National Balance Research Articles

The US Dollar Shortage in Global Banking and the International Policy Response

Among the policy responses to the global financial crisis, the international provision of US dollars via central bank swap lines stands out. This paper studies the build-up of stresses on banks' balance sheets that led to this coordinated policy response. Using the BIS international banking statistics, we reconstruct the worldwide consolidated balance sheets of the major banking systems. This allows us to investigate the structure of banks' global operations across their offices in various countries, shedding light on how their international asset positions are funded across currencies and counterparties. The analysis first highlights why a country's national balance sheet, a residency-based measure, can be a misleading guide to where the vulnerabilities faced by that country's banking system (or residents) lie. It then focuses on banking systems' consolidated balance sheets, and shows how the growth (since 2000) in European and Japanese banks' US dollar assets produced structural US dollar funding requirements, setting the stage for the dollar shortage when interbank and swap markets became impaired.

Cointegration between gas and power spot prices

In this paper we show how cointegration can be applied to capture the joint dynamics of multiple energy spot prices. For an example system we study the Title Transfer Facility, the Zeebrugge gas spot market and the National Balancing Point gas spot market, and, additionally, the Amsterdam Power Exchange power spot market, since these markets are strongly connected in terms of physical transportation and generation of power from gas. We develop a cointegrating multi-market model framework that is able to plausibly connect different singlemarket spot-price models. This is achieved by considering the mean-reverting spot-forward price spreads instead of spot prices only. Our analysis shows that the gas prices are strongly cointegrated, with a specific connection pattern for the markets, whereas cointegration of gas and power prices is at long-term forward price levels only.

Country-scale phosphorus balancing as a base for resources conservation

In order to effectively conserve the non-renewable resource phosphorus (P), flows and stocks of P must be known at national, regional and global scales. P is a key non-renewable resource because its use as fertilizer cannot be substituted posing a constraint on the global food production in the long-term. This paper presents a methodology to establish country-wide P balances that emphasises resource use. We develop a material flow analysis (MFA) model that comprises all relevant flows and stocks of P in five subsystems, seven processes and 36 material flows. For quantification, statistical data from economic and agricultural sources as well as available information about P partitioning in natural and anthropogenic processes are used. Special attention is paid to data gaps and uncertainties. The model was tested in two case studies on P management in Turkey and Austria. MFA appears to be a tool well suited for establishing country-wide P balances, provided that national statistics are well-structured and accessible. If a common approach is used for modelling P-flows and stocks, regional and national balances can be compared and linked towards larger scale P balances for an improved management of the resource.

Sovereign Wealth Funds, Macroeconomic Policy Alignment and Financial Stability

This paper firstly discusses alignment of SWFs with macroeconomic policy. We believe that SWFs can become an effective tool for fiscal policy; SWF investments should be made in alignment with the monetary authority, and help stabilize the exchange rate. SWFs also contribute to stability of the national balance sheet. Asset allocation of SWFs has significant impacts on the current and capital accounts of both domestic and international balance sheets. Secondly, this paper explores the impacts of SWFs on the global financial market and its stability, including those on asset bubbles, equity risk premium and financial market stability. We argue that the potential negative impact of SWFs on the global financial market is very limited, and that they are important stabilizing forces in the global financial market. We believe that SWFs contribute to the coordination of macroeconomic policy from a domestic point of view and to the stability of global financial market from an international point of view.

