The effectiveness of exchange rate channel in Azerbaijan: an empirical analysis

Most of the GCC countries currencies are pegged to the US dollar, which make the economy those countries susceptible to the US monetary policy change. This paper used the non-structural VAR tests to examine the spillovers impact of the two recently developed US monetary policy uncertainty indices (the BBD MPU and the HRS MPU) shocks on GCC stock markets from 2003: M01 to 2017: M07. The result revealed that during the period under review, the two MPU have slight significant impact on some GCC markets. But the HRS MPU has more impact than the BBD MPU. Besides this, unidirectional causality running from HRS MPU to Bahraini and Kuwaiti Stock market was detected within the period. Hence, policymakers should realize the heterogeneity impacts from US MPU to stock markets in GCC countries. The findings also help investors and portfolio managers to better understand the effects of US monetary policy uncertainty on the stock markets.

Foreign direct investment (FDI) inflows to Vietnam have increased significantly in recent years. Theoretically, capital inflows will put pressure on the overvaluation of local currencies in countries, despite different exchange rate mechanisms. So, the problem facing the Vietnamese government is the need to examine the relationship between the exchange rate and FDI in order to develop effective policies. This study examined the relationship between the exchange rate and FDI in Vietnam in the period of 2005–2019 using the VAR (vector autoregression) model based on quarterly frequency data. The new points of this study are: (i) using the real effective exchange rate (REER) of the Vietnamese currency with 143 major trading partners of Vietnam; and (ii) adding two control variables into the VAR model to examine the relationship between the exchange rate and FDI in Vietnam – a case study for developing countries. The findings show that, firstly, there is a positive causal relationship between FDI and Vietnam’s real effective exchange rate. Secondly, trade openness has a positive impact on FDI and REER in Vietnam. Thirdly, economic growth has an impact on REER, but no statistically significant impact on FDI was found. The findings can provide useful information to help policymakers plan and make decisions on future policies and support further research studies.

Money is a widely accepted commodity, which enables us to determine the economic value of purchased goods and services and make payments. The dynamic development of technology and social expectations has expanded the spectrum of available types of payment instruments, including e-money and cryptocurrencies. Among dematerialized means of payment, cryptocurrencies began to play an important role due to their independence from central financial institutions and a highly effective form of saving money. The paper aims to present legal authorization, referring to cryptocurrencies, in countries of the European Union and prove that bitcoin is a high-riskу financial instrument. The methodology of the study was based on the review of available legal acts and literature (regarding the nature and function of money) and Value at Risk (VaR) model on the example of risk assessment of cryptocurrencies with respect to investing in the selected currencies. The outcomes showed several discrepancies in the definition of cryptocurrencies. They indicated that bitcoin, as one of the best-known cryptocurrencies, does not fulfill the functions of money formulated in economic theory (in relation to e-money). Besides, cryptocurrencies have been shown to be high-risky instruments.