Times Of Economic Stress Research Articles

A Study of Central Bank Swap Line Use: Are They a Suitable Tool for the IMF in Maintaining Central Bank Liquidity for Developing Countries?

Developing countries do not have the same access for swap line use during times of economic stress, currently used by central banks in developed countries to maintain liquidity. Biblically, economic tools should favor all and not just developed nations. As Christians we are commanded to help others by bearing the burden of others and to help the poor. Of course, biblical wisdom is necessary, specifically an understanding of how exactly swap lines may be of benefit before making any recommendations, along with and considering the reality of level of risk when working with developing nations. Swap lines are a currency exchange between two banks where an agreed upon amount is traded-- a liquidity swap between two banks. The research on swap line use is limited, especially when related to use by developing countries. Since developing nations are more vulnerable to economic stress, expanding the use of swap lines from developed countries to developing nations appears reasonable and the IMF being the lender of last resort is the recommended organization to use them. The purpose of the study is to determine if swap lines maintain or improve liquidity between central banks during times of economic stress, which in turn will be considered for feasibility as an additional financial assistance tool the IMF can use for developing countries. A pragmatic mixed approach will be used to determine if swap lines are improving liquidity conditions with the capacity to deliver U.S. dollar funding to institutions in their jurisdiction during times of market stress. The comparisons consider capital flow and foreign exchange rate differences between countries that used swap lines and countries not using swap lines during periods of economic stress. The results will be considered for use by the IMF for developing countries.

Housing independence pathways in Europe: the influence of parents’ socio-economic background in times of economic stress

ABSTRACT The housing independence of young adults has become more complex and uncertain in Europe over the last decades. Previous research suggests that patterns of independent living and housing demand have become more differentiated and socially stratified, especially since the Great Financial Crisis (GFC). The decline in homeownership and the availability of social housing has been accompanied by an increase in private renting and shared accommodation. Moreover, young adults have increasingly relied on their parents for both material and non material support to overcome constraints and achieve independent living. This paper examines how the relationship between parental background and both young adults' leaving home, and their first housing tenure changed during the GFC in different European housing contexts. Using longitudinal data from EU-SILC (2008–2018), the results show that parental background still plays a significant stratifying role in the housing independence of young adults from the pre – to the post-crisis period, particularly in terms of first tenure status rather than home-leaving. The influence of the housing context on both housing market opportunities and the role of parents in young adults' independence shapes the shift from co-residence with parents to living independently in either homeownership or rented accommodation.

Entrepreneurship in times of economic stress: unraveling the U-shaped relationship between the internality of causal attributions and growth

PurposeThis paper examines the relationship between entrepreneurs' internality of causal attributions and firm growth during an economic crisis. We propose a U-shaped relationship between the two variables, arguing that the highest-growth entrepreneurs are those with either the highest or lowest levels of internal attribution (IA) during such periods.Design/methodology/approachTo test our hypothesis, we analyze a database of 804 interviews with entrepreneurs in Brazil during a period of economic stress. Due to the existence of endogeneity, we estimate a model of simultaneous equations in two stages.FindingsWe find evidence of a U-shaped relationship. This means that during economic stress, the fastest-growing entrepreneurs are those who rely more on their own effort (high IA) and those who attribute their success to the economic crisis (low IA).Practical implicationsTailoring interventions based on attribution patterns and recognizing the U-shaped relationship ensures effective support during economic stress. Entrepreneurial support programs should align with internality levels, emphasizing external awareness or skill development accordingly. Policymakers should take attributions into account when promoting financial resilience. Entrepreneurs would benefit from awareness programs on attributions for reflective decision-making. Ecosystems should foster collaboration by recognizing diverse attributions, enhancing a collective understanding of entrepreneurial responses in crises.Originality/valueOur results have important implications for understanding the role of entrepreneurs in economic crises. Our results are relevant because they challenge the usual claim that entrepreneurs with high IA are the ones who perform better in situations where external economic conditions are adverse.

