market efficiency and insider trading new evidence that corporate insiders earn profits from stock trading does not surprise most financial economists but that outsiders can earn abnormal returns by using pub licly available insider trading data constitutes a serious exception to stock market efficiency the authors show that this anomaly conti nues to exist despite the publication of studies attesting to its exi stence they suggest that the anomalous profits to outsiders are a ma nifestation of the size and earnings price ratio effects controlling for these factors reduces outsider profits by half the additional a ssumption of a 2 percent transactions cost makes outsider profits zer o or negative insider profits after an assumed 2 percent transactio ns cost are a moderate 3 percent per annum for annual holding period s copyright 1988 by the university of chicago

the income elasticity of non point source air pollutants revisiting the environmental kuznets curve abstract this paper examines the income pollution relationship for three non point source pollutants in 1990 ambient concentrations reported at monitors throughout the us are regressed on median household income and other socio economic variables for the census tracts in which the monitors were located contrary to earlier studies a u shaped relationship is obtained

industrial pollution in economic development the environmental kuznets curve revisited abstract using new international data this paper tests the environmental kuznets curve ekc hypothesis for industrial water pollution we measure the effect of income growth on three determinants of pollution the share of industry in national output the share of polluting sectors in industrial output and end of pipe eop pollution intensities per unit of output in the polluting sectors we find that the industry share of national output follows a kuznets type trajectory but the other two determinants do not when combined our results imply rejection of the ekc hypothesis for industrial water pollution it rises rapidly through middle income status and remains roughly constant thereafter

the environment and welfare implications of trade and tax policy developing countries with comparative advantage in dirty industries face the risk of environmental degradation unless appropriate policies are implemented using applied general equilibrium analysis we examine how trade influences the environment and assess the welfare and environmental implications of alternative pollution abatement policies for indonesia our results indicate that unilateral trade liberalization by indonesia would increase the ratio of emission levels to real output for almost all major pollution categories more importantly when tariff removal is combined with a cost effective tax policy the twin objectives of welfare enhancement and environmental quality improvement appear to be feasible this sheds new and positive light on the role of trade in sustainable development

do stock investors value corporate sustainability evidence from an event study this paper analyzes the impacts of index inclusions and exclusions on corporate sustainable firms by studying a sample of us stocks that are added to or deleted from the dow jones sustainability world index over the period 2002 2008 the impacts are measured in terms of stock return risk and liquidity we cannot find any strong evidence that announcement per se has any significant impact on stock return and risk however on the day of change index inclusion exclusion stocks experience a significant but temporary increase decrease in stock return liquidity deteriorates after the announcement day and bounces back significantly near the day of change systematic risk shows little change after announce ments but idiosyncratic risk is higher after announcements the overall results support harris and eitan s the journal of finance41 4 815 829 1986 price pressure hypothesis which posits that event announcement does not carry information and any shift in demand and hence the corresponding price change and liquidity change is temporary

causal relationship between telecommunications and economic growth in china and its regions shiu a and lam p l causal relationship between telecommunications and economic growth in china and its regions regional studies this paper studies the causal relationship between telecommunications development and economic growth of china its result indicates that there is a unidirectional relationship running from real gross domestic product gdp to telecommunications development at the national level causality running from telecommunications development to real gdp is found only in the provinces in the affluent eastern region but not in the low income central and western provinces the results imply that an improvement in telecommunications infrastructure alone is not sufficient for stimulating growth in the central and western provinces it is equally important for the chinese government to develop and enhance other complementary factors like business environments transportation networks education and manpower training in order to make the best use of the telecommunications systems in the ce

another look at the income elasticity of non point source air pollutants a semiparametric approach in this paper a semiparametric model is used to examine the relationship between pollution and income for three non point source pollutants statistical tests reject the quadratic specification in favor of the semiparametric model in all cases however the results do not support the inverted u hypothesis for the pollution income relationship

the toxic intensity of industrial production global patterns trends and trade policy this paper exploits a newly developed data set to investigate recent changes in the international distribution of industrial pollution in particular the authors examine three issues 1 the relationship between the toxic intensity of industrial production and the level of economic development 2 the impact of oecd environmental regulation on global changes in toxic intensity and 3 the relationship between trade policy and the toxic intensity of industrial production in ldc s 10 refs

economic development and co2 emissions a nonparametric panel approach we examine the empirical relation between co2 emissions per capita and gdp per capita during the period 1960 1996 using a panel of 100 countries relying on the nonparametric poolability test of baltagi et al baltagi b h hidalgo j li q 1996 a nonparametric test for poolability using panel data journal of econometrics 75 345 367 we find evidence of structural stability of the relationship we then specify a nonparametric panel data model with country specific effects estimation results show that this relationship is upward sloping nonparametric specification tests do not reject monotonicity but do reject the polynomial functional form which leads to the environmental kuznets curve in several studies

