are firms successful at selective hedging we analyze the corporate risk management policies of 44 companies in the gold mining industry firms tend to decrease hedging as prices move against them behavior contrary to that predicted by risk management theory these results along with new survey evidence suggest that firms attempt to time market prices so called selective hedging although estimates show a statistically significant ability of producers to favorably adjust hedge ratios this can be attributed to sample specific negative autocorrelation in gold prices economic gains to selective hedging are small and no evidence suggests that selective hedging leads to superior operating or financial performance

digital contracts and price manipulation corporate insiders holding derivative contracts on their firm s stock have an incentive to engage in stock price manipulation i examine several derivative contracts susceptible to manipulation and the price impact of the insiders strategic behavior digital contracts the basic building blocks for valuing complex financial derivatives are vulnerable to manipulation the impact of the strategies from holding digital contracts is consistent with an implied volatility skew and volatility clustering even seemingly innocuous derivatives such as ordinary bull spreads generate these manipulation incentives this has strong implications for corporate policy since firms often use option spreads in their stock repurchase programs

hedging and coordinated risk management evidence from thrift conversions we provide an explanation for hedging as a means of allocating rather than reducing risk we argue that when increases in total risk are costly firms optimally allocate risk by reducing increasing exposure to risks that provide zero positive economic rents our evidence shows that mutual thrifts that convert to stock institutions increase total risk following conversion consistent with their increased abilities and incentives for risk taking they achieve this increase by hedging interest rate risk and increasing credit risk we provide some evidence that risk management activities are related to growth capacity and management compensation structure attained at conversion

the impact of natural disaster on energy consumption international evidence abstract this research shows that natural disasters may hurt energy consumption by using data on 123 countries over the period 1990 2015 and classifying them according to their economic development level and region based on world development indicators we employ a two step system gmm method to examine the effect of natural disasters on energy consumption presenting findings that support our hypotheses in the models and show a strong negative effect for low income countries or those in the africa region after considering an alternative proxy for natural disaster we implement quantile regression methods their results find that natural disasters exhibit a negative and significant impact on oil renewable and nuclear energy consumptions the quantile regression models used in the robustness check present that the effects are stronger for low level energy consumption economies

energy comes home the growth in private energy consumption is an increasing problem in western countries from an environmental point of view this consumption has to be reduced on the basis of two norwegian case studies this article discusses private energy consumption and possibilities for reduction with a special focus on the home it argues against a rational economic view of the consumer and emphasizes the significance of a more subtle understanding of private energy use the article approaches the challenges of reducing private energy consumption by analysing the domestication of the home and discusses everyday life activities as well as the phenomenon of rebuilding and redecorating by using the concept of domestication the article challenges the linear understanding of technological as well as behavioural change private energy consumption is part of a complex network and it is necessary to understand this network in order to achieve a more permanent reduction

storms and jobs the effect of hurricanes on individuals employment and earnings over the long term hurricanes katrina and rita devastated the us gulf coast in 2005 we use job level data to compare the evolution of earnings for affected workers in four states with workers from matched control co

energy security and renewable energy deployment in the eu liaisons dangereuses or virtuous circle abstract a large body of literature estimates the effect of energy security drivers on renewable energy deployment using import dependence as a proxy for energy security which is an approach that ignores the potential effect of other energy security strategies such as the diversification of energy sources using panel data for the energy sector across 21 eu member states we investigate the effect of different energy security concepts on the development of renewable energies we compare the results of applying different energy security indicators including the ones used in eu energy policymaking unlike previous studies this study reports a long term relationship between energy security and renewable deployment our findings suggest that the relationship between energy security policies and renewable energy sources res deployment is far from straightforward and depends on the chosen energy security strategy which is usually linked to different energy security conceptualizations our primary findings confirm i that res deployment is a consequence of a combination of energy security strategies including environmental concerns rather than being solely caused by a shift towards more sustainable energy policies and ii that among the different energy security strategies the diversification of energy sources through renewable energy deployment is a more coherent strategy than using res to reduce dependency

preferred solutions to the energy crisis as a function of causal attributions results of two studies support the hypotheses that those accepting personal responsibility for the energy crisis favor and report adopting the personal solution of voluntary energy conservation and those making attributions to nonpersonal causes opec oil companies u s government are most likely to favor nonpersonal solutions implications are discussed

