Economic Fundamentals Research Articles

Evolution and Impact of the Global Trade Network for Strategic Environmental Products

Amid global economic integration and changes in international patterns, strategic emerging industries have become the core driving force for high-quality economic development and industrial structure upgrading. Studying the structural evolution of the global trade network of strategic environmental products and its influence mechanism can help reveal the changes in the industrial division of labour and guide the formulation of green trade policies. Based on this, this paper analyses the evolution of trade networks of products in the fields including energy-saving technologies, new materials, renewable energy, etc., using social network analysis and an exponential random graph model with 50 countries around the world as the research object from 2010 to 2022. It is found that the global trade network of strategic environmental products has been affected by the decoupling of the international situation, and trade links have been reduced, forming three major independent groups, with a stable core-edge structure, and the United States, Germany, and China playing an important pivotal role. Factors such as economic fundamentals, R&D expenditures, and trade openness have a positive impact on network formation, while external factors and internal structural features of the network also influence network evolution.

UMA ANÁLISE SISTEMÁTICA SOBRE O FUNCIONAMENTO DA ECONOMIA E SUA RELAÇÃO COM A EVOLUÇÃO TECNOLÓGICA

The global economy is a dynamic system shaped by transactions, credit, and economic cycles, fundamental pillars for understanding its functioning. Although often seen as a technical field reserved for specialists, economics directly impacts the lives of all individuals. This article examines economic fundamentals and contextualizes them within a scenario profoundly transformed by the digital revolution and the Information Age. Technological evolution, especially the advancement of disruptive technologies and artificial intelligence (AI), plays a central role in this process, accelerating innovation, automating processes, and reconfiguring markets on a global scale. Additionally, the impact of blockchain and cryptocurrencies is analyzed as a driving force for decentralization and transparency in financial markets, while AI reshapes productive processes and personalizes financial services. The study also addresses the role of individuals in the new economy, emphasizing how access to digital and educational tools empowers economic agents to make more informed decisions and actively participate in innovative models, such as the sharing economy. These emerging technologies challenge traditional economic structures, drive productive efficiency, and create new opportunities while raising ethical and social questions. By connecting technological advancements to contemporary economic dynamics, the study provides a comprehensive analysis of the complex interactions between economics and technology.

Metaverse economics for tourism and hospitality: economic fundamentals in a semi-imaginary world

This study elaborates on the economics of the Metaverse in tourism and hospitality. It identifies the Metaverse stakeholders from a tourism perspective, namely: IT companies (infrastructure), IT companies (Metaverse presence), tourism and hospitality companies, other (non-tourism) companies, destination management organisations, tourists, and public authorities. The paper elaborates on the activities each stakeholder would be able to perform in the Metaverse and the associated revenue and costs. Based on this, the paper discusses the economic relationships between the stakeholders, their impacts on the financial performance of tourism and hospitality companies, and the potential economic externalities of the Metaverse. Theoretical, managerial and policy implications, limitations and future research directions are outlined as well.

Non-monetary news in Fed announcements: Evidence from the corporate bond market

When the Federal Reserve tightens monetary policy, do the prices of riskier assets fall relative to safer assets? Or, do investors interpret policy tightening as a signal that economic fundamentals are stronger than they previously believed, thus leading riskier assets to outperform? We present evidence that the latter of these two forces empirically dominates within the U.S. corporate bond market. Following an unanticipated monetary policy tightening, riskier corporate bonds outperform safer corporate bonds, demonstrating the importance of an informational, or non-monetary, component within monetary policy announcements.

Threads of Transformation: Prerequisites and Sustainable Economic Strategies for T&A-Catalyzed Industrialization in Emerging Nations

