regulation profitability and diffusion of photovoltaic grid connected systems a comparative analysis of germany and spain abstract although both germany and spain were pioneers in the support and adoption of photovoltaics pv through feed in tariffs fits germany is the world s leading country in terms of installed pv capacity per capita and remains on a path of pv growth while the spanish pv market is virtually paralysed we analyse the divergent performance in both countries by reviewing the evolution of fits and by analysing the profitability of different types of installations for the period 2004 2014 while in germany the policies profitability and diffusion of pv were relatively stable over time in spain erratic policy changes and the distortionary effect of the solar orchard ownership structure caused a diffusion bubble june 2007 september 2008 and a subsequent profitability bubble 2009 2011 these bubbles led to the collapse of the support system in 2012 revealing the difficulty inherent in designing innovation and diffusion policies in the context of high uncertainty and rapid technological change

optimal bank capital this article reports estimates of the long run costs and benefits of having banks fund more of their assets with loss absorbing capital or equity we model how shifts in funding affect required rates of return and how costs are influenced by the tax system we draw a clear distinction between costs to individual institutions private costs and overall economic or social costs we find that the amount of equity capital that is likely to be desirable for banks to use is very much larger than banks have used in recent years and also higher than targets agreed under the basel iii framework this article reports estimates of the long run costs and benefits of having banks fund more of their assets with loss absorbing capital by which we mean equity rather than debt the benefits come because a larger buffer of truly loss absorbing capital reduces the chance of banking crises which as both past history and recent events show generate substantial economic costs the offset to any such benefits comes in the form of potentially higher costs of intermediation of saving through the banking system the cost of funding bank lending might rise as equity replaces debt and such costs can be expected to be reflected in a higher interest rate charged to those who borrow from banks that in turn would tend to reduce the level of investment with potentially long lasting effects on the level of economic activity calibrating the size of these costs and benefits is important but far from

quality of available mates education and household labor supply we investigate the impact of sex ratios by education and metropolitan area on spouses bargaining power and labor supplies to capture the local and qualitative nature of mate availability using current population survey and census data for 2000 1990 and 1980 we estimate these effects in a collective household framework we find that a higher relative shortage of comparably educated women in the couple s metropolitan area reduces wives labor supply and increases their husbands the impact is stronger for couples in higher education groups but not significant for high school graduates results are similar across decades no such effects are found for unmarried individuals jel d1 j22 2008 western economic association international

how do sex ratios affect marriage and labor markets evidence from america s second generation sex ratios i e relative numbers of men and women can affect marriage prospects labor force participation and other social and economic variables but the observed association between sex ratios and social and economic conditions may be confounded by omitted variables and reverse causality this paper uses variation in immigrant flows as a natural experiment to study the effect of sex ratios on the children and grandchildren of immigrants the flow of immigrants affected the second generation marriage market because second generation marriages were mostly endogamous i e to members of the same ethnic group the empirical results suggest that high sex ratios had a large positive effect on the likelihood of female marriage and a large negative effect on female labor force participation perhaps surprisingly the marriage rates of second generation men appear to be a slightly increasing function of immigrant sex ratios higher sex ratios also appear to have raised male earnings and the incomes of parents with young children the empirical results are broadly consistent with theories where higher sex ratios increase female bargaining power in the marriage market

women s labor supply and marital choice this paper hypothesizes that value of time and consequently labor force participation can vary with circumstances specific to a marriage or a marriage market wives traits valued in the marriage market are expected to be associated with lower labor force participation whereas husbands traits valued in the marriage market are expected to be associated with lower participation rates on the part of wives evidence for these hypotheses is found on the basis of regressions of labor force participation for a sample of israeli married women inclusion of traits valued in the marriage market and marital sorting patterns increases the explanatory power of the regressions

diversification in banking is noninterest income the answer this paper assesses potential diversification benefits in the u s banking industry from the steady shift toward activities that generate fee income trading revenue and other types of noninterest income in the aggregate declining volatility of net operating revenue reflects reduced volatility of net interest income not diversification benefits from noninterest income which is quite volatile and increasingly correlated with net interest income at the bank level greater reliance on noninterest income particularly trading revenue is associated with lower risk adjusted profits and higher risk this suggests few obvious diversification benefits from the ongoing shift toward noninterest income

