regional climate change policy under positive feedbacks and strategic interactions the surface albedo feedback along with heat and moisture transport from the equator to the poles is associated with polar amplification which is a well established scientific fact the present paper extends brock and xepapadeas in eur econ rev 94 263 282 2017 to a non cooperative framework with polar amplification where regions decide emissions by maximizing own welfare this can be regarded as a case of regional non cooperation regarding climate change open loop and feedback solutions are derived and compared in terms of temperature paths and welfare with the cooperative solution carbon taxes which could bridge the gap between cooperative and non cooperative emissions path are also derived finally the framework is extended to a ramsey set up in which it is shown how the regional climate model can be coupled with standard optimal growth models numerical simulations confirm the theoretical results and provide insights about the size and the direction of deviations between the cooperative and the non cooperative solutions

spatial evolution of social norms in a common pool resource game we study the conditions for the emergence of cooperation in a spatial common pool resource cpr game we consider three types of agents cooperators defectors and enforcers the role of enforcers is to punish defectors for overharvesting the resource agents are located on a circle and they only observe the actions of their two nearest neighbors their payoffs are determined by both local and global interactions and they modify their actions by imitating the strategy in their neighborhood with the highest average payoffs on average using theoretical and numerical analysis we find a large diversity of equilibria to be the outcome of the game in particular we find conditions for the occurrence of equilibria in which the three strategies coexist we also derive the stability of these equilibria finally we show that introducing resource dynamics in the system favors the occurrence of cooperative equilibria

marginal analysis of welfare costs of environmental policies the case of pesticide regulation we present a methodology for estimating net social welfare costs and their distribution using only information on price quantities elasticities of supply and demand and estimates of cost and or yield effects of policies provided by natural scientists an application to a case of pesticide regulation demonstrates the importance of equity effects simulations show that redistribution of income among producers becomes the dominant effect of pesticide policies when supply elasticities are higher and demand elasticities are lower with changes in supply elasticity having a greater impact than changes in demand elasticity for crops with significant export markets foreign consumers are shown to bear much of the short run cost many cases now exist of legislation and executive orders mandating the use of benefit cost criteria in policy choice to be useful in policy assessments welfare methodologies must meet certain requirements first they must provide estimates of the efficiency impacts of alternative policies measured by changes in net social surplus second estimates of the

weather variations and international trade in this paper i investigate the effect of weather variations in the exporter and importer countries separately as well as a the difference between weather variations in both countries on bilateral trade flows the analysis is done at the country sectoral and product levels worldwide and over the 1992 2014 period i find a negative effect of temperature variations in the exporter country and in the difference between exporter and importer countries on bilateral trade at the country level at the product level both negative and positive effects arise but the negative effect of temperature dominates the temperature effects are on the agricultural and manufacturing sectors especially in the textile and metals sectors i show that possible channels are the impact of temperature on output and labour productivity the negative impacts are larger in exporter countries that are closer to the equator that have lower quality of institutions and that export to more remote countries if countries are able to adapt to climate change the long term effects of temperature variations should be lower than the contemporaneous effect nevertheless my results on the long term effects analysis do not support this hypothesis suggesting no or very low adaptation moreover the negative effect of temperature is persistent and cumulative through several years after the temperature shock concerning precipitation variation effects they are found mainly at the product level with the positive effect dominating for the affected products

exchange rate hedging financial versus operational strategies exchange rate exposure is an important source of risk for multinational corporations to mitigate the impact of exchange rate fluctuations it has been claimed that multinational corporations can employ risk management strategies not only through financial derivatives but also through operational hedges for example schering plough in its 1995 annual report p 25 argues in support of exclusive use of operational hedges to date management has not deemed it cost effective to engage in a formula based program of hedging the profitability of these operations using derivative financial instruments some of the reasons for this conclusion are the company operates in a large number of foreign countries the currencies of these countries generally do not move in the same direction at the same time conversely many corporations with large worldwide networks such as ibm or coca cola make extensive use of derivative financial instruments this paper investigates both financial and operational exchange rate risk management strategies of multinational firms while several studies have examined either firms financial hedging or firms operational hedging activities no study thus far has examined financial and operational hedging simultaneously for a large cross section of firms to the extent that the decision to use financial hedging strategies is related to and affected by the operational strategies that a firm employs it is important to examine how each strategy contributes to the overall goal of mitigating risk and improving shareholder value using a sample of u s multinational nonfinancial firms during 1996 1998 we find that operational hedging is not an effective substitute for financial risk management however we find that the more geographically dispersed a firm is the more likely it is to use financial hedges the end result on firm value is that operational hedging strategies benefit shareholders only when used in combination with financial hedging strategies

natural capital in integrated assessment models of climate change in integrated assessment models iams economic activity leads to global warming which causes future economic costs however typical iams do not explicitly represent the role of natural capital in this paper the dice model by nordhaus 2008 is expanded with a natural capital variable that is affected both by climate change and by depletive effects of economic activity due to a synergy between the two effects the optimal policy of the expanded model features more and earlier abatement of co2 emissions than dice interestingly the policy implications are different from what follows if one tries to capture the depletive effects on natural capital by simply reducing factor productivity growth in dice acknowledging considerable uncertainty simulations show that climate and savings rate policies from the expanded model are more robust in the long term than policies that do not consider non climatic depletion effects on natural capital

natural disasters in a two sector model of endogenous growth using an endogenous growth model with physical and human capital accumulation this paper considers the sustainability of economic growth when the use of a polluting input e g fossil fuels intensifies the risk of capital destruction through natural disasters we find that growth is sustainable only if the tax rate on the polluting input increases over time the long term rate of economic growth follows an inverted v shaped curve relative to the growth rate of the environmental tax and it is maximized by the least aggressive tax policy of those that asymptotically eliminate the use of polluting inputs unavailability of insurance can accelerate or decelerate the growth maximizing speed of the tax increase depending on the relative significance of the risk premium and precautionary savings effects welfare is maximized under a milder environmental tax policy especially when the pollutants accumulate gradually

the implicit value of corn base acreage the impact of recent changes to the u s commodity program and efficacy of environmental regulations designed to discourage continuous corn rotations will depend upon the value farmers place on corn base acreage this paper estimates this value by assuming that the benefits of access to the program are capitalized into farmland rents using iowa rental survey data and a hedonic pricing approach the rent gradient for base acreage is found to be on the order of 12 per acre the discounted stream of returns to base acreage suggests an asset value for corn base of approximately 200 per acre