inflation targeting as a shock absorber abstract we study the characteristics of inflation targeting as a shock absorber using quarterly data for a large panel of countries to overcome an endogeneity problem between monetary regimes and the likelihood of crises we propose to study large natural disasters we find that inflation targeting improves macroeconomic performance following such exogenous shocks it lowers inflation raises output growth and reduces inflation variability compared to alternative monetary regimes this performance is mostly due to a different response of monetary policy and fiscal policy under inflation targeting finally we show that only hard but not soft targeting reaps the rewards deeds not words matter for successful monetary stabilization

potential cooperation in renewable energy between china and the united states of america abstract china and the united states of america us are developing renewable energy concurrently in this paper we seek the opportunities for potential cooperation between these two countries based on the analysis of annual economic data a mathematical model has been established to characterize correlations among gdp carbon dioxide emissions energy prices and the renewable energy cooperation index based on statistical analyses such cooperation can promote economic development reduce carbon dioxide emissions improve the environment and realize green growth if us monetary and technology resources and chinese markets are combined benefits can be mutually gained

rejecting renewables the socio technical impediments to renewable electricity in the united states if renewable power systems deliver such impressive benefits why do they still provide only 3 percent of national electricity generation in the united states as an answer this article demonstrates that the impediments to renewable power are socio technical a term that encompasses the technological social political regulatory and cultural aspects of electricity supply and use extensive interviews of public utility commissioners utility managers system operators manufacturers researchers business owners and ordinary consumers reveal that it is these socio technical barriers that often explain why wind solar biomass geothermal and hydroelectric power sources are not embraced utility operators reject renewable resources because they are trained to think only in terms of big conventional power plants consumers practically ignore renewable power systems because they are not given accurate price signals about electricity consumption intentional market distortions such as subsidies and unintentional market distortions such as split incentives prevent consumers from becoming fully invested in their electricity choices as a result newer and cleaner technologies that may offer social and environmental benefits but are not consistent with the dominant paradigm of the electricity industry continue to face comparative rejection

deep impact geo simulations as a policy toolkit for natural disasters adverse post natural disaster outcomes in low income regions like elevated internal migration levels and low consumption levels are the result of market failures poor mechanisms for stabilizing income and missing insurance markets which force the affected population to respond and adapt to the shock they face in a spatial environment with multiple locations with independent but inter connected markets these transitions quickly become complex and highly non linear due to the feedback loops between the micro individual level decisions and the meso location wise market decisions to capture these continuously evolving micro meso interactions this paper presents a spatially explicit bottom up agent based model to analyze natural disaster like shocks to low income regions the aim of the model is to temporally and spatially track how population distributions income and consumption levels evolve in order to identify low income workers that are food insecure the model is applied to the 2005 earthquake in northern pakistan which faced catastrophic losses and high levels of displacement in a short time span and with market disruptions resulted in high levels of food insecurity the model is calibrated to pre crisis trends and shocked using distance based output and labor loss functions to replicate the earthquake impact model results show how various factors like existing income and saving levels distance from the fault line and connectivity to other locations can give insights into the spatial and temporal emergence of vulnerabilities the simulation framework presented here leaps beyond existing modeling efforts which usually deals with macro long term loss estimates and allows policy makers to come up with informed short term policies in an environment where data is non existent policy response is time dependent and resources are limited

the structure and incentive effects of corporate tax liabilities this paper describes situations in which tax liabilities assume the form of a negative position in a call option this structure motivates an examination of the investment decisions of taxed corporations in the presence of risk it is shown that the structure of the tax liability creates an incentive to underinvest in more risky projects and an incentive for conglomerate merger these effects are then evaluated in the presence of conflicts of interest between stockholders and bondholders and under alternative assumptions about the tax code and about the timing of investment and financing decisions this paper makes an observation regarding the functional form assumed by the tax liabilities of corporations with potentially redundant deductions and evaluates its consequences for investment incentives interest and other deductions against taxable income can be taken for the most part only to the extent of that income in a single period model this gives the net tax liability a familiar structure it can be viewed as a call option where the exercise price on the call is the allowable deductions the tax paying entity holds a positive position in the assets which generate the taxable income and a negative position in a call option on those assets the analogy between options and the structure of tax liabilities calls attention to some interesting incentive effects concerning risk using their model of option valuation black and scholes 5 showed that the value of an option is increasing in the variance of the asset it is written on other authors have generalized this result and studied its implications for corporate financing see jagannathan 16 jensen and meckling 17 and green 15 the importance of the risk attributes of the underlying asset in option valuation suggests that taxation may have important incentive consequences for investment decisions involving risk it has been recognized in the public economics literature for some time that asymmetries in the tax schedule can affect risk taking behavior early papers by mossin 20 and stiglitz 25 studied individual portfolio decisions over a riskless and a risky asset our analysis differs from these in a number of respects the most important of these is our use of market valuation rather than expected utility in the decision maker s objective function this is surely a more appropri

