http://www.hindawi.com The latest articles from Hindawi Publishing Corporation © 2013 , Hindawi Publishing Corporation . All rights reserved. Thu, 04 Apr 2013 14:07:28 +0000 http://www.hindawi.com/isrn/economics/2013/324127/ Price responsiveness is argued to be one important factor determining the possibility for a natural monopoly such as a district heating company to exercise its monopoly power. Increased price responsiveness, measured, for example, by the own price elasticity, reduces monopoly power, as consumers increasingly reduce demand as a response to a price increase. However, consumers in single houses having individual metering have presumably higher price responsiveness compared to consumers in residential buildings using collective metering. One major question raised in this paper is thus whether single houses show larger price responsiveness compared to residential buildings. Using cross-sectional data for 187 networks in Sweden for the year 2007 indicates that even if single houses have higher price responsiveness, district heating reveals in general a very inelastic behavior. Stefan Hellmer Copyright © 2013 Stefan Hellmer. All rights reserved. Thu, 04 Apr 2013 13:26:37 +0000 http://www.hindawi.com/isrn/economics/2013/761482/ We experiment within a laboratory the respective effects of being observed and sanctioned in both a dictator and an ultimatum game. We obtain the classical results that individuals do not play the subgame perfect equilibria. We also show that being observed increases the offers made by the proposer in the dictator game but this effect is difficult to identify in the ultimatum game. We also find that in the dictator game, the more the individuals are sensitive to observation the less they are to sanction. Agnès Festré and Pierre Garrouste Copyright © 2013 Agnès Festré and Pierre Garrouste. All rights reserved. Wed, 13 Mar 2013 08:42:46 +0000 http://www.hindawi.com/isrn/economics/2013/603973/ In 2003, John Nyman published The Theory of Demand for Health Insurance. His principal contributions are (1) to replace the previously unexamined axiom of risk avoidance with the axiom of welfare maximization; (2) to uncover a misinterpretation in the literature on moral hazard, namely, the insurance payoff as a price reduction, rather than as an income transfer. The immediate consequence of these reformulations is to recognize insurance-induced health care utilization as resulting in an increase in social welfare. Despite its evident validity and enormous implications, Nyman’s work has received very little attention or recognition in the health economics literature. Sander Kelman and Albert Woodward Copyright © 2013 Sander Kelman and Albert Woodward. All rights reserved. Mon, 11 Mar 2013 10:33:16 +0000 http://www.hindawi.com/isrn/economics/2013/825862/ This paper constructs a tractable dynamic stochastic general equilibrium (DSGE) model of a regional economy that is considered small because it does not affect its national economy. To examine properties of our small-region DSGE model, we conduct several numerical simulations. Notably, fiscal expansion in our model is larger than that in standard DSGE models. This is because the increase in regional output does not raise interest rates, and this leads to the crowding-in effects of investment. Kenichi Tamegawa Copyright © 2013 Kenichi Tamegawa. All rights reserved. Tue, 26 Feb 2013 14:08:02 +0000 http://www.hindawi.com/isrn/economics/2013/289718/ This paper examines the factor risk premiums of stock returns for the hospitality and tourism companies in New Zealand. The Arbitrage Pricing Theory (APT) approach is used to investigate the expected return for stock portfolio with respect to market, macro (i.e., money supply and discount rate), and tourism factor sensitivities. Monthly stock prices, market index, tourism, and macroeconomic data are used in the study. The results indicate that the risk premiums for international tourism demand and term premium (proxy for discount rate) are positively significant at the 5% level. A one unit increase in tourist arrival sensitivity would result in expected return increase of 10 to 17 percentage point. Similarly, a one unit increase in term premium can increase hospitality-tourism expected returns by 0.2 percentage point. However, the findings for the money supply factor are not significant. As the study shows that investors face high positive tourism demand risk, it is imperative for firms and policymakers in New Zealand to promote inbound tourism through effective marketing and management. This in turn can provide high expected returns and create shareholder value for investors. Christine Lim and Felix Chan Copyright © 2013 Christine Lim and Felix Chan. All rights reserved. Tue, 12 Feb 2013 08:46:34 +0000 http://www.hindawi.com/isrn/economics/2013/138182/ This paper examines how labour turnover costs affect average labour demand when troughs are more persistent than booms. We show that the effect of firing costs on average labour demand is more expansionary (or less contractionary): the