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This paper proposes a new methodological approach arising from an idea first presented in Burgsthaler and Dichev (1997) for detecting income smoothing. The proposed test does not rely on specific distributional assumptions, as is the case in previous studies, and may be applied to small databases. The procedure could be particularly useful in analyzing economic activities where significant economic power is concentrated in a small number of firms. The proposed methodology is applied to the case of Spanish Savings Banks during the period 1993--2001. It is revealed that these institutions would appear to be interested in reporting a consistently stable and detectable growth rate. Income smoothing is essentially applied to avoid both small earnings decreases and very small earnings increases. Income smoothing is revealed in changes in scaled pretax earnings and in scaled surplus (net earnings) for the year. [ABSTRACT FROM AUTHOR]

We explore determinants of job reallocation, employment change and average job tenure in this paper. A model which associates technological advances with the process of economic growth is modified and analysed. The features of this model allow for the possibility of asymmetric behaviour when looking at the net change in employment. Workplace data from Australia (AWIRS95) are used to test the predictions generated from the model for both employment change and average job tenure. Results are presented that provide clear evidence as to the nature of workplaces in which net employment growth is concentrated. We find that employment growth is asymmetrically related to expected changes in demand for the output of the workplace. We also find that employment is lower for workplaces that are larger, older, have greater union density, offer higher relative earnings, or are operating in a more competitive environment. The impacts on average tenure are as expected from the model and from these changes in employment. Overall there is a substantial degree of agreement between the predictions of the model and our empirical results. [ABSTRACT FROM AUTHOR]

Theory and practice suggest that entrepreneurship is the engine of economic growth. The speed with which a nation moves from economic growth to economic development depends on the performance of entrepreneurial initiatives. Given the role played by entrepreneurship for the development of an economy, increasing its performance can help the development of national markets and the increase in national competitiveness. The main objective of our paper is to investigate the link between entrepreneurial performance and economic development of countries. The research was carried out on a sample of 27 European Union countries in a period of twelve years. We used panel data regression models. As dependent variables for expressing the economic development, we considered the global competitiveness index and the gross domestic product per capita growth. As independent variables, we used a set of indicators measuring entrepreneurial performance. Our findings highlight the significant role played by increased entrepreneurial performance for enhancing the economic development of EU countries. We also find that some indicators expressing entrepreneurial performance might have different effects on the economy depending on the stage of economic development of countries. Our research provides empirical evidence regarding the need for performant entrepreneurial activities for enhancing economic development. [ABSTRACT FROM AUTHOR]

The interest rate assumptions for macroeconomic forecasts differ among central banks. Common approaches are given by the assumptions that interest rates remain constant over the forecast horizon, follow a path as expected by market participants or follow a path as expected by the central bank itself. Theoretical papers such as Svensson (The instrument-rate projection under inflation targeting: the Norwegian example. Centre for European Policy Studies Working Paper (127), 2006) and Galí (J Monet Econ 58:537-550, 2011) suggest an accuracy ranking for these forecasts, from employing central bank expectations yielding the highest forecast accuracy to conditioning on constant interest rates yielding the lowest. Yet, when investigating the predictive accuracy of the Bank of England's and the Banco Central do Brasil's forecasts for interest rates, inflation and output growth, we hardly find any significant differences between forecasts based on the different interest rate paths. Our results suggest that the choice of the interest rate assumption appears to be of minor relevance empirically. [ABSTRACT FROM AUTHOR]

In this paper, we analyze the impact fiscal policy rules have on budget deficits and forecasting biases in official budget outlooks. Persistent budget deficits and over-optimistic budget forecasts have been observed in many countries in the past, especially in the euro area. To prevent such developments from happening in the future, fiscal rules have been revised or implemented with the aim to strengthen both preventive (ex-ante) and corrective (ex-post) elements of fiscal rules frameworks. Do such ex-ante and ex-post rules differ in their effects? In an attempt to answer this question, we build a two-period model and distinguish between ex-ante rules that apply to budget forecasts and ex-post rules that apply to realized budget deficits. Our model indicates that effectively enforced ex-post rules are more effective than ex-ante rules at reducing budget deficits. Interestingly, ex-ante rules differ from ex-post rules in their effects on forecasting biases. Only ex-post sanctions reduce forecasting biases, while ex-ante rules have no impact on such biases. In addition, we show that political stability and the size of government increase the effectiveness of fiscal rules. If, however, financial markets have a disciplining effect on governments, the effectiveness of fiscal rules is reduced. Our results imply that if fiscal policy rules cannot be effectively enforced, reforming other areas such as electoral rules or financial market regulations might be a more promising approach to ensuring sound public finances than fiscal policy rules. [ABSTRACT FROM PUBLISHER]

