crude oil trade and current account deficits abstract this paper provides an empirical exploration into the relationship between crude oil trade and a nation s current account for 91 countries over the 1984 2009 period reduced oil import dependence may initially reduce a country s general trade deficit under certain conditions the analysis probes the nature of this relationship and whether it holds equally to oil importing and oil exporting countries after controlling for other exogenous drivers we find that net oil exports are a significant factor in explaining current account surpluses but that net oil imports often do not influence current account deficits among all oil importers the one exception applies to relatively rich countries where higher oil imports appear to contribute to greater current account deficits one explanation for these trends is that oil exporters and wealthier oil importers may view oil income gains and losses as temporary income sources that influence their savings patterns

a liquidity based model of security design we consider the problem of the design and sale of a security backed by specified assets given access to higher return investments the issuer has an incentive to raise capital by securitizing part of these assets at the time the security is issued the issuer s or underwriter s private information regarding the payoff of the security may cause illiquidity in the form of a downward sloping demand curve for the security the severity of this illiquidity depends upon the sensitivity of the value of the issued security to the issuer s private information thus the security design problem involves a tradeoff between the retention cost of holding cash flows not included in the security design and the liquidity cost of including the cash flows and making the security design more sensitive to the issuer s private information we characterize the optimal security design in several cases we also demonstrate circumstances under which standard debt is optimal and show that the riskiness of the debt is increasing in the issuer s retention costs for assets

limited liability and incentive contracting with ex ante action choices abstract this article examines a principal agent model of financial contracting in which a risk neutral entrepreneur agent makes an unobservable ex ante effort choice while employing the investment funds of a risk neutral investor principal the key innovation is that the investment contract is subject to statutory liability limits given these liability limits two settings are considered one in which the investor payoff function is also constrained to be monotonically nondecreasing in firm profit and another in which no such monotonic contract constraint is imposed in the former case a standard debt contract is shown to emerge and a first best effort choice is not achieved in the latter setting the optimum is characterized by a live or die payoff function and a first best effort level may or may not be realized

quantifying the risk to crude oil imports in china an improved portfolio approach abstract china s rapid economic development caused a sharp increase in crude oil demand in 2011 china imported 254 million tons of crude oil in total with its dependence on imported oil reaching 56 5 this paper carries out a quantitative study on the risk of china s crude oil imports by establishing an assessment model which has two primary characteristics first the model not only uses portfolio theory to assess the risk to china s crude oil imports taking into consideration the effect of the diversified sources of imports but also introduces a correlation coefficient which considers the risks associated with importing oil from oversea sources second the correlation between import prices and global oil prices is analyzed with respect to each exporting country the ease of doing business index grading system is introduced in order to represent the risk weight for each exporting country because of these improvements the model provides operable methods for studying how global oil prices import volumes the diversification index and the political and economic situation of the exporting countries affects china s crude oil import risks as well as offers a method for implementing optimal crude oil import strategies it is concluded that china s crude oil import risks associated with the middle east are not as precarious as researchers traditionally reported among countries in the middle east there exist obvious disparities and differences affecting the kinds and types of risks involved therefore these risks should be treated piecemeal when performing an overall assessment of crude oil import risks in china it should also be noted that with respect to the middle east there is still room for china to optimize the mix of source countries in order to reduce risks china should raise the volume of imports coming from low risk countries as well as add new low risk exporting countries to its importing portfolio

strategic liquidity supply and security design we study how securities and issuance mechanisms can be designed to mitigate the adverse impact of market imperfections on liquidity in our model asset owners seek to obtain liquidity by selling claims contingent on privately observed future cash flows liquidity suppliers can be competitive or strategic in the optimal trading mechanism associated to an arbitrary given security issuers with low cash flows sell their entire holdings of the security while issuers with high cash flows are typically excluded from trade by designing the security optimally issuers can avoid exclusion altogether we show that the optimal security is debt because of its low informational sensitivity debt mitigates the adverse selection problem furthermore by pooling all issuers with high cash flows debt also reduces the ability of a monopolistic liquidity supplier to exclude them from trade in order to better extract rents from issuers with lower cash flows

