political determinants of government loans in japan abstract this paper examines the political determinants of government banks lending decisions using prefecture level panel data on japan s government loans from 1975 to 1992 it finds that the size of government loans is positively correlated with two political factors 1 the electoral vulnerability of politicians who belong to the ruling liberal democratic party ldp and 2 their seniority these political effects are statistically robust to the inclusion of prefecture fixed effects year fixed effects and other socioeconomic factors and more important are present only in government loans and not in private loans these results suggest that self interested ldp members ab used government loans for political purposes as implied by the political view of government banks

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

towards an operational sustainability criterion abstract this paper examines the concept of sustainability and its implications for environmental policy analysis it builds on the premise that present society holds a moral obligation to pass on a world of undiminished life opportunities to members of future generations maintaining life opportunities in turn can be achieved by maintaining or improving a diverse set of resources and capabilities that support a person s freedom to define and pursue her own conception of the good life on an operational level this framework points to the following guideline for environmental policy protecting the rights of future generations requires either the conservation of environmental resources or compensatory measures including the provision of substitute technologies that ensure the fair and proportionate sharing of net benefits over intergenerational time scales in this framework resource depletion is permissible only if with reasonable certainty it would generate a pareto improvement relative to a baseline scenario involving strict resource conservation

hedging and liquidity this article develops a model for evaluating alternative hedging strategies for financially constrained firms a key advantage of the model is the ability to capture the intertemporal effects of hedging on the firm s financial situation we characterize the optimal hedge a wide range of alternative hedging strategies can be specified and the model allows us to determine in each case if the hedging strategy raises or lowers firm value and by how much we show that hedging firm value hedging cash flow from operations and hedging sales revenue are not optimal the article highlights the fact that every hedging strategy comes packaged with a borrowing strategy which requires careful consideration futures markets often provide the most liquid and convenient instruments for managing risk however because futures contracts are marked to market it is often impossible to simultaneously hedge cash flows and values for example a futures contract that locked in the value of gold that a corporation planned to extract in one year would generate an uncertain cash flow pattern over the year this article examines how liquidity and cash flow timing problems associated with different hedging strategies can affect a firm s value in our model the objective for hedging is to increase the firm s financial flexibility an optimal hedge maximizes the firm s liquidityslack in the form of excess cash or unused debt capacitywhen liquidity is most valuable this lowers the danger of costly financial distress reduces the effective cost of external financial constraints and makes value maximizing investments affordable a firm with no financial constraints does not gain from hedging and the higher the firm s financial constraints the greater the potential value of hedging the value of hedging depends critically on the design of the hedging strategy we show that the optimal hedge minimizes the variability in the marginal value of the firm s cash balances such a hedge efficiently redistributes cash balances across different states and periods taking cash from those states for which the marginal cost of the financial constraint is low and giving cash to those states for which the marginal

water scarcity social power and the production of an elite suburb the political ecology of water in matadepera catalonia abstract this article investigates the history of land and water transformations in matadepera a wealthy suburb of metropolitan barcelona analysis is informed by theories of political ecology and methods of environmental history although very relevant these have received relatively little attention within ecological economics empirical material includes communications from the city archives of matadepera 1919 1979 17 interviews with locals born between 1913 and 1958 and an exhaustive review of grey historical literature existing water histories of barcelona and its outskirts portray a battle against natural water scarcity hard won by heroic engineers and politicians acting for the good of the community our research in matadepera tells a very different story we reveal the production of a highly uneven landscape and waterscape through fierce political and power struggles the evolution of matadepera from a small rural village to an elite suburb was anything but spontaneous or peaceful it was a socio environmental project well intended by landowning elites and heavily fought by others the struggle for the control of water went hand in hand with the land and political struggles that culminated and were violently resolved in the spanish civil war the displacement of the economic and environmental costs of water use from few to many continues to this day and is constitutive of matadepera s uneven and unsustainable landscape by unravelling the relations of power that are inscribed in the urbanization of nature swyngedouw 2004 we question the perceived wisdoms of contemporary water policy debates particularly the notion of a natural scarcity that merits a technical or economic response we argue that the water question is fundamentally a political question of environmental justice it is about negotiating alternative visions of the future and deciding whose visions will be produced

