Shareholder gains from callable-bond refundings

A re-examination indicates that current procedures for measuring the benefit realized by shareholders when a firm calls and refunds an outstanding debt obligation are mis-specified. The key to a proper measurement is found to lie in the identification of the extinguished remaining-time-to-maturity value of the exercised option on the called debt. A simple procedure for assessing that value is provided and incorporated into a corrected measure of the gains from a callable-bond refunding.     

Nonparametric measurement of potential gains from mergers: an additive decomposition and application to Indian bank mergers

Journal of Productivity Analysis - In this paper, we derive conditions under which merger between a number of firms within the same industry would induce a more cost efficient production of the...     

Intraindustry trade and the gains from fragmentation

The process of cross-border production fragmentation has received much attention as a possible source of deteriorating labor-market prospects, in particular for low-skilled workers. Of the research that has concentrated on the labor-market consequences of intra-product specialization, some has been rather skeptical of whether this notion generally holds true. The paper complements this research insofar as we explicitly acknowledge that fragmentation is associated with increasing returns as they might give rise to additional labor market and welfare effects. Though these effects tend to benefit high-skilled labor, we can also identify cases in which it is the low-skilled that benefit the most. In any case, there is a range of parameter values for which both skill levels do better.     

Welfare gains from optimization in dynamic planning models

This paper compares the results of two multisectoral models used to plan the dynamic consistency of sectoral investment. Solution of an optimizing model forecasts a frontier of the economy's future choice set. This frontier represents a ten year welfare gain only 2 or 3 percent greater than any investment program simulated by a dynamic Leontief system. The paper explains what efficient behavior accounts for the better performance of the optimizing model. Developing dynamic programming models is costly in terms of data, computational complexity, man-machine interaction, and solution interpretation. Therefore, it is recommended that the lessons derived by working with the dynamic LP be applied to improve the planner's control of the less expensive input/output simulation model.Final Draft for Economics of Planning-April, 1975H. G. Bergendorff is a staff economist at the Development Research Center of the World Bank, P. B. Clark is Staff Director, Center for Energy Policy (Boston, Mass., U.S.A.) and L. Taylor is Professor of Nutrition Economics at Massachusetts Institute of Technology. The project has been sponsored by the Development Research Center of the World Bank. The authors are grateful for the collaboration of Alejandro Foxley and Paul Ide in early versions of this study and for the assistance of Lucy Cardwell, Jon Eaton, Ruth Sheshinski, and Mieko Nishimizu during the computation phase. Any errors and the interpretations expressed are the responsibility of the authors alone.     

Financial constraints and synergy gains from mergers and acquisitions

This paper examines mergers and acquisitions motivated by financial constraints. Synergy gain is measured as the cumulative abnormal return of a value‐weighted portfolio of the acquirer and the target around the acquisition announcement. By constructing a financial constraint difference between the target and the acquirer, we find a positive relationship between the financial constraint difference and synergy gains generated from the acquisition. The positive effect of the financial constraint difference is only significant for high growth targets and severely constrained targets. The acquirer's corporate governance also enhances the synergy gains created from the financial constraint difference. Additional evidence shows that both acquirer's and target's shareholders benefit from the financial constraint difference. Our results are robust for different measures of financial constraint.     

Efficiency measurements and the gains from trade under transaction costs

The paper investigates the measurement of economic efficiency under transaction costs in a second best world. New measurements of technical efficiency, allocative efficiency, and price efficiency are proposed. They have three desirable properties. First, they measure efficiency loss in monetary units. Second, they are additive and can be conveniently summed into an overall efficiency measure. Third, they allow for transaction costs and their effects on prices and trade incentives. The paper investigates the welfare effects of technology choice, government pricing and trade policy, and market imperfections on efficiency. It provides new insights on the measurement of benefits from trade liberalization when trade affects not only price efficiency, but also technical and allocative efficiency.

