RESEARCH
Asif’s primary research interests lie in the fields of Applied Macroeconomics, Macroeconomic Policy and Business Cycles. He also has interests for International Macroeconomics, International Finance, Sudden Stops and Financial Crises, Macro-prudential Policy, Political Economics, Development Economics and Emerging Markets.
MEMBER OF RESEARCH GROUP(S) OF DEPARTMENT OF ECONOMICS, UNIVERSITY OF YORK
Macroeconomics and Finance
Political Economy
PROJECTS
“On the Consequences of Fear of Free Floating and Procyclical Monetary Policy”, January 2021, (with Gulcin Ozkan and Richard McManus).
WORKING PAPER
Ahmad. A, “Why Are Some Countries In A Fiscal Procyclicality Trap?” (Job Market Paper)
We study the cyclical behavior of fiscal policy to explain why some countries exhibit procyclical fiscal policy – fiscal authorities that increase taxes and cut government spending during the recession while adopting expansionary policies during booms. In this paper, we reinvestigate the procyclicality evidence proposed by the previous literature and estimate the cyclicality stances by applying the instrumental variable techniques. By utilising alternative estimation techniques, and using a comprehensive set of data from 137 countries for 1970-2014, our results are in line with earlier literature and suggests that fiscal procyclicality has become the norm rather than the exception in many countries. More specifically, over the last 45 years, a substantial number of emerging and low-income developing countries are trapped within the procyclical policy, in the sense of not being able to move from procyclical to countercyclical fiscal policy. We then ask a critical question, why these group of countries fall under procyclicality trap? We rely on political ideology to answer this question. We argue that the lack of appropriate government quality, which appears to be a key determinate of a countries inability to get out of this trap. We show that, even after controlling for the endogeneity of government quality and other determinates of procyclicality, there is a causal link running from better government quality to more countercyclical or less procyclical policy.
Ahmad. A, “Is Fear of Free Floating Responsible for Procyclical Monetary Policy?”
We study the cyclical behaviour of monetary policy to explain why some countries exhibit procyclical policy – monetary authorities increase interest rates during economic downturns while adopting expansionary policies during upturns. This paper documents that many countries, specifically emerging and low-income developing countries have faced challenges in implementing countercyclical monetary policies. We find overwhelming evidence to support the idea that procyclical monetary policy in many countries is in fact truth, not fiction. More specifically, over the last 55 years, a substantial number of emerging and low-income developing countries are trapped in a procyclical monetary policy cycle or have recently turned procyclical. We then ask a critical question, why did this group of countries implementing procyclical policies? To answer it, we provide empirical evidence that procyclical stop-and-go policies are intensified in the presence of fear of free floating, that is, reluctance to avoid large swings in the exchange rates. We call for credible monetary policy frameworks featuring an inflation targeting regime to conduct countercyclical policy. Our results are robust to control for the endogeneity of fear of free floating and other determinants of procyclical monetary policy.
Ahmad. A, “On the Consequences of Macroeconomic Policy: Procyclicality, Volatility and Growth.”
This paper studies the impacts of procyclical fiscal and monetary policy on output volatility, inflation volatility and growth. Using 137 countries’ fiscal policy cyclical stances and 100 countries’ monetary policy cyclical stances over the period 1960-2014, our results suggest that on average emerging and low-income developing countries conduct procyclical policies. Does it matter whether a country adopts a procyclical policy stances-being contractionary in bad times and expansionary in good times, rather than a countercyclical one? We provide empirical evidence that procyclical fiscal and monetary policy is costly for the macroeconomic outcomes; in a sense, procyclical countries have lower rates of economic growth, higher rates of output volatility and inflation volatility. Our results are robust to control for the endogeneity and wide range of control variables.
WORK IN PROGRESS
Ahmad. A, “The Role of Trade Demand and External Debt in Global Financial Crisis: Evidence from Emerging Economies.”
The aim of this paper is to explore, empirically, the trade and financial channels of global financial crisis transmission during the 2008-09. Using cross country data from 38 emerging countries, we find that trading partner’s reduced export demand had a positive impact on output losses during the crisis (2008-09) and the countries who were more open to trade during pre-crisis time (2007) had an amplified impact. More specifically, this paper investigates countries’ pre-crisis time foreign currency denominated external debt to measure financial crisis transmission mechanism on growth collapse. We find that country’s short-term external debt prior to the crisis, specifically financial sectors’ short-term external debt were important determinates in explaining the incidence of output losses during the crisis. Our analysis also suggests that countries with a more leveraged domestic financial sectors, combined with their foreign rollover risk tend to be inflicted by grater losses during the crisis.
Ahmad. A, “Is Corruption Harmful For Economics Growth: An Empirical Investigation.”
This paper measures the non-linear relationship between the impact of corruption and the quality of governance on economic growth in a sample of 157 countries during the 1950-2017. Previous empirical literature has shown a linear relationship between corruption and growth but hasn’t detangled the relation between growth enhancing and growth reducing levels of corruptions. Our empirical studies find corruption has negative effects on growth but the impact is non-linear. Our analysis shows that a decrease in corruption raises the economic growth rate in an inverted “U-shaped” Way. These impacts are, however, different depending on the quality of governance. The impact of corruption is worsen when the quality of governance deteriorates. Our overall analysis is based on the panel fixed effects and dynamic panel data techniques to control for the endogeneity of corruption on economic growth.
REVIEWER OF
SCOTTISH JOURNAL OF POLITICAL ECONOMY
BULLETIN OF ECONOMIC RESEARCH