Domestic Economic Policy Research Articles

Chinese Accounting Standards Convergence with International Financial Reporting Standards

As the global economy becomes more integrated, Chinese Accounting Standards (CAS) are gradually moving towards convergence with International Financial Reporting Standards (IFRS). So far, CAS and IFRS do still have a number of variations including content, format and setup mechanisms. This paper analyzes three main differences in the content between CAS and IFRS regarding the financial instrument, biological asset, and lease measurement. These differences may cause problems for international practitioners and investors. In addition, the paper discusses the influences of the global convergence of CAS and the challenges faced by the technology industry, listed companies, and government. It is recommended that China need to consider the domestic economic situation and policies when adopting IFRS, and properly adjust the content of the standard accordingly, so as to better meet the domestic needs and development prospects. And industries should balance convergence and market challenges and work together to shape a practical and comprehensive China accounting system to enable China to develop globally further.

Volatility dynamics in energy and agriculture markets: An analysis of domestic and global uncertainty factors

PurposeThis study aims to explore the intricate relationship between uncertainty indicators and volatility of commodity futures, with a specific focus on agriculture and energy sectors.Design/methodology/approachThe authors analyse the volatility of Indian agriculture and energy futures using the GARCH-MIDAS model, taking into account different types of uncertainty factors. The evaluation of out-sample predictive capability involves the application of out-sample R-squared test and computation of various loss functions.FindingsThe research outcomes underscore the significant impact of diverse uncertainty factors such as domestic economic policy uncertainty (EPU), global EPU (GEPU), US EPU and geopolitical risk (GPR) on long-run volatility of Indian energy and agriculture (agri) futures. Additionally, the study demonstrates that GPR exhibits superior predictive capability for crude oil futures volatility, while domestic EPU stands out as an effective predictor for agri futures, particularly castor seed and guar gum.Practical implicationsThe study offers practical implications for market participants and policymakers to adopt a comprehensive perspective, incorporating diverse uncertainty factors, for informed decision-making and effective risk management in commodity markets.Originality/valueThe research makes an inaugural attempt to examine the impact of domestic and global uncertainty indicators on modelling and predicting volatility in energy and agri futures. The distinctive feature of considering an emerging market also adds a novel dimension to the research landscape.

Differentials in Countries’ Total Factor Productivity and the Factors Influencing Them

The diminishing potential for enhancing productive resources in order to sustain economic growth demands greater emphasis on how efficiently they are used as measured by total factor productivity (TFP). Long-term trends, differences between countries, and macro-level factors were assessed using qualitative and quantitative analysis of economic and financial indicators for a sample of 74 countries from 1978 to 2022. The article confirms that Russia and most other countries have been experiencing a steady downturn in total factor productivity. In some cases, productivity has been falling since the 2008 global financial crisis because key factors changed in the post-crisis period. In particular, growth of TFP has become correlated with increasing fixed investment, a high level of domestic financial development and protection of property rights, and limitation of state intervention in the economy, as well as with following a model of capitalism that allows for a moderate level of state ownership. Those developing countries of Central and Eastern Europe that have consistently implemented market-oriented reforms have also been able to sustain growth. The increasing importance of highly country-specific variables suggests that countries are trying to make greater use of domestic economic policies to support TFP growth and thus counteract the global productivity decline observed by many economists. Although individual countries may succeed in maintaining their growth, such measures are not sufficient to prevent a global slowdown.

The Impacts of Financial Market, Trade and Economic Policy Uncertainties on the Import Performance of Advanced Economies

This study aims to examine the long-term and short-term diverse effects of economic policy uncertainty, trade policy uncertainty, and financial market uncertainties on the import performance of advanced economies. It employs the Pooled mean group autoregressive distributed lag (PMG/ARDL) method for the panel of 27 advanced economies using quarterly data from the first quarter of 1996 to the fourth quarter of 2020. The study's results reveal that local and global economic and trade policy uncertainties have significant adverse long-term effects on the import performance of advanced economies. Besides, financial market uncertainties negatively impact advanced economies’ imports in the long run. Nonetheless, the results imply that domestic economic and trade policy uncertainties positively affect imports in the short run. Moreover, the Dumitrescu-Hurlin (D-H) panel causality test indicated that bidirectional causality exists between financial market and trade policy uncertainty indicators and imports. However, unidirectional causality exists between economic policy indicators and imports. The results are consistent across different sensitivity analyses. Based on these findings, we propose policy implications to control economic, trade and financial market uncertainties and thereby alleviating their impact on the import performance of advanced economies.

