PEGFA Seminar Series 2024/25: Ugur & Nikolaidi

13th Mar 2025 5pm - 6:30pm

Greenwich Campus

QA010 & Online

The Institute of Political Economy, Governance, Finance and Accountability (PEGFA) invites you to its Research Seminar Series 2024/25.

This Research Seminar will take place on 13th March 2025 in QA010 & Online, featuring PEGFA speakers Prof. Mehmet Ugur and Dr Maria Nikolaidi.

Prof. Ugur will be discussing 'Democracy, markups and economic growth: Dose-response evidence from continuous treatment estimations'.

'Democracy is a source of growth in both institutional and Schumpeterian models of economic growth. In the former, the growth effect of democracy is due to lower incidence of extractive (rent-seeking) economic institutions it fosters. In the latter, the effect is due to higher competition levels and entry/exit rates fostered by democracy. To probe the validity of these predictions, we utilise different continuous measures of democracy and estimate dose-response functions for the democracy-growth relationship in 130 countries observed from 1980-2019.  Our findings indicate that: (i) the average treatment effect on the treated (ATET) is hump-shaped (ii) the ATET tends to decline after the democracy threshold is reached; and (iii) the growth premium on (the marginal effect of) democratisation is either insignificant or negative. In contrast, both the average and marginal effects of markups on per-capita GDP growth are positive! These findings follow naturally from a different reading of the Schumpeterian and endogenous growth models, where innovation and economic growth are both driven by the scope for economic rents. In these settings, economic growth requires ever-increasing markups, with the implication that democracies deliver poor growth when they deliver lower markups compared to autocracies. We conclude by arguing that democracy may be necessary but not sufficient for growth when the latter is driven by the scope for economic rents.'

Dr Nikolaidi will be speaking on 'Incorporating climate into the Eurosystem collateral framework'.

'The Eurosystem collateral framework is a powerful policy tool. It determines the access of euro area banks to central bank liquidity and shapes market-based finance in Europe. The ECB is only now starting to address its carbon bias, through a 'passive' climate risk exposure approach whereby climate risk is treated as another credit risk and modelled based on a microprudential financial materiality perspective. Using bond- and company-level data, we critically evaluate this approach, contrasting it with a climate footprint approach that adjusts the haircuts and eligibility of the collateral framework based on the climate performance of bond issuers. Our approach adopts a double materiality perspective that views the collateral framework as a tool that can discipline carbon financiers and play a complementary role in the context of a ‘sticks and carrots’ climate policy mix. In contrast to our climate footprint approach, the ECB’s risk exposure approach will significantly delay the decarbonisation of the Eurosystem collateral framework. Moreover, the ECB’s approach would not guarantee smooth access to central bank liquidity if climate transition risks start becoming very high.'

The MS Teams meeting can be accessed here.

We look forward to seeing you there!

The full schedule for the 2024/25 PEGFA Seminar Series can be found here.

BOOKING REQUIRED

Further details