Search

Begin New Search Topic Economy Political Geography Global Focus

51. Estimation of Nonlinear Exchange Rate Dynamics in Evolving Regimes

Author:
Jeffrey Frankel, Yao Hou, and Danxia Xie
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper develops a new econometric framework to estimate and classify exchange rate regimes. They are classified into four distinct categories: fixed exchange rates, BBC (band, basket and crawl), managed floating, and freely floating. The procedure captures the patterns of exchange rate dynamics and the interventions by authorities under each of the regimes. We pay particular attention to the BBC and offer a new approach to parameter estimation by utilizing a three-regime Threshold Auto Regressive (TAR) model to reveal the nonlinear nature of exchange rate dynamics. We further extend our benchmark framework to allow the evolution of exchange rate regimes over time by adopting the minimum description length (MDL) principle, to overcome the challenge of simultaneous two-dimensional inference of nonlinearity in the state dimension and structural breaks in the time dimension. We apply our framework to 26 countries. The results suggest that exchange rate dynamics under different regimes are well captured by our new framework.
Topic:
Economy, Econometrics, and Exchange Rates
Political Geography:
Global Focus

52. Managing the financial impact of cybersecurity incidents

Author:
Zsolt Bederna and Tamás Szádeczky
Publication Date:
03-2023
Content Type:
Journal Article
Journal:
Security and Defence Quarterly
Institution:
War Studies University
Abstract:
The complex relationships of economic actors and the high dependency on information and communication technologies make it necessary for all relevant entities to develop protection. This protection should include preventive and reactive controls in a risk-proportionate manner in relation to the business value protected. We aimed to develop a solution to support cybersecurity-related business decisions with financial analytics. The risk-based approach helps management find the optimum solution with minimal costs, where protection prevents some incidents from occurring, while the risks associated with other incidents are accepted in an informed way. The security industry developed a number of apparatuses to find the optimum security controls that enforced the fiscal aspects, which typically contain solutions used in planning. However, the actual expenditure often differs from the planned budget for several reasons, one of which is the occurrence of security incidents. We used the common methodology toolset for financial analysis (NPV, NFV, risk assessment). We developed novel metrics based on these that can be used in cybersecurity management. Within the framework thus defined, the article discusses the economic context of the effects of incidents involving Meta (previously Facebook) services from 2016 to 2020. This paper introduces the ‘Effect of incidents’ metric to measure the impact of unplanned incidents’ on actual expenditure compared to the planned budget and the ‘Incidence of incident recognition’ metric to measure deviations of an incident’s impact as perceived by owners relative to the effect on the value of the assets. The paper also proves the applicability of those metrics using the example of Meta.
Topic:
Science and Technology, Cybersecurity, Finance, and Economy
Political Geography:
Global Focus

53. Green Jobs and the City: Towards a Just Transition in Developing Countries

Author:
Alexander Kleibrink, Anna Pegels, Michael Fink, and Wolfgang Scholz
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This policy brief examines actions for a just transition of local job markets in developing countries. We identify building blocks for shifting from carbon-intensive towards green jobs in this transition. Green jobs in cities are key to ensure a just transition of local employment markets, both formal and informal, and make cities function more sustainably. They are part of a wider inclusive green economy aiming at carbon-neutrality and resource efficiency with a focus on human well-being and social equity while paying special attention to local nature-based solutions. The transition will create winners and losers. Both need to be managed if the process and outcomes are to be just.
Topic:
Climate Change, Development, Economy, and Green Jobs
Political Geography:
Global Focus

54. Decoding Financial Crises: Analyzing Predictors and Evolution

Author:
Young Sik Jeong and Yaein Baek
Publication Date:
08-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
We examine factors that predict financial crises and the evolution of financial crises using non-traditional methodologies, such as machine learning and system dynamics. Firstly, in our random forest model, the top six most important predictors among 12 indicators for the entire period (1870-2017) are the slope of the yield curve, the CPI, consumption, the debt service ratio, equity return, and public debt. Secondly, even though the manifestations of financial crises differ in each case, five common characteristics have been identified by examining various past financial crisis cases using a system dynamics approach (causal loop diagram). The first characteristic is a feedback loop that reinforces credit expansion. Next, the feedback loop leads to the buildup of financial crisis risk. Third, there is the shock that triggers the financial crisis. Fourth, there are risk-spreading factors. Lastly, individual financial crises do not end in themselves but have the common characteristic of becoming the seeds of new crises. In conclusion, two key findings emerge. First, the financial crisis is a systemic problem rather than an individual risk factor. Second, in diagnosing the recent situation, the results point to the risk of the financial crisis spreading.
Topic:
Financial Crisis and Economy
Political Geography:
Global Focus

55. Liberalizing Markets for Environmental Goods and Services

Author:
Jukwan Lee
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The international community is striving to establish trade rules for the environmental market in order to secure a free and fair trade order and contribute to achieving carbon neutrality and sustainability. This paper examines the related discussions, reviews the current status and market openness of environmental goods and services, and analyzes the effects of environmental market regulation and liberalization on the global and Korean economies.
Topic:
Environment, Markets, Economy, Trade, and Liberalization
Political Geography:
South Korea and Global Focus

