An interregional policy model for energy-economic-environmental interactions

This article deals with conflicts between energy, pollution and economic issues in an interregional framework. On the basis of an interregional input output model extended with pollution and energy sectors a policy analysis aiming at finding compromise solutions forconflicting objectives is carried out. The rigid input output structure is adjusted by incorporating price effects of inputs via demand relationships based on a translog price possibility frontier. The analysis is illustrated by means of some empirical applications to the Dutch economy.     

Analytical methods for environmental and energy policies

Summary The article focuses on new techniques for effective decision making in the field of energy use and environmental quality. Special attention is paid to the solution of conflicts between different options for economic development. A multi-sector model is constructed which links the use of different energy inputs to production and consumption. This model is further extended with a pollution model which describes the waste discharges associated with a given pattern of energy consumption. Next, substitution between various energy alternatives (induced by price changes resulting from scarcity) are analysed. The conflicts between different options are further analysed by means of learning strategies for conflicting objectives based on the concept of displaced ideals. Finally, the model is applied to Dutch economic-environmental-energy interactions by means of a structural model describing environmental pollution and energy use in relation to production and employment. Some empirical results concerning price reactions from producers induced by external conditions are presented as well.     

Optimal dynamic durability

Consider a firm that adjusts its production and the choice of durability for its products instantaneously. We show that when the marginal cost with the respect to durability is nonincreasing, (a) the optimal durability for both the competitive firm and the monopolist decreases over time and (b) the monopolist will produce a good with lower durability than the competitive firm. We thus lend support for empirical findings and causal observations that found the phenomenon of declining durability over time.     

PORTFOLIO PERFORMANCE IN RELATION TO QUALITY,EARNINGS, DIVIDENDS,FIRM SIZE,LEVERAGE, AND RETURN ON EQUITY

This paper examines the risk-return performance of portfolios formed from S&P quality rankings over the time period 1970–1979. In addition, the risk-return characteristics of the portfolios are compared with performance as measured by fundamental data regarding earnings, dividends, firm size, leverage, and return on equity. The results suggest that the S&P quality rankings are closely correlated to risk as measured by the variability of returns and earnings changes, but the rankings are not correlated with the variability of dividend changes. The quality rankings are not uniformly correlated with mean portfolio returns or mean dividend changes, nor is the relationship between quality and mean earnings changes strong. Finally, quality rankings are related to firm size and return on equity. However, relationships between quality and leverage are discernible only at the extremes.     

Pricing commercial mortgages and their mortgage-backed securities

This article has taken considerable effort to accurately model the complexity of a commercial mortgage and its mortgage-backed security. In fact, it is the first example in the general literature on mortgage pricing to present a comprehensive set of numerical results in which the valuation of a mortgage-backed security is explicitly tied to that of the underlying mortgage. The conclusion we reach is that option pricing provides an accurate and flexible approach to valuing the complex mortgage instruments now being developed in the financial community.