a theory of marriage formality the case of guatemala a theory of marriage formality which regards formality as an indication of commitment and loyalty is explained and tested using multiple regressions on data from the 1974 rand incap survey of 6 guatemalan ladino communities it is argued that a trade off exists between formality and the material benefits a woman receives in return for providing services to a man similar to the trade off between monetary returns and job stability found in the labor market the relations between husbands and wives are described in terms of the concepts of supply demand and market equilibrium and derived hypotheses concerning the factors leading to various combinations of marriage formality and material compensation for wife services are proposed 2 subsamples of women in the 6 guatemalan communities are compared for a range of socioeconomic indicators following which a series of regressions using formal marriage or informal unions as the dependent variable are carried out the major finding is that a marriage ceremony has tangible consequences in terms of material benefits a woman can obtain through marriage as predicted by the theory women with more physical and human assets and men with fewer such assets are more likely to marry formally rather than to live together informally

credit risk and asymmetric information a simplified approach abstract we present a simple model for risky corporate debt debtholders and equityholders have incomplete information about the financial state of the debt issuing company information is incomplete because it is delayed for all agents and it is asymmetrically distributed between debtholders and equityholders we solve for the equityholders optimal default policy and for the credit spreads required by debtholders delayed information accelerates the equityholders optimal decision to default interestingly this effect is small implying only a small impact on credit spreads asymmetric information however has a major impact on credit spreads our model predicts high credit spreads for short term debt as observed empirically in credit markets

how excessive is banks maturity transformation we quantify the gains from regulating banks maturity transformation in an infinite horizon model of banks which finance long term assets with non tradable debt banks choose the amount and maturity of their debt trading off investors preference for short maturities with the risk of systemic crises as in stein 2012 pecuniary externalities make unregulated debt maturities inefficiently short the assessment is based on the calibration of the model to eurozone banking data for 2006 lengthening the average maturity of wholesale debt from its 2 8 months to 3 3 months would produce welfare gains with a present value of euro 105 billion

securitization and bank performance theory suggests that securitization provides financial institutions with an opportunity to lower the cost of funding improve credit risk management and increase profitability in practice however it might lead to adverse consequences through a number of indirect channels therefore the net impact of securitization on bank performance is ambiguous this study aims to evaluate whether banks improve their performance through the use of the securitization market by applying a propensity score matching approach in other words we build a counterfactual group of banks to assess what would have happened to the securitizing banks had they not securitized using us commercial banking data from 2001 to 2008 we first test these hypotheses using univariate analysis and find that securitizing banks are on average more profitable institutions with higher credit risk exposure and higher cost of funding however the propensity score matching analysis does not provide evidence of significant causal effects of securitization on the performance of banks therefore securitization does not seem to outperform alternative funding risk management and profitability improvement techniques used by banks that have ex ante similar characteristics to those securitizing our evidence raises important questions about the motives for banks increasing securitization activities and consequent implications for the banking system

bank capital structure regulatory capital and securities innovations since late 1993 nonfinancial corporations have used financial instruments that permit them to treat preferred stock dividends as tax deductible interest bank holding companies bhcs however did not issue these trust preferred securities tps until 1996 when the federal reserve qualified them as tier 1 capital we delineate and test five not mutually exclusive hypotheses by 1 analyzing the stock market s reaction to the fed s ruling and to tps filings and 2 comparing bhcs that issued tps with those that did not we find that regulatory capital requirements tax savings and uninsured sources of funds had significant positive effects on bhcs demand for capital and that the market responded favorably to tps filings our event study findings are contrary to prior empirical results in that we find a positive market reaction to equity offerings

discrimination in matchmaking evidence from the price policy of a french marriage bureau this article shows how a matchmaking agency may improve the quality of serious meetings between individuals seeking long term relationship thanks to a price discrimination policy its filtering is based on objective and official characteristics sex age and contract s environment and on implicit criteria the few asked characteristics by its clients

a theory of allocation of time in markets for labour and marriage this paper analyzes the interdependence between labor and marriage markets it is argued that market conditions concerning marriage influence the value of time in the home according to this economic view marriage involves an exchange of household labor between individual men and women wages in labor markets affect marital behavior and conditions in the markets for household labor influence labor supply single persons must decide whether to marry and if so how much work to invest and employ in the framework of marriage in monogamous societies marriage tends to occur when a man demands the amount of household labor a woman wants to supply and a woman demands the amount of labor supplied by the man however changing outside factors can disrupt this equilibrium and produce changes in income redistribution between the spouse new marital labor relations or divorce this approach diverges from the traditional theory of labor supply in the way the value of time in the home is determined awareness that the supply of labor can shift following changes in a market determined wage for household labor opens new avenues for research in labor economics and studies of female labor supply a change in sex ratio is likely to increase the proportion of women who marry and decrease the number of hours women work outside the home group differences in patterns of division of household labor further influence the elasticity of female labor supply a positive correlation between achievements in markets for labor and household labor can provide an additional explanation for the backward bending supply of labor finally the relative position of husbands and wives in their respective marriage markets has implications for their consumption patterns and fertility this theory could provide a useful framework for analyzing the consequences of public policy for production reproduction and the distribution of wealth

