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The Effect of Macroeconomic Variables on Industry Sector Output Growth of Ethiopia
Issue:
Volume 8, Issue 6, December 2019
Pages:
325-338
Received:
9 July 2019
Accepted:
30 July 2019
Published:
20 September 2019
Abstract: Industrialization plays a key role in the process of a nation’s economic development. The experience of the developed world revealed that industrialization significantly increased their productivity and changed the economic structure. Mainly with the context of reoccurring unstable macroeconomic performance in Ethiopia, analyzing the effect of macroeconomic variables on industry sector output growth is a proper way to design suitable industrial policies. Therefore, this study aimed to examine the effect of some macro-economic variables on the industry output growth in Ethiopia. To do so the study used a time series data ranging from 1991 up to 2018 from Ministry of Finance and Economic Cooperation of Ethiopia. The study also used Augmented Dickey-Fuller (ADF) and the Phillip-Perron (PP) unit root tests of stationary, Auto Regressive Distributed Lag (ARDL) bound test to co-integration and error correction model. Accordingly the study confirmed the existence of a long-run relationship between industrial output growth and macroeconomic variables. Macroeconomic variables such as, lending rate, inflation rate and trade balance found to be affecting the industrial sector output growth negatively, positively and negatively, respectively in the long run. Therefore, the government has to keep lending rate to the level that could be amenable for firms and maintaining the trade balance; via manipulating the export and import.
Abstract: Industrialization plays a key role in the process of a nation’s economic development. The experience of the developed world revealed that industrialization significantly increased their productivity and changed the economic structure. Mainly with the context of reoccurring unstable macroeconomic performance in Ethiopia, analyzing the effect of macr...
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The Impact of Average Effective Tax Rate on China's Foreign Direct Investment: Evidence from 45 Countries
Yue Wang,
Gong Liang Tang
Issue:
Volume 8, Issue 6, December 2019
Pages:
339-346
Received:
26 July 2019
Accepted:
20 August 2019
Published:
25 September 2019
Abstract: In the open economy, the government always regards improving the national competitiveness as an important strategic goal. The use of tax means is an important way of the application of national macroeconomic policies. How to effectively improve the competitiveness of the international tax system has become a matter of great concern to us. Based on the OECD average effective tax rate model, this paper uses the average effective tax rate as an indicator of the competitiveness of the international tax system to test its impact on China's FDI decision-making. It is found that the lower average effective tax rate of the host country is beneficial to the inflow of FDI. In the process of calculating the average effective tax rate, enterprise income tax is an important tax parameter affecting the marginal average tax rate. In order to improve the competitiveness of China's tax system, it is suggested to promote foreign investment and attract high-quality foreign direct investment. Consider the perfection of tax system from two perspectives of capital.
Abstract: In the open economy, the government always regards improving the national competitiveness as an important strategic goal. The use of tax means is an important way of the application of national macroeconomic policies. How to effectively improve the competitiveness of the international tax system has become a matter of great concern to us. Based on ...
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The Role and Importance of Financial Management in the Urban Development with the Light of the Impacts of Real Estate Market in Developing the Economic Growth in Egypt
Waleed Hussein Ali Hussein
Issue:
Volume 8, Issue 6, December 2019
Pages:
347-357
Received:
22 August 2019
Accepted:
5 September 2019
Published:
25 September 2019
Abstract: This paper adopts an inductive research approach and is divided into three sections. The first section is a theoretical inductive overview of Economics Market in Egypt and discusses the role of financial markets in resources mobilization and division of financial market in Egypt. Aiming to read the current situation of the Egyptian economic market. The second section describes the key players in the capital market by reviewing the role of financial markets economic growth. The third part introduces the reading in the real estate market in Egypt with Real Estate’s Big Picture. The overall economic sector has a number of distinctive focal points, one of which is real estate, a primary sector of the economy. Between 30% and 50% of high and middle-income assets consist of real estate property and the percentage is even higher for lower-income Egyptian families. Moreover, the market capitalizations of land corporations publicly listed on the Egyptian Stock Market has been boosted by double-digit revenue growth, and the real estate sector has also been growing markedly at the macro level; with a growth rate exceeding 20%, its overall contribution to GDP has surpassed 10%. It is to be noted that the Egyptian real estate market is not one uniform sector; it is divided between principal residences located in Greater Cairo (mainly dominated by large and mid-scale developers), vacation homes on the coast (assorted real estate developers) and real estate in other areas across the country (generally developed by individual owners). Finally, with the results and recommendations, we will find that as a part of the whole urban development it is a very important part of the economic growth of Egypt.
