Narrow Results

The standard multivariate test of Gibbons et al. (1989) used in studies examining relative performance of alternative asset pricing models requires the number of stocks to be less than the number of time-series observations, which requires stocks to be grouped into portfolios. This results in a loss of disaggregate stock information. We apply a new statistical test to get around this problem. We find that the multivariate average F-test developed by Hwang and Satchell (2014) has superior power to discriminate among competing models and does not reject tested models altogether, unlike the standard multivariate test. Application of the multivariate average F-test for examination of relative performance of asset pricing models demonstrate that a parsimonious 6-factor model with the market, size, orthogonal value, profitability, investment, and momentum factors outperforms all other models.

In this study, we aim to test the pricing power of market liquidity in the cross-section of US stock returns. We examine three liquidity measures: Pástor and Stambaugh (2003)’s liquidity factor, Bali et al. (2014)’s liquidity shocks, and Dreshsler, Savov, and Schanbl (2017)’s money market liquidity premium. With a large set of test assets and the time-series regression approach of Fama and French (2015), we find that aggregate liquidity is not priced in the cross-sections of stock returns. That is, adding the liquidity factor to common asset-pricing models does not improve the performance of models significantly. Therefore, our results call for more research on the impact of aggregate liquidity on the stock market.

Energy efficiency means using less energy while still maintaining the same service. For example, an inefficient or efficient car will get you where you need to go, but a car that can go 60 miles on a gallon of gasoline will need less fuel to get you there. In the United States, about $60–115 billion dollars is spent on energy efficient investments each year (estimates vary depending on the methodology used). This chapter discusses which types of households and businesses are most likely to make efficiency investments, and why. We start with the residential sector (homes), and then proceed to businesses. Based on our findings we conclude with 10 recommendations on ways to increase energy efficiency investments.

While billions have been invested globally in efforts to tackle climate change, the threat is urgent and the world is not on track to achieve the goal to limit temperature rises to below 2°C. The last Intergovernmental Panel on Climate Change report shows that a $1.6–3.8 trillion energy system investment is needed to avoid the most harmful effects of climate change (IPCC, 2018). Further, the UN Adaptation Gap report suggests that $140–300 billion are needed annually for investments in adaptation (UNEP, 2018)…

This chapter finds out how money from the governments of developed countries that is allocated to reducing greenhouse gas emissions (GHG) is spent to increase private companies’ investment in Indonesia. To reduce GHG, Indonesia and other developing countries need about $180–540 billion investment per year between 2010 and 2030 (Fankhauser et al., 2016). To fill in this gap, some donor countries such as the UK include leveraging private investment as their performance indicator and allocate some of their money to leverage green investment in Indonesia. So far, there is very little information on how this money is spent to achieve its aim. This chapter addresses three main questions: (1) Who are the major private-sector actors in Indonesia with a potential role in reducing emissions? (2) How has money to reduce GHG emissions been used to leverage the private sector’s investment in Indonesia’s GHG emission reduction? (3) Does money to reduce emissions take into account the perceived incentives of the private sector and its patterns of interaction, to leverage its investments in Indonesia’s GHG emission reduction?

This paper is a brief survey of systematic violations of security market efficiencies in the US, Japan and other world wide equity markets. These security market regularities or anomalies seem to occur because of cash flow, institutional constraints and policies, investor behavior and sentiment, the slowness of markets to react to new information, the timing of favorable or unfavorable information flows and market maker supply–demand balances and optimal bid–ask spreads. While such anomalies are controversial and difficult to measure precisely as well as being variable over time, the persistence of many of these market regularities is of considerable interest to researchers and financial traders.

Developing economies, especially emerging market economies (EMEs), face complex challenges in investing for growth, including building infrastructure. Many developing economies are trying to sustain the growth catch-up process, and manage disruptions related to transition to the “new economy”, as well as headwinds from protectionist tendencies in trade and technology. Investing for the long term — including in infrastructure — has therefore become a critical issue. In this context, the Belt and Road Initiative (BRI) has captured the imagination of the world. An ambitious initiative involving more than 70 countries collaborating through investments in infrastructure, it seeks to improve connectivity for cross-border trade and investment, and generate economic benefits for the countries involved. It seeks to address large infrastructure gaps and build capacities for growth. And it helps countries unable to get affordable financing for plugging savings-investment shortfalls. However, the BRI has drawn criticisms over China’s underlying geopolitical motives, and BRI partner countries have been warned of the risk of becoming heavily indebted or getting locked into business platforms created by China. This paper aims to contribute to the policy debate over the BRI from an ASEAN perspective. It analyzes the reasons for the persistent infrastructure investment gaps in EMEs from an ASEAN perspective; assesses whether BRI is more of a development opportunity or a debt trap; outlines a framework to address the risks and concerns in order to unlock the potential benefits; and uses case studies both outside of and within the ASEAN region to distil key themes needing policy attention.

