The political economy of decarbonisation: from green energy ‘race’ to green ‘division of labour’

This paper aims to provide an addendum to the rapidly growing concept of a global ‘green energy race’ between major states. It argues that although this framing has been useful in underscoring important dynamics in the process of decarbonisation, its narrow focus on installed capacity obscures a much broader and more complex process at play. In particular, it overlooks the critical role played by states aggressively investing in R&D and export manufacturing in the renewable energy sector. The paper thus supplements the concept of a green ‘energy race’ with that of a green ‘global division of labour’, which sees the process of decarbonisation not exclusively as an effort by individual states to install renewables domestically, but rather as a collective and interdependent process by dozens of states, all striving in different ways to promote capital accumulation on their soil. The paper provides an overview of data covering innovation, manufacturing and deployment in the clean energy sector, and offers a theoretical analysis of the trends observed.     

The double EMG distribution and trade elasticities

Using Brazilian export data that, unlike many trade data sets, have a full record of small export sales, this paper reconsiders trade elasticities and the welfare gains from trade. Using the Brazilian data, this paper provides novel evidence on the properties of the distributions of log‐export sales and shows that the double exponentially modified Gaussian (EMG) distribution parsimoniously captures these properties. Using the double EMG distribution in a standard monopolistic competition model of trade, this paper demonstrates that data truncation, which is prevalent in many data sets, leads to an upward bias in measuring the partial elasticity of trade with respect to variable trade costs. This bias subsequently leads to the underestimation of the gains from trade by 1% to 9% depending on the extent of data truncation, a range that is commensurate with typical economic growth and large booms.     

Cross-sectional determinants of bank performance under deposit dollarization in emerging markets

Dollar-denominated deposits and loans could increase financial fragility in emerging market banking systems. This currency mismatch does not only increase banks' currency risk when the proportion of dollar-denominated loans with respect to local-denominated loans increases but also it increases their clients' default risk if depreciation occurs. This paper investigates the profitability of 36 dollarized banking systems. Results suggest that after controlling for some macroeconomic and institutional variables, dollarization, as the currency mismatch hypothesis suggests, depresses bank performance and lowers bank profitability. Results also show that the effect of institutions more than offsets the negative impact of dollarization on banks' profitability.     

Testing the presence and the absence of purchasing power parity: results for fixed and flexible regimes

Recent empirical studies concerning purchasing power parity (PPP), using the concept of cointegraton, have tested the null hypothesis of the absence orthe presence of PPP. The disadvantage of using either of these approaches is that the conclusion is ambiguous when not rejecting the null: the result could be due to either the null hypothesis being true or by the low power of the test and lack of information in the data. Therefore, there is substantial information to be gained by applying both approaches within the same study. This study uses the ordinary DF test with PPP as the alternative hypothesis and a recently suggested test by Kwiatkowski et al. (1992) with PPP as the null. The tests are applied to four major industrial countries real exchange rates, each split into four different samples, including fixed as well as flexible exchange rate regimes. The absence of PPP cannot be rejected while the presence can be rejected.     

The Impact of Institutions and Exchange Rate Volatility on China’s Outward FDI

Over the past decade, China’s outward foreign direct investment (OFDI) has rapidly increased. However, its characteristics are not sufficiently studied. In this article, we explore the host country’s determinants of China’s OFDI, with a focus on institutional quality, exchange rate volatility, and natural resources by performing an econometric analysis for the period 2003–2013 for a sample of 49 countries. Our results reveal that China’s OFDI is invested in countries with relatively poor institutional quality and abundant natural resources. Exchange rate variability has a dampening effect on China’s OFDI and that the appreciation of the Chinese renminbi enhances OFDI flows.     

Optimal stopping under model uncertainty and the regularity of lower Snell envelopes

The analysis of American options in incomplete markets has motivated the development of robust versions of the classical Snell envelopes: The cost of superhedging an American option is characterized by the upper Snell envelope, while the infimum of the arbitrage prices is given by the lower Snell envelope. Lower Snell envelopes also appear in the problem of optimal stopping under model uncertainty. In this paper we focus on the lower Snell envelope. We construct a regular version of this stochastic process. To this end, we apply results due to Dellacherie and Lenglart on the regularization of stochastic processes and 𝒯-Systems.     

Comparisons of stakeholder perceptions of tourism impacts in rural eastern North Carolina

The purpose of this study was to discover if differences in perceptions of tourism's impacts on a rural community existed between four stakeholder groups in eastern North Carolina: residents, entrepreneurs, government officials, and tourists. Data were collected from stakeholders using a mail-back questionnaire, which included nine Likert-style questions inquiring about attitudes and perceptions of tourism development in the community. To discover if differences existed, an ANOVA test was conducted for each question, followed by a Scheffe test to determine which groups were different. The analysis indicated that there were differences in the perception of tourism impacts between stakeholder groups. More specifically, the results of the ANOVA test indicated that there were statistically significant differences between stakeholder groups for seven of the nine questions. Differences were identified between the entrepreneurs and government officials, residents and governmental officials, residents and entrepreneurs, and residents and tourists.     

Political Effects on Pension Underfunding

Pension underfunding in the public sector has received considerable attention recently and is often cited as the next looming crisis. The majority of recent research has focused on appropriately measuring the underfunding. In this paper, we employ a political economy framework to show that increases in partisan polarization and electoral uncertainty lead to greater underfunding. Using an unbalanced panel of individual pension plans, we find robust empirical evidence that higher legislative turnover rates, more electoral competition, and term limits all lead to more pension underfunding. The political environments of state and local governments play a pivotal role in pension underfunding.     

EFFICIENT HEDGING OF EUROPEAN OPTIONS WITH ROBUST CONVEX LOSS FUNCTIONALS: A DUAL‐REPRESENTATION FORMULA

Motivated by numerical representations of robust utility functionals, due to Maccheroni et al., we study the problem of partially hedging a European option H when a hedging strategy is selected through a robust convex loss functional L(·) involving a penalization term γ(·) and a class of absolutely continuous probability measures . We present three results. An optimization problem is defined in a space of stochastic integrals with value function EH(·) . Extending the method of Föllmer and Leukerte, it is shown how to construct an optimal strategy. The optimization problem EH(·) as criterion to select a hedge, is of a “minimax” type. In the second, and main result of this paper, a dual‐representation formula for this value is presented, which is of a “maxmax” type. This leads us to a dual optimization problem. In the third result of this paper, we apply some key arguments in the robust convex‐duality theory developed by Schied to construct optimal solutions to the dual problem, if the loss functional L(·) has an associated convex risk measure ρ^L(·) which is continuous from below, and if the European option H is essentially bounded.     

Strategic Interaction and Trade Policymaking: Formal Analysis and Simulation

This paper introduces a simple game‐theoretic model and a Monte Carlo simulation of trade negotiations with the aim of identifying the nature of the selection bias that may threaten valid inference from empirical tests relying on data from trade disputes. Insights from the formal model are used to critically engage recent empirical analyses. This model is applied more specifically to the American use of Section 301 as an instrument to prise open foreign markets. The results of the game‐theoretical model and the Monte Carlo simulation demonstrate that, despite significant statistical results, models of trade negotiations might potentially suffer from misspecification due to non‐random selection effects.