oil price cycles and wavelets abstract the present paper addresses the question of the oil price macroeconomy relationship using world data and a time scale decomposition based on the theory of wavelets our approach is based on a global indicator the morgan stanley capital international msci index for the world and on the new framework offered by wavelets to analyse the oil price cycles and to investigate the oil price msci relationship this original approach enables us to identify that the cycles which contribute the most to oil price variations are 20 to 40 years cycles which correspond to the size of kuznets infrastructure cycles and probably represent energy investment cycles this wavelet decomposition also provides additional evidence to the reverse causality theory

market structure and resource depletion a contribution to the theory of intertemporal monopolistic competition a the theory of resource extraction in the model we present there exists a produced substitute to the natural resource the primary question with which we are concerned is the interaction of the resource and its substitute the model we present can thus be thought as providing a link between rent and production based price theories one of the general results in the earlier literature on resource extraction is that deposits with lower extraction costs will be exploited first the analysis

on r d timing under uncertainty abstract in this paper we analyze the problem of endogenous r d timing when technological breakthrough and innovation are random events in a dynamic framework which involves the substitution of an exhaustible resource oil for instance by an alternative technology the backstop that provides an everlasting source of energy under fairly general assumptions we characterize the pattern of exploitation of both energy sources and study the effect of uncertain technological breakthrough on the r d timing decision on resource prices and on the pattern of resource use in comparison to the certainty case it is shown that uncertainty consideration might delay the undertaking of r d and might lead to a more rapid resource depletion pattern for a considerable range of r d capital costs while the opposite result the conventional wisdom holds only for some other range

learning to carry the cat by the tail firm experience disasters and multinational subsidiary entry and expansion we investigate whether firm experience with discontinuous risks particularly high impact disasters that are episodic and difficult to anticipate moderates the relationship between disasters foreign entry and expansion decisions using a panel data set with 57 500 observations from 106 large european multinational corporations and their subsidiaries operating across 109 countries from 2001 to 2007 we find that although discontinuous risk was negatively related to firm entry and expansion firms that had experience with high impact disasters were more likely to expand in countries experiencing disasters

oil price shocks and their short and long term effects on the chinese economy a considerable body of economic literature shows the adverse economic impacts of oil price shocks for the developed economies however there has been a lack of empirical study of this kind on china and other developing countries this paper attempts to fill this gap by answering how and to what extent oil price shocks impact china s economy emphasizing on the price transmission mechanisms to that end we develop a structural vector auto regressive model our results show that an oil price increase negatively affects output and investment but positively affects inflation rate and interest rate however with the differentiated price control policies for materials and intermediates on the one hand and final products on the other hand in china the impact on real economy represented by real output and real investment lasts much longer than that to price monetary variables our decomposition results also show that the short term impact namely output decrease induced by the cut of capacity utilization rate is greater in the first one to two years but the portion of the long term impact defined as the impact realized through an investment change increases steadily and exceeds that of short term impact at the end of the second year afterwards the long term impact dominates and maintains for quite some time

place space and geographical exposure foreign subsidiary survival in conflict zones this study focuses on the role of geography in foreign subsidiary survival in host countries afflicted by political conflict we argue that survival is a function of exposure to conflicts and depends on the characteristics of place the conflict zone and space geographic concentration and dispersion of other home country firms the roles of place and space are explored using street level analysis of geographic information systems data for 670 japanese multinational enterprises mne subsidiaries in 25 conflict afflicted host countries over 1987 2006 through dynamic modeling of conflict zones as stretchable and shrinkable places relative to subsidiary locations we develop a means of characterizing a foreign subsidiary s exposure to multiple threats in its geographic domain our results show that greater exposure to geographically defined threats in both a static and a dynamic sense reduces the likelihood of mne survival the findings indicate moreover that both concentration and dispersion with other firms affect survival however the effects depend on where the firm is spatially located whether the firm is in a conflict zone and with whom home country peers or sister subsidiaries

