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Decarbonizing heavy-duty freight transport is essential for achieving climate neutrality targets. Although internal combustion engine (ICE) trucks currently dominate logistics, they contribute substantially to greenhouse gas emissions. Zero-emission alternatives, such as battery electric vehicles (BEVs) and hydrogen fuel cell vehicles (H2), provide different decarbonization pathways; however, their relative roles remain contested, particularly in small economies. While BEVs benefit from technological maturity and declining costs, hydrogen offers advantages for high-payload, long-haul operations, especially within energy-intensive cold supply chains. The aim of this paper is to examine the gradual transition from ICE trucks to hydrogen-powered vehicles with a specific focus on cold-chain logistics, where reliability and energy intensity are critical. The hypothesis is that applying a system dynamics forecasting approach, incorporating investment costs, infrastructure coverage, government support, and technological progress, can more effectively guide transition planning than traditional linear methods. To address this, the study develops a system dynamics economic model tailored to the structural characteristics of a small economy, using a European case context. Small markets face distinct constraints: limited fleet sizes reduce economies of scale, infrastructure deployment is disproportionately costly, and fiscal capacity to support subsidies is restricted. These conditions increase the risk of technology lock-in and emphasize the need for coordinated, adaptive policy design. The model integrates acquisition and maintenance costs, fuel consumption, infrastructure rollout, subsidy schemes, industrial hydrogen demand, and technology learning rates. It incorporates subsystems for fleet renewal, hydrogen refueling network expansion, operating costs, industrial demand linkages, and attractiveness functions weighted by operator decision preferences. Reinforcing and balancing feedback loops capture the dynamic interactions between fleet adoption and infrastructure availability. Inputs combine fixed baseline parameters with variable policy levers such as subsidies, elasticity values, and hydrogen cost reduction rates. Results indicate that BEVs are structurally more favorable in small economies due to lower entry costs and simpler infrastructure requirements. Hydrogen adoption becomes viable only under scenarios with strong, sustained subsidies, accelerated station deployment, and sufficient cross-sectoral demand. Under favorable conditions, hydrogen can approach cost and attractiveness parity with BEVs. Overall, market forces alone are insufficient to ensure a balanced zero-emission transition in small markets; proactive and continuous government intervention is required for hydrogen to complement rather than remain secondary to BEV uptake. The novelty of this study lies in the development of a system dynamics model specifically designed for small-economy conditions, integrating industrial hydrogen demand, policy elasticity, and infrastructure coverage limitations, factors largely absent from the existing literature. Unlike models focused on large markets or single-sector applications, this approach captures cross-sector synergies, small-scale cost dynamics, and subsidy-driven points, offering a more realistic framework for hydrogen truck deployment in small-country environments. The model highlights key leverage points for policymakers and provides a transferable tool for guiding freight decarbonization strategies in comparable small-market contexts.

Sustainable consumption is becoming an increasingly important aspect of our consumer society. The scarcity of natural resources is a growing concern in many countries. Considering the recent developments related to the promotion of sustainable production and consumption, as well as the introduction of the Climate Action Plan and the Green Deal at the EU level, it is vital to understand the trends of sustainable consumption in individual countries, which may influence overall consumption trends in Europe. The purpose of the article is to analyse the trends of sustainable consumption in small economies with limited natural resources and facing the problem of resource allocation priorities. Sustainable consumption reflects the demand side of sustainable consumption/production. Demand is the most important factor to focus on when planning economic activities, so its trends, in this case, sustainable consumption trends, must be constantly analysed. Exponential smoothing was used to forecast sustainable consumption trends. The research results show that favourable and unfavourable trends in decoupling environmental impact from economic growth and waste generation and management in small economies are forecasted. While resource and energy productivity increases show that small economies have begun to use their resources more efficiently, the demand and consumption of materials (and the associated environmental impact) continue to increase.

Empirical evidence demonstrates that credit standards, including lending margins and collateral requirements, move in a countercyclical direction. In this study, we construct a small open economy model with financial frictions to generate the countercyclical movement in credit standards. Our analysis demonstrates that countercyclical fluctuations in credit standards work as an amplifier of shocks to the economy. In particular, the existence of endogenous credit standards increases output volatility by 21%. We also suggest three alternative tools for policymakers to dampen the effects of endogenous credit standards on macroeconomic volatility. First, the introduction of credit growth to the monetary policy succeeds in counteracting the fluctuation of lending, and thus decreasing the additional volatility considerably. Second, the exchange rate augmented monetary policy, if well-constructed, is considered an efficient tool to eliminate most of the additional fluctuations caused by deep habits in the banking sector. Finally, the introduction of the foreign interest augmented policy also proves successful in dampening the effect of endogenous movements in lending standards.

This paper proposes a dynamic politico-economic theory of fiscal policy in a world comprising a set of small open economies, whose driving force is the intergenerational conflict over debt, taxes, and public goods. Subsequent generations of voters choose fiscal policy through repeated elections. The presence of young voters induces fiscal discipline, that is, low taxes and low debt accumulation. The paper characterizes the Markov-perfect equilibrium of the voting game in each economy, as well as the stationary equilibrium debt distribution and interest rate of the world economy. The equilibrium can reproduce some salient features of fiscal policy in modern economies.

