heat exposure and youth migration in central america and the caribbean emerging evidence demonstrates migration may be used by individuals in the southern hemisphere to adapt to environmental changes the authors build upon recent work in the region using a similar triple difference in difference quasi experimental design and dataset to test whether repeated and or prolonged heat exposure affect inter province migration the growth literature has pointed to numerous examples in which environmental migration contributes to urbanization the authors therefore additionally predict how gradual changes in temperature influence the skill set of who migrates and their location choice the authors further confirm using two separate datasets whether the observed mobility patterns correspond to changes in income levels by examining the gross domestic product gdp losses at the district and national levels the former may be indicative of local vulnerability while national vulnerability from prolonged heat exposure can narrow the set of employment opportunities at destinations reducing the desirability of environmental migration

inventory investment and asymmetric adjustment some evidence for the uk abstract there is now a plethora of non linear time series models of output over the business cycle and considerable empirical evidence that there are key non linear poorly understood mechanisms at work though they account for a small part of the total flow of national income inventories play a disproportionately large role in fluctuations in output it would seem natural to try to determine what role inventories play in the non linear behaviour of the business cycle the first question is are there economic models of firm behaviour suggesting that the movement of inventories over the business cycle is non linear the second issue is whether we can detect such non linearity in the data in this paper we use data on the aggregate behaviour of uk manufacturing but disaggregated according to the stage of fabrication we find that the asymmetric adjustment of inventories varies with the stage of fabrication

the impact of climate change on internal migration in brazil abstract business as usual climate change forecasts point to sharp temperature rises and agriculture yield losses in many regions of brazil we study the impact of these changes on internal migration and population distribution we employ a spatial equilibrium model in which the climate shapes workers locational choices through the usual amenity value channel and the novel indirect channel via agriculture wages our simulations reveal that migration rates are 9 65 higher and that 0 9 million more people migrate inter regionally under future climate conditions furthermore climate change will likely exacerbate the country s regional inequalities as the most developed regions gain population and welfare while the least developed regions lose

optimal risk allocation for regulated monopolies and consumers abstract the model shows how a regulated monopolist s price should change as random cost and demand parameters are revealed the regulator has a ramsey type problem with a linear tariff a trade off between allocative efficiency and risk sharing typically exists the attitudes of the consumer and the firm to both income and price risk determine how the price should move sufficient conditions are found for price adjustment schemes used in practice to be optimal these schemes include full partial and zero pass through of marginal costs and price caps average cost pricing and caps on total revenue for demand risk

the unequal geographic burden of federal taxation in the united states workers in cities offering above average wages cities with high productivity low quality of life or inefficient housing sectors pay 27 percent more in federal taxes than otherwise identical workers in cities offering below average wages according to simulation results taxes lower long run employment levels in high wage areas by 13 percent and land and housing prices by 21 and 5 percent causing locational inefficiencies costing 0 23 percent of income or 28 billion in 2008 employment is shifted from north to south and from urban to rural areas tax deductions index taxes partially to local cost of living improving locational efficiency

financial constraints and firm post entry performance abstract firms finance production by internally generated funds and external loans the benefits of leverage however come with a cost this cost is related to the uncertainty banks face about the firm s quality and output price as time evolves banks learn about the firm and adjust the terms of the loan contract because of this firms do not have equal access to credit small young firms face greater binding debt constraints than more mature firms with well known prospects the firm survival rate as well as the firm rate of growth are therefore important issues in analyzing firm post entry performance

non performing loans moral hazard and regulation of the chinese commercial banking system abstract non performing loans npls represent a major obstacle to the development of banking sector one of the key objectives of the banking sector reforms in china has therefore been to reduce the high level of npls to do so chinese regulatory authorities have injected significant capital into the banking system and scrutinized npls since 2003 this paper examines the impact of npls on bank behavior in china using a threshold panel regression model and a dataset covering 60 city commercial banks 16 state owned banks and joint stock banks and 11 rural commercial banks during 2006 2012 we test whether lending decisions of chinese banks exhibit moral hazard the results support the moral hazard hypothesis suggesting that an increase in the npls ratio raises riskier lending potentially causing further deterioration of the loan quality and financial system instability policy implications of findings are evaluated

improving climate change modeling of us migration manmade climate change cc has catastrophic consequences the united states has already experienced wholesale population realignment due to climate as households have relocated to the sunbelt and west the irony is that people are moving towards the heat and major storms associated with cc as cc intensifies with high rates of internal u s factor mobility firms and households will likely again relocate to areas with higher utility and profits reducing cc costs yet current research typically focuses on cc costs in a given location without considering this realignment we propose several avenues to overcome such shortcomings in u s cc modelling

