Economic valuation of habitat defragmentation: A study of the Veluwe, the Netherlands

This paper offers an economic value assessment of a nature protection programme in the Veluwe, the Netherlands. This programme involves two defragmentation scenarios: the first scenario connects the central part of the Veluwe with river forelands in a north-eastern direction (i.e. the meadows of the IJssel river), while the second scenario is focussed on defragmentation in a south-western direction (i.e. the meadows of the Rhine river). The valuation is based on a questionnaire that was administered during face-to-face interviews in the area and through the Internet. We employ a contingent valuation approach to assess the respondents' willingness to pay for the realisation of the defragmentation scenarios. It appears that the mean willingness to pay (WTP) for the two defragmentation scenarios is € 162.2 (lognormal distribution) per respondent. Because the Veluwe is considered a nature park of national importance, we performed an aggregation of individual WTP estimates over Dutch households. With the resulting aggregate estimates we can compare the total costs and benefits of the two scenarios for habitat defragmentation in the Veluwe. In addition, we test whether respondents value the two scenarios equally. We also check whether the methods of data collection (face-to-face interviews and Internet questionnaires) have distinct influences on the stated WTP responses.     

The Dynamics of International Trade Patterns

This paper introduces new dynamic measures for examining changes in international trade patterns. Using data for 20 OECD countries over the 1980–2000 period, we show that inter-industry trade changes contrary to countries’ previous specialization are frequently the dominant form of trade expansion. The econometric analysis indicates that the observed changes in trade patterns were explained by initial endowments of human-capital and industry-specific changes in labour productivity and labour costs. The results also suggest that trade liberalization induced an increase in the previous specialization of larger OECD economies in industries with increasing returns to scale. JEL no. F1, O33, O50     

Does sovereign debt ratings news spill over to international stock markets?

The evidence here indicates that sovereign debt rating and credit outlook changes of one country have an asymmetric and economically significant effect on the stock market returns of other countries over 1989–2003. There is a negative reaction of 51 basis points (two-day return spread vis-á-vis the US) to a credit ratings downgrade of one notch in a common information spillover around the world. Upgrades, however, have no significant impact on return spreads of countries abroad. Closeness (e.g., geographic proximity) and emerging market status amplify the effect of a spillover. Downgrade spillover effects at the industry level are more pronounced in traded goods and small industries.     

Toward Equitable and Sustainable Rural Water Supplies: A Contingent Valuation Study in Brazil

Because many rural people are poor, it is usually assumed thatrural water supplies must be financed by government agencies.It is now widely recognized, however, that many rural peoplecan and will pay for improved water supplies, and that sustainingand extending services depends on mobilizing this willingnessto pay. This article describes a study of willingness to payfor water in Brazil. The study shows that surveys of actualand hypothetical water-use practices can provide policy-relevantinformation on willingness to pay, which is shown to vary accordingto household socioeconomic characteristics and the characteristicsof the existing and new supplies of water. In rural Brazil,tariffs for yard taps can be increased substantially beforesignificant numbers of households would choose not to connectto an improved system, whereas provision of free water at publictaps can protect the poor without jeopardizing the financialviability of the scheme.     

Auctions with endogenous participation

We study endogenous-participation auctions where bidders only know the number of potential participants. After seeing their values for the object, potential participants decide whether or not to enter the auction. They may not want to enter the auction since they have to pay participation costs. We characterize equilibrium bidding strategies and entry decisions for both first- and second-price sealed-bid auctions when participation is endogenous. We show that there is a pure strategy entry equilibrium where only bidders with values greater than a certain cut-off point actually bid. In this context, both types of auctions generate the same expected revenue. We also show that, contrary to the predictions of the fixed number of bidders literature, the seller's expected revenue may decrease when the number of potential participants increases. In addition, we show that it is optimal for the seller to charge an entry fee, which contrasts with results from the existing literature on auctions with entry. As in the fixed-n literature, we show that first-price auctions generate more expected revenue than second-price auctions when buyers are risk-averse. Finally, we characterize the optimal auction – the auction that maximizes the seller's expected revenue – by using a direct revelation mechanism. The optimal auction involves a reserve price larger than the optimal reserve price in the fixed-n literature. The winner's payment is the second highest bid less the participation cost and losers receive a subsidy equal to the participation cost. Received: 17 August 1998 / 21 September 1999     

Institutions and industrial policy in Brazil after two decades: have we built the needed institutions?

ABSTRACT

This paper aims to examine the design and implementation of industrial policy in Brazil based on their capacity to affect the prevailing institutions. We argue that the main reason for the failure of policies in Brazil, and in Latin America, is their inability to induce persistent changes in firms’ innovative behavior. Based on the analysis of national innovation indicators, and on previous empirical studies, we demonstrate that the Brazilian industrial policy was not able to change the prevailing conventions. The main problems related to this fragility are: institutional problems and related to industrial policy development conventions; serious coordination problems; maintaining a macroeconomic policy that is not convergent toward industrial policy efforts; policy instruments that were not able to change prevailing conventions, such as low R&D and innovative expenditures; a set of strategic choices that are inconsistent with innovation, technological catch-up and structural change.     

A Note on Credit Allocation,Income Distribution and the Circuit of Capital

This note considers the relationship between credit allocation and the class distribution of income in the Circuit of Capital. Production and consumption credit inject means of purchase into different phases of capitalist reproduction. Comparative‐dynamic analysis of steady‐state evolutions shows that in the dynamic terms of Circuit of Capital production and consumption credit respectively increase wage and profit shares of aggregate income. These findings hold more broadly for any setting where sectoral revenue elasticities of outlays are below unity. They also have direct policy relevance for advanced and middle‐income economies where household borrowing has been encouraged in attempts to support demand and growth.     

MLP ensembles improve long term prediction accuracy over single networks

This work describes an award winning approach for solving the NN3 Forecasting Competition problem, focusing on the sound experimental validation of its main innovative feature. The NN3 forecasting task consisted of predicting 18 future values of 111 short monthly time series. The main feature of the approach was the use of the median for combining the forecasts of an ensemble of 15 MLPs to predict each time series. Experimental comparison to a single MLP shows that the ensemble increases the performance accuracy for multiple-step ahead forecasting. This system performed well on the withheld data, having finished as the second best solution of the competition with an SMAPE of 16.17%.     

Persistent poverty and informal credit

This paper explores the consequences of nonlinear wealth dynamics for the formation of bilateral credit arrangements to help manage idiosyncratic risk. Using original data on expected wealth dynamics, social networks and informal loans among southern Ethiopian pastoralist households, we find that the threshold at which expected wealth dynamics bifurcate serves as a focal point at which lending is concentrated. Informal lending responds to recipients' losses but only so long as the recipients are not “too poor”. Our results suggest that when shocks can have long term effects, loans are best understood as providing a safety net rather than a scale-neutral insurance mechanism. Furthermore, the persistently poor are excluded from social networks that are necessary to obtain loans given in response to shocks.