Transformation of the role of the state in the regulation of economic processes through the prism of modern trends in the development of the world economy

The article aims to analyze the current trends in the development of the world economic system, identify the current risks of its development, and identify the vectors of transformation of the macroeconomic regulation system in the conditions of the departure from the state-centric paradigm. The influence of globalization processes on the mechanisms of regulation of economic processes and changes in the weight and scope of application of traditional macroeconomic policy tools are studied. In the structure of the risks of the development of the world economy, those that have the most significant long-term impact in case of untimely application of corrective strategies are identified, namely the threat of a large-scale debt crisis in developing countries, the risk of non-fulfillment of the Sustainable Development Goals. An analysis of the conceptual reasons for asymmetric economic development on the global market was carried out. The mutual conditioning of probabilistic events at the meta-level is shown. Based on understanding the mainstream nature of the tendency to move away from the state-centric paradigm, the erosion of national sovereignty and the formation of governmental and non-governmental international organizations of their sovereignty based on the alienation of objects of power from the state were investigated. Examples of the influence of non-state actors on the strategic directions of development of the world community as a whole and the national economic system represented by the Club of Rome and the IMF, are given. Identified factors affecting the country's place in the system of determining trends in geopolitics depend on several factors, including the country's image, the ability to mobilize human and material resources, independence in determining its goals and interests, the state's ability to form effective alliances and coalitions. It illustrated (based on the history of Ukraine's interaction with the IMF) the causes and consequences of the deliberate loss of autonomy and independence regarding decision-making regarding domestic economic policy and transformation into an object of world politics. Keywords: state regulation of the economy, macroeconomic regulation, world economy, globalization, sustainable development, economic policy, international organizations.

IS DE-DOLLARIZATION INEVITABLE?

Relying on relevant studies of internationally recognized economists, using content analysis, synthesis, and comparison methods, we monitor the process of de-dollarization, i.e. phenomenon of establishing a new balance of power in the global financial order. The main intention of the work is to project future directions of international monetary policy by pointing out the institutional and other barriers to the internationalization of the main contender for the status of global currency — the Chinese renminbi. The aim of the work is to provide guidelines to the creators of domestic economic policy in the context of the increased importance of non-Western currencies, and consequently, the need to rebalance the foreign exchange reserves and create the necessary infrastructure for the increased use of the Chinese currency on the domestic foreign exchange market. We conclude that despite a certain weakening of the global importance of the US currency — especially from the beginning of 2022 — the process of dedollarization is in its initial phase, and that could last for decades. Namely, in order to form a multilateral currency system, taking into account the current hegemonic status of the dollar, a substantial increase in the use of other currencies is necessary. This applies to world trade crediting, where the greatest, but still limited, progress of the yuan is seen, but also to the other domains such as the allocation of central bank’s foreign exchange reserves, the securities’ denomination, and the invoicing of financial transactions in bilateral trade and other arrangements.

