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Implementing green fiscal and tax policies for reducing emissions and pollution without negatively impacting economic growth remains a challenge. We aimed to determine whether environmental protection and economic growth can both be attained under a green fiscal and tax policy. Specifically, we created a dynamic stochastic general equilibrium (DSGE) model to explore the environmental, economic, and welfare impacts of green fiscal and tax policies. Additionally, a welfare analysis based on an environmental DSGE (E-DSGE) model was performed. We found that (1) raising the environmental or energy tax rate was beneficial for reducing emissions and environmental pollution. However, this approach inhibited economic growth, an outcome not conducive to improving welfare. (2) Increasing the subsidy rate for emission reduction not only incentivized businesses to reduce emissions but also improved economic growth and welfare. (3) The emission reduction mechanisms of environmental tax policies, energy tax policies, and subsidy policies are different. Among them, the environmental tax policy and the energy tax policy both reduce pollution by forcing businesses to increase their emission reduction efforts, but the former is a tax on pollution emissions, while the latter is a tax on energy consumption. However, emission reduction subsidy policies incentivize companies to increase their emission reduction efforts and reduce pollution emissions by alleviating their financial burden. (4) Increasing government spending on environmental remediation could promote economic growth. However, considering that this does not motivate companies to reduce emissions, increasing their share will lead to a reduction in emission reduction subsidies, ultimately negatively impacting social welfare. (5) An environmental tax would cause greater losses in welfare than an energy tax. These findings will enable policymakers to optimize expenditures and tax systems. [ABSTRACT FROM AUTHOR]

PurposeThis study investigates the influence of economic conditions, healthcare system capacity, and health-related variables on the proportion of the older adult population (Population ages 65 and above) in European Union countries. It aims to identify how factors such as GDP, unemployment, inflation, healthcare expenditure, hospital bed availability, and the prevalence of chronic diseases impact the aging demographic.MethodsThis study explores the dynamic interactions and temporal relationships between economic stability, healthcare capacity, chronic disease prevalence, and demographic aging patterns. The research employs a mixed-method approach, utilizing System GMM and wavelet coherence analysis on panel data from 27 EU countries between 2000 and 2021.ResultsThe findings reveal significant positive associations between economic prosperity and healthcare resources with the size of the older adult population. Increased GDP, efficient healthcare spending, and hospital bed availability are positively correlated with a larger older adult demographic. In contrast, high unemployment and inflation are linked to negative outcomes for the older adult population, reducing available resources and access to healthcare. Wavelet coherence analysis further uncovers how fluctuations in the prevalence of chronic diseases influence aging trends across different periods and frequencies.ConclusionThe study highlights the importance of integrated economic and healthcare policies to support the growing older adult population. Ensuring economic stability, enhancing healthcare infrastructure, and effectively managing chronic diseases are essential for improving quality of life and promoting sustainable aging in EU societies.

Abstract This study examines the potential economic and labour market impacts of a hypothetical but plausible migration scenario of 250,000 new migrants inspired by Austria’s experience in 2015. Using the agent-based macroeconomic model developed by Poledna et al. (Eur Econ Rev, 151:104306, 2023. 10.1016/j.euroecorev.2022.104306, the study explores the detailed labour market outcomes for different groups in Austria’s population and the macroeconomic effects of the migration scenario. The analysis suggests that Austria’s economy and labour market have the potential to be resilient to the simulated migration influx. The results indicate a positive impact on GDP due to increased aggregate consumption and investment. The labour market experiences an increase in the unemployment rates of natives and previous migrants. In some industries, the increase in the unemployment rates is more significant, potentially indicating competition among different groups of migrants. This research provides insights for policymakers and stakeholders in Austria and other countries that may face the challenge of managing large-scale migration in the near future.

This study examines the potential economic and labour market impacts of a hypothetical but plausible migration scenario of 250,000 new migrants inspired by Austria's experience in 2015. Using the agent-based macroeconomic model developed by Poledna et al. (Eur Econ Rev, 151:104306, 2023. 10.1016/j.euroecorev.2022.104306, the study explores the detailed labour market outcomes for different groups in Austria's population and the macroeconomic effects of the migration scenario. The analysis suggests that Austria's economy and labour market have the potential to be resilient to the simulated migration influx. The results indicate a positive impact on GDP due to increased aggregate consumption and investment. The labour market experiences an increase in the unemployment rates of natives and previous migrants. In some industries, the increase in the unemployment rates is more significant, potentially indicating competition among different groups of migrants. This research provides insights for policymakers and stakeholders in Austria and other countries that may face the challenge of managing large-scale migration in the near future. [ABSTRACT FROM AUTHOR]

