Macroeconomics Commons^™

The Lingering Effects On Junk Bond Spreads Of The Fed’S 2020 Corporate Bond Backstop Facilities, John V. Duca, An Nguyen

Journal of Financial Crises

The US corporate bond market is typically disrupted during financial crises, when uncertainty and risk premiums are high and bond issuance is depressed. During the COVID-19 recession, the Federal Reserve introduced two unprecedented interventions: the Primary Market Corporate Credit Facility and Secondary Market Corporate Credit Facility. These backstop facilities stood ready to purchase corporate bonds when corporate bond spreads were wide. While existing literature highlights their effects on investment-grade bonds, the implications for high-yield (junk) bonds remain less well understood. We track uncertainty using the Cboe Volatility Index, or VIX; Jurado, Ludvigson, and Ng’s measures of macroeconomic uncertainty; and other …

A Framework For Understanding The Vulnerabilities Of New Money-Like Products, Kenechukwu Anadu, Patrick Mccabe, J.P. Perez-Sangimino, Nathan Swem

Journal of Financial Crises

New money-like products, such as tokenized money market funds (MMFs), money market exchange-traded funds, and stablecoins, could be transformative for finance. These products may offer significant benefits, but like other money-like assets, they also have certain vulnerabilities. We introduce a framework to analyze the vulnerabilities of new products by comparing their features to those that contribute to vulnerabilities in MMFs. Specifically, we examine the extent to which each product engages in liquidity transformation, is subject to threshold effects, serves as a money-like asset, poses contagion risks, and has reactive investors. Our framework is useful for assessing the potential effects of …

Inflation-Differential Rule Versus (De Facto Soft-Peg) Discretion: Exchange-Rate Management Approach In Developing Economies, Behnam Ebrahimi, Mohammad Vaez Barzani Dr.

Bulletin of Monetary Economics and Banking

Many developing and emerging economies officially report a managed floating exchange-rate regime tailored with a fundamental exchange rate management approach, while in practice operating a de facto soft peg, characterized by discretionary, near-constant exchange-rate depreciation aimed at dampening inflation expectations. This discretionary approach—often justified as a pragmatic response to inflationary pressure—produces a hybrid regime that lacks the transparency and credibility emphasized in IMF policy guidance. This study evaluates whether substituting Discretionary Soft-Peg Exchange Rate Management approach with an Inflation-Differential Rule of Exchange Rate Management approach, which links exchange-rate adjustments to the inflation differential between domestic and rest of the world, …

Usability Of Bitcoin As Currency In Türkiye: Fourier Shin Approach, İsmail Cem Özkurt, Deniz Özyakışır, Yunus Kutval

The Indonesian Capital Market Review

This paper seeks to assess the feasibility of utilizing Bitcoin as a currency within Türkiye. To achieve this, the research analyzes long-term cointegration relationships between Bitcoin and both the US Dollar and Euro, employing monthly data from November 2017 to February 2025 and utilizing the Fourier Shin cointegration test. The results of the cointegration tests, bolstered by Fourier series analysis, reveal significant long-term cointegration relationships between Bitcoin and both the USD and Euro. The DOLS analysis indicates that a 1% rise in Bitcoin leads to a 14% decrease in the USD price and a 17% increase in the Euro. These …

Financial Stability Versus Bank Lending Channel Transmission: The Impact Of Bank Competition And Concentration In Indonesia, Alif Ihsan A Fahta, Chaikal Nuryakin

Bulletin of Monetary Economics and Banking

Using financial data from 47 publicly listed banks in Indonesia from 2013Q4 to 2023Q3, this study employs a new approach by utilizing ΔCoVaR as a proxy for financial stability to examine how changes in bank competition in bank competition and banking industry concentration affects financial stability and the effectiveness of bank lending channel transmission. We find that, on one hand, an increase in market power (decreased bank competition) and an increase in banking industry concentration reduce financial stability. On the other hand, an increase in banking industry concentration enhances the effectiveness of the bank lending channel transmission by increasing the …

