nonrenewable resources with switching costs abstract this paper considers a firm s decision to commence or to suspend extraction of a nonrenewable resource when there are start up or shut down costs for a given level of reserves the critical price that would cause an inactive mine to be opened exceeds the price that would induce an active mine to be closed as one would expect greater switching costs cause firms to be less inclined to change status this impact can be substantial even for modest switching costs possible implications of switching costs are considered including the potential for firms to abandon mines with economically valuable remaining reserves

the role of american depositary receipts in the development of emerging equity markets this paper finds that the growth and expansion of u s cross listings by firms from emerging markets around the world facilitated an expansion of cross border equity flows and overall development of their stock markets during the 1990s however these benefits have negative spillover effects the capitalization and turnover ratios of local market firms that do not pursue overseas listings decline as u s cross listings in the form of american depositary receipts adrs increase in size and scope we investigate various possible sources of these negative spillovers and offer new evidence that the growth of adrs neither facilitates nor hinders local market development but represent an outcome of poorly functioning local markets policy implications are discussed

the irreversibility effect in environmental decisionmaking we provide a new more general definition for the irreversibility effect and demonstrate its relevance to problems involving environmental and other decisions under uncertainty we establish several analytical and numerical results that suggest both that the effect holds more widely than generally recognized and that an existing result epstein s theorem giving a sufficient condition for determining whether the effect holds can be applied more widely than previously indicated in particular to problems involving intertemporally nonseparable benefit functions we further show that a low elasticity of intertemporal substitution will however result in failure of the effect

the financial development and growth nexus a meta analysis this is the accepted manuscript the final version is available from wiley at http onlinelibrary wiley com doi 10 1111 joes 12086 abstract

a pragmatic approach to capital account liberalization in the mid 1990s mainstream economists of nearly all stripes commonly recommended capital account liberalization that is allowing a free flow of funds in and out of a country s economy as an essential step in the process of economic development but then came the east asian financial crisis of 1997 98 in which even seemingly healthy and well managed economies like those of south korea were engulfed by massive capital outflows and tremendous currency volatility and capital account liberalization became quite controversial in the economics profession a decade later now that time has quelled passions and intervening research can shed more light on the debate it appears that both the costs and benefits of capital account liberalization may have been misunderstood in that earlier debate now it appears that the main benefits of capital account liberalization for emerging markets are indirect more related to their role in building other institutions than to the increased financing provided by capital inflows and these indirect benefits are important enough that countries should look for creative approaches to capital account liberalization that would help attain these benefits while reducing the risks countries don t have much choice but to plan for capital account liberalization because capital accounts are de facto becoming more open over time whatever governments may do to try to control them

risk taking global diversification and growth this paper develops a continuous time stochastic model in which international risk sharing can yield substantial welfare gains through its effect on expected consumption growth the mechanism linking global diversification to growth is an attendant world portfolio shift from safe low yield capital to riskier high yield capital the presence of these two types of capital captures the idea that growth depends on the availability of an ever increasing array of specialized hence inherently risky production inputs calibration exercises using consumption and stock market data imply that most countries reap large steady state welfare gains from global financial integration copyright 1994 by american economic association

exploring the nexus between financial openness and informational efficiency does the quality of institution matter this article examines the empirical link between financial openness and informational efficiency of stock markets in 27 emerging markets improving on earlier papers this study has used world bank s worldwide governance indicators wgi as the proxy of institutional development in dynamic panel data models estimated by generalized method of moments gmm our results show first financial liberalization by itself has no impact on enhancing efficiency of stock market second for countries with high level of institutional development the interaction of trade openness and financial openness become significant third for the same group of countries interaction effect of financial liberalization and institutional development leads to more efficiency in stock market hence our finding demonstrates the utmost importance of institutional development and its role on liberalization our results conclude that institutional development and trade openness are pre requisites for a country to benefit from financi

