Pub Date : 2026-01-19DOI: 10.1016/j.econlet.2026.112832
Michele Dell’Era
Experts issuing crisis warnings face a trade-off between fostering immediate protection and shaping public trust for future influence. We model expert crisis communication when public trust evolves through memorable communication outcomes rather than through Bayesian belief updating. Correct warnings increase trust, false alarms and missed crises reduce it, and correct silence leaves public trust unchanged. Memory-driven public trust generates communication distortions. Low-trust experts remain silent even when observing crisis signals (trust trap), while high-trust experts issue warnings even when observing no-crisis signals (trust cushion).
{"title":"Crisis warnings under memory-driven trust","authors":"Michele Dell’Era","doi":"10.1016/j.econlet.2026.112832","DOIUrl":"10.1016/j.econlet.2026.112832","url":null,"abstract":"<div><div>Experts issuing crisis warnings face a trade-off between fostering immediate protection and shaping public trust for future influence. We model expert crisis communication when public trust evolves through memorable communication outcomes rather than through Bayesian belief updating. Correct warnings increase trust, false alarms and missed crises reduce it, and correct silence leaves public trust unchanged. Memory-driven public trust generates communication distortions. Low-trust experts remain silent even when observing crisis signals (trust trap), while high-trust experts issue warnings even when observing no-crisis signals (trust cushion).</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112832"},"PeriodicalIF":1.8,"publicationDate":"2026-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146023996","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 : 2026-01-19DOI: 10.1016/j.econlet.2026.112828
Eduard Baumöhl , Tibor Lalinský
We study zombie firm dynamics during the COVID-19 pandemic. Using detailed firm-level data and decomposing zombie flows, we find that the prevalence of zombie firms tracks aggregate activity with a lag, driven primarily by profitability rather than interest rates. Contrary to widespread concerns, generous pandemic support did not fuel zombification. Employment subsidies offered short-term liquidity but had only a marginal impact on zombie margins. Crucially, firms receiving early support were less likely to become zombies afterward and more likely to recover. Our results suggest that well-designed crisis support can stabilize firms without entrenching inefficiency.
{"title":"Firm support without zombification: Evidence from the COVID-19 pandemic","authors":"Eduard Baumöhl , Tibor Lalinský","doi":"10.1016/j.econlet.2026.112828","DOIUrl":"10.1016/j.econlet.2026.112828","url":null,"abstract":"<div><div>We study zombie firm dynamics during the COVID-19 pandemic. Using detailed firm-level data and decomposing zombie flows, we find that the prevalence of zombie firms tracks aggregate activity with a lag, driven primarily by profitability rather than interest rates. Contrary to widespread concerns, generous pandemic support did not fuel zombification. Employment subsidies offered short-term liquidity but had only a marginal impact on zombie margins. Crucially, firms receiving early support were less likely to become zombies afterward and more likely to recover. Our results suggest that well-designed crisis support can stabilize firms without entrenching inefficiency.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112828"},"PeriodicalIF":1.8,"publicationDate":"2026-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146023998","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 : 2026-01-17DOI: 10.1016/j.econlet.2026.112824
Yuki Iwanaga , Teruyoshi Kobayashi
This paper quantifies the efficiency of the Nash equilibrium in the class of linear-quadratic network games. We show that the theoretical bounds of the welfare ratio, defined as the equilibrium welfare relative to the social optimum, are fully characterized by the spectrum of the adjacency matrix of the underlying network. Specifically, the lower bound of the welfare ratio is determined by the largest eigenvalue of the adjacency matrix, while the upper bound reaches unity whenever the matrix is rank-deficient. Applying the theory to empirical social networks, we find that the upper bounds tend to be close to unity.
{"title":"Welfare bounds for linear-quadratic network games","authors":"Yuki Iwanaga , Teruyoshi Kobayashi","doi":"10.1016/j.econlet.2026.112824","DOIUrl":"10.1016/j.econlet.2026.112824","url":null,"abstract":"<div><div>This paper quantifies the efficiency of the Nash equilibrium in the class of linear-quadratic network games. We show that the theoretical bounds of the welfare ratio, defined as the equilibrium welfare relative to the social optimum, are fully characterized by the spectrum of the adjacency matrix of the underlying network. Specifically, the lower bound of the welfare ratio is determined by the largest eigenvalue of the adjacency matrix, while the upper bound reaches unity whenever the matrix is rank-deficient. Applying the theory to empirical social networks, we find that the upper bounds tend to be close to unity.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112824"},"PeriodicalIF":1.8,"publicationDate":"2026-01-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146023994","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 : 2026-01-15DOI: 10.1016/j.econlet.2026.112822
Aljoscha Janssen
I study how the 2023 Bud Light boycott affected overall alcohol demand using household-level panel data and a set of difference-in-differences designs. Focusing on households that, before April 2023, regularly purchased Bud Light, I find a large drop in Bud Light volume (34%–37%), partial switching into other beer (＋70 to ＋90 ounces per month), and a net decline in total ethanol purchases of about 3–4 fl-oz per month, or roughly 5.5%–7.5% of pre-boycott intake. I detect no compensatory increase in wine or spirits. Scaled nationally, the quantity response is equivalent to roughly 150 million standard drinks per year; using CDC cost-of-illness estimates updated to 2023 dollars implies social savings of about $430 million. A back-of-the-envelope translation suggests an excise-tax equivalent near 0.34% (range 0.23%–0.63%) despite unchanged statutory prices. Identity-driven boycotts can thus reduce harmful consumption via non-price channels, complementing traditional fiscal tools.
