This paper analyzes the second-best pricing and investment rules to be followed in the transportation industries in the presence of intermodal competition, exogenous price distortions, and financing constraints, using both theoretical and simulation analysis. It shows that price distortions and financing constraints in one mode will not only affect the investment rules in that mode, but will al...

Abstract This study examines the pricing of municipal bonds before and after a currency shock in Switzerland. Two approaches are used to decompose treasuries bond spreads into liquidity, maturity, default risk premiums. The first approach is model cross-sectional instrumental variables, second variables with panel data. composition for both approaches, three scenarios: before, throughout, shock...

Alwyn Young (2000) provided evidence for distortions begetting distortions in a partially reformed economy by examining barriers to inter-provincial trade in China. His findings of increasing barriers to inter-provincial trade are based on five arguments. This paper critically examines each of the five arguments and their evidence in turn, and concludes that in all five instances neither argume...

We compare macroeconomic models of sticky-prices (Calvo and Costsof-adjustment) with flexible price models in terms of optimal seigniorage. This sheds light on the importance of relative price distortions. Sticky-price models with no price dispersion terms have unattractive implications, we argue, when it comes to the derivation of optimal policies. We provide examples where they may imply very...

This article explores whether a carbon price will effectively encourage the more efficient use of greenhouse gas intensive materials such as steel. The article identifies a range of distortions that arise when some of the restrictive assumptions of neoclassical economics are relaxed. Distortions occur due to the sequential nature of decision-making along supply chains, due to imperfect competit...

Capitalizing on the most recent estimates of agricultural border protection in China and in other countries, this paper assesses the economic and poverty impact of global trade reform in China. It also examines the interplay between the trade reforms and factor market reforms aimed at improving the allocation of labor within the Chinese economy. The results suggest that trade reforms in the res...

This paper uses distortions of the bivariate Gaussian copula to produce a heavy tail for expected portfolio loss distribution in the context of synthetic Collateralized Debt Obligations (CDOs). We demonstrate that when the distorted copulas are used within the JP Morgan CDO pricing formula, as an example, we can simulate quite realistic tranche prices. Furthermore, we need only one dependence p...