individual heterogeneity and cultural attitudes in credence goods provision abstract i study the heterogeneity of credence goods provision in taxi drivers taking detours in new york city first i document that there is significant detouring on average by drivers second there is significant heterogeneity in detouring across individuals yet each individual s propensity to take detours is stable drivers who detour almost always detour while those who do not detour almost never do drivers who take longer detours on each trip also take such trips more often third cultural attitudes plausibly explain some of this heterogeneity in behavior across individuals

price and volatility spillovers across the international steam coal market we examine the degree of integration of the global steam coal market using a variety of measures we show that the australian market remains the dominant force in setting world coal prices followed by mozambique and south africa we find little evidence of asymmetric price and volatility transmission in fact most markets react to both positive and negative shocks in a symmetric manner the coal market displays a significant degree of integration although this effect varies over time while china provides a major source of volatility to the global coal market it is relatively insignificant in terms of price transmission

stock price reactions as surrogates for the net cash flow effects of corporate policy decisions abstract this paper adopts a rational market structure to examine the link between the cash flow effects of management policy decisions and the resulting stock price reactions the focus is on testing cross sectional associations between cash flow effects and the underlying characteristics of affected firms we find that it is not possible to infer the sign of association between the stock price reaction and any characteristics of the firm that are observable before management announces its decision our methodological suggestions involve exploiting either a priori assumptions or sample information about the probability distribution of unobservable decision variables underlying the management decision process

the sectoral effects of brexit on the british economy early evidence from the reaction of the stock market abstractwe investigate the impact of the outcome of the eu referendum brexit on various sectors of the british economy over the period june july 2016 using the event study methodology we assess the effects of brexit relative to what had been anticipated as measured by abnormal returns ars the results show that the banking and travel and leisure sectors were affected negatively with a cumulative ar of 15 37 for the banking sector we observe that brexit has a mixed effect on ars with apparent sector by sector differences

tariff preferences wto negotiations and the ldcs the case of the everything but arms initiative by assessing the impact of the recently adopted everything but arms eba initiative of the eu on the least developed countries ldcs and by showing how further multilateral trade liberalisations erode the eba preferences and impact the ldcs this paper attempts to uncover the ldcs difficult positions in the wto trade negotiations due to its limited product coverage and previous preferences granted by the eu welfare impacts of the eba on the ldcs are shown to be small and the bulk of these gains are associated with the sensitive products that are subject to gradual liberalisations moreover these small gains are likely to disappear if the eu conducts trade policy reforms in fulfilling its wto obligations resulting in an actually worse off situation for the ldcs extending the analysis to a multilateral trade liberalisation scenario reinforces the above results that the ldcs may well lose due to preference erosion and higher world market prices it concludes that other development assistance measures from developed countries should be made available to the ldcs to ease their dependency on trade preferences and to foster their supply capacities the ldcs themselves should attempt to integrate the duty and quota free market access status contained in the eba into a binding wto agreement to secure a stable trading environment but more importantly in order to solve the difficulties at the root these countries should actively engage in reforming their own trade policies

energy consumption at business cycle horizons the case of the united states in this paper we propose a simple extension to a keynesian type macro model by augmenting it with energy consumption we show the relationship between energy consumption and output in a macroeconomic setting and ask the question do permanent shocks dominate changes in energy consumption and output at business cycle horizons for the united states to achieve the goal of this paper we undertake a variance decomposition analysis of shocks based on a common trend and common cycle framework within a vector error correction model our main finding is that permanent shocks explain the bulk of the variations in energy consumption and output at business cycle horizons for the united states

the wealth effect and diamond risk structure of financial regulation the objective of this article was to evaluate the effect of announcements of financial regulation on risk and return in the vietnamese equity market the techniques used for the purpose of analysing risk and return include event study and non parametric tests as well as asset pricing models supplemented with interaction variables and a variety of arch like specifications such as garch tarch egarch and parch we find evidence for the wealth effect the presence of delayed response and a risk shifting behaviour in the form of diamond risk structure our results show that abnormal returns are present around the announcements of operating rules and other stock market regulations abnormal returns can also be obtained after considering legal documents such as circulars and decisions

domestic support and border measures for processed horticultural products in horticultural markets trade barriers often apply to the processed products whereas domestic support applies to farm produced raw commodities here we assess the effects of such trade barriers and domestic support by simulating the effects of policy reform on global processing tomato markets which are faced with modest processed product tariffs and high domestic support in the european union eu both protection and eu subsidy drive down world welfare but we find that reducing import tariffs for tomato products would yield greater effects on markets and larger welfare impacts outside europe than would reductions in eu domestic support copyright 2008 oxford university press

