the impact of population on co2 emissions evidence from european countries this paper analyses the impact of population growth on co2 emissions in european union countries traditionally researchers have assumed a unitary elasticity of emissions with respect to population growth in this study population is treated as a predictor in the model instead of being included as part of the dependent variable per capita emissions thus relaxing the above mentioned assumption of unitary elasticity we also contribute to the existing literature by taking into account the presence of heterogeneity in the sample and considering a dynamic specification the sample covers the period 1975 1999 for the current european union members our results show that the impact of population growth on emissions is more than proportional for recent accession countries whereas for old eu members the elasticity is lower than unity and non significant when the properties of the time series and the dynamics are correctly specified the different impact of population change on co2 emissions for the current eu members should therefore be taken into account in future discussions of climate change policies within the eu

technological change and the rebound effect in the stirpat model a critical view abstract technological change is key to understand the explanatory variables behind environmental impacts in the context of the stirpat stochastic impacts by regression on population affluence and technology model an adequate representation and analysis of the significance of the technology variable t in the stirpat model becomes crucial even more if one aims to better understand underlying processes such as the environmental rebound effect e re a critical review of the application of the stirpat model has been conducted to understand the diversity and value of the variables scopes assumptions statistical approaches and the environmental impacts commonly studied the findings highlight that despite the multiple applications and the high potential of the stirpat model inconclusive results and or knowledge gaps remain notably 1 a geographical imbalance in the scope of studies 2 the almost exclusive focus on carbon emissions 3 a lack of agreement on the choice of data additional explanatory variables and regression models 4 a lack of consensus on how to approximate t and 5 a lack of explicit analyses of the e re our findings are useful to both policymakers and academics for method design further research and policy evaluation

asset redeployability liquidation value and endogenous capital structure heterogeneity firms with lower leverage are not only less likely to experience financial distress but are also better positioned to acquire assets from other distressed firms with endogenous asset sales and values each firm s debt choice then depends on the choices of its industry peers with indivisible assets otherwise identical firms may adopt different debt policies with some choosing highly levered operations to take advantage of ongoing debt benefits and others choosing more conservative policies to wait for acquisition opportunities our key empirical implication is that the acquisition channel can induce firms to reduce debt when assets become more redeployable

a model of capital structure when earnings are mean reverting a multiperiod model of optimal capital structure is developed under the assumption that earnings follow an autoregressive process firm value and leverage vary through time and at each date the firm achieves an optimal debt level that is a function of the full state contingent debt policy the reversion parameter of the earnings series is shown to be positively related to various measures of variability and negatively related to leverage if earnings processes are not homogeneous across firms then standard earnings risk measures in capital structure studies do not adequately represent crosssectional differences in variability in firm value

balanced budget redistribution as the outcome of political competition this paper models balanced budget redistribution between socio economic groups as the outcome of electoral competition between two political parties equilibrium is unique in the present model and a sufficient condition for existence is given requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate the validity of hotelling s principle of minimum differentiation and of director s law are examined under alternative hypotheses concerning administrative costs of redistributions and voter s possibilities both of abstaining from voting and of becoming campaign activists for one of the parties the policy strategy of expected plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality incomes are fixed and known so lump sum taxation is feasible however constraints on tax transfer differentiation between individuals are permitted in the analysis

shareholders and stakeholders human capital and industry equilibrium producing high technology output and supplying sophisticated services often involves costly investment in industry specific skills but the threat of poaching means that it is the individual stakeholder not the firm who must bear the cost we investigate various mechanisms for funding human capital investment in an industry equilibrium framework where capital market imperfections would in the absence of intervention result in underinvestment the main result is that government provision of loan guarantees conditional on no bankruptcy leads to wage hikes which raises profits in a socially inefficient manner income contingent loans and levy subsidy schemes meanwhile can result in a socially efficient outcome recent analysis of investment under uncertainty has stressed the irreversible commitment that this may involve and the value of waiting before committing or withdrawing resources dixit and pindyck 1994 the investment considered is usually in physical capital oil rigs for example and the decision makers are the shareholders who own equity capital or their delegates but in many high technology and service industries investments of a less tangible nature are also required those in human skills if they are costly to acquire and are not transferable outside the industry then this will also involve irreversible decisions under uncertainty

dynamic recapitalization policies and the role of call premia and issue discounts in a dynamic framework the advantage of leverage depends upon the firm s recapitalization policy we show that if bonds are callable at par then equityholders have an incentive to recapitalize too early call premia and issue discounts however mitigate the agency problem of early recapitalization the model provides the optimal call premium and issue discount as a function of firm specific characteristics an analysis of a bond sample supports the model s prediction that the optimal call premium is positively related to firm risk

the impact of debt financing on entry and exit in a duopoly this article investigates the interaction between market entry company foreclosure and capital structure in a duopoly we find that the order in which firms foreclose is determined not only by differences in firm specific factors but also by common economic factors such as the interest rate and the market profit volatility we extend the exit model by allowing financially distressed firms to renegotiate their debt contracts through a one off debt exchange offer we find that firms with high bankruptcy costs or with prospects of profit improvement can get bigger reductions on their debt repayments investigating market entry we find that financial vulnerability of the incumbent induces earlier entry article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

incumbency and distributive politics intergovernmental transfers in mexico in this article the objective is to focus on the likelihood that politicians will rely on intergovernmental transfers to pursue political ambition in what circumstances are incumbents more likely to rely on transfers to win votes than to reward core supporters how are constraints introduced to ensure that politicians rely on predetermined formulae which reduce the incentive to design transfers to win re election likely to influence distributive politics predictions in this article are tested with reference to intergovernmental transfers to 31 mexican states between 2004 and 2012

investment in competitive equilibrium the optimality of myopic behavior there is an extensive literature on the optimal irreversible investment strategy of a solitary firm facing an exogenous price process this paper shows that the investment strategies that this literature derives may be optimal in competitive equilibrium even though the price process is now endogenous this provides a simple means for computing equilibrium investment strategies

real options and preemption under incomplete information abstract this paper introduces incomplete information and preemption into an equilibrium model of firms facing real investment decisions the optimal investment strategy may lie anywhere between the zero npv trigger level and the optimal strategy of a monopolist depending on the distribution of competitors costs and the implied fear of preemption our model implies that the equity returns of firms which hold real options and are subject to preemption will contain jumps and positive skewness

dynamic investment and capital structure under manager shareholder conflict abstract this paper investigates the interactions between the investment and financing decisions of a firm under manager shareholder conflicts arising from asymmetric information in particular we extend the manager shareholder conflict problem in a real options model by incorporating debt financing we show that manager shareholder conflicts over investment policy increase not only the investment and default triggers but also coupon payments which lead to a decrease in the equity value moreover given the presence of manager shareholder conflicts debt financing increases investment and decreases total social welfare as a result there is a trade off between the efficiency of investment and total social welfare with debt financing these results fit well with the findings of previous empirical work in this area

resolution of financial distress under chapter 11 abstract we develop a contingent claims model for a firm in financial distress with a formal account for renegotiations under the u s bankruptcy procedure known as chapter 11 shareholders and two classes of creditors senior and junior alternatively propose a reorganization plan subject to a vote the bankruptcy judge can intervene in any renegotiation round to impose a plan the multiple stage bargaining process is solved in a non cooperative game theory setting the calibrated model yields the liquidation rate the duration of chapter 11 and the frequency of deviations from the absolute priority rule which are consistent with empirical evidence

