Monetary Policy, Stock Price Misalignments and Macroeconomic Instability

Perhaps the most fundamental prediction of financial theory is that the expected returns on financial assets are determined by the amount of risk contained in their payoffs. Assets with a riskier payoff pattern should provide higher expected returns than assets that are otherwise similar but provide payoffs that contain less risk. Financial theory also predicts that not all types of risks should be compensated with higher expected returns. It is well-known that the asset-specific risk can be diversified away, whereas the systematic component of risk that affects all assets remains even in large portfolios. Thus, the asset-specific risk that the investor can easily get rid of by diversification should not lead to higher expected returns, and only the shared movement of individual asset returns – the sensitivity of these assets to a set of systematic risk factors – should matter for asset pricing. It is within this framework that this thesis is situated. The first essay proposes a new systematic risk factor, hypothesized to be correlated with changes in investor risk aversion, which manages to explain a large fraction of the return variation in the cross-section of stock returns. The second and third essays investigate the pricing of asset-specific risk, uncorrelated with commonly used risk factors, in the cross-section of stock returns. The three essays mentioned above use stock market data from the U.S. The fourth essay presents a new total return stock market index for the Finnish stock market beginning from the opening of the Helsinki Stock Exchange in 1912 and ending in 1969 when other total return indices become available. Because a total return stock market index for the period prior to 1970 has not been available before, academics and stock market participants have not known the historical return that stock market investors in Finland could have achieved on their investments. The new stock market index presented in essay 4 makes it possible, for the first time, to calculate the historical average return on the Finnish stock market and to conduct further studies that require long time-series of data.

Analysis of energy utilization in the grain mill sector in Karnataka

Energy is a major constituent of a small-scale industry such as grain mills. Based on a sample survey of several mills spread over Karnataka, a state in India, a number of energy analyses were conducted primarily to establish relationships and secondarily to look at them in more detail. Initially specific energy consumption (SEC) was computed for all industries so as to compare their efficiencies of energy use. A wide disparity exists in SEC among various grain mills. In order to understand the disparities better, regression analyses were performed on the variables energy and production, SEC and production, and energy/SEC with percentage production capacity utilization. The studies show that smaller range industries have lower capacity utilization. This paper also examines the energy savings possible by shifting industries from the lower production ranges to the next higher range (thereby utilizing installed production capacity optimally). This leads to an overall energy capacity saving of 23.12% for the foodgrain sector and 18.67% for the paddy dehusking subgroup. If this is extrapolated to the whole state, we obtain a saving of 55 million kWh.

'South-South' Remittance - Poverty reduction nexus. The Case of 'Hadiya' immigrants in South Africa, as Agents of 'Constituence development' in Ethiopia, and the policy implications of their 'remittance instrument'

