Economic Research Forum

• Abnormal weather shocks cause delayed but persistent declines in U.S. municipal bond returns. • Municipal bond returns fall about 35 bps after 4–6 months and 40 bps after one year. • Republican-led states show sharper short-term bond return declines after weather shocks. • Medium-term effects converge, indicating widespread fiscal costs across all states. This paper investigates how abnormal weather shocks influence U.S. state-level municipal bond returns, offering evidence on the pricing of climate risk in local public debt markets. Using a composite index of standardized weather anomalies and a panel local projections framework, we find delayed but persistent negative effects of abnormal weather shocks on municipal bond returns. Returns remain stable initially but decline by about 35 basis points after four to six months and by 40 basis points after one year, indicating gradual repricing as fiscal and credit conditions adjust. Furthermore, we document partisan asymmetries: bonds issued by Republican-led states exhibit sharper short-term declines, reflecting weaker climate policies and adaptation efforts. Over the medium term, the effects converge across states, suggesting that abnormal weather shocks ultimately impose real and widespread fiscal costs on municipalities, regardless of political orientation.

This study examines how climate variability affects child labor in the Occupied Palestinian Territories, where ongoing conflict and scarce resources amplify household vulnerabilities. Drawing on Palestinian Labor Force Survey data from 2000 to 2018 linked with district-level data on climate indicators, we employ a linear probability model to measure the effects of climate shocks on child labor. Our analysis reveals that rainfall increases child labor, particularly among boys in agricultural roles, while extreme heat discourages it. We also find that girls often respond to rainfall shocks through early marriage. These patterns vary across northern, central, and southern districts, highlighting the importance of place-based adaptation. Our findings show that structural constraints mediate how households cope with environmental stress. The results suggest that effective policy must integrate climate-resilient agricultural investments with targeted social-protection measures, educational support, and gender-responsive programming to mitigate the risks of child labor and early marriage under increasing climate pressure.

A laboratory study was conducted to evaluate the efficacy of various plant powders, including fenugreek (Trigonella foenum-graecum), pomegranate (Punica granatum), anise (Pimpinella anisum), and harmel (Peganum harmala), at doses of 2g, 4g, and 8g. The larval and adult stages mortality of the red flour beetle Tribolium castaneum (Herbst) was recorded after 24, 48, and 96 hours. The results revealed that the plant powder and the concentration-dependent had a significant effectiveness after 24 h and 48 h for both larva and adult stages mortality, respectively. Moreover, all plant powders and their concentrations, in addition to their interactions between them, had a crucial effectiveness after 96 h as well. The harmel powder scored the most effective, achieving the highest mortality rates of both the larval and adult stages. After 24 h was the highest mortality rates were 29.67% and 68.22% of the larval and adult stages, respectively. Additionally, the results demonstrated that powder concentrations increased the mortality from 37.28% at 2g to 45.59% at 8g and 62.58% at 2g to 70.14% at 8g after 96 h of exposure of the larval and adult stages, respectively, reinforcing a concentration-dependent increase; the mortality rates also increased.

The purpose of this study is to investigate the strength of the relationship between Sovereign Credit Ratings (SCR) and Foreign Direct Investment (FDI) and Economic Growth, by analyzing how changes in SCRs overtime have influenced investors’ decisions to invest in Egypt. This study employs annual time-series data spanning from 1996 to 2023 to investigate the influence of Sovereign Credit Ratings (SCRs) on Foreign Direct Investment (FDI) and Economic Growth in Egypt. The Autoregressive Distributed Lag (ARDL) approach is utilized to ascertain both the short-run and long-run relationships among these variables. The empirical study reveals a robust correlation between Sovereign Credit Ratings (SCRs), Foreign Direct Investment (FDI), and Economic Growth in Egypt. Moreover, the analysis indicates that SCRs exert a more significant influence on economic growth compared to their impact on FDI. This research underscores the critical role of Sovereign Credit Ratings (SCRs) in attracting foreign direct investment (FDI) and fostering economic growth in Egypt. Policymakers should prioritize initiatives to enhance the country's business climate, thereby improving its creditworthiness and attracting investors. By implementing these measures, Egypt can create a more favorable environment for economic development and prosperity.

