nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2024‒09‒02
24 papers chosen by
Georg Man,


  1. Central bank digital currency, economic growth and inflation By Ozili, Peterson K
  2. Link among Domestic Investments, Exports and Economic Growth: New Evidence from Australia By Bakari, Sayef
  3. The Joint Effect of Emigration and Remittances on Economic Growth and Labor Force Participation in Latin America and the Caribbean By Ms. Alina Carare; Alejandro Fiorito Baratas; Jessie Kilembe; Metodij Hadzi-Vaskov; Wenzhang Zhang
  4. Impact of credit expansion and contraction on unemployment By Ozili, Peterson K; Oladipo, Oladije
  5. From the Saving Glut to Financial Instability: Evidence from the Silicon Valley Bank Failure By Vuillemey, Guillaume
  6. Reallocating Liquidity to Resolve a Crisis By Kinda Hachem
  7. Rational Bubbles: A Clarification By Tomohiro Hirano; Alexis Akira Toda
  8. Climate Minsky Moments and endogenous financial crises By Kaldorf, Matthias; Rottner, Matthias
  9. Bridging the Gap? Fintech and financial inclusion By Josep Gisbert; José E. Gutiérrez
  10. Financial inclusion and fintech research in India: A Review By Ozili, Peterson K
  11. Household Finance at the Origin: Home Ownership as a Cultural Heritage from Agriculture By Vuillemey, Guillaume
  12. The Origins of Limited Liability: Catering to Safety Demand with Investors' Irresponsibility By Vuillemey, Guillaume
  13. Public Perceptions of Canada’s Investment Climate By Flora Lutz; Yuanchen Yang; Chengyu Huang
  14. International Risk Sharing and Wealth Allocation with Higher Order Cumulants By Corsetti, G.; Lipińska, A.; Lombardo, G.
  15. Capital Controls on Outflows: New Evidence and a Theoretical Framework By Roberto Chang; Andrés Fernández; Humberto Martinez
  16. Foreign institutional ownership and cross-border lending By Li, Xi; Lou, Yun
  17. The Role of IMF Arrangements in Restoring Access to International Capital Markets By Joseph Kogan; Romina Kazandjian; Shijia Luo; Moustapha Mbohou; Hui Miao
  18. Gold's overly long farewell as money By Herr, Hansjörg
  19. Government debt and stock price crash risk: International Evidence By Hamdi Ben-Nasr; Sabri Boubaker
  20. Who lends to the Indian state? By Aneesha Chitgupi; Ajay Shah; Manish K. Singh; Susan Thomas; Harsh Vardhan
  21. The Mirage of Falling R-stars By Mr. Ales Bulir; Mr. Jan Vlcek
  22. The welfare cost of ignoring the beta By Gollier, Christian
  23. Corporate capture of blockchain governance By Ferreira, Daniel; Li, Jin; Nikolowa, Radoslawa
  24. Do firm credit constraints impair climate policy? By Kaldorf, Matthias; Shi, Mengjie

  1. By: Ozili, Peterson K
    Abstract: This study investigates the effect of CBDC issuance on economic growth rate and inflation rate in Nigeria. We are interested in determining whether the rate of economic growth and inflation changed significantly after the issuance of a non-interest bearing CBDC in Nigeria. Two-stage least square regression and granger causality test were used to analyse the data. Inflation significantly increased in the CBDC period, implying that CBDC issuance did not decrease the rate of inflation in Nigeria. Economic growth rate significantly increased in the CBDC period, implying that CBDC issuance improved economic growth in Nigeria. The financial sector, agricultural sector and the manufacturing sector witnessed a much stronger contribution to gross domestic product (GDP) after CBDC issuance. There is one-way granger causality between CBDC issuance and monthly inflation, implying that CBDC issuance causes a significant change in monthly inflation in Nigeria. The implication of the result is that the non-interest bearing eNaira CBDC is not able to solve the twin economic problem of “controlling inflation which stifles economic growth” and “stimulating economic growth which leads to more inflation.” Policy makers should therefore use the eNaira CBDC alongside other monetary policy tools at their disposal to control inflation while stimulating growth in the economy. There are no empirical studies on the effect of CBDC issuance on economic growth or inflation using real-world data. We add to the monetary economics literature by analyzing the effect of CBDC issuance on economic growth and inflation.