the shocking origins of political transitions evidence from earthquakes do earthquakes trigger political transitions using a rich panel dataset of 160 countries observed over 1950 2007 we find that earthquake shocks measured in terms of the effect of ground motion amplitude on death toll have two contradicting effects on political change on the one hand earthquakes drive transitions into democracy due to an affective shock which we interpret to be the reaction of citizens by which they hold the incumbent government responsible for earthquake damages on the other hand earthquakes indirectly hasten transitions into a less democratic regime because they increase the income level contemporaneously possibly due to short term emergency response and recovery expenditures and thus raising the opportunity cost of contesting the incumbent government overall we show that while not leading to a full fledged regime transition earthquake shocks open a new democratic window of opportunity but this window is narrowed by improved economic conditions

concerned consumption global warming changing household domestication of energy this is the authors accepted and refereed manuscript to the article licensed under a creative commons attribution non commercial no derivatives license locked until 2018 11 01

publics knowledge attitudes and behavioral toward the use of solar energy in yemen power sector abstract this paper presents the information of the public s views on the solar energy use in yemen it examines the public knowledge of attitudes and behavioral intentions that include the variables willingness to pay willingness to change and willingness to invest and then compare them a personal interview with 348 urban household and 258 rural household was performed the descriptive statistics chi square for independence odds ratios mann whitney and kruskal wallis tests were the statistical tools employed in the analysis the results showed that the citizens in both areas have a moderate level of knowledge about renewable energy resources the benefits and drawbacks of solar energy use in the power sector and the solar power technologies despite that they have highly positive attitudes towards the use of renewable energy particularly solar energy and its technologies they also accept to engage in the renewable energy activities which aim to improve the quality of the electrical service provided in the country the findings also indicate 66 55 7 and 78 4 of urban citizens are willing to pay to change and to invest compared to 70 55 4 and 75 6 of rural citizens the place of residence factor affected significantly the citizens knowledge level about renewable energy wind biomass and geothermal energy renewable energy resources the drawbacks of solar energy use in the power sector and the solar power technologies it also affected significantly the citizens attitudes towards the use of solar power technologies at home the implications for the policymakers are that elevating the knowledge and awareness of the citizens by formal and informal education and enacting effective supportive policies assists in encouraging the citizens to use renewable energies in their daily lives would lead to achieve the country s renewable energy targets for 2025

the environment left wing political orientation and ecological economics the objectives of this commentary are twofold the first is to examine the relationship between a party s position within the left right political spectrum and its stance on environmental issues as stated in party manifestos the second is to examine the relationship between individuals ideological orientation and pro environmental beliefs attitudes and self reported behavior equality distributional concerns and market skepticism are typically regarded as defining factors of left wing political orientation our results suggest that left wing parties and individuals are also more pro environmental than their right wing counterparts ecological economics similarly embraces sustainability efficient resource allocation and equitable distribution and is skeptical towards the ability of unregulated markets to achieve these objectives the hypothesis is put forward that ecological economics is more likely to be supported by left wing parties and individuals

renewable and non renewable energy consumption growth nexus evidence from a panel error correction model abstract unlike previous renewable energy consumption growth studies this study examines the relationship between renewable and non renewable energy consumption and economic growth for 80 countries within a multivariate panel framework over the period 1990 2007 the pedroni 1999 2004 heterogeneous panel cointegration test show a long run equilibrium relationship between real gdp renewable energy consumption non renewable energy consumption real gross fixed capital formation and the labor force with the respective coefficient estimates positive and statistically significant there is little difference in the elasticity estimates with respect to renewable and non renewable energy consumption the results from the panel error correction model reveal bidirectional causality between renewable and non renewable energy consumption and economic growth in both the short and long run also there is bidirectional short run causality between renewable and non renewable energy consumption indicative of substitutability between the two energy sources

