Weak Economic Conditions Research Articles

The effect of economic policy uncertainty on stock-commodity correlations and its implications on optimal hedging

Motivated by previous studies documenting significant return and volatility effects of economic policy uncertainty (EPU) on the stock market, this study examines whether EPU has an effect on the dynamic conditional correlations between stock and commodity returns. Our findings point to a positive and significant effect of EPU on stock-commodity correlations with particularly stronger effects in the case of energy and industrial metals. The EPU effect is stronger during weak economic conditions, while VIX as a proxy of market uncertainty is generally found to be insignificant. Finally, we show that the EPU effect on correlations has investment implications as well, implied by a significant effect on optimal hedge ratios in commodities in order to mitigate stock market risks. Our results underscore the importance of selective hedging strategies in which risk managers base the timing and size of their hedging programs on future price expectations, conditional on the level of policy uncertainty state and prevalent economic conditions.

Municipal borrowing costs and state policies for distressed municipalities

Policies on financially distressed municipalities differ across US states, with some allowing unconditional access to Chapter 9 bankruptcy (Chapter 9 states) and others having proactive policies to assist distressed municipalities (Proactive states). These differences significantly affect borrowing costs. In Chapter 9 states, local municipal bond yields are higher, more cyclical, and more sensitive to default events than Proactive states. Default events have a contagion effect in Chapter 9 states, but not Proactive states. Lower local borrowing costs in Proactive states come at the expense of the state via higher intergovernmental revenue transfers in times of weak economic conditions.

Wizerunek północnego wymiaru współpracy w regionie Morza Bałtyckiego

The aim of the article is to analyze the cooperation in the Baltic Sea Region and to assess its potential from the perspective of Poland. The hypothesis assumes that the development of cooperation in the region contributes to the deepening of integration, but it does not reduce in the expected pace the still visible disparity between countries. As a result, Poland is still in the group of those with comparatively (relatively) weaker economic conditions and with unused potential. At the same time, acquiring experience in this dimension of cooperation, Poland not only notices the resulting benefits and opportunities, but also intensifi es activities in the area of the northern dimension of the state’s foreign policy. To investigate the thesis the characteristics and analysis of integration activities in the Baltic macro-region have been made, with particular emphasis on the EU dimension (such as the EU Strategy for the Baltic Sea, EUSBSR) and the other regional cooperation formats, mainly in the framework of the Council of the Baltic Sea States (CBSS). Then, the potential of the region and Poland’s involvement in cooperation in the Baltic Sea basin was evaluated. Finally, it allowed to show whether and how and how effectively Poland defines its interests in this region.

“JOB-KILLER” BILLS IN TOUGH ECONOMIC TIMES: SOCIAL MOVEMENTS AND LEAVE-POLICY AGENDAS BEFORE AND AFTER THE GREAT RECESSION*

How do economic conditions influence social movements' capacity to set legislative agendas? This research examines multiple efforts to expand family, medical, and sick leave policies in California across almost two decades spanning the Great Recession. Longitudinal analysis in a state with political conditions favorable to leave policy agendas permits close consideration of how varying economic conditions shape social movement influence in the policy process. Drawing from various qualitative sources, this research finds that, after the recession, leave bills were more often held in appropriations committees for their estimated costs to the state and anticipated pressures on funding sources. Weak economic conditions also shifted leave advocates' priorities away from leave policy issues toward maintaining public employment and services. The article advances social movement research by showing the mechanisms by which state fiscal capacity shapes social movement strategies and interacts with political conditions at the early, agenda-setting stages of the legislative process.

Central–provincial sharing of financial responsibilities for China's social safety-net

Using Chinese provincial panel data from 2004 to 2014, this paper describes the division of fiscal responsibilities in basic social assistance and services (BSAS): China's social safety-net programme. The results suggest that there has been a recentralization—provinces with weaker economic conditions rely more on central governmental transfers, showing signs of fiscal equalization. The authors did not find any evidence of ethnicity-based preferential treatments.

The Effect of Economic Policy Uncertainty on Stock-Commodity Correlations and its Implications on Optimal Hedging

Motivated by previous studies documenting significant return and volatility effects of economic policy uncertainty (EPU) on the stock market, this study examines whether EPU has an effect on the dynamic conditional correlations between stock and commodity returns. Our findings point to a positive and significant effect of EPU on stock-commodity correlations with particularly stronger effects in the case of energy and industrial metals. The EPU effect is stronger during weak economic conditions, while VIX as a proxy of market uncertainty is generally found to be insignificant. Finally, we show that the EPU effect on correlations has investment implications as well, implied by a significant effect on optimal hedge ratios in commodities in order to mitigate stock market risks. Our results underscore the importance of selective hedging strategies in which risk managers base the timing and size of their hedging programs on future price expectations, conditional on the level of policy uncertainty state and prevalent economic conditions.

