yields have dropped back to only 1.7% since mid-March (only 0.1% above their February lows), with German yields at just 0.1% and Japanese yields at - 0.1%. So the 'great squeeze' on G7 bond yields is still continuing. [ABSTRACT FROM AUTHOR]

Overview: What do falling bond yields tell us? US bond yields have fallen considerably since the start of the year - by about 40bp for 10-year bonds - a development apparently at odds with expectations of stronger US growth this year and next and with the process of Fed 'tapering'., There are several possible explanations, some of which tie in with our global forecast story. Recent US growth data have been largely disappointing, with GDP barely expanding in Q1. This month sees our forecast for growth in 2014 cut to 2.4% from 2.9%., But we expect a solid rebound in growth from Q2, in line with most observers. This suggests other factors are at work - including factors outside the US., First, the US bond market seems to have taken a 'sell on the rumour, buy on the fact' attitude to tapering. This may reflect a view that tapering will lead to falls in prices of risky assets, and also perhaps indicates Fed success in managing its forward guidance. Notably, one-year interest rates have drifted lower since Q3 2013: the market has pushed away expectations of early Fed rate hikes., Second, long-term inflation expectations are stable or declining in most advanced economies. US expectations have hovered around 2% in recent months (down from 2.5% a year ago) while inflation expectations in the Eurozone have declined notably: 10-year breakeven inflation in France is just 1.1%., Our growth forecast in the Eurozone has edged up in recent months but remains low, implying the negative output gap will remain wide and disinflationary pressures continue. And emerging markets are set to add to the global negative output gap. PMI surveys show continued weak growth and this month sees some further GDP forecast downgrades in the BRICs., Taken together, these factors suggest that bond markets are pricing modest economic growth and low inflation, broadly in line with our forecast. But there are significant nodes of downside risk in the Eurozone and the Chinese financial sector. The ECB seems likely to act next month but how decisive it will be is unclear. Whether the authorities in China can contain financial sector risks also remains an open question. [ABSTRACT FROM AUTHOR]

We evaluate the predictive power of leading indicators for output growth at horizons up to 1 year. We use the MIDAS regression approach as this allows us to combine multiple individual leading indicators in a parsimonious way and to directly exploit the information content of the monthly series to predict quarterly output growth. When we use real-time vintage data, the indicators are found to have significant predictive ability, and this is further enhanced by the use of monthly data on the quarter at the time the forecast is made. Copyright © 2009 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Abstract: Successful portfolio management strategies partly require accurate forecasts of term spreads. Such forecasts may also be useful for policymaking since the yield curve may contain predictive information for economic growth. This study asks whether experts accurately predict term spreads. We show that the consensus forecasts from two separate panels, while superior to alternative benchmark forecasts, are free of systematic bias but unable to replicate the degree of variability in the actual change. Moreover, these forecasts are directionally accurate under symmetric loss, implying that they are of value to a market participant who assigns similar costs to incorrect upward and downward moves. [Copyright &y& Elsevier]

The article presents an outlook for the world economy in 2008. Because of the continued impact of the credit crunch, the flow of economic news over February 2008 has mostly pointed towards weaker growth. The U.S. growth forecast for the first half of 2008 has been downgraded because of a series of weak indicators on employment, chain store sales and service activity. In the Eurozone, the growth forecast for 2008 has been revised from 1.7% to 2%, reflecting a deteriorating outlook in the main Mediterranean economies.

The article presents an assessment of the impact of credit crisis on the economy. In response to the crisis, banks cut their volume of lending to each other and the disorderly market conditions put downward interbank rates up to unusual levels. The tentative signs of stabilisation in the U.S. housing was erased by the subprime crisis. According to the article, this could put downward pressure on growth through negative wealth effects. It is also expected that the credit crunch would affect the growth in major economies.

The article presents economic outlook for London, England as of May 2007. Real gross domestic product (GDP) is expected to increase by a further 3.6 percent this year on top of an estimated 4.4 percent in 2006. Increasing global demand for financial services and London's position as the most global of world cities reinforce a forecast of continuing strong economic growth for the city. Tables are presented that show detailed forecasts for employment sector by sector.

