COMPARING THE PERFORMANCES OF THE PARTIAL EQUILIBRIUM AND TIME-SERIES APPROACHES TO HEDGING

This research compares partial equilibrium and statistical time-series approaches to hedging. The finance literature stresses the former approach, while the applied economics literature has focused on the latter. We compare the out-of-sample hedging effectiveness of the two approaches when hedging commodity price risk using a simple derivative with a linear payoff function (a futures contract). For various methods of parameter estimation and inference, we find that the partial equilibrium models cannot out-perform the time series model. The partial equilibrium models unpalatable assumptions of deterministically evolving futures volatility seems to impede their hedging effectiveness, even when potentially foresighted option-implied volatility term structures are employed.Marketing,

Anomalous subdiffusion with multispecies linear reaction dynamics

We have introduced a set of coupled fractional reaction-diffusion equations to model a multispecies system undergoing anomalous subdiffusion with linear reaction dynamics. The model equations are derived from a mesoscopic continuous time random walk formulation of anomalously diffusing species with linear mean field reaction kinetics. The effect of reactions is manifest in reaction modified spatiotemporal diffusion operators as well as in additive mean field reaction terms. One consequence of the nonseparability of reaction and subdiffusion terms is that the governing evolution equation for the concentration of one particular species may include both reactive and diffusive contributions from other species. The general solution is derived for the multispecies system and some particular special cases involving both irreversible and reversible reaction dynamics are analyzed in detail. We have carried out Monte Carlo simulations corresponding to these special cases and we find excellent agreement with theory

Targeting Industry Clusters for Regional Economic Development: An Overview of the REDRL Approach

An industry cluster is a geographically bounded collection of similar and/or related firms that together create competitive advantages for member firms and the local economy. The targeting of economic development programs at industry clusters provides three principal advantages: multiplier effects are stronger, employment growth potential is enhanced, and new firm spin-offs are promoted. The Clemson University Regional Economic Development Research Laboratory (REDRL) targeting method uses a screening process to identify local industry clusters with high potential for future growth. The region’s industries must pass five screens to be selected as a targeted cluster: substantial local presence as indicated by number of establishments and employees, industry employment in the region is growing, the region is relatively specialized in the industry (LQ> 1.0), and local employment growth exceeds the national industry average. Next, industry value chains are identified to determine if linked industries are good prospects for targeting. Finally, the identified high potential industry clusters are rated according to workers’ wages, potential future employment growth, import substitution potential, average plant size, and linkages to the local economy. Comparisons of these industry characteristics provide communities with insights regarding the potential economic and fiscal impacts associated with the attraction of an establishment in one of the target industries. In summary, the industry cluster targeting approach provides community leaders with (1) a list of industries for which they have a reasonable likelihood of attracting and (2) information regarding the likely benefits and costs associated with each industry. As such, a targeting approach permits communities to use their limited industrial development resources more efficiently to meet their industrial development goals.Community/Rural/Urban Development,

ESTIMATING THE COMMUNITY-LEVEL IMPACTS OF ATTRACTING NEW BUSINESSES: THE IMPLICATIONS OF LOCAL LABOR MARKET ADJUSTMENTS

The purpose of this report is to estimate short-and long-run labor market adjustments associated with employment change for South Carolina counties. An appreciation of the source of employees for new jobs enables community leaders to better select the appropriate level of industrial incentives and to better plan for changes in demand for public goods and services. We provide an overview of the components of a local labor force and the implications of component change on local income and expenditures for public goods and services. Then we present the results of the Clemson University Community Policy Analysis (CPAN) Model for county labor markets. This model estimates the allocation of new jobs in a county among the components of a county's labor force. Third, we summarize the concepts of "job chains" and "leakages" and discuss the relationship between these concepts and community-level impacts. Finally, we conclude with a discussion of how insights into labor market adjustments may be used to improve public policy in community planning and industrial development.Labor and Human Capital,

Estimating Actual Bid-Ask Spreads in Commodity Futures Markets

Various bid-ask spread estimators are applied to transaction data from LIFFE cocoa and coffee futures markets, and the resulting estimates are compared to observed actual bid-ask spreads. Results suggest that actual bid-ask spreads, which are not reported by most open-outcry futures markets, can be reasonably estimated using readily available transaction data. This is especially important since recent research seems to indicate that efforts to estimate effective spreads using data commonly available from futures markets have not been successful. Thus estimates of actual spreads can give market participants and researchers some idea of potential transaction costs. Accurate estimates of bid-ask spreads will also be needed to assess the relative efficiency of electronic versus open-outcry trading. Results indicate that estimators using averages of absolute price changes perform significantly better at estimating actual bid-ask spreads in futures markets than estimators using the covariance of successive price changes.Marketing,

