Fundamentals and Oil Price Behaviour: New Evidence from Co‐integration Tests with Structural Breaks and Granger Causality Tests

As the world economy has undergone various changes and shocks, the oil market went through significant fluctuations during the period 1994–2015. This study focuses on discussing the possible factors that determine crude oil prices, which include world economic growth, market power of Organization of the Petroleum Exporting Countries (OPEC), non‐OPEC supply and the value of dollar, taking into account the structural changes that influence the study period, which is quarterly data for the period of 1994.Q1–2015.Q3. For time series stationarity tests, Zivot and Andrews (1992) and Perron (1997) unit root test with structural break is used. To test the existence of a long relationship in the presence of structural changes, the Gregory and Hansen (1996a, 1996b) method of co‐integration is used. For long‐run coefficient, we proceed to estimate fully modified least squares. The result shows a significant influence of non‐OPEC supply, the dollar appreciation and world gross domestic product growth, but OPEC did not have a significant effect on the price of oil, which is indicated by the structural break for OPEC capacity utilisation at 2002.Q1, that indicates the starting point of the loss of OPEC power. Establishing the presence of co‐integration, we apply the evaluation of Granger causality for co‐integrated data, using vector error‐correction model.     

The biological hypothesis in cliometrics of growth: a methodological critique of Fogel (post 1982) and Ashraf & Galor (2013)

The resort to biological “analogies”, “metaphors” and “concepts” is an important aspect of the history of the relationships between economics and biology and has long been greatly controversial. This controversy continues today in the most recent work of three cliometricians, i.e. Fogel (post 1982) and Ashraf and Galor (2013). We focus on the theories of historical growth relying on biological explanations which have been formulated by these economists, from the specific angle of biological reductionism. We propose a methodological critique of their use of biological variables as determinants of the historical dynamics of economic growth. Based upon the transposition to the field of economics of Ernst Mayr’s distinction between functional and evolutionary biology and his definitions of reductionism, we argue that despite some similarities, the questions raised by Fogel’s and Ashraf & Galor’s theories are of distinct nature. Nonetheless, we stress the need for a careful examination of the biological mechanisms supporting these researches.     

CDM 20 years after

ABSTRACT

In year 1998, the seminal paper Research Innovation and Productivity: An Econometric Analysis at the Firm Level was published in this journal. The empirical framework, following on ideas in the research of Zvi Griliches at the NBER and commonly labeled CDM (the acronym of the three authors’ names, Crépon, Duguet and Mairesse) is one of the most influential contributions in recent literature on economics of innovation. The original CDM paper and papers inspired by its framework have received hundreds of citations in the empirical innovation literature. Whether directly linked or not to the CDM framework, the flow of studies improving on and enlarging the scope and methods of the empirical literature on R&D, innovation and productivity is continuing. Some of them, for example, focus on financing innovation, innovation and employment, innovation and trade, competition, or intellectual property; some adopt a managerial perspective, while others prefer an innovation system approach in a Schumpeterian tradition, etc. This introduction to the special issue of EINT surveys a collection of 12 papers on the CDM model by 25 authors from eight countries. The papers take stock of the evolution of research based on the original CDM model launched 20 years ago, linking it to the previous literature, and proposing developments and generalizations of it in various dimensions.     

THE PRICE OF SILENCE: MARKETS FOR NOISE LICENSES AND AIRPORTS*

This article presents a market design for the management of noise pollution created by aircraft traffic around airports. A local market for noise licenses allows noise generators to compensate noise victims and to meet social acceptability. We show that the market allows the market designer to implement the social planner's optimal allocation of flights as long as the latter does not put too high a weight in his/her objective function on firms' profits compared to the disutility of noise pollution. The fact that local representatives of noise victims may be strategic players does not fundamentally alter this finding. Because of the market auctioneer's information constraints, noise licenses are likely to distribute windfall gains to residents, which alters the urban structure in the long run.     

Meeting Maastricht: Nominal convergence of the new member states toward EMU

This paper estimates whether the new member states (NMS) that joined the EU in 2004 have achieved a form of inflation and long-term interest rate convergence. Using quarterly data from the mid-1990s, convergence is evaluated through a series of unit root and cointegration tests. Both univariate and panel tests are performed, including tests for a large number of combinations of inflation and interest rates satisfying the Maastricht inflation and long-term interest rate criteria. It is generally found that nominal convergence in inflation has been attained among the NMS. There is, however, less evidence of convergence in long-term interest rates. Possible exceptions include Estonia and the Czech Republic and, to a lesser extent, Slovakia which has since joined the euro area. There is also a large degree of consistency between the various unit root and cointegration tests in both the univariate and panel variations.     

