The Impact of Backwardation on Hedgers' Demand for Currency Futures Contracts: Theory versus Empirical Evidence

This study compares the relation between backwardation and optimal hedging demand as suggested by economic theory to empirical findings concerning the impact of weak and strong backwardation on hedgers' trading volume in six long and short currency futures contracts. First, the optimal hedging demand of a representative importer, with and without hedging costs, is derived. Then hedgers' position data from the Commitments of Traders (COT) report are regressed on weak and strong backwardation. The empirical results offer little support for the hypotheses suggested by economic theory.Backwardation, hedging, currency futures

Investigating nonlinear speculation in cattle, corn, and hog futures markets using logistic smooth transition regression models

This article explores nonlinearities in the response of speculators’ trading activity to price changes in live cattle, corn, and lean hog futures markets. Analyzing weekly data from March 4, 1997 to December 27, 2005, we reject linearity in all of these markets. Using smooth transition regression models, we find a similar structure of nonlinearities with regard to the number of different regimes, the choice of the transition variable, and the value at which the transition occurs.Futures markets, speculation, nonlinear dynamics, smooth transition regression model

Hedging speculation, and investment in balance-sheet triggered currency crises

This paper explores the linkage between corporate risk management strategies, investment, and economic stability in an open economy with a flexible exchange rate regime. Firms use currency futures contracts to manage their exchange rate exposure – caused by balance sheet effects as in Krugman (2000) – and therefore their investments’ sensitivity to currency risk. We find that, depending on whether futures contracts are used for risk reduction (i.e., hedging) or risk taking (i.e., speculation), the implied magnitudes of recessions and booms are decreased or increased. Corporate risk management can therefore substantially affect economic stability on the macrolevel.Mundell-Fleming-Tobin model, foreign-debt financed investment, currency crises, real crises, currency futures, hedging, speculation

Coral reef carbonate budgets and ecological drivers in the central Red Sea: a naturally high temperature and high total alkalinity environment.

The structural framework provided by corals is crucial for reef ecosystem function and services, but high seawater temperatures can be detrimental to the calcification capacity of reef-building organisms. The Red Sea is very warm, but total alkalinity (TA) is naturally high and beneficial for reef accretion. To date, we know little about how such detrimental and beneficial abiotic factors affect each other and the balance between calcification and erosion on Red Sea coral reefs, i.e., overall reef growth, in this unique ocean basin. To provide estimates of present-day reef growth dynamics in the central Red Sea, we measured two metrics of reef growth, i.e., in situ net-accretion/-erosion rates (Gnet) determined by deployment of limestone blocks and ecosystem-scale carbonate budgets (Gbudget), along a crossshelf gradient (25 km, encompassing nearshore, midshore, and offshore reefs). Along this gradient, we assessed multiple abiotic (i.e., temperature, salinity, diurnal pH fluctuation, inorganic nutrients, and TA) and biotic (i.e., calcifier and epilithic bioeroder communities) variables. Both reef growth metrics revealed similar patterns from nearshore to offshore: net-erosive, neutral, and net-accretion states. The average cross-shelf Gbudget was 0.66 kg CaCO3 m−2 yr−1 , with the highest budget of 2.44 kg CaCO3 m−2 yr−1 measured in the offshore reef. These data are comparable to the contemporary Gbudgets from the western Atlantic and Indian oceans, but lie well below “optimal reef production” (5–10 kg CaCO3 m−2 yr−1 ) and below maxima recently recorded in remote high coral cover reef sites. However, the erosive forces observed in the Red Sea nearshore reef contributed less than observed elsewhere. A higher TA accompanied reef growth across the shelf gradient, whereas stronger diurnal pH fluctuations were associated with negative carbonate budgets. Noteworthy for this oligotrophic region was the positive effect of phosphate, which is a central micronutrient for reef building corals. While parrotfish contributed substantially to bioerosion, our dataset also highlights coralline algae as important local reef builders. Altogether, our study establishes a baseline for reef growth in the central Red Sea that should be useful in assessing trajectories of reef growth capacity under current and future ocean scenariosResearch reported in this publication was supported by funding to Christian R. Voolstra from KAUST

