nonrenewable resource scarcity nonrenewable resource theory often is summarized by hotelling s rule this paper reviews theoretical extensions and empirical investigations of resource extraction models observed data are often inconsistent with the hotelling rule suggesting that other characteristics of nonrenewable resource supply including exploration heterogeneous ore quality technological progress and capital investment are important determinants of the dynamic behavior of resource prices given the persistent recurrence of concern about nonrenewable resource scarcity measures of nonrenewable resource scarcity and the empirical evidence for the time trends of those measures are reviewed finally the implications of nonrenewable resource scarcity for economic growth are examined

identifying jumps in financial assets a comparison between nonparametric jump tests we perform a comprehensive monte carlo comparison between nine alternative procedures available in the literature to detect jumps in financial assets using high frequency data we evaluate size and power properties of the procedures under alternative sampling frequencies persistence in volatility jump size and intensity and degree of contamination with microstructure noise the overall best performance is shown by the andersen bollerslev and dobrev 2007 and lee and mykland 2008 intraday procedures abd lm provided the price process is not very volatile we propose two extensions to the existing battery of tests the first regards the finite sample improvements based on simulated critical values for the abd lm procedure the second regards a procedure that combines frequencies and tests able to reduce the number of spurious jumps finally we report an empirical analysis using real high frequency data on five stocks listed in the new york stock exchange

implications of ethnic diversity ethnically differentiated societies are often regarded as dysfunctional with poor economic performance and a high risk of violent civil conflict the author distinguishes between dominance in which one group constitutes a majority and fractionalization in which there are many small groups in terms of overall economic performance the research shows that both theoretically and empirically fractionalization is normally unproblematic in democracies although it can be damaging in dictatorships in terms of the risk of civil war the author shows that both theoretically and empirically fractionalization actually makes societies safer while dominance increases the risk of conflict a policy implication is that fractionalized societies are viable and secession should be discouraged

jumps cojumps and macro announcements we use recently proposed tests to extract jumps and cojumps from three types of assets stock index futures bond futures and exchange rates we then characterize the dynamics of these discontinuities and informally relate them to us macroeconomic releases before using limited dependent variable models to formally model how news surprises explain co jumps nonfarm payroll and federal funds target announcements are the most important news across asset classes trade balance shocks are important for foreign exchange jumps we relate the size frequency and timing of jumps across asset classes to the likely sources of shocks and the relation of asset prices to fundamentals in the respective classes

information shocks liquidity shocks jumps and price discovery evidence from the u s treasury market in this paper we identify jumps in u s treasury bond t bond prices and investigate what causes such unexpected large price changes in particular we examine the relative importance of macroeconomic news announcements versus variation in market liquidity in explaining the observed jumps in the u s treasury market we show that while jumps occur mostly at prescheduled macroeconomic announcement times announcement surprises have limited power in explaining bond price jumps our analysis further shows that preannouncement liquidity shocks such as changes in the bid ask spread and market depth have significant predictive power for jumps the predictive power is significant even after controlling for information shocks finally we present evidence that post jump order flow is less informative relative to the case where there is no jump at announcement

the tragedy of the commons and economic growth why does capital flow from poor to rich countries we analyze a differential game in which all interest groups have access to a common capital stock we show that the introduction of a technology that has inferior productivity but enjoys private access may ameliorate the tragedy of the commons we use this model to analyze capital flight in many poor countries property rights are not well defined since safe bank accounts in rich countries the inferior technology are available to citizens of these countries they engage in capital flight we show that the occurrence of capital flight does not imply that opening the capital account reduces growth and welfare

macroannouncements bond auctions and rating actions in the european government bond spreads this paper investigates the impact of macroannouncements government bond auctions and rating actions on the 10 year government bond spreads for belgium france italy the netherlands spain with respect to germany using a unique tick by tick dataset over 1 02 2009 05 31 2012 we identify the impact of the three drivers via jump and cojump detection procedures disentangling the pre from the post announcement effects real economy and forward looking news releases from us and euro area country specific spanish and german macroannouncements and auctions hold in distressed countries such italy and spain have a statistically and economically significant effect no role is played by rating actions

external debt capital flight and political risk abstract this paper explains the simultaneous occurence of large external debts private capital outflows and low domestic capital formation we consider a general equilibrium model in which two government types with conflicting distributional goals randomly alternate in office uncertainty over the fiscal policies of future governments generates capital flight and small domestic investment and induces the government to overaccumulate external debt the model also predicts that left wing governments are more inclined to restrict capital outflows than right wing governments finally we examine how political uncertainty affects the risk premium and how debt repudiation may occur after a regime change