Purpose – Basic income (BI) is predicted to be the major economic intervention in response to raising income inequality and accelerating technological progress. Financing is often the first question that arises when discussing a BI. A thorough answer to this question will determine the sustainability of any BI program. However, BI experiments implemented worldwide have not answered this question. This paper explores two options for a BI program in Australia: (1) BI and (2) top-up basic income (TBI). Design/methodology/approach – The authors employ “back-of-the-envelope” calculations with the latest publicly available data on income distribution, the poverty line and the share of income tax in the government revenue to estimate the costs of implementing BI in Australia. Findings – Even without any change in the current tax regulations, the TBI option, which requires a contribution of 2–3% disposable income from net contributors, will guarantee that no Australian family lives under the current national poverty line. The BI for all options is not financially feasible under the current tax and transfer regulations because it requires an additional tax rate of at least 42% of disposable income from net contributors. Practical implications – The results of this study can serve as inputs for the design and implementation of BI options in Australia and similar countries. Originality/value – This is the first paper that examines the macroeconomic effects of BI options in Australia.

Globalization has brought larger spillovers of global risks across borders since the 2000s. Specifically, global policy risk has sharply increased due to policy uncertainty in major countries in the recent decade as are shown in the Brexit, the US‐China trade friction and the COVID‐19 pandemic. This paper empirically investigates effects of both global policy risk and global financial risk on macroeconomy and financial markets in eight major countries from January 1997 to June 2020. We employed a structural vector autoregressive framework to obtain interesting empirical results. First, global risks have recessionary effects on the macroeconomy, reducing production, deteriorating employment, lowering long‐term interest rates, depressing prices and reducing global trade. Second, global risks also have recessionary effects on financial markets, plunging stock prices, appreciating the safe‐haven currencies and depreciating the other currencies. Third, the macroeconomies and the financial markets respond to the global financial risk more significantly than the global policy risk. Fourth, the recessionary effects of global risks vary depending on countries. [ABSTRACT FROM AUTHOR]

The article explores the potential of blockchain technology for international settlements, specifically focusing on the Russian economy. It discusses the macroeconomic effects of transitioning cross-border payments to blockchain platforms and estimates that this could lead to a 4.0% annual increase in GDP, equivalent to 6.05 trillion rubles ($75.6 billion US dollars). The study emphasizes the potential use of blockchain in mitigating risks associated with sanctions and its contribution to FinTech development. The article also discusses the impact of blockchain on international settlements, new ecosystems, and the need for methodological support in evaluating its macroeconomic effects. It concludes by presenting estimates and calculations related to the use of blockchain technology in the Russian economy, highlighting the potential increase in financial results and turnover of economic entities. The article acknowledges that these estimates are hypothetical and further research is needed to fully understand the actual impact of transitioning to blockchain technology. It also explores the efficiency indicators and key performance indicators of blockchain in financial payment platforms, as well as the potential cost savings associated with its use in global trade. Overall, the article highlights the potential benefits of blockchain in international settlements and its impact on the Russian economy. [Extracted from the article]

This paper analyses the impact of cyclical external shocks on the macroeconomic performance of Eurozone and EU member countries. The latter is achieved through a comparative study of two EU countries, Slovenia and Croatia, of which only the former is a Eurozone member state. Cross-country differences are observed over the 2000-2018 period, thus covering all stages of the economic cycle. The primary hypothesis is that the Eurozone economic integration provides its members with comparably greater macroeconomic stability and balanced growth rates. The research elaborates on the possibilities and effects of more autonomous macroeconomic adjustments tailored to the specific needs of non-Eurozone EU countries. Methodologically, the study exhibits an intricate nexus among theoretical, empirical, and institutional economics and shows that the impact of the country's international interconnectedness, stemming from the economic and geographical links, bears greater importance than Eurozone membership. Concurrently, this analysis confirms that whether the Eurozone's benefits outweigh the shortcoming of monetary sovereignty abnegation depends predominantly on the capabilities of individual countries and Eurozone's institutions to design and execute an effective monetary-fiscal policy mix. [ABSTRACT FROM AUTHOR]

