Macroeconomic Stability

Factores como la aparición en el mercado de nuevas formas de financiación, los nuevos patrones de consumo y ahorro, o la estabilidad macroeconómica de los últimos años han impulsado el incremento del endeudamiento de los hogares. Sin embargo, la situación de ...

Using panel data for the period 1989-2006 we revisit the empirics of economic growth in the context of the post-communist transition. We pay particular attention to the mechanisms of causation and to the potential endogeneity of the macroeconomic stability indicators considered to be important in the existing literature. Carefully employing a variety of econometric techniques we consistently find that macroeconomic instability is bad for economic growth. We find some evidence that institutions of governance are important for economic growth through their influence on the macroeconomic environment. That is, good institutions are conducive to macroeconomic stability which in turn positively impacts upon economic growth. We also find, in contrast with other work, that investments in education have had a strong positive impact on growth in transition while other 'standard' economic growth determinants remain less important. These findings are shown to be robust to a variety of e...

This paper evaluates the usefulness of a currency board regime based on Argentina’s experience. Argentina adopted the currency board in March 1991 to put an end to a long history of large macroeconomic imbalances and high inflation that culminated in the hyperinflation process of 1989-91. The regime has been extremely successful in restoring macroeconomic stability and ensuring low inflation. The adoption of a tight fiscal stance, and of sound polices to strengthen the financial system were critical to ensure the resilience of the economy to respond to adverse external shocks. The paper will argue that a strict exchange rate rule like the one used in Argentina can be a strong alternative to other exchange rate regimes to ensure macroeconomic stability in a globalized world with highly integrated capital markets.

This paper develops a conceptual and methodological framework for the analysis and measurement of economic resilience. The working definition of economic resilience adopted in this paper is the "nurtured" ability of an economy to recover from or adjust to the effects of adverse shocks to which it may be inherently exposed. This concept is used to provide an explanation as to why a number of inherently vulnerable countries have attained relatively high levels of GDP per capita. The paper also presents a tentative approach aimed at developing an index of economic resilience covering four aspects namely macroeconomic stability, microeconomic market efficiency, governance and social development.

This study investigates the effect of budget deficit reduction on exchange rate between US dollar and Turkish lira (TL). Our article aims to illustrate that the evidence on the relationship between budget deficits and exchange rates is not clear-cut and to explain why the theoretical approaches that underlie the relationship are ambiguous while there is general agreement that cutting budget

This paper examines how macroeconomic policies can be managed to accommodate a large inflow of foreign aid to combat the HIV/AIDS epidemic and still maintain macroeconomic stability. Because of the daunting scale of this epidemic, funds need to be disbursed urgently in order to contain its spread, yet some economists worry that rapidly scaling up foreign assistance for this purpose

During the first half of this decade, the belief that new financial products would adequately shield investors from risk encouraged financial flows to less creditworthy households and businesses. By late 2006, U.S. financial markets were flashing warning signals of a potential financial crisis. ; In a sign that investors had become too complacent, risk premiums had all but vanished in

After 1990, the Central and Eastern European (CEE) countries lowered the barriers to FDIs. Of course, many other developments were taking place at the same time: increasing openness to trade, privatization of previously government-owned production, and many other changes as these countries moved in various degrees from socialist to market economies and democratic governments. They privatized many state-owned enterprises, signed

We analyze the efiects of flscal policy in a currency area. We de- velop a two-region model having sticky prices, a common monetary authority and regional flscal policies. We break the ricardian equiva- lence and allow for keynesian efiects of public expenditure introducing rule-of-thumb agents in each region. Main results are the following. First, consistently with the empirical evidence, after a public spend- ing shock in one region private agents demand for imports increases and the terms of trade appreciates. Second, a countercyclical flscal rule can restore the Taylor principle and the uniqueness of the equi- librium. Finally, a countercyclical flscal rule contributes to reduce macroeconomic volatility.

This paper examines the relationship between Nigeria financial sector development and macroeconomic stability from 1980 – 2014. The objective is to investigate the extent and the direction of relationship between various components of financial sector development and macroeconomic stability in Nigeria. Time series data were sourced from Central Bank of Nigeria (CBN) statistical bulletin. The study modeled percentage of Nigerian Gross Domestic Product to Balance of Payment (GDP/EXT) as our dependent variable total commercial banks credit to Gross Domestic Product (TCBC/GDP), Broad Money Supply to Gross Domestic Product (M2/GDP), Credit to Core Private Sector to Gross Domestic Product (CPS/GDP), Stock Market Capitalization to Gross Domestic Product (MKT/GDP) and Total savings to Gross Domestic Product (TS/GDP) as our independent variables. The study employed Co-integration Test, Augmented Dickey Fuller Unit Root Test, Granger Causality Test and Vector Error Correction Model were used to examine the extent to which the independent variables affect dependent variable. The static regression result shows that all the independent variables have positive effect on the dependent variables. The Augmented Dickey Fuller result shows non stationarity at level and stationarity at first difference. The cointegration result shows long run relationship, the Granger Causality Test shows multivariate relationship running through the independent to the dependent variable and the dependent to the independent variables. The vector error correction result shows adequate speed of adjustment to equilibrium. The study conclude that Nigerian financial sector development have significant relationship with macroeconomic stability. It therefore recommends effective financial system policies to deepen the development of the financial system to enhance Nigerian macroeconomic stability.

Currently, many monetary and fiscal policy measures are aimed at preventing the financial market meltdown that started in the US subprime sector and has spread world wide as a great recession. Although some slow recovery appears to be on the horizon, it is worthwhile exploring the fragility and potentially destabi- lizing feedbacks of advanced macroeconomies in the context of

This study is undertaken to determine the relative impacts of the uncertainty of macroeconomic variables on investment and make policy recommendations that may help dampen their fluctuations. In the study, generalized autoregressive conditional heteroscedasticity (GARCH) model was applied in the estimation of uncertainty of the macroeconomic variables. In the analysis of the data, econometric results were obtained from cointegration test

The current crisis has struck and still strikes most sectors of the economy. The question that is being asked is which are the areas and sectors that have the potential to withstand the crisis and to develop despite this adverse economic reality. Experience shows that creative industry in particular and creative economy in general has the ability to face the