bank discrimination holding bank ownership and economic consequences evidence from china abstract this paper finds that compared with chinese state owned firms non state owned firms have a greater propensity to hold significant ownership in commercial banks these results are consistent with the notion that because non state owned firms are more likely to suffer bank discrimination for political reasons they tend to address their financing disadvantages by building economic bonds with banks we also find that among non state owned firms those that hold significant bank ownership have lower interest expenses and are less likely to increase cash holdings but more likely to obtain short term loans when the government monetary policy is tight these results suggest that the firms building economic bonds with banks can enjoy benefits such as lower financial expenses and better lending terms during difficult times finally we find that non state owned firms with significant bank ownership have better operating performance overall we find that firms can reduce discrimination through holding bank ownership

the enduring impact of the american dust bowl short and long run adjustments to environmental catastrophe the 1930 s american dust bowl was an environmental catastrophe that greatly eroded sections of the plains analyzing new data collected to identify low medium and high erosion counties the dust bowl is estimated to have immediately substantially and persistently reduced agricultural land values and revenues during the depression and through at least the 1950 s there was limited reallocation of farmland from activities that became relatively less productive agricultural adjustments such as reallocating land from crops to livestock recovered only 14 to 28 of the initial agricultural cost the economy adjusted predominately through migration rather than through capital inows and increased industry

ethnic ties in trade relationships and the impact on economic performance the case of small scale producers in the handloom sector in ethiopia abstract this article analyses the importance of ethnic ties in trade relationships of small scale producers in the handloom sector in ethiopia using both a non parametric and a parametric statistical method it is shown how various socio economic characteristics of producers lead to ethnic ties with traders it is also shown that ethnic ties affect the performance of producers negatively apparently the positive effect of ethnic ties through the reduction of transaction costs arising from market imperfections does not outweigh the negative effects of closed social networks

where modern macroeconomics went wrong this paper provides a critique of the dsge models that have come to dominate macroeconomics during the past quarter century it argues that at the heart of the failure were the wrong microfoundations which failed to incorporate key aspects of economic behaviour e g incorporating insights from information economics and behavioural economics inadequate modelling of the financial sector meant they were ill suited for predicting or responding to a financial crisis and a reliance on representative agent models meant they were ill suited for analysing either the role of distribution in fluctuations and crises or the consequences of fluctuations on inequality the paper proposes alternative benchmark models that may be more useful both in understanding deep downturns and responding to them

new estimates of climate demand evidence from location choice abstract we develop and apply to census data a new method for estimating climate demand the method is useful for ranking quality of life based upon a willingness to pay criterion our two major findings are that the willingness to pay quality of life index is correlated with the hedonic approach s ranking but that the migration approach generates much larger estimates of willingness to pay for a more moderate climate this finding is relevant for evaluating the economic impact of global warming

the impact of classes of innovators on technology financial fragility and economic growth in this article we study innovation processes and technological change in an agent based model by including a behavioral switching among heterogeneous innovative firms the model is able to replicate via simulations well known industrial dynamic and growth type stylized facts the main original element of the model is that firms are allowed to endogenously change among three different classes namely single innovators collaborative innovators and imitators moreover our analysis focuses on the impact of these three innovation categories on micro meso and macro aggregates we find that collaborative companies are those having the highest positive impact on the economic system furthermore we have paid particular attention to the role of credit market in promoting smart growth for this purpose we analyze the role of banks as sources of external funds for innovative entrepreneurs our results suggest a trade off between short term profit maximization and long term efficiency which prevents banks to foster investment in r d and technological progress the model is then used to study the effect that different innovation policies have on macroeconomic performance

new estimates of quality of life in urban areas implicit markets capture compensation for intraurban and interregional differe nces in amenities and yield differences in housing prices and wages these pecuniary differences become preference based weights in a qual ity of life index hedonic equations are estimated using microdata fr om the 1980 census and assembled county based amenity data on climati c environmental and urban conditions ranking of 253 urban counties reveals substantial variation within as well as among the 185 urba n areas the quality of life differences across counties within one s msa is almost one half of the difference between the top and bottom ranked counties in the nation copyright 1988 by american economic association

the amenity value of the italian climate the hedonics literature suggests that locations with more favourable characteristics should display compensating wage and house price differentials specifying climate in terms of january and july averages estimates of the marginal willingness to pay for small changes in climate variables are derived using this technique applied to italian data italians would prefer a drier climate during the winter months but higher summertime temperatures are shown to reduce welfare in some locations households would prefer to see clearer skies these results may have relevance to the task of determining the economic impact of future climate change c 2003 elsevier science usa all rights reserved

