speculative investor behavior and learning as traders learn about the true distribution of some asset s dividends a speculative premium occurs as each trader anticipates the possibility of reselling the asset to another trader before complete learning has occurred small differences in prior beliefs lead to large speculative premiums during the learning process this phenomenon helps explain a paradox concerning the pricing of initial public offerings the result casts light on the significance of the common prior assumption in economic models

the labor market effects of introducing unemployment benefits in an economy with high informality abstract unemployment benefit systems are nonexistent in many developing economies introducing such systems poses many challenges which are partly due to the high level of informality in the labor markets of these economies this paper studies the consequences on the labor market of implementing an unemployment benefit system in economies with large informal sectors and high flows of workers between formality and informality we build a search and matching model with endogenous destruction on the job search and intersectoral flows where agents in the economy decide optimally whether or not to formalize jobs we calibrate the model for mexico and show that the introduction of an unemployment benefit system where workers contribute when employed in the formal market and collect benefits when they lose their jobs even if they obtain informal jobs can lead to an increase in formality in the economy while also producing small increases in unemployment the exact impact of incorporating such benefits depends on the relative strength of two opposing effects the generosity of the benefits and the level of the contributions that finance those benefits we also show important policy complementarities with other interventions in the labor market in particular combining the unemployment benefit program with policies that reduce the cost of formality such as lower employment taxes and firing costs can produce greater decreases in informality and lower impacts on unemployment than when the program is applied in isolation

short sales are almost instantaneously bad news evidence from the australian stock exchange this paper investigates the market reaction to short sales on an intraday basis in a market setting where short sales are transparent immediately following execution we find a mean reassessment of stock value following short sales of up to 0 20 percent with adverse information impounded within fifteen minutes or twenty trades short sales executed near the end of the financial year and those related to arbitrage and hedging activities are associated with a smaller price reaction trades near information events precipitate larger price reactions the evidence is generally weaker for short sales executed using limit orders relative to market orders this article analyzes the intraday price behavior surrounding short sales executed using market and limit orders within a transparent setting a number of recent studies have focused on daily or monthly stock price behavior surrounding short selling activity in u s markets e g senchack and starks 1993 figlewski and webb 1993 conrad 1994 hanley and seyhun 1994 asquith and meulbroek 1996 and dechow et al 1997 this research has been motivated by the continued interest of market regulators i n short selling activity and the controversy surrounding the desirability restrictions and disclosure requirements related to short selling see janvey 1992 and ramsay 1993 in particular several studies such as that by figlewski and webb 1993 have examined the relationship between short positions and subsequent abnormal returns without finding a strong relationship asquith and meulbroek 1996 in contrast focus on firms with large short positions and find a strong and consistent relationship dechow et al 1997 find a correlation between short selling strategies and strategies based on fundamental analysis these results are consistent with short sellers being able to identify

migration and job search in a dualistic economy abstract by introducing optimal search behavior a la stigler into a todarian dual sector urban economy the probability of urban formal sector entry as a function of the rural urban migrants optimal search intensity is derived and its implications studied

efficiency in a search and matching economy with a competitive informal sector we consider a dual labor market with a frictional formal sector and a competitive informal sector we show that the size of the informal sector is generally too large compared to the optimal allocation of the workers it follows that our results give a rationale to informality reducing policies

assessing the short term revenue impacts of residential pv systems on electricity customers retailers and network service providers abstract falling costs and supportive government policies have seen remarkable growth in residential photovoltaic systems in jurisdictions around the world while there have been detailed studies of the financial attractiveness of pv for home owners under different policy and retail market arrangements there has been less consideration of the impacts of such systems on some other key industry participants in this paper we undertake an investigation of the annual short term revenue impacts of pv systems for those households installing them for their electricity retailers and network service providers nsps and for all electricity customers more in general in the australian state of nsw we use actual half hourly pv generation and electricity consumption for 80 households in sydney to estimate the real world impacts of a range of former current and possible future pv policy and retail tariff arrangements including gross and net feed in tariffs fit we found that the short term revenue impacts differ significantly for different commercial arrangements and are highly variable and largely driven by the pv performance and its match with household consumption patterns results highlight that current net metering policies in australia with low net fit rates may provide only moderate revenue incentives to households yet quite adverse revenue impacts on nsps and retailers depending on the level of pv export while nsp short term revenue losses will likely involve increasing electricity tariffs in the longer term losses for retailers may add risks to the profitability of household customers with pv the challenge for policy makers is to facilitate socially valuable pv deployment whilst appropriately managing the impacts on all key electricity industry stakeholders

making the case for grid connected photovoltaics in brazil abstract in the developed world grid connected photovoltaics pvs are the fastest growing segment of the energy market from 1999 to 2009 this industry had a 42 compound annual growth rate from 2009 to 2013 it is expected to grow to 45 and in 2013 the achievement of grid parity when the cost of solar electricity becomes competitive with conventional retail including taxes and charges grid supplied electricity is expected in many places worldwide grid connected pv is usually perceived as an energy technology for developed countries whereas isolated stand alone pv is considered as more suited for applications in developing nations where so many individuals still lack access to electricity this rationale is based on the still high costs of pv when compared with conventional electricity we make the case for grid connected pv generation in brazil showing that with the declining costs of pv and the rising prices of conventional electricity urban populations in brazil will also enjoy grid parity in the present decade we argue that governments in developing nations should act promptly and establish the mandates and necessary conditions for their energy industry to accumulate experience in grid connected pv and make the most of this benign technology in the near future

