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Germany’s economy is so bad even sausage factories are closingIWHThe Economist, January 15, 2026
We implement a novel empirical strategy for measuring and studying a strong form of nationalism—the willingness to fight and die in a war for national independence—using name choices corresponding to a previous war leader. Based on data on almost half a million soldiers, we first show that having been given a first name that is synonymous with the leader(s) of the Croatian state during World War II predicts volunteering for service in the 1991–1995 Croatian war of independence and dying during the conflict. Next, we use the universe of Croatian birth certificates and the information about nationalism conveyed by first names to suggests that in ex-Yugoslav Croatia, nationalism rose continuously starting in the 1970s and that its rise was curbed in areas where concentration camps were located during WWII. Our evidence on intergenerational transmission of nationalism is consistent with nationalist fathers purposefully reflecting the trade-off between within-family and society-wide transmission channels of political values. We also link the nationalist values we proxy using first name choices to right-wing voting behavior in 2015, 20 years after the war.
In complex systems, statistical dependencies between individual components are often considered one of the key mechanisms which drive the system dynamics observed on a macroscopic level. In this paper, we study cross-sectional time-lagged dependencies in financial markets, quantified by nonparametric measures from information theory, and estimate directed temporal dependency networks in financial markets. We examine the emergence of strongly connected feedback components in the estimated networks, and hypothesize that the existence of information feedback in financial networks induces strong spatiotemporal spillover effects and thus indicates systemic risk. We obtain empirical results by applying our methodology on stock market and real estate data, and demonstrate that the estimated networks exhibit strongly connected components around periods of high volatility in the markets. To further study this phenomenon, we construct a systemic risk indicator based on the proposed approach, and show that it can be used to predict future market distress. Results from both the stock market and real estate data suggest that our approach can be useful in obtaining early-warning signals for crashes in financial markets.
There are many economic theories that promote human capital as a key driver of a country’s economic growth, but it is challenging to test this theory empirically on a country level and causally interpret the coefficients due to several identification problems. We tried to answer this particular question by using a quasi-natural experiment that happened quarter century ago – the fall of communist block in Eastern Europe. We use a shock to a particular scientific field – economics, to test whether the future investment into that particular field resulted in increased welfare and economic growth. The economics paradigm that was governing all of the communist block ceased to exist. Human capital depreciated over night and all communist countries had to transit from planned economy to a market economy. In the following years countries had to adapt to market economy through additional investment in human capital and research. We find that countries which lack both of the two fourth mentioned components had 25 years later a relatively lower economic growth and wealth. Unlike economics, other fields such as physics and medicine did not go through the same process so we use them as a placebo effect for our study. We find that the relative ratio of citations between economics and physics in post-communist countries is increasing only 15 years after the “paradigm” shock which gives a suggestive evidence that timing of investment into particular scientific field matters the most.
Among the central tenets of globalization is the free migration of labor. Although much has been written about the benefits of globalization, little is known about its limitations and how antiglobalist sentiment can be strongly affected by high levels of immigration. Analyzing poll data from a group of EU countries affected by the recent migrant crisis, we find that over the last three years the percentage of right-wing (RW) populist voters in a given country depends on the prevalence of immigrants in this country’s population and the total immigration inflow into the entire EU. The latter is likely due to the perception that the EU functions as a supranational state in which a lack of inner borders means that “someone else’s problem” can easily become “my problem.” We find that the increase in the percentage of RW voters substantially surpasses the percentage of immigration inflow, implying that if this process continues, ongoing democratic processes will cause RW populism to prevail and globalization to rapidly decrease. We locate tipping points between the fraction of immigrants and the rise of RW populism, and we model our empirical findings using a complex network framework in which the success of globalization rests on a balance between immigration and immigrant integration.
When companies are faced with an upcoming and expected economic shock some of them tend to react better than others. They adapt by initiating investments thus successfully weathering the storm, while others, even though they possess the same information set, fail to adopt the same business strategy and eventually succumb to the crisis. We use a unique setting of the recent financial crisis in Croatia as an exogenous shock that hit the country with a time lag, allowing the domestic firms to adapt. We perform a survival analysis on the entire population of 144,000 firms in Croatia during the period from 2003 to 2015, and test whether investment prior to the anticipated shock makes firms more likely to survive the recession. We find that small and micro firms, which decided to invest, had between 60 and 70% higher survival rates than similar firms that chose not to invest. This claim is supported by both non-parametric and parametric tests in the survival analysis. From a normative perspective this finding could be important in mitigating the negative effects on aggregate demand during strong recessionary periods.