{"title":"Brand switching or behavior change: The 2023 Bud Light boycott’s impact on alcohol purchases","authors":"Aljoscha Janssen","doi":"10.1016/j.econlet.2026.112822","DOIUrl":"10.1016/j.econlet.2026.112822","url":null,"abstract":"<div><div>I study how the 2023 Bud Light boycott affected overall alcohol demand using household-level panel data and a set of difference-in-differences designs. Focusing on households that, before April 2023, regularly purchased Bud Light, I find a large drop in Bud Light volume (34%–37%), partial switching into other beer (＋70 to ＋90 ounces per month), and a net decline in total ethanol purchases of about 3–4 fl-oz per month, or roughly 5.5%–7.5% of pre-boycott intake. I detect no compensatory increase in wine or spirits. Scaled nationally, the quantity response is equivalent to roughly 150 million standard drinks per year; using CDC cost-of-illness estimates updated to 2023 dollars implies social savings of about $430 million. A back-of-the-envelope translation suggests an excise-tax equivalent near 0.34% (range 0.23%–0.63%) despite unchanged statutory prices. Identity-driven boycotts can thus reduce harmful consumption via non-price channels, complementing traditional fiscal tools.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112822"},"PeriodicalIF":1.8,"publicationDate":"2026-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145974728","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 : 2026-01-14DOI: 10.1016/j.econlet.2025.112804
Angela-Maria Filip , Bogdan Negrea
We propose analytical expressions for the Omega performance measure based on Gram–Charlier and Edgeworth expansions, incorporating the first five moments of the return distribution. On a sample of 708 U.S.-registered hedge funds, we assess managers’ ability to generate performance across different investment strategies using the analytically derived Omega measures, the empirical Omega, and its main competitor, the Sharpe ratio. Although these metrics yield similar rankings in our sample, we show, within a Monte Carlo simulation framework, that the five-moment Edgeworth approximated Omega is preferable for evaluating under-performing hedge funds, while the five-moment Gram–Charlier approximated Omega provides superior accuracy for well-performing hedge funds.
{"title":"Hedge fund strategies performance: The edge of Omega ratio over conventional metrics","authors":"Angela-Maria Filip , Bogdan Negrea","doi":"10.1016/j.econlet.2025.112804","DOIUrl":"10.1016/j.econlet.2025.112804","url":null,"abstract":"<div><div>We propose analytical expressions for the Omega performance measure based on Gram–Charlier and Edgeworth expansions, incorporating the first five moments of the return distribution. On a sample of 708 U.S.-registered hedge funds, we assess managers’ ability to generate performance across different investment strategies using the analytically derived Omega measures, the empirical Omega, and its main competitor, the Sharpe ratio. Although these metrics yield similar rankings in our sample, we show, within a Monte Carlo simulation framework, that the five-moment Edgeworth approximated Omega is preferable for evaluating under-performing hedge funds, while the five-moment Gram–Charlier approximated Omega provides superior accuracy for well-performing hedge funds.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112804"},"PeriodicalIF":1.8,"publicationDate":"2026-01-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145974729","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 : 2026-01-12DOI: 10.1016/j.econlet.2026.112820
Marco Albori, Fabrizio Ferriani, Livia Ristuccia
We examine how financial markets value defence firms’ R&D investments in the context of rising European military spending. Using data for listed European and US contractors, we relate equity valuation and expected earnings to R&D intensity and dual-use (civilian and military) activities. We find that higher R&D intensity is linked to stronger equity valuations, especially for firms with substantial dual-use exposure.
{"title":"Beyond military sales: The market premium on dual-use R&D in the defence sector","authors":"Marco Albori, Fabrizio Ferriani, Livia Ristuccia","doi":"10.1016/j.econlet.2026.112820","DOIUrl":"10.1016/j.econlet.2026.112820","url":null,"abstract":"<div><div>We examine how financial markets value defence firms’ R&D investments in the context of rising European military spending. Using data for listed European and US contractors, we relate equity valuation and expected earnings to R&D intensity and dual-use (civilian and military) activities. We find that higher R&D intensity is linked to stronger equity valuations, especially for firms with substantial dual-use exposure.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112820"},"PeriodicalIF":1.8,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145974724","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 : 2026-01-12DOI: 10.1016/j.econlet.2026.112823
Olurotimi O. Soneye
In models of voluntary contributions to public goods, pure altruists are typically held to donate either time or money, but not both. I show that under self-employment, a pure altruist can rationally contribute both time and money when the opportunity cost of time is endogenously linked to productivity. This link segments giving into time-only, money-only, and joint regimes. An implication is that observing joint contributions of time and money does not necessarily imply behavior driven by warm glow.