confronting the environmental kuznets curve t he environmental kuznets curve posits an inverted u relationship between pollution and economic development kuznets s name was apparently attached to the curve by grossman and krueger 1993 who noted its resemblance to kuznets s inverted u relationship between income inequality and development in the first stage of industrialization pollution in the environmental kuznets curve world grows rapidly because people are more interested in jobs and income than clean air and water communities are too poor to pay for abatement and environmental regulation is correspondingly weak the balance shifts as income rises leading industrial sectors become cleaner people value the environment more highly and regulatory institutions become more effective along the curve pollution levels off in the middle income range and then falls toward pre industrial levels in wealthy societies the environmental kuznets curve model has elicited conflicting reactions from researchers and policymakers applied econometricians have generally accepted the basic tenets of the model and focused on measuring its parameters their regressions typically fitted to cross sectional observations across countries or regions suggest that air and water pollution increase with development until per capita income reaches a range of 5000 to 8000 when income rises beyond that level pollution starts to decline as shown in the conventional ekc line in figure 1 in developing countries some policymakers have interpreted such results as conveying a message about priorities grow first then clean up numerous critics have challenged the conventional environmental kuznets curve both as a representation of what actually happens in the development process and as a policy prescription some pessimistic critics argue that crosssectional evidence for the environmental kuznets curve is nothing more than a

empirical asymmetries in foreign direct investment and taxation abstract this paper assesses the sensitivity of the operations of multinational corporations mncs to host country taxation the empirical analysis is based on two different measures of mnc activity by u s majority owned foreign affiliates panel data for aggregate real gross product in manufacturing that originates in a given host country and micro data for a single year regarding the likelihood of a firm locating in a given host country the empirical estimates indicate that investment geared toward export markets rather than the domestic market is particularly sensitive to host country taxation that this sensitivity appears to be greater in developing countries than developed countries and that it is becoming greater over time

neoclassical growth the j curve for abatement and the inverted u curve for pollution abstract this paper reexamines the neoclassical environmental growth model of forster to gain insights into the dynamic relationships among pollution abatement effort and economic development whereas the model has heretofore been used to examine steady state levels of capital consumption and environmental quality it also provides a theoretical basis for recent empirical research on j curves for abatement effort and inverted u curves for pollution

mimickers of corporate insiders who make large volume trades most prior research shows that corporate insiders can systematically earn abnormal returns by buying or selling their own securities also several studies have investigated whether outsiders can earn abnormal returns by mimicking the trades of insiders after the latter report their trades the findings of these studies suggest that they cannot in contrast this study s results indicate that outsiders can earn significant abnormal returns by mimicking such trades this conclusion is consistent with a growing body of empirical literature that suggests that the market is not efficient in the semistrong form i e is not efficient with respect to all publicly available information

a direct test of roll s conjecture on the firm size effect empirical research indicates that small firms earn higher average rates of return than large firms even after accounting for beta risk roll conjectured that the small firm effect might be attributed to improper estimation of security betas the evidence shows that while the direction of the bias in beta estimation is consistent with roll s conjecture the magnitude of the bias appears to be too small to explain the firm size effect

telecommunications and economic growth an empirical analysis of sub saharan africa we examine the effect of mobile cellular phones on economic growth in sub saharan africa where a marked asymmetry is present between land line penetration and mobile telecommunications expansion this study extends previous research along two important dimensions first we allow for the potential endogeneity between economic growth and telecommunications expansion by employing a special linear generalized method of moments gmm estimator second we explicitly model for varying degrees of substitutability between mobile cellular and land line telephony so that greater expansion of mobile telecommunications can have a different impact whenever the level of land line penetration differs we find that mobile cellular phone expansion is an important determinant of the rate of economic growth in sub saharan africa moreover we find that the contribution of mobile cellular phones to economic growth has been growing in importance in the region and that the marginal impact of mobile telecommunication service

analysis on the growth of telecommunication services a global comparison of diffusion patterns with the development of the internet the telecommunication market has seen a rapid shift from voice based services to data based services relationships of substitutability and complementarity have emerged among communications technology services such as internet service mobile phone service and fixed telephone service the article analyses the diffusion patterns of communication services in different continents a modified logistic growth model is estimated using panel data for the years 1975 2004 the research forms a valuable framework for forecasting demand for new services based on the diffusion of incumbent services and can inform strategies for entering the communications network industry