Expectations and uncertainty play a key role in economic behavior. This paper deals with both, expectations and uncertainty derived from the European Central Bank Survey of Professional Forecasters. Given the strong turbulences that the euro area macroeconomic indicators observe since 2007, the aim of the paper is to check whether there is any room for improvement of the consensus forecast accuracy for GDP growth and inflation when accounting for uncertainty. We propose a new measure of uncertainty, alternative to the ad hoc equal weights commonly used, based on principal components. We test the role of uncertainty in forecasting macroeconomic performance in the euro area between 2005 and 2015. We also check the role of surprises in the considered forecasting sample. [ABSTRACT FROM AUTHOR]

Empirical studies in the forecast combination literature have shown that it is notoriously difficult to improve upon the simple average despite the availability of optimal combination weights. In particular, historical performance-based combination approaches do not select forecasters that improve upon the simple average going forward. This paper shows that this is due to the high correlation among forecasters, which only by chance causes some individuals to have lower root-mean-squared error (RMSE) than the simple average. We introduce a new nonparametric approach to eliminate forecasters who perform well based on chance as well as poor performers. This leaves a subset of forecasters with better performance in subsequent periods. The average of this group improves upon the simple average in the SPF particularly for bond yields where some forecasters may be more likely to have superior forecasting ability. [ABSTRACT FROM AUTHOR]

This paper seeks to identify evidence of regime-switching behaviour in the monetary policy response function and the variance of the shocks. It makes use of various specifications of a small open-economy Markov-switching dynamic stochastic general equilibrium model that is applied to South African data from 1989 to 2014. While the in-sample statistics suggest that some of the regime-switching models may provide superior results, the out-of-sample statistics suggest that the inclusion of various forms of regime-switching does not significantly improve upon the forecasting performance of the model. The results also suggest that the central bank response function has been consistently applied over the sample period. [ABSTRACT FROM AUTHOR]

A very common practice when extracting factors from non-stationary multivariate time series is to differentiate each variable in the system. As a consequence, the ratio between variances and the dynamic dependence of the common and idiosyncratic differentiated components may change with respect to the original components. In this paper, we analyze the effects of these changes on the finite sample properties of several procedures to determine the number of factors. In particular, we consider the information criteria of Bai and Ng (Econometrica 70(1):191-221, 2002), the edge distribution of Onatski (Rev Econ Stat 92(4):1004-1016, 2010) and the ratios of eigenvalues proposed by Ahn and Horenstein (Econometrica 81(3):1203-1227, 2013). The performance of these procedures when implemented to differentiated variables depends on both the ratios between variances and dependencies of the differentiated factor and idiosyncratic noises. Furthermore, we also analyze the role of the number of factors in the original non-stationary system as well as of its temporal and cross-sectional dimensions. Finally, we implement the different procedures to determine the number of common factors in a system of inflation rates in 15 euro area countries. [ABSTRACT FROM AUTHOR]

According to Harvey (1988) , the forecasting ability of the term spread on economic growth is due to the fact that interest rates reflect investors' expectations about the future economic situation when deciding their plans for consumption and investment. Past literature has used ex post data on output or consumption growth as proxies for their expected value. In this paper, we employ a direct measure of economic agents' expectations, the Economic Sentiment Indicator elaborated by the European Commission, to test this hypothesis. Our results indicate that a linear combination of European yield spreads explains a surprising 93.7\% of the variability of the Economic Sentiment Indicator. This ability of yield spreads to capture economic agent expectations may be the actual reason for the predictive power of yield spreads about future business cycle. [ABSTRACT FROM AUTHOR]

