Shared wealth or nobody's land? The worth of natural capital and ecosystem services

The prerequisite for a sustainable and equitable use of common resources (the so-called Commons) must be the proper evaluation of their role within the complex network of relationships that ensure ecosystems functioning, resilience, and evolutionary dynamics. It is crucial to ascertain to what extent the common wealth is used for the common benefit. Money-based schemes for valuing the Commons, such as the so-called “willingness-to-pay”, provide a user-side evaluation perspective based on the idea that value only stems from utilization by humans. As a complement to such a point of view, we present and discuss in this paper a donor-side evaluation method (Emergy Synthesis) based on the idea that a proper measure of value can be achieved by also accounting for the work done by the biosphere in generating services and resources. It should not be disregarded that such resources and services also provide support to other species in the web of life. Emergy, a scientific measure of such environmental support, is suggested as a tool capable to assess quantity and quality of shared resources, thus providing a basis for their environmentally sound management.     

On Britain's Return to the Gold Standard: Was there a ‘Pigou–McKenna School’?

It is common to refer to the ‘Keynes–McKenna school’ in opposition to Britain's return to the gold standard. However, after considering A.C. Pigou's reading of Sir Reginald McKenna's testimony to the Chamberlain–Bradbury Committee and the influence of that reading on Pigou's draft of the Committee's report to the British government, the case is made for the ‘Pigou–McKenna school’ as a policy school that was supportive of a return to the gold standard but against doing so prematurely. This is perhaps more meaningful than reference to the ‘Keynes–McKenna school’, which incorrectly implies that McKenna was opposed to Britain returning to gold.     

Pursuing the wrong options? Adjustment costs and the relationship between uncertainty and capital accumulation

Abel and Eberly (1999) prove that uncertainty has an ambiguous effect on long run capital accumulation in a real options model. We show that, with adjustment costs quadratic in investment, more uncertainty reduces capital and this effect may be large.     

Human capital depletion, human capital formation, and migration: a blessing or a “curse”?

We specify conditions under which a strictly positive probability of employment in a foreign country raises the level of human capital formed by optimizing workers in the home country. While some workers migrate, “taking along” more human capital than if they had migrated without factoring in the possibility of migration (a form of brain drain), other workers stay at home with more human capital than they would have formed in the absence of the possibility of migration (a form of brain gain).     

Is China’s Development Finance a Challenge to the International Order?

China is a major funder of developing country infrastructure, lending $40 billion annually through policy banks. Lending does not favor the belt and road above other regions. China’s lending is indifferent to risk, that is, it is uncorrelated with indices of political stability and rule of law. Some major borrowers with poor governance are beginning to have debt sustainability problems, while other borrowers are in good fiscal shape. Chinese banks have been reluctant to follow global environmental norms but seem to be evolving in that direction. Chinese actions seem more a revision of the global system than a challenge to it.     

Do the world’s largest cities follow Zipf’s and Gibrat’s laws?

We examine whether the size distribution and the growth process of the world’s largest cities follow Zipf’s law and Gibrat’s law. The parametric results of the size distribution analysis reject Zipf’s law for all sample sizes and also show the Zipf exponent systematically declines as the sample size increases. The growth process analysis confirms Gibrat’s law and yields a local Zipf exponent of one for cities with a normalized population less than 0.53%, which includes about 95% of the total observations. The deviations from Zipf’s law occur at the extreme upper tail and are likely a result of restricted mobility of population across countries. However, given that Gibrat’s law holds, we can expect the size distribution to converge to Zipf’s law with a decline in the barriers to immigration.     

Balance sheet in the REDD +: Are global estimates measuring the wrong costs?

This article challenges some of the assumptions underpinning the UN programme to Reduce Emissions from Deforestation and forest Degradation (REDD +) in developing countries. Firstly, it argues that the cost-effectiveness of REDD + may have been exaggerated as current estimates ignore some cost categories as well as the evolution of drivers. Whilst REDD + remains a ‘low-hanging fruit’ for climate mitigation, if all costs were included estimates would be at the high end of the currently accepted range. Secondly, the article highlights that REDD + will be affected by a large funding gap at least until the entry into force of a new climate protocol in 2020. This gap is due as much to the poor status of public finances in donor countries as to the languishing state of carbon markets, and it calls for a revision of the assumptions regarding the design of the programme. Finally, it is advocated that, in order to contribute to the development of the programme, economic research on REDD + should consider different policy options, assessing their efficiency and identifying measures that increase their cost-effectiveness.     

Impact of split share structure reform on capital structures: empirical evidence from China’s listed companies

An econometric model based on a natural experiment and the difference-in-differences method is introduced to empirically investigate the impact of split share structure reform on capital structures. A total of 1026 listed companies in Chinese A-share during 2001–2011 are used as the sample for the research and interest-bearing debt ratios (BDRs) are taken as a representative indicator for capital structures. The theoretical and empirical analysis indicates that both market expansion effect and corporate governance effect caused by the split share structure reform are associated with an increase in BDR. As far as the timeliness is concerned, the effects of split share structure reform on capital structures will last 3–4 years.     

