sustainable de growth mapping the context criticisms and future prospects of an emergent paradigm article i nfo sustainable de growth is both a concept and a social grassroots northern movement with its origins in the fieldsofecologicaleconomics socialecology economicanthropologyand environmentalandsocialactivistgroups this paper introduces the concept of sustainable de growth by mapping some of the main intellectual influences fromthese fields with special focus on the francophone and anglophone thinking about this emergent notion we propose hypotheses pertaining to the appeal of sustainable de growth and compare it to the messages enclosed within the dominant sustainable development idea we scrutinize the theses contradictions and consequences of sustainable de growth thinking as it is currently being shaped by a heterogeneous body of literature and as it interacts with an ample and growing corpus of social movements we also discuss possible future paths for the de growth movement compared to the apparent weakening of the sustainable development paradigm

the bond old bond spread abstract i document the profits on a trade that is long the old 30 year treasury bond and short the new 30 year treasury bond and is rolled over every auction cycle from june 1995 to november 1999 despite the systematic convergence of the spread over the auction cycle the average profits are close to zero the difference in repo market financing rates between the two bonds is a significant cost of carry in this trade i show that variation in the bond old bond spread is driven by the treasury supply of 30 year bonds as well as aggregate factors affecting investors preference for liquid assets

bond liquidity premia recent asset pricing models of limits to arbitrage emphasize the role of funding conditions faced by financial intermediaries in the us the repo market is the key funding market then the premium of on the run u s treasury bonds should share a common component with risk premia in other markets

contagion as a wealth effect financial contagion is described as a wealth effect in a continuous time model with two risky assets and three types of traders noise traders trade randomly in one market long term investors provide liquidity using a linear rule based on fundamentals convergence traders with logarithmic utility trade optimally in both markets asset price dynamics are endogenously determined numerically as functions of endogenous wealth and exogenous noise when convergence traders lose money they liquidate positions in both markets this creates contagion in that returns become more volatile and more correlated contagion reduces benefits from portfolio diversification and raises issues for risk management during the f inancial panic associated with the default of the russian government in august 1998 and the subsequent collapse of the hedge fund long term capital management numerous hedge funds banks and securities firms tried simultaneously to reduce exposures to a variety of financial instruments such as russian bonds brazilian stocks u s mortgages spreads between on therun and off the run government securities and spreads between swaps and u s treasuries although the fundamental values of these positions would appear to have little correlation during this financial crisis the asset prices in these markets exhibited the following common empirical pattern 1 financial intermediaries suffered losses as prices moved against their positions 2 market depth and liquidity decreased simultaneously in several markets 3 the volatility of prices increased simultaneously in several markets and

sustainability in light of competitiveness abstract there is cause for concern that many current practices in the strategic use of advanced manufacturing technologies are unsustainable since they lead to increased resource consumption in the aggregate this article examines the ways the current generation of production technologies structure the formation and growth of product markets and explains why firms driven to stay competitive are adopting manufacturing strategies based on reducing the time it takes to develop and manufacture new products as experience in the use of advanced manufacturing technologies has accumulated distinctive patterns in market organization have emerged which in turn cause more firms to adopt these technologies in effect the markets and productions systems have co evolved faster product cycles presage new product variants and faster product obsolescence linked to intensified customers needs this interdependency of market needs and the strategic use of manufacturing technologies has significance for drafting sustainable consumption policy

mfa model to assess economic and environmental consequences of food production and consumption abstract agri food sector is a crucially important part of the society because it is a major factor affecting public health and welfare and it also contributes directly and indirectly both to the environment and to the national gross product and employment improving sustainability of the agri food sector implies production of nutritionally better food by using fewer inputs and by reducing environmental burden in reducing environmental burden it is essential to restrict the material throughput to identify the hot spots and direct the measures to them improving performance of the food sector requires that the benefits and inputs be quantified in an unambiguous way and that the inputs are estimated for the whole production chain a comprehensive view of the whole system is necessary here the material flow approach mfa has been used to describe the finnish food flux the quantitative numerical data have been derived from the farm models data base and the data have been adjusted so as to comply with the production and consumption statistics of finland using the compiled data an extended input output model has been constructed the model allows for the evaluation of some of the economic and environmental consequences when the structure of food production and the patterns of food consumption are changed the consequences can be traced within agriculture within the food sector as a whole or at the level of the nation wide economy in combination with other information the model thus serves as a practical tool for planning the paper at hand gives an overview of the data base and the basic calculation principles of the model the usability of the model is demonstrated with results from modelling examples in which the share of organic production or the share of vegetarian food in the average finnish diet has been increased the possibilities and restrictions of the approach as well as some of the needs for further development are discussed the study is the first step in developing mfa methods to analyse and to monitor the material flows of the finnish food flux the results have been used also in compiling the finnish physical input output tables the study thus contributes to the overall development of the materials flow accounting

