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Public health events (PHEs) have emerged as significant threats to human life, health, and economic growth. PHEs, such as COVID-19, have prompted a reevaluation for enhanced regular prevention and control (RPC). In this study, we focus on the core concept of prevention and control intensity (PCI), and establish a neoclassical economic growth model from the long-term and macro perspective to balance life protection and economic growth. The model construct the mechanism of PCI on economic growth through population dynamics and capital accumulation under the backdrop of RPC for PHEs. We find the conditions for PCI when the economy achieves steady state, and provides an algorithm establishing the optimal strategy that maximises per capita disposable income based on the optimal PCI and consumption. Simulation result quantifies an inverted U-shaped relationship between PCI and capital per capita, output per capita and consumption per capita in the steady state. The model suggests that, given the PHEs of inducing potential unemployment shock, it is worthwhile to combine the implementation of moderate PCI with coordinated policies of income distribution. Highlights: • Building a Neoclassical economic growth model under public health events (PHEs). • Model links regular prevention and control (RPC) to macroeconomic factors. • Exploring mechanism of RPC for PHEs on economic growth. • Appropriate prevention and control intensity can engender economic growth. [ABSTRACT FROM AUTHOR]

Using annual data from 1970 to 2020, this study examines the effects of economic leadership, information and communication technology (ICT) infrastructure, and financial development on long-term economic growth in Malaysia. To accomplish this, we employ the Kapetanios multiple breaks unit root test and the Saikkonen-Lütkepohl (SL) test for cointegration with breaks. We add to the body of knowledge on this topic by exploring the direct and indirect (moderating) effects of economic leadership and financial development on the ICT-growth nexus. We discover that poor leadership impedes economic advancement in Malaysia and that the expansion of the financial sector tends to enhance the growth-improving effects of ICT. Moreover, the effects of both financial and ICT developments on growth are contingent upon Malaysia’s economic leadership. As such, Malaysia should encourage competent economic leadership, financial development, and a comprehensive ICT infrastructure network to boost its long-term economic growth. [ABSTRACT FROM AUTHOR]

AbstractLucas (1972) permanently changed the course of macroeconomics, even though his “money supply surprise” model lost its central place in the area within a decade because of empirical difficulties. However, Lucas’s novel methodology, based on clearing markets and rational expectations, still dominates orthodox macroeconomic theorising. An unfortunate side effect of this has been that, because mainstream models have no analytic room for money to play a key role in economic activity, the theoretical case for taking that role seriously was undermined just at the time when traditional monetarist macro-models were facing empirical problems, not least in policy applications. Some consequences for today’s monetary policy environment are briefly discussed. [ABSTRACT FROM AUTHOR]

We construct recursive solutions for, and study the properties of the dynamic equilibrium of an economy with three types of agents: (i) household/investors who supply labor with a finite elasticity, consume a large variety of goods that are not perfect substitutes and trade government bonds; (ii) firms that produce those varieties of goods, receive productivity shocks and set prices in a Calvo manner; (iii) a government that collects an income-driven fiscal surplus and acts mechanically, buying and selling bonds in accordance with a Taylor policy rule based on expected inflation. In this setting, we show that stock market returns are much less than one-for-one related to inflation over a 1-year holding period, which means that stock securities have a strong nominal character. We also show that their nominal character diminishes as the length of the stock-holding period increases, in accordance with empirical evidence. [ABSTRACT FROM AUTHOR]

