Monetary Economics

Using micro-level panel data, the paper analyzes the impacts of macroeconomic uncertainty and country risk on real investment under financial liberalization. The results suggest that increasing macroeconomic volatility and country risk hurt fixed investment spending of real sector firms.

Employing a matched employer-employee dataset, this paper explores the effects of exchange rate volatility on the growth performances of domestic versus foreign, and publicly traded versus non-traded private manufacturing firms in a major developing country, Turkey. The empirical results using dynamic panel data estimation techniques and comprehensive robustness tests suggest that exchange rate volatility has a significant growth reducing effect on manufacturing firms. However, having access to foreign, and to a lesser degree, domestic equity markets is found to reduce these negative effects at significant levels. These findings continue to hold after controlling for firm heterogeneity due to differences in export orientation, external indebtedness, profitability, productivity, size, industrial characteristics, and time-variant institutional changes.

The objective of this study was to analyze the money demand function for Zambia for the period 1978 – 2018 using annual time series data. The study employed the Gregory Hansen cointegration technique. The study also employed Hendry’s General to Specific technique to estimate the error correction model by obtaining a parsimonious model. The results of the Gregory Hansen test confirmed the presence of a cointegrating relationship and selected the GH-2 model as the most plausible model with a level shift and a trend. The results also endogenously determined 1994 as the break year in the money demand function. Other interesting results obtained by the study suggest that inflation and interest rate are the robust determinants of real money demand both in the short and long run. Furthermore, unlike many other developing countries, the results show that money is a necessity in Zambia. The other interesting results suggested by the study are that the financial sector reforms of 1994 diminis...

The results show that financially-constrained firms are more likely to hold extra cash out of their cash inflows than their unconstrained counterparts. Further, the sensitivity of cash holdings to cash inflows is more in growing firms than other firms.

This paper investigates‐whether liquidity and liquidity risk are priced in Japan. Using modified Amihud illiquidity measures, we find both cross‐sectional and time series evidence that liquidity is priced in the Japanese stock market during the period 1975–2006. The evidence is largely consistent with Amihud's (2002) findings in the US market. We further employ the liquidity‐adjusted CAPM proposed by Acharya and Pedersen (2005) to examine whether liquidity risk is priced in Japan. Consistent with Acharya and Pedersen's findings in the US, we show that liquidity risk is priced in the stock market, in addition to the liquidity level. These findings strengthen the confidence that liquidity is a determinant of stock returns.

Empirical investigations examining the relationship between budget deficits, monetary growth and inflation have not reached a consensus on the possible relationship between deficits, monetary growth and the rate of inflation. But the major outcome from the empirical studies indicated strong evidence that a budget deficit financed through monetisation and a rising money supply could lead to inflation. The inflationary effect of budget deficits depends on the means by which the deficit is financed and the impact of that on aggregate demand. In this study, budget deficits, monetary growth and inflation relationships are investigated by utilizing the ARDL bounds testing approach for Turkey over the period 1992:1-2006:12. While empirical results show that there is a statistically positive relationship between monetary growth and inflation in both long and short run, no connection found between inflation and budget deficit in the both runs.

This study examined interest rate variations among banks in Ghana. The objective of the study was to estimate the key driving factor(s) that influences interest rate spreads in Ghana. It was also the aim of this study to examine the impact of the 2008/2009 financial crises on this relationship, to know whether ownership (foreign and local banks) differences in this relationship is significant and to know whether age of the bank determines their interest rate spread. The study used an unbalanced panel of all 28 banks from 2000 to 2011. The fixed effect estimation technique was employed throughout the analysis of data. The study found that, for bank specific variables, age of a bank was significant and a positive determinant of net interest margin while ownership structure had a significant negative impact on net interest margin. This suggests that banks that have been in operations in the country for a long time seem to enjoy higher interest margins while generally most of the foreig...

This paper conducts a first systematic investigation of the determinants and costs of terrorism attacks at the aggregate level. We use newly assembled datasets on terrorism attacks, natural disasters and bank and currency crises to answer three questions: what are the determinats of terrorism incidence, is there an output cost after a terrorist attack and do democracies suffer a larger or smaller cost? We find that rich countries are the most prone to suffer attacks while democracies are neither more nor less vulnerable than other countries. There is a cost to terrorism, which is quantitatively small and associated with the occurrence of an event rather than with the number of casualties. Finally, we find strong evidence that the output cost of attacks is smaller in democracies.

