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on Mining |
| By: | Rafael Guerra; Gabriel Zelpo |
| Abstract: | This paper analyses the state-dependent effects of geopolitical risks on gold prices (i.e. the safe-haven role of gold), conditional on financial conditions. Geopolitical risks are often associated with tighter financial conditions. However, recent data reveal a decoupling be tween such shocks and more restrictive financial conditions, raising the question of how gold returns are affected by geopolitical shocks, conditional on the macro-financial environment. Using monthly data from 1990 to 2026, we find that increases in geopolitical risks– both geopolitical threats and realised events– increase gold returns, with stronger effects ob served during periods of loose financial conditions. We decompose this relationship into two mechanisms: (i) the credit and liquidity risk channel and (ii) the opportunity cost channel. Our findings indicate that the relationship operates most clearly through the first channel, suggesting that the key factor is investors’ capacity to rebalance, while the evidence for the second channel is less conclusive. Finally, we also find that the largest impact occurs when periods of loose financial conditions are compounded with periods of geopolitical escala tions, as seen in 2024–26. These insights highlight the relevance of understanding gold as a safe-haven asset amid complex macro-financial conditions. |
| Keywords: | gold prices, geopolitical risk, financial conditions |
| JEL: | G15 E44 F51 G12 Q02 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1380 |
| By: | Haonan Li (Graduate School of Economics, Waseda University); Yasuyuki Todo (Graduate School of Economics, Waseda University, and Research Institute of Economy, Trade and Industry) |
| Abstract: | Existing measures of geopolitical risk are country-level and assume that all investors face the same risk in a given destination. This paper constructs a directional, bilateral geopolitical risk index that captures how the domestic media of each source country report on geopolitical conflicts involving each destination country. Using GDELT news data, the index covers more than 200 source and destination countries at a monthly frequency. We combine the index with project-level data on greenfield FDI and product-level trade data, and exploit variation across source countries for the same destination and period while controlling for destination-specific shocks. Source countries whose media place greater emphasis on a destination's geopolitical risk subsequently announce more greenfield projects there: a one-standard-deviation increase in the index is associated with a 7% increase in new projects. This suggests that firms may read such coverage as a signal of future market-access frictions and localize production in advance. Consistent with this interpretation, the association is concentrated in projects serving the host market and in sectors that depend on local demand, and is absent among politically aligned country pairs. By contrast, higher risk coverage is followed by a short-lived decline in imports, driven by severe conflicts, while exports do not respond. |
| Keywords: | geopolitical risk, media, foreign direct investment, trade, GDELT |
| JEL: | F14 F21 F23 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2615 |
| By: | Romain Houssa; Jolan Mohimont |
| Abstract: | This paper develops a dynamic general equilibrium model of the global crude oil market that delivers horizon-dependent price elasticities of oil supply and demand, arising from the gradual adjustment of oil producers and consumers over time. We refer to elasticities beyond the impact horizon as dynamic elasticities. We derive closed-form expressions for the elasticities, which allow us to impose transparent prior restrictions in the empirical analysis and to quantify how dynamic elasticities shape the propagation of structural shocks to oil prices and global real activity. We estimate the model with Bayesian methods using monthly data on industrial production and key oil-market indicators — production, inventories, and prices. Diffuse priors on dynamic elasticities imply elasticity profiles that are essentially flat across horizons. By contrast, informative priors — or an expanded information set including drilling activity under diffuse elasticity priors — yield elasticities that rise with the horizon, increase the contribution of supply shocks to fluctuations in oil prices and real activity, and reduce that of oil-consumption demand shocks. |
| Keywords: | oil market, real business cycle (RBC), Bayesian estimation, dynamic elasticities, oil supply and demand |
| JEL: | C32 C11 E32 Q41 Q43 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13037 |
| By: | Zoltan Bartha |
