energy consumption and economic growth relationship evidence from panel data for low and middle income countries abstract this paper uses the panel data of energy consumption ec and economic growth gdp for 51 countries from 1971 to 2005 these countries are divided into three groups low income group lower middle income group and upper middle income group countries firstly a relationship between energy consumption and economic growth is investigated by employing pedroni 1999 panel cointegration method secondly panel causality test is applied to investigate the way of causality between the energy consumption and economic growth finally we test whether there is a strong or weak relationship between these variables by using pedroni 2001 method the empirical results of this study are as follows i energy consumption and gdp are cointegrated for all three income group countries ii the panel causality test results reveal that there is long run granger causality running from gdp to ec for low income countries and there is bidirectional causality between ec and gdp for middle income countries iii the estimated cointegration factor is not close to 1 in other words no strong relation is found between energy consumption and economic growth for all income groups considered in this study the findings of this study have important policy implications and it shows that this issue still deserves further attention in future research

quantitative analysis of sustainable energy strategies in china this paper conducted quantitative study on china s sustainable energy strategies by using the econometric method gdp growth will be over 6 annually between 2005 and 2030 the continuation of rapid economic growth could result in a lot of difficulties for energy security environment protection and co2 emissions reductions for the sustainable development more comprehensive strategies should be adopted including improvement in energy efficiency with highest priority enhancing development of renewable energy and promoting structural adjustment in transport sector etc at the same time international cooperation such as establishing asia energy and environment agency towards asia community is also an important strategic option

how accurate are forecasts of costs of energy a methodological contribution forecasts of the cost of energy are typically presented as point estimates however forecasts are seldom accurate which makes it important to understand the uncertainty around these point estimates the scale of the differences between forecasts and outturns i e contemporary estimates of costs may have important implications for government decisions on the appropriate form and level of support modelling energy scenarios or industry investment appraisal this paper proposes a methodology to assess the accuracy of cost forecasts we apply this to levelised costs of energy for different generation technologies due to the availability of comparable forecasts and contemporary estimates however the same methodology could be applied to the components of levelised costs such as capital costs the estimated forecast errors capture the accuracy of previous forecasts and can provide objective bounds to the range around current forecasts for such costs the results from applying this method are illustrated using publicly available data for on and off shore wind nuclear and ccgt technologies revealing the possible scale of forecast errors for these technologies

aggregate earnings and gross domestic product international evidence abstractrecent studies in macro accounting suggest that changes in aggregate accounting earnings can predict quarterly gdp growth in the usa our objective in this study is to test the robustness o

refinancing profitability and capital structure abstract we revisit the well established puzzle that leverage is negatively correlated with measures of profitability in contrast we find that at times when firms are at or close to their optimal level of leverage the cross sectional correlation between profitability and leverage is positive at other times it is negative these results are consistent with dynamic trade off models in which infrequent capital structure rebalancing is optimal the time series of market leverage and profitability in the quarters prior to rebalancing events match the patterns predicted by these models our results are not driven by investment layouts market timing payout or mechanical mean reversion of leverage

energy consumption at business cycle horizons the case of the united states in this paper we propose a simple extension to a keynesian type macro model by augmenting it with energy consumption we show the relationship between energy consumption and output in a macroeconomic setting and ask the question do permanent shocks dominate changes in energy consumption and output at business cycle horizons for the united states to achieve the goal of this paper we undertake a variance decomposition analysis of shocks based on a common trend and common cycle framework within a vector error correction model our main finding is that permanent shocks explain the bulk of the variations in energy consumption and output at business cycle horizons for the united states

debt in industry equilibrium this article shows 1 how entry and exit of firms in a competitive industry affect the valuation of securities and optimal capital structure and 2 how given a trade off between tax advantages and agency costs a firm will optimally adjust its leverage level after it is set up we derive simple pricing expressions for corporate debt in which the price elasticity of demand for industry output plays a crucial role when a firm optimally adjusts its leverage over time we show that total firm value comprises the value of discounted cash flows assuming fixed capital structure plus a continuum of options for marginal increases in debt article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the effect of business risk on corporate capital structure theory and evidence under corporate and personal taxation we demonstrate that the relation between optimal debt level and business risk is roughly u shaped this result follows from the fact that the tax liability is an option portfolio that is long in the corporate tax option and short in the personal tax option therefore the net effect of a change in business risk on the optimal debt level depends upon the relative magnitudes of the resultant marginal changes in the values of these two options results of empirical tests offer support for the predicted u shaped relationship

the causality relationship between energy consumption and gdp in g 11 countries revisited abstract this paper explores whether energy conservation policies can be implemented in countries with the same level of development that is is restraining energy consumption without compromising economic growth feasible in all industrialized countries a new granger non causality testing procedure developed by toda and yamamoto 1995 journal of econometrics 66 225 250 is applied to re investigate the relationship if any between energy consumption and income in 11 major industrialized countries the results clearly do not support the view that energy consumption and income are neutral with respect to each other except in the case of the united kingdom germany and sweden where a neutral relationship is found bi directional causality in the united states and uni directional running from energy consumption to gdp in canada belgium the netherlands and switzerland are found this indicates that energy conservation may hinder economic growth in the latter five countries further the causality relationship appears to be uni directional but reversed for france italy and japan which implies that in these three countries energy conservation may be viable without being detrimental to economic growth

path towards achieving of china s 2020 carbon emission reduction target a discussion of low carbon energy policies at province level abstract following the announcement of the china s 2020 national target for the reduction of the intensity of carbon dioxide emissions per unit of gdp by 40 45 compared with 2005 levels chinese provincial governments prepared to restructure provincial energy policy and plan their contribution to realizing the state reduction target focusing on fujian and anhui provinces as case studies this paper reviews two contrasting policies as a means for meeting the national reduction target that of the coastal province of fujian proposes to do so largely through the development of nuclear power whilst the coal rich province of anhui proposes to do so through its energy consumption rate rising at a lower rate than that of the rise in gdp in both cases renewable energy makes up a small proportion of their proposed 2020 energy structures the conclusion discusses in depth concerns about nuclear power policy energy efficiency energy consumption strategy and problems in developing renewable energy