quantifying china s oil import risks and the impact on the national economy abstract with an increase in china s oil imports china s oil supply will also continue to be effected by the socio economic stability of oil exporting countries and the safety of oil transport routes this paper introduces a systematic and quantitative method to evaluate the influence of china s oil import risks oir on the national economy and industrial sectors from a perspective of apply chain process for this analysis china s oir is quantified by integrating oil exporting country risk and the risks from oil transportation routes country risk is defined as the oil exporting country s political risk caused by political changes or internal conflicts transport risk is defined as the risk of shipping routes affected by pirate attacks and geopolitics second the relationship between china s oir and oil import costs is analyzed using a multiple linear approach third an input output analysis method is used to research the effect of the cost of china s oil imports on the cost of investment within china s domestic sectors this research finds that the corresponding impact on gdp is 3494 5 million dollars given an increasing by 10 of china s oir and the impact on domestic sectors differs from sector to sector finally this paper puts forth recommendations to improve long term oil supply security in china

competition transmission and pattern evolution a network analysis of global oil trade abstract this paper studies the competition among oil importers using complex network theory combined with several alternative measures of competition intensity to analyze the evolution of the pattern and transmission of oil trading competition the results indicate that oil trade has formed a global competition pattern and that the role played by the asian pacific region in the evolution of this competition pattern is becoming increasingly prominent in addition global competition intensity has continued to rise and non oecd countries have become the main driving force for this increase in global competition intensity the large oil importers are the most significant parts of the global oil trading competition pattern they are not only the major participants in the competition for oil resources but also play important roles in the transmission of oil trading competition china and the united states especially display the feature of globalization whose impacts of transmission reach across the whole oil trading competition network finally a 5c changeability contestability cooperation commitment and circumstances policy framework is put forward to maintain the stability of oil trade and improve the energy security of oil importers in various aspects

oil price shocks and trade imbalances abstract this study aims to examine whether a large part of the variability of trade balances and their oil and non oil components is associated with oil price fluctuations the long run causality running from oil price to overall oil and non oil trade balances and their short run dynamics are investigated by applying the toda and yamamoto 1995 ty causality approach and generalized impulse response functions irfs respectively to the monthly data spanning from january 1999 to november 2011 three asian economies that represent three distinct characteristics in terms of oil are chosen and examined malaysia as an oil exporter singapore as an oil refinery and japan as an oil importer the stability of the causality is also checked and the estimated impulse responses across different periods are examined the results have implications for both policy makers and economic modeling of the impact of oil price shocks

optimal security design how should new securities be designed traditional theories have little to say on this the literature on capital structure and general equilibrium theories with incomplete markets take the securities firms issue as exogenous this paper explicitly incorporates the transaction costs of issuing securities and develops a model where the instruments that are traded are chosen optimally and the economy s market structure is endogenous among other things it is shown that the firm s income stream should be split so that in every state all payoffs are allocated to the security held by the group that values them most this abstract was borrowed from another version of this item

effects of oil price fall on the betas in the unconventional oil gas industry abstract we examine the consequences of the oil prices movements started in july 2014 on the financial systematic risk proxied by betas of firms operating in the unconventional oil gas industry compared to that of the conventional oil gas players the analysis is developed using two cross section regressions performed before and after the 2014 oil price drop respectively the results look coherent with the reasonable belief that a sharp and sudden decrease in the oil price can generally lead to higher betas in the oil gas industry interestingly it emerged that the market tends to attribute an additional risk to unconventional firms and analyzing the regression coefficients evolution it appears that this circumstance has been substantially amplified by the 2014 oil price shock to our knowledge this is the first paper covering the topic treated

an empirical analysis of the dynamic programming model of stockpile acquisition strategies for china s strategic petroleum reserve abstract the world s future oil price is affected by many factors the challenge therefore is how to select optimal stockpile acquisition strategies to minimize the cost of maintaining a reserve this paper provides a new method for analyzing this problem using an uncertain dynamic programming model to analyze stockpile acquisition strategies for strategic petroleum reserve using this model we quantify the impact of uncertain world oil price on optimal stockpile acquisition strategies of china s strategic petroleum reserve for the period 2007 2010 and 2011 2020 our results show that the future stockpile acquisition is related to oil prices and their probability and if not considering the occurrence of oil supply shortage china should at least purchase 25 million barrels when world oil price is at an optimal level the optimal price of stockpile acquisition of every year has a stronger relationship with the probability of high price and the optimal expected price and size of stockpile acquisition is different in each year

