http://www.hindawi.com The latest articles from Hindawi Publishing Corporation © 2013 , Hindawi Publishing Corporation . All rights reserved. Wed, 15 May 2013 17:05:22 +0000 http://www.hindawi.com/journals/econ/2013/763818/ The challenges and opportunities facing today's agriculture within the climate change context are at least twofold: in addition to adapting to a potentially more variable climate, agriculture may also take on the addition role of mitigating GHG emissions—such as providing renewable fuels to replace fossil fuels to some extent. For the US, a large-scale GHG mitigation effort through biofuels production pursuant to the Renewable Fuel Standard (RFS2) is already unfolding. A question thus naturally arises for the RFS2-relevant US agricultural sector: will climate change make it harder to meet the volume goals set in the RFS2 mandates, considering that both climate change and RFS2 may have significant impacts on US agriculture? The agricultural component of FASOMGHG that models the land use allocation within the conterminous US agricultural sector is employed to investigate the effects of climate change (with autonomous adaptation at farm level), coupled with RFS2, on US agriculture. The analysis shows that climate change eases the burden of meeting the RFS2 mandates increasing consumer welfare while decreasing producer welfare. The results also show that climate change encourages a more diversified use of biofuel feedstocks for cellulosic ethanol production, in particular crop residues. Yuquan W. Zhang and Bruce A. McCarl Copyright © 2013 Yuquan W. Zhang and Bruce A. McCarl. All rights reserved. Tue, 30 Apr 2013 08:49:41 +0000 http://www.hindawi.com/journals/econ/2013/321051/ This study examines the impact of stochastic harvest field time on profit maximizing potential of corn cob/stover collection in North Dakota. Three harvest options are analyzed using mathematical programming models. Our findings show that under the first corn grain only harvest option, farmers are able to complete harvesting corn grain and achieve maximum net income in a fairly short amount of time with existing combine technology. However, under the second simultaneous corn grain and cob (one-pass) harvest option, farmers generate lower net income compared to the net income of the first option. This is due to the slowdown in combine harvest capacity as a consequence of harvesting corn cobs. Under the third option of separate corn grain and stover (two-pass) harvest option, time allocation is the main challenge and our evidence shows that with limited harvest field time available, farmers find it optimal to allocate most of their time harvesting grain and then proceed to harvest and bale stover if time permits at the end of harvest season. The overall findings suggest is that it would be more economically efficient to allow a firm that is specialized in collecting biomass feedstock to participate in cob/stover harvest business. Thein A. Maung and Cole R. Gustafson Copyright © 2013 Thein A. Maung and Cole R. Gustafson. All rights reserved. Thu, 04 Apr 2013 09:43:35 +0000 http://www.hindawi.com/journals/econ/2013/315787/ Much research has estimated induced land use changes (ILUCs) and emissions for first generation biofuels. Relatively little has provided estimates for the second generation biofuels. This paper estimates ILUC emissions for the first and second generation biofuels. Estimated ILUC emissions are uncertain not only because their associated land use changes are uncertain, but also because of uncertainty in the land use emission factors (EFs). This paper also examines uncertainties related to these factors. The results suggest that converting crop residues to biofuel has no significant ILUC emissions, but that is not the case for dedicated energy crops. Use of dedicated energy crops transfers managed natural land and marginal land (cropland-pasture) to crop production. Producing biogasoline from miscanthus generates the lowest land requirement among alterative pathways. The largest land requirement is associated with switchgrass. The difference is due largely to the assumed yields of switchgrass and miscanthus. The three major conclusions from uncertainty in emissions analyses are (1) inclusion or exclusion of cropland-pasture makes a huge difference; (2) changes in soil carbon sequestration due to changes in land cover vegetation play an important role; and (3) there is wide divergence among the emission factor sources, especially for dedicated crop conversion to ethanol. Farzad Taheripour and Wallace E. Tyner Copyright © 2013 Farzad Taheripour and Wallace E. Tyner. All rights reserved. Wed, 20 Mar 2013 13:16:36 +0000 http://www.hindawi.com/journals/econ/2013/138485/ One of the major motivations to establish a biobased energy sector in the United States is to promote economic development in the rural areas of the nation. This study estimated the economic impact of investing and operating a switchgrass-based ethanol plant in East Tennessee. Applying a spatially oriented mixed-integer mathematical programming model, we