Events Calendar

November 2014

Monday, 03 Nov 2014

  • Mon, Nov 3, 2014 4:10 pm - 5:30 pm
    368A Heady Hall

    "Asset prices and climate policy," with Larry Karp, University of California, Berkeley, Monday, November 3, 4:10-5:30 pm, 368A Heady Hall

    Abstract:  If climate-related damages lower productivity, climate policy increases future productivity. When the production possibility frontier between an investment and a consumption good is strictly concave, the price of investment — not just the level of investment — is endogenous. Current climate policy can increase the endogenous price of capital, benefitting current generations and providing a self-interested rationale for them to adopt climate policy. Asset markets transfer future policy-related benefits to currently living generations; either the old or the young might appropriate those benefits. A political economy equilibrium involving self-interested agents can support a significant level of abatement.

Tuesday, 04 Nov 2014

  • Tue, Nov 4, 2014 3:40 pm - 5:00 pm
    368A Heady Hall

    "Has the Time Arrived for Online Consumer Surveys:  A Comparison of an Online Survey to a Traditional Mailed Survey," with Wuyang Hu, University of Kentucky, Tuesday, November 4, 3:40-5:00 pm, 368A Heady Hall

    Abstract:  Internet consumer surveys have become increasingly popular in agricultural and food research. This study compares the results of an identical survey instrument implemented by mail and the Internet respectively. Aspects compared include survey logistics, timelines, costs, consumer demographics and socioeconomic features, observed univariate variables, and multivariate regression coefficient estimates and predictions. Results do reveal some differences in data collected by these two approaches. However, given the similarities between the two samples, the differences observed do not offer enough support for either approach to be superior to the other. It appears both methodologies can generate high quality data and are appropriate when used carefully.

Thursday, 06 Nov 2014

  • Thu, Nov 6, 2014 3:40 pm - 5:00 pm
    368A Heady Hall

    "The role of collateral in joint liability group lending:  Evidence from a framed field experiment in Tanzania," with Jon Einar Flatnes, University of California, Davis, Thursday, November 6, 3:40-5:00 pm, 368A Heady Hall

    Abstract:  Both collateralized individual loan contracts and joint liability group lending contracts have received much attention in the microfi nance literature, yet neither contract has been found to be optimal from a welfare perspective. On the one hand, a heavily collateralized individual loan contract is very risky for borrowers, resulting in low levels of credit market participation. On the other hand, while joint liability contracts are designed to harness the social collateral among community members, numerous studies have shown that such contracts are prone to moral hazard, free-riding, and collusion. This paper analyzes an alternative contract which combines joint liability with a modest collateral requirement. Using a simple theoretical framework, I show that adding a collateral requirement to a joint liability contract reduces moral hazard but has an ambiguous e ffect on credit market participation. To test the predictions of the model, I conduct a unique framed fi eld experiment among active credit group members in Tanzania. The results demonstrate that adding a collateral requirement reduces moral hazard among borrowers and helps increase repayments without compromising the e ffect of the social collateral in the groups. Moreover, I find evidence that a collateral requirement leads to a modest reduction in credit market participation.

Monday, 10 Nov 2014

  • Mon, Nov 10, 2014 4:10 pm - 5:30 pm
    368A Heady Hall

    Is there "Too Much" Inequality in Health Spending Across Income Groups? with Roozbeh Hosseini, Arizona State University, Monday, November 10, 4:10-5:30 pm, 368A Heady Hall

    Abstract:  In this paper we study the efficient allocation of health resources across individuals.  We focus on the relation between health resources and income. In particular we determine the efficient level of the health care social safety net for the indigent. We assume that individuals have different life cycle profiles of productivity. Health care increases survival probability. We adopt the classical approach of welfare economics by considering how a central planner with an egalitarian (ex-ante) perspective would allocate resources. We show that, under the efficient allocation, health care spending increases with labor productivity, but only during the working years. Post retirement, everyone would get the same health care. Quantitatively, we find that the amount of inequality across the income distribution in the data is of the same magnitude as what would be justified solely on the basis of production efficiency. As a rough summary, in U.S. data the top to bottom income quartile spending ratio is about 1.3 for most of the working life, dropping to 1 at retirement. Efficiency implies a steady decline from about 1.3 (at age 25) to 1 at retirement. We find larger inefficiencies in the lower part of the income distribution and ages between 50 to 65.

