Dynamic Effects of Currency Depreciation on Stock Market Returns during the Asian Financial Crisis

The current international integration of financial markets provides a channel for currency depreciation to affect stock prices. Moreover, the recent financial crisis in Asia with its accompanying exchange rate volatility affords a case study to examine that channel. This paper applies a bivariate GARCH-M model of the reduced form of stock market returns to investigate empirically the effects of daily currency depreciation on stock market returns for five newly emerging East Asian stock markets during the Asian financial crisis. The evidence shows that the conditional variances of stock market returns and depreciation rates exhibit time-varying characteristics for all countries. Domestic currency depreciation and its uncertainty adversely affects stock market returns across countries. The significant effects of foreign exchange market events on stock market returns suggest that international fund managers who invest in the newly emerging East Asian stock markets must evaluate the value and stability of the domestic currency as a part of their stock market investment decisions.

Intra-regional trade between China, Japan, and Korea : before and after the financial crisis

East Asian economies have been heavily dependent on the U.S. and EU markets, especially for the export of final goods. Therefore, once the financial crisis hit Western economies hard, the East Asian economies lost their major markets.Their production networks then worked to the region's disadvantage and stifled industrial development.This reflects the vulnerability of the East Asian economies which have adopted an export-led growth strategy. Such vulnerability needs to be addressed to prevent future economic crises, as well as to sustain economic growth. This paper examines the trade structure of the three countries-China, Japan, and Korea-before and after the Lehman Shock, and discusses how the three countries should cooperate in addressing imbalances in the trade structure.

No effect of unemployment on intimate partner-related femicide during the financial crisis: a longitudinal ecological study in Spain

Background: Spain’s financial crisis has been characterized by an increase in unemployment. This increase could have produced an increase in deaths of women due to intimate partner-related femicides (IPF). This study aims to determine whether the increase in unemployment among both sexes in different regions in Spain is related to an increase in the rates of IPF during the current financial crisis period. Methods: An ecological longitudinal study was carried out in Spain’s 17 regions. Two study periods were defined: pre-crisis period (2005–2007) and crisis period (2008–2013). IPF rates adjusted by age and unemployment rates for men and women were calculated. We fitted multilevel linear regression models in which observations at level 1 were nested within regions according to a repeated measurements design. Results: Rates of unemployment have progressively increased in Spain, rising above 20 % from 2008 to 2013 in some regions. IPF rates decreased in some regions during crisis period with respect to pre-crisis period. The multilevel analysis does not support the existence of a significant relationship between the increase in unemployment in men and women and the decrease in IPF since 2008. Discussion: The increase in unemployment in men and women in Spain does not appear to have an effect on IPF. The results of the multilevel analysis discard the hypothesis that the increase in the rates of unemployment in women and men are related to an increase in IPF rates. Conclusions: The decline in IPF since 2008 might be interpreted as the result of exposure to other factors such as the lower frequency of divorces in recent years or the medium term effects of the integral protection measures of the law on gender violence that began in 2005.

The euro before the financial crisis of 2008: an integrating and stabilizing factor. Jean Monnet/Robert Schuman Vol. 13 No. 9, June 2013

From the Introduction. The main focus of this study is to examine whether the euro has been an economic, monetary, fiscal, and social stabilizer for the Eurozone. In order to do this, the underpinnings of the euro are analysed, and the requirements and benchmarks that have to be achieved, maintained, and respected are tested against the data found in three major statistics data sources: the European Central Bank’s Statistics Data Warehouse (http://sdw.ecb.europa.eu/), Economagic (www.economagic.com), and E-signal. The purpose of this work is to analyse if the euro was a stabilizing factor from its inception to the break of the financial crisis in summer 2008 in the European Union. To answer this question, this study analyses a number of indexes to understand the impact of the euro in three markets: (1) the foreign exchange market, (2) the stock market, and the Crude Oil and commodities markets, (3) the money market.

Policy Lessons for Macroeconomic and Financial Crisis Management in the Southern and Eastern Mediterranean. CEPS Policy Brief No. 308, 13 December 2013

This Policy Brief attempts to draw lessons from the combination of the global financial crisis and the Arab uprisings focusing on the domains related to fiscal, monetary and financial policies. It does so by answering the following questions: What has been the impact of the crisis and the uprisings on the fiscal, monetary and financial policies of the SEMCs? What have been the crisis management actions? And what policy lessons can be drawn for crisis management in the future? And how can the EU contribute to this within the Euro-Med Partnership?

