The effects of disasters on income mobility: Bootstrap inference and measurement error simulations

We evaluate the impact of disasters on income mobility by drawing on "natural experiments". While the poor have a much higher probability of remaining poor when entering a crisis compared to normal times, there is also a negative effect in the year after. Richer households seem to be unaffected. A simple bootstrap method is proposed to facilitate statistical inference for mobility matrices. Also, we simulate measurement error to illustrate its magnitude on these matrices. Small errors induce a substantial downward bias of the probability of remaining poor, while comp arisons across states seem more robust, which is promising for impact analysis.Income mobility Effects of disasters Bootstrap Measurement error Simulations Natural experiments Control group Treatment group Poverty

Is bonded labor voluntary? A framework against forced work

UN estimate that 20 million are held in bonded labor. Several economic analyses assert that bonded laborers accept these contracts voluntarily, which could imply that a ban would make such laborers worse off. We question the voluntariness of bonded labor, and present a mechanism that keeps workers trapped. With different types of landlords not revealed to the laborer, we show how some landlords manipulate contract terms so that the laborer becomes bonded. Enforcement mechanisms and the monopolistic market for credit thus play a joint role. Providing alternative sources of credit, offer proper conflict resolution institutions over labor-contract disputes and banning could emancipate bonded labor, which would make them better off.Coercion Debt slavery Power Bonded labor Nepal Asia

Powerful donors and foreign policy: The role of multilateral financial institutions

The opportunity for a powerful donor country, such as the United States, to use a multilateral financial institution (MFI) strategically in order to promote its own foreign policy goals has received little attention. The gain to a donor that is able to make the World Bank or other MFIs adapt to this donor's view on an issue can be substantial. In that case, all the contributions from the other member nations will also stand behind the MFI's stance on the particular issue, and recipients may feel compelled to comply with this massive counterpart. As a result, influencing MFIs may give much more leverage to a donor's foreign assistance in the foreign policy arena than pursuing the same goals bilaterally with the same amount of aid. We present a model where a donor tries to influence a MFI to put pressure on a recipient to comply with the foreign policy interests of the donor. This game-theoretic multi-agent model with one donor, two MFIs and one recipient illustrates the virtue of using the multilateral as an instrument in foreign policy as seen from the powerful donor's point of view. Similarly, we show how this strategic behavior is damaging for the recipient in particular and for development in general.Foreign policies Conditionality Unilateralism

Approximation in FEM, DG and IGA: A Theoretical Comparison

In this paper we compare approximation properties of degree $p$ spline spaces with different numbers of continuous derivatives. We prove that, for a given space dimension, \smooth {p-1} splines provide better a priori error bounds for the approximation of functions in $H^{p+1}(0,1)$. Our result holds for all practically interesting cases when comparing \smooth {p-1} splines with \smooth {-1} (discontinuous) splines. When comparing \smooth {p-1} splines with \smooth 0 splines our proof covers almost all cases for $p\ge 3$, but we can not conclude anything for $p=2$. The results are generalized to the approximation of functions in $H^{q+1}(0,1)$ for $q<p$, to broken Sobolev spaces and to tensor product spaces.Comment: 21 pages, 4 figures. Fixed typos and improved the presentatio

On nonlocal quasilinear equations and their local limits

We introduce a new class of quasilinear nonlocal operators and study equations involving these operators. The operators are degenerate elliptic and may have arbitrary growth in the gradient. Included are new nonlocal versions of p-Laplace, $\infty$-Laplace, mean curvature of graph, and even strongly degenerate operators, in addition to some nonlocal quasilinear operators appearing in the existing literature. Our main results are comparison, uniqueness, and existence results for viscosity solutions of linear and fully nonlinear equations involving these operators. Because of the structure of our operators, especially the existence proof is highly non-trivial and non-standard. We also identify the conditions under which the nonlocal operators converge to local quasilinear operators, and show that the solutions of the corresponding nonlocal equations converge to the solutions of the local limit equations. Finally, we give a (formal) stochastic representation formula for the solutions and provide many examples

Derivatives pricing in energy markets: an infinite dimensional approach

Based on forward curves modelled as Hilbert-space valued processes, we analyse the pricing of various options relevant in energy markets. In particular, we connect empirical evidence about energy forward prices known from the literature to propose stochastic models. Forward prices can be represented as linear functions on a Hilbert space, and options can thus be viewed as derivatives on the whole curve. The value of these options are computed under various specifications, in addition to their deltas. In a second part, cross-commodity models are investigated, leading to a study of square integrable random variables with values in a "two-dimensional" Hilbert space. We analyse the covariance operator and representations of such variables, as well as presenting applications to pricing of spread and energy quanto options