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on Financial Development and Growth |
| By: | Yao Chen (Erasmus University Rotterdam and CEPR); Nuno Palma (University of Manchester, Universidade de Lisboa & CEPR); Felix Ward (Erasmus University Rotterdam) |
| Abstract: | We estimate the contribution of the American precious metal windfall to West Eu- rope’s growth performance in the early modern period. The exogenous nature of American precious metal extraction allows for the identification of monetary effects. We find that American precious metals fostered West Europe’s growth by stimulating trade and capital accumulation. Our findings place West Europe’s second-stage receivers in a particularly fortunate goldilocks zone that enjoyed monetary stimulus, while being insulated against the transport-loss induced financial crises that caused persistent damage to first-stage receiver Spain. |
| Keywords: | money non-neutrality, Great Divergence, Little Divergence, Smithian growth, market integration |
| JEL: | E51 F40 N10 |
| Date: | 2022–09–08 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20220063 |
| By: | Nina Boyarchenko; Leonardo Elias |
| Abstract: | Long-run trends in increased access to credit are thought to improve real activity. However, “rapid” credit expansions do not always end well and have been shown in the academic literature to predict adverse real outcomes such as lower GDP growth and an increased likelihood of crises. Given these financial stability considerations associated with rapid credit expansions, being able to distinguish in real time “good booms” from “bad booms” is of crucial interest for policymakers. While the recent literature has focused on understanding how the composition of borrowers helps distinguish good and bad booms, in this post we investigate how the composition of lending during a credit expansion matters for subsequent real outcomes. |
| Keywords: | intermediated credit; credit expansion; predictable financial crises |
| JEL: | E32 G21 G23 G32 |
| Date: | 2024–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:98695 |
| By: | Oualid MECHTI (UM5 - Université Mohammed V de Rabat [Agdal]); Khadija EL ISSAOUI (UM5 - Université Mohammed V de Rabat [Agdal]) |
| Abstract: | The objective of this paper is to analyse the impact of corruption control and the economic environment on foreign direct investment (FDI) flows to African middle-income countries over the period 2002-2022 (21 years). To examine this relationship, this paper uses the dynamic two-stage system GMM approach suggested by Blundell and Bond (1998). The results reveal that controlling corruption (휷ퟒ= 3.61) has a positive effect on FDI inflows. Indeed, a one-percentage point improvement in the control of corruption generates a 3.61% increase in FDI inflows in the context of African middle-income countries. In terms of macroeconomic indicators, only the variables GDP growth rate (휷ퟏ= 0.015) and trade openness (휷ퟑ= 0.046) have a positive and significant influence on the attractiveness of FDI. Inflation, on the other hand, has no significant effect. This proves that a healthy macroeconomy and effective control of corruption are essential for attracting FDI flows, which is another novelty of this study. These results constitute important empirical evidence for researchers, as well as for African economies to apply macroeconomic reforms and policies aimed at reducing corruption. |
| Abstract: | L'objectif poursuivi dans ce papier est d'analyser l'impact du contrôle de la corruption et l'environnement économiquesur les flux d'investissements directs étrangers (IDE) dans les pays africains à revenu intermédiaire au cours de la période 2002-2022 (21 ans). Pour examiner cette relation, ce papier, utilise le modèle dynamique de l'approche GMM en système et en deux étapes suggéréespar Blundell et Bond (1998). Les résultats révèlent que le contrôle de la corruption (휷ퟒ= 3.61) a un effet positif sur les entrées d'IDE. En effet, une amélioration d'un point de pourcentage du contrôle de la corruption engendre une hausse de 3.61% des entrées d'IDE dans le contexte des pays africains à revenu intermédiaire. Concernant les indicateurs macroéconomiques seuls les variables le taux de croissance du PIB (휷ퟏ= 0.015) et l'ouverture commerciale (휷ퟑ= 0.046), exercent une influence positive et significative sur l'attractivité des IDE. Tandis que ‘'le taux d'inflation'' ne génère aucun effet significatif. Cela prouve qu'une macroéconomie saine et un contrôle efficace de la corruption sont essentiels pour attirer les flux d'IDE, ce qui est une autre nouveauté de cette étude. Ces résultats constituent des preuves empiriques importantes pour les chercheurs, ainsi que pour les économies africaines à d'appliquer des réformes macroéconomiques, ainsi que des politiques visant à réduire la corruption. |