consistent estimation of cross sectional models in event studies event studies often include cross sectional regressions of announcement effects on exogenous variables if the event is voluntary and investors are rational then standard ols and gls estimators are inconsistent consistent ml estimators are constructed for a cross sectional model of horizontal mergers relating announcement effects to exgeneous characteristics of firms and industries the ols and ml estimates differ dramatically for bidders but not for targets the evidence suggests that managers of bidders but not targets have valuable private information about the potential synergies from proposed mergers article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

modeling returns and volatility transmission between oil price and us nigeria exchange rate article i nfo this paper models returns and volatility transmission between oil price op and us nigeria exchange rate exr consequently it provides five main innovations i it analyzes op and exr using the recently devel oped test by narayan and popp 2010 np which allows for two structural breaks in the data series ii it employs the narayan and liu 2011 nl garch unit root test to evaluate robustness of np test iii it con siders the newly developed var garch model to capture the spillover effects in the returns and volatility of op and exr iv it modifies the var garch model to account for structural breaks obtained from the np procedure and v using the results obtained from the var garch model it examines the optimal weights of holding oil and foreign exchange fx assets and also computes the hedging ratios in the presence of oil risk based on the np and nl tests it finds robust structural breaks that coincide with the period of global fi nancial crisis as well as period of fx crisis in nigeria also it establishes a bidirectional returns and spillover transmission between oil and fx markets finally its findings reveal evidence of hedging effectiveness involving oil and fx markets in nigeria and thus the inclusion of oil into a diversified portfolio of fx will improve its risk adjusted return performance

the effects of the paris climate agreement on stock markets evidence from the german stock market we investigate the effects of the 2016 paris climate agreement on the german stock market by considering the impact of 20 announcements pertaining to the agreement on 17 industries the event study

how does the stock market react to the announcement of green policies abstract we investigate the impact of 19 announcements of environmental regulation on the equities listed on the australian stock exchange over the period 2005 2011 using a well established event study methodology we assess whether these announcements are value constructive or destructive for equity investors additionally we estimate the change in systematic risk following the announcements our results show that the australian market was particularly sensitive to the carbon pollution reduction scheme cprs announcement a cumulative abnormal return of 31 was recorded in the alternative energy sector after australia submitted its target range to the copenhagen accord we observe that a move towards a greener nation has a mixed effect on abnormal returns with apparent sector by sector differences green policies appear to affect the long term systematic risk of industries leading to the diamond risk phenomenon

the economics of credence goods an experiment on the role of liability verifiability reputation and competition credence goods markets are characterized by asymmetric information between sellers and consumers that may give rise to inefficiencies such as under and overtreatment or market breakdown we study in a large experiment with 936 participants the determinants for efficiency in credence goods markets while theory predicts that liability or verifiability yield efficiency we find that liability has a crucial but verifiability at best a minor allowing sellers to build up reputation has little influence as predicted seller competition drives down prices and yields maximal trade but does not lead to higher efficiency as long as liability is violated jel d12 d82

assessing the impact of unilateral trade policies eba and agoa on african beneficiaries exports using matching econometrics the existing literature studying the impact of non reciprocal preferential trade agreements nrptas assumes implicitly nrptas are non randomly assigned without showing the evidence of that using a matching methodology this paper investigates whether the african growth and opportunity act agoa and the everything but arms eba unilateral trade concessions have had an impact and in what magnitude on the exports of african beneficiary countries in the light of the evidence of the non random nature endogeneity of nrptas methodologically previous studies using the matching procedure focused on bi or multilateral trade agreements our work focuses on nrptas that depend only on donors conditions accordingly we show that for nrptas gravity covariates cannot be used for the matching procedure we propose to use political variables as determinants for obtaining non reciprocal trade preferences in order to address the endogenous nature of nrpta assignment our main results confirm that a country becomes eligible for a nrpta only when it meets certain conditions defined by their donors such as political stability and economic regulation for agoa and freedom of expression and human development for eba results also show that both agoa and eba policies have had a positive impact on african beneficiary countries exports to nrpta s providers even if the magnitude impact of eba is significantly lower than that of agoa

on multivariate tests of the capm abstract this paper evaluates the power of multivariate tests of the capital asset pricing model the results indicate that when employing an unspecified alternative hypothesis the ability of the tests to distinguish between the capm and other pricing models is poor an upper bound is derived for the distance the alternative distribution of the test statistic can be from the null distribution when the deviations from the capm are due to missing factors this upper bound explains the low power of the tests

