ABSTRACT: This paper examines the recent fragmentation of global trade, focusing on how purely-economic and geopolitical shocks have reshaped bilateral flows. Building on an atheoretical model of bilateral trade growth, we develop an empirical strategy (based on the contribution of Amiti and Weinstein, in the context of bank-firm lending) that extends beyond standard specifications of the inward and outward multilateral resistance terms by explicitly disentangling shocks related to belonging to different geopolitical trading blocs, in addition to the more standard economic blocs. The results reveal a growing segmentation of trade flows along geopolitical lines where geopolitical trading blocs have been important in determining world export growth after 2018, especially in the years of the first US-China trade war. The hegemons of the two main blocs seem to have a different weight. China has had a persistently higher role than the US in the export dynamics of its blocs (both defined as economic and geopolitical). The only exception is if we consider the USMCA as the US-referenced economic bloc where the US clearly dominates. 

ABSTRACT: Self-selection into social programs can lead to socially excessive or insufficient participation. We propose a framework to detect and address these inefficiencies, applying it to diabetes care, where individuals above a biomarker threshold receive nudges to seek care. Crossing the threshold increases healthcare utilization and improves health outcomes. However, those who opt into care—both compliers and beyond-compliers—are generally healthier and benefit less, indicating reverse selection on gains. Targeting based on observable characteristics reduces excessive participation and improves welfare, while outreach to individuals reluctant to seek care despite high potential benefits mitigates insufficient participation and may further raise welfare.

ABSTRACT: The purpose of this paper is to extend the CES model of monopolistic competition to the case where varieties are both horizontally and vertically differentiated. A distinctive feature of our model is the presence of a network externality, which operates through the number of varieties available at each quality level. We show that, depending on the quality gap, there can either be corner equilibria in which consumers purchase only high-quality or low-quality varieties, or an interior equilibrium, in which consumers are split between the two qualities. Differently from the standard CES model of monopolistic competition, the equilibrium can be inefficient and the market may even select the outcome that generates the lowest surplus.

ABSTRACT: Does geopolitical risk lead to financial fragmentation? We answer this question using fund-level data on international bond funds' portfolio allocations and investor flows. We find that fund managers persistently reduce the portfolio weights of countries where geopolitical risk increases. This is especially true for emerging market economies and when geopolitical risk is extreme. Increases in geopolitical risk spark financial fragmentation, with managers investing in fewer countries, holding portfolios that are more concentrated and tilted towards countries that are geopolitically aligned with the fund's home country. End investors also react adversely to geopolitical risk. Fund flows decline sharply when geopolitical risk increases but recover less than one quarter after the initial shock. These empirical findings are consistent with the predictions of a simple model of delegated portfolio management.

ABSTRACT: It is now widely acknowledged that the rise of populism around the world poses a serious challenge to liberal democracy. In response, a substantial research agenda has emerged which seeks to identify how liberal democracies can deal with this challenge, ranging from mainstream party strategies to media approaches to institutional design. But mostly missing from these discussions has been any attention to political finance: that is, the funding of parties and elections. In this paper we explore the potential of political finance as a counter-populism measure. In particular, we consider the problem of how to design (or reform) a political finance system with a view to minimising the threat of populism in a liberal democracy, particularly the challenges it poses to cross-party collegiality and to the mediating role of representative institutions. Our analysis integrates across normative and empirical literatures, and research agendas on political finance, populism and parties, to identify the most populism-resistant designs of a political finance system, with an eye to potential empirical implications.

ABSTRACT: Affirmative action policies in higher education aim to promote equity and enhance access for underrepresented groups. This study examines Portugal's recently introduced quota system, which reserves 2% of university seats for students from low-income households (ASE-A). Using detailed administrative data, the analysis evaluates the effectiveness of this policy in increasing university enrollment and access to selective academic programs among disadvantaged students. The findings indicate that, while the quota system improved admission rates and alignment with students' top preferences, only 43% of eligible students opted to utilize the quota. The paper investigates the factors contributing to this low uptake rate, revealing that quota users typically demonstrated higher GPAs, a stronger preference for competitive programs, and broader application strategies compared to non-users. Key barriers to quota utilization include insufficient information, financial constraints, and limited aspirations, which may reduce the policy's overall effectiveness. By situating these findings within the broader context of socioeconomic targeting, the study underscores the potential of affirmative action policies to foster diversity and mitigate educational inequities. The analysis also highlights the necessity of complementary interventions to address the structural barriers faced by low-income students, ensuring more comprehensive support for achieving equitable outcomes in higher education.

ABSTRACT: This paper investigates the impact of physical infrastructures on sectoral total factor productivity (TFP). In the first part, a neoclassical growth model with multiple productive sectors and public capital (in the form of infrastructures) uncovers a long-run relationship between infrastructures and sectoral TFP. In the second part, a panel-cointegration analysis evaluates the long-run impact of 4 distinct types of infrastructures − transport, energy, ICT, health − on the TFPs of 22 manufacturing sectors in a sample of 65 (developed and emerging) countries between 1995 and 2018. We find that infrastructures are a positive and significant determinant of sectoral TFPs. A panel error-correction model also confirms that causality runs from infrastructures to TFPs. These results are robust to further empirical analysis conducted on sub-samples segmented by several dimensions. Our findings can inform policy in designing targeted interventions and prioritizing investment.

ABSTRACT: We study which common factors drive downside risk across a large panel of U.S. macroeconomic variables. We consider a broad set of candidate downside risk factors, comprising of both observed factors constructed from macroeconomic, financial, and text data sources, as well as unobserved factors associated with the panel. We assess the relevance of the factors by evaluating how they contribute to improving the out-of-sample accuracy of downside risk forecasts. Factors are mapped into downside risk forecasts through quantile regression and location-scale regression. Results point to a single factor associated with macroeconomic volatility, which is most closely proxied by the macroeconomic uncertainty index (Jurado et al., 2015).

ABSTRACT: Eradicating organized criminal groups requires the efforts of both the state and ordinary citizens. But how do citizens react to collusion between public officials and criminal organizations? With two novel datasets and a generalized difference-in-differences design, I estimate that collusion episodes in Italy increase citizens’ participation in the activities of anti-mafia NGOs by about 25%. This positive effect persists for four years. I analyze the causal mechanisms behind this effect with an original survey experiment. Receiving information about the incidence of collusion increases citizens' concerns about organized crime, while decreasing their confidence in the state as an effective anti-mafia player. This makes them turn to civil society organizations as an alternative way to curb the influence of organized criminal groups. These findings complement the existing literature about the effects of corruption on citizens' behavior, showing that it can foster their engagement in non-traditional forms of political participation.

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