Asymmetric Effects of Economic Activity on Inflation: Evidence and Policy Implications

1995 ◽  
Vol 42 (2) ◽  
pp. 344 ◽  
Author(s):  
Douglas Laxton ◽  
Guy Meredith ◽  
David Rose
Keyword(s):  
Economic Activity ◽  
Policy Implications ◽  
Asymmetric Effects

The Lewis Model: A 60-Year Retrospective

2014 ◽  
Vol 28 (3) ◽  
pp. 71-88 ◽  
Author(s):  
Douglas Gollin
Keyword(s):  
Development Economics ◽  
Economic Activity ◽  
Development Strategies ◽  
Policy Implications ◽  
Poor Countries ◽  
Current Thinking ◽  
Per Capita ◽  
The Difference ◽  
Rich Countries ◽  
Proximate Explanation

The Lewis model has remained, for more than half a century, one of the dominant theories of development economics. This paper argues that the power of the model lies in the simplicity of its central insight: that poor countries contain enclaves of economic activity just as rich countries contain enclaves of poverty; and that a proximate explanation for the difference in income per capita across countries is that there are large differences in the relative sizes of their “modern” and “traditional” sectors. But while the Lewis model contains a powerful and compelling macro narrative, its details have proved somewhat elusive to scholars and students who have followed, and its policy implications are unclear. This paper identifies several key insights of the Lewis model, discusses several different interpretations of the model, and then reviews modern evidence for the central propositions of the model. In closing, we consider the relevance of Lewis for current thinking about development strategies and policies.

Asymmetric impact of shocks on Islamic stock indices: a cross country analysis

2019 ◽  
Vol 10 (1) ◽  
pp. 2-86 ◽  
Author(s):  
Anum Fatima ◽  
Abdul Rashid ◽  
Atiq-uz-Zafar Khan
Keyword(s):  
Stock Returns ◽  
Empirical Analysis ◽  
Spillover Effects ◽  
Policy Implications ◽  
Bad News ◽  
Volatility Spillover ◽  
Content Type ◽  
Asymmetric Effects ◽  
Stock Indices ◽  
Asymmetric Impact

PurposeSeveral studies focus on asymmetric impact of shocks on conventional stocks. However, only few studies explore Islamic stocks, but none has examined the asymmetric impact of shocks on Islamic stocks. This study aims to fill the gap by investigating the asymmetric impact of shocks on Islamic stocks. Specifically, it identifies the effect of good and bad news on Islamic stock market. The study also aims to examine the returns and volatility spillover effects across different Islamic markets.Design/methodology/approachTo carry out the empirical analysis, the authors have applied the exponential generalized autoregressive conditional heteroscedasticity (ARCH) model on daily Islamic stock indices of 18 countries. The study covers the period from July 2009 to July 2016. The authors have started their empirical analysis by examining the time series properties and testing the presence of ARCH effects. Further, the authors have applied several post-estimation tests to ensure the robustness of the results.FindingsThe results indicate that there is significant leverage effect in Islamic stocks traded in the sampled countries. That is, negative shocks or bad news have stronger effects on Islamic stock returns’ volatility as compared to positive shocks or good news. The authors also found that there are significant mean spillover effects for the examined countries. This finding implies that increased Islamic stock returns in country have significant and positive effects in Islamic stocks’ returns in another other. Similarly, the results regarding the volatility spillover effects suggest that there are significant volatility spillover effects across all examined countries. However, the authors found both positive and negative volatility spillover effects. It should also be noted that in some cases, the authors did not find any significant volatility spillover effect.Practical implicationsThe findings of this study have several important policy implications for both investors and policymakers. As the findings suggest that Islamic stock indices are integrated across countries both in terms of returns (mean) and risk (volatility), they are useful for investors to design well-diversified portfolios. The significant volatility spillovers suggest policymakers to design such policy that may help in reducing the adverse effects of increased volatility of Islamic stock of other/foreign countries on the Islamic stocks of the home countries. The significant evidence of the presence of leverage (asymmetric) effects suggest investors to use effective and active hedging instruments to hedge risk, particularly, in bad times.Originality/valueUnlike other studies on Islamic stocks, this study takes into account the asymmetric effects of positive and negative shocks. Further, the study examines the mean and variance spillover effects for a large panel of countries having Islamic stocks. Finally, several pre- and post-estimation tests are applied to ensure the robustness of the results.

