Pub Date : 2022-08-13DOI: 10.1177/09749101221113881
Abdhut Deheri, Ajit Nag
This article assesses the long-run sustainability of public debt and fiscal deficit in India for the period 1980–1981 to 2019–2020. The study estimated a model-based fiscal reaction function (FRF) using the Autoregressive Distributed Lag (ARDL) model to assess debt sustainability. The results revealed that the primary surplus responds positively and significantly to the previous period debt in both the short- and long-run. This implies that the fiscal policy satisfies the intertemporal budget constraint (IBC) and follows the debt-stabilizing rule. Next, to assess the sustainability of the fiscal deficit, we examined the long-run association between total revenues and total expenditures using a structural break cointegration test. The results revealed that they are cointegrated, implying that IBC is met and the fiscal deficit is sustainable. The results of long-run estimation provide evidence in support of strong budgetary sustainability. Overall, the results indicate that the public debt and the fiscal deficit are sustainable in India. From a policy standpoint, our research suggests that the government should take the necessary measures to reduce the growing public debt to ensure its long-run sustainability.
{"title":"Assessing the Long-Run Sustainability of Public Debt and Fiscal Deficit in India","authors":"Abdhut Deheri, Ajit Nag","doi":"10.1177/09749101221113881","DOIUrl":"https://doi.org/10.1177/09749101221113881","url":null,"abstract":"This article assesses the long-run sustainability of public debt and fiscal deficit in India for the period 1980–1981 to 2019–2020. The study estimated a model-based fiscal reaction function (FRF) using the Autoregressive Distributed Lag (ARDL) model to assess debt sustainability. The results revealed that the primary surplus responds positively and significantly to the previous period debt in both the short- and long-run. This implies that the fiscal policy satisfies the intertemporal budget constraint (IBC) and follows the debt-stabilizing rule. Next, to assess the sustainability of the fiscal deficit, we examined the long-run association between total revenues and total expenditures using a structural break cointegration test. The results revealed that they are cointegrated, implying that IBC is met and the fiscal deficit is sustainable. The results of long-run estimation provide evidence in support of strong budgetary sustainability. Overall, the results indicate that the public debt and the fiscal deficit are sustainable in India. From a policy standpoint, our research suggests that the government should take the necessary measures to reduce the growing public debt to ensure its long-run sustainability.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45242431","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}
Pub Date : 2022-07-19DOI: 10.1177/09749101221108788
A. Jamal, G. Bhat
The primary objective of the study was to scrutinize the effect of exchange rate volatility on foreign direct investment (FDI) inflows and Indian exports during the flexible exchange rate period. The bounds testing procedure confirmed the presence of a single (stable) long-run relationship between exports, conditional exchange rate volatility, and unconditional exchange rate volatility. The autoregressive distributed lag model verified that volatility in Indian rupee vis-à-vis USD had a significant (negative) impact on Indian exports and FDI inflows. Besides, trade openness and gross domestic product, in the long run, were positive and significant in explaining the exports and FDI inflows. Based on the empirical results, India should devise suitable macroeconomic policies to reduce exchange rate volatility to make the export-led growth strategy a success. Moreover, emerging and progressive economies like India should strengthen and streamline their domestic foreign exchange markets without compromising the level of trade openness. More precisely, the forward exchange markets’ coverage should be broadened, as they provide protection (hedging) against the exchange rate volatility in the long run.
{"title":"Disentangling the Nexus Between Exchange Rate Volatility, Exports, and FDI: Empirical Evidence from the Indian Economy","authors":"A. Jamal, G. Bhat","doi":"10.1177/09749101221108788","DOIUrl":"https://doi.org/10.1177/09749101221108788","url":null,"abstract":"The primary objective of the study was to scrutinize the effect of exchange rate volatility on foreign direct investment (FDI) inflows and Indian exports during the flexible exchange rate period. The bounds testing procedure confirmed the presence of a single (stable) long-run relationship between exports, conditional exchange rate volatility, and unconditional exchange rate volatility. The autoregressive distributed lag model verified that volatility in Indian rupee vis-à-vis USD had a significant (negative) impact on Indian exports and FDI inflows. Besides, trade openness and gross domestic product, in the long run, were positive and significant in explaining the exports and FDI inflows. Based on the empirical results, India should devise suitable macroeconomic policies to reduce exchange rate volatility to make the export-led growth strategy a success. Moreover, emerging and progressive economies like India should strengthen and streamline their domestic foreign exchange markets without compromising the level of trade openness. More precisely, the forward exchange markets’ coverage should be broadened, as they provide protection (hedging) against the exchange rate volatility in the long run.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42703979","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}
Pub Date : 2022-06-22DOI: 10.1177/09749101221104226
M. Malefane
This article estimates the import demand function for Botswana, which is rated among the fastest-growing countries in Sub-Saharan Africa. Using the autoregressive distributed lag (ARDL) approach to cointegration, the study finds that Botswana’s import demand is inelastic to the changes in import prices, both in the short run and in the long run, which resembles the import demand behavior in other fast-growing economies. The inelastic response of the import demand to import price is not surprising for a country that mainly imports diamonds, fuel, and machinery, all essential items for export production and economic development. The study further confirms that structural instabilities have a significant negative impact on Botswana’s import demand, which is an element that the policymakers must pay attention to. Considering the recent developments in the African continent, which include the recent ratification of the African Continental Free Trade Area (AfCFTA), this study suggests that policymakers in Botswana should revisit the country’s import policy and determine how Botswana’s imports can be positioned in a way that could benefit the sought-after intra-African trade.