The Theoretical Logic of Sovereign Wealth Funds

Sovereign wealth funds (SWFs) form a new class of institutional investors with significant influence on the global financial market. Assets under management (AUM) of global SWFs totaled around US$3.0 trillion at the end of 2007, and are still rising. Three developments are behind the current cause of SWFs: First, reform of international monetary system is the core reason for the rise in SWFs; Secondly, the phenomenal raise of energy price is an important reason contributing in the expansion of SWFs; finally, the economic globalization facilitates SWFs’ operation. According to the model of National Economic Man model, the foreign reserve of a nation will increase sharply and gradually this nation will invest surplus wealth during the economic stage of early expansion or fast-growing stage. Whereas, with the decreasing of the production factors, accumulated wealth of a nation will gradually attain to peak. When the economy enters into wealth-oriented stage or the stage of sustainable low growth, the nation will increasingly rely on wealth accumulated by consumption, and incline to invest in risk-free assets. At present, the aims of SWFs are mainly focused on the following five aspects, including stabilization the national balance sheet for different periods, diversification of the central bank's reserves, smoothening inter-generation revenue of country, prevention of national socio-economic crisis and assistance of the government’s overall development strategy.

Using the balance sheet approach in financial stability surveillance: Analyzing the Israeli economy's resilience to exchange rate risk

This paper presents a framework for analyzing an economy's resilience to exchange rate risk using the balance sheet approach (BSA), which is gaining prominence worldwide in the surveillance of financial stability. The framework is applied to Israel's economy, by using an unique and extensive dataset: a combination of new national balance sheet data and foreign currency balance sheet data. The analysis using the BSA shows that Israel's economy was highly vulnerable to a depreciation of the shekel in 1997, but from then until 2005 it became more resilient. The improvement was due mainly to the lowering of the business sector's high level of exposure to depreciation and its greater financial strength. This, together with higher capital adequacy in the banking system, made the latter more resilient to indirect damage that could be caused by depreciation. The analysis shows further that despite the heavy exposure of the economy as a whole and most sectors within it to appreciation of the shekel at the end of 2005, the economy was quite resilient to such appreciation, as the private sector and the banks suffered little direct or indirect damage through it. The analysis stresses the central, but not exclusive, role played by the banks’ resilience in the economy's financial stability, and thus also favors the continuation of the process of reducing the banks’ dominance in financing the business sector, so that their indirect exposure to financial risks will fall. The findings yielded by the BSA are highly significant, because an analysis using the traditional approach leads to very different results, viz., that in 1997 the economy was not vulnerable to changes in the exchange rate, and that in 2005 it was highly vulnerable to shekel appreciation. The conclusions in the paper support the use of the balance sheet approach as an important instrument in surveillance of financial stability, the formulation of other similar frameworks for analyzing financial risks, and the provision of more detailed data in the national balance sheet that would enable a deeper analysis of overall economic risks and the risks in the major sectors.

The US Dollar Shortage in Global Banking and the International Policy Response

Among the policy responses to the global financial crisis, the international provision of US dollars via central bank swap lines stands out. This paper studies the build-up of stresses on banks' balance sheets that led to this coordinated policy response. Using the BIS international banking statistics, we reconstruct the worldwide consolidated balance sheets of the major banking systems. This allows us to investigate the structure of banks' global operations across their offices in various countries, shedding light on how their international asset positions are funded across currencies and counterparties. The analysis first highlights why a country's national balance sheet, a residency-based measure, can be a misleading guide to where the vulnerabilities faced by that country's banking system (or residents) lie. It then focuses on banking systems' consolidated balance sheets, and shows how the growth (since 2000) in European and Japanese banks' US dollar assets produced structural US dollar funding requirements, setting the stage for the dollar shortage when interbank and swap markets became impaired.

Analysis of Renewable Energy Situation in Jordan

Jordan, like most developing countries, has problems, constraints, and difficulties that mandate increasing renewable energy (RE) technology utilization. The most effective argument in favor of the adoption of RE technologies in Jordan is that its lack of conventional energy sources is complemented by abundant RE resources. Because RE technologies are not complex, require less operating and maintenance costs and are inherently more environmentally benign than conventional energy sources foster their consideration by energy policy makers as essential components of the national energy balance. The most prudent approach to address this strategic issue is to alleviate the problems, constrains, and difficulties associated with each of the above-mentioned influencing factors. This paper analyzes the current energy situation in Jordan, and discuses the importance of increasing the role of RE technologies in the energy mix. It also discusses some success stories in the RE technologies domain, analyzes the barriers affecting their development, and suggests future courses of action in order to attain their maximum utilization potential. It is believed that this paper will benefit energy policy makers in Jordan, as well as in other developing countries.

