Cross-country effects of regulatory capital arbitrage

One reason for the recent asset price bubbles in many developed countries could be regulatory capital arbitrage. Regulatory and legal changes can help traditional banks to move their assets off their balance sheets into the lightly regulated shadows and thus enable regulatory arbitrage through the securitized sector. This paper adopts a global vector autoregression (GVAR) methodology to assess the effects of regulatory capital arbitrage on equity prices, house prices and economic activity across 11 OECD countries/ regions. A counterfactual experiment disentangles the effects of regulatory arbitrage following a change in the net capital rule for investment banks in April 2004 and the adoption of the Basel II Accord in June 2004. The results provide evidence for the existence of an international finance multiplier, with about half of the countries overshooting U.S. impulse responses. The counterfactual shows that regulatory arbitrage via the U.S. securitized sector may enhance the cross-country reallocation of capital from housing markets towards equity markets.

Recovery based on plot experiments is a poor predictor of landscape-level population impacts of agricultural pesticides

Current European Union regulatory risk assessment allows application of pesticides provided that recovery of nontarget arthropods in-crop occurs within a year. Despite the long-established theory of source-sink dynamics, risk assessment ignores depletion of surrounding populations and typical field trials are restricted to plot-scale experiments. In the present study, the authors used agent-based modeling of 2 contrasting invertebrates, a spider and a beetle, to assess how the area of pesticide application and environmental half-life affect the assessment of recovery at the plot scale and impact the population at the landscape scale. Small-scale plot experiments were simulated for pesticides with different application rates and environmental half-lives. The same pesticides were then evaluated at the landscape scale (10 km × 10 km) assuming continuous year-on-year usage. The authors' results show that recovery time estimated from plot experiments is a poor indicator of long-term population impact at the landscape level and that the spatial scale of pesticide application strongly determines population-level impact. This raises serious doubts as to the utility of plot-recovery experiments in pesticide regulatory risk assessment for population-level protection. Predictions from the model are supported by empirical evidence from a series of studies carried out in the decade starting in 1988. The issues raised then can now be addressed using simulation. Prediction of impacts at landscape scales should be more widely used in assessing the risks posed by environmental stressors.

Effects of agricultural management practices on earthworm populations and crop yield: validation and application of a mechanistic modelling approach

There is little consensus on how agriculture will meet future food demands sustainably. Soils and their biota play a crucial role by mediating ecosystem services that support agricultural productivity. However, a multitude of site-specific environmental factors and management practices interact to affect the ability of soil biota to perform vital functions, confounding the interpretation of results from experimental approaches. Insights can be gained through models, which integrate the physiological, biological and ecological mechanisms underpinning soil functions. We present a powerful modelling approach for predicting how agricultural management practices (pesticide applications and tillage) affect soil functioning through earthworm populations. By combining energy budgets and individual-based simulation models, and integrating key behavioural and ecological drivers, we accurately predict population responses to pesticide applications in different climatic conditions. We use the model to analyse the ecological consequences of different weed management practices. Our results demonstrate that an important link between agricultural management (herbicide applications and zero, reduced and conventional tillage) and earthworms is the maintenance of soil organic matter (SOM). We show how zero and reduced tillage practices can increase crop yields while preserving natural ecosystem functions. This demonstrates how management practices which aim to sustain agricultural productivity should account for their effects on earthworm populations, as their proliferation stimulates agricultural productivity. Synthesis and applications. Our results indicate that conventional tillage practices have longer term effects on soil biota than pesticide control, if the pesticide has a short dissipation time. The risk of earthworm populations becoming exposed to toxic pesticides will be reduced under dry soil conditions. Similarly, an increase in soil organic matter could increase the recovery rate of earthworm populations. However, effects are not necessarily additive and the impact of different management practices on earthworms depends on their timing and the prevailing environmental conditions. Our model can be used to determine which combinations of crop management practices and climatic conditions pose least overall risk to earthworm populations. Linking our model mechanistically to crop yield models would aid the optimization of crop management systems by exploring the trade-off between different ecosystem services.