first determined the location of biorefinery, feedstock draw area, and the resources used in various feedstock supply systems by minimizing the total plant gate cost of feedstock. Based on the model output, an input-output model was utilized to determine the total economic impact, including direct, indirect, and induced effects of feedstock investment and annual production in the study region. Moreover, the economic impact of ethanol plant investment and annual conversion operation was analyzed. Results suggest that the total annual expenditures in an unprotected large round bale system generated a total $92.5 million in economic output within the 13 counties of East Tennessee. In addition, an estimated $234 million in overall economic output was generated through the operation of the biorefinery. This research showed that the least-cost configuration of the feedstock supply chain influenced the levels and types of economic impact of biorefinery. Burton C. English, Tun-Hsiang Edward Yu, James A. Larson, R. Jamey Menard, and Yuan Gao Copyright © 2013 Burton C. English et al. All rights reserved. Tue, 19 Mar 2013 13:54:09 +0000 http://www.hindawi.com/journals/econ/2013/154546/ Anthony N. Rezitis, José M. Gil, and Maria Sassi Copyright © 2013 Anthony N. Rezitis et al. All rights reserved. Sun, 17 Mar 2013 10:05:59 +0000 http://www.hindawi.com/journals/econ/2013/694507/ The present paper provides a literature review of studies examining the potential causes and consequences of recent surges in food and agricultural commodity prices. Furthermore, this paper uses the structural trend methodology proposed by Koopman et al. (2009) to analyze movements in the IMF monthly commodity food price index for the period 1992(11)–2012(10) and to provide forecasts for the period 2012(11)–2014(12). The empirical results indicate that commodity food prices present seasonality and cyclicality with the longest periodicity of two years. The empirical findings identify certain structural breaks in commodity food price series as well as outliers. These structural breaks seem to capture the trend component of the price series well, while the outliers take account of temporal effects, that is, short-lived spikes. Finally, the presented forecasts show high and volatile commodity food prices. Anthony N. Rezitis and Maria Sassi Copyright © 2013 Anthony N. Rezitis and Maria Sassi. All rights reserved. Thu, 14 Mar 2013 10:14:19 +0000 http://www.hindawi.com/journals/econ/2013/412725/ The study of the logistics project evaluation model features reviews the traditional value evaluation model. On the basis of this, using the fuzzy theory, we establish several logistics project evaluation models under fuzzy environment. The analysis of the respective characteristics and the comparison of the calculated results of the three models show that these models are important methods of investment value of logistics evaluation. Ke Qiu Cheng Zhou Copyright © 2013 Ke Qiu Cheng Zhou. All rights reserved. Mon, 11 Mar 2013 15:04:44 +0000 http://www.hindawi.com/journals/econ/2013/352847/ Simple Cournot models of divestiture tend to generate incentives to divest which are too strong, predicting that firms will break up into an infinite number of divisions resulting in perfect competition. This paper shows that if the order of divestitures is endogenized, firms will always choose sequential, and hence very limited, divestitures. Divestitures favor the larger firm and the follower in a sequential game. Divestitures in which the larger firm is the follower generate greater industry profit and social welfare, but a smaller consumer surplus. Wen Zhou Copyright © 2013 Wen Zhou. All rights reserved. Thu, 07 Mar 2013 17:10:59 +0000 http://www.hindawi.com/journals/econ/2013/920164/ The present paper proposes a framework for examining whether a food production enterprise, attempting to build an ecocertification strategy, connects the creation of environmental value with the creation of economic value, balancing environmental sustainability with economic sustainability. More specifically, the paper combines demand theory with a discreet choice consumers’ model in an embryonic ecocertified food market, to examine whether economic value is created and to identify the determinants of this value creation. An empirical investigation of the model using consumer data indicates that a variety of factors, such as consumer’s age and profession, family’s income and purchasing strategy, product quality association in consumers’ mind and the retailing outlet, play an important role in shaping the respondents’ intention to pay for the ecofriendliness of products. The proposed framework can help enterprise management to balance the consumers’ and enterprise owners’ claims in cases where certification schemes or standards exist that enable enterprises to communicate social responsibility to their customers. Philippos Karipidis and Eftichios Sartzetakis Copyright © 2013 Philippos Karipidis and Eftichios Sartzetakis. All rights reserved. Wed, 06 Mar 2013 09:15:54 +0000 http://www.hindawi.com/journals/econ/2013/618039/ The aim of this study was to estimate the annual number of days absent from work associated with diabetes-related complications. Registry data were obtained for 34,882 individuals aged 18–70 years with hospital-diagnosed diabetes (ICD-10 codes: E10–E14) identified from a large national sample (40% of the Danish population) with 6 years of hospital utilisation data. The occurrence of a complication was defined as a hospital admission with a specified diagnosis or procedure code. Data on sickness episodes with municipal subsidy were retrieved for each individual. Days absent from work attributable to complications were defined as the estimated difference in absence days between individuals with and without the specified complication and were estimated for the first and subsequent years after the initial episode of the recorded complication. Angina pectoris, ischaemic stroke, and heart failure were the three most frequent complications in the population. Heart failure, amputation, renal disease, and peripheral vascular disease were on average associated with more than three-month additional absence from work during the first and subsequent years. Leg ulcers and neuropathy were associated with more days absent from work during the first year than in subsequent years. Diabetes complications are associated with a substantial number of additional days absent from work. The avoidance of these complications would benefit both patients and society. Jan Sørensen and Uffe Jon Ploug Copyright © 2013 Jan Sørensen and Uffe Jon Ploug. All rights reserved. Thu, 07 Feb 2013 17:17:59 +0000 http://www.hindawi.com/journals/econ/2013/470412/ Within existing literature, it is well known that people’s behavior in ultimatum game experiments cannot be explained by perfect rationality model. There is, however, evidence showing that people are boundedly rational. In this paper, we studied repeated ultimatum game experiments in which the pie size is only known to the proposer (player 1), but the transaction history is made known to both players. We found that subject’s behavior can be very well explained by the history-consistent-rationality model (HCR model) of Lee and Ferguson (2010), which suggests that people’s behavior is affected by what they observed in the past. The HCR model is able to yield point predictions whose errors are on average within 5% of the total pie size. The experimental results provide evidence that subjects' behavior is boundedly rational with respect to the transaction history. Ching Chyi Lee and William K. Lau Copyright © 2013 Ching Chyi Lee and William K. Lau. All rights reserved. Wed, 21 Nov 2012 16:24:05 +0000 http://www.hindawi.com/journals/econ/2012/463856/ This paper investigates the impact of foreign direct investment (FDI), trade openness, domestic demand, and exchange rate on the export performance of Bangladesh over the period of 1980–2009 using the vector error correction (VEC) model under the time series framework. The stationarity of the variables is checked both at the intercept and intercept plus trend regression forms under the ADF and PP stationarity tests. The Johansen-Juselius procedure is applied to test the cointegration relationship between variables followed by the VEC regression model. The empirical results trace a long-run equilibrium relationship in the variables. FDI is found to be an important factor in explaining the changes in exports both in the short run and long-run. However, the study does not trace any significant causal relationship for the cases of trade openness, domestic demand, and exchange rate. The study concludes that Bangladesh should formulate FDI-led polices to enhance its exports. Bishnu Kumar Adhikary Copyright © 2012 Bishnu Kumar Adhikary. All rights reserved. Thu, 08 Nov 2012 08:22:01 +0000 http://www.hindawi.com/journals/econ/2012/732583/ This paper focused on the effects of some sociodemographic factors on the decision of the consumer to purchase packed or unpacked fluid milk in Sivas, Turkey. The data were collected from 300 consumers by using face-to-face survey technique. The sample size was determined using the possibility-sampling method. Probit model has been used to analyze the socioeconomic factors affecting milk consumption of households. Four estimators (household size, income, milk preferences reason, and milk price) in the probit model were found statistically significant. According to empirical results, consumers with lower household size and higher income levels tend to consume packed milk consumption. Our study findings suggest that consumers who were sensitive to price were less likely to consume packed milk and believe that packed milk price is expensive compared to unpacked milk price. Also, milk price was effective factor concerning packed and unpacked milk consumption behavior. The majority of consumers read the contents of packed fluid milk and are affected by safety food in their shopping preferences. Meral Uzunoz and Yasar Akcay Copyright © 2012 Meral Uzunoz and Yasar Akcay. All rights reserved. Tue, 30 Oct 2012 10:09:00 +0000 