the impact of derivatives on firm risk an empirical examination of new derivative users abstract the appropriateness of financial reporting rules for derivative securities depends on corporations reasons for using the instruments empirically little is documented about how the instruments affect firms risk exposures this study examines derivatives roles in firms initiating derivatives use the results are consistent with firms using derivatives to hedge and not to increase entity risk firm risk measured several ways declines following derivatives use realized risk reductions and decisions to initiate derivatives programs vary across firms with the expected benefits from hedging the findings emphasize the importance of hedge accounting rules that incorporate the impact of derivatives and hedged items simultaneously

the exchange rate exposure of u s multinationals this article examines the exposure of u s multinationals to foreign currency risk evidence is presented that the relationship between stock returns and exchange rates differs systematically across multinationals given these results the study focuses on the determinants of exchange rate exposure the comovements between stock returns and the value of the dollar is found to be positively related to the percentage of foreign operations of u s multinationals copyright 1990 by the university of chicago

dyadic compromise effect existing research on the compromise effect has focused exclusively on the individual this paper investigates compromise effects in a setting that involves multiple individuals making a choice we study whether the dyadic compromise effect dce exists the association between dyadic and individual compromise effects and strategies to mitigate the dce we build a statistical model of dyadic choice that formally incorporates dce we conduct two studies to test our proposed models empirically in study 1 we begin with an investigation of the dce with student subjects in study 2 we test for the presence of dce among married couples when making retirement investment choices in both studies model free and model based evidence provides strong support for the presence of dce a model that incorporates dce provides a better fit than models that do not evidence in support of dce is shown to be robust to alternative compromise effect model specifications and utility aggregation methods we find that the indi

testing asset fixity for u s agriculture two problems which have concerned agricultural economists since the great depression are low farm resource returns and agriculture s tendency to maintain high aggregate production in the face of declining real product prices the latter phenomenon referred to as irreversibility of supply has spawned a significant literature on approaches to estimating and testing irreversible supply curves houck tweeten and quance while there are numerous explanations of these problems it is widely accepted that both are at least partially due to some asset fixity within agriculture that is in the aggregate there are certain productive factors which are trapped in agriculture attempts to explain asset fixity are not new galbraith and black early argued that high fixed costs contribute to a lumpiness of important factors which makes their temporary reduction or reorganization so expensive as to be unprofitable in the short run later g l johnson hypothesized that productive assets are trapped in agriculture because of a divergence between acquisition costs and salvage value formal developments are in edwards hathaway and johnson and quance both explanations have been challenged d g johnson concluded that available empirical evidence did not support galbraith and black s high fixed cost hypothesis he argued instead that the data were consistent with inelastic supply of agricultural inputs johnson and pasour criticized inferring asset fixity from a divergence between acquisition costs and salvage values they argued that the appropriate concept for investigating resource allocation is that of the resource s opportunity cost although they criticized g l johnson s fixed asset theory they still concluded that asset fixity theory can contribute toward an understanding of why the supply function whether firm or industry is not reversible

a multimarket bounded price variation model under rational expectations corn and soybeans in the united states the bounded prices model under rational expectations is extended to a multimarket setting because the resulting rational expectations model is highly nonlinear fair and taylor s iterative procedure is employed in conjunction with the multimarket framework to obtain maximum likelihood estimates of a supply demand model for corn and soybeans the estimated model is then used to simulate the market equilibrium effects associated with removing price support and acreage set aside programs over the sample period among other things the results reveal that acreage set asides have dominated the induced supply effects of price support programs for corn

estimating supply response in the presence of farm programs previous empirical research on crop supply response has given insufficient attention to the fundamentally different nature of supply response under farm programs versus competitive markets a simple theoretical model is presented which highlights the program participation option in the farmer s acreage allocation decision the model also provides the basis for different expected supply elasticities under free market and farm program regimes for corn and soybeans econometric supply estimation for corn belt states for 1948 80 using a temporally disaggregated approach confirms a greater supply elasticity for corn and a lower supply elasticity for soybeans under acreage restricting feed grain programs

industrialization and environmental externalities in a solow type model in this paper we examine the role played by environmental externalities in shaping the dynamics of an economy with two sectors a farming sector and an industrial one free inter sectoral labor mobility and heterogeneous agents workers farmers and industrial entrepreneurs we find that in the presence of the environmental pressure of the economic activity of the industrial sector the stability properties of the equilibria and their features in terms of environmental preservation welfare outcomes and sectoral allocation of labor are sensitive to the level of carrying capacity we show that an endogenous process of industrialization associated with a reduction in farmers workers welfare can emerge

operational hedges and the foreign exchange exposure of u s multinational corporations this paper examines the impact of operational hedges of us multinational corporations mncs on their exchange rate exposure the two important contributions of this study are first it documents the importance of operational hedges as significant determinants of exchange rate risk as measured by breadth and depth dimensions of the mnc foreign subsidiary network second this finding remains robust even after examining the impact of operational hedges on exposure separately for negatively and positively exposed mncs

uniform and non uniform second best input taxes we investigate second best input based taxes foragricultural nonpoint pollution control when marketprices are endogenous and production isheterogeneous theoretically we derive the optimalforms of taxes which take account of heterogeneity non uniform taxes and a tax which does not auniform tax empirically we use a multi factor market equilibrium simulation model to determineoptimal tax rates and associated equity effects particularly differences in landowner gains lossesacross a heterogeneous region when market prices areendogenous second best tax policies result inpecuniary externalities that affect existingenvironmental externalities in particular thepecuniary externalities amplify the effect of producerheterogeneity on determination of sub regionaldifferences in tax rates and returns to land particularly for the uniform policy with endogenousprices the uniform tax rate is considerably higherthan any of the non uniform rates and ironically thenon uniform taxes result in less dispersion oflandowner gains across sub regions than the uniformtax

impact of spatial differentiation of nitrogen taxes on french farms compliance costs the spatial differentiation of input based pollution fees should in theory decrease compliance costs in the case of nitrate pollution of water bodies from agriculture because both the damage and the compliance costs vary over space however the empirical evidence in the literature does not agree on the extent of the potential savings from differentiation we address this issue in the case of france using a mathematical programming model of agricultural supply aropaj the modeling approach used accounts for the spatial diversity of nitrate pollution and the heterogeneity of farming systems our results reveal the efficiency gains from differentiating pollution fees among polluters and water bodies for instance firm specific and water body specific taxes represent respectively 5 8 and 32 5 of farmers gross margin in terms of compliance costs whereas a uniform policy at the river basin district or national level leads to major economic losses and abandonment of the agricultural activity these results stem from the lower tax rates faced by farmers in less polluted areas for scenarios based on spatial differentiation our estimates suggest that realistic regulation via input based pollution fees should be differentiated in order to significantly reduce the financial burden on farmers of conforming to predefined pollution levels some potential adverse effects related to input based taxation and land use change call for additional fine scale nitrogen pollution regulation e g limitations on crop switching

