Modelling Risk Perceptions of Stakeholders in Public–Private Partnership Toll Road Contracts

This paper investigates the risk perceptions of key stakeholder groups typically involved in public–private partnership (PPP) toll roads. Risk perceptions have an important impact on these PPP schemes for investing in public infrastructure. However, the nature and extent of risk associated with the specification of a PPP contract that commits contracting parties to deliver on their obligations remain unclear. In the context of major transport infrastructure, such as a new toll road, the often‐cited key risk to investors is the traffic (and hence demand) risk. There are, however, other risks, including political risk and media risk, the latter often causing untold harm resulting in modifications to the planned infrastructure. This paper develops a method to capture evidence on how public sector and private sector partners involved in previous PPPs perceive the levels of risk associated with each risk attribute, as a way of identifying the ex ante risk setting brought to negotiations in PPP toll road investments. Using a sample of 101 experts with contract experience in 32 countries, we develop a stated choice experiment and estimate a discrete choice model to quantify a risk profile index (RPI) to capture the perceived (relative) influence of each dimension of risk, and then identify sources of systematic differences in the RPI as a way of understanding the influence of personal traits and contextual and contractual factors.     

Public—Private Partnerships in Ireland: Policy and Practice

Ireland's National Development Plan 2000–2006 includes a significant programme of public—private partnerships (PPPs). The Irish Government's policy on PPPs has been shaped to ensure that capital investments under PPP are not included when calculating key fiscal aggregates. This article traces the origins of Ireland's PPP programme and outlines the extent of PPP activity to date. It details how the PPP programme has failed to make an impact in terms of addressing Ireland's infrastructure deficit and examines three particular cases where the PPP model has been applied.     

Risk assessment for public–private partnership projects: using a fuzzy analytic hierarchical process method and expert opinion in China

Public–private partnerships (PPP) have been widely used in China to procure public facilities and services. Complicated problems in PPP projects in China arise because of a variety of risk factors. A proper risk assessment model is needed to identify risks and provide risk response strategies for future Chinese PPP projects. The fuzzy analytic hierarchy process (F-AHP) method provides the ability to solve complex risk assessment of PPP projects. Current risk assessment models are limited to PPP projects in specific countries and do not consider unique risks in China, especially political, economic, social, and legal risks. This paper designed a risk evaluation index system for PPP projects based on the Delphi expert investigation method, and then established an optimized risk evaluation model for PPP projects in China using the F-AHP method. The risks identified are confirmed by interviewing experts from Chinese local government departments, private enterprise, third-party intermediary consulting and regulatory agencies, and academic organizations. The results show that the risks that ranked among the top ten are closely related to China’s political and economic policies and relationships among stakeholders. It can be concluded that government authorities play a critical role in providing a favorable political, social, and economic environment and an effective institutional framework for PPP projects. Furthermore, it is also important to deal with relationships among stakeholders based on the public–private ‘win–win’ principle. This study provides risk response strategies, addressing key issues from eight aspects: an impeccable legal and regulatory framework; a central coordinating and regulating PPP authority; supportive governmental authorities; institutional capacity-building; favorable economic conditions and viability; community, partner, and moral accountability; clear division of responsibilities through contracts; and effective advisory management. These effective measures may be useful in reducing the adverse effects of risk for PPP projects in China.     

Multidimensional principal–agent value for money in healthcare project financing

Value for money (VfM) is a key parameter for the public sector in the choice between a public–private partnership (PPP) and traditional procurement, especially for healthcare infrastructure. This paper investigates the differences in what VfM means to the public and private sectors.     

Innovation in public–private partnerships (PPPs): the Spanish case of highway concessions

This article identifies the factors that determine innovation in transport PPPs in Spain. Innovation is an important way of achieving efficiency but it is not an intrinsic characteristic of PPP projects. The authors describe the multiple regression model they devised to estimate innovation. The results show that PPP contracts can be designed to maximize innovation in R&D. However, there does not appear to be greater innovation in any other areas. The information provided has important implications for public service organizations considering new contracts with the private sector.     

Deviations from purchasing power parity under different exchange rate regimes: Do they revert and,if so,how?

We propose an empirical model for deviations from long-run purchasing power parity (PPP) that simultaneously accounts for three key features: (i) adjustment toward PPP may occur via nominal exchange rates and relative prices at different speeds; (ii) different exchange rate regimes may generate regime shifts in the structural dynamics of PPP deviations; (iii) nonlinear reversion toward PPP in response to shocks. This empirical framework encompasses and synthesizes much previous empirical research. Using over a century of data for the G5 countries, we provide evidence that long-run PPP holds, the relative importance of nominal exchange rates and prices in restoring PPP varies over time and across different exchange rate regimes, and reversion to PPP occurs nonlinearly, at a speed that is fairly consistent with the nominal rigidities suggested by conventional open economy models.     

