THE BASIC PUBLIC FINANCE OF PUBLIC–PRIVATE PARTNERSHIPS

Public–private partnerships (PPPs) have been justified because they release public funds or save on distortionary taxes. However, the resources saved by a government that does not finance the upfront investment are offset by giving up future revenue flows to the concessionaire. If a PPP can be justified on efficiency grounds, the PPP contract that optimally balances demand risk, user‐fee distortions, and the opportunity cost of public funds has a minimum revenue guarantee and a revenue cap. The optimal contract can be implemented via a competitive auction with reasonable informational requirements. The optimal revenue guarantees, revenue sharing agreements, and auction mechanisms are different from those observed in the real world. In particular, the optimal contract duration is shorter in demand states where the revenue cap binds. These results also have implications for budgetary accounting of PPPs, as they show that their fiscal impact resembles that of public provision, rather than privatization.     

The 2007 Subprime Market Crisis Through the Lens of European Central Bank Auctions for Short‐Term Funds

We study European banks' demand for short‐term funds (liquidity) during the summer 2007 subprime market crisis. We use bidding data from the European Central Bank's auctions for one‐week loans, their main channel of monetary policy implementation. Our analysis provides a high‐frequency, disaggregated perspective on the 2007 crisis, which was previously studied through comparisons of collateralized and uncollateralized interbank money market rates which do not capture the heterogeneous impact of the crisis on individual banks. Through a model of bidding, we show that banks' bids reflect their cost of obtaining short‐term funds elsewhere (e.g., in the interbank market) as well as a strategic response to other bidders. The strategic response is empirically important: while a naïve interpretation of the raw bidding data may suggest that virtually all banks suffered an increase in the cost of short‐term funding, we find that, for about one third of the banks, the change in bidding behavior was simply a strategic response. We also find considerable heterogeneity in the short‐term funding costs among banks: for over one third of the bidders, funding costs increased by more than 20 basis points, and funding costs vary widely with respect to the country‐of‐origin. The funding costs we estimate using bidding data are also predictive of market‐ and accounting‐based measures of bank performance, reinforcing the usefulness of “revealed preference” information contained in bids.     

The urban market of Açaí fruit (Euterpe oleracea Mart.) and rural land use change: Ethnographic insights into the role of price and land tenure constraining agricultural choices in the Amazon estuary

This paper examines the recent development of the açaí fruit economy in regional Amazonian urban markets (as a staple food) and more recently among national and international consumers (as a fashion food) and the consequences for agroforestry intensification by Caboclo communities in the Amazon estuary. The paper is based on long-term ethnographic research and field experiments; the açaí fruit economy is discussed from agricultural, social, and economic perspectives; attention is given to its historical development, the structure of açaí fruit production, its agents, the relationship among themselves and the urban market. Decadal price performance is presented for açaí fruit and açaí transportation costs and compared to major agropastoral products for the Eastern Amazon region. Dominant views about the economic rationality of rural producers' decision-making are discussed. Açaí fruit has performed as well as and in some cases surpassed most agro-pastoral products of the Northern region. Economic returns for producers reflect linkages between price signals from urban markets, harvesting decision, and land tenure condition of the producer. Urban markets for the fruit is expanding and bringing new participants to the açaí fruit economy further conditioning the ability of rural producers to take advantage of external markets for forest products. Discussion of factors conditioning agricultural development and integration between urban and rural areas conclude the article.     

Synergistic development and participatory action research in a Nahuat community

This is a report of twenty years of participatory action research conducted by a team of Mexican urban professionals with community members in a Nahuat indigenous region at Sierra Norte de Puebla (Mexico). The article first outlines three main issues of Latin American participatory action research projects. The context and the unfolding of the case are presented through five stages highlighting the role of the team, its relationship with the community along the years, and the development of some of their joint activities. In the final pages the authors evaluate the case in relation to the issues raised in the first section and discuss what is important about this process. María Eugenia Sánchez is a sociologist and President and Founder of Proyecto de Animación y Desarrollo, Asociación Civil (PRADE A.C.), the nongovernmental organization living and working since 1973 in San Miguel Tzinacapan (Mexico). She is currently (1992–1993) a Fulbright Scholar at the Latin American Studies Program, Center for International Studies at Cornell University. He is currently (1992–1993) a Fulbright Scholar at the Latin American Studies Program, Center for International Studies at Cornell University. Address for correspondence: María Eugenia Sánchez or Eduardo Almeida, 190 Uris Hall, Latin American Studies Program, Cornell University, Ithaca, N.Y. 14853-7601. In Mexico: PRADE, A.C., Apartado Postal 6, Cuetzalan, Pue. 73560 Mexico.     

Catholic social teaching and business ethics: A search for moral foundations

Do the social encyclicals, especially the 100-year old Rerum Novarum,have any relevance to business people and managers in the practice of their profession? To respond to this question, one must attempt to find a link between Catholic social teaching and business ethics. Establishing this relationship is the goal of this paper. It will discuss the notion of the social question, which is addressed in the social encyclicals; present the philosophical and theological foundations of the social teaching; and point to areas where the linkage between the social teaching and business ethics can be established. By reaching deep into the philosophical grounds of the social encyclicals, the analysis attempts to cut through the often muddled diversity of opinions on specific ethical issues which characterize most moral debates.     

Estimation of Long Memory in Integrated Variance

A stylized fact is that realized variance has long memory. We show that, when the instantaneous volatility is a long memory process of order d, the integrated variance is characterized by the same long-range dependence. We prove that the spectral density of realized variance is given by the sum of the spectral density of the integrated variance plus that of a measurement error, due to the sparse sampling and market microstructure noise. Hence, the realized volatility has the same degree of long memory as the integrated variance. The additional term in the spectral density induces a finite-sample bias in the semiparametric estimates of the long memory. A Monte Carlo simulation provides evidence that the corrected local Whittle estimator of Hurvich et al. (2005 Hurvich , C. M. , Moulines , E. , Soulier , P. ( 2005 ). Estimating long memory in volatility . Econometrica 73 ( 4 ): 1283 – 1328 .[Crossref], [Web of Science ®] , [Google Scholar]) is much less biased than the standard local Whittle estimator and the empirical application shows that it is robust to the choice of the sampling frequency used to compute the realized variance. Finally, the empirical results suggest that the volatility series are more likely to be generated by a nonstationary fractional process.     

Informed consent comprehension among vulnerable populations in Ecuador: video-delivered vs. in-person standard method

The informed consent comprehension process is key to engaging potential research subject participation. The aim of this study is to compare informed consent comprehension between two methods: standard and video-delivered. We compared the in-person and video-delivered informed consent process in the Familias Unidas intervention. We evaluated comprehension using a 7-item true/false questionnaire. There were a total of 152 participants in the control group and 87 in the experimental. General characteristics were similar between both groups (p > 0.05). First-attempt informed consent comprehension was higher in the intervention group but was not statistically significant (80% and 78% respectively p = 0.44). A video-delivered informed consent process did not differ from the standard method of informed consent in a low educational and socioeconomic environment.