Integrated bio-economic models as tools to support land-use decision making: a review of potential and limitations

Bio-economic modelling has become a useful tool for anticipating the outcomes of policies and technologies before their implementation. Advances in mathematical programming have made it possible to build more comprehensive models. In an overview of recent studies about bio-economic models applied to land-use problems in agriculture and forestry, we evaluated how aspects such as uncertainty, multiple objective functions, system dynamics and time have been incorporated into models. We found that single objective models were more frequently applied at the farm level, while multiple objective modelling has been applied to meet concerns at the landscape level. Among the objectives, social aspects are seldom represented in all models, when being compared to economic and environmental aspects. The integration of uncertainty is occasionally a topic, while stochastic approaches are more frequently applied than non-stochastic robust methods. Most multiple-objective models do not integrate uncertainty or sequential decision making. Static approaches continue to be more recurrent than truly dynamic models. Even though integrating multiple aspects may enhance our understanding of a system; it involves a tradeoff between complexity and robustness of the results obtained. Land-use models have to address this balance between complexity and robustness in order to evolve towards robust multiple-objective spatial optimization as a prerequisite to achieve sustainability goals.     

The sweet smell of advertising: the essence of matching scents with other ad cues

New technologies enable practitioners to communicate scents in advertisements on various media. The current research examines the importance of matching scent cues to the advertised product, and the joint effect of scent and other cues such as colour on consumer responses to advertising. A 4 × 2 experimental design was conducted, where participants (N = 603) were presented with scented colour print advertisements. Three hierarchical responses were measured: emotional response, attitude, and purchase intention. Findings reveal that higher congruence between scent and the advertised product heightens positive consumer response. Furthermore, this research stresses the significant joint effect of scent and colour cues, and supports the incongruence approach, suggesting that combining scents that are poorly congruent with other sensory cues enhance consumer response. Practical and theoretical implications are discussed.     

Offshoring in the New Global Political Economy

abstract    This essay challenges claims by economists and management scholars that 'offshoring' is simply another form of trade with mutual benefits. I argue that reducing wages through offshoring leads to wealth creation for shareholders but not necessarily for countries and employees, and that many displaced workers have difficulty 'trading up' to higher skilled jobs. Offshoring is a new phenomenon that entails the organizational and technological ability to relocate specific tasks and coordinate a geographically dispersed network of activities. It decouples the linkages between economic value creation and geographic location. The result is the creation of global commodity markets for particular skills and a shift in the balance of market power among firms, workers, and countries.     

Self-enforcing international environmental agreements with a stock pollutant

In this paper the stability of an International Environmental Agreement (IEA) among N identical countries that emit a pollutant are studied using a two-stage game. In the first stage each country decides noncooperatively whether or not to join an IEA, and in the second stage signatories jointly against nonsignatories determine their emissions in a dynamic setting defined in continuous time. A numerical simulation shows that a bilateral coalition is the unique self-enforcing IEA independently of the gains coming from cooperation and the kind of strategies played by the agents (open-loop or feedback strategies). We have also studied the effects of a minimum participation clause finding that for this case a self-enforcing IEA just consists of the number of countries established in the clause.JEL Classification: C73, D62, Q28 Corresponding author : Santiago J. RubioThis paper is based on chapter four of Begoña Casinos Ph. Dissertation. Financial support from the Instituto Valenciano de Investigaciones Económicas, the Ministerio de Ciencia y Tecnología under grant BEC2000-1432 and Fundación BBVAis gratefully acknowledged. We also appreciate the helpful comments of three anonymous referees, whose suggestions improved the paper. Regarding any remaining inadequacies, the usual caveat applies.     

Flexible exchange rates as shock absorbers

In this paper we analyze empirically the effect of terms of trade shocks on economic performance under alternative exchange rate regimes. We are particularly interested in investigating whether terms of trade disturbances have a smaller effect on growth in countries with a flexible exchange rate arrangement. We also analyze whether negative and positive terms of trade shocks have asymmetric effects on growth, and whether the magnitude of these asymmetries depends on the exchange rate regime. We find evidence suggesting that terms of trade shocks get amplified in countries that have more rigid exchange rate regimes. We also find evidence of an asymmetric response to terms of trade shocks: the output response is larger for negative than for positive shocks. Finally, we find evidence supporting the view that, after controlling for other factors, countries with more flexible exchange rate regimes grow faster than countries with fixed exchange rates.     

Farm earnings, educational attainment, and role of public policy: Some evidence from Mexico

Using real household survey data from Mexico, this study evaluates

• 1. 

  (a) the impact of schooling on farm earnings through the “direct” and “allocative” effects of human capital;

• 2. 

  (b) the household demand for children's schooling;

• 3. 

  (c) using macro-level data, the association between children's school-participation and some policy variables.

The overall rate of return to household heads' schooling is estimated at 25%, and for wives, 19%. The allocative effect of schooling of household heads dominates over the direct effect. Mother's schooling and farm size exercise significantly positive effects on household demand for schooling; while in the macro model, policy variables, government expenditure and pupil-teacher ratio appear strong determinants of children's attainment of primary schooling.     

Mood and Judgment of Subjective Probabilities: Evidence from the U.S. Index Option Market

Numerous psychological studies show that weather conditions affect people'smood and that mood states are correlated with people's subjective evaluationof future probabilities. In this paper, a new approach is developed and assetmarket data are employed to test the mood-subjective probability relation. Cloudcover and precipitation volume serve as two mood proxies. Our statistical analysissuggests that bad mood states are characterized by investors placing higher probabilitieson adverse events.     

Return and risk in initial public offerings of both shares and warrants

In the past few years there has been an increasing number of new issues of shares of common stock together with warrants intended to raise interest in initial public offerings of relatively young, growing firms. In this study we examine the pricing efficiency of stocks and warrants offered simultaneously to the public as a single unit. We present a model for evaluating the warrants in such offerings and test it empirically against data from the Tel-Aviv Stock Exchange, where such offerings have become standard. We find that the issued units are usually undervalued, allowing for significant abnormal positive returns. But, while the warrants are usually underpriced, the stocks are overpriced. Largely consistent with the evidence from other financial markets around the world, we also find abnormal negative rates of return in the long run.     

Dynamic coordinating non-equilibrium

Neo-Walrasian conceptualizations and DSGE models are incompatible with the emergence of coordination and discoordination in economic activity. While many conceptualizations stemming from the Austrian tradition are generally consistent with these fundamental problems, their process driven approach is hampered by the use of equilibrium constructs. This paper argues for the adoption of formal models that avoid this problem by addressing the following questions. Why should Austrian macroeconomists model? Where do models fit in with respect to pure and applied theory? How to model without equilibrium? To answer this final question I present a structure that aids in the construction and communication of such models.