on inventory control of product recovery systems subject to environmental mechanisms abstract the aim of this paper is to study the impact of inventory control in reducing the carbon footprint of an organization through a stochastic inventory model our research extends the traditional minimization cost problem by incorporating environmental legislation we consider a finite horizon closed loop system whereby decisions are subject to an emissions trading scheme and to random demand and returns demand can be satisfied by two sources the primary source is environmentally friendly but expensive whereas the second is cost effective but with negative environmental consequences the problem is formulated as a stochastic dynamic problem where replenishment and carbon management decisions must be made at each period the objective is to describe how replenishment and carbon management strategies are affected by environmental constraints in particular considering the computation restriction of dynamic programming in order to extend the results we propose a genetic algorithm to find near optimal solutions for larger instances a sensitivity analysis is performed to identify the impact of carbon allowance prices emission cap and other environmental factors in the decision making process the results indicate that environmental strategies and their factors have an impact on replenishment decisions there is an emission cap from which a company must focus on strategic decisions rather than on tactical and operational decisions in addition if the carbon allowance price is such that the environmental benefit absorbs the cost of less polluting technology a change in the inventory policy must be made

the role of public capital in production the impact of the stock of public capital on costs of production in the private sector is examined using annual data over the period 1958 89 a translog cost function is estimated and public capital is found to be a significant input the estimates indicate that public capital has positive marginal product and that private and public capital are complements in production rather than substitutes copyright 1992 by mit press

capital mobility for developing countries may not be so high abstract international capital flows to developing countries have taken on considerable policy importance in recent years there is disagreement however about whether financial capital mobility has become so high that developing countries have little ability to sterilize capital flows this paper reviews several popular methods of estimating the degree of capital mobility for developing countries and shows that they are subject to potentially important upward biases due to inappropriate assumptions concerning the roles of domestic inflation and sterilization corrections for these factors can cut estimates of capital mobility by one half or more

reducing emissions in transportation and inventory management r q policy with considerations of carbon reduction abstract in this study we examine three approaches on the effects of controlling carbon emissions in transportation and inventory management a business as usual scenario model bausm which delineates how carbon footprints from inventory storage and related transportation are captured is firstly developed as the benchmark model based on bausm we then develop three models with different carbon reduction approaches the first one is constructed by adding a constraint to represent the percentage target of emission reduction the second one integrates carbon taxes or cap and trade scheme into inventory management and the last one takes both reduction target and carbon offset opportunities into account our work provides new analytical models which integrate cost and emissions in transportation and storage under the framework of continuous inventory review r q policy for stochastic demand optimization algorithms are developed for solving models and related properties are investigated to examine the effects of carbon reduction and associated costs of three models the policy implications of the models are examined and discussed to provide insights for reference of the practitioners and the policy makers

volatility spillovers across international swap markets the us japan and the uk abstract this paper examines volatility spillovers across the three major international swap markets namely the us japan and the uk we apply a multivariate var egarch model by incorporating the slope of term structure and corporate spread variables to capture the time varying nature of swap spread volatility across countries our empirical findings show that the changes in the swap spreads are significantly influenced by the slope of term structure variable in all three currencies we find that the us swap market has a major influence on the japanese and uk swap markets but not vice versa we also find that reciprocal spillovers exist between japanese and the uk swap markets in almost all cases the degree of volatility persistence is fairly strong and in many cases we find asymmetric volatility spillovers across maturity and country

global and country specific movements in real effective exchange rates implications for external competitiveness abstract using the bayesian factor model we decompose real effective exchange rates which are considered a measure of external competitiveness into global and country specific factors among several findings we report a particular global trend in real exchange rates but a substantial proportion of their variation is found to be country specific in line with this finding we find that structural shifts when they do exist are contained in country specific factors furthermore consistent with economic theory this global factor is closely related to a trend in the global interest rate while country specific factors are closely related to idiosyncratic movements in the countries own interest rates such a decomposition results in better understanding of the exchange rate interest rate relationship and therefore our results can be interpreted as evidence that external competitiveness is heterogeneous among countries and that economic policies can influence countries competitiveness

convergence of real capital market interest rates evidence from inflation indexed bonds this paper investigates the convergence of long term ex ante real interest rates rirs obtained from canadian french uk and u s inflation indexed government bonds in contrast to previous research our evidence suggests full convergence in the long run and hence capital market integration for the same sample period global convergence is rejected for rirs measured in conventional terms from these results we conclude that previous tests of the long run real interest rate parity might have suffered from weak measurement of real capital market interest rates

