Macroeconomic Policy Research Articles

How Do Household Coping Strategies Evolve With Increased Food Insecurity? An Examination of Nigeria's Food Price Shock of 2015–2018

ABSTRACTFaced with a significant devaluation of its currency and a surge in food prices, the Nigerian government prohibited the use of foreign currency for food imports. This essentially blocked the importation of numerous food items under the guise of stimulating the domestic output of these staples. Consequently, food prices in Nigeria increased despite a global decline in food prices, and the incidence and severity of food insecurity escalated. This study examines the changes in the types and severity of coping mechanisms for food insecurity resulting from the food price shock caused by the oil price crash, currency devaluation, and restrictions on foreign exchange. Nigeria's General Household Survey Panel data from 2012 and 2015, during periods of high oil prices, is compared with data from 2018 when oil prices had remained low, the currency had been devalued, and the treasury had been depleted. Alongside detailed descriptive statistics, logistic and hurdle regressions are employed for statistical analysis. Findings indicate a rise in the percentage of Nigerian households grappling with food insecurity from 2015 to 2018. During this period, 68.7% of households resorted to at least one coping mechanism, 31.8% adopted six or more coping strategies, and 43.2% resorted to severe coping strategies. The issue stems not primarily from natural disasters or conflicts but from a failure in macroeconomic and agricultural economic policies. Our findings confirm that these policies come at great cost, particularly to female‐headed households, single‐parent households, households headed by elderly people, and other vulnerable populations, pushing them deeper into food insecurity.

Analyzing the Impact of Fiscal and Monetary Policies on Income Distribution in Central Asian Economies

Abstract This study examines the impacts of macroeconomic policies (i.e. fiscal policy through government consumption spending and total tax revenue, and monetary policy through broad money and real interest rate) along with other regressors such as inflation, Gross Domestic Product (GDP) per capita, remittances, exchange rate, and financial development on income distribution in four Central Asian countries from 1995 to 2020. After conducting unit root tests, the Autoregressive Distributed Lag (ARDL)/Pooled Mean Group (PMG) approach was implemented for empirical analysis. The results show that both fiscal and monetary policies have positive and negative effects on income inequality. Moreover, inflation is found to increase income inequality, while financial development, higher levels of per capita income, and foreign remittances decrease inequality in the panel and individual country analyses. These findings suggest that coordinated policies, along with increased remittances and financial sector development, are needed to reduce income inequality.

The Macroeconomic Impact of Crude Oil Price Fluctuations in Nigeria

The main objective of the study was to determine the way fluctuations in the price of crude oil affected macroeconomic variables in Nigeria from 2000 Q1 to 2022 Q4. The data was analysed in the paper using Structural Vector Autoregressive (SVAR) models. According to the findings, Nigeria's current economic growth has been significantly impacted by lag GDP values. This indicates that economic growth in Nigeria was significantly impacted by one-period lag GDP by 3,791.7 units in the short-run and 7,430.4 units in the long-run. Also in the short-run, the current broad money supply was significantly impacted by both the one-period lag general price level (0.445 units) and the one-quarter lag broad money supply (757.7 units). According to the crude oil price fluctuation model, current crude oil price variations in Nigeria are significantly influenced by one-period lags in general price level (-64.9 units), crude oil price fluctuation (1,114.6 units), and fiscal budget deficits (0.65 units). All of the one-period lagged coefficients of macroeconomic variables, including real GDP, broad money supply, interest rates, general price level, inflation rates, and fiscal budget deficits, had a significant impact on current economic growth and broad money supply, respectively, as demonstrated by the long-run economic growth and broad money supply models. The real GDP's impulse response to fluctuations in crude oil prices fell during the first period, peaked during the second, and then increased to show a positive trend during the third. This study came to the conclusion that shocks or fluctuations in the price of crude oil are the main cause of macroeconomic policy instability in Nigeria. The study recommended that the government should control foreign exchange rate regimes, pursue expansionary monetary policy, general price level control and stabilisation measures.

