Macroeconomic Conditions Research Articles

Looking up the sky: unidentified aerial phenomena and macroeconomic attention

Attention to information plays a key role in recent macroeconomic analysis, yet measuring it is a challenging endeavor, most notably in terms of covering varying geographical levels and time frequencies. We propose a novel, unconventional measure of public attention, which addresses these limitations, based on individuals’ reports of Unidentified Aerial Phenomena (UAP). We document a surprising link between UAP sightings and macroeconomic conditions at the U.S.-county, state, and national levels. Controlling for weather conditions, and external influences, UAP sightings are more common in wealthier regions, but within regions the pattern is counter-cyclical. Thus, variations in attention to exceptional phenomena in the skies implicitly point at more general patterns of variations in the public attention. We further support this interpretation by a quasi-experimental design that utilizes plausibly exogenous regional variations in COVID-19 restrictions and find evidence for a causal effect on public attention. We further show that the UAP sightings measure is highly correlated with conventional measures of attention that are based on expectations data. We then apply our measure in the context of monetary policy transmission. We find that it can account for sizable regional heterogeneity in the response to monetary shocks. Higher levels of attention across U.S. regions, as well as within regions over the business cycle, substantially mitigate the effect of monetary policy.

DO MACROECONOMICS AND COMMODITIES PREDICT STOCK MARKET?

The stock market is a leading indicator and barometer of a nation’s economics and is influenced by a wide of factors, including macroeconomic conditions and global commodity prices. One of the consequential effects of the stock market is foreign exchange. International commodity prices, such as tin, may have an impact on the stock market too. Foreign exchange and the stock market are two significant components of the financial system, and the price of commodities has been a concern for industrialists, economists, and researchers in recent years. This research examines the effect of foreign exchange and commodities on the stock market, uses daily data from the beginning of January 2020 to the end of December 2023, and applies the Generalized Auto Regression Conditional Heterokedasticity (GARCH) method. The findings show that foreign exchange has a negative significant effect on the stock market, while commodities have a positive and significant effect on the stock

Employee tenure and macroeconomic conditions

ABSTRACT This analysis examines the effects of macroeconomic conditions on worker tenure using econometric hazard rates to model the annual probability that workers separate from (or leave) their employer. The models are estimated using longitudinal data from the National Longitudinal Survey of Youth on the weekly employment experiences of an older cohort of individuals born between 1957 and 1964 and surveyed from 1979 to 2019 and a younger cohort of individuals born between 1980 and 1984 and surveyed from 1997 to 2019. This analysis is one of the first to examine completed employment spells. Most tenures are short. Good economic conditions decrease the likelihood of leaving an employer in the first year or two on a job but increase the probability of leaving during subsequent years of tenure.

Macroeconomics As A Determinant Of Demand For Oil And Gas Exports And Non-oil And Gas In East Nusa Tenggara Region By Timor Leste

International trade is a key component in enhancing welfare and economic growth, as well as generating foreign exchange needed for development. East Nusa Tenggara (NTT), with its significant potential in the oil and gas, as well as non-oil and gas sectors, has considerable export opportunities to Timor Leste. However, the effectiveness of NTT's exports is heavily influenced by various macroeconomic factors, such as exchange rates, per capita income, and government spending in both Indonesia and Timor Leste. The variation in resources and production capacity in NTT offers opportunities to meet Timor Leste's demand, but changes in macroeconomic conditions play a critical role in determining the competitiveness of NTT's export products. This study employs a quantitative approach with multiple linear regression analysis to examine the impact of macroeconomic variables on the demand for oil and gas, as well as non-oil and gas exports from NTT to Timor Leste. The sample used consists of annual time series data from 2021 to 2023, including the Rupiah exchange rate against the US Dollar, Timor Leste's per capita income, and government spending in Timor Leste. The results show that the exchange rate has a significant negative impact on export demand, while government spending has a positive effect. Timor Leste's per capita income does not significantly affect export demand. These findings are expected to contribute to policymakers in improving NTT's export competitiveness and volume, ultimately having a positive impact on the region's economic welfare.ipsum

The Capacity of Power of Biogas Plants and Their Technical Efficiency: A Case Study of Poland

