A Demand - and Supply- Side Constrained Model for Liquidation Value and Related Exposure Periods

Abstract Two problems appear to be most topical in conjunction with mortgage valuation practices during an economic crisis: the assessment of sustainable long-term mortgage values and the assessment of liquidation discounts to prevailing market values which would provide for the most advantageous liquidation/quick sale strategy. This paper addresses the latter issue, which has traditionally proven intractable to analytical modeling. Apart from reviewing some research devoted to the subject of liquidation value modeling, predominantly from the Eastern European perspective, where this issue has, for years, commanded a particular economic interest, this paper synthesizes the best features of this research and builds on it to propose its own model, which lays equal emphasis on both the sellerside and demand-side perspectives. The first perspective accounts for the financial interests of a lender in forced sale disposals, while the latter perspective engages economic analysis on the side of market feasibility of identified efficient lender disposal strategies. By negotiating both perspectives, an optimal analytic solution to the issue of liquidation value discounts can be obtained. This is achieved by what we call a SI-MI framework which is developed throughout the paper. We also adapt this framework specifically to the mortgage banking context where we use it to bring to light some rarely discussed linkages between the LTV policies of a bank and its mortgage liquidation strategies. This also allows us to propose a model and an LTV formula which can help organize thinking about optimal LTV policies in credit issuing processes. We hope that, with the re-appearance of liquidation value basis/premise of valuation as a recognized international basis of valuation in the new edition of the International Valuation Standards (IVS 2017), the findings of this paper will become topical.

Download Full-text

Mathematical Framework for Breathing Chimera States

Journal of Nonlinear Science ◽

10.1007/s00332-021-09779-1 ◽

2022 ◽

Vol 32 (2) ◽

Author(s):

O. E. Omel’chenko

Keyword(s):

Coupled Oscillators ◽

Analytic Solution ◽

Coarse Grained ◽

Mathematical Framework ◽

Intensive Study ◽

Phase Oscillators ◽

Chimera States ◽

The Subject ◽

Self Consistency

AbstractAbout two decades ago it was discovered that systems of nonlocally coupled oscillators can exhibit unusual symmetry-breaking patterns composed of coherent and incoherent regions. Since then such patterns, called chimera states, have been the subject of intensive study but mostly in the stationary case when the coarse-grained system dynamics remains unchanged over time. Nonstationary coherence–incoherence patterns, in particular periodically breathing chimera states, were also reported, however not investigated systematically because of their complexity. In this paper we suggest a semi-analytic solution to the above problem providing a mathematical framework for the analysis of breathing chimera states in a ring of nonlocally coupled phase oscillators. Our approach relies on the consideration of an integro-differential equation describing the long-term coarse-grained dynamics of the oscillator system. For this equation we specify a class of solutions relevant to breathing chimera states. We derive a self-consistency equation for these solutions and carry out their stability analysis. We show that our approach correctly predicts macroscopic features of breathing chimera states. Moreover, we point out its potential application to other models which can be studied using the Ott–Antonsen reduction technique.

Download Full-text

Infrastructure investment and employment: Evidence for Portugal

Journal of Infrastructure Policy and Development ◽

10.24294/jipd.v5i2.1377 ◽

2021 ◽

Vol 5 (2) ◽

pp. 1377

Author(s):

Alfredo M. Pereira ◽

Rui M. Pereira ◽

Pedro G. Rodrigues

Keyword(s):

Infrastructure Investment ◽

Supply Side ◽

Long Term Effects ◽

Demand And Supply ◽

Vector Autoregressive ◽

Employment Effects ◽

Long Run ◽

Short Run ◽

Infrastructure Investments

We estimated how investment in 12 infrastructure types affects employment in Portugal. Using a vector-autoregressive specification at the industry level, we found a double dividend associated with ports and airports: investing in either delivers the greatest bang per euro, both on impact and in the long run. One million euros invested in ports and airports creates 717.1 and 290.5 jobs in the long run, respectively, and 535 and 253.3 jobs in the short run, respectively. Regarding long-term employment effects, these are followed by municipal roads, telecommunications, national roads, health structures, education facilities, refineries, railroads, and highways. Water infrastructures and electricity and gas infrastructures have negligible effects. With the long-term effects decomposed, sizable supply-side employment effects for health and education facilities exist, while demand-side effects dominate for airports, ports, municipal roads, and telecommunications. Employment following the investment in national roads is balanced across demand and supply channels. We found no significant employment-related location effects of infrastructure investments. Also, investing in either health facilities or in education buildings entails non-negligible job losses in the short run. These results suggest that the magnitude and the timing of job creation crucially depend on the type of infrastructure investment. Policymakers in Portugal need to be aware of this in choosing between countercyclical or structural targets.