natural disasters in a two sector model of endogenous growth using an endogenous growth model with physical and human capital accumulation this paper considers the sustainability of economic growth when the use of a polluting input e g fossil fuels intensifies the risk of capital destruction through natural disasters we find that growth is sustainable only if the tax rate on the polluting input increases over time the long term rate of economic growth follows an inverted v shaped curve relative to the growth rate of the environmental tax and it is maximized by the least aggressive tax policy of those that asymptotically eliminate the use of polluting inputs unavailability of insurance can accelerate or decelerate the growth maximizing speed of the tax increase depending on the relative significance of the risk premium and precautionary savings effects welfare is maximized under a milder environmental tax policy especially when the pollutants accumulate gradually

on the asset substitution problem in their seminal paper modigliani and miller 11 12 demonstrate that if capital markets are perfect and investment policy is held constant the market value of the firm is independent of its financial decisions furthermore if capital markets are perfect stockholders have incentive to choose the investment policy which maximizes the market value of the firm see 6 motivated by this assumption the firm has been viewed as a black box namely as one homogeneous unit whose clear objective is to maximize its market value however in a growing body of recent literature see 1 2 7 9 13 and 14 researchers recognize that the firm in an imperfect capital market is a collection of groups whose interests can and do conflict jensen and meckling 9 study the roles of three important groups the owner manager the stockholders and the bondholders focusing on the potential costs resulting from divergence of interests among them they provide a theory of optimal capital structure in terms of reducing the costs of these conflicts

public estimates of support for offshore wind energy false consensus pluralistic ignorance and partisan effects abstract meeting future energy demands will require large scale implementation of renewable energy projects if one of these energy sources offshore wind becomes a common sight off coastlines consideration of local public opinion and action will be critical previous research from the social sciences has lacked depth in examining the underlying factors that shape public opinion towards offshore wind development the current research brings a new perspective to the literature by showing that how members of the public perceive support among others relates to their own opinions of offshore wind energy we report results from two surveys the first focused on opinion formation relating to offshore wind in general among new england residents while the second focused on a specific offshore wind project in rhode island we find evidence that both supporters and opponents of offshore wind underestimate levels of support among others indicating a pluralistic ignorance effect and false consensus effect respectively we also find distinct patterns of perceived support among self identified republicans and democrats the findings hold important implications for policymakers and developers in understanding the nature of public support and opposition for offshore wind energy particularly with respect to individuals willingness to publicly engage with offshore wind projects

social acceptance of renewable energy innovation an introduction to the concept this paper introduces the special issue on social acceptance of renewable energy innovation it is a collection of best papers presented at an international research conference held in tramelan switzerland in february 2006 while there are ambitious government targets to increase the share of renewable energy in many countries it is increasingly recognized that social acceptance may be a constraining factor in achieving this target this is particularly apparent in the case of wind energy which has become a subject of contested debates in several countries largely due to its visual impact on landscapes this paper introduces three dimensions of social acceptance namely socio political community and market acceptance factors influencing socio political and community acceptance are increasingly recognized as being important for understanding the apparent contradictions between general public support for renewable energy innovation and the difficult realization of specific projects the third dimension market acceptance has received less attention so far and provides opportunities for further research particularly from management scholars

densification what does it mean for fuel poverty and energy justice an empirical analysis energy is increasingly at the forefront of the global political agenda while there is a longstanding literature relating to fuel poverty and increasingly energy justice there remains little evidence which explores its link with the urban form specifically the purpose of this study is to explore the relationship between the urban consolidation hypothesis and the cultivation of energy justice in australia this study uses data from the household income and labour dynamics in australia hilda survey years 2007 2014 a national probability sample and indefinite life panel the substantive findings of this study demonstrate that for low income and renting households greater urban density corresponds to a higher likelihood of experiencing fuel poverty further for households with a dwelling type described as an apartment two or three storeys there is a separate and quite generalisable indication that this type of dwelling is associated with a lower likelihood of experiencing fuel poverty this study connects the debate regarding urban consolidation and energy consumption to the fuel poverty and energy justice literature alongside this contribution this study also provides policymakers and planners with new evidence to inform remediation policies that are directed at supporting the fuel poor