The article is based on empirical data from Australian Economy. It made an attempt to evaluate the success of Reserve Bank of Australia (RBA) in controlling inflation by aggressively using cash rate. The main objective of the research is to find out the relationship of RBA's monetary policy with Taylor Rule; whether it follows the Taylor Rule mechanically or uses a different form (e.g. forward looking) or depends on other factors as well. Other models have been used for estimation and the results are analyzed subsequently. The evidences from the test results suggest the successful implementation of interest rate rule by the Reserve Bank to stabilize the inflationary pressure in terms of forward looking perspective. The monetary policy has evolved in the last few decades towards a new concept-inflation targeting. Many countries are already practicing inflation targeting as a tool for monetary policy. New Zealand was the first country that introduced inflation targeting in 1990. Till then it dispersed to other countries, i.e. Canada, UK, Sweden, Australia, Finland etc. The basic idea of inflation targeting is that, central bank adjusts the short term interest rate in such a way that ensures the projections of inflation and other variables satisfy the target criterion. Though the objective of inflation targeting is to stabilize the inflation around the target, it also takes into account the importance of output gap by allocating some weight onto it. The inflation targeting is based on the following characteristics: Numerical Inflation Target: Central bank usually specifies the target as a range rather than point estimation. Inflation-Forecasting-Targeting: The decision making process is stated as inflation-forecasting-targeting. Transparency & Accountability: The overall process must be transparent and central bank must be accountable for the consequences. Usually, in the inflation targeting regime, central bank makes public announcements about any changes in policy indicating both current inflation and expected future inflation states and steps needed to keep inflation in track. The desired level of target inflation actually achieved gradually over a period than in one instance. The stability is linked with the concept "Price Stability", and this price stability does not refer to zero inflation rather it is closer to a low level (i.e. 2%) annual rate of price changes. The target price level need not remain constant indefinitely, but could be allowed to drift upward in a predetermined way over time (Goodhart and Vinals, 1994; Svensson, 1996).

Effective corporate tax rate is a finance subject of interest to firms, policy makers and researchers. It measures level of tax burden at firm level. Thus, governments implement various investment incentives to influence effective corporate tax rate. The effective corporate tax rate in Kenya is still a problem averaging 31.3 percent for the last 10 years. Such high effective corporate tax rate militates against desired competitive corporate environment for the manufacturing sector. In the last ten years, the manufacturing sector has deteriorated to 7.4 percent contribution to gross domestic product which is less than 15 percent as envisaged in Kenya Vision 2030. This undesirable phenomenon prompted design of this study. The objective of the study was to determine the effect of investment incentives on effective corporate tax rate. The study adopted positivist philosophy and longitudinal research design. A sample of 278 firms provided secondary data for the period 2010 to 2020. Descriptive and inferential statistics were conducted using panel data regression. The study established that investment incentives are statistically significant predictors of effective corporate tax rate for manufacturing firms in Kenya. The study recommends that public policy makers should design appropriate profit based, capital investment and custom duty incentives as part of fiscal policy instruments to grow firms involved in manufacturing. The study has added to finance knowledge that fiscal policy affects corporate operations. However, there is need for further investigation on other possible investment incentives that were not covered in this study that influence effective corporate tax.

Purpose: The objective of this study is to examine the impact of investor confidence, corporate governance and stock liquidity on dividend policy of firms listed on Pakistan stock exchanges from 2010-2015. The liquidity constraint enabled a superior association with the interests of the controlling shareholders, particularly outside investors, which make a significant enhancement in firms’ liquidity and governance. Findings: Our results indicate that dividends have a less significant impact on investor confidence after the corporate governance. Practical Implication: Our interpretation is that the improvement in corporate governance, especially the improvement in the alignment between growth opportunities and cash dividends, may take longer time to emerge. These findings provide strong evidence that shift in corporate governance and stock liquidity influence dividend policy of a firm in a substantial manner. Another implication is that stock liquidity matters in firms’ dividend deci...

