banking in computable general equilibrium economies abstract in this paper we develop a computable general equilibrium economy that models the banking sector explicitly banks intermediate between households and between the household sector and the government sector households borrow from banks to finance their purchases of houses and they lend to banks to save for retirement banks pool households savings and they purchase interest bearing government debt and non interest bearing reserves we use this structure to answer two sets of questions one normative in nature that evaluates the welfare costs of alternative monetary and tax policies and one positive in nature that studies the real effects of following a procyclical interest rate policy rule

dynamic behaviour of a value maximizing firm under personal taxation in this paper we study the impact of both corporate and personal taxation on the optimal dynamic behaviour of a value maximizing firm by determining simultaneously the optimal financial investment and dividend policy over a finite horizon to do so an optimal control model is formulated and resolved we discuss the successive stages in the evolution of the firm derive optimal financial and investment dividend decision rules and present sensitivity analysis results that are important for understanding the behaviour of firms in a dynamic setting the gap between the personal tax rates on dividend and capital gain respectively turns out to play an important role in providing the optimal policy string

effectiveness of macroprudential policies under borrower heterogeneity we study the impact of macroprudential policies using a novel model which takes into account households ability to borrow under different loan to value ratios which are tied to their collateral values such model generates a larger amplification in real and financial variables compared to standard models that assume homogeneity in the leveraging and deleveraging process conditional on this model we consider the implications of macroprudential policies that aim to lean against an excessive credit cycle in particular we allow macroprudential authorities to tighten excessive lending to higher leveraged households whose riskiness had been evaluated too optimistically we find thata policy that targets only the group of households that most strongly deleveraged after an adverse idiosyncratic housing investment risk shock is welfare improving at social and individual levels relative to a macroprudential policy which targets all households in the economy

housing markets consumption and financial liberalisation in the major economies abstract this paper analyses the implications of relaxing credit restrictions in housing finance markets a theoretical model of the interaction of financial and housing markets and forward looking agents is developed the effects of financial liberalisation in the model are analysed and evidence from the u s a and u k on the impact of easing credit restrictions is presented estimates are also made of the degree to which credit restrictions may bind on households in those countries where the range of mortgage products on offer is still more limited than in the u k and u s a simulations are undertaken to gauge the effect on consumption saving and bequests of wealth of possible future convergence in national systems of housing finance

can financial technology innovate benefit distribution in payments for ecosystem services and redd abstract benefit distribution in payments for ecosystem services pes and redd involves the disbursement of cash or in kind incentives to local participants that opt to manage their land in ways that increase or maintain ecosystem service provision for decades existing benefit distribution approaches have been debated by academics and presented challenges for conservation practitioners in passing through long chains of project actors payments incur high transaction costs and are susceptible to elite capture and corruption a new type of financial technology fintech mobile money could offer a novel and available solution to these challenges at what is now a critical stage in pes and redd implementation mobile payments made via cell phones have been used successfully in development projects related to micro credit micro insurance and aid relief and this commentary considers their possible advantages and drawbacks for pes redd schemes several countries e g cambodia china tanzania and the philippines demonstrate both high pes redd uptake and high mobile money penetration in certain circumstances benefit distribution via fintech may lower transaction costs enable higher frequency payments and provide new socioeconomic benefits it could also improve the privacy transparency traceability and security of disbursements contributing to more efficient and equitable pes and redd schemes

designing payments for environmental services in theory and practice an overview of the issues abstract payments for environmental services pes have attracted increasing interest as a mechanism to translate external non market values of the environment into real financial incentives for local actors to provide environmental services es in this introductory paper we set the stage for the rest of this special issue of ecological economics by reviewing the main issues arising in pes design and implementation and discussing these in the light of environmental economics we start with a discussion of pes definition and scope we proceed to review some of the principal dimensions and design characteristics of pes programs and then analyze how pes compares to alternative policy instruments finally we examine in detail two important aspects of pes programs their effectiveness and their distributional implications pes is not a silver bullet that can be used to address any environmental problem but a tool tailored to address a specific set of problems those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers pes is based on the beneficiary pays rather than the polluter pays principle and as such is attractive in settings where es providers are poor marginalized landholders or powerful groups of actors an important distinction within pes is between user financed pes in which the buyers are the users of the es and government financed pes in which the buyers are others typically the government acting on behalf of es users in practice pes programs differ in the type and scale of es demand the payment source the type of activity paid for the performance measure used as well as the payment mode and amount the effectiveness and efficiency of pes depends crucially on program design