To examine COVID-19 mortality demographics to determine if there will be any substantive shifts in population forecasts that will impact health and long-term care planning for seniors in both countries. Demographic data from Statistics Canada and the U.S. Census Bureau to 2060 are adjusted for COVID-19 age-group-specific mortality and then projected forward in five-year increments. These projections are then annualized using a linear imputation between each projected value. Consideration is given to the seniors 65 + , 75 + and 85 + as well as dependency ratios of each age category. Forecasts suggest that the proportion of seniors in the population will roughly plateau in 2035 at approximately 21% (U.S.) and 24% (Canada)–with another uptick observed beginning in 2050 for those aged 75 +. Adjustments due to the pandemic have had little impact on these projections suggesting that–unless there is a major shift in the demographics of pandemic-related mortality–the resource planning implications will be largely inconsequential. Investments in resources to serve seniors need not be done with the intention to repurpose these assets before they are fully depleted. While the demonstrated demographic plateau is likely to hold steady, there is uncertainty around the expected rate of decline in the health of seniors. Depending on this trajectory, community-level social supports could play a large role in lengthening the duration of senior health and independence. [ABSTRACT FROM AUTHOR]

Climate change has made the decarbonization of the different domestic economies a widely accepted and urgent priority. Yet, this is a very challenging task in a largely uncharted territory. In this context, in this paper, we address the issue of energy taxation reform with an environmental focus in Portugal. We do so using a multi-sector and multi-household dynamic computable general equilibrium model of the Portuguese economy. We analyze the environmental, macroeconomic, and distributional effects of different policies replacing current energy taxation with carbon taxation and, then, extend the carbon taxation to the levels necessary to achieve the IPCC 2018 emissions reduction targets. Our analysis indicates a clear path in the quest for decarbonization. First, replace energy taxes with a carbon tax; second, adopt the levels of carbon taxation necessary to achieve the emissions goals; third, use extra tax revenues from the carbon tax to reverse any potential adverse macroeconomic and distributional effects of carbon taxation. In the process, this would be a way around the pervasive problem of perverse fossil fuel subsidies, which would effectively disappear and, as such, would improve the efficiency of the tax system. [ABSTRACT FROM AUTHOR]

We examine the macroeconomic effects of the introduction of a scheme to pay a basic income of approximately $900 per year to each citizen through a land-holding tax. Unlike other studies, we address the issue of whether a sharp increase in the land-holding tax rate intended to raise funds for a basic income scheme causes landowners to sell their land. We also use the relationship between holding assets and reservation wages to determine whether household members supply their labor in accordance with the payment of basic income. Our simulation results obtained using data for Korea show that the introduction of the basic income scheme decreases real gross domestic product, total labor demand, and social welfare by 1.3%, 0.3%, and 0.4%, respectively. [ABSTRACT FROM AUTHOR]

In the last two decades, there have been exponential increases in Chinese loans and grants, particularly flowing to the Global South. The subsequent growth effects in the South have led to speculation about China's development models that govern its official finance and the overall macroeconomic effects. Consequently, a considerable body of research has investigated how different Chinese development policies affect the allocation patterns and outcomes in the Global South. This paper critically reviews related scholarly works, emphasising empirical literature. It identifies that the One China Policy is unanimously the most important strategy in explaining Chinese funding, although this policy tool may not be linked to trade with China and its humanitarian assistance. Chinese finance undermines efforts to promote good governance and contributes to political extortion and environmental degradation in recipient countries by not imposing governance reform conditionality on official financing. However, this argument must be carefully weighed against the positive impact of Chinese finance on health and economic growth, among other benefits. Despite intense research efforts, further research is still needed to understand vulnerabilities associated with China's development models. The information conveyed by the review will be of interest to foreign aid spectators seeking to learn from China's experience. [ABSTRACT FROM AUTHOR]

The paper contributes to the debate on natural interest rates and potential growth rates. We build a model-based projection of the world's most significant economies/areas to improve understanding of their change over the long run and the factors behind their decline. We use a general equilibrium overlapping generation model to understand the simultaneous role of demographics, technology, and globalization. The novelty of the model lies in the way it constructs a human capital index based on UN population projections and an estimated increasing returns production function for major economies worldwide. We find that the decline in interest rates is well explained through labor market dynamics and the increasing obsolescence of capital goods. We also find that a reduced share of labor income has caused movement in the opposite direction, leading to an increase in natural interest rates, which runs counter to the empirical evidence. Moreover, the dynamics of economic integration predict an endogenous adjustment of global imbalances over the long run, with an increasing weight of the Chinese economy and, consequently, a phase of weakness in United States growth between 2030 and 2040. The model is also used to perform shock scenario analysis. We find that demographic decline can adversely affect the growth dynamics for European countries, while a change in the dynamics of globalization can have serious consequences, especially for the United States, with significant benefits for European countries and China. [ABSTRACT FROM AUTHOR]