greater is the difference between the persistence of troughs and the persistence of booms, and the more prolonged are the macroeconomic shocks. This analysis may shed some light on the expected effect of a reduction of firing costs when an economy is suffering more prolonged recessions (relative to booms): average labour demand will be lower. Pilar Díaz-Vázquez and Luis E. Arjona-Béjar Copyright © 2013 Pilar Díaz-Vázquez and Luis E. Arjona-Béjar. All rights reserved. Thu, 31 Jan 2013 09:36:34 +0000 http://www.hindawi.com/isrn/economics/2013/346750/ Millennium Development Goal 1 focuses on the eradication of poverty and hunger by 2015. While progress towards achieving this goal is promising in many developing countries, it is estimated that 920 million people would still be living under the adjusted poverty threshold of US$1.25 per day. This study employed data from the Malawi 2010 Demographic and Health Survey to examine the relative ranking of women ( 23,020) across the wealth index scale by identifying the characteristics of women which influence their likelihood of belonging to “poor” or “rich” households. Results from the ordered probit model show that older women and those with some formal schooling were likely to fall within the higher categories of the wealth status index. Belonging to households headed by females was associated with lower categories of wealth status than those headed by males. We interpret these results in line with the current development strategies aimed at reducing poverty and hunger by 2015 and the need to identify and respond appropriately to the layers of socioeconomic vulnerability in Malawi. Henry V. Doctor Copyright © 2013 Henry V. Doctor. All rights reserved. Thu, 31 Jan 2013 09:18:07 +0000 http://www.hindawi.com/isrn/economics/2013/398021/ The contribution of this paper is to explore time and spatial scale dimensions of economic growth in Brazil using alternative panel data techniques to provide a measure of the extent of spatial autocorrelation (in kilometres) over three decades (1970–2000) as well as discussing the determinants of economic growth at a variety of geographic scales (minimum comparable areas, micro-regions, meso-regions, and states). The magnitude and statistical significance of growth determinants such as schooling, population density, population growth, and transportation costs are dependent on the scale of analysis. Moreover, the extent of residual spatial autocorrelation showed that it seems to vary across spatial scales. Indeed, spatial autocorrelation seems to be bounded at the state level and it shows positive and statistically significant values across distances of more than 1,500 kilometres at the other three spatial scales. Among other results, the study suggests that the nonspatial panel data techniques are not able to deal with spatially correlated omitted variables across different spatial scales, except for the state level where nonspatial panel data models seem to be appropriate to investigate growth determinants and convergence process in the Brazilian states case. Guilherme Mendes Resende Copyright © 2013 Guilherme Mendes Resende. All rights reserved. Mon, 28 Jan 2013 16:16:54 +0000 http://www.hindawi.com/isrn/economics/2013/158240/ This paper proposes computationally tractable methods for selecting the appropriate spatial weighting matrix in the context of a spatial quantile regression model. This selection is a notoriously difficult problem even in linear spatial models and is even more difficult in a quantile regression setup. The proposal is illustrated by an empirical example and manages to produce tractable models. One important feature of the proposed methodology is that by allowing different degrees and forms of spatial dependence across quantiles it further relaxes the usual quantile restriction attributable to the linear quantile regression. In this way we can obtain a more robust, with regard to potential functional misspecification, model, but nevertheless preserve the parametric rate of convergence and the established inferential apparatus associated with the linear quantile regression approach. Philip Kostov Copyright © 2013 Philip Kostov. All rights reserved. Thu, 17 Jan 2013 13:36:26 +0000 http://www.hindawi.com/isrn/economics/2013/452358/ Using the most recent Longitudinal Survey of Immigrants to Canada, this paper measures the incidence of job-education mismatch, particularly over-education, examines its determinants, and estimates its impact on the earnings of immigrants. Job-education mismatch is measured using the realized match method, and the corresponding earnings impact is estimated using an over-required-under education technique. Determinants of over-education are examined using a bivariate probit model to account for selectivity into employment. Panel data estimation methods are used to estimate earnings equations and the analysis is stratified by gender. Results show that recent immigrants to Canada have a persistent high incidence and intensity of over-education with a substantial negative impact