reinsurance under conditions of capital market equilibrium a note having accepted a contingent liability under an insurance contract the insurer has an insurable interest in the subject of the insurance policy and can insure all or part of that liability with a second insurer this reinsurance agreement protects the first insurer known as the primary or ceding insurer against unusually large claims since it permits the risk to be broken down into smaller units which can be absorbed easily by individual insurers these agreements are commonly placed with other direct insurers and with specialist reinsurance companies usually holding internationally diversified portfolios the reinsurance agreement affects the risk return structure of the insurer s liability portfolio and consequently affects the risk return characteristics of the insurer s common stock the insurance literature has long assumed such reinsurance is an important procedure and much attention has been devoted to analyzing its use explicit statements of the objectives of reinsurance can be found in most insurance texts these texts commonly stress the portfolio risk effects of reinsurance that is the reduction in the probability of the failure or ruin of the insurance fund and the stabilization of returns to its owners 2 the subdivision of policies and the spreading of risk between insurers permits each insurer to hold a more completely diversified portfolio of liabilities than would be available without reinsurance apart from explicit statements the bulk of analytical literature on optimal reinsurance agreements has assumed risk reduction to be the objective in earlier works such as vajda 15 and ohlin 11 the benefits of reinsurance were identified in the reduction of the variance of the insurer s loss distribution subsequently writers such as borch 3 chs 1 11 buhlmann and jewell 5 du mouchel 6 and gerber 7 have used utility analysis to isolate the effects of reinsurance and to identify the properties of the optimal reinsurance treaty here reinsurance is studied as a bilateral risk reducing device arranged between two or more risk averse insurers the pareto condition has been evoked to define the optimality of a reinsurance treaty and not surprisingly it is shown to depend upon the form and parameters of the participating insurers utility functions the equilibrium conditions for reinsurance have also been established by borch 3

trends in the development of ecological economics from the late 1980s to the early 2000s abstract as the contributions to ecological economics are very diverse recent years have seen some discussion on both how to delimit the field and in which direction it should develop the intention with this paper is to contribute to the discussion by outlining important trends in the development of the field from the late 1980s to the early 2000s the study is inspired by other studies in the sociology and history of science in particular by the theoretical framework regarding scientific fields as reputational organizations which draws attention to both cognitive and social aspects of the formation of a field the basis for the paper is a combination of literature studies interviews with key researchers in the field and participant observations the paper outlines the characteristic cognitive features of ecological economics at the time of the birth of the field it is then described how the development in ecological economics was influenced by broader social factors during the following years and how the field was shaped by the inflow and outflow of different groups of researchers the emergence of different research programmes is outlined as is the organizational development finally the characteristics of ecological economics are summarized and the future prospects are briefly assessed

exploring futures for amazonia s sierra del divisor an environmental valuation triadics approach to analyzing ecological economic decision choices in the context of major shifts in boundary conditions abstract this text presents a new methodological approach to ecological economic analysis employing georgescu roegen s flow fund theory of economic process it offers an alternative to monetary valuation based analyses and aims to contribute toward advancing work concerned with addressing complex ecological economic questions as complete wholes the methodology is demonstrated through reference to the empirical case of a proposed rail link between peru and brazil which would cut across the sierra del divisor of western amazonia connecting the pacific and atlantic coasts and further opening up the amazon commodity frontier in order to analyze the potential impacts of the rail link four flow fund representations of economic process two at the regional and two at the local level are developed in order to juxtapose two alternative political economy contexts that might govern the rail link s impacts in the region one where conservation is prioritized over cash income and one where it is not our results suggest that completion of the rail link under the current political economy context which prioritizes cash income over conservation is likely to have substantial negative consequences for forest conservation in both peru and brazil and for local livelihoods throughout the region

risk shifting incentives of depository institutions a new perspective on federal deposit insurance reform abstract we characterize the risk shifting incentives of a depository institution as arising fundamentally from the existence of limited liability and the associated convex payoff to equity holders this risk incentive feature is unchanged by deposits being insured and hence excessive risk taking by depository institutions is not solely attributable to the flat rate insurance premium consequently the incentive problem cannot be resolved through a risk based insurance premium contrary to the prevailing view we propose a solution that eliminates risk shifting through an optimal tax structure and specify a corresponding insurance premium that is revenue neutral from the social planner s regulator s standpoint the solution is derived in the context of a social objective function that trades off the benefits of liquidity services by banks and the unique informational role of bank loans with the costs of investment distortions engendered by risk shifting