Increases in energy efficiency are reduced by the rebound effect. Efficiency gains on the micro level do not lead to proportionate reductions of energy consumption on the macro level. The German energy-economy model PANTA RHEI is applied to better understand the rebound effect. To get more robust estimates micro data from a cost structure survey of the German manufacturing sector was used to derive price elasticities of energy demand. The mesoeconomic rebound effect of an autonomous increase in energy efficiency at the industry level in manufacturing is between 7% in 2021 and 12% in 2030. The macroeconomic rebound effect lies between 12% in 2021 and 18% in 2030. Inclusion of necessary investment and assumptions of higher elasticities of substitution increase the effects. Rebound effects limit the scope of technology-driven efficiency improvements and must be considered in the design of ambitious energy efficiency programs and climate policies. [ABSTRACT FROM AUTHOR]

Global concerns over increasing carbon emissions, climate change, decreasing environmental quality, limited and uneven endowments of fossil fuels, rising energy demand, and volatile oil prices have inspired the move toward global energy system decarbonization. The challenges of achieving ambitious climate targets and sustainable development cannot be solved without the significant efforts of the Global South. Regarding net-zero emissions, the main issue for developing countries is avoiding future emissions from industrialization and lock-in into fossil fuel-intensive technologies. However, achieving strategic and ambitious climate targets in the Global South will require understanding the economic implications of decarbonization. This study’s objective and key contribution are to systematically review and provide a detailed assessment of the literature on decarbonization in the Global South to understand the multi-level economic implications of achieving net-zero emissions in the Global South. The assessment considers four broad themes–investment costs, employment impacts, economic growth, and other macroeconomic impacts (such as consumption, debt level, net savings, income and welfare, and trade balance, among others). Overall, the review finds that energy system decarbonization requires substantial investment outlay. Also, it is linked with job displacement in fossil energy sectors and job creation in green sectors. However, there is no unanimous evidence on net job creation in developing countries. Additionally, the GDP impacts are ambiguous; some studies find future GDP growth impacts, while others find GDP decline impacts of decarbonization scenarios. This paper also provides directions for future research.

The significance of retirement savings and private pension funds increased in the latest decades and gathered important amounts of capitals. The purpose of this paper is to investigate the macroeconomic effects of pension systems from an investment perspective in five Central and Eastern European countries. The analyzing process regarding several underlying macroeconomic effects of pension systems started from the premises that there is a strong connection between the structure of pension systems, the national economy and the development of the financial sector. The econometric tests were processed and applied by using pool data regression models and the method Pooled Instrumental Variables (IV) - Two-stage Least Squares (2SLS). The main conclusion highlights that the interest rate at deposits is correlated with the amount of incomes earned by population, inflation rate, severe material deprivation rate and the investment strategy of private pension funds.

Korea's economy has suffered greatly as a result of the COVID-19 pandemic. Based on such a background, this paper investigates the macroeconomic effects of the COVID-19 pandemic. Via impulse response function analysis, the results reveal that the COVID-19 pandemic has a considerable short-term influence on Korea's key macroeconomic variables, while its long-term effects are not significant. As a consequence of the COVID-19 pandemic, total demand in Korea has decreased. It is mostly reflected in the lower consumption and investment demand. Simultaneously, this has put increased pressure on inflation and unemployment. Moreover, the results also show that government investment expenditure and monetary policy may, to some degree, ameliorate the status of consumption demand. Meanwhile, they may alleviate employment pressures in order to boost output. In reality, both have some negative consequences. Based on the evidence presented in this article, the Korean government may implement appropriate policies to ensure the smooth functioning of the Korean macroeconomy. [ABSTRACT FROM AUTHOR]

Artificial intelligence (AI) has the potential to increase economic growth substantially across the world. This paper explores the predicted potentials of AI from macroeconomic perspectives, employing theoretical analysis and contextualizing Bangladesh. The study employs time series data to examine the effects of AI on the labor market and productivity. The findings indicate that Bangladesh was yet to realize the expected economic merits though the integrated number of AI-induced industry robots has been insignificant. For AI to be effective in Bangladesh, the country shall adopt more AI robots across the various sectors, mainly manufacturing and service. Besides, the country may complement the human labor force with AI labor instead of relying on only one as a source of labor.

