Macroeconomics

We are living in a complex and dynamic world in which innovation and entrepreneurship are occupying a decisive role for economic development. According to Joseph Alois Schumpeter "carrying out innovations is the only function which is fundamental in history". He also accented that It is entrepreneurship that "replaces today's Pareto optimum with tomorrow's different new thing". Schumpeter's words that entrepreneurship is innovation have never seemed so appropriate as the nowadays, when modern capitalism is experiencing a serious crisis and lost his strength during last subprime and euro-debt crises. The purpose of this paper is the analysis of the Schumpeter's innovation concept in a context of "first" and "second" Entrepreneurship theory.

This paper presents recent research on access to finance by small and medium-size enterprises (SMEs). SMEs form a large part of private sector in many developed and developing countries. While cross-country research sheds doubt on a causal link between SMEs and economic development, there is substantial evidence that small firms face larger growth constraints and have less access to formal sources of external finance, potentially explaining the lack of SMEs' contribution to growth. Financial and institutional development helps alleviate SMEs' growth constraints and increase their access to external finance and thus levels the playing field between firms of different sizes. Specific financing tools such as leasing and factoring can be useful in facilitating greater access to finance even in the absence of well-developed institutions, as can systems of credit information sharing and a more competitive banking structure.

This paper examines whether institutional changes have affected the interaction between the real economy and monetary policy in China. We find evidence that structural changes in the financial and real sectors over the period of our study did influence the way in which monetary policy affected the real economy. There were an increasing influence of interest rates on output over 1984 to 1997 and non-state owned enterprises were increasingly reacting to monetary policy changes, suggesting that banking sector reforms were having effects, despite the fact that most credit was allocated to the loss-making State sector.

Calvert K and Simandan D (2010) Energy, space, and society: a reassessment of the changing landscape of energy production, distribution, and use Journal of Economics and Business Research XVI(1), pp. 13-37.
ABSTRACT: While geography has always mattered for the energy sector, the relative effects of location and distance on the economics of energy regimes are increasing as we begin to deploy more renewable energy technologies. This reintroduction of the friction of distance is leading to an energy landscape that is far different from fossil-based regimes. The new energy paradigm, based as it is upon the physics and the economics of renewable energy, is being reflected in the landscape as distributed, decentralized, and diversified patterns of energy generation. Because the increased use of renewable energy technologies is beginning to change the spatial patterns of political and socioeconomic activities, a thorough understanding of these patterns is crucial to increasing the socio-political acceptability of new technologies and to avoiding the socially costly unintended consequences of policy and investment decisions.  This paper proposes a theoretical foundation upon which economists and economic geographers could scaffold their analyses of the spatial characteristics of the economics of energy use.  To this end, we bring together two complementary conceptualizations of economic geography: firstly, as the study of the effects of location and distance on energy economics, and secondly, as the study of the ways in which political, economic, and technological energy-related practices give rise to particular spatial patterns of socio-economic welfare. We end the paper by developing the concept of energy rationality and showing how it relates to discussions of metarationality, common sense, and wisdom.

The main purpose of this study is to measure the relationship between macroeconomic variables and the housing price. This paper examines empirically whether the increasing trend in the Malaysian housing price is related to changes in the gross domestic product (GDP), population, inflations rate, costs of construction, interest rate and real property gains tax (RPGT). The paper is exploratory in nature. The empirical data were collected from Valuation and Property Services Department of the Ministry of Finance Malaysia from 2001 to 2010. The paper provides empirical results that the gross domestic product (GDP), population and RPGT are the key determinants of housing prices. However, changes in housing prices may not necessarily be influenced by the gross domestic products (GDP), population and RPGT in Malaysia. The general finding of this paper strongly suggests that housing bubbles in the Malaysian residential property market are becoming bigger and stronger. The paper is useful for speculators, investors and buyers to know which factors to account for in housing investment decision. This paper can serve as a guide for the government in stabilizing the residential housing price in Malaysia.

ased on vital contribution of the commercial banks to economic progress of Pakistan, this study investigates the impact of macroeconomic variables on profitability of public limited commercial banks in Pakistan for years method is used to examine the effect of 3 major external factors; inflation rate, real gross domestic product (GDP) and real interest rate on profitability indicators; return on assets (ROA), return on equity (ROE) and equity multiplier (EM) ratios in 3 separate models. The empirical findings indicate a strong positive relationship of real interest rate with ROA, ROE and EM. Secondly, real GDP is found to have an insignificant positive effect on ROA, but an insignificant negative impact on ROE and EM. Inflation rate on the other hand, has a negative link with all 3 profitability measures. Overall, the selected macroeconomic factors are found to have a negligible impact on earnings of commercial banks.