| Keywords: | African economies, FDI flows, corruption control, macroeconomic approach., Economies africaines, flux d’IDE, contrôle de corruption, approche macroéconomique, Economies africaines flux d'IDE contrôle de corruption approche macroéconomique Classification JEL : F21 G28 O16 O11 O38 O55 African economies FDI flows corruption control macroeconomic approach. JEL Classification: F21 G28 O16 O11 O38 O55, flux d'IDE, approche macroéconomique Classification JEL : F21, G28, O16, O11, O38, O55 African economies, macroeconomic approach. JEL Classification: F21, O55 |
| Date: | 2024–08–27 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04679512 |
| By: | Boukezata Salim (UMBB - Université M'Hamed Bougara Boumerdes) |
| Abstract: | The main purpose of this article is to examine the effect of Information Communication Technology (ICT), market size and trade openness on Foreign Direct Investment (FDI) for the panel of 21 countries of the Organization of Islamic Cooperation (OIC), over the period 1998-2021, using the panel Vector Error Correction Models (panel VECM). overall, we find a strong evidence supporting the view that ICT, market size and trade openness effects FDI in OIC members countries in the long-term. however, in the short-term ICT, market size and trade openness haven't a significant effect on FDI inflows. |
| Keywords: | ICT FDI VECM trade openness market size OIC countries. JEL Classification Codes: D83 F13 F14 F21 G11 P45, ICT, FDI, VECM, trade openness, market size, OIC countries. JEL Classification Codes: D83, F13, F14, F21, G11, P45 |
| Date: | 2024–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04678750 |
| By: | Chetouane Hania (Pan-African Institute for Development, African Academy of Sciences and University of Dschang, University of Ebolowa, Cameroon); Boniface Ngah (University of Yaoundé [Cameroun]); Sonia Chetouane (UMSBJ - Université Mohammed Seddik Benyahia [Jijel] | University of Jijel) |
| Abstract: | This study explores the link between financial inclusion and food security in Algeria from 2003 to 2022. Using a composite financial inclusion index and the Vector Error Correction Model (VECM), we analyse the data, subjecting it to various diagnostic tests. Surprisingly, our results reveal that financial inclusion (FI) has a significant and positive impact on undernourishment prevalence, indicating a negative effect on food security in both the short and long term. Likewise, food imports (FIM) contribute to higher undernourishment prevalence, implying a weakening of food security in the long-run. Conversely, unemployment rate (UEM) and food production (FOP) show no substantial long-term impact on food security, although UEM has an opposing effect in the short run, meaning it improves food security at the short term; which can be attributed to the informal economy and other State's policies. Notably, income per capita (INCAPITA) negatively affects undernourishment prevalence, improving food security. These findings offer a nuanced understanding of the complex relationship between financial inclusion and food security in Algeria, emphasizing the need for multifaceted, contextspecific policies to address the country's unique challenges. |
| Keywords: | financial inclusion food security prevalence of undernourishment Vector Error correction model (VECM) Algeria JEL Classification Codes: B26 C58 D53 E44 L66, financial inclusion, food security, prevalence of undernourishment, Vector Error correction model (VECM), Algeria JEL Classification Codes: B26, C58, D53, E44, L66 |
| Date: | 2024–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04678454 |
| By: | Monastiriotis, Vassilis; Randjelovic, Sasa |
| Abstract: | The aim of this paper to evaluate the relationship between public and private capital formation in 16 economies from Central Eastern and South Eastern Europe by applying panel-cointegration methods to 2000–2017 data. We find a positive public-private capital formation nexus both in the short and the long-run, with pro-cyclicality of private capital formation and negative relevance of the user costs of capital. The results imply that expansionary public investment policy may be effective in boosting private investment both in the short and the long-run, if fit into a financially sustainable framework that limits negative impact of the user cost of capital. |
| Keywords: | crowding-in hypothesis; emerging Europe; private investment; public investment |
| JEL: | E22 H54 O16 O52 P33 |
| Date: | 2023–02–08 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:118277 |