market power in nonrenewable resource markets an empirical dynamic model this paper estimates a dynamic model of the world markets for five nonrenewable resources over the period 1970 2004 and tests for market power in each of these markets the results show that during the study period the world markets for copper iron lead tin and zinc were characterized by oligopolistic behavior our model enables us to estimate an upper bound for the price elasticity of demand for those markets exhibiting market power we find that the demand for copper iron lead and zinc is relatively inelastic while the demand for tin is extremely elastic

capital flight in the presence of domestic borrowing evidence from eastern european economies summary we estimate capital flight from 10 central and eastern european countries for the period 1996 2009 capital flight from the transition economies is mainly an economic phenomenon driven by differences in interest rates and investors perceptions of economic conditions in their countries as well as by the ease with which they are able to obtain funds that can be transferred overseas through domestic loans and capital inflows domestic credit expansion is an important source of financing for capital flight paradoxically financial liberalization has fueled rather than reduced capital flight by reducing its costs and increasing the funds that can be moved abroad

the missing wealth of nations are europe and the u s net debtors or net creditors this paper shows that official statistics substantially underestimate the net foreign asset positions of rich countries because they fail to capture most of the assets held by households in offshore tax havens drawing on systematic anomalies in portfolio investment positions and a unique swiss dataset i find that 8 of the global financial wealth of households is held in tax havens 6 of which goes unrecorded on the basis of plausible assumptions accounting for unrecorded assets turns the eurozone officially the world s second largest net debtor into a net creditor it also reduces the u s net debt significantly the results shed new light on global imbalances and challenge the widespread view that after a decade of poor to rich capital flows external assets are now in poor countries and debts in rich countries i provide concrete proposals to improve international investment statistics

coase lecture taxes targets and the social cost of carbon in environmental economics the marginal external cost of emitting a pollutant determines the optimal abatement policy which might take the form of an emissions tax but the marginal external cost is often difficult to estimate this is especially the case when it comes to climate change estimates of the social cost of carbon scc range from around 10 per metric ton to well over 200 per metric ton and there has been little or no movement toward a consensus number partly as a result rather than an scc based carbon tax climate policy has focused on a set of targets that would put limits on temperature increases or atmospheric co2 concentrations which in turn imply targets for emission reductions economics however can tell us little about whether such targets are socially optimal i discuss the trade off between taxes versus targets as the focus of policy explain why it has been so difficult to estimate a marginal scc and suggest an approach to estimating an average scc through the use of expert elicitation i argue that such an approach could serve as the basis for a harmonized carbon tax

on the hidden links between financial and trade opening abstract developing countries characterized by high costs of tax collection and enforcement opt to use financial repression as an implicit tax on savings providing the impetus for capital flight a mechanism facilitating illicit capital movements is trade misinvoicing where the effectiveness of capital controls would increase with the resources spent on monitoring and enforcement per one dollar of international trade under these circumstances greater trade openness increases the effective cost of enforcing financial repression thereby reducing the usefulness of financial repression as an implicit tax this in turn implies that financial reforms tend to be the by product of greater trade integration

china s capital flight pre and post crisis experiences abstract we study china s illicit capital flow and document a change in its pattern specifically we observe that china s capital flight especially the one measured by trade misinvoicing exhibits a weakened response in the post 2007 period to the covered interest disparity which is a theoretical determinant of capital flight further analyses indicate that the post 2007 behavior is influenced by quantitative easing and other factors including exchange rate variability capital control policy and trade frictions our study confirms that china s capital flight pattern and its determinants are affected by the crisis event further both the canonical and additional explanatory variables have different effects on different measures of capital flight these results highlight the challenges of managing china s capital flight which requires information on the period and the type of capital flight that the policy authorities would like to target

oil exploration under climate treaties abstract in this paper we focus on how an international climate treaty will influence the exploration of oil in non opec countries we present a numerical intertemporal global equilibrium model for the fossil fuel markets the international oil market is modelled with a cartel opec and a competitive fringe on the supply side following a nash cournot approach an initial resource base for oil is given in the non opec region however the resource base changes over time due to depletion exploration and discovery when studying the effects of different climate treaties on oil exploration two contrasting incentives apply if an international carbon tax is introduced the producer price of oil will drop compared to the reference case this gives an incentive to reduce oil production and exploration however the oil price may increase less rapidly over time which gives an incentive to expedite production and exploration in fact in the case of a rising carbon tax we find the last incentive to be the strongest which means that an international climate treaty may increase oil exploration in non opec countries for the coming decades and reduce opec s market share

