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This paper aims at estimating the impact of Quantitative Easing (QE) implemented by the ECB on external assets and liabilities recorded in the International Investment Position (IIP). Indeed, monetary policy affects the prices of securities and exchange rates, as well as international capital flows. These movements affect the IIP and can trigger important global imbalances and financial stability issues. Our analysis focuses on France. We find that QE affected all the items composing its IIP. Announcements played a stronger role compared to amounts purchased. We also decompose changes in the IIP into flows and valuation effects and show that the latter was the most reactive to the programme. Finally, we quantify the overall effect by establishing counterfactual scenarios in the absence of QE. The strong impact observed initially was rapidly counterbalanced; suggesting an over-adjustment phenomenon at the beginning of the programme.

This study seeks to ascertain whether the Multi-Sectoral Balance of Payments Constrained Growth model is suitable to explain Nigeria's growth experience from 1981 to 2018. The paper explicitly incorporates the effects of intermediate imports and relative prices into the analysis. We employ the autoregressive distributed lag econometric procedure for the analysis. The outcome of the study shows that the Multi-Sectoral Balance of Payments Constrained Growth model correctly predicts Nigeria's growth path. It was found that manufactured export is one of the main determinants of the intermediate import demand function. Considerable reliance on this type of import to produce final exports could reduce the gains from trade, thus adversely affecting the GDP growth of the economy compatible with the BoP constrained growth model in the long run.

We develop a probabilistic approach to measure a country's external debt sustainability. Using data on international investment position and balance of payments from the International Monetary Fund, we estimate a vector autoregressive model for 38 countries (11 developed and 27 developing). Using the estimated parameters, we perform a Monte Carlo simulation to compute the distribution of the capacity to repay for each country. A large portion of the projected distribution to the right of current debt is a warning indicator, signalling the need for devaluation. We provide simulations for each country. One scenario is where the discount factor is lower than 1. According to the literature, this situation should prevail in the medium and long run. A quite different situation is where external sustainability is achieved because of a simulated discount factor of more than 1. Here, interest on debt is lower than GDP growth. This situation is associated with dynamic inefficiency. The results suggest that flight to safety is penalising some developing countries, whilst benefiting some developed countries.

This paper addresses (I) the transition dynamics incompatibility between the BPCM and the Prebisch-Singer hypothesis (PSH) (II) the causes of cyclical volatility in developing countries. In order to discuss these issues, we expand the Dutt (2002) model adding: (a) a productivity gap dynamics in which the south has a catching-up element; (b) a labor market dynamics, by including a wage curve in the relationship between employment rate and economic activity; and (c) a labor supply dynamics that considers the labor transfer issue between traditional and modern sectors. The result is a four dimensional dynamic model that represents a lagged developing economy constrained by its balance of payments. We find that our model converges and generates damped cycles. Fragile economies show an oscillatory decline in terms of trade, reinforcing an uneven development pattern between north and south. Industrialization and higher learning capabilities, however, can change the adjustment to a catching-up scenario.

•The dynamics of the BOP constrained growth model are analyzed.•Future growth is forecasted by means of a long-run component consistent with external equilibrium and a cyclical term.•Whenever the cyclical term, driven by current account deficits, is substantial, it conditions future growth rates.•Our findings are in sharp contrast with the predictions of forward-looking rational expectations models.

The article integrates a baseline Kaleckian model with a balance of payments constrained growth for addressing the interaction among: income distribution, international competitiveness and environmental innovation taking into account the proactive role of environmental policies The crucial link is given by intermediate inputs (raw materials and energy) in the Kaleckian price equation, which impacts on real wages, the wage share, the rate of capital utilization (and hence growth) and international competitiveness (through changes in domestic prices for a given international inflation rate). It is shown that an economy which has higher energy efficiency will attain at the same time a higher wage share and higher growth. Being green not only helps attain a more sustainable growth path, but also a more inclusive one both in the short run and the medium-run. In the long-run, within a balance of payments constraint, the combination of green taxes with an industrial policy aimed at increasing the energy efficiency of production and the diversification of the economy is crucial to raise the wage share and sustain growth.

We study the determinants of sudden stops in capital flows to emerging markets. Using gross international asset and liability flows (from the point of view of domestic residents), we identify three types of situations: countries that do not experience any type of sudden stops; those who experience a sudden stop in inflows (liabilities), but no sudden stop in their net financial account of the balance of payments; and countries who suffer a sudden stop in inflows and in their net financial account. Based on these three events, we estimate a multinomial logit model and obtain two important results. We find that developed countries have about the same probability of experiencing sudden stops in gross capital inflows as emerging economies. Moreover, the probability of experiencing a sudden stop in gross inflows that winds up becoming a sudden stop in the financial account is affected by the behavior of a country's international assets: countries whose agents possess assets abroad tend to repatriate them during periods of sudden stops in inflows, while the economies of countries whose agents do not possess foreign assets are much more sensitive to the behavior of foreign investors: a sudden stop in inflows can have very adverse effects on output and employment.