This study examined the biological, social, and clinical risk factors for mortality in coronavirus of the year 2019 (COVID-19) hospitalised patients. The population of the study is prone to COVID-19, thus understanding the most common traits and comorbidities of people who were affected is crucial in reducing its consequences. In this study, four supervised machine learning algorithms were implemented and compared to predict the mortality rate based on the explanatory variables across the five districts of Limpopo Province in South Africa. The data was obtained from Limpopo Department of Health. Prediction about the chances of dying from COVID-19 disease was made using logistic regression, random forest, support vector machine, and decision tree algorithms on the dataset of 20,592 records with twenty-one attributes. Due to the imbalanced nature of the data, Random Over-Sampling Examples (ROSE) were employed to balance our data for more accurate classification effectively. The ROSE package provides functions to deal with binary classification problems in the presence of imbalanced classes. We used 70% of the data for training, while 30% was selected for testing the predictive algorithms. A technique called Step Akaike's Information Criterion (StepAIC) was deployed to reduce the insignificant variables from the full model of the logistic regression. According to the findings of the study, among the four algorithms tested, random forest had the highest recall rate for predicting mortality at roughly 79 percent compared to the other three algorithms. Accordingly, we conclude that random forest algorithm is appropriate for predicting the chances of patients dying from COVID-19 based on the attributes of the five districts of Limpopo Province. In terms of the features and their importance, a function called Variable Importance (VarImp) was used to check which of the attributes have predictive power on the outcome variable (discharged status). The findings revealed that age, ever ventilated, ever oxygenated, intensive ward upon admission, Waterberg district, and private facility type were among the risk factors that could be selected for the logistic regression model to predict mortality in hospitalised patients. This implies that special attention should be given to these identified variables. The random forest model is adequate to establish these factors since the findings reveal that a fairly considerable percentage of explained variation would correctly classify 79% of the cases. The novelty of conducting research on the analysis of COVID-19 cases and comorbidities using machine learning algorithms lies in the potential to uncover new insights and patterns that might not be immediately apparent through traditional statistical methods. Machine learning algorithms can quickly and accurately analyze large datasets and identify complex relationships between variables, which could provide valuable information for public health officials and policymakers.

This article examines the optimal accumulation of capital and the effects of government debt in neoclassical growth models in which firms have market power and therefore charge prices above marginal cost. In this environment, the real interest rate earned by savers is less than the net marginal product of capital. We establish a new method for evaluating dynamic efficiency that can be applied in such economies. A plausible calibration suggests that the wedge between the real interest rate and the marginal product of capital is about 4 percentage points and that the US economy is dynamically efficient. In addition, government Ponzi schemes can have different implications for welfare than they do under competition. Even if the government can sustain a perpetual rollover of debt and accumulating interest, the policy may nonetheless reduce welfare by depressing steady-state capital and aggregate consumption. These findings suggest that even with low interest rates, as have been observed recently, fiscal policymakers should still be concerned about the crowding-out effects of government debt. [ABSTRACT FROM AUTHOR]

Advanced economies undergo three transitions during their development: (1) transition from a rural to an urban economy, (2) transition from low-income growth to high-income growth, (3) transition from high fertility and mortality rates to low modern levels. The timings of these transitions are correlated in the historical development of most advanced economies. I consider a nonlinear model of endogenous long-run economic and demographic change, in which child quantity-quality substitution is driven by declining child mortality. Because the model captures the interactions between all three transitions, it is able to explain three additional empirical patterns: a declining urban-rural wage gap, a declining rural-urban family size ratio, and most surprisingly, that early urbanization slows development. This third prediction distinguishes the model from other theories of long-run growth, and I document evidence for it in cross-country data. [ABSTRACT FROM AUTHOR]

This paper adopts a neoclassical framework to study the effect of age composition of the working-age population on labour productivity and its determinants, based on an unbalanced panel of 64 non-oil-producing countries, over the period 1950-2017. Our first contribution comes from testing whether a shock in age structure has the ability to permanently shift labour productivity dynamics. From methodological standpoint, we try to reduce the risk of model mispecification in the existing literature, that has often overlooked the possibility of cross-sectional dependence in the data and heterogeneity in slope coefficients. We also note the importance of time series properties of the data for valid statistical inference. Our results indicate, that ageing of the working-age population depresses labour productivity growth; negative impact of individuals aged between 55 and 64 on total factor productivity growth is only partially offset by its positive impact on human and physical capital accumulation. For sustaining the current level of living standards, adoption of policies, which forestall the negative impact of older workers on innovation process and promote their positive impact on the supply of production factors, is of crucial importance. We do not find evidence, that higher public spending on education in% of GDP has such an effect.

