scholarly journals Sensitivity of Debt Flows to Fiscal External Shocks in Emerging Market and Capital Market Correlations

2021 ◽  
Vol 8 (5) ◽  
pp. 157-171
Author(s):  
Ahmet Niyazi Özker
Keyword(s):  
Interest Rates ◽  
Emerging Economies ◽  
Capital Accumulation ◽  
Structural Characteristics ◽  
Emerging Market ◽  
Financial Risks ◽  
Financial Shocks ◽  
Monetary Policies ◽  
Global Priority ◽  
Current Change

In this study, we attempted to reveal the reasons for possible debt changes regarding the sensitivity of capital change indices in emerging economies to global financial risks and the meaning of possible correlation effects at the global level. Overcoming to Global economic and financial instabilities in emerging economies have required to take different fiscal measure have been aimed at balancing the rising interest rates and global financial change costs, which are caused by rising global priority costs. The external effects of global financial shocks in emerging economies led to a significant increase in global borrowing in these economies. In other words, in these countries representing emerging economies at different levels of development, they have also provided a reason for the inclusion of different financial and monetary policies in the process. Sensitivity to global financial shocks in emerging economies is related to the structural characteristics of countries and structural impact scales and correlations regarding which markets are affected by the needs. In this respect, it appears that the developments regarding the sectors, especially the capital flow, are meaningful in terms of indexes created by the periodic changes in the values of the current change. In this respect, in emerging economies, these shocks mostly emerge with effects giving different correlation results in countries that differ according to global crises and have other capital accumulations. The remarkable point in terms of the correlations determined here is that debt ratios and capital accumulation variations in emerging economies have put forth a significant correlation in a period of global financial shocks.

At a Glance…: The world economy

2015 ◽  
Vol 234 ◽  
pp. F2-F2
Keyword(s):  
Interest Rates ◽  
World Economy ◽  
Emerging Market ◽  
List Type ◽  
Monetary Policies ◽  
Advanced Economies ◽  
The Us ◽  
The World ◽  
Bank Of England ◽  
Global Growth

The world economy is expected to grow by 3.0 per cent in 2015, unchanged from our August forecast, and by 3.4 per cent in 2016, marginally weaker than projected last time. Growth in emerging market economies has weakened further; recoveries have remained hesitant in the advanced economies.The projected pickup in global growth next year will be supported by accommodative monetary policies and lower oil prices. Growth should strengthen further in 2017 as recoveries take hold in some key emerging markets. But considerable risks remain.We expect the US Federal Reserve to lead the turn in official interest rates in December, with the Bank of England following next February.

Rising intra-firm corporate debt poses stability risks

2019 ◽  
Keyword(s):  
Interest Rates ◽  
Emerging Economies ◽  
Student Loan ◽  
Monetary Policies ◽  
Content Type ◽  
Credit Booms ◽  
Emerging Nations ◽  
Advanced Economies ◽  
Low Interest Rates ◽  
Structured Financial Products

Subject Global debt risks. Significance Global indebtedness is slowly declining -- down to 234% of GDP in 2018, after rising from 202% of GDP in 2008 to peak at 245% of GDP in 2017. The drop is consistent across the household, corporate and government sectors in both advanced and emerging economies. Ultra-low interest rates and abundant liquidity provided by unconventional monetary policies drove the increase in advanced economies. Expansionary domestic policies, subdued inflation and liquidity from advanced economies searching for yield encouraged emerging economies' indebtedness. Impacts Research shows that only 33% of credit booms end in crisis, but deleveraging in most major economies will nonetheless dampen growth. High-risk structured financial products and lending by ‘shadow’ non-bank channels has surged, raising the risk of panic in a downturn. Global average household debt is moderate, but pockets of risk include nations with booming property prices or student loan markets. In low-to-lower-mid-income emerging nations, exchange rate risk is very high as 80% of cross-border loans are dollar-denominated. Fears about China risk masking other nations; debt-to-GDP in other emerging economies is growing faster than advanced nations' debts.

scholarly journals US Long-Term Interest Rates and Capital Flows to Emerging Economies

2015 ◽  
Vol 06 (02) ◽  
pp. 1550008 ◽  
Author(s):  
Eduardo Olaberría
Keyword(s):  
United States ◽  
Interest Rates ◽  
Emerging Economies ◽  
Capital Flows ◽  
Emerging Market ◽  
The Other ◽  
Macroeconomic Conditions ◽  
The Us ◽  
Gross Capital Flows

This paper studies the association between United States (US) long-term interest rates and cycles of capital flows to emerging market economies (EMEs). It finds that cycles in capital flows to EMEs are linked to global conditions, including interest rates in the US. In particular, higher US long-term interest rates are associated with lower levels of gross capital flows to EMEs, and to a higher probability of observing sharp reversals in those flows. Episodes of sharp reversals of net capital flows, on the other hand, are mostly associated with domestic macroeconomic conditions and not necessarily with global factors such as US interest rates.

scholarly journals Country risk for emerging economies: a dynamical index proposal with a case study.

