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on Project, Program and Portfolio Management |
| By: | Agustí Segarra (Universitat Rovira i Virgili & CREIP); José García-Quevedo (Universitat de Barcelona & IEB); Mercedes Teruel (Universitat Rovira i Virgili & CREIP) |
| Abstract: | Theoretical and empirical approaches have stressed the existence of financial constraints in innovative activities of firms. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. In the empirical analysis carried out for a panel data of potential innovative Spanish firms for the period 2004-2010, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage and that low-technological manufacturing and non-KIS service sectors are more sensitive to financial constraints. |
| Keywords: | Barriers to innovation, failure of innovation projects, financial constraints |
| JEL: | O31 D21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2013/6/doc2013-11&r=ppm |
| By: | Dorje C. Brody; Lane P. Hughston |
| Abstract: | The well-known theorem of Dybvig, Ingersoll and Ross shows that the long zero-coupon rate can never fall. This result, which---although undoubtedly correct---has been regarded by many as counterintuitive and even pathological, stems from the implicit assumption that the long-term discount function has an exponential tail. We revisit the problem in the setting of modern interest rate theory, and show that if the long "simple" interest rate (or Libor rate) is finite, then this rate (unlike the zero-coupon rate) acts viably as a state variable, the value of which can fluctuate randomly in line with other economic indicators. New interest rate models are constructed, under this hypothesis, that illustrate explicitly the good asymptotic behaviour of the resulting discount bond system. The conditions necessary for the existence of such "hyperbolic" long rates turn out to be those of so-called social discounting, which allow for long-term cash flows to be treated as broadly "just as important" as those of the short or medium term. As a consequence, we are able to provide a consistent arbitrage-free valuation framework for the cost-benefit analysis and risk management of long-term social projects, such as those associated with sustainable energy, resource conservation, and climate change. |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1306.5145&r=ppm |
| By: | Kasahara, Tetsuya |
| Abstract: | This paper analyzes the role and effects of public investment policy when coordination problems among agents can result in individually rational but socially inefficient investment decisions. Developing a coordination investment model in which individuals simultaneously and independently determine whether to undertake a risky but potentially more profitable investment project or an alternative with safe but lower returns, we first show that the risk of coordination failure can in equilibrium result in socially inefficient investment and small consumption. We then investigate the role and effects of a public investment policy designed to help mitigate inefficiency. In our model, the size of a feasible public investment policy is determined endogenously. Our numerical results show that the divisibility of investment projects, the presence of financial constraints, the productivity of public investments, and the relative precision of public and private information, as well as the relative tax rates imposed on risky investments and safe investments, have complex effects on the effectiveness of public investment policy and welfare. In particular, we demonstrate that a public investment policy of a larger size and the availability of more precise information do not necessarily increase welfare. |
| Keywords: | Strategic complementarities, coordination games, information precision, public investment policy, financial constraints |
| JEL: | C72 D81 H21 H53 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hituec:589&r=ppm |
| By: | Voss, Eckhard; Gospel, Howard; Dornelas, Antonio; Vitols, Katrin |
| Keywords: | social dialogue, labour relations, role of ILO, development project, project evaluation, evaluation technique, dialogue social, relations de travail, rôle de l'OIT, projet de développement, évaluation de projet, technique d'évaluation, diálogo social, relaciones laborales, papel de la OIT, proyecto de desarrollo, evaluación de proyectos, técnica de evaluación |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:480904&r=ppm |
| By: | Brancati, Emanuele |
