CEEAplA Working Paper Series 2009
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- Operational asset replacement strategy : a real options approachPublication . Zambujal, João; Duque, JoãoThis article analyses the problem of replacement by investigating the optimal moment of investment replacement in a given tax environment with a given depreciation policy. An operation and maintenance cost minimization model, based on the definition of equivalent annual cost, is applied to a real options paradigm. The developed methodology allows for an innovative evaluation of the flexibility of replacement process analysis. A new two- factor evaluation function is introduced to quantify decisions of asset replacement under a unique cycle environment. This study improves upon previous findings in the literature as it accounts for autonomous salvage value processes. Based on partial differential equations, this model achieves a general analytical solution and particular numerical solution. The results differ significantly from those observed in one-factor models by showing evidence of over-evaluation in optimal levels of replacement, and by confirming suspicions that different types of uncertainties produce non-monotonous effects on the optimal replacement level. The scientific contribution of this study lies in new and stronger approaches to equivalent annual cost literature, supplying an algorithm for operation and maintenance cost minimization that is conditioned by autonomous salvage value. This study also contributes to the real options literature by developing of a two-factor model with Brownian processes applied to asset replacement.
- Azormod dynamic general equilibrium model for AzoresPublication . Fortuna, Mário; Bayar, Ali; Mohora, Cristina; Opese, Masudi; Sisik, SuatThe main objective of this paper is to present a multi-sectoral, multi-regional dynamic modelling platform of the Azores economy integrated within the European and global context. The platform will have the highest capabilities of analysis and forecasting in Azores for problems related to structural sectoral and regional issues, agriculture, labour markets, public finance, trade, EU funds, regional development, environment, and energy. The modelling platform is intended to act as an analytical and quantitative support for policy-making.
- Analysing the impacts of closure of a military base using a dynamic CGE modelPublication . Bayar, Ali; Mohora, Cristina; Fortuna, Mário; Rege, Sameer; Sisik, SuatMilitary bases are commonplace in many countries and may have a significant impact in the communities where they are integrated. Impacts of military bases have been analysed through different perspectives. Our aim is to analyse their economic impact. The importance of military bases has become a topic of discussion particularly when base closures or base activity reductions are under consideration. In a previous paper the authors looked at the issue using a static CGE model applied to the analysis of the economic impact of a US base located in the island of Terceira in the Azores. In the current paper a dynamic model is used to study the same issue, using more recent data and disaggregating the impact among different household categories. A base closure scenario is created and the impacts traced through various economic indicators. It is concluded that GDP falls, relative to the base scenario for a number of years recovering after some time, assuming that worsened trade balances are compensated by other transfers. This fall is prompted by a fall in employment, personal income and consumption. The model also predicts that the impact hurts different household income groups with diverse intensity. Lower income households are hurt more in relative terms but generate a smaller absolute impact. With time, the negative impact tapers off for most income groups except for the lowest which keeps on loosing more until the end of the simulation period.
- Measuring the impacts of personal and corporate income tax cuts on a small island open economyPublication . Bayar, Ali; Fortuna, Mário; Mohora, Cristina; Opese, Masudi; Sisik, SuatIn 1999, subsequent to a legislative review, the authorities of the Azores, an autonomous region of Portugal, decided to reduce income tax rates applicable locally by 30% in the case of corporate income and by 20% in the case of personal income. There was no debt or transfer compensation for this tax reduction, meaning that the regional budget was reduced by the equivalent amount of the tax reduction. The current paper analyses the impact of such a shock on various macro and micro variables pertaining to the Azorean economy, including social welfare, using a dynamic CGE model comprising forty five sectors, six household groups, three government levels and four trading partners. It is concluded that the short run impact on GDP is, as expected, negative, given that the marginal propensity to save of the private sector is positive and there was no compensating policy. There is an initial increase in unemployment due to the cut in government expenditures. In the long run, however, the impact becomes positive due to increased investment and private consumption. The stronger effect comes from the reduction in personal income taxes, a much greater proportion of all taxes collected in the region. Real wages net of personal income taxes rise as does the labour supply. The impact of the policy is shown to be positive for all household income groups, as evaluated through equivalent variation. The lowest income group ends up benefiting the most, in relative terms.
- Welfare impacts of road construction using a public-private partnership : a CGE analysis of a projectPublication . Bayar, Ali; Fortuna, Mário; Rege, SameerThe Azorean Government embarked on a public-private partnership to build a road on the island of São Miguel, to circumvent the budget restriction imposed by the central government. We build a sequentially dynamic general equilibrium model with 45 sectors to measure the welfare changes arising from the project. The initial investment is amortised over a period and the payments are simulated through an increase in income taxes, reduction in transfer payments or calculating the fall in transport margins. We find that under any type of repayment scheme the welfare benefits do not justify the road construction thus making it a poor investment decision.