direct foreign ownership institutional investors and firm characteristics in this paper we characterize foreign ownership using a dataset of ownership and attributes of swedish rms the analysis reveals that foreigners show a preference for large rms rms paying low dividends and rms with large cash positions on their balance sheets when we further analyze the preference for large rms we nd that market liquidity and presence in international markets measured through export sales or listings on other exchanges seem to characterize foreign holdings better than rm size alone foreigners also tend to underweight rms with a dominant owner importantly we demonstrate that most of the features associated with foreign ownership are driven by the fact that foreign investors typically are mutual funds or other institutional investors hence we identify an institutional investor bias rather than a foreign investor bias finally using ownership data on a country level we conclude that the results are particularly strong among u s investors who comprise the largest institutions among foreign investors 2001 elsevier science s a all rights reserved jel classixcation g1 g15

negotiating reductions in agricultural support implications of technology and factor mobility this paper highlights the joint significance of agricultural technology and factor mobility in determining the impact of changing support policies the impact of across the board reductions in farm support on output exports employment and land values will vary systematically across countries depending on their relative reliance on export output and input subsidies furthermore considerable maneuvering room exists even after an aggregate reduction in support is agreed upon for example the aggregate u s producer subsidy equivalent could be reduced while leaving unchanged the demand for farm labor by shifting the mix of remaining subsidies toward inputs which are complementary

pricing carbon and adjusting capital to fend off climate catastrophes the optimal reaction to a potential productivity shock as a consequence of climate tipping is to substantially tax carbon in order to curb the risk of tipping but to adjust capital as well in order to smooth consumption when tipping occurs we also allow for conventional marginal climate damages and decompose the optimal carbon tax in two catastrophe components and the conventional component we distinguish constant and increasing marginal hazards moreover the productivity catastrophe is compared with recoverable catastrophes and with a shock to the climate sensitivity finally we allow for investments in adaptation capital as an alternative to counter the potential adverse effects of climate tipping quantitatively the results are investigated with a calibrated model for the world economy

firm valuation earnings expectations and the exchange rate exposure effect consistent with previous research we fail to find a significant correlation between the abnormal returns of our sample firms with international activities and changes in the dollar we investigate the possibility that this failure is due to mispricing lagged changes in the dollar are a significant variable in explaining current abnormal returns of our sample firms suggesting that mispricing does occur a simple trading strategy based upon these results generates significant abnormal returns corroborating evidence from returns around earnings announcements as well as errors in analysts forecasts of earnings is also provided it is a widely held view that exchange rate movement should affect the value of a firm standard economic analysis implies that the profitability and value of most u s firms with foreign sales or operations abroad should increase decrease with an unexpected depreciation appreciation of the dollar as expected foreign currency cash flows translate into larger smaller u s

acreage decisions under risk the case of corn and soybeans an acreage supply response model is developed under expected utility maximization the resulting framework is used to specify and estimate a system of risk responsive acreage equations for corn and soybeans in the united states particular attention is given to the truncation effects of government price supports on the distribution of corn and soybean prices also a wealth variable is included in the acreage equations the empirical results indicate that risk and wealth variables play an important role in cornsoybean acreage decisions the analysis also shows that cross commodity risk reduction is important in acreage allocation decisions

leader driven primacy using attribute order to affect consumer choice leader driven primacy uses initial product information to install a targeted brand as the early leader in a choice between two brands biased evaluation of subsequent attributes builds support for the targeted brand causing the choice itself to be biased study 1 finds evidence of this effect in choices between two equally attractive brands study 2 extends the finding to a situation where one brand is inferior and to conditions where participants do not explicitly identify their leader study 3 shows how leader driven primacy can be reduced by encouraging brand based processing

inherent rule variability in consumer choice changing rules for change s sake the present research demonstrates that consumers tend to vary their use of decision rules independent of option and set characteristics in five experiments increased choice of a particular option e g lower price brand name or compromise option was associated with relatively decreased choice of that same generic option on occasions that followed results indicate that this inherent rule variability is not an effect of background contrast but instead relates to consumers favorable valuation of decision change itself this research implies that the idea of contingent decision making applies not only to decision outcomes but also to decision processes

efficient dynamic pollution taxation in an uncertain environment this paper analyzes efficient pollution taxation within a stochastic model of endogenous growth pollution is a by product of production and causes disutility furthermore the productivity which results from environmental quality is uncertain this reflects e g uncertain capital depreciation induced by natural disasters like hurricanes or floods this uncertainty is shown to raise an ambiguous impact on the optimal pollution level as well as on optimal environmental taxation market equilibrium turns out to be suboptimal since the households mis perceive their individual impact on pollution conditions for welfare maximizing pollution taxation are stated and it is shown that a direct pollution tax is not appropriate to yield pareto optimal growth instead a linear capital income tax together with a linear abatement subsidy build an efficient tax scheme if secondarily the governmental budget is balanced moreover an increase in the riskiness of environmental productivity may even lead to an increase in the optimal pollution level and to a decrease in optimal environmental taxation depending predominantly on the preference parameters

the gains from differentiated policies to control stock pollution when producers are heterogeneous we derive optimal input taxes to control stock pollution problems generated by heterogeneous agents the taxes vary over time and in response to differences of asset quality and technology choice we also derive second best policies and compare them to the efficient policy and also among themselves different policies will affect the timing for when and the extent to which conservation technologies are adopted a numerical example based on the california drainage problem shows significant efficiency gains from the optimal policy compared to no intervention but much of the gains are lost with second best interventions the gains from optimal policies do not always increase with the degree of heterogeneity copyright 2008 oxford university press

the foreign exchange exposure of japanese multinational corporations we find that about 25 percent of our sample of 171 japanese multinationals stock returns experienced economically significant positive exposure effects for the period january 1979 to december 1993 the extent to which a firm is exposed to exchange rate fluctuations can be explained by the level of its export ratio and by variables that are proxies for its hedging needs highly leveraged firms or firms with low liquidity tend to have smaller exposures foreign exposure is found to increase with firm size we also find that keiretsu multinationals are more exposed to exchange rate risk than nonkeiretsu firms it is conventional wisdom that exchange rate movements affect both the cash flows of a firm s operations and the discount rate employed to value these cash flows measuring foreign exchange exposure is now a central issue of international financial management and this issue has spawned a considerable amount of research existing empirical evidence on foreign exchange exposure however seems perplexing studies have so far documented a weak link between contemporaneous exchange rate fluctuations and stock returns of u s multinational firms 2 gendreau 1994 finds it difficult and unconvincing that the weak results imply that exchange rate changes have no effect on exporters stock returns bartov arnd bodnar 1994 attribute the observed insignificant relationship between exchange rate changes and st ock returns to probable problems associated with the previous studies samiple selection procedure or to mispricing caused by investors errors in estimat

