Consumer Expertise or Credit Risk? An empirical analysis of mortgage pricing

Loan mortgage interest rates are usually the result of a bank-customer negotiation process. Credit risk, consumer cross-buying potential, bundling, financial market competition and other features affecting the bargaining power of the parties could affect price. We argue that, since mortgage loan is a complex product, consumer expertise could be a relevant factor for mortgage pricing. Using data on mortgage loan prices for a sample of 1055 households for the year 2005 (Bank of Spain Survey of Household Finances, EFF-2005), and including credit risk, costs, potential capacity of the consumer to generate future business and bank competition variables, the regression results indicate that consumer expertise-related metrics are highly significant as predictors of mortgage loan prices. Other factors such as credit risk and consumer cross-buying potential do not have such a significant impact on mortgage prices. Our empirical results are affected by the credit conditions prior to the financial crisis and could shed some light on this issue.

Understanding Tariff Deficit and its Challenges

Regulators and market participants have become increasingly concerned about the Spanish electricity tariff deficit due to its size and the difficulties to control its growth. The deficit can be traced to inefficiencies in market organization and solutions should be designed to mitigate those inefficiencies. Tariff deficits have allowed for the transfer of part of the present costs of electricity services to future consumers, but this situation has reached a limit and a deep revision of regulation in this market cannot be postponed. In general, solutions that interfere with market prices and signals are not appropriate.

Cost effectiveness of a combination of instruments for global warming: a quantitative approach for Spain

Climate change is an important environmental problem and one whose economic implications are many and varied. This paper starts with the presumption that mitigation of greenhouse gases is a necessary policy that has to be designed in a cost effective way. It is well known that market instruments are the best option for cost effectiveness. But the discussion regarding which of the various market instruments should be used, how they may interact and what combinations of policies should be implemented is still open and very lively. In this paper we propose a combination of instruments: the marketable emission permits already in place in Europe for major economic sectors and a CO(2) tax for economic sectors not included in the emissions permit scheme. The study uses an applied general equilibrium model for the Spanish economy to compute the results obtained with the new mix of instruments proposed. As the combination of the market for emission permits and the CO(2) tax admits different possibilities that depend on how the mitigation is distributed among the economic sectors, we concentrate on four possibilities: cost-effective, equalitarian, proportional to emissions, and proportional to output distributions. Other alternatives to the CO(2) tax are also analysed (tax on energy, on oil and on electricity). Our findings suggest that careful, well designed policies are needed as any deviation imposes significant additional costs that increase more than proportionally to the level of emissions reduction targeted by the EU.

The survey of Lake Victoria's fishers

The findings are presented of a survey conducted regarding the fishers of Lake Victoria, which examined the relationships affecting supply flows of raw material on to the market, and also the characteristics of fishing activities and their effects on fish quality and distribution. Fish marketing plays a vital role in the lives of much of the lake basin's population, both in terms of employment and nutrition. The results of the survey comprise, in part, a base-line data set which will facilitate further research, analysis and management decision-making in relation to stakeholders of the lake's resources. Data collection, methods and research difficulties encountered are described and details given of a profile of a boat owner/renter and aslo of a profile of a crew member. The survey shows that Lake Victoria's fishery is one of very limited diversity. The fishers recount that they consistently target one or more of the 3 most common species within the lake (Nile perch, tilapia and dagaa) and very rarely consider any other species type. The largest proportion of fishers on the lake are Nile perch fishers; there is considerable demand for this species, and hence fishers have little incentive to either target alternative fish species, not to try and establish firm marketing outlets through the creation of arrangements with their principal buyers. In Kenyan waters, however, the number of Nile perch fishers is equaled by the number of dagaa fishers; this fish now commands a considerable portion of the market for fish from Lake Victoria through its availability as well as its relatively low prices. The tilapia fishery is in decline, and all 3 riparian states would not appear to be attracting investment almost certainly as a result of declining catches. For many of those working in Lake Victoria's fishery, the problems faced appear most often to be associated with the vagaries of an unstable market which may rise or fall depending on the state of the international market or the state of access roads to fish landings. (PDF contains 42 pages)

Cooperative and market-based solutions to pollution abatement problems

This work concerns itself with the possibility of solutions, both cooperative and market based, to pollution abatement problems. In particular, we are interested in pollutant emissions in Southern California and possible solutions to the abatement problems enumerated in the 1990 Clean Air Act. A tradable pollution permit program has been implemented to reduce emissions, creating property rights associated with various pollutants.

