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1 – 10 of over 13000This chapter investigates the impact of the COVID-19 pandemic on economic stimulus policies. Based on data from 156 economies, empirical results show that in the medium term…
Abstract
This chapter investigates the impact of the COVID-19 pandemic on economic stimulus policies. Based on data from 156 economies, empirical results show that in the medium term, cumulative effect of COVID-19 pandemic is positively correlated with the economic stimulus policies but not in the short term. Heterogeneity tests show that while economic policies are used in developed economies more often, restrictive measures in developing countries are likely used as a substitution; deaths have a positive impact on economic stimulus policies but confirmed cases not. The results suggest that the pandemic may reinforce economic inequality due to potential stimulus policy capabilities, requiring international coordination and assistance to low-and-middle income countries in various aspects.
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The purpose of this paper is to review monetary policy options in countries assumed to be suffering from two common economic problems: deficient private demand and high and rising…
Abstract
Purpose
The purpose of this paper is to review monetary policy options in countries assumed to be suffering from two common economic problems: deficient private demand and high and rising public debt.
Design/methodology/approach
The analytical approach assumes that relevant authorities have decided that new money creation is necessary to address their economic problems. The paper asks the question: how should this new money creation best be deployed to create the required economic stimulus in the context of rising public debt?
Findings
The first finding is that the latest rounds of “quantitative easing” in the USA (QE2) and Japan are likely to be inefficient, largely ineffective and have adverse side‐effects, and that in periphery countries the risk of debt default is being increased by current defensive policy settings. The second finding is that the policy of financing budget deficits by printing new money is likely to be more effective (than “quantitative easing” and current Eurozone policy) in raising demand, output and employment without adding unnecessarily to already high levels of public debt.
Practical implications
There are very substantial practical policy implications, involving a potential change of monetary policy strategies for two of the world's largest economies and for Eurozone periphery countries. Post‐earthquake reconstruction in Japan could be financed in the manner recommended in this paper.
Originality/value
The originality/value lies in demonstrating that current monetary policy orthodoxy is misplaced, and that an alternative policy strategy has been overlooked and is likely to be more effective.
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Thi Thanh Xuan Pham and Thi Thanh Trang Chu
This study undertakes a comprehensive investigation into the far-reaching repercussions of Covid-19 stimulus packages and containment policies on stock returns, meticulously…
Abstract
Purpose
This study undertakes a comprehensive investigation into the far-reaching repercussions of Covid-19 stimulus packages and containment policies on stock returns, meticulously examining a diverse array of 14 distinct markets.
Design/methodology/approach
This study employed the Panel SVAR model to analyze the relationships between various policies and stock market performance during the Covid-19 outbreak. The sample comprises 5432 daily observations spanning from December 2020 to January 2022 for the 14 selected markets, with missing data excluded.
Findings
The findings reveal three consistent impacts across all 14 markets. Firstly, stock returns immediately reversed and decreased within a day when Governments tightened containment policies. Secondly, economic stimulus packages led to a fall in stock returns. Thirdly, an increasing death rate caused the stock return to decrease in the following two days. These findings are supported by the uniform impulse responses in all three shocks, including common, composite and idiosyncratic shocks. Furthermore, all inverse root tests satisfy the stability conditions, indicating the stability and reliability of Panel SVAR estimations.
Practical implications
One vital implication is that all government decisions and measures taken against the shock of Covid-19 must consider economic impacts to avoid unnecessary financial losses and support the effective functioning of stock markets during similar shocks. Secondly, investors should view the decline in stock returns due to Covid-19 effects as temporary, resulting from anxiety about the outbreak. The study highlights the importance of monitoring the impact of policies on financial markets and the broader economy during crises. Overall, these insights can prove helpful for investment decisions and policymaking during future crises.
Originality/value
This study constitutes a noteworthy addition to the literature on behavioural finance and the efficient market hypothesis, offering a meticulous analysis of the multifaceted repercussions of Covid-19 on market interactions. In particular, it unveils the magnitude, duration and intricate patterns of market volatilities linked to significant shock events, encompassing a comprehensive dataset spanning 14 distinct markets.