Measuring utility from demand

This study presents a new method to calculate a preference relation from a demand function. Our method works well under the weak axiom and can calculate a smooth utility function if the demand function obeys the strong axiom. Further, if the demand function is derived from a customary utility function, our method restores the original preference. Our method provides a complete and rigorous proof of Samuelson’s conjecture. In addition to these results, we guarantee the recoverability: i.e., the uniqueness of the preference relation corresponding to a demand function.     

The effects of oil price shocks on job reallocation

We investigate the effect of oil price innovations on U.S. manufacturing job flows using a simultaneous equation model that nests symmetric and asymmetric responses. We find no evidence of asymmetry in the response of job flows to positive and negative oil price innovations. We then inquire whether firms, when facing positive shocks, shed jobs faster than they create jobs. We show that positive innovations lead to a decline in net employment and an increase in job reallocation, possibly due to search and matching issues. Yet, the latter effect becomes statistically insignificant when we control for data mining. We demonstrate that the cumulative one-year effect of oil price shocks on job creation and destruction was smaller during the Great Moderation, but it was larger for gross job reallocation. These variations were caused by a change in the transmission channel and not by smaller oil price shocks.     

Arbitrage, equilibrium, and gains from trade: A counterexample

We present a counterexample to a theorem due to Chichilnisky (Bulletin of the American Mathematical Society, 1993, 29, 189–207; American Economic Review, 1994, 84, 427–434). Chichilnisky's theorem states that her condition of limited arbitrage is necessary and sufficient for the existence of an equilibrium in an economy with unbounded short sales. Our counterexample shows that the condition defined by Chichilnisky is not sufficient for existence of equilibrium. We also discuss difficulties in Chichilnisky (Economic Theory, 1995, 5, 79–107).     

Forecasting the volatility of asset returns: The informational gains from option prices

A new class of forecasting models is proposed that extends the realized GARCH class of models through the inclusion of option prices to forecast the variance of asset returns. The VIX is used to approximate option prices, resulting in a set of cross-equation restrictions on the model’s parameters. The full model is characterized by a nonlinear system of three equations containing asset returns, the realized variance, and the VIX, with estimation of the parameters based on maximum likelihood methods. The forecasting properties of the new class of forecasting models, as well as a number of special cases, are investigated and applied to forecasting the daily S&P500 index realized variance using intra-day and daily data from September 2001 to November 2017. The forecasting results provide strong support for including the realized variance and the VIX to improve variance forecasts, with linear conditional variance models performing well for short-term one-day-ahead forecasts, whereas log-linear conditional variance models tend to perform better for intermediate five-day-ahead forecasts.     

The optimal management of renewable resources under the risk of potential regime shift

Complex dynamic systems can undergo changes in feedbacks between system components causing a rapid and persistent shift in system behavior (“regime shifts”), and potentially reduce welfare from declining provision of important ecosystem services. In this paper, we provide an analytical condition that determinfilefs whether the threat of a potential regime shift causes management to be more aggressive or more precautionary. In numerical simulations we find that aggressive management can occur for reasonable parameter values, which is counter prior results that the potential for harmful regime shift always leads to precautionary management.     

Trading places: An experimental comparison of reallocation mechanisms for priority queuing

In a laboratory experiment, we compare two auction mechanisms that are designed to improve a queue's efficiency by allowing customers to trade places. In the server‐initiated auction, the server, when idle, sells the right to be served next to the highest bidding customer in the queue and distributes the proceeds among the remaining customers. In the customer‐initiated auction, new arrivals can sequentially trade places with queued customers. We use two novel experimental protocols to examine the behavioral properties of both auction mechanisms. We find that both auction mechanisms improve a queue's efficiency on average and that both perform equally well in terms of efficiency gain. We also find evidence of the sunk‐cost effect but not of the endowment effect. Participants indicated that they found the server‐initiated auction a fairer mechanism than the customer‐initiated auction. When voting between the two auctions, the participants tended to favor the server‐initiated auction.     