Hedging speculation, and investment in balance-sheet triggered currency crises

This paper explores the linkage between corporate risk management strategies, investment, and economic stability in an open economy with a flexible exchange rate regime. Firms use currency futures contracts to manage their exchange rate exposure – caused by balance sheet effects as in Krugman (2000) – and therefore their investments’ sensitivity to currency risk. We find that, depending on whether futures contracts are used for risk reduction (i.e., hedging) or risk taking (i.e., speculation), the implied magnitudes of recessions and booms are decreased or increased. Corporate risk management can therefore substantially affect economic stability on the macrolevel

Betriebswirtschaftliche Analyse der Kapazitätsauslastung in der Siedlungsentwässerung

Die vorliegende Ausgabe gibt einen Überblick über Zusammenhänge der Kapazitätsauslastung und den Veränderungen der Umwelt der Siedlungsentwässerung. Anhand des Abwasserentsorgers ABWASSERZWECKVERBAND „SPREEQUELLEN“ werden die Auswirkungen des demografischen Wandels auf die Gebühren unter Beachtung der Kostenentwicklung analysiert. Die Umwelt der Siedlungsentwässerung wird von politisch-rechtlichen, ökonomischen, soziokulturellen, technologischen und ökologischen Faktoren beeinflusst, welche miteinander im Zusammenhang stehen. Veränderungen dieser Faktoren beeinflussen die Kapazitätsauslastung in der Siedlungsentwässerung, besonders mit dem Rückgang des anfallenden Abwassers. Vor allem die lange Lebensdauer beziehungsweise Nutzungsdauer der Anlagen führt dazu, dass in der Planungsphase zukünftige Entwicklungen nicht immer vollständig abgeschätzt werden können. Auswirkungen einer geringeren Auslastung der Abwasseranlagen können zu Problemen beim Betrieb wie auch zu wirtschaftliche Folgen führen. Weiterhin werden mögliche künftige Strategien, wie zum Beispiel eine weitere Reduzierung der Kosten soweit dies bei einem weiterhin regulären Betrieb möglich ist oder auch eine Erhöhung der erhobenen Gebühren vorgestellt

Year-long monitoring of physico-chemical and biological variables provide a comparative baseline of coral reef functioning in the central Red Sea.

Research reported in this publication was supported by funding to CRV from King Abdullah University of Science and Technology (KAUST)

Stable mucus-associated bacterial communities in bleached and healthy corals of Porites lobata from the Arabian Seas

Coral reefs are subject to coral bleaching manifested by the loss of endosymbiotic algae from coral host tissue. Besides algae, corals associate with bacteria. In particular, bacteria residing in the surface mucus layer are thought to mediate coral health, but their role in coral bleaching is unknown. We collected mucus from bleached and healthy Porites lobata colonies in the Persian/Arabian Gulf (PAG) and the Red Sea (RS) to investigate bacterial microbiome composition using 16S rRNA gene amplicon sequencing. We found that bacterial community structure was notably similar in bleached and healthy corals, and the most abundant bacterial taxa were identical. However, fine-scale differences in bacterial community composition between the PAG and RS were present and aligned with predicted differences in sulfur- and nitrogen-cycling processes. Based on our data, we argue that bleached corals benefit from the stable composition of mucus bacteria that resemble their healthy coral counterparts and presumably provide a conserved suite of protective functions, but monitoring of post-bleaching survival is needed to further confirm this assumption. Conversely, fine-scale site-specific differences highlight flexibility of the bacterial microbiome that may underlie adjustment to local environmental conditions and contribute to the widespread success of Porites lobata.This publication is based upon work supported by the King Abdullah University of Science and Technology (KAUST) Office of Sponsored Research (OSR) under Award Nos FCC/1/1973-21-01 and FCC/1/1973-22-01