The size of a company is a fundamental factor that can influence its efficiency. In larger companies, economies of scale are a key consideration. The objective of this study was to evaluate the technical efficiency of agricultural biogas plants differentiated according to their capacity of power. The study included 43 agricultural biogas plants, which were divided into three groups according to their capacity power: group I, <0.5 MW; group II, 0.5–1 MW; group III, ≥1 MW. In order to assess the technical efficiency of agricultural biogas plants under the research, the Data Envelopment Analysis (DEA) method was applied. It was found that the largest biogas plants were the most efficient. However, the technical efficiency of the smallest biogas plants was not statistically significantly different from that of the largest biogas plants. This indicates that small entities can achieve the technical efficiency at a satisfactory level. For this reason, in the development policy of agricultural biogas plants, the optimal solution is the coexistence of large and small facilities. The smallest biogas plants were more sensitive to changes in the macroeconomic environment than other biogas plants. This may suggest a need to pay more attention to energy policy mechanisms to stabilize their performance in periods of disadvantageous macroeconomic conditions.

Економічна нерівність: концепт та підходи до вимірювання

The study of economic inequality has evolved from the classical works of S. Kuznets and A. Atkinson to the modern approaches of A. Sen, J. Foster, A. Shorrocks, G. Palma, and T. Piketty, which take into account the impact of globalization, technological changes, and political decisions. Economic inequality is understood as the uneven distribution of economic opportunities and resources, including income and wealth, among individuals and population groups. Two primary forms of economic inequality are distinguished: income inequality (which reflects differences in current income) and wealth inequality (which focuses on disparities in already accumulated income). Horizontal and vertical dimensions of inequality are identified. The key factors include global factors (globalization, technological progress) and specific ones (macroeconomic conditions, labor market regulation, demographic changes, and redistribution policies). The specific mechanisms for measuring wealth and income inequality are presented. By analyzing the advantages and disadvantages of methodological approaches to measuring economic inequality, it is established that, due to the absence of a universal methodological approach, using a combination of survey data, tax statistics, and national accounts allows for a more comprehensive analysis of inequality. The assessment of the advantages and disadvantages of the Gini index, mean log deviation, Theil index, Palma ratio, and quantile ratios demonstrates that combining simple percentile ratios with complex indices fosters a deeper understanding of the structure and dynamics of inequality. Quintile ratios or the Palm ratio estimate the income gap between the richest and poorest groups, and the Gini ratio and the Theil index reflect changes in income across all segments of the population. It is emphasized on the need to adapt existing inequality indicators in Ukraine to international practices, particularly regarding wealth inequality.

The impacts of convergence policies on macroeconomic stability in the West African monetary zone

PurposeThis paper examines the effectiveness of the joint impact of convergence policy measures on macroeconomic stability conditions in the West African monetary zone (WAMZ) countries, using an annual panel data from 1990 to 2021.Design/methodology/approachIt uses the dynamic autoregressive distributed lag (ARDL) approach to exploit the short and long run dynamics macro stability. A composite convergence index was constructed and its impact was examined on three different macroeconomic stability measures representing: internal stability, external stability and overall stability.FindingsFindings from the study suggest that a unit deviation of the convergence policy index from its mean, in the short run, leads to worsening external and overall macroeconomic stability conditions in the zone, but it leads to improvement in the internal macroeconomic stability conditions. However, in the long run, the opposite occurs, a unit deviation of the convergence policy index from its mean, it leads to improvement in both external and overall macroeconomic stability situations and deterioration in internal macroeconomic stability situation.Practical implicationsIt is concluded that the convergence policy criteria are effective only in the long run and therefore these policies alone cannot be used to achieve short run macroeconomic stability within the zone. Thus, policymakers should have a second look at how fiscal and monetary policies are conducted and also work to address structural challenges.Originality/valueThe paper examines the effectiveness of the joint impact of convergence policy measures on macroeconomic stability conditions in the WAMZ countries.

Covid-19 and the factors affecting the performance of listed commercial banks in Vietnam: Utilizing the two-stage DEA method

This article measures the performance of listed commercial banks in Vietnam and identifies factors influencing their efficiency. The study follows a two-stage approach: (i) In the first stage, scale efficiency scores from 2016 to 2022 are assessed using the Data Envelopment Analysis (DEA) method; (ii) In the second stage, Tobit regression analyzes internal factors, macroeconomic conditions, and the impact of Covid-19. Key findings show that internal factors such as return on assets positively affect efficiency, while the ratio of equity to total capital has a negative and statistically significant impact. Bank size positively influences efficiency scores. Macroeconomic factors, including economic growth and inflation, were statistically insignificant. However, the Covid-19 pandemic had a significant negative effect on bank efficiency.

