Topics in Spatial Econometrics - With Applications to House Prices

Topics in Spatial Econometrics — With Applications to House Prices Spatial effects in data occur when geographical closeness of observations influences the relation between the observations. When two points on a map are close to each other, the observed values on a variable at those points tend to be similar. The further away the two points are from each other, the less similar the observed values tend to be. Recent technical developments, geographical information systems (GIS) and global positioning systems (GPS) have brought about a renewed interest in spatial matters. For instance, it is possible to observe the exact location of an observation and combine it with other characteristics. Spatial econometrics integrates spatial aspects into econometric models and analysis. The thesis concentrates mainly on methodological issues, but the findings are illustrated by empirical studies on house price data. The thesis consists of an introductory chapter and four essays. The introductory chapter presents an overview of topics and problems in spatial econometrics. It discusses spatial effects, spatial weights matrices, especially k-nearest neighbours weights matrices, and various spatial econometric models, as well as estimation methods and inference. Further, the problem of omitted variables, a few computational and empirical aspects, the bootstrap procedure and the spatial J-test are presented. In addition, a discussion on hedonic house price models is included. In the first essay a comparison is made between spatial econometrics and time series analysis. By restricting the attention to unilateral spatial autoregressive processes, it is shown that a unilateral spatial autoregression, which enjoys similar properties as an autoregression with time series, can be defined. By an empirical study on house price data the second essay shows that it is possible to form coordinate-based, spatially autoregressive variables, which are at least to some extent able to replace the spatial structure in a spatial econometric model. In the third essay a strategy for specifying a k-nearest neighbours weights matrix by applying the spatial J-test is suggested, studied and demonstrated. In the final fourth essay the properties of the asymptotic spatial J-test are further examined. A simulation study shows that the spatial J-test can be used for distinguishing between general spatial models with different k-nearest neighbours weights matrices. A bootstrap spatial J-test is suggested to correct the size of the asymptotic test in small samples.

Angel Investing in Finland: An Analysis Based on Agency Theory and the Incomplete Contracting Theory

Wealthy individuals - business angels who invest a share of their net worth in entrepreneurial ventures - form an essential part of an informal venture capital market that can secure funding for entrepreneurial ventures. In Finland, business angels represent an untapped pool of capital that can contribute to fostering entrepreneurial development. In addition, business angels can bridge knowledge gaps in new business ventures by means of making their human capital available. This study has two objectives. The first is to gain an understanding of the characteristics and investment behaviour of Finnish business angels. The strongest focus here is on the due diligence procedures and their involvement post investment. The second objective is to assess whether agency theory and the incomplete contacting theory are useful theoretical lenses in the arena of business angels. To achieve the second objective, this study investigates i) how risk is mitigated in the investment process, ii) how uncertainty influences the comprehensiveness of due diligence as well as iii) how control is allocated post investment. Research hypotheses are derived from assumptions underlying agency theory and the incomplete contacting theory. The data for this study comprise interviews with 53 business angels. In terms of sample size this is the largest on Finnish business angels. The research hypotheses in this study are tested using regression analysis. This study suggests that the Finnish informal venture capital market appears to be comprised of a limited number of business angels whose style of investing much resembles their formal counterparts’. Much focus is placed on managing risks prior to making the investment by strong selectiveness and by a relatively comprehensive due diligence. The involvement is rarely on a day-to-day basis and many business angels seem to see board membership as a more suitable alternative than involvement in the operations of an entrepreneurial venture. The uncertainty involved does not seem to drive an increase in due diligence. On the contrary, it would appear that due diligence is more rigorous in safer later stage investments and when the business angels have considerable previous experience as investors. Finnish business angels’ involvement post investment is best explained by their degree of ownership in the entrepreneurial venture. It seems that when investors feel they are sufficiently rewarded, in terms of an adequate equity stake, they are willing to involve themselves actively in their investments. The lack of support for a relationship between increased uncertainty and the comprehensiveness of due diligence may partly be explained by an increasing trend towards portfolio diversification. This is triggered by a taxation system that favours investments through investment companies rather than direct investments. Many business angels appear to have substituted a specialization strategy that builds on reducing uncertainty for a diversification strategy that builds on reducing firm specific (idiosyncratic) risk by holding shares in ventures whose returns are not expected to exhibit a strong positive correlation.

Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

The Physical Strenuousness of Work is Slightly Associated with an Upward Trend in the Body Mass Index

This paper explores the relationship between the physical strenuousness of work and the body mass index in Finland, using individual microdata over the period 1972-2002. The data contain self-reported information about the physical strenuousness of a respondent’s current occupation. Our estimates show that the changes in the physical strenuousness of work can explain around 8% at most of the definite increase in BMI observed over the period. The main reason for this appears to be that the quantitative magnitude of the effect of the physical strenuousness of work on BMI is rather moderate. Hence, according to the point estimates, BMI is only around 1.5% lower when one’s current occupation is physically very demanding and involves lifting and carrying heavy objects compared with sedentary job (reference group of the estimations), other things being equal. Accordingly, the changes in eating habits and the amount of physical activity during leisure time must be the most important contributors to the upward trend in BMI in industrialised countries, but not the changes in the labour market structure.

Chronopotentiometry with power-law perturbation functions at an expanding plane electrode with and without a preceding blank period for systems with a coupled first-order homogeneous chemical reaction

The systems formalism is used to obtain the interfacial concentration transients for power-law current input at an expanding plane electrode. The explicit results for the concentration transients obtained here pertain to arbitrary homogeneous reaction schemes coupled to the oxidant and reductant of a single charge-transfer step and the power-law form without and with a preceding blank period (for two types of power-law current profile, say, (i) I(t) = I0(t−t0)q for t greater-or-equal, slanted t0, I(t) = 0 for t < t0; and (ii) I(t) = I0tq for t greater-or-equal, slanted t0, I(t) = 0 for t < t0). Finally the potential transients are obtained using Padé approximants. The results of Galvez et al. (for E, CE, EC, aC) (J. Electroanal. Chem., 132 (1982) 15; 146 (1983) 221, 233, 243), Molina et al. (for E) (J. Electroanal. Chem., 227 (1987) 1 and Kies (for E) (J. Electroanal. Chem., 45 (1973) 71) are obtained as special cases.

Photocatalytic degradation of nitrobenzenes with combustion synthesized nano-TiO2

The photocatalytic degradation of nitrobenzene and substituted nitrobenzenes under UV exposure was investigated with combustion synthesized nano-TiO2 and commercial TiO2 catalyst, Degussa P-25. The experimental data indicated that the photodegradation kinetics was first order. The photocatalytic degradation rates were considerably higher when catalyzed with combustion synthesized TiO2 compared to that of Degussa P-25. The degradation rate coefficients followed the order: 1-chloro,14-dinitrobenzene similar or equal to 4-nitrophenot > 2-nitrophenol > 1-chloro.4-nitrobenzene > 3-niti-ophenol > 2,4-dinitrophenol > 1-chloro,2-nitrobenzene > nitrobenzene > 1,3-dinitrobenzene. Plausible mechanisms and reasons for the observation of the above order are discussed.

International Portfolio Investments and The Informational Value of Trade

A large volume of literature suggests that information asymmetry resulting from the spatial separation between investors and investments have a significant impact on the composition of investors’ domestic and international portfolios. I show that institutional factors affecting trading in tangible goods help explain a substantial portion of investors’ spatial bias. More importantly, I demonstrate that an information flow medium with breadth and richness directly linked to the bilateral commitment of resources between countries, that I measure by their trading intensity in tangible goods, is consistent with the prevailing country allocation in investors’ international portfolios.

The Impact of FDI on International Portfolio Investments

Some empirical research has argued that part of the reason for the observed "home bias" is that investors are able to indirectly achieve internationally diversified portfolios via domestically listed multinational firms. Another branch of this research attributes the "home bias" and country allocations to more deeply rooted informational causes. Using a four-year annual panel of Finnish international portfolios and Foreign Direct Investments in twenty-five countries, I provide evidence consistent with an information asymmetry explanation

Flame retardant polyphosphate esters: 1. Condensation polymers of bisphenols with aryl phosphorodichloridates: synthesis, characterization and thermal studies

Polyphosphate esters were synthesized by the solution polycondensation of bisphenols with aryl phosphorodichloridates. The polymers were characterized by i.r. and 1H, 13C and 31P n.m.r. spectroscopy. The molecular weights were determined by end group analysis using 1H and 31P n.m.r. spectral data. The thermal stability of the polymers was analysed by thermogravimetry.