    Keywords: central bank digital currency, CBDC, inflation, economic growth, Nigeria
    JEL: E31 E32 E42 E52 E58 O43
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:pra:mprapa:121524
  2. By: Bakari, Sayef
    Abstract: In this study, we conducted a comprehensive analysis of the interplay between domestic investments, exports, and economic growth in Australia from 1972 to 2021. The Vector Error Correction Model (VECM) provided insights into short-term and long-term dynamics, highlighting how deviations from equilibrium are corrected over time and the nature of these interactions. Our findings underscore that domestic investments positively impact GDP, with a 1% increase in investments correlating to a 0.11% increase in GDP in the long run. Conversely, the study found a negative relationship between exports and domestic investments, suggesting that growth in exports does not necessarily lead to increased domestic investment. These insights are crucial for developing balanced economic policies that support both investment and export growth while ensuring sustainable economic development.
    Keywords: Domestic Investment, Exports, Economic Growth, VECM, Australia.
    JEL: C32 E22 F13 F14 F43 O47
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:pra:mprapa:121604
  3. By: Ms. Alina Carare; Alejandro Fiorito Baratas; Jessie Kilembe; Metodij Hadzi-Vaskov; Wenzhang Zhang
    Abstract: We provide a consistent empirical framework to estimate the net joint effect of emigration and remittances on the migrants’ countries of origin key economic variables (GDP growth and labor force participation), while addressing the endogeneity concerns using novel “shift-share” instrumental variables in the spirit of Anelli and others (2023). Understanding this joint impact is crucial for the Latin America and the Caribbean region that has seen a continuous growth in remittances over the past decades, due to steady emigration, and where remittances represent the largest capital inflows for many countries now. Focusing on the past two decades (1999-2019), this study finds that on average emigration has a negative and statistically significant impact on contemporaneous economic growth and change in labor force participation in the countries of origin across LAC, while remittances partially mitigate this adverse impact—especially on economic growth—resulting in a small negative net joint effect. There are significant differences across subregions for all estimates, with the largest negative effects observed in the Caribbean. In addition, the negative impact of emigration and remittances on the change in labor participation is small, but for the youngest cohort (15-24) is twice as large as for the overall labor force participation. The results are robust to various specifications, variables, and measurements of emigration and remittances.
    Keywords: Emigration; Remittances; Labor Force Participation; Economic Growth; Latin America
    Date: 2024–08–09
    URL: https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/175
  4. By: Ozili, Peterson K; Oladipo, Oladije
    Abstract: The literature has not examined the factors leading to tight labor markets or unemployment in West African countries. We investigate the impact of private credit expansion and contraction on the unemployment rate in Economic Community of West African States (ECOWAS) countries. Credit expansion and contraction are measured using a three-level criterion. The fixed effect panel regression model was used to estimate the impact of private credit contraction and expansion on the unemployment rate in ECOWAS countries. Private credit contraction significantly increases the unemployment rate in ECOWAS countries. Private credit expansion does not have a significant effect on the unemployment rate. Real GDP growth has a significant negative effect on the unemployment rate which supports the prediction of the Okun’s Law while the inflation rate has a positive and insignificant effect on the rate of unemployment in ECOWAS countries which contradicts the prediction of the Phillips curve. Policymakers in ECOWAS countries need to be cautious when introducing policies that lead to private credit contraction as it could increase unemployment. Policymakers in ECOWAS countries should also find the “threshold” below which private credit contraction will worsen the unemployment rate and introduce policy measures to ensure that private credit contraction does not fall below the threshold.
    Keywords: unemployment, credit, economic growth, ECOWAS, legal system, inflation, domestic private credit to private sector.
    JEL: E24 E51 E58
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:pra:mprapa:121525
  5. By: Vuillemey, Guillaume (HEC Paris)
    Abstract: I show that the saving glut spurs banking instability. In the US, banks locally exposed to its root causes -- higher savings by intangible-intensive firms and the rise in household wealth inequality -- massively increased deposits since 2000, leading to an unprecedented deposit-to-GDP ratio and to a surge in uninsured deposits. To causally identify an impact of this ``deposit glut'' on financial instability, I use the unexpected failure of Silicon Valley Bank in March 2023 as a quasi-natural experiment: other US banks with high local exposure to either intangible-intensive firms or wealth inequality experienced significantly larger drops in market valuation.