In recent years, China has been catching-up with other advanced economies and become one of the “leading geese” in the Asian economy. China not only plays a leading role in regional production network but also in various regional economic cooperation. Indonesia, being one of the following geese, needs to adjust its position to benefit from this change in global and regional order. While other more advanced economies have less to offer, Indonesia has gradually moved closer toward China in terms of economic cooperation. Using the flying geese model, this paper argues that China’s BRI might change trade and investment trends in Indonesia. China BRI might complement the role of Japan as a catalyst for economic development in the Asian region in general and in Indonesia in particular. There is no official BRI project agreed by Indonesia so far. However, there are a number of completed and ongoing China–Indonesia projects, which arguably might pave the way for future BRI investment. Currently, apart from the Jakarta–Bandung high speed railways, most of the projects are concentrated in resource-exploitation needed by China and the fulfilment of Indonesian development needs, such as power generation, mineral smelters and industrial parks. From the Beijing’s perspective, these projects are perceived as part of BRI. Since these so-called BRI projects have not been completed, it is therefore impossible to assess their impacts on Indonesia’s industrialization at this point. However, we can still argue that BRI might have initiated a new type of investment that might in turn change the industrial trends, structure and performance in Indonesia. If this change leads to improvement in products quality or value added, industrial upgrading, technological transfer and export boost, then one may argue that BRI has brought promised benefits to the host economy (i.e., Indonesia). Otherwise, the benefits would be negligible.

This chapter provides insights into varying perspectives on climate change which underpin the politics circumventing this subject. Several reports and experts have discussed the pitfalls of politicking around a subject as overpowering and overwhelming as climate change which has been the outcome of humanity’s unrelenting assault on the very resources which support life on this beautiful blue planet, Earth. Evidently, countries have been evading responsibilities as the pollutants that cause climate change mix across national borders. This blue planet has been warming at an unprecedented rate; especially so in the last 50 years and cooperative actions and mechanisms with the political will to implement these must be the way forward. However, whether governments will cooperate by investing in institutions and technologies and provide required financial support needed to reduce the carbon footprint of human actions depends on their chosen priorities. Countries clearly vary in population, affluence, technology as also in terms of their relative vulnerability to climate impacts — factors that, among others, affect how much they are willing to pay to address global climate change. Hence, in the first section this chapter interrogates the capacity of governments to pledge their commitment to climate action. The second section comprises the structure of the volume as it aims to deepen the debate and understanding of contemporary climate change narratives.

The development of the export potential of the Southern Federal District of the Russian Federation is associated with the justified need to increase the capacity of transport and logistics infrastructure of the studied region and make more rational use of its geopolitical potential. Using geopolitical potential, regions of the Russian Federation seek to optimize the development of competitive industries in areas of economic activity, expanding export potential and pursuing the objectives of government policy to increase the region’s non-resource and non-energy exports, including from the perspective of the region’s transit potential. In essence, the concepts of export potential and transit potential are interrelated and interdependent; In practice, the formation and development of one provoke the growth of the other. Transit and export potential are concepts based on export-oriented production and on the capacity of transport and logistics infrastructure. Investments in the construction of regional distribution centers, which are embedded in the distribution chains of industries operating in the region, have the greatest importance in developing the transit and export potential of the logistics system. The chapter identifies the need to transition logistics services provided in the Russian Federation to a new integrated level of service. The reason for this situation is the increasing demand for quality and accelerated time performance of services every year, as evidenced by the expansion of the very concept of fulfillment. The authors applied statistical analysis and comparison methods, sampling, correlation and regression, and horizontal and vertical analysis. Investments in the construction of logistics centers are objectively local in practice, i.e., they have a local character. The investor receives the necessary information via the relevant ministries and departments, and the possible benefits and threats in terms of production location and preferences are considered in the investment decision-making process. In this process, the agencies must be fully involved in preparing a package of information on the available transport and logistics options for the transport and marketing of products. Implementing an investment project is a lengthy process. By understanding the investor’s needs, it is possible to offer solutions that are as attractive as possible for the investment. Since the necessary transport and logistics system will be developed by local businesses and logistics operators, the regional economy receives significant benefits realized in the creation of new jobs and increased revenues for the regional budget.

We consider the optimal investment and consumption policy for a constant absolute risk averse investor who faces fixed and/or proportional transaction costs when trading a stock and maximizes his expected utility from intertemporal consumption. We show that the Hamilton-Jacobi-Bellman PDE with free boundaries can be reduced to an ODE, which greatly simplifies the problem. Using the stochastic impulse and singular control techniques, we then derive the optimal investment and consumption policy. In particular, when there are both fixed and proportional costs, it is shown that the optimal stock investment policy is to keep the dollar amount invested in the stock between two constant levels and upon reaching these two thresholds, the investor jumps to the corresponding optimal target level.

