Subcritical coal in Australia: risks to investors and implications for policymakers

This paper locates subcritical coal-fired power stations in Australia and identified the ones most at risk of stranding due to their carbon intensity and local environmental impacts. The research shows which companies own these assets in Australia and ranks companies by exposure. In addition, we examine the implications of subcritical coal for Australian policymakers, in particular we look at the the costs, benefits, and mechanisms for phasing out subcritical coal in Australia

London office performance: determinants and measurement of capital returns

This thesis develops three chapters which extend our understanding of asset performance within the London office market by analysing the determinants and measurement of capital returns. The first chapter examines whether enlisting the services of a star-architect allows developers to persuade city planners to build bigger within the tightly regulated London property market, and therefore to engage in rent-seeking behaviour. We find that outside protected conservation areas famous architects can not only build taller, but that their designs have no effect on building sale prices holding the amount of space constant. For a given land plot however, the ability to build taller increases total floorspace and developer profits even when accounting for the increased costs of hiring a famous architect and building to their higher standards. The second chapter investigates potential sources of bias in commercial repeat-sales price indices by constructing such an index for the central London office market and examining the sources of index change relative to the underlying market. We find evidence that employment density changes and the restrictiveness of new development in the relevant local authority are key external drivers of bias on estimated price levels. This discrepancy arises because repeat-sales occur disproportionately in areas where changes in these attributes differ relative to the stock as a whole. The third chapter presents a comparison of seven competing real estate price index construction methodologies in the London office market. This exercise sheds light on the history of London office market returns from 1998-2010, and the relative pros and cons of the major index construction methods utilized by research and industry. This comparison also reveals substantial differences between indices in the timing of market turning points and various descriptive statistics, and demonstrates that the hedonic model outperforms the repeat-sales index due to the greater inclusivity of sale observations

'Iconic design' as deadweight loss: rent acquisition by design in the constrained London office market

Britain’s land use regulation (planning) system imposes very tight restrictions on the supply of office space so creating substantial rents. An unmeasured part of the costs associated with these restrictions likely comes from compliance costs, one form of which could be rent-seeking activity (Krueger, 1974) of a gentlemanly form: employing a ‘trophy architect’ to get ‘more rentable space’ on a given site (Cheshire & Hilber, 2008). This paper finds evidence strongly supportive of this hypothesis. It employs an hedonic approach on a sample of offices sold between 1998 and 2011, defining trophy architects (TAs) as those who had won a major lifetime achievement award. Much of London is covered by absolute height restrictions but outside these areas we show that i) for a given site a building designed by a TA is more valuable, but ii) this only arises because a TA squeezes more space on a given site – an extra 19 stories, increasing the site value by an estimated 130 percent. Planning restrictiveness also varies within London by jurisdiction and the price of space is higher where restrictiveness is tighter. While these effects of trophy architects could be windfall gains to developers, we suggest a more likely interpretation is that they represent the additional but difficult to measure returns demanded for the extra risk and delays imposed by using a TA to try to game the system - hence a form of compliance cost and a deadweight loss associated with England’s planning system

The billion pound drop: the blitz and agglomeration economics in London

This paper exploits locally exogenous variation in the location of bombs dropped during the Blitz to quantify the effect of density restrictions on agglomeration economies in London: an elite global city. Employing microgeographic data on office rents and employment, this analysis points to effects for London several multiples larger than the existing literature which primarily derives its results from secondary cities. In particular, doubling employment density raises rents by 25%. Consequently if the Blitz had not taken place, the resulting loss in agglomeration economies to present day London would cause total annual office rent revenues to fall by $4:5 billion {equivalent to 1:2% of London's annual GDP. These results illuminate the substantial impact of land-use regulations in one of the world's largest and most productive cities

How the Blitz enhanced London's economy

The Blitz lasted from Sept 1940 to May 1941, during which the Luftwaffe dropped 18,291 tons of high explosives and countless incendiaries across Greater London. Although these attacks have now largely faded from living memory, our recent paper shows that the impact of the Blitz remains evident to this day in both London's physical landscape and economy