{"title":"Dynamic Estimation of a Traditional Import Demand Function for Botswana","authors":"M. Malefane","doi":"10.1177/09749101221104226","DOIUrl":"https://doi.org/10.1177/09749101221104226","url":null,"abstract":"This article estimates the import demand function for Botswana, which is rated among the fastest-growing countries in Sub-Saharan Africa. Using the autoregressive distributed lag (ARDL) approach to cointegration, the study finds that Botswana’s import demand is inelastic to the changes in import prices, both in the short run and in the long run, which resembles the import demand behavior in other fast-growing economies. The inelastic response of the import demand to import price is not surprising for a country that mainly imports diamonds, fuel, and machinery, all essential items for export production and economic development. The study further confirms that structural instabilities have a significant negative impact on Botswana’s import demand, which is an element that the policymakers must pay attention to. Considering the recent developments in the African continent, which include the recent ratification of the African Continental Free Trade Area (AfCFTA), this study suggests that policymakers in Botswana should revisit the country’s import policy and determine how Botswana’s imports can be positioned in a way that could benefit the sought-after intra-African trade.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-06-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48241009","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}
Pub Date : 2022-06-21DOI: 10.1177/09749101221100637
T. Tadesse
Low-income African countries face significant customs tax evasion due to undervaluation and smuggling of imports by registered traders. This study uses trade policy, law enforcement, product misclassification, and product differentiation to examine customs tax evasion in Ethiopian imports from Kenya. Using “missing imports” data disaggregated at the harmonized system 6-digit level, the econometric model employs the trade gap as a measure of evasion. This study seeks to explain two types of evasion: undervaluation-based evasion, and smuggling- and product misclassification–based evasion. According to the econometric estimates, 1% increase in the taxes imposed on imports increases evasion by 1.12% for undervaluation-based evasion and 2% for entirely “missing imports”. Based on a quantitative measure of law enforcement, the findings show that expecting higher fee as a penalty for tax evasion is negatively associated with both forms of evasions. Regarding the extent of evasion, customs tax evasion is significantly higher for differentiated items than for homogeneous goods. Furthermore, mislabeling products from higher to lower tariff categories explains a large portion of evasion in goods that are either entirely smuggled or misclassified. The findings validate the importance of reducing evasion by judiciously lowering tariffs and enforcing the law at the border.
