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Fretwell & Regan: Divided Lands – State vs. Federal Management in the West

Oregon_High_Desert

Introduction: There is a great divide in the United States. Land in the East is mostly privately owned, while nearly half of the land in the West is owned by the federal government. In recent years, several western states have passed, introduced, or considered resolutions demanding that

Hassler, Krusell, Shifa & Spiro: Sovereign wealth funds and spending constraints in resource rich developing countries – the case of Uganda

2000px-Flag_of_Uganda.svg

ABSTRACT: A large increase in government spending following resource discoveries often entails political risks, inefficient investments and increased volatility. Setting up a sovereign wealth fund with a clear spending constraint may decrease these risks. On the other hand, in a developing economy with limited access

Jalil: Did globalisation stimulate increased inequality? A heterodox perspective

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From the Introduction: Global income inequality has been steadily rising since the 1980s. The sensational success of Thomas Piketty’s “Capital” shows that the topic resonates well with the global population. Many have argued that this has been the result of “globalisation” (Palma, 2006), another concept

Delechat et al.: Harnessing Resource Wealth for Inclusive Growth in Fragile States

TS-Open_pit_Suncor-600

ABSTRACT: Like other fragile sub-Saharan African countries, Côte d’Ivoire, Guinea, Liberia, and Sierra Leone are seeking to harness their natural resource potential in the context of ambitious development strategies. This study investigates options for scaling up public investment and expanding social safety nets in a

Lyu & Zhang: Institutional Investors and the Cost of Equity Capital – Evidence from Chinese Listed Companies

1500px-Flag_of_the_People's_Republic_of_China.svg

ABSTRACT: This paper investigates the relationship between institutional investors and the company’s cost of equity capital. Especially considering the large proportion of state-owned shares in China’s capital market; we divide the Chinese listed companies into state-owned shares and non-state-owned shares, and investigate the different effects

Fretwell & Regan: Divided Lands – State vs. Federal Management in the West

Oregon_High_Desert

Introduction:

There is a great divide in the United States. Land in the East is mostly privately owned, while nearly half of the land in the West is owned by the federal government. In recent years, several western states have passed, introduced, or considered resolutions demanding that the federal government transfer much of this land to state ownership.1 These efforts are motivated by local concerns over federal land management, including restrictions on natural resource development, poor land stewardship, limitations on access, and low financial returns.

The resolutions reflect a sentiment in many western states that state control will result in better public land management. To date, however, there has been little research comparing the costs of state and federal land management. Most existing studies assume that the costs of federal land management would be the same under state management and do not consider the different management goals, regulatory requirements, and incentive structures that govern state and federal lands.

The purpose of this report is to compare state and federal land management in the West. In particular, we examine the revenues and expenditures associated with federal land management and compare them with state trust land management in four western states: Montana, Idaho, New Mexico, and Arizona. These states, which encompass a wide range of landscapes, natural resources, and land management agencies, allow for a robust comparison.

Our analysis will help explain why revenues and expenditures may differ between state and federal land agencies and explore some of the implications of transferring federal lands to the states. We find that state trust agencies produce far greater financial returns from land management than federal land agencies. In fact, the federal government often loses money managing valuable natural resources. States, on the other hand, consistently generate significant amounts of revenue from state trust lands. On average, states earn more revenue per dollar spent than the federal government for each of the natural resources we examined, including timber, grazing, minerals, and recreation.

 

Available for download here.

Hassler, Krusell, Shifa & Spiro: Sovereign wealth funds and spending constraints in resource rich developing countries – the case of Uganda

2000px-Flag_of_Uganda.svg

ABSTRACT:

A large increase in government spending following resource discoveries often entails political risks, inefficient investments and increased volatility. Setting up a sovereign wealth fund with a clear spending constraint may decrease these risks. On the other hand, in a developing economy with limited access to international borrowing, such a spending constraint may lower welfare by reducing domestic capital accumulation and hindering consumption increases for the currently poor. These two contradicting considerations pose a dilemma for policy makers in deciding whether to set up a sovereign wealth fund. Using Uganda’s recent oil discovery as a case study, this paper presents a quantitative macroeconomic analysis and examines the potential loss of constraining spending through a sovereign wealth fund with a simple spending rule. We find that the loss is relatively low suggesting that such a spending structure seems well warranted.