flexibility and security within european labor markets in this comparative qualitative study the authors examine how local bargaining shapes the trade off between labor flexibility and employment security policies in four multinational subsidiaries in belgium britain and germany they also consider whether and how union power to shape flexibility and security policies is affected by national institutions the way that multinationals organize their subsidiaries and local contextual factors findings support this multilevel interdependent framework trade offs are shaped by differences in workers structural power in specific local subsidiaries differences in inter subsidiary organizational configurations markets and technologies modify how unions can leverage collective resources to wield power in their relationship with management

rich regions poor regions and bank branch deregulation in spain abstractrich regions poor regions and bank branch deregulation in spain regional studies the links between financial deregulation and economic performance are evaluated in a european context specifically the study analyses the relaxation of bank branching restrictions in spain which triggered a remarkable interregional expansion of savings banks that coincided with an unprecedented period of sustained economic expansion although related questions have been widely investigated for the united states experiences in europe have received far less research attention an additional contribution of the paper lies in its use of quantile regression which enables the investigation of the possibility of economic effects taking into account the degree of regional development the potential endogeneity of some of the regressors is also explicitly considered results do not support the case for a positive effect of bank branch deregulation in spain out of region entry in particular does not seem to have had

does globalization affect growth evidence from a new index of globalization the study develops an index of globalization covering its three main dimensions economic integration social integration and political integration using panel data for 123 countries in 1970 2000 it is analysed empirically whether the overall index of globalization as well as sub indexes constructed to measure the single dimensions affect economic growth as the results show globalization indeed promotes growth the dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries although less robustly information flows also promote growth whereas political integration has no effect

forest conservation in costa rica when nonuse benefits are uncertain but rising stochastic dynamic programming is used to investigate optimal holding of primary tropical forest in humid costa rica when future nonuse benefits of forest conservation are uncertain and increasing the quasi option value of maintaining primary forests is included as a component of investment in natural capital although the impact of uncertainty on conservation incentives is substantial our results indicate that a rising trend in future benefits and compensation by the international community for beneficial spillovers are more important factors in determining optimal holdings of forest stocks without compensatory payments however further deforestation may be warranted

mobilidade de capitais e crescimento economico uma analise empirica dinâmica com dados em painel this paper aims at analyzing empirically the relationship between economic growth and openness of the financial account of the balance of payments it takes into consideration the balance of payments constrained growth as well as the difficulties in the empirical literature in measuring capital mobility departing from capital mobility index we estimate a panel across 80 countries both developed and developing ones between 1997 2003 results suggest that more capital mobility in developing countries affects negatively growth whereas it possibly stimulates growth in developed countries

is financial globalization beneficial this lecture examines whether financial globalization is beneficial to developing countries by first examining the evidence on financial development and economic growth and concludes that financial development is indeed a key element in promoting economic growth it then asks why if financial development is so beneficial it often does not occur it then goes on to examine whether globalization particularly of the financial kind can help encourage financial and economic development and argues that it can however financial globalization does not always work to encourage economic development because it often leads to devastating financial crises the issue is thus not whether financial globalization is inherently good or bad but whether it can be done right

global growth opportunities and market integration we propose an exogenous measure of a country s growth opportunities by interacting the country s local industry mix with global price to earnings pe ratios we find that these exogenous growth opportunities predict future changes in real gdp and investment in a large panel of countries this relation is strongest in countries that have liberalized their capital accounts equity markets and banking systems we also find that financial development external finance dependence and investor protection measures are much less important in aligning growth opportunities with growth than is capital market openness finally we formulate new tests of market integration and segmentation by linking local and global pe ratios to relative economic growth in a perfectly integrated world economy capital should be invested where it

internationalization and the evolution of corporate valuation by documenting the evolution of tobin s q before during and after firms internationalize the authors provide evidence on the bonding segmentation and market timing theories of internationalization using new data on 9 096 firms across 74 countries over the period 1989 2000 they find that tobin s q does not rise after internationalization even relative to firms that do not internationalize instead q rises significantly before internationalization and during the internationalization year but then q falls sharply in the year after internationalization quickly relinquishing the increases of the previous years to account for these dynamics the authors show that market capitalization rises before internationalization and remains high while corporate assets increase during internationalization the evidence supports models stressing that financial internationalization facilitates corporate expansion but challenges models stressing that internationalization produces an enduring effect on q by bonding firms to a better corporate governance system

