The Cambodian capital markets have come a long way considering that the Paris Peace Agreements, which ended the nation’s civil war, were signed only in 1991. Strong GDP growth (10.8% annually between 2000 and 2018), a dollarized economy with free movement of capital, and a policy consensus favoring investments should have spurred the rapid development of a securities exchange in Cambodia. The first equity listing on the Cambodian Stock Exchange (CSX), however, did not take place until 2012.
Currently in Cambodia, seven companies are listed on the main board, and another six companies have issued eight bonds. The CSX is still small in size compared with its Asian neighbors’ bourses. Its development is also behind schedule given the urgent need of local corporations to find cheap and convenient sources of funding. Stocks and bonds on the CSX have had comparatively low returns historically when compared with less risky bank deposits or higher returns from real estate.
Mindful of these challenges, the Royal Government of Cambodia has implemented a broad range of measures to support faster capital market development. Educating both investors and corporations, introducing accounting standards and audit requirements, and licensing such market actors as fund management companies, securities brokers, and custodian banks, to name a few, will provide the infrastructure and support Cambodia needs for long-term growth.
Listing private companies with exciting growth prospects will be key in renewing interest among potential investors in Cambodia. Likewise, new investment choices such as REITs, private equity, and mutual funds should spur further interest. The creation of a government bond market will be critical as well in order to attract institutions that crave safe and long-dated assets for asset–liability management purposes.
All of these factors combine for a constructive view of the prospects for Cambodian capital markets.
{"title":"The Emerging Asia Pacific Capital Markets: Cambodia","authors":"Chakara Sisowath, Seng Chan Thoeun, Varabott Ho","doi":"10.2139/ssrn.3807454","DOIUrl":"https://doi.org/10.2139/ssrn.3807454","url":null,"abstract":"The Cambodian capital markets have come a long way considering that the Paris Peace Agreements, which ended the nation’s civil war, were signed only in 1991. Strong GDP growth (10.8% annually between 2000 and 2018), a dollarized economy with free movement of capital, and a policy consensus favoring investments should have spurred the rapid development of a securities exchange in Cambodia. The first equity listing on the Cambodian Stock Exchange (CSX), however, did not take place until 2012.<br><br>Currently in Cambodia, seven companies are listed on the main board, and another six companies have issued eight bonds. The CSX is still small in size compared with its Asian neighbors’ bourses. Its development is also behind schedule given the urgent need of local corporations to find cheap and convenient sources of funding. Stocks and bonds on the CSX have had comparatively low returns historically when compared with less risky bank deposits or higher returns from real estate.<br><br>Mindful of these challenges, the Royal Government of Cambodia has implemented a broad range of measures to support faster capital market development. Educating both investors and corporations, introducing accounting standards and audit requirements, and licensing such market actors as fund management companies, securities brokers, and custodian banks, to name a few, will provide the infrastructure and support Cambodia needs for long-term growth.<br><br>Listing private companies with exciting growth prospects will be key in renewing interest among potential investors in Cambodia. Likewise, new investment choices such as REITs, private equity, and mutual funds should spur further interest. The creation of a government bond market will be critical as well in order to attract institutions that crave safe and long-dated assets for asset–liability management purposes.<br><br>All of these factors combine for a constructive view of the prospects for Cambodian capital markets.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133014950","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Mongolian Stock Exchange was established in 1991, primarily to assist with the privatization of state-owned entities in the early stages of transition from a Soviet-led centrally planned economy to a market economy.
At the end of 2019, 200 companies were listed on the MSE with 54 licensed brokerage firms. Total equity market capitalization was US$984 million — approximately 73% of GDP — and the annual equity trading volume was US$79.5 million. The low trading activity is considered to result from heavy concentration of shares, generally poor corporate governance, and lack of institutional investor base.
Mongolia’s fixed-income market consists mostly of government bonds. The latest government bonds issued had maturities of one to three years and coupon rates of 14%–18%, attracting both local and international investors.
To speed development of the Mongolian capital market, the government, often with help from international organizations, has been taking measures to improve governance practices of listed companies, develop the corporate bond market, introduce an institutional investor base, and list major state-owned mining companies. The timing for developing the capital market is also appropriate, because interest rates are on a downward trend in the past several years, pushing investors to seek higher returns that can no longer be gained from term deposits at banks.
