Local Currency Research Articles

Identification and prioritization of risks for new entrants in automobile sector using Monte Carlo based approach

The automotive industry serves as a crucial support system for the economies of industrialized nations in their pursuit of international market competitiveness. Despite this industry's importance, most developing countries face the challenge of acquiring a reasonable economic position at the global level in the automotive sector for various reasons. The most salient reasons include inconsistent government policies, multiple taxes, investor insecurity, political instability, and currency devaluation. Identifying risks is crucial for a new entrant in the already-established automotive industry. The researchers have used multiple (qualitative and quantitative) techniques to identify and prioritize risks in setting up manufacturing plants. The efforts to tackle these identified risks are undertaken at the domestic and government levels to smoothen the establishment of industry. The risks are first identified, in the current study, by reviewing the previous literature and conducting interviews of the various stakeholders (automotive dealers, managers, and customers). Then this study uses Monte Carlo simulation (MCS) approach and develops a risk exposure (high, medium, or low) matrix for the automotive industry of Pakistan. The findings reveal that the depreciation of local currency against the foreign exchange, oligopoly nature of competition, and low market acceptability of new entrants due to their products' image are the most critical risks the automobile industry faces. These findings will help automotive research institutes in developing national policies that specifically aim to support new players in the automotive industry, particularly in addressing high-priority hazards. The results may also provide valuable insights for new participants seeking to identify and address the key challenges in the Pakistani automotive industry before entering it.

Dynamic cross-border payment preferences: A qualitative study of Indonesian expatriates in Thailand and Malaysia

Along with the development of global digitalization, international financial transactions are also advancing. In response, Indonesia (Bank Indonesia) collaborated with Malaysia and Thailand by launching Local Currency Settlement (LCS) integrated with Quick Response (QR) codes to reduce the use of dollars in cross-border transactions. Therefore, this study aims to investigate the Indonesian customer (Indonesian expatriates) preferences for payment methods provided by Bank Indonesia, specifically in the context of facilitating cross-border transactions. The number of research participants was 50 Indonesian expatriates (36 in Thailand, 14 in Malaysia), who were purposefully selected based on the criteria of being Indonesian traveling, studying, or residing in Thailand and Malaysia while maintaining Indonesian bank accounts. To identify these preferences, this study uses qualitative research using the Analytic Hierarchy Process (AHP) method. Based on the Hierarchical analysis, the results show that the main alternatives in payment method preference in Thailand and Malaysia show that Visa is still the most dominant in cross-border transactions. Across hierarchical criteria, including trust, speed, usability, installment flexibility, timing, and offering interest-free installment plans, Visa consistently outperformed QR Codes and Cash. Nonetheless, it is essential to highlight that QR Codes scored the highest in the criteria of Ease of Use in Malaysia. While in Thailand, QR codes achieved the highest score in terms of cost-effectiveness.

Systematic challenges and opportunities in insect monitoring: a Global South perspective.

Insect monitoring is pivotal for assessing biodiversity and informing conservation strategies. This study delves into the complex realm of insect monitoring in the Global South-world developing and least-developed countries as identified by the United Nations Conference on Trade and Development-highlighting challenges and proposing strategic solutions. An analysis of publications from 1990 to 2024 reveals an imbalance in research contributions between the Global North and South, highlighting disparities in entomological research and the scarcity of taxonomic expertise in the Global South. We discuss the socio-economic factors that exacerbate the issues, including funding disparities, challenges in collaboration, infrastructure deficits, information technology obstacles and the impact of local currency devaluation. In addition, we emphasize the crucial role of environmental factors in shaping insect diversity, particularly in tropical regions facing multiple challenges including climate change, urbanization, pollution and various anthropogenic activities. We also stress the need for entomologists to advocate for ecosystem services provided by insects in addressing environmental issues. To enhance monitoring capacity, we propose strategies such as community engagement, outreach programmes and cultural activities to instill biodiversity appreciation. Further, language inclusivity and social media use are emphasized for effective communication. More collaborations with Global North counterparts, particularly in areas of molecular biology and remote sensing, are suggested for technological advancements. In conclusion, advocating for these strategies-global collaborations, a diverse entomological community and the integration of transverse disciplines-aims to address challenges and foster inclusive, sustainable insect monitoring in the Global South, contributing significantly to biodiversity conservation and overall ecosystem health. This article is part of the theme issue 'Towards a toolkit for global insect biodiversity monitoring'.

