Economies

20 pages, 352 KB

Open AccessArticle

Are Corruption and Regulation Less Burdensome in Special Economic Zones?

by George R. G. Clarke

Economies 2026, 14(2), 69; https://doi.org/10.3390/economies14020069 - 23 Feb 2026

Viewed by 997

Many developing country governments would like to attract investment and create jobs in manufacturing and high-tech industries. Heavy and unpredictable laws and regulations, frequent demands for bribes, high taxes, poor-quality roads, slow and inefficient ports, and unreliable power, however, deter private investors. Moreover, [...] Read more.

Many developing country governments would like to attract investment and create jobs in manufacturing and high-tech industries. Heavy and unpredictable laws and regulations, frequent demands for bribes, high taxes, poor-quality roads, slow and inefficient ports, and unreliable power, however, deter private investors. Moreover, political opposition and fiscal constraints prevent governments from resolving the numerous issues. Rather than attempting to solve everything everywhere, many governments have tried to fix problems in only small regions. These special economic zones (SEZs) often have lower taxes, more liberal regulation, and better infrastructure. This paper asks whether firms located in African and South Asian SEZs report less regulation and corruption than other firms in the same countries. We find, on average, being located in an SEZ is associated with lower burdens due to corruption and regulation. Firms in the zones are less likely to report paying bribes than firms outside the zones and report spending less time dealing with inspections and regulations. However, this is not true in Africa; firms in African zones report that corruption and regulation are as troublesome as for similar firms outside the zones. Full article

(This article belongs to the Section Economic Development)

19 pages, 323 KB

Open AccessArticle

Political Stability and Money Laundering Risk

by Hamza Mahmood, Badar Nadeem Ashraf and Vy Tran

Economies 2026, 14(2), 68; https://doi.org/10.3390/economies14020068 - 23 Feb 2026

Cited by 4 | Viewed by 2017

Abstract

The influence of political stability on financial crime remains a subject of ongoing debate. While stability is often associated with policy continuity, regulatory credibility, and more effective enforcement, an alternative view suggests that unstable democracies may outperform stable autocracies in curbing financial crime. [...] Read more.

The influence of political stability on financial crime remains a subject of ongoing debate. While stability is often associated with policy continuity, regulatory credibility, and more effective enforcement, an alternative view suggests that unstable democracies may outperform stable autocracies in curbing financial crime. Using panel data from 158 countries over the period 2012–2023, this study finds that political stability is associated with lower money laundering (ML) risk, even after controlling for the extent of democratic governance. With respect to moderating factors, democracy independently lowers ML risk, but its interaction with political stability is limited, suggesting that stability constrains illicit financial activity largely irrespective of regime type. Economic development emerges as a more decisive moderator: in high-income countries, political stability translates into more credible AML enforcement, whereas in low-income settings, its impact is constrained by weaker institutional capacity. Legal origin exhibits weaker moderating effects, with political stability reducing ML risk across both common law and civil law systems. Overall, the findings highlight political stability as a key institutional determinant of structural Anti-Money Laundering (AML) vulnerability, underscoring the importance of strengthening governmental capacity to enhance the effectiveness of anti-money laundering frameworks. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

14 pages, 517 KB

Open AccessArticle

Bilateral Trade and Exchange Rate Volatility: Evidence from a Multiple-Threshold Nonlinear ARDL Model

by Min-Joon Kim

Economies 2026, 14(2), 67; https://doi.org/10.3390/economies14020067 - 22 Feb 2026

Cited by 1 | Viewed by 1506

Abstract

This study applies a multiple threshold nonlinear autoregressive distributed lag (MTNARDL) model to examine the asymmetric impact of real exchange rate volatility on Vietnam’s exports and imports with its three leading trading partners: China, the United States, and South Korea. By allowing trade [...] Read more.

This study applies a multiple threshold nonlinear autoregressive distributed lag (MTNARDL) model to examine the asymmetric impact of real exchange rate volatility on Vietnam’s exports and imports with its three leading trading partners: China, the United States, and South Korea. By allowing trade responses to vary across different volatility regimes, the MTNARDL framework provides a flexible approach to capturing potential nonlinear adjustment dynamics that cannot be addressed by single-threshold models. Moreover, using bilateral import and export data helps reduce aggregation bias. The results indicate the presence of asymmetric long-run adjustment dynamics in the relationship between real exchange rate volatility and bilateral trade flows, while short-run effects are generally weak and less consistent across trading partners. These findings provide valuable insights into the complex effects of exchange rate volatility, enabling policymakers to more effectively design and manage policies to mitigate its impact. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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18 pages, 357 KB

Open AccessArticle

Is the Book Judged by Its Cover? Unveiling the Impact of Corruption on Foreign Direct Investment in the PALOP Economies

by Filipa Sá, Isabella Castro, Mariana Resende, Matilde Ramos and Jorge Cerdeira

Economies 2026, 14(2), 66; https://doi.org/10.3390/economies14020066 - 21 Feb 2026

Viewed by 914

Abstract

This paper analyzes the impact of corruption on foreign direct investment (FDI) in the Portuguese-speaking African countries (PALOP) economies between 2006 and 2018. The focus lies on Angola, Cape Verde, Guinea-Bissau, and Mozambique since, according to Transparency International, they exhibit intermediate to low [...] Read more.

This paper analyzes the impact of corruption on foreign direct investment (FDI) in the Portuguese-speaking African countries (PALOP) economies between 2006 and 2018. The focus lies on Angola, Cape Verde, Guinea-Bissau, and Mozambique since, according to Transparency International, they exhibit intermediate to low levels on the Corruption Perceptions Index. Despite sharing historical and cultural ties, as former Portuguese colonies, no research has focused on the impact of corruption on FDI in the PALOP economies, to the best of our knowledge. To accomplish this, we use an Instrumental Variables Fractional Probit Regression applied to data from the World Bank Enterprise Surveys, which gather information for 2180 firms. The results show that, on average, corruption does not significantly affect FDI in PALOP economies. Trade, credit, and firm size emerge as key FDI determinants, while investment levels and tax rates are not relevant. Corruption has negligible effects on FDI in manufacturing but boosts FDI in services. Interestingly, while corruption has no significant effect on FDI for small and medium firms, a positive, significant impact is revealed for large firms. Finally, corruption’s overall FDI impact is the same across PALOP countries, except in Angola, where it negatively influences FDI compared to Mozambique. Full article

29 pages, 1573 KB

Open AccessArticle

The Impact of Mobile Money and CBDCs on Remittance Fees: Evidence from Nigeria and Sub-Saharan Africa

by Francisco Elieser Giraldo-Gordillo and Ricardo Bustillo-Mesanza

Economies 2026, 14(2), 65; https://doi.org/10.3390/economies14020065 - 20 Feb 2026

Cited by 1 | Viewed by 2705 | Correction

Abstract

This study investigates the potential effects of Mobile Money (MM) and Central Bank Digital Currencies (CBDCs) on the average transaction costs of remittances to Sub-Saharan Africa (SSA), with a focus on Nigeria. While much of the current literature highlights the theoretical benefits of [...] Read more.

