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Prices vs Quantities under Severe Uncertainty
No full textThe consensus among economists in favour of carbon taxes over emissions permits is based on a groundbreaking result due to Weitzman (1974). It assumes, however, a probability distribution over abatement costs, and similarly for damages. As many have argued, current climate uncertainties are far more severe, and do not justify any such distributions. This paper reconsiders the tax-permit comparison in the presence of severe or Knightian uncertainty, drawing on the workhorse maxmin-EU model from the literature on decision under uncertainty (Gilboa and Schmeidler, 1989). Our results show that optimally set permits are strictly more efficient than optimal taxes when uncertainty concerning the slope of marginal abatement costs is severe. They suggest that, given the uncertainty reported in the latest IPCC report, permit policies are more efficient
The Early Bird Catches the Worm: How Lasting is the Value of New, Alternative Data?
No full textWe investigate how the information content of alternative data is impounded in prices and the duration of its value to mutual fund managers. Using a regression discontinuity design, we document that mutual funds increase their loadings on specific stocks by 0.7%-3% in response to exogenous, rounding-induced 1-percentage-point increase in ratings from customer-generated comments about companies’ products and services on social media platforms. This effect is more pronounced when information asymmetry is greater. Funds relying more on such data yield higher abnormal future returns and exhibit better stock-picking and market-timing abilities. This effect dissipates when the data becomes public
Dynamic Contracting with Many Agents
No full textThis paper analyzes dynamic capital allocation and risk sharing between a principal and many agents, who privately observe their output. The state variables of the mechanism design problem are aggregate capital and the distribution of continuation utilities across agents. This gives rise to a Bellman equation in an infinite dimensional space, which we solve with mean-field techniques. We fully characterize the optimal mechanism and show that the level of risk agents must be exposed to for incentive reasons is decreasing in their initial reservation utility. We extend classical welfare theorems by showing that any incentive-constrained optimal allocation can be implemented as an equilibrium allocation, with appropriate transfers and wealth taxation by the principal
Diversity in Founder Teams
No full textThe article first documents the general rise of female-led and ethnic minority led startups, while Venture Capital (VC) funding to these groups is still at very low levels. It then summarizes recent research on gender differences in founding choices, gender and ethnic bias in VC funding, the role of founder team diversity on team performance as well as on fund performance
O Futuro de uma ilusão: a civilização e a ilusão necessária. A Religião: Uma ilusão ou/e um álibi político?
No full textInternational audienc
Fiscal Dominance: Implications for Bond Markets and Central Banking
No full textFiscal dominance refers to situations in which monetary policy is constrained by the public sector’s budget constraint. Large shifts in the dynamics of sovereign debts, surpluses, and central bank’s balance sheets since the Great Financial Crisis have created the perception of a heightened risk of such fiscal dominance in major jurisdictions. This paper reviews the theoretical and empirical literature on fiscal dominance. We offer a simple theory in which fiscal dominance arises as the outcome of strategic interactions between the government and the central bank
STRUCTURAL TRANSFORMATION AND INTERINDUSTRY LINKAGESDURING MULTIFACETED CRISES: KEY SECTORS OF THE ALGERIANECONOMY FROM 2015 TO 2021
No full textInternational audienceIn the modern field of economic analysis, structural analysis techniques have emerged as invaluable tools for monitoring and understanding the structure of the economics' sectors dynamic. This article analyses structural change in the Algerian economy for the period 2015 -2021, based on a series of input-output tables. For this purpose, we used the powerful Rasmussen's structural decomposition method to inspect the structure of the economy and examined the evolving internal complexity of relationships and interdependencies, using key sector analysis to assess the strength of forward and backward linkages. The objective was to gain insights into the dynamics of this economy and to evaluate the extent to which it has undergone changes during this critical period witness of a multifaceted crisis. The findings from our analysis provide support for the hypothesis that the structural framework of the economy remained relatively stable over this period. While the broader structure exhibited signs of continuity, our investigation also revealed a modest enhancement in the cross-sector connections within the economy. These results could be used as a strong tool in terms of the relationships and interactions among various sectors, for the country's economic resilience and prospects for diversification. Indeed, over time we would expect economic growth and development to coincide with increasing internal complexity and perhaps durability.</div
Labor Market Polarization and the Great Urban Divergence
No full textLabor market polarization is among the most important features in recent decades of advanced country labor markets. Yet key spatial aspects of this phenomenon remain under-explored. We develop four key facts that document the universality of polarization, a city-size difference in the shock magnitudes, a skew in the types of middle-paid jobs lost, and the role of polarization in the great urban divergence. Existing theories cannot account for these facts. Hence we develop a parsimonious theoretical account that does so by integrating elements from the literatures on labor market polarization and systems of cities with heterogeneous labor in spatial equilibrium
Regulation, Compliance, and Proximity: Evidence from Nuclear Safety
No full textEffective regulation relies on monitoring the compliance of regulated firms. Using data on regulatory inspections and employees’ emergency training in the universe of US nuclear plants, we investigate how regulatory monitoring drives compliance with nuclear safety procedures. We find that nuclear plants farther from the regulator’s regional office exhibit more safety incidents, and their employees are less trained to deal with emergencies. These spatial differences exist despite regulatory monitoring is conducted daily through resident inspectors (i.e., monitoring is continuous and decentralized). The matching between resident inspectors and nuclear plants helps to explain why differences in safety exist: less experienced inspectors are assigned to more distant nuclear plants, and this assignment leads to a decline in employees’ emergency training. Hence, attaining safety through decentralized monitoring requires assigning experienced inspectors to plants that are insulated from the regulator
Bigger and Further: An Operational Perspective of Windfarms Design and Planning
No full textMoving toward a net zero energy system demands heavy investment in renewable energy sources. Wind energy, specifically offshore wind, has proven to be one of the most promising technologies in this space. To that end, there is a significant trend toward installing larger turbines further offshore, based on the premise that these, often massive installations, generate more energy with less intermittency, which has been a considerable challenge in integrating renewables into the electricity grid. We explore the operational reality of this trend by building a mathematical model of electricity generation that captures the economics and environmental impact of offshore wind electricity generation that spans the lifecycle of the wind turbines, including the maintenance and end-of-life phases. We find that the ongoing trend of larger turbines further offshore can undermine the economic viability of wind farms. Specifically, we show that the decision maker's profit is inverse-U shaped both in turbine size and distance to the shore. Under reasonable assumptions, the optimal turbine size may decrease in the distance to the coast, suggesting that considering maintenance and end-of-life costs, it can be optimal for the further offshore turbines to be smaller. These results are mediated by wake loss---the phenomenon that the wind energy available to be harnessed downwind is reduced after passing through a turbine. Overall, our results caution against considering only the short-term engineering aspects and invite a more thorough understanding of wind turbines' lifetime economics and environmental impact in determining the size and distance to the shore of the wind turbines