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1 – 10 of over 41000The purpose of this paper is to examine the relationship between trade integration and intra-regional business cycle synchronization using value-added trade data. Most empirical…
Abstract
Purpose
The purpose of this paper is to examine the relationship between trade integration and intra-regional business cycle synchronization using value-added trade data. Most empirical studies analyzing the relationship between trade integration and business cycle synchronization use gross trade data which suffer from double-counting. Double-counting distorts the empirical results on the estimated relationship between trade integration and business cycle synchronization. This paper explores the relationship using value-added trade data to be free from distortions caused by double-counting.
Design/methodology/approach
Gross trade data on exports and imports are decomposed into sub-categories following Koopman et al. (2014). Then, value-added data on exports and imports without double-counted terms are built to measure value-added bilateral trade intensity and value-added intra-industry trade intensity. Using this value-added trade intensities, the author run panel regressions for Europe and East Asian countries to examine how value-added trade intensities are correlated with output co-movements.
Findings
The paper finds that for European countries, the positive association between trade and business cycle co-movements is more evidently observed and the role of intra-industry trade increasing the business cycle synchronization is also more clearly revealed by value-added trade data. On the other hand, for East Asian countries, value-added trade data reveal that it is very uncertain whether increased trade contributes to stronger synchronization of business cycles and intra-industry trade is truly the major factor which deepens the business cycle co-movements.
Research limitations/implications
First, the paper examines the relationship only by running static panel regression. There is a need to employ different methodologies such as instrumental variable regression or dynamic panel regression. Second, financial integration and policy coordination within a region are also other relevant factors which influence the intra-regional business cycle synchronization. There is a need to examine the relationship using value-added trade data with the variables measuring the degree of financial integration and policy coordination. Third, value-added trade data used in this paper has limited coverage of East Asian countries. There is also a need to extend the value-added data set to cover more countries and industries.
Originality/value
Most empirical literature studying the relationship between trade integration and business cycle synchronization rely on gross trade data. This paper would be the first attempt to study the relationship using value-added trade data. Duval et al. (2014) also use value-added data, but their value-added data are not supported by a solid accounting framework which decomposes a country’s gross exports into various value-added components by source and additional double-counted terms. Value-added data in this paper computed based on Koopman et al. (2014) are the total domestic value exports that are ultimately consumed abroad via final and intermediate exports. The author believes that value-added data in this paper are most relevant in estimating the relationship between trade integration and business cycle synchronization.
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Business cycle theory is normally described as having evolved out of a previous tradition of writers focusing exclusively on crises. In this account, the turning point is seen as…
Abstract
Business cycle theory is normally described as having evolved out of a previous tradition of writers focusing exclusively on crises. In this account, the turning point is seen as residing in Clément Juglar's contribution on commercial crises and their periodicity. It is well known that the champion of this view is Schumpeter, who propagated it on several occasions. The same author, however, pointed to a number of other writers who, before and at the same time as Juglar, stressed one or another of the aspects for which Juglar is credited primacy, including the recognition of periodicity and the identification of endogenous elements enabling the recognition of crises as a self-generating phenomenon. There is indeed a vast literature, both primary and secondary, relating to the debates on crises and fluctuations around the middle of the nineteenth century, from which it is apparent that Juglar's book Des Crises Commerciales et de leur Retour Périodique en France, en Angleterre et aux États-Unis (originally published in 1862 and very much revised and enlarged in 1889) did not come out of the blue but was one of the products of an intellectual climate inducing the thinking of crises not as unrelated events but as part of a more complex phenomenon consisting of recurring crises related to the development of the commercial world – an interpretation corroborated by the almost regular occurrence of crises at about 10-year intervals.
Geoffrey Lancaster and Inger Wesenlund
States that product life cycle theory has been applied to many industries and has proved successful in identifying future product and service strategies. Looks at how this theory…
Abstract
States that product life cycle theory has been applied to many industries and has proved successful in identifying future product and service strategies. Looks at how this theory can be applied to international trade especially with regard to competition in the form of low‐cost imports, by using the textile industry a case in point. Emphasizes the need to recognize the changing environment within the textile industry suggesting that businessmen should be aware of the constant process of change in order that they might survive.
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Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and, conversely…
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Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and, conversely, innovative thought structures and attitudes have almost always forced economic institutions and modes of behaviour to adjust. We learn from the history of economic doctrines how a particular theory emerged and whether, and in which environment, it could take root. We can see how a school evolves out of a common methodological perception and similar techniques of analysis, and how it has to establish itself. The interaction between unresolved problems on the one hand, and the search for better solutions or explanations on the other, leads to a change in paradigma and to the formation of new lines of reasoning. As long as the real world is subject to progress and change scientific search for explanation must out of necessity continue.