divestiture and its implications for innovation and productivity growth in u s telecommunications this study has sought to determine the impact of policy changes that led to the breakup of the monopoly structure of u s telecommunications on productivity and research activities of at t a simultaneous equations model is used to examine the relationship between research intensity market share firm size and total factor productivity tfp before and after divestiture the results show that the effect of divestiture on productivity is negative but that competition has a significantly positive effect contrary to popular argument competition led to significant increases in r d investment by at t the study also finds a strong and positive relationship between r d and productivity in the postdivestiture period marked by its absence in the predivestiture years scale economies remain important indicating the industry continues to favor large firms

environmental kuznets curve for co2 in canada abstract according to the environmental kuznets curve hypothesis the relationship between per capita gdp and per capita pollutant emissions has an inverted u shape this implies that past a certain point economic growth may actually be profitable for environmental quality most studies on this subject are based on estimating fully parametric quadratic or cubic regression models while this is not technically wrong such an approach somewhat lacks flexibility since it may fail to detect the true shape of the relationship if it happens not to be of the specified form we use semiparametric and flexible nonlinear parametric modeling methods in an attempt to provide more robust inferences we find little evidence in favour of the environmental kuznets curve hypothesis our main results could be interpreted as indicating that the oil shock of the 1970s has had an important impact on progress towards less polluting technology and production

misspecification of capital asset pricing this study documents empirical anomalies which suggest that either the simple one period capital asset pricing model capm is misspecified or that capital markets are inefficient in particular portfolios based on firm size or earnings price e p ratios experience average returns systematically different from those predicted by the capm furthermore the abnormal returns persist for at least two years this persistence reduces the likelihood that these results are being generated by a market inefficiency rather the evidence seems to indicate that the equilibrium pricing model is misspecified however the data also reveals that an e p effect does not emerge after returns are controlled for the firm size effect the firm size effect largely subsumes the e p effect thus while the e p anomaly and value anomaly exist when each variable is considered separately the two anomalies seem to be related to the same set of missing factors and these factors appear to be more closely associated with firm size than e p ratios

a new approach to testing asset pricing models the bilinear paradigm we propose a new approach to estimating and testing asset pricing models in the context of a bilinear paradigm introduced by kruskal 18 this approach is both simple and at the same time quite general as an illustration we apply it to the special case of the arbitrage pricing model where the number of factors is pre specified the data appear to be generally in conflict with a five or seven factor representation of the model used by roll and ross 30 when we consider the number of replications of our test and the large number of observations on which it is performed the frequency with which we reject the three factor apm does not lead us to conclude that this model is unrepresentative of security returns further the rejection of the five and seven factor versions is to be expected if the three factor version is correct the paradigm gives insight into the appropriate specification of the model and suggests that there may be a small number of economy wide factors that affect security returns tests of asset pricing models on the basis of observed stock market data have represented a staple of the financial economics literature of the past twenty years the early work is reviewed in the famous paper by jensen 12 and papers by fama and macbeth 6 rosenberg and marathe 31 and roll and ross 30 there has been a great deal of confusion regarding what testable propositions are implied by these models see discussion in roll 29 in this paper we show that at a minimum all asset pricing models yet proposed imply a simple easily testable hypothesis which we refer to as the bilinear hypothesis while specific models may imply further testable propositions if the bilinear hypothesis is rejected the model is inconsistent with the data and should be rejected our test exploits the fact that the economic content of any equilibrium asset pricing model can be expressed in the form of a potentially refutable constraint on the set of parameters of the process generating security returns this constraint specifies that given a set of security specific characteristics there exists a linear relationship common across securities relating expected returns to these

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

transaction costs telecommunications and the microeconomics of macroeconomic growth the sources of differences in growth rates across nations are unclear this observation constitutes one of the central intellectual challenges of our time why is the whole world not developed consequently a host of scholars offer various explanations for growth or nongrowth including cultural factors politics and economics 2 the objective of this article is to determine whether a link exists between transaction costs telecommunications and economic growth the article builds on recent research on the macroeconomic determinants of growth as well as on research regarding the significant economic effects of telecommunications on transaction costs it is organized as follows section i reviews the theory of transaction costs section ii the link between transaction costs and telecommunications section iii contains the empirical analysis and section iv some conclusions

growth effects of currency mismatches evidence from emerging economies this article investigates empirically the effects of currency mismatches on economic growth and volatility of growth in emerging market economies using the arellano bond dynamic panel data approach the analyses provide evidence on the presence of adverse growth effects of currency mismatches this illustrates the crucial role played by foreign currency denominated debts in the propagation mechanism of contractionary depreciations in emerging economies in the last decade further evidence from estimations implies that the adverse effects of mismatches on growth and growth volatility are more pronounced with higher exchange rate fluctuations