The impact of career capital on expatriates’ perceived marketability

We examine how the development of three types of career capital (knowing how, knowing whom, and knowing why) during an international assignment affects the perceived marketability of organizational expatriates. Using the perceived marketability perspective and long-term follow-up data, we show that knowing how is seen as the most transferable type of career capital, while the development of other aspects of career capital has little impact on perceived marketability. We also show that career capital development is more recognized in the external market than by current employers. Our findings expand our understanding of long-term career marketability among people who have completed international assignments.

The career competencies of self-initiated and assigned expatriates: assessing the development of career capital over time

Building on a modern careers approach, we assess the effects of working abroad on individuals’ career capital. Given the dearth of longitudinal studies, we return to a sample of economics graduates in Finland eight years later. We measure changes in three dimensions of career capital; ‘knowing how’, ‘knowing whom’, ‘knowing why’ and find that company assigned expatriates learn more than self-initiated expatriates. All three career capital areas benefit from international experience and all are increasingly valued over time. Based on our findings we conclude that a dynamic notion of career capital acquisition and use is needed. Managerial implications include the need for a wider view of talent management for international businesses.

Relationship between the somatic cell count in raw milk and the casein fractions of UHT milk

The relationship between somatic cell count (SCC) in raw milk and casein fractions of 15 batches of the corresponding ultra-high-temperature (UHT) milk was examined. Raw milk was collected, pasteurised and submitted to UHT treatment. Samples of the UHT milk were taken on days 8, 30, 60, 90 and 120 of storage at room temperature and their casein fractions analysed by high performance liquid chromatography. SCC ranged from 197,000 to 800,000 cells/mL. No correlation (p>0.05) was found between SCC and K-casein concentrations in raw or UHT milks. The alpha(s2) and P-casein concentrations in raw milk were negatively correlated with SCC (p<0.05). In UHT milk, negative correlations were observed for a,1-casein (p<0.05) and beta-casein (p<0.05) on the 8th day, and for alpha S-2-casein (p<0.01) on the 60th day of storage. Results indicate that higher SSC in raw milk is associated with substantial degradation of beta-casein and alpha(s)-casein, which may lead to quality defects in UHT milk during storage. Aust. J. Dairy Technol. 63, 45-49

Effects of dietary urea levels on milk protein fractions of Holstein cows

The aim of this study was to evaluate the effects of substituting soybean meal for urea on milk protein fractions (casein, whey protein and non-protein nitrogen) of dairy cows in three dietary levels. Nine mid-lactation Holstein cows were used in a 3 x 3 Latin square arrangement, composed of 3 treatments, 3 periods of 21 days each, and 3 squares. The treatments consisted of three different diets fed to lactating cows, which were randomly assigned to three groups of three animals: (A) no urea inclusion, providing 100% of crude protein (CP), rumen undegradable protein (RUP) and rumen degradable protein (RDP) requirements, using soybean meal and sugarcane as roughage; (B) urea inclusion at 7.5 g/kg DM in partial substitution of soybean meal CP equivalent; (C) urea inclusion at 15 g/kg DM in partial substitution of soybean meal CP equivalent. Rations were isoenergetic and isonitrogenous-1 60 g/kg DM of crude protein and 6.40 MJ/kg DM of net energy for lactation. When the data were analyzed by simple polynomial regression, no differences were observed among treatments in relation to milk CP content, true protein, casein, whey protein, non-casein and non-protein nitrogen, or urea. The milk true protein:crude protein and casein:true protein ratios were not influenced by substituting soybean meal for urea in the diet. Based on the results it can be concluded that the addition of urea up to 15 g/kg of diet dry matter in substitution of soybean meal did not alter milk protein concentration casein, whey protein and its non-protein fractions, when fed to lactating dairy cows. (c) 2007 Elsevier B.V. All rights reserved.