Sovereign Wealth Funds and Nigeria’s Economy (2012–2021)

This study examined how Nigeria’s sovereign wealth funds has related to the economy: 2012-2021. The sovereign wealth fund is designed to build a savings base for the Nigerian people, enhancing the development of Nigeria’s infrastructure, and providing stabilization support in times of economic stress, somehow stabilizing the local currency value. It seems that the sovereign wealth funds of Nigeria is not yet growing sustainably. Thus, this work seeks to ascertain how the sovereign wealth fund has related to economic growth of Nigeria. The study made use of secondary data sourced from the Central Bank of Nigeria and the Nigerian Sovereign Investment Authority. Using descriptive and scooping methods, the study showed that the total assets value of the Sovereign Wealth Fund (SWF) authority, the total assets value of the SWF group consolidated, the net profit of the SWF authority and the net profit of the SWF group consolidated have not reasonably influenced the economic growth of Nigeria. The work recommends amongst others that the government should be consistent in transferring excess crude oil revenue to the Fund; strategic partnership with investors with superior business intelligence is required; and the SWF Authority must promote accountability and transparency in the management of the funds.

Preserving Equity of Access in Times of Economic Stress

Preserving Equity of Access in Times of Economic Stress

Longitudinal trends in enrollees\u2019 employment and student status after Medicaid expansion

BackgroundMedicaid community engagement requirements previously received federal approval in 12 states, despite limited data on their impact on enrollees’ employment-related activities. Our objective was to assess longitudinal changes in enrollees’ employment and student status after implementation of Michigan’s Medicaid expansion.MethodsLongitudinal telephone survey of Michigan Medicaid expansion enrollees in 2016 (response rate [RR] = 53.7%), 2017 (RR = 83.4%), and 2018 (N = 2,608, RR = 89.4%) serially assessing self-reported employment or student status. Survey responses were benchmarked against statewide changes in assessed similar low-income adults in the U.S. Census Bureau Current Population Survey. We used mixed models with individual random effects to assess changes in the proportion of enrollees who were employed or students by year.ResultsMost respondents had incomes < 100% FPL (61.7% with 0–35% of the federal poverty level [FPL], 22.9% with 36–99% FPL, and 15.4% with 100–133% FPL), 89.3% had at least a high school diploma/equivalent, and they ranged in age (39.6% age 19–34, 34.5% age 35–50, 25.9% age 51–64). Employment or student status increased significantly among Michigan Medicaid expansion respondents, from 54.5% in 2016 to 61.4% in 2018 (P < 0.001), including among those with a chronic condition (47.8% to 53.8%, P < 0.001) or mental health/substance use disorder (48.5% to 56.0%, P < 0.001). In contrast, the statewide proportion of low-income non-elderly adults who were employed or students did not change significantly (from 42.7% in 2016 to 46.0% in 2018, P = 0.57).ConclusionsMedicaid expansion, absent a community engagement requirement, was associated with increased employment and related activities. The role of Medicaid in providing safety-net coverage to individuals during times of economic stress is likely to grow.

The gold-stock market relationship during COVID-19

The belief that investors shift to gold during times of economic stress, resulting in a negative correlation between gold returns and stock returns, is not supported in both the 2007–09 financial crisis and during COVID-19. However, the gold-stock market relationship is positive in periods of negative real rates of return. The evidence points to gold as a safe haven in times of stock market volatility and negative interest rates.

The dynamics of sovereign yields over swap rates in the Eurozone market

We explore the dynamics of the adjusted swap spread (calculated as the difference between the swap rate and sovereign yields over the credit default swap premium) in the Eurozone market by studying three markets simultaneously: 1) sovereign bonds, 2) credit default swaps (CDS), and 3) swap rates. We find a strong relationship between the markets. Specifically, based on the no-arbitrage argument, we show that the difference between the Euribor and Repo rates is a key driver of the adjusted swap spread. However, illiquidity premiums and systemic risk also play an essential role in times of economic stress and for less creditworthy countries. The findings also shed light on the recent negative swap spreads puzzle in the United States.

The Dynamics of Sovereign Yields Over Swap Rates in the Eurozone Market

We explore the dynamics of the adjusted swap spread (calculated as the difference between the swap rate and sovereign yields over the credit default swap premium) in the Eurozone market by studying three markets simultaneously: 1) sovereign bonds, 2) credit default swaps (CDS), and 3) swap rates. We find a strong relationship between the markets. Specifically, based on the no-arbitrage argument, we show that the difference between the Euribor and Repo rates is a key driver of the adjusted swap spread. However, illiquidity premiums and systemic risk also play an essential role in times of economic stress and for less creditworthy countries. The findings also shed light on the recent negative swap spreads puzzle in the United States.