We analyze the effectiveness of various macroprudential policy instruments in reducing the procyclicality of loan-loss provisions (LLPs) using individual bank information from over 65 countries and applying the two-step GMM Blundell-Bond (1998) approach with robust standard errors. Our research identifies several new facts. Firstly, borrower restrictions are definitely more effective in reducing the procyclicality of loan-loss provisions than other macroprudential policy instruments. This effect is supported in both unconsolidated and consolidated data and is robust to several robustness checks. Secondly, dynamic provisions, large exposure concentration limits and taxes on specific assets are effective in reducing the procyclicality of loan-loss provisions. And finally, we find that both loan-to-value caps and debt-to-income ratios, are especially effective in reducing the procyclicality of LLP of large banks. Concentration limits and taxes are also effective in reducing the procyclicality of LLP of large banks. Dynamic provisions reduce the procyclicality of LLP independently of bank size.

UW FM Working Paper Series are written by researchers employed at the Faculty of Management of UW and by other economists, and are published by the Faculty. DISCLAIMER: An objective of the series is to get the research results out quickly, even if their presentations are not fully polished. The findings, interpretations, and conclusions expressed in this Working Paper are those of their author(s) and do not necessarily the views of the Faculty of Management of UW.

Effective corporate tax rate is a finance subject of interest to firms, policy makers and researchers. It measures level of tax burden at firm level. Thus, governments implement various investment incentives to influence effective corporate tax rate. The effective corporate tax rate in Kenya is still a problem averaging 31.3 percent for the last 10 years. Such high effective corporate tax rate militates against desired competitive corporate environment for the manufacturing sector. In the last ten years, the manufacturing sector has deteriorated to 7.4 percent contribution to gross domestic product which is less than 15 percent as envisaged in Kenya Vision 2030. This undesirable phenomenon prompted design of this study. The objective of the study was to determine the effect of investment incentives on effective corporate tax rate. The study adopted positivist philosophy and longitudinal research design. A sample of 278 firms provided secondary data for the period 2010 to 2020. Descriptive and inferential statistics were conducted using panel data regression. The study established that investment incentives are statistically significant predictors of effective corporate tax rate for manufacturing firms in Kenya. The study recommends that public policy makers should design appropriate profit based, capital investment and custom duty incentives as part of fiscal policy instruments to grow firms involved in manufacturing. The study has added to finance knowledge that fiscal policy affects corporate operations. However, there is need for further investigation on other possible investment incentives that were not covered in this study that influence effective corporate tax.

In the article, the effects of oil price changes on inflation and the exchange rate in Saudi Arabia, Iraq, Kuwait, and UAE, as well as in Azerbaijan, were econometrically assessed. The comparison between Azerbaijan and these Arab countries was made because oil revenues play an important role in the economy of these countries, but its effects are different. Saudi Arabian riyal, Iraqi dinar, Kuwaiti dinar, and UAE dirham depend on oil prices in the world market for the long run. In the short run, there is no such dependence. It is confirmed that Azerbaijani manat is dependent on oil revenues for the long run. Addiction is not felt in the short run. In the oil-rich Arab countries and Azerbaijan, the non-dependence of the national currency on the world market on oil prices is due to the state regulation of the national currency's exchange rate in these countries. In none of these countries is the national currency liberal, and its exchange rate is not determined by supply and demand in the market.

This paper identifies which of the two factors, namely labour and capital, bears the cost of currency crises and for what reasons. It analyzes two main types of effects that currency crises may have on the labour share: across sector effects and within sector effects. We build a descriptive model with a tradable sector and a non-tradable one which can differ in their capital intensities so that structural changes occurring during currency crises may change the aggregate level of the labour share. The model also highlights that crises erode the bargaining power of workers so that within sectors, crises lower the labour share. We perform estimations on manufacturing sectoral panel data for 20 countries which have experienced currency crises. We conclude that currency crises lower the aggregate manufacturing labour share by 2 points on average and that this decline reflects mostly changes within sectors.

This study aims to analyze the influence of macro economy between composite stock prices index. The dependent variable in this study was represented by the composite stock price index, while the independent variables consist of exchange rate, interest rate, inflation and oil price. The sampling used in this research observation period were 6 years during 2010-2015, then the data was analyzed by Multiple Linear Regression Test. The results of this study indicate that there were three variables that affect the composite stock price index, it’s a exchange rate, interest rate and oil prices, while inflation have no effect on composite stock price index. Anova test result indicates exchange rate, interest rate, inflation and oil price simultaneously influence the composite stock price index. The test result show that these variables have significant positive impact on stock prices, i.e 0,000.

