the reformed eu ets intertemporal emission trading with restricted banking abstract with the increase of the linear reduction factor the implementation of the market stability reserve and the introduction of the cancellation mechanism the eu ets changed fundamentally we develop a discrete time model of the intertemporal allowance market that accurately depicts these reforms assuming that prices develop with the hotelling rule as long as the aggregated bank is non empty a sensitivity analysis ensures the robustness of the model results regarding its input parameters the accurate modelling of the eu ets allows for a decomposition of the effects of the individual amendments and the evaluation of their cost effectiveness the market stability reserve shifts emissions to the future but is allowance preserving a one time cancellation reduces the overall emission cap increasing allowance prices in the long run but does not significantly impact the emission and price path in the short run the increased linear reduction factor leads with 9 billion cancelled allowances to a stronger reduction than the cancellation mechanism and is therefore the main price driver of the reform

comparing policies to confront permit over allocation abstract instability in cap and trade markets particularly with respect to permit price collapses has been an area of concern for regulators to that end several policies including hybrid price quantity mechanisms and the newly introduced market stability reserve msr systems have been introduced and even implemented in some cases i develop a stochastic dynamic model of a cap and trade system parameterized to values relevant to the european union s emission trading system eu ets to analyze the performance of these policies aimed at adding stability to the system or at least at reducing perceived over allocations of permits results suggest that adaptive allocation mechanisms such as a price collar or msr can reduce permit over allocations and permit price volatility in a more cost effective manner than simply reducing scheduled permit allocations however it is also found that the performance of these adaptive allocation policies and in particular the msr are greatly affected by assumed discount rates and policy parameters

detecting abnormal credit union performance abstract credit unions are an important financial intermediary but little credit union research is done a primary reason for the lack of research is the cooperative nature of the industry making traditional methods of detecting abnormal performance inappropriate this paper proposes two methods of detecting abnormal performance one parametric the other non parametric instead of testing the efficiency of the institution this paper proposes testing the return vector as indicated in the theoretical objective function of the member simulations demonstrate that both methods are correctly specified and powerful

can agents be better off with pay caps a popular way to discipline the managers of companies or banks that got into trouble during the recent financial crisis has been to impose caps on managers pay using a small extension of the standard principal agent model we argue that pay caps might serve the opposite purpose because the agent might be better off with a pay cap specifically we show that given a fixed effort level to be implemented the agent s expected utility can be decreasing in an upper bound for the agent s reward the effect of pay caps on the general structure of optimal incentive contracts is also characterized while an improvement of contracting information always helps the principal it might increase or decrease the marginal cost of imposing pay caps

energy regulation in china objective selection potential assessment and responsibility sharing by partial frontier analysis to cope with the excessive growth of energy consumption the chinese government has been trying to strengthen the energy regulation system by introducing new initiatives that aim at controlling the total amount of energy consumption a partial frontier analysis is performed in this paper to make a comparative assessment of the combinations of possible energy conservation objectives new constraints and regulation strategies according to the characteristics of the coordination of existing regulation structure and the optimality of regulation strategy four scenarios are constructed and regional responsibilities are reasonably divided by fully considering the production technology in the economy the relative importance of output objectives and the total amount controlling is compared and the impacts on the regional economy caused by the changes of regulation strategy are also evaluated for updating regulation policy

a symmetric safety valve abstract how to set policy in the presence of uncertainty has been central in debates over climate policy concern about costs has motivated the proposal for a cap and trade program for carbon dioxide with a safety valve that would mitigate against spikes in the cost of emission reductions by introducing additional emission allowances into the market when marginal costs rise above the specified allowance price level we find two significant problems both stemming from the asymmetry of an instrument that mitigates only against a price increase one is that most important examples of price volatility in cap and trade programs have occurred not when prices spiked but instead when allowance prices collapsed second a single sided safety valve may have unintended consequences for investment we illustrate that a symmetric safety valve provides environmental and welfare improvements relative to the conventional one sided approach