does the energy efficiency paradox exist technological progress and uncertainty we explain why firms may choose not to undertake investments inenergy saving technologies that appear profitable from a net presentvalue perspective as future technological advances are inherentlyuncertain and investments in new technology are at least partly irreversible it may pay to postpone investments in energy savingand wait for the arrival of improved varieties this insight casts doubton the existence of so called low hanging fruits in energy saving although we do not wish to deny that organisational failures may alsobe important failure to appreciate the underlying stochasticity oftechnological progress may obscure the insight that there is value inwaiting and costs involved in terminating the option to invest theappetite for low hanging fruits will be less when these costs areincorporated in the analysis we demonstrate that the effect of thearrival rate of new technologies on the adoption lag for a rational firmis ambiguous the same holds for the effect of the expected jump inefficiency of new technologies government policies aimed at enhancingthe adoption of new technologies through stimulation of r d maytherefore be counterproductive

equilibrium urban unemployment in developing countries is migration the culprit this paper challenges the prediction of todaro s model of rural to urban migration that an increase in urban employment increases urban unemployed it is shown that if the urban demand for labor is isoelastic or inelastic creation of urban jobs causes urban unemployment to decline and urban to rural migration to take place moreover urban job creation always reduces the rate of urban unemployment the paper then remodels the urban job search process and derives the result that equilibrium urban unemployment would not vanish even if the urban rural wage gap were eliminated

do more jobs in the modern sector increase urban unemployment abstract this note considers the effect of an increase in the rate of urban job creation on migration and urban unemployment the different results obtained when the issue was previously analyzed are reconciled the period of time allowed for adjustment and the specification of the migration function are crucial in explaining the different results

information flow expectations and job search rural to urban migration process in india abstract probabilistic migration models assume that search for urban jobs is entirely an urban based activity and that employment in free entry activities is a transitional phase during which migrants are actively searching for formal sector employment this paper tests the empirical validity of these assumptions using data collected by the author in a sample survey in delhi in 1975 76 on 1400 migrants from rural areas the evidence indicates that the migration process postulated in probabilistic models is not realistic in the case of delhi over one half of the sample had moved to delhi after lining up specific jobs a sizeable proportion expected to enter on arrival activities generally considered to be characterized by freedom of entry and the majority of entrants into free entry activities did not search for alternative employment and were engaged in the same activities at the time of the survey

energy conservation investment do consumers discount the future correctly we argue that the apparently high discount rates attributed to investors making energy conservation investments are not irrational or the result of some market failure rather they may result from an investor recognizing that many conservation investments entail substantial sunk costs in the presence of these costs and uncertainty over future conservation savings consumers should use a higher hurdle rate for investment than if there were no uncertainty simulations suggest that the hurdle rate should be about four times greater than the standard rate an implication of our model is that tax subsidies for the purchase of conservation capital are likely to be ineffective we discuss alternative policy approaches which are more likely to increase energy efficient investment namely mandatory efficiency standards and energy taxes

job search and mobility in developing countries theory and policy implications abstract a labor market model is developed in which the formal sector is characterized by search frictions whereas the informal sector is competitive we show that there exists a unique steady state equilibrium in this dual economy we then consider different policies financed by a tax on firms profits we find that reducing the unemployment benefit or the firms entry cost in the formal sector induces higher job creation and formal employment reduces the size of the informal sector but has an ambiguous effect on wages we also find that an employment wage subsidy policy and a hiring subsidy policy have different implications in particular the former increases the size of the informal sector while the latter decreases it

residential energy efficiency and distributed generation natural partners or competition abstract residential energy efficiency and distributed generation seem to be natural partners in our journey towards a more sustainable energy future a growing range of energy efficient consumer technologies and extraordinary declines in photovoltaics system prices has seen household electricity demand fall whilst a growing proportion of the remaining load is provided by household self generation australia is a particularly interesting example of these developments with around 15 of households now possessing a pv system while per capita household demand has also fallen markedly however existing retail electricity tariffs and regulatory arrangements can create mixed incentives for households contemplating both pv and energy efficiency options and for their network service providers this is certainly the case in australia with net metering arrangements that value self consumption of pv far more than pv exports to the grid there are also complex benefits for the electricity network created by these household energy resources that can be significant in this paper we use real household load and pv data from sydney households to model the potential implications of existing electricity tariff arrangements on the financial attractiveness of pv and energy efficiency we model these options separately and in combination for both households implementing these options and their network service providers our results highlight how inappropriate tariffs may well adversely impact on the value that the combination of energy efficiency and pv offers not only to households but also to their network service providers and suggest ways that such impacts might be ameliorated by acknowledging the benefits that these resources can offer to the electricity network

on the quantification of the network capacity deferral value of distributed generation this paper presents an approach to the quantification of the distribution network capacity deferral value of distributed generation dg besides different technical benefits such as reliability and power quality improvement there are a number of economic benefits related to dg the most important of which being the end user electricity bill reduction capability however since the onset of the implementation of these technologies the potential of dg to defer investments on distribution wires and transformers was soon realized to the point that non wire solutions are now considered as an alternative to network upgrades in this work a first approximation to the capacity deferral benefits brought about by dg is obtained such approach can be the starting point towards the development of a framework of credits to the owners of dg that fully and fairly recognize the deferral benefits provided to the utility the financial performance of investments on these important technologies can be then improved thus broadening dg as a viable market alternative for customers and utilities

investment in technological innovations an option pricing approach abstract this paper develops a model of the optimal investment strategy for a firm confronted with a sequence of technological innovations we incorporate many of the most important characteristics of real world technology markets for example we permit innovations to be stochastic in their arrival times and their profitability we also incorporate learning so that firms adopting current innovations become better able to benefit from future innovations the model yields four distinct investment strategies the model is then used to predict actual firm policy these implications are discussed and compared with observed firm behavior

shadow economies at times of banking crises empirics and theory this paper investigates the response of the shadow economy to banking crises our empirical analysis based on a large sample of countries suggests that the informal sector is a powerful buffer which expands at times of banking crises and absorbs a large proportion of the fall in official output to rationalise our evidence we build a dynamic stochastic general equilibrium model which accounts for financial and labour market frictions and for nominal rigidities in line with the empirical literature on the shadow economy we assume that in the informal sector access to external finance is limited and the production technology is relatively more labour intensive following a banking shock in the official sector the model predicts a large negative transmission to the unofficial economy that substantially dampens the overall effect of the shock

