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Several research efforts were dedicated to analysing the effects of foreign direct investment (FDI) inflows on gross domestic product (GDP) and employment in the host economies. The variations in the conclusions signal that other variables influence and moderate the effects of FDI on GDP and employment. Institutional elements receive limited research attention, despite their influence on the host economies. This paper investigates the moderating role of institutional elements in the FDI-host economies on FDI’s effects on GDP and employment with China and India as case studies. The approach utilises three principal methodologies. The first methodology presents an in-depth analysis of China and India, highlighting selected institutional elements with the potential to influence FDI’s effects. The second methodology confirms the presence of a positive correlation between FDI and GDP and a negative correlation between FDI and employment-to-population ratio (EPR) in both China and India. The FDI, GDP purchasing power parity per capita, and EPR datasets are extracted from the World Bank – DataBank World Development Indicators to ensure the consistency of the data. The results of the quantitative analysis validate the qualitative analysis. The qualitative analysis confirms the moderating role of the selected institutional elements with variations in direction and strength. Significant variations in FDI’s effects on GDP and employment are strongly related to variations in the institutions of governance. The institutions of governance include the functionality of the state organs, the efficiency of the legal system and enforcement of the rule of law, and the quality of implementation of FDI-supportive policies. The findings aim to increase the absorption of the positive effects of FDI on GDP and employment in the respective countries. The research is a cornerstone of in-depth future research into the following areas: the role of selective FDI and constructive conditional FDI policies, the functionality of judicial authority controls, and FDI favourable exchange rates and interest rates policies. The novelty and contribution of the paper lie in its comprehensive exploration of the moderating role of institutional elements on the effects of FDI on GDP and employment in host economies, with a specific focus on China and India. The paper contributes significantly to the academic literature on FDI and economic development by emphasising the importance of institutional factors and providing actionable insights for policymakers and researchers. [ABSTRACT FROM AUTHOR]

The development of financial sectors is considered as one of vital determinants of the growth of Ethiopian economy, and for secure equitable distribution of the benefits to the society. However, financial distress has an effect on the sectors. This review was conducted to assess financial distress situation of financial sectors in Ethiopia. The objective is specifically to identify the determinants of financial distress, opportunities of financial sectors, and challenges and constraints of financial distress in Ethiopia. Ethiopia is a developing country with majority of unbanked population. Liquidity, profitability, leverage, firm size, capital adequacy, management efficiency, earning ability, inflation and interest rate are major determinant of financial distress in Ethiopia. Moreover, Ethiopian financial sectors have an opportunity of trade openness, rapid economic growth, unexploited resource, population growth and encouragement of privatization. [ABSTRACT FROM AUTHOR]

The article lists working papers, technical reports and monographs relevant to the real estate business in the United States. These include "Long Run Impact of the Fed Funds Rate on Texas Mortgage Interest Rates," by A. Anari and M. Dotzour, "Refinancing and the U.S. Economy," by A. Anari and M. Dotzour, "Directional Rates of Change Under Spatial Process Models," by S. Banerjee, A.E. Gelfand, H.-J. Kim and C. F. Sirmans, "Homeownership in the Immigrant Population," by G. Borjas and "Service With a Smile (Commercial Leasing)," by L. Bravenec.

This paper examines market entrance and pricing strategies for a remanufacturer with capital constraint and competition from an original equipment manufacturer. In the study, the remanufacturer is divided into two types, namely the H-type and L-type, and is assumed to have access to bank loans and equity financing to ease the capital constraint. With the Nash game, it is found that (i) if remanufacturing is costly, the remanufacturer will choose partial remanufacturing and not enter into the remanufacturing market until the equity financing ratio excesses a certain threshold. (ii) A H-type remanufacturer is more flexible in term of market entrance than a L-type remanufacturer. (iii) The remanufacturer's profit increases first and then decreases in the equity ratio. (iv) Equity ratio and interest rate have opposite effects on the pricing of the new and remanufactured products. Furthermore, with some research extensions, it is exhibited that the results and managerial implications developed in the paper hold well for different financing modes and the random demand setting, and hence are robust to a good extent. [ABSTRACT FROM AUTHOR]

An increasing number of countries have launched their central bank digital currencies (CBDC) in recent years, but the economic impacts of CBDC adoption are underexplored. To empirically assess how CBDC adoption influences regional economic integration, this paper investigates the Greater Bay Area, where China carried out one of its first digital renminbi pilot programs. The Greater Bay Area provides a good example because the growing acceptance of digital renminbi in the area can potentially mitigate transaction costs and risks due to the exchange rate volatility of the Chinese renminbi, Hong Kong dollar, and Macao pataca. CBDC adoption can lead to greater real and financial integrations by facilitating cross-border trade in goods and services. This paper evaluates deviations from uncovered interest rate parity, purchasing power parity, and real interest rate parity across Guangdong, Hong Kong, and Macao based on monthly interest rate and price data from January 2016 to December 2022. The time series have mean values near zero, which validate the parity conditions and indicate high degrees of financial, real, and economic integrations. The Markov regime-switching regression model identifies three regimes: (1) pre-Covid, (2) post-Covid, and (3) post-CBDC. The Covid-19 outbreak brought lower integration and stability, but the launch of the CBDC restored some of the pre-Covid integration and stability. Regimes 1 and 2 are persistent, and transitions from Regime 3 back to Regime 1 are probable. Hence, this study finds evidence that CBDC adoption improves regional economic integration in the short and long run. [ABSTRACT FROM AUTHOR]

