LOCAL WELL‐POSEDNESS OF MUSIELA’S SPDE WITH LÉVY NOISE

We determine sufficient conditions on the volatility coefficient of Musiela’s stochastic partial differential equation driven by an infinite dimensional Lévy process so that it admits a unique local mild solution in spaces of functions whose first derivative is square integrable with respect to a weight.     

Strategic trade policy: a review of the theoretical debate

This paper reviews the recent debate on strategic trade policies, whose main conclusion is that while the real world may be far from the condition of perfect competition considered by standard theory, free trade remains the best ruleofthumb policies. In the second part of the paper several issues are reviewed which suggest that the debate is far from complete. Two aspects, in particular, require closer scrutiny: (i) the implications of multiple equilibria and pathdependency phenomena in a world in which innovation activities have crucial effects on trade performance; (ii) the problems of collective action associated with the constitution of a free trade régime.     

LeNS China:A Chinese learning network on sustainability for the development and diffusion of teaching materials and tools on design for sustainability

It is a shared opinion that sustainable development requires a system discontinuity, meaning that radical changes in the way we produce and consume are needed. Within this framework there is an emerging understanding that an important contribution to this change can be directly linked to decisions taken in the design phase of products, services and systems. Design schools have therefore to be able to provide design students with a broad knowledge and effective Design for Sustainability tools, in order to enable a new generation of designers in playing an active role in re-orienting our consumption and production patterns. This paper presents the intermediate results of the LeNS China, the Learning Network on Sustainability of Chinese design Higher Education Institutions aiming at curricula development on Design for Sustainability. The project is a regeneration of the LeNS Asian-European multi-polar network project financed by the European Commission. LeNS China is taking in consideration the local needs, interests and opportunities could represent a significant enabling platform capable to sensitise, support and empower a new generation of Chinese design educators, designers and entrepreneurs to reach design practice throughout an open collaborative learning approach. The paper will firstly introduce the LeNS project and its ethos, and then the LeNS China network will be described in terms of the state of the art of design for sustainability and its education in China, the scope and the objective, the results achieved so far and the next steps.     

FROM INPUT–OUTPUT TABLES TO SUPPLY-AND-USE TABLES

In 1991, Statistics Netherlands introduced the supply-and-use tables as part of the national accounts. Since then, the supply-and-use tables have been the main statistics on the production structure of the Dutch economy. They form the basis from which input–output tables are derived. The time series of supply-and-use tables starts in 1987. However, there is a need for a time series since 1970 because benchmark revisions of the Dutch national accounts would become far easier if such time series were available. Therefore, a method has been developed to derive supply-and-use tables from existing input–output tables. This article presents the algorithm.     

An Average-Based Accounting Approach to Capital Asset Investments: The Case of Project Finance

Literature and textbooks on capital budgeting endorse net present value (NPV) and generally treat accounting rates of return as not being reliable tools. This paper shows that accounting numbers can be reconciled with NPV and fruitfully employed in real-life applications. Focusing on project finance transactions, an average return on investment (AROI) is drawn from the pro forma financial statements, obtained as the ratio of aggregate income to aggregate book value. We show that such a metric correctly captures a project's economic profitability, as long as it is compared with a comprehensive weighted average cost of capital (WACC) that includes a correction factor that takes account of the capital foregone by the investors. In contrast to the internal rate of return, AROI is unique, and we provide an explicit functional relation that links it to the NPV. The approach holds for levered and unlevered projects, constant and non-constant leverage ratios, and constant and non-constant WACCs.     

Stochastic models of resonating markets

This paper describes a way to model a seasonally and irregularly peaking price dynamics, as that originated in commodity and energy markets, using a system of coupled nonlinear stochastic differential equations. The specific case of an electric power market is used to show which microeconomic features this approach is able to model. Critical point analysis is used in a simple way to show how the interaction between dynamic criticality and stochasticity can be used to develop further models, useful to explore more deeply other types of peaking price dynamics.     

Deficits, Money Growth and Inflation in Italy: 1875–1994

In this paper, we examine econometrically the "fiscal dominance" model of the Monetary History of Italy proposed by Spinelli and Fratianni (1996). We test the proposition that monetary policy is endogenous to fiscal policy, and that such an endogeneity creates a specificity in the process generating Italian inflation. We perform our econometric tests by estimating a small structural linear econometric model, addressing carefully the issues of data-congruency of the specification, non-stationarity, cointegration, and credibility of the over-identifying restrictions. Our econometric investigation is based on a sample of annual observations from 1875–1994 and exploits the structural break which occurred in 1975, when Baffi became Governor of the Bank of Italy and the lack of independence of the central bank was first perceived as a problem. Baffi started the slow evolution process leading to the independence of the central bank, which was institutionally ratified by his successor Ciampi, when, in 1981, the Bank of Italy interrupted his commitment to buy all the government bonds left unsold in the public tenders (the "divorce"). Our empirical analysis over the sample 1875–1975 confirms the existence of a link between government deficit and money growth, and of a long-run relationship between the quantity of money and the price level; the evidence also stresses the relevance of supply side factors in the determination of inflation. When the model estimated for the sample 1875–1975 is applied to the period 1975–1994, a clear structural break in the relation between government deficits and money growth emerges. (J.E.L.: E5, E6).     

Estimating Market Power with Weak A Priori Information: An Exploratory Approach to the Model-Specification Problem

Choosing the wrong theoretical model to describe an industry??s behavior may lead to biased estimates of the degree of market power. This paper presents a two-step, data-driven methodology to reduce the risk of mis-specification bias. In the first step, a sliced inverse regression identifies the significant factors that affect the industry??s pricing behavior. In the second step, a non-parametric regression of price on the SIR factors estimates the link functions. The output of the algorithm offers useful information to identify the model that best approximates the industry??s pricing behavior. In addition, the output of the algorithm is used to develop a post-estimation test for model specification.