Power system capacity expansion planning model considering carbon emissions constraints

This paper presents a power system capacity expansion planning modelconsidering carbon emissions constraints. In addition to the traditionaltechnical and economical issues usually considered in the planning process, two environmental policies that consist on the taxation and the annual limitsof carbon dioxide (CO 2) emissions are considered. Furthermore, the gradualretirement of old inefficient generation plants has been included. The approachguarantees a cleaner electricity production in the expanded power system ata relatively low cost. The proposed model considers the transmission systemand is applied to a 4-region and 11-region power systems over a 20-yearplanning horizon. Results show practical investment decisions in terms of sustainability and costs.

Integration in Latin America - Trends and Challenges

Regional trade agreements have had a significant presence in the design of international and productive policies in Latin American and Caribbean countries since the early 1950s. Fifty years later, the region has not reached the degree of economic inter-relation found, for instance, in Western Europe, but the concern with promoting regional integration has been a tradition in an impressive amount of speeches and declarations by policy makers in the last decades. The weakening of multilateral negotiations and the multiplicity of bilateral agreements with countries in other regions might affect regional trade both via trade diversion and through investment decisions, considering a larger time horizon. International capital movement might affect exchange rates and output growth, hence influencing trade. At the same time the need for new, broader negotiating agenda, from simply dealing with trade issues to taking into consideration topics not directly related to trade but rather to competition, labour standards, environmental issues and others increase the difficulties in designing integration strategies. Even more so if the group of countries that aim at integrating their economies present markedly different characteristics. This article – an extension of a presentation made at the German Development Institute Conference on Regional Economic Integration Beyond Europe held in Bonn in December, 2007 - discusses these and other aspects related to regional integration in Latin America and the Caribbean.

An economic assessment of the impact of climate change on the health sector in Montserrat

Climate change has the potential to impact on global, regional, and national disease burdens both directly and indirectly. Projecting and valuing these health impacts is important not only in terms of assessing the overall impact of climate change on various parts of the world, but also in terms of ensuring that national and regional decision-making institutions have access to the data necessary to guide investment decisions and future policy design. This report contributes to the research focusing on projecting and valuing the impacts of climate change in the Caribbean by projecting the climate change-induced excess disease burden for two climate change scenarios in Montserrat for the period 2010 - 2050, and by estimating the monetary value associated with this excess disease burden. The diseases initially considered in this report are variety of vector and water-borne impacts and other miscellaneous conditions; specifically, malaria, dengue fever, gastroenteritis/diarrheal disease, schistosomiasis, leptospirosis, ciguatera poisoning, meningococcal meningitis, and cardio-respiratory diseases. Disease projections were based on derived baseline incidence and mortality rates, available dose-response relationships found in the published literature, climate change scenario population projections for the A2 and B2 IPCC SRES scenario families, and annual temperature and precipitation anomalies as projected by the downscaled ECHAM4 global climate model. Monetary valuation was based on a transfer value of statistical life approach with a modification for morbidity. Using discount rates of 1%, 2% and 4%, results show mean annual costs (morbidity and mortality) ranges of $0.61 million (in the B2 scenario, discounted at 4% annually) – $1 million (in the A2 scenario, discounted at 1% annually) for Montserrat. These costs are compared to adaptation cost scenarios involving increased direct spending on per capita health care. This comparison reveals a high benefit-cost ratio suggesting that moderate costs will deliver significant benefit in terms of avoided health burdens in the period 2010-2050. The methodology and results suggest that a focus on coordinated data collection and improved monitoring represents a potentially important no regrets adaptation strategy for Montserrat. Also the report highlights the need for this to be part of a coordinated regional response that avoids duplication in spending.

