Economics of Environmental Management in a Spatially Heterogeneous River Basin

This article examines the allocative efficiency of water quality management activities to protect endangered salmonid species in a heterogeneous watershed in the Pacific Northwest. Using an integrated hydrological, biological, and economic modeling framework, the relative efficiency of alternative policy targets such as temperature reductions and enhanced fish populations is investigated. Results indicate that the heterogeneous nature of riparian conditions and stream morphology influence the choice of management activities. Localized effects of management efforts on temperature are important to achieve small temperature reductions. However, as the desired magnitude of temperature reductions increases, the cumulative (longitudinal) effects become more important, and management efforts in more distant reaches are more efficient than efforts nearer the point of monitoring. Finally, if the underlying objective is to increase fish populations, targeting conservation efforts based on physical criteria such as water temperatures or other total maximum daily load regulations may lead to substantial inefficiencies.     

How to Determine the Number of Relations Among Deterministic Trends

Hatanaka (1998a) showed that the number of relations between deterministic trends of different variables played an important role in empirical studies of macroeconomic theories. In the present paper two methods are presented to determine the number from the time-series data. The one investigates eigenvalues of the data covariance matrix on a parametric model of trends accommodating interrelationships. The other analyses OLS residuals on the basis of a looser concept of interrelated trends.
JEL Classification Numbers: C32, C50.     

Cross-sectional regression analysis of return and beta in Japan

This paper investigates the relationship between return and beta using the cross-sectional regression method. Regression of return on beta without differentiating positive and negative market excess returns produces a flat relationship between return and beta. Taking into account the difference between positive and negative market excess returns yields significant conditional relationships between return and beta. The conditional relationship between return and beta is found to be in general better fit when the market excess return is negative than positive in terms of the goodness of fit measures such as R² and the standard error of the equation.     

An empirical re-evaluation of wealth effect in Japanese household behavior

This study investigates empirically the role of wealth in the behavior of Japanese households from two standpoints. One is concerned with what types of wealth are relevant in consumption decision by households. The other is which component of consumption spending is affected by wealth. We find that the liquid financial wealth appears as a significant explanatory variable in expenditure function of many commodity groups as well as total consumption. It turns out that variations of liquid wealth are responsible for about one third of the change in aggregate consumption in the boom period starting from the middle of 1980s.     

Applying Multiattribute-Based Group Decision Making Techniques in Complex Equipment Selection Tasks

A practicing industrial engineer, even an experienced decision maker, needs help in the sense that there is a necessity to use more logical or analytical decision support tools, especially when dealing with control and instrumentation projects which are often worth millions of dollars. In this article we propose an algorithm which can support the process of group decision making relating to industrial automation, especially involving the selection of control and instrumentation equipment. The aim of this article is to look only at the algorithm's application and how it is applied. To this end, two test cases are used as examples: (1) selecting a local area network for installation in an academic environment; and (2) selecting an integrated control system for a real-world pulp and paper mill. Obtained results show that the algorithm leads to a satisfactory solution. A software form of the algorithm is being programmed for use as a decision support tool.     

Reexamining the Robustness of the Market Value of Equity

We apply the methodology of Knez and Ready (KR) (1997) to data from the Japanese stock market and reexamine the robustness of the risk premium for the market value of equity (MVE). In particular, we compare two alternative explanations for the relation between stock returns and MVE: the one pointed out by Fama and French (FF) (1992) and the other proposed by Berk (1995). Consistent with results for the U.S. market, when we check FF's explanation for MVE, we find that the risk premium for MVE is not robust against extreme observations. Besides the evidence supporting KR's findings, we study the role of MVE proposed by Berk (1995), who points out that under controlled expected cash flows, MVE will be negatively correlated with expected returns. After showing that MVE negatively correlates with risk in the presence of expected cash flows, we test the robustness of the relation between returns and MVE. We find that the estimated risk premium for MVE is robust when realized cash flows (earnings plus depreciation) or book value of equity (BE) is used as a proxy for expected cash flows.