Pub Date : 2025-11-11DOI: 10.1016/j.econlet.2025.112725
Ernest Owusu Boakye, Kari Heimonen
This study investigates the impact of climate and biodiversity-related risks on financial stress in the EU, USA, and UK using the DCC-MGARCH model. The results indicate that stringent environmental policies initially increase financial stress in the short term, however, these effects diminish over time, leading to reductions in stress by promoting sustainable growth. Persistent volatility spillovers across regions highlight the interconnectedness of global financial systems and the systemic nature of climate-related shock. Although there is short-term volatility, markets generally stabilize as policy impacts become evident.
{"title":"Climate risk and biodiversity exposure","authors":"Ernest Owusu Boakye, Kari Heimonen","doi":"10.1016/j.econlet.2025.112725","DOIUrl":"10.1016/j.econlet.2025.112725","url":null,"abstract":"<div><div>This study investigates the impact of climate and biodiversity-related risks on financial stress in the EU, USA, and UK using the DCC-MGARCH model. The results indicate that stringent environmental policies initially increase financial stress in the short term, however, these effects diminish over time, leading to reductions in stress by promoting sustainable growth. Persistent volatility spillovers across regions highlight the interconnectedness of global financial systems and the systemic nature of climate-related shock. Although there is short-term volatility, markets generally stabilize as policy impacts become evident.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112725"},"PeriodicalIF":1.8,"publicationDate":"2025-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145621313","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-11DOI: 10.1016/j.econlet.2025.112718
Armando R. Lopez-Velasco
An OLG model generates distinct but related power laws for wages, earnings, and wealth. CES-labor technology drives top-wage and top-earnings inequality, while top-wealth inequality stems from higher returns to wealthier agents which in turn amplifies top-earnings inequality.
{"title":"An OLG model with endogenous but distinct power-laws in earnings and wealth","authors":"Armando R. Lopez-Velasco","doi":"10.1016/j.econlet.2025.112718","DOIUrl":"10.1016/j.econlet.2025.112718","url":null,"abstract":"<div><div>An OLG model generates distinct but related power laws for wages, earnings, and wealth. CES-labor technology drives top-wage and top-earnings inequality, while top-wealth inequality stems from higher returns to wealthier agents which in turn amplifies top-earnings inequality.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"257 ","pages":"Article 112718"},"PeriodicalIF":1.8,"publicationDate":"2025-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145517097","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-11DOI: 10.1016/j.econlet.2025.112719
Christopher Parmeter
Estimation of technical efficiency lies at the core of stochastic frontier analysis. However, it is common that only the conditional expectation of technical efficiency for each observation is calculated. If one were interested in alternative features of the conditional distribution, such as quantiles or the mode, these are commonly unavailable in closed form and require simulation methods. Here we propose a simple nonparametric approach that can provide an array of features of the distribution of technical efficiency, for any set of distributional assumptions.
{"title":"A simple approach to estimate technical efficiency in stochastic frontier models","authors":"Christopher Parmeter","doi":"10.1016/j.econlet.2025.112719","DOIUrl":"10.1016/j.econlet.2025.112719","url":null,"abstract":"<div><div>Estimation of technical efficiency lies at the core of stochastic frontier analysis. However, it is common that <em>only</em> the conditional expectation of technical efficiency for each observation is calculated. If one were interested in alternative features of the conditional distribution, such as quantiles or the mode, these are commonly unavailable in closed form and require simulation methods. Here we propose a simple nonparametric approach that can provide an array of features of the distribution of technical efficiency, for any set of distributional assumptions.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"257 ","pages":"Article 112719"},"PeriodicalIF":1.8,"publicationDate":"2025-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145517415","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-11DOI: 10.1016/j.econlet.2025.112723
Kevin Pirazzi Maffiola , Hasret Ozan Sevim
This paper analyzes how thematic crypto asset categories responded to the 2024 U.S. presidential election using cumulative abnormal returns (CARs) within an event study framework. We examine four thematic categories: Made in U.S., DeFi & Real-World Assets, AI & Big Data, and World Liberty Financial. The results show significant negative CARs in the pre-election window, followed by sharp positive reversals on the election day and after the election. The most pronounced post-election recoveries appear in the Made in U.S. category with CARs over 40 %, suggesting market reassessment of regulatory expectations. Innovation-driven categories such as (World Liberty Financial, DeFi & Real-World Assets, and AI & Big Data) exhibit more muted responses. These findings underscore how political alignment influences crypto performance and offer new evidence on the pricing of political risk in digital asset markets.
