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This paper investigates the interdependence between the Vietnamese stock market and other influential equity markets in terms of return linkage and volatility transmission covering the period including pre, during and post the 2008 Global Financial Crisis. A VAR model is utilized to estimate the conditional return linkage among these indices and a GARCH-BEKK model is employed to investigate the volatility transmission. We find evidence of statistically significant correlation, return spillover and volatility linkage between Vietnamese stock market with other leading equity markets of the US, Hong Kong and Japan. Moreover, we find that during the financial crisis, stock markets become more interrelated. [ABSTRACT FROM AUTHOR]

Using a panel fixed effects model for a sample of 121 countries covering 1975–2005, we examine how financial development, financial liberalization and banking crises are related to income inequality. In contrast with most previous work, our results suggest that all finance variables increase income inequality. The level of financial development conditions the impact of financial liberalization on inequality. Also the quality of political institutions conditions the impact of financial liberalization on income inequality, in contrast to the quality of economic institutions. Our main findings are robust for using random effects, cross-country regressions and legal origin as instrument for financial development. [ABSTRACT FROM AUTHOR]

This study assesses the effect of time-dynamic financial globalisation uncertainty on financial development in 53 African countries for the period 2000–2011. The empirical evidence is based on the Generalised Method of Moments with forward orthogonal deviations. The following findings are established. First, financial globalisation uncertainty does not significantly affect money supply, financial system deposits and financial size. Second, the uncertainty increases banking system efficiency, banking system activity and financial system activity. Moreover, the positive effects are consistently driven by above-median uncertainty levels. It follows that uncertainty in foreign capital flows may be a disguised advantage for domestic financial development, especially in dealing with the substantially documented issue of surplus liquidity in African financial institutions. Additionally, the sceptical view in the financial globalisation literature that ‘allocation efficiency’ is only plausible in the absence of uncertainty/instability is not substantiated by the findings. Justifications for the nexuses and policy implications are discussed. [ABSTRACT FROM AUTHOR]

We address the issue of the relevance in the transnational arena of the concept of patriotic vigilance, as expressed by French Minister Arnaud Montebourg in 2014. Firstly, we examine the globalization paradox with its underpinnings in the literature and its illustration through the recent Alstom saga. Secondly, we review the idea of a paradigm shift in world monetary affairs signaled by the recent crisis. Finally, drawing on Kant’s ideas on cosmopolitism, we sketch out an alternative to the globalization paradox. [ABSTRACT FROM AUTHOR]

In recognition of the severe consequences of the recent international financial crisis, the topic of macroprudential policy has elicited considerable research effort. The present study constructs, for 46 economies around the globe, an index of the capacity to deploy macroprudential policies. Building on elements that have been the subject of recent research, we develop an index that aims to represent the essence of what constitutes a macroprudential regime. Specifically, the index quantifies: (1) how existing macroprudential frameworks are organized; and (2) how far a particular jurisdiction is from reaching the goals established by the Group of Twenty (G20) and the Financial Stability Board (FSB). The latter is a benchmark that has not been considered in the burgeoning literature that seeks to quantify the role of macroprudential policies. [ABSTRACT FROM AUTHOR]

We investigate the process of currency internationalisation of the Chinese Renminbi (RMB). Aggregated cross-border data provided by the Society for Worldwide Interbank Financial Telecommunications (SWIFT) allows better measurement of the role played by a currency in trade and settlement. RMB transactions are significant and increasing but remain concentrated in key financial centres. Analysis using an asset pricing framework shows that the footprint of Chinese corporations in international markets has at times been significant, with the size of these transactions prompting many to reassess the likely pace of RMB internationalisation and its usage as an alternate vehicle currency. [ABSTRACT FROM AUTHOR]

We investigate how investors trading in financial and real sectors of a stock market react to IMF announcements during abnormal times, such as a financial crisis. To do so, we examine the impact of IMF-program and negotiation news on financial and real stock sectors in Indonesia, Korea and Thailand during the Asian crisis using time-varying models. The results indicate that IMF actions affect sector returns differently suggesting different wealth effects of IMF programs on investor wealth. [ABSTRACT FROM AUTHOR]

