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on Macroeconomics |
| By: | Ricardo J. Caballero; Alp Simsek |
| Abstract: | We analyze monetary policy responses to noisy financial conditions in an open economy where exchange rates and domestic asset prices affect aggregate demand. Noise traders operate in both markets, and specialized arbitrageurs have limited risk-bearing capacity. Monetary policy creates cross-market spillovers: by adjusting the interest rate to stabilize one market, the central bank influences volatility in the other. We show that targeting a financial conditions index (FCI)—a weighted average of exchange rates and domestic asset prices—delivers substantial macroeconomic benefits. FCI targeting commits the central bank to respond to unexpected movements in financial conditions beyond what discretionary monetary policy implies. These stronger responses improve diversification across markets: each market becomes more exposed to external shocks but less exposed to its own. This reduces volatility in both markets and activates the recruitment effect from Caballero et al. (2025b) in each market—lower variance induces arbitrageurs to trade against noise, further dampening volatility. Foreign exchange (FX) targeting can also be effective when the exchange rate is the primary source of noise, with benefits that increase as the economy becomes more open. In this case, FX targeting recruits arbitrageurs to stabilize the FX market, reducing volatility and dampening the macroeconomic impact of noise. However, FX targeting also raises volatility in non-targeted markets through anti-recruitment effects, limiting its effectiveness relative to FCI targeting, especially when domestic asset markets also matter for financial conditions and are comparably noisy. |
| JEL: | E32 E40 E44 E52 F30 F41 G12 G15 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34974 |
| By: | Gero Stiepelmann |
| Abstract: | Short-time work (STW) is a subsidy program linked to a reduction in working hours that has been widely used across Europe and partly used in some US states to combat job losses in the Great Recession and the COVID-19 pandemic. Although typically used alongside an unemployment insurance (UI) system, the interaction between STW and UI remains conceptually unclear. To close this gap in the literature, I develop a search and matching model of the labor market with risk-averse workers, flexible hours choice, endogenous separations, and generalized Nash bargaining. Deriving closed-form expressions for the optimal policy mix, I demonstrate that while the UI system provides income insurance to workers, the STW system mitigates the fiscal externality of UI-induced separations. Notably, STW only exists due to the UI system. Consistent with often observed policy practice, I allow the STW system to adjust over the business cycle while keeping the UI system constant. In line with the actual policy, my findings indicate that optimal STW benefits have to increase in recessions, while in contrast to the actual policy, optimal eligibility criteria have to be tightened. Using UI with an optimal STW system is fiscally less expensive than the UI system on its own. |
| Keywords: | Short-time work; unemployment insurance; optimal policy; labor markets; search and matching; business cycles |
| JEL: | E24 E32 H21 J63 J64 J65 |
| Date: | 2026–03–23 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:102917 |
| By: | Anna Sznajderska; Andrzej Torój; Rafał Chmura |
| Abstract: | This paper focuses on the role of fiscal rules in shaping the macroeconomic effects of fiscal policy. We compare the fiscal multipliers across the European Union members and search for the drivers of their heterogeneity. To this aim we apply interacted panel vector autoregressive models to data from 27 EU countries over the period 1999-2022. Our results show that government spending multipliers are higher for countries with a relatively higher fiscal rule index compared to those with a lower index. |
| Keywords: | fiscal multipliers, fiscal rules, debt, interacted panel VAR model, European Union |
| JEL: | C33 E62 H50 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:sgh:kaewps:2025108 |
| By: | Hyeongwoo Kim (Department of Economics, Auburn University); Shuwei Zhang (Department of Economics, Towson University) |
| Abstract: | This paper investigates the design of optimal monetary policy responses to technology shocks in a two-country model framework featuring sticky prices and local currency pricing, where technology shocks propagate internationally. We demonstrate that technology shocks originating in the tradable sector, regardless of their country of origin, elicit monetary policy responses that are symmetric and closely aligned across countries, thereby providing a rationale for a fixed exchange rate regime. In contrast, technology shocks in the nontradable sector generate asymmetric policy reactions and weaken the source country's currency, supporting the case for exchange rate flexibility. In addition, the international transmission of technology shocks amplifies real-sector dynamics through news effects, prompting central banks to adopt contractionary policies, starkly contrasting with the findings of previous literature. |
| Keywords: | Sticky Price; Local Currency Pricing, Exchange Rate Regimes, Technology Diffusion, Interest Rate Rules. |
| JEL: | F31 F41 O0 E52 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:tow:wpaper:2026-03 |