density social networks and job search methods theory and application to egypt we first develop a theoretical model in which individuals are embedded within a network of social relationships we show that conditional on being employed the probability to find a job through social networks relative to other search methods increases and is concave with the size of the network the effects are stronger for the uneducated there is however a critical size of the network above which this probability decreases we then test empirically these theoretical findings for egypt using the 1998 labor market survey the empirical evidence supports the predictions of our theoretical model

environmental taxation employment and public spending in developing countries this paper investigates the consequences of environmental tax reforms for unemployment and welfare in the case of developing countries with a large informal sector rural urban migration and three different assumptions about public spending 1 as part of a revenue neutral policy 2 fixed and 3 varying endogenously under the indexation of unemployment benefits and informal sector income that give rise to a double dividend a lower level of public spending is associated with a smaller negative impact on the after tax income of households and a higher increase in employment these policies however still lead to a reduction in social welfare even more so in the case of endogenous public spending although it is associated with a higher increase in employment and a smaller reduction in private sector incomes the model implies that complementary policy in terms of lower public spending is unlikely to be socially acceptable and does not support the case for a green tax reforms in developing countries

special repo rates this article provides the causes and symptoms of special repo rates in a competitive market for repurchase agreements a repo rate is in effect an interest rate on loans collateralized by a specific instrument a special is a repo rate significantly below prevailing market riskless interest rates this article shows that specials can occur when those owning the collateral are inhibited whether from legal or institutional requirements or from frictional costs from supplying collateral into repurchase agreements specialness increases the equilibrium price for the underlying instrument by the present value of savings in borrowing costs associated with the repo specials this article characterizes competitive repurchase or repo markets and the equilibrium relationship between repo rates and the underlying cash market prices repurchase markets are often called financing markets since they are effectively vehicles for collateralized borrowing that are often used to finance the purchase of the underlying collateral this article provides causes and effects of specials meaning specific repo rates significantly below prevailing market interest rates for loans of similar maturity and credit risk the example of united states treasury instruments is emphasized because of the extensive use of the treasury repo market as a means of hedging against or speculating on changes in u s interest rates and because of the high incidence of specials in treasury repo rates numerous specific instru

brain drain informality and inequality a search and matching model for sub saharan africa abstract this paper revisits the effect of brain drain on development and inequality using a two sector model with formal and informal labor markets contrary to existing studies we use a search and matching setting that allows to endogenize the employment structure and the wage differentials between different skill groups in the same sector and between workers with identical skills employed in different sectors theoretically the brain drain induces ambiguous welfare effects for those left behind as the potential loss gain depends on the parameters of the model we thus parameterize our model on 33 sub saharan african countries and produce comparative results for each of them we find that skilled emigration induces heterogeneous welfare losses for the low skilled population the size of these losses varies between 0 2 and 8 and is influenced by the parameters of the production and education technologies the results are fairly robust to identifying assumptions to the inclusion of technological externalities and to the endogenization of training decisions

short sale restrictions and market reaction to short interest announcements according to the diamond verrecchia hypothesis if increases in short interest are correlated with information that is not yet public they should precipitate a price adjustment stocks with unexpected increases in short interest are found to generate statistically significant but small negative abnormal returns for a short period around the announcement date when the sample is divided into stocks with and without tradable options nonoptioned stocks closely mimic these results but the optioned stocks do not in a cross sectional analysis of individual firms the short term negative abnormal returns are found to be 1 more negative the higher the degree of unexpected short interest and 2 less negative if the firm has tradable options

formal measures of the informal sector wage gap in mexico el salvador and peru using comparable micro level data from three countries we ask what type of person works in the informal sector and whether informal workers earn lower wages than observationally equivalent workers in the formal sector the characteristics of informal workers are similar across countries surprisingly when we control for these personal characteristics we find a significant wage premium associated with formal employment in el salvador and peru but a premium associated with work in the informal sector in mexico a model of endogenous selection offers little help in explaining the differences in wage patterns the research casts doubt on the received wisdom that the informal sector always and everywhere is a poorly paid but easily entered refuge for those who have no other employment opportunities this abstract was borrowed from another version of this item

ownership structure limits to arbitrage and stock returns evidence from equity lending markets we examine how institutional ownership structure gives rise to limits to arbitrage through its impact on short sale constraints stocks with lower more concentrated short term and less passive ownership exhibit lower lending supply higher costs of shorting and higher arbitrage risk these constraints limit the ability of arbitrageurs to take short positions and delay the correction of mispricing stocks with more concentrated ownership exhibit smaller announcement day reactions larger post earnings announcement drift and an additional negative abnormal return of 0 47 in the week following a positive shorting demand shock received june 16 2014 accepted june 8 2016 by editor laura starks

informality over the life cycle abstract in developing countries informality is mainly concentrated among younger and older workers and low skilled workers in this study we propose a dual labor market theory that highlights how frictions and taxation in the formal sector and educational choices interact to shape the informality rate over the life cycle we develop a life cycle model with search frictions skill heterogeneities and endogenous educational choices we carry out a numerical analysis and show that our model reproduces remarkably well the life cycle patterns of informality non employment and formal employment in argentina we analyze several public policies and show that an educational grant reduces both informality and non employment and may be fully financed by the extra tax revenues generated by the increase in formal employment and wages lowering taxes may achieve similar results but is detrimental to the government budget despite increasing the base on which they are levied

unemployment vs mismatch of talents reconsidering unemployment benefits we develop an equilibrium search matching model with risk neutral agents and two sided ex ante heterogeneity unemployment insurance has the standard effect of reducing employment but also helps workers to get a suitable job we show through calibrations how the mere difference on unemployment insurance when countries experience a common skilled biased technological shock may result in differences in unemployment productivity growth and wage inequality these results are consistent with the contrasting performance of the labour market in europe and the united states in the last twenty five years the model is used to address some political economy issues