Exchange rate is known as the one of the crucial element for the development of the economy, it is seen that volatility hassignificant influence on the international trade. In this paper analyzed that impact of inflation rate and money supply onthe volatility of exchange rate of India. We collected the monthly data to estimate the short and long run relationshipbetween these variables. For this purpose, we have applied theJohansen Cointegration, VECM, GCT and IRF for analysisthe response of different shocks on the variables. This paper is showing that high money supply and interest rate increasethe inflation rate, which leads to increase the volatility in exchange rate on India.

The chances for fiscal and monetary influence on the business cycle of Bulgaria under a currency board arrangement have been analyzed. The determinants of Bulgaria’s business cycle phase and output gap from the first quarter of 2000 till the second quarter of 2017 have been identified. The effects of minimum reserve requirements, fiscal balance, government revenue, government expenditure and government debt on the business cycle phase and the output gap have been studied. Two research methods have been employed – logistic regression and ordinary least squares regression of times series data. The study results imply that all mentioned variables except for government debt have a statistically significant impact on the output gap. The business cycle phase is significantly affected by all mentioned variables with the exception of government expenditure.

This paper analyses the reasons why Ecuador changed its monetary policy by substituting the national currency Sucre by US Dollar; the benefits and costs of dollarization in Ecuador; examines economic performance by using data collected by the Central Bank and International database available, the period from 1996 to 2007 have been chosen for this study; and uses variables like GDP, Foreign Direct Investment, Debt, Taxes and Inflation.

We have shown, in a series of articles, that a classical description of a large number of economic agents can be replaced by a statistical fields formalism. To better understand the accumulation and allocation of capital among different sectors, the present paper applies this statistical fields description to a large number of heterogeneous agents divided into two groups. The first group is composed of a large number of firms in different sectors that collectively own the entire physical capital. The second group, investors, holds the entire financial capital and allocates it between firms across sectors according to investment preferences, expected returns, and stock prices variations on financial markets. In return, firms pay dividends to their investors. Financial capital is thus a function of dividends and stock valuations, whereas physical capital is a function of the total capital allocated by the financial sector. Whereas our previous work focused on the background fields that describe potential long-term equilibria, here we compute the transition functions of individual agents and study their probabilistic dynamics in the background field, as a function of their initial state. We show that capital accumulation depends on various factors. The probability associated with each firm's trajectories is the result of several contradictory effects: the firm tends to shift towards sectors with the greatest long-term return, but must take into account the impact of its shift on its attractiveness for investors throughout its trajectory. Since this trajectory depends largely on the average capital of transition sectors, a firm's attractiveness during its relocation depends on the relative level of capital in those sectors. Thus, an under-capitalized firm reaching a high-capital sector will experience a loss of attractiveness, and subsequently, in investors. Moreover, the firm must also consider the effects of competition in the intermediate sectors. An under-capitalized firm will tend to be ousted out towards sectors with lower average capital, while an over-capitalized firm will tend to shift towards higher average-capital sectors. For investors, capital allocation depends on their short and long-term returns. These returns are not independent: in the short-term, returns are composed of both the firm's dividends and the increase in its stock prices. In the long-term, returns are based on the firm's growth expectations, but also, indirectly, on expectations of higher stock prices. Investors' capital allocation directly depends on the volatility of stock prices and firms' dividends. Investors will tend to reallocate their capital to maximize their short and long-term returns. The higher their level of capital, the stronger the re-allocation will be.

We examine the conditions under which a central bank raises welfare by revealing its ex-pected future interest rate in a simple two-period model with heterogeneous information. The release of this information fully aligns central bank and private sector expectations about future shocks, therefore about future ination and interest rates, which determine the current long-term interest rate. Transparency, therefore, tends to raise welfare because it reduces the impact of expectation errors on ination volatility. Yet, it may be desirable for the central bank not to release the expected interest rate. This possibility arises because of how the private sector inter-prets the latest interest rate decision. The less msitaken it is, the more transparency is desirable. Conditions that favor the case for transparency are a high degree of precision of central bank relative to private sector information, reasonably good early information and a high elasticity of current to expected ination.