The article describes the analytical potential of EAEU intercountry input–output table (EAEU IIOT) and its model as well as the approaches to its enhancement. It also presents EAEU IIOT scheme, composition of its indicators, and IIOT model. An approach is proposed to eliminating the distorting effect of re-export on the coefficients of direct costs in the IIOT model, and the proportions of the EAEU economy for 2016 are estimated using this approach, as well as several effects multiplied by the trade ties of the EAEU countries. The limitations of the IIOT model are described and methods for improving the accounting of influencing factors in the model when assessing macroeconomic effects are substantiated. [ABSTRACT FROM AUTHOR]

We propose and estimate several models controlling for firm‐specific information, to examine the relation of macroeconomic variables with the probability of default of firms in the Eurozone. The novelty of our approach consists in capturing the informational value of macroeconomic factors on credit default prediction by using data from firms spanning 11 European countries; our panel data set covers 534 thousand firm‐year observations. The results we obtain confirm that macroeconomic information strengthens the accuracy of models forecasting credit default of non‐financial firms. With a negative effect on the probability of default, GDP growth stands out among the key macroeconomic predictors of default. Yet, we find compelling evidence that asymmetries exist within the Eurozone regarding the benign effects of GDP growth over credit risk; the reduction of the probability of default due to economic growth mostly occurs in economies more exposed to conditions of financial stress. [ABSTRACT FROM AUTHOR]

This paper estimates the macroeconomic effects of market-oriented reforms in Latin America and the Caribbean using the IMF Structural Reform database. We find that large changes in the reform index have positive effects on GDP that exceed 2 percent after five years. Furthermore, reforms boost employment, investment, exports, and imports and reduce export concentration, in addition to favoring tradable sectors. The evidence on the effects of reforms on business confidence is mixed, and the effects on total factor productivity are positive, but less precisely estimated. Nonetheless, our results also indicate that the effects of reforms have not been uniform across different segments of the population. Our results are robust to the use of an instrumental variables approach that exploits regional waves of reform to deal with endogeneity concerns. These findings bring to the forefront the need to consider accompanying policies to ensure that reforms promote inclusive growth. [ABSTRACT FROM AUTHOR]

Increase of the Earth’s average surface temperature observed in the last century has affected almost all countries of the world. No state has managed to escape the effects of global warming, and scientists predict that no country will escape a further increase in temperature. However, the highest temperature increases are expected in countries with relatively colder climates. The contribution of low-income developing countries, typically located in some of the hottest geographic areas of the planet, to atmospheric greenhouse gas concentrations is negligible, both in absolute and per capita terms. This article provides a meta-analysis of quantitative estimates of the damage caused by global climate change occurring on the planet since the last century. A rise in temperature has been shown to decrease per capita production in countries with relatively high average annual temperatures, which include most low-income countries. In these countries, the negative effect has long-term nature and operates through several channels, including decrease in agricultural production and labor productivity in sectors more exposed to weather; reduction in capital accumulation and deterioration of human health. Moreover, as evidence shows, in recent years macroeconomic indicators have not become less sensitive to temperature shocks, which points at significant limitations on countries’ adaptation to climate change. Meta-analysis of climate change damage estimates documented in relevant literature will, first, provide an idea of the scale of such estimates and help to assess the current state of knowledge in this area. In addition, a meta-analysis will demonstrate sensitivity of the results of calculations regarding assessment approach, measurement errors or insufficient data, choice of sample, etc. Finally, systematization of climate damage quantitative estimates is highly likely to be of practical importance for authorities and international organizations responsible for developing measures to deal with climate change and mitigate its effects, especially for developing and poor countries, most affected by the negative effects of global warming.

This paper explores the effects of trade credit by assessing its macroeconomic impacts on several dimensions. To that end, we develop an agent-based model (ABM) with two types of firms: downstream firms, which produce a final good for consumption purposes using intermediate goods, and upstream firms, which produce and supply those intermediate goods to the downstream firms. Upstream firms can act as trade credit suppliers, by allowing delayed payment of a share of their sales to downstream firms. Our results suggest a potential trade-off between financial robustness as measured by the proportion of non-performing loans and the average output level. The intuitive reason is that greater availability of trade credit, which however does not necessarily imply proportionately greater actual use of it by downstream firms, allows more financial resources to remain in the real sector, favoring the latter's financial robustness. Yet, given that trade credit is proportionally more beneficial to smaller downstream firms, it enhances market competition. This results in a decrease in markups and thereby in profits and dividends, which contributes negatively to aggregate demand formation.

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This article examines the economic, distributional and environmental impacts of the regulated early closure of coal-fired power plants in Portugal using a multi-sector and multi-household dynamic computable general equilibrium model. The closure of the power plants has positive and significant environmental effects. It results, however, in an increase in electricity prices, which, in turn, leads to detrimental macroeconomic and distributional effects. We argue that a carbon tax with the same environmental impact would have substantial conceptual, pragmatic and pedagogical advantages over regulated early plant closures. It would generate the tax revenues necessary to mitigate or reverse the adverse macroeconomic and distributional effects. Regulated early closures could be a good second best alternative if there is no political will for or consensus on the implementation of a proper carbon tax with adequate revenue recycling. In any case, these plant closures are far from leading to the reductions in emissions established by the IPCC and adopted by the Portuguese authorities. [ABSTRACT FROM AUTHOR]

