Narrow Results

This paper estimates how land expropriation affects household consumption and savings rate using a nationally representative household data from China. We argue that land expropriation is likely to be random across households within the same village. We find that land expropriation has positive and statistically significant effects on per capita household consumption and savings rate. The effects on consumption of durable goods and on savings rate, however, weaken and become insignificant over time.

As countries grapple with the aftermath of climate-related disasters, the disruptions they inflict on domestic consumption ripple through the fabric of income and price level shocks. The income shock emanates from the adverse effects of such disasters on economic agents, leading to both wage and asset income losses. On the other hand, the destruction of productive capacity and the disruption of supply chains by climatic disasters generate a price level shock. To delve deeper into these channels, this paper builds a novel climate economy model using nonlinear model predictive control. Moreover, using time-series analysis for Bangladesh, the study uncovers compelling evidence of the existence of income and price channels through which climatic disasters impact consumption where the price effect has appeared stronger than the income effect. The findings suggest that policymakers should simultaneously prioritize income-generating and price-supporting initiatives after climate-related disasters to achieve a rapid and sustainable consumption recovery to match or surpass the predisaster level.

The recent Malaysian attempt to introduce the Goods and Services Tax (GST) was thwarted by public concerns about: (i) its impact on the price level; (ii) its regressivity; (iii) the possibility of the rate increases once the tax is in place; and finally, the disincentive large revenues from the GST would be in addressing the underlying causes of wasteful public expenditures and leakages. The experiences of countries that have implemented a similar tax are surveyed to assess these concerns. It is concluded that within the Malaysian context, all the concerns are well-founded and measures are therefore suggested to ameliorate them.

Disaster research has been concerned with the role of adverse environmental conditions vis-à-vis adverse social conditions in determining food access during catastrophes. This paper investigates the issue, and presents household-data from flood-devastated Bangladesh to argue that, while hunger is clearly associated with exposure to disaster conditions, prior deficits in resources (given the education, occupation and ownership of productive assets of household-members) are more significant in determining the risk of consumption failure during catastrophes. The paper finds that, the risk-generating factors are often interrelated, but, their relative contributions vary across households having varying locations of natural hazards and in consumption distribution.

Global debt will keep growth subdued over the next decade. Falling work force will move labor intensive manufacturing out of China and into South Asia. Investment, not consumption, will be the main driver of growth, which primarily will take place in Asia and probably also Africa. New institutional frameworks such as AIIB emerge, but they will operate inside the existing global order. Falling albeit still tangible Chinese saving combined with fading interest for US treasury bonds will pose an awkward dilemma for US monetary policy. Under such circumstances current savings–investment balances will continue to rule the global economy.

The objective of this paper is to investigate the impacts of urbanization on influencing the rural–urban consumption disparity in China, a research gap which has not been bridged so far. Adopting a provincial dataset from 1997 to 2014, a generalized method of moments (GMM) estimator is employed to reveal the impact of urbanization on the ratio of per capita consumption expenditure of the urban households to the rural households, along with other socioeconomic variables. Empirical results show salient relationship between increasing urbanization ratio and declining rural–urban inequality. Significant impact of education costs on increasing the rural–urban inequality is also observed. Other factors that increase the disparity include foreign investment and gross regional product (GRP) indices. Industrial structure, costs of housing and health care are insignificant factors. The results of this study help in understanding China’s new urbanization development strategy in a better way.

Since 2010, China’s miraculous growth has come to a halt and has shown steady deceleration. To re-accelerate economic growth, stimulating domestic consumption is a crucial way with fighting poverty as the key step. This paper attempts to explore the impact of poverty on resident consumption in China over the last four decades. Based on provincial data, we first simulate income distribution at the individual level and provide moderate poverty profiles at the provincial level. The empirical analyses are then conducted to gauge the poverty impacts using the estimated poverty index. Results show that (1) moderate poverty has decreased sharply in China, with the best achievement in Beijing, Shanghai and Guangdong; (2) moderate poverty exerts a significantly negative impact on resident consumption; and (3) when poverty increases, resident consumption on household equipment decreases the most, while resident consumption on food, transportation, and telecommunication decreases the least.