the political dimensions of payments for ecosystem services pes cascade or stairway this paper aims to advance our understanding of payments for ecosystem services pes as political projects by offering an analytical tool for investigating power relations political decisions place specific ideas and social norms in the construction and operation of pes schemes this proposed analytic tool is based on a revised version of the ecosystem service cascade which we propose to transform into an ecosystem service stairway model as a device to analyse political processes in ecosystem service construction and provision we show that the key to understanding the politics of pes lies in the antagonistic processes between the different steps of the stairway in particular we show that the definition and mobilisation of the ecosystem service potential esp is the stage where the most fundamental political decisions are made here the role of intermediaries is particularly significant as they introduce their own conceptions of society nature relations which function as epistemic selectivities in further defining and mobilising the esp and in generating the resulting ecosystem services ess we illustrate our main conceptual insights and evaluate the usefulness of our political ecosystem stairway model by applying it to two latin american cases one in brazil and the other in bolivia

requiem for the representative consumer aggregate implications of microeconomic consumption behavior macroeconomists pursuing microfoundations for aggregate consumption have generally adopted one of two approaches either to model microeconomic consumption behavior carefully and then to aggregate or to thoroughly understand the behavior of a representative consumer in general equilibrium then to introduce microeconomic risk and heterogeneity the broad conclusion from the bottom up approach has been that precautionary saving and microeconomic heterogeneity can profoundly change behavior stephen p zeldes 1989 angus s deaton 1991 christopher d carroll 1992 the broad conclusion from the top down approach has been that precautionary saving is of little importance in determining the aggregate capital stock s rao aiyagari 1994 per krusell and anthony a smith 1998 leading some economists to conclude that heterogeneity is unimportant for macroeconomic purposes this paper shows that while general equilibrium effects do imply that the aggregate magnitude of precautionary saving is modest nevertheless when a model with uninsurable idiosyncratic risk is modified so that it can match the key micro facts it produces behavior very different in important respects from that produced by the representative agent economy this leads to the conclusion that for many purposes the representative consumer model should be abandoned in favor of a model which matches key microeconomic facts this abstract was borrowed from another version of this item

a characterization of ramsey equilibrium abstract consider a perfect foresight equilibrium model with a single capital good a borrowing constraint and many infinitely lived households with fixed but different discount factors the steady state capital stock is held by the most patient household quart j econ 95 1980 375 382 econ j 38 1928 543 559 an example shows the total capital can exhibit an equilibrium cycle in contrast to the stability property of the one household case in the example only the most patient household saves and his income deceases in capital we give a condition implying income is increasing in capital and use it to show any equilibrium converges to the steady state

revisiting the concept of payments for environmental services this article revisits the payments for environmental services pes concept and reviews existing pes definitions based on weberian philosophy of science it is argued that an ideal pes type strongly embedded in pes theory is needed to understand their logic many broader empiricist definitions fail to distinguish pes from the larger generic family of positive environmental incentives thus eroding their meaning by excessive vagueness arguably pes definitions should focus on describing a functional tool rather than normatively integrating desirable pes outcomes a modified narrow pes definition is proposed outlining conditionality as the single defining feature avoiding the buyer seller terms and linking pes to offsite externalities extensive explanatory guidelines address many valid conceptual concerns raised in the recent pes literature

investment behavior observable expectations and internal funds we use earnings forecasts from securities analysts to construct a new measure of the neoclassical fundamentals that drive investment spending we find that investment responds significantly to our new measure of fundamentals but is insensitive to cash flow even for firms typically thought to be liquidity constrained these results have two key implications first fundamentals may be more important for investment spending than would be suggested by the results to date from investment q models second the positive cash flow effects obtained in such models may reflect a failure to control properly for fundamentals rather than the presence of financial constraints jel d92 e22

