Currencies of greater interest for central Asian economies:an analysis of exchange market pressure amid global and regional interdependence

Central Asian Economies(CAEs)have diverse exchange rate policies.They have recorded higher volatility in the foreign exchange market since inception.High volatility of the transition era has drifted these economies towards partial dollarization.Monetary authorities in CAEs,(already have a challenge of maintaining monetary policy autonomy)have a gigantic task of price stability and stopping the spread of dollarization.This study is directed towards assessing the drivers and the determinants of foreign exchange market pressure in CAEs.The results,based on panel data analysis and the System GMM model,have provided useful insights about the exchange market pressure determinants particularly USD,Euro,Ruble,and Renminbi.The results show that China and Russia exchange market pressure has a negative effect on the exchange market pressure of CAEs.While the dollar index shows a positive impact on the exchange market pressure of CAEs.Overall,the findings imply that China and Russia currency appreciation results in a trade deficit across CAEs.The policy implication suggests that the floating exchange rate regime(inflation targeting regime)is not in favor of CAEs,and they must use managed-float to reduce their trade deficits.

Relative trust and tax morale

This paper investigates the importance of trust in international institutions for the development of tax morale by focussing on interactions between trust in the national government and trust in the European Union(EU)or trust in the United Nations(UN).Using large-scale survey data from European countries,we provide evidence that all three trust variables are significantly related to the individual level of tax morale.Overall,the results regarding trust in the EU and the UN are very similar,while trust in the national government appears to be the main factor in driving tax morale.However,depending on the national context,trust in the national government interacts differently with trust in different international institutions with respect to the shaping of tax morale.