Derivatives Use In The Partial Hedging Of Currency Risk: A Firm-Specific Approach To Understanding The Exchange Rate Exposure Puzzle

This study investigates whether firms with significant foreign exchange rate exposure change their future use of foreign exchange rate derivatives (FXDs). Unlike prior research, we employ firm-specific accounting data on hedging strategy and currency risk. Our results indicate that firms with high FXDs use relative to their foreign sales have significant exposure to either firm-specific bilateral exchange rates or a broad exchange rate index. Among such firms with significant foreign exchange rate exposure, we find that partial hedgers change their future use of FXDs, consistent with our expectations for firms that monitor the effectiveness of their hedging strategy. These results are timely in light of the increased scrutiny of derivatives use during the current financial crisis, and contribute to our understanding of extant research on returns-based estimates of foreign exchange rate exposure (aka, the exchange rate exposure puzzle)

Sustainable infrastructure technologies: impact and policy

This dissertation presents three studies that examine localized spatial effects of sustainable infrastructure investments in several contexts. The first chapter estimates public local economic benefits and costs of contaminated land cleanup and redevelopment through New York’s Brownfield Cleanup Program. Unlike prior literature, I value site redevelopment separately from cleanup, assess whether green redevelopment adds value, and examine time to capitalization. Using a property level fixed effects model and controlling for time-varying shocks, I find that the program has added 4% to nearby property values, producing a $1.26 billion property tax gain that outweighs its public costs. Most benefits stem from program participation and site cleanup. Furthermore, site entry and site cleanup do not immediately capitalize into nearby property values and are valued by the housing market with a lag of approximately three years. The second chapter estimates the value of contaminated land cleanup through Illinois’ Site Remediation Program in the presence of foreclosures and demonstrates the potential consequences of not controlling for time-varying unobservables in hedonic regressions. Failure to control for incidence of foreclosures, which can act as a time-varying correlated unobservable, can lead to overestimation of the property effects of contaminated site participation in SRP by as much as 46% in absolute terms. Mean differencing of time-varying neighborhood amenities substantially reduces this bias. Given that foreclosures may be correlated with a myriad of neighborhood amenities, these findings provide cautionary evidence suggesting that studies employing hedonic analysis should control for time-varying market conditions. The third chapter studies electricity consumption patterns generated by newly commissioned renewable energy plants in Indonesia to determine whether these facilities provide electricity to the regions in which they are located. This paper uses a novel application of satellite nighttime light data used as a proxy for energy consumption combined with data on geocoded locations of 15 renewable energy plants and Village Potential Statistics survey for Indonesia. I estimate a difference-in-difference model to compare the intensity of nighttime lights in nearby areas around incoming plants to that in geographically matched locations before and after each plant becomes operational. Results show that a 1% increase in capacity of a newly commissioned renewable energy plant leads to a 0.09% increase in nighttime lights relative to the matched control group. This corresponds to a 0.15% increase in residential electricity consumption and implies that local populations benefit, although to a small degree, from the energy these plants produce. Results further show that the immediate increase in nighttime lights associated with plant commissioning grows over time, but at a decreasing rate

Sustainable infrastructure technologies: impact and policy

This dissertation presents three studies that examine localized spatial effects of sustainable infrastructure investments in several contexts. The first chapter estimates public local economic benefits and costs of contaminated land cleanup and redevelopment through New York’s Brownfield Cleanup Program. Unlike prior literature, I value site redevelopment separately from cleanup, assess whether green redevelopment adds value, and examine time to capitalization. Using a property level fixed effects model and controlling for time-varying shocks, I find that the program has added 4% to nearby property values, producing a $1.26 billion property tax gain that outweighs its public costs. Most benefits stem from program participation and site cleanup. Furthermore, site entry and site cleanup do not immediately capitalize into nearby property values and are valued by the housing market with a lag of approximately three years. The second chapter estimates the value of contaminated land cleanup through Illinois’ Site Remediation Program in the presence of foreclosures and demonstrates the potential consequences of not controlling for time-varying unobservables in hedonic regressions. Failure to control for incidence of foreclosures, which can act as a time-varying correlated unobservable, can lead to overestimation of the property effects of contaminated site participation in SRP by as much as 46% in absolute terms. Mean differencing of time-varying neighborhood amenities substantially reduces this bias. Given that foreclosures may be correlated with a myriad of neighborhood amenities, these findings provide cautionary evidence suggesting that studies employing hedonic analysis should control for time-varying market conditions. The third chapter studies electricity consumption patterns generated by newly commissioned renewable energy plants in Indonesia to determine whether these facilities provide electricity to the regions in which they are located. This paper uses a novel application of satellite nighttime light data used as a proxy for energy consumption combined with data on geocoded locations of 15 renewable energy plants and Village Potential Statistics survey for Indonesia. I estimate a difference-in-difference model to compare the intensity of nighttime lights in nearby areas around incoming plants to that in geographically matched locations before and after each plant becomes operational. Results show that a 1% increase in capacity of a newly commissioned renewable energy plant leads to a 0.09% increase in nighttime lights relative to the matched control group. This corresponds to a 0.15% increase in residential electricity consumption and implies that local populations benefit, although to a small degree, from the energy these plants produce. Results further show that the immediate increase in nighttime lights associated with plant commissioning grows over time, but at a decreasing rate

The Economic Impacts of Harmful Algal Blooms on Property Values in Southwest Florida

Paper temporarily removed June 27, 2023 pending review by data provider

The Economic Impacts of Harmful Algal Blooms on Property Values in Southwest Florida

Paper temporarily removed June 27, 2023 pending review by data provider

The Future of Four Creeks Farm: Scale-Up, Diversify, or Exit?

This decision-scenario case study is designed to be suitable for both online and face-to-face instruction in an undergraduate-level agribusiness, agricultural policy, or business strategy course. The case challenges students to assume the role of decision makers for a struggling family-owned dairy farm to determine whether the farm should scale-up, diversify, or exit the industry. Students will (1) learn about the unique features of the U.S. dairy market and domestic government support policies for dairy farms, (2) understand the challenges facing small family-operated farms, (3) apply strategic management tools to analyze and select the best strategic option to ensure short-term and long-term survival of the farm, and (4) advance critical thinking and decision-making skills. This case study is versatile and can be adapted to a variety of classroom settings. It can also facilitate broader discussions of management decisions facing agricultural businesses operating outside of the dairy industry