endogenous taxes in a vertically integrated natural resource extracting firm abstract contingent time varying taxes depend on variables internal to the industry or firm the petroleum extraction industry includes three technologically different activities exploration development and production a vertically integrated petroleum extracting firm is modelled to study an endogenous profits tax which varies with the level of proved reserves the analysis shows that the traditional measure of scarcity marginal user cost is not accurate and that the endogenous tax exaggerates the correct measure of scarcity

stock prices and economic news this paper examines the daily response of stock prices to announcements about the money supply inflation real economic activity and the discountrate except for the discount rate survey data on market participants expectations of these announcements are used to identify the unexpected component of the announcements in order to test the efficient markets hypothesis that only the unexpected part of any announcement the surprise moves stock prices the empirical results support this hypothesis and indicate further that surprises related to monetary policy significantly affect stock prices there is only limited evidence of an impact from inflation surprises and no evidence of an impact from real activity surprises on the announcement days there is also only weak evidence of stock price responses to surprises beyond the announcement day this abstract was borrowed from another version of this item

the reaction of stock prices to unanticipated changes in money a note much of the past work on the money stock market relationship centered on the question of whether money is a leading indicator of stock prices studies by sprinkel 22 homa and jaffee 10 and hamburger and kochin 8 supported the view that past increases in money lead to increases in equity prices the implication of this work was that investors could earn above normal proflts by using a trading strategy based on the observed behavior of the money stock this contradicts the efficient markets hypothesis which asserts that current asset prices reflect all available information so that no such trading strategy can exist subsequent research by cooper 3 pesando 17 rozeff 21 and rogalski and vinso 19 has shown that past money changes do not contain predictive information on stock prices upholding the efficient markets view this paper investigates whether the response of common stock prices to weekly money announcements is consistent with the efflcient markets hypothesis unlike the above research therefore the focus is on the very short run response of stock prices to both anticipated and unanticipated announced changes in money recent work by berkman 1 grossman 7 urich and wachtel 25 and roley 20 indicates that short term interest rates respond only to the unexpected component of the announcement with short term rates rising when the announced change in money exceeds the expected change berkman also examined the reaction of stock prices finding that an unanticipated increase in the money supply depressed share prices lynge 13 found that positive money announcements lowered stock prices but since he did not distinguish expected from unexpected money growth his results do not bear directly on the efficient markets issue in investigating the response of stock prices to weekly money announcements survey data on market participants forecasts of the announced weekly change

extracting information or resource the hotelling rule revisited under asymmetric information we characterize the optimal extraction path when a concessionaire has private information on the initial stock of resource under asymmetric information a virtual hotelling rule describes how the resource price evolves over time and how extraction costs are compounded with information costs along an optimal extraction path in sharp contrast with the case of complete information elds which are heterogeneous in terms of their initial stocks follow di erent extraction paths some resource might be left unexploited in the long run as a way to foster incentives the optimal contract may sometimes be implemented through royalties and license fees with a market of concessionaires asymmetric information leads to a virtual her ndahl principle and to a new form of heterogeneity across active concessionaires under asymmetric information the market price converges faster to its long run limit exhibiting more stability

environmental compliance and energy exploration and production application to offshore oil and gas an integrated investment production regulatory model is developed to examine the economic consequences of proposed environmental regulations on firms in the offshore oil and gas industry ocs related environmental regulatory issues the general modeling approach and selected simulation results are discussed the results show that the impacts of these regulations on ocs firms can be significant in terms of the reduction in after tax net present value the distribution of economic rent and minimum field size results also indicate that at the firm level the influences of different sets of regulatory proposals vary significantly with more stringent regulations having bigger effects

deutsche mark dollar volatility intraday activity patterns macroeconomic announcements and longer run dependencies this paper provides a detailed characterization of the volatility in the deutsche mark dollar foreign exchange market using an annual sample of five minute returns the approach captures the intraday activity patterns the macroeconomic announcements and the volatility persistence arch known from daily returns the different features are separately quantified and shown to account for a substantial fraction of return variability both at the intraday and daily level the implications of the results for the interpretation of the fundamental driving forces behind the volatility process is also discussed the efficient market hypothesis contends that financial asset prices provide rational assessments of fundamental values and future payoffs by implication price changes should reflect the arrival and processing of all relevant new information however the proportion of return variability that can be ascribed to public news announcements is low for example cutler poterba and summers 1989 find that even the largest daily price changes in the stock market generally cannot be associated with any significant economic news 1 moreover proxies for the flow of public information e g the number of news items released by reuter s news service berry and hiowe 1994 or dow jones company mitchell and mulherin 1994 explain little of the overall variation thus if private information is ruled out proponents of rational price formation have to assert the existence of important news items