This study investigates the potential effects of Mobile Money (MM) and Central Bank Digital Currencies (CBDCs) on the average transaction costs of remittances to Sub-Saharan Africa (SSA), with a focus on Nigeria. While much of the current literature highlights the theoretical benefits of CBDCs in reducing intermediation costs, empirical evidence remains limited. The analysis combines descriptive statistics and regression models to examine the role of MM in reducing remittance fees across SSA. In addition, the Synthetic Control Method (SCM) is applied to assess the post-launch impact of Nigeria’s CBDC, the eNaira, on inward remittance costs. Results show that MM adoption is associated with significant reductions in remittance costs, reinforcing its importance as a tool for financial inclusion and efficiency. In contrast, the eNaira is not yet associated with transaction fee reduction and has not displaced the bank-dominated remittance channels, which are the most expensive. These findings suggest that while CBDCs hold promise, their effectiveness in emerging markets depends on complementary digital infrastructure and policies that support competition and interoperability. This paper offers one of the first empirical assessments of a CBDC’s economic impact on remittance costs, moving beyond largely theoretical or technical discussions. Jointly analyzing MM and CBDCs provides novel insights into their interaction and highlights policy considerations for emerging markets piloting CBDCs or expanding MM infrastructure. Full article

(This article belongs to the Special Issue Unveiling the Power of Remittances: Drivers, Effects, and Trends)

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22 pages, 1664 KB

Open AccessArticle

Economic Policy Uncertainty and Exchange Rate Volatility: An Asymmetric GARCH-MIDAS Approach with Simulation-Based Validation

by Achouak Barguellil and Khalil Alnabulsi

Economies 2026, 14(2), 64; https://doi.org/10.3390/economies14020064 - 20 Feb 2026

Cited by 2 | Viewed by 2497

Abstract

This paper examines the asymmetric impact of economic policy uncertainty (EPU) on exchange rate volatility across a sample of developed and emerging economies. Using an asymmetric GARCH-MIDAS model, volatility is decomposed into short-term and long-term components, with the latter associated with EPU shocks. [...] Read more.

This paper examines the asymmetric impact of economic policy uncertainty (EPU) on exchange rate volatility across a sample of developed and emerging economies. Using an asymmetric GARCH-MIDAS model, volatility is decomposed into short-term and long-term components, with the latter associated with EPU shocks. The methodology utilizes a simulation-based approach to validate the model’s performance and evaluate the robustness of the empirical findings. The results suggest directional patterns indicating that economic policy uncertainty influences exchange rate volatility, often appearing to align with the theoretical expectations of investor loss aversion. Specifically, positive and negative shocks to uncertainty exhibit distinct volatility responses in several cases, though the statistical significance of these asymmetric parameters varies across the sample. The comparative analysis identifies notable heterogeneity between developed and emerging countries, suggesting that transmission mechanisms vary across different institutional contexts. These findings provide new insights into how global currencies react to political shocks and highlight the qualitative relevance of the asymmetry hypothesis in volatility modeling, while acknowledging that statistical power remains limited for certain currency pairs. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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13 pages, 449 KB

Open AccessArticle

Regional Labour Market Polarisation in Hungary

by Zoltán András Dániel, Dorottya Edina Kozma and Tamás Molnár

Economies 2026, 14(2), 63; https://doi.org/10.3390/economies14020063 - 17 Feb 2026

Viewed by 1312

Abstract

This study investigates the spatial dimensions of labour market polarization in Hungary by examining the widening gap between developed agglomerations and lagging peripheral regions. It explores how educational inequality, technology-driven risks, and constrained mobility affect the spatial aspects of labour market polarization. It [...] Read more.

This study investigates the spatial dimensions of labour market polarization in Hungary by examining the widening gap between developed agglomerations and lagging peripheral regions. It explores how educational inequality, technology-driven risks, and constrained mobility affect the spatial aspects of labour market polarization. It covers all 197 districts of Hungary on the LAU-1 level. Using cluster analysis and OLS regression models, we shall explore relationships between employment rates, educational attainment, automation exposure—as based on occupation-level data—and a composite mobility index. From the data, we detected distinct labour market zones, which are dynamic agglomerations, industrial transition zones, and peripheral lagging. The data confirms that the “triple trap” is clearly experienced by the peripheral regions, with lower educational attainment, high exposure to automation impacting nearly 50%, and mobility constraints keeping the workforce bound to local public works employment. These results provide evidence that labor market polarization is a self-reinforcing spatial process. It implies that successful policy interventions should be comprehensive, addressing the interrelated elements of transport infrastructure, skill development, and regional economic diversification in one stroke to break the vicious circle of immobility. Full article

(This article belongs to the Special Issue Labour Market Dynamics in European Countries)

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28 pages, 2170 KB

Open AccessArticle

Regional Food Reserves in West Java, Indonesia: An Assessment of Availability and Management Performance

by Adang Agustian, Helena Juliani Purba, Rika Reviza Rachmawati, Ening Ariningsih, Ashari Ashari, Rizma Aldillah, Benny Rachman, Sri Hery Susilowati, Mewa Ariani, Dewa Ketut Sadra Swastika, Thomas Agoes Soetiarso, Nyak Ilham, Risfaheri Risfaheri, Agung Hendriadi, Dewi Sahara, Ika Inayah and Handewi Purwati Saliem

Economies 2026, 14(2), 62; https://doi.org/10.3390/economies14020062 - 17 Feb 2026

Viewed by 1303

Abstract

The government has established food reserves to support national food security; however, their volume varies widely across regions, and many districts still lack such reserves. The objectives of this study were to analyze the determination of volume and the problems in determining it, [...] Read more.

