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1 – 10 of over 7000Lars Schweizer and Andreas Nienhaus
Sensemaking models generally lack an objective determinant to distinguish between CEO fault and changes in systematic risk caused by exogenous negative shocks like a banking…
Abstract
Purpose
Sensemaking models generally lack an objective determinant to distinguish between CEO fault and changes in systematic risk caused by exogenous negative shocks like a banking crisis. The interdisciplinary approach of this paper combines attribution theory with econometric time series analyses to provide an objective measure of exogeneity and persistence of a negative shock to an organization. The purpose of this paper is to address the exploratory research question, of how scapegoating by managers can be avoided by the use of an objective and empirical measurement and if the recent financial crisis can be seen as an exogenous shock to manufacturing firms.
Design/methodology/approach
By testing for stationarity with a structural break with an econometric time series analysis, the model helps to reduce agency costs during organizational crisis by effectively determining crisis causation and avoid scapegoating by managers.
Findings
By combining the sensemaking models of Haleblian and Rajagopalan (2006), Staw (1980), and Weick (1988), an integrated model of sensemaking in performance crises under the specific context of simultaneously occurring external crises is provided. By applying the authors approach the results suggest that the financial crisis of 2008/2009 has true exogenous adverse effects on US manufacturing firms.
Originality/value
The interdisciplinary approach encourages the integration of econometric time series analysis as an objective determinant in sense making models.
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Canh Thi Nguyen, Thanh Quang Ngo and Quan Hong Nguyen
The paper aims to assess the impact of weather-induced shocks on household food consumption in the rural Vietnamese Mekong Delta (VMD) through the case of Long An province and…
Abstract
Purpose
The paper aims to assess the impact of weather-induced shocks on household food consumption in the rural Vietnamese Mekong Delta (VMD) through the case of Long An province and evaluate the effectiveness of widely used coping strategies in mitigating weather-related shock impacts.
Design/methodology/approach
The system generalized method of moments (GMM) estimation method is applied to explore information on shock incidence, recovery, and time occurrences. The paper uses a sample of 272 repeated farming households from 5-wave survey data from 2008 to 2016, resulting in 1,360 observations.
Findings
The paper confirms the robust negative effect of a natural shock on food consumption. Additionally, using savings proves to be the most potent measure to smooth food consumption. Other favorable coping strategies are “getting assistance from relatives, friends” or “getting assistance from the Government, and non-government organizations (NGOs).” The mitigating effects are also traced in the current analysis.
Research limitations/implications
Using caution when generalizing the results from Long An to the whole VMD is reasonable. The rather limited observations of coping strategies do not allow the authors to analyze any specific strategy.
Originality/value
The proposed approach employs the GMM technique and controls for endogenous coping strategies and thus provides accurate estimates of the effects of weather-related shocks and the mitigation effectiveness in the rural VMD.
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The primary purpose of this paper is to investigate the sources of the business cycle fluctuations in Vietnam. To this end, the author develops a small open economy New Keynesian…
Abstract
Purpose
The primary purpose of this paper is to investigate the sources of the business cycle fluctuations in Vietnam. To this end, the author develops a small open economy New Keynesian dynamic stochastic general equilibrium (SOE-NK-DSGE) model. Accordingly, this model includes various features, such as habit consumption, staggered price, price indexation, incomplete exchange-rate pass-through (ERPT), the failures of the law of one price (LOOP) and the uncovered interest rate parity. It is then estimated by using the Bayesian technique and Vietnamese data 1999Q1–2017Q1. Based on the estimated model, this paper analyzes the sources of the business cycle fluctuations in this emerging economy. Indeed, this research paper is the first attempt at developing and estimating the SOE-NK-DSGE model with the Bayesian technique for Vietnam.
Design/methodology/approach
A SOE-NK-DSGE model—Bayesian estimation.
Findings
This paper analyzes the sources of the business cycle fluctuations in Vietnam.
Originality/value
This research paper is the first attempt at developing and estimating the SOE-NK-DSGE model with the Bayesian technique for Vietnam.
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Qi Cui and Jikun Huang
The purpose of this paper is to examine the impacts of large income and expenditure shocks on household food expenditures and determines whether the impacts of large shocks differ…
Abstract
Purpose
The purpose of this paper is to examine the impacts of large income and expenditure shocks on household food expenditures and determines whether the impacts of large shocks differ among households, especially low-income households.
