US Interest Research Articles

The US, Strategic Environment in the South Caucasus and Armenia: A Sight on the Future

The political, economic and geopolitical presence of the United States in the South Caucasus dates back at least a century, when, after the First World War, they emerged as a global political, economic and geopolitical actor. Cooperation has increased dramatically since 1991, when the three countries gained independence after the collapse of the Soviet Union. From this perspective, the article focuses on identifying core US interests in Eurasia and attempting to define US strategic interests and priorities with respect to the region. In this sense, the main research question is how the US relations with the South Caucasus and in particular with Armenia will look like in the future, especially within the current stage of the Ukrainian conflict that began after February 2022. The article simulates and tests four scenarios for future US engagement with the South Caucasus. Based on these scenarios, it is argued that, despite the lack of strategic interests in the region, the Ukrainian conflict prompted the US to increase its presence in the South Caucasus. This study is based on strategic documents, including the US National Security Strategy (2017), the Interim National Security Strategic Guidance of 2021, other white papers, reports, and studies of US foreign policy priorities.

The multifaceted impact of US trade policy on financial markets

SummaryWe study the multifaceted effects of trade policy shocks on financial markets using a structural vector autoregression identified via event day heteroskedasticity. We find that restrictive US trade policy shocks affect US and international stock prices heterogeneously, but generally negatively. They increase market uncertainty, lower US interest rates, and lead to an appreciation of the US dollar. The effects are significant for several weeks or quarters. Decomposing the trade policy shocks further suggests that trade policy uncertainty dominates tariff level effects. Chinese trade policy shocks against the United States further hurt US stocks.

Impact of Shanghai Cooperation Organization on the US Interests in Central Asia

The US is increasingly interested in Central Asia. Yet it remains an imperiled area because that confronts numerous routine issues arising from global power and the hard enthusiasm of terrorist groups in trying to overthrow domestic authoritarian governments. Today, the interests of the USA are below contest in three defined ways. Firstly, Russia and China have established a matched movement to expel the USA’s deliberate attendance from Central Asia. Secondly, the USA has organized “color revolutions” with the title of democratic reforms to throw out those governments from a power whose interests are allied with China and Russia in the region. In the wake of the Ukraine-Russia war, Regional powers are also joining/ backing the SCO, which is the third major challenge for the US. Therefore, the USA faces concurrent and several military, political, economic, and ideological challenges to its interests. For a decade, the Shanghai Cooperation Organization has also emerged in the worldwide arena as a substitute method for consensus-building in central Asia. So far, this geopolitical discussion neglects the massive effect of the Shanghai Cooperation Organization on its main region.

The rise in foreign currency bonds: The role of US monetary policy and capital controls

An unintended consequence of loose US monetary policy is the increase in currency risk exposure abroad. Using firm-level data on corporate bond issuances in 16 emerging market economies (EMEs) between 2003 and 2017, we find that EME companies are more likely to issue bonds in foreign currency when US interest rates are low. This effect is driven by non-exporters. Interestingly, capital controls on bond inflows significantly decrease the likelihood of issuing in foreign currency and can even eliminate the adverse impact of low US interest rates. In contrast, macroprudential foreign exchange regulations increase foreign currency issuances among nonfinancial companies.

PUSH AND PULL FACTORS DETERMINANTS OF FOREIGN DIRECT INVESTMENT TO NIGERIA: AN AUTOREGRESSIVE DISTRIBUTED LAG (ARDL) APPROACH

