ABSTRACT. We study the effect of consumer sentiment on bank lending in a panel of eleven European economies that have experienced significant credit expansion in recent decades. Using standardized survey-based consumer data, we distinguish between the sentiment about i) current and ii) future (expected) economic conditions. Nonlinear machine-learning techniques allow us to improve the identification of exogenous sentiment shocks by using a large set of macro-financial variables. The component of sentiment that is unexplained by economic conditions reflects exogenous (or irrational) sentiment shocks. Using a local projections approach, we show that positive sentiment shocks lead to both short- and long-term increases in housing loans, with little effect on consumer loans. We also find that shocks to sentiment related to future economic conditions have a stronger effect on bank lending than shocks to present sentiment do. Large positive shocks to sentiment can increase the housing loan growth by one-tenth over the next two years following the shock and are most pronounced under persistently loose monetary policy. Finally, we also show that sentiment has implications for financial stability, as positive sentiment shocks increase the vulnerability of the banking system.

ABSTRACT. This study examines whether banks incorporate climate transition risks into loan pricing for non-financial firms in Portugal, using loan-level data from 2018–2023. The results show that banks do price climate transition risks, with firms exhibiting greater emission intensity facing higher interest rates and smaller loan amounts, indicating a pricing and credit rationing response to environmental risk. Public support measures affect how climate risk is transmitted, highlighting the potential relevance of policies with explicit environmental criteria. Firms subject to a higher emission reduction effort up to 2050 under a current green policies scenario benefit from more favourable loan terms, possibly emphasizing the role of transparent reporting and integration of environmental performance into credit assessments. Coordinated government and prudential policies may channel credit to low-emission and transformative projects fostering the green transition while safeguarding financial stability.

ABSTRACT. Why do international transfers sometimes promote cooperation yet often produce only partial compliance or fail altogether? This paper develops a political-economy framework linking domestic political structures to the effectiveness of transfer-based diplomacy. Departing from traditional models that emphasize capabilities or commitment problems, the analysis treats domestic political constraints—shaped by inequality, polarization, and cultural attitudes—as latent features that influence leaders’ incentives. Transfers function not only as compensation but also as screening instruments that reveal political types under asymmetric information. The model generates discrete equilibrium regimes—pooling cooperation, partial cooperation, or breakdown—determined by the interaction between donor capacity and recipient political thresholds. Comparative statics show how domestic inequality and polarization shrink cooperative regions, while anti-authoritarian norms expand them. The framework explains why engagement strategies may succeed in some contexts yet fail in others despite similar material incentives. More broadly, the analysis highlights the central role of domestic political environments in shaping international bargaining outcomes.

ABSTRACT. This paper analyses the relationship between the Bank of Italy and the Treasury from the 1960s to the Euro’s adoption. For two decades, monetary policy was subordinated to public financing through routine deficit accommodation. While the 1981 "divorce" initiated operational independence, definitive institutional separation was achieved only through EMU convergence and the Maastricht Treaty’s prohibition of monetary financing, confirming the vincolo esterno as the binding constraint on Italian monetary-fiscal interaction.

The study tests whether Italy operated under a non-Ricardian regime, as defined by the Fiscal Theory of the Price Level (FTPL), evaluating the shift in dynamics after the divorce. The empirical strategy combines bivariate VAR models, a structural-cyclical balance decomposition addressing the observational equivalence critique, and a three-variable VAR variance decomposition. These results are corroborated by administrative data from the Bank of Italy’s Annual Reports.

Impulse response analysis consistently yields Ricardian-like patterns: positive surplus shocks reduce government liabilities and exhibit positive autocorrelation. However, the structural primary balance remained unresponsive to debt dynamics, satisfying the definition of "active" fiscal policy. The paper characterizes this as a hybrid regime—latent fiscal dominance within a Ricardian outcome—sustained by the central bank’s dual role as fiscal accommodator and market coordinator. The divorce did not trigger an immediate regime switch but progressively dismantled this architecture: fiscal contributions to monetary base variance fell from 93% pre-divorce to 48% in the full sample. Administrative records confirm this transition reached completion only with the formal obligations of the Maastricht Treaty.