determinants of college major choice identification using an information experiment this article studies the determinants of college major choice using an experimentally generated panel of beliefs obtained by providing students with information on the true population distribution of various major specific characteristics students logically revise their beliefs in response to the information and their subjective beliefs about future major choice are associated with beliefs about their own earnings and ability we estimate a rich model of college major choice using the panel of beliefs data while expected earnings and perceived ability are a significant determinant of major choice heterogeneous tastes are the dominant factor in the choice of major analyses that ignore the correlation in tastes with earnings expectations inflate the role of earnings in college major choices we conclude by computing the welfare gains from the information experiment and find positive average welfare gains

measuring sustainable welfare a new approach to the isew abstract sustainability and welfare assessment is a contemporary theme of major scientific and policy relevance requiring the consideration of multiple dimensions and diverse perspectives the economic approach to sustainability and welfare assessment has frequently relied on alternatives or adjustments to gdp widely used as an indicator of macroeconomic performance several authors have proposed alternative indicators such as the isew which intend to measure sustainability and economic welfare in a way that avoids the limitations of gdp namely accounting for the value of externalities the distribution of income and natural resources depletion since daly and cobb 1989 there have been proposed improvements to the isew however its aptitude to represent a sound alternative to gdp is still the subject of scientific debate this paper presents a new approach to the isew named modified isew including new components and methodological changes for the estimation of the index these have the purpose of avoiding some of the index shortcomings and allow for a direct comparison with the gdp which are advantages over previous studies an application is developed for the us case taking advantage of wide data availability and the possibility of comparing the results with previous works the results obtained provide a clearer picture of the success or failure of environmental and social policies namely by avoiding the tampering effect resulting from the cumulative accounting of environmental externalities this work also emphasizes the inadequacy of gdp as a welfare indicator as well as the need to develop and adopt alternative indicators

how are stock prices affected by the location of trade abstract we examine pairs of large siamese twin companies whose stocks are traded around the world but have different trading and ownership habitats twins pool their cash flows so with integrated markets twin stocks should move together however the difference between the prices of twin stocks appears to be correlated with the markets on which they are traded most i e a twin s relative price rises when the market on which it is traded relatively intensively rises we examine several explanations of this phenomenon including the discretionary use of dividend income by parent companies differences in parent expenditures voting rights currency fluctuations ex dividend date timing issues and tax induced investor heterogeneity only the last hypothesis can explain some but not all of the empirical facts we conjecture that a country specific sentiment shocks might affect share intensity b investors are rational but markets are segmented by frictions other than international transactions costs such as agency problems

belief disagreements and collateral constraints belief disagreements have been suggested as a major contributing factor to the recent subprime mortgage crisis this paper theoretically evaluates this hypothesis i assume that optimists have limited wealth and take on leverage so as to take positions in line with their beliefs to have a significant effect on asset prices they need to borrow from traders with pessimistic beliefs using loans collateralized by the asset itself since pessimists do not value the collateral as much as optimists do they are reluctant to lend which provides an endogenous constraint on optimists ability to borrow and to influence asset prices i demonstrate that the tightness of this constraint depends on the nature of belief disagreements optimism concerning the probability of downside states has no or little effect on asset prices because these types of optimism are disciplined by this constraint instead optimism concerning the relative probability of upside states could have significant effects on asset prices this asymmetric disciplining effect is robust to allowing for short selling because pessimists that borrow the asset face a similar endogenous constraint these results emphasize that what investors disagree about matters for asset prices to a greater extent than the level of disagreements when richer contracts are available relatively complex contracts that resemble some of the recent financial innovations in the mortgage market endogenously emerge to facilitate betting