Satiation of need is generally ignored by growth theory. I study a model where consumers may be satiated in any given good but new goods may be introduced. A social planner will never elect a trajectory with long-run satiation. Instead, he will introduce enough new goods to avoid such a situation. In contrast, the decentralized equilibrium may involve long run satiation. This, despite that the social costs of innovation are second order compared to their social benefits. Multiple equilibria may arise: depending on expectations, the economy may then converge to a satiated steady state or a non satiated one. In the latter equilibrium, capital and the number of varieties are larger than in the former, while consumption of each good is lower. This multiplicity comes from the following strategic complementarity: when people expect more varieties to be introduced in the future, this raises their marginal utility of future consumption, inducing them to save more. In turn, higher savings reduces interest rates, which boosts the rate of innovation. When TFP grows exogenously and labor supply is endogenized, the satiated equilibrium generically survives. For some parametrer values, its growth rate is positive while labor supply declines over time to zero. Its growth rate is then lower than that of the non satiated equilibrium. Hence, the economy may either coordinate on a high leisure, low growth, satiated "leisure society" or a low leisure, high growth, non satiated "consumption society". [ABSTRACT FROM AUTHOR]

Since the end of the expansionary period after the Second War, the world economy went through a long period of mediocre growth with a major recession in 2009 and another in 2020. This period is examined following As Time Goes By, the last contribution by Chris Freeman, with the cooperation of this co-author. As a long period of readjustment after the beginning of a structural crisis is imposed by the mismatch between the capabilities of the emerging techno-economic paradigm and the socio-institutional framework, my argument is that the duration of this transition is explained by the difficult process of replacing a successful institutional setting, that which supported the post-War expansion, by the new accumulation regime that is being constituted. Instead of most of the literature on long waves, which tries to uncover some mechanics of succession of radical technological innovations, this paper addresses different questions: how does the socio-institutional adaptation proceed, and how relevant is this process to explain the length of the downswing since the turning point of the 1970s. In order to investigate such process of readjustment, the conditions for the new rule of financial accumulation are discussed, including the forms and duration of the process of selection, reproduction, and education of the elite, and changes in institutions, norms, and social networks. [ABSTRACT FROM AUTHOR]

The study investigates the effect of New Keynesian liquidity trap on fiscal stance in the United States, United Kingdom and Japan economies. We developed our DSGE model in the context of an optimal and persistent interactive fiscal policy, which allows us to track the transmission channel through which shocks are distributed among real economic variables. The evidence suggests that zero lower bound mitigates the ability of monetary policy to absorb the effect of exogenous shock on the macroeconomic variables while expansionary fiscal policy was able to absorb the shock persistence transmitted from the nominal interest rate.

This paper investigates the relationship between economic growth in Poland and a few metrics of fiscal policy: budget deficit relative to GDP, the structure of public debt, education expenditures, and public consumption. We prove that with constant values of parameters of fiscal policy, over time the economy converges to the balanced growth path which is unique and globally asymptotically stable. Having calibrated the model with statistical data, we demonstrate that in the period of 2000–2016 economic growth in Poland was driven primarily by rapid improvement in the level of human capital (at a rate of 5.4% per annum), and secondarily due to the accumulation of capital (2.7% annually). If recent trends in fiscal policy are continued, the Polish economy will converge to the balanced growth path with GDP growing at 3.7%. This rate may be boosted, if fiscal policy is appropriately adjusted, for example by permanent reduction in budget deficit. We also analyse the effects of changes in the financing structure of public debt. Finally, we present several scenarios of increasing public and private spending on education. [ABSTRACT FROM AUTHOR]

The great recession (2008) triggered an apparent discrepancy between empirical findings and macroeconomic models based on rational expectations alone. This gap led to a series of recent developments of a behavioral microfoundation of macroeconomics combined with the underlying experimental and behavioral Beauty Contest (BC) literature, which the authors review in this paper. They introduce the reader to variations of the Keynesian Beauty Contest (Keynes, The general theory of employment, interest, and money, 1936), theoretically and experimentally, demonstrating systematic patterns of out-of-equilibrium behavior. This divergence of (benchmark) solutions and bounded rationality observed in human behavior has been resolved through stepwise reasoning, the so-called level k, or cognitive hierarchy models. Furthermore, the authors show how the generalized BC function with limited parameter specifications encompasses relevant micro and macro models. Therefore, the stepwise reasoning models emerge naturally as building blocks for new behavioral macroeconomic theories to understand puzzles like the lacking rise of inflation after the financial crisis, the efficacy of quantitative easing, the forward guidance puzzle, and the effectiveness of temporary fiscal expansion.