Causes and consequences of demographic processes and changes in contemporary society

For the functioning and development of society the great significancehave demographic processes and changes (natural population growth,fertility, birth rate, mortality rate, aging of population, changes in regardto marriage, the frequency of celibacy, divorce). This paper analyzesthe causes and consequences of these processes and changes incontemporary society. The trends of demographic changes are not thesame in all societies in the world. In developed societies today can beobserved, with minor differences, the same demographic trends - lowand/or negative natural population growth, the rapid aging of population,low mortality rates, increasing of the divorces and the like. Onthe other hand, in underdeveloped societies are born many children,where weak economic conditions are conducive to a deterioration inthe material, social and health status of the population (illness andmortality, particularly of women and children). This clearly indicatesthat demographic processes and changes are not directly influencedby economic and social factors (the level of education, the developmentof society in general, etc.), but that there are a number of indirectsocial factors causing it (national, class, political, cultural, religiousand other). In response to the unfavorable demographic trends(population size, the age of the population, etc.) and the consequenceswhich population factor creates in many economic and social areas(reduction of the working population, the burden of social securityfunds, etc.), in the past two decades in the most countries populationpolicy was placed in the area of population fertility - there were introducedthe pro-natalist measures in developed countries and measuresto discourage procreation in underdeveloped countries.

The Effect of Religiosity & Morality Interaction on the Degree of Auditor Independence: The Case of Egypt

The problem of auditor independence has been (and still) a long debatable issue. Major failures to maintain independence were attributed to extended auditor client relationship. The theory of Social Interactionism claims that, auditor independence is theoretically not only a matter of so called socioeconomic/Meso-level factors (raising the interdependence effect between the auditor and the client) but it also tends to be a macro as well as micro levels factors of social interaction. Due to such non-linear relationship, this research intends to examine the effect between different levels of interactions (with a focus on the micro level representation and the degree of auditors’ religiosity, i.e. religious commitment) on the degree of auditors’ independence (in different situations at auditors’ moral development). The main objective of the paper is to determine the interactive effect between religiosity and moral development on the degree of auditor independence. This main objective is to be achieved through three sub-objectives. First is to test whether there is a main effect of moral development on the degree of auditor independence under different economic conditions of clients. Second is to test, whether there is a substantial effect of auditors’ degree of religiosity on the degree of auditor independence, and the interactive effect between religiosity and moral development on auditor independence at different economic conditions of clients. This statistical experimental research was conducted using a questionnaire at a sample of 190 auditors working in Egypt. This research uses the mixed factorial ANOVA technique to determine the interactional effects of the previously listed independent variables on the degree of auditor independence assessed by his/her likelihood to accept client’s materially misstated reported information using eight (2x2x2) scenarios. The findings of the paper demonstrate that religiosity can affect the degree of auditor independence only at clients’ weak economic conditions, and the same applies to morality as well. There is no evidence that there is an interactive effect between the religiosity and moral development that affect the degree of auditors’ independence. The originality of this research rests being the first experimental designed research, measuring the degree of auditor independence, in Egypt rather than the classical perceptional assessment approach. Second, it is the first study to test the interactive effect between religious orientation/commitment rather than religious affiliation and morality on the degree of auditor independence.

Municipal Borrowing Costs and State Policies for Distressed Municipalities

State policies on financially distressed municipalities differ across U.S. states, with some allowing unconditional access to Chapter 9 bankruptcy (“Chapter 9 states”) and others having proactive policies in place to assist distressed municipalities (“Proactive states”). These differences significantly affect borrowing costs. In Chapter 9 states, local municipal bond yields are higher, more cyclical, and more sensitive to default events than Proactive states. Default events have a contagion effect in Chapter 9 states, but not Proactive states. Lower local borrowing costs in Proactive states come at the expense of higher state borrowing costs via higher intergovernmental revenue transfers during weak economic conditions.

Funders and founders: partners in good times and in bad?