the pecking order of segmentation and liquidity injection policies in a model of contagious crises we study a two country setting in which leveraged investors generate fire sale externalities leading to financial crises and contagion governments can affect the incidence of financial crisis and the degree of contagion by injecting public liquidity and additionally by segmenting the countries liquidity markets we show that segmentation allows a country to avoid contagion and fend off mild financial crises caused by a small shock to its liquidity demand at the cost of exposing it to more severe financial crises caused by a large shock we derive a pecking order result whereby segmentation is a second best measure that coordinated governments should use only when tax capacity constrains them from injecting liquidity even when segmentation is welfare enhancing it should be applied to public liquidity alone never restricting the free flow of private liquidity across countries uncoordinated governments tend to use segmentation excessively

performance in competitive environments gender differences even though the provision of equal opportunities for men and women has been a priority in many countries large gender differences prevail in competitive high ranking positions suggested explanations include discrimination and differences in preferences and human capital in this paper we present experimental evidence in support of an additional factor women may be less effective than men in competitive environments even if they are able to perform similarly in non competitive environments in a laboratory experiment we observe as we increase the competitiveness of the environment a significant increase in performance for men but not for women this results in a significant gender gap in performance in tournaments while there is no gap when participants are paid according to piece rate this effect is stronger when women have to compete against men than in single sex competitive environments this suggests that women may be able to perform in competitive environments per se

the role of portfolio constraints in the international propagation of shocks we study the comovement among stock prices and exchange rates in a three good three country centre periphery dynamic equilibrium model in which the centre s agents face portfolio constraints we characterize equilibrium in closed form for a broad class of portfolio constraints solving for stock prices terms of trade and portfolio holdings we show that portfolio constraints generate wealth transfers between the periphery countries and the centre which increase the comovement of the stock prices across the periphery we associate this excess comovement caused by portfolio constraints with the phenomenon known as contagion the model generates predictions consistent with other important empirical results such as amplification and flight to quality effects copyright 2008 wiley blackwell

convergence trading with wealth effects an amplification mechanism in financial markets abstract i study convergence traders with logarithmic utility in a continuous time equilibrium model in general convergence traders reduce asset price volatility and provide liquidity by taking risky positions against noise trading however when an unfavorable shock causes them to suffer capital losses thus eroding their risk bearing capacity they liquidate their positions thereby amplifying the original shock in extreme circumstances this wealth effect causes convergence traders to be destabilizing in that they trade in exactly the same direction as noise traders this situation is consistent with the near collapse of long term capital management in 1998

oil consumption and economic efficiency a comparative analysis of advanced developing and emerging economies abstract this paper investigates the economic efficiency oil consumption relationship in 42 countries during the period 1986 2006 in a first stage by using dea window analysis countries economic efficiencies are obtained in a second stage an econometric analysis based on robust gmm estimators reveals an inverted u shape relationship between oil consumption and economic efficiency in order to capture heterogeneities among countries development stages the analysis has been separated into two groups advanced economies and developing emerging economies the results show that advanced economies have much higher turning points compared to emerging and developing economies it appears that oil consumption increases countries economic efficiency in addition the consumption patterns of oil products and its derivatives have changed through years and among countries the different turning points from the econometric analysis indicate the dependence of oil consumption in advanced economies higher turning points is driven mainly by household purchasing activities and their standards of living transport housing and water food etc finally it appears that oil consumption is the main driver behind the progress of industrialization and urbanization regardless of the country s development stage

a macroeconomic model with a financial sector this paper studies a macroeconomic model in which financial experts borrow from less productive agents we pursue four sets of results i the economy is prone to instability and occasionally enters volatile episodes as volatility spikes agents precautionary motive increases depressing prices even further log linear approximations fail to capture these non linear effects that can cause economies to be significantly depressed for long periods of time ii endogenous risk during volatile episodes increases asset price correlations iii financial experts impose a negative externality on each other and on the labor sector by not maintaining adequate capital cushion and funding structure iv while risk sharing within the financial sector through securitization and derivatives contracts reduces many inefficiencies it can also amlify systemic risks

