The literature on finance and innovation treats the relationship as monotone: more capital directed at innovative firms should raise long-run productivity growth. This paper shows why that need not hold. A Schumpeterian growth model is developed in which financiers screen heterogeneous candidate innovations before funding them, subject to a genuine cost-speed tradeoff: stricter screening raises the average quality of funded projects but slows the rate at which capital reaches the innovation frontier. The balanced-growth rate is a strictly concave, single-peaked function of screening intensity — an Allocation Frontier — with a technologically determined peak and a decentralized equilibrium that always falls strictly short of it, by an amount governed by the cost of screening relative to the value of getting it right. A calibration combining OECD productivity data, the markup literature, and an illustrative target for screening intensity finds this shortfall costs the calibrated economy roughly four percent of its attainable growth rate. Comparative statics further show that “more innovation finance” is not one thing: cheaper screening and greater entrant heterogeneity both raise growth by moving the economy toward its own frontier peak, while a larger raw flow of candidates raises growth by moving it away from an unchanging one.
Martin Christy ABIAYA'A, Tati Gaelle TIMBA, Jean Hugues NLOM, Marcellin NDONG NTAH
Abstract The objective of this article is to analyze the effect of fiscal decentralization on early childhood education in Cameroon. Using a methodological framework based on econometric modeling by ordinary least squares (OLS), generalized least squares (GLS), and the generalized method of moments (GMM), it emerges that fiscal decentralization positively and significantly affects early childhood education in Cameroon. The results obtained by OLS and GLS reveal that Fiscal decentralization has a significant and positive effect on the number of desks per student. The Global Monitoring Mechanisms (GMM) demonstrate that fiscal decentralization leads to a significant and positive increase in both the number of classrooms per student and the number of desks per student. The investigations revealed that fiscal decentralization has a positive effect on early childhood education in Cameroon.These results suggest implementing financing mechanisms for local authorities to stimulate local development through the provision of sustainable socioeconomic infrastructure that can ensure equal and equitable access to education for children. Keywords: Cameroon, schooling, early childhood, fiscal decentralization
The coming decade will be a defining period for the global digital economy, with emerging markets playing a central role in shaping its trajectory. This chapter provides a strategic forecast of the evolving digital landscape, analyzing how industry transformation, geopolitical shifts, and investment strategies will influence global competitiveness. Artificial intelligence, fintech, and decentralized finance are accelerating industry evolution, allowing emerging economies to expand their economic influence, foster technological innovation, and attract capital. Simultaneously, global power structures are being redefined as developing nations actively shape digital trade policies, technology governance, and economic frameworks. The chapter also examines key investment trends, highlighting high-growth sectors and risk mitigation strategies for investors navigating regulatory uncertainties and market volatility. By synthesizing insights from previous chapters, this forward-looking analysis offers policymakers, business leaders, and investors actionable strategies to harness the digital revolution for sustainable economic growth and global integration.
We present the first formal treatment of \emph{yield tokenization}, a mechanism that decomposes yield-bearing assets into principal and yield components to facilitate risk transfer and price discovery in decentralized finance (DeFi). We propose a model that characterizes yield token dynamics using stochastic differential equations. We derive a no-arbitrage pricing framework for yield tokens, enabling their use in hedging future yield volatility and managing interest rate risk in decentralized lending pools. Taking DeFi lending as our focus, we show how both borrowers and lenders can use yield tokens to achieve optimal hedging outcomes and mitigate exposure to adversarial interest rate manipulation. Furthermore, we design automated market makers (AMMs) that incorporate a menu of bonding curves to aggregate liquidity from participants with heterogeneous risk preferences. This leads to an efficient and incentive-compatible mechanism for trading yield tokens and yield futures. Building on these foundations, we propose a modular \textit{fixed-rate} lending protocol that synthesizes on-chain yield token markets and lending pools, enabling robust interest rate discovery and enhancing capital efficiency. Our work provides the theoretical underpinnings for risk management and fixed-income infrastructure in DeFi, offering practical mechanisms for stable and sustainable yield markets.