| By: | Aleksandra Jandric (Institute of Economic Studies, Charles University, Prague, Czech Republic & Faculty of Economics, University of Banja Luka); Adam Gersl (Institute of Economic Studies, Charles University, Prague, Czech Republic) |
| Abstract: | This paper examines the determinants of private equity activity across Europe. We analyze a total of 43 explanatory variables, categorized into six groups: Economy; Finance and capital markets; Quality of institutions; Life quality; Economic freedom and Globalization. We assess their impact on three target variables representing overall private equity activity: Investments, Divestments and Fundraising. The study covers 26 European countries over the period from 2007 to 2022. First, we use Bayesian Model Averaging (BMA) to identify which variables are essential for further analysis. We then conduct a multicollinearity test and remove variables highly correlated with those deemed significant by BMA. The final step involves panel data analysis to identify the key variables that countries should prioritize in order to enhance their private equity activity and make the necessary policy adjustments to improve their attractiveness in the private equity sector. Our findings highlight the significance of certain variables that have not been previously analyzed, alongside some traditionally acknowledged factors. Notably, trade openness, bank credit to the private sector, public spending on education, inflation and labor force emerge as significant determinants across Investments, Divestments, and Fundraising. |
| Keywords: | Private equity, Venture capital, Fundraising, Investments, Divestments, Bayesian Model Averaging, Panel data analysis |
| JEL: | C58 E44 G11 G24 G28 M13 O21 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_30 |
| By: | Shada Almuwallad (Aston university) |
| Abstract: | This study provides a quantitative analysis of the causal association between macroeconomic factors and stock share prices at the sectoral level in the UK, with a specific emphasis on the periods prior and after the global financial crisis of 2008. Employing both conventional and quantile Granger causality analysis, we examine the causality between GDP, interest rates, money supply, inflation, exchange rates, and the sectors of the FTSE All-Share index covering the period from 1999 to 2022 by dividing the sample to prior the financial crisis from 1999 to 2007 and after the crisis from 2008 to 2022. Our results present complex and dynamic causation, which varies among different sectors and economic circumstances. The conventional Granger causality test revealed limited findings, whereas the quantile technique reveals deeper bidirectional causality in particular quantiles, implying that the impact of economic factors on stock prices is reliant upon the current economic circumstances. For instance, before the financial crisis of 2008, the standard Granger causality test revealed that GDP causes only the consumer staples and energy sectors, but there were no causation effects from stocks to GDP. However, the Granger causality test for quantiles suggested a bidirectional effect between GDP and stock prices across various distributional quantiles, which indicates that stock prices also cause changes in the GDP, particularly in the upper and middle quantiles of the distribution. However, After the financial crisis from 2008 to 2022, the traditional Granger causality analysis indicates that GDP do not predict the FTSE All-Share index or any of its sector indices. However, the index and its sectors (except the materials sector) caused significant changes in GDP. The more in-depth analysis of the quantile Granger causality tests revealed a significant causality from the FTSE All-Share index and its sectors to GDP in the majority of quantiles, in addition to causality from GDP to stock prices, but in fewer quantiles. The two tests agreed on the extreme effect of stock prices on GDP after the crisis, but they were dissimilar regarding causality in the other direction. These findings emphasise the significance of involving distributional elements in economic examination and present valuable implications for investors, policymakers, and economic analysts, emphasising the importance of customised strategies that meet distinct market situations and sectors. |
| Keywords: | Macroeconomic, Stock, Sectoral, Granger, Quantile |
| JEL: | E44 B26 C22 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iefpro:14416316 |
| By: | Felix Haase |
