Factors Affecting Global Inventory Prepositioning Locations in Humanitarian Operations—A Delphi Study

This article investigates the factors that are important to humanitarian organizations when determining locations for inventory prepositioning in preparation for emergencies—a critical decision faced by humanitarian managers. Current research in the sector is rich with mathematical models that focus on this decision, although these models have a limited scope in terms of decision factors. Through a Delphi study our article investigates, identifies, and orders a comprehensive set of factors that decision makers in the humanitarian sector take into consideration when determining where to preposition inventory on the global level. Through this process, 10 main factors are identified, with the top five factors being required: speed of emergency response, the availability and quality of infrastructure, the availability and quality of business support services, the cost of operating the facility, and the availability and quality of labor. We also include suggestions for facility location research based on the outcomes of our study.     

Which Companies Benefit from Liberalization? a Study of the Influence of Initial Productivity

Theoretical research shows that competition has positive effects on productivity, for companies that are initially efficient, but not for unproductive firms. Our empirical analysis on a panel data of Czech companies, years 1995–2004, confirms this result. In addition, our analysis shows that when economic reforms affect both domestic and foreign competition, controlling for domestic competition is crucial when assessing the impact of trade liberalization. Otherwise, the effect of trade liberalization on firm productivity is upward biased.     

Estimating the Impact of Time-Invariant Variables on FDI with Fixed Effects

This paper applies the panel fixed effects with vector decomposition estimator to three FDI data sets to estimate the impact of time-invariant variables on FDI while including fixed effects. We find that the omission of fixed effects significantly biases the results, leading to contradictory predictions regarding the effect of trade costs and culture across data sets. After eliminating these biases, the differences across data sets largely disappear and many time-invariant variables consistently indicate the importance of vertical FDI. This suggests that some controversies in the literature may be driven by the extent to which unaccounted fixed effects biases vary across different data sets. JEL no.  F14, F23     

A spatial analysis of land-use change and agriculture in eastern Canada

Publicly available statistics regarding rural demographics, rural society and land use are presented and analysed using Geographic Information System (GIS). Our aim was to provide a quantitative basis for discussion of rural policy issues such as urban encroachment. Productivity (tonnage) of crop agriculture has increased by about 230% over 40 years while that of livestock (expressed as livestock units) has remained constant. Agricultural consolidation and intensification seen in southern Ontario has not translated into economic sustainability where on-farm income declined from 1991 to 2000. However, on-farm income in southern Quebec and municipalities adjacent to Toronto increased, perhaps due to the niche markets created in these regions. The increases in agricultural activity throughout southern Ontario have occurred in regions that have been designated as sites for innovation clusters, thus providing a foundation of resources for bio-based industries to expand and innovate. Reflecting on trends of demographics and production systems we conclude that rural policy should orient its geographical delineation to regional and inter-provincial scales. Our analysis indicates that rural populations and communities are sustainable but agricultural enterprises have changed radically; they have maintained or increased productivity but lost profitability. Applying a rural landscape design to the entire region would help address the sustainability of agriculture and rural communities.     

Endogenous trading in credit default swaps

We introduce a real options model in order to quantify the moral hazard impact of credit default swap (CDS) positions on the corporate default probabilities. Moral hazard is widely addressed in the insurance literature, where the insured agent may become less cautious about preventing the risk from occurring. Importantly, with CDS the moral hazard problem may be magnified since one can buy multiple protections for the same bond. To illustrate this issue, we consider a firm with the possibility of switching from an investment to another one. An investor can influence the strategic decisions of the firm and can also trade CDS written on the firm. We analyze how the decisions of the investor influence the firm value when he is allowed to trade credit default contracts on the firm’s debt. Our model involves a time-dependent optimal stopping problem, which we study analytically and numerically, using the Longstaff–Schwartz algorithm. We identify the situations where the investor exercises the switching option with a loss, and we measure the impact on the firm’s value and firm’s default probability. Contrary to the common intuition, the investors’ optimal behavior does not systematically consist in buying CDSs and increase the default probabilities. Instead, large indifference zones exist, where no arbitrage profits can be realized. As the number of the CDSs in the position increases to exceed several times the level of a complete insurance, we enter in the zone where arbitrage profits can be made. These are obtained by implementing very aggressive strategies (i.e., increasing substantially the default probability by producing losses to the firm). The profits increase sharply as we exit the indifference zone.     

SHAREHOLDER RISK MEASURES

The aim of this paper is to put forward a new family of risk measures that could guide investment decisions of private companies. But at the difference of the classical approach of Artzner, Delbaen, Eber, and Heath and the subsequent extensions of this model, our risk measures are built to reflect the risk perception of shareholders rather than regulators. Instead of an axiomatic approach, we derive risk measures from the optimal policies of a shareholder value‐maximizing company. We study these optimal policies and the related risk measures that we call shareholder risk measures. We emphasize the fact that due to the specific corporate environment, in particular the limited shareholders' liability and the possibility to pay out dividends from cash reserves, these risk measures are not convex. Also, they depend on the specific economic situation of the firm, in particular its current cash level, and thus they are not translation invariant. This paper bridges the gap between two important branches of mathematical finance: risk measures and optimal dividends.     

Optimum currency area theory: evidence from post-Soviet countries and implications for Eurasian Economic Union

In this article the theory of optimum currency area is applied to post-Soviet and other selected countries. The study finds smaller exchange rate variability when the economies are closely linked by bilateral trade, are subject to similar shocks both on aggregate and at the industry level, have similar inflation rates, are open and smaller in economic size, and have higher labour migration as proxied by remittance flows. The estimation results also substantiate that the US dollar plays a dominant role as an anchor currency. Next, the study shows that economic fundamentals suggest limited prospects of a common currency for post-Soviet countries, particularly for the Eurasian Economic Union (EAEU). It is also found that Moldova, among the post-Soviet countries, better approximates an optimum currency area with Russia. Further, when the government debt-to-GDP ratio is taken into account, only Kazakhstan from the EAEU member countries stands out as having positive prospects for forming a common currency area with Russia.