Spatial economics deals with the mutual socioeconomic influence of the geographical boundary of an administrative body on the neighboring entities- municipalities, districts, states, and countries. Researchers have conducted spatial analyses to solve a variety of economic problems like labor dynamics, wage equilibrium, capital formation, and demographic agglomeration/dispersion, among others. However, the application of spatial economics in public finance, despite being a pressing priority, has not been extensively explored. With India being the largest democracy in the world and having a decentralized state budget mechanism in place, focused attention is required to measure the contiguity effect in state finance. I find strong spatial dependence by implementing a fixed effect panel regression design followed by a spatial regression approach to assess fiscal health in Indian states over 22 years. The analysis reveals spatial dependence on both the income and expenditure sides of state budgetary fiscal and primary deficits. I also analyze the dynamics of the capital budget revenue and its idiosyncrasies in determining the spatial roles that govern state deficits. The empirical results underscore that fiscal policymaking through budget preparation for an Indian state must account for major fiscal components of bordering states to achieve targeted fiscal objectives.
The main goal of this paper was to investigate the effect of fiscal decentralization on foreign direct investment (FDI) in developing countries during the years 1990-2022.For this purpose, we have used the Panel Smooth Transition Regression method (PSTR).Decentralization is the financial equivalent of the central government transferring resources to local governments.Policies that increase the proportion of provincial government financing allocated to local infrastructure through fiscal decentralization can attract more foreign direct investment.Based on the results obtained from the model estimation, on percent increase the fiscal decentralization causes to increase in foreign direct investment equal to 0.86.So, we can say that providing the necessary fields for the expansion of fiscal decentralization can help to promote foreign direct investment levels in developing countries.
In this zealous word, for a better understanding of a decentralized system, might take a revolution in the traditional banking system. This chapter examines the relationship between decentralized finance that is DeFi and technology readiness in the context of a smart global value chain. As a substitute for the centralized finance system, blockchain technology creates the groundwork for efficiency, transparency, and safety. It helps in a decentralized financial ecosystem. This chapter provides a deep introduction, working and delving into the concept of DeFi. This chapter talks about significant elements with the combination of blockchain census process, (DAPPs) that is decentralized apps, and smart contracts. Secondly, it also examines the decentralized banking system (DeFi) that is currently used in terms of technology maturity, with elements like interoperability, safety, security, and scalability. With the help of a decentralized system development of DeFi is discussed under the friction of lower transactions, democratizing access to financial services, and reducing the risk of counterparty. Various case studies and empirical research demonstrate how DeFi banking practices are posing a threat. DeFi promotes financial inclusion and is also beneficial economically and opens new doors for economic benefits. This chapter evaluates the regulatory and financial benefits of the DeFi method. Artificial intelligence and Internet of Things (IoT) and technology are also covered in it. For the decentralized banking services complex technologies and other financial ecosystems can be improved so that working on technologies, AI can increase and make work more effective, quick, and easy for making the system decentralized.
This chapter examines the different types of ‘tokens’ DLT projects can create, including security tokens, exchange tokens and utility tokens. It reviews the current state of regulatory thinking about what has been called ‘the token economy’ - the digitisation of interests located in both the physical world and the metaphysical world of the distributed ledger. Many new investment offerings begin life through an ‘Initial Coin Offering’ (ICO), a form of public offering of digital tokens designed to raise capital funding for the investment or project in question. The chapter reviews when ICOs constitute securities and when they might fall outside the scope of financial services regulation.
This paper considers the "DeFi intermediation chain"-the market structure that underlies the creation and distribution of ETH, the native cryptocurrency of Ethereum-to examine how information asymmetry shapes intermediation rents.We argue that using proof-of-stake blockchain technology in DeFi leads to a novel limit to arbitrage, arising from the tension between arbitrageurs' privacy needs and blockchain transparency.Using a new dataset which distinguishes private and public transactions in Ethereum, we find that a 1% increase in private information advantage leads to a 1.4% increase in intermediaries' profit share.We develop a dynamic bargaining model that predicts information market power stems exclusively from participants' private information advantage.Our analysis illustrates how blockchain technology can sustain arbitrage opportunities despite low entry barriers.