In Case You Haven't Heard…

Researchers have found a connection between a higher minimum wage and a lower suicide rate, The Hill reported Jan. 13. In a study published in the Journal of Epidemiology &amp; Community Health and first reported by ArsTechnica, researchers at Emory University found that raising the minimum wage appeared to be linked to a reduction in the suicide rate for Americans with a high school diploma or less. The study's measured effects were only noticed during times of economic stress, according to ArsTechnica, with researchers finding no significant link between the two figures during times of low unemployment (less than 4%). “We estimated a six percent reduction in suicide for every dollar increase in the minimum wage among adults aged 18–64 years” for those with lower education levels, the study's authors wrote. According to the researchers, raising the federal minimum wage by just $1 ahead of the 2008 economic collapse could have prevented more than 13,000 suicides. “Minimum wage increases appear to reduce the suicide rate among those with a high school education or less, and may reduce disparities between socioeconomic groups,” read the study's conclusion.

The impact of mandatory arrest laws on domestic violence in times of economic stress

We test the effectiveness of mandatory arrest laws to suppress domestic violence under changing levels of community-wide economic stress. While existing economic scholarship focuses upon the influence of arrest laws and financial strain independently of one another, we provide a meaningful bridge across these two factors to assess whether arrest laws are effective when communities need them most. Using county-level monthly unemployment rates and national crime data for years 2000 to 2015, we examine changes in incidents of intimidation and assault between intimate partners across states with and without mandatory arrest laws. After controlling for baseline county characteristics, we document the subsequent increase in domestic violence from rising rates of unemployment. We find the efficacy of arrest laws to mitigate intimate partner violence is strongest when unemployment increases. However, these results do not hold for more severe forms of domestic violence. Our results suggest that while mandatory arrest laws are not a single solution to domestic violence, they lessen the adverse effects of rising unemployment rates.

Sovereign Market Tensions and Covered Bond Issuances

The purpose of this paper is to test whether tensions in the sovereign of the 5 largest euro area Member States had an impact on the funding sources of the most relevant banks based in these Member States and more specically, on the issuance of covered bonds. This could constitute additional proof of the existence of the feedback loop between sovereigns and banks. To this end, we use several econometric methodologies like panel, VAR and ProbVAR models to analyze the impact an increase in the 10 year sovereign bond yield has on the amount of covered bonds issued and the probability to issue covered bonds by these banks. The results of the panel model indicate that the amount and probability of issuing covered bonds increase when sovereign bond yields soar in times of economic stress and not in times of more stability. The VAR and ProbVAR models confirm the results of the panel model for the cases of Germany, Spain and the Netherlands on the one hand and for Germany, Italy, Spain and the Netherlands on the other hand. On the basis of these results, relevant policy implications can be drawn in terms of the diversification of the funding sources of credit institutions and the finalization of the projects of the Banking Union and the Capital Markets Union.

Contributing to Nature’s Recovery through Urban Agriculture

The paper analyses the legally established practice of agriculture has been forced out of the urban environment as land value increases with higher population densities. It’s stated, that cities and surrounding urban environments have grown dependent upon regional areas and industrial agricultural practices to provide food for their increasing populations. Most commonly, urban agriculture is practiced by third world nations as a first line of defence against hunger and malnutrition or as poverty alleviation in times of economic stress. This paper argues that the practice of urban agriculture contributes to vital environmental recovery necessary in this, the geological age of the Anthropocene. As human activity continues to impact the functioning of earth systems at the planetary scale, we must actively assist nature to recover rather than assume that our existing environmental protection and conservation strategies are effective in preserving the natural environment.

A Friend Indeed: Does the Use of Biometric Digital Identity Make Welfare Programs Counter Cyclical?

We examine the responsiveness of the world's largest workfare program to distress and ask whether a techno-administrative intervention involving biometric digital identity enabled direct transfer of benefits makes any difference. Wage payment delays, which where high before the intervention, reduce significantly after the intervention. In line with the thesis that delays are more costly and their reduction more beneficial during distress, we find a reduction in demand and supply of jobs during times of economic stress in the pre-intervention period and an increase in demand and supply of jobs during times of economic stress in the post intervention period.

