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The authors evaluate financial stability and capital flows management objectives of capital controls in the context of four capital control events: removing or imposing controls on capital inflows and removing or imposing controls on capital outflows. The authors use synthetic control method to solve the endogeneity problem stemmed from the timing of capital control implementation. The authors find new evidence that capital controls are not consistently effective in reaching financial stability outcomes but are consistent in reaching capital flows management outcomes. The authors compare our results to estimates using difference-in-difference (DID) and carry out placebo analysis. Finally, we use synthetic DID to correct for the parallel trend bias and show that the results still hold.

There are two important determinants in the banking system which directly affect the number of credit deliveries to the economy in the first round and impact the growth and developmental status of the economies in the second round. They are the amount of non-performing assets (NPA) and the number of banking funds invested in the governments’ securities. The present chapter, thus, focuses on the trends of these two and their associations with the credit, GDP and human development of the countries. First, it develops a basic theoretical structure of credit creation in the banking system and then develops theoretical linkages among the two lead variables, NPA and investment, in relation to the rest of the economy. Then, it goes for empirical exercises from the perspectives of the descriptive statistical analysis. The trends of NPA and investment show rising trends in almost all countries. Furthermore, it is found that the signs of correlation coefficients between the two with credit, GDP and HDI are positive in most cases of the list of developing countries and negative in some cases of the list of developed countries.

This chapter studies trends in income distributions and inequality in the European Union using data from the European Union Statistics on Income and Living Conditions. The author models the income distribution for each country under a Dagum distribution assumption and using maximum likelihood techniques. The author uses parameter estimates to form distributions for regions defined as finite mixtures of the country distributions. Specifically, the author studies the groups of ‘new’ and ‘old’ countries depending on the year they joined the European Union. The author provides formulae and estimates for the regional Gini coefficients and Lorenz curves and their decomposition for all the survey years from 2007 through 2011. The estimates of this study show that the ‘new’ European Union countries have become richer and less unequal over the observed years, while the ‘old’ ones have undergone a slight increase in inequality which is however not significant at conventional levels.

This chapter conducts an event study of 30 quantitative easing (QE) announcements made by 21 central banks on daily government bond yields and bilateral US dollar exchange rates in March and April 2020, in the midst of the global financial turmoil triggered by the COVID-19 outbreak. The chapter also investigates the transmission of innovations to long-term interest rates in a standard GVAR model estimated with quarterly pre-COVID-19 data. The authors find that QE has not lost effectiveness in advanced economies and that its international transmission is consistent with the working of long-run uncovered interest rate parity and a large dollar shortage shock during the COVID-19 period. In emerging markets, the QE impact on bond yields is much stronger and its transmission to exchange rates is qualitatively different than in advanced economies. The GVAR evidence that the authors report illustrates the Fed’s pivotal role in the global transmission of long-term interest rate shocks, but also the ample scope for country-specific interventions to affect local financial market conditions, even after controlling for common factors and spillovers from other countries. The GVAR evidence also shows that QE interventions can have sizable real effects on output driven by a very persistent impact on long-term interest rates.

Private politics refers to situations in which activists or NGOs try to push firms to conform to social standards (regarding, for instance, human rights and environmental protection) without public policy intervention. The existing literature on private politics has focused on large campaigns such as consumer boycotts, and looked at the impact of those boycotts on firms’ financial performance and on the likelihood that firms comply with activist demands. Even though these large campaigns are important, focusing on them leads to neglecting the fact that a large portion of the time and resources that activists consecrate to private politics is used to monitor firms and criticize them through Internet posting and media statements, rather than to launch high profile campaigns. Little is known, however, about what drives these activists when they criticize companies, why they target certain companies and not others, and whether this criticism should be considered as a primary step in the production of full-fledged campaigns. In this paper, we fill this gap by exploring a unique international database of CSR-based criticisms against Fortune 500 companies for the 2006–2009 period. This database allows us to look at the impact of a broad range of factors including industry differences, country/institutional differences and firm-specific dimensions, on the likelihood that a certain firm will be targeted by activist critique. Results indicate that criticism is driven by strategic intents. Similar to previous literature, large and visible firms in certain industries are more targeted than others. In addition, these firms also tend to come from countries with strong institutions and high standards of living.