This thesis explores the link between South-South remittance and development. It attempts to establish improved understanding about the role of immigrants as agents of constituency growth and development. By doing so, it illuminates the dark corners of the policy implications that the unconventional development agency of immigrants might have for countries in the Organization ft Economic Cooperation and Development (OECD). The thesis problematises the existence of state-centric international cooperation as providing the recipe for failed Aid in the face of global poverty menace. In the last half a century, the relative shi' of focus to non-state actors brought about the proliferation of NGOs. That, intrun, helped improve international access to crisis situations; however, their long-term remedial impacts on poverty and development have been contested. Major misgivings for non-governmental organizations (NGOs) are, on one hand, low level goal-bound expenditures and lack of independence from influence of the state, on the other. Therefore, the thesis enterprises to empirically verify its fundamental question whether remitting immigrants constitute an alternative development agency to the traditional players: the State and NGOs. Its main arguments are: due to state's failures in bringing sustainable development in many countries of the South, the future of poverty reduction and development also rests in immigrants' remittances. Nonetheless, in the last decade, remittance security-nexus dominated its discourse. Because of that remittance was viewed as something requiring global regime and restrictions. These temptations to tightly regulate remittance flows carry the danger of overlooking its trans-boundary nature and its strong link with livelihood of the poor. Therefore, to avoid unintended consequences of interventions, there need to be clear policy that bases itself on a discursive knowledge on the issues of North-South and South-South remittances The study involved both literature based and empirical research. It employed Discourse Analysis (C as main method for the former and snow-balling as its approach for the latter. For the first part the thesis constructed three conceptual models, these are: metrological model, police model and ecological model on remittance development-nexus. Through this modeling, the thesis achieved better deconstruction on the concepts remittance, immigrants and development agency. The protagonists of each model, the values and interests they represent, and their main arguments along various lines of dichotomies have been discussed. For instance, the main treats of meteorological model include: it sees remittance as transitional economic variable which require constant speculations and global management; it acts as meteorological station for following up or predicting the level, direction, flow and movement of global remittance. It focuses on official lines and considers the state as legitimate recipient of advic and positive consequence of remittance. On the other hand, police model views remittance as beir at best, development neutral or as an illicit activity requiring global regulations and tight control. Both immigrants and remittance viewed as subversive to establishments. It gives primacy to state stable agent of development and a partner for international cooperation. The anti-thesis to the police model is supplied by ecological model, which this thesis is a part. Ecological model on remittance and immigrants argues that, tight global regulations alone cannot be a panacea for possible abuse of informal remittance system. Ecological model, not only links remittance to poverty reduction, the main trust of development, but also considers the development agency of immigrants as critical factor for 21st century north-south development intervention. It sees immigrants as development conscious and their remittance instrument as most stable flow of finance to the developing countries. Besides, it sees remittance as effective poverty solutions than Foreign Direct Investment and international AID. This thesis focuses on the significance of South-South remittance and investigates the South Africa - Ethiopia remittance corridor, as case study; and empirically verifies the role of Ethiopian (Kembata and Hadiya) immigrants in South Africa as agents of local development back home. The study involved techniques of interview, group discussions, observations and investigative study. It also looked into the determinants of their migration to South Africa, and their remittance to Ethiopia. The theoretical models in the first part of the thesis have been operationalised throughout the empirical part to verify if the Kembata and Hadiya immigrants played the crucial role in their household poverty and local development in comparison with the Ethiopian state and the NGOs involved in the system. As evidenced by the research the thesis has made three distinct contributions to the discourse of remittance development-nexus. Fist, it systematized the debate about linkages between remittance, immigrants, development agency and policy of international cooperation by creating three conceptual models (school of thoughts); second, it singled out remitting immigrants as new agents of development in the South; third, it deconstructed concept of remittance and established South¬South remittance as additional sphere of academic investigation. In addition to the above contributions, the thesis finds that Kembata and Hadiya immigrants have engaged in various developmental activities in their locality than usually anticipated. Hence, it concludes that Ethiopian immigrants constitute an alternative development agency to the state and other non-state actors in their country, and the lesson can be applied to poverty reduction strategies in most developing countries.

Macro-economic analysis of forestry options on carbon sequestration in India

The forestry sector provides a number of climate change mitigation options. Apart from this ecological benefit, it has significant social and economic relevance. Implementation of forestry options requires large investments and sustained long-term planning. Thus there is a need for a detailed analysis of forestry options to understand their implications on stock and flow of carbon, required investments, value of forest wealth, contribution to GNP and livelihood, demand management, employment and foreign trade. There is a need to evaluate the additional spending on forestry by analysing the environmental (particularly carbon abatement), social and economic benefits. The biomass needs for India are expected to increase by two to three times by 2020. Depending upon the forest types, ownership patterns and land use patterns, feasible forestry options are identified. It is found among many supply options to be feasible to meet the 'demand based needs' with a mix of management options, species choices and organisational set up. A comparative static framework is used to analyze the macro-economic impacts. Forestry accounts for 1.84% of GNP in India. It is characterized by significant forward industrial linkages and least backward linkage. Forestry generates about 36 million person years of employment annually. India imports Rs. 15 billion worth of forest based materials annually. Implementation of the demand based forestry options can lead to a number of ecological, economic and institutional changes. The notable ones are: enhancement of C stock from 9578 to 17 094 Mt and a net annual C-sequestration from 73 to 149 Mt after accounting for all emissions; a trebling of the output of forestry sector from Rs. 49 billion to Rs. 146 billion annually; an increase in GDP contribution of forestry from Rs. 32 billion to Rs. 105 billion over a period of 35 years; an increase in annual employment level by 23 million person years, emergence of forestry as a net contributor of foreign exchange through trading of forestry products; and an increase in economic value of forest capital stock by Rs. 7260 billion with a cost benefit analysis showing forestry as a profitable option. Implementation of forestry options calls for an understanding of current forest policies and barriers which are analyzed and a number of policy options are suggested. (C) 1997 Elsevier Science B.V.