http://www.hindawi.com/journals/econ/2012/875287/ In this paper we construct a standard CGE model to explore the impact of scaling up infrastructure in six African countries. As the debate on the importance of scaling up infrastructure to stimulate growth and provide a push to African economies, some analysts raise concern on financing these infrastructures after construction and that external funding of these can create major distortion and have a negative impact on the trade balance of these countries. This study aims to provide insights into this debate. It draws from the infrastructure productivity literature to postulate positive productive externalities of new infrastructure and Fay and Yepes (2003) for operating cost associated with new infrastructure. We compare various infrastructure investments funded with different fiscal tools. These investments scenarios are compared to nonproductive investment that can be interpreted as a business as usual scenario. Our results show that foreign aid does produce Dutch disease effects but the negative impacts are strongly dependent on the type of investments performed. Moreover, growth effects contribute to attenuate the negative effects. Antonio Estache, Jean-François Perrault, and Luc Savard Copyright © 2012 Antonio Estache et al. All rights reserved. Mon, 22 Oct 2012 11:53:20 +0000 http://www.hindawi.com/journals/econ/2012/942748/ This paper analyzes a demand system for eight major fresh vegetables in the USA using the most recently available dataset (1970–2010). A first-differenced Linear Approximate Almost Ideal Demand System (LA-AIDS) is applied to estimate price and expenditure elasticity of demand, imposing homogeneity and symmetry restrictions. We find that not only are consumers responsive to changes in own-prices but they also respond significantly to changes in prices of other fresh vegetables that are consumed together. Conditional budget share allocation to lettuce, cabbage, and celery has declined, while the share of the consumer dollar going to tomatoes, peppers, and onions has increased over the period. Except for cabbage, all own-price elasticity estimates are negative, less than unity in absolute value, and statistically significant. About half of the 56 cross-price elasticities are negative and significant, indicating high, albeit asymmetric, complementarities among these fresh vegetables. Expenditure elasticities are positive and significant for all but one of these eight vegetables. Over the period under consideration, demand and expenditure elasticities remained fairly stable. Cephas Naanwaab and Osei Yeboah Copyright © 2012 Cephas Naanwaab and Osei Yeboah. All rights reserved. Mon, 22 Oct 2012 11:34:11 +0000 http://www.hindawi.com/journals/econ/2012/868216/ It is widely recognized that inflation as a monetary phenomenon is determined by money supply changes. In the short run, however, several factors may lead to inflation rate differentials among different regions in the same country or among different countries in a monetary union. This paper examines the mean reversion attitude of food price inflation rates in the Euro zone, borrowing the concepts and developments from the recent growth literature and using panel unit root tests. Additionally, in order to capture sufficiently the evolving distributional dynamics, nonparametric econometric methods are also implemented. Finally, the comovement of the inflation rates among different food subgroups is also explored. The data consist of monthly observations of the EU harmonized consumer price indices of food and three different food subgroups (meat, bread and cereals, and vegetables) for the 12 older member states of the Euro zone, covering the period from 1997 to 2010. The results do not fully support the hypothesis of the food price inflation rates convergence for the whole period under investigation. Mean reversion shows up in different time periods and in different food categories. Moreover, the analysis of distribution dynamics sheds light to different aspects of convergence and highlights processes like club formation and polarization. Angelos Liontakis Copyright © 2012 Angelos Liontakis. All rights reserved. Tue, 16 Oct 2012 17:05:53 +0000 http://www.hindawi.com/journals/econ/2012/230638/ Aflatoxin (AF) is a human health, nutrition, and financial risk to many people in the developing world. AF contamination in peanut is caused by the fungi: Aspergillus flavus and Aspergillus parasiticus. AF is a potent carcinogenic toxin that also causes millions of dollars of financial losses to people in Africa. The fungus producing the AF can be reduced to an acceptable level by proper drying, sorting, storage, and cleaning of peanut. Government intervention and regulation can also encourage market participants to reduce AF contamination. In this paper, we examine the financial risk associated with sorting, and storing of peanut and peanut products along the marketing chain. Study results show that the prices paid for peanut, prices received, the costs of sorting and storage are dominant factors in reducing