Welfare Consequences of the Six-Year Presidential Term Evaluated in the Context of a Model of the U.S. Economy

1983 ◽  
Vol 77 (1) ◽  
pp. 75-91 ◽  
Author(s):  
Henry W. Chappell ◽  
William R. Keech
Keyword(s):  
Government Spending ◽  
Policy Instruments ◽  
Public Welfare ◽  
Simulation Experiments ◽  
Trade Off ◽  
Long Run ◽  
Short Run ◽  
Short And Long Term ◽  
The U.S

We evaluate the six-year presidential term proposal in the context of a model of the U.S. economy characterized by a short-run but not a long-run trade-off between inflation and unemployment. Votes and public welfare are separately conceptualized as functions of inflation and unemployment, which are indirectly controlled by the president through manipulation of government spending.In a series of simulation experiments, the vote-maximizing choice of policy instruments led to less we(fare loss with six- than with four-year terms under most conditions. Ironically, vote maximizing was shown to lead not only to short- and long-term welfare loss, but also to long-run political disadvantage.

Where Did All the Dollars Go? The Effect of Cash Flows on Capital and Asset Structure

2011 ◽  
Vol 46 (5) ◽  
pp. 1259-1294 ◽  
Author(s):  
Sudipto Dasgupta ◽  
Thomas H. Noe ◽  
Zhen Wang
Keyword(s):  
Cash Flow ◽  
Economic Effect ◽  
Balance Sheet ◽  
Cash Flows ◽  
Long Run ◽  
Goods Market ◽  
Short Run ◽  
Debt Market ◽  
Short And Long Term

AbstractThis paper documents the short- and long-term balance sheet effect of cash flows. We show that cash savings in the short run and debt reduction in both the short and the long run account for a substantial fraction of cash flow use. Although, in the long run, investment exhibits substantial sensitivity to cash flows, investment does not absorb the entire cash flow shock. In fact, the tighter the financial constraints, the smaller the fraction of cash flow absorbed by investment and the more by leverage reduction. Firms stage their response to increases in cash flow, delaying investment while building up cash stocks and reducing leverage. These results suggest that much of the short-run economic effect of cash flow shocks to the corporate sector may be channeled into the corporate debt market rather than the capital goods market, especially when financing constraints tighten.

scholarly journals Integration Rice Price And Farmers Welfare With Error Correction Model Analysis

2019 ◽  
Vol 7 (9) ◽  
pp. 221-228
Author(s):  
Yogi Makbul
Keyword(s):  
Error Correction ◽  
Error Correction Model ◽  
Policy Intervention ◽  
Correction Model ◽  
Long Run ◽  
Short Run ◽  
Short And Long Term ◽  
Rice Prices ◽  
Support Policy

This research analyzes the short- and long-term influence of rice prices on the welfare of Indonesian farmers using an error correction model. Drawing upon data from Indonesia's Central Bureau of Statistics, it reveals that rice prices exert significant positive short-run effects and no significant long-run influence on farmers' welfare. These findings extend or refine results from earlier studies that lack the time series perspective of our research. They also support policy intervention by the Indonesian government to increase farmers' welfare and assure food supply.  

Benefits of international portfolio diversification

2014 ◽  
Vol 7 (4) ◽  
pp. 457-472 ◽  
Author(s):  
S. Jamaledin Mohseni Zonouzi ◽  
Gholamreza Mansourfar ◽  
Fateme Bagherzadeh Azar
Keyword(s):  
Middle Eastern ◽  
Equity Returns ◽  
Content Type ◽  
International Portfolio Diversification ◽  
Long Run ◽  
Ardl Approach ◽  
International Portfolio ◽  
Short Run ◽  
Short And Long Term

Purpose – This paper aims to investigate opportunities of the short- and long-run international portfolio diversification (IPD) benefits by investing in the Middle Eastern oil-producing countries. Over the past decades, IPD has been the integral feature of global capital markets. Several potential benefits like increasing returns and/or reducing risk have made investors to internationalize their portfolios. Solnik’s theory (1974) approved that gains can be achieved through IPD if returns in the different markets are not perfectly correlated. This may attribute to low correlations of equity returns among different economies. In this regards, there would be a large potential of diversification benefits for investors that diversify into new emerging group of economies such as equity markets of the main oil-producing countries. These markets are often segmented and they may ensure a superior return rate for a given risk level. Design/methodology/approach – In most of the previous studies, Pearson’s correlation test is used to analyze the short-run relationship of market prices. However, recent empirical studies indicate that correlations between equity returns vary over the time. To examine the time-varying conditional correlation, this paper used the dynamic conditional correlation (DCC) model to investigate opportunities of the short-run IPD benefits. In addition, for the long-run linkage analysis, the autoregressive distributed lag (ADRL) approach introduced by Pesaran et al. (2001) is applied. Findings – It is found that, the market returns of the sampled countries are not definitely correlated in the short- and long-term. So, international portfolio investors may get the short- and long-term diversification benefits by diversifying their portfolios among the Middle Eastern equity markets, namely, Iran, Bahrain, Qatar, Kuwait, Oman, Saudi Arabia and UAE. Originality/value – This paper departs from earlier studies by focusing on the dynamic characteristics of correlation. Two main issues are pursued in this paper. First, instead of modeling the correlation by methods like Pearson correlation coefficient that consider the constant-correlation assumption, this paper directly uses the DCC model. Second, to empirically estimate the long-run relationship among stock markets in the Middle Eastern oil-producing countries, the ARDL approach is utilized. The ARDL approach is more robust and performs well for small sample sizes than other co-integration techniques.