    Keywords: Saving glut; Silicon Valley Bank; Deposits; Financial stability; Wealth inequality; Intangibles
    JEL: E22 G21
    Date: 2023–04–18
    URL: https://d.repec.org/n?u=RePEc:ebg:heccah:1475
  6. By: Kinda Hachem
    Abstract: Shortly after the collapse of Silicon Valley Bank (SVB) in March 2023, a consortium of eleven large U.S. financial institutions deposited $30 billion into First Republic Bank to bolster its liquidity and assuage panic among uninsured depositors. In the end, however, First Republic Bank did not survive, raising the question of whether a reallocation of liquidity among financial institutions can ever reduce the need for central bank balance sheet expansion in the fight against bank runs. We explore this question in this post, based on a recent working paper.
    Keywords: bank run; bank liquidity; interbank markets; Clearinghouse; Panic of 1873
    JEL: D62 G01
    Date: 2024–08–12
    URL: https://d.repec.org/n?u=RePEc:fip:fednls:98659
  7. By: Tomohiro Hirano; Alexis Akira Toda
    Abstract: "Rational bubble", as introduced by the famous paper on money by Samuelson (1958), means speculation backed by nothing. The large subsequent rational bubble literature has identified attaching bubbles to dividend-paying assets in a natural way as an important but challenging question. Miao and Wang (2018) claim to "provide a theory of rational stock price bubbles". Contrary to their claim, the present comment proves the nonexistence of rational bubbles in the model of Miao and Wang (2018). We also clarify the precise mathematical definition and the economic meaning of "rational bubble" in an accessible way to the general audience.
    Date: 2024–07
    URL: https://d.repec.org/n?u=RePEc:arx:papers:2407.14017
  8. By: Kaldorf, Matthias; Rottner, Matthias
    Abstract: Does a shift to ambitious climate policy increase financial fragility? In this paper, we develop a quantitative macroeconomic model with carbon taxes and endogenous financial crises to study such "Climate Minsky Moments". By reducing asset returns, an accelerated transition to net zero exerts deleveraging pressure on the financial sector, initially elevating the financial crisis probability substantially. However, carbon taxes improve long-run financial stability since permanently lower asset returns reduce the buildup of excessive leverage. Quantitatively, we find that the net financial stability effect of ambitious climate policy is positive for low but empirically plausible social discount rates.
    Keywords: Climate Policy, Financial Stability, Financial Crises, Transition Risk
    JEL: E32 E44 G20 Q52 Q58
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:zbw:bubdps:300701
  9. By: Josep Gisbert (IE UNIVERSITY); José E. Gutiérrez (BANCO DE ESPAÑA)
    Abstract: The rise of FinTech lenders offers an opportunity to promote financial access but may disrupt banks’ banking efforts. This paper presents a banking model where an incumbent bank specializes in certain niche markets. When a FinTech lender enters, competition intensifies, reducing the bank’s gains from serving some of its niches. Although FinTech lending can help serve certain unattended niches, the bank may abandon others, creating an ambiguous impact on financial inclusion. Financial inclusion may even decline when the FinTech lender is less efficient at serving new niches and better able to compete with the bank for its customers.
    Keywords: FinTech, financial inclusion, soft information, regulatory arbitrage, economic growth
    JEL: G21 G23 G28
    Date: 2024–08
    URL: https://d.repec.org/n?u=RePEc:bde:wpaper:2426
  10. By: Ozili, Peterson K
    Abstract: This article presents a concise review of the existing financial inclusion research in India. We use a thematic literature review methodology. We show that the Reserve Bank of India (RBI) has been at the forefront of financial inclusion in India and has used collaborative efforts to deepen financial inclusion in India. The review of existing literature shows that the major determinants of financial inclusion in India are income, age, gender, education, employment, ICT, bank branch network and nearness to a bank. The common theories used to analyse financial inclusion in India are the finance-growth theory, the diffusion of innovations theory, development economics and modernization theory, the vulnerable group theory of financial inclusion and the dissatisfaction theory of financial inclusion. The common methodologies used in the literature are surveys, questionnaires, financial inclusion index, regression estimations and causality tests. Existing studies also show that financial inclusion in India affects the level of poverty, human development, financial stability, monetary policy, and income level. Some criticisms of the financial inclusion efforts in India include the inability to meet the specific needs of the poor, poor geographical access, excessive transaction cost, inappropriate banking products, financial illiteracy and a large digital divide between tech savvy and non-tech savvy people. We also suggest some areas for future research.