政府和社会资本合作（PPP）立法的美国镜鉴与启示

尽管我国与美国的体制、国情社情、PPP发展情况不尽相同，但美国PPP立法的经验与教训对我国的PPP立法具有重要启示作用。PPP在美国是旧现象、新概念，存在“横向”“纵向”之分。联邦层面至今没有统一的PPP法律，相关立法散见联邦立法与州立法中，集中在交通运输领域，主要是授权立法，整体上呈现多层级、分散式的特征。美国现行PPP法律引发合同条款约束政府公共行为、为加快项目进程不惜削弱环境保护、PPP采购缺乏竞争性等争议，由此带来的经验启示包括：加强顶层设计、加大金融支持力度、明确政府间财政关系等。     

绿色PPP项目组合的最优契约:经济与环境效应的福利视角

绿色PPP搭配高收益项目的激励方式是吸引社会资本参与环境治理的举措之一。本文基于经济与环境的双重福利效应,从理论上研究了该激励方式的契约设计问题,阐释了博弈均衡的存在性以及最优特许期的形成逻辑和关键决定因素。研究表明:第一,绿色PPP搭配高收益项目能够提高企业利润,激发社会资本参与环境治理来应对环境风险。第二,政企双方博弈决策模式决定了契约能否订立。如果独立决策,使企业利润最大的特许期也能够带来最高的环境效益,但此时博弈结果展现为“刀刃上的均衡”,契约难以建立;如果合作博弈,双方最优特许期选择达成一致,契约得以订立,政府向企业让渡经济利润而收获环境效益,最终实现经济与环境福利的双赢。第三,绿色PPP搭配高收益项目优于传统政府补贴的激励方式,在收获同等环境效益的基础上,能够带动社会总福利的提升。研究结论为绿色PPP搭配高收益项目激励方式的推广实施、从而助力实现碳达峰和碳中和战略目标提供了契约设计理论依据和相关框架。     

Risk Management in Public–Private Partnerships

This study investigates the risk management in long‐term concession contracts known as public–private partnerships (PPPs). The M4 is the first Australian PPP road concession to reach the end of its concession cycle. It provides a unique and timely opportunity to examine the risk management process over its contract term and the efficacy of PPP contractual structures in managing uncertainties. Our specific research interests focus on two questions. First, what risk management approach was implemented? Second, has the risk‐allocation strategy defined in the contract facilitated or hindered the risk management process? The findings of the study suggest that under the incomplete contract approach, the risk management practices rooted in a strong contractual framework, allied with good relationship skills, has contributed to a positive outcome for the M4 PPP. The study provides generalisable insights into risk management in inter‐organisational long‐term contracts.     

Transparency trade-offs in the operation of national Public Private Partnership units: The case of Ireland’s National Development Finance Agency

Since 2002, the Irish National Development Finance Agency [NDFA] has played a leading role in the procurement of Public Private Partnership [PPP] projects in Ireland (UNECE, 2008). It has procured 9 PPP projects bundles, which are currently listed on its website, between 2002 and 2022 ¹ in addition to Primary Care, Justice, OPW and Education bundles not currently listed on its website. Ireland follows a global pattern where national or provincial PPP units, frequently organised as arm’s-length bodies, play a central role in managing the partnership-based procurement of infrastructure projects (Burger, 2009). This paper examines how the NDFA, acting as Ireland’s PPP unit, has affected the transparency and accountability of Irish PPP procurement. Our analysis indicates that the expanding role played by the NDFA has been depoliticisation and agencification. Our analysis deviates from some previous critical studies of PPP agency governance (Sześciło, 2020) in that we argue that agencification can adversely affect some aspects of PPP transparency while strengthening others, such as selection process transparency. Nonetheless, we suggest the approach to PPP procurement could harm the long-term sustainability of Irish PPP. Using the example of Ireland, our paper contributes to an understanding of the impact of such institutional arrangements on transparency and accountability of PPP procurement.     