Does the Inflation, Interest Rates, and Global Gold Price affect Islamic and Conventional Bank Stock Prices?

The dynamic relationship between macroeconomic conditions, global gold prices, and stock market performance has been a major focus in various studies. This study investigates the impact of inflation, BI rates, and gold prices on the stock prices of Islamic and conventional banks in Indonesia. Using monthly data from January 2021 to December 2023. The method employed panel data regression using the Random Effect Model. The findings indicate that inflation has a negative and significant impact on the Islamic banks stock prices, while BI rates has insignificant effect. On the other hand, inflation has a positive and significant effect on the conventional banks’ stock prices, along with BI rates also having a positive and significant impact. However, global gold prices do not have a significant effect on the stock prices of either Islamic or conventional banks. These results provide deeper insights into how macroeconomic factors influence the performance of the stock market for Islamic and conventional banks in Indonesia.

Sustainability of Islamic Bank Financing across Macroeconomic and Internal Factors

The sustainability of Islamic banking financing can be evaluated by examining the dynamics of financing risk, as an escalation in financing risk may lead to significant losses for banks. This study aims to investigate the long-term and short-term effects of internal factors and macroeconomic conditions on the financing risk encountered by Islamic banks in Indonesia. This study utilizes quarterly time series data from 2015 to 2023, with Financing Risk as the endogenous variable and Macroeconomics, Capital, Efficiency, and Bank Performance as the exogenous factors. This study utilizes Autoregressive Distributed Lag (ARDL) analysis technique. The results indicate that, over the long term, internal factors such as capital, efficiency, and performance substantially affect financing risk. Capital exerts a detrimental influence, although both efficiency and the performance of Islamic banks positively affect financing risk. In contrast, macroeconomic factors are found to exert no substantial influence on financing risk. In the short term, capital and efficiency exert considerable effects, with capital adversely influencing financing risk and efficiency favorably improving it. The performance of Islamic banks does not substantially influence financing risk throughout this period. Macroeconomic conditions are observed to positively affect financing risk. This study's conclusions offer significant insights for analysts of Islamic banking risk, facilitating educated short-term and long-term decision-making to more effectively predict variations in financing risks.

Financial Distress and Earnings Management An Empirical Study of Non-Financial Firms Listed on the Indonesia Stock Exchange

This study examines the relationship between financial distress and earnings management among non-financial firms listed on the Indonesia Stock Exchange during the period 2018–2022. The research employs a quantitative approach using the modified Jones model to measure discretionary accruals, with leverage, firm size, and profitability included as control variables. The findings reveal that profitability has the strongest positive influence on earnings management, indicating that firms with higher profitability are more likely to manipulate earnings to enhance financial results and meet market expectations. Conversely, leverage demonstrates a significant negative effect, suggesting that firms with higher debt levels are less likely to engage in earnings manipulation due to increased creditor scrutiny and financial discipline. Meanwhile, financial distress and firm size have minimal impacts, with their coefficients showing no significant influence on discretionary accruals. These results highlight the importance of profitability and leverage as key drivers of earnings management while suggesting that financial distress and firm size play lesser roles in this context. The study acknowledges limitations, including its focus on non-financial firms in Indonesia, a five-year observation period, and the exclusion of additional factors like governance and macroeconomic conditions. Future research could address these limitations by expanding the dataset, incorporating more variables, and exploring other emerging markets.

Income Diversification, Credit Risk and Profitability of Ethiopian Commercial Banks

This study examined the impact of income diversification on credit risk-taking and profitability of commercial banks in Ethiopia. Additionally, it investigated how bank-specific and macroeconomic factors influence diversification, risk-taking and profitability of these banks. The analysis was based on unbalanced panel data of 19 banks over the period of 1997-2022. The empirical estimation relies on a two-step Generalized Methods of Moments (GMM) technique. The results indicate that commercial banks in Ethiopia tend to enhance their profitability by assuming greater credit risk. The findings also indicate that diversifying income sources toward non-traditional banking activities has a significant risk reducing and profit enhancing effect for Ethiopian commercial banks. This study further suggests that bank specific characteristics, such as bank size, capitalization and liquidity; macroeconomic conditions, and the structure of the banking industry play important role in determining income diversification, credit risk-taking and profitability of banks in Ethiopia. Finally, the paper concluded by recommending the importance of promoting diversification into non-traditional businesses so as to ensure more profitable and more stable commercial banking system in Ethiopia.