capital account liberalization what do cross country studies tell us capital account liberalization it is fair to say remains one of the most controversial and least understood policies of our day one reason is that different theoretical perspectives have very different implications for the desirability of liberalizing capital flows another is that empirical analysis has failed to yield conclusive results the answer another influential strand of thought contends is that this efficient markets paradigm is fundamentally misleading when applied to capital flows limits on capital movements are a distortion it is an implication of the theory of the second best that removing one distortion need not be welfare enhancing when other distortions are present

organizational isomorphism and corruption in financial institutions empirical research in emerging countries the globalizations of capital markets in the last 20 years has led to a historic degree of financial integration in the world it is clear however that globalization is not conducive to a complete homogeneity of financial markets and institutions among others one element of diversity is the importance of the impact of corruption in emerging countries corruption decreases the credibility of financial institutions and markets scandals and unethical behavior in financial institutions erode confidence in such firms relying on neoinstitutional literature this article focuses on the link between corruption and organizational isomorphism in financial institutions in emerging countries therefore our aim is to examine the institutional reasons for corruption in financial institutions in emerging countries our structural equation model is based on empirical research in financial institutions in emerging countries a questionnaire was administrated to 70 top executives of financial institutions in 18 different emerging countries

the globalization of service work comparative institutional perspectives on call centers introduction to a special issue of the industrial labor relations review this introduction to the special issue on the globalization of service work provides an overview of the call center sector and its development in coordinated liberal market and emerging market ec

flexibility learning and irreversibility in environmental decisions a bayesian approach the bayes decision is characterized and studied for a two period decision problem involving a proposed resource development project it is assumed that development is irreversible and that expectations about benefits and costs during the second period vary with experiences resulting from the first period action the amount and types of learning achieved depend upon the particular action taken during the first period flexible sequential decision procedures are compared with fixed once and for all decisions it is shown that under this specification optimal development decisions are not necessarily more conservative when a sequential procedure is used the possibility of reneging on a fixed decision is formally specified and studied

financial liberalization bureaucratic corruption and economic development abstract we study the effect of international financial integration on economic development when the quality of governance may be compromised by corruption our analysis is based on a dynamic general equilibrium model of a small economy in which growth is driven by capital accumulation and public policy is administered by government appointed bureaucrats corruption may arise due to the opportunity for bureaucrats to embezzle public funds an opportunity that is made more attractive by financial liberalization which at the same time raises efficiency in capital production our main results may be summarized as follows 1 corruption is always bad for economic development but its effect is worse if the economy is open than if it is closed 2 the incidence of corruption may itself be affected by both the development and openness of the economy 3 financial liberalization is good for development when governance is good but may be bad for development when governance is bad and 4 corruption and poverty may coexist as permanent rather than just transitory fixtures of an economy

variation in approaches to european works councils in multinational companies drawing on a unique international data set of multinational companies employment practices the authors use logistic regression analysis to address variation in the existence of and management practice toward transnational social dialogue through european works councils ewcs adopting a contingency perspective they find that the degree of internationalization of companies operations and management organization international hr structure and the presence of workforce organization exercise strong influence on whether multinationals covered by the relevant european union legislation have established an ewc so too do multinationals country of origin sector and size by employment while concern has focused on the significant proportion of ewcs in which management s information and consultation practice seems to be minimalist the authors find that this is less likely to be the case where the hr function is internationalized

optimal environmental management in the presence of irreversibilities abstract we consider an environment of a fixed size that can be converted to another use this conversion can be made in steps but it is irreversible the future benefits per unit from the original use and from the alternative use follow a diffusion process for a fairly general case we show that the value function must be the unique viscosity solution to the associated hamilton jacobi bellman equation we also exhibit several properties of the solution for the case of constant relative risk aversion between 0 and 1 and a log linear diffusion for the benefits journal of economic literature classification numbers c61 d90 q30