Download Full-text

Secular Stagnation, Unemployment Hysteresis and Monetary Policy in EMU: Scratches but Not Scars?

The Economists Voice ◽

10.1515/ev-2018-0034 ◽

2018 ◽

Vol 15 (1) ◽

Cited By ~ 2

Author(s):

Ansgar Belke

Keyword(s):

Monetary Policy ◽

Two Dimensions ◽

Supply Side ◽

Fiscal Policies ◽

Structural Unemployment ◽

Demand And Supply ◽

Second Wave ◽

Prevailing View ◽

Unemployment Problem

Abstract The strength of mutually reinforcing links between the demand and supply sides of the macroeconomy is an important issue for policymakers which has emerged from the financial crisis. The prevailing view that only cyclical policies influence the demand side, and structural policies affect the supply side has been challenged in two dimensions. Firstly, long periods of weak demand have the potential to lead to rising structural unemployment and a permanently lower capital stock – inducing hysteresis effects. Secondly, if one believes in the relevance of hysteresis in the form propagated by [Blanchard, Olivier J., and Lawrence H. Summers. 1986. “Hysteresis and the European Unemployment Problem.” In NBER Macroeconomics Annual, edited by Fischer, S., Vol. 1, 15–78. Cambridge: MIT Press], stronger demand fueled, for instance, by monetary policy may, as a corollary, be able to reverse such effects. This paper argues that the Blanchard and Summers type of hysteresis should, however, not be taken literally and not taken as the basis of one-to-one into recommendations for monetary policy and/or the monetary policy strategy. We show that bluntly pointing to the hard form of “reverse hysteresis” and implementing bold counter-cyclical monetary (and fiscal) policies to cope with hysteretic unemployment is neither necessary nor sufficient. Instead, we argue that it is necessary to refer to subtler forms of hysteresis, which are more compatible with the data. These subtler forms still leave some room for monetary policy to maneuver, but in a much more complex way. If long-term unemployment is stagnating even during an upturn, they may even serve as a basis to recommend a contractionary monetary policy stance. At the same time, however, inequality which is causing persistent or even permanent demand deficiencies becomes relevant as hurdle for lower unemployment in the hysteresis context. Seen on the whole, thus, a second wave of hysteresis-based research on monetary policy options following the first wave in the 1980s should clearly be on the agenda.

Download Full-text

Are Jobs Available in the Market? A Perspective from the Supply Side

Sustainability ◽

10.3390/su13041973 ◽

2021 ◽

Vol 13 (4) ◽

pp. 1973

Author(s):

Salwaty Jamaludin ◽

Rusmawati Said ◽

Normaz Wana Ismail ◽

Norashidah Mohamed Nor

Keyword(s):

Labour Market ◽

Supply Side ◽

Relative Importance ◽

Demand And Supply ◽

Unemployed People ◽

Importance Index ◽

Global Trend ◽

Graduate Unemployment ◽

The Unemployed

Graduate unemployment exhibits a clear increasing global trend, and Malaysia is no exception. The unemployment rate among graduates is witnessing a considerable upsurge, growing from 43,800 in 2000 (15% of total unemployed) to more than 175,500 in 2017 (35%). Numerous programmes have been implemented in order to secure jobs for the unemployed in the labour market; however, the number of unemployed graduates keeps on increasing. It is significant to recognise the main reason behind this issue to tackle the risk of long-term unemployment, specifically from the supply side. Using the Relative Importance Index (RII), this study investigated 402 respondents at selected job fairs to identify the cause of their difficulty in entering the labour market. The findings revealed that the unemployed people believe that the principal cause of their unemployment is the lack of suitable jobs for them in the market. This circumstance sends a signal of asymmetric information between demand and supply in the labour market, especially to young graduates.