managing the mne subsidiary advancing a multi level and dynamic research agenda abstract multinational enterprise mne subsidiaries abroad are important organizations in their own rights they typically hold some of the mne s most critical resources and operate at the forefront of complex international environments in this review we identify and organize theoretical and empirical research on subsidiary management based on over 600 articles in leading academic journals we develop a conceptual framework that integrates complementary streams of theoretical and empirical research with the subsidiary as its focal unit of analysis in particular we review six lines of research on subsidiary scope practices knowledge management engagement with local market and nonmarket actors performance and individuals within subsidiaries we highlight theoretical perspectives that have contributed to and been advanced by research on mne subsidiaries based on the review we explore future research agendas linking the contemporary research themes with two main thrusts first subsidiary management is a multi level phenomenon that would benefit from more microfoundational research second subsidiary management operates at key interfaces of technology paradigm shifts and of disruptions in the political and institutional environment research into the dynamics of subsidiary management would thus enhance our understanding of international business in a volatile global economy

food energy nexus in europe price volatility approach abstract the literature on food biofuel price volatility spillovers is growing published articles so far have widely ignored nonlinearities and the influence of exogenous variables on volatility patterns this article allows for these issues when characterizing eu biodiesel industry price dynamics while brazilian and us ethanol markets have been thoroughly investigated less attention has been paid to eu biodiesel markets pure eu biodiesel and rapeseed oil prices are the object of our research two different methods are applied to model these data a parametric approach and long et al s 2011 semiparametric approach empirical results suggest significant asymmetries in volatility spillovers between pure biodiesel and rapeseed oil prices rapeseed stock levels and euro dollar exchange rates are found to play a significant role in reducing food and biofuel price volatilities

divestment response to host country terrorist attacks inter firm influence and the role of temporal consistency abstract host country terrorism poses extreme uncertainty to mnes foreign operations however little is known about how mnes respond to host country terrorist attacks and how they make the related decisions drawing on the research on mnes responses to exogenous shocks and the inter firm imitation literature we argue that mnes obtain relevant information from peers actions under terrorist attacks to inform their own responses thus mnes are more likely to divest under host country terrorist attacks when peers also divest furthermore the impact of peers divestments on focal mnes divestments is magnified by the temporal consistency in peers behavioral pattern under terrorist attacks as temporal consistency reduces inferential difficulties empirical evidence based on 93 fortune us companies and their 8698 foreign subsidiaries over 2005 2015 support our hypotheses our study extends the literature on mnes responses to host country exogenous shocks and on inter firm imitation by demonstrating the social amplification of terrorism threat and the role of temporal consistency in inter firm imitation under extreme uncertainty practically we stress that mne executives should always consider their firms idiosyncratic situations when modeling peer mnes actions and be mindful that they are especially likely to imitate peers temporally consistent behaviors under extreme uncertainty

the relationship between energy and equity markets evidence from volatility impulse response functions this paper examines the relationship between the energy and equity markets by estimating volatility impulse response functions from a multivariate bekk model of the goldman sach s energy index and the sp in addition we also calculate the time varying conditional correlations and time varying dynamic hedge ratios from volatility impulse response functions we find that low sp however we find only a weak response from s p 500 volatility to energy price shocks moreover our dynamic hedge ratio analysis suggests that the energy index is generally a poor hedging instrument

terrorism and international business a research agenda terrorism threatens international business ib through its direct and indirect effects as governments tighten security at public sites businesses have become more attractive terrorist targets with important implications for the operations and performance of multinational firms while terrorism has been substantially studied in other fields there has been little scholarly research to address terrorism and the distinctive challenges that it poses for ib in this article we conceptualize terrorism in relation to ib we provide background on the dimensions and effects of terrorism and develop a theoretical grounding for terrorism research by drawing on the literature from ib economics political science and other fields after discussing findings from the literature review we offer a comprehensive agenda for future research regarding the relationship between terrorism and ib our agenda emphasizes the effects of terrorism organizational preparedness company strategy and performance global supply chain and distribution channels and human resource issues our review helps establish a baseline for future empirical research consistent with the early stages of research ib scholars are encouraged to offer useful perspectives and effective solutions that shed needed light on terrorism and help reduce its destructive effects for ib and multinational firms