can financial incentives change farmers motivations an agrarian system approach to development pathways at the nicaraguan agricultural frontier abstract this article offers a conceptual methodological approach to assess how new institutional frameworks such as pes payments for ecosystem services interact with motivations for land use change at the individual and collective level increasing empirical evidence suggests that the effects of payments on inducing long term behavioural change can vary substantially depending on how they are integrated in territorial dynamics we show how individual motivation is the result of collective societal pathways that generate particular opportunities and constraints as well as guiding ideas and habits that work within these pathways through an illustrative case study at the agricultural frontier in nicaragua we show how an agrarian system approach offers a more nuanced understanding of the dynamic interactions on the ground and allows us to better connect farmers individual motivations to collective development pathways in that territory our case study also demonstrates how a local pes intervention is unlikely to lastingly alter the production system logic of farmers or stimulate long term pro environmental behaviour unless accompanied by other types of policies

payments for ecosystem services and agricultural intensification evidence from a choice experiment on deforestation in zambia agriculture is considered to be one of the major drivers of deforestation worldwide in developing countries in particular this process is driven by small scale agriculture at the same time many african governments aim to increase agricultural productivity empirical evidence suggests however that win win relationships between agricultural intensification and forest conservation are the exception payments for ecosystem services pes could be linked to agriculture support programmes to simultaneously achieve both goals due to potentially higher profits from intensified agriculture than from pure cash transfers potential payment recipients may prefer in kind over conventional cash payments nevertheless little scientific evidence exists regarding the preferences of potential pes recipients for such instruments we report from a discrete choice experiment in zambia that elicited preferences of smallholder farmers for pes contracts our results suggest that potential pes recipients in zambia value in kind agricultural inputs more highly than cash payments even when the monetary value of the inputs is lower than the cash payment highlighting that pes could potentially succeed in conserving forests and intensifying smallholder agriculture respondents who intended to clear forest within the next three years were found to require higher payments but could be motivated to enrol in appropriately designed pes

habit formation in consumption and its implications for monetary policy models this paper explores a monetary policy model with habit formation for consumers in which consumers utility depends in part on current consumption relative to past consumption the empirical tests developed in the paper show that one can reject the hypothesis of no habit formation with tremendous condence largely because the habit formation model captures the gradual hump shaped response of real spending to various shocks the paper then embeds the habit consumption specication in a monetary policy model and nds that the responses of both spending and inflation to monetary policy actions are signicantly improved by this modication jel d12 e52 e43

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

technology shocks in the new keynesian model in the new keynesian model preference cost push and monetary shocks all compete with the real business cycle model s technology shock in driving aggregate fluctuations a version of this model estimated via maximum likelihood points to these other shocks as being more important for explaining the behavior of output inflation and interest rates in the postwar u s data these results weaken the links between the current generation of new keynesian models and the real business cycle models from which they were originally derived they also suggest that federal reserve officials have often faced difficult trade offs in conducting monetary policy

how funding source influences the form of redd initiatives the case of market versus public funds in brazil abstract the mechanism to reduce emissions from deforestation and forest degradation redd which is being implemented by the united nations framework convention on climate change is considered essential to provide economic incentives for the adoption of forest based mitigation measures against global climate change this article analyses the key characteristics of redd pilot initiatives in brazil from different perspectives concerning the concept of payment for environmental services while exploring how these characteristics relate to the funding models adopted regardless of whether they are sourced from public funds or via the carbon market data collected from publicly available databases are analysed using hypothesis tests ten variables from 89 pilot initiatives approved by the voluntary carbon market or the fundo amazonia amazon fund are examined findings show that initiatives under each funding model have distinct characteristics in terms of stakeholders criteria for incentive concession time frames geographical reach as well as measurement report and verification mrv practices differences are consistent with distinct theoretical conceptions on incentive based economic instruments

house prices borrowing constraints and monetary policy in the business cycle i develop a general equilibrium model with sticky prices credit constraints nominal loans and asset prices changes in asset prices modify agents borrowing capacity through collateral value changes in nominal prices affect real repayments through debt deflation monetary policy shocks move asset and nominal prices in the same direction and are amplified and propagated over time the financial accelerator is not constant across shocks nominal debt stabilises supply shocks making the economy less volatile when the central bank controls the interest rate i discuss the role of equity debt indexation and household and firm leverage in the propagation mechanism finally i find that monetary policy should not target asset prices as a means of reducing output and inflation volatility

