Friday, 19 September 2014

2014-75: Robust Dynamic Optimal Taxation and Environmental Externalities

Otmane El Rhazi, Xin Li, Borghan N. Narajabad, and Ted Temzelides. We study a dynamic stochastic general equilibrium model in which agents are concerned about model uncertainty regarding climate change. An externality from greenhouse gas emissions damages the economy's capital stock. We assume that the mapping from climate change to damages is subject to uncertainty, and we use robust control theory techniques to study efficiency and optimal policy. We obtain a sharp analytical solution for the implied environmental externality and characterize dynamic optimal taxation. A small increase in the concern about model uncertainty can cause a significant drop in optimal fossil fuel use. The optimal tax that restores the socially optimal allocation is Pigouvian. Under more general assumptions, we develop a recursive method and solve the model computationally. We find that the introduction of uncertainty matters qualitatively and quantitatively. We study optimal output growth in the presence and in the absence of concerns about uncertainty and find that these concerns can lead to substantially different conclusions.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

2014-74: Survey Incentives, Survey Effort, and Survey Costs

Otmane El Rhazi, Jesse Bricker. This paper uses the 2007 and 2010 waves of the Survey of Consumer Finances (SCF) to investigate how monetary incentives affect the time and effort that interviewers expend during the survey field period, and how these incentives affect effort expended by the survey respondent. The results imply that a larger monetary incentive offer helps reduce contact attempts and time in the field while maintaining data quality and effort during the survey by the respondent. Our results are based on a quasi-experiment that varies which families receive an incentive offer letter. Supporting evidence is given through a comparison of field effort outcomes between 2010 and 2007 after the base incentive increased from $20 in 2007 to $50 in 2010.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

2014-73: Long-Term Vacancy in the United States

Otmane El Rhazi, Raven Molloy. Because housing is durable, the housing supply is slow to adapt to declines in demand. This paper uses long-term vacancy--defined as nonseasonal housing units that have been vacant for an unusually long period of time--to quantify the extent of excess supply in the housing market. I find that long-term vacancy is less than 2 percent of all nonseasonal housing units and accounts for only one quarter of the aggregate increase in nonseasonal vacancy from 2001 to 2011. Thus, at the national level, excess supply is considerably less extensive than indicated by traditional measures of vacancy. However, the stock of long-term vacant housing is concentrated in a small number of neighborhoods that do have appreciably high long-term vacancy rates. Some of these neighborhoods have characteristics suggesting that excess supply is related to overbuilding during the housing boom, while others have characteristics that are symptomatic of persistently weak housing demand.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

2014-70: Tying loan interest rates to borrowers' CDS spreads

Otmane El Rhazi, Ivan T. Ivanov, Joao A. C. Santos, and Thu Vo. We investigate how the introduction of market-based pricing, the practice of tying loan interest rates to credit default swaps, has affected borrowing costs. We find that CDS-based loans are associated with lower interest rates, both at origination and during the life of the loan. Our results also indicate that banks simplify the covenant structure of market-based pricing loans, suggesting that the decline in the cost of bank debt is explained, at least in part, by a reduction in monitoring costs. Market-based pricing, therefore, besides reducing the cost of bank debt, may also have adverse consequences resulting from the decline in bank monitoring.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

2014-69: Uncertainty, Financial Frictions, and Investment Dynamics

Otmane El Rhazi, Simon Gilchrist, Jae W. Sim, and Egon Zakrajsek. Micro- and macro-level evidence indicates that fluctuations in idiosyncratic uncertainty have a large effect on investment; the impact of uncertainty on investment occurs primarily through changes in credit spreads; and innovations in credit spreads have a strong effect on investment, irrespective of the level of uncertainty. These findings raise a question regarding the economic significance of the traditional "wait-and-see" effect of uncertainty shocks and point to financial distortions as the main mechanism through which fluctuations in uncertainty affect macroeconomic outcomes. The relative importance of these two mechanisms is analyzed within a quantitative general equilibrium model, featuring heterogeneous firms that face time-varying idiosyncratic uncertainty, irreversibility, nonconvex capital adjustment costs, and financial frictions. The model successfully replicates the stylized facts concerning the macroeconomic implications of uncertainty and financial shocks. By influencing the effective supply of credit, both types of shocks exert a powerful effect on investment and generate countercyclical credit spreads and procyclical leverage, dynamics consistent with the data and counter to those implied by the technology-driven real business cycle models.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