a theory of wage and promotion dynamics inside firms we show that a framework that integrates job assignment human capital acquisition and learning captures several empirical findings concerning wage and promotion dynamics inside firms including the following first real wage decreases are not rare but demotions are second wage increases are serially correlated third promotions are associated with large wage increases fourth wage increases at promotion are small relative to the difference between average wages across levels of the job ladder fifth workers who receive large wage increases early in their stay at one level of the job ladder are promoted quickly to the next

collateral requirements and asset prices many assets derive their value not only from future cash flows but also from their ability to serve as collateral in this article we investigate this collateral premium and its impact on asset returns in an infinite horizon general equilibrium model with heterogeneous agents we document that borrowing against collateral substantially increases the return volatility of long lived assets moreover otherwise identical assets with different degrees of collateralizability exhibit substantially different return dynamics because their prices contain a sizable collateral premium that varies over time this premium can be positive even for assets that never pay dividends

the tips treasury bond puzzle we show that the price of a treasury bond and an inflation swapped treasury inflation protected securities tips issue exactly replicating the cash flows of the treasury bond can differ by more than 20 per 100 notional treasury bonds are almost always overvalued relative to tips total tips treasury mispricing has exceeded 56 billion representing nearly 8 of the total amount of tips outstanding we find direct evidence that the mispricing narrows as additional capital flows into the markets this provides strong support for the slow moving capital explanation of arbitrage persistence

do women shy away from competition do men compete too much we examine whether men and women of the same ability differ in their selection into a competitive environment participants in a laboratory experiment solve a real task first under a noncompetitive piece rate and then a competitive tournament incentive scheme although there are no gender differences in performance men select the tournament twice as much as women when choosing their compensation scheme for the next performance while 73 percent of the men select the tournament only 35 percent of the women make this choice this gender gap in tournament entry is not explained by performance and factors such as risk and feedback aversion only playa negligible role instead the tournament entry gap is driven by men being more overconfident and by gender differences in preferences for performing in a competition the result is that women shy away from competition and men embrace it

dynamic competitive economies with complete markets and collateral constraints in this article we examine the competitive equilibria of a dynamic stochastic economy with complete markets and collateral constraints we show that provided the sets of asset pay offs and of collateral levels are sufficiently rich the equilibrium allocations with sequential trades and collateral constraints are equivalent to those obtained in arrow debreu markets subject to a series of limited pledgeability constraints we provide both necessary and sufficient conditions for equilibria to be pareto efficient and show that when collateral is scarce equilibria are not only pareto inefficient but also often constrained inefficient in the sense that imposing tighter borrowing restrictions can make everybody in the economy better off we derive sufficient conditions for the existence of markov equilibria and for the case of two agents for the existence of equilibria that have finite support these equilibria can be computed with arbitrary accuracy and the model is very tractable

the dynamics of financially constrained arbitrage we develop a model of financially constrained arbitrage and use it to study the dynamics of arbitrage capital liquidity and asset prices arbitrageurs exploit price discrepancies between assets traded in segmented markets and in doing so provide liquidity to investors a collateral constraint limits their positions as a function of capital we show that the dynamics of arbitrage activity are self correcting following a shock that depletes arbitrage capital profitability increases and this allows capital to be gradually replenished spreads increase more and recover faster for more volatile trades although arbitrageurs cut their positions in these trades the least when arbitrage capital is more mobile across markets liquidity in each market generally becomes less volatile but the reverse may hold for aggregate liquidity because of mobility induced contagion

the seemingly anomalous price behavior of royal dutch shell and unilever n v plc abstract we examine two anglo dutch groups the shares of whose parents trade on several international exchanges within each group the parents corporate charters mandate the division of cash flows available for distribution this implies a specific ratio for the market prices of their securities we document persistent deviations from these ratios on both the new york and london exchanges the direction and magnitude of the mispricing are common to both pairs of stocks and both markets nevertheless we find no evidence of profitable intra or intermarket trading rules

