On the distribution of profits and covering of war-risk

Abstract

Extract

Owing to the low premium rates used by Norwegian Life Insurance Companies, the solution of the question relating to the covering of the war-risk offers, in their case, peculiar difficulties. In their proposal for a new basis of calculations the Norwegian actuaries pointed to the desirability of the Companies trying, to a greater extent than heretofore, to arrive at the full payment, in case of a war, of claims arising from deaths among insured persons participating in the war. Most of the Norwegian Companies introduced the new calculations from Jan. 1st 1925, the proposal of the minority as to loading having been adopted. Only one of the companies, the Idun, granted to its policyholders the right to full indemnity in case of death in war, and this right was given on the basis of a special regulation for the allotment of profits.     

Agriculture versus fish – Norway in WTO

The Norwegian agriculture is highly protected and subsidised. The opposite is the case for fisheries and fish farming which suffer from foreign market restrictions. Using a computational general equilibrium model, the gain for Norway of a complete elimination of food subsidies and tariffs is estimated to be in the range of 1.2–2.7 per cent of GDP. Most of this gain stems from domestic farm sector liberalisation. The gain from free market access for seafood is estimated to 4.4 per cent of the seafood export value. Consequently, Norway has much to gain from offering other countries market access for agricultural products. By pursuing such a policy, Norway may also strengthen the case for fisheries and fish farming in trade talks.     

Digging in the dirt? Extractive industry FDI and corruption

Does corruption attract or deter foreign investment in the extractive sectors? This article presents an econometric analysis of extractive industry foreign direct investment (FDI) inflows to 81 countries in the period 1996–2009. The results suggest that increased corruption within a country is associated with increased extractive industry FDI, but at a diminishing rate as corruption increases grow larger. For realistic changes in corruption, however, more corruption is associated with more extractive industry investment.     

Overtourism,optimisation, and destination performance indicators: a case study of activities in Fjord Norway

Abstract

Many global tourist destinations have experienced growth in arrivals. This has triggered various conflicts in destinations and sparked debates as to how to deal with what is increasingly referred to as ‘overtourism’. Most Destination Marketing Organisations (DMOs) pursue strategies to stimulate arrivals even further. Pro-growth discourses are reinforced by lead bodies such as the World Tourism Organisation (UNWTO). However, maximisation strategies based on higher numbers of tourists increasingly cause conflicts with local residents, whereas simultaneously undermining climate change mitigation pledges as negotiated in the Paris Agreement. New approaches to destination management based on optimisation are therefore warranted. Drawing on a survey of international tourists (n?=?5,249) in south-western Norway, this article discusses whether ‘activities’, i.e. the development of local, small-scale and ideally more sustainable experiences, can contribute to economic growth without necessarily increasing numbers of arrivals. Results confirm that destinations should seek to better understand their markets, including length of stay, spending, and/or activity intention, to identify profitable markets. Ultimately, such knowledge may help addressing overtourism conflicts while building tourism systems that are more economically, socially, and environmentally resilient.     

A binomial approximation for two-state Markovian HJM models

This article develops a lattice algorithm for pricing interest rate derivatives under the Heath et al. (Econometrica 60:77–105, 1992) paradigm when the volatility structure of forward rates obeys the Ritchken and Sankarasubramanian (Math Financ 5:55–72) condition. In such a framework, the entire term structure of the interest rate may be represented using a two-dimensional Markov process, where one state variable is the spot rate and the other is an accrued variance statistic. Unlike in the usual approach based on the Nelson-Ramaswamy (Rev Financ Stud 3:393–430) transformation, we directly discretize the heteroskedastic spot rate process by a recombining binomial tree. Further, we reduce the computational cost of the pricing problem by associating with each node of the lattice a fixed number of accrued variance values computed on a subset of paths reaching that node. A backward induction scheme coupled with linear interpolation is used to evaluate interest rate contingent claims.     

Investment cash flow sensitivity and financial constraint: a cluster analysis approach

This article sheds light on the mixed empirical evidence concerning financial constraint and investment sensitivity to cash flow. The literature suggests that measuring financial constraint is far from straightforward, and we therefore propose a cluster analysis procedure to identify unambiguous groups of constrained firms. We found the investment results to be highly sensitive to cash flow for financial constraint firms. Moreover, in line with previous research, our results showed that the traditional criteria used to identify financially constrained firms led to ambiguous interpretations. Overall, our results propose that the cluster analysis can be used to encompass the various single-criterion approaches, thereby providing a finer measurement of the financial constraint construct and deeper insight into the relationship between investment sensitivity to cash flow and financial constraint.     

Risk assessment of highway bridges under multiple hazards

The aim of this paper is to provide a rational framework for the quantitative risk assessment of highway bridges under multiple hazards. Risk is a crucial indicator to be considered when managing structures of great importance such as highway bridges. It associates the consequences of a structural failure or malfunction with the probability of bridge failure. Time-dependent total risk is computed and the effect of structural redundancy is investigated and implemented. The proposed framework includes the estimation of the effects of multiple common hazards such as abnormal traffic loads, environmental attacks, scour, and earthquakes. The failure probabilities associated with the considered hazards are evaluated separately using different approaches. Time-dependent failure probabilities, hazard functions, and probability density functions of the time-to-failure are also assessed for each hazard. These assessments contribute to the evaluation of risk considering the traffic flow and the local economy at the bridge location. Both epistemic and aleatory uncertainties are considered in this approach. Time-dependent profiles of risk, accounting for direct and indirect consequences, are obtained for an existing highway bridge.     

Corruption,intrinsic motivation,and the love of praise

Do higher wages prevent corruption (bribe taking)? We investigate a setting where individuals who apply for public sector jobs are motivated not just by monetary incentives but also by intrinsic motivation and concern for the collective reputation of their profession. We show that an increase in monetary compensation may cause reputation‐concerned individuals to be more prone to participate in corruption due to an “overjustification” effect. The overall effect of monetary incentives on fighting corruption crucially depends on the composition of the pool of public sector workers for two reasons: first, different types of workers react differently to the same policy; second, the composition of the pool of workers affects individual behavior through its effect on collective reputation. These results imply in particular that policies to fight corruption should focus more on increasing the collective reputation of the public sector rather than using monetary incentives, which have perverse effects on some agents.