are oil shocks permanent or temporary panel data evidence from crude oil and ngl production in 60 countries this paper examines the unit root properties of crude oil production for 60 countries employing a range of panel data unit root tests for the period 1971 to 2003 the study first employs a number of panel data tests that do not accommodate structural breaks and then proceeds to apply the lagrange multiplier lm panel unit root test with one structural break the results of the panel data tests without a structural break are inconclusive with at best mixed support for joint stationarity the findings from the lm panel unit root test with a structural break however are conclusive suggesting that for a world panel and smaller regional based panels crude oil and ngl production are jointly stationary

second opinions and price competition inefficiency in the market for expert advice we consider a market in which an expert must exert costly but unobservable effort to identify the service that meets the consumer s need in our model experts offer competing contracts and the consumer may gather multiple opinions we explore the incentives that a competitive sampling of prices and opinions provides for experts to exert effort and find that there is a tension between price competition and the equilibrium effort in particular the equilibrium fails to realize the second best welfare optimum an intervention that limits price competition via price control increases welfare

volatility behavior of oil industrial commodity and stock markets in a regime switching environment abstract this study supplements previous regime switching studies on wti crude oil and finds two possible volatility regimes for the strategic commodity prices of brent oil wti oil copper gold and silver and the s p 500 index but with varying high to low volatility ratios the dynamic conditional correlations dccs indicate increasing correlations among all the commodities since the 2003 iraq war but decreasing correlations with the s p 500 index the commodities also show different volatility persistence responses to financial and geopolitical crises while the s p 500 index responds to both financial and geopolitical crises implications are discussed

on doctors mechanics and computer specialists the economics of credence goods most of us need the services of an expert when our apartment s heating or our washing machine breaks down or when our car starts to make strange noises and for most of us commissioning an expert to solve the problem causes concern this concern does not disappear even after repair and payment of the bill on the contrary one worries about paying for a service that was not provided or receiving some unnecessary treatment this article studies the economics underlying these worries under which conditions do experts have an incentive to exploit the informational problems associated with markets for diagnosis and treatment what types of fraud exist what are the methods and institutions for dealing with these informational problems under which conditions does the market provide incentives to deter fraudulent behavior and what happens if all or some of those conditions are violated

the economics of breakdowns checkups and cures a market in which the owner of a durable good x contracts with an expert for diagnostic and treatment services is studied good x may be in one of three states health disease or failure only experts can determine whether x is healthy or diseased and perform treatment the owner cannot tell whether recommended treatment is really needed this creates an information based demand for health insurance by risk neutral consumers imperfections in the market for spot insurance may give rise to free diagnostic checks strategic procrastination and long term health maintenance agreements

a resource based perspective on corporate environmental performance and profitability drawing on the resource based view of the firm we posited that environmental performance and economic performance are positively linked and that industry growth moderates the relationship with the returns to environmental performance higher in high growth industries we tested these hypotheses with an analysis of 243 finns over two years using independently developed environmental ratings results indicate that it pays to be green and that this relationship strengthens with industry growth we conclude by highlighting the study s academic and managerial implications making special reference to the social issues in management literature

investigating security price performance in the presence of event date uncertainty abstract this paper introduces an event study method that incorporates the possibility of a random event date consistent with empirical evidence we assume an event may affect not only the conditional mean of a security s return but also its conditional variance we compare the statistical power and efficiency of our maximum likelihood method with the standard application of traditional event study methods to multiday security returns assuming a two day event period our empirical results provide evidence that the multiday approach is robust we use our maximum likelihood method to investigate the valuation effects of stock splits and stock dividends

what drives taxi drivers a field experiment on fraud in a market for credence goods credence goods are characterized by informational a symmetries between sellers and consumers that invite fraudulent behavior by seller s this paper presents the results of a natural field experiment on taxi rides in athens g reece set up to measure different types of fraud and to examine the influence of passengers p resumed information and income on the extent of fraud results reveal that taxi drivers c heat passengers in systematic ways passengers with inferior information about optimal routes are taken on longer detours while asymmetric information on the local tariff system l eads to manipulated bills higher income seems to lead to more fraud

applied econometrics and implications for energy economics research abstract developments in applied econometrics particularly with regard to unit root tests and cointegration tests have motivated a rich empirical literature on energy economics over the last decade this study reviews recent developments in time series econometrics applications in the energy economics literature we first consider the literature on the integration properties of energy variables we begin with a discussion of the implications of whether energy variables contain a unit root and proceed to examine how results differ according to the specific unit root or stationarity test employed we then proceed to examine recent developments in the literature on cointegration granger causality and long run estimates between disaggregated energy consumption and economic growth we review both single country and panel studies and pay particular attention to studies which have expanded the literature through adding variables such as financial development and trade in addition to energy consumption to the augmented production function as well as studies which have extended the literature through examining disaggregated energy consumption by type in each case we highlight best practice in the literature point to limitations in the literature including econometric modeling challenges and suggest recommendations for future research a key message of our survey is that the profession needs to guard against overload of research in these areas as most applied studies are no longer adding anything more to what is already known

