Turkish Economic Review

History rhymes: A comparison of China today with Japan in the 1920s

John GREENWOOD — 2026-01-12

During the First World War Japan experienced large surpluses on its external accounts which, via monetary expansion, drove up prices to an uncompetitive level compared with other leading economies such as the US and the UK. Similarly, following China’s devaluation of its currency and exchange rate reunification in 1994 along with the adoption of a fixed rate against the US dollar, China gradually built up huge external surpluses in the early 2000s, which continued even after the 2005-14 appreciation of the currency. For Japan in the 1920s the result of the overvaluation was a decade of financial crises, slow growth, agricultural depression and deflation. Only in December 1931 did the authorities finally abandon the fetish of returning to the pre-war exchange rate and devalue the yen, allowing Japan’s external accounts to return to equilibrium. In 2017, China is faced with essentially a similar set of choices as Japan in the 1920s.

Keywords. Central bank; Purchasing power parity; Balance of payments; Japan; China.

JEL. B25; G20; J71; N32; P16.

Beyond benign neglect: An extreme bounds analysis of the relationship between monetary policy and financial stress indicators in South Africa

Nomvula Z. NDLOVU — 2026-01-12

The 2008 global financial crisis fundamentally challenged the "benign neglect" orthodoxy, which posited that central banks should ignore asset price fluctuations unless they directly impact inflation outlooks. Since then, the debate has shifted toward "leaning against the wind," suggesting that monetary policy should proactively respond to financial misalignments. This paper investigates the empirical relationship between a broad set of financial stress indicator variables and the monetary policy interest rate in South Africa from January 2000 to December 2013. To address the lack of consensus on which financial variables are most relevant and to mitigate model uncertainty, the study employs Extreme Bounds Analysis (EBA) as proposed by Leamer (1985) and Sala-i-Martin (1997). This methodology assesses the robustness of 15 financial stress indicators across thousands of regression specifications, categorizing them into bond, equity, commodity, and exchange rate markets. The empirical results reveal that sovereign bond spreads, A-rated bond spreads, corporate bond spreads, stock market returns, credit extension growth, and property market returns are robustly associated with the South African repurchase rate. In contrast, variables such as oil market returns, the VIX S&P500, and sector-specific betas appear fragile and weakly linked to policy decisions. These findings suggest that the South African Reserve Bank implicitly accounts for specific financial imbalances in its policy deliberations. The study provides a necessary precondition for designing optimal monetary policy frameworks that integrate financial stability without compromising inflation targeting objectives.

Keywords. Monetary policy; Financial stress indicators; Extreme bounds analysis; South Africa; Asset price misalignment.

JEL. C52; E44; E52; E58; G12.

The impact of macroeconomic determinants on stock prices: Empirical evidence from the Dar es Salaam Stock Exchange

Mariam Zuhura MWINYI — 2026-01-12

This study investigates the influence of key macroeconomic variables—specifically interest rates, inflation, exchange rates, and money supply—on both the aggregate and individual stock prices of firms listed on the Dar es Salaam Stock Exchange (DSE). Utilizing monthly data spanning from January 2012 to December 2016, the research analyzes 10 major companies across diverse sectors, including manufacturing and banking. The motivation for this study stems from the inconclusive and often contradictory findings in existing literature regarding the direction and significance of macroeconomic impacts on capital markets. The conceptual framework posits that while variables like inflation and exchange rates can have dual effects depending on economic expectations and firm-specific trade orientations (import vs. export), interest rates typically exert a negative pressure on stock valuations due to the increased opportunity cost of capital and higher discount rates. Conversely, money supply is generally expected to stimulate economic activity and corporate earnings, though its inflationary potential may offset these gains. By employing a country-specific empirical analysis for Tanzania, this paper aims to resolve theoretical ambiguities within the local context. The findings are intended to provide investors with better risk management insights and assist policymakers in formulating effective monetary and financial strategies to ensure market stability and enhance investor confidence in one of Africa's significant emerging stock exchanges.
Keywords. Dar es Salaam Stock Exchange (DSE); Macroeconomic variables; Stock price volatility; Monetary policy; Emerging markets.
JEL. C32; E44; G12; G15; O16; O24.

The Borders of the European Union in a Conflictual World: Interdisciplinary European Studies. By Antonina Bakardjieva Engelbrekt, Per Ekman, Anna Michalski, and Lars Oxelheim (Eds.), Springer, 2024

Xiulan Yan LI — 2026-01-12

This edited volume, featuring contributions by Antonina Bakardjieva Engelbrekt, Per Ekman, Anna Michalski, and Lars Oxelheim, offers an interdisciplinary analysis of the contemporary challenges facing the European Union's external and internal borders. The book addresses a "Conflictual World," examining how geopolitical tensions, particularly those related to Russia, energy security (e.g., REPowerEU), and the weaponization of economic instruments like sanctions, reshape the concept and reality of the EU's frontier. The analysis is structured around key thematic areas: the integrity of the internal market and free movement, as governed by the Schengen Agreement; the legal and political dynamics of border securitisation; and the fundamental adherence to the Rule of Law under stress. It highlights the growing tension between open borders, a foundational EU principle, and the imperative for enhanced security and defense mechanisms in response to heightened global instability. The work is essential for scholars and policymakers seeking to understand the complex, multi-layered governance of borders in an era of renewed great power competition.

Keywords. European Union Borders; Geopolitics; Conflictual World; Free Movement; Securitisation; Interdisciplinary European Studies; Rule of Law.

JEL. F13; F50; H77; K33; P52.

2025 International Conference on Economic Research and Policy in Emerging Markets (ICERPEM 2025).

EconSciences LIBRARY — 2026-01-12

The International Conference on Economic Research and Policy in Emerging Markets (ICERPEM 2025) convened in Istanbul from September 15–18, 2025, as a pivotal platform for scholars, policymakers, and economic practitioners focused on the dynamics of emerging economies. With a program emphasizing applied research, policy evaluation, and regional economic trends, ICERPEM 2025 offered a unique opportunity to bridge academic theory with practical policy implications for emerging and transition economies, particularly Turkey and its regional neighbors. The conference published a comprehensive Abstract Book and Proceedings Book, providing an extensive archive of empirical studies, methodological approaches, and policy analyses highly relevant to the Turkish Economic Review. These Conference Notes synthesize the intellectual contributions, empirical insights, and policy debates that emerged during ICERPEM 2025. Key thematic areas include macroeconomic policy in emerging markets, structural reforms, financial stability, international trade, labor and inequality dynamics, regional integration, and sector-specific studies, all of which are closely aligned with the journal’s scope.

Keywords. European Union Borders; Geopolitics; Conflictual World; Free Movement; Securitisation; Interdisciplinary European Studies; Rule of Law.

JEL. F13; F50; H77; K33; P52.

Front Matter

EconSciences Library — 2026-01-12

Front Matter