Temporal aggregation and purchasing power parity persistence

This paper uses a unique new monthly US-UK real exchange rate series for the January 1794-December 2009 period to reexamine the academic debate over purchasing power parity (PPP). The consensus view described by Rogoff (1996) is that PPP holds in the long-run, but short-run deviations are very persistent, with half-lives ranging from 3 to 5 years. Most of the literature using long time series relies on the annual data developed by Lee (1976) and Lothian and Taylor (1996), which were both constructed from underlying higher-frequency data sources. Estimates of purchasing power parity persistence using these series may therefore be subject to temporal aggregation bias. We find evidence of aggregation bias which indicates the half-life of PPP deviations has been overestimated in much of the previous literature. We also find that estimates of the half-lives are further reduced once we account for the Harrod (1933)-Balassa (1964)-Samuelson (1964) effect. The result of aggregation bias appears to be robust even when considering the case that real exchange rates exhibit nonlinear dynamics.     

Public—Private Partnerships in Ireland: Policy and Practice

Ireland's National Development Plan 2000–2006 includes a significant programme of public—private partnerships (PPPs). The Irish Government's policy on PPPs has been shaped to ensure that capital investments under PPP are not included when calculating key fiscal aggregates. This article traces the origins of Ireland's PPP programme and outlines the extent of PPP activity to date. It details how the PPP programme has failed to make an impact in terms of addressing Ireland's infrastructure deficit and examines three particular cases where the PPP model has been applied.     

基于前景理论的PPP项目政企决策行为的演化博弈分析

本文以PPP项目中政府和私人企业的决策行为作为研究对象,基于前景理论,考虑PPP项目中政企合作双方决策时的有限理性状态,通过建立前景价值函数进而构建PPP项目合作中政企双方动态演化博弈模型。从演化博弈的视角分析政府和私人企业之间的策略选择和博弈行为。借助数值模拟,对不同参数和概率条件下政企决策行为展开路径分析,以期对政企双方在PPP项目中的决策提供有益的理论参考和借鉴。     

Cointegrated Periodically Collapsing Bubbles in the Exchange Rate of “BRICS”

We test the occurrence of periodically recurring rational bubbles in the exchange rate of each of the “BRICS” countries currency relative to the US dollar. The forward exchange rate is used as a proxy for the expected exchange rate, different Purchasing Parity Power (PPP)-based rules for the fundamental exchange rate are considered, and its initial value is endogenously determined. For the chosen model, the regime switching equation satisfactorily fits the data, confirming the presence of rational bubbles for all countries. The dynamics of the exchange rate series for each country is interpreted with the help of the estimated bubbles. The bubbles are compared across countries, found to be cointegrated, and this is interpreted as evidence of the international transmission of exchange rate shocks between these countries.     

Testing PPP Hypotheses between Japan and the Six G7 Countries

The paper examines the purchasing power parity(PPP) theory of the foreign exchange rate of the yenagainst the currencies of the six G7 countries. We usethe error-corrected five-dimensional vectorautoregressive (VAR) model with structural changes inthe trend function. The data cover the period of thepost-Breton–Woods floating exchange rate system. Theresults reveal that the PPP relation alone determinesthe exchange rates for the USA, France, Germany, andItaly, while a linear combination of PPP and uncoveredinterest rate parity (UIP) relations determines that for Canada. Ina model without trend breaks, the PPP relations holdonly for Germany, which indicates that a correctspecification of the sampling distribution of data isimportant. The one-step prediction based on the errorcorrection model (ECM) outperforms the random walkmodel. The ECM is useful to predict the out-of-samplebehaviors of the exchange rates.     

Global Public‐Private Investment Partnerships: A Financing Innovation with Positive Social Impact

Global bond markets, along with banks and governments, are the main source of funding for investment in environmentally friendly infrastructure and the transition to clean energy. Although such bonds are a relatively recent innovation, the green bond market has grown rapidly from its start in 2008 to around $800 billion in outstanding issues. The problem, however, is that green bonds, which represent less than 1% of global bond markets, have been issued disproportionately by government‐sponsored entities, corporations, and municipalities in developed markets. In the emerging market countries where the infrastructure investments are most needed, they barely exist. The authors describe a new investment vehicle, called the AP EGO fund, whose mission and MO are to channel the vast global pools of institutional savings that are now invested in low or (even negative) yield fixed‐income assets—as much as $17 trillion in 2019—to higher‐return emerging markets green investments, in particular sustainable infrastructure, by creating a new asset class: emerging‐market green bonds issued by banks. The AP EGO fund is premised on and involves a reworking of the public‐private partnership (PPP) into a form they call the global public‐private investment partnership (or GPPIP). Unlike the PPP, which combines a public agency with a private operator, the GPPIP has four instead of just two partners. In addition to the standard public agency and the private concession operator, there is a development bank—in this case the International Finance Corporation (IFC), which is the financial markets affiliate of the World Bank—and private investors that include emerging‐market banks as well as global institutional investors. Along with the mediating role played by a public agency like the IFC, the AP EGO Fund is fundamentally different from other PPPs in that it takes the form of a special purpose securitization vehicle whose shares are backed by a pool of green bonds issued by emerging market banks in multiple emerging market countries. And besides its application to a new asset class, the fund also breaks new ground by applying a securitization technique with a fund structure designed with an embedded “first‐loss” protection to a global pool of green bonds originated in emerging market economies. By means of this structuring, the green‐bond‐backed fund shares issued by the AP EGO are now providing developed market institutional investors with somewhat higher‐yielding fixed income securities that nevertheless carry an investment‐grade rating.     

