on electricity consumption and economic growth in china abstract the invention and application of the electric power technology triggered the second industrial revolution in human history which marked the human society entered the age of electricity electricity provides the sustainable power for economic and social development with the rapid development of economy the electricity consumption is also increasing the increase of electricity consumption has further promoted the progress of the industrial economy in order to achieve the goal of improving the level of economic development while reducing energy consumption it is necessary to reveal the relationship between electricity consumption and economic growth this study is an extensive overview of the literature surrounding this topic in this paper we focus on the relationship between electricity consumption and economic growth in china we first analyze the general situation of china s electricity consumption and economic development then we explore the relationship between china s electricity consumption and economic growth from three dimensions i e the time dimension the regional dimension and the industrial dimension finally we study the key issues in the research of the relationship between electricity consumption and economic growth including variable selection model construction and results discussion this work suggests that the nature of the nexus in china should and can be explored from a wider perspective by developing a suitable integrated methodological framework

answering the skeptics yes standard volatility models do provide accurate forecasts a voluminous literature has emerged for modeling the temporal dependencies in financial market volatility using arch and stochastic volatility models while most of these studies have documented highly significant in sample parameter estimates and pronounced intertemporal volatility persistence traditional ex post forecast evaluation criteria suggest that the models provide seemingly poor volatility forecasts contrary to this contention we show that volatility models produce strikingly accurate interdaily forecasts for the latent volatility factor that would be of interest in most financial applications new methods for improved ex post interdaily volatility measurements based on high frequency intradaily data are also discussed

industrialization electricity consumption and co2 emissions in bangladesh this paper investigates the relationship between industrialization electricity consumption and co2 emissions in case of bangladesh using quarter frequency data over the period of 1975 2010 the ar

unexpected tails in risk measurement some international evidence risk management critically depends on the assumptions made about the distribution of stock returns this paper applies extreme value methods to investigate the limiting distribution of the extreme returns of the nikkei225 ftse100 and s p500 indices as well as the indices of some of largest sectors in japan uk and us the results indicate that the much celebrated generalised extreme value distribution does not provide the most accurate description of the minima since the generalised logistic distribution performs better due to its ability to better capture the fat tails of returns the time varying nature of extremes is also confirmed while a simulation exercise adds to the robustness of our results it is also shown that the findings may have important implications for risk models such as var and expected shortfall since risk measures which cannot capture the fatness of tails of the empirical distribution function of returns may lead to serious underestimation of downside risk

electricity consumption real gdp causality nexus evidence from a bootstrapped causality test for 30 oecd countries the goal of this paper is to examine any causal effects between electricity consumption and real gdp for 30 oecd countries we use a bootstrapped causality testing approach and unravel evidence in favour of electricity consumption causing real gdp in australia iceland italy the slovak republic the czech republic korea portugal and the uk the implication is that electricity conservation policies will negatively impact real gdp in these countries however for the rest of the 22 countries our findings suggest that electricity conversation policies will not affect real gdp

the informational content of implied volatility implied volatility is widely believed to be informationally superior to historical volatility because it is the markets forecast of future volatility but for s p 100 index options the most actively traded contract in the united states we find implied volatility in aggregate and across subsamples separated by maturity and strike price implied volatility has virtually no correlation with future volatility and it does not incorporate the information contained in recent observed volatility article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the relationship between economic growth and electricity consumption from renewable and non renewable sources a study of turkey abstract the main objective of this study is to analyze the short and long run estimates as well as the causality relationships between economic growth gr electricity consumption from renewable sources relc and electricity consumption from non renewable sources nrelc for turkey in a multivariate model wherein capital k and labor l are included as additional variables using the autoregressive distributed lag ardl approach to cointegration the johansen cointegration test and the gregory hansen cointegration test with structural break we show that gr relc nrelc k and l are cointegrated although nrelc has a long run positive effect on gr the long run estimate of relc is negative but insignificant at 5 level of significance the granger causality test based on the vector error correction model reveals the evidence of neutrality hypothesis between relc and gr and between nrelc and gr in turkey in the short run in addition the granger causality runs from relc nrelc k and l to gr as well as from gr relc k and l to nrelc in the long run which supports the existence of growth hypothesis between relc and gr and feedback hypothesis between nrelc and gr in the long run it is advised that policy makers in the turkish government should continue to reduce the share of electricity consumption from renewable sources and encourage the usage of electricity from non renewable sources to have sustainable long run growth rates it is also essential to promote the investment projects to increase the efficiency of electricity generation from non renewable sources

