BOFIT Discussion Papers (1999- )

 

BOFIT Discussion Papers är en serie diskussionsrapporter på engelska med inriktning på tillväxtmarknader. Forskningsrapporter publiceras av både gästande forskare och institutets egna forskare.

Nyligen publicerat

  • Simola, Heli (2021)
    BOFIT Discussion Papers 12/2021
    We examine the role of demand composition in explaining the trade collapse and recovery during the ongoing covid-19 crisis. We apply an import-intensity-adjusted measure of demand to examineimport trends in 40 advanced and emerging economies over the period 1Q95 to 4Q20. We focus on the crisis periods related to covid-19 and the global financial crisis in 2008–2009. As during the global financial crisis, we find that import-intensity-adjusted demand is a key factor contributing to trade developments during the covid-19 crisis. The analysis also reveals substantial differences between the current crisis and the global financial crisis. Trade decline during the global financial crisis was heavily investment-led. In the current crisis, consumption and import demand from the service sector have had much larger roles. The recovery of trade has been notably faster during the covid-19 crisis and led by exports as opposed to the much more important role played by domestic demand during the global financial crisis.
  • Beckmann, Joscha; Comunale, Mariarosaria (2021)
    BOFIT Discussion Papers 11/2021
    This paper assesses the financial channel of exchange rate fluctuations for emerging countries and the link to the conventional trade channel. We analyze whether the effective exchange rate affects GDP growth, the domestic credit and the global liquidity measure as the credit in foreign currencies, and how global liquidity affects GDP growth. We make use of local projections in order to look at the shocks’ transmission covering 11 emerging market countries for the period 2000Q1–2016Q3. We find that foreign denominated credit plays an important macroeconomic role, operating through various transmission channels. The direction of effects depends on country characteristics and is also related to the policy stance among countries. We find that domestic appreciations increase demand regarding foreign credit, implying positive effects on investment and GDP growth. However, this is valid only in the short-run; in the medium-long run, an increase of credit denominated in foreign currency (for instance, due to apeiation) decreases GDP. The financial channel works mostly in the short run except for Brazil, Malaysia, and Mexico, where the trade channel always dominates. Possibly there is a substitution effect between domestic and foreign credit in the case of shocks in exchange rate.
  • Saka, Orkun; Ji, Yuemei; De Grauwe, Paul (2021)
    BOFIT Discussion Papers 10/2021
    We first present a simple model of post-crisis policymaking driven by both public and private interests. Using a novel dataset covering 94 countries between 1973 and 2015, we then establish that financial crises can lead to government interventions in financial markets. Consistent with a public interest channel, we find post-crisis interventions occur only in democratic countries. However, by using a plausibly exogenous setting -i.e., term limits- muting political accountability, we show that democratic leaders who do not have re-election concerns are substantially more likely to intervene in financial markets after crises, in ways that may promote (obstruct) private (public) interests.
  • Borisova, Ekaterina; Ivanov, Denis (2021)
    BOFIT Discussion Papers 09/2021
    In this study, we use random assignment of vignettes that feature optimistic and pessimistic scenarios with respect to vaccine safety and efficacy on a sample of roughly 1,600 Russians in order to gauge public support for anti-pandemic measures under various scenarios. Negative information on vaccine safety and efficacy reduces support for the anti-pandemic measures among individuals who fear Covid-19 and were initially supportive of government restrictions. These individuals tend to be old, and therefore vulnerable to Covid-19, and politically active. This loss of support is strongest for economically costly measures such as banning of large gatherings and the shuttering of non-essential businesses. Mask-wearing, which involves only minor costs, finds broad acceptance. We interpret the reactions in light of adaptation, fatigue over Covid-19 restrictions, and fatalism. The political consequences of non-pharmaceutical measures to deal with a pandemic include loss of public support over time, erosion of trust in government, and political backlash.
  • Mäkinen, Mikko (2021)
    BOFIT Discussion Papers 8/2021
    Can a major financial crisis trigger changes in a bank’s risk-taking behavior? Using the 2008 Global Financial Crisis as a quasi-natural experiment and a difference-in-differences approach, I examine whether the worst crisis-hit Russian banks – the banks that have strong incentives to behavior-altering changes – can decrease their post-crisis exposure to risk. A shift in risk-taking behavior by these banks indicates the learning hypothesis. The findings are mixed. The evidence concerning credit risk is inconsistent with the learning hypothesis. On the other hand, the evidence concerning solvency risk is consistent with the learning hypothesis and corroborates evidence from the Nordic countries (Berglund and Mäkinen, 2019). As such, bank learning from a financial crisis may not depend on the institutional context and the level of development of national financial market. Several robustness checks with alternative regression specifications are provided.