Hot spots regulation and environmental justice

This paper analyzes whether regulating “hot spots” of toxic air pollution by increasing the spatial resolution of regulation could address environmental justice (EJ) concerns. To examine this question, this paper develops a decision model of a regulator choosing emission controls within a net cost minimizing framework. An empirical application of the model using air toxic emission data for Escambia and Santa Rosa Counties in Florida estimates the emission standards and spatial distribution of risks at a coarse and a finer spatial resolutions. Implications for EJ are analyzed by combining the simulated spatial risk distributions at the two resolutions with the demographic data. Results indicate that different measures of EJ point to different conclusions regarding the question of whether finer resolution regulation alleviates EJ concerns. The paper concludes with a discussion of the implications for EJ policy.     

Improving the productivity of vertisols in the Accra plains of Ghana using leguminous cover crops

The productivity of the Vertisols of the Accra plains is low, in spite of its high potential fertility. This could be attributed to physical constraints and low organic matter content. A study was conducted at the Agricultural Research Centre, Kpong, to assess the suitability of Mucuna pruriens, Mimosa invisa and Stylosanthes guianensis, in short fallows, for improving the fertility, physical properties, moisture conservation and weed control in the case of these soils. Mucuna had the highest biomass of 5.3tha^?1, as opposed to 4.1tha^?1 under natural fallow. The mucuna and stylosanthes biomass had comparatively higher total N values (240.75 and 203.51kgha^?1, respectively) than mimosa and natural fallow (152.46 and 162.74kgha^?1, respectively). Soil organic carbon, one year after the incorporation of cover crops, was found to be relatively higher under the cover crops (mucuna, stylosanthes and mimosa) than it was under natural fallow. Bulk densities were thus lower under the cover crops than they were under natural fallow. Also, soils under the cover crops had higher total porosity, water infiltration rates and moisture storage than they did under natural fallow. Weed cover, 115 days after planting maize, was significantly lower in plots previously under Mucuna pruriens than it was under natural fallow, Stylosanthes guianensis and Mimosa invisa. There was a negative linear correlation between cover crop biomass and weed density (R ² = 0.593–0.805). Grain and stover yields of maize were higher under Mucuna pruriens than they were under natural fallow (138 and 70 per cent higher, respectively). Burning of the natural fallow resulted in greater weed growth than when the material was worked into the soil (41 and 8 per cent, respectively). Grain yield was significantly greater under mucuna than it was under natural fallow (3.1 and 1.3tha^?1, respectively).     

Discounts in Placing Pre-renounced Shares in Rights Issues

Abstract:  The paper presents evidence from UK rights issues on the discounts at which large blocks of new shares plus rights are sold. The shares are renounced by the shareholders entitled to them and placed with passive investors at substantial discounts of around 8% to the expected ex-rights midpoint price of the existing shares. Tests indicate that the discounts arise because of uncertainty about issuer value and inelastic demand for the shares rather than because the issuing companies are overvalued. The finding that selling renounced shares is costly removes an apparent advantage of rights issues compared with open offers and private placings.     

The Gender Implications of Public Sector Downsizing: The Reform Program of Vietnam

Using data from Vietnam, this article describes several typesof analysis that could be conducted before launching a majordownsizing operation to identify possible gender effects. Itdraws several conclusions about Vietnam's downsizing reforms.First, although women's prospects of obtaining salaried jobsfollowing displacement from state-owned enterprise worsenedas a result of recent reforms, they are likely to improve inthe near future. Second, reforms are associated with a sharpdecline in the gender gap in earnings, both in and outside thestate sector. Third, overstaffing is greatest in sectors inwhich most employees are men, such as construction, mining,and transportation; it is much less prevalent in sectors inwhich women dominate the work force, such as footwear, textiles,and garments. Fourth, training and assistance programs currentlyin place to help redundant workers reveal no evidence of stronggender bias. Fifth, severance packages based on a multiple ofearnings are more favorable to men, whereas lump-sum packagesfavor women.      

Wage misalignment in CFA countries: were labour market policies to blame?

