Global commodity prices and global stock market volatility shocks: Effects across countries

We investigate the time-varying dynamics of global stock market volatility, commodity prices, domestic output and consumer prices. We find (i) stock market volatility and commodity price shocks impact each other and the economy in a gradual and endogenous adjustment process, (ii) impact of commodity price shock on global stock market volatility is significant during global financial crises, (iii) effects of global stock market volatility on the US output are amplified by endogenous commodity price responses, (iv) effects of global stock market volatility shocks on the economy are heterogeneous across nations and relatively larger in twelve developed countries, (v) four developing/small economies are more vulnerable to commodity price shocks.     

Responding to High Commodity Prices

The recent commodity price boom resulted from rising demand in the face of a long period of low supply growth and market distortions. Structural factors are expected to return international commodity prices to relatively high levels as the global economy recovers. The Asian and Pacific economies and the region's poor will be among the most exposed to a rebound in prices. The recent response to high commodity prices can be improved upon. At the global level, the priority for Asian and Pacific governments is to seek a commitment to lessening distortions favouring bio-fuels. At the regional level, there is a need to address the use of trade restrictions on food commodities in Asia, notably rice. At a national level, the long-term neglect of the rural economy warrants correction; and efforts to expand and make social safety nets more 'market friendly' are called for.     

2011-2012年东盟经济的分析与预测

2011年东盟国家经济保持复苏的态势。随着欧元区主权债务危机的蔓延,世界经济增长趋于放缓,东盟国家的经济增长也呈现出减缓的趋势。为应对国内经济的下滑,一些国家开始逐步调整宏观经济政策的方向。同时东盟区域经济一体化取得新的进展。在新的国内外经济形势下,2012年东盟国家经济发展将面临新的挑战,这将考验各国政府的宏观调控能力。     

Disequilibrium analysis in developing economies: An overview

Disequilibrium is ubiquitous in most developing economies. In product markets, disequilibrium is pervasive in the tradeable goods sector due to foreign trade restrictions. In general, protection discriminates among domestic products, between domestic and foreign goods, and between domestic and foreign sales of any given commodity. Disequilibrium is also common in factor markets. Capital markets are frequently distorted by interest-rate ceilings and credit rationing. Labour markets are subjected to differential income tax rates, minimum wages and social security levies. Here, the techniques developed to analyse product and factor market disequilibrium and the empirical evidence measuring the economic costs of policy-imposed distortions are reviewed.     

Recovery from financial crises in peripheral economies, 1870–1913

What drives recoveries after financial crises? I address this question for the 1870–1913 “first era of globalization,” focusing on whether trade policy changes or positive movements in commodity prices played a bigger role in stimulating output growth after financial crises in peripheral economies. At this time before governments had modern fiscal and monetary policy tools to use while responding to crises protectionism was one of the few national-level policy options available for shaping economic activity. Improving terms of trade is another major factor that could influence output growth in the commodity-exporting countries included in this analysis. While previous studies of this period have looked at longer-run associations between these explanatory variables and economic growth, I focus on the aftermath of crises, and find that tariff rate increases had a positive impact on GDP per capita growth, while positive terms of trade changes did not have a significant effect on output growth. This suggests that governments played a substantial role in shaping post-crisis recoveries during this period.     

The search for the key: aid, investment and policies in Africa

The traditional aid-to-investment-to growth linkages are notvery robust, especially for African economies. Aid does notnecessarily finance investment and investment does not necessarilypromote growth. Differences in economic policy, on the otherhand, can explain much of the difference in growth performances.Furthermore, domestic politics rather than aid or conditionalityhas been the main determinant of policy reform. Where societiesand governments have succeeded in putting growth-enhancing policiesinto place, aid has provided useful support. The combinationof good policies and aid has created a productive environmentfor private investment and growth.     

Macroeconomic Effects of Commodity Price Shocks in a Low‐income Economy: The Case of Tobacco in Malawi

A major concern for developing economies is a dependence on commodities when their prices are volatile as a major change in the international commodity price can have important implications for economic growth. While some cross‐country studies exist, there is lack of country specific studies that take into account the different characteristics of low‐income economies. This paper contributes to the growing literature by considering the case of Malawi and the macroeconomic impact of price shocks in its major export crop of tobacco. Using a structural vector autoregression (SVAR) approach on quarterly Malawian data from 1980:1 to 2012:4, the paper establishes that a positive tobacco price shock has a significant positive impact on the country's gross domestic product, decreasing consumer prices and inducing real exchange rate appreciation. The results are robust to alternative specifications of a SVAR on difference stationary data and cointegrating VAR. The cointegrating VAR confirms the existence of a long run‐relationship among the variables and causality that runs from tobacco prices.     