The effects of China’s split-share reform on firms’ capital structure choice

China’s split-share structure reform in 2005–2006 mitigates agency conflicts between controlling shareholders and minority shareholders and thus may bring substantial changes to corporate financing behaviour. This article examines the impact of that reform on the capital structure decisions of firms by applying a variety of trade-off and pecking-order models. Using data from 1176 non-financial Chinese listed firms during the period 2000–2012, we present empirical evidence indicating that equity tracks the financing deficit better than debt in Chinese firms, a finding which is not consistent with pecking-order theory. This phenomenon is more prominent after 2006 as share reform increases trading activity in the secondary stock market and improves the transparency of financial markets. In addition, Chinese firms have an optimal leverage ratio and they adjust below-target leverage ratios faster than above-target leverage ratios after the implementation of share structure reform, although they make symmetric adjustments towards the target leverage ratio before 2007. Finally, recent share reform has prompted Chinese firms to more quickly address the divergence of actual leverage ratios from long-term target levels, but has slowed their response to short-term target leverage divergence.     

Complementarity between heterogeneous human capital and R&;D: can job-training avoid low development traps?

This paper uses a non-overlapping generations model of endogenous growth to emphasize the effect of human capital’s heterogeneity on economic growth. In addition to education, we present two different typologies of training. The first, technology-general, is independent of R&D; the second, technology-specific, is connected to the success of innovative activities and it is only provided to workers engaged in research. By extending Redding (Econ J 106:452–470, 1996), we demonstrate that human capital composition is important in determining the probability of innovation and the economy’s growth rate. Moreover, the paper shows that technology-general training avoids low development traps when R&D is absent.     

Cost of capital: spot rate or forward rate?

In this study, we intend to reveal some problems with the classic valuation method – the weighted average cost of capital (WACC) method. We first address a fundamental question about WACC, that is, should WACC be interpreted as a spot rate, a forward rate or any kind of average of either of them? We show that the nature of WACC is the expected forward rate. We next demonstrate that without understanding this nature, we may misinterpret the famous MM formula and MM Proposition II, as well as develop incorrect valuation framework. Our findings provide insightful implications to academia and practitioners for the proper interpretation and implementation of the WACC method.     

Public and Private Investments in Greece: Complementary or Substitute ‘Goods’?

This paper investigates whether government investment spending exerts a positive or a negative effect on private investments. Time-series data for Greece as well as the methodology of cointegration suggest that, over the period 1948-80, public investment spending exerted a positive effect on private investments, while over the period 1981-96, the relationship turned out to be negative. Empirical results indicate that the large increase of the public share in the total investment process tended to crowd out private investments and to jeopardize the growth process of the economy.     

A women’s boom in the boardroom: effects on performance?

This article analyses whether improving gender diversity in boardrooms improves firms’ economic performance. In the context of French CAC40-listed companies between 2008 and 2012, this research uses instrumental variable panel regressions, including production frontier estimates, to arrive at two key results. First, gender diversity in boards depends on firms’ attributes including their previous gender promotion strategies. Second, promoting women in boardrooms has a significant and positive effect on economic performance while accounting for the endogeneity boards’ gender diversity. Gender diversity even reduces corporate inefficiencies and enables firms to come closer to their optimal performance.     

Volunteering and life or financial shocks: does income and wealth matter?

Volunteering is a dominant social force that signals a healthy state. However, although the literature on volunteering is extensive, knowledge on how life’s discontinuities (life and financial shocks) affect volunteering is limited because most studies work with static (cross-sectional) data. To reduce this shortcoming, we use longitudinal data from Australia (HILDA) that track the same individuals over time to assess how individuals from different income and wealth groups respond to life and financial shocks with respect to volunteering. Although both income and wealth can act as buffers against life shocks by providing stability and reducing vulnerability – which decreases the need to actually change behaviour patterns – we observe more heterogeneity than expected and also stickiness at the lowest income levels. Response delays in post-shock volunteering also suggest that volunteering habits may be driven and influenced by strong commitment and motivation that are not shattered by life or financial shocks. In fact, the amount of time spent volunteering tends to increase after negative income shocks and decrease after positive income shocks.     

Economic growth and the demand for education: is there a wealth effect?

Human capital investment in developing countries is thought to be significantly constrained by household resources. This paper studies the relationship between household resources and the demand for education using recent household survey data from Vietnam. The data cover a period, 1993–1998, of exceptional income growth in Vietnam, during which secondary school enrollment rose substantially. Using consumption expenditures to measure household wealth, we find a positive and significant relationship between changes in wealth and changes in the demand for education. This wealth effect persists even after controlling for locality-specific factors such as changes in education returns and the supply and quality of schools, and for the opportunity costs of schooling.     

The U.S. Department of Commerce’s approach to targeted dumping: the wrong test and the wrong response

The U.S. Department of Commerce (DOC) defines targeted dumping as a pattern of significant differences in the prices that importers charge in the U.S. to different purchasers, in different regions, or during different periods. If DOC finds targeted dumping, then it calculates the average dumping margin using zeroing, a practice that increases the calculated dumping duty. This article shows that DOC is using an inappropriate statistical test in targeted dumping investigations. The article also shows that a finding of targeted dumping does not justify the use of zeroing, an inherently flawed methodology that DOC has discarded in cases without targeted dumping.