The government has established food reserves to support national food security; however, their volume varies widely across regions, and many districts still lack such reserves. The objectives of this study were to analyze the determination of volume and the problems in determining it, management performance, and propose strategies to strengthen food reserves in local governments. This study was conducted in West Java Province in 2022, using primary and secondary data from the study area. Primary data were collected through FGDs with farmer groups and stakeholders from central and regional agencies, and secondary data consisted of food reserve statistics and secondary literature. Quantitative analysis using mathematical equations in accordance with food reserve calculation regulations was used to calculate the potential food reserve production and ideal reserve volume, while qualitative descriptive analysis obtained from the field was used to clarify the results of the analysis. The main findings of this study are as follows. (1) The determination of local government food reserves is regulated by regional policy, with the volume increasing from 23% in 2018 to 187% in 2022 of the ideal volume in West Java; (2) the potential for rice-based food reserves can be expanded in line with regional production capacity, although there are still obstacles, including limited budgets and a lack of commitment from local governments in determining optimal reserve volumes; (3) strengthening regional food reserves must be complemented by the development of community-based reserves; and (4) improving management performance requires supporting regional government policies to ensure sustainable food reserves, adequate warehousing infrastructure, efficient distribution facilities, and effective distribution mechanisms through collaboration with logistics institutions. This study suggests policy recommendations to implement a multi-year cooperation contract with the Logistics Affairs Agency covering procurement, storage, and distribution to expand reserve volumes and improve management effectiveness. Full article

(This article belongs to the Topic Food Security and Healthy Nutrition)

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14 pages, 1352 KB

Open AccessArticle

Global Attention and Market Resilience: Evidence from the Gaza Conflict and Israeli Financial Assets

by Nikolaos Papanikolaou, Evangelos Vasileiou and Themistoclis Pantos

Economies 2026, 14(2), 61; https://doi.org/10.3390/economies14020061 - 14 Feb 2026

Viewed by 1640

Abstract

This study investigates how the origin and language of public attention influence financial markets during geopolitical conflict, using Israel’s experience during the 2023–2025 Gaza War as a case study. We use Google Trends data—in Hebrew, English, and Arabic, sourced both worldwide and domestically—to [...] Read more.

This study investigates how the origin and language of public attention influence financial markets during geopolitical conflict, using Israel’s experience during the 2023–2025 Gaza War as a case study. We use Google Trends data—in Hebrew, English, and Arabic, sourced both worldwide and domestically—to explain fluctuations in the Tel Aviv Stock Exchange’s TA-35 Index and the Israeli shekel’s exchange rates (USD/ILS and EUR/ILS). The results uncover a striking asymmetry: international searches, especially those in Hebrew and English, have significant power to explain Israeli market performance, while local, domestic searches are largely insignificant. Specifically, global Hebrew attention is positively associated with the shekel appreciating, suggesting that expressions of confidence or solidarity from the diaspora may actively reinforce market stability. In contrast, spikes in global English-language searches correspond with lower equity returns and temporary shekel depreciation, consistent with heightened international risk perception. These findings demonstrate that transnational behavioral networks and diaspora attention critically shape financial resilience during war. By integrating behavioral finance, conflict economics, and computational analytics, this research shows that the geographic and linguistic origin of attention, not just its sheer volume, is the key determinant of market reactions in times of crisis. Full article

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22 pages, 883 KB

Open AccessArticle

Impact of Demographic and Macroeconomic Variables on Gross Saving: Evidence from Jordan

by Omar Mohammad Alzoubi and Nahil Ismail Saqfalhait

Economies 2026, 14(2), 60; https://doi.org/10.3390/economies14020060 - 14 Feb 2026

Viewed by 1183

Abstract

This study analyzes the determinants of gross saving in Jordan over the period 1991–2023, with particular attention paid to the role of macroeconomic and demographic factors in shaping saving behavior. The empirical analysis employs the Autoregressive Distributed Lag (ARDL) bounds testing approach to [...] Read more.

This study analyzes the determinants of gross saving in Jordan over the period 1991–2023, with particular attention paid to the role of macroeconomic and demographic factors in shaping saving behavior. The empirical analysis employs the Autoregressive Distributed Lag (ARDL) bounds testing approach to examine both short-run and long-run relationships between gross saving, the age dependency ratio, real per capita GDP growth, real interest rates, and unemployment. The results indicate rapid short-run adjustment dynamics in saving behavior and a stable long-run association between saving and its key determinants. In contrast to standard theoretical predictions, a higher dependency ratio is found to increase gross saving. This outcome appears to reflect Jordan’s socio-demographic context, precautionary saving motives, family-based support mechanisms, limited social security coverage, and the role of remittances. Income growth has a positive effect on saving, while unemployment exerts a negative effect. The real interest rate exhibits limited and transitory short-run effects, while remaining insignificant in the long-run. From a policy perspective, the findings underscore the importance of job creation, sustained income growth, and the development of broader saving instruments. Full article

(This article belongs to the Section Economic Development)

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28 pages, 858 KB

Open AccessArticle

Evaluation of Public Expenditure in Morocco: An Analysis Using Efficiency Frontiers

by Yassin Lhajhouji, Rachid Hasnaoui and Mohcine Bakhat

Economies 2026, 14(2), 59; https://doi.org/10.3390/economies14020059 - 13 Feb 2026

Viewed by 2381

Abstract

In Morocco, the increasing public expenditure on essential sectors, such as education, does not always lead to improved outcomes, highlighting a significant gap between resource allocation and quality enhancement. This study examines the efficiency of public expenditure in education, health, and infrastructure from [...] Read more.

In Morocco, the increasing public expenditure on essential sectors, such as education, does not always lead to improved outcomes, highlighting a significant gap between resource allocation and quality enhancement. This study examines the efficiency of public expenditure in education, health, and infrastructure from 1990 to 2022, employing a robust Data Envelopment Analysis (DEA) approach supplemented by bootstrap regression techniques. Our analysis reveals considerable inefficiencies, particularly in education, where higher expenditures have not consistently resulted in greater efficiency. This underscores the importance of prioritising quality, effective management, and optimal resource utilisation alongside budget increases. By integrating DEA with bootstrap methods, we provide more reliable efficiency estimates and identify key economic factors, such as inflation, urbanisation, corruption, and political stability that influence the performance of public expenditure. These findings offer valuable insights for policymakers aiming to optimise resource use and enhance the effectiveness of public expenditure within Morocco’s broader development strategy. Full article

(This article belongs to the Special Issue Advances in Applied Economics: Trade, Growth and Policy Modeling)

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18 pages, 802 KB

Open AccessArticle

Digital Development Levels in the European Union: Measurement and Analysis

by Manuel de Maya Matallana, Olga García-Luque, María López-Martínez and Myriam Rodríguez-Pasquín

Economies 2026, 14(2), 58; https://doi.org/10.3390/economies14020058 - 12 Feb 2026

Cited by 1 | Viewed by 1553

Abstract

Digital transformation is a key driver of economic and social progress, and assessing its evolution is essential for guiding public policies. In the European Union (EU), until 2022 the European Commission published the quantitative values of the Digital Economy and Society Index (DESI); [...] Read more.