The main task of central banks is to set the level of short-term nominal interest rates in reaction to economic developments, with the aim of achieving their statutory objectives (typically some combination of inflation and output variability). If agents are forward-looking, central banks can achieve better macroeconomic outcomes by committing to follow a rule-like behaviour. Against this background, the contribution of this paper is twofold. First, it estimates a small-scale model of the euro area economy that can be used as a benchmark for the evaluation of different simple policy rules in the euro area economy. Second, it studies the performance of a relatively new type of rule, labelled ‘speed limit’ (SL), where the nominal interest rate reacts to the rate of growth in the output gap. The main conclusion of the study is that an SL policy performs remarkably well. [ABSTRACT FROM AUTHOR]

This paper studies uncertainty using the ECB Survey of Professional Forecasters' data. Both inflation and real GDP growth forecasts at the micro level are considered. Our analysis indicates that individual inflation uncertainty is closely related to output growth uncertainty. Individual forecasters seem to behave according to an uncertainty-augmented hybrid specification of the New Keynesian Phillips curve. We also find evidence that inflation uncertainty has a negative impact on economic activity by lowering output growth, boosting inflation and reducing the price-sensitiveness of aggregate supply. [ABSTRACT FROM AUTHOR]

The article discusses the rapid growth of the Chinese economy, which he describes as one of the fastest in the world. It offers information on the gross domestic product of the economy rising annually by 10% or more in recent years. It offers a full range of topics on the contribution and response of municipal engineers to the growth of China covered by publications. It concludes that providing an overview of recent practice in the Far East country somehow engages the interest of readers in the development of its economy.

This paper proposes the use of Bayesian model averaging (BMA) as an alternative tool to forecast GDP relative to simple bridge models and factor models. BMA is a computationally feasible method that allows us to explore the model space even in the presence of a large set of candidate predictors. We test the performance of BMA in now-casting by means of a recursive experiment for the euro area and the three largest countries. This method allows flexibility in selecting the information set month by month. We find that BMA-based forecasts produce smaller forecast errors than standard bridge model when forecasting GDP in Germany, France and Italy. At the same time, it also performs as well as medium-scale factor models when forecasting Eurozone GDP. [ABSTRACT FROM AUTHOR]

This paper develops a methodology to measure the degree of economic integration between nations that are members of an integrated area. We show that a fully integrated economic area (IEA) is characterized by three properties regarding the distribution of member shares of total IEA output and total IEA stocks of physical and human capital. We then show that the expected distribution of member shares within a fully IEA is a harmonic series, with the share distribution depending only on the number of IEA members. This property is then used to develop a composite indicator of the degree of economic integration within an IEA that indicates the distance between the theoretical and actual distribution of shares: the closer is the actual distribution to the expected distribution, the greater the degree of integration. We empirically compute our degree of integration for US states, and alternative regional trading agreements (e.g., EU countries, MERCOSUR, Bangkok Agreement, etc.) and a 'world' comprising 64 countries. [ABSTRACT FROM AUTHOR]

In this paper we provide a comprehensive evaluation of the euro area GDP growth and unemployment rate forecasts collected in the quarterly ECB Survey of Professional Forecasters (SPF) over the period 1999Q1-2008Q4. Our results suggest that while SPF forecasts generally appear to be slightly superior to naïve and purely backward-looking benchmarks, forecast errors nonetheless exhibit a high degree of persistence. In addition, our analysis of the heterogeneity across individual SPF replies suggests that the broad pattern of the individual forecasts is essentially the same as that of the aggregate SPF results. This may reflect a high degree of commonality in the information available (and not available) to panel members, thus leading them to "get it wrong" (or right) not only in the aggregate, but also individually. In particular, although a small number of forecasters perform substantially above average for some variables and horizons, none does so systematically for all variables and all horizons. Lastly, we have presented and assessed the information about forecast uncertainty provided by the SPF. In line with other studies based on the US SPF, disagreement among panel members does not appear to be a good proxy for overall macroeconomic uncertainty, i.e., a high degree of consensus is not necessarily an indication of a low level of forecast uncertainty. Our analysis also suggests that, at the individual level, panel members may not fully internalise the overall level of macroeconomic uncertainty. For example, compared with the level of uncertainty indicated by the historical volatility of actual GDP growth and the unemployment rate, the perceptions of individual panel members about uncertainty appear quite low. This possible underestimation of overall uncertainty is much less severe when densities are aggregated across forecasters. [ABSTRACT FROM AUTHOR]