Can Management Practices Make a Difference? Nonprofit Organization Financial Performance during Times of Economic Stress

The economic crisis presented unprecedented challenges to nonprofit organizations to sustain their services. In this study, we examined both financial and management factors that influence the financial performance of nonprofit organizations during times of economic stress. In particular, we investigated whether strategic planning and plan implementation, revenue diversification, and board involvement help nonprofit organizations deal with financial uncertainty and strengthen financial performance. Despite the negative impacts that the economic downturn had on nonprofit organizations, we found that the implementation of strategic plans can help nonprofit organizations reduce financial vulnerability. Our findings call attention to key management factors that influence the financial performance of nonprofit organizations.

FISCAL POLICY MULTIPLIERS IN AN RBC MODEL WITH LEARNING

Using the standard real business cycle model with lump-sum taxes, we analyze the impact of fiscal policy when agents form expectations using adaptive learning rather than rational expectations (RE). The output multipliers for government purchases are significantly higher under learning, and fall within empirical bounds reported in the literature, which is in sharp contrast to the implausibly low values under RE. Positive effects of fiscal policy are demonstrated during times of economic stress like the recent Great Recession. Finally, it is shown how learning can lead to consumption and investment dynamics empirically documented during some episodes of “fiscal consolidations.”

Beyond the Great Recession: Was the Foreclosure Crisis Harmful to the Health of Individuals With Diabetes?

The housing foreclosure crisis was harmful to the financial well-being of many households. In the present study, we investigated the health effects of the housing foreclosure crisis on glycemic control within a population of patients with diabetes. We hypothesized that an increase in the neighborhood foreclosure rate could worsen glycemic control by activating stressors such as higher neighborhood crime, lower housing prices, and erosion of neighborhood social cohesion. To test this, we linked public foreclosure records at the census-block level with clinical records from 2006 to 2009 of patients with diabetes. We specified individual fixed-effects models and controlled for individual time-invariant confounders and area-level time-varying confounders, including housing prices and unemployment rate, to estimate the effect of the foreclosure rate per census-block group on glycated hemoglobin. We found no statistically significant relationship between changes in the neighborhood foreclosure rate per block group in the prior year and changes in glycated hemoglobin. There is no evidence that increased foreclosure rates worsened glycemic control in this continuously insured population with diabetes. More research is needed to inform our knowledge of the role of insurance and health-care delivery systems in protecting the health of diabetic patients during times of economic stress.

Household Shocks and Education Investments in Madagascar

AbstractThis paper investigates the impact of exogenous shocks to household income, assets and labour supply on children's school attendance in Madagascar. The analysis uses a unique data set with 10 years of recall data on school attendance and household shocks. We find that the probability of a child dropping out of school increases significantly when the household experiences an illness, death or asset shock. We propose a test to distinguish whether the impact of shocks on school attendance can be attributed to credit constraints, labour market rigidities, or a combination of the two. The results suggest that credit constraints, rather than labour market rigidities, explain the inability of households in Madagascar to keep their children in school during times of economic stress.

Donald Trump and the Scourge of Populism

AbstractPopulism is a means of speaking to voters, a mode of speech that Michael Kazin once called “the populist persuasion.” During times of economic stress and cultural change, populism often becomes a popular means of communication, and has been used by aspirants for the presidency ranging from William Jennings Bryan to Bernie Sanders and Donald Trump. It is particularly potent when conditions exist that refute historian John Crozier’s description of the American polity as resting on a “gently graded prosperity.” The lack of any “gently graded prosperity” in 2016 fueled the candidacies of Bernie Sanders and Donald Trump. This article focuses on Trump, noting his penchant for action, not adherence to conservative principles or Republican party orthodoxy. The “scourge” Donald Trump’s populism, like his predecessors is that he blames the “other” for the failures of American government and the inability of those who aspire to achieve the American Dream from achieving their goals. This is the scourge of populist candidates who have led their respective parties to ultimate defeat and repudiation. In Trump’s case, blaming Hispanics and immigrants for the country’s problems is a scourge that will take the Republican party years to recover from once the 2016 election is over and the ballots counted.

Is the asset growth anomaly driven by macroeconomic states?

ABSTRACTThis study examines the asset growth anomaly in the presence of different macroeconomic states. The results show that the asset growth effect is strongly associated with macroeconomic conditions. When the economy is quiet, the spread between low and high investment firms is small and insignificant. In times of economic stress, the spread is economically large and statistically significant. The results support risk-based explanations for the asset growth effect in line with q-theory.