differential game models in management science abstract this paper reviews a number of differential games applications to management science and operations research problems published with a few exceptions during the last decade the purpose of the article is to provide the reader with an up to date account of the state of the art within this field after having stated in an introduction the general differential games framework as well as some conceptual problems we proceed to review the models which have been divided into the following functional areas investment consumption and employment production inventories and maintenance marketing advertising pricing and rd bargaining natural resources and pollution the survey concludes with some remarks on applicability solvability and directions for future research

market structure and resource extraction under uncertainty this paper compares the rate of extraction of a natural resource under alternative market structures when there is uncertainty about the date of discovery of a substitute or about the date of discovery of a new deposit the analysis shows that imperfectly competitive market structures are excessively conservationist for any value of the initial stock of the natural resource the price is higher than in competitive equilibrium and therefore higher than the socially optimal level but markets with limited competition may have a higher price than markets with pure monopoly the same monopolist controlling the natural resource and its substitute in particular we find that the highest prices are associated with nash quantity setting duopolists the next highest prices occur in markets in which the monopolist controls the resource but the substitute is competitively produced the pure monopolist sets his price lower than this while the market in which a monopolist controls the substitute but the resource is competitvely owned is still lower

managerial cognition and the mimetic adoption of market positions what you see is what you do managers planning to abandon a market position need to find a promising alternative and face a choice of inventing a new market position or entering an existing one the great uncertainty on the consequences of different actions leads them to rely on other organizations for information on how to compete making adoption of existing market positions likely their wish to avoid direct rivalry and maximize growth leads them to seek out information on new market positions with few incumbents as a result recently innovated market positions are mimetically adopted by organizations that can easily observe previous adoptions and see them as relevant to their market situations increasing the market differentiation this theory is tested and supported by analysis of the spread of new radio formats in the united states 1998 john wiley sons ltd

the costs of uncoordinated regulation patents encourage firms to undertake research and development by protecting innovator revenues from competition controls on pollution of the environment are intended to close the gap between the private and social costs of natural resource use this paper examines the incentives that are created by the interaction of these two separate pieces of regulation a model is developed that shows how an incumbent patent holding firm can take advantage of environmental regulation to exclude rivals from her market

double limit pricing abstract we study oil extraction by a monopolist who faces demand from a climate aware and a climate ignorant region a renewable perfect substitute for oil is available at constant unit cost the climate aware region uses a carbon tax and a renewables subsidy as policy instruments due to heterogeneity in climate policies between regions the oil price path possibly contains two limit pricing phases we specify conditions under which a tightening of climate policies results in lower initial carbon emissions a renewables subsidy and a carbon tax effectively force the monopolist to sell more oil to the climate ignorant region during the stage when demand from the climate aware region has already vanished we calibrate the model and numerically investigate climate damage and welfare effects of the policies of the climate aware region we find that both the carbon tax and a renewables subsidy lower climate damage even though cumulative emissions are fixed

modeling volatility and correlations between emerging market stock prices and the prices of copper oil and wheat abstract increased financial integration between countries and the financialization of commodity markets are providing investors with new ways to diversify their investment portfolios this paper uses varma agarch and dcc agarch models to model volatilities and conditional correlations between emerging market stock prices copper prices oil prices and wheat prices the dynamic conditional correlation model is found to fit the data the best and used to generate dynamic conditional correlations hedge ratios and optimal portfolio weights emerging market stock prices and oil prices display leverage effects where negative residuals tend to increase the variance conditional volatility more than positive ones correlations between these assets increased considerably after 2008 and have yet to return to their pre 2008 values on average oil provides the cheapest hedge for emerging market stock prices while copper is the most expensive but given the variability in the hedge ratios one should probably not put too much emphasis on average hedge ratios