This paper investigates both long- and short-term relationships among foreign direct investment (FDI), domestic capital, and economic growth in Taiwan using the threshold error-correction approach. The results show a long-term equilibrium relationship among the three variables, which remains stable with asymmetric adjustments. Three short-term relationships are found: (1) promoting growth may stimulate domestic capital accumulation; (2) increasing FDI inflow may stimulate investment from domestic sources rather than crowd out the formation of capital; and (3) FDI inflows directly influence growth through stimulating domestic investment. [ABSTRACT FROM AUTHOR]

The stochastic convergence amongst Mexican Federal entities is analyzed in panel data framework. The joint consideration of cross-section dependence and multiple structural breaks is required to ensure that the statistical inference is based on statistics with good statistical properties. Once these features are accounted for, evidence in favour of stochastic convergence is found. Since stochastic convergence is a necessary, but not sufficient, condition for convergence as predicted by economic growth models, the paper also investigates whether β-convergence process has taken place. We found that the Mexican states have followed either heterogeneous convergence patterns or divergence process throughout the analyzed period. [ABSTRACT FROM AUTHOR]

This paper develops a time series model to forecast the growth in imports by major advanced economies in the current and following year (two to six quarters ahead). Both pure time series analysis and structural approaches that include additional predictors based on economic theory are used. Our results compare favourably with other trade forecasts, as measured by standard evaluation statistics and can serve as a benchmark for more complex macroeconomic models. [ABSTRACT FROM AUTHOR]

African economies have experienced weak levels of growth in per capita income over the past decade. While standard models of growth suggest institutional governance as one key to success, thus far little attention has been given to the role of risk in institutional reform. In this paper, we use a nested panel regression model to estimate the economic value of institutional reform on economic growth, with data for 30 Sub-Saharan African countries from 1980–2004. Our findings provide a basis for measuring the economic value of institutional reform through its impact on reducing aggregate country risk. [ABSTRACT FROM AUTHOR]

Several recent studies have focused on the predictive power of the yield spread for future economic activity. The current paper reformulates the work of Estrella and Mishkin (1998) by focusing on the usefulness of monetary variables for generating probability predictions of rising or falling real GDP growth and inflation. Besides redefining the dependent variables, the independent monetary variables are allowed to include lagged information. Also, the current paper considers the usefulness of the Divisia monetary aggregates in the context of probit models for predicting the probability that real GDP growth or inflation will be increasing [ABSTRACT FROM AUTHOR]

Purpose - This paper aims to investigate whether empirical evidence for scale economies can be found across countries and if so, whether this evidence varies across the stage of development. Design/methodology/approach - The paper uses statistical methods to make comparisons between countries. Findings - The empirical results suggest overall evidence towards aggregate increasing returns across all samples. Within the Cobb-Douglas framework, stronger evidence for aggregate increasing returns is found among samples depicting economies in the early stages of development. The CES framework in turn supports aggregate scale economies for advanced economies, while unitary elasticity of substitution cannot be rejected for less developed economies, giving further support for the Cobb-Douglas estimates. Research limitations/implications - Given that evidence for scale economies is found within different estimation frameworks for different groups of economies, comparative judgment is prevented. The results nevertheless provide evidence on the overall relevance of scale economies within and across groups of economies, as well as a clear indication of the relevance of stage of development in economic growth and development analysis. Originality/value - The most fundamental insight of the empirical results presented in this paper is that there is no reason to assume that the determinants of growth or the parameters guiding economies' adjustments towards their steady states or growth paths will be similar for economies at different stages of development, given their significant structural differences, whether in terms of production structures and characteristics or consumption patterns. [ABSTRACT FROM AUTHOR]

It has long been an article of faith amongst regional economists that increasing returns to scale are necessary to explain the punctiform location of economic activity and population. However, there is no consensus in the empirical literature over whether returns to scale are constant or increasing. A notable example of this lack of agreement is provided by the static-dynamic Verdoorn law paradox. While the dynamic Verdoorn law (specified using growth rates) yields estimates of substantial increasing returns to scale, the static Verdoorn law (specified using log-levels) indicates only the presence of constant returns to scale. In this paper, we explain the static-dynamic Verdoorn law paradox by showing that estimates of returns to scale obtained using the static law are subject to a spatial aggregation bias, which biases the estimates towards constant returns to scale. We illustrate our arguments by means of simulation exercises. The results obtained hold general lessons for applied economic analysis using spatial data. [ABSTRACT FROM AUTHOR]