Applied analysis aimed at assessing which value of the NIIP is appropriate for a given country is relatively scarce, and the few existing papers on the topic estimate one-size-fits-all NIIP benchmarks (e.g., Catao and Milesi-Ferretti, 2014). This paper estimates country-specific NIIP benchmarks on a sample of 65 advanced and emerging economies according to two different criteria: consistency with economic fundamentals (NIIP norms, obtained as cumulated current account norms) and prudence against the risk of external crises (NIIP prudential thresholds, obtained as the threshold of the NIIP variable interacted with relative income per capita that maximises signal power in predicting external crises). The median for the country-specific NIIP norms is around −17% of GDP, while the median for prudential threshold is about −44%. The two benchmarks are negatively correlated across countries, highlighting a tension between factors underpinning the scope for external borrowing and debt tolerance. Gaps between actual and NIIP benchmarks are highly persistent, but help predicting subsequent medium-term NIIP changes better than the NIIP level, thus confirming the usefulness of country-specific reference values. The adjustment of the NIIP in response to NIIP gaps is asymmetric, with a significant adjustment limited to negative gaps, with the exception of countries with a positive net position in foreign currency.

Financial crises pose unique challenges for forecast accuracy. Using the IMF’s Monitoring of Fund Arrangements (MONA) database, we conduct the most comprehensive evaluation of IMF forecasts to date for countries in times of crises. We examine 29 macroeconomic variables in terms of bias, efficiency, and information content to find that IMF forecasts add substantial informational value, as they consistently outperform naive forecast approaches. However, we also document that there is room for improvement: two-thirds of the key macroeconomic variables that we examine are forecast inefficiently, and six variables (growth of nominal GDP, public investment, private investment, the current account, net transfers, and government expenditures) exhibit significant forecast biases. The forecasts for low-income countries are the main drivers of forecast biases and inefficiency, perhaps reflecting larger shocks and lower data quality. When we decompose the forecast errors into their sources, we find that forecast errors for private consumption growth are the key contributor to GDP growth forecast errors. Similarly, forecast errors for non-interest expenditure growth and tax revenue growth are crucial determinants of the forecast errors in the growth of fiscal budgets. Forecast errors for balance of payments growth are influenced significantly by forecast errors in goods import growth. The results highlight which macroeconomic aggregates require further attention in future forecast models for countries in crises.

Since the middle of the last century, the world has seen the emergence of Sovereign Wealth Funds (SWF). According to the Sovereign Wealth Funds Institute (2012), these legal entities can be defined as “a state-owned investment fund or entity that is commonly established from balance of payments surpluses, official foreign currency operations, the proceeds of privatizations, governmental transfer payments, fiscal surpluses, and/or receipts resulting from resource exports.” The SWFs are governed by the Santiago Principles, a document constructed by the IMF's International Working Group of Sovereign Wealth Funds (IWG) to recommend and to standardize the applications and investments of this kind of fund. SWFs are created in order to meet macroeconomic demands, using a series of investments strategies, which including foreign assets acquisitions. For instance, the Norwegian Government Pension Fund is one of the world's model SWFs. Its revenue is obtained from petroleum exploitation and is considered a savings fund, although part of the financial return can be applied in budget deficit. Following this example, Brazil created the Pre-Salt Social Fund to invest pre-salt petroleum revenues, and consists of a savings fund, according to the IMF classification. The present article focuses on the analysis and comparison of the legal structures of the Norwegian Government Pension Fund (GPF) and the Brazilian Pre-Salt Social Fund (SF), aiming to understand if the Brazilian fund applies the Norwegian standards.

Some countries in the world aim to increase biofuel production and consumption as a way to decarbonize the transport sector and transit to a low carbon economy. Besides their potential environmental advantages compared to conventional fuels, biofuels may also bring other socioeconomic benefits. Using the Input-Output Analysis, this study has looked at the socio-economic impacts associated to the biofuels targets established in Uruguay by estimating the associated gross and net effects on production of goods and services; value added and job creation categorized into rural and non-rural. Next, the impacts on the Uruguay's balance of payments, energy security and tax revenues have been estimated and added to the previous effects. When it comes to value added, bioethanol from sugarcane ranks first among the considered biofuels with 431 million US$2018, followed by bioethanol from sorghum and biodiesel. As to job creation, around 34,000 full time new jobs are created as a result of sugarcane bioethanol, twice as much as from biodiesel. Of these figures, rural employment share represents a 13% and 6% in the case of sugarcane bioethanol and biodiesel respectively. On concluding result from this study is that while biofuel production costs in Uruguay are higher than fossil fuel, when the economic effects on tax revenues and balance of payments are added to the previous socio-economic impacts, the total benefits from biofuels compensate the extra costs. However, this situation may be altered in the future as a result of changes in biofuel production costs, fiscal policies as well as import and export prices variations.

Target2 (T2) balances in the Eurozone are again in a divergent trend after the pandemic shock. The recent financial literature seems to have reached a consensus about the need to characterize such phenomena under specific monetary policy configurations variable in time. T2 balances can be decomposed by using the balance of payments (BoP) identities. Indeed, proving a strong causality link from data that have to fulfill an accounting identity can be challenging, since the closer the data are to an accounting identity, the less information on causal relation can be inferred from econometric techniques. Nevertheless we believe that useful information can be extracted from accounting correspondences. In this perspective, both long-term and short-term BoP decompositions are performed for Italy, Germany and France under different regimes of monetary policies in the Euro Area, showing the uttermost importance of current account imbalances and interbank credit flows in determining the behavior of T2 net balances.