trade and the environment from a southern perspective the relationship between free trade and the environment is one of the main issues of contention between environmental and ecological economics environmental economics assumes a positive relationship between free trade economic growth and environmental policies environmental externalities may cause important damage however trade is not to be blamed for this instead the fault lies with policy inadequacies at the national level on the other hand some ecological economists criticise the assumptions of environmental economics especially the immobility of production factors and the positive correlation between income and environmental quality they plead for measures to prevent deterioration of northern environmental standards in a race to the bottom due to ecological dumping from the south in this paper we argue that neither environmental economics nor northern ecological economics take into account the structural conditions determining the international trade system based on some new empirical evidence on material flows we stress the notion of environmental cost shifting if physical and political ecology perspectives are adopted a southern approach to the trade and environment issue may arise 2001 elsevier science b v all rights reserved

why are the returns to schooling higher for women than for men many studies have found that the impact of schooling on earnings is greater for females than for males despite the fact that females tend to earn less both absolutely and controlling for personal characteristics this study investigates possible reasons for this effect using data from the national longitudinal survey of youth 1979 one explanation is that education appears to have a double effect on the earnings of women it increases their skills and productivity as it does with men and in addition it appears to reduce the gap in male and female earnings attributable to factors such as discrimination tastes and circumstances the latter appear to account for about half of the differential in the returns to schooling

dynamic equilibrium with two stocks heterogeneous investors and portfolio constraints we study dynamic equilibrium in a lucas economy with two stocks two heterogeneous constant relative risk aversion investors and portfolio constraints we focus on margin and leverage constraints which restrict access to credit we find a positive relationship between the amount of leverage in the economy and magnitudes of stock return correlations and volatilities tighter constraints generate rich patterns in correlations and volatilities make them less countercyclical increase risk premia proportionally to assets margins and increase prices of low margin assets more than prices of high margin assets we derive closed form solutions for the unconstrained case and the case of leverage constraints

the sports business as a labor market laboratory with superior data on compensation and productivity as well as the occurrence of abrupt dramatic market structure and player allocation rules changes sports labor markets offer an excellent setting in which to test economic hypotheses this paper reviews evidence from sports in four areas employer monopsony discrimination the coase theorem and incentive contracts supervision and performance there is considerable evidence of monopsony as well as for the existence of some forms of discrimination against minority athletes incentive contracts have strong effects on player performance and behavior and there is mixed evidence on the predictions of the coase theorem

career choices and the evolution of the college gender gap the opportunity cost for men of pursuing a college degree has been rising due to the increase in the rewards to becoming a superstar in occupations typically dominated by men like professional spo

capital mobility and asset pricing we present a model for the equilibrium movement of capital between asset markets that are distinguished only by the levels of capital invested in each investment in that market with the greatest amount of capital earns the lowest risk premium intermediaries optimally trade off the costs of intermediation against fees that depend on the gain they can offer to investors for moving their capital to the market with the higher mean return the bargaining power of an investor depends on potential access to alternative intermediaries in equilibrium the speeds of adjustment of mean returns and of capital between the two markets are increasing in the degree to which capital is imbalanced between the two markets and can be reduced by competition among intermediaries

collateral constraints and asset prices abstract we study the effects of collateral constraints in an economy populated by investors with nonpledgeable labor incomes and heterogeneous preferences and beliefs we show that these constraints inflate stock prices and generate spikes and crashes in price dividend ratios and volatilities clustering of volatilities and leverage cycles they also lead to substantial decreases in interest rates and increases in sharpe ratios when investors are anxious about hitting constraints due to production crises in the economy furthermore stock prices have large collateral premiums over nonpledgeable incomes we derive asset prices and stationary distributions of the investors consumption shares in closed form

intermediary asset pricing abstract we model the dynamics of risk premia during crises in asset markets where the marginal investor is a financial intermediary intermediaries face an equity capital constraint risk premia r

hidden linkages between resources and economy a beyond gdp approach using alternative welfare indicators taking gdp as the standard economic indicator for economic welfare recent resources economy studies indicate the dematerialization of the economy the so called decoupling effect this conclusion seems to alleviate concerns over resource scarcity and limits to growth and feeds optimism for green growth and sustainability prospects however the validity of gdp as the sole and unambiguous measure of the ultimate outcome of the economy has been severely disputed there is nowadays increasing interest in broader welfare measurements that capture more aspects of economic output and hence constitute better approximations of well being the present paper provides an overview of the above discussion and sets out to explore the relevance of three alternative welfare indicators the human development index hdi the index of sustainable economic welfare isew and the genuine progress indicator gpi as a basis for evaluating the dependency of welfare and its major engine the economy on natural resources increasing welfare appears to require a disproportionate use of resources strong and increasing dependency on resources at the global level and in giant countries such as china and india may have serious implications for current sustainability policies and the united nations sustainable development goals