This study extends the formal analysis of inflation targeting monetary policy using the standard New Keynesian framework to a small open economy by adding inflation and output persistence as well as a direct exchange rate channel to domestic inflation. We find that output variability is lower under CPI inflation targeting than under domestic inflation targeting. However, CPI inflation results in higher variability of the real exchange rate than domestic inflation targeting. Output and the nominal interest rate are less volatile under flexible inflation targeting than under almost-strict inflation targeting. We also find that almost-strict domestic inflation targeting cannot completely insulate domestic inflation from foreign shocks due to a direct exchange rate channel. The model is calibrated to Canadian data.

This article begins with an analysis of small-firm economies in Italy and China and then compares and contrasts the migrations of Italian peasants and Wenzhou Chinese to Prato, a historic center of textile production in northern Italy. The purpose of our analysis is not to argue that, despite many differences, the rural to urban migration of Italian peasants and the international migration of Wenzhou Chinese are fundamentally the same. Instead, through an analysis of similarities and differences into the organizational nature of these two migrations, we can better understand the crucial historical differences between the two cases, differences that give us insight into the more complex questions about the place of Italian and Chinese family firms in the global economy of the twenty-first century.

This paper assesses the impact of trade liberalisation on the economic growth of the Republic of Srpska (RS). The aim of the research is to prove the hypothesis that trade liberalisation and export orientation positively impact on GDP growth. RS has characteristically small and open economies. The degree and character of the connections between the observed variables was determined by means of regression analysis. Regression analysis indicates that there is a positive connection between the total trade and GDP growth. Further, there is a marked positive correlation between export and GDP, that is, export growth contributes to GDP growth. Foreign trade deficit stands in a negative correlation with GDP. Lastly, regression analysis points to the connection between the Republic of Srpska economic growth and openness of its economy. However, uncontrolled opening and exposure to foreign competitiveness can also bring about problems which in certain circumstances lead to long-term macroeconomic instability

The COVID-19 pandemic induces the worst economic downturn since the Second World War, requiring governments to design large-scale recovery plans to overcome this crisis. This paper quantitatively assesses the potential of government investments in eco-friendly construction projects to boost the economy and simultaneously realise environmental gains through reduced energy consumption and related greenhouse gas emissions. The analysis uses a Computable General Equilibrium model that examines the macroeconomic impact of the COVID-19 crisis in a small open economy (Belgium). Subsequently, the impact of the proposed policy is assessed through comparative analysis for macroeconomic parameters as well as CO2 equivalent emissions for four scenarios. Our findings demonstrate that the COVID-19 pandemic damages economies considerably, however, the reduction in emissions is less than proportionate. Still, well-designed public policies can reverse this trend, achieving both economic growth and a disproportionally large decrease in emissions. Moreover, the positive effect of such a decoupling policy on GDP is even stronger during the pandemic than compared to the pre-COVID-19 period. This is the result of a targeted, investment-induced green transition towards low energy-intensive economic activities. Finally, this paper describes how the net effect on the government budget is positive through the indirect gains of the economic uptake.

This study assesses the impact of external shocks on select small open economies (SOEs) using the Bayesian variant of the global vector autoregression model with time varying parameters and stochastic volatility. We account for the curse of dimensionality in the multi-country VAR system by implementing three different priors in the estimation of the parameters of the model: the Minnesota (M-N) prior of Doan–Litterman et al. (1984; Litterman 1986); the Normal-Gamma (N-G) prior of Park and Casella (Bayesian Anal 1:515–533, 2008); and the Stochastic Search Variable Selection (SSVS) prior of George and McCulloch (1995) as extended by Koop and Korobilis (2010, 2013). From our simulation results, we found that global economies of the USA, Western Europe and China are the major drivers of cyclical fluctuation in the SOEs. However, in spite of the perceived superior influence of China on the SOEs GDPs’ response to external shocks, we found no evidence to conclude that the influence is significantly greater than those exerted by the United States or Europe on the bloc’s economies.

This paper investigates how Nepal’s monetary policy reacts to growing global uncertainty and major structural changes, highlighting the challenges of a small open economy. Annual data from 1977 to 2024 were measured using the Autoregressive Distributed Lag (ARDL) framework which include structural break dummies for the 2015 earthquake and economic blockade, and 2020 COVID-19 pandemic. Unit root and cointegration tests were used; error correction form of ARDL model captures the log-run relationship and speed of adjustment, and Granger causality is applied to measure short-run predictive links between the variables. The Findings highlights that global uncertainty weakens the impact of monetary policy on growth, through foreign-exchange reserves and inflation maintain a positive long-run influence. Structural breaks alter the speed and direction of policy transmission, with rapid but uneven adjustments to equilibrium. Nepal’s monetary system remains highly exposed to external shocks, demanding flexible, credible, and well-coordinated policy actions.