corporate risk management and the incentive effects of debt this paper demonstrates how the incentive of manager equityholders to substitute toward riskier assets commonly referred to as the asset substitution problem is related to the level of observable risk in the firm when observable and unobservable risks are sufficiently positively correlated increases decreases in observable risk generate the incentive for manager equityholders to increase decrease unobservable risk thus credible commitments to hedge observable risk can benefit the firm s manager equityholders by reducing the incentive to shift risk and the associated agency cost of debt this provides a positive rationale for hedging diversifiable risk at the firm level in the last few years a sizeable literature has emerged which is devoted to explaining how shareholders can benefit from hedging undertaken by the firm such hedging may include the purchase of insurance the use of financial futures and options and even diversification at the level of the firm four lines of reasoning have been pursued in the literature smith and stulz 1985 and campbell and kracaw 1987 rely on the fact that under optimal contracting between managers and shareholders managers are less diversified than are shareholders hedging by the firm which reduces the manager s exposure to risk can improve on the optimal compensation contract between the manager and equityholders this argument may be applied to a firm with any capital structure or any degree of leverage the other arguments apply to firms which are financed with risky debt smith and stulz show that hedging may be useful in reducing expected bankruptcy costs they also show as does macminn 1985 that hedging by the firm may reduce the probability that depreciation tax shields may be lost due to financial distress finally diamond 1984 has shown that monitoring costs may be reduced through diversification macminn s result is of particular interest part of his analysis is based on an earlier paper by green and talmor 1985 which demonstrates that the equityholders of a levered firm will have an incentive to underinvest in risky assets if the firm cannot capture its interest and depreciation tax shields with certainty in green and talmor s analysis the firm has no mechanism to reduce or hedge the uncertainty surrounding its tax shields other than to alter its investment decisions however as macminn argues if the firm is allowed to hedge its risks

public attitudes towards renewable energy technologies in norway the role of party preferences abstract transition to a sustainable society requires large scale conversion of the energy system to new renewable non fossil sources of energy this presupposes public support for new technologies which means the public must deal with challenges in terms of placement area requirements ecological degradation and price developments this paper discusses how citizens view renewable energy technologies it analyses responses to representative surveys of the norwegian population on the desirability of various energy technologies such as hydroelectric dams onshore and offshore wind energy bioenergy plants and for contrast gas plants with and without carbon capture and storage our main focus is on the influence of party political preference on views of renewable energy we find that the sometimes lukewarm enthusiasm for renewable energy technologies cannot be fully explained by existing theories and that political party preference has a larger impact on energy technology attitudes than previously believed

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

why economic dynamics matter in assessing climate change damages illustration on extreme events extreme events are one of the main channels through which climate and socioeconomic systems interact and it is likely that climate change will modify the probability distribution of the losses they generate the long term growth models used in climate change assessments however cannot capture the eects of such shortterm shocks to investigate this issue a non equilibrium dynamic model nedym is used to assess the macroeconomic consequences of extreme events this exercise allowed us to dene the economic amplic ation ratio as the ratio of the overall production loss due to an event to its direct costs this ratio could be used to improve the cost benet analysis of prevention measures we found also that unlike a solow like model nedym exhibits a bifurcation in gdp losses for each value of the capacity to fund reconstruction gdp losses remain moderate if the intensity and frequency of extremes remain under a threshold value beyond which gdp losses increase sharply this bifurcation may partly explain why some poor countries that experience repeated natural disasters cannot develop applied to the specic issue of climate change this model suggests that changes in the distribution of extremes may entail signican t gdp losses in absence of specic adaptation it suggests therefore that to avoid inaccurately low assessments of damages researchers must take into account the distribution of extremes instead of their average cost and make explicit assumptions on the organization of future economies

local mobilisation against windfarm developments in spanish rural areas new actors in the regulation arena the region of valencia has a marked territorial duality an urbanised populated and high income coastal line and mountain and depressed inland rural areas this territorial duality also derives in a functional duality so that market and regulation drivers seem to assign rural areas specific roles for the provision of raw materials energy water and the like one of the clearest examples can be found in the design and development of the wing energy plan passed by the regional government in 2001 which designated areas for the installation of windmills however this regulation has resulted in an outstanding emergence of associations that have organised at several levels from the local to the national as a strong opposition movement to the local developments of the plan with this background the objective of this paper is to analyze from a set of case studies the processes of emergence and the evolution of collective actors associations which have been arising in many rural areas as a response to the local applications of the wind energy plan attention will be paid to understand the tactics used the process of adaptation to the participation mechanisms and the role played by local and non local networks