Digital transformation is a key driver of economic and social progress, and assessing its evolution is essential for guiding public policies. In the European Union (EU), until 2022 the European Commission published the quantitative values of the Digital Economy and Society Index (DESI); however, it is no longer being published, which makes it difficult to compare the digitalisation process between Member States. This study proposes a new composite index, the DESI-DP2, constructed using the distance P2 methodology (DP2), which provides a synthetic and up to date measurement of the digitalisation levels in the twenty-seven EU countries in 2025, both at an aggregate term and by dimensions. The results reveal notable stability in the ranking of countries, with Denmark, Finland, the Netherlands, and Sweden as persistent leaders, and Bulgaria and Romania among the most lagging countries. Moreover, although digitalisation is positively associated with human development, a high level of development alone is not sufficient to ensure strong digital performance. Finally, the study identifies a shift in the explanatory factors behind cross-country differences, from digital skills toward the digital transformation of the business sector, offering relevant insights for the design of public policies within the framework of the European Digital Decade. Full article

(This article belongs to the Special Issue Emerging Trends in the Digital Economy: Opportunities, Challenges, and Implications for Developing Countries)

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24 pages, 525 KB

Open AccessArticle

How Does the Establishment of Government Industrial Funds Affect Enterprise Innovation in China? A Perspective from “Bridging the Equity Gap”

by Yuxin Zhang and Yaodong Zhou

Economies 2026, 14(2), 57; https://doi.org/10.3390/economies14020057 - 12 Feb 2026

Cited by 1 | Viewed by 1014

Abstract

Focusing on the role of government industrial funds in bridging the equity gap, in this paper, we examine how the establishment of government industrial funds (GIFs) affects enterprise innovation and the underlying mechanism of the guiding and synergistic effects on social capital. By [...] Read more.

Focusing on the role of government industrial funds in bridging the equity gap, in this paper, we examine how the establishment of government industrial funds (GIFs) affects enterprise innovation and the underlying mechanism of the guiding and synergistic effects on social capital. By conducting an empirical study employing a fixed-effect model comprising panel data of Chinese industrial enterprises covering the recent period of 2014 to 2024, we found that GIFs play a positive role in promoting local enterprise innovation. We also provide supporting evidence that China’s GIFs are effectively designed in bridging the equity gap, which hinders innovation, and that they are productive in alleviating the structural friction of the venture capital market. The findings of this study also offer some new evidence regarding the influence of fund-level characteristics on the innovation-promoting effect of GIFs, which has not been previously explored for the Chinese context. Our research also reveals the “seeding” role and “patient capital effect” of GIFs, which guide social capital to gather towards early-stage and long-term funds, improve the structural supply shortage in the local venture capital market, and thereby alleviate the financing gap for corporate innovation. The focus on early-stage and long-term capital is an innovative perspective of this paper. Our results also indicate that private capital, as an important participant in government industrial funds, can positively moderate the innovation-promoting effect of government industrial funds. The impact of funds’ internal governance mechanisms on their innovation-promoting effect is also one of the unique contributions of this paper. Full article

(This article belongs to the Section Economic Development)

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22 pages, 1339 KB

Open AccessArticle

Fiscal Regressivity and Allocative Inefficiency: The Economic Cost of Thailand’s 2024 Wine Tax Reform

by Mana Luksamee-Arunothai, Chittawan Chanagul and Phubet Senbut

Economies 2026, 14(2), 56; https://doi.org/10.3390/economies14020056 - 12 Feb 2026

Viewed by 1575

Abstract

Thailand’s 2024 excise tax reform aimed to stimulate the tourism economy through the elimination of import tariffs and the reduction in excise rates on wine. This study evaluates the causal economic and distributional impacts of this policy intervention. The analysis employs a quasi-experimental [...] Read more.

Thailand’s 2024 excise tax reform aimed to stimulate the tourism economy through the elimination of import tariffs and the reduction in excise rates on wine. This study evaluates the causal economic and distributional impacts of this policy intervention. The analysis employs a quasi-experimental Doubly Robust Difference-in-Differences (DR-DiD) estimator on a stratified cluster sample to isolate shifts in consumption expenditure, volume, and net ethanol intake. Results indicate a null effect for the general population, which confirms that the price floor remained prohibitive for median earners despite the tax reduction. The top income quintile conversely exhibited a statistically significant “additive premiumization” effect characterized by a surge in wine quantity without the substitution of other beverage categories. This behavioral shift generated a substantial Net Economic Loss driven by the divergence between foregone tax revenue and projected human capital productivity losses. The policy consequently functioned as a regressive fiscal transfer to the elite and created severe allocative inefficiency. These findings suggest that ad valorem tax incentives for luxury goods in emerging markets generate deadweight loss. Future policy strategies should therefore prioritize specific volumetric taxation to align fiscal incentives with public health objectives. Full article

(This article belongs to the Section Health Economics)

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37 pages, 6144 KB

Open AccessArticle

Inflation Shocks and Equity Vulnerability: Regime, Sign, and Cross-Country Asymmetries in the G7

by Ezer Ayadi, Lotfi Ben Jedidia and Noura Ben Mbarek

Economies 2026, 14(2), 55; https://doi.org/10.3390/economies14020055 - 11 Feb 2026

Cited by 1 | Viewed by 1323

Abstract

This paper investigates the nonlinear and state-dependent relationship between inflation surprises and real equity returns across G7 economies. Using monthly data from January 1998 to May 2025, we employ nonlinear local projection models to estimate the dynamic responses of the equity market to [...] Read more.

This paper investigates the nonlinear and state-dependent relationship between inflation surprises and real equity returns across G7 economies. Using monthly data from January 1998 to May 2025, we employ nonlinear local projection models to estimate the dynamic responses of the equity market to domestic inflation shocks. While linear estimates reveal modest but persistent average losses, once regime dependence and sign asymmetry are jointly considered, three critical findings emerge. First, equity responses are strongly regime-dependent: inflation shocks occurring in high-inflation environments produce losses two to four times larger than those in low-inflation regimes. Second, the direction of the shock matters: positive inflation surprises are associated with deeper and longer-lasting equity declines than the gains generated by negative surprises. Third, these effects exhibit pronounced cross-country heterogeneity, with distinct vulnerability profiles that remain invisible in linear or pooled models. To systematically assess these differences, we develop a Sensitivity–Volatility–Vulnerability (SVV) assessment that synthesizes regime-dependent and sign-asymmetric responses into market vulnerability profiles. Our results underscore that inflation risk in equity markets is not only nonlinear and regime-dependent but also fundamentally country-specific, implying that conventional linear models materially understate downside equity exposure. These findings carry important implications for monetary policy, financial regulation, and international portfolio diversification. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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18 pages, 359 KB

Open AccessArticle

FDI and Corruption: Panel Evidence from EU Member States

by Davor Mance, Mara Trbojević and Davorin Balaž

Economies 2026, 14(2), 54; https://doi.org/10.3390/economies14020054 - 11 Feb 2026

Viewed by 1526

Abstract

This paper examines the relationship between corruption and foreign direct investment (FDI) inflows in European Union member states using a dynamic panel framework. Using an unbalanced EU panel from 2002 to 2022 and an Arellano–Bond difference-GMM specification, we model inward FDI inflows per [...] Read more.