This paper examines spatial polarisation in the regional distribution of per capita income in a set of European Union countries over the period 1980–2001. The analysis reveals marked differences in the level and evolution of regional polarisation within the various countries considered. In addition, the empirical evidence presented clearly supports the key role played by national development processes in this context. The estimations show that, beyond a certain level of per capita income, regional polarisation decreases as the process of economic development advances. However, there are signs to suggest that regional polarisation increases once a relatively high level of per capita income is attained, although this rise is less marked than the decrease experienced previously. In fact, these findings are robust to the inclusion of additional variables in the analysis and to the choice of the measure used to quantify regional polarisation. [ABSTRACT FROM AUTHOR]

Verdoorn's Law implies that the process of growth is a cumulative one with the ‘manufacturing advanced’ economies growing at the expense of their ‘less-advanced’ counterparts. This paper tests a range of conventional and spatial specifications of Verdoorn's Law across the Greek regions. The findings indicate that the law holds in the case of Greece and that the spatial models (and the spatial-error one, in particular) perform better than the conventional ones. The results indicate that, in the long run, the process of ‘cumulative causation’ can and does slow down in favor of the less-advanced regions. [ABSTRACT FROM AUTHOR]

In this paper we examine a rather popular eyeball check which has been used to establish the presence of state dependence in aggregate unemployment duration data. We correct the literature by showing that this check may well lead to wrong conclusions. [ABSTRACT FROM AUTHOR]

The article presents a paper on a proposed index of human development which is not only dependent on economic indicators. The paper presents two alternative indices of human development and their respective development rankings. The work of the United Nations Development Program (UNDP) is improved by not considering the methodological errors of the UNDP index. Indicators are improved by considering income differences between the literacy and life expectancy of males and females. Alternative indicators of human development such as respect for human rights and measures of environment quality are included in the index.

In this paper, we have analysed the main indicators regarding the incomes and costs of the renewable energy producers, indicators that a Decision Support System must take into account for when predicting, analysing and monitoring the technological and business processes in the field of energy produced from renewable sources in Romania. The results presented in this paper represent a part of the research conducted within the SIPAMER project ("Sistem Inteligent pentru Predicþia, Analiza .i Monitorizarea Indicatorilor de Performanþã a Proceselor Tehnologice °i de Afaceri în Domeniul Energiilor Regenerabile"), financed by the National Authority for Scientific Research (NASR). [ABSTRACT FROM AUTHOR]

The paper deals with the problem of forming comprehensive methodology for determining the level of economic, social and environmental performance of all organizations. The system of indicators that allow an individual to make a forecast of the development of economy under the conditions of its transition from "brown" to a "green" one is proposed by authors. These indicators can be grouped into three categories: indicators of economic transformation, indicators of progress and well-being, and indicators of resource efficiency. An assessment methodology for resource-efficient development at the macro level was created in accordance with the international standard of the Global Reporting Initiative and methodology for sustainable development of the industrial organizations. This methodology is based on specific categories of indicators of organization's sustainable development, such as the indicators of economic sustainability, social sustainability and environmental sustainability. The main stages in the formation and implementation of the methodology in the performance of an organization are presented in the given paper. [ABSTRACT FROM AUTHOR]

This paper assesses the economic importance and the limits of using the Economic Freedom Index (EFI) to help explain and realize higher levels of per-capita income. Specifically, I elaborate on the need to disaggregate and place the EFI into a coherent and meaningful theoretical context in order to generate economically cogent analytical predictions as well as more reasonable public policy recommendations. As it stands, the EFI can produce highly misleading causal results with potentially disastrous consequences for public policy. Hereby, I make a preliminary attempt at constructing an alternative aggregate index to measure the importance of market-related institutions for achieving higher levels of per-capita income. This alternative index, termed here the Good Capitalist Governance Index (GCGI), better correlates with per-capita income and has a higher threshold value than the Economic Freedom Index. The GCGI highlights the importance of secure private rights, limited corruption, and sound money for the realization of higher levels of per-capita income. The evidence supports the hypothesis that good capitalist governance requires a well-working, but not minimalist government. [ABSTRACT FROM AUTHOR]