The Impact of Tax Policy on the Attractiveness of Foreign Direct Investment (FDI): An Analysis of National Strategies and Economic Effects

In the context of globalization, the economic ties between countries are getting closer and closer, and capital flows are significantly stronger. Countries take measures to attract foreign direct investment (FDI), and among them, tax policy has a significant impact on the purpose of attracting foreign investment, as tax policy plays an important role in the country's macroeconomic policy. In this article, this paper will analyze the attractiveness of the tax policies adopted by FDI in recent years, and the impact of their tax policies on the economic effects of their respective countries, supported by the theories of internationalization, tax policy stability, and tax competition theory. Then, by summarizing and comparing the analysis, we can identify more attractive policies and analyze their reasons. Finally, it is concluded that tax policy plays a very important role in the development of the global economy, and countries can effectively attract foreign investment, promote economic growth and industrial upgrading by adjusting tax policies. However, due to the challenges of balancing attracting foreign investment with maintaining fair competition, tax base erosion and fiscal sustainability, countries need to improve policy transparency and stability, optimize the preferential tax structure, strengthen international tax cooperation and other measures to help their countries achieve higher quality development and bring higher economic benefits.

Analysis of Problems and Countermeasures in Chinese Stock Market

Chinas stock is one of the most popular trading platforms with high global attention, it plays an important role in Chinese economy and global economy. With the rapid development of Chinese economy, Chinas stock market has also achieved significant achievements. It not only provides a vital platform to finance, but also optimize resource allocation. Whats more, it decreases the investors risk of the investment, and makes it is possible for government to carry out macro-economic policies through market stock. it boosts the development of Chinas financial system, and increases the ability of the Chinas financial system to anti-risks. However, there are also some problems existing in Chinese stock market, for example, the less reasonable structure of investors, serious disadvantages in the small and medium-sized GEM market governance, and frequent problems occur in the stock market trading mechanism and exchange system. This paper will as these three problems basis of starting the topic, and put forward countermeasures and strategies, which will have significant role in solving the existing problems efficiently in Chinese stock market.

The impact of macroeconomic policy and supply shocks on sectoral output and the implications for policy

The impact of macroeconomic policy and supply shocks on sectoral output and the implications for policy

Managerial macroeconomic perception and systemic risk in China

This paper constructs a managerial macroeconomic perception index based on the textual financial disclosures and examines its impact on systemic risk in China. We reveal a significant positive relationship between managerial macroeconomic perception, particularly the forward-looking managerial macroeconomic perception, and bank systemic risk. Our study shows that managers with optimistic perception about macroeconomic conditions tend to engage in excessive risk-taking activities and increase the risk contagion among banks. Heterogeneous analyses suggest that the positive relationship between manager macroeconomic perception and systemic risk is more pronounced among banks that are non-state-owned, exclusively listed in A-shares, highly leveraged, or not considered systemically important. We also show that macroeconomic policy can mitigate the negative impact of managerial macroeconomic perception on systemic risk. These findings highlight the substantial role that managerial macroeconomic perception plays in shaping systemic risk within the banking sector.

The relationship between inflation and economic growth: Empirical evidence from Vietnam in 1996-2023

Together with the impact of the post-COVID-19 pandemic, the world economy has had many fluctuations, especially the global economic crisis, which has reduced economic growth and caused inflation to rise in many countries. However, the goal of high and sustainable economic growth along with low inflation is often the main goal of each country's macroeconomic policy. So, this study aims to determine the relationship between inflation and economic growth in Vietnam, in the period 1996-2023, to determine the inflation threshold and make effective recommendations. The regression will use the least squares method (OLS) with the Newey-West standard error. This study shows that inflation supports growth in the short term and harms growth in the long term, at a light level, but does not find a converse impact, which is economic growth affecting inflation. The relationship between economic growth and inflation is a long-term relationship. Simultaneously, the study also agrees that effective control of inflation is essential for economic growth in Vietnam by proposing some solutions.