| Abstract: | Financial frictions may represent a severe obstacle for firms' innovative activity. This paper shows the existence and quantifies the effect of binding financial constraints on the innovation propensity of Italian companies. Once provided a rich baseline specification for innovation, I analyze the impact of financial constraints by exploiting a survey-based direct measure, enriched with a credit-score-index estimated ad hoc on a representative sample of confidential local bank ratings. A recursive bivariate probit model is employed to estimate the probability of undertaking innovative projects conditional on the likelihood of facing financial constraints. This econometric strategy accounts for possible correlations between these two features. My results show firms that are more likely to suffer from financial problems to have a probability of innovation that is 34% lower than financially-sound companies. Furthermore, instrumenting innovation with R&D into the financial-status equation, I control for a feedback effect of the innovation propensity on the financial status. As predicted by economic theory, most dynamic firms are shown to suffer from greater financial problems. This in turn is reflected onto a stronger depressive effect of financial constraints on innovation (-42%). This impact is shown to be sizable only for those firms with a higher ex ante probability to innovate, not being driven by a sub-group of most distressed companies. Finally, the last section deepens the role of firm size in alleviating the effects of financial frictions on a breakdown of three definitions of innovation. Relevant differences are found, especially for product and process--innovations. |
| Keywords: | Innovation; firm performance; financial constraints; banks; ratings |
| JEL: | G21 L25 O31 |
| Date: | 2013–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47750&r=ppm |
| By: | Sebastián Nieto-Parra; Mauricio Olivera; Anamaría Tibocha |
| Abstract: | This paper analyses the Policy-Making Process (PMP) of transport infrastructure projects in Colombia for the period 2002-10. It aims to identify the main bottlenecks to improve the implementation of public policies in the main phases of the transport infrastructure policy cycle, namely planning, budgeting, execution, and monitoring and evaluation. The main results draw three conclusions. Firstly, there is a need to improve the planning and prioritisation stages of roads construction. Secondly, information problems affect monitoring and evaluation. Finally, the institutional weakness in the transport sector causes co-ordination failures between different transport modes (horizontal level) as well as inadequate separation of responsibilities and management of resources between national and sub-national governments (vertical level). This paper contributes to the research studying the PMP in Latin American economies.<BR>Cet article analyse le processus de formulation des politiques de mise en place de projets d'infrastructure de transport en Colombie pour la période 2002-10. Il identifie les principaux obstacles qui doivent être traités afin d'améliorer la mise en oeuvre des politiques publiques dans les principales phases du cycle de l'infrastructure de transport, à savoir la planification, la budgétisation, l'exécution, le suivi et l'évaluation. Les principaux résultats conduisent à trois conclusions. Tout d'abord, il est nécessaire d'améliorer la planification et la priorisation de la construction du réseau des voies. Deuxièmement, les problèmes d'information affectent le suivi et l'évaluation. Enfin, la défaillance institutionnelle dans le secteur des transports provoque des échecs dans la coordination entre les différents modes de transport (niveau horizontal) ainsi que dans la séparation insuffisante des responsabilités et de la gestion des ressources entre les gouvernements nationaux et sous-nationaux (niveau vertical). Ce document contribue aux travaux de recherche sur le processus de formulation des politiques des pays latino-américains. |
| Keywords: | infrastructure, political economy, game theory, transport policies, policy making process, infrastructure, économie politique, théorie des jeux, politiques de transport, processus de formulation des politiques |
| JEL: | D78 H11 H54 O18 P16 |
| Date: | 2013–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaaa:316-en&r=ppm |
| By: | Framstad, Nils Chr. (Dept. of Economics, University of Oslo); Strand, Jon (Dept. of Economics, University of Oslo) |
| Abstract: | Energy-intensive infrastructure may tie up fossil energy use and carbon emissions for a long time after investments, making the structure of such investments crucial for society. Much or most of the resulting carbon emissions can often be eliminated later, through a costly retrofit. This paper studies the decisions to invest in such infrastructure, and retrofit it later, given that future climate damages are uncertain and follow a geometric Brownian motion process with positive drift. It shows that greater uncertainty about climate cost (for given unconditional expected costs) then delays the retrofit decision by increasing the option value of waiting to invest. Higher energy intensity is also chosen for the initial infrastructure when uncertainty is greater. These decisions are efficient given that energy and carbon prices facing the decision maker are (globally) correct, but would be inefficient when they are lower, as typical in practice. Greater uncertainty about future climate costs will then further increase lifetime carbon emissions from the infrastructure, related both to initial investments, and to too infrequent retrofits when this emissions level is already too high. An initially excessive climate gas emissions level is then likely to be worsened when volatility increases. |
| Keywords: | Greenhouse gas emissions; long-term investments; retrofits; uncertainty; option value of waiting |
| JEL: | C61 Q54 R42 |
| Date: | 2013–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2013_011&r=ppm |