Empirical calibration of climate policy using corporate solvency: a case study of the UK's carbon price support

Emission reductions improve the chances that dangerous anthropogenic climate change will be averted, but could also cause some firms financial distress. Corporate failures, especially if they are unnecessary, add to the social cost of abatement. Social value can be permanently destroyed by the dissolution of organizational capital, deadweight losses paid to liquidators, and unemployment. This article proposes using measures of corporate solvency as an objective tool for policy makers to calibrate the optimal stringency of climate change policies, so that they can deliver the least loss of corporate solvency for a given level of emission reductions. They could also be used to determine the generosity of any compensation to address losses to corporate solvency. We demonstrate this approach using a case study of the UK’s Carbon Price Support (a carbon tax)

Development and validation of a firm-level vertical and horizontal internationalization metric

The lack of valid and reliable measures of firm-level vertical and horizontal internationalization is impeding the development and testing of hypothesized relationships between these respective dimensions of internationalization and a range of important MNE characteristics, actions, and effects. Through a series of qualitative and quantitative studies using data collected from senior MNE executives (total N=3,146), we develop and validate a scale to measure both vertical and horizontal firm-level internationalization. Subscales for each type of internationalization prove to be unidimensional, reliable, temporally stable, and to have predictive, cross-cultural, cross-sectoral, and discriminant validity

Development and validation of a firm-level vertical and horizontal internationalization metric

The lack of valid and reliable measures of firm-level vertical and horizontal internationalization is impeding the development and testing of hypothesized relationships between these respective dimensions of internationalization and a range of important MNE characteristics, actions, and effects. Through a series of qualitative and quantitative studies using data collected from senior MNE executives (total N=3,146), we develop and validate a scale to measure both vertical and horizontal firm-level internationalization. Subscales for each type of internationalization prove to be unidimensional, reliable, temporally stable, and to have predictive, cross-cultural, cross-sectoral, and discriminant validity

The billion pound drop: The Blitz and agglomeration economies in London

We exploit locally exogenous variation from the Blitz bombings to quantify the effect of redevelopment frictions and identify agglomeration economies at a micro-geographic scale. Employing rich location and office rental transaction data, we estimate reduced-form analyses and a spatial general equilibrium model. Our analyses demonstrate that more heavily bombed areas exhibit taller buildings today, and that agglomeration elasticities in London are large, approaching 0.2. Counterfactual simulations show that if the Blitz had not occurred, the concomitant reduction in agglomeration economies arising from the loss of higher-density redevelopment would cause London’s present-day GDP to drop by some 10% (or £50 billion)

Do the happy-go-lucky?

While popular aphorisms and etymologies across diverse languages suggest an intrinsic association between happiness and luck beliefs, empirically testing the existence of any potential link has historically been constrained by varying and unclear conceptualizations of luck beliefs and by their sub-optimally valid measurement. Employing Thompson and Prendergast’s (2013) bi-dimensional refinement of trait luck beliefs into, respectively, ‘Belief in Luck’ and ‘Belief in Personal Luckiness’, we explore the relationship between luck beliefs and a range of trait happiness measures. Our analyses (N=844) find broadly that happiness is negatively associated with Belief in Luck, but positively associated with Belief in Personal Luckiness, although results differ somewhat depending on which measure of happiness is used. We further explore interrelationships between luck beliefs and the five-factor model of personality, finding this latter fully accounts for Belief in Luck’s negative association with happiness, with additional analyses indicating this is wholly attributable to Neuroticism alone: Neuroticism appears to be a possible mediator of Belief in Luck’s negative association with happiness. We additionally find that the five-factor model only partially attenuates Belief in Personal Luckiness’ positive association with happiness, suggesting that Belief in Personal Luckiness may be either a discrete facet of trait happiness or a personality trait in and of itself