Rising Military Expenditures, Climate Change, and Government Debt Crises
Paper Session
Saturday, Jan. 3, 2026 8:00 AM - 10:00 AM (EST)
- Chair: Giuseppe Fontana, University of Leeds
Risk Spillovers from Climate Policy Uncertainty to Energy Markets: Does Climate Policy Stringency Matter?
Abstract
In addressing climate change and advancing the energy transition, the imbalance in energy supply and demand caused by climate policy uncertainty (CPU) may trigger risk spillovers across global energy markets. This paper characterizes the complex risk contagion between the CPU and the global energy market utilizing an improved high dimensional time-varying parameter vector autoregressive (HD-TVP-VAR) model. A dual machine learning (DML) approach is applied to test whether strict climate policies can mitigate the risk spillover from the CPU to the energy market. The results indicate that the risk connections between CPU and various national energy markets are highly interconnected, revealing a high-dimensional intricate network characteristic. Within this systemic risk framework, countries such as Indonesia, Poland, South Africa, France, Austria, and the United States are risk spillovers. The risk spillover of CPU exhibits evident time-varying characteristics, and the extent of CPU’s risk spillover effects on individual national energy markets varies. Furthermore, we find that climate policy stringency (CPS) plays a significant mitigating role in CPU risk spillover to energy markets. These results provide valuable insights into the effective identification of CPU’s risk contagion paths in the global energy market and how to enhance the risk prevention capability in the global energy market.Natural Resource Security with Energy Efficiency and Digital Governance for Sustainable Development: Evidence from Global Economy
Abstract
In today's technological integration, digitalization of government services is a vital indicator of a country's progress toward sustainable development. It underscores the extent to which electronic transformation augments the ability of the government to modernize the public administration, deliver efficient services, ensure transparency, and foster civic engagement. Present manuscript investigates the distributional properties, as shown by quantiles of digital governance on the effectiveness of natural resource efficiency using both theoretical frameworks and empirical analyses using panel data across 178 economies spanning the years 2000 to 2022. Our findings reveal that digital governance significantly enhances natural resource efficiency. Specifically, a 1% increase in the E-Government Development Index (EGI) is associated with substantial reductions in natural resource depletion (NRD) and energy intensity (EI) by up to 27.42% and 8.35%, respectively, at higher quantiles. Moreover, digital governance positively influences agricultural orientation index (AOI) and access to clean fuel technologies (ACFT), with increases of up to 1.76% and 1.21%, respectively. These findings predominantly stem from the enhancement of government digital services, which is a decisive indicator of a versatile governance and administration. Moreover, the enhanced governance through digital monitoring of energy efficiency, proper control of energy usage will lead to strategic decision making in lowering energy intensity, reduce waste, and promote sustainable practices. These findings suggest policymakers to fully integrate digitalization into governance and develop effective strategies in offering digital education, integration of internet and training programs via government portals.Climate Policy, Biocapacity Debt and Public Debt- New Evidence from Panel Threshold Approach
Abstract
The United Nations (UN) Climate Change Conference COP 28 in 2023 identified the “triple planetary crisis”—climate change, air pollution, and biodiversity loss—to be the three main and interlinked environmental challenges in front of humanity (UN Framework Convention on Climate Change (UNFCCC, 2023). A call to action has been issued, centered on the urgency for a joint approach to both climate action and nature conservation, because ecosystems, besides being suppliers of renewable natural resources to humanity, are also carbon stores. Consequently, reversing the rise in global temperature and the rise of biodiversity loss are considered closely linked, and targets are set for both reversal processes. These goals, however, face a major challenge from the rising public debt levels in most economies, which forces governments to make difficult choices between spending on social services and the environment. While existing studies on climate policy have been centered on CO2 emissions (Boly et al., 2022) or biocapacity (Doytch et al., 2025), we propose an approach that examines the impact on ecological debt of public debt based on biocapacity deficit (Footprint Network). More specifically, we investigate whether countries’ approach to reducing ecological debt depends on their public debt threshold levels. Working with a panel data set of 180 countries for the period 1961-2022, we differentiate countries based on an endogenously determined public debt threshold level, following Wang and Uctum (2024) methodology.Captured by Conflict: Examining the Consequences of War on the Board
Abstract
We explore the effects of the Russian invasion of Ukraine on a high-level cognitive task using data of professional chess players. Analyzing over 400,000 chess games played over the course of four years and matching air attack alarms in Ukraine to players’ home regions we are able to map the effect of war on human cognitive performance in the civilian population. We show that air alarms are associated with a temporary decline in cognitive performance. Our results indicate that individuals from relatively safer regions are affected less than individuals from frequently targeted regions.JEL Classifications
- E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H5 - National Government Expenditures and Related Policies