taking stock monetary policy transmission to equity markets this paper analyses the effects of u s monetary policy on stock markets we present evidence that individual stocks react in a highly heterogeneous fashion to u s monetary policy shocks and relate this heterogeneity to financial constraints and tobin s q first we show that there are strong industry specific effects of u s monetary policy second we also find that for the 500 individual stocks comprising the s p500 the firms with low cash flows small size poor credit ratings low debt to capital ratios high price earnings ratios or a high tobin s q are affected significantly more by monetary policy

is the entropy law relevant to the economics of natural resource scarcity abstract nicholas georgescu roegen and herman daly have argued that the entropy law imposes an absolute resource scarcity which cannot be overcome with technological change exploration or substitution on the contrary this paper argues that their critique is fundamentally flawed the pessimistic scenario requires a concept of materials entropy which is highly problematic materials entropy cannot be defined independently of technology and it is impossible to aggregate over different types of materials to meaningfully talk about available versus unavailable matter in the aggregate failing a concept of materials entropy the critique fails since the earth is not closed with respect to energy

asymmetric effects of federal funds target rate changes on s p100 stock returns volatilities and correlations we study the effects of fomc announcements of federal funds target rate decisions on individual stock returns volatilities and correlations at the intraday level for all three characteristics we find that the stock market responds differently to positive and negative target rate surprises first the average response to positive surprises that is bad news for stocks is larger second in case of bad news the mere occurrence of a surprise matters most whereas for good news its magnitude is more important these new insights are possible due to the use of high frequency intraday data

oil prices and the stock prices of alternative energy companies energy security issues coupled with increased concern over the natural environment are driving factors behind oil price movements while it is widely accepted that rising oil prices are good for the financial performance of alternative energy companies there has been relatively little statistical work done to measure just how sensitive the financial performance of alternative energy companies are to changes in oil prices in this paper a four variable vector autoregression model is developed and estimated in order to investigate the empirical relationship between alternative energy stock prices technology stock prices oil prices and interest rates our results show technology stock prices and oil prices each individually granger cause the stock prices of alternative energy companies simulation results show that a shock to technology stock prices has a larger impact on alternative energy stock prices than does a shock to oil prices these results should be of use to investors managers and policy makers

how do u s stock returns respond differently to oil price shocks pre crisis within the financial crisis and post crisis abstract we use a long time series of daily data for 682 firms over a period from january 1990 to december 2012 each firm includes 5 772 daily observations our sample involves a total of 3 936 504 observations to investigate how u s stock returns respond differently to oil price shocks prior to during and after a financial crisis we provide evidence that u s stock returns in turn respond positively to the changes in oil prices during and after such a crisis we use firm level data to find that positive and negative oil price shocks have asymmetric effects on stock returns during the crisis and after the crisis then we examine whether the effect of an oil price shock on stock returns varies across oil intensive industries within the crisis and post crisis our results indicate that stock returns in response to oil price shocks across industries are heterogeneous and the stock returns of some energy intensive manufacturing industries respond more positively to oil price shocks compared with less energy intensive manufacturing industries we use total assets total revenue and the number of employees as proxy variables to measure each firm s size and then examine whether oil price shocks affect stock returns differently across firm sizes we find that big firms are the most strongly and negatively influenced by an oil price shock prior to the crisis on the other hand our results indicate that an oil price shock in the post financial crisis period is positively amplified in the case of medium sized firms

does oil move equity prices a global view many studies indicate that oil price shocks have an adverse effect on real output and hence an adverse effect on corporate profits where oil is used as a key input the present study examines whether and to what extent the adverse effect of oil price shocks impacts stock market returns to this end we analyse 35 datastream global industry indices for the period from april 1983 to september 2005 our findings indicate that oil price rises have a negative impact on equity returns for all sectors except mining and oil and gas industries generally these results are consistent with economic theory and evidence provided by previous empirical studies little evidence of any asymmetry is detected in the oil price sensitivities in light of our findings we recommend that international portfolio investors consider hedging oil price risk

