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This article revisits the oft-cited relationship between economic shocks and coups. According to conventional wisdom, economic recessions trigger coups. However, existing empirical studies have not consistently produced supporting evidence for that relationship. This article claims that this is partly because existing studies have not differentiated transitory from permanent shocks to the economy. Two different economic shocks could have different effects on coups. Moreover, existing studies have not sufficiently addressed measurement error in gross domestic product (GDP) data. To overcome these problems, I use exogenous rainfall and temperature variation to instrument for economic growth. Instrumental estimates demonstrate, consistently across four different GDP per capita growth measures, that a decrease in GDP per capita growth rates, induced by short-run weather shocks, significantly increases the probability of a coup attempt. Conversely, noninstrumental variable estimates vary according to different GDP measures, and are close to zero, consistent with previous findings.

We show that democratic change may be triggered by transitory economic shocks. Our approach uses within-country variation in rainfall as a source of transitory shocks to sub-Saharan African economies. We find that negative rainfall shocks are followed by significant improvement in democratic institutions. This result is consistent with the economic approach to political transitions, where transitory negative shocks can open a window of opportunity for democratic improvement. Instrumental variables estimates indicate that following a transitory negative income shock of 1 percent, democracy scores improve by 0.9 percentage points and the probability of a democratic transition increases by 1.3 percentage points.

Using centuries of Nile flood data, I document that during deviant Nile floods, Egypt's highest-ranking religious authority was less likely to be replaced and relative allocations to religious structures increased. These findings are consistent with historical evidence that Nile shocks increased this authority's political influence by raising the probability he could coordinate a revolt. I find that the available data provide support for this interpretation and weigh against some of the most plausible alternatives. For example, I show that while Nile shocks increased historical references to social unrest, deviant floods did not increase a proxy for popular religiosity. Together, the results suggest an increase in the political power of religious leaders during periods of economic downturn.

We examine the evolution of competition and entry-order advantages in markets under macroeconomic distress. Through formal modeling of early-mover advantages along industry life cycles subjected to economic shocks and based on simulation findings, we propose that such shocks exogenously induce temporary industry discontinuities that shift the relative value of distinct asset endowments, thereby switching the bases for competitive advantages vis-à-vis those found in stable contexts. A vital trade-off then emerges between a firm's financial flexibility and its pace of investments in isolating mechanisms, such that the former operates as a contingency factor for the latter. As such, flexibility superiority boosts early-entrants' advantages, while it alternatively gives laggards a much desired strength to out trump first-mover rivals. Our study informs entry-order advantage theory and management practice in economically turbulent contexts.

Using a new measure of economic policy-related uncertainty (EPU), this study evaluates whether macroeconomic uncertainty affects oil price or vice versa. Specifically, we investigate mean and volatility spillovers between the EPU index and oil returns and the underlying drivers for the time-varying correlation. Our results illustrate the importance of policy uncertainty. Although the mean spillover of EPU on oil returns is negligible in the long run, the mean spillover in the short term and the volatility spillover of EPU are significant for oil spot and futures returns. Moreover, we provide evidence that both oil supply shocks and real economic shocks lead the correlation between the EPU and oil returns to fluctuate over time.

This paper investigates the impact of the Covid-19 pandemic on the performance of Islamic insurance versus conventional insurance firms in the Organization of Islamic Cooperation (OIC) member countries. Using Dynamic Capabilities theory and Resource Dependence Theory, the study examines the reasons behind the more significant performance reduction in Islamic insurance firms during the pandemic. Using firm- and country-level panel data from 425 insurance firms for 7 years (2016–2022) and employing OLS, RE, and GMM regression models, the analysis focuses on Return of Assets (ROA) and Asset Turnover Ratio as performance measures. The results indicate that Islamic insurance firms exhibited a greater reduction in performance, during the pandemic, compared to conventional firms, primarily due to weaker liquidity management and operational flexibility. Cash from operating activities (COA) was the key factor of lack of liquidity management, contributing to the underperformance of Islamic insurance firms during the pandemic. The findings highlight the need for improved liquidity management approaches in Islamic insurance firms to increase their resilience to future economic shocks.

We conceptualize capital markets in terms of resource access and governance, and argue that more developed capital markets facilitate firm restructuring through more effective provision of capital and governance of transactions. We then develop a contingency model that specifies that the effects of capital market development on restructuring vary by (1) types of restructuring, (2) the nature of the economic environments, and (3) firms’ access to resources. We evaluate a broad range of restructuring actions among independent firms and business group affiliates in Singapore and South Korea before and during the economic shock of 1998–1999. Results support our predictions of the impact of capital market development and of contingencies, and highlight the value of incorporating an external capital markets perspective to complement internally focused theoretical explanations for firm restructuring.

We study optimal regional insurance provision in federations with regionally and privately observable shocks to the degree of intergenerational externality (DIE) induced by local intergenerational public goods (IPGs), or to the degree of technological progress (DTP) for producing the IPGs. Federal transfers provide interregional insurance, and local debt provides intergenerational insurance. If optimal federal transfers increase (decrease) with a region’s debt level, we say the two insurance policies are complements (substitutes). We address such questions as whether it is efficiency-enhancing to adopt both schemes for providing regional insurance and how the answer varies with these two different economic shocks. The paper’s main results are twofold: first, under the DIE shocks, federal transfers and local debt act as complements in implementing the asymmetric information optimum when borrowing and spending decisions are decentralized at the regional level; second, under the DTP shocks, they act as complements with observable output of IPGs, but act as substitutes with observable expenditure on the IPGs.

There is limited quantitative evidence of the effects of socio‐economic shocks on biological resource use. Focusing on wild meat hunting, a substantial livelihood and food source in tropical regions, we evaluated the impacts of the shock from Nigeria's coronavirus disease (COVID‐19) lockdown on species exploitation around a global biodiversity hotspot. Using a 3‐year quantitative dataset collected during and after the lockdown (covering 1008 hunter‐months) and matching by time of year, we found that successful hunting trip rates were more frequent during the lockdown, with a corresponding increase in the monthly number, mass, and value of animals caught. Moreover, hunters consumed a larger proportion of wild meat and sold less during lockdown, compared to non‐lockdown periods. These results suggest that local communities relied on wild meat to supplement reduced food and income during the lockdown, buffering the COVID‐19's socio‐economic shock. Our findings also indicate that wild species may be especially vulnerable to increased hunting pressure during socio‐economic shocks.

Using two estimated models for the euro area and the United States, this paper investigates whether the observed difference in the amplitude of the interest rate cycle since 1999 in both areas is due to differences in the estimated monetary policy reaction function, differences in the structure of the economy or differences in the size and nature of the shocks hitting both economies. The paper concludes that differences in the type, size and persistence of shocks in both areas can largely explain the different interest rate setting.