This paper investigates the welfare effects of developed countries with heterogeneous and uncoordinated immigration policies. We build a simple three-country model where two rich countries with different immigration policies receive immigrants from the third developing country. We consider the effects of economic integration in the form of free mobility of native workers and show that under certain conditions, wage gap between two developed countries is crucial whether integration ends in win–win or lose–lose. [ABSTRACT FROM AUTHOR]

Owing to its strong dependence on exports, Germany was among the economies hit hardest by the financial crisis. But unlike almost all other countries, Germany emerged from the crisis quickly and stronger than before. What lies behind this success story, if at all it is one? The commonplace – neoliberal – answer is that Germany's success is the hard-won reward for strict economic management, combining fiscal conservatism and structural reforms of welfare and the labour market. The latter, by reducing labour costs, fostered competitiveness, boosted growth, and increased employment. “Progressive” economists arguing that Germany beggared its Eurozone neighbours by squeezing workers’ wages, share a similar view. However, this particular explanation of Germany's resilience is wrong and unhelpful. Germany's export success cannot be explained in terms of its (labour) cost competitiveness, but is caused by strong non-price competitiveness. This, in turn, is due – much more than is normally recognized – by the remaining distinctly non-neoliberal dimensions of Germany's economic model (including a Keynesian crisis response). German and European policymakers preaching austerity and structural labour-market changes as the model for other Eurozone countries, misunderstand Germany's rebound from crisis, with serious costs to Eurozone populations. [ABSTRACT FROM AUTHOR]

Abstract: We apply unit root tests in a multivariate TAR model with bootstrapping simulations to assess the influence of short-run economic conditions on long-run economic convergence and to extract economic policy implications. We use two different groups of countries whose members share important business cycle characteristics over the period 1953–2010. We show that per capita income convergence is not uniform along the business cycle and our analysis reveals that, apart from growth-led actions and structural reforms to avoid the evolution towards different national stationary states – especially within the euro zone – short-run stabilisation policies are vividly advised to guarantee long-run economic convergence. [Copyright &y& Elsevier]

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Abstract: This paper examines the existence of any relations between globalization and corruption using cross-section data for 127 countries. The estimation results indicate that, under the assumption of a linear model, a positive correlation between corruption and globalization exists, while when linearity is dropped there seems to be no significant effect of globalization on corruption. According to our analysis, linearity is a good approximation only for middle and high income countries. Hence, our main conclusion is that globalization is a powerful weapon against corruption only for middle and high income countries, while for low income countries globalization has no significant impact on corruption. For such countries fighting corruption requires additional global action aiming at the reduction of poverty. [Copyright &y& Elsevier]

Abstract: This paper considers the socio-economic world context in 2009 and is aimed at achieving two goals: on one hand, to carry out an economic quantitative analysis of interdependence of the world markets; on the other hand, to investigate the relationship between economic growth and social well-being. In order to reach the first aim, we use, as a starting point, Wallerstein’s World Systems Theory (1982) presenting a hierarchical but unfixed division of the world in three levels (core, semi-periphery and periphery); then we consider a group of 124 countries and assign each of these country to one of the three areas. The assignment has been realized by looking at the total score achieved by each country, with the addition of the partial scores based on the position occupied in three different rankings which consider three distinct economic indicators each of them has been divided by the population size (real GDP, exports and debt-external). Therefore we proceed by reaching our second goal concerning the examination of the nature of the relationship existing between the level of each country’s participation in the world economy and its social well-being. We have decided to calculate the Physical Quality of Life Index (PQLI) in order to show the level of well-being gained by each country considered. The PQLI was created by M. D. Morris (1979) to satisfy the need of constructing new indexes to overcome the limitations of economic parameters for measuring human development, which were highlighted by the social indicators movement of the 1960s and by very important works produced by Amartya Sen (1985, 1987, 1999). The construction of PQLI for each country has given us the possibility of comparing the results of the first part of our work with those coming from the second part, in order to focus on the relationship between economic growth and well-being. The results obtained have further been underlined by using a selected group of 9 countries reflecting the main trends which characterize the entire group of countries. In conclusion, the findings of this study reveal that the relationship between a high level of economic growth and an advanced degree of social well-being is not necessarily a cause/effect relationship because it may not occur in consequence of historical, cultural, social and/or political contingencies. [Copyright &y& Elsevier]