This  paper  investigates  the  effects  of  education,  inflation,  consumption,  and  GDP  growth  on unemployment  in  the  Philippines.  Using  Ordinary  Least  Squares,  the  impact  of  each  factors affecting  unemployment  is  determined.  To  yield  robust  estimates,  possible  violations  of  the assumptions  of  the  classical  linear  regression  model  (CLRM)  are  accounted  for.  Several theories  indicate  that  an  increase  in  education  and  consumption  is  associated  with  a decrease  in  unemployment.  However,  results  of  this  study  show  otherwise.  The  findings suggest  that  the  country’s  labor  force  grows  faster  than  its  GDP.  Furthermore,  the government  highly  invests  in  education,  but  focuses  less  on  the  availability  of  jobs  for future  labor  force  participants.  Because  of  this,  there  is  an  oversupply  of  potential  workers that would  not only  lead  to  more  unemployment but underemployment  as  well.

Vat was introduced into the Indian taxation system from 1 April 2005. Vat is a significant improvement over the local sales tax system. At the state level the advantage of vat is that it is a multi-point tax with set-off for tax paid on purchases and it prevents repeated taxation of the same product. Despite the success of vat there are still certain limitations in the structure of vat both at the central and at the state level. To solve the issues untouched by vat the then Finance minister Pranab Mukherjee while presenting the budget on July 6, 2009, said that GST would come into effect from April 2010. The goods and services Tax (GST) will indeed be a further significant improvement towards a comprehensive indirect tax reforms in the country.

Using objective measures of investor protections in 170 countries, I establish that the level of investor protection matters for cross-country differences in GDP growth: countries with stronger protections tend to grow faster than those with poor investor protections.

This collection of essays reviews the current state of knowledge of the convergence hypothesis, which asserts that at least a fairly restricted set of countries, the members of the "convergence club," are undergoing a process that brings their levels of productivity and living standards increasingly close to one another. The book summarizes the available empirical information and contributes a considerable amount of new evidence. It examines the patterns exhibited by individual industries in particular countries as well as the behavior of the aggregate economies of those countries and their manufacturing sectors. It reports evidence, old and new, on the influences underlying the degree of convergence that appears in fact to have occurred. It studies the role that convergence has played and promises to play in the future of the newly industrialized countries and the less developed countries. There are separate investigations of performance in earlier periods, notably that of the United States, and analytic comparisons with the record after World War II. The chapters are about equally divided in focusing on two different convergence concepts to which we will refer, respectively, as homogenization and catch-up. The first refers to a state of affairs in which most of the countries in some specified group constantly grow closer to one another in terms of per-capita incomes and other pertinent variables. The second concept refers to the case in which laggard countries narrow the distance separating them from the leading economy. More will be said shortly about the distinction between the two orientations.

This study evaluates the result of Structural Adjustment Programme (SAP) on Nigerian economy. The period under review was bifurcated into pre-SAP and during SAP (1986SAP ( -2008 periods to enable us investigate the extent to which SAP has achieved the cardinal objectives of exchange rate stability, minimal price escalation and trade balance adjustment. Using quarterly data for the period 1960 -2008, we employ co integration analysis and error correction mechanism (ECM) technique to tests whether the objectives have been achieved. The results suggest that in both time horizons, the role of exchange rate depreciation in trade balance adjustments appears to be inconsequential. The results further suggest that the problem of Nigeria appear not to be that of demand management as diagnosed by prescribers of SAP, but rather that of supply. The exchange rate has remained volatile and kept a downward trend while inflation and import index have kept rising profiles. All these suggest that SAP failed to achieve the cardinal objectives in terms of exchange stabilization, minimum acceptable inflation rate, substantial reduction in import demand index and non-oil export promotion. This must have accounted for it's official abandonment in 2006. To this effect, we suggest that the Central Bank of Nigeria plays its stabilizing role in the economy through reversed appropriate economic policies tailored towards effective supply management for improved internal and external sector performance.