| Abstract: | Building on the success of Ferreira and Santa-Clara (2011) in separately forecasting the return components of the stock market, this paper examines the links between economic regimes and these components to predict the aggregate U.S. stock market. We propose a three-step methodology that we call the flexible regime approach. First, we estimate the regime dynamics of ten macro-financial variables using Markov-switching regressions. Second, we treat the regime filtering results from the Hamilton filter as views and test the predicted regime classification, the predicted regime probabilities, and the conditional and mixture densities as view generators. We use entropy pooling to re-weight the historical distribution to derive posterior probabilities. Finally, we link these probabilities to the realized outcomes of earnings growth and changes in the price-earnings multiple to form the sum-of-the-parts forecast. Our results demonstrate significant predictability from a statistical and economic perspective. We emphasize the role of default spreads and interest rates in predicting earnings growth and stock market volatility and inflation in predicting multiple growth. Finally, our results suggest that the predictability of both return components varies over time and is affected by the business cycles. While earnings growth is more predictable during periods of expansion, forecasting multiple growth is more advantageous during recessions. |
| Keywords: | Economic Restrictions, Entropy Pooling, Flexible Probabilities, Markov-switching Models, Return Predictability, Stock Market Regimes, Sum-of-the Parts |
| JEL: | C53 G11 G17 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:trr:wpaper:202410 |
| By: | Seo, Jinyoung (Wake Forest University, Economics Department) |
| Abstract: | I show that Treasuries’ role as hedge assets is determined by the level of trend inflation and the conduct of monetary policy, using a Generalized New Keynesian habit model. A novel prediction from the model is that when trend inflation is high, nominal bonds exhibit a positive correlation with stock returns, making them risky assets. As trend inflation rises, inflation becomes more countercyclical because any transitory inflation generates temporary output loss due to endogenous cost-push effects, which emerge under positive trend inflation. When countercyclical inflation prevails, bond returns drop when stocks underperform, leading to a positive bond-stock correlation. The model explains the shift in US bond-stock correlation from positive to negative in 1997 as a consequence of stabilized trend inflation. |
| Keywords: | Bond-stock correlation; trend inflation; monetary policy; output gap-inflation correlation; bond risk premium |
| JEL: | E31 E43 E44 E52 G12 |
| Date: | 2024–08–30 |
| URL: | https://d.repec.org/n?u=RePEc:ris:wfuewp:0115 |
| By: | Hiroya Tanaka (Kyoto University); Keiichi Hori (Kwansei Gakuin University); Akihisa Shibata (Kyoto University) |
| Abstract: | This study analyzes the impact of investors' search-for-yield behavior on home bias in the bond market. We conduct a regression analysis using data from 27 countries, including both developed and emerging economies, for 2001–2021. We use two types of home bias indicators as dependent variables and the yield on 5-year government bonds denominated in the local currency as independent variables to analyze search-for-yield behavior. Considering that central banks in many countries, including major advanced economies, have made substantial domestic bond purchases over the past 20 years, we examine the effect of excluding central banks' domestic bond holdings from the home bias calculation. The results show that, with a few exceptions, both domestic and foreign investors in advanced and emerging economies tend to increase their demand for higher-yield bonds, which is consistent with the search-for-yield behavior. This trend is further reinforced when the central banks' domestic bond holdings are excluded. Specifically, we found that the significance of bond yields for foreign investors’ home bias in emerging economies increased after the global financial crisis. This indicates that emerging economies became more attractive to yield-seeking investors in a post-crisis low-interest-rate environment. In addition, by excluding the domestic bond holdings of central banks from the home bias calculation, we observed a higher coefficient of bond yields for the home bias of domestic investors in advanced economies. This suggests that when excluded, central banks' substantial domestic bond holdings in developed countries allow investors' decisions to be better reflected in the country's overall asset composition. |
| Keywords: | search for yield, monetary policy, home bias, foreign bond investment, portfolio selection |
| JEL: | E52 G11 G15 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:kyo:wpaper:1106 |
