co firing coal with wood pellets for u s electricity generation a real options analysis abstract in contrast to eu u s electric utilities are not employing the bioenergy technology of co firing wood pellets with coal this difference in employment patterns is explored within a real options analysis roa for possible u s utilization of wood pellets considering fuel price series from 2009 to 2014 for analysis these series are divided into two sub periods based on different market conditions infancy 2009 2011 and substitution 2012 2014 roa indicates co firing wood pellets with coal is feasible considering adoption during wood pellets infancy under low discount rates and long power plant lifespans a portfolio effect of employing multiple fuels underlies this result however co firing is not currently economically feasible the different adoption decisions are likely a consequence of recent cheap and abundant u s natural gas for co fired wood pellets to be feasible government incentives and or a market increase in natural gas prices appear necessary

measurement of welfare applications to australia abstract this paper is concerned with the measurement of welfare which takes into account both the size and distribution of income an alternative approach to measuring welfare which captures the sense of envy felt by individuals when they compare their incomes with each other is considered this methodology is then used to analyse the extent and nature of welfare in australia the main objective of the empirical investigation is to measure the direct impact of australian personal taxes and government cash transfers on the distribution of economic welfare by the size of income and by other household characteristics the household expenditure survey 1975 1976 forms the basis of the present study

burning wood pellets for us electricity generation a regime switching analysis abstract applying a regime switching model under the theoretic framework of real options we inspect the optimal timing boundaries for coal and coal mixed wood pellets as two alternative fuels for a power plant in georgia united states results indicate that cofiring wood pellets with coal is generally not a commercially viable option however lower level with wood pellets

optimizing the level of renewable electric r d expenditures using real options analysis abstract one of the primary objectives of the united states federal non hydro renewable electric r d program is to promote the development of technologies that have the potential to provide consumers with stable and secure energy supplies in order to quantify the benefits provided by continued federal renewable electric r d this paper uses real option pricing techniques to estimate the value of renewable electric technologies in the face of uncertain fossil fuel prices within the real options analysis framework the current value of expected future supply from renewable electric technologies net of federal r d expenditures is estimated to be 30 6 billion of this value 86 can be attributed to past federal r d efforts and 14 can be attributed to future federal r d efforts assuming continued federal r d funding at 300 million yr in addition real options analysis shows that the value of renewable electric technologies increases as current and future r d funding levels increase this indicates that the current level of federal renewable electric r d funding is sub optimal

defining geographic coal markets using price data and shipments data abstract given the importance of coal in world energy supply an analysis of the relevant geographic market is essential for consumers producers as well as for competition policy the purpose of this paper is to define the relevant economic market for steam and coking coal and to test the hypothesis of single world markets for these coal products methodologically the paper relies on two different tests for defining markets using both shipments data and price data the results from both methods point in the same direction in the case of coking coal the results indicate that the market is essentially global in scope and also that the market has become more integrated over time the results for steam coal show that the market is more regional in scope and there exist no clear tendencies of increased integration over time one policy implication of the finding that the steam coal market is more regional in scope and thus that the market boundary is smaller than if the market would have been international is that a merger and acquisition in this market likely would have been of a more concern for antitrust authorities than the same activity on the coking coal market

stature and the standard of living research on the standard of living now emphasizes alternatives or supplements to the national income accounts this paper reviews the results of two decades of research using stature as a measure of health aspects of human welfare after comparing and contrasting stature with per capita income i consider height patterns discovered by economic historians that challenge traditional beliefs about the past including long term trends cycles in heights and the dreadfully small stature of slave children that was followed by catch up growth the paper concludes with comparisons to work in development economics and suggestions for research

