Optimales Vertragsdesign bei moralischem Risiko in der Rückversicherung

This paper addresses the optimal design of risk sharing arrangements in reinsurance contracts with asymmetric information concerning the primary insurer’s behavior. The latter usually has significant unobservable discretions, for instance with respect to risk selection, implying a moral hazard problem. We show that the existence of moral hazard strongly affects the characteristics of the reinsurance indemnification rule, i. e. the connection between the level of losses and the indemnity, which is specified in the contract. For this analysis, a standard model framework from the theory of optimal reinsurance with perfect information is modified by the assumption that the primary insurer has unobservable control of the probability distribution of the extent of losses. In particular, the solution indicates that for this situation, a Pareto-optimal indemnity rule is less steep, and therefore the primary insurer’s share in a marginal increase of the loss is greater, compared to the case of complete information. A deductible, however, turns out not to be a suitable approach in this context.     

Delaying integration of immigrant labor for the purpose of taxation

Delayed integration (DI) is a rule for taxing migrants. It requires that immigrants be taxed in the host country only after some period of transition. Conversely, emigrants are released from the obligation to pay taxes only after a certain period. DI is an alternative to the Employment Principle and the Home-Country Principle. The former governs the international taxation of labor. The latter is a close substitute for the Nationality Principle, on which US tax law is based. The paper studies DI in a setting which allows one to trade off the efficiency costs of distortionary taxation and of wasteful government.     

Außenhandelsstruktur und Faktorintensität 1962/1977

Summary As a supplement to the findings presented in an article in volume 2/1978 of this journal byG. Fink andJ. Skolka some further results concerning the capital and labour intensity of Austria's trade are provided. These results are based on a more disaggregated input-output approach and on modified ways to measure direct capital and labour inputs and seem to strenghten the hypothesis that in 1964 the capital and labour intensity of Austria's foreign trade was more or less neutral.The same approach was used to investigate the effects of the changing composition of export and import bundles on the factor intensities for the period 1962/1977. Although the structure of both exports and imports changed remarkable over this period the total content of labour and capital remained rather stable and the evolution was almost paralell for exports and imports.     

Concave utility on finite sets

When does a preference relation on a finite set have a concave or a strictly concave utility function? We provide a complete answer. Our proof is an application of the Theorem of the Alternative, and constructs a concave utility if one exists.     

The effects on investment incentives of an allowance for corporate equity tax system: the Belgian case as an example

The Modigliani–Miller theorem serves as the standard finance paradigm on corporate capital structure and managerial decision making. Implicitly, it is assumed that the market possesses full information about the firm. However, if firm managers have insider information, they may attempt to ‘signal’ changes in the firm’s financial structure and, in competitive equilibrium, shareholders will draw deductions from such signals. Empirical work shows that the value of underlying firms rises with leverage because investors expect such firms to implement positive NPV projects. We empirically examine this view using a sample of debt issue announcements by publicly traded firms listed on the London Stock Exchange. We argue that the timing of debt issues is fundamental in determining the relationship between leverage and risk-adjusted returns. We show that an announcing firm’s intrinsic value may not rise depending on when management publicly ‘signals’ changes in their firm’s capital structure. Specifically, we show that risk-adjusted returns rise positively for firms that make debt announcements during normal economic conditions while they tend to decline for firms making debt announcements during recessionary periods. During recessionary periods, market risk and loss aversion rise and investors focus less on the potential growth of debt announcing firms and focus more on potential losses instead. We conclude that the timing of new debt is of paramount importance and managers’ inability to prudently time such announcements can lead to exacerbated levels of systematic risk coupled with a significant erosion in shareholder wealth.     

Trade and the Environment: The Role of Firm Heterogeneity

In this paper, we derive a new effect of trade liberalization on the quality of the environment. We show that in the presence of heterogeneous firms, the aggregate volume of emissions is influenced by a reallocation effect resulting from an increase in the relative size of more productive firms. The relative importance of this reallocation effect and the scale effect well‐known from the literature is affected by the emission intensity at the firm level. Domestic emissions decrease as a result of a unilateral tariff reduction if and only if firm‐specific emission intensity decreases strongly with increasing firm productivity. As a result of the induced change in foreign emissions, domestic pollution can increase even if domestic emissions decrease.     

Green Project Bonds als finanzielle Alternative für Energieunternehmen

The reorientations of energy policy, and in particular the promotion of renewables, have changed the market conditions for energy companies significantly. Over recent years, the resulting challenges put the energy companies’ financial ratios under severe stress. As the need to invest remains urgent, energy firms seek to broaden and diversify their sources of funding. Against this backdrop, the article addresses an innovative form of securities-based debt financing for energy companies, which explicitly links the financing transaction to the investing of funds in renewable energy projects. Due to the early stage of development of so called green (project) bonds, an initial disambiguation is essential. Thereafter, current market processes, structures and rules are considered. Based hereupon, it is possible to discuss the new opportunities that green project bonds afford energy companies.     

Regional- und Gesammteffekte der steirischen Endverwendung

Summary This paper starts off by describing the methodology of the compilation of the 1964 IO-table for Styria, which is conceptually fully consistent with the 1964 table for Austria. Basic definitions are given and some information is provided on the more important stages of the compilation of the table, such as estimation of a table in purchaser prices, conversion to producer prices, estimation of complete import matrices for interregional and international imports. The underlying philosophy in all these stages was to work on a very low level of aggregation (products, groups of products) in order to make use of all available detailed information and to overcome the problems arising from the lack of some basic information (e.g. shipments between regions).In the second part of the paper we present some empirical results derived from an analysis of the Styrian IO-table, Version C (only regional deliveries in the first two quadrants). This analysis shows a remarkably high regional multiplier effect of Styrian exports (to other parts of Austria, and abroad) and of private consumption on the economy of the region. High multiplier effects of final demand deliveries are exhibited by such sectors as saw mills, hotels and restaurants, housing and food production (all above 1,6). Finally the bias from using a single regional table instead of a multi-regional table in estimating the regional and total effects of final demand on the economy of a region is discussed.