The Unassuming Economist

From a paper by Naveen Kumar & Dibyendu Maiti:

“This paper examines the understudied relationship between anthropogenic global warming and wealth inequality, two defining challenges of the twenty-first century, by focusing on the impact of temperature on subnational wealth inequality across 1000 regions worldwide, using data from the Global Data Lab spanning the period from 1992 to 2021. Building on earlier climate-economy studies, this paper estimates heterogeneous parameter models under a common factor framework, which addresses econometric challenges of heterogeneous slopes, cross-sectional spillover, unobserved common factors, and explicitly allows the temperature effect on wealth to differ across subnational regions. Our preferred specification estimates provide suggestive evidence that a 1 C rise in temperature is associated with a modest increase in wealth inequality, measured by Gini coefficients, approximately 0.54 units. The effect of precipitation on wealth inequality remains unclear. Second, the results suggest that poorer and hotter regions, predominantly located in the Global South, are adversely affected by temperature-induced wealth inequality. Third, we empirically identify two key plausible channels among others through which temperature worsens wealth inequality: (i) health and education-induced reduction in labor productivity, (ii) worsening gender equality. Our findings are consistently robust across alternative specifications, datasets, and estimation strategies. The evidence suggests that climate change will significantly shape the trajectory of future global inequality and poses serious challenges for sustainable development under business as usual emission scenarios.”

From a paper by Thuy Dao, Haithem Awijen, Rizwan Ahmed, and Hachmi Ben Ameur:

“This study examines the influence of technological innovation and geopolitical risk on energy security by analysing energy diversification indices—the Adjusted Herfindahl-Hirschman Index (HHI) and Country Diversification Index (CDI)—across 117 nations from 2002 to 2021. Utilising Pooled OLS, Feasible Generalised Least Squares (FGLS), and Multilevel Regression models, we evaluate the impact of patent-driven innovation and geopolitical volatility on energy diversification, political risk, and covariance effects. Our study concentrates on significant geopolitical events, such as the Iraq War, the Annexation of Crimea, and the 2014 Oil Price Collapse. Findings indicate that technological innovation consistently improves diversification and covariance dimensions, however, its impact on risk is contingent upon specific events. Conversely, geopolitical risk exhibits inconsistent statistical significance, indicating a more intricate, indirect influence on energy security outcomes. These findings provide practical recommendations for policymakers aiming to integrate an innovation-focused energy strategy with resilience to geopolitical disruptions.”

From a new paper by Ameni Mtibaa and Foued Badr Gabsi:

“Concerns about ensuring a sustainable environment are growing, attracting major attention from policy professionals worldwide. Therefore, this study investigates the nonlinear impacts of fiscal consolidation on CO₂ emissions in 17 OECD countries from 1978 to 2020. To probe the short- and long-term connections across various quantiles of CO₂ emissions, we adopted panel QARDL frameworks. The Granger non-causality test was used to investigate the variables’ association with CO₂ emission. The study’s main findings confirm the overall beneficial effect of fiscal consolidation on carbon emissions. It reduces CO₂ emissions at almost all quantiles in the short run. By contrast, in the long run, the effect is positive at lower quantiles and turns negative at upper quantiles. Furthermore, a causality analysis identified a bidirectional causal relationship between fiscal consolidation and CO₂ emissions, confirming the existence of mutual influence. While Keynesian theory links fiscal consolidation to economic recession, our findings support the non-Keynesian view, showing that such policy can foster economic growth and thereby contribute to reducing CO₂ emissions in the short run. Thus, OECD countries are orienting public spending and carbon taxation toward environmentally friendly practices while ensuring environmental protection and deficit reduction. Nonetheless, the identified mixed effect in the long run highlights the need for sustained consolidation policies by enhancing expenditure efficiency and adopting targeted taxation measures to achieve lasting emission reductions and support the transition to cleaner energy, even when emissions are relatively low.”

From a paper by Arief Rahman, Vely Brian Rosandi, Galuh Syahbana Indraprahasta, Abdurrakhman Prasetyadi, Andi Yoga Saputra, and Andrea Emma Pravitasari:

“While the term rural transformation was first coined in the late 1960s, it is only recently that there has been a significant increase in interest in research employing this label. This particular corpus of research has evolved into a diverse body of literature. However, there is a lack of understanding of the academic landscape of this literature. The objective of this paper is to present a comprehensive and up-to-date review of the key characteristics, research topics, and evolution of this body of literature over the past six decades. To this end, the paper employed a science mapping tool, namely CiteSpace, to retrieve data from the Scopus database, combined with an exploratory review. A total of 580 academic articles published up to 2023 were identified and analysed. As the notion of rural transformation has evolved, the extant literature has expanded beyond its initial focus on economic and demographic changes to encompass a broader range of topics, including sustainability, young population, and spatiotemporal analysis, as well as to capture diverse experiences from around the globe. This diversity indicates the need to situate rural transformation within different geographical contexts. In addition to the recent trend, potential areas of research that may shape the future direction of rural transformation literature include environmental sustainability, contemporary globalisation, technological progress, and population dynamics.”

From a paper by Gregor Semieniuk, Isabella M. Weber, Iain S. Weaver, Evan Wasner, Benjamin Braun, Philip B. Holden, Pablo Salas, Jean-Francois Mercure, and Neil R. Edwards:

“The 2022 oil and gas crisis resulted in record fossil-fuel profits globally that rehabilitated the oil and gas industry, obstructed the energy transition and contributed to inflation, but their magnitude and beneficiaries have been insufficiently understood. Here we show the size of profits across countries and their distribution across socio-economic groups within the United States, using company income statements, comprehensive ownership data and a network model for propagating profits via shareholdings. We estimate that globally, net income in publicly listed oil and gas companies alone reached US$916 billion in 2022, with the United States the biggest beneficiary with claims on US$301 billion, more than U.S. investments of US$267 billion in the low carbon economy that year. In a network of U.S. shareholdings with 252,433 nodes including privately held U.S. companies, 50 % of profits went to the wealthiest 1 % of individuals, predominantly through direct shareholdings and private company ownership. In contrast the bottom 50 % only received 1 %. The incremental U.S. fossil-fuel profits in 2022 relative to 2021 were enough to increase the disposable income of the wealthiest Americans by several percent and compensate a substantial part of their purchasing power loss from inflation that year, thereby exacerbating inflation inequality. These profits also reinforced existing racial and ethnic inequalities and inequalities between groups with different educational attainments. We discuss how an excess profit tax could be used to both lower inequality and accelerate the energy transition as increasing geopolitical tensions and climate impacts threaten continued volatility in oil and gas markets.”