External Shocks Research Articles

Economic Diversification In Iraq: A Comprehensive Review

Economic diversification is crucial for Iraq to overcome the limitations imposed by its heavy reliance on oil. This study explores Iraq's economic history, current structure, and the urgent challenges it faces, emphasizing the need for structural transformation. It examines the vulnerabilities caused by fluctuating global oil prices, geopolitical instability, and internal demographic pressures for the period of 2004 to 2022. By analyzing government policies, sectoral developments, and international collaborations, this research highlights the efforts and obstacles in achieving economic diversification. The findings indicate that while Iraq has made strides toward diversifying its economy, it still faces significant challenges such as bureaucratic inefficiencies, political instability, and security concerns. International collaborations and foreign direct investment (FDI) emerge as crucial components, providing the financial support and technological expertise needed for economic transformation. Lastly, economic diversification is more than just an economic strategy for Iraq; it is a comprehensive approach to achieving long-term stability and growth. A diversified economy can help Iraq build resilience against external shocks, promote inclusive growth, and secure a sustainable and prosperous future. The imperative for economic diversification is clear: to create a stable, balanced, and resilient economy that can withstand global market fluctuations and geopolitical dynamics, ultimately improving the well-being of its population

On the Issue of Coordinating the Objectives and Instruments of Financial and Monetary Policies

The relevance of the issue of mutual influence of the goals and instruments of financial and monetary policy increases during periods of economic instability. External and internal macroeconomic shocks can undermine the financial stability of the state and have a negative impact on both price and financial stability. In this regard, there is a need to adjust both financial and monetary policies based on harmonization of the instruments of financial and monetary regulation. The purpose of this study is to develop the theoretical, methodological and applied foundations for coordinating the goals and instruments of monetary and financial policies. The article concludes with the results obtained in the course of the research.

Comparative dynamics of housing finance: A cross-country analysis

This paper conducts a comparative analysis of housing finance markets in the United States, United Kingdom, and Germany, focusing on their responses to market changes and significant external shocks like the Global Financial Crisis (GFC) and the COVID-19 pandemic. It aims to clarify the complex relationship between market dynamics and housing finance structures, as well as the impact of major market shocks on these systems. The study uncovers subtle differences in responses, underscored by governmental interventions, levels of securitisation, and diverse funding models of mortgage originators. It also highlights how regulatory interventions influence variations across markets in specific circumstances such as the GFC and the pandemic. This research contributes valuable insights into the adaptability and resilience of housing finance systems against external shocks, enhancing our understanding of their strengths and vulnerabilities.

Realpolitik Returns to Berlin

Abstract “Never again” has been a mantra of German foreign policy since the end of World War II. Together with Ostpolitik it informs its approach toward the conflict in Ukraine. The discourse moved from “never again war originating from German soil” via justifying military interventions to prevent ethnic cleansing in the Balkans in 1998 with Joshka Fischer's injunction of “never again Auschwitz” to Olaf Scholz’ programmatic 2023 speech invoking “never again war of aggression in Europe.” This development is interpreted in the light of Realpolitik, providing the hard security means to defend the rule of law and democratic governance. External shocks have led Germany to expand its soft security arsenal as a civilian power and to embrace military means for liberal ends.

Ion transport across bilayer lipid membranes using a track-etched membrane filter

Bilayer lipid membranes (BLM) are widely employed to study the electrochemical behavior across cell membranes, particularly the ion transport in the presence of hydrophobic ions or ionophores. However, owing to the physical fragility of BLMs, they are readily broken down by external shocks, such as the applications of a potential difference, current, and vibration. Thus, in this study, a facile method for enhancing the physical stability of BLMs was developed using a track-etched membrane (TM). Physically stable BLMs were rapidly fabricated within the apertures of TM by dropping an n-decane solution containing lecithin and cholesterol on TM. Therefore, BLM formation was confirmed by capacitance measurement, and the estimated membrane thickness and mean capacitance were 3.5 ± 0.4 nm and 0.51 ± 0.05 μF cm−2, respectively. The applied membrane potential could be extended to ≥1.5 V, which is approximately 10 times higher than those of conventional BLMs, and the lifetime exceeded 40 min. The applicability of the fabricated BLM was verified by electrochemical measurements during ion transport.

