NHH Brage (Norges Handelshøyskole)
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What Characterizes Cycles with Crashes versus Corrections in the House Market? An Empirical Test on Price Behaviour Based on Economic Key Indicators
Get PDFThis thesis aims to examine and compare the cycles characterized by crashes and corrections
in the Norwegian house market, by focusing on crucial economic indicators. By employing
descriptive analysis and time-series Ordinary Least Squares (OLS) regression, we examine
two periods characterized by crashes and corrections.
Subsequently, we shall delve into crisis theory and the dynamics between supply and
demand. Contrary to previous studies, which primarily focused on the outcomes of bubbles
and crashes in the house market, our thesis will focus on the differences between cycles with
crash and correction.
To examine the differences, our paper deploys Hodrick-Prescott filtering to monitor real
house prices and observe how they deviate from the long-term trend. We discuss the
economic indicators such as GDP, nominal income, nominal interest rate, Price/Rent (P/R)
ratio, house stock, unemployment rate, money supply, and credit volume, and analyse how
they affect house prices.
The outcome from our analysis illustrates that during both crashes and corrections, house
prices were significantly influenced by changes in credit volume and money supply. In
scenarios with crashes, these factors contribute to the inflation of house prices and bubble
tendencies, eventually leading to a bubble burst and subsequent market collapse. The
findings further reveal that unemployment rate and house stock significantly influence the
market during crashes, whereas their importance diminishes during corrections. The P/R
ratio considerably impacted the model for both types of market cycles. However, in periods
with crashes, it increases more over time. Conversely, nominal interest rate, GDP, or
nominal income did not significantly influence the model.nhhma
Evaluating Norway’s electric vehicle incentives
Get PDFWe use product-level data from 2000 to 2021 to evaluate Norway’s incentives for consumers to choose electric vehicles. These include taxes on fossil fuels, EV exemption from car purchase taxes, and other incentives, like discounts on road tolls. We find that undoing the incentive with the largest effect, the EV exemption from purchase taxes, would reduce the EV market share to 25 percent from the 66 percent observed in 2021, increase CO2 emissions of new cars sold by 170 percent, reduce their total weight by 22 percent, and reduce the number of new cars sold by 10 percent
Why do committees work?
Get PDFWe report on the results of an experiment designed to disentangle behavioral biases in information aggregation of committees. Subjects get private signals about the state of world, send binary messages, and finally vote under either majority or unanimity rules. Committee decisions are significantly more efficient than predicted by Bayesian equilibrium even with lying aversion. Messages are truthful, subjects correctly anticipate the truthfulness (contradicting limited depth of reasoning), but strikingly overestimate their pivotality when voting (contradicting plain lying aversion). That is, committees are efficient because members message truthfully and vote non-strategically. We show that all facets of behavior are predicted by overreaction, subjects overshooting in Bayesian updating, which implies that subjects exaggerate the importance of truthful messages and sincere voting. A simple one-parameteric generalization of quantal response equilibrium capturing overreaction covers 87 percent of observed noise
Effects of Uncoupling the North Sea Link : An empirical analysis of risks and premiums in the two day-ahead auctions in bidding area N0 2
Get PDFIn this thesis, we study the impact of the current auction solution on the North Sea
Link (NSL), an interconnector between the electricity systems of Great Britain (GB) and
Southern Norway (NO2). Due to Brexit, interconnector capacity is allocated through
an implicit day-ahead auction, which closes before the regular NO2 (SDAC) auction.
Consequently, traders in NO2 can decide to participate in two consecutive auctions.
To address this decision problem, we develop a forecast model to predict day-ahead NO2
(SDAC) prices. Using these forecasts, we approximate the premium that the marginal
trader requires to take positions in the first auction (NSL). Contrary to initial expectations,
we find that traders are, on average, pricing in a positive premium in the NSL auction.
This results in a systematic difference between the NO2 and NSL prices.
We further examine the drivers behind the premium to determine when and why it arises.
Our findings indicate that when traders have less confidence in their NO2 price forecasts,
they demand a larger premium for trading with the NSL. On average, the marginal trader
in our model requires a 0 . 2 2 /MWh higher premium for each incremental increase in the
prediction interval of the point forecast. In an efficient market with risk-neutral traders,
such premiums would not exist as the traders would increasingly take advantage of the
arbitrage opportunity. Therefore, we argue that traders in the NSL auction are risk-averse.
The risk premium comes with a commercial cost for the interconnector owners. We find
that Statnett has lost 2 7 million in congestion revenues since the opening of the NSL on
the 1st of October 2021 to the 15th of January 2023. This amounts to approximately 10%
of the total congestion revenues accumulated during the period.
Overall, we find that the implicit auction solution on the NSL leads to a redistribution
of socio-economic welfare from the interconnector owners to the traders in the form
of a systematic risk premium. We argue that this finding should be acknowledged in
future research on the socio-economic welfare gains from the NSL and in future projects
considering the use of an implicit auction to connect uncoupled markets.nhhma
Portfolio optimization of chartering contracts : An empirical study of the chartering policies for Western Bulk Chartering ASA in the period from 2016 to 2022
Get PDFThis thesis looks at how the shipping operator Western Bulk can structure their chartering
decisions through a portfolio approach. This entails looking at chartering contracts as single
investments, which are part of a universal investment set. Looking at the period 2016-2022
we seek to discover how an optimal portfolio can be constructed and how it compares with
the actual operations of Western Bulk.
