Climate Change

We develop a search-based theory of mergers and acquisitions with heterogeneous firms and endogenous search complementarities. We use this model to understand how merger incentives and the firm size distribution interact. In equilibrium, search costs and entry rates determine search intensities and shape the distribution of market power. We derive the law of motion of the firm size distribution, provide closed-form solutions, and solve for endogenous search efforts. Finally, we derive the aggregate welfare function and show how our framework can be used to simulate the impact of various antitrust policies. In particular, antitrust policy can have large effects on welfare due to the existence of multiple equilibria.

This paper contributes to the relatively limited literature on the impact of political uncertainty on international capital flows to emerging market economies. We incorporate elections as a proxy for political uncertainty into a standard push-pull framework for analyzing capital flows. Using quarterly data for a panel of 38 emerging market economies from 1990 to 2020, we show that periods surrounding elections are associated with a decline in gross private capital inflows. This adverse impact is larger and more persistent when uncertainty extends beyond the election period, for example in the context of uncertain policy priorities following incumbent’s loss. By contrast, higher levels of overall political stability appear to mitigate these adverse effects. We also find evidence that stronger institutions, as reflected in indicators such as regulatory quality and rule of law, help to mitigate the adverse effects of political uncertainty on capital flows. The results remain robust across a range of alternative specifications, including controls for standard economic drivers of capital flows, election characteristics, and model assumptions.

The Romanian economy is expected to grow gradually in the near term amid necessary fiscal consolidation addressing the widening twin deficits. The public finances have deteriorated, driven by significant increases in pension spending, public wages, and domestically financed capital expenditure, and added pressure on the current account. A large fiscal reform package aimed at reducing the deficit to below 6 percent of GDP in 2026, including a VAT rate hike and other tax measures, has helped avoid a cutoff of structural EU funds and a sovereign credit rating downgrade to non-investment status. Headline inflation is expected to remain elevated until mid-2026 due to the impact of the VAT rate hike and the end of energy price caps.

According to the recent unpublished domestic national risk assessment (NRA),2 China faces relatively lower ML/TF threats from abroad with a higher risk of domestic criminal proceeds being transferred overseas. The update to the NRA concluded that the overall level of ML risk is medium and has remained the same (since 2017). Notably, there have been some changes in the major types of illicit proceeds-generating crimes, with tele and internet fraud becoming the most significant ML threat. The domestic understanding of risks including those related to corruption and domestic politically exposed persons (PEPs) may suffer from blind spots and could be further deepened. For example, given the dominant role of the state and state-owned-enterprises in the economy, more detailed analysis of corruption, as a predicate offence, would be worthwhile along with an assessment of the levels of politically exposed persons (PEPs) and the quality of related preventive measures (discussed further below). To improve the understanding of risk among government entities and the private sector responsible for reporting suspicious transactions, the publication of analysis from the NRA should be considered.

This paper reviews the cumulative access limits (CALs) under the Rapid Credit Facility (RCF) of the PRGT. As part of its pandemic response in 2020, the Fund temporarily increased annual and cumulative access limits by 50 percent of quota under its emergency financing instruments, the RCF and the Rapid Financing Instrument (RFI). The pre-pandemic CALs under the RFI were already restored on July 1, 2024. Staff proposed and the Board approved on November 7, 2025, a two-step, time bound reversion of RCF CALs to pre pandemic levels. Specifically, the current CALs for RCF exogenous shock (ES) and large natural disaster (LND) windows would remain in place for another year, followed by a 25 percent of quota reduction on January 1, 2027, and another 25 percent of quota a year later. This would restore CALs under the RCF ES and LND windows to their pre-pandemic levels of 100 and 133.33 percent of quota by the start of 2028. This time-bound, phased approach would provide predictability for the return of RCF CALs to pre-pandemic levels while retaining adequate borrowing space for most LICs to cope with unexpected exogenous shocks. For RCF food shock window (FSW) users, the additional 25 percent of quota would remain until end-2029, aligned with the timing of repayments.

This paper examines the effectiveness of monetary policy transmission in developing countries using loan-level data from Uganda’s credit registry. We analyze more than 632,000 household loans issued by all commercial banks between 2017 and 2023, a period marked by significant policy rate fluctuations. We find that household credit, which accounts for over 50 percent of new loan accounts, responds to monetary policy: rate hikes are followed by higher lending rates and reduced loan size and maturity. Controlling for credit demand with time-varying borrower-group fixed effects, we find stronger transmission among banks with lower liquidity and capital, and those holding more government securities. The effects are more pronounced for fixed-rate loans than for floating-rate loans. In general, our results support the presence of a bank lending channel in Uganda, similar to what is observed in more advanced economies.