The recent financial and sovereign debt crises around the world have sparked a growing literature on models and empirical estimates of defaultable debt. Frequently households and firms come under default threat, local governments can default, and recently sovereign default threats were eminent for Greece and Spain in 2012–2013. Moreover, Argentina experienced an actual default in 2001. What causes sovereign default risk, and what are the escape routes from default risk? Previous studies such as Arellano (2008), Roch and Uhlig (2013), and Arellano et al. (2014) have provided theoretical models to explore the main dynamics of sovereign defaults. These models can be characterized as threshold models in which there is a convergence toward a good no-default equilibrium below the threshold and a default equilibrium above the threshold. However, in these models aggregate output is exogenous, so that important macroeconomic feedback effects are not taken into account. In this chapter, we (1) propose alternative model variants suitable for certain types of countries in the EU where aggregate output is endogenously determined and where financial stress plays a key role, (2) show how these model variants can be solved through the Nonlinear Model Predictive Control numerical technique, and (3) present some empirical evidence on the nonlinear dynamics of output, sovereign debt, and financial stress in some euro areas and other industrialized countries.

Violent conflicts have become one of the major concerns of modern nation states. Regardless of their political, social, and economic conjunctures, nations are increasingly exposed to the risk of conflicts. Conflicts are generally categorized as “major” and “minor” based on the level of intensity and the number ofcasualties. The Middle East has experienced a dramatic increase in the number of conflicts since the early 1990s. In this chapter we examine the causes that triggered unprecedented changes in conflicts by using a panel of conflict estimates for 10 Middle Eastern nations for the period 1963–1999. The fixed effects model is used to control for unobservable country-specific effects that result in a missing-variable bias in cross-sectional studies. More importantly, the fixed effects model is chosen since the main goal of this study is to investigate what factors have caused statistically significant changes in conflicts over time within nations rather than to explain variation in conflicts across these nations. On the basis of the panel data, we explain the roles of inequality, inflation, growth, military spending, foreign direct investment, and remittances in the surge in conflicts in the Middle East.

The fundamental idea that we seek to establish in this chapter is that the establishment of regional or local, peace calls forth global peace. In other words, our argument is that local and regional conflicts are partly driven by global factors, especially what is commonly known as international tension. In order to achieve meaningful and sustained peace, there is a reason to believe that it is mandatory to manage and contain international tensions. The main thesis of this chapter is to explain or posit, conflicts as a product of continuing international chasms, splits and differences of political and social ideologies in our modern world. Thus, we argue that conflicts are, to some extent, driven by international tension or global, ideological and geo-political factors. Notwithstanding the global influence, local factors – such as income inequality, income growth or lack of it, political institutions – can and do exacerbate conflicts and a peaceful resolution of conflicts becomes a difficult phenomenon.

The principle of tariffs dispersion, or differential tariffs depending on country of origin, is well known. For instance, Canada adapted a double column of tariffs after 1846, Spain in 1877, and Switzerland in the 1880–1890s. But there has never before been a comprehensive measure for any national economy, to our knowledge. This contribution proposes an original and exhaustive measure of customs tariffs dispersion depending on the origin of imported products for France between 1850 and 1913. Part of this dispersion arises indirectly as the result of compiling the nomenclature – or the schedule of categories – for France’s general trade chart. Our study nevertheless reveals the existence of direct discriminatory practices applied to certain countries for certain products. The creation of this measure yields important insights. First, tariff dispersion’s evolution completes the analysis of the chronology of trade policy. Second, it is possible to link tariff discrimination, imports in particular sectors, and national production. In our opinion, the paper should pave the way to work that reintroduces a country-specific dimension into the study of late 19th century commercial policy.