Unraveling the causal relationship between inflation uncertainty and rates of inflation in GCC countries: Evidence from a mixture of causal (linear) relationships models, and (causal inference with panel data)

This study investigates the links between rising inflationary pressures and monetary policy uncertainty (Inflation Uncertainty) in the GCC economies. After discovering cross-sectional dependency among the countries as an index of their reciprocal developmental traits, we used the bootstrap panel Granger causality approach. Individual nation research reveals that only KSA has a bidirectional correlation between high global inflation rate pressures and economic policy uncertainty, whereas Bahrain has no causality. The United Arab Emirates and Qatar exhibit bidirectional causality between high global inflation rate pressures and domestic economic policy uncertainties. Domestic economic policy uncertainty has no bearing on KSA's high global inflation rate pressures; thus, there is a one-way causality from high global inflation rate pressures to domestic economic policy uncertainty in KSA. Overall, economic policy uncertainty influences high global inflation rate pressures in these nations, while high global inflation rate pressures and domestic economic policy uncertainty mutually impact each other. Overall, the GCC countries would benefit from an augmented Taylor rule that includes financial stability as an extra monetary policy aim. It is necessary to make a more general adjustment in the model dynamics underlying the shock transmission mechanism. JEL Classification Code: ECM, PNARDL, PVAR, Eviews12, ARDL, NCSS12

The “EU‐Leash”: Growth Model Resilience and Change in the EU’s Eastern Periphery

Although the EU’s Eastern periphery has been afflicted by a series of crises over the past two decades, the region’s dependent market economies have shown puzzling resilience. Since the global financial crisis, the FDI-led, export-oriented growth models of the Visegrád countries have been reinforced. Meanwhile, the debt-based, consumption-oriented capitalism of the Baltic states has not experienced dramatic shifts either, despite a strengthening of its export component. Scholarly accounts from a comparative political economy perspective explain this resilience as the product of country-specific factors and tend to downplay the role of external influence. Instead, we aim to bridge these approaches with international political economy scholarship by arguing that European integration, in general, and the EU’s transnational regulatory influence, in particular, serves as an external anchoring mechanism for both semi-peripheral growth models. In addition to the region’s structural characteristics, such as deep embeddedness in global value chains, high exposure to trade with the EU, and dependence on external sources of finance, which already limit domestic agency in changing national growth models, we argue that European transnational regulatory integration involves an “EU-leash” that sets the boundaries for domestic economic policies, thereby influencing growth model trajectories. This ensures institutional continuity and prevents sudden and radical changes in semi-peripheral growth models. We demonstrate these mechanisms through two country studies (Estonia and Hungary).

Կիլիկիայի դասերը. մաս հինգերորդ / CILICIA LESSONS։ PART FIVE

Due to its geographical location, the Armenian state of Cilicia was located at the intersection of land and sea trade routes East-West. In other words, it played the role of a transit hub and therefore, in the context of the construction and implementation of the economic policy of the principality, and then the kingdom, this factor was considered the most important. During this period, the main port of trade routes connecting the East with European states and cities across the Mediterranean Sea became Cilician Aias, the economic importance of which was assessed both from a geopolitical and military-political point of view. As a crossroads, the role of Cilician Armenia became more valuable during the period of the Crusades, when the Mediterranean route began to transport soldiers participating in hostilities and the cargo necessary for their existence (food, weapons, ammunition). A number of Italian states, known for their merchant fleets (Venice, Genoa), as well as merchant groups of southern French cities (Marseille, Narbonne, Montpellier) were very interested in the uninterrupted operation of this sea route. The fifth part of the series of articles examines the economic policy implemented by Cilician Armenia, based on the fact that in this period the geopolitical, military and economic processes of the West-East were aimed at forming new rules of the “game”. At the same time, an attempt was made to reveal the strategic and tactical steps arising from the foreign and domestic economic policies pursued by the state, their direction and target accents, highlighting both positive and negative experiences.

Economic Impact on Russia After the Russian-Ukrainian Conflict

Based on the premise of the outbreak of war in the Russian-Ukrainian conflict war, the following article examines the impact on the Russian macro and micro economy. Raw oil, fertilizer fuels and gas energy are the main pillars of the Russian economy, while the domestic economy is dominated by the service sector. The methodology of research on the Russian economy is the integration of information and data through academic articles. One of the main sources of damage to the Russian economy was found to be the series of economic sanctions implemented by the United States and the European Union, and the main groups affected by these losses, in terms of data, were the wealthy Russians and senior members of the government leadership. At the macro level, Russian energy exports have suffered a severe setback, with a larger percentage drop compared to previous years. In the meanwhile, however, the losses to the Russian economy and the impact from inflation have been reduced by increasing the share of trade with the Chinese market and improving the domestic economic policies. This study will help to explore the development of a more appropriate economic policy in Russia and the direction of foreign trade, as well as recommendations for the reorganization of the economic structure in the country. However, the drawback of the study is that the material or content of the study may not always have a clear political stance, which may affect the judgment of researcher to the real state of the Russian economy.