taxation agency conflicts and the choice between callable and convertible debt abstract we analyze debt choice in light of taxes and moral hazard the model features an infinite sequence of nonzero sum stochastic differential games between equity and debt closed form expressions are derived for all contingent claims if equity can increase volatility without reducing asset drift callable bonds with call premia are optimal although callable bonds induce risk shifting call premia precommit equity to less frequent restructuring and are tax advantaged convertible bonds mitigate risk shifting but only induce hedging if assets are far from the default threshold convertibles are optimal only if risk shifting reduces asset drift sufficiently

interactions of corporate financing and investment decisions the effects of agency conflicts abstract we examine interactions between flexible financing and investment decisions in a model with stockholder bondholder conflicts over investment policy we find that financial flexibility encourages the choice of short term debt thereby dramatically reducing the agency costs of under and overinvestment however the reduction in agency costs may not encourage the firm to increase leverage since the firm s initial debt level choice depends on the type of growth options in its investment opportunity set the model has a number of testable predictions for the joint choice of leverage and maturity and how these choices interact with a firm s growth opportunities

how does industry affect firm financial structure we examine the importance of industry to firm level financial and real decisions we find that in addition to standard industry fixed effects financial structure also depends on a firm s position within its industry in competitive industries a firm s financial leverage depends on its natural hedge its proximity to the median industry capital labor ratio the actions of other firms in the industry and its status as entrant incumbent or exiting firm financial leverage is higher and less dispersed in concentrated industries where strategic debt interactions are also stronger but a firm s natural hedge is not significant our results show that financial structure technology and risk are jointly determined within industries these findings are consistent with recent industry equilibrium models of financial structure copyright 2005 oxford university press

environmental degradation and real per capita output new evidence at the global level grouping countries by income levels abstract the objective of this research is to examine the relationship between real per capita output and carbon dioxide emissions both globally and by groups of countries we used panel data from 151 countries for the period 1980 2016 the countries are classified according to income levels using the world bank atlas method the argument behind this classification is that the strength of the relationship between the two variables differs according to the income levels of countries based on the theoretical framework of the kuznets environmental curve we found that there is a strong u shaped relationship between the two variables in middle high and low income countries the hypothesis of the kuznets environmental curve holds true in high income and middle high income countries the inclusion of additional covariants shows that urbanization has a positive and significant relationship with carbon dioxide emissions middle high and middle low income countries energy consumption and manufacturing have a positive and statistically significant relationship with carbon dioxide emissions in all the groups of countries a possible implication of economic policy derived from our research is that incentives to production should focus on activities that use environmentally friendly technologies to limit the irreversible damage caused by contamination

real options agency conflicts and optimal capital structure abstract we examine the impact of a stockholder bondholder conflict over the timing of the exercise of an investment option on firm value and corporate financial policy we find that an equity maximizing firm exercises the option too early relative to a value maximizing strategy and we show how this problem can be characterized as one of overinvestment in risky investment projects equityholders incentive to overinvest significantly decreases firm value and optimal leverage and significantly increases the credit spread of risky debt numerical solutions illustrate how the agency cost of overinvestment and its effect on corporate financial policy vary with firm and project characteristics

refinancing profitability and capital structure abstract we revisit the well established puzzle that leverage is negatively correlated with measures of profitability in contrast we find that at times when firms are at or close to their optimal level of leverage the cross sectional correlation between profitability and leverage is positive at other times it is negative these results are consistent with dynamic trade off models in which infrequent capital structure rebalancing is optimal the time series of market leverage and profitability in the quarters prior to rebalancing events match the patterns predicted by these models our results are not driven by investment layouts market timing payout or mechanical mean reversion of leverage

debt in industry equilibrium this article shows 1 how entry and exit of firms in a competitive industry affect the valuation of securities and optimal capital structure and 2 how given a trade off between tax advantages and agency costs a firm will optimally adjust its leverage level after it is set up we derive simple pricing expressions for corporate debt in which the price elasticity of demand for industry output plays a crucial role when a firm optimally adjusts its leverage over time we show that total firm value comprises the value of discounted cash flows assuming fixed capital structure plus a continuum of options for marginal increases in debt article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

measuring the agency cost of debt we adapt a contingent claims model of the firm to reflect the incentive effects of the capital structure and thereby to measure the agency costs of debt an underlying model of the firm and the stochastic features of its product market are analyzed and an optimal operating policy is chosen we identify the change in operating policy created by leverage and value this change the model determines the value of the firm and its associated liabilities incorporating the agency consequences of debt the optimal capital structure for a firm is now widely regarded to be determined by a broad range of factors including a mix of tax effects the various agency problems associated with different securities and the various costs of issuing securities including the costs created by adverse selection while the existence of a theoretical optimum has been demonstrated in a variety of papers a less explored area has been the construction of detailed models that enable us to measure each of the relevant factors for a particular company and thereby to determine the actual optimal mix for that firm this gap in our understanding is particularly glaring in the case of agency costs in order to allow a careful modelling of strategic relations the parameters of most agency models are either so simplified that it is impossible to associate them with measurable parameters of a real world case or else the models simply abstract from certain critical factors such as a robust measure of price risk that must be incorporated into any real application for example although we now understand that sinking funds dividend restrictions and other bond covenants help to resolve the conflict of interest between bondholders and equity we do not yet have much in the way of models with which to determine the optimal parameters of these very covenants contingent claims models can provide a consistent framework for multiperiod valuation that properly accounts for risk but they usually abstract from the agency factors entering capital structure decisions when using a contingent claims model to value a firm s securities it is common to take the value of the firm itself as governed by an exogenously defined stochastic process the value of the firm s securities are then derived from this underlying value and as merton 1974 points out in his paper on the pricing of risky debt the modigliani miller theorem obtains so that the value of the firm is independent of the value and the type of debt in order to apply the contingent claims techniques to a setting in which agency problems are central some adaptation is necessary in this paper we

intergovernmental grants as signals and the alignment effect theory and evidence this paper provides a simple political agency model to explain the effect of political alignment between different tiers of government on intergovernmental grants and election outcomes key features of the model are i rational voters interpret public good provision as a signal of incumbent competence and ii realistically grants are unobservable to voters in this setting the national government will use the grant as an instrument to manipulate the public good signal for the benefit of aligned local incumbents and challengers then aligned municipalities receive more grants with this effect being stronger before elections and the probability that the aligned local incumbent is re elected is higher these predictions are tested using a regression discontinuity design on a new data set on italian municipalities at a second empirical stage the national grant to municipalities is instrumented with an alignment indicator allowing estimation of a flypaper effect for italian municipalities

oil futures prices in a production economy with investment constraints we document a new stylized fact that the relationship between the volatility of oil futures prices and the slope of the forward curve is nonmonotone and has a v shape this pattern cannot be generated by standard models that emphasize storage we develop an equilibrium model of oil production in which investment is irreversible and capacity constrained investment constraints affect firms investment decisions and imply that the supply elasticity changes over time since demand shocks must be absorbed by changes in prices or changes in supply time varying supply elasticity results in time varying volatility of futures prices estimating this model we show it is quantitatively consistent with the v shape relationship between the volatility of futures prices and the slope of the forward curve in recent years commodity markets have experienced dramatic growth in trad

