Academic literature on the topic 'Observed price'

This paper derives, in closed forms, upper and lower bounds on risk-neutral cumulative distribution functions of the underlying asset price from the observed prices of European call options, based only on the no-arbitrage assumption. The computed bounds from the option price data show that the gap between the upper and lower bounds is large near the underlying asset price but gets smaller away from the underlying asset price. Since the bounds can be easily computed and visualized, they could be practically used by investors in various ways.

Background: This research focuses on pharmaceutical competition in South Africa where concurrent pricing legislation is being implemented without monitoring the consequences on generic drug competition and usage.Objective: To examine the relationship between originator drug prices and the number of generic brands within the cardiovascular class of drugs and to compare South African prices with international reference prices.Method: Data on private sector drug prices was sourced from the South African Medicine Price Registry. The relationship between the median proportional price and the number of brands in the therapeutic class was analysed using correlation analysis. International reference prices were obtained from the Management Sciences for Health International Drug Price Indicator Guide (2012 edition).Results: A weak correlation between originator and generic drug prices and the number of available brands was observed, the exception being diuretic drugs. The median prices per strength of the originator generic were still higher than the most expensive generic version manufactured by any other company, the exception being telmisartan. Comparison of price ratios between the originator drug, lowest priced generic and international reference price values revealed that the originator drug prices had a median price ratio of 20.99 (interquartile range 7.31—53.46) and the lowest priced generics had a median price ratio of 4.28 (interquartile range 2.10—8.47).Conclusion: Increased generic competition is not a predictor of lower drug prices. The study also concludes that the current South African pharmaceutical policies have not yet achieved the lowest prices for drugs when compared internationally.

The world annual biofuel production has exceeded 100 billion litres in 2009. The development of the biofuel production is partly influenced by the government support programs and partly by the development of oil prices. The main purpose of this paper is to analyze the statistical relationship between ethanol, gasoline and crude oil prices. We aim to check the correlation among these variables and to analyze the strength and direction of a possible linear relationship among the variables. We are interested in analyzing how each variable is related to another, so we evaluate the inter-relationship among the variables in the Vector Autoregression (VAR) and the Impulse Response Function (IRF). In order to achieve our goal, we first collected weekly data for each variable from January, 2000 to October, 2009. The results provide evidence of the cointegration relationship between oil and gasoline prices, but no cointegration between ethanol, gasoline and ethanol, oil prices. As a result, we used a VAR model on first differences. After running the Impulse Response Function, we found out that the impact of the oil price shock on the other variables is considerable larger than vice versa. The largest impact of oil price shock was observed on the price of gasoline.  

We consider the problem of finding a consistent upper price bound for exotic options whose payoff depends on the stock price at two different predetermined time points (e.g. Asian option), given a finite number of observed call prices for these maturities. A model-free approach is used, only taking into account that the (discounted) stock price process is a martingale under the no-arbitrage condition. In case the payoff is directionally convex we obtain the worst case marginal pricing measures. The speed of convergence of the upper price bound is determined when the number of observed stock prices increases. We illustrate our findings with some numerical computations.

Abstract Price differentiation has long been recognized as a strategy that companies can use to increase profits when consumers’ tastes and valuations of a good price vary. Companies engaging in price differentiation have the opportunity to increase profits considerably compared to those which use a uniform pricing strategy. Accordingly, it should be beneficial for companies to exploit the possibility of charging different prices in online and offline channels as they offer different shopping benefits and are differently valued by consumers. nevertheless, it can be observed that some multi-channel retailers prefer to charge uniform prices in online and offline channels. They argue for consistent prices across distribution channels to maintain a strong brand - and because varying prices may lead to customers’ confusion, anger, irritation and perceptions of price unfairness.