shadow economies size causes and consequences using various methods the size of the shadow economy in 76 developing transition and oecd countries is estimated average size varies from 12 percent of gdp for oecd countries to 23 percent for transition countries and 39 percent for developing countries increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy especially in oecd countries according to some findings corruption has a positive impact on the size of the shadow economy and a growing shadow economy has a negative effect on official gdp growth

labor market institutions taxation and the underground economy abstract the paper aims at qualifying the links between labor market institutions taxation tax monitoring and underground economic activity the proposed model is a continuous time matching model with one commodity roduced either overground or underground underground economic activity arises because of partial compliance with regulations and tax contributions imposed by the government vacancies and workers search are directed at a specific labor market workers are heterogenous in the subjective cost they face when operating in the irregular sector analytical and numerical investigations suggest that interactions between regular and irregular activities can affect standard results of policy interventions in that respect the paper supports the view that policies aiming at increasing individuals benefits of participating in the regular sector are more desirable than a deterrence policy

modelling the informal sector formally abstract the theoretical characterization of formal informal sector dualism by labor market dualism is integrated with its empirical characterization by size dualism by supposing that the minimum formal sector wage is only enforced for firms greater than a certain size a firm s size varies directly with the talent of its enterpreneur manager and the choice between formal and informal sector entrepreneurship is determined endogenously it is then shown that the size gap between the smallest formal sector firm and largest informal sector firm varies directly with the formal informal sector wage differential which in turn is shown as expected to increase the further is the minimum wage above the market clearing wage the comparative statics of changes in the size of the firm above which the minimum wage is enforced are also examined

contractual dualism market power and informality we develop a search theoretic model of contractual dualism in formal and informal labour markets the model i provides the micro underpinnings for endogenous determination of employer market power in the formal and informal sectors ii offers a unified and coherent set up whereby a host of salient features of developing country labour markets can be explained together and iii places for the first time the stiglerian prescription of the optimal unemployment minimising minimum wage in the broader context of labour markets where formal job creation is costly where employer market power is endogenous and where formal employment informal employment and unemployment coexist

informal sector the credit market channel abstract we build a model of firms choice between formality and informality complying with costly registration procedures allows the firms to benefit from key public goods enforcement of property rights and contracts that make the participation in the formal credit market possible in a moral hazard framework with credit rationing their decision is shaped by the interaction between the cost of entry into formality and the relative efficiency of formal versus informal credit mechanisms and their related institutional arrangements the model is consistent with existing stylized facts on the determinants of informality

the private and public economics of renewable electricity generation generating electricity from renewable sources is more expensive than conventional approaches but reduces pollution externalities analyzing the tradeoff is much more challenging than often presumed because the value of electricity is extremely dependent on the time and location at which it is produced which is not very controllable with some renewables such as wind and solar likewise the pollution benefits from renewable generation depend on what type of generation it displaces which also depends on time and location without incorporating these factors cost benefit analyses of alternatives are likely to be misleading other common arguments for subsidizing renewable power green jobs energy security and driving down fossil energy prices are unlikely to substantially alter the analysis the role of intellectual property spillovers is a strong argument for subsidizing energy science research but less persuasive as an enhancement to the value of installing current renewable energy technologies

informality and the labor market effects of financial crises abstract we provide evidence based on a large sample of countries on the effects of financial crises on key labor market indicators including official and unofficial employment unemployment and the participation rate crises are followed by a drop in the official market participation rate and by an increase in informal employment these responses are strongly persistent empirical results are then interpreted with a dsge model which accounts for informality and for financial and labor market frictions in this framework the informal sector acts as a buffer which absorbs workers in bad times and vice versa our simulations suggest the informal sector also is a crisis amplifier for the official economy for a given financial shock the ensuing contraction in the official economy is deeper and more persistent the larger the initial size of the unofficial sector this implies that in less developed economies financial crises cause a relatively stronger reallocation of inputs towards less efficient sectors expose a larger fraction of the population to the adverse effects of informality cause a sharper deterioration of public finances limiting governments ability to supply public goods and to engage in countercyclical fiscal policies

an evaluation of the installation of solar photovoltaic in residential houses in malaysia past present and future abstract this paper examines solar energy development in malaysia particularly in relation to the installation of solar photovoltaic pv in residential houses it analyzes the past activities related to solar energy in malaysia in terms of research and developments r ds the implementations used as well as the national policies for the past 20 years which have pushed the installation of pv in the country the feed in tariff fit scheme is discussed showing comparative cost benefit analysis between the pv installation in houses in the united kingdom uk and malaysia and with other investment schemes available in malaysia to investigate the awareness of renewable energy policies and incentives a preliminary survey of the public opinion in malaysia has been carried out and an evaluation of public willingness to invest in the fit scheme by installing the pv on their houses is presented the cost benefit analysis shows that the proposed fit programme is capable of generating good return on investment as compared to the one in the uk but the return is lower than other investment tools the survey suggests that most malaysians are unaware of the government s incentives and policies towards renewable energies and are not willing to invest in the fit scheme

design of incentive programs for accelerating penetration of energy efficient appliances abstract incentives are policy tools that sway purchase retail stocking and production decisions toward energy efficient products incentives complement mandatory standards and labeling policies by accelerating market penetration of products that are more energy efficient than required by existing standards and by preparing the market for more stringent future mandatory requirements incentives can be directed at different points in the appliance s supply chain one point may be more effective than another depending on the technology s maturity and market penetration this paper seeks to inform future policy and program design by categorizing the main elements of incentive programs from around the world we identify advantages and disadvantages of program designs through a qualitative overview of incentive programs worldwide we find that financial incentive programs have greater impact when they target highly efficient technologies with a small market share and that program designs depend on the market barriers addressed the target equipment and the local market context no program design is inherently superior to another the key to successful program design and implementation is a thorough understanding of the market and identification of the most important local obstacles to the penetration of energy efficient technologies