This paper studies the issuing pricing character of green bonds with the evidence from China and further analyzes the reason why green factor affects bond issuing pricing by analyzing credit rating's intermediary effect and exploring the mediating of policy incentives and third-party green certification. Furthermore, heterogeneity analysis is conducted to analyze how green factor impacts on bond issuing pricing at different quantiles and for companies in different industries or with different ownership. The findings include: (1) Green factor generally reduces the issuance interest rate of green bonds, though this effect is not significant at the low quantiles or at the early development stage. (2) Green factor's impact on bond issuing pricing occurs partly by improving bond credit rating, fully by this way for companies in the construction industry, but directly for companies in other industries. (3) For non-state-owned companies, green factor has direct effect on bond issuing pricing, but this effect is not significant for state-owned companies. (4) Third-party green certification and incentive policies enhance the reducing effect of green factor on the issuance interest rate. This study provides a theoretical reference for environment-friendly investors, financiers with green projects and the regulators caring about green finance. [ABSTRACT FROM AUTHOR]

Over the last decades, despite the remarkable progress toward the harmonization of banking regulation, interest rate differentials in the Eurozone remain large. In this context, rejecting the law of one price as a measure of financial integration, this paper applies the co-integration technique to investigate the presence of a long-run equilibrium relationship among retail interest rates. The data sample of the co-integration analysis conducted in this paper includes three (3) loan and two (2) deposit interest rates data sets from the 12 original Eurozone member countries for the time period 2000–2020, filling in that way the gap in the existing research by extending the application of this methodology to incorporate an updated database. The empirical findings of the paper provide evidence that in most of cases, there is a co-movement and a long-run equilibrium relationship between retail interest rates. On the basis of the co-integration approach, these findings are being perceived as a signal of retail banking market integration in the Eurozone. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to conduct a survey of the recent literature that evaluates, in an empirical way, the distributional impacts of monetary policy. In the first two sessions, we discuss, respectively, the transmission channels of monetary policy to income distribution and the empirical strategies used to measure it. The majority of surveyed papers find that a contractionary monetary policy worsen the income distribution, and that an expansionist policy tends to improve it. Moreover, several papers found that the higher is the redistributive impact of fiscal policy, the lower is the impact of monetary policy on inequality. Another outcome with empirical support is the role of the labor share on total income: the higher is this share, the higher is the impact of monetary policy on inequality. The last point discussed is the asymmetric effects of contractionary and expansionary monetary policy. There is evidence that increases in interest rates have statistically significant effects on income distribution, whereas the effects of reductions in interest rates are not statistically different from zero. This empirical finding goes against the conventional view that the distributional effects of interest rate changes are temporary and likely to net out over the business cycle. [ABSTRACT FROM AUTHOR]

The paper examined the interest rate operations and processes in Nigeria and examined the role of financial development in incentivizing central bank monetary policies from the monetary policy rate to the money market rates, lending rates, and deposit rates. The analysis covered the period from 1981 to 2021 with sub-samples for 1981 to 2011 and 1991 to 2021 to test the consistency of the findings. The findings confirmed that interest rate pass-through is incomplete for Nigeria, albeit to a lower degree in the short run compared to the long run. The reasons for this may be due to interest rate stickiness, problems of asymmetric information, and bank switching costs. Also, the findings confirmed that financial development weakens the impact of monetary policy on the interest rate pass-through process, while the analysis of the asymmetric mean adjustment lags confirmed that changes in the policy rate are transmitted to the deposit and lending rates within the year it was announced. The analysis confirmed that the results across each sub-sample and the robustness tests are consistent with the main analysis. Therefore, it is imperative that policymakers should account for financial development when designing monetary policy effectiveness since it can hinder or strengthen the interest rate monetary policy channel. [ABSTRACT FROM AUTHOR]

This paper takes stock of the literature on the monetary transmission mechanism in currency boards and analyzes the process of monetary transmission in Bosnia and Herzegovina. The transmission of monetary signals through the economy is based on the automatic adjustment mechanism of the currency board. Three channels of monetary transmission are discussed in this paper: the interest rate channel, the narrow credit channel, and the exchange rate channel. The empirical analysis shows how exogenous monetary shocks are transmitted through different channels and how long it takes for the automatic adjustment mechanism to restore equilibrium in the economy. [ABSTRACT FROM AUTHOR]

This paper explores the effects of government debts and deficits on long-term interest rates under different international monetary systems from the perspective of monetary sovereignty. The findings of this paper confirm conventional accounts of financial crowding-out and the adverse impact of growing public debt on interest rates among countries under the classical Gold Standard period (1879–1913) and non-sovereign countries under the recent fiat system (1973–2016). By contrast, countries in the Bretton Woods era (1959–1970) and sovereign countries in the contemporary post-Bretton Woods era (1973–2016) do not exhibit such positive debt-interest rates relationships while still showing crowding-out but with much less magnitude. Overall, the results support the Modern Money Theory (MMT) view that the consequence of monetary sovereignty from 1879 to 2016 is to remove, or greatly attenuate, the impact of default risk, fiscal balance, and bond vigilantes on the interest rate. [ABSTRACT FROM AUTHOR]

