DOI: 10.32609/j.ruje.11.146303

Authors: Heba Helmy

Abstract: We aim to show how any variants of a unified currency among BRICS Plus countries are challengeable, by probing the disparate influence of the positive and negative alterations in the crude oil’s international price on the real effective exchange rates. The paper applies the nonlinear autoregressive distributed lag approach to separate oil price upswings from downswings and assesses how such changes asymmetrically affect the real effective exchange rates of BRICS Plus members in the short and long runs using monthly time series variables from January 2000 until July 2023. Our findings reveal that in the short run, the asymmetric impacts of the positive and negative oil price changes on the real effective exchange rates appear in all BRICS Plus countries. In the long run, Brazil and Argentina confirmed the asymmetric impact of oil price changes on their real effective exchange rates, while the symmetric impact is confirmed in Russia, the United Arab Emirates, and Ethiopia. Our findings prove that a unified currency or a unified monetary union is a very challenging idea, as continuous appreciations or depreciations of the local currencies of BRICS Plus countries will have to be implemented to preserve their alignment with the composite currency unit. Moreover, the asymmetric responses will induce diverse policy recommendations concerning the oil pricing. Our study comes to fill a vital lacuna in the literature as it is the first study to probe the asymmetric association between the oil’s international price and the real effective exchange rate in the BRICS Plus countries.

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DOI: 10.32609/j.ruje.10.113578

Authors: Inna S. Lola, Dmitry G. Asoskov

Abstract: This study investigates the utility of business uncertainty indicators as predictive tools for forecasting economic activity in the context of Russia. In an era characterized by global economic volatility and geopolitical shifts, understanding the dynamics of economic uncertainty and its impact on overall economic performance is of paramount importance. The study utilizes a comprehensive dataset based on the results of business tendency surveys in Russia, spanning the period from 2009 to the first half of 2024. Given the importance of uncertainty in shaping economic outcomes, the central research question of this study is: can uncertainty indicators predict business activity in Russia or not? To address this question, we compared two alternative approaches to calculating business uncertainty: the ex‑ante approach, which uses the business community’s assessments of future business trends to measure uncertainty as the dispersion of opinions expressed, and the ex‑post approach, which applies entrepreneurial assessments of both future and current trends to determine business uncertainty as the degree of deviation of entrepreneurial expectations from the real picture. National indicators and sectoral indicators were calculated for the mining and quarrying industry, manufacturing industry, construction, retail trade, wholesale trade and services. For most of the industries under consideration (except for the construction and service sector) and at the national level, the specifications of vector autoregression models that were effective for forecasting real indicators of economic activity, characterized by lower forecast errors compared to standard autoregressive models, were built. According to the results obtained, at the national level, when forecasting GDP, clear preference should be given to the ex‑post indicator.

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DOI: 10.32609/j.ruje.10.118505

Authors: Osama D. Sweidan

Abstract: Recently researchers performed empirical economic studies to investigate how geopolitical risk impacts diverse economic sectors. We take a fresh perspective by exploring whether advancements in the U.S. IT sector can account for fluctuations in China’s geopolitical risk. The conflict between China and the United States regarding semiconductors revolves around technological supremacy, economic dominance, and national security concerns. China has been striving to become self-sufficient in semiconductor production to reduce reliance on foreign suppliers, particularly the United States. However, the United States has imposed restrictions on semiconductor exports to China. Our study constructs a theoretical framework and utilizes the bounds testing approach for cointegration to estimate the parameters of the Autoregressive Distributed Lag model. We use monthly data from January 1993 to November 2023. The findings reveal that the U.S. IT sector significantly and positively influences China’s geopolitical risk. From a policy implication perspective, the race to lead the global IT sector may emerge as the primary source of economic and political instability unless rival nations reach a compromise.

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DOI: 10.32609/j.ruje.9.97733

Authors: Osama D. Sweidan

Abstract: Exploring the nexus between geopolitical risk (GPR) and military expenditures (ME) has been limited during the past period. It is justified by the absence of a well-published proxy for GPR. Recently, the work of Caldara and Iacoviello (2022) stimulated scholars to examine the consequences of GPR. Our paper seeks to understand the relationship between GPR and ME in the United States (US). It designs a theoretical framework and computes an econometric model using the Autoregressive Distributed Lag methodology based on annual data (1960–2021). In addition, it uses the pairwise Toda–Yamamoto causality test. The results show that the relationship between GPR and ME is one of unidirectional causality and runs from ME to GPR in the US. Further, this relationship is statistically significant and positive in the short and long run. This finding supports our hypothesis that the US GPR is a consequence of resource allocation, i.e., ME, and can be controlled, directed, and mitigated. Thus, ME is a tool to achieve the US international hegemony’s strategic goals. From a policy implication perspective, it has been proved that GPR has broad negative consequences for various economies. Thus, moving toward cooperation and coordination with other nations instead of accumulating ME tends to support the international economy.

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DOI: 10.3897/j.ruje.4.27086

Authors: Christos Kollias, Suzanna-Maria Paleologou, Panayiotis Tzeremes, Nickolaos Tzeremes

Abstract: The allocation of resources to defense and national security is influenced by several factors, both domestic and external. Findings, reported in the relevant empirical literature, suggest that military spending is determined by a cohort of economic, strategic and political factors. This paper estimates a demand function for Russian military expenditure for the period 1992–2015. The results indicate that Russian defense spending is strongly dependent on income from energy exports as well as on the overall performance of the Russian economy. Strategic factors also emerge as significant determinants of such expenditure.

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DOI: 10.1016/j.ruje.2017.02.007

Authors: Guglielmo Maria Caporale, Valentina Zakirova

Abstract: This research note investigates whether or not calendar anomalies (such as the January, day-of-the-week and turn-of-the-month effects) characterize the Russian stock market, which could be interpreted as evidence against market efficiency. Specifically, OLS, GARCH, EGARCH and TGARCH models are estimated using daily data for the MICEX market index over the period Sept. 1997–Apr. 2016. The empirical results show the importance of taking into account transactions costs (proxied by the bid-ask spreads): once these are incorporated into the analysis, calendar anomalies disappear, and therefore, there is no evidence of exploitable profit opportunities based on them that would be inconsistent with market efficiency.

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