This paper considers the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development. Three models are considered and compared to evidence: a model emphasizing physical capital accumulation and technological change, a model emphasizing human capital accumulation through schooling. and a model emphasizing specialized human capital accumulation through learning-by-doing. 0304-3932j88j$3.50©1988, Elsevier Science Publishers B.V.

The relationship between information technology (IT) and productivity is widely discussed but little understood. Delivered computing power in the U.S. economy has increased by more than two orders of magnitude since 1970 (Figure 1) yet productivity; especially in the service sector, seems to have stagnated ( ). Given the enormous promise of IT to usher in "the biggest technological revolution men have known" [29], disillusionment and even frustration with the technology is increasingly evident in statements like "No, computers do not boost productivity, at least not most of the time" .

This paper assesses how fiscal and monetary policies influence economic growth and development in Nigeria. The paper argues that curbing the fiscal indiscipline of Government will take much more than enshrining fiscal policy rules in our statute books. This is because the statute books are replete with dormant rules and regulation. It notes that there exist a mild long-run equilibrium relationship between economic growth and fiscal policy variables in Nigeria. The paper suggest that for any meaningful progress towards fiscal prudence on the part of Government to occur, some powerful pro-stability stakeholders strong enough to challenge government fiscal recklessness will need to emerge.

A true Nation-state has never yet existed in our diverse and vibrant world. For states to remain in the game, they need to understand they are no longer the only actor. The current policy arena is a kind of unstructured complexity in which a lot of actors are key for policy making. The descriptive label governance is used for the changing nature of the policy process. The dispersion of the power and activities of the state towards stakeholders at different spatial levels is the most visible change in the state, in a globalized world. The thesis about the end of the state is unsustainable. According to Poulantzas, a nation-state should be seen as 'self-replaceable'. Economic globalization is seen as the force which most threatens the authority of the nation-state. The state's ability to act in opposition to market forces is devastated by the fact that the state must reduce regulatory standards in order to attract capital. The theory which satisfactorily reflects the nexus of globalization and reduction of regulatory policy is the 'race-to-the-bottom' (RTB) hypothesis. In today's globalized states, there is a trend towards subordinating social policy to the needs of structural competitiveness and the flexibility of the labour market. Such a state is called a Schumpeterian workfare post-national regime. Globalization causes the state to be unable to protect its population. Contemporary security threats and challenges, which are by nature transnational and largely a product of globalization, make nation-states vulnerable and interdependent. The result of globalization is also new nonspace-based identities that do not derive from the nation-state.

The exchange rate is defined as the number of units of domestic currency, the need to buy one unit of foreign currency. In other words, the exchange rate at which one currency in one country can be exchanged for other currencies. The exchange rate is very important, because it allows for the conversion of national currency into another, thus it can facilitate international trade for goods and services and the transfer of funds between countries and it also allows comparison of prices of goods at the same in different countries. In general, the price difference between similar goods determines the goods traded and where they were sent. However, the currency could stir volatility it depends on the economic situation in the foreign exchange market in particular.

This paper examines the dynamic interactions between Islamic banking and economic growth of Malaysia by employing the Cointegration test and Vector Error Model (VECM) to see whether the financial system influences growth and growth transforms the operation of the financial system in the long-run. We use time series data of total Islamic bank financing (IBFinancing) and real GDP per capita (RGDP), fixed investment (GFCF), and trade activities (TRADE) to represent real economic sectors. We found that in the short-run only fixed investment that granger cause Islamic bank to develop for 1997:1-2005:4. Where as in the long-run, there is evidence of a bidirectional relationship between Islamic bank and fixed investment and there is evidence to support ‗demand following' hypothesis of GDP and Islamic bank, where increase in GDP causes Islamic banking to develop and not vice versa.