The Relationship Between Government Bailouts And Risk-Taking Behavior In Banks: A Case Study From The Great Financial Crisis Of 2008-09, Derek J. Cameron

Economics Working Papers

This study seeks to determine whether the expectation of a government bailout in the event of a crisis incentivizes ex ante risk-taking in banks. Although this subject has been the subject of extensive research in both economics and finance, this specific paper differs from existing literature in that it uses a strictly empirical methodology with minimal theoretical modeling and few assumptions about the banking sector, while also considering the entire banking sector and limiting itself exclusively to ex ante bank investment decisions. This study employs data compiled from various sources about 11 American banks of various sizes between January 2002 …

Fiscal And Monetary Policies For Inclusive Growth In Developing And Emerging Markets, Collins Anosike

Journal of Global Awareness

The study examined the effects of monetary and fiscal policies in attaining inclusive growth for some developing countries and emerging markets. The study selected 20 countries and grouped them into group one and group two. The study is unique because it captures a broader range of countries compared to previous studies and shows their effect on economic growth. We use panel data and employ OLS regression and Johansen cointegration. We examine how each variable, general government expenditure, gross national expenditure, total revenue, official exchange rate, broad money, and deposit interest rate, affects the dependent variable (real GDP) from 1980 to …

Notes From The Editor, Jay Nathan

Journal of Global Awareness

No abstract provided.

Undertaking Short-Term Finance Transactions In Brazil - An Historic And Modern Look At The Brazilian Economy And Associated Risks, Shawn M. D'Aversa

Student Research

The following report discusses the risks and construction of a hypothetical short-term trade finance transaction involving the five parties: Citibank N.A., Caterpillar Inc. (CAT), Banco Do Brasil, Paracatu Gold Mine and EXIM Bank. Fair warning: this is a long paper for a short-term transaction.

For the deal, Caterpillar Inc. (CAT) has approached Citibank N.A. in New York regarding a financing transaction for five 797F-400 short-ton haul trucks. The trucks are worth $5mn each, including the costs of training and spare parts, for a total of $25mn. Put simply, the trucks are beasts for mining. They will then be shipped to …

Manipulation Or Monetization?: The Rise Of Stock Buybacks And Their Effects On Firm Valuation And Investment, Thomas H. Serrano

Economics Undergraduate Honors Theses

Abstract:

This thesis uses basic econometrics to examine the relationship between stock buybacks, firm valuation, and investment among publicly traded firms from 2000-2024. Using firm-level data pulled from Compustat North America and a fixed-effect multivariate regression, it evaluates whether buybacks are associated with higher valuation and stronger productive investment as defined in the paper. The results show that buybacks are positively associated with firm valuation the first year that they occur, but the relationship disappears when they are lagged for a year. Furthermore, the analysis does not find strong statistical evidence that repurchases are associated with changes in investment, or …

Converting The Social Security Trust Fund Into A Sovereign Wealth Fund: A Proposal To Secure The Future, Keanu Moore

Dartmouth College Master’s Theses

This thesis proposes the conversion of the Social Security Trust Fund into a sovereign wealth fund (SWF), paired with the phased creation of a mandatory retirement savings system for all working-age Americans. In response to forecasts projecting Trust Fund depletion by 2034, the proposed portfolio shift would diversify assets beyond U.S. Treasuries into global equities, real estate, alternatives, and fixed income, with the goal of enhancing long-term returns while remaining passively managed. While this reform would extend the Fund’s solvency, it is not, on its own, a permanent fix. To ensure structural sustainability beyond the exhaustion date, the thesis proposes …

Black Swans And Financial Stability: A Framework For Building Resilience, Daniel J. Barth, Stacey L. Schreft

Journal of Financial Crises

This article refines the concept of black swans, typically described as highly unlikely and catastrophic events, to be internally consistent. It explores features of the financial system that prevent the eradication of black swans. The main implication is the need to enhance the financial system’s resilience to withstand unforeseen events rather than focus on past crises. The article introduces a “resilience principle” for designing official-sector policies that can achieve such goals. The principle calls for policies that are adaptable, universal, and systemic. The article provides examples of policies with these features, assuming that the official sector is not better positioned …