green expectations current effects of anticipated carbon pricing i report evidence that an anticipated strengthening of environmental policy increased emissions i find that the breakdown of the u s senate s 2010 climate effort generated positive excess returns

agricultural liberalisation and the least developed countries six fallacies today agriculture remains the most distorted sector of the world economy therefore agricultural liberalization in the doha negotiations is rightly the top priority but the public policy discourse on the subject remains fogged by a number of fallacies these fallacies probably originated with the leadership of the world bank but have now been embraced by the imf oecd oxfam and the leading academic critics of globalization the paper identifies six fallacies and offers evidence and analysis to debunk them 1 agricultural border protection and subsidies are largely a developedcountry phenomenon 2 developed country agricultural subsidies and protection hurt the poorest developing countries most 3 developed country subsidies and protection hurt the poor rural households in the poorest countries 4 developed country agricultural protection and subsidies constitute the principal barrier to the development of the poorest developing countries 5 agricultural protection reflects double standard and hypocrisy on the part of the developed countries 6 what the donor countries give with one hand aid they take away with the other farm subsidies

the dependence structure across oil wheat and corn a wavelet based copula approach using implied volatility indexes abstract this paper examines the dependence structure between three commodities implied volatility indexes oil wheat and corn during bear normal and bull markets and at different scales for this purpose we combine wavelet and copula methods to analyse the changes of the tail dependence at different scales or investment horizons the results support evidence of time varying asymmetric tail dependence between the pair of cereals as well as between oil and the two cereals at different time horizons short term horizon medium term horizon and long term horizon suggesting that the dependence structure is sensitive to time horizons these results have important implications for the analysis of portfolio risk management

do corporate global environmental standards create or destroy market value arguments can be made on both sides of the question of whether a stringent global corporate environmental standard represents a competitive asset or liability for multinational enterprises mnes investing in emerging and developing markets analyzing the global environmental standards of a sample of u s based mnes in relation to their stock market performance we find that firms adopting a single stringent global environmental standard have much higher market values as measured by tobin sq than firms defaulting to less stringent or poorly enforced host country standards thus developing countries that use lax environmental regulations to attract foreign direct investment may end up attracting poorer quality and perhaps less competitive firms our results also suggest that externalities are incorporated to a significant extent in firm valuation we discuss plausible reasons for this observation

agriculture reform and food crisis in syria impacts on poverty and inequality abstract the paper pursues a twofold objective from a methodological viewpoint it shows how to carry out an impacts evaluation of exogenous shocks on poverty and inequality in a context characterised by out of equilibrium poorly adjusting markets as it is the case in many developing countries using a social accounting matrix framework from an empirical viewpoint it provides an assessment of how the cereal price spikes of 2007 2008 and the global recession of 2008 2009 have impacted the welfare of syrian households and how did they compound with the on going agricultural sector liberalisation implemented by the government of syria since mid 1990s this will contribute to shed some lights on the economic background behind the spreading of unrest across the country over the last couple of years or so the results show that liberalisation impacts are very different and largely affected by the adopted budget closure rules while reforms aiming at reducing agricultural market distortions such as production subsidies and price support for strategic crops could generally have a positive effect on growth poverty and inequality the elimination of food security interventions such as food stamp schemes determines an adverse distributional impact against rural household and an increase of poverty the recent macroeconomic shocks food price crisis and the global recession determined a generalised poverty increase and showed an income distribution bias against rural households three fundamental policy implications can be drawn by this study first the liberalisation of agricultural sector shows a significant growth potential and is likely to determine positive effects on poverty through a generalised increase of incomes as well as public budget savings that could be used for pursuing other policy goals second in the short run there is a structural trade off between equity improvements and poverty alleviation the policy options that will more likely reduce absolute poverty show undesirable distributive biases both on overall inequality and on rural households vis a vis urban households third the reform should include a careful design of the use of budget savings mainly to address equity goals that are likely to be generated in the short run by liberalisation

