News‐Specific Price Discovery in Credit Default Swap Markets

We examine the lead and lag relation between equity and credit default swap (CDS) markets. We find that price discovery in equity markets only leads CDS markets following aggregate positive news and not so following other news. While difficult to reconcile with standard asset pricing theories, asymmetric price adjustment is common in goods markets, arising from intermediary power. We provide an explanation for this asymmetry based on dealers exploiting informational advantages vis‐à‐vis investors with hedging motives. Consistent with this explanation, we find that the patterns we document are related to firm‐level proxies for hedging demand, as well as economy‐wide measures of information asymmetries.     

Neue Anforderungen an optimierende Energiesystemmodelle für die Kraftwerkseinsatz- und Zubauplanung bei begrenzten Netzkapazitäten

Recent changes in energy economic frameworks conditions lead to new requirements for energy systems models. Particularly in Germany, structural and locational changes in the power plant sector can be observed. Above all, this is due to the liberalisation process entailing the legal unbundling of system operators and generation companies as well as to the ambitious aims for the extension of wind energy. Consequently, modelling energy systems as single node systems, in which network constraints are neglected, can lead to suboptimal results. Most energy systems models offer the possibility to limit interregional energy exchange capacities. However, these so-called transhipment models normally neglect the actual load flows. Yet, there are several possibilities to adequately consider the characteristics of power transmission. In this paper, the most popular approaches, which are used in particular technical applications, such as the AC- (Alternating Current), the DC- (Direct Current) and the PTDF- (Power Transfer Distribution Factors) approach are introduced and discussed with respect to their application in energy systems models. In addition, first experiences with their implementations are presented.     

The marketability of bank assets, managerial rents and banking stability

Financial innovation and greater information availability have increased the tradability of bank assets and have reduced banks’ dependence on individual bank managers. We show that this can have two opposing consequences for banking stability. First, the hold-up problem between bank managers and shareholders becomes less severe. Consequently, banks’ capital structure needs to be less concerned with disciplining the management. Deposits – the most effective disciplining device – can be reduced, increasing banks’ resilience to adverse return shocks. However, limiting the hold-up problem also diminishes bank managers’ rents, reducing their incentives to properly monitor and screen borrowers, with adverse implications for asset quality. Thus, the default risk of banks does not necessarily decline. We argue that this delivers a novel explanation for the origin of the recent subprime crisis.     

The liquidity of bank assets and banking stability

This paper shows that an increased liquidity of bank assets, paradoxically, increases banking instability and the externalities associated with banking failures. This is because even though higher asset liquidity directly benefits stability by encouraging banks to reduce the risks on their balance sheets and by facilitating the liquidation of assets in a crisis, it also makes crises less costly for banks. As a result, banks have an incentive to take on an amount of new risk that more than offsets the positive direct impact on stability.     

Beyond the journey: the lasting impact of culinary tourism activities

In general, food tourism research has focused on tourist behaviour prior to or during trips, as well as food tourism development and marketing from a destination perspective. This exploratory study investigates food tourism from a broader context to determine if food tourism activities may impact attitudes and future behaviours. Data from a nine-country survey indicate that food activities likely impact trip satisfaction and influence intention to return and likelihood to recommend a destination. Food experiences are connected with memory, and these food experiences and souvenirs may influence destination image and lead to future purchases. Suggestions are provided for further research.     

Is Globalisation in Danger?

This paper compares the globalisation experience of the late 19^th century with that of the post world war period. It notes the enormous changes in the world economy arising from the increasing participation of the developing countries in the world goods, labour and capital markets and the reduction in the cost of communications that has underlined these changes. More importantly globalisation was made by a consensus on trade, debt and macroeconomics which has led to policy reforms in developing countries including China whose entry into the WTO provides a high watermark in globalisation of the latter period. The paper notes that globalisation is not in danger of reversal given that the forces that led to this outcome in the earlier period have become weak. Ideas, interests, international relations and stability achieved in the post World War period gives ground for qualified optimism about the continuation of globalisation.