Is risk shock a key factor driving business cycles in China?

2017 ◽  
Vol 19 (1) ◽  
Author(s):  
Zhe Li ◽  
Shuixing Luo
Keyword(s):  
Business Cycles ◽  
Chinese Economy ◽  
New Keynesian ◽  
Macroeconomic Policies ◽  
Us Economy ◽  
Keynesian Model ◽  
The Us ◽  
Key Factor ◽  
Investment Capital ◽  
The Impact

Abstract This paper studies the impact of risk shock on the Chinese economy using a New-Keynesian model with financial frictions. The study shows that risk shock is an important driving force for the fluctuations of GDP, investment, capital, credit, and credit spread in China. However, the role of risk shock in driving China’s business cycles is not as crucial as in the US economy (see Christiano, Motto, and Rostagno 2014). There are three main reasons that explain the different performance of risk shocks in China and the US: the volatility of risk shock, the effect of equity shock, and the influence of macroeconomic policies are all different in China and in the US. Our paper contributes to an understanding of the business cycles in China during the period from 1999 to 2015, particularly in comparison with business cycles in the US.

scholarly journals SECTORAL LABOR MOBILITY AND OPTIMAL MONETARY POLICY

2021 ◽  
pp. 1-34
Author(s):  
Alessandro Cantelmo ◽  
Giovanni Melina
Keyword(s):  
Labor Mobility ◽  
Central Banks ◽  
New Keynesian ◽  
Optimal Monetary Policy ◽  
Relative Prices ◽  
Optimal Weights ◽  
Us Economy ◽  
Keynesian Model ◽  
Inflation Rates ◽  
The Us

How should central banks optimally aggregate sectoral inflation rates in the presence of imperfect labor mobility across sectors? We study this issue in a two-sector New-Keynesian model and show that a lower degree of sectoral labor mobility, ceteris paribus, increases the optimal weight on inflation in a sector that would otherwise receive a lower weight. We analytically and numerically find that, with limited labor mobility, adjustment to asymmetric shocks cannot fully occur through the reallocation of labor, thus putting more pressure on wages, causing inefficient movements in relative prices, and creating scope for central bank’ s intervention. These findings challenge standard central banks’ practice of computing sectoral inflation weights based solely on sector size and unveil a significant role for the degree of sectoral labor mobility to play in the optimal computation. In an extended estimated model of the US economy, featuring customary frictions and shocks, the estimated inflation weights imply a decrease in welfare up to 10% relative to the case of optimal weights.

Optimal Inflation for the US Economy

2011 ◽  
Vol 3 (3) ◽  
pp. 29-52 ◽  
Author(s):  
Roberto M Billi
Keyword(s):  
Inflation Rate ◽  
Low Cost ◽  
Policy Instrument ◽  
New Keynesian ◽  
Worst Case ◽  
Us Economy ◽  
Keynesian Model ◽  
Long Run ◽  
The Us ◽  
The Government

This paper studies the optimal long-run inflation rate (OIR) in a small New Keynesian model, where the only policy instrument is a short-term nominal interest rate that may occasionally run against a zero lower bound (ZLB). The model allows for worst-case scenarios of misspecification. The analysis shows first, if the government optimally commits, the OIR is below 1 percent annually. Second, if the government re-optimizes each period, the OIR rises markedly to 17 percent. Third, if the government commits only to an inertial Taylor rule, the inflation bias is eliminated at very low cost in terms of welfare for the representative household. (JEL E12, E31, E43, E52, E58)

scholarly journals Fiscal Volatility Shocks and Economic Activity

2015 ◽  
Vol 105 (11) ◽  
pp. 3352-3384 ◽  
Author(s):  
Jesús Fernández-Villaverde ◽  
Pablo Guerrón-Quintana ◽  
Keith Kuester ◽  
Juan Rubio-Ramírez
Keyword(s):  
Adverse Effect ◽  
Economic Activity ◽  
The United States ◽  
New Keynesian ◽  
Time Varying ◽  
New Keynesian Model ◽  
Us Economy ◽  
Keynesian Model ◽  
The Us ◽  
Previous Step

We study how unexpected changes in uncertainty about fiscal policy affect economic activity. First, we estimate tax and spending processes for the United States with time-varying volatility to uncover evidence of time-varying volatility. Second, we estimate a VAR for the US economy using the time-varying volatility found in the previous step. Third, we feed the tax and spending processes into an otherwise standard New Keynesian model. Both in the VAR and in the model, we find that unexpected changes in fiscal volatility shocks can have a sizable adverse effect on economic activity. An endogenous increase in markups is a key mechanism. (JEL E12, E23, E32, E52, E62)

Lenovo’s successful acquisition of the IBM PC Division

2016 ◽  
Vol 32 (9) ◽  
pp. 32-35
Author(s):  
Mark Thomas
Keyword(s):  
Design Methodology ◽  
Chinese Economy ◽  
High Tech ◽  
Tablet Computers ◽  
Content Type ◽  
Us Economy ◽  
The Us ◽  
Pertinent Information ◽  
Traditional Manufacturing