an energy centric theory of agglomeration abstract this paper sets out a simple spatial model of energy exploitation to ask how the location and productivity of energy resources affects the distribution of economic activity across geographic space by combining elements from energy economics and economic geography we link the productivity of energy resources to the incentives for economic activity to agglomerate we find a novel scaling law links the productivity of energy resources to population sizes while rivers and roads effectively magnify productivity we show how our theory s predictions concerning a single core aggregate to predictions over regional landscapes and city size distributions at the country level

response of hourly stock prices and trading volume to economic news this paper examines hourly stock returns and trading volume response to announcements about the money supply consumer price index cpi producer price index industrial production and the unemployment rate the empirical results indicate that surprises in announcements about money supply and cpi are significantly associated with stock price changes the announcements of the other three variables do not affect stock prices significantly trading volume is not affected by any of the five economic variable announcements indicating that market participants do not differ substanti ally in the interpretations of the effects of announcements the spee d of adjustment analysis indicates that the effect of information on stock prices is reflected in a short period of one hour or so copyright 1988 by the university of chicago

good bad cojumps and volatility forecasting new evidence from crude oil and the u s stock markets abstract in this article we investigate the impacts of jumps cojumps and their signed components on forecasting oil futures price volatility in the framework of the heterogeneous autoregressive realized volatility model our empirical results reveal several noteworthy findings first the effects of signed jumps and cojumps based on the daily and intraday jump tests on future volatility are asymmetric and the negative components are much more powerful in forecasting volatility moreover our proposed models including the signed jump and cojump components are able to generate higher forecasting accuracy and we find that disentangling the effects of positive and negative jumps and cojumps can significantly improve forecasts of future volatility lastly our findings are reliable for various robustness checks and our study provides some new insights into forecasting oil price realized volatility which are useful for researchers market participants and policymakers

the cost of doing business in africa evidence from enterprise survey data summary data from the world bank enterprise surveys show that indirect costs related to infrastructure and services account for a relatively high share of firms costs in poor african countries and pose a competitive burden on african firms we estimate firm level revenue and value added functions for six industries in 17 developing countries demonstrating that firm performance is sensitive to the cost of indirect inputs as indirect inputs are not usually included in estimations of value added we argue that existing estimates understate the relative performance of african manufacturing firms

environmental and land use regulation in nonrenewable resource industries implications from the wyoming checkerboard this paper examines how the oil and soning that these effects should be similar gas industry responds to changes in environmental to those of production and property taxes and land use regulations pertaining to drilling by like stollery however they do not conexamining differences in regulatory practices on sider the situation where environmental federal and private land a simulation model for regulations directly affect explo ration and wyoming is used to estimate losses of oil and gas development output over the next 60 years because of higher activities in any case the drilling costs found on federal property the pres limited number of studies in this area and ent value of these losses comes to about 800 mil their narrow scope is surprising in light of lion a lso this case study is of interest because it the importance of environmental complishows that future production is more sensitive to ance costs to firms that produce from nonchanges in environmental regulations that apply to renewable resources and because of the drilling than to changes in severance taxes levied observation by jaffe et al 1995 that a on production

can the west save africa in the new millennium the western aid effort toward africa has surged due to writ ings by well known economists a celebrity mass advocacy campaign and decisions by western leaders to make africa a major foreign policy priority this survey contrasts the predominant transformational approach west comprehensively saves africa to occasional swings to a marginal approach west takes one small step at a time to help individual africans evaluation of one step at a time initiatives is generally easier than that of transformational ones either through controlled experiments although these have been oversold or simple case studies where it is easier to attribute outcomes to actions we see two themes emerge from the literature survey 1 escalation as each successive western transformational effort has yielded disappointing results as judged at least by stylized facts since again the econometrics are shaky the response has been to try an even more ambitious effort and 2 the cycle of ideas rather than a progressive testing and discarding of failed ideas we see a cycle in aid ideas in many areas in africa with ideas going out of fashion only to come back again later after some lapse long enough to forget the previous disappointing experience both escalation and cyclicality of ideas are symptomatic of the lack of learning that seems to be characteristic of the transfor mational approach in contrast the marginal approach has had some successes in improving the well being of individual africans such as the dramatic fall in mortality

