Optimal input trade policy under economic uncertainties in a small open economy

This article theoretically analyses optimal input trade policy under economic uncertainties in a small open economy. The benchmark model explains both key business cycle moments and asset prices of a representative emerging economy, and the corresponding deterministic version of the model finds no gain by deviating from the free input trade policy. The main findings are as follows: (1) it is optimal for the government to subsidize imported intermediate inputs in the benchmark model and (2) the result is robust to various shocks, various key structural parameters and various preference specifications.     

Macroeconomic policy uncertainty shocks on the Chinese economy: a GVAR analysis

This article studies the spillovers of economic policy uncertainty (EPU) from developed economies to China in terms of the source, extent and persistence by estimating a global vector autoregressive (GVAR) model with both financial and trade variables acting as the transmission channels. Our findings confirm the existence of international transmissions of policy uncertainty, while the patterns differ markedly. The US EPU appears to be the most significant cause of the fall of export, industrial production, equity price and exchange rate, meanwhile, the EU EPU is also to be blamed for the depreciation of RMB. In contrast to industrial production, which shows the largest negative impact, Chinese inflation increases to a relatively smaller extent with the EPU shocks ranking as the US, Japanese and the EU. Regardless of the minor impact on a long-term interest rate, the short-term interest rate in China reacts positively to the European and US EPU shocks. Despite the independent national monetary policies, EPUs from the EU, Japan and the UK can decrease the Chinese monetary aggregate. In summary, the Chinese economy responds the most to the US EPU, especially to its inflation expectation disagreement component, whereas it responds the least to the UK EPU.     

Long memory,economic policy uncertainty and forecasting US inflation: a Bayesian VARFIMA approach

We compare inflation forecasts of a vector autoregressive fractionally integrated moving average (VARFIMA) model against standard forecasting models. U.S. inflation forecasts improve when controlling for persistence and economic policy uncertainty (EPU). Importantly, the VARFIMA model, comprising of inflation and EPU, outperforms commonly used inflation forecast models.     

The economic policy uncertainty and firm investment in Australia

ABSTRACT

This paper examines the impact of economic policy uncertainty (EPU) on the Australian firm investment activity. We find a significant positive relationship between the EPU and the firm investment over 2002 to 2017 period. Our main results remain unchanged after several endogeneity tests. Further analysis reveals that this relationship becomes pronounced for firms if their headquarters located in small states, firms with more tangible assets, higher operating cash flows and cash holdings, higher profits and leverage, but firms with fewer dividend payouts. Our paper sheds lights on the unique attribute of the impact of the EPU on the Australian firm investment activity and offers important policy and managerial implications.     

Model uncertainty and the rationality of economic policy

This paper examines the process of economic policy-making under conditions of model uncertainty. A median voter model is introduced in which the electorate is uncertain of the policy measures available as well as their respective outcomes and opinion formation is a social process of communication and contagion. Learning from experience is also considered. It is shown that economic policy-making under uncertainty produces novel policy routines, but that a mechanism of efficiently utilising the generated knowledge is missing.JEL Classification: D78, D83, H73     

The role of industrial policy in the economic development of Uzbekistan

This paper discusses the role of industrial policy in the economic development of Uzbekistan, which took a gradualist approach in transition and continued to record rapid economic growth from the early 2000s. It stopped depending on cotton monoculture and was able to achieve self-sufficiency in grain. It transformed itself from a net fuel importer to an exporter. The government promoted the manufacturing sector, focusing on the heavy industries, such as the automotive and chemical industries. Industrial restructuring in Uzbekistan has been supported by the industrial policy. The government has taken several industrial policy measures, including tax and financial incentives, state orders, policy selectively welcoming foreign direct investment, import protection and export promotion, and exchange-rate management. This paper provides policy implications for the other developing and transition economies pursuing economic development and considers the appropriate role of the government.     

