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Prominent numbers, indices and ratios in exchange rate determination and financial crashes : in Economists' models, in the field and in the laboratory

Pope, Robin; Selten, Reinhard; Kube, Sebastian; Hagen, … - 2009

laboratory. Third, nominalist heuristics are incompatible with expected utility theory which excludes the evaluation stage, and … are also incompatible with prospect theory which assumes that, while the evaluation stage can involve systematic mistakes … model and identify what is a mistake, and b) decision makers can maximise. However, contrary to prospect theory, in the …

Persistent link: https://www.econbiz.de/10003867227

Rules vs. Targets : Climate Treaties Under Uncertainty

Gersbach, Hans; Oberpriller, Quirin - 2012

We demonstrate the advantages of a climate treaty based solely on rules for international permit markets when there is uncertainty about abatement costs and environmental damages. Such a ‘Rules Treaty’ comprises a scaling factor and a refunding rule. Each signatory can freely choose the...

Persistent link: https://www.econbiz.de/10014041072

Chapter 10. Uncertainty and ambiguity in environmental economics: conceptual issues

Heal, Geoffrey; Millner, Antony - In: Handbook of environmental economics : Volume 4, (pp. 439-468). 2018

Uncertainty is ubiquitous in environmental economics: the field studies interactions between socio-economic and biogeochemical systems and neither is fully understood. So our grasp of their interactions is necessarily limited. We argue that this pervasive uncertainty is best modeled as ambiguity...

Persistent link: https://www.econbiz.de/10014023893

Does Economic Policy Uncertainty Affect Cryptocurrency Markets? Evidence from Twitter-Based Uncertainty Measures

Wu, Wanshan - 2020

Using the daily frequency data for the period from August 9, 2015, to July 7, 2020, this paper re-examines the effects of the Economic Policy Uncertainty (EPU) on returns of four cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Ripple. For this purpose, two new measures of the EPU...

Persistent link: https://www.econbiz.de/10012827031

Confronting Deep and Persistent Climate Uncertainty

Wagner, Gernot; Zeckhauser, Richard J. - 2016

Deep-seated, persistent uncertainty is a pernicious feature of climate change. One key parameter, equilibrium climate sensitivity, has eluded almost all attempts at pinning it down more precisely than a ‘likely’ range that has stalled at 1.5–4.5°C for over thirty-five years. The marginal...

Persistent link: https://www.econbiz.de/10014126044

Does the nominal exchange rate regime matter for investment?

Böhm, Hjalmar; Funke, Michael - 2001

This paper analyses the impact of exchange rate uncertainty upon the pattern of investment in different exchange rate regimes (very hard pegs, intermediate regimes, and floats) by means of a unified approach. The comparison of different exchange rate regimes indicates that currency volatility...

Persistent link: https://www.econbiz.de/10011400788

Optimal carbon abatement in a stochastic equilibrium model with climate change

Hambel, Christoph; Kraft, Holger; Schwartz, Eduardo S. - 2015

This paper studies a dynamic stochastic general equilibrium model involving climate change. Our model allows for damages on economic growth resulting from global warming. In the calibration, we capture effects from climate change and feedback effects on the temperature dynamics. We solve for the...

Persistent link: https://www.econbiz.de/10010495010

On Welfare Frameworks and Catastrophic Climate Risks

Millner, Antony - 2011

Recent theoretical work in the economics of climate change has suggested that climate policy is highly sensitive to 'fat-tailed' risks of catastrophic outcomes (Weitzman, 2009). Such risks are suggested to be an inevitable consequence of scientific uncertainty about the effects of increased...

Persistent link: https://www.econbiz.de/10013127841

The Bayesian Roots of Risk Parity in a Mean-Risk World

Kaya, Hakan - 2012

Risk parity has been considered a heuristic asset allocation method. In this paper, we show that, to the contrary, risk parity is a special case of a mean-risk type of a portfolio optimization problem with log-regularization to constrain weights. We show that log-regularization leads to a fund...

Persistent link: https://www.econbiz.de/10013103702

Snowball Effect of a CDS Market

Boyarchenko, Svetlana - 2009

Exponential growth of credit default swaps market and the resulting pile of CDS contracts of notional value of $62 trillion by the end of 2007 as well as the OTC nature of the contracts are widely believed to be one of the main causes of the current crisis and its depth, because large volumes of...

Persistent link: https://www.econbiz.de/10013157682

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