58 research outputs found
Globalization, secular stagnation, and soft national balances: A pro-equilibrium manifesto
It is argued that increased freedom to run economic activities combined with the growing impotence of national governments (i.e., globalization) have contributed to the secular growth slowdown at the global level. Fast globalisation-driven growth of international trade has unleashed the global race for economic surpluses. The process involves the suppression of wages and widening income inequalities â restricting aggregate demand globally. A âbeggar-thy-neighborâ tactics of keeping large trade surpluses by countries successfully suppressing wages and domestic demand is likely to be unproductive. Overcoming the secular stagnation may not be possible without safeguarding equilibrium (or balance) in international transactions between major industrial countries â even if this may necessitate that in most (or all) of them the public sectors run large fiscal deficits permanently
Economic disintegration of the European Union: Not unavoidable, but probable
Abstract
It is argued that European integration has not fulfilled its chief economic
promises. Output growth has been increasingly weak and unstable. Productivity
growth has been following a decreasing trend. Income inequalities, both within
and between the EU member states, have been rising. This sorry state of affairs
is likely to continue â and likely to precipitate further exits, or eventually,
the dissolution of the Union. However, this outcome is not unavoidable. A better
integration in the EU is possible, at least in theory. Also, the negative
consequences implicit in the existence of the common currency could be
neutralised. However, the basic paradigms of the economic policies to be
followed in the EU would have to be radically changed. First, the unconditional
fiscal consolidation provisions still in force would have to be repelled.
Second, âbeggar-thy-neighbourâ (or mercantilist) wage policies would have to be
âoutlawedâ
Labour productivity growth slowdown: An effect of economic stagnation rather than its cause?
This paper reports the results of an econometric examination on the links between labour productivity and output growth for 22 countries (for which long-term data are available). It turns out that, generally, labour productivity does not âcauseâ output. In more cases, the causation seems to be running in the opposite direction: from output to productivity. This finding, though inconsistent with the âmainstreamâ ideas on the sources of long-term economic growth, is reminiscent of the classical Kaldor-Verdoorn Law. The progressing slowdown in output growth on the global level, initiated around the mid-1970s (when the process of discarding the earlier economic policy paradigms set in), may have been mirrored by the progressing slowdown in productivity growth (and that despite the hardly disputable acceleration of technological progress)
Central and Eastern Europe: Trapped in integration?
The Central and Eastern European new Member States of the European Union (CEECs) went through the transition process following the commandments of the Washington Consensus, which gradually evolved into the âintegrative growth modelâ. External liberalisation exposed the CEECs to recurring problems over external imbalances, bubbles driven by capital inflows, and resulting growth instabilities. Large foreign direct investment inflows attracted by repressed wages and low taxes do not accelerate growth. Arguably, real convergence would be much faster under a system with built-in limitations to free trade, free capital movements â and with more scope for traditional industrial, trade, incomes, and fiscal policies
The Structural Relationship Between Current and Capital Account Balance in India: A Time Series Analysis
The long run relationship between current account balance (CAB) and capital account balance (KAB) and the repercussions of capital account convertibility (KAC) on growth process of a country is a much debated issue. In particular, in the aftermath of the Southeast Asian crisis, the limitation of the liberal capital regime for a developing country like India is often highlighted in the literature. However, the probable impact of introducing KAC on CAB in India generally is discussed theoretically. Though some of the existing studies in India have earlier focused on this research question, they have done so by exogenously assuming the existence of a single structural break in the interrelationship between CAB and KAB. The present study intends to bridge the gap in the literature by raising two empirical questions: first, how far KAC is likely to destabilize the CAB and second, measuring the strength of the interrelationship between CAB and KAB. The current paper also contributes to the literature by incorporating multiple endogenous structural breaks in the empirical analysis. The empirical findings do not support any long term relationship between capital and current account balance and reveals that two significant structural breaks are observed in 1993-94 and 2003-04
Assessing the Demand for Food in Europe by the Year 2010
Data on household consumption provided by the European Comparison Project for 1999 are used to estimate the parameters of the cross-country Almost Ideal Demand System (AIDS) for two aggregates food and non-food. The estimates are highly significant. AIDS specified with parameter estimates is used for assessing food demand in 2010. Four alternative price trends are considered, each assuming 2% real per capita income growth p.a. in Western Europe and 4% in 12 EU accession countries (ACs). Food consumption will be rising 2.6% p.a. in ACs, and the ACs' share in all-Europe food consumption will increase from 13.6% (1999) to 16-17% (2010).cross-country demand functions, Almost Ideal Demand System, food consumption, European Comparison Project
Global output growth: wage-led rather than profit-led?
Abstract Contrary to 'conventional wisdom' globalization seems to have been associated with slowdown of global output growth and falling share of capital formation (investment) in global output. Referring to the theory of 'demand-led growth', this Note suggests that the negative global tendencies may have arisen under systematic declines in the shares of wage incomes worldwide experienced over recent decades. Making globalization more 'productive' (and investment-friendly) may require a global rebalancing of interests of labor and business. JEL codes F63, E25, O4
FURTHER EVIDENCE ON THE VALIDITY OF THIRLWALLâS LAW
A simple equation is considered whose empirical analysis could confirm â or reject â the validity of Thirlwallâs Law. Autoregressive Distributed Lags (Bounds) approach is used to establish the empirical adequacy of the Law. The analysis, working with data for 58 countries and covering the years 1960-2012, suggests that the Law may not hold for the decisive majority of countries considered
Why is food cheaper in rich (European) countries?
Relative to non-food items, food tends to be cheaper in rich, as compared with poorEuropean countries. This tendency cannot be explained in terms of cost developments or foreign-trade considerations. A positive explanation proposed focuses on demand-income-supply interaction. An analysis of a cross-country price-augmented modification of Engel Law, econometrically specified, indicates that the relative price offood is related positively to the supply of food items and negatively to that of non-food items. This finding is consistent with "agricultural price scissors", and also casts a different light on the nature of economic development and structural change
GROWTH SLOWDOWN ENDANGERS THE ECONOMIC COHESION OF THE EUROPEAN UNION
It is argued that European integration has not fulfilled its chief economic
promises. According to official documents and in compliance with post-Keynesian
economic interpretation of major long-term trends characterizing the Euro area, the
output growth has been increasingly weak and unstable. Productivity growth has been
following a decreasing trend. Income inequalities, both within and between the EU
Member States, have been rising. This sorry state of affairs is likely to continue â and
likely to precipitate further exits, or eventually, the dissolution of the Union. However,
this outcome is not unavoidable. A better integration in the EU is possible, at least in
theory. Also the negative consequences implicit in the existence of the common currency
could be neutralised. However, the basic paradigms of the economic policies to be
followed in the EU would have to be radically changed. First, it follows from
considerations presented that the unconditional fiscal consolidation provisions still in
force would have to be repelled. Second, âbeggar-thy-neighbourâ (or mercantilist) wage
policies would have to be âoutlawedâ
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