Economies

In this article, we examine the dynamic interdependencies among components of Japan’s consumer price index (CPI) using a two-lag time-varying loading factor (TLTVLF) model. Whereas previous studies have typically decomposed CPI series into long-term trends, seasonal patterns, and cyclical fluctuations, such approaches mainly describe structural features without fully uncovering the latent mechanisms that drive price dynamics. The proposed TLTVFL modeling framework addresses this limitation by allowing both factor loadings and their lagged effects to evolve over time, thereby capturing gradual structural changes and the time-varying propagation of shocks across CPI categories. Using monthly data for ten major CPI categories from January 1970 to December 2024, we identify evolving common factors, category-specific sensitivities, and dynamic transmission patterns associated with major macroeconomic events. The findings reveal substantial temporal variation in inter-category linkages, offering fresh insights into sectoral contributions to inflationary pressures and providing policy-relevant implications for more effective monetary and fiscal interventions. Methodologically, this study extends the frontier of dynamic factor modeling, while empirically, it deepens the understanding of the mechanisms underlying price fluctuations over a long historical horizon.

This study examines global econo-environmental capability for 118 countries over 1995 to 2024 using a five-lens framework covering productive capacity (PC), developmental momentum (DM), resource efficiency (RE), degradation and depletion ratio (DDR), and remaining development potential (RDP). Using pooled k-means, a stable four archetype typology is identified and shown to persist over time. The analysis assesses how archetypes characterize country–year outcomes (RQ1), whether cross-sectional fairness is changing and relates to frontier slowdown (RQ2), and how archetypes, distance, and regional context shape transition probabilities and club convergence (RQ3). Inequality in five-dimensional capability declines slightly over the period (Gini from 0.109 to 0.092 and Palma from 1.563 to 1.464), implying modest convergence rather than increasing polarization. Average capability also improves, with larger gains for initially distant countries and smaller gains near the frontier, which is consistent with mild club convergence. Regionally, high capability cases are concentrated in Western Europe and North America, while sustained upgrading is observed in parts of Eastern Europe, mixed stability is observed in East and Central Asia, and selective advances are observed in ASEAN. Policy implications should be based on a country’s archetype and its distance to the capability ideal. Lagging countries should prioritize diffusion of proven high efficiency options and basic capability building, while frontier countries should priorities innovation, structural change, and deeper decarbonization. Policy emphasis should be updated as countries move within the capability space over time.

This paper extends the gravity model to financial markets by examining how distance and bilateral linkages influence stock market correlations between the United States and selected emerging economies. To this end, the Poisson Pseudo Maximum Likelihood (PPML) estimator is used to account for heteroskedasticity and zero-value observations. Results show that greater economic distance weakens equity market correlations, while larger combined economic mass strengthens them, suggesting that bigger economies foster deeper financial linkages. Moreover, the results show that higher trade intensity between the U.S. and emerging markets results in negative correlations, which are explained by portfolio diversification motives—investors view these markets as substitutes, reallocating funds in opposite directions under varying conditions. The findings highlight how structural factors, distance measures, and trade intensity influence international equity market correlations, providing key insights for portfolio allocation and diversification strategies.