on their earnings. In particular, two-thirds of recent immigrants to Canada are over-educated with a wage loss of 8%, while an under-educated immigrant loses around 2% on average. Results also show that proficiency in English or French and post-immigration investment in education and training significantly reduce the likelihood of being over-educated. The findings of this study could benefit policies directed to help immigrants integrate in the labour market. Mesbah Fathy Sharaf Copyright © 2013 Mesbah Fathy Sharaf. All rights reserved. Thu, 17 Jan 2013 08:12:48 +0000 http://www.hindawi.com/isrn/economics/2013/954071/ We find that individuals’ opinions concerning protectionist policies match with how their revenue could be affected in the medium or long term by trade liberalisation in line with predictions of the comparative advantage models. An adverse macroeconomic context (large increase in the unemployment rate or inflation rate) increases protectionist attitudes, thus reflecting that people do not trust that free trade will lead to lower prices or create jobs despite trade theory optimism. People share a mercantilist view of trade since more imports increase protectionism support, while people positively value exports, especially in small countries. Regarding policy measures, while protectionist measures do not influence protectionism support in general, easy access to exports reduces people’s support for protectionism. Natalia Melgar, Juliette Milgram-Baleix, and Máximo Rossi Copyright © 2013 Natalia Melgar et al. All rights reserved. Mon, 31 Dec 2012 17:46:02 +0000 http://www.hindawi.com/isrn/economics/2012/703541/ We compare the properties in terms of rent extraction of spatial competition and monopoly franchises using Dutch first price auctions, two of the most widely used tools to regulate public service provision. In a framework where the regulator can imperfectly observe costs, but the latter are not necessarily private information to each competitor, spatial competition is more effective in extracting rent if providers are very different in their productivity and if they can observe the costs of their competitors. When they are quite similar and have limited information on the competitors' characteristics, the use of a monopoly franchise through an auction mechanism should be preferred. In the latter environment, a multiple object auction allows more rent to be extracted from the provider. Laura Levaggi and Rosella Levaggi Copyright © 2012 Laura Levaggi and Rosella Levaggi. All rights reserved. Sun, 30 Dec 2012 10:58:27 +0000 http://www.hindawi.com/isrn/economics/2012/421789/ The effectiveness of tax incentives on charitable donation expenditures in Canada is explored, and the analysis is extended to compare the effectiveness across different donation sectors. Price elasticities are estimated with data from the 2007 Canada Survey of Giving, Volunteering and Participating. Results suggest that specific charitable sectors are affected differently by Canada’s tax credit system. The findings have implications for public policy. Belayet Hossain and Laura Lamb Copyright © 2012 Belayet Hossain and Laura Lamb. All rights reserved. Mon, 24 Dec 2012 18:44:36 +0000 http://www.hindawi.com/isrn/economics/2012/509165/ We consider price regulation in oligopolistic markets when firms are quantity setters. We consider a market for a homogeneous good with a demand function of special form (-linearity), constant returns to scale, and identical firms. Marginal costs can take two values only: low or high. Values of all parameters except the marginal costs are known to the regulator. Assuming that the regulator is risk-neutral and maximizes expected social welfare (defined as the sum of consumer surplus and profits), we characterize the optimal policy and show how this policy depends on the basic parameters of demand and costs. Luis C. Corchón and Félix Marcos Copyright © 2012 Luis C. Corchón and Félix Marcos. All rights reserved. Sun, 16 Dec 2012 15:09:25 +0000 http://www.hindawi.com/isrn/economics/2012/612081/ This study examines the effect restrictive state abortion laws have on the pregnancy resolution decisions of women with unintended pregnancies. The empirical results find that the abortion ratio and the abortion rate of unintended pregnancies are more sensitive to increases in the abortion price than previous estimates that analyzed total pregnancies (unintended and intended). A Medicaid funding restriction has very little effect on a state's abortion rate of unintended pregnancies, but causes a larger decrease in the number of abortions of unintended pregnancies than previous estimates. A parental involvement law is associated with a significant reduction in a state's abortion ratio and the abortion rate of unintended pregnancies, which suggests that the law may have a behavioral modification effect. Neither a mandatory counseling law nor a two-visit law has a significant effect on a state's abortion ratio and the abortion rate of unintended pregnancies. Marshall H. Medoff Copyright © 2012 Marshall