oil prices and the terms of trade abstract the combination of substantial terms of trade variability and unstable correlation patterns of trade prices with output and trade volumes has led some to suggest a break in the link between trade volumes and prices we find that oil accounts for much of the variation in the terms of trade over the last twenty five years and its quantitative role varies significantly over time and since our dynamic general equilibrium model predicts that the economy responds differently to oil supply shocks than to other shocks changes in their relative importance helps to account for the unstable correlations in the data

editorial to the special issue sustainable energy policies in northeast asia abstract paris agreement in 2015 made a great milestone toward the sustainable development worldwide based on the bottom up market and performance oriented mechanism new climate regime on the paris agreement provides the optimal path control for toward the below 2 c target from pre industrial levels by decreasing substantial ghg emissions unfortunately the withdrawal of the usa from paris agreement may result in 13 gtco2 higher than its original 56 gt target 23 increase nonetheless the strong commitment by china and pro active participation of the northeast asian countries made a new hope against the global warming this special edition shall shed the light on the efforts by these countries based on the comparative analysis to result in the oriental model for the sustainable development and its energy policies especially urbanization became one of the hottest issues for the special issue and the differentiated diverse efforts by the governments are much emphasized in this issue

what determines china s crude oil importing trade patterns empirical evidences from 55 countries between 1992 and 2015 abstract this study develops a conceptual framework that synthesizes the supply demand price and openness of crude oil trade along with a list of traditional economic political and geographical factors to investigate the determinants of crude oil imports in emerging markets we test the framework using china s crude oil imports from 55 countries for the period from 1992 to 2015 using both static and dynamic panel data models we find that china s crude oil import is associated with exporting country s supply demand and price as well as its bilateral trade relationships these factors were found to affect china s import of crude oil from the middle east however only bilateral trade relationships affect its imports of crude oil from the asia pacific furthermore we do not find substantial evidence in this research to indicate that china s direct investment increases crude oil imports from those countries this article is part of a virtual special issue entitled comparing sustainable energy policies in northeast asia toward the harmonized public private partnership

financial intermediaries and liquidity creation trading losses associated with information asymmetries can be mitigated by designing securities which split the cash flows of underlying assets these securities which can arise endogenously have values that do not depend on the information known only to informed agents bank debt deposits is an example of this type of liquid security which protect relatively uninformed agents and we provide a rationale for deposit insurance in this content high grade corporate debt and government bonds are other examples implying that a money market mutual fund based payments system may be an alternative to one based on insured bank deposits

determinants of china s energy imports an empirical analysis sustained economic growth in china has triggered a surge of energy imports especially oil imports this paper investigates the determinants of china s energy import demand by using cointegraiton and vecm techniques the findings suggest that in the long run growth of industrial production and expansion of transport sectors affect china s oil imports while domestic energy output has a substitution effect thus as the chinese economy industrializes and the automotive sector expands china s oil imports are likely to increase though china s domestic oil production has a substitution effect on imports its growth is limited due to scarce domestic reserve and high exploration costs it is anticipated that china will be more dependent on overseas oil supply regardless of the world oil price

energy security in china a quantitative analysis and policy implications abstract this study aims to examine how china s energy security has changed over 30 years of reform and the opening period it constructs a 4 as quantitative evaluation framework the availability of energy resources the applicability of technology the acceptability by society and the affordability of energy resources the quantitative results show that china s energy security was at its best during the sixth fyp period 1981 1985 but then deteriorated until it hit higher levels between 1995 and 2005 however it was still lower than the level reached during the sixth fyp period during the eleventh fyp period 2006 2010 the energy security situation deteriorated again differences in policy priority over the study period appear to affect the country s energy security status this study suggests that china needs to develop renewable energy resources on a large scale and pay more attention to emissions control to reverse the downward trend in energy security

the integration of china into the world crude oil market since 1998 abstract the integration of china into the world oil market is an important issue for at least two reasons first the influence of the country on the world oil market is dependent on the level of the integration second integration into the world oil market means that china is opening itself up to potential disturbances in the world market and this leads to significant energy security concerns for the country the aim of this paper is to investigate whether or not china is an integral part of the world oil market by reviewing the relevant trade and pricing policies of the chinese government as well as the behavior of the chinese national oil companies we find that china is actively engaging itself in the world oil market our time series results show that the chinese oil price is cointegrated with the major oil prices in the world and a high degree of co movement between the prices is found causality between the price pairs is found to be bi directional in most cases the empirical results suggest that china is now an integral part of the world oil market