External shock, stimulus policy and economic resilience of small and micro businesses: evidence from COVID-19 pandemic in China

External shock, stimulus policy and economic resilience of small and micro businesses: evidence from COVID-19 pandemic in China

Обзор подходов к оценке влияния новых вызовов на экономику и отдельные аспекты налогообложения

The article presents a review of publications devoted to the approaches to assessing the impact of external shocks on the economy in general and on certain aspects of taxation in particular. It considers both studies that assess this impact by analyzing macroeconomic indicators (less often — budget indicators) and building econometric models (mainly SVAR and VAR models are used in this case), and studies in which various authors propose their own indicators to assess this impact (most often they are either sustainability indicators or stress indicators). Special attention is paid to publications the subject of which is the impact of new challenges on the tax system. A separate block includes publications in which the above issues are considered in relation to the Russian tax system. These are not only scientific articles on the topic, but also documents of international organizations, such as the International Monetary Fund, OECD, World Bank, etc. In addition, the article provides an overview of publications of foreign scientific institutes and research centers. Sanctions imposed on the economy of the Russian Federation are a particular case of an external shock. Thus, a review of publications assessing the impact of new challenges (by the example of sanctions) on the tax system of the Russian Federation is presented. The authors conclude that to assess the impact of new challenges on the tax system it is more advisable to use indicators based on statistical tax reporting.

Import Dynamics in the Central and Eastern European Countries

The dynamics of imports in Central and Eastern European countries are closely related to foreign direct investment and government policies. By reducing tariff and non-tariff barriers to imports and promoting trade and investment liberalization, governments can attract foreign capital and diversify the range of products and services available in the host economy. This interconnection between imports and foreign direct investment can have a positive impact on economic development and global integration, depending on national strategies and policies. The article examines the dynamics of imports in Central and Eastern European countries in relation to foreign direct investment and government policies and aims to identify trends, import differences, and adjustments made by each country to improve their economic development. The research highlights the ongoing evolution of international trade in the region and advocates for a strategic approach to trade and economic policy for economic expansion and resilience to external shocks.

Extended flexible capacity planning methodology with flight network contribution to the airline fleet assignment problem

Flexible capacity planning is crucial for the airline industry due to the high fixed cost of assets, notably aircraft ownership, and the fluctuating demand, particularly in response to external shocks like pandemics and political crises. Following the negative consequences of such events on the financial positions of almost all airline companies, there is growing interest in developing more responsive capacity planning structures for cost efficiency in the airline industry. In this study, we present a sequential two-phase methodology for flexible capacity planning and airline fleet assignment considering the factors related to fleeting strategies, passenger demand behavior, and contribution of flights in the network. The first phase of the methodology generates potential scenarios to estimate the number of flights to the destinations, based on the data and the reports provided by two prominent associations in the aviation industry, which incorporate various country-related and airline-related factors, including population, income, routes, airports, and connectivity. The second phase identifies the required number of aircraft for each type within the fleet inventory, taking into account the aircraft utilization rates associated with each scenario. The fleet assignment problem is also reformulated to employ the objective of maximizing total profit of the entire flight network by introducing network contribution and nation/region-specific limitations in this phase. A real case study from Turkey is conducted to illustrate efficiency of the proposed methodology. We also present a comparative study to highlight the impact of network contribution and how fleet size affects the outcomes. We have observed that the inclusion of the network contribution aspect and country constraints has led to a significant improvement in financial indicators and connectivity. The results show that the methodology can effectively tackle challenges in airline transportation problems.

Aggregate productivity, economic fluctuations, and export orientation: Evidence from India

Understanding the cyclicality in aggregate productivity helps answer whether the economy allocates resources efficiently or not. The paper analyses the sources of aggregate productivity growth, such as direct efficiency gain within-plants, allocative efficiency gain, and gains due to entry and exit during economic fluctuations. In particular, we exploit the economic shock of the Great Recession to analyse the validity of the 'Cleansing’ or ‘Scarring’ effect of recession and 'Schumpeterian Darwinian Selection' for Indian manufacturing. The rise and fall of within-plant and net-entry effects during the economic fluctuations explains the pro-cyclicality of productivity growth. Plants in export-oriented industries are crucial in explaining the pro-cyclicality. Negative external shock to exporting sectors during 2008–09 shifted resources from more productive to less productive plants. The relatively productive exporters exited the markets following the global crisis, scarring the economy. Nonetheless, the positive effect from the net-entry exit of plants during the economic downturn makes the 'Schumpeterian approach of Darwinian Selection' valid.

