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The paper explains the origin of the financial crisis in one country and its spread to other countries—contagion, in a dynamic model of international capital inflow. The origin of the crisis is rooted in this model in the common international loan market, and crisis can occur even when the countries are not interconnected via bi-lateral or multi-lateral trade and commerce, when connected via trade or commerce the contagion hits with a stronger effect. The paper introduces country-level heterogeneity of risk of default for individual countries in the borrowing group which generates interesting cases of the contagion effect. A change in the risk of default of an individual country adversely affects the total supply in the international loan market leading to crises in other countries via increased international interest rates. It has an enhanced effect when the risk of default depends on the lagged domestic productivity of the borrowing country. The model can explain various episodes of financial crisis in a common framework and can be usefully employed for policy formulation. [ABSTRACT FROM AUTHOR]

Understanding the rationale for macroeconomic policy coordination with the aim of achieving greater policy credibility and effectiveness in West Africa still remains the subject of debate.

The study examined the conditionalities of the cash transfer programme in Osun state, Nigeria. It examined the level of compliance of the beneficiaries of the programme and investigated the impacts of conditionalities of the cash transfer programme. A descriptive research design was adopted for the study and a sample size of 240 respondents was involved. Twenty-four communities were purposively selected for the study in Osun State. Ten recipients of the cash transfer programme were selected from each of the 24 communities using a simple random sampling technique. A research instrument was used for data collection known as the ‘Beneficiaries’ Questionnaire on Impacts of Conditionalities on Cash Transfer programme in Osun State’. Data collected were subjected to percentage analysis. Findings showed that the majority of the programme’s beneficiaries complied with the requirements or conditions attached to it. The findings of the study equally showed that the conditional cash transfer programme has changed the orientation of the beneficiaries on regular visitation to maternity centres. The study therefore concluded that for any poverty alleviation programme to be successful in Nigeria, especially in Osun state, conditionalities must be attached and beneficiaries should be encouraged to comply.

In the following paper, with the assistance of the international regime theory and hegemonic stability theory, a better understanding of the formation and creation of NATO is provided. The topic is linked to the ongoing debate about its future and to the high tensions currently taking place in Eastern Ukraine. The paper forms the hypothesis that NATO has been created to advocate the interest of the US. Based on qualitative research methodology, the main conclusion is that the current hegemon status of the US is under threat, which is resulting in higher maintenance costs.

In 2020, in the context of the COVID-19 health crisis, the rules of the Stability and Growth Pact were temporarily suspended in the European Union. Nevertheless, the European Council and the European Parliament reached an agreement for the reactivation of these rules in 2024. A simple analytical modeling then shows that the empirical implications of the new rules suggested for a reformed Stability and Growth Pact would not be very different from those derived from the rules previously applied. Regarding highly indebted countries, the new debt sustainability safeguard of the reformed SGP could be slightly less binding than the previous rule of the Six Pack requiring to reduce 1/20th of the excess of the public debt each year. However, this criterion as well as those related to the structural budget deficit would not change much the conclusions and the recommendations of the reformed Stability and Growth Pact in comparison with former European fiscal rules. So, reactivated fiscal rules should remain difficult to comply with for many European countries.

The consequences of the COVID-19 crisis have had a negative impact on the fiscal stability of Republic of Srpska. Although the crisis is not officially over yet, a large number of countries needed to implement fiscal consolidation. Republic of Srpska is one of the small and open economies that are exposed to various negative market distortions. COVID-19 crisis of the most important foreign trade partners of the Republic Srpska has had a negative impact on the economy of Republic Srpska.

This paper explores some of the ways in which international central banking can contribute to containing the imminent worldwide climate crisis in a context in which the role of national central banks is important but effectively limited to employing two new stabilization policy tools: macroprudential policy and QE programmes. The authors argue in favour of institutional reform that would gradually transform the IMF into an international central bank and the SDR into a genuine international currency. Even its limited scope would substantially increase the IMF’s capacity to solve one of the key problems of the global climate policy, namely the shortage of funding for the decarbonization of developing economies.

The U.S. real effective exchange rate is at its highest level since 1985. In that year, the U.S. and its trading partners coordinated a depreciation of the dollar and the U.S. agreed to reduce its budget deficit. This paper reports that a dollar depreciation today would still improve U.S. trade imbalances with East Asia and the world. East Asian countries would also benefit from a dollar depreciation because it would lower the local currency costs of imported oil, commodities, and food and reduce imported inflation. The U.S. and East Asia should consider engineering a coordinated dollar depreciation and the U.S. should again reduce its budget deficit.

