An econometric analysis of private-sector investment in Brazil

Includes bibliography

Risk/investment-driven transmission expansion planning with multiple scenarios

This study presents a new methodology based on risk/investment to solve transmission network expansion planning (TNEP) problem with multiple future scenarios. Three mathematical models related to TNEP problems considering multiple future generation and load scenarios are also presented. These models will provide planners with a meaningful risk assessment that enable them to determine the necessary funding for transmission lines at a permissible risk level. The results using test and real systems show that the proposed method presents better solutions compared with scenario analysis method. ©The Institution of Engineering and Technology 2013.

Multicollinearity and financial constraint in investment decisions: a bayesian generalized ridge regression

This paper addresses the investment decisions considering the presence of financial constraints of 373 large Brazilian firms from 1997 to 2004, using panel data. A Bayesian econometric model was used considering ridge regression for multicollinearity problems among the variables in the model. Prior distributions are assumed for the parameters, classifying the model into random or fixed effects. We used a Bayesian approach to estimate the parameters, considering normal and Student t distributions for the error and assumed that the initial values for the lagged dependent variable are not fixed, but generated by a random process. The recursive predictive density criterion was used for model comparisons. Twenty models were tested and the results indicated that multicollinearity does influence the value of the estimated parameters. Controlling for capital intensity, financial constraints are found to be more important for capital-intensive firms, probably due to their lower profitability indexes, higher fixed costs and higher degree of property diversification.

Educational Investment, Family Context, and Children’s Math and Reading Growth from Kindergarten through the Third Grade

Drawing on longitudinal data from the Early Childhood Longitudinal Study, Kindergarten Class of 1998–1999, this study used IRT modeling to operationalize a measure of parental educational investments based on Lareau’s notion of concerted cultivation. It used multilevel piecewise growth models regressing children’s math and reading achievement from entry into kindergarten through the third grade on concerted cultivation and family context variables. The results indicate that educational investments are an important mediator of socioeconomic and racial/ethnic disparities, completely explaining the black-white reading gap at kindergarten entry and consistently explaining 20 percent to 60 percent and 30 percent to 50 percent of the black-white and Hispanic-white disparities in the growth parameters, respectively, and approximately 20 percent of the socioeconomic gradients. Notably, concerted cultivation played a more significant role in explaining racial/ethnic gaps in achievement than expected from Lareau’s discussion, which suggests that after socioeconomic background is controlled, concerted cultivation should not be implicated in racial/ethnic disparities in learning.

Lumpiness, capital adjustment costs and investment dynamics

Aggregate investment in the US economy displays a hump-shaped pattern in response to shocks, and the autocorrelation of aggregate investment growth is positive for the first few quarters, turning negative for the later quarters. This paper shows that this feature of the data is the natural outcome of a two-sector consumption/investment model designed and calibrated to reproduce plant-level evidence on capita: accumulation. (C) 2012 Elsevier B.V. All rights reserved.

The Impact of Foreign Direct Investment on Economic Growth

Over the past four decades, the number of democracies in the world has increased exponentially. This project considers how democracy and FDI affect economic growth as well as whether the impact of FDI depends on the level of democracy in a country. Thus, I explore two major research questions: 1) Whether increased FDI speeds up economic growth, controlling for political regime type, urbanization and other developmental indicators; and 2) Whether an increase in political freedom helps or hinders economic growth, and specifically whether the impact of FDI varies depending on the political regime in the recipient country. To examine these questions, this paper used data from 150 countries over a period between 1980 and 2010 and utilized several models, testing variables such as institutions, agglomerations, urbanization, FDI and type of political regime, among others, for their impact on economic growth. I found that FDI does have a positive impact on economic growth, and that this impact is often magnified when it interacts with other relevant factors. I also found that, after controlling for other variables, FDI inflows do not have a different impact on economic growth in autocracies than they do in democracies. This may be partially explained by autocratic outliers such as China and the OPEC states, which have recently experienced rapid export-led growth. This suggests that factors such as education could have a greater impact on a country¿s economic growth than does its political system.