Study on the influence of outlet diameter on the out-field pressure action characteristics of pulse detonation cleaning device

Pulse detonation cleaning technology is an efficient cleaning technology that is used inert shock waves generated by decoupling the detonation to remove ash and deposits. And it has great advantages in the field of furnace cleaning. In order to investigate the pressure distribution characteristics outside the detonation cleaning device and to explore the effect of the device outlet diameter on the pressure distribution characteristics, numerical simulations and experimental studies of pulse detonation cleaning device with using propane-air as the fuel has been carried out. The numerical simulation and experimental study on pulse detonation cleaning device by using propane-air as the fuel has been carried out. The results show that: as the propagation distance increases, there is a trend for the out-field arc shaped shock wave to transform into plane wave, and the applied pressure tends to be similar from the axis outward, and the time it acts on the ash accumulation surface also tends to be similar. When the external shock wave acts on the ash accumulation surface of the non-convective tube bundle, except for the positive reflection at the axial opposite position, which generates one pressure peak, the other positions mainly generate two pressure peaks due to oblique reflection. The ratio (diameter ratio) between the diameter of the tail outlet and the diameter of the detonation chamber is 1, the pressure peak of inert shock wave in the out-field is the largest. Increasing or decreasing the out diameter of the tail will weaken the action of the inert shock to different degrees. For diameter ratio smaller than 1, the pressure peak of the inert shock increases with increasing diameter ratio, while for diameter ratios larger than 1, decreases with increasing diameter ratio.

Real-time nowcasting the monthly unemployment rates with daily Google Trends data

Policymakers often have to make decisions based on incomplete economic data because of the usual delay in publishing official statistics. To circumvent this issue, researchers use data from Google Trends (GT) as an early indicator of economic performance. Such data have emerged in the literature as alternative and complementary predictors of macroeconomic outcomes, such as the unemployment rate, featuring readiness, public availability and no costs. This study deals with extensive daily GT data to develop a framework to nowcast monthly unemployment rates tailored to work with real-time data availability, resorting to Mixed Data Sampling (MIDAS) regressions. Portugal is chosen as a use case for the methodology since extracting GT data requires the selection of culturally dependent keywords. The nowcasting period spans 2019 to 2021, encompassing the time frame in which the coronavirus pandemic initiated. The findings indicate that using daily GT data with MIDAS provides timely and accurate insights into the unemployment rate, especially during the COVID-19 pandemic, showing accuracy gains even when compared to nowcasts obtained from typical monthly GT data via traditional ARMAX models.

Macroeconomic shocks, market uncertainty and speculative bubbles: a decomposition-based predictive model of Indian stock markets

PurposeStock markets are essential for households for wealth creation and for firms for raising financial resources for capacity expansion and growth. Market participants, therefore, need an understanding of stock price movements. Stock market indices and individual stock prices reflect the macroeconomic environment and are subject to external and internal shocks. It is important to disentangle the impact of macroeconomic shocks, market uncertainty and speculative elements and examine them separately for prediction. To aid households, firms and policymakers, the paper proposes a granular decomposition-based prediction framework for different time periods in India, characterized by different market states with varying degrees of uncertainty.Design/methodology/approachEnsemble empirical mode decomposition (EEMD) and fuzzy-C-means (FCM) clustering algorithms are used to decompose stock prices into short, medium and long-run components. Multiverse optimization (MVO) is used to combine extreme gradient boosting regression (XGBR), Facebook Prophet and support vector regression (SVR) for forecasting. Application of explainable artificial intelligence (XAI) helps identify feature contributions.FindingsWe find that historic volatility, expected market uncertainty, oscillators and macroeconomic variables explain different components of stock prices and their impact varies with the industry and the market state. The proposed framework yields efficient predictions even during the COVID-19 pandemic and the Russia–Ukraine war period. Efficiency measures indicate the robustness of the approach. Findings suggest that large-cap stocks are relatively more predictable.Research limitations/implicationsThe paper is on Indian stock markets. Future work will extend it to other stock markets and other financial products.Practical implicationsThe proposed methodology will be of practical use for traders, fund managers and financial advisors. Policymakers may find it useful for assessing the impact of macroeconomic shocks and reducing market volatility.Originality/valueDevelopment of a granular decomposition-based forecasting framework and separating the effects of explanatory variables in different time scales and macroeconomic periods.

