IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/32753.html
   My bibliography  Save this paper

Scenarios for post-crisis period based on a set of presumed changes in the interest rate – investment – GDP growth relationship

Author

Listed:
  • Albu, Lucian-Liviu

Abstract

The interest rate and investment are among the central variables influencing the growth rate. Due to the complexity empirically demonstrated of the interest rate – investment – GDP growth relationship, last decades a growing concern over the modelling this relationship has increased attention among officials, politicians, and economists. Moreover, the actual global crisis seems to provoke new changes in the economic growth mechanism. Based on statistical data for last period, we try to build a set of partial models in order to investigate the interest rate - investment - growth rate relationship in case of EU members and in the same time to verify some hypotheses usually in standard economic literature. Applying such simple models derived from standard ones in our experiment we estimated their parameters in case of EU countries. The main two partial models are referring to the impact of investment on GDP growth rate and respectively to the relation between interest rate and investment. Moreover, an equation including inflation dynamics was taken into account. Finally, the derived global model demonstrates complex dynamics, moreover permitting to compute so-called natural rate of interest and other key-parameters for macroeconomic decisions.

Suggested Citation

  • Albu, Lucian-Liviu, 2010. "Scenarios for post-crisis period based on a set of presumed changes in the interest rate – investment – GDP growth relationship," MPRA Paper 32753, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:32753
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/32753/1/MPRA_paper_32753.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Barro, Robert J, 1989. "The Ricardian Approach to Budget Deficits," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 37-54, Spring.
    2. Albu, Lucian Liviu, 2008. "Strain and Inflation-Unemployment Relationship in Transitional Economies: A theoretical and empirical investigation," Working Papers of Institute for Economic Forecasting 081103, Institute for Economic Forecasting.
    3. Albu, Lucian Liviu, 2002. "Sustainability Function," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 5-14, June.
    4. Nicolas Carnot & Vincent Koen & Bruno Tissot, 2005. "Economic Forecasting," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-00581-5, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Borodin, Konstantin & Strokov, Anton, 2011. "Central banks' interest rate and international trade in BRIC countries: Agriculture vs machinery industry?," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth 18, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    2. Mihaela SIMIONESCU, 2015. "Is Africa’s current growth reducing inequality? Evidence from some selected african countries," Computational Methods in Social Sciences (CMSS), "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences, vol. 3(1), pages 68-74, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Albu, Lucian Liviu, 2006. "Trends in the Interest Rate - Investment - GDP Growth Relationship," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 3(3), pages 5-13, September.
    2. Albu, Lucian-Liviu, 2008. "A simulation model of public debt sustainability," MPRA Paper 11713, University Library of Munich, Germany.
    3. Reiner Eichenberger & David Stadelmann, 2009. "Consequences of Debt Capitalization: Property Ownership and Debt/Tax Choice," CREMA Working Paper Series 2009-08, Center for Research in Economics, Management and the Arts (CREMA).
    4. Xinshen DIAO & Terry L. ROE & A. Erinç YELDAN, 1999. "How Fiscal Mismanagement May Impede Trade Reform: Lessons From An Intertemporal, Multi-Sector General Equilibrium Model For Turkey," The Developing Economies, Institute of Developing Economies, vol. 37(1), pages 59-88, March.
    5. Hany Eldemerdash & Hugh Metcalf & Sara Maioli, 2014. "Twin deficits: new evidence from a developing (oil vs. non-oil) countries’ perspective," Empirical Economics, Springer, vol. 47(3), pages 825-851, November.
    6. Hayo, Bernd & Neumeier, Florian, 2017. "The (In)validity of the Ricardian equivalence theorem–findings from a representative German population survey," Journal of Macroeconomics, Elsevier, vol. 51(C), pages 162-174.
    7. Altin Hoti & Aranit Shkurti & Scheherazade Rehman, 2022. "Impact of External Debt on Economic Growth in Western Balkan Countries," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 11, March.
    8. Eregha, Perekunah B. & Aworinde, Olalekan B. & Vo, Xuan Vinh, 2022. "Modeling twin deficit hypothesis with oil price volatility in African oil-producing countries," Resources Policy, Elsevier, vol. 75(C).
    9. repec:spo:wpmain:info:hdl:2441/3l2vounfl99nvqsr0k24sn3k5l is not listed on IDEAS
    10. Bespalova, Olga, 2018. "Forecast Evaluation in Macroeconomics and International Finance. Ph.D. thesis, George Washington University, Washington, DC, USA," MPRA Paper 117706, University Library of Munich, Germany.
    11. Nazia Abdul Rehman & Musarrat Shamshir & Khurram Shakir, 2020. "Correlation of Macroeconomic Variables with Twin Deficit in Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 16(1), pages 16-11.
    12. Fatma Ben Slama, 2024. "International Public Sector Accounting Standards and Economic Growth: An International Study of IPSAS Adoption and Experience," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 23(3), pages 483-506, June.
    13. Soledad Arellano & Felipe Larraín, 1996. "Tipo de Cambio Real y Gasto Público: Un Modelo Econométrico para Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 33(98), pages 47-76.
    14. Mordechai E. Schwarz, 2006. "Intergenerational Transfers: An Integrative Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 61-93, January.
    15. Vladimir Filipovski & Taki Fiti & Borce Trenovski, 2016. "Efficiency of the Fiscal Policy and the Fiscal Multipliers – The Case of the Republic of Macedonia," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 3-23.
    16. Comanescu , Anton, 2012. "Central Bank Transparency and Monetary Policy Effectiveness," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 6(4), pages 61-88, July.
    17. Hernán Herrera Echeverri & Haar, Jerry & Juan Benavides Estévez-Bretón, 2013. "Foreign Investment, Institutional Quality, Public Expenditure And Activity Of Venture Capital Funds In Emerging Countries," Documentos de Trabajo de Valor Público 11808, Universidad EAFIT.
    18. Jose Tavares & Rossen Valkanov, 2001. "The neglected effect of fiscal policy on stock and bond returns," Nova SBE Working Paper Series wp413, Universidade Nova de Lisboa, Nova School of Business and Economics.
    19. Xavier Giné & Martin Kanz, 2018. "The Economic Effects of a Borrower Bailout: Evidence from an Emerging Market," The Review of Financial Studies, Society for Financial Studies, vol. 31(5), pages 1752-1783.
    20. Ahmad Zubaidi Baharumshah & Evan Lau, 2005. "Budget and Current Account Deficits in SEACEN Countries: Evidence Based on the Panel Approach," International Finance 0504002, University Library of Munich, Germany.
    21. Philippe Aghion & Matias Braun & Johannes Fedderke, 2008. "Competition and productivity growth in South Africa," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 741-768, October.

    More about this item

    Keywords

    Investment; GDP Growth; Interest Rate; Depreciation Rate; Contour Plot;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:32753. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.