The rate of fluctuation of Exchange rate in Uganda has been on a rise and this prompted research (study) to examine the major determinants and also analyse the real effective Exchange rate. The study focused on four specific objectives which are; to examine the influence of Balance of Payment on exchange rate in Uganda for the period 1990-2019, to determine the effect of Money supply on exchange rate in Uganda between 1990 and 2019, to analyze the influence of Debt service on external debt on the exchange rates in Uganda between 1990-2019, to measure the impact of Terms of Trade on exchange rate in Uganda for the period 1990-2019 in Uganda. The study involved the use of a quantitative research approach using secondary data for the period 1990-2019. Several diagnostic tests were conducted to determine the econometric properties of the variables such as Multicollinearity, Autocorrelation, heteroscedasticity, and stationarity. Tests on heteroscedasticity indicated that there was constant variance in the series since the P-value 0.2451 > 0.05 thereby concluding that there is Homoscedasticity, while the Autocorrelation test provided evidence that there was no autocorrelation given the d-statistic of 1.7004 being approximated to 2. Tests on stationarity indicated that there was stationarity in the variables Balance of Payment while Exchange rate, Debt, Terms of Trade and Money Supply were nonstationary at level which were later differenced once to make them stationary. In addition, the Multicollinearity test indicated that there was no Multicollinearity in the data set given the VIF results being all less than 5. In order to establish the relationship between the Exchange rate and the independent variables, a multiple regression model was fitted for the stationary variables and the results indicate that there was a positive significant relationship between Exchange rate and Money Supply with P-value (0.0000

Profit shifting by multinational enterprises—through manipulation of transfer prices of related-party trade, intragroup lending, or the location of intangibles—affects international flows, raising the question of its impact on the current account and external balances. This paper approaches this question theoretically and empirically. In theory, profit shifting distorts the components of the current account and bilateral current account balances but leaves a country’s aggregate net balance unaffected. There is, however, a real effect on current account balances, because taxes are paid to different jurisdictions. Moreover—in practice—the measured current account could change, because not all transactions are equally easy to track. Our panel empirical results broadly confirm that the current account balance tends to be, on average, unaffected by profit shifting, but taking heterogeneity into account we find that both the real tax effect and mismeasurement strengthen income balances—and thus the current account—in investment hubs.

In Q2 2021, the current account balance amounted to $19.9 bn, vs $1.6 bn in Q2 of last year. Russia’s trade balance demonstrated a significant increase relative to Q2 2020. Net capital outflow from the private sector declined on the same period of last year, while the global economy was recovering, and the Bank of Russia was tightening its monetary policy. The regulator continued its foreign currency purchases within the framework of the fiscal rule, which produced an increase in reserve assets by $8.3 bn in Q2 2021. International reserves increased to $591.7 bn. According to the period-end results of Q2 2021, the ruble exchange rate against the US dollar gained 4.4%, rising to Rb72.4.

Kenya’s current account for quite over a long time has experienced deterioration and hence reflecting a deficit. This worsening in the current account balance is as a result of high growth in import merchandise bill relative to export merchandise hence the import-export gap has continued to worsen, the high continuous rise of inflation rate and overall slow economic growth in Kenya. It is however despite the deterioration Kenya marked some significant surpluses the current accounts within the period for some years that is 1977 and 2003. In 1977 the surplus was attributed to the coffee boom and in 2003 it was attributed to decline in imports as receipts from exports increased. The performance of BOP is influenced by a number of factors which among others include; trade balance, terms of trade, competitiveness, domestic money supply, exchange rate, fiscal deficit, economic growth rate, domestic capital formation, inflation rate, net foreign direct investment, capital market, remittances and loans.

New France, like most European colonies in the New World, suffered from a persistent shortage of metal coins. As Quebec could only legally import from France, their standards of living were constrained by their ability to export a few primary products (mostly fur, cod, timber and wheat). Mercantilist restrictions and underdeveloped financial markets limited the ability to use the capital account to import coins and tightened the balance of payments constraint. The introduction of playing card money in New France in 1685, the first use of paper money in the West, provided a means of relaxing this constraint. It produced a substitute domestic money which allowed scarce metal coins to be used to purchase imports. The balance-of-payments constrained growth models that grew out of Thirlwall’s Law is applied to this experience, with discussions of the export constraints of Quebec’s reliance on a few primary exports (with furs being the most dominant one) with inelastic demand and facing the vagaries of changing tastes in Europe.

The price-specie-flow mechanism (PSFM) is a theory of the adjustment of the balance of trade and gold flows in response to deviations in relative price levels across countries under a gold standard. The PSFM is central to quantity-theoretic discussions of economic fluctuations under a gold standard as well as analysis of whether central banks followed "the rules of the game" of the gold standard. The PSFM is often the standard working assumption when it comes to gold standard adjustment. However, at least since Adam Smith there has been an alternative to the PSFM that has come to be known as the monetary approach to the balance of payments. The distinction between the PSFM and the monetary approach have important implications for both quantity-theoretic explanations of economic fluctuations as well as the interpretation of the so-called "rules of the game." In this paper, we outline and test the empirical predictions of each theory to determine which is more accurate. The evidence is mixed, but largely favors the monetary approach to the balance of payments.

Italian Abstract: Il passaggio al 6° manuale della bilancia dei pagamenti (BPM6) ha implicato una revisione significativa degli standard internazionali per la compilazione delle statistiche sull’estero (flussi e stock); come da accordi internazionali, la ricostruzione e stata effettuata a partire dal 1995 per la bilancia dei pagamenti e da fine 1998 per la posizione patrimoniale sull’estero. Per entrambe il presente lavoro, di natura esclusivamente statistica, estende la revisione all’indietro fino al 1970, ricorrendo a stime ad hoc ove necessario. In linea di massima la ricostruzione si e basata sul criterio di tenere fermi i saldi complessivi, ossia di non alterare significativamente la storia passata. Anche se l’adeguamento agli standard previsti dal BPM6 non e sempre stato possibile in termini rigorosi, la possibilita di disporre di serie storiche temporalmente piu estese amplia comunque la possibilita di analisi di lungo periodo dei fenomeni, reali e finanziari, riguardanti i rapporti con l’estero dell’Italia. English Abstract: The changeover to the sixth Balance of Payments Manual (BPM6) has meant a significant revision of the international standards for compiling external statistics (flows and stocks). In accordance with international agreements, the reconstruction was carried out starting from 1995 for the balance of payments and from the end of 1998 for the international investment position. This statistical work extends the revision back to 1970 for both of them, using ad hoc estimates when necessary. By and large, the reconstruction was based on the criterion of keeping overall balances unchanged, i.e. of not significantly altering past history. Although compliance with BPM6 standards has not always been strictly possible, the possibility of having longer time series nonetheless widens the scope for the long-term analysis of real and financial phenomena concerning Italy’s external economic relations.