Design/methodology/approach
The study’s data are drawn from a household survey conducted in rural China. Multivariate analysis examines the impacts of large income and expenditure shocks on food expenditures.
Findings
The impacts of large positive income shocks on food expenditure are moderate. However, households reduce their per capita food expenditures within a range of about 25-30 percent after suffering large negative shocks. The greatest impact is found for shocks where expenditures more than double, followed by the impact of shocks where income declines by more than half. Moreover, food expenditures among low-income households are much more sensitive to large negative income and expenditure shocks. The paper concludes with policy implications.
Originality/value
This is the first Chinese study to empirically examine the impacts of different income and expenditure shocks on household food expenditures. The results have important implications for smoothing households’ food consumption after they suffer from shocks.
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Sufficiently persistent rise in nominal interest increases inflation rate in short-run. This short-run comovement of nominal interest rate and inflation rate is known as…
Abstract
Sufficiently persistent rise in nominal interest increases inflation rate in short-run. This short-run comovement of nominal interest rate and inflation rate is known as Neo-Fisherianism. This chapter proposes a policy based on Neo-Fisherianism to escape Zero Lower Bound (ZLB) using a textbook Forward Looking New Keynesian Model. I have shown that proposed policy with properly chosen inflation target and persistence can stimulate economy and escape ZLB by raising nominal interest rate. I have also shown that the proposed policy is robust to varying degrees of price stickiness.
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Amrita Kulshreshtha, Sk Raju, Sai Manasa Muktineni and Devlina Chatterjee
The purpose of this study was to investigate the relationship between income shock suffered during the coronavirus pandemic and subsequent financial well-being (FWB) of Indian…
Abstract
Purpose
The purpose of this study was to investigate the relationship between income shock suffered during the coronavirus pandemic and subsequent financial well-being (FWB) of Indian adults, mediated by financial resilience (FR) and psychological resilience (PR).
Design/methodology/approach
The authors propose a conceptual model for the relationship between income shock and FWB, with FR and PR as mediator variables. The authors consider four dimensions of financial resilience: economic resources, financial inclusion, financial knowledge and social capital. This study uses a unidimensional scale for PR. Data were collected from 370 respondents from 11 cities across India. Structural equation models were built to test the proposed hypotheses.
Findings
Income shock was negatively associated with FWB. Estimated path coefficients for FR and PR were statistically significant and confirmed a mediating role. Among the four dimensions of financial resilience, only economic resources were positively associated with FWB. The mediation relation between economic resources and FWB was larger than PR.
Research limitations/implications
Since convenience sampling was used to collect data, the results of this study are indicative but not generalizable.
Social implications
For individuals who suffered income shocks during the pandemic, adequate economic resources are crucial for FWB. Governmental disbursements, personal savings and medical or life insurance could provide an adequate safety net.
Originality/value
There are no extant studies that examine the association between income shocks and FWB in the pandemic, and this study contributes to the literature.
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Nicholas Apergis and James E. Payne
The purpose of this paper is to examine the short-run monetary policy response to five different types of natural disasters (geophysical, meteorological, hydrological…
Abstract
Purpose
The purpose of this paper is to examine the short-run monetary policy response to five different types of natural disasters (geophysical, meteorological, hydrological, climatological and biological) with respect to developed and developing countries, respectively.
Design/methodology/approach
An augmented Taylor rule monetary policy model is estimated using systems generalized method of moments panel estimation over the period 2000–2018 for a panel of 40 developed and 77 developing countries, respectively.
Findings
In the case of developed countries, the greatest nominal interest rate response originates from geophysical, meteorological, hydrological and climatological disasters, whereas for developing countries the nominal interest rate response is the greatest for geophysical and meteorological disasters. For both developed and developing countries, the results suggest the monetary authorities will pursue expansionary monetary policies in the short-run to lower nominal interest rates; however, the magnitude of the monetary response varies across the type of natural disaster.
Originality/value
First, unlike previous studies, which focused on a specific type of natural disaster, this study examines whether the short-run monetary policy response differs across the type of natural disaster. Second, in relation to previous studies, the analysis encompasses a much larger panel data set to include 117 countries differentiated between developed and developing countries.
