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"Economic growth is generally regarded by governments and most ordinary people as a panacea for all problems, including issues caused by the COVID pandemic. But this raises an important question: is further growth in advanced economies able to increase well-being once people's basic subsistence needs are met? Some advanced market economies, e.g. the United States, have exhibited a decline in well-being, both subjectively and objectively measured, over several decades despite seeing economic growth during the same period. This book provides an original and comprehensive explanation: economic growth, as driven by market forces, induces people, through both the demand- and supply-side channels, to pursue command over more material resources, and this weakens the self-generation of capabilities, putting well-being at risk of deterioration. The book argues, with the support of a variety of evidence, that the challenge can be overcome if governments' policies and people's choices pursue, as their ultimate goal, 'fundamental human development' on an evolutionary basis: the development of the capability of a typical person to conceive and share with others new purposes, to pursue them individually or collectively, and thus to contribute to building human culture. If such human development is prioritised, it makes people satisfied with their lives and resistant to adverse shocks, and it can even shape the pattern of economic growth. By contrast, if economic growth is prioritised, it tends to weaken and impoverish fundamental human development, and consequently people's well-being and social cohesion. With this volume, readers will find an answer to a problem that is both urgent and long-term, both individual and societal. The work makes a substantial contribution to the literature on wellbeing, the economics of happiness, human capital and growth, and the capability approach. Maurizio Pugno (M. Phil., Cambridge, UK) is Full Professor of Economics at the University of Cassino, Italy"--

We analyze the link between nonperforming loans (NPL) and macroeconomic performance using two complementary approaches. First, we investigate the macroeconomic determinants of NPL in panel regressions and confirm that adverse macroeconomic developments are associated with rising NPL. Second, we investigate the feedback between NPL and its macroeconomic determinants in a panel vector autoregressive (PVAR) model. The impulse response functions (IRFs) attribute to NPL a central role in the linkages between credit market frictions and macrofinancial vulnerability. They suggest that a sharp increas

AbstractWith the Great Recession leaving nearly all advanced economies with substantially higher debt–gross domestic product ratios, this paper re‐evaluates the long‐term fiscal sustainability of these economies based on current estimates of their current‐policy fiscal trajectories. Through measuring fiscal imbalance, we find that for many countries, short‐term fiscal measures such as the debt–gross domestic product ratio and current budget deficits as a share of gross domestic product bear little relationship to the sustainability of policy. The longer‐term challenges these countries face are related much more to the future fiscal challenge of growing primary deficits, associated with the cost of providing pensions and health care in the face of growing old‐age dependency ratios. While focusing on managing the short‐term debt burden may help avoid crises like the one being played out in Greece, attention and policy actions must eventually turn to the longer‐term fiscal problem.

AbstractUtilizing the cross-sectional fully modified OLS (FMOLS) method, this paper tackles the pressing need to address climate change disasters, particularly in the context of recent COVID-19 restrictions. By developing an econometric model specifically for advanced economies, the study aims to enhance understanding and reduce carbon emissions. Examining ten advanced economies from 1995 to 2019, it identifies a significant gap in the literature concerning the integration of demographic, social, economic, and political (DSEP) factors in dual carbon economy models. The results show that a 1% improvement in good governance is associated with a 0.23% reduction in carbon footprint, due to stricter environmental regulations. In contrast, a 1% increase in economic growth results in a 0.17% rise in carbon footprint, driven by industrial activities. Similarly, a 1% rise in electricity consumption leads to a 0.32% increase in carbon footprint, reflecting dependence on fossil fuels. Additionally, a 1% increase in population size corresponds to a 0.21% rise in carbon footprint, linked to higher urban energy consumption. Finally, a 1% increase in the poverty ratio results in a 0.17% rise in carbon footprint, underscoring the influence of socio-economic factors on sustainability. The paper advocates for a comprehensive approach to fostering a dual carbon economy, emphasizing green economic growth, smart, sustainable cities, social sustainability literacy, and sustainable governance.