Abstract: This paper adopts an inductive research approach and is divided into three sections. The first section is a theoretical inductive overview of Economics Market in Egypt and discusses the role of financial markets in resources mobilization and division of financial market in Egypt. Aiming to read the current situation of the Egyptian economic market....
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Urban Agriculture: Where Urban Pressures Meet City Farmers
Claire Elizabeth Haselhorst,
Grace Lynn Baldwin,
Robert Merton Stwalley III
Issue:
Volume 8, Issue 6, December 2019
Pages:
358-363
Received:
13 July 2019
Accepted:
19 September 2019
Published:
9 October 2019
Abstract: As agrarian practices return to the urban space, a lack of understanding between the urban farmers and local city officials is stunting the development and economic sustainability of urban agriculture. Many promoters of urban agriculture fail to grasp the modern reality of operating a significant venture within a zoned municipal space. A failure to account for all potential stakeholders in the planning of these agricultural projects can cause unforeseen delays in execution and economic disaster. The needs of the agricultural installation must be balanced with the complexities of the city systems, and modern zoning procedures take multiple perspectives into account. There are numerous variables and considerations that must be evaluated in the creation of an urban farm that developers accustomed to working within the rural environment may not naturally include in their thinking. City planning and neighborhood integration must be addressed to ensure smooth geographic transition between the farming operation and further local real estate market development. The urban agricultural project developer will be required to demonstrate that the logistical needs of the enterprise can be accommodated within the existing infrastructure or be willing to upgrade the lacking requirement. Odor abatement and visual occlusion may be required. These complex elements of successfully installing an agricultural enterprise within an urban environment often frustrate successful project managers with agrarian backgrounds and cause them to pay minimal attention to the requirements of urban operation. Unfortunately, it can be clearly demonstrated that to do so is fraught with peril. Without thoughtful design, many urban agriculture efforts have slow growth, and the impact of these design failures on the progression of these enterprises is immense.
Abstract: As agrarian practices return to the urban space, a lack of understanding between the urban farmers and local city officials is stunting the development and economic sustainability of urban agriculture. Many promoters of urban agriculture fail to grasp the modern reality of operating a significant venture within a zoned municipal space. A failure to...
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To What Extend do the Migrant's Remittances Affect on the Economic Growth in Jordan
Issue:
Volume 8, Issue 6, December 2019
Pages:
364-368
Received:
29 January 2019
Accepted:
6 September 2019
Published:
16 October 2019
Abstract: The magnitude of a huge number of remittances which comes from individuals or from foreign direct investments that flow on the economies of developing countries during the last few decades cannot be ignored, and especially on Jordanian macroeconomic, where it is not considered as an industrial or oil country, but it is characterized by a human resources wealth. The revenues of these resources are considered to be one of the main pillars on the Jordanian economy. While, these human resources divided into two parts, some of them tend or choose to work inside the country and others tend to work abroad. On another level, The Kingdom of Jordan seeks to attract the foreign investment despite of some obstacles and conditions. Hence, the problem stems from the extent of the impact of migration revenues and foreign direct investment on Jordanian economic growth. So this study will examines the effects of remittances and FDI on the growth of Jordanian GDP using a time series data during 1980-2015, and then assess the relative importance and the interaction of both. The result of this study showed a long-run relationship of the impact of remittances and the foreign direct investment on gross domestic product growth. Whereas, the impact of foreign direct investment is greater than the impact remittances on GDP, while the study found a lack of causality between these variables in the short-term period.