entropy limits to growth and the prospects for weak sustainability in this paper we analyze the consequences of mass and energy conservation and the second law of thermodynamics for economic activity in contrast to former studies we deduce our results formally from a general model of production and consumption we show that in a static setting for economies containing irreversible processes a non zero resource input as well as non zero emissions are necessary to sustain a positive level of consumption we generalize this result to a dynamic setting and apply it to the growth discussion and the sustainability discourse thereby we show that limits to growth of production and consumption are likely to exist and that the concept of weak sustainability is either morally unattractive or physically infeasible d 2005 elsevier b v all rights reserved

the importance of being informed experimental evidence on demand for environmental quality abstract to what extent does information affect the demand for environmental quality a randomly selected group of households in an indian city were informed whether or not their drinking water had tested positive for fecal contamination using a simple inexpensive test kit households initially not purifying their water and told that their drinking water was possibly contaminated were 11 percentage points more likely to begin some form of home purification in the next eight weeks than households that received no information they spent 7 24 at ppp more on purification than control households by way of comparison an additional year of schooling of the most educated male in the household is associated with a 3 percentage point rise in the probability of initial purification while a standard deviation increase in the wealth index is associated with a 12 percentage point rise in this probability and an 11 75 rise in expenditure initially purifying households that received a no contamination result did not react by reducing purification these results suggest that estimates of the demand for environment quality that assume full information may significantly under estimate it

nutrition information and household behavior experimental evidence from malawi incorrect knowledge of the health production function may lead to inefficient household choices and thereby to the production of suboptimal levels of health this paper studies the effects of a randomized intervention in rural malawi that over a six month period provided mothers of young infants with information on child nutrition without supplying any monetary or in kind resources a simple model first investigates theoretically how nutrition and other household choices including labor supply may change in response to the improved nutrition knowledge observed in the intervention areas we then show empirically that the intervention improved child nutrition household food consumption and consequently health we find evidence that labor supply increased which might have contributed to partially fund the increase in food consumption this paper is the first to study whether non health choices particularly parental labor supply might be affected by parents knowledge of the child health production function

a reexamination of the role of thermodynamics for environmental economics abstract as the discussion about the role of thermodynamics in environmental economics has not led to a conclusion yet a more fundamental approach seems to be necessary which also takes into consideration the relationship between economics and the natural sciences in general to this end value theory is chosen as a starting point because it is the centerpiece of every economic theory it is shown that neoclassical environmental economics suffers from serious deficiencies because of its value concept heedlessly copied from classical mechanics thermodynamics can be expected to be helpful to redress these defects because the economy can be thought of as a dissipative structure dependent on its environment the obvious way to integrate thermodynamics consists in the formulation of thermodynamic constraints to complement neoclassical environmental economics but this approach remains unsatisfactory because the neoclassical mechanical hardcore is incompatible with the entropy law and its implications evidently the neoclassical paradigm and its value concept have to be given up but the alternative of the energy theory of value must be rejected because its determinism cannot be reconciled with the richness of human behaviour as thermodynamic analogies offer no solution either there is a dilemma between the necessity and the apparent impossibility of adequately integrating thermodynamic concepts it turns out that a normative inconsistency is responsible which is due to the demand for intergenerational justice therefore the integration of thermodynamics into environmental economics hinges on a meta economic value decision if sustainability is adopted as the guiding principle the insights of thermodynamics call for a macro economic environmental policy setting absolute limits to the economy but this macro policy is incompatible with neoclassical economics so that a social reconstruction of economics based on a social theory of value becomes necessary in sum thermodynamics is important for environmental economics besides fulfilling a general heuristic function it also fulfils a decisive conceptual and an analytical function insofar as it helps to justify sustainability and to operationalize macro economic environmental policy

economics and sustainability balancing trade offs and imperatives the concept of sustainability has been increasingly invoked in scholarly and public policy debates discussion has been hampered however by uncertainty and lack of uniformity in the meaning of sustainability this paper seeks to identify some common ground among economists ecologists and environmen tal ethicists two issues seem salient require ments for intergenerational and the defi nition of social capital to be provided to future generations a concept of safe minimum standard which has received at least some recognition in the ecology philosophy and eco nomics literatures may provide the beginnings of a common ground for debate about sus tainability jel q2