This paper examines the prerequisite conditions necessary for the textile and apparel (T&A) sector to catalyze industrialization and economic growth in emerging nations. Despite the simplicity of entry into the sector, characterized by its labor-intensive nature, minimal capital requirements, and limited technological expertise, its ability to sustain economic growth hinges on development past critical economic prerequisites. The central thesis argues that emerging nations must transition beyond rudimentary participation in global value chains (GVCs) to adopt economic development strategies in labor, infrastructure, capital, and trade that cultivate intrinsic value and sustain economic success. The four essential prerequisites are labor abundance and integration into GVCs, infrastructural investment, access to capital, and export-import trade policies. This paper explores how these economic fundamentals can develop into long-term growth drivers through human capital development, infrastructure investment and agglomeration economies, financial deepening, and trade diversification. Drawing on key economic models—including the Lewis Dual-Sector Model, Solow Growth Model, Heckscher-Ohlin Model, Marshallian externalities model, and Ricardian Trade Model—as well as case studies from emerging T&A markets and T&A-industrialized global superpowers, the paper underscores the role of industrial policy in fostering value-added production, innovation, and mitigating risks inherent to low-value manufacturing. Ultimately, this paper advocates for a shift from a "bare minimum" approach towards a value-driven economic strategy that supports competitive, self-sustaining T&A industries in emerging nations.

FX Comovements and Their Economic Determinants

Abstract This article models high- and low-frequency dynamic components of FX excess return correlations and examines their relationship with economic fundamentals. A factor pricing model with time-varying betas is used to characterize these correlations. From the low-frequency components, an aggregate comovement measure is derived. This component is countercyclical relative to the U.S., as it is negatively related to economic growth and positively related to both inflation volatility and economic policy uncertainty. Idiosyncratic volatilities also drive currency comovements. I examine their cross-sectional variation and find significant impacts of inflation levels, monetary policy variables, real output growth, trade, and capital flows.

The Performance of Indian Banking Share Market

The performance of the Indian banking share market reflects the sector's critical role in the country's economic growth and its response to macroeconomic and policy shifts. Over the years, banking stocks have emerged as key drivers of the equity market, influenced by economic cycles, reforms, and market sentiment. Indian banking stocks have shown strong performance due to increasing credit demand, digital transformation, and financial inclusion initiatives. Private sector banks, such as HDFC Bank and ICICI Bank, have consistently outperformed due to better asset quality, customer-centric strategies, and technology adoption. Public sector banks (PSBs), after struggling with high non-performing assets (NPAs), have seen improvements due to recapitalization and bad loan resolutions. The COVID-19 pandemic initially led to a decline in banking stocks due to fears of loan defaults and an economic slowdown. However, post-pandemic recovery, supported by fiscal stimulus and accommodative policies from the Reserve Bank of India (RBI), revitalized the sector. The Russia-Ukraine conflict, inflationary pressures, and global monetary tightening caused temporary volatility but did not derail the sector's long-term growth trajectory. Despite challenges such as rising interest rates and geopolitical uncertainties, Indian banks have displayed resilience. The sector’s strong fundamentals, improved balance sheets, and focus on innovation continue to attract domestic and foreign investors. In summary, the Indian banking share market has delivered robust performance, driven by a blend of strong economic fundamentals, sectoral reforms, and increasing investor confidence.

Non-standard monetary policy and ECB communication: Confusion or predictability?

Using a dataset of 273 press releases and introductory statements over the period 1999-2020, we investigate how the communication of the European Central Bank (ECB) influences the ability of market participants to predict its monetary decisions. We build four new indicators of communication intensity and frequency and measure predictability by decomposing the surprises on the variation of asset prices around monetary announcements into a “target” – which captures the standard dimension of monetary policy surprises – a “path” factor – which corresponds to the forward guidance dimension of monetary surprises – and a QE factor – which accounts for their quantitative easing dimension. Our findings reveal that the intensity and frequency of ECB communication reduce the surprise of market participants regarding non-standard dimensions of monetary policy. Moreover, the improvement of the predictability of monetary decisions is not achieved at the expense of greater confusion over standard monetary decisions. Additionally, the reduction in surprises operates through the information channel, by which monetary policy announcements transfer information about economic fundamentals from the central bank to market participants.

What Explains Differences in Minimum Wage Growth Between EU Member States?

Abstract There are considerable differences in minimum wage growth between EU member states with national minimum wages. Potential sources for these differences are discrepancies in economic fundamentals and institutional differences in how minimum wages are adjusted. Using a novel dataset based on macroeconomic data, institutional information on minimum wage setting and data on economic policy orientation and elections, the article tests whether growth differences in the minimum wage of 21 EU member states during the time period 2000 to 2020 can be explained by a catch-up dynamic in new EU member states, by different growth models of EU member states or by differences in the actors that are responsible for the adjustment of minimum wages. The results show that across the entire sample and irrespective of actors, minimum wage growth follows consumer price inflation and wage growth most closely. Higher than average minimum wage growth rates in EU member states stem from overshooting inflation during the period of EU accession, reducing wage inequality and increasing the Kaitz index. Actors also mattered for minimum wage growth. Adjustments by social partner consensus led to higher minimum wage growth than the benchmark of indexed minimum wages, introducing a distributive element to minimum wage adjustments.