After the replacement of Libor with alternative reference rates across the world, market participants must now adjust to a variety of changes to both contract terms and market rate dynamics. Focusing mostly on the new SOFR rate in the US, this paper considers the interaction of two important characteristics of SOFR derivatives: the backward-looking settlement style of SOFR floating rate payments; and the historically ‘jagged’ nature of SOFR time series. We introduce mechanisms that allow us to modify existing term structure models to incorporate rich dynamics for both ‘surprising’ and anticipated spikes and hikes in overnight rates. Numerical tests on SOFR-style caplets show that such model enhancements can produce significant effects on implied caplet volatility levels and skews. Besides establishing a practitioner-friendly framework for derivatives pricing, our paper is broadly applicable to scenario generation and risk management in any market with discontinuous rates dynamics. [ABSTRACT FROM AUTHOR]

AbstractThis paper evaluates the natural rate of interest (NRI) for Indonesia, Malaysia, Philippines, Singapore, South Korea, [Taipei, China], and Thailand and aggregates them using a GDP-weighted average. This paper discusses four key points. Firstly, to estimate the NRI in emerging Asian economies, this paper introduces a Time Varying Parameter Vector Autoregression (TVP-VAR) model that integrates exchange rates alongside conventional growth and inflation variables. Secondly, the results show that NRIs in the emerging Asia have been declining in trend since the 1990s. Thirdly, the behavior of the NRI for each economy is not uniform across crises—the Asian Financial Crisis, the Global Financial Crisis, and the COVID-19 pandemic. Fourthly, the findings reveal that the ascertained Asian NRI decreased to the vicinity of 0% during the COVID-19 pandemic period. [ABSTRACT FROM AUTHOR]

Recently, considerable research effort has been devoted to studying the impact of monetary policy on inequality. This paper summarizes the literature on the causes of rising inequality and looks at the empirical work on interest rates and inequality. It argues that growing empirical evidence concerning the impact of monetary policy on inequality is mixed and that the conflicting results concerning monetary policy and inequality involve, to a large extent, how one measures inequality. Overall, it seems that loose monetary policy increases incomes of those at the bottom of the distribution but reduces their income relative to those at the top of the distribution. The paper also examines some post-Keynesian monetary policy rules to deal with inequality and finds them wanting in many respects. Going further, the paper argues that monetary policy is too a blunt instrument for reducing inequality and that reducing inequality needs to be the job fiscal policy, which is better suited to dealing with this problem and which has the political authority to deal with distributional problems. [ABSTRACT FROM AUTHOR]

Monetary policy has been historically concerned with controlling inflation, using the interest rate as its main tool. However, such policies are not gender- or race-neutral. This paper explores econometrically the effect of changes in the interest rate for female and black employment creation in Brazil. We conducted a fixed effects analysis for 13 states between 2012 and 2021 to estimate the effects of changes in interest rates on unemployment, separating it by gender and race. Our results show that the increase in the real interest rate has a positive effect on the relative unemployment of black men to white men, no effect on the relative unemployment of black women to white men, and a negative effect on the relative unemployment of white women to white men. These effects are intensified in regions where the black share of the population is lower. This paper contributes to understanding the challenges to closing gender and racial gaps, particularly in developing economies. We conclude that social stratification, if not considered, can lead to misleading policies that perpetuate unequal socioeconomic outcomes. [ABSTRACT FROM AUTHOR]

This paper examines the post-Keynesian and Sraffian perspectives on the relationship between monetary policy and income distribution, highlighting their endogenous demand-led money approach and rejection of the neutrality of interest rates, and monetary policy as tool of redistribution among social classes. Both approaches acknowledge that the central bank can influence interest rates and hence, the functional distribution of income. These shared ideas recognize the political nature of interest rates and the distributive impacts of monetary policy. Although all are crucial common points, some differences persist; PK theory often emphasizes the impact of monetary policy on rentiers vs. non-rentier classes, while Sraffians focus more on wage earners vs. non-wage earners. Further, while PK theorists advocate for alternative monetary policy rules, Sraffians favor discretionary policy tailored to each economy's unique institutional framework. The paper concludes by suggesting that these shared critical conceptions, despite minor differences, should stimulate collaborative efforts to further develop heterodox theories of monetary policy and income distribution. [ABSTRACT FROM AUTHOR]

This paper examines the long-run pattern of the U.S. nonfinancial corporate sector's liquid financial asset holdings in the period from 1951 to 2018. My approach to examining this pattern builds from the banks' liquidity preference theory put forward in Keynes' 1937 papers, as well as Minsky's 1957 paper discussing the role of financial innovation in the banks' management of liquidity preference. I argue that financial intermediaries affect nonfinancial corporations' liquid asset holdings through two primary money creation channels: (1) banks' commercial and industrial loans advanced to nonfinancial corporations and (2) the liquidity premium of financial intermediaries, which can be measured by the interest rate spread in the intermediaries' liabilities markets. Through theoretical and empirical exercises, I find that these two endogenous liquidity creation channels have been the important factors accounting for liquid asset accumulation by the nonfinancial corporate sector. Overall, my results suggest that financial innovations, structural changes of the U.S. financial system, and financial intermediaries' liquidity premium could contribute to our understanding of the shift in nonfinancial corporations' asset portfolio composition in favor of liquid financial assets. [ABSTRACT FROM AUTHOR]

