Pub Date : 2026-02-01Epub Date: 2025-11-22DOI: 10.1016/j.jimonfin.2025.103475
Qingyuan Du , Shengjie Hong , Yao Wang , Yaqi Wang
In this paper, we investigate the effect of exchange rate volatility on firm-level investment, highlighting the role of the financial channel for firms that borrow in foreign currencies. Using Chinese firm-level data (2000–2021), we find that an increase in exchange rate volatility significantly reduces investment for firms with foreign currency debt. The results suggest that exchange rate volatility has a more pronounced effect on firm investment through the financial channel, compared with the trade channel commonly discussed in the literature. Our investigation into debt structure reveals that the impact of exchange rate volatility due to long-term foreign currency debt exposure and the US dollar exchange rate volatility exposure is particularly pronounced among Chinese firms. Moreover, our analyses identify the real option, precautionary savings and cross-industry spillover mechanisms as key factors determining the impact of exchange rate volatility on Chinese firm investment.
{"title":"Exchange rate, foreign currency debt and firm-level investment","authors":"Qingyuan Du , Shengjie Hong , Yao Wang , Yaqi Wang","doi":"10.1016/j.jimonfin.2025.103475","DOIUrl":"10.1016/j.jimonfin.2025.103475","url":null,"abstract":"<div><div>In this paper, we investigate the effect of exchange rate volatility on firm-level investment, highlighting the role of the financial channel for firms that borrow in foreign currencies. Using Chinese firm-level data (2000–2021), we find that an increase in exchange rate volatility significantly reduces investment for firms with foreign currency debt. The results suggest that exchange rate volatility has a more pronounced effect on firm investment through the financial channel, compared with the trade channel commonly discussed in the literature. Our investigation into debt structure reveals that the impact of exchange rate volatility due to long-term foreign currency debt exposure and the US dollar exchange rate volatility exposure is particularly pronounced among Chinese firms. Moreover, our analyses identify the real option, precautionary savings and cross-industry spillover mechanisms as key factors determining the impact of exchange rate volatility on Chinese firm investment.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"161 ","pages":"Article 103475"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145694234","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-12-03DOI: 10.1016/j.jimonfin.2025.103502
Barry Eichengreen , Akiko Terada-Hagiwara , Yothin Jinjarak
In many respects, the challenges of local government debts in the People's Republic of China (PRC) parallel those faced by members of the European Union, which also contend with high deficits and debts in a currency union. European fiscal rules shed light on issues for the PRC, including the difficulty in assessing fiscal compliance, the necessity of adaptable governance, the intricacies of political processes, and enforcement challenges in operating fiscal rules. Our assessment points to the significance of context-specific strategies for addressing local government debts with a rule-based fiscal framework for it to be operational for the PRC. We provide corroborating evidence from PRC provinces, Euro member states, and German Länder.
{"title":"Fiscal rules in monetary union: insights from Europe for the PRC","authors":"Barry Eichengreen , Akiko Terada-Hagiwara , Yothin Jinjarak","doi":"10.1016/j.jimonfin.2025.103502","DOIUrl":"10.1016/j.jimonfin.2025.103502","url":null,"abstract":"<div><div>In many respects, the challenges of local government debts in the People's Republic of China (PRC) parallel those faced by members of the European Union, which also contend with high deficits and debts in a currency union. European fiscal rules shed light on issues for the PRC, including the difficulty in assessing fiscal compliance, the necessity of adaptable governance, the intricacies of political processes, and enforcement challenges in operating fiscal rules. Our assessment points to the significance of context-specific strategies for addressing local government debts with a rule-based fiscal framework for it to be operational for the PRC. We provide corroborating evidence from PRC provinces, Euro member states, and German Länder.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"162 ","pages":"Article 103502"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145929039","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper leverages a rare quasi-experiment—the unexpected September 2021 interest rate cut by the Central Bank of the Republic of Türkiye—to examine how inflation expectations shape firm behavior in a high-inflation environment. Drawing on a rich dataset that combines monthly survey responses with administrative records, we exploit the heterogeneous revisions in firms’ inflation expectations triggered by the policy shock. Firms that significantly increased their inflation forecasts (treated) subsequently became more pessimistic about economic conditions, reduced employment, and curbed domestic sales. At the same time, they strategically raised procurement, acquired more foreign currency assets, and boosted borrowing in local currency—even at higher costs—in anticipation of debt erosion. These patterns suggest that firms’ heightened inflation expectations drive both defensive and opportunistic behaviors, ranging from hedging against currency depreciation to locking in lower financing costs. Overall, the findings highlight the critical role of inflation expectations in guiding firm-level decisions and document the importance of policy credibility in volatile macroeconomic settings.