determinants of pollution abatement in developing countries evidence from south and southeast asia abstract developing countries pa ticularly those in asia are fast adopting industrial pollution control standards similar to those in developed countries formal regulation has been greatly hampered however by the absence of clear and legally binding regulations limited institutional capacity lack of appropriate equipment and trained personnel and inadequate information on emissions one would predict highly pollution intensive production under such conditions our research however has uncovered strongly contradictory evidence despite weak or nonexistent formal regulation there are many clean plants in the developing countries of south and southeast asia of course there are also many plants which are among the world s most serious polluters what explains such extreme interplant variation this paper reviews evidence drawn from three empirical studies of plant level abatement practices conducted 1992 1994 the analyses test the importance of plant characteristics economic considerations and external pressure in determining environmental performance the results consistently show that pollution intensity is negatively associated with scale productive efficiency and the use of new process technology it is strongly and positively associated with public ownership but foreign ownership has no significant effect once other plant characteristics are taken into account among external sources of pressure community action or informal regulation emerges as a clear source of interplant differences in all three studies the results suggest that local income and education are powerful predictors of the effectiveness of informal regulation they also show that existing formal regulation has measurably beneficial effects even when it is quite weakly developed

public sector capital and the productivity puzzle a number of studies have suggested a quantitatively important relationship between public sector capital accumulation and private sector productivity with the most compelling evidence derived from analyses of state level data estimates herein of production functions that use standard techniques to control for unobserved state specific characteristics however reveal essentially no role for public sector capital in affecting private sector productivity only estimates of state production functions that do not include such controls find substantial productivity impacts this result reconciles existing econometric estimates with the findings of hulten and schwab based on growth accounting techniques as such techniques effectively control for state specific effects region level estimates are essentially identical to those from state data suggesting no quantitatively important spillover effects across states copyright 1994 by mit press

telecommunications infrastructure and economic development a simultaneous approach in diesem beitrag wird untersucht welchen einflus die telekommunikations infrastruktur auf die wirtschaftliche entwicklung ausubt diese wichtige frage hat im zusammenhang mit der diskussion um informationsautobahnen aktualitat erlangt in der vorliegenden studie wird der einflus der telekommunikations infrastruktur fur 21 oecdlander fur die vergangenen 20 jahre analysiert es wird ein strukturgleichungsmodell geschatzt in dem investitionen in die telekommunikations infrastruktur als endogene variable erfast werden und in einem mikromodell angebot und nachfrage nach telekommunikations investitionen spezifiziert werden das mikromodell wird dann zusammen mit der makro wachstumsgleichung geschatzt als ergebnis stellen die autoren dann eine positive kausalbeziehung zwischen telekommunikations investitionen und wirtschaftlicher entwicklung fest wenn eine kritische masse an telekommunikations infrastruktur existiert

dirty industries patterns of change in industrial countries this article concerns itself with the environmental role of heavily polluting industries since 1970 analysing its development in 11 basic industries as well as electricity production and road transport in 32 industrial countries it argues for a green industrial policy demonstrating that other mitigations of environmental pressure in industrial countries end of pipe treatment relocation to the third world structural change in the industrial sector and even environmentally oriented modernization have so far been unable to solve the problems of dirty industries although some approaches have shown some promise

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

telecommunications and economic growth a panel data approach telecommunication investment is increasingly identified as one with a strong potential to improve economic productivity and growth the objective of this study is to investigate the long run relationship between telecommunications infrastructure and economic growth using data from 22 oecd countries a dynamic panel data method is used for estimation which corrects for omitted variables bias of single equation cross section regression the fixed effects specification accounts for country specific differences in aggregate production functions the results show a significant and positive correlation between telecommunications infrastructure and growth after controlling for a number of other factors

externalities information costs and social benefit cost analysis for economic development an example from telecommunications the analytics of achieving a socially optimal allocation of investment resources has been a continuing problem in the field of economic development early work on this subject focused on externalities and on the need to include in the analysis a project s indirect promotional effects later research in what came to be called social benefit cost analysis sbca has added an emphasis on shadow prices on uncertainty and increasingly on income distribution effects 2 in principle these diverse concerns of social benefit cost analysis are complementary rather than competitive in the conditions of a less developed country ldc an investment project s side effects on income creation can be very significant 3 similarly an investment project s indirect impact on income distribution may also be substantial consequently an analysis incorporating externalities is necessary to take indirect social benefits and costs into account in practice however the more recent concerns of sbca have sometimes been accompanied by diminished interest in externalities 4 this paper presents an example that illustrates the importance of including externalities in considering both the efficiency and the equity consequences of investment choice our example analyzes the welfare effects of investment in telecommunications primarily telephone facilities in developing countries 5 investments that make available additional telephones in ldcs are often viewed as having welfare effects similar to increased availability of consumer durables like color television or air conditioning those goods are primarily an added convenience for the upper classes and their availability enlarges further the