| By: | Calvo, Guillermo A.; Velasco, Andres |
| Abstract: | We study the effects of monetary and fiscal policies when both money and government bonds provide liquidity services. Because money is the unit of account, the price of money is the inverse of the price level. If prices are sticky, so is the price of money in terms of goods, and this is one important reason why money is liquid and attractive. By contrast, the price of government bonds is free to jump and often does, especially in response to news about changes in fiscal policy and the supply of bonds. Those movements in government bond prices affect available liquidity, and therefore aggregate demand, inflation, and output. Under these conditions, bond-financed fiscal expansions can be contractionary, causing deflation and a temporary recession. To avoid those effects, changes in bond supply must be matched by changes in money supply and in the interest rate on money. We conclude that in a liquidity-dependent world, fiscal and monetary policies are joined at the hip. |
| Keywords: | obnd markets; fiscal policy; liquidity; monetary policy |
| JEL: | B22 E42 E44 E51 E52 E58 E61 |
| Date: | 2026–02–24 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137613 |
| By: | Paweł Kopiec |
| Abstract: | When central banks announce future interest rate cuts, the expected costs of servicing government debt decrease, freeing up additional resources in future budgets. This paper demonstrates that if the rational-expectations assumption is dropped, fiscal authority can exploit these savings by allocating them to future transfers. By announcing these transfers to households today, fiscal authorities can enhance the output effects of forward guidance. Employing a version of the New Keynesian setup with bounded rationality in the form of level-k thinking, I derive an analytical expression that captures the output effects of this additional fiscal announcement. A similar formula is then derived in a tractable heterogeneous agent New Keynesian model, incorporating bounded rationality, uninsured idiosyncratic risk, and targeted transfers. Finally, these analytical insights are used to investigate the effects of a forward-guidance-induced fiscal announcement in a fully-blown heterogeneous agent New Keynesian model with level-k thinking, calibrated to match U.S. data. The findings suggest that fiscal communication can amplify the output effects of standard one-year-ahaed forward guidance by 42%. Moreover, those gains can reach 85% when the debt-to-GDP ratio doubles. This indicates that forward guidance, when complemented by fiscal announcements regarding future transfers, can be an effective policy tool, particularly when both monetary and fiscal policies are constrained, such as during liquidity trap episodes accompanied by high levels of public debt. |
| Keywords: | Forward Guidance, Monetary Policy, Fiscal Policy, Heterogeneous Agents, Bounded Rationality |
| JEL: | D31 D52 D81 E21 E43 E52 E58 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:sgh:kaewps:2025109 |
| By: | Lingxiao Huang; Wenyang Xiao; Nisheeth K. Vishnoi |
| Abstract: | As AI systems enter institutional workflows, workers must decide whether to delegate task execution to AI and how much effort to invest in verifying AI outputs, while institutions evaluate workers using outcome-based standards that may misalign with workers' private costs. We model delegation and verification as the solution to a rational worker's optimization problem, and define worker quality by evaluating an institution-centered utility (distinct from the worker's objective) at the resulting optimal action. We formally characterize optimal worker workflows and show that AI induces *phase transitions*, where arbitrarily small differences in verification ability lead to sharply different behaviors. As a result, AI can amplify workers with strong verification reliability while degrading institutional worker quality for others who rationally over-delegate and reduce oversight, even when baseline task success improves and no behavioral biases are present. These results identify a structural mechanism by which AI reshapes institutional worker quality and amplifies quality disparities between workers with different verification reliability. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.02961 |
| By: | Dubey, Rohan (National Institute of Public Finance and Policy); Chakraborty, Lekha (National Institute of Public Finance and Policy) |
| Abstract: | The rapid diffusion of artificial intelligence (AI) has generated widespread expectations of substantial productivity gains, yet empirical evidence on its macroeconomic effects remains limited. This paper provides across-country empirical assessment of the relationship between AI adoption and labour productivity using a newly constructed panel dataset covering G20 over the period 2012–2023. We develop two composite indices of AI adoption that capture both relative cross-country positioning and within-country evolution overtime, drawing on indicators of investment, innovation, computational capacity, and scientific output. Employing panel regressions with country and time fixed effects and a rich set of macroeconomic controls, we find evidence of a statistically significant short-run effect of AI diffusion on aggregate labour productivity. These results are robust across alternative index constructions and model specifications. We then extend our analysis to human development indicators and find that AI diffusion is positively associated with UNDP the Human Development Index (HDI). At the sametime, the magnitude and dynamics of the estimated effects suggest that productivity gains from AI are likely to materialize gradually and depend on complementary investments and structural conditions. Beyond the regression results, the indices developed in this paper provide a transparent framework for tracking AI diffusion and identifying areas of AI preparedness and technological lag, offering useful insights for future research and policy design. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:npf:wpaper:26/445 |
