Agency Conflicts, Asset Substitution, and Securitization

Asset-backed securities represent one of the largest and fastest growing financial markets. Under securitization, agents perform functions (for fees) that would alternatively be performed by a vertically integrated lender with ownership of a whole loan. We examine how outsourcing impacts performance using data on 357 commercial mortgage-backed securities deals with over 46,000 individual loans. To alleviate agency conflicts in managing troubled loans, underwriters often sell the first-loss position to the special servicer, the party who is charged with handling delinquencies and defaults. When holding the first-loss position, special servicers appear to behave more efficiently, making fewer costly transfers of delinquent loans to special servicing, but liquidating a higher percentage of loans that are referred to special servicing. Special servicers are also more likely to own the first loss position in deals that require additional effort (deals with higher delinquencies). Market pricing reflects the existence of agency costs. Despite the apparent reduction of agency costs, the first-loss position is increasingly owned by a party other than the special servicer. We pose a number of explanations, including conflicts between junior and senior securities holders (the asset substitution problem) and risk aversion among special servicers. Consistent with asset substitution, we show that special servicers delay liquidation when they hold the first-loss position in deals with more severe delinquency problems.

A Conjoint Analysis of Wetland-Based Recreation: A Case Study of Louisiana Waterfowl Hunting.

Conjoint analysis is a recent evolution in mathematical psychology that has been employed extensively in the marketing environment. The technique is concerned with measuring the joint effect of two or more independent variables on the ordering of a dependent variable. Conjoint analysis relates an individual\u27s preferences to a set of prespecified attributes. The objective of conjoint analysis is to decomposed a set of responses to factorially designed stimuli in which the utility of each stimuli attribute can be inferred from the respondents\u27 evaluations of the stimuli. In addition, conjoint analysis and its economic foundations are developed in the context of conventional related market and non-market valuation approaches. Given the multiattribute nature of wetland based activities such as waterfowl hunting, conjoint analysis becomes an attractive approach in estimating the benefits and values derived from wetland based activities. An empirical and economic analysis is presented in which waterfowl hunters\u27 willingness-to-pay for various hunting trip attributes is derived from a rank-ordered logit specification of the indirect utility function. The hunting trip vignettes are developed according to seven different attributes with each attribute varying across three levels using a fractional factorial experiment. The data for the analysis were derived from questionnaires mailed to 7,500 randomly selected individuals who purchased 1990 Louisiana duck stamps. The statistical estimation technique employed in this research was rank-ordered logit via weighted least squares. Weighted least squares was chosen due to the presence of heteroskedasticity and uncertainty regarding the properties of the error term which masks the efficiency of the ordinary least squares regression. A Box-Cox transformation was also employed to test for specification of the functional form. The results indicated that the length of the hunting season, the daily duck bag limit, and the rate of congestion were three significant factors influencing waterfowl hunters\u27 trip rating preferences. In addition, conjoint analysis appears to be a viable technique for analysis of resource based multiattribute activities

The Impact of Capital Intensive Farming in Thailand: A Computable General Equilibrium Approach

The aim of this study is to explore whether efforts to encourage producers to use agricultural machinery and equipment will significantly improve agricultural productivity, income distribution amongst social groups, as well as macroeconomic performance in Thailand. A 2000 Social Accounting Matrix (SAM) of Thailand was constructed as a data set, and then a 20 production-sector Computable General Equilibrium (CGE) model was developed for the Thai economy. The CGE model is employed to simulate the impact of capital-intensive farming on the Thai economy under two different scenarios: technological change and free trade. Four simulations were conducted. Simulation 1 increased the share parameter of capital in the agricultural sector by 5%. Simulation 2 shows a 5% increase in agricultural capital stock. A removal in import tariffs for agricultural machinery sector forms the basis for Simulation 3. The last simulation (Simulation 4) is the combination of the above three simulations. The results for each simulation are divided into four effects: input, output, income and macroeconomic effects. The results of the first two simulations produced opposite outcomes in terms of the four effects. Simulation 2 accelerated the capital intensification of all agricultural sectors, whereas Simulation 1 led to more capital intensity in some agricultural sectors. The effects of the input reallocation had a simultaneous impact on output in every sector. Simulation 1 led to a fall of almost all outputs in the agricultural sectors, whereas there was an increase in agricultural output in Simulation 2. In terms of domestic income effects, as a result of the decline of the average price of factors in Simulation 1, there was a decrease in factor incomes belonging to households and enterprises. Consequently, government revenue decreased by 0.7%. In contrast, Simulation 2 resulted in an increase in all incomes above. Finally, regarding macroeconomic variables, Simulation 1 had a negative impact on private consumption, government consumption, investment, imports and exports, resulting in Gross Domestic Product (GDP) decreasing by 0.8%. On the other hand, Simulation 2 had a positive impact on those same variables, affecting a 0.4% rise of GDP. The effects of Simulation 3 were very small in everything compared with the first two simulations. The effect of Simulation 4 was mostly dominated by Simulations 1 and 2; the negative results of Simulation 1 were compensated by the positive effects of Simulation 2.Capital intensive farming, CGE, general equilibrium, SAM, Thailand, Agricultural and Food Policy, Crop Production/Industries, Environmental Economics and Policy, Farm Management, Productivity Analysis,