Modeling hourly and daily fractions of UV, PAR and NIR to global solar radiation under various sky conditions at Botucatu, Brazil

In this analysis, using available hourly and daily radiometric data performed at Botucatu, Brazil, several empirical models relating ultraviolet (UV), photosynthetically active (PAR) and near infrared (NIR) solar global components with solar global radiation (G) are established. These models are developed and discussed through clearness index K(T) (ratio of the global-to-extraterrestrial solar radiation). Results obtained reveal that the proposed empirical models predict hourly and daily values accurately. Finally. the overall analysis carried Out demonstrates that the sky conditions are more important in developing correlation models between the UV component and the global solar radiation. The linear regression models derived to estimate PAR and NIR components may be obtained without sky condition considerations within a maximum variation of 8%. In the case of UV, not taking into consideration the sky condition may cause a discrepancy of up to 18% for hourly values and 15% for daily values. (C) 2008 Elsevier Ltd. All rights reserved.

A NOTE ON FREE GROUPS IN THE RING OF FRACTIONS OF SKEW POLYNOMIAL RINGS

Let L be a function field over the rationals and let D denote the skew field of fractions of L[t; sigma], the skew polynomial ring in t, over L, with automorphism sigma. We prove that the multiplicative group D(x) of D contains a free noncyclic subgroup.

Mutagenicity and DNA adduct formation of PAH, nitro-PAH, and oxy-PAH fractions of atmospheric particulate matter from Sao Paulo, Brazil

Urban particulate matter (UPM) contributes to lung cancer incidence. Here, we have studied the mutagenic activity and DNA adduct-forming ability of fractionated UPM extractable organic matter (EOM). UPM was collected with a high-volume sampler in June 2004 at two sites, one at street level adjacent to a roadway and the other inside a park within the urban area of the city of Sao Paulo, Brazil. UPM was extracted using dichloromethane, and the resulting EOM was separated by HPLC to obtain PAH, nitro-PAH, and oxy-PAH fractions which were tested for mutagenicity with the Salmonella strains TA98 and YG1041 with and without S9 metabolic activation. The PAH fraction from both sites showed negligible mutagenic activity in both strains. The highest mutagenic activity was found for the nitro-PAH fraction using YG1041 without metabolic activation; however, results were comparable for both sites. The nitro-PAH and oxy-PAH fractions were incubated with calf thymus DNA under reductive conditions appropriate for the activation of nitro aromatic compounds, then DNA adduct patterns and levels were determined with thin-layer chromatography (TLC) (32)p-postlabeling method using two enrichment procedures-nuclease PI digestion and butanol extraction. Reductively activated fractions from both sites produced diagonal radioactive zones (DRZ) of putative aromatic DNA adducts on thin layer plates with both enrichment procedures. No such DRZ were observed in control experiments using fractions from unexposed filters or from incubations without activating system. Total adduct levels produced by the nitro-PAH fractions were similar for both sites ranging from 30 to 45 adducts per 10(8) normal nucleotides. In contrast, the DNA binding of reductively activated oxy-PAH fractions was three times higher and the adduct pattern consisted of multiple discrete spots along the diagonal line on the thin layer plates. However, DNA adduct levels were not significantly different between the sampling sites. Both samples presented the same levels of mutagenic activity. The response in the Salmonella assay was typical of nitroaromatics. Although, more mutagenic activity was related to the nitro-PAH fraction in the Salmonella assay, the oxy-PAH fractions showed the highest DNA adduct levels. More studies are needed to elucidate the nature of the genotoxicants occurring in Sao Paulo atmospheric samples. (C) 2008 Elsevier B.V. All rights reserved.

The risk-properties of human capital and the design of government policies

Whether human capital increases or decreases wage uncertainty is an open question from an empirical standpoint. Yet, most policy prescriptions regarding human capital formation are based on models that impose riskiness on this type of investment. In a two period and finite type optimal income taxation problem we derive prescriptions that are robust to the risk characteristics of human capital: savings should be discouraged, human capital investments encouraged and both types of investment driven to an efficient level from an aggregate perspective. These prescriptions are also robust to the assumptions regarding what choices are observed, despite policy instruments being not.