do professional traders exhibit myopic loss aversion an experimental analysis two behavioral concepts loss aversion and mental accounting have been combined to provide a theoretical explanation of the equity premium puzzle recent experimental evidence supports the theory as students behavior has been found to be consistent with myopic loss aversion mla yet much like certain anomalies in the realm of riskless decision making these behavioral tendencies may be attenuated among professionals using traders recruited from the cbot we do indeed find behavioral differences between professionals and students but rather than discovering that the anomaly is muted we find that traders exhibit behavior consistent with mla to a greater extent than students

conditional heteroscedasticity in time series of stock returns evidence and forecasts this article presents new evidence about the time series behavior of stock prices daily return series exhibit significant levels of second order dependence and they cannot be modeled as linear white noise processes a reasonable return generating process is empirically shown to be a first order autoregressive process with conditionally heteroskedastic innovations in particular generalized autoregressive conditional heteroskedastic garch 1 1 processes fit to data very satisfactorily various out of sample forecasts of monthly return variances are generated and compared statistically forecasts based on the garch model are found to be superior copyright 1989 by the university of chicago

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

an evaluation of volatility forecasting techniques the existing literature contains conflicting evidence regarding the relative quality of stock market volatility forecasts evidence can be found supporting the superiority of relatively complex models including arch class models while there is also evidence supporting the superiority of more simple alternatives these inconsistencies are of particular concern because of the use of and reliance on volatility forecasts in key economic decision making and analysis and in asset option pricing this paper employs daily australian data to examine this issue the results suggest that the arch class of models and a simple regression model provide superior forecasts of volatility however the various model rankings are shown to be sensitive to the error statistic used to assess the accuracy of the forecasts nevertheless a clear message is that volatility forecasting is a notoriously difficult task

socioeconomic development and electricity consumption a cross country analysis using the random coefficient method this paper analyses the relationship between electricity consumption and socioeconomic variables by estimating the electricity consumption function on the basis of single year cross country data and using ols and random coefficient rc methods the latter method yields both mean response as well as country specific coefficients while electricity consumption is found to rise with socioeconomic development it is found to be inelastic with respect to changes in all the variables the estimated country specific coefficients with respect to per capita gnp and share of industry in gdp are found not to vary across countries indicating that the impact of these variables on electricity consumption is similar across countries on the other hand the impact of other variables years of schooling gdp growth urbanization and population density is found to vary substantially across countries

sectoral analysis of the causal relationship between electricity consumption and real output in pakistan this study uses the annual data from 1972 to 2010 to assess the causal relationship between electricity consumption and real output at the aggregate and sectoral levels in pakistan this study covers three main economic sectors in pakistan namely agricultural manufacturing and services sectors our cointegration results reveal that the variables are cointegrated at the aggregate and sectoral levels at the aggregate level we find that there is uni directional granger causality running from electricity consumption to real output in pakistan at the sectoral level we find that electricity consumption granger causes real output in the manufacturing and services sectors however there is no causal relationship between electricity consumption and real output in the agricultural sector the policy implication of these results is that electricity conservation policies in general would deteriorate the process of economic growth as well as the real output in the manufacturing and services sectors in pakistan nevertheless we suggest the pakistani government to implement the electricity conservation policies merely to the agricultural sector because such policies may have less or no adverse impact on its real output

the effect of myopia and loss aversion on risk taking an experimental test myopic loss aversion is the combination of a greater sensitivity to losses than to gains and a tendency to evaluate outcomes frequently two implications of myopic loss aversion are tested experimentally 1 investors who display myopic loss aversion will be more willing to accept risks if they evaluate their investments less often 2 if all payoffs are increased enough to eliminate losses investors will accept more risk in a task in which investors learn from experience both predictions are supported the investors who got the most frequent feedback and thus the most information took the least risk and earned the least money language en