An assessment of the economic impact Of climate change on the health sector in Saint Lucia

Climate change has the potential to impact on global, regional, and national disease burdens both directly and indirectly. Projecting and valuing these health impacts is important not only in terms of assessing the overall impact of climate change on various parts of the world, but also of ensuring that national and regional decision-making institutions have access to the data necessary to guide investment decisions and future policy design. This report contributes to the research focusing on projecting and valuing the impacts of climate change in the Caribbean by projecting the climate change-induced excess disease burden for two climate change scenarios in Saint Lucia for the period 2010 - 2050, and by estimating the non-market, statistical life-based costs associated with this excess disease burden. The diseases initially considered in this report are a variety of vector and water-borne impacts and other miscellaneous conditions; specifically, malaria, dengue fever, gastroenteritis/diarrhoeal disease, schistosomiasis, leptospirosis, ciguatera poisoning, meningococcal meningitis, and cardio-respiratory diseases. Disease projections were based on derived baseline incidence and mortality rates, available dose-response relationships found in the published literature, climate change scenario population projections for the A2 and B2 IPCC SRES scenario families, and annual temperature and precipitation anomalies as projected by the downscaled ECHAM4 global climate model. Monetary valuation was based on a transfer value of statistical life approach with a modification for morbidity. Using discount rates of 1, 2, and 4%, results show mean annual costs (morbidity and mortality) ranges of $80.2 million (in the B2 scenario, discounted at 4% annually) -$182.4 million (in the A2 scenario, discounted at 1% annually) for St. Lucia.1 These costs are compared to adaptation cost scenarios involving direct and indirect interventions in health care. This comparison reveals a high benefit-cost ratio suggesting that moderate costs will deliver significant benefit in terms of avoided health costs from 2010-2050. In this context indirect interventions target sectors other than healthcare (e.g. water supply). It is also important to highlight that interventions can target both the supply of health infrastructure (including health status and disease monitoring), and households. It is suggested that a focus on coordinated data collection and improved monitoring represents a potentially important no regrets adaptation strategy for St Lucia. Also, the need for this to be part of a coordinated regional response that avoids duplication in spending is highlighted.

Diabete e gravidez: estudo prospectivo do custo benefício da hospilização comparado com atenção ambulatorial

Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES)

As decisões de investimento e a instabilidade financeira

Initially, the text handles the theories of ancient classical and changes with the emerging of the debates of the schools of economic of Keynes and Kalecki. Over the years, from 1930 onwards, investment theories were debated and modified by various schools of economic thought. One of the debates that stands out in this work are the theories of Minsky that will bring new reformulations to Keynesian theory and a greater focus on psychological factors as determinants of investment decisions. Through financial instability hypothesis Minsky explains how the decisions to invest and the access to credit cause instability to financial system. Finally the work will show how access to credit is material when companies decide to invest and how these investments are often handled due to information asymmetries in the market. The financial institutions seek to maximize their profits while dribbling moral hazard and adverse selection, and thus the government needs to intervene once in a while as a regulator to maintain the solvency of the system

Health and Growth: Causality through Education

Purpose--The paper theoretically and empirically investigates the impact on human capital investment decisions and income growth of lowered life expectancy as a result of HIV/AIDS and other diseases. Design/methodology/approach--The theoretical model is a three-period overlapping generations model where individuals go through three stages in their life, namely, young, adult and old. The model extends existing theoretical models by allowing the probability of premature death to differ for individuals at different life stage, and by allowing for stochastic technological advances. The empirical investigation focuses on the effect of HIV/AIDS on life expectancy and on the role of health on educational investments and growth. We address potential endogeneity by using various strategies, such as controlling for country specific time-invariant unobservables and by using the male circumcision rate as an instrumental variable for HIV/AIDS prevalence. Findings--We show theoretically that an increased probability of premature death leads to less investment in human capital, and consequently slower growth. Empirically we show that HIV/AIDS has resulted in a substantial decline in life expectancy in African countries and these falling life expectancies are indeed associated with lower educational attainment and slower economic growth world wide. Originality/value--The theoretical and empirical findings reveal a causal link flowing from health to growth, which has been largely overlooked by the existing literature. The main implication is that health investments, that decrease the incidence of diseases like HIV/AIDS resulting on increases in life expectancy, through its complementarity with human capital investments lead to long run growth..

Decisões de investimento em ativos de longo prazo nas empresas brasileiras: Qual a aderência ao modelo teórico?