less than 2 c an economic environmental evaluation of the paris agreement abstract the literature dedicated to the analysis of the different climate agreements has usually focused on the effectiveness of the aims for emissions in the light of the advance in climate change this article quantifies the variation in emissions that the intended nationally determined contributions indcs will entail and their financial allocation and policies country by country and regionally the objective is evaluating the paris agreement feasibility regarding the indcs and its economic and environmental constraints the criteria through which the 161 indcs are analysed are as follows i socio economic impact of the transition ii focus on energy management iii substitution of non renewable sources iv the role of technology v equality of the transition vi compliance with emission reductions the results obtained show that the paris agreement excessively relies on external financial support 41 4 moreover its unilateralist approach the socio economic and biophysical constraints could be the underlying cause of the ineffectiveness of the 2 c objective this way each country would emit an average of 37 8 more than in the years 2005 2015 when this is weighted the figure would be a 19 3 increase due mainly to the increases in china and india these figures would lead the temperatures up to 3 4 c

institutional challenges caused by the integration of renewable energy sources in the european electricity sector the integration of large amounts of variable renewable energy poses fundamental challenges to the operation and governance of the energy system in this article we address the main institutional challenges that are caused by the integration of variable renewable energy sources like solar and wind energy in the european power system we first address how the variable and unpredictable nature of wind and solar energy increases the demand for flexible resources and we discuss potential sources of flexibility next we elaborate on how the need for more flexibility challenges the prevailing market design of todays liberalized power systems furthermore we discuss the key areas where there is a need for a more integrated approach to research and policy making the need for a more integrated approach is motivated by exposing a number of critical interdependencies between technical and institutional sub systems

credit market competition and capital regulation market discipline for financial institutions can be imposed not only from the liability side as has often been stressed in the literature on the use of subordinated debt but also from the asset side this will be particularly true if good lending opportunities are in short supply so that banks have to compete for projects in such a setting borrowers may demand that banks commit to monitoring by requiring that they use some of their own capital in lending thus creating an asset market based incentive for banks to hold capital borrowers can also provide banks with incentives to monitor by allowing them to reap some of the benefits from the loans which accrue only if the loans are in fact paid off since borrowers do not fully internalize the cost of raising capital to the banks the level of capital demanded by market participants may be above the one chosen by a regulator even when capital is a relatively costly source of funds this implies that capital requirements may not be binding as recent evidence seems to indicate

does corporate lending by banks and finance companies differ evidence on specialization in private debt contracting this paper establishes empirically the existence of specialization in private market corporate lending adding a new dimension to the public versus private debt distinctions now common in the literature comparing corporate loans made by banks and by finance companies we find that the two types of intermediaries are equally likely to finance information problematic firms however finance companies tend to serve observably riskier borrowers particularly more leveraged borrowers evidence supports both regulatory and reputation based explanations for this specialization in passing we shed light on various theories of debt contracting and intermediation and present facts about finance companies

static and intertemporal household decisions we discuss the most popular static and dynamic models of household behavior our main objective is to explain which aspects of household decisions different models can account for using this insight we describe testable implications identification results and estimation findings obtained in the literature particular attention is given to the ability of different models to answer various types of policy questions

demandable debts as a means of payment banknotes versus checks we examine whether transactable forms of privately issued demandable debt are better used as banknotes or checks the distinction between the two is that a check must be redeemed by the issuing bank with each use whereas a banknote can circulate we find that the answer to the question depends on the cost of early redemption if this cost is small banknotes will not circulate so the question is moot if this cost is large incentive problems may prevent the circulation of banknotes for intermediate values of the early redemption cost banknotes will be preferred over checks