An efficient web cache replacement policy

Several replacement policies for web caches have been proposed and studied extensively in the literature. Different replacement policies perform better in terms of (i) the number of objects found in the cache (cache hit), (ii) the network traffic avoided by fetching the referenced object from the cache, or (iii) the savings in response time. In this paper, we propose a simple and efficient replacement policy (hereafter known as SE) which improves all three performance measures. Trace-driven simulations were done to evaluate the performance of SE. We compare SE with two widely used and efficient replacement policies, namely Least Recently Used (LRU) and Least Unified Value (LUV) algorithms. Our results show that SE performs at least as well as, if not better than, both these replacement policies. Unlike various other replacement policies proposed in literature, our SE policy does not require parameter tuning or a-priori trace analysis and has an efficient and simple implementation that can be incorporated in any existing proxy server or web server with ease.

Groundwater Management in India:Physical, Institutional and Policy Alternatives

Groundwater constitutes a vital natural resource for sustaining India’s agricultural economy and meeting the country’s social, ecological and environmental goals. It is a unique resource, widely available, providing security against droughts and yet it is closely linked to surface-water resources and the hydrological cycle. Its availability depends on geo-hydrological conditions and characteristics of aquifers, from deep to alluvium, sediment crystalline rocks to basalt formations; and agro-climate from humid to subhumid and semi-arid to arid. Its reliable supply, uniform quality and temperature, relative turbidity, pollution-safe, minimal evaporation losses, and low cost of development are attributes making groundwater more attractive compared to other resources. It plays a key role in the provision of safe drinking water to rural populations. For example, already almost 80% of domestic water use in rural areas in India is groundwater-supplied, and much of it is being supplied to farms, villages and small towns. Inadequate control of the use of groundwater, indiscriminate application of agrochemicals and unrestrained pollution of the rural environment by other human activities make groundwater usage unsustainable, necessitating proper management in the face of the twin demand for water of good quality for domestic supply and adequate supply for irrigation, ensuring equity, efficiency and sustainability of the resource. Groundwater irrigation has overtaken surface irrigation in the early 1980s, supported by well energization. It is estimated that there are about 24 million energised wells and tube wells now and it is driven by demand rather than availability, evident through the greater occurrence of wells in districts with high population densities. Apart from aquifer characteristics, land fragmentation and landholding size are the factors that decide the density of wells. The ‘rise and fall’ of local economies dependent on groundwater can be summarized as: the green revolution of 1980s, groundwaterbased agrarian boom, early symptoms of groundwater overdraft, and decline of the groundwater socio-ecology. The social characteristics and policy interventions typical of each stage provide a fascinating insight into the human-resource dynamics. This book is a compilation of nine research papers discussing various aspects of groundwater management. It attempts to integrate knowledge about the physical system, the socio-economic system, the institutional set-up and the policy environment to come out with a more realistic analysis of the situation with regard to the nature, characteristics and intensity of resource use, the size of the economy the use generates, and the negative socioeconomic consequences. Complex variables addressed in this regard focusing on northern Gujarat are the stock of groundwater available in the region, its hydrodynamics, its net outflows against inflows, the economics of its intensive use (particularly irrigation in semi-arid and arid regions), its criticality in the regional hydroecological regime, ethical aspects and social aspects of its use. The first chapter by Dinesh Kumar and Singh, dwells on complex groundwater socio-ecology of India, while emphasizing the need for policy measures to address indiscriminate over-exploitation of dwindling resources. The chapter also explores the nature of groundwater economy and the role of electricity prices on it. The next chapter on groundwater issue in north Gujarat provides a description of groundwater resource characteristics followed by a detailed analysis of the groundwater depletion and quality deterioration problems in the region and their undesirable consequences on the economy, ecosystem health and the society. Considering water-buyers and wellowning farmers individually, a methodology for economic valuation of groundwater in regions where its primary usage is in agriculture, and as assessment of the groundwater economy based on case studies from north Gujarat is presented in the fourth chapter. The next chapter focuses on the extent of dependency of milk production on groundwater, which includes the water embedded in green and dry fodder and animal feed. The study made a realistic estimate of irrigation water productivity in terms of the physics and economics of milk production. The sixth chapter analyses the extent of reduction in water usage, increase in yield and overall increase in physical productivity of alfalfa with the use of the drip irrigation system. The chapter also provides a detailed synthesis of the costs and benefits associated with the use of drip irrigation systems. A linear programmingbased optimization model with the objective to minimize groundwater use taking into account the interaction between two distinct components – farming and dairying under the constraints of food security and income stability for different scenarios, including shift in cropping pattern, introduction of water-efficient crops, water- saving technologies in addition to the ‘business as usual’ scenario is presented in the seventh chapter. The results show that sustaining dairy production in the region with reduced groundwater draft requires crop shifts and adoption of water-saving technologies. The eighth chapter provides evidences to prove that the presence of adequate economic incentive would encourage farmers to adopt water-saving irrigation devices, based on the findings of market research with reference to the level of awareness among farmers of technologies and the factors that decide the adoption of water-saving technologies. However, now the marginal cost of using electricity for agricultural pumping is almost zero. The economic incentives are strong and visible only when the farmers are either water-buyers or have to manage irrigation with limited water from tube-well partnerships. The ninth chapter explores the socio-economic viability of increasing the power tariff and inducing groundwater rationing as a tool for managing energy and groundwater demand, considering the current estimate of the country’s annual economic loss of Rs 320 billion towards electricity subsidy in the farm sector. The tenth chapter suggests private tradable property rights and development of water markets as the institutional tool for achieving equity, efficiency and sustainability of groundwater use. It identifies the externalities for local groundwater management and emphasizes the need for managing groundwater by local user groups, supported by a thorough analysis of groundwater socio-ecology in India. An institutional framework for managing the resource based on participatory approach that is capable of internalizing the externalities, comprising implementation of institutional and technical alternatives for resource management is also presented. Major findings of the analyses and key arguments in each chapter are summarized in the concluding chapter. Case studies of the social and economic benefits of groundwater use, where that use could be described as unsustainable, are interesting. The benefits of groundwater use are outlined and described with examples of social and economic impacts of groundwater and the negative aspects of groundwater development with the compilation of environmental problems based on up-to-date research results. This publication with a well-edited compilation of case studies is informative and constitutes a useful publication for students and professionals.

