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Exchange Rate Dynamics and Fiscal Policy in an Era of...
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Exchange Rate Dynamics and Fiscal Policy in an Era of Polycrisis: Inflation, Geopolitical Risks, and Global Uncertainty

A special issue of Economies (ISSN 2227-7099). This special issue belongs to the section "Macroeconomics, Monetary Economics, and Financial Markets".

Deadline for manuscript submissions: 31 October 2026 | Viewed by 5346

Editors

Dr. Bogdan Andrei Dumitrescu

E-Mail Website
Guest Editor
1. Department of Money and Banking, Faculty of Finance and Banking, Bucharest University of Economic Studies, 010961 Bucharest, Romania
2. “Victor Slăvescu” Centre for Financial and Monetary Research, Calea 13 Septembrie, 050711 Bucharest, Romania
Interests: macroeconomics; banking; fiscal policy; financial markets
Special Issues, Collections and Topics in MDPI journals
Dr. Catalin Gheorghe

E-Mail Website
Guest Editor
Department of Engineering and Industrial Management, Transilvania University of Brasov, Eroilor Street 29, 500036 Brasov, Romania
Interests: exchange rate dynamics; financial market volatility; economic uncertainty; time-series analysis

Special Issue Information

Dear Colleagues,

Following the COVID-19 pandemic, many economies faced a series of shocks. Energy prices surged, inflation reached levels not seen in decades, and geopolitical tensions, including armed conflicts, created additional strain. These concurrent shocks have intensified exchange rate volatility and exposed the limitations of conventional macroeconomic frameworks. Today, the economic landscape is markedly different: interest rates are higher, inflation remains persistent, uncertainty is widespread, and public finances are more vulnerable.

Against this background, this Special Issue proposes to explore how exchange rates and fiscal policies react during these overlapping global crises. We welcome contributions on a broad range of topics, including the exchange rate dynamics, impact of inflation shocks, asymmetries, fiscal policy, geopolitical risk, and sovereign debt challenges on macroeconomic stability. Submissions may include theoretical work, empirical analyses, or policy-focused studies, in advanced and emerging economies.

The goal of this Special Issue is to provide insights into how policymakers can navigate multiple, simultaneous pressures while maintaining economic stability and supporting sustainable economic growth. While previous studies have examined exchange rate dynamics and fiscal policy under individual crises, this Special Issue highlights how these interactions play out in a context of overlapping global shocks and heightened uncertainty.

Dr. Bogdan Andrei Dumitrescu
Dr. Catalin Gheorghe
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 250 words) can be sent to the Editorial Office for assessment.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a double-anonymized peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Economies is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1800 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • exchange rate dynamics
  • fiscal policy
  • inflation shocks
  • economic uncertainty
  • geopolitical risk
  • sovereign debt sustainability
  • monetary policy
  • international finance

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Published Papers (2 papers)