56. Consolidating Gains: Lessons and Priorities for Promoting Fair and Ethical Recruitment

Author:
Kate Hooper
Publication Date:
12-2023
Content Type:
Policy Brief
Institution:
Migration Policy Institute (MPI)
Abstract:
Moving to another country for work is far from a new phenomenon, but questions of how and under what conditions workers are recruited across international borders have attracted increased scrutiny in the last decade and a half. This attention has been spurred by the rising number of people on the move in search of employment and growing awareness of the risks involved, including the potential for exploitation, human trafficking, and forced labor. Considerable progress has been made in developing a consensus about what fair and ethical recruitment could and should look like. This has involved, among other things, defining recruitment fees and other related costs; pushing for the principle that employers, not workers, should bear the costs of recruitment; establishing guidance for different industries and stakeholders; and developing recommendations on how governments can better regulate recruitment. The next, formidable challenge will be building on this significant progress and more fully implementing recruitment standards so that more migrant workers benefit from them. This policy brief explores progress toward fair and ethical recruitment to date and priorities for future work by governments, employers, and recruiters. The brief results from a multiyear research partnership between MPI and the Swiss Agency for Development and Cooperation’s Thematic Section Migration and Forced Displacement to support the development of global solutions for migration-related challenges.
Topic:
Development, Migration, Employment, Ethics, Economy, and Recruitment
Political Geography:
Global Focus

57. World Economy in Winter 2023: Expansion continues with little momentum

Author:
Klaus-Jurgen Gern, Stefan Kooths, Jan Reents, Nils Sonnenberg, and Ulrich Stolzenburg
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The global economy held up better than expected in the face of the inflation shock and the massive tightening of monetary policy in 2023, even if the economic expansion was moderate. Inflation is now falling swiftly and monetary policy is expected to start cutting interest rates in the first half of 2024. However, there are currently scant signs that global outlook will meaningfully improve in the near term. In the advanced economies, a high level of policy uncertainty is weighing on growth while fiscal policy stimuli are waning. In China, economic momentum remains subdued due to structural problems. Overall, we expect global production - measured on a purchasing power parity basis - to increase by 2.9 percent in the coming year, following 3.1 percent in 2023. For 2025, we expect global growth to pick up to 3.2 percent. We have thus revised upwards our forecast for 2023 and 2024 slightly - by 0.1 percentage points - compared to our September report. Although unemployment in the advanced economies will increase slightly going forward, it will remain historically low. Inflation will continue to fall and generally approach target levels again by 2025.
Topic:
Monetary Policy, Economy, Inflation, and Production
Political Geography:
Global Focus

58. Interest Rate Dynamics and Commodity Prices

Author:
Christophe Gouel, Qingyin Ma, and John Stachurski
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
In economic studies and popular media, interest rates are routinely cited as a major factor behind commodity price fluctuations. At the same time, the channels of transmission are far from transparent, leading to long-running debates on the sign and magnitude of interest rate effects. Purely empirical studies struggle to address these issues because of the complex interactions between interest rates, prices, supply changes and aggregate demand. To move this debate to a solid footing, we extend the competitive storage model to include stochastically evolving interest rates. We establish general conditions for existence and uniqueness of solutions, as well as providing a systematic theoretical and quantitative analysis of the interactions between interest rates and prices.
Topic:
Economy, Commodities, and Interest Rates
Political Geography:
Global Focus

59. Energy in a World in Transition: Challenges, Opportunities and Perspectives

Author:
Jorge Camargo, Pedro Malan, Winston Fritsch, Clarissa Lins, and Alessandra Amaral
Publication Date:
05-2022
Content Type:
Special Report
Institution:
Brazilian Center for International Relations (CEBRI)
Abstract:
The Energy Transition process is complex and multifaceted, with substantial impacts on the energy industries’ business models. In order to contribute with a greater understanding of this trend, CEBRI, in partnership with BMA, organized a collection of articles that analyzes the main implications of this process, which is well positioned to be one of the major drivers of economic transformation in this historic period. Published in English and Portuguese, the collection is structured around the theme “Energy in a World in Transition”, and assesses a global process from a Brazilian perspective. The first edition, published in June, included important reflections on the future of Brazilian energy.
Topic:
Economy, Business, Industry, Energy, and Green Transition
Political Geography:
Brazil, South America, and Global Focus

60. The return of inflation: Can we protect real incomes?

Author:
Manos Matsaganis and Sotiria Theodoropoulou
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
High inflation, virtually unknown in advanced economies since the 1980s, has made a comeback. In this policy paper, we first explain where inflation comes from, and describe how the policy context for dealing with it was shaped after Keynesian demand management proved unable to defeat stagflation. We then critically examine the various policy options. Generally speaking, policy makers may attempt to (i) contain inflation by raising interest rates or, more directly, by controlling prices, (ii) alleviate the impact of inflation on household budgets through price subsidies or income transfers, and (iii) protect workers’ real incomes via wage indexation and social pacts. We conclude by assessing the merits, costs, and distributional implications of each option in turn.
Topic:
Economy, Inflation, and Income
Political Geography:
Europe and Global Focus