non renewable and renewable energy consumption and co2 emissions in oecd countries a comparative analysis abstract this paper attempts to explore the determinants of co 2 emissions using the stirpat model and data from 1980 to 2011 for oecd countries the empirical results show that non renewable energy consumption increases co 2 emissions whereas renewable energy consumption decreases co 2 emissions further the results support the existence of an environmental kuznets curve between urbanisation and co 2 emissions implying that at higher levels of urbanisation the environmental impact decreases therefore the overall evidence suggests that policy makers should focus on urban planning as well as clean energy development to make substantial contributions to both reducing non renewable energy use and mitigating climate change

investment dynamics with fixed capital adjustment cost and capital market imperfections this paper examines the implications of financing frictions on capital stocks and on capital accumulation in the presence of non convex costs of adjusting the capital stock in this setup finance has an influence on both the level of capital and the timing of investment finance and productivity are complements and finance influences investment the strongest when firms wish to significantly adjust capital for fundamental reasons these theoretical considerations are confronted with uk data while finance is mostly irrelevant for long term capital decision the short run investment function shows a significant impact of finance which is also strongest for strong fundamental investment incentives

the breakup of nations a political economy analysis this paper develops a model of the breakup or unification of nations in each nation the decision to separate is taken by majority voting a basic trade off between the efficiency gains of unification and the costs in terms of loss of control on political decisions is highlighted the model emphasizes political conflicts over redistribution policies the main results of the paper are i when income distributions vary across regions and the efficiency gains from unification are small separation occurs in equilibrium and ii when all factors of production are perfectly mobile all incentives for separation disappear i introduction following the demise of communism the entire map of europe from the atlantic coast to the urals is being redrawn and issues of separation unification and the redrawing of borders are yet again at the forefront of european concerns many of the issues raised by this process are primarily of a political cultural or linguistic nature however there are also economic considerations that bear on this problem the objective of this paper is to analyze some important economic and political determinants of the process of unification and separation of democratic nations the starting point of our analysis is to suppose that from an economic efficiency point of view separation of nations is never desirable a unified nation is always more efficient since free trade among regions is guaranteed duplication costs in defense and law enforcement are avoided and local public goods provision such as transportation and communication networks or common standards can be coordinated furthermore any benefits of decentralization that might be obtained in a world with several nations may also be achieved within a unified nation by replicating the administrative structure of the world with several

interactions of corporate financing and investment decisions a dynamic framework this article analyzes the interaction between a firm s dynamic investment operating and financing decisions in a model with operating adjustment and recapitalization costs using numerical analysis we solve the model for cases that highlight interaction effects we find that higher production flexibility due to lower costs of shutting down and reopening a production facility enhances the firm s debt capacity thereby increasing the net tax shield value of debt financing while higher financial flexibility resulting from lower recapitalization costs has a similar effect production flexibility and financial flexibility are to some extent substitutes we find that the impact of debt financing on the firm s investment and operating decisions is economically insignificant

impacts of urbanization and industrialization on energy consumption co2 emissions does the level of development matter urbanization and industrialization have significant impacts on energy consumption and co2 emissions but their relationship varies at different stages of economic development taking cognizance of heterogeneity and the ratchet effect this paper adopts the stochastic impacts by regression on population affluence and technology stirpat framework as a starting point and re estimates the relationship using different panel date models the main results are obtained by dynamic panel threshold regression models which divide a balanced panel dataset of 73 countries over the period of 1971 2010 into four groups according to their annual income levels the key results are 1 in the low income group urbanization decreases energy consumption but increases co2 emissions 2 in the middle low income and high income groups industrialization decreases energy consumption but increases co2 emissions while urbanization significantly increases both energy consumption and co2 emissions 3 for the middle high income group urbanization does not significantly affect energy consumption but does hinder the growth of emissions while industrialization was found to have an insignificant impact on energy consumption and co2 emissions 4 from the population perspective it produces positive effects on energy consumption and also increases emissions except for the high income group these novel methodology and findings reveal that different development strategies of urbanization and industrialization should be pursued depending on the levels of income in a bid to conserve energy and reduce emissions

do financial development urbanization and trade affect environmental quality evidence from china abstract it is of great significance to study the impact of financial development on carbon emissions for the development of low carbon economy although many empirical studies reveal significant correlations between financial development and various environmental pollution variables few studies differentiate financial scale and efficiency from other factors and pay attention to the impact of securities capital market on carbon emissions in view of the complexity of financial development impact mechanism on carbon emissions in china this paper classifies financial development into two dimensions financial scale and securities size we establish a broader autoregressive distributed lag error correction model ardl ecm which is used to measure the dynamic relationship among financial scale securities size urbanization economic development trade openness and china s carbon emission intensity the study indicates that there is positive short run and long run relationship among financial scale economic growth and carbon emission intensity this reflects that the current development of financial scale has stimulated the development of china s economy but brought carbon emissions the size of securities has a relatively small impact on carbon emission intensity both in the short run and long run this shows that china s current securities market mechanism of regulating carbon emissions needs further improvement the above conclusions are convinced by the robustness tests this paper provides empirical evidence for policy makers to support the implementation of financial and low carbon economy growth

regulation and corporate investment policy in a previous paper it was shown that the traditional rule that the allowed return on the equity of a regulated firm should be set equal to its cost of equity capital was conceptually deficient 2 this deficiency arises because the cost of equity capital of a regulated firm depends upon its risk which depends in turn upon the regulatory policy that will be followed in the future including the allowed rate of return it was argued therefore that this traditional rule should be replaced by the requirement that the regulatory policy be consistent a consistent regulatory policy achieves what the traditional rule only attempts it ensures that at the time of a regulatory hearing the market value of the firm equity is equal to the equity financed portion of the rate base to devise a consistent regulatory policy it is necessary to have a valuation model which takes explicit account of regulatory policy such a model was developed in the above mentioned paper in this paper we generalize the earlier valuation model so that the investment policy of the regulated firm is determined by the value maximizing decisions of the management instead of being taken as exogenous to the extent that investment policy is discretionary its endogeneity must be taken into account in devising a consistent regulatory policy and this is made possible by the generalized model in reality it seems unclear to what extent the investment policies of regulated firms are predetermined by the requirement that they meet demand and to what extent they are discretionary since the model presented here easily accommodates constraints on the investment policy it is the more appropriate model so long as there exists any element of discretionary investment behaviour and permits a more adequate approach to the determination of consistent regulatory policies with discretionary investment policy an important consequence of any particular consistent regulatory policy is the investment policy it induces in section 4 we show how the value maximizing investment policy is affected by the choice of regulatory policy on the other hand regulated firms are wont to argue that their investments are in the main predetermined by demand and must be undertaken regardless of their profitability this putative lack of discretion it is maintained means that the appropriate allowed rate of return is higher than would otherwise be the case in section 4 also we evaluate the strength of this consideration by comparing the allowed rate of return under consistent regulatory policies when investment policy is and is not discretionary section 5 shows briefly how the analysis can be extended to account for the effect of debt in the capital structure

output decision under demand uncertainty with stochastic production function a contingent claims approach this paper presents a contingent claims analysis of output decisions for the firm facing technological and demand uncertainty the paper reveals that i the optimal output level increases with the higher interest rate when the firm is subject to demand and technological uncertainty ii the effect of demand volatility and production lead time on the optimal output level could be either positive or negative iii the optimal project value decreases with the higher demand volatility iv the optimal project value decreases with the longer production lead time when the firm is subject to demand uncertainty and v the optimal project value decreases with the higher interest rate when the firm is subject to demand uncertainty it increases with the higher interest rate however when the firm is subject to both demand and technological uncertainty some important managerial implications are discussed

