Distributional biases in the analysis of climate change

The economic analysis of global warming is dominated by models based on optimal growth theory. These representative-agent models have an intrinsic distributional bias in favor of the rich. The bias is compounded by the se of revenue-neutrality in the allocation of emission permits. The result is mitigation recommendations that are biased downwards. JEL Categories: Q13, I3, E1representative agent, welfare, global warming, inequality.

Positional goods, climate change and the social returns to investment

The economic analysis of global warming is dominated by models based on optimal growth theory. This approach can generate biases in the presence of positional goods and status effects. We show that by ignoring these direct consumption externalities, integrated assessment models overestimate the social return to conventional investment and underestimate the optimal amount of investment in mitigation. Empirical evidence on the influence of relative consumption on utility suggests that the bias could be quantitatively significant. Our results from a simple survey support this conclusion. JEL Categories: Q13, I3, E1representative agent, consumption externalities, positional goods, relative consumption, welfare, global warming, discount rates.

Financialization and the nonfinancial corporation: an investigation of firm-level investment behavior in the U.S., 1971-2011

Changes in the portfolio and financing behavior of nonfinancial corporations (NFCs) over the post-1970 period point to the financialization of the nonfinancial corporation and raise the question of accompanying changes in fixed investment behavior. Using a firm-level panel, this paper econometrically investigates the relationship between financialization and investment, exploring the implications of changes in financing behavior, increasingly entrenched shareholder value norms, and rising firm-level demand volatility for investment by NFCs in the U.S. between 1971 and 2011. Shareholder value norms and firm-level volatility are, in particular, identified as characteristics of the post-1970 U.S. economy that are associated with a significant decline in NFC investment rates. The analysis also highlights key differences by firm size. In particular, shareholder value norms are found to primarily influence the investment behavior of large NFCs, while rising volatility most substantially impacts small firms

The financialization of the nonfinancial corporation in the post-1970 U.S. economy

This dissertation analyzes the financialization of nonfinancial corporations (NFCs), emphasizing changes in firm-level financial behavior in the post-1970 U.S. economy. The dissertation consists of four essays. These essays ask what is the financialization of NFCs, explore why NFCs have ‘financialized’, and evaluate the implications for fixed investment behavior. Chapter 2 lays out a simple stylized framework describing firm-level portfolio choice and utilizes this framework to analyze the implications of increasing NFC involvement in the provision of financial services, increasingly entrenched shareholder value norms, and rising firm-level demand volatility for NFC financial structure. By articulating underlying determinants of firm-level portfolio and financing decisions, this chapter isolates specific features of the post-1970 U.S. economy that can be identified with the ‘financialization’ of nonfinancial corporations, and links these factors to expected changes in financial structure. Chapter 3 identifies the key phenomena constituting the financialization of NFCs via a detailed decomposition of firm-level balance sheets, thereby addressing the question of what is the financialization of NFCs. Changes in NFC financial behavior are reflected in both an increasing share of – largely liquid – financial assets in firm portfolios, and in changes in the structure of external finance, including increased indebtedness and equity repurchases among large firms. Chapter 4 explores the increasing intertwinement of industry and finance in the case of General Electric, thereby analyzing in more detail the ‘financialization’ of large firms. This case study exemplifies important complementarities and interdependence between the industrial and financial aspects of GE’s business. The shifts in GE’s balance sheet structure towards greater financial asset holdings, increased indebtedness and a reduction in outstanding equity are, furthermore, consistent with GE’s increased emphasis on ‘creating’ shareholder value and engagement in banking activities since the mid-1980s. Chapter 5 uses a firm-level panel to econometrically analyze the relationship between financialization and fixed investment, exploring the implications of changes in financing behavior, increasingly entrenched shareholder value norms and rising firm-level demand volatility for NFC investment rates between 1971 and 2011. Both shareholder value norms and rising volatility are identified as factors associated with an empirically and economically meaningful decline in NFC investment rates. This analysis also highlights key firm-size differences, building on the discussion in Chapters 3 and 4. In particular, shareholder value norms are found to primarily influence the financial decisions and investment behavior of large firms, whereas rising volatility most substantially impacts small firms

Modeling Service Interaction Networks

Service systems rely on internal interactions of service provider agents and the external interactions with customers in the design and delivery of services. Careful analysis and modeling of such interactions are essential to the design of effective service systems. This research focuses on service interaction networks in the context of the design and delivery of information technology (IT)-centric services. We develop and test a model of service interaction network effectiveness and investigate the effects of some of its structural properties on the effectiveness of service systems. We empirically analyze the validity of the model by using data from SourceForge.net and develop and test a set of specific hypotheses. The results indicate that network centrality and the network density have negative impacts whereas network size has positive influence on on service systems effectiveness

Competition and Monopoly in the U.S. Economy: What do Industrial Concentration Data Tell?

A recent series of academic studies, think-tank reports, and news articles shows widespread attention to rising industrial concentration and market power in the U.S. economy. In this paper, we focus on concentration in the U.S. nonfinancial corporate sector to make three contributions to this literature. First, we trace the theoretical origins of the debate on industrial concentration, and show that there is a certain degree of ambiguity surrounding the expected consequences of concentration and monopolization for nonfinancial firms. Second, we use industry- level concentration data to describe recent trends in average concentration. We show that, while concentration increases across the majority of U.S. industries after the late 1990s, the retail and information-services sectors are particularly key for understanding recent trends in average industrial concentration. Third, we link our industry-level analysis with firm-level data to describe the relationship between industrial concentration and nonfinancial corporations’ profitability, markups, and investment. Consistent with the ambiguities in the theoretical literature, we find that these relationships are not uniform: while some highly-concentrated industries confirm standard expectations with high markups, high profitability, and low investment rates, other highly-concentrated industries earn lower-than-average markups and profits, suggesting that – in some industries – increased concentration and intensified competition may go hand in hand

Churning and Profitability in the U.S. Corporate Sector

This paper establishes that entry and exit regulate the top half of the profitability distribution in the post-1970 U.S. economy. We, first, document stability in the distribution of total profits earned on tangible, intangible, and financial capital. Whereas a narrower measure of returns on tangible capital, instead, suggests rising dispersion, it fails to capture post-1970 growth in intangible and financial assets. Second, we use quantile decompositions to show that churning – specifically, exit for cause – regulates median and top-end profitability. Thus, the process by which competition drives out unprofitable firms acts to stabilize profit rates in the U.S. economy

Promoting Innovation and High-Tech Entrepreneurship in Historically Black Colleges and Universities: An Exploratory Research

This study explores the current state of innovation and high-tech entrepreneurial initiatives in Historically Black Colleges and Universities (HBCUs). Previous research showed that institutions’ environment, faculty empowerment, organizational trust, early stage capital, innovation centers and innovative teaching practice had a major effect to support innovation and foster tech-entrepreneurship. We present our conceptual model. The final section explains the current state of research and implications for future research are discussed