Volume 29, Issue 4

The war between Ukraine and Russia does not only harm their respective populations: the rest of Europe is heavily affected. While some welfare losses for the EU are salient, the most significant one is not: it is the risk that the war escalates into a major nuclear conflict. A promising policy to minimize those losses exploits the desire of both Ukrainians and Russians to join the EU. I propose that they should if they immediately cease all fighting and subscribe to a distinctive, incentive-compatible, peace agreement brokered by the EU. Such an agreement would come at small costs to the EU, costs that would vanish in comparison to the risk of nuclear holocaust.

The article discusses the spillover impacts between geopolitical uncertainty, inflation, exchange rates, and exports worldwide by employing the Time-Varying Parameter Vector Autoregressive (TVP-VAR) methodology. The net directional pairwise and net total directional causality among these variables is examined in major advanced economies (US, UK, Germany, France, Israel, South Korea and Japan) and rising economies (Russia, Türkiye, China, India, Brazil, and South Africa). Normal market conditions (since early 2000) and stressed ones since the latest crises (the Covid-19 disease and the Russia–Ukraine conflict) are covered. It is revealed that the national currency value constitutes the most influential determinant of exports and inflation but also in the system examined. Currency values exert direct impacts on inflation but also indirect, affecting exports and enhancing geopolitical risk as this is found to increase inflationary pressures. Intriguingly, this gives credence to the emergence of a new channel of inflation-creation that works through geopolitical risk. Such linkages are more pronounced in the US, South Korea, and Brazil while Germany and France present the weakest relations. Inflation, the currency value, and exports turned out to be very decisive regarding the geopolitical risk in Russia during the Russia–Ukraine war.

Military expenditures constitute a large chunk of the United States’ annual budget and its macroeconomic implications had been modelled using the Granger causality test, which suffers power loss when variables are subjected to structural breaks. This study explored alternative approaches by applying both traditional VAR-based Granger causality and the time-varying causality test techniques to obtain new evidence on the causality between military spending and selected macroeconomic indicators (economic growth, investment, unemployment and inflation rate) in the United States. Relevant data covering 1972Q1–2021Q2 were analysed. The results of the VAR-based Granger Causality test are dominated by a unidirectional causality that runs from macroeconomic variables to military spending and the result are robust to alternative military spending measures. However, the results of the time-varying causality method show that bidirectional causality dominates the relationship between military spending and some macroeconomic indicators, especially economic growth, investment and unemployment. With the variance observed in the causality between military spending and macroeconomic indicators, policymakers need to moderate military spending to achieve desired economic outcomes.

Are differences in per capita income between countries really the main cause of migratory flows? Mainstream economic thinking would give an affirmative answer. In the light of the heterodox literature, in this article, the authors critically evaluate this view and then they conduct an empirical test (applying panel and dynamic panel models) on data relating to the stocks of migrants on 232 countries from 1990 to 2019, trying to explain migration trends based on social-political, cultural, demographic and economic variables (obtained by integrating 4 official datasets). The results reveal a non-unique influence of differences in per capita income on migratory flows: up to a certain threshold (around $27,000) migration appears to be directly related to per capita GDP of migrants’ country of origin. Furthermore, the pre-existing stock of migrants in the country of destination takes on an important role, in line with the findings of the literature on migratory chains. These empirical findings could contribute to improve migration policies.

This paper focuses on the determinants of military spending in Africa by considering the role played by institutions. With data obtained between the years 1996–2019, the Driscoll and Kraay fixed effects, the Generalised Method of Moments (GMM), and the Bayesian Model Averaging (BMA) estimators are used. The findings suggest that government size, trade freedom, economic risk, and political risk decrease military spending, whereas government stability and military involvement in politics are found to raise it. Using alternative institutional variables, we find that corruption, government effectiveness, political stability, regulatory quality, the rule of law, and voice and accountability significantly diminish military spending in Africa. In addition, concerning the economic determinants, the results reveal that trade openness and total natural resource rents reduce military spending, while GDP per capita, inflation, and foreign debt stocks increase it. Looking at strategic determinants, arms imports, urban population, and ethnic tensions positively affect African military expenditures. Robustness checks show that these results change once regional specificities are considered. The study concludes that institutional factors could be an engine for evolution in Africa’s military spending.