Alibaba and Coupang had enjoyed a period of success, starting with their IPOs. However, both companies have underperformed Amazon during the last 12 months. This special issue explores the underlying drivers for their tumultuous performance outcomes, including governance, political risks and internationalization strategies. This introduction paper sets the scene by studying the market perspective based on analyst reports, financial statements and stock market data. To understand growth expectations, we decompose current share prices into their present value, explained by current earnings and future value, driven by future growth and profitability. Exogenous factors such as the recent increase in interest rates, woes of governance problems associated with foreign corporations in South Korea and China's anti-monopoly drive aimed at its tech giants have contributed to weaker performance. Our analysis of implied growth rates suggests that the market expects annual revenue growth above 11% for the foreseeable future. These expectations will be hard to meet, requiring a rethink of business models and processes. [ABSTRACT FROM AUTHOR]

This paper traces R.G. Hawtrey's main contributions to the theory of the lender of last resort (LLR), both national and international (ILLR). This theory is a continuation of one of the traditions of the classical period, started by Henry Thornton, which differs in important points from that of Walter Bagehot. In their treatment of the classical concepts the authors partly depart from the interpretation of Thomas M. Humphrey, who considers that Thornton and Bagehot have basically the same approach about LLR. Hawtrey renewed Thonton's views and extended the concepts to new problems, including the ILLR. Hawtrey built a model of LLR in a dynamic macroeconomic model that includes the Cambridge market for cash balance and introduces the bases of a theory of ILLR, describing the sequence of twin crisis, exchange and banking crisis, thus explaining the difficulties for an ILLR to act on the currency market without taking the risks involved, in a situation completely different to the one faced on the money market by the national LLR. [ABSTRACT FROM AUTHOR]

Despite considerable reforms of Chinese monetary policy, very few papers have empirically examined the long-run effects of monetary policy on China's economic growth. Our purpose is to shed some light on it. We use money supply, real effective exchange rate, and real interest rate to describe monetary policy of China. We first apply the Granger causality test to annual data from 1980 to 2020 to examine the relationship between monetary policy and China's economic growth measured by Chinese real GDP. Our results suggest both money supply and real effective exchange rate Ganger cause Chinese real GDP, while real interest does not. We then adopt the autoregressive distributed lag (ARDL) model without asymmetric effects and nonlinear ARDL with asymmetric effects of exchange rate to estimate the impact of monetary policy on China's economic growth. Our long-run results indicate that expansion of money supply would promote Chinese real GDP growth. Both higher interest rate and depreciation would hinder China's economic growth. There are asymmetric effects of exchange rate on growth. Finally, the CUSUM and CUSUMQ stability test results reveal that the relationship among money supply, real effective exchange rate, and real interest rate with Chinese real GDP is stable. [ABSTRACT FROM AUTHOR]

Numerous discussions on money and financial institutions have been advanced both between and within economic theories. Heterodox schools of thought consider money to be non-neutral, with causality running from money demand to money supply and the interest rate as a monetary and distributive variable. In this paper we discuss the views of Michał Kalecki and John Maynard Keynes on money and the operation of financial institutions. Kalecki and Keynes formulated the theory of effective demand, specifically in terms of its effects on economic growth and financial instability. Nonetheless, in line with the work of Tracy Mott, we argue that Kalecki's analyses of the financial system are more profound because they better capture the complexity of the oligopolistic financial system, providing the foundations for Keynes' liquidity preference theory. As a result, it may be concluded that the main problem of economic growth and investment spending is the structure of corporate finance. [ABSTRACT FROM AUTHOR]

John Maynard Keynes argued that the central bank influences the long-term interest rate through the effect of its policy rate on the current short-term interest rate. However, Keynes's claim was confined to the behavior of the long-term government bond yield. This paper investigates whether Keynes's claim holds for the yields of spread products and over-the-counter financial derivatives by econometrically modeling the dynamics of the pound sterling (GBP)–denominated long-term interest rate swap yield. It uses the generalized autoregressive conditional heteroskedasticity modeling approach to examine the relationship between the month-over-month change in the current short-term interest rate and the month-over-month change in the long-term swap yield, while controlling for several key macroeconomic and financial variables. The month-over-month change in the current short-term interest rate has a positive and statistically significant effect on the month-over-month change in the long-term swap yield. This finding reinforces and extends Keynes's conjecture concerning the central bank's influence over the long-term interest rate. The investigation's empirical findings and their policy implications are discussed from a Keynesian perspective. [ABSTRACT FROM AUTHOR]