Historians of economic thought have begun to reintegrate “un-Austrian” Austrians back into discussions of Austrian Economics, yet many scholars have argued that the Austrian…
Abstract
Historians of economic thought have begun to reintegrate “un-Austrian” Austrians back into discussions of Austrian Economics, yet many scholars have argued that the Austrian School dissolved after emigration, with only Mises and his followers left to carry on the legacy. This chapter argues that a renewed focus on the networks established by the Austrians themselves, before and after emigration, reveals a distinctly different picture of Austrian Economics. Focusing on their shared interest in international trade theory and business cycle theory and their continued contributions to economic methodology, we see the émigré Austrians advancing Austrian ideas while also reconstituting and elaborating new Austrian affiliations. Ultimately, we find ourselves in agreement with Herbert Furth that Austrian Economics is far broader than Hayek, Mises, and their acolytes would have it, and that it is vital to understand and preserve this more diverse tradition by investigating more closely the works of Haberler, Machlup, Morgenstern, and others.
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Shawn Chen-Yu Leu and Jeffrey Sheen
We consider whether there has been a gradual decoupling of the Australian business cycle from its trading partners in Europe and North America and a closer convergence toward its…
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We consider whether there has been a gradual decoupling of the Australian business cycle from its trading partners in Europe and North America and a closer convergence toward its trading partners in Asia. We set up a dynamic latent factor model to estimate common dynamic components or factors for the real GDP growth rate of 19 countries. From variance decomposition over the 1991–2009 sample, we find that a global factor contributed the most in explaining Australian output growth variations, followed by a European factor, an Asian factor, and finally a North American factor. However, the correlation between Australian output growth movements and the Asian business cycle factor evolved from negative and small to positive and large after 2002. The European and North American factors were negatively correlated with Australian output growth for most of the sample period before turning positive in the global financial crisis of 2007–2008. This evidence supports the hypothesis that the Australian economy has decoupled to some extent from Europe, was not much coupled with North America except insofar as the United States drove the global factor, and has increasingly become positively coupled with Asia.
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Standard measures of business cycle comovement, based on correlation coefficients, are very sensitive to the phase of the business cycle, as well as to regional crises. Adjusting…
Abstract
Standard measures of business cycle comovement, based on correlation coefficients, are very sensitive to the phase of the business cycle, as well as to regional crises. Adjusting for these factors overturns the empirical result that Asia-Pacific economies are becoming decoupled from the United States over time. An alternative, intuitive, measure of business cycle comovement is proposed, based on the difference between output growth rates adjusted for its long-run average. The new measure suggests that Asia-Pacific economies are becoming more strongly coupled with the United States over time.
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Hugo Benedetti, Ehsan Nikbakht and Giga Zukhubaia
The current security trade settlement life cycle presents several inefficiencies derived from intermediaries involved in the transaction between buyers and sellers. This chapter…
Abstract
The current security trade settlement life cycle presents several inefficiencies derived from intermediaries involved in the transaction between buyers and sellers. This chapter examines distributed ledger technology (DLT), the underlying technology of all blockchain applications, including trade settlements. It also reviews the implications of using blockchain in trade settlements for cryptoassets. Emerging blockchain technology provides investors, exchanges, regulators, and countless potential intermediaries with the most up-to-date technology with the highest efficiency, transparency, credibility, and automation enabled by smart contracts. Smart contracts allow an ecosystem to manage the process of trade settlements starting from execution to clearing and then settlement. These contracts reduce reconciliation and recordkeeping costs and streamline repetitive processes present in today’s trade settlement system. The chapter highlights the benefits of implementing DLT in financial markets globally in all trading aspects, including cryptoassets.
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I seek to identify whether cash flow management can affect the performance and risk of the Greek listed companies.
Abstract
Purpose
I seek to identify whether cash flow management can affect the performance and risk of the Greek listed companies.
Design/methodology/approach
This study examines the relationship of cash flow management with performance and risk, using a sample of 80 non-financial companies listed in the Athens Exchange. The study covers the period 2018–2022, and panel data analysis is applied. Both financial performance and stock return are taken into consideration, while risk concerns the volatility of the companies’ share prices. The various explanatory variables used include the net cash flow, free cash flow, cash conversion cycle days, cash flow from operating activities, cash flow from investing activities, cash flow from financing activities, inventory days, customer days and supplier days.
Findings
The empirical results provide evidence of a positive relationship between financial performance and net cash flow and free cash flow. In addition, operating cash flow is positively related to financial performance. The opposite is the case for investing and financing cash flow. Finally, some evidence of a negative relationship between financial performance and inventory and customer days is provided too. On the other hand, stock return and risk are not related to the cash flow management variables at all.
Originality/value
To the best of my knowledge, this is one of the few studies to examine the relationship of cash flow management with performance and risk, using data from the Greek stock market. The results can form an effective selection tool for investors seeking Greek companies with the highest financial performance potential, which may reward them with higher dividends.
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