photovoltaics and wind status in the european union after the paris agreement abstract over the last decade the utilisation of renewable energy in the electricity sector especially from solar and wind sources is growing at a much faster pace than the rest of the economy in europe and world wide the significant cost reduction of solar pv and wind power during this time and their zero fuel cost volatility have increased their attractiveness between 2005 and 2015 the installed solar pv power in europe as increased 50 fold to reach 95 gw and wind power has increased three and a half times to 142 gw at the end of 2015 the fact that the paris agreement went into force on 4 november 2016 will be another accelerating factor for the use of electricity from renewable energy sources this paper shows the deployment of photovoltaics and wind power in the european union and the policy drivers behind this development so far the european union is the largest economy with a legally binding target to reach 27 of its energy consumption from renewable energy sources by 2030 the data used for this publication are collected on a regular basis from statistical offices stock exchange filings press releases public and commercial studies the results are cross checked with personal communications and on site visits as well as meetings with government officials and policymakers in order to provide a timely coverage of the dynamic increase of solar and wind power this use of grey data is necessary in 2016 slightly more than 12 of the union s electricity demand was covered by solar and wind but in order to reach the 2030 target a tripling of this contribution is needed

multi family households in a labour supply model a calibration method with application to poland models of cooperative and noncooperative behaviour opened the household black box and allowed for individual treatment of partners in couples however labour supply literature has so far largely ignored a broader issue the distinction of single versus multi family complex households we propose a method to account for multi family household structure by borrowing from recent applications of the collective model to identify the degree of sharing we assume that each household is characterized by a between family sharing parameter which is calibrated on estimated preferences observed labour market status and other characteristics we apply the method to polish labour market data

dressing a ghost size and value of unpaid family care unpaid family care work encompasses care and assistance provided by members of a household to other members it is not considered to be a productive activity and its exclusion from national accoun

how do asset encumbrance and debt regulations affect bank capital and bond risk abstract we study how optimal bank capital and bond risk are influenced by asset encumbrance depositor preference and bail in resolution frameworks due to changes in optimal capital structure the net effect on bond debt risk and valuation is small the effects on shareholder value and public sector liability value are significant a gap between optimal and required capital represents a cost to shareholders and increases the risk of regulatory arbitrage the features of bank debt financing we analyze here may explain the stable cross sectional variation in bank capital documented in literature based on a small sample of european banks we find support for the central model predictions

intertemporal diversification in financial intermediation abstract this paper examines the incentive problem between a bank and depositors or deposit insurer limited liability makes risk shifting lucrative we show how intertemporal diversification of lending decisions i e bank s loan portfolio consists of overlapping long term loans and is thus gradually renewed may solve the incentive problem of risk shifting a new or expanding bank sets a high equity level and acquires depositors confidence subsequently it can allow its equity to depreciate to a permanently lower level depositors can control the bank by monitoring equity and realized credit losses ex post they do not have to monitor bank s lending choices ex ante maturity mismatch illiquidity of long term loans and liquidity of deposits is optimal the analysis can be extended more generally to the borrower lender relationship

it s raining men hallelujah the long run consequences of male biased sex ratios we document the short and long run effects of male biased sex ratios we exploit a natural historical experiment where large numbers of male convicts and far fewer female convicts were sent to australia in the 18th and 19th centuries in areas with more male biased sex ratios women were historically more likely to get married and less likely to work outside the home in these areas today both men and women continue to have more conservative attitudes towards women working and women work fewer hours outside the home while these women enjoy more leisure they are also less likely to work in high ranking occupations we demonstrate that the consequences of uneven sex ratios on cultural attitudes labour supply decisions and occupational choices can persist in the long run well after sex ratios are back to the natural rate we document the roles of vertical cultural transmission and marriage homogamy in sustaining this cultural persistence

what makes a bank risky insights from the optimal capital structure of banks abstract assessing the risk of bank failures is the paramount concern of bank regulation this paper argues that in order to assess the default risk of a bank it is important to consider its financing decisions as an endogenous dynamic process we provide a continuous time model where banks choose the deposit volume in order to trade off the benefits of earning deposit premiums against the costs that occur at future capital structure adjustments the bank s asset value may suffer from shocks and follows a jump diffusion process our main finding is that the dynamic endogenous financing decision introduces an important self regulation mechanism where it is crucial to distinguish between the diffusion risk and the jump risk component

term structures of credit spreads with incomplete accounting information we study the implications of imperfect information for term structures of credit spreads on corporate bonds we suppose that bond investors cannot observe the issuer s assets directly and receive instead only periodic and imperfect accounting reports for a setting in which the assets of the firm are a geometric brownian motion until informed equityholders optimally liquidate we derive the conditional distribution of the assets given accounting data and survivorship contrary to the perfect information case there exists a default arrival intensity process that intensity is calculated in terms of the conditional distribution of assets credit yield spreads are characterized in terms of accounting information generalizations are provided