Flame retardant polyphosphate esters: 2. Condensation polymers of bisphenol A with alkyl phosphorodichloridates: synthesis, characterization and thermal studies

Polyphosphate esters based on bisphenol A and alkyl phosphorodichloridates have been synthesized and characterized by i.r. and n.m.r. spectroscopy. The molecular weights were calculated from 31P n.m.r. The thermal stability of the polymers were analysed by thermogravimetry.

Interaction of synthetic analogs of distamycin and netropsin with nucleic acids. Does curvature of ligand play a role in distamycin-DNA interactions?

Distamycin and netropsin, a class of minor groove binding nonintercalating agents, are characterized by their B-DNA and A-T basespecific interactions. To understand the CQI I ~OIT~ ~ I ~ ~aOnMd ~c hemical basis of the above specificities, the DNA-binding characteristics of a novel synthetic analogue of distamycin have been studied. The analogue, mPD derivative, has the requisite charged end groups and a number of potential hydrogen-bonding loci equal to those of distamycin. The difference in the backbone curvatures of the ligands, distamycin, the mPD derivative, and NSC 101327 (another structurally analogous compound),is a major difference between these ligands. UV and CD spectrosoopic studies reported here show the following salient features: The mPD derivative recognizes only B-DNA, to which it binds via the minor groove. On the other hand, unlike distamycin, it binds with comparable affinities to A-T and G-C base pairs in a natural DNA. These DNA-binding properties are compared with those reported earlier for distamycin and NSC 101327 [Zimmer, Ch., & Wahnert, U. (1986) Prog. Biophys. Mol. Biol. 47, 31-1121. The backbone structures of these three ligands were compared to show the progressive decrease in curvatures in the order distamycin, mPD derivative, and NSC 101327. The plausible significance of the backbone curvature vis-&vis the characteristic B-DNA and AT-specific binding of distamycin is discussed. To our knowledge, this is the first attempt (with a model synthetic analogue) to probe the possible influence of backbone curvature upon the specificity of interactions of the distamycin class of groove-binding ligands with DNA.