지역화폐와 주민들의 퇴근길 경유 통행

Local currency is a type of voucher that can only be used at participating stores in the issuing district or province, issued by local governments in South Korea. We use the micro data from the Household Travel Survey in 2010 and 2016 to analyze how the introduction of local currency is related to changes in residents’ post-work traffic behavior using a Difference-in-Differences model. The results of the linear probability model show that the probability of stopbys when returning home from work increases for local residents following the implementation of local currency. The results of the Poisson regression show that the number of post-work stopbys decreases for local residents after local currency is implemented. This suggests that the traffic behavior of the residents changes from stopbying several places with a low occurrence to stopbying fewer places with a higher occurrence when returning home from work. This result is consistent with the explanation that the residents substitute out-of-town consumption with local consumption when local currency is introduced.

Ecological money and finance—upscaling local complementary currencies

This paper puts forth a new pathway to sustainable policy to upscale the transformative power of local complementary currencies. It first reviews the mechanisms by which complementary currencies re-embed monetary circulation within sustainability and biomimetic resilience criteria. It then puts forth a prototype policy pathway whereby private banks swap SDG impact certificates of their complementary currency loans against new reserve assets held at the Central Bank. It finally provides analytical insight on this prototype policy with a a new PK-SFC model comprising 106 accounting and behavioral equations. Simulations show that the prototype policy generates short-lived economic expansion, increases banking stability, and induces structural change through increased systemic capacity for evolution, resilience, and fitness for evolution. We finally discuss the practical implications of our results for sustainability policies.

Macroeconomic Environment and Stock Price Movement in Nigeria: An Evaluation of Fama’s Model of Efficient Market

The study examined the link between macroeconomic environmental dynamics and stock price movements in Nigeria using Fama’s model of efficient market approach. The macroeconomic climate posed issues for Nigerian stock markets. The buying power of local currency occasionally impacted unfavourable changes in the majority of macroeconomic variables. In this study, an ex post facto research design was used. The study looked at certain macroeconomic variables and the evolution of Nigerian stock prices between 1985 and 2021. To test the hypothesis, quantile regression estimates of the Fama-French three-factor coefficient were derived. The findings showed that the interest rate and stock price movement have a negative and negligible association. Additionally, a strong and positive correlation was observed between the exchange rate and changes in stock prices. It was recommended that in order to promote stock market activity and, by extension, enhance stock prices in Nigeria, a suitable monetary policy and a sufficient amount of money supply must be implemented. Also, well-diversified portfolios that mirror the entire market portfolio should be recommended to investors to protect themselves against stock price volatility. This would serve as a guide to protect them against shocks resulting from the macroeconomic environment.

Limiting money: redesigning the artifact that shapes modern people

AbstractThe transdisciplinary argument in this article is that the social and ecological unsustainability of modern, globalized capitalism ultimately derives from the design of its central artifact: what Polanyi called all- or general-purpose money. The notion of a singular measure of economic value is a peculiar cultural conception that is inherently at odds with physical reality, yet it pervades modern economic thought and practice as if it were immutable. To transcend the political impasse of economic globalization, a complementary national currency (CC) exclusively for local use could distinguish a sphere of exchange and special-purpose currency for basic needs from a global sphere of more remote exchange-values. To avoid the pitfalls and failures of earlier experiments with local currencies, such a CC would require the support of national authorities, the specified objective of sustainable consumption and production, and systematic efforts to provide citizens and entrepreneurs with ample incentives to utilize it. In combining the concept of a CC with that of a universal basic income (UBI), the reform would allow their advantages to complement each other, joining the generalized scale of UBI with the potential of politically influencing consumption patterns that is inherent in CC. An essential difference in relation to earlier experiments would be that the reach of the CC would not be defined in terms of the geographical location of retailers but in terms of the derivation, relative to the consumer, of the products and services into which it could be converted. Although no such system yet exists, this should not stop us from imagining its possibilities.