real options approach to renewable energy investments in mongolia developing nations are seeking alternative energy for electricity and one attractive alternative is renewable energy this research analyzes changing investment environment for renewable energy with real options approach and explores its potential in developing economies through studying the case of mongolia under coal price uncertainty to evaluate comparative attractiveness of either continuing to use coal based infrastructures or switching to renewable energy we formulate social revenue functions for the two environments assuming that renewable energy has lower external costs and coal prices follow geometric brownian motion gbm or geometric mean reverting gmr processes we find the optimal trigger coal prices for switching technologies with some scenarios in electricity price and externality characterize when renewable energy investments become attractive in contrast to conventional wisdom we identify some situations where the value of having more decision opportunities does not exceed that of a now or never decision for switching technologies and welfare losses are incurred the optimal trigger prices are higher in gbm than in gmr and our result raises the possible risks for waiting to switch energy to avoid welfare losses in mongolia the government should increase electricity prices or switch to renewable energy earlier especially when people pay more for the removal of externalities

optimal timing problems in environmental economics abstract because of the uncertainties and irreversibilities that are often inherent in environmental degradation its prevention and its economic consequences environmental policy design can involve important problems of timing i use a simple two period model to illustrate these optimal timing problems and their implications for environmental policy i then lay out and solve a continuous time model of policy adoption in which the policy itself entails sunk costs and environmental damage is irreversible the model generalizes earlier work in that it includes two stochastic state variables one captures uncertainty over environmental change and the other captures uncertainty over the social costs of environmental damage solutions of the model are used to show the implications of these two types of uncertainty for the timing of policy adoption

price index convergence among united states cities we study the dynamics of price indices for major u s cities using panel econometric methods and find that relative price levels among cities mean revert at an exceptionally slow rate in a panel of 19 cities from 1918 to 1995 we estimate the half life of convergence to be approximately nine years the surprisingly slow rate of convergence can be explained by a combination of the presence of transportation costs differential speeds of adjustment to small and large shocks and the inclusion of nontraded goods prices in the overall price index do price indices in major u s cities share a common trend and if so how quickly do they revert to that trend following a local shock to the price index to answer this question we study the dynamics of consumer price indices for 19 major u s cities over the period from 1918 to 1995 the panel time series methods we employ are now commonly used for studying real output growth rates and levels of real exchange rates across countries we estimate that price index divergences across u s cities are temporary but surprisingly persistent with a half life of nearly nine years our research has two primary motivations first we hope to gain a better understanding of the sources of persistence in the deviations from purchasing power parity ppp found in studies of national price indices and exchange rate data second and more importantly we see the european monetary union as having many similarities to the united states and believe that studying the behavior of prices across u s cities will help us in understanding the likely nature of inflation convergence in the euro area the european central bank s stated inflation objective is a year on year change in the harmonized index of consumer prices hicp of not more than 2 but how large might we expect regional deviations from this euro area wide average to be and how long are they likely to persist the lack of data prevents us from answering this question directly using european prices under monetary union instead we look to the united states a mature common currency area of similar regional diversity size and industrial development

efficient pricing and investment in electricity markets with intermittent resources facing growing technological and environmental challenges the electricity industry needs effective pricing mechanism to promote efficient risk management and investment decisions in a restructured electricity market with competitive wholesale prices and traditionally regulated retail rates however there are technical and institutional barriers that prevent dynamic pricing with price responsive demand in regions with limited energy storage capacity intermittent renewable resources present special challenges this could adversely affect the effectiveness of public policies causing inefficient investments in energy technologies in this paper we present an updated economic model of pricing and investment in restructured electricity market and use the model in a simulation study for an initial assessment of renewable energy strategy and alternative pricing mechanisms a key objective of the study is to shed light on the policy issues so that effective decisions can be made to improve efficiency

capability failure and group disparities some evidence from india for the 1980s this paper advances a particular measure of deprivation called the capability failure ratio cfr on the dimensions of longevity knowledge and income and suggests how an inequality adjusted version of the cfr may be derived these measurement concerns are explored in the context of relevant state wise data for the indian union the paper thus makes an attempt to enrich the analysis of human predicament by sensitising measures of central tendency to distributional concerns

