Search Results (8)

This paper examines whether government debt financing crowds out private consumption in South Africa or whether household behaviour is consistent with Ricardian equivalence. Using quarterly data from 1960Q1 to 2025Q1, the study employs a Bayesian time-varying parameter framework that accommodates non-stationarity, structural change, and evolving fiscal transmission mechanisms, and is complemented by a Markov-switching Bayesian VAR as a robustness check. All variables are expressed relative to GDP to avoid scale effects, and inference is based on posterior distributions. The results reveal pronounced state dependence in the debt–consumption relationship. In earlier decades, increases in the debt-to-GDP ratio are associated with statistically meaningful declines in the private consumption share, consistent with crowding-out or precautionary behaviour under weaker fiscal credibility. Over time, however, this negative association weakens and converges toward neutrality, with post-2010 estimates indicating no significant effect of debt on consumption. Conditioning on fiscal stance and financial conditions shows that debt does not exert an independent influence on consumption once government expenditure, tax revenue, and interest rates are taken into account. A constant-parameter Bayesian benchmark masks these dynamics, producing an average effect close to zero. Evidence from a Markov-switching Bayesian VAR similarly finds no persistent regime-specific crowding-out effects. Overall, the findings suggest that observed debt–consumption linkages in South Africa operate primarily through broader fiscal and macroeconomic conditions rather than debt accumulation itself, highlighting the importance of fiscal credibility and policy composition. Full article

The effect of corporate social responsibility (CSR) disclosure on zero-leverage policies is examined for listed firms at the Pakistan Stock Exchange (PSX) from 2010 to 2021. Binary logistic regression models show a statistically significant positive relationship between CSR disclosure and zero leverage. Increased CSR disclosure raises the propensity of firms to have zero leverage. Moreover, the negative effect of CSR disclosure on debt ratios further confirms these findings. Results show that highly disclosed CSR firms face less information asymmetry and prefer equity financing over bank debt. Regulators should develop incentive programs to increase their CSR disclosure and strengthen stakeholders’ relationships. Full article

Europe’s decarbonization calls for an increase in the resources used to ensure a fairer transition. The objective of this study is to evaluate the role of public finance in the decarbonization process, considering the context of various uncertainties. Data from 1995 to 2023 for selected European countries were analyzed in this sense. We used the cross-sectional dependence–consistent Driscoll–Kraay estimator as the main econometric approach and Feasible Generalized Least Squares (FGLS) as a robustness test. The results revealed a positive impact of public debt, world uncertainty, and gross domestic product on renewable energy usage in European countries. Additionally, general fiscal pressure is shown to have a negative impact on the renewable energy used during the analyzed period. The results showcase the importance of public finance tools adjustments in supporting the race to zero breakthroughs and dawdling climate change. Several policy recommendations were made in this regard. Full article

Fundamentally, the term premium in long-term nominal yields is compensation to investors for bearing interest rate risk. There is substantial evidence of sizable and time-varying term premia. As opposed to yields, term premia are not directly observable. In this paper, we estimate term premia in Norwegian interest rate swaps from a set of dynamic term structure models, covering the period from 2001/04 until 2022/06. In line with international studies, we find evidence of declining term premia over the sample period. Furthermore, our estimates indicate that term premia have been close to zero, as well as negative in periods, during the last decade of global extraordinary monetary policy measures. We find that the recent rise in Norwegian interest rate swaps is partly caused by increases in term premia. From a practitioner’s perspective, our term premia estimates can be utilized as part of applied management of both investment and debt portfolios. Full article

The aim of this paper is to analyze the factors affecting hydrogen and Carbon Capture and Storage Technologies (“CCS”) policies, taking into consideration Fossil Fuel Consumption, Oil Reserves, the Debt/GDP Ratio, the Trilemma Index and other variables with respect to OECD countries. STATA 17 was used for the analysis. The results confirm the hypothesis that countries with high fossil fuel consumption and oil reserves are investing in blue hydrogen and CCS towards a “zero-carbon-emission” perspective. Moreover, countries with a good Debt/GDP ratio act most favorably to green policies by raising their Public Debt, because Foreign Direct Investments are negatively correlated with those kinds of policies. Future research should exploit Green Finance policy decision criteria on green and blue hydrogen. Full article

This paper summarizes the findings of an extensive review of literature that was conducted to understand the historical state of the food, energy, and water nexus in the Lake Atitlan basin and to recommend incentive-based, long-term sustainable policies to become a significant driver to Guatemala’s tourism industry and GDP growth. The SWAT (Soil and Water Assessment Tool) was implemented in the basin to work towards the goal of simulating nutrient loading. A key conclusion of this review study is for the local population to have advocacy for the “zero wastewater discharge to Lake Atitlan” initiative to bring long-term benefits to lake water quality. One of the recommended policy decisions is to seek external financing from international agencies like the World Bank at low-cost interest (IDA Loans) to implement waste management systems and pay this external debt by putting a small but affordable tax on tourists visiting the lake. Once a culture of zero municipal effluent discharge to Lake Atitlan is adopted by the local population, the livelihood of residents will become sustainable and the standard of living will increase because of improved water and air quality, making Lake Atitlan a haven of tourism for Guatemala and lifting its economy. Full article

We build a model of debt for firms with investment projects, for which flexibility and free cash flow problems are important issues. We focus on the factors that lead the firm to select the zero-debt policy. Our model provides an explanation of the so-called “zero-leverage puzzle”. It also helps to explain why zero-debt firms often pay higher dividends when compared to other firms. In addition, the model generates new empirical predictions that have not yet been tested. For example, it predicts that firms with zero-debt policy should be influenced by free cash flow considerations more than by bankruptcy cost considerations. Additionally, the choice of zero-debt policy can be used by high-quality firms to signal their quality. This is in contrast to most traditional signalling literature where debt serves as a signal of quality. The model can explain why the probability of selecting the zero-debt policy is positively correlated with profitability and investment size and negatively correlated with the tax rate. It also predicts that firms that are farther away from their target capital structures are less likely to select the zero-debt policy when compared to firms that are close to their target levels. Full article

The purpose of this article was to conduct an empirical evaluation of the Czech public programme START, which was funded from the European Regional Development Fund. The programme lasted from 2007–2011, and supported new entrepreneurs through the zero interest soft loans and credit guarantees. The counterfactual analysis (using three matching techniques: propensity score, nearest neighbour, and kernel) was conducted on the firm level and investigated the changes in financial performance (net profits, return on assets (ROA), return on equity (ROE), sales, assets turnover, and debt ratio) of the supported firms four years after the end of intervention. The obtained findings could not support the hypothesis assuming a positive impact of the programme on the firm’s performance. On the contrary, supported companies reported on average lower sales and lower return on assets, when compared to the control group. The remaining variables could not prove any statistically significant impact of the programme. Indicators measuring firm’s profitability (net profit, return on assets, and return on equity) suggested a negative influence of the programme and the variable representing debt ratio further indicated that firms that were supported by the programme reported on average higher debt ratio in comparison with the control group. Several policy implications are discussed in the study. Full article