| Abstract: | This paper examines the post-2010 expansion of the Hungarian construction sector as a case study of large-scale government intervention in a single market. A political economy framework conceptualises the intervention as two mutually reinforcing policies - expansionary demand (public procurement and housing subsidies) and preferential allocation towards politically connected firms - operating under inelastic supply through two mechanisms: market-level subsidy capitalisation and firm-level rent extraction. Using a structured descriptive case study design, the paper draws on Hungarian Central Statistical Office and Eurostat macroeconomic statistics, firm-level data on Hungary's largest companies (CrefoPort), policy documents, and a regional comparison to assess four propositions derived from the framework. The evidence supports all four: real construction output grew faster than in any regional peer except Romania; construction producer prices persistently outpaced the GDP deflator; ownership of the leading firms shifted towards politically connected domestic owners, whose profitability rose sharply while their exports remained negligible; labour productivity per hour worked returned by 2024 to roughly its 2000 level; and connected firms captured a rising share of sector profits, as the subsidies' value was partly eroded by the price increases they induced. Competing explanations do not jointly account for this configuration. The findings illustrate how combined demand stimulus and favouritism produce extensive growth without efficiency gains. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.03791 |
| By: | Todd B. Walker |
| Abstract: | Implied stock-market volatility is widely used to identify uncertainty shocks and discipline models of their macroeconomic effects. This paper gives distributional content to the option-price variation underlying these exercises. A normalized at-the-money forward put price, the Downside Protection Premium (DPP), closely tracks the VIX and preserves the principal macroeconomic responses in the specifications examined. Its price and local strike slope separate risk-neutral shortfall probability from conditional severity. Severity accounts for almost all monthly premium comovement and 91.5 percent of the recession log premium. Conditional gains also rise substantially, while conditional losses remain larger in phase averages. Despite this severity dominance, quotations across strikes frequently exclude a common-scale explanation, conditional on the maintained forward and premium construction. Realized-volatility and future-volatility-news innovations both raise protection costs primarily through severity, yet produce different estimated employment responses in common impact-severity units; simultaneous significance depends on the inference formulation. Together, these findings supply joint empirical restrictions on the connection between uncertainty, option prices, and economic activity. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.03849 |
| By: | Biswajit Banerjee (Ashoka University); Juraj Zeman (National Bank of Slovakia) |
| Abstract: | Motor vehicle production in the Visegrád Four economies (Czechia, Hungary, Poland, Slovakia) has undergone a profound structural transformation since their EU accession. This transformation has unfolded along two fronts: ever-deepening integration into European and global value chains, and, more recently, the industry's shift to electrification. This paper examines both over 2010–2023. We test a prominent claim in the recent literature: that since 2018, global value chains have been reshoring, regionalising and shortening in response to pandemic disruption and geopolitical risk. Decomposing Eurostat FIGARO input-output tables and measuring production-chain length, we find no support for reshoring, shortening or derisking: backward linkage and chain length both rose in every country; where domestic sourcing increased, it was not matched by additional domestically generated value; and diversification away from EU suppliers occurred alongside longer, not shorter, chains. Testing a monthly Comext series on lithium-ion battery imports for structural breaks, we find the EV transition offers no exception: battery-import growth and break timing diverge sharply by country, tracking individual firm investments more closely than EU or national policy. These findings are consistent with the Dependent Market Economy framework, which predicts persistent foreign dependence rather than upgrading. But the four countries do not follow one shared trajectory. Slovakia, Czechia and Hungary form a cluster of increasingly import-dependent assembly platforms with lengthening, internationalising chains, while Poland retains a structurally deeper domestic base than the other three, though this gap narrows as all four countries' chains internationalise. The paper's central contribution is to show that a shared institutional exposure to foreign capital does not imply a shared national trajectory, and that treating the V4 as a single regional production platform obscures the differentiated way dependence is deepening within it. |
| Date: | 2026–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:ash:wpaper:172 |
| By: | Greaney, Brian; Shapiro, Joseph; Wagner, Katherine |
| Abstract: | We study the optimality of human groundwater extraction from many of the world's 3, 400 aquifers, where institutional or market failures may produce non-optimal extraction decisions. We use remote sensing and economic data to estimate a dynamic model of water extraction for each aquifer, recover the discount factor that rationalizes observed groundwater extraction, and compare it against Ramsey and market benchmarks. Three- to four-fifths of aquifers are extracted more rapidly than is optimal, decreasing aquifer present value by several percent, and creating trillions of dollars in present value welfare losses. Policies that guarantee users constant water quantities indefinitely, through subsidies or prior appropriation, or policy rules that fully discount future extraction, generate larger welfare costs. A sustainable extraction path that maintains current fill forever generates meaningfully lower welfare than the optimal extraction path, because most aquifer stocks are already inefficiently low. |