RESEARCH OF PROCESSES OF TRANSFORMATION OF THE ROLE OF THE STATE IN REGULATING ECONOMIC PROCESSES: LOGICAL-HISTORICAL ANALYSIS

The article aims to analyze the evolution of views on the state's role in regulating economic processes using the methodological approach of combining the historical and logical, constructing an objective process of modifying the economic system and subjectivizing it within the framework of the concepts of mainstream economics. The conditions for the transformation of theoretical views based on the determination of the influence of the basic parameters of the economic system are studied, among which the primary attention is paid to the characteristics of the competitive environment. The dialectic of the evolution of theoretical visions is presented as a transition from the dominance of supporters of market self-regulation (classical political economy) to a significant expansion of the functions of the state with an emphasis on the pluralism of approaches to the recognition of the most effective strategies for the implementation of economic policy with the selection of personalized views on the optimal system of its instrumental content. The logic of forming a two-factor model of macroeconomic regulation of the market economy based on historical relativity is revealed. It is shown that the state's acquisition of the role of a social center is a consequence of the delegation of part of its functions by economic subjects in the pursuit of realizing the interests of both the monopoly sector (it was freed from the need to eliminate the structural disparities created by it), and the non-monopolist sector and consumers (they received guarantees of protection competitive features). The stages in the dominance of liberal doctrines and dirigisme policies in the economic theory and practice of the late 20th - early 21st centuries were studied. The main task of modernizing the content of macroeconomic policy in the conditions of transferring the problems of optimizing the distribution of resources to the supranational level, the erosion of state sovereignty is outlined, which consists of finding individual national trajectories of a combination of integration into global economic structures and justified economic nationalism.

Տնտեսական աճի ներառականությանը միտված հարկաբյուջետային քաղաքականության միջազգային փորձ / International experience with fiscal policies for inclusive economic growth

The challenge for macroeconomic policy is to integrate policies that support economic growth and create and expand equal opportunities to participate in and benefit from the economy. This includes policies to improve the functioning of labour markets, reduce discrimination, support equal access to education and skills, and increase economic and financial inclusion in all parts of society. The idea of inclusive economic development has been introduced into academic discourse in recent decades and has become one of the main guidelines for economic policy makers and implementers in many countries around the world. The policy of formation and redistribution of public revenues through the state budget is important from the point of view of overcoming the existing inequalities in society and solving the problems of inclusiveness. Therefore, it is important to activate public policy with fiscal policy instruments, to increase its effectiveness in the context of ensuring inclusiveness of economic growth, mitigating inequality in the distribution of income and national wealth. This article studies and interprets the international experience and specific features of the application of fiscal policy oriented to the inclusiveness of economic growth, which is especially important from the point of view of identifying opportunities for its localisation in the Republic of Armenia. The conclusions drawn can be useful in the development of solutions aimed at increasing the inclusiveness of fiscal policy in the Republic of Armenia.

Integration of Stock Markets Between Indonesia and Its Major Trading Partners

The aim of this study is to analyse the integration between the emerging stock market of Indonesia and its major trading partners The Research methodology using VECM (Vector Error Correction Model) frameworks, (i.e., US, China, Japan, and Singapore) during the period of January 2016 to December 2018 with monthly data of the Indonesian stock market. The result of is this research found that the Indonesia stock market affected by its major trading partner in short term and long term. Indonesian market (JCI) responds to US market (DJIA) in positive (+) both in short run and long run. Meanwhile, Indonesian market (JCI) responds to Japan market (N225) in negative (-) only in the long run and not significant in the short run. However, China (SCI) and Singapore market (STI) are not significant in short run and long run. This research gap is to explain how the implications of the dynamics of one country's capital market affect the development of stock indexes in other countries. The benefits of this study are to explain the interaction between the dynamics of one capital market in a country and the capital markets of other countries so that appropriate macroeconomic policies can be formulated to anticipate economic effects that have the potential to cause uncertainty in the capital market. The implications of this study provide an overview of the relationship between the development of stock indexes in one country and another.