Tuesday, 11 Nov 2014

  • Tue, Nov 11, 2014 3:40 pm - 5:00 pm
    368A Heady Hall

    "Policy Shocks and Market-Based Regulations:  Evidence from the Renewable Fuel Standard," with Gabriel Lade, University of California, Davis, Tuesday, November 11, 3:40-5:00 pm, 368A Heady Hall

    Abstract:  We study the market for tradeable compliance credits known as Renewable Identifi cation Numbers (RINs) under the Renewable Fuel Standard (RFS2), a policy that mandates large increases in biofuel consumption through 2022. To understand RIN market dynamics, we develop a dynamic model of compliance with the RFS2 under uncertainty. We then provide a test of market efficiency. Last, we study historical RIN price drivers. We show that three 'policy shocks' that reduced expected 2014 mandate levels and created signifi cant uncertainty regarding future compliance obligations led to large decreases in the value the RFS2 provides to fuel industry. We estimate that one event in particular, the release of the 2013 Final Rule in which the Environmental Protection Agency suggested it would likely reduce the 2014 mandate, decreased the value of the subsidy (tax) provided by the RFS2 to the biofuel (fossil fuel) industry by between $7.4 and $8.4 billion for the 2013 compliance year alone. Similar policy shocks followed in RIN markets with two subsequent events that released preliminary versions of the 2014 mandate reductions but gave no guidance as to the compliance path post 2014.  We show that the three events adversely aff ected advanced biofuel companies and decreased soybean oil futures prices, while prices in other commodity markets and stock prices of conventional ethanol producers were largely unaffected. Our paper provides a real world example highlighting a well known weakness of quantity based regulations when compliance costs are uncertain. The findings suggest the goals of the RFS2 would be better served through more active management of tradeable credit markets by, for example, instituting a minimum and maximum allowable compliance credit price.

Wednesday, 12 Nov 2014

  • Wed, Nov 12, 2014 4:10 pm - 5:00 pm
    368A Heady Hall

    "The Expanding Ethanol Market and Farmland Values:  Identifying the Changing Influence of Proximity to Agricultural Market Channels," with Wendong Zhang, The Ohio State University, Wednesday, November 12, 4:10-5:30 pm, 368A Heady Hall

    Abstract:  Farmland values in the Corn Belt states have been on the rise throughout the 2000s, which is in part fueled by the expansion of the biofuels market. Using parcel-level data on agricultural land sales from 2001 to 2010 for a 50-county region of western Ohio and a quasi-experimental design, this paper tests for structural change in the relative effects of proximity to agricultural market channels before and after the construction of seven ethanol plants in or near western Ohio in late 2006 and early 2007. I address the endogeneity problem associated with proximity to the nearest ethanol plants using propensity score matching and instruments relying on the spatial competition among ethanol plants and other agricultural markets. Instrumental variables regression on the matched sample demonstrates the positive effects of proximity to newly constructed ethanol plants. In contrast, the effect of proximity to agricultural terminals is significantly less after 2007 due to competition from newly constructed ethanol plants.

Tuesday, 18 Nov 2014

  • Tue, Nov 18, 2014 3:40 pm - 5:00 pm
    368A Heady Hall

    "A Welfare Analysis of Conservation Easement Tax Credits," with James Vercammen, University of British Columbia

    Abstract:  Selling land for development and signing a conversation easement are typical joint real optiondecisions facing the owners of undeveloped land. The size of the easement paymentrelative to the environmental value of the land, and the social opportunity cost of the taxcredit which is provided to easement holders are both important determinants of the efficiencyof the easement outcome. Combining the real option decision by the landowner witha social welfare function reveals the conditions under which a landowner will choose to accepta socially undesirable easement and choose to reject a socially desirable easement. Ahigher level of development value uncertainty raises the value of the real option to defer theland development decision, which in turn decreases both the private and social value of theconservation easement. Simulation results reveal that shifting from a one-time easementto a standing offer easement generates comparatively small gains for the landowner andcomparatively large gains for society.

Wednesday, 19 Nov 2014

  • Wed, Nov 19, 2014 4:10 pm - 5:00 pm
    368A Heady Hall

    "The Farmer-Handler Decision Problem and Spatial Competition in Agricultural Procurement Markets," with Christopher Taylor, University of Wisconsin, Wednesday, November 19, 4:10-5:30 pm, 368A Heady Hall

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