Before we discuss the performance of market-based solutions to LA's pollution woes, we consider the existence of cooperative solutions. In Chapter 2, we examine pollutant emissions as a trans boundary public bad. We show that for a class of environments in which pollution moves in a bi-directional, acyclic manner, there exists a sustainable coalition structure and associated levels of emissions. We do so via a new core concept, one more appropriate to modeling cooperative emissions agreements (and potential defection from them) than the standard definitions.

However, this leaves the question of implementing pollution abatement programs unanswered. While the existence of a cost-effective permit market equilibrium has long been understood, the implementation of such programs has been difficult. The design of Los Angeles' REgional CLean Air Incentives Market (RECLAIM) alleviated some of the implementation problems, and in part exacerbated them. For example, it created two overlapping cycles of permits and two zones of permits for different geographic regions. While these design features create a market that allows some measure of regulatory control, they establish a very difficult trading environment with the potential for inefficiency arising from the transactions costs enumerated above and the illiquidity induced by the myriad assets and relatively few participants in this market.

It was with these concerns in mind that the ACE market (Automated Credit Exchange) was designed. The ACE market utilizes an iterated combined-value call market (CV Market). Before discussing the performance of the RECLAIM program in general and the ACE mechanism in particular, we test experimentally whether a portfolio trading mechanism can overcome market illiquidity. Chapter 3 experimentally demonstrates the ability of a portfolio trading mechanism to overcome portfolio rebalancing problems, thereby inducing sufficient liquidity for markets to fully equilibrate.

With experimental evidence in hand, we consider the CV Market's performance in the real world. We find that as the allocation of permits reduces to the level of historical emissions, prices are increasing. As of April of this year, prices are roughly equal to the cost of the Best Available Control Technology (BACT). This took longer than expected, due both to tendencies to mis-report emissions under the old regime, and abatement technology advances encouraged by the program. Vve also find that the ACE market provides liquidity where needed to encourage long-term planning on behalf of polluting facilities.

Sustainable IT and IT for sustainability

Energy and sustainability have become one of the most critical issues of our generation. While the abundant potential of renewable energy such as solar and wind provides a real opportunity for sustainability, their intermittency and uncertainty present a daunting operating challenge. This thesis aims to develop analytical models, deployable algorithms, and real systems to enable efficient integration of renewable energy into complex distributed systems with limited information.

The first thrust of the thesis is to make IT systems more sustainable by facilitating the integration of renewable energy into these systems. IT represents the fastest growing sectors in energy usage and greenhouse gas pollution. Over the last decade there are dramatic improvements in the energy efficiency of IT systems, but the efficiency improvements do not necessarily lead to reduction in energy consumption because more servers are demanded. Further, little effort has been put in making IT more sustainable, and most of the improvements are from improved "engineering" rather than improved "algorithms". In contrast, my work focuses on developing algorithms with rigorous theoretical analysis that improve the sustainability of IT. In particular, this thesis seeks to exploit the flexibilities of cloud workloads both (i) in time by scheduling delay-tolerant workloads and (ii) in space by routing requests to geographically diverse data centers. These opportunities allow data centers to adaptively respond to renewable availability, varying cooling efficiency, and fluctuating energy prices, while still meeting performance requirements. The design of the enabling algorithms is however very challenging because of limited information, non-smooth objective functions and the need for distributed control. Novel distributed algorithms are developed with theoretically provable guarantees to enable the "follow the renewables" routing. Moving from theory to practice, I helped HP design and implement industry's first Net-zero Energy Data Center.

The second thrust of this thesis is to use IT systems to improve the sustainability and efficiency of our energy infrastructure through data center demand response. The main challenges as we integrate more renewable sources to the existing power grid come from the fluctuation and unpredictability of renewable generation. Although energy storage and reserves can potentially solve the issues, they are very costly. One promising alternative is to make the cloud data centers demand responsive. The potential of such an approach is huge.