optimal priority structure capital structure and investment we study the interaction between financing and investment decisions in a dynamic model where the firm has multiple debt issues and equityholders choose the timing of investment jointly optimal capital and priority structures can virtually eliminate investment distortions because debt priority serves as a dynamically optimal contract examining the relative efficiency of priority rules observed in practice we develop several predictions about how firms adjust their priority structure in response to changes in leverage credit conditions and firm fundamentals notably financially unconstrained firms with few growth opportunities prefer senior debt while financially constrained firms with or without growth opportunities prefer junior debt moreover lower rated firms are predicted to spread priority across debt classes finally our analysis has a number of important implications for empirical capital structure research including the relations between market leverage book leverage and credit spreads and tobin s q the influence of firm fundamentals on the agency cost of debt and the conservative debt policy puzzle the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

bureaucrats or politicians part i a single policy task this paper investigates the normative criteria that guide the allocation of a policy task to an elected politician versus an independent bureaucrat the bureaucrat is preferable for technical tasks for which ability is more important than effort or if there is great uncertainty about whether the policymaker has the required abilities the optimal allocation of redistributive tasks is ambiguous and depends on how the bureaucrat can be instructed but irrespective of the normative conclusion the politician prefers not to delegate redistributive policies

irreversible investment financing and bankruptcy decisions in an oligopoly this paper examines a firm s debt level investment timing and investment scale choices in a continuous time model where the output price of a good that the firm produces depends on a stochastic demand shift variable and the total industry supply of the good using the simple symmetric cournot nash equilibrium assumption that all firms are identical and therefore follow the same financing and investment strategies we show that competition decreases the output price and hence encourages a firm to wait for a higher demand level before it is profitable to invest we also demonstrate how uncertainty bankruptcy costs and corporate taxation affect the firm s financing and investment decisions

dividends and leverage how to optimally exploit a non renewable investment in this paper we model the situation where a non renewable investment is given for instance a resource reservoir and show how to optimally trade off between dividends and leverage in order to maximize a performance indicator for shareholders up to the bankruptcy time we then study the way market risk the volatility of the market price of the resource impacts the optimal policies and the default risk of the company the moments when the policies are rebalanced are analyzed and we give a measure of the agency costs which appear between the shareholders and the debt holders

the political resource curse this paper studies the effect of additional government revenues on political corruption and on the quality of politicians both with theory and data the theory is based on a political agency model with career concerns and endogenous entry of candidates the data refer to brazil where federal transfers to municipal governments change exogenously at given population thresholds allowing us to implement a regression discontinuity design the empirical evidence shows that larger transfers increase observed corruption and reduce the average education of candidates for mayor these and other more specific empirical results are in line with the predictions of the theory jel d72 d73 h77 o17 o18

impacts of urbanization and real economic development on co 2 emissions in non high income countries empirical research based on the extended stirpat model abstract this article focuses on the effects of urbanization and economic development on carbon dioxide co 2 emissions in non high income countries using the extended stirpat model following the building idea of the ipat model co 2 emissions i are decomposed into nine factors population affluence technology level urbanization level urban employment level industrialization level population carrying intensity of the real economy built on goods and services co 2 emission intensity and energy intensity then the extended ipat model is reconstructed as the extended stirpat model furthermore based on panel data from 1991 to 2013 and using the extended stirpat model this article respectively analyzes the effects of the driving forces especially urbanization and real economic development on co 2 emissions for non high income countries upper and lower middle income countries the results indicate that urbanization and real economic development have a small impact on co 2 emissions in non high income countries accelerating urbanization and real economic development will not result in a significant increase in co 2 emissions in fact for upper middle income countries real economic development will lead to a decrease in co 2 emissions and acceleration of the urbanization process will only cause a small increase in emissions the main driving factors of co 2 emissions remain population affluence energy intensity and co 2 emission intensity this article also quantitatively calculates the actual contribution rate of each driving force for the 1991 2013 period the study contributes to understanding the emission characteristics and key driving forces in each type of countries allowing for appropriate policy recommendations

federal tax policies congressional voting and natural resources can abundance of natural resources affect legislators voting behavior over federal tax policies we construct a political economy model of a federalized economy with district heterogeneity in natural resource abundance the model shows that representatives of natural resource rich districts are more less willing to vote in favor of federal tax increases decreases this occurs because resource rich districts are less responsive to federal tax changes due to the immobile nature of their natural resources we test the model s predictions using data on roll call votes in the u s house of representatives over the major federal tax bills initiated during the period of 1945 2003 in conjunction with the presence of active giant oil fields in u s congressional districts our identification strategy rests on plausibly exogenous giant oil field discoveries and exploitation and narrative based aggregate federal tax shocks that are exogenous to individual congressional districts and legislators we find that i resource rich congressional districts are less responsive to changes in federal taxes ii representatives of resource rich congressional districts are more less supportive of federal tax increases decreases controlling for legislator congressional district and state indicators our results indicate that resource richness is approximately half as dominant as the main determinant namely party afiliation in driving legislators voting behavior over federal tax policies

bankruptcy costs and the theory of oligopoly this paper examines the relationship between financial decisions and output decisions in oligopolistic markets assuming a duopoly market structure in which financial decisions and output decisions follow in sequence the authors analyze how bankrupt cy costs which are incurred when the firm is unable to meet current debt obligations affect the firm s behavior in output markets with fixed bankruptcy costs firms have an incentive to increase output le vels if they take on more debt proportional bankruptcy costs lead to a u shaped relationship between output and debt foresighted owners of firms are led to take into account the strategic output effects of financial structure when considering an optimal financial structure for the firm

pricing the strategic value of putable securities in liquidity crises putable security holders have a de facto rst claim on the rm s liquid assets and can threaten to force solvent issuers to bear nancial distress costs their threatening power implies that the puts have a strategic value larger than their intrinsic value strategic value depends on the issuer s size potential distress costs and the distribution of put ownership relative to the rm s liquidity position the analysis of kmart s put induced crisis in 1995 and a calibration to observed secondary market yield reductions on poison put bonds shows that strategic value is an important determinant of payouts received by bondholders 2001 elsevier science s a all rights reserved

optimal bank reorganization and the fair pricing of deposit guarantees abstract when should regulators close a financially ailing bank fdic practice in the us has moved in the direction of early closure in contrast banking regulators in japan continue to follow a more patient approach this paper analyses a series of models in which closure rules and bailout policies arise endogenously through the interaction of i regulators attempts to minimize discounted expected bankruptcy costs and ii equity holders incentives to recapitalise banks we characterize subsidy policies for distressed banks that implement socially optimal closure rules at minimum financial cost to regulators and which reduce moral hazard

evaluating natural resource investments notwithstanding impressive advances in the theory of finance over the past 2 decades practical procedures for capital budgeting have evolved only slowly the standard technique which has remained unchanged in essentials since it was originally proposed see dean 1951 bierman and smidt 1960 derives from a simple adaptation of the fisher 1907 model of valuation under certainty under this technique expected cash flows from an investment project are discounted at a rate deemed appropriate to their risk and the resulting present value is compared with the cost of the project this standard textbook technique reflects modern theoretical developments only insofar as estimates of the discount rate may be obtained from crude application of single period asset pricing theory but see brennan 1973 bogue and roll 1974 turnbull 1977 constantinides 1978 the inadequacy of this approach to capital budgeting is widely acknowledged although not widely discussed its obvious deficiency is its the evaluation of mining and other natural resource projects is made particularly difficult by the high degree of uncertainty attaching to output prices it is shown that the techniques of continuous time arbitrage and stochastic control theory may be used not only to value such projects but also to determine the optimal policies for developing managing and abandoning them the approach may be adapted to a wide variety of contexts outside the natural resource sector where uncertainty about future project revenues is a paramount concern