 

Available for download here.

Jalil: Did globalisation stimulate increased inequality? A heterodox perspective

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From the Introduction:

Global income inequality has been steadily rising since the 1980s. The sensational success of Thomas Piketty’s “Capital” shows that the topic resonates well with the global population. Many have argued that this has been the result of “globalisation” (Palma, 2006), another concept which is widely discussed but rarely defined. Most divide globalisation into economic globalisation, focusing on international trade and foreign direct investments, and political globalisation, focusing on institutional arrangements. This division hinges on the existence of a conceptual separation between political logic from economic policy, which seems untenable. The contour of the global economy, the structure of the global market, who can participate in it and how they can engage in exchange are seldom apolitical choices.

This paper showcases four scenarios to show that the “political economy” aspect of globalisation is important, and posits that the “neoliberal version of globalisation” has contributed significantly towards increased inequality rather than just globalization. This detrimental and pervasive effect of neoliberalism has been carried out through dismantling the welfare state, reduced power of trade unions, massive industrial consolidation, deregulation of the economy, increased financialization of the international economy and the belief in the primacy of “self-regulating” market. The author believes it is critical to specify that a specific form of globalisation is at fault rather than the whole idea of globalisation; otherwise many may wrongly associate increasing inequality as a necessary consequence of engaging with the global economy and thereby decide to disengage their country and move towards autarky, which might be detrimental. Also unless we define the form of globalisation that is damaging, the debate wrongly focuses on merits and demerits of globalisation rather than what form of global engagement suits an individual country the best. The challenge is to take advantage of globalisation while limiting its offsetting costs.

 

Available for download here.

Delechat et al.: Harnessing Resource Wealth for Inclusive Growth in Fragile States

TS-Open_pit_Suncor-600

ABSTRACT:

Like other fragile sub-Saharan African countries, Côte d’Ivoire, Guinea, Liberia, and Sierra Leone are seeking to harness their natural resource potential in the context of ambitious development strategies. This study investigates options for scaling up public investment and expanding social safety nets in a general equilibrium setting. First, it assesses the macro-fiscal implications of alternative fiscal rules for public investment, and, second, it explicitly accounts for redistribution through direct cash transfers. Results show that a sustainable non-resource deficit target is robust to the high uncertainty of resources output and prices, while delivering growth benefits through higher public investment. The scaling-up magnitudes, however, depend on the size of projected resource revenue and absorptive capacity. Adding a social transfer raises private consumption, suggesting that a fraction of the resource revenue could be used to expand safety nets.

 

Available for download here.

Lyu & Zhang: Institutional Investors and the Cost of Equity Capital – Evidence from Chinese Listed Companies

1500px-Flag_of_the_People's_Republic_of_China.svg

ABSTRACT:

This paper investigates the relationship between institutional investors and the company’s cost of equity capital. Especially considering the large proportion of state-owned shares in China’s capital market; we divide the Chinese listed companies into state-owned shares and non-state-owned shares, and investigate the different effects of institutional investors on the company’s cost of equity capital in two groups. This study confirms that with the increase of the proportion of institutional ownership, the company reduced the cost of equity capital; Relative to state-owned enterprises, institutional investors help to reduce much more cost of equity capital of non-state-owned enterprises.

 

Available for download here.

Lee: Hybrid Corporate Governance – The Case of Asia

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ABSTRACT:

Asia’s economy has undergone a number of changes in corporate ownership and financial structure in the last several years. This paper addresses the evolving patterns of corporate governance among Asian countries since the crisis in 1997. Based on institutional theory, the discussion in this article is intended to illuminate in particular the notion of hybridization of institutional change in the form of corporate governance. The paper shows how Asian economies are reshaping their corporate governance features, leading to a diversity of corporate governance forms. Our empirical analysis suggest that the current Asian model can be described as being in a ‘hybrid model,’ with a mixture of new market-oriented elements and old practices of the Asian model.

 

Available for download here.