hedging financing and investment decisions theory and empirical tests abstract in this paper we theoretically and empirically examine the interaction between hedging financing and investment decisions a simple equilibrium model with costly financial distress suggests that as firms become more efficient at risky investments vis a vis low risk investments they will borrow less invest more in risky assets and hedge more the model also predicts a positive relationship between hedging and leverage a result consistent with debt capacity arguments we test the model empirically using a simultaneous equations framework to investigate the determinants of firm level hedging financing and investing decisions the results strongly support the hypothesis that the hedging financing and investment decisions are jointly determined in addition we find strong support for the central hypothesis that firms more efficient investing in risky technologies more aggressively hedge and use less debt financing in order to maximize their comparative advantage

maturity intermediation and intertemporal lending policies of financial intermediaries this paper considers the maturity intermediation and intertemporal lending decisions of risk averse financial intermediaries in particular the maturity mismatch problem and the fixed versus variable rate lending decision are modeled when the major source of risk involves uncertain future interest rates the results imply that the strategy of matching the maturity of assets and liabilities is not generally optimal or even minimum risk this is due primarily to the built in hedge that the intermediary has as a result of rolling over short term loans while continuing to finance long term loans intertemporal dependencies between loan demand and costs or both also have an effect on the optimal degree of maturity mismatching and provide one rationale for making loans at rates below current marginal cost

investment crowding out firm level evidence from northern germany michalek j ciaian p and kancs d a investment crowding out firm level evidence from northern germany regional studies the main objective of this paper is to estimate the extent to which firm investment is substituted crowded out by investment support policies granted under the european union rural development programme rdp the empirical analyses employed the difference in difference propensity score matching approach which allows several important sources of bias to be addressed such as selection bias simultaneity bias and functional form misspecification from which many previous studies suffer using panel data of 1333 firms from the schleswig holstein region in germany it is found that the crowding out effect of the rdp is close to 100 implying that firms use public support to substitute for private investments furthermore no evidence was found that due to the rdp programme support firms would have brought forward their investments planned originally for a later period rejecting t

implications of financial crisis for east asian trend growth the article sets the asian financial crisis in the context of the developmental state model of asian development and sees it as in part the downside risk of a financial liberalization that was badly handled but nevertheless appropriate as a stimulus to better productivity performance the east asian economies are shown still to have a large labour productivity gap with the leading oecd countries and substantial scope for further rapid catch up growth historical experience suggests that the policy response to the crisis is fundamental not only to immediate recovery prospects but also to realizing this remaining fast growth potential

public subsidies tfp and efficiency a tale of complex relationships this paper evaluates the impact of subsidies on the different components of tfp for granted firms long term growth the impact of capital subsidies is captured by a quasi experimental method multiple rdd exploiting the conditions for a local random experiment created by an italian industrial policy results show that capital subsidies negatively affect tfp growth in the short term and signals of positive effects appear only after 3 4 years this positive medium long term impact comes especially through technological change and not through scale impact change as may have been expected

on the foundation of a general theory of stocks abstract this essay develops the concept of stocks a conceptual notion designed to enable a clearer understanding of the interaction between the dynamics of ecosystems and the economy the notion of stocks is formulated in a general manner based on set theory the central attribute of a stock is its temporal durability seen thus stocks are suitable for depicting the influences a system s history has on its present and hence for analysing temporal developments since permanency is a temporal attribute the concept of stocks is not specifically limited to individual scientific disciplines and is suitable for interdisciplinary analysis the notion is applied to economic and ecological examples and generalised for stochastic sets the hierarchical structure of actual ecological economic systems can be analysed by distinguishing the stock perspective from a system view a theory of stocks may be a building block for the conceptual foundations of ecological economics

valuation capital structure and shareholder unanimity for depository financial intermediaries the theory of corporate finance is not directly applicable to financial intermediary decision making the lack of applicability stems largely from the particular conditions that distinguish intermediary operations from those of the nonfinancial firm first when intermediaries accept deposit financing they must produce services such as liquidity and convenience at considerable expense for real resources second the introduction of intermediation is likely to be accompanied by incomplete markets so that shareholder unanimity is not in general valid in this paper a model with incomplete markets is developed and a shareholder approved rule for intermediary capital structure decisions is derived

growth economies of scale and targeting in japan 1955 1990 this paper explores the usage of various industrial policy tools in japan contrary to the conventional wisdom the authors find that a disproportionate amount of japanese targeting occurred in low growth sectors and sectors with decreasing returns to scale in addition they find no evidence that productivity was enhanced as a result of industrial policy measures copyright 1996 by mit press