Macroeconomic soundness and financial inclusion: catalysts for developing robust financial markets in emerging economies

ABSTRACT This study examines the relationship between financial inclusion and financial market development in emerging economies, emphasizing macroeconomic conditions. Using panel SGMM and Granger causality, it finds that financial inclusion fosters financial market growth, with stronger effects in robust macroeconomic environments. Financial inclusion positively or neutrally impacts banking and capital markets, amplified by sound macroeconomic factors. The findings highlight the importance of inclusive financial systems for advancing financial markets, influenced by national savings, trade, private capital flows, and regulatory quality.

MACROECONOMIC OUTLOOK AND BANK STABILITY: THE CASE OF SHARIAH BANK ON MIDDLE EAST COUNTRY

There have been many studies on the impact of war and the economy on Middle East countries. However, specific studies on banking stability and macroeconomic conditions have not been found. This study aims to find the interaction between macroeconomic and banking stability in the Middle East. Panel data with 12 middle east countries during 2014-2023 was employed in this study. Our study found that inflation, GDP, exchange rate, and unemployment rate cause banking stability.

The Impact of Uncertainty and Macroeconomic on Income Inequality in Indonesia

This study explores the impact of global uncertainty and macroeconomic factors on income inequality in Indonesia from 1991 to 2023, employing the Autoregressive Distributed Lag (ARDL) and Error Correction Model (ECM) methodologies. The findings reveal that global uncertainty significantly reduces income inequality in the long term, while key macroeconomic variables like unemployment and real income have pronounced effects on inequality in both the short and long term. Unemployment is positively associated with income inequality, exacerbating the disparity as job losses primarily affect the lower-income segments. Real income increases, on the other hand, paradoxically heighten inequality due to the uneven distribution of wealth across socio-economic groups. Inflation, however, was found to have no significant effect on income inequality. The study highlights the role of economic policy uncertainty, which disproportionately affects the wealthier segments during economic downturns, leading to a relative decline in inequality. However, the persistent concentration of wealth among the top 10% underscores the need for policy interventions, including progressive taxation and social assistance programs. Policymakers are urged to address unemployment and ensure equitable income growth to mitigate inequality effectively. The research underscores the necessity of robust strategies to navigate global uncertainties and stabilize macroeconomic conditions to achieve inclusive growth in Indonesia.

On the economic sustainability of Russian households at a socially acceptable level

The paper is focused on determination and analysis of the thresholds for socially acceptable criteria of economic sustainability for households of different composition. The paper shows the key methodological aspects of determining the economic sustainability of households and its socially acceptable criterion. The main macroeconomic conditions for the formation of economic sustainability of households in Russia are also considered. Besides, the characteristics of employment for the people living in economically (un)sustainable households have been identified and analysed. The basis for the household economic sustainability, according to the authors, is self-sufficiency that enables using its own resources to support the socially acceptable level of consumption of socially significant goods and to accumulate savings subject to the resources’ limitations and social risks. The socially acceptable consumer budget is used as the criterion for identification of the household economic sustainability, including the specifics of the consumption of the main socio-demographic groups of the population (population of working age, pensioners, children) and savings in consumption due to cohabitation. Differentiating features of the threshold values for the households of different types are determined in the paper. It is shown that the threshold values of the criterion for economic sustainability of households per household member decrease as the number of minor children per 1 adult increases. However, the income position of such households worsens and, in conditions of unsustainability, the income deficit increases relative to the threshold value. It is revealed that there are no unemployed individuals among the people from economically sustainable households (unlike those living in economically unsustainable ones), while the situation regarding the share of the employed and the level of income from employment varies, depending on the composition of households, indicating different “strategies” for achieving sustainability of their households.

Initial labor market conditions and subsequent fertility behavior

The conditions upon which young adults enter the labor market have been demonstrated to affect various later-life employment and family formation outcomes. After the 2008–2009 Global Financial Crisis, a thick strand of the literature has shown that precarious initial employment leads to postponed childbearing and higher ultimate childlessness. However, it is not only individual conditions that matter. Broader macroeconomic conditions upon entry also matter. The “scarring” literature has illustrated the consequences of entering the labor market during a recession on later life outcomes. Speaking to both strands and using detailed employment and birth histories of labor market entrants in Germany, this paper examines the effects of initial conditions, operationalized using fixed-term employment and recession year entry, on subsequent fertility behavior. To partly address bias from endogenous selection into initial conditions, we employ a two-step estimation strategy combining a non-parametric optimal full matching step and a parametric event history modeling step using the matched data. Results suggest that entering the labor market with a fixed-term contract is persistently and negatively associated with first births up to a decade after entry, and this pattern is pronounced only among women, whereas entering during a recession has persistent negative associations only among men.

