Economic voting theory states the economic conditions shape voting choices. Despite institutional and resource constraints, evidence shows that incumbents (mis)use the public machine pre-polls, leaving significant financial losses, employment, and capital distortions behind. Yet, little is known about the electoral return of this practice. In this paper, we focus on a policy instrument that has received little attention in the political budget cycle literature: public credit. We show how incumbent presidents strategically allocate public credit during elections to win votes. They prioritize credit allocation according to political competition and alliances. Unlike previous research, we observe political lending only when credit cycles are taken into account. Also, election types and partisan alliances matter. While incumbents benefit their allies in local elections by smoothing credit contraction episodes, they prioritize non-allied regions in the same way during federal elections. Such a move is done at the expense of credit cuts in non-competitive and non-allied regions. This strategic behavior pays off as we document a credit-vote share elasticity of one to five. Post-elections, we observe higher defaults and patronage towards allied areas, which receive extra public credit. 

Changes in relative energy prices are central to the green transition, but their effectiveness depends on firms’ ability to adjust their energy input mixes. This ability is captured by elasticities of substitution across energy inputs—parameters for which we lack empirical knowledge. Using firm-level microdata from several European countries, I estimate elasticities between clean and dirty energy, as well as among individual energy sources (e.g., electricity, natural gas, coal, etc.). They have declined over the past decades, vary significantly across sectors and countries, and are systematically lower among larger firms. I then embed these estimates in a standard model of technical change to simulate countries’ decarbonization paths. I document large cross-country differences in the reduction of dirty energy shares and the underlying drivers. Between 50 and 85 percent of the reduction is accounted for by within-firm substitution, with the remainder driven by between-firm reallocation, entry, and exit.