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• Cyclicality in aggregate productivity predicts the efficiency of resources reallocation. • Aggregate productivity growth originates from within-plants, allocative efficiency gain, and due to entry and exit. • We exploit the Great Recession to analyse the validity of the 'Cleansing' or 'Scarring' effect of recession and 'Schumpeterian Darwinian Selection' for Indian manufacturing. • The contributions to aggregate productivity growth from within-plant and net-entry effects are procyclical. • Plants in export-oriented industries are crucial in explaining the pro-cyclicality. • The exporting sectors during 2008-09 shifted resources from more productive to less productive plants. • The relatively productive exporters exited the markets following the global crisis, scarring the economy. • The positive contribution from the net-entry exit effect of plants during the economic downturn validates the 'Schumpeterian approach of Darwinian Selection'. Understanding the cyclicality in aggregate productivity helps answer whether the economy allocates resources efficiently or not. The paper analyses the sources of aggregate productivity growth, such as direct efficiency gain within-plants, allocative efficiency gain, and gains due to entry and exit during economic fluctuations. In particular, we exploit the economic shock of the Great Recession to analyse the validity of the 'Cleansing' or 'Scarring' effect of recession and 'Schumpeterian Darwinian Selection' for Indian manufacturing. The rise and fall of within-plant and net-entry effects during the economic fluctuations explains the pro-cyclicality of productivity growth. Plants in export-oriented industries are crucial in explaining the pro-cyclicality. Negative external shock to exporting sectors during 2008–09 shifted resources from more productive to less productive plants. The relatively productive exporters exited the markets following the global crisis, scarring the economy. Nonetheless, the positive effect from the net-entry exit of plants during the economic downturn makes the 'Schumpeterian approach of Darwinian Selection' valid. [ABSTRACT FROM AUTHOR]

We modify the standard descriptive growth model to incorporate what Keynes (1936) called the "essence" of his general theory. The essence is that exogenous changes in investment cause changes in employment and unemployment. We implement this idea by assuming the path for the capital growth rate is exogenous, which implicitly indicates that the significant fluctuations in investment do not result from rational calculation but rather result from what Keynes labelled "animal spirits." Testing the Keynes hypothesis using post-WWII U.S. data, we find that changes in investment Granger-cause changes in unemployment but the reverse is not supported by the data. [ABSTRACT FROM AUTHOR]

This paper studies the impact of sanitary protocols aimed at reducing the contagion by Covid-19 during the production and consumption of goods and services. We augment a heterogeneous SIR model with a two-way feedback between contagion and economic activity, allowing for firm and sector heterogeneity. While protocols are a burden for firms (especially SMEs), they may enhance economic activity by avoiding infections that reduce the labor supply. Using Chilean data, we calibrate the model and assess the impact of recommended firm protocols on contagion and economic activity in the after-lockdown period. Our quantitative results suggest that: (i) A second wave of infections is likely in the absence of protocols; (ii) Protocols targeted at some sectors can reduce deaths while at the same time improving economic conditions; (iii) Protocols applied widely have a negative effect on the economy. We also find that applying strict protocols to a few sectors is generally preferable to applying milder protocols to a larger number of sectors, both in terms of health and economic benefits. [ABSTRACT FROM AUTHOR]

We develop an epidemiological approach to analyze how financial contagion may affect and be affected by economic activity. We show that, according to specific parameter values, the economy may converge either to a non-speculative or to a speculative equilibrium: in the former situation the level of per capita income is maximal, while in the latter it is reduced by financial contagion. The presence of economic and financial feedback effects may also give rise to macroeconomic fluctuations during the transitional path, clearly showing that such economic and financial links are an important driver of the short run macroeconomic performance. By extending the analysis to a spatial dimension, we also show that financial contagion in some specific region may propagate quickly also in regions far away from those in which the contagion initially occurs, highlighting the role of regional policy coordination to avoid interregional contagion. [ABSTRACT FROM AUTHOR]