from value at risk to stress testing the extreme value approach this article presents an application of extreme value theory to compute the value at risk of a market position in statistics extremes of a random process refer to the lowest observation the minimum and to the highest observation the maximum over a given time period extreme value theory gives some interesting results about the distribution of extreme returns in particular the limiting distribution of extreme returns observed over a long time period is largely independent of the distribution of returns itself in financial markets extreme price movements correspond to market corrections during ordinary periods and also to stock market crashes bond market collapses or foreign exchange crises during extraordinary periods an approach based on extreme values to compute the var thus covers market conditions ranging from the usual environment considered by the existing var methods to the financial crises which are the focus of stress testing univariate extreme value theory is used to compute the var of a fully aggregated position while multivariate extreme value theory is used to compute the var of a position decomposed on risk factors 2000 elsevier science b v all rights reserved

the electricity consumption versus economic growth of the polish economy abstract the aim of this contribution is an investigation of causal interdependences between electricity consumption and gdp in poland our research was conducted for total electricity consumption as well as for the industrial consumption of electricity in order to reflect the causality between gdp and electricity consumption properly we performed our investigations in a three dimensional framework with employment chosen as an additional variable we used reliable quarterly data from the period q1 2000 q4 2009 in order to check the stability of the causalities the investigations were performed on two samples a full sample and a pre crisis i e q1 2000 q3 2008 subsample we applied both traditional methods and some recently developed econometric tools we found feedback between total electricity consumption and gdp as well as between total electricity consumption and employment we also found unidirectional causality running from industrial electricity consumption to employment and no direct causal links between industrial electricity consumption and gdp in addition all these findings were in general not seriously affected by the financial and economic crises of 2008 a significant exception is the causal effect of industrial electricity consumption on employment which was more pronounced after the crisis of 2008

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

energy development in china the need for a coherent policy abstract china the world s third largest consumer of primary energy remains in relative terms a poor developing country ambitious modernization plans exemplified by the goal of quadrupling per capita gnp by the year 2000 will require considerable attention to long range energy planning yet the past developments including the most recent guidelines have been marked by abrupt changes and outright reversals leaving china without any coherent energy policy the most durable strategies which emerged during the late 1970s are the stress on coal as the principal fuel building of mine mouth power plants accelerated construction of large hydro stations massive diffusion of small biogas digesters and widespread energy conservation measures

electricity consumption and economic growth a time series experience for 17 african countries abstract while the availability of electricity by itself is not a panacea for the economic and social problems facing africa the supply of electricity is nevertheless believed to be a necessary requirement for africa s economic and social development this paper tests the long run and causal relationship between electricity consumption per capita and real gross domestic product gdp per capita for 17 african countries for the period 1971 2001 using a newly developed cointegration test proposed by pesaran et al 2001 and using a modified version of the granger causality test due to toda and yamamoto 1995 the advantage of using these two approaches is that they both avoid the pre testing bias associated with conventional unit root and cointegration tests the empirical evidence shows that there was a long run relationship between electricity consumption per capita and real gdp per capita for only 9 countries and granger causality for only 12 countries for 6 countries there was a positive uni directional causality running from real gdp per capita to electricity consumption per capita an opposite causality for 3 countries and bi directional causality for the remaining 3 countries the result should however be interpreted with care as electricity consumption accounts for less than 4 of total energy consumption in africa and only grid supplied electricity is taken into account

electricity consumption and economic growth in china abstract this paper applies the error correction model to examine the causal relationship between electricity consumption and real gdp for china during 1971 2000 our estimation results indicate that real gdp and electricity consumption for china are cointegrated and there is unidirectional granger causality running from electricity consumption to real gdp but not vice versa in order to overcome the constraints on electricity consumption the chinese government has to speed up the nation wide interconnection of power networks to upgrade urban and rural distribution grids and to accelerate rural electrification