Cbdcs Vs Decentralized Currencies: Considerations For 21st Century Global Financial Challenges, Andrew Michael Sobhy, Shuai Wang

The Downtown Review: An Interdisciplinary Journal Written and Peer-Reviewed by Mandel Honors College Students at Cleveland State University

As digital currencies gain prominence in everyday life, policymakers in the United States at the federal, state, and local levels debate the potential for innovation, surveillance, global relations, and a plethora of areas that concern citizens. While existing literature highlights the opportunities and pitfalls within this new digital age, including inclusivity and challenges to traditional banking, this study aims to contribute a quantitative approach to the discussion utilizing Federal Reserve data, studies from financial institutions, and various credible resources that hold a stake. Specifically, comparing novel Central Bank Digital Currency (CBDCs) and Decentralized Financial Currencies (DeFi) will provide a foundation …

The Tcja And Shareholder Payouts, Carson T. Bloom

CMC Senior Theses

Abstract

The Tax Cuts and Jobs Act (TCJA) provided corporations an estimated $233 billion in tax savings, yet relatively little is known about how firms allocated this cash windfall. This study examines whether growth and mature firms differed in whether they used these tax savings to distribute dividends and repurchase shares. Using panel data on publicly traded North American firms from 2016–2019, I classify firms as either growth or mature based on their cash-flow patterns and estimate the effects of the TCJA on their behavior using a difference-in-differences design.

The results indicate that mature firms increased shareholder payouts significantly more …

Essays On Financial Econometrics And Macro-Financial Forecasting, Zhendong A. Li

Electronic Theses & Dissertations (2024 - present)

The first chapter proposes an innovative supervised learning technique for dimension reduction and forecasting financial and macroeconomic time series in the presence of weak factors that can undermine the effectiveness of traditional Principal Component Analysis (PCA). This approach employs double or multiple supervised learning procedures and is termed ``Supervised Scaled Principal Component Analysis'' (SsPCA). Initially, each predictor is scaled using its predictive slope on the target forecast variable, giving more weight to those with stronger predictive abilities and less to those with weaker ones. Subsequently, utilizing the scaled predictors, we intelligently identify the most informative subset for prediction. This involves …

Lessons Learned: Andreas Verykios And Kostas Tsatsaronis, Mercedes Cardona

Journal of Financial Crises

Andreas Verykios was appointed in 2018 to lead the board of directors of the General Council of the Hellenic Financial Stability Fund (HFSF), an independent special purpose vehicle created to stabilize the Greek banking sector in the wake of the country’s debt crisis. The Greek economy was badly affected by the Global Financial Crisis (GFC) and the Sovereign Debt Crisis, when the government was found to have underreported its fiscal deficits and public debt. This led to a downgrade and eventual default of its sovereign bonds, requiring assistance from the European Commission. From 2010 through 2018, the commission implemented three …

Lessons Learned: Paul Tucker, Salil Gupta

Journal of Financial Crises

After joining the Bank of England (BoE) in 1980, Sir Paul Tucker held a number of positions of increasing responsibility including serving as a member of several key committees. Tucker played a crucial role in the BoE’s response to the Global Financial Crisis (GFC) as director for markets, through March 2009, then as deputy governor of the bank until November 2013. Post-crisis, he has been instrumental in constructing the international regulatory framework on financial stability. From 2016 to 2021, Tucker also chaired the Systemic Risk Council.