Abstract: The magnitude of a huge number of remittances which comes from individuals or from foreign direct investments that flow on the economies of developing countries during the last few decades cannot be ignored, and especially on Jordanian macroeconomic, where it is not considered as an industrial or oil country, but it is characterized by a human reso...
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Gross Domestic Product Per Capita and Individual Income Tax Revenue: Empirical Evidence from Vietnam
Issue:
Volume 8, Issue 6, December 2019
Pages:
369-374
Received:
28 September 2019
Accepted:
15 October 2019
Published:
23 October 2019
Abstract: Taxes are the most important revenue source for the state budget. Income from individual income tax as a percentage of total tax revenue is increasing according to the development process of each country. The purpose of the article is to analyze the relationship between GDP per capita and individual income tax revenue in Vietnam. Empirical method is employed on secondary time series data set during the period 1999-2018. Econometric tools are employed to present and analyze the collected data from concerned bodies. The result shows that the GDP per capita has a positive effect on individual income tax revenue at 1% significant level. Moreover, the article also finds that tax revenues during the period of the individual income tax law are higher than the period of the income tax ordinance for high-income earners.
Abstract: Taxes are the most important revenue source for the state budget. Income from individual income tax as a percentage of total tax revenue is increasing according to the development process of each country. The purpose of the article is to analyze the relationship between GDP per capita and individual income tax revenue in Vietnam. Empirical method i...
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Determinants of Real Exchange Rate: Case of Jordan
Issue:
Volume 8, Issue 6, December 2019
Pages:
375-381
Received:
5 October 2019
Accepted:
22 October 2019
Published:
29 October 2019
Abstract: This paper aims to investigate the determinants of real exchange rate in Jordan, four determinants were chosen which are; governmental expenditures, foreign reserves, workers' remittances receipts and term of trade. Time series quarterly data were collected for the period of 2000-2017. The unit root tests and Johansen's coingetration were performed to find that there is a long relationship among the variables of this study. Then VECM was tested to find a long-run causality running the determinants to RER equilibrium which can be reached within 3 quarters. Also, it can be endorsed that government expenditures can negatively affect RER in significance, both in short-run and long-run dynamics. However, three other variables of the study have positive and lower association with RER. The results imply an opportunity to enhance the real exchange rate through monitoring the governmental spending, and setting a policy to encourage the migrants to increase their remittances they send home. The foreign reserves are necessary to stabilize RER. However, TOT is also affected by RER, when exchange rate rises it suggests lowering the prices of the domestic goods and services, however, it may not affect the prices of the exported commodities. Therefore, there were possibilities for several corrective policy actions to reduce the misalignment in real exchange rate. Thus it is suggested that the capital government spending should concentrate more on capital expenditures, and to follow the track of trade liberalization in tendency to depreciate RER. Also, workers' remittances should be encouraged to promote economic development through increasing the opportunity for household investments.
Abstract: This paper aims to investigate the determinants of real exchange rate in Jordan, four determinants were chosen which are; governmental expenditures, foreign reserves, workers' remittances receipts and term of trade. Time series quarterly data were collected for the period of 2000-2017. The unit root tests and Johansen's coingetration were performed...
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Practices and Countermeasures of Cross-border Insolvency Under Chinese Law
Wang Deling,
Wu Changyue,
Wang Yubao,
Li Junfeng
Issue:
Volume 8, Issue 6, December 2019
Pages:
382-388
Received:
10 October 2019
Accepted:
5 November 2019
Published:
15 November 2019
Abstract: As the globalization of economy accelerates greatly, more and more cross-border trade and investment is inevitably coming into being, resulting in many bankruptcy cases in which the relationship of creditor's rights and debts is no longer limited to the territory of a country. In recent years, the most influential case is the bankruptcy case of Hanjin Shipping. Hanjin Shipping’s bankruptcy has had a great impact on the international shipping market, the global supply chain has been interrupted, and a large number of commercial disputes have been triggered. The problems of insolvency international cooperation and the conflicts between bankruptcy and ship arrest proceedings in cross-border insolvency case have aroused widespread concern of experts and scholars in shipping. China has not adopted “UNCITRAL Model Law on Cross-border Insolvency”, making the case more complicated to deal with the proceedings under jurisdiction of China. In order to deal with cross-border bankruptcy cases in China and better protect the interests of stakeholders, this paper makes a detailed analysis of the legal provisions on cross-border bankruptcy under Chinese law, and statistically analyzes the practice of Chinese courts in dealing with cross-border bankruptcy cases. Through a comparative analysis of the similarities and differences of legal provisions and practices between China and “UNCITRAL Model Law on Cross-border Insolvency” and other typical countries, this paper puts forward some suggestions and countermeasures to deal with similar cross-border bankruptcy cases under the jurisdiction of Chinese courts in the future.
Abstract: As the globalization of economy accelerates greatly, more and more cross-border trade and investment is inevitably coming into being, resulting in many bankruptcy cases in which the relationship of creditor's rights and debts is no longer limited to the territory of a country. In recent years, the most influential case is the bankruptcy case of Han...
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Liquidity of a Stock Exchange, Between Investor Behavior and Scarcity of Securities: The Case Study of the West African Regional Stock Exchange
Pourakin Djarius Dieudonné Bama,
Balibié Serge Auguste Bayala
Issue:
Volume 8, Issue 6, December 2019
Pages:
389-398
Received:
27 September 2019
Accepted:
4 November 2019
Published:
21 November 2019
Abstract: Liquidity may be evident at first glance, as it is widely debated in the literature, but regarding the question on the threshold at which a stock market is liquid, the answers are far from being evident and unanimous. This paper studies the determinants of liquidity in the West African Regional Stock Exchange through the level of float and investors behavior based on a conceptual model. The model takes into account the specificities of a market governed by players’ orders and behaviors. We analysed the scarcity of stocks and the behaviors of players based on a case study and simulation methodology. We found that investors are passive in the market, which results in under-liquidity. It can be deduced that the market is savings driven. In addition, the average time that a stock market order finds a counterpart is three to seven days. This situation is due to the scarcity of securities and / or the inability of investors to intervene in the market in a timely manner. As a result, new entrants to the market will have difficulty in offering securities, due to a lack of sufficient liquidity. In conclusion, the market liquidity depends mainly on a minimum of auctioned securities rather than investor’s participation.
Abstract: Liquidity may be evident at first glance, as it is widely debated in the literature, but regarding the question on the threshold at which a stock market is liquid, the answers are far from being evident and unanimous. This paper studies the determinants of liquidity in the West African Regional Stock Exchange through the level of float and investor...
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SWOT Analysis of Micro Entrepreneurship and Start-ups in Haryana
Jyoti Yadav,
Neelam Gulati
Issue:
Volume 8, Issue 6, December 2019
Pages:
399-405
Received:
30 July 2019
Accepted:
29 August 2019
Published:
22 November 2019
Abstract: MSMEs (Micro, Small and Medium Enterprises) have been globally considered as an engine of economic growth and as key instruments for promoting equitable development in most of the economies of the world. The MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth. They not only play crucial role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural & backward areas, which in turn, reduces regional imbalances, assuring more equitable distribution of national income and wealth. Micro, Small and Medium Enterprises (MSME) and Start-ups play vital role in the process of development in India. It generates employment at low cost and helps the society to move on the path of prosperity & growth. As more than 65% of Indians live in villages and as there is little scope for establishment of Large-scale industries in these areas, MSME is an important aspect with regard to development of rural areas. Even though the State has huge potential for industrialization, especially for MSME sector, its potential has not been fully harnessed so far. Thus the present paper is an attempt towards finding out the Strengths, Weaknesses, Opportunities and Threats of MSMEs and Start-ups in the State of Haryana. The present study proposes interprets, analyse, and understand the challenges faced by the Micro entrepreneurs and their business in Haryana State. By virtue of so, the study will prove to be a panacea for Micro entrepreneurs and start-ups. The study further suggests them how to increase the innovativeness, decision making and diversification of their businesses in Haryana state.
Abstract: MSMEs (Micro, Small and Medium Enterprises) have been globally considered as an engine of economic growth and as key instruments for promoting equitable development in most of the economies of the world. The MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growt...
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A Study on the Asymmetric Effect to Housing Market Price Volatility
Issue:
Volume 8, Issue 6, December 2019
Pages:
406-413
Received:
18 October 2019
Accepted:
20 November 2019
Published:
25 November 2019
Abstract: The objective of this paper empirically analyzes the relations between information and housing market volatility using the housing price index of Seoul, San Francisco and Los Angeles for the time period from January 1995 to July 2019. For the empirical test of the asymmetric effect of information on housing market volatility, this paper employs GJR-GARCH model which enable good information and bad information to have impact on volatility. The analysis results are as follows. First, it was found that the GJR-GARCH (1,1) model is suitable for analyzing the asymmetric reaction of housing price volatility for information types. Second, it was found that for information types, Seoul, San Francisco, and Los Angeles all displayed asymmetric housing price volatility. It was found that Seoul reacted greater to volatility for unexpected positive earnings rate information than unexpected negative earnings rate information, while on the contrary, San Francisco and Los Angeles showed that they reacted greater to unexpected negative earnings rate information than to unexpected positive earnings rate information. These findings support the hypothesis. Third, for sensitivity to volatility, Seoul was found to be about five times higher than San Francisco and Los Angeles. It is necessary to differentiate the housing price volatility prediction model and portfolio composition according to the information type.
Abstract: The objective of this paper empirically analyzes the relations between information and housing market volatility using the housing price index of Seoul, San Francisco and Los Angeles for the time period from January 1995 to July 2019. For the empirical test of the asymmetric effect of information on housing market volatility, this paper employs GJR...
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Oil Shocks and Macroeconomic Effects of Occasionally Binding Constraint on External Reserves of CEMAC
Issue:
Volume 8, Issue 6, December 2019
Pages:
422-438
Received:
28 October 2019
Accepted:
22 November 2019
Published:
2 December 2019
Abstract: This paper investigates the macroeconomic effects of Central African States Bank (BEAC) commitment to ensure its nominal anchoring when the underlying external reserves constraint occurs after an oil shock. Indeed, the current monetary agreements place external reserves at the heart of the cooperation between BEAC and the French Treasury, and their fluctuations are the main risks indicators to the durability of the cooperation between these two institutions: a system described as pegged to reserves which neither fully resembles a fixed exchange rate regime or a flexible exchange rate regime, much less an intermediate regime. To this end, there is a need to monitor their ability to cover a proportion of the central bank's liabilities in the short run by tithing the monetary conditions, in order to avoid drastic adjustment measures as devaluation. Therefore, as a result of the fall of these reserves below their long run threshold, the central bank essentially focused on their recovery. Our framework is a Markov-switching approach of the Smets and Wouters textbook model were we have modelled the dynamics of external reserves from the balance of payments identity and the simplified balance sheet of the central bank. The monetary policy rule is also augmented by the gap of reserves to their long run trend. Two scenarios are subsequently evaluated namely, a variation of the probability of occurrence of the constraint while maintaining that of leaving or, conversely, a variation of the probability of exit from the constraint by assuming that its occurrence is fixed. The results obtained show that at the approach of the constraint and in the presence of an oil shock, the behaviour of the central bank induces many undesired effects such as the fall in consumption, investment and production. Conversely, when the probability of exit from the constraint is high, the central bank adopts a somewhat passive behaviour, with a late reaction that makes the imbalances continue. Following the fact that (i) export revenue of the region are mainly composed of oil resources (84%), (ii) imports are rigid and, (iii) the oil price cannot be under control of CEMAC countries for competitiveness purpose, the paper highlights the need for permanent monetary discipline alongside economic diversification.
