ASYMMETRY IN ECONOMIC ELUCTUATIONAS IN THE US ECONOMY : THE PRE-WAR AND THE 1946-1991 PERIODS COMPARED

KANDIL, MAGDA 한국국제경제학회 2002 International Economic Journal Vol.16 No.1

The focus of this investigation is on the asymmetric effects of monetary growth shocks in the pre-and post-war periods of United States history. The downward rigidity of nominal wages in the post-war period appears to be an important factor in differentiating the slope of the aggregate supply curve over time. Accordingly, the response of real output and price to expansionary monetary growth shocks is similar in the pre-and post-war periods. In contrast, the aggregate supply curve is flatter in the face of negative monetary growth shocks in the post-war period, exacerbating output contraction and moderating price deflation. The apparent change in the asymmetric effects of monetary growth shocks has determined economic performance in the United States over time. [E30, E33, E34, E35]

Determinants and Implications of Cyclicality: Contrasting Evidence Across Developed and Developing Countries

Magda Kandil 한국국제경제학회 2018 International Economic Journal Vol.32 No.4

Using data for a sample of advanced and developing countries, the paper studies variation in the effects of aggregate demand shocks on the macro-economy and distinguish between the effects of expansionary and contractionary shocks. The aim is to study the determinants and implications of cyclicality across representative countries in each group. The composite evidence points to high degree of cyclicality in many countries. The risk of cyclicality is higher in developing countries as high trend inflation limits the scope to mobilize growth and increases downward rigidity of prices. Policy priorities in developing countries should be focused on fighting inflation and improving the investment environment towards maximizing the return on investment and sustaining growth and capacity building. Policy priorities in advanced countries should be focused on mobilizing resources to ease capacity constraints and finance larger investment, with limited crowding out, to maximize the potential of real growth and combat inflationary pressures.

Exchange Rate Fluctuations and the Balance of Payments: Channels of Interaction in Developing and Developed Countries

( Magda Kandil ) 세종대학교 경제통합연구소 (구 세종대학교 국제경제연구소) 2009 Journal of Economic Integration Vol.24 No.1

Agents engage in a process of forecasting the exchange rate based on observations of macroeconomic fundamentals. Deviations in the realized exchange rate from agents` forecasts determine fluctuations in components of the current and financial accounts of the balance of payments in a sample of developing and industrial countries. Absent measures to stimulate export growth in developing countries and given their high dependency on imports, the current account balance deteriorates with respect to currency depreciation. Across industrial countries, the reduction in the value of exports with respect to currency depreciation correlates with a reduction in the value of imports. The combined effect cancel out on the trade and current account balances in industrial countries. Similarly, currency appreciation increases the nominal value of exports and imports without a significant effect on the current account balance in industrial countries. The combined evidence highlights the benefits of a flexible exchange rate system, prevailing in many industrial countries, to ensure that a depreciating rate curbs import growth and increases financial flows. In contrast, currency appreciation increases imports and deteriorates the current account balance across developing countries. Moreover, the evidence indicates the adverse effect of an overvalued exchange rate and the expected deterioration in the balance of payments should developing countries be forced to abandon a peg abruptly.

Trade Flows, Financial Linkage, and Business Cycles in Latin America

( Magda Kandil ) 세종대학교 경제통합연구소(구 세종대학교 국제경제연구소) 2011 Journal of Economic Integration Vol.26 No.3

This paper studies co-movements in real output growth across countries of Latin America in the sample period 1970-2007. To detect the change over time, correlations in real growth are analyzed over two sub-samples: 1970-1986 and 1987-2007. Correlation coefficients detect co-movements in real growth across five regional groups: Andean, Caribbean, Central America, LAC7(Argentina, Brazil, Chile, Columbia, Mexico, Peru, Venezuela) and Mercosur. In addition, growth in each of the EU, the U.S., and Brazil are assumed to be common sources of co-movements in real output growth in Latin America. Business-cycle comovements within and across regions have varied over time. We also examine the impact of trade flows and financial linkage on co-movements in real growth within and across regions. The effect of trade flows is not conclusive. Business cycles may diverge, converge, or not vary significantly in response to trade flows across countries. More recently, co-movement in real growth appears to be tracking comovement in short-term interest rates across Latin America.

Exchange Rate Fluctuations and Economic Activity in Developing Countries: Theory and Evidence

Magda Kandil 중앙대학교 경제연구소 2004 Journal of Economic Development Vol.29 No.1

This paper examines the effects of exchange rate fluctuations on real output growth and price inflation in a sample of twenty-two developing countries. The analysis introduces a theoretical rational expectation model that decomposes movements in the exchange rate into anticipated and unanticipated components. The model demonstrates the effects of demand and supply channels on the output and price responses to changes in the exchange rate. In general, exchange rate depreciation, both anticipated and unanticipated, decreases real output growth and increases price inflation. The evidence confirms concerns about the negative effects of currency depreciation on economic performance in developing countries.

