This paper presents estimates of the effects that terms of trade volatility has on real GDP per capita growth. Based on 5-year non-overlapping panel data comprising 175 countries during 1980-2010, the paper finds that terms of trade volatility has significant adverse effects on economic growth in countries with procyclical government spending; in countries where government spending is countercy...

New Zealand entered a period of economic recession in early 2008, intensified by the global economic crisis of September 2008. Gross domestic product (GDP) fell consistently during 2008, and that year saw the economy’s worst performance in over a decade (The Treasury, 2010a). Real per capita GDP contracted through 2009 and, despite some market optimism in early 2010, economic indicators remain ...

The paper examines the sustainability of U.S. fiscal policy, finding substantial evidence in favor. I summarize the U.S. fiscal record from 1792-2003, critically review sustainability conditions and their testable implications, and apply them to U.S. data. I particularly emphasize the ramifications of economic growth. A “growth dividend” has historically covered the entire interest bill on the ...

This technical report illustrates the methodology adopted for the estimation of a monthly indicator of the euro area real gross domestic product. We carry out the disaggregation of the chain-linked quarterly value added from the output side for six branches of the NACE Rev. 1 Level A6 classification and from the expenditure side for the main GDP components. With the sole exception of the agricu...

This paper uses a structural multi-country macroeconometric model to estimate the size of the decrease in transfer payments (or tax expenditures) needed to stabilize the U.S. government debt/gross domestic product (GDP) ratio. It takes into account endogenous effects of changes in fiscal policy on the economy and in turn the effect of changes in the economy on the deficit. A base run is first o...

Beginning in 2009, in many advanced economies, policy rates reached their zero lower bound (ZLB). Almost at the same time, oil prices started rising again. We analyze how the ZLB affects the propagation of oil shocks. As these shocks move inflation and output in opposite directions, their effects on economic activity are cushioned when monetary policy is constrained. The burst of inflation from...

This paper examines government expenditure convergence within the expanded European Union. Except for a few cases convergence was generally not validated for government consumption, transfers, subsidies nor for their aggregate, all expressed in constant real per capita terms. Neither was any long run equilibrium relationship found between these categories of expenditures and GDP. Causality test...

Introduction Until recent years a country’s aggregate output, or gross domestic product (GDP), was used almost exclusively as the primary measure of economic development. Both comparative (i.e. between countries) and over time, growth in GDP per capita was commonly used to describe changes in well-being. Recognizing the inadequacy of this measure of well-being , the United Nations began to devi...

A Moment Ratio estimator is proposed for an AR(p) model of the errors in an OLS regression, that provides standard errors with far less median bias and confidence intervals with far better coverage than conventional alternatives. A unit root, and therefore the absence of cointegration, does not necessarily mean that a correlation between the variables is spurious. The estimator is applied to a ...