A Summary of the Bank of Canada Conference on Fixed-Income Markets, 3-4 May 2006

The Bank of Canada's interest in fixed-income markets spans several of its functional areas of responsibility, including monetary policy, funds management, and financial system stability and efficiency. For that reason, the 2006 conference brought together top academics and central bankers from around the world to discuss leading-edge work in the field of fixed-income research. The papers and discussions cover such topics as the efficiency of fixed-income markets, price formation, the determinants of the yield curve, and volatility modelling. This article provides a short summary of each conference paper and the ensuing discussion.

Asset Auctions, Information, and Liquidity

A model is presented of a uniform price auction where bidders compete in demand schedules; the model allows for common and private values in the absence of exogenous noise. It is shown how private information yields more market power than the levels seen with full information. Results obtained here are broadly consistent with evidence from asset auctions, may help explain the response of central banks to the crisis, and suggest potential improvements in the auction formats of asset auctions.adverse selection, market power, reverse auctions, bid shading

Broadbasing and Deepening the Bond Market in India

At the time of its independence in 1947 India had only the traditional commercial banks, all with private sector ownership. Like the typical commercial banks in other parts of the world, all banks in India were also not keen to provide medium and long-term finance to industry and other sectors for their fixed asset formation. The banks were willing to fund basically the working capital requirements of the credit-worthy borrowers on the security of tangible assets. Since the government was keen to stimulate setting up of a wide range of new industrial units as also expansion/diversification of the existing units it decided to encourage setting up of financial intermediaries that provided term finance to projects in industry. Thus emerged a well-knit structure of national and state level development financial institutions (DFIs) for meeting requirements of medium and long-term finance of all range of industrial units, from the smallest to the very large ones. Reserve Bank of India (the central banking institutions of the country) and Government of India nurtured DFIS through various types of financial incentives and other supportive measures. The main objective of all these measures was to provide much needed long-term finance to the industry, which the then existing commercial banks were not keen to provide because of the fear of asset-liability mismatch. Since deposits with the banks were mainly short/medium term, extending term loans was considered by the banks to be relatively risky. The five-year development plans envisaged rapid growth of domestic industry even in the private sector to support the import substitution growth model adopted by the national planners. To encourage investment in industry, a conscious policy decision was taken that the DFIs should provide term-finance mainly to the private sector at interest rates that were lower than those applicable to working capital or any other short-term loans. In the early years of the post-Independence period, shortages of various commodities tended to make trading in commodities a more profitable proposition than investment in industry, which carried higher risk. Partly to correct this imbalance, the conscious policy design was to increase attractiveness of long-term investment in industry and infrastructure through relatively lower interest rates. To enable term-lending institutions to finance industry at concessional rates, Government and RBI gave them access to low cost funds. They were allowed to issue bonds with government guarantee, given funds through the budget and RBI allocated sizeable part of RBI's National Industrial Credit (Long Term Operations) funds to Industrial Development Bank of India, the large DFI of the country. Through an appropriate RBI fiat, the turf of the DFIs was also protected, until recently, by keeping commercial banks away from extending large sized term loans to industrial units. Banks were expected to provide small term loans to small-scale industrial units on a priority basis.

Cost-Benefit Analysis of the Large Hadron Collider to 2025 and beyond

Social cost-benefit analysis (CBA) of projects has been successfully applied in different fields such as transport, energy, health, education, and environment, including climate change. It is often argued that it is impossible to extend the CBA approach to the evaluation of the social impact of research infrastructures, because the final benefit to society of scientific discovery is generally unpredictable. Here, we propose a quantitative approach to this problem, we use it to design an empirically testable CBA model, and we apply it to the the Large Hadron Collider (LHC), the highest-energy accelerator in the world, currently operating at CERN. We show that the evaluation of benefits can be made quantitative by determining their value to users (scientists, early-stage researchers, firms, visitors) and non-users (the general public). Four classes of contributions to users are identified: knowledge output, human capital development, technological spillovers, and cultural effects. Benefits for non-users can be estimated, in analogy to public goods with no practical use (such as environment preservation), using willingness to pay. We determine the probability distribution of cost and benefits for the LHC since 1993 until planned decommissioning in 2025, and we find there is a 92% probability that benefits exceed its costs, with an expected net present value of about 3 billion euro, not including the unpredictable economic value of discovery of any new physics. We argue that the evaluation approach proposed here can be replicated for any large-scale research infrastructure, thus helping the decision-making on competing projects, with a socio-economic appraisal complementary to other evaluation criteria.Comment: 17 pages, 7 figure

The Lasting Effects of Crime: The Relationship of Discovered Methamphetamine Laboratories and Home Values

This study estimates a household’s willingness to pay to avoid the stigma of crime while minimizing concerns of omitted variable bias. By assuming methamphetamine producers locate approximately at random within a narrowly defined neighborhood, this study is able to use hedonic estimation methods to estimate the impact of the discovery of a methamphetamine laboratory on the home values near that location. Specifically, the analysis designates those closest to the site as the treated, while those slightly farther away act as the comparison group. The discovery of a methamphetamine laboratory has a significant effect on the property values of those homes close to the location that peaks from six to 12 months after each lab’s discovery. The estimates found in this study range from a decrease in sale prices of ten to nineteen percent in the year following a laboratory’s discovery compared to the prices for homes that are farther away but still in the same neighborhood. Surprisingly, the impact does not appear to depend on intensity as both the discovery of a second lab and being very close to the discovered lab do not adversely impact home values.Location choice, crime valuation, methamphetamine, housing prices

The course of lectures on discipline “Intellectual property” (for the 5 year students of the specialty 8.03060101 “Management”)

Затверджено на засіданні кафедри менеджменту інноваційної діяльності та підприємнцтва. Протокол No 1 від 27 серпня 2015 р. Рекомендовано методичною комісією факультету управління і бізнесу у виробництві ТНТУ імені Івана Пулюя. Протокол No 6 від 26 лютого 2016 р.У методичних вказівках, у відповідності до робочої програми, сформовано лекційний матеріал з дисципліни “Інтелектуальна власність” для іноземних студентів спеціальності 8.03060101 “Менеджмент організацій та адміністрування”.Методичні вказівки призначені для допомоги іноземним студентам при вивченні курсу “Інтелектуальна власність”. У методичних вказівках містяться загальні теоретичні відомості, необхідні до вивчення даного курсу. Рекомендовано для іноземних студентів спеціальності 8.03060101 “Менеджмент організацій та адміністрування” з метою закріплення, поглиблення і узагальнення знань, одержаних студентами за час навчання та їх застосування до комплексного вирішення конкретного фахового завдання із дисципліни “Інтелектуальна власність”. Складено з урахуванням робочої програми вивчення курсу, методичних розробок інших вузів, а також матеріалів літературних джерел, наведених у рекомендованій літературі

Water Quality and Residential Property Values: A Natural Experiment Approach

We use hedonic techniques to measure the impact of improved water quality on inland real estate values. By considering a unique natural experiment setting where consistent and recognizable variation in water quality across two rivers within a small geographic area is well known to market participants, we avoid the major problems inherent in hedonic water quality studies. Controlling for spatial autocorrelation, results show that land and property values increase more substantially with proximity to the non-contaminated river as opposed to the mercurycontaminated river that carries a fish consumption advisory. Results suggest that the value of improving water quality to a level that will remove the advisory is between $7.3 and$12 million. Key Words: