Economic Interpretation Research Articles

The role of demographic and economic drivers on the environment in traditional and standardized STIRPAT analysis

The STIRPAT approach identifies human impacts on the environment. Most studies find higher ecological elasticities related to population compared to GDP per capita growth. Applying the logarithmic form of the STIRPAT equation, which mitigates the problem of the variables' different variances and units, further allows for appealing economic interpretation and policy conclusions. At the same time, the question of the predictor variables' relative importance cannot be finally answered by this approach. In response, the present paper complements the traditional ecological elasticities by the calculation of standardized β-coefficients (for a sample of 84 countries and the period between 1980 and 2014). Results indicate that GDP per capita rather than population growth matters more for explaining environmental impacts. Admittedly, interpretation of standardized coefficients is not without limitations. First, they are sample-specific and cannot be compared across different studies. Second, a predictor variable might not affect the environment only on its own, but joint impacts could be present. The paper addresses these problems and provides a careful interpretation of and comparison between non-standardized and standardized β-coefficients. Overall, there is good reason to assume that environmental impacts can be reduced more readily by a policy giving priority to economic rather than population growth.

A proposal of an economic optimization model for sustainable waste management

When planning sustainable waste management systems (WMSs), decision makers should consider various aspects, including environmental, economic and social issues. In this framework, a linear programming model may be useful to identify the best scenario among the many theoretically possible. With reference to previous research by the same authors on environmental optimization, this paper focuses on the economic optimization of WMSs. Various mathematical models, generally complex and difficult to solve, have been proposed for the analysis of municipal solid WMSs. This study proposes a model structured according to the transportation problem and which involves an economic interpretation of the dual problem. This simple formulation of the problem allows a rapid estimated solution of the real problem. The proposed model was tested in a hypothetical, although realistic, context, by considering four different waste sources, five waste fractions and six potential destinations, with and without more restrictive constraints. Through an economic interpretation of the dual problem, which has not been considered in the literature until now for this topic, decision makers can decide whether outsourcing the waste management or receiving a certain amount of waste to handle/dispose of. The results show the usefulness of this model for strategic decisions, such as in the case of plant siting. A limitation of the proposed model is that it does not take into account some important aspects, such as economies of scale. It is certainly useful in the short term and needs to be applied systematically over time and at small time intervals.

Non-zero-sum reinsurance and investment game between two mean-variance insurers under the CEV model

This paper considers a non-zero-sum stochastic differential game between two competitive mean-variance insurers, who aim to seek the time-consistent reinsurance and investment strategies. These two insurers are allowed to purchase proportional reinsurance to mitigate individual claim risks; and can invest in one risk-free asset and one risky asset whose price dynamics follows the constant elasticity of variance model. The main objective of each insurer is to maximizing the mean-variance utility of his relative terminal wealth with respect to that of his competitor. Applying the techniques of stochastic control theory, we derive the Nash equilibrium reinsurance and investment strategies explicitly and present the corresponding verification theorem. Furthermore, Nash equilibrium strategies and value functions are also provided under the diffusion approximation model. Finally, we perform some numerical examples to illustrate the influence of model parameters on the equilibrium reinsurance and investment strategies and draw some economic interpretations from these results.

Stability and direction of Hopf bifurcations of a cyclical growth model with two-time delays and one-delay dependent coefficients

• We study the impact of two discrete-time delays on the basic Goodwin growth cycle model. • We study a delayed differential equation system with discrete-time delays and delay-dependent coefficients depending only on one of the time delay. • Having chosen the time delays as bifurcation parameters, we study the stability-switching properties of the transcendental characteristic equation. • We analyze the direction and stability of Hopf bifurcation by means of the first Lyapunov coefficient. This paper deals with the impact of two discrete-time delays on the basic Goodwin growth cycle model. The former concerns the existence of a finite time delay for building capital goods as suggested by Kalecki. The latter pertains to the wage lag hypothesis. This is because, taking the current change of the employment rate into account, workers and capitalists bargain new wage periodically. There are no examples in the literature on the Goodwin model of the use of both those lags in order to explore the GDP dynamics. From the analytical point-of-view, what we obtain is a delayed differential equation system with discrete-time delays and delay-dependent coefficients depending only on one of the time delays. Having chosen the time delays as bifurcation parameters, we study the stability-switching properties of the transcendental characteristic equation resulting from the stability analysis and the direction of the Hopf bifurcations. Although the system with no lag displays a stable focus, the introduction of the two lags preserves the stable solution only for particular combinations of parameters and length of the lags. In any other case, instability prevails and regular cycles or chaotic fluctuations emerge. Finally, we provide the analytical results with the necessary economic interpretations.