We examine the conditions under which a central bank raises welfare by revealing its expected future interest rate in a simple two-period model with heterogeneous information between the central bank and the private sector. The central bank optimally sets the interest rate given its information. The model is designed to rule out common-knowledge and time inconsistency eects. Transparency - when the central bank publishes its interest rate forecast - fully aligns central bank and private sector expectations about the future in‡ation rate. The private sector fully trusts the central bank to eliminate future in‡ation and sets the long-term interest rate accordingly, leaving only the unavoidable central bank forecast error as a source of in‡ation volatility. Under opacity - when the central bank does not publish its interest rate forecast - current period in‡ation diers from its target not just because of the unavoidable central bank expectation error but also because central bank and p...

We examine the effects of the release by a central bank of its expected future interest rate in a simple two-period model with heterogeneous information between the central bank and the private sector. The model is designed to rule out common-knowledge and time-inconsistency effects. Transparency—when the central bank publishes its interest rate path—fully aligns central bank and private-sector expectations about the future inflation rate. The private sector fully trusts the central bank to eliminate future inflation and sets the long-term interest rate accordingly, leaving only the unavoidable central bank forecast error as a source of inflation volatility. Under opacity—when the central bank does not publish its interest rate forecast—current-period inflation differs from its target not just because of the unavoidable central bank expectation error but also because central bank and privatesector expectations about future inflation and interest rates are no longer aligned. Opacity ...

Noting that the literature has focused on the link between the level of public expendi ture and growth, we derive conditions under which a change in the composition of expenditure leads to a higher steady-state growth rate of the economy. The conditions depend not just on the physical productivity of the different components of public expenditure but also on the initial shares. Using data from 43 developing countries over 20 years we show that an increase in the share of current expenditure has positive and statistically significant growth effects. By contrast, the relationship between the capital component of public expenditure and per-capita growth is negative. Thus, seemingly productive expenditures, when used in excess, could become unproductive. These results imply that developing-country governments have been misallocating public expenditures in favor of capital expenditures at the expense of current expenditures.

Pese al respaldo empírico con el que ha contado la teoría de la restricción externa desarrollada a partir del modelo de Thirlwall, éste muestra algunas deficiencias destacadas en la literatura. En nuestra opinión, dos de ellas merecen ser analizadas. Por un lado, la necesidad de incorporar desequilibrios transitorios de la balanza de pagos y los consiguientes flujos de capital. Por otro, creemos los precios relativos pueden desempeñar un papel importante en el comercio exterior, sin que ello invalide la existencia de una restricción externa. El objetivo del presente trabajo consiste en desarrollar un modelo que incorpore ambas cuestiones, permitiendo, así, un mayor protagonismo a los precios relativos y a los desequilibrios temporales de la balanza de pagos. Este modelo se emplea posteriormente para analizar la evolución de las economías española y portuguesa en las últimas décadas y, en especial, las diferencias mostradas desde su incorporación a la Eurozona.

This paper examines the effect of the Riksbank's currency market interventions on the level and the volatility of the USD/SEK and DEM/SEK exchange rates between 1993 and 1996. To model volatility both GARCH models and implied volatilities from currency options are used. Some support is found for the idea that interventions affect the exchange rate level during certain sub periods but overall the results are weak. Furthermore, in line with the findings for other countries, little empirical support is found for the hypothesis that central bank intervention systematically decreases exchange rate volatility.

Financial economists view the tax benefits of leasing as a complex function of the tax deductions and income associated with rentals, depreciation, and interest attributed to lessors and lessees facing different tax rates. We offer two ways to simplify that complexity using the concept of present value depreciation, which reflects the decline in an asset's value (present value of remaining cash flows) over time. We rely on the insight in Samuelson (1964) that tax rates do not matter if depreciation allowed under tax rules equals present value depreciation. We show that tax benefits of leasing, between a high tax rate lessor and zero tax rate lessee, equal the present value of lessor tax shields on a) the difference between actual tax depreciation and tax-neutral depreciation implied by actual rentals, or b) interest expense associated with a "loan" from the lessor to the lessee created by deferring actual lease rents relative to tax-neutral rents implied by actual tax depreciation.

