Bird G, Mandilaras A (2003) Viral spiral? Contagion, interdependence and fundamentals in Latin America, New Economy 10 (3) pp. 181-186
Some diseases are more contagious than others, but what determines whether a disease spreads or is contained? Proximity is a factor but some have stronger immunity than others. Even vaccination does not guarantee against infection but if a person does get infected there may be an available antidote. Could the same things be said about financial crises, such as those experienced in Latin America? This article looks at the channels through which economic developments in one country can spill over to others. It discusses interdependence and contagion. However, we suggest that the simple 'trigger-spillover' story is deficient in the Latin American context. It would be wrong to view the crisis in Argentina as the root cause of Latin America's current problems. World economic growth has declined and this has more clearly exposed the deficiencies in Latin America's economic fundamentals. But how can countries immunies themselves against crisis and contagion and, in the midst of the crisis, is the IMF doctor prescribing the best medicine?
Bird G, Mandilaras A (2005) Reserve Accumulation in Asia, World Economics Journal 6 (1) pp. 85-99
In the aftermath of the 1997/1998 crisis, Asian economies have built up large holdings of international reserves. Although initially encouraged to do so by the IMF, more recently they have been criticised for maintaining undervalued currencies, running large current account balance of payments surpluses and accumulating excessive reserves, policies that have been blamed in part for causing global economic imbalances. This paper examines two related issues. The first is the role of closer international macroeconomic policy co-ordination in rectifying the imbalances and the institutional mechanisms through which this may be achieved. The second is the alternative ways in which the liquidity needs of Asian economies may be met without them having to acquire large reserve holdings. There may be an inconsistency in opposing reserve accumulation in Asia and at the same time blocking reform that would provide additional security against subsequent economic and financial crises.
Arpac O, Bird G, Mandilaras A (2008) Stop interrupting: An empirical analysis of the implementation of IMF programs, WORLD DEVELOPMENT 36 (9) pp. 1493-1513 PERGAMON-ELSEVIER SCIENCE LTD
Bird G, Mandilaras A (2013) Fiscal imbalances and output crises in Europe: Will the fiscal compact help or hinder?, Journal of Economic Policy Reform 16 (1) pp. 1-16
The eurozone crisis has involved sharp output declines and has generated much discussion about the appropriate design of macroeconomic policy both in terms of dealing with the contemporary situation and minimising the risks of future crises. Much of the debate surrounding the crisis has focused on fiscal policy. All but two member states of the European Union have signed a draft treaty, the 'fiscal compact', that seeks to eliminate structural fiscal deficits. This paper examines the relationship between fiscal balances and output shortfalls amongst the eurozone countries allowing for other factors. In the light of the findings it critically assesses the fiscal compact. © 2013 Copyright Taylor and Francis Group, LLC.
Arpac O, Bird G, Mandilaras A (2006) What Determines the Implementation of IMF Programs?, 1806
For many years analysis of IMF conditionality overlooked the extent to
which it was implemented. However, more recently increasing attention
has been paid to implementation. Theoretical contributions have focused
on the importance of special interest groups, but empirical evidence has
failed to provide compelling support for the theory. Indeed, empirical
studies have reported mixed results that sometimes seem to be
conflicting. This paper identifies a range of economic, political and
institutional factors that may, in principle, influence implementation.
Using various measures of implementation, it then tests an econometric
model designed to capture these influences over 1992-2004 exploiting
improved sources of data. The results suggest that significant
determinants of implementation are trade openness, the existence of veto
players and the amount of resources committed by the Fund. The paper
offers an interpretation of the results and discusses the implications for
Mandilaras A, Popper H (2009) Capital flows, capitalization, and openness in emerging East Asian economies, Review of International Economics 17 (4) pp. 734-750 WILEY-BLACKWELL
Mandilaras A (2015) The International Policy Trilemma in the Post-Bretton Woods Era, Journal of Macroeconomics 44 pp. 18-32 Elsevier
The international macroeconomic policy trilemma suggests that despite the appeal of exchange rate stability, financial account openness and monetary sovereignty, these cannot be achieved simultaneously. Using elements of Euclidean geometry, this paper proposes a new method for testing the trilemma and finds considerable evidence in support of it. Further tests indicate that, on average, policy configurations are not on the trilemma constraint, i.e. there is a degree of ?trilemma-ineffectiveness?, which is costly for real output growth and price inflation. It is shown that these costs can be attributed to limited exchange rate stability and financial account openness.