co2 emissions energy consumption trade and income a comparative analysis of china and india in order to prevent the destabilisation of the earth s biosphere co2 emissions must be reduced quickly and significantly the causes of co2 emissions by individual countries need to be apprehended in order to understand the processes required for reducing emissions around the globe china and india are the two largest transitional countries and growing economies but are in two entirely different categories in terms of structural changes in growth trade and energy use co2 emissions from the burning of fossil fuels have significantly increased in the recent past this paper compares china and india using the bounds testing approach to cointegration and the ardl methodology to test the long and short run relationships between growth trade energy use and endogenously determined structural breaks the co2 emissions in china were influenced by per capita income structural changes and energy consumption a similar causal connection cannot be established for india with regard to structural changes and co2 emissions because india s informal economy is much larger than china s india possesses an extraordinarily large number of micro enterprises that are low energy consumers and not competitive enough to reach international markets understanding these contrasting scenarios is prerequisite to reaching an international agreement on climate change affecting these two countries

an experiment on risk taking and evaluation periods does the period over which individuals evaluate outcomes influence their investment in risky assets results from this study show that the more frequently returns are evaluated the more risk averse investors will be the results are in line with the behavioral hypothesis of myopic loss aversion which assumes that people are myopic in evaluating outcomes over time and are more sensitive to losses than to gains the results have relevance for the equity premium puzzle and also for the marketing strategies of fund managers

a note on the causal relationship between energy and gdp in taiwan abstract this paper re examines the causality between energy consumption and gdp by using updated taiwan data for the period 1954 1997 as a secondary contribution we investigate the causal relationship between gdp and the aggregate as well as several disaggregate categories of energy consumption including coal oil natural gas and electricity applying granger s technique we find bidirectional causality between total energy consumption and gdp we find further that different directions of cause exist between gdp and various kinds of energy consumption

the relation between implied and realized volatility abstract previous research finds the volatility implied by s p 100 index option prices to be a biased and inefficient forecast of future volatility and to contain little or no incremental information beyond that in past realized volatility in contrast we find that implied volatility outperforms past volatility in forecasting future volatility and even subsumes the information content of past volatility in some of our specifications our results differ from previous studies because we use longer time series and nonoverlapping data a regime shift around the october 1987 crash explains why implied volatility is more biased in previous work

a theoretical comparison between integrated and realized volatility in this paper we provide both qualitative and quantitative measures of the precision of measuring integrated volatility by realized volatility for a fixed frequency of observation we start by characterizing for a general diffusion the difference between realized and integrated volatility for a given frequency of observation then we compute the mean and variance of this noise and the correlation between the noise and the integrated volatility in the eigenfunction stochastic volatility model of meddahi 2001a this model has as special cases log normal affine and garch diffusion models using previous empirical results we show that the noise is substantial compared with the unconditional mean and variance of integrated volatility even if one employs five minute returns we also propose a simple approach to capture the information about integrated volatility contained in the returns through the leverage effect we show that in practice the leverage effect does not matter copyright 2002 john wiley sons ltd

forecasting stock return variance toward an understanding of stochastic implied volatilities we examine the behavior of measured variances from the options market and the underlying stock market under the joint hypotheses that markets are informationally efficient and that option prices are explained by a particular asset pricing model forecasts from time series models of the stockreturn process should not have predictive content given the market forecast as embodied in option prices both in sample and out of sample tests suggest that this hypothesis can be rejected using simulations we show that biases inherent in the procedure we use to imply variances cannot explain this result thus we provide evidence inconsistent with the orthogonality restrictions of option pricing models that assume that variance risk is unpriced these results also have implicationsfor optimal variance forecast rules

a conditional extreme value volatility estimator based on high frequency returns abstract this paper introduces a conditional extreme value volatility estimator evt based on high frequency returns the relative performance of the evt is compared with the discrete time garch and implied volatility models for 1 day and 20 day ahead forecasts of realized volatility this is also a first attempt towards detecting any time series variation in extreme value distributions using high frequency intraday data the information content of evt is examined in the context of forecasting sp 2 vix generally yields a less accurate characterization of realized volatility than evt and garch models these results have implications for financial risk management and are thus relevant to both regulators and practitioners