polices for increasing energy efficiency thirty years of experience in oecd countries energy efficiency improvement was an important phenomenon in the global energy balance over the past 30 years without energy efficiency improvements the oecd nations would have used approximately 49 more energy than was actually consumed as of 1998 this paper first reviews energy intensity trends for the major oecd nations since 1973 considering how much of the overall reduction in e gdp was due to energy efficiency improvement and how much was due to structural change the bulk of the paper examines the energy efficiency policies and programs adopted in japan united states and western europe commenting on their effectiveness and energy savings impacts where possible the paper also reviews the energy efficiency policies and programs adopted in california this experience shows that well designed policies can result in substantial energy savings as demonstrated in the united states where nine specific policies and programs reduced primary energy use in 2002 by approximately 11 substantial energy savings also occurred in japan some european countries and in the electricity sector in california

the economic effect of electricity net metering with solar pv consequences for network cost recovery cross subsidies and policy objectives abstract net metering is commonly known as a practice by which owners of distributed generation dg units may offset their electricity consumption from the grid with local generation the increasing number of prosumers consumers that both produce and consume electricity with solar photovoltaic pv generation combined with net metering results in reduced incomes for many network utilities worldwide consequently this pushes utilities to increase charges per kw h in order to recover costs for non pv owners this could result into inequality issues due to the fact that also non pv owners have to pay higher chargers for their electricity consumed to make up for netted costs of pv owners in order to provide insight in those inequality issues caused by net metering this study presents the effects on cross subsidies cost recovery and policy objectives evolving from different applied netmetering and tariff designs for a residential consumer eventually this paper provides recommendations regarding tariffs and metering that will result in more explicit incentives for pv instead of the current implicit incentives which are present to pv owners due to net metering

connecting two markets an equilibrium framework for shorts longs and stock loans abstract we analyze a reduced form framework for understanding the equity loan market s impact on share prices we show that hard to borrow stocks will have distinct return patterns responding more to shocks in the supply of shares available and to changes in the heterogeneity of investor beliefs than other stocks we conduct two empirical tests in which we find strong support for these equilibrium predictions in our first test we take advantage of a tax driven exogenous shock to share loan supply and find that when supply is reduced around dividend record dates prices of hard to borrow stocks increase 1 1 while prices of easy to borrow stocks are unaffected in our second test we find that hard to borrow stocks have 4 8 lower three month returns than other stocks with negative returns concentrated in stocks with high heterogeneity in investor beliefs thus we extend the diether malloy and scherbina 2002 result that stocks with a greater dispersion of investor beliefs have lower returns

profitability analysis of grid connected photovoltaic facilities for household electricity self sufficiency abstract spain exhibits a high level of energy dependence and has significant solar energy resources these two facts have given rise to the prominence that renewable energy particularly solar photovoltaic technology has enjoyed in recent years supported by a favorable regulatory framework currently the spanish government is providing new ways in energy policy to enhance and accelerate the development of low power photovoltaic generation facilities for self consumption by introducing energy policies for feed in payments of surplus electricity such facilities are an example of distributed electrical generation with important benefits for the environment and the rest of the electrical system because when properly managed they can help improve the system s stability and reduce overall losses by analyzing household demand and solar photovoltaic energy resources the profitability of such facilities is considered in this article taking into account the technical and economic impact of storage systems and proposing models for feed in payments of surplus electricity in an attempt to assess whether this method of electricity generation versus the method of conventionally supplied power from a grid at a regulated tariff can rival each other economically in terms of parity

the informational effects of restrictions on short sales some empirical evidence in a world of heterogeneous investors a competitive financial market has two major functions first it is the mechanism by which ownership of the existing supply of risky assets is distributed among investors this is the role which is analyzed in detail by the standard capital asset pricing model capm and its many extensions the second important market function is to aggregate the diverse information held by different investors into a single price most versions of the capm eliminate the information aggregation function by assuming that investors hold homogeneous beliefs with respect to the probability distribution of asset returns exceptions which deal with some aspects of the problem are lintner 7 grossman 4 grossman and stiglitz 5 and figlewski 1 3

short interest explanations and tests cross sectional and time series tests are performed to explain levels and changes in short interest explanatory variables and tests are chosen based on tax arbitrage and speculative reasons for going short short interest is found to follow a seasonal pattern that is weakly consistent with tax based trading stocks with high betas and the existence of convertible securities or options tend to have higher levels of short interest which is con sistent with arbitrage efforts for firms with traded options there is a positive association between the month to month changes in option open interest and short interest prior months returns and changes in short interest are positively related but there is no rela tionship between changes in short interest and returns in the subsequent month

on the job search in a labor market model ex ante choices and ex post outcomes abstract this paper builds a multi sector labor market model including wage dualism open unemployment underemployment on the job search and expected wage equalization the innovative feature of this model is the distinction between the ex ante allocation of the labor force among search strategies and the ex post allocation of the labor force among labor market outcomes among the findings are more efficient on the job search lowers the equilibrium unemployment rate in a rational expectations equilibrium the average rural and urban wages will not be equal modern sector enlargement may leave labor market conditions in one of the sectors unchanged even when wages and employment in that sector are fully flexible

quantifying the financial impacts of net metered pv on utilities and ratepayers abstract deployment of customer sited photovoltaics pv in the united states has expanded rapidly in recent years driven by falling pv system prices the advent of customer financing options and various forms of policy support at the federal state and local levels with the success of these efforts heated debates have surfaced in a number of u s states about the impacts of customer sited pv on utility shareholders and ratepayers we performed a scoping analysis using a financial model to quantify the financial impacts of customer sited pv on utility shareholders and ratepayers and to assess the magnitude of these impacts under alternative utility conditions we find that customer sited pv generally reduces utility collected revenues greater than reductions in costs leading to a revenue erosion effect and lost future earnings opportunities we also find that average retail rates increase as utility costs are spread over a relatively smaller sales base we analyze these results under various assumptions about utility operating and regulatory environments and find that these impacts can vary greatly depending upon the specific circumstances of the utility based on this analysis we highlight potential implications for policymakers and identify key issues warranting further analysis