what drives the formation of global oil trade patterns abstract in this paper the spatial characteristics of current global oil trade patterns are investigated by proposing a new indicator moran f meanwhile the factors that influence the formation of oil trade patterns are identified by constructing four different kinds of spatial econometric models the findings indicate that most oil exporters have an obvious export focus in north america and a relatively balanced export in europe and the asia pacific region besides supply and demand factors technological progress and energy efficiency have also significantly influenced the oil trade moreover there is a spillover effect of trade flow among different regions but its impact is weak in addition oil importers in the same region have the potential to cooperate due to their similar import sources finally promotion of oil importers r d investments can effectively reduce the demand for global oil trade

short selling and price discovery in corporate bonds we show short selling in corporate bonds forecasts future bond returns short selling predicts bond returns where private information is more likely in high yield bonds particularly after lehman brothers collapse of 2008 short selling predicts returns following both high and low past bond returns this together with short selling increasing following past buying order imbalances suggests short sellers trade against price pressures as well as trade on information short selling predicts bond returns both in the individual bonds that are shorted and in other bonds by the same issuer past stock returns and short selling in stocks predict bond returns but do not eliminate bond short selling predicting bond returns bond short selling does not predict the issuer s stock returns these results show bond short sellers contribute to efficient bond prices and that short sellers information flows from stocks to bonds but not from bonds to stocks

energy consumption and economic growth the case of oil exporting countries this paper examines the causal relationship between the per capita energy consumption and the per capita gdp in a panel of 11 selected oil exporting countries by using panel unit root tests and panel cointegration analysis the results show a unidirectional strong causality from economic growth to energy consumption for the oil exporting countries the findings have practical policy implications for decision makers in the area of macroeconomic planning in most major oil exporting countries government policies keep domestic prices bellow free market level resulting in high levels of domestic energy consumption the results imply that the energy conservation through reforming energy price policies has no damaging repercussions on economic growth for this group of countries

oil and the macroeconomy since the 1970s economists have long been intrigued by empirical evidence that suggests that oil price shocks may be closely related to macroeconomic performance this interest dates back to the 1970s the 1970s were a period of growing dependence on imported oil unprecedented disruptions in the global oil market and poor macroeconomic performance in the united states thus it was natural to suspect a causal relationship from oil prices to u s macroeconomic aggregates since then a large body of work has accumulated that purports to establish this link on theoretical grounds and to provide empirical evidence in its support we do not attempt a comprehensive survey of this literature but rather provide an idiosyncratic synthesis of what we view as the key issues in this debate and the insights gained over the last 30 years the timing seems right for such an account although the experience of the 1970s continues to play an important role in discussions of the link between oil and the macroeconomy there have been a number of new oil price shocks since the 1970s notably the 1986 collapse of oil prices and the 2000 boom in oil prices as well as the oil price increases associated with the 1990 1991 gulf war and the 2003 iraq war given this richer case history we are arguably in a better position than two decades ago to distinguish the idiosyncratic features of each oil crisis from the systematic effects increases in oil prices have been held responsible for recessions periods of excessive inflation reduced productivity and lower economic growth in this paper we review the arguments supporting such views first we highlight some of the conceptual difficulties in assigning a central role to oil price shocks in explaining

quest for middle east oil the us versus the asia pacific region abstract two very powerful geopolitical factors will decisively determine whether the quest for middle east oil mainly gulf oil could enhance the global oil security or could lead to oil supply disruptions and also instability and conflict in the asia pacific region the two factors are the united states growing dependence on oil imports from the middle east and the asia pacific region s thirst for oil and the increasingly likely chinese dependence on oil from the region the asia pacific countries are increasingly growing concerned about their ability to supply enough oil to fuel future economic growth the region s phenomenal economic growth up to july 1997 and its economic recovery since then and its steadily rising energy needs lend urgency to the question of how the region would meet its considerable energy challenges this paper will endeavour to analyze the impact of this growing dependence on middle east oil on global oil supplies the price of oil and global oil security it will argue that such dependence on a volatile region like the middle east and the perception of scarcer energy resources in the asia pacific region have the potential to lead to conflict in both regions unless these issues are dealt with in geoeconomic rather than geostrategic terms the paper will strongly express the view that potential conflicts can be resolved not by force but through markets and investment and also through the diversification of energy sources and the promotion of alternative energy development and use across the region

