Trade openness, financial openness, and macroeconomic volatility

2021 ◽  
pp. 100934
Author(s):  
Yong Ma ◽  
Yiqing Jiang ◽  
Chi Yao
Keyword(s):  
Trade Openness ◽  
Financial Openness ◽  
Macroeconomic Volatility

Financial Integrational Effects on Macroeconomic Instability in India

2017 ◽  
Vol 11 (2) ◽  
pp. 143-166
Author(s):  
Niranjan R.
Keyword(s):  
Financial Development ◽  
Financial Integration ◽  
Trade Openness ◽  
Jel Classification ◽  
Financial Openness ◽  
Vector Error Correction ◽  
Vector Error ◽  
International Financial Integration ◽  
Macroeconomic Instability ◽  
Negative Effect

The nexus between international financial integration and economic growth continues to be one of the most debated issues among macroeconomists, and these debates often raise several issues from the theoretical and policy perspectives. Financial integration can catalyse financial development, improve governance and impose discipline on macro-policies. However, in the absence of a basic pre-existing level of supporting conditions, financial integration can aggravate instability (Khadraoui, 2010). In addition, economic theory suggests that increased financial openness intensifies macroeconomic instability. This article investigates the financial integrational effects on macroeconomic instability in terms of output, consumption and investment volatility by employing the vector error correction model (VECM) with empirically reasonably parameters for an emerging economy, India, for the period 1989–2014. From the results, it is evident that financial openness has had a significant effect on output, consumption and investment volatility. Financial development has had a statistically significant negative effect on output, consumption and investment volatility. Similarly, trade openness and terms of trade significantly influence output, consumption and investment volatility. JEL Classification: F36, F41, F43, E32

Sectoral analysis of productivity in the developing and developed economies of Asia-Pacific

2019 ◽  
Vol 13 (1) ◽  
pp. 37-71
Author(s):  
Pami Dua ◽  
Niti Khandelwal Garg
Keyword(s):  
Technological Progress ◽  
Developing Economies ◽  
Trade Openness ◽  
Institutional Quality ◽  
Asia Pacific ◽  
Government Size ◽  
Financial Openness ◽  
Content Type ◽  
Developed Economies ◽  
The Impact

Purpose The study aims to empirically investigate the trends and determinants of labour productivity of the two broad sectors –industry and services – and their components, namely, manufacturing and market services sectors, in the case of major developing and developed economies of Asia-Pacific over the period 1980-2014 and make a comparison thereof. Design/methodology/approach The study uses econometric methodology of panel unit root tests, panel cointegration and group-mean full modified ordinary least squares (FMOLS). Findings The study finds that while capital deepening, government size, institutional quality, productivity of the other sector and financial openness affect productivity of all the sectors significantly, the impact of human capital and trade openness varies across sectors in the case of developing economies. Furthermore, the impact of technological progress becomes significant in the post-liberalization reforms period in the developing economies. The study further finds that capital deepening, human capital, government size, institutional quality, productivity of the other sector, government size and trade openness are significant determinants of productivity of all sectors of developed economies under consideration. However, the impact of technological progress is stronger for manufacturing sector than services and its components. Furthermore, while both equity and debt liabilities (as measures of financial openness) influence sectoral productivity of industry and manufacturing sectors positively and significantly in case of developed economies, only equity liabilities have a significant influence on the productivity of developing economies. This may indicate existence of more developed financial markets in the case of developed economies. Originality/value The study identifies important structural differences in determinants of productivity both across sectors and across developing and developed economies of Asia-Pacific.

Financial integration and macroeconomic volatility: evidence from Asia

2019 ◽  
Vol 35 (2) ◽  
pp. 94-112
Author(s):  
Inder Sekhar Yadav ◽  
Phanindra Goyari ◽  
Ram Kumar Mishra
Keyword(s):  
Financial Integration ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Cross Sectional ◽  
Content Type ◽  
Macroeconomic Volatility ◽  
Advanced Economies ◽  
Asian Economies ◽  
The Impact ◽  
Over Time

Purpose The purpose of this paper is to empirically examine the impact of financial integration on macroeconomic volatility for developing and emerging economies of Asia. Design/methodology/approach The effects of financial integration and dynamics of macroeconomic volatility over time and across different groups of Asian economies vis-à-vis advanced economies are investigated using four different variables such as consumption, output, income and the ratio of consumption to income. Further, an empirical link between the degree of international financial integration and macroeconomic volatility for Asian economies is econometrically investigated using generalized method of moments (GMM) system one-step estimator. Findings Macroeconomic volatilities of per capita output and consumption growth tend to be lower for advanced economies compared to Asian economies. The computed cross-sectional median of the volatility of consumption, output, income and the ratio of consumption volatility to income suggested that the volatility of advanced economies is lower compared to all the regions of Asia. GMM results suggested that the financial openness, trade openness and broad money are negatively and significantly associated with macroeconomic volatility whereas inflation is positively and significantly associated with macroeconomic volatility but the magnitude of trade openness is found to be negligible. Research limitations/implications The present study has not included the effects of other country-specific variables (such as fiscal policy volatility) and other external factors to understand macroeconomic volatility. Practical implications High integration of economies promote economic growth, reduce macroeconomic volatility and reduce vulnerability to external shocks. This implies that policy makers should thrive to reform and create institutional infrastructure to deepen the integration. Originality/value The paper is an important empirical contribution toward examining the effects of financial integration on dynamics of macroeconomic volatility for a large number of Asian developing and emerging economics over time and across different groups using recent data and latest analytical framework and techniques.