FDI and Growth: A Re-look at Evidence on Developing Economies

Using cross-country data, this article investigates the impact of foreign direct investment (FDI) on growth in developing economies during globalisation. The study adopts an approach different from existing studies by categorising countries from Asia, Africa, Latin America, and the Caribbean based on FDI growth and per capita gross domestic product (GDP) growth relationship in the two phases: 1991–2004 and 2005–2019. In a sample of 29 countries, the least-squares dummy variable (LSDV) estimation shows a significant negative between FDI and per capita GDP controlling for both country-specific and time-specific effects and various other factors including gross domestic capital formation, inflation, physical infrastructure, human capital, trade openness, financial development and governance. This study confirms the positive impact of FDI in the earlier phase, while a significant negative impact on the later phase. The observed negative relationship holds for sub-sets of the sample countries for the entire period. These results are despite the importance of human capital, infrastructure, financial development, trade openness and governance along with FDI. These developing countries thus need to formulate complementary domestic economic policies, including institutional changes, which complement foreign direct investment in promoting per capita growth. JEL: F21, F43, O11, C23

경제정책 불확실성이 장단기 국채 수익률에 미치는 영향 분석

This study analyzes the impact of Korean and foreign economic policy uncertainty on Korean short-term and long-term government bond yield. First of all, the effect of domestic economic policy uncertainty on short-term and long-term government bond yields was analyzed, and then relative policy uncertainty, which was constructed as a ratio of Korean economic policy uncertainty to foreign economic policy uncertainty, was used. Japan, China, and the United States were considered for foreign economic policy uncertainty. In addition, through principal component analysis, Korea's economic policy uncertainty was divided into Korea-specific factors and common factors with Japan, China and USA. The analysis results are as follows. First, Korea's economic policy uncertainty did not have a significant effect on long-term and short-term government bond yields. Second, Korea's unique factor in economic policy uncertainty was found to significantly increase short-term government bond yields. Third, the economic policy uncertainties of Japan, China, and the US have been shown to increase Korea's short-term government bond yields. Fourth, in case of analyzing the effect of relative economic policy uncertainty, Korea's short-term government bond yield rises when Korea's economic policy uncertainty is relatively greater than China's. This implies that the impact of uncertainty on government bond yields can be clearly understood only when economic policy uncertainty is distinguished as a country-specific factor and a common factor.

Agrarianist content of P. Skoropadskyi’s agrarian reform

The aim of the research – the authors of the article aim to gain new knowledge about the agrarianist content of the agrarian policy of Ukrainian State. The research method- ology is based on the principles of objectivity, historicism, and systematicity. The authors used universal scientifi c research methods: analysis, synthesis, induction, deduction. In the study of the topic, the authors used such special-historical and interdisciplinary methods as historical- comparative, historical-genetic. Th e scientifi c novelty is that it is substantiated that there are suffi cient reasons to consider the hetman’s agrarian policy as having an agrarianist character and corresponding to the principles of Eastern European agrarianism at that time. Conclusions. Th e agrarian policy of Ukrainian State had an agrarianist character, given that it corresponded to the basic principles of agrarianism. Firstly, the hetman and the political parties that supported him understood the peasantry as an active subject of history, as the social basis of the state. Th ey also had a corresponding attitude towards the peasantry, which is refl ected in legislation and agrarian policy. Secondly, agrarian policy was widely understood by the head of Ukrainian State and the political parties that supported him, as a component of domestic economic policy, containing socio-economic and socio-political components. Th e socio-economic part is the im- plementation of land reform and the settlement of current agricultural issues: improvement of land management, improvement of agrotechnical cultivation of land, provision of peasant farms with agricultural equipment, seed stock, working cattle, etc. Socio-political aspect – forms and methods of cooperation between authorities and the peasantry, subjectivization of the peasantry in the current political and legal model of the state. Th irdly, P. Skoropadskyi was looking for an alternative path, not a monarchical one, not a socialist one, he was a supporter of an innova- tive model of agricultural development. In his understanding – highly cultured peasant farms. Fourthly, for him, the instrument of subjectivization of the peasantry – the social basis of the state – was private peasant ownership of land. Th e latter was considered the foundation of cul- ture and civilization, the inviolable principle of the state’s existence. Entitlement of peasants to private ownership of land and signifi cant limitation of large land ownership is the cornerstone of P. Skoropadskyi’s agrarian reform.