Traditionally portfolio optimization has been common within securities and corporate
finance. However, its applications have been extended to a wide array of industries. Our
paper builds on this and implements this approach into bulk shipping. Through the
Markowitz model we investigate what constitutes an optimal portfolio in terms of contractand
geographical distribution. The optimal solution finds evidence for deviations to the
historic operational data of Western Bulk. These results and preceding calculations have not
been subjected to a full set of possible constraints. Thus, our findings do not provide a
complete realistic application to Western Bulk’s operations.nhhma
(Breaking) intergenerational transmission of mental health
Get PDFWe estimate health associations across generations and dynasties using information on healthcare visits from administrative data for the entire Norwegian population. A parental mental health diagnosis is associated with a 9.3 percentage point (40%) higher probability of a mental health diagnosis of their adolescent child. Intensive margin physical and mental health associations are similar, and dynastic estimates account for about 40% of the intergenerational persistence. We also show that a policy targeting additional health resources for the young children of adults diagnosed with mental health conditions reduced the parent-child mental health association by about 40%
What Makes Hiring Difficult? Evidence from Linked Survey-Administrative Data
Get PDFWe designed an innovative survey of firms and linked it to Danish administrative data to yield new insights about the factors that can influence firms’ hiring decisions. Several important findings stand out: (1) search and training frictions and economic uncertainty are as important as labor costs in hiring decisions ; (2) search and training frictions are more likely to affect younger and smaller firms; (3) uncertainty is more likely to affect hiring decisions in low-productivity firms; (4) thirty percent of firms prefer to hire already employed persons over the unemployed, because they believe that unemployed workers have lower abilities due to negative selection or skill depreciation during unemployment; and (5) these firms are more likely to report that labor market frictions and labor costs considerations discourage them from hiring
The Imbalanced Consumer: The Effect off Physical Imbalance on Brand Recall and Construal Level
Get PDFThe role of physical imbalance in consumer behavior is an understudied topic in consumer
psychology. This dissertation investigated the effect of physical imbalance on consumers. In a
consumer environment, imbalance can be activated in various ways, such as when consumers
struggle to walk on wet floors, icy sidewalks, miss a step, travel, or walk in a virtual space. This
dissertation hypothesized that momentary loss of physical balance reduces consumers´ capacity to
recall brands from memory. The finding extends research on subjects with balance impairments by
testing this proposition with young and healthy consumers. Consumers and practitioners should
know whether the number of recalled brands decreases when physical imbalance is experienced.
Recognizing that imbalance is a source of cognitive load, consumers and marketers can benefit
from understanding whether the remaining capacity becomes subject to limitations. According to
Construal level theory, consumers perceive available choice alternatives as more viable when
proximal sensations are dominant. This dissertation tested the proposition that imbalance reduces
cognitive capacity and demands abrupt proximal action, prompting consumers to prefer low
construed proximal choice alternatives. The first study suggested that consumers’ find their mental
performance to be reduced during imbalance. The study found scant evidence for a decrease in the
retrieval of brands from memory among young and healthy consumers. Subsequent studies tested
whether imbalance could instigate a preference for low construal choice alternatives. The following
two studies highlighted the need to improve study design and measurement. The final study found
that imbalanced participants were more likely to choose certain smaller monetary rewards in the
present over higher, more uncertain future rewards. The finding suggests a small effect of proximal
sensation prompting a preference for lower construed alternatives. A single-paper meta-analysis
suggested that the evidence for the proximal sensation of imbalance on psychological distance is
weak. Alternative explanations about consumers´ certainty, mood, and self-efficacy were also
tested. None of the alternative relationships were significant. The findings from this dissertation
contribute to the literature by pinpointing the complexities of physical balance as a symphony of
sensory interactions rather than a mere conceptual metaphor. This was the first study in consumer
psychology to test the effect of physical imbalance on young and healthy adults as a demanding
sensory state. The dissertation demonstrated that measuring the effect of proximal sensation of
imbalance requires technical skill and resources. It contributes to consumer psychology by
concluding that imbalance does not have a significant effect on the retrieval of brands or preference
among young consumers. The study of imbalance will continue to be relevant for consumer
research as aging populations are more likely to suffer from imbalance impairments while the use
of balance-demanding virtual reality is increasing in popularity
Competition and risk taking in local bank markets: evidence from the business loans segment
Get PDFThis paper studies empirically the relationship between competition and risk taking in banking markets. We exploit an unique dataset providing information about all bank loans to Norwegian firms over several years. Rather than relying on observed market shares, we use the distance between bank branches and firms to measure the competitiveness of local markets. The cross-sectional and longitudinal variation in competition in local markets are used to identify the relationship between competition and risk taking, which we measure by the non-performing loans and loss provision rates of the individual banks. We find that more competition leads to more risk taking. We also examine the effects of bank competition on the availability of loans. More competition leads to lower interest rates and higher loan volumes, but also makes it more difficult for small and newly established firms to obtain a loan
ESSAYS ON MUTUAL FUNDS
Get PDFThis paper analyzes whether sustainable investors are sensitive to fees and whether investors
in funds with a higher sustainability rating are more sensitive to fees than investors in nonsustainable
funds. Using an international sample of equity mutual funds, I find that they in
general are more sensitive to fees and that this sensitivity increases with Morningstar's globe
ratings. Moreover, investors in funds without an explicit sustainability objective are more
sensitive to fees than investors in funds with such an objective. The results indicate that
sustainable investors elicit a stronger response to fees than other investors, but that those
investing in sustainable funds without a sustainability mandate respond the most