The impact of public capital and public investment on economic growth: an empirical investigation

in this anicle we measure the impact of public sector capital and investment on economic growth. Initially, traditional growth accounting regressions are run for a cross-country data set. A simple endogenous growth model is then constructed in order to take into account the determinants of labor, private capital and public capital. In both cases, public capital is a separate argument of the production function. An additional data-set constructed with quarterly American data was used in the estimations of the growth mode!. The results indicate lhat public capital and public investment play a significant role in determining growth rates and have a significant impact on capital and labor returns. Furthermore, the impact of public investment on productivity growth was found to be positive and always significant for bolh samples. Hence. in a fully optimizing modelo we confmn previous results in the literature that lhe failure of public investment to keep pace with output growlh during the Seventies and Eighties may have played a major role in the slowdown of lhe productivity growth in the period. Anolher main outcome concems the output elasticity wilh respect to public capital. The coefficiem estimates are always positive and significant but magnitudes depend on each of lhe two data set used.

Formation of social capital in Eastern Europe : explaining the gap vis-à-vis developed countries

Recent Eurobarometer survey data are used to document and explain the leveI of social capital in thirteen new members and fifteen current members of the European Union. Social capital in Eastern Europe - measured by participation in clubs and organization, intensity of networks or altruistic behavior - lags behind that in developed countries. The differences in individual-leveI determinants cannot fully account for the gap at the aggregate leveI. Once we also include aggregate measures of economic development and quality of institutions, the gap disappears. This implies that the EU enlargement will contribute to a convergence in social capital, assuming that it contributes to the economic and institutional development of Eastern European countries. A necessary condition is that both, formal and informal institutions and their interaction should be regarded in this process.

How the full opening of the capital account to highly liquid financial markets led Latin America to two and a half cycles of ‘mania, panic and crash’

Latin America has recently experienced three cycles of capital inflows, the first two ending in major financial crises. The first took place between 1973 and the 1982 ‘debt-crisis’. The second took place between the 1989 ‘Brady bonds’ agreement (and the beginning of the economic reforms and financial liberalisation that followed) and the Argentinian 2001/2002 crisis, and ended up with four major crises (as well as the 1997 one in East Asia) — Mexico (1994), Brazil (1999), and two in Argentina (1995 and 2001/2). Finally, the third inflow-cycle began in 2003 as soon as international financial markets felt reassured by the surprisingly neo-liberal orientation of President Lula’s government; this cycle intensified in 2004 with the beginning of a (purely speculative) commodity price-boom, and actually strengthened after a brief interlude following the 2008 global financial crash — and at the time of writing (mid-2011) this cycle is still unfolding, although already showing considerable signs of distress. The main aim of this paper is to analyse the financial crises resulting from this second cycle (both in LA and in East Asia) from the perspective of Keynesian/ Minskyian/ Kindlebergian financial economics. I will attempt to show that no matter how diversely these newly financially liberalised Developing Countries tried to deal with the absorption problem created by the subsequent surges of inflow (and they did follow different routes), they invariably ended up in a major crisis. As a result (and despite the insistence of mainstream analysis), these financial crises took place mostly due to factors that were intrinsic (or inherent) to the workings of over-liquid and under-regulated financial markets — and as such, they were both fully deserved and fairly predictable. Furthermore, these crises point not just to major market failures, but to a systemic market failure: evidence suggests that these crises were the spontaneous outcome of actions by utility-maximising agents, freely operating in friendly (‘light-touch’) regulated, over-liquid financial markets. That is, these crises are clear examples that financial markets can be driven by buyers who take little notice of underlying values — i.e., by investors who have incentives to interpret information in a biased fashion in a systematic way. Thus, ‘fat tails’ also occurred because under these circumstances there is a high likelihood of self-made disastrous events. In other words, markets are not always right — indeed, in the case of financial markets they can be seriously wrong as a whole. Also, as the recent collapse of ‘MF Global’ indicates, the capacity of ‘utility-maximising’ agents operating in (excessively) ‘friendly-regulated’ and over-liquid financial market to learn from previous mistakes seems rather limited.