This paper examines the relationship between corruption and foreign direct investment (FDI) inflows in European Union member states using a dynamic panel framework. Using an unbalanced EU panel from 2002 to 2022 and an Arellano–Bond difference-GMM specification, we model inward FDI inflows per capita as a function of institutional integrity (measured by Transparency International’s Corruption Perceptions Index), market size, development level, and trade integration. The results show a robust positive association between improvements in perceived integrity (higher CPI scores) and increases in inward FDI inflows per capita, conditional on macroeconomic controls and dynamic adjustment. Market size and trade variables have the expected signs, while GDP per capita is the empirically sensitive margin, consistent with the idea that higher development can indicate greater purchasing power but also higher costs and saturation effects in advanced economies. Robustness checks using the inverse hyperbolic sine transformation—suited to heavy tails, zeros, and negative net flows—confirm that the governance association is not an artifact of scaling. The findings highlight the importance of institutional quality and market openness as correlates of FDI attractiveness within the EU. Full article

(This article belongs to the Special Issue Advances in Applied Economics: Trade, Growth and Policy Modeling)

18 pages, 314 KB

Open AccessArticle

Public Debt Sustainability in the Eurozone: An Empirical Assessment Using Macroeconomic Indicators

by Noah Cheruiyot Mutai, Lawrence Ibeh, Karim Farag, Olufunke Mercy Popoola and James Agbor Okpokiri, Jr.

Economies 2026, 14(2), 53; https://doi.org/10.3390/economies14020053 - 10 Feb 2026

Viewed by 2403

Abstract

This study examines public debt sustainability in the Eurozone by estimating fiscal reaction functions that assess how fiscal balances respond to rising public debt under heterogeneous macroeconomic conditions. Using annual panel data for 20 EU countries from 2000 to 2024, we employ fixed [...] Read more.

This study examines public debt sustainability in the Eurozone by estimating fiscal reaction functions that assess how fiscal balances respond to rising public debt under heterogeneous macroeconomic conditions. Using annual panel data for 20 EU countries from 2000 to 2024, we employ fixed effects, system Generalized Method of Moments (GMM), and nonlinear specifications grounded in the intertemporal budget constraint framework. The results indicate that, under fixed effects, fiscal balances respond negatively to higher debt levels, consistent with the presence of fiscal fatigue. In contrast, dynamic GMM estimates reveal weak or statistically insignificant debt responses, while confirming strong fiscal persistence and a positive role for economic growth. Nonlinear specifications suggest that fiscal responsiveness weakens at high debt levels, with adjustment capacity further strained during major crisis episodes. Inflation and interest rates exert adverse effects on fiscal balances, whereas GDP growth supports fiscal sustainability. In summary, the findings highlight substantial cross-country heterogeneity and raise doubts about the effectiveness of uniform fiscal rules in the European Union, lending support to calls for more flexible and country-specific fiscal frameworks. Full article

(This article belongs to the Special Issue Studies on Fiscal Policy in Times of High Debt)

15 pages, 305 KB

Open AccessArticle

Stock Market Development and Economic Growth Nexus: Evidence from the Fragile Five Countries

by Yeşim Helhel

Economies 2026, 14(2), 52; https://doi.org/10.3390/economies14020052 - 9 Feb 2026

Cited by 1 | Viewed by 2280

Abstract

In emerging markets, stock markets play a crucial role in supporting long-term growth. This study explores the causal relationship between stock market development and economic growth in the Fragile Five countries—Brazil, India, Indonesia, South Africa, and Turkey—covering the period from 2001 to 2024. [...] Read more.

In emerging markets, stock markets play a crucial role in supporting long-term growth. This study explores the causal relationship between stock market development and economic growth in the Fragile Five countries—Brazil, India, Indonesia, South Africa, and Turkey—covering the period from 2001 to 2024. To ensure robust findings, it uses second-generation panel cointegration and causality tests that account for cross-sectional dependence and structural heterogeneity. The model includes three parameters representing financial depth, liquidity, and efficiency. Results indicate significant long-term cointegration, suggesting causality from stock market development to economic growth, supporting the supply-led growth hypothesis. This aligns with recent evidence highlighting the importance of institutional quality and sectoral interconnectedness in emerging markets. Furthermore, Panel DOLS and FMOLS analyses reveal that stock market capitalization has a notable positive effect on domestic productivity. Overall, these findings underscore that stock market parameters are vital for accurate economic forecasting and that strengthening capital markets is essential for sustainable growth in the Fragile Five. Full article

(This article belongs to the Special Issue Advances in Applied Economics: Trade, Growth and Policy Modeling)

15 pages, 419 KB

Open AccessArticle

Determinants of Preferences for Employment Patriarchy in Turkey

by Tekin Kose and Dogan Kaan Erdinc

Economies 2026, 14(2), 51; https://doi.org/10.3390/economies14020051 - 9 Feb 2026

Viewed by 1278

Abstract

Patriarchal attitudes persistently constrain women’s employment outcomes in Turkey. This study investigates individual-level determinants of preferences for employment patriarchy using the World Values Survey (WVS) Wave 7 data for the Turkish case. An ordered probit model is utilized to quantify associations of sociodemographic [...] Read more.

Patriarchal attitudes persistently constrain women’s employment outcomes in Turkey. This study investigates individual-level determinants of preferences for employment patriarchy using the World Values Survey (WVS) Wave 7 data for the Turkish case. An ordered probit model is utilized to quantify associations of sociodemographic characteristics, religiosity, political views, and other patriarchal attitudes with preferences for employment patriarchy in Turkey. Findings reveal that higher religiosity, right-wing views, and other patriarchal attitudes (educational, managerial, and household) are positively associated with preferences for employment patriarchy in Turkey. Females are less likely to have preferences for employment patriarchy. The results imply that there are multidimensional pathways leading to preferences for employment patriarchy. Hence, policies to improve female labor market outcomes should develop multidimensional mechanisms to mitigate the impacts of religious, political and normative factors by moving beyond one-size-fits-all approaches. Full article

(This article belongs to the Special Issue Labour Market Dynamics in European Countries)

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25 pages, 2203 KB

Open AccessArticle

Macroeconomic Determinants of Renewable Energy Deployment: The Role of Inflation, Fiscal Policy, and Economic Volatility in MENA Countries (2000–2023)

by Rifaat Fathi Metwally Yousef

Economies 2026, 14(2), 50; https://doi.org/10.3390/economies14020050 - 7 Feb 2026

Viewed by 912

Abstract

The worldwide move toward renewable energy indicates a fundamental change that is particularly important in the MENA region, which has abundant renewable resources and has depended on hydrocarbon economies. This study presents an empirical examination of key macroeconomic determinants—inflation, fiscal policy, and economic [...] Read more.