{"title":"The Emerging Asia Pacific Capital Markets: Mongolia","authors":"Bayarsaikhan Davaadorj, Bujinlkham Boldbaatar","doi":"10.2139/ssrn.3807442","DOIUrl":"https://doi.org/10.2139/ssrn.3807442","url":null,"abstract":"The Mongolian Stock Exchange was established in 1991, primarily to assist with the privatization of state-owned entities in the early stages of transition from a Soviet-led centrally planned economy to a market economy.<br><br>At the end of 2019, 200 companies were listed on the MSE with 54 licensed brokerage firms. Total equity market capitalization was US$984 million — approximately 73% of GDP — and the annual equity trading volume was US$79.5 million. The low trading activity is considered to result from heavy concentration of shares, generally poor corporate governance, and lack of institutional investor base.<br><br>Mongolia’s fixed-income market consists mostly of government bonds. The latest government bonds issued had maturities of one to three years and coupon rates of 14%–18%, attracting both local and international investors.<br><br>To speed development of the Mongolian capital market, the government, often with help from international organizations, has been taking measures to improve governance practices of listed companies, develop the corporate bond market, introduce an institutional investor base, and list major state-owned mining companies. The timing for developing the capital market is also appropriate, because interest rates are on a downward trend in the past several years, pushing investors to seek higher returns that can no longer be gained from term deposits at banks.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115901957","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the impact of financial crises on human development over a panel of 113 countries for the years 1980-2017. Special attention is given to the effects of different types of financial crises on overall human development and its components: health, education, and income. Relying on a System-GMM estimator, this study finds that financial crises are more important than political, institutional, and economic factors to explain the human development dynamics. Moreover, all types of financial crises have both short- and long-run adverse effects on human development and its components. Such deteriorations are permanent and increase the burden for future generations, especially for low-income households. Nevertheless, education is less affected by financial crises than health and income. Furthermore, low- and middle-income countries pay a higher price, in terms of human development loss, than developed countries as consequences of financial crises.
{"title":"Financial Crises and Human Development","authors":"Thanh Cong Nguyen, Vítor Castro, Justine Wood","doi":"10.2139/ssrn.3802418","DOIUrl":"https://doi.org/10.2139/ssrn.3802418","url":null,"abstract":"This study examines the impact of financial crises on human development over a panel of 113 countries for the years 1980-2017. Special attention is given to the effects of different types of financial crises on overall human development and its components: health, education, and income. Relying on a System-GMM estimator, this study finds that financial crises are more important than political, institutional, and economic factors to explain the human development dynamics. Moreover, all types of financial crises have both short- and long-run adverse effects on human development and its components. Such deteriorations are permanent and increase the burden for future generations, especially for low-income households. Nevertheless, education is less affected by financial crises than health and income. Furthermore, low- and middle-income countries pay a higher price, in terms of human development loss, than developed countries as consequences of financial crises.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125781089","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
By focusing on the episodes of substantial capital account liberalization and adopting a new methodology, this paper provides new evidence on the dilemma and global financial cycle theory. I first identify the capital account liberalization episodes for 95 countries from 1970 to 2016, and then employ an augmented inverse propensity score weighted (AIPW) estimator to calculate the average treatment effect (ATE) of opening capital account on the interest rate comovements with the core country. Results show that opening capital account causes a country to lose its monetary policy independence, and a floating exchange rate regime cannot shield this effect. Moreover, the impact is stronger when liberalizing outward and banking flows.
{"title":"Dilemma and Global Financial Cycle: Evidence from Capital Account Liberalization Episodes","authors":"Xiang Li","doi":"10.2139/ssrn.3942080","DOIUrl":"https://doi.org/10.2139/ssrn.3942080","url":null,"abstract":"By focusing on the episodes of substantial capital account liberalization and adopting a new methodology, this paper provides new evidence on the dilemma and global financial cycle theory. I first identify the capital account liberalization episodes for 95 countries from 1970 to 2016, and then employ an augmented inverse propensity score weighted (AIPW) estimator to calculate the average treatment effect (ATE) of opening capital account on the interest rate comovements with the core country. Results show that opening capital account causes a country to lose its monetary policy independence, and a floating exchange rate regime cannot shield this effect. Moreover, the impact is stronger when liberalizing outward and banking flows.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"99 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127273184","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper is a first attempt to include credit derivatives in international macro-financial analysis. We document that gross credit derivatives holdings map to bilateral portfolio investment linkages. On a net basis, our results suggest an asymmetry between sectors and between net buyers and net sellers of CDSs. When a banking system is a net buyer of protection, the protection purchased is proportional to the debt securities held. Conversely, when a banking system is a net seller, the protection sold is proportional to the securities held. For investment funds, we find no aggregate relation between net CDSs and the debt securities held.