In complete financial markets, given a particular market variable, which could be finite dimensional (e.g., a price vector of a collection of stocks) or infinite dimensional (e.g., a price trajectory of some security over some period of time), the unique optimal strategy of consumption and investment in European claims contingent on that variable is obtained from two kinds of preference structure. Several examples are given to illustrate the optimality of the strategy. Results obtained in this paper are an extension of Jankunas [4].

This paper develops a three-country model that incorporates international relocation of firms and explores the macroeconomic effects of deregulation in the services sector by each country. A novel feature of our model is that the international relocation of firms responds to exchange rate movements caused by deregulation shocks in the services sector. From this analysis, it is found that a deregulation shock in a country always benefits the country in spite of the outflows of firms, while it can be detrimental to other two countries, in terms of relative consumption levels.

The lack of comprehensive empirical narratives about the effects of income and price differentials, as well as possible distributional asymmetries on consumption in G7 countries, compelled this study by using both ARDL and Quantile ARDL models. NARDL results indicate that positive shocks in income have significant and positive effects on consumption in all countries. Moreover, evidence from the Quantile ARDL model indicates that positive and significant impacts were momentary except at the 95th quantile of consumption distributions in Canada. Furthermore, price variations negatively affected consumption in all G7 countries and across all distributions, with evidence of panic buying in Italy, the US and at the 5th quantile in Japan. Meanwhile, there is evidence of asymmetric effects from income and price variations on consumption in all G7 countries, whereas the influence of income variations on consumption is heterogeneous in Canada. Moreover, the asymmetric effects of price differentials were consistent across all the distributions in all the countries. Overall, to ensure consumption optimization and by extension, economic growth, differentiated policies to respond to income and price variations at all times are of the essence.

National and international investors are exposed to risk, stemming from volatile asset prices and inflation uncertainty. However investors can enter futures markets to hedge against these risks. The paper develops a dynamic hedging model, where the evolution of asset price, price level and futures price and hence real wealth is stochastic. For a risk averse investor, optimal dynamic consumption and hedging strategy are derived and discussed.

Various empirical studies have been conducted. However, these studies fail to examine the asymmetric effect of income and price across different quantiles of consumption in the emerging 7 countries. This study extends the existing literature using a novel approach called the quantile ARDL model along with the standard nonlinear ARDL model. Findings based on the nonlinear ARDL model indicate that positive shocks in income positively and significantly affect consumption in the short- and long-run. On the other hand, negative shocks in income do not significantly affect consumption which, therefore, suggests an asymmetric effect of income on consumption. In addition, the quantile ARDL estimates indicate that income positively affects consumption across all quantiles of the consumption except the 95th quantile. Moreover, the quantile ARDL estimates indicate that price variations negatively affect consumption across all emerging 7 countries. These estimates suggest that devising policies without considering the asymmetric effect may lead to unfavorable consequences.

This paper computes the welfare gains from optimal hedging with futures contracts for an oil-exporting country. Unlike previous studies, this paper derives the welfare gains under a more realistic futures hedging model. This is accomplished by considering basis risk and by relaxing the full-hedging assumption. Furthermore, this is the first paper to derive the welfare gains under optimal hedging strategies. We also incorporate the empirical relationship between spot and futures prices within our models, rather than the theoretical relationship which most studies employ. The models were developed under a dynamic stochastic optimization framework and the optimal consumption and value functions were found using the method of Endogenous Gridpoints. The results showed that the choice of the optimal hedging strategy employed led to a slight improvement in the country’s welfare gains relative to full hedging. We also found that the strategies with the highest welfare gains were the most effective at volatility reduction. Finally, this paper provides compelling evidence for the use of optimal macro futures hedging as an effective risk management tool for oil-exporting developing countries.

There has been an explosion in the amount of parts and components traded within East Asian production networks. The People's Republic of China (PRC) has emerged as the final assembly point for the goods produced. These goods then flow primarily outside of the region. When the global financial crisis (GFC) occurred, the decrease in Western demand led to a synchronized decline in Asian exports. If more final goods could flow to Asian consumers, it would provide insurance against another slowdown in the rest of the world. This paper uses a gravity model to investigate if emerging Asia is importing fewer consumption goods than predicted. The results indicate that since the GFC, the PRC and the Association of Southeast Asian Nations (ASEAN) have imported more final goods than expected. Nevertheless, their consumption imports per capita are orders of magnitude lower than those of developed economies. This highlights the need for further growth in emerging Asia.