Urban Sprawl Pattern Analysis Using GIS

Urbanisation has evinced interest from a wide section of the society including experts, amateurs, and novices. The multidisciplinary scope of the subject invokes the interest from ecologists, to urban planners and civil engineers, to sociologists, to administrators and policy makers, students and finally the common man. With the development and infrastructure initiatives mostly around the urban centres, the impacts of urbanisation and sprawl would be on the environment and the natural resources. The wisdom lies in how effectively we plan the urban growth without - hampering the environment, excessively harnessing the natural resources and eventually disturbing the natural set-up. The research on these help urban residents and policymakers make informed decisions and take action to restore these resources before they are lost. Ultimately the power to balance the urban ecosystems rests with regional awareness, policies, administration practices, management issues and operational problems. This publication on urban systems is aimed at helping scientists, policy makers, engineers, urban planners and ultimately the common man to visualise how towns and cities grow over a period of time based on investigations in the regions around the highway and cities. Two important highways in Karnataka, South India, viz., Bangalore - Mysore highway and the Mangalore - Udupi highway, in Karnataka and the Tiruchirapalli - Tanjavore - Kumbakonam triangular road network in Tamil Nadu, South India, were considered in this investigation. Geographic Information System and Remote Sensing data were used to analyse the pattern of urbanisation. This was coupled with the spatial and temporal data from the Survey of India toposheets (for 1972), satellite imageries procured from National Remote Sensing Agency (NRSA) (LANDSAT TM for 1987 and IRS LISS III for 1999), demographic details from the Census of India (1971, 1981, 1991 and 2001) and the village maps from the Directorate of Survey Settlements and Land Records, Government of Karnataka. All this enabled in quantifying the increase in the built-up area for nearly three decades. With intent of identifying the potential sprawl zones, this could be modelled and projected for the future decades. Apart from these the study could quantify some of the metrics that could be used in the study of urban sprawl.

Packet flow analysis in IP networks using data-flow analysis

Static analysis (aka offline analysis) of a model of an IP network is useful for understanding, debugging, and verifying packet flow properties of the network. Data-flow analysis is a method that has typically been applied to static analysis of programs. We propose a new, data-flow based approach for static analysis of packet flows in networks. We also investigate an application of our analysis to the problem of inferring a high-level policy from the network, which has been addressed in the past only for a single router.