bankruptcy risk and optimal capital structure this study finds shortcomings in empirical tests of the capital structure irrelevance hypothesis the alternative hypothesis is that firms choose value maximizing mixes of debt and equity on account of bankruptcy costs and the tax deductibility of interest payments based upon the cross sectional implications of the tax shelter bankruptcy cost hypothesis an alternative test of the irrelevance hypothesis is performed the test examines the relationship between failure rates and leverage ratios for 36 lines of business the results are inconsistent with the irrelevance hypothesis in their landmark paper modigliani and miller 26 demonstrate that under certain assumptions the market value of a firm is independent of its capital structure these assumptions include the absence of taxes transactions costs and bankruptcy costs recently miller 24 has argued that the introduction of corporate and personal taxes does not alter the capital structure irrelevance result in the absence of bankruptcy costs 1 the inclusion of bankruptcy costs generally considered in conjunction with the tax deductibility of interest payments has led others to conclude that capital structure will affect the value of the firm 2 in this case value maximizing firms may choose optimal capital structures consisting of both debt and equity there have been numerous attempts to discriminate empirically between the miller irrelevance mi hypothesis and the tax shelter bankruptcy cost ts bc hypothesis several are discussed in section i of this paper there it is argued that studies attempting to measure directly the effect of changes in capital structure on firm values are subject to serious complications and are unable to discriminate between the mi and ts bc hypotheses other studies focus on cross sectional implications of the mi and ts bc hypotheses the cross sectional tests are based on the assertion that bankruptcy costs may tend to induce firms with greater business risk to include less debt in their capital structures whereas the mi hypothesis does not predict such a relationship unfortunately the existence of positive bankruptcy costs is not sufficient to ensure that the ts bc hypothesis will predict the inverse relation

institutional determinants of capital structure adjustment speeds abstract many authors relate a firm s performance to legal and political features and the regulatory environment in which it operates this article compares firms capital structure adjustments across countries and investigates whether institutional differences help explain the variance in estimated adjustment speeds we find that legal and financial traditions significantly correlate with firm adjustment speeds more narrowly institutional features also relate to adjustment speeds consistent with the hypothesis that better institutions lower the transaction costs associated with adjusting a firm s leverage such associations between institutional arrangements and leverage adjustment speeds are consistent with the dynamic trade off theory of capital structure choice

capital structure and product market rivalry how do we reconcile theory and evidence this paper presents empirical evidence on the interaction of capital structure decisions and product market behavior we examine when firms recapitalize and increase the proportion of debt in their capital structure the evidence in this paper shows that firms with low productivity plants in highly concentrated industries are more likely to recapitalize and increase debt financing this finding suggests that debt plays a role in highly concentrated industries where agency costs are not significantly reduced by product market competition following the empirical evidence we introduce the strategic investment effects of debt and argue that this effect in conjunction with agency costs appears to fit the data this abstract was borrowed from another version of this item

determinants of capital structure evidence from a major developing economy a major shortcoming of capital structure studies on developing economies is that they generally restrict their analyses to large publicly traded manufacturing firms consequently we know little about the applicability of various capital structure theories to firms that are private small and or outside the manufacturing industry in these economies in this paper we conduct a comparative test of the trade off and pecking order theories using a comprehensive firm level dataset that covers manufacturing non manufacturing small large publicly traded and private firms in a major developing economy turkey the trade off theory provides a better description of the capital structures of all firm types than the pecking order theory moreover the trade off theory appears to be particularly suitable for understanding the financing choices of large private firms in the non manufacturing sector and when the economic environment is relatively stable by contrast pecking order theory is most useful when it comes to small publicly traded manufacturing firms especially when the economic environment is relatively unstable

multinationality portfolio diversification and asymmetric mne performance the moderating role of real options awareness the field of international business is fundamentally concerned with the implications of managerial actions that affect multinational risk and performance outcomes while portfolio diversification and real options theory are often used to describe the outcomes of multinational investment existing work often confuses the actions and predictions proposed by these theories this is concerning as the two theories emphasize different causal mechanisms managerial actions and conceptions of risk and performance whereas portfolio theory argues that passive management affects symmetric outcomes such as variance in returns by attaining a well diversified portfolio real options theory posits that managers actively shift subsidiary resources to affect asymmetric outcomes such as upside potential or downside risk by monitoring and responding to environmental changes affecting the portfolio this paper disentangles these two theories by focusing on unique predictions from real options theory that geographic dispersion of mne activities is associated with asymmetric outcomes that this association is contingent on management being aware of real options logic and that these effects are moderated by the degree of market uncertainty our findings confirm these predictions and suggest differences in the types of managerial strategies and actions required to effectively implement these distinct theories of the mne

the debt equity choice when firms adjust their capital structures they tend to move toward a target debt ratio that is consistent with theories based on tradeoffs between the costs and benefits of debt in contrast to previous empirical work out tests explicitly account for the fact that firms may face impediments to movements toward their target ratio and that the target ratio may change over time as the firm s profitability and stock price change a separate analysis of the size of the issue and repurchase transactions suggests that the deviation between the actual and the target ratios plays a more important role in the repurchase decision than in the issuance decision

investment and competition this paper examines how industry structure affects corporate investment patterns real options theory shows that deferring irreversible investment in the face of uncertainty is valuable theory also shows that the value of waiting to invest falls if investment opportunities are contestable consistent with these theories we find that firms in monopolistic industries exhibit lower investment q sensitivity and are slower to invest than firms in competitive industries however we find that investment q sensitivity and investment speed are highest in oligopolistic industries suggesting that the value of investing strategically can outweigh the value of waiting indeed oligopolistic industries experience less entry and more exit than other industries

financial signalling and the deep pocket argument this article provides a formal representation of telser s 1966 deep pocket argument by considering a model in which the entrant s and the incumbent s financial structures are endogenous the entrant s financial vulnerability may be explained by informational asymmetries in financial markets financiers are uncertain of the entrant s true value but they know the incumbent s true worth both firms have to finance a fixed expenditure before starting production in equilibrium the incumbent finances with equity while the high value entrant comes into the market heavily leveraged compared with the incumbent this provides an incentive for the incumbent to engage in predatory practices such as a price war to exhaust the entrant financially and cause his bankruptcy

are observed capital structures determined by equity market timing contrary to baker and wurgler 2002 i find that the importance of historical average market to book ratios in leverage regressions is not due to past equity market timing al though equity transactions may be timed to equity market conditions they do not have sig nificant long lasting effects on capital structure debt transactions exhibit timing patterns that are unlikely to induce a negative relation between market to book ratios and leverage i also find that historical average market to book ratios have significant effects on current financing and investment decisions implying that they contain information about growth opportunities not captured by current market to book ratios

poverty and growth impacts of high oil prices evidence from sri lanka the sharp rise in oil and food prices in 2007 and 2008 caused negative impacts on poverty and economic growth in many oil and food importing developing countries some analysts believe that these countries are under stress again due to a rise in crude oil prices to a two and a half year high in march 2011 which has also been partly responsible for higher food prices in recent months however there is a limited body of empirical evidence available from developing countries on the impact of high oil prices on growth in general and household poverty in particular in this study sri lanka is used as a case study and a computable general equilibrium cge approach is adopted as an analytical framework to explore the growth and poverty impacts of high oil prices the results suggest that urban low income households are the group most adversely affected by high global oil prices followed by low income rural households in contrast estate low income households are the least affected out of all low income households the energy intensive manufacturing sector and services sector are affected most compared to the agricultural sector