Purpose This study aims to examine whether the inclusion of firms in the participation index provides sustainability according to firm growth and financial leverage within the Islamic finance principles framework by using the Local Projections method for Turkish nonfinancial firms. Design/methodology/approach The authors use the semiparametric local projections method which allow us to make dynamic panel impulse-response analysis. At the same time, the data set the authors use is a hand collected data set. In this framework, the authors investigate the impact of inclusion in the participation index for two quarters on the firm dynamics of Turkish nonfinancial firms using the local projections methodology. Findings The results suggest that firms included in the index for at least two quarters experience more stable growth and significantly lower leverage, while short-term inclusion yields weaker effects. These findings suggest that prolonged compliance with Islamic financial standards strengthens internal financing capacity and shields firms from debt exposure. The study contributes to Islamic finance theory by incorporating time-varying Shariah compliance and offers practical implications for financial regulation and firm governance. Practical implications This study highlights the impact of Islamic finance on firm growth, and stability, indicates its potential to decrease dependence of debt, support sustainable growth and increase economic resilience through its principles and practices. For high-value businesses to benefit from the Islamic finance principles, policymakers can create opportunities to reduce reliance on debt and increase liquid assets by aligning financial structures with Shariah standards. Originality/value To the best of the authors’ knowledge, this is the first study in the emerging markets Islamic finance context that uses a time-varying participation index approach in its empirical analysis and sheds new light on this relationship in the literature.

This study provides the first empirically-grounded assessment of how fossil fuel subsidies constrain renewable energy generation in Saudi Arabia. Leveraging an autoregressive distributed lag (ARDL) model with structural break testing (Zivot-Andrews) on 1995–2023 data—encompassing both the 2016 and 2018 subsidy reform waves—we quantify the dynamic interplay between fossil fuel subsidies and renewable energy generation. The current undertaking has unearthed that a 1% reduction in fossil fuel subsidies increases renewable energy generation by 6.45% in the short run and 9.94% in the long run, with economic diversification emerging as a statistically robust accelerant. These findings empirically validate that suppressing fossil fuel subsidies and reallocating investments via economic diversification are pivotal to unlocking Saudi Arabia’s renewable energy potential. The results we gleaned could prove substantially important to policymakers and stakeholders seeking to maximize fossil fuel subsidy reform benefits and strategically redirect resulting revenues to jump-start the renewable energy industry.

This paper examines how logistics services influence Domestic Value Added (DVA) in seven African countries from 2000 to 2022. Using dynamic panel GMM analysis, results show that a one-unit increase in the Logistics Performance Index (LPI) leads to a 1% rise in DVA (p < 0.001), highlighting the role of efficient logistics in supporting economic growth. This is especially crucial for landlocked and less developed nations that rely on coastal countries for their exports. A $109,953.73 increase in manufacturing value added (MAUVA) is linked to a 1% rise in DVA, emphasizing the importance of industrialization. Egypt, a key contributor, exemplifies how structural changes support inclusive growth. Surprisingly, GDP per capita negatively correlates with DVA (−76.60), suggesting structural inefficiencies or import dependence. Conversely, population size positively affects DVA, indicating demographic advantages. These findings stress improving trade facilitation, logistics infrastructure, and industrial growth to enhance domestic value addition. They have policy implications for resilient growth in Africa, especially within initiatives like the African Continental Free Trade Area (AfCFTA).

The prevailing literature on International Environmental Agreements (IEAs) commonly posits the existence of a Depth-Participation Dilemma (DPD), suggesting that while precise agreements with well-defined obligations promote deeper cooperation, their specificity often deters participation. This paper revisits this assumption and introduces the differing institutional capacities of the negotiating countries. It thus provides a theoretical framework for understanding the interplay between vagueness, institutional capacities, and, most importantly, the dynamics of the DPD. Our analysis suggests that the DPD is only relevant when institutional capacities are highly uneven across negotiating states, or when a significant number of participants have limited capacities. In contrast, we find that greater precision enhances participation when most negotiating countries possess moderate to high institutional capacities. To test these predictions, we analyze ratification behavior for five climate-related IEAs from 1995 to 2018, constructing a precision index. Our empirical findings reveal (i) a bandwagon effect, where countries are more likely to ratify agreements when others do, (ii) that greater institutional differences weaken this bandwagon effect, thereby reducing ratification rates, (iii) that vagueness in agreements generally undermines incentives to ratify, and (iv) that vague agreements, once ratified, are less binding and correlate with higher CO 2 emissions. This framework and evidence provide new insights into how agreement design influences participation and effectiveness in IEAs. • We examine the Depth-Participation Dilemma (DPD) in environmental agreements. • A theoretical framework with the agreements vagueness is developed. • The DPD is relevant when institutions are uneven across negotiating states. • A precision index is constructed for five climate-related agreements. • We analyze ratification behavior for these agreements from 1995 to 2018. • We find a bandwagon effect where countries ratify agreements when others do. • Greater institutional differences weaken this bandwagon effect. • This framework provides insights on the participation in environmental agreements.