The worldwide move toward renewable energy indicates a fundamental change that is particularly important in the MENA region, which has abundant renewable resources and has depended on hydrocarbon economies. This study presents an empirical examination of key macroeconomic determinants—inflation, fiscal policy, and economic volatility—on renewable energy security in MENA countries from 2000 to 2023. Applying a Panel Autoregressive Distributed Lag (ARDL) model of 16 countries, we assess the short-run dynamic and long-run equilibrium relationships, where renewable energy security is measured using the share of renewable electricity in total generation. These results support the existence of a significant long-run cointegrating relationship. We find fiscal policy to have a positive effect on renewable energy security, while inflation and economic volatility have significant negative short- and long-term effects. The error-correction term of −0.421 signaled a relatively fast return to long-run equilibrium. We conclude that sound management of these macroeconomic variables—especially price stability and counter-cyclical fiscal policies—is an essential precondition for achieving renewable energy security in the MENA region. Our policy implications highlight the need to support stable investment inquiries led by coordinated monetary, fiscal, and energy policies aimed at creating the conditions for renewable energy security. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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16 pages, 979 KB

Open AccessArticle

Monetary Fundamentals and Exchange Rate Forecasting in Hyperinflation

by Mohammad Alawin

Economies 2026, 14(2), 49; https://doi.org/10.3390/economies14020049 - 6 Feb 2026

Viewed by 660

Abstract

The Meese–Rogoff puzzle suggests that exchange rate models rarely outperform a random walk in out-of-sample forecasting. This paper re-examines that puzzle in the context of the German hyperinflation, an environment in which monetary forces dominate economic behavior. Using simple bivariate specifications derived from [...] Read more.

The Meese–Rogoff puzzle suggests that exchange rate models rarely outperform a random walk in out-of-sample forecasting. This paper re-examines that puzzle in the context of the German hyperinflation, an environment in which monetary forces dominate economic behavior. Using simple bivariate specifications derived from the quantity theory of money, purchasing power parity, and the monetary model of exchange rates, the paper evaluates forecasting performance against a random walk benchmark. The results show that during the most intense phase of hyperinflation, these fundamentals-based models can outperform the random walk in terms of root mean square error. This finding indicates that exchange rate predictability is regime-dependent and that, under extreme monetary instability, basic theoretical relationships can regain forecasting power. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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15 pages, 270 KB

Open AccessArticle

Trade Openness, Foreign Direct Investment and Industrial Growth: Panel Data Evidence from the ASEAN Region

by Muhammad Tahir, Adam Abdullah, Abdulrahman A. Albahouth and Umar Burki

Economies 2026, 14(2), 48; https://doi.org/10.3390/economies14020048 - 6 Feb 2026

Cited by 3 | Viewed by 2907

Abstract

This paper re-examines the role of trade and FDI inflows in accelerating the process of industrial growth involving countries belonging to the “Association of Southeast Asian Nations (ASEAN)” region. Trade openness and foreign direct investment (FDI) have improved the growth performance of numerous [...] Read more.

This paper re-examines the role of trade and FDI inflows in accelerating the process of industrial growth involving countries belonging to the “Association of Southeast Asian Nations (ASEAN)” region. Trade openness and foreign direct investment (FDI) have improved the growth performance of numerous economies and regions over the years. However, the specific role of both trade openness and FDI inflows in advancing the industrial growth process of economies has yet to be investigated in the case of economies belonging to ASEAN. This study analyzes data from 2000 to 2023 and employs several relevant econometric tools, including the “Pooled Ordinary Least Squares (POLS)”, “Fixed Effects Filter (FEF)”, “Feasible Generalized Least Squares (FGLS)” and “Two Stages Least Squares (TSLS)”, to assess the specific impact of both trade openness and FDI inflows on industrial growth. Our findings show that both trade openness and FDI have advanced the industrial growth of ASEAN member economies. In terms of relative importance, the impact of trade openness is higher as compared to FDI inflows on the industrial sector. Similarly, the results demonstrate that the industrial growth of ASEAN economies could be explained positively by increased domestic investment and government expenditures. Moreover, our results indicate that the inflation rate and the natural resource sector have adversely impacted industrial growth. Finally, the labor force has not had the desirable positive impact on the industrial progress of ASEAN economies. The obtained results are robust across alternative specifications and estimation techniques. Therefore, our results have important policy implications for ASEAN economies. Full article

(This article belongs to the Section International, Regional, and Transportation Economics)

33 pages, 1644 KB

Open AccessArticle

Does Finance Green the Energy Frontier? A DEA–Tobit Assessment of the European Union and Western Balkan Economies

by Ledjon Shahini and Martin Serreqi

Economies 2026, 14(2), 47; https://doi.org/10.3390/economies14020047 - 5 Feb 2026

Viewed by 1141

Abstract

This paper examines how financial development shapes total factor energy efficiency (TFEE) across the European Union (EU-27) and Western Balkans (WB-6) via a two-stage methodology. We develop DEA-based TFEE indicators from 2006 to 2021 via a window approach that reflects short- and medium-term [...] Read more.

This paper examines how financial development shapes total factor energy efficiency (TFEE) across the European Union (EU-27) and Western Balkans (WB-6) via a two-stage methodology. We develop DEA-based TFEE indicators from 2006 to 2021 via a window approach that reflects short- and medium-term changes. The production technique integrates primary energy, capital, and labor as inputs, with GDP as a desirable outcome and CO₂ emissions as an undesirable output. In the second stage, we estimate a fixed-effects Tobit model that associates latent TFEE scores with standard and composite indices of financial and economic development, while accounting for unobserved country heterogeneity, common temporal shocks, and non-linearities in gross domestic product per capita. While similar Tobit frameworks have been implemented for EU-27, this represents the first case, to our knowledge, of estimating such a model for six Western Balkan countries within a unified EU–WB context. This extension is both methodological and substantive as it integrates the Western Balkans into the finance–energy efficiency discourse and offers policy-relevant evidence regarding the effectiveness of current financial architectures in the region in facilitating the transition mandated by the European Green Deal and the Green Agenda for the Western Balkans. Full article

(This article belongs to the Section Growth, and Natural Resources (Environment + Agriculture))

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25 pages, 664 KB

Open AccessArticle

Tourism-Induced Data Envelopment Analysis (T-DEA): An Application in the Eurozone Economic Space

by George Ekonomou and Dimitris Kallioras

Economies 2026, 14(2), 46; https://doi.org/10.3390/economies14020046 - 5 Feb 2026

Cited by 1 | Viewed by 1228

Abstract

This study investigates technical efficiency scores and performance change patterns by applying the tourism-induced Data Envelopment Analysis (DEA) to the Eurozone from 1996 to 2019. The study uses direct employment in tourism and capital investment spending directly related to the travel and tourism [...] Read more.