Bird G, Mandilaras A (2015) Transitions in exchange rate regimes in the aftermath of the global economic crisis, Applied Economics Letters 22 (7) pp. 567-571
© 2014, © 2014 Taylor & Francis.Has the global economic crisis resulted in countries shifting their exchange rate regimes and, if so, in what way? Focusing on the relevant period of 2008?2012, and using the IMF?s Annual Report on Exchange Arrangements and Exchange Restrictions classification of exchange rate regimes and database, we calculate exchange rate regime transition probabilities and test their statistical significance. Even though there is some evidence of state dependence, in the sense that transitions are relatively infrequent, we do find that these are significant, especially in the direction of fixity. Our testing procedure employs the Wilson (1927) statistic, which is appropriate for drawing inference based on relatively rare events. By examining all transitions in detail, we also find further evidence that countries that shift often flip back to their previous regime.
A fature of the late 1990s was the accumulation of International reserves in many countries. Against the background of this phenomenon, in what follows we investigate the following questions: how widely has the tendency to accumulate reserves been seen? Does the incidence of a currency crisis increase the subsequent demand for reserves? Do countries make choices between different combinations of exchange rate regime and reserve holding? Does an arrangement with the IMF encourage countries subsequently to build up reserves more than they otherwise would have done? Do different patterns emerge depending upon the measure of reserves used? In addressing the above questions, we find significant support for the 'Mrs. Machlup's Wardrobe Theory' of international reserves, which purports that irrespective of the amount of reserves countries have accumulated, they continue to add to their stock. © 2010 Taylor & Francis.
Popper H, Mandilaras A, Bird G (2011) Trilemma Stability and International Macroeconomic Archetypes
in Developing Economies, 0311
In this paper, we examine the stability of international macroeconomic policies of developing countries in the post-Bretton Woods period. We use the simple geometry of the classic, open-economy trilemma to construct a new, univariate measure of inter- national macroeconomic policy stability, and to characterize international macroeconomic arrangements in terms of their semblance to definitive policy archetypes; and, we use the trilemma constraint to provide a new gauge of monetary sovereignty. Using these measures, we find that the greatest international macroeconomic stability among developing economies exists where there are capital controls and limited exchange rate flexibility. The least stable policies occur in the economies with flexible exchange rates and open financial markets. We also find that official holdings of foreign exchange re- serves seem to be weakly linked to greater policy stability, and their link is further weakened where financial markets are open.
Mandilaras A, Bird G (2011) Once Bitten: The Effects of IMF Programs on Subsequent Reserve Behaviour, Review of Development Economics 15 (2) pp. 264-278
Mandilaras A, Popper H (2007) What Macroeconomic Conditions Best Explain Southeast Asian Capital Flows?,
The paper examines the capital flows of seven Southeast Asian emerging economies over the last decade and a half.
It first evaluates the role of economic conditions within a country itself, including the country's domestic
financial conditions and the openness of its financial markets to international capital flows. Then, the role of
the counties' own domestic conditions is compared with regional influences and with the importance of
macroeconomic conditions elsewhere, such as in Europe, and in the largest single recipient of the outflows, the
United States. Key results include: (1) domestic capital market conditions are the best predictors (among the
variables that we examine) of the capital flows of these countries; (2) capital market openness is of little use
in predicting changes in capital flows; and, (3) while the macroeconomic conditions of the United States are
strong predictors of subsequent GDP growth in the region, they are not, by themselves, good predictors of the
region's capital flows.
Mandilaras A, Bird G (2008) Foreign exchange pressures in Latin America: Does debt matter?, Journal of International Development 20 (5) pp. 613-627
Latin American countries have been in the eye of economic and financial storms several times in recent years. Advice from the International Monetary Fund has consistently highlighted the need for sound fiscal policies and lower debt levels. But is public debt relevant? Following a brief discussion of the theoretical issues involved, this paper examines empirically the relationship between public indebtedness and pressures in the foreign exchange market. Alternative measures are used to capture the latter and the analysis controls for a de facto classification of exchange rate regimes. Estimations of static and dynamic panels for 28 Latin American and Caribbean (LAC) countries report substantial fiscal effects. Copyright © 2008 John Wiley & Sons, Ltd.
The East Asian crisis of 1997 sparked an extensive literature in an effort to explain the causes and spread of heightened foreign exchange (FX) market pressures in the region. In this paper, we model FX movements and calculate spillover effects covering the extended period between 1990 and 2004. Using Markov switching vector autoregressions, we find evidence that FX correlations vary across crisis and non-crisis states, a result that bears implications for international portfolio diversification and reserve pooling. Even though the direction of effects does not follow discernible patterns, it is clear from the data that contagion effects are present. © 2006 Elsevier Inc. All rights reserved.