optimal conservation extinction debt and the augmented quasi option value abstract optimal conversion defines rules that determine the rate at which land is irreversibly moved out of conservation into production what are the implications on these rules of allowing for a feedback between conversion decisions and the stochasticity of conservation benefits we address this question using the well known ecological mechanism of extinction debt as an illustration this yields a model with a controlled diffusion process at its core we solve this model using a real options approach which leads to the conventional conversion rule as a special case calibrating the model to a specific case costa rica we demonstrate the presence of an augmented quasi option value the size of this value depends on the strength of the feedback

non linear growth effects of financial development does financial integration matter using both macro and industry level data this paper analyses the non linear effects of financial development and international financial integration on economic growth in europe special attention is devoted to modeling threshold effects with respect to the depth of financial markets as a measure of economies absorption capacity results reveal evidence of significant non linear effects with less developed european countries gaining more from financial development in contrast benefits of international financial integration become significant at higher levels of financial development the data show that monetary integration in europe significantly contributed to a higher degree of financial integration entry of new eu members to the european monetary union may thus be the mechanism ensuring a virtuous development circle as the adoption of the euro may allow the development of domestic financial markets and financial integration to go hand in hand

how does capital control spur economic growth this paper provides a conceptual and empirical framework for evaluating the effect of capital controls on long term economic growth in a small open economy which relies on successful investment projects to provide capital goods taking out short term loans has two contradictory impacts i it reduces the interest costs of financing investment projects and ii it also leads to larger asset losses in the scenario of short term debt run in this work we hypothesise that private financing decisions made by domestic investors are distorted towards excessive risk taking leading to ineffective capital formation thus capital control policies particularly regulations on short term loans can be socially beneficial as they alter the debt composition promote capital formation and achieve a higher output level using a panel data set covering 77 countries from 1995 to 2009 we employ a system generalised method of moments gmm estimator to sequentially test three hypotheses and find strong empirical evidence that supports our theory

effects of financial autarky and integration the case of the south africa embargo abstract the paper interprets the imposition in 1985 and removal in 1993 of the embargo on south africa as financial autarky and financial integration natural experiments and studies the effects on the economy the aggregate data indicate a decrease in the levels and growth rates of investment capital and output during the embargo period relative to the pre embargo and post embargo periods to further rationalize these findings we calibrate a neoclassical growth model to the economy during the transition to steady state we limit the country s ability to borrow for a period corresponding to the duration of the embargo the derived dynamics for investment capital and output support the findings of a positive negative link between financial integration isolation and economic growth

species preservation and biodiversity value a real options approach abstract we evaluate biodiversity in a real options framework when the resources in use are substitutable we examine optimal conservation decisions given that a biodiversity loss is irreversible and that future use values are uncertain while species substitutability has been shown to reduce the value of diversity we show that the flexibility associated with substitutability is a source of value marginal species value is decreasing in the number of species but rising and convex in the value of the marginal species as we show in the two species homogenous model increased volatility raises biodiversity value and a positive correlation between species values both reduces the value of the pool of species and the value of biodiversity the role played by the correlation between the value of a species and the value of other species is reminiscent of the beta of a financial asset just like an asset with a negative beta derives additional value by providing insurance against fluctuations in the market portfolio a species whose value tends to move in the opposite direction as the species in use derives additional value from its higher probability to be available for substitution if the value of the species in use diminishes

international financial integration and economic growth abstract this paper uses new data and new econometric techniques to investigate the impact of international financial integration on economic growth and also to assess whether this relationship depends on the level of economic development financial development legal system development government corruption and macroeconomic policies using a wide array of measures of international financial integration for 57 countries and an assortment of statistical methodologies we are unable to reject the null hypothesis that international financial integration does not accelerate economic growth even when controlling for particular economic financial institutional and policy characteristics

optimal investment in ecological rehabilitation under climate change ecological rehabilitation is subject to a variety of risks affecting the likely return on investment we propose an options approach to allocating scarce conservation funds that explicitly allows for the irreversibility of investment and risks to investment payoffs the approach captures ecosystem dynamics from extinction debt as well as ecological and climatic risks at the project scale climatic risks are introduced through three channels the effects of climate change on species loss future rehabilitation benefits and frequency of catastrophic events our results suggest that allocating voluntary rehabilitation contracts on the basis of real options criteria increases cost efficiency and delivers greater value for money for the government when compared with the conventional cost effectiveness criterion as it is illustrated for the case of box gum grassy woodland rehabilitation in australia