• Heterogeneous trading behaviors cause an endogenous stock bubble. • The endogenous inverted U-shaped bubble affects the real economy through the borrowing constraint channel, which causes an inverted U-shaped output and promotes the output to rise against the decline of the total factor productivity (TFP) shock. • The positive bubble and increasing bubble dominate in promoting output and investment of the real economy. The impact of stock market bubbles on the real economy has always been an important topic. By introducing heterogeneous transactions of behavioral economics into a standard dynamic stochastic general equilibrium (DSGE) model, this paper finds, first, that heterogeneous trading behaviors cause an endogenous stock bubble. Second, the endogenous inverted U-shaped bubble affects the real economy through the borrowing constraint channel, which causes an inverted U-shaped output and promotes the output to rise against the decline of the total factor productivity (TFP) shock. Third, the positive bubble and increasing bubble dominate in promoting the output and investment of the real economy. [ABSTRACT FROM AUTHOR]

Abstract: Following the broad outlines of , we develop a simple non-convex Keynesian macroeconomic model. It has two stable short-run equilibria, achieved by expectations adjustment; shifting curves in the medium run can cause a jump from high employment equilibrium to stagnation. Such a leap can arise from endogenous declines in the demand/debt ratio occurring after persistent periods of high employment (cf. ). We thus provide an explanation of the U.S. economy “falling off a cliff” – perhaps as seen during 2007–2009 – as being due to the “Great Moderation” of 1985–2006; this interpretation is made more plausible by reference to empirical data. The model also allows for milder fluctuations. The model''s asymmetries suggest the need for “pump-priming” by policy-makers to allow recovery after a steep recession. We use a synthesis of the rational and adaptive theories of expectation determination. [Copyright &y& Elsevier]

Abstract: This study examines the impact of unemployment on suicide rates in Taiwan and Hong Kong during the period of rising unemployment (1997–2003) and its subsequent decline (2003–2007), with 2003 as the turning point. During these initial years of high unemployment, suicide rates increased markedly in Hong Kong and Taiwan; however, as employment conditions improved, suicide rates fell in Hong Kong but continued to increase in Taiwan. ARMAX time-series models with appropriate time lags were used to assess the impact of unemployment on suicide rates for both periods. It was found that for Taiwan, the unemployment rate was positively related with the suicide rate for both males and females during the period of high unemployment, whereas a negative relationship was observed as the rate of unemployment decreased. On the other hand, the reduction in suicide rates since 2003 was not statistically significantly related to the improvement of employment conditions for Hong Kong; whereas the suicide rate in Taiwan still remained at a high level due to the increasing number of charcoal burning suicide deaths despite improvements in employment conditions. In conclusion, lower unemployment was not necessarily associated with lower suicide rates. Exogenous factors other than economic ones have been suggested to be important for understanding differences in suicide patterns in Hong Kong and Taiwan. The impact of employment conditions on suicide across different countries deserves further investigation. [Copyright &y& Elsevier]

Abstract: This paper proposes a simple prototype model that describes the complex dynamics of a sophisticated monetary economy. The interaction between the current and intertemporal financial constraints on economic units brings about irregular fluctuations at both micro and macro levels. We use qualitative dynamic analysis and numerical simulations to investigate the interaction between financial fragility, modeled in terms of structural instability, and dynamically unstable financial fluctuations. The model, suggested recently by one of the authors, is here reformulated in more operational terms and extended in a number of new directions. [Copyright &y& Elsevier]

Abstract: In this paper, we reconstruct the complex itinerary towards the solution of a conceptual and mathematical problem, how to obtain growth and fluctuations in a framework where structural change is an endogenous, though intermittent, phenomenon and irregularity a natural dynamic property. This has been Goodwin''s life-long research program, driven by the effort of marrying Poincaré''s qualitative approach to dynamical systems with the earliest (and some of the later) attempts to formalise economic structure as a set of interacting economic units, i.e. the cells of the modern cellular dynamics. This eventually led him to computational dynamics. Our interpretation integrates the more conventional one that emphasises conceptual connections with the thoughts of Marx, Schumpeter and Keynes. Focussing upon modelling issues of an apparently pure technical nature permits a comparison of Goodwin''s evolving views with those that have emerged more recently in dynamics, e.g. in the real business cycle and endogenous theories of growth. In a brief assessment towards the end of the paper, it is argued that while there is still much to be done along the path he chose, Goodwin left enough indications for us to know in which direction to go. [Copyright &y& Elsevier]