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Ruin Probabilities for Strategies with Asymmetric Risk
Get PDFWe analyze sequential investment strategies that expose capital to asymmetric payoff structures--scenarios in which losses are small and frequent, while gains are large but rare. This setup generalizes the classical gambler's ruin problem, traditionally framed as a symmetric game, into a framework for modeling repeated financial decisions under uncertainty. Payoff asymmetry is common in domains such as venture capital, tail-risk hedging, and derivative strategies. We consider cases where each investment has positive, zero, or negative expected return, and derive analytic results for ruin probabilities, expected final wealth, and game duration. Our findings show that increasing asymmetry--higher potential rewards but lower success probability--raises the likelihood of ruin in positive-return settings and mitigates it when returns are negative. For zero-return strategies, we establish bounds on ruin probabilities and show that convergence to terminal outcomes is faster when payoffs are skewed. The results have implications for portfolio risk management and capital allocation in repeated-risk environments
Inequality, financialization, and political disintegration
Get PDFDrawing on Peter Turchin’s structural-demographic theory, this paper provides a preliminary examination of how rising inequality and financial liberalization contribute to political instability through the interplay of mass immiseration and elite overproduction. We capture these dynamics through a simplified agent-based macroeconomic model, introducing two structural shocks - growing inequality and financial liberalization - that reflect the transformations reshaping advanced economies in recent decades, a process intertwined with political disintegration. A wealth tax on the richest households can reduce political fragmentation and improve economic performance, but lasting resilience will require embedding such measures within a broader rethinking of the policy paradigm that has prevailed since the 1980s
A ascensão dos Mercados Emergentes e suas Oportunidades para Investimentos Estrangeiro. Desafios e Oportunidades
Get PDFThis article focuses on the rise of emerging markets and their opportunities for foreign investment. Its objective is to analyze the opportunities and challenges emerging markets offer for foreign direct investment (FDI), relating them to classical theories of corporate internationalization, such as the Uppsala Model, Internalization Theory, and the Eclectic Paradigm (OLI), as well as complementary perspectives, such as the Resource-Based View (RBV), institutional theory, and frugal innovation. The study adopts a qualitative, descriptive, and exploratory approach, based on a literature review of classical and contemporary authors. Emerging markets offer attractiveness in strategic sectors such as infrastructure, energy, technology, agribusiness, and sustainable tourism, but face challenges related to political instability, commodity dependence, institutional weaknesses, climate change, and geopolitical pressures. The case of Mozambique is highlighted as an example of the duality between high growth potential and the risks associated with regional conflicts and dependence on natural resources. It is concluded that, although emerging markets present significant risks, they are key destinations for FDI, provided they are accompanied by business adaptation strategies, public policies for economic diversification, and institutional strengthening
The Post-2015 German Lending Surge: What Role for QE?
Get PDFThis paper uses German microdata to test whether the ECB’s quantitative easing (QE) spurred bank lending to non-financial firms. Bank-firm loan data
allow me to control for loan demand at firm level. The share of bonds in banks’ total assets before QE serves as treatment proxy. While the effects are positive and statistically significant, they are small: Increasing the bond/asset share in a firm’s lender bank by one standard deviation increases the de-trended outstanding bilateral loan volume by 3-5% of its within-sample mean. At firm level, no unambiguous effect can be observed
A thermodynamic analysis of market and planned economies
Get PDFMarket and planned economies are considered antagonistic types of material production systems in modern society. Since they are thermodynamic systems, the entropy and energy requirements of each system can be estimated based on its specific characteristics and dynamics. The results show that the entropy and energy requirements of a market economy are much higher than those of a planned economy. This is due to competition for profit, the driving mechanism of market dynamics and self-organization, which is absent in a planned economy. Thus, the entropy and energy needs of a planned economy approach the minimum magnitudes required of a modern economic system that is irreversibly driven to equilibrium with an external reservoir supplying low-entropy energy. Dissipative systems on Earth absorb low-entropy energy from an external source, using it to gain internal order and stability while emitting high-entropy energy. Conversely, a market economy increases its internal entropy during energy exchange with an external reservoir. Large internal entropy in a market economy does not result from summing the entropy of individual capitals. Rather, it results from self-similar dynamics driven by competition for profit, which manifests as larger system property magnitudes
Romer Meets Weber-Schumpeter: The Spirit of Capitalism, Entrepreneurial Drive and Long-Run Growth
Get PDFIn this article, we develop a growth theory by integrating the Weber-Schumpeterian spirit of capitalism into Romer's (1990) model of endogenous technological change. The spirit of capitalism influences innovation and long-run growth through capital accumulation and the reallocation of human capital, mediated by a price mechanism. It also helps prevent economic stagnation arising from a limited stock of human capital. Explicit solutions illustrate the qualitative effects of the spirit of capitalism on growth. Using calibrated parameters based on U.S. data, we find this effect is quantitatively significant, accounting for more than half of U.S. long-run growth