evidence on the impact of the agency costs of debt on corporate debt policy in the last several years there has been increased theoretical emphasis on the agent principal problem as it applies to corporate finance this paper is an attempt to empirically test for the presence of the agency costs and their relation to the debt policy of corporations we find that firms with higher insider ownership have greater debt ratios than firms with lower insider ownership which may be explained by the agency costs of debt and or the agency costs of equity other regression results tend to confirm the theoretically optimal relationships put forth by myers we find that high growth firms use less debt rather than more debt high operating risk firms use more debt rather than less debt and firm size appears to be uncorrelated to the level of debt

causality relationship between electricity consumption and gdp in bangladesh in this paper we examine the causal relationship between the per capita electricity consumption and the per capita gdp for bangladesh using cointegration and vector error correction model our results show that there is unidirectional causality from per capita gdp to per capita electricity consumption however the per capita electricity consumption does not cause per capita gdp in case of bangladesh the finding has significant implications from the point of view of energy conservation emission reduction and economic development

control rights and capital structure an empirical investigation we show that incentive conflicts between firms and their creditors have a large impact on corporate debt policy net debt issuing activity experiences a sharp and persistent decline following debt covenant violations when creditors use their acceleration and termination rights to increase interest rates and reduce the availability of credit the effect of creditor actions on debt policy is strongest when the borrower s alternative sources of finance are costly in addition despite the less favorable terms offered by existing creditors borrowers rarely switch lenders following a violation a fundamental question in financial economics is how do firms choose their financial policies extant empirical research on this question has focused primarily on the presence of taxes and bankruptcy costs e g scott 1976 information asymmetry e g myers and majluf 1984 and more recently market timing behavior e g baker and wurgler 2002 however beginning with jensen and meckling 1976 a large body of theoretical research examines how incentive conflicts between managers and external investors affect corporate financial policies in particular theoretical research on financial contracting shows that in the presence of incentive conflicts optimal debt contracts will allocate certain rights to creditors after negative performance in order to help firms secure financing ex ante e g aghion and bolton 1992 and dewatripont and tirole

methods for including income distribution in global cge models for long term climate change research abstract the consequences of climate policy and the impacts of climate change vary among different types of households depending on their income level expenditure pattern and other socioeconomic characteristics global economy environment models that are used to assess climate change issues traditionally do not distinguish households by income or other attributes to facilitate progress in this area we review and assess literature on methods to include household heterogeneity in global long term computable general equilibrium cge models we distinguish among three categories of approaches 1 the explicit modeling of multiple household types within the cge framework 2 micro simulation modeling and 3 direct modeling of income distribution for each of these approaches we describe the method key assumptions limitations and several prominent examples from the literature moreover we discuss data needs including the contents of household survey data their availability and processing we conclude with an overview of what each method could provide for global long term climate related research

an econometric study on china s economy energy and environment to the year 2030 abstract an integrated econometric model consisting of macroeconomic sub model energy sub model and environment sub model was developed and used to perform a long term simulation study for china in the coming 30 years the potential of gdp growth will be around 7 annually and the continuation of rapid economic growth could result in insurmountable difficulties for energy security air protection and co2 emission reductions for the sustainable development more comprehensive measures should be adopted including improvements in energy efficiency more rapid energy switching from coal to natural gas and renewable energy sources imposing carbon tax development of clean coal technology establishment of strategic petroleum stockpiling enforcement of air protection etc

challenges and countermeasures of china s energy security china is now a major consumer and importer of energy and its choices and policies will increasingly affect the rest of the world this paper analyses the key features of china s energy policy as it faces the prospect of possible challenges to its energy security given the increasing reliance on fuel imports and the need to transform its energy to meet the requirements of a modern fast growing economy the paper examines whether the current energy mix is appropriate and sustainable and considers the china s policymakers new emphasis on energy efficiency conservation renewable energy and the shift to natural gas the primary energy source it examines the internal and external constraints on china s energy policy and considers the strategic dilemmas arising from china s increasing involvement in international energy markets it concludes that both the domestic and international implications of china s search for energy security will confront policymakers with hard choices that will affect not only energy policy but also china s geopolitical grand strategy

how stable are corporate capital structures leverage cross sections more than a few years apart differ markedly with similarities evaporating as the time between them lengthens many firms have high and low leverage at different times but few keep debt to assets ratios consistently above 0 500 capital structure stability is the exception not the rule occurs primarily at low leverage and is virtually always temporary with many firms abandoning low leverage during the post war boom industry median leverage varies widely over time target leverage models that place little or no weight on maintaining a particular ratio do a good job replicating the substantial instability of the actual leverage cross section

the spillover effects of md a disclosures for real investment the role of industry competition abstract we explore whether disclosures in the management discussion analysis mda it is stronger when firms operate in industries that have lower entry costs are larger and have less substitutable products we obtain similar results for investment efficiency overall our evidence suggests that md a disclosures have spillover effects for investment that can improve investment efficiency and that spillover effects are moderated by industry competition

historical construction costs of global nuclear power reactors the existing literature on the construction costs of nuclear power reactors has focused almost exclusively on trends in construction costs in only two countries the united states and france and during two decades the 1970s and 1980s these analyses koomey and hultman 2007 grubler 2010 and escobar rangel and leveque 2015 study only 26 of reactors built globally between 1960 and 2010 providing an incomplete picture of the economic evolution of nuclear power construction this study curates historical reactor specific overnight construction cost occ data that broaden the scope of study substantially covering the full cost history for 349 reactors in the us france canada west germany japan india and south korea encompassing 58 of all reactors built globally we find that trends in costs have varied significantly in magnitude and in structure by era country and experience in contrast to the rapid cost escalation that characterized nuclear construction in the united states we find evidence of much milder cost escalation in many countries including absolute cost declines in some countries and specific eras our new findings suggest that there is no inherent cost escalation trend associated with nuclear technology

an international comparison of capital structure and debt maturity choices this study examines how the institutional environment influences capital structure and debt maturity choices of firms in 39 developed and developing countries we find that a country s legal and tax system corruption and the preferences of capital suppliers explain a significant portion of the variation in leverage and debt maturity ratios specifically firms in more corrupt countries and those with weaker laws tend to use more debt especially short term debt explicit bankruptcy codes and deposit insurance are associated with higher leverage and more long term debt more debt is used in countries where there is a greater tax gain from leverage