We analyse how tax incentives in the form of accelerated depreciations ("bonus depreciation") affect business investment. By exploiting exogenous variation in tax regulation of a regional bonus depreciation program in the former East Germany, we identify and quantify the impact from bonus depreciation on building and equipment investments at the extensive and intensive margins in the German manufacturing industry. We observe a stronger response for building investments and from large firms. There is only weak evidence of subsidy shopping but stronger evidence of investment shifting to years with more generous bonus depreciation regulations.

In this paper, we use an exogenous variation in tax regulations to analyze the impact of bonus depreciation programs on business investment. To promote economic convergence of Eastern and Western Germany after reunification, bonus depreciation tax incentives were granted for investments in Eastern Germany before 1999. Using business establishments in Western Germany as control group, we address the question if and to what extent these investment tax incentives boosted investment. In line with the theoretical literature, there is empirical evidence for strong and significant effects of the bonus depreciation program. The effects were stronger for long-lived capital goods, large businesses, and investments before the tax incentives were cut back in 1997. Moreover, there was a significant reduction in building investment in the year after the expiration of the program. This provides evidence for a 'shifting' of investment between periods with higher and lower benefits.

This paper examines the effect of tax incentives in the form of bonus depreciation on the quality of investment. Using the expiration of tax incentives via bonus depreciation in East Germany and a representative panel of West German establishments, we show that bonus depreciation significantly lowers the quality of investment. The average quality of investments, measured by the responsiveness of future sales to current investment, reduces by 22.6-34.6%. This adverse effect of tax subsidies is greater for jurisdictions with higher tax rates as well as for large or high-productivity firms. Overall, while increasing investment quantity, as shown by prior literature, tax incentives such as bonus depreciation substantially reduce the quality of investments.

The nexus between oil prices and inflation has piqued the curiosity of policymakers, business leaders, and academics alike since oil price fluctuations have an impact on the inflation rates and accordingly on the entire economy. In this paper, we tried to investigate the relationship between oil prices and inflation in Turkey during the period from 1995 to 2022, utilizing the Bounds Cointegration test. The dependent variable is Inflation, consumer prices (annual %). The independent variables are Gross national expenditure (% of GDP), Broad money growth (annual %), and Oil prices -Crude oil prices. The results of this test confirm the long-run cointegration between inflation and oil prices during the studied interval. It's imperative for policymakers to contemplate amplifying economic tenacity by expanding the avenues of national revenue and targeting selfsufficiency in energy or a diverse energy landscape.

J. suggests that central banks shift short-term lending rates in the same direction as the difference between actual and potential gross domestic product and the deviations between actual and targeted inflation rates. This rule, called the Taylor Rule, ensures that the monetary policies carried out by central banks are predictable. Thus, economic units are protected from the cost of missing information. Complex rules set forth by monetary authorities as an optimal policy rule can be limited because they cannot be followed by economic agents. The Taylor Rule, which is a simple rule, is easier to understand and apply. The exchange rate is not included in the original Taylor Rule (1993). In this study, the Taylor Rule has been expanded to include the exchange rate. Therefore, the Taylor rule that applies to the validity of some developed countries to Turkey is investigated using variable data sets that make up the extended Taylor Rule.

This study aims to analyze the effect of Return on Assets (ROA), Debt to Assets Ratio (DAR) and Current Ratio (CR) on the stock prices of real estate companies listed on the Indonesia Stock Exchange (IDX) in 2016-2020. Return on assets (ROA) is measured by profit before interest tax, depreciation and amortization of total assets. The debt-toassets ratio (DAR) is measured by total liabilities divided by total assets, and the current ratio (CR) is measured by total current assets divided by total current liabilities. So far, the stock price is measured by the closing price. The method used is purposeful sampling. The samples used in this study were 31 real estate and real estate companies listed on the Indonesia Stock Exchange (IDX) during 2016-2020. The type of data is secondary data from financial reports and annual reports. The data analysis method used in this study is multiple linear regression analysis. The results of hypothesis testing show that simultaneously return on assets (ROA), debt to assets ratio (DAR) and current ratio (CR) have a significant effect on price.share. Partly, only return on assets (ROA) has a significant effect on stock prices. Meanwhile, the partial Debt to Asset Ratio (DAR) and Current Ratio (CR) have no significant effect on stock prices.