Abstract: Using the Standardized World Income Inequality Database, we examine if the KOF Index of Globalization and the Economic Freedom Index of the Fraser institute are related to within-country income inequality using panel data covering around 80 countries 1970–2005. Freedom to trade internationally is robustly related to inequality, also when adding several control variables and controlling for potential endogeneity using GMM. Social globalization and deregulation is also linked to inequality. Reforms towards economic freedom seem to increase inequality mainly in rich countries, and social globalization is more important in less developed countries. Monetary reforms, legal reforms and political globalization do not increase inequality. [ABSTRACT FROM AUTHOR]

Vito Tanzi [Tanzi, V., 2008. The future of fiscal federalism. European Journal of Political Economy 24, 705-712] makes a case for global government. This comment reconsiders the merits of global government as advocated by Tanzi. [Copyright &y& Elsevier]

Abstract: While a number of crises in emerging markets generated widespread contagion in financial markets during the 1990s, more recent crises (notably, in Argentina) have been mostly contained within national borders. This has led some observers to wonder whether contagion might have become a feature of the past, with financial markets now better discriminating between emerging countries with good and bad fundamentals. Available data suggest that the main channels that contribute to transmitting financial crises across countries are – if anything – even stronger today than in the 1990s. Moreover, anticipation by international investors may help to explain the near-absence of contagion in the context of the Argentine crisis. This paper argues that a prudent working assumption is that financial contagion has not vanished. [Copyright &y& Elsevier]

Abstract: Which variables determine whether a country chooses an open or protected market? It has been argued that economic downturn leads to a higher propensity for protectionism. We find for seven Latin American countries in the second half of the 20th century that declining GDP motivated the opening wave, especially during the 1980s. Moreover, inequality could play a role, either in favor of “opening”, as Stolper–Samuelson models would predict, or in favor of closing, as recent empirical studies found that open periods were associated with higher inequality. Using anthropometric indicators, we find that inequality in general tended to motivate “closing”, whereas inequality did not stimulate opening. [Copyright &y& Elsevier]

This paper offers an empirical evaluation of the economic effects of the European Structural and Cohesion aids received by Spain in the period 1989 through 2006 amounting to a total of almost €100 billion at 1999 prices. To that end, we use the HERMIN-Spain model. Our results suggest that these EU packages have contributed significantly to Spanish economic growth having increased the levels of income and promoting real convergence with the most advanced economies of the Union. The successive aid programmes produced an average increase of almost 0.4 percentage points in the real annual growth rate of the Spanish economy with respect to the situation that would have ensued without the European grants. This translates into an average increase in per capita income of €638 each year (at 1999 prices) over the entire period, and of €1027 per capita if we refer to the period 2000 through 2006. Without the structural aids, in 2006, the Spanish per capita income index relative to the average for EU-15 would be, ceteris paribus, almost 6 percentage points lower. The paper ends with a simulation of the likely consequences due to the reduction in structural and cohesion grants suffered by many Spanish regions that will cease to belong to the Objective 1 club after 2007 as a result of their natural or statistical convergence. [Copyright &y& Elsevier]

Abstract: The conjecture that democracy discourages foreign direct investment (FDI) has been widely refuted in empirical studies. However, we find support of this view. We distinguish between civil and political liberties and propose that multinational firms tend to invest in countries with low civil but with high political liberties. We show that the negative relationship between civil liberties and FDI is hump-shaped. A threshold level of civil liberties exists, below which repression of civil liberties is associated with more FDI. The results are explained by different economic motives for FDI in different groups of countries. [Copyright &y& Elsevier]