is it myopia or loss aversion a study on investment game experiments abstract gneezy and potters 1997 designed an investment game experiment and found that consistent with myopic loss aversion mla individuals are more willing to take risks when they evaluate the results of their investments less frequently we formally prove that these findings can be accommodated by a standard crra functional once we assume narrow bracketing a specific form of myopia by which subjects take each decision in isolation and neglect asset integration we build a compound dataset containing the evidence of gneezy and potters 1997 and other replications and structurally estimate both crra plus narrow bracketing and mla together with a mixture model in which we estimate the probability with which each observation is generated by either model our results suggest that the crra model can also accommodate this experimental evidence providing empirical support to our theoretical findings

the information content of implied volatilities and model free volatility expectations evidence from options written on individual stocks abstract we measure the volatility information content of stock options for individual firms using option prices for 149 us firms and the s p 100 index we use arch and regression models to compare volatility forecasts defined by historical stock returns at the money implied volatilities and model free volatility expectations for every firm for 1 day ahead estimation a historical arch model outperforms both of the volatility estimates extracted from option prices for 36 of the firms but the option forecasts are nearly always more informative for those firms that have the more actively traded options when the prediction horizon extends until the expiry date of the options the option forecasts are more informative than the historical volatility for 85 of the firms however at the money implied volatilities generally outperform the model free volatility expectations

predicting volatility in the foreign exchange market measures of volatility implied in option prices are widely believed to be the best available volatility forecasts in this article we examine the information content and predictive power of implied standard deviations isds derived from chicago mercantile exchange options on foreign currency futures the article finds that statistical time series models even when given the advantage of ex post parameter estimates are outperformed by isds isds however also appear to be biased volatility forecasts using simulations to investigate the robustness of these results the article finds that measurement errors and statistical problems can substantially distort inferences even accounting for these however isds appear to be too variable relative to future volatility it is widely believed that the volatility implied in option prices is the market s best estimate of future volatility after all if it were not one could devise a trading strategy that could generate profits by identifying mispriced options the purpose of this article is to investigate the information content and predictive power of volatility implied in options on foreign currencies the paper focuses on options on currency futures traded on the chicago mercantile exchange cme because of the depth and liquidity of cme futures and options traded side by side in the same market implied standard deviations isds allow for clean tests of the predictive power of implied volatilities early studies of the information content of isds have generally found that these contain substantial information for future volatility latane and rendleman 1976 chiras and manaster 1978 and beckers 1981 for example regress future volatility on the weighted implied volatility across a broad sample of chicago board options exchange cboe stocks and find that options contain volatility forecasts that are more accurate than historical measures 1 these studies performed shortly after the 1973 beginning of the cboe option market could only use a relatively short time span and therefore focused on cross sections rather than time series predictions

testing the empirical performance of stochastic volatility models of the short term interest rate i introduce two factor discrete time stochastic volatility models of the short term interest rate to compare the relative performance of existing and alternative empiricial specificattions i develop a nonlinear asymmmetric framework that allows for comparisons of non nested models featuring conditional heteoskedasticity and sensitivity of the volatility process to interest rate levels a new class of stochastic volatility models with asymmetric garch models the existing models are rejected in favor of the newly proposed models because of the asymmetric drift of the short rate and the presence of nonlinearity asymmetry garch and level effects in its volatility i test the predictive power of nested and non nested models in capturing the stochastic behavior of the risk free rate empirical evidence on three six and 12 month u s treasury bills indicates but that two factor stochastic volatility models are better than diffusion and garch models in forecasting the future level and volatility of interest rate changes

expo power utility a flexible form for absolute and relative risk aversion a new utility function which i call expo power is proposed that exhibits decreasing constant or increasing absolute risk aversion and decreasing or increasing relative risk aversion depending on parameter values numerical analysis suggests that the expo power function performs well in incorporating these risk preference structures and that arbitrary risk preference specifications may lead to biased risk response estimates

