Industry and country factors in emerging market returns: Did the Asian crisis make a difference?

Should investors diversify across emerging stock markets or across industries to achieve improvements in their risk–return tradeoffs especially during financial crisis periods? We examine the issue using individual firm data from a selection of emerging markets and including the period of the 1997 Asian financial crisis. We find that country effects were the dominant force behind the low co-movements among emerging stock market returns. There is evidence of increased industry effects beginning at the time of the Asian financial crisis, but this may have been a temporary phenomenon associated with contagion effects during the crisis.     

Land rents and the demand for protection

Some stylized facts of protection can be addressed by a regional trade model in which the existence of extra markets constitutes a barrier to labor relocation and motivates demands for protection. A regional Ricardo-Viner model is used, in which markets for residential land create increasing endogenous relocation costs, so that under neutral assumptions an improvement in the terms of trade leads to an absolute fall in welfare for labor in a declining region, while labor is mobile, giving a new resolution of the “neoclassical ambiguity”     

Terms-of-Trade Shocks, Labor-Market Adjustment, and Safeguard Measures

This paper explores a simple model of labor-market adjustment where intersectoral transfer in response to terms-of-trade shocks involves both sector-specific skill acquisition and workplace disruption. Externalities arise because the marginal migrant does not consider the congestion costs imposed on intramarginal migrants or the disruption costs imposed on the incumbent workers in both sectors. While these externalities give rise to a case for temporary adjustment assistance, the analysis does not support the use of trade measures such as tariffs.     

Environmental Degradation As an Incentive For Trade*

A modified Heckscher-Ohlin-Samuelson model is used in which industries are allocated by historical accident to geographical regions and agents care about their environment. Incentives for international trade arise when economies with identical factor endowments and geophysical characteristics differ in the allocation of industries to regions, and economies will tend to export goods produced in regions with higher environmental assimilative capacity.     

Bio economic modeling for a sustainable management of biodiversity in agricultural lands

For several decades, significant changes in farmland biodiversity have been reported in Europe. Agriculture is a major driver of these modifications. Taking into account these environmental impacts, agriculture nowadays aims at a more sustainable way of producing which would reconcile its economic and ecological functions. The objective of this paper is to give insights into the impact of public policies on both conservation of biodiversity and farming production. We develop a macro-regional model combining community dynamics of 34 bird species impacted by agricultural land-uses and an economic decision model. The ecological dynamic model is calibrated with the STOC (French Breeding Bird Survey) and AGRESTE (French land-uses) databases while the economic model relies on the gross margins of the FADN (Farm Accountancy Data Network). We investigate the scenario based on subsidies and taxes. We show that simple economic instruments could be used to establish scenarios promoting economic performances and bird populations. It is pointed out how the sustainability of the policies is sensitive to the ecological and economic indicators used by the planner. The bio-economical analysis shows several solutions for the ecology-economy trade-off. These results suggest that many possibilities are available to develop multi-functional sustainable agriculture.     

Changes in the risk structure of stock returns: Consumer Confidence and the dotcom bubble

Changes in the risk structure of stock returns may sometimes be very revealing. We examine economic variables that help explain principal components in UK stock returns, 01/1985 to 12/2001. The loading pattern on explanatory variables for the first component in a ‘bubble’ period is distinctive and consistent with a bubble/crash market. The second component shows a loading pattern on a Consumer Confidence variable in a pre-bubble period only. We observe apparently systematic changes in the structure of risk, and conjecture that Consumer Confidence captures a change in market sentiment that could be a signal for the evolution of stock prices.