We construct a tractable general equilibrium model of DeFi lending to shed light on the role of pricing rules. We determine how the rule controls key equilibrium variables such as the utilization rate. Our model delivers a measure of welfare which incorporates the DeFi borrowing rate and the security of the underlying (Proof-of-Stake) blockchain, which we use to find welfare-maximizing pricing rules. Using a genuine function of the utilization rate becomes meaningful when there is parameter uncertainty. We establish conditions under which the first-best can be implemented by such a function, which we exhibit explicitly. When these conditions are not met, allowing the rule to also depend on the staking level restores efficiency. Our analysis leads to several other practical recommendations and conceptual clarifications.
<em>Female human capital is particularly a crucial pathway for the development of an economy as women consist of half of human resources. Despite the increasing trend of fiscal decentralization for the improvement of various socioeconomic indicators in Pakistan, there are very few attempts on its impact on human capital. This study increases the knowledge by empirically estimating the research hypothesis that how fiscal decentralization affects female human capital in Pakistan with 18th amendment in NFC as a backdrop taking the period from 1975 to 2020. The robust analysis shows that fiscal decentralization policy is helpful to frame female human capital in Pakistan. These results are particularly important for policy formulation for provinces to increase female human capital as well as for public finance sector in Pakistan.</em>
Overview The aim of the International Conferences "Economic Scientific Research-Theoretical, Empirical and Practical Approaches"- (ESPERA), initiated in 2013 by the "Costin C. Kirițescu" National Institute for Economic Research (NIER) within the Romanian Academy is to present and evaluate the economic scientific research portfolio, to argue and substantiate the Romanian development strategies - including European and global best practices, to provide an opportunity for researches, practitioners, and academics interested in economic scientific research, both theoretical, practical and empirical discuss and exchange insightful research ideas. The 7th edition of the International Conferences “Economic Scientific Research-Theoretical, Empirical and Practical Approaches”- (ESPERA), under the title ”30 Years of Inspiring Academic Economic Research – From the Transition to a Market Economy to the Interlinked Crises of 21st Century” was organized virtually during 26th -27th November 2020, In Bucharest, Romania. The event, dedicated to the 30th anniversary of NIER and its economic research network of its return under the auspices of the Romanian Academy, will include a scientific program of wide diversity initiatives, bringing together researchers from all NIER institutes and centers, members of the Romanian Academy, Romanian academic researchers and also guests from other countries. The
During the 1990s Morocco implemented a series of major institutional and economic reforms that made the country politically stable and helped it to withstand the destabilizing effects of the Arab Spring. Political reforms resulted in the adoption of a new constitution in 2011, was followed by initiatives to improve justice, public administration, the fight against corruption, and to strengthen governance, transparency, and ethics in public life. The country also embarked on a regionalization of public policies and decentralization of administration to ensure an integrated and durable regional development. This reform momentum was further emphasized by the King of Morocco when in his 2019 throne speech he stressed that &ldquo;&hellip; the stake is thus to rebuild a strong and competitive economy, by encouraging the private initiative, while launching new productive investment plans and by creating new job opportunities&hellip;&rdquo; During two last decades Morocco recorded relatively solid economic and social results due to significant public investments and structural reforms aiming to: (i) stabilize the macroeconomic framework by reducing domestic and external vulnerabilities, in particular through the gradual suppression of subsidies for energy products and some foodstuffs; (ii) improve the framework of management of public finance through the adoption of a new Organic Law of Finance in 2015; and (iii) support the diversification and the competitiveness of the national economy. Morocco also reinforced its sectorial policies through plans for sector development aiming at enhancing the economic growth potential and the creation of jobs, including in the manufacturing sectors with significant added value in sectors such as the automotive, aeronautics and pharmaceutical products. The Moroccan economy has demonstrated an appreciable resilience in the face of an international context characterized by a succession of crises. The rate of growth of real GDP improved on average annually from 3.1% during the 1990s to nearly 4.2% on average annually between 2007 and 2018, sustained by the tertiary sector&rsquo;s dynamism which posted an increase in its value added of 4.2%, contributing of 2.1 points in the GDP (Figure 1). The secondary sector also showed a similar tendency with a 3.3% increase in added value, carrying with it 0.9 percentage points contribution in economic growth, while the primary sector added value grew by 4.4% for a contribution to the growth of the GDP of 0.6 point (DEPF, 2019).