{"title":"Cross-Border Credit Derivatives Linkages","authors":"B. Bianchi","doi":"10.2139/ssrn.3804830","DOIUrl":"https://doi.org/10.2139/ssrn.3804830","url":null,"abstract":"This paper is a first attempt to include credit derivatives in international macro-financial analysis. We document that gross credit derivatives holdings map to bilateral portfolio investment linkages. On a net basis, our results suggest an asymmetry between sectors and between net buyers and net sellers of CDSs. When a banking system is a net buyer of protection, the protection purchased is proportional to the debt securities held. Conversely, when a banking system is a net seller, the protection sold is proportional to the securities held. For investment funds, we find no aggregate relation between net CDSs and the debt securities held.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125149099","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the wake of the COVID-19 pandemic, states around the world swiftly enacted a multitude of far-reaching emergency responses to contain the viruses’ spread and to cope with the economic repercussions of the ensuing crisis. However, these measures detrimentally impacted the operating conditions of many businesses or otherwise decreased their profitability. As this inevitably affected foreign investments, investors could be tempted to invoke ISDS clauses in International Investment Agreements to initiate proceedings before arbitral tribunals and seek compensation for loss of profit caused by states’ COVID-19 responses. Due to the specific circumstances in most developing countries, they were hit particularly hard by the crisis and are especially vulnerable to the threat of investment claims. It is therefore important to enable developing countries to realistically anticipate the risk of investment arbitration by assessing the chances of success of foreign investment claims against those policies that were most frequently adopted by them amidst the crisis. Against this background, this paper assesses how likely developing countries’ COVID-19 responses breached substantive standards of investor treatment under typical IIAs and which defence strategies states may invoke to justify their regulatory action. Based on this analysis, this paper concludes by formulating policy recommendations on how developing countries may enhance the resilience of their emergency responses against foreign investors amidst future public health crises.
{"title":"Corporate Wealth Over Public Health? Assessing the Resilience of Developing Countries' COVID-19 Responses Against Investment Claims and the Implications for Future Public Health Crises","authors":"T. Hagemann","doi":"10.2139/ssrn.3858446","DOIUrl":"https://doi.org/10.2139/ssrn.3858446","url":null,"abstract":"In the wake of the COVID-19 pandemic, states around the world swiftly enacted a multitude of far-reaching emergency responses to contain the viruses’ spread and to cope with the economic repercussions of the ensuing crisis. However, these measures detrimentally impacted the operating conditions of many businesses or otherwise decreased their profitability. As this inevitably affected foreign investments, investors could be tempted to invoke ISDS clauses in International Investment Agreements to initiate proceedings before arbitral tribunals and seek compensation for loss of profit caused by states’ COVID-19 responses. Due to the specific circumstances in most developing countries, they were hit particularly hard by the crisis and are especially vulnerable to the threat of investment claims. It is therefore important to enable developing countries to realistically anticipate the risk of investment arbitration by assessing the chances of success of foreign investment claims against those policies that were most frequently adopted by them amidst the crisis. Against this background, this paper assesses how likely developing countries’ COVID-19 responses breached substantive standards of investor treatment under typical IIAs and which defence strategies states may invoke to justify their regulatory action. Based on this analysis, this paper concludes by formulating policy recommendations on how developing countries may enhance the resilience of their emergency responses against foreign investors amidst future public health crises.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116021937","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Prior findings suggest that investors learn with experience. We study the complementary channel of learning from data, particularly the effects of making additional predictive signals available to investors. We analyse a panel of systematic traders' investment outcomes, sourced from a FinTech platform that organises trading contests under highly-controlled conditions that allow us to identify learning effects. Investor outcomes improve with experience, and this is also apparent when counterfactually assessing their trading decisions on historical data, suggesting that they make use of historical data to attain their objectives. Importantly, when additional predictive variables are added to the common part of investors' information sets, the individual-level dispersions of investors' performance outcomes narrow, while their relative performance outcomes improve at higher experience levels. To explain why this widening of their common dataset benefits experienced investors, we model an investor as choosing a portfolio by learning from historical data while also taking model uncertainty into account. The robust learner therefore ignores predictive signals with historical predictive contributions below a subjective model uncertainty threshold; we conjecture this threshold varies with experience.