macroeconomic news announcements and stock market jump intensity dynamics abstract this paper examines the effect of macroeconomic releases on stock market volatility through a poisson gaussian garch process with time varying jump intensity which is allowed to respond to such information the day of the announcement per se is found to have little impact on jump intensities employment releases are an exception however when macroeconomic surprises are considered inflation shocks show persistent effects while monetary policy and employment shocks reveal only short lived effects also the jump intensity responds asymmetrically to macroeconomic shocks evidence on macroeconomic variables relevance in explaining jump dynamics and improving volatility forecasts on event days is provided

steady state growth in a hotelling model of resource extraction this paper re examines the hotelling model of optimal nonrenewable resource extraction in light of stock effects and technological progress we assume functional forms for cost and demand so that the solution to the hotelling problem is a steady state consistent with the empirical observation that the growth rates of market prices have remained zero over a long period of time we use data on 14 minerals from 1970 to 2004 to estimate the supply and demand functions using sur and 3sls and to test the model we validate the model for 8 of 14 minerals c 2007 elsevier inc all rights reserved

exploration and development of u s oil and gas fields 1955 2002 we study the exploration and development of oil and gas fields in the u s over the period 1955 2002 we make four contributions to explain the economic evolution of the oil and gas industry during this period first we derive a testable model of the dynamics of competitive oil and gas field exploration and development second we show how to empirically distinguish hotelling scarcity effects from effects due to technological change third we test these hypotheses using statewide panel data of exploration and development drilling we find that the time paths of exploration development and total wells drilled are dominated by hotelling scarcity effects finally we offer an explanation for why fixed costs from exploration can make the contracting equilibrium in the mineral rights market efficient

bank reforms foreign ownership and financial stability abstract numerous studies have focused on foreign ownership of banks but instead of linkages to financial stability they typically analyzed other issues and used country level data this article fills the gap in the literature by applying the gmm techniques on dynamic panels using bank level data for asian countries to investigate the impact of foreign ownership on financial stability as well as whether the relation between foreign ownership and stability changes under different conditions of bank reforms in the host country specifically we reach five conclusions first the existence of the home field advantage hypothesis is supported nevertheless when considering the effects of bank reforms the global advantage hypothesis holds second an inverse u shaped relation between foreign ownership and stability is supported third a higher degree of credit control liberalization mitigates the negative effect of foreign ownership on stability fourth liberalization of interest rate control and banking supervision do enhance stability fifth and finally we confirm a significantly negative relation between an explicit deposit and stability

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

resource characteristics extraction costs and optimal exploitation of mineral resources this paper modifies the traditional theories ofnon renewable resource exploitation where reserve sizeis assumed to be the major determinant of extractioncosts in a competitive model of resourceexploitation characteristics of aggregate reservesare considered as a determinant of extraction cost then dynamic solutions for the price and exploratoryefforts are developed various price paths arefeasible under different assumptions with regard tothe changes in the reserve characteristics over time past empirical research shows that there is noconsistent price path for all materials in fact itis the quality of newly discovered reserves as well astheir size that has affected material prices todemonstrate the complexity of a firm s decision torecover mineral from new deposits potentials forsubstantial high quality marine mineral resources areevaluated as a substitute for land based resources however several factors including the decreasingtrend in marine mining r d expenditures and thepotential impact of large scale marine mining on priceof minerals indicate that mining of mostnon hydrocarbon marine minerals will not take place inthe near future

exploration and exhaustible resources the microfoundations of aggregate models the appropriate specifications for aggregate extraction and exploration cost functions are derived from a disaggregate model of the search for low cost deposits of an exhaustible resource the common practice of combining the no discovery extraction cost function with exploration is shown to result in a misspecified model for which the total cost of extracting the resource is not well defined the widely accepted prediction that the anticipated discovery of low cost deposits results in a u shaped price path appears to be an artifact of this misspecification for the authors properly specified cost functions the predicted resource price always rises copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

harnessing windfall revenues optimal policies for resource rich developing economies a windfall of natural resource revenue or foreign aid faces government with choices of how to manage public debt investment and the distribution of funds for consumption particularly if the windfall is both anticipated and temporary we show that the permanent income hypothesis prescription of an ever lasting increase in consumption financed by borrowing ahead of the windfall and then accumulating a sovereign wealth fund swf is not optimal for capital scarce developing economies such countries should accumulate public and private capital to accelerate their development and only if the windfall is large relative to initial foreign debt is it optimal to build a swf the optimal time profile of consumption is biased towards the near future as compared to the permanent income hypothesis outcomes depend on instruments available to government we study cases where the government can make lump sum transfers to consumers where such transfers are impossible so optimal policy involves cutting distortionary taxation in order to raise investment and wages and where ricardian consumers can borrow against future revenues in which case the policy response to possible over consumption is a high level of investment in infrastructure

