What determines investment is a much analysed policy question all around the world. Growth and previous investments are the primary variable used to analyse current investment. But there is much difference in opinions among economists regarding which policy instrument should be emphasised more...

Albania has experienced a rapid transition from a centrally planned economy to a mixed economy since the fall of communism in 1989. Policy changes, trade liberalization, and privatization have come about at a rapid pace, allowing foreign direct investment (FDI) and international trade to become...

An increase in the wage share has contradictory effects on the subaggregates of aggregate demand. Private consumption expenditures ought to increase because wage incomes typically are associated with higher consumption propensities than capital incomes. Investment expenditures ought to be...

This testimony makes three main points. First, income volatility, especially when it involves income declines, imposes significant hardships on American families. It heightens stress about finances and may increase household living expenses. These hardships are most pronounced for middle-and...

This paper investigates the inter-linkages between financial stability and fiscal policy. It analyzes the effect of selected financial stability indicators on the probability of future debt deterioration, controlling for several macroeconomic variables. We find significant evidence that a...

Should fiscal consolidations be front-loaded or proceed at a more steady pace, and how does this affect growth? We make an attempt to address this question using a three-step methodology. First, we modify a standard regression of growth on consolidation size to allow speed to affect the...

The authors solve the IS puzzle for the G7 countries. They find that five of the G7 countries have the expected significant negative relationship between the output gap and the real-rate gap; the time series of the remaining two show material deviation from expected IS-curve behavior. The...

This study contributes to the literature by identifying the most appropriate factor to detect and measure Financial Cycles, similar to Gross Domestic Product (GDP) for Business Cycles. Four financial variables were included in the study: Credit, House Prices, Share Prices and Interest Rates. The...

A popular interpretation of the Rational Expectations/Efficient Markets hypothesis states that, if the hypothesis holds, then market valuations must follow a random walk. This postulate has frequently been criticized on the basis of empirical evidence. Yet the assertion itself incurs what we...

Is real investment fully determined by fundamentals or is it sometimes affected by stock market misvaluation? We introduce three new tests that: measure the reaction of investment to sales shocks for firms that may be overvalued; use Fama-MacBeth regressions to determine whether overinvestment...