{"title":"A quasi-experiment in monetary policy: The impact of unexpected easing on inflation expectations and firm behavior","authors":"Okan Akarsu , Emrehan Aktuğ , Altan Aldan , Ünal Seven","doi":"10.1016/j.jimonfin.2026.103533","DOIUrl":"10.1016/j.jimonfin.2026.103533","url":null,"abstract":"<div><div>This paper leverages a rare quasi-experiment—the unexpected September 2021 interest rate cut by the Central Bank of the Republic of Türkiye—to examine how inflation expectations shape firm behavior in a high-inflation environment. Drawing on a rich dataset that combines monthly survey responses with administrative records, we exploit the heterogeneous revisions in firms’ inflation expectations triggered by the policy shock. Firms that significantly increased their inflation forecasts (treated) subsequently became more pessimistic about economic conditions, reduced employment, and curbed domestic sales. At the same time, they strategically raised procurement, acquired more foreign currency assets, and boosted borrowing in local currency—even at higher costs—in anticipation of debt erosion. These patterns suggest that firms’ heightened inflation expectations drive both defensive and opportunistic behaviors, ranging from hedging against currency depreciation to locking in lower financing costs. Overall, the findings highlight the critical role of inflation expectations in guiding firm-level decisions and document the importance of policy credibility in volatile macroeconomic settings.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"162 ","pages":"Article 103533"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146079222","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2026-01-10DOI: 10.1016/j.jimonfin.2026.103529
Haoyuan Ding , Daming Huang , Zida Li , Xingyu Lu
This study explores whether China Cross-Border E-Commerce (CBEC) Comprehensive Pilot Zone served as a cushion for global supply chains against the shock of the China-U.S. trade war. Leveraging micro-level supply chain data and a difference-in-differences design, we find participation in CBEC Comprehensive Pilot Zone reduces supply chain disruptions by 4.1 percentage points – equivalent to a 53 % decline relative to the mean, and the mitigating effect is particularly pronounced for non-U.S. trade partners and industries not directly targeted by tariffs. Further analysis identifies four underlying mechanisms: (1) easing financial constraints, (2) reducing information costs and negotiation costs, (3) leveraging trade infrastructure, and (4) synergies with customers’ institutional quality. Moreover, firms in CBEC comprehensive pilot zones also establish more U.S. relationships in non-targeted industries, exhibiting lower costs and higher operational efficiency.
{"title":"Digital safeguards in trade wars: assessing the impact of China’s CBEC pilot zone on global supply chain resilience","authors":"Haoyuan Ding , Daming Huang , Zida Li , Xingyu Lu","doi":"10.1016/j.jimonfin.2026.103529","DOIUrl":"10.1016/j.jimonfin.2026.103529","url":null,"abstract":"<div><div>This study explores whether China Cross-Border E-Commerce (CBEC) Comprehensive Pilot Zone served as a cushion for global supply chains against the shock of the China-U.S. trade war. Leveraging micro-level supply chain data and a difference-in-differences design, we find participation in CBEC Comprehensive Pilot Zone reduces supply chain disruptions by 4.1 percentage points – equivalent to a 53 % decline relative to the mean, and the mitigating effect is particularly pronounced for non-U.S. trade partners and industries not directly targeted by tariffs. Further analysis identifies four underlying mechanisms: (1) easing financial constraints, (2) reducing information costs and negotiation costs, (3) leveraging trade infrastructure, and (4) synergies with customers’ institutional quality. Moreover, firms in CBEC comprehensive pilot zones also establish more U.S. relationships in non-targeted industries, exhibiting lower costs and higher operational efficiency.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"162 ","pages":"Article 103529"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145980413","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-11-19DOI: 10.1016/j.jimonfin.2025.103465
Stefan Avdjiev , Leonardo Gambacorta , Linda S. Goldberg , Stefano Schiaffi
The period after the Global Financial Crisis (GFC) was characterized by a considerable risk migration within global liquidity flows, away from cross-border bank lending towards international bond issuance. We show that the post-GFC shifts in the risk sensitivities of global liquidity flows are related to the tightness of the balance sheet (capital and leverage) constraints faced by international (bank and non-bank) lenders and to the migration of borrowers across funding sources. We document that the risk sensitivity of global liquidity flows is higher when funding is provided by financial intermediaries that are facing greater balance sheet constraints. We also provide evidence that the post-GFC migration of borrowers from cross-border loans to international debt securities was associated with a decline in the risk sensitivity of global liquidity flows to EME borrowers.