real flexibility and financial structure an empirical analysis i examine the empirical relation between real flexibility and financial structure i test whether real flexibility increases debt capacity by lowering default risk and making assets more marketable or decreases debt capacity by facilitating risk shifting and asset substitution i measure real flexibility as the sensitivity of marginal production and investment decisions to variations in the economic environment i find that financial leverage is negatively related to production flexibility but positively related to investment flexibility this split in results suggests that although asset substitution facilitated by investment flexibility can be prevented contractually risk shifting facilitated by production flexibility is intractable copyright 2003 oxford university press

the effects of uncertainty on the leverage of nonfinancial firms this paper investigates the link between the optimal level of nonfinancial firms short term leverage and macroeconomic and idiosyncratic sources of uncertainty we develop a structural model of a firm s value maximization problem that predicts a negative relationship between uncertainty and optimal levels of borrowing this proposition is tested using a panel of nonfinancial u s firms drawn from the compustat quarterly database covering the period 1993 2003 the estimates confirm that as either form of uncertainty increases firms decrease their levels of short term leverage this effect is stronger for macroeconomic uncertainty than for idiosyncratic uncertainty jel c23 d8 d92 g32

debt and the marginal tax rate abstract do taxes affect corporate debt policy this paper tests whether the incremental use of debt is positively related to simulated firm specific marginal tax rates that account for net operating losses investment tax credits and the alternative minimum tax the simulated marginal tax rates exhibit substantial variation due to the dynamics of the tax code tax regime shifts business cycle effects and the progressive nature of the statutory tax schedule using annual data from more than 10 000 firms for the years 1980 1992 i provide evidence which indicates that high tax rate firms issue more debt than their low tax rate counterparts

computable general equilibrium models for development policy analysis in ldcs abstract the use of cge models has gained much popularity among policy analysts in ldcs and there is a fast growing body of literature on this area of economics in this survey the advantages of general equilibrium approach over partial equilibrium approach in analysing a wide range of policy issues are highlighted the evolution of cge modelling is discussed and more than 60 cge applications related to different policy issues in ldcs are surveyed this comprehensive survey shows that the cge models have become quite popular analytical tools among policy analysts in ldcs over the last decade or so the debate in the economic profession regarding the value and appropriateness of using cge models for policy analysis is examined in the final section of this paper some of the criticisms levelled at cge models are discussed and it is argued that despite this criticism such models are capable of providing insight into important policy problems

on the debt capacity of growth options we relate the value of growth options in the firm s investment opportunity set to the level of debt in the firm s capital structure underinestment costs of debt increase and free cash flow benefits fall with additional growth options thus if debt capacity is defined as the amount of debt the firm optimally adds for an incremental project then the debt capacity of growth options is negative this result implies that book leverage should fall with the addition of growth options our tests using a large sample of industrial firms confirm this prediction

on the existence of an optimal capital structure theory and evidence one of the most contentious issues in the theory of finance during the past quarter century has been the theory of capital structure the geneses of this controversy were the seminal contributions by modigliani and miller 18 19 the general academic view by the mid 1970s although not a consensus was that the optimal capital structure involves balancing the tax advantage of debt against the present value of bankruptcy costs no sooner did this general view become prevalent in the profession than miller 16 presented a new challenge by showing that under certain conditions the tax advantage of debt financing at the firm level is exactly offset by the tax disadvantage of debt at the personal level since then there has developed a burgeoning theoretical literature attempting to reconcile miller s model with the balancing theory of optimal capital structure e g deangelo and masulis 5 kim 12 and modigliani 17 the general result of this work is that if there are significant leverage related costs such as bankruptcy costs agency costs of debt and loss of non debt tax shields and if the income from equity is untaxed then the marginal bondholder s tax rate will be less than the corporate rate and there will be a positive net tax advantage to corporate debt financing the firm s optimal capital structure will involve the trade off between the tax advantage of debt and various leverage related costs the upshot of these extensions of miller s model is the recognition that the existence of an optimal capital structure is essentially an empirical issue as to whether or not the various leverage related costs are economically significant enough to influence the costs of corporate borrowing the miller model and its theoretical extensions have inspired several timeseries studies which provide evidence on the existence of leverage related costs trczinka 28 reports that from examining differences in average yields between taxable corporate bonds and tax exempt municipal bonds one cannot reject the miller hypothesis that the marginal bondholder s tax rate is not different from the corporate tax rate however trczinka is careful to point out that this finding does not necessarily imply that there is no tax advantage of corporate debt if the personal tax rate on equity is positive indeed buser and hess 1 using a longer time series of data and more sophisticated econometric techniques estimate that the average effective personal tax rate on equity is statistically positive and is not of a trivial magnitude more importantly they document evidence that is consistent with the existence of significant leverage related costs in the economy

capital structure and interaction among firms in output markets theory and evidence i develop a simple model that examines the relations between the extent of competitive interaction among firms in output markets their capital structures and the aggressiveness of their operating strategies a firm s optimal leverage is related to the degree to which its operating strategy affects its rivals value functions and resulting optimal output market choices this relation is positive regardless of whether the competition in output markets is in strategic substitutes or in strategic complements i test the model s prediction using two proxies for the extent of competitive interaction among firms the empirical evidence provides support for the model

cost trajectories of low carbon electricity generation technologies in the uk a study of cost uncertainty cost uncertainty has latterly come to be presented in the uk s department of energy and climate change decc levelised cost of electricity lcoe estimates using sensitivities high and low figures are presented alongside central estimates this presentation of uncertainty is limited in its provision of context and as an overall picture of how costs and uncertainty vary over time this study aims to address these two shortcomings two analyses are performed using reported decc lcoe estimates for three important electricity generation technologies for the uk nuclear offshore wind and coal with carbon capture and storage the first analysis composes lcoe estimate trajectories from previous years decc estimates and presents them alongside contextual data including some out turn costs the second quantifies the variability presented in the lcoe estimate trajectories for commissioning dates in the decade 2020 2030 nuclear costs are presented as both the most consistent and lowest in magnitude an imminently forecast steep fall in the lcoe of offshore wind raises questions about the timing of investment and deployment in most cases estimate variability decreases over the estimation horizon strangely suggesting greater levels of certainty for further flung commissioning dates further observations and implications for policy stemming from the analyses are discussed

the impact of firm characteristics on speed of adjustment to target leverage a uk study abstractresponding to the need to investigate heterogeneity in the speed of adjustment soa to target leverage in a manner that reflects the fractional nature of leverage we estimate soa across sub samples of uk firms using the dynamic panel fractional dpf estimator using firm characteristics to identify firms subject to varying costs of deviation from and adjustment to target leverage we find significant evidence of heterogeneity in the speeds at which uk firms adjust to target leverage our results show that small high growth and low dividend paying firms adjust to target leverage faster than their large low growth and high dividend paying counterparts we also find some evidence to suggest openly held firms adjust faster than closely held firms though our results are not robust to the categorizing criterion employed or target leverage specification