Can capital flow management measures (CFMs) reduce external vulnerability of the economy? This paper studies the effectiveness of a macroprudential stability levy introduced in Korea, which was intended to curb foreign currency (FX) debt as well as to lengthen its maturity structure in the banking sector. Using the detailed bank-level balance sheet data, this study finds that the levy had limited effects on curbing non-core FX debt, while it substantially lengthened its maturity structure driven mainly by foreign bank branches' interoffice account. The subsequent analysis employing the transaction-level loan rate data further suggests that it likely had unintended consequences favoring foreign bank branches that took advantage of regulatory arbitrage and therefore were able to take FX loan market share from domestic banks that could not avoid passing the levy onto their borrowers. [ABSTRACT FROM AUTHOR]

There are many reasons to reform the Stability and Growth Pact, but that reform is no panacea. This is because the euro area periphery has increasingly entered a debt conundrum. [ABSTRACT FROM AUTHOR]

In this paper, the extant literature on the impact of external shocks on monetary policy effectiveness with reference to non-WAEMU countries is reviewed. The importance of this literature review is to provide contemporary perspectives to scholars and policymakers on the relevance of the incidence of external shocks to the effectiveness of monetary policy with reference to non-WAEMU countries. The literature reviewed in this study shows that, on the whole, the extent and the degree to which external shocks are transmitted to the domestic economy substantially depend on a plethora of features, namely the absence of exchange rate flexibility; a strong export concentration, especially with respect to commodities; the level of global economic integration; restricted capacities of production; the absence of competitiveness in exports; over-reliance on foreign aid; foreign reserves that are not adequate and capital account openness.

This paper investigates the spillover effects of United States monetary policy on exchange rates of 11 emerging markets and 12 advanced economies during the pre-Coronavirus Disease 2019 (COVID-19) period of 2019 versus the COVID-19 period of 2020. The investigation was achieved via a structural vector autoregression model, where year-on-year changes in weekly measures of economic activity, exchange rates and policy rates were used. The empirical results suggest evidence for the spillover effects of United States monetary policy for several countries during the pre-COVID-19 period, whereas they have been effective only for certain countries during the COVID-19 period that can be explained by the disease outbreak channel. It is implied that policies keeping the pandemic under control may help mitigate the unforeseen economic effects of the COVID-19 crisis. [ABSTRACT FROM AUTHOR]

China's rapidly growing role in the world economy has been accompanied by rising bilateral trade with Australia and the Association of Southeast Asian Nations (ASEAN group) as well as expanded offshore renminbi (RMB) markets in the region. Using a Markov-switching analysis that allows for variation across stable and volatile domestic inflation regimes, we find evidence of significant inflation transmission from China to Australia and the five larger ASEAN economies. Chinese inflation effects are further confirmed when we incorporate money supply and commodity price effects within a Markov-switching Vector Autoregressive (MSVAR) framework. The importance of allowing for regime change over our sample period is clear and these inflation effects are shown to generally be stronger during periods when domestic inflation is more volatile. These findings on inflation pass-through from China represent a novel extension to a prior literature that has been primarily limited to real economy and trade effects.

While entrepreneurial ecosystem research has attracted increasing attention in the scholarly literature, research focusing on its structure beyond geographical borders is limited. The aim of this paper is to examine the configuration of the entrepreneurial ecosystem and propose an original model by implementing an international perspective. Specifically, this study combines the following two theoretical streams: the entrepreneurial ecosystem and the international context. An empirical investigation was performed through an exploratory study of key public and private French internationalization support organizations. The findings provide new insights related to 4 axes, i.e., structural, systemic, evolutionary and spatial axes, which are enhanced by the adopted international perspective. This perspective is connected to a glo-cal culture that combines both adaptation to local specificities and global integration. The findings also underline the importance of sub-ecosystem interactions in establishing a consistent and effective long-term entrepreneurial development strategy in a territory. This research provides useful implications for both theory and practice, especially for policymakers and support organizations. [ABSTRACT FROM AUTHOR]

Corruption has a major impact on growth in low-income economies, while ease of doing business has a major impact on growth in developed countries. The study empirically examines the effect of corruption on ease of doing business. The study analyses unbalanced panel data of corruption rank, corruption score, control of corruption, and inflation, together with other economic and financial institutional factors and ease of doing business score for the period of 2004–2017. Results indicate that: corruption rank, inflation, and import have negative and significant effect on ease of doing business; corruption score, control of corruption, lending rate spread, and education (skill level) have positive and significant effect on ease of doing business; gross capital formation and population have insignificant negative effect on ease of doing business; export and gross domestic product have insignificant positive effect on ease of doing business. The random effect model is a consistent and most efficient model, indicating common mean value for ease of doing business for the dataset. The study recommends improved corruption scores, control of corruption, and ranks to encourage ease of doing business through monetary policy and infrastructural facilities.

