Lower Frictions Research Articles

Tribological Study of Ecological Lubricants Containing Titanium Dioxide Nanoparticles

Titanium dioxide (TiO2), belonging to the family of transition metal dichalcogenides (together with molybdenum disulfide (MoS2) and tungsten disulphide (WS2)), is well known for its solid lubricating behaviour. Thin films of TiO2 exhibit extremely low coefficient of friction in dry environments, and are typically applied by mixed in oil, grease or impregnated into porous matrix of powdered materials. Current researches in many areas imply the using of different types of nanoparticles in the composition of oily lubricants. Results of these researches upon the friction couples show that nanoparticles contained by lubricant can improve the tribological properties, the friction-wear reduction and the lubrication effect. When nanomaterials are used to improve lubrication effect, the selection of metal is very important. In this paper, the authors chose for investigating the tribological properties of two samples of TiO2 with the mean diameter of 15 nm (n-TiO2) and 250 nm (m-TiO2), under different friction conditions. The tribological properties of TiO2 nanoparticles mixed in the ecological lubricant oil were investigated using a four-ball tribometer and a block-on-ring tribometer and show the lowering of the friction coefficient in comparison to the lubricant base oil. The finally obtained lubricant is not considered toxic for the environment. The analyses of surface film composition, characterized with the help of X-ray photoelectron spectroscope (XPS) and scanning electron microscopy (SEM) images showed that the deposed nanoparticles form a protective film (TiO3) allowing for an increase in the load capacity of friction couple. XPS and SEM were used to examine the morphology of the wear track, after the four-ball experiment. The main advantage of the nanoparticles is ascribed to the release and furnishing of the nanoparticles from the valley onto the friction metal surface and their confinement at the interface. The TiO2 nanoparticles showed lower frictions coefficient and higher wear resistance as compared to the common TiO2 particles (about 1.5 μm in diameter(c- TiO2)) on a four-ball machine, which were caused by the microstructure of the protective film and serve as perfect intermediate lubricants between the contact surfaces.

Prices, debt and market structure in an agent-based model of the financial market

We develop an agent-based model in which heterogeneous and boundedly rational agents interact by trading a risky asset at an endogenously set price. Agents are endowed with balance sheets comprising the risky asset as well as cash on the asset side and equity capital as well as debt on the liabilities side. A number of findings emerge when simulating the model: we find that the empirically observable log-normal distribution of bank balance sheet size naturally emerges and that higher levels of leverage lead to a greater inequality among agents. Furthermore, greater leverage increases the frequency of bankruptcies and systemic events. Credit frictions, which we define as the stickiness of debt adjustments, are able to explain a key difference in the relation between leverage and assets observed for different bank types. Lowering credit frictions leads to an increasingly procyclical behavior of leverage, which is typical for investment banks. Nevertheless, the impact of credit frictions on the fragility of the model financial system is complex. Lower frictions do increase the stability of the system most of the time, while systemic events become more probable. In particular, we observe an increasing frequency of severe liquidity crises that can lead to the collapse of the entire model financial system.

Institutions and financial frictions: Estimating with structural restrictions on firm value and investment

Using an enhanced version of the standard investment model, we estimate how institutions affect financial frictions at the firm (micro) level and, through the required rate of return, at the country (macro) level. Based on some 78,000 firm–year observations from 40 countries over the period 1990–2007, we show that good shareholder rights lower financial frictions, especially for firms with large external finance relative to their capital stock (e.g., small, growing or distressed firms). However, creditor rights generally do not affect financial frictions. It thus appears that in explaining cross-country differences in firm investment, frictions related to shareholder rights (e.g., shirking or “tunneling”) are more relevant than debt-related frictions (e.g., limited liability or collateral constraints).

Impact of ethical behavior on syndicated loan rates

This paper shows that borrowers’ ethical behavior leads lending banks to loosen financing conditions when setting loan rates. We advance the banking literature by stressing that the previous financing loosening is enhanced when there is similarity of lenders and borrowers along their ethical domain given that such similarity brings about familiarity and trust in non-opportunistic behavior between them, thereby contributing to lower information frictions. Unique data composed of 12,545 syndicated loan facilities from 19 countries for the period 2003–2007 indicate a 24.8% reduction in the mean spread associated with an increase of one standard deviation in the degree of borrowers’ ethical behavior from its mean value. Such reduction is enhanced to 37.6% when lenders also behave in an ethical way. Results withstand a battery of robustness tests including the use of alternative databases that capture the effect of the 2008 financial crisis, financing alternatives such as equity financing as well as nonparametric estimations.