International economic relation and trade are occurred in different currency system. The currency of one country may not be tendered in another country. So, the natural person or organization requires buying the currency of target country. In fact it is the process of converting one currency into another currency, which makes globalization and international trade possible. Buying and selling of currency is made in spot market, forward market, futures market, swap market, and option market. Additionally, change in real price, structural change, speculation, inflation, interest rate, public debt, and status of terms of trade make effect in equilibrium position of exchange rate. Yet, demand and supply of the currency determine appreciation and depreciation of currency. Policy exchange rate is accepted as fixed rate, floating rate, crawling band, crawling peg, conventional fixed peg arrangement, pegged exchange rate within horizontal band peg, currency board, dollarization and no separate legal tender. Earlier mint par theory was universally accepted. However, in contemporary time, balance of payment theory and purchasing power parity theory are accepted as theories of foreign exchange. Market transaction is made through hedging, speculation, and arbitrage etc. Exchange control is made through unilateral method and bilateral method. Unilateral method includes bank rate policy, import and export policy, exchange equalization fund, exchange pegging, multiple exchange rates, rationing of foreign exchange, and blocked account whereas bilateral method includes clearing agreement, payment agreement, installment agreement, differed payment agreement, and compensation agreement etc as per necessity. Nepal has accepted fixed peg exchange rate regime with Indian currency and flexible exchange rate regime with rest of the currencies.

Balance of payment crises, characterized by Sudden Stops, are not a phenomenon exclusive to emerging economies. This paper identifies 16 and 50 crises in advanced and emerging economies, respectively. Further, decomposing the Financial Account uncovers important differences between both groups of economies in the Foreign Direct Investment (FDI) flows: the average net FDI in advanced economies is close to zero and in emerging economies is negative, and during Sudden Stop episodes, net FDI in emerging economies shows large contractions while advanced economies flows do not move at all. To quantify the FDI’s channel effect on the dynamics of a crisis episode we develop a model with incomplete markets and an endogenous collateral constraint that generates endogenous Sudden Stops. The results from the model suggest that an emerging economy that increases the outflow FDI and eliminates the expropriation risk would reduce the long-run probability of a Sudden Stop from 2.9 to 1.3 percent.

The impact of terms of trade on economic growth in any country cannot be underestimated since it affects the external balance of payments and have direct impact on the overall economy. This paper investigates the effect of terms of trade on economic growth of Namibia using annual time series data from 1989 to 2019. The study applies ARDL model bound testing approach determine the long-run association between the variables. The results show the variables are co-integrated i.e. there is long run equilibrium between the terms of trade and economic growth. Further, the results of the coefficient of ECMs model is negative and statistically significant which means that generally terms of trade have a short-run relationship with the economic growth of Namibia. Furthermore, Granger Causality indicates that terms of trade do not granger cause economic growth and vice versa. We suggest that economic policies may be applied to depreciate terms of trade which will further enhance the economic growth of Namibia.

The first quarter of 2020 saw the positive Russia’s balance of trade to plunge on the back of contraction of exports value amid plummeting crude oil prices with stabilized imports volumes. Due to the decline in foreign liabilities and growth of assets in foreign banks and enterprises, net capital outflow was observed in the private sector. In the contexts of negative external shocks, ruble’s exchange rate against dollar plunged by more than 20%.

Monetary Policy and the Balance of Payments are key parameters in a country, in elevating the economy to the next favorable level. Balance of payments can be used as a measurement to understand whether the country in question is in debt to the rest of the world. Proper management of the mentioned parameters though different vital. The aim of this study is to analyze the impact of the monetary expansion on Balance of Payments. Furthermore, in order to identify the impact of monetary expansion on the balance of payment, paper investigates the fluctuation of interest rate, inflation rate and exchange rate on Balance of payment. For this purpose, data from Central Bank of Sri Lanka and world bank were collected for a sample period of twenty-three years from 1995 to 2018. In this regard, qualitative research though different literature sources and simple linear regression technique has been used. The data analyze concluded that there is a negative string relationship among the country's balance of Payment and broad money supply. Furthermore, it was noted that in Sri Lanka interest rate, inflation rate and the exchange rate to have a negative impact on the Balance of payments.

This paper presents the most comprehensive and up-to-date panel data set of invoicing currencies in global trade. It provides data on the shares of exports and imports invoiced in US dollars, euros, and other currencies for more than 100 countries since 1990. The evidence from these data confirms findings from earlier research regarding the globally dominant role of the US dollar in invoicing – despite the comparatively smaller role of the US in global trade – and the overall stability of invoicing currency patterns. But the evidence also points to several novel stylised facts. First, both the US dollar and the euro have been increasingly used for invoicing even as the share of global trade accounted for by the US and the euro area has declined. Second, the euro is used as a vehicle currency in parts of Africa, and some European countries have seen significant shifts toward euro invoicing. And third, as suggested by the dominant currency paradigm, countries invoicing more in US dollars (euros) tend to experience greater US dollar (euro) exchange rate pass-through to their import prices; also, their trade volumes are more sensitive to fluctuations in these exchange rates.

