The Threat of Capital Drain: A Rationale for Public Banks?

This paper yields a rationale for why subsidized public banks may be desirable from a regional perspective in a financially integrated economy. We present a model with credit rationing and heterogeneous regions in which public banks prevent a capital drain from poorer to richer regions by subsidizing local depositors, for example, through a public guarantee. Under some conditions, cooperative banks can perform the same function without any subsidization; however, they may be crowded out by public banks. We also discuss the impact of the political structure on the emergence of public banks in a political-economy setting and the role of interregional mobility

Gas Storage Valuation: A Comparative Simulation Study

The purpose of this paper is the comparative analysis of four natural gas storage valuation approaches. In competitive natural gas markets the optimal valuation and operation of natural gas storages is a key task for natural gas companies operating storages. Within this paper, four spot based valuation approaches are analyzed regarding computational time and accuracy. In particular, explicit and implicit finite differences, multinomial recombining trees, and Least Squares Monte Carlo Simulation are compared. These approaches are applied to the valuation of a gas storage facility considering three different underlying price processes. Major characteristics of historical natural gas prices are: seasonality, mean reversion and jumps. Therefore, we consider a mean reversion process as underlying price process. In a first step, we extend this mean reversion process to a mean reversion jump diffusion process, to account for jumps, occurring in historical gas spot price time series. Moreover, we consider a more general price process accounting for mean reversion as well as seasonal patterns as observed in the historical time series. Besides the analysis of the numerical results, the benefits and drawbacks of the methodologies are discussed

IPO Pricing and the Relative Importance of Investor Sentiment - Evidence from Germany

Veröff. im Internet: Lehrstuhl für Betriebswirtschaftslehre, insbesondere Finanzwirtschaft / Forschung / Veröffentlichungen und Downloads / BAFIF

Monetary Policy Reform in a World of Central Banks

The paper identifies based on the monetary overinvestment theories by Wicksell (1898), Mises (1912) and Hayek (1929) monetary policy mistakes in large industrial countries issuing international currencies. It its argued that a neglect towards monetary policy reform in a world dominated by financial markets has led to the erosion of the allocation and signaling function of the interest rate, which has triggered an excessive rise of the government debt and structural distortions in the world economy. The backlash of high government debt levels on monetary policy making is argued to have led to a hysteresis of the liquidity trap. In this context, monetary reform is discussed with respect to the exit from low interest rate and high debt policies, an adaption of monetary policy rules to financial market dominated economic development, and the displacement of the prevalent world monetary system. Enhanced competition between dollar and euro as international currencies moderated by East Asia is proposed to constitute a more stable international monetary system

On the Incentive Effect of Job Rotation

The longer an agent is employed in a job, the more the principal will have learned about his ability through the history of performance. With implicit incentives, influence perceptions and effort incentives decrease over time. Rotating agents to a different job deletes learning effects about ability, creating fresh impetus for effort. However, job rotation also reduces the time horizon, and thus reduces rents from working and also incentives. In this trade-off, we derive conditions for the desirability of job rotation and show how in the presence of career concerns job rotation may emerge endogenously. Finally, our model allows for more general comments on the optimal rotation frequency as well as the preferred organizational design of a firm

Gaia Early Data Release 3 Summary of the contents and survey properties

Context. We present the early installment of the third Gaia data release, Gaia EDR3, consisting of astrometry and photometry for 1.8 billion sources brighter than magnitude 21, complemented with the list of radial velocities from Gaia DR2. Aims. A summary of the contents of Gaia EDR3 is presented, accompanied by a discussion on the differences with respect to Gaia DR2 and an overview of the main limitations which are present in the survey. Recommendations are made on the responsible use of Gaia EDR3 results. Methods. The raw data collected with the Gaia instruments during the first 34 months of the mission have been processed by the Gaia Data Processing and Analysis Consortium and turned into this early third data release, which represents a major advance with respect to Gaia DR2 in terms of astrometric and photometric precision, accuracy, and homogeneity. Results. Gaia EDR3 contains celestial positions and the apparent brightness in G for approximately 1.8 billion sources. For 1.5 billion of those sources, parallaxes, proper motions, and the (GBP − GRP) colour are also available. The passbands for G, GBP, and GRP are provided as part of the release. For ease of use, the 7 million radial velocities from Gaia DR2 are included in this release, after the removal of a small number of spurious values. New radial velocities will appear as part of Gaia DR3. Finally, Gaia EDR3 represents an updated materialisation of the celestial reference frame (CRF) in the optical, the Gaia-CRF3, which is based solely on extragalactic sources. The creation of the source list for Gaia EDR3 includes enhancements that make it more robust with respect to high proper motion stars, and the disturbing effects of spurious and partially resolved sources. The source list is largely the same as that for Gaia DR2, but it does feature new sources and there are some notable changes. The source list will not change for Gaia DR3. Conclusions. Gaia EDR3 represents a significant advance over Gaia DR2, with parallax precisions increased by 30 per cent, proper motion precisions increased by a factor of 2, and the systematic errors in the astrometry suppressed by 30–40% for the parallaxes and by a factor ~2.5 for the proper motions. The photometry also features increased precision, but above all much better homogeneity across colour, magnitude, and celestial position. A single passband for G, GBP, and GRP is valid over the entire magnitude and colour range, with no systematics above the 1% leve