early nuclear retirements in deregulated u s markets causes implications and policy options abstract electricity prices have fallen significantly since 2008 putting commercial nuclear reactors in the united states under substantial financial pressure in this market environment driven by persistently low natural gas prices and stagnant electricity demand we estimate that about two thirds of the 102 gw nuclear capacity are uncompetitive over the next few years under the current trajectory among those 18 gw are retiring or are merchant plants at high risk of retiring prematurely the potential consequences of the hypothetical withdrawal of 20 gw of nuclear capacity include 1 a 3 2 increase in carbon emissions of the power sector if replaced by gas fired units or 2 a significant increase in cost if replaced by renewables without a carbon price out of the market payments would be needed to effectively maintain merchant nuclear capacity filling the revenue gap would come at a fleet average cost of 3 5 5 5 mwh for these plants which is much lower than the cost of subsidizing wind power the policy support could take the form of direct zero emission credits renewable portfolio standard expansion or clean capacity market mechanisms as a last resort the exercise of a new mothballing status could prevent the irreversible retirement of nuclear power assets

regional allocation of co2 emissions allowance over provinces in china by 2020 the mitigation efforts of china are increasingly important for meeting global climate target since the rapid economic growth of china has led to an increasing share in the world s total co2 emissions this paper sets out to explore the approach for realizing china s national mitigation targets submitted to the unfccc as part of the copenhagen accord that is to reduce the intensity of co2 emissions per unit of gdp by 40 45 by 2020 as well as reducing the energy intensity and increasing the share of non fossil fuel consumption through regional allocation of emission allowance over china s provinces since the realization of china s mitigation target essentially represents a total amount emission allowance allocation problem an improved zero sum gains data envelopment analysis optimization model which could deal with the constant total amount resources allocation is proposed in this study by utilizing this model and based on several scenarios of china s economic growth co2 emissions and energy consumption a new efficient emission allowance allocation scheme on provincial level for china by 2020 is proposed the allocation results indicate that different provinces have to shoulder different mitigation burdens in terms of emission intensity reduction energy intensity reduction and share of non fossil fuels increase

debt agency costs and industry equilibrium we show that risk characteristics of projects cash flows are endogenously determined by the investment decisions of all firms in an industry as a result in reasonable settings financial structures which create incentives to expropriate debtholders by increasing risk are shown not to reduce value in an industry equilibrium without taxes capital structure is irrelevant for individual firms despite its effect on the equityholders incentives but the maximum total amount of debt in the industry is determinate allowing for a corporate tax advantage of debt capital structure becomes relevant but firms are indifferent between distinct alternative debt levels the effect of firms financial structures on subsequent investment and output decisions has recently received considerable attention in the finance literature the central insight that equityholders control the firm s investment and production decisions and in general do not maximize the value of a levered firm has been applied to the analysis of risk shifting underinvestment and firms abilities to enter into optimal contracts with their customers existing models of firms financial structures and their effect on investment decisions are generally based on a single firm framework and do not take into account the relationship between project cash flows and the investment decisions of all firms in the industry 2 in this paper we allow the distribution of investment projects within an industry to adjust and show that this generates new insights and reverses several key results of single firm agency cost models the new predictions conform with well documented

cost estimates for nuclear power in the uk abstract current uk government support for nuclear power has in part been informed by cost estimates that suggest that electricity from new nuclear power stations will be competitive with alternative low carbon generation options the evidence and analysis presented in this paper suggests that the capital cost estimates for nuclear power that are being used to inform these projections rely on costs escalating over the pre construction and construction phase of the new build programme at a level significantly below those that have been experienced by past us and european programmes this paper applies observed construction time and cost escalation rates to the published estimates of capital costs for new nuclear plant in the uk and calculates the potential impact on levelised cost per unit of electricity produced the results suggest that levelised cost may turn out to be significantly higher than expected which in turn has important implications for policy both in general terms of the potential costs to consumers and more specifically for negotiations around the level of policy support and contractual arrangements offered to individual projects through the proposed contract for difference strike price

cost overruns and financial risk in the construction of nuclear power reactors a critical appraisal lovering and colleagues attempt to advance understanding of construction cost escalation risks inherent in building nuclear reactors and power plants a laudable goal although we appreciate their focus on capital cost increases and overruns we maintain in this critical appraisal that their study conceptualizes cost issues in a limiting way methodological choices in treating different cost categories by the authors mean that their conclusions are more narrowly applicable than they describe we also argue that their study is factually incorrect in its criticism of the previous peer reviewed literature earlier work for instance has compared historical construction costs for nuclear reactors with other energy sources in many countries and extending over several decades lastly in failing to be transparent about the limitations of their own work lovering et al have recourse to a selective choice of data unbalanced analysis and biased interpretation

target behavior and financing how conclusive is the evidence the notion that firms have a debt ratio target that is a primary determinant of financing behavior is influential in finance yet how definitive is the evidence we address this issue by generating samples where financing is unrelated to a firm s current debt ratio or a target we find that much of the available evidence in favor of target behavior based on leverage ratio changes can be reproduced for these samples taken together our findings suggest that a number of existing tests of target behavior have no power to reject alternatives

testing theories of capital structure and estimating the speed of adjustment this paper examines time series patterns of external financing decisions and shows that publicly traded u s firms fund a much larger proportion of their financing deficit with external equity when the cost of equity capital is low the historical values of the cost of equity capital have long lasting effects on firms capital structures through their influence on firms historical financing decisions we also introduce a new econometric technique to deal with biases in estimates of the speed of adjustment toward target leverage we find that firms adjust toward target leverage at a moderate speed with a half life of 3 7 years for book leverage even after controlling for the traditional determinants of capital structure and firm fixed effects

financing investment spikes in the years surrounding world war i abstract in the period surrounding world war i us firms sharply increased investment in fixed assets and working capital to accommodate large increases in demand associated with the war concurrently the us adopted an excess profits tax which created a tax bias in favor of equity financing despite this tax bias firms in need of external funds largely issued debt not equity to finance investment spikes when the excess profits tax was in effect further we find these firms systematically reduced debt after the war whereas other firms did not the results support models that link the dynamics of firms financing decisions with the dynamics of their investment opportunities and are inconsistent with models that emphasize taxes as a primary determinant of financing decisions