Terms of Trade Shocks and Inflation Targeting in Emerging Market Economies

Emerging market economies (EMEs) have persistently experienced different waves of commodity terms of trade disturbances, generating macroeconomic instabilities. The adoption of inflation targeting (IT) by many EMEs has raised questions about its relative suitability in dealing with these shocks compared with other monetary policy regimes. This paper tests the robustness of IT compared with monetary targeting and exchange rate targeting regimes in coping with commodity terms of trade shocks using the panel vector autoregressive technique. The results show that in general, IT countries respond better to commodity terms of trade shocks especially with respect to inflation and output gap. However, exchange rates are more volatile in IT countries than in exchange rate targeting countries. The results suggest that EME countries can reduce the adverse effects of commodity terms of trade fluctuations when they adopt IT, but they also need to pay attention to exchange rate movements.     

The impact of the COVID-19 pandemic on global GDP growth

This paper describes one of the first attempts to gauge the effect of the COVID-19 pandemic on the global trajectory of real GDP over the course of 2020 and 2021. It is also among the first efforts to distinguish between the role of domestic variables and global trade in transmitting the economic effects of COVID-19. We estimate panel data regressions of the quarterly growth in real GDP on pandemic variables for 90 countries over the period 2020 Q1 through 2021 Q4. We find that readings on the number of COVID-19 deaths had a very small effect in our aggregate sample. On the other hand, changes in the stringency of the lockdown measures taken by governments to restrict the spread of the virus were an important influence on GDP. The economic effects of the pandemic differed between rich and poor countries: COVID-19 deaths exerted a somewhat greater drag on GDP in advanced economies, although this difference was not statistically significant, whereas lockdown restrictions were more injurious to economic activity in emerging and developing economies. In addition to these domestic pandemic effects, global trade represented a significant channel through which the economic effects of the pandemic spilled across national borders. This finding underscores how globalization makes each country vulnerable not only to medical contagion from the COVID-19 pandemic, but to economic contagion as well.     

THE ROLE OF COMMODITY TERMS OF TRADE IN THE DETERMINATION OF THE REAL EXCHANGE RATES OF THE MEDITERRANEAN COUNTRIES

The aim of this paper is to investigate whether there exists a long‐run relationship between the real exchange rate and the commodity terms of trade in the so‐called Mediterranean or MENA countries. These economies are good candidates for this type of formulation, as are commodity exporting countries. Using cointegration techniques, we find long‐run relationships linking the real exchange rate and a commodity‐based measure of the terms of trade. Therefore, commodity terms of trade are a potential explanation for the apparent nonstationarity of MENA countries’ real exchange rates previously found in the empirical literature.     

Emerging Impact of Chinese Commodity Futures Market on Domestic and Global Economy

In this paper we construct a set of indices that capture the special features of the Chinese commodity futures market for the period from January 2000 to December 2011 to analyze the general properties of China＇s commodity futures market. Using these indices we investigate the risk premiums of Chinese commodity futures and verify that the commodity futures can act as an effective diversification tool for Chinese asset management. It is found that the commodity futures can hedge both expected and unexpected inflation in China, and agricultural commodity futures are found to signal inflation 2 months beforehand. Finally, we explore the relationship between Chinese and US commodity futures markets in the years 2000 and 2010, and find that their interactions strengthen over time. Our research reveals an increasingly important role of the Chinese commodity futures market in both the domestic and the global economy. Some policy changes are suggested in response to this trend.     

金砖国家汇率制度演进研究——兼论危机前后金砖五国汇率表现

在发达经济体遭遇债务和高失业困扰、经济增长乏力的背景下,新兴经济体经济依然呈现快速增长、经济规模不断扩大的发展态势。以金砖五国为代表的新兴经济体在全球舞台上的地位得到提升。但是,相比第一、第二产业的强势发展,这些后起之秀在金融等软实力产业方面的表现相对较弱。随着全球化进程的推进,汇率作为一国对外交换的主要制度,成为影响国内经济稳定发展的关键问题。本文分析了金砖国家汇率制度演进的过程,总结其中的经验与教训,并对危机前后这五个国家主要汇率的变动进行了比较,以期为中国汇率制度的安排提供参考与借鉴。     

Why floating exchange rates fall: A reconsideration of the liquidity trap

In the international capital market, interest rates would seem to be natural shock absorbers for balancing currency risk associated with expected inflation or differential taxation. Under a floating exchange rate, however, short-term interest rates in each national money market behave as if caught in a liquidity trap. The problem arises because the domains for national monetary circulation remain somewhat disjoint even though the bond market is fully integrated internationally. The national rate of interest is ncapable of equilibriating the domestic money market on the one hand and the international bond market on the other. The result is excessively high exchange-rate volatility that distorts the flow of international commodity trade and causes cycles of inflation and deflation in open economies.     