the causal relationship between electricity consumption and economic growth in the asean countries abstract this paper investigates the causal relationship between electricity consumption and economic growth among the association of south east asian nations asean 4 members namely indonesia malaysia singapore and thailand using modern time series techniques for the period 1971 2002 the results indicate that there is a bi directional causality between electricity consumption and economic growth in malaysia and singapore this means that an increase in electricity consumption directly affects economic growth and that economic growth also stimulates further electricity consumption in the two countries however uni directional causality runs from economic growth to electricity consumption in indonesia and thailand without any feedback effect thus electricity conservation policies can be initiated without deteriorating economic side effects in the two countries

does aggregated returns disclosure increase portfolio risk taking many experiments have found that participants take more investment risk if they see returns less frequently see portfolio level returns rather than each individual asset s returns or see long horizon rather than one year historical return distributions in contrast we find that such information aggregation treatments do not affect total equity investment when we make the investment environment more realistic than in prior experiments previously documented aggregation effects are not robust to changes in the risky asset s return distribution or the introduction of a multi day delay between portfolio choice and return realizations

an extreme value approach to estimating volatility and value at risk this article determines the type of asymptotic distribution for the extreme changes in u s treasury yields the thin tailed gumbel and exponential distributions are strongly rejected against the fat tailed frechet and pareto distributions the empirical results indicate that the volatility of maximal and minimal changes in interest rates declines as time to maturity rises yielding a downward sloping volatility curve for the extremes the article proposes an extreme value approach to estimating value at risk and shows that the statistical theory of extremes provides a more accurate approach for risk management and value at risk var calculations than the standard models

a generalized extreme value approach to financial risk measurement this paper develops an unconditional and conditional extreme value approach to calculating value at risk var and shows that the maximum likely loss of financial institutions can be more accurately estimated using the statistical theory of extremes the new approach is based on the distribution of extreme returns instead of the distribution of all returns and provides good predictions of catastrophic market risks both the in sample and out of sample performance results indicate that the box cox generalized extreme value distribution introduced in the paper performs surprisingly well in capturing both the rate of occurrence and the extent of extreme events in financial markets the new approach yields more precise var estimates than the normal and skewed t distributions

estimating quadratic variation using realized variance this paper looks at some recent work on estimating quadratic variation using realised variance rv that is sums of m squared returns this econometrics has been motivated by the advent of the common availability of high frequency financial return data when the underlying process is a semimartingale we recall the fundamental result that rv is a consistent as m estimator of quadratic variation qv we express concern that without additional assumptions it seems difficult to give any measure of uncertainty of the rv in this context the position dramatically changes when we work with a rather general sv model which is a special case of the semimartingale model then qv is integrated variance and we can derive the asymptotic distribution of the rv and its rate of convergence these results do not require us to specify a model for either the drift or volatility functions although we have to impose some weak regularity assumptions we illustrate the use of the limit theory on some exchange rate data and some stock data we show that even with large values of m the rv is sometimes a quite noisy estimator of integrated variance

