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Global Warming And Extreme Events: Rethinking The Timing And Intensity Of Environmental Policy
Get PDFThe possibility of low-probability extreme events has reignited the debate over the optimal intensity and timing of climate policy. In this paper we therefore contribute to the literature by assessing the
implications of low-probability extreme events on environmental policy in a continuous-time real options model with “tail risk”. In a nutshell, our results indicate the importance of tail risk and call
for foresighted pre-emptive climate policies
An HEI-Disaggregated Input-Output Table for Scotland
Get PDFThis paper describes how the education sector of the Scottish Input-Output tables is
disaggregated to identify a separate sector for each of Scotland’s twenty Higher
Education Institutions (HEIs). The process draws on accounting and survey data to
accurately determine the incomes and expenditures of each institution. In particular we emphasise determining the HEIs incomes source of origin to inform their treatment, as endogenous or exogenous, in subsequent analyses. The HEI-disaggregated Input- Output table provides a useful descriptive snapshot of the Scottish economy and the role of HEIs within it for a particular year, 2006. The table can be used to derive multipliers and conduct various impact studies of each institution or the sector as a whole. The table is furthermore useful to calibrate other multi-sectoral, HEI disaggregated models of regional economies, including Social Accounting Matrix
(SAM) and computable general equilibrium (CGE) models
Periodic Sequences of Arbitrage: A Tale of Four Currencies
Get PDFThis paper investigates arbitrage chains involving four currencies and four foreign exchange trader-arbitrageurs. In contrast with the three-currency case, we fi nd that arbitrage operations when four currencies are present may appear periodic in nature, and not involve smooth convergence to a \balanced" ensemble of exchange rates in which the law of one price holds. The goal of this article is to understand some interesting features of sequences of arbitrage operations, features which might well be relevant in other contexts
in finance and economics
“Policy Scepticism” and the Impact of Welsh Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints
Get PDFThis paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010b) for the case of Wales in order to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of Welsh HEIs. A “policy scepticism” has emerged that challenges the results of conventional regional HEI impact analyses. This denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper
we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of the publicsector
expenditure constraints that are binding under devolution. We show how conventional
impact analyses can be augmented to accommodate regional public sector budget constraints.
While our results suggest that conventional impact studies overestimate the expenditure
impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity
“Policy Scepticism” and the Impact of Northern Irish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints
Get PDFThis paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010b) for the case of Northern Ireland. The motivation is to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of Northern Irish HEIs.
A comparative analysis will follow in due course. A “policy scepticism” has emerged that challenges the results of conventional regional HEI impact analyses. This denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper
we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of the public sector
expenditure constraints that are binding under devolution. We show how conventional
impact analyses can be augmented to accommodate regional public sector budget constraints.
While our results suggest that conventional impact studies overestimate the expenditure
impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity
The EMU sovereign-debt crisis: Fundamentals, expectations and contagion
Get PDFWe offer a detailed empirical investigation of the European sovereign debt crisis based on the theoretical model by Arghyrou and Tsoukalas (2010). We find evidence of a marked shift in market pricing behaviour from a ‘convergence-trade’ model before August 2007 to one driven by macro-fundamentals and international risk thereafter. The majority of EMU
countries have experienced contagion from Greece. There is no evidence of significant
speculation effects originating from CDS markets. Finally, the escalation of the Greek debt crisis since November 2009 is confirmed as the result of an unfavourable shift in countryspecific
market expectations. Our findings highlight the necessity of structural,
competitiveness-inducing reforms in periphery EMU countries and institutional reforms at the EMU level enhancing intra-EMU economic monitoring and policy co-ordination
Affirmative Action Policy and Effort Levels. Sequential-Move Contest Game Argument
Get PDFIn this paper we analyse a simple two-person sequential-move contest game with heterogeneous players. Assuming that the heterogeneity could be the consequence of past discrimination, we study the effects of implementation of affirmative action policy,
which tackles this heterogeneity by compensating discriminated
players, and compare them with the situation in which the heterogeneity is ignored and the contestants are treated equally. In
our analysis we consider different orders of moves. We show that the order of moves of contestants is a very important factor in
determination of the effects of the implementation of the affirmative action policy. We also prove that in such cases a significant role is played by the level of the heterogeneity of individuals.
In particular, in contrast to the present-in-the-literature predictions, we demonstrate that as a consequence of the interplay of these two factors, the response to the implementation of the affirmative action policy option may be the decrease in the total equilibrium effort level of the contestants in comparison to the
unbiased contest game
Growth Rate Estimation in the presence of Unit Roots
Get PDFThis study addresses the issue of the presence of a unit root on the growth rate estimation by the least-squares approach. We argue that when the log of a variable contains a unit root, i.e., it is not stationary then the growth rate estimate from the log-linear trend model
is not a valid representation of the actual growth of the series. In fact, under such a
situation, we show that the growth of the series is the cumulative impact of a stochastic process. As such the growth estimate from such a model is just a spurious representation of the actual growth of the series, which we refer to as a “pseudo growth rate”. Hence such an estimate should be interpreted with caution. On the other hand, we highlight that the statistical representation of a series as containing a unit root is not easy to separate from an alternative description which represents the series as fundamentally deterministic (no unit root) but containing a structural break. In search of a way around this, our study presents a survey of both the theoretical and empirical literature on unit root tests that
takes into account possible structural breaks. We show that when a series is trendstationary with breaks, it is possible to use the log-linear trend model to obtain well defined estimates of growth rates for sub-periods which are valid representations of the actual growth of the series. Finally, to highlight the above issues, we carry out an empirical application whereby we estimate meaningful growth rates of real wages per
worker for 51 industries from the organised manufacturing sector in India for the period
1973-2003, which are not only unbiased but also asymptotically efficient. We use these
growth rate estimates to highlight the evolving inter-industry wage structure in India
Disaggregating the Household Sector in a 2004 UK Input Output Table and Social Accounting Matrix by Income Quintiles
Get PDFThis paper disaggregates a UK Input-Output (IO) table for 2004 based on household income quintiles from published survey data. In addition to the Input-Output disaggregation, the household components of a UK Income Expenditure (I-E) account used to inform a Social Accounting Matrix (SAM),have also been disaggregated by household income quintile. The focus of this paper is on household expenditure on the UK energy sector
The Long Term Prospects for Activity in the UK Continental Shelf
Get PDFNORTH SEA STUDY OCCASIONAL PAPER
No. 11