WELCOME AND INTRODUCTION
Prof. Francesco Serti (IMT School)
Doctoral Theses with International Joint Supervision and Double Degree
PRESENTATIONS
Prof. Teresa Molina Millán (University of Alicante)
Artisanal gold mining in Africa: Green for gold? (with Victoire Girard and Guillaume Vic)
The livelihoods of 130 to 270 million people depend on artisanal mining. Artisanal mining is a labor-intensive, often illegal, extractive activity. We combine geological knowledge and a source of exogenous temporal variation to construct the first proxy for artisanal gold mining in Africa – the main form of artisanal mining. We establish that an increase in the potential value of artisanal mining is a significant driver of deforestation. The historical increase in the gold price accounts for 8% of deforestation continent-wide, 28% in gold suitable areas. In parallel, artisanal mining increases local economic wealth and may provide an alternative livelihood in case of weather shock jeopardizing agricultural output. Finally, the bulk of the deforestation induced by artisanal mines appears to be rooted in direct deforestation, where trees are cut to make room for the mining activity itself.
Prof. Iván Payá (University of Alicante)
Public Debt Burden and Crisis Severity
Recent theoretical studies have highlighted that both the level of public debt and the unit cost of servicing the debt (r −g) play a role in the sustainability of the public finances. This paper builds on this literature and introduces a new approach in the analysis of the link between economic downturns and sovereign debt risks by considering the total public debt burden, that is, the interaction between the level of debt and r−g. We do this for 18 advanced economies over 150 years. Our analysis reveals three novel findings. First, we document that
the level of public debt and the interest-growth differential exhibited contrasting patterns over extended periods of time, strengthening the argument to use both of them in an analysis that accounts for public debt sustainability risks. Second, we uncover a plausible causal effect that runs from the total burden of public borrowing prior to a financial crisis to the severity of the crisis. We demonstrate that high levels of public debt burden imply that recessions experience deeper economic downturns and falls in investment, deflationary pressures and
significant credit contractions. This result highlights that limited fiscal space at the onset of a financial crisis systematically exacerbates the severity of the crisis. Third, we show that, whilst a high total debt burden does not systematically precede financial crises, these crises, when they occur, do systematically worsen both the level and the cost of public debt, thus increasing the likelihood of sovereign debt crises in the aftermath of financial crises.
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