Examining the nexus between oil shocks and sovereign credit risk: Multidimensional insights from major oil exporters

This paper investigates the frequency and quantile connectedness between oil market shocks and sovereign credit risk of seven major oil exporting countries: Saudi Arabia, Russia, the United Arab Emirates, Norway, the United States, Brazil, and Mexico. We apply the time-domain approach of Diebold & Yılmaz (2012), the frequency-domain approach of Baruník & Křehlík (2018), and the quantile-based connectedness approach of Ando et al. (2018). Empirical results indicate that (i) spillover effects vary significantly across different investment horizons, with Mexico, Brazil, and Saudi Arabia emerging as key transmitters of credit risk volatility, (ii) the United Arab Emirates consistently appears as a major net receiver of these risks, highlighting its vulnerability to external shocks, (iii) in both short-term and long-term horizon, demand shocks stand out as the most influential determinants of volatility in sovereign credit risks, and (iv) during periods of heightened credit risk perception, the exacerbating role of oil demand shocks becomes more pronounced..

Social media-based implosion of Silicon Valley Bank and its domino effect on bank stock indices: evidence from advanced machine and deep learning algorithms

Social media-driven speculations play a crucial role in triggering the collapse of the banking system and stock markets. In this paper, we investigate the effect of Twitter-based investor sentiment on the collapse of Silicon Valley Bank (SVB), the 16th largest bank in the US. Additionally, we examine the spillover effect of the social media-based investor sentiment and SVB collapse on the bank stock indices from twelve countries where Global Systemically Important Banks (G-SIBs) operate. Advanced machine and deep learning models are employed to model the social media-based investors’ sentiment regarding SVB implosion and its spillover effect on the G-SIBs’ bank stock indices. Our results reveal that social media-based negative investors’ sentiment played an important role in SVB implosion. Our results further show that the negative investors’ sentiment persisted, and its systemic shock was transmitted to the G-SIBs bank stock indices. Importantly, our results provide a lead and lag relationship between investors’ sentiment and returns of G-SIBs bank stock indices. The findings of this study offer crucial insights for policymakers to consider the external shocks associated with social media-based investors’ sentiment when devising policies related to bank runs, thus helping to prevent future financial crises and cross-border contagion.

Экологическая готовность промышленных компаний в Республике Саха (Якутия) и влияние изменяющихся внешний условий на корпоративную экологическую политику.

The purpose of the work is to identify assessments of the readiness of industrial enterprises of the Republic of Sakha (Yakutia) to the conditions of post-Covid external shocks and sanctions pressure, as well as the impact of these conditions on corporate environmental policy. As a result of the study, an expert assessment was obtained on a fairly high level of environmental maturity of industrial enterprises of the Republic of Sakha (Yakutia), expressed in the presence of environmental management systems, not a high level of adaptation to crisis conditions associated with the uncertainty of the external environment and the delayed reaction of environmental management, not the uncertainty of the external environment. The reaction to uncertainty regarding changes in corporate environmental policy is associated with the postponement and reduction of the volume of implementation of environmental activities, and as adaptation measures, a softening of the environmental industrial policy of the Russian Federation is expected.

Explaining the Dynamics of Transition to an Integrated WEF System: Two Cases of Irrigated Agriculture in Oregon, USA

