Government spending effects in low-income countries

Shen, Wenyi; Yang, Shu-Chun Susan; Zanna, Luis-Felipe

doi:10.1016/j.jdeveco.2018.02.005

Cited by 57 publications

(47 citation statements)

References 37 publications

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“…The discount factor (β) is set at 0.983, such that it yields a steady-state annual (net) interest rate of 8.52% (or 2.13% quarterly), as reported by Garcia-Cicco et al (2010) for a set of emerging market economies. Moreover, this value falls also in the range considered by Shen et al (2018) for low-income countries. Trend TFP growth (Λ A ) is set to 0.0035, as suggested by Araujo et al (2016) with reference to countries in the Economic and Monetary Community of Central Africa.…”

Section: Calibration and Solution Methodsmentioning

confidence: 65%

“…The parameter governing investment adjustment costs (κ) is set to 12, in line with the calibration of Schubert and Turnovsky (2011) for a set of developing economies. Private and public capital depreciation rates (δ and δ g , respectively) are borrowed from Shen et al (2018) who assume that the latter is half of the former, at 0.025 and 0.0125, respectively. The inverse of the intertemporal elasticity of substitution (Ψ) is calibrated to the standard value of 0.5.…”

Section: Calibration and Solution Methodsmentioning

confidence: 99%

“…We therefore set the persistence (ρ A ) and the standard deviation (σ A ) of the TFP shock to match these moments at a quarterly frequency. We set the persistence of the tax rate (ρ τ ) to 0.90, in line with the calibration of Shen et al (2018) for low-income countries and close to the values estimated for the U.S. (i.e. Zubairy, 2014) and Euro Area economies (i.e.…”

Section: Calibration and Solution Methodsmentioning

confidence: 99%

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Macroeconomic Outcomes in Disaster-Prone Countries

Cantelmo¹,

Melina²,

Papageorgiou³

2019

IMF Working Papers

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Using a dynamic stochastic general equilibrium model, we study the channels through which natural disaster shocks affect macroeconomic outcomes and welfare in disaster-prone countries. We solve the model using Taylor projection, a solution method that is shown to deal effectively with high-impact weather shocks calibrated in accordance to empirical evidence. We find large and persistent effects of weather shocks that significantly impact the income convergence path of disaster-prone countries. Relative to non-disaster-prone countries, on average, these shocks cause a welfare loss equivalent to a permanent fall in consumption of 1.6 percent. Welfare gains to countries that self-finance investments in resilient public infrastructure are found to be negligible, and international aid has to be sizable to achieve significant welfare gains. In addition, it is more cost-effective for donors to contribute to the financing of resilience before the realization of disasters, rather than disbursing aid after their realization.

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Section: Calibration and Solution Methodsmentioning

confidence: 65%

Section: Calibration and Solution Methodsmentioning

confidence: 99%

Section: Calibration and Solution Methodsmentioning

confidence: 99%

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Macroeconomic Outcomes in Disaster-Prone Countries

Cantelmo¹,

Melina²,

Papageorgiou³

2019

IMF Working Papers

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“…To support the agricultural economic cycle, stimulate/promote agricultural growth [1], and support independence food security and agricultural [2], the Government through the Ministry of Agriculture has budgeted assistance/grants continuously in Indonesia. Through the Agricultural Research and Development Centre of the Indonesian Ministry of Agriculture in Bogor, it has also been discussed plans involving elements of machinery innovation can drive progress and competitive advantage in the world of agriculture in developing economies [3].…”

Section: Introductionmentioning

confidence: 99%

Auto-Stirring Grains Bed Dryer as an Innovative Efficiency Solution

2019

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The government has budgeted assistance/grants continuously many bed dryers to farmers but many of them were not used because farmers felt that the drying production rate of rice is more expensive than the traditional open sun drying. The farmers choose to go back to the traditional way that takes the drying process longer than using the dryer. For 1 year, open sun drying can process 100 batches, and dryer can process 450 batches. This research tries to solve the high cost problem by looking for a new alternative solution. The solution is replacing the oil burner with a rice husk burner, which is appropriate both economically and environmentally. For the stirring mechanism, this system must continuously stir up the pile of grains during the drying process. The point must be fulfilled is that the total cost of the drying process should not rise, especially the cost of the stirring process. A stirrer mechanism that needs smaller power than the maximum power setting is made. Farmers’ income for this innovative modification will get a 332% increasing profit than using oil burner bed dryer machine and will get a 41% increasing in welfare than using the standard husk burner bed dryer.

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“…They defined the role of spending in the process of economic growth (Ventelou, Bry, 2006). Shen and Yang focused their research on open low-income countries where sustainable economic growth depends on the continuity of consumption and investment (Shen, Yang, 2018).…”

Section: Introductionmentioning

confidence: 99%

Impact of Consumption and Investment onto Growth: An Example of the Republic of Srpska

Spasojevic¹,

Đukić²

2018

AEF

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The economy of the Republic of Srpska is burdened by inherited (structural) issues and a sluggish adjustment of the current economic policy to the contemporary global trends. According to the standards of the WB, IMF and Kuznets, the Republic of Srpska is classified as a small economy. Just like Bosnia and Herzegovina or any other countries of Western Balkans, it too is finalising the transition to a market economy. The Republic of Srpska features insufficient GDP growth rates. Under such circumstances, there is a need for enticement of GDP growth. Consumption (both final and public) as well as all forms of investment affect economic growth, with FDIs having a particularly important role. In most countries, there is a positive correlation between investment and GDP growth. Likewise, there is a positive correlation between GDP growth and final consumption. Therefore, the Republic of Srpska, as well as any other small economy, resorts to attracting investments and increasing final consumption. However, the issue is that public debt maintains its growing trend in most of such transitional economies. This paper contains the quantification of the impact of investments and consumption onto the GDP of the Republic of Srpska. It has been proven that the final consumption and investments affect GDP growth in the Republic of Srpska. Correlation-regression analysis confirmed a positive correlation between the mentioned variables. This development policy affects the continuous growth of public debt and brings the increase in the share of government (public) consumption in total consumption. In addition, it also affects the insufficient efficiency of investments. As a consequence, low productivity and insufficient competitiveness emerge, followed by the occurrence of other economic and social problems. Therefore, the Republic of Srpska and Bosnia and Herzegovina need to complete the initiated reforms and expedite their EU integration, modernize and restructure their industry as per the requirements of the global market, reduce the costs of public institutions and increase their overall competitiveness.

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Government spending effects in low-income countries

Cited by 57 publications

References 37 publications

Macroeconomic Outcomes in Disaster-Prone Countries

Macroeconomic Outcomes in Disaster-Prone Countries

Auto-Stirring Grains Bed Dryer as an Innovative Efficiency Solution

Impact of Consumption and Investment onto Growth: An Example of the Republic of Srpska

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