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

returns to scale concept estimation and analysis of japan s turbulent 1964 88 economy there is policy interest in factoring productivity growth into technical progress and returns to scale components our approach uses exact index number methods to reduce the parameters that must be estimated and allows us to exploit the cross sectional dimension of plant level panel data we show that the same equation can also be used to estimate harberger scale economies and technical progress indicators that require fewer assumptions estimates of the elasticity of scale for japanese establishments in three major industries over 1964 88 are presented our study spans the high growth era of the 1960s two oil shocks and other exogenous shocks il y a interet en politique publique a identifier les composantes de la croissance de la productivite attribuables au progres technique et aux rendements a l echelle l approche utilise les methodes des nombres indices exacts pour reduire les parametres qui doivent etres estimes et pouvoir exploiter la dimension transversale des donnees de panel au niveau de l etablissement on montre que la meme equation peut etre utilisee pour estimer les indicateurs d economies d echelle et de progres technique a la harberger lesquels necessitent un plus petit nombre de postulats on presente des evaluations de l elasticite d echelle pour des etablissements japonais dans trois industries importantes entre 1964 et 1988 l etude couvre la periode de forte croissance des annees 1960 celle des deux chocs petroliers et d autres chocs exogenes

malthus vs wordsworth perspectives on humankind nature and economy a contribution to the history and the foundations of ecological economics abstract in this paper the view of humankind and nature upon which the thinking of malthus is founded will be reflected on and contrasted with the opposed understanding of his contemporary wordsworth we show that the economic considerations of both are based decidedly on the premise of these views and that their alternative interpretations of the contemporary economy and the relationship between economy and nature may thus be explained from the comparison of malthus and wordsworth we draw conclusions for modern ecological economics identifying its malthusian understanding of nature and reflecting on the capacities and limits implied for further research we ascribe a central role in the conceptual history of ecological economics to wordsworth and present his philosophical presumptions as a fruitful alternative for ecological economics finally attention will be drawn to the principle importance of the philosophical foundations underpinning this field of research

new foundations for ecological economics abstract ecological economics has been repeatedly described as transdiciplinary and open to including everything from positivism to relativism i argue for a revision and rejection of this position in favour of realism and reasoned critique looking into the ontological presuppositions and considering an epistemology appropriate for ecological economics to meaningfully exist requires rejecting the form of methodological pluralism which has been advocated since the start of this journal this means being clear about the differences in our worldview or paradigm from others and being aware of the substantive failures of orthodox economics in addressing reality this paper argues for a fundamental review of the basis upon which ecological economics has been founded and in so doing seeks improved clarity as to the competing and complementary epistemologies and methodologies in part this requires establishing serious interdisciplinary research to replace superficial transdisciplinary rhetoric the argument places the future of ecological economics firmly amongst heterodox economic schools of thought and in ideological opposition to those supporting the existing institutional structures perpetuating a false reality of the world s social environmental and economic systems and their operation

the art of long term thinking a bridge between sustainability science and politics abstract policy makers are dependent upon scientific knowledge however scientific results cannot be applied straightforwardly in practical decision making we deploy kant s term power of judgment the human capacity to apply general insights to specific contingent situations to show that this problem is systematic rather than coincidental decision making requires the power of judgment to make use of scientific knowledge power of judgment in turns can be supported by heuristics against this background we focus on sustainability politics and outline a heuristic for framing and analyzing sustainability problems because time is a key factor in relation to sustainability we distinguish three distinct concepts of time and argue that the economic concepts of stocks and institutions can be used to foster power of judgment with respect to these time concepts based on these concepts the heuristic serves to bridge the gap between scientific knowledge and practical decision making in sustainability politics

risk management in the global economy a review essay abstract this paper provides a review of developments in the area of risk management at both the firm level and the macro economy we review rationales regarding why firms choose to manage risk as well as new developments in measuring and managing risk in a dynamic setting we also consider current risk sharing arrangements in light of the theory regarding optimal risk sharing the paper concludes with some suggestions for additional research that emphasizes the importance of incorporating market incompleteness in an equilibrium setting we also discuss the role of incompleteness at the macro level and speculate on how derivatives markets may influence macro economic stabilization policy