fiscal federalism and redistributive politics abstract we consider the interaction between redistributive politics at central and local levels in a federal system and characterize the factors influencing success in redistributive politics in both federal and unitary systems we examine how the political characteristics of different states and groups give them better or worse outcomes in a federal system as opposed to a unitary system we examine possibilities of multiple equilibria with divided government between the two layers we analyze the choice between block grants and matching grants we also examine the impact of federalism on the incentives for geographic mobility

optimal financial policy and firm valuation since the classic work of miller and modigliani 1961 laid down the principles for the valuation of firms under conditions of certainty some two decades ago academic interest in the problem of valuing the individual firm has waned yet in addition to the obvious importance of this problem for security analysts investors and acquirers of corporations the issue of firm valuation is fundamental to much of the theory of corporate finance what determines the risk of the firm how the rate of return required by investors may be inferred from capital market data the influence of financing policy on firm value and other issues of central concern to the theory of financial management this almost total neglect of firm valuation is attributable perhaps to the overwhelming influence of the research programme initiated by the development of the capital asset pricing model only three years after the publication of the above mentioned paper by miller and modigliani in its primary form the capital asset pricing model is a statement about the equilibrium rates of return on securities rather than about the equilibrium values of securities it is straightforward to transform the model into a statement about the dependence of current equilibrium values upon an exogenously specified distribution of end of period values however in this form the model is inherently unsatisfactory since it fails to take account of the fact that in reality the distribution of end of period firm values is not exogenously given but is determined as part of a subsequent capital market equilibrium attempts to iterate the single period capital asset pricing model over several periods in order to avoid the need to take the distribution future security values as exogenous have been unsuccessful for the most part since not being able to derive they have been forced to assume both the requisite normality of the distribution of subsequent security prices and the legitimacy of ignoring endogenously determined shifts in the individual investor s investment

analysis on major drivers of cement consumption during the urbanization process in china abstract accompanying by the rapid urbanization process of china unprecedented amounts of cement have been poured into urban construction over the last decade since research is still scarce on the factors underlying the cement consumption the motivation of this paper is to provide insight into cement based socioeconomic metabolism and to improve understanding of the linkage between human activities and cement consumption to explore the key impact factors of cement consumption an extended stirpat model is exploited in this paper to examine the effect of population gross domestic product gdp per capita cement consumption intensity fixed investment and urbanization level with regional panel data of china from 2005 to 2013 the empirical results indicate that fixed investment and gdp per capita are the decisive driving factors of cement consumption the unbalanced investment between infrastructure and people s livelihood reflects bias urbanization policy in china inverted u shaped nexus between cement consumption and urbanization as well as gdp per capita are observed in the empirical results moreover regional heterogeneities are taken into account in the model estimation on the ground of the empirical findings several policy recommendations are provided for policy makers it is suggested that policy makers should take account of the regional discrepancy and implement a sustainable urbanization strategy to curtail cement consumption only when excessive fixed investment is curbed does the enthusiasm of cement consumption calm down

optimal capital structure and bankruptcy choice dynamic bargaining versus liquidation abstract we model a firm s optimal capital structure decision in a framework in which it may later choose to enter either chapter 11 reorganization or chapter 7 liquidation creditors anticipate equityholders ex post reorganization incentives and price them into the ex ante credit spreads using a realistic dynamic bargaining model of reorganization we show that the off equilibrium threat of costly renegotiation can lead to lower leverage even with liquidation in equilibrium if reorganization is less efficient than liquidation the added option of reorganization can actually make equityholders worse off ex ante even when they liquidate on the equilibrium path

dynamic relationship among environmental regulation innovation co2 emissions population and economic growth in oecd countries a panel investigation abstract promoting green innovation and regulating emissions through carbon pricing are the two fundamental driving forces of climate change policies on carbon abatement however the existing body of empirical evidence focusing on these inter linkages is rather meager such evidence is also inconclusive in the context of the organization for economic co operation and development oecd countries this study therefore examines the effects of environmental regulation and innovation on the carbon emission reduction of oecd countries during the period 1999 2014 on the basis of the stochastic impacts by regression on population affluence and technology stirpat model this study also develops a new model called stochastic impacts by regression on population affluence regulation and technology stirpart to extend the analysis on the evaluation of factors influencing carbon emissions in addition the effects of environmental regulations and environmentally friendly technologies are empirically tested by using panel fixed effects random effects and generalized method of moments gmm models with the driscoll kraay corrected robust standard errors that tackle cross sectional dependence and time and panel fixed effects results indicate that a 1 increase in environmentally friendly patent reduces carbon emissions by 0 017 and a 1 increase in environmental tax revenue per capita reduces carbon emissions by 0 03 for oecd countries the current contribution aims to optimize market based instruments such as patents and carbon pricing for the implementation of efficient and cost effective climate change policies

notes on multiperiod valuation and the pricing of options a mean variance risk return tradeoff relationship is derived for the diffusion process limiting case of a state preference model with aggregate consumption serving as a pivotal variable the model is compared to other recent models along the dimensions of generality and tractable implementation the incorporation of stochastic interest rates in general equilibrium and arbitrage based valuation models is examined and an extension to earlier methods is discussed in connection with the implementation of robust general valuation procedures this paper develops an integrative discussion of some recent developments in the theory of multiperiod valuation our aim is not to survey the rapidly burgeoning literature in this area in an exhaustive way instead it is our goal to highlight some results of our own and others that have a bearing on judgments regarding promising and robust directions of enquiry in this area of research in doing so areas that have been particularly empnasized are 1 the incorporation of aggregate consumption as a pivotal variable in general and specialized multiperiod valuation formulae and 2 the incorporation of endogenized dynamics for the riskless rate of interest in black scholes 4 type option pricing methodology throughout our emphasis is on the internal consistency generality and simplicity of different models insofar as full information valuation in a general equilibrium context is concerned rather than on issues pertaining to empirical testing and econometric methodology the starting point for much of our analysis is rubinstein s 28 important paper on multiperiod valuation and hakansson s 15 related contributions in this paper rubinstein considers a multiperiod state preference model of general exchange equilibrium with no explicit modeling of production investment in order to develop pricing relationships linking the prices of elementary arrow

how big is the tax advantage to debt this paper uses an option valuation model of the firm to answer the question what magnitude tax advantage to debt is consistent with the range of observed corporate debt ratios we incorporate into the model differential personal tax rates on capital gains and ordinary income we conclude that variations in the magnitude of bankruptcy costs across firms can not by itself account for the simultaneous existence of levered and unlevered firms when it is possible for the value of the underlying assets to jump discretely to zero differences across firms in the probability of this jump can account for the simultaneous existence of levered and unlevered firms moreover if the tax advantage to debt is small the annual rate of return advantage offered by optimal leverage may be so small as to make the firm indifferent about debt policy over a wide range of debt to firm value ratios the observed range of debt to firm value ratios in the u s economy is roughly speaking from zero to 60 percent traditional explanatory models of capital structure have focused on the tradeoff between the tax shield and bankruptcy costs arising from the use of debt finance 2 9 10 18 19 other