The effects of economic policy uncertainty on China’s economy: evidence from time-varying parameter FAVAR

ABSTRACT

This article explores the effects of China’s economic policy uncertainty (EPU) on its fiscal policy, monetary policy and a wide range of macro-economic variables using a time-varying parameter FAVAR model. Based on monthly data from 07/2003 to 08/2017, the time-varying structure of the model allows us to capture the time-varying characteristics of the macro-economic variables and which channel is relevant. Empirical results reveal that the reaction of monetary and fiscal policies to EPU is highly asymmetric across macro-economic circumstances. Loose monetary and fiscal policies are adopted in response to EPU shocks during the financial crisis, while policies are moderately tightened after the crisis. The China Interbank Offered Rate (Chibor) responds more sensitively and severely than M2 to EPU shocks. Additionally, EPU shocks have a significant and negative impact on economic growth, consumption, exchange rates, bonds and the stock market, but showing a positive impact on credit, real estate and fixed asset investment (which might be due to China’s special economic market environment and the high investment return). The results indicate that EPU shocks significantly affect macroeconomic fundamentals through precautionary savings and financial market channels but lose their effectiveness through a ‘real options’ effect.     

碳市场与股票市场间的风险溢出效应研究

研究碳市场与股票市场间的风险溢出,深层次揭示其中的内在机制与规律,对于有效防范碳金融风险具有重要意义。本文基于广义预测误差方差分解构建溢出指数,从静态和动态两个层面捕捉中国碳市场与电力、材料、房地产、工业、金融、传统能源、新能源等股票板块市场之间的风险溢出强度和方向;在此基础上,进一步从复杂网络视角构建“碳-股票”系统的风险溢出网络,识别风险的中心与演化。结果表明：碳市场与股票市场之间存在一定的风险溢出,碳市场是各股票板块市场的风险净接收方,但不同板块的影响具有非对称性,其中新能源市场的影响最大。在宏观经济波动和有关政策出台时,碳市场与股票市场之间的风险溢出也会发生波动;工业板块市场是“碳-股票”系统的风险中心,基于上述结论提出了相关政策建议。     

列宁新经济政策理论中的“以退为进”策略及其当代启示

列宁的新经济政策是在“战时共产主义”政策弊端逐渐暴露、苏维埃政权面临着严重危机之时所采取的果断措施。在战时共产主义政策失败的前提下,列宁采取“以退为进”的迂回策略,创造性地提出了新经济政策思想。这不仅为经济文化落后国家建设社会主义提供了新的道路,也为中国的社会主义建设提供了借鉴。     

Economic policy uncertainty and the Chinese stock market volatility: new evidence

This study investigates the impacts of the economic policy uncertainty (EPU) indexes of China and the G7 countries on Chinese stock market volatility and further constructs a new diffusion index based on these indexes using principal component analysis (PCA) to achieve enhanced predictive ability. The in-sample results indicate that the EPU indexes of China and some of the G7 countries show a significantly negative impact on future volatility. Moreover, our constructed diffusion index also has a significantly negative impact. Furthermore, the out-of-sample results show that this diffusion index exhibits a significantly higher forecast accuracy than the EPU itself and combination forecasts. Finally, various robustness checks are consistent with our main conclusions. Overall, we construct a new and useful indicator that can substantially increase forecast accuracy with respect to the Chinese stock market.     

The source of global stock market risk: A viewpoint of economic policy uncertainty

This study explores the effect of economic policy uncertainty (EPU) in four countries or regions (China, Japan, Europe, and the United States) on the contagion risk of investments in the global stock market. The stock returns of 22 stock markets worldwide are analyzed to determine which region’s EPU exhibits the greatest effect on regional systematic risk in the global stock market and on volatility risk in individual stock markets. First, all of the samples, the markets of different continents and the spillover indices of the developed and emerging markets, are calculated to observe the dynamic correlation among these markets with the aim of quantifying regional systematic risk and further examining the contagion risk effect of EPU. The results indicate the following: EPU in China is the most influential, and its contagion risk spreads to different regional markets, except for Europe; the effect of EPU in the United States is inferior to that in China; EPU in Japan merely influences contagion risk in emerging markets; contagion risk in European markets is not influenced by the four EPU indices; and EPU in Europe is not influenced by contagion risk in the global stock market. However, according to the volatility risk in each market, the EPU in Europe and China respectively influence Asian countries and European countries the most. These results may be attributable to the extremely high trade dependence among these countries because the performance of international enterprises is mainly determined by the economic policies of their trading partners.     

交通基础设施、空间溢出与经济增长:来自中国的实证研究

This paper develops an empirical model to test the spatial spillover effects of transport infrastructure on economic growth. It uses spatial econometric techniques and provincial panel data of China from 1993 to 2004 to analyze the contribution of transport infrastructure to the economic growth of local province and its spatial spillover effects on the economic growth of other provinces. The main findings include: (1) Transport infrastructure and economic growth of China show an evident pattern of spatial clustering. They largely congregate in developed eastern coastal regions, forming a gradient gradually diminishing from east to west. (2) Output elasticity of local transport infrastructure is 0.106, between the values calculated by early researchers with time series data and panel data. (3) Spatial output spillovers from transport infrastructure are largely positive, but evidences of negative spatial spillovers are also found with population density spatial weights matrix model.      