non radial cost luenberger productivity indicator abstract this study decomposes cost inefficiency into technical and allocative components in a more general way based on the directional russell measure drm of fukuyama and weber 2009 with the allocative component being completely clear of technical inefficiency based on this decomposition we develop a cost oriented productivity indicator the cost luenberger productivity indicator cl which completely embraces the concept of cost minimization and provides four sources of productivity change technical efficiency change the change in allocative efficiency the shift of technology and the effect of input price change to illustrate the above decompositions of cost inefficiency and productivity change and to investigate whether the establishment of a financial holding company fhc offers a bank greater operating efficiency and an improvement in productivity change this study employs data on taiwan s banking industry covering the period 2006 2012

the evolution of cost productivity and efficiency among us credit unions abstract advances in information processing technology have eroded the advantages of small scale and proximity to customers that traditionally enabled small lenders to thrive nonetheless the membership and market share of us credit unions have increased though their average size has also risen we investigate changes in the efficiency and productivity of us credit unions during 1989 2006 by benchmarking the performance of individual firms against an estimated order quantile lying near the efficient frontier we construct a cost analog of the malmquist productivity index which we decompose to estimate changes in cost and scale efficiency and changes in technology we find that cost productivity fell on average across all credit unions but especially among smaller credit unions smaller credit unions confronted a shift in technology that increased the minimum cost required to produce given amounts of output all but the largest credit unions also became less scale efficient over time

are credit unions too small abstract u s credit unions serve 93 million members hold 10 of u s savings deposits and make 13 2 of all nonrevolving consumer loans since 1985 the share of u s depository institution asse

an economic theory of a credit union the majority of research to date on cus has been empirical cf cargill 1 and kidwell and peterson 7 yet there is serious need to develop a theoretical framework of cu behavior that incorporates their unique characteristics a cu is essentially a financial intermediation cooperative however the standard theoretical treatments of financial intermediaries cf meyer 8 and cooperative enterprises cannot be directly applied to model credit union behavior there are two principal characteristics of cus that prevent this first in a cu and cooperatives in general the members are both the owners of the organization and the consumers of its output or suppliers of its input one cannot simply assume that the members seek to maximize the profit generated by their transactions with the cu irrespective of the price and quantities of those same transactions thus models of a financial firm based on profit maximization cannot be directly translated to a cu environment second in a cu the membership provides both the demand for and supply of loanable funds the cu then intermediates between its member savers and member borrowers this heterogeneity is an inherent source of conflict between members clearly a cu cannot simultaneously maximize its dividend rate for savers and minimize its loan rate for borrowers since most theoretical models of cooperative enterprises assume a homogeneous member objective they are not generally applicable to cus there are two basic requirements for a framework to model cu behavior first the specification of the objective function should focus on the value of cu participation to the members this value should include the prices and quantities of transactions as well as any profit that results second the analysis should explicitly consider the possibility of conflict among members and the resolution of that conflict being a preference to either the borrowers or savers the existing literature on cus contains a wide variety of objective functions hempel and yawitz 5 ignore the owners are consumers issue and simply contend that cus like other financial intermediaries should maximize profit most writers however recognize that profit maximization would be a somewhat incongruous objective for an organization that typically labels itself not for profit murray and white 9 use cost minimization subject to an output constraint keating 6 employs the managerial discretion approach by maximizing the manager s utility function subject to minimum member benefit constraints taylor 11 12 suggests that the cu should minimize the difference between its average loan rate and savings rate paid smith 10 argues that the cu should