bounded price variation models with rational expectations and price risk abstract the bounded price variation model under rational expectations is extended to include higher moments of price in the supply equation the resulting framework is then used to estimate a disequilibrium model of the u s corn market that includes price risk

adding asymmetrically dominated alternatives violations of regularity and the similarity hypothesis an asymmetrically dominated alternative is dominated by one item in the set but not by another adding such an alternative to a choice set can increase the probability of choosing the item that dominates it this result points to the inadequacy of many current choice models and suggests product line strategies that might not otherwise be intuitively plausible

monetary valuation in life cycle assessment a review abstract monetary valuation is the practice of converting measures of social and biophysical impacts into monetary units and is used to determine the economic value of non market goods i e goods for which no market exists it is applied in cost benefit analysis to enable the cross comparison between different impacts and or with other economic costs and benefits for this reason monetary valuation has a great potential to be applied also in life cycle assessment lca especially in the weighting phase however several challenges limit its diffusion in the field which resulted in only a few applications so far the authors have performed a review of different monetary valuation methods for use in lca firstly monetary valuation approaches methods and lca applications were identified secondly key features and the strengths and weaknesses of each monetary valuation method were determined finally monetary valuation methods and lca applications were evaluated according to a comprehensive set of criteria ranging from scientific foundation to uncertainty and complexity it was found that observed and revealed preference methods and the abatement cost method have limited applicability in lca whereas the choice experiment method and the budget constraint method are the best options for monetary valuation in lca

sustainable resource use and economic dynamics we argue that the sustainable use of natural resources has to be placed in a dynamic perspective both in theoretical modelling and in applied research this can be achieved by applying endogenous growth theory and other recent advances in dynamic theory in this paper we discuss five contributions that combine the topics of natural resource use and economic dynamics in particular we show the common features of these contributions thereby providing an overview of a very active and promising research area

foreign direct investments environmental externalities and capital segmentation in a rural economy this paper examines the possible effects of external investment inflows on the development of local rural economies taking into account two recurrent features of many developing countries capital market segmentation and environmental externalities to investigate this issue we examine a model with two sectors the local sector and the external sector physical capital accumulation in the latter sector is driven by foreign direct investments while in the former sector it follows a solow type accumulation mechanism we assume that the production activity of the external sector damages the environment while the local sector relies on natural resources in this context we give the conditions under which capital inflows can promote diversification of host economy while improving welfare of local populations if these conditions are not satisfied external investments fuel a welfare reducing process for the local community and a self enforcing growth of the external sector at the expense of the local one

the impact of wage differentials on choosing to work in agriculture based on a model of industry choice and wage determination a 1 increase in the relative wage in agriculture increases the probability that a nonurban male with no more than a ninth grade education works in agriculture by 3 37 at the sample mean and by 1 3 when averaged over the entire sample a 10 increase in wages may increase the proportion of those males who choose to work in agriculture by nearly a quarter

limitations in evaluating environmental and agricultural policy coordination benefits agricultural policy has traditionally been concerned with the maintenance and stability of farm income and the provision of a stable food supply at low relative prices the food security act of 1985 was the first farm legislation to directly tie farm income and environmental concerns through the conservation reserve program conservation compliance sodbuster and swampbuster provisions the coordination of conservation and farm income policies contributed to commodity supply control by reducing the availability of arable land and it promoted environmental quality by removing some highly erodible land and wetlands from crop production a number of new environmental and food safety initiatives are also being enacted outside the agricultural policy process the most significant piece of legislation is the water quality act of 1987 designed to control

simple rules for climate policy and integrated assessment a simple integrated assessment framework that gives rules for the optimal carbon price transition to the carbon free era and stranded carbon assets is presented which highlights the ethical economic geophysical and political drivers of optimal climate policy for the ethics we discuss the role of intergenerational inequality aversion and the discount rate where we show the importance of lower discount rates for appraisal of longer run benefit and of policy makers using lower discount rates than private agents the economics depends on the costs and rates of technical progress in production of fossil fuel its substitute renewable energies and sequestration the geophysics depends on the permanent and transient components of atmospheric carbon and the relatively fast temperature response and we allow for positive feedbacks the politics stems from international free rider problems in absence of a global climate deal we show how results change if different assumptions are made about each of the drivers of climate policy our main objective is to offer an easy back on the envelope analysis which can be used for teaching and communication with policy makers

exchange rate variability and the riskiness of u s multinational firms evidence from the breakdown of the bretton woods system abstract we examine the relation between exchange rate variability and stock return volatility for u s multinational firms and decompose this relation into components of systematic and diversifiable risk focusing on two five year periods around the 1973 switch from fixed to floating exchange rates we find a significant increase in volatility of monthly stock returns corresponding to the period of increased exchange rate variability even relative to the increase in stock return volatility for three control samples in conjunction with this increase in total volatility there is also an increase in market risk beta for multinational firms

climate change and uneven development in this paper using a theoretical model with endogenous capital depreciation we study the effects of climate change and adaptation on long run development we show that climate change affects economic growth depending on climate exposure and adaptation efficiency which are asymmetric between different countries poor countries are likely to be hurt more because of the negative effects of climate change on the rate of depreciation of the assets that represent the engine of growth these asymmetries generally induce growth deficits and unsustainability traps in less developed economies

measuring the marginal cost of nonuniform environmental regulations a method is presented for measuring the marginal welfare cost of environmental regulations affecting agriculture the method incorporates output market effects and recognizes diversity in production conditions among crops regions and seasons an important advantage of the method is that only regional outputs and changes in regional production costs are needed to calculate deadweight loss thus simplifying the measurement of welfare changes this feature of the model is significant since the complexity and substantial data requirements of most existing impact models cause many environmental regulations to be enacted with inadequate analysis of their economic impacts the method also disaggregates welfare impacts by crop place and time thus encouraging the implementation of nonuniform interventions that achieve a given level of environmental quality more efficiently than uniform policies

research issues in nonpoint pollution control research on nonpoint pollution control instruments has focused primarily on incentives applied either to production inputs that affect nonpoint pollution or to ambient pollution concentrations both approaches may in theory yield an efficient solution however input based incentives will generally have to be second best to make implementation practical design issues include which inputs to monitor and the rates to apply to them the limited research indicates that second best input based incentives can be effective in adjusting input use in environmentally desirable ways alternatively ambient based incentives have theoretical appeal because efficient policy design appears to be less complex than for input based incentives these incentives have no track record nor close analogues that demonstrate potential effectiveness however research on how households and firms might react in response to ambient based incentives is needed before these instruments can be seriously considered