Transactive Energy Supported Economic Operation for Multi-Energy Complementary Microgrids

Multi-energy complementary microgrids (MECMs) provide an important means to accommodate renewable energy sources due to their abundant adjustable resources and flexible operation modes. However, limited capacity and controllability are the main obstacles that prevent MECMs from participating in the market. In this study, we develop a transactive energy (TE) mechanism-supported energy sharing strategy to coordinate interconnected MECMs in a regional integrated energy system (RIES), where the uncertainty of renewable energy and loads is taken into account via stochastic programming. An RIES operator is introduced to trade with the utility grid as an intermediate player between the electricity market and MECMs. For the TE mechanism, we employ alternating direction method of multipliers (ADMM) algorithm to achieve distributed optimization of energy sharing, which is based on the average of the shared energy residual over all MECMs. A clear economic interpretation exists in the method, wherein shared electrical and thermal energy prices can be obtained. Case studies demonstrate the effectiveness of the multi-energy sharing scheme considering integrated demand response (IDR). Moreover, the distributed algorithm can be implemented and converge easily while respecting MECMs' individual benefits and private information.

Optimal time-consistent reinsurance strategies for mean-variance insurers under thinning dependence structure

This paper considers an optimal time-consistent proportional reinsurance problem with constraints on the strategies under the mean-variance criterion for an insurer. It is assumed that the surplus process is described by a compound Poisson risk model with dependent classes of insurance business named thinning-dependence structure, in which the stochastic sources related to claim occurrence are classified into different groups, and that each group may cause a claim in each insurance class with a certain probability. By solving the extended Hamilton-Jacobi-Bellman equation within the game theoretic framework, not only explicit expressions of the optimal strategies and value function are obtained for but closed-form expressions of optimal results are derived for by the method of dimension reduction. Moreover, some numerical examples are presented to illustrate the effects of parameters on the optimal strategies as well as the economic interpretation behind.

A Systemic Approach to Estimating the Output Gap for the Italian Economy

Estimating potential output and the corresponding output gap plays a key role, not only for inflation forecasting and the assessment of the economic cycle, but also for the fiscal governance of the European Union (EU). Potential output is, however, an unobservable and extremely uncertain variable. Empirical measurements differ considerably depending on the econometric approach adopted, the specification of the data generating process and the dataset used. The method adopted at the EU level, which was agreed within the Output Gap Working Group, has been subject to considerable debate. The fiscal councils of the various Member States contribute to the discussion over the output gap modelling. This paper aims at estimating the potential output of the Italian economy, using a combination of five different models proposed by the relevant literature. More specifically, in addition to a statistical filter, we use unobserved components models based on the Phillips curve, the Okun law and the production function. The approach adopted allows to reconcile the parsimony of the econometric specification with the economic interpretation of the results. Estimates of the output gap obtained with the five selected models present important properties: low pro-cyclicity, stability with respect to the preliminary data and consistency with the economic theory. The use of multiple models also enables the construction of confidence bands for the output gap estimates, which are helpful for policy analysis. In the empirical application for Italy, estimates and forecasts of the output gap recently produced by relevant organisations tend to fall within the confidence interval calculated on the basis of the five selected models.

Maximum entropy approach to market fluctuations as a promising alternative

Conventional models studying market fluctuations often suffer from over simplifying assumptions of highly complex economic systems. A brief but critical review is given of “conventional” economic theory and modeling approaches. A detailed discussion contrasts various approaches to modeling market fluctuations which introduce more realistic frameworks than conventional models; namely, Log Periodic Power Law Models (LPPL), Heterogenous Agent Models (i.e. Simple Heterogenous Models and Agent Based Models), and Quantal Response Statistical Equilibrium Models (QRSE). From this review, a clear picture is formed for the capacity for each of these approaches to overcome existing problems in economic theory and modeling of large complex systems. QRSE framework as an “Information Theoretic Maximum Entropy Approach” is presented here and discussed with special emphasis on the explanatory power and physical meaning of the model parameters regarding their economic interpretation and significance, and its simple modeling framework.