Most of the existing studies in theoretical and empirical understanding of the macroeconomic consequences of oil price shocks have been focused on the US economy. In contrast to these studies, the purpose of this paper is to investigate whether economic world growth can be explained by changes in the oil price. We will also investigate if there are any differences in oil price effects on economic growth between different countries and group of countries. A possible reason for these differences was oil exports/imports countries. For the oil importer countries, oil price increase and economic growth are negatively correlated while all things being equal, the relation is positively correlated for oil exporter countries. The data used in this paper covers the G-7 group, OPEC countries in addition to Russia, China and India. The main findings may be summarized as follows: Our use of Granger causality-tests allows us to conclude that the interaction between oil price changes and economic growth is not proved for the most countries but for the G-7 group where, a unidirectional relation from oil price to gross domestic product is proven.

This paper provides further evidence on the relationship between economic growth and government spending. For the first time two different panel data methodologies have been applied to seven transition economies in the South Eastern Europe (SEE), generating significant results which, if considered, may enhance the economic performance of the countries in the region. More specifically, the evidence generated indicate that four out of the five variables used in the estimation i.e. government spending on capital formation, development assistance, private investment and trade-openness all have positive and significant effect on economic growth. Population growth in contrast, is found to be statistically insignificant.

Given the importance of FDI for the economic growth of both home and host countries, the aim of this paper is to assess the importance granted to location advantages during the development of FDI theory. We start with the earliest theoretical directions as regards FDI location issues and extend our study to describing less debated theories, but of a particular importance for this theme. In this way, we have the opportunity to emphasize the changes in FDI location determinants. We find that a direction of the FDI theories' expansion is due to the incorporation of new variables on location, although the location advantages are barely mentioned in the first explanations regarding the international activity of the firms.

Evolution of money supply and gross domestic product are in a close relationship. This study examine the relationship between money supply and economic growth in Iran adopting ordinary least squares (OLS) technique and also uses data obtained from the central bank of Iran during 1974 to 2008. To do so, using Levine and Renelt growth model we found that there is a positive and significance relationship between money supply and economic growth in Iran.

GDP The gross domestic product (GDP) is one of the primary indicators used to measure the health of a country's economy. It represents the total rupee value of all goods and services produced over a specific time period; by this one can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year. Measuring GDP is complicated (which is why we leave it to the economists), but at its most basic, the calculation can be done in one of two ways: either by adding up what everyone earned in a year (income approach), or by adding up what everyone spent (expenditure method). Logically, both measures should arrive at roughly the same total. The income approach, which is sometimes referred to as GDP (I), is calculated by adding up total compensation to employees, gross profits for incorporated and non-incorporated firms, and taxes less any subsidies. The expenditure method is the more common approach and is calculated by adding total consumption, investment, government spending and net exports. As one can imagine, economic production and growth, what GDP represents, has a large impact on nearly everyone within that economy. For example, when the economy is healthy, you will typically see low unemployment and wage increases as businesses demand labour to meet the growing economy. A significant change in GDP, whether up or down, usually has a significant effect on the stock market. It's not hard to understand why: a bad economy usually means lower profits for companies, which in turn means lower stock prices. Investors really worry about negative GDP growth, which is one of the factors economists use to determine whether an economy is in a recession.

This paper examines the incidence and consequences
of financialization in the industrialized countries of the
Organization for Economic Cooperation and Development
(OECD). Using the latest panel data from the OECD and the
ILO, the paper first documents the extent of financialization in
OECD countries and then analyzes the relationships between
financialization and three other variables: inequality, growth and
unemployment. There is strong empirical evidence for
considerable financialization across the OECD, with significant
and negative impacts on all three variables.

