An empirical examination of the currency denomination of trade

The currency denomination of trade has important effects on inflation and the macroeconomic transmission of shocks. This study examines the currency denomination of Italian exports and imports with countries outside the European Union during 2010. By using a unique dataset we find evidence to suggest that invoicing currencies do not always have consistent determinants. Significant effects, new to the literature, include the massive, robust effect of geography and tax treaties, which suggest the importance of information asymmetry. The distance between trading partners has one of the largest marginal effects, increasing the likelihood of vehicle currency use relative to the euro.     

Foreign education and international trade: empirical evidence from selected Latin American countries

Social ties among university students – of friendship, mutual trust and attachment to the alma mater – tend to be robust and enduring. Through information-diffusion and behaviour-enforcement mechanisms, they can boost the economic exchanges between countries. This paper tests the influence of Latin American people with a tertiary education in OECD countries on the bilateral trade between the home economy and the country of the alma mater, taking into account potential endogeneity concerns. Results show that Latin American student networks exert strong, positive and significant effects on bilateral imports and exports. A 10% increase in the number of Latin American students in the OECD economy boost bilateral trade by about 3%. At a more disaggregated level, their impact on differentiated goods is significantly higher than on homogenous products. Their incidence is lower in the presence of bilateral trade agreements and economic integration between countries. Results are robust to the deep economic and political transformations of the period considered, and to the use of different regressors and specifications.     

基于灰色预测和神经网络的人口预测

人口预测是土地利用总体规划的重要基础工作。未来人口规模是土地利用总体规划中确定各类土地需求量控制性指标,调整土地利用结构,实现土地供需平衡,解决人地矛盾的重要依据。人口预测是否科学准确,直接关系到总体规划方案是否合理和实用。利用灰色预测建模所需信息少、方法简单的特点和神经网络具有较强的非线性映射能力的特性,提出一种基于灰色预测和神经网络的人口预测方法。首先对人口规模的NARMA(p,q)的递归网络模型进行一步预测及其灰色预测GM(1,1)等维新息模型预测,然后再用前馈神经网络对GM(1,1)模型和递归网络模型的预测值进行组合预测以作为其最终的预测值。以温州市为例,对其总人口进行了试验预测。结果表明：NARMA(p,q)递归网络模型比GM(1,1)模型具有更高的预测精度,而FNN模型的组合预测效果优于其它单一预测模型。     

Exchange rate versus credit policy: Analysis with a monetary model of trade and inflation in India

A general equilibrium model of the trade balance and inflation in India is specified, and empirically analyzed. The model takes into account many important institutional features of India such as foreign exchange rationing, and emphasizes the effects of monetary disequilibrium on the trade balance. Policy simulations compare the dynamic responses to devaluation with the responses to tight credit policy. It is shown that the relative price effects of policies are often significantly offset by perverse liquidity effects which serve to raise absorption. However, the trade balance effects of devaluation are found to be more enduring than those of tight credit policy.     

Growth opportunities and trade credit: evidence from Chinese listed firms

Private firms in China have led the explosive growth of the country’s economy, but with restricted or no access to formal financing. It is puzzling that these firms use relatively less trade credit than their counterparts in developed countries. We argue that firms with more growth opportunities should rely mainly on internal financing owing to high asymmetric information, especially in a financial market environment biased towards state-owned enterprises (SOEs) such as China. To explore growth opportunities, these firms may reduce their level of trade credit in the trade-off they face in deciding where to invest. Using panel data of Chinese non-financial listed firms for the period 2003–2013, we find that the relationship between growth opportunities and trade credit (both accounts receivable and payable) is significantly negative and is more pronounced in private firms than in SOEs. Furthermore, we also find that subsequent to the new receivable pledge policy being introduced, Chinese firms with more growth opportunities have higher accounts receivable, but similar levels of accounts payable.     

Monetary policy credibility and macrodynamics: evidence from Ghana

We compute a time-varying metric of monetary policy credibility based on Ghana’s experience, using both symmetric and asymmetric approaches. We then follow-up with some empirical evidence to address the linkages between macroeconomic developments and central bank credibility. The empirical results reveal high and low credibility cycles with an average duration of 2 years over the study period. Particularly, higher levels of credibility were associated with stable domestic currency and lower nominal interest rates. This reinforces the notion that efficient monetary policy delivers higher central bank credibility with better outcomes for macroeconomic variables. In contrast, the level of credibility tends to worsen in the wake of weakening macro fundamentals which are not adequately countered by monetary policy decisions. There is therefore the need for efficient monetary policy formulation to achieve a stable macroeconomic environment in Ghana. This will in the long-run build policy credibility towards attaining the central bank’s medium-term inflation target.     