Abstract: This paper investigates the macroeconomic effects of Central African States Bank (BEAC) commitment to ensure its nominal anchoring when the underlying external reserves constraint occurs after an oil shock. Indeed, the current monetary agreements place external reserves at the heart of the cooperation between BEAC and the French Treasury, and their...
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An Empirical Study Analyzing the ATM Service Quality and Customer Satisfaction Relationship in Rwanda
Nshimiyimana Alexis,
Wenpei Chen
Issue:
Volume 8, Issue 6, December 2019
Pages:
439-451
Received:
4 November 2019
Accepted:
22 November 2019
Published:
2 December 2019
Abstract: ATM as one type of Electronic banking systems have become a strategic technology in the banking sector by delivering banking products/services and are expected to offer competitive advantages to banks investing in ATM technology over those that do not. In Rwanda, the cash-based system is now gradually being replaced by the card-based system and this requires banks to improve ATM service quality to satisfy customers. The aim of this paper was to conduct empirical evidence from ATM cardholders of five selected commercial banks in Rwanda to analyze the relationship between ATM service quality and customer satisfaction. To achieve this objective, a structured questionnaire was used to collect primary data of 250 ATM users in five commercial banks from Kigali, capital city of Rwanda (Bank of Kigali, Cogebanque, Equity Bank, Banque Populaire du Rwanda Limited and Ecobank). The questionnaire consists mainly of 32 constructs observed under seven ATM service quality dimensions (Reliability, Responsiveness, Assurance, Empathy, Tangibles, ease of use and Convenience) and a five-point rating scale was adopted as the scale for the statements formulated in the questionnaire. Findings showed that 70.8% of respondents were under or equal to 35 years old which presents a range of youths in Rwanda. From the results, 70% of respondents claimed that they have never been educated on utilization of ATMs. Using SPSS, customer satisfaction has shown a strong correlation with all seven ATM service quality. The multiple regression results identified ease of use as the most important dimension on customer satisfaction and it was followed by convenience, empathy and Tangibles. Therefore, it is suggested that banks could improve their customer satisfaction ratings by educating customers to use ATM and not forget other important improvements in automated teller machine banking services.
Abstract: ATM as one type of Electronic banking systems have become a strategic technology in the banking sector by delivering banking products/services and are expected to offer competitive advantages to banks investing in ATM technology over those that do not. In Rwanda, the cash-based system is now gradually being replaced by the card-based system and thi...
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The Game Analysis of Insurance Funds to Participate in the PPP Earnings Distribution
Issue:
Volume 8, Issue 6, December 2019
Pages:
452-457
Received:
31 October 2019
Accepted:
28 November 2019
Published:
10 December 2019
Abstract: The long-term and stable nature of insurance funds and the long-term demand of PPP projects for funds are naturally in line with each other. In the future, there is still great potential for insurance funds to deeply participate in PPP projects and serve the development of real economy. According to the current development rate, the available scale of insurance funds during the 13th five-year plan period will reach 20 trillion yuan, which not only provides sufficient sources of funds for insurance funds to participate in PPP projects. At the same time, it also creates a good condition for the insurance fund to conduct financing and service innovation in combination with the characteristics of PPP projects. The participation of insurance funds in PPP projects has become an important issue in the current development, but the earnings in the cooperation between the two sides need to be fully discussed and analyzed to avoid a series of problems caused by unreasonable distribution. Based on the current developing situation of insurance funds participating in PPP projects, this paper conducts two-party game analysis and three-party game analysis according to the classification of complete information condition and incomplete information condition. Through conditional assumption, model establishment and solution, the reasonable proportion of insurance enterprises, public sectors and project companies under different circumstances is obtained, and policy suggestions on promoting insurance funds to participate in PPP model are put forward.