leverage and default in binomial economies a complete characterization our paper provides a complete characterization of leverage and default in binomial economies with financial assets serving as collateral our binomial no default theorem states that any equilibrium is equivalent in real allocations and prices to another equilibrium in which there is no default thus actual default is irrelevant though the potential for default drives the equilibrium and limits borrowing this result is valid with arbitrary preferences and endowments contingent or noncontingent promises many assets and consumption goods production and multiple periods we also show that only no default equilibria would be selected if there were the slightest cost of using collateral or handling default our binomial leverage theorem shows that equilibrium loan to value ltv for noncontingent debt contracts is the ratio of the worst case return of the asset to the riskless gross rate of interest in binomial economies leverage is determined by down risk and not by volatility

bond returns liquidity and missing data this paper examines holding period returns to constant duration portfolios of u s govern ment notes and bonds and measures the return premium generated by liquidity differences in bonds the approach compares constant duration portfolios constructed in two distinct ways one using only bonds issued in the most recent treasury auction one using all other bonds comparisons of the resulting series are made meaningful by choosing narrow du ration ranges in the portfolio formation procedure this in turn induces a missing data problem in the created time series parameters of return distributions are therefore estimated employing a maximum likelihood framework that explicitly accounts for the missing data it is estimated that recently issued bonds are priced to return a premium of around 55 basis points per annum over otherwise equivalent instruments

how countries resource use history matters for human well being an investigation of global patterns in cumulative material flows from 1950 to 2010 abstract global resource use has been expanding rapidly after 1950 and improved material living conditions and human well being of large parts of the global population we here apply a cumulative long term perspective to gain broader insights into the material requirements of human well being the role of trade and the history of environmental pressures than the usual perspective of annual or most recent flows would reveal furthermore we investigate environmental pressures expressed as cumulative extraction per area over the last 60 years to both ends we utilize cumulative data on material flows on domestic material inputs dmi and domestic extraction de for 148 countries from 1950 to 2010 and the social progress index we find that a high level of well being required at least 460 t cap of cumulative material inputs from 1950 to 2010 an analysis of the relation between cumulative flows and current human well being shows statistically significant that at similar levels of cumulative material inputs biophysical export orientation of a country has a weak negative influence on well being when the sustainable development goals are to be achieved the scientific community and policy makers have to consider the history of development of resource use to better understand the future challenges ahead

making long term economic growth more sustainable evaluating the costs and benefits currently traditional development issues such as economic stagnation poverty hunger and illness as well as newer challenges like environmental degradation and globalisation demand attention sustainable development including its economic environmental and social elements is a key goal of decisionmakers optimal economic growth has also been a crucial goal of both development theorists and practitioners this paper examines the conditions under which optimal growth might be sustainable by assessing the costs and benefits of growth key environmental and social aspects are considered the ecol opt growth 1 model analyses economic ecological interactions including resource depletion pollution irreversibility other environmental effects and uncertainty it addresses some important issues including savings investment technical progress substitutability of productive factors intergenerational efficiency equity and policies to make economic growth more sustainable a basic element of the sustainomics framework the empirical results support growing concerns that costs of growth may outweigh its benefits resulting in unsustainability basically in a wide range of circumstances long term economic growth is unsustainable due to increasing environmental damage nevertheless the model has many options that can be explored by policy makers to make the development path more sustainable as advocated by sustainomics one example suggests that government supported abatement programs are needed to move towards sustainable development since the model runs without abatement were infeasible the optimal rate of abatement increases over time abatement of pollution is necessary to improve ecosystem viability and increase sustainability further research is necessary to seek conditions under which alternative economic growth paths are likely to become sustainable