{"title":"The risk sensitivity of global liquidity flows: Heterogeneity, evolution and drivers","authors":"Stefan Avdjiev , Leonardo Gambacorta , Linda S. Goldberg , Stefano Schiaffi","doi":"10.1016/j.jimonfin.2025.103465","DOIUrl":"10.1016/j.jimonfin.2025.103465","url":null,"abstract":"<div><div>The period after the Global Financial Crisis (GFC) was characterized by a considerable risk migration within global liquidity flows, away from cross-border bank lending towards international bond issuance. We show that the post-GFC shifts in the risk sensitivities of global liquidity flows are related to the tightness of the balance sheet (capital and leverage) constraints faced by international (bank and non-bank) lenders and to the migration of borrowers across funding sources. We document that the risk sensitivity of global liquidity flows is higher when funding is provided by financial intermediaries that are facing greater balance sheet constraints. We also provide evidence that the post-GFC migration of borrowers from cross-border loans to international debt securities was associated with a decline in the risk sensitivity of global liquidity flows to EME borrowers.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"161 ","pages":"Article 103465"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145625364","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-12-04DOI: 10.1016/j.jimonfin.2025.103499
Antonio Fatás , Bram Gootjes , Joseph Mawejje
Fiscal rules have been shown to support fiscal discipline by improving government budget balances and restraining the growth of debt. However, questions remain about what enhances their effectiveness and how certain conditions help to build the credibility needed for their survival and success. Using data from 116 countries between 1984 and 2015, this paper studies the dynamic effects of fiscal rule adoption. It shows that although fiscal rules generally improve the cyclically adjusted primary balance, their effects depend on the time horizon under consideration and the context of adoption. In advanced economies and countries with strong political institutions, the effects strengthen over time. Conversely, in emerging markets and developing economies—especially those with weaker institutions—their impact tends to fade as time passes. The findings highlight the critical role of economic conditions and consensus building at the time of adoption. Specifically, fiscal rules introduced in times of economic hardship or under highly concentrated political power are often less effective in the medium term. Good design of fiscal rules is important, but it is no silver bullet.
{"title":"Dynamic effects of fiscal rules: Do initial conditions Matter?","authors":"Antonio Fatás , Bram Gootjes , Joseph Mawejje","doi":"10.1016/j.jimonfin.2025.103499","DOIUrl":"10.1016/j.jimonfin.2025.103499","url":null,"abstract":"<div><div>Fiscal rules have been shown to support fiscal discipline by improving government budget balances and restraining the growth of debt. However, questions remain about what enhances their effectiveness and how certain conditions help to build the credibility needed for their survival and success. Using data from 116 countries between 1984 and 2015, this paper studies the dynamic effects of fiscal rule adoption. It shows that although fiscal rules generally improve the cyclically adjusted primary balance, their effects depend on the time horizon under consideration and the context of adoption. In advanced economies and countries with strong political institutions, the effects strengthen over time. Conversely, in emerging markets and developing economies—especially those with weaker institutions—their impact tends to fade as time passes. The findings highlight the critical role of economic conditions and consensus building at the time of adoption. Specifically, fiscal rules introduced in times of economic hardship or under highly concentrated political power are often less effective in the medium term. Good design of fiscal rules is important, but it is no silver bullet.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"161 ","pages":"Article 103499"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145747969","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-12-05DOI: 10.1016/j.jimonfin.2025.103500
Aariya Sen , Rudra Sensarma
Greater integration among world economies have made Emerging Market Economies (EMEs) susceptible to actions of developed countries. While the literature has studied cross-border ramifications of monetary policy decisions, the effects on financial stress and the role of policy independence of the domestic economies have been ignored. We examine the spillover effects of the US Fed’s monetary policy, including Unconventional Monetary Policy (UMP) episodes, on financial stress of EMEs. We also explore the role of EMEs’ monetary policy independence by examining whether the spillover effects are moderated by the responsiveness of an EME’s interest rates to that of the US. We analyse the impact of the US Monetary Policy Shocks (MPS) on the financial stress and monetary independence of 18 EMEs during 2008–2021. The results from Pooled Mean Group estimation reveal that Fed monetary tightening is associated with higher financial stress of EMEs. Furthermore, monetary independence of the EMEs provide a buffer from these spillover effects. These findings underscore the importance of EMEs recognizing the spillover effects of global shocks on their financial markets and the need to safeguard themselves through appropriate institutional design.