In this paper we describe a recursive Bayesian algorithm for the estimation of forward price models. The forward price is modeled within the benchmark framework for a forward price volatility function which includes a stochastic variable; a forward price with a liquidly traded maturity. A relationship between the bond price, the spot price and certain forward prices is stated. We set up the stochastic real world dynamics for these discretely compounded market observed forward prices. We propose a dynamic Bayesian estimation algorithm for a Monte Carlo time-discretized version of the resulting forward prices dynamics. The parameter to be estimated is a vector consisting of the forward price volatility parameters and the benchmarked bond price volatility parameters.

ObjectivesOver the past 15 years, tobacco companies operating in Canada abandoned their long-standing unitary price model in favour of price differentiation. Concerns about low cigarette prices were identified by the Quebec government in 2015 when it introduced restrictions on the types of incentives that tobacco manufacturers may offer to retailers. This study sought to explore cigarette prices in Quebec 1 year after these restrictions came into effect.MethodsDetails on cigarette trading terms and programmes were obtained from websites maintained by retailer groups. Visits were made to tobacco retailers in four Quebec municipalities in the autumn of 2017. The price displayed for cigarettes was observed and recorded in 273 convenience stores.ResultsTwo forms of price differentiation were observed. The first was price-segmentation between brands, reflected in a difference of $3 or more in the average displayed price between premium and discount brands of each manufacturer (ie, $10.48 vs $7.43 for a package of 20 cigarettes of the most and least expensive brands sold by Philip Morris International). Price localisation was also observed, reflected in a $2 range of prices between retail outlets for the same package of cigarettes. Even among outlets of a given chain of convenience stores, the price of the least expensive brands varied by more than $1 per package. The size of the variance in prices rivals or exceeds the size of tobacco tax increases in Quebec over the past decade.ConclusionsRecent restrictions on tobacco industry incentive programmes for retailers have not ended price differentiation. Tobacco manufacturers’ and retailers’ pricing policies continue to provide price-sensitive smokers with ways to avoid the impact of tobacco tax increases.

ObjectiveDespite claims by tobacco companies that plain packaging would lead to lower cigarette prices, recommended and observed real cigarette prices in Australia rose in the 9–11 months after plain packaging was introduced. However, little is known about trends in prices longer term. In this report, we assess whether inflation (Consumer Price Index; CPI) and tax adjusted (‘CPI-tax-adjusted’) prices of the market-leading Australian cigarette brand changed in the 3-year period after plain packaging, and whether price changes were associated with retailer characteristics.MethodCigarette prices were ascertained from a panel of tobacco retailers at three time points: (1) in November 2012 (n=857) (before full implementation of plain packaging, compulsory in retail outlets from December 2012), (2) between October 2014 and February 2015 (n=789) and (3) between November 2015 and March 2016 (n=579). Generalised estimating equations were used to estimate percentage change in mean CPI/tax-adjusted cigarette prices over time.ResultsCPI/tax-adjusted adjusted mean stick prices rose by 13.7% (95% CI 13.0 to 16.0) and 15.2% (95% CI 14.3 to 16.0) at 2.1 and 3.1 years after plain packaging was introduced, respectively. Increases in mean CPI/tax-adjusted stick prices varied by outlet type (p<0.001), socioeconomic status (p=0.013) and remoteness of retailer’s area (p=0.028) and whether twin packs were sold (p=0.009).ConclusionsContrary to tobacco company predictions of a fall in prices, the price of the market-leading Australian cigarette brand increased significantly in the 3 years after plain packaging was introduced, and these increases were above the combined effects of inflation and increases in excise/customs duty.

Abstract Economists have been concerned with price dispersion for apparently homogeneous goods for a long time. Many models have been developed which explain price dispersion by imperfect consumer information about prices in the market. There are few empirical tests of these models. Moreover, these tests at most show that the observed price dispersion is consistent with the models; however, an alternative explanation of price dispersion is always that the goods sold are not homogeneous from the consumers' point of view but that there are quality differences which cannot be observed by the empirical economist. Since both models yield different welfare conclusions, it would be important to distinguish empirically between the two explanations. We use data from the German life insurance industry for tests of the two models. Our data support the equilibrium price dispersion model.