Based on a sample of 3097 small firms, we investigated how Finnish entrepreneurs perceive the relationship between corporate ownership structure and growth orientation. In particular, we investigated the type of ownership that entrepreneurs would provide to different types of funders in exchange for investment. Our empirical results suggest that the more growth-oriented the firm, the more accepting the entrepreneur of funders taking ownership that allows a strategic role in the company. Conversely, entrepreneurs in non-growth-oriented firms favour investors that will finance the operations without exerting power and influencing decision-making. Further, entrepreneurs in firms that are about to cease operations, generally due to weak economic conditions, are as likely to accept strategic ownership as high-growth-oriented firms. This study contributes to the literature by confirming the link between growth orientation and ownership structure in small firms, and by highlighting variations in entrepreneurial acceptance of different types of investor ownership.

Teenagers’ risky health behaviors and time use during the great recession

This paper uses individual-level data from both the 2003–2011 American Time Use Survey and Youth Risk Behavior Survey along with state-level unemployment rates to examine the effects of a weakening economy during the Great Recession on U.S. teenagers’ activities. Black male teenagers had less sex and spent more time with their parents. Hispanic male teenagers spent less time playing sports and more time watching time TV, and were more likely to be obese. Female teenagers, on the other hand, spent less time working, but made greater investments in their education. However, there were signs that female teenagers were stressed by the weak economic conditions, because they slept less and were more likely to smoke daily. Black females also consumed more alcohol.

Teenagers' Risky Health Behaviors and Time Use During the Great Recession

This paper uses individual-level data from both the 2003-2011 American Time Use Survey and Youth Risk Behavior Survey and state-level unemployment rates to examine the effects of a weakening economy during the Great Recession on U.S. teenagers’ activities. I present results by gender and by race/ethnicity within gender groups. Over the period, I find changes in sexual activity for black males associated with changes in time spent with parents. In addition, Hispanic males were more likely to be obese when the economy weakened, which corresponded to a decrease in time spent playing sports and an increase in time watching TV. Female teenagers, on the other hand, made greater educational investments while spending less time working. However, there were signs that female teenagers were stressed by the weak economic conditions, because they slept less and were more likely to smoke regularly. In addition, black females consumed more alcohol.

PELAKSANAAN PEMBELAJARAN IPS PADA SMP TERBUKA 02 KECAMATAN BANJARMASIN UTARA TAHUN AJARAN 2014/2015 DALAM PENINGKATAN KUALITAS PEMBELAJARAN

For children who have difficulty continuing school because of economic necessity, through the open junior high they can acquire the necessary educational services. , SMP Terbuka aims to provide learning opportunities more widely to children graduate SD / MI or equal who can not attend secondary school education Regular due to many barriers it faces. The existence of open SMP is perceived necessary and help students who are in a weak economic conditions or dropping out of school in a letter of graduation or diploma, so that children can also compete to further levels of schooling. This study aims to describe and analyze the implementation of social studies learning, student activities and the management of the Junior Open 02 North Banjarmasin Academic Year 2014/2015. This research approach is qualitative survey approach, and retrieval of data using observation sheets, interview and documentation. Based on the results of the study found that the teachers teaching social studies in the , SMP Terbuka 02 North Banjarmasin Academic Year 2014/2015 is already quite good, although there are some items that have not reached the maximum, and to aktiviats students have also been good, while for the management of the teaching provided is sufficient adequate.Keywords: curriculum development, teacher IPS, SMP Terbuka

The Relationship between Australian Mutual Fund Fees and Risk‐Adjusted Performance in Differing Economic Conditions

We find that Australian mutual fund investors should avoid high fee funds as these funds generate relatively low after‐fee risk‐adjusted returns both unconditionally and in weak economic conditions. This result is different from some of the previous findings which showed that US mutual funds with relatively high expense ratios may generate relatively higher risk‐adjusted returns during recessions relative to non‐recessions, although their unconditional alphas may be negative. We find some support for the Glode hypothesis in surviving Australian wholesale funds. High‐fee surviving Australian wholesale funds perform relatively strongly in both weak economic conditions and unconditionally. High‐fee funds in other types of Australian mutual funds generally do not perform strongly either in weak economic conditions or unconditionally. Amongst low‐fee funds, we commonly find that those that perform well unconditionally and well in weak economic conditions do charge more than those that perform well unconditionally and poorly in weak economic conditions. Amongst low‐fee funds, it is often true that those that perform poorly unconditionally but well in weak economic conditions can charge more than those that perform poorly unconditionally and poorly in weak economic conditions.