To realize this potential, we need adaptive and distributed control of cloud data centers and new electricity market designs for distributed electricity resources. My work is progressing in both directions. In particular, I have designed online algorithms with theoretically guaranteed performance for data center operators to deal with uncertainties under popular demand response programs. Based on local control rules of customers, I have further designed new pricing schemes for demand response to align the interests of customers, utility companies, and the society to improve social welfare.

Análisis de precios del mercado diario de electricidad español

El trabajo analiza los precios de la electricidad del mercado diario español. En el mismo se realiza un estudio del mercado eléctrico español y sus componentes junto con un análisis de los cambios regulatorios más significativos durante el periodo muestral. A partir de allí, se analiza la muestra a través de los estadísticos descriptivos principales. Luego se presenta un modelo general que es analizado a partir de los resultados empíricos principales obtenidos con su estimación. Finalmente, se realizan ajustes al mismo para obtener un modelo simplificado que se ajuste mejor a lo que se quiere conseguir, que es analizar la evolución de los precios de la electricidad. Los resultados del ajuste arrojan que los precios horarios dependen en su mayor parte de los precios de las horas anteriores. También que el modelo recoge muy bien la estacionalidad mensual y horaria que presenta la muestra. Por otro lado, características de la serie de precios como son la volatilidad y los saltos no quedan bien recogidos por el modelo, lo que lleva a plantearse la búsqueda de modelos alternativos.

Análisis de precios del mercado diario de electricidad español

El trabajo analiza los precios de la electricidad del mercado diario español. En el mismo se realiza un estudio del mercado eléctrico español y sus componentes junto con un análisis de los cambios regulatorios más significativos durante el periodo muestral. A partir de allí, se analiza la muestra a través de los estadísticos descriptivos principales. Luego se presenta un modelo general que es analizado a partir de los resultados empíricos principales obtenidos con su estimación. Finalmente, se realizan ajustes al mismo para obtener un modelo simplificado que se ajuste mejor a lo que se quiere conseguir, que es analizar la evolución de los precios de la electricidad. Los resultados del ajuste arrojan que los precios horarios dependen en su mayor parte de los precios de las horas anteriores. También que el modelo recoge muy bien la estacionalidad mensual y horaria que presenta la muestra. Por otro lado, características de la serie de precios como son la volatilidad y los saltos no quedan bien recogidos por el modelo, lo que lleva a plantearse la búsqueda de modelos alternativos.

Valuation of Wind Energy Projects: A Real Options Approach

We address the valuation of an operating wind farm and the finite-lived option to invest in it under different reward/support schemes: a constant feed-in tariff, a premium on top of the electricity market price (either a fixed premium or a variable subsidy such as a renewable obligation certificate or ROC), and a transitory subsidy, among others. Futures contracts on electricity with ever longer maturities enable market-based valuations to be undertaken. The model considers up to three sources of uncertainty: the electricity price, the level of wind generation, and the certificate (ROC) price where appropriate. When analytical solutions are lacking, we resort to a trinomial lattice combined with Monte Carlo simulation; we also use a two-dimensional binomial lattice when uncertainty in the ROC price is considered. Our data set refers to the UK. The numerical results show the impact of several factors involved in the decision to invest: the subsidy per MWh generated, the initial lump-sum subsidy, the maturity of the investment option, and electricity price volatility. Different combinations of variables can help bring forward investments in wind generation. One-off policies, e.g., a transitory initial subsidy, seem to have a stronger effect than a fixed premium per MWh produced.

Review of the California Trawl Fishery for Pacific Ocean Shrimp, Pandalus jordani, from 1992 to 2007

The commercial bottom trawl fishery for Pacific ocean shrimp, Pandalus jordani, or pink shrimp, operates mostly off the west coast of the contiguous United States. The California portion of the fishery has not been thoroughly documented or reviewed since the 1991 fishing season, despite its fluctuating more during the last 16 years (1992–2007) than at any other period in its 56-year history. We used fishery-dependent data, California Department of Fish and Game commercial landing receipts and logbook data, to analyze trends and review the California pink shrimp trawl fishery from 1992 to 2007. In particular, we focus on the most recent years of the fishery (2001–07) to highlight the gear developments and key management measures implemented in the fishery. The fishery is primarily driven by market conditions and is highly regulated by both state and Federal management agencies. Several key regulatory measures implemented during this decade have had significant effects on the fishery. For example, the requirement of a Bycatch Reduction Device on trawl nets targeting pink shrimp was approved in 2001 and has greatly reduced levels of finfish bycatch. Fishery production has declined, particularly in recent years, and may be attributed to decreased market prices, followed by reduced fishermen participation; both of which are related to changes in the processing sector and demand for the product.