Spiders and snakes: Offshoring and agglomeration in the global economy

Global production sharing is determined by international cost differences and frictions related to the costs of unbundling stages spatially. The interaction between these forces depends on engineering details of the production process with two extremes being ‘snakes’ and ‘spiders’. Snakes are processes whose sequencing is dictated by engineering; spiders involve the assembly of parts in no particular order. This paper studies spatial unbundling as frictions fall, showing that outcomes are very different for snakes and spiders, even if they share some features. Both snakes and spiders have in common a property that lower frictions produce discontinuous location changes and ‘overshooting’. Parts may move against their comparative costs because of proximity benefits, and further reductions in frictions lead these parts to be ‘reshored’. Predictions for trade volumes and the number of fragmented stages are quite different in the two cases. For spiders, a part crosses borders at most twice; the value of trade increases monotonically as frictions fall, except when the assembler relocates and the direction of parts trade is reversed. For snakes the volume of trade and number of endogenously determined stages is bounded only by the fragmentation of the underlying engineering process, and lower frictions monotonically increase trade volumes.

Earnings Volatility, Post–Earnings Announcement Drift, and Trading Frictions

ABSTRACTWe find that lower ex ante earnings volatility leads to higher Post–Earnings Announcement Drift (PEAD). PEAD is a function of both the magnitude of an earnings surprise and its persistence. While prior research has largely investigated market reactions to the magnitude of the earnings surprise, in this study we show that the persistence of the earnings surprise is equally important. A unique feature of the anomalous PEAD returns documented here concerns the association between abnormal returns and trading frictions. Besides demonstrating that firms with lower earnings volatility have higher abnormal returns, we also find that lower earnings volatility firms have lower trading frictions. Taken together, these findings imply that higher abnormal returns are associated with lower trading frictions. We exploit this implication to empirically demonstrate that PEAD returns due to earnings volatility are not concentrated in the firms with the largest trading frictions, which is in contrast to the findings in prior anomaly studies.

Impact of altitude on fuel consumption of a gasoline passenger car

Engines of new passenger cars are tuned at the sea level. However, in several countries, a significant part of the engine operation is performed at higher altitudes than that of the sea level. The different air density can have a significant impact on fuel consumption. In the case of gasoline engines, the higher altitude theoretically leads to lower fuel consumption due to lower throttle frictions due to the wider throttle opening. From the other side, as the air is less dense at higher altitudes, the vehicle aerodynamic is changed and this also leads to lower fuel consumption. This work studies, on three regulated driving cycles, the impact of high altitude on the fuel consumption of a gasoline passenger car. The impact of changed vehicle aerodynamics of higher altitudes, through the change of deceleration times, on fuel consumption is also analyzed.

Labour Market Rigidities, Trade and Unemployment

We study a two-country, two-sector model of international trade in which one sector produces homogeneous products and the other produces differentiated products. Both sectors are subjected to search and matching frictions in the labour market and wage bargaining. As a result, some of the workers searching for jobs end up being unemployed. Countries are similar except for frictions in their labour markets, such as efficiency of matching and costs of posting vacancies, which can vary across the sectors. The differentiated-product industry has firm heterogeneity and monopolistic competition. We study the interaction of labour market rigidities and trade impediments in shaping welfare, trade flows, productivity, and unemployment. We show that both countries gain from trade. A country with relatively lower frictions in the differentiated-product industry exports differentiated products on net. A country benefits from lowering frictions in its differentiated sector’s labour market, but this harms the country’s trade partner. Alternatively, a simultaneous, proportional lowering of labour market frictions in the differentiated sectors of both countries benefits both of them. The opening to trade raises a country’s rate of unemployment if its relative labour market frictions in the differentiated sector are low, and it reduces the rate of unemployment if its relative labour market frictions in the differentiated sector are high. Cross-country differences in rates of unemployment exhibit rich patterns. In particular, lower labour market frictions do not ensure lower unemployment, and unemployment and welfare can both rise in response to falling labour market frictions and falling trade costs.

Microeconomic Flexibility, Creative Destruction and Trade

We investigate whether greater microeconomic flexibility facilitates the process of creative destruction in the context of new trade models with heterogeneous firms (Bernard et al., 2003 and Melitz, 2003). In these models, freer trade increases aggregate productivity because high-efficiency plants expand through exporting and low-efficiency plants exit the market. However, factor reallocation could be negatively affected by the presence of microeconomic frictions. We use these insights of the theory to analyze whether a reduction in trade costs increases the probability of becoming an exporter relatively more in industries with greater microeconomic flexibility and whether plant exit driven by trade costs declines is more likely in industries with lower frictions. Using plant level data from Venezuela, we report results supporting these predictions.