time frequency causality and connectedness between international prices of energy food industry agriculture and metals abstract this study analyzes the lead lag relationship between the price indices of energy fuels and each of food industrial inputs agriculture raw materials metals and beverages in the time frequency domain to this end we first use the wavelet coherency and phase differences next we use the diebold and yilmaz 2012 and barunik and krehlik 2017 spillover indices to analyse the connectedness among the set of the price indices under consideration the period of the study is 1990m1 to 2017m5 the wavelet coherency results reveal that there are important and significant relations between the fuel and food prices the fuel and industrial prices and the fuel and metal prices these results also show that there are phase relationships between those paired prices the volatility spillover results indicate that the agricultural sector is the most affected by shocks from the other markets the return series of the industrial input prices at all frequencies appears to be the main source of volatility transmission to the prices of the other commodities over the whole period this finding underlines the relevance of the industrial inputs to policy makers particularly when they design policies to provide incentives related to industrial production

the transition to nondepletable energy social planning and market models of capacity expansion as depletable energy becomes increasingly scarce and expensive energy markets will turn to a multitude of nondepletable sources of energy the rate at which this transition occurs will depend on the quantities of fuels available production costs government policies and the choices of major producers in this paper we analyze the transition to nondepletable fuels first in the context of a social planning model then using a stackelberg model to represent the dynamic game between owners of depletable and nondepletable fuels we show that the pace of capacity expansion in the nondepletable sector has a strong influence on socially optimal energy prices and production rates with the stackelberg model we characterize the strategy a market dominating producer of depletable energy will use against the nondepletable sector numerical implementations of this model allow us to compare the socially optimal and market determined outcomes our results show how a dominant depletable energy producer can manipulate the nondepletable sector by pricing at the marginal cost of backstop output during an early phase of resource depletion

volatility spillovers between food and energy markets a semiparametric approach previous literature on volatility links between food and energy prices is scarce and mainly based on parametric approaches this article examines these links by using a semiparametric garch model recently proposed by long et al 2011 which is essentially a nonparametric correction of the parametric conditional covariance function the analysis focuses on price links between crude oil ethanol and sugar prices in brazil results suggest strong volatility links between the prices studied parametric approximations of the conditional covariance matrix may lead to misleading results that can be improved upon by using nonparametric techniques

invention and innovation under alternative market structures the case of natural resources this paper examines the interactions between market structure and resource allocation over time when there is endogenous technical progress the structures considered are a planned economy pure monopoly and competition with patent rights in an efficient allocation the date of invention coincides with the date of innovation the date at which technology is used this is also true with a pure monopoly but monopoly retards technical progress relative to the efficient level competition for patents rights to a new technology results in excessively rapid technical progress if the resource endowment of the economy is sufficiently large also competition may lead to sleeping patents where invention strictly precedes the date of innovation

national capital city location and subsidiary portfolio expansion the negative effect of geographic distance to the capital city at inception on the speed of subsequent investments a multinational enterprise develops its subsidiary portfolio by investing in new foreign markets and subsequently pursuing further investments within these host countries we find that firms which locate their first equity investment closer to the national capital city can subsequently expand their subsidiary portfolio within the host country at a higher speed this effect is particularly strong in emerging economies further analyses of various contingencies support the robustness of our findings we discuss different theoretical mechanisms which could cause these effects in particular face to face interactions with governmental actors and opportunities to develop political connections our research contributes to the literature on internationalization processes by analyzing how the initial location choice affects the development of the subsidiary portfolio

nonlinearities in the u s corn ethanol oil gasoline price system we use a smooth transition vector error correction model to assess price relationships within the u s ethanol industry monthly ethanol corn oil and gasoline prices from 1990 to 2008 are used in the analysis results indicate the existence of long run relationships among the prices analyzed strong links between energy and food prices are identified

monopolistic resource extraction and limit pricing the market penetration of competitively produced synfuels this paper analyzes the market penetration of a competitively produced synfuel e g solar energy in a market that is initially dominated by a resource extracting monopoly the availability of the renewable substitute depends not only on the price cost ratio but also on the installed capacities which reflect historical investments as a consequence the resource monopoly faces a discontinuous residual demand schedule the dynamic interactions between the resource cartel and the synfuel industry are modelled as a differential game the open loop nash equilibrium is applied to this game it will be shown that the commodity price will exceed the production costs of the backstop and that the transition from the periods of resource dependence to the backstop technology will be gradual