investment in the shadow of conflict globalization capital control and state repression in conflict prone societies the fear of expropriation that accompanies a regime change reduces capital investment these reductions in investments in turn harm the economy amplifying the likelihood of regime change this article studies the implications of these feedback channels on the interactions between globalization capital control state repression and regime change i show that processes that facilitate capital movements e g globalization economic modernization and technologies that reduce transportation costs amplify the likelihood of regime change in conflict prone societies and strengthen the elite s demand for a strong coercive state in particular to limit their collective action problem and manage the political risk of regime change capitalists support a state that imposes capital control we identify two conflicting forces the boix effect and the marx effect which determine when capital control and state repression become complements nazi germany or substitutes latin american military regimes in right wing regimes

macroeconomic announcements and asymmetric volatility in bond returns this study analyses the impact of macroeconomic news announcements on the conditional volatility of bond returns using daily returns on the 1 3 5 and 10 year us treasury bonds we find that announcement shocks have a strong impact on the dynamics of bond market volatility our results provide empirical evidence that the bond market incorporates the implications of macroeconomic announcement news faster than other information moreover after distinguishing between types of macroeconomic announcements releases of the employment situation and producer price index are especially influential at the intermediate and long end of the yield curve while monetary policy seem to affect short term bond volatility

asset policies during an oil windfall some simple analytics many developing countries are currently experiencing oil windfalls whether due to discoveries or to price effects such windfalls pose a series of policy dilemmas the literature has focused on one of these the choice between using windfall savings for public capital formation and investment in foreign assets there are good theoretical reasons for investing a substantial part of the windfall initially abroad the return to investment would fall below the world interest rate if the windfall were to be used entirely for domestic investment investing abroad offers an escape from diminishing returns foreign assets can be repatriated gradually and used for domestic investment however in practice the efficient balance between domestic and foreign assets is politically difficult to sustain also even if politically feasible this strategy is inefficient due to the failure to expand the private capital stock equipment the policy problem is that the government cannot undertake such investment itself and trying to induce private agents to undertake equipment investment by transferring part of the windfall to them is likely to fail as a result of information problems we argue that domestic debt repayment solves this dilemma it has the added advantage of making foreign asset accumulation difficult to reverse 2005 blackwell publishing ltd

flight capital as a portfolio choice the authors examine flight capital in the context of portfolio choice they estimate the stock of flight capital held abroad and compare it with the stock of real nonfinancial capital held within each country for 51 countries they construct estimates as of 1990 of private domestic capital and flight capital which combined add up to domestic wealth there are large regional differences in the proportion of private wealth that is held abroad ranging from 3 percent in south asia to 39 percent in africa they explain differences in portfolio choice in terms of the capital to labor ratio indebtedness exchange rate distortions and risk ratings all proxies for differences in the risk adjusted rate of return on capital they then apply the results to four policy questions in which private portfolio choices are potentially important the effect of the east asian crisis on domestic capital outflows spillovers the effect of hipc debt relief on capital repatriation and why africa has so much of its private wealth outside the continent their conclusions 1 the four most severely affected east asian countries will eventually lose about 250 billion in domestic wealth as a result of the deterioration in risk between march 1997 and september 1998 2 they found some support for a spillover model 3 the effect of the hipc debt relief initiative on capital repatriation will vary massively between hipc eligible countries 4 africa has by far the lowest capital per worker which makes massive capital flight from africa all the more distinctive three variables explain capital flight in africa exchange rate overvaluation adverse investor risk ratings and high indebtedness

a test of the hotelling rule using old growth timber data the paper tests hotelling s prediction that scarcity rent for a non renewable resource will rise at the rate of discount in a market equilibrium we perform the test using data for old growth timber a resource that is effectively non renewable in contrast to previous studies for this resource a measure of scarcity rent is directly observable in the form of stumpage price bids in timber auctions we construct a model that allows for replanting and captures the institutional framework of the western u s timber market the modified hotelling rule that we derive is not rejected in several of our specifications

