A critical review of climate change risk for ski tourism

Ski tourism is a multi-billion dollar international market attracting between 300 and 350 million annual skier visits. With its strong reliance on specific climatic conditions, the ski industry is regarded as the tourism market most directly and immediately affected by climate change. A critical review of the 119 publications that have examined the climate change risk of ski tourism in 27 countries is provided. This growing and increasingly diverse literature has projected decreased reliability of slopes dependent on natural snow, increased snowmaking requirements, shortened and more variable ski seasons, a contraction in the number of operating ski areas, altered competitiveness among and within regional ski markets, and attendant implications for ski tourism employment and values of vacation property real estate values. The extent and timing of these consequences depend on the rate of climate change and the types of adaptive responses by skiers as well as ski tourism destinations and their competitors. The need to understanding differential climate risk grows as investors and financial regulators increasingly require climate risk disclosure at the destination and company scale. Key knowledge gaps to better assist ski tourism destinations to adapt to future climate risk are identified.     

The effects of social heterogeneity on travel patterns: A replication study

This paper examines differences between the U.S. and Australian urban landscape in terms of the relationship between urban structure and the effectiveness of public transportation. A replication study is undertaken that tests the validated hypothesis from a U.S. study that urban travel corridor social heterogeneity reduces patronage of public transportation because of resident concerns with social composition of passengers and effects on the travel privacy dimension. A causal model is identified for the city of Sydney that specifies enogenous and endogenous variables, as per the U.S. study, which affect bus and rail use. Results do not lead to the acceptance of the hypothesized relationship. The presence of social heterogeneity in Sydney travel corridors does not deter residents within the study corridors from using the bus or train for the journey to work, nor do they appear to affect longer term decisions on car ownership. Bus patronage was shown to be dependent on social heterogeneity factors while rail use was associated with car owning households. These results highlight differences in urban spatial structure and travel patterns between Sydney and cities in the U.S. study, and suggest differential effects of changes in urban spatial structure and policy responses.     

The impact of public R&D expenditure on business R&D*

This paper attempts to quantify the aggregate net effect of government funding on business R&D in 17 OECD Member countries over the past two decades. Grants, procurement, tax incentives and direct performance of research (in public laboratories or universities) are the major policy tools in the field. The major results of the study are the following: Direct government funding of R&D performed by firms has a positive effect on business financed R&D (except if the funding is targeted towards defence activities). Tax incentives have an immediate and positive effect on business-financed R&D; Direct funding as well as tax incentives are more effective when they are stable over time: firms do not invest in additional R&D if they are uncertain of the durability of the government support; Direct government funding and R&D tax incentives are substitutes: increased intensity of one reduces the effect of the other on business R&D; The stimulating effect of government funding varies with respect to its generosity: it increases up to a certain threshold (about 10% of business R&D) and then decreases beyond; Defence research performed in public laboratories and universities crowds out private R&D; Civilian public research is neutral for business R&D. * We thank the participants to various seminars, including the OECD Committee for Scientific and Technology Policy and the NBER 2000 Summer Institute on Productivity for helpful comments and suggestions. All opinions expressed in this article are those of the authors and do not reflect necessarily the views of the OECD or Université Libre de Bruxelles.     

The effectiveness of capital controls: evidence from Colombia and Thailand

In the run up to the financial crisis of 2007–2009 many developing nations were subject to massive inflows of capital, capital that their financial systems found difficult to absorb. One of a number of policy options to respond to such inflows is unremunerated reserve requirements (URR). Two countries, Colombia and Thailand, deployed URR in the second half of the decade. This paper analyses the effectiveness of the URR in those two instances. We find that URRs were modestly successful in Colombia and Thailand. In Colombia, the controls were able stem an asset bubble in the stock market. In Thailand, the URR reduced the overall volume of flows, and the announcement of the URR caused a sharp drop in asset prices. However, some of the other goals of capital controls were not fulfilled. The results in this paper demonstrate that there is still a role for capital controls in the twenty-first century, but such controls should be more sophisticated than in years past.     

A pure foreign exchange asset pricing model

If consumption tastes differ among countries, a position in foreign-denominated nominally riskless bonds is risky in real terms. Risk averse and rational consumer-investors facing such a situation would generally seek a diversified portfolio of foreign bonds. They would demand risk premia in accordance with portfolio (covariance) risk. A model is specified to portray this behavior and it is tested with data from eight countries. The results indicate that the actual premia earned in foreign risky positions are positively related on average to portfolio risk measures; but the premia deviate significantly from those predicted by the model.     

Inference in difference-in-differences: How much should we trust in independent clusters?

We analyze the challenges for inference in difference-in-differences (DID) when there is spatial correlation. We present novel theoretical insights and empirical evidence on the settings in which ignoring spatial correlation should lead to more or less distortions in DID applications. We show that details, such as the time frame used in the estimation, the choice of the treated and control groups, and the choice of the estimator, are key determinants of distortions due to spatial correlation. We also analyze the feasibility and trade-offs involved in a series of alternatives to take spatial correlation into account. Given that, we provide relevant recommendations for applied researchers on how to mitigate and assess the possibility of inference distortions due to spatial correlation.     

A quasi-sure optional decomposition and super-hedging result on the Skorokhod space

Finance and Stochastics - We prove a robust super-hedging duality result for path-dependent options on assets with jumps in a continuous-time setting. It requires that the collection of martingale...     

Dynamic competition with network externalities: how history matters

We consider dynamic competition among platforms in a market with network externalities. A platform that dominated the market in the previous period becomes “focal” in the current period, in that agents play the equilibrium in which they join the focal platform whenever such equilibrium exists. Yet when faced with higher-quality competition, can a low-quality platform remain focal? In the finite-horizon case, the unique equilibrium is efficient for “patient” platforms; with an infinite time horizon, however, there are multiple equilibria where either the low- or high-quality platform dominates. If qualities are stochastic, the platform with a better average quality wins with a higher probability, even when its realized quality is lower, and this probability increases as platforms become more patient. Hence, social welfare may decline as platforms become more forward looking.     

Middle Class,Government Effectiveness and Poverty in the EU: A Dynamic Multilevel Analysis

Using the 2008-2011 EU-Statistics on Income and Living Conditions data, we implement a dynamic three-level model to analyze poverty persistence in 26 EU countries. We isolate true state dependence phenomena by disentangling the effects of observed and unobserved heterogeneity at country level and employ cofactors not previously considered by the literature. Estimates show that unobserved heterogeneity across individuals remains large, even after explicitly controlling for the observable components of individual characteristics. The initial value of poverty has large effects on current poverty status but this effect is not uniform across countries. The risk of poverty is negatively related to the size of the structural middle class and to the level of structural social expenditure but it increases when lagged total public expenditure increases (with respect to the structural value). There is strong evidence of true state dependence.