Mandilaras A, Bird G (2007) Foreign exchange markets in South-East Asia 1990-2004: An empirical analysis of spillovers during crisis and non-crisis periods, The North American Journal of Economics and Finance 18 (1) pp. 41-57
Mandilaras A, Levine P (2001) Public debt and inflation: The role of inflation-sensitive instruments, MANCHESTER SCHOOL 69 pp. 1-21 WILEY-BLACKWELL
Mandilaras A (2004) Industrial Placement and Degree Performance: Evidence from a British Higher Institution, International Review of Economics Education 3 (1) pp. 39-51
Using data from the University of Surrey's Economics Department, this paper explores the role of professional placement in degree performance. The list of control variables includes a measure of ability, A-level subject choice, gender and nationality. The statistical analysis offers evidence that participation in the placement scheme significantly increases the chances of obtaining an upper second or higher degree class. Ability, as captured by the student's second-year average mark, is also related to better academic performance. British students are also predicted to do better than their foreign peers.
Some commentators have claimed that there is a growing Beijing Consensus among emerging and developing economies concerning the merits of China's economic policies. Within an analytical framework provided by the well known international policy trilemma, this paper investigates the empirical evidence concerning this claim with specific reference to the adoption of international macroeconomic policies. We find that there are substantial differences between what China does and what is done in other emerging and developing economies. While we discover some regional and inter-temporal variations, there seems to be little or no support for the existence of a Beijing Consensus. © 2012 Elsevier Ltd.
This paper uses the simple geometry of the classic, open-economy trilemma to introduce a new gauge of the stability of international macroeconomic arrangements. The new stability gauge reflects the simultaneity of a country's choices of exchange rate fixity, financial openness, and monetary sovereignty. So, the new gauge is bounded and correspondingly non-Gaussian. We use the new stability gauge in nonlinear panel estimates to examine the post-Bretton Woods period, and we find that trilemma policy stability is linked to official holdings of foreign exchange reserves in low income countries. We also find that the combination of fixed exchange rates and financial market openness is the most stable arrangement within the trilemma; and middle-income countries have less stable trilemma arrangements than either low or high-income countries. The paper also characterizes international macroeconomic arrangements in terms of their semblance to definitive policy archetypes; and, it uses the trilemma constraint to provide a new gauge of monetary sovereignty.
Has the global economic crisis resulted in countries shifting their exchange rate regimes and, if so, in what way? Focusing on the relevant period of 2008-12, and using the IMF?s Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER) classification of exchange rate regimes and database, we calculate exchange rate regime transition probabilities and test their statistical significance. Even though there is some evidence of state de- pendence, in the sense that transitions are relatively infrequent, we do find that these are significant, especially in the direction of fixity. Our testing procedure employs the Wilson (1927) statistic, which is appropriate for draw- ing inference based on relatively rare events. By examining all transitions in detail, we also find further evidence that countries that shift often flip back to their previous regime.
Oil price fluctuations have been prominent in economy since World War II. Researchers have been busy exploring the possible transmission mechanisms from these fluctuations to the economy, with their task being complicated over the years by a changing economic environment and transforming dynamics in the oil industry.
This thesis uniquely brings on board the study of three topical research areas pertaining to the oil market that have attracted attention both in academic and industrial circles. The first chapter explores the role of financial participants in the oil futures market by applying Markov-switching vector autoregressions. A popular view has been that significant oil price changes cannot be explained solely by fundamentals. Investigating whether oil prices convey information about supply-demand forces, or they are a result of `speculative effects', can be of importance for the economy as their information content constitutes a key input in a variety of decisions, from businesses to governments and regulators. The second chapter studies the relationship between public debt and economic growth for hydrocarbon-rich developing economies. The dependence of these countries on oil and gas revenues can raise serious concerns about their fiscal sustainability, especially during the oil industry's bust cycles. By employing threshold analysis, this work examines whether a common threshold debt level exists for these countries beyond which debt can adversely affect the economic performance. The third chapter is a case study for Saudi Arabia, the largest exporter of crude oil in the world. The internal economic and social conditions of Saudi Arabia are, indirectly, important for the world as the Kingdom has the ability to decrease or increase oil production levels during supply interruptions or high demand growth, which in turn can affect global oil prices. While the natural resource endowment has been translated into more financial wealth for the Kingdom, placing the Saudi economy to the 19th position of the global rank, it remains questionable to what extent this wealth has further been translated into economic development and social progress for the Saudi population.
Our findings suggest that oil prices are driven by the forces of demand and supply, with trader positions having little impact on oil prices. The Markov-switching model with two regimes proves to be a good description of the behaviour for the majority of the futures market participants. Next, the results of the debt-growth relationship confirm existing empirical evidence that debt can stimulate growth, with the impact turning negative and having a detrimental effect on the country's economic activity when debt crosses a certain tipping point. Finally, the case study analysis on Saudi Arabia shows that oil prices have had significant repercussions on the economic development and social progress of the country. Saudi Arabia, heavily reliant on hydrocarbon revenues, has failed to successfully utilise its oil wealth and convert it into development and welfare levels equivalent to those economies with similar-sourced incomes.