Purpose: Foreign direct investment is sensitive to domestic and external factors. The sensitivity to external factors means changes in global productivity levels (financial sentiments) may produce a substantial impact on FDI in Nigeria. The study is aimed at examining the pull and push factor determinants of foreign direct investment to Nigeria.
 Methods: The study adopted the Autoregressive Distributed Lag (ARDL) Approach to achieve the long and short-run determinants. The study uses secondary data sets from 1986 to 2018 with the application of Eviews 9 output to analyse data.
 Results: Findings from the ARDL model shows that foreign direct investment is sensitive to domestic (depreciation of exchange rate and interest rate) and external factors (US gross domestic product and US interest rate) both in the long and short run. The study concludes that foreign direct investment into Nigeria is due to ‘pull’ factors rather than ‘push’ factors.
 Implications: The implication of the study showed that foreign direct investment flow surges cannot be denied in determining the macroeconomic performance in Nigeria. The choice of FDI seems to future more in Nigeria’s economy. Understanding of the factors that drives FDI can inform efforts by government and expert on how to attract and manage FDI to the Nigerian economy.
 Conclusion: The study concluded that the flutuation in FDI is determined by both domestic and global factors. These factors had differential impact on FDI volatility. Consequently, the study recommended the need for the prudent management of these determinants to ensure reduced volatilities which are essential for the growth of the domestic economic particularly at this time when the Nigerian economy is in great need of foreign investment owing to the continuous fall in international crude oil price and the recession facing the economic.

International currency substitution and the demand for money in the euro area

Using quarterly data for the period from 1983:Q1 until 2019:Q4, we identify a stable money demand relationship for the euro area M3, with the US long-term interest rate as a regressor, together with the domestic interest rate and income. This specification is consistent with the open economy liquidity services approach to money demand, in light of which the ownership of money is separate from portfolio decisions. Our results suggest international currency substitution, pointing to interdependency of monetary policies, even in a context of floating exchange rates. In the short-run analysis, we find that excess liquidity helps predict nominal money but not the price level. In general, our findings cast doubt on the usefulness of the information content of M3 to analyse prospective inflation in the euro area. • Using quarterly data, we identify a stable money demand function for the EA M3. • We find a significant influence of the US interest rate on the EA money demand. • Results point to interdependency of monetary policies, even under float. • We find that excess liquidity helps predict nominal money, but not the price level. • Our evidence casts doubt on the usefulness of M3 to analyse prospective inflation.

Study of the Global Economic Recession

Since 2020, the global economy and financial system have suffered the biggest demand and supply shock since the financial crisis in 2008 as the new pneumonia epidemic spread to almost all countries. Panic in international financial markets has been rising, and asset prices of stocks, bonds, currencies, commodities and other assets have fallen rapidly. This paper analyzes the impact of the epidemic on the global economic and financial system from different perspectives, including the supply chain, the Russia-Ukraine war, and the US interest rate hike. In this paper, we argue that since 2020, the "pandemic" of Newcastle pneumonia has caused a comprehensive impact on the manufacturing industry, service industry, public confidence, and social governance, and a liquidity crisis in the international financial markets. Whether the epidemic will evolve into a financial and economic crisis depends on the development of the epidemic and the effectiveness of preventive and control measures, on whether the epidemic will trigger corporate debt defaults and sovereign debt crises in some countries, and on whether a fall in oil prices or geopolitical conflicts will trigger financial and capital flow crises in emerging markets. Given the inevitable impact of the epidemic on the economic growth situation in various regions, the global economy is expected to fall into recession in the future.

EUR/USD Exchange Rate Characterization: Study of Events

This study aims to evaluate the impact of major and minor changes in the Euro Zone and US interest rates on the EUR/USD exchange rate between 1 January 1999 and 31 December 2020. Therefore, twelve events are analyzed in this period, five related to changes in the US interest rate, six related to changes in the European interest rate, and finally, a single event in which both interest rates undergo an equal variation on the same date. The event study methodology was used, which, through the calculation of abnormal returns, makes it possible to evaluate whether there was a repercussion of the events on the value of the EUR/USD exchange rate. This methodology is used in several studies related to capital markets. The obtained results prove that there are abnormal returns with statistical significance on the event days, and, on the days that follow, changes in the interest rates have an impact on the EUR/USD exchange rate; however, there is no clear direction of the asset after the events occur.