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Donghui Liu, Lingjie Meng and Yudong Wang
Oil is crucial for industrial development. This paper investigates the impacts of oil price changes on China's industrial growth and examines whether the impacts are asymmetric…
Abstract
Purpose
Oil is crucial for industrial development. This paper investigates the impacts of oil price changes on China's industrial growth and examines whether the impacts are asymmetric. The estimations can help determine how oil price shocks are transmitted throughout the economy.
Design/methodology/approach
This paper adopts West Texas Intermediate (WTI) crude oil price and industrial sector output and uses monthly data. The recently developed nonlinear autoregressive distributed lag (NARDL) model is employed to illustrate the effects in both the short term and long term. Importantly, under NARDL framework, this paper examines whether the impacts are asymmetric by decomposing oil price shocks into their positive and negative partial sums.
Findings
The empirical results prove clear evidence of asymmetries in the short term, long term or both terms. Specifically, some sectors benefit from, rather than suffer from higher oil prices, even some energy-intensive sectors, i.e. C31 (Smelting and Pressing of Ferrous Metals) and C32 (Smelting and Pressing of Non-ferrous Metals). However, the effects on some other energy-intensive sectors appear insignificant. Additionally, the results prove significantly negative responses in some sectors in the long term, and most of these sectors are in the top half of the ranking by energy consumptions.
Originality/value
This paper studies the economic responses at a disaggregated level by employing industry-level data. NARDL method is used to decompose oil price changes into their increases and decreases and investigate the asymmetries in the impacts of oil price changes.
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This paper seeks to draw together the various essential elements of the conflict inflation approach within the context of an open economy and to highlight the importance of global…
Abstract
Purpose
This paper seeks to draw together the various essential elements of the conflict inflation approach within the context of an open economy and to highlight the importance of global external factors in explaining inflation.
Design/methodology/approach
A theoretical framework is proposed based on a model with a few simple building‐blocks. A supply side relationship that determines the trade‐off between a stable distribution of income and the external balance is first derived. As a second step the model combines the supply side relationship with James Meade's analysis of the relation between internal and external balance.
Findings
The study first shows, in the context of an small open economy, relevant trade‐offs among three crucial macroeconomics targets – external balance, internal balance, and workers/firms' aspiration balance. It then disentangles the adjustment mechanism that explains how an adverse balance of payments shocks may lead eventually to the breakdown of the conflicting claims equilibrium and inflation. Finally, it provides analytical reasons for believing that the focus of globalization (sustained and higher world demand and strong global competitiveness) is the main cause of global disinflation.
Research limitations/implications
The present study provides a starting‐point for further theoretical developments within the conflict inflation approach and requires empirical testing.
Originality/value
The open economy conflict inflation framework could prove to be useful in improving the understanding of the relationship between global external forces and domestic inflation.
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Isiaka Akande Raifu and Sebil Olalekan Oshota
It has been said that oil price shocks affect stock market returns. However, empirical studies remain inconclusive regarding the nexus between oil price shocks and stock market…
Abstract
Purpose
It has been said that oil price shocks affect stock market returns. However, empirical studies remain inconclusive regarding the nexus between oil price shocks and stock market returns. Consequently, the purpose of this study is to investigate the asymmetric impact of oil price shocks on stock returns in Nigeria.
Design/methodology/approach
A two-stage Markov regime-switching approach is used to examine the asymmetric effects of three different structural oil shocks on stock returns. The oil shocks, which include oil supply shock, aggregate demand shock and oil-specific demand shock, are derived using structural vector autoregressive. Monthly data that spans the period between January 1990 and December 2018 are deployed for estimation.
Findings
The linear estimation results show that only oil demand shock negatively and significantly affects the stock market returns. The Markov-switching regime results reveal that oil supply shock has a significant positive impact on the stock returns in a low-volatility state, whereas oil-specific demand shock negatively impacts the stock returns in a high-volatility state.
Practical implications
There is a need for policymakers and investors to take cognizance of not only the positive outcomes of a relatively stable state of oil price but also the negative consequences of a high-volatility state when formulating policy and making investment decisions, respectively.
Originality/value
This study differs from other similar studies in Nigeria that have examined the asymmetric relationship between oil price shocks and stock market return by using a two-stage Markov regime-switching approach. To the best of the authors’ knowledge, this is the first attempt at using this methodology.
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