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Based on an uncertainty model with an infinite horizon, this chapter analyzes how financial development and monetary policy in two countries can impact international trade and capital flows and influence individual behavior and welfare. Our study shows that differences in capital market development are the major contributing factors for trade imbalance and investment among countries. We also find that monetary policies are important factors affecting the trade balance, consumption, and investment. Countries with one-sided, pegging exchange rate policies tend to buy more bonds and enjoy larger trade surpluses. This effect is closely related to the level of capital market development: in these two countries, at higher stages of development, the effects of idiosyncratic monetary policy on imbalance are amplified.

Nearly all international trade takes place in middle products, rather than in finished goods as it is assumed in most models of international trade theory. Recognition of this fact has some far-reaching consequences for the measurement of real value added, real domestic income, and productivity, and it brings forward the role of a number of related, yet distinct, key price ratios: the terms of trade, the real exchange rate, and the trading gains. Production theory, rather than consumer theory, is therefore the appropriate setting for analyzing issues such as openness, trade imbalances, and income distribution.

The chapter examines the current state and prospects of cooperation between the Eurasian Economic Union and the BRICS members. Firstly, the chapter describes comparative analysis between the economic strategies, which represents the two associations facing similar challenges; set themselves similar goals and objectives to achieve sustainable economic growth. Also, the authors provide an empirical analysis of trade and economic cooperation between the EAEU and the BRICS countries, which shows different levels and dynamics of relations with each member of the BRICS. Furthermore, it is proposed to use new ‘soft’ formats, which, in the authors' opinion, will provide synergistic use of the fundamental platforms for dialogue created in the EAEU and BRICS to intensify cooperation and deepen practical interaction. Finally, the chapter concludes that the potential interaction between the two associations of developing countries would create positive prospects and new opportunities, subsequently accelerating their economic growth. Such consolidation of capabilities of these institutions would transfer such cooperation into a practical direction by implementing the goals defined in the strategic planning of the EAEU and BRICS countries.

This study investigates whether broker anonymity impairs the ability of the market to detect informed trading in the lead up to takeover announcements. Our research represents the first study in this area to analyse the effects of broker anonymity in the context of significant information asymmetry. Results indicate that informed traders are less detected, and therefore better off when broker identifiers are concealed. This finding has important policy implications for exchange officials deciding whether or not to reveal broker identifiers surrounding trades, especially considering that almost all prior research suggests that broker anonymity is correlated with improved liquidity.

A news report from South Africa reads, “Clothing and Textile Workers’ Union (SACTWU) members held a string several meter long with 40,000 pieces of fabric attached to display their agitation over cheap Chinese imports which has claimed thousands of jobs loss. Due to cheap Chinese imports over 67,000 jobs had been lost and more than 350,000 people have been suffering who were engaged in clothing, footwear and textile sectors.” A saver in Southeast Asia once complained, “When I opened up my dollar savings account about 3 years ago, I bought a sizable amount of the green bucks at Philippine peso 56.40. Today, the peso–dollar exchange rate stands at Philippine peso 43.27. That's a net loss of Php13.13 for every dollar that I have in the bank. That loss closely amounts to a brand new car or a down payment for a house and lot. And I thought going with a dollar savings was the best fiscal move I made in years.” Other savers in many countries are also affected since their local currencies have become much stronger against the U.S. green bucks.

This chapter argues that the key Eurozone imbalances are not a failure of nation states. At the heart of the integration process is the convergence criteria – limits on government deficit, debt, interest rate, inflation, etc. While these were intended to eliminate asymmetries across countries, the conception of convergence was too narrow since the euro designers completely ignored the elephant in the room – that countries were on different technological frontiers. I show that this difference is an important determinant of the key macroeconomic imbalances across the Eurozone. It follows that the primary convergence criterion should be limits on non-price competitive gaps across countries. The chapter overturns the simplistic view of price competitiveness and illustrate that the regulating forces of competition originate from productive structures.

Asynchronous current account trends between North and South of the Euro Area were accompanied by significant appreciations of real exchange rate originating in the strong shifts in consumer prices and unit labor costs in the periphery economies relative to the core countries of the Euro Area. The issue is whether the real exchange rate is a significant driver of persisting current account imbalances in the Euro Area considering that, according to some authors, differences in domestic demand are more important than is often realized. In the paper we examine relative importance of real exchange rate and demand shocks according to the current account adjustments in the Euro Area member countries. Our results indicate that while the prices and costs related determinants of external competitiveness affected current account adjustments primarily during the pre-crisis period, demand drivers shaped current account balances mainly during the crisis period.