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1 – 10 of over 78000Purpose: This chapter looks specifically at the sources of economic policy uncertainty in Nigeria, and discusses their impact on the Nigerian economy while drawing implications…
Abstract
Purpose: This chapter looks specifically at the sources of economic policy uncertainty in Nigeria, and discusses their impact on the Nigerian economy while drawing implications for Africa. It identifies factors that transmit uncertainty in economic policy in Nigeria and draw implications for other African countries.
Methodology: This chapter uses a literature survey methodology to identify the sources of economic policy uncertainty in Nigeria.
Findings: The identified sources of economic policy uncertainty in Nigeria are: the frequent changes in central bank policy, unexpected changes in government policy, political interference, unexpected fall in global oil price, recession, and unethical practices.
Implications: The implication of the study is that rising economic policy uncertainty in Nigeria can have a significant effect on the Nigerian economy and for connected African countries.
Originality: Previous studies have not examined the sources of economic policy uncertainty in Nigeria.
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This paper aims to determine the status of the socialist market economy through a logical analysis of the evolution of economic systems in human society.
Abstract
Purpose
This paper aims to determine the status of the socialist market economy through a logical analysis of the evolution of economic systems in human society.
Design/methodology/approach
This paper presents an analysis of uncertainty and the functions performed by different economic systems in managing and resolving it, thereby explaining the evolutionary rationale behind economic system evolution.
Findings
Firstly, the socialist market economy empowers the market to play a decisive role in resource allocation, which serves as the foundation for activating individuals' motivation to engage in economic activities. Secondly, the socialist market economy adheres to the basic socialist economic system, which is the basis for the socialist market economy to stabilize the economy and society or to address the risk of economic uncertainty that may trigger macro-level inconsistencies in economic operations. Thirdly, the advantages of a socialist market economy in adapting to economic uncertainties do not arise spontaneously and must be exerted through continuous improvement of the socialist market economy.
Originality/value
The innovation of this paper lies in introducing uncertainty to clarify the logic behind the evolution of economic systems in human society and explaining the typical significance of the socialist market economy and its advantages in accommodating and resolving uncertainty.
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Omar Farooq, Imad Jabbouri and Maryem Naili
This paper attempts to document the effect of economic uncertainty on financing constraints faced by private firms.
Abstract
Purpose
This paper attempts to document the effect of economic uncertainty on financing constraints faced by private firms.
Design/methodology/approach
Ordered logistic regression is used to analyze the data of private firms from 101 developing countries. The data was provided by the World Bank's Enterprise Surveys and was gathered during the period between 2006 and 2019.
Findings
The findings show that firms headquartered in countries with high economic uncertainty face more financing constraints than firms headquartered in countries with low economic uncertainty. The authors argue that the increase in economic uncertainty allows capital providers to adjust their lending decisions by reducing the provision of capital to firms. The paper also shows that firms headquartered in countries with strong institutional infrastructure and well-functioning firms are less likely to be affected by economic uncertainty while accessing finance.
Practical implications
The findings would help managers, investors, regulators, and policymakers better understand the implication of economic policy uncertainty on the real economy. This study also sheds the light on the importance of minimizing volatility, ambiguity, and randomness in governmental decisions and policies. Regardless of the pertinence of these policies, arbitrariness surrounding their development and communication can limit their effectiveness and produce unwanted effects.
Originality/value
This paper is closely related to prior literature that documents the behavior of credit providers and investors (the supply side) during the periods of economic uncertainty. The authors differ from this strand of literature by taking the perspective of firms – the demand side.
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Yusuf Bala Zaria and Jasman Tuyon
Apart from providing theoretical clarity, the present research aims to validate empirically that the EPU will be adversely affecting these key macroeconomic variables and that…
Abstract
Purpose
Apart from providing theoretical clarity, the present research aims to validate empirically that the EPU will be adversely affecting these key macroeconomic variables and that managing EPU matters for economic policymaking in Nigeria.
Design/methodology/approach
A dynamic autoregressive distributed lag regression model is employed to analyse the relationship from 1990 to 2020. Based on the theory of multiplier effect, the analysis could examine the positive and negative changes in policy uncertainty, as well as the reliability in macroeconomic activities such as unemployment, infrastructure development and foreign direct investment inflows.
Findings
The findings revealed EPU is cointegrated with the key economic variables in focus. Further, the negative impact of EPU on corporate investment in FDI and positive impact of EPU on unemployment confirm for both short and long-run. However, the impact of EPU on government investment in infrastructure development is found to be positive which does not confirm the expected hypothesis.
Practical implications
Dynamic relationship between policy uncertainty and macroeconomic activities in Nigeria seems to exist. Taking risky decisions has impact and causing a high unemployment rate, poor infrastructural development and lower foreign direct investment inflows in the country.