portfolio choice and risk attitudes an experiment i introduction suppose an investor is faced with a decision concerning how to allocate financial resources between a risky lottery asset with a higher expected return and an asset with a fixed and guaranteed lower return is the choice of portfolio independent of preferences outside the standard neoclassical model in experiments with financial incentives we study how portfolio choice depends on three well documented behavioral phenomena ambiguity aversion the illusion of control and myopic loss aversion we also investigate whether participants are willing to explicitly pay a small sum of money to indulge such preferences pay for more perceived control less ambiguity or more frequent opportunities to change the portfolio based on feedback about its performance while standard finance theory presumes that investors successfully identify and process information relevant to reaching optimal decisions in recent years a body of empirical evidence suggests that there are systematic departures from this behavior behavioral finance is concerned with psychological influences in financial decision making and markets investors make decisions while trying to stay afloat in a sea of uncertainty when predictability is low people may be prone to unjustified beliefs that may survive and even flourish in such an environment 1 people may resort to rules of thumb on a conscious or subconscious level to the extent that psychological influences are present it is economically important to consider which of these actually affect risk attitudes and portfolio choice a key issue is whether any such influences disappear when monetary incentives are present we pursue a systematic experimental comparison of three of the most prominent behavioral phenomena documented in the literature the illusion of control langer 1975 is concerned with greater confidence in one s predictive ability or in a favorable outcome when one has a higher degree of personal involvement even when one s involvement is not actually relevant ambiguity aversion ellsberg 1961 is the desire to avoid unclear circumstances even when this will not increase the expected utility myopic loss aversion benartzi and thaler 1995 combines loss aversion kahneman and tversky 1979 tversky and kahneman 1992 and a tendency to evaluate outcomes frequently this combination leads investors to be more willing to invest a greater proportion of their portfolio in risky assets if they evaluate their investments less frequently we show that these phenomena are present with monetary incentives and also investigate whether people are willing to pay money to accommodate such preferences or whether they are closer to the rational model when incentives are present with the procedure we chose the willingness to actually pa for such preferences depends on the preference the great majority of investors pay for less ambiguity or more frequent feedback investment opportunities but fewer than 10 pay to roll a determinative die themselves 2 we then examine how the preferences between lotteries in the different treatments affect portfolio choice we have participants allocate their investment capital between an asset with a sure return and a risky asset with a higher expected rate of return in fact there is very little variation in investment behavior across any of the illusion of control or ambiguity aversion treatments in contrast the results found in previous experimental studies of myopic loss aversion suggest that participants invest less in their preferred option the main conclusion we draw from these findings is that the relation between which procedure or lottery people prefer and how much they are willing to actually invest in this lottery is not trivial at all people are generally unwilling to pay even small amounts of money to indulge the illusion of control and it does not influence their portfolio choice people are generally willing to pay money for less ambiguity but having less ambiguity does not influence their portfolio choice finally in some cases people are willing to pay money for more frequent feedback and opportunities to change their portfolio but again previous studies have shown that people invest less with this additional information and greater flexibility

electricity consumption and economic growth in nigeria a revisit of the energy growth debate abstract this paper examines the dynamic causal linkages between electricity consumption and economic growth in nigeria within a trivariate vecm for the period 1971 2011 the paper obviates the variable omission bias and the use of cross sectional techniques that characterise most existing studies the results show that there is a distinct causal flow from electricity consumption to economic growth both in the short run and in the long run this finding supports the electricity led growth hypothesis that has been conjectured in the literature the paper urges policy makers in nigeria to implement policies which enhance the generation and consumption of electricity in order to engineer economic growth appropriate monetary policies must also be put in place in order to moderate inflation thus enhancing growth

electricity consumption and economic growth in transition countries a revisit using bootstrap panel granger causality analysis abstract the purpose of this paper is to revisit the granger causal relationship between electricity consumption and economic growth for 15 transition economies for the period 1975 2010 using a bootstrap panel causality approach that allows for both cross sectional dependency and for heterogeneity across countries applying this approach we found a unidirectional causality running from electricity consumption to economic growth only in belarus and bulgaria from economic growth to electricity consumption in the czech republic latvia lithuania and the russian federation bidirectional causality only in ukraine while no granger causality in any direction in albania macedonia moldova poland romania serbia slovak republic and slovenia these results show that there is a limited support for the electricity led growth hypothesis nevertheless these different findings provide important implications for energy strategies and policies for transition countries

analyzing energy consumption and gdp nexus using maximum entropy bootstrap the case of turkey abstract we employ a maximum entropy bootstrap based framework to analyze the energy consumption and real gdp nexus between 1950 and 2006 in turkey our approach provides more accurate inference in comparison to conventional hypothesis tests based on asymptotic theory it also avoids preliminary testing and shape destroying transformations such as differencing and detrending the bivariate analysis as well as a multivariate framework controlling for exchange rate and oil prices shows no evidence of a causal relation our results are robust to both the number of lags and the time period chosen we also perform a cointegration analysis of the data and point out a common misunderstanding in the literature regarding the concept of causation