Poverty Alleviation in Nigeria: A Decadal Examination of Political Economic Forces and Implications for Future Initiatives, Spotlighting Microfinance Banks

This research investigates the impact of political-economic dynamics on the effectiveness of Poverty Reduction Strategy Papers (PRSPs) in Nigeria from 2004 to 2014, with a specific emphasis on the role played by Microfinance Banks (MFBs). Employing a phenomenological approach within the social constructionist tradition, the study utilizes both individual and focus group interviews, complemented by the analysis of official documents from Nigerian Federal Ministries and the Central Bank. The case selection centers on microcredit, an important component of the IMF country report for the specified period. The findings reveal that while the National Economic Empowerment and Development Strategy (NEEDS) exhibits positive macroeconomic indicators, its alignment with the empowerment framework is nuanced. The study highlights the challenges faced by microcredit users, emphasizing the high interest rates, lack of government support, and inadequacies in the regulatory framework. Microfinance policy, as outlined by the Central Bank of Nigeria, is critiqued for its failure to provide safety nets and welfare benefits for microcredit users, exacerbating their economic vulnerabilities. This research contributes a comprehensive understanding of the socio-economic impact of PRSPs in Nigeria, shedding light on the complex interplay between macroeconomic policies and micro-level dynamics. The policy recommendations provided aim to address these challenges, advocating for regulatory enhancements, targeted interventions, and inclusive economic growth to foster a more effective and equitable poverty reduction strategy.

Structural policies, FDI and economic stability effects on employment elasticities: case of emerging economies

The focus of this paper is centred on distinguishing between labour and product market policy ( Lmp and Pmp ) indicator’s role to empirically examine if foreign direct investment (FDI) and economic stability (GDPG volatility) effect the employment’s sensitivity to output fluctuations in 44 countries from Africa and Middle East Area over the period of 2000–2017. To address this objective, in the first step we provide by OLS the cross-sectional employment elasticities. Then, unlike previous studies, which are based only on linear specifications, this paper propose different nonlinear specifications to assess the floating marginal effect of the structural indicators. In a third step, each augmented nonlinear model is used to deduce the role of macroeconomic indicators. Based on U- or N-shaped floating marginal effect of only a single structural labour or product market policy ( Lmp or Pmp ), the Lmp indicator is found to have the important increasing impact on employment elasticities which depends on the initial policy condition. Based on augmented cubic model, to maximise employment responsiveness, structural policies have to be complemented by macroeconomic stability policies. Furthermore, the estimations confirm that FDI triggers aggregate employment elasticities and then employment follows the FDI promotions.

Empirical Analysis of the Macroeconomic Drivers of Banking Industry Stability in Nigeria

The main purpose of this study is to determine the macroeconomic drivers of banking industry stability in Nigeria. The study employed Quantitative Research method using ex-post research design to analyse the impact of exchange rate, interest rate, inflation rate, economic growth rate, and unemployment rate on bank credit-asset ratio from 1991 to 2023. Based on preliminary estimations from the Phillips-Perron unit root and F-Bounds tests, the study employed the Autoregressive Distributed Lag (ARDL) technique to establish the following key findings. Macroeconomic variables collectively and significantly influence banking industry stability. Specifically, high economic growth rate, moderate inflation rate, and low unemployment rate are the core drivers of banking industry stability, while high interest rate and volatile exchange rate exert a significant negative influence on banking industry stability. Consequently, bankers and macroeconomic policymakers should collaborate to ensure that macroeconomic policy frameworks provide banks with the opportunities for capital mobilisation necessary to effectively perform their financial intermediation roles for the overall benefit of the economy. The study recommends balancing macroeconomic targets and bank stability through growth-inflation-employment targeting policies to improve households' loan repayment resilience and reduce the credit risk of Nigerian banks. Additionally, exchange rate stabilisation through government intervention is suggested to help banks hedge against asset and credit value loss due to exchange rate volatility.