uk competitiveness policy vs japanese industrial policy it is often claimed that japanese industrial policy targeted high growth or high productivity growth sectors see inter alia johnson i982 carliner i986 nester i99i tyson 1992 it is then argued that because both the targeted industries and the japanese economy have prospered it follows that japanese industrial policy must have been successful hence britain and other advanced nations either are justified in emulating or should hasten to follow the japanese example this raises the question of whether the united kingdom s competitiveness policy is the appropriate response or is a completely different animal the purpose of this paper is to explore the main areas in contention but before doing so it is important to be clear about what one means by industrial and competitiveness policies

ecology and valuation big changes needed abstract ecological economics has developed as a transdisciplinary science but it has not taken significant steps toward a truly integrated process of evaluating anthropogenic ecological change the emerging dominance within ecological economics of the movement to monetize ecological services when combined with the already well entrenched dominance of contingent pricing as a means to evaluate impacts on amenities has created a monistic approach to valuation studies it is argued that this monistic approach to evaluating anthropogenic impacts is inconsistent with a sophisticated conception of ecology as a complex science that rests on shifting metaphors an alternative pluralistic and iterative approach to valuation of anthropogenic ecological change is proposed

moral development of the economic actor abstract in this article we argue that the changes in moral content in economics can be explained as an evolution in accordance with the maturing process presented in kohlberg s stages of moral development firstly we describe and discuss the three levels of moral progress pre conventional conventional and post conventional as presented in kohlberg s theory secondly we draw a distinction between classical economics neoclassical economics and ecological economics and discuss to what extent the differences in ethics within the three theories can be explained by referring to the ethical development characterizing kohlberg s moral stages thirdly we discuss some of the hallmarks characterizing economics based upon what kohlberg termed universal principles at the highest stage in the development of moral reasoning to exemplify the evolution of moral reasoning in different economic theories we describe the changes that take place in the image of man over the last 2 300 years the human being in economics has been discussed in this journal with reference to three different relations to himself community and nature we have used the metaphors economic man social man and ecological man to characterize the ethical content of the three first stages at the first stage economic man interpreted as an egocentric individual seeking personal gain characterizes classical economics at the second stage social man seeks the best for a group of people within the perspective of neoclassical economics at the third stage ecological man is aware of the interrelatedness between economy and nature within ecological economics the agent is termed ecological man to indicate the interconnectedness between economy and the ecosystems while being aware of the weakness in predictive power inherent in these kinds of stage theories we find it stimulating to conclude with a description of economics based upon the ideas characterizing the highest level stage 7 in kohlberg s theory we put forward a hypothesis concerning a fourth stage in the development of economics termed neo ecological economics we describe the economic actor as cosmic man cosmic man has an extended self and incorporates all the other images of man

environmental regulations and the problem of sustainability moving beyond market failure abstract the standard metaphor of market failure is an impediment to the crafting of environmental policy that can escape policy lock in sustainability requires a policy process that can avoid this lock in sustainability concerns the creation of dynamic human processes that can respond to indeed anticipate unanticipated feedback from biological processes

how to be an ecological economist abstract to answer the question how to be an ecological economist we must start by defining the field of ecological economics mainstream economics altogether lacks the concepts required to deal adequately with nature justice and time it was the absence of these three concepts in this otherwise great social science that led to the establishment of ecological economics the interest in nature justice and time is its defining characteristic the main thesis of this paper is that our field is a fragile institution and that the professional existence of an ecological economist is no less fragile however this very fragility also represents freedom scope for free thinking conceptualising and research nevertheless to be able to really use and in turn enjoy the full scope of this freedom an ecological economist needs certain specific characteristics in particular what is termed in the german philosophical tradition urteilskraft and in english power of judgement a description of these characteristics is developed in this paper providing an answer to the question how to be an ecological economist

learning by doing export subsidies and industry growth japanese steel in the 1950s and 1960s abstract the paper examines the japanese steel industry to evaluate the role of export subsidy policies export subsidies can be instrumental in increasing an industry s cost competitiveness in the presence of learning by doing a characteristic of production in the steel industry using a dynamic estimation model this paper identifies a significant learning rate of above 20 with little intra industry knowledge spillover simulations made with the model indicate that the subsidy policy had an insignificant impact on industry growth the paper finds that the export subsidy had a small effect in stimulating industry growth because the estimated steel supply function was relatively inelastic