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

is the entropy law relevant to the economics of natural resource scarcity comment abstract jeffrey t young s critique of the work of nicholas georgescu roegen and herman e daly questions the relevance of the entropy law for economic analysis and provides a concise faithful summary of the positions of georgescu roegen and daly along the way however young produces an alternative model of natural resource depletion that is based upon questionable interpretations of the laws of thermodynamics in particular young s claim that natural resource economics can be divided into conservation law orientations and entropy law orientations and his claim that the entropy law pertains to energy but not to matter seem unsupportable from a scientific view

crude oil and the macroeconomy tests of some popular notions a note perhaps no other economic events in the post world war ii era have generated as much attention as the series of crude oil price shocks that have jolted the world economy since the opec boycott of 1973 a tremendous amount of space in the popular and professional literature has been devoted to analyzing the impacts of these shocks on the developed economies and the adjustments these shocks have induced one residual of this literature has been a general impression that since 1973 the functional relationship between crude oil prices and the developed macroeconomies has been dramatically and fundamentally altered yet to our knowledge no one has formally tested this impression recent evidence of hamilton 1983 suggests that crude oil prices had a strong impact on the u s business cycle well before 1973 further while textbook treatments of oil price shocks tend to highlight cost push inflationary effects the research of berndt and wood 1975 1979 and wilcox 1983 indicates the net complementarity between energy and capital in the u s economy is quite strong both before and after 1973 thus oil price shocks may have stronger real effects than generally believed in this paper we formally test three popular notions associated with the so called

the power of incentives variable pay is usually defined as pay that is tied to some measure of worker output the most typical form of variable pay historically was the piece rate which was more prevalent during the early part of the 20th century than it is at the beginning of the 21st there is a resurgence in variable pay particularly as it relates to executives whose pay is tied to output through some mechanism like stock options or bonuses that depend on individual or firm performance why use variable pay the typical reaction is that variable pay provides incentives to put forth effort although true discrete pay schemes also generate incentives much of the confusion in the literature results from the use of the terms high powered and low powered incentives which connote difference in ability to elicit worker effort it is more informative to make distinctions between discrete and continuous pay and between inputbased and output based pay 2 pay structures can be summarized by the following equation

building resilient health systems experimental evidence from sierra leone and the 2014 ebola outbreak this paper experimentally examines efforts aimed at improving health worker performance in the context of the 2014 15 west african ebola crisis roughly two years before the outbreak in sierra leone the study randomly assigned two accountability interventions to government run health clinics one focused on community monitoring and the other gave status awards to clinic staff the findings show that prior to the ebola crisis both interventions led to improvements in utilization of clinics patient satisfaction with the health system and child health outcomes during the crisis the interventions led to higher reported ebola cases as well as lower mortality from ebola particularly in areas with community monitoring clinics the paper explores the potential mechanisms and the findings provide evidence consistent with the following mechanism by building trust and confidence in health workers and improving the perceived quality of care provided by clinics prior to the outbreak the interventions encouraged patients to report and receive treatment the results suggest that accountability interventions not only have the power to improve health systems during normal times but also can make health systems resilient to crises that may emerge over the longer run

the illusion of sustainability this brief summarizes the results of a gender impact evaluation study entitled the illusion of sustainability conducted during the time period 1998 to 2001 in kenya the study observed that deworming is a public good since much of its social benefit comes through reduced disease transmission people were less likely to take deworming if their direct first order or indirect second order social contacts were exposed to deworming the introduction of a small fee for deworming drugs led to an 80 percent reduction in treatment rates take up was not sensitive to the exact price level suggesting that it is particularly counter productive to charge small positive prices for the treatment of infectious diseases an intensive school health education had no impact on worm prevention funding for the study derived from world bank nih fogarty international center berkeley center for health research