Target2 (T2) balances in the Eurozone are again in a divergent trend after the pandemic shock. The recent financial literature seems to have reached a consensus about the need to characterize such phenomena under specific monetary policy configurations variable in time. T2 balances can be decomposed by using the balance of payments (BoP) identities. Indeed, proving a strong causality link from data that have to fulfill an accounting identity can be challenging, since the closer the data are to an accounting identity, the less information on causal relation can be inferred from econometric techniques. Nevertheless we believe that useful information can be extracted from the analysis of accounting correspondences. In this perspective, both long-term and short-term BoP decompositions are performed for Italy and Germany under different regimes of monetary policies in the Euro Area.

Recent research finds that benchmark-driven investment has increased markedly since the global financial crisis, a phenomenon that has arguably led to more volatile capital flows and increased vulnerability for emerging markets. We investigate how far this is true by examining the contribution of benchmark-driven investment to the volatility of foreign portfolio flows of emerging markets, focusing on equity flows, and the sensitivity of benchmark-driven investment to factors that tend to have an influence on the global economy or emerging markets. Interestingly, we find that benchmark-driven-investment-related flows are generally less volatile, thus having an effect of reducing, rather than increasing, the overall volatility of foreign portfolio flows. However, our results also show that they are more interconnected with each other due possibly to their higher sensitivity to global and emerging-market-related factors, supporting the notion that their rapid growth could make emerging markets more vulnerable in times of extreme market adversity, as sudden and simultaneous withdrawal of portfolio flows would potentially expose them to greater risks of external financing or balance of payment difficulties.

In 2019, Russia’s trade surplus shrank significantly as result of a declining value volume of exports which, in its turn, was pushed down by sliding prices of oil and increasing imports. Meanwhile, net capital outflow that had been observed in 2018 gave way to net capital inflow, to the value of $ f 1.8bn, secured by an increase in the public sector’s foreign liabilities and a slower-than-in-2018 rate of growth displayed by those of the private sector. International reserves by the year end surged above $ 554bn, thus hitting their record high of the entire period after the global financial crisis. Due to the application of the budgetary rule (which made the ruble less dependent on the oil price movement pattern) coupled with the financial account surplus, the ruble’s exchange rate against foreign currencies became stronger.

This paper provides an analytical overview of the most widely used capital flow datasets. The paper is written as a guide for academics who embark on empirical research projects and for policymakers who need timely information on capital flow developments to inform their decisions. We address common misconceptions about capital flow data and discuss differences between high-frequency proxies for portfolio flows. In a nowcasting “horse race” we show that high-frequency proxies have significant predictive content for portfolio flows from the balance of payments (BoP). We also construct a new dataset for academic use, consisting of monthly portfolio flows broadly consistent with BoP data.

This survey begins with an overview of the WTO/GATT system, which has been the heart of the rules-based, multilateral trading regime for over 70 years. It then devotes considerable attention to the WTO’s dispute settlement system and how its has functioned to date. The survey examines the principles and rules contained in the WTO agreements – trade liberalization; non-discrimination (focusing on GATT Articles I (most-favored-nation treatment) and III (national treatment); fair trade (focusing on the rules relating to dumping, subsidies and intellectual property); transparency; and special treatment for developing countries. The survey then examines the principal exceptions to the rules, including those for safeguards, national security and balance of payments. Special attention is given to the exception for public policy (morals, health, conservation), including consideration of the TBT and SPS Agreements. The survey closes with thoughts on the WTO’s current twin crises: the failure of its negotiating function and the collapse of the Appellate Body.

In Q2 2020, Russia’s positive trade balance plunged due to a decrease in quantum shipments and export prices on commodities exported by Russia. In April-June, net outflow of capital was observed on the back of priority growth of foreign financial assets of non-oil and gas sector, as well as contraction of banks’ foreign liabilities. Measures adopted by the monetary authorities in spring 2020 aimed at maintaining financial sustainability translated into keeping the ruble’s exchange rate close to equilibrium values. As a result, in Q2 2020 the exchange rate averaged Rb72 per USD.

This paper analyses the main drivers of Italian service exports using firm-level data. A gravity equation, augmented with firm characteristics and FDI variables, is estimated using a panel of Italian exporters constructed by merging two datasets, the first on international trade in services and the second on FDI relationships, both used to compile the Italian balance of payments. After presenting a formal justification for the presence of FDI variables in the gravity equation, the model is estimated using a panel composed of non-financial firms exporting services other than travel, transport and processing in the period from 2013 to 2018. The econometric analysis shows that FDI is, among the standard drivers of exports (firm size and productivity, foreign demand, trade costs), a significant variable that positively affects Italian firms’ exports of services, pointing to complementarity rather than to substitution. This evidence suggests that a significant component of trade in services includes intra-group transactions.

In Q3 2020, Russia’s favorable trade balance plunged compared to the same period last year due to a contraction in exports under a relatively stable volume of export deliveries. Nevertheless, despite a combination of the most adverse factors, current account balance remained favorable. Having said that, in July-September there was net outflow of capital that was due primarily by a reduction in financial liabilities before non-residents of other sectors of economy in the wake of raising geopolitical risks and decline in the interest of investors towards assets of developing countries.As a result, in Q3 2020, ruble’s exchange rate dropped by 14% and from the start of the year – by 29%.