Dasgupta: Home Country Effect of FDI Outflows from the BRIC Countries – Study of Domestic Investment

Currency-Revaluation

ABSTRACT:

The recent phenomenon of rising outward foreign direct investment (OFDI) flows has raised serious policy concerns about its effects on the domestic investment and capital formation in the source countries. Does OFDI stimulate domestic investment or does it crowd it out? The concern arises because OFDI activities could shift not only some of the production activities from home to foreign destinations but also could possibly threaten the availability of scarce financial resources at home by allocating resources abroad. All this have the potential to reduce domestic investment, thus lowering the long run economic growth and employment of the home economies. The central goal of this paper is to empirically explore the evidence of the macroeconomic relationship between OFDI and levels of domestic capital formation in the BRIC economies. Our study reveals that OFDI has both short run and long run positive causality with domestic investment and thus figures out to be a significant factor affecting domestic investment in the BRIC nations. It becomes imperative, therefore, that the BRIC countries make special effort to promote their OFDI through the designing of appropriate OFDI policies that would help stimulate their domestic investment and economic growth now and in the future.

 

Available for download here.

Çelik, Demirtaş & Isaksson: Corporate Bonds, Bondholders and Corporate Governance

corporate-governance_2736-29

ABSTRACT:

Worldwide, primary corporate bond markets have become an increasingly important source of financing for non-financial companies. This trend is coupled with a relative decrease in traditional bank lending to non-financial companies and low levels of bond interest rates. Just as shareholders, bondholders can play an important role in corporate governance. They can use both exit and voice. This report provides a comprehensive global overview of all corporate bond issues since 2000 and experiences of governance engagement by bondholders. The report builds on issue level data for more than 100,000 individual bond issues in 108 jurisdictions between 2000 and 2013. Data is provided with respect to the type of issues and numerous bond characteristics, such as country of origin, investment grade, maturity, covenants and conditions for redemption. The report also analyses trends in secondary bond markets, including market liquidity, the role of market makers and the relatively slow introduction of electronic trading systems. In order to analyse trends over time with respect to governance, we provide detailed time series data on the use and relative importance of 15 different categories of covenants. By constructing an overall “covenant protection index” we suggest that bond investors in their search for yield have overall traded governance rights for higher expected returns. This shift also seems to be associated with higher risk-taking. We also conclude that the degree of governance engagement primarily is linked to the business model of the bond investor. We end the report with a discussion about the scope for institutional changes that may build a larger community of truly informed and motivated bond investors.

 

Available for download here.

Avalos & Lombardi: The biofuel connection – impact of US regulation on oil and food prices

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ABSTRACT:

Biofuel policies are frequently mentioned in the policy and academic debates because of their potential impact on food prices. In 2005, the United States authorities passed legislation under which corn-based ethanol became in practice the only available gasoline additive. Some studies have then argued that ethanol and biodiesel subsidies in advanced economies may have strengthened the link between the prices of oil and those of some food commodities. This paper tests whether the response of food commodity prices to global demand shocks and to oil-specific demand shocks has changed following the introduction of this legislation. Our results show that corn prices exhibit a stronger response to global demand shocks after 2006. Some short-lived but statistically significant response to oil-specific demand shocks is also documented. Close substitutes of corn in the feedstock business (eg soybeans and wheat) exhibit comparable but more muted responses, while other food commodities unaffected by biofuel policies do not change their behaviour. We also report some evidence that global liquidity is a factor driving global demand shocks, and through that channel may have affected food commodity prices.

 

Available for download here.

Cao, Humphrey-Jenner & Suchard: Government ownership and venture performance – Evidence from China

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ABSTRACT:

We study the government’s role in VC market in China. The impact of government depends on whether the fund is wholly or partially government-owned at central or provincial level. Partially government-owned VCs improve venture success, e.g., the likelihood of exit via an IPO and the likelihood of exit in mainland China. Investment from provincial government-owned VCs is associated greater exit-success, with such advantage diminishing with more funds. Government-owned funds exhibit worse performance at the fund-level. Our findings suggest that government VCs may benefit through political connections may help VCs, but that excessive government control leads to inefficiencies.

 

Available for download here.

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