| By: | Cyprien Batut; Caroline Coly; Sarah Schneider-Strawczynski |
| Abstract: | This paper investigates the impact of the #MeToo movement in the workplace, drawing on French survey data on harassment behaviours and administrative data on worker flows. Using a difference-in-differences strategy, we find that, following the #MeToo movement, women began leaving high-risk workplaces at a significantly higher rate. This increase is mainly driven by women who quit their jobs. Both men and women who exit high-risk plants subsequently adjust their job search strategies toward less toxic workplaces. |
| Keywords: | sexual harassment, occupational gender inequality, workflows |
| JEL: | J16 D7 J81 J52 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12551 |
| By: | Lidia Ceriani; Paolo Verme |
| Abstract: | This paper pays tribute to Professor Giovanni Andrea Cornia's lifelong contributions to the measurement of global inequality. We review twelve world and regional databases of the Gini coefficient, illustrate their coverage, overlapping, and data gaps, and analyse the major sources of discrepancy among published Ginis. Merging all databases into a unified collection of over 122, 000 observations spanning 222 countries from 1867 to 2024, we document how differences in welfare metrics, reference units, sub-metric definitions, post-survey adjustments, and survey design produce Gini estimates that diverge considerably -- sometimes by as much as 50 percentage points -- for the same country and year. We quantify pairwise cross-database discordance, document the income-consumption Gini gap by region and income group, and discuss the contributions of welfare metric and equivalence scale choices to cross-database dispersion. We extend the analysis with a dedicated discussion of comparability across time and across measurement dimensions, showing how multiple layers of methodological choice interact to make any single Gini figure a product of a complex chain of decisions that are rarely fully disclosed. Our analysis confirms that the choice of welfare metric remains the single most important source of cross-country non-comparability, while sub-metric definitions and equivalence scales introduce further systematic differences that are routinely overlooked in comparative work. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.18195 |
| By: | Joel P. Flynn (Yale University); George Nikolakoudis (Yale University); Karthik A. Sastry (Princeton University) |
| Abstract: | Modern theories of the business cycle do not allow for the simultaneous rational choice of both prices and quantities, instead assuming that an Òinvisible handÓ determines one of these variables to clear markets. In this paper, we develop a macroeconomic framework in which both prices and quantities are chosen directly by firms, and exchange is both voluntary and efficient. Because of uncertainty about demand and productivity, individual product markets can be in excess supply or rationed. The absence of market-clearing changes pricing and production in qualitatively important ways: markups are no longer determined solely by the elasticity of demand, and higher uncertainty reduces production and increases markups. |
| Date: | 2026–02–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2501 |
| By: | Kichko, Sergei; Marini, Marco A.; Saulle, Riccardo D.; Thisse, Jacques-François |
| Abstract: | This paper extends the CES model of monopolistic competition to the case where varieties are both horizontally and vertically differentiated. A distinctive feature of our model is the presence of a network externality, which operates through the number of varieties available at each quality level. Depending on the quality gap, there are corner equilibria in which consumers purchase only high-quality or low-quality varieties, or an interior equilibrium in which consumers are split between the two qualities. Unlike the CES model of monopolistic competition, the equilibrium is never efficient and the market may even select the outcome with the lowest surplus. |
| Keywords: | Production Economics, Public Economics |
| Date: | 2026–03–24 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:396374 |