what do we learn from the weather the new climate economy literature a rapidly growing body of research applies panel methods to examine how temperature precipitation and windstorms influence economic outcomes these studies focus on changes in weather realizations over time within a given spatial area and demonstrate impacts on agricultural output industrial output labor productivity energy demand health conflict and economic growth among other outcomes by harnessing exogenous variation over time within a given spatial unit these studies help credibly identify i the breadth of channels linking weather and the economy ii heterogeneous treatment effects across different types of locations and iii nonlinear effects of weather variables this paper reviews the new literature with two purposes first we summarize recent work providing a guide to its methodologies datasets and findings second we consider applications of the new literature including insights for the damage function within models that seek to assess the potential economic effects of future climate change jel c51 d72 o13 q51 q54

oil price shocks and chinese banking performance do country risks matter abstract this paper contributes to the existing literature by investigating the impacts of oil prices on bank performance through a broad array of camel capital adequacy asset quality management earnings and liquidity indicators in china over the period 2000 2014 to gain further insights into this issue we also discuss whether the correlations change with different dimensions of country risk i e economic financial and political which extant studies ignored the results reveal that oil prices have a significant impact on banking performance as their increase triggers a reduction in banking performance in terms of capitalization management efficiency earning power and liquidity however these adverse effects are mitigated by country stability especially economic stability and political stability these results are important for policy makers who should be cautious when formulating a strategy for macroeconomic stability from the managerial perspective bank managers should consider establishing early warning and response mechanisms on the back of oil price shocks in order to operate under better performance

who gets credit the behavior of bureaucrats and state banks in allocating credit to chinese state owned enterprises abstract using a sample of chinese state owned enterprises spanning 1980 to 1994 we investigate the factors that determine the sources of finance for firm level fixed investment including retained earnings bank finance and government transfers direct government transfers were not significantly associated with profitability throughout the period in contrast bank finance was positively linked to both profitability and some types of reform reforms that enabled managers to self select and thus expose themselves and their employees to greater risk were positively associated with acquiring bank finance the association between bank finance and profitability weakened in the 1990s as banks increasingly assumed bailout responsibility

the property liability insurance cycle a comparison of alternative models the objective of this paper is to compare alternative models of insurance pricing as theories of the property liability underwriting cycle the existing literature has focused on comparing two models the financial pricing and capacity constraint models however these are not the only relevant models we show that six alternative models imply the same general form of the pricing equation we apply the model to data on stock property liability insurers for the period 1935 1997 we find that the actuarial model and the capacity constraint hypothesis are the only theoretical models that are consistent with the data

the u shaped investment curve theory and evidence we analyze how the availability of internal funds affects a firm s investment we show that under fairly standard assumptions the relation is u shaped investment increases monotonically with internal funds if they are large but decreases if they are very low we discuss the tradeoff that generates the u shape and argue that models predicting an always increasing relation are based on restrictive assumptions using a large data set we find strong empirical support for our predictions our results qualify conventional wisdom about the effects of financial constraints on investment behavior and help to explain seemingly conflicting findings in the empirical literature

valuing open space in a residential sorting model of the twin cities abstract we present an analysis of how open space amenities affect residential location choices using a horizontal sorting model to estimate household preferences for open space to parameterize the model a new and rich dataset spanning 17 years of home sales in the seven county twin cities area of minnesota was assembled heterogeneity across types of open space and across households is shown to be a critical determinant of the welfare impacts of open space conservation our general equilibrium simulations allow housing prices to re equilibrate in response to policy induced demand shifts demonstrating that as the scale of intervention becomes larger general equilibrium and partial equilibrium welfare measures increasingly diverge finally we find that the spatial structure of policy is an important component of policy design suggesting open space policy should be place specific in its design and implementation

the determinants and welfare implications of us workers diverging location choices by skill 1980 2000 abstract from 1980 to 2000 the rise in the us college high school graduate wage gap coincided with increased geographic sorting as college graduates concentrated in high wage high rent cities this paper estimates a structural spatial equilibrium model to determine causes and welfare consequences of this increased skill sorting while local labor demand changes fundamentally caused the increased skill sorting it was further fueled by endogenous increases in amenities within higher skill cities changes in cities wages rents and endogenous amenities increased inequality between high school and college graduates by more than suggested by the increase in the college wage gap alone jel d31 i26 j24 j31 j61 r23

the effect of banking system reform on investment cash flow sensitivity evidence from china abstract this study investigates the effect of banking system reform on the investment behavior of chinese listed firms we find that the politically oriented investment problem for state controlled listed companies is mitigated by the reform due to foreign participation in the management of chinese banks the problem of underinvestment in non state controlled listed companies also appears to be alleviated due to an increase of bank loans we include leverage in our analysis and the main findings are robust the results provide evidence that chinese banking system reform has increased the efficiency of resource allocation easing investment distortions in state controlled listed companies and reducing financial constraints in non state controlled listed companies