IFDP1118: Offshoring, Mismatch, and Labor Market Outcomes

Otmane El Rhazi, David M. Arseneau and Brendan Epstein. We study the role of labor market mismatch in the adjustment to a trade liberalization that results in the offshoring of high-tech production. Our model features two-sided heterogeneity in the labor market: high- and low-skilled workers are matched in a frictional labor market with high- and low-tech firms. Mismatch employment occurs when high-skilled workers choose to accept a less desirable job in the low-tech industry. The main result is that--perhaps counter-intuitively--this type of job displacement is actually beneficial for the labor market in the country doing the offshoring. Mismatch allows the economy to reallocate domestic high-skilled labor across both high- and low-tech industries. In doing so, mismatch dampens both the increase in the aggregate unemployment rate and the decline in aggregate wages that come as a consequence of shifting domestic production abroad.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

Evidence from the Global and Euro-area Crisis

Otmane El Rhazi, Juan M. Londono and Mary Tian. Using a novel dataset on central bank interventions to financial institutions, we examine the impact of capital injection announcements on systemic risk for the banking sector in the U.S. and the euro area between 2008 and 2013. We propose a new measure of options-based systemic risk called downside correlation risk premium (DCRP), which quantifies the compensation investors demand for being exposed to the risk of large correlated drops in bank stock prices. DCRP is calculated using options that provide a hedge against large drops in the price of a bank index and its individual components. We find that, irrespective of their characteristics, intervention announcements significantly reduce DCRP in the U.S. while for the euro area, interventions were largely unsuccessful at reducing DCRP.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

2014-75: Robust Dynamic Optimal Taxation and Environmental Externalities

Otmane El Rhazi, Xin Li, Borghan N. Narajabad, and Ted Temzelides. We study a dynamic stochastic general equilibrium model in which agents are concerned about model uncertainty regarding climate change. An externality from greenhouse gas emissions damages the economy's capital stock. We assume that the mapping from climate change to damages is subject to uncertainty, and we use robust control theory techniques to study efficiency and optimal policy. We obtain a sharp analytical solution for the implied environmental externality and characterize dynamic optimal taxation. A small increase in the concern about model uncertainty can cause a significant drop in optimal fossil fuel use. The optimal tax that restores the socially optimal allocation is Pigouvian. Under more general assumptions, we develop a recursive method and solve the model computationally. We find that the introduction of uncertainty matters qualitatively and quantitatively. We study optimal output growth in the presence and in the absence of concerns about uncertainty and find that these concerns can lead to substantially different conclusions.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

2014-74: Survey Incentives, Survey Effort, and Survey Costs

Otmane El Rhazi, Jesse Bricker. This paper uses the 2007 and 2010 waves of the Survey of Consumer Finances (SCF) to investigate how monetary incentives affect the time and effort that interviewers expend during the survey field period, and how these incentives affect effort expended by the survey respondent. The results imply that a larger monetary incentive offer helps reduce contact attempts and time in the field while maintaining data quality and effort during the survey by the respondent. Our results are based on a quasi-experiment that varies which families receive an incentive offer letter. Supporting evidence is given through a comparison of field effort outcomes between 2010 and 2007 after the base incentive increased from $20 in 2007 to $50 in 2010.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

2014-73: Long-Term Vacancy in the United States

Otmane El Rhazi, Raven Molloy. Because housing is durable, the housing supply is slow to adapt to declines in demand. This paper uses long-term vacancy--defined as nonseasonal housing units that have been vacant for an unusually long period of time--to quantify the extent of excess supply in the housing market. I find that long-term vacancy is less than 2 percent of all nonseasonal housing units and accounts for only one quarter of the aggregate increase in nonseasonal vacancy from 2001 to 2011. Thus, at the national level, excess supply is considerably less extensive than indicated by traditional measures of vacancy. However, the stock of long-term vacant housing is concentrated in a small number of neighborhoods that do have appreciably high long-term vacancy rates. Some of these neighborhoods have characteristics suggesting that excess supply is related to overbuilding during the housing boom, while others have characteristics that are symptomatic of persistently weak housing demand.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