2021 ◽  
Vol 40 (2) ◽  
pp. 285-302
Author(s):  
Ernesto Mordecki ◽  
Andrés Sosa Rodríguez
Keyword(s):  
Interest Rates ◽  
Emerging Economies ◽  
Emerging Market ◽  
Risk Index ◽  
Expectation Maximization Algorithm ◽  
Country Risk ◽  
Affine Model ◽  
Multidimensional Affine ◽  
The Relationship

We introduce a dynamical country risk index for emerging economies. The proposal is based on the intensity approach of credit risk, i.e. the default is the first jump of a point process with stochastic intensity. Two different models are used to estimate the yield spread. They differ in the relationship between the default-free instantaneous interest rate process and the intensity process. The dynamics of the interest rates is modeled through a multidimensional affine model, and the Kalman filter with an Expectation-Maximization algorithm is used to calibrate it. The USD interest rates constitute part of the input of the model, while prices of relevant domestic bonds in the emerging market complete the input. For an application, we select the Uruguayan bond market as the emerging economy.

scholarly journals Central Bank Balance Sheet Policies and Spillovers to Emerging Markets

2017 ◽  
Vol 17 (172) ◽  
Author(s):  
Manmohan Singh ◽  
Haobin Wang
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Financial Stability ◽  
Emerging Market ◽  
Balance Sheet ◽  
Two Dimensions ◽  
Short Term ◽  
Monetary Policies ◽  
Policy Tool ◽  
Advanced Economies

We develop a theoretical model that shows that in the near future, the monetary policies of some key central banks in advanced economies (AEs) will have two dimensions—changes in short-term policy rates and balance sheet adjustments. This will affect emerging market economies (EMs), especially those with a pegged exchange rate, as these EMs primarily use a single monetary policy tool, i.e., the short-term policy rate. We show that changes in policy rates and balance sheet adjustments in AEs may differ in their respective financial spillovers to pegged EMs. Thus, it will be difficult for EMs to mitigate different types of spillovers with a single monetary policy tool. In that context, we use the model to show how EMs might use additional tools—capital controls and/or macro-prudential policy—to complement their monetary policy and financial stability toolkit. We also discuss how balance sheet adjustments that affect long-term interest rates may percolate to influence short-term interest rates via financial plumbing.

GLOBAL FINANCIAL SHOCKS AND THEIR ECONOMIC IMPACT ON EMERGING MARKET ECONOMIES

2013 ◽  
Vol 04 (02) ◽  
pp. 1350008 ◽  
Author(s):  
GUSTAVO ADLER ◽  
CAMILO E. TOVAR
Keyword(s):  
Emerging Economies ◽  
Financial Integration ◽  
Emerging Market ◽  
Global Scale ◽  
Financial Shocks ◽  
The Past ◽  
Advanced Economies ◽  
Macroeconomic Fundamentals ◽  
The World ◽  
The Impact

The world has experienced episodes of global financial stress every 2.5 years on average over the past two decades, with repercussions on a global scale. Over the same period, emerging economies have improved their macroeconomic fundamentals while becoming increasingly integrated with the world. Against this backdrop, are these economies more or less vulnerable to large global financial shocks? What roles have macroeconomic fundamentals and financial integration played in amplifying or buffering the impact of these shocks? This paper addresses these questions by examining the output cost associated with these events in 40 emerging and nine "small" advanced economies during the period 1990–2010.

Investments by Emerging-Market Multinationals in Other Emerging Markets

2018 ◽  
pp. 630-656
Author(s):  
Jing Li ◽  
Daniel Shapiro
Keyword(s):  
Sustainable Development ◽  
Corporate Governance ◽  
Emerging Economies ◽  
Multinational Enterprises ◽  
Emerging Market ◽  
Institutional Development ◽  
Spillover Effects ◽  
Investment Strategy ◽  
Future Research ◽  
Foreign Direct Investments

This chapter reviews the literature on foreign direct investments among emerging economies (E-E FDI), focusing on the motivations behind E-E FDI, country-specific advantages and firm-specific advantages associated with emerging-economy multinational enterprises (EMNEs), and spillover effects of E-E FDI on host-country economic and institutional development. We identify the following topics as posing important questions for future research: EMNEs’ ability to leverage home-government resources and diplomatic connections to promote investment in other emerging economies; nonmarket strategies of EMNEs in emerging economies; ownership and corporate governance affecting investment strategy and performance of EMNEs; E-E FDI contributions to sustainable development in host countries. Future studies should also consider potential heterogeneity among EMNEs by integrating insights from institutional theory, network theory, political science, corporate governance, corporate social responsibility, and sustainable-development research.