{"title":"Explaining Customs Tax Evasion in Ethiopia: The Effect of Trade Tax, Law Enforcement, and Product Characteristics","authors":"T. Tadesse","doi":"10.1177/09749101221100637","DOIUrl":"https://doi.org/10.1177/09749101221100637","url":null,"abstract":"Low-income African countries face significant customs tax evasion due to undervaluation and smuggling of imports by registered traders. This study uses trade policy, law enforcement, product misclassification, and product differentiation to examine customs tax evasion in Ethiopian imports from Kenya. Using “missing imports” data disaggregated at the harmonized system 6-digit level, the econometric model employs the trade gap as a measure of evasion. This study seeks to explain two types of evasion: undervaluation-based evasion, and smuggling- and product misclassification–based evasion. According to the econometric estimates, 1% increase in the taxes imposed on imports increases evasion by 1.12% for undervaluation-based evasion and 2% for entirely “missing imports”. Based on a quantitative measure of law enforcement, the findings show that expecting higher fee as a penalty for tax evasion is negatively associated with both forms of evasions. Regarding the extent of evasion, customs tax evasion is significantly higher for differentiated items than for homogeneous goods. Furthermore, mislabeling products from higher to lower tariff categories explains a large portion of evasion in goods that are either entirely smuggled or misclassified. The findings validate the importance of reducing evasion by judiciously lowering tariffs and enforcing the law at the border.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-06-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41860323","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}
Pub Date : 2022-03-17DOI: 10.1177/09749101221082723
S. Y. Glazev, V. Arkhipova
The research explores the fundamental structural changes in the world economy resulting from the shifting of technological mode (TM) and world economic mode (WEM). Based on the theory of long cycles in economic development, we defined practical reasons for current escalation of international tension and substantiate the hypothesis of world economic center moving to Asia. The article reflects on new WEM image with mixed economy combining strategic planning and market competition mechanisms, state control over monetary system, private entrepreneurship following public interests while regulating capital accumulation processes and creative self-realization freedom for all. The research proves the inevitability of the world financial and economic system restructuring on the ground of international law restoration with respect to national sovereignty, paying special attention to the extension of contractual legal relations in issuance of world currencies and regulating circulation, capital market regulation, information technologies, and international media space. We present ideas for creating a broad coalition of the Eurasian countries to speed up transition to a new WEM and thus prevent a world war. The leading role of India, Russia and China in this process is of special interest. Focusing on comparative analysis of current American-centric order and new emerging WEM, we predict the end of liberal globalization and strengthening of interstate cooperation. The article substantiates the hypothesis that global economic development in the twenty-first century will be determined by peaceful and constructive competition between two political systems of the new WEM: Indian and Chinese.
{"title":"Russia, India, and China: Cooperation and New Role in the Development of International Relations","authors":"S. Y. Glazev, V. Arkhipova","doi":"10.1177/09749101221082723","DOIUrl":"https://doi.org/10.1177/09749101221082723","url":null,"abstract":"The research explores the fundamental structural changes in the world economy resulting from the shifting of technological mode (TM) and world economic mode (WEM). Based on the theory of long cycles in economic development, we defined practical reasons for current escalation of international tension and substantiate the hypothesis of world economic center moving to Asia. The article reflects on new WEM image with mixed economy combining strategic planning and market competition mechanisms, state control over monetary system, private entrepreneurship following public interests while regulating capital accumulation processes and creative self-realization freedom for all. The research proves the inevitability of the world financial and economic system restructuring on the ground of international law restoration with respect to national sovereignty, paying special attention to the extension of contractual legal relations in issuance of world currencies and regulating circulation, capital market regulation, information technologies, and international media space. We present ideas for creating a broad coalition of the Eurasian countries to speed up transition to a new WEM and thus prevent a world war. The leading role of India, Russia and China in this process is of special interest. Focusing on comparative analysis of current American-centric order and new emerging WEM, we predict the end of liberal globalization and strengthening of interstate cooperation. The article substantiates the hypothesis that global economic development in the twenty-first century will be determined by peaceful and constructive competition between two political systems of the new WEM: Indian and Chinese.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"65375508","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}
Pub Date : 2022-03-17DOI: 10.1177/09749101221082049
C. J. Anwar
This research investigates the relationship between central bank independence and inflation for 37 developing countries during the period from 1972 to 2019. Given that most developing countries experienced high inflation, many opted for central bank independence to enhance their focus on inflation. Central bank independence reforms were anticipated to create a higher level of independence, which would result in a low inflation rate. We employed pooled least square with the assumption of homogeneity of co-efficients; the result showed no significant relationship between central bank independence and inflation. We checked the homogeneity assumption of the panel by applying Chow and Roy–Zellner tests; results showed that the model was not homogeneous. Furthermore, we performed the panel heterogeneity model with the pooled mean group estimator which indicated that a reverse relationship exists between central bank independence and inflation. This finding is robust as we split the sample into two groups: moderate and high inflation countries; the negative relationship between those variables still exists.
