{"title":"Lebanon: From Dollars to Lollars","authors":"Salim Baz, Lara Cathcart, Alexander Michaelides","doi":"10.1111/infi.12459","DOIUrl":"https://doi.org/10.1111/infi.12459","url":null,"abstract":"<p>What were the policies that created one of the world's largest financial and economic crisis (as a percent of GDP) in Lebanon in the early 2020s? An artificially strong currency peg created a consumption boom financed by government debt and international capital flows/remittances, exposing both the public and private sector to classic currency mismatch vulnerabilities. Moreover, a volatile deposit growth through international remittances created banking risks that both a government and a central bank needed to manage. High deposit growth resulted in large banks that invested in high interest-bearing USD deposits at the central bank. The central bank financed government debt, exposing the banking sector to sovereign debt. A worsening international economic environment and political fractionalization in a geopolitically sensitive region exacerbated the classic delays arising from taking difficult burden-sharing, distributional decisions to address the financial crisis.</p>","PeriodicalId":46336,"journal":{"name":"International Finance","volume":"28 1","pages":"37-63"},"PeriodicalIF":1.3,"publicationDate":"2025-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/infi.12459","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143801730","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"A Composite Indicator of Sovereign Bond Market Liquidity in the Euro Area","authors":"Riccardo Poli, Marco Taboga","doi":"10.1111/infi.12458","DOIUrl":"https://doi.org/10.1111/infi.12458","url":null,"abstract":"<div>\u0000 \u0000 <p>We propose a methodology to build and validate a composite indicator of the market liquidity of euro-area sovereign bonds, with the aim of providing a comprehensive assessment of liquidity conditions in several different trading venues and countries. The composite indicator, which starts in 2010, allows us to put into historical context the liquidity deterioration observed during the Covid-19 crisis, which was almost as severe as that experienced during the European sovereign debt crisis. While the latter impairment in liquidity conditions lasted for more than 2 years, the most recent one was quickly reabsorbed. We provide evidence that the promptness and boldness of the European Central Bank's interventions in 2020 could contribute to explain this difference: according to our indicator, the announcements of some monetary policy measures having an explicit market stabilization function were followed by significant improvements in the liquidity of sovereign bonds.</p>\u0000 </div>","PeriodicalId":46336,"journal":{"name":"International Finance","volume":"28 1","pages":"23-36"},"PeriodicalIF":1.3,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143801463","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Rafael Guerra, Steven B. Kamin, John Kearns, Christian Upper, Aatman Vakil
{"title":"Latin America's Nonlinear Monetary Response to Pandemic Inflation","authors":"Rafael Guerra, Steven B. Kamin, John Kearns, Christian Upper, Aatman Vakil","doi":"10.1111/infi.12457","DOIUrl":"https://doi.org/10.1111/infi.12457","url":null,"abstract":"<div>\u0000 \u0000 <p>This paper estimates empirical Taylor rules to analyze the recent monetary policy of the five main Latin American inflation-targeting central banks. We find that during the inflationary surge of 2021–2023, monetary policy reacted more strongly and more quickly to changes in inflation than predicted by a standard linear Taylor rule, estimated on data from the prepandemic period. Although this appears to represent a shift in the monetary reaction function, we think it more likely that Latin American central banks have been following a nonlinear strategy, responding more aggressively to inflation, the higher it rose. We confirmed this by adding the square of inflation to the Taylor rule model: its coefficient was positive and significant, indicating that policy interest rates exhibited a nonlinear response to inflation, even during the prepandemic period, and the model did a better job of predicting the sharp rise in interest rates during 2021–2023.</p>\u0000 </div>","PeriodicalId":46336,"journal":{"name":"International Finance","volume":"28 1","pages":"2-22"},"PeriodicalIF":1.3,"publicationDate":"2025-02-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143801750","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Brexit, what Brexit? Euro area portfolio exposures to the United Kingdom since the Brexit referendum","authors":"Daniel Carvalho, Martin Schmitz","doi":"10.1111/infi.12453","DOIUrl":"https://doi.org/10.1111/infi.12453","url":null,"abstract":"<p>We study euro area investors' portfolio adjustment since the Brexit referendum in terms of securities issued in the UK or denominated in pound sterling, in the context of heightened policy uncertainty surrounding the exit process of the UK from the EU. Our sector-level analysis ‘looks-through’ holdings of investment fund shares to gauge euro area sectors' full exposures. Our key finding is the absence of a negative ‘Brexit-effect’, rendering UK-issued and pound-denominated securities less attractive. Instead, we observe that all euro area sectors increased their absolute and relative exposures to UK-issued and pound-denominated debt securities since the Brexit referendum, as well as to listed shares issued by UK nonfinancial corporations, while the exposures to shares issued by UK banks declined. These findings should be seen against the backdrop of low yields on euro area debt securities and a strong recovery in UK share prices since the Brexit referendum.