Purpose The purpose of this paper is to analyze Lenovo’s successful acquisition of IBM’s PC division using Ghemawat’s (2001) CAGE framework. It was an acquisition that was so full of symbols that it is difficult to know where to begin. Lenovo’s purchase of IBM in 2005 was first seen as a sign of the rapid growth and expansion of the Chinese economy and its transformation away from the traditional manufacturing base to more high-tech areas. For doomsday merchants in the land of Uncle Sam, it foretold the end of the world domination of the US economy. Despite a considerable number of skeptics at the time, Lenovo was clearly up to the task. Such was the success of the acquisition that by 2015, Lenovo could claim to have grown into the world’s number 1 PC maker, number 3 smartphone manufacturer and number 3 in the production of tablet computers. Design/methodology/approach This paper is a case study. Findings Despite a considerable number of skeptics at the time, Lenovo was clearly up to the task. Such was the success of the acquisition that by 2015, Lenovo could claim to have grown into the world’s number 1 PC maker, number 3 smartphone manufacturer and number 3 in the production of tablet computers. Indeed, by 2014, the firm had enough confidence to add the IBM server business to its portfolio. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

scholarly journals Medical costs of keeping the US economy open during COVID-19

2020 ◽  
Vol 10 (1) ◽  
Author(s):  
Jiangzhuo Chen ◽  
Anil Vullikanti ◽  
Stefan Hoops ◽  
Henning Mortveit ◽  
Bryan Lewis ◽  
...  
Keyword(s):  
National Level ◽  
Medical Costs ◽  
Medical Attention ◽  
Health States ◽  
Us Economy ◽  
Hospital Referral Region ◽  
Hospital Referral ◽  
The Us ◽  
Hospital Beds ◽  
The Impact

Abstract We use an individual based model and national level epidemic simulations to estimate the medical costs of keeping the US economy open during COVID-19 pandemic under different counterfactual scenarios. We model an unmitigated scenario and 12 mitigation scenarios which differ in compliance behavior to social distancing strategies and in the duration of the stay-home order. Under each scenario we estimate the number of people who are likely to get infected and require medical attention, hospitalization, and ventilators. Given the per capita medical cost for each of these health states, we compute the total medical costs for each scenario and show the tradeoffs between deaths, costs, infections, compliance and the duration of stay-home order. We also consider the hospital bed capacity of each Hospital Referral Region (HRR) in the US to estimate the deficit in beds each HRR will likely encounter given the demand for hospital beds. We consider a case where HRRs share hospital beds among the neighboring HRRs during a surge in demand beyond the available beds and the impact it has in controlling additional deaths.

scholarly journals Fat Tail Analysis on S&P 100 Stocks-before and after US President Election

2020 ◽  
Vol 19 (3) ◽  
pp. 79-88
Author(s):  
Sandeep Thakur
Keyword(s):  
Heavy Tails ◽  
Economic Condition ◽  
Donald Trump ◽  
Fat Tail ◽  
Us Economy ◽  
The Us ◽  
Before And After ◽  
Key Factor ◽  
Climate And Health ◽  
Tail Analysis

The main aim of this paper is to determine whether the volatility in the stocks can be created by events like the US Election and whether it leads to Fat Tail in the stocks. Fat Tail analysis is a key factor in determining volatility and has been used in the economy as well as in many other fields like climate and health. Log return has been used to determine the Fat Tail. To make the work more reliable, two Presidential election periods, that of Barack Obama and Donald Trump is selected and is compared for volatility and Fat Tail. For this study, stocks from the S&P 100 are selected and observed. The results show that the US economy is not at all driven by who comes in power and when but rather by the present economic condition. Stocks showing heavy tails during the Obama presidency are primarily because the economy was under Sub Prime Crisis too.

Modelling sectoral spillovers in the USA (1992–2015)

2020 ◽  
Vol 47 (3) ◽  
pp. 561-595
Author(s):  
Konstantinos N. Konstantakis ◽  
Panayotis G. Michaelides ◽  
Theofanis Papageorgiou ◽  
Theodoros Daglis
Keyword(s):  
Information Technology ◽  
General Equilibrium ◽  
Methodological Approach ◽  
Robustness Analysis ◽  
Autoregressive Process ◽  
Spillover Effects ◽  
Content Type ◽  
Us Economy ◽  
The Us ◽  
The Impact

PurposeThis research paper uses a novel methodological approach to investigate the spillover effects among the key sectors of the US economy.Design/methodology/approachThe paper links the US sectors via a node theoretic scheme based on a general equilibrium framework, whereas it estimates the general equilibrium equation as a Global Vector Autoregressive process, taking into consideration the potential existence of dominant units.FindingsBased on our findings, the dominant sector in the US economy, for the period 1992–2015, is the sector of information technology, finance and communications, a fact that gives credence to the view that the US economy is a service-driven economy. In addition, the US economy seems to benefit by the increased labour mobility across knowledge-intensive sectors, thus avoiding the ‘employment trap’ which in turn enabled the US economy to overcome the financial crisis of 2007.Originality/valueFirstly, the paper models by means of a network approach which is based on a general equilibrium framework, the linkages between the US sectors while treating the sector of information, technology, communications and finance as dominant, as dictated by its degree of centrality in the network structure. Secondly, the paper offers a robustness analysis regarding both the existence and the identification of dominant sectors (nodes) in the US economy. Thirdly, the paper studies a wide period, namely 1992–2015, fully capturing the recent global recession, while acknowledging the impact of the global crisis through the introduction of the relevant exogenous dummy variables; Lastly and most importantly, it is the first study to apply the GVAR approach in a network general equilibrium framework at the sectoral level.

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