Perinatal mortality and maternal health in rural China

Background and context Since the economic reforms of 1978, China has been acclaimed as a remarkable economy, achieving 9% annual growth per head for more than 25 years. However, China's health sector has not fared well. The population health gains slowed down and health disparities increased. In the field of health and health care, significant progress in maternal care has been achieved. However, there still remain important disparities between the urban and rural areas and among the rural areas in terms of economic development. The excess female infant deaths and the rapidly increasing sex ratio at birth in the last decade aroused serious concerns among policy makers and scholars. Decentralization of the government administration and health sector reform impacts maternal care. Many studies using census data have been conducted to explore the determinants of a high sex ratio at birth, but no agreement has been so far reached on the possible contributing factors. No study using family planning system data has been conducted to explore perinatal mortality and sex ratio at birth and only few studies have examined the impact of the decentralization of government and health sector reforms on the provision and organization of maternal care in rural China. Objectives The general objective of this study was to investigate the state of perinatal health and maternal care and their determinants in rural China under the historic context of major socioeconomic reforms and the one child family planning policy. The specific objectives of the study included: 1) to study pregnancy outcomes and perinatal health and their correlates in a rural Chinese county; 2) to examine the issue of sex ratio at birth and its determinants in a rural Chinese county; 3) to explore the patterns of provision, utilization, and content of maternal care in a rural Chinese county; 4) to investigate the changes in the use of maternal care in China from 1991 to 2003. Materials and Methods This study is based on a project for evaluating the prenatal care programme in Dingyuan county in 1999-2003, Anhui province, China and a nationwide household health survey to describe the changes in maternal care utilization. The approaches used included a retrospective cohort study, cross sectional interview surveys, informant interviews, observations and the use of statistical data. The data sources included the following: 1) A cohort of pregnant women followed from pregnancy up to 7 days after birth in 20 townships in the study county, collecting information on pregnancy outcomes using family planning records; 2) A questionnaire interview survey given to women who gave birth between 2001 and 2003; 3) Various statistical and informant surveys data collected from the study county; 4) Three national household health interview survey data sets (1993-2003) were utilized, and reanalyzed to described the changes in maternity care utilization. Relative risks (RR) and their confidence intervals (CI) were calculated for comparison between parity, approval status, infant sex and township groups. The chi-square test was used to analyse the disparity of use of maternal care between and within urban and rural areas and its trend across the years in China. Logistic regression was used to analyse the factors associated with hospital delivery in rural areas. Results There were 3697 pregnancies in the study cohort, resulting in 3092 live births in a total population of 299463 in the 20 study townships during 1999-2000. The average age at pregnancy in the cohort was 25.9 years. Of the women, 61% were childless, 38% already had one child and 0.3% had two children before the current pregnancy. About 90% of approved pregnancies ended in a live birth while 73% of the unapproved ones were aborted. The perinatal mortality rate was 69 per thousand births. If the 30 induced abortions in which the gestational age was more than 28 weeks had been counted as perinatal deaths, the perinatal mortality rate would have been as high as 78 per thousand. The perinatal mortality rate was negatively associated with the wealth of the township. Approximately two thirds of the perinatal deaths occurred in the early neonatal period. Both the still birth rate and the early neonatal death rate increased with parity. The risk of a stillbirth in a second pregnancy was almost four times that for a first pregnancy, while the risk of early neonatal deaths doubled. The early neonatal mortality rate was twice as high for female as for male infants. The sex difference in the early neonatal mortality rate was mainly attributable to mortality in second births. The male early neonatal mortality rate was not affected by parity, while the female early neonatal mortality rate increased dramatically with parity: it was about six times higher for second births than for first births. About 82% early neonatal deaths happened within 24 hours after birth, and during that time, girls were almost three times more likely to die than boys. The death rate of females on the day of birth increased much more sharply with parity than that of males. The total sex ratio at birth of 3697 registered pregnancies was 152 males to 100 females, with 118 and 287 in first and second pregnancies, respectively. Among unapproved pregnancies, there were almost 5 live-born boys for each girl. Most prenatal and delivery care was to be taken care of in township hospitals. At the village level, there were small private clinics. There was no limitation period for the provision of prenatal and postnatal care by private practitioners. They were not permitted to provide delivery care by the county health bureau, but as some 12% of all births occurred either at home or at private clinics; some village health workers might have been involved. The county level hospitals served as the referral centers for the township hospitals in the county. However, there was no formal regulation or guideline on how the referral system should work. Whether or not a woman was referred to a higher level hospital depended on the individual midwife's professional judgment and on the clients' compliance. The county health bureau had little power over township hospitals, because township hospitals had in the decentralization process become directly accountable to the township government. In the township and county hospitals only 10-20% of the recurrent costs were funded by local government (the township hospital was funded by the township government and the county hospital was funded by the county government) and the hospitals collected user fees to balance their budgets. Also the staff salaries depended on fee incomes by the hospital. The hospitals could define the user charges themselves. Prenatal care consultations were however free in most township hospitals. None of the midwives made postnatal home visits, because of low profit of these services. The three national household health survey data showed that the proportion of women receiving their first prenatal visit within 12 weeks increased greatly from the early to middle 1990s in all areas except for large cities. The increase was much larger in the rural areas, reducing the urban-rural difference from more than 4 times to about 1.4 times. The proportion of women that received antenatal care visits meeting the Ministry of Health s standard (at least 5 times) in the rural areas increased sharply from 12% in 1991-1993 to 36% in 2001-2003. In rural areas, the proportion increase was much faster in less developed areas than in developed areas. The hospital delivery rate increased slightly from 90% to 94% in urban areas while the proportion increased from 27% to 69% in rural areas. The fastest change was found to be in type 4 rural areas, where the utilization even quadrupled. The overall difference between rural and urban areas was substantially narrowed over the period. Multiple logistic regression analysis shows that time periods, residency in rural or urban areas, income levels, age group, education levels, delivery history, occupation, health insurance and distance from the nearest health care facilities were significantly associated with hospital delivery rates. Conclusions 1. Perinatal mortality in this study was much higher than that for urban areas as well as any reported rate from specific studies in rural areas of China. Previous studies in which calculations of infant mortality were not based on epidemiological surveys have been shown to underestimate the rates by more than 50%. 2. Routine statistics collected by the Chinese family planning system proved to be a reliable data source for studying perinatal health, including still births, neonatal deaths, sex ratio at birth and among newborns. National Household Health Survey data proved to be a useful and reliable data source for studying population health and health services. Prior to this research there were few studies in these areas available to international audiences. 3.Though perinatal mortality rate was negatively associated with the level of township economic development, the excess female early neonatal mortality rate contributed much more to high perinatal mortality rate than economic factors. This was likely a result of the role of the family planning policy and the traditional preferences for sons, which leads to lethal neglect of female newborns and high perinatal mortality. 4. The selective abortions of female foetuses were likely to contribute most to the high sex ratio at birth. The underreporting of female births seemed to have played a secondary role. The higher early neonatal mortality rate in second-born as compared to first-born children, particularly in females, may indicate that neglect or poorer care of female newborn infants also contributes to the high sex ratio at birth or among newborns. Existing family planning policy proved not to effectively control the steadily increased birth sex ratio. 5. The rural-urban gap in service utilization was on average significantly narrowed in terms of maternal healthcare in China from 1991 to 2003. This demonstrates that significant achievements in reducing inequities can be made through a combination of socio-economic development and targeted investments in improving health services, including infrastructure, staff capacities, and subsidies to reduce the costs of service utilization for the poorest. However, the huge gap which persisted among cities of different size and within different types of rural areas indicated the need for further efforts to support the poorest areas. 6. Hospital delivery care in the study county was better accepted by women because most of women think delivery care was very important while prenatal and postnatal care were not. Hospital delivery care was more systematically provided and promoted than prenatal and postnatal care by township hospital in the study area. The reliance of hospital staff income on user fees gave the hospitals an incentive to put more emphasis on revenue generating activities such as delivery care instead of prenatal and postnatal care, since delivery care generated much profits than prenatal and postnatal care . Recommendations 1. It is essential for the central government to re-assess and modify existing family planning policies. In order to keep national sex balance, the existing practice of one couple one child in urban areas and at-least-one-son a couple in rural areas should be gradually changed to a two-children-a-couple policy throughout the country. The government should establish a favourable social security policy for couples, especially for rural couples who have only daughters, with particular emphasis on their pension and medical care insurance, combined with an educational campaign for equal rights for boys and girls in society. 2. There is currently no routine vital-statistics registration system in rural China. Using the findings of this study, the central government could set up a routine vital-statistics registration system using family planning routine work records, which could be used by policy makers and researchers. 3. It is possible for the central and provincial government to invest more in the less developed and poor rural areas to increase the access of pregnant women in these areas to maternal care services. Central government together with local government should gradually provide free maternal care including prenatal and postnatal as well as delivery care to the women in poor and less developed rural areas. 4. Future research could be done to explore if county and the township level health care sector and the family planning system could be merged to increase the effectiveness and efficiency of maternal and child care. 5. Future research could be done to explore the relative contribution of maternal care, economic development and family planning policy on perinatal and child health using prospective cohort studies and community based randomized trials. Key words: perinatal health, perinatal mortality, stillbirth, neonatal death, sex selective abortion, sex ratio at birth, family planning, son preference, maternal care, prenatal care, postnatal care, equity, China