In this article, we argue that there are strong reasons for using linear instead of exponential models when analysing post-war economic growth. Incorrect model specifications will lead to misinterpretations of the underlying economic reality and to erroneous economic forecasts. Our argument is based on an empirical investigation of real Gross Domestic Product per capita growth in 25 Organization for Economic Co-operation and Development (OECD) countries (and three country aggregates) during the post-war period using the Box-Cox transformation method. The conclusion is that per capita growth is generally (more or less) linear (and definitely not exponential) for the level of economic development represented by these countries. Based on this we argue that analyses of growth should use linear instead of exponential models. This change of model could give new insights into problems connected with economic growth. [ABSTRACT FROM AUTHOR]

This article examines the relationship between output volatility and long-run growth for 18 developed countries between 1880 and 1990. The analysis builds on the existing literature by decomposing output growth volatility into expected and unexpected components and then examining whether the types of volatility have different effects on long-run growth. The results are consistent with the view that unexpected volatility reduces long-run growth and that expected volatility increases long-run growth. The results also suggest that the combined effect of expected and unexpected volatility is to reduce long-run growth for most countries and most time periods. [ABSTRACT FROM AUTHOR]

We reconsider the out-of-sample forecasting ability of a large number of financial variables with respect to real output growth over the 1985:1-1999:4 period We show that models including financial variables display almost no forecasting ability relative to an autoregressive benchmark model over this period according to a mean squared forecast error metric. However, tests based on forecast encompassing indicate that many financial variables do, in fact, contain information that is useful for forecasting real output growth over the 1985:1-1999:4 out-of-sample period. Our results suggest that the extant literature exaggerates the demise of the forecasting power of financial variables with respect to real activity since the mid-1980s. [ABSTRACT FROM AUTHOR]

Presents forecasts on the economic recovery and growth in Great Britain through 2006. Performance of gross national product in the third quarter of 2003; Comparison of growth in the U.S. and in Britain in the 1990s; Level of demand for exports in continental Europe.

The article focuses on typologies and evidence that serve as a guide to economic growth in Europe during the nineteenth century. There has also been increased reliance on comparative methods by historians seeking to achieve a cross-fertilization of explanatory ideas. For both purposes it is desirable, for the first purpose essential, that any historical generalizations called into aid should be not only true of several particular instances but also should be very widely applicable. It could be harmfully misleading if what looked to be proclamations of universal relationships turned out to be no more than accounts of one or two highly individual cases, disguised in the language of generality. All the chief schemes expounding alleged universalities in the history of economic growth have received plenty of criticism, both appreciative and hostile, but it is doubtful whether they have often been starkly confronted by the question whether the evidence they use is comprehensive enough to provide a secure foundation of genuine history for edifices as vast as they have grown to be. They have been challenged on grounds of unclarity or inappropriateness in their basic concepts, or because they have been inaccurate on some specific points, or because some particular case may be more convincingly interpreted by postulating a different chain of causation.

The article offers an outlook for the world economy. It is expected that the impact on global growth would be modest, given the limited decline in equity markets. The U.S. housing sector has worsened and set to remain a drag on the overall growth. Based on data on employment and consumption, resilience is seen in the wake of the crisis. The cost of borrowing for firms and consumers have been driven by the repricing of risk and the liquidity squeeze in money markets. Meanwhile, gross domestic product growth in the Eurozone was disappointing at 0.3%.

The article offers an outlook for the world economy. It is expected that the impact on global growth would be modest, given the limited decline in equity markets. The U.S. housing sector has worsened and set to remain a drag on the overall growth. Based on data on employment and consumption, resilience is seen in the wake of the crisis. The cost of borrowing for firms and consumers have been driven by the repricing of risk and the liquidity squeeze in money markets. Meanwhile, gross domestic product growth in the Eurozone was disappointing at 0.3%.