H. Medoff. All rights reserved. Wed, 12 Dec 2012 17:09:52 +0000 http://www.hindawi.com/isrn/economics/2012/481856/ Minimum variance and mean-variance optimizing hedges are developed when basis risk exhibits heteroscedasticity; that is, the variance of the difference between spot and futures prices is not constant but rises with the level of spot prices. Two different hedging objectives are modeled and optimized. The resulting optimality conditions are then interpreted both analytically and intuitively. Simulations are run to determine whether the model proposed here is superior to the traditional model in terms of minimizing the hedger’s terminal wealth. The resulting hedge ratios are shown to differ from those that are obtained for the traditional homoscedastic basis case, but consistent with the extant theoretical paradigm, the demand for futures contacts is dichotomized into pure hedging and pure speculative components. The simulations demonstrate that, under the statistical assumptions invoked, the proposed model implies uniformly less hedging and a lower variance of terminal wealth compared with the traditional model. Subhankar Nayak and Jacques A. Schnabel Copyright © 2012 Subhankar Nayak and Jacques A. Schnabel. All rights reserved. Wed, 12 Dec 2012 14:14:12 +0000 http://www.hindawi.com/isrn/economics/2012/909727/ We construct a family of models to analyse the effect on optimal educational investment of (i) society's preferences for equity and (ii) competition between countries. The models provide insights about the impact of a variety of parameters on optimal policy. In particular, we identify a form of “overeducation” that is new to the literature and provide a counterexample to a common finding in the literature on fiscal federalism. Geraint Johnes Copyright © 2012 Geraint Johnes. All rights reserved. Mon, 26 Nov 2012 15:07:33 +0000 http://www.hindawi.com/isrn/economics/2012/723536/ The purpose of this paper is to shed light on the political economy aspects of state-owned-enterprises (SOEs) governance and privatization in the Middle East and North Africa (MENA) region. In particular, the paper presents an overview of privatization in the region and examines the extent to which SOEs operate at arm's length from the public sector and the motives for this behavior. Showing empirically the region’s relative reticence on privatizing public assets, the paper highlights the political economy aspects contributing to this impasse, offers Lebanon as a case study, and suggests a policy framework for successful reform of SOEs. Highlighting the lack of sustainable drives for SOEs reform and privatization in the region and the need for better governance systems based on the rule of law, property rights protection, and combating corruption, the paper proposes policy options to deal with privatization and improve the governance of SOEs through advocating a state-owned enterprise governance framework. This framework suggests subjecting SOEs to regulation and supervision of more than one government entity as opposed to only one ministry of custody. This should help to ensure a level-playing field in the industry and reduce the pressure on SOEs to heed to political pressures. Ibrahim Akoum Copyright © 2012 Ibrahim Akoum. All rights reserved. Sat, 03 Nov 2012 12:28:17 +0000 http://www.hindawi.com/isrn/economics/2012/573826/ This study examines whether there is empirical evidence that Wagner's law holds in the Sri Lankan economy using time series annual data over the period from 1960 to 2010 for Sri Lanka, applying cointegration and error correction modeling (ECM) techniques. In particular, this study keeps a special focus to examine the validity of six versions of Wagner's hypothesis, which support the existence of long-run relationship between public expenditure and economic growth. The empirical evidence of this study indicates that while there prevail is a short-run relationship between public expenditure and economic growth, the long-run results showed no strong evidence in support of the validity of the Wagner’s law for Sri Lankan economy. Granger causality analysis also confirms this result. Therefore, the findings of this study pave to broaden this study further for a deeper understanding about the relationship between public expenditure and economic growth by giving more attention on individual items of public expenditure and by including more macroeconomic variables in the econometric model using different methodology in future. Mayandy Kesavarajah Copyright © 2012 Mayandy Kesavarajah. All rights reserved. Mon, 22 Oct 2012 14:07:30 +0000 http://www.hindawi.com/isrn/economics/2012/619602/ This paper investigates the probability of employment in Greece and focuses on 2006, namely, well after the Athens 2004 Olympics and its fiscal stimulus and before the eruption of the global financial crisis of 2007–2009 that transformed into an economic and sovereign debt crisis with unprecedented consequences in the country's postwar economic history. Based on microdata from the Labour Force Survey, the analysis