how not to pay field experimental evidence on the design of redd payments abstract payments for ecosystem services pes can use many design features we investigate the impact of payment conditionality types i e different specifications when to pay and when not to pay for pes on deforestation and agricultural production in a lab in the field experiment our experiment also tests variations in contract period and payment volatility we designed a highly visual simulation game to characterize the decision situation of a cattle rancher in brazil the player can expand extensive pasture by deforestation or intensify existing pasture the model includes both a land and a capital constraint we applied the game in an economic framed lab in the field experiment in tocantins brazil payments conditional on forest carbon stock lead to slow but steady deforestation while payments conditional on forest carbon stock change suppressed deforestation more strongly but payments conditional on stock increase cattle production while payments conditional on stock change have no effect on production thus depending on the level of leakage either type of conditionality can be more cost effective in reducing global carbon emissions contracts with limited periods lead to strong deforestation after the end of the payment period payment volatility had no significant effect

whose equity matters national to local equity perceptions in vietnam s payments for forest ecosystem services scheme this paper focuses on the assessment of legislative considerations and local perceptions of equity in vietnam s payments for forest ecosystem services scheme pfes equity perceptions are powerful determinants of human behaviour and consequently many environmental conflicts arise from contested visions of what constitutes as equitable environmental management therefore equity can play an instrumental role in shaping outcomes of pfes schemes this paper analyzes how contextual procedural and distributive equity considerations are reflected in national pfes legislation and implementation how equity outcomes are perceived locally and whether local perceptions match legislative considerations we reviewed national legislation and government reports conducted expert interviews on the national and provincial level as well as surveys focus group discussions and in depth interviews on the local level our findings reveal that equity outcomes are very much affected by contextual factors such as how the forest land allocation regulation determines the distribution of use rights in the implementation of pfes national aspirations and rationales of equity as outlined in legislation were not met due to technical constraints financial costs and social and institutional conflicts the implementation on the ground contrasts with local interests our results show that on the local level the preference for a distributive equity principle is very much influenced by the degree of transparency of the payment distribution process the prevailing perceptions of equitable benefit distribution by local pfes participants correspond to a merit based principle of compensation for the effort of forest protection

the credit view old and new recent writings in the so called credit view focus on binding finance constraints of macroeconomic activity which arise from the incomplete substitutability of bank credit and from changes in borrowers net worth they criticize the standard approaches in the money view for not taking full account of the observable effects of monetary restrictions on real activity in this paper the new credit view is contrasted with older macroeconomic theories that placed special emphasis on the banks systemic potential to expand credit beyond planned saving the comparative discussion of the underlying arguments about bank behaviour about the non neutrality of credit money and about the transmission of monetary policy impulses reveals some shortcomings in the new view history helps moreover to set the conventional confrontations of the credit view and the money view in perspective jel classification b22 e32 e44 e51 e52

should central banks respond to movements in asset prices in recent decades asset booms and busts have been important factors in macroeconomic fluctuations in both industrial and developing countries in light of this experience how if at all should central bankers respond to asset price volatility we have addressed this issue in previous work bernanke and gertler 1999 the context of our earlier study was the relatively new but increasingly popular monetary policy framework known as inflation targeting see e g bernanke and frederic mishkin 1997 in an inflation targeting framework publicly announced medium term inflation targets provide a nominal anchor for monetary policy while allowing the central bank some flexibility to help stabilize the real economy in the short run the inflation targeting approach gives a specific answer to the question of how central bankers should respond to asset prices changes in asset prices should affect monetary policy only to the extent that they affect the central bank s forecast of inflation to a first approximation once the predictive content of asset prices for inflation has been accounted for there should be no additional response of monetary policy to assetprice fluctuations in use now for about a decade inflationtargeting has generally performed well in practice however so far this approach has not often been stress tested by large swings in asset prices our earlier research employed simulations of a small calibrated macroeconomic model to examine how an inflation targeting policy defined as one in which the central bank s instrument interest rate responds primarily to changes in expected inflation might fare in the face of a boom and bust cycle in asset prices we found that an aggressive inflationtargeting policy rule in our simulations one in which the coefficient relating the instrument interest rate to expected inflation is 2 0 substantially stabilizes both output and inflation in scenarios in which a bubble in stock prices develops and then collapses as well as in scenarios in which technology shocks drive stock prices intuitively inflation targeting central banks automatically accommodate productivity gains that lift stock prices while offsetting purely speculative increases or decreases in stock values whose primary effects are through aggregate demand conditional on a strong policy response to expected inflation we found little if any additional gains from allowing an independent response of central bank policy to the level of asset prices in our view there are good reasons outside of our formal model to worry about attempts by central banks to influence asset prices including the fact that as history has shown the effects of such attempts on market psychology are dangerously unpredictable hence we concluded that inflationtargeting central banks need not respond to asset prices except insofar as they affect the inflation forecast in the spirit of recent work on robust control the exercises in our earlier paper analyzed the performance of policy rules in worst case discussants robert shiller yale university glenn rudebusch federal reserve bank of san francisco kenneth rogoff harvard university