The Political Economy of American Exchange Rate Bill Voting: From the Perspective of RMB Appreciation

Abstract Under the theoretical framework of international trade political economy, this paper examines whether interest groups can dominate the voting of the US Exchange Rate Manipulation Act in 2015 from the perspective of RMB appreciation. Taking 100 senators as samples, this paper makes model estimation by using Full Information Maximum Likelihood Method (FIML), and quantitatively investigates the deep-seated driving factors behind the voting results of the US Exchange Rate Manipulation Act. The empirical results show that the influence of political donations from different interest groups on the voting behavior of parliamentarians is different. The political donations from American labor organization significantly affect the voting behavior of parliamentarians, but business groups and ideological organizations do not play a significant role in the voting results. In addition, senators’ personal characteristics affect the political donation of the bill to a certain extent, but do not affect the voting results. In the future, China needs to continuously pay attention to the latest progress of US exchange rate policy, correctly evaluate its impact on China’s economy, and maintain communication and coordination with important US interest groups to reduce the negative impact on related industries in China. JEL classification numbers: F14, F50, F31. Keywords: RMB Appreciation, Trade Protection, Bills Voting, Political Donation, Interest Group.

Effect of news and noise shocks of US monetary policy on economic fluctuations in emerging market economies

AbstractThis study investigates the effect of news and noise shocks of US monetary policy on economic fluctuations in emerging market economies. In the first part of our two‐step estimation method, the news and noise shocks of US monetary policy are estimated using dynamic structural vector autoregression identification. In the second step, the impact of the news and noise shocks on macro variables reflecting the business cycle (e.g., production, consumption, investment and trade balance) is examined using local projection. Our empirical results show no significant differences in the responses to both shocks at the early stage, when news and noise are not separable. However, when the monetary policy becomes known, emerging market economies enter a full‐scale recession with respect to a news shock of raised US interest rates. Meanwhile, emerging market economies enter an economic boom phase of the business cycle when the shock turns out to be noise. Fluctuations driven by noise are likely to incur greater costs than normal economic fluctuations because the former are out of sync with the fundamentals.

Geopolitics and Hong Kong as international financial centre: a dynamic IPE perspective

ABSTRACT This article examines the impact of US–China geopolitical tensions on Hong Kong as an IFC, and how Hong Kong is coping. Utilizing a dynamic IPE perspective, it details how Hong Kong officials, financial market actors and corporations have responded to the punitive US measures against Hong Kong and China in 2020 and 2021, measures that are tantamount to commercial and financial warfare on China and the city, but also that work against the interests of US corporates in Hong Kong. The analysis highlights Hong Kong’s competitive resiliency as an IFC, from 2019 to early-2022, and the sources of its resiliency.

Effects of US interest rate shocks in the emerging market economies: Evidence from panel structural VAR

We examine, using a monthly dataset from 2007 to 2020, the US interest rate shocks’ effects on exchange rates, broad money aggregates, and foreign exchange reserves in emerging market economies (EMEs) post global financial crisis. To evaluate the impact of unconventional monetary policy initiatives, we employ Wu-Xia’s shadow interest rates. There are two parts to the methodology. The first part focuses on the identification of the unanticipated US interest rate shock in a SVAR model. In the second part, we incorporate the US interest rate shock into the panel structural VAR to analyze its impact on 29 countries from various regions. A positive shock to US interest rates depreciates the exchange rate of EMEs against the US dollar. According to our findings, it results in a decline in the broad money aggregate and foreign exchange reserves. The findings are consistent across multiple EME regions.

A Comparative Analysis of the Biden Administration’s Indo-Pacific Strategy vs. the Trump Administration’s

In recent years the United States has placed the Indo-Pacific at the centre of its foreign policy and national security strategy. While the Trump administration introduced the United States’ first strategy for the Indo-Pacific, the administration fell short of implementing an effective policy that catered to the regional realities on the ground. The Biden administration has improved upon its predecessor’s shortcomings in the diplomatic domain but has yet to implement a comprehensive economic strategy for the region. This article compares the distinctive diplomatic, economic and security characteristics of the Trump and the Biden administrations’ Indo-Pacific strategies and argues that the latter administration crafted a more effective, albeit incomplete, strategy for advancing US interests.