why leverage affects pricing we explain and provide evidence for effects of leverage on pricing our model identifies two effects that either counteract or reinforce each other depending on the debt maturity structure i firms set higher prices underinvest in market share if they have more debt and ii firms engage in dynamic risk shifting by setting lower higher prices if the current debt obligation will be higher lower in the next period than in the present period using a unique dataset of owner managed hotels in austrian ski resorts we provide empirical evidence of both effects

evaluating the role of subsidy reform in addressing poverty levels in malaysia a cge poverty framework abstractmalaysia as one of the top subsidised countries around the world has launched to reduce subsidies to capture its development goals this study therefore analyses the effects of the subsidy reform on the macroeconomic welfare and poverty levels of malaysia by applying a cge model the findings suggest that subsidy removal leads to significant falls in both income and consumption of rural urban and non citizen households and consequently decreases their welfare however poverty levels among rural households will most likely increase significantly when compared to urban households due to their relatively low level of income compared to other groups

the role of target leverage in security issues and repurchases the paper examines whether security issues and repurchases adjust the capital structure toward the target the time series patterns of debt ratios imply that only debt reductions are initiated to offset the accumulated deviation from target leverage the importance of target leverage in earlier debt equity choice studies is driven by the subsample of equity issues accompanied by debt reductions unlike debt issues and reductions equity issues and repurchases have no significant lasting effect on capital structure therefore even firms that have target debt ratios can engage in timing the equity market

debt and communications technology diffusion retrospective evidence this study has evaluated the relationship between debt in the capital structure of firms and the dynamics of broadband and digital technology adoption in the united states based on a large dataset on local exchange carriers in the united states over a contemporary historical fourteen year period from 1988 to 2001 using treatment effects modeling the impact of debt in impacting the levels of firms broadband deployment has been found to be negative and significant the primary source of debt in the sector has been in the form of arm s length corporate bonds and the assumptions of the monitoring hypothesis associated with such debt that lenders in the face of information and collective actions problems might not be able to control managers and hence invest less in highly technology intensive situations are supported by the data additionally the data set has been split into separate sets for two periods one between 1988 and 1995 for the period before the telecommunications act of 1996 came into force and the other set between 1996 and 2001 and the results have stayed consistent a test of the coefficients between the two periods has shown that the negative impact of leverage on broadband deployment has become stronger after the introduction of competition in the sector and this has suggested that the change in the institutional logics between the two periods has been of material impact in influencing lenders perceptions

corporate liquidity and capital structure we solve for a firm s optimal cash holding policy within a continuous time contingent claims framework using dividends short term borrowing and equity issues as controls assuming mean reversion of earnings optimal cash is non monotone in business conditions and increasing in the level of long term debt the model matches closely a wide range of empirical benchmarks and predicts cash and leverage dynamics in line with the empirical literature firm value is quite insensitive to changes in the level of long term debt the model has interesting implications for asset substitution hedging and pecking order growth opportunities do not greatly affect cash holding policy

industry characteristics and financial risk contagion this article proposes a new measure of tail risk spillover the conditional coexceedance ccx defined as the number of joint occurrences of extreme negative returns in an industry conditional on an extreme negative return in the financial sector the empirical application provides evidence of significant volatility and tail risk spillovers from the financial sector to many real sectors in the u s economy from 2001 to 2011 these spillovers increase in crisis periods the ccx in a given sector is positively related to its amount of debt financing and negatively related to its valuation and investment therefore real economy sectors which require relatively high debt financing and whose value and investment activity are relatively lower are prime candidates for stock price volatility and depreciation in the wake of a financial sector crisis evidence also suggests that the higher the industry s degree of competition the stronger the tail risk spillover from the financial sector

risks and financing decisions in the energy sector an empirical investigation using firm level data using a sample of 102 uk energy firms over the period 1981 2009 this paper empirically examines the effects of uncertainty on firms leverage decisions the results indicate that both firms specific and macroeconomic uncertainty have negative sizeable and statistically significant impacts on the uk energy sector firms target leverage the results also indicate that the profitability of energy firms plays an important role in uncertainty leverage relationship by changing the total effect of uncertainty on leverage while more profitable firms appear to reduce their leverage by a relatively large amount in response to increased macroeconomic uncertainty they are less likely to be affected by firm specific uncertainty these results suggest that stability in macroeconomic conditions and business activity is important to the stability of the capital structure of firms in the energy sector which would in turn be conducive to stability in their investments and production

do industry level analyses improve forecasts of financial performance prior research documents mean reversion in firm profitability and growth under the implicit assumption that profitability and growth of all firms revert to a common benchmark at the same rate however a large body of academic research suggests that there are systematic interindustry differences e g industry barriers to entry that differentially affect firm performance based on industry membership we evaluate the relative forecast accuracy of mean reverting models at the industry and economywide levels and find that industry specific models are generally more accurate in predicting firm growth but not profitability

the effect of taxes and depreciation on corporate investment and financial leverage this paper provides an analysis of the effect of corporate and personal taxes on the firm s optimal investment and financing decisions under uncertainty it extends the deangelo aad masulis capital structure model by endogenizing the firm s investment decision the authors results indicate that when investment is allowed to adjust optimally the existing predictions about the relationship between investment related and debt related tax shields must be modified in particular the authors show that increases in investment related tax shields due to changes in the corporate tax code are not necessarily associated with reductions in leverage at the individual firm level in cross sectional analysis firms with higher investment related tax shields normalized by expected earnings need not have lower debt related tax shields normalized by expected earnings unless all firms utilize the same production technology differences in production technologies across firms may thus explain why the empirical results of recent cross sectional studies have not conformed to the predictions of deangelo and masulis

taxes and capital structure evidence from firms response to the tax reform act of 1986 while the theoretical relation between taxes and capital structure has been extensively analyzed the empirical evidence on this issue has thus far been inconclusive one of the main difficulties confronting previous empirical studies of the cross sectional relationship between taxes and leverage was the control of intervening variables the tax reform act of 1986 tra which drastically changed the tax regime provides a unique opportunity to assess the interaction between taxes and leverage decisions in a controlled environment the authors test the relationship between leverage and certain tax related variables for a large sample of companies in the years surrounding the enactment of tra the results support the tax based theories of capital structure the findings indicate that there exists a substitution effect between debt and nondebt tax shields and that both corporate and personal tax rates affect leverage decisions coauthors are dan givoly aharon r ofer and oded sarig article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the limitations of industry concentration measures constructed with compustat data implications for finance research industry concentration measures calculated with compustat data which cover only the public firms in an industry are poor proxies for actual industry concentration these measures have correlations of only 13 with the corresponding u s census measures which are based on all public and private firms in an industry also only when u s census measures are used is there evidence consistent with theoretical predictions that moreconcentrated industries which should be more oligopolistic are populated by larger and fewer firms with higher price cost margins further the significant relations of compustatbased industry concentration measures with the dependent variables of several important prior studies are not obtained when u s census measures are used one of the reasons for this occurrence is that compustat based measures proxy for industry decline overall our results indicate that product markets research that uses compustat based industry concentration measures may lead to incorrect conclusions jel g10 g30 l10 a growing number of studies that consider the effects of product markets on financial economics related phenomena use industry concentration measures calculated with compustat data which cover only the public firms in an industry these studies examine issues related to asset pricing hou and robinson 2006 informed trading tookes 2008 idiosyncratic stock return volatility gaspar and massa 2006 mergers and acquisitions song and walkling 2000 fee and thomas 2004 shahrur 2005 corporate governance defond and park 1999 engel hayes andwang2003 rennie2006 karuna2007 capitalstructure lang and stulz 1992 kaleand shahrur 2007 corporate disclosurepolicy