Variazione di superficie e fissazione di carbonio in foresta nel territorio montano della Regione Veneto in riferimento all’applicazione del Protocollo di Kyoto

The Parties that have signed the Kyoto Protocol must reduce global emissions of Greenhouse Gasses (GHG) during the First Commitment Period (2008 - 2012) by at least 5% with respect to 1990. This share is 6.5% for Italy. The Kyoto Protocol lays down some measures for reducing GHG emissions, which include actions in agriculture and forestry. it will thus be possible to take emissions and absorptions resulting from land use changes into account in the National Balances. Given the widespread forests in Italy, it is very important to have an assessment of the aptitude of this sector to act as a carbon sink. In this study we analysed the variation of forestland cover in a mountain area of the Veneto Region (NE Italy). The analysis was done by comparing aerial photos taken in 1991 with orthophotos reported to 2003, by photointerpretation of points with casual distribution on sample areas, according to a stratified sampling. We estimated a statistically relevant increment of about 0.095% of forest land only up to 1500 m compared to the estimated forest cover for 1990 (about 42 ha), underlining how this low increase is mainly due to forest management. The second step was to estimate the fixed carbon in the areas where forests increased. This was achieved by collecting biometrical data in the field, and then using allometric functions. The annual carbon sink was estimated as 0.69 Mg ha-1 year-1. Comparing these results with previous studies done in the pre-alpine region we estimate the annual increment of the forest area in the whole Veneto region to be about 409.94 ha and that the total carbon sink is about 282.86 Mg C year-1. A method for estimating carbon sink in afforestation/reforestation areas is proposed that could also be applied to other sites in Italy.

Toward Self-Sustaining Stability? How the Constitutional Treaty Would Enhance Forms of Institutional and National Balance

The Treaty establishing a Constitution for Europe (CT) strengthens some of the federal features of the future European political order and, hence, makes it more appropriate to apply standards of assessment from federal thought. Stable and legitimate federal political orders require multiple forms of balancing. Many of the changes in the CT are improvements on the Nice Treaty in these regards, and the CT would therefore go some way toward creating a European political order more likely both to merit and facilitate trust and trustworthiness. Such trust is crucial if the institutions are to foster willing support and ‘dual loyalty’ among the citizenry and authorities toward both one's own member state and toward the union as a whole.

An International Relations Theory of Technological Change

Why are some countries more technologically innovative than others? National technological capability plays an important causal role in theories of war, alliance formation, and patterns of international trade and finance. However, explanations for national differences in technological capabilities have had little place in theories of international politics. This gap is the result of assumptions made by most IR theorists that the rate and direction of technological change are either random, scientifically determined, or structured solely by domestic institutions. This paper will bring together recent findings about the political economy of technological innovation in order to show that much of this conventional wisdom about technology is incorrect. Instead it will be theorized that, due to the distributive nature of technological change, each nation's balance of internal versus external threats to security determines its technological trajectory. That is, ceteris paribus, states concerned more with domestic security (the maintenance of civil order between domestic interest groups) should innovate relatively less; states concerned more with external security threats (to strategic economic inputs or military capability) should innovate relatively more. Put more simply, this paper will show how international relations are as important as domestic institutions, if not more so, in determining national innovation rates.

The post-Kyoto economy of Russia

The paper analyzes the global carbon dioxide balance and uses it to build Russia’s national balance, from which it follows that to develop its energy sector, which depends on fossil fuel combustion, Russia has forests with enough carbon absorptive capacity to last it, without applying costly carbon absorption technologies, until the end of this century.