This study has employed aggregate energy augmented production framework utilizing the gross domestic product (GDP), labor input, capital stock, energy, and export over the years from 1980 to 2014 on annual time series of the variables for Pakistan and South Asia panel. There is statistically insignificant association amid the variables for Pakistan while there is indication of long-run association amid the variables for panel of South Asia. The findings imply that energy conservation is efficient without hindering the economic growth and export expansion in Pakistan, albeit such kind of policy option is not much promising for the panel of four other South Asian countries. Furthermore, energy demand models must consider the role of exports expansion and its due impacts on the energy conservation of fossil fuels-based energy source and thereby on the trajectory of sustainable economic growth in the region. [ABSTRACT FROM AUTHOR]

The number of diesel cars in Europe has grown significantly over the last three decades, a process usually known as dieselization, and they now account for nearly 40% of the cars on the road. We build on a dynamic general equilibrium model that makes a distinction between diesel motor and gasoline motor vehicles and calibrate it for main European countries. Firstly, we find that the dieselization can be explained by a change in consumer preferences paired with the productivity gains from the specialization of the European automotive industry. Secondly, the lenient tax policies in favor of diesel fuel help to explain the rebound effect in road traffic. Finally, from a normative standpoint, the model suggests that a tax discrimination based on the carbon content of each fuel (higher for diesel relative to gasoline) would actually be more effective in curbing CO 2 emissions rather than a tax based on fuel efficiency. Based on the existing studies, we also document that other external costs of diesel are always higher than those of gasoline, and the Pigouvian tax rates should reflect this aspect. This recommendation is radically different to the existing fuel tax design in most European countries. [ABSTRACT FROM AUTHOR]

The paper extends a standard two‐country international real business cycle model to include financial intermediation by banks of loans and government bonds. The paper contributes an explanation for both the United States relative to the Euro‐area, and the United States relative to China, of cross‐country correlations of loan rates, deposit rates, and the loan premia. It shows a type of financial retrenchment for the United States relative to both Europe and China following a negative bank productivity shock, such as during the 2008 crisis. After 2008, results suggest that the Euro‐area has been more financially integrated with the United States, and China less financially integrated. [ABSTRACT FROM AUTHOR]

We provide robust evidence of the impact on spot market liquidity and the pricing efficiency of FBM-FKLI index futures following the introduction of lower tick sizes for the stocks listed in the Bursa Malaysia. Our findings show a significant increase in unexpected trading volume and the speed of mean reversion of the futures mispricing. We find that the increase in the unexpected trading volume of the underlying stocks helps in reducing inter-market price discrepancies. The findings offer new evidence that lowering of tick sizes improves pricing efficiency in the Malaysian futures market. [ABSTRACT FROM AUTHOR]

In the struggle between the forces of free trade and the restrictive influence of insularism the latter recently seems to have the upper hand. This is illustrated by the referendum of June 23, 2016 where the United Kingdom (UK) voted to leave the European Union (EU). In this paper we evaluate the consequences of this event for EU integration. In particular, we analyze how the extent of EU economic integration would change once the UK leaves the Union. To that end we develop an integration benchmark that consists of the steady state production equilibrium characterized by arbitrage pricing and perfect factor mobility. We apply metrics to measure the distance between this benchmark and the data. We find that the integration in the EU is incomplete and its trend is non-linear while Brexit would not bring negative consequences to its development. [ABSTRACT FROM AUTHOR]

Following Kanbur and Mukherjee (Bull Econ Res 59(4):339-359 2007), a solution to the "missing poor" problem (i.e., selection bias in poverty measures due to income-differentiated mortality) consists in computing hypothetical poverty rates while assigning a fictitious income to the prematurely dead. However, in a dynamic general equilibrium economy, doing "as if" the prematurely dead were still alive is likely to affect wages, output and capital accumulation, with an uncertain effect on poverty. We develop a three-period OLG model with income-differentiated mortality and compare actual poverty rates with hypothetical poverty rates that would have prevailed if everyone faced the survival conditions of the top income class. Including the prematurely dead has an ambiguous impact on poverty, since it affects income distribution through capital dilution, composition effects, and horizon effects. Our results are illustrated by quantifying the impact of income-differentiated mortality on poverty measures for France (1820-2010). [ABSTRACT FROM AUTHOR]