ABSTRACT. An influential empirical literature fails to establish a clear-cut relationship between public debt and economic growth. Our paper provides a theoretical analysis of the complex debt—growth relationship by relying on the concept of fiscal space. In an otherwise6standard growth model, accounting for fiscal space through the social resistance to ta6xincreases generates two balanced-growth paths (a high-growth path and a low-growth trap), with the following consequences. We find that public debt may exhibit threshold effects with respect to the high-growth path, and we obtain rich dynamics around the low-growth trap (giving rise to local and global indeterminacy) making the sign of the debt—growth relationship to be ambiguous. Consequently, our study provides a theoretical mechanism that explains the heterogeneity in the public debt—economic growth relationship through differences in the degree of fiscal space.

ABSTRACT. While fiscal rules are often viewed as an effective way to curb the deficit bias arising from, inter alia, partisan pressures in common-pool budget settings, much less is known about how their effects vary with partisan preferences. This paper fills that gap by estimating local projections for a panel of EU-27 countries over 1995–2019. We innovatively link COFOG expenditure categories with the Manifesto Project Database to study how political preferences condition the impact of tighter fiscal rules across spending functions. Our first result is that more stringent national fiscal rules are associated with lower public spending in the short- and medium-run. Digging deeper, we show that the recomposition of expenditure under tighter rules depends on governments’ preferences: adjustment falls disproportionately on categories that are less favoured by the incumbent. These results are robust to alternative estimators, different definitions of the dependent variable, and placebo tests. Lastly, the cuts associated with stricter fiscal rules in low-preference government contexts are amplified when sovereign debt yields are higher.

ABSTRACT. The purpose of this article is to observe whether the sentiment score, calculated based on the press releases of the National Bank of Romania (NBR), represents a main factor of influence on the EUR/RON exchange rate, along with other economic and stock market indices. To model the presented economic relationship, an event study regression was performed on the logarithmic returns of the mentioned economic variables, where the sentiment score represents the intensity of the event. The inconclusive results extracted from the model determined the creation of several quantile regression models, in order to see the behavior of the variables depending on the quantile. After calculating the cumulative quantile abnormal returns (CQARs) and interpreting the results from the additional models (classical and clustered bootstrap quantile regressions), it resulted that the statistical significance of the variables used changes from one quantile to another, including for the sentiment score. However, at the overall level, the sentiment score calculated in this way does not produce a specific effect on the exchange rate. This paper was co-financed by The Bucharest University of Economic Studies during the PhD program.

ABSTRACT. Central bank digital currencies (CBDCs) pose novel opportunities and risks for banks and credit intermediation. This paper examines how the introduction of a retail CBDC – specifically a dual implementation of a digital domestic currency (RON) alongside a digital euro – might impact banks’ balance sheets and credit supply in a small open economy. We develop a behavioural simulation model that integrates forecasts of machine-learning adoption with bank balance-sheet stress scenarios. The results suggest that even moderate CBDC uptake can trigger significant deposit outflows, prompting some banks to curtail lending. For instance, if roughly 7–8% of deposits migrate to CBDC, around 15% of banks could shrink their loan portfolios by more than 10%, resulting in a 0.7–1.1% reduction in credit for every 1 billion RON withdrawn. System-wide, credit growth could slow by an estimated 2.5–3.2% in the two quarters following the shock, with potential knock-on effects on investment and economic activity. These findings highlight a tangible risk of bank disintermediation and credit contraction if CBDCs are not carefully designed. We discuss policy implications for financial stability – including the role of central bank liquidity backstops, tiered remuneration, and international coordination – to ensure that a digital currency rollout does not inadvertently undermine credit provision.

ABSTRACT. This article investigates the determinants of spillovers between crypto-assets and equity markets, and notably the role of crypto-market integration in global finance. For that purpose, we derive a spillover equation from a portfolio model, and implement two complementary empirical methodologies : the Diebold and Yilmaz (2012) methodology to measure time series of cross-market pairwise spillovers, and a panel model to investigate their determinants. Our results indicate that the transmission of the shocks is eased by investors’ adoption of crypto-assets. In addition, we find that the gradual adoption of crypto-assets allows for a contagion channel from equity to crypto markets.