O objetivo deste estudo foi verificar como as organizações brasileiras de grande porte tratam investimentos de longo prazo. O constructo teórico levou em conta tanto a literatura de estratégia quanto a de finanças, a partir das quais foram propostas hipóteses envolvendo a utilização de métodos e mecanismos para avaliação de investimentos. Por meio de um questionário eletrônico, desenvolveu-se um levantamento junto a 82 empresas, e, com o emprego da técnica de modelagem de equações estruturais, constatou-se aderência parcial ao modelo teórico. Dentre os achados, verificou-se que os mecanismos de análise de investimentos estão associados positivamente à preocupação com a análise do risco percebido. Em adição, constatou-se que projetos aprovados no planejamento estratégico apresentam acompanhamento relativamente mais estruturado e que a maior necessidade de definição de financiamento e custo de oportunidade está associada positivamente à inclusão do projeto no planejamento estratégico.

Corporate Venture Capital: How established firms use external resources to create new competencies

This Doctoral Dissertation is triggered by an emergent trend: firms are increasingly referring to investments in corporate venture capital (CVC) as means to create new competencies and foster the search for competitive advantage through the use of external resources. CVC is generally defined as the practice by non-financial firms of placing equity investments in entrepreneurial companies. Thus, CVC can be interpreted (i) as a key component of corporate entrepreneurship - acts of organizational creation, renewal, or innovation that occur within or outside an existing organization– and (ii) as a particular form of venture capital (VC) investment where the investor is not a traditional and financial institution, but an established corporation. My Dissertation, thus, simultaneously refers to two streams of research: corporate strategy and venture capital. In particular, I directed my attention to three topics of particular relevance for better understanding the role of CVC. In the first study, I moved from the consideration that competitive environments with rapid technological changes increasingly force established corporations to access knowledge from external sources. Firms, thus, extensively engage in external business development activities through different forms of collaboration with partners. While the underlying process common to these mechanisms is one of knowledge access, they are substantially different. The aim of the first study is to figure out how corporations choose among CVC, alliance, joint venture and acquisition. I addressed this issue adopting a multi-theoretical framework where the resource-based view and real options theory are integrated. While the first study mainly looked into the use of external resources for corporate growth, in the second work, I combined an internal and an external perspective to figure out the relationship between CVC investments (exploiting external resources) and a more traditional strategy to create competitive advantage, that is, corporate diversification (based on internal resources). Adopting an explorative lens, I investigated how these different modes to renew corporate current capabilities interact to each other. More precisely, is CVC complementary or substitute to corporate diversification? Finally, the third study focused on the more general field of VC to investigate (i) how VC firms evaluate the patent portfolios of their potential investee companies and (ii) whether the ability to evaluate technology and intellectual property varies depending on the type of investors, in particular for what concern the distinction between specialized versus generalist VCs and independent versus corporate VCs. This topic is motivated by two observations. First, it is not clear yet which determinants of patent value are primarily considered by VCs in their investment decisions. Second, VCs are not all alike in terms of technological experiences and these differences need to be taken into account.

Financial decision making about found oil and gas in Ghana : real options vs. traditional methods

This research is a study of the use of capital budgeting methods for investment decisions. It uses both the traditional methods and the newly introduced approach called the real options analysis to make a decision. The research elucidates how capital budgeting can be done when analysts encounter projects with high uncertainty and are capital intensive, for example oil and gas production. It then uses the oil and gas find in Ghana as a case study to support its argument. For a clear understanding a thorough literature review was done, which highlights the advantages and disadvantages of both methods. The revenue that the project will generate and the costs of production were obtained from the predictions by analysts from GNPC and compared to others experts’ opinion. It then applied both the traditional and real option valuation on the oil and gas find in Ghana to determine the project’s feasibility. Although, there are some short falls in real option analysis that are presented in this research, it is still helpful in valuing projects that are capital intensive with high volatility due to the strategic flexibility management possess in their decision making. It also suggests that traditional methods of evaluation should still be maintained and be used to value projects that have no options or those with options yet the options do not have significant impact on the project. The research points out the economic ripples the production of oil and gas will have on Ghana’s economy should the project be undertaken. These ripples include economic growth, massive job creation and reduction of the balance of trade deficit for the country. The long run effect is an eventually improvement of life of the citizens. It is also belief that the production of gas specifically can be used to generate electricity in Ghana which would enable the country to have a more stable and reliable power source necessary to attract more foreign direct investment.