Political Marketing: A study of the political attitude in the rural and urban population of the Municipality of Sucre

The present investigation explains and gathers various analysis variables for the theoretical understanding of the political marketing and its incidence over the people of the city of Sucre, taking as a parameter the rural and urban population. The text sustains that the influence of the political marketing on the population happens through its affectation in the environment of the political communication and the effort of the actual government to make it‟s acts believable in all the actions that performs.It exposed from an economic interpretation, how much the government invest in publicity in the different media (television, radio and newspapers) in a relation with the credibility that it is creating in the mind of the population able to vote.

The accuracy of nipple discharge cytology in detecting breast cancer.

This study aimed to disclose the importance of nipple discharge (ND) and the accuracy of its economic and fast cytological interpretation. All ND cytology cases for Saudi patients done between 2004 and 2013 were retrieved from the Pathology e-system. Only cases that have subsequent tissue diagnoses were included in this study (n=228). Age and bloody nature of the ND were both tested for association with a higher chance of carcinoma. Diagnostic accuracy of ND cytology was calculated twice, including and excluding the "atypical" cases. Specificity and positive predictive value were 100% for ND cytology in both cases. Sensitivity (34.6%; 52.9%), negative predictive value (93.15 %; 96.1%), false-negative rate (65.4%; 47.1%), accuracy rate (93.4%; 96.2%), when atypical cases were included and excluded; respectively. Only 10.5% of the patients complaining from nipple discharge had breast cancer. For those who had cancer, nipple discharge cytology was positive and showed the cancer cells in only 37.5%, while the rest were false negative. Bloody ND disclosed a significant association with malignancy (p<0.001), but the association was statistically not significant for old age (p=0.062). The prospect of having breast cancer with the presentation of ND is low, and it can be missed by studying the ND cytology alone in a high proportion of cases. Excluding the atypical category did not make a significant improvement in the test's accuracy.

Economic Interpretation of Demand Curves in Multi-Product Electricity Markets − Part II: Practice

In the absence of demand-side bids for certain reliability products in the wholesale electricity markets, Independent System Operators (ISOs) traditionally use fixed demand requirements with penalty factors to clear the market. This approach does not allow proper tradeoffs between cost and reliability due to the inelasticity of the fixed requirements. Therefore, ISOs have been replacing the fixed requirements with sloped demand curves. However, the economic interpretation of demand curves, especially for multiple coupled products, is largely missing in both theory and practice. This could lead to the misrepresentation of the demand benefit in the market clearing objective. Using a two-product market model, Part I of this paper reveals two distinct interpretations of demand curves, each associated with a specific form of the market clearing problem. This implies that the construction of demand curves and the use of them in market clearing must be consistent with their economic interpretation. In Part II of this paper, we analyze the sequential and iterative market clearing processes currently implemented in some markets to demonstrate their solution sub-optimality. The root cause of the problem is the lack of a clear representation of the demand benefit. The social surplus optimization based on the proper interpretation of demand curves is proposed.

Imperatives of Quality Insuring of the Production Cycle and Effective Functioning Process of the Enterprises of Agro-Product Subcomplex of Ukraine

The article deals with the imperatives of quality insuring of the production cycle and the effective functioning process of the enterprises of agro-product subcomplex of Ukraine. An effective functional system has been built which, based on the quantitative and qualitative criteria of competitiveness of enterprises, determines the scale and effectiveness of their activity, provides opportunities to reproduce the resource potential of the agro-product subcomplex industries. The set of processes of relevant implication ‘resources – structure – efficiency – development of the system’ was singled out in order to improve the qualitative and quantitative properties of the production cycle as a creation of efficiency. An adaptive-renovation approach is proposed, which allows selecting from the system of indicators representative-effective indicators and factors of financial and resource load on the level of self-financing of the production cycle with 95% probability. The criterion of ‘optimal maximum profit’, which meets the requirements of a clear economic interpretation of the performance indicators, provides an increase in the value of cash flow to reduce the dependence of the entities of inter-economic relations on the slowdown in the self-financing of the production cycle. It is proved that the integration of agro-product industries with a long continuous cycle has specified functional changes in their efficiency. We have grouped the entities of inter-economic relations by the level of production cost and profitability of the sold products, which ensure the effective process of functioning of the enterprises of the agro-product subcomplex. The parameters of financial and resource load on indicators of self-financing of the production cycle of enterprises of poultry agro-complex in the average for one region of Ukraine are determined. Alternative business projects for the production of poultry products are proposed while changing the cash flow discount rate.&#x0D;