consumer responses towards home energy financial incentives a survey based study abstract residential energy efficient and renewable energy eere products play an important role in energy conservation and carbon emissions reduction various financial incentive programs have been developed to promote the adoption of these products however their effectiveness in attracting consumers is not very well understood in this study we investigated impacts of financial incentives on homeowner s decision making towards six eere products two forms of incentives tax credits and interest free loans were examined through a household mailing survey in florida the united states results showed that although half of the respondents were interested in eere products the high investment cost was a major concern that hindered their purchase activities homeowners were attracted to financial incentives and valued tax credits much higher than interest free loans the current federal home energy tax credit levels were found to attract only 2 12 percent of homeowners to buy eere products the willingness of participation was especially low for the costly products such as solar panels the participation rate was also very low for lower income i e annual household income below 50 000 families living in older residences this study contributes to the understanding of economic and social aspects of consumer decision making on energy efficiency and alternative energy

how important is financial risk we explore the determinants of equity price risk of nonfinancial corporations operating and asset characteristics are by far the most important determinants of risk for the median firm financial risk accounts for only 15 of observed stock price volatility furthermore financial risk has declined over the last 3 decades indicating that any upward trend in equity volatility was driven entirely by economic risk factors this explains why financial distress as opposed to economic distress was surprisingly uncommon in the nonfinancial sector during the 2007 2009 crisis even as measures of equity volatility reached unprecedented highs

asset substitution and the agencycosts of debt financing agency costs of debt have been advanced in the literature as an important consideration foroptimal corporate debt policies recently there have been some doubts concerning the theoretical foundations of the notion that these costs increase as the firm employs more debt in this paper we examine explicitly the incentive for asset substitution by solving endogenously for the optimal risk policy the results support the notion that more debt aggravates shareholders incentives to take risk we also investigate the marginal agency cost function and discuss conditions for interior optimal capital structure

a quantile approach to identify factors promoting renewable energy in european countries this paper analyses the impact of several factors on the use of renewable energy sources in a set of european union countries by applying a quantile regression approach we find that different factors are effective for different levels of renewable energy commitment and the magnitudes of some effects evolve in accordance with the level of renewable energy sources used consequently some policies that do not take into account the different stages could carry different effects the results suggest that the lobbying effect of the established industries hampers the development of renewable sources and that this effect is greater for lower initial level of renewable energy use the results reveal that environmental concerns have not yet achieved enough pressure to stimulate major developments on renewables we include two new drivers geographic area and european union directive 2001 77 ec that directive was effective in signaling the commitment to renewables namely for countries with lower renewables use

natural disasters and macroeconomic performance recent empirical research has shown that output and gdp per capita in the aftermath of natural disasters are not necessarily lower than before the event in many cases both are not significantly affected and surprisingly sometimes they are found to respond positively to natural disasters here we propose a novel economic theory that explains these observations specifically we show that gdp is driven above its pre shock level when natural disasters destroy predominantly durable consumption goods cars furniture etc disasters destroying mainly productive capital in contrast are predicted to reduce gdp insignificant responses of gdp can be expected when disasters destroy both durable goods and productive capital we extend the model by a residential housing sector and show that disasters may also have an insignificant impact on gdp when they destroy residential houses and durable goods we show that disasters irrespective of whether their impact on gdp is positive negative or insignificant entail considerable losses of aggregate welfare

household income strategies and natural disasters dynamic livelihoods in rural nicaragua this paper assesses the impact of hurricane mitch on livelihood strategies of rural households in nicaragua through destruction or distress sales of productive assets a hurricane or another natural hazard could induce people with relatively remunerative livelihoods to choose more defensive strategies which allow them to survive but at a permanently lower welfare level than before using panel data from before and after hurricane mitch we find that livelihood strategies can be grouped into three welfare categories annual farming and farm employment generate low incomes whereas nonfarm wage employment and livestock farming result in relatively high incomes perennial farming nonfarm self employment and annual cropping with nonfarm employment take an intermediate position high welfare strategies were associated with high levels of capital and the number of people involved was very similar between different years suggesting that households following low welfare strategies were trapped in poverty however many households moved actively between strategies of different welfare levels this indicates that there was no absolute poverty threshold but also that being able to initiate a relatively profitable livelihood strategy was no guarantee that this strategy could be maintained there is no evidence that hurricane mitch affected livelihood strategy transitions livelihood mobility was similar for households inside and outside mitch affected areas