{"title":"How do investors learn as data becomes bigger? Evidence from a FinTech platform","authors":"Ahmed Guecioueur","doi":"10.2139/ssrn.3708476","DOIUrl":"https://doi.org/10.2139/ssrn.3708476","url":null,"abstract":"Prior findings suggest that investors learn with experience. We study the complementary channel of learning from data, particularly the effects of making additional predictive signals available to investors. We analyse a panel of systematic traders' investment outcomes, sourced from a FinTech platform that organises trading contests under highly-controlled conditions that allow us to identify learning effects. Investor outcomes improve with experience, and this is also apparent when counterfactually assessing their trading decisions on historical data, suggesting that they make use of historical data to attain their objectives. Importantly, when additional predictive variables are added to the common part of investors' information sets, the individual-level dispersions of investors' performance outcomes narrow, while their relative performance outcomes improve at higher experience levels. To explain why this widening of their common dataset benefits experienced investors, we model an investor as choosing a portfolio by learning from historical data while also taking model uncertainty into account. The robust learner therefore ignores predictive signals with historical predictive contributions below a subjective model uncertainty threshold; we conjecture this threshold varies with experience.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121741156","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Described by Hull (2011, 2012) as ‘a procedure for calculating credit value at risk’, CreditMetrics methodology (RiskMetrics Group 2007) is used for assessing portfolio risk due to changes in bond or debt value caused by credit quality changes including credit migration (upgrades and downgrades), as well as, default. It measures the uncertainty in forward value of the bond portfolio at the risk horizon caused by such credit events. Changes in debt value could be small in case of credit quality ratings change; however, they could be enormous, 50% to 90%, in case of default. Characterized by a long downside tail, credit-returns are highly-skewed and fat-tailed and thus far from the Gaussian normal distribution assumptions about market risk in VaR (Fig. 1). In the portfolio context, based upon correlation of credit quality moves across obligors, CreditMetrics assesses both value-at-risk (VaR), i.e., the volatility of value, as well as expected losses (EL). By distinguishing high quality well-diversified portfolios from low-quality concentrated portfolios, it offers better understanding of credit risk in terms of diversification benefits and concentration risk compared to mandated standard capital adequacy measures.
赫尔(2011年、2012年)将CreditMetrics方法描述为“计算风险中的信用价值的程序”，该方法(RiskMetrics Group 2007年)用于评估因信用质量变化(包括信用迁移(升级和降级)以及违约)引起的债券或债务价值变化而导致的投资组合风险。它衡量由此类信用事件引起的风险水平上债券投资组合远期价值的不确定性。如果信用质量评级发生变化，债务价值的变化可能很小;然而，在违约的情况下，它们可能是巨大的，50%到90%。以长下行尾部为特征，信贷回报是高度倾斜和厚尾的，因此与VaR中市场风险的高斯正态分布假设相距甚远(图1)。在投资组合背景下，基于债务人之间信贷质量移动的相关性，CreditMetrics评估风险价值(VaR)，即价值的波动性，以及预期损失(EL)。通过区分高质量的分散投资组合和低质量的集中投资组合，与强制性标准资本充足率指标相比，它可以更好地理解分散收益和集中风险方面的信用风险。
{"title":"CreditMetrics Methodology and Credit Value at Risk (Credit VaR)","authors":"Y. Malhotra","doi":"10.2139/ssrn.3783490","DOIUrl":"https://doi.org/10.2139/ssrn.3783490","url":null,"abstract":"Described by Hull (2011, 2012) as ‘a procedure for calculating credit value at risk’, CreditMetrics methodology (RiskMetrics Group 2007) is used for assessing portfolio risk due to changes in bond or debt value caused by credit quality changes including credit migration (upgrades and downgrades), as well as, default. It measures the uncertainty in forward value of the bond portfolio at the risk horizon caused by such credit events. Changes in debt value could be small in case of credit quality ratings change; however, they could be enormous, 50% to 90%, in case of default. Characterized by a long downside tail, credit-returns are highly-skewed and fat-tailed and thus far from the Gaussian normal distribution assumptions about market risk in VaR (Fig. 1). In the portfolio context, based upon correlation of credit quality moves across obligors, CreditMetrics assesses both value-at-risk (VaR), i.e., the volatility of value, as well as expected losses (EL). By distinguishing high quality well-diversified portfolios from low-quality concentrated portfolios, it offers better understanding of credit risk in terms of diversification benefits and concentration risk compared to mandated standard capital adequacy measures.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128870144","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Akash Chattopadhyay, Matthew R. Lyle, Charles C. Y. Wang