</p>","PeriodicalId":46336,"journal":{"name":"International Finance","volume":"27 3","pages":"203-230"},"PeriodicalIF":1.3,"publicationDate":"2024-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142860915","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Institutional differences, state ownership and financing decisions: Evidence from Chinese cross-border mergers and acquisitions","authors":"Siman Xie, Muhammad Farhan Bashir","doi":"10.1111/infi.12455","DOIUrl":"https://doi.org/10.1111/infi.12455","url":null,"abstract":"<p>Using data on Chinese cross-border mergers and acquisitions (M&As) from 2002 to 2022, this paper considers the effects of institutional differences and state ownership on the financing decisions of Chinese cross-border M&As. We find that cultural differences and formal institutional differences have significantly positive effects on internal financing and equity financing. These findings indicate that under the influence of institutional differences, internal financing is the type of financing most favoured by Chinese enterprises engaged in cross-border M&As, followed by equity financing and, finally, debt financing. We document that the financing decision most favoured by Chinese state-owned enterprises is debt financing, whereas the least favoured decision is equity financing. In addition, we find a prominent mediating effect of information asymmetry, which implies that information asymmetry serves as a potential channel through which institutional differences impact the financing decisions of Chinese cross-border M&As.</p>","PeriodicalId":46336,"journal":{"name":"International Finance","volume":"27 3","pages":"309-338"},"PeriodicalIF":1.3,"publicationDate":"2024-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142860532","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Monetary policy transmission and trade-offs in the United States: Old and new","authors":"Boris Hofmann, Gert Peersman","doi":"10.1111/infi.12452","DOIUrl":"https://doi.org/10.1111/infi.12452","url":null,"abstract":"<p>This study shows that monetary policy transmission in the United States has evolved considerably over the postwar period. Since the mid-1980s, the effects of monetary policy on credit and housing markets have become much stronger relative to the impact on gross domestic product, while the effects on inflation have become weaker. We show that these changes in the relative effects of monetary policy can be explained by several important changes in the monetary transmission mechanism and in the composition of credit aggregates. Most notably, the increasing impact of monetary policy on credit was predominantly driven by an extraordinarily higher responsiveness of mortgage credit and a larger share of mortgages in total credit. These findings imply important changes over time in short-term monetary policy trade-offs between inflation and output stability on the one hand and between financial and macroeconomic stability on the other.</p>","PeriodicalId":46336,"journal":{"name":"International Finance","volume":"27 3","pages":"253-278"},"PeriodicalIF":1.3,"publicationDate":"2024-12-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142860320","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Impact of monetary policy on corporate R&D investment: From the perspective of loan term structure","authors":"Yanling Yang, Yuegang Song","doi":"10.1111/infi.12454","DOIUrl":"https://doi.org/10.1111/infi.12454","url":null,"abstract":"<p>Monetary policy can directly impact corporate R&D investment, and it can also be achieved through loan term structure indirectly. This study examines the relationship between macro-level monetary policy and micro-level corporate R&D investment from the perspective of loan term structure using data from A-share listed companies in China from 2007 to 2018. The study has three major findings: (i) There is a positive correlation between monetary policy easing and corporate R&D investment. (ii) From the perspective of the loan term structure, when monetary policy tightens, changes in the loan term structure may discourage corporate R&D activities, which is more pronounced for non-state-owned, high-tech and growth-stage companies. The effect of unconventional monetary policy is greater than that of conventional monetary policy in the period of severe economic shock, and monetary policy has a clear asymmetric effect that is greater when it is tight than when it is accommodative. (iii) Through survival analysis, it is found that tight monetary policy is not conducive to prolonging the duration of enterprises' R&D investment. Based on these findings, the study presents recommendations that provide a reference for the government to implement macro-control.</p>","PeriodicalId":46336,"journal":{"name":"International Finance","volume":"27 3","pages":"279-308"},"PeriodicalIF":1.3,"publicationDate":"2024-12-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142860027","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"How large is the output cost of disinflation?","authors":"Robert J. Tetlow","doi":"10.1111/infi.12451","DOIUrl":"https://doi.org/10.1111/infi.12451","url":null,"abstract":"<p>This paper examines estimates of, and drivers for, the sacrifice ratio, defined as the cumulative sum of foregone annualised output accruing from a disinflation of one percentage point. Three approaches are employed. The first reviews the literature on what sacrifice ratio might be expected. The second studies a generic disinflation experiment using 40 estimated macro models of the U.S. economy, calculating a distribution of sacrifice ratios. Those sacrifice ratios are high by historical standards and the paper discusses some stories for why this is so. The role of expectations formation and the credibility of policy is emphasised. The third approach investigates more closely some drivers of the output cost of disinflation by carrying out a selection of disinflation experiments using the FRB/US model, varying certain characteristics of the model's expectations formation mechanism. Pinning down a precise measure for the output cost of disinflation is challenging. However, the literature and policy experiments do offer some guidance on how the sacrifice ratio can be reduced.</p>","PeriodicalId":46336,"journal":{"name":"International Finance","volume":"27 3","pages":"231-252"},"PeriodicalIF":1.3,"publicationDate":"2024-11-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142862249","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}