Currently, Tucker is a research fellow at Harvard Kennedy School, Mossavar-Rahmani Center for Business …

Lessons Learned: Ewald Nowotny, Maryanne Chute Lynch, Rosalind Z. Wiggins

Journal of Financial Crises

Ewald Nowotny was appointed governor of the National Bank of Austria in September 2008 at the start of the Global Financial Crisis (GFC), having previously served as a vice president of the European Investment Bank in Luxembourg, the house bank of the European Union. Nowotny participated in the implementation of the multilateral stabilization framework known as the Vienna Initiative, which helped restore stability in the financial markets of Central, Eastern, and Southeastern Europe during the GFC. Working with the Austrian Central Bank, the European Commission, and the International Monetary Fund (IMF), he steered the Austrian economy away from recession. During …

Lessons Learned: Pedro Machado, Mercedes Cardona

Journal of Financial Crises

Pedro Machado began his career as a legal adviser to the European Central Bank in the years leading up the Global Financial Crisis (GFC), then joined the Bank of Portugal (BOP) in 2006, where he has held several positions. He was chief of staff to Portugal’s minister of state and finance in 2011, during the European Sovereign Debt Crisis, when the government negotiated a bailout with the International Monetary Fund (IMF) and European Union. He returned to the BOP, as deputy director of the prudential supervision department, while the program was being implemented. The EUR 78 billion bailout was largely …

Central Bank Crisis Interventions: A Review Of The Recent Literature On Potential Costs, Patrick Aldridge, David A. Cimon, Rishi Vala

Journal of Financial Crises

Central banks may engage in large-scale lending and asset purchases to stabilize financial markets and implement monetary policy during crises. The ability of these actions to restore financial market functioning is well documented; however, they come with costs. We provide a literature review of the costs associated with these post-Global Financial Crisis central bank actions, without commenting on the net benefits they provide. We find support for the premise that crisis actions may negatively impact market liquidity, distort asset prices, increase rent-seeking and inefficient uses of the liquidity provided by the central bank, create international spillovers, and create distortions in …

Marketcrafters: The 100-Year Struggle To Shape The American Economy, Jay Nathan

Journal of Global Awareness

No abstract provided.

Letter From The Editor, Jay Nathan

Journal of Global Awareness

No abstract provided.

Firms Heterogeneity In Indonesia’S Manufacturing And Services Sectors, Rizki Nauli Siregar

Economics and Finance in Indonesia

Firm heterogeneity is the building block of modern trade theories. One of its important implications is that comparative advantage is driven by firm productivity, rather than sector differences across countries. Despite the prevalence of this framework, there has not been any systematic documentation on firm heterogeneity in Indonesia’s man ufacturing and services firms. Using the World Bank Enterprise Survey (WBES) data for Indonesia in 2015 and 2023, we confirm that there is firm heterogeneity in the form of size and productivity dispersion in both of the economy’s manufacturing and services sectors. We also find no strong association between size and …

Investigating The Relationship Between Noun Classes And Plant Folk Taxonomy In Chasu Language Of Kilimanjaro Region In Tanzania, Peter Rabson Mziray

Journal of Humanities and Social Sciences

The current study investigates the relationship between noun classes and plant folk taxonomy in Chasu (G 22). The study focuses on two objectives: the first objective is to describe the plant folk taxonomy in Chasu and the second objective is to determine the relationship between noun classes and plant folk taxonomy in Chasu. Data were collected from rural villages in Same and Mwanga districts by using free listing, field interviews (jungle-walk-and-identify), and written texts containing Chasu plant names. The findings reveal that Chasu folk taxonomy reflects different ethnobotanical categories; including a unique beginner which is mmea/mimea ‘plant(s)’, and three life …

Analisis Dampak Kebijakan Insentif Fiskal Terhadap Tingkat Komponen Dalam Negeri (Tkdn) Industri Manufaktur Di Indonesia, Muhammad Muhammad, Riyanto Riyanto

Jurnal Kebijakan Ekonomi

Over the last decade, the manufacturing sector's contribution to Indonesia's economy has declined. In 2010, it was 29.10% of GDP, but by 2022, it had dropped to 19.14%. Employment in the sector also fell, from 14.91% of the workforce in 2010 to 13.80% in 2022. To reverse this trend, the government introduced a policy to boost the Domestic Component Level (DCL) in manufacturing. By offering fiscal incentives to industries meeting certain DCL targets, the government aims to drive economic growth and job creation. A study using BPS data from 2008-2019 shows that this policy raised DCL by 23.5%.

