The shadow economy (SE), which is hard to define and even harder to tackle, is posing a serious challenge in emerging countries. The study examines the impact of tariff (TAR) and non-tariff (NTAR) barriers on SE in N-11 countries. Additionally, it investigates the role of market signaling factors, specifically trade freedom (TFR)’s impact on SE. Employing the method of moments quantile regression (MMQR) and mean group estimation techniques, the study analyzes panel data from 2000 to 2020. The empirical findings demonstrate that increases in TAR barriers significantly contribute to an increase in SE activities. Conversely, NTAR regulations and enhanced trade freedom substantially reduce the magnitude of informal economic activities. These results highlight the importance of non-tariff measures and trade liberalization in reducing informality and fostering a formal economy. The study offers practical insights for policymakers, economic planners, and international organizations in designing trade policies that encourage formal participation while limiting shadow economy activities.

JEL Classification: E00, O11, E69

This study examines the dynamic impact of Global Economic Policy Uncertainty (GEPU), Climate Policy Uncertainty (CPU), and Geopolitical Risk (GPR) on sustainable markets (DJSI and green bonds), conventional equity market (S&P 500), and commodity markets (oil and gold). Utilizing monthly data from September 2014 to June 2024, the analysis employs a Time-Varying Parameter Vector Autoregression (TVP-VAR) model to capture the dynamic linkages and volatility spillover mechanisms across global financial markets and key risk factors. Unlike prior research focusing on a single uncertainty factor, this study integrates three distinct risk factors accounting for multifaceted global risk, supported by Principal Component Analysis (PCA), across multiple financial markets. To ensure the robustness of the findings, a standard VAR model is estimated, confirming the persistence of spillover dynamics. The results offer three major insights: First, the impact of uncertainty is heterogeneous across the financial markets, and is amplified especially during crises such as COVID-19 and geopolitical conflicts. Second, GEPU, GPR, and S&P 500 emerged as dominant volatility transmitters, while gold and sustainable assets exhibit hedging properties highlighting their role in portfolio diversification. Finally, periods of heightened uncertainties lead to asymmetric and time-varying transmissions, emphasizing the importance of adaptive risk management strategies. The results of the study provide understanding of how various risk factors affect financial markets, offering valuable insights to investors, policy-makers, and portfolio managers seeking resilience to the global crisis.

JEL Classification: G11, G15, F51

This paper sets up a medium-scale small open economy TANK model with incomplete markets to address business cycles in Korea extensively. The estimated model via Bayesian estimation methodology shows that the fraction of households who lack access to financial markets increased from 30 percent to 40 percent after the Asian Financial Crisis. This feature appears to be associated with structural changes in employment practices, including life-time employment and seniority-based salaries, as well as an increase in part-time jobs after the crisis. Since the mid-1970s, domestic markup, government spending, and risk premium shocks have been key factors influencing business cycles in Korea.

JEL Classification: E32, F31

This study investigates the impact of temperature shocks on prices and output for the ASEAN+3 countries, using annual data for the 1990-2023 period. Based on the panel SVAR framework, the empirical evidence indicates that temperature shocks, which can be considered as negative supply shocks, lead to output contraction and cause inflationary pressures. When the sample is split into two subgroups, namely the ten ASEAN countries and the +3 advanced economies, similar findings are derived. These effects seem to be quite persistent as they last for several years after the initial shock. Moreover, the results imply that temperature shocks initiate expansionary fiscal policies, which are of greater magnitude in the case of the +3 economies. For these three countries, a temperature shock also triggers a rather temporary expansionary monetary policy. The discussion that follows indicates that the monetary authorities of the region may have a role to play in dealing with the adverse effects of climate change. The use of new financial tools, such as green bonds and green loans, could be a solution. However, their use should be prudent because of the potential risks they bear.

JEL Classification: C33, E58, Q54