Redefining Pakistan-US Relations in Post-Afghanistan Withdrawal Phase

Pak-US relationship has mostly been marred due to broken promises, disastrous misunderstandings, lack of trust, and exaggerated expectations from each other's policies. Pak-US engagement has always been absorbedly framed either to achieve short-term security-related goals or around the compulsions to meet common challenges, especially the US needs & interest in the broader regional environment. Concerning the geo-strategic environment, the relevance that the US accorded to Pakistan has always been restricted to Afghanistan, whether it was during the cold war, the Soviet Union's invasion of Afghanistan, or the post 9/ 11 US war on terror. The future of Pak-US relations in the post-US withdrawal from Afghanistan is full of uncertainty and the nature of US interest towards Pakistan has changed. The paper analyzes the historical transactional patterns of the relationship and compulsive factors, circumstances behind the US decision to alienate, abandon and impose economic and military sanctions on Pakistan, post-withdrawal complexities.

Social and environmental apparel practices and perceived value of “Made in the USA”

PurposeThis study aims to investigate the relationship between people’s socially and environmentally responsible apparel practices (SERAP) and valuing US made clothing, current perceptions of US made clothing and factors affecting apparel purchases.Design/methodology/approachAn online survey was completed by 502 US consumer aged 18-65. Five factors were identified representing responsible apparel practices and US made clothing. Inter-factor correlations were tested. People’s perceptions toward US made clothing were examined through perceived quality, purchase experience and intentions to pay premium prices.FindingsThere was a positive correlation between SERAP and valuing US made clothing. Perceived quality of US apparel influenced both actual purchase and intentions to pay higher prices. Availability and affordability were major purchase factors.Practical implicationsUS apparel companies that produce their products domestically may consider developing specific messaging that resonates with customers, taking advantage of the perception of high quality and being transparent with the cost of producing apparel domestically.Originality/valueThis study suggests domestically made apparel purchases as part of a move toward SERAP. Although previous studies have addressed consumer responsibility and sustainable businesses, the connection has been inconclusive. This study provides current data of renewed and growing interest in US made apparel and expands its value.

Internal and External Reasons for China’s One Belt, One Road Initiative

Over the past decades, China has managed to become one of the most developed countries in the world. Having strengthened its economy, China began to actively pursue a foreign policy, one of the instruments for the implementation of which was the One Belt, One Road initiative. Initially, the initiative was considered by the leadership of the PRC as a mechanism for solving internal problems, as well as a plan to promote relations with the countries of Southeast Asia. However, as it developed, the initiative began to acquire the features of a foreign policy strategy, the purpose of which is to provide China with a reliable connection with the world, capable of functioning even in the event of escalation of conflicts and US attempts to control communications connecting China with the world. According to the Chinese authorities, the global financial crisis of 2008, conflicts in the Middle East, terrorist attacks - all this indicates that global changes are ripe for the world. A system of international relations based on US interests is no longer in the interests of all mankind. The promotion of the One Belt, One Road initiative is seen in this context as a road map for the reform of the existing world order, the emergence of which is predetermined by the very course of history. In this article, we will look at the internal and external reasons for the launch of the One Belt, One Road initiative, a detailed analysis of which will help to understand the true intentions of the Chinese authorities, as well as to determine the place that, in their opinion, China should take in the world.