on the todaro paradox this paper presents a version of the harris todaro model in which the rural labour market is characterised by monopsonistic behaviour it is shown that the todaro paradox i e that the creation of jobs in the urban sector actually increases urban unemployment does not hold if the urban employed outnumber the urban unemployed the latter is the rule in all ldcs

taxes inequality and the size of the informal sector abstract in this note we develop a simple heterogeneous agent model with incomplete markets to explain the prevalence of a large low productivity informal sector in developing countries in our model taxes levied on formal sector agents are used to finance the provision of a productive public infrastructure which creates a productivity premium from formalization our model offers endogenous differentiation of rich and poor countries complete formalization is an equilibrium only in countries with the appropriate initial conditions we discuss the existence of this equilibrium and highlight the ambiguous effect of taxes

spatial mismatch in search equilibrium we construct a search equilibrium model for a city with central and suburban labor markets that is consistent with the set of empirical regularities commonly associated with the spatial mismatch hypothesis a higher rate of unemployment for central city residents than suburban residents a higher job vacancy rate for suburban firms and reverse commuting and higher suburban wages the effectiveness and welfare implications of public policy programs that might be used to remedy the underlying mismatch are examined

are small scale grid connected photovoltaic systems a cost effective policy for lowering electricity bills and reducing carbon emissions a technical economic and carbon emission analysis this research discusses findings from technical simulations and economic models of 1kw p and 3kw p grid connected photovoltaic pv systems supplying a rural home electricity load in parallel with the electricity network in western australia wa the technical simulations are based on electricity billing consumption monitoring an energy audit data combined with 15min interval load and pv system performance for commercially available technologies and balance of system components using long term meteorological input data the economic modelling uses 2010 market prices for capital costs operational costs electricity tariffs subsidies and is based on discounted cash flow analyses which generate a final net present value npv for each system against network electricity costs in australian dollars aud over a 15 year investment horizon the results suggest that current market prices generate a negative npv a net private loss even with the current government subsidies which lead to higher home electricity costs than conventional network electricity use additionally the private costs of carbon emission mitigation aud tco 2 e 1 for the grid connected pv system simulations and models were around aud 600 700 tco 2 e 1 a particularly expensive option when compared to existing large scale renewable energy mitigation activities

comparative economic analysis of supporting policies for residential solar pv in the united states solar renewable energy credit srec potential numerous studies and market reports suggest that the solar photovoltaic markets rely heavily if not entirely upon governmental support policies at present unlike in other countries where these policies are enacted at a national level the 50 states in the us pursue different policies in an attempt to foster the growth of renewable energy and specifically solar photovoltaics this paper provides an economic and financial analysis of the us federal and state level policies in states with solar targeted policies that have solar renewable energy credits srec markets after putting a value on srecs this study further compares solar carve outs with other incentives including the federal tax credit net metering and state personal tax credits our findings show that srec markets can certainly be strong with new jersey delaware and massachusetts having the most potential despite their strong potential as effective renewable policies the lack of a guaranteed minimum and the uncertainty attached are major drawbacks of srec markets however the leveraging of this high value offers hope that the policies will indeed stimulate residential solar photovoltaic markets

the solar photovoltaic feed in tariff scheme in new south wales australia solar photovoltaic pv electricity systems are part of australia s energy supply matrix in the case of new south wales nsw the state government has had to deal with a complex policy problem in order to play its role in the federal small scale renewable energy scheme the nsw government initiated the 7 year solar bonus scheme in 2010 however in attempting to maximise community investment in small scale solar pv systems it relied on faulty financial modelling that applied a generous feed in tariff fit and underestimated the level of investor participation and installed capacity consequently the scheme has resulted in very high public costs that will require policy changes that bring investors and energy retailers into conflict and unpopular electricity retail price adjustments this paper uses a structured case and stakeholder analysis to critically analyse the fit policy while also highlighting important lessons for policymakers engaging in fit design

the dynamics of solar pv costs and prices as a challenge for technology forecasting an effective energy technology strategy has to balance between setting a stable long term framework for innovation while also responding to more immediate changes in technology cost and performance over the last decade rather than a steady progression along an established learning curve pv costs and prices have been volatile with increases or plateaus followed by rapid reductions the paper describes and considers the causes of recent changes in pv costs and prices at module and system level both international trends and more place specific contexts it finds that both module and system costs and price trends have reflected multiple overlapping forces established forecasting methods experience curves and engineering assessments have limited ability to capture key learning effects behind recent pv cost and price trends production scale effects industrial re organization and shakeouts international trade practices and national market dynamics these forces are likely to remain prominent aspect of technology learning effects in the foreseeable future and so are in need of improved more explicit representation in energy technology forecasting

the effects of labour market policies in an economy with an informal sector in this article we build an equilibrium search and matching model of an economy with an informal sector our model extends mortensen and pissarides 1994 by allowing for ex ante worker heterogeneity with respect to formal sector productivity we use the model to analyse the effects of labour market policy on informal sector and formal sector output on the division of the workforce into unemployment informal sector employment and formal sector employment and on wages finally we examine the distributional implications of labour market policy specifically we analyse how labour market policy affects the distributions of wages and productivities across formal sector matches in this article we construct a search and matching model that we use to analyse the effects of labour market policies in an economy with a significant informal sector what we mean by an informal sector is a sector that is unregulated and hence not directly affected by labour market policies such as severance or payroll taxes we find that labour market policies that apply only to the formal sector nonetheless affect the size and the composition of employment in the informal sector this is important since there is substantial economic activity in the informal sector in many economies particularly in developing countries estimates for some latin american countries put the informal sector at more than 50 of the urban work force 1 the informal sector is also important in many transition countries as well as in some developed economies 2 although much of the literature treats the informal sector as a disadvantaged sector in a segmented labour market framework this interpretation is not consistent with recent empirical evidence from latin america under a segmented or dual labour market interpretation one would expect jobs to be rationed in the primary sector and workers to be in the secondary or informal sector involuntarily and to be queuing for formal sector jobs maloney 2004 presents evidence for several latin american countries that challenges this view and instead interprets the informal sector as an unregulated micro entrepreneurial sector similarly using data from the argentinian household survey pratap and quintin 2006 reject the notion that labour markets are segmented in the greater buenos aires area concluding that there is no evidence of a formal sector wage premium after controlling for individual and establishment we thank mauricio santamaria for stimulating conversations that inspired our interest in this topic we also thank bob hussey and fabien postel vinay as well as our editor steve pischke and two anonymous

