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Foreign Investment under Inflationary Pressure: Macroeconomic Fragility in Zimbabwe
Get PDFThis research paper looks at the different economic factors that affect foreign investments in Zimbabwe, specifically the interaction between foreign investment and inflation changes. It delves into how central bank policy, in the face of erratic inflation, can affect the duration and the change of investment patterns in a macroeconomic environment full of uncertainties. The model presented in this paper embodies the interaction among inflation thresholds, money supply reactions, and capital inflows, thus depicting the scenarios of macroeconomic fragility due to late policy adjustments to structural shocks.
The empirical analysis reveals an optimal inflation threshold of A*=3.02, beyond which real investment begins to decouple from monetary policy, and a neutral policy coefficient of a*=0.0000, indicating the complete erosion of policy traction under hyperinflation. These results suggest that Zimbabwe’s monetary authorities faced a regime in which stabilization efforts were rendered ineffective, emphasizing the importance of credibility restoration for regaining investment responsiveness. The findings pinpoint the issues of achieving a perfect equilibrium between inflation control and investment stimulation in a market environment with price instability
Optimal transfer of a quality-enhancing innovation in a vertical related market
Get PDFThis paper examines the commercialization of an external, quality-enhancing (product) innovation within a vertically related market, comparing outright sale and licensing. Licensing may involve a royalty of per-unit or ad valorem type and potential adopters are two downstream firms that source a core input from a single upstream supplier. The analysis reveals that the patentholder’s incentive to license the innovation, particularly through per-unit royalties, outweighs that of an outright sale. This form of technology transfer, however, is shown to potentially reduce consumer and social welfare compared to the pre-innovation state, thus providing a rationale for public policy interventions aimed at restricting royalty-based technology transfer
The Impact of Board Characteristics on the Performance of Banks in the MENA Region
Get PDFThis paper examines the impact of board characteristics on the variability of bank performance in the Middle East and North Africa (MENA) region. Based on a sample of 97 banks over the period 2016–2020, the study employed four corporate governance mechanisms to investigate their effect on two performance measures: ROA and ROE. In addition, three control variables were included to isolate the effect of corporate governance variables on bank performance. Using panel data regression, the results indicate that board size, CEO duality, and the presence of institutional directors on the board are the only corporate governance mechanisms that have a positive and significant effect on return on assets (ROA). Board size has a negative and significant effect on return on equity (ROE), while the presence of institutional directors on the board has a positive and significant impact on return on equity (ROE)
Modeling Loss Risk in Loan Portfolios with Various Heterogeneity Factors
Get PDFThis paper extends the classical Vasicek credit risk model by introducing a comprehensive multi-factor framework that simultaneously incorporates key sources of portfolio heterogeneity – namely, variations in asset weights, recovery rates, default probabilities, and asset correlations. By modeling the complex interactions among these factors, our approach provides a more realistic and nuanced assessment of loss distributions and risk measures. Monte Carlo simulations demonstrate that the extended Vasicek-style model yields accurate approximations of portfolio Value at Risk (VaR) across portfolios with diverse recovery profiles and moderate concentration levels. This advancement improves the precision of credit risk measurement, addresses current regulatory gaps, and offers a solid foundation for more sophisticated risk management of heterogeneous credit portfolios
Trade Openness and Economic Growth in Southeast Asia
Get PDFThis paper investigates the extent to which the integration of Southeast Asian countries into the global economy has contributed to their economic growth. It uses regression analysis to model the relationship between trade openness and economic growth, identifying policy lessons on the key drivers of convergence for the next set of developing countries that seek to achieve rapid rates of economic growth in the context of a more challenging globalization context
Economic Resilience and Vulnerability: Concepts and Indices
Get PDFThis paper examines the concepts and indices of economic resilience and vulnerability. The central notion in clarifying both resilience and vulnerability is that of an adverse shock. If a shock does not alter the growth path of an economy or cause a recession, the economy is considered “resilient.” Resilience refers to an economy’s ability to return to its pre-shock growth trajectory. A resilient economy, after experiencing a shock, resumes its long-term growth path. Endogenous growth can strengthen economic resilience, and resilient economies tend to experience sustainable growth. Macroeconomic stability and effective institutions are two principal indicators of economic resilience. Resilience stems largely from economic policymaking, while vulnerability is related to the inherent structural characteristics of an economy that expose it to adverse shocks. Export concentration, dependence on strategic imports and external financing, as well as geographical vulnerability, constitute the main indicators of economic vulnerability. The greater the capacity to respond to shocks, the lower the vulnerability. The paper explores the indices of economic resilience, including Briguglio, Centennial group and Oxford FM Global. In vulnerability indices, the paper discusses the Briguglio vulnerability index, Guillamount and OECD indices