how does germany s green energy policy affect electricity market volatility an application of conditional autoregressive range models abstract based on a dynamic model for the high low range of electricity prices this article analyses the effects of germany s green energy policy on the volatility of the electricity market using european energy exchange data from 2000 to 2015 we find rather high volatility in the years 2000 2009 but also that the weekly price range has significantly declined in the period following the year 2009 this period is characterised by active regulation under the energy industry law enwg the eu emissions trading directive etd and the renewable energy law eeg in contrast to the preceding period price jumps are smaller and less frequent especially for day time hours implying that current policy measures are effective in promoting renewable energies while simultaneously upholding electricity market stability this is because the regulations strive towards a more and more flexible and market oriented structure which allows better integration of renewable energies and supports an efficient alignment of renewable electricity supply with demand

an analysis of the impact of deposit rate ceilings on the market values of thrift institutions this paper examines the impact of changes in deposit interest rate regulations on the common stock values of savings and loan institutions the analysis indicates that stockholder owned savings and loans s l s have experienced statistically significant declines in equity market values at the announcement of the removal of ceilings on certain consumer small saver certificate accounts and the introduction of short term variable rate money market certificates we find the evidence to be consistent with the hypothesis that s l s have earned economic rents from restrictions on interest rates paid to small saver accounts and that relaxation of interest rate ceilings has reduced these rents a central issue in the economics of regulation is whether regulators behave in a way that primarily benefits the economic agents whose actions they are supposed to regulate the proposition that regulation is demanded and acquired by the regulated and that regulations are designed and administered primarily for their benefit was originally put forth by stigler 19 and has come to be known as the capture theory of regulation an alternative view is that regulators adopt policies which serve some other perhaps public or possibly the regulators own interest and that administration of these policies does not benefit the regulated entities this paper examines the regulation of savings and loan associations deposit interest rates and reports evidence pertaining to the impact of the administration of regulation regulation of interest rates paid to depositors in federally insured savings and loan associations began in 1966 since that time several changes in the maximum allowed interest rates deposit rate ceilings have been made these changes present an opportunity to observe the impact of one form of regulatory action on savings and loan institutions deposit rate regulation has been the subject of extensive previous research the empirical investigations have focused primarily on two issues 1 the allocational efficiency and wealth redistribution effects of rate ceilings and 2 the impact of deposit rate ceilings on the flow of funds into the residential

an econometric analysis of the choice of daily versus monthly returns in tests of information content studies investigating the association between information events and security returns are common in accounting and finance 1 earlier studies used monthly return data but the recent availability of daily return data confronts the researcher with a decision on which type of return data is more appropriate in this paper i examine some econometric issues on the choice between monthly and daily return data the analysis is easily extended to weekly return data which has been used in some information event studies the purpose of this paper is to examine factors affecting the power of statistical tests to investigate the effect of information on security returns based on return data over different units of time one set of factors affecting the power of the tests pertains to the characteristics of the information event such as 1 the existence of confounding information events during the same period as the information event of interest 2 uncertainty about the magnitude of the effect of the information event on security returns and 3 uncertainty about

derived factors in event studies abstract we examine the utility of the statistical factor model of the process generating stock returns in the context of event studies for a variety of estimation procedures and experimental designs we find limited value added relative to the use of a simple market model we would attribute this finding to misspecification of the statistical factor analysis model and suspect that there exist more robust procedures for estimating the factor structure of stock returns

do markets care who chairs the central bank this paper assesses the effects of central bank governor appointments on financial market expectations of monetary policy to measure these effects we assemble a new dataset of appointment announcements from 15 countries and conduct an event study analysis on exchange rates bond yields and stock prices our main findings are threefold first exchange rates and bond yields display a statistically significant response to the announcement of a new governor especially when the appointee s identity was not anticipated in advance second the reactions are especially pronounced for central banks lacking either independence or a clear nominal anchor third new governors are not generally perceived to lack credibility there is no tendency for announcements to be associated with jumps in inflation expectations

is monthly us natural gas consumption stationary new evidence from a garch unit root test with structural breaks we apply a recently developed unit root test that simultaneously accounts for heteroskedasticity and structural breaks to united states monthly natural gas consumption we find that united states monthly natural gas consumption is stationary our results illustrate the importance of accounting for heteroskedasticity when testing for a unit root in energy consumption with higher frequency data

the impact of terrorism on financial markets an empirical study the main focus of this paper is to previous termstudynext term empirically the previous termimpact of terrorismnext term on the behavior of stock bond and commodity previous termmarkets next term we consider terrorist events that took place in 25 countries over an 11 year time period and implement our analysis using different methods an event previous termstudynext term approach a non parametric methodology and a filtered garch evt approach in addition we compare the effect of terrorist attacks on previous termfinancial markets with the impactnext term of other extreme events such as previous termfinancialnext term crashes and natural catastrophes the results of our analysis show that a non parametric approach is the most appropriate method among the three for analyzing the previous termimpact of terrorism on financial markets next term we demonstrate the robustness of this method when interest rates equity previous termmarketnext term integration spillover and contemporaneous effects are controlled we show how the results of this approach can be used for investors portfolio diversification strategies against previous termterrorismnext term risk