capital structure and debt structure using a novel dataset that records individual debt issues on the balance sheets of public firms we demonstrate that traditional capital structure studies that ignore debt heterogeneity miss substantial capital structure variation relative to high credit quality firms lowcredit quality firms are more likely to have a multi tiered capital structure consisting of both secured bank debt with tight covenants and subordinated non bank debt with loose covenants we discuss the extent to which these findings are consistent with existing theoretical models of debt structure in which firms simultaneously use multiple debt types to reduce incentive conflicts jel g32

the campfire programme in zimbabwe payments for wildlife services abstract payments for environmental services pes have been distinguished from the more common integrated conservation and development projects on the grounds that pes are direct more cost effective less complex institutionally and therefore more likely to produce the desired results both kinds of schemes aim to achieve similar conservation outcomes however and generally function in analogous social political and economic environments given the relative novelty of pes what lessons can be learnt and applied from earlier initiatives in this paper we describe the evolution over the first 12 years 1989 2001 of zimbabwe s communal areas management programme for indigenous resources campfire a community based natural resource management programme in which rural district councils on behalf of communities on communal land are granted the authority to market access to wildlife in their district to safari operators these in turn sell hunting and photographic safaris to mostly foreign sport hunters and eco tourists the district councils pay the communities a dividend according to an agreed formula in practice there have been some underpayments and frequent delays during 1989 2001 campfire generated over us 20 million of transfers to the participating communities 89 of which came from sport hunting the scale of benefits varied greatly across districts wards and households twelve of the 37 districts with authority to market wildlife produced 97 of all campfire revenues reflecting the variability in wildlife resources and local institutional arrangements the programme has been widely emulated in southern and eastern africa we suggest five main lessons for emerging pes schemes community level commercial transactions can seldom be pursued in isolation non differentiated payments weaken incentives start up costs can be high and may need to be underwritten competitive bidding can allow service providers to hold on to rents and schemes must be flexible and adaptive

in markets we trust setting the boundaries of market based instruments in ecosystem services governance abstract a growing tendency to frame environmental problems as a failure to price ecosystem services has coincided with the rise of so called market based instruments mbis the aim of this introductory article to the special section in markets we trust contrasting views on the performance and legitimacy of market based instruments in global environmental governance is to promote critical reflection about the nature scope and limits of mbis in ecosystem services governance and to provide guidance on where the boundaries for the application of markets ought to be set first we examine the role that methodological assumptions and implicit normative positions play in shaping academic perception of the effectiveness and legitimacy of mbis second we examine mbis in the broader ideological context and socio political processes that have favored their development and implementation third we test claims of the literature on mbis against insights and data from case studies presented in the special section fourth we discuss the scope and limits of markets in ecosystem services governance in the light of biophysical institutional and normative boundaries we end with a summary of concluding remarks from the special section and by identifying critical tasks for the scientific and policy agenda on ecosystem services governance