| By: | Yang Zhou (Institute of Developing Economies, Japan External Trade Organization and Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN); Shigeto Kitano (Research Institute for Economics and Business Administration (RIEB), Kobe University, JAPAN) |
| Abstract: | We provide cross-country evidence that variations in capital flow management measures (CFMs) result in differences in wealth inequality and distribution by using counterfactual estimators for causal inference. The imposition of aggregate CFMs increases wealth inequality in advanced economies, and the imposition of aggregate CFMs on outflows increases wealth inequality in emerging economies significantly. Diverging from previous studies, we analyze the impacts of ten distinct asset-specific CFMs. In particular, the imposition of the related CFMs to money market and derivatives reduces wealth inequality significantly. The decrease in wealth inequality is due to a decrease in the wealth shares of the top 1% and 10% groups along with an increase in the wealth shares of the middle 40% and bottom 50%. Overall, the effects of CFMs on wealth inequality and distribution are quite heterogeneous; they depend on income levels, capital flow directions, and asset categories. |
| Keywords: | Capital flow management measures (CFMs); Wealth inequality; Gini coefficient; Wealth distribution; Counterfactual estimator |
| JEL: | D63 E21 F38 G15 G28 O16 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2024-30 |
| By: | Pierfederico Asdrubali; Soyoung Kim; Haerang Park |
| Abstract: | International risk sharing in OECD countries weakens during domestic recessions, when its role is most needed. Instead, no significant changes emerge during boom periods or in relation to the global business cycle. The asymmetry in the risk sharing response to cyclical fluctuations is driven mainly by dissmoothing effects in the capital market channel and the credit market channel. Specifically, interest payments to abroad and credit constraints of households increase during domestic recessions, limiting the smoothing role of risk sharing channels. However, countries with more internationally integrated financial markets and corporate disclosure can mitigate the dis-smoothing effects of these two channels and thus the asymmetry in international risk sharing. These findings contribute to rationalise heterogeneous results in the literature on the impact of globalisation and of financial frictions on international risk sharing. From an analytical viewpoint, they caution against assessments of international risk sharing over time which do not take the business cycle into account. From a policy perspective, they establish that, contrary to part of the literature on financial frictions, financial integration and corporate disclosure do affect international risk sharing during recessions. Since our results carry over to EU countries, they support the pursuit of the Capital Markets Union and further elimination of financial barriers to the completion of the Single Market. They also call for a more active role of counter-cyclical fiscal policy: during a recession, when a negative (positive) output shock hits, net government savings should fall (rise) along with net private savings, in order to preserve consumption stability. |
| JEL: | E00 E21 F15 G15 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:205 |
| By: | Cormier, Benjamin; Naqvi, Natalya |
| Abstract: | Outside of the rich world, international financial markets are thought to discipline borrowing governments by monitoring political and economic characteristics. But increasingly, asset managers do not assess individual country risk/return profiles. They replicate benchmark indexes, delegating investment decisions to index providers. This has two effects. First, it relocates market discipline into the hands of index providers. Second, it alters the constraints sovereigns face when accessing bond markets, conditioning the relationship between a sovereign’s political-economic features and its ability to raise capital. Using a novel data set of index inclusion and weights, we show that country-specific factors traditionally associated with bond market access do not have the expected constraining effects on countries included in a major index but do continue to affect excluded countries. Index investment has profoundly restructured debt markets by circumscribing the disciplinary link between country characteristics and capital allocation, with wide-ranging implications for the political economy of debt and finance. |
| JEL: | H62 |
| Date: | 2023–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:117248 |
| By: | Jean-Charles Bricongne; Mathilde Dufouleur |
