Analysis of the Effect of the European Debt Crisis on the Saudi Arabian Economy

This paper investigates the economic impact of the 2009 European debt crisis on Saudi Arabia’s real economy from 2004 Q2 to 2014 Q2 using a structural vector autoregressive model (SVAR). The results of the impulse response functions obtained from the aggregated data show that the shock to European imports from Saudi Arabia had a significant impact on the real effective exchange rate, inflation rate, and economic growth that lasted for three periods. Moreover, the variance decomposition analysis shows that Europe’s imports from Saudi Arabia explain approximately 20% of the variance of the Saudi real effective exchange rate and real economic growth, 10% of the interest rate variability, and only 5% of the inflation rate variance. The results of the individual country analysis show that the impact of shocks to imports from all European countries had an instantaneous impact, except for France and Spain, where the impact on the economic growth was significant in the second and sixth periods respectively. The results suggest that Saudi Arabian policymakers should continue the process of export diversification in order to reduce its dependence on this region.

The Impact of International Electronic Commerce on Export Trade: Evidence from China

The impact of international electronic commerce (IEC) on export trade increases along with its expanding scale. Based on relevant data and the gravity model of China’s IEC export trade, this paper develops a theoretical model that can be used in IEC scenarios, applies regression equations, a Hausman test, and other empirical methods to verify relevant data, and performs a robustness test. The purpose of this paper is to explore the mechanism of IEC impact on China’s trade, and hopefully to study the temporal structural changes of the impact of IEC activities on China’s export trade based on the financial crisis and European debt crisis variables. The innovation of this paper is mainly reflected in the large sample of China’s trade selected in this paper. It can also determine the changes in the distance effect of international trade in the era of IEC, and reveal the mechanism by which IEC applications help foreign trade enterprises overcome economic crises. Four key conclusions are obtained as follows. First, the development of IEC has significantly promoted the expansion of China’s export trade scale. Second, in the context of the global financial crisis and European debt crisis, the positive promotion effect of IEC on exports is not significant. Third, the promotion effects of IEC on China’s exports to both developing and industrialized countries are significant, with the impact on developed country exports being slightly greater. Fourth, although the geographical distance for measuring transportation costs has a negative effect on China’s exports, such effect has been greatly weakened.

A Comparative Analysis of Dynamic Interactions between European and Indonesian Cocoa Markets during the 2008 Global Financial Crisis and the 2011 European Debt Crisis

This study empirically explores the dynamic interactions between the European and Indonesian cocoa markets during the 2008 global financial crisis (GFC) and the 2011 European debt crisis (EDC) using a battery of time series approaches of cointegration and multivariate Granger causality. The study documented a long-run equilibrium between the European and Indonesian cocoa markets, implying a reciprocal relationship. However, an inefficient adjustment transmission in the Indonesian cocoa prices was recorded throughout the study. The US currency constantly influenced Indonesian cocoa prices, while cocoa markets were independent of fluctuations in world oil prices. Overall, the study recorded a different level of the speed of adjustment of short-run imbalances to long-run equilibrium in the domestic cocoa market across economic crises.

Herd behavior of pension funds in sovereign bond investments

This study investigates herd behavior exhibited by pension funds in the sovereign bond market before, during and after the European debt crisis. It uses unique monthly data on sovereign bond holdings of pension funds and transactions between December 2008 and December 2014. The dataset covers 67 large Dutch pension funds that invest in bonds from 109 countries. We find evidence of intensive herd behavior of Dutch pension funds in sovereign bonds. We also distinguish between European countries which suffer from the European debt crisis, such as Cyprus, Greece, Ireland, Italy, Portugal and Spain, and those that have not. We find high sell herding and low buy herding for the crisis countries during the European debt crisis, whereas in the non-crisis period their herd behavior does not differ substantially from that in non-crisis countries. When we control for institutional, macroeconomic, financial market and pension fund factors, sell herding in crisis countries is still significantly higher. However, we find no evidence of destabilizing behavior with respect to bonds of crisis countries during the European debt crisis.

Collective memories on the 2010 European debt crisis

We examine whether collective memories on the aid and reform programs chosen to handle the 2010 European debt crisis differ between citizens from borrower and lender countries. We use new international survey data for non-experts and experts in member countries of the euro area. The results show that non-experts from borrower and lender countries remember aspects of the programs in different manners; indicating biases for assessments of how the crisis outcomes are perceived in borrower and lender countries. Nation-serving biases may well explain that the 2010 European debt crisis has reduced the sense of belonging rather than bringing European citizens closer together.

Market failure and government failure in European debt crisis

This paper takes the “five European pig countries” in the European debt crisis as an example to analyze the event from the perspective of market failure and government failure. The main conclusions are as follows: the European debt crisis is the common product of market failure and government failure. Both sides should make great efforts to solve this problem. There is a long-term process to solve the European debt problem. Only by developing competitive industries and regaining international competitiveness is the effective way for euro zone countries to get rid of the predicament fundamentally.