redefining payments for environmental services abstract the environmental economics and the ecological economics perspectives on payments for environmental services pes propose rather different views on how to define pes its key elements and on the role of pes in ecosystem conservation and rural development this paper compares these two perspectives and addresses the following questions what is an appropriate definition of pes grounded in the theory and practice underlying it what are the key design elements of pes what should the scope of pes be given the possible trade offs between efficiency and equity it is found that pes schemes should focus on cost effectiveness and best practice for positive livelihood impacts pes schemes should be transparent and provide additional services with conditional payments to voluntary providers

permanent income liquidity and expenditure on automobiles evidence from panel data several recent papers have tested the permanent income cum rational expectations hypothesis using data on nondurable or semidurable consumption we show how this approach can be extended to the case of durables an application to panel data on automobile expenditures reveals no evidence against the permanent income hypothesis this result is unchanged in subsamples segregated by family holdings of liquid assets

the taylor rule and optimal monetary policy where it denotes the fed s operating target for the federal funds rate pt is the inflation rate measured by the gdp deflator yt is the log of real gdp and y t is the log of potential output identified empirically with a linear trend the rule has since been subject to considerable attention both as an account of actual policy in the united states and elsewhere and as a prescription for desirable policy taylor argues for the rule s normative significance both on the basis of simulations and on the ground that it describes u s policy in a period in which monetary policy is widely judged to have been unusually successful taylor 1999 suggesting that the rule is worth adopting as a principle of behavior here i wish to consider to what extent this prescription resembles the sort of policy that economic theory would recommend i consider the question in the context of a simple but widely used optimizing model of the monetary transmission mechanism which allows one to reach clear conclusions about economic welfare the model is highly stylized but incorporates important features of more realistic models and allows me to make several points that are of more general validity out of concern for the robustness of the conclusions reached the analysis here addresses only broad qualitative features of the taylor rule and attempts to identify features of a desirable policy rule that are likely to hold under a variety of model specifications

between economic loss and social identity the multi dimensional cost of avoiding deforestation in eastern madagascar this paper exhibits the multiple dimensions of the cost of stopping the main driver of deforestation in madagascar slash and burn agriculture tavy as well as being a major component of the economic livelihoods of most local households living at the edge of forests tavy has been described by anthropologists as an important cultural practice in this paper we show that stopping tavy does not only entail an economic cost for local households the loss of the cultural dimension of tavy would come at an additional cultural cost for some our results suggest that a viable cessation of deforestation in madagascar would require going beyond simple compensation of the opportunity costs of avoiding deforestation

can redd still become a market ruptured dependencies and market logics for emission reductions in brazil abstract during almost 20 years of political debate on the nature of payments for ecosystem services pes these schemes have been characterized mostly as a non market approach even though attempts to transform them into market instruments has persistently recurred in these debates one notable example is the materialization of reducing emissions from deforestation and forest degradation redd in brazil where a sustainable development discourse dominates national forest governance at the expense of a carbon commodification discourse this research paper adopts a foucauldian approach to plot the epistemological foundations of the market logics that still influence redd institutionalization in brazil to a large extent and thereby reproduce what we define as a ruptured dependence on nature more specifically we recognize ruptured dependence in the three building blocks of market instruments namely singularization monetary valuation and appropriation our analysis shows that redd institutions have retained the singularization and monetary valuation of emission reductions even though the appropriation processes have rejected the possibility of exchange and instead emphasized the national ownership of emission reductions however appropriation remains a highly politicized process that is sensitive to criticism and open to calls for alternative approaches that are closer to ruptured dependence

the history of ecosystem services in economic theory and practice from early notions to markets and payment schemes article i nfo this paper reviews the historic development of the conceptualization of ecosystem services and examines critical landmarks in economic theory and practice with regard to the incorporation of ecosystem services into markets and payment schemes the review presented here suggests that the trend towards monetization and commodification of ecosystem services is partly the result of a slow move from the original economic conception of nature s benefits as use values in classical economics to their conceptualization in terms of exchange values in neoclassical economics the theory and practice of current ecosystem services science are examined inthelight ofthis historicaldevelopment from thisreview we conclude thatthefocus onmonetary valuation and payment schemes has contributed to attract political support for conservation but also to commodify a growing number of ecosystem services and to reproduce the neoclassical economics paradigm and the market logic to tackle environmental problems