product market competition and credit risk abstract this study theoretically and empirically investigates effects of product market competition on credit risk we first develop a real options based structural model in a homogeneous oligopoly and show that credit spreads are positively related to the number of firms in an industry the disparity of firm size in an industry is relevant to both product market competition and credit risk and we therefore extend the model to an asymmetric duopoly case in particular we demonstrate that credit spreads of relatively small large firms within an industry are positively negatively related to herfindahl hirschman index and the relative firm size in an industry is an important determinant of credit risk the models implications are empirically scrutinized by a reduced form hazard model and generally supported by performing out of sample analyses the results demonstrate that firm size together with the interaction terms between intra industry firm size dummies and competition intensity can effectively predict default

hybrid renewable energy support policy in the power sector the contracts for difference and capacity market case study abstract the article employs qualitative methods in contextualizing and conceptualizing the hybrid renewable energy support policy it claims that hybrid policies may combine distinct mechanisms to drive desirable objectives better than traditional policies a policy cycle helps to frame the united kingdom s contracts for difference and capacity market cfd cm scheme as a case study the cfd cm policy emerged to address environmental and energy challenges through the deployment of renewable energy re in a low carbon economy employing liberalization environmental protection is foremost in this scheme the policy combines and improves on the elements of feed in tariff fit and quota obligation qo and strives to solve the problems of these traditional policies it addresses regulatory uncertainty under fit by employing private law mechanics to guarantee above loss reward for low carbon generation and addresses market uncertainty under qo by incentivizing the capacity to supply future low carbon energy based on projected demand hence creating a predictable and stable market it also accommodates other important commitments overall the cfd cm scheme is a hybrid policy that engages the energy market mainly for advancing the end goal of environmental protection to thrive however it needs to meet private sector interests substantially

corporate behavior in adjusting to capital structure and dividend targets an econometric study this study of financing decisions by u s corporations examines the issuance of long term debt issuance of short term debt maintenance of corporate liquidity issuance of new equity and payment of dividends given costs and imperfections inherent in markets a firm s financial behavior is characterized as partial adjustment to long run financial targets individual firm data are used so that speeds of adjustment are allowed to vary by company and over time the results suggest that financial decisions are interdependent and that firm size interest rate conditions and stock price levels affect speeds of adjustment this study of financing decisions by u s corporations examines the issuance of long term debt short term debt and equity the maintenance of corporate liquidity and the payment of dividends the firm s financial behavior is characterized as partial adjustment to long run financial targets and individual firm data 1966 1978 are used to estimate firm specific time varying speeds of adjustment the results suggest that financial decisions are interdependent and that firm size interest rate conditions and stock price levels affect speeds of adjustment also the estimated coefficients are more plausible than the very small taggart 28 or very large spies 26 values found in earlier studies section i of the paper introduces the general model in section ii a tractable empirical model is developed section iii presents the data to be used in the study and discusses econometric issues in section iv results and conclusions are offered

oil development in china current status and future trends the future of oil has become an important topic of the discussion of energy policy in china this paper attempts to present a full picture of the current status and future trends of china s oil development through system analysis first we map a sankey diagram of china s oil flow to reveal the physical pattern of china s oil supply and consumption then we present the historical and ongoing trends of china s oil flow from key aspects such as oil demand oil resource availability technology improvement and policy adjustment based on these understandings we design three scenarios of china s oil demand in 2030 and analyze policy implications for oil saving automotive energy development and energy security from the analysis we draw some conclusions for policy decisions such as to control the total oil consumption to avoid energy security risks to enhance oil saving in all sectors with road transportation as the emphasis and to increase the investment on oil production and refining to secure oil supply and reduce emissions

labor protection and leverage this paper exploits inter temporal variations in employment protection across countries and finds that rigidities in labor markets are an important determinant of firms capital structure decisions over the 1985 2007 period we find that reforms increasing employment protection are associated with a 187 basis point reduction in leverage we interpret this finding to suggest that employment protection increases operating leverage crowding out financial leverage this result is robust across measures of employment protection and leverage and does not appear to be due to pre treatment differences between treated and control firms omitted variables unobserved changes in regional economic conditions and reverse causality heterogeneous treatment effects are consistent with our economic intuition we find that the negative effect is more pronounced in firms that are subject to frequent hiring and firing

investment efficiency and product market competition does more competition lead to more information production and greater investment efficiency this question is largely unexplored in the finance literature this article provides both a model and a series of extensive empirical tests the model features a 2 stage bayesian game in differentiated products market competition we find that competition causes firms to acquire less information and investments to become more inefficient relative to a first best case with the same market structure empirically the panel regression analysis provides strong support for the theory and shows that investment is more efficient in concentrated industries

do rivals enhance your credit conditions abstract in a model where firms rely on bank financing to build capacity put up specialized productive assets as collateral and then compete a la cournot we introduce a probability of default we investigate how the number of competitors affects the equilibrium amount of bank credit and derive conditions under which an inverted u shaped relationship occurs on the one hand more competitors enhance the resale value of collateralized productive assets on the other hand more competitors shrink firms profits and the resulting income that can be pledged to banks we then extend the analysis to firms outside the cournot industry that are willing to buy productive assets in liquidation and show that the equilibrium bank credit becomes monotonically decreasing in the number of competitors

mechanical mean reversion of leverage ratios abstract the leverage ratio of an average firm reverts to mean mechanically regardless of whether target leverage exists this cautions against studies that use the ability of the leverage ratio or deviation from target leverage to predict future leverage changes to draw inference on capital structure theories