| By: | Aliakbar Akbaritabar (Max Planck Institute for Demographic Research, Rostock, Germany); Andrés F. Castro Torres (Max Planck Institute for Demographic Research, Rostock, Germany); Emilio Zagheni (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | Scientists move internationally in search of opportunities, because of push factors in the origin countries, for family-related, personal, or other reasons. Regardless of what prompts international relocations of researchers, mobility (or lack of it) has macro-level implications for scientific production that are often not fully visible because they have not been quantified. We analyzed bibliometric data on 30+ million publications, indexed by Scopus, and written by 19+ million scholars between 1996 and 2021, to measure the contribution of internationally mobile scholars to scientific production in their country of residence. We found that, across countries, scientific fields, and genders, internationally mobile scholars consistently contribute far more publications than their share of the population of scientists would imply. In advanced economies, mobile scholars account for approximately 20% of all publications, compared to 14--15% in non-advanced economies; in both cases their contribution far exceeds their share of the scholarly population. Smaller countries show a distinct pattern of hosting a larger fraction of scholars with international mobility experience (up to 60%) who are highly productive (in some cases contributing to up to 80% of the publications of the country). Standard bibliometric metrics of national scientific production are analogous to Gross Domestic Product (GDP) accounting: they capture what is produced within a country's borders regardless of who produced it. Our results quantify a dimension invisible in such metrics---the contribution of internationally mobile scholars---and motivate complementary measures of scientific production that account for scholar's country of origin and mobility history. |
| Keywords: | World, computational social science, international migration, migration |
| JEL: | J1 Z0 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:dem:wpaper:wp-2026-009 |
| By: | Roberto Brunetti (GATE CNRS, France; Universitè Lumiére Lyon 2, France; Université Jean-Monnet Saint-Etienne, France; Emlyon Business School, France.); Gianluca Grimalda (Passau University, Germany.); Maria Marino (Universitat de Barcelona, Spain.) |
| Abstract: | Despite growing income inequality, demand for redistribution has remained stagnant, which is puzzling for the poor. We investigate whether attitudes toward “trickle-down” economics and fairness affect redistribution demand. We involve US residents from the bottom and top 20% of the income distribution (N = 2, 346) in experimental redistributive decisions from high-income real-life entrepreneurs to low-income recipients. We find that entrepreneurs’ activities possibly generating trickle-down effects, such as employing 1, 000 workers, are irrelevant to redistribution. Conversely, the desire to sanction the “undeserving poor” and, less importantly, to reward the “deserving rich” significantly affect redistribution. High-income and low-income participants’ decisions follow surprisingly similar patterns. |
| Keywords: | Trickle-down; Fairness; Merit; Redistribution. JEL classification: D72; D91; H2; H23; H41. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ira:wpaper:202518 |
| By: | James Giesecke; Robert Waschik |
| Abstract: | This paper examines the consistency between Armington and Melitz trade specifications in computable general equilibrium (CGE) models, focusing on the parameterisation of Melitz elasticities for the motor vehicle sector. Using the framework developed by Dixon, Jerie and Rimmer (2018), we first restrict the Melitz parameter space by imposing bounds derived from theoretical constraints and potentially observable industry characteristics. We then assess whether any admissible Melitz parameterisation can reproduce the import response generated by a standard Armington specification in GTAP-FIN for a 25 per cent U.S. tariff on motor vehicle imports. We find that no such parameter combination exists. This incompatibility raises a parameterisation dilemma: when Melitz parameters are constrained to generate empirically plausible industry characteristics, the implied import responses substantially exceed those produced under conventional Armington elasticities. We therefore reverse the calibration exercise and identify the range of Armington elasticities required to match the import responses generated by the restricted Melitz model. The implied Armington elasticities are considerably larger than values identified in the literature. One interpretation is that conventional Armington parameterisations understate trade responsiveness in sectors characterised by firm-level heterogeneity. Another is that alternative representations of heterogeneity, such as small group monopolistic competition, may warrant further investigation. |
| Keywords: | Melitz model, Armington elasticities, tariffs, motor vehicles, computable general equilibrium |
| JEL: | F12 C68 F17 F47 D58 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cop:wpaper:g-365 |
| By: | Hongbum SO |