An anatomy of commodity futures returns in China

We provide a broad empirical analysis for cross-sectional excess returns in the Chinese commodity futures market. We find two commodity futures strategies, the carry and the momentum, provide significant returns. These two factors, along with a commodity average factor, explain most cross-sectional variations in the Chinese commodity futures market. We then discuss economic interpretations for commodity carry and momentum in China in comparison with their US counterparts. We show that commodity carry in China provides a lower return than the one in the US because it is not compensated by the equity volatility innovation risk. The commodity momentum in China is closely related to the individual investors' behavioural bias of herding effects in the Chinese equity market.

Analysis of the DuPont model of the construction industry in the Baikal region

In the context of globalization, the role of the investment component in the dynamics of economic development is significantly increased. The DuPont model allows you to determine which factors caused the change in profitability or to make a factor analysis of the return on equity. The object of the study is construction companies (construction of residential and non-residential buildings) in the Baikal region of the Russian Federation (Irkutsk region, Republic of Buryatia, Zabaikalsky Krai). The article describes the methods of factor analysis developed by Filatov E. A., which make it possible to make an accessible and relatively simple conclusion about changes in the financial position of the enterprise, as well as to assess the degree of influence of factors on changes in the studied indicator. The purpose of this article is to generalize and systematize the theoretical and methodological foundations of factor analysis in a form that is accessible to specialists in the field of economics and management. The article should contribute to the formation of a basis for managers and economists to develop economic thinking, understanding the essence of economic processes and phenomena occurring within the framework of economic entities, and most importantly – the development of skills for their quantitative assessment, economic interpretation and search for reserves to improve the efficiency of functioning. The article was carried out within the framework of the scientific project of the Inc SB RAS no. XI.174.1.4 ‘Activation of the internal development potential of regions of resource specialization (on the example of the Baikal region)’

Socio-econmic system stability researches in the MathCad enviroment

The article is devoted to the study of the dynamics of the stability of the socio-economic system in the environment of MathCad on the example of a specific company. Issues of making strategic decisions in the face of uncertainty have always been relevant at all levels of the national economy. So, for business entities, strategic issues are the development of a project, product, or functional (business) unit. Here are based on the categories of profitability, break-even, turnover, liquidity and other groups of criteria. In addition to traditional planning and forecasting tools, alternative techniques can be applied. For example, if we consider the main goal of the business entity’s activity not to maximize its own profit (economic interpretation), but to satisfy the needs of the population in goods and services with consumer properties that are necessary for the market (marketing interpretation), then when making decisions, the integrated assessment of social efficiency should be used. A set of chain indices is used that determine the level of satisfaction at transformation points created by the company’s products.There is no conflict of interests.

Using mathematical models in a disequilibrium economy with offsetting demand

When modeling a nonequilibrium economy, the behavior of participants is described by the same optimization problems, including the criterion and internal technological and budgetary constraints, as in the theory of Walrasian equilibrium. They are only supplemented by external restrictions on the purchase (or sale) of scarce (slow-moving) products. Various principles are known for establishing these boundaries. They can be fixed (a rigid scheme of rationing) and not depend directly on the decisions of the participant, or be determined by the demand expressed by them (flexible scheme). The presented demand for rationable products, as a rule, does not coincide with the Walrasian one. We will call it an order. In well-known models, the order is considered equal to active demand. The concept of active demand has been successfully used in price control models. However, it is not the object of the choice of participants aimed at optimizing their criteria. Meanwhile, it seems natural that manufacturers and consumers, seeking to maximize utility, are free to choose order sizes at their own discretion. Modeling of the situation arising with this approach is the goal of the present work and is based on a modification of the rationing scheme proposed by J.P. Benassi The work also considers equilibrium models at fixed prices, in which participants, when forming demand, take into account the scarcity of products and the level of satisfaction of orders. Models are used to assess the impact of taxes, government spending, and other macro-regulators on employment and national income. The paper provides an overview of literary sources in the subject area, as well as an economic interpretation of the results.