horses and rabbits trade off theory and optimal capital structure this paper examines optimal capital structure choice using a dynamic capital structure model that is calibrated to reflect actual firm characteristics the model uses contingent claim methods to value interest tax shields allows for reorganization in bankruptcy and maintains a long run target debt to total capital ratio by refinancing maturing debt using this model we calculate optimal capital structures in a realistic representation of the tra ditional trade off model in contrast to previous research the calculated optimal capital structures do not imply that firms tend to use too little leverage in practice we also esti mate the costs borne by a firm whose capital structure deviates from its optimal target debt to total capital ratio the costs of moderate deviations are relatively small suggesting that a policy of adjusting leverage infrequently is likely to be reasonable for many firms

macroeconomic conditions financial constraints and firms financing decisions abstract we examine how time varying macroeconomic conditions affect firms financing decisions a principal components decomposition of several macroeconomic variables characterizes three phases of the business cycle relative to recessions early recovery robust recovery and economic crest a fourth represents windows of opportunity in capital markets that are unrelated to recessions this characterization yields results that traditional approaches miss specifically debt issuance exhibits a non monotonic pattern during the upward phase of the business cycle it declines in robust recovery relative to recessions but peaks at the economic crest financially constrained firms issue more equity during windows of high stock market valuation whereas unconstrained firms time debt issuance in response to debt market spreads

pricing exit and location decisions of firms evidence on the role of debt and operating efficiency abstract we compare pricing and exit decisions of discounters across the business cycle cities containing high debt and or low efficiency firms display higher prices during non recession years during recessions prices increase in cities with less efficient incumbents but decrease in cities with a mix of high and low debt firms high debt firms are more likely to exit cities with lower prices and high debt exiting firms are more likely to be efficient apparently low debt firms strategically lower prices during recessions to force exit of efficient financially constrained rivals weaker competitors face another cost new entrants locate closer

the speed of adjustment to the target market value leverage is slower than you think in the capital structure literature speed of adjustment soa estimates are similar whether book or market leverage is used this robustness is suspect given the survey evidence that firms target their book leverage and the empirical evidence that they don t issue securities to offset market leverage changes caused by stock price changes we show that existing market soa estimates are substantially upward biased due to the passive influence of stock price fluctuations controlling for this bias the soa estimate is 16 for book leverage and 10 for market leverage implying that the trade off theory is less important than previously thought

aggregate poverty measures the way poverty is measured is important for an understanding of what has happened to poverty as well as for anti poverty policy evaluation sen s 1976 pathfinding work has motivated many researchers to focus on the way poverty should be measured a poverty measure argued by sen should satisfy certain properties or axioms and the desirability of a poverty measure should be evaluated by these axioms during the last two decades many researchers have adopted the axiomatic approach pioneered by sen to propose additional axioms and develop alternative poverty measures the objective of this survey is to provide a clarification on the extensive literature of aggregate poverty measures in this survey we first examine the desirability of each axiom the properties of each poverty measure and the interrelationships among axioms the desirability of an axiom cannot be evaluated in isolation and some combination of axioms may make it impossible to devise a satisfactory poverty measure some axioms can be implied by other axioms combined and so are not independent some others are ad hoc and are disqualified as axioms for poverty measurement based on the interactions among axioms we identify the core axioms which together have a strong implication on the functional form of a poverty measure we then review poverty measures that have appeared in the literature evaluating the interrelationships among different measures and examining the properties of each measure the axioms each measure satisfies violates are also summarized in a tabular form several good poverty measures which have not been documented by previous surveys are also included

oil prices and the south african economy a macro meso micro analysis abstract three levels of analysis are used to track the channels by which south africa and its people are impacted by an increase of oil prices namely the macro economic level the meso economic level and the micro economic household level the paper uses an economy and energy integrated approach to quantify these different channels the approach combines a household survey dataset and an input output dataset to implement the models results indicate that the impacts on the macroeconomy are negative with gross domestic product falling and the current account balance worsening all of the industries falling into the high intensive oil use group witness an increase of their input cost that is above the economy wide average the impact of doubling paraffin prices results in poor households in rural areas and among the black population in particular witnessing an increase of their cost of living which is much higher than their corresponding highest expenditure quintile groups an increase of transport fuel hits the richer households much harder the distributional impacts of rising transport cost as a consequence of high oil and oil products prices shows that median quintile expenditure groups observe the highest impact both in urban and rural areas and especially among the black population

retesting the causality between energy consumption and gdp in china evidence from sectoral and regional analyses using dynamic panel data abstract the increasing attention on energy policy needs has provided a renewed stimulus to research the linkages between energy consumption and economic performance in china this paper examined the causal relationship between energy consumption and economic growth in the regional and sectoral aspects by adopting provincial panel data in china from 1995 to 2008 the results indicate that economic growth causes more energy consumption in china not only at the national level but also at the regional and sectoral levels then the eastern region and the industrial sector show results quite similar to that of the whole country in which a bidirectional causality relationship exists between energy consumption and economic growth the implication for energy policies in china is that the eastern region and the industrial sector should play a leading role in the adjustment of energy consumption patterns and the transformation of the economy structure energy prices have limited effects on energy consumption but do have effects on economic growth because the energy price mechanism is more government oriented than market oriented in china

incorporating active adjustment into a financing based model of capital structure abstract the conventional partial adjustment model which focuses on leverage evolution has difficulty identifying deliberate capital structure adjustments as it confounds financing decisions with the mechanical autocorrelation of leverage we propose and estimate a financing based partial adjustment model that separates the effects of financing decisions on leverage evolution from mechanical evolution the speed of adjustment soa is firm specific and stochastic and active targeting of capital structure has a multiplier effect that depends on the size of financial deficit overall we find expected soa from active rebalancing 30 more than doubles what is expected from mechanical mean reversion alone 13

bankruptcy costs and the theory of oligopoly this paper examines the relationship between financial decisions and output decisions in oligopolistic markets assuming a duopoly market structure in which financial decisions and output decisions follow in sequence the authors analyze how bankrupt cy costs which are incurred when the firm is unable to meet current debt obligations affect the firm s behavior in output markets with fixed bankruptcy costs firms have an incentive to increase output le vels if they take on more debt proportional bankruptcy costs lead to a u shaped relationship between output and debt foresighted owners of firms are led to take into account the strategic output effects of financial structure when considering an optimal financial structure for the firm

how does industry affect firm financial structure we examine the importance of industry to firm level financial and real decisions we find that in addition to standard industry fixed effects financial structure also depends on a firm s position within its industry in competitive industries a firm s financial leverage depends on its natural hedge its proximity to the median industry capital labor ratio the actions of other firms in the industry and its status as entrant incumbent or exiting firm financial leverage is higher and less dispersed in concentrated industries where strategic debt interactions are also stronger but a firm s natural hedge is not significant our results show that financial structure technology and risk are jointly determined within industries these findings are consistent with recent industry equilibrium models of financial structure copyright 2005 oxford university press