Developing countries experience balance of payments deficits, dwindling foreign exchange reserves and declining national incomes. Their ability to finance development is therefore affected. To fill such gaps, countries turn to foreign direct investment (FDI). While FDI is viewed as both bad and good, this article presents an overview presentation of FDI theory and examines how the Maldives as an FDI host has fared in recent years.

In recent years, the international crude oil price has become increasingly volatile. It influences the exchange rate changes of relevant countries through economic growth, price level, international balance of payments, and other channels. Such exchange rate fluctuations have caused certain risks for the development of China’s “Belt and Road” Initiative. This article analyzes the impact of oil price changes on the exchange rates of countries. Because the fluctuation of oil prices and exchange rates has shown the characteristics of multiple time scales, this study used the empirical mode decomposition (EMD) method to obtain the long-cycle and short-cycle sequences of oil prices and the exchange rates of various countries, then analyzed the impact of oil price changes on exchange rates under different time scales. The results showed that oil price fluctuations have an impact on the exchange rate changes of countries along the “Belt and Road” under different time scales. However, this effect is asymmetric between oil-producing countries and non-oil-producing countries, and the transmission path of oil prices to exchange rates varies from cycle to cycle.

Negative commodity price shocks can induce balance of payments crises in resource dependent economies. Governments often react by intervening against currency depreciation as, for example, in the case of Papua New Guinea in response to the commodity price shocks of 2014. We develop an original theoretical model to analyze the balance of payments impact of a commodity price shock under alternative exchange rate regimes: a flexible rate regime and a fixed rate regime with foreign exchange rationing. The balance of payments consequences are shown to depend on the elasticity of exports and imports with respect to the exchange rate. For the Papua New Guinea case, we estimate export elasticities for a variety of commodities (gold, silver, copper, oil, coffee, cocoa, copra, copra oil, palm oil, rubber, tea, logs, and marine products) as well as for imports. The results indicate that the Marshall-Lerner condition is satisfied for this resource-rich economy, implying that exchange rate flexibility may be practicable. We implement our calibrated model to conduct a counter-factual simulation and find that with a flexible exchange rate, foreign reserves would have been 20 percent higher three years after the shock than they were under the actual policy of exchange rate stabilization. In light of this, we argue the merits of greater exchange rate flexibility.

Does the current account improve or deteriorate following a monetary policy expansion? We examine this issue theoretically and empirically. We show that a standard open economy DSGE model predicts that the current account response to a monetary policy shock depends on the degree of financial regulation. In particular, financial liberalisation makes it more likely that the current account deteriorates following a monetary expansion. We test this theoretical prediction with a varying coefficient Bayesian panel VAR model, where the coefficients are allowed to vary as a function of the degree of financial, product and labour market regulation on data from 1976Q1-2006Q4 for 19 OECD countries. Our empirical results support the theory. We therefore conclude that following a monetary policy expansion, the current account is more likely to go into deficit in countries with more liberalised financial markets.

This paper examines empirically the causes of the 2010 Eurozone debt crisis. We use a battery of econometric models with quarterly data from 2004 to 2014 to identify domestic and external nominal shocks and their transmission mechanisms through impulse response functions and granger causality tests derived from a structural VAR (SVAR) specification. It is shown that shocks to Germany’s macroeconomic fundamentals have a significant impact on Greece’s inflation rates, industrial production, and interest rates. Our empirical results indicate that the root cause of the Greek debt crisis emanates from imbalances in its balance of payment, mainly in its current account, losses in competitiveness vis-a-vis Germany, and the lack of nominal adjustment measures through monetary policy due to Greece’s membership in the Eurozone. We argue, in the absence of nominal adjustment mechanisms, Greece will probably have to go through prolonged deflationary episodes in order to enhance its competitiveness, produce a positive current account, reduce its budget deficits and public debt, and reverse capital outflows. We also argue, in the absence of an effective monetary policy, countries members in a monetary union running large budget and current account deficits maybe more prone to a Greek debt type crisis.

Macroeconomic performances are extremely affected by unexpected oil price shocks in oil-exporting countries. Monetary rules rarely work properly in this environment. Therefore, determining the appropriate rules to reduce macroeconomic volatilities is essential. This study mainly aims to evaluate the oil price shock on macroeconomic variables through the lens of the new Keynesian dynamic stochastic general equilibrium (NK-DSGE) model for oil-exporting economies. The proposed model contains various components including households, firms, the central bank, government, external, and oil sectors as well as some real and nominal frictions and calibrates for an oil-exporting economy, Iran. We have designed an account called a consolidated account by aggregating the government budget, the balance of payments account, and entering the foreign currency. Three novel scenarios have also been developed by combining various rules including exchange rate regimes, inflation targeting, and the oil export revenues in our study. The findings imply that oil price shocks coupled with the rise in oil revenues result in a broadening of the monetary base, and eventually leads to liquidity growth and higher inflation rates. Moreover, such an oil price shock leads to a depreciation in the real exchange rate and a decline in economic competitiveness in all scenarios. Therefore, monetary rules-regardless of the exchange rate regime would lead to a lack of competitiveness with varying degrees of intensity. Our findings suggest that the sovereign wealth funds (SWFs) could be utilized to cushion the economy from external oil price shocks in oil-exporting countries.