optimal forward trading and battery control under renewable electricity generation abstract the increased market penetration of renewable energy sources and the rapid development of electric battery storage technologies yield a potential for reducing electricity price volatility while maintaining stability of the power grid this work presents an algorithmic approach to control battery levels and forward positions to optimally manage power output fluctuations caused by intermittent renewable energy generation this paper will also explore the effect of battery technology on the firm s optimal trading behaviour in the electricity spot market

environmental regulation the obama effect and the stock market some empirical results following the signing of the kyoto protocol in 2005 a new wave of green policies emerged with the intention of protecting our planet this study explores the effects these policies have on capital markets in particular we assess how the risk and return of us industrial portfolios react to the announcement of green policies event study methodology and asset pricing models are used to that end we document negative abnormal returns and increase in systematic risk for the biggest polluters whereas environmentally friendly businesses are affected to a lesser degree an apparent obama effect is observed resulting from the 2008 outcome of the us presidential election

why the wto is deadlocked and what can be done about it the gatt was hugely successful yet its successor organisation is to date failing this paper argues that the expansion in both scope and membership make it radically more difficult for a purely bargain based organisation to succeed three factors limit the scope for deals that would be recognised as mutually beneficial many developing countries are accustomed to transfers rather than bargains the poorest countries have no basis for bargaining and even where mutual advantage is possible it requires cross sectoral deals which are only feasible with new rules that are unattractive to many wto members the paper proposes solutions to these new problems it proposes an explicit component of transfer in the form of non reciprocated liberalisation it proposes a plurilateral solution to the tension between rules and sovereignty it links these through a grand bargain that offers transfers in return for plurilateralism for the marginalised countries it proposes time bound preferences in oecd markets along the lines of agoa finally to recreate for the larger developing countries similar incentives for liberalisation to those previously achieved for developed countries it proposes a limited mfn through which they could restrict their liberalisations to include only other developing countries

experts vs discounters consumer free riding and experts withholding advice in markets for credence goods this paper studies the incentives for credence goods experts to invest effort in diagnosis if effort is both costly and unobservable and if they face competition by discounters who are not able to perform a diagnosis the unobservability of diagnosis effort and the credence characteristic of the good induce experts to choose incentive compatible tariff structures this makes them vulnerable to competition by discounters we explore the conditions under which honestly diagnosing experts survive competition by discounters we identify situations in which experts misdiagnose consumers in order to prevent them from free riding on experts advice and we discuss policy options to solve the free riding consumers cheating experts problem

the impact of environmental management on firm performance environmental management has the potential to play a pivotal role in the financial performance of the firm many individuals suggest that profitability is hurt by the higher production costs of environmental management initiatives while others cite anecdotal evidence of increased profitability a theoretical model is proposed that links strong environmental management to improved perceived future financial performance as measured by stock market performance the linkage to firm performance is tested empirically using financial event methodology and archival data of firm level environmental and financial performance significant positive returns were measured for strong environmental management as indicated by environmental performance awards and significant negative returns were measured for weak environmental management as indicated by environmental crises the implicit financial market valuation of these events also was estimated cross sectional analysis of the environmental award events revealed differences for first time awards and between industries first time award announcements were associated with greater increases in market valuation although smaller increases were observed for firms in environmentally dirty industries possibly indicative of market skepticism this linkage between environmental management and financial performance can be used by both researchers and practitioners as one measure of the benefits experienced by industry leaders and as one criterion against which to measure investment alternatives

are shocks to energy consumption permanent or temporary evidence from 182 countries this article applies univariate and panel data unit root tests to annual panel data for 182 countries over the period 1979 2000 to examine the stationarity properties of per capita energy consumption the univariate unit root test can only reject the unit root null for 56 countries or 31 of the sample at the 10 level or better however univariate unit root tests have low power with short spans of data and therefore failure to reject the unit root null should be treated with caution when we apply the panel data unit root test we find overwhelming evidence that energy consumption is stationary we discuss the policy implications of these findings and offer suggestions for future research