how high are option values in energy efficiency investments high implicit discount rates in consumers energy efficiency investments have long been a source of controversy in several recent papers hassett and metcalf argue that the uncertainty and irreversibility attendant to such investments and the resulting option value account for this anomalously high implicit discounting using their model and data we show that to the contrary their analysis falls well short of providing an explanation of this pattern

evolutionary modelling of the macro economic impacts of catastrophic flood events this paper examines the possible contribution of evolutionary economics to macro economic modelling of flood impacts to provide guidance for future economic risk modelling most macro economic models start from a neoclassical economic perspective and focus on equilibrium outcomes either in a static or dynamic way and describe economic processes at a high level of aggregation as a consequence they typically fail to account for the complexity of social interactions and other behavioural responses of consumers and producers to disasters which may affect the macroeconomic impacts of floods employing evolutionary principles and methods such as agent based modelling may help to address some of the shortcomings of current macro economic models we explore and discuss the implications of applying consumer and producer heterogeneity bounded rationality network effects social and technological learning co evolution and adaptive policy making concepts into existing economic frameworks for the assessment of macro economic impacts of floods authors abstract

can natural disasters have positive consequences investigating the role of embodied technical change it has been suggested that disasters might have positive economic consequences through the accelerated replacement of capital this possibility is referred to as the productivity effect this effect is investigated using a model with embodied technical change in this framework disasters can influence the production level but cannot influence the growth rate in the same way than the saving ratio in a solow like model depending on reconstruction quality indeed accounting for embodied technical change can either decrease or increase disaster costs but is never able to turn disasters into positive events moreover a better but slower reconstruction amplifies the short term consequences of disasters but pays off over the long term regardless the productivity effect cannot prevent the existence of a bifurcation when disaster damages exceed the reconstruction capacity potentially leading to poverty traps c 2008 elsevier b v all rights reserved

forward markets stock markets and the theory of the firm this paper models a competitive financial market economy in which there are forward markets as well as stock and bond markets although there are separation theorems in the stock and forward markets literatures this analysis shows that neither separation theorem survives in this integrated financial market economy next the analysis shows that the separation results hold and are equivalent if the manager has an appropriate compensation package then the model is modified to allow for depreciation charges and tax credits a positive theory of hedging is developed that shows that the corporation can preserve deductions and credits by hedging and so increase corporate value the theory of the firm under uncertainty has been developed along seemingly independent lines in the literature on stock market economies and the literature on forward market economies there are some interesting parallels but apparently no financial market model also incorporates forward markets some of the models in the two literatures may be viewed as extensions of the theory of the competitive firm under uncertainty developed by both baron 1 and sandmo 13 in each literature the firm manager s optimal production decision may be characterized as the production level at which expected price equals marginal cost plus a marginal risk premium each literature contains a separation theorem in the stock market literature we have the unanimity theorem which shows that stockholders will agree on the optimal production level despite different probability beliefs and attitudes toward risk in a competitive stock market economy this result is equivalent to all stockholders agreeing that the firm should maximize corporate value since any competitive firm s manager finds it in his or her own best interests to maximize corporate value despite his or her probability beliefs and attitude toward risk the unanimity theorem is a separation theorem in the forward market literature we have a separation theorem that shows that any firm manager will select the production level at which the forward price equals marginal cost again despite his or her probability beliefs and attitude toward risk 2 the purpose of this paper is to investigate the theory of the competitive firm in a financial market economy characterized by stock bond and forward markets although one might expect the separation results of the two literatures to survive this generalization we show that they do not we go on to show that

long run implications of investment specific technological change an attempt is made to disentangle its effects from the more traditional hicksneutral form of technological progress the balanced growth path for the model is characterized and calibrated to u s national income and product account nipa data the quantitative analysis suggests that investment specific technological change accounts for the major part of growth jel e13 030 041 047