{"title":"Heterogeneity Effect of Central Bank Independence on Inflation in Developing Countries","authors":"C. J. Anwar","doi":"10.1177/09749101221082049","DOIUrl":"https://doi.org/10.1177/09749101221082049","url":null,"abstract":"This research investigates the relationship between central bank independence and inflation for 37 developing countries during the period from 1972 to 2019. Given that most developing countries experienced high inflation, many opted for central bank independence to enhance their focus on inflation. Central bank independence reforms were anticipated to create a higher level of independence, which would result in a low inflation rate. We employed pooled least square with the assumption of homogeneity of co-efficients; the result showed no significant relationship between central bank independence and inflation. We checked the homogeneity assumption of the panel by applying Chow and Roy–Zellner tests; results showed that the model was not homogeneous. Furthermore, we performed the panel heterogeneity model with the pooled mean group estimator which indicated that a reverse relationship exists between central bank independence and inflation. This finding is robust as we split the sample into two groups: moderate and high inflation countries; the negative relationship between those variables still exists.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44147956","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}
Pub Date : 2022-03-11DOI: 10.1177/09749101221081940
Chokri Zehri
The evidence that capital controls adversely affect cross-border trade is debatable. This study shows that capital controls may support international trade by mitigating the negative effect of macroeconomic volatility. We use quarterly data from a sample of 25 emerging countries over the period 2011–2019. Using long- and short-standing capital control dynamic panel models, and diversifying robust estimation techniques, our results show that capital controls alleviate the adverse effects of the exchange rate, interest rate differential, and inflation volatilities. The long-lasting capital controls (walls) are more effective than short-lasting capital controls (gates). Besides, the effects of these controls are asymmetric regarding the financial development level and category of flows. The study highlights the beneficial role of macroprudential policy in supporting capital control actions. The results of this study have two main policy implications, the effectiveness of “walls” controls and the importance of macroeconomic policy coordination.
{"title":"The Volatility Lowering Effects of Capital Controls","authors":"Chokri Zehri","doi":"10.1177/09749101221081940","DOIUrl":"https://doi.org/10.1177/09749101221081940","url":null,"abstract":"The evidence that capital controls adversely affect cross-border trade is debatable. This study shows that capital controls may support international trade by mitigating the negative effect of macroeconomic volatility. We use quarterly data from a sample of 25 emerging countries over the period 2011–2019. Using long- and short-standing capital control dynamic panel models, and diversifying robust estimation techniques, our results show that capital controls alleviate the adverse effects of the exchange rate, interest rate differential, and inflation volatilities. The long-lasting capital controls (walls) are more effective than short-lasting capital controls (gates). Besides, the effects of these controls are asymmetric regarding the financial development level and category of flows. The study highlights the beneficial role of macroprudential policy in supporting capital control actions. The results of this study have two main policy implications, the effectiveness of “walls” controls and the importance of macroeconomic policy coordination.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42429433","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}
Pub Date : 2022-03-11DOI: 10.1177/09749101221082724
Deepika Krishnan, Vishal Dagar
During trade tussles, most of the stock exchanges are impacted, both directly and indirectly, thereby influencing the exchange rates of the countries. This article gives a comprehensive insight into the effects of exchange rate on the USA, China, and Indian stock market, that is, the Dow Jones industrial average index (DJI), Shanghai Stock Exchange (SSE) composite index, and Nifty50 index during trade conflicts. Trade conflicts here talk about the recent trade war between the USA and China, which was invariably fallen in line with the outbreak of COVID-19. Sample of this study comprises the daily closing price from different indices and exchange rate values US dollar, yuan, and rupee. This article uses ordinary least square (OLS) model and generalized autoregressive conditional heteroskedasticity (GARCH) model to analyze the volatility and influence of exchange rate over the stock market. Results from OLS model indicated that the fluctuations in exchange rate have minimum impact on the daily closing price of stock indices, that is, DJI, SSE, and Nifty50 in the USA, China, and India, respectively, however, exchange rate impacts volume of shares traded in all three stock exchanges. The GARCH model implies that the conditional variance is less volatile for Nifty volume, but highly volatile for SSE and DJI stock volumes traded. The findings of the study provide insights to the domestic and foreign investors regarding their investment in the stock market during trade conflicts and mostly during COVID-19 situation.