Presidential approval and macroeconomic conditions: evidence from a nonlinear model

Contrary to previous empirical studies that find a linear link between economic conditions and presidential approval, this study argues for and finds a nonlinear relationship. A threshold regression is used to assess potential nonlinear relationships between macroeconomic variables and presidential popularity. A quarterly data analysis for the 1960Q1–2012Q2 time period reveals that domestic factors prevail in shaping presidential approval. Most compelling is evidence of a threshold relationship involving economic conditions: When unemployment is slightly over 7%, its decline impacts significantly and favourably on presidential approval, an effect that virtually disappears below the threshold value. Change in consumer sentiment affects presidential approval in a limited way, while inflation shows no association at all. These results combine to encourage further investigation of nonlinear processes in the nexus of economics and politics.     

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

In this study, we investigate the impact of global economic policy uncertainty (GEPU) on Chinese stock market volatility. More importantly, for the first time, we explore the effects of directional GEPU based on the changing directions of GEPU and Chinese economic policy uncertainty (EPU). We make several noteworthy findings. First, the in-sample estimated results show that up and down GEPU can lead to substantially high stock market volatility for China. Second, the out-of-sample estimated results support the contention that the GEPU index is helpful for predicting volatility. Moreover, compared to GEPU alone, directional GEPU can provide more useful information that can increase the forecast accuracy. Third, we empirically find that directional GEPU is more effective in predicting Chinese stock market volatility when GEPU and EPU rise in the same month.     

The effect of monetary and fiscal credibility on public debt: empirical evidence from the Brazilian economy

This study relates to the literature regarding credibility effect on public debt for developing economies under inflation targeting. The novelty is the investigation of effects of both monetary and fiscal credibility on public debt and its management. The main idea is that high credibility might improve public debt management. With this purpose, this paper addresses empirical evidence based on the Brazilian experience. The findings denote that credibility is an important instrument to improve the public debt management under inflation targeting.     

An economic-ecological model of urban growth and urban externalities: empirical evidence from Italy

The importance of urban size for urban sustainability is well known; it plays an important role in the possibility of shaping the quality of urban living conditions. For this reason, it is important to study urban dynamics in connection with the issue of environmental quality. Moreover, awareness of the existence of cyclical patterns in urban dynamics, which we stress in this paper, can be useful for the formulation of environmental policies enabling a steady state equilibrium to be reached in terms of sustainability by flattening out the cyclical waves. A number of more quantitative models for the interpretation of urban growth has been provided; these models are related to the well-known ecological prey-predator model of Lotka–Volterra, and provide a good interpretative framework of the territorial phenomena, characterised by strong feed-back mechanisms. Recently, a pure economic model, linking the per-capita income and the urban rents has been suggested as a possible interpretative model of urban growth which is characterised by two main advantages: (a) its capacity to overcome some of the limits of the previous prey-predator models, like the necessity to apply the concept of an urban carrying capacity; (b) its pure economic feature. The present paper presents the model and the logic behind it and provides an empirical analysis of the model based on the Italian case. An econometric model is presented on the relationship between urban population growth and urban rent, based on a database of 95 Italian cities in time series from 1963 to 1996; the feedback mechanisms between the two variables emerge. This work represents the first attempt to provide an estimate of the prey-predator model based on real data.     

Corruption in a model of vertical linkage between formal and informal credit sources and credit subsidy policy

The present note develops a model of vertical linkage between the formal and informal credit markets highlighting the presence of corruption in the distribution of formal credit. The existing dominant moneylender, the bank official and the new moneylenders move sequentially. The existing moneylender acts as a Stackelberg leader and unilaterally decides on the informal interest rate. We show that there may arise a case where an increase in the supply of formal credit results in an increase in the informal interest rate under reasonable parametric restrictions. This shows that apart from (i) asymmetric information on the part of informal sector lenders (Bose, 1998), (ii) an increase in the probability of default of all informal sector lenders (Hoff and Stiglitz 1997), and the (iii) possibility of informal lenders to collude (Floro and Ray 1997), the presence of corruption in the distribution of formal credit might be another factor responsible for the policy of vertical linkage to break down.     

Financial openness,market structure and private credit: An empirical investigation

Consistent with recent theoretical models, this paper finds that financial openness has a positive effect on private credit in economies characterized by a competitive banking sector, but that this effect vanishes and even becomes negative in economies with imperfect banking competition.     

Strategic monetary and fiscal policy interactions: An empirical investigation

This paper identifies leadership regimes in monetary-fiscal policy interactions in three countries, the UK, the US and Sweden. We specify a small-scale, structural general equilibrium model of an open economy and estimate it using Bayesian methods. We assume that the authorities can act strategically in a non-cooperative policy game, and compare different leadership regimes. We find that the model of fiscal leadership gives the best fit for the UK and Sweden, while in the US the Nash or non-strategic regime dominates. We assess the extent to which policy maker preferences reflect microfounded social preferences.     