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Research

87 pages, 2873 KB  
Article
External Price Shock Vulnerability in Import-Dependent Economies: The Case of the Republic of Moldova and a Commodity Import Price Index
by Mircea Diavor
Economies 2026, 14(6), 207; https://doi.org/10.3390/economies14060207 - 4 Jun 2026
Viewed by 418
Abstract
This study examines the Republic of Moldova’s macroeconomic vulnerability to external commodity price shocks (1992–2025) using the IMF’s Commodity Import Price Index (CIPI) combined with time series analysis and a mixed-frequency VAR model linking monthly price data to quarterly GDP. Four key findings [...] Read more.
This study examines the Republic of Moldova’s macroeconomic vulnerability to external commodity price shocks (1992–2025) using the IMF’s Commodity Import Price Index (CIPI) combined with time series analysis and a mixed-frequency VAR model linking monthly price data to quarterly GDP. Four key findings emerge: First, vulnerability is event-driven rather than seasonal—irregular shocks dominate predictable patterns. Second, the CIPI exhibits highly persistent innovations and is non-stationary in levels, consistent with an I(1) process. This indicates that external import price shocks have long-lasting effects rather than dissipating quickly through mean reversion. Third, structural regimes have shifted, with the post-2020 period showing elevated volatility and higher baseline costs. Fourth, VAR impulse responses reveal a stop–go transmission: external price spikes initially raise nominal GDP through a valuation effect (higher lei value of unchanged import volumes), then feed into inflation, trigger policy tightening, and subsequently depress nominal activity while leaving persistent CPI level effects, which are the primary channel through which the shocks erode household welfare. Policy recommendations include: continuous CIPI monitoring for macro stress testing, buffer design accounting for persistent import-cost shifts, and structural measures such as energy diversification, domestic production capacity expansion, and commodity risk management tools to reduce exposure to global price volatility. Full article
(This article belongs to the Special Issue Exchange Rate Dynamics and Fiscal Policy in an Era of Polycrisis: Inflation, Geopolitical Risks, and Global Uncertainty)
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15 pages, 309 KB  
Article
Geopolitical Shocks and Crude Oil Market Tail Risk: Evidence from the Russia–Ukraine Conflict
by Charalampos Vasilios Basdekis, Apostolos G. Christopoulos, Konstantinos Gkillas and Ludovica Grifa
Economies 2026, 14(3), 92; https://doi.org/10.3390/economies14030092 - 12 Mar 2026
Viewed by 4471
Abstract
This study examines the impact of the Russia–Ukraine war on crude oil tail risk using the Conditional Autoregressive Value at Risk (CAViaR) framework. We analyzed 2364 daily observations of West Texas Intermediate (WTI) crude oil futures spanning 1 January 2015 to 11 December [...] Read more.
This study examines the impact of the Russia–Ukraine war on crude oil tail risk using the Conditional Autoregressive Value at Risk (CAViaR) framework. We analyzed 2364 daily observations of West Texas Intermediate (WTI) crude oil futures spanning 1 January 2015 to 11 December 2023, thereby capturing both the pre-war period and the conflict regime. To operationalize the geopolitical shock, we identify four theoretically grounded event dates (21 February, 24 February, 11 May, and 15 June 2022) associated with military escalation and energy-supply disruptions, and incorporate them as exogenous dummy variables. Methodologically, we implement a two-step approach. First, we estimate 1-day Value at Risk (VaR) at the 5% and 1% levels using four alternative CAViaR specifications (Adaptive, Symmetric, Asymmetric, and Indirect GARCH(1,1)) within a rolling-window framework to capture the dynamic evolution of tail risk. Second, we regress the resulting VaR series on geopolitical-event indicators to quantify the marginal effect of war-related developments on downside risk. The empirical results show tail risk increases in oil-market after the most important geopolitical events in all the model specifications across the market characteristics. The Indirect GARCH(1,1) CAViaR model exhibited the highest sensitivity, producing event coefficients of 0.795 (5% VaR) and 0.710 (1% VaR), both significant at the 1% level. Our adaptive specification has magnitudes that are even higher at the extreme tail (2.002 at 1% VaR), further supporting increased vulnerability during periods of escalation in conflict. Evidence from the asymmetric model would also indicate stronger market response to unfavorable news, in line with loss-sensitive investor behavior. In sum, the outcomes indicate that the Russia–Ukraine war considerably elevated the downside risk of crude oil markets and that geopolitical events have economically and statistically significant effects on the tail dynamics. Incorporating event-based geopolitical indicators in the framework of CAViaR, contributes to the literature in energy-market risk modeling and applies practical information to investors, risk managers, and policymakers operating under a dynamic environment characterized by geopolitical uncertainty. Full article
(This article belongs to the Special Issue Exchange Rate Dynamics and Fiscal Policy in an Era of Polycrisis: Inflation, Geopolitical Risks, and Global Uncertainty)
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