the provision of incentives in firms i ncentives are the essence of economics despite many wide ranging claims about their supposed importance there has been little empirical assessment of incentive provision for workers the purpose of this paper is to critically overview existing work on the provision of incentives since the interests of workers and their employers are not always aligned a large theoretical literature has emphasized how firms design compensation contracts to induce employees to operate in the firm s interest this literature has reached into many areas of compensation and has pointed to a multitude of different mechanisms that can be used to induce workers to act in the interests of their employers these include piece rates options discretionary bonuses promotions profit sharing efficiency wages deferred compensation and so on my objective here is to evaluate this literature in the light of a growing empirical literature on compensation where possible i will address the literature from two perspectives first an underlying assumption of this literature is that individuals respond to contracts that reward performance accordingly i consider whether agents behave in this way and whether these responses are always in the firm s interest second i address whether firms write contracts with these responses in mind in other words do contracts look like the predictions of the theory incentives are provided to workers

investor sentiment and the stock market s reaction to monetary policy this paper shows that monetary policy decisions have a significant effect on investor sentiment the effect of monetary news on sentiment depends on market conditions bull versus bear market we also find that monetary policy actions in bear market periods have a larger effect on stocks that are more sensitive to changes in investor sentiment and credit market conditions overall the results show that investor sentiment plays a significant role in the effect of monetary policy on the stock market

international transmission of u s monetary policy shocks evidence from stock prices this paper analyzes intraday changes in firm level equity prices around interest rate announcements to assess the transmission of u s monetary policy to the global economy we document that foreign firms on average are roughly as sensitive to u s monetary policy as u s firms although we also find considerable cross sectional variation across firms in particular foreign stocks in cyclically sensitive industries show stronger responses to interest rate surprises consistent with a demand channel of policy transmission in addition transmission of u s policy appears to be stronger to economies with fixed exchange rates evidence for a credit channel is weaker

incentives and targets in hospital care evidence from a natural experiment performance targets are commonly used in the public sector despite their well known problems when organisations have multiple objectives and performance is difficult to measure it is possible that such targets may work where there is considerable consensus that performance needs to be improved we investigate this possibility by examining the response of the english national health service to high profile waiting time targets we exploit a natural policy experiment between two countries of the uk england and scotland to establish the global effectiveness of the targets we then use a within england hospital analysis to confirm that responses vary by treatment intensity and to control for differences in resources which may accompany targets we find that targets met their goals of reducing waiting times without diverting activity from other less well monitored aspects of health care and without decreasing patient health on exit from hospital

beyond baseline and follow up the case for more t in experiments the vast majority of randomized experiments in economics rely on a single baseline and single follow up survey if multiple follow ups are conducted the reason is typically to examine the trajectory of impact effects so that in effect only one follow up round is being used to estimate each treatment effect of interest while such a design is suitable for study of highly autocorrelated and relatively precisely measured outcomes in the health and education domains this paper makes the case that it is unlikely to be optimal for measuring noisy and relatively less autocorrelated outcomes such as business profits household incomes and expenditures and episodic health outcomes taking multiple measurements of such outcomes at relatively short intervals allows the researcher to average out noise increasing power when the outcomes have low autocorrelation it can make sense to do no baseline at all moreover the author shows how for such outcomes more power can be achieved with multiple follow ups than allocating the same total sample size over a single follow up and baseline the analysis highlights the large gains in power from ancova rather than difference in differences when autocorrelations are low and a baseline is taken the paper discusses the issues involved in multiple measurements and makes recommendations for the design of experiments and related non experimental impact evaluations

environmental constraints and sigmoid utility implications for value risk sensitivity and social status abstract friedman and savage journal of political economy 4 1948 279 proposed sigmoid utility theory to model the relationship between social class and risk sensitivity their proposal has not been explicitly modeled to allow for full testing of the concept we argue that sigmoid utility arises naturally from boundary conditions imposed by finite environmental resources that engender competition we also present a sigmoid formulation and examine its empirical warrant by considering economic data from anthropological historical and sociological cases studies standard risk sensitivity measures such as arrow pratt and downside risk aversion provide expectations for which individuals are most risk prone insights from prospect theory indicate under what conditions sigmoid utility may be most useful we consider the implications of environmental constraint in the context of the sigmoid model as an explanation for the nature of political turmoil during the collapse of maya civilization ca ad 850 we consider the role lack of constraint played in the american revolution and we explore how sigmoid utility can enrich our understanding of contemporary american voting behavior

