In the current study, we examine, for the first time in the literature, the impact of exogenous effects in the shipping industry by employing data from the recent Covid-19 pandemic outbreak and explore the reactions of freight rates for dry bulk, clean, and dirty tankers. Our results, using both GARCH (1,1) and VAR specifications, suggest that such events are directly affecting the dry bulk and the dirty tanker segments. In addition, the results also suggest that second round effects, mostly via the decline in oil prices and, in some cases, third round effects via the impact from the stock market, also exist. Finally, by employing daily port calls a proxy variable for the demand for transportation services, we show that both the dry bulk and clean tankers are highly affected by the demand side of the economy, while vessels which transport crude oil do not register such a relationship.

No abstract

Following the United Kingdom's decision to leave the European Union, the pound has depreciated against the euro. This study aims to examine whether the UK could potentially benefit from this depreciation, that is, improve its trade balance with its euro area counterparts. Theory suggests that this could happen only if the Marshall–Lerner condition holds, i.e. if the sum of import and export elasticities is greater than unity. Due to the fact that the Marshall–Lerner condition is static, a more dynamic estimate, the J‐curve, which allows for a distinction between the short‐run and the long‐run response of the trade balance, is employed using bilateral trade data between the UK and 10‐euro area countries. Results, employing both bilateral ARDL and Pooled Mean Group methods show that, until a new trade agreement is reached, the UK trade balance vis‐à‐vis the euro area is not expected to change significantly in the short‐run, while it should improve in the long‐run. The wide range of bilateral findings underlies the idiosyncrasies between euro area countries and also suggests that there is a rationale for countries to explore different paths such as bilateral agreements with the UK.

No abstract

No abstract

This paper explores the impact different types of conflict have on the nominal exchange rate (NER), using a panel of developing economies. Accounting for NER determinants, the evidence suggests that in addition to the depreciation caused by macroeconomic factors, intra-state (civil) wars have a strong and significant depreciative impact on the exchange rate. In contrast, international wars do not appear to have any excess effect. A potential explanation of this phenomenon is that, unlike international wars where winners and losers are more difficult to distinguish a priori, in civil wars the country is much more likely to face economic deterioration, therefore promoting an over-discounting effect.The findings provide insights for both investors and policymakers given that exchange rate devaluation can likely provide a negative feedback mechanism to the local economy, especially if they hold foreign currency debt. The depreciation could also potentially have strong effects on the long-run growth potential, considering that most developing economies rely on imports of capital goods for research and development purposes.

No abstract

The counterfactual estimation technique of Pesaran and Smith () is employed to provide an assessment of the impact stemming from the implementation of negative interest rates in three European economies (Denmark, Sweden and Switzerland). The analysis indicates that negative interest rates did not have a significant effect on bank lending growth or inflation in any country. This failure to reject the policy ineffectiveness hypothesis most likely lies in the fact that negative interest rates did not ease the situation for the factors restricting the supply of bank lending, namely bank funding costs and Return‐on‐Equity.