options in the real world lessons learned in evaluating oil and gas investments many firms in the oil and gas business have long used decision analysis techniques to evaluate exploration and development opportunities and have looked at recent development in option pricing theory as potentially offering improvements over the decision analysis approach unfortunately it is difficult to discern the benefits of the options approach from the literature on the topic most of the published examples greatly oversimplify the kinds of projects encountered in practice and comparisons are typically made to traditional discounted cash flow analysis which unlike the option pricing and decision analytic approaches does not explicitly consider the uncertainty in project cash flows in this paper we provide a tutorial introduction to option pricing methods focusing on how they relate to and can be integrated with decision analysis methods and describe some lessons learned in using these methods to evaluate some real oil and gas investments

the value of flexibility preservation remediation or development for ginostra we are concerned with land allocation andinvestment decisions when dealing withpartially degraded areas that might be 1 remediated and returned to a more natural state or 2 irreversibly developed this type ofproblem seems particularly relevant in europewhere the issue of wilderness conservation isof less concern than the remediation oflandscapes which have been altered by previouseconomic activities traditional expectedpresent value analysis will fail to capture thevalue of investments that might be undertakensequentially or when certain investments areirreversible we show how to determine withina discrete time stochastic model the optimaladaptive development strategy and how tocalculate the option value of flexibility thetheoretical model is then applied to ginostra a town on stromboli an island off the southerncoast of italy

a real options model for renewable energy investment with application to solar photovoltaic power generation in china this paper proposes a real options model for evaluating renewable energy investment by considering uncertain factors such as co2 price non renewable energy cost investment cost and market price of electricity a phase out mechanism is built into the model to reflect the long term changes of subsidy policy we apply the proposed model to empirically evaluate the investment value and optimal timing for solar photovoltaic power generation in china our empirical results show that the current investment environment in china may not be able to attract immediate investment while the development of carbon market helps advance the optimal investment time a sensitivity analysis is conducted to investigate the dynamics of investment value and optimal timing under the changes of unit generating capacity subsidy level market price of electricity co2 price and investment cost it is found that the high investment cost and the volatility of electricity and co2 prices are not conducive to attract immediate investment instead increasing the level of subsidy promoting technological progress and maintaining the stability of market are useful to stimulate investment

the effect of mean reversion on investment under uncertainty abstract mean reverting processes are appropriate for most real option investment models yet geometric brownian motion gbm processes are generally used for tractability hassett and metcalf j econom dyn control 19 1995 1471 1488 argue that using a gbm process is justified because mean reversion has two opposing effects it brings the investment trigger closer and also reduces the conditional volatility thereby lowering the likelihood of reaching the trigger and the overall effect on investment should be negligible for most reasonable parameter values this paper extends the hassett and metcalf model by incorporating a third factor the effect of mean reversion on systematic risk the main result is that mean reversion in general does have a significant impact on investment moreover this effect could be either positive or negative depending on various factors such as project duration cost of investing interest rate etc thus it is generally inappropriate to use the gbm process to approximate a mean reverting process

growth rates of per capita income and aggregate welfare an international comparison this paper is concerned with the measurement of aggregate growth rates where the aggregation is over time the paper demonstrates that any mechanical procedures for computing aggregate growth rate

demand uncertainty inventories and resale price maintenance we show that a manufacturer facing uncertain demand and selling through a competitive retail market may wish to support adequate retail inventories by preventing the emergence of discount retailers in our model discounters offer low prices made possible by low probability of being saddled with unsold inventories in the event of slack demand full price retailers are compensated for a higher probability of unsold inventories by a higher retail price when they sell we show that preventing discounting increases the manufacturer s wholesale demand and profits and we delineate demand conditions under which equilibrium inventory holding and consumer welfare increase

investment under alternative return assumptions comparing random walks and mean reversion abstract many recent theoretical papers have come under attack for modeling prices as geometric brownian motion this process can diverge over time implying that firms facing this price process can earn infinite profits we explore the significance of this attack and contrast investment under geometric brownian motion with investment assuming mean reversion while analytically more complex mean reversion in many cases is a more plausible assumption allowing for supply responses to increasing prices we show that cumulative investment is generally unaffected by the use of a mean reversion process rather than geometric brownian motion and provide an explanation for this result

