INDIFFERENCE PRICES AND IMPLIED VOLATILITIES

We consider a general local‐stochastic volatility model and an investor with exponential utility. For a European‐style contingent claim, whose payoff may depend on either a traded or nontraded asset, we derive an explicit approximation for both the buyer's and seller's indifference prices. For European calls on a traded asset, we translate indifference prices into an explicit approximation of the buyer's and seller's implied volatility surfaces. For European claims on a nontraded asset, we establish rigorous error bounds for the indifference price approximation. Finally, we implement our indifference price and implied volatility approximations in two examples.     

Analytical approximations of local‐Heston volatility model and error analysis

This paper studies the expansion of an option price (with bounded Lipschitz payoff) in a stochastic volatility model including a local volatility component. The stochastic volatility is a square root process, which is widely used for modeling the behavior of the variance process (Heston model). The local volatility part is of general form, requiring only appropriate growth and boundedness assumptions. We rigorously establish tight error estimates of our expansions, using Malliavin calculus. The error analysis, which requires a careful treatment because of the lack of weak differentiability of the model, is interesting on its own. Moreover, in the particular case of call–put options, we also provide expansions of the Black–Scholes implied volatility that allow to obtain very simple formulas that are fast to compute compared to the Monte Carlo approach and maintain a very competitive accuracy.     

An integrated analysis of the effects of local water institutions on irrigated agriculture outcomes in the arid western United States

Irrigation water rights and their governance structures constitute the foundation of local water institutions and profoundly influence water resource allocations, irrigated agricultural productivity and other consumptive water uses in the arid climate zones. This article explores the regional structures of irrigation water rights and water governance and empirically analyses the priority effects of water rights on irrigated agriculture at the micro level in Idaho, an arid and semiarid state in the western United States. We integrate a unique data set of water rights and water supplies with agricultural features and environmental characteristics into our empirical analysis. Results indicate that seniority in water resources allocation has significant, positive effects on both the average crop revenue and crop water use efficiency. Local water rights structures differ significantly in seniority and water sources from region to region. In response to the heterogeneity in local water rights structures, the aforementioned effect of allocative priority of water rights on average crop revenue per hectare and crop water productivity varies significantly, reaching up to an 87% difference, when measured across regions. In addition, the priority effects of water rights are nonlinear, which reflects the influence of historical patterns of water rights establishment on water institutions to date.     

地方政府债务空间与空间债务——基于地根经济的区位黏性视角

本文从人口流动的区位黏性这一全新视角，将地方政府性债务的李嘉图等价命题纳入新经济地理研究框架进行理论分析。为了进一步揭示理论模型的政策含义，采用空间计量方法验证沿海地区地方政府性债务的局部正相关特征。最优的债务政策取决于经济系统的初始条件，在非对称经济结构已经存在的情况下，单纯建设本地区的基础设施只会降低区域内的交易成本，这对于那些仅着眼于投巨资用于城市“硬件”建设的地方政府来说显然是一叶障目。建议依靠基础设施网络提高区域协同创新能力，培育规模报酬递增的专业化产业集群。     

Medication,equipment, and supply costs for common interventions providing extended post-surgical analgesia following total knee arthroplasty in US hospitals

Aims: To estimate the cost to hospitals of materials (i.e. medications, equipment, and supplies) required to administer common interventions for post-surgical analgesia after total knee arthroplasty (TKA), including single-injection peripheral nerve block (sPNB), continuous peripheral nerve block (cPNB), periarticular infiltration of multi-drug cocktails, continuous epidural analgesia, intravenous patient-controlled analgesia (IV PCA), and local infiltration of bupivacaine liposome injectable suspension (BLIS).

Materials and methods: This analysis was conducted using a mixed methods approach combining published literature, publicly available data sources, and administrative data, to first identify the materials required to administer these interventions, and then estimate the cost to the hospital of those materials. Medication costs were estimated primarily using the Wholesale Acquisition Costs (WAC), the cost of reusable equipment was obtained from published sources, and costs for disposable supplies were obtained from the US Government Services Administration (GSA) database. Where uncertainty existed about the technique used when administering these interventions, costs were calculated for multiple scenarios reflecting different assumptions.

Results: The total cost of materials (i.e. medications, equipment, and supplies) required to provide post-surgical analgesia was $41.88 for sPNB with bupivacaine; $756.57 for cFNB with ropivacaine; $16.38 for periarticular infiltration with bupivacaine, morphine, methylprednisolone, and cefuroxime; $453.84 for continuous epidural analgesia with fentanyl and ropivacaine; $178.94 for IV PCA with morphine; and $319.00 for BLIS.