optimal investment financing and dividends a stackelberg differential game abstract over a finite planning period a film has two shareholders who trade shares at a fixed price external transactions are disregarded the total amount of shares is fixed and the majority shareholder decides on the rate of dividend payout each shareholder maximizes a profit functional comprised of total earnings from share transactions plus dividends and capital gains at the horizon date the shareholders are subject to personal taxation on dividends and capital gains decisions on investments and borrowing lending are made by a manager who maximizes accumulated profits after corporate taxation the problem is modelled as an open loop stackelberg differential game such that the manager is the leader the shareholders are followers playing a nash game the latter game is analyzed by using standard techniques of optimal control theory the analysis of the manager s problem is done by using a path connecting procedure

investor borrowing heterogeneity in a kiyotaki moore style macro model we introduce heterogeneity in investors ability to borrow from collateral in a kiyotaki moore style macro model calibrated to the quintiles of the leverage ratio distribution of us non financial firms financial amplification intensifies because of stronger asset price reactions of highly levered investors

the cost effectiveness of conservation payments international donors invest billions of dollars to conserve ecosystems in low income nations the most common investments aim to encourage commercial activities such as ecotourism that indirectly generate ecosystem protection as a joint product we demonstrate that paying for ecosystem protection directly can be far more cost effective although direct payment initiatives have imposing institutional requirements we argue that all conservation initiatives face similar challenges thus conservation practitioners would be well advised to implement the first best direct payment approach rather than a secondbest policy option an empirical example illustrates the spectacular cost savings that can be realized by direct payment initiatives

taking stock a comparative analysis of payments for environmental services programs in developed and developing countries abstract payments for environmental services pes are an innovative approach to conservation that has been applied increasingly often in both developed and developing countries to date however few efforts have been made to systematically compare pes experiences drawing on the wealth of case studies in this special issue we synthesize the information presented according to case characteristics with respect to design costs environmental effectiveness and other outcomes pes programs often differ substantially one from the other some of the differences reflect adaptation of the basic concept to very different ecological socioeconomic or institutional conditions others reflect poor design due either to mistakes or to the need to accommodate political pressures we find significant differences between user financed pes programs in which funding comes from the users of the es being provided and government financed programs in which funding comes from a third party the user financed programs in our sample were better targeted more closely tailored to local conditions and needs had better monitoring and a greater willingness to enforce conditionality and had far fewer confounding side objectives than government financed programs we finish by outlining some perspectives on how both user and government financed pes programs could be made more effective and cost efficient

the effectiveness of payments for environmental services we adopt a theory based approach to synthesize research on the effectiveness of payments for environmental services in achieving environmental objectives and socio economic co benefits in varying contexts our theory of change builds on established conceptual models of impact pathways and highlights the role of 1 contextual dimensions e g political institutional and socio economic conditions spatial heterogeneity in environmental service values and provision costs and interactions with pre existing policies and 2 scheme design e g payment type and level contract length targeting and differentiation of payments in determining environmental and socio economic outcomes to shed light on the overall effectiveness of payment schemes and its determinants we review counterfactual based empirical evaluations comparative analyses of case studies and meta analyses our review suggests that program effectiveness often lags behind the expectations of early theorists however we also find that theory has advanced sufficiently to identify common reasons for why payment schemes fail or succeed moreover payment schemes are often rolled out along with other policy instruments in so called policy mixes advances in theory and evaluation research are needed to improve our understanding of how such policy mixes interact with the targeted social ecological systems 2017

the pes conceit revisiting the relationship between payments for environmental services and neoliberal conservation payments for environmental services pes has become a popular means to neoliberalize biodiversity conservation throughout the world yet research on pes is increasingly focused on debating exactly how neoliberal programmes really are documenting complexities in pes implementation and concluding that few programmes are very market based in practice while we agree that ideal neoliberal implementation of pes does not and cannot exist we argue that focusing only on micro politics misunderstands the importance of analysing pes as a form of neoliberal conservation the question is not just whether pes is innately neoliberal but how it functions within a broader neoliberal political economy by focusing on the overarching governance and power structures that gave rise to pes in the first place we more clearly see what we call the pes conceit namely that the approach implicitly accepts neoliberal capitalism as both the problem and the solution to the ecological crisis this strategy is not only contradictory but also commonly fails to achieve intended outcomes falling far short of conservation objectives while also often exacerbating socioeconomic inequality this problematic conceit we conclude cannot be addressed through only micro oriented studies it demands connecting micro and macro political economic analyses to confront broader neoliberal power structures

