Economics and Business Letters

Transition climate risks and corporate risky asset holdings: evidence from US firms

Nicholas Apergis, Iraklis Apergis — Tue, 26 Nov 2024 00:00:00 +0000

Using data from US firms over 22 years, this paper shows that firms’ risky asset holdings are negatively associated with their transition climate risks exposure. The evidence remains robust across model specifications and robustness checks, while is more pronounced for financially constrained firms. The findings are consistent with the precautionary motive framework and imply that firms need to reduce their risky asset holdings in the event of negative shocks of transition climate risks.

Human genetic diversity and income inequality

Mustafa Kilinc, Zeynel Abidin Kilinc — Tue, 26 Nov 2024 00:00:00 +0000

This paper examines whether human genetic diversity is relevant to understand income inequality differences across countries. It extends the existing genetics-development studies in the literature to the relationship between genetics and inequality. The results obtained from 147 countries indicate that there is a statistically significant U-shaped relationship between genetic diversity and inequality. An important mediating factor in this relationship can be the level of trust in society. Genetic homogeneity can increase mutual support, aid, and cooperation in society. Hence, higher levels of genetic homogeneity can be associated with higher trust levels, which improves income equality. In addition, the relationship between genetics and the innovation capacity of societies can be another causal mechanism relating genetics to inequality.

A new time-varying method for club convergence analysis

Mateusz Tomal — Tue, 26 Nov 2024 00:00:00 +0000

One of the most frequently used methods to test the club convergence hypothesis is the Phillips-Sul approach. However, this method does not allow the verification of whether the number, size, or structure of convergence clubs vary over time. Therefore, this study proposes a new time-varying method for identifying convergence clubs by modifying the Phillips-Sul approach. The new method was applied to data on gross domestic product per capita in selected European countries for 1995–2021. The results reveal that the number of convergence clubs, their size, and their internal structure changed over time.

The relationship between income and subjective well-being: the case of Spain

Ana Cárcaba, Eduardo González — Tue, 26 Nov 2024 00:00:00 +0000

This paper examines the evolution of individual subjective well-being (SWB) in Spain from 2013 to 2022, with special focus on its relationship with income. Of the many driving forces of SWB identified in the literature, income is one of the most controversial. We use a large sample of individuals to analyze how income and SWB interacted during the post-2008 crisis period. As expected, our findings show that income is positively related to SWB, but at a decreasing rate. The time interaction with income reveals that the effect of income has also diminished over time. Therefore, as material conditions have improved in Spain during the period under analysis, the relevance of income in determining SWB has not.

The effect of election outcome on economic activity: a tale of two countries

Amr Saber Algarhi — Tue, 26 Nov 2024 00:00:00 +0000

This paper investigates the effect of partisan politics on macroeconomic performance in France and the United Kingdom between 1971-2023. Using a panel autoregressive distributed lag (ARDL) model, it examines whether ideological divides between left- and right-wing parties and coalition governments relate to accountability for key macroeconomic indicators. Results suggest that economic growth is slightly lower under the left-wing governments, whereas unemployment and inflation rates are higher with a statistically significant difference of 10% for inflation. Furthermore, coalition governments underperform on growth and unemployment, struggling to stimulate economic expansion. Finally, despite the characterization of political parties as either right or left leaning in terms of cultural matters, their implemented economic policies seem to yield comparable economic outcomes.