wage bargaining inventories and union legislation this paper analyses a strategic bargaining game where the firm may or may not be able to sell out of its inventory of finished goods during a strike firms and the union are both risk neutral and have the same discount rate it is shown that the wage equilibrium corresponds to the axiomatic nash bargaining solution where the threatpoints are the agents payoffs should bargaining continue indefinitely we use the 1980 and 1982 employment acts to test this theory interpreting that legislation change as changing the firm s threatpoint but not its bargaining power this allows us to identify the value of the firm s threatpoint post 1982 formal tests support the theory also consistent with the theory it is found that union wages decrease with inventories after 1982 but not before and that the union wage gap is smaller after 1982 wage bargaining as described in the strategic bargaining literature is a peaceful affair if there is no agreement workers simply withdraw their labour for one period and there is a consequent one period loss of production for the firm but strikes tend to generate a lot of conflict in the u k in the 1970s striking unions would form picket lines across the factory gates their aim was not only to prevent strikebreakers going to work but also to stop lorries delivering goods conversely firms often with the help of the police would try to get the lorries across those lines the employment acts of 1980 and 1982 stopped this struggle stopping lorries crossing picket lines had always been illegal but this new legislation gave firms power to have picket lines immediately lifted should striking workers act illegally the courts would immediately sequester the union s assets if its members refused to comply with the law using the strategic bargaining approach this paper considers the equilibrium effect of this change in legislation on union wage formation using wage and inventory data from a panel of firms across this time period this paper also formally tests that theory there have been two main approaches to bargaining theory the strategic bargaining

a theoretic framework for the analysis of credit union decision making this paper presents a formal theoretic framework to analyze credit union interest rates on loans and savings deposits the unique motivational and institutional features of a credit union in particular its structure as a financial service cooperative are used to develop the objective function this is based on a comparison of the credit union s rates to alternatively available market rates and includes parameters to recognize the possibility of borrower saver conflict the principal result is that the optimal rates and reactions to exogenous changes depend critically on the preference of the organization toward financial gain to the borrowing and saving members

the growth of us credit unions abstract the growth of us credit unions during the 1990s is investigated empirically using univariate and multivariate cross sectional and panel estimation techniques univariate tests of the law of proportionate effect suggest that in general large credit unions grew faster than their smaller counterparts on average credit unions with above average growth in one period tended to experience below average growth in the next smaller credit unions tended to have more variable growth than large ones while credit unions share a common co operative philosophy they differ in terms of age profile scope for membership growth charter type and financial structure and performance in estimations of a multivariate growth model most of these characteristics are found to have a significant influence on the size growth relationship while large state chartered credit unions grew faster than their smaller counterparts the reverse was true for federally chartered credit unions in general if larger credit unions grew faster than smaller ones they tended to do so for specific reasons because their charters were less restrictive because they were more efficient or because they had a financial structure that was more conducive to growth therefore credit union growth was not random but highly systematic

the diversification and financial performance of us credit unions abstract for us credit unions revenue from non interest sources has increased significantly in recent years we investigate the impact of revenue diversification on financial performance for the period 1993 2004 the impact of a change in strategy that alters the share of non interest income is decomposed into a direct exposure effect reflecting the difference between interest and non interest bearing activities and an indirect exposure effect which reflects the effect of the institution s own degree of diversification on both risk adjusted and unadjusted returns measures a positive direct exposure effect is outweighed by a negative indirect exposure effect for all but the largest credit unions this may imply that similar diversification strategies are not appropriate for large and small credit unions small credit unions should eschew diversification and continue to operate as simple savings and loan institutions while large credit unions should be encouraged to exploit new product opportunities around their core expertise

combining price and quantity controls under partitioned environmental regulation abstract this paper analyzes hybrid emissions trading systems etss under partitioned environmental regulation when firms abatement costs and future emissions are uncertain we show that hybrid policies that introduce bounds on the price or the quantity of abatement provide a way to hedge against differences in marginal abatement costs across partitions price bounds are more efficient than abatement bounds as they also use information on firms abatement technologies while abatement bounds can only address emission uncertainty using a numerical stochastic optimization model with equilibrium constraints for the european carbon market we find that introducing hybrid policies in eu ets reduces expected excess abatement costs of achieving targeted emission reductions under eu climate policy by up to 89 we also find that under partitioned regulation there is a high likelihood for hybrid policies to yield sizeable ex post cost reductions

turbulent firms turbulent wages abstract has greater turbulence among firms fueled rising wage instability in the u s we find strong support for the hypothesis that rising turbulence in the sales of large publicly traded u s firms over the past three decades has raised their workers high frequency wage volatility through controls and instrumental variable probes we rule out straightforward compositional churning as an explanation for the link between firm sales and wage volatility we also observe that the relationship between sales and wage volatility at the firm level is stronger since 1980 is present only in large companies and is stronger in services than in manufacturing companies

