World Journal of Surgical Infection

ABSTRACTWe propose a methodology to build and validate a composite indicator of the market liquidity of euro‐area sovereign bonds, with the aim of providing a comprehensive assessment of liquidity conditions in several different trading venues and countries. The composite indicator, which starts in 2010, allows us to put into historical context the liquidity deterioration observed during the Covid‐19 crisis, which was almost as severe as that experienced during the European sovereign debt crisis. While the latter impairment in liquidity conditions lasted for more than 2 years, the most recent one was quickly reabsorbed. We provide evidence that the promptness and boldness of the European Central Bank's interventions in 2020 could contribute to explain this difference: according to our indicator, the announcements of some monetary policy measures having an explicit market stabilization function were followed by significant improvements in the liquidity of sovereign bonds.

ABSTRACTThis paper estimates empirical Taylor rules to analyze the recent monetary policy of the five main Latin American inflation‐targeting central banks. We find that during the inflationary surge of 2021–2023, monetary policy reacted more strongly and more quickly to changes in inflation than predicted by a standard linear Taylor rule, estimated on data from the prepandemic period. Although this appears to represent a shift in the monetary reaction function, we think it more likely that Latin American central banks have been following a nonlinear strategy, responding more aggressively to inflation, the higher it rose. We confirmed this by adding the square of inflation to the Taylor rule model: its coefficient was positive and significant, indicating that policy interest rates exhibited a nonlinear response to inflation, even during the prepandemic period, and the model did a better job of predicting the sharp rise in interest rates during 2021–2023.

AbstractWe study euro area investors' portfolio adjustment since the Brexit referendum in terms of securities issued in the UK or denominated in pound sterling, in the context of heightened policy uncertainty surrounding the exit process of the UK from the EU. Our sector‐level analysis ‘looks‐through’ holdings of investment fund shares to gauge euro area sectors' full exposures. Our key finding is the absence of a negative ‘Brexit‐effect’, rendering UK‐issued and pound‐denominated securities less attractive. Instead, we observe that all euro area sectors increased their absolute and relative exposures to UK‐issued and pound‐denominated debt securities since the Brexit referendum, as well as to listed shares issued by UK nonfinancial corporations, while the exposures to shares issued by UK banks declined. These findings should be seen against the backdrop of low yields on euro area debt securities and a strong recovery in UK share prices since the Brexit referendum.

AbstractUsing data on Chinese cross‐border mergers and acquisitions (M&As) from 2002 to 2022, this paper considers the effects of institutional differences and state ownership on the financing decisions of Chinese cross‐border M&As. We find that cultural differences and formal institutional differences have significantly positive effects on internal financing and equity financing. These findings indicate that under the influence of institutional differences, internal financing is the type of financing most favoured by Chinese enterprises engaged in cross‐border M&As, followed by equity financing and, finally, debt financing. We document that the financing decision most favoured by Chinese state‐owned enterprises is debt financing, whereas the least favoured decision is equity financing. In addition, we find a prominent mediating effect of information asymmetry, which implies that information asymmetry serves as a potential channel through which institutional differences impact the financing decisions of Chinese cross‐border M&As.

AbstractThis study shows that monetary policy transmission in the United States has evolved considerably over the postwar period. Since the mid‐1980s, the effects of monetary policy on credit and housing markets have become much stronger relative to the impact on gross domestic product, while the effects on inflation have become weaker. We show that these changes in the relative effects of monetary policy can be explained by several important changes in the monetary transmission mechanism and in the composition of credit aggregates. Most notably, the increasing impact of monetary policy on credit was predominantly driven by an extraordinarily higher responsiveness of mortgage credit and a larger share of mortgages in total credit. These findings imply important changes over time in short‐term monetary policy trade‐offs between inflation and output stability on the one hand and between financial and macroeconomic stability on the other.

AbstractMonetary policy can directly impact corporate R&D investment, and it can also be achieved through loan term structure indirectly. This study examines the relationship between macro‐level monetary policy and micro‐level corporate R&D investment from the perspective of loan term structure using data from A‐share listed companies in China from 2007 to 2018. The study has three major findings: (i) There is a positive correlation between monetary policy easing and corporate R&D investment. (ii) From the perspective of the loan term structure, when monetary policy tightens, changes in the loan term structure may discourage corporate R&D activities, which is more pronounced for non‐state‐owned, high‐tech and growth‐stage companies. The effect of unconventional monetary policy is greater than that of conventional monetary policy in the period of severe economic shock, and monetary policy has a clear asymmetric effect that is greater when it is tight than when it is accommodative. (iii) Through survival analysis, it is found that tight monetary policy is not conducive to prolonging the duration of enterprises' R&D investment. Based on these findings, the study presents recommendations that provide a reference for the government to implement macro‐control.