Product Market Integration and Heterogeneity—Rent Sharing and Pricing to Market

AbstractInternational product market integration makes market penetration easier and therefore creates both export opportunities and import threats. This changes the competitive position of firms and is associated with changes in trade, production, and specialization structures. The gains and losses in this process are unlikely to be equally shared due to heterogeneity across firms/sectors. In a Ricardian trade model with heterogeneity across firms, we find “pricing to market”—effects not only for exports, but also for pricing in the domestic market even for nontradables. Rents to be shared in wage bargaining differ across tradables and nontradables. It is shown that lower trade frictions affect the scope for “pricing to market” and cause wages to become more closely driven by (relative) productivity. Labor market prospects tend not to improve for low wage jobs, and not to deteriorate for high wage jobs.

Product market integration, wage dispersion and unemployment

International product market integration enhances both the export possibility of supplying to foreign markets and the import threat of foreign firms penetrating into domestic markets. These mechanisms affect labour markets since they amount to increased job mobility. At the same time heterogeneity may increase since it is unlikely that the opportunities and threats are uniformly distributed across different groups/sectors. In a Ricardian trade model admitting heterogeneity in the labour market, it is shown that lower trade frictions are associated with aggregate welfare gains, increased trade and specialization, but also more dispersion in wages. Structural labour market problems caused by union market power are reduced while those caused by minimum (reservation) wages are strengthened.

Product Market Integration, Comparative Advantages and Labour Market Performance

In a two-country model with trade driven by comparative advantages, it is considered how imperfectly competitive labour markets are affected by lower frictions in international goods trade. Easier goods trading is equivalent to increased mobility of employment across countries and thus a change in the trade-off between wages and employment faced by wage setters. While the effects of product market integration on the trade-off between wages and employment in general is ambiguous, it is shown that product market integration works like a general improvement in productivity via the specialization it allows through trade. Unambiguously, real wages and employment and welfare improve upon reductions in trade frictions, and therefore workers are better off irrespective of whether the market power of unions is enhanced or muted.

International Integration, Risk and the Welfare State

How does international integration affect the welfare state? Does it call for a leaner or an expanded welfare state? International integration may affect the distortions caused by welfare state activities but also the risks motivating social insurance mechanisms. This paper addresses these potentially counteracting effects in a fully specified intertemporal two–country stochastic endowment model, focusing on the implications when product market integration reduces trade frictions across national product markets. It is shown that lower trade frictions may increase the marginal costs of public funds, which gives an argument for reducing (steady–state) public consumption. However, tighter integration of product markets unambiguously leads to more variability in private consumption, and this gives a case for expanding the social insurance provided via state–contingent public sector activities (automatic stabilizers). JEL classification: E30; F10; H11

International Integration, Risk and the Welfare State

How does international integration affect the welfare state? Does it call for a leaner or an expanded welfare state? International integration may affect the distortions caused by welfare state activities but also the risks motivating social insurance mechanisms. This paper addresses these potentially counteracting effects in a fully specified intertemporal two-country stochastic endowment model focusing on the implications of product market integration reducing trade frictions across national product markets. It is shown that lower trade frictions may increase the marginal costs of public funds, which gives an argument for reducing (steady-state) public consumption. However, tighter integration of product markets unambiguously leads to more variability in private consumption, and this gives a case for expanding the social insurance provided via state-contingent public sector activities (automatic stabilizers).

Effect of basal guided waves on landslides

A landslide model riding on basal guided waves is investigated to explain lower net frictions at high slide velocities from the wave-theoretical point of view. It is shown that there is a wave propagated along the basal layer at the phase velocity equal to the slide velocity, as well as a guided wave with considerably higher phase velocities propagated likewise along the basal layer as a leaking mode at low slide velocities. With increasing slide velocity the phase velocity of the guided wave decreases until it is equal to that of the slide mass. Over this threshold slide velocity, a “sonic boom” is generated around the basal layer, and the shock contributes to a loosening of the slide mass into a fluidized state. Landslides on long slide-ways are more liable to exceed this threshold velocity since their slide velocities tend to be higher than those on short slide-ways of a similar shape. Hence, the reduction of net friction of landslides can possibly be better correlated with the lengths of slide-ways than with the volumes of landslides as is widely maintained.