ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)
Bahram Adrangi, Arjun Chatrath and Kambiz Raffiee
Correspondence: Bahram Adrangi, adrangi@up.edu
W.E. Nelson Professor of Financial Economics, University of Portland, Portland, Oregon, USA
pdf (711.8 Kb) | doi: https://doi.org/10.47260/bae/1222
We investigate how the volatility of the iShares Latin America 40 ETF (ILF) responds to key economic and market sentiment indicators associated with economic uncertainty. Specifically, we explore the regime-dependent nature of ILF volatility in relation to Economic Policy Uncertainty (EPU), U.S. Economic Uncertainty (ECU), Global Economic Policy Uncertainty (GEPU), and implied risk, as captured by the Chicago Board Options Exchange's VIX (CBOE VIX), from 2001 to 2023. Our findings highlight that the connection between market volatility and economic/market sentiment is influenced by distinct volatility regimes. Utilizing a two-covariate GARCH-MIDAS (GM) model, a regime-switching Markov Chain (MSR) model, and quantile regressions (QR), we reveal that the impact of sentiment on realized volatility varies depending on the prevailing volatility regime, reflecting investors’ differing responses to market uncertainty. Additionally, our results show a significant linkage between ILF’s short and long-term volatility and economic uncertainty/sentiment indicators, suggesting that these factors shape ILF volatility across different market conditions and quantiles of the volatility distribution. Overall, our findings indicate that investor sentiment and economic uncertainty extend beyond their domestic origins, influencing volatility patterns in U.S., global, and Latin American markets.
Volatility, GARCH-MIDAS, VIX, Economic policy uncertainty, Global economic policy uncertainty, Quantile regression, Regime switching Markov Chain regression.
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Correspondence: Soukvisan Khinsamone, khinsamone@yahoo.com
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pdf (711.8 Kb) | doi: https://doi.org/10.47260/bae/1221
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Junhyun Bae
Correspondence: Junhyun Bae , bae@oakland.edu
School of Business Administration, Oakland University, Rochester MI 48309. (ORCiD: https://orcid.org/0000-0003-1382-241X).
pdf (711.8 Kb) | doi: https://doi.org/10.47260/bae/1216
This study employs a game-theoretic approach to examine cost pass-through in a supply chain involving a manufacturer and a retailer, factoring in yield uncertainty and bargaining power. We analyze how manufacturer cost changes affect wholesale and retail prices, focusing on supply-side risks and negotiation dynamics. The base model reveals three key insights: (1) yield uncertainty lowers the cost pass-through rate, stabilizing downstream prices; (2) higher mean yield enhances pass-through, reflecting cost shifts more fully; and (3) increased manufacturer bargaining power reduces pass-through, keeping costs upstream. An extended model introduces retailer effort to boost demand, uncovering additional dynamics: low effort costs can lead to negative pass-through, where retail prices drop despite cost rises, while higher effort costs shift pass-through toward positive values. These findings underscore the complex interplay of uncertainty, bargaining, and strategic effort in shaping pricing outcomes. We offer managerial insights for navigating cost volatility and suggest future research directions, such as dynamic models and empirical validation.
Supply chain risk, Cost pass-through, Stackelberg game, Bargaining power.
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Bahram Adrangi, Arjun Chatrath, Saman Hatamerad and Kambiz Raffiee
Correspondence: Bahram Adrangi, adrangi@up.edu
W.E. Nelson Professor of Financial Economics University of Portland 5000 N. Willamette Blvd. Portland, Oregon.
pdf (711.8 Kb) | doi: https://doi.org/10.47260/bae/1215
This study investigates the relationship between the market volatility of the iShares Asia 50 ETF (AIA) and economic and market sentiment indicators from the United States, China, and globally during periods of economic uncertainty. Specifically, it examines the association between AIA volatility and key indicators such as the US Economic Uncertainty Index (ECU), the US Economic Policy Uncertainty Index (EPU), China's Economic Policy Uncertainty Index (EPUCH), the Global Economic Policy Uncertainty Index (GEPU), and the Chicago Board Options Exchange's Volatility Index (VIX), spanning the years 2007 to 2023. Employing methodologies such as the two-covariate GARCH-MIDAS model, regime-switching Markov Chain (MSR), and quantile regressions (QR), the study explores the regime-dependent dynamics between AIA volatility and economic/market sentiment, taking into account investors' sensitivity to market uncertainties across different regimes. The findings reveal that the relationship between realized volatility and sentiment varies significantly between high- and low-volatility regimes, reflecting differences in investors' responses to market uncertainties under these conditions. Additionally, a weak association is observed between short-term volatility and economic/market sentiment indicators, suggesting that these indicators may have limited predictive power, especially during high-volatility regimes. The QR results further demonstrate the robustness of MSR estimates across most quantiles. Overall, the study provides valuable insights into the complex interplay between market volatility and economic/market sentiment, offering practical implications for investors and policymakers.
Volatility, GARCH-MIDAS, VIX, Economic policy uncertainty, Quantile regression, Regime switching Markov Chain regression.