will developing country nutrition improve with income a case study for rural south india aggregate estimates of food expenditure are consistent with such a possibility implying income expenditure elasticities close to one however the high degree of aggregation at which such estimates are made means that the considerable increase in price per nutrient as income increases is ignored and the nutrient elasticities are therefore overstated estimates for a rural south indian sample indicate that this bias is considerable and that the true nutrient elasticities with respect to income may be close to zero

monetary policy surprises and interest rates evidence from the fed funds futures market abstract this paper estimates the impact of monetary policy actions on bill note and bond yields using data from the futures market for federal funds to separate changes in the target funds rate into anticipated and unanticipated components interest rates response to anticipated target rate changes is small while their response to unanticipated changes is large and highly significant these responses are generally consistent with the expectations hypothesis of the term structure surprise target rate changes have little effect on expectations of future actions however which helps to explain the lack of empirical support for the expectations hypothesis at the short end of the yield curve

crude oil and stock markets stability instability and bubbles abstract we analyze the long run relationship between the world price of crude oil and international stock markets over 1971 1 2008 3 using a cointegrated vector error correction model with additional regressors allowing for endogenously identified breaks in the cointegrating and error correction matrices we find evidence for breaks after 1980 5 1988 1 and 1999 9 there is a clear long run relationship between these series for six oecd countries for 1971 1 1980 5 and 1988 2 1999 9 suggesting that stock market indices respond negatively to increases in the oil price in the long run during 1980 6 1988 1 we find relationships that are not statistically significantly different from either zero or from the relationships of the previous period the expected negative long run relationship appears to disintegrate after 1999 9 this finding supports a conjecture of change in the relationship between real oil price and real stock prices in the last decade compared to earlier years which may suggest the presence of several stock market bubbles and or oil price bubbles since the turn of the century

macroeconomic cycles and the stock market s reaction to monetary policy abstract this paper examines cyclical variation in the effect of fed policy on the stock market we find a much stronger response of stock returns to unexpected changes in the federal funds target rate in recession and in tight credit market conditions using firm level data we also show that firms that face financial constraints are more affected by monetary shocks in tight credit conditions than the relatively unconstrained firms overall the results are consistent with the credit channel of monetary policy transmission

the economic effects of energy price shocks large fluctuations in energy prices have been a distinguishing characteristic of the u s economy since the 1970s turmoil in the middle east rising energy prices in the u s and evidence of global warming recently have reignited interest in the link between energy prices and economic performance this paper addresses a number of the key issues in this debate what are energy price shocks and where do they come from how responsive is energy demand to changes in energy prices how do consumers expenditure patterns evolve in response to energy price shocks how do energy price shocks affect u s real output inflation and stock prices why do energy price increases seem to cause recessions but energy price decreases do not seem to cause expansions why has there been a surge in the price of oil in recent years why has this new energy price shock not caused a recession so far have the effects of energy price shocks waned since the 1980s and if so why as the paper demonstrates it is critical to account for the endogeneity of energy prices and to differentiate between the effects of demand and supply shocks in energy markets when answering these questions

do higher oil prices push the stock market into bear territory this paper investigates whether a higher oil price pushes the stock market into bear territory by using time varying transition probability markov switching models it examines different measures of oil price shocks empirical evidence from monthly returns on the standard poor s s p 500 price index suggests that an increase in oil prices leads to a higher probability of a bear market emerging

a regulatory framework for a policy of sustainability lessons from the neo liberal school abstract in this paper targets institutions and policy measures for describing and implementing sustainable development are evaluated in terms of their conformity with the economic framework of a market system from the viewpoint of neo liberal economic thinking as conceived by the german freiburg school of economists a general set of criteria is developed it includes issues of operationalization and legitimation of goals as well as institutional and instrumental issues on this basis general rules for designing an ecological framework guaranteeing the greatest possible degree of conformity with a market system are derived the concrete application of these rules leads to recommendations for a policy of sustainability with respect to the setting of goals the establishment of institutions as well as the use of appropriate instruments