The biological standard of living and body height in colonial and post-colonial Indonesia, 1770–2000

How did the biological standard of living develop in Indonesia during colonial times? Did it increase substantially after decolonization? In our study, we use four sets of anthropometric data to construct time series of average human height since the 1770s. The paper observes a significant decline in heights in the 1870s, followed by only modest recovery during the next three decades, both of which are related to a sequence of disasters. Average heights increased from the 1900s and accelerated after World War II. The World Economic Crisis, the Japanese occupation and the war of independence in the 1930s and 1940s constituted a difficult period. Average height growth thereafter is related to improvements in food supply and the disease environment, particularly hygiene and medical care.     

Applying Target Costing in the Development of Marketable and Environmentally Friendly Products from Swine Waste

Management of swine waste generated in the United States is a challenging problem facing engineers, farmers, scientists, regulators, and policy-makers. Technologies for processing and storing swine waste have not been fully developed and refined in a manner acceptable to the public and environmental regulators. The primary concerns with improperly disposed swine waste are the effects on human and livestock health, surface and groundwater quality, air quality, and conservation of nitrogen fertilizers (Hagenstein 2003 Hagenstein, P. R. 2003. Air Emissions from Animal Feeding Operations: Current Knowledge, Future Needs, Washington, D. C.: National Research Council, National Academy Press.  [Google Scholar]).

The purpose of this study is to demonstrate the concept of target costing by applying it to a very specific example: the production of biomethanol from swine manure. This study summarizes the analyses that outline a design and calculate a preliminary cost estimate for a proposed system for producing biomethanol from swine manure (initial process). In this study the target costing process is demonstrated with calculation of a target cost. This article also demonstrates an application of value engineering as a systematic, interdisciplinary examination of factors affecting the cost of a product so as to find means to fulfill the product's specified purpose at the required standards of quality and reliability and at an acceptable cost.

The article is organized as follows. First, the purpose of applying target costing methodology to the development of marketable by-products from swine manure is outlined. Next, target cost is calculated for biomethanol made from swine manure based on current methanol prices and currently available subsidies for biomethanol made from swine manure. A system for producing biomethanol from swine manure is described. The current cost is calculated for producing biomethanol. Concepts of value engineering are employed to reduce a significant cost component of the initial process resulting in Process II. Finally, value engineering is employed the second time to further reduce the cost of Process II yielding Process III.     

The role of cognitive appraisal,emotion and commitment in affecting resident support toward tourism performing arts development

Abstract

While residents’ perceptions of tourism development have been widely explored through a rational cost-benefit lens, little is known about residents’ emotional responses and their influences on resident support toward tourism development. By integrating cognitive appraisal theory and affect theory of social exchange, this study examines the psychological factors (cognitive appraisals, emotions, and commitment) that underlie residents’ behaviors toward Tourism Performing Arts (TPA) development. Based on a survey of 435 residents undertaken in Yangshuo, China, the results reveal that outcome desirability, fairness and coping potential are significant antecedents differentiating resident positive and negative emotional responses toward TPA developments. Commitment was found to moderate the relationship between resident negative emotions and supportive behaviors and played a significant role in shaping resident behaviors. Additionally, resident support was found to be influenced by negative emotions rather than positive emotional responses toward TPA development. The findings have implications for alleviating resident hostility, cultivating commitment toward specific types of tourism, reducing community conflicts and obtaining local support for sustainable tourism development.     

Solvable local and stochastic volatility models: supersymmetric methods in option pricing

In this paper we provide an extensive classification of one- and two-dimensional diffusion processes which admit an exact solution to the Kolmogorov (and hence Black–Scholes) equation (in terms of hypergeometric functions). By identifying the one-dimensional solvable processes with the class of integrable superpotentials introduced recently in supersymmetric quantum mechanics, we obtain new analytical solutions. In particular, by applying supersymmetric transformations on a known solvable diffusion process (such as the Natanzon process for which the solution is given by a hypergeometric function), we obtain a hierarchy of new solutions. These solutions are given by a sum of hypergeometric functions, generalizing the results obtained in a paper by Albanese et al. (Albanese, C., Campolieti, G., Carr, P. and Lipton, A., Black–Scholes goes hypergeometric. Risk Mag., 2001, 14, 99–103). For two-dimensional processes, more precisely stochastic volatility models, the classification is achieved for a specific class called gauge-free models including the Heston model, the 3?/?2-model and the geometric Brownian model. We then present a new exact stochastic volatility model belonging to this class.