Working the Night Shift: The Impact of Compensating Wages and Local Economic Conditions on Shift Choice

The theory of compensating differentials asserts that night shift workers should receive compensating wage differentials due to undesirable work conditions. In weak local economies, workers may have difficulty finding jobs; thus, these workers might be more likely to accept night shift work and be less concerned with the size of the compensating differential for night shifts. Using CPS data from 2001, this paper employs maximum likelihood estimation of an endogenous switching regression model to analyze wages of day and night shift workers and shift choice. The findings indicate the presence of selection bias, thus emphasizing the importance of correcting for self-selection into night shifts. The average of the estimated wage differentials for night shift work is negative for the overall sample, with differentials varying by worker characteristics. The shift differential is found to be a statistically significant predictor of shift choice, indicating that shift premiums play an important role in motivating individuals to select night shift work. Using two measures of local economic conditions and a new method of analyzing interaction effects in the context of an endogenous switching regression model, this paper finds limited evidence that weak local economic conditions lessen the impact of compensating differentials on shift choice.

The dynamic power law model

I propose a new measure of common, time-varying tail risk for large cross sections of stock returns. Stock return tails are described by a power law in which the power law exponent is allowed to transition smoothly through time as a function of recent data. It is motivated by asset pricing theory and is estimable via quasi-maximum likelihood. Estimates indicate substantial time variation in stock return tails, and that the risk of extreme returns rises in weak economic conditions.

Political uncertainty and risk premia

We develop a general equilibrium model of government policy choice in which stock prices respond to political news. The model implies that political uncertainty commands a risk premium whose magnitude is larger in weaker economic conditions. Political uncertainty reduces the value of the implicit put protection that the government provides to the market. It also makes stocks more volatile and more correlated, especially when the economy is weak. We find empirical evidence consistent with these predictions.

Overview of the International Financial Instruments Issued in Spain

The Spanish economy continues to contract as it undergoes a difficult process of correcting pre-crisis imbalances. The challenge of this adjustment has been exacerbated by weak economic conditions in many of Spain’s main trading partners and by continued financial market fragmentation within the euro area. Spain is undertaking a major program of financial sector reform with support from the European Stability Mechanism (ESM). On June 25, 2012, Spain requested financial assistance from the European Financial Stability Facility (EFSF) to support the ongoing restructuring and recapitalization of its financial sector. The Eurogroup approved this support for Spain. This paper deals with the present economic condition in Spain and the dynamic changes in the financial market present in Spain with reference to its financial instruments.

Bank exposure to market fear

We find that increases in implied market volatility (a proxy for market fear) have a significant impact on returns of bank stocks, above and beyond systematic risk proxied by the expected excess market return during a bad economic regime. Large bank returns are favorably affected by increases in implied market volatility during the crisis, while small banks are adversely affected by increases in implied market volatility. We attribute the different effects among the size-categorized bank portfolios to the perception that large banks are protected by too-big-to-fail policies. Within the sample of small banks, the adverse share price response to increased implied market volatility is more pronounced for banks that rely more heavily on non-traditional sources of funds, use a high proportion of loans in their assets, have a higher level of non-performing assets, and have a relatively low provision for loan losses. The adverse effect of negative innovations in implied market volatility on small bank returns during the crisis is primarily driven by exposure of their loan portfolio to weak economic conditions.

Strategies for business turnaround and recovery: a review and synthesis

PurposeAgainst a backdrop of continued weak economic conditions and with many firms experiencing declining financial performance, this paper presents a synthesis of the business turnaround literature. It aims to identify which turnaround and recovery strategies have been effective historically, based on the evidence provided by previous empirical research.Design/methodology/approachThe authors review literature that includes 22 empirical studies, which investigated business turnarounds in previous recessionary environments. This literature was reviewed in its entirety, rather than as individual contributions, to synthesise the lessons available for businesses operating in today's challenging economic environment.FindingsThe literature review revealed convergence in the findings of the prior studies. In total, six effective turnaround strategies were consistently identified and four of these relate to the content of the turnaround, namely: cost efficiencies, asset retrenchment, a focus on the firm's core activities and building for the future and two relate to accompanying change processes required for implementation: reinvigoration of firm leadership and culture change.Research limitations/implicationsThe authors highlight areas where knowledge on business turnarounds remains limited and suggest potentially fruitful directions for future research.Practical implicationsThe authors discuss the elements involved in each of the six effective turnaround strategies identified. The authors also provide a contemporary example to illustrate the application of these strategies in the current economic environment.Originality/valueThe paper offers practitioners an evidence‐based view on effective business turnaround and recovery strategies, in addition to providing researchers with an accessible review of the existing literature.