technology as an agricultural pollution control policy in this paper we consider the market level impacts of factor augmenting innovations designed to reduce the use of fertilizers and pesticides first within the context of a simple two factor model and then through a simulation model of the u s corn market in both models the impacts depend on the output demand elasticity and input substitution elasticities the principal conclusion of the simulation analysis is that the potential for new techniques to reduce the use of agricultural chemicals is limited capital augmenting innovations would actually raise fertilizer and pesticide usage land augmenting innovations would also tend to increase pesticide usage

a re examination of exposure to exchange rate risk the impact of earnings management and currency derivative usage abstract in an attempt to explain the weak evidence of priced exchange rate risk we hypothesize that in addition to currency derivative usages earnings management serves as another factor contributing to a reduction in exchange rate exposure our evidence reveals that earnings management activities particularly those undertaken for the purpose of income smoothing significantly reduce firm specific exchange rate exposure and that such role is particularly important if appropriate currency derivative instruments are limited these results complement prior attempts to explain the puzzle of unpriced exchange rate risk the investigation also highlights the importance of recognizing different managerial purposes behind discretionary accruals

a regional dynamic general equilibrium model of alternative climate change strategies outcomes and noncooperative equilibria this study finds that cooperative policies show much higher levels of emissions reductions than do noncooperative strategies that there are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries and that high income countries may be the major losers from cooperation jel h41 q4 q2 q20

self enforcing intergenerational social contracts for pareto improving pollution mitigation we consider in an overlapping generations model with an environmental externality a scheme of contracts between any two successive generations under each contract agents of the young generation invest a share of their labor income in pollution mitigation in exchange for a transfer in the second period of their lives the transfer is financed in a pay as you go manner by the next young generation different from previous work we assume that the transfer is granted as a subsidy to capital income rather than lump sum we show that the existence of a contract which is pareto improving over the situation without contract for any two generations requires a sufficiently high level of income in a steady state with social contracts in each period the pollution stock is lower compared to a steady state without contracts analytical and numerical analysis of the dynamics under nash bargaining suggests that under reasonable conditions also steady state income and welfare are higher delaying the implementation of a social contract for too long or imposing a contract with too low mitigation can be costly net income may inevitably fall below the threshold in finite time so that pareto improving mitigation is no longer possible and the economy converges to a steady state with high pollution stock and low income and welfare in the second part of the paper we study a game theoretic setup taking into account that credibly committing to a contract might not be possible we show that with transfers granted as a subsidy to capital income there exist mitigation transfer schemes which are both pareto improving and give no generation an incentive to deviate from any of its contracts even in a dynamically efficient economy social contracts coexist with private savings

dynamic corn supply functions a model with explicit optimization both static and dynamic models have been used to estimate aggregate supply elasticities for annual crops the early studies relied on static singleequation models in a few variables assumed static price expectations e g kohls and paarlberg and produced very small estimates of own price supply elasticities e g 0 07 for corn nerlove 1956 1958a and nerlove and addison showed that agricultural supply models incorporating adaptive price expectations and or dynamic resource adjustment produced larger estimates of supply elasticities for corn and other agricultural commodities additionally they showed that supply elasticities obtained from static models need not be bounded by the short run and long run supply elasticities of

solving the phosphorus pollution puzzle synthesis and directions for future research despite the success of efforts to reduce phosphorus p pollution from point sources p from non point agricultural sources remains a vexing problem with many u s water bodies having impairments key to solving the p pollution puzzle is to take stock of progress to date the puzzle pieces available and the gaps to be filled in this paper we synthesize the state of knowledge on p pollution discuss the state of existing public programs and review economists contributions to informing p pollution policies we review the water quality valuation literature identifying limitations in the linkages to policy relevant environmental quality metrics we examine how and why p is used agriculturally along with recent advances in market based policy design and field testing we survey new knowledge in biology and engineering including improved understanding of the fate and transport of p in light of recent learning and persistent knowledge gaps we recommend directions for economic research to add needed pieces to the puzzle of how to protect our water bodies puzzle gaps meriting attention include mechanisms to target public funds more effectively in voluntary abatement programs policy design for emerging mitigation technologies new ways to implement performance based policies means to leverage social norms and behavioral cues changes in the pay the polluter paradigm and application of state of the art evaluation methods to conservation programs beyond the realm of public policy lies that of private supply chains where establishment of environmental standards holds additional promise rich research opportunities exist for economists in tandem with biologists engineers and others

constructive consumer choice processes consumer decision making has been a focal interest in consumer research and consideration of current marketplace trends e g technological change an information explosion indicates that this topic will continue to be critically important we argue that consumer choice is inherently constructive due to limited processing capacity consumers often do not have well defined existing preferences but construct them using a variety of strategies contingent on task demands after describing constructive choice consumer decision tasks and decision strategies we provide an integrative framework for understanding constructive choice review evidence for constructive consumer choice in light of that framework and identify knowledge gaps that suggest opportunities for additional research

the dynamics of foreign direct investments in land and pollution accumulation following the recent increase of foreign direct investments in land this paper studies their possible effects on the development of a local economy to this aim we use a two sector model external and local with heterogeneous agents external investors and local land owners we assume that both sectors are negatively affected by pollution but only the external sector is polluting the local government can tax the external sector s production activities to finance environmental defensive expenditures we first examine the equilibria that emerge in the model from the dynamics of pollution and physical capital and then investigate the conditions for the coexistence of the two sectors and the impact of the external sector on the revenues of the local population using numerical simulations we show that a revenue increasing path may occur only if the pollution tax is high enough and the impact of the external sector on pollution is low enough otherwise foreign direct investments may end up impoverishing the local population

trade the pollution haven hypothesis and the environmental kuznets curve examining the linkages abstract this paper examines the extent to which the ekc inverted u relationship can be explained by trade and specifically the migration or displacement of dirty industries from the developed regions to the developing regions the pollution haven hypothesis phh using detailed data on north south trade flows for pollution intensive products the evidence for the phh is assessed emissions of 10 air and water pollutants are then estimated controlling for trade openness structural change and dirty north south trade flows evidence of pollution haven effects is found although such effects do not appear to be widespread and appear to be relatively small compared to the roles played other explanatory variables