The Dynamics of FPI and FDI in Indian Economy : A Correlational Study

Foreign Portfolio Investment (FPI) and Foreign Direct Investment (FDI) play distinct yet complementary roles in India's economic development. FPI is short-term and volatile, enhancing liquidity in financial markets, while FDI is long-term and supports sustainable growth through capital formation, technology transfer, and employment generation. Despite their individual contributions, FPI and FDI operate independently, driven by different factors. Policymakers must adopt differentiated approaches: FPI can be promoted through market stability and regulatory transparency, whereas FDI requires structural reforms and an investment-friendly environment. This paper also suggests directions for future research, focusing on sector-specific impacts, the influence of policy changes, and the role of macroeconomic conditions in shaping these investment inflows.

Identifying policy determinants of bank default risk during the COVID-19 pandemic: empirical evidence from the U.S. and Canada

ABSTRACT This study examines the policy determinants of bank default risk, proxied by credit default swap (CDS) spreads, using quarterly data from the U.S. and Canada for the period 2020 to 2022. The analysis considers four determinant groups: the COVID-19 pandemic shock, aggressive monetary and fiscal policy responses, macroprudential-related bank financial fundamentals, and macroeconomic and market conditions. Utilizing General Least Squares (GLS) and dynamic panel models with system General Method of Moments (GMM), the findings reveal that rising COVID-19 deaths significantly widen CDS spreads. Expansionary monetary policies reduce bank default risk, though the effectiveness under conventional monetary policy is reduced by increasing COVID-19 deaths. In contrast, expansionary fiscal policies and inflation broaden CDS spreads. The combined analysis highlights policy stances as dominant factors, with macroprudential-related fundamentals having minimal impact. The findings are robust using both 5-year and 10-year CDS measures. This study has significant policy implications during health and economic crises. For financial stability, policymakers should prioritize reducing pandemic-related deaths, utilize expansionary monetary policies with health support strategies, balance fiscal support to avoid excessive government spending, and implement measures to control inflation. It is essential to enhance coordination between healthcare, fiscal, and monetary authorities for effective policy implementation.

Levels of mandatory CSR compliance and the payoff: evidence from India

Purpose This paper aims to examine the diverse levels of corporate social responsibility (CSR) expenditure among Indian companies and its influence on their performance. The study aims to determine whether exceeding the mandatory CSR spending limit provides an edge to companies that outperform in enhancing corporate firm value. Design/methodology/approach A dynamic model using system generalized method of moments (GMM) was used to analyze a balanced panel data set of 191 firms over seven years, spanning from 2016 to 2022. Return on assets was used as a proxy to gauge financial performance. At the same time, the study also examined the robustness of the results by considering return on equity and Tobin’s Q as additional measures. Findings The study results indicate that, in a mandatory CSR setting, all companies are generally perceived as performing and reporting on CSR equally. Hence, it will not make any payoff, although few companies outperform. Therefore, companies should differentiate themselves regarding CSR spending and reporting to claim a competitive advantage in the market. The study also suggests that the payoff of mandatory CSR expenditure for both performing and outperforming companies is reflected more in non-quantifiable firm characteristics than in measurable performance metrics. Research limitations/implications The period of study covers 7 years, i.e. 2015–2016 to 2022–2023. This may limit capturing long-term CSR practices and firm performance trends. Additionally, data from only 191 Indian companies restrict generalizability; future research should include diverse geographic regions with mandated CSR spending to provide a more comprehensive view. In subsequent studies, contextual factors like regulatory changes and macroeconomic conditions could be considered moderating variables. Practical implications The study provides valuable insights to top management, indicating that spending beyond the threshold limit of mandatory CSR spending does not enhance corporate firm value. Instead, this additional investment may yield benefits in the form of goodwill and reputation over the long term. Social implications This study assists corporations in optimizing their CSR strategies to enhance their social and financial performance impact. Moreover, the study suggests ways to improve the CSR payoff and the need for increasing stakeholder satisfaction. Originality/value The study provides original insights into the relationship between mandatory CSR spending and firm performance in the Indian context, revealing that CSR spending does not significantly impact financial metrics, and it highlights the importance of considering a non-quantitative matrix to enhance the firm value in a mandatory CSR setting.