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Panagiotis Tsintzos
Correspondence: Panagiotis Tsintzos, ptsintzos@uth.gr
Department of Economics, School of Economics and Business Administration, University of Thessaly.
pdf (711.8 Kb) | doi: https://doi.org/10.47260/bae/1214
This paper examines the impact of a tax scheme that considers a flat tax rate on employment income on equilibrium employment within a general equilibrium framework, incorporating Shapiro and Stiglitz's (1984) theory of wage rigidity. We consider taxation of wages, which are used to finance, under a government’s balanced budget regime, unemployment benefits, and analyse the effects on labour market outcomes. Our results show that the introduction of taxation on wages leads to an upward shift of the no-shirking condition (NSC) curve and a new equilibrium point at a higher level of unemployment and higher wages. The results underscore the significance of tax scheme design in shaping labour market equilibrium. These results may have a role in policy decisions aimed at promoting employment and economic growth and offer some insight for empirical studies on the estimation of the level of equilibrium unemployment.
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Paul Muda, John MacCarthy, Kingsley Tornyeva and Nora Danso
Correspondence: John MacCarthy, john_maccarthy@hotmail.com
Accounting Department, University of Professional Studies, Accra, Ghana.
pdf (711.8 Kb) | doi: https://doi.org/10.47260/bae/1213
The purpose of the study was to assess the direct and indirect effect of institutional isomorphic pressures on the adoption of IFRS for SMEs in Ghana. This study administered a questionnaire to collect primary data to assess the relationship between the variables. Multistage sampling methods were used to select the sample size as the true representative of the 16 regions of Ghana without bias. The study employed factor analysis, and structural equation model analysis to test the null hypotheses in this study. The results revealed that coercive isomorphic and mimetic isomorphic pressures significantly affect the adoption of IFRS for SMEs positively in Ghana. Secondly, the result showed that firm resilience partly mediates the direct relationship between coercive, mimetic isomorphic pressures and the adoption of IFRS for SMEs. However, normative isomorphic pressure has no direct or indirect (mediation) effect on the adoption of IFRS for SMEs in Ghana. The study recommends that the government must place emphasis on both internal and external drivers, particularly the firm’s resilience, to facilitate more successful adoptions of IFRS for SMEs in Ghana. Secondly, the government needs to encourage accountants in SMEs to join professional accounting bodies. Again, the study recommends that the government, through the Ministry of Trade and Industry (MoTI), collaborate with the regulator (ICAG) to provide financial accounting education to SME owners and accounting personnel who lack the necessary skills to adopt and implement IFRS for SMEs in Ghana. Finally, Ministry of Trade and Industries should establish a special pathway for non-professional accounting personnel in SMEs to become ICAG members and receive incentives.
IFRS for SMEs, Coercive pressure, Normative pressure, Mimetic pressure, Isomorphic pressure.
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Vasilis Zervos
Correspondence: Vasilis Zervos, vasilis.zervos@uth.gr
Economics of Defence and Security, Department of Economics and Related Studies, University of Thessaly, Volos, Greece.
pdf (711.8 Kb) | doi: https://doi.org/10.47260/bae/1212
Policy makers and academics have long analyzed a duopoly in the commercial airliners manufacturers industry between Airbus and Boeing. Particular attention has been paid to the structure and performance of the industry, as well as the crucial role of subsidies in the context of strategic trade theory and applications, leading to one of the longest World Trade Organization cases. This analysis is becoming increasingly topical as both competitors experience significant backlogs with indications that their capacity does not meet demand, public discussion on subsidies is increasing and new contenders in the long haul market are becoming visible. The modeling method developed compares and evaluates government support in the forms of capacity enhancement with the relevant support of per unit cost on the performance of the domestic firm. The results are compatible with the stylized evidence, revealing that the capacity enhancement mechanism is inferior in boosting the domestic firm’s performance.
Subsidies, Airbus, Boeing, Microeconomics, Strategic Trade.
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Mohammad Sogir Hossain Khandoker, Md. Shakil Mallik and Rafiqul Bhuyan
Correspondence: Rafiqul Bhuyan, rafiqul.bhuyan@aamu.edu
Department of Accounting and Finance Alabama A&M University, USA.
pdf (711.8 Kb) | doi: https://doi.org/10.47260/bae/1211
The main purpose of the study is to explore the impact of macroeconomic variables, such as GDP growth rate (GDPGR), inflation rate (INF), the real exchange rate (RER), and balance of trade (BOT) on foreign direct investment the FDI in Bangladesh. Data has been gathered from the World Bank's data indicators for the years 1987-2022. Our result shows that there is a significant and positive correlation between the macro variables and FDI. Additionally, the macro variables are co-integrated and have both short-run and long-run relations with FDI. We also observe that there are unidirectional relations of GDP growth and real exchange rate with foreign direct investment. On the contrary, there is a non-directional causality between the balance of trade and FDI along with inflation and FDI. Thus, for attracting foreign investors, the government of Bangladesh and economic policymakers should focus on and critically analyze macroeconomic aspects that highly influence the FDI in Bangladesh.
Foreign Direct Investment (FDI), Gross Domestic Product Growth Rate (GDPGR), Balance of Trade (BOT), Real Exchange Rate (RER), Inflation Rate (INF).
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