Variation in Estimated Medicare Prescription Drug Plan Costs and Affordability for Beneficiaries Living in Different States

BackgroundMedicare Part D prescription drug plans (PDPs) implemented in January 2006 are designed to improve beneficiaries’ access to pharmaceuticals and use market competition to yield affordable drug costs. Variations in estimated PDP costs for beneficiaries living in different states have not previously been characterized.ObjectiveTo describe variations in the estimated costs of PDPs (plan premium, copays, and coinsurance) within and across states.DesignTo estimate PDP costs based on 4 actual patient cases that exemplify common conditions and prescription drug combinations for Medicare beneficiaries, we used the online tool provided by the Centers for Medicare and Medicaid Services.MeasurementsPrincipal study outcomes included (a) variation across states in the estimated annual cost of the lowest-cost PDP for each case and (b) variation in the estimated affordability of the lowest-cost PDPs across states, based on cost-of-living-adjusted median income for zero-earner households.ResultsFor all 4 patient cases, we found substantive within-state and between-state differences in the estimated costs of Medicare PDPs incurred by beneficiaries. The estimated annual costs to beneficiaries of the lowest-cost PDPs varied across states by as much as $320 for medications in the least expensive scenario, and by as much as $13,000 for the most expensive scenario. On average across states, a beneficiary with cost-of-living-adjusted median income would expect to spend 3%–28% of annual income to pay for medications in the lowest-cost PDPs in the 4 patient cases. The affordability of the lowest-cost plans varied across states, and for 2 of the 4 cases the lowest-cost PDP estimates were negatively correlated with cost-of-living-adjusted median income.ConclusionsSubstantive differences in estimated PDP costs are evident across states for patients with common Medicare conditions. Importantly, the lowest-cost plans were not proportionally affordable with respect to state-specific cost-of-living-adjusted median income. Refinement of the Medicare drug program may be needed to improve national balance in PDP affordability for beneficiaries living in different states.Electronic Supplementary MaterialSupplementary material is available for this article at http://dx.doi.org/10.1007/s11606-006-0018-y and is accessible for authorized users.

Forecasting natural gas prices using cointegration technique

AbstractThis paper uses Augmented Dickey‐Fuller and Phillips‐Perron technique for determining whether individual crude oil prices (West Texas Intermediate, Brent, Japan crude cocktail) and natural gas prices‐ Henry Hub (HH), National Balancing Point (NBP), European and Japanese liquefied natural gas (LNG) prices are stationary or non‐stationary. It then applies Johansen and Juselius cointegration technique for establishing long‐run correlation between respective oil prices and natural gas prices. The paper concludes that all individual series pertaining to oil and natural gas prices are non‐stationary and indeed having long‐run relationship, despite short term drift. Ordinary least square method was used to forecast individual natural gas prices in various markets, assuming of course, that historical relationship continues to hold with respective oil prices throughout the forecasting period. Natural gas prices in each of the markets are expected to be stronger during 2005–25 as compared to respective historical average prices showing the tightness of the market. The mean NBP and HH forecast during 2005–25 are expected to be 92 and 84 per cent stronger than the historical average, whilst LNG prices in Japan continue to exhibit stronger trends during the forecast period as compared to rest of the markets in Europe and North America ‐ showing greater dependency of imports and security of supply considerations.

Japan and the cross-Taiwan Strait conflict

An armed conflict between Taiwan and China is not unthinkable in the future. For historical, geographical, economic, and diplomatic reasons, Japan would not be able to stand on the sidelines. Relying on three major concepts—national interests, path dependence and balance of power, this paper explores Japan’s three possible roles in the event of a cross-Strait conflict. First, Japan could pass the buck, staying out of the conflict as much as possible and providing at most logistical and intelligence support for an American military operation. Second, it could balance power, throwing its weight behind Washington against Beijing. Finally, it could play peacemaker. At the end of the article, the author discusses several key factors that would shape Tokyo’s decision-making in the event of a cross-Strait conflict and assesses the relative probability of each option.