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Chao Liang, Bai Liu and Hing Kai Chan
China is the only major economy in the world that has achieved positive gross domestic product (GDP) growth in 2020. The paper aims to explore the effect of China's public policy…
Abstract
Purpose
China is the only major economy in the world that has achieved positive gross domestic product (GDP) growth in 2020. The paper aims to explore the effect of China's public policy restarting supply and consumption after coronavirus disease-2019 (COVID-19).
Design/methodology/approach
Affected by the epidemic, global economic growth slowed down. Using the stock price data of Chinese A-share listed company, combining natural experiment and event study method, the paper examines the policy effects of work resumption and consumer vouchers.
Findings
Compared with demand capacity, the work resumption has a more significant role in promoting the supply industry. Issuing consumer vouchers can effectively promote local demand recovery, and the effect is mainly concentrated in the industries involved in consumption vouchers. At the same time, public management capacity and the income level of residents play an important role in restarting supply and demand.
Practical implications
Understanding China's public policies and effects are of positive significance to the restoration of economic development in other countries.
Originality/value
The study contributes to knowledge by empirically examining the effect of China's public policies against the COVID-19 pandemic. The paper also expands the scope of policy-oriented research based on the perspective of supply and demand capacity building.
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Wei-Jie Liao, Nai-Ling Kuo and Shih-Hsien Chuang
The authors examine the Taiwanese government's budgetary responses to COVID-19, with a focus on the special budgets created for containing the virus, undertaking bailouts and…
Abstract
Purpose
The authors examine the Taiwanese government's budgetary responses to COVID-19, with a focus on the special budgets created for containing the virus, undertaking bailouts and providing economic stimulus. The authors assess the short-term and long-term fiscal implications of the budgetary measures and discuss how Taiwan's experiences could provide lessons for other countries for future emergencies.
Design/methodology/approach
The authors collect data from Taiwan's official documents and news reports and compare the special budgets proposed by the Taiwanese government during the Great Recession and the COVID-19 pandemic. The authors discuss lessons learned from the 2008–09 special budget and possible concerns of the 2020 special budgets. In the conclusions, the authors discuss potential long-term implications for Taiwan's budgetary system as well as possible lessons for other countries based on Taiwan's experiences
Findings
The authors found that the 2008–09 special budgets focused only on economic stimulus, whereas the 2020 special budgets covered COVID-19 treatments, bailouts and economic stimulus. In 2020, the Taiwanese government devised targeted bailout plans for industries and individuals most affected by the pandemic and created the Triple Stimulus Vouchers to boost the economy. Since the special budgets were largely funded through borrowing, the authors pointed out concerns for fiscal sustainability and intergenerational equity.
Originality/value
COVID-19 has changed how the world functions massively. This work adds to the literature on COVID-19 by providing Taiwan's budgetary responses to the pandemic. This work also identifies ways for Taiwan to improve the existing budgetary system and discusses lessons for other countries.
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Luis Alfonso Dau, Elizabeth Marie Moore and Margaret Soto
The purpose of this chapter is to examine how multinational firms have an added incentive to promote corporate social responsibility (CSR) in order to maximize profitability and…
Abstract
Purpose
The purpose of this chapter is to examine how multinational firms have an added incentive to promote corporate social responsibility (CSR) in order to maximize profitability and adapt to the changing normative climate in a post Great Recession economy.
Methodology/approach
This chapter builds on institutional theory using contextual evidence from Mexican firms to provide insight into the varying pressures facing local and multinational enterprises in emerging markets.
Findings
This chapter highlights different sets of pressures faced by emerging market firms, both domestic and multinational. This chapter contends that emerging market multinational enterprises (EMNEs) are incentivized to uphold CSR practices to a greater degree than domestic firms from emerging markets.
Research limitations
Contextual evidence for this chapter was confined to Mexican firms, which provides an opportunity for future research to be carried out from alternative emerging markets.
Social and practical implications
From a social standpoint, this chapter sheds light on the challenges of globalization and the current rift between national level policies, coinciding behavior, and global expectations. From a practical standpoint, this chapter could inform and alert CEOs and practitioners to the nuances of CSR expectations, contingent upon the sphere in which they choose to operate in.