Renewable energy production subsidies alleviate the pressure on electricity prices associated with carbon and energy pricing policies in the process of decarbonization and electrification of the Portuguese economy. Our simulation results show that a feed in tariff financed by a carbon tax leads to adverse macroeconomic as well as adverse and regressive distributional welfare effects. On the flip side, however, we show that use of the carbon tax revenues to finance a feed in tariff is an improvement over the simple carbon tax case along all the relevant policy dimensions. The feed in tariff mechanism when added to the carbon tax leads to better environmental outcomes at lower costs both in terms of the economic and social justice implications. The policy implications are clear. First, because of its adverse economic and distributional effects, a carbon tax should not be used in isolation. The use of the revenues to finance a feed in tariff dominates the simple carbon tax case in all dimensions. Second, the search for an appropriate recycling mechanisms beyond a feed in tariff is an issue as important as the carbon tax itself as it pertains to the potential reversal of the adverse effects of such a tax.

The significance of retirement savings and private pension funds increased in the latest decades and gathered important amounts of capitals. The purpose of this paper is to investigate the macroeconomic effects of pension systems from an investment perspective in five Central and Eastern European countries. The analyzing process regarding several underlying macroeconomic effects of pension systems started from the premises that there is a strong connection between the structure of pension systems, the national economy and the development of the financial sector. The econometric tests were processed and applied by using pool data regression models and the method Pooled Instrumental Variables (IV) - Two-stage Least Squares (2SLS). The main conclusion highlights that the interest rate at deposits is correlated with the amount of incomes earned by population, inflation rate, severe material deprivation rate and the investment strategy of private pension funds. [ABSTRACT FROM AUTHOR]

This paper explores how climate change and the transition to a low-carbon economy pose new systemic financial risks (so-called Green Swans), and the role of central banks in addressing them within their financial stability mandate. It does so by developing a three-layered analytical framework that central banks could use to shape their climate-related monetary and financial policies. First, central banks have already started to revisit their backward-looking risk models for the purpose of integrating forward-looking climate-related risks. Second, given the limitations of existing climate-economy models in a context of radical uncertainty, we argue that future climate scenario analysis should rely on systems-based approaches such as non-equilibrium models and more qualitative tools such as those provided by a socio-technical perspective. However, even these new approaches will not suffice from the perspective of financial stability: climate-related risks will remain largely unhedgeable as long as a system-wide and structural transformation is not undertaken, including an unprecedented level of cooperation between central banks, fiscal authorities, the private and public sectors at large, civil society, and the international community. Third, and as a result of the first two points, embracing climate-related uncertainty means that central banks play a new role: helping to coordinate the policies needed to fight climate change, so as to fulfil their own mandate of financial stability. To this end, we make a few specific policy proposals. Key policy insights Central banks' traditional risk models do not enable them to identify climate-related systemic risks (Green Swans). Adopting new forward-looking and non-equilibrium modelling approaches is necessary to better appreciate the nature of climate-related risks, but it is not sufficient. To continue fulfilling their mandate of financial stability over longer time horizons than those traditionally considered, central banks must also get involved in policy coordination to mitigate climate change. This includes exploring which policy mixes (fiscal-monetary-prudential) can better address the climate imperatives ahead; considering climate stability as a global public good to be supported through reforms of the international monetary and financial system; and systematizing the integration of long-term sustainability criteria in both private and public sectors. [ABSTRACT FROM AUTHOR]

This paper estimates the macroeconomic effects of market-oriented reforms in Latin America and the Caribbean using the IMF Structural Reform database. We find that large changes in the reform index have positive effects on GDP that exceed 2 percent after five years. Furthermore, reforms boost employment, investment, exports, and imports and reduce export concentration, in addition to favoring tradable sectors. The evidence on the effects of reforms on business confidence is mixed, and the effects on total factor productivity are positive, but less precisely estimated. Nonetheless, our results also indicate that the effects of reforms have not been uniform across different segments of the population. Our results are robust to the use of an instrumental variables approach that exploits regional waves of reform to deal with endogeneity concerns. These findings bring to the forefront the need to consider accompanying policies to ensure that reforms promote inclusive growth. [ABSTRACT FROM AUTHOR]