ABSTRACT. This paper introduces a new measure of labor market slack to estimate the slope of the Phillips curve. The measure is based on business surveys of perceived labor shortages and is available at the sub-sector-country level. This granularity enables panel estimation with interactive fixed effects, which flexibly controls for unobserved common components related to inflation expectations and supply-side factors allows heterogeneous responses across units. Estimates for the euro area result in a significantly steeper Phillips curve than those obtained using conventional measures and standard empirical specifications.

ABSTRACT. Work-related migration is a gendered phenomenon with significant socio-economic consequences for those left behind, particularly women in rural households. While in countries like the Philippines, work-related migration is female-dominated, in regions such as South Asia, including India, work-related migration is predominantly male specific. This paper explores the impact of male out-migration on the labour force participation of women in farm households who are left behind for the state of Assam which has experienced large-scale rural-urban migration in recent years. Using primary data collected from 284 households in four districts of Assam and by applying the Endogenous Switching Regression Model, this study has found that male out-migration increases the workforce participation rate of left-behind female members in the family. The increase in the workforce participation rate of the female members in the households may be to compensate for the immediate income loss of the households caused by male out-migration. In our study area, most of the female workers are found to be engaged in unpaid activities and low-paying jobs.

ABSTRACT. This study examines the determinants of total factor productivity (TFP) growth across 26 European Union countries from 1996 to 2019, with particular focus on the role of foreign direct investment (FDI) and the distinctive growth dynamics of Central and Eastern European (CEE) economies. Employing the GMM-IV approach of Lewbel (2012), which exploits heteroskedasticity for identification, we find that FDI has a robust negative effect on TFP growth. Controlling for TFP convergence reveals that approximately 75% of the CEE growth premium reflects catch-up dynamics, while the remaining premium persists as a CEE-specific residual. The FDI–TFP relationship exhibits both temporal and regional heterogeneity: the pan-European negative effect is concentrated in the pre-crisis period (1996–2007), while a CEE-specific negative FDI effect (-1.2 to -1.8 percentage points) persists robustly in the post-crisis period (2010–2019), even as FDI shows no effect in Western Europe. Demographic aging enters with the expected negative sign in baseline specifications but loses significance once convergence dynamics are controlled for, suggesting it operates through TFP levels rather than direct growth channels. These findings challenge the conventional wisdom that FDI universally benefits host-country productivity and highlight the absorptive capacity constraints facing CEE economies.

ABSTRACT. This paper investigates the relationship between Regional Trade Agreements (RTAs), labor provisions, and trade in sectors with a high concentration of female workers. Us- ing a gravity model framework on a dataset with 150 countries for the period 1995-2024, we find that while labor provision generally boost trade, RTAs with legally-binding provisions mainly promote exports in male-intensive sectors. Additionally, we find a paradoxical result. RTAs without gender provisions actually promote trade in female- intensive sectors, while RTAs with gender provisions show no significant effect. For male-intensive sectors, the pattern is reversed: RTAs without gender provisions do not significantly boost their exports, while RTAs with gender provisions show a positive effect on trade.

ABSTRACT. We examine the relationship between climate-related financial policies (CRFPs) and banks’ systemic risk. Using a sample of 458 banks in 47 countries over the period 2000-2020, we document that more stringent CRFPs are detrimental to overall financial stability and contribute to increased system-wide distress. Measures that restrict banks' exposure to carbon-intensive counterparties may lead to less lending at higher lending rates, yet reduced bank profitability and systemic resilience. However, the implementation and ratification of the Paris Agreement, more robust adaptation strategies to cope with climate shocks and a higher incidence of natural disasters and a larger number of people affected by extreme climate events may counteract the amplifying effects of CRFPs on systemic risk. Moreover, banks with stronger environmental, social, and governance (ESG) commitments experience less systemic distress when exposed to green financial policies. Our findings have critical policy implications for public authorities formulating green financial policies.