This paper analyses the phenomenon of 'sellers' inflation', that is to say, the increases in consumer prices as a result of firms' decision to increase their selling prices as much as possible in the aftermath of the war in Ukraine. This analysis focuses also on central banks' responses to such inflationary pressures, which monetary authorities have been trying to limit with several increases in their policy rates of interest. The paper explains the major shortcomings of this monetary policy strategy and its negative consequences for a number of economic agents. The last section puts forward an alternative economic policy stance, proposing in particular a series of 'green' monetary policy interventions to address these inflationary pressures in the general interest for the common good. [ABSTRACT FROM AUTHOR]

The aim of this study is twofold: on the one hand, to provide evidence of the positive association between the inflation rate and the labor share in the US; on the other, to show that monetary policy slows inflation by depressing the labor share. With the help of Bayesian econometrics, the paper shows evidence of a conflict Phillips curve. Furthermore, a structural vector autoregressive model reveals the detrimental effects of interest rate hikes on the labor share. Together, these results mean the monetary policy of administered interest rates resolves the class conflict in favor of capital to control inflation. Scrutiny of the US monetary policy development and a model of a controlled predator-prey system prepare the way for the empirical sections. Finally, the paper concludes that controlling the distributive conflict matters for impinging on inflation and that the Fed might follow alternative monetary rules to cease being the third party participating in the distributive conflict. [ABSTRACT FROM AUTHOR]

This paper empirically investigates the effect of inflation uncertainty on domestic investment in Ghana. In addition, it investigates the differential impacts of permanent and transitory inflation uncertainty on investment in Ghana. Inflation uncertainty was measured using the conditional variance generated from the generalized autoregressive conditional heteroscedasticity (CGARCH (1, 1)) model. Employing the autoregressive distributed lag (ARDL) estimator on data covering 1970 to 2020, the results provide strong evidence that inflation uncertainty, associated with high volatility in commodity prices, hampers domestic investment in Ghana. After disaggregating total inflation uncertainty into two components, this paper finds that permanent inflation uncertainty has a stronger adverse effect on domestic investment than does transitory inflation uncertainty. Additionally, the results reveal that domestic interest rate, foreign interest rate, government expenditure, and trade openness are also important factors that significantly affect investment in Ghana. Given the economic implications of these results, this paper offers actionable policy recommendations to improve investor confidence and spur domestic investment in Ghana. [ABSTRACT FROM AUTHOR]

This paper presents a simple model of the long-term interest rate. The model represents Keynes's conjecture that the central bank's actions influence the long-term interest rate primarily through the short-term interest rate, while allowing for other important factors. It relies on the geometric Brownian motion to formally model Keynes's conjecture. Geometric Brownian motion has been widely used in modeling interest rate dynamics in quantitative finance. However, it has not been used to represent Keynes's conjecture. Empirical studies in support of the Keynesian perspective and the stylized facts on the dynamics of the long-term interest rate on government bonds suggest that interest rate models based on Keynes's conjecture can be advantageous. [ABSTRACT FROM AUTHOR]

We prove that if the total factor productivity A of an aggregative economy is right at the barrier $ \sigma +\lambda $ σ + λ , with σ being the growth rate of labor force and λ the real interest rate, then the unique policy to optimally control the economy is the same as the one for optimally controlling weak economies, where $ A \lt \sigma +\lambda $ A < σ + λ. This result gives a complete answer for the interesting open question raised by Vu Thi Huong in her recent paper [Optimal economic growth problems with high values of total factor productivity. Appl Anal. 2022;101:1315–1329]. [ABSTRACT FROM AUTHOR]

The aim of this paper is to assess to what extent the Taylor rule can be considered an appropriate representation of the tendency of central banks to react to inflation. After an overview of the origin and use of the Taylor rule, the paper stresses some difficulties in its implementation and the limits of its interpretation by the New Consensus models. Specifically, the inherent difficulties stemming from the notion and estimates of a benchmark interest rate determined by 'productivity and thrift' are pointed out. We then move on to advance an alternative interpretation of the Taylor rule along Classical-Keynesian lines. In this context, inflation is fuelled by conflicting claims on income distribution and the rule will be interpreted, as it is in actual fact, as a flexible and non-mechanical benchmark for monetary policies which will be seen to affect the division of product between wages and profits. [ABSTRACT FROM AUTHOR]

Over the last decades, the Brazilian Development Bank (BNDES) has been the main source of long-term credit for investments in Brazil. However, from the mid-2010s onward, the fiscal costs of the subsidized credits provided by the bank have been increasingly stressed, configuring a second narrative of its role in the Brazilian economy. Based upon a review of the most frequently cited and most relevant academic articles about the BNDES published between 2005 and 2019, this paper analyzes these competing narratives and their impact on the public policies adopted to foster investments in the country. In a context marked by lower market interest rates and by an increasing capacity of large companies to obtain long-term credit from non-governmental sources, the second narrative prevailed over the last years and led to a law reform in 2017 to reduce the subsidies provided by the bank. The paper empirically demonstrates a narrative shift that influenced public policies regarding development banking and shows how changing settings affect the interest groups' capacity to disseminate their narratives. [ABSTRACT FROM AUTHOR]