Financial integration and economic growth in Africa

The main objective of this article is to assess the link between financial integration and economic growth in African countries during the period 1990-2017. To achieve this goal, we used a dynamic panel model using the generalized method of moments (GMM) in first difference with threshold effects on a sample of 29 African countries. The results of the estimates reveal, on the one hand, that the countries that benefit from the benefits of financial integration on economic growth are those with high trade and financial openness, high human capital, low inflation, democratic regime, and high public expenditure. On the other hand, these results indicate that financial integration is associated with a low probability of surviving a banking crisis in the countries studied. Thus, the governments of African countries must implement policies aimed at a progressive liberalization of trade and financial activities, coupled with the implementation of macroeconomic stability policies and the improvement of the quality of the institutional environment, which determines the impact of financial integration on economic growth.

Shock or empowerment? Artificial intelligence technology and corporate ESG performance

Artificial intelligence (AI) plays a significant role in realizing sustainable economic development. This paper uses the textual content of annual reports of listed companies to count 73 words frequencies related to AI and construct AI indicators through precise vocabulary. It also examines how AI affects environment, social, and governance (ESG) performance at the firm level using unbalanced panel data of Chinese listed firms from 2007 to 2022. The results indicate that the development of artificial intelligence has significantly improved the ESG performance of Chinese listed companies, and the conclusion still holds after a series of robustness tests. As a moderating variable, macroeconomic policy uncertainty reinforces the positive impact of AI on ESG performance. In terms of the impact mechanism, AI enhances firms’ ESG performance by increasing firms’ total factor productivity and R&D expenditures. The results of heterogeneity analysis show that AI has a significant positive impact on the ESG performance of non-state-owned firms, firms with executives without overseas backgrounds, and technology and capital-intensive firms. Compared with the western region, AI in the eastern and central regions has a more significant improvement effect on ESG performance. Our study deepens the knowledge and understanding of the role played by AI in the green development process at the micro level. It provides valuable suggestions and reflections for promoting AI development at the micro-enterprise level.

Monetary Policy Effectiveness under the Ultra‐Low Interest Rate Environment: Evidence from Yield Curve Dynamics in Japan

I examine the effectiveness of monetary policy under the ultra‐low interest rate environment in Japan through the lens of yield curve dynamics. To that end, I employ the dynamic Nelson–Siegel model with time‐varying parameters, thereby computing indicators for tracing monetary easing effects. I show that the estimation performance of the yield curve models is sufficiently improved even under the ultra‐low interest rate environment by extending the dynamic Nelson–Siegel model to allow a loading parameter to vary over time, in addition to three factors of yield curve dynamics: level, slope, and curvature. However, I also demonstrate that the identification of the level and loading parameters is critical in assessing monetary policy effects. I reveal that monetary easing effects under the Quantitative and Qualitative Monetary Easing (QQE) are produced by flattening the yield curve in the ultra‐long‐term maturity zone over 10 years, while monetary easing effects from maturities shorter than ten years remain almost unchanged. Monetary policy fails to produce sufficient monetary easing effects within the time frame of the standard macroeconomic stabilization policy, even with the full‐fledged implementation of unconventional monetary policy measures under the ultra‐low interest rate environment in Japan.

The Emission-Reduction Effect of Green Demand Preference in Carbon Market and Macro-Environmental Policy: A DSGE Approach