The present study investigates the relationship between working capital management and SME profitability. It also analyzes the impact of macroeconomic impulses on firm profitability through efficient management of working capital in the case of Indian small and medium scale enterprises over the time period spanning from 2010 to 2017 using Feasible Generalized Least Square (FGLS) regression models. The study concludes the negative relationship of account receivables together with a positive relationship of inventories and account payables with SME profitability. It implies the firm managers can maximize SME's profitability by converting the credit sales to cash as early as possible, by increasing the days of accounts payable and following a conservative inventory management strategy. Changes in economic growth and commercial bank advances to small scale industries are the key macroeconomic determinants that are impacting SME profitability. The results from this paper may guide the firm managers to shape their working capital management strategies to maximize profitability. Policymakers may find the study interesting to identify the macroeconomic parameters that significantly influence Indian SMEs. [ABSTRACT FROM AUTHOR]

This paper investigates the time-varying volatility patterns of some major commodities as well as the potential factors that drive their long-term volatility component. For this purpose, we make use of a recently proposed generalized autoregressive conditional heteroskedasticity-mixed data sampling approach, which typically allows us to examine the role of economic and financial variables of different frequencies. Using commodity futures for Crude Oil (WTI and Brent), Gold, Silver and Platinum, as well as a commodity index, our results show the necessity for disentangling the short-term and long-term components in modeling and forecasting commodity volatility. They also indicate that the long-term volatility of most commodity futures is significantly driven by the level of global real economic activity as well as changes in consumer sentiment, industrial production, and economic policy uncertainty. However, the forecasting results are not alike across commodity futures as no singlemodel fits all commodities. [ABSTRACT FROM AUTHOR]

Abstract Following the international commitment to tackle climate change issues, many countries have introduced climate change policies to reduce emission levels. Australia also expects to follow the international pathways to implement a climate change policy to curb its greenhouse gas emissions. In this context, the former Labor Government in Australia intended to switch its carbon tax policy to an emissions trading scheme (ETS) after 2 years of its initial operation to achieve an emission target of 5 per cent below the 2000 level by 2020. By employing a computable general equilibrium model and a social accounting matrix database, this article analyses the potential impacts of an ETS with various revenue recycling options on Australian households. Results show that an emission permit price of A$20 per tonne of CO2-e would help Australia to achieve the 2020 emission reduction target. This permit price is likely to have a small contraction in Australia's real GDP (i.e. about 0.3 per cent) and in real household consumption (i.e. about 0.19 per cent). The price of electricity is projected to increase by 13 per cent. The revenue recycling options seem to create an improvement in the macro-economy and there is a trade-off between economic efficiency and equity in the Australian economy with compensations. The personal income tax reduction policy results in an economic efficiency with a positive change in real aggregate household consumption whereas providing an equal lump-sum transfer brings benefits equally for all household groups. Increased government transfers based on recipients' current pension and allowance rates generate more welfare gains for middle-income household groups. Highlights • A CGE model for Australia is developed and applied to analyse the impact of a domestic emissions trading scheme (ETS). • The modelling results show that an emissions permit price of A$20 per tonne of CO 2 -e to achieve the emissions target. • CO 2 -e to achieve the emissions reduction target. • Three revenue recycling options are examined to improve the efficiency and equity. • Increased government payments generate more welfare gain for middle income household groups. [ABSTRACT FROM AUTHOR]

Abstract With the increasing share of renewables in electricity generation in Europe, implied economy-wide macroeconomic feedbacks and spill-over effects to other sectors and actors are of rising importance. We quantify the macroeconomic effects of a large-scale expansion of wind and photovoltaics (PV) in Europe, employing a global multi-regional multi-sectoral computable general equilibrium (CGE) model. We place special emphasis on electricity market integration costs, which have so far been neglected not only in most bottom-up technology comparisons, but also in macroeconomic studies. We find that the societal welfare effects of a large-scale expansion of wind and PV tend to be positive; however, when integration costs are taken into account, positive welfare effects are either much smaller or even become negative, depending very much on regional characteristics, such as the prevailing electricity mix, weighted average costs of capital (WACC) or capacity factors. We also show that macroeconomic feedback effects raise generation costs above what is anticipated from a bottom-up perspective, since the high capital intensities of renewable electricity generation technologies drive up economy-wide capital prices. This may imply that they are no longer competitive when installed at large-scales. Highlights • Integration costs are a crucial factor in large scale variable renewable expansion. • Renewable expansion generally tends to increase societal welfare in EU regions. • Integration costs at high penetration rates can result in negative welfare effects. • De-risking of investment in renewables increases welfare. • Large scale renewable expansion raises capital income at the cost of labor income. [ABSTRACT FROM AUTHOR]

International crude oil market faces almost 2 years of sharp fall in benchmark crude oil prices (mainly Brent) from $ 105.7 / barrel in June 2014 to $ 36 / barrel in December 2015 and a minimum of $ 27-28 / barrel (for the last 13 years), in January 2016. Several economists are raising the question whether low crude oil prices are a “growth factor or a curse” for the world economy, and whether they could even cause a recession. Opinions about the effects of the sharp decline, in world oil prices are divided. Some analysts say that such evolution is good for consumers, while others consider it is bad for the global economy. Low oil prices could create disadvantages by causing deflation. The risk is that deflationary expectations determine consumers to refrain from additional purchases in anticipation of even lower prices. This would lead to an excess of production capacity and to ample inventories that will force down the prices even further. When buyers’ suspicions are confirmed, they delay further consumption resulting in a vicious circle. Historically, plummeting crude oil prices have been perceived as a growth factor, especially in the net importing countries. But this has not yet been translated into tangible positive economic effects worldwide.