| Abstract: | This paper examines the impact of insolvency framework reforms on non-performing loans (NPLs), extending prior research by considering both creditor and debtor factors. Using a new metric derived from the European Banking Authority's Transparency Exercises, we focus on the insolvency regime of the debtor's country in cross-border insolvencies. Furthermore, we contribute to the creditor vs. debtor-friendly insolvency regime debate by analysing reforms according to their orientation. Our findings suggest that debtor-oriented reforms are more effective in reducing NPLs, particularly benefiting non-SMEs and large banks in high NPL contexts. Moreover, such reforms have a larger effect in non-debtor and creditor-friendly insolvency regime countries. Finally, we also find that creditor-oriented reforms are associated with higher NPL ratios. |
| Keywords: | Non-Performing Loans, Insolvency Regime, Transparency Exercise, Reform, Banking Sector |
| JEL: | Q02 Q5 Q42 L72 G3 Q3 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:953 |
| By: | Körner, Tobias; Papageorgiou, Michael |
| Abstract: | We analyze the impact of the announcement of the banking union on stock market returns of euro area banks against the backdrop of three commonly held views of the banking union. We document positive individual abnormal returns for most banks. Abnormal returns are large and positive on average, and they vary substantially across banks. The more systemically important a bank is, the higher are the abnormal returns, both in 'crisis countries' and 'non-crisis countries'. Moreover, abnormal returns of banks are positively related to sovereign risk, with Greek banks experiencing extremely high abnormal returns. By contrast, abnormal returns are not robustly related to bank risk. These findings reveal market expectations consistent with the view that the banking union makes banks less dependent on their home country's sovereign strength and mitigates a financial trilemma. However, market participants do not seem to take the view that the banking union reduces a moral hazard problem that may emerge from a common lender of last resort and national responsibilities for banking supervision and resolution. |
| Keywords: | Euro area crisis, banking union, sovereign-bank nexus, systemic risk, event study |
| JEL: | G01 G21 G28 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:302175 |
| By: | Bouhmidi Souhila (Université d'Oran 2 Mohamed Ben Ahmed [Oran]) |
| Abstract: | Sovereign Wealth Funds SWFs play a crucial role in global financial markets, particularly during periods of crisis. This paper delves into the impact of SWF interventions on inflation rates amidst financial crises. By analyzing historical data of some emerging country how possessed a SWFs, the paper examines how SWFs actions affect inflation dynamics. Additionally, the paper investigates the relationship between SWF interventions and inflation rate. Through empirical analysis, the paper provides insights into the extent to which SWF interventions contribute to inflation volatility and stability during times of crisis. Understanding the interplay between SWFs and inflation is essential for macroeconomic stability in the face of financial turmoil. |
| Keywords: | Sovereign Wealth Funds Financial Crisis Inflation Rate. JEL Classification Codes: E31 G23 G01, Sovereign Wealth Funds, Financial Crisis, Inflation Rate. JEL Classification Codes: E31, G23, G01 |
| Date: | 2024–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04678787 |
| By: | Fengqi Xie (Tomsk State University); Marina V. Ryzhkova (Tomsk State University / Tomsk Polytechnic University) |
| Abstract: | With the rapid growth of the digital economy, digital currency has emerged as a prominent area of research. Central Bank Digital Currency (CBDC), issued by the central bank and backed by its liability, has garnered significant attention. This article builds upon Baumol's money demand theory to conduct an extensive analysis of the factors influencing the choice between cash and CBDC, as well as the selection of currency usage. It finds that the decision to adopt either cash or CBDC is often driven by the lower holding costs associated with the latter. Additionally, various factors such as public perception, government policies, and social acceptance contribute to the prolonged coexistence of cash and CBDC. Although CBDC in their current state may not completely replace traditional currencies, they are projected to have a substantial impact on the future of financial transactions. |
| Keywords: | Digitalization, central bank digital currency, CBDC, cash, Baumol's money demand theory |
| URL: | https://d.repec.org/n?u=RePEc:sek:iefpro:14416317 |
| By: | Tobias Berg; Jan Keil; Felix Martini; Manju Puri |