Spatial linkages of positive feedback trading among the stock index futures markets

Positive feedback trading, a destabilizing sentiment-driven strategy, executes purchases after price upswings and vice versa, driving price away from economic fundamentals in the short term. We apply spatial econometric approach to investigate the linkages of positive feedback trading among the stock index futures markets of 27 countries from 2010 to 2023, and the empirical results reveal that there exist not only significant local effects but also strong spatial spillovers in positive feedback trading among these markets. Moreover, we find that the spatial linkages of positive feedback trading are stronger in an upward trend when market volatility exceeds 2 % but more pronounced in the downward trend when the market volatility exceeds 4 %. Overall, our empirical findings are of considerable concern for global investors who use index futures to hedge or exploit arbitrage opportunities, as well as inspiring for policymakers to manage financial derivatives trading risk.

Bubbles and crashes: A tale of quantiles

Periodically collapsing bubbles, if they exist, induce asymmetric dynamics in asset prices. In this article, I show that unit root quantile autoregressive models can approximate such dynamics by allowing the largest autoregressive root to take values below unity at low quantiles, which correspond to price crashes, and above unity at upper quantiles, that correspond to bubble expansions. On this basis, I employ two unit root tests based on quantile autoregressions to detect bubbles. Monte Carlo simulations suggest that the two tests have good size and power properties, and can outperform recursive least‐squares‐based tests. The merits of the two tests are further illustrated in three empirical applications that examine Bitcoin, US equity and US housing markets. In the empirical applications, special attention is given to the issue of controlling for economic fundamentals. The estimation results indicate the presence of asymmetric dynamics that closely match those of the simulated bubble processes.

Animal spirits at play? Firm sentiments and labour demand during the COVID‐19 pandemic

Economists have long theorized that sentiments, or spontaneous beliefs that are unjustified by economic fundamentals, are a driver of economic behaviours. In this study, I explore whether such sentiments influenced firms’ behaviours following the outbreak of COVID‐19. Using a sample of Italian firms, I observe that in the immediate aftermath of the outbreak, firms’ expectations about post‐COVID economic recovery largely reflected beliefs unexplained by their COVID‐related experiences. I then show that these beliefs were associated with firms’ labour market behaviours. Firms that displayed more pessimistic beliefs were more likely to implement cost‐cutting labour market measures, such as dismissing employees and reducing work hours.

Quenching thirst, easing debt: Improvement in water resource endowment alleviates local government debt risk

Water resources serve as a vital pillar sustaining both economic activities and daily life for residents. However, the uneven distribution of water resources across time and space has made water scarcity a bottleneck factor restricting the economic and social development of some regions. The implementation of the South-to-North Water Diversion project provides an excellent quasi-natural experiment for in-depth research on the effects and influence mechanism of cross-regional productive factor allocation on economic development. This study focuses on whether the water resource endowment improvement is reflected on the capital market. Based on the trading data of urban construction investment bonds from 2011 to 2016, we empirically examine how the South-to-North Water Diversion project affects the local government financing costs. The results indicate that the water diversion project significantly reduces the credit spread of urban construction investment bonds from the water-receiving areas. Further analysis reveals that the water diversion project improves the economic fundamentals and increases the land sales revenue of the water receiving cities, enhancing local governments' implicit guarantee ability for the financing platforms, thereby reducing the credit risks of urban construction investment bonds. This study not only enriches the research on the determinants of credit risk for urban construction investment bonds, but also provides empirical evidence from the capital market that the coordinated allocation of productive factors promotes regional balanced development. The conclusions imply that the government should actively advance the corresponding infrastructure construction and institutional arrangements to promote the flow and complementarity of economic elements between regions.