strategic debt service and investment decisions firms alter investing decisions when there is debt in the capital structure security design features can exacerbate the situation this article studies how strategic debt service may affect investment distortions resulting from debt financing in a dynamic framework when the production decision involves an expansion option the shareholders option to strategically default on the outstanding debt eliminates bankruptcy costs but in contrast to previous literature where production decisions are fixed leads to suboptimal investing decisions this is due to higher wealth transfers from shareholders to debt holders upon exercise of the growth option strategic debt service therefore may reduce the value of the firm the setting of an endogenous production set offers a potential explanation for empirical observations of wide credit spreads and low leverage

stochastic control of corporate investment when output affects future prices the advance of the theory of contingent claim pricing has made it possible to model and analyze very complex financial claims when the value ofthe firm can be represented as a contingent claim then the firm s optimal financial policy can be determined with only a slight modification in standard solution techniques for contingent claims in this paper stochastic control theory is used to determine a dynamic investment policy for the valuemaximizing firm the value of future stochastic economic rents i e the net present value ofthe firm and the firm s optimal investment policy must reflect a rational reaction on behalf of its competitors a computationally efficient methodology is presented for solving the simultaneous investment valuation problem for an firm game the primary objectives of this paper are first to present a computationally efficient methodology for solving stochastic control problems that arise in the formulation of financial policy and second to apply stochastic control to the firm s problem of finding a dynamic investment policy that maximizes firm value the value of the firm is modeled as a continuous time contingent claim which is traded in a financial market that is perfect complete and free of riskless arbitrage opportunities in such a world the financial policy of the firm should be designed to maximize firm value the contingent claim pricing model provides sufficient versatility to incorporate diverse policy issues such as firm size asset mix capital structure dividend policy and basic existence issues such as reorganization and liquidation this paper examines the optimal investment policy for a firm when the firm s output decision via total industry output affects the evolution of output prices the investment problem considered here is similar to the optimal control problem of pindyck 28 pindyck analyzes the optimal labor capital mix in the presence of investment adjustment costs and a stochastic demand schedule in

is the environmental kuznets curve hypothesis a sound basis for environmental policy in africa achieving economic development and environmental sustainability simultaneously is one of the most important development challenges for africa today the relationship between economic growth and environmental sustainability is founded on the environmental kuznets curve ekc this paper examines the validity of the hypothesis and the driving factors of carbon dioxide co2 emission in five african countries using the stirpat empirical model panel cointegration and fully modified ordinary least squares unlike previous studies economic development is disaggregated into agriculture and industrial economic development the results show that there is no evidence of the validity of the hypothesis in africa regardless of whether economic development is driven by agriculture or industrialisation energy structure and energy intensity are the two major driving forces of co2 emissions in africa population growth and urbanisation have negative relationship with co2 emissions from our results the ekc is not a sound basis for environmental policy in africa rather environmental policy in africa specifically for co2 emissions mitigation should focus on encouraging energy efficiency enhancing the use of clean energy incorporating the impact of population growth and harnessing the positive impacts of urbanisation

do voters affect or elect policies evidence from the u s house there are two fundamentally different views of the role of elections in policy formation in one view voters can affect candidates policy choices competition for votes induces politicians to move toward the center in this view elections have the effect of bringing about some degree of policy compromise in the alternative view voters merely elect policies politicians cannot make credible promises to moderate their policies and elections are merely a means to decide which one of two opposing policy views will be implemented we assess which of these contrasting perspectives is more empirically relevant for the u s house focusing on elections decided by a narrow margin allows us to generate quasi experimental estimates of the impact of a randomized change in electoral strength on subsequent representatives roll call voting records we find that voters merely elect policies the degree of electoral strength has no effect on a legislator s voting behavior for example a large exogenous increase in electoral strength for the democratic party in a district does not result in shifting both parties nominees to the left politicians inability to credibly commit to a compromise appears to dominate any competition induced convergence in policy

product market imperfections and loan commitments i show in a model of competitive banks that the characteristics of loan contracts are affected by product market imperfections in the borrower s industry a bank loan commitment increases the value of a borrower firm operating in an imperfectly competitive industry and thus dominates a simple loan even in the absence of risk sharing considerations and informational asymmetries between the borrower and the bank while it is individually rational for a firm to obtain a loan commitment all the firms in that industry taken together are made worse off by the existence of loan commitments a loan commitment is a contract guaranteeing future availability of credit to a borrower at a prespecified fixed or stochastic interest rate although bank loan commitments are an important financial instrument and there exists an extensive literature analyzing them the rationale for their existence is still a matter of research this paper provides an explanation for the existence of bank loan commitments to borrowers from industries in which there is imperfect competition in the product market it is shown that in such industries the option to acquire financing at predetermined rates enhances the borrower s strategic power and thus creates value for the individual borrower consider an industry with imperfect competition where firms face the problem of noncooperatively exploiting a product market opportunity the optimal product market strategy of a firm depends on the output of its rivals a firm with access to resources at a lower marginal cost than its competitors has a strategic advantage that it can exploit to gain a larger market share and profits it is shown here that a firm that does not have such a strategic advantage can create it by purchasing for a fixed initial fee an option to acquire a factor of production such as financing at favorable terms specifically by initially negotiating a bank loan commitment the firm can finance an expansion of output to meet a strategic contingency at more favorable terms than would be possible if the expansion had to be financed in the spot market the ability to exercise the commitment enables the firm to threaten its rivals strategically and moves the industry to an equilibrium more favorable to that firm thus creating value for the borrower it is shown below that it is optimal for all firms to acquire bank loan commitments altering the industry equilibrium in the process

can the trade off theory explain debt structure we examine the optimal mixture and priority structure of bank and market debt using a tradeoff model where banks have the unique ability to renegotiate outside formal bankruptcy flexible bank debt offers a superior tradeoff between tax shields and bankruptcy costs ease of renegotiation limits bank debt capacity however optimal debt structure hinges upon which party has bargaining power in private workouts weak firms have high bank debt capacity and utilize bank debt exclusively strong firms lever up to their lower bank debt capacity augment with market debt and place the bank senior therefore the tradeoff theory offers an explanation for i why young small firms use bank debt exclusively ii why large mature firms employ mixed debt financing and iii why bank debt is senior the tradeoff theory also generates predictions consistent with international evidence in countries where the bankruptcy regime entails soft tough enforcement of contractual priority bank debt capacity is low high implying greater less reliance on market debt

endogenous federal grants and crowd out of state government spending theory and evidence from the federal highway aid program contrary to simple theoretical predictions existing evidence suggests that federal grants do not crowd out state government spending a legislative bargaining model with endogenous grants documents a positive correlation between grant receipts and preferences for public goods this correlation has likely biased existing work against measuring crowd out to correct for such endogeneity the model motivates instruments based on the political power of state congressional delegations exploiting this exogenous variation in grants the instrumental variables estimator reports crowd out that is statistically and economically significant this endogeneity may explain the flypaper effect a nonequivalence between grant receipts and private income jel d70 h40 h77

institutional determinants of capital structure adjustment speeds abstract many authors relate a firm s performance to legal and political features and the regulatory environment in which it operates this article compares firms capital structure adjustments across countries and investigates whether institutional differences help explain the variance in estimated adjustment speeds we find that legal and financial traditions significantly correlate with firm adjustment speeds more narrowly institutional features also relate to adjustment speeds consistent with the hypothesis that better institutions lower the transaction costs associated with adjusting a firm s leverage such associations between institutional arrangements and leverage adjustment speeds are consistent with the dynamic trade off theory of capital structure choice