Drawing on expenditure and survey data from the Gold and Sunshine Coasts in Queensland, Australia, this chapter compares expenditures on beaches relative to their recreational benefits. Beaches are found to be exceptional investments. The comparison of the two councils also provides insights into their relative capacity to adapt to the adverse impacts of climate change. The Gold Coast can rely to some extent on historical large investments in infrastructure to defend itself against change. In contrast, the Sunshine Coast has more options which may lower the cost of adaptation e.g., it can rely more heavily on retreating from change in certain locations because of historical investment in dunal buffer zones. However, historical investment patterns impact in different ways on the environmental quality of beaches and the benefits provided to users and non-users. Limitations and areas of future research are also outlined.

This is a study of competing visions or designs of trans-Pacific economic cooperation, and attempts to unify, or retain, the differences that have evolved, in the organization and objectives of the multilateral Asia — Pacific Economic Cooperation (APEC) forum. This analysis also demonstrates the challenges faced by groups of countries with very different political-economy structures and values as they attempt to constitute an arrangement to gain trade advantages. Differences over how best to reach APEC's goals of trade liberalization, the extent to which APEC should be institutionalized, and the items to be put on the agenda of the annual conferences are at times so deep that the effective functioning of the forum itself gets questioned. There has been no shortage of meetings or reports within APEC, except that they typically lead to extremely few concrete proposals that all parties could agree on to implement and evaluate together, and even fewer results.

The contention in designing alternative visions for APEC may be seen as a reflection of opposing interests on liberalization and institutionalization within the forum between the United States, developed or industrialized countries and open export-oriented market economies on the one hand, and China and developing or industrializing countries on the other hand, with Japan having moved from the predominantly “Western” “camp” to the mostly “Asian” one. Fundamentally, while adherents of the “Western” design would like to promote economic competition and perpetuate the advantages that they enjoy with trade and investment liberalization, advocates of the “Asian” vision still believe to some extent in preserving the business-political nexus and industrial policies that have brought a respectable measure of political stability, material prosperity and diplomatic influence to countries like Japan, South Korea, Taiwan and Singapore. These two roadmaps reflect differences of interest and value, and are not easily reconcilable.

This paper is a brief survey of systematic violations of security market efficiencies in the US, Japan and other world wide equity markets. These security market regularities or anomalies seem to occur because of cash flow, institutional constraints and policies, investor behavior and sentiment, the slowness of markets to react to new information, the timing of favorable or unfavorable information flows and market maker supply-demand balances and optimal bid-ask spreads. While such anomalies are controversial and difficult to measure precisely as well as being variable over time, the persistence of many of these market regularities is of considerable interest to researchers and financial traders.

Over the years, India's development cooperation has evolved in its modalities and quantum. In the recent past, India has gone beyond the traditional role of supplier of skills and capacity building to a major source of investment and provider of highly sophisticated technology. India's major initiative in this regard has been in the agriculture and pharmaceutical sector. This chapter further explores the issues linked with India's emergence as source of investment and technology in development partnership and assess its ongoing engagements in this milieu. The rapid economic development of the emerging economies has amplified their presence in the development assistance programme for fellow developing countries. These economic linkages are being further intensified with increasing trade, investment and technology transfer. FDI outflows from emerging countries witnessed substantial expansion, reaching 35% of total FDI in 2012. Investments from India have expanded significantly in the past two decades. Indian companies are rigorously investing abroad particularly in information and communication technology and pharmaceuticals for setting up trading outlets and distribution networks. Further, emerging economies are increasingly acknowledging the gains from strengthened collaboration in science and technology. The recent signing of agreements between IBSA member to collaborate more closely in science and technology reflects this realization. Since its onset, this constructive engagement was challenged by absence of adequate and trained manpower. In this context, India has made concerted efforts for enhancing technical cooperation and capacity building for fellow developing countries. ITEC and SCAAP (Special Commonwealth Assistance for Africa Programme) are two important programmes in that direction. India has provided over US$2 billion worth of technical assistance through ITEC since its inception in 1964.

Since 1991, India has witnessed wide-ranging economic reforms in its policies governing international trade and foreign direct investment (FDI) flows which has consequently led to a dramatic rise in both trade and FDI flows since then. Using firm-level panel data, this chapter investigates whether these trends have contributed to significant productivity improvements since 2000, as measured by total factor productivity (TFP). In addition, the chapter also examines the determinants of TFP across a range of different industry categories. The results suggest the existence of significant productivity improvements since 2000 and also identify variables such as imports of raw materials and capital goods, size of operation, quality of employment captured by wage rates, and technology imports as crucial determinants of productivity.

This chapter provides an empirical investigation of the main determinants of entrepreneurial activities across three groups of countries over the period 2004–2008, by specifically examining the importance of institutional setting and economic growth on entrepreneurial activities. The classification of countries is based on the Economic Freedom Index and the World Economic Forum (2011) which groups them on the basis of whether they are innovation-driven, efficiencydriven, or factor-driven countries. On the one hand, empirical results find a positive and significant role for economic freedom to accelerate entrepreneurial activities and growth in innovation and efficiency-driven countries characterized by strong institutional systems. On the other hand, the results suggest that in factor-driven countries characterized by relatively less economic freedom and weak institutions, there is a significant negative relationship between economic freedom and entrepreneurial activities.