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Economic debates around mitigating climate change and weather-related events have long centred on fiscal policy tools than those of monetary policy. However, recent discussions point out that monetary policy formulation could also be affected and hence the need to deploy monetary policy tools as well. Our article seeks to investigate the impacts of climate change, particularly extreme weather events, on headline inflation and food price inflation and their apparent implications for monetary policy in Africa over the period 1990–2017. Using a two-step dynamic system Generalized Method of Moments estimation strategy with robust standard errors, we find that weather-related events may need to be large and consequential to cause a significant price hike in Africa. We also find the incidence of droughts and floods to have a bearing on food price inflation. Furthermore, our empirical evidence using mediation analysis, reveals agricultural production to be the critical mechanism whereby extreme weather events affect headline inflation. As central banks are charged with the mandate of ensuring a stable monetary environment, we suggest that monetary policy authorities consider the short and long run impacts of supply shocks caused by extreme weather events on general price levels in their policy formulation.

In this paper, we empirically examine the long-run and short-run dynamics of the US gross national product and petroleum imports for the last three decades. We find evidence of a long-run relationship between gross domestic national product and petroleum imports, but only a fragile one. Similarly there is a significant feedback (long-term) effect from petroleum imports to gross national product and vice versa. This feedback is fairly significant. However, the short-term effect is highly significant, but there is a relatively slow response from the values of gross national product to petroleum imports. Therefore, the link between US gross national product and petroleum imports is fragile in the long run.

PurposeThe aim of this research is to find out which mergers and acquisitions (M&A) market is better able to absorb all the shocks from legislations in securities and banking in Europe and the USA, 11 September 2001 terrorist attacks in the USA, and other global events. The most exogenous or self‐dependent market may be the mover and shaker in the M&A deals in the world. The sample period spans from October 1998 to September 2004.Design/methodology/approachThis research uses cointegration and innovation accounting techniques (variance decomposition analysis and impulse response functions) to find out: if the two M&A markets are linked and explained each other in the long‐run; which of the two markets can able to withstand all the list shocks in the observed period; how long each of the market is about to deal with the shocks (are the shocks long‐lasting or short‐lasting?).FindingsThe major findings are: The cointegration results indicate that the M&A markets in Europe and the USA tend to move together in the long‐run, particularly, the European M&A deals (EUMA) and US cross‐border M&A deals in Europe (USCROSS). On one hand, the most consistent result from the variance decomposition analysis and impulse response functions is that the European M&A market is the most exogenous or self‐dependent market in the observed period. On the other hand, the most interactive market (less able to deal with the shocks) is the US M&A market (USMA) because it is significantly impacted by the legislations in securities and banking, 9/11 and other global events. US cross‐border M&A deals in Europe (USCROSS) and European cross‐border M&A deals in the USA (EUCROSS) are able to deal with the shocks when the order of VAR is 6. However, when the order of VAR is extended to 12 they are less able to absorb the shocks.Research limitations/implicationsThe limitation of the data at that time did not allow examination of US M&A deals with individual European countries, particularly, United Kingdom that has historically invested in the US more than any country in Europe.Practical implicationsThe pivotal conclusion of this study suggests that EUMA and USCROOS move together in the long‐run and EUMA is the strongest market in dealing with shocks, the world business may be gradually shifting to Europe. Practically, most of the multinational corporations (MNCs), especially the US MNCs are craving for market niches in Europe.Originality/valueThe real value of this paper is that the changing financial landscape is the US implies that all the shake‐up may lead to Europe. Philosophically, “all roads lead to Rome” New trends in world business is that the center of gravity in business may be pointing to Europe.