Modeling of Crisis Processes in the Financial Market

Global liquidity shortage as well as the availability on the market of overpriced assets and derivatives led to the situation where the global economy depends primarily on liquidity, becoming prone to chain-consistent world crises. Only for the last 15 years, the world has witnessed a continuous series of crises. Therefore, the study of the processes and phenomena of crisis is one of the most important scientific and practical tasks. The aim of this work consisted in the development of methods and models for the early detection of crises in the economy. The significance of the work is to develop an econometric model and tools for detection of crisis.

Global Capital Cycles and Market Discipline: Perceptions of Developing-Country Borrowers

Developing countries are often thought to be particularly exposed to the constraints of global markets. Facing scrutiny from foreign investors, why do developing-country governments enter international bond markets, especially when they can access cheaper finance from international financial institutions? I argue that borrowing governments' perception of market constraints depends on global liquidity. When bond markets are highly liquid, investors become more risk acceptant and governments perceive the political costs of borrowing to be lower, especially compared to the conditionality of concessional loans. I use data on the timing of bond issues and three case studies—Ethiopia, Ghana, and Kenya—to demonstrate that choices to issue debt were shaped by global liquidity. These findings nuance debates about how markets constrain governments, emphasizing that market constraints are conditional on systemic factors, including, global liquidity.

Trends and determinants of raising ECBs in Indian Context

This study examines the effect of capital control measures initiated during the last two decades in terms of all-in-cost ceilings and enhanced limits on ECB in India over the sample period 2004Q1 to 2020Q2. Using global liquidity, the exchange rate between INR/USD, imports and interest rate differentials as control variables and changes in capital control measures from 2008 to 2011 in the all-in-cost ceiling, and changes in the enhanced limits on ECBs from USD 500 million to USD 750 million under the automatic route in 2012, regression analysis of three ECB series show interesting results. Using Robust Least Squares method, we document that (1) the successive increment in all-in-cost ceilings on ECB from 2008 to 2011 is inducing ECBs to flow, indicating that Indian firms benefit more than they pay due to increase the cost for ECBs having maturities 3<5 years. However, such capital control measures are not effective on ECBs having maturities >5 years. (2) The effect of the enhanced limits on ECBs from USD 500 million to USD 750 million under the automatic route in 2012 has a pronounced impact on ECB, averaging 1602.1 USD million per quarter. We observed that CCAs in India are initiated in response to the volatility of the exchange rate and global liquidity, imports, and interest rate differentials are significant variables in India's required capital control actions.

Money Doctor in Latin America

Robert Triffin started working at the Board of Governors of the Federal Reserve System in 1942. He worked mainly on Latin America and participated in several missions on monetary and banking reforms. They were part of the Roosevelt administration’s Good Neighbor Policy and imbued by New Deal values. Triffin was an open and multicultural person, with both his Belgian and American background. Moreover, as a progressive Catholic with a strong grounding in economics, he was the ideal person for this new type of monetary reform mission. Triffin emphasized that the aim was to put monetary and banking policy at the service of development objectives previously ignored in central bank legislations. This also reflected a change in economic paradigms, from classical economics to Keynesian economics. During this period Triffin wrote a first important essay on the international monetary system, putting global liquidity at the core of the international monetary system.

The Impact of Global Economy and Global Liquidity on Domestic Economic Growth

Economic globalization has considerably accelerated in recent years. Therefore, they are expected that developments in the global economy have an impact on domestic economies. The chapter aims to analyse empirically the effects of global economic growth, global import demand, and global liquidity on Turkish economic growth. The method of the study is NARDL. The analyses include the 1987-2019 period. According to the empirical results, the growth in global economic output and global import demand has a positive effect on Turkish economic growth. Interestingly, the contraction in global economic output and global import demand also increases more strongly Turkish economic growth. In addition, while the increase in global liquidity has a positive effect on Turkish economic growth, the effect of the decrease in global liquidity is statistically insignificant.