The development of measures and patterns to increase energy efficiency appears as one of the key objectives of the world economy and is aimed at solving environmental problems associated with energy consumption and climate change. The chapter focuses on the issue of the impact of economic growth and structural changes on the energy intensity of territories. Empirical studies highlight a significant influence of macroeconomic, demographic, and political factors on changes in the energy intensity of economies. Russia has significant capacity for improving energy efficiency, primarily in the electricity and housing sectors. The released volumes of fossil fuels can be exported, reduce emissions into the atmosphere, and, as a result, improve the quality of life. A consistent reduction in the consumption of fuel and energy resources due to the transition to a new technological order is demonstrated by the electric power industry, the manufacturing industry, and the transport sector. For Russia, the transition from a raw-material model of the economy to an innovative one is a priority for sustainable development. To overcome the causes of low energy efficiency and realize the existing potential, it is necessary to intensify the state policy at the regional and federal levels. Simultaneously, measures to save energy and increase energy efficiency will not be able to achieve the goal of reducing the energy intensity of GDP/GRP without high economic growth rates. The authors present the analysis of the influence of the structure of the gross regional product on energy consumption in the Rostov Region and characterize the structure of the economy and the electricity consumption of the region. It was noted that the development of the service sector and high-tech industries, as well as investment in environmental technologies, will allow the Rostov Region to move to an energy-efficient model of economic growth.

In the downward phase of the economic cycle, there is an abnormal phenomenon that the sales of luxury goods increase instead of decrease, which is generally believed to be caused by the influence strategy of luxury goods. However, this view—luxury sales are less affected by the economic cycle and should maintain a slow growth trend year by year, cannot explain the reason why luxury sales show a significant growth trend in the downward phase of the economic cycle. In order to explain this phenomenon, this paper puts forward the alternative theory, which believes that people’s consumption behavior is inevitable, but there can be differences in consumer goods. When they are able to consume A or B, they choose consumption B instead of consumption A for various reasons. It can be considered that the alternative theory has played an important role. The growth rate of luxury consumption in China from 2011 to 2019 is proposed and combined by the least square method to obtain the theoretical growth rate in 2020 and 2021. The comparison shows that the theoretical growth rates in 2020 and 2021 are significantly higher than the real growth rates. Finally, using the alternative theory, this paper expounds on the reasons for the increase of luxury consumption in the downward stage of the economic cycle from the aspects of psychological needs, consumption motivation, and the impact of COVID-19.

This paper deals with the problem of optimal consumption and portfolio for a generalized Black and Scholes market where the volatility is driven by a standard Brownian motion and by a fractional Brownian motion in the same time.

We consider the optimal investment and consumption policy for a constant absolute risk averse investor who faces fixed and/or proportional transaction costs when trading a stock and maximizes his expected utility from intertemporal consumption. We show that the Hamilton-Jacobi-Bellman PDE with free boundaries can be reduced to an ODE, which greatly simplifies the problem. Using the stochastic impulse and singular control techniques, we then derive the optimal investment and consumption policy. In particular, when there are both fixed and proportional costs, it is shown that the optimal stock investment policy is to keep the dollar amount invested in the stock between two constant levels and upon reaching these two thresholds, the investor jumps to the corresponding optimal target level.

Using farmer household level data from the poor areas of China, this chapter studies the relationship between total consumption and the demand for food and nutrition. The results show that the demand for food is very elastic, with an estimated elasticity of 0.74, but the demand for nutrition is relatively inelastic, with an estimated elasticity of 0.14. This suggest that the growth in food consumption does not necessarily lead to an increase of nutritional intakes, but rather to improving the “quality” or “taste” of the food. So, implementing nutritional intervention to some extent may be of important significance to improving the nutrition status of the poor areas in China.

The following sections are included:

• INTRODUCING MACROECONOMICS
• MEASURES OF INCOME AND PRODUCTION
• PROBLEMS IN CALCULATING GDP AND NATIONAL INCOME
• DIFFICULTIES WHEN COMPARING LIVING STANDARDS
• CATEGORIES OF THE GDP
• SUMMARY
• QUESTIONS
• APPENDIX TO CHAPTER 1
• POVERTY AND THE DISTRIBUTION OF NATIONAL INCOME
• SUMMARY OF APPENDIX
• QUESTIONS ON APPENDIX
• CONNECTIONS: ACCOUNTING FOR NATIONAL ECONOMIC PERFORMANCE