    Keywords: ICT, Internet, financial inclusion, literature review, access to finance, causality tests, regression, India, index, theory.
    JEL: G20 G21 O31
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:pra:mprapa:121526
  11. By: Vuillemey, Guillaume (HEC Paris)
    Abstract: I show that home ownership decisions across countries and individuals are shaped by a cultural heritage from agriculture. For centuries, dominant assets in pre-industrial economies were either land or cattle. Consequently, the type of farming prevailing locally shaped preferences and believes about the relative value of immovable and movable assets. This cultural heritage had long-lasting consequences. Today, individuals originating from societies with a history of crop agriculture - where the dominant asset was land - are more likely to be homeowners. For identification, I rely both on home ownership decisions of second-generation immigrants in the US and on instrumental variables.
    Keywords: Homeownership; Culture; Persistence; Immovable assets; Movable assets; Agriculture; Land
    JEL: G11 G51 R21
    Date: 2023–02–09
    URL: https://d.repec.org/n?u=RePEc:ebg:heccah:1477
  12. By: Vuillemey, Guillaume (HEC Paris)
    Abstract: Limited liability is a key feature of corporate law. Using data on asset prices and capital flows in mid-19th century England, I argue that its liberalization was not decided to relax firms' financing constraints, but to satisfy investors' demand for "safe" stores of value. Limited liability eliminated adverse selection about the quality of other shareholders; stocks could be held to store wealth in diversified portfolios, without extended forms of responsibility. Prices of newly issued stocks are consistent with this hypothesis. Thus, the quest for "safe" stores of value explains not only features of debt markets, but also of equity markets.
    Keywords: Limited Liability; Safe Assets; Corporate Responsability; Contracts; Law
    JEL: G32 N23
    Date: 2023–02–09
    URL: https://d.repec.org/n?u=RePEc:ebg:heccah:1476
  13. By: Flora Lutz; Yuanchen Yang; Chengyu Huang
    Abstract: Canada’s muted productivity growth during recent years has sparked concerns about the country’s investment climate. In this study, we develop a new natural language processing (NPL) based indicator, mining the richness of Twitter (now X) accounts to measure trends in the public perceptions of Canada’s investment climate. We find that while the Canadian investment climate appears to be generally favorable, there are signs of slippage in some categories in recent periods, such as with respect to governance and infrastructure. This result is confirmed by both survey-based and NLP-based indicators. We also find that our NLP-based indicators would suggest that perceptions of Canada’s investment climate are similar to perceptions of U.S. investment climate, except with respect to governance, where views of U.S. governance are notably more negative. Comparing our novel indicator relative to traditional survey-based indicators, we find that the NLP-based indicators are statistically significant in helping to predict investment flows, similar to survey-based measures. Meanwhile, the new NLP-based indicator offers insights into the nuances of data, allowing us to identify specific grievances. Finally, we construct a similar indicator for the U.S. and compare trends across countries.
    Keywords: Investment Climate; Canada; Machine Learning; Sentiment Analysis
    Date: 2024–07–26
    URL: https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/165
  14. By: Corsetti, G.; Lipińska, A.; Lombardo, G.
    Abstract: We study how risk sharing affects the macroeconomic allocation, asset prices and welfare. Employing perturbation and global methods, we characterize a global (multi-country) equilibrium in terms of asymmetries in higher-order moments of non-Gaussian shocks and country size. Financial integration has consumption smoothing and wealth level effects. Wealth effects emerge through the revaluation of a country assets and terms of trade— benefiting safer and/or smaller economies. Riskier countries enjoy smoother consumption, but at the expense of lower relative wealth. Although riskier countries gain more, safety command a welfare and financial premium, with welfare differences being near-linear in relative asset prices.
    Keywords: Asymmetries in Risk, Tail Risk, Gains from Risk Sharing, Terms of Trade, Consumption Smoothing, Wealth Transfers
    JEL: F15 F41 G15
    Date: 2024–08–08
    URL: https://d.repec.org/n?u=RePEc:cam:camjip:2422
  15. By: Roberto Chang; Andrés Fernández; Humberto Martinez
    Abstract: We study capital controls on outflows (CCOs) in situations of macroeconomic and financial distress. We present novel empirical evidence indicating that CCO implementation is associated with crises and declines in GDP growth. We then develop a theoretical framework that is consistent with such empirical findings and also yields policy and welfare lessons. The theory features costly coordination failures by foreign investors which can sometimes be avoided by suitably tailored CCOs. The benefits of CCOs as coordination devices can make them optimal even if CCOs entail deadweight losses; if the latter are large, however, CCOs are detrimental for welfare. We show that optimal CCOs can suffer from time inconsistency, and also how political opportunism may limit CCO policy. Hence government credibility and reputation building emerge as critical for the successful implementation of CCOs.