quasi fixed inputs in u s and japanese manufacturing a generalized leontief restricted cost function approach in this paper a generalized leontief variable cost function is develope d which permits analytical derivation of steady state levels of quasi fixed inputs and capacity output and does not require specification of a numeraire input this framework is then used to evaluate the fa ctor demand patterns of japanese and u s manufacturing based on bot h one quasi fixed capital input and two quasi fixed capital and la bor input specifications and both static and dynamic optimization t he findings provide evidence of considerable flexibility of demand re sponses in japan which may have contributed to japan s relatively st rong economic performance in the volatile 1970s copyright 1988 by mit press

optimal production planning with emissions trading emissions trading is a market based mechanism for curbing emissions and it has been implemented in europe north america and several other parts of the world to study its impact on production planning we develop a dynamic production model where a manufacturer produces a single product to satisfy random market demands the manufacturer has access to both a green and a regular production technology of which the former is more costly but yields fewer emissions to comply with the emissions regulations the manufacturer can buy or sell the allowances in each period via forward contracts in an outside market with stochastic trading prices while needing to keep a nonnegative allowance account balance at the end of the planning horizon we first derive several important structural properties of the model and based upon them we characterize the optimal emissions trading and production policies that minimize the manufacturer s expected total discounted cost in particular the optimal emissions trading pol

are real interest rates equal across countries an empirical investigation of international parity conditions this paper conducts empirical tests of the equality of real interest rates across countries the empirical evidence strongly rejects the hypothesis of real rate equality and the joint hypotheses of uncovered interest parity and ex ante relative ppp or the unbiasedness of forward rate forecasts and ex ante relative ppp the evidence suggests that it is worth studying open economy macroeconomic models which allow 1 domestic real rates to differ from world rates 2 time varying risk premiums in the forward market or 3 deviations from ex ante relative ppp the relationship of real interest rates across countries is of central importance to our understanding of open economy macroeconomics in some models where there is costless international arbitrage in goods and financial assets real interest rates for comparable securities should be equal across countries this has been a feature of much of the early research in the monetary approach to exchange rates e g frenkel 11 and bilson 2 on the other hand finance theory indicates that risk premia may well differ for comparable securities denominated in different currencies solnick 27 roll and solnick 26 stulz 28 fama and farber 7 hansen and hodrick 17 and dornbusch 6 and more recent theoretical models in the exchange rate literature such as dornbusch 5 frankel 10 and mussa 24 depend on real rates differing between countries in the short run the proposition that real rates are equal across countries is worth studying

dynamics of public infrastructure industrial productivity and profitability a restricted equilibrium framework is utilized to estimate the contribution of public investment in infrastructure to private sector profitability a restricted cost function in translog form which treats labor and materials as variable inputs and private capital and public sector capital stock in transportation communications and electricity as quasi fixed inputs is specified a system of non linear equations comprising variable cost function and derived input demand equations is estimated using data from 1970 to 1987 for twenty six mexican three digit manufacturing industries the divergence of private and public capital stocks from their static equilibrium levels is estimated the net rate of return to fixed factors is also calculated estimates of allocative efficiency are derived the study further provides estimates of short run and long run scale economies output elasticity of factors measures of productivity growth and technical change economic significance and policy implications of the findings are also presented copyright 1992 by mit press

does the real interest parity hypothesis hold evidence for developed and emerging markets we present empirical evidence on the real interest parity hypothesis for a set of emerging and developed countries this is done by carrying out a set of unit root tests on the real interest differentials with respect to the us our results support the hypothesis of a rapid reversion towards a zero differential for developed countries and towards a positive one for emerging markets mean reversion is faster for emerging market economies we also find that this adjustment tends to be highly asymmetric and markedly different for developed and emerging markets our evidence reveals a high degree of market integration for developed countries and highlights the importance of risk premia for emerging markets

production inventory control under environmental constraints the aim of the paper is to investigate how environmental policies in the form of emission charges or emission limits affect the production inventory decisions of a firm our framework applies control theory to analyze optimal production policies the paper modifies the holt modigliani muth simon model

real interest rate equalization some empirical evidence from the three major world financial markets this article examines the linkage of real interest rates of the three major world financial markets usa japan and the uk with the use of cointegration methods unlike previous works the investigation uses a trivariate vector autoregressive var model in which a constant term in the common stochastic trends space is excluded based on data generated after the liberalization of japan s foreign exchange market at the end of 1980 1981 1 1998 12 the article finds some empirical evidence indicating that the extent of the departure from the long run real interest rate equalization rie is not very large although the null hypothesis of the long run rie is rejected in most cases