the effects of partisan alignment on the allocation of intergovernmental transfers differences in differences estimates for spain abstract in this paper we test the hypothesis that municipalities aligned with upper tier grantor governments i e controlled by the same party will receive more grants than those that are unaligned we use a rich spanish database which provides information on grants received by nearly 900 municipalities during the period 1993 2003 from three different upper tier governments i e central regional and upper local since three elections were held at each tier during this period we have enough within municipality variation in partisan alignment to provide differences in differences estimates of the effects of alignment on the amount of grants coming from each source moreover the fact that a municipality may simultaneously receive grants from aligned and unaligned grantors allows us to use a triple differences estimator which consists of estimating the effects of changing alignment status on the change in grants coming from the aligned grantors relative to the change in grants coming from the unaligned ones the results suggest that partisan alignment has a sizeable positive effect on the amount of grants received by municipalities for example with majority governments at the two layers aligned municipalities receive over 40 more grants than unaligned ones

spillover effects in local public spending abstractthis paper investigated the fiscal interactions between italian municipalities over the period 2001 11 and found a positive horizontal interdependence in spending decisions the results are robust to different specifications of the spatial neighbours and are confirmed by a natural experiment an earthquake in the abruzzo region of italy in 2009 that creates an exogenous variation in the neighbours spending furthermore there is no evidence of yardstick competition when one considers political effects while a negative relationship is found between spatial interaction and the size of the municipality thus it can be concluded that spillover effects drive the strategic interactions in spending decisions

do political parties matter evidence from u s cities are cities as politically polarized as states and countries no is the answer from our regression discontinuity design analysis which shows that whether the mayor is a democrat or a republican does not affect the size of city government the allocation of local public spending or crime rates however there is a substantial incumbent effect for mayors we investigate three mechanisms that could account for the striking lack of partisan impact at the local level and find the most support for tiebout competition among localities within metropolitan areas

using a discontinuous grant rule to identify the effect of grants on local taxes and spending when investigating the effects of federal grants on the behavior of lower level governments it is hard to defend the handling of grants as an exogenous factor federal governments often set grants based on characteristics and performance of decentralized governments in this paper we make use of a discontinuity in the swedish grant system in order to estimate the causal effects of general intergovernmental grants on local spending and local tax rates the formula for the distribution of funds is used as an exclusion restriction in an iv estimation we find evidence of crowding in where federal grants are shifted to more local spending but not to reduced local tax rates

continuous time methods in finance a review and an assessment i survey and assess the development of continuous time methods in finance during the last 30 years the subperiod 1969 to 1980 saw a dizzying pace of development with seminal ideas in derivatives securities pricing term structure theory asset pricing and optimal consumption and portfolio choices during the period 1981 to 1999 the theory has been extended and modified to better explain empirical regularities in various subfields of finance this latter subperiod has seen significant progress in econometric theory computational and estimation methods to test and implement continuous time models capital market frictions and bargaining issues are being increasingly incorporated in continuous time theory the roots of modern continuous time methods in finance can be traced back to the seminal contributions of merton 1969 1971 1973b in the late 1960s and early 1970s merton 1969 pioneered the use of continuous time modeling in financial economics by formulating the intertemporal consumption and portfolio choice problem of an investor in a stochastic dynamic programming setting merton 1973b also showed how such a framework can be used to develop equilibrium asset pricing implications thereby significantly extending the asset pricing theory to richer dynamic settings and expanding the scope of applications of continuous time methods to study problems in financial economics 1 within a span of about 30 years from the publication of merton s inf luential papers continuous time methods have become an integral part of financial economics indeed in certain core areas in finance such as e g asset pricing derivatives valuation term structure theory and portfolio selection continuoustime methods have proved to be the most attractive way to conduct research and gain economic intuition the continuous time approach in these areas has produced models with a rich variety of testable implications the econometric theory for testing continuous time models has made rapid strides in the last decade and has thus kept pace with the impressive progress on the theoretical front one hopes that the actual empirical investigations and estimation using the new procedures will follow suit soon

do parties matter for economic outcomes a regression discontinuity approach a long standing issue in political economics is to what extent party control makes a difference in determining fiscal and economics policies this question is very difficult to answer empirically because parties are not randomly selected to govern political entities this article uses a regression discontinuity design namely party control changes discontinuously at 50 of the vote share which can produce near experimental causal estimates of the effect of party control on economic outcomes the method is applied to a large panel data set from swedish local governments with a number of attractive features the results show that there is an economically significant party effect left wing governments spend and tax 2 3 more than right wing governments left wing governments also have 7 lower unemployment rates which is partly due to that left wing governments employ 4 more workers than right wing governments jel c21 d72 d78 h71 h72

strategic growth options we provide a strategic rationale for growth options under uncertainty and imperfect competition in a market with strategic competition investment confers a greater capability to take advantage of future growth opportunities this strategic advantage leads to the capture of a greater share of the market either by dissuading entry or by inducing competitors to make room for the stronger competitor as a result of this strategic effect payoffs are in a rough sense more convex than in the case of no investment in a growth option when the strategic advantage is strong increased uncertainty encourages investment in growth options higher uncertainty means more opportunity rather than simply larger risk if the strategic effect is weak the reverse is true on the other hand an increase in systematic risk discourages the acquisition of growth options our results contradict the view that volatility is a strong disincentive for investment

redistributive politics and economic efficiency the political process often compensates the losers from technical change or international competition in an economically inefficient way namely by subsidizing or protecting declining industries instead of encouraging the movement of resources to other more productive uses we find that a dynamic inconsistency in the game of redistributive politics contributes to this outcome to achieve economically efficient outcomes it is necessary that those making economically inefficient choices not be given offsetting transfers but the political process distributes income on the basis of political characteristics which are in general different from the economic characteristics that are rewarded by the market we identify circumstances in which the inefficient choosers have desirable political characteristics and are therefore immune from threats of having to face the economic consequences of their choices

socioeconomic driving forces and scenario simulation of co2 emissions for a fast developing region in china abstract guangdong is one of china s fastest developing provinces and thus faces the challenge of reducing co2 emissions whilst fostering economic growth in order to advance the goal of developing a low carbon economy in china this study explored influencing factors change trends and reduction potential in relation to co2 emissions in guangdong province using a provincial dataset covering the period 1995 to 2014 we used extended stirpat stochastic impacts by regression on population affluence and technology model and the technique of ridge regression in order to identify key influencing factors behind guangdong s co2 emissions we also forecasted emission trends and estimated reduction potential in the period 2015 2030 our empirical results indicate that economic development population growth urbanization fixed asset investment and industrialization level all positively affected co2 emissions during the period studied while the impacts of energy consumption structure and technology progress were found to be negative scenario simulations reveal that the aggregate co2 emissions of guangdong province will increase continuously up to 2030 under all of the twenty scenarios developed and tested in this study despite this we argue that the potential for emission reduction remains large an optimal scenario was identified after cross sectional comparison our analysis casts new light on the importance of exploring socioeconomic determinants and reduction potential in relation to emissions in order to plan for rapidly developing regions like guangdong the empirical findings have significant implications for the chinese government in implementing policy measures in order to promote low carbon development