international experience and fdi location choices of chinese firms the moderating effects of home country government support and host country institutions we examine the extent to which chinese government support of foreign direct investment fdi projects and host country institutional environments interact with prior entry experience by chinese firms and how this interrelationship affects fdi undertaken by chinese firms we hypothesize that home country government support and well established host country institutions enhance organizational capabilities to take risks in fdi as such they reduce the need to accumulate experiential knowledge and capabilities relating to entering host countries based on prior entry experience in a particular country when undertaking follow up investment projects using a unique hand collected panel data set of chinese publicly listed firms during 2002 2009 we find that home government support and well developed host country institutions reduce the importance of prior entry experience and significantly increase the likelihood of fdi entry into a host country further from our subsample analyses we identify differences between entering developed and developing host countries in terms of the impact of home country government support and quality of host country institutions our findings help explain the puzzle concerning why emerging economy firms have rapidly internationalized in a short period of time and do not follow the pattern predicted by classical ib theories

terrorism and the world economy abstract it has been argued that terrorism should not have a large effect on economic activity because terrorist attacks destroy only a small fraction of the stock of capital of a country see e g becker g murphy k 2001 prosperity will rise out of the ashes wall street journal october 29 2001 in contrast empirical estimates of the consequences of terrorism typically suggest large effects on economic outcomes see e g abadie a gardeazabal j 2003 the economic cost of conflict a case study of the basque country american economic review 93 113 132 the main theme of this article is that mobility of productive capital in an open economy may account for much of the difference between the direct and the equilibrium impact of terrorism we use a simple economic model to show that terrorism may have a large impact on the allocation of productive capital across countries even if it represents a small fraction of the overall economic risk the model emphasizes that in addition to increasing uncertainty terrorism reduces the expected return to investment as a result changes in the intensity of terrorism may cause large movements of capital across countries if the world economy is sufficiently open so international investors are able to diversify other types of country risks using a unique data set on terrorism and other country risks we find that in accordance with the predictions of the model higher levels of terrorist risks are associated with lower levels of net foreign direct investment positions even after controlling for other types of country risks on average a standard deviation increase in the terrorist risk is associated with a fall in the net foreign direct investment position of about 5 of gdp the magnitude of the estimated effect is large which suggests that the open economy channel impact of terrorism may be substantial

the effect of global oil price shocks on china s agricultural commodities abstract this paper studied the effect of global oil price shocks on agricultural commodities in china including strong wheat corn soybean bean pulp cotton and natural rubber we regarded oil price volatility process as a combination of continuous process and jump process we not only separated oil price shocks into positive and negative categories to identify different effects on agricultural commodities in continuous process but also investigated how jump behavior influenced these agricultural commodities we found that the oil price was characterized by volatility clustering and jump behavior at the same time oil price shocks had different effects on agricultural commodities in addition the shocks on most agricultural commodities were asymmetric only natural rubber was under influence of the jump intensity of the oil price in contrast to strong wheat corn soybean bean pulp and cotton

confidence in imitation niche width strategy in the uk automobile industry our study examines the imitation behavior of uk automobile manufacturers from 1894 to 1981 and supports previous studies on interorganizational imitation by showing that manufacturers tend to imitate other manufacturers that are similar we also find that the degree of confidence manufacturers have in their imitating behavior affects the intensity of that behavior where an organizations confidence is determined by the variance of the routines used by its reference group and the number of firms in the reference group our results show that 1 manufacturers whose reference groups showed large variance in niche width changes during the previous year are less likely to imitate the mean of those changes 2 manufacturers who have large reference groups are more likely to imitate the changes and 3 the negative effect of variance on the imitating behavior is strengthened as the number of reference organizations increases