AbstractThis paper examines estimates of, and drivers for, the sacrifice ratio, defined as the cumulative sum of foregone annualised output accruing from a disinflation of one percentage point. Three approaches are employed. The first reviews the literature on what sacrifice ratio might be expected. The second studies a generic disinflation experiment using 40 estimated macro models of the U.S. economy, calculating a distribution of sacrifice ratios. Those sacrifice ratios are high by historical standards and the paper discusses some stories for why this is so. The role of expectations formation and the credibility of policy is emphasised. The third approach investigates more closely some drivers of the output cost of disinflation by carrying out a selection of disinflation experiments using the FRB/US model, varying certain characteristics of the model's expectations formation mechanism. Pinning down a precise measure for the output cost of disinflation is challenging. However, the literature and policy experiments do offer some guidance on how the sacrifice ratio can be reduced.

AbstractThis study employs the MS‐GARCH‐EVT‐vine copula model to examine changes in the dependence structure and risk spillovers among global stock markets during the COVID‐19 pandemic. Our results indicate that the dependence structure of global stock markets exhibits intercontinental clustering characteristics. Specifically, the Hong Kong, French and US stock markets serve as the central nodes in the Asia‐Pacific, European and American regions, respectively. Furthermore, the COVID‐19 pandemic has reduced the number of stock markets directly linked to central nodes and exacerbated the synchronized decline in global stock markets. Additionally, the COVID‐19 pandemic has increased risk spillovers among global stock markets outside China, altering the direction of intercontinental risk contagion. These findings are significant for policy makers to prevent cross‐border risk spillovers and for investors to enhance their risk management strategies.

AbstractThis paper investigates how the commitment to maintain an established inflation target as opposed to changing it depends on the extent to which institutional or economic preconditions improve in a country. For 19 inflation‐targeting countries, we show that stronger operational commitment to the preannounced target is pronounced in countries with a greater improvement in institutional or economic preconditions, such as central bank independence, inflation, government indebtedness, financial development and central bank credibility. Our results also highlight the heterogeneous contingencies for the discretionary behaviour of adjusting the target, including the gradual disinflation phase, fiscal dominance and the transition to flexible targeting.

AbstractIt is widely assumed that the renminbi (RMB) cannot acquire a meaningful place in central bank reserve portfolios without full liberalization of China's capital account. We argue that the RMB can in fact develop into an international reserve currency in the absence of capital‐account convertibility. Trade and investment links can drive use despite limited access to Chinese financial markets. But this route to currency internationalization requires policy support. China must provide access to RMB through loans and the People's Bank of China (PBoC) currency swaps. It must ensure the convertibility of RMB into US dollars in offshore markets. It must provide RMB services at a stable and predictable price. Currency internationalization without full capital‐account liberalization thus requires the RMB to be backed by dollar reserves, which the PBoC consequently will continue to hold and use. Hence, we do not foresee RMB internationalization as supplanting dollar dominance.

AbstractThis paper investigates international monetary spillovers to stock prices in Bangladesh, a frontier market that has been excluded from prior studies in the literature. Using daily stock price data for over 300 publicly traded firms in a high‐frequency event study framework, we find that contractionary monetary shocks originating from the US, euro area, and China lower stock prices, with Chinese monetary shocks having the largest impact. Contractionary shocks originating from India, on the other hand, lead to a statistically significant increase in stock returns. The positive response is driven by a small number of policy decisions. When these outlier decisions are removed from the sample, contractionary Indian monetary shocks lead to a decline in stock prices in line with spillovers from the other countries.

AbstractBy constructing a novel index, the oil security attention index, this paper uses the  heterogeneous autoregressi (HAR)‐type and its extended models to study whether oil security attention can predict oil volatility. Based on the definition of the different dimensions of oil security and three‐pass regression filter (TPRF) dimension reduction technology, combined with Google search volume data of 23 keywords related to oil security, the oil security attention index is constructed. Considering the potential nonlinear relationship between attention and oil volatility, we incorporate asymmetric effects in the new extended HAR‐type models. The research findings show that the oil security attention index we propose can capture the volatility of West Texas Intermediate. The out‐of‐sample results indicate that the extended models have better predictive power, which confirms the asymmetric relationship between oil security attention and oil volatility. In the robustness analysis, we compare TPRF with traditional principal component analysis (PCA) and partial least squares (PLS), and show that the oil security attention index constructed using TPRF has more favourable information than PCA and PLS to capture the oil security attention of the public.