Russian Economy in 2020–2022: Transition to a New Development Model

The article presents the study results on the changes in the Russian economy related to effects of the specific circumstances of 2020–2022. The authors support the conclusion about the ongoing shift in the economic development model and make several proposals for domestic economic policy. The authors note that the strong negative influence of external factors can, under certain conditions (on the principle of «challenge-and-response» or «shock-and-reaction»), create momentum towards the accelerated structural transformation of the economy and transition to a new national economic cycle adapted to current trends in scientific and technological development.The paper analyses indicators of dynamics and structural changes in the final use of gross domestic product (GDP), in production, and in investment activity. The article describes the differences in the development trends for three major sectors of the economy in which its industries were incorporated: the raw materials and processing sector, the infrastructure sector, and the innovation sector, and also for the aggregate «other industries» (tabular material contains detailed analytical data on enlarged categories).The article presents the results of GDP dynamics factor analysis based on two approaches – using the intersectoral model and the GDP dynamics macroeconomic function. Based on the first approach, the authors obtained the overall estimates of the impact of changes in export volumes and domestic final demand on GDP in 2022, as well as the decrease in the import intensity of production and other estimates. Based on the second approach, the authors obtained the estimate of the potential GDP rate, its gap with the actual rate, and the influence of the main factors on economic dynamics. The features of the new development model (transition to development based mainly on internal sources of funds, resources, etc.) are indicated. The paper outlines authors' views on the conditions that can meet the challenges of developing the country as part of the new development model. The issues of making the investment forecasts and providing investment process with the financial resources are considered. According to the authors, further development of the systematic approach to managerial decision-making and transition to ensuring better coherence between vital economic development directions makes it possible to achieve economic and social objectives more effectively.

The impact of policy uncertainty on stock liquidity in Vietnam’s M&A market

This study investigates the impact of policy uncertainty on stock liquidity in Vietnam’s M&A market. Using a comprehensive sample of M&A acquisition deals over the 2005-2020 period, we find that policy uncertainty is negatively associated with stock liquidity of target firms, indicating that firms should increase their information disclosure to improve the information environment during periods of increased asymmetric information due to policy uncertainty. We also find that higher levels of policy uncertainty lead to lower market valuations of target firms, reflecting greater market skepticism about the completion of the transaction and related synergy benefits. This study highlights the importance of transparency in improving stock liquidity and suggests that policymakers need to consider the impact of domestic economic and investment policies on M&A activity and stock liquidity in Vietnam.

Determining Hotel Room Rates: Domestic Economic Policy Uncertainty and Crises

Although the impacts of economic policy uncertainty (EPU) on different aspects of the hospitality industry have been studied, none analyzes the effects of EPU on the hotel room rates. To close this gap, using the monthly data from January 2008 to November 2019, this article investigates the influences of Singapore's EPU (hereafter domestic EPU) on the hotel room rates of two types of hotels, luxury and economy, in Singapore with cointegration technique and error correction model. Although prior research findings suggest that economic and disease crises, and EPU, have negative effects on the dependent variable of interest, the results of this study do not always support this. The findings of this study show domestic EPU has a negative impact on the room rates of economy hotels, but no impact on the room rates of luxury hotels, and Global Financial Crisis has a negative effect on the room rates of luxury hotels, but no effect on the room rate of economy hotels. To avoid the omission of important independent variables, domestic economic condition and inbound tourism are included as other independent variables.