dodging bullets the heterogeneous effect of political violence on greenfield fdi the relationship between political violence and greenfield foreign direct investment is contingent on the type of violence characteristics of the investment receiving sector and extent to which the investing firm is geographically diversified this paper presents an analysis with a dynamic fixed effects model for a panel of 90 developing countries from 2003 to 2012 the analysis shows that nationwide political conflict is negatively associated with total and non resource related greenfield foreign direct investment but not with resource related greenfield foreign direct investment the insensitivity to political conflict of multinational firms in the resource sector is associated with the high profitability of natural resource extraction and the companies geographic constraints on location choice during the period of estimation in the non resource sector the less geographically diversified firms are most sensitive to the risk of conflict

opec and world oil security abstract on the margin the effectiveness of policy to enhance the stability of world oil market oil conditions greatly depends on which countries supply what economists would call the marginal barrels that is the barrels whose production responds to changes in demand if the countries dominating the production of the marginal barrels are relatively unstable policies to reduce world oil consumption or boost oil production from stable suppliers will provide the additional benefit of reducing the contribution of unstable producers to the world oil market if the countries dominating the marginal barrel are relatively stable however policies to reduce world oil consumption or boost oil production from stable suppliers will be less effective in promoting oil market stability typically we think of the highest cost producers as supplying the marginal barrel of oil but our assessment finds it quite likely that opec dominates production of the marginal barrel of world oil moreover opec members have been among the more unstable producers on a historical basis hence reducing world oil consumption and promoting oil production in stable non opec countries will enhance world oil security policies to promote stability in opec countries also would enhance world oil security

international economic policy uncertainty and stock prices wavelet approach this paper examines the link between economic policy uncertainty and stock price in both a time and frequency domain wavelet analysis reveals that the relationship is generally negative but changes over time exhibiting low to high frequency cycles moreover the timing of frequency changes overlaps when us policy uncertainty comoves with other countries policy uncertainty

decomposing uncertainty and its effects on imitation in firm exit decisions this study examines the effects of different uncertainty types on interorganizational imitation in firm exit decisions we draw on herding models to conceptualize exit decisions as being based on a firm s private information which the firm updates with information inferred from observing the actions of others we posit that different types of uncertainty differentially affect this observational learning process in particular we propose that certain uncertainty types attenuate rather than foster observational learning and subsequent imitation we test this theory using a 29 year panel data set on the exit of private venture capital firms our results indicate that observational learning does influence imitation in firm exit decisions and they also suggest that a common belief that uncertainty enhances imitation does not apply to all types of uncertainty specifically we find that uncertainty fosters imitation only when it is idiosyncratic to the firm uncertainties that are common to all firms in contrast actually reduce reliance on observational learning by decomposing uncertainty into different types and explicating their effects on imitation we demonstrate that this relationship is more nuanced than previously assumed and in addition highlight the role of deliberate information processing in imitation

joint production of substitutable exhaustible resources or is flaring gas rational this paper studies the optimal extraction of finite resources which are substitutes and the joint output from a monopolist s production facilities the investigation is motivated by the real world example of the production of oil and associated gas additionally the analysis extends the commonly applied paradigm of perfect substitutes for oil and compares it with the more general description of imperfect substitutes thereby it is shown that wasting one of the finite resources e g flaring natural gas could be optimal to support the revenues from the other commodity furthermore the traditional declining sale policies need not hold over the entire planning horizon because it is optimal at least for some time to increase the sales of the byproduct this result has important consequences on the world energy markets since it suggests that pegging the price of natural gas to the price for crude oil is suboptimal and hence most likely subject to downward revisions

resource extraction of imperfect substitutes abstract the recent literature about exhaustible resource extraction emphasized the analysis of perfect substitutes backstop but overlooked the important case of imperfect substitutes this paper introduces imperfect substitutes and investigates whether properties which are robust in one commodity case carry over to the case of limited substitution in particular the proposition of strict sequential exploitation of reservoirs of a certain resource from the cheapest to the more costly grades and the validity of declining extraction are investigated for the more general case of imperfect substitutes it will be shown that these properties are not robust against variations in the assumption of the degree of competition of the resource types contained in the difference pools