PRICE AND PRICE RISK DYNAMICS IN BARGE AND OCEAN FREIGHT MARKETS AND THE EFFECTS ON COMMODITY TRADING

The effects of volatility of barge and ocean freight prices on prices throughout the international grain-marketing channel are analyzed using a Multivariate GARCH-M model. The model is used to infer the extent to which transportation price risk affects the level of international grain prices. Results indicate that both barge and ocean price volatility influence grain prices, but barge price volatility tends to have a greater impact on grain prices than that arising from ocean price volatility. The lack of a futures contract for barge rates may be partially responsible for its significant influence on grain price levels.Barge and ocean freight prices, futures contracts, Multivariate GARCH-Models, Price volatility, International Relations/Trade,

ADVANTAGES AND DISADVANTAGES OF TARGETING INDUSTRY CLUSTERS

Regional industrialization efforts include industrial recruitment, entrepreneurial and small business development, and business retention and expansion programs. Recently, many states and communities have targeted their industrialization programs at specific industries to promote the development of industry clusters. Broadly defined, an industry cluster is a loose, geographically bounded collection of similar and/or related firms that together create competitive advantages for member firms and the regional economy. The purpose of this paper is to summarize the debate concerning the advisability of industry cluster targeting as an employment generation strategy for states and sub-state regions. Our review of the appropriateness of a clusters strategy begins with a summary of industry cluster characteristics. Next we present the potential advantages developed clusters provide regional economies and the difficulties of establishing competitive clusters in new locations. We conclude with a summary of the implications of an industry clusters strategy for regional industrial development.Industrial Organization,

Community development, higher education institutions and the Big Society: opportunities or opportunism?

In his Prison Notebooks, written between 1929-35, Gramsci claimed that 'all men are intellectuals: but not all men have in society the function of intellectuals.' He used this term 'organic intellectuals' to illustrate that those working at grassroots level who have significant knowledge(s) about the way communities of all types work, are as important to the development of society as academic intellectuals. This article explores the current idea of a 'Big Society' as a hegemonic idea. This exploration is undertaken in relation to the current economic, social and political situation and with reference to the practice of community development, lifelong learning and the role of the Higher Education Institutions (HEIs) in supporting this field of activity. In this article we use the term 'community development' as Tett defines in Morgan-Klein and Osborne (2007:104). She claims it means to 'increase the capacity of particular communities through targeted resources for particular areas'. We specifically explore the following areas: <p> • challenging the hegemonic ideas and policies • practising within the restrictions of cuts and limited resources • setting up supportive networks which will sustain workers • making meaningful international links abroad and using international examples of good practice • turning the ideology of the Big Society into an opportunity</p> We will pose the critical questions that we think need to be addressed and which we hope will help us to find direction and an understanding of the way forward at a deeper level. We hope to create both useful and innovative knowledge which will be a valid contribution to the field of community development

Do children use different forms of verbal rehearsal in serial picture recall tasks? A multi-method study

Use of verbal rehearsal is a key issue in memory development. However, we still lack detailed and triangulated information about the early development and the circumstances in which different forms of rehearsal are used. To further understand significant factors that affect children’s use of various forms of rehearsal, the present study involving 108 primary school children adopted a multi-method approach. It combined a carefully chosen word length effect method with a self-paced presentation time method to obtain behavioural indicators of verbal rehearsal. In addition, subsequent trial-by-trial self-reports were gathered. Word length effects in recall suggested that phonological recoding (converting images to names - a necessary precursor for rehearsal) took place, with evidence of more rehearsal among children with higher performance levels. According to self-paced presentation times, cumulative rehearsal was the dominant form of rehearsal only for children with higher spans on difficult trials. The combined results of self-paced times and word length effects in recall suggest that ‘naming’ as simple form of rehearsal was dominant for most children. Self-reports were in line with these conclusions. Additionally, children used a mixture of strategies with considerable intra-individual variability, yet strategy use was nevertheless linked to age as well as performance levels

Innovative activity in rural areas: the importance of local and regional characteristics

Innovation, supported by a developed and active entrepreneurial system, long has been recognized as critical to regional economic competitiveness. Innovation also plays an essential role for rural economic development as these regions respond to the challenges of competing in the global economy. Barkley and Henry identify assets that contribute to nonmetro innovation “hot spots.”Community development ; Research and development ; Patents