scholarly journals EXPRESS: Unbundling the Effects of Internationalization on Firm Performance in Emerging Economies: The Moderating Effects of Strategic Resource Decisions

2021 ◽  
pp. 1069031X2110306
Author(s):  
Nilay Bicakcioglu-Peynirci ◽  
Robert E. Morgan
Keyword(s):  
Firm Performance ◽  
Emerging Economies ◽  
Emerging Market ◽  
Strategic Marketing ◽  
Slack Resources ◽  
Moderation Effect ◽  
Strategic Resource ◽  
And Performance ◽  
Resource Decisions ◽  
The Relationship

We investigate how strategic resource decisions—concerning slack resources and strategic marketing ambidexterity—influence the relationship between internationalization and firm performance of emerging market firms. Based upon the resource-based view, we synthesize two dominant, yet divergent, perspectives that explain the respective resource slack advantages and liabilities in the internationalization literature: the flexible capacity and the efficient capacity perspectives. We also explore the moderating role of strategic marketing ambidexterity which comprises a bundle of marketing activities covering both exploitation-dominant actions and exploration-dominant actions. We empirically examine our hypothesized relationships with data from a sample of 1,683 firm-year observations for the period between 2005 and 2018 and find that distinct forms of resource slacks have contrasting effects on the relationship between internationalization and performance. Our results provide strong evidence for positive moderation effect of unabsorbed slack resources and a negative moderation effect of absorbed slack resources on the internationalization-performance relationship. We also indicate nonsignificant moderating effect of strategic marketing ambidexterity, demonstrating that internationalization attains higher firm performance regardless of its exploration-dominant or exploitation-dominant strategic emphasis in emerging economies.

scholarly journals Liquidity Synchronization, Its Determinants and Outcomes under Economic Growth Volatility: Evidence from Emerging Asian Economies

Risks ◽  
2021 ◽  
Vol 9 (2) ◽  
pp. 43
Author(s):  
Syeda Hina Zaidi ◽  
Ramona Rupeika-Apoga
Keyword(s):  
Economic Growth ◽  
Emerging Markets ◽  
Interest Rates ◽  
Emerging Market ◽  
The Philippines ◽  
Country Level ◽  
Market Index ◽  
High Inflation ◽  
Asian Emerging Markets ◽  
Growth Volatility

This study investigates the country-level determinants of liquidity synchronization and degrees of liquidity synchronization during economic growth volatility. As a non-diversifiable risk factor, liquidity co-movement shock spreads market-wide and thus disrupts the overall functioning of the financial market. Firms in Asian markets operate in legal and regulatory environments distinct from those of firms analyzed in the previous literature. Comprehensive analyses of liquidity synchronicity in emerging markets are limited. A major knowledge gap pertaining to Asian emerging markets serves as the primary motivation for this study. Seven Asian emerging economies are selected from the MSCI emerging market index: Bangladesh, China, India, Indonesia, Malaysia, Pakistan and the Philippines for analysis from 2010 to 2019. The empirical findings show high levels of liquidity synchronicity in weaker economic and financial environments with low GDP growth, high inflation and interest rates and underdeveloped financial systems taking the form of low levels of private credit. Liquidity synchronicity is also affected by poor investor protection, political instability, weak rule of law and government ineffectiveness. Moreover, levels of liquidity synchronicity are higher in a period of economic growth volatility.

The Political Manipulation of Macroeconomic Policy

1990 ◽  
Vol 84 (3) ◽  
pp. 767-795 ◽  
Author(s):  
John T. Williams
Keyword(s):  
Interest Rates ◽  
The United States ◽  
Real Income ◽  
Policy Cycle ◽  
Presidential Approval ◽  
Policy Changes ◽  
Macroeconomic Policies ◽  
Monetary Policies ◽  
Economic Forces ◽  
Party Differences

Conventional wisdom and some research indicate that macroeconomic policies follow cycles corresponding to political, as well as economic, forces. Using vector autoregression analysis, I test three models of monetary policy determination for the United States, 1953–1984: the electoral cycle model (that reelection motivations on the part of presidents create a policy cycle), the party differences model (that policy changes reflect revolving presidential party administrations), and the referendum model (that changes in presidential approval create, in effect, a continuing referendum, allowing presidents to monitor their success and change macroeconomic policies when necessary). Analysis shows that monetary policies, as measured by the monetary base and short-term interest rates, respond to the election cycle and presidential approval (although the effect on macroeconomic outcomes is ambiguous). Party differences are found in real income but are not very significant in other variables.

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