Addressed in this paper is an information-theoretics inspired econometric approach to evolve a forecast model on the growth profiles of telecommunication services. It includes cohesively, both the profile of user-economics as well as the technological framework of service providers; and the forecasting suite is built on the basis of information-theoretics considerations. It refers to a modified Fisher-Kaysen method that accounts for 'free-market' principles and uses entropy (stochastic) details of differential changes in the short-run (state) variables of the growth function. Further, the principle of proportional fairness is appropriately invoked and the heuristics of users' willingness-to-pay for the network resources allocated to them is presumed. A few simulation examples using real-world data are furnished to validate the forecast algorithm developed. The computed results on forecasting presented depict a 'cone-of-forecast' in the ex ante regime of the examples considered. Relevance of this method to modern aspects of managerial approach and market penetration vis-à-vis forecast trends is indicated. Shortcomings of the method are identified. [ABSTRACT FROM AUTHOR]

(1433) Audrone Jakaitiene and Stephane Dees Forecasting the world economy is a difficult task given the complex interrelationships within and across countries. This paper proposes a number of approaches to forecast short-term changes in selected world economic variables and aims, first, at ranking various forecasting methods in terms of forecast accuracy and, second, at checking whether methods forecasting directly aggregate variables (direct approaches) outperform methods based on the aggregation of country-specific forecasts (bottom-up approaches). Overall, all methods perform better than a simple benchmark for short horizons (up to 3 months ahead). Among the forecasting approaches used, factor models appear to perform the best. Moreover, direct approaches outperform bottom-up ones for real variables, but not for prices. Finally, when country-specific forecasts are adjusted to match direct forecasts at the aggregate levels (top-down approaches), the forecast accuracy is neither improved nor deteriorated (i.e. top-down and bottom-up approaches are broadly equivalent in terms of country-specific forecast accuracy). [ABSTRACT FROM AUTHOR]

What is the relationship between trade and economic growth? Does trade positively affect economic growth? Owing to the ambiguity of this relationship, the empirical relationship has remained open ( Rodriguez and Rodrik, 2001 ; Baldwin, 2003 ). This paper introduces “trade structure” variables, borrowed from the paper of Lederman and Maloney (2003 ), and applies them to the relationship. A dynamic panel estimation for the data of 66 countries during 1991–2004 is used to verify the validity and robustness of the relationship. Trade structure variables show strong evidence of positive effects on growth. Free-trade agreements/areas (FTAs) also enhance economic growth. East Asia shows a different relationship between trade and growth than the world and reflects a weaker role of FTAs in its growth. [ABSTRACT FROM AUTHOR]

This paper investigates the reasons behind the resilience of China's economy to the global financial tsunami. China's economy is lowly leveraged in its banking, household, public and external sectors and, therefore, is less plagued by the global deleveraging than most developed economies. Chinese domestic sectors have improved significantly over the past decade, giving them larger capacity to cope with external shocks than during the Asian financial crisis a decade ago. Contrary to the conventional wisdom that China's economic growth is highly dependent on exports, we find that the main growth engine for China is domestic demand. Destocking, rather than falling exports, was the main cause of the sharp economic slowdown in China in late 2008 and early 2009. Therefore, the global economic slowdown should have limited impact on China's economy. We forecast a sustained economic recovery in China in 2009–2011, with real GDP growth exceeding 10 percent in 2010. [ABSTRACT FROM AUTHOR]

This paper (1) examines whether there is a bilateral relationship between HIV/AIDS and economic development; (2) estimates the impact of HIV/AIDS on economic development; and (3) identifies some of the factors affecting the spread of HIV/AIDS. Analyses are based on data from 39 sub-Saharan African countries for the period 1989-1998. HIV/AIDS negatively impacted economic development, with no evidence of a reciprocal relation. Expenditures on health and education as well as political freedom had positive impacts on development, but negative impacts on HIV/AIDS incidence. Expenditures on female education impacted development and HIV/AIDS incidence. [ABSTRACT FROM AUTHOR]