Limitations: This analysis did not consider the cost of healthcare providers required to administer these interventions. In addition, this analysis focused on the cost of materials and, therefore, did not consider aspects of relative efficacy or safety, or how the choice of intervention for post-surgical analgesia might impact outcomes such as length of stay, re-admissions, discharge status, adverse events, or total hospitalization costs.

Conclusions: This study provided an estimate of the costs to hospitals for materials required to administer commonly used interventions for post-surgical analgesia after TKA.     

New development: China renews reform of central–local fiscal relations and provides for basic national public services

China’s reform on central–local fiscal reform has slowed down in recent years. The appointment of a new finance minister experienced in local government affairs is expected to renew the reform affirmed by the Chinese Communist Party (CCP) congress in late 2017. China has unprecedentedly identified a comprehensive list of 81 national basic public services as entitlements. Eighteen of them are subject to national and local standards, and co-financed by central and local governments. A new cost-sharing method for 10 of these services classifies sub-national jurisdictions into five tiers, in which the central government’s share declines from 80% to 10%. These measures, effective in 2019, aim at creating a ‘harmonious and moderately prosperous society’.     

Examining the relationship between municipal consolidation and cost reduction: an instrumental variable approach

This study explores the cost-reduction effects of local government consolidation, using data from Japanese municipalities. We use municipal panel data from Japan for the years 2000, 2005 and 2010, a data set including numerous consolidation cases. Reverse causality between consolidation decisions and size of municipal expenditure is a concern in the voluntary consolidation of local governments. An instrumental variable (IV) methodology is employed to deal with possible endogeneity associated with consolidation decisions. The main finding is that municipal current expenditure per capita increases immediately after consolidation, but then gradually declines. Because consolidation seems to increase per capita expenditure in the absence of the effect of this long-term declining trend, incorporating this trend into estimation is crucial in cost-efficiency analysis of consolidation. It is also shown that conventional panel data regressions yield biased consolidation effects, suggesting the superiority of the IV approach.     

Citizens’ e-participation on agenda setting in local governance: Do individual social capital and e-participation management matter?

Although a growing body of literature has touted e-participation as a means of facilitating greater citizen participation in policy decision-making processes, little is known about the driving forces behind citizens’ use of e-participation. Based on a literature review of social capital and citizen participation, this study develops and tests a model proposing that three dimensions of social capital and three dimensions of citizen participation management should be positively associated with e-participation in agenda setting. Using data from a Korean e-participation survey conducted in 2009, we found that citizens tend to be more active e-participants when they have greater trust in government and are weakly tied to offline social groups. We also found that citizen participants’ perception of government responsiveness to their input can facilitate their e-participation. The study findings imply that local governments should pay more attention to the function of public trust in local government and provide quality feedback in response to citizen input. They should also be sensitive to how the social factors of e-participants can facilitate involvement in agenda setting.     

Has local informational advantage disappeared?

This study examines how changes in the information environment affect the informational advantage of geographically proximate agents. The long‐term advantage of local agents disappeared at the turn of the millennium. This is accompanied by the reduction in local bias of institutional investors and equity analysts. However, institutional investors continue to trade local stocks disproportionately more often than non‐local stocks; moreover, their local trades outperform non‐local trades in the short term—even for large and liquid stocks. Our results are consistent with improvements in the information environment shortening the horizon of proximity‐based informational advantage.     

Recovering Sociology from the Trash Heap: Of Waste Politics and the Spatialization of Local Representation in Lagos

This article excavates the debate that unfolded during the 1980s between Jacques Rancière and Pierre Bourdieu to shed light on the theoretical divide that still cuts across the field of urban studies today. Looking at contemporary Rancièrian scholarship through a Bourdieusian lens, it points to their main theoretical shortcomings and reasserts the value of relational, field‐based and empirically grounded approaches to urban politics. At the same time, this article engages seriously Rancière's critique of Bourdieu's failure to account for space in order to question the territoriality inherent to the notion of field. We put this theoretical discussion to the test of Lagos's garbage. Drawing on an ethnographic study conducted in Lagos from 2015 to 2016, we propose analyzing the process of spatialization of the field of local representation by looking at the ways solid waste—here conceived as a political opportunity—is mobilized by different actors. We argue that the deployment of a waste infrastructure in Lagos is congruent with a relative disinvestment in practices of territorial control that reshapes the structure of local representation, reconfiguring the ‘stage’ on which politics is played out in the Nigerian metropolis.