Time-varying risk premia in foreign exchange and equity markets: evidence from Asia–Pacific countries

This paper examines the validity of the risk premia hypothesis in explaining deviations from Uncovered Interest Parity (UIP) and the role of deviations from Purchasing Power Parity (PPP) in the pricing of foreign exchange rates and equity securities in five Asia–Pacific countries and the US. Using weekly data from 1 January, 1988 to 27 February, 1998, I find that conditional variances are not related to the deviations from UIP in any statistical sense based on an univariate GARCH(1,1)-M model. As I consider both foreign exchange and equity markets together and test a conditional international CAPM (ICAPM) in the absence of PPP, I cannot reject the model based on the J-test by Hansen (Econometrica 50 (1982), 1029–1054) and find significant time-varying foreign exchange risk premia present in the data. This empirical evidence supports the notion of time-varying risk premia in explaining the deviations from UIP. It also supports the idea that the foreign exchange risk is not diversifiable and hence should be priced in both markets.     

Forecasting exchange rates out-of-sample with panel methods and real-time data

This paper evaluates out-of-sample exchange rate forecasting with Purchasing Power Parity (PPP) and Taylor rule fundamentals for 9 OECD countries vis-à-vis the U.S. dollar over the period from 1973:Q1 to 2009:Q1 at short and long horizons. In contrast with previous work, which reports “forecasts” using revised data, I construct a quarterly real-time dataset that incorporates only the information available to market participants when the forecasts were made. Using bootstrapped out-of-sample test statistics, the exchange rate model with Taylor rule fundamentals performs better at the one-quarter horizon and panel estimation is not able to improve its performance. The PPP model, however, forecasts better at the 16-quarter horizon and its performance increases in panel framework. The results are in accord with previous research on PPP and Taylor rule models.     

The relationship between awareness of road safety measure and accident involvement in pre-drivers: the basis of a road safety programme

Objectives: This research aims to carry out a first validation of the QAR-Precon screening questionnaire applied in Catalonia during the drivers’ initial training, analyse the differences in risky road user behaviour according to two main variables: whether they had any experience of an accident and sex and examine the different risky road user patterns of pre-drivers. Methods: In order to group the questionnaire variables together, an exploratory factorial analysis (principal component analysis (PCA)) was used. Subsequently, the reliability coefficients of the questionnaire and the subscales were calculated. Lastly, ANOVA models were used to compare differences in the whole sample and a cluster analysis was performed to identify different risky pre-driver groups. Results: The factorial analysis (PCA) reveals the existence of five risk factors (speed and risk, external circumstances, distraction, alcohol and driving and other elements of driving) that explain 44.6% of the variance. More males than females reported that they had a higher tendency to take risks in all the risky factors exposed and injured pre-drivers reported less awareness of road safety than pre-drivers who had not been injured. A two-cluster solution indicated that it was possible to distinguish a group of pre-drivers who engaged in high risky behaviour (high group) from the group who engaged in moderate and low levels of risky road user behaviour (low group). Conclusions: The implications of these findings for programme designs and training initiatives to improve efficiency in reducing the accident rate are discussed.     

Infrastructure endowment,financial constraints and willingness to engage in PPPs: The case of Poland

Public-private partnership (PPP) is widely considered to be a solution to overcoming a public infrastructure gap while providing value for money. A growing body of empirical research papers suggests that value for money is not the only reason for a government setting up PPPs. This paper presents a detailed analysis of why local municipalities in Poland have chosen the PPP route to develop public infrastructure.

IMPACT

Government’s investment opportunities are often restricted by debt limits. That is why a PPP can be an attractive solution. Municipalities in Poland seem to opt for PPPs to keep their debt figures low. There is a risk that they are choosing the PPP route for the wrong reasons. Therefore we suggest that legislation is needed that requires greater financial transparency of PPP projects. This could help verify whether PPPs are being compiled according to EUROSTAT rules and to assess if PPP really is the best available option in terms of value for money.