Banks are important for mobilizing savings and then channeling those funds to productive investment projects. While providing these and other services that contribute to economic growth and development, banks take on various types of risks with the expectation that the return they receive will compensate for the risks. This paper presents a simple model and tests the extent to which information asymmetry between bank owners and depositors induces risk-shifting behavior that allows for higher bank net interest margins. The empirical results support the hypothesis that the greater the degree of information asymmetry the higher net interest margins base upon a sample of 3,115 banks in 98 countries. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to test regional convergence and to investigate interregional disparities in terms of per capita income in Greece. The novelty of our study lies in the use of a disaggregated dataset for an extended time period (1971–2003) at two regional levels (NUTS II & NUTS III). Our results indicate that there is β convergence between prefectures but not among regions, while no evidence of σ convergence is found at both regional levels. Also, the GDP geographic concentration and population density have a negative impact on growth, which outweighs the positive growth effect of population geographic concentration and GDP spatial inequality. Thus, policies aiming at the decentralization of economic activity in Greece might enhance growth and regional equality simultaneously. Finally, we do not find economic dualism across geographic areas; however, rich prefectures seem to converge faster than poor ones. [ABSTRACT FROM AUTHOR]

During the 1997 economic crisis in Asia, we observed that several East Asian economies encountered significant external and internal shocks that led to a widespread economic recession. The severe exchange rate depreciation may have harmed the supply side of these economies such that production was contracted. Many argue that the initial tightened domestic policies aimed at countering these shocks and restoring economic growth may have further exacerbated the initial crisis by contracting the domestic sector. This paper analyzes the impact of anticipated and unanticipated changes in the real exchange rate, fiscal spending, the money supply, and energy prices on output and price in Korea, Indonesia, Malaysia, Philippines, and Thailand. The results indicate that anticipated real depreciation during the crisis may have adversely affected the supply side, shrinking output growth while accelerating price inflation. In contrast, the combined effects of supply and demand channels render the outcome of unanticipated currency depreciation inconclusive on output growth and price inflation. Indonesia and Malaysia have experienced a significant reduction in average real output growth beyond the crisis period with a significant increase in domestic price inflation in Indonesia only. In most cases, we credit accommodating policies for countering external shocks. [ABSTRACT FROM AUTHOR]

Using the interregional input–output model, the present paper analyzes the impact of Olympic-related investments on the economic development of Beijing and its surrounding areas, as well as the rest of China. The interregional input–output model provides a satisfactory simulation and analysis of Olympic-related investments that are implemented in Beijing and other areas and their spillover effects on other regions. We estimate that from 2002 to 2007, Olympic-related investments will add 2.02, 0.23 and 0.09 percent annually to gross regional products of Beijing, its surrounding areas and the rest of China, respectively. [ABSTRACT FROM AUTHOR]

This paper addresses the question of whether or not a theory of total factor productivity (TFP) is needed in order to explain the observed large per capita income differences across countries. As the argument that it is needed has been reached by calculating TFP empirically, we show that the way the estimates of TFP have been computed is not an innocuous issue. To illustrate our point, we discuss how two well-known textbooks on growth theory present the arguments and the problems associated with these expositions. We conclude that the tautological nature of the estimates of TFP lies at the heart of an important question that the empirical literature on economic growth has been dealing with during recent years. Hence, our arguments cast doubt on the need for a theory of TFP. [ABSTRACT FROM AUTHOR]

In the period of 1990s alone, four waves of financial crises occurred around the world. The repeated occurrence of financial crises stimulated a large number of theoretical and empirical studies on the phenomena, in particular studies on the determinants of or early warning signals of financial crises. Nonetheless, the different studies of early warning systems have achieved mixed results and there remains much room for further investigation. Since, so far, the empirical studies have focused on conventional economic modelling methods such as simplified probabilistic models and regression models, in this study we examine whether new insights can be gained from the application of the fuzzy clustering method. The theories of fuzzy sets and fuzzy logic offer us the means to deal with uncertainties inherent in a wide variety of tasks, especially when the uncertainty is not the result of randomness but the result of unknown factors and relationships that are difficult to explain. They also provide us with the instruments to treat vague and imprecise linguistic values and to model nonlinear relationships. This paper presents empirical results from analysing the Finnish currency crisis in 1992 using the fuzzy C-means clustering method. We first provide the relevant background knowledge and introduce the fuzzy clustering method. We then show how the use of fuzzy C-means method can help us to identify the critical levels of important economic indicators for predicting of financial crises. Copyright © 2007 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The purpose of this study is to examine the determinants of the sovereign credit ratings provided by the three major rating agencies: Fitch Ratings, Moody's and Standard and Poor. A principal component analysis is employed in order to identify the common factors affecting these ratings. The impact of the variables correlated with these factors on ratings is then assessed through an ordered logistic model. Results show that sovereign ratings are mostly influenced by per capita income, government income, real exchange rate changes, inflation rate and default history. The study also highlights the importance of corruption, as measured by Transparency International's Corruption Perceptions Index, which appears as a proxy for both economic development and the quality of the governance of a country. [ABSTRACT FROM AUTHOR]

