M. Aynul Hasan

Is Money an Omitted Variable in the Production Function? Some Further Results

In recent years, numerous studies have emphasized the role of real balances in the production function in terms of money being useful: as an intermediate good; as liquid reserves for investment; and also serving as a link between aggregate supply and the nominal interest rate. In this paper we report new Canadian empirical evidence regarding the important role of money in the production process of aggregate manufacturing industries based on a flexible translog cost function approach. In general, our results support the hypothesis that money is an important factor in the production function and that there are potential supply side effects of a change in the interest rate.

Rational expectations estimation of macroeconomic models: some Monte Carlo results

Abstract This paper analyzes the relative performance of alternative estimation methods for rational expectations macroeconomic models using a Monte Carlo approach. The methods studied include a single equation instrumental variable method most often attributed to McCallum, a full information substitution method proposed by Taylor and an efficient full information technique developed by Wickens. In general, the results of our Monte Carlo experiments indicate that although the full information methods tend to perform bettern than the single equation techniques, the gains of efficiency are relatively modest. However, in some experiments involving misspecification errors, the single equation method outperforms the full information estimators.

Is the Social Action Programme in Pakistan Financially Sustainable

Earlier neoclassical, classical, or structuralist theories [due to Rostow (1960)] considered economic growth to be a result of the right quantity and combination of saving, investment, and foreign aid, with surpluses from the primary, commodityproducing sectors being channelled into capital for further growth. Accordingly, the main constraint in these growth models has been the relatively low level of capital formation available. While the above paradigm has intuitive appeal, it, however, ignores the complementarity of social-political influences on the physical variables (i.e., capital, labour, etc.) in growth and development. Urquidi (1971) argued that the social progress of a nation is a necessary condition for sustained economic growth. It is now increasingly evident that the investment in the social sectors—primary education, basic health, housing, changes in land-tenure system, social security, better social relations–are as, if not more, important than the investment in the commodity-producing sectors or related infrastructure.

Policy shocks and the Canadian macroeconomy: A Bayesian vector autoregression approach☆

Abstract In this paper we estimated a nine-variable Canadian monthly macroeconometric model within the context of a Bayesian vector autoregression (BVAR) innovation accounting technique over the period 1971:01 to 1988:12. Employing impulse response functions and variance decomposition measures we examined the monthly responses of Canadian key macroeconomic variables to unanticipated shocks in policy variables. Contrary to the results of the Dungan and Wilson study, which contradicts the ineffectiveness proposition of expenditure (or fiscal) policy of the standard new neoclassical model, our results support the ineffectiveness proposition of the latter model. The impact of monetary policy on real GDF in our study seemed to be quite strong and persistent.