EGG PRICE RESPONSE TO INCREASE IN THE PRICES OF MAIZE AND SOYBEAN MEAL IN NIGERIA USING ECONOMETRIC TOOLS

Poultry egg productionn depends greatly on maize and soybean meal which affect the price of egg directly. Egg has been confirmed as one of the cheapest sources of protein. This study was aimed at estimating the relationship between egg price (EP) response to maize price (MP) and soybean meal price (SBMP) changes in Nigeria from 1990 to 2021Time series data in respect of SBMP (N/Kilogramme), MP (N /Kilogramme) and EP (N /Crate) in local currency were obtained. Augmented Dickey Fuller (ADF) test and, the Johansen cointegration technique were employed to test for the stationarity of the variables and the long-run relationship between variables, respectively. Result of the study shows the presence of one co integrating long run equilibrium relationship between the variables. The Vector Error Correction Model (VECM) estimates showed that MP and SBMP had a negative influence on egg production which consequently transform to high price of egg. Policies on reduction of MP and SBMP should be implemented so as to reduce the EP and make the produce more available to the Nigeria populace.

Private sector participation in infrastructure in emerging market and developing economies: Evolution, constraints, and policies

AbstractThe private sector can play important roles in closing the infrastructure investment gaps in emerging market and developing economies. However, private participation in emerging market and developing economies' infrastructure has declined over the past decade, reflecting persistent structural challenges and risks in the business environment. The decline was broad‐based and gained momentum following the 2013 taper tantrum and the end of the commodity super cycle. Incentivizing greater private sector participation in infrastructure will require policies to improve access to long‐term finance and to derisk the business environment. This will require efforts to strengthen the banking sector regulation and supervision, to improve the legal and contractual environment, and to limit information asymmetries. Deepening local financial and bond markets can make it possible for infrastructure bonds to be issued in local currencies and minimize potential currency mismatches. Improvements in the broader business environment can benefit from greater macroeconomic stability and stronger institutional frameworks. Policies that improve the quality of projects at entry, address currency risk, relax capital controls, and enable cost recovery pricing can unlock private sector participation in infrastructure financing. Strong government support, including ensuring regulatory quality, and providing well‐targeted guarantees and subsidies, can play a critical role.

Financial inclusion and monetary policy targets: Evidence from the ECOWAS countries

The study examines the impact of financial inclusion on monetary policy targets in the Economic Community of West African States for the period between 2004 and 2020. To capture how a shock to financial inclusion affects monetary policy targets in the ECOWAS sub-region, the study employs panel vector autoregression via the Generalized Method of Moments framework and uses the impulse response functions. The results show that in all ECOWAS countries, financial inclusion leads to an appreciation of the local currency, thereby improving the value of the exchange rate. However, it reduces the effectiveness of monetary policy. In particular, financial inclusion increases consumer prices and interest rates. Based on the findings, the study recommends, among others, the need for a single monetary policy in the ECOWAS sub-region to properly integrate its monetary policy framework in line with the economic and monetary integration policy of the West African Monetary Zone.

Asymmetric influence of fintech, oil prices, and precious metals on green growth of emerging seven countries

The resources and financial technology can be a powerful driver of sustainable economic growth and financial stability in emerging countries. Understanding the pivotal role behind gold, oil, and fintech in achieving green growth, this study intends to establish a cross-section association for Emerging (E-7) countries: Brazil, China, India, Indonesia, Mexico, Russia, and Turkey. The annual data of gold, silver, oil, fintech, and green growth from 1991 to 2022 has been used for empirical analysis. Method of Moment Quantile Regression (MMQR) has been employed to scrutinize the impact of said variables at several quantities of green growth. All variables are measured at the same unit using their respective local currency rates. The outcomes revealed that oil, gold, and silver prices influence the green growth of the E-7 economies. However, this negative impact validates the resource curse phenomenon for the sampled countries. Manifestly, fintech improves the conventional mode of the economic cycle in emerging countries and encourages green growth. The bidirectional causality is also observed between minerals, financial technology, and green growth. The study furnishes notable policies regarding mineral resource dependency as sustainable economic development is desirable for emerging nations.