In recent years, the integrated Water-Energy-Food (WEF) Nexus approach has gained traction as a more effective way to manage these interdependent and essential resources. A growing number of traditional food and water irrigation systems in Oregon, USA are transitioning to modernized, holistic, and sustainable Hydro-Irrigation-Restoration Systems that embrace the WEF Nexus approach (Weber 2017). The question is: what factors explain the successful transition? Two cases of irrigation modernization in Hood River, Oregon demonstrate that system transitions follow a pattern of socio-technical change wherein four structural factors are key: economic incentives, changing values expressed in regulations, technological innovation, and external shocks (e.g., major disasters). Yet, while the structural variables associated with the social-technical change approach are necessary for explaining the transitions to new WEF systems in Hood River, they are not sufficient. The case studies display the crucial importance of individual agency, or the actor dynamics capable of enabling or hindering system transformations (see Van Driel and Schot 2005, 54). Chief among these “agency” factors are (1) facilitative, visionary, trust-worthy leadership, (2) the cultivation of trust and collaborative problem-solving capacity, (3) the willingness to embrace risk and trade short-term costs for the potential of long term gains (e.g., low discount rates), and (4) the adoption of a new set of ideas, or shared norms, governing decision-making which embraced the idea that an integrated, modernized system could simultaneously promote economic, environmental, and energy sustainability.

The [formula omitted]-logistic growth model. Qualitative and quantitative dynamics

The κ-exponential function, representing a generalization of the exponential function, has been firstly introduced in physics, and, then, it has been considered in a noteworthy number of fields because of its ability to take rare events into account. Among the possible applications of this function, one of particular interest is in economics in which rare events may consist in natural disasters, such as earthquakes that reduce the supply of capital, or epidemics or other external shocks influencing the supply of intermediate inputs, human or physical capital. Starting from the κ-exponential function, the κ-logistic function, which is a generalization of the sigmoidal function, can be obtained and used to describe production functions in a unique setting to take into account (1) several shapes usually considered in economics (i.e. concave and non-concave production functions), (2) economies at different development levels, and, (3) the possible occurrence of rare events. In this paper, we investigate the economic growth model as proposed by Böhm and Kaas (2000), wherein the production function utilizes the κ-logistic function. We provide theoretical results confirmed by extensive computational experiments and in line with economic literature showing that a poverty trap may emerge together with fluctuations, multistability and complex dynamics.

How has the COVID-19 pandemic shaped behavior in crowdsourcing? The role of online labor market training

AbstractThe outbreak of the COVID-19 pandemic and the associated lockdown measures have been a shock to market systems worldwide, affecting both the supply and demand of labor. Intensified by this pandemic-driven recession, online labor markets are in many ways at the core of the economic and policy debates about their technological innovation, which could be used as a way of economic reform and recovery. In this work, we focus on crowdsourcing, which is a specific type of online labor. We apply a unique dataset of labor data to investigate the effects of online training, a policy that was provided to requesters by the platform during the COVID-19 period. Our findings suggest that workers indirectly finance on-the-job online training by accepting lower wages during the pandemic. By utilizing a difference-in-difference research design, we also provide causal evidence that online training results in lower job completion time and the probability of being discontinued. Our findings show that both employers and employees in our online labor context reacted to the pandemic by participating in online labor procedures with different risk strategies and labor approaches. Our findings provide key insights for several groups of crowdsourcing stakeholders, including policy-makers, platform owners, hiring managers, and workers. Managerial and practical implications in relation to how online labor markets react to external shocks are discussed.

Кризис на рынке удобрений и его влияние на продовольственную безопасность в странах Африки южнее Сахары

The stability of the fertilizer market plays a critical role in ensuring food security, particularly in regions heavily reliant on agriculture such as Sub-Saharan Africa. However, the recent fertilizer market crisis has underscored the vulnerability of African countries to external shocks, exacerbating existing challenges related to food production and access. The article examines the assessment of the role of the fertilizer market crisis of 2022–2023 in exacerbating the food security situation in Sub-Saharan African countries. The findings suggest that the increase in the number of people experiencing malnutrition, reaching 262 million individuals (23 % of the population) in 2022 in Sub-Saharan Africa, is largely attributed to the inability to enhance domestic agricultural production. In turn, events in the fertilizer market, leading to a reduction in available supply and price hikes in the global market, hindered African farmers from increasing fertilizer application to boost crop yields. The article also conducts an analysis of factors that prevented African countries from adapting to the fertilizer market crisis, drawing comparisons with developed nations. Addressing the fertilizer market crisis in Sub-Saharan Africa requires a multi-faceted approach that involves improving domestic fertilizer production capacity, enhancing agricultural extension services, and promoting sustainable farming practices. Furthermore, there is a need for increased collaboration between governments, international organizations, and the private sector to develop long-term solutions that strengthen food security and resilience in the face of future challenges.