social preferences and strategic uncertainty an experiment on markets and contracts this paper reports experimental evidence on a stylized labor market the experiment is designed as a sequence of three phases in the first two phases p1 and p2 agents face simple games which we use to estimate subjects social and reciprocity concerns together with their beliefs in the last phase p3 four principals who face four teams of two agents compete by offering agents a contract from a fixed menu then each agent selects one of the available contracts i e he chooses to work for a principal production is determined by the outcome of a simple effort game induced by the chosen contract we find that heterogeneous social preferences are significant determinants of choices in all phases of the experiment since the available contracts display a trade off between fairness and strategic uncertainty we observe that the latter is a much stronger determinant of choices for both principals and agents finally we also see that social preferences explain to a large extent matching between principals and agents since agents display a marked propensity to work for principals with similar social preferences

the impact of eu export refunds on the african continent an impact assessment abstractthe eu s export refund policy has long been a source of controversy for its perceived impacts on third country markets however the eu commission maintain that these concerns are largely historic as cap reforms mean that export refunds are now used infrequently the purpose of this article is therefore to assess the impacts of refunds in the wake of the 2003 reform of the cap using two complementary analyses first an analysis using a computable general equilibrium model and second two case studies to assess the potential impact of export refunds in selected african developing countries

risk dependence of covar and structural change between oil prices and exchange rates a time varying copula model abstract this paper analyses the dynamic dependence between wti crude oil and the exchange rates of the united states and china taking structural changes of dependence into account by using six time varying copula models upside and downside conditional values at risk covars are introduced specifically to measure the upward and downward risk dependences between oil prices and exchange rates the findings indicate a structural break point of dependence exists between daily or weekly crude oil and the us dollar index the dependence between crude oil and the rmb exchange rate is faintly positive with lower tail dependence while the dependence between crude oil and the us dollar index is significantly negative with lower upper and upper lower tail dependence finally the covars results show that there is significant risk spillover from crude oil to chinese and the us exchange rate markets furthermore the spillover effect is significantly asymmetry in chinese exchange rate market in response to rising and falling oil returns while the asymmetry of spillover effect for the us dollar index is not significant

the effects of recent terrorist attacks on risk and return in commodity markets abstract the event study methodology of brown and warner 1985 is adopted and augmented to evaluate the effect of the recent terrorist attacks on risk and returns in commodity markets the methodology is supplemented with various techniques such as the non parametric ranking test and kernel regression to find out if 20 terrorist attacks including in paris nice brussels stockholm manchester jakarta london and melbourne generated abnormal returns asset pricing models are fitted with interaction variables while garch tarch egarch and parch models are used to determine changes in systematic risk our results show abnormal returns and delayed reactions of up to 120 days in the commodity markets evidence which defies the efficient market hypothesis in addition we identify sector and commodity effects in risk analysis

what are the categories of geopolitical risks that could drive oil prices higher acts or threats abstract this study characterizes the oil market as a nonlinear switching phenomenon and examines its dynamics in response to changes in geopolitical risks over low and high risk scenarios we separate the shocks due to geopolitical acts from those due to geopolitical threats to address whether the serious effects of geopolitical risks are mostly due to increased threats of adverse events or to their realization as acts while we find the acts to generate a positive and strong impact on oil price dynamics the effect of threats appears to be moderate or non significant imperfect information in the oil price determination the history of oil supply disruptions emanating from geopolitical events the continued rise in populism in the world oil market volatility multifractility and the time varying degree of weak form efficiency have been advanced to explain the unforeseen responses of oil prices to geopolitical threats to accommodate recent oil related events we construct a composite geopolitical risk indicator by accounting for contemporaneous sources of geopolitical risks namely global trade tensions us china relation risks us iran tensions saudi arabia s uncertainty and venezuela s crisis the combined effects have an outsized impact on oil prices

stock market reaction to financial statement certification by bank holding company ceos in 2002 the sec mandated that the ceos of large publicly traded firms certify the accuracy of their company financial statements the sec s certi fication order provides a natural experiment that gives insight into the question of whether banks are opaque we find that the bhcs subject to the sec s order experienced positive and significant average abnormal returns from certification characteristics associated with greater opaqueness liquid asset holdings information intensive lending and split credit ratings are systematically associated with the size of abnormal returns

how decoupled is the single farm payment and does it matter for international trade the extent to which decoupled agricultural support including the european union single farm payment sfp creates production incentives remains unclear we apply an extended version of the standard global trade analysis project model and generate a set of 21 databases that captures a comprehensive representation of domestic support by considering and modeling a range of different assumptions regarding the sfp s degree of decoupling we investigate the sfp s effect on the model s results the results of our analysis reveal substantially different effects that depend on the degree of decoupling and the findings can help validate trade analysis results particularly for developing countries