‘If You Can’t Beat ’em, Join ’em’: An Argument for US Support of and Participation in INSTEX

US policymakers have said little in response to the Instrument in Support of Trade Exchanges (INSTEX) and its efforts to seemingly undermine US economic sanctions by downplaying its significance and making a single threat of severing European access to the US financial system. Should INSTEX be feared? INSTEX, which currently has ten European members, has been marketed as a humanitarian mechanism largely directed toward Iran to preserve the Joint Comprehensive Plan of Action and mitigate the impact of US economic sanctions by helping to facilitate trade in medicines, medical devices, food, and other humanitarian goods. I argue that US efforts to quash or undermine INSTEX are counterproductive to US interests and US foreign policy and that the US should work collaboratively with Europe in both the development of INSTEX and, ultimately, through participation in it. I discuss how INSTEX’s commitment to Financial Action Task Force (FATF) principles makes it an important outlet through which the US can not only shape its development and implementation but also in helping to generate goodwill throughout the international community by permitting trade in humanitarian goods through reliable channels. Failure to address the development of this nascent special purpose vehicle has long-term implications for US foreign policy by weakening the effectiveness of economic sanctions and US financial dominance.

Իրանի հարկադրական արտաքին քաղաքականությունը Հարավային Կովկասում

Many Iranian experts and scholars believe that the influence of the US is eroding in the region. This argument is justified by the US withdrawal from Afghanistan, Iraq, and other parts of the Middle East. However, the US military withdrawal and redeployment from the region does not mean its influence will diminish since the Americans will pursue their policy through their proxies and allies. Hence, the Saudis, Israelis, and Turks will try to shape the US interest in the region by containing the Russian, Iranian and Chinese interests. Iranians, especially the conservatives, view the regional geopolitical and geo-economic developments through this (anti-Israeli and anti-American) prism. This is why Iranians directly intervened in Syria and Iraq since they saw the “Sunni-Islamist jihadism” as an “American-Zionist plot” to change the balance of power in the region and destabilize Iran. Tehran looks to the South Caucasus through the same prism. Although Tehran, diplomatically and militarily was not pro-active as its presence in the Middle East, however, this paper will highlight Iran’s limitations and “red lines” in the region, analyze them and ask why Iran shifted from passive to assertive diplomacy, and raise few recommendations to strengthen the Armenian-Iranian relations.

Impact of Macroeconomic Variables on Nifty Private Bank Index and Nifty PSU Index

This study covers the influence of Macroeconomic variables like Inflation rate, Exchange rate of Indian Rupee toward US Dollar and Interest rate on Nifty Private Bank Index and Nifty PSU Index. Data for a period of 10 years from 2012 to 2021 is collected and analysed using Correlation and Multiple Regression. The results of the study shows that Inflation rate is negatively correlated with both Nifty Private Bank Index and Nifty PSU Index; Exchange rate is positively correlated with Nifty Private Bank Index and is negatively correlated with Nifty PSU Index; Interest rate is negatively correlated with Nifty Private Bank Index and positively correlated with Nifty PSU Index. From the regression analysis it is understood that the Macroeconomic variables significantly impact the changes in both Nifty Private Bank Index and Nifty PSU Index.

Bantuan Luar Negeri sebagai Bentuk Implementasi Economic Persuasion Amerika Serikat ke Sudan

<p><em>The foreign aid provided by the United States in the Darfur’s conflict, Sudan has received attentions from the global community. This assistance reflected on the policy of economic persuasion as a number of the United States’ political and economic interests in Sudan. The US was assumed to be inconsistent. The US still committed to provide aids to Sudan whereas it imposed economic sanctions on Sudan. A wide variety of aids included humanitarian assistance, food, sanitation, technical assistance, conditional loans, grants, and so forth. This paper has used a descriptive qualitative approach, because this study only described the US interests behind a number of foreign aid’s distributions, when the US carried out economic sanctions against Sudan. The result of this study is that the US empowered foreign aid as a form of realization of economic persuasion, especially a structural economic linkage. Although the US enforced economic sanctions on Sudan, the US still distributed foreign aid to that country. The US had ambitions to obtain an access to energies such as oil and gas, as well as to maintain a political stability in the African region. The US played a role in minimizing the Darfur’s conflict by providing a range of foreign assistances not only to normalize diplomatic relations with Sudan, but also to maintain sustainable partnerships with among countries in an African region.</em></p>