{"title":"Beyond borders: spillover effects of US monetary policy on the financial stress of emerging market economies","authors":"Aariya Sen , Rudra Sensarma","doi":"10.1016/j.jimonfin.2025.103500","DOIUrl":"10.1016/j.jimonfin.2025.103500","url":null,"abstract":"<div><div>Greater integration among world economies have made Emerging Market Economies (EMEs) susceptible to actions of developed countries. While the literature has studied cross-border ramifications of monetary policy decisions, the effects on financial stress and the role of policy independence of the domestic economies have been ignored. We examine the spillover effects of the US Fed’s monetary policy, including Unconventional Monetary Policy (UMP) episodes, on financial stress of EMEs. We also explore the role of EMEs’ monetary policy independence by examining whether the spillover effects are moderated by the responsiveness of an EME’s interest rates to that of the US. We analyse the impact of the US Monetary Policy Shocks (MPS) on the financial stress and monetary independence of 18 EMEs during 2008–2021. The results from Pooled Mean Group estimation reveal that Fed monetary tightening is associated with higher financial stress of EMEs. Furthermore, monetary independence of the EMEs provide a buffer from these spillover effects. These findings underscore the importance of EMEs recognizing the spillover effects of global shocks on their financial markets and the need to safeguard themselves through appropriate institutional design.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"161 ","pages":"Article 103500"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145797134","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-12-01DOI: 10.1016/j.jimonfin.2025.103497
Yuanyuan Li , Xun Wang , Jingwen Yu
The transmission mechanisms of global liquidity shocks have garnered significant attention, particularly in the context of emerging market economies. This study contributes to this literature by empirically examining a novel household income channel through which foreign-owned enterprises (FOEs) propagate US monetary policy shocks to host countries. Leveraging a large Chinese individual-level survey dataset, we uncover a hitherto understudied mechanism linking external monetary tightening to income dynamics in the private sector. Tightening US monetary policy shocks exhibit a significantly larger contractionary effect on individuals employed in FOEs relative to those in non-FOEs. These spillover effects are more pronounced for individuals working in industries with greater external financial dependence and in provinces with less developed financial sector. Moreover, the income dampening effect of US monetary policy shocks through FOEs affects household consumption, and households with greater financing constraints are more prominently affected. Our paper provides new insights into how FOEs act as transmission intermediaries for external liquidity shocks, affecting the host country’s economy.
{"title":"FOEs and the transmission of US monetary policy shocks: Evidence from China","authors":"Yuanyuan Li , Xun Wang , Jingwen Yu","doi":"10.1016/j.jimonfin.2025.103497","DOIUrl":"10.1016/j.jimonfin.2025.103497","url":null,"abstract":"<div><div>The transmission mechanisms of global liquidity shocks have garnered significant attention, particularly in the context of emerging market economies. This study contributes to this literature by empirically examining a novel household income channel through which foreign-owned enterprises (FOEs) propagate US monetary policy shocks to host countries. Leveraging a large Chinese individual-level survey dataset, we uncover a hitherto understudied mechanism linking external monetary tightening to income dynamics in the private sector. Tightening US monetary policy shocks exhibit a significantly larger contractionary effect on individuals employed in FOEs relative to those in non-FOEs. These spillover effects are more pronounced for individuals working in industries with greater external financial dependence and in provinces with less developed financial sector. Moreover, the income dampening effect of US monetary policy shocks through FOEs affects household consumption, and households with greater financing constraints are more prominently affected. Our paper provides new insights into how FOEs act as transmission intermediaries for external liquidity shocks, affecting the host country’s economy.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"161 ","pages":"Article 103497"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145748021","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-11-15DOI: 10.1016/j.jimonfin.2025.103474
Junsoo Lee , Md. Towhidul Islam , Margie Tieslau , James E. Payne , Saban Nazlioglu
The Prebisch-Singer (1950, PS) hypothesis posits a long-term decline in the relative prices of primary commodities (natural resources) compared to manufactured goods. This hypothesis carries important implications for resource management, economic growth, and the terms of trade in developing countries. It raises two critical questions that are inherently interlinked: (1) Do relative commodity prices exhibit a negative trend? and (2) Are these prices non-stationary? When addressing these questions, prior analyses have often overlooked the potential influence of cross-correlations among relative commodity prices. In this study, we jointly address these questions while explicitly accounting for cross-correlations. To achieve this, we first employ a dynamic factor model, which effectively captures the shared variations across commodity prices. Additionally, we incorporate the Fourier function to model smooth structural breaks, allowing for the identification of gradual changes in the underlying trend. The combined use of these methods yields significant insights. Our findings provide robust evidence supporting the PS hypothesis over the period 1900–2020, highlighting the persistent and systematic decline in the relative prices of primary commodities.
