The Formation Mechanism of Systemic Financial Risk under External Shocks

By incorporating both the fire sales contagion mechanism and the bankruptcy contagion mechanism into a bank network model,this paper examines how risks are generated under dynamic shocks.In particular,this paper constructs systemic risk indicators suitable for analyzing multiple rounds of contagion under different shocks(time dimension)and from institutions and assets(spatial dimension).Indicators that measure the indirect relevance between institutions and between assets are also innovatively built.It is found that due to deleveraging or bankruptcy among a large number of banks,the systemic risk exhibits an upward trend marked by intermittent jumps under varying intensities of shocks.Risks are generated mainly through the fire sales contagion mechanism of deleveraging under small shocks,and through the bankruptcy contagion mechanism under large shocks.In terms of influencing factors,a stronger indirect relevance,a lower leverage skewness and a higher leverage level in the banking system lead to higher risks.In particular,the influence of leverage skewness on systemic risk is stronger than that of leverage level.

Export fluctuation and overcapacity in China’s manufacturing industry--The inspection of the causes of excess capacity from the perspective of external demand

Intuitively speaking,there is an inverse proportional relationship between exports and overcapacity,which means in export’s busy season enterprises would expand output and improve capacity utilisation rate but control yields to avoid dull sale in slack season,causing exacerbated excess capacity.However,this is just the reflections of“sales effect”on overcapacity by export fluctuation.For some enterprises,there is indeed“competition effect”which may alleviate overcapacity because enterprises face even more fierce domestic competition for the sake of weak exports and may increase the utilisation load of existing capacity in order to cut costs.A test is conducted in this paper to verify the relationship between export fluctuation and excess capacity based on data of China's manufacturing industry from 2001 to 2013.The overall results indicate that export fluctuation is not the significant cause for excess capacity.In the small and medium-sized enterprises or in industries with higher proportion of non-state capital,the negative relationship between exports and excess capacity is more obvious,with“sales effect”taking a dominant position.On the other hand,under the influence of“competition effect”,the relationship between the two may be positive.Thus,external demand shocks exert different influence on the alleviation of excess capacity of different industries,and extensively driven exports may not have anticipated effect on the dissolution of the excess capacity.To regulate overcapacity with the aid of external market,a fair and orderly competition environment should be provided to the export subjects of different size and ownerships.

Poverty Volatility and Tax Revenue Instability in Developing Countries

This paper complements the relatively few existing studies on the macroeconomic effects of poverty in developing countries, by investigating the effect of poverty volatility on tax revenue instability. The empirical analysis has been conducted using an unbalanced panel dataset of 97 developing countries covering the period of 1980–2017 and primarily the two-step system generalized method of moments estimator. Findings have revealed that least developed countries tend to experience a positive tax revenue instability effect of poverty volatility, while poverty volatility results in lower tax revenue instability in relatively advanced countries. Additionally, poverty volatility dampens the instability of tax revenue when poverty rates are low, and enhances it when countries face a greater extent of external shocks. From a policy perspective, this analysis shows that it would be essential for policymakers to dampen the volatility of poverty rates (notably in countries with high poverty rates) if they were to ensure the stability of tax revenue or reduce its instability, given the adverse effect of tax revenue instability on economic growth.