Emerging Market Economies: Globalization, Monetary Policy, and Asset Prices

A special issue of Economies (ISSN 2227-7099).

Deadline for manuscript submissions: 31 December 2025 | Viewed by 122

Special Issue Editor


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Guest Editor
Department of Economics and Finance, La Trobe Business School, La Trobe University, Melbourne, VIC 3086, Australia
Interests: corporate finance; asset pricing; international finance

Special Issue Information

Dear Colleagues,

This Special Issue explores the dynamic interplay between globalization, monetary policy, and asset prices within emerging market economies. As these economies increasingly integrate into global financial systems, they face unique challenges and opportunities that influence policy formulation and market behavior. Contributions to this issue examine how cross-border capital flows, trade liberalization, and global financial shocks affect domestic monetary policies and, in turn, asset price dynamics. The issue welcomes both theoretical and empirical studies that shed light on the transmission mechanisms linking globalization with local financial stability, interest rate adjustments, inflation targeting, and exchange rate policies. By analyzing the impact of global economic trends and crises on emerging markets, this research aims to uncover how monetary policy decisions can either mitigate or exacerbate asset price volatility. This interdisciplinary approach encourages insights from econometrics, international finance, and policy analysis, providing a comprehensive understanding of the forces shaping asset markets in a rapidly evolving global context. The findings are expected to inform policymakers, investors, and academics about strategies to enhance economic resilience and sustainable growth in emerging market settings.

Dr. Hui Li
Guest Editor

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Keywords

  • globalization
  • emerging markets
  • monetary policy
  • asset prices
  • capital flows
  • financial integration
  • exchange rates
  • inflation
  • economic stability
  • policy analysis

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Published Papers (1 paper)

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Research

27 pages, 978 KiB  
Article
Global Shocks and Local Fragilities: A Financial Stress Index Approach to Pakistan’s Monetary and Asset Market Dynamics
by Kinza Yousfani, Hasnain Iftikhar, Paulo Canas Rodrigues, Elías A. Torres Armas and Javier Linkolk López-Gonzales
Economies 2025, 13(8), 243; https://doi.org/10.3390/economies13080243 - 19 Aug 2025
Abstract
Economic stability in emerging market economies is increasingly shaped by the interplay between global financial integration, domestic monetary dynamics, and asset price fluctuations. Yet, early detection of financial market disruptions remains a persistent challenge. This study constructs a Financial Stress Index (FSI) for [...] Read more.
Economic stability in emerging market economies is increasingly shaped by the interplay between global financial integration, domestic monetary dynamics, and asset price fluctuations. Yet, early detection of financial market disruptions remains a persistent challenge. This study constructs a Financial Stress Index (FSI) for Pakistan, utilizing monthly data from 2005 to 2024, to capture systemic stress in a globalized context. Using Principal Component Analysis (PCA), the FSI consolidates diverse indicators, including banking sector fragility, exchange market pressure, stock market volatility, money market spread, external debt exposure, and trade finance conditions, into a single, interpretable measure of financial instability. The index is externally validated through comparisons with the U.S. STLFSI4, the Global Economic Policy Uncertainty (EPU) Index, the Geopolitical Risk (GPR) Index, and the OECD Composite Leading Indicator (CLI). The results confirm that Pakistan’s FSI responds meaningfully to both global and domestic shocks. It successfully captures major stress episodes, including the 2008 global financial crisis, the COVID-19 pandemic, and politically driven local disruptions. A key understanding is the index’s ability to distinguish between sudden global contagion and gradually emerging domestic vulnerabilities. Empirical results show that banking sector risk, followed by trade finance constraints and exchange rate volatility, are the leading contributors to systemic stress. Granger causality analysis reveals that financial stress has a significant impact on macroeconomic performance, particularly in terms of GDP growth and trade flows. These findings emphasize the importance of monitoring sector-specific vulnerabilities in an open economy like Pakistan. The FSI offers strong potential as an early warning system to support policy design and strengthen economic resilience. Future modifications may include incorporating real-time market-based metrics indicators to better align the index with global stress patterns. Full article
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