optimal design of subsidy to stimulate renewable energy investments the case of china this paper proposes a real options model for estimating the optimal subsidy for renewable energy power generation project by using stochastic process to describe the market price of electricity co2 price and investment cost two indicators i e project value and threshold value are used to derive the optimal subsidy the least squares monte carlo simulation method is used to solve the model the proposed model is used to empirically evaluate the optimal level of subsidy for solar photovoltaic power generation in china the results show that carbon emission trading scheme helps reduce subsidy unit generating capacity market price of electricity co2 price and the volatility of investment cost are negatively related with subsidy whereas investment cost and the volatility of electricity price and co2 price are positively related with subsidy it is suggested that chinese governments take some measures e g promoting technological progress establishing a nationwide carbon emission trading market promoting the competition in renewable energy industry as well as maintaining the stability of co2 price and electricity price to reduce the required subsidy

inflexible prices and procyclical productivity hall has shown that with perfect competition and price flexibility total factor productivity measured using labor s share either in revenues or in costs will be acyclical regardless of the level of labor hoarding we show that if firms producing a homogeneous good under constant returns must pick their prices before demand is known both measures of productivity become procyclical the model implies that productivity should be more procyclical the more important is labor hoarding empirically productivity is more procyclical in industries and in nations where labor hoarding appears more important

welfare measures an international comparison abstract based on previous work by sen and the author alternative welfare measures are proposed that take into account both the level and distribution of income an empirical application shows that there are substantial differences among countries with respect to the level of welfare even among subgroups such as mature capitalist economies

switching outputs in a bioenergy cogeneration project a real options approach abstract environmental concerns have stimulated the search for economically feasible renewable energy projects one such alternative is the use of biomass for energy generation which has increasingly been the focus of interest traditional valuation methods on the other hand fail to capture the value of the embedded options that exist in many of these projects which may lead to non optimal investment decisions in this article we analyze the feasibility of installing a cogeneration unit in an industrial plant in brazil in order to extract value from biomass residue currently discarded which can be used for thermal and electric energy generation the cogeneration unit also allows the firm the flexibility to optimally choose between an increase in production or the generation of surplus energy for sale in the short term market once additional investment in interconnection to the grid is made we model the uncertainty over future energy prices as a mean reverting process with jumps and seasonality and the embedded flexibility as a bundle of european options under the real options approach the results indicate that the investment in the cogeneration plant is warranted and that the option to switch outputs adds significant value to the project which suggests that biomass residue may be a sustainable energy alternative in this case

efficient barriers to trade a sequential trade model with heterogeneous agents abstract this paper studies the choice of tariffs and other type of consumption taxes and subsidies in a flexible price version of the prescott prescott edward c 1975 efficiency of the natural rate journal of political economy 83 1229 1236 hotels model it is shown that a country with unstable demand may benefit from a tariff on imports more surprisingly the exporting country may also benefit from the tariff in general i consider the problem of a world planner who chooses country specific consumption taxes and subsidies i show that buyers in countries that tend to consume relatively more in the high demand state should be taxed and buyers in countries that tend to consume relatively more in the low demand state should be subsidized

real options analysis for renewable energy investment decisions in developing countries abstract renewable energy projects in developing countries should provide clean energy supply as well as support sustainable economic development to this end risks arising from uncertainties such as rapidly changing technologies and host government conditions should be carefully addressed however traditional methods for economic assessment are not adequate to support decision making regarding investments in renewable energy this paper proposes a real options analysis framework as a tool to assess renewable energy investment in developing countries a case study involving a hydropower project in indonesia was conducted to validate and verify the proposed framework this framework is expected to help host countries and investors assess renewable energy projects with high volatility and risk