Nitrogen and Phosphorus Balances of Hungarian Farms as Management Tools for Sustainable Agriculture

At the moment, Hungarian agriculture is confronted with a certain duality as far as nutrients are concerned. On the one hand, national soil nutrient balances show substantial deficits, and on the other hand, agricultural nutrient use is responsible for a part of the nitrogen (N) and phosphorus (P) losses to the environment. To understand this duality and help optimize farm nutrient management, the farm gate N and P balances of 12 farms, representing a variety of Hungarian agriculture, were calculated for the year 2002. The farm gate N and P surpluses/deficits in the east of the country were lower than in the west. This was correlated with a lower fertilization rate. The low soil fertility level due to a prolonged period of low fertilization in combination with continuing nutrient deficits can lead to possible future reduction in crop yields.

Alfred Thayer Mahan and American Geopolitics: The Conservatism and Realism of an Imperialist

Debate about the goals of American foreign policy at the end of the twentieth century, especially that thread differentiating “conservative” from “neoconservative” perspectives, might profit by revisiting the debate over American expansion at the end of the nineteenth century. “I am an imperialist,” Captain Alfred Thayer Mahan once remarked, “simply because I am not isolationist.” This paper explores the connection between Mahan's defense of imperialism-often couched in terms of national interest and balance of power- and the norms of American power in world politics. The will-to-power behind American expansion and involvement, a formidable pillar in Mahan's realism, coexisted (often uneasily) with the affirmation of national purpose, a less formidable but still important part of Mahan's idealism. Mahan's strong conservative inclinations in politics were matched by a willingness to employ the tools of realism-particularly traditional diplomatic methods-as a way to uphold historic national goals and moral vision in American foreign policy. Far from seeing an irremediable conflict between the counsels of realism and limited moral gains in foreign policy, Mahan understood that governments are not immune from certain overall constraints. Seldom if ever could American actions abroad be defended by arguing solely for the maintenance or increase of national power.

Henry Hub and national balancing point prices: what will be the international gas price reference?

One of the lessons in the history of international trade in commodities is the emergence — sooner or later — of an international price reference, most commonly known as an international marker price. In the area of oil, West Texas Intermediate (WTI) plays the role of a marker for sour crudes traded in the Atlantic basin. Brent oil fulfils this function for sweet crudes traded in Europe. Another important aspect in the area of global commodities is that the emergence of a marker price is not always necessarily related to the relative share of production or exports of the commodity, but primarily to the existence of an organized market for this commodity. Today, while international gas trade is intensifying, we still lack an international price reference for this commodity. This is due to the fact that the international trade of natural gas is still highly regionalized. It is also due to the fact that most gas markets are still regulated. Nevertheless, deregulation efforts have been implemented in both developed (the United States, the United Kingdom, continental Europe, Korea) and developing countries (Brazil, Chile) and have led to new market structures based on more competition in all segments of the gas chain, except transportation. In the meantime, price structures based on supply and demand principles are supposed to have emerged in the US and UK markets in the 1990s as a result of the implementation of deregulation measures. Today, the US gas market, which represents more than 660 billion cubic metres per year of consumption and the UK gas market, which is close to 100 bcm annually, are considered mature enough to make the principles of supply and demand operate inside these markets. In fact, the Henry Hub (HH) price, which is determined at a physical location in Louisiana, US, and the national balancing point (NBP) price, which is determined somewhere inside the national transmission system (NTS), without any precise location, are considered as potential candidates to serve as a marker price in the international trade of gas. The objective of this paper is to examine some fundamental properties of the HH and NBP prices and assess which of them has the biggest potential to become an international price reference. Our main conclusions are: 1According to the relatively huge volume of gas traded on the US spot market, compared with the UK, and according to the experience accumulated by the New York Mercantile Exchange (NYMEX) in gas trading, the HH price has a bigger potential than the NBP to become an international price reference, particularly because the UK market is supposed to import more and more gas indexed to oil in the coming years. 2However, on the price fluctuation side, the NBP spot price seems to fluctuate more normally than the HH price in the short term, which can give a certain advantage to NBP prices. 3We cannot exclude the fact that in the coming years we will have two or even more reference prices in the Atlantic Basin: the NBP, the HH and also reference prices at other regional hubs.