Abstract: The long-term and stable nature of insurance funds and the long-term demand of PPP projects for funds are naturally in line with each other. In the future, there is still great potential for insurance funds to deeply participate in PPP projects and serve the development of real economy. According to the current development rate, the available scale...
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Social Health Insurance Reform and Economic Growth: Simulation Analysis in China
Issue:
Volume 8, Issue 6, December 2019
Pages:
458-468
Received:
21 November 2019
Accepted:
6 December 2019
Published:
10 December 2019
Abstract: China has implemented drastic reforms in social health insurance within the past decade. I investigate how social health insurance affects economic growth in China by employing a three-period overlapping generations’ model in which social health insurance is determined endogenously. My model consists of three parts: individuals, firms and the government. In my model, social health insurance influences savings, physical capital, human capital and economic growth. I find that the higher the contribution rates of individual accounts to social health insurance, the lower the personal savings rate; with an increase in the personal account payment rate, an increase in the payment rate is associated with an increase in personal account funds, and the medical expenditure will increase; the contribution of each monetary unit will lead to more than one monetary unit of output, representing the multiplier effect of the personal account payment rate on economic growth. So the contribution rates of personal accounts are conducive to physical and human capital accumulation, generating a multiplier effect on economic growth. Simulation results show that a lower rate of pooled account payments and higher rate of personal account payments result in greater economic growth. I also find that the proportion of employment payments transferred to personal accounts positively influences economic growth. The theoretical model and simulation indicate that the reform of social health insurance causes an increase in economic growth.
Abstract: China has implemented drastic reforms in social health insurance within the past decade. I investigate how social health insurance affects economic growth in China by employing a three-period overlapping generations’ model in which social health insurance is determined endogenously. My model consists of three parts: individuals, firms and the gover...
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The Impact of Economic Freedom on Economic Growth
Fayrouz Al–Katout,
Amir Bakir
Issue:
Volume 8, Issue 6, December 2019
Pages:
469-477
Received:
14 November 2019
Accepted:
12 December 2019
Published:
24 December 2019
Abstract: This study investigated the relationship between economic growth and economic freedom. Fourty two countries were covered for the period 1996- 2017. The dependent variable is the real GDP per capita and the independent variables are; the index of economic freedom, real fixed capital formation, real government spending and average number of hours worked. The sources of data is the World Bank Group (WBG) and the Center for Growth and Development (GGDC). The sample of 42 countries was divided into two groups, based on the score of the country on the index of economic freedom for 2017. While the economic freedom index, which ranges from 100 to 70, has 13 countries. The second group having 69.9 to 50 points, consisted of 29 countries. The data was subjected to cross sectional panel analysis; the unit root indicated that all variables in the two groups were stable at the level, and The Pedroni Residual Co-integration Test showed that there was no co-integration between the variables. The normal least squares method was applied for each group of countries. The results of the analysis showed that the fixed effects model (Fixed Effect) was the appropriate model for data analysis. The study showed that there was a positive and statistically significant relationship between the economic freedom index and the real GDP per capita. In addition, the relationship was positive and statistically significant between real GDP per capita, and both fixed capital formation and government expenditure. The study recommended that more attention should be directed to the factors that have an impact on economic freedom, as these factors might have a positive impact on economic growth.
Abstract: This study investigated the relationship between economic growth and economic freedom. Fourty two countries were covered for the period 1996- 2017. The dependent variable is the real GDP per capita and the independent variables are; the index of economic freedom, real fixed capital formation, real government spending and average number of hours wor...
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