本文在事件研究框架内使用累积异常回报（CARs）分析了主题加密资产类别对2024年美国总统大选的反应。我们研究了四个主题类别：美国制造、DeFi和真实世界资产、人工智能和大数据以及世界自由金融。结果显示，在选举前窗口，car值显著为负，随后在选举日和选举后出现急剧的正逆转。大选后最明显的复苏出现在美国制造类别，其收益率超过40%，表明市场对监管预期进行了重新评估。创新驱动类（World Liberty Financial、DeFi &； Real-World Assets和AI &； Big Data）则表现出较为低调的反应。这些发现强调了政治结盟如何影响加密货币的表现，并为数字资产市场的政治风险定价提供了新的证据。
{"title":"Policy-sensitive crypto assets: Event study of thematic returns around U.S. elections","authors":"Kevin Pirazzi Maffiola , Hasret Ozan Sevim","doi":"10.1016/j.econlet.2025.112723","DOIUrl":"10.1016/j.econlet.2025.112723","url":null,"abstract":"<div><div>This paper analyzes how thematic crypto asset categories responded to the 2024 U.S. presidential election using cumulative abnormal returns (CARs) within an event study framework. We examine four thematic categories: Made in U.S., DeFi & Real-World Assets, AI & Big Data, and World Liberty Financial. The results show significant negative CARs in the pre-election window, followed by sharp positive reversals on the election day and after the election. The most pronounced post-election recoveries appear in the Made in U.S. category with CARs over 40 %, suggesting market reassessment of regulatory expectations. Innovation-driven categories such as (World Liberty Financial, DeFi & Real-World Assets, and AI & Big Data) exhibit more muted responses. These findings underscore how political alignment influences crypto performance and offer new evidence on the pricing of political risk in digital asset markets.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112723"},"PeriodicalIF":1.8,"publicationDate":"2025-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145519002","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-11DOI: 10.1016/j.econlet.2025.112722
Arthur Jonath , John P. O’Connell , Fred Khorasani
This paper examines how corporate profit distribution choices impact macroeconomic health, arguing that wise managing of profits maximizes economic stability and robustness. Analogies of economic cash flow with physical heat energy flow and entropy generation are given to help appreciate the impacts of profit decisions. We conclude that direct investment of profits to generate new value is better for economic health than delaying reinvestment, sequestering resources in dormant accounts or for luxury purchases, or buying back stock. A mechanism to foster healthy profit decisions is suggested.
{"title":"Managing profits for economic health","authors":"Arthur Jonath , John P. O’Connell , Fred Khorasani","doi":"10.1016/j.econlet.2025.112722","DOIUrl":"10.1016/j.econlet.2025.112722","url":null,"abstract":"<div><div>This paper examines how corporate profit distribution choices impact macroeconomic health, arguing that wise managing of profits maximizes economic stability and robustness. Analogies of economic cash flow with physical heat energy flow and entropy generation are given to help appreciate the impacts of profit decisions. We conclude that direct investment of profits to generate new value is better for economic health than delaying reinvestment, sequestering resources in dormant accounts or for luxury purchases, or buying back stock. A mechanism to foster healthy profit decisions is suggested.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112722"},"PeriodicalIF":1.8,"publicationDate":"2025-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145578015","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-10DOI: 10.1016/j.econlet.2025.112716
Federico Innocenti , Lucia Schiavon
We investigate theoretically the introduction of a market for commercial surrogacy for social motives. Agents have heterogeneous incomes and preferences for parenthood, and face pregnancy-related income reductions. In equilibrium, low-income agents provide surrogacy for high-income agents who seek “insurance” against income loss and would not become parents without surrogacy. Surrogacy has an ambiguous effect on fertility: it increases fertility only if the latter is low without surrogacy. Otherwise, its impact on fertility is negative.
