Fiscal transfers for biodiversity conservation: The Portuguese Local Finances Law

Biodiversity loss is a serious and ongoing global environmental problem. Economic instruments in biodiversity policies can contribute towards reconciling the conservation costs encountered at local level with the benefits of biodiversity conservation at higher levels of governance, from regional and national levels up to the global level. This paper outlines the theoretical foundations of fiscal transfers in conservation policies and also offers a concise account of existing international experience and future prospects. The recently amended Portuguese Local Finances Law (LFL) of 2007, with its groundbreaking new article on the promotion of local sustainability, is analysed in terms of the significance of fiscal transfers for municipal budgets. It is compared with its predecessor law, highlighting changes in fiscal revenues for selected municipalities in the country in relation to their designated conservation areas. The analysis shows that these ecological fiscal transfers can be significant for those municipalities with a large proportion of land under protected status. However, because it also introduces a considerable number of changes to the Portuguese fiscal transfer scheme, the ecological impact of the new LFL is difficult to grasp due to the presence of several crossover effects. The results obtained offer significant insights both for improving the Portuguese LFL and for designing new ecological fiscal transfer schemes.     

Love,hate and murder: Commitment devices in violent relationships

Many violent relationships are characterized by a high degree of cyclicality: women who are the victims of domestic violence often leave and return multiple times. To explain this we develop a model of time inconsistent preferences in the context of domestic violence. This time inconsistency generates a demand for commitment. We present supporting evidence that women in violent relationships display time inconsistent preferences by examining their demand for commitment devices. We find that no-drop policies – which compel the prosecutor to continue with prosecution even if the victim expresses a desire to drop the charges – result in an increase in reporting. No-drop policies also result in a decrease in the number of men murdered by intimates suggesting that some women in violent relationships move away from an extreme type of commitment device when a less costly one is offered.     

Expectational coordination in simple economic contexts

We consider an economic model that features (1) a continuum of agents and (2) an aggregate state of the world over which agents have an infinitesimal influence. We first review the connections between the ??eductive?? viewpoint on expectational stability and standard game-theoretical rationalizability concepts. The ??eductive?? reasoning selects different plausible beliefs that are a priori, and possibly a posteriori, ??diverse??. Such beliefs are associated with the sets of ??Cobweb tatonnement?? outcomes, ??Rationalizable States?? and ??Point-Rationalizable States?? (the latter two being shown to be convex). In the case where our model displays strategic complementarities, unsurprisingly, all our ??eductive?? criteria support similar conclusions, particularly when the equilibrium is unique. With strategic substitutabilities, the success of expectational coordination, in the case where a unique equilibrium does exists, relates with the absence of cycles of order 2 of the ??Cobweb?? mapping: in this case, full expectational coordination would be achieved. However, when cycles of order 2 do exist, our different criteria predict larger sets of outcomes, although all tied with cycles. Under differentiability assumptions, the Poincaré?CHopf method leads to other global stability results. At the local level, the different criteria under scrutiny can be adapted. They lead to the same expectational stability conclusions, only when there are local strategic complementarities or strategic substitutabilities. However, for the local stability analysis, it is demonstrated that the stochastic character of expectations can most often be forgotten.     

How a Reduction of Standard Working Hours Affects Employment Dynamics

December 1, 1996 a new law was implemented in Portugal to gradually reduce the standard workweek from 44 to 40 h. We study how this mandatory reduction affected employment through job creation and job destruction. There was considerable regional, sectoral and firm-size variation in the share of workers who were affected by the working hours reduction. We exploit this variation to assess the impact of the workweek reduction. We find evidence that the working hours reduction had a positive effect on employment through a fall in job destruction.     

Two Trees

We solve a model with two i.i.d. Lucas trees. Although the correspondingone-tree model produces a constant price-dividend ratio andi.i.d. returns, the two-tree model produces interesting asset-pricingdynamics. Investors want to rebalance their portfolios afterany change in value. Because the size of the trees is fixed,prices must adjust to offset this desire. As a result, expectedreturns, excess returns, and return volatility all vary throughtime. Returns display serial correlation and are predictablefrom price-dividend ratios. Return volatility differs from cash-flowvolatility, and return shocks can occur without news about cashflows.     

Method for identifying strategic objectives in strategy maps

This paper describes a simple tool for identifying strategic objectives as part of the design of strategy maps, based on the balanced scorecard, and meant to be used in organisations to establish performance indicators. To design the tool, a number of companies that implemented the balanced scorecard were analysed, in order to obtain their methodologies to create strategy maps. Three types of methods were found, different from each other in the way the strategic objectives are defined. By studying the benefits and drawbacks of the three methods, a simple, method was obtained. Basically, the method identifies general and specific strategic objectives and uses a modified SWOT (strengths, weaknesses, opportunities, threats) analysis. This paper also makes an analysis of the type of strategic objectives that the studied companies defined as part of the balanced scorecard implementation process.     

HETEROGENEITY IN REAL WAGE CYCLICALITY

This paper presents evidence that real wage cyclicality can be a particularly heterogeneous parameter, depending on different worker characteristics and also on the specific stage of the business cycle. Using matched employer–employee panel data for Portugal covering the period 1986–2004, real wages are shown to be considerably more procyclical during recessions than during expansions, resulting in relatively moderate overall levels of cyclicality (about −0.6). However, most of the procyclicality during downturns is shown to be driven by the younger employees, as older workers appear to be insulated from the business cycle. Moreover, movers between firms typically display higher cyclicality than workers that stay in the same firm, regardless of whether the latter move or not between job levels. Most results also hold when considering basic wages instead of total wages, except that the procyclicality of movers during downturns is substantially higher.     

American options and callable bonds under stochastic interest rates and endogenous bankruptcy

A new characterization of the American-style option is proposed under a very general multifactor Markovian and diffusion framework. The efficiency of the proposed pricing solutions is shown to depend only on the use of a viable valuation method for the corresponding European-style option and for the transition density of the model’s state variables. Under a Gauss-Markov stochastic interest rates setup, these new American option pricing solutions are shown to offer a much better accuracy-efficiency trade-off than the approximations already available in the literature. This result is also used to price callable corporate bonds under an endogenous bankruptcy structural approach, by decomposing the option to call or default into a European put on the firm value plus two early exercise premium components.