This study investigates technical efficiency scores and performance change patterns by applying the tourism-induced Data Envelopment Analysis (DEA) to the Eurozone from 1996 to 2019. The study uses direct employment in tourism and capital investment spending directly related to the travel and tourism sector as input variables, whereas it considers the direct contribution of tourism to a country’s Gross Domestic Product (GDP) and arrivals as output variables. This set of tested variables is rarely found in the relevant literature, as many studies focus on hotel business-related proxies. After receiving the scores, we regress them on renewable energy sources using panel data. Based on the results, the Eurozone countries’ technical efficiency scores increase by approximately 1% per year on average. On the contrary, productivity growth declines slightly (−0.1% per year), signaling the need for additional effort in technological advancement. The error correction term is negative and significant in the tested models, whereas long-run coefficients are insignificant. Moreover, the empirical results indicate the absence of statistically significant short-run linkages, consistent with a neutrality-type outcome. Practical implications call for accelerating the adoption of renewables in the sector by simultaneously integrating additional measures to support innovation and sustainable investment plans. Full article

(This article belongs to the Section Growth, and Natural Resources (Environment + Agriculture))

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23 pages, 328 KB

Open AccessArticle

Institutional Thresholds and the Distributional Effects of Foreign Direct Investment in ASEAN-5

by Tin Maw Maw Tun, Paravee Maneejuk and Songsak Sriboonchitta

Economies 2026, 14(2), 45; https://doi.org/10.3390/economies14020045 - 31 Jan 2026

Cited by 1 | Viewed by 1692

Abstract

Using a fixed-effects panel threshold regression with Driscoll–Kraay inference, this paper examines how institutional quality shapes the distributional effects of foreign direct investment (FDI) in the ASEAN-5 economies (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) over 2002–2023. The empirical framework allows the impact [...] Read more.

Using a fixed-effects panel threshold regression with Driscoll–Kraay inference, this paper examines how institutional quality shapes the distributional effects of foreign direct investment (FDI) in the ASEAN-5 economies (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) over 2002–2023. The empirical framework allows the impact of FDI on income inequality (net Gini index) to differ across low- and high-institutional regimes and to vary within regimes through interaction terms. Across governance indicators from the Worldwide Governance Indicators and a composite institutional quality index (IQ) constructed via principal component analysis (PCA), the results reveal pronounced nonlinearities, most clearly for government effectiveness, where the association between FDI and inequality switches sign across institutional regimes. For other governance dimensions, the FDI–inequality relationship is similarly regime-dependent and operates partly through regime-specific interaction effects, underscoring the importance of institutional thresholds in mediating distributional outcomes. Robustness checks confirm the directional consistency of the baseline results. Our findings imply that governance reforms must surpass critical institutional thresholds, particularly in effectiveness and implementation capacity, before FDI can contribute to reducing income inequality, highlighting the central role of deep governance improvements in enabling inclusive growth in ASEAN economies. Full article

(This article belongs to the Special Issue 19th Thailand Econometrics Society (TES 2026) Conference on Economics and Financial Modelling and Application)

30 pages, 1934 KB

Open AccessArticle

Unlocking Inclusive Growth: The Mediating Role of E-Commerce in MSME Digitalization for Economic Development and SDGs’ Achievement in Jambi Province, Indonesia

by Lidya Anggraeni, Zulgani, Siti Hodijah and Etik Umiyati

Economies 2026, 14(2), 44; https://doi.org/10.3390/economies14020044 - 30 Jan 2026

Cited by 1 | Viewed by 2000

Abstract

Although Micro, Small and Medium Enterprises (MSMEs) are the backbone of economic activity and inclusive growth in Indonesia, and recent data from Jambi Province reveal a disconnect between robust post-pandemic recovery and meaningful poverty reduction. While regional GDP climbed from 0.99% to 6% [...] Read more.

Although Micro, Small and Medium Enterprises (MSMEs) are the backbone of economic activity and inclusive growth in Indonesia, and recent data from Jambi Province reveal a disconnect between robust post-pandemic recovery and meaningful poverty reduction. While regional GDP climbed from 0.99% to 6% between 2020 and 2024, poverty declined only slightly, highlighting persistent inequality. This study addresses this gap by examining, for the first time in the context of Jambi Province, how e-commerce adoption mediates the link between Micro, Small and Medium Enterprises’ (MSMEs’) quality and the achievement of economic growth, innovation, and Sustainable Development Goals (SDGs) 1 and 9. Using Structural Equation Modeling–Partial Least Squares (SEM-PLS) on data from 250 Micro, Small and Medium Enterprises (MSMEs), the findings reveal that improvements in Micro, Small and Medium Enterprises’ (MSMEs’) quality alone do not drive growth or reduce poverty unless they are accompanied by the effective adoption of e-commerce. This integrated approach, combining Micro, Small and Medium Enterprises’ (MSMEs’) capacity, digital transformation and regional Sustainable Development Goal outcomes, offers new empirical evidence and practical recommendations for emerging economies. Despite a sectoral and regional focus, the framework and results are generalizable to similar contexts. Future research should expand into additional sectors and regions, and adopt longitudinal analysis to validate and enrich these findings. Full article

(This article belongs to the Section Economic Development)

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33 pages, 352 KB

Open AccessArticle

The Weakest Link: Sibling Dynamics and Bank Failures in Multi-Bank Holding Companies

by Nilufer Ozdemir

Economies 2026, 14(2), 43; https://doi.org/10.3390/economies14020043 - 30 Jan 2026

Viewed by 939

Abstract

This paper examines bank failures during the subprime mortgage crisis, emphasizing sibling dynamics within multi-bank holding companies (MBHCs). While traditional risk indicators effectively predict failures for one bank holding companies (OBHCs), they exhibit limited explanatory power for MBHCs, where internal capital markets and [...] Read more.