This paper aims to deal with the status of micro enterprises, cottage and small scale industries in Nepal and observe and analysis their contribution in the economy. Micro and Small Enterprises (MSEs) has contributed to the economy couldn't be underrated. Least Developed Countries like Nepalese, MSEs is contributing to the economy through employment generation, creation of added value, GDP, export activities etc. The paper is based on empirical evidence drawn from the publication

Stock exchange and interest rate are two crucial factor of economic growth of a country. The impacts of interest rate on stock exchange provide important implications for monitory policy, risk management practices, financial securities valuation and government policy towards financial markets. This study seeks evidence supporting the existence of market efficiency on the Dhaka Stock Exchange (DSE) based on the daily general price index 1994 to 2005 and also shows empirical relationship between stock index and interest rate in Bangladesh based on monthly data from May 1992 to June 2004. Stationary of market return is tested and found DSE Index does not follow random walk model indicate DSE is not efficient in week form. The linear relationship between share price and interest rate, share price and growth of interest rate, growth of share price and interest rate, and growth of share price and growth of interest rate were determined through ordinary least-square (OLS) regression. For all of the cases, included and excluded outlier, it is found that Interest Rate has significant negative relationship with Share Price and Growth of Interest Rate also has significant negative relationship with Growth of Share Price. So if the interest rate is considerably controlled in Bangladesh than it will be the great benefit of Dhaka Stock Exchange through demand pull way of more investor in share market and supply pull way of more extensional investment of companies.

Key Words: Efficient Market Hypothesis, Random walk model, Market Return, Interest Rate, Investment, Dhaka Stock Exchange

This paper estimates the causal relationships between energy consumption and income for India, Indonesia, the Philippines and Thailand, using cointegration and error-correction modelling techniques. The results indicate that, in the short-run, unidirectional Granger causality runs from energy to income for India and Indonesia, while bidirectional Granger causality runs from energy to income for Thailand and the Philippines. In the case of Thailand and the Philippines, energy, income and prices are mutually causal. The study results do not support the view that energy and income are neutral with respect to each other, with the exception of Indonesia and India where neutrality is observed in the short-run. ᮊ

To explain the economic growth of America and Europe from the middle of the nineteenth century through the twentieth century, growth economists added another factor in the production function, namely, technology. There are two main theories of economic growth incorporating the effects of technical knowledge - the exogenous growth theory and the endogenous growth theory. The essential difference between these two models arises from the way each explains the nature of Technology and consequently the varying effect it has on economic growth.

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Simandan D (2009) Industrialization, In R Kitchin & N Thrift, (Eds.), International Encyclopedia of Human Geography , Oxford: Elsevier, volume 5, pp. 419-425.
ABSTRACT: This article (1) defines industrialisation and indicates ways in which it can be measured, (2) highlights the importance of the timing of industrialisation and the inherent limits to the proper scientific explanation of this phenomenon, (3) disentangles the often confused conceptual relation between industrialisation and capitalism, (4) explicates the causal links between industrialisation and modernisation, (5) undertakes a brief assessment of the relative costs and benefits of industrialisation, and (6) discloses the defining contours of scholarship on industrialisation in Anglo-American human geography and illustrates it with a recent attempt to integrate the field with the help of a master metaphor called ‘recursive cartographies’. Its portrayal of economic reality as interplay of legacies, rhythms, and events conveys the usefulness of spatial thinking in industrialisation research.

The investigates the factors that influence the growth of Small, Medium and Micro Enterprises (SMMEs) 2 in Botswana. The study used the econometric model adapted from Mateev and Anastasov (2012)with some modifications. From the econometric model estimation, the growth of SMMEs is positively and significantly influenced by labour productivity, capital productivity, access to credit, age of the entrepreneur, and having primary edcation. However SMME growth is negatively influenced by the labour laws which prohibit access to cheap foreign labour. Policy recommendations to promote SMME growth in Botswana include (i) Introduction of new funding models for SMME development especially for SMMEs run by women. The current funding for women under the Department for Gender Affairs could be enhanced to the level of the Youth Development Fund (YDF) in order to cater for women who are constrained access to credit and (ii) Government should simplify the tax system for SMMEs and the registration process for new businesses.

In case of Pakistan, only economic variables are observed as causes to high economic volatility while political variables are completely ignored. Although, it is apparent that the development pattern in Pakistan is highly volatile during the years of political instability that spans almost over the half history of the country. By taking the sample of 1971 to 2008 and using simple OLS technique, we observe how far political instability hampers the economic development of Pakistan. For the political instability measurement, ignoring all traditional measures of political instability, we construct political instability index by using seven different variables for Pakistan by employing Principal Component Technique; while for economic development measurement frequently economic development variables are used. Through analysis, the negative relationship is found between political instability and economic development in Pakistan.