limits to the growth paradigm abstract this paper is a synthesis of several current controversies it makes four broad claims 1 that economic growth as conventionally measured is not and never has been the most important contributor to increasing human welfare 2 that technological progress has always been the primary source of both growth and welfare considered separately 3 that trade was at best a minor contributor to growth in the past and is probably now contributing negatively to both national wealth and equity hence to welfare in western europe and north america and 4 that both growth of gdp and trade are increasingly incompatible with environmental protection in fact while increasing prosperity breeds environmental sensitivity many of the processes by which it is achieved are environmentally destructive the paper assembles and presents some of the key arguments and evidence

margin based asset pricing and deviations from the law of one price in a model with heterogeneous risk aversion agents facing margin constraints we show how securities required returns increase in both their betas and their margin requirements negative shocks to fundamentals make margin constraints bind lowering risk free rates and raising sharpe ratios of risky securities especially for high margin securities such a funding liquidity crisis gives rise to bases that is price gaps between securities with identical cash flows but different margins in the time series bases depend on the shadow cost of capital which can be captured through the interest rate spread between collateralized and uncollateralized loans and in the cross section they depend on relative margins we test the model empirically using the credit default swap bond bases and other deviations from the law of one price and use it to evaluate central banks lending facilities jel g01 g12 g13 e44 e50 the paramount role of funding constraints becomes particularly salient during liquidity crises with the one that started in 2007 being an excellent case in point banks unable to fund their operations closed down and the funding problems spread to other investors such as hedge funds that relied on bank funding therefore traditional liquidity providers became forced sellers interest rate spreads increased dramatically treasury rates dropped sharply and central banks stretched their balance sheets to facilitate funding these funding problems had significant asset pricing effects the most extreme example being the failure of the law of one price loop securities with nearly

gender competitiveness and career choices gender differences in competitiveness have been hypothesized as a potential explanation for gender differences in education and labor market outcomes we examine the predictive power of a standard laboratory experimental measure of competitiveness for the later important choice of academic track of secondary school students in the netherlands although boys and girls display similar levels of academic ability boys choose substantially more prestigious academic tracks where more prestigious tracks are more math and science intensive our experimental measure shows that boys are also substantially more competitive than girls we find that competitiveness is strongly positively correlated with choosing more prestigious academic tracks even conditional on academic ability most important we find that the gender difference in competitiveness accounts for a substantial portion about 20 of the gender difference in track choice

duration to first job and the return to schooling estimates from a search matching model this paper investigates the properties of the joint distribution of the duration to the first post schooling full time job and of the accepted wage for that job within a search matchingbargaining theoretic model the model provides an interpretation of the observations on duration to first job and accepted wages that differentiates between behavioural influences and market fundamentals in determining the accepted wage schooling relationship the return to schooling is appropriately measured by differences in the wage offer distribution which depends only on market fundamentals we use data from the 1979 youth cohort of the national longitudinal surveys of labor market experience to follow several school leaving cohorts of young males a model which allows for five types of heterogeneous workers within schooling race groups fits the duration and wage data well for all such groups offer probabilities for all groups are estimated to be close to one mean offered wages are about 1000 less than mean accepted wages and the internal annual rate of return for attending college relative to graduating from high school is 32 for blacks and 17 for whites this paper investigates the properties of the joint distribution of the duration to the first post schooling full time job and of the accepted wage for that job within a search matching bargaining model it is a well established empirical regularity that hazard rates are decreasing with the duration of search unemployment it is also true for the data we use that the sample mean of the accepted wage associated with the first job is not increasing with duration these findings hold for both black and white male youth at all levels of schooling conditional on schooling however the time between leaving school and working at the first full time job is longer for blacks and their accepted mean wage is lower conditional on race the time between leaving school and working at the first full time job is shorter for those with higher levels of schooling and their accepted mean wage is higher interestingly blacks display a similar pattern of duration and accepted wages to whites who are one level of schooling below e g black high school graduates and white high school dropouts