nuclear energy policy in the united states 1990 2010 a federal or state responsibility this paper examines from a policy perspective nuclear energy policy in the united states us from 1990 to 2010 and questions whether it is or has become a federal or state responsibility the present study as befits policy research engages with many disciplines for example in particular law and politics and hence the contributions move beyond that of nuclear energy policy literature and in particular to that on nuclear new build and other assessments of large infrastructure projects several examples at the federal level are identified that demonstrate that the nuclear industry has evolved to a stage where it requires a focus on the power of actions at a more localised state level in order to re ignite the industry the research concludes that there remains a misunderstanding of the issue of project management for complex construction projects and it is highly arguable whether many of its issues have been resolved further the research asserts that the economics of nuclear energy are not the most influential reason for no nuclear new build in the us

mode size and location of foreign direct investments and industry markups abstract several studies find that inward foreign direct investment fdi raises host industries competition and productivity using aggregate fdi measures the monetary flows or the change in the industries foreign production share yet fdi flows are composed of many individual heterogeneous investments reflecting this heterogeneity i ask how the average traits of the individual investments that constitute the fdi flow further affect the host while the results show that inward fdi does heighten competition for us manufacturing industries in 1987 1991 price cost markups fall even more when foreign investments locate further away from incumbent industry which is consistent with endogenous location choice

what drives the global land rush the authors review evidence regarding the size and evolution of the land rush in the wake of the 2007 8 boom in agricultural commodity prices and authors study the determinants of foreign land acquisition for large scale agricultural investment the use of data on bilateral investment relationships to estimate gravity models of transnational land intensive investments confirms the central role of agro ecological potential as a pull factor however this finding contrasts the standard literature insofar as the quality of the destination country s business climate is insignificant and weak tenure security is associated with increased interest for investors to acquire land in the country policy implications are discussed

uncoordinated agricultural and environmental policy making an application to irrigated agriculture in the west agriculture and the environment are linked by a mutual reliance on scarce resources and prevalent market distortions in this paper we examine the efficiency costs of policies that correct distortions in one sector while ignoring those in another the dual distortions of an environmental externality and water subsidies are studied in the context of irrigated agriculture in california the welfare costs associated with independent action by either a water agency or an environmental authority when that policy maker attempts to correct the respective market distortion without consideration of the distortion in the other market are estimated policies to correct the two distortions are found to be complementary under these conditions the independent correction of either distortion improves welfare by at least 118 per acre in most cases the simultaneous adoption of various second best policies further reduces welfare losses associated with these distortions

environmental externalities and immiserizing structural changes in an economy with heterogeneous agents the way in which natural and physical capital are accumulated distributed and harnessed underpins the functioning and sustainability of the productive system of each society as well as its social stratification significant changes in the interactions between natural and physical capital accumulation give rise to processes of structural change sc which affect not only sectoral composition of the productive system but also social equity and environmental quality we propose a taxonomy of different scs on the basis of distributive environmental and economic outcomes and we study a two sector model with environmental externalities to identify under which conditions each sc can occur our model shows how the type of sc is shaped by the link between agents heterogeneity in terms of productive asset endowment and their vulnerability to environmental degradation in particular we find that a sc associated with reduction in poverty and in environmental pressures can occur only if productivity of the physical capital intensive sector increases but its rate of environmental impact remains relatively lower than that of the natural capital intensive sector

choice based on reasons the case of attraction and compromise effects building on previous research this article proposes that choice behavior under preference uncertainty may be easier to explain by assuming that consumers select the alternative supported by the best reasons this approach provides an explanation for the so called attraction effect and leads to the prediction of a compromise effect consistent with the hypotheses the results indicate that 1 brands tend to gain share when they become compromise alternatives in a choice set 2 attraction and compromise effects tend to be stronger among subjects who expect to justify their decisions to others and 3 selections of dominating and compromise brands are associated with more elaborate and difficult decisions

the application of contrast explanation to energy policy research uk nuclear energy policy 2002 2012 abstract this paper advances the application of the methodology contrast explanation to energy policy research research in energy policy is complex and often involves inter disciplinary work which traditional economic methodologies fail to capture consequently the more encompassing methodology of contrast explanation is assessed and its use in other social science disciplines explored in brief it is then applied to an energy policy research topic in this case nuclear energy policy research in the uk contrast explanation facilitates research into policy and decision making processes in energy studies and offers an alternative to the traditional economic methods used in energy research further contrast explanation is extended by the addition of contested and uncontested hypotheses analyses this research focuses on the methods employed to deliver the new nuclear programme of the uk government in order to achieve a sustainable nuclear energy policy three issues are of major importance 1 law policy and development 2 public administration and 3 project management further the research identifies that policy in the area remains to be resolved in particular at an institutional and legal level however contrary to the literature in some areas the research identifies a change of course as the uk concentrates on delivering a long term policy for the nuclear energy sector and the overall energy sector

multiple unit holdings yield attenuated endowment effects previous endowment effect experiments have examined circumstances in which people encounter a single unit of a good e g one chocolate we contrast single unit treatments with multiple unit treatments in which participants encounter several units of a good e g five chocolates we observe endowment effects of typical magnitude for singleton holdings but attenuated endowment effects for multiple unit holdings moreover endowment effects consistently arise for singletons even as the definition of a unit is altered for instance participants holding one piece of chocolate show an endowment effect of standard size but so do participants holding one box of chocolates yet the box contains about 20 individual pieces of chocolate and participants given that many separate pieces show a substantially attenuated endowment effect we thus propose the property of unit dependence the definition of a unit can change but contingent on any given definition a pronounced endowment effect may emerge for singletons but not multiples this paper was accepted by teck ho decision analysis

induced bias of technical change in agriculture the united states and japan 1880 1980 because of extreme differences in factor endowments and price ratios among factors between the united states and japan both countries have experienced sharply different patterns of factor use and productivity growth in agriculture for the past 100 years of modern economic growth in this study the method of testing the hicksian hypothesis of induced innovation was developed using the two level ces production function the model was applied to the historical data of u s and japanese agricultural development for 1880 1980 the results were consistent with the hypothesis that different patterns of technical change in the two countries were induced by differences in the levels and the movements in relative factor prices