| Abstract: | This paper analyzes the first Sanitary and Phytosanitary (SPS) dispute under the United States–Mexico–Canada Agreement (USMCA), which concerns Mexico’s measures restricting the use of genetically engineered (modified) corn under its 2023 Presidential Decree. The dispute highlights the tension between a Party’s regulatory autonomy to pursue food sovereignty, especially to protect human health, indigenous peoples’ rights, and biodiversity, and the obligation of Parties to ensure market access for GMO products under the USMCA. The principal issues in this case centered on Mexico’s obligations to base its SPS measures on an “appropriate risk assessment, ” as well as its obligations regarding the “necessity” and “trade-restrictiveness” of the measures. Mexico further contended that its measures additionally serve non-SPS objectives and thus could be justified under the General Exceptions and the Indigenous Peoples’ Rights Exception. After reviewing the procedural background and the Parties’ main arguments, this paper critically assesses the Panel’s interpretations and findings on those legal issues. Notably, the findings under the SPS Chapter have weighed heavily against Mexico’s arguments for justification regarding its non-SPS objectives. This underscores the relevance of scientific explanations (e.g., risk assessment), as part of justification claims, within the context of the necessity test and the chapeau requirements, particularly in cases involving crucial scientific elements. Finally, as the Panel introduced notable interpretive approaches to some provisions that parallel WTO Law, this paper explores their implications for WTO dispute settlement jurisprudence. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rpdpjp:26002 |
| By: | Maarten C. Vonk; Anna V. Kononova; Thomas B\"ack; Tim Sweijs |
| Abstract: | Western governments have adopted an assortment of counter-hybrid threat measures to defend against hostile actions below the conventional military threshold. The impact of these measures is unclear because of the ambiguity of hybrid threats, their cross-domain nature, and uncertainty about how countermeasures shape adversarial behavior. This paper offers a novel approach to clarifying this impact by unifying previously bifurcating hybrid threat modeling methods through a (multi-agent) influence diagram framework. The model balances the costs of countermeasures, their ability to dissuade the adversary from executing hybrid threats, and their potential to mitigate the impact of hybrid threats. We run 1000 semi-synthetic variants of a real-world-inspired scenario simulating the strategic interaction between attacking agent A and defending agent B over a cyber attack on critical infrastructure to explore the effectiveness of a set of five different counter-hybrid threat measures. Counter-hybrid measures range from strengthening resilience and denial of the adversary's ability to execute a hybrid threat to dissuasion through the threat of punishment. Our analysis primarily evaluates the overarching characteristics of counter-hybrid threat measures. This approach allows us to generalize the effectiveness of these measures and examine parameter impact sensitivity. In addition, we discuss policy relevance and outline future research avenues. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.03526 |
| By: | Amare, Mulubrhan; Andam, Kwaw S.; Spielman, David J.; Bamiwuye, Temilolu; Nwagboso, Chibuzo; Zambrano, Patricia; Chambers, Judith A. |
| Abstract: | Excessive insecticide use in smallholder agriculture can threaten human health and the environment. We evaluate the effects of receiving a genetically modified cowpea variety that confers resistance to the legume pod borer (Maruca vitrata) using a clustered randomized controlled trial with an encouragement design in Nigeria. We find that farmers who received the pod borer-resistant (PBR) cowpea with complementary inputs significantly reduce insecticide volumes and report fewer days of insecticide-related illness compared to farmers who only received a conventional cowpea variety. Farmers receiving PBR cowpea alone experience smaller, mostly insignificant reductions. To explore heterogeneous responses, we combine ANCOVA (analysis of covariance) interactions with machine learning-based Causal Forest estimates of Conditional Average Treatment Effects (CATEs). Results reveal that smaller, less wealthy, and labor-constrained households experience the largest reductions in insecticide use and health improvements, whereas wealthier farmers or those with higher baseline spraying practices experience lower reductions. Women-managed plots exhibit modestly higher responsiveness. Our findings highlight the importance of moving beyond average effects and seed distribution toward targeted, context-specific interventions that account for behavioral and resource constraints in smallholder farming systems. |
| Keywords: | insecticides; farmers; health; genetically modified foods; cowpeas; randomized controlled trials; machine learning; Nigeria; Western Africa |
| Date: | 2025–12–18 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:ifprid:179030 |
| By: | Eiji Yamamura |
| Abstract: | Immediately after the establishment of the New Meiji Government in the 19th century, a system of conscription was adopted. The exemption rule has changed several times. Using individual-level panel data on the academic performance of Keio Gijuku, I found a surge in the family head's student rate between 1884 and 1888, and the rate declined immediately thereafter. After regaining privileges for private school students, family head performance declined, and the difference between head and non-family heads disappeared. This made it evident that conscription increased educational attendance quantitatively, but did not qualitatively improve academic performance. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.09005 |
| By: | Dirk Bergemann (Yale University); Alessandro Bonatti (MIT Sloan); Alex Smolin (Toulouse School of Economics) |