Originality/value
This chapter contributes to the growing dialogue on EMNEs while highlighting the schism between national and global expectations for CSR. Further, this chapter adds to the literature on institutional theory by connecting it to the in-group and out-group literature from sociology.
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Malcolm Salter and Wolf Weinhold
A number of factors ranging from economic conditions to managerial self‐interest have contributed to today's unprecedented merger boom. But the tide may be turning as the public…
Abstract
A number of factors ranging from economic conditions to managerial self‐interest have contributed to today's unprecedented merger boom. But the tide may be turning as the public policy debate over mergers heats up. Most scenarios show a long‐range drop in merger activity. However, the need for an informed, rational national policy on mergers remains.
Roseline Nyakerario Misati, Alfred Shem Ouma and Kethi Ngoka-Kisinguh
All over the world, the role of central banks is being redefined following the outbreak of the global financial crisis and subsequent breakdown of the “great moderation”…
Abstract
All over the world, the role of central banks is being redefined following the outbreak of the global financial crisis and subsequent breakdown of the “great moderation” consensus. Consequently, most advanced economies adopted non-conventional approaches of monetary policy which resulted in spill-overs to emerging markets and developing countries with implications on their financial system and monetary policy transmission. This, coupled with, internal developments in the financial systems of developing countries necessitated modifications of not only monetary policy frameworks but also responsibilities of most central banks. This chapter acknowledges possible evolutions of the financial structure variables in developing countries and uses data from Kenya to analyze the dynamic linkages between financial sector variables and monetary policy transmission in the light of the financial crisis. The study used structural vector autoregression to examine the relationship between financial structure variables and monetary policy as well as assess the relative importance of various monetary transmission channels in Kenya. The results show that the changing financial structure represented by credit to the private sector and stock market indicators in Kenya only slightly altered relative importance of monetary policy transmission. The insignificance of credit to the private sector suggests that the importance attached to the bank lending channel in previous studies is waning while the marginal significance of the stock market indicator signals the potential for asset price channel. The results also indicate that the interest rate and exchange rate channels are relatively more important in Kenya while the asset prices is only marginally significant and bank lending channel is the weakest in the intermediate stage of monetary policy transmission. However, transmission of monetary policy to the ultimate objectives is somewhat slow and weak to inflation and almost absent to output. The result implies a limited role of monetary policy on growth and questions the wisdom of pursuing multiple objectives.
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Ahmed Shoukry Rashad and Mahmoud Farghally
The monetary policy is an important driver of the real estate sector’s performance. The recent wave of monetary tightening in 2022 in response to the cost-of-living crisis has…
Abstract
Purpose
The monetary policy is an important driver of the real estate sector’s performance. The recent wave of monetary tightening in 2022 in response to the cost-of-living crisis has been associated with the decline in housing prices across the globe. There are two main channels through which the US monetary policy may affect the real estate market in the dollar-pegged countries: the cost of serving mortgages (financing cost) and the exchange rate channel (for example, the appreciation of the US dollar and consequently the local currency). The exchange rate channel, which involves the appreciation of the US dollar and the subsequent effect on the local currency, is particularly significant in the case of Dubai, given how international the housing market in Dubai and might be viewed as a tradable good. Using recent data, the purpose of this study to evaluate the spillover impact of the US monetary policy on the housing market performance in the dollar-pegged countries using Dubai as a case study.
Design/methodology/approach
For this purpose, this study collected unique longitudinal data on the volume of the monthly transactions of residential properties and performs a panel-data analysis using within-variation models. The changes in the interest rate policy in the USA are determined by the domestic inflation in the USA, thereby, representing an exogenous shock in the UAE.
Findings
The results are robust to different specifications and suggest that a strong negative correlation between the interest rate in the USA and the housing sector demand in Dubai. Fiscal policy measures can be taken to mitigate tighter financial conditions in case of policy misalignment.
Originality/value
Few studies have looked at the spillover impact of the global monetary conditions on the real estate market in the GCC region. This study fills this gap by exploring the impact of the US financial conditions on Dubai’s real estate, using panel data analysis.
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