Eradication of predatory fishes in fish ponds and nursery ponds using electricity

Prior to stocking economic species in tanks and nursery ponds, all the unwanted and predatory fishes in them will have to be removed. Even though most of them can be caught with ordinary gear such as cast net, drag net, scoop net etc. Total or absolute eradication is not possible and those left over are sufficient to destroy all the fingerlings introduced. Development of an electrical method for killing predatory fishes at reasonable cost is therefore, expected to provide a solution. This paper deals with a few methods, based on the use of electricity and which are suitable for different ponds.

Chemical, bacteriological and sensory examination of split, dried, smoked bream on the market in Zambia

A critical examination of the market quality of split, dried and smoked bream (Tilapia spp.) was chemically, bacteriologically and organoleptically conducted for the period of August 1968 to January 1969. The aim of this survey was to obtain basic information for the development of national quality standards for the commodity. Relationships of cooked meat score to pH, fish size, appearance and smell score, and water content wcre significantly correlated and responsive. Therefore, these parameters were proposed to be used as indices for the quality standards of the products.

Prices need no preferences: social trends determine decisions in experimental markets for pain relief.

OBJECTIVE: A standard view in health economics is that, although there is no market that determines the "prices" for health states, people can nonetheless associate health states with monetary values (or other scales, such as quality adjusted life year [QALYs] and disability adjusted life year [DALYs]). Such valuations can be used to shape health policy, and a major research challenge is to elicit such values from people; creating experimental "markets" for health states is a theoretically attractive way to address this. We explore the possibility that this framework may be fundamentally flawed-because there may not be any stable values to be revealed. Instead, perhaps people construct ad hoc values, influenced by contextual factors, such as the observed decisions of others. METHOD: The participants bid to buy relief from equally painful electrical shocks to the leg and arm in an experimental health market based on an interactive second-price auction. Thirty subjects were randomly assigned to two experimental conditions where the bids by "others" were manipulated to follow increasing or decreasing price trends for one, but not the other, pain. After the auction, a preference test asked the participants to choose which pain they prefer to experience for a longer duration. RESULTS: Players remained indifferent between the two pain-types throughout the auction. However, their bids were differentially attracted toward what others bid for each pain, with overbidding during decreasing prices and underbidding during increasing prices. CONCLUSION: Health preferences are dissociated from market prices, which are strongly referenced to others' choices. This suggests that the price of health care in a free-market has the capacity to become critically detached from people's underlying preferences.

Forecasting Daily Chlorophyll a Concentration during the Spring Phytoplankton Bloom Period in Xiangxi Bay of the Three-Gorges Reservoir by Means of a Recurrent Artificial Neural Network

A recurrent artificial neural network was used for 0-and 7-days-ahead forecasting of daily spring phytoplankton bloom dynamics in Xiangxi Bay of Three-Gorges Reservoir with meteorological, hydrological, and limnological parameters as input variables. Daily data from the depth of 0.5 m was used to train the model, and data from the depth of 2.0 m was used to validate the calibrated model. The trained model achieved reasonable accuracy in predicting the daily dynamics of chlorophyll a both in 0-and 7-days-ahead forecasting. In 0-day-ahead forecasting, the R-2 values of observed and predicted data were 0.85 for training and 0.89 for validating. In 7-days-ahead forecasting, the R-2 values of training and validating were 0.68 and 0.66, respectively. Sensitivity analysis indicated that most ecological relationships between chlorophyll a and input environmental variables in 0-and 7-days-ahead models were reasonable. In the 0-day model, Secchi depth, water temperature, and dissolved silicate were the most important factors influencing the daily dynamics of chlorophyll a. And in 7-days-ahead predicting model, chlorophyll a was sensitive to most environmental variables except water level, DO, and NH3N.

International market selection : Measuring actions instead of intentions

Alexander, N.; Rhodes, M.; and Myers, H. (2007). International market selection: measuring actions instead of intentions. Journal of Services Marketing. 21(6), pp.424-434 RAE2008