china s energy security and its challenges towards 2035 abstract within the last twenty years china has become dependent on import of coal oil and natural gas especially oil is now an economic and a security concern by the chinese regime and key international stakeholders until 2035 china will account for one fourth of the global net growth in global gas consumption and more than half of the net growth in oil consumption the future demand cannot be covered by china s own conventional and unconventional sources pipelines from neighboring countries can cover more than half of the needed import of natural gas by 2030 but only 10 percent of the import demand of oil is secured so far even if china attempts to address its insufficient supply of oil by increased investments in overseas oil fields there is still a large gap furthermore the oil import will largely come from politically unstable countries and regions and the bulk of the supplies must be shipped through the potentially insecure hormuz and malacca straits the ongoing territorial disputes with neighboring countries regarding areas with gas and oil reserves in contested waters bear evidence to regional conflict potentials and china appears to engage more actively in energy diplomacy and regional cooperation

china s energy security perception and reality abstract china now the world s second largest economy is worried about energy security which underpins the core objectives of beijing and the political legitimacy of the communist party of china the purpose of this study is to explore certain popular myths about china s energy security the study consists of six parts after the introduction it formulates the obscure concept of energy security and attempts to contextualize it with chinese characteristics then it explicitly points out that the largest driver of oil demand by china as the world s factory is transport instead of industry next it explores the effectiveness of transnational pipelines as a measure of energy security and explains why they are less effective than many observers have previously assumed furthermore it investigates the global expansion of chinese national oil companies and questions their actual contribution to energy security a few concluding remarks then follow

the overseas acquisitions and equity oil shares of chinese national oil companies a threat to the west but a boost to china s energy security abstract this paper argues that both china and the western countries need to de politicize china s global quest for energy security the western politicians need to recognize that their rhetoric in relation to china s efforts to secure energy supplies overseas has done nothing but intensify china s fear that they might seek to deny china s access to the oil it needs for the development china needs to reconsider its stance of distrusting global oil markets and to recognize that the reliance on aggressive acquisitions of overseas oil fields and equity oil production has been of little help in strengthening its energy security given that china s energy security depends increasingly and deeply on the stability of global oil markets and reliable and growing oil supplies to the market china shares with other major oil importing countries profound common interests in maintaining and strengthening the stability of global oil markets and reducing the chance of potential disruptions to oil supply and the resulting damaging oil price shocks

exploring crude oil production and export capacity of the opec middle east countries abstract as the world economy highly depends on crude oil it is important to understand the dynamics of crude oil production and export capacity of major oil exporting countries since crude oil resources are predominately located in the opec middle east these countries are expected to have significant leverage in the world crude oil markets by taking into account a range of uncertainties in this study we develop a scenario for crude oil export and production using the aceges model considering uncertainties in the resource limits demand growth production growth and peak decline point the results indicate that the country specific peak of both crude oil export and production comes in the early this century in the opec middle east countries on the other hand they occupy most of the world export and production before and after the peak points consequently these countries are expected to be the key group in the world crude oil markets we also find that the gap between the world crude oil demand and production broadens over time meaning that the acceleration of the development of ultra deep water oil oil sands and extra heavy oil will be required if the world continuous to heavily rely on oil products

forecasting the development of china s coal to liquid industry under security economic and environmental constraints abstract coal to liquid ctl technology has attracted attention in china as an alternative way to alleviate oil shortages however due to low profits and environmental problems chinese ctl policy is cautious and unstable rendering the future development of ctl technology uncertain considering security economic and environmental constraints this study uses system dynamics models to predict the long term development of the ctl industry in china the results show that ctl production will steadily increase over the next few years and a greater increase will occur after 2021 if the government will not provide support policies for ctl industry we forecast ctl production will be 29 3 million tons by 2030 once government actively supports ctl its production is projected to reach 51 8 million tons which is 45 times greater than that in 2015 when environmental issues are also considered the production is expected to 47 3 million tons the sensitivity analysis shows that under different refined oil prices ctl production ranges from 29 3 to 56 3 million tons at present china s ctl only accounts for 0 2 of its oil consumption and the eroi value of ctl is approximately 0 9 1 the low eroi implies little importance for ctl from a net energy perspective based on these research findings this research offers some relevant policy suggestions

