No abstract

This article makes both a theoretical and an empirical contribution to the literature on financial liberalization and income inequality. In the first part, we develop a tractable model that features agents with varying investment abilities and a banking sector. There are two possible interventions to liberalize the banking sector: first, a reduction in reserve requirements, and, second, an increase in the amount of foreign funds that can be used to finance domestic loans. Financial liberalization leads to enhanced banking sector efficiency and adjustments in interest rates affecting income of investors and savers, and, therefore, income inequality. Theoretically, the impact of financial liberalization on income inequality is ambiguous. Yet, the model suggests that financial liberalization will improve income distribution in countries where financial depth is high. Our empirical estimates confirm this conditional effect. More precisely, the estimates suggest that capital account liberalization only tends to lower income inequality if the level of financial depth, as measured by private credit over GDP, exceeds 25 percent. © 2015 Elsevier Ltd

Mitigating the detrimental effects of climate change is a collective problem that requires global cooperation. However, achieving cooperation is difficult since benefits are obtained in the future. The so-called collective-risk game, devised to capture dangerous climate change, showed that catastrophic economic losses promote cooperation when individuals know the timing of a single climatic event. In reality, the impact and timing of climate change is not certain; moreover, recurrent events are possible. Thus, we devise a game where the risk of a collective loss can recur across multiple rounds. We find that wait and see behavior is successful only if players know when they need to contribute to avoid danger and if contributions can eliminate the risks. In all other cases, act quickly is more successful, especially under uncertainty and the possibility of repeated losses. Furthermore, we incorporate influential factors such as wealth inequality and heterogeneity in risks. Even under inequality individuals should contribute early, as long as contributions have the potential to decrease risk. Most importantly, we find that catastrophic scenarios are not necessary to induce such immediate collective action.

Climate change is one of the most challenging problems of our times. To be effective, climate policies need to receive citizens’ approval. The objective of this article is to examine both the extent of individuals’ support for different climate policies and key determinants of policy support. To this end, an overview of the related empirical literature is provided. The article shows that the empirical literature on public climate policy support is very diverse in terms of concepts, measures of policy support and empirical approaches. Moreover, the bulk of the existing empirical literature has a strong U.S. focus. The article concludes that public support for climate policies is rather a matter of climate change beliefs and party identification, and not primarily a question of socio-demographic background. The article also offers suggestions for future research as well as policy recommendations.