efficiency adjusted public capital and growth summary this paper constructs an efficiency adjusted public capital stock series and re examines the public capital and growth relationship the paper also examines the effects of four specific stages of the public investment process appraisal selection implementation and evaluation on capital accumulation and growth the results show that public capital is a significant contributor to economic growth the quality of public investment as measured by variables capturing the adequacy of project selection and implementation is statistically significant in explaining variations in economic growth a result mainly driven by low income countries

exploration can cause falling non renewable resource prices abstract this note shows that when marginal exploration costs are increasing in the rate of exploration that it is possible to observe non renewable resource prices falling over a portion of the extraction profile thus while the model of pindyck j polit econ 86 1978 841 was based on an incorrect specification of the aggregate extraction cost function its general conclusion that exploration can cause falling non renewable resource prices is upheld this result is in contrast to mendelsohn and swierzbinski int econ rev 30 1989 175 who assumed that marginal extraction costs were constant

the revolving door external debt and capital flight a philippine case study abstract in recent decades the private citizens of a number of third world countries accumulated substantial external assets via capital flight at the same time their governments incurred large external debts this paper proposes a classification of hypothetical linkages between capital flight and external debt disbursements and examines the strength of these linkages in the philippines during 1962 86 econometric analysis and anecdotal evidence indicate that large sums of capital flowed into and out of the philippines through a financial revolving door on this basis i conclude that there is scope for political and legal challenges to the legitimacy of a substantial fraction of the country s external debt

depletion of the environmental basis for renewable resources the economics of interdependent renewable and nonrenewable resources abstract this paper synthesizes familiar theories of nonrenewable and renewable resource economics in a two sector partial equilibrium analysis of efficient trade offs between renewable resource production and environmental development the irreversible impacts of coastal zone development provide a motivating example while development proceeds the efficient harvest of renewable resources may exceed the sustainable rate while development may involve several periods of growth and decline once development begins it proceeds without significant interruptions if a profitable renewable sector survives development ceases before exhausting all profitable opportunities interdependent stocks reduce distinctions between resource types because each sector exhibits features of the other

optimal exploration for and exploitation of heterogeneous mineral deposits abstract we model exploration for and production from a multiple deposit nonrenewable resource exploration is viewed as a bayesian process involving learning about undiscovered reserves and is undertaken both to improve the quality of and to replenish known reserves known reserves are not physically defined but depend on the realizations of discrete episodes of exploration elsewhere and on decisions at each instant about the margin between ore to be mined and low grade material to be rejected the appropriate measure of resource scarcity the sustainable level of the contribution of the resource and the treatment of depletion in the national accounts are considered

macroeconomic releases and the interest rate term structure abstract we extract two systematic economic factors from a wide array of noisy and sparsely observed macroeconomic releases and link the dynamics and market prices of the two factors to the interest rate term structure the two factors predict 77 9 82 1 of the daily variation in libor and swap rates from one month to 10 years shocks on inflation related releases have large positive impacts on interest rates of all maturities leading to parallel shifts of the yield curve but shocks on output related releases have larger impacts on the short rate than on the long rate thus generating a slope effect

the economics of exploration for non renewable resources abstract the literature on exploration for non renewable resources is surveyed following a brief synopsis in section 2 section 3 focuses on issues related to the world market for resources section 4 considers more microeconomic supply related issues linked to the exploration of the small region or play section 5 turns to the small but growing literature on exploration as a learning process related to r d the latter sections pay particular attention to empirical and policy aspects

public debts and private assets explaining capital flight from sub saharan african countries we investigate the determinants of capital flight from 30 sub saharan african countries including 24 countries classified as severely indebted low income countries for the period 1970 1996 the econometric analysis reveals that external borrowing is positively and significantly related to capital flight suggesting that to a large extent capital flight is debt fueled we estimate that for every dollar of external borrowing in the region roughly 80 cents flowed back as capital flight in the same year capital flight also exhibits a high degree of persistence in the sense that past capital flight is correlated with current and future capital flight the growth rate differential between the african country and its oecd trading partners is negatively related to capital flight we also explore the effects of several other factors inflation fiscal policy indicators the interest rate differential exchange rate appreciation financial development and indicators of the political environment and governance we discuss the implications of the results for debt relief and for policies aimed at preventing capital flight and attracting private capital held abroad

a model of the operation and development of a national oil company we present a model of the exploration and development activities of a national oil company noc which uses similar technology to a private firm to extract a depletable resource however unlike the private firm the noc may have a wider range of objectives than maximizing the present value of profits specifically we assume an objective function that balances firm profitability against a political desire to favor domestic consumer surplus and domestic employment we find that the non commercial objectives faced by a noc tend to reinforce each other in their effects on profitability the timing of cash flows and employment