Wage rigidity, stemming from highly distortive labour marketpolicies, is a natural candidate to explain the overvaluationof the CFA franc after the adverse external shocks of the 1980s.This paper uses a variety of data sources to assess wage rigidityin CFA countries until the 1994 devaluation, and to analysewhether it was due to labour market policies. The paper showsthat wages were high in CFA countries, compared with both wagesin similar countries and the labour earnings of similar individualswithin the same countries. It also shows that wages were rigidin real terms, in the sense of following closely the fluctuationsof government wages and consumer prices, but it finds no evidenceof nominal wage rigidity, though. From an international perspective,minimum wages were not high enough to account for the observedwage misalignment. Moreover, their adjustment over time washighly responsive to real shocks. Private sector unions, inturn, seemed more instrumental in achieving wage moderationthan wage drift. Their members usually had lower wages thansimilar, non-unionised workers, which probably reflects the'subordinate' nature of the labour movement. The most likelycandidates to explain wage misalignment and real rigidity inCFA countries in the 1980s and early 1990s are therefore governmentpay policies and (possibly) limited competition in product markets.     

Payout flexibility and capital expenditure

Over the past two decades or so, repurchases have become an appealing method for disbursing cash to shareholders compared to the traditional dividends. Managerial perception as well as empirical evidence suggests that repurchases are inherently more flexible than dividends, which may account for their increasing popularity. The rigidity of dividends and the apparent flexibility of share repurchases could impact firm investments. Firms may forego profitable investment opportunities to maintain their dividend levels, while repurchases could be easily scaled back to fund profitable investment projects without fear of an adverse market reaction. We test the flexibility hypothesis of repurchases by regressing capital expenditures on repurchases and dividends in addition to other control variables. Consistent with our hypotheses, we find an inverse relationship between capital expenditures and repurchases but an insignificant relationship with dividends. Further, we find that the flexibility associated with repurchases is especially evident for firms that are financially constrained, and during the recent financial crisis period when external capital constraints were severe. Finally, we find that flexibility of repurchases with respect to capital expenditures is stronger in the more recent time period during which regulatory changes made repurchases more attractive as a mechanism to disburse cash back to shareholders.     

Discount rates for long-term projects: the cost of capital and social discount rate compared

Research on the cost of capital and on the social discount rate (SDR) has developed largely along separate paths. This paper offers an overview and comparison of both concepts. The consumption-based theory of discount rates is common to both, but there are striking differences in how the cost of capital and SDR are estimated. A project's cost of capital is inferred in practice from market data, by a well-established package of techniques, and project risk makes a large difference. In contrast, the SDR is estimated by applying judgement about the welfare of future generations, in the setting of consumption-based theory. Project risk has tended to be ignored under the SDR approach.     

The Elasticity of Taxable Income during the 1990s: New Estimates and Sensitivity Analyses

Over the past two decades, the elasticity of taxable income has emerged as the central parameter for assessing efficiency and revenue implications from changes to tax policy. This article estimates short‐ and longer‐run responses of taxable (and gross) income to changes in tax rates using panels of U.S. tax returns for the 1990s. With the richest set of income controls, income—weighted elasticity estimates range from 0.19 to 0.33, depending on whether responses are measured over one‐ or three‐year intervals. An alternative approach designed to capture delayed and anticipatory responses yields much larger estimates—ranging from 0.43 over the short term and from 0.78 to 1.46 over the longer term. A continuing obstacle to identification encountered here is that the income controls most likely to control for mean reversion and divergence within the income distribution are also the most likely to absorb independent variation in tax rates, also needed for identification.     

A CONSISTENT PRICING MODEL FOR INDEX OPTIONS AND VOLATILITY DERIVATIVES

We propose a flexible framework for modeling the joint dynamics of an index and a set of forward variance swap rates written on this index. Our model reproduces various empirically observed properties of variance swap dynamics and enables volatility derivatives and options on the underlying index to be priced consistently, while allowing for jumps in volatility and returns. An affine specification using Lévy processes as building blocks leads to analytically tractable pricing formulas for volatility derivatives, such as VIX options, as well as efficient numerical methods for pricing of European options on the underlying asset. The model has the convenient feature of decoupling the vanilla skews from spot/volatility correlations and allowing for different conditional correlations in large and small spot/volatility moves. We show that our model can simultaneously fit prices of European options on S&P 500 across strikes and maturities as well as options on the VIX volatility index.