AF levels in peanut. Practices such as drying, sorting, and storing, however, pose financial risks to market traders of peanut. Unless government intervenes by requesting an AF-reduced peanut and provides assistance for market liberalization where market participants consider quality in trading decisions, suppliers of peanut will be reluctant to adopt AF-reducing techniques. C. Bley N'dede, C. M. Jolly, Simplice D. Vodouhe, and P. E. Jolly Copyright © 2012 C. Bley N'dede et al. All rights reserved. Wed, 26 Sep 2012 10:48:47 +0000 http://www.hindawi.com/journals/econ/2012/401472/ This study intends to estimate the demand for indigenous chicken meat in Kenya, including other available meat products for comparison purposes. Data used was collected from six counties. A total 930 rural and urban households were sampled. Linear Approximated Almost Ideal Demand System (LA/AIDS) model was used to obtain the demand elasticities and to examine the socioeconomic and demographic factors influencing the meat budget shares. The results ascertain that the socio-demographic factors such as household location, the proportion of household members and the family size are important factors in explaining perceived variations in the consumption of meat products. Indigenous chicken meat, beef and mutton, were identified as necessities. Indigenous chicken meat and beef were identified as substitutes while indigenous chicken, goat and exotic chicken meats were complements. In view of the high expenditure elasticities, therefore, considering a policy option that would enhance consumer income is desirable, since it will result in high consumption thereby providing more incentives for production of meat products. The information generated would be more beneficial to the interest groups in the livestock sector as a whole. This would be utilised in the formulation of effective policies in line with food security and poverty alleviation. H. K. Bett, M. P. Musyoka, K. J. Peters, and W. Bokelmann Copyright © 2012 H. K. Bett et al. All rights reserved. Mon, 24 Sep 2012 14:54:35 +0000 http://www.hindawi.com/journals/econ/2012/652056/ This study addresses the indirect impacts of state-mandated workers' compensation benefits on workers' wages. The benefit structure of workers' compensation causes a fundamental estimation problem. I develop a new strategy to limit the biases inherent in earlier models. I utilize individual-level census data (between 1940 and 1990) to exploit benefit variation that occurs both across states and within the fifty states over time. The results suggest that wage offsets are not constant across time and may be larger for workers at lower-wage levels. Samuel K. Allen Copyright © 2012 Samuel K. Allen. All rights reserved. Tue, 18 Sep 2012 08:44:27 +0000 http://www.hindawi.com/journals/econ/2012/364715/ For Brazil to realize the economic benefits of competitive advantage, it is critically important that the country's policy makers have an awareness of the determinants of Brazilian exports. Our study aims to evaluate the role of human capital measured by the average years of workforce formal education, in the value of exports from each Brazilian state from 1995 through 2006, highlighting differences among the states and/or regions. Based on the Dixit and Woodland (1982) model, our empirical analysis is implemented by running a regression of data organized into a panel that takes into account the fixed effects (i.e., the amenities) found in each of the 27 Brazilian states (including the Federal District). Our findings are consistent with the selected theoretical model and indicate that human capital in Brazil has a nonlinear effect on exportation with an inflection point of 6.7 years of formal education. Gilberto Joaquim Fraga and Carlos José Caetano Bacha Copyright © 2012 Gilberto Joaquim Fraga and Carlos José Caetano Bacha. All rights reserved. Tue, 04 Sep 2012 11:36:13 +0000 http://www.hindawi.com/journals/econ/2012/846326/ The aim of this paper is to assess the willingness to justify illegal actions (or permissiveness) in the case of Uruguayans. We introduce new factors within the analysis: whether this attitude has changed between 1996 and 2006. In line with previous findings, some sociodemographic variables (age, education, beliefs in God, and patriotism) reduce the probability of being permissive. We also add new elements to the discussion and present some particularities of the Uruguayan case: the role of political affiliation depends on the ideological ground of the elected political party, permissiveness has dramatically changed and it is much higher in 2006. Natalia Melgar and Máximo Rossi Copyright © 2012 Natalia Melgar and Máximo Rossi. All rights reserved. Sun, 02 Sep 2012 11:59:20 +0000 http://www.hindawi.com/journals/econ/2012/148702/ This paper investigates the changes in cigarette demand in response to the changes in cigarette prices; smokeless tobacco prices; adoption of clean indoor air laws (CIALs). We used an error-correction econometric method to estimate the cigarette sales adjustment path in response to