scholarly journals The comparative African regional economics of globalization in financial allocation efficiency: the pre-crisis era revisited

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Simplice A. Asongu ◽  
Joseph Nnanna ◽  
Vanessa S. Tchamyou
Keyword(s):  
Fixed Effects ◽  
Regional Economics ◽  
Trade Openness ◽  
Principal Component ◽  
Policy Implications ◽  
Financial Openness ◽  
Allocation Efficiency ◽  
Interactive Fixed Effects ◽  
Financial Allocation ◽  
Economic Regions

AbstractThis study assesses the role of globalization-fueled regionalization policies on the financial allocation efficiency of four economic and monetary regions in Africa from 1980 to 2008. Banking and financial system efficiency proxies are used as dependent variables and seven bundled and unbundled globalization variables are employed as independent indicators. The bundling is achieved by principal component analysis, while the empirical evidence is based on interactive fixed effects regressions. The findings are as follows. First, financial allocation efficiency is more sensitive to financial openness compared to trade openness and most sensitive to globalization. The relationship between allocation efficiency and globalization-fueled regionalization policies is defined by: (i) a Kuznets or inverted U-shaped curve in the UEMOA and CEMAC zones (evidence of decreasing returns for allocation efficiency from globalization-fueled regionalization) and (ii) a U-shaped relationship overwhelmingly in the COMESA and scantily in the EAC (increasing returns to allocation efficiency due to globalization-fueled regionalization). These relationships are relevant to the specific globalization dynamics within regions. Economic and monetary regions are more prone to surplus liquidity than pure economic regions are. Policy implications and measures for reducing surplus liquidity are also discussed.

scholarly journals Financial Sector Development, Openness, and Entrepreneurship: Panel Regression Analysis

2018 ◽  
Vol 10 (10) ◽  
pp. 3493 ◽  
Author(s):  
Yilmaz Bayar ◽  
Marius Gavriletea ◽  
Zeki Ucar
Keyword(s):  
Banking Sector ◽  
Negative Impact ◽  
Early Stage ◽  
Trade Openness ◽  
Financial Sector ◽  
Entrepreneurial Activity ◽  
Financial Openness ◽  
Middle Income ◽  
Fdi Inflows ◽  
Financial Sector Development

Entrepreneurship plays a major role in all countries’ economies through generating new jobs and innovation, and in turn making a contribution to the economic growth. Therefore, the determinants underlying entrepreneurship have become important for designing an environment that increases entrepreneurial activity. In this study, we considered it important to investigate the influence of factors such as financial sector development, foreign direct investment (FDI) inflows, and trade and financial openness on entrepreneurship, using information from 15 upper middle income and high-income countries over the 2001–2015 period. The findings reveal that the banking sector and capital market development, FDI inflows, and trade openness affect the total early-stage entrepreneurial activity positively. Furthermore, the crises had a negative impact on the entrepreneurship.

scholarly journals Vulnerability to foreign macroeconomic shocks – an empirical study in cross-industry perspective. Example of 2008–2009 global crisis in Europe*

2013 ◽  
Vol 13 (1) ◽  
pp. 150-173
Author(s):  
Agnieszka Domańska ◽  
Dobromił Serwa
Keyword(s):  
Empirical Study ◽  
Foreign Trade ◽  
Trade Openness ◽  
Industry Structure ◽  
European Countries ◽  
Financial Openness ◽  
Macroeconomic Shocks ◽  
Global Crisis ◽  
Cross Country ◽  
Structure Of Trade

Abstract The paper analyses the factors explaining the vulnerability of the European countries’ industries to foreign trade and production downturn in the years 2008-2009 and attempts to identify branches and industries (or their features significant in this context) that most greatly contributed to the last crisis transmission in Europe, mainly through the slump in their trade. Among those factors we took into particular consideration: the level of specialization versus diversification of the export basket and production, trade openness in the cross-country and cross-industry perspective, the intra-industry/inter-industry structure of trade and the financial openness.

scholarly journals Do institutions, financial and trade openness matter for financial development? Evidence from Muslim Countries

2020 ◽  
Author(s):  
Amjad Ali ◽  
Faqeer Muhammad ◽  
Rehmat Karim
Keyword(s):  
Panel Data ◽  
Financial Development ◽  
Random Effect ◽  
Trade Openness ◽  
Law And Order ◽  
Financial Openness ◽  
Development Indicators ◽  
Muslim Countries

Abstract This study investigates the influence of institutional, financial openness and trade openness on financial development in the case of 26 Muslim countries. For this purpose, panel data have been taken from world development indicators for the period 2002-2014 and the panel data model has been estimated using fixed effect random effect models. The findings of this paper have highlighted the role of institutions, trade and financial openness in financial development. The results show that the quality of institution, trade openness and economic growth have significant and positive effect on financial development. Keeping in view the results, it is recommended that Muslim countries should focus on adopting free trade policies, maintaining law and order situation, elimination of corruption and enhancing the quality of institutions for financial sector development.

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