Fiscal financing and the efficacy of fiscal policy in Korea: An empirical assessment with comparison to the U.S. evidence

This paper aims to assess the empirical implications of fiscal financing in Korea and study how they differ from those of the U.S. We estimate two versions of the dynamic stochastic general equilibrium (DSGE) model—a small open economy (SOE) model for Korea and its closed economy counterpart for the U.S.—in which the former nests the latter as a special case. The fiscal policy specification posits that government spending, lump-sum transfers, and distortionary taxation on labor income, capital income and consumption expenditures respond to the level of government debt and the state of economic activity. Analysis of the data from 2000 to 2015 shows that distortionary capital taxes play a critical role in stabilizing government debt in the U.S., whereas non-distorting fiscal instruments are the primary means of fiscal adjustment in Korea. Regarding the magnitude of debt-financed fiscal stimuli, the substantial trade openness of Korea is significant in that it produces relatively smaller government spending and transfer multipliers compared to the U.S.     

Corporate social responsibility and strategic trade policy: An endogenous timing game and its policy implications

This study incorporates the corporate social responsibility (CSR) initiatives of a domestic firm and analyses strategic trade policy towards a foreign firm in a different market structure. We show that the tariff rate under a foreign (domestic) firm's leadership is lowest when the degree of CSR is large (small). We also show that the foreign firm's leadership yields the highest welfare when the degree of CSR is intermediate, while the domestic firm's leadership yields the highest welfare otherwise. In an endogenous‐timing game, we show that a simultaneous‐move outcome is the unique equilibrium when the degree of CSR is small; thus, it is never socially desirable. We also show that the domestic firm's leadership can be an equilibrium, which results in the highest welfare when the degree of CSR is large. Finally, when the degree of CSR is large, collusive behaviours between the domestic and foreign firms can increase welfare.     

The opportunistic approach to monetary policy and financial market conditions

We test the concept of the opportunistic approach to monetary policy in South Africa post-2000 inflation targeting regime. The article contributes to the current debate on central banks having additional objectives over and above inflation and output by incorporating a measure of financial conditions in the modelling framework. Our findings support the two features of the opportunistic approach. First, we find that the models that include an intermediate target that reflects the recent history of inflation rather than simple inflation target improve the fit of the models. Second, the data supports the view that the South African Reserve Bank (SARB) behaves with some degree of nonresponsiveness when inflation is within the zone of discretion but react aggressively otherwise. Recursive estimates from our preferred model reveal that overall there has been a subdued reaction to inflation, output and financial conditions amidst the increased economic uncertainty of the 2007–2009 financial crisis.     

Economies of scale and trade policy: The median voter model revisited

Why do some political economy models perform so poorly in predicting actual trade policy? Do scale economies provide the missing puzzle to our understanding of the anti-trade bias? By integrating economies of scale in production, this paper theoretically reinstates the median voter model as in Mayer [Mayer, W. (1984). Endogenous tariff formation. The American Economic Review, 74, 970–985] as a suitable political economy model in predicting trade policy. The modified model generates the scope for the anti-trade bias and predicts that sometimes economic, rather than political, considerations may lead to restrictive trade.     

Monetary,fiscal, and structural drivers of inflation in Ethiopia: new empirical evidence from time series analysis

This study empirically investigates the drivers of inflation in Ethiopia using monthly data over the period July 1998 to September 2020. It explores short-run and long-run effects of domestic and external determinants of inflation—including demand-side, supply-side, and structural factors—using the cointegration and vector error-correction methodology. Four measures of inflation are considered: cereals, food, nonfood, and all-items Consummer Price Index (CPI) inflation. A key contribution to the existing literature is the investigation of the role of the fiscal sector in modeling inflation, a topic that has been neglected in the existing studies on inflation in Ethiopia. The empirical results show that disequilibria in the monetary sector, grains sector, and food markets have long-run effects on inflation. In the short run, inflation is driven by structural factors (notably, cereal output gaps and imported inflation) as well as demand-side factors (notably, money growth and public sector borrowing). The results hold when analysis is limited to the high growth period from 2005 onward, following the end of the International Monetary Fund (IMF) program in the country. The evidence provides valuable insights in the context of ongoing macroeconomic policy reforms in Ethiopia.     

An options-based approach to forecast competing bids: evidence for Canadian takeover battles

During takeover battles, a tender offer provides a call option right to the target’s shareholders: it guarantees the offered price but maintains the chance of a higher offer. We present an options-based approach to estimate the probability and expected value of higher competing takeover bids using target stock price data. Analysing Canadian takeover battles in the period 1997 to 2007 we find that during the 5 trading days prior to the occurrence of an increased takeover bid, the estimated probability of a higher bid exceeds 80% on average and the expected value of a potential competing bid almost matches the realized value.