This paper investigates Lieberman's claim that Chow's money demand data supports the transactions over the asset motive for holding money. The results indicate that permanent income and the long-term interest rate perform best in the long-run specification, whereas current income and the commercial paper rate perform better in the short-run specification. These results appear to conflict, however, if lagged money captures the effects on money demand up to the last period so that other variables measure their effect on money at the margin, then it is not necessarily the case. For example, the results are consistent with the butter stock analysis of Cart and Darby and with a general expectations interpretation of the term structure of interest rates. Thus, the results presented here suggested that Chow's original conclusion emerges unrefuted. [ABSTRACT FROM AUTHOR]

Explaining the Eurozone crisis requires explaining the origins of the external imbalances until then. The paper divides the literature arguments into three "fundamental causes", not mutually exclusive: a competitiveness problem, North-South flows, and excess of public and/or private spending. Within each of these causes, we find divergences between authors in the literature and identify a set of variables correlated with the accumulation of external imbalances before the crisis. These variables help to create clusters of Eurozone countries and separate core countries from the periphery. We then develop an original argument, that the convergence of nominal long-term interest rates in the periphery cluster countries, relative to the core cluster countries, between 1996 and 2007, was the trigger for the three "fundamental causes" mentioned. We find Granger-causality between this convergence and subsequent (after four quarters) annual variations in the quarterly current account balance. [ABSTRACT FROM AUTHOR]

Finance plays an important role in China's new development pattern, and the financial industry is also a crucial part of the country's economic growth. This paper selects the four financial index data of 76 listed companies in the financial profile of Hithink RoyalFlush stocks and the consolidated balance sheet and consolidated income statement in the China Stock Market Accounting Research (CSMAR) database, empirically studies the impact of tax reduction and fee reduction on the financial industry through the Panel Vector Autoregression (PVAR) model, and gives relevant suggestions. The results show that: (1) The implementation of tax reduction and fee reduction policy makes the net profit available to the financial industry increase in the short term, but the long-term effect is not obvious. (2) The reduction of the tax burden will significantly increase the net sales interest rate of the financial industry within one year, and then the fluctuation in the impact tends to 0. (3) The reduction of the tax burden will lead to the reduction of financial enterprises' sense of hardship in a certain period of time, which will lead to the reduction of the total asset turnover rate. (4) The reduction of the tax burden will increase the debt-to-asset ratio of financial enterprises within two years, thus increasing financial risk. The research not only provides a theoretical analysis and policy basis for the analysis of the impact of tax reduction on the financial industry but also provides decision support for tax reduction policies to revitalize industry development, stimulate financial market activities, ensure direct access to financial resources to enterprises, and further increase the market activities of the whole society. [ABSTRACT FROM AUTHOR]

This paper performs a case study analysis of a deal (snowball swap) conducted by a state-owned transportation firm in Portugal. This deal lowered immediately the financing costs by 3 percentage points in the first 2 years and then it would cost an additive spread (snowball) if the Euribor interest rate crossed the barrier of 2% to 6%. The Euribor interest rate dropped to levels well below 2% and these contracts, which had a notional value of 80 million euros, had a cost of around 700 million euros. From the analysis of the contours of this business, it is possible to conclude that the corporate governance model of state-owned companies does not prevent situations of lack of independence of managers from the political power and this leads to a very short-term vision of these managers and creates adverse incentives for these managers. The paper concludes with a discussion of this case study implications for public policy on state-owned firms' governance. [ABSTRACT FROM AUTHOR]

Forward guidance is widely considered a useful tool for improving monetary policy transmission. This paper introduces endogenous Delphic guidance in which future policy targets are time-varying and dependent on the future economy. The results show that the performance of inflation-targeting forward guidance depends partially on the forward horizon and the agents' expectation, while announcing an interim output target could stimulate the economy only under a rational expectation environment and requires a short forward horizon. We also discuss the effectiveness of Odyssean forward guidance which incorporates monetary authorities' preferences. The results indicate that the effect of a commitment on future paths of an interest-rate rule is based on the agents' expectations. [ABSTRACT FROM AUTHOR]

An introduction is presented in which the editor discusses various reports within the issue on topics including bank interest rates in Poland, consumer-perceived price index, and unemployment rate forecasting.