Kostenorientiertes Controlling von E-Learning-Plattformen mit dem TCO-Konzept

Zur administrativen Unterstützung von Lehr- und Lernprozessen werden E-Learning-Plattformen eingesetzt, die auf der Grundlage des Internet Funktionen zur Distribution von Lehr- und Lernmaterialien und zur Kommunikation zwischen Lehrenden und Lernenden anbieten. Zahlreiche wissenschaftliche Beiträge und Marktstudien beschäftigen sich mit der multikriteriellen Evaluation dieser Softwareprodukte zur informatorischen Fundierung strategischer Investitionsentscheidungen. Demgegenüber werden Instrumente zum kostenorientierten Controlling von E-Learning-Plattformen allenfalls marginal thematisiert. Dieser Beitrag greift daher das Konzept der Total Cost of Ownership (TCO) auf, das einen methodischen Ansatzpunkt zur Schaffung von Kostentransparenz von E-Learning-Plattformen bildet. Aufbauend auf den konzeptionellen Grundlagen werden Problembereiche und Anwendungspotenziale für das kostenorientierte Controlling von LMS identifiziert. Zur softwaregestützten Konstruktion und Analyse von TCO-Modellen wird das Open Source-Werkzeug TCO-Tool eingeführt und seine Anwendung anhand eines synthetischen Fallbeispiels erörtert. Abschließend erfolgt die Identifikation weiterführender Entwicklungsperspektiven des TCO-Konzepts im Kontext des E-Learning. Die dargestellte Thematik ist nicht nur von theoretischem Interesse, sondern adressiert auch den steigenden Bedarf von Akteuren aus der Bildungspraxis nach Instrumenten zur informatorischen Fundierung von Investitions- und Desinvestitionsentscheidungen im Umfeld des E-Learning.

The Value of Negotiating Cost-Based Transfer Prices

This paper analyzes the potential of one-step transfer prices based on either variable or full costs for coordinating decentralized production and quality-improving investment decisions. Transfer prices based on variable costs fail to induce investments on the upstream stage. In contrast, transfer prices based on full costs provide strong investment incentives for the upstream divisions. However, they fail to coordinate the investment decisions. We show that negotiations prevent such coordination failure. In particular, we find that the firm benefits from a higher degree of decentralization so that total profit increases in the number of parameters being subject to negotiations.

Mergers, executive risk reduction and stockholder wealth

Among the possible consequences of agency problems between owners and managers is a tendency by managers to make investment decisions for their firms that are deliberately aimed at reducing firm risk, as a means to control managers' personal wealth risk. The literature has suggested that such behavior may occur to the detriment of shareholder wealth, and that mrgers may be a particular class of investment decisions for which the behavior would be observable. We test these hypotheses empirically, but find no evidence from our merger sample that risk reduction for the aqquiring firm is the typical outcome nor that, when it occurs, it is differentially costly for shareholders.

Essays on behavioral aspects of the design and disclosure of compensation contracts

