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This chapter provides an empirical assessment of the effects of infrastructure provision on structural change and aggregate productivity using industrylevel data for a set of developed and developing countries over 1995–2010. A distinctive feature of the empirical strategy followed is that it allows the measurement of the resource reallocation directly attributable to infrastructure provision. To achieve this, a two-level top-down decomposition of aggregate productivity that combines and extends several strands of the literature is proposed. The empirical application reveals significant production losses attributable to misallocation of inputs across firms, especially among African countries. Also, the results show that infrastructure provision has stimulated aggregate total factor productivity growth through both within and between industry productivity gains.

The aim of this chapter is to examine the nominal and real convergence of Czechia. The importance of the convergence of Czechia with the euro area is linked to the future intention of joining the Economic and Monetary Union after the Maastricht criteria are met. This chapter covers the period from 2004 to 2021. We argue that nominal convergence is relative to the Maastricht criteria, when real convergence focuses on different areas: the Maastricht criteria, gross domestic product (GDP) per capita in purchasing power standards and real GDP growth rate, labour market (minimum labour costs and unemployment rates. Findings suggest that Czechia has reported the strongest real convergence in the area of relative economic level, moderate convergence of labour costs and divergence of unemployment. The nominal convergence analysis suggests that Czechia will not meet the Maastricht benchmarks in the near future and is not ready to join the euro area given its high inflation rate and the state of public finances.

Carbon leakage – where multinational enterprises (MNEs) transfer carbon-intensive production activities to countries with laxer emissions constraints for cost purposes – is one of the main mechanisms through which international business (IB) contributes to climate change. This chapter discusses a new policy initiative called the Carbon Border Adjustment Mechanism (CBAM) that the European Union (EU) introduced in May 2023 to fight carbon leakage. The authors analyze the logic of CBAM and discuss how it will likely influence IB both in industries that are directly targeted by CBAM and related industries that will face spillover effects.

Motivated by empirical features that characterize cryptocurrency volatility data, the authors develop a forecasting strategy that can account for both model uncertainty and heteroskedasticity of unknown form. The theoretical investigation establishes the asymptotic optimality of the proposed heteroskedastic model averaging heterogeneous autoregressive (H-MAHAR) estimator under mild conditions. The authors additionally examine the convergence rate of the estimated weights of the proposed H-MAHAR estimator. This analysis sheds new light on the asymptotic properties of the least squares model averaging estimator under alternative complicated data generating processes (DGPs). To examine the performance of the H-MAHAR estimator, the authors conduct an out-of-sample forecasting application involving 22 different cryptocurrency assets. The results emphasize the importance of accounting for both model uncertainty and heteroskedasticity in practice.

There is growing empirical evidence that firm heterogeneity is technologically non-neutral. This chapter extends the Gandhi, Navarro, and Rivers (2020) proxy variable framework for structurally identifying production functions to a more general case when latent firm productivity is multi-dimensional, with both factor-neutral and (biased) factor-augmenting components. Unlike alternative methodologies, the proposed model can be identified under weaker data requirements, notably, without relying on the typically unavailable cross-sectional variation in input prices for instrumentation. When markets are perfectly competitive, point identification is achieved by leveraging the information contained in static optimality conditions, effectively adopting a system-of-equations approach. It is also shown how one can partially identify the non-neutral production technology in the traditional proxy variable framework when firms have market power.