Record linkage is the process of matching together records from different data sources that belong to the same entity. Record linkage is increasingly being used by many organizations including statistical, health, government etc. to link administrative, survey, and other files to create a robust file for more comprehensive analysis. Therefore, it becomes necessary to assess the ability of a linking method to achieve high accuracy or compare between methods with respect to accuracy. In this paper, we evaluate the accuracy of individual link using varying block sizes and different cutoff values by utilizing a Markov Chain based Monte Carlo simulation approach (MaCSim). MaCSim utilizes two linked files to create an agreement matrix. The agreement matrix is simulated to generate re-sampled versions of the agreement matrix. A defined linking method is used in each simulation to link the files and the accuracy of the linking method is assessed. The aim of this paper is to facilitate optimal choice of block size and cutoff value to achieve high accuracy in terms of minimizing average False Discovery Rate and False Negative Rate. The analyses have been performed using a synthetic dataset provided by the Australian Bureau of Statistics (ABS) and indicated promising results. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between bank funding costs and solvency for a large sample of euro area banks using two proprietary ECB datasets for both wholesale funding costs and deposit rates. In particular, the paper studies the relationship between bank solvency, on the one hand, and senior bond yields, term deposit rates and overnight deposit rates, on the other. The analysis finds a significant negative relationship between bank solvency and the different types of funding costs. It also shows that this relationship is non-linear, namely convex, for senior bond yields and term deposit rates. It also identifies a positive realistic solvency threshold beyond which the effect of an increase in solvency on senior bond yields becomes positive. The paper also finds that senior bond yields are more sensitive to a change in solvency than deposit rates. Among the deposit rates, the interest rates of the overnight deposits are the least sensitive. Banks' asset quality, profitability and liquidity seem to play only a minor role in driving funding costs while the ECB monetary policy stance, sovereign risk and financial markets uncertainty appear to be material drivers. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of government debt and deficits on long-term interest rates in 17 advanced economies over the period 1973–2016 from the perspective of currency sovereignty. The empirical findings of this paper suggest the market penalizes non-sovereign nations for the same amount of fiscal deficit with higher interest rates than sovereigns. In addition, non-sovereign countries face accelerating interest rates for an increase in the debt-to-GDP ratio beyond a certain threshold (49% to GDP) while such a pattern is not obvious among sovereign nations. Overall, the results support Modern Monetary Theory (MMT) view that a monetarily sovereign government, as a monopoly issuer of currency, can influence the prices of their liabilities to a significant extent, somewhat independent of existing public debt and market sentiment. [ABSTRACT FROM AUTHOR]

This paper adopts a multiunit bilateral bargaining framework on financial decision. In a two-echelon supply chain, the supplier sells products through a financial constraint retailer. If needed, the retailer gets a short-term financing from a bank by supplier credit guarantee loan (CGL). Through applying the Nash bargaining framework, we formulate two-level game models, i.e. Retailer-Supply System negotiation and Supplier-Bank negotiation. In this paper, we study and discuss the equilibrium order quantity which is affected by initial working capital and interest rate, the retailer-supply system negotiation and upstream wholesale price effects for supply chain performance, the supplier-bank negotiation and interest rate decisions with different capital markets. The results show: (i) there exists loan size limit for financial constraint retailer under CGL. (ii) The upstream wholesale price increase will weaken retailer's bargaining position, and the supply system may gain or lose depending on the bargaining power. (iii) There exists unique equilibrium sharing ratio in supply system, which means CGL can achieve risk sharing. (iv) Within a supply system, the upstream wholesale price advantage will weaken bank's profit, whereas supplier may gain or lose depending on his bargaining power. [ABSTRACT FROM AUTHOR]

This study examines day-of-the-week effects in short term New Zealand bank bills with maturities of 30, 60 and 90 days. The analysis is based on a within-subject design. The spot interest rates within a week are treated as repeated measures on the same subject. These interest rates are transformed into orthogonal contrasts which can be analysed separately as dependent variables. Two analyses are conducted. The full data does not exhibit significant day-of-the-week effects. When the data is trimmed, to ameliorate the presence of fat tails, a Wednesday effect is observed for the three series. The ubiquitous weekend effect is observed for one series of interest rates. However, the reverse of the weekend effect is present for the two other series. The practical importance of the results is discussed. [ABSTRACT FROM AUTHOR]

The aim of this paper is to decide whether or not term premiums appear and thus are predictable in Central European countries in the data sample of forward rate agreement interest rates and corresponding spot interest rates. Term premiums theoretically are explained thanks to the applications of the efficient market hypothesis theory, the expectations theory, and the liquidity preferences theory. Empirically, we used cointegration techniques for nonstationary time series, mainly using the cointegration method (simple and even for panel data) and the vector error correction model. We used data samples of Central European countries (the Czech Republic, Hungary, Poland) and also of the United Kingdom. We found that the best future estimate of term premiums is its current value. It does not refer in the same way to the market efficiency hypothesis (EMH) or theexpectations hypothesis (EH). [ABSTRACT FROM AUTHOR]

This paper investigates whether green credit policy can mitigate firms' financialization. Using data from Chinese non-financial public listed firms during 2008 to 2019, we take the green credit policy promulgated in 2012 as a quasi-natural experiment and find that: (1) the green credit policy can reduce firms' entrusted loans, especially affiliated entrusted loans. Moreover, the governance effect exerted by banks' green credit policy reduces free cash flow and excess cash in heavily polluting firms, as shown in mechanism analysis. (2) The profit-seeking incentive dominates shadow banking activities in heavily polluting enterprises. (3) The 2012 green credit guidelines reduce entrusted loans maturity but increase the interest rate. The findings of this paper provide market-oriented insights into the regulation of shadow banking activities. This research also contributes to the literature on the effects of green credit policy by exploring their impact on firm shadow banking activities, and takes one step further to investigate the effect of green credit policy on firms' entrusted loans. This paper also sheds light on how green credit policy can alleviate the imperfections and distortions of financial markets in the emerging market. [ABSTRACT FROM AUTHOR]