inequality growth and environmental quality trade offs in a model with human capital accumulation this paper develops a simple endogenous growth model where pollution exposure and vulnerability are unequally spread across the population and growth and distribution are endogenous in this set up we investigate whether trade offs between growth distributional and environmental concerns may emerge we show that a tighter environmental policy reduces income inequality and can improve both growth and total welfare immediate welfare losses though do occur and are larger for countries that start at low levels of environmental quality e g developing countries inegalite croissance et qualite de l environnement arbitrages dans un modele d accumulation de capital humain nous developpons un modele de croissance endogene ou l exposition et la vulnerabilite a la pollution sont inegalement reparties dans la population et ou la croissance et la distribution des revenus sont determinees de facon endogene dans ce cadre d analyse nous cherchons s il existe des arbitrages entre la croissance les inegalites et l environnement notamment dans les pays en developpement nous montrons qu une politique environnementale plus stricte conduit a la fois a une reduction des inegalit es et a une augmentation de la croissance et du bien etre dans un premier temps cependant ce changement de politique conduit a une reduction du bien etre qui est relativement plus importante pour les pays dont la qualite environmentale est initiallement faible e g les pays en developpement

green attitude and economic growth we analyze the interdependence between green attitude and equilibrium development of environmental quality in an endogenous growth model individuals take only part of their impact on pollution into account hence there is a negative externality of capital accumulation on environmental quality increasing wealth or increasing pollution enhance green attitude and reduce the externality because individuals care more about the environment if their income is higher or if pollution is more obvious the time path of pollution as well as the evolution of equilibrium growth are shown to depend crucially on the determinants of green attitude ongoing growth may lead to complete internalization of the environmental externality if green attitude improves with increasing wealth e g as a consequence of an increase in environmental education in contrast if green attitude is determined exclusively by the level of environmental quality pollution remains at a suboptimally high level the interdependence of wealth and pollution in the determination of environmental awareness implies more complex dynamics capital growth enhances green attitude and thereby decreases pollution improved environmental quality in turn may increase capital growth due to less green attitude and therefore slow down convergence to the sustainable balanced growth path

a review of the stern review on the economics of climate change how much and how fast should we react to the threat of global warming the stern review argues that the damages from climate change are large and that nations should undertake sharp and immediate reductions in greenhouse gas emissions an examination of the review s radical revision of the economics of climate change finds however that it depends decisively on the assumption of a near zero time discount rate combined with a specific utility function the review s unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today s marketplace real interest rates and savings rates

international evidence on the determinants of foreign exchange rate exposure of multinational corporations in this paper we explore some of the potential determinants of foreign exchange fx exposure and firm value we contribute to previous research on stock returns and firm value as we have access to a unique survey database and can include as determinants in our empirical analysis the objectives and emphasis on risk management as well as considering previous factors including the nature of the business environment we can also examine any regional influences as our sample includes uk us and asia pacific multinational companies mncs as predicted by theory we find some evidence that mncs with greater foreign operations have a larger magnitude of fx exposure however our proxy for the emphasis of fx management does not have the predicted negative association with the magnitude of fx indicating that managers may focus on short term cash flows in their fx management rather than firm value with regard to the potentially differential regional role of our variables a range of interesting results is found arguably in our most notable such finding we see that the contribution of overseas business to total revenues has no association with the magnitude of fx exposure for us mncs it has a positive role for uk mncs consistent with theory and a negative role for asia pacific mncs which could be explained by macroeconomic and or financial characteristics of the mncs in the sample

using genuine savings for climate policy evaluation with an integrated assessment model there has been a recent increase in efforts to develop broader models to assess the impact of climate change and climate change policies both in terms of impact measures beyond gdp and in terms of modelling complexity beyond dice rice models climate policies aimed at reducing co2 emissions can have impacts in multiple sectors of the economy and can change consumption levels over time we show how the sustainability indicator genuine savings can be endogenised within a general equilibrium model and used as a criterion for judging the impacts of such policies in terms of future well being differences in genuine savings rates between co2 emission reduction scenarios are discussed we show how a broader genuine savings based assessment of climate change can result in a re evaluation of the consequences and costs of inaction in terms of various climate change related policies and how multiple environmental and well being outcomes can be analysed within a unified modelling framework

the economic value of farm program base mixed integer programming and dynamic programming models were used to obtain the implicit economic value of the initial endowment of base acreage on a cotton farm while low levels of initial base have almost no impact on land value high levels can be worth a considerable premium with the implicit value of additional initial base endowment increasing at an increasing rate this pattern of increasing implicit value can be explained by provisions of the farm program allowing base to be created by a landowner who develops a planting history in a program commodity

hedging and coordinated risk management evidence from thrift conversions we provide an explanation for hedging as a means of allocating rather than reducing risk we argue that when increases in total risk are costly firms optimally allocate risk by reducing increasing exposure to risks that provide zero positive economic rents our evidence shows that mutual thrifts that convert to stock institutions increase total risk following conversion consistent with their increased abilities and incentives for risk taking they achieve this increase by hedging interest rate risk and increasing credit risk we provide some evidence that risk management activities are related to growth capacity and management compensation structure attained at conversion

on the causal links between fdi and growth in developing countries we analyse the granger causal relationships between foreign direct investment fdi and gdp in a sample of 31 developing countries covering 31 years using estimators for heterogeneous panel data we find bi directional causality between the fdi to gdp ratio and the level of gdp fdi has a lasting impact on gdp while gdp has no longrun impact on the fdi to gdp ratio in that sense fdi causes growth furthermore in a model for gdp and fdi as a fraction of gross capital formation gcf we also find long run effects from fdi to gdp this finding may be interpreted as evidence in favour of the hypotheses that fdi has an impact on gdp via knowledge transfers and adoption of new technology

as bad as it gets how climate damage functions affect growth and the social cost of carbon the paper analyzes the effects of varying climate impacts on the social cost of carbon and economic growth we use polynomial damage functions in a model of an endogenously growing two sector economy the framework includes nonrenewable natural resources which cause greenhouse gas emissions pollution stock harms capital and reduces economic growth we find a big effect of the selected damage function on the social cost of carbon and a significant impact on the growth rate in our calibration a quartic damage function raises the social cost of carbon by more than a factor of ten compared to the linear function in the social optimum the growth rate remains positive even when the damage function is highly convex we test the robustness of the results by adding pollution decay lowering the elasticity of intertemporal substitution and addressing uncertainty which does not alter our results we find that high marginal climate damages require stringent climate policies but do not preclude positive economic growth despite convexity provided that policies are designed in an efficient manner

exchange rate exposure and industry characteristics evidence from canada japan and the usa abstract this paper examines industry level exchange rate exposures for canada japan and the usa measuring exposure by adding the change in the exchange rate to the domestic market model of industry portfolio returns some industries in all three countries display significant exposures moreover for each country the exchange rate is important for explaining industry returns at the economy wide level to explore whether exchange rate exposures are systematically linked to the activities of the industries we model exposure as a function of industry characteristics for all three countries the relation between exposure and industry characteristics is broadly consistent with economic theory jel f3