Practical Proposals for Specifying k-Nearest Neighbours Weights Matrices

In this article we introduce and evaluate testing procedures for specifying the number k of nearest neighbours in the weights matrix of spatial econometric models. The spatial J-test is used for specification search. Two testing procedures are suggested: an increasing neighbours testing procedure and a decreasing neighbours testing procedure. Simulations show that the increasing neighbours testing procedures can be used in large samples to determine k. The decreasing neighbours testing procedure is found to have low power, and is not recommended for use in practice. An empirical example involving house price data is provided to show how to use the testing procedures with real data.

Optimal Receive Antenna Selection in Time-Varying Fading Channels with Practical Training Constraints

Hardware constraints, which motivate receive antenna selection, also require that various antenna elements at the receiver be sounded sequentially to obtain estimates required for selecting the `best' antenna and for coherently demodulating data thereafter. Consequently, the channel state information at different antennas is outdated by different amounts and corrupted by noise. We show that, for this reason, simply selecting the antenna with the highest estimated channel gain is not optimum. Rather, a preferable strategy is to linearly weight the channel estimates of different antennas differently, depending on the training scheme. We derive closed-form expressions for the symbol error probability (SEP) of AS for MPSK and MQAM in time-varying Rayleigh fading channels for arbitrary selection weights, and validate them with simulations. We then characterize explicitly the optimal selection weights that minimize the SEP. We also consider packet reception, in which multiple symbols of a packet are received by the same antenna. New suboptimal, but computationally efficient weighted selection schemes are proposed for reducing the packet error rate. The benefits of weighted selection are also demonstrated using a practical channel code used in third generation cellular systems. Our results show that optimal weighted selection yields a significant performance gain over conventional unweighted selection.