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

anomalies in security returns and the specification of the market model we examine the hypothesis originally advanced by roll 12 that observed anomalies in excess returns can be explained by misspecification of the market model used to estimate systematic risk we find substantial misspecifications in the model systematically related to size and period of listing of the securities in question there is some evidence that these misspecifications are associated with systemic biases in measured betas used to construct excess returns

searching for a kuznets curve in environmental efficiency using kernel estimation abstract the paper constructs environmental efficiency indexes for a sample consisting of high and low income countries using nonparametric production frontier techniques and then establishes an environmental kuznets relationship for environmental efficiency by nadaraya watson kernel estimation methodology

trade and environment an empirical analysis of the technology effect in the steel industry abstract the objective of this paper is to study the impact of free trade on global environmental quality by focusing on the technology effect that is the relationship between trade openness and the adoption diffusion of clean technologies the paper attempts to empirically verify the existence of the technology effect by looking at the relationship between trade policy regime or openness and the speed of clean technology diffusion in the steel industry focusing on a cleaner steel technology the electric arc furnace eaf in 30 steel producing countries over 25 years the results show that eaf technology is diffused faster in countries that have more open trade policy regimes thereby supporting the existence of the technology effect for the industry considered

economic structure development policy and environmental quality an empirical analysis of environmental kuznets curves with chinese municipal data in many cases the relationship between environmental pollution and economic development can be generally depicted by an inverted u shaped curve or an environmental kuznets curve where pollution increases with income at the beginning and decreases after a certain level of income however what determine the shape of an enviornmental kuznets curve such as the height and the turning point of the curve have not been thoroughly studied a good understanding of the determinants is vitally important to the development community especially for the developing world where income growth is a high priority and yet environmental pollution also needs to be carefully controlled this study analyzes the impacts of economic structure development strategy and environmental regulation on the shape of the environmental kuznets curve with a city level panel dataset obtained from china the results show that economic structure development strategy and environmental regulation can all have important implications on the relationship between environmental environmental quality and economic development but the impacts can be different at different development stages

corruption pollution and the kuznets environment curve abstract this paper examines the implications of corruption and rent seeking behavior by the government for the relationship between pollution and growth cases of both cooperative and non cooperative interaction between the government and the private firm are studied it is shown that corruption is not likely to preclude the existence of an inverted u shaped kuznets environmental curve under both these cases however for any level of per capita income the pollution levels corresponding to corrupt behavior are always above the socially optimal level further the turning point of the kuznets curve takes place at income and pollution levels above those corresponding to the social optimum

an overlapping generations model of growth and the environment this article analyzes the potential conflict between economic growth and the maintenance of environmental quality in an overlapping generations model short lived individuals make decisions which have long lasting effects on both factor productivity and the environment the model provides a theoretical explanation of observed correlations between environmental quality and income whereby economic growth is associated first with declines then improvements in environmental quality it suggests circumstances in which multiple pareto ranked steady state equilibria may arise and in which sustained growth of both capital and environmental quality may occur overmaintenance of the environment analogous to dynamically inefficient overaccumulation of capital may emerge copyright 1994 by royal economic society

energy consumption and income a semiparametric panel data analysis this paper proposes a semiparametric analysis for the study of the relationship between energy consumption per capita and income per capita for an international panel dataset it shows little evidence for the existence of an environmental kuznets curve for energy consumption energy consumption increases with income for a majority of countries and then stabilizes for very high income countries neither changes in energy structure nor macroeconomic cycle technological change have significant effect on energy consumption

international investment location decisions abstract in international location tournaments governments compete for foreign investment with tax and other short run incentives such tournaments can be won if agglomeration economies are sufficiently powerful to overcome investors desire to spread investments as a hedge against risk we focus on manufacturing investments by u s multinationals in the 1980s our econometric results suggest that agglomeration economies are indeed the dominant influence on investor calculations paradoxically short run incentives have limited apparent impact on location choice we conclude that high cost tournament play is unnecessary for countries with good infrastructure development specialized input suppliers and an expanding domestic market