Effects of Liberalizing the Exchange Rate on the Production Costs for Cotton and Sugar Beet (Case Study: the New Lands of Kafr El-Sheikh Governorate, Egypt)

The policy of decreasing the local currency is considered one of the most important policies to achieve external balance by increasing exports and reducing imports. The exchange rate of the Egyptian pound has deteriorated compared to the US dollar in light of the liberalization of the economy from about 2.1 LE/$ in 1990 to about 3.4 LE/$. in 2000, then to about 5.95 LE/$ in 2010, and exceeded LE 8 in 2015, reaching about 8.88 LE/$ in October 2016. The problem of the study is the emergence of positive and negative effects on the national economy in general and the agricultural sector in particular, and the problem of high prices has led to Local demand for goods, especially agricultural and food, and the occurrence of fluctuations in the volume of agricultural trade and the agricultural trade balance affect the national economy, The research generally aims to measure the impact of changing the exchange rate on the production requirements for cotton and sugar beet crops in Kafr El-Sheikh Governorate by achieving the following sub-objectives: studying the productive indicators for cotton and sugar beet crops in Egypt and Kafr El-Sheikh Governorate, studying the impact of liberalizing the exchange rate on agricultural production requirements in Kafr El-Sheikh Governorate, a study Productive problems of cotton and sugar beet crops in Kafr El-Sheikh Governorate The study relied on the descriptive and quantitative analytical method to estimate and explain economic phenomena related to the economic and social effects of liberalizing the exchange rate on production requirements, using the descriptive analysis method to describe the problem, in addition to the quantitative analysis method using some different measurements such as the general trend. Regarding data sources, the study relied mainly on field data by selecting a random sample in the Al-Hamoul center in Kafr El-Sheikh Governorate during the agricultural season 2022/2023. The most important results were an increase in the cost of an feddan of cotton from about LE 30,500 during the 2021/2022 production season to about LE 36,380 during the 2022/2023 production season, an increase of LE 5,880, representing about 16.16%. The highest increase was in the items of human labor costs, followed by the cost of pesticides, with percentages amounting to about 35.16%, 10.99%, and it was also shown that the costs of an feddan of sugar beets increased from about LE 20,601 during the 2021/2022 production season to about 28,245 pounds during the 2022/2023 production season, an increase of LE 7,644, representing about 27.06%, and that the highest increase was in the labor cost items. Human work is followed by automated work, with percentages of about 29.39% and 12.79%.

Impact of the Petroleum Tax System in Norway on the evolution of money market and bond yields. Considerations from the “atypical” year 2022

We call the year 2022 as “atypical” for the Norwegian budget, given the record revenue that was achieved due to increases in oil and gas prices. After the Russian invasion in Ukraine in 2022, and the subsequent oil cut deliveries from Russia, Norway became Europe's largest supplier of natural gas. The event lead to Norway generating the highest oil and gas tax revenue ever recorded by the Scandinavian government, with spill-over effects on the economy as a whole and on the money market liquidity and hence interest rates in particular.Given the benefit that the Scandinavian state ended up with, as a result of the war in Ukraine, some researchers even argue about its so-called status of “war profiteer”.Also, the Norwegian Krone (NOK) significantly benefited from the demand of local currency from the oil and gas companies, especially in October 2022, when the second yearly tax installment was due. Money market rates skyrocketed in that particular period, as the structural liquidity decreased, signaling the level of oil and gas taxes (and hence the market demand for NOK to pay them) was markedly beyond Norges Bank estimations.