is full banking integration desirable abstract we analyze the links between banking integration and economic development for a sample of oecd countries we measure banking integration considering indicators that merge not only openness but also connectedness with other banking systems we plug these indicators into income regressions also controlling for other relevant variables considered by the literature in contrast to previous initiatives this second stage explicitly takes into account the differing levels of economic development of the countries in our sample since the benefits of enhanced banking integration might not be generalizable to this end we implement quantile regression also considering the presence of endogenous regressors results show that bank connectedness is more important for economic development than bank openness but the combined effect i e banking integration overall is positive and significant the quantile regression models used in the second stage show that the effects are stronger for the poorest economies

financial integration investment and economic growth evidence from two eras of financial globalization abstract does international financial integration boost economic growth the empirical literature has not yet established a robust link between openness to the international capital market and economic growth in this paper we turn to the economic history of the first era of financial globalization 1880 1914 for new insights using identical empirical models and techniques as contemporary studies we find a significant growth effect in the historical period a key difference between now and then is that opening up to the international market led to net capital movements and higher investment in the historical period but it no longer does so today

organizational isomorphism and corruption an empirical research in russia based on neo institutional literature this article aims to show the influence of organizational isomorphism on corruption the focus is institutional explanations of corruption our model is based on empirical research in russia at the end of the 1990s a face to face questionnaire was conducted with 552 top executives in private firms across various economic sectors we used the structural equation model partial least squares pls technique to test our hypotheses the developed model provides an integrated approach to the study of the relationship between corruption and organizational isomorphism our empirical data from firms in russia allowed us to test various theoretical hypotheses concerning the influence of organizational isomorphism on corruption our emphasis is on the influence of competitive and institutional isomorphism on corruption

confronting the food energy environment trilemma global land use in the long run economic agronomic and biophysical drivers affect global land use so all three influences need to be considered in evaluating economically optimal allocations of the world s land resources a dynamic forward looking optimization framework applied over the course of the coming century shows that although some deforestation is optimal in the near term in the absence of climate change regulation the desirability of further deforestation is eliminated by mid century although adverse productivity shocks from climate change have a modest effect on global land use such shocks combined with rapid growth in energy prices lead to significant deforestation and higher greenhouse gas emissions than in the baseline imposition of a global greenhouse gas emissions constraint further heightens the competition for land as fertilizer use declines and land based mitigation strategies expand however anticipation of the constraint largely dilutes its environmental effectiveness as deforestation accelerates prior to imposition of the target

capital control liberalization and stock market development the authors address two questions what happens to stock market size liquidity volatility and integration with world capital markets after capital controls are liberalized and what is the relationship between those indicators of stock market development and regulations about information disclosure accounting standards and investor protection an analysis of data on stock markets in 16 developing countries suggests the following a stock markets become larger more liquid more integrated internationally and more volatile after controls on capital and dividend flows are liberalized b easy access to information about firms is positively associated with the size and liquidity of stock markets and c countries that officially establish internationally accepted accounting standards and laws to protect investors do not have substantially better functioning stock markets than countries that do not adopt those official standards

benefits and costs of international financial integration theory and facts the author provides a selective review of the recent analytical and empirical literature on the benefits and costs of international financial integration he discusses the impact of financial openness on consumption investment and growth and the impact of foreign bank entry on the domestic financial system consistent with some recent studies the author argues that financial integration must be carefully prepared and managed to ensure that the benefits outweigh the short run risks prudent macroeconomic management adequate supervision and prudential regulation of the financial system greater transparency and improved capacity to manage risk in the private sector are important requirements for coping with potentially abrupt reversals in pro cyclical short term capital flows the author adopts a more skeptical view than some assessments in two areas however first only foreign direct investment appears to provide dynamic gains and improved prospects for growth the evidence on the benefits of other types of capital flows remains weak second empirical research on the net benefits associated with foreign bank penetration is far from conclusive in particular the possibility that such penetration may lead to adverse changes in the allocation of credit among domestic firms cannot be dismissed on the basis of the existing evidence