- The poverty effect of remittance flows : evidence from GeorgiaPublication . Uzagalieva, Ainura; Menezes, António Gomes deThe main purpose of this study is to analyze the poverty effects of emigration and inward remittance flows through direct and indirect channels within the context of a standard computable general equilibrium (CGE) model. For that purpose, we use a novel approach in modeling a social accounting matrix (SAM) based CGE model by combining a novel and original data set, containing rich, highly-disaggregated household budget suveys with detailed macro-level data for Georgia. A distinctive contribution of this study is the attention paid to regional differences in terms of market access and transaction costs, in addition to households’ factor endowments and consumption patterns. The main questions of interest are if and to what extent remittance flows contribute to the production and consumption pattern of the poor. Two aspects of poverty reduction are emphasized: (1) the impact of remittances on the aggregate and sectoral economic growth; and (2) the impact of remittances on poor households, their production and consumption patterns across regions. The study concludes that while having a strong macroeconomic growth effect at the aggregate level, emigration and inward remittance flows do not affect all sectors and residents symmetrically. Moreover, they have a rather limited impact in terms of poverty and income inequality.
- Dinâmicas de empreendedorismo e microcrédito nos AçoresPublication . Couto, Gualter; Ponte, João Crispim Borges daEste estudo versará a análise de estatísticas nacionais e regionais que nos permitirão tecer algumas considerações relativamente ao perfil do empreendedor utilizador do microcrédito, designado microempreendedor, na Região Autónoma dos Açores, procurando também perceber quais os sectores de maior procura. Os resultados sugerem que os projectos de microcrédito nesta região são principalmente vocacionados para o comércio a retalho e são liderados por indivíduos do sexo masculino residentes na ilha de São Miguel, com uma idade compreendida entre os 25 e os 34 anos de idade, numa situação de desemprego, que terminaram ou frequentaram o ensino secundário.
- Os determinantes da estrutura de capital de empresas do PSI-20Publication . Couto, Gualter; Ferreira, Sofia C.In this paper, the intention is to analyse the capital structure features of the companies operating in the Portuguese Capital Market (PSI-20). A panel analysis allows the studying of relationships between debt level and those factors which financial literature considers as determining for capital structure: size, tangibility, growth opportunities, operational risk, non-debt tax shields, profit, dividend payout, and stock price performance. This empirical study purports to describe the effects of these variables on the companies' debt level.
- Las lenguas y los derechos linguísticos en la Unión EuropeaPublication . Rodrigues, José NoronhaA multiplicidade cultural e linguística da União Europeia é um elemento da identidade europeia. Nesta medida, o multilinguismo tornou-se a arma secreta dos Estados-membros da União Europeia possibilitando uma comunicação mais eficaz e um melhor entendimento mútuo, entre os povos europeus. A língua atinge, no século XXI, no seio da União Europeia, o seu clímax.
- Quotas leiteiras : aplicação do método DelphiPublication . Oliveira, Carlos; Mendes, Armando B.; Silva, EmilianaO sector leiteiro desempenha na produção agrícola um papel importantíssimo, especialmente nos Açores, onde assume uma importância económica e social enorme. Este sector depara-se com uma forte instabilidade, fruto da conjuntura actual que é caracterizada por mercados voláteis, não só nos lacticínios, mas também nos factores de produção. Esta actividade foi regulada durante muito tempo por um sistema de quotas leiteiras, uma medida que permitiu o equilíbrio entre a oferta e a procura de leite e seus derivados, obrigando a alguma contenção, principalmente nos países mais produtivos e competitivos. No caso da abolição deste sistema, regiões como os Açores terão forçosamente de promover estratégias de desenvolvimento e sustentabilidade da produção regional. A aplicação de métodos de previsão quantitativos, baseados num historial quantificado não é aplicável ao problema actual, uma vez que se trata de uma situação disruptivo sem uma série histórica. O método Delphi aplicado neste estudo é uma das metodologias científicas que permite obter e analisar resultados através de dados qualitativos, compilando opiniões de especialistas (painel Delphi) através da realização de uma série de questionários. As conclusões apontam para um desmantelamento gradual das quotas definidas para vigorar até 2015, através de aumentos sucessivos de quota para os diversos países da Comunidade Europeia. Outro resultado relevante deste estudo é a necessidade, considerada fundamental, da diminuição da dependência dos factores de produção por parte das explorações, principalmente a nível dos cereais, especialmente nos Açores. Para tal, deverá ser dada especial importância à melhoria da produção de forragens. A aposta na produção de qualidade e no emparcelamento são também caminhos seguir. Às indústrias é recomendado uma aposta na diversificação, inovação e diferenciação, nomeadamente através da valorização da marca Açores.