This paper examines some economic forecasts made in late 1930 that were intended to predict economic activity in the United States in order to shed light on several methodological issues. We document that these forecasts were extremely optimistic, predicting that the recession in the US would soon end, and that 1931 would show a recovery. These forecasts displayed egregious errors, because 1931 witnessed the largest negative growth rate for the US economy in any year in the twentieth century. A specific question is what led forecasters to make such serious and substantial empirical errors. A second more general issue involves the methodology of forecasting. The 1930 forecasts were sometimes based on explicit analogies with previous serious business cycles. Modern forecasting approaches are based on techniques that may not be recognized as analogies. Using the 1930 forecasts, we examine the implicit‐analogy content of forecasts, and what might render such implicit analogies valid or invalid. This 1930 forecast example also resonates beyond the confines of economic methodology because forecasts about the Great Depression are of continuing interest to the profession at large, and we produce a forecast series not previously available. [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.

We investigate whether combining forecasts from surveys of expectations is a helpful empirical strategy for forecasting inflation in Brazil. We employ the FGV-IBRE Economic Tendency Survey, which consists of monthly qualitative information from approximately 2000 consumers since 2006, and also the Focus Survey of the Central Bank of Brazil, with daily forecasts since 1999 from roughly 250 professional forecasters. Natural candidates to win a forecast competition in the literature of surveys of expectations are the (consensus) cross-sectional average forecasts (AF). We first show that these forecasts are a bias-ridden version of the conditional expectation of inflation using the no-bias tests proposed in Issler and Lima (J Econom 152(2):153-164, 2009) and Gaglianone and Issler (Microfounded forecasting, 2015). The results reveal interesting data features: Consumers systematically overestimate inflation (by 2.01 p.p., on average), whereas market agents underestimate it (by 0.68 p.p. over the same sample). Next, we employ a pseudo out-of-sample analysis to evaluate different forecasting methods: the AR(1) model, the Granger and Ramanathan (J Forecast 3:197-204, 1984) forecast combination (GR) technique, a Phillips-curve based method, the Capistrán and Timmermann (J Bus Econ Stat 27:428-440, 2009) combination method, the consensus forecast (AF), the bias-corrected average forecast (BCAF), and the extended BCAF. Results reveal that: (i) the MSE of the AR(1) model is higher compared to the GR (and usually lower compared to the AF); and (ii) the extended BCAF is more accurate than the BCAF, which, in turn, dominates the AF. This validates the view that the bias corrections are a useful device for forecasting using surveys. The Phillips-curve based method has a median performance in terms of MSE, and the Capistrán and Timmermann (2009) combination method fares slightly worse. [ABSTRACT FROM AUTHOR]

This paper makes the case for developing accounts of economic activity by placing such activity in its ambient cultural contexts. It is shown that doing so provides the basis for credibly attributing significance to economic acts and coming to terms with the belief structures economic agents employ, e.g., what they expect of each other, expect others expect of them, and so on. The role of culture systems as social orchestrators is discussed. The implications of a context-sensitive explanatory approach for the commitment to view economic behavior as rational are considered. A wider conception of economic rationality is proposed. [ABSTRACT FROM AUTHOR]

This paper identifies the major factors explaining GDP growth in a number of Southeast Asian countries during the 1980s and early 90s. Estimates of the contribution of technological change, increases in the endowments of labor and capital, movements in the terms of trade, and changes in domestic output prices are reported for Hong Kong, Japan, South Korea, the Philippines, and Thailand. Partial results for Indonesia and Malaysia are also shown. An index number approach is used; it has a tight theoretical foundation being based on the GNP/GDP function approach to modeling the production sector of an open economy. [ABSTRACT FROM AUTHOR]