Download Full-text

Global energy efficiency improvement in the long term: a demand- and supply-side perspective

Energy Efficiency ◽

10.1007/s12053-010-9097-z ◽

2010 ◽

Vol 4 (3) ◽

pp. 435-463 ◽

Cited By ~ 15

Author(s):

Wina Graus ◽

Eliane Blomen ◽

Ernst Worrell

Keyword(s):

Energy Efficiency ◽

Supply Side ◽

Efficiency Improvement ◽

Global Energy ◽

Demand And Supply ◽

Energy Efficiency Improvement

Download Full-text

European Integration

10.3366/edinburgh/9781474455893.001.0001 ◽

2020 ◽

Author(s):

Johann P. Arnason

Keyword(s):

European Integration ◽

Eastern European ◽

The European Union ◽

Historical Processes ◽

History Of ◽

External Conditions ◽

Eastern European Countries ◽

Totalitarian Regimes ◽

The Eu

Different understandings of European integration, its background and present problems are represented in this book, but they share an emphasis on historical processes, geopolitical dynamics and regional diversity. The introduction surveys approaches to the question of European continuities and discontinuities, before going on to an overview of chapters. The following three contributions deal with long-term perspectives, including the question of Europe as a civilisational entity, the civilisational crisis of the twentieth century, marked by wars and totalitarian regimes, and a comparison of the European Union with the Habsburg Empire, with particular emphasis on similar crisis symptoms. The next three chapters discuss various aspects and contexts of the present crisis. Reflections on the Brexit controversy throw light on a longer history of intra-Union rivalry, enduring disputes and changing external conditions. An analysis of efforts to strengthen the EU’s legal and constitutional framework, and of resistances to them, highlights the unfinished agenda of integration. A closer look at the much-disputed Islamic presence in Europe suggests that an interdependent radicalization of Islamism and the European extreme right is a major factor in current political developments. Three concluding chapters adopt specific regional perspectives. Central and Eastern European countries, especially Poland, are following a path that leads to conflicts with dominant orientations of the EU, but this also raises questions about Europe’s future. The record of Scandinavian policies in relation to Europe exemplifies more general problems faced by peripheral regions. Finally, growing dissonances and divergences within the EU may strengthen the case for Eurasian perspectives.

Download Full-text

Effectiveness of Flood Protection Project Valuation Methods

Olsztyn Economic Journal ◽

10.31648/oej.3152 ◽

2015 ◽

Vol 10 (3) ◽

pp. 275-289

Author(s):

Tadeusz Liziński ◽

Marcin Bukowski ◽

Anna Wróblewska

Keyword(s):

Essential Element ◽

Weather Conditions ◽

Point Of View ◽

Flood Protection ◽

Costs And Benefits ◽

Protection Measures ◽

Investment Projects ◽

Market Values ◽

Project Valuation ◽

The Subject

Projects for flood protection are increasingly the subject of investment projects in the field of water management. This is related to the increasing frequency of worldwide threats caused by extreme weather conditions, including extremely high rainfall causing floods. Technical and nontechnical flood protection measures are also increasing in importance. In the decision-making process, it is necessary to take into account both the costs and benefits of avoiding losses, including an analysis of social benefits, whose valuation of non-market goods is an essential element. A comprehensive account of projects in the field of flood protection based on the estimated costs and benefits of the investment allows the economic efficiency from a general social point of view to be determined. Previous evaluations of the effectiveness of investment projects have mainly taken into account only categories and market values. The aim of the article is to identify the possibilities to expand the values of non-market assessments and categories formulated on the basis of the theoretical economics of the environment.

Download Full-text

The Economics of Commodities and Commodity Markets

10.1093/oso/9780190656010.003.0002 ◽

2018 ◽

Author(s):

Florian Ielpo

Keyword(s):

Raw Materials ◽

Commodity Prices ◽

Essential Element ◽

Commodity Markets ◽

Production Costs ◽

Demand And Supply ◽

Spot Prices ◽

Supply Shocks ◽

The Business Cycle

This chapter covers the economic fundamentals of commodity markets (i.e., what shapes the evolution of the price of raw materials) in three steps. First, it covers the theories explaining why the futures curve can be upward or downward sloping, an essential element for commodity producing companies. The evolution of inventories and hedging pressures are the two dominant sources of explanation. Second, the chapter reviews the fundamentals of commodity spot prices: technologies, supply, demand, and speculation. Production costs draw the long-term evolution of prices, but demand and supply shocks can trigger substantial variations in commodity prices. Third, the chapter presents how commodity prices interact with the business cycle. Commodities are influenced by the world activity but can also have a material impact on it.

Download Full-text