Towards sustainable housing market: A simple distributional analysis of Australia
Get PDFClimate change increasingly affects housing markets, yet distributional impacts are rarely examined beyond mean-based analyses. Using quantile regression on over 500,000 Australian property transactions (2015–2020), this study shows that affordable housing is disproportionately devalued by bushfire and flood risks, while resilience factors such as altitude and elevated coastal proximity command premiums in higher-end markets. These results reveal a “vulnerability trap” for low-income households and a “resilience divide” favoring affluent buyers, underscoring the need for distribution-sensitive climate adaptation housing policies
Higher Education as Regional Development: Labor Market Impacts of Nigeria’s 2011 Federal University Expansion
Get PDFThis paper examines the causal impact of higher education expansion on regional labor markets and human capital development. Exploiting the 2011 establishment of nine federal universities across previously underserved Nigerian states, we implement a difference-in-differences approach to analyze effects on employment, wages, job quality, and sectoral composition. Our results show significant positive effects on employment and wages, with particularly strong impacts for youth and in urban areas. We find evidence of both direct employment effects and broader spillovers to private sector activity such as self-employment, suggesting universities can serve as catalysts for regional economic development. Our findings contribute to understanding the role of higher education institutions in human capital formation and labor market development in emerging economie
Between Easing and Anchoring: How the Fed Navigated the Final Mile of Disinflation in July 2025
Get PDFBy July 2025 the Federal Reserve confronted the most treacherous phase of post-pandemic disinflation—“the final mile” in which the last half-percentage-point of inflation proves harder to expunge than the first four. Headline PCE had fallen from 7 % in mid-2022 to 2.5 %, yet core services inflation, amplified by tariff-driven cost-push shocks and still-elevated wage growth, refused to converge to the 2% target. Meanwhile, payroll gains had slowed to a crawl (73 k in July), the unemployment rate had drifted up to 4.1%, and financial markets were pricing two 25 bp cuts before year-end. This paper reconstructs the FOMC’s July 29-30 deliberations—held against a backdrop of White House pressure, a flattening yield curve and an ongoing framework review—to show how the Committee balanced the competing risks of under-tightening (un-anchoring expectations) and over-tightening (precipitating a recession). Using the newly released minutes, high-frequency market data and a calibrated New-Keynesian model, we argue that the decision to hold the federal-funds target at 4.25-4.50 % can be interpreted as a state-contingent “flexible anchoring” strategy: keep policy moderately restrictive today while signalling that even a modest deterioration in labor-market momentum would justify insurance cuts as early as September. Counterfactual simulations indicate that the chosen path shaved 15 bp off the term premium, reduced the probability of a 2026 recession by one-third relative to a hawkish baseline, and kept 5y5y inflation expectations anchored at 2.05%. The episode illustrates how a transparently data-dependent reaction function can substitute for explicit forward guidance when the economy is buffeted by supply-side shocks whose persistence is unknown
Public finance for space odyssey - Scope for gender budgeting
Get PDFAgainst the backdrop of United Nations Office for Outer Space Affairs' (UNOOSA’s) 2025 Landmark Study, which documents women's 30 percent global workforce share in public space agencies—declining to 19 percent on boards—this paper applies gender budgeting framework to diagnose fiscal policy imperatives in the Department of Space (DoS), India. Aligning with the foundational principles of the UN Outer Space Treaty (1967), which mandates equitable benefits from space exploration "for all people," and with Sustainable Development Goals (SDGs) 4 (quality education), 5 (gender equality), 9 (industry, innovation, and infrastructure), and 17 (partnerships for the goals), this analysis underscores the scope of gender budgeting as a fiscal accountability tool for inclusive growth in emerging space economies. We analysed the Space budgets across 20 space centres in India, and also across 41 sanctioned Space projects to understand the fiscal incidence and marksmanship in space technology (e.g., launch vehicles, propulsion systems) and space applications (e.g., Earth observation, communication satellites). Despite the absence of specifically targeted programmes for women in the space sector within the Ministry of Finance’s Gender Budgeting Statement 2025-26, our ex-post fiscal incidence analysis reveals that ISRO's significant achievements are inherently women-inclusive in their outcomes, despite workforce underrepresentation. Key findings highlight marked variations in the gender disaggregated fiscal incidence, with utilisation rates ranged from a low of 10.9 percent at IN-SPACe to 21 percent at Vikram Sarabai Space Centre (VSSC) and 32 percent at UR Rao Satellite Centre (URSC). Fiscal marksmanship analysis reveals the deviations between Budget Estimates and Actuals are relatively insignificant in space sector. Integrating results-linked gender budgeting into space policy is crucial, which emerges as a dual lever for equity—ensuring women's voice in high impact decision-making—and efficiency, by harnessing diverse perspectives to optimise resource allocation and innovation trajectories