SEP-Optimal Transmit Power Policy for Peak Power and Interference Outage Probability Constrained Underlay Cognitive Radios

In underlay cognitive radio (CR), a secondary user (SU) can transmit concurrently with a primary user (PU) provided that it does not cause excessive interference at the primary receiver (PRx). The interference constraint fundamentally changes how the SU transmits, and makes link adaptation in underlay CR systems different from that in conventional wireless systems. In this paper, we develop a novel, symbol error probability (SEP)-optimal transmit power adaptation policy for an underlay CR system that is subject to two practically motivated constraints, namely, a peak transmit power constraint and an interference outage probability constraint. For the optimal policy, we derive its SEP and a tight upper bound for MPSK and MQAM constellations when the links from the secondary transmitter (STx) to its receiver and to the PRx follow the versatile Nakagami-m fading model. We also characterize the impact of imperfectly estimating the STx-PRx link on the SEP and the interference. Extensive simulation results are presented to validate the analysis and evaluate the impact of the constraints, fading parameters, and imperfect estimates.

Decentralized demand-supply matching using community microgrids and consumer demand response: A scenario analysis

Developing countries constantly face the challenge of reliably matching electricity supply to increasing consumer demand. The traditional policy decisions of increasing supply and reducing demand centrally, by building new power plants and/or load shedding, have been insufficient. Locally installed microgrids along with consumer demand response can be suitable decentralized options to augment the centralized grid based systems and plug the demand-supply gap. The objectives of this paper are to: (1) develop a framework to identify the appropriate decentralized energy options for demand supply matching within a community, and, (2) determine which of these options can suitably plug the existing demand-supply gap at varying levels of grid unavailability. A scenario analysis framework is developed to identify and assess the impact of different decentralized energy options at a community level and demonstrated for a typical urban residential community Vijayanagar, Bangalore in India. A combination of LPG based CHP microgrid and proactive demand response by the community is the appropriate option that enables the Vijayanagar community to meet its energy needs 24/7 in a reliable, cost-effective manner. The paper concludes with an enumeration of the barriers and feasible strategies for the implementation of community microgrids in India based on stakeholder inputs. (C) 2014 Elsevier Ltd. All rights reserved.

Fiscal Policy and Economic Stability: Does PIGS stand for Procyclicality In Government Spending?

The Financial Crisis has hit particularly hard countries like Ireland or Spain. Procyclical fiscal policy has contributed to a boom-bust cycle that undermined fiscal positions and deepened current account deficits during the boom. We set up an RBC model of a small open economy, following Mendoza (1991), and introduce the effect of fiscal policy decisions that change over the cycle. We calibrate the model on data for Ireland, and simulate the effect of different spending policies in response to supply shocks. Procyclical fiscal policy distorts intertemporal allocation decisions. Temporary spending boosts in booms spur investment, and hence the need for external finance, and so generates very volatile cycles in investment and the current account. This economic instability is also harmful for the steady state level of output. Our model is able to replicate the relation between the degree of cyclicality of fiscal policy, and the volatility of consumption, investment and the current account observed in OECD countries.

On the Informational Role of Term Structure in the U.S. Monetary Policy Rule

This paper uses a structural approach based on the indirect inference principle to estimate a standard version of the new Keynesian monetary (NKM) model augmented with term structure using both revised and real-time data. The estimation results show that the term spread and policy inertia are both important determinants of the U.S. estimated monetary policy rule whereas the persistence of shocks plays a small but significant role when revised and real-time data of output and inflation are both considered. More importantly, the relative importance of term spread and persistent shocks in the policy rule and the shock transmission mechanism drastically change when it is taken into account that real-time data are not well behaved.

Analysis of the legislative framework in the Brazilian policymaking process

Analisa os aspectos da estrutura política brasileira que contribuem para falhas nos processos decisórios e ineficácia nos resultados finais de políticas de governo, com ênfase nos problemas institucionais do poder legislativo. Aborda os seguintes tópicos: fragmentação do sistema partidário, infidelidade partidária, modelo de federalismo, preenchimento de cargos públicos, larga utilização de medidas provisórias, disfunções do processo legislativo.

The Importance of Stock Market Returns in Estimated Monetary Policy Rules: a Structural Approach

This paper estimates a standard version of the New Keynesian Monetary (NKM) model augmented with financial variables in order to analyze the relative importance of stock market returns and term spread in the estimated U.S. monetary policy rule. The estimation procedure implemented is a classical structural method based on the indirect inference principle. The empirical results show that the Fed seems to respond to the macroeconomic outlook and to the stock market return but does not seem to respond to the term spread. Moreover, policy inertia and persistent policy shocks are also significant features of the estimated policy rule.

Term Structure and the Estimated Monetary Policy Rule in the Eurozone

Published as an article in: Spanish Economic Review, 2008, vol. 10, issue 4, pages 251-277.