The economic costs of weeds on productive land in New Zealand

Here we review published research on the costs of weeds to New Zealand’s pastoral, arable and forestry sectors, and propose an alternative dynamic approach for future research. The studies reviewed had little in common methodologically, often contained guesswork, or were outdated. Their aggregation resulted in a conservative estimate of the cost of weeds to New Zealand’s agricultural economy of $1658 million (2014 NZD). To address deficiencies in previously used methodologies, a dynamic approach is developed and applied to a case study on giant buttercup in dairy pastures. This approach accounts for probable temporal changes in both the geographic extent of the weed and in producer prices and indicates annuitized costs (over the period 2012–2030) of $166 million, $259 million and $592 million for rates of spread of 144, 60 and 20 years for giant buttercup to invade all dairy regions in New Zealand. Comparing the aggregate cost of all weeds to the three productive sectors estimated from the historical data with these ‘dynamic’ estimates for the one species in dairy pasture, indicates that the historical data provide a substantial underestimate of the true aggregate cost of weeds to New Zealand’s agricultural economy.     

Imports under a Foreign Exchange Constraint

To assess proposed macroeconomic adjustment programs, policymakersmust estimate import demand relative to the foreign exchangeavailable. Traditional models estimate import demand as a functionof relative prices (the real exchange rate) and income (grossdomestic product) but omit changes in foreign exchange. In the1980s, however, declines in foreign lending and the terms oftrade and increased debt service costs reduced foreign exchangeavailability in most developing countries and limited importcapacity. In this article two import models are presented which incorporateboth the traditional variables and indicators of import capacity—foreignexchange inflows and international reserves. The first modelassumes that import prices are exogenous, but in the secondmodel import prices are endogenous—allowing for governmentattempts to reduce import demand by increasing the domesticimport price. The models are estimated using data for twenty-onedeveloping countries for 1970–83. The results suggestthat the import model presented here does a better job of explainingimport behavior than do the traditional model (which excludeschanges in foreign exchange) and the Hemphill model (which excludesrelative import prices and income).     

Schritt für Schritt: Erfolgreiche Internationalisierungsstufen von KMU

Früh zu wissen, wie die Schritte der Internationalisierung erfolgreich anzugehen sind — das ist der Wunschtraum vieler Unternehmer. Lesen Sie, wie kleine und mittlere Unternehmen die Organisationsstrukturen, -prozesse und -kultur in unterschiedlichen Stufen ihrer internationalen Entwicklung gestalten k?nnen. Als Benchmarks dienen erfolgreiche und weniger erfolgreiche KMU. Dabei werden fünf Stufen betrachtet, von ersten Exporten in Europa bis hin zu multinationaler Auslandst?tigkeit.     

Economically significant stock market forecasts

It has been known for some time that a small, but statistically significant portion of the monthly variation in excess returns on the S&P 500-stock index is predictable using ex ante information. This paper presents a model whose out-of-sample forecasts have economic significance. Specifically, a switching rule conditioned on out-of-sample forecasts of stock excess returns, produces investment outcomes that mean-variance dominate the buy-and-hold. The switching strategy yields superior risk-adjusted returns as judged by the composite performance measures of Treynor, Sharpe, and Jensen.     

Risk aversion and business cycles: An empirical analysis

Unlike investors, who tend to maintain highly-diversified portfolios, private entrepreneurs usually lack access to complete risk-pooling for idiosyncratic risks, thus more directly internalize the cost of volatility. Risk aversion, however, modifies the optimal contract between entrepreneurs and lenders by incorporating the risk premium that entrepreneurs demand for the uninsurable risk: the private equity premium. Consequently, real shocks tend to be amplified as changes in entrepreneurs’ net worth affect the private equity premium and so the rental rate of capital, investment and output. This theoretical framework suggests that economies where the private entrepreneurial sector is a relatively larger, and therefore more vulnerable to uninsurable risk, all else equal, should present higher volatility. I test this prediction by (1) conducting a simple reduced-form analysis that shows that output volatility is negatively associated with the relative importance of the corporate vs. the privately-held sector; and (2) estimating the model's structural parameters. Intuitively, countries where private entrepreneurs are predominant and so risk aversion is likely to impose stronger impacts, positive risk aversion coefficients should be found. Results suggest that risk aversion is empirically more relevant for economies like Argentina, Brazil, Chile, Korea, Mexico and Thailand than for Canada, France, Germany, the U.K. and the U.S.     