a model of intertemporal emission trading banking and borrowing abstract this paper provides a general treatment of emission trading banking and borrowing in an intertemporal continuous time model using optimal control theory the decentralized behavior of firms is shown to lead to the least cost solution attainable under joint cost minimization explicit solutions for the time paths of emissions and permit prices are derived when firms are allowed to both bank and borrow and when firms are only allowed to bank emission permits the policy implications of emission banking and borrowing are discussed

malmquist indices of productivity growth during the deregulation of norwegian banking 1980 89 productivity growth during the deregulation of the norwegian banking industry is studied within the framework of data envelopment analysis which explicitly allows for multiple outputs introducing malmquist indices for productivity growth total growth can be decomposed into frontier growth and change in each bank s distance to the frontier both the total growth index and its components can be consistently chained over time we find productivity regress at the average bank prior to the deregulation but rapid growth when deregulation took place deregulation also led to less dispersion of productivity levels within the industry

firm specific determinants of the real wage bargaining models suggest that firm specific variables play an important role in wage determination yet previous empirical studies of wage determination have largely ignored these variables the authors analysis of a large panel data set of u s wage contracts suggests that firm specific variables suggested by bargaining models such as the value of sales the capital labor ratio and the financial liquidity of the firm are important determinants of negotiated real wages copyright 1992 by mit press

wage differentials across firms an application of multilevel modelling multilevel modelling techniques are applied to a dataset that matches firms and workers to pinpoint and explain contrasts among company wage policies results indicate that wage differences across firms are statistically significant affecting every parameter of the pay policy returns to schooling tenure experience the penalty imposed on newly hired workers and on women gross labour productivity average schooling in the firm firm size and economic sector are relevant forces shaping the contrast between employers pay policies copyright 2000 john wiley sons ltd

shareholder wealth and wages evidence for white collar workers we present empirical evidence on the relationship between individual wages conditional on worker characteristics and equity returns using a unique survey from the bureau of labor statistics equity returns affect the wages only of workers with three or more years of tenure a 4 percent increase in a firm s market value raises pay by 0 3 percent within three years our estimates suggest that each 10 increase in shareholder wealth raises the present value of a firm s wage bill by 1 the elasticity of white collar wages with respect to equity returns is one third smaller than the ceo salary elasticities in our sample

insurance within the firm we evaluate the allocation of risk between firms and their workers using matched employer employee panel data unlike previous contributions this paper focuses on idiosyncratic shocks to the firm which are the correct empirical counterpart of the theoretical notion of diversifiable risk we allow for both temporary and permanent shocks to output and find that firms absorb temporary fluctuations fully but insure workers against permanent shocks only partially risk sharing considerations can account for about 15 percent of overall earnings variability the remainder originating from idiosyncratic shocks to individual workers our welfare calculations indicate that firms are an important vehicle of insurance provision

economies of diversification in the us credit union sector summary significant scale economies have been recently cited to rationalize a dramatic growth in the us retail credit union sector over the past few decades in this paper we explore another plausible supply side explanation for the growth of the industry namely economies of diversification we focus on the fact that credit unions differ among themselves in the range of financial services they offer to their members since larger credit unions tend to offer a more diversified financial service menu than credit unions of a smaller size the incentive to grow in size may be fueled not only by present scale economies but also by economies of diversification this paper provides the first robust estimates of such economies of diversification for the credit union sector we estimate a flexible semiparametric smooth coefficient quantile panel data model with correlated effects that is capable of accommodating a four way heterogeneity among credit unions our results indicate the presence of non negligible economies of diversification in the industry we find that as many as 27 91 depending on the type and the cost quantile of diversified credit unions enjoy substantial economies of diversification the cost of most remaining credit unions is invariant to the scope of services we also find overwhelming evidence of increasing returns to scale in the industry