| Abstract: | We analyze the effect of a major central bank digital currency (CBDC) – the digital euro – on the payment industry to find remarkably heterogeneous effects. Stock prices of U.S. payment firms decrease, while stock prices of European payment firms increase in response to positive announcements on the digital euro. Bank stocks do not react. We estimate a loss in market capitalization of USD 127 billion for U.S. payment firms, vis-à-vis a gain of USD 23 billion for European payment firms. Our results emphasize the medium-of-exchange function of CBDCs and point to a novel geopolitical dimension of CBDCs: enhanced autonomy in payments. |
| JEL: | G1 G20 G21 G22 G23 G24 G28 G29 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32857 |
| By: | Bianchi, Milo; Rhodes, Andrew |
| Abstract: | We consider a model in which consumers live in isolated villages and need to send money to each other. Each village has (at most) one digital payment provider, which acts as a bridge to other villages. With fully rational consumers interoperability is beneficial: it raises financial inclusion, which in turn increases consumer surplus. With behavioural consumers who have imperfect information or incorrect beliefs about off-net fees, interoperability can reduce consumer welfare. Policies that cap transaction fees have an ambiguous effect on consumers, depending on how the cap is implemented, whether consumers are rational, and on how asymmetric providers are in terms of coverage. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129664 |
| By: | David A. Matsa; Brian T. Melzer; Michal Zator |
| Abstract: | Many young employees work on a temporary basis, which entails significantly greater income risk than “permanent” work, even for jobs in the same occupation and at a similar wage. We find that this income uncertainty leads lenders to ration credit to temporary workers, precisely at the stage of life when permanent workers rely on mortgages to invest in housing and loans to smooth consumption and purchase durable goods. Labor laws that improve job security for permanent workers create a dual credit market alongside the dual labor market, making it harder for young adults to establish financial independence and new families. |
| JEL: | D14 G51 J41 J68 R21 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32858 |
| By: | Fabrice Defever; Alejandro Riano; Gonzalo Varela |
| Abstract: | This paper evaluates the impact of two large export finance support schemes on firm-level export performance. The Export Finance Scheme (EFS) and the Long-Term Finance Facility for Plant & Machinery (LTFF), provide loans at subsidized interest rates for Pakistani exporters to finance working capital and the purchase of machinery and equipment respectively. We combine customs data with information on firms' participation in each program between 2015 and 2017 and use matching combined with difference-in-differences to estimate the effect of the subsidies on firms' export values, the number of products exported and the number of destinations they serve. We find that both programs deliver a large and positive impact on export growth rates - primarily along the intensive margin - and do so in an effective way relative to the direct financial cost of the subsidies. |
| Keywords: | trade finance, export subsidies, working capital, machinery and equipment, export margins, Pakistan |
| Date: | 2024–08–30 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2027 |
| By: | Maria Teresa Punzi (Singapore Management University) |
| Abstract: | This paper analyses the effectiveness of macroprudential policy on macro-financial fluctuations when the government enforces carbon pricing to reduce carbon emissions and achieve the net-zero target. A carbon tax policy alone can reduce carbon emissions by 2030, but at the cost of a deep and prolonged recession, with consequential financial instability due to a higher probability of default on entrepreneurs in the brown sector. This result suggests that carbon pricing should be coupled with complementary policies, such as macroprudential policy. In particular, differentiated LTV ratios and differentiated capital requirements that penalise the brown sector in favour of the green sector tend to decrease the probability of default in the green sector and encourage green lending in supporting the transition to a green economy. However, such policies have little contribution in offsetting the negative impact on the macroeconomy. More stringent levels of prudential regulations are needed to reduce the fall in GDP and consumption. More specifically, the “one-forone†prudential capital requirements on fossil fuel financing can effectively reduce defaults and move to a greener economy. |
| JEL: | E32 E44 E52 G18 G50 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1107 |