scholarly journals Control Strategies against COVID-19 in China: Significance of Effective Testing in the Long Run

2020 ◽  
Author(s):  
Yatang Lin ◽  
Fangyuan Peng
Keyword(s):  
Control Strategies ◽  
Credible Interval ◽  
Personal Contact ◽  
Mobility Data ◽  
Long Run ◽  
Intercity Travel ◽  
Travel Restrictions ◽  
Short Run ◽  
Short And Long Term

The coronavirus disease 2019 (COVID-19) outbreak is reasonably contained in China. In this paper, we evaluated the effectiveness of different containment strategies in halting the pandemic spread in both short- and long-term. We combined a networked metapopulation SEIR model featuring undocumented infections, actual mobility data and Bayesian inference to simulate the counterfactual outbreak scenarios removing each one or a combination of the following three policies in place: i) city lockdowns, ii) intercity travel bans, and iii) testing, detection, and quarantine. Our estimates revealed that 11.4% [95% credible interval (CI): 9.7-13.0%] of the infected cases were unidentified before January 23, 2020. The rate grew to 92.5% [95% credible interval (CI): 85.9-94.5%] in early March, thanks to the boost in coronavirus testing capacity. We show that increasing the detection rate of infections from 11.4% to 92.5% alone would explain 75% of the reduction in infections from a no-policy baseline by March 15, 2020. The most pronounced policy implication is that city lockdowns appeared to be the more effective intervention in the short-run but effective testing is essential in containing the COVID-19 spread in the long run. By March 15, restoring within-city personal contact to its 2019 level would lead to a 678% growth in infections with all the other interventions remaining unaffected. Removing intercity travel restrictions and effective detection measures would lead to 3% and 477% growth, respectively. Extending the time horizon to July 15, the counterfactual increase in infections would become 581%, 3% and 30000% had the three classes of interventions been lifted individually.

Heterogeneous corruption and inflation

2019 ◽  
pp. 81-96
Author(s):  
I. L. Kavitskaya ◽  
I. N. Safonov
Keyword(s):  
Indirect Effects ◽  
Rational Expectation ◽  
First Case ◽  
Long Run ◽  
Different Types ◽  
Short Run ◽  
Research Findings ◽  
Short And Long Term ◽  
Simultaneous Influence

The article analyzes the simultaneous influence of different types of corruption on inflation in the absence of seignorage. Basing on the model of fiscal and monetary policymakers behavior, we analyze the joint impact of “grand” and “petty cash” corruption on economy in short and long term in discretionary policy and rational expectation assumptions. Research findings demonstrate that even in the absence of seignorage heterogeneous corruption relates to inflation differently in short and long term: in the first case, relationship is positive and straightforward, in the second, some indirect effects take place what reduces equilibrium inflation in the long run compared to the short run.

Budget Policy and Economic Growth

2013 ◽  
pp. 35-59 ◽  
Author(s):  
G. Idrisov ◽  
S. Sinelnikov-Murylev
Keyword(s):  
Economic Growth ◽  
Policy Implementation ◽  
Government Spending ◽  
Limited Budget ◽  
Long Run ◽  
Budget Policy ◽  
Short And Long Term ◽  
Budget Institutions ◽  
Expenditure Structure

The paper analyzes the prior approaches to budget policy implementation in the context of accelerating economic growth. The authors review the academic issues of short and long term economic growth and discuss the Russian budget policy opportunities and constraints. The authors conclude that (1) in the current situation Russia has quite limited budget measures to smooth economic growth; (2) options to raise total government spending in short and middle-run perspective are absent, and, thus, (3) it is needed to change the expenditure structure along with transforming budget institutions in order to create preconditions for long-run economic growth.

scholarly journals Associative Study on Government Spending, Inflation, Trade Balance, and Gross Domestic Product

2020 ◽  
Vol 15 (1) ◽  
pp. 27
Author(s):  
Agus Eko Sujianto ◽  
Muhammad Fajar Ulil Azmi
Keyword(s):  
Government Spending ◽  
Trade Balance ◽  
Government Expenditure ◽  
Negative Slope ◽  
Short Term ◽  
Correction Model ◽  
Long Run ◽  
Macroeconomic Indicators ◽  
Short Run