genuine savings and sustainability genuine savings gs has emerged as the leading economic indicator of sustainable economic development at the country level it derives from the literatures on weak sustainability wealth accounting and national income accounting we discuss the theoretical underpinnings of gs focusing on the relationship between changes in a nation s extended capital stock and the future path of consumption the indicator has entered widespread use propelled by the world bank s publications despite its varying performance as a predictor for future consumption notwithstanding the extensive body of literature reviewed promising future research avenues are identified

are there limits to growth a simple theoretical model of pollution is developed that generates an inverted u shape relationship between per capita income and environmental quality this model is then used to study long run growth the same inverted u shape is shown to appear in time series and the prospects for sustained growth are shown to hinge on whether increasingly strict environmental regulation is compatible with a constant rate of return on capital implementation is also studied tax and voucher schemes are shown to have an advantage over direct regulation because they provide the correct incentives for capital accumulation copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the optimal timing of adoption of a green technology we study the optimal timing of adoption of a cleaner technology and its effects on the rate of growth of an economy in the context of an ak endogenous growth model we show that the results depend upon the behavior of the marginal utility of environmental quality with respect to consumption when it is increasing we derive the capital level at the optimal timing of adoption we show that this capital threshold is independent of the initial conditions on the stock of capital implying that capital poor countries tend to take longer to adopt also country specific characteristics as the existence of high barriers to adoption may lead to different capital thresholds for different countries if the marginal utility of environmental quality decreases with consumption a country should never delay adoption the optimal policy is either to adopt immediately or if adoption costs are too high to never adopt the policy implications of these results are discussed in the context of the international debate surrounding the environmental political agenda

exchange rate movements and the profitability of u s multinationals abstract this paper studies the effects of unexpected exchange rate movements on the stock returns of u s multinationals unlike most previous studies of exchange rate exposure we explicitly consider the time variability of exchange rate exposure by taking into account firms foreign sales and foreign production information in our tests empirical results based on a sample of eighty u s multinationals from seven 3 digit sic manufacturing industries show that the stock market correctly reveals the profitability effects of exchange rate news predicted by theory a depreciation shock to the u s dollar for example has significant positive effects on the abnormal returns on the stocks of the multinationals through foreign sales and significant negative effects through foreign production

a translog cost function analysis of u s agriculture 1939 77 over the past four decades major changes have occurred in u s agriculture a new era in agricultural production in the united states began in 1939 world war ii gave a boost to agriculture still bogged in the depression productivity increases over the period 1939 77 have been quite impressive measured crudely by the ratio of the indices of output and input the productivity index 1967 100 increased from 59 in 1939 to 119 in 1977 to study this phenomenon a multi input translog cost function incorporating hicks neutral technical change hntc was specified annual timeseries data for the united states was used to estimate the model neoclassical duality theory provides an approach for computing the pairwise elasticities of substitution between inputs for each year as well as the annual own and cross price elasticities of demand for inputs

a dynamic model of the environmental kuznets curve turning point and public policy we set up a simple dynamic macroeconomic model with i polluting consumption and a preference for a clean environment ii increasing returns in abatement giving rise to an ekc and iii sustained growth resulting from a linear final output technology there are two sorts of market failures caused by external effects associated with consumption and environmental effort the model is employed to investigate the determinants of the turning point and the cost effectiveness of different public policies aimed at a reduction of the environmental burden moreover the model offers a potential explanation of an n shaped pollution income relation it is shown that the model is compatible with most empirical regularities on economic growth and the environment

determinants of biofuel oriented land acquisitions in sub saharan africa abstract the recent surge of investors interest for african land has triggered the debate about the drivers and effects of the so called land grabbing after a review of the relationship between investment in land and biofuel development in sub saharan africa we contribute to the existing literature in four dimensions we use the updated version of land matrix whose potentialities are currently underexploited we concentrate on land deals for cultivating biofuel crops which are emblematic of the food land energy nexus we focus on fdi to the african continent the most targeted region for land grabbing finally we delve deeper into the influence of institutional quality by testing the role of different institutional dimensions we find that abundance of water resources and general business conditions security and regulatory quality facilitate the investment in land for biofuels as for land governance what matters is the strength and security of land tenure rights rather than the type of tenure system

exchange rate exposure hedging and the use of foreign currency derivatives abstract we examine whether firms use foreign currency derivatives for hedging or for speculative purposes using a sample of s p 500 nonfinancial firms for 1993 we find evidence that firms use currency derivatives for hedging as their use significantly reduces the exchange rate exposure firms face we also find that while the decision to use derivatives depends on exposure factors i e foreign sales and foreign trade and on variables largely associated with theories of optimal hedging i e size and r d expenditures the level of derivatives used depends only on a firm s exposure through foreign sales and trade

spatially uniform versus spatially heterogeneous compensation payments for biodiversity enhancing land use measures the importance of compensation payments for biodiversity enhancing land use measures has grown over the past decade particularly in connection with agri environmental policy given that both the costs and the benefits of biodiversity enhancing land use measures are subject to spatial variation the criterion of cost effectiveness calls for spatially heterogeneous compensation payments however when deciding whether to implement uniform or heterogeneous compensation payments the regulator has to compare the disadvantage of uniform payments in terms of cost effectiveness with the disadvantages of spatially heterogeneous payments to help resolve this issue this paper provides a simple ecological economic model that allows the reduced cost effectiveness associated with uniform payments for biodiversity enhancing land use measures to be assessed for different types of benefit and cost functions

exposure and markups this article examines how to properly specify and test for factors that affect exchange rate exposure starting from theoretical underpinnings and a sample of u s manufacturing industries between 1979 and 1995 we find that 4 of 18 industry groups are significantly exposed to exchange rate movements through the effect of industry competitive structure export share and imported input share on average a 1 appreciation of the dollar decreases the return of the average industry by 0 13 consistent with our model s predictions as an industry s markups fall rise its exchange rate exposure increases decreases exchange rate movements are an important source of risk for a firm they affect a firm s expected cash flows and or change the terms of competition for exporters importers and multinationals hung 1992 estimates that during the 1980s u s manufacturing industries lost approximately 23 billion year or 10 of total profits due to the dollar s movements surprisingly early studies which assume exchange rate exposure to be constant e g jorion 1990 bodnar and gentry 1993 and amihud 1994 find that exchange rates have no effect on the stock returns of u s multinationals exporters or manufacturing industries recently however allayannis 1997 and bodnar dumas and marston 1998 examine time varying exposure of industry returns 1 in particular the former article focuses on the effect the variation of u s industries import and export shares have on exposure while the latter focuses on pass through and exposure in a sample of japanese export oriented industries besides trade shares and pass through exchange rate exposure also depends on the markup of an industry specifically in industries with