Exchange Rate Variability and the Macro-economy: Evidence from Developing and Developed Countries

Magda Kandil 연세대학교 동서문제연구원 2013 Global economic review Vol.42 No.2

Using annual data, the paper studies the time-series evidence regarding the allocation of fluctuations in the exchange rate between demand components, real growth, and price inflation in a sample of developing and advanced countries. The evidence reveals patterns of interaction between the macro-economy and exchange rate variability. Across developing countries, appreciation decreases the cost of imports and price inflation, while depreciation shrinks the output supply, indicating high dependency on imported goods. The reduction in output supply correlates with higher inflation and an increase in the import value. In contrast, the evidence of the negative effect of currency appreciation on output growth is more prevalent across advanced countries, while depreciation stimulates competitiveness, resulting in higher demand for exports, investment and consumption. Across developing countries, exchange rate variability decreases trend real growth and increases trend price inflation. Across advanced countries, exchange rate variability decreases trend real growth while increasing the variability of price inflation and import growth. Minimizing variability of the exchange rate would be beneficial to sustain higher growth and reduce cyclical variability in developing and advanced countries.

Consumption, Credit, and Macroeconomic Policies: Theory and Evidence from the United States

MAGDA KANDIL,IDA AGHDAS MIRZAIE 연세대학교 동서문제연구원 2011 Global economic review Vol.40 No.3

The paper examines determinants of private consumption in the USA. The empirical model includes disposable income, the University of Michigan consumer sentiment index, the interest rate, and the real effective exchange rate. Anticipated movements in these determinants are likely to affect planned consumption, while unanticipated changes determine cyclical consumption. Fluctuations in private consumption are mostly cyclical with respect to changes in disposable income and the consumers’ sentiment index. In contrast, an increase in the interest rate decreases both planned and cyclical consumption. Fiscal policy has a direct negative effect on cyclical consumption, which is not dependent on the interest rate. Monetary growth, in contrast, increases liquidity to finance both planned and cyclical private consumption.

On the Significance of Trade Relations between GCC Countries and Japan

( Shaykha Alshamsi ),( Magda Kandil ) 세종대학교 경제통합연구소 (구 세종대학교 국제경제연구소) 2001 Journal of Economic Integration Vol.16 No.3

Trade relations between Japan and the Gulf Cooperation Council Countries (GCC Countries) is very strong and has been growing at very high rates during the last twenty years. In 1996, Japan imported more than 65% of its crude oil from the GCC Countries. The GCC countries` imports from Japan were 25% of their total imports in 1996. The aim of this paper is to analyze the impact of trade relations on the economies of the GCC countries and Japan.

On the Significance of Trade Relations between GCC Countries and Japan

AIShamsi, Shaykha,Kandil, Magda 세종대학교 국제경제연구소 2001 Journal of Economic Integration Vol.16 No.3

Trade relations between Japan and the Gulf Cooperation Council Countries (GCC Countries) is very strong and has been growing at very high rates during the last twenty years. In 1996, Japan imported more than 65% of its crude oil from the GCC Countries. The GCC countries' imports from Japan were 25% of their total imports in 1996. The aim of this paper is to analyze the impact of trade relations on the economies of the GCC countries and Japan.

What does Egypt's Revolution Reveal about its Economy?

Amr Hosny,Magda Kandil,Hamid Mohtadi 한국국제경제학회 2014 International Economic Journal Vol.28 No.4

On the third anniversary of the Egyptian revolution and against the backdrop of lingering political instability and deteriorating economic conditions, we diagnose the constraints to sectoral growth in Egypt using the 2011 Egyptian revolution as a natural experiment. We combine quantile regressions to study sector outliers with a difference in difference methodology to capture sectoral behavior before and after revolution. We find that the revolution's effect has been adverse, on average, but heterogeneous across sectors. We identify and characterize sectors most and least impacted. Results reveal that Egypt's fastest growing sectors before Revolution have been the most vulnerable after Revolution. This evidence is supported by our diagnosis approach that shows that faster growing sectors are constrained by continuous increases in prices that threaten export competitiveness (as they erode the benefits accrued to nominal depreciation of currency). Such sectors also benefited from higher monetary growth and fewer constraints on credit availability that have mitigated somewhat the speed of deterioration in the aftermath of the revolution. Our results, which hold under several robustness checks, inform policy priorities as to how to revive investors’ confidence, boost competitiveness, and design priorities in industrial policy to ease structural impediments and align sectoral growth with macro priorities.