Autonomous bureaucrats in independent bureaucracies? Loyalty perceptions within supreme audit institutions

The independence of Supreme Audit Institutions (SAIs) is essential to their effectiveness, yet the actual autonomy of SAIs auditors can be questioned. To whom do SAI officials owe their loyalty? To what extent are their loyalty perceptions reflected in their auditing reports? Our comparative study triangulates interviews, direct observations, and documents and, based on Q methodology, constructs four types of SAI officials who disavow traditional loyalties to political appointees or external stakeholders but abide to Constitutional and professional rules as well as to their respective audit institutions. Loyalty perceptions reflect SAIs’ associational contexts and are related to different work outcomes.     

Term structure modelling with observable state variables

This paper proposes and implements a parsimonious three-factor model of the term structure whose dynamics is driven uniquely by observable state variables. This approach allows comparing alternative views on the way state variables – macroeconomic variables, in particular – influence the yield curve dynamics, avoids curse of dimensionality problems, and provides more reliable inference by using both the cross-sectional and the time series dimension of the data. I simulate the small-sample properties of the procedure and conduct in- and out-of-sample studies using a comprehensive set of US data. I show that even a parsimonious model where the level, slope and curvature factors of the term structure are driven by, respectively, inflation, monetary policy and economic activity consistently outperforms the (latent-variable) benchmark model in an out-of-sample study.     

HOME COMPUTER USE AND THE DEVELOPMENT OF HUMAN CAPITAL

This paper uses a regression discontinuity design to estimate the effect of home computers on child and adolescent outcomes by exploiting a voucher program in Romania. Our main results indicate that home computers have both positive and negative effects on the development of human capital. Children who won a voucher to purchase a computer had significantly lower school grades but show improved computer skills. There is also some evidence that winning a voucher increased cognitive skills, as measured by Raven's Progressive Matrices. We do not find much evidence for an effect on non-cognitive outcomes. Parental rules regarding homework and computer use attenuate the effects of computer ownership, suggesting that parental monitoring and supervision may be important mediating factors.     

Payment shock and mortgage performance

The effect of payment shocks on subprime hybrid ARM mortgage prepayment and delinquency is examined. Using loan level data from private label securities, we modeled the effects of payment shocks on mortgage performance. Our study provided interesting empirical results in three main areas: First, we addressed the effect of payment shocks on subsequent mortgage delinquency. Second, we studied how the effect of payment shocks varies and decays over time. Third, we disentangled the impact of payment shocks based on the reason for the shocks: payment shock due to the expiration of a teaser rate (i.e. “teaser shock”) versus the payment shock due to index rate changes at the time of reset (i.e. “market rate shock”).We find that the effect of payment shock on loan performance varies by the delinquency status of the loan at the time of the shock. That is, the payment shock has the most significant effect on “current” loans rather than loans already in delinquency. Also of note, we find that the effect of a payment shock decays only gradually over time. We find that the impact of “teaser shocks” and “market rate shocks” on mortgage performance do not differ substantially, even though teaser shocks may be somewhat more predictable than market rate shocks. This suggests that either subprime ARM borrowers did not fully understand the product and the extent of the shock at the first reset date or that financially strapped borrowers used the product to speculate and were caught by the teaser shock when they were unable to refinance or sell (i.e. “flip”) their properties .The study suggests that any modification plan designed to eliminate potential payment shocks or to otherwise lower payments will be most effective for loans that are currently performing rather than loans that are already in delinquency.