This diploma thesis deals with the determination of the difference between the cost of the holiday cottage and the holiday house of the same size located in the Highlands. At the beginning the thesis explains the basic concepts associated with the valuation of the real estates, the definition of the basic measuring units and the description of the most commonly used methods of valuation of real estates. In the practical part of the thesis there is the selected building for individual recreation always located in the built and unbuilt area of the village. The building for individual recreation is located in three areas, namely ‘Strážek’, ‘Bystřice nad Pernštejnem’ and ‘Žďár nad Sázavou’. The price is determined by the regulation and it is set including the landscaping, land and permanent crops. In conclusion the thesis describes the difference between the same building for individual recreation located in the different areas of the Highlands and evaluates the suitability of the techniques used for valuation of the holiday cottage and the holiday house according to the regulation

The thesis deals comparison of house prices in Havlíčkův Brod in 2014 and 2015. The task is to find out and assess influence of lokality for the price of family house. This family house is located in suburb of the town and then for comparison will be moved to the center Havlíčkův Brod. House prices are determined by observed price and market value. The important element of thesis will determine factors, which affect these price.

Le problème de détection et d'isolation de défauts se résout à l'aide d'une procédure de diagnostic composée de deux étapes : la génération de résidus et leur évaluation. Plusieurs méthodes utilisant la redondance analytique ont été développées qui doivent être robustes vis-à-vis des perturbations du système comme les bruits de mesure et les incertitudes de modèle. On peut citer les approches par espace de parité, à base d'observateurs ou de filtres ainsi que les techniques d'estimation paramétriques. Les liens entre ces méthodes sont connus sous certaines hypothèses et nous prouvons par nos théorèmes le lien entre les résidus directs basés sur les équations de redondances et les résidus indirects basés sur les observateurs à entrées inconnues. Le résidu pris comme l'erreur d'estimation peut être inutile pour le diagnostic car elle peut accumuler les incertitudes de modèle du fait de la mémoire infinie. Afin de s'affranchir des inconvénients de la mémoire infinie (non convergence de l'erreur vers la valeur nulle), les observateurs à mémoire finie ont été introduits (i. E. Un nombre fini de mesures est alors nécessaire au calcul de l'estimation). Pour de tels observateurs (à la fois dans les cas continu et discret), un nouveau résidu est défini comme la différence de deux estimations de l'état au même instant mais calculées à partir de deux horizons qui se chevauchent créant ainsi une fenêtre de détection. L’apport de notre travail est la conception de cette fenêtre de façon à assurer la robustesse vis-à-vis de certaines variations de paramètres. Enfin, un observateur généralisé à mémoire finie pour les représentations continues des systèmes est développé de manière à reconstruire simultanément les sorties et entrées du système à partir d'un nombre fini de leurs mesures. Les propriétés d'un tel observateur sont similaires à celles de l'estimateur d'état généralisé sur horizon glissant pour les représentations temporelles discrètes.