We develop a new multistep monotone map approach to characterize minimal state-space recursive equilibrium for a broad class of infinite horizon dynamic general equilibrium models with positive externalities, dynamic complementarities, public policy, equilibrium indeterminacy, and sunspots. This new approach is global, defined in the equilibrium version of the household’s Euler equation, applies to economies for which there are no known existence results, and existing methods are inapplicable. Our methods are able to distinguish different structural properties of recursive equilibria. In stark contrast to the extensive body of existing work on these models, our methods make no appeal to the theory of smooth dynamical systems that are commonly applied in the literature. Actually, sufficient smoothness to apply such methods cannot be established relative to the set of recursive equilibria. Our partial ordering methods also provide a qualitative theory of equilibrium comparative statics in the presence of multiple equilibrium. These robust equilibrium comparison results are shown to be computable via successive approximations from subsolutions and supersolutions in sets of candidate equilibrium function spaces. We provide applications to an extensive literature on local indeterminacy of dynamic equilibrium. [ABSTRACT FROM AUTHOR]

This special issue brings together eight separate contributions reflecting recent advances in the methodology of supermodular optimization/games and monotone methods. Two of the papers extend some aspects of the methodology itself: Barthel and Sabarwal (Econ Theory, 2018. 10.1007/s00199-017-1079-3) deal with comparative statics without the strong set order on constraints and Beggs (Econ Theory, 2018. 10.1007/s00199-016-0987-y) deals with the case of boundary optimal solutions. The next five papers deal with various economic applications, which may be classified into two broad groups. The first of these deals with dynamic general equilibrium within macroeconomic dynamics (Datta et al. in Econ Theory, 2018. 10.1007/s00199-017-1046-z; Barbie and Hillebrand in Econ Theory, 2018. 10.1007/s00199-017-1082-8). The second group of papers consists of studies applying the techniques at hand to industrial organization (Reynolds and Rietzke in Econ Theory 2018. 10.1007/s00199-016-0963-6; Cosandier et al. in Econ Theory, 2018. 10.1007/s00199-017-1050-3) and applied microeconomic theory (Dekel and Pauzner in Econ Theory, 2018. 10.1007/s00199-017-1083-7). Finally, the paper by Bich et al. (Econ Theory, 2018. 10.1007/s00199-017-1045-0) considers an alternative general formulation of a theoretical framework for dynamic programming. [ABSTRACT FROM AUTHOR]

This paper revisits the interactions between housing dynamics and the business cycle in a two-sector model developed and calibrated from the multi-sector neoclassical growth model originally envisioned by Davis and Heathcote in 2005. A two-sector model with housing sector specific capital and productivity shocks can successfully predict a correct positive correlation between housing prices and residential investment. The model can also replicate the fact observed in the United States that housing prices are more volatile than output. [ABSTRACT FROM AUTHOR]

We measure the gains from a trade cost reduction in a model with dynamic accumulation of factors. We show that the tight link between import intensity and gains from trade that exists in static models breaks down along transition paths in dynamic models. When trade costs are reduced, the need to accumulate factors temporarily shifts spending from consumption to investment. Import intensity may rise or fall along the transition path, depending on the relative import intensity of consumption and investment. Calibrating the model to the US economy, we find that investment is more import intensive than consumption, so that import intensity is falling along the transition path even as consumption is rising. Therefore, while higher import intensity is associated with higher consumption when comparing steady states (as in static models), it is associated with lower consumption along a given transition path. We also consider the case of endogenous firm creation as another form of investment and factor accumulation, and again find a negative relationship between consumption and import intensity along the transition path. [ABSTRACT FROM AUTHOR]