| Abstract: | We develop a framework for the optimal pricing and product design of LLMs in which a provider sells menus of token budgets to users who differ in their valuations across a continuum of tasks. Under a homogeneous production technology, we show that users' high-dimensional type profiles are summarized by a scalar index, reducing the seller's problem to one-dimensional screening. The optimal mechanism takes the form of committed-spend contracts: buyers pay for a budget that they allocate across token classes priced at marginal cost. We extend the analysis to environments with multiple differentiated models and to competition between a proprietary leader and an open-source fringe, showing that competitive pressure reshapes both the intensive and extensive margins of compute provision. Each element of our theory (token-budget menus, maximum- and minimum-spend plans, multi-model versioning, and linear API pricing) has a direct counterpart in the observed pricing practices of providers such as Anthropic, OpenAI, and GitHub. |
| Date: | 2026–03–07 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2502 |
| By: | Yoonseok Lee (Syracuse University); Peter C. B. Phillips (Yale University, University of Auckland, and Singapore Management University); Suyong Song (University of Iowa); Donggyu Sul (University of Texas at Dallas) |
| Abstract: | This paper develops a novel method for identifying observable determinants of latent common trends in nonstationary panel data, which are typically removed or controlled in two-way fixed effects regressions. By examining cross sectional dispersion processes, we assess whether panel series exhibit distributional convergence toward specific observed time series, revealing them as long run determinants of the underlying latent trend. The approach also offers a new perspective on cointegration between time series and panel data, focusing on the relative variation of the panel data with respect to the cointegration error. Applying this method to U.S. state-level crime rates demonstrates that the percentage of young adults is a key determinant of violent crime trends, while the incarceration rate drives property crime trends. These findings, which differ from standard two-way fixed effects analysis results, provide a compelling explanation for the sharp decline in U.S. crime rates since the early 1990s. |
| Date: | 2026–03–10 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2504 |
| By: | Isaak Mengesha; Debraj Roy |
| Abstract: | Economic growth is conventionally analyzed at the national level, yet cities generate the bulk of global output. Here we construct GDP trajectories for 8, 808 functional urban areas (FUAs) across 165 countries over 1993-2019 using satellite-derived nighttime light data and identify 17 distinct, persistent growth regimes through clustering of full temporal trajectories. Rather than converging toward a common frontier, FUAs inhabit distinct economic niches-analogous to ecological niches-defined by shared volatility profiles, shock responses, and long-run dynamics that transcend national boundaries. Cities within the same country frequently belong to different regimes, while structurally similar cities on different continents share the same one; regime membership explains 16% of within-country growth variance beyond country fixed effects. National-level convergence emerges as an aggregation artifact: conditional convergence operates within regimes, not globally. A directed propagation network reveals that shocks transmit along lines of structural similarity rather than geographic proximity, with advanced economies exporting disturbances and emerging economies absorbing or amplifying them. Within-country spatial inequality declines with industrialization maturity, consistent with growth initially concentrating in leading cities before diffusing across the urban system. The global economy is better understood as an ecology of heterogeneous urban growth regimes than as a collection of nations on a shared development path. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.16007 |
| By: | Guglielmo Maria Caporale; Luis Alberiko Gil-Alana; Oluwadare O. Ojo |
| Abstract: | This paper examines the impact on crude oil prices of the trade tariffs announced by the Trump administration on 2 April 2025 (“Liberation Day”). More specifically, it uses fractional integration methods to analyse daily data on WTI, Brent and Murban oil prices spanning the period from 3 June 2024 to 14 January 2026 for the former two and from 8 October 2024 to 15 January 2026 for the latter. Their long-memory and persistence properties are investigated initially over the full sample, and then the effects of the Trump tariff announcement are assessed by means of subsample analysis for the pre- and post-announcement period as well as recursive estimation of the fractional differencing parameter d measuring persistence. The results indicate that the unit root null cannot be rejected in any case, whether one considers the full sample or the subsamples, which implies that shocks have permanent effects. Further, the recursive estimation shows a significant impact of tariffs on the degree of persistence of oil prices only at the time of the announcement, when the wide confidence bands suggest a high degree of uncertainty - in the subsequent period no significant changes can be detected in the stochastic behaviour of the series following the downward shift in their level caused by the announcement. |
| Keywords: | Trump tariffs, crude oil prices, fractional integration, long memory, persistence |
| JEL: | C22 F10 F13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12562 |