intermediation and the equilibrium allocation of investment capital implications for economic development abstract we investigate several common assertions about intermediation and how it affects the allocation of investment capital we use a model with adverse selection and costly state verification in which both debt contracts and credit rationing are observed intermediaries arise due to a comparative advantage in information acquisition relative to the situation absent intermediation intermediaries reduce credit rationing and inefficient interest rate differentials the model also shows how large interest rate differentials can be observed when financial markets are not integrated and how the volume of intermediation is affected by changes in the environment

international financial remoteness and macroeconomic volatility abstract this paper shows that proximity to major international financial centers seems to reduce business cycle volatility in particular we show that countries that are farther from major locations of international financial activity systematically experience more volatile growth rates in both output and consumption even after accounting for political institutions trade and other controls our results are relatively robust in the sense that more financially remote countries are more volatile though the results are not always statistically significant the comparative strength of this finding is in contrast to the more ambiguous evidence found in the literature

portfolio flows volatility and growth abstract we study the realized openness to portfolio flows of economically more developed and less developed countries as it affects future gdp growth outflows of a country s funds into u s securities are predictive of gdp growth suggesting that the benefits of openness outweigh local capital flight both inflows and outflows of funds via local equity securities are predictive of growth which is the evidence of the benefits of openness for less developed countries the effect of inflows is especially strong country specific volatility in flows does not detract from growth and volatility in world wide flows precedes growth overall the evidence is consistent with strong benefits of realized financial integration where the availability of u s markets for local portfolio investment along with equity investment from the outside enhances economic growth

integration and competition in the european financial markets abstract financial integration in europe should affect the competition between markets and intermediaries and generate a convergence of both interest rates and margins among different countries this paper analyzes both the evolution of the convergence in interest rates and the level of competition and its inequalities among the european banking systems for the period 1993 2001 the inequality index used the theil index allows us to break down the inequalities into a country and a specialization effect if the former effect dominates it would mean that national banking markets are segmented due to the existence of obstacles or barriers to integration on the other hand dominance of the latter effect would be related to the different level of competition depending on the type of banking specialization

financial integration productivity and capital accumulation understanding the mechanism through which nancial globalization aects eco nomic performance is crucial for evaluating the costs and bene ts of opening nancial markets this paper is a rst attempt at disentangling the eects of nancial inte gration on the two main determinants of economic performance productivity tfp and investment i provide empirical evidence from a sample of 70 countries observed between 1975 and 1999 the results for both de jure and de facto indicators suggest that nancial integration has a positive direct eect on productivity while it does not directly aect capital accumulation i also control for indirect eects of nancial globalization through nancial development and banking and currency crises while nancial integration does not systematically increase domestic nancial depth it may raise the likelyhood of banking crises though only to a minor extent yet the overall eect of nancial liberalization remains positive for productivity and negligible for investment

stochastic economic assessment of afforestation on marginal land in irrigated farming system we analysed the economic viability of afforestation on marginal irrigated croplands in irrigated drylands of uzbekistan the revenues derived from a combination of diversified agricultural production carbon sequestration nitrogen fixation and avoided irrigation water use were analysed considering uncertainty associated with on farm activities such as crop production and short rotation forestry at the per hectare scale variability in land use revenues would necessitate substantial increases in carbon prices for afforestation to be as profitable as crop cultivation on marginal lands assuming an abundant irrigation water supply in contrast at the farm scale the analysis results revealed that afforestation can be attractive financially even without carbon payments due to farm production constraints variable land use returns and the benefits of land use diversification increased carbon prices would promote carbon sequestration by motivating farmers to plant high biomass producing tree species but would have an ecosystem service trade off by reducing the appeal of nitrogen fixing species that are essential for nitrogen self sufficiency of afforestation efforts given the modest irrigation needs of afforestation efforts compared to the cultivation of annual crops tree plantations could become a primary income source for farms during periods of drought irrigation water saved from replacing crops with trees on marginal farmland would enhance the cultivation of commercial crops on productive lands thus increasing farm income