Efforts and Models of Education for Parents: the Danish Approach

The report examines the relationship between day care institutions, schools and so called “parents unfamiliar to education” as well as the relationship between the institutions. With in Danish public and professional discourse concepts like parents unfamiliar to education are usually referring to environments, parents or families with either no or just very restricted experience of education except for the basic school (folkeskole). The “grand old man” of Danish educational research, Prof. Em. Erik Jørgen Hansen, defines the concept as follows: Parents who are distant from or not familiar with education, are parents without tradition of education and by that fact they are not able to contribute constructively in order to back up their own children during their education. Many teachers and pedagogues are not used to that term; they rather prefer concepts like “socially exposed” or “socially disadvantaged” parents or social classes or strata. The report does not only focus on parents who are not capable to support the school achievements of their children, since a low level of education is usually connected with social disadvantage. Such parents are often not capable of understanding and meeting the demands from side of the school when sending their children to school. They lack the competencies or the necessary competence of action. For the moment being much attention is done from side of the Ministries of Education and Social Affairs (recently renamed Ministry of Welfare) in order to create equal possibilities for all children. Many kinds of expertise (directions, counsels, researchers, etc.) have been more than eager to promote recommendations aiming at achieving the ambitious goal: 2015 95% of all young people should complement a full education (classes 10.-12.). Research results are pointing out the importance of increased participation of parents. In other word the agenda is set for ‘parents’ education’. It seems necessary to underline that Danish welfare policy has been changing rather radical. The classic model was an understanding of welfare as social assurance and/or as social distribution – based on social solidarity. The modern model looks like welfare as social service and/or social investment. This means that citizens are changing role – from user and/or citizen to consumer and/or investor. The Danish state is in correspondence with decisions taken by the government investing in a national future shaped by global competition. The new models of welfare – “service” and “investment” – imply severe changes in hitherto known concepts of family life, relationship between parents and children etc. As an example the investment model points at a new implementation of the relationship between social rights and the rights of freedom. The service model has demonstrated that weakness that the access to qualified services in the field of health or education is becoming more and more dependent of the private purchasing power. The weakness of the investment model is that it represents a sort of “The Winner takes it all” – since a political majority is enabled to make agendas in societal fields former protected by the tripartite power and the rights of freedom of the citizens. The outcome of the Danish development seems to be an establishment of a political governed public service industry which on one side are capable of competing on market conditions and on the other are able being governed by contracts. This represents a new form of close linking of politics, economy and professional work. Attempts of controlling education, pedagogy and thereby the population are not a recent invention. In European history we could easily point at several such experiments. The real news is the linking between political priorities and exercise of public activities by economic incentives. By defining visible goals for the public servants, by introducing measurement of achievements and effects, and by implementing a new wage policy depending on achievements and/or effects a new system of accountability is manufactured. The consequences are already perceptible. The government decides to do some special interventions concerning parents, children or youngsters, the public servants on municipality level are instructed to carry out their services by following a manual, and the parents are no longer protected by privacy. Protection of privacy and minority is no longer a valuable argumentation to prevent further interventions in people’s life (health, food, school, etc.). The citizens are becoming objects of investment, also implying that people are investing in their own health, education, and family. This means that investments in changes of life style and development of competences go hand in hand. The below mentioned programmes are conditioned by this shift.

Cost Improvements, Returns to Scale, and Cost Inefficiencies for Real Estate Investment Trusts

This paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate stochastic-frontier, panel-data models specifying a translog cost function. The specified model updates the cost frontier with new information as it becomes available over time. The model can identify frontier cost improvements, returns to scale, and cost inefficiencies over time. The results disagree with most previous research in that we find no evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, higher leverage associates with more efficiency.

The Value of Waiting: Foreign Direct Investment with Uncertainty and Imperfect Local Knowledge

This paper examines the role of uncertainty and imperfect local knowledge in foreign direct investment. The main idea comes from the literature on investment under uncertainty, such as Pindyck (1991) and Dixit and Pindyck (1994). We empirically test .the value of waiting. with a dataset on foreign direct investment (FDI). Many factors (e.g., political and economic regulations) as well as uncertainty and the risks due to imperfect local knowledge, determine the attractiveness of FDI. The uncertainty and irreversibility of FDI links the time interval between permission and actual execution of such FDI with explanatory variables, including information on foreign (home) countries and domestic industries. Common factors, such as regulatory change and external shocks, may affect the uncertainty when foreign investors make irreversible FDI decisions. We derive testable hypotheses from models of investment under uncertainty to determine those possible factors that induce delays in FDI, using Korean data over 1962 to 2001.