payments for ecosystem services from local to global abstract payment for ecosystem services pes is becoming increasingly popular as a way to manage ecosystems using economic incentives the environmental economics approach to pes tries to force ecosystem services into the market model with an emphasis on efficiency the ecological economics approach in contrast seeks to adapt economic institutions to the physical characteristics of ecosystem services prioritizing ecological sustainability and just distribution and requiring a transdisciplinary approach this paper summarizes the results of a participatory atelier workshop held in costa rica we developed a set of principles the heredia declaration for pes systems and report on evolving initiatives in several countries we discuss how the distinction between ecosystem goods which are stock flow resources and ecosystem services which are fund service resources and the physical characteristics of the fund services affect the appropriate institutional form for pes we conclude that pes systems represent an important way to effectively manage fund service resources as public goods and that this represents a significant departure from conventional market institutions

reconciling theory and practice an alternative conceptual framework for understanding payments for environmental services article i nfo this article provides an alternative and novel theoretical approach to the conceptualization and analysis of payments for environmental services pes we devote special emphasis to institutional and political economy issues which have been somewhat neglected in the literature on pes we argue that the coasean and pure market approach dominating the conceptualization of pes in the literature cannot be easily generalized and implemented in practice by contrast taking into account complexities related to uncertainty distributional issues social embeddedness and power relations permits acknowledging the variety of contexts and institutional settings in which pes operate the alternative approach presented in this introductory article to the special section may be more appealing to pes practitioners since while avoiding restrictive and prescriptive standpoints it allows some key sources of complexities they usually deal with on the ground to be more easily understood

dynamic results of financial leverage clienteles abstract in this paper we consider the impact of both corporate and personal taxation on the optimal dynamic behaviour of a value maximizing firm by determining simultaneously the optimal financial investment and dividend policy over a finite horizon for the description an optimal control model is applied we discuss the analytical solution of the model and show similarities with the theory of financial leverage clienteles

contracts and money why are contracts not fully indexed in a setting in which fully indexed contracts are feasible we find that when price level data are gathered with delay these contracts are not renegotiation proof the contracts that replace them entail a lower level of welfare for the parties to that contract they also imply that real variables respond to nominal shocks

home is where the equity is mortgage refinancing and household consumption applying a permanent income model with exogenous liquidity constraints and mortgage behavior household refinancing when mortgage interest rates are historically high and rising a persistent empirical puzzle is explained using data from the panel study of income dynamics households experiencing an unemployment shock and having limited initial liquid assets to draw upon are shown to have been 25 more likely to refinance 1991 94 on average such liquidity constrained households converted over two thirds of every dollar of equity they removed into current consumption as mortgage rates plummeted 1991 94 producing an estimated expenditure stimulus of at least 28 billion

stock market wealth and consumption this paper explores the link between changes in the aggregate value of corporate stock and changes in consumer spending it presents data on the distribution of corporate stock ownership based on the 1998 survey of consumer finances it also uses time series evidence on the comovement of stock market wealth and various categories of consumer spending to calibrate the wealth effect it concludes that in the year after a change in stock market values consumer spending is likely to rise by between one and two cents for each dollar increase in the value of corporate stock

payments for environmental services in watersheds insights from a comparative study of three cases in central america we have compared three cases of payments for water related environmental services pes in central america in terms of socioeconomic background opportunity costs of forest conservation and stakeholders perceptions of the conditions of water resources and other issues we found that in general the opportunity costs are larger than the amounts paid which apparently contradicts the economic foundation of pes schemes and suggests that the role of intangibles is important in inducing participation the results also show that trade offs between different environmental and social goals are likely to emerge in pes schemes posing some doubts as to their ability to be multipurpose instruments for environmental improvement and rural development we also found that pes schemes may work as a conflict resolution instrument facilitating downstream upstream problem solving though at the same time they might introduce changes in social perceptions of property rights