Dans cette thèse nous avons tout d'abord développé un solveur neutronique de cinétique transport 3D en géométrie déstructurée avec une discrétisation spatiale par éléments finis (solveur MINARET). L'écriture d'un tel code représente en soi une contribution importante dans la physique des réacteurs car il permettra de connaître de façon très précise l'état du coeur au cours d'accidents graves. Il jouera aussi un rôle très important pour des études de fluence de la cuve des réacteurs. D'un point de vue mathématique, l'apport le plus important dans l'écriture de ce solveur a consisté en l'implémentation d'algorithmes modernes adaptés aux architectures actuelles et à venir de calcul parallèle, permettant de réduire de façon significative les temps de calcul. Un effort particulier a été mené pour paralléliser de façon efficace la variable temporelle par l'algorithme pararéel en temps. Ce travail a consisté dans un premier temps à analyser les performances que le schéma classique de pararéel apporte dans la résolution de l'équation de transport de neutrons. Ensuite, nous avons cherché à améliorer ces performances en proposant un schéma de pararéel qui intègre de façon plus optimisée la présence de schémas itératifs autres que le pararéel dans la résolution de chaque pas de temps de l'équation du transport. L'idée principale de ce nouveau schéma consiste à limiter le nombre d'itérations internes pour chaque pas de temps du solveur fin et d'atteindre la convergence au cours des itérations pararéelles. Dans un second temps, une réflexion a été entamée autour de la question suivante: étant donné le haut degré de précision que MINARET fournit dans la connaissance de la population neutronique, serait-il possible de l'utiliser en tant qu'outil de surveillance pendant l'opération d'un réacteur nucléaire? Et, qui plus est, comment rendre un tel outil à la fois cohérent et complémentaire par rapport aux mesures prises \textit{in situ}? Une des difficultés majeures de ce problème réside dans le besoin de fournir les simulations en temps réel alors que, malgré nos efforts pour accélérer les calculs, les méthodes de discrétisation utilisées dans MINARET ne permettent pas des calculs de coeur à une telle vitesse. Cette question a été abordée en développant tout d'abord une généralisation de la méthode Empirical Interpolation (EIM) grâce à laquelle on a pu définir un processus d'interpolation bien posé pour des fonctions appartenant à des espaces de Banach. Ceci est rendu possible par l'utilisation de formes linéaires d'interpolation au lieu des traditionnels points d'interpolation et une partie de cette thèse a été consacrée à la compréhension des propriétés théoriques de cette méthode (analyse de convergence sous hypothèse d'ensemble de petite dimension de Kolmogorov et étude de sa stabilité). Ce processus d'interpolation (appelé Generalized EIM) permet de reconstruire en temps réel des processus physiques de la façon suivante: étant donné un système pouvant être décrit par une EDP paramétrée et sur lequel des mesures peuvent être prises \textit{in situ}, on construit d'abord une base d'interpolation constituée de solutions de cette EDP pour différentes valeurs du paramètre grâce à GEIM (ceci est fait par un algorithme greedy). On donne ensuite une approximation en temps réel de l'état du système via une fonction interpolée exprimée dans la base calculée et qui utilise des mesures acquises \textit{in situ} comme données d'entrée (et modélisées mathématiquement par les formes linéaires). La méthode a été appliquée avec succès dans des exemples simples (équations de Laplace et de Stokes) et nous espérons que les développements actuels et à venir pourront mener à son emploi dans des cas réels plus complexes comme celui de la reconstruction de la population neutronique dans un coeur de réacteur avec MINARET.