Theoretical Models Based on a Flowchart Approach to Industrial Cluster Policy

This article examined the issue of whether or not the currency exchange rate, country risk, and cooperate tax rate affect decisions of multinational firms to invest in industrial clusters. First, if the exchange rate between a multinational company in an industry of diminishing returns to scale and a developing country is appreciated, then production in the developing country should increase. Second, if the investment period becomes longer, the currency exchange rate of a multinational company's country should be revalued more in order for it to further invest in the developing country. Third, if the investment period becomes longer, the developing country's risk should become less. Fourth, compensation for the developing country's high risk can be made by lowering its corporate tax rate.

Export platform foreign direct investment : theory and evidence

This paper proposes a model that accounts for “export platform” FDI – a form of FDI that is common in the data but rarely discussed in the theoretical literature. Unlike the previous literature, this paper’s theory nests all the typical modes of supply, including exports, horizontal and vertical FDI, horizontal and vertical export platform FDI. The theory yields the testable hypothesis that a decrease in either inter-regional or intra-regional trade costs induces firms to choose export platform FDI. The empirical analysis provides descriptive statistics which point to large proportions of third country exports of US FDI, and an econometric analysis, whose results are in line with the model’s predictions. The last section suggests policy implications for nations seeking to attract FDI.

FDI and investment barriers in developing economies

Does investment liberalization in developing economies affect FDI decisions differently across individual firms? To address this question, we simulate the response of individual firms to reductions in investment costs across developing economies. We explore two policy experiments: elimination of setup-procedure requirements for foreign investors and a reduction in corporate tax rates on foreign-owned multinationals. We find that a relaxing of discriminatory foreign investment procedures induces middle productive firms to increase their entry and production in developing economies substantially, but the most productive firms to expand moderately. Multinationals expand their entry and production in developing economies more substantially following a decline in entry barriers than following a decrease in corporate tax rates.

Innnovation and new business models for the regional development: travel and transportation

Regional development could present different strategies: •Relocation of industry clusters •Foreign Direct Investment attraction •Innovation based on new business models The Regional Government of Madrid (3rd largest GDP in the EU) selected strategic industries to compete & innovate: •Travel & Transportation •Aerospace •Nanotech. & •Biotech. •ICTs. •Energy

Instability of signaling resolution models of parent–offspring conflict

Recent signaling resolution models of parent–offspring conflict have provided an important framework for theoretical and empirical studies of communication and parental care. According to these models, signaling of need is stabilized by its cost. However, our computer simulations of the evolutionary dynamics of chick begging and parental investment show that in Godfray’s model the signaling equilibrium is evolutionarily unstable: populations that start at the signaling equilibrium quickly depart from it. Furthermore, the signaling and nonsignaling equilibria are linked by a continuum of equilibria where chicks above a certain condition do not signal and we show that, contrary to intuition, fitness increases monotonically as the proportion of young that signal decreases. This result forces us to reconsider much of the current literature on signaling of need and highlights the need to investigate the evolutionary stability of signaling equilibria based on the handicap principle.

Banking Business Models Monitor 2014: Europe. CEPS Paperbacks, 14 October 2014

CEPS and the International Observatory on Financial Services Cooperatives (IOFSC) at HEC Montreal have initiated an annual monitoring exercise on banking business models in the EU. Based on their balance sheet structures, 147 European banks that account for more than 80% of the industry assets were categorised in four business models. The Monitor emphasises the ownership structures and assesses the financial and economic performance, resilience and robustness, before, during and after the financial and economic crises across retail diversified-, retail focused-, investment-, and wholesale oriented banks. Inter alia, this edition of the Monitor finds that banks that engage more in traditional retail banking activities with a mix of funding sources fared well as compared to other bank models during the different phases of the crisis.