debt agency costs and industry equilibrium we show that risk characteristics of projects cash flows are endogenously determined by the investment decisions of all firms in an industry as a result in reasonable settings financial structures which create incentives to expropriate debtholders by increasing risk are shown not to reduce value in an industry equilibrium without taxes capital structure is irrelevant for individual firms despite its effect on the equityholders incentives but the maximum total amount of debt in the industry is determinate allowing for a corporate tax advantage of debt capital structure becomes relevant but firms are indifferent between distinct alternative debt levels the effect of firms financial structures on subsequent investment and output decisions has recently received considerable attention in the finance literature the central insight that equityholders control the firm s investment and production decisions and in general do not maximize the value of a levered firm has been applied to the analysis of risk shifting underinvestment and firms abilities to enter into optimal contracts with their customers existing models of firms financial structures and their effect on investment decisions are generally based on a single firm framework and do not take into account the relationship between project cash flows and the investment decisions of all firms in the industry 2 in this paper we allow the distribution of investment projects within an industry to adjust and show that this generates new insights and reverses several key results of single firm agency cost models the new predictions conform with well documented

election goals and income redistribution recent evidence from albania this paper examines the impact of political competition on block grants from federal to sub federal levels of government we model the extent and direction of income redistribution as determined proximately by the political agendas of central decision makers and at a deeper level by the institutions within which they nd themselves operating we contrast two political objective functions that yield di erent empirical predictions of the ways in which politics should a ect scal policy lessons learned here may prove important in understanding limits on the types of redistribution possible via block grants given the institutional framework in both developing and developed countries 2001 elsevier science b v all rights reserved jel classixcation h1 h7 o1

does urbanization lead to less energy use and lower co2 emissions a cross country analysis despite the relationship between urbanization energy use and co2 emissions has been extensively studied in recent years little attention has been paid to differences in development stages or income levels most previous studies have implicitly assumed that the impact of urbanization is homogenous for all countries this assumption can be questionable as there are many characteristic differences among countries of different levels of affluence this paper investigates empirically the effects of urbanization on energy use and co2 emissions with consideration of the different development stages using the stochastic impacts by regression on population affluence and technology stirpat model and a balanced panel dataset of 99 countries over the period 1975 2005 the findings suggest that the impact of urbanization on energy use and emissions varies across the stages of development surprisingly urbanization decreases energy use in the low income group while it increases energy use in the middle and high income groups the impact of urbanization on emissions is positive for all the income groups but it is more pronounced in the middle income group than in the other income groups these novel findings not only help advance the existing literature but also can be of special interest to policy makers and urban planners

the flypaper effect and other anomalies abstract i develop a model in which income both in its own right and as a proxy for other socioeconomic characteristics is an input in the production function for local public services the most obvious example is education though there are other applications as well the comparative statics results from this model yield the following results 1 the observed flypaper effect the tendency for local government to spend a higher fraction of unrestricted grants than income of residents may be due at least in part to the fact that own income but not grants is a substitute for purchased inputs in the technology hence the propensity to spend on purchased inputs out of own income is lower than out of grants 2 the income elasticity of demand for public sector output may be higher than the observed income elasticity of demand for purchased inputs 3 equalization of educational opportunity via wealth neutrality as suggested by feldstein requires major changes in education finance once we recognice the distinction between purchased inputs and output

electoral goals and center state transfers a theoretical model and empirical evidence from india we construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations these considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not a testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers we test this prediction using indian data for 14 states from 1974 75 to 1996 97 we find that a state which is both aligned and swing in the last state election is estimated to receive 16 higher transfers than a state which is unaligned and non swing

the impact of urbanization on co2 emissions evidence from developing countries abstract this paper analyzes the impact of urbanization on co2 emissions in developing countries from 1975 to 2003 it contributes to the existing literature by examining the effect of urbanization taking into account dynamics and the presence of heterogeneity in the sample of countries the results show an inverted u shaped relationship between urbanization and co2 emissions indeed the elasticity emission urbanization is positive for low urbanization levels which is in accordance with the higher environmental impact observed in less developed regions among our contributions is the estimation of a semi parametric mixture model that allows for unknown distributional shapes and endogenously classifies countries into homogeneous groups three groups of countries are identified for which urbanization s impact differs considerably for two of the groups a threshold level is identified beyond which the emission urbanization elasticity is negative and further increases in the urbanization rate do not contribute to higher emissions however for the third group only population and affluence but not urbanization contribute to explain emissions the differential impact of urbanization on co2 emissions should therefore be taken into account in future discussions of climate change policies

determinants of the foreign equity share of international joint ventures abstract due to host government restrictions a multinational corporation is required to form a joint venture with a local partner rather than set up a wholly owned subsidiary both parties to the joint venture simultaneously decide their respective equity shares and the time to exercise an irreversible investment project via nash bargaining since the multinational corporation has a cost advantage over its local partner it will therefore hold a share larger than its relative bargaining power however if its cost advantage is less significant uncertainty is greater or the cost of exercising the investment option is increasing over time at a lower rate the multinational firm will hold a smaller share and will also be more hesitant as regards exercising the investment option

debt valuation renegotiation and optimal dividend policy the valuation of debt and equity reorganization boundaries and firm s optimal dividend policies are studied in a framework where we model strategic interactions between debt holders and equity holders in a game theoretic setting which can accommodate varying bargaining powers to the two claimants two formulations of reorganization are presented debt equity swaps and strategic debt service resulting from negotiated debt service reductions we study the effects of bond covenants on payout policies and distinguish liquidity induced defaults from strategic defaults we derive optimal equity issuance and payout policies the debt capacity of the firm and the optimal capital structure are characterized

the relation between risk and optimal debt maturity and the value of leverage this paper considers the capital structure and debt maturity choice for a value maximizing corporation in the model interest expense is tax deductible bankruptcy is costly and debt is fairly priced at issue in contrast to the results of kane marcus and mcdonald 1985 optimal debt maturity does not always approach zero in the absence of transaction costs and is increasing in the volatility of the assets of the firm the model predicts a positive association between the value of leverage and total risk in some circumstances

debt policy and the rate of return premium to leverage equilibrium in the market for real assets requires that the price of those assets be bid up to reflect the tax shields they can offer to levered firms thus there must be an equality between the market values of real assets and the values of optimally levered firms the standard measure of the advantage to leverage compares the values of levered and unlevered assets and can be misleading and difficult to interpret we show that a meaningful measure of the advantage to debt is the extra rate of return net of a market premium for bankruptcy risk earned by a levered firm relative to an otherwise identical unlevered firm we construct an option valuation model to calculate such a measure and present extensive simulation results we use this model to compute optimal debt maturities show how this approach can be used for capital budgeting and discuss its implications for the comparison of bankruptcy costs versus tax shields

the effects of energy prices urbanization and economic growth on energy consumption per capita in 186 countries abstract energy is the material basis for the development of national economy however energy shortages become increasingly serious as a result of the growing population and the modernization of the global economy therefore investigating drivers of energy consumption is crucial to coordinate the relationship between energy and national economic growth this study aimed to uncover the effects of energy prices ep urbanization urn and gdp on per capita energy consumption ec with considering the income gaps between countries the paper adopted the granger causality test approach and the impulse response function analysis by using long term time series data on ec ep urn and gdp during 1980 2015 in 186 countries divided into three groups high income upper and lower middle income groups the results indicated a long term co integration relationship among these variables granger causality test showed a bidirectional causality between urn and ec in high and lower middle income countries but no causality in the upper middle income group in all groups there is a bidirectional causal link between gdp and ec the results of irf showed that as urbanization level improves its role in promoting ec become less significant moreover ep affected ec negatively both in high and lower middle income countries but it has a positive impact on ec in upper middle income countries the study supports the finding that urbanization is an important factor affecting energy consumption per capita although its contributions vary across income groups which offers a new pathway to control the excessive growth of energy consumption