Originality/value
Policy uncertainty in Nigeria is determining. Despite that, very little research found that rising uncertainty issues may significantly affect unemployment, investment in infrastructure and foreign direct investment inflows adversely. Therefore, policy uncertainty is an open space for economic activities to thrive in Nigeria, especially unemployment.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2022-0555
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The purpose of this study is to investigate the effects of uncertainty, namely, macroeconomic uncertainty (MU) and financial uncertainty (FU) on foreign exchange market stability…
Abstract
Purpose
The purpose of this study is to investigate the effects of uncertainty, namely, macroeconomic uncertainty (MU) and financial uncertainty (FU) on foreign exchange market stability, specifically on foreign exchange market pressure (EMP) and jump risk (RJV).
Design/methodology/approach
The latent threshold time-varying parameter VAR (LT-TVP-VAR) econometric approach is used in estimations to solve structural breaks.
Findings
The relationship of uncertainties and China's foreign exchange market stability is latent threshold nonlinear dynamic time-varying. In China's renminbi (RMB) appreciation stage, both MU and FU weaken the appreciation pressure of RMB. Moreover, MU and FU significantly increase the RJV, while MU significantly affects the RJV of the foreign exchange market. In the RMB depreciation stage, both MU and FU strengthen the EMP.
Research limitations/implications
Findings based on data in China's foreign exchange market can be considered for other global markets in future research.
Practical implications
An increase in MU and FU has a negative effect on foreign exchange stability. Regulators can prevent the economic system uncertainty shocks on foreign exchange market stability through observation and judgment of MU and FU, which helps prevent and relieve financial risks. Investors can reduce foreign exchange risk as the exchange rate rebounds after hedging behavior during high uncertainty periods.
Originality/value
The effect of MU on the foreign exchange market stability is greater than that of FU, regardless of whether EMP or RJV occurs in the foreign exchange market.
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This paper aims to discuss financial reporting under economic policy uncertainty.
Abstract
Purpose
This paper aims to discuss financial reporting under economic policy uncertainty.
Design/methodology/approach
The paper uses discourse analysis to examine financial reporting under economic policy uncertainty.
Findings
The paper identifies the link between economic policy uncertainty and financial reporting, in terms of earnings management and fair value accounting. It argues that high economic policy uncertainty will transmit fewer new information to firms which can motivate managers to influence accounting numbers in the direction of the desired financial reporting outcome.
Originality/value
The relationship between economic policy uncertainty and financial reporting has not been studied. This paper is one of the first papers to relate economic policy uncertainty to financial reporting behavior.
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Shuzhen Zhu, Xiaofei Wu, Zhen He and Yining He
The purpose of this paper is to construct a frequency-domain framework to study the asymmetric spillover effects of international economic policy uncertainty on China’s stock…
Abstract
Purpose
The purpose of this paper is to construct a frequency-domain framework to study the asymmetric spillover effects of international economic policy uncertainty on China’s stock market industry indexes.
Design/methodology/approach
This paper follows the time domain spillover model, asymmetric spillover model and frequency domain spillover model, which not only studies the degree of spillover in time domain but also studies the persistence of spillover effect in frequency domain.
Findings
It is found that China’s economic policy uncertainty plays a dominant role in the spillover effect on the stock market, while the global and US economic policy uncertainty is relatively weak. By decomposing realized volatility into quantified asymmetric risks of “good” volatility and “bad” volatility, it is concluded that economic policy uncertainty has a greater impact on stock downside risk than upside risk. For different time periods, the sensitivity of long-term and short-term spillover economic policy impact is different. Among them, asymmetric high-frequency spillover in the stock market is more easily observed, which provides certain reference significance for the stability of the financial market.
Originality/value
The originality aims at extending the traditional research paradigm of “time domain” to the research perspective of “frequency domain.” This study uses the more advanced models to analyze various factors from the static and dynamic levels, with a view to obtain reliable and robust research conclusions.
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Ozgur Ozdemir, Wenjia Han and Michael Dalbor
The purpose of this paper is twofold. First, the study examines the prolonged effect of policy-related economic uncertainty on hotel operating performance, particularly the room…
Abstract
Purpose
The purpose of this paper is twofold. First, the study examines the prolonged effect of policy-related economic uncertainty on hotel operating performance, particularly the room demand (occupancy). Second, the study attempts to explain why occupancy drops when the perceived economic uncertainty is high by studying the mediating effect of consumer sentiment in the relationship between economic policy uncertainty and hotel demand.
Design/methodology/approach
This quantitative study uses secondary data – US economic policy uncertainty (EPU) index, University of Michigan's index of consumer sentiment (ICS), and property-level hotel operating data from three states of the US – California, Florida and New York. Data were analyzed using random effect regression and structural equation modeling. Robustness tests were conducted to enhance the reliability of the research findings.
