The global financial crisis and its effects on the international monetary funds

ABSTRACT This paper aims to analyze the innovations introduced in the functions of the International Monetary Fund in the context of the 2008 economic and financial crisis. This promoted an action that aimed to strengthen the surveillance function through the adoption of the Integrated Surveillance. Thus, alongside the traditional conditionality based on an a posteriori implementation of adequate economic policies, a criterion of ex ante conditionality in the precautionary branches was also introduced or based on the economic characteristics of the country to be financed. Concerning traditional conditionality, it will be asked whether the IMF has adopted a less extensive approach than its role.

Four New Horsemen of an Apocalypse? Solar Flares, Super-volcanoes, Pandemics, and Artificial Intelligence

If economists have largely failed to predict or prevent the Global Financial Crisis in 2008, and the more disastrous economic collapse associated with the pandemic of 2020, what else is the profession missing? This is the question that motivates this survey. Specifically, we want to highlight four catastrophic risks – i.e., risks that can potentially result in global catastrophes of a much larger magnitude than either of the 2008 or 2020 events. The four risks we examine here are: Space weather and solar flares, super-volcanic eruptions, high-mortality pandemics, and misaligned artificial intelligence. All four have a non-trivial probability of occurring and all four can lead to a catastrophe, possibly not very different from human extinction. Inevitably, and fortunately, these catastrophic events have not yet occurred, so the literature investigating them is by necessity more speculative and less grounded in empirical observations. Nevertheless, that does not make these risks any less real. This survey is motivated by the belief that economists can and should be thinking about these risks more systematically, so that we can devise the appropriate ways to prevent them or ameliorate their potential impacts.

The source of financial contagion and spillovers: An evaluation of the covid-19 pandemic and the global financial crisis

This study investigates the reaction of stock markets to the Covid-19 pandemic and the Global Financial Crisis of 2008 (GFC) and compares their influence in terms of risk exposures. The empirical investigation is conducted using the modified ICSS test, DCC-GARCH, and Diebold-Yilmaz connectedness analysis to examine financial contagion and volatility spillovers. To further reveal the impact of these two crises, the statistical features of tranquil and crisis periods under different time intervals are also compared. The test results show that although the outbreak’s origin was in China, the US stock market is the source of financial contagion and volatility spillovers during the pandemic, just as it was during the GFC. The propagation of shocks is considerably higher between developed economies compared to emerging markets. Additionally, the results show that the COVID-19 pandemic induced a more severe contagious effect and risk transmission than the GFC. The study provides an extensive examination of the COVID-19 pandemic and the GFC in terms of financial contagion and volatility spillovers. The results suggest the presence of strong co-movements of world stock markets with the US equity market, especially in periods of financial turmoil.

A Conceptual Forecasting Analysis of International Trade Aspects Based on Globalization Impact Issues

Global GDP is really important for trade, since the larger the global economy, the more goods and services available for trade. Global GDP grew by around two-thirds in real terms between 2000 and 2020 – or 2.6% per year on average.2020 saw some of the largest trade reductions and output volumes for both industrial production and goods trade since WWII. The year 2020 was marked by some of the largest reductions in trade and output volumes since WWII. The declines in both world industrial production and goods trade in the first half of 2020 were of similar depth to those at the trough of the Global Financial Crisis (GFC). In addition, trade and production impacts across specific goods, services and trade partners were highly varied. Initial pandemic-era expectations for a double-digit decline in world merchandise trade in 2020 did not materialise. Global trade turned out to recover from the shock at an extraordinarily fast pace from around mid-2020.