insider forces and wage determination this paper investigates the relative importance of firm specific factors i e insider forces in wage determination using firm level data on 219 u k companies over 1974 82 it finds that a 1 percent rise in a firm s prices or productivity relative to the aggregate economy leads to a rise in relative wages of 0 1 0 2 percent as a corollary to this outside factors like the aggregate wage and the unemployment rate also play an important role there is evidence for insider based hysteresis effects but these are inversely related to the extent to which firms take national agreements into account copyright 1990 by royal economic society

evaluating the performance of us credit unions credit unions are small cooperative not for profit institutions which distinguishes them from other financial intermediaries in this study we conduct a performance evaluation of credit unions the criteria respect the unique organizational and institutional features of credit unions without losing sight of the fact that they must compete with other financial intermediaries we use nonparametric nonstochastic techniques to measure performance and we use parametric stochastic techniques to attribute performance variation to features of credit unions and their operating environment our sample consists of two thirds of all active credit unions in 1990

a carbon price floor in the reformed eu ets design matters abstract despite the reform of the european emissions trading system eu ets discussions about complementing it with a carbon price floor cpf are ongoing this paper analyzes the effect of a european cpf in the reformed eu ets using a hotelling model of the eu ets amended by the market stability reserve msr and the cancellation mechanism two cpf designs are compared 1 a buyback program and 2 a top up tax the buyback program sets a minimum price for the allowances from the implementation year onwards after the announcement firms anticipate the cpf which immediately increases the carbon price to the discounted cpf level therefore firms emit less and bank more allowances leading to more intake into the msr and more cancellation of allowances the top up tax imposes a tax on emissions which enhances the market price of allowances to the cpf level from the implementation year onwards firms increase their short run emissions in anticipation of the upcoming tax only after the implementation year firms start to lower their emissions thus the effect on aggregate cancellation is ambiguous despite being equivalent in a static setting the design choice for the cpf matters in a dynamic context such as the eu ets

inventories and strikes this paper analyses a dynamic model of bargaining and strikes in which the reservation wage of union members in each period is private information the model endogenizes the firm s decision to accumulate inventories of finished goods in order to enhance its bargaining position with higher inventories the firm makes a lower wage offer thereby accepting an increased probability of a strike the model can help explain empirical results that have found a positive correlation between wages and inventory accumulation it also shows that unless inventories are controlled for strike incidence will exhibit a spurious negative state dependence

technical progress inefficiency and productivity change in u s banking 1984 1993 studies often find that on average u s commercial banks are quite inefficient and the authors find that banks became more technically inefficient between 1984 and 1993 from a new decomposition of the malmquist productivity index into changes in pure technical and scale efficiency as well as both pure technical changes and changes in scale of technology they find that much of the inefficiency increase can be attributed to the general failure of banks to adopt technological improvements made by a few banks that advanced the efficient frontier small banks experienced especially large decreases in both efficiency and productivity

banking and borrowing in the eu ets a review of economic modelling current provisions and prospects for future design this article deals with the issue of banking and borrowing in the context of the european union emissions trading scheme eu ets by attempting to provide a policy oriented unifying theoretical framework after describing the main features of the eu ets the core part of the article consists of variations of an inter temporal continuous time optimization model additional elements include flexibility measures currently discussed and proposed in other emissions trading systems usa australia which include the use of safety valves minimum price auctioning or offsets from domestic or international projects

a nonparametric approach for assessing productivity dynamics of large u s banks the 1980s marked an era of substantial change for the us commercial banking industry an issue of considerable interest to banking analysts and economists alike is whether the intensified competitive pressure generated by deregulation and notable financial innovations enhanced productivity to investigate the response to these changes the non parametric malmquist index is used to evaluate productivity dynamics a statistically significant productivity surge found between 1983 and 1984 is followed by productivity regress the next period post 1985 sustained productivity progress is observed for the remainder of the decade productivity movements are primarily attributable to technological changes rather than scale changes or convergence to the production frontier

strategic bargaining with firm inventories this paper characterizes how a firm s opportunity to sell from its stock of inventories affects the outcome of strategic wage negotiations with a union of workers in equilibrium the union and firm share the benefits from an immediate return to work less the costs of a strike of infinite duration this outcome is equivalent to a nash bargaining solution in which the threat points are the agents expected payoffs should a strike last forever we also demonstrate that for a given level of inventories the wage increases when demand is high conversely given demand the wage falls as inventories rise