{"title":"Exchange Rate and Stock Markets During Trade Conflicts in the USA, China, and India","authors":"Deepika Krishnan, Vishal Dagar","doi":"10.1177/09749101221082724","DOIUrl":"https://doi.org/10.1177/09749101221082724","url":null,"abstract":"During trade tussles, most of the stock exchanges are impacted, both directly and indirectly, thereby influencing the exchange rates of the countries. This article gives a comprehensive insight into the effects of exchange rate on the USA, China, and Indian stock market, that is, the Dow Jones industrial average index (DJI), Shanghai Stock Exchange (SSE) composite index, and Nifty50 index during trade conflicts. Trade conflicts here talk about the recent trade war between the USA and China, which was invariably fallen in line with the outbreak of COVID-19. Sample of this study comprises the daily closing price from different indices and exchange rate values US dollar, yuan, and rupee. This article uses ordinary least square (OLS) model and generalized autoregressive conditional heteroskedasticity (GARCH) model to analyze the volatility and influence of exchange rate over the stock market. Results from OLS model indicated that the fluctuations in exchange rate have minimum impact on the daily closing price of stock indices, that is, DJI, SSE, and Nifty50 in the USA, China, and India, respectively, however, exchange rate impacts volume of shares traded in all three stock exchanges. The GARCH model implies that the conditional variance is less volatile for Nifty volume, but highly volatile for SSE and DJI stock volumes traded. The findings of the study provide insights to the domestic and foreign investors regarding their investment in the stock market during trade conflicts and mostly during COVID-19 situation.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44088019","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}
Pub Date : 2022-01-31DOI: 10.1177/09749101211073933
C. Law
The level of international reserves could influence the monetary independence of a country. Nonetheless, this relationship is usually estimated in a single structural equation. This article examines the dynamics from a shock in a partial sum of negative and positive changes in the international reserves on monetary independence in 17 emerging countries from 1991 to 2015 by applying the panel vector regressive estimation. The Granger causality analysis indicates that a decline in the international reserve has a unidirectional impact on monetary independence. The impulse response analysis shows that the monetary independence moves in the same direction immediately after a change in the international reserves. The impact reverses a year later before returning to its initial trend. Besides, the negative partial sum of international reserves has a more lingering effect on monetary independence. Otherwise, the variance decomposition analysis suggests that the monetary independence movement is partially explained by the shock in international reserves, albeit the magnitude is relatively small. The outputs imply that sterilization has played a critical role in moderating the negative effect of raising international reserves on monetary independence. In sum, hoarding of international reserves needs to be complemented with effective sterilization.
{"title":"The Impacts of International Reserves on Monetary Independence in Emerging Countries: An Asymmetric Analysis","authors":"C. Law","doi":"10.1177/09749101211073933","DOIUrl":"https://doi.org/10.1177/09749101211073933","url":null,"abstract":"The level of international reserves could influence the monetary independence of a country. Nonetheless, this relationship is usually estimated in a single structural equation. This article examines the dynamics from a shock in a partial sum of negative and positive changes in the international reserves on monetary independence in 17 emerging countries from 1991 to 2015 by applying the panel vector regressive estimation. The Granger causality analysis indicates that a decline in the international reserve has a unidirectional impact on monetary independence. The impulse response analysis shows that the monetary independence moves in the same direction immediately after a change in the international reserves. The impact reverses a year later before returning to its initial trend. Besides, the negative partial sum of international reserves has a more lingering effect on monetary independence. Otherwise, the variance decomposition analysis suggests that the monetary independence movement is partially explained by the shock in international reserves, albeit the magnitude is relatively small. The outputs imply that sterilization has played a critical role in moderating the negative effect of raising international reserves on monetary independence. In sum, hoarding of international reserves needs to be complemented with effective sterilization.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42577800","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}
Pub Date : 2022-01-21DOI: 10.1177/09749101211070960
P. Mishra, S. Mishra
This article examined the impact of the unanticipated outbreak of global public health crisis, COVID-19 pandemic, on the equity market performances and on the degree of integration of these markets in BRICS bloc. The empirical analyses lend support to the weakened equity market integration in the BRICS economies amid the pandemic, and the key driving forces include the rate of inflation, the real rate of interest, real exchange rate and composite leading indicator in the long-run, and trade performance and composite leading indicator in the short-run. The implications on the one hand, indicate increased opportunities for international portfolio diversification, and on the other hand, suggest for controlling the macroeconomic uncertainties of inflation, interest rate and exchange rate fluctuations during global health crisis to promote stable economic conditions for ensuring equity market integration in the long-run.
{"title":"Is the Impact of COVID-19 Significant in Determining Equity Market Integration? Insights from BRICS Economies","authors":"P. Mishra, S. Mishra","doi":"10.1177/09749101211070960","DOIUrl":"https://doi.org/10.1177/09749101211070960","url":null,"abstract":"This article examined the impact of the unanticipated outbreak of global public health crisis, COVID-19 pandemic, on the equity market performances and on the degree of integration of these markets in BRICS bloc. The empirical analyses lend support to the weakened equity market integration in the BRICS economies amid the pandemic, and the key driving forces include the rate of inflation, the real rate of interest, real exchange rate and composite leading indicator in the long-run, and trade performance and composite leading indicator in the short-run. The implications on the one hand, indicate increased opportunities for international portfolio diversification, and on the other hand, suggest for controlling the macroeconomic uncertainties of inflation, interest rate and exchange rate fluctuations during global health crisis to promote stable economic conditions for ensuring equity market integration in the long-run.","PeriodicalId":37512,"journal":{"name":"Global Journal of Emerging Market Economies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44054591","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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