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Financial cycles are widely regarded as key drivers of global financial conditions and major contributors to international financial crises. Understanding the extent to which these cycles are interconnected is essential for developing early warning systems to predict financial crises and for informing the design of macroprudential and monetary policies. In this context, a dynamic factor model and time-varying Granger causality (TVGC) are employed to assess the degree of financial cycle synchronization between advanced economies and systemic middle-income countries (SMICs). Our data spans the period from 1980Q1 to 2023Q4. The analysis reveals that a common factor—shared by both advanced and systemic middle-income economies—plays a significant and persistent role in driving financial cycles across these regions. Notably, the influence of this common factor intensified following the 2007–2009 global financial crisis, highlighting the growing financial interconnectedness between these economies. These results strongly support the argument for closer coordination of macroprudential policies between advanced economies and SMICs. The findings from the TVGC analysis further reinforce the conclusions drawn from the dynamic factor model. Specifically, the TVGC results indicate a bidirectional causality between the financial cycles of advanced economies and SMICs, suggesting mutual influence. This bidirectional relationship underscores the importance of enhanced policy coordination across these economies to mitigate systemic risks.

The main aim of this study was to investigate the impact of foreign portfolio investment on economic growth in Africa.  The motivation to explore the effects of portfolio investment and growth stemmed from the fact that Africa has recorded large capital inflows since the global financial crisis. These capital flows can have positive or negative consequences. The effects of foreign portfolio investment on the African economy is an area of interest because very little has been done on the subject area. The study used quarterly panel from 1995 to 2014. The study used only five African countries; South Africa, Botswana, Kenya, Mauritius and Nigeria. These countries were chosen because they are in the top five of the African financial markets index. A GMM model was adopted to test the effects of portfolio flows on economic growth in the selected African states. Results showed that there is a weak relationship between portfolio investment and economic growth and that there is a positive relationship between INT and GDP. Results also show a positive relationship between EXCH and GDP in the long run.  A depreciation in the rand exchange rate is seen to be depressing economic growth. The study recommended that the Central Banks in African countries develop better strategies to enhance capital flows' benefits. This can be done by establishing and improving financial institutions which are still developing.

For more than a decade, China has a policy of managing its currency exchange rate (RMB) to limit its appreciation against other currencies like U.S dollar. This policy has been subjected to many criticisms from United States’ lawmakers as currency manipulation.  The U.S. argues that China is gaining an advantage of export and attracting direct foreign investment at the expense of other countries including the United State. The claim also has included that China’s manipulation causes U.S. trade deficit as well as high rate of unemployment. Meanwhile, China’s policy makers argue that its policy of exchange rate is a mechanism tool to enhance the development of the country and attaining market growth to make China rich and powerful. This research paper underlines the root of this argument and how china’s currency policy has affected both economics of U.S. and China. Many economists have emphasized on the appreciation of RMB as an important factor to attain the trade balance. However, this research argues that the appreciation is not going to matter. Pressure has been put on Obama’s Administration to push China to appreciate its currency and to designate China as a "currency manipulator". Several Bills have been introduced to discuss this issue.From a legal perspective, two entities could tackle this issue. They are the World Trade Organization (WTO) and the International Monetary Fund (IMF). However, IMF lack legitimacy and leverage and WTO has no jurisdiction over the exchange rate. So, none of these entities could handle the currency issue. Therefore, this paper analyzes some possible solutions such as Omnibus Act, tariffs, import quotas and forming new legislation. Where, it concludes that the best solution could be via forming a new international agency.