Tracking Impact: Leveraging Pre-Existing Monitoring Tools For Assessing Indonesia’S Free Nutritious Meal (Makan Bergizi Gratis) Programme, Putu Geniki Lavinia Natih

Economics and Finance in Indonesia

Indonesia’s Makan Bergizi Gratis (MBG) programme is among the largest school feeding initiatives globally, yet its rapid scale-up has outpaced the development of a robust monitoring, evaluation, and learning (MEL) framework capable of assessing welfare-relevant outcomes. This paper examines whether pre-existing national survey instruments can be leveraged to strengthen outcome monitoring in the absence of MBG-specific microdata. Focusing on the Food Insecurity Experience Scale (FIES) collected through Indonesia’s National Socio-Economic Survey (Susenas), the study first situates experiential food insecurity within Indonesia’s broader food security landscape. It then applies a propensity score matching framework using participation in the Bantuan Pangan Non-Tunai …

The Evolution Of Global Gold And Copper Trade Networks, Oleksandr Hulianskyi

Northeast Journal of Complex Systems (NEJCS)

Gold and copper have emerged as two of the most vital commodities in global trade. Despite serving distinct purposes, their international trade networks reveal interconnected patterns, critical to understanding the dynamics of global economics. This paper studies these attributes and their evolution during the last 36 years for both metals and finds correlations between them. The first part of the research is focused on the sustainability of networks through efficiency and robustness indexes; the second part is dedicated to interconnectedness – the Louvain and Bayesian SBM algorithms, partition, and modularity instruments are used. Community detection algorithms provide valuable insights into …

Pension Funds For Housing Development In Indonesia: Challenges And Strategies, Thomas Soseco, Anggari Marya Kresnowati, Ayu Dwidyah Rini

Economics and Finance in Indonesia

Housing infrastructure is necessary to improve the quality of life of the community, yet a recent assessment of housing infrastructure development in Indonesia highlights a low level of performance. Therefore, actions are needed to stimulate it through pension funds, which remain minimally utilized for direct investment in the housing sector. This research investigates the potential and challenges of using pension funds for housing investment in Indonesia, employing Input Output (IO) Analysis with data from Statistics Indonesia (BPS). The findings reveal a significant gap between the potential and realized pension fund investments, indicating the substantial capacity of pension funds to be …

Non-Tariff Measures On Indonesian Tea Products: Do Sps And Tbt Impede Or Promote The Export?, Fikri Aldi Dwi Putro, Widyastutik Widyastutik, Nia Kurniawati Hidayat

Economics and Finance in Indonesia

Previous studies highlight the heterogeneous effects of Non-Tariff Measures (NTMs) on international trade. This study identifies the enforcement of NTMs and examines the effects on the export performance of Indonesian tea products. This study employed an inventory (coverage ratio) approach and panel regression with the Poisson-Pseudo Maximum Likelihood (PPML) method. The results indicate that 31 out of 36 analyzed destination countries enforce NTMs, with Vietnam imposing the most prevalent ones. Furthermore, SPS measures substantially promote the export of Indonesian tea products, whereas TBT measures show no significant effect. Therefore, the government needs to provide incentives and harmonize the national Voluntary …

Welfare Implication Of Alternative Tax Rates Adjustment Policy In Nigeria: A Dsge Analysis, Umar B. Ibrahim, Isah F. Abubakar

CBN Journal of Applied Statistics (JAS)

This study sets out to determine the desirable policy adjustment in the tax rate for Nigeria that ensures the least welfare cost. A calibrated small open-economy New Keynesian Dynamic Stochastic General Equilibrium (NKDSGE) model of the Nigerian economy is applied to achieve this objective. Within this framework, we examined the impact of an increase in value-added tax (VAT) rate from 7.5 to 15 percent on key macroeconomic variables relative to the impact of an increase in company income tax (CIT) rate from 30 to 35 percent on macroeconomic variables. Furthermore, we examined the welfare costs of the increases in the …