efficient sourcing and debt financing in imperfect product markets supplier relations play an important role in determining a firm s product market strategy and position by affecting the cost and quality of the product produced by the firm these relations are especially significant because the cost of purchased materials for an average firm is more than half its total sales in this paper we model the adverse incentives of a firm that sources from a competitive supplier industry we show that a firm s propensity to behave opportunistically towards its suppliers raises the firm s input costs by decreasing the number of suppliers servicing it this results in a suboptimal production decision compared to the firm s first best choice we argue that an appropriate level of debt financing alters the shareholder incentives and mitigates the hold up problem further we also show that at the optimal debt level the firm produces its first best level of output

investment incentives debt and warrants abstract this paper models and characterizes investment incentive problems associated with debt financing the decision problem of residual claimants is explicity formulated and their investment policies are characterized the paper also analyzes the use of conversion features and warrants to control distortionary incentives these claims reverse the convex shape of levered equity over the upper range of the firm s earnings and this mitigates the incentive to take risk it is shown that under certain conditions such claims can be constructed to restore net present value maximizing incentives and simultaneously meet the financing requirements of the firm

mobilizing private finance for low carbon innovation a systematic review of barriers and solutions this paper analyses the field of innovation studies regarding barriers to low carbon innovation and consequences for finance investment and divestment and contributes to a more holistic understanding of the underlying mechanisms a combination of technological barriers combined with economic barriers institutional and political barriers contribute to sub optimal low carbon investment all along the innovation cycle policy makers need to take a systemic approach to enable the redirection of diverse private financial sources instruments range from cutting dirty r d subsidies and support for clean technology innovation and diffusion levelling the institutional playing field and making risks of high carbon and low carbon technologies transparent to providing a consistent but adaptive long term transition strategy this would allow financiers to gradually shift their investments away from high carbon mainstream markets and scale low carbon technology niche markets however financiers also need to sharpen their competencies with regard to new clean technologies and markets

debt maturity and the cost of bank loans abstract this study explores the extent to which a firm s debt maturity structure affects the cost of bank loans by examining the u s syndicated loans from 1990 and 2014 we find that debt maturity structure is a major determinant of loan spreads after accounting for firm and loan specific variables and firm and year fixed effects a one standard deviation increase in the ratio of short term debt to total assets is associated with an increase of 11 44 basis points in loan spread representing an additional 0 644 million in interest expenses the results support the rollover risk hypothesis which predicts that short term debts intensify the shareholder and bondholder conflicts and lead to greater credit risk in addition high growth firms experience significantly smaller increases in their loan spreads than low growth firms when the short term debt ratio increases this finding is consistent with the asset substitution theory that short term debt mitigates the managerial shareholders risk taking incentives leading to a decrease in firm risk our results remain strong when we use alternative short term debt proxies address endogeneity concerns and perform various robustness tests

naturally negative the growth effects of natural disasters abstract growth theory predicts that natural disasters should on impact lower gdp per capita however the empirical literature does not offer conclusive evidence most existing studies use disaster data drawn from damage records of insurance companies we argue that this may lead to estimation bias as damage data and the selection into the database may correlate with gdp we build a comprehensive database of disaster events and their intensities from primary geophysical and meteorological information in contrast to insurance data our geomet data reveal a substantial negative and robust average impact effect of disasters on growth the worst 5 disaster years come with a growth damage of at least 0 46 percentage points that average effect is driven mainly by very large earthquakes and some meteorological disasters poor countries are more strongly affected by geophysical disasters rich more by meteorological events international openness and democratic institutions reduce the adverse effect of disasters

renewable energy policy and public perceptions of renewable energy a cultural theory approach abstract public opposition to the siting of renewable energy re facilities and public reluctance to invest in re remain key obstacles to the expansion of the renewables sector in the uk and a number of other european countries although there is a growing body of qualitative research on factors that inform public attitudes towards re the majority of studies have tended to be quantitative and to view the public and public opinion as homogeneous wholes this study uses a cultural theory framework and focus groups conducted in the south west uk to develop deeper understandings of how individuals worldviews can inform opinions and behaviour in relation to re these findings are used to explore ways in which government policies on re might be tailored to engender greater public support and participation issues discussed include the provision of economic incentives information on climate change and re linking renewables to overall energy behaviour and landscape aesthetics