Valuing Flexibility: The case of an Integrated Gasification Combined Cycle Power Plant

In this paper we analyze the valuation of options stemming from the flexibility in an Integrated Gasification Combined Cycle (IGCC) Power Plant. First we use as a base case the opportunity to invest in a Natural Gas Combined Cycle (NGCC) Power Plant, deriving the optimal investment rule as a function of fuel price and the remaining life of the right to invest. Additionally, the analytical solution for a perpetual option is obtained. Second, the valuation of an operating IGCC Power Plant is studied, with switching costs between states and a choice of the best operation mode. The valuation of this plant serves as a base to obtain the value of the option to delay an investment of this type. Finally, we derive the value of an opportunity to invest either in a NGCC or IGCC Power Plant, that is, to choose between an inflexible and a flexible technology, respectively. Numerical computations involve the use of one- and two-dimensional binomial lattices that support a mean-reverting process for the fuel prices. Basic parameter values refer to an actual IGCC power plant currently in operation.

Unions, Monetary Shocks and the Labour Market Cycle

Published as an article in: Economic Modelling, 2011, vol. 28, issue 3, pages 1140-1149.

Employment comovements at the sectoral level over the business cycle

This paper extends the technique suggested by den Haan (2000) to investigate contemporaneous as well as lead and lag correlations among economic data for a range of forecast horizons. The technique provides a richer picture of the economic dynamics generating the data and allows one to investigate which variables lead or lag others and whether the lead or lag pattern is short term or long term in nature. The technique is applied to monthly sectoral level employment data for the U.S. and shows that among the ten industrial sectors followed by the U.S. Bureau of Labor Statistics, six tend to lead the other four. These six have high correlations indicating that the structural shocks generating the data movements are mostly in common. Among the four lagging industries, some lag by longer intervals than others and some have low correlations with the leading industries indicating that these industries are partially influenced by structural shocks beyond those generating the six leading industries.

Cyclical Features of Uzawa-Lucas Endogenous Growth Model

This paper analyzes the cyclical properties of a generalized version of Uzawa-Lucas endogenous growth model. We study the dynamic features of different cyclical components of this model characterized by a variety of decomposition methods. The decomposition methods considered can be classified in two groups. On the one hand, we consider three statistical filters: the Hodrick-Prescott filter, the Baxter-King filter and Gonzalo-Granger decomposition. On the other hand, we use four model-based decomposition methods. The latter decomposition procedures share the property that the cyclical components obtained by these methods preserve the log-linear approximation of the Euler-equation restrictions imposed by the agent’s intertemporal optimization problem. The paper shows that both model dynamics and model performance substantially vary across decomposition methods. A parallel exercise is carried out with a standard real business cycle model. The results should help researchers to better understand the performance of Uzawa-Lucas model in relation to standard business cycle models under alternative definitions of the business cycle.

Optimal Fiscal Policy with Rationing in the Labor Market

Published as an article in: Topics in Macroeconomics, 2005, vol. 5, issue 1, article 17.

Activation of violaxanthin cycle in darkness is a common response to different abiotic stresses : a case study in Pelvetia canaliculata

Background: In the violaxanthin (V) cycle, V is de-epoxidized to zeaxanthin (Z) when strong light or light combined with other stressors lead to an overexcitation of photosystems. However, plants can also suffer stress in darkness and recent reports have shown that dehydration triggers V-de-epoxidation in the absence of light. In this study, we used the highly stress-tolerant brown alga Pelvetia canaliculata as a model organism, due to its lack of lutein and its non-photochemical quenching independent of the transthylakoidal-ΔpH, to study the triggering of the V-cycle in darkness induced by abiotic stressors. Results: We have shown that besides desiccation, other factors such as immersion, anoxia and high temperature also induced V-de-epoxidation in darkness. This process was reversible once the treatments had ceased (with the exception of heat, which caused lethal damage). Irrespective of the stressor applied, the resulting de-epoxidised xanthophylls correlated with a decrease in Fv/Fm, suggesting a common function in the down-regulation of photosynthetical efficiency. The implication of the redox-state of the plastoquinone-pool and of the differential activity of V-cycle enzymes on V-de-epoxidation in darkness was also examined. Current results suggest that both violaxanthin de-epoxidase (VDE) and zeaxanthin-epoxidase (ZE) have a basal constitutive activity even in darkness, being ZE inhibited under stress. This inhibition leads to Z accumulation. Conclusion: This study demonstrates that V-cycle activity is triggered by several abiotic stressors even when they occur in an absolute absence of light, leading to a decrease in Fv/Fm. This finding provides new insights into an understanding of the regulation mechanism of the V-cycle and of its ecophysiological roles.