changes in prices and CIAL coverage in the United States by utilizing scanner data from supermarkets. Finding from this study indicates that smokeless tobaccos are not perfect substitutes for cigarettes, but increases in the price of cigarettes are associated with an increase in smokeless tobacco sales. The error-correction econometric method suggest that the demand for cigarettes and smokeless tobacco is related to each other; a price increase in either product leads to an increase in demand for the other product. However, the adjustment paths are quite different; an increase in cigarette prices lowers cigarette sales in relatively faster rate than decreases in smokeless tobacco prices or adoption of smoke-free laws. Changes in cigarette demand in response to changes in cigarette prices occur relatively quickly; but the full effects of smokeless tobacco price change and the adoption of 100% smoke-free laws on cigarette demand take a longer time. Bishwa B. Adhikari, Chen Zhen, Jennifer W. Kahende, Joshua Goetz, and Brett Loomis Copyright © 2012 Bishwa B. Adhikari et al. All rights reserved. Thu, 30 Aug 2012 14:15:30 +0000 http://www.hindawi.com/journals/econ/2012/616793/ This paper provides new insights into the calculation of trade potential between the EU and its Southern and Eastern Mediterranean partners (MPs). It is based on an econometric specification which takes into account some new explanatory variables which are not included simultaneously in the previous studies. These include trade costs (tariffs, NTBs, and logistics costs), factor movement (migration and FDI), as well as governance. In addition, specific estimators are implemented in order to account for zero trade flows, endogeneity and dynamics. The main conclusion of this study is that contrary to some results found in previous studies, MPs have reached their export potential with the EU. It is also shown that there is no specificity of the MP-EU trade potential in comparison with the other main PTAs (NAFTA, MERCOSUR, and ASEAN) which have also reached their trade potential. These results have strong policy implications. Nicolas Péridy Copyright © 2012 Nicolas Péridy. All rights reserved. Wed, 29 Aug 2012 16:06:15 +0000 http://www.hindawi.com/journals/econ/2012/781581/ Total Factor Productivity (TFP) measures the growth in output which is not accounted for by inputs. Data Envelopment Analysis which forms the basis for the computation of Malmquist TFP index is used in this paper to study the performance of different river basins in Andhra Pradesh state, India. The results indicated that average technical efficiency of all the basins is only 66%. In all the basins there was a decline in growth of agricultural output during the first two decades, viz., 1979-1980 to 1988-1989 and it had picked in the last decade (1999-2000). All the river basins have TFP change greater than 1 indicating progress in agricultural productivity. Out of the 40 river basins, 14 river basins have technical efficiency change less than 1 indicating decline in TFP growth whereas all the basins have technical changes greater than 1 implying that there is shift in production frontier over years. In general, within the TFP, technical change contributed more than technical efficiency change. Looking at the future options for increasing the agricultural output in the river basins, it is important to focus on improving the TFP growth compared to increasing the quantities of physical inputs. K. Palanisami and C. R. Ranganathan Copyright © 2012 K. Palanisami and C. R. Ranganathan. All rights reserved. Wed, 29 Aug 2012 13:30:26 +0000 http://www.hindawi.com/journals/econ/2012/463627/ The purpose of this study is to investigate how earnings announcement event affects stock returns at Karachi Stock Exchange (KSE). For this purpose we use the KSE-100 Index as our sample. We use the CAR Analysis to analyze the impact of earnings announcement over the stock returns around announcement dates. Our results suggest that KSE experiences abnormal stock returns around earnings announcement dates for the overall market and for different categories which indicate that efficient market hypothesis does not hold in Pakistani market and point out the presence of informational dissemination inefficiencies in the market. Muhammad Azeem Qureshi, Ali Abdullah, and Muhammad Imdadullah Copyright © 2012 Muhammad Azeem Qureshi et al. All rights reserved. Tue, 28 Aug 2012 15:38:56 +0000 http://www.hindawi.com/journals/econ/2012/525089/ Conditional expected shortfalls calculated for European insurance companies and banks under stressed market conditions are shown to be of similar magnitudes. Measured at 95% and 99% stress levels, on data covering the period from 1995 to 2011, the equity-return tail losses of insurance undertakings and banks are indistinguishable. Granger causality analysis, on all pairs of banks and insurance companies included in the sample, shows that banks and insurance companies have equal propensity to cause each others price movements. Even though the business model of insurance undertakings is