The possibility of parallel market correction for exchange rate changes according to the ARDL and ARIMA models

The parallel market is an indicator of the prevailing economic situation in the country, and the exchange rate is one of the important tools that link the local economy to the global economy. It also plays an important role in influencing many variables in the Iraqi economy. Therefore, we find that the monetary authority represented by the Central Bank of Iraq is in a continuous monetary struggle across... Over the past few years and up to the present, we have sought to find accurate solutions to the problem of the difference between the official and parallel exchange rates.As the sustainable and growing difference between the two prices leaves the impression on the public of turning towards the foreign currency in their transactions and reducing transactions in the local currency, then the effect is greatly reflected in the Iraqi economic sectors, especially the commercial sector, causing large and sudden changes in price levels, which creates and stimulates a group of complicit traders and researchers. For their personal gains through illegal and fraudulent means, which harms the interests of society as a whole, and this is what we notice. Despite the attempts made by the Central Bank of Iraq, they did not significantly affect the reduction of the difference between the two prices. Therefore, this study attempted to find a predictive approach between the official and parallel exchange rates through the model. According to the standard forecast, we see that the parallel exchange rate will reach (1433.64) per US dollar in the future for the year 2027. Therefore, the Central Bank, the government, and members of society must use all measures necessary to address the imbalances in the exchange rate.

Informal Care Time and Costs of Dementia Care in Benin (West Africa)

Background: Dementia is a growing global health challenge, with significant socioeconomic implications. This study examined the informal care duration and related costs along with the total cost of care for older individuals with dementia in Benin, West Africa, providing insights into a region with limited dementia research. Methods: We conducted a cost-of-illness study in Benin. Both hospital and community recruitments were used to enroll adults aged ≥60 years and their primary caregivers. Structured questionnaire and validated tools were used to collect the demographic, clinical, healthcare resource utilization data as well as informal care duration. Replacement costs approach was performed to valuate informal care time. Official exchange rates from the World Bank were used to convert costs from local currency to purchasing power parities dollars (PPP$). Results: Data from 135 individuals with varying dementia stages revealed that dementia places substantial caregiving demands, predominantly on women who provide up to 8 h of daily care. In 2021, the mean annual cost of dementia care was estimated to be PPP$ 2,399.66 ± 2,057.07. Informal care represented a significant portion of dementia expenses, up to 92% of the total care costs in this study. Discussion: Policy interventions are urgently needed to address the dementia care challenges in Benin, especially because economic transitions and educational advancements may reduce the availability of informal caregivers. This emphasizes the vital role of informal caregivers and underscores the need of implementing dementia policies to support families facing the evolving challenges of dementia care.

Design of a CBDC in a Highly Dollarized Emerging Market Economy: The Case of Cambodia

Cambodia is one of the first two countries that adopted a retail central bank digital currency (CBDC) in October 2020. The design of the CBDC, called the Bakong, is a bit unique. We find a few design flaws that could potentially damage the central bank and then the Cambodian economy as a whole. We show some key statistics from our own survey in 2022 to support our arguments. The Bakong is offered in two currencies, the Khmer Riel (KHR) and the US dollar (USD), as Cambodia has been highly dollarized. We discuss theoretical predictions for the CBDC based on three kinds of substitutes: paper money, bank deposits, and foreign currencies. The third one is specific to the Bakong. Unlike a typical local currency CBDC, the USD Bakong may substitute for the KHR more. Moreover, it has been announced that the retail Bakong is legally not a liability of the central bank, but from the viewpoint of the underlying technology and economics, it is a central bank liability.

Trust in the central bank, financial literacy, and personal beliefs

This paper examines trust in the central bank across ten Central, Eastern and Southeastern European countries, using survey data collected from 61,398 individuals. Our results show that financially literate individuals are more likely to trust central banks. The association is stronger in countries with inflation targeting and flexible exchange rates regimes. Distrust in the central bank is associated with higher inflation expectations, savings in foreign currency or a preference for cash. Even when the sample is restricted to individuals with high inflation expectations, financial literacy remains associated with greater trust in the central bank. We find that trust in the central bank correlates negatively with financial inclusion but positively with wealth. Financially literate citizens express less trust in the government, which highlights that trust in the central bank is not entirely indicative of trust in the government. However, individuals who think that prices will rise and the local currency will depreciate distrust both the central bank and the government.