| Keywords: | Groundwater extraction, dynamic programming, renewable resource management, tragedy of the commons, agricultural production |
| Date: | 2026–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:econwp:qt1nr9t71t |
| By: | James E. Anderson (Boston College); Mario Larch (University of Bayreuth); Serge Shikher (United States International Trade Commission); Yoto V. Yotov (School of Economics, Drexel University and Center for Global Policy Analysis (CGPA)) |
| Abstract: | We propose a theory-consistent procedure to aggregate tariffs. Theory implies that the weights on disaggregated tariffs should be a function of tariff-free trade and trade elasticities. Our aggregator nests as special cases and corrects the deficiencies of the two existing alternatives – the simple-average and import-weighted tariffs. We create a Theory-Consistent Tariff Database (TCTD) by aggregating HS 6-digit tariffs to the industry level of the International Trade and Production databases of the USITC. Several applications highlight the advantages of the theory-consistent tariffs. |
| Keywords: | Tariffs; Tariff Aggregation; Gravity Theory; Trade Elasticity |
| JEL: | F11 F13 F14 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202620 |
| By: | Diego R. Känzig; James H. Stock; Luca Zanotti |
| Abstract: | We study how the shale revolution and the U.S. transition from petroleum importer to net exporter have changed the macroeconomic effects of oil shocks. Using oil supply news shocks identified from OPEC announcements, a time-varying model of the U.S. macroeconomy shows that the contractionary effects weakened over time and eventually became expansionary. State-dependent local projections link this change to the U.S. petroleum trade balance. The improvement goes beyond mechanical net export effects: as the terms-of-trade response turns more favorable, consumption, equity valuations, and activity strengthen broadly across sectors and regions, pointing to general-equilibrium income and wealth effects. A counterfactual analysis of the 2022 oil price surge implies sharply different paths for U.S. activity, prices, and monetary policy under the propagation mechanisms prevailing before the shale boom vs. the early 2020s. |
| JEL: | C32 E31 E32 F41 Q43 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35864 |
| By: | Joseph E. Aldy; Michael W. Toffel; Alison J. Ong; Lavender Yang |
| Abstract: | Many large, publicly-traded companies adopt voluntary greenhouse gas emission reduction commitments in the presence of a fragmented public policy landscape. To explore the potential emission implications of such commitments, we develop a framework for understanding how firms’ voluntary emission targets interact with carbon pricing, regulatory mandates, subsidies, and heterogeneous policies across political jurisdictions. This analysis highlights the difficulty of distinguishing incremental voluntary emission abatement from policy-induced emission reductions. We introduce the Salata Institute Corporate Climate Targets Database, which we produced from public domain reports published by Russell 3000 firms over 2000-2024. The database documents the growth, form, scope, and sectoral distribution of voluntary greenhouse gas emission targets, including net-zero, carbon-neutral, carbon-reduction, energy-related, and qualitative commitments. Comparing this database with CDP, a non-profit organization formerly known as the Carbon Disclosure Project and the most common source of corporate emission targets used in the research literature, reveals substantial omissions in their survey-based data, especially in recent years. We show that voluntary corporate targets often mirror government-established goals and public policies, and some firms benchmark their internal carbon prices to existing carbon taxes and emission trading systems. The paper concludes by outlining empirical challenges and future research needs for evaluating the emission impacts of voluntary commitments. |
| JEL: | M48 Q54 Q58 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35869 |
| By: | Aashish Bohra; Lokendra Vishwakarm |
| Abstract: | Wavelet-based financial forecasters typically use the transform only to denoise, or reduce it to a single spectral snapshot at the forecast origin, and the convolution that produces the coefficients is usually bilateral, so it can read past the forecast origin. DSTNet instead retains the recent evolution of filter-bank magnitudes as a causal Dynamic Spectral Trajectory, built from seven trailing technical indicators over a twenty-day lookback with a one-sided Morlet-derived filter bank and an explicit burn-in for the left-boundary transient. A factorized Scale-Temporal Spectral Transformer attends along the time and filter-bank axes separately, a learned gate fuses the spectral branch with a CNN-BiLSTM, and horizon-specific gates emit one, three, five, and ten day forecasts in a single pass. We evaluate seven equity indices and gold under a common expanding-window protocol and an untouched one-year hold-out, against nine learned baselines and a random-walk persistence benchmark. Under MAE and MAPE, persistence is the strongest of the ten fixed competitors in 29 of the 32 series-horizon cells and DSTNet is the only model below it in every cell, by 0.7 to 0.9 percent at one day and 3.4 to 4.5 percent at ten days. At one day, paired testing favours DSTNet against the weaker learned baselines but is inconclusive against persistence and the strongest learned forecasters. A downstream allocation diagnostic does not support an equity-timing advantage on any of the seven indices. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.09654 |