EVALUATING NATURE-BASED TOURISM USING THE NEW ENVIRONMENTAL PARADIGM

Nature-based tourism (NBT), alternatively known as ecotourism, is a rapidly expanding area in the tourism travel sector. States such as Louisiana with a well established urban-based tourism industry may have expansion opportunities through development of complementary nature-based tourism. This study analyzes the decision to participate in NBT among Louisiana tourists.Nature tourism, Ecotourism, NEP, Resource /Energy Economics and Policy,

QUALITY AS A LATENT VARIABLE IN RECREATION ACCESS ANALYSIS

Recreation trends indicating an increasing demand for quality recreation experiences suggest the need for special consideration of quality in analysis of fee access recreation. By viewing quality as a subjective latent variable, this paper uses a simultaneous equation framework to consider the use of subjective versus objective appraisals of quality in fee-based recreation access analysis.Resource /Energy Economics and Policy,

An Economic Analysis of Waterfowl Hunting in Louisiana (Bulletin #841)

Waterfowl-related activities generate millions of dollars for Louisiana’s economy annually, with duck and goose hunting as one of the most significant sporting activities. Economic information on the characteristics that influence the decision to hunt waterfowl can provide valuable information to resource managers faced with declining waterfowl populations as well as declining numbers of waterfowl hunters.https://digitalcommons.lsu.edu/agcenter_bulletins/1017/thumbnail.jp

Impact of model fidelity in factory layout assessment using immersive discrete event simulation

Discrete Event Simulation (DES) can help speed up the layout design process. It offers further benefits when combined with Virtual Reality (VR). The latest technology, Immersive Virtual Reality (IVR), immerses users in virtual prototypes of their manufacturing plants to-be, potentially helping decision-making. This work seeks to evaluate the impact of visual fidelity, which refers to the degree to which objects in VR conforms to the real world, using an IVR visualisation of the DES model of an actual shop floor. User studies are performed using scenarios populated with low- and high-fidelity models. Study participant carried out four tasks representative of layout decision-making. Limitations of existing IVR technology was found to cause motion sickness. The results indicate with the particular group of naïve modellers used that there is no significant difference in benefits between low and high fidelity, suggesting that low fidelity VR models may be more cost-effective for this group

COMMUNITY LOSS OF RESIDENTIAL VALUE FROM WATER AND NOISE POLLUTION

The impact of environmental disamenity on residential value had continued to receive attention in the property market. This study estimates community loss of residential value resulting from water and noise pollutions in the local neighbourhoods. The study areas comprised residential neighbourhoods nearby sources of such pollutions. Upon integration of the digital cadastre and house transaction data, digital maps were used to identify parcels of residential properties that were presumably affected by such pollutions in the study areas. Using the overlay and buffering functions, two proxy environmental variables were included in the regression models to capture pollution effects on residential values. The analysis disclosed that houses located closer to water and noise pollution were sold at lower prices compared to those located farther away from it. The total amount of community loss of “pollution-imposed†residential value in seven selected neighbourhoods was in excess of RM 57 million. The evidence shows that house buyers regard environmental quality as an important factor in real estate transaction. In particular, environmental disamenity resulting from water and noise pollution could have been negatively capitalised into residential values

The Differential Impact of Financial Intermediation on Economic Growth in Oil-Dependent Economies

This paper analyses the relationship between bank credit and economic growth. We extend existing literature by treating separately the oil and non-oil sectors of 28 oil-dependent economies from 1990-2012. We employ panel cointegration and pooled mean group estimation techniques which are appropriate for drawing conclusions from dynamic heterogenous panels. The results of the panel cointegration test indicate that bank credit has no significant long-run relationship with non-oil GDP per capita. The results of the pooled mean group estimator reveal no significant long-run impact of bank credit on non-oil GDP per capita. Overall results suggest that banks do not yet provide adequate credit to stimulate non-oil economic growth. The policy implication of our findings is that the financial sector should be more involved in productive investment activities to promote inclusive growth