Analysis of the evolution of trends in exchange rates and interest rates in the Iraqi economy for the period )2004-2020(

Every economy in the world is characterized by its adoption of a specific interest rate, as well as its own exchange rate, according to its capabilities and degree of development. Therefore, these two variables are the tool for linking the value of goods, assets, and wages in the local markets, and their counterparts in foreign markets, and through them many relationships arise. International, the most important of which is the possibility of directing and transferring capital to one country and not another, as these two variables (interest rate, exchange rate) have a direct role in international transactions. Through the interaction of the interest rate and the exchange rate, we have an economic relationship that has a direct impact on the flow of foreign investments between countries. Therefore, these concepts and their relationship to the overall economy and what are the most prominent factors affecting them will be discussed. The study sought to demonstrate the impact of these two variables on the Iraqi economy through the research objective. The research aims to describe and analyze the paths of interest rates and exchange rates during the period (2004 - 2020) in order to determine their behavior during the research period. The most prominent conclusions reached by the research were that the exchange rate is considered a measure of international competitiveness, which exerts a major influence on the local economy, as does the interest rate, as it reflects the economic position in general, and commercial position in particular, because it represents the linking tool through which prices are determined. The relative proportion of local goods to foreign goods. That is, it is the linking tool through which the purchasing power of the local currency is determined against other foreign currencies, as the local currency is considered a commodity, and the foreign currency is its monetary price. The research concluded with a set of recommendations, the most important of which was in order to encourage investment instead of the Iraqi investor’s tendency to invest in foreign currencies, work must be done to activate the interest rate in Iraq

The role of local currency pricing in the international transmission effects of a government spending shock in an economy with vertical production linkage and foreign direct investment

By constructing a two-country model with asymmetry in price-setting behavior between home and foreign intermediate goods firms, vertical production and trade, and endogenous entry of three types of final goods firms, this paper examines the effects of a home government spending shock. In particular, it focuses on the role of asymmetry in price-setting behavior between home and foreign intermediate goods firms. A home government spending shock is shown to result in the entry of multinational firms from both countries, an increase in the aggregate outputs of both countries, a deterioration in home welfare, and an improvement in foreign welfare. In addition, with an increase in the ratio of home and/or foreign intermediate goods firms setting their export prices in the local currency, the effects of this shock on the entry of home multinational firms, the increase in aggregate foreign output, the deterioration in home welfare and the improvement in foreign welfare are shown to be weakened, while the effects of this shock on the entry of foreign multinational firms and the increase in aggregate home output are intensified.

Demand for U.S Banknotes at Home and Abroad: A Post-Covid Update

In principle, physical currency should be disappearing: payments are increasingly electronic, with new technologies emerging rapidly, and governments increasingly restrict large-denomination notes as a way to reduce crime and tax evasion. Nonetheless, demand for U.S. banknotes continues to grow, and consistently increases at times of crisis both within and outside the United States because dollar banknotes remain a desirable store of value and medium of exchange when local currency or bank deposits are inferior. Most recently, the COVID crisis resulted in historic increases in currency demand. After allowing for the effect of crises, U.S. banknote demand appears to be driven by the usual factors determining money demand, with no discernible downward trend. In this work, I review developments in demand for U.S. currency over the past few decades with a focus on developments since early 2020. In addition, I revisit the question of international demand: I present the raw data available for measuring international banknote flows and updates on indirect methods of estimating the stock of currency held abroad. These methods continue to indicate that a large share of U.S. currency is held abroad, especially in the $100 denomination. As shown earlier (Judson 2012, 2017), once a country or region begins using dollars, subsequent crises result in additional inflows: the dominant sources of international demand over recent decades are the countries and regions that were already heavy dollar users in the early to mid-1990s. While international demand for U.S. currency eased during the early 2000s as financial conditions improved, the abrupt return to strong international demand that began with the collapse of Lehman Brothers in 2008 has not slowed and reached new heights over 2020 and 2021. In contrast, however, the growth rate of demand for smaller denominations is slowing, perhaps indicating the first signs of declining domestic cash demand.