regulation of entry labor market institutions and the informal sector abstract this paper develops a two sector matching model that incorporates the main features of latin american labor markets it has an innovation in its matching structure that makes it more consistent with some key stylized facts of the informal sector in these countries the model is numerically solved using brazilian data and several policy simulations are performed reducing formal sector s entry cost significantly reduces the size of the informal sector and improves overall labor market performance increasing enforcement significantly reduces informality but has strong adverse effects on unemployment and welfare thus the results indicate that the tradeoff between lower informal employment and higher unemployment rates is not present when one looks at policies that aim at reducing the costs of being formal as opposed to policies that simply increase the costs of being informal

ranking unemployment duration and wages it explores the implication of one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time this assumption ranking is contrasted with the assumption of random hiring no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching the joint behaviour of unemployment the distribution of unemployment durations and wages are characterized the implication that the re employment prospects of employed workers were they to become unemployed are better than those of the currently unemployed appears to have been an important feature of european unemployment experience in the 1980 s this paper examines the effects of the composition of unemployment on wage determination it explores one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time we refer to this assumption as ranking and contrast it throughout to the assumption of random hiring or no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching we characterize the joint behaviour of unemployment the distribution of unemployment durations and wages ranking has a number of important implications first in addition to the obvious result that the exit rate from unemployment is a decreasing function of duration we show that the effect of duration is stronger the higher the rate of unemployment second with the wage depending on the distributions of prospective unemployment durations the presence of long term unemployed per se has little effect on wages third looking at the relation between the wage and the aggregate level of unemployment and comparing ranking to the case of no ranking the wage moves less with the level of unemployment but more with the change in unemployment put simply ranking and no ranking models show exactly the same aggregate unemployment slightly different long run responses of wages to unemployment and sharply different wage dynamics the paper is organized as follows section i characterizes the matching process and derives a matching function based on an urn ball process with vacancies as urns and applications by unemployed workers as balls thus the distribution of applications per vacancy depends on aggregate unemployment and vacancies vacancies with at least one acceptable application are filled when a vacancy receives more than one acceptable application firms use a rule to choose among applicants thus the rule determines who is hired but does not affect the number of hires section ii uses this matching function in a model of the labour market with continual job creation and destruction and characterizes the equilibrium values of unemployment vacancies and hires

pareto improving immigration in an economy with equilibrium unemployment economists from around the industrialized world demonstrate the strength of both theories about the rise of economic inequality that is it the mechanical consequence of changes in such economic fundamentals as technology and demographic parameters and that it is the contingent consequence country specific and time specific changes in institutions they find that though institutions always play a crucial role in shaping inequality and sometimes preventing it still it creeps in

informality in developing economies regulation and fiscal policies abstract this paper proposes a unified theoretical framework where formal and informal firms coexist and face the same type of product and labor market imperfections they have monopoly power in the goods market they are subject to matching frictions in the labor market and wages are determined by bargaining between large firms and their workers through either individual or collective bargaining our model matches the main stylized facts on informality for developing countries and appears to be a good candidate for policy analysis in this framework we study the impact on informality wages and unemployment of policies that may be used to reduce informality we consider changes in product market regulation pmr and in two types of fiscal policies labor taxes and formality enforcement we find that lessening pmr decreases informality and unemployment simultaneously indicating that there is not necessarily a tradeoff between informality and unemployment the tradeoff appears when fiscal policies are used though moreover the impacts of pmr on unemployment and on wages are larger under collective than individual bargaining with respect to wage inequality lessening pmr reduces it while lower taxes tend to increase the formal sector wage premium

asset float and speculative bubbles we model the relationship between asset float tradeable shares and speculative bubbles investors with heterogeneous beliefs and short sales constraints trade a stock with limited float because of insider lockups a bubble arises as price overweighs optimists beliefs and investors anticipate the option to resell to those with even higher valuations the bubble s size depends on float as investors anticipate an increase in float with lockup expirations and speculate over the degree of insider selling consistent with the internet experience the bubble turnover and volatility decrease with float and prices drop on the lockup expiration date

returns on investments in energy saving technologies under energy price uncertainty in dutch greenhouse horticulture conventional net presentvalue calculations evaluating the profitabilityof investments in energy saving technologies indutch horticultural outlays predict a muchhigher rate of adoption of these technologiesthan is actually observed this paper tries toexplain this gap by applying a real optionsframework hurdle rates for investments in twotypes of energy saving technology are estimatedusing simulated future revenue streams givenuncertainty regarding energy prices and energytax policies hurdle rates found in this wayare on average about 1 76 times the hurdlerates that result from net present valuecalculations furthermore this paper tests thepredictive value of the theory by estimating alogit model this model relates the incidenceof having invested in an energy savingtechnology to the difference between the returnon investment and the hurdle rate thepredictive power turns out to be encouraging as the statistical tests indicate that higherhurdle rates tend to reduce rates of technologyadoption