different from the business model typically applied by banks, and even though insurance companies are not depending to a similar degree on short term funding as banks, the empirical results indicate that the financial equity markets in Europe do not differentiate their trading of banks and insurance companies in periods of stress. Ken Nyholm Copyright © 2012 Ken Nyholm. All rights reserved. Thu, 23 Aug 2012 15:35:37 +0000 http://www.hindawi.com/journals/econ/2012/465265/ We analyze the mutual relations among firms’ capital structure, ownership structure, and valuation. Through the estimation of a system of simultaneous equations for a sample of 1,130 firms from 16 countries from both the common law and the civil law environments, our results confirm the differential effect of ownership structure on firms’ value in each setting. Whereas in civil law firms the higher ownership concentration results in an entrenchment and an alignment effect, in the common law firms higher ownership concentration increases the value of the firm. Second, we corroborate the endogeneity of ownership structure since we find that ownership structure is affected by the value of the firm and by the capital structure. Third, our results suggest that corporate finance decisions are taken simultaneously with other mechanisms of corporate governance and conditional on firms’ valuation. Félix J. López-Iturriaga and Juan Antonio Rodríguez-Sanz Copyright © 2012 Félix J. López-Iturriaga and Juan Antonio Rodríguez-Sanz. All rights reserved. Wed, 22 Aug 2012 11:04:05 +0000 http://www.hindawi.com/journals/econ/2012/409135/ In normative public economics, intergovernmental competition is usually viewed as harmful. Although empirical support for this position does not abound, market integration has intensified competition among developed countries. In this paper we argue that when assessing welfare effects of intergovernmental competition for various forms of political failures (the public choice critique), the outcome is ambiguous and competition can be welfare improving. Jean Hindriks Copyright © 2012 Jean Hindriks. All rights reserved. Thu, 16 Aug 2012 16:03:20 +0000 http://www.hindawi.com/journals/econ/2012/297658/ In the past 50 years, a striking stylized fact has been the downward—or flat—trend of intra-African trade as a share of Africa’s total trade, while official development assistance (ODA) has experienced a noticeable expansion. During the same period, economic growth performances have not been consistent and robust enough to put a dent in the poverty level across the African continent in general and the Economic Community of West African States (ECOWAS) in particular. Using a two-stage least square (TSLS) estimation technique, this paper finds out that intra-ECOWAS trade stimulates per capita income growth substantially more than foreign aid, which rather constitutes an impediment to that growth in most specifications. Additionally, comparable results are obtained when the scope of the study is expanded to include trade of ECOWAS members with the rest of the world. As a result, it becomes appropriate to suggest policy recommendations encouraging increased cooperation among member states in an attempt to (i) expand and build new cross-states infrastructures, aimed at boosting communications and telecommunications networks, (ii) accelerate the trade facilitation process by addressing administrative red tapes that balloon both transaction costs and delays in the flows of goods across borders, seaports, and airports, and (iii) develop and diversify the industrial base in member states. Assandé Désiré Adom Copyright © 2012 Assandé Désiré Adom. All rights reserved. Thu, 16 Aug 2012 13:16:33 +0000 http://www.hindawi.com/journals/econ/2012/316564/ In 2008 Scott Barrett wrote a paper on “The incredible economics of geoengineering” in which he argued that the potentially low cost of climate engineering (CE) measures together with the quick response of the earth’s temperature to such interventions will change the whole debate about the mitigation of climate change. Whereas Barrett was mostly focusing on the cost of running CE measures, we point out that several determinants of overall economic cost like price or external effects are not yet sufficiently accounted for and that the question of dynamic efficiency is still unresolved. Combining the existing theoretical investigations about the topic from the literature, we show that even though these new measures provide new options to deal with climate change, several of them might also reduce our scope of action. Consequently, we suggest that economic research should shift its focus to portfolios of CE measures and put more emphasis on those measures which control atmospheric carbon concentration and therefore allow extending our scope of action. Additionally, economic research should address the question of phase-in and phase-out scenarios for measures which directly influence the radiation balance. Gernot Klepper and Wilfried Rickels Copyright © 2012 Gernot Klepper and Wilfried Rickels. All rights reserved.