the paradox of liquidity the more liquid a firm s assets the greater their value in a short notice liquidation it is generally thought that a firm should find it easier to raise external finance against more liquid assets this paper focuses on the dark side of liquidity greater asset liquidity reduces the firm s ability to commit to a specific course of action as a result greater asset liquidity can in some circumstances reduce the firm s capacity to raise external finance firms with excessively liquid assets are in the best position to finance illiquid projects this leads us to a theory of financial intermediation and disintermediation based on the liquidity of assets

credit risk in private debt portfolios default loss severity and average loss rates for a large sample of privately placed bonds are presented and compared with loss experience for publicly issued bonds the chance of very large portfolio losses is estimated and some determinants of such losses are analyzed results show ex ante riskier classes of private debt perform better on average than public debt both diversification and the riskiness of individual portfolio assets influence the bad tail of the portfolio loss distribution private placements are similar to corporate loans in that both are monitored private debt the results are thus relevant to management and securitization of private debt portfolios generally more than half of nonfinancial corporate debt finance is iss ued privately and decisions of the financial intermediaries that invest in such debt depend importantly on its credit risk regulators of such institutions are similarly attentive to portfolio credit risk and it is an important consideration in the design of securitizations of pools of private debt in spite of its importance little is known empirically about private debt credit risk especially ex ante risk as a function of portfolio characteristics many studies have examined the loan portfolio performance of banks thrifts and insurance companies but the ex ante risk characteristics of the portfo

economic behavior marriage and fertility two lessons from polygyny abstract this paper derives and estimates an index of the relative importance of children in marriage by comparing the effect of husband s income on the actual number of wives in the household with the demand for wives derived from the number of children in the household moreover the paper presents the monogamy bias as a possible explanation for often observed low or negative income effects on fertility

dynamic debt maturity a firm chooses its debt maturity structure and default timing dynamically both without commitment via the fraction of newly issued short term bonds equity holders control the maturity structure which affects their endogenous default decision a shortening equilibrium with accelerated default emerges when cash flows deteriorate over time so that debt recovery is higher if default occurs earlier self enforcing shortening and lengthening equilibria may coexist with the latter possibly pareto dominating the former the inability to commit to issuance policies can worsen the leland problem of the inability to commit to a default policy a self fulfilling shortening spiral and adverse default policy may arise received april 16 2015 accepted february 20 2016 by editor itay goldstein

risk adjusted financial costs of photovoltaics recent research shows significant differences in the levelised photovoltaics pv electricity cost calculations the present paper points out that no unique or absolute cost figure can be justified the correct solution is to use a range of cost figures that is determined in a dynamic power portfolio interaction within the financial scheme support mechanism and industry cost reduction the paper draws attention to the increasing role of financial investors in the pv segment of the renewable energy market and the importance they attribute to the risks of all options in the power generation portfolio based on these trends a former version of a financing model is adapted to project the energy mix changes in the eu electricity market due to investors behaviour with different risk tolerance aversion the dynamic process of translating these risks into the return expectation in the financial appraisal and investment decision making is also introduced by doing so the paper sets up a potential electricity market trend with the associated risk perception and classification the necessary risk mitigation tasks for all stakeholders in the pv market are summarised which aims to avoid the burden of excessive risk premiums in this market segment

having it all for all child care subsidies and income distribution reconciled abstract we study the design of child care policies when redistribution matters traditional mothers provide some informal child care whereas career mothers purchase full time formal care the sorting of women across career paths is endogenous and shaped by a social norm about gender roles in the family via this social norm traditional mothers informal child care imposes an externality on career mothers so that the market outcome is inefficient informal care is too large and the group of career mothers is too small so that inefficiency and gender inequality go hand in hand in a first best world redistribution across couples and efficiency are separable redistribution is performed via lump sum transfers and taxes which are designed to equalize utilities across all couples the efficient allocation of child care is obtained by subsidizing formal care at a pigouvian rate however in a second best setting a trade off between efficiency and redistribution emerges the optimal uniform subsidy is lower than the pigouvian level conversely under a nonlinear policy the first best pigouvian rule for the marginal subsidy on informal care is reestablished while the share of high career mothers continues to be distorted downward for incentive reasons this policy is effective in reconciling the objectives of reducing the child care related inefficiency and achieving a more equal income distribution across couples our results continue to hold when the norm is defined within the mothers social group rather than being based on the entire population