Peer Violence in Children's Residential Care

Children, Youth and Environments Vol. 15 No. 2 (2005) ISSN: 1546-2250 Peer Violence in Children’s Residential Care Barter, Christine and Renold, Emma and Berridge, David (2004). Basingstoke, UK: Palgrave Macmillan; 249 pages. $75.00 (hard). ISBN 1403935599. The advent of this book is particularly timely as it coincides with the conclusion of a landmark British court case, thought to be the first involving peer abuse in a United Kingdom boarding school. In the book there is no statement about the intended audience but it can be presumed that it specifically includes not only practitioners but also researchers and administrators. It is potentially of general use for all those concerned with any aspect of residential and boarding education and care. The four authors are experienced researchers linked variously with Cardiff University, Luton University and the National Society for the Prevention of Cruelty to Children (NSPCC). While all have had long associations with research, none has been a practitioner. 443 The book describes the main results of a research program funded by the Economic and Social Research Council (ESRC) under the Violence Research Programme. There are eight chapters and a conclusion. The inventory of summary points at the end of each chapter is of great value. There are also a detailed bibliography and three appendices of which Appendix A, “Researching Violence” and Appendix B, “Analysing the Data,” are relevant in assessing the research. Chapter One sets out the background to the program with a detailed discussion on violence, including abuse and bullying, and how these can be considered together if the focus is upon the overall impact. Residential child care is equated solely with children’s homes. This is perplexing in that there is also in this chapter a good survey of violence in other sectors including custodial care and boarding schools. The point is made that transfer of practice from non-residential settings such as schools can be dangerous but surely there is a very good case for transfer among different types of residential environment. Work was undertaken in 13 residential homes chosen to reflect the national balance between local authority, private and voluntary homes. Interviews were conducted with 71 children and young people and to these were added interviews with staff and observations by the researchers. Given these numbers, results must be taken as indicative rather than definitive of the state of violence in children’s homes. Most of the research involved semi-structured interviews but, in attempting to elicit the views of the young people, use was made of four vignettes. Of these vignettes, one was essentially discarded as it proved relatively incomprehensible to the young people. In summary, the research provides a privileged view inside a number of children’s homes and a unique focus upon peer violence. Chapter Two makes a distinction between high- and low-level violence and includes a good section on bullying. Following the discussion, the homes could be placed into one of three categories, according to the level of violence. This violence continuum provides the model for the research. In assessing 444 the homes, the main input was from interviews with the young people. The researchers also rated the homes but exactly how this was achieved is not mentioned. Appendix A sets out in detail the intentions of the research with regard to the young people and the potential emotional distress that might be occasioned during interviews. This is illustrated clearly in Chapter Three which provides a compelling look at the perspective of young people. Among a wide variety of interesting points, the distinction between micro- and macro-cultural codes is made. Also, highly relevant in all forms of residence for children is the section on the pecking order including insights into “positioning” and “acting out.” Useful distinctions are made in the field of physical violence between what are taken to be the masculine and the feminine approaches, while the subdivision of retaliation into spontaneous and planned provides material for thought. Many readers and practitioners will find the comments by staff in Chapter Four enlightening. The key factors in violence are set out as: (i) peer group; (ii) gender; (iii) race; (iv) age; and (v) background. For many staff the peer...

How can small donors contribute to sustainable development in large regions? The case of NZAID in Latin America

Donors face many issues when trying to support development goals in large regions such as Latin America. In their attempts to channel assistance to appropriate end‐users, they also have to provide coherence with national strategy, balance supply and demand of technical resources, and ensure accountability to their taxpayers. Resolution of these issues requires considerable focus and a clear understanding of all relevant factors. This is particularly so for, but not exclusive to, small donors. This paper provides agencies with a model to assess regional involvement and create a decision‐making framework for future investments. It places the quality of aid above the quantity of donation.