Abstract: During the past half century multilateral trade liberalization has reduced tariffs to historically low levels. The Received Theory of trade policy, based solely on terms-of-trade externalities between national governments, offers an explanation that has become the conventional wisdom among international trade theorists. This paper uses a simple version of the Grossman–Helpman Protection-for-Sale Model (a central example of the Received Theory) to examine the consistency of the implications of this theory with actual trade policy. The conclusion is that the theory is dramatically inconsistent with reality. Furthermore, terms-of-trade externalities — the central component of the Received Theory — are the sole cause of this inconsistency. Empirical work seeming to confirm the Protection-for-Sale model actually does not do that, but instead offers support for a generic political-economy view of trade policy. [Copyright &y& Elsevier]

Abstract: There are two opposing views on global imbalances: The “traditional” view, which regards the imbalances as a threat to global economic and financial stability, and the “new paradigm” view, which considers that they are the natural consequence of economic and financial globalization. In terms of their policy implications, the traditional view focuses on monetary and fiscal policy decisions in the United States that need to be urgently reversed to avoid an abrupt unwinding of the imbalances involving a sell-off of dollar assets, a sharp increase in U.S. interest rates, and a hard landing for the global economy. By contrast, the new paradigm view considers that the imbalances will be resolved smoothly through the normal functioning of markets. This paper argues that an abrupt unwinding of imbalances is highly unlikely and advances a number of arguments in support of the new paradigm view. [Copyright &y& Elsevier]

Abstract: In the new millennium two developments have dominated the international economic situation: the persistence of high oil price and, consequently, the worsening of the U.S. trade deficit. In this paper I argue that it is possible to set forth an alternative explanation of U.S. trade deficit mainly considering a possible microeconomics missing link, taking in account the “twin nature” of the U.S. trade deficit and conjecturing that U.S. trade deficit can be explained as the result of a convergence of the Chinese and U.S. long run interest, in order to obtain a less energy intensive long run growth. So, I set forth the idea that the U.S., as the future exporter of the New Clean Technology, is a very attractive feature for China and this is a possible answer to the question: “Why should China continue to accumulate dollar reserves?” [Copyright &y& Elsevier]

Abstract: This paper presents evidence for a common global pattern in the movement of inequality in national structures of pay, over the years 1963 to 1999. We find a worldwide pattern of declining inequality from 1971 until 1980, followed by a long and sharp period of increasing inequality from 1981 through the end of the century. The existence of a global pattern suggests that the study of inequality, long associated with the disparate effects of technology, trade in local or national labor markets and with national policy choices, would be better treated as a branch of a global macroeconomics, associated with the breakdown of Bretton Woods in 1971–73 and with the onset of the global debt crisis in 1981–82. The work is based on data sets developed by the University of Texas Inequality Project. [Copyright &y& Elsevier]

Abstract: In this paper we pursue the work started jointly with R. Goodwin in the 1990s. Goodwin’s later work went very much in the direction of modelling Schumpeter’s insights into structural and technological transformations in the context of disaggregated models while allowing for non-full employment outcomes and macroeconomic cyclical patterns to develop alongside these transformations. In a series of papers we have followed up this work for closed and open economies, drawing out in particular the implications of structural transformations for macro-distributional dynamics and effective demand problems. This has been analysed for advanced and catching-up economies and their interdependencies on the global stage. We shall review our modelling efforts in this respect and trace these back to Goodwin’s life-long preoccupation with synthesising disaggregated (linear) modelling with macro-dynamic analysis. [Copyright &y& Elsevier]

Abstract: Arguments for a positive link between trade and per-capita income are often met with the counterargument that “there is more to life than income”—the implication being that trade improves income, but degrades “quality of life.” In this paper, we attempt to address this counterargument by examining the impact of trade on countries’ social developments as measured by the Human Development Index (HDI)—a composite measure of education, literacy, and income published by the United Nations Development Programme. Utilizing a generalized method of moments (GMM) procedure in a panel data framework, we find that increases in trade are positively associated with future increases in social welfare. [Copyright &y& Elsevier]