Dynamic Linkages Between U.S and Indian Equity Markets: An Empirical Study

In this study, we investigate the dynamic linkages between US and Indian equity markets by examining the daily Total Return Index values of NIFTY 50 and NASDAQ Composite over a decade ending October 2024. While the indices are not found to be cointegrated, suggesting potential long-term diversification benefits, they exhibit significant short-term correlations. Through various statistical analyses including regression, correlation, and variance tests, we find strong positive associations between the markets, with NASDAQ Composite movements explaining approximately 89% of variations in NIFTY 50 Total Return Index (TRI). The study reveals distinct volatility patterns, with the Indian market showing higher price fluctuations but stronger absolute growth compared to its US counterpart. Despite the strong correlation, both markets maintain unique characteristics influenced by their respective economic fundamentals. The findings demonstrate the evolving nature of market integration between developed and emerging economies, offering valuable insights for international portfolio diversification strategies and risk management in an increasingly interconnected global financial system. Keywords: Market Integration, Volatility Spillover, Portfolio Diversification, Stock Market Returns, Emerging Markets, Cross-market Correlation

FX resilience around the world: Fighting volatile cross-border capital flows

The volatility of cross-border capital flow (CF) has become higher in the last two decades. We use a sample of advanced and emerging market economies in the last two decades, with a focus on portfolio fund flows (equities and bonds). We find that the impact of portfolio CF volatility on exchange rate (FX) volatility is diminished in the short-term if specific economic fundamentals of the country are stronger, especially when these fundamentals pass certain threshold levels. The finding is controlled for different exchange rate regimes and the level of capital control. We further introduce an intuitive FX resilience measure that can be used to assess the stability of exchange rates in the context of heightened CF volatility. The decomposed FX resilience measure shows that the major contributing fundamentals to FX resilience are from the finance channel, including short-term interest rate, fiscal surplus, and financial development.

Jurisprudential Rulings Related To Digital Currencies And Linguistic Connotations/ الأحكام الفقهية المتعلقة بالعملات الرقمية ودلالاتها اللغوية

It aims to describe of the provisions of Islamic Sharia of encrypted digital currencies and its linguistic implications. Using a scientific jurisprudential methodology. It also discusses the search for the credibility of encrypted digital currencies that comply with the provisions of Islamic Sharia. The results that production is a basis in addition to the value that financing contributes and its linguistic implications, with the most prominent costs as high. Efficiency of Islamic financial financial services, and that the engineering of financial products is based on innovations and creating new solutions for financial management or reproducing the trader in traditional financial finance, with the participation of a strong entitlement basis and participation in many of the basis of effective management of Islamic finance systems, and a statement of the trading rule in those currencies, This is to achieve economic fundamentals and legal credibility and its linguistic implications.

Impact of asymmetry on exchange rate determination: The role of fundamentals

This study tries to take a new look at the exchange rate determination model by employing recent developments in time series estimation methodologies. For this purpose, the validity of the sticky price monetary exchange rate model has been searched for the Turkish lira / US dollar case. Estimation results considering both linear and non–linear modeling approaches highly support the theoretical foundations and reveal explicitly the asymmetric nature of the model. The paper infers that since the nominal exchange rate seems to be determined through the economic fundamentals, it should not be used as a policy tool with a long–term perspective.

