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Vol.7 No.4
December 2019

 Page Number

 Article Information

1-24

Regulator Communication and Market Confidence in Difficult Times: Lessons from the Great Financial Crisis

Paul Gower, Florian Meier, and Karl Shutes

DOI: 10.15604/ejef.2019.07.04.001

Abstract

Communication with financial markets is an important task carried out by financial market supervisory bodies. In times of crisis, this can contribute to spreading confidence and calming markets. In light of the 10th anniversary of the last financial crisis, we examine the effect the UK Financial Services Authority (FSA), as the financial market regulator during that period, had on market confidence. Our aim is to derive lessons to aid the current supervisor in potential future crises. Analyzing the period 2006-2009, we find that both more positivity and uncertainty in tone in communications could either reduce or increase stock market volatility, depending on the type of communication and communicator. Further analysis also shows distinct impacts on short-term and long-term market volatility. The findings highlight the importance of considering source and type of communication when decisions on who communicates with the market are made. These results can be of use for any regulatory authority that communicates with financial markets to increase effectiveness of their messages.

Keywords: Market Communication, Market Confidence, Volatility, Financial Market Regulator, Text Analysis

25-31

Georgia in the Process of Transition from Planned to Market Economy

Ketevan Rizhamadze

DOI: 10.15604/ejef.2019.07.04.002

Abstract

The last two decades of the 20th century was marked with the most noteworthy proceedings in modern economy that has been the socialist countries’ transition from the Soviet-type planned economy to a market economy. The collapse of Soviet Union was a “geopolitical tremor” that profoundly transformed the entire political landscape, revolving the globe on five continents and leaving fifteen independent nations on the place of one single state. The crumple of communism finalized the millenarian politics and the era of planned economy. Newly emerging democracies of Europe had to overcome political and economic obstacles along the way. Market economy and economic systems are highly researched topics. Nevertheless, there are scarcity of researches that explores knowledge, convictions and expectations that people and government officials have held toward change. The purpose of this paper is to identify the challenges and prospects that Georgia had faced in the transition process and to scrutinize the strategies of overcoming the problems. It shall address the following issues: forming a market and market prices via privatization, establishing monetary and financial systems, developing state institutions and fiscal roles of state. This research shall take a closer look at region’s geopolitical dynamics and shall explore the complex nature of transition process. It shall investigate the competing interests, challenges and opportunities during the conversion process. Research paper reveals that changing an economic system through mere economic factors, such as prices and privatization is not enough. People’s philosophy must follow and sustain that change for success. Change must obviously have a clear destination and goal. Consequently, people must become more cognizant why these changes are necessary and why this is happening in order to steep them actively in the process of transition.

Keywords: Transition Process, Market Economy, Soviet System, Privatization, Economic Systems

32-49

The Budget Policy Implemented in Turkey in Scope of Medium Policy Documents after 2008 Crisis

Cigdem Berna Kocaman and N. Selcen Hancer

DOI: 10.15604/ejef.2019.07.04.003

Abstract

It is a fact that economic history of capitalism is full of crises which are quite different from each other. While some of them are only financial crises, the others are twin crises consisting of both financial and banking crises. The last and most destructive crisis of neoliberalism erupted in 2008 which had a devastating impact on both central and surrounding countries. Globalization was an important factor that made this crisis spread fastly around the world. Turkey was one of those economies that was influenced by the global crisis but the impacts of crisis had not been much destructive for Turkey. Especially tight fiscal policy and banking sector regulations were two of the important factors in this situation. This article will focus on the budget policy, which is one of the main pillars of financial policy for Turkey after the 2008 crisis through medium term policy documents.

Keywords: 2008 Crisis, Globalization, Fiscal Policy, Medium-Term Fiscal Plan and Medium-Term Program, Budget Law

50-58

Trade Effects of Textile Industry in the Context of the Comprehensive and Progressive Agreement for Trans-Pacific

Phan Thanh Hoan

DOI: 10.15604/ejef.2019.07.04.004

Abstract

Textiles are a sensitive sector in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP includes Vietnam, a major apparel producer that now mainly sources yarns and fabrics from China and other Asian nations, the agreement could shift global trading patterns for textiles. Canada and Mexico, both significant regional textile markets for the United States, and Japan, a major manufacturer of high-end textiles and industrial fabrics, are also TPP members. Thus, this paper aims to evaluate the trade and welfare effects of textile industry in the context of CPTPP by applying the multi-country partial equilibrium (PE) model (GSIM) designed by World Bank – World Integrated Trade Solution. The results from GSIM model show that textile trading is likely to increase significantly after CPTPP formation. CPTPP members’ export is predicted to increase about US$ 1 billion. Among textile product groups, maximum gains are concentrated on finished textile products (HS chapter 61-63). The welfare for CPTPP’s members are also predicted by the GSIM simulation. As would be expected, the elimination of import tariffs from CPTPP is shown to bring great benefits to textile producers and consumers in the region, however, it also harm all governments’ revenues.

Keywords: CPTPP, Textile, GSIM, Trade Effects, Welfare

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