The purpose of this paper is to measure employee income mobility during the first year of COVID-19 and, as a further result, to offer evidence of the progressive effect of short-term work schemes. Using the rotational sample structure of the EU Labour Force Survey (EU LFS) database, the individual income position, measured in quintiles, may be identified in two separate quarters within 2020. As a result, a variety of income mobility indices and the underlying transition matrices may be computed. Mobility indices and transition matrices give highly comprehensive information on the percentage of individuals whose economic situation improves or deteriorates. Indeed, the analysis, carried up to the quintile level, provides significant evidence of the progressivity of the cushioning measures, particularly the short-term work schemes. Six EU Member States are examined, and the research compares the first year of COVID-19 to a baseline scenario (2019). The COVID-19-induced crisis is also compared to prior financial and sovereign debt crises.
Many believe that the inflation target of 2 percent as set by the U.S. Federal Reserve is too low. Setting an inflation target that is too low or too high would prompt the Fed to prematurely use a contractionary or expansionary monetary policy, thereby doing more harm than good to the economy. Our purpose, therefore, was to find the right inflation target from a U.S. monetary policy perspective. We applied the threshold model on U.S. real GDP growth rate and the inflation rate using annual data from 1990 to 2020. Our study found that an inflation rate of up to 3.39 percent would positively impact the growth rate of real GDP and that above that, it had no effect. The policy implication of our study is therefore that the right inflation target from U.S. monetary policy perspective would be 3.39 percent.
Monetary policy shocks can come from a variety of sources, including chairpersons of the Federal Reserve. Chairpersons may have different preferences as to which variables to put the most weight on, respond differently to political pressures, or have different personalities affecting the ability to gain consensus among participants. This paper investigates the effects of controlling for changes in chairperson when measuring monetary policy shocks in the Romer and Romer (AER 2004) framework. The results show that different chairpersons are a substantial source of shocks to policy.
Expected gains guide the decision to join trade agreements (TAs). While it is difficult to predict whether the ongoing trade war will result in a significant shift in the global trade paradigm, India's renewed interest in TAs with numerous developed economies, as well as worsening trade balances with existing TA partners, necessitates a review of India's current TAs before negotiating new ones. Using a stochastic frontier gravity model, the study evaluates the impact of RTAs (free and preferential; deep and shallow) on India's export efficiency from 2002 to 2020. The paper also investigates how TA affected Indian exports during the COVID-19 epidemic in 2020. The findings demonstrate that India's preferential and shallow TAs had a maximum export efficiency of 55% between 2002 and 2020. Moreover, shallow TAs demonstrated their resilience in encouraging Indian exports in 2020. Findings reveal that India has failed to fully leverage its deep TAs, which are critical for stimulating commerce, investment, and economic growth. As a result, India must safeguard its interests during the ongoing deep trade talks by focusing on non-tariff barriers and rules of origin to promote exports and harmonize regulatory standards to facilitate FDI-led integration into global GVCs to boost export potential.
Technological advancements have been the driving factor responsible for the structural composition of the financial markets and the development of digital financial technologies. The widespread use of information and communication technology (ICT) and artificial intelligence in the operation of the global financial sector is the hallmark of this development. Access to and usage of financial services have changed significantly due to this revolution and, more recently, the pandemic, which embraced digital solutions. Digitization of the economy promotes economic growth through inclusivity, efficiency, and innovation. The availability of electronic payment systems triggers a positive economic impact through rising consumption and production, thereby creating more employment and income and, in turn, strengthening economic growth. It benefits consumers and merchants as these payment methods are safer and more efficient, convenient, transparent, and affordable. Many empirical studies support the idea that digital financial development is crucial for enhancing efficiency and productivity and promoting a country's economic growth. The study explores the relationship between gross value added, credit transfer, debit transfer, card payment, and prepaid instruments in India taking quarterly data from 2011 to 2019 and using the Autoregressive Distributive Lag (ARDL) model. The study reports a cointegrating relationship between the variables and discusses the implications of this relationship.
Emerging economies have been focusing on enhancing exports by adopting relaxed trade policies and easing the institutional environment for firms to operate in. To assess the export performance of firms, export intensity (EI) is a measure that has been used widely. Across studies, a mixed and contradictory relationship has been seen between export intensity and firm-specific competencies. This study attempts to develop a model by dichotomizing export strategy between expansion-oriented and escape-oriented strategies, the first being motivated by a resource-based view and the second depending on a domestic institutional perspective. It extends recent research by proposing that exporting firms, depending on the strategy adopted, are influenced by learning from exporting, human capital, and the domestic institutional environment. In contrast to previous studies, this study finds that high export intensity does not always lead to advanced firm competencies. It is seen that high export intensity firms may export to escape the inefficiencies of the domestic environment and may not develop advanced firm competencies or focus on retaining human capital. While firms with low EI gain from learning by exporting, undertake expansionary activities in exporting, in turn develop advanced competencies, they incur high human capital costs. The present study helps to provide clarity and integrates the dichotomous export strategies with export intensity and their influence on firm-level competencies as well as institutional environments in emerging economies. The hypotheses formulated in the study are validated and supported by a sample of exporting firms from India.
The social and solidarity economy has been promoted for its potential to reduce poverty, enhance economic inclusion, and provide alternative solutions to labor market issues, but very few empirical evaluations of its impact exist. We build an original qualitative and quantitative survey on the population of cooperatives in different sectors in Morocco with the aim of analyzing their economic models and relevance for job creation and economic inclusion. Much like commercial firms, we find that cooperatives grow and survive based on (i) internal factors pertaining to total factor productivity, (ii) management factors related to characteristics and management style of the president or manager, and (iii) external factors dependent upon the business or market environment.
The role of exchange rate pass-through has dominated the recent heated debates over effective monetary policies as well as exchange rate regimes in general equilibrium models. Empirical literature from developed economies has provided evidence that in many cases, the pass-through to prices may be incomplete. These studies report substantial differences between countries. To fill the gap in empirical literature on developing countries, in the present article, we examine exchange rate pass-through in Egypt from 2005 to 2018 using nine endogenous variable vector auto-regressive models (VAR), estimating the degree and the size of exchange rate pass-through to domestic prices. In addition, we use a reduced two-dimensional VAR to estimate once for the relation between inflation (CPI) and money supply (M2) and once for the relation between inflation (CPI) and imports, along with Granger causality tests to investigate causality between two variables. In the last part of the analysis, we investigate the exchange rate pass-through to inflation (CPI) in Egypt before floatation, from December 2005 to October 2016, and in the post-floatation period, from November 2016 to February 2018. The results have important implications for Egypt’s ability to achieve an effective inflation-targeting regime.
This paper empirically examines South Africa’s fiscal sustainability through a Markov-switching model which utilizes quarterly datasets for the period from 1960 to 2019. The results show that public debt responds positively, demonstrating a sustainable fiscal policy. Furthermore, considering the regime-specific feedback coefficients of the fiscal policy rule and the durations of fiscal regimes, the study finds that South Africa’s fiscal policy satisfies the No-Ponzi game condition. Therefore, from a policy perspective, the South African government should take measures such as pension reforms, reducing operational expenses, reducing subsidies, and funding micro and small enterprises to gain the double dividend on the expenditure side along with revenue-enhancing measures on consumption taxes to achieve stable public finances and lower debt levels.