Relationship between Public Expenditure and Inflation

Effective management of inflation remains one of the arduous tasks for managers of global economies. Inflation remains a macroeconomic indicator whose management outcomes have the potential to decide the electoral fortunes of elected governments and determine the purchasing power of household incomes. The purpose of this research was to assess how a steady increase in public expenditure could impact inflationary levels. The quantitative approach to scientific inquiry was adapted and used in the research. Specifically, the cross-sectional design formed the basis of the research. Data required for the research were obtained mainly from secondary sources. These included textbooks, peer-reviewed articles published in journals and grey literature. Other sources were Google Search Engine, including Netcials, MacroTrends, and databases of the World Bank and Bank of Ghana, among other significant sources. Respective data on Ghana’s annual GDP values from 1960 through 2020, annual inflation data from 1965 through 2020, changes in annual inflation rates from 1965 through 2020, and annual public expenditure values from 1983 through 2020 were collected and used in the research. Descriptive statistics and regression models were used to describe the research variables and to evaluate their behaviour over the stated time frame on inflation. The study revealed lax monetary policy as the root cause of consistently high inflationary rates over considerable periods and remained a strong contributor to the weak purchasing power of national fiat currencies. Further, relative price distortions away from their economic equilibrium are not healthy for the economy, while disinflationary policies adapted for implementation should be contingent on the causes of inflation. The single largest cost of inflation to consumers is the erosion of income, whereas higher tax rates are not the panacea for the challenges of mounting public expenditure and public debts. Respective inflation rates recorded in Ghana during 2012 (7.13%) and 1995 (59.46%) remained the lowest and highest from 1993 through 2020. Fiscal periods 2017 through 2020, 2009 through 2012, and 2005 through 2008 recorded the respective best (9.33%), second-best (11.46%) and third-best (13.32%) annual average inflation rates. With the exception of 2013 through 2016, the performance of the Ghanaian economy in relation to annual average inflationary control witnessed improvements during the second political and administrative terms compared to the first terms. However, the best annual average inflation rate over an eight-year period during the Fourth Republic was recorded from 2009 through 2016 (13.45%). Findings from the research revealed a positive and significant relationship between public expenditure and inflation (coefficient value = 1.2004653; p = 0.004, p < 0.05). Public expenditure accounted for 21.30% of the variation in inflation rate from 1983 through 2020. Results from the statistical output validated the significant influence of public expenditure on inflationary hikes, the need for monetary and fiscal policies related to inflation control to be strategically reviewed and strengthened to improve implementation outcomes, and the potential of rising public expenditure to undermine the rigidity and robustness of economic fundamentals through an unexpected surge in inflationary levels. The findings underscored the need for managers of various global economies to be keen on “economic” public expenditure to the neglect of profligate public expenditure, so the socio-economic derivatives from investments in public infrastructure would strongly add to, rather than subtract from, national development and growth efforts. The fundamental objective of MPC should be pivoted around three cardinal functions: the creation of maximum employment, moderation of long-term interest rates and ensuring price stability. Excessive public expenditure requires careful consideration by economies that whet their national development appetite with increased public infrastructure projects.

How Economic Theories Shape Chemical Technology Profile

The chemical industry, a cornerstone of the global economy essential for modern life, has raised significant concerns due to its unique nature. Chemical technologies often require high energy inputs, involving ecotoxic reagents thus assessing risks from an economic standpoint becomes complex. While the economic aspects of chemical technologies have been discussed and economic tools have been used to inform investment decisions in this field, many fundamental issues remain unexplored, such as the clear definition of chemical technology economics and the reasons for its importance. The primary contribution of this article is to synthesize insights into these fundamental issues and propose pathways for future research in chemical technology economics. This review is divided into two sections: the first provides an overview of the significance of economic factors in chemical technologies, and the second explores the fundamentals of economics and their application to chemical technology considerations. Our research underscores that economic theories significantly influence the profile of chemical technologies, viewing the chemical sector as a dual asset. First, the sector has a unique opportunity to lead the way in promoting sustainable economic development, and second, it can adopt economic behaviors that align with environmental and societal needs.

Impact of Monetary Policy on Stock Market Volatility

Purpose: The general objective of the study was to analyze the impact of monetary policy on stock market volatility. Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library. Findings: The findings reveal that there exists a contextual and methodological gap relating to the impact of monetary policy on stock market volatility. Preliminary empirical review revealed that monetary policy exerts significant influence on stock market volatility through various channels such as interest rate adjustments, quantitative easing, and forward guidance. It highlighted that the timing and clarity of policy announcements play a crucial role in shaping market reactions, with unexpected shifts often leading to heightened volatility. Global interconnectedness amplified these effects, underscoring the need for coordinated policy responses. Behavioral factors also contributed, as investor sentiment and market psychology could magnify volatility independently of economic fundamentals. Understanding these dynamics is crucial for effective policy design and market stability amidst evolving financial landscapes. Unique Contribution to Theory, Practice and Policy: Efficient Market Hypothesis (EMH, Rational Expectations Theory and Keynesian Economics may be used to anchor future studies on monetary policy on stock market volatility. Recommendations from the study included integrating behavioral finance models into economic frameworks to enhance predictive accuracy. It advocated for clearer and more consistent central bank communications to align market expectations with policy actions, reducing uncertainty-driven volatility. Collaborative efforts among central banks were emphasized to manage international spillovers and enhance global financial stability. Adaptive policy frameworks were proposed to respond flexibly to changing market conditions while promoting regulatory measures to safeguard against excessive risk-taking. These recommendations aimed to foster a stable financial environment supportive of sustainable economic growth and market confidence.