We assess the transmission of monetary policy and the impact of fluctuations in commodity prices on the real economy for the five biggest and fastest growing emerging market economies: Brazil, Russia, India, China and South Africa (BRICS). Using modern econometric techniques, we show that a monetary policy contraction has a negative effect on output, suggesting that it can lean against unexpected macroeconomic shocks even when the financial markets are not welldeveloped in this group of countries. We also uncover the importance of commodity price shocks, which lead to a rise in inflation and demand an aggressive behaviour from central banks towards inflation stabilisation.

PurposeThe goal of this work is to determine whether Bitcoin behaves as a safe-haven asset. In order to do so, the influence of Economic Policy Uncertainty (EPU) on Bitcoin returns and volatility was studied.Design/methodology/approachIt is evaluated whether, when compared with the evolution of EPU, Bitcoin's returns and volatility show behaviours typical of safe havens or rather, those of conventional speculative assets. When faced with an increase in EPU, safe havens – such as gold – can be expected to increase their returns and volatility, while conventional speculative assets will increase their volatility and reduce their returns. This study uses simple linear regression and quantile regression models on a daily data sample from 19 July 2010 to 11 April 2019, to analyse the influence of EPU on the returns and volatility of Bitcoin and gold.FindingsBitcoin's returns and volatility increase during more uncertain times, just like gold, showing that Bitcoin acts not only as...

This study aims to examine the influence of macroeconomic indicators and infrastructure spending on foreign direct investment (FDI) in the period 1981 to 2018. This study uses a quantitative approach. The sample in this study is macroeconomic variables, which include gross domestic product, inflation, debt to GDP ratio, interest rates, exchange rates, and infrastructure spending in the 1981 to 2018 period. The analysis technique used is cointegration and error correction modeling. The analysis shows that gross domestic product, inflation, debt to GDP ratio, interest rates, exchange rates, and infrastructure spending have a long-term and short-term relationship to FDI.

This study aims to examine the influence of macroeconomic indicators and infrastructure spending on foreign direct investment (FDI) in the period 1981 to 2018. This study uses a quantitative approach. The sample in this study is macroeconomic variables, which include gross domestic product, inflation, debt to GDP ratio, interest rates, exchange rates, and infrastructure spending in the 1981 to 2018 period. The analysis technique used is cointegration and error correction modeling. The analysis shows that gross domestic product, inflation, debt to GDP ratio, interest rates, exchange rates, and infrastructure spending have a long-term and short-term relationship to FDI.

We analyze fiscal policy procyclicality in resource-rich countries. We obtain a strong Ushaped relationship between the procyclicality of government capital expenditures and the resource richness measure comprised of the mineral exports share in total merchandise exports for developing countries. Such a relationship is robust to different methodologies and various checks. We consider two hypotheses: first, the political economy hypothesis, and second, the borrowing constraints hypothesis. Empirical observations appear to be consistent with the hypotheses. We build a model able to generate a U-shape effect combining political economy and borrowing constraint hypotheses. We argue that with a model of simple settings such a U-shape relationship can be obtained and interpreted.

We analyze fiscal policy procyclicality in resource-rich countries. We obtain a strong Ushaped relationship between the procyclicality of government capital expenditures and the resource richness measure comprised of the mineral exports share in total merchandise exports for developing countries. Such a relationship is robust to different methodologies and various checks. We consider two hypotheses: first, the political economy hypothesis, and second, the borrowing constraints hypothesis. Empirical observations appear to be consistent with the hypotheses. We build a model able to generate a U-shape effect combining political economy and borrowing constraint hypotheses. We argue that with a model of simple settings such a U-shape relationship can be obtained and interpreted.

One of the macroeconomic consequences of the COVID-19 epidemic is that the global economy has seen a robust increase in the countries‘ gross external debt and the sovereign public debt that is part of it. Nor have the eurozone Member States escaped this effect. The increase in gross external debt and sovereign government debt also means that it has become theoretically more risky for investors to buy debt securities (typically bonds). Theoretically, however, it follows that as a result of the increase in risks in the country, CDS spreads had to rise as well. The study uses a correlation calculation to show that the development of the price of CDSs is more closely correlated with gross government debt than with gross external debt. Using hierarchical cluster analysis, the study groups the countries of the Eurozone. The basis for clustering is the close relationship between a country‘s gross government debt and its CDS spread over the period under review. A relevant conclusion of the ...