Macroeconomic and Financial Crisis Management in the Southern and Eastern Mediterranean: Diagnosis and Prospects. CEPS Paperbacks. December 2013

The global financial crisis, which started in the summer of 2007 and deepened in the aftermath of the Lehman failure in September 2008, has led to a virtual collapse in economic activity and increased financial volatility worldwide. For the developing countries, the main channel of transmission has been a drop in external transactions, such as trade, financial and capital flows, and remittances. The emerging economies in the southern and eastern Mediterranean have also faced declining economic activity, although there seems to be considerable variation in the relative magnitude and timing. Most of these economies have shown a delayed but more lasting response to the crisis, driven mostly by their close trade and investment ties with the EU and the Gulf Cooperation Council (GCC) countries. This book explores the fiscal, monetary and financial effects of the crisis in the region and provides an in-depth analysis of the fiscal, monetary and banking policies in the post-crisis era, the viability of their exit strategies and the future of reforms in the region. These analyses not only provide a comprehensive comparison between the countries but also provide a solid basis for assessing future economic and financial developments and reforms in the region.

Repurposing Globalization: Discourse and Political Strategy in New Labour Britain. ACES Working Papers, 2012

As elsewhere in Europe and around the world, the discourse of globalization in the United Kingdom—the particular representation of the world as undergoing an epochal shift away from the traditional autonomy of the nation-state—has powerfully reshaped political debate. And this has had important distributional effects on the balance of power in the political party system, most notably in the return to power of the Labour Party as “New Labour” under the leadership of Tony Blair and Gordon Brown. But while it is known that articulations of globalization are embedded in the political system, a systematic analysis linking such discourse with party competition is lacking. In this paper, I propose that many features of the globalist language invoked by New Labour can be explained in terms of concrete strategic aims. Working with concepts of “heresthetics” and “bricolage” drawn from a synthesis of literatures, I illustrate this approach through several representative texts. These findings are then used to make predictions about the kind of globalization discourse to expect in the communications of two nationalist parties in the UK—“least likely” cases for globalism—which can be explored further as part of a larger research program.

What if the Next Financial Crisis Hits the Banking Union? A Call for an “If All Else Fails” Clause. European Policy Brief No. 16, September 2013

This Policy Brief argues that the envisaged design of the Banking Union risks not being sufficient to deal with the next large-scale financial crisis. Therefore, an “if all else fails” clause should be approved, stating that the Banking Union members can provide joint last resort financing to deal with a future crisis. An agreement on the clause should be feasible because it is beneficial to all Member States.

Europe’s Untapped Capital Market: Rethinking integration after the great financial crisis. Final report of the European Capital Markets Expert Group. Task Force Report, February 2016

In December 2014, ECMI and CEPS formed the European Capital Markets Expert Group (ECMEG) with the aim of providing a long-term contribution to the debate on the Capital Markets Union (CMU) project, proposed by the European Commission. After an intensive, year-long research effort and in-depth discussions with ECMEG members, this final report aims to rethink financial integration policies in the European Union and to devise an EU-wide plan to remove the barriers to greater capital markets integration. It offers a methodology to identify and prioritise cross-border barriers to capital markets integration and provides a set of policy recommendations to improve its key components: price discovery, execution and enforcement of capital markets transactions.

State Transformation and the European Integration Project. Lessons from the financial crisis and the Greek paradigm. CEPS Special Report No. 130/February 2016

The financial crisis that erupted in the eurozone not only affected the EU’s financial governance mechanisms, but also the very nature of state sovereignty and balances in the relations of member states; thus, the actual inequalities between the member states hidden behind their institutional equality have deteriorated. This transformation is recorded in the case law of the Court of Justice of the European Union and the member states’ constitutional courts, particularly in those at the heart of the crisis, with Greece as the most prominent example. It is the issue of public debt (sovereign debt) of the EU member states that particularly reflects the influence of the crisis on state sovereignty as well as the intensely transnational (intergovernmental) character of European integration, which under these circumstances takes the form of a continuous, tough negotiation. The historical connection between public debt (sovereign debt) and state sovereignty has re-emerged because of the financial crisis. This development has affected not only the European institutions, but also, at the member state level, the actual institutional content of the rule of law (especially judicial review) and the welfare state in its essence, as the great social and political acquis of 20th century Europe. From this perspective, the way that the Greek courts have dealt with the gradual waves of fiscal austerity measures and structural reforms from 2010 to 2015 is characteristic. The effect of the financial crisis on the sovereignty of the member states and on the pace of European integration also has an impact on European foreign and security policy, and the correlations between the political forces at both the national and European level, thus producing even more intense pressures on European social democracy. In light of the experience of the financial crisis, the final question is whether the nation state (given the large real inequalities among the EU member states) currently functions as a brake or as an engine for future European integration.