the possibility of social choice the subject of social choice includes within its capacious frame various problems with the common feature of relating social judgments and group decisions to the views and interests of the individuals who make up the society or the group some challenges and foundational problems faced by social choice theory as a discipline are discussed social choice theory is a subject in which formal and mathematical techniques have been very extensively used voting based procedures are entirely natural for some kinds of social choice problems such as elections referendums or committee decisions they are however altogether unsuitable for many other problems of social choice impossibility results in social choice theory led by the pioneering work of arrow 1951 have often been interpreted as being thoroughly destructive of the possibility of reasoned and democratic social choice including welfare economics that view is argued against

health nutrition and economic development the relationship between health and economic development is explored focusing on nutrition based health indicators the spotlight is placed on the inter related feedbacks between the influence of health on productivity on one hand and the influence of income on health status on the other disentangling causality in these relationships has preoccupied much of the literature we evaluate different empirical strategies that have been adopted and assess the results there is now a body of evidence based on careful empirical studies that demonstrates a causal relationship between health and labor productivity there is also evidence that at least among the very poor additional income is spent on improved nutrition there are two issues that have received little attention although we argue they are likely to be very important first measurement of health is discussed in detail evidence is presented on how taking into account differences in the extent of measurement error is critical for interpreting the impact of health on wages the same theme emerges in studies of the effect of income on health specifically calorie intake the key role of non linearities in these relationships is highlighted and we demonstrate that a good deal of the variation in estimates of income elasticities of demand for calories can be ascribed to the role of measurement and functional form authors

valuing investment decisions of renewable energy projects considering changing volatility abstract volatility is an important parameter when evaluating investments using the real options method for renewable energy investments the volatility of cash flow continuously changes because as new information and knowledge are gathered there is less foreseen variation this paper proposes an extended recombining trinomial tree model where the changing volatility is used to generate transition probabilities the changing volatility is generated using a consolidation process where multiple random variables including the market price of electricity carbon price and lending rate are integrated into a low dimension stochastic process a two factor learning curve is used to model the changes of investment cost we apply the proposed model to analyze solar photovoltaic pv power generation investment in china the results show volatility with changing feature compared with constant volatility changing volatility may advance investment decisions and change the project value complete grid parity policy in the solar pv industry is infeasible because the opportunity cost brought by the option of delaying cannot be offset the changing volatility may produce a lower and equally effective subsidy level compared with constant volatility a carbon emission trading scheme is helpful in advancing investments in renewable energy which is reflected in improvements in project value advancements in investment decisions and reductions in the required subsidy level

a panel project on purchasing power parity mean reversion within and between countries abstract previous time series studies have shown evidence of mean reversion in real exchange rates deviations from purchasing power parity ppp appear to have half lives of approximately four years however the long samples required for statistical significance are unavailable for most currencies and are potentially inappropriate because of regime changes in this study we re examine deviations from ppp using a panel of 150 countries and 45 annual post wwii observations our panel shows strong evidence of mean reversion that is similar to that from long time series ppp deviations are eroded at a rate of approximately 15 annually i e their half life is around four years such findings can be masked in time series data but are relatively easy to find in cross sections

marginal cost pricing when spot markets are complete the standard formulation of a spot market subject to uncertain excess demand uses a tatonnement process that restricts trade until the market clearing price is found here i present a model in which there is no restriction on trade during the process of the resolution of uncertainty about aggregate excess demand the idea is to enlarge the commodity space and define goods by the probability that they will sell in addition to other characteristics the probability of sale characteristic is the spot market analogue of the contingencies under which delivery will take place in the arrow debreu model a failure to distinguish goods by the probability of sale characteristic can lead to the rejection of the competitive paradigm even when everyone is a price taker and the allocation is efficient

equilibrium price dispersion under demand uncertainty the roles of costly capacity and market structure when capacity is costly and prices are set in advance firms facing uncertain demand will sell output at multiple prices and limit the quantity available at each price i show that the optimal price strategy of a monopolist and the unique pure strategy nash equilibria of oligopolists both exhibit intrafirm price dispersion moreover as the market becomes more competitive prices become more dispersed a pattern documented in the airline industry while generating similar predictions the model differs from the revenue management literature because it disregards market segmentation and fare restrictions that screen customers