This thesis consists of four essays on the design and disclosure of compensation contracts. Essays 1, 2 and 3 focus on behavioral aspects of mandatory compensation disclosure rules and of contract negotiations in agency relationships. The three experimental studies develop psychology- based theory and present results that deviate from standard economic predictions. Furthermore, the results of Essay 1 and 2 also have implications for firms’ discretion in how to communicate their top management’s incentives to the capital market. Essay 4 analyzes the role of fairness perceptions for the evaluation of executive compensation. For this purpose, two surveys targeting representative eligible voters as well as investment professionals were conducted. Essay 1 investigates the role of the detailed ‘Compensation Discussion and Analysis’, which is part of the Security and Exchange Commission’s 2006 regulation, on investors’ evaluations of executive performance. Compensation disclosure complying with this regulation clarifies the relationship between realized reported compensation and the underlying performance measures and their target achievement levels. The experimental findings suggest that the salient presentation of executives’ incentives inherent in the ‘Compensation Discussion and Analysis’ makes investors’ performance evaluations less outcome dependent. Therefore, investors’ judgment and investment decisions might be less affected by noisy environmental factors that drive financial performance. The results also suggest that fairness perceptions of compensation contracts are essential for investors’ performance evaluations in that more transparent disclosure increases the perceived fairness of compensation and the performance evaluation of managers who are not responsible for a bad financial performance. These results have important practical implications as firms might choose to communicate their top management’s incentive compensation more transparently in order to benefit from less volatile expectations about their future performance. Similar to the first experiment, the experiment described in Essay 2 addresses the question of more transparent compensation disclosure. However, other than the first experiment, the second experiment does not analyze the effect of a more salient presentation of contract information but the informational effect of contract information itself. For this purpose, the experiment tests two conditions in which the assessment of the compensation contracts’ incentive compatibility, which determines executive effort, is either possible or not. On the one hand, the results suggest that the quality of investors’ expectations about executive effort is improved, but on the other hand investors might over-adjust their prior expectations about executive effort if being confronted with an unexpected financial performance and under-adjust if the financial performance confirms their prior expectations. Therefore, in the experiment, more transparent compensation disclosure does not lead to more correct overall judgments of executive effort and to even lower processing quality of outcome information. These results add to the literature on disclosure which predominantly advocates more transparency. The findings of the experiment however, identify decreased information processing quality as a relevant disclosure cost category. Firms might therefore carefully evaluate the additional costs and benefits of more transparent compensation disclosure. Together with the results from the experiment in Essay 1, the two experiments on compensation disclosure imply that firms should rather focus on their discretion how to present their compensation disclosure to benefit from investors’ improved fairness perceptions and their spill-over on performance evaluation. Essay 3 studies the behavioral effects of contextual factors in recruitment processes that do not affect the employer’s or the applicant’s bargaining power from a standard economic perspective. In particular, the experiment studies two common characteristics of recruitment processes: Pre-contractual competition among job applicants and job applicants’ non-binding effort announcements as they might be made during job interviews. Despite the standard economic irrelevance of these factors, the experiment develops theory regarding the behavioral effects on employees’ subsequent effort provision and the employers’ contract design choices. The experimental findings largely support the predictions. More specifically, the results suggest that firms can benefit from increased effort and, therefore, may generate higher profits. Further, firms may seize a larger share of the employment relationship’s profit by highlighting the competitive aspects of the recruitment process and by requiring applicants to make announcements about their future effort. Finally, Essay 4 studies the role of fairness perceptions for the public evaluation of executive compensation. Although economic criteria for the design of incentive compensation generally do not make restrictive recommendations with regard to the amount of compensation, fairness perceptions might be relevant from the perspective of firms and standard setters. This is because behavioral theory has identified fairness as an important determinant of individuals’ judgment and decisions. However, although fairness concerns about executive compensation are often stated in the popular media and even in the literature, evidence on the meaning of fairness in the context of executive compensation is scarce and ambiguous. In order to inform practitioners and standard setters whether fairness concerns are exclusive to non-professionals or relevant for investment professionals as well, the two surveys presented in Essay 4 aim to find commonalities in the opinions of representative eligible voters and investments professionals. The results suggest that fairness is an important criterion for both groups. Especially, exposure to risk in the form of the variable compensation share is an important criterion shared by both groups. The higher the assumed variable share, the higher is the compensation amount to be perceived as fair. However, to a large extent, opinions on executive compensation depend on personality characteristics, and to some extent, investment professionals’ perceptions deviate systematically from those of non-professionals. The findings imply that firms might benefit from emphasizing the riskiness of their managers’ variable pay components and, therefore, the findings are also in line with those of Essay 1.

Dynamic Effects of Currency Depreciation on Stock Market Returns during the Asian Financial Crisis

The current international integration of financial markets provides a channel for currency depreciation to affect stock prices. Moreover, the recent financial crisis in Asia with its accompanying exchange rate volatility affords a case study to examine that channel. This paper applies a bivariate GARCH-M model of the reduced form of stock market returns to investigate empirically the effects of daily currency depreciation on stock market returns for five newly emerging East Asian stock markets during the Asian financial crisis. The evidence shows that the conditional variances of stock market returns and depreciation rates exhibit time-varying characteristics for all countries. Domestic currency depreciation and its uncertainty adversely affects stock market returns across countries. The significant effects of foreign exchange market events on stock market returns suggest that international fund managers who invest in the newly emerging East Asian stock markets must evaluate the value and stability of the domestic currency as a part of their stock market investment decisions.