production planning horizon production smoothing and convexity of the cost functions abstract one of the productions planning models economists have used for the past four decades is the production smoothing model the model s conclusion is simple if cost functions are convex under certain conditions firm s production plans may show smaller variability than the firm s sales this is a result of the first order condition for cost minimization over the production planning horizon in a 1986 paper blinder raised doubts regarding the ability of the production smoothing model to explain the observed data some researchers e g ramey journal of political economy 99 2 1991 306 explained the inconsistency between the theory and the data by providing evidence that the cost functions are non convex in this paper i point out that the shapes of the cost functions depend on the length of the time horizon under consideration it is possible that while short run cost functions are upward sloping long run cost functions may be downward sloping because the planning horizon for firms facing seasonal demand has been shown to be one seasonal cycle the short run cost function whose shape determines the firm s production plan over the horizon need to be estimated using single planning horizon data i e a single seasonal cycle researchers who use long time series data are in effect estimating long run cost functions the slopes of which may be non positive i show further that convexity of the production cost function is neither necessary nor sufficient condition for production smoothing to be an optimal plan

production strategies under environmental constraints in an arrow karlin model abstract the aim of the paper is to investigate how environmental policies affect the production inventory decisions of a firm optimal control theory is applied to analyze optimal production policies the environmental policy investigated in the paper is a combined emission charges and limits policy the paper modifies the results of wirl european journal of operational research 55 1991 191 200 1 for the case of this combined policy

who drives real interest rates around the pacific rim the usa or japan abstract this paper investigates the relative influence of us and japanese real interest rates in the determination of local pacific rim rates where influence is defined by the presence of common stochastic trends furthermore the degree to which long run real interest parity holds is examined the cointegration testing methodology of johansen 1988 is adopted for this analysis which allows for multiple cointegrating vectors the results indicate that hong kong malaysia and taiwan are linked with both the usa and japan in terms of cointegration and positive covariation while only singapore is solely linked with the usa on the other hand korea and perhaps indonesia and thailand appear to be more closely linked with japan real interest parity holds for only the following interest rate pairs usa singapore usa taiwan and japan taiwan

public infrastructure private input demand and economic performance in new england manufacturing much of the current debate on the economic performance impacts of public infrastructure investment relates to the input specific effects of such investment in this article we explore these impacts by evaluating substitution patterns affecting private input use in new england manufacturing using a cost based methodology we find that in the short run public capital expenditures provide cost saving benefits that exceed the associated investment costs due to substitutability between public capital and private inputs over time however stimulating investment in private capital increases economic performance more effectively than public capital expenditures alone and in fact reduces the cost incentive for such expenditures in addition growth in output motivated by infrastructure investment increases employment opportunities because this growth overrides short run substitutability

the effects of emission trading on production and inventories in the arrow karlin model abstract the paper deals with the effect of introduction of tradable permits on the production inventory strategy of a firm it is assumed that the firm will minimize its costs the cost function consists of linear holding and convex production costs after introducing emission trading the cost function will contain a linear emission procurement selling cost we will compare the optimal production inventory strategy before tradable permits and thereafter the mathematical investigation is based on the well known dynamic arrow karlin model

emission permit banking pollution abatement and production inventory control of the firm abstract in this paper we present a dynamic model modified with emission permit banking and pollution abatement and investigate the effect of emission permit banking and pollution abatement on the production inventory strategy of the firm after introducing emission permit banking and pollution abatement the cost function consists of the inventory holding and production costs the cost of investment in abatement capital goods and the emission procurement selling cost furthermore the inventory holding costs are linear production costs are non decreasing and convex functions of the production level and the costs of investment in abatement capital goods are increasing and convex functions of the investment level we compare the optimal production inventory strategy before emission permit banking and pollution abatement and thereafter the mathematical investigation is based on the arrow karlin model

the effect of emission permit trading with banking on firm s production inventory strategies abstract we investigate the effect of tradable emission permits with banking on the production inventory strategy of a firm in this paper the basis of the work is the well known arrow karlin dynamic production inventory model in which the inventory holding costs are linear and production costs are non decreasing and convex functions of the production level the cost of environmental protection is taken into account in the model we assume there is an emission trading program with which firms are able to purchase their emission rights or sell them and the rights are allowed to be deposited in intertemporal trading we compare the optimal production inventory strategies of this paper with those without emission permits