We consider two models of economic growth with exhaustible natural resources and agents heterogeneous in their time preferences. In the first model, we assume private ownership of natural resources and show that every competitive equilibrium converges to a balanced-growth equilibrium with the long-run rate of growth being determined by the discount factor of the most patient agents. In the second model, natural resources are public property and the resource extraction rate is determined by majority voting. For this model, we define an intertemporal voting equilibrium and prove that it also converges to a balanced-growth equilibrium. In this scenario, the long-run rate of growth is determined by the median discount factor. Our results suggest that if the most patient agents do not constitute a majority of the population, private ownership of natural resources results in a higher rate of growth than public ownership. At the same time, private ownership leads to higher inequality than public ownership, and if inequality impedes growth, then the public property regime is likely to result in a higher long-run rate of growth. However, an appropriate redistributive policy can eliminate the negative impact of inequality on growth. [ABSTRACT FROM AUTHOR]

Capital investment requires a gestation lag for being productive. This time-to-build feature can lead to an autonomous system of mixed-type functional differential equations (FDEs), causing aggregate fluctuations for a deterministic economy. We present a continuation method to solve a system of mixed FDEs by solving a sequence of boundary value problems for systems of ordinary differential equations (ODEs). Unlike other iteration techniques, this method can avoid the need to predetermine both forward-looking and backward-looking difference terms. The strategy is to form a homotopy that can deform a simpler ODE system into a target FDE system, while treating the deformation process as a sequence of ODEs. We can thereby compute oscillatory cycles for a time-to-build economy while it is in transition to the steady state. [ABSTRACT FROM AUTHOR]

Abstract: Sectoral comovement of output and hours worked is a prominent feature of business cycle data. However, most two‐sector neoclassical models fail to generate this sectoral comovement. We construct and estimate a two‐sector neoclassical Dynamic Stochastic General Equilibrium (DGSE) model generating sectoral comovement in response to both anticipated and unanticipated shocks. The key to our model's success is a significant degree of intersectoral labor immobility, which we estimate using data on sectoral hours worked. Furthermore, we demonstrate that imperfect intersectoral labor mobility provides a better explanation for the sectoral comovement than an alternative model emphasizing the role of labor‐supply wealth effects. [ABSTRACT FROM AUTHOR]

János Kornai rejected the relevance of Walrasian equilibrium and considered only disequilibrium states to be compatible with reality in his Anti-Equilibrium. His research was guided by the belief that reality and theory should form an integral unit. Neoclassical economists did not accept his anti-equilibrium theory, which motivated Kornai to relentlessly provide additional evidences. The article follows this exciting and noble struggle from a new perspective in the context of scientific theory. [ABSTRACT FROM AUTHOR]

ABSTRACT: This paper develops a new approach, termed as the stock approach, to calculate the steady‐state output loss caused by public debt in neoclassical growth models. The novelty of our stock approach is that it provides a closed‐form solution to the steady‐state output‐debt relationship. The main conclusion of the paper is that the steady‐state burden of public debt is country‐specific in neoclassical growth models and it decreases with the private saving rate and increases with the population growth rate, with the exception of the special case where Ricardian equivalence holds. [ABSTRACT FROM AUTHOR]

The present study proposes a two-phase model to predict nonlinear elasto-plastic behavior, including deformation patterns and large displacements of geosynthetic-reinforced soil structures under monotonic loading. The two-phase model considers reinforced soil as the superposition of two mutually-interacting continuous phases; the matrix (soil) and the reinforcement (inclusion). The Pastor-Zienkiewicz-Chan model is implemented in a two-phase model as the constitutive law for the matrix phase by which the hardening–softening behavior of the two-phase medium can be considered. The model is applicable for granular soils under drained conditions. Inclusions are treated as linearly-elastic perfectly-plastic material. The perfect bonding hypothesis is assumed between the matrix and reinforcement phases. The approach was validated by comparison of the results with those of plane strain element testing and layered simulation models. Two centrifuge tests on geosynthetic-reinforced soil slopes were then simulated. The settlement, deformation pattern and potential failure surface of the slopes are also investigated. The results indicate satisfactory performance of the model for investigation of the nonlinear behavior of reinforced soil slopes. [ABSTRACT FROM AUTHOR]