Measuring Productivity from Vertically Integrated Sectors

There are many ways to measure productivity. The choice will depend on the suitability of each index to the main purpose the researcher has in mind. Whenever we are interested in 'competitiveness', the proper measure will be the inverse of the total labour embodied in one unit of final product; or, what amounts to the same, the labour employed in the vertically integrated sector corresponding to each final good. A weighted mean of these yields an index of aggregate productivity suitable for measuring social welfare. Another index of aggregate productivity (this one related to the profit rate and potential growth) coincides with the inverse of the maximum eigenvalue of the 'socio-technical matrix'. These indices are computed for the Spanish economy and compared with more conventional ones.     

Dynamic gains from North American free trade in an equilibrium model of the current account

The benefits of economic integration in North America are explored by quantifying the gains that the two small open economies of the region can obtain from free trade in financial assets as a vehicle to smooth consumption. Numerical simulations of a stochastic intertemporal equilibrium model are used to estimate the effects of free financial asset trading on economic activity and welfare. The results suggest that in Mexico, where business cycles have been larger and access to world markets has been more limited, free asset trading would produce more benefits that in Canada, where the risk of business cycles is smaller.     

Measuring TQEM returns from the application of quality frameworks

This study addresses one of the major perceived barriers to total quality environmental management (TQEM): cost measurement. Operations managers have difficulty assessing the impact of TQEM programs because of the lack of appropriate measures. In order for TQEM to be given serious consideration, a cost framework is required for evaluating TQEM by appropriately including all the environmental costs and savings for each investment option. At present, frameworks such as life‐cycle assessment (LCA) and environmental cost accounting (ECA) exist, but they have both been recognized as too difficult to implement at the plant level among operations managers. This study focuses on identifying and formulating a set of easy‐to‐use quantitative cost measures. The structure of these measures is taken from the operations management (OM) literature itself, and specifically the total quality management (TQM) and cost of quality (COQ) frameworks developed by Joseph Juran. However, an empirical examination of this remains untested. The findings of this study provide an important foundation for theory development and set the stage for further research in this burgeoning field of TQEM. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

Measuring Scale Efficiency from a Translog Production Function

In parametric analysis based on a frontier production function, usually the scale elasticity rather than scale efficiency level is reported. In this paper we show how one can use an estimated translog production function to obtain output- and input-oriented measures of scale efficiency at an observed input bundle. We also show how the estimated model can be used to determine the optimal quantity of labor input for an exogenously fixed quantity of capital.     

永定县富岭煤矿构造特征及深部资源潜力分析

文章通过收集富岭煤矿及其所在的富岭井田资料,结合本区的地层、构造特征,对矿区深部及外围赋存煤系地层情况进行分析后,推断本区深部及外围赋存有一定的煤炭资源储量,对今后该矿的开发具有一定的指导意义。笔者认为,富岭煤矿深部具有一定的煤炭资源潜力,且有向外围延伸的趋势,值得进行接替资源勘查。     

Do dropouts suffer from dropping out? Estimation and prediction of outcome gains in generalized selection models

In this paper we describe methods for predicting distributions of outcome gains in the framework of a latent variable selection model. We describe such procedures for Student‐t selection models and a finite mixture of Gaussian selection models. Importantly, our algorithms for fitting these models are simple to implement in practice, and also permit learning to take place about the non‐identified cross‐regime correlation parameter. Using data from High School and Beyond, we apply our methods to determine the impact of dropping out of high school on a math test score taken at the senior year of high school. Our results show that selection bias is an important feature of this data, that our beliefs about this non‐identified correlation are updated from the data, and that generalized models of selectivity offer an improvement over the ‘textbook’ Gaussian model. Further, our results indicate that on average dropping out of high school has a large negative impact on senior‐year test scores. However, for those individuals who actually drop out of high school, the act of dropping out of high school does not have a significantly negative impact on test scores. This suggests that policies aimed at keeping students in school may not be as beneficial as first thought, since those individuals who must be induced to stay in school are not the ones who benefit significantly (in terms of test scores) from staying in school. Copyright © 2004 John Wiley & Sons, Ltd.