the effects of government grants on plant survival a micro econometric analysis abstract in this paper we analyse the impact of government grant provision on plant survival to this end we utilise rich information derived from three data sources for the manufacturing sector in ireland where grant provision has been an important part of industrial policy our empirical analysis is based on estimating a hazard model of plant exit on a matched sample of plants in order to provide a valid counterfactual our results indicate that grants can in some cases provide an important impetus to plant survival

economic history and economics i have in the back of my mind a picture of the sort of discipline economics ought to be or at least the sort of discipline i wish it were if economics were practiced in that way there would be nothing problematical about its reciprocal relationship with economic history it would be pretty clear what it is that economic theory offers to economic history and what economic history offers to economic theory i will try to describe what i mean below for better or worse however economics has gone down a different path not the one i have in mind one consequence not the most important one but the one that matters for this discussion is that economic theory learns nothing from economic history and economic history is as much corrupted as enriched by economic theory i will come to that too later on you will notice that i am using strong language i am prepared to admit right away that i may be dead wrong in my judgements but there is no point in pussyfooting bluntness may lead to an interesting discussion after all no one would remember the old german historical school if it were not for the famous methodenstreit actually no one remembers them anyway there must be a lesson in that to get right down to it i suspect that the attempt to construct economics as an axiomatically based hard science is doomed to fail there are many partially overlapping reasons for believing this but since that is not the topic under discussion today i do not have to lay them out in an orderly way i hope the following hodgepodge will convey what i mean a modern economy is a very complicated system since we cannot conduct controlled experiments on its smaller parts or even observe them in isolation the classical hardscience devices for discriminating between competing hypotheses are closed to us the main alternative device is the statistical analysis of historical time series but then another difficulty arises the competing hypotheses are themselves complex and subtle we know before we start that all of them or at least many of them are capable of fitting the data in a gross sort of way then in order to make more refined distinctions we need long time series observed under stationary conditions unfortunately however economics is a social science it is subject to damon runyon s law that nothing between human beings is more than three to one to express the point more formally much of what we observe cannot be treated as the realization of a stationary stochastic process without straining credulity moreover all narrowly economic activity is embedded in a web of social institutions customs beliefs and attitudes concrete outcomes are indubitably affected by these background factors some of which change slowly and gradually others erratically as soon as time series get long enough to offer hope of discriminating among complex hypotheses the likelihood that they remain stationary dwindles away and the noise level gets correspondingly high under these circumstances a little cleverness and persistence can get you almost any result you want i think that is why so few econometricians have ever been forced by the facts to abandon a firmly held belief indeed some of fortune s favorites have been known to write scores of empirical articles without once feeling obliged to report a result that contradicts their prior prejudices if i am anywhere near right about this the interests of scientific economics would be better served by a more modest approach there is enough for us to do without pretending to a degree of completeness and department of economics massachusetts institute of technology cambridge ma 02139

government financial institutions and capital allocation efficiency in japan abstract this paper uses the industry level panel data from 1975 2005 and estimates wurgler s the elasticity of industry investment to value added for each of japan s 47 prefectures we find that wurgler s varies considerably across prefectures even though there is no regulatory restriction on inter regional flow of financial capital moreover exploiting cross prefecture variation in wurgler s we show that the share of government loans is strongly and negatively correlated with the quality of capital allocation we also find that this negative correlation is robust to controlling for local economic and financial development and more pronounced in declining industries than growing industries moreover the share of government loans is positively correlated with investment to output ratio but negatively correlated with total factor productivity growth taken as a whole the results are broadly consistent with the view that japan s government financial institutions stimulate investment in declining industries while distorting capital allocation and reducing overall productivity growth

the policy roots of socioeconomic stagnation and environmental implosion latin america 1950 2000 abstract the persistence of growth and its equity and environmental effects heavily depend on the composition of asset investments physical human and natural capital are the key assets behind the development process market failures tend to affect the accumulation of such assets asymmetrically leading to underinvestment in human and natural capital public policy in latin america has generally exacerbated such market failures by promoting physical capital investments using massive public subsidies instead of relying on the expansion of public and semipublic assets that complement physical capital the result economic stagnation deep social inequities and environmental destruction