This paper examines bank failures during the subprime mortgage crisis, emphasizing sibling dynamics within multi-bank holding companies (MBHCs). While traditional risk indicators effectively predict failures for one bank holding companies (OBHCs), they exhibit limited explanatory power for MBHCs, where internal capital markets and interdependencies across affiliates shape risk outcomes. We extend the standard failure framework by incorporating group-level characteristics that capture sibling network structure and the distribution of risk across affiliates. Using pre-crisis data from 2006 to 2007, we show that group structure significantly influences failure risk. Larger sibling networks reduce individual bank failure risk through diversification, while greater size dispersion across affiliates increases vulnerability by constraining internal resource allocation. Beyond these aggregate effects, we introduce a weakest link approach that identifies the most distressed affiliate based on extreme tail risk in capitalization, asset quality, liquidity, earnings, and income volatility, capturing organizational fragility that aggregate measures miss. Concentrated vulnerabilities at a single affiliate significantly amplify failure risk throughout the holding company, even after controlling for traditional bank-level fundamentals and parent-level characteristics. These findings, derived from the 2007–2010 crisis, a severe stress test of holding company structures, identify organizational dynamics: resource competition among siblings and concentrated vulnerabilities at the weakest affiliate. Supervisory frameworks should explicitly account for within-group interdependencies rather than relying solely on individual bank metrics or aggregate indicators when monitoring bank holding company structures. Full article

(This article belongs to the Special Issue Modeling and Forecasting of Financial Markets)

16 pages, 1111 KB

Open AccessArticle

Fiscal and Monetary Dominance in a Small Open Economy: A Markov-Switching VAR Approach to Hungarian Policy

by Sara Salimi, Tibor Tatay, Eszter Kazinczy and Mehran Amini

Economies 2026, 14(2), 42; https://doi.org/10.3390/economies14020042 - 30 Jan 2026

Cited by 2 | Viewed by 1446

Abstract

The interplay between fiscal and monetary policy is critical for small open economies exposed to global volatility, yet the regime-dependent nature of this transmission often remains underexplored. This study investigates whether the Hungarian economy operated under fiscal or monetary dominance from 2010 to [...] Read more.

The interplay between fiscal and monetary policy is critical for small open economies exposed to global volatility, yet the regime-dependent nature of this transmission often remains underexplored. This study investigates whether the Hungarian economy operated under fiscal or monetary dominance from 2010 to 2024, a period marked by significant external shocks. Adopting a Markov Regime-Switching VAR (MS-VAR) framework tailored to an open-economy context, the research estimates state-dependent reaction functions and Impulse Response Functions (IRFs) for both the central bank and the fiscal authority. The model explicitly controls for exogenous geopolitical and economic crises and is validated through rigorous stationarity and regime-selection tests. Empirical results reveal that Hungary predominantly operated under fiscal dominance, with the fiscal authority exhibiting non-Ricardian behavior and no significant response to debt accumulation across the sample. Conversely, the Magyar Nemzeti Bank demonstrated regime-switching behavior: a “Passive” stance accommodating fiscal expansion from 2013 to 2019, followed by a forced shift to an “Active” regime in 2022 characterized by aggressive responses to inflation and high-interest rate volatility. These findings suggest that in small open economies, policy dominance is frequently dictated by external constraints, with the burden of macroeconomic stabilization falling disproportionately on monetary policy during crisis episodes. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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21 pages, 824 KB

Open AccessArticle

Volatility Spillover Effects in Founding Members of BRICS Stock Markets: A DCC-GARCH Perspective

by Pravin Kumar Agrawal, Aamir Aijaz Syed, Alka Singh and Mohit Kumar

Economies 2026, 14(2), 41; https://doi.org/10.3390/economies14020041 - 29 Jan 2026

Cited by 1 | Viewed by 1750

Abstract

This study explores how the volatility spillover mechanism and dynamic dependence among the founding BRICS equity markets, namely IBOVESPA, MICEX, Nifty 50, SSE, and JSE, have evolved over time using a multivariate DCC-GARCH model. The analysis is conducted across three distinct regimes: the [...] Read more.

This study explores how the volatility spillover mechanism and dynamic dependence among the founding BRICS equity markets, namely IBOVESPA, MICEX, Nifty 50, SSE, and JSE, have evolved over time using a multivariate DCC-GARCH model. The analysis is conducted across three distinct regimes: the pre-COVID-19 period (1 January 2010 to 10 March 2020), the COVID-19 crisis (11 March 2020 to 23 February 2022), and the Russia–Ukraine war and sanction period (24 February 2022 to 31 March 2024). The findings indicate that, prior to the COVID-19 pandemic, the BRICS equity markets experienced significant short-term volatility spillovers and significant volatility persistence, indicative of slow financial integration, as opposed to rapid contagion. In comparison, the COVID-19 pandemic resulted in significant structural shifts in the form of increased shock transmission, greater co-movement, and evident financial contagion among the markets. During the post-COVID-19 conflict period, while there was considerable persistence in volatility, the primary drivers of volatility spillovers were geopolitical. Across the three sub-periods, the volatility spillover network shows pronounced structural changes. Before COVID-19, IBOVESPA, MICEX, and SSE act as net transmitters, while Nifty 50 and JSE are net receivers. During the COVID-19 crisis, SSE and JSE become the main shock transmitters, whereas IBOVESPA, MICEX, and Nifty 50 shift to receiver roles. In the post-COVID-19 Russia–Ukraine war period, the network becomes more asymmetric, with JSE and Nifty 50 again emerging as net transmitters, while MICEX and SSE function primarily as net receivers. Overall, this study demonstrates that BRICS equity market interdependence is regime-specific and greatly dependent on exogenous global events. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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34 pages, 1040 KB

Open AccessArticle

Digital Infrastructure, SME E-Commerce, and Economic Growth: Evidence from China’s Platform Economy

by Tengyue Hao, Rajah Rasiah and Sohaib Mustafa

Economies 2026, 14(2), 40; https://doi.org/10.3390/economies14020040 - 28 Jan 2026

Cited by 4 | Viewed by 4146

Abstract

Digitalization is increasingly central to economic growth strategies, yet robust macro-level evidence on the role of SME-led e-commerce remains limited. Drawing on the Resource-Based View, this study examines how SME digitalization, internet finance, and platform-based activities influence regional economic growth in China, and [...] Read more.

Digitalization is increasingly central to economic growth strategies, yet robust macro-level evidence on the role of SME-led e-commerce remains limited. Drawing on the Resource-Based View, this study examines how SME digitalization, internet finance, and platform-based activities influence regional economic growth in China, and how these effects depend on digital infrastructure readiness (DIR). We construct an annual panel of 30 provincial-level regions in China over 2015–2024 and estimate dynamic relationships using two-step system GMM to address endogeneity and growth persistence. The results show that SME digitalization, supply-chain efficiency, mobile payment penetration, tech-driven employment growth, platform-economy contribution, and DIR all exert statistically significant positive effects on GDP growth. Quantitatively, a 10-percentage-point increase in SME digitalization is associated with approximately 0.3-percentage-point higher regional GDP growth, while a 10-point increase in DIR corresponds to about 0.4-percentage-point higher growth. Moderation analyses reveal that DIR significantly amplifies the growth effects of e-commerce expansion, mobile payments, and digital marketing, whereas its moderating role is weaker or insignificant for cross-border payments and supply-chain efficiency. These findings reconceptualize digitalization as a coordinated bundle of complementary resources and position DIR as a critical enabling capability for translating SME digital transformation into macroeconomic growth. The study offers policy-relevant evidence for targeting infrastructure investment and digital-economy strategies in emerging platform economies. Full article

(This article belongs to the Section Economic Development)

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