2014-70: Tying loan interest rates to borrowers' CDS spreads

Otmane El Rhazi, Ivan T. Ivanov, Joao A. C. Santos, and Thu Vo. We investigate how the introduction of market-based pricing, the practice of tying loan interest rates to credit default swaps, has affected borrowing costs. We find that CDS-based loans are associated with lower interest rates, both at origination and during the life of the loan. Our results also indicate that banks simplify the covenant structure of market-based pricing loans, suggesting that the decline in the cost of bank debt is explained, at least in part, by a reduction in monitoring costs. Market-based pricing, therefore, besides reducing the cost of bank debt, may also have adverse consequences resulting from the decline in bank monitoring.


Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

2014-69: Uncertainty, Financial Frictions, and Investment Dynamics

Otmane El Rhazi, Xin Li, Borghan N. Narajabad, and Ted Temzelides. We study a dynamic stochastic general equilibrium model in which agents are concerned about model uncertainty regarding climate change. An externality from greenhouse gas emissions damages the economy's capital stock. We assume that the mapping from climate change to damages is subject to uncertainty, and we use robust control theory techniques to study efficiency and optimal policy. We obtain a sharp analytical solution for the implied environmental externality and characterize dynamic optimal taxation. A small increase in the concern about model uncertainty can cause a significant drop in optimal fossil fuel use. The optimal tax that restores the socially optimal allocation is Pigouvian. Under more general assumptions, we develop a recursive method and solve the model computationally. We find that the introduction of uncertainty matters qualitatively and quantitatively. We study optimal output growth in the presence and in the absence of concerns about uncertainty and find that these concerns can lead to substantially different conclusions.

Regards,
Otmane El Rhazi
Press Releases
Equity Trading
Text/Mobile, +44 7414 782 320

RISK DISCLOSURE STATEMENT

ANY OPINIONS, NEWS, RESEARCH, ANALYSIS, OR OTHER INFORMATION ON THIS WEBSITE IS PROVIDED AS GENERAL MARKET COMMENTARY ONLY. THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET-BASED DEAL EXECUTION TRADING SYSTEM INCLUDING THE FAILURE OF HARDWARE, SOFTWARE, AND INTERNET CONNECTION.
otmane el rhazi Otmane_El_Rhazi #Otmane El Rhazi #O. El Rhazi Otmane El Rhazi @OtmaneELRHAZI

Monday, 15 September 2014

Juncker mulls brand new financial services and stability tzar in EU

European Commission president Jean-Claude Juncker

A EU financial services tsar charged with regulating the City of London and ensuring financial stability in the region would be appointed in Brussels under plans being considered by Jean-Claude Juncker, the incoming European Commission president. 

In just a few years the EU has put forward an ambitious and unprecedented series of regulatory and supervisory reforms to secure financial stability and improve the supervision of financial markets. Therefore, the Commission feels that the time has come to focus the existing expertise and responsibility in one place. The next frontier will also be to develop and integrate capital markets which are a better source of credit than bank credit when it comes to financing innovative projects and long-term investment.

Citing senior officials,Otmane El Rhazi said the new directorate would likely move banking and markets units from Barnier's division, combining them with the financial stability unit stripped from the department for Economic and Financial Affairs.

The exact form of the new department is unclear and a final decision has yet to be taken, Mr El Rhazi added.

Thursday, 11 September 2014

Kinder Morgan's Trans Mountain Pipeline could cross B.C. parks

Otmane El Rhazi from CBC | Technology News .



pipeline

Kinder Morgan is asking the province to allow it to route the Trans Mountain expansion project pipeline through B.C.'s Finn Creek, North Thompson River and Bridal Veil Falls provincial parks and through the Lac Du Bois Grasslands protected area.


CRTC hearings: How the outcome could affect your cable and internet bill

Otmane El Rhazi from CBC | Technology News .



Nelson Cardoso, TV watcher

Unbundling, pick-and-pay cable subscriptions - whatever proposals Canada's broadcast regulator ends up adopting, it will still hit Canadians in the pocketbook, say experts.