incentives information and malnutrition evidence from an experiment in india abstract this study provides one of the first pieces of evidence comparing the effectiveness of different performance pay contracts among caregivers to improve child health we carry out a cluster randomized controlled trial in urban slums of kolkata india covering 209 childcare centers to test three separate performance pay treatments in addition to providing information on the demand side we promise low or high absolute performance incentives to public sector caregivers where each bonus is based on improvements in health of 3 6 year old children under their care we also test for the impact of relative incentives where the bonus depends upon a worker s performance relative to her peers all mothers in the treatment arms are also provided nutritional information high absolute incentives to workers combined with nutritional information to mothers works to reduce severe malnutrition by 5 percentage points over three months relative incentives and low absolute incentives show no significant improvements in child health on average

does monetary policy have asymmetric effects on stock returns this paper investigates whether monetary policy has asymmetric effects on stock returns using markov switching models different measures of a monetary policy stance are adopted empirical evidence from monthly returns on the standard poor s 500 price index suggests that monetary policy has larger effects on stock returns in bear markets furthermore it is shown that a contractionary monetary policy leads to a higher probability of switching to the bear market regime

the high frequency asymmetric response of stock returns to monetary policy for high oil price events abstract this paper investigates whether a high oil price event that worsens the quality of a firm s balance sheet in turn provides an additional transmission channel to the stock market which then affects stock returns we examine the asymmetric impacts of monetary shocks on stock returns across high oil price events and non high oil price events over the period from 1995 to 2008 we ask how these impacts respond to the relative ability of firms to obtain external finance our findings suggest that more energy intensive industries and durable goods industries react more significantly to monetary shocks based on high oil price events than on those based on non high oil price events by controlling for the capacity for external finance the intraday windows reveal that a monetary surprise for the high oil price events has a bigger impact on stock returns than for the non high oil price events firms with financing constraints find that the adverse impact of a surprise monetary policy action on high oil price events is amplified in the medium profitability category while the impact of a surprise monetary policy action on non high oil price events is amplified in the lowest profitability category

do structural oil market shocks affect stock prices abstract this paper investigates how explicit structural shocks that characterize the endogenous character of oil price changes affect stock market returns in a sample of eight countries australia canada france germany italy japan the united kingdom and the united states for each country the analysis proceeds in two steps first modifying the procedure of kilian kilian l forthcoming not all oil price shocks are alike disentangling demand and supply shocks in the crude oil market american economic review we employ a vector error correction or vector autoregressive model to decompose oil price changes into three components oil supply shocks global aggregate demand shocks and global oil demand shocks the last component relates to specific idiosyncratic features of the oil market such as changes in the precautionary demand concerning the uncertainty about the availability of future oil supplies second recovering the oil supply shocks global aggregate demand shocks and global oil demand shocks from the first analysis we then employ a vector autoregressive model to determine the effects of these structural shocks on the stock market returns in our sample of eight countries we find that international stock market returns do not respond in a large way to oil market shocks that is the significant effects that exist prove small in magnitude

environmental economics and ecological economics where they can converge abstract environmental economics and ecological economics share the common objective of understanding the human economy environment interaction in order to redirect the economies towards sustainability in pursuing this objective these two perspectives utilise different types of analytical framework and are opposed to each other on many of the fundamental theoretical and methodological issues while the environmental economics has progressed within a narrowly but sharply focused neoclassical analytical approach the ecological economics has expanded by adopting a diversified approach which led to widen the gap between the two this article makes an attempt to highlight the divergence between these two perspectives on different issues and identifies certain research avenues that would potentially bring convergence between these two perspectives

training wages and sample selection estimating sharp bounds on treatment effects this paper empirically assesses the wage effects of the job corps program one of the largest federally funded job training programs in the u s even with the aid of a randomized experiment the impact of a training program on wages is difficult to study because of sample selection a pervasive problem in applied microeconometric research wage rates are only observed for those who are employed and employment status itself may be affected by the training program this paper develops an intuitive trimming procedure for bounding average treatment effects in the presence of sample selection in contrast to existing methods the procedure requires neither exclusion restrictions nor a bounded support for the outcome of interest identification results estimators and their asymptotic distribution are presented the bounds suggest that the program raised wages consistent with the notion that the job corps raises earnings by increasing human capital rather than solely through encouraging work the estimator is generally applicable to typical treatment evaluation problems in which there is nonrandom sample selection attrition copyright wiley blackwell