presidential address asset price dynamics with slow moving capital i describe asset price dynamics caused by the slow movement of investment capital to trading opportunities the pattern of price responses to supply or demand shocks typically involves a sharp reaction to the shock and a subsequent and more extended reversal the amplitude of the immediate price impact and the pattern of the subsequent recovery can reflect institutional impediments to immediate trade such as search costs for trading counterparties or time to raise capital by intermediaries i discuss special impediments to capital formation during the recent financial crisis that caused asset price distortions which subsided afterward after presenting examples of price reactions to supply shocks in normal market settings i offer a simple illustrative model of price dynamics associated with slow moving capital due to the presence of inattentive investors i address the implications for asset price dynamics of the apparent slow movement of investment capital to trading opportunities the arrival of new capital to an investment opportunity can be delayed by fractions of a second in some markets for example an electronic limit order book market for equities or by months in other markets such as that for catastrophe risk insurance accordingly prices respond to supply or demand shocks with a sharp reaction because of the relatively small subset of capital and thus risk bearing capacity that is immediately available to absorb a shock on short notice such a price impact is substantially reversed over time as additional capital becomes available the amplitude of the immediate price impact and the pattern of the subsequent recovery can reflect many sorts of attention costs to trade as well as institutional impediments to capital movement such as search costs for trading

from turmoil to crisis dislocations in the fx swap market before and after the failure of lehman brothers abstract this paper investigates dislocations in the foreign exchange fx swap market between the us dollar and three major european currencies after the failure of lehman brothers in september 2008 deviations from covered interest parity cip were negatively associated with the creditworthiness of us financial institutions as well as that of european institutions consistent with the deepening of a dollar liquidity problem into a global phenomenon us dollar term funding auctions by the ecb snb and boe as well as the us federal reserve commitment to provide unlimited dollar swap lines are found to have ameliorated the fx swap market dislocations

how does environmental regulation affect production location of non carbon ecological footprint abstract the aim of the paper is to investigate how the location of non carbon ecological footprint home or abroad changes along with environmental regulation ecological footprint measures the amount of biocapacity required to sustain the consumption patterns of human beings employing panel data analysis the relationship between income and footprints that result from domestic production and importsis investigated for 87 countries during the period 2004 2010 within the environmental kuznets curve ekc framework we find that an ekc relationship cannot be validated for income gdp per capita and non carbon footprints of production and of imports besides the analysis shows that countries reach the turning points for import footprint at lower levels of income once stringency of environmental regulation and enforcement of environmental regulation are accounted for environmental regulations push the economic structure towards a cleaner transformation by which resources can be exploited more effectively and short run losses in economic growth can be avoided in the medium and long run conditional on a successful transformation toward higher value added and cleaner production processes

economic growth and land use changes the declining amount of wilderness land in norway abstract the paper presents the evidence and analyses of macroeconomic factors explaining the reduction of wilderness land in norway the analysis is at the county level 18 counties for the years 1988 and 1994 and the regressions are carried out as cross section models as well as pooled fixed effects models using a new and probably unique database that categorizes the total area in norway into four zones of distance from larger technical installations wilderness land has been defined in three ways reflecting different qualities of the same type of natural resource land as more than 5 3 and 1 km from closest man made encroachment respectively the explanatory variables comprise gdp per capita gdp per capita squared and population density the main finding from the cross sections analysis is that the relative amount of wilderness land wilderness land as a fraction of the total area within each county is negatively related to the level of economic activity as measured by gdp per capita secondly the fixed effects model reveals a negative relationship between economic growth and the reduction of wilderness land these effects are tighter for wilderness land defined within a short distance from existing encroachments a high level of economic activity and high economic growth per capita is therefore associated with less wilderness land and hence the study gives no support for any environmental kuznets curve ekc relationships

collateral motivated financial innovation collateral frictions have a profound effect on our economic landscape ranging from the design of financial securities laws and institutions to various rules and regulations we analyze a model with disagreement where securities and collateral requirements are endogenous it shows that the security that isolates the variable with disagreement is optimal in the sense that alternative securities cannot generate any trading in an economy with n states investors may introduce more than n securities and markets are still incomplete the model has several novel predictions on the behavior of basis the spread between the prices of an asset and its replicating portfolio

how responsive is investment in schooling to changes in redistributive policies and in returns this paper uses an unusual pay reform to test the responsiveness of investment in schooling to changes in redistribution schemes that increase the rate of return to education we exploit an episode where different israeli kibbutzim shifted from equal sharing to productivity based wages in different years and find that students in kibbutzim that reformed earlier invested more in high school education and in the long run also in post secondary schooling we further show that the effect is mainly driven by students in kibbutzim that reformed to a larger degree our findings support the prediction that education is highly responsive to changes in the redistribution policy