linkages between pro poor growth social programmes and labour market the recent brazilian experience summary this paper analyzes the relationship between growth patterns poverty and inequality in brazil during its globalization process focusing on the role played by the labor market and social programs methodologically the paper makes two contributions to the literature one is the proposal of a new measure of pro poor growth which links growth rates in mean income and in income inequality the other contribution is a decomposition methodology that explores linkages between three dimensions growth patterns labor market performances and social policies the proposed methodologies are then applied to the brazilian national household survey covering the period 1995 2004

composite indices of physical quality of life basic needs fulfilment and income a principal component representation abstract in the context of international comparisons the multivariate method of principal components is suggested for computing composite indices of economic development that capture per capita income basic needs fulfilment and other possible indicators of well being the method is conceptually appealing easy to apply and seems promising in several directions two illustrative applications are given one develops a composite index based on the three pqli constituents and per capita gnp for 147 countries in the other a composite index of basic needs fulfilment is first computed for 82 countries and then a more inclusive measure that also takes account of per capita gnp is derived

paths to success the relationship between human development and economic growth summary this paper explores the two way relationship between economic growth eg and human development hd we develop panel data strategies to estimate the strength of these relationships and find that hd plays an essential role in determining growth trajectories our measure of sustained growth not only is hd a final product in the sense that it measures basic human well being but it is also a critical input into eg our findings illustrate the empirical relevance of endogenous growth and are consistent with threshold effect models our results imply that successful policy requires an early focus on hd not only because of its direct impact but also because of its feedback effect on sustaining eg

restructuring electricity policy and financial models the old regulated electric industry provided reliable service not necessarily in the most economic manner at a declining real price the semi competitive electric industry model now operating in the united states and the uk has shown that electric companies can operate more efficiently than before but it has not delivered significantly greater benefits to consumers than the old model financial modelers and policy makers should address those issues whose solution will provide the most bang for the buck in order to bring about greater benefits to consumers

consumer surplus enhancing collusion and trade that collusion among sellers hurts buyers is a central tenet in economics we provide an oligopoly model in which collusion can raise consumer surplus a differentiated product duopoly operates in two geographically separated markets each market is home to a single firm but can import at a cost from the foreign firm under some circumstances a perfect cartel relative to duopolistic competition raises the price of the imported good and lowers the price of the home good this raises welfare for most consumers and increases aggregate consumer surplus a similar possibility result applies to autarky our analysis applies beyond the spatial setting

real option valuation in renewable energy literature research focus trends and design abstract in light of intensive development of the renewable energy re sector a growing number of academic papers address the complexity of re investment planning and valuation to take account of the high risk profile and irreversibility of re investments researchers have resorted to sophisticated real options ro approaches that enable flexibility to be incorporated into project design in the face of an uncertain environment the variety of different frameworks and models adopted as well as a lack of aggregated analysis of the field suggest a need for a critical review of ro methodology and design in re assessment this study describes the research focus trends and design found in contemporary academic literature devoted to re valuation with a ro approach particular attention is given to ro in project and policy design the results give a comprehensive picture of existing research on the topic thus providing researchers with a solid foundation for further study and indications of directions for future development furthermore the findings provide policymakers and project planners with valuable insights into key aspects of re project and policy design

the world price of coal a significant increase in the seaborne trade for coal over the past 20 years has unified formerly separate coal markets into a world market in which prices move in tandem by virtue of its large domestic market the usa has become the residual supplier and price setter in the world coal market changes in multifactor productivity have been the primary cause of the long term fluctuations in coal prices that have been observed in the usa since the end of the second world war and in the world coal market

inefficient trade patterns excessive trade cross hauling and dumping abstract i study an example of a competitive environment in which trade occurs in a sequential manner in this example a country with a stable demand may suffer from trade with a country with unstable demand there may be too much trade a country may import and export the same good in the same period cross hauling and dumping may occur the timing of delivery is important when delivery occurs before trade delivery to stocks trade improves welfare there is dumping but no cross hauling when delivery occurs after trade delivery to order trade may reduce welfare and cross hauling may occur