Along with the new stage of prevention and control of the COVID-19 pandemic and the vision and goals of combatting climate change, the challenges of the transition to a green economy have become more severe. The need for green recovery of the economy, stability and security of energy production and consumption, and the coordination of low-carbon transformation and socio-economic development has become increasingly urgent. This paper proposes a new theoretical framework to study the effect of carbon emission reduction on the mutual application of the carbon market, fiscal policy and monetary policy under the non-homothetic preference of energy product consumption. By constructing an environmental dynamic stochastic general equilibrium (E-DSGE) model with residents’ non-homothetic preferences, this paper finds that coordinating the carbon market and macroeconomic policies can achieve economic and environmental goals. However, the transmission paths for each are different. The carbon market influences producers’ abatement efforts and costs through carbon prices. Monetary policy controls carbon emissions by adjusting interest rates, while fiscal policy controls carbon emissions by adjusting total social demand. Improving non-homothetic preferences will amplify business cycle fluctuations caused by exogenous shocks, thus assuming the role of a “financial accelerator”. Further research shows that non-homothetic preferences influence the heterogeneity of different policy mixes. Finally, this paper discovers that the welfare effects, the relative size and difference of long-term and short-term effects resulting from the different policy mixes, also depend on the level of non-homothetic preferences. The intertemporal substitution mechanism due to the improvement of non-homothetic preferences endows low-carbon production with “option” characteristics. Our study reveals the role of non-homothetic preferences on the effectiveness of policy implementation. It highlights the importance of matching monetary and fiscal policies with the carbon market based on the consumption and production side. It provides ideas for policy practice to achieve the goal of “dual carbon” and promoting coordinated socio-economic development.

Rethinking urban spatial planning and industrial development approaches in Ethiopia: bridging gaps for better outcomes

Urbanization is occurring at an unprecedented rate in developing countries like Ethiopia, especially with the rapid growth of industrialization. However, this urbanization and industrial development surge puts immense pressure on preparing and implementing city spatial plans. Urban spatial planning plays a crucial role in shaping the development of cities, aiming to create livable and sustainable urban development. The plan-making process and its subsequent implementation often encounter challenges that hinder the realization of planned objectives. Galan and Dukem, cities near Addis Ababa’s capital, have seen substantial industrial investment in recent decades. This article explores the challenges associated with urban spatial planning and industrial development while proposing alternative approaches. The paper relies on information gathered from primary and secondary sources, including expert surveys and key informants’ interviews. The research highlights that industrial developments have led to significant and uncontrolled changes in urban land use and urbanization in the study areas. Due to the lack of clear planning guidelines and institutional capacity, the study cities are experiencing haphazard development without effective urban spatial plans. Proximity to Addis Ababa has driven the urbanization process through increased investments. The article contends that effective management of urbanization and industrialization can create enjoyable living conditions and foster job growth. Macroeconomic policies, including industrial policies, should pay attention to spatial elements and prevent policy-making processes that are “space-blind”. This, however, requires clairvoyance and a high level of expertise, integrating inputs from advocacy planning and community participation to bridge gaps and ensure effective urban spatial plans and industrialization processes.

China’s GDP-at-Risk: Real-Time Monitoring, Risk Tracing, and Macroeconomic Policy Effects

Timely monitoring GDP-at-risk and tracing economic downside risk sources can help establish effective risk warning and prevention systems. This study constructs a probability distribution for China’s economic growth with skewness determined by a multidimensional predictor information set of macro fundamentals. Such a treatment allows us to identify changing drivers of economic downside risks during monitoring GDP-at-risk’s dynamic evolutionary path. We also employ a time-varying parameter vector autoregression model with random volatility to explore the heterogeneous impacts of different macroeconomic policy instruments on economic slowdowns. Our results provide empirical support for macroeconomic management and policy formulation in emerging markets. We reach three conclusions. First, the dynamics of GDP-at-risk exhibit significant event-driven characteristics, and economic downside risk increases significantly under the influence of extreme events. Moreover, the probability distribution of economic growth is asymmetric--as the downside risk of the economy increases, its upside potential increases disproportionately. Second, the time-varying risk trace of GDP-at-risk shows that the contribution of financial conditions and local government debt to economic downside risk declines. The importance of the risk-driving role of housing price growth gradually increases, suggesting that China’s property prices can provide more valuable early warning information about future growth risk, allowing time for precise preventive measures. Nevertheless, interest rates and inflation as risk divers have consistently minimal impacts. Third, the heterogeneity impulse response function of GDP-at-risk suggests that quantity-based monetary policy and fiscal policy can manage economic downside risks in the short run. In contrast, price-based monetary policy can curb economic overheating and reduce downside risks in the medium to long term. Therefore, the effect of price-based monetary policy is more sustainable in China.