depicts the impact of gender, age, marital status, area of residence, level of education, and immigrant status on finding a job, in Greece as a whole and the two most populated Greek regions, Attica and Central Macedonia. The findings of the logit model show differences in the three areas under examination mainly among the educational variables and area of residence. Stavros Rodokanakis Copyright © 2012 Stavros Rodokanakis. All rights reserved. Wed, 17 Oct 2012 10:56:01 +0000 http://www.hindawi.com/isrn/economics/2012/608645/ The paper proposes a simple utility function that can generate Giffen behaviour. The function suggests an alternative direction where Giffen behaviour can be found and also implies a convenient framework for empirical testing. Moreover, because of its simple form, the utility function is well-suited for teaching purposes. Rein Haagsma Copyright © 2012 Rein Haagsma. All rights reserved. Tue, 16 Oct 2012 18:32:48 +0000 http://www.hindawi.com/isrn/economics/2012/293478/ The present study examines how a number of market conditions may constrain entry mode choice into Middle East nations. Specifically, this paper focuses on master franchising and analyzes the determining factors in this entry mode decision. A quantitative approach was applied to a sample of Spanish franchisors operating through 96 franchisee outlets across 6 Middle East countries in January 2010. They are Bahrain, Cyprus, Israel, Jordan, Saudi Arabia, and United Arab Emirates. Findings show the importance of a number of host country’s features (economic development, corruption, and efficiency of contract enforcement). The scant theoretical or empirical attention given to the topic of foreign entry mode choice via franchising has usually been examined from a U.S. base and focused on developed markets. To fill this gap, the present study analyzes the international spread of the Spanish franchise system—ranked fifth worldwide both in terms of the number of franchisors (1,019) and the quantity of franchisee outlets (65,026)—into the Middle East. Veronica Baena Copyright © 2012 Veronica Baena. All rights reserved. Sun, 14 Oct 2012 15:04:54 +0000 http://www.hindawi.com/isrn/economics/2012/941695/ The textile and clothing (TC) sector has not escaped the slowdown in Egypt in response to the crisis. But it has been in decline since 2001 in response to a changing global environment. Exports, which have been surviving on account of the Qualifying Industrial Zones (QIZ) and Euro-Mediterranean Partnership agreements, have been hit hard by the crisis. Domestic sales are in decline as a result of liberalization, and non-QIZ exporter—unprotected by the agreement—have been turning to the domestic market in competition with non-exporters. If domestic sales continue to decline, without being offset by growth in exports, the industry will continue to decline. To deal with the crisis, short-run mitigation policies can be considered as ensuring banks credit, and paying social insurance for workers in distressed firms. But the sector is suffering from inherent structural problems resulting in high costs. In other words, the crisis has exacerbated the shrinkage of an already struggling industry, so a longer run strategy is needed beyond the crisis response, comprising moving up the clothing industry value chain, conditional export incentives, skills upgrading and undergoing comprehensive institutional reform. Amirah El-Haddad Copyright © 2012 Amirah El-Haddad. All rights reserved. Wed, 26 Sep 2012 16:14:09 +0000 http://www.hindawi.com/isrn/economics/2012/702974/ In this quality-ladder product-cycles model, a southern firm can undertake innovation by collaborating with a northern firm through R&D outsourcing. Generally, I find that the initial steady-state scale of R&D outsourcing and the fraction of innovative tasks undertaken by southern labor through R&D outsourcing critically affect the results of comparative statics. Particularly, the friendly policy to promote R&D outsourcing may be beneficial for both of the North and the South only if the scale of R&D outsourcing is small. Hsiao-Lei Chu Copyright © 2012 Hsiao-Lei Chu. All rights reserved. Thu, 20 Sep 2012 15:10:07 +0000 http://www.hindawi.com/isrn/economics/2012/218071/ This study examines the impact of a remittances shock on the main macroeconomic aggregates of a small open economy. It uses a stochastic limited participation model to generate dynamics that are consistent with the empirical literature, like the increase in inflation, consumption, and leisure. However, the remittances shock generates a prolonged decline in GDP, which only diminishes when remittances are a larger percentage of GDP, the fraction of remittances directed towards investment increases, or when the fraction of labor income that remittances represent is reduced and is overturned when the persistence of the remittances shocks is shortened. Dennis W. Jansen, Diego E. Vacaflores, and George S. Naufal Copyright © 2012 Dennis W. Jansen et al. All rights reserved. Sun, 02 Sep 2012 11:21:52 +0000 