anticipation acquisitions and bidder returns industry shocks and the transfer of information across rivals we document market anticipation of merger bids and show that less anticipated bids earn significantly higher announcement returns subsequent bidders in the industry experience significant and positive abnormal returns around the time of initial industry bid announcements these results suggest that announcement period returns underestimate the wealth effects of bidding after accounting for anticipation bidding activity is on average a significant wealth creating event moreover bidders pursuing public targets increase shareholder wealth and bidders in stock swaps do not lose these results contradict conventional wisdom our results shed light on the correct magnitude of acquisition returns and on the transfer of information throughout an industry around the time of an economic shock 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

credence goods monopolists abstract with a credence good consumers never discover how much of the good they actually need therefore the seller acts as the expert determining the customers requirements this information asymmetry creates strong incentives for the seller to cheat on services we analyze whether the market mechanism may induce non fraudulent seller behavior we consider four scenarios differing in the amount of information consumers have at hand to infer the seller s incentives to be honest in three constellations the profit maximizing credence goods monopolist provides honest services only in one scenario there is no trade

how social preferences shape incentives in experimental markets for credence goods credence goods markets suffer from inefficiencies caused by superior information of sellers about the surplus maximising quality while standard theory predicts that equal mark up prices solve the credence goods problem if customers can verify the quality received experimental evidence indicates the opposite we identify a lack of robustness with respect to heterogeneity in social preferences as a possible cause of this and conduct new experiments that allow for parsimonious identification of sellers social preference types our results confirm the assumed heterogeneity in social preferences and provide strong support for our explanation of the failure of verifiability to increase efficiency

coal consumption urbanization and trade openness linkage in indonesia abstract this paper explores the effects of economic growth urbanization industry and trade openness on coal consumption in indonesia over the period 1970 2015 to closely adhere to the environmental kuznets curve narratives we consider coal consumption which has been scarcely explored in the ekc debate as a proxy of environmental pressure we estimate the autoregressive distributed lag ardl method and confirm that the variables are cointegrated for long run linkage with the presence of structural breaks the empirical evidence showed that economic growth urbanization and trade openness increase coal consumption while decreasing share of secondary industry reduce it we also verify the existence of environmental kuznets curve having a vital role in the energy mix indonesia needs to restrain excessive coal consumption to enhance environmental quality our results also imply urbanization and trade openness are crucial factors on coal consumption consequently it should be taken into consideration in energy policy making process such as energy conservation policies in the residential sector and prioritize foreign investment which brings cutting edge coal technologies

a unit root model for trending time series energy variables in this paper we propose a garch based unit root test that is flexible enough to account for a trending variables b two endogenous structural breaks and c heteroskedastic data series our proposed model is applied to a range of time series trending and heteroskedastic energy variables our two main findings are first the proposed trend based garch unit root model outperforms a garch model without trend and second allowing for a time trend and two endogenous structural breaks are important in practice for doing so allows us to reject the unit root null hypothesis

the effects of multilateral trading systems on risk and return in equity markets the event study methodology of brown and warner 1985 is adopted and augmented to evaluate the effect of the launch of multilateral trading systems on risk and return in equity markets the methodology is supplemented with various techniques such as the nonparametric ranking test and kernel regression to find out if announcements about the introduction of chi x australia generated abnormal returns ars asset pricing models are fitted with interaction variables while garch threshold arch tarch exponential garch egarch and power arch parch are used to determine changes in systematic risk we find evidence in favour of fisher s separation theorem and detect a new market anomaly which we call the fisher market anomaly our results show that chi x system testings affect ars consistent with the adaptive expectations theory we confirm that the first announcement about the launch of chi x affected systematic risk the most in addition we identify industry and firm effects in risk analysis

event studies in economics and finance the event study is an important research tool in economics and finance the goal of an event study is to measure the effects of an economic event on the value of firms event study methods exploit the fact that given rationality in the marketplace the effects of an event will be reflected immediately in security prices thus the impact can be measured by examining security prices surrounding the event in this paper event study methods are described including some of the potential complications an example is included to illustrate the approach

structural breaks and petroleum consumption in us states are shocks transitory or permanent abstract this short communication extends the literature on the stationarity of energy consumption to the case of us petroleum consumption at the state level from 1960 to 2007 the results of lee and strazicich 2003 and narayan and popp forthcoming unit root tests with endogenously determined structural breaks in the intercept and slope of the trend function reveal break dates that correspond to the two opec oil shocks of the 1970s along with the double dip recession of 1980 1982 the null hypothesis of a unit root in petroleum consumption is rejected for a majority of states these results highlight the importance of recognizing the heterogeneity in the behavior of petroleum consumption across states in the formulation of energy conservation and demand management policies