The Markov Tree model is a discrete-time option pricing model that accounts for short-term memory of the underlying asset. In this work, we compare the empirical performance of the Markov Tree model against that of the Black-Scholes model and Heston’s stochastic volatility model. Leveraging a total of five years of individual equity and index option data, and using three new methods for fitting the Markov Tree model, we find that the Markov Tree model makes smaller out-of-sample hedging errors than competing models. This comparison includes versions of Markov Tree and Black-Scholes models in which volatilities are strike- and maturity-dependent. Visualizing the errors over time, we find that the Markov Tree model yields more accurate and less risky single instrument hedges than Heston’s stochastic volatility model. A statistical resampling method indicates that the Markov Tree model’s superior hedging performance is due to its robustness with respect to noise in option data.

In this paper, we trace the transmission of monetary policy shocks from three prominent sources of global financial and trade shocks (US, Europe, and China) to the two largest emerging economies in Sub-Saharan Africa (SSA) (Nigeria and South Africa). To pursue this study's objective, we employ Global Vector Autoregression (GVAR) model and update the common GVAR database to accommodate selected SSA countries. We report impulse response functions obtained from the model to analyse the responses of inflation, exchange rate, interest rate, and output in the emerging SSA economies to monetary policy shocks emanating from the large open economies. We document some new findings on the relationship between international monetary policy and the behaviour of economic factors in the emerging SSA countries. First, we show that tight monetary policy in the US and EU moderates prices in Nigeria while it is inflationary in South Africa. Second, the impact of the same policy shock is positive and prolonged on the Nigerian Naira and South African Rand. Third, the monetary policy decisions in China and the US have greater influence on the monetary policy in Nigeria and South Africa compared to similar policy decisions in the EU.

We analyze the conduct of fiscal policy in a financially integrated union in the presence of financial frictions. Frictions create a wedge between the return to investment and the union interest rate. This leads to an over-spending externality. While the social cost of spending is the return to investment, governments care mostly about the (depressed) interest rate they face. In other words, the crowding-out effects of public spending are partly "exported" to the rest of the union. We argue that it may be hard for the union to deal with this externality through the design of fiscal rules, which are bound to be shaped by the preferences of the median country and not by efficiency considerations. We also analyze how this overspending externality—and the union's ability to deal with it effectively—changes when the union is financially integrated with the rest of the world. Finally, we extend our model by introducing a zero lower bound on interest rates and show that, if financial frictions are severe enough, the union is pushed into a liquidity trap and the direction of the spending externality is reversed. At such times, fiscal rules that are appropriate during normal times might backfire. [ABSTRACT FROM AUTHOR]

The relationship between monetary policy and financial stability has gained importance in recent years as Central Bank policy rates neared the zero-lower bound. We use an SVAR model to study the impact of monetary policy shocks on three proxies for financial stability as well as a proxy for economic growth. Monetary policy is represented by policy rates for the emerging market economies and shadow rates for the advanced economies in our paper. Our main results show that monetary policy may be used to correct asset mispricing, to control fluctuations in the real business cycle and also to tame credit cycles in the majority of cases. Our results also show that for the majority of cases, in line with conventional wisdom, local currencies appreciate following a positive monetary policy shock. Monetary policy intervention may indeed be successful in contributing to or achieving financial stability. The results, however, show that monetary policy may not have the ability to maintain or re-establish financial stability in all cases. Alternative policy choices such as macroprudential policy tool frameworks which are aimed at targeting the financial system as a whole may be implemented as a means of fortifying the economy. [ABSTRACT FROM AUTHOR]

We study the welfare effects of international monetary policy spillovers at the zero lower bound, focusing on the effects of forward guidance in a large economy ("foreign") on its smaller trading partner ("home") in scenarios motivated by the global financial crisis. We find that foreign forward guidance has an overall prosper‐thy‐neighbor effect on the home economy as long as it increases foreign welfare. This finding holds under alternative assumptions about exchange rate pass‐through or the degree of international financial integration. However, foreign forward guidance may worsen the trade‐off between the stabilization objectives of home monetary policy. [ABSTRACT FROM AUTHOR]