Specifically, this study aims to examine the effect of macroeconomic indicators namely government spending, inflation and trade balance on PDB. The observation period from 1981-2017 is based on International Monetary Fund (IMF) documentation. Data analysis using the Error Correction Model (ECM). The results of the study: (1) in the short term and long term government spending significantly influence PDB; (2) in the short-run and long-run inflation affects PDB in the opposite way; (3) in the short term PDB is not affected by the trade balance, whereas in the long run the trade balance variable also has no effect on PDB with a negative slope and (4) the results of simultaneous tests of government expenditure, inflation, and the trade balance affect PDB.

The Nexus Between Infrastructure and Export: An Empirical Evidence from Pakistan

2020 ◽  
Vol 12 (2) ◽  
pp. 141-157 ◽  
Author(s):  
Faheem Ur Rehman ◽  
Yibing Ding ◽  
Abul Ala Noman ◽  
Muhammad Asif Khan
Keyword(s):  
Causal Relationship ◽  
Short Term ◽  
Long Run ◽  
Advanced Economies ◽  
Dependent Variables ◽  
Short Run ◽  
Short And Long Term ◽  
Domestic Spending ◽  
Catch Up

This research, by using the autoregressive distributive lag method, examines the long- and short-term causal relationship between infrastructure and exports in Pakistan over the period 1990–2017. The empirical results revealed the existence of short- and long-term bi-directional causality concerning infrastructure and export in Pakistan. The results demonstrated that infrastructure strongly improves export in the short and long run. Conversely, export encourages the quality and availability of infrastructure in Pakistan in the long run. Furthermore, this study also uses sub-indices of infrastructure individually as dependent and independent variables. The study result demonstrated that the long- and short-term effects of infrastructure and its sub-indices (transport, electricity, communication, finance) on export is positive and significant. Also, when infrastructure sub-indices are used as dependent variables, the results indicate that the effect of export on sub-indices is positive and significant in the long run; however, in the short run, it is insignificant. The bi-directional linkage between infrastructure and export suggests that improving the quality and increasing the availability of infrastructure would enable Pakistan’s economy to catch up with the advanced economies, specifically in export. Furthermore, control variables of per-capita GDP, exchange rates, human capital, and domestic spending also expand the bi-directional causal relationship between Pakistan’s infrastructure and exports.

The Real Effects of Military Spending on Security

2014 ◽  
Vol 20 (3) ◽  
pp. 377-393 ◽  
Author(s):  
Lloyd J. Dumas
Keyword(s):  
Military Spending ◽  
Well Being ◽  
Military Force ◽  
Physical Security ◽  
Dead Weight ◽  
Economic Relationships ◽  
Real Effects ◽  
Long Run ◽  
Short Run

AbstractThe indirect effects of military spending on security are stronger and more important than its direct effects, and its long run impact more telling than its short run impact. In the short run, military spending can be a source of both physical security and economic stimulus. In the long run, it can be counterproductive in terms of physical security and will be a dead weight on the economy. How a society’s productive resources are deployed, as between military spending and more economically productive activities, sets it on a long-term course with powerful implications for the ability of its economy to do what it is supposed to do – provide for the material well-being of the population as a whole. The mechanism by which the extensive and extended diversion of productive economic resources to economically unproductive military spending drags an economy down is analyzed. Furthermore, it is possible to use properly structured international and domestic economic relationships in place of threats or use of military force to increase national and international security, while at the same time enhancing, rather than degrading, economic wellbeing. Three principles for structuring such a “peacekeeping economy” are set forth.

Does Public Debt Service Expenditure Crowd-Out Economic Growth? Empirical Evidence from an African Developing Country

2019 ◽  
Vol 64 (3) ◽  
pp. 23-38
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Time Series Data ◽  
Policy Formulation ◽  
Debt Service ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
The Impact

Abstract This paper contributes to the ongoing debate on the impact of public debt service on economic growth; and it provides an evidence-based approach to public policy formulation in Zimbabwe. The empirical analysis was performed by applying the autoregressive distributed lag (ARDL) technique to annual time-series data from 1970 to 2017. The study findings reveal that the impact of public debt service on economic growth in Zimbabwe is negative in the short run but positive in the long run. The results are suggestive of the existence of a crowding-out effect of public debt service in Zimbabwe in the short run and a crowding-in effect in the long run. In view of these findings, the government should consider fiscal and financial policies that promote a constant supply of long-term finance, long-term fixed investments, and extension of a government securities maturity structure so as to ensure sustainable short- and long-term public debt service expenditures. The study further recommends the strengthening of non-distortionary revenue mobilisation reforms to reduce market distortions and boost domestic investment.

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