Just-noticeable difference as a behavioural foundation of the critical cost-efficiency index

Despite its ad hoc nature and lack of an appealing economic interpretation, the critical cost-efficiency index (or CCEI) proposed in Afriat (1973) is one of the most widespread measures of departures from rationality. In this paper, we provide a behavioural foundation for this index by showing that it is equivalent to a notion of the just-noticeable difference — a measure of dissimilarity between alternatives that is sufficient for the agent to tell them apart.

On the axiomatic foundation of carbon and energy footprints

BackgroundA wide variety of footprint concepts is proposed in the scientific literature giving rise to a selection problem.MethodThe objective of this paper is to provide an axiomatic foundation to the concept of ecological footprint indices, in particular carbon and energy footprints. For this purpose, we define five axioms representing general properties which any ecological footprint measure should fulfill.ResultsIt can be shown that there exists a unique index which is characterized by the given set of axioms. Its functional form is determined, and an economic interpretation is given. The most prominent empirical application is discussed.ConclusionWe find that the proposed index as a generalization of more specific indices like carbon and energy footprint indices may confirm some important issues discussed in the literature. First, it incorporates a trade component indicating the ecological footprint of economic activities embodied in the trade pattern of a country or region. Moreover, the productivity of land use in production as a means to mitigate the pressure on the ecological system is reflected. But, most importantly, from a methodological point of view, there is no longer the need for designing ecological footprint indices ad hoc, in particular for the sake of empirical application.

Wind Turbine Shutdowns and Upgrades in Denmark: Timing Decisions and the Impact of Government Policy

For policymakers, an important long-run question related to the development of renewable industries is how government policies affect decisions regarding the scrapping or upgrading of existing assets. This paper develops a dynamic structural econometric model of wind turbine owners’ decisions about whether and when to add new turbines to a pre-existing stock, scrap an existing turbine, or replace old turbines with newer versions (i.e., upgrade). We apply our model to owner-level panel data for Denmark over the period 1980-2011 to estimate the underlying profit structure for small wind producers (who constitute the vast majority of turbine owners in the Danish wind industry during this time period), and evaluate the impact of technology and government policy on wind industry development. Our structural econometric model explicitly takes into account the dynamics and interdependence of shutdown and upgrade decisions, and generates parameter estimates with direct economic interpretations. Results from the model indicate that the growth and development of the Danish wind industry were driven primarily by government policies as opposed to technological improvements. We use the parameter estimates to simulate counterfactual policy scenarios in order to analyze the relative effectiveness and cost-effectiveness of the Danish feed-in-tar-iff and replacement certificate programs. Results show that both of these policies significantly impacted the timing of shutdown and upgrade decisions made by small wind producers and accelerated the development of the wind industry in Denmark. We also find that when compared with the feed-in-tariff; a declining feed-in-tariff; and the replacement certificate program and the feed-in-tariff combined, the replacement certificate program was the most cost-effective policy both for increasing payoffs of small wind producers and also for decreasing carbon emissions.

TRUST ASSET MANAGEMENT: ESSENCE AND FEATURES

The article examines the essence of the concept of "trust asset management" in the banking system. The article examines the essence of the concept of "trust management" in the banking system. Various approaches to defining the essence of trust management in scientific and business literature are systematized, various nuances of its legal and economic interpretation are presented. The subjects and objects of trust management, the system of relationships between the main subjects are named and disclosed. The regulatory framework for the practice of trust management has its own characteristics at the national and international levels. The common couples and differences of different models of organization of trust activity are highlighted. The main approaches to the classification of trusts, the main types of trusts are revealed and their features are determined. The forms of trust management are very diverse and can differ in the purposes of creating trusts, methods of creation, depending on the role of the owner and trustee, depending on the financial instruments used. The purposes of the use of trust management, as well as certain risks of using the control system (legal uncertainty, presence of risk, imperfection of state regulation, etc.) are characterized. In world practice, this service is constantly developing and is increasingly becoming an important integral part of banking in different countries and regions.