Does the energy transition foster productive sophistication, or does it merely replace fossil fuels within an unchanged industrial structure? This study examines the relationship between renewable electricity and economic complexity in Morocco and 29 emerging and frontier economies. It combines an autoregressive distributed lag (ARDL) model for Morocco (1996–2021), using bootstrap critical values, with a panel Pooled Mean Group (PMG) estimator for 29 economies (2011–2023). Robustness checks address common shocks, parameter heterogeneity, and country sensitivity. For Morocco, the results suggest a fast-adjusting long-run relationship, although sensitivity to lag selection and individual years, together with residual autocorrelation, limits the evidence. At the panel level, renewable electricity shows no statistically significant common long-run association with economic complexity. Government effectiveness is positively associated with complexity in the PMG estimates, but its magnitude declines after controlling for common year effects, and its significance weakens under alternative estimators. An interaction specification suggests that renewable electricity is more strongly associated with complexity where government effectiveness is higher. These conditional associations do not establish causality but challenge the assumption that renewable capacity automatically drives industrial upgrading. The findings identify institutional capacity as a potential enabling condition and motivate three policy hypotheses for future testing.
This paper studies how beliefs about fiscal backing shape monetary–fiscal regimes and how fiscal choices influence those beliefs. Credibility is updated from observed compliance using discounted Beta learning. Conditional on credibility, a threshold separates fiscal from monetary dominance, governs the response of the price level to interest-rate-rule disturbances, and changes the inflation-variance-minimizing monetary response. A debt-dependent fiscal limit yields a credibility frontier under a frozen effective-backing approximation; this approximation matches the local fiscal response at steady-state debt but does not establish a fully endogenous-feasibility equilibrium. The paper's distinctive contribution is an optimizing fiscal authority. In a deterministic benchmark, optimal policy reaches the monetary-dominance threshold from outside a credibility trap, while sustained dominance requires an additional maintenance condition. That condition holds in the computed rebuilding cases, not for all parameters. Relative to an independent exogenous-backing benchmark, fiscal choices make regime transitions depend on political incentives and inherited credibility. Numerical results with debt and private political-cost shocks show persistent low credibility and preventive fiscal backing at higher obligations. Argentina serves as an illustration rather than an empirical test.
This study examines the long‑run equilibrium and predictive Granger causality among international trade, economic freedom (EF), and foreign direct investment (FDI) in 20 OECD member countries over 2000–2022. Using annual panel data, we address methodological challenges including cross‑sectional dependence, mixed orders of integration (FDI is I(0) while trade and EF are I(1)), structural breaks, and country heterogeneity. We employ second‑generation panel unit root tests (CIPS) that account for cross‑sectional dependence, and a Panel ARDL (Pooled Mean Group) estimator that accommodates mixed integration orders. We test the homogeneity assumption of long‑run coefficients using the Hausman test (PMG vs. MG). Granger causality is examined using a modified Dumitrescu‑Hurlin test that respects the different orders of integration: FDI in levels, trade and EF in first differences. We also include control variables (GDP per capita, inflation, political stability, capital account openness), structural break dummies (2008‑2009 crisis, 2020‑2021 pandemic), and we winsorize extreme outliers (FDI in Ireland). Country heterogeneity is assessed via slope homogeneity tests and interaction terms rather than low‑power country‑specific cointegration tests. Our main findings are: (i) CIPS tests confirm mixed orders: FDI is I(0), trade and EF are I(1). (ii) The Panel ARDL error correction term is negative and significant, confirming a long‑run equilibrium relationship without requiring all variables to be I(1). (iii) The Hausman test does not reject homogeneity (p = 0.27), but the test has low power given N=20, T=23, and the slope homogeneity test is borderline (p = 0.104). We therefore report Mean Group (MG) estimates as the primary specification, which reveal substantial cross‑country heterogeneity (EF→TRADE coefficients range from –0.09 to 0.61). (iv) Long‑run effects (Mean Group estimates, primary specification): a 1% increase in trade openness is associated with a 0.36% increase in FDI inflows (p = 0.066); a 1‑point increase in EF is associated with a 0.31% increase in trade (p = 0.10). The direct EF‑FDI effect is weak and not statistically significant (0.13, p = 0.21). Pooled Mean Group estimates (Appendix), which assume homogeneous coefficients, yield more precise estimates (0.38 and 0.33, both p<0.01) but mask substantial cross‑country heterogeneity. (v) Structural break dummies are significant for 2008‑2009 (negative effect on trade and FDI) but the system returns to equilibrium (ECT = -0.28 for trade, -0.15 for FDI). (vi) Residual cross‑sectional dependence tests and CUSUM stability tests are satisfied. The study contributes a methodologically rigorous analysis of the trade‑EF‑FDI nexus in OECD countries, explicitly handling mixed integration orders, structural breaks, and heterogeneity. Policy implications emphasize improving regulatory efficiency and rule of law, leveraging trade as a driver of institutional reform, coordinating trade and investment policies, and adopting crisis‑resilient strategies
The implementation of financial inclusion and the promotion of economic growth are struggling to overcome certain challenges, notably the spatial factor. This paper examines the relationship between regional financial inclusion and regional economic growth across Morocco's 12 regions over the period 2015–2021. A composite financial inclusion index is constructed. The spatiotemporal characteristics of financial inclusion and economic growth are analyzed using Moran's I statistic to detect the presence of spatial autocorrelation. The Spatial Durbin Model (SDM) is adopted after many tests. Results support the positive relationship between regional financial inclusion and regional economic growth. Spatial autocorrelation between the two variables is statistically significant. The results not only reveal the importance of financial inclusion in promoting regional economic growth, but also highlight the need for further research into the issue of spatial inequalities
This paper develops an Archimedean mechanical reinterpretation of portfolio selection that operates within the classical mean variance and factor model frame- works. Rather than invoking Archimedes as a loose metaphor for leverage or bal- ance, we formalize two of his core mechanical principles, the lever law and center-of- mass computation, as explicit mathematical constraints on top of existing optimality conditions. The result is not a departure from portfolio theory but a reorganiza- tion of it: the ALP is a shrinkage-robust variant of the tangency portfolio, and the ACM is a factor-aligned variant of the minimum-variance portfolio, both derived from mechanical equilibrium conditions that make their economic content more transparent and their practical implementation more robust. We first introduce the Archimedean Lever Portfolio (ALP), where asset-specific torques are required to be proportional to the assets’ risk contributions. Under standard mean variance assumptions this yields a closed-form portfolio that is structurally identical to the classical tangency portfolio, but computed with a volatility-scaled return signal σiμi in place of raw expected returns μi, an implicit Bayes-Stein shrinkage that makes the ALP a robust variant of the tangency solution with lower turnover and smaller drawdowns. We then consider factor models and define Archimedean Center-of- Mass (ACM) portfolios as minimum-variance allocations whose factor center of mass is aligned with the factor risk premium. This leads to a second closed-form solution obtained from a low-dimensional linear system. We test these strategies empirically on U.S. ETF equity portfolios and we find that Archimedean portfolios deliver com- petitive risk-adjusted returns relative to the benchmarks across multiple estimation windows and data frequencies, with lower turnover and smaller drawdowns than the classical tangency portfolio, though results are subject to the usual caveats of a small-universe backtest.