Systemic Risk-Driven Portfolio Selection

How can we construct portfolios that perform well in the face of systemic events? The global financial crisis of 2007–2008 and the coronavirus disease 2019 pandemic have highlighted the importance of accounting for extreme form of risks. In “Systemic Risk-Driven Portfolio Selection,” Capponi and Rubtsov investigate the design of portfolios that trade off tail risk and expected growth of the investment. The authors show how two well-known risk measures, the value-at-risk and the conditional value-at-risk, can be used to construct portfolios that perform well in the face of systemic events. The paper uses U.S. stock data from the S&P500 Financials Index and Canadian stock data from the S&P/TSX Capped Financial Index, and it demonstrates that portfolios accounting for systemic risk attain higher risk-adjusted expected returns, compared with well-known benchmark portfolio criteria, during times of market downturn.

An Optimal Control Approach to Portfolio Diversification on Large Cap Stocks Traded in Tokyo Stock Exchange

In this chapter, Markowitz mean-variance approach is proposed for examining the best portfolio diversification strategy within three subperiods which are during the global financial crisis (GFC), post-global financial crisis, and during the non-crisis period. In our approach, we used 10 securities from five different industries to represent a risk-mitigation parameter. In this way, the naive diversification strategy is used to serve as a comparison for the approach used. During the computation process, the correlation matrices revealed that the portfolio risk is not well diversified during non-crisis periods, meanwhile, the variance-covariance matrices indicated that volatility can be minimized during portfolio construction. On this basis, 10 efficient portfolios were constructed and the optimal portfolios were selected in each subperiods based on the risk-averse preference. Performance-wise that optimal portfolio dominated the naïve strategy throughout the three subperiods tested. All the optimal portfolios selected are yielding more returns compared to the naïve portfolio.

How does business power operate? A framework for its working mechanisms

The global financial crisis of 2008, its following bank bailouts, and associated corporate impunity sparked a renewed interest in the concept of the structural power of business and the question of “who rules?” in capitalist societies. This new wave of scholarship mitigated some of the problems of the original, theory-driven discussions from the 1970s and 1980s. But despite significant advancements in the empirical identification of business power, we lack a unified framework for studying its working mechanisms. So-called hybrid approaches, drawing on instrumental and structural power for their analyses, display high potential for such a unified and easily applicable framework. We build on this hybrid tradition and propose a novel model that integrates instrumental and structural power analysis into a basic framework. With this, we recalibrate the often rigid division between instrumental and structural power forms and emphasize the role of perceptions as key for understanding the dynamics of business power over time. We illustrate this parsimonious framework by an analysis of the plans of the Dutch government to abolish a dividend tax in 2018 that would have benefited a number of large multinationals but collapsed before implementation.

Impact of the Global Financial Crisis on IT Sector. The Case of Greece

The impact of the Information and Technology (IT) sector on the countries’ innovation development has been recognized as crucial in prior and recent research studies. Moreover, firms’ innovativeness affects positively countries’ economies. Nevertheless, the global economic crisis of the last decade constituted a significant barrier to the development of country economies and had a negative effect on firms’ performance. Specifically, the negative consequences of the global crisis became harder for Southern Europe Countries. More specifically the Greek economy was suffered by an extended period of crisis with harder consequences than those of other European countries. The main purpose of this study was to examine the financial performance of Greek IT firms in the early years of crisis. Our findings have been relevant to those of previous studies which observed negative effects of the financial recession on firms profitability.

Factors in Saudi FDI Inflow

This study explores the driving factors for attracting Foreign Direct Investment (FDI) inflow in the Saudi Arabian economy in two stages. First, it applies a general to specific approach to form a model reflecting theoretical and anecdotal evidence of the Saudi Arabian economy. Second, we analyse time series data over the years 1984 to 2018. applying Autoregressive Distributed Lags (ARDL) approach, incorporating several structural breaks. This study explores Saudi membership of the World Trade Organization (WTO) and institutional quality, identifying them as promising factors in fostering FDI inflows in the economy. Our empirical investigation demonstrates that the Saudi economy experienced a higher inflow of FDI during the global financial crisis (GFC) due to economic stability. Trade openness is found to be conducive to promote FDI inflow. This study provides several policy implications.