During the economic crisis, Slovenia has transformed from one of the most successful new EU Member States into one of the most problematic ones. The reason for this is largely extensive banking problems, that continue to cause uncertainty on financial markets and adversely affect the rating of the country and consequently also the price of borrowing for both the state and private entities. Slovenia has opted to rehabilitate its banking sector by means of a bad bank (DUTB) that, however, only became operational at the end of 2013. The paper seeks to examine whether a bad bank has indeed proven the most appropriate choice out of possible methods of resolving the banking crisis, based on the most recent findings regarding the suitability of various methods of bailing out banking systems in crisis, taking into consideration key elements required for the successful rehabilitation thereof. The paper finds that, taking into consideration all relevant circumstances, the bad bank has proven to be appropriate solution in the Slovenian case but the delay in rehabilitating the banking system has had significant negative macroeconomic impacts as demonstrated by a comparison to other selected countries that had opted to bail out the banking sector before Slovenia. State ownership of systemic banks and political instability have both greatly contributed to slow action taken.

Abstract As pollution has become a significant issue in China, developing clean energy power generation is one of the main strategies to promote the sustainable economy. Based on the partially closed input-output model corresponding to 29 industries in 2012, this paper categorized power generation sectors to coal-fire power generation, gas power generation, wind power generation, photovoltaic generation, biomass energy power generation, and nuclear power generation to analyze the impacts on environment and social-economic developments. The results showed that improving single clean energy technology would lead to different degrees of positive impacts on environment, but the effects of GDP development and employment are highly correlated with the various generating costs. For the high generating costs, the clean-energy technologies would contribute to the positive effects; however, the drawbacks of social economic development could overweight the benefits for the low generating costs in short run. In addition, improving diverse clean energy generating approaches could promote GDP growth, reduce pollution, and increase employment. Finally, this paper provided some policy suggestions for the green-energy power supply and low-carbon economic developments. [ABSTRACT FROM AUTHOR]

We study the effects of unconventional monetary policy shocks on output, inflation and uncertainty using a sign restricted panel VAR over the monthly period of 2008:1-2015:1. Our sample includes primarily OECD countries (Canada, Germany, France, Italy, Japan, Spain, UK and US) that reached the interest rate zero lower bound in response to the recent financial crisis. Central bank balance sheets are used to gauge the size of unconventional monetary policy reactions to the crisis. We control for the degree of uncertainty by estimating the economic response to balance sheet shocks in two economic states: high versus low uncertainty. We use sign restrictions to identify our shocks, but remain agnostic regarding price and output responses to balance sheet shocks. We show that the mean group response of prices and output increases in response to monetary policy. The results, however, vary by country and are sensitive to the degree of uncertainty. Prices and output do not necessarily increase uniformly across countries. [ABSTRACT FROM AUTHOR]

This article outlines a critical gap in the assessment methodology used to estimate the macroeconomic costs and benefits of climate and energy policy, which could lead to misleading information being used for policy-making. We show that the Computable General Equilibrium (CGE) models that are typically used for assessing climate policy use assumptions about the financial system that sit at odds with the observed reality. These assumptions lead to ‘crowding out’ of capital and, because of the way the models are constructed, negative economic impacts (in terms of gross domestic product (GDP) and welfare) from climate policy in virtually all cases. In contrast, macro-econometric models, which follow non-equilibrium economic theory and adopt a more empirical approach, apply a treatment of the financial system that is more consistent with reality. Although these models also have major limitations, they show that green investment need not crowd out investment in other parts of the economy – and may therefore offer an economic stimulus. Our conclusion is that improvements in both modelling approaches should be sought with some urgency – both to provide a better assessment of potential climate and energy policy and to improve understanding of the dynamics of the global financial system more generally. POLICY RELEVANCE This article discusses the treatment of the financial system in the macroeconomic models that are used in assessments of climate and energy policy. It shows major limitations in approach that could result in misleading information being provided to policy-makers. [ABSTRACT FROM AUTHOR]