diversification of oil import sources and energy security a key strategy or an elusive objective this paper explores the relationship between the diversification of sources of imported oil and energy security of oil importing countries it examines the importance of diversification policy for oil importers explains why oil importers implement oil diversification policy and contextualizes the oil import diversification strategy in the overall energy security policy of oil importers the paper analyzes the factors and the contexts that affect the level of importance assigned to oil import diversification policy in oil importing countries and the limitations that may affect the successful implication of oil import diversification policy the examples are drawn from the world s top three oil importers the united states japan and china the policymakers in these and other oil importing countries place much importance on energy security the diversification of oil import sources is used as one of the strategies to enhance energy security in oil importing countries this paper is important for policymakers in oil importing countries as it provides them with a qualitative conceptual framework with which to evaluate the need to diversify their countries sources of imported oil and with which to identify the likely limitations to the successful implementation of oil import diversification policy

secondary market liquidity and security design theory and evidence from abs markets we develop and empirically test a theory of optimal security design under adverse selection accounting for strategic trading by uninformed investors who will liquidate a security in secondary markets only if their idiosyncratic carrying costs exceed the security s expected trading loss such investors demand primary market discounts equaling expected carrying costs borne plus trading losses incurred issuers minimize the total illiquidity discount by splitting cash flow into tranched debt claims with liquidity predicted to increase with seniority while the optimal number of tranches increases with underlying cash flow risk empirical tests confirm our model predictions

the relationship between energy consumption energy prices and economic growth time series evidence from asian developing countries this paper estimates the causal relationships between energy consumption and income for india indonesia the philippines and thailand using cointegration and error correction modelling techniques the results indicate that in the short run unidirectional granger causality runs from energy to income for india and indonesia while bidirectional granger causality runs from energy to income for thailand and the philippines in the case of thailand and the philippines energy income and prices are mutually causal the study results do not support the view that energy and income are neutral with respect to each other with the exception of indonesia and india where neutrality is observed in the short run c 2000 elsevier science b v all rights reserved jel classifications c22 q43 q48

ramsey prices average cost prices and price sustainability abstract we study the relationship between sustainable and average cost prices in the multiproduct case it is shown that for the case where costs are separable only average cost prices can be sustainable even if demands are interdependent as for the non separable cost case the notion of average cost prices is axiomatically defined as an extension of the average cost concept of the single product case we then use this extension to derive necessary as well as sufficient conditions for the extended average cost prices to be sustainable

a supply model for crude oil and natural gas in the middle east abstract crude oil co and natural gas ng play an important role in the world economy the arab countries acs share 64 of the total oil reserves and 40 of the ng reserves opec 2003 the annual statistical bulletin on the production side acs contribute to 30 and 9 of the world production of co and ng respectively accurate forecast models are needed to do better planning and create less risky business environment in this paper an econometric model is built to capture the behavior of co and ng production in the escwa 1 countries the model is used to forecast future production trends of co and ng and thus provide a powerful tool for researchers planners and investors working in the energy field

information production dilution costs and optimal security design abstract we investigate the problem of a firm wishing to finance a project by issuing securities under asymmetric information we find that when outside investors can produce noisy information on the firm s quality the degree of information asymmetry resulting in equilibrium is endogenous and depends on the information sensitivity of the security issued thus in contrast to the prediction of the pecking order theory see e g myers and majluf j financial econom 13 1984 187 a security with low sensitivity to private information such as debt does not always dominate one with high information sensitivity such as equity a firm s preference for equity rather than debt depends on the costs of information production the precision of the information production technology and the extent of the information asymmetry we also study the optimal security design problem and find that depending on the cost and precision of the information production technology risky debt or a composite security with a convex payoff emerges as optimal securities

optimal design of securities under asymmetric information a firm must decide what security to sell to raise external capital to finance a profitable investment opportunity there is ex ante asymmetry of information regarding the probability distribution of cash flow generated by the investment in this setting we derive necessary and sufficient conditions for a security to be optimal uniquely optimal that is for pooling at this security to be an the unique equilibrium outcome using these conditions we show that the debt contract is uniquely optimal if and only if cash flows are ordered by strict conditional stochastic dominance finally we derive an equivalence relationship between optimal security designs and designs that minimize mispricing