We outline a framework in which accounting “valuation anchors" could be connected to expected stock returns. Under two general conditions, expected log returns is a log- linear function of a valuation (market value-to-accounting) multiple and the expected growth in the valuation anchor. We show that the framework can: 1) allow for expected enterprise returns, 2) correct for the use of stale accounting data in estimation, and 3) accommodate differences in information quality. This analytical formulation is tractable and flexible, and provides building blocks for further innovations in accounting valuation research.
{"title":"Connecting Expected Stock Returns to Accounting Valuation Multiples: A Primer","authors":"Akash Chattopadhyay, Matthew R. Lyle, Charles C. Y. Wang","doi":"10.2139/ssrn.3774442","DOIUrl":"https://doi.org/10.2139/ssrn.3774442","url":null,"abstract":"We outline a framework in which accounting “valuation anchors\" could be connected to expected stock returns. Under two general conditions, expected log returns is a log- linear function of a valuation (market value-to-accounting) multiple and the expected growth in the valuation anchor. We show that the framework can: 1) allow for expected enterprise returns, 2) correct for the use of stale accounting data in estimation, and 3) accommodate differences in information quality. This analytical formulation is tractable and flexible, and provides building blocks for further innovations in accounting valuation research.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"81 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127709863","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
F. Ferrara, Jörg Stefan Haas, Andrew Peterson, T. Sattler
The economic imbalances that characterize the world economy have unequally distributed costs and benefits. That raises the question of how countries could run long-term external surpluses and deficits without significant opposition against the policies that generate them. We show that political discourse helps to secure public support for these policies and the resulting economic outcomes. First, a content analysis of 32 000 newspaper articles finds that the dominant interpretations of current account balances in Australia and Germany concur with very distinct perspectives: external surpluses are seen as evidence of competitiveness in Germany, while external deficits are interpreted as evidence of attractiveness for investments in Australia. Second, survey experiments in both countries suggest that exposure to these diverging interpretations has a causal effect on citizens’ support for their country’s economic strategy. Political discourse, thus, is crucial to provide the societal foundation of national growth strategies.
{"title":"Exports vs. Investment: How Political Discourse Shapes Popular Support for External Imbalances","authors":"F. Ferrara, Jörg Stefan Haas, Andrew Peterson, T. Sattler","doi":"10.2139/ssrn.3298742","DOIUrl":"https://doi.org/10.2139/ssrn.3298742","url":null,"abstract":"\u0000 The economic imbalances that characterize the world economy have unequally distributed costs and benefits. That raises the question of how countries could run long-term external surpluses and deficits without significant opposition against the policies that generate them. We show that political discourse helps to secure public support for these policies and the resulting economic outcomes. First, a content analysis of 32 000 newspaper articles finds that the dominant interpretations of current account balances in Australia and Germany concur with very distinct perspectives: external surpluses are seen as evidence of competitiveness in Germany, while external deficits are interpreted as evidence of attractiveness for investments in Australia. Second, survey experiments in both countries suggest that exposure to these diverging interpretations has a causal effect on citizens’ support for their country’s economic strategy. Political discourse, thus, is crucial to provide the societal foundation of national growth strategies.","PeriodicalId":284021,"journal":{"name":"International Political Economy: Investment & Finance eJournal","volume":"362 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115939521","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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