We study how individual income expectations adjust during periods of high macroeconomic uncertainty, using survey data from professional forecasters and households. We find that mean expectations decrease disproportionally with rising macroeconomic uncertainty, as predicted by most economics and finance models. However, the relationship between macroeconomic uncertainty and individual subjective uncertainty is more nuanced. While there is a positive correlation among professional forecasters, it is not the case among households. In fact, for households, the correlation is often negative, contrary to what is typically predicted. In addition, subjective uncertainty shows significant persistence, even after controlling for macroeconomic and individual factors. We demonstrate that our empirical results can be reconciled with Max-Min expected utility and smooth ambiguity preferences. This has implications for economic and financial research seeking to study periods of high macroeconomic uncertainty.
This paper provides a comparative analysis of global regulatory frameworks governing digital assets, emphasizing legal definitions, classifications, and jurisdictional approaches. Digital assets—defined as cryptographically secured digital representations of value—are categorized into cryptocurrencies, utility tokens, security tokens, stablecoins, NFTs, and CBDCs. The study examines regulatory regimes in the United States, European Union, Hong Kong SAR (China), Japan, and Singapore, highlighting varying degrees of regulatory fragmentation, harmonization, and innovation support. Key regulatory goals include transparency, fraud prevention, AML/KYC compliance, consumer protection, and international coordination. The paper concludes with policy recommendations aimed at enhancing global cooperation, regulatory clarity, and consumer education, while acknowledging challenges such as jurisdictional divergence and resource limitations in developing nations.
Climate change poses a profound threat to global development, with Asia particularly vulnerable due to its rapid warming and ecological exposure. Despite contributing 44% of global greenhouse gas emissions in 2019, the region faces challenges in balancing economic growth with climate commitments. Nature-based solutions (NbS), leveraging Asia’s rich biodiversity and ecosystems, offer a cost-effective pathway for climate mitigation and adaptation. However, a significant biodiversity finance gap — estimated at USD 700 billion — impedes progress. This paper examines the barriers to scaling private sector financing for NbS in Asia, focusing on financial institutions. Key challenges include fragmented data and disclosure frameworks, limited integration of nature-related risks in financial decision-making, and a scarcity of bankable projects. The paper also reviews current regulatory and voluntary initiatives, taxonomies, and financial instruments aimed at mobilizing capital. It proposes a multi-pronged approach for financial regulators to enhance NbS financing, including mandatory disclosures, taxonomy integration, and strategic alignment of financial decisions with nature-related considerations.
This paper presents an exploration of portfolio optimization strategies, with a specific focus on integrating the Recovery Ratio as a novel metric for quantifying the time period of losses and the resilience of portfolios. Drawing from historical data of Thai blue-chip stocks (SET50 index), the study emphasizes the strategic inclusion of quick-recovery stocks to enhance portfolio performance, particularly during market downturns. A significant contribution of this research lies in integrating the Recovery Ratio into portfolio optimization models as an objective function or a constraint. Through empirical analysis, the study uncovers that despite appearing less risk-efficient on efficient frontiers, quick-recovery portfolios consistently outperform slow-recovery counterparts in backtests and forward tests. This finding underscores the necessity of incorporating recovery metrics alongside traditional risk measures for effective portfolio management in dynamic market environments.
The experience of flexible inflation targeting in ASEAN-5 has been favorable. The present paper shows improvements in macroeconomic outcomes consistent with the framework's mandated objectives: lower levels and volatility of inflation, more stable economic growth, and a well-functioning financial system. Using difference-in-difference approaches, we find that, for ASEAN-5 and developing countries, the inflation targeting framework mainly benefits adopters in terms of reducing inflation levels. In response to the challenges emanating from capital flow volatility and domestic financial imbalances, over the past 20 years, ASEAN-5 policy frameworks have continuously evolved to incorporate various policy tools. These include, among others, foreign exchange intervention, macroprudential policy, and capital flow measures. A multitude of policy tools is arguably one of the key factors contributing to sound macroeconomic outcomes during the post-targeting periods.