Global and domestic economic policy uncertainties and tourism stock market: Evidence from China

This study investigates the impacts of global economic policy uncertainty (GEPU) and domestic (Chinese) economic policy uncertainty (CEPU) on the long-run volatility of the tourism stock market in China based on an improved GARCH–MIDAS–X model. Empirical results reveal that both CEPU and GEPU have significant negative effects on the long-run volatility of China’s tourism stock market. It is further identified that the impact of GEPU on tourism companies’ performance is short-lived. The findings suggest that tourism-related practitioners should monitor both CEPU and GEPU when conducting risk assessments related to tourism investment and policymaking.

European Energy Crisis Analysis: The Background of Russian-Ukrainian Conflict

This paper argues that the Russia-Ukraine conflict significantly impacts the energy crisis in Europe. The conflict economy will destabilize the trade between Russia and the EU countries that mainly support Ukraine. This new international conflict opens up a new space for analyzing the impact of global conflicts on the economy and trade. In this article, the economic issues raised by the conflict will be from the energy market, trade position, financial market, and GDP, and how the two sides should adjust their domestic economic policies to cope with the crisis. The article shows that ruthless unilateral economic decisions can have a negative impact on the domestic economies of both sides. International conflict is also a significant reforming influence on the global economy.

External Balance and Financialization: An Interpretation of the Evolution of the Brazilian Economy Since 2000

Brazil experienced a complete economic cycle with an ascending phase in the 2000s, followed by a decline during the following decade. Using the national accounts, the objective of this article is to trace the growth path of the Brazilian economy from the 2000s onwards through a detailed analysis of the financial balance and income flows of the institutional sectors. It will be shown that the economy has two relevant points of inflection: the first was the external shock occasioned by the 2008 global financial crisis, and the second was the change in domestic economic policy after 2015 following an austerity agenda. The article compares the financial balance of the institutional sectors at the two historical moments. It sheds new light on why the Brazilian economy entered the descending phase of the economic cycle and is stagnating and deepening its financialization process.

The Agrarian Question in the Views of N. Kh. Bunge (to the 200th Anniversary of his Birthday)

Introduction. 2023 marks the 200th anniversary of the birth of N. Kh. Bunge, an outstanding Russian scientist, economist, public figure and statesman. His views, especially on the agrarian question, are still poorly understood. The aim of the study is to analyze and evaluate the views of N. Kh. Bunge on the agrarian issue and to reveal their humanistic nature. Materials and Methods. The study used methods of analysis, synthesis, generalizations and axiology, as well as historical-retrospective, historical-genetic and hermeneutical, program-targeted and structural-functional methods for studying problematic issues in the history of economic science. The study is based on primary sources: the writings of N. Kh. Bunge himself and the works of his contemporaries. Results. Among the most significant ideas in the field of posing and solving the agrarian issue of N. Kh. Bunge, his approaches to the issues of land ownership and land use, migration (settlement) processes, the development of peasant self-government, the development of rental, tax and financial-credit relations are identified and disclosed. The multidimensional and at the same time contradictory nature of the views of N. Kh. Bunge in matters of domestic economic policy were revealed. The conclusion is made about the humanistic orientation of the scientific heritage of the scientist and the need for its further more detailed study in the context of a new social reality. Discussion and Conclusion. Specific approaches of Russian historiography to the study of the works of N. Kh. Bunge in the pre-revolutionary period (A. N. Zak, I. I. Levin, A. A. Mikulin, M. N. Sobolev, M. I. Tugan-Baranovsky and others) and the growing interest in his political and economic views in the 21st century. An assessment is given to the debatable thesis about the characterization of the views of N. Kh. Bunge as being “between historicism and liberalism” (J. Zweinert).