Financial Crises and Climate Change

We empirically assess by means of the local projection method, the impact of financial crises on climate change vulnerability and resilience. Using a new dataset covering 178 countries over the period 1995–2017, we observe that resilience to climate change shocks has been increasing and that advanced economies are the least vulnerable. Our econometric results suggest that financial crises (particularly systematic banking ones) tend to lead to a short-run deterioration in a country´s resilience to climate change. This effect is more pronounced in developing economies. In downturns, if an economy is hit by a financial crisis, climate change vulnerability increases. Results are robust to several sensitivity checks.info:eu-repo/semantics/publishedVersio

Wagner and the fading voracity effect : short vs. long-run effects in developing countries

This paper empirically revisits the validity of Wagner’s proposition in a panel of 149 developing countries between 1980-2015 by focusing on different components of government expenditure. We rely on an ARDL approach which allow us to uncover short and long-run cyclicality coefficients. Our results do not overwhelmingly support the existence of higher than unity long-run elasticities of government spending components vis-a-vis economic growth, suggesting that the Wagner’s regularity is more the exception than the norm. Moreover, the case for voracity is fading away as developing countries catch-up the development ladder and graduate from procyclicality. In fact, most short-run elasticities are countercyclical. Finally, some macroeconomic and institutional and political characteristics affect the degree of government spending cyclicality.info:eu-repo/semantics/publishedVersio

Monetary aggregates and macroeconomic performance : the Portuguese Escudo, 1911-1999

This paper takes a long time span approach to provide a full characterization of several monetary aggregates over Portuguese’s historical economic business cycles. By focusing on the 1911-1999 period (the life span of the currency Escudo), the paper also revisits the issue of the role of money on real macroeconomic outcomes. We get inspiration from the monetarists versus Keynesians debate about direction of causality in the output-money relation and the quest for validity of money (non-)neutrality. By means of descriptive statistics we first uncover that money changes were associated with changes in real economic activity. Most monetary aggregates are more volatile than GDP, display high serial autocorrelation, are generally countercyclical and lead the economic cycle (except checking accounts). Then, through formal time series techniques, our results show that our monetary series were characterized by unit roots and were cointegrated with real GDP (after accounting for endogenously estimated breaks). Evidence suggested that money supply Granger-caused real GDP supporting the money non-neutrality hypothesis in the case of Portugal.info:eu-repo/semantics/publishedVersio

Polluting emissions and GDP : decoupling evidence from brazilian states

We provide a comprehensive analysis of the relationship between greenhouse gas (GHG) emissions and GDP in Brazil using both aggregate and state-level data. The trend or Kuznets elasticity is about 0.8 for Brazil, higher than that in advanced countries but below that of major emerging markets. The elasticity is somewhat higher for consumption-based emissions than for production-based emissions, providing evidence against the “pollution haven” hypothesis. Additional evidence comes from state-level data analysis where one can observe a great deal of heterogeneity but also some hope as far as decoupling is concerned. In addition to the trend relationship between emissions and output, we find that there does not seem to exist a cyclical relationship holding in Brazil at the aggregate level (despite having become more procyclical over time), but it does exist in a few states.info:eu-repo/semantics/publishedVersio

Endogenous Growth Models: Jones Vs Romer the Path to a Fully-Fledged Dynamic Analysis

The last two decades were marked by a high increase in economic growth research, namely related to three important issues as stated in Klenow et al. [1997]: world growth, country growth and dispersion in income levels. The Charles Jones’ [2002] technique to solve endogenous growth models relies on the two-step approach, which is in fact a clever way to study the dynamic behaviour of the usual two production factors of this type of models, technology and capital. However, he does that sequentially, therefore reducing the general scope of the model, as it is a special case of a broader version developed by David Romer [2001]. Romer’s general case analyse the dynamic behaviour more closely and, more importantly, allowing for a simultaneous analysis of the dynamics of the endogenous factors, which provide additional insights. The aim of this paper is to tackle the differences between the two endogenous models as an exercise to see expost exogenous shocks’ implications to the variables of interest. More specifically, in addition to the strictly theoretical analysis of some dynamic properties of the model, by programming difference equations in discrete time, one is also able to simulate and examine how the model will respond to shocks that one administer to it, on an ad-hoc basis – deterministic simulation.