| By: | Olivier Gu\'eant |
| Abstract: | In actuarial science and quantitative finance, convex order provides a natural way to compare risks with the same mean. In dimension one, convex order is well understood through several characterisations. In higher dimensions, a natural approach is to compare all one-dimensional projections, but, although necessary, the resulting condition is in general not sufficient for multivariate convex order. A simple counterexample due to Pinelis exploits Popoviciu's inequality. We revisit this example using gauge functions, and show that gauge functions themselves do not suffice to characterise multivariate convex order for symmetric distributions, even in dimension two. We then show that the radial case makes the source of the failure transparent and construct radial counterexamples in every dimension at least two. Nevertheless, projection tests are sufficient for some important families of distributions. In particular, this is the case for linear transformations of a common radially distributed random vector. This framework includes elliptical distributions generated from a common radial distribution and, in particular, centred Gaussian distributions. Beyond comparisons between Gaussian distributions, Jourdain and Pag\`es recently studied the comparison of a Gaussian distribution with a Gaussian mixture, obtaining necessary conditions and sufficient conditions whose equivalence was left open in general. In this paper, we settle the comparison of a centred Gaussian distribution with a mixture of two centred Gaussian distributions: in every finite dimension, the Gaussian is dominated by the mixture in multivariate convex order if and only if all one-dimensional projections are ordered in convex order. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.07404 |
| By: | OECD |
| Abstract: | Transition finance has emerged as an approach to financing companies and activities that are not yet aligned with environmental goals but are pursuing credible transition pathways. This paper examines how enabling policies shape the mobilisation of transition finance and the credibility and economic feasibility of corporate transitions. Drawing on case studies of Japan, the European Union and the United Kingdom, a structured review of 167 academic and institutional studies, and a 2026 OECD survey of 121 financial institutions and non-financial companies, it provides new evidence on the conditions under which credible transition pathways can become commercially viable and financeable. The analysis assesses how specific policy instruments and broader features of the policy environment, including policy direction, durability and implementation, interact with sectoral pathways and real-economy factors such as technology costs and maturity, infrastructure availability, market demand and expected revenues. It also considers how cross-border differences in transition-related policy and regulatory frameworks form part of the wider conditions shaping investment and financing. The paper is relevant to policymakers, financial institutions and companies involved in transition-related investment, planning and financing. |
| JEL: | Q56 |
| Date: | 2026–10–05 |
| URL: | https://d.repec.org/n?u=RePEc:oec:envaaa:278-en |
| By: | Gandhi, Piyush; Hagerty, Nick; Zucker, Ariel |
| Abstract: | Energy efficiency is a global priority, but investments in energy efficiency do not always deliver the expected benefits. This paper studies micro-irrigation systems (MIS), a technology thought to reduce the energy required for irrigation by as much as 70 percent. We installed individual meters to directly measure the energy consumption of several hundred farmers in Gujarat, India, and linked the meter data with survey data to yield a uniquely comprehensive view into energy use patterns in smallholder agriculture. We document two facts. One, energy use varies widely across farmers, and this variation is unexplained by factors such as farm area or village geography. Two, MIS users in our sample consume 30 to 40 percent more energy than non-users of MIS. This difference does not appear to be fully explained by observable differences across farmers nor by rebound effects, suggesting that the energy efficiency gains of MIS under real-world conditions may be disappointing. Our results highlight a need for increased attention to the details of implementation and further research into the actual benefits of resource-conserving technologies. |
| Keywords: | 4404 Development Studies (for-2020), 44 Human Society (for-2020), 2 Zero Hunger (sdg), Energy efficiency, Rebound effect, Irrigation, Technology subsidies, Energy (science-metrix), 3304 Urban and regional planning (for-2020), 4407 Policy and administration (for-2020), 4802 Environmental and resources law (for-2020) |
| Date: | 2026–12–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:ucscec:qt8gn3x7gz |
| By: | Francis Annan; Collin B. Raymond |
