Cross‐Border Auction Cycle Effects of Sovereign Bond Issuance in the Euro Area

We provide evidence for the euro area of spillovers from foreign public debt auctions into domestic secondary‐market auction cycles. We also confirm existing evidence of such spillovers from domestic issues into the domestic secondary market. Consistent with a theory of primary dealers’ limited risk‐bearing capacity, we find that auction cycles from domestic issues are stronger during the recent crisis period, whereas cross‐border effects are stronger in the precrisis period, but this evidence is not strong. This finding likely reflects the opposing effects of reduced sovereign bond market integration during the crisis and higher yield covariances caused by more market volatility.     

Internal Markets,Management by Targets,and Quasi‐Markets: An Analysis of Health Care Reforms in the English NHS

There have been two major attempts to introduce market mechanisms into England's National Health Service: the ‘internal market’ reform project of the 1990s, and the ‘quasi‐market’ of the 2000s. Despite their similarities, the former attempt was on balance unsuccessful while the latter succeeded. This article examines and compares the outcomes of the two periods, analysing the reasons for their relative successes and failures. It goes on to highlight options for future reforms that would build on those achievements.     

Bailout uncertainty in a microfounded general equilibrium model of the financial system

This paper develops a micro-founded general equilibrium model of the financial system composed of ultimate borrowers, ultimate lenders and financial intermediaries. The model is used to investigate the impact of uncertainty about the likelihood of governmental bailouts on leverage, interest rates, the volume of defaults and the real economy. The distinction between risk and uncertainty is implemented by applying the multiple priors framework to beliefs about the probability of bailout.Results of the analysis include: (i) An unanticipated increase in bailout uncertainty raises interest rates, the volume of defaults in both the real and financial sectors and may lead to a total drying up of credit markets. (ii) Lower exante bailout uncertainty is conducive to higher leverage, which in turn raises moral hazard and makes the economy more vulnerable to expost increases in bailout uncertainty. (iii) Bailout uncertainty affects the likelihood of bubbles, the amplitude of booms and busts as well as the banking and the credit spreads. (iv) Higher bailout uncertainty is associated with higher returns’ variability in diversified portfolios and higher systemic risks, (v) Pre-crisis expansionary monetary policy reinforces those effects by inducing higher aggregate leverage levels. (vi) The larger the change in bailout uncertainty and the change in aversion to this uncertainty, the stronger the pre-crisis buildup and the deeper the ensuing crisis.A central policy implication of the analysis is that the vaguest is bailout policy prior to a crisis, the lower is the magnitude of investments destroyed or missed due to errors in evaluating bailout and other intervention policies. On the other hand, the clearer is bailout policy upon the eruption of a crisis, the smaller the contraction of credit and the destruction of investment activity.     

Childhood preventive care,adult healthcare and economic growth: The role of healthcare financing

We analyze the impact of healthcare financing on economic growth, focusing on the issue of the joint public–private financing of healthcare (co-payment). We use an overlapping-generations model with endogenous growth based on health human capital accumulation, where families pay for childhood preventive care and the government can either fully finance or co-finance adulthood curative care. From a growth maximizing perspective, distortionary taxes give an advantage to co-financing. Nevertheless, we prove that, if agents are assumed to be heterogeneous in preferences, full financing can become the best option.     

Climate adaptation in ‘new world’ cultural landscapes: The case of Bay of Fundy agricultural dykelands (Nova Scotia,Canada)