the high frequency impact of news on long term yields and forward rates is it real abstract macroeconomic news announcements move yields and forward rates on nominal and index linked bonds and inflation compensation this paper estimates the reactions using high frequency data on nominal and index linked bond yields allowing the effects of news announcements on real rates and inflation compensation to be parsed far more precisely than is possible using daily data long term nominal yields and forward rates are very sensitive to macroeconomic news announcements inflation compensation is sensitive to announcements about price indices and monetary policy however for news announcements about real economic activity such as nonfarm payrolls the vast majority of the sensitivity is concentrated in real rates accordingly most of the sizeable impact of news about real economic activity on the nominal term structure of interest rates represents changes in expected future real short term interest rates and or real risk premia rather than changes in expected future inflation and or inflation risk premia such sensitivity of real rates to macroeconomics news is hard to rationalize within the framework of existing macroeconomic models

information and exhaustible resources a bayesian analysis abstract we develop a continuous time bayesian model of investment in information about an exhaustible resource because of the way that information affects expectations the deterministic hotelling rule turns out to be more appropriate as a description of how resource owners forecast the value of their stocks than as a predictor of observed changes in the resource price a flow of information generates both unanticipated changes in expectations which cause the mean rate of change in the resource price to deviate systematically from the deterministic hotelling rule and reductions in uncertainty which do not affect the hotelling prediction

jumps in financial markets a new nonparametric test and jump dynamics this paper introduces a new nonparametric test to detect jump arrival times and realized jump sizes in asset prices up to the intra day level we demonstrate that the likelihood of misclassiflcation of jumps becomes negligible when we use high frequency returns using our test we examine jump dynamics and their distributions in the u s equity markets the results show that individual stock jumps are associated with prescheduled earnings announcements and other company speciflc news events additionally s p 500 index jumps are associated with general market news announcements this suggests difierent pricing models for individual equity options versus index op

capital flight to germany two alternative measures abstract we use two measures to study two capital flight channels for germany one measure is based on the concept of trade misinvoicing and one on net claims and liabilities in the eurosystem of central banks for both measures we propose refinements to enhance the assessment of capital flight we find that capital flight towards germany via these two channels has been quite sizable in the recent decade and can tally to about 2 of gdp annually regarding their determinants we show that the two capital flight measures are driven by both common and measure specific factors traditional determinants such as covered interest differentials only play a limited role while crisis specific factors such as economic policy uncertainty the ecb collateral policy as well as currency misalignment are driving factors of the investors apparent flight to safety behavior

considering aquacultural externality in coastal land allocation decisions in india commercial aquaculture in india has come under attack for having caused negative agricultural and environmental impacts this paper formulates an interactive model of non renewable and renewable resources to characterize land allocations between aquaculture and agriculture in ecologically and economically sustainable fashion through an empirical application various economic and policy circumstances that affect the optimal land allocation mix are evaluated the aquaculture industry must address two economic effects off site negative effects on renewable food and other coastal resources and on site self pollution of shrimp ponds current regulatory and land use policies are inadequate to address these effects

economic growth and transitions between renewable and nonrenewable energy resources abstract we study transitions between nonrenewable and renewable energy forms at different development stages of an economy it is shown that in the historical context the emphasis on energy production may evolve from renewables to nonrenewables and back to renewables typically both energy forms are used simultaneously along the equilibrium path nonrenewable resource consumption may increase and their price decrease an inverted u relation between carbon emissions and income level may follow even without environmental policy

how did highly indebted poor countries become highly indebted reviewing two decades of debt relief how did highly indebted poor countries become highly indebted after two decades of debt relief efforts a set of theoretical models predict that countries with unchanged long run savings preferences will respond to debt relief with a mixture of asset decumulation and new borrowing a model also predicts that a high discount rate government will choose poor policies and impose its inter temporal preferences on the entire economy reviewing the experience of highly indebted poor countries compared with that of other developing countries the author finds direct and indirect evidence of asset decumulation and new borrowing associated with debt relief the ratio of the net present value of debt to exports rose strongly over 1979 97 despite the debt relief efforts average policies in highly indebted poor countries were generally worse than those in other developing countries nor were wars more likely in highly indebted poor countries over time there has been an important shift in financing for highly indebted poor countries away from private and bilateral nonconcessional sources to the international development association and other sources of multilateral concessional financing but this implicit form of debt relief also failed to reduce debt in net present value terms although debt relief is done in the name of the poor the poor are worse off if debt relief creates incentives to delay reforms needed for growth