{"title":"Trends of relative commodity prices with comovements and structural breaks","authors":"Junsoo Lee , Md. Towhidul Islam , Margie Tieslau , James E. Payne , Saban Nazlioglu","doi":"10.1016/j.jimonfin.2025.103474","DOIUrl":"10.1016/j.jimonfin.2025.103474","url":null,"abstract":"<div><div>The Prebisch-<span><span>Singer (1950</span></span>, PS) hypothesis posits a long-term decline in the relative prices of primary commodities (natural resources) compared to manufactured goods. This hypothesis carries important implications for resource management, economic growth, and the terms of trade in developing countries. It raises two critical questions that are inherently interlinked: (1) Do relative commodity prices exhibit a negative trend? and (2) Are these prices non-stationary? When addressing these questions, prior analyses have often overlooked the potential influence of cross-correlations among relative commodity prices. In this study, we jointly address these questions while explicitly accounting for cross-correlations. To achieve this, we first employ a dynamic factor model, which effectively captures the shared variations across commodity prices. Additionally, we incorporate the Fourier function to model smooth structural breaks, allowing for the identification of gradual changes in the underlying trend. The combined use of these methods yields significant insights. Our findings provide robust evidence supporting the PS hypothesis over the period 1900–2020, highlighting the persistent and systematic decline in the relative prices of primary commodities.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"161 ","pages":"Article 103474"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145580382","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-11-25DOI: 10.1016/j.jimonfin.2025.103491
Sayuri Shirai
Climate change is increasingly recognized as having material impacts on the economy and inflation. However, its integration into core monetary policy frameworks—such as inflation targeting or policy rate setting—remains limited in scope and depth. Instead, some central banks apply green considerations to peripheral tools such as lending facilities, collateral frameworks, or reserve management, whose impact can be enhanced with clear taxonomies or similar classification systems. Looking ahead, the direct integration of climate factors into monetary policy may become feasible when (a) climate risks have measurable and persistent impacts on inflation and output; (b) reliable data are incorporated into macroeconomic forecasting models, and (c) mandates explicitly allow consideration of such risks. By contrast, financial stability frameworks have been advancing more rapidly, with central banks and financial supervisors embedding climate risks into prudential reviews and conducting climate scenario analysis or stress testing. To promote banks’ further climate actions, encouraging climate-related disclosure including financed emissions and adopting common methodologies is essential.
{"title":"Climate risk and central banking in Asia: balancing price stability and financial stability","authors":"Sayuri Shirai","doi":"10.1016/j.jimonfin.2025.103491","DOIUrl":"10.1016/j.jimonfin.2025.103491","url":null,"abstract":"<div><div>Climate change is increasingly recognized as having material impacts on the economy and inflation. However, its integration into core monetary policy frameworks—such as inflation targeting or policy rate setting—remains limited in scope and depth. Instead, some central banks apply green considerations to peripheral tools such as lending facilities, collateral frameworks, or reserve management, whose impact can be enhanced with clear taxonomies or similar classification systems. Looking ahead, the direct integration of climate factors into monetary policy may become feasible when (a) climate risks have measurable and persistent impacts on inflation and output; (b) reliable data are incorporated into macroeconomic forecasting models, and (c) mandates explicitly allow consideration of such risks. By contrast, financial stability frameworks have been advancing more rapidly, with central banks and financial supervisors embedding climate risks into prudential reviews and conducting climate scenario analysis or stress testing. To promote banks’ further climate actions, encouraging climate-related disclosure including financed emissions and adopting common methodologies is essential.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"161 ","pages":"Article 103491"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145938364","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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