Mises' Regression Theorem and Bitcoin - From a Problem to a Full Program and Methodology for Researching the Non-Monetary Utility of Cryptographic Money
Get PDFThis essay argues that Ludwig von Mises’ regression theorem, when interpreted with full attention to its original logical structure and later Austrian developments, can be elevated from a narrow solution to the monetary circularity problem into a comprehensive methodological framework for analysing the non-monetary utility of cryptographic money. The authors reconstruct the classical Mises–Rothbard formulation and apply it to early Bitcoin history and to Monero’s genesis—especially the first non-coinbase transaction at block 110—to show that these systems exhibited technological, epistemic, and ideological utilities at “zero-day,” prior to any established exchange value. The article also critiques recent misapplications of the regression theorem that dilute its rigor by treating virtually any collectible or idiosyncratically valued object as sufficient to satisfy its requirements, thereby trivializing the theorem. In contrast, the authors propose a disciplined regression-based research programme capable of distinguishing genuine cryptographic innovations from speculative tokens, tracing how early non-monetary utilities bootstrap intersubjective demand, marketability, and eventual monetary roles. The essay concludes that a rigorously applied regression framework provides a powerful tool for evaluating digital assets, advancing cryptographic research, and understanding the emergence of new monetary and institutional forms
Stockpiling or Recycling? Country-Specific Strategies for EV Battery Mineral Security
Get PDFAccelerating transport electrification is vital for net-zero goals, yet remains hindered by slow, uncertain development of battery minerals. We show how non-technical risk, such as policy, regulatory, social, and geopolitical risk, inflate capital costs, delay greenfield supply, and heighten price volatility for lithium, cobalt, nickel, manganese, graphite, and copper. Combining Fraser Institute investment scores with reserve shares of these critical minerals, we construct dynamic, mineral-specific risk premiums, derive an optimal stockpiling rule balancing risk and storage costs and introduce a distance-to-iso-cost map comparing recycling and stockpiling strategies. Our framework suggests that in 2040 recycling-led stabilization will be the optimal strategy for mitigating non-technical risk for Japan and Korea, strategic stockpiling will be the optimal strategy for China and the United States, and mixed outcomes for Europe. The method that we propose provides a tractable and updateable toolkit for deciding optimal stockpiles and prioritising recycling where it is most cost-effective
The stability clause paradox: How binding tax commitments in mining contracts undermine WAEMU/CEMAC coordination and lock in race-to-the-bottom dynamics
Get PDFSince 2003, the West African Economic and Monetary Union (WAEMU) and Central African Economic and Monetary Community (CEMAC) have implemented binding directives to harmonize mining tax regimes and eliminate fiscal competition. Yet, we observe a proliferation of mine-specific stability clauses—contractual provisions that freeze tax rates for 20-30 years—in response to these coordination efforts. Analyzing 47 mining contracts across 12 WAEMU and CEMAC countries (2010-2023), this paper identifies a Stability Clause Paradox: instruments designed to provide tax certainty have become the primary vehicle for undermining regional tax coordination. Our results show that mines with stability clauses face effective tax rates that are 18-23 percentage points lower than statutory rates, creating a dual fiscal regime that coordination cannot reach. Our theoretical model demonstrates that stability clauses act as commitment devices in tax competition, locking in race-to-the-bottom dynamics for decades. The paper provides the first empirical evidence that regional tax coordination in Africa is systematically circumvented through contractual tax stabilization, with immediate implications for WAEMU's ongoing mining code reforms and CEMAC investment policy reviews
Method for Comparing Economic Impacts Caused by Government Actions on Natural Resource Extraction in Logging, Oil and Gas, and Mining
Get PDFThis paper describes a methodology to compare historical episodes where governments announce policy changes that impact natural resources and extractive industries. For example, the Province of British Columbia implemented a new tax policy for mining in 1974 that created “super royalty payments” and drastically reduced local mining activity; this paper introduces statistical measurements to capture media attention, stock market effects, and GDP impacts of policy changes like the creation of super royalties in BC. These statistical measures can be compared between different historical episodes to understand the range of outcomes for government policy changes. The method also applies to logging, oil and gas, and agriculture, which are highly impacted by government policy. The paper identifies several historical episodes that can serve as case studies to use the methodology, although full implementation of the method is beyond the scope of this paper