| Abstract: | We study how firms choose among incentive contracts and how accurately managers predict their effects. Using a survey of managerial beliefs and a large-scale field experiment, we randomly assign agents at the market level to several widely used, expenditure-equivalent incentive schemes. In the field, the best-performing contract increases agent output and firm revenue by over 20% relative to the status quo, despite being ranked lower by managers, whereas the worst-performing contract performs as predicted. Managers correctly identify underperforming contracts but systematically underestimate top- performing ones. We document the sources of performance di!erences—labor supply responses rather than selection or pricing and the determinants of managerial predictability: contract complexity and managerial hierarchy. Our results highlight the importance of contract design for firm performance and reveal systematic limits to managerial cognition in shaping incentives. |
| JEL: | D86 D91 G23 L21 O12 O16 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35788 |
| By: | Stijn Van Nieuwerburgh |
| Abstract: | Artificial intelligence is driving a large expansion in data center capacity, power infrastructure, and specialized computing equipment. We estimate that a 1 GW AI campus costs about $41 billion. A 188 GW U.S. buildout completed by 2032 would require total investment of nearly$9 trillion and amount to annual investment of 3.2 percent of GDP over 2025–2032. As hyperscaler capital expenditures outgrow internal cash flow, financing is shifting toward leases, joint ventures, project debt, private credit, securitization, and special-purpose vehicles. These structures expand funding capacity but also raise asset-level leverage, obscure contingent obligations, and expose investors to tenant concentration, technological obsolescence, execution delays, and uncertain residual values. |
| JEL: | E01 E22 G1 G31 R33 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35865 |
| By: | - |
| Abstract: | In 2025, Latin America and the Caribbean accounted for 19.5% and 22.2% of United States total trade and goods trade, respectively, down from 2024, reflecting stronger global trade rather than weaker regional trade, with a limited regional contribution to the surge in non-monetary gold trade. Latin America and the Caribbean, driven by Mexico, remained a net exporter of goods to the United States, whose goods trade deficit with the region widened to US$ 156 billion given imports up 4.7% to US$ 705 billion and exports up 2.5% to US$ 549 billion. In 2025, the region accounted for 12.5% of total services trade for the United States, which remained a net exporter of services to the region with exports of US$ 156 billion and imports of US$ 112 billion that resulted in a services surplus of US$ 43 billion. This report, prepared annually by the Economic Commission for Latin America and the Caribbean office in Washington D.C., reviews major trends in trade relations between the United States and Latin America and the Caribbean. |
| Date: | 2026–09–29 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col896:90370 |
| By: | Gert Bijnens; Anders Humlum; Stijn Vanormelingen |
| Abstract: | New machinery has long been argued to raise the relative demand for skilled labor, yet firm-level evidence finds no such shift at investing firms. We resolve this puzzle by looking beyond firm boundaries. Linking Belgian data on capital investments, buyer–supplier transactions, and worker skills, we show that the skill bias of new machinery arises entirely at external suppliers. Following machinery investment spikes, purchases from suppliers raise firms’ total demand for high-STEM workers by 45%, three times the rise for other skill groups, while in-house hiring raises it by less than 5%, evenly across skill groups. This external demand comes first from machine integrators and later from complementary services such as software, and is stronger for smaller firms, lumpier investments, and rapidly advancing capital, consistent with fixed and adjustment costs of hiring high-STEM workers in-house. In a general-equilibrium model estimated on our event studies, the rise in machinery per worker from 2003 to 2021 raises relative demand for high-STEM workers by 8.8 log points and their wage premium by 3.1. Measured on payrolls alone, both would fall. |
| JEL: | E22 J23 J24 J31 L24 O33 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35857 |
| By: | Geir B. Asheim; Wolfgang Buchholz |
| Abstract: | How should the interests of different generations be balanced when considering both the issue of taming the extreme demands by strong longtermism on the present as well as ensuring a sustainable development that protects the well-being of generations in the far future? We adopt a pluralistic ethical approach which determines sets of intergenerational distributions that are robustly deemed morally unacceptable by considering only comparisons where there is unanimity among all elements in an entire class of commonly accepted distributional norms. In the setting of a simple technological environment we demonstrate that any morally unacceptable stream is dominated in terms of the moral criterion by some morally permissible stream. Furthermore, we show that increased productivity and an extended time horizon make it morally permissible for the present generation to incur greater sacrifices for future—in line with longtermism—while not obliging it to renounce an equal share of well-being. |
| Keywords: | longtermism, sustainable development, intertemporal social choice |
| JEL: | D63 Q01 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13038 |