shared wealth or nobody s land the worth of natural capital and ecosystem services the prerequisite for a sustainable and equitable use of common resources the so called commons must be the proper evaluation of their role within the complex network of relationships that ensure ecosystems functioning resilience and evolutionary dynamics it is crucial to ascertain to what extent the common wealth is used for the common benefit money based schemes for valuing the commons such as the so called willingness to pay provide a user side evaluation perspective based on the idea that value only stems from utilization by humans as a complement to such a point of view we present and discuss in this paper a donor side evaluation method emergy synthesis based on the idea that a proper measure of value can be achieved by also accounting for the work done by the biosphere in generating services and resources it should not be disregarded that such resources and services also provide support to other species in the web of life emergy a scientific measure of such environmental support is suggested as a tool capable to assess quantity and quality of shared resources thus providing a basis for their environmentally sound management

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

the shallow or the deep ecological economics movement ecological economics and its policy recommendations have become overwhelmed by economic valuation shadow pricing sustainability measures and squeezing nature into the commodity boxes of goods services and capital in order to make it part of mainstream economic financial and banking discourses there are deeper concerns which touch upon the understanding of humanity in its various social psychological political and ethical facets the relationship with nature proposed by the ecological economics movement has the potential to be far reaching however this is not the picture portrayed by surveying the amassed body of articles from this journal or by many of those claiming affiliation a shallow movement allied to a business as usual politics and economy has become dominant and imposes its preoccupation with mainstream economic concepts and values if instead ecological economists choose a path deep into the world of interdisciplinary endeavour they will need to be prepared to transform themselves and society the implications go far beyond the pragmatic use of magic numbers to convince politicians and the public that ecology still has something relevant to say in the 21st century author s abstract

a new methodology linking concentration dynamics to current and steady state profits examining korean industrial policy during take off abstract we model the dynamics of industrial structure and market power using korean manufacturing data during the take off period 1978 82 structure conduct performance scp methodologies have been criticized for using accounting data and because a few superior firms may have greater shares and greater profits both are argued to present possible spurious correlations between concentration and profits this paper follows earlier work which shows that market structure responds to observed accounting profits as if these were accurate indices of real profits and not as if leading firms are perceived to have unmatchable advantages the methodological contribution of this model is a new latent variable for steady state profits derived from the speed of structural adjustment long run profits are identified by the hypothesis that structural adjustment will be more rapid when industries are farther from steady state levels we analyze the long run profits latent variable finding strong support for this hypothesis the speed of adjustment is greater for positive and negative deviations from steady state structure we show that the profits and structural adjustment relationship is non monotone the scp criticisms above are based on spurious correlations which are monotone in profits and structure positing spurious correlations which are at the same time monotone in structure and non monotone in structural adjustment seems less plausible than accepting the scp results which are consistent with both our analysis also is new in that it is the first direct econometric analysis of korean industrial policy during its take off years we note that in korea unlike elsewhere industrial policy was hypothesized to lead to concentration and market power in the popular press and by professional economists ours is the first direct econometric analysis of this hypothesis and we find it supported

competition in japan japan registered a remarkable 6 5 percent rate of economic growth from 1955 to 1990 catching up with high income western countries in its level of economic development during the 1950s 1960s 1970s and into the 1980s japan s share of world exports rose dramatically from 2 9 percent in 1960 to 6 1 percent in 1970 8 2 percent in 1980 and a peak of 9 8 percent in 1985 porter takeuchi and sakakibara 2000 japanese firms were increasingly successful internationally in large visible industries such as automobiles semiconductors and consumer electronics the striking economic success of japan was widely attributed to a set of economic institutions and policies that encouraged collaboration and limited competition the japanese case then called into question many of the bedrock assumptions of competition thinking it seemed to show that there was a different path to economic prosperity this article begins by examining competition in japan and the supporting policies and institutions during the twentieth century many factors seem to suggest that competition in japan has been less intense but there is an awkward complication the empirical evidence about the intensity of competition in japanese industry does not support the conclusion the story clearly is more complicated we seek to reconcile the apparent differences between policy and institutional circumstances and the empirical evidence by examining the types of competition that prevail across japanese industries and the underlying causes japan indeed pursued an array of policies that limited competition but these policies were not applied throughout the economy in fact those industries in which competition