A Comparison of Construction Contract Prices for Traditionally Procured Roads and Public–Private Partnerships

Theoretical literature suggests higher asset construction costs in a public-private partnership (PPP) than in traditional public procurement, due to the bundling of construction and operation and the transfer of construction risk, among other factors. Data on ex ante road construction prices in Europe suggest a PPP road to be 24% more expensive than a traditionally procured road, ceteris paribus. This estimate resembles reported ex post cost overruns in traditionally procured roads. Thus, the public sector seems to pay a premium on ex ante PPP construction contract prices mostly to cover construction risk transfer. Other reported sources of higher PPP road construction costs, including bundling, seem on average of lesser importance.     

Indonesian healthy living intentions: Segmentation study insights

Obesity is a global epidemic. The very rapid growth rates of obesity prevalence observed in developing countries is alarming. Segmentation is under applied in social marketing and, when it is applied, it is based primarily on demographic data in samples drawn from developed nations. The current study adopts psychographic segmentation to understand lifestyle attitudes and intentions towards exercise and weight loss among an Indonesian sample. TwoStep cluster analysis (n = 499) identified 4 distinct segments (At risk, Conscious healthy, Overweight, and Tryers). The results of this study demonstrate that different groups exist in the larger population and that consideration of these groups may assist social marketers in creating service/intervention offerings that meet the needs of a broader range of people in the market, thus extending penetration of campaigns that address obesity.     

Underestimation of mean square error matrix in misspecified linear models

In this paper a necessary and sufficient condition is derived for the mean square error matrix to be overestimated on average by the covariance matrix of the OLS estimator when the linear model is misspecified by omitting at least one independent variable. A sufficient condition for this is also considered and the situation is illustrated by simple examples showing, as previously noted by Gupta and Maasoumi (1979), that underestimation is the prevailing case in practice.     

Forecasting the consumption of alcoholic beverages in Finland: A box-Jenkins approach

In this report the results of identifying, estimating and diagnostically checking short-term rational distributed lag (transfer function) models for forecasting the consumption of alcoholic beverages other than beer in Finland are reviewed and compared with some other Scandinavian studies. The output of models is the logarithm of the monthly consumption of alcoholic beverages while the only specified input is the logarithm of the price index of alcoholic beverages. Other explanatory variables are included in the ARIMA noise. The importance of the price variable is demonstrated by comparing ex post predictions obtained using different methods.     

Boosting nonlinear predictability of macroeconomic time series

We apply the boosting estimation method in order to investigate to what extent and at what horizons macroeconomic time series have nonlinear predictability that comes from their own history. Our results indicate that the U.S. macroeconomic time series have more exploitable nonlinear predictability than previous studies have found. On average, the most favorable out-of-sample performance is obtained via a two-stage procedure, where a conventional linear prediction model is fitted first and the boosting technique is applied to build a nonlinear model for its residuals.     

Eco-efficiency analysis of consumer durables using absolute shadow prices

We develop a method for eco-efficiency analysis of consumer durables that is based on Data Envelopment Analysis (DEA). In contrast to previous product efficiency studies, we consider the measurement problem from the policy perspective. The innovation of the paper is to measure efficiency in terms of absolute shadow prices that are optimized endogenously within the model to maximize efficiency of the good. Thus, the efficiency measure has a direct economic interpretation as a monetary loss due to inefficiency, expressed in some currency unit. The advantages as well as technical differences between the proposed approach and the traditional production-side methods are discussed in detail. We illustrate the approach by an application to eco-efficiency evaluation of Sport Utility Vehicles.     

Managed Floating as a Monetary Policy Strategy

Although there seems to be a broad consensus among economists that purely floating or completely fixed exchange rates (the so-called corner solutions) are the only viable alternatives of exchange rate management, many countries do not behave according to this paradigm and adopt a strategy within the broad spectrum of exchange rate regimes that is limited by the two corner solutions. Many of these intermediate regimes are characterized by significant foreign exchange market interventions and a certain degree of exchange rate flexibility with non-preannounced exchange rate targets. While academic research in this area usually concentrates on some specific aspects of intermediate regimes (such as the effectiveness of interventions or institutional aspects), managed floating has rarely been analyzed as a comprehensive monetary policy strategy. In this paper, we present a monetary policy framework in which central banks simultaneously use the exchange rate and the interest rate as operating targets of monetary policy. We explain the mechanics of foreign exchange market interventions and sterilization and we explain why a central bank has an interest of controlling simultaneously the two operating targets. We derive the monetary policy rules for the two operating targets from a simple open economy macro model in which the uncovered interest parity condition and the monetary conditions index play a central role.     

Enhancement of value investing strategies based on financial statement variables: the German evidence

This paper examines the added-value of combining traditional valuation ratios with each other as well as with some financial statement variables in the German stock markets during the 2000–2015 period. The results show that combination pays off and, moreover, that the benefits of combination are greater in Germany than in most other developed stock markets. Particularly, we find strong evidence of the added-value of using Piotroski’s F-score as a supplementary selection criterion for value stocks as well as for low-accrual stocks. Our results show further that the F-score also boosts the efficacy of other valuation ratios besides the book-to-price ratio. In addition, the inclusion of F-score besides a relative value measure tends to increase the average market equity of portfolio firms. The decomposition of the full-sample-period performance into separate bull- and bear-period performance shows clearly that the better performance of F-score-boosted portfolios is mostly attributable to their outperformance during bearish periods, even though on average, they also generate higher bull-period returns than the comparable value portfolios formed without F-score. The use of F-score as a supplementary criterion also increases the proportion of stocks that earn above-market-average returns during the subsequent holding period. For the first time in the financial literature, we also document a strong relationship between high F-score stocks and momentum stocks.     

Environmental cost-benefit analysis of alternative timing strategies in greenhouse gas abatement: A data envelopment analysis approach

Assessing the benefits of climate policies is complicated due to ancillary benefits: abatement of greenhouse gases also reduces local air pollution. The timing of the abatement measures influences both the economic costs and ancillary benefits. This paper conducts efficiency analysis of ten alternative timing strategies, taking into account the ancillary benefits. We apply the approach by Kuosmanen and Kortelainen [Valuing Environmental Factors in Cost-Benefit Analysis Using Data Envelopment Analysis, Ecological Economics 62 (2007), 56-65], which does not require prior valuation of the environmental impacts. The assessment is based on synthetic data from a dynamic applied general equilibrium model calibrated to The Netherlands. Our assessment shows that if one is only interested in GHG abatement at the lowest economic cost, then equal reduction of GHGs over time is preferred. If society is willing to pay a premium for higher ancillary benefits, an early mid-intensive reduction strategy is optimal.