This paper explores the dynamic relationship between the current account deficits and fiscal deficits in India. This paper has used the very much familiar Enders and Siklos (2001) and Hansen and Seo (2002) regime-switching threshold cointegration with an asymmetric error correction approach and non-linear ARDL model developed by Shin et al. (2014) to examine the non-linearity, short and long-run asymmetry, and asymmetrical adjustment between the current account deficits and fiscal deficits in India. Initial results validate the asymmetric adjustment between current account deficits and fiscal deficits, indicating the twin divergence hypothesis. However, the posterior sensitivity analysis suggests the twin deficit hypothesis, which seems more robust. Moreover, empirical results reveal that the interaction between these deficits is asymmetrically related, and fiscal deficits' upward and downward movement substantially affect India's current account deficits in the short-run and long run. The asymmetrical lead-lag relationship between current account deficits and fiscal deficits harms the current account sustainability, balance of payments, exchange rate, bond, and financial markets. Therefore, the study argues in its policy solution that the central bank of India must try to overcome the prolonged current account deficits and maintain stability in the domestic currency.

Green evolution of enterprises is a significant way to realize society's sustainable development. Although this concept is generally accepted, the attitude of stakeholders is not positive. For example, some countries have different views on the question of whether to adopt relevant policies in order to promote the green evolution of enterprises. In this study, this issue is described as an exploration of the differences between free-market competition and policy intervention. In addition, a life cycle model of competition between green and non-green products is constructed by drawing upon game theory and Hotelling's model. This study provides reasonable suggestions for relevant policy formulation. The results show that, first, policy interventions help accelerate the green evolution of firms, but consumers bear the necessary costs. Second, green firms have advantages in terms of price, sales volume, and revenue under policy intervention, when compared with non-green firms, which have disadvantages that are more significant under policy intervention. In addition, free-market competition can create more cumulative profits at the expense of the time for firms to evolve green. Finally, a decision-targeting mechanism is designed on the basis of governmental balance of payments that considers the policy-planning period and provides specific decision-making references for policymakers.

Countries globally have committed to deploy electric vehicles immensely within the decade. However, these deployments at an early stage come at a huge cost to governments. The high ownership costs of electric vehicles require them to be supported by subsidies, tax exemptions and other incentives – not to mention the costs of installing new charging infrastructure. Several cost-benefit studies have looked into various components, and this present work aims to contribute to the literature by estimating the impact to the country's trade deficit or surplus. While ownership cost parity between electric vehicles and internal combustion vehicles might be farfetched, the modeling results in this study show that electric vehicles can achieve societal cost-benefit parity with internal combustion vehicles within the decade. This finding can provide a strong justification for subsidies and incentives provided to electric vehicles. To conclude, the authors provide some policy implications supporting the local production of electric vehicles.

International tourism plays an increasing role as an engine for economic growth in Ghana, and has enormous potential to enhance the country's balance of payments. The National Tourism Development Plan for 2013–2027 is testament to government recognition of the industry's importance. This paper examines motivations for and obstacles to international tourism in Ghana, based upon the analysis of field data from mixed-format survey questionnaires collected during 2014 in Accra, Kumasi, and Cape Coast, three of Ghana's major tourist destination cities. Tourists are attracted to Ghana's rich offerings in culture and natural environment, including the UNESCO listed Cape Coast Castle, Elmina Castle, Kwame Nkrumah Mausoleum, and Kakum and Mole National Parks. Challenges faced by tourists include the visa acquisition process and mobility within the country, especially with regard to limited public transportation options and deficient highway infrastructure. Based upon these findings, government planners should place a higher emphasis on the quality of the tourist product as articulated by the Ministry of Tourism (2012). Moreover, the national and local tourism authorities, as well as tourism service providers should make a concerted effort to help guide tourist expectations and make them more realistic, especially when it comes to tourists from wealthier countries.

This study builds a multi-sectoral balance-of-payments-constrained growth model that incorporates structural heterogeneity between sectors and countries, such as differences in labor productivity, price competition, shares of exports and imports, and the quality of commodities. The model in the current paper generates more comprehensive results than those presented by Thirlwall (1979) , Blecker (1998) , and Araujo and Lima (2007) , even though it contains their properties and reproduces their implications. Furthermore, compared with these existing works, the current model sheds more light on the relationship between the trade structure, international competition, productivity dynamics, and economic growth. It also shows the differences between industrial and macroeconomic phenomena, by presenting an example that illustrates how changes in nominal wages, the Kaldor–Verdoorn effect, and the degree of market competition in both countries affect economic growth in the home country.

This paper addresses the issue of the assessment of foreign exchange and capital controls in the context of the Southern African Development Community's goal of regional integration. It reviews the pros and cons of current and capital account liberalisation and argues that there is a lack of sufficiently refined de jure measures of capital account openness. A new index for measuring exchange control restrictiveness is created based on data from the International Monetary Fund's Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER) for the 15 SADC member states. This index is unique in that it employs ordinal measures of exchange control restrictions rather than the binary measures used in previous measures. The new index illustrates the considerable range of variation of exchange restrictiveness within SADC, as well as illustrating SADC's relative exchange restrictiveness compared with other countries, inside and outside of Africa. The new index also correlates with several measures of financial development, certain balance of payment items, and some measures of institutional development, which makes it a useful measure for SADC integration. The paper highlights the challenges for SADC monetary union in the sphere of exchange control.