{"title":"A self-employed pure altruist can donate both time and money","authors":"Olurotimi O. Soneye","doi":"10.1016/j.econlet.2026.112823","DOIUrl":"10.1016/j.econlet.2026.112823","url":null,"abstract":"<div><div>In models of voluntary contributions to public goods, pure altruists are typically held to donate either time or money, but not both. I show that under self-employment, a pure altruist can rationally contribute both time and money when the opportunity cost of time is endogenously linked to productivity. This link segments giving into time-only, money-only, and joint regimes. An implication is that observing joint contributions of time and money does not necessarily imply behavior driven by warm glow.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112823"},"PeriodicalIF":1.8,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145974726","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 : 2026-01-12DOI: 10.1016/j.econlet.2026.112821
Shiyi Lu , Cheng Qian , Yiyin Wu
In this paper, we find that interfirm technological linkage could induce commonality in stock liquidity. Analyzing the listed firms on the Chinese STAR Market, we document notable liquidity comovements among technology-linked stocks, a phenomenon not attributable to alternative interfirm linkages. Additionally, our research indicates that technological liquidity commonality is less pronounced among firms with more institutional investors, more analyst coverage, and higher profitability. Overall, our findings provide a new insight into the demand-side dynamics shaping commonality in liquidity.
{"title":"Technological linkage and commonality in liquidity","authors":"Shiyi Lu , Cheng Qian , Yiyin Wu","doi":"10.1016/j.econlet.2026.112821","DOIUrl":"10.1016/j.econlet.2026.112821","url":null,"abstract":"<div><div>In this paper, we find that interfirm technological linkage could induce commonality in stock liquidity. Analyzing the listed firms on the Chinese STAR Market, we document notable liquidity comovements among technology-linked stocks, a phenomenon not attributable to alternative interfirm linkages. Additionally, our research indicates that technological liquidity commonality is less pronounced among firms with more institutional investors, more analyst coverage, and higher profitability. Overall, our findings provide a new insight into the demand-side dynamics shaping commonality in liquidity.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112821"},"PeriodicalIF":1.8,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146023993","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 : 2026-01-12DOI: 10.1016/j.econlet.2026.112819
Yong Ma, Yiwei Yu
We theoretically examine the role of government intervention in mitigating the adverse market effects caused by hybrid information. Compared to purely fundamental information, hybrid information increases liquidity and trading volume but reduces market efficiency and promotes mispricing. Government interventions, such as mandatory information disclosure and trading against noise, can alleviate efficiency losses and mispricing driven by hybrid information trading; however, trading against noise results in lower liquidity and decreased trading activity. Our findings provide insights into how governments should balance short- and long-term economic policies.
{"title":"Government interventions in hybrid information markets","authors":"Yong Ma, Yiwei Yu","doi":"10.1016/j.econlet.2026.112819","DOIUrl":"10.1016/j.econlet.2026.112819","url":null,"abstract":"<div><div>We theoretically examine the role of government intervention in mitigating the adverse market effects caused by hybrid information. Compared to purely fundamental information, hybrid information increases liquidity and trading volume but reduces market efficiency and promotes mispricing. Government interventions, such as mandatory information disclosure and trading against noise, can alleviate efficiency losses and mispricing driven by hybrid information trading; however, trading against noise results in lower liquidity and decreased trading activity. Our findings provide insights into how governments should balance short- and long-term economic policies.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112819"},"PeriodicalIF":1.8,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145974733","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 : 2026-01-12DOI: 10.1016/j.econlet.2026.112817
Christopher Johns , Aaron Mehrotra , Fabrizio Zampolli
Using panel data from euro area member states, we examine whether the transmission of monetary policy to the real economy depends on the degree of sovereign risk. We uncover asymmetric effects of monetary policy shocks. In particular, in the presence of elevated sovereign risk, expansionary monetary policy shocks are found to dampen economic activity. We discuss possible explanations for this seemingly puzzling result.
{"title":"Sovereign risk and monetary policy transmission: Evidence from the euro area","authors":"Christopher Johns , Aaron Mehrotra , Fabrizio Zampolli","doi":"10.1016/j.econlet.2026.112817","DOIUrl":"10.1016/j.econlet.2026.112817","url":null,"abstract":"<div><div>Using panel data from euro area member states, we examine whether the transmission of monetary policy to the real economy depends on the degree of sovereign risk. We uncover asymmetric effects of monetary policy shocks. In particular, in the presence of elevated sovereign risk, expansionary monetary policy shocks are found to dampen economic activity. We discuss possible explanations for this seemingly puzzling result.</div></div>","PeriodicalId":11468,"journal":{"name":"Economics Letters","volume":"260 ","pages":"Article 112817"},"PeriodicalIF":1.8,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145974727","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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