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The analysis of coincident and leading indicators can help policymakers gauge the short-term direction of economic activity. While such analysis is well established in advanced economies, it has received relatively little attention in many emerging market and developing economies, reflecting in part the lack of sufficient historical data to determine the reliability of these indicators. This paper presents an econometric approach to deriving composite indexes of coincident and leading indicators for a small open economy, Jordan. The results show that, even with limited monthly observations, it is possible to establish meaningful economic and statistically significant relations between indicators from different sectors of the economy and the present and future direction of economic activity.

Economic indicators --- Economic forecasting --- Economics --- Forecasting --- Business indicators --- Indicators, Business --- Indicators, Economic --- Leading indicators --- Economic history --- Quality of life --- Index numbers (Economics) --- Social indicators --- Finance: General --- Macroeconomics --- Industries: General --- Business Fluctuations --- Cycles --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Macroeconomics: Production --- General Financial Markets: General (includes Measurement and Data) --- Economic growth --- Finance --- Cyclical indicators --- Business cycles --- Industrial production --- Emerging and frontier financial markets --- Production index --- Production --- Financial markets --- Industries --- Financial services industry --- Economic theory --- Jordan

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Using a new firm-level dataset with comprehensive information on Asian firms’ FX liabilities, we show that Asia’s nonfinancial corporate sector is vulnerable to a tightening of global financial conditions. Higher global interest rates and exchange rate depreciation increase the probability of default of Asian firms. A 30 percent currency depreciation is associated with a two-notch downgrade in the corporate credit rating (e.g., from A to BBB+), resulting in 7 percent of Asian firms falling into bankruptcy. But the impact is nonlinear—as the firms’ FX liability increases, the balance sheet channel of exchange rate offsets, then dominates, the competitiveness channel. The balance sheet channel offsets the competitiveness channel when the share of U.S. dollar debt is between 10 and 20 percent. We also find that currency depreciation increases firm-level investment on average, but for firms with the share of FX liabilities above 20 percent, investment contracts with depreciation.

Economics --- Economic sociology --- Socio-economics --- Socioeconomics --- Sociology of economics --- Sociology --- Sociological aspects. --- Social aspects --- Accounting --- Foreign Exchange --- Investments: General --- Money and Monetary Policy --- Open Economy Macroeconomics --- Economic Growth of Open Economies --- Financial Crises --- General Financial Markets: General (includes Measurement and Data) --- International Financial Markets --- Corporate Finance and Governance: General --- Capital Budgeting --- Fixed Investment and Inventory Studies --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Public Administration --- Public Sector Accounting and Audits --- Investment --- Capital --- Intangible Capital --- Capacity --- Currency --- Foreign exchange --- Monetary economics --- Financial reporting, financial statements --- Macroeconomics --- Exchange rates --- Currencies --- Financial statements --- Depreciation --- Money --- Public financial management (PFM) --- National accounts --- Finance, Public --- Saving and investment --- United States

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In this paper we analyze the dynamics among past major pandemics, economic growth, inequality, and social unrest. We provide evidence that past major pandemics, even though much smaller in scale than COVID-19, have led to a significant increase in social unrest by reducing output and increasing inequality. We also find that higher social unrest, in turn, is associated with lower ourput and higher inequality, pointing to a vicious cycle. Our results suggest that without policy measures, the COVID-19 pandemic will likely increase inequality, trigger social unrest, and lower future output in the years to come.

United States --- Business and Economics --- Health and Fitness --- Econometrics --- Macroeconomics --- Diseases: Contagious --- Equity, Justice, Inequality, and Other Normative Criteria and Measurement --- Conflict --- Conflict Resolution --- Alliances --- Aggregate Factor Income Distribution --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- Health Behavior --- Personal Income, Wealth, and Their Distributions --- Econometrics & economic statistics --- Infectious & contagious diseases --- Income inequality --- Vector autoregression --- Communicable diseases --- Income distribution --- Personal income --- COVID-19 --- Health --- National accounts --- Econometric analysis --- Income --- Covid-19

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This paper assesses empirically the key drivers of private capital flows to a large sample of emerging market economies in the last decade. It analyzes the effect of the global financial cycle, measured by the VIX, on capital flows and investigates the role of fundamentals and country characteristics in mitigating or amplifying its effect. Using interaction models, we find the effect of the VIX to be non-linear. For low levels of the VIX, capital flows are driven by fundamental factors. During periods of stress, the VIX becomes the dominant driver of capital flows while other determinants, with the exception of interest rate differentials, lose statistical significance. Our results also suggest that the effect of global financial conditions on gross private capital flows increases with the host country’s level of financial sector development. Finally, our results imply that countries cannot fully insulate themselves from global financial shocks, unless creating a fragmented global financial system.

Capital movements --- Exports and Imports --- Finance: General --- Current Account Adjustment --- Short-term Capital Movements --- Portfolio Choice --- Investment Decisions --- International Investment --- Long-term Capital Movements --- General Financial Markets: General (includes Measurement and Data) --- Financial Markets and the Macroeconomy --- International economics --- Finance --- Capital flows --- Emerging and frontier financial markets --- Private capital flows --- Capital inflows --- Financial sector development --- Balance of payments --- Financial markets --- Financial services industry --- United States

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This paper analyzes the effects of trade openness on budget balances by distinguishing the effects of natural openness from those of trade-policy induced openness. Using the GMMsystem estimator, the econometric analysis focuses on 66 developing countries during 1974-98. The results show that trade openness increases a country's exposure to external shocks regardless of its underlying causes. This reinforces the adverse effects of terms of trade instability on budget balances. However, trade openness also influences budget balances through several other channels: corruption, income inequalities, etc. The paper shows that these additional effects of natural openness and trade-policy induced openness on budget balances go in opposite directions: the former deteriorates budget balances whereas the latter improves them.

Budget -- Developing countries. --- Developing countries -- Commercial policy. --- Terms of trade -- Developing countries. --- Terms of trade --- Budget --- Developing countries --- Commercial policy. --- Budgeting --- Expenditures, Public --- Finance, Public --- Competition, International --- Prices --- Forecasting --- Exports and Imports --- Public Finance --- National Deficit Surplus --- International Economic Order and Integration --- Trade Policy --- International Trade Organizations --- National Budget --- Budget Systems --- Empirical Studies of Trade --- Debt --- Debt Management --- Sovereign Debt --- National Government Expenditures and Related Policies: General --- Budgeting & financial management --- International economics --- Public finance & taxation --- Budget planning and preparation --- Trade policy --- Government debt management --- Expenditure --- Economic policy --- nternational cooperation --- Commercial policy --- Debts, Public --- Nternational cooperation