North America has few cultural agricultural landscapes, and often commensurately poor governance arrangements for managing change in such settings. This research uses the Acadian dykelands of Nova Scotia, Canada, as an opportunity to explore the social and governance limits to coastal climate adaptation in ‘new world’ cultural agricultural landscapes, as well as inform local decision-making. Approximately half of Nova Scotia’s coastal wetlands were converted to dykeland in the 1600s, lowering local resilience to the increased frequency and storm severity anticipated with climate change. Today, dykelands protect a diversity of public and private interests, meanings and values, yet are controlled by the agricultural sector, which can no longer afford to maintain them all to 2050 climate projections. We report here on a representative online Q-methodology survey of 183 adult Nova Scotians in the spring of 2015. Respondents sorted 34 statements along a normal distribution about whether they prefer dykeland maintenance or wetland restoration, and under what governance arrangements. Four factors were derived: the dominant discourse was local, female and strongly pro-dykeland, indicating the likelihood for local resistance to dykeland removal on for cultural, recreational and farming reasons. The second factor was supportive of wetland restoration for reasons of efficiency, not wetland affinity, but characterized by those in positions of management power. The two minority viewpoints were less informed about dykelands, characteristic of outsiders, and concerned more with governance. More education is needed about the challenges facing dykelands, the benefits of coastal wetlands, and the management options, but this research shows proposals to change landscape should emphasize flood mitigation over cost-saving. Cultural values and status quo bias are clearly barriers to adaptation planning, even when discussing the removal of man-made structures. The factors were surprisingly polarized, suggesting the forced-normal distribution affects the space available to convey nuanced perspectives. Large p-set Q-method of this kind is likely most useful for characterizing the emergent discourses demographically, and understanding their prevalence; the same discourses had emerged within a much smaller pilot study.     

The future of Russian gas exports to East Asia: Feasibility and market implications

For a long time, the Russian government has aimed to diversify gas exports to East Asian countries. This gearing of Russia towards Asia will have great consequences on world energy, the global economy, and geopolitics in the coming years. This paper analyzes the growth potential of Russia's diversification strategy and the impact this policy would have on sales to Europe. As the most likely scenario is for total gas exports to grow at a moderate rate from 2010 to 2030, any increase in sales to Asia could make difficult the raising of exports to Europe. Our thesis is that this trade-off will depend primarily on domestic consumption trends, geographic targeting of investments, and commercial and financial alliances with foreign partners. However, imports from Central Asia, declining exports to Ukraine and Belarus, and Gazprom investments in other gas-producing countries could also affect gas exports and gas distribution among different markets.     

BUILDING THE MANAGERIAL CAPITAL OF AGRICULTURAL COOPERATIVES IN AFRICA

Agricultural cooperatives in Africa tend to be community‐based organizations defined by principles of inclusion, voluntarism, democracy, equity, autonomy, mutuality and solidarity. This means that they generally operate in accordance with the principles endorsed by the International Cooperative Alliance (ICA). However, only a few of these organizations are successful in commercializing the agricultural produce of their members. In this study, we argue that growth‐problems leading to commercial failure and organizational degeneration in these cooperatives can be attributed to a lack of managerial capital. Drawing on the literature and evidence from the field we set out key management solutions for counterbalancing cooperative principles in the context of rural Africa. These solutions were taught to the leaders and managers of 362 cooperatives at four training events held in Madagascar, Malawi and twice in Uganda. Using a production function for cognitive achievement and key informant interviews, we find that our training contributed to the adoption of the proposed solutions by some of the cooperatives. Using the Ugandan sub‐ sample, we estimate an OLS regression and a PSM model to show that the training translated into higher revenues per member generated through collective commercialization.     

The productivity of agricultural credit in India

This study examines the nature of the relationship between formal agricultural credit and agricultural Gross Domestic Product (GDP) in India, specifically the role of the former in supporting agricultural growth, using state level panel data covering the period 1995–1996 to 2011–2012. The study uses a mediation analysis framework to map the pathways through which institutional credit relates to agricultural GDP relying on a control function approach to tackle the problem of endogeneity. The findings from the analysis suggest that over this period, all the inputs are highly responsive to an increase in institutional credit to agriculture. A 10% increase in credit flow in nominal terms leads to an increase by 1.7% in fertilizers (N, P, K) consumption in physical quantities, 5.1% increase in the tonnes of pesticides, 10.8% increase in tractor purchases. Overall, it seems quite clear that input use is sensitive to credit flow, whereas GDP of agriculture is not. Credit seems therefore to be an enabling input, but one whose effectiveness is undermined by low technical efficiency and productivity.     

Lumpy Investment and Corporate Tax Policy

In the presence of both convex and nonconvex capital adjustment costs in a dynamic general equilibrium model, corporate tax policy generates both intensive and extensive margin effects via the channel of marginal Q. Its impact is determined largely by the strength of the extensive margin effect, which, in turn, depends on the cross‐sectional distribution of firms. Depending on the initial distribution of firms, the economy displays asymmetric responses to tax changes. Moreover, an anticipated increase in the future investment tax credit reduces investment and adjustment rate initially.