electricity market design for facilitating the integration of wind energy experience and prospects with the australian national electricity market abstract australia has been an early and enthusiastic adopter of both electricity industry restructuring and market based environmental regulation the australian national electricity market nem was established in 1999 and australia also implemented one of the world s first renewable energy target schemes in 2001 with significant recent growth in wind generation australia provides an interesting case for assessing different approaches to facilitating wind integration into the electricity industry wind project developers in australia must assess both potential energy market and tradeable green certificate income streams when making investments wind farm energy income depends on the match of its uncertain time varying output with the regional half hourly market price a price that exhibits daily weekly and seasonal patterns and considerable uncertainty such price signals assist in driving investments that maximize project value to the electricity industry as a whole including integration costs and benefits for other participants recent nem rule changes will formally integrate wind generation in the market s scheduling processes while a centralized wind forecasting system has also been introduced this paper outlines experience to date with wind integration in the nem describes the evolution of market rules in response and assesses their possible implications for facilitating high future wind penetrations

state level benefits of energy efficiency this paper describes benefits attributable to state level energy efficiency programs nationwide state level energy efficiency programs have targeted all sectors of the economy and have employed a wide range of methods to promote energy efficiency standard residential and industrial programs typically identify between 20 and 30 energy savings in homes and plants respectively over a 20 year period of time an average state that aggressively pursues even a limited array of energy efficiency programs can potentially reduce total state energy use by as much as 20 well designed energy efficiency programs can be expected to help overcome numerous barriers to the market penetration of energy efficient technologies and accelerate the market penetration of the technologies energy efficiency programs are cost effective typical benefit cost ratios exceed 3 1 and are much higher when non energy and macroeconomic benefits are included indeed energy efficiency and associated programs and investments can create significant numbers of new jobs and enhance state tax revenues several states have incorporated energy efficiency into their economic development programs it should also be noted that increasing amounts of venture capital are being invested in the energy sector in general and in specific technologies like solar power in particular

informal labor markets and on the job training evidence from wage data i introduction this study explores the role of informal jobs in the formation of human capital among young less educated workers an informal job is a job that fails to comply with some or all of the labor regulations 1 the set of all informal jobs constitute what is typically known as the informal sector due to the lack of compliance with the labor laws informal jobs are not registered with the authorities 2 however it is often argued that compliance with these laws is of great significance in developing countries to ensure social justice for workers berg and kucera 2008 and to protect them against the forces of reallocation in the labor market inter american development bank 2003 in spite of these arguments the lack of compliance with these mandates in developing countries is common practice leading to the existence of sizable informal labor markets especially among the youth and the less educated 3 hence the importance of understanding what role the informal sector is playing in the lives of young less educated workers the traditional views of the informal sector in the literature are that of a sector that is the last resort for many workers who are rationed out of the protected and better paid jobs in the formal sector e g ozorio de almeida et al 1995 or that it is the disadvantaged sector in a segmented labor market e g fields 1975 harris and todaro 1970 4 the support for these views of the informal sector is mixed in the literature the work of maloney 1999 amaral and quintin 2006 and galiani and weinschelbaum 2012 suggests that the existence of informal labor markets is not necessarily evidence of segmentation and that could be an equilibrium outcome in a competitive labor market however the work of arias and khamis 2008 presents some evidence that is consistent with the rationing of formal salaried jobs and with segmentation in the labor market 5 despite the ongoing debate informal jobs play an important role in the work lives of less educated workers maloney 1999 argues that informal salaried jobs serve as the main point of entry for young poorly educated workers into paid employment the current study further explores this idea focusing on the group of young less educated workers in mexico the study explores the extent to which less educated workers in the informal sector experience wage growth and how wage growth in the informal sector compares with wage growth in the formal sector the basic question is whether informal jobs offer wage growth and skill accumulation to less educated workers and how it compares with formal jobs the empirical analysis uses a household survey from mexico the enoe acronym in spanish for encuesta nacional de ocupacion y empleo the panel structure of the survey allows the construction of measures of wage growth and continuing sector participation the results indicate that young less educated workers in the informal sector experience faster wage growth than their peers in the formal sector based on existing models of on the job training acemoglu and pischke 1999a 1999b becker 1993 stevens 1994 this result suggests that informal jobs offer valuable general training opportunities to young less educated workers the literature provides little evidence on wage growth in the informal sector or on how it compares with wage growth in the formal sector there is some evidence on the wage gain or loss from informality for example maloney 1999 and alcaraz et al 2011 provide estimates of the wage change associated with transitions between the formal and informal sectors in mexico the results in both studies indicate that informal to formal transitions are associated with positive wage changes while transitions in the opposite direction are associated with negative wage changes however none of these two studies provide evidence on wage growth experienced by workers in the informal sector or how it compares to wage growth in the formal sector

comparing the costs of intermittent and dispatchable electricity generating technologies economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected life cycle production costs per unit of electricity supplied the standard life cycle cost metric utilized is the levelized cost per mwh supplied this paper demonstrates that this metric is inappropriate for comparing intermittent generating technologies like wind and solar with dispatchable generating technologies like nuclear gas combined cycle and coal levelized cost comparisons are a misleading metric for comparing intermittent and dispatchable generating technologies because they fail to take into account differences in the production profiles of intermittent and dispatchable generating technologies and the associated large variations in the market value of the electricity they supply levelized cost comparisons overvalue intermittent generating technologies compared to dispatchable base load generating technologies they also overvalue wind generating technologies compared to solar generating technologies integrating differences in production profiles the associated variations in the market value of the electricity supplied and life cycle costs associated with different generating technologies is necessary to provide meaningful comparisons between them this market based framework also has implications for the appropriate design of procurement auctions created to implement renewable energy procurement mandates the efficient structure of production tax credits for renewable energy and the evaluation of the additional costs of integrating intermittent generation into electric power networks

future lending income and security value i test the duffie g rleanu and pedersen hypothesis that security prices incorporate expected future securities lending income to determine whether institutional investors anticipate gains from future lending of securities i examine their trading behavior around loan fee increases the evidence suggests that institutions buy shares in response to an increase in lending fees and that this could explain the premium associated with high lending fee stocks expected future lending income affects stock prices although the effect seems to be attenuated by the negative information that arises from short selling