We build an endogenous growth model with consumer-generated data as a new key factor for knowledge accumulation. Consumers balance between providing data for profit and potential privacy infringement. Intermediate good producers use data to innovate and contribute to the final good production, which fuels economic growth. Data are dynamically nonrival with flexible ownership while their production is endogenous and policy-dependent. Although a decentralized economy can grow at the same rate (but are at different levels) as the social optimum on the Balanced Growth Path, the R&D sector underemploys labor and overuses data—an inefficiency mitigated by subsidizing innovators instead of direct data regulation. As a data economy emerges and matures, consumers’ data provision endogenously declines after a transitional acceleration, allaying long-run privacy concerns but portending initial growth traps that call for interventions. This paper was accepted by Kay Giesecke, finance.
Os mercados de criptomoedas vem chamando a atenção e atraindo todo tipo de investidores, desde pessoas até instituições financeiras, buscando altos retornos resultado de la significativa variação dos preços e a sua rápida valorização. No entanto, esse mercado é caracterizado pelo nível de volatilidade e incerteza, levando os preços a níveis muito altos e também a níveis baixos, estas características geram uma grande dificuldade para a toma de decisões dos gestores de investimentos. Este artigo propõe um sistema híbrido para a tomada de decisões no gerenciamento de investimentos no mercado de criptomoedas, considerando um perfil de investimento conservador, que busca reduzir o risco e maximizar o retorno do investimento. A metodologia visa, com base no preço histórico das criptomoedas, estabelecer níveis de retorno e estimar as probabilidades de transição dos retornos para cada nível, isso é feito com base na análise das cadeias de Markov, que são integradas nas múltiplas árvores de decisão para identificar a criptomoeda que projeta o maior retorno futuro, considerando que será vendida em um ou dois períodos após a aquisição. Os resultados são comparados com os dados reais e comprova-se a eficiência da metodologia.
This paper summarizes the arguments and counterarguments within the scientific discussion on the influence of fiscal decentralization measures on the management of innovative country development. The main purpose of the research is to test the hypothesis that expenditure and revenue decentralizations have a positive impact on the management of innovative country development. Testing the hypothesis considers realization of panel data regression analysis, and consists of several stages, such as: 1) elimination of control variables multicollinearity based on the correlation analysis; 2) identification of the regression model specification (fixed or random effects model) with the help of Hausman test; 3) realization of the regression analysis and characteristic of its results (confirmation or rejection of the hypothesis). It also should be noted that country sample consists of 12 unitary European countries (Czech Republic, Denmark, Estonia, France, Hungary, Italy, Latvia, Lithuania, Poland, Slovak Republic, Slovenia, and Ukraine). Time horizon – 2008-2018. Global Innovation Index is a measure of innovative country development. At the same time, the ratio of local budget revenue to consolidated budget revenue, the rate of domestic budget expenditure to consolidated budget expenditure, the proportion of local budget tax revenue to gross local budget revenue are measures of fiscal decentralization in the research. There are also selected a set of control variables that often used in economic growth models and reflect macroeconomic perspectives of country development. However, the practical realization of the stages, as mentioned above, allow identifying that fixed effect specification of the model is more appropriate in all three cases (for three different measures of fiscal decentralization). Panel data regression analysis allows confirming the hypothesis on the positive impact of revenue fiscal decentralization and the negative impact of expenditure decentralization on innovative country development. In turn, there is no statistically significant cohesion between ratio of local budget tax revenue to gross local budget revenue and Global Innovation Index. These findings in terms of fiscal decentralization reform might be considered in order to ensure a balance between power (expenditures) redistribution from central to sub-central governments and local budget financial capacity. While in terms of innovative country development, it should be considered that the lack of local budget financial resources to cover all redistributed from central government level powers makes it impossible to invest in the development of innovation. However, the increase of local government financial capacity creates opportunities not just for essential functions financing but also advanced features investment such as innovative development. Keywords fiscal decentralization, innovation development, local budget expenditures, local budget revenue, local community.