{"title":"Social surrogacy: Market design and implications for fertility","authors":"Federico Innocenti , Lucia Schiavon","doi":"10.1016/j.econlet.2025.112716","DOIUrl":"10.1016/j.econlet.2025.112716","url":null,"abstract":"<div><div>We investigate theoretically the introduction of a market for commercial surrogacy for social motives. Agents have heterogeneous incomes and preferences for parenthood, and face pregnancy-related income reductions. In equilibrium, low-income agents provide surrogacy for high-income agents who seek “insurance” against income loss and would not become parents without surrogacy. Surrogacy has an ambiguous effect on fertility: it increases fertility only if the latter is low without surrogacy. Otherwise, its impact on fertility is negative.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"257 ","pages":"Article 112716"},"PeriodicalIF":1.8,"publicationDate":"2025-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145517413","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-09DOI: 10.1016/j.econlet.2025.112717
Chenghua Guan , Chaofan Chen , Yilin Wang , Gangqing Pu
Experimental studies have shown that punishment mechanisms effectively address the social dilemma in PGG. However, when punishment is implemented through democratic voting, it may face a democratic premium or rejection, limiting contribution increase. Drawing on insights from Putterman et al. (2011) and Andreoni and Gee (2012), we developed two formal punishment mechanisms with democratic punishment parameters. Our findings indicate that both mechanisms increase contributions while crowding out the effects of past contributions and reciprocity preferences. However, they differ in efficacy. The Lowest Punished Mechanism (LPM) resembles the anticipation effect and performs better. In LPM, both group and individual voting significantly enhance contributions.
实验研究表明，惩罚机制有效地解决了PGG中的社会困境。但是，如果通过民主投票的方式实施处罚，则可能面临民主溢价或拒绝，从而限制了捐款的增加。根据Putterman et al.（2011）和Andreoni and Gee（2012）的见解，我们开发了两种具有民主惩罚参数的正式惩罚机制。我们的研究结果表明，这两种机制都增加了贡献，同时挤出了过去贡献和互惠偏好的影响。然而，它们在功效上有所不同。最低惩罚机制（LPM）与预期效应相似，且效果更好。在LPM中，群体和个人投票都显著提高了贡献。
{"title":"Formal democratic sanction mechanisms address the social dilemma in public goods games: A Chinese experimental study","authors":"Chenghua Guan , Chaofan Chen , Yilin Wang , Gangqing Pu","doi":"10.1016/j.econlet.2025.112717","DOIUrl":"10.1016/j.econlet.2025.112717","url":null,"abstract":"<div><div>Experimental studies have shown that punishment mechanisms effectively address the social dilemma in PGG. However, when punishment is implemented through democratic voting, it may face a democratic premium or rejection, limiting contribution increase. Drawing on insights from Putterman et al. (2011) and Andreoni and Gee (2012), we developed two formal punishment mechanisms with democratic punishment parameters. Our findings indicate that both mechanisms increase contributions while crowding out the effects of past contributions and reciprocity preferences. However, they differ in efficacy. The Lowest Punished Mechanism (LPM) resembles the anticipation effect and performs better. In LPM, both group and individual voting significantly enhance contributions.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"258 ","pages":"Article 112717"},"PeriodicalIF":1.8,"publicationDate":"2025-11-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145519003","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-07DOI: 10.1016/j.econlet.2025.112679
Zhangchi Ding , Minwook Kang , Kyoowon Yang
This paper investigates the relationship between the “transfer paradox” and “destruction paradox”. We address two key questions: (1) When faced with either paradox, is destruction or transfer more effective in improving the utility of the donor? (2) Does the existence of one paradox imply the existence or absence of the other? For a two-good economy, the destruction paradox always exists and is preferable when the transfer paradox decreases the price of the non-transferred good, but never occurs when the transfer paradox increases it. When the destruction paradox exists, destruction is always more effective than transfer for improving utility.