scholarly journals The Asymmetric Effects and Spillovers of Inflation and Output Uncertainty Between the US and Euro Area

2015 ◽  
Vol 11 (1) ◽  
pp. 5-19
Author(s):  
Riyad Abubaker
Keyword(s):  
Euro Area ◽  
Economic Activity ◽  
Higher Order ◽  
Output Growth ◽  
Inflation Uncertainty ◽  
Quarterly Data ◽  
European Economic ◽  
Asymmetric Effects ◽  
Output Uncertainty ◽  
The Us

AbstractThis paper uses GARCH in mean models to examine the potential transmission and asymmetry of output growth and inflation uncertainty across the United States  and the Euro Area . I employ quarterly data on output growth and inflation from 1970Q1-2012Q4. The results in respect to negative and positive shocks show that US output growth and inflation display asymmetric uncertainty. The US uncertainty has asymmetric effects on mean questions.  Within the Euro Area, while the coefficients detecting the asymmetric uncertainty are insignificant; a significant asymmetric affect can exist.  Results also yield that the inflation uncertainty spillover between the two regions is more significant than that of output growth.  US economic activity responds to Euro Area volatility at a higher speed, while the European economic activity is affected  by higher-order lags of US uncertainty.

Are the Effects of Financial Market Disruptions Big or Small?

2020 ◽  
pp. 1-39
Author(s):  
Regis Barnichon ◽  
Christian Matthes ◽  
Alexander Ziegenbein
Keyword(s):  
Time Series ◽  
Financial Market ◽  
Economic Activity ◽  
Financial Distress ◽  
Financial Shocks ◽  
Asymmetric Effects ◽  
Structural Time Series ◽  
Financial Conditions ◽  
Time Series Analyses ◽  
Structural Time

While episodes of financial distress are followed by large and persistent drops in economic activity, structural time series analyses point to relatively mild and transitory effects of financial market disruptions. We argue that these seemingly contradictory findings are due to the asymmetric effects of financial shocks, which have been predicted theoretically but not taken into account empirically. We estimate a model designed to identify the (possibly asymmetric) effects of financial market disruptions, and we find that a favorable financial shock —an easing of financial conditions— has little effect on output, but an adverse shock has large and persistent effects. In a counter-factual exercise, we find that over two thirds of the gap between current US GDP and its 2007 pre-crisis trend was caused by the 2007-2008 financial shocks.

scholarly journals The Determinants of Risk Transmission between Oil and Agricultural Prices: An IPVAR Approach

Agriculture ◽  
2020 ◽  
Vol 10 (4) ◽  
pp. 120 ◽  
Author(s):  
Tan Ngoc Vu ◽  
Chi Minh Ho ◽  
Thang Cong Nguyen ◽  
Duc Hong Vo
Keyword(s):  
Exchange Rates ◽  
Economic Activity ◽  
Empirical Studies ◽  
Oil Prices ◽  
Policy Implications ◽  
Biofuel Production ◽  
Economic Activities ◽  
Vector Autoregressive ◽  
Agricultural Prices ◽  
The Relationship

Previous empirical studies have generally considered biofuel as a main factor in changes in the relationship between oil and agricultural prices because these changes happened after U.S. biofuel policies were implemented. However, it has been argued that other economic factors can trigger the correlation of these two markets. This study was conducted to examine the transmission mechanisms that influence the relationship between oil and agricultural prices. This paper used the interacted panel vector autoregressive framework, which allowed us to investigate the effect of biofuel production under different regimes of exchange rates and global economic activities. The responses of agricultural prices to oil prices at different levels of biofuel production, global economic activity, and exchange rates were examined in this paper. Data on prices for 10 agricultural commodities—barley, beans, corn, cotton, oats, rice, sorghum, soybean, sunflower, and wheat—from January 2000 to May 2019, were used in this study. Our findings indicate that oil prices can affect agricultural prices through biofuel and exchange rates. Moreover, the effect of biofuel depends on the level of global economic activity and exchange rates. We offer some policy implications on the basis of our findings in this study.

Asymmetric Effects of Economic Activityon Inflation: Evidence and Policy Implications

1994 ◽  
Vol 94 (139) ◽  
pp. 1 ◽  
Author(s):  
Douglas Laxton ◽  
Guy Meredith ◽  
David Rose ◽  
◽  
◽  
...  
Keyword(s):  
Policy Implications ◽  
Asymmetric Effects
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