ABSTRACT. This paper aims to investigate the effects of macroprudential policy measures on asset price dynamics, focusing on the banking sector stock market and residential house prices in France. Using quarterly data for the period 2000Q3 to 2024Q3, the anlaysis employs an Autoregressive Distributed Lag Bounds Testing framework to examine both the short and long-run relationships between macroprudential policy and the two markets. The empirical results suggest that the effects of macroprudential policy are not uniform across markets. While tighter macroprudential measures tend to reduce bank stock prices in the short run, the relationship with house price dynamics appears more complex.

ABSTRACT. Building on the work of Meh and Moran (2015), we develop a framework to assess the impact of the implementation of regulations such as Basel 3 on bank balance sheet management. The aim of our work is to expand the model with a risk-free asset and a liquidity constraint. In the two models developed, banks are free to define the level of risk taken on the projects they finance via a monitoring process. The benchmark model from Meh and Moran with a regulatory solvency constraint ongoing allows a comparison for the effect of including a risk-free asset in the model, as well as a liquidity constraint. The analyses are carried out using DSGE models to highlight responses to shocks and differences in steady state of the economy. Different levels of regulation have an impact on access to credit and the economy as a whole, but the introduction of risk-free assets provides banking institutions with a degree of flexibility. We indeed show that the introduction the risk-free asset with the liquidity constraint allows banks to diversify their portfolios and reduce the monitoring requirements while satisfying all the regulatory constraints.

ABSTRACT. This paper investigates the spatial distribution, dynamics, and driving factors of Cultural and Creative Industries (CCIs) across Slovak districts from 2008 to 2024. Using a unique longitudinal dataset and spatial econometric techniques, it explores the geography of CCI firms and how their clustering patterns have evolved over time. The paper provides evidence of increasing spatial autocorrelation, with strong but shifting concentrations around urban areas such as Bratislava and Poprad, and persistent underdevelopment in eastern peripheral districts. Through Moran’s I and LISA indicators, it identifies distinct cluster trajectories—ranging from persistent creative hubs to emerging regions and stagnant peripheries. A Gini index analysis shows a progressive decline in spatial inequality of CCI shares, suggesting a diffusion of creative activities beyond traditional cores. The findings confirm the relevance of urbanization, accessibility, and educational attainment in shaping regional creative ecosystems and highlight the role of spatial dependence and institutional context in fostering or hindering CCI development. Policy implications support the promotion of localized creative hubs and the design of targeted interventions for lagging regions.

ABSTRACT. This study empirically examines the dynamic relationships between economic, demographic, and trade-related factors, and ecological footprint per capita (EFPC) in G-7 countries, across both spatial and temporal domains. We adopt the novel spatiotemporal artificial intelligence regression models. Empirical results suggest that GDP per capita has a significant impact on ecological footprint, indicating that higher economic growth is associated with lower environmental pressure. Population density and energy intensity also exhibit a positive relationship with EFconsPC, highlighting the effect of economic expansion and energy use on environmental outcomes. Additionally, globalization increases carbon emissions while negatively influencing the ecological footprint. In contrast, economic complexity and trade openness have an adverse effect on per capita ecological footprint. These results offer valuable insights for policymakers and governments seeking to strike a balance between economic growth and environmental responsibility.

ABSTRACT. This paper explores the intersection of economic and regulatory frameworks in promoting digital sustainability within the broader paradigm of the circular economy. Focusing specifically on digital devices (such as smartphones and computers) it examines how a combination of economic incentives and legal measures can improve material lifecycle management, reduce wastes and environmental impacts, and enhance energy efficiency across production, use, and disposal phases. The analysis draws on existing policy instruments, such as Extended Producer Responsibility (EPR) and eco-design regulations, as well as market dynamics that shape consumer behaviour and corporate strategies. By integrating perspectives from economics and law, the paper identifies both synergies and gaps in current approaches and proposes a set of coordinated strategies to support sustainable innovation in the digital technology sector. This interdisciplinary approach offers insights for policymakers, industry actors, and researchers seeking to align technological progress with environmental and resource efficiency objectives in an increasingly digitized world.