Journal of International Commerce, Economics and Policy

A voluminous literature has been devoted to the effect of countries’ participation in international trade (for example through trade policy reforms and greater trade openness) on their poverty level, but not on the issue the other way around. The current analysis contributes to filling this gap in the literature by examining the effect of poverty on trade openness in a set of 99 developing countries over the period 1980–2014. Results suggest that while over the full sample poverty exerts a negative effect on trade openness, this effect ultimately depends on countries’ development levels, proxied by their real per capita income level. A rise in poverty levels reduces trade openness in relatively poor countries, but increases it in relatively advanced economies. These findings suggest that enhancing the ability of poor countries to participate in international trade would help promote greater trade openness, which could in turn help reduce poverty. The international community has a key role to play in that respect.

Shadow banking has become an important part of many financial systems despite having contributed to the financial crisis of 2008/2009. This study analyzes the relationship between shadow banking and economic growth using a panel of 28 developed and emerging economies. We employ panel feasible GLS technique and find a positive association between shadow banking and economic growth in the long-run. Further, we test for the Finance–Growth relationship using Granger causality tests and find a bi-directional relationship between shadow banking and economic growth. Stock market development and bank credit also have positive bi-directional relationships with economic growth. Our findings emphasize the role of financial innovation in enhancing economic performance given a stable regulatory environment. We suggest regular review of macro-prudential policy to carter for new financial activities and also to allow for development of new financing techniques.

In this paper, we study whether the implementation of unconventional monetary policy (UMP) in Japan is relevant to its economy fluctuations. We conducted a Bayesian estimation of a DSGE model with an endogenous financial intermediary, and the central bank in the model is allowed to conduct a credit policy. Our findings can be summarized in the following three points: first, we find that the estimated posterior distribution of model parameters and the impulse response provide a plausible interpretation of the data. Second, by shock decomposition, we find that the credit supply shock of the bank sector played a crucial role in the GDP and investment fluctuations in the sample period. Third, the estimated risk spread reveals a high degree of correlation to the actual credit spread in Japan. Our estimation results suggest that UMP in Japan is effective in the sense of narrowing credit spreads, which leads to subsequent increase in investment and, in turn, positively affects the economy.

The recent explosion of bilateral and regional deals, President Trump’s policy against multilateralism, and, lastly, the restrictions to international trade because of the COVID-19 pandemic have highlighted the issue of the need for a multilateral trading system, currently embodied by the World Trade Organization (WTO). Although the WTO has achieved most of its goals over the last two decades, it is undeniable that it is facing major challenges that question its relevance, effectiveness, fitness and responsiveness to contemporary issues. Is the lack of multilateralism worrisome? What will be the future of the WTO? By summarizing the past and current debate and proposing a critical reading of the WTO, this paper aims to answer these crucial questions.

This study examines the effects of government spending shocks on real effective exchange rate in South Africa over the period 1970Q1–2019Q2. In doing so, a version of vector autoregressive impulse response model developed by Jordà is employed and the shocks are identified recursively. The impulse responses show that government spending shock has a significant appreciation effect on real effective exchange rate and its effect depends on the nature of the fiscal shock. Although the effect of government spending on real effective exchange rate does not depend on the sign of the shock, it varies over economic cycle.