    Keywords: Capital Flows; Capital Controls; Coordination Failures; Reputation; Time Inconsistency
    Date: 2024–07–26
    URL: https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/164
  16. By: Li, Xi; Lou, Yun
    Abstract: We study the role of foreign institutional investors in cross-border lending. We find that a borrower’s foreign institutional ownership is positively associated with the likelihood of foreign banks leading a loan syndicate. This relation is stronger among borrowers with more opaque information environment and when foreign institutional shareholders have better access to soft information. We also find that foreign banks are more likely to extend loans to borrowers with foreign institutional shareholders that are headquartered in the same country or members of the same loan associations. These results are consistent with foreign institutional shareholders facilitating cross-border lending by reducing monitoring costs and information frictions faced by foreign lenders.
    Keywords: syndicated loans; foreign institutional ownership; cross-border lending; information; monitoring
    JEL: G23 G32
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:ehl:lserod:124422
  17. By: Joseph Kogan; Romina Kazandjian; Shijia Luo; Moustapha Mbohou; Hui Miao
    Abstract: Using a database of emerging market fundamentals and bond index spreads across 56 frontier and emerging market countries rated below investment grade during the period 2002-22, we assess whether IMF arrangements can restore access to international capital markets (ICM) for countries in distress through liquidity and conditionality channels. We find that global financial conditions and debt/GDP are the most important determinants of access to ICM within the horizon of a typical IMF arrangement. Using an event study methodology, we show that spreads increase prior to the start of an IMF arrangement and then decrease gradually. By exploiting different characteristics of IMF arrangements, we find evidence that the reforms implemented under the IMF arrangement, as measured by rounds of successful IMF reviews, matter more in the medium term than the IMF’s role as a liquidity provider. These results are consistent with our analysis of 55 credit rating upgrades to ICM access levels, which suggests that debt reduction plays the largest role and that IMF arrangements lend credibility to reforms.
    Keywords: International capital markets; market access; IMF; debt crisis; debt rescheduling; default; sovereign debt; sovereign debt restructuring; sovereign bonds; Eurobonds
    Date: 2024–08–09
    URL: https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/173
  18. By: Herr, Hansjörg
    Abstract: Today all countries have fiat money issued by a central bank. There is no obligation by a central bank to exchange its money for gold or any other good. Central banks have the monopoly to issue central bank money and have the power to create their money out of nothing. Creating such a monetary system is functional for a capitalist economy and must be regarded as a major feat of civilization, which could only be completed after around 200 years of capitalist development. This article traces the painful farewell from gold from the Classical Gold Standard in the early 19th century up to the end of the Bretton Woods system in the mid-20th century.
    Keywords: money, gold standard, currency systems
    JEL: E40 N20 P20
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:zbw:ipewps:300844
  19. By: Hamdi Ben-Nasr (Qatar University); Sabri Boubaker (VNU - Vietnam National University [Hanoï], Métis Lab EM Normandie - EM Normandie - École de Management de Normandie, Swansea University)
    Abstract: We add to the literature on the economic outcomes of government debt and argue that government debt increases crash risk via two channels: (i) hoarding bad news and (ii) tax avoidance. Based on a large international sample, our results indicate that stock crash risk is positively associated with government debt. Our conclusions are robust when we treat endogeneity issues, and our tests confirm the validity of bad news hoarding and tax avoidance as channels through which government debt influences stock price crash risk.