Abstract: In this paper I use a large multi-country data set to analyze the determinants of abrupt and large “current account reversals.” FS [Copyright &y& Elsevier]

Abstract: This research will present a new methodology on the study of openness or trade liberalization. This paper is divided into three parts. The first part reviews the literature on analytical methods evaluating openness based on three different approaches focusing on political economy, economic theory, and trade policy. The second part will present a new model of analysis to evaluate the trend, vulnerability and harmonization of openness growth. the relationship between openness growth and income growth is based on a new group of indicators and a new type of graph (see Appendix A, Fig. 1). This new model of analysis is entitled “The Openness Growth Monitoring Model (OGM-Model)”. The OGM-Model is based on a series of steps/elements in its application to study openness growth and income growth: (i) degree of openness by production sectors (Oi); (ii) openness average rate (); (iii) harmonization of openness (HO); (iv) openness growth rate (ΔO); (v) per-capita gross national income (Y), (vi) income growth rate (ΔY); (vii) openness diamond graph (viii); openness/income growth rates (O:Y) Sensitivity Analysis Chart (see Appendix A). The objective of the OGM-Model is to offer policy-makers and researchers new analytical tools to study the impact and trend of openness in the economy of any country from a new perspective. The OGM-Model application is not limited to the study of a special group of countries or regions. It is not constrained by issues about the region or the development stages of any country. OGM-Model, in effect, is a simple and flexible scheme. The third part of this paper shows the results obtained in the application of OGM-Model in different countries and regions. The OGM-Model''s general objective is to measure the evolution, vulnerability, and openness growth of any country. The period of study is from 1995 to 2001 and the reason to select this short period is to observe the rapid changes in openness growth and income growth. [Copyright &y& Elsevier]

Abstract: Fostering the use of renewable energies for power generation is at the heart of the EU''s long term energy policy. Accordingly, the European Commission and literally all member states have set up ambitious installations targets for alternative energy sources. These aims can only be reached by recurring to support systems that help covering the cost disadvantages faced on liberalised electricity markets. Currently, a dichotomy of support models exists: Feed-in tariffs on the one side and green certificates on the other side seem promising tools to foster renewable energies. In this contribution we look closely at the concepts of both models as well as their advantages and disadvantages in terms of ecological effectiveness and economic efficiency. It becomes obvious that in the context of the liberalised power markets and the rush for the harmonisation of the instruments it will depend very much on in-detail regulations whether the installation targets will be met-regardless of the basic choice of model. [Copyright &y& Elsevier]

Abstract: Globalization, defined in economic terms as the phenomenon of increased integration of the world economy, generates strong reactions due to some negative effects of the growth of international trade, the internationalization of industrial production, and unrestricted cross-border capital flows, while the overall mobility of labor remains quite limited. Evidence on the growth of international trade and factor mobility is reviewed and analyzed, and problems affecting developed and developing countries are detected. Policy measures to alleviate some of the dislocations from increased globalization are discussed, and measures recommended to avoid social and political disruptions. [Copyright &y& Elsevier]

Abstract: This paper studies the incentives to sustain and extend a monetary union under alternative assumptions about the extent of market reform within the union and accession countries. Lack of labour mobility, or wage/price flexibility, or fiscal reform, brings costs for both new entrants and in the existing union. Countries will therefore want a union where there has been sufficient reform, and also one where markets are more flexible than their own. But existing members will want the same properties of their partners. Fiscal restrictions may exaggerate this incentive mismatch and could therefore delay the necessary reforms. Similarly, too large costs up front may also delay those reforms. [Copyright &y& Elsevier]

With a homogeneous population and perfect population mobility, as conventionally modeled, the following result is derived for a very general class of economies with interregional interactions: a socially efficient outcome is a Nash equilibrium of the game of decentralized and uncoordinated policy setting. However, if decisions about migration take a longer time to make than decisions of policy changes, that general result no longer holds. With this decision sequence, decentralization may also give an inefficient outcome in situations where the decentralized outcome is efficient in the absence of population mobility. [Copyright &y& Elsevier]

