This study examines the macroeconomic impact of the India-Middle East-Europe Economic Corridor (IMEC), launched at the 2023 G20 Summit. It constructs standardized GDP-adjusted bilateral distance, trade-to-GDP, and debt-to-GDP measures for 2000-2023. Using an open-economy DSGE framework and the Distance Business Cycle approach, the study develops an IMEC Index via Principal Component Analysis and an autoregressive distance-trade-debt shock. Panel AR and Box-Jenkins estimations indicate that IMEC enhances macroeconomic stability by supporting GDP, investment, capital formation, and consumption, while moderating price levels. The findings underscore IMEC's role as both a connectivity corridor and a macroeconomic stabilizer fostering rules-based regional integration.
This study examines the informational efficiency of eight MENA stock markets during four major crises: the Global Financial Crisis, the Arab Spring, COVID-19, and the Russia - Ukraine war. Using daily data (2007-2011; 2020-2024) and rolling Shannon and Tsallis entropy, we assess linear and nonlinear efficiency. Results show a systematic decline in efficiency during crises, with stronger inefficiencies in Tunisia, Egypt, and Lebanon. Shannon entropy indicates reduced randomness, while Tsallis entropy reveals nonlinear dependence and herding. The findings support the Adaptive Market Hypothesis. Policy implications emphasize improving liquidity, transparency, and diversification to enhance market resilience.
This study investigates the impact of the 2025 US reciprocal tariff policy on the Indonesian stock market using the EGARCH model, analyzing volatility, technology firms' financial resilience, and the exchange rate. The findings indicate that technology companies exhibit robust adaptability to market uncertainty through business flexibility. However, shifts in US trade policy significantly affect their resilience, with capital market volatility mediating this impact. No asymmetric leverage effect is detected, as investors evaluate news primarily based on profitability. These results extend the literature on trade policy uncertainty, market volatility, and corporate resilience within emerging economies.
Intra-regional trade in Sub-Saharan Africa (SSA) remains limited despite regional integration efforts. Using system Generalized Method of Moments on 33 SSA countries (2006-2023), this study examines financial development's role in promoting intra-regional trade, with economic growth as a complementary factor. Domestic financial development significantly enhances intra-SSA trade, but its interaction with economic growth is insignificant, revealing muted synergy. Partner countries' financial development shows marginal positive significance. Home country economic growth is significant, while partner growth is not. Policymakers should develop domestic financial systems, pursue financial harmonization and better integrate financial and broader productive real sectors to boost intra-SSA trade.
This paper investigates the paradoxical effects of quantitative easing (QE) in Morocco, challenging its direct transfer to emerging economies. We uncover a dominant risk channel, where QE unexpectedly tightens financial conditions, and a pronounced crowding-out of private credit. These findings, derived from a sectoral VAR analysis, demonstrate that financial structure and sovereign dominance critically alter policy transmission. The Moroccan case provides vital, generalizable insights. It cautions against standardized unconventional frameworks and underscores the need for context-specific, targeted designs to avoid counterproductive outcomes in similar bank-dominated, emerging markets.
Consumer prices in India are often influenced by supply-side forces, such as wages and input costs. Inflation-targeting central banks track such costs to gauge inflationary pressures. After remaining rangebound in the pre-pandemic period, global commodity prices and domestic input costs heightened in the post-pandemic period. In parallel, high inflation episodes were witnessed in India. This study investigates the impact of input costs and wages on CPI inflation in India using augmented-Phillips-Curve and VAR frameworks, and how this impact evolved over time. While empirical results suggest increased significance of input costs in driving post-pandemic inflation, they also indicate improved anchoring of inflation expectations.
Infrastructure development is widely considered a key driver of economic growth in developing regions such as WAEMU, where infrastructure deficits constrain productivity and competitiveness. This study examines the impact of infrastructure on economic growth in eight WAEMU countries from 2007 to 2023 using panel data and two estimators, including the Augmented Mean Group (AMG). Results show a statistically significant negative effect of infrastructure on growth, suggesting that short- to medium-term adjustment costs and implementation inefficiencies outweigh productivity gains. Investment is positively associated with growth, confirming the importance of capital accumulation. Policy should prioritise efficiency, governance, maintenance, coordination, and effective public-private partnerships.
This study examines how macroprudential policy moderates the impact of bank credit, as a key transmission channel of monetary policy, on the distribution of economic output in Vietnam. Using quarterly data from Q2/2008 to Q4/2022, the research provides evidence that a socialist-oriented macroprudential instrument - the credit growth limit - enhances capital allocation efficiency and reduces the concavity of the bank credit-output nexus. Tightening macroprudential policy affects both inefficient firms and high-risk, high-reward ventures that generate high returns during booms. Therefore, the efficiency of capital allocation leads to a heterogeneous moderating impact across the output distribution.