Motivated to some extent by the empirical significance of student loans in the U.S., this paper incorporates knowledge capital formation by working households financed through debt to a demand-led dynamic model of physical and knowledge capital utilization and output growth. Average labor productivity varies positively with the average knowledge capital across the labor force. A rise in labor productivity resulting from knowledge capital accumulation is fully passed on to the real wage so that the wage share remains constant. In the unique long-run equilibrium, which is stable, an exogenous rise in the wage share raises the rates of physical capital utilization and output growth but has an ambiguous effect on the rate of employment (which also measures the rate of knowledge capital utilization). The long-run equilibrium also features the following interrelated results: the output growth rate is greater than the exogenous interest rate; the debt ratio (working households' debt as a ratio of either the physical or the knowledge capital, or the output) is independent of the interest rate; and the allocation of a higher (lower) proportion of wage income to debt repayment (consumption) raises instead of lowers the debt ratio, which we dub the paradox of debt repayment. [ABSTRACT FROM AUTHOR]

This paper presents multifactor Keynesian models of the long-term interest rate. In recent years, there have been a proliferation of empirical studies based on the Keynesian approach to interest rate modelling. These studies evince the connection between the long-term interest rate and the short-term interest rate. However, standard multifactor models of the long-term interest rate in quantitative finance have not been yet incorporated Keynes's insights about interest rate dynamics. Keynes's insights are introduced in two different multifactor models of the long-term interest rate to illustrate how the long-term interest rate relates to the short-term interest rate, after controlling for the central bank's policy rate, expected inflation, the central bank's inflation target, volatility in financial markets, and Wiener processes. [ABSTRACT FROM AUTHOR]

Unlike many other countries, Britain had a weak private rented sector (PRS) in decline for most of the twentieth century. A revival began from the turn of the millennium. The platform for this rebirth was the removal of regulation and the arrival of buy to let (BTL) mortgages for individuals at competitive interest rates. The dynamic and rapid development of the PRS cannot be understood in isolation to the financial rewards that the sector was offering to its investors. This paper calculates the internal rate of return (IRR) from investing in BTL, since its inception in 1996. It uses a financial model to simulate average BTL purchases in eleven regions, investing in every year over the period from 1996 to 2015. The paper finds strong evidence that the early spectacular growth in the BTL market was stimulated and sustained by very attractive perceived rewards. Over the entire analysis period from 1996 to 2015, investors have attained an average IRR of 12%, compared to 5.8% from the stock market. The paper also finds that recent unfavourable tax changes lower the returns, but that the sector will continue to offer a much higher return than that offered by the equity market. [ABSTRACT FROM AUTHOR]

Like most central banks, the European Central Bank makes and implements its monetary policy decisions by adjusting its targets for short-term interest rates in response to information gleaned from a wide range of macroeconomic indicators and projections. Unlike other central banks, however, the ECB also monitors money growth as a 'cross check' against the macroeconomic analysis that guides its policies of interest rate management. This paper argues that making further use of this 'second pillar' would help the ECB to better achieve its nominal objectives in the present environment of exceptionally low interest rates. By modifying the 'P-star' framework – a small-scale model with Quantity Theory foundations – the paper shows how the ECB could set a quantitative 'reference value' for Divisia money growth to stabilize nominal spending around a target path, even while its traditional interest rate policies are constrained by the zero lower bound. [ABSTRACT FROM AUTHOR]

This paper investigates the consistency of asymmetric interest rate past-trough (IRPT) using a nonlinear autoregressive distributed lag framework. Superior to the previous studies, this study exploits the historical profile of Indonesia to enrich the analysis. Asian Financial Crisis (AFC) which crashed the country in 1998 and several monetary policy changes implemented by the government offer different perspectives to grasp IRPT. The results of this study indicate that there is a consistent upward rigidity in the long-run pass-through in Indonesia. Particularly during the AFC, it is well proven that the asymmetric behavior is fickle whether disappear or bounce back to the downward rigidity. This finding demonstrates the importance of a rolling-window approach in understanding IRPT. [ABSTRACT FROM AUTHOR]

This paper establishes a predictive relationship between financial vulnerability and volatility in emerging stock markets. Focusing on China and India and utilizing GARCH-MIDAS models, we show that incorporating financial vulnerability can substantially improve the forecasting power of standard macroeconomic fundamentals (output growth, inflation and monetary policy interest rate) for stock market volatility. The findings have significant implications for investors to improve the accuracy of volatility forecasts. [ABSTRACT FROM AUTHOR]

A bibliography on the subject of real property is presented which includes "Modeling the Term Structure of Interest Rates: A Literature Review," by Rosa C. Canto, "Centralization of School Finance and Property Values: Lessons from Vermont," by Thomas Downes, and "Regulation of Large Financial Institutions: Lessons from Corporate Finance," by J. P. Harding and S. Ross.

Rising US interest rates impact emerging economies through capital outflows and currency depreciations. For those with flexible exchange rates, the appropriate monetary policy response weighs the traditional competitiveness effect with a balance sheet effect created by the presence of foreign currency denominated debt (liability dollarization). This paper presents a basic Keynesian macro model that incorporates this balance sheet effect and demonstrates that it significantly complicates the monetary policy response to depreciations. Without full knowledge of the size of these competing effects, the central bank can make large mistakes in setting interest rates. [ABSTRACT FROM AUTHOR]