    Keywords: Government debt, Fiscal policy uncertainty, Bad news hoarding, Tax avoidance, Crash risk
    Date: 2024–02–16
    URL: https://d.repec.org/n?u=RePEc:hal:journl:hal-04648524
  20. By: Aneesha Chitgupi (xKDR Forum); Ajay Shah (xKDR Forum); Manish K. Singh (Indian Institute of Technology, Roorkee); Susan Thomas (xKDR Forum); Harsh Vardhan (xKDR Forum)
    Abstract: Much of Indian public finance research has focused on the level of debt and deficits. In this paper, we examine the structure of lenders to the Indian state. To what extent is this lending coerced? Is the present debt management strategy consistent with the objectives of low cost borrowing for the government in the long run, while preserving efficiency in the economy, and retaining the optionality of surging borrowing when faced with rare events? We find 5% of the lending to the Indian state comes from voluntary sources. While financial repression for banks eased `de jure' with a decline in the SLR from 33% in 1988 to 18% in 2021, lending to the state beyond regulatory requirements was Rs.30 trillion in 2021. Alongside this, the growth of the pension and insurance industries created new pools of assets where financial repression generated bountiful lending to the government. These facts help re-examine debt management strategy in India.
    JEL: H63 H68 H74 G28
    Date: 2024–08
    URL: https://d.repec.org/n?u=RePEc:anf:wpaper:34
  21. By: Mr. Ales Bulir; Mr. Jan Vlcek
    Abstract: Was the recent decline in real interest rates driven by a diminishing natural real interest rate, or have we observed a long sequence of shocks that have pushed market rates below the equilibrium level? In this paper we show on a sample of 12 open economies that once we account for equilibrium real exchange rate appreciation/depreciation, the natural real interest rate in the 2000s and 2010s is no longer found to be declining to near or below zero. The explicit inclusion of equilibrium real exchange rate appreciation in the identification of the natural rate is the main deviation from the Laubach-Williams approach. On top of that, we use a full-blown semi-structural model with a monetary policy rule and expectations. Bayesian estimation is used to obtain parameter values for individual countries.
    Keywords: r-star; zero lower bound; equilibrium real appreciation; Penn effect
    Date: 2024–07–26
    URL: https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/161
  22. By: Gollier, Christian
    Abstract: Because of risk aversion, any sensible investment valuation system should value less projects that contribute more to the aggregate risk. In theory, this is done by adjusting discount rates to consumption betas. But in reality, most public institutions use a dis-count rate that is rather insensitive to the risk profile of their investment projects. The economic consequences of the implied misallocation of capital are severe. I calibrate a Lucas model in which the investment opportunity set contains a constellation of projects with different expected returns and risk profiles. The model matches the traditional finan-cial and macro moments, together with the observed heterogeneity of assets’ risk profiles. The welfare loss of using a single discount rate is equivalent to a permanent reduction in consumption that lies somewhere between 15% and 45% depending upon which single discount rate is used.
    Keywords: Discounting; investment theory; asset pricing; carbon pricing; Arrow-Lind theorem; WACC fallacy; rare disasters; capital budgeting
    JEL: G12 H43 Q54
    Date: 2024–07
    URL: https://d.repec.org/n?u=RePEc:tse:wpaper:129648
  23. By: Ferreira, Daniel; Li, Jin; Nikolowa, Radoslawa
    Abstract: We develop a theory of blockchain governance. In our model, the proof-of-work system, the most common set of rules for validating transactions in blockchains, creates an industrial ecosystem with specialized suppliers of goods and services. We analyze the interactions between blockchain governance and the market structure of the industries in the blockchain ecosystem. We show that the proof-of-work system may lead to a situation in which some large firms in the blockchain industrial ecosystem—blockchain conglomerates—capture the governance of the blockchain.
    Keywords: governance; blockchain conglomerates; industrial ecosystem; proof-of-work
    JEL: G30 L13 M20
    Date: 2023–04–01
    URL: https://d.repec.org/n?u=RePEc:ehl:lserod:115618
  24. By: Kaldorf, Matthias; Shi, Mengjie
    Abstract: This paper shows that firm credit constraints impair climate policy. Empirically, firms with tighter credit constraints, measured by their distanceto-default, exhibit a relatively smaller emission reduction after a carbon tax increase. We incorporate this channel into a quantitative DSGE model with endogenous credit constraints and carbon taxes. Credit frictions reduce the optimal investment into emission abatement since shareholders are less likely to receive the payoff from such an investment. We find that carbon taxes consistent with net zero emissions are 24 dollars/ton of carbon larger in the presence of endogenous credit constraints than in an economy without such frictions.
    Keywords: Climate Policy, Credit Constraints, Emission Reduction, Corporate Capital Structure, Firm Heterogeneity
    JEL: E44 G21 G28 Q58
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:zbw:bubdps:300704

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