Income inequality has exhibited a dynamic and variable trend throughout history. After declining post World War II in Advanced Economies (AEs), it surged during the 1980s due to sluggish economic growth. Meanwhile, Emerging Markets and Developing Economies (EMDEs) witnessed higher Gini Coefficients during the 1980s but saw moderate levels of inequality in the early 2000s. Over the past decade, however, income inequality in AEs and EMDEs has become increasingly unpredictable, reaching some of the highest levels recorded. While prior studies have explored this area, they have focused on either a broad sample of countries or numerous factors, rarely combining both aspects. This study analyses the impact of 8 macroeconomic factors on income inequality, proxied by the Gini Coefficient, in EMDEs and AEs from 2010 to 2021. It employs a Fixed Effects Model for the 24 EMDEs and Random Effects Model for the 31 AEs, thereby factoring in a total of 5280 observation points. The findings reveal that unemployment is the biggest driver of inequality in both EMDEs and AEs. It exerts a positive bearing at a significance level of less than 1%, exerting a more pronounced impact in EMDEs than AEs. Additionally, in EMDEs, fertility rate and economic growth significantly increase income inequality while financial development mitigates it. Conversely, economic growth has a negative influence on the Gini Coefficient in AEs. Contrary to expectations, traditional economic indicators like inflation, foreign Investment, and trade openness do not significantly impact income inequality in either group. Literacy, often believed to lower the Gini, is also statistically insignificant. The evolving and multifaceted nature of inequality underscores the need for this study - a more holistic approach to studying income inequality, considering factors beyond conventional economic metrics. This research provides valuable insights for policymakers and economists striving to address income inequality in EMDEs and AEs.

AbstractThe decline in the share of bank credit to non-financial firms since the 1990s, relative to credit for real estate and financial asset markets, has raised concerns over economic growth and financial stability and sparked renewed interest in credit policies, instruments and institutions. We examine their theoretical case and post-war use, and trace their demise during the wider market-oriented policy reconfiguration from the 1980s. Notably, this included home ownership polices favouring mortgage markets. We then examine the empirical relationship between credit policy and credit allocation in the 1973–2005 period for 17 advanced economies. Taking account of co-integration, we present evidence that the decline of credit policies is significantly associated with a lower share of lending to non-financial firms. It may be worth revisiting the potential of credit policies to support adequate financing for goals such as innovation, industrial development and the transition to a low-carbon economy.

This article argues that advanced economies never eradicated political risk. We demonstrate that elections had large impacts on the long-term interest rates of nineteen countries in 130 elections over thirty years. Using an event-study methodology, we calculate that the resolution of uncertainty on the announcement of election results reduces interest rates. Very little of the variation is explained by economic variables. By contrast, familiar variables from comparative politics provide powerful explanations of variation in the impact of elections on borrowing rates. The biggest is ideology: the larger the swing towards the right in the parliament the larger the reduction in the interest rate. Two other variables also matter through their role in uncertainty. Close elections increase uncertainty during the campaign, leading to a greater reduction in uncertainty when the result is announced and a drop in the interest rate. By contrast, consensual institutions reduce uncertainty during campaigns and therefore do not reduce the interest rate. Political economists should not ask whether there is political risk or not. Rather they need to calculate how much risk there is and explain variation.

Across the social sciences, a recurring theme is that market production, where goods and services are produced for monetized exchange by capitalist firms for profitmotivated purposes, is replacing non-market production in the advanced economies. The aim of this article is to evaluate critically this marketization thesis. Analysing data on the volume of market and non-market activity in the advanced economies, it reveals not only the relatively shallow penetration of the market sphere but also how for some four decades, contrary to the marketization thesis, the market sphere does not appear to have grown relative to the nonmarket realm. Here, therefore, the view that non-market activity is a vestige of a pre-capitalist past is rejected and its persistence and growth are instead explained in terms of both the prevalence of resistance cultures to marketism and the inherent contradictions embedded in the pursuit of marketization. The article thus concludes with a call to transcend the currently dominant view that the market is victorious, pervasive and hegemonic, and for greater recognition and value to be given to the non-market realm as well as the possibility of alternative futures beyond marketization.