We empirically study the impact of inflation targeting credibility on business cycle synchronization with G-7 economies. To do this, we use a sample of 15 inflation targeting countries to develop and calculate a reputation-based credibility measure for long- and short-term memory. By using dynamic multipliers through a panel vector autoregressive model, our main findings indicate that greater credibility allows for greater anchoring of inflation expectations by economic agents. This would lead to a greater effectiveness of monetary policy in stabilizing the evolution of prices, allowing the output gap to be more sensitive to external aggregate demand shocks. Therefore, countries with inflation targeting regimes must develop and maintain credibility for their monetary policy if they want to encourage greater interactions with the rest of the world. [ABSTRACT FROM AUTHOR]

In this paper, we argue that the ECB's unconventional monetary policy announcements have generated significant spillover effects in Russia and Eastern Europe. The hypothesis is tested using OLS estimations of event-based regressions on monetary policy event dummies and seven financial variables in eleven East European countries including Russia. Overall, the empirical results associate the ECB's unconventional policy announcements with the appreciation of East European currencies, rising stock market indices as well as falling long-term government bond yields and lower sovereign CDS spreads in Eastern Europe and Russia. Bilateral integration with the eurozone is a key determinant of the strength of spillovers, with spillovers strongest in non-euro EU countries and weakest in non-EU East European countries. Furthermore, we find differentiated strength of spillovers to Russia compared to other non-EU East European countries, which we attribute to its fixed exchange rate regime. We also argue for the presence of portfolio rebalancing and confidence transmission channels. [ABSTRACT FROM AUTHOR]

We use the recently created monthly Interest Rate Uncertainty measure, to investigate monetary policy uncertainty across the US, Germany, France, Italy, Spain, UK, Japan, Canada, and Sweden in both the time and frequency domains. We find that the largest spillover indices are from innovations in the country itself; however, there are some instances where spillover indices between countries are large. These relationships change over time and we observe large variances in pairwise spillovers during the global financial crisis. We find that most of the volatility is confined to the crisis period. Policy makers should consider accounting for the spillovers from the US, Germany, France and Spain, as we found that they are the most consistent net transmitters of monetary policy uncertainty. [ABSTRACT FROM AUTHOR]

We examine the role of US monetary policy in banking crises across the world by using a cross-country database spanning 69 countries over the 1870–2010 period. US monetary policy tightening increases the probability of a banking crisis for those countries with direct linkages to the USA, either in the form of trade links or significant share of USD-denominated liabilities. Conversely, if a country is integrated globally, rather than having a direct exposure, the effect is ambiguous. These findings suggest that the effect of US monetary policy in global banking crises is not uniform and is largely dependent on the nature of linkages with the USA. [ABSTRACT FROM AUTHOR]

This paper puts forward a proposal to help monetary policies confront the challenge of the “normalisation” of money creation and interest rates. The difficult unwinding of years of unorthodox policies put financial stability at risk in major monetary centres and in EMEs. The authors argue that global coordination is crucial to facing this challenge. They propose to convene appropriate official meetings to coordinate in an explicit, formal, and wellcommunicated way the process of normalisation and the discussions on the needed longterm changes in the strategy and institutional setting of monetary policies.

This paper investigates the impacts of conventional and unconventional US monetary policies on global financial markets, using the global vector autoregressive (GVAR) model from 2004 through 2017. The impulse response results suggest unconventional easing had little effect on stock prices as in conventional easing while the responses of interest rates indicate liquidity was provided throughout the world. An unconventional US monetary tightening policy shock could effectively affect the stock prices of the world as is the case with a conventional US monetary tightening shock. Furthermore, the transmission of a US monetary policy shock to stock prices via exchange rates tends to attenuate the decrease in stock prices both in the conventional and unconventional tightening (the exit from a zero rate) phases. On the other hand, the transmission tends to push down stock prices in the conventional, unconventional monetary easing and the unconventional tightening (the shadow rate is negative) phases. [ABSTRACT FROM AUTHOR]

This paper studies the synchronization of financial cycles across 17 advanced economies over the past 150 years. The comovement in credit, house prices, and equity prices has reached historical highs in the past three decades. While comovement of credit and house prices increased in line with growing real sector integration, comovement of equity prices has increased above and beyond growing real sector integration. The sharp increase in the comovement of global equity markets is particularly notable. We demonstrate that fluctuations in risk premiums, and not risk-free rates and dividends, account for a large part of the observed equity price synchronization after 1990. We also show that US monetary policy has come to play an important role as a source of fluctuations in risk appetite across global equity markets. These fluctuations are transmitted across both fixed and floating exchange rate regimes, but the effects are more muted in floating rate regimes. [ABSTRACT FROM AUTHOR]