quantifying the net cost of a carbon price floor in germany abstract the german energy and climate policy mix is failing to decarbonize electricity production until now with only 6 overall co2 emissions reductions since 2005 using empirical methods and hourly market data we estimate the aggregate supply curve of the german power market and simulate the effect of a 20 tco2 and 40 tco2 carbon price floor on the german power market and on the renewable subsidy scheme with the 40 tco2 carbon price floor median prices increase by 37 mwh and average price peaks by 50 mwh at the wholesale level the market s annual volume increases by some 18 billion to 39 billion at the retail level however the net cost to consumers is moderated due to costs savings from the renewable subsidy scheme worth some 4 billion or roughly one fifth the same ratio applies to a price floor at 20 tco2

robust nonparametric quantile estimation of efficiency and productivity change in u s commercial banking 1985 2004 this article uses a new nonparametric unconditional hyperbolic order quantile estimator to construct a hyperbolic version of the malmquist index unlike traditional nonparametric efficiency estimators the new estimator is both robust to data outliers and has a root n convergence rate we use this estimator to examine changes in the efficiency and productivity of u s banks between 1985 and 2004 we find that larger banks experienced larger efficiency and productivity gains than small banks consistent with the presumption that recent changes in regulation and information technology have favored larger banks

malmquist type indices in the presence of negative data an application to bank branches in this paper we develop an index and an indicator of productivity change that can be used with negative data for that purpose the range directional model rdm a particular case of the directional distance function is used for computing efficiency in the presence of negative data we use rdm efficiency measures to arrive at a malmquist type index which can reflect productivity change and we use rdm inefficiency measures to arrive at a luenberger productivity indicator and relate the two the productivity index and indicator are developed relative to a fixed meta technology and so they are referred to as a meta malmquist index and meta luenberger indicator we also address the fact that vrs technologies are used for computing the productivity index and indicator a requirement under negative data which raises issues relating to the interpretability of the index we illustrate how the meta malmquist index can be used not only for comparing the performance of a unit in two time periods but also for comparing the performance of two different units at the same or different time periods the proposed approach is then applied to a sample of bank branches where negative data were involved the paper shows how the approach yields information from a variety of perspectives on performance which management can use

procrastinating reform the impact of the market stability reserve on the eu ets abstract we study the impact of the market stability reserve msr on price and emission paths of the eu ets from 2019 onwards the msr will adjust the number of allowances auctioned as a function of the size of the surplus i e in times of a large surplus it shifts the issue date of allowances into the future in a perfectly competitive allowance market the msr only affects price and emission paths if the baseline equilibrium becomes unfeasible if the msr is binding prices increase in the short run but drop in the medium run relative to the baseline the msr increases price variability if uncertainty over future allowance demand is resolved while there is a surplus the long run cap is unaffected by both the msr and overlapping climate policies this contrasts the eu s objectives of improving the resilience of the eu ets and increasing synergies with overlapping climate policies

carbon pricing in the eu evaluation of different eu ets reform options abstract this paper studies various options to support allowance prices in the eu emissions trading system ets such as adjusting the cap an auction reserve price and fixed and variable carbon taxes in addition to the eu ets we use a dynamic computable general equilibrium model that explicitly allows for allowance banking and for a detailed cost effectiveness analysis at the eu member state level we find that tightening the cap provides an ad hoc solution to the fundamental issue of the robustness of the effective carbon price while introducing a price component to the ets brings structural carbon price support in times of negative demand shocks for emission allowances these price based policies still benefit from the intertemporal flexibility through the banking provision in the eu ets by re allocating emissions over time with stronger emission reductions in early years and emission increases in later years a higher emission price has a larger negative impact on the new member states economies than on other member states furthermore introducing a carbon tax in addition to the eu ets decreases the price of allowances resulting in welfare gains for net buyers of allowances while net sellers are worse off