EU Competition Policy: Some Real Case Applications

European Union Antitrust Laws have been successfully applied to anti-competitive behaviour, which can take place abroad, but have an effect within the EU. Under Antitrust Laws, not only abuse of dominant position practices but also mergers that restrain competition are regarded as illegal and subject to severe remedies. This paper accesses both Microsoft-WMP and Volvo-Scania cases in the light of the EU Competition Policy and identifies the circumstances involved, final decisions made as well as the suggested remedies and the consequences from the consumers’ perspective. The issues considered are per se controversial and these are clear examples of the long path to go through, in order to make the competition law regime uniformly applicable in all member states. The lack of international consensus on competition law and enforcement requires huge efforts in co-operation between countries and organisations, because in combination with economic liberalisation, nations have come to recognise competition as a powerful instrument for stimulating innovation and economic growth. This paper focus on the past, i.e., already assessed anticompetitive cases; the present - the current EU Competition Policy rules - and finally on the future of Antitrust jurisdiction, in which part I will briefly describe the major actual concerns in the long course towards a common and homogeneously valid system of International Competition Policy.

Empirical Applications of Neoclassical Growth Models the "Fit" of the Solow Augmented Growth Model

The theories of country growth models are supported by the high scale variation observed in these countries’ growth rates. This is the reason behind those typical questions, like “Why did some East Asian countries grow so much?”, amongst others. Therefore, a lot of recent research has been focused in trying to explain why some countries are richer than others, using, for example, the human capital-augmented Solow Swan model of dispersion in income levels. The article by Mankiw, Romer and Weil [1992] contains a thorough empirical analysis of this type of Solow model augmented with human capital, based on version Penn World Table (ab hinc PWT) 4.0 of the famous Summers and Heston dataset. In this paper I apply a similar analysis to the augmented Solow model as presented in Jones [2002], Chapter 3. Like the augmented Solow model of Mankiw, Jones’ model has the basic Solow model as a special case. Using a more recent version PWT 5.6 of the Summers and Heston dataset, updated until 1997 and with the variable referring to the fraction of time individuals spend on learning new skills added, this paper aims to perform a new and revisited level and convergence analysis of both the (un)restricted basic and augmented Solow-Swan Model.

On the performance of US fiscal forecasts : government vs. private information

This paper contributes to shed light on the quality and performance of US fiscal forecasts. The first part inspects the causes of official (CBO) fiscal forecasts revisions between 1984 and 2016 that are due to technical, economic or policy reasons. Both individual and cumulative means of forecast errors are relatively close to zero, particularly in the case of expenditures. CBO averages indicate net average downward revenue and expenditure revisions and net average upward deficit revisions. Focusing on the causes of the technical component, we uncover that its revisions are quite unpredictable which casts doubts on inferences about fiscal policy sustainability that rely on point estimates. Comparing official with private-sector (Consensus) forecasts, despite the informational advantages CBO might have, one cannot unequivocally say that one or the other is more accurate. Evidence also seems to suggest that CBO forecasts are consistently heavily biased towards optimism while this is less the case for Consensus forecasts. Not only is the extent of information rigidity is more prevalent in CBO forecasts, but evidence also seems to indicate that Consensus forecasts dominate CBO’s in terms of information content.info:eu-repo/semantics/publishedVersio

This changes everything : climate Shocks and sovereign bonds

Climate change is already a systemic risk to the global economy. While there is a large body of literature documenting economic consequences, there is scarce research on the link between climate change and sovereign risk. This paper investigates the impact of climate change vulnerability and resilience on sovereign bond yields and spreads in 98 countries over the period 1995–2017. We find that the vulnerability and resilience to climate change have a significant impact on the cost government borrowing, after controlling for conventional determinants of sovereign risk. That is, countries that are more resilient to climate change have lower bond yields and spreads relative to countries with greater vulnerability to climate change. Furthermore, partitioning the sample into country groups reveals that the magnitude and statistical significance of these effects are much greater in developing countries with weaker capacity to adapt to and mitigate the consequences of climate change.info:eu-repo/semantics/publishedVersio

Crises and emissions : new empirical evidence from a large sample

In this paper, we empirically assess by means of the local projection method, the impact of different types of financial crises on a variety of pollutant emissions categories for a sample of 86 countries between 1980-2012. We find that financial crises in general lead to a fall in CO2 and methane emissions. When hit by a debt crisis, a country experiences a rise in emissions stemming from either energy related activities or industrial processes. During periods of slack, financial crises in general had a positive impact on both methane and nitrous oxide emissions. If a financial crisis hit an economy when it was engaging in contractionary fiscal policies, this led to a negative response of CO2 and production-based emissions.info:eu-repo/semantics/publishedVersio