the impact of negative cash flow and influential observations on investment cash flow sensitivity estimates abstract kaplan and zingales quart j econ 112 1997 169 and clearly j finance 54 2 1999 673 diverge from the large literature on investment cash flow sensitivity by showing that investment is most sensitive to cash flow for the least financially constrained firms we examine if this result can be explained by the fact that when firms are in sufficiently bad shape incurring cash losses investment cannot respond to cash flow we find that while cleary s results can be explained by such negative cash flow observations the kaplan zingales results are driven more by a few influential observations in a small sample we also record a decline in investment cash flow sensitivity over the 1977 1996 period particularly for the most constrained firms

capital and risk in property liability insurance markets abstract this paper investigates the capital and portfolio risk decisions of property liability insurance firms a theoretical model based on option pricing theory is developed which predicts a positive relationship between insurer capital and risk as firms balance these two factors to achieve their desired overall insolvency risk the implications of the model are then tested empirically using a simultaneous equations methodology the results support the predictions of the model they also provide evidence that managerial incentives play a role in determining capital and risk in insurance markets the findings have significant implications for insurance solvency regulation

on interdependent supergames multimarket contact concavity and collusion abstract following bernheim and whinston 1990 this paper addresses the effects of multimarket contact on firms ability to collude real world imperfections tend to make firms objective function strictly concave and market supergames interdependent firms payoffs in each market depend on how they are doing in others then multimarket contact always facilitates collusion it may even make collusion sustainable in all markets when otherwise it would not be sustainable in any the effects of conglomeration are discussed multigame contact is shown to facilitate cooperation in supergames other than oligopolies as long as agents objective function is submodular in material payoffs journal of economic literature classification numbers c72 d43 l13 l21

price and hedging policy the case of an intertemporarily risk averse bank abstract in a two period framework we analyze the behavior of a maturity transforming intertemporarily risk averse bank in the presence of a stochastic inter bank rate and futures markets we show that the separation property holds but that loan and deposit price decisions show non linear dependence

risk propensity and firm performance a study of the petroleum exploration industry this paper explores the differences in observed risk propensity among petroleum firms and their impact on firm performance in this work we 1 develop a decision theoretic model which measures a firm s risk propensity in the form of an implied utility function 2 investigate changes in corporate risk propensity with respect to changes in firm size and 3 examine the relationships between firms risk propensities and alternative dimensions of economic performance including ex post risk and return measures we also develop a new risk propensity measure the risk tolerance ratio rtr which controls for firm size and allows firms to be differentiated in terms of relative risk propensity the motivation for this work is managerial concerns regarding appropriate risk taking behavior and the effect of risky choice on firm performance this methodology has importance business strategy implications in that we are able to make strong inferences about causal relationships between ex ante risk taking and performance our findings are compelling in that corporate risk propensity seems to matter and that decisions about corporate risk policy have a significant impact on the petroleum firm s economic performance

the no loss offset provision and the attitude towards risk of a risk neutral firm abstract this paper examines how discrete tax brackets induce an otherwise risk neutral firm to behave in a very specific risk averse manner we show how the firm s investment decisions relate to various factors such as other firm revenue tax rates tax exemption levels and project risk in particular such a firm is shown to exhibit first order risk aversion with a possible zero demand for a risky investment even when the expected excess return is positive firm behavior displays risk aversion that is in some sense increasing in firm profits at low profit levels and decreasing at high profit levels

asymmetric information and the new theory of the firm financial constraints and risk behavior this paper summarizes recent developments in the theory of the firm that have arisen in examining the implications of imperfect information it shows that a wide range of these models have similar implications for the likely reaction of firms to external environmental and policy changes two significant implications are 1 that firms behave as if they are risk averse individuals maximizing a utility function of terminal wealth profitability even when the risks involved are unsystematic and 2 in many circumstances because this utility function is likely to be characterized by decreasing absolute risk aversion firms are likely to respond significantly and positively to changes in cash flow and profitability together these two phenomena are able to account for a wide range of firm behaviors that have been empirically observed both formally and informally and that are difficult to explain in terms of the traditional theory of the firm furthermore the responses of such firms to policy interventions are likely to differ significantly from those of neoclassical firms this abstract was borrowed from another version of this item

ambiguity and underwriter decision processes this paper provides empirical evidence that risk and ambiguity affect underwriters decisions on pricing insurance a field study of primary insurance underwriters in a random sample of commercial property and casualty insurance companies reveals that premiums are significantly higher for risks when there is either ambiguity regarding the probability of a particular event occurring and or uncertainty about the magnitude of the resulting loss the paper suggests economic and organizational rationales for this behaviour and offers several explanations as to why insurers in a competitive market can charge higher prices for ambiguous risks which promise to yield excess profits in the long run