differences in relative prices and international differences in growth rates the new growth literature following paul m romer 1986 and robert e lucas jr 1988 has formulated models in which growth rates can differ systematically across countries a large empirical literature has used cross sectional techniques to examine the cause of international differences in growth rates this paper examines whether this work has used data which have been constructed in such a way as to introduce inadvertently a spurious correlation between growth and income levels this effect occurs because relative prices evolve because of different rates of technological progress in different industries many of the new growth models assume single goods or goods produced by the same technology so this phenomenon has so far escaped analysis if technological progress is more rapid in some sectors than others relative prices will change during the process of development the change of relative prices has two effects on measured growth rates first the choice of base prices affects the growth rate this phenomenon is sometimes called the gerschenkron effect second using any base prices or weights introduces a spurious correlation between income and growth less developed countries would tend to have lower growth rates not because they grew more slowly but because of data construction techniques for the sake of simplicity these phenomena will be called the gerschenkron or the level effect and the spurious correlation effect 3 this paper examines the international comparison program icp and the penn world tables pwt which are based on the icp the penn world tables are the data most widely used in empirical studies of international differences in economic growth both the icp and pwt use international prices to adjust for differences in the purchasing power of currencies these prices most closely resemble hungarian prices using such prices tends to produce time series with lower growth rates than those in the national accounts for countries less developed than hungary conversely the growth rates would be higher for countries more developed than hungary however the growth rates of poorer countries are not systematically lower in the penn world tables the paper examines why the growth rates are not distorted and makes some specific recommendations for data construction and use virginia polytechnic institute and state university blacksburg va 24061 0316 part of this work was supported by a grant from the institute of international studies at brown university and by a summer internship at the division of international finance at the federal reserve board i am grateful to peter garber david weil oded galor and anonymous referees for helpful comments alan heston and robert summers have also helped me understand icp and pwt methodology of course i alone am responsible for any mistakes in this paper iexamples include steve dowrick and duc tho nguyen 1989 robert j barro 1991 j bradford de long and lawrence h summers 1991 and n gregory mankiw et al 1992 2a series of papers by christina d romer 1986a b 1989 has already emphasized the importance of data construction techniques in another context 3there is a third effect a real acceleration effect caused by shifting consumption patterns and the reallocation of resources between sectors growth accountants such as angus maddison 1987 adjust estimates of total factor productivity for this sort of shift william j baumol et al 1989 have also referred to this phenomenon for an analysis in terms of a simple multisector solow model see nuxoll 1992a

a real options approach to the valuation of a forestry investment abstract the theory of real options is used to model the optimal tree harvesting decision the value of the option to harvest is estimated using a dynamic programming approach and a general numerical solution technique suitable for any type of stochastic process for prices the conditions under which the optimal harvest time is independent of price are examined in addition the impact of assuming future lumber prices are mean reverting is considered it is found that option value and optimal cutting time are significantly different under the mean reversion assumption compared to geometric brownian motion

wind power reliability valuation in a hydro dominated power market the colombian case abstract the design of market mechanisms that remunerates the reliability provided by a generator in a power market is a task that aims to ensure the normal operation of the system for the case of a hydro dominated system when wind power is introduced and operated under the merit order effect it is possible to assess the effect of the displacement of hydro generation due to wind generation over the system s reliability in terms of firm energy taking this into account a model that valuates the firm energy provided by wind power in a hydro dominated system is proposed this model considers the effect of wind power over the system s reservoirs and the market price of electricity and valuates the firm energy as the net savings of the system related to the increase in the firm energy of the system when wind power is introduced the results show that wind power under merit order effect increases the firm energy of the system and decreases the market price of electricity being the net savings in comparison to the corresponding hydro only system the reliability income that should be perceived by the wind power generator

the relative deprivation curve and its applications this article introduces the relative deprivation curve to represent the size distribution of income and wealth the curve has many useful applications in the measurement of poverty and inequality which are explored the methodology developed is then applied to the data obtained from the australian household expenditure survey 1975 1976