http://www.hindawi.com/isrn/economics/2012/816964/ This study examines the Granger causality between Taiwan's aggregate and disaggregate energy consumption and trade variables, including total imports (IM), total exports (EX), total energy consumption (ENERGY), oil and petroleum products consumption (OIL), coal and coal products consumption (COAL), natural gas consumption (GAS), export value of the industrial sector (EX_I), export value of heavy-chemical industrial products (EX_HI), and export value of non-heavy-chemical industrial products (EX_NHI) with monthly data during 1998–2009. Via applying Hsiao's version of the Granger causality method, the results find causality running from ENERGY to IM, EX, EX_I, and EX_HI. The impulse-response simulations show that the above relations have positive responses at the initial period. OIL Granger causes all trade variables. The impulse directions to IM and EX_NHI are negative, whereas others are positive. On the other hand, COAL responds to impulses in all trade variables. The impulse-response simulations show that these relations have positive responses at the initial period except for causality running from EX_HI and EX_NHI to COAL. GAS positively responds to impulses in EX, EX_I, and EX_HI at the initial period. The bidirectional Granger causality between pairs of variables (such as GAS and EX_NHI as well as GAS and EX_HI) is found. Jin-Li Hu, Tzu-Pu Chang, Fang-Yu Yeh, and Tzu-Cheng Yang Copyright © 2012 Jin-Li Hu et al. All rights reserved. Sun, 05 Aug 2012 09:38:14 +0000 http://www.hindawi.com/isrn/economics/2012/429506/ The issue of child labour is a frontline concern in India, as early entry into labour market at formative stage of life does mean absconding from proper schooling leading to loss of future scope of better livelihood, since the existing literature shows that there is wage premium for education in Indian labour market. In this perspective, this study aims to carry out a supply-side analysis towards examining the incidence and pattern of child labour and child schooling to test out regional and gender disparities, if any, in terms of these incidences. Socio-economic determinants across gender and region also have been identified for an everlasting way out of the crisis. The data-base utilized for the analysis has been extracted from the National Sample Survey on “Employment and Unemployment Situation in India” for the 61st large sample round (2004-2005). The pattern of child employment in a range of industries confirms the malfunctioning of lawful steps to save child labourers from mischief of occupational vulnerability. It also reveals significant discrepancy in incidence of child labour both across region and gender, but for schooling choice no considerable regional gap is substantiated. Saswati Das Copyright © 2012 Saswati Das. All rights reserved. Thu, 26 Jul 2012 14:35:34 +0000 http://www.hindawi.com/isrn/economics/2012/658982/ Banks tend to leave their currency exposures uncovered in fixed and “intermediate” exchange rate regimes. The paper asks why this is the case. There are three possible explanations: First, hedges are costly and the currency peg is credible; Second, financial markets are incomplete and so hedging instruments are unavailable; or third, hedges are costly and banks expect a bailout should currency gyrations threaten their solvency. The paper demonstrates that the third argument is not time consistent and therefore that uncovered currency exposures reflect currency peg credibility or financial incompleteness and not moral-hazard risk taking. Victoria Miller Copyright © 2012 Victoria Miller. All rights reserved. Tue, 17 Jul 2012 09:33:43 +0000 http://www.hindawi.com/isrn/economics/2012/982093/ Project selection based on the net present value can be optimal only if the discount rate is optimal. The optimal discount rate for a government project can be a risk-free rate, a comparable market rate (market interest rate corresponding to the risk of cash flows to the government), or an adjusted market rate, depending on circumstances. This paper clarifies the conditions for each case. Provided that the optimal discount rate is the comparable market rate, it varies across intervention methods and changes with the subsidy rate. Sangkyun Park Copyright © 2012 Sangkyun Park. All rights reserved. Mon, 25 Jun 2012 09:14:25 +0000 http://www.hindawi.com/isrn/economics/2012/478485/ Behavioral finance research stresses the prevalence of overconfidence in capital budgeting practices. To remedy this shortcoming, specifically the upward bias in cash flow forecasts, the extant literature emphasizes the reduction of such forecasts. This paper considers the conditions under which a different adjustment is warranted, namely, an upward correction in the hurdle rate employed to evaluate the project. It is argued here that if adverse events can have a long-term, versus a merely transitory, deleterious effect on the project's cash flows, the second adjustment is appropriate. Jacques A. Schnabel Copyright © 2012 Jacques A. Schnabel. All rights reserved.