{"title":"Destruction or transfer","authors":"Zhangchi Ding , Minwook Kang , Kyoowon Yang","doi":"10.1016/j.econlet.2025.112679","DOIUrl":"10.1016/j.econlet.2025.112679","url":null,"abstract":"<div><div>This paper investigates the relationship between the “transfer paradox” and “destruction paradox”. We address two key questions: (1) When faced with either paradox, is destruction or transfer more effective in improving the utility of the donor? (2) Does the existence of one paradox imply the existence or absence of the other? For a two-good economy, the destruction paradox always exists and is preferable when the transfer paradox decreases the price of the non-transferred good, but never occurs when the transfer paradox increases it. When the destruction paradox exists, destruction is always more effective than transfer for improving utility.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112679"},"PeriodicalIF":1.8,"publicationDate":"2025-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145923903","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-07DOI: 10.1016/j.econlet.2025.112714
Georges Casamatta , Helmuth Cremer
We analyze the optimal combination of direct and indirect taxes in the presence of tax avoidance. Proportional commodity taxes remain part of the optimal tax structure when avoidance is possible, even when the Atkinson–Stiglitz conditions hold. Taxing consumption, despite avoidance, enhances the screening of unobserved productivity relative to income taxation alone. Under weak separability and homothetic subutility, optimal commodity taxes are positive and uniform. With non-homothetic preferences, uniformity may not hold, and the optimal differentiation between luxuries and necessities depends on the distribution of productivity.
{"title":"Tax avoidance and commodity tax differentiation","authors":"Georges Casamatta , Helmuth Cremer","doi":"10.1016/j.econlet.2025.112714","DOIUrl":"10.1016/j.econlet.2025.112714","url":null,"abstract":"<div><div>We analyze the optimal combination of direct and indirect taxes in the presence of tax avoidance. Proportional commodity taxes remain part of the optimal tax structure when avoidance is possible, even when the Atkinson–Stiglitz conditions hold. Taxing consumption, despite avoidance, enhances the screening of unobserved productivity relative to income taxation alone. Under weak separability and homothetic subutility, optimal commodity taxes are positive and uniform. With non-homothetic preferences, uniformity may not hold, and the optimal differentiation between luxuries and necessities depends on the distribution of productivity.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"257 ","pages":"Article 112714"},"PeriodicalIF":1.8,"publicationDate":"2025-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145517414","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-11-06DOI: 10.1016/j.econlet.2025.112710
David P. Myatt , David Ronayne
We study a Bertrand oligopoly with asymmetric costs in which each seller has some “captive” buyers. In the limit as captive buyers vanish, the lowest-cost firm sells to all buyers at a price equal to the second-lowest marginal cost. However, the closest competing price arises from non-degenerate mixed strategies, firms play exclusively undominated strategies, and with positive probability all but one firm sets the monopoly price.
{"title":"Bertrand competition and captive customers","authors":"David P. Myatt , David Ronayne","doi":"10.1016/j.econlet.2025.112710","DOIUrl":"10.1016/j.econlet.2025.112710","url":null,"abstract":"<div><div>We study a Bertrand oligopoly with asymmetric costs in which each seller has some “captive” buyers. In the limit as captive buyers vanish, the lowest-cost firm sells to all buyers at a price equal to the second-lowest marginal cost. However, the closest competing price arises from non-degenerate mixed strategies, firms play exclusively undominated strategies, and with positive probability all but one firm sets the monopoly price.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"257 ","pages":"Article 112710"},"PeriodicalIF":1.8,"publicationDate":"2025-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145463464","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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