This paper analyzes the determinants of scal policies during the Covid-19 crisis. Using the robust regression MM-estimator for 180 countries we have found that GDP per capita, quantitative easing, debt to GDP ratio, trade openness and total revenue had a positive and a statistically signi cant impact on the scal policy responses, while unemployment rate and current account balance had a negative one. Furthermore, we have shown that the proportion of the population aged 65 and above had a positive in uence on the size of scal packages. In contrast, factors such as political stability, absence of violence, and political ideology had no discernible impact on the allocation of scal aid. The outcomes of our ndings carry substantial implications and offer valuable insights for authorities and policymakers.

Porang (Amorphophallus muelleri B.) is a type of tuber that contains glucomannan, which is used as a raw materials for the food, chemical, pharmaceutical and cosmetic industries. In vitro culture as porang propagation method using plant parts (leaf explants) was developed under aseptic environmental conditions. Sterilization is an important aspect in the success of micropropagation in obtaining sterile explants. This research method used a Completely Randomized Design (CRD) with 2 factors, namely clothes bleach sterilant containing NaOCl 5.25% (Bayclin®) at 30% concentration for 15 minutes (Treatment A), and using clothes bleach containing NaOCl 5.25% (Bayclin®) at 30% concenteration for 15 minutes + 70% alcohol for 15 seconds (Treatment B). Each treatment was filled with 3 explants, and every treatment was repeated 27 times, so that experimental units were obtained with a total of 162 explants. Treatment B is the best treatment in obtaining sterile explants, because it is more effective in removing contamination and inhibiting contamination and browning with survival the highest rate of 51.85% and the lowest mortality rate of 48.15%, it can also suppress and inhibit the appearance of contamination and browning compared to treatment A.

The Greek economy was affected very badly by the global economic and financial crisis of 2007-2008. The main reason of this catastrophic event is that the country's speedy economic and financial growth in the pre-crisis period heavily based on the foreign funds, and the flow of these funds stopped immediately -even turned to opposite direction-with the spread of the crisis to Europe. This negative happening as well as the rearrangement of the public debts and remarkable reduction in the bank deposits led to a big financial crisis, and thus economic recession. Meanwhile, the loan quality in the banking system worsened extremely -almost half of the credits turned to bad loan-due to the macroeconomic deterioration as well as the banks' very tolerated lending policies before the crisis, the borrowers' imperfect attitudes, and improper governance. The improvement in NPLs ratio, which started simultaneously with the modest economic recovery in 2017, decreased it to 30.2 percent in 2020 from its peak level of 48.5 percent in 2016. However, a big part of it has been achieved thanks to write-offs and loan-sales.In this study, it was aimed to measure the effect of the changes in economic growth on these drastic changes in NPLs ratio. Although the changes in the gross domestic product (GDP) and NPLs ratio have always been in consistency with the economic theory, except the pandemic year of 2020, the often big differences between their changing rates imply that some other factors have also played significant role on NPLs movements. The findings of some studies for Greece indicate to remarkable impact of both economic growth and the other factors on bad loans issue. The results of our regression analysis also show that the relation between economic growth and NPLs is not so strong.In spite of the noticeable improvement, NPLs ratio is still at a very high level and requires constant remarkable declines in order to come down to the generally accepted levels. To perform this and have economic and financial recovery at the same time, the recovery should not be achieved only by write-offs and portfolio sales, but by collections from borrowers, and executions. The banks and the government should make the necessary changes in their policies and applications so as to decrease NPLs ratio through new lending, compromise with proper borrowers, and court executions.

In this paper we derive a new model on exchange rate response to a lasting higher interest rate level. Contemporary models do not provide a convincing explanation for this relationship, but recent research suggests that models based on demand-pull effects to be somewhat confined to small funding cost increases. This would make cost-push effects more relevant when the interest rate differential (IRD) is larger and longer-lasting. The new model accounts for cost-push effects and suggests that a persistent higher IRD can evoke multiple responses, including currency depreciation, specialization, inflation, and wage drift. The model suggests that excessive long-lasting IRD can spark a chronic interaction between inflation and currency depreciation. Empirical data substantiate the prediction capability of the new model. We also demonstrate how the uncovered interest rate parity (UIP) principle is a special case, which can explain its empirical research anomalies, and when carry trade is a profitable investment strategy.