financial integration in the pacific basin region rip by panic attack abstract we exploit advances in panel data econometrics to test whether real interest parity holds in the pacific basin region we test for a unit root in the difference between either the us japanese or euro area real interest rate and the real interest rates from a panel of eleven pacific basin economies unlike extant studies that test for rip using panel data we use bai and ng s 2004 panic test which allows for a very general model of cross section dependence including the possibility of cross unit cointegration ignoring the possibility of cross unit cointegration can lead to severe size distortions and to an over rejection of the null hypothesis of a unit root we overturn earlier findings based on first generation panel tests and demonstrate that cross unit cointegration leads to incorrect conclusions we find that rip holds in the pacific region real interest rates converge to the us rate we find no support for the hypothesis that pacific basin real interest rates converge to either the japanese or euro area rates

the international linkage of real interest rates the european us connection abstract in this paper we present evidence on several questions regarding the movement in short term real interest rates in eight countries have ex ante real estates in the united states and europe been high during recent years has there been a link between us real rates and those in other countries can this link be quantified the basic finding in this paper is that real rates have climbed dramatically from the 1970s to the 1980s in both the european countries and the united states there is also strong evidence that there is a positive association between movements in us real rates and those in europe however european real rates typically do not move one for one with us real rates still leaving open the possibility that european monetary policy can influence domestic economic activity

competition under industry stock driven prevailing market price environmental consequences and the effect of uncertainty abstract we address competition between several firms that cause pollution when producing fully substitutable products these firms comprise the industry and each individual firm charges for its products the market price determined by the difference between cumulative market supply and demand i e by the industry s stock we find that although the greater the number of firms competing for the same primary market the lower the market price and the higher the industry inventory surplus the reduction in price at market equilibrium is insufficient to stimulate greater aggregate sales that is greater competition does not necessarily induce higher industry output and pollution furthermore we show that commitment production pollution strategies compared to contingent strategies do not necessarily result in lower pollution especially when the number of competing firms is not high market uncertainty is low and proportional pollution taxation is high

tradable permits and production inventory strategies of the firm abstract the paper deals with the effect of introduction of tradable permits on the production inventory strategy of a firm the basic model of arrow and karlin 1958 production over time with increasing marginal costs in arrow k j karlin s scarf h eds studies in the mathematical theory of inventory and production stanford university press stanford pp 61 69 assumes that the firm minimizes the sum of linear holding and convex production costs these costs depend explicitly on time after introducing emission trading the cost function will contain linear emission procurement selling cost we compare two optimal production inventory strategies of a firm to examine changes of optimal strategies the first strategy is the optimal solution of the arrow karlin model then we analyze this model extended with costs of tradable permits

dynamic version of the economic lot size model this article originally appeared in management science october 1958 volume 5 number 1 pp 89 96 published by the institute of management sciences a forward algorithm for a solution to the following dynamic version of the economic lot size model is given allowing the possibility of demands for a single item inventory holding charges and setup costs to vary over n periods we desire a minimum total cost inventory management scheme which satisfies known demand in every period disjoint planning horizons are shown to be possible which eliminate the necessity of having data for the full n periods

convergence of interest rates around the pacific rim this article applies the panel data unit root tests provided by im pesaran and shin discussion paper 1997 to examine the interest rate convergence of small open asian countries with major financial centres with monthly data from 1988 1 to 1997 6 it was found that the nominal interest rates of these countries converge to the us rates rather than to japan s this finding is consistent with the view that the monetary authorities of non japan asian economies pegged their exchange rates overwhelmingly to the dollar rather than the yen before the financial crisis of 1997

financial integration of east asian economies evidence from real interest parity in this article we investigate the financial linkages between the east asian economies with japan and the united states we test for long run real interest rate parity rip using an array of panel data techniques including recent techniques developed by breuer et al 2002 and carrion i silvestre et al 2005 this study offers two important results first the failure to account for structural breaks in the industrialized countries and asian emerging economies is likely to provide evidence of nonstationary series that are stationary second we found strong evidence that the parity condition holds in all the asian countries the failure of earlier studies to confirm mean reversion of real interest rate differential rid may reflect the choice of estimation testing procedure rather than any inherent deficiency in the rip

dynamic linkages among real interest rates in international capital markets abstract short run and long run dynamic linkages among weekly real interest rates for g 10 countries are examined using a variety of time series tests these tests give special attention to the time series properties of nominal interest rates ex ante expected rates of inflation and real interest rates term structure information is used to recover a theoretically consistent measure of ex ante expected inflation in sample and out of sample granger causality tests are also examined to evaluate lead lag relationships among real interest rates the results provide strong support for well integrated markets particularly in the long run the results imply leadership roles for the us in international asset markets