Russia’s central bank adopted a new monetary policy regime in 2018 by raising the key interest rate for the first time since December 2014. After slashing the key interest rate on February 9th and on March 23rd by 0.25 percentage points to 7.5 and 7.25 percent per annum, respectively, the central bank lifted the rate on September 14th by 0.25 percentage points to 7.5 percent per annum, with another hike on December 14th of 0.25 percentage points to 7.75 percent per annum. The transition to a neutral monetary policy regime slowed as far back as in 2017. There were more constraints to interest rate cuts in 2018 that came from new April and August anti-Russia sanctions that spurred capital outflows from the country and depreciation of the Russian ruble, a VAT hike decision scheduled for 2019, a late-year fall in energy prices, and concerns about possible heightening of inflation expectations. The key interest rate hike suggested that the Bank of Russia is committed to bring inflation back down to target in the medium term. For instance, according to a forecast of the central bank, end-of-year inflation for 2019 may reach 5–5.5 percent, and it is not until 2020 that inflation is back to its target.

This paper studies the determinants of repeated use of Fund-supported programs in a large sample covering virtually all General Resources Account (GRA) arrangements that were approved between 1952 and 2012. Generally, the revolving nature of the IMF’s resources calls for the temporary sup-port of member countries to address balance of payments problems while repeated use has often been viewed as program failure. First, using probit models we show that a small number of country-specific variables such as growth, the current account balance, the international reserves position, and the institutional framework play a significant role in explaining repeated use. Second, we discuss the role of IMF-specific and program-specific variables and find evidence that a country’s track record with the Fund is a good predictor of repeated use. Finally, we conduct an out-of-sample forecasting exer-cise. While our approach has predictive power for repeated use, exact forecasting remains challenging. From a policy perspective, the results could prove useful to assess the risk IMF programs pose to the revolving nature of the Fund’s financial resources.

The paper summarizes the literature of the explanations of the European debt crisis. We mainly use literature which was published after the financial crisis 2007/08. Many papers were written about the topic, but there is no clear overview about the different EMU critique. This paper tries to fill this gap. The discussions about advantages and disadvantages started at the end of the 1980s, but they intensified during and after the debt crisis. We classified the literature into non-European and European Economic Monetary Union (EMU) critique. Within the non-European literature especially US economists are relevant who referred to the issue of Optimal Currency Area (OCA). Europe did not fulfil the OCA criteria in their view. The European critique can be divided into ordoliberal, Post-Keynesian and heterodox thoughts. Most relevant for politics is still the ordo liberal EMU critique.

Already fragile Turkish-American foreign relations became severely strained when US Pastor Andrew Brunson was indicted on espionage charges in October 2016 and was sentenced to 38 months in prison after a guilty verdict by one of Turkey’s high criminal courts. As a US retaliation, bank executive Mehmet Hakan Atilla (Turkey's state-controlled Halkbank) was arrested in New York in March 2017 and sentenced to 32 months after he was found guilty of helping Iran to evade the US sanctions. These along with the domestic issues fostered a currency crisis in August 2018 (most severe since the 2001 economic crisis), the farfetched implications of the currency and debt crisis caused the economy of Turkey to debilitate and find itself in a severe financial emergency. Since the August rout, the Turkish economy has been on a wild roller-coaster ride. First, all economic indicators recorded their worst levels in more than a decade (since 2003); interest rates in October 2018 skyrocketed, 36% for commercial loans, 28% for housing loans, and as high as 24% for deposits in lira. Second, after central bank (TCMB) has cut 750 basis points in its key policy rate (reduced from 24% to 16.50%), interest rates for commercial loans dropped to below 20%, 16% for housing loans, and as low as 14% for deposits in lira. The events that contributed to the Ottoman Empire’s collapse are strikingly similar to the financial collapse of the Turkish economy at the end of 2018. The Ottoman’s financial problems began with its engagement in the costly Crimean War (1853-56); likewise, Turkey’s gloomy economic situation was contributed by its war affairs alongside the Iraq and Syria borders as well as its costly military operations to eradicate terrorists at home and near borders. The Ottoman borrowing spree in mid-19th century onward turned into an elongated addiction to foreign capital which resulted in Ottoman’s default on its public debt in 1876, and in 1878 at the Congress of Berlin, France and Britain took control of the Ottoman finances by forcing sultan Abdulhamid II to create the Ottoman Public Debt Administration (OPDA) in 1881. Similarly, the increased military spending even though Turkey did not take part in WWII and repeated economic disruptions in the post-WWII era often resulted in balance of payments crises as well as consequent devaluations of the Turkish lira; political turmoil coupled with economic difficulties prompted the military to intervene (coup) in 1960 and this paved the road to Turkey’s first standby agreement with the IMF in 1961.

In the decade 1999-2009, Jordan experienced an impressive growth acceleration, tripling its exports and increasing income per capita by 38%. Since then, a number of external shocks that include the Global Financial Crisis (2008-2009), the Arab Spring (2011), the Syrian Civil War (2011), and the emergence of the Islamic State (2014) have affected Jordan in significant ways and thrown its economy out of balance. Jordan’s debt-to-GDP ratio has ballooned from 55% (2009) to 94% (2018). The economy has continued to grow amidst massive fiscal adjustment and balance of payments constraints, but the large increase in population – by 50% between 2008 and 2017 – driven by massive waves of refugees has resulted in a 12% cumulative loss in income per capita (2010-2017). Moving forward, debt sustainability will require not only continued fiscal consolidation but also faster growth and international support to keep interest payments on the debt contained. We have developed an innovative framework to align Jordan’s growth strategy with its changing factor endowments. The framework incorporates service industries into an Economic Complexity analysis, utilizing the Dun and Bradstreet database, together with an evaluation of the evolution of Jordan’s comparative advantages over time. Combining several tools to identify critical constraints faced by sectors with the greatest potential, we have produced a roadmap with key elements of a strategy for Jordan to return to faster, more sustainable and more inclusive growth that is consistent with its emerging comparative advantages.