Enlargement of the EU with 10 Central and Eastern European Countries is a major item on the EU’s policy agenda. Assessing the economic consequences of the accession to the internal market is not obvious. This paper provides a new method to quantify the impact of the accession. The assessment is based on a gravity equation, estimated for 16 industries. The estimations exploit the fact that the current EU members already operate in a Single Market since 1992. The estimations provide information on the barriers, at the level of industries, that the Single Market program succeeded to remove. This is used to assess the industry-level impact of enlargement, for the current EU members and for the accession countries.This approach yields different estimates for the impact of accession to the internal market for the different industries and different countries. The impact of accession to the internal market is notably large in Agriculture, Textiles, Trade Services, Transport Equipment, Non-metallic Minerals and Food Processing. Moreover, the aggregate excess trade within the internal market is comparable to what other studies find. The shock of accession to the internal market is plausibly largest for the accession countries. For the current members of the EU the upcoming enlargement likely has the largest impact for Austria, Greece and Germany. [Copyright &y& Elsevier]

This article attempts to apply the flying geese metaphor to emerging foreign direct investment (FDI) patterns in Europe and the Mediterranean. Such a division of labour is at best at a nascent stage, given the overwhelming share of Western Europe in both inward and outward foreign direct investment flows. Because of these imbalances, special attention is to be paid to Central and Eastern Europe’s (CEE) potential, both in the group joining the European Union (EU) in 2004 and the rest of the subregion. For the former, middle-income countries, risks in investment promotion are related to uncertainty brought about by the transition to European Union’s acquis and an eventually too fast increase in production costs. Policy response to that requires a modernisation of both general and specific investment promotion policies, adjusted to the rules of the Union. For the rest of Central and Eastern Europe, the challenge is to adjust to the enlarged European Union and to improve the business and investment environment, in order to capture the foreign direct investment outflows of other European countries searching for optimum labour costs. [Copyright &y& Elsevier]

This paper represents a critique of that aspect of globalization theory that predicts the convergence of national economic institutions and practices toward some single optimal model. This is done through the examination of the innovative practices of Japanese firms and government within the context of US–Japanese competition in high-technology industries. A profile of Japanese innovative competencies is developed through an overview of competition in consumer electronics and personal computing and the emerging wireless Internet industry. The paper argues that different national systems of innovation result in levels of competitiveness that vary according to the technological profile in a given industry, thus undermining one of the basic premises of convergence theory. [Copyright &y& Elsevier]

Given its official objectives, the Treaty of Nice is a failure. This paper applies political–economic reasoning to explain the failure. The starting point is that eastern enlargement can only be successfully completed if the interests of decisive players in present EU countries are respected. The Treaty of Nice is reinterpreted as an opportunity for EU-15 players to protect their interests in an enlarged community and to overcome a commitment problem on the side of the newcomers. After identifying decisive players and their interests, the results of Nice are analysed. It is shown that reweighting of Council votes and seat allocation in the Parliament favour EU-15 interests and partially contradicts official objectives including capability to act. Nice has improved the outlook for a successful enlargement, because legislators with veto power on enlargement are less likely to veto since their interests are better protected. [Copyright &y& Elsevier]

The recent process of globalisation of international markets has managed to sustain the economic growth of the countries that have actively participated in this process. The available empirical evidence suggests, however, that it has been accompanied by a worldwide increase in environmental degradation and economic inequality. Therefore, there is growing concern that these features of the globalisation process may jeopardise its social and environmental sustainability. In order to clarify to what extent the recent process of globalisation may be considered as sustainable, this paper draws some hints from a critical assessment of the literature on the Kuznets curve and the environmental Kuznets curve. In particular it is argued that the optimistic implications of this literature on the sustainability of globalisation are ungranted and that the Kuznets approach is in principle unable to give reliable answers to the questions raised in this work. These curves, however, may be generalised as Kuznets relations whose analysis allows a clarification of a few basic conditions for sustainable globalisation. We conclude that these conditions can be met by implementing a systematic policy strategy aimed at shifting both Kuznets relations downwards. [Copyright &y& Elsevier]