Exchange rate volatility undermines economic stability and growth in sub-Saharan Africa (SSA) where commodity dependence and shallow financial markets heighten external shocks. This study advances a novel hypothesis: ICT infrastructure moderates the adverse impact of volatility. Using the dynamic panel system GMM on 28 SSA countries, we test this interaction directly. The results confirm volatility significantly hinders growth, but ICT penetration weakens this effect. A marginal analysis shows the growth penalty falls by 40% in high-ICT economies. Sectoral evidence highlights manufacturing as most responsive. The findings position digital infrastructure as a foundation for resilience, urging integrated exchange rate and digital strategies.
Global financial disturbances challenge countries' ability to maintain stable economic performance, raising questions about the effectiveness of monetary policy frameworks. This study evaluates how inflation-targeting (IT) countries respond to external spillovers compared to non-IT economies. Using entropy balancing combined with a differences-in-differences strategy for 1980-2019, we address self-selection and estimate causal effects on real per capita income, debt-to-GDP, and employment. The results indicate that IT adoption may involve higher employment costs under shifting global conditions, while effects on output and public debt vary across income groups. Overall, the findings suggest that IT economies display heightened vulnerability to external spillovers.
This study examines the nonlinear effects of fiscal policy on economic growth in sub-Saharan Africa by jointly analysing taxation and productive public investment. Using annual data for 36 countries from 1981-2020 and a System-GMM approach, the results validate the BARS-curve hypothesis for both instruments. Growth-maximizing levels are about 21% of GDP for the tax burden and 12-12.5% for public investment. Incorporating the budget balance shifts these thresholds: higher deficits raise the optimal tax rate but lower the optimal investment rate. Overall, the findings highlight persistent undertaxation and insufficient productive spending across the region.
This paper tests the effect of financial development (FD) and interest rate liberalisation on macroeconomic volatility (MV) in emerging markets. This study used panel data of 64 countries from 1990 to 2019, and a dynamic panel model (Difference GMM) was applied. Our findings indicate that (i) the impact of FD and interest rate liberalisation on macro fluctuation exhibits a U-shaped bidirectional, (ii) enhancing the financial sector facilitates personal consumption and investment, thereby mitigating MV, (iii) the financial sector serves as both positive and negative effect, and (iv) when FD surpasses a critical threshold, it becomes a catalyst for macroeconomic instability.
This study investigates whether sub-Saharan Africa's anomalous financial market structure is due to adverse macroeconomic fundamentals. To this end, it uses comparative statistics to derive a novel analytical framework to first characterize an ideal structure and later explore the features of an aberrant system. In its subsequent empirical analysis that employs panel quantile regression, the paper affirms that the sub-region's macroeconomic fundamentals mostly explain the mentioned aberration in a nonlinear manner. The paper's two key contributions are its novel analytical framework and application of a panel quantile methodology to consider the relation between the regressand and regressors.
This study examines the effect of inflation targeting adoption on stock market capitalization in 39 developing countries from 1995 to 2023. Baseline propensity score matching with two-way fixed effects shows positive but sometimes insignificant effects. Robustness checks excluding the 2008-2009 Global Financial Crisis, hyperinflation episodes, and both combined often yield larger and more significant estimates. To address concerns about staggered policy adoption, we use the Staggered Difference-in-Differences estimator, finding that significance emerges five to ten years after adoption. Results suggest IT supports financial development by enhancing investor confidence and macroeconomic stability, especially in lower-volatility environments.
This study investigates how CEO confidence moderates the impact of financial risk on the health of banks in Ghana's commercial banking sector. Using a dynamic panel of 18 banks (2009-2022) and the System GMM estimator, we classify CEOs as overconfident, underconfident, or balanced based on qualifications and experience. Findings reveal that financial risks weaken bank health, with overconfident CEOs amplifying this effect, while balanced CEOs mitigate it most effectively. Grounded in behavioural finance and managerial preference theory, the study highlights the value of behavioural screening in executive appointments to enhance bank resilience in emerging markets.
This study investigated exchange rate volatility effects on manufacturing Foreign Direct Investment in Thailand, Vietnam, and Indonesia during 2010-2024. Using panel data analysis, threshold regression, and Vector Error Correction modelling, the research identified a critical 3.47% monthly volatility threshold above which negative effects intensify substantially. Results showed coefficients of -847.32 in linear models and -1156.89 above the threshold, with confirmed long-run equilibrium relationships and unidirectional causality from volatility to investment flows. The precise threshold identification represents a significant methodological advancement, providing policymakers with specific volatility targets for optimizing manufacturing FDI attraction in Southeast Asian economies.
