Project FATIMA Final Report: Part 2

The final report of project FATIMA is presented in two parts. Part 1 contains a summary of the FATIMA method and sets out the key recommendations in terms of policies and optimisation methodology from both project OPTIMA and project FATIMA. Part 1 is thus directed particularly towards policy makers. Part 2 contains the details of the methodology, including the formulation of the objective functions, the optimisation process, the resulting optimal strategies under the various objective function regimes and a summary of the feasibility and acceptability of the optimal strategies based on consultations with the city authorities. This part is thus mainly aimed at the professional in transport planning and modelling

Risk and return of open-end real estate funds : the German case

Open-end real estate funds (so called “Offene Immobilienfonds”) play a major role in the German market for securitised real estate investments. Such funds are pools of money from many investors, which are invested in real estate by special investment management companies. This study seeks to identify the risk and return profile of this investment vehicle (before and after income taxes), to compare them with those of other major asset classes, and to provide implications for their appropriate role in a mixed-asset portfolio. Addition-ally, an overview of the institutional architecture and role of German open-end real estate funds is given. Empirical evidence suggests that the financial characteristics of open-end real estate funds are in many respects similar to those reported for direct real estate invest-ments. Accordingly, German open-end real estate funds qualify for medium and long-term investment horizons, rather than for shorter holding periods

Pension systems and financial systems in Europe: a comparison from the point of view of complementarity : [Version July 2001]

At present, the question of how national pension or retirement payment systems should be organised is being hotly debated in various countries, and opinions vary widely as to what should be regarded as the optimal design for such systems. It appears to the authors of the present paper that in this entire discussion one aspect is largely overlooked: What relationships exist between the pension system and the financial system in a given country? As such relationships might prove to be important, the present paper investigates the following questions: (1) Are there differences between the national pension systems of three major European countries – Germany, France and the U.K. – and between the financial systems of these countries? (2) And if the existence of such differences can be demonstrated, is there a correspondence between the differences with respect to the various national pension systems and the differences as regards the countries’ financial systems? (3) And if such a correspondence exists, is there any kind of interrelationship between the national financial and pension systems of the individual countries which goes beyond a mere correspondence? Looking mainly at two aspects – namely, risk allocation and the incentives to create human capital – the authors of this paper argue (1) that there are indeed considerable differences between the financial and pension systems of the three countries; (2) that in both Germany and the U.K. there are also systematic correspondences between the respective pension systems and financial systems and their economic characteristics, but that such a correspondence cannot be identified in the case of France; and (3) that these parallels are, in the final analysis, based on complementarities and are therefore likely to contribute to the efficiency of the German and the British systems. The paper concludes with a brief look at policy implications which the existence of, or the lack of, consistency between national pension systems and national financial systems might have

Asymmetric Taxation and Cross-Border Investment Decisions

This paper analyzes the impact of particular loss offset limitations on intrastate and cross-border investment decisions. Investment can be realized in the investor’s domestic business, in a foreign branch or in a foreign subsidiary. The relative impact on the optimal real investment alternative compared to the optimal financial investment alternative indicates the investment incentives of tax law asymmetries. Integrating an initial loss carryforward at the time of investment creates a special decision situation. Varying loss offset parameters typically induces ambiguous effects that depend on the combination of all parameters under consideration. On average, a domestic minimum tax and a time limit on loss carryforwards tend to depress real investment. However, it is possible to find counter-examples. Real investment projects with decreasing cash flows and expected infra-marginal projects are less likely to be discriminated against than projects with increasing cash flows and expected marginal projects, respectively. An initial loss carryforward generates a domestic lock-in effect that may be intensified by loss offset limitations. Depending on the parameter setting, the opposite – a push-out effect – may occur as well.investment, asymmetric taxation, loss offset, loss carryforward, minimum tax

International Equity Portfolios and Currency Hedging: The Viewpoint of German and Hungarian Investors

In this paper we study the benefits derived from international diversification of stock portfolios from German and Hungarian point of view. In contrast to the German capital market, which is one of the largest in the world, the Hungarian Stock Exchange is an emerging market. The Hungarian stock market is highly volatile, high returns are often accompanied by extremely large risk. Therefore, there is a good potential for Hungarian investors to realize substantial benefits in terms of risk reduction by creating multi-currency portfolios. The paper gives evidence on the above mentioned benefits for both countries by examining the performance of several ex ante portfolio strategies. In order to control the currency risk, different types of hedging approaches are implemented

The changing pattern of foreign direct investment in Latin America

Latin America has regained attractiveness for foreign direct investment. However, it is still uncertain whether the recent boom of capital inflows is sustainable, and which countries are well prepared to benefit from the current trend towards globalized production. Economic policies pursued by Latin American governments are shown to be of overriding importance for explaining why the region as a whole lost ground vis-a-vis Asian competitors for foreign direct investment, and why some Latin American economies were more successful than others in restoring their locational attractiveness.

Financing technology transfer

Global policy discussions increasingly focus on innovation and the knowledge economy as a driver of long-term growth. In parallel new forms of innovation processes are emerging, notably open innovation and innovation networks stressing the importance of connections between various stakeholders. Links between universities and the business sector are of particular importance as many inventions come out of universities but have to be further developed to become economically relevant innovations. New financing instruments and attracting private investors to technology transfer (TT) are necessary but difficult as the patterns of risk and information in this “in-between area” is complex: Technology is not basic anymore and it requires large amounts of capital to be scaled up – with uncertain market prospects. This paper addresses new financial instruments for TT, building on European Investment Fund’s experience in this field.Technology Transfer; Financing; Innovation; Commercialisation; Funding gap; Patents; Licensing; Intellectual Property

Innovation, Entrepreneurship and Governance for Sustainable Development of Africa’s Agri-food System

Africa has the human capital to transform its agricultural sector Growth in urban markets provides new opportunities for enterprise development Investments in science, technology, engineering and math must be increased Bold leadership, as well as policies that promote R&D collaboration and provide incentives for partnering with the private sector, should be implemented

Optimal Power-Down Strategies

We consider the problem of selecting threshold times to transition a device to low-power sleep states during an idle period. The two-state case, in which there is a single active and a single sleep state, is a continuous version of the ski-rental problem. We consider a generalized version in which there is more than one sleep state, each with its own power-consumption rate and transition costs. We give an algorithm that, given a system, produces a deterministic strategy whose competitive ratio is arbitrarily close to optimal. We also give an algorithm to produce the optimal online strategy given a system and a probability distribution that generates the length of the idle period. We also give a simple algorithm that achieves a competitive ratio of $3 + 2\sqrt{2} \approx 5.828$ for any system

An Overview of Economic Approaches to Information Security Management

The increasing concerns of clients, particularly in online commerce, plus the impact of legislations on information security have compelled companies to put more resources in information security. As a result, senior managers in many organizations are now expressing a much greater interest in information security. However, the largest body of research related to preventing breaches is technical, focusing on such issues as encryption and access control. In contrast, research related to the economic aspects of information security is small but rapidly growing. The goal of this technical note is twofold: i) to provide the reader with an structured overview of the economic approaches to information security and ii) to identify potential research directions