The effect of economic policy uncertainty on bank valuations

This article examines how economic policy uncertainty (EPU) affects bank valuations. Using a large sample of banks over a long period, we find that EPU has a negative effect on bank valuations. One explanation for this result is that EPU reduces bank loan growth, and lower loan growth then leads to lower bank valuations. Consistent with this explanation, we find that the negative effect of EPU is more pronounced for banks with a higher ratio of loans to total assets.     

Conjectural variations, symmetric equilibria and economic policy

In this paper, we consider conjectural variations in a simple static general equilibrium model under oligopolistic competition. The modeling of conjectures captures the role played by beliefs in a micro-founded model. So, the economy may have three kinds of symmetric general equilibria. Furthermore, these equilibria can be Pareto-ranked by the conjectural variation parameter. Finally, we consider the implementation of a tax on the strategic behaviors in case of balanced-budget rule. The comparative statics illustrates the idea according to which the effectiveness of the multiplier mechanism to mitigate the market distortions depends on the symmetric equilibrium considered. Therefore, the effect of the tax on the prices and economic activity depends on the degree of market power which is conjectured by the agents.     

Environmental policy and long-term welfare in a tourism economy

A dynamic general equilibrium model of a small open economy specialized in producing tourism services is presented. The tourism package is a bundle of attributes provided by firms, the government and the natural environment. Investment in accommodation increases the number of visitors but also congests public goods and reduces environmental quality. The model is used to determine the conditions for the existence of a long-term double dividend. These conditions depend on both the initial level of environmental quality and the responsiveness of the tourism price to marginal changes in environmental and accommodation quality and congestion of public goods. Support from the Balearic Islands Government (PRIB-2004-10142) and helpful comments from anonymous referees are gratefully thanked.     

Economic policy uncertainty and demand for money in Australia

The demand for money has received a great deal of attention in the empirical literature. This literature, however, has emphasized factors such as interest rate, income, inflation rate and exchange rate as the primary determinants of money demand. Although an emerging strand of literature examines uncertainty as a potential determinant of money demand, findings have been mixed. Using a news-based Economic Policy Uncertainty (EPU) index and Australian quarterly data from 1998 to 2017, we study the impact of policy uncertainty on demand for money. Autoregressive distributed lag (ARDL) results show that the economic policy uncertainty measure has a negative short-run effect on the demand for money, suggesting the wider public hedge against future expected inflation, and positive long-run effect, whereby the broader public hold more cash to stay liquid during times of economic uncertainty. Also, introducing nonlinearity into the money demand equation, we find an asymmetric effect, more in favour of currency appreciations, supporting the expectations effect of further appreciations in exchange rate movements.     

发达国家发展循环经济的政策及启示

本文揭示了循环经济的内涵和特征,通过对日本、德国等发达国家发展循环经济的政策体系和手段的总结,分析并指出了我国发展循环经济的不足之处。我国要发展循环经济,必须借鉴发达国家的成功经验,从法律体系、经济政策、价格机制等方面完善制度建设,这是我国成功实施循环经济的关键性条件。     

Economic policy uncertainty,CEO characteristics and firm R&D expenditure: a Bayesian analysis

ABSTRACT

This paper applies a linear Bayesian regression model to study the effects of economic policy uncertainty (EPU) and Chief Executive Officer (CEO) characteristics on firm Research and Development (R&D) expenditure. We specifically analysed data from 1,163 Chinese companies listed as A-shares from 2008–2016. EPU is believed to curtail firm investments as it causes unexpected market conditions. Yet, our findings obtained with Bayesian analysis show a positive relationship between EPU and firm R&D expenditure. Specifically, we found that some CEO attributes (e.g., age, tenure and marketing/sales experience) led to a negative relationship between EPU and firm R&D expenditure, whereas other attributes (e.g., education, overseas study/work experience, product R&D experience, and process engineering experience) lead to a positive relationship. Our findings provide nuanced insights into how different CEO characteristics influence firms’ R&D expenditure in a context of uncertainty.