hydroelectricity consumption and economic growth nexus evidence from a panel of ten largest hydroelectricity consumers abstract this paper explores the long run and causal relationships between hydroelectricity consumption and economic growth for a panel of the 10 largest hydroelectricity consuming countries over the period 1965 2012 the countries include brazil canada china france india japan norway sweden turkey and the u s a using the bai and perron 2003 9 tests for cointegration the results indicate that real gdp per capita and hydroelectricity consumption per capita appear to be cointegrated around a broken intercept granger causality results from a nonlinear panel smooth transition vector error correction model suggest different results depending on the regimes which we identified based on structural break tests the test identified three breaks at 1988 2000 and 2009 for the pre 1988 period there is evidence of unidirectional causality running from real gdp per capita to hydroelectricity per capita in both the short and long run over the post 1988 period there exists evidence of bidirectional causality between hydroelectricity energy consumption per capita and real gdp per capita in both the short and the long run the results imply the existence of a feedback hypothesis with both hydroelectricity consumption and growth promoting each other in more recent periods as the importance of hydroelectricity as a renewable energy has become more prominent

electricity consumption growth nexus the case of malaysia abstract the goal of this paper is to model the relationship between electricity consumption and real gross domestic product gdp for malaysia in a bivariate and multivariate framework we use time series data for the period 1971 2003 and apply the bounds testing approach to search for a long run relationship our results reveal that electricity consumption real gdp and price share a long run relationship the results of the autoregressive distributed lag ardl estimates of long run elasticity of electricity consumption on gdp are found to be around 0 7 and statistically significant finally in the short run the results of the causality test show that there is a unidirectional causal flow from electricity consumption to economic growth in malaysia from these findings we conclude that malaysia is an energy dependent country leading us to draw some policy implications this paper adds support and validity thus reducing the policy makers concern on the ambiguity of the electricity and growth nexus in malaysia

myopic prospect theory vs myopic loss aversion how general is the phenomenon abstract individuals often act myopically in evaluating sequences of investment opportunities for loss averse decision makers myopia causes the sequence to look less attractive and might result in rejecting an investment program that would have been accepted otherwise in this paper we argue that the relation between myopia and the attractiveness of a lottery sequence is less general than previously suggested in the literature we extend the concept myopic loss aversion to myopic prospect theory predicting that for specific risk profiles myopia will not decrease but increase the attractiveness of a sequence we support our theoretical predictions by experimental evidence

the relationship between electricity consumption electricity prices and gdp in pakistan abstract this study analyzes the relationship among electricity consumption its price and real gdp at the aggregate and sectoral level in pakistan using annual data for the period 1960 2008 the study finds the presence of unidirectional causality from real economic activity to electricity consumption in particular growth in output in commercial manufacturing and agricultural sectors tend to increase electricity consumption while in residential sector growth in private expenditures is the cause of rising electricity consumption the study concludes that electricity production and management needs to be better integrated with overall economic planning exercises this is essential to avoid electricity shortfalls and unplanned load shedding

how much have electricity shortages hampered china s gdp growth abstract based on an econometric analysis of the annual growth data for china s gdp and electricity generation from 1953 to 2010 we find that electricity generation growth granger causes gdp growth but not vice versa we also find that the gdp elasticity of electricity generation is about 0 6 implying that a 1 increase in china s electricity generation growth would increase gdp growth by 0 6 while deng s reform raised china s gdp growth rate by about 5 per year it did not alter the gdp elasticity of electricity generation hence an obvious strategy to promote china s economic growth would be accelerating electricity generation expansion rapidly adding thermal generation units however could have large scale adverse environmental impacts we therefore support china s 2011 five year plan which calls for expanding investments in renewable energy conservation and energy efficiency as well as improving china s integrated electricity planning and cost based pricing decisions

myopic loss aversion information feedback vs investment flexibility we experimentally disentangle the effect of information feedback from the effect of investment flexibility on the investment behavior of a myopically loss averse investor our findings show that varying the information condition alone suffices to induce behavior that is in line with the hypothesis of myopic loss aversion