China Spillovers: New Evidence from Time-Varying Estimates

The recent “rebalancing” of China’s economy has raised concerns that the country’s growth slowdown may have large global implications. This note looks at this issue by analyzing the effects of China’s growth shocks on the output of other countries and how these effects have changed over time. Estimates indicate that the magnitude of China’s spillovers has steadily increased during the last two decades, but remains yet limited. Spillovers are larger in neighboring (Asian) countries and in emerging markets and developing economies. Trade linkages remain main transmission channels. In addition, a negative shock in China has (marginal) positive effects for net commodity importers while negative for net commodity exporters.     

The determinants and long-term projections of saving rates in Developing Asia

In this paper, we present data on trends over time in domestic saving rates in twelve economies in Developing Asia during the 1966–2007 period and analyze the determinants of these trends. We find that domestic saving rates in Developing Asia have, in general, been high and rising but that there have been substantial differences from economy to economy, that the main determinants of these trends appear to have been the age structure of the population (especially the aged dependency ratio), income levels, and the level of financial sector development, and that the impacts of income levels and the level of financial sector development have been nonlinear (convex and concave, respectively). We then project future trends in domestic saving rates in Developing Asia for the 2011–2030 period based on our estimation results and find that the domestic saving rate in Developing Asia as a whole will remain roughly constant during the next two decades despite rapid population aging in some economies in Developing Asia because population aging will occur much later in other economies and because the negative impact of population aging on the domestic saving rate will be largely offset by the positive impact of higher income levels.     

国际金融危机-资本主义末日抑或重塑

自大萧条以来本场国际金融危机是我们这年代经历的最大经济危机。这场危机导致大型金融机构倒闭,这些机构倒闭导致了世界经济系统的瘫塌。为了应对危机,很多国家注入数亿计的资金来刺激经济,而且通过控制私有公司来改造它们,我们实现了所谓"国有化"。政府提出的干预主义目的是通过社会主义方针政策调控处理危机。自2008年来工业化及新兴国家同意建立G20作为应对金融危机的主要策略。     

Food Security in Asia

Rapid economic and agricultural sector growth have enhanced greatly food security in Asia during the past three decades. Most studies suggest this positive trend will continue into the next century. This paper reviews past trends and future prospects in access and availability of food in Asia at the national level. The paper concludes that the positive overall trend in increased food security relies on the capacity of Asian economies to address several key policy issues, including sustained economic growth, population pressure, structural changes in domestic economies, shifts in international comparative advantage, technological changes, developments in the domestic and international food markets, and environmental sustainability. The paper identifies cost-effective ways to increase food security in light of these issues and suggests that Asia's food security can be maintained only if international and domestic policies, institutional frameworks, and public expenditure patterns are conducive to cost–effective and sustainable agriculture development.     

Global Spillovers of China's Monetary Policy

Spillovers from China's monetary policy have become increasingly obvious with China's growing importance in the global economy and its close economic and trade ties with the world. This study establishes a proxy structure vector autoregression model to investigate the magnitude and transmission channel of spillovers from China to global and regional economies, taking advantage of high-frequency changes in asset prices in the financial markets to identify monetary policy shocks. The analysis reveals that China's monetary policy can affect the global economy by influencing international trade and commodity prices but there is no evidence of China's monetary policy affecting global financial variables. Tightness in China's monetary policy can cause a decline in world output whereas expansion in monetary policy can support global trade and output. This study also finds that the response of emerging Asian economies to China's monetary policy shock was nearly twice that of developed economies, while the transmission path did not change. The results of this study are consistent with the stylized fact that China's monetary policy plays an important role in the global trade and commodity cycle, although it does not drive the global financial cycle.     

Rethinking the role of sovereign wealth funds in small island developing states: evidence from Tuvalu and Kiribati

This paper examines the important role that can be played by sovereign wealth funds in financing of disaster risk management. The governments of Tuvalu and Kiribati are predicting climate change and natural disaster risks imposing increasing financial pressure on their economies. Having the required financial response in the aftermath of disasters is important to these low‐lying atolls. The long‐term sustainability of sovereign wealth funds in Kiribati and Tuvalu in contributing to ex post disaster risk management is examined.     

Commodity Prices, Inflationary Pressures, and Monetary Policy: Evidence from BRICS Economies

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 well-developed 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.