Findings
Random-effects regression analysis reveals that policy-related economic uncertainty has a negative and lead-lag effect on hotel occupancy, average daily rate and revenue per available room (RevPAR). Structural equation modeling results show that the relationship between economic policy uncertainty and hotel occupancy is significantly mediated by consumer sentiment. Robustness test results support the findings from the main analysis.
Practical implications
This study offers valuable implications for the hotel professionals in regard to anticipating the economic impact of policy-related uncertainty on hotel industry and understanding how consumer sentiment affects demand at such crises times. Moreover, the study suggests potential course of actions to deal with declining room demand at times of uncertainty.
Originality/value
This empirical study explores how economic policy uncertainty affects hotel performance at the property level and explains the mediating effect of consumer sentiment on hotel room demand. The study provides a first-hand evidence of how consumer sentiment relates to the perception of economic uncertainty and leads to decline in consumer demand. In that regard, findings of the study have valuable implications for hospitality industry practitioners and relevant policymakers.
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Canh Phuc Nguyen, Christophe Schinckus and Thanh Dinh Su
This study aims to investigate the influences of global uncertainty indicators volatility on the domestic socioeconomic and environmental vulnerability in a sample of 54…
Abstract
Purpose
This study aims to investigate the influences of global uncertainty indicators volatility on the domestic socioeconomic and environmental vulnerability in a sample of 54 developing countries.
Design/methodology/approach
The two-step system generalized method of moments estimator is recruited to deal with autoregression and endogeneity matter in our dynamic panel data. Seven different global uncertainty indicators (US trade uncertainty; world trade uncertainty; economic policy uncertainty; world commodities and oil prices; the geopolitical risk index and the world uncertainty index) have been mobilized and compared for their empirical impact on the economic (growth and GDP), social (the misery index and income inequality) and environmental (CO2 emissions) vulnerabilities of nations.
Findings
Our empirical estimations suggest that the socioeconomic and environmental vulnerability cannot be solved through the same pattern: all decrease of a particular aspect will necessarily have a cost and an opposite influence on at least one of the other aspects of the nations' vulnerability.
Originality/value
The originality of this article is to combine these three dimensions of vulnerability in the same investigation. To our knowledge, our research is one of the few providing a joint analysis of the influence of global uncertainty on the economic and socioenvironmental countries' vulnerabilities – given the fact social, economic and environmental aspects are at the heart of the UN sustainable goals, our study can be seen as an investigation of the nations' capabilities to work proactively on meaningful sustainable goals in an increasingly uncertain world.
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Junchao Li and Shan Huang
Under the background of the overall increase of China's economic policy uncertainty and the urgent need for the transformation and upgrading of the substantial economy, this paper…
Abstract
Purpose
Under the background of the overall increase of China's economic policy uncertainty and the urgent need for the transformation and upgrading of the substantial economy, this paper studies the time-varying causality between China's economic policy uncertainty and the growth of the substantial economy through bootstrap rolling window causality test, further refines economic policies and studies the causal differences between different types of economic policies and substantial economic growth, refining the conclusions of previous studies.
Design/methodology/approach
This paper first studies the causal relationship between China's economic policy uncertainty and substantial economic growth in the full sample period through bootstrap Granger causality test. Then, the paper tests the short-term and long-term stability of the parameters of the VAR model, and it is found that the model parameters are unstable in both the short and long term, so the results of the Granger causality test of the full sample are not credible. Finally, we conduct a dynamic test of the causal relationship between China's economic policy uncertainty and substantial economic growth by means of rolling window, so as to comprehensively analyze the dynamic characteristics and sudden changes of the relationship between them.
Findings
The research shows that economic policy uncertainty in China has a significant inhibiting effect on the growth of substantial economy. Growth in the substantial economy will drive up economic policy uncertainty before 2016 and restrain it after that. In addition, this paper further subdivides economic policy uncertainty to explore the causal differences between different types of economic policy uncertainty and substantial economic growth. The test results show that the relationship between them has obvious policy heterogeneity. The fiscal policy uncertainty and the monetary policy uncertainty, as the main policy means in China, has a significant impact on the growth rate of substantial economy in multiple ranges, but the effect time is short. Although trade policy uncertainty has a significant impact on the growth rate of substantial economy only during the financial crisis, the effect lasts for a long time. The impact of exchange rate and capital account policy uncertainty on the growth rate of substantial economy is mainly reflected after 2020.
Originality/value
The values of this paper are as follows: First, the economic policy uncertainty is combined with the growth of substantial economy, which makes up the gap of previous studies. Second, the economic policy uncertainty is further subdivided. The paper explores the causal differences between different types of economic policy uncertainties and the growth of substantial economy, so as to make the research more detailed. Finally, different from the previous static analysis, this paper uses dynamic model to examine the relationship between China's economic policy uncertainty and the growth of substantial economy from a dynamic perspective, with richer research conclusions.
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