The impact of regulatory change on EU energy utility returns: the three liberalization packages

The European Union’s (EU) energy sector is changing due to major policy reforms. In this article, we examine the impact of major legislative changes which were designed to induce competition in the energy sector: the three liberalization packages. Competition was expected to benefit the industry by phasing out inefficient firms. EU citizens were also expected to benefit as competition was likely to promote a more efficient energy sector and more consumer choice of energy products and services. However, this legislative change occurred during a period of extreme market turmoil. We examine the impact of all these changes on the risk profile of the sector. Our results show that the liberalization legislation significantly increased systematic risk exposure of the sector, reducing its role as a defensive investment asset. We also show that commodities had relatively little impact on sector returns, but this was expected as utilities can offset commodity risk in hedging markets. We compare our results to those obtained in neighbouring EU sectors and find the impacts are isolated to the energy sector. This article makes a major contribution to energy policy by empirically showing the change in risk as a result of sector liberalization.     

TESTING FOR SPECULATIVE BUBBLES USING SPOT AND FORWARD PRICES

The probabilistic structure of periodically collapsing bubbles creates a gap between future spot and forward (futures) asset prices in small samples. By exploiting this fact, we use a recently developed recursive unit root test and rolling Fama regressions for detecting bubbles. Both methods do not rely on a particular model of asset price determination, are robust to explosive fundamentals, and allow date stamping. An application to U.S. dollar exchange rates provides evidence of bubbles during the interwar German hyperinflation, but not during the recent floating‐rate period. A further application to S&P 500 supports the existence of bubbles in the U.S. equity market.     

Deregulation and firm investment: evidence from the dismantling of the license system in India

We analyse the impact of deregulatory reforms in India during the 1990s, which eliminated compulsory industrial licensing, on manufacturing firms’ investment decisions. We find an economically and statistically significant positive effect of delicensing on investment. We also show that firms in states with better credit conditions benefitted more from the removal of licences. Moreover, our analysis demonstrates that the increase in investment was predominantly driven by smaller firms.     

Rebalancing China's Economy: Domestic and International Implications

This paper considers interactions between China's domestic and external imbalances and their global implications. We present scenarios detailing how a rebalancing of China's growth pattern from investment‐driven growth towards more consumption‐driven growth may occur in practice. Using input–output tables for 2012, we illustrate the knife‐edged nature of Chinese rebalancing, the linkages between expenditure‐side and production‐side rebalancing, and how an internal rebalancing could exacerbate external imbalances. A policy implication for China is that for rebalancing to be fast, consumption must be exceptionally resilient and the efficiency of investment must increase sharply. If rebalancing is too slow, the capital‐to‐output ratio will rise to potentially unsustainable levels and consumption will fail to attain levels of contemporary upper middle‐income economies by 2030. Global input–output tables (1995–2011) suggest that the patterns of Chinese rebalancing considered in our scenarios may generate substantial headwinds for exports to China by its trading partners.     

The determinants of Italian domestic tourism: A panel data analysis

In this study, a GMM panel data estimation is used to investigate the main determinants of Italian domestic tourism demand as measured by regional bilateral tourism flows. The analysis is developed both at aggregate level and for the two traditional macro-areas of the country, namely Centre-North and South. For the whole nation, the importance of traditional economic variables in determining domestic tourism flows is confirmed. However tourist actual choices appear also to be influenced by past experiences and by regional differences in the quality of the wider environment. Additionally it appears that, for Italian tourists, domestic and international destinations behave as substitutable goods. The sub-sample analysis highlights some interesting differences between macro-areas. In particular, southern tourists appear more responsive to income variations, and less sensitive to prices differentials than their northern counterparts. Moreover, the degree of competition between domestic and outbound trips is higher in the South. Finally, southern tourists seem to be more influenced by environmental attributes while northern tourists are more sensitive to cultural activities.     

From feudal colonization to agrarian capitalism in Mallorca: Peasant endurance under the rise and fall of large estates (1229–1900)

The colonization of Mallorca gave rise to a late‐feudal agrarian society that evolved towards capitalism based on large estates owned by noblemen who hired large numbers of wage labourers from among smallholders living in agro‐towns, the dispossessed remnants of a formerly wealthier peasantry. These well‐off peasants originated from when the colonization frontier was open in the 13th and 14th centuries, but had been defeated when three peasant–plebeian revolts were crushed. Afterwards, Mallorca followed a latifundist transition towards agrarian capitalism similar to southern Italy or Spain, in sharp contrast with the middle‐peasant paths seen in Catalonia or Valencia. The land rent rose, while agricultural wages fell from 1659 to 1800. Peasant families could not survive, and had to supplement wages with the products of their own plots. This set a socio‐agroecological limit to growth in this agrarian class structure. The agrarian crisis at the end of the 19th century bankrupted the Mallorcan nobility. Bankers bought much of the land and sold it on as small allotments. This expanded the intensive cropping formerly limited to agro‐town belts, giving rise to a new “peasantization”. Despite their subordination, Mallorcan peasants had survived and created complex agroecological landscapes endowed with a rich biocultural heritage.     

Spillover Effects from Inward FDI on the Exporting Decisions of Chilean Manufacturing Plants

We study the presence of spillover effects on three exporting decisions (likelihood, quantity, propensity) of Chilean manufacturing firms during the period 2001–2004. Evidence suggests that Chilean firm’s export likelihood is positively affected by other domestic firms’ exports. In contrast, exports by MNEs operating in Chile negatively affect Chilean firm’s export likelihood, although MNE-employment generates positive spillover effects, suggesting externalities in human capital. We also find evidence of spillovers from MNE activity on the proportion of production the firm exports (export propensity), but not on how much they decide to export (export quantity).     

Tragedy of the Partnership: A Critique of Elinor Ostrom

Elinor Ostrom thinks she has discovered a third way apart from private and government property: the commons. In her view, there is no “tragedy” associated with this third option. The present article takes strong issue with her. Our claim is that she has not properly distinguished between a commons and partnership arrangements. In the former case, outsiders cannot be excluded from entry; in the latter, they can. The reason for this confusion between the commons and private property in Ostrom's work is that she believes private property is possible only if government protects and enforces it. We show by using various historical examples that this assumption is wrong, and hence the central tenet of Ostrom's model of the commons fails.     

Measuring business cycles: Empirical Mode Decomposition of economic time series

This paper continues discussion on the issue of time series decomposition by presentation of the Empirical Mode Decomposition technique. This technique outperforms well-known time-series filters by providing a deeper insight into the structure of time series.