Dans cette thèse nous avons tout d'abord développé un solveur neutronique de cinétique transport 3D en géométrie déstructurée avec une discrétisation spatiale par éléments finis discontinus (solveur MINARET). L'écriture d'un tel code représente en soi une contribution importante dans la physique des réacteurs car il permettra de connaître de façon très précise l'état du c¿ur au cours d'accidents graves. Il jouera aussi un rôle important pour des études de fluence de la cuve des réacteurs. D'un point de vue mathématique, l'apport le plus important a consisté en l'implémentation d'algorithmes adaptés aux architectures de calcul parallèle, permettant de réduire de façon significative les temps de calcul. Un effort particulier a été mené pour paralléliser de façon efficace la variable temporelle par l'algorithme pararéel en temps. Nous avons ensuite cherché à développer une méthode qui permettrait d'utiliser MINARET comme outil de surveillance pendant l'opération d'un réacteur nucléaire. Une des difficultés majeures de ce problème réside dans le besoin de fournir les simulations en temps réel. La question a été abordée en développant tout d'abord une généralisation de la méthode Empirical Interpolation (EIM) grâce à laquelle on a pu définir un processus d'interpolation bien posé pour des fonctions appartenant à des espaces de Banach. Ceci est rendu possible par l'utilisation de formes linéaires d'interpolation au lieu des traditionnels points d'interpolation et une partie de cette thèse a été consacrée à la compréhension des propriétés théoriques de cette méthode (analyse de convergence sous hypothèse d'ensemble de petite dimension de Kolmogorov et étude de sa stabilité)
In this thesis, we have first developed a time dependent 3D neutron transport solver on unstructured meshes with discontinuous Galerkin finite elements spatial discretization. The solver (called MINARET) represents in itself an important contribution in reactor physics thanks to the accuracy that it can provide in the knowledge of the state of the core during severe accidents. It will also play an important role on vessel fluence calculations. From a mathematical point of view, the most important contribution has consisted in the implementation of algorithms that are well adapted for modern parallel architectures and that significantly decrease the computing times. A special effort has been done in order to efficiently parallelize the time variable by the use of the parareal in time algorithm. On a second stage, we have developed the foundations of a method with which we could use MINARET to monitor in real time the population of neutrons during the operation of the reactor. One of the major difficulties relies in the necessity of providing computations in real time. This question has been addressed by proposing an extension of the Empirical Interpolation Method (EIM) thanks to which a well-posed interpolation procedure has been defined for functions belonging to Banach spaces. This is possible thanks to the use of interpolating linear forms instead of the traditional interpolation points and a part of this thesis has been devoted to the understanding of the theoretical properties of this method (convergence analysis under the hypothesis of small Kolmogorov n-width and stability of the procedure)

In the early 2000s, financial investors began pouring billions of dollars into the commodity futures markets seeking the unique investment benefits of this distinct asset class. This “financialization” process has called into question the fundamental risk and return properties of commodity futures as evidence has emerged favoring the idea that the massive increase in investor flows caused a rise in futures prices, volatility, and intra- and intermarket return correlations. However, a contrarian line of research contends that the effects of the new “speculative” capital on the futures markets are unsubstantiated and the increased participation of financial investors poses little consequence to the economics of the marketplace. This latter line of literature maintains that the investment benefits of commodity futures have not been diminished and that fundamental factors and business cycle variations can explain the observed changes in commodity price behavior.

This chapter examines the period between the mid-1680s and 1740, long considered to be the time ‘the rise of the novel’ occurred. Scholars have difficulty separating fiction from factual narrative during this era, as the authors and readers of the time thought of fiction not as the ‘novel’ but rather as a congeries of disparate and overlapping types: ‘history’, ‘letters’, ‘tale’, ‘romance’, ‘secret history’, ‘memoirs’, ‘true relation’, and the like. Only in the 1740s could one find a publishing environment more familiar to modern observers. Moreover, a recurrent theme of this era is price, to which book historians are usually sensitive, but which literary critics have not tended to consider important. Price is a crucial factor in relation to the length of the book, the author's remuneration, the publisher's profit, and the audience that can be reached.

We develop a simple semi-structural model for the Rwandan economy to better understand the monetary policy transmission mechanism. A key feature of the model is the introduction of a modified uncovered interest parity condition to capture key structural features of Rwanda’s economy and policy framework, such as the limited degree of capital mobility and managed floating regime. A filtration of the observed data through the model allows us to illustrate the contribution of various factors to inflation dynamics and its deviations from the inflation target. Our results, consistent with evidence for other countries in the region, suggest that food and oil prices as well as the exchange rate have accounted for the bulk of inflation dynamics in Rwanda.

This paper examines the relationship between monetary policy and wealth inequality in South Africa. We employed a unique database of tax administrative data which allowed us to account for individual heterogeneity. These tax data span from 2011 to 2017 and include over 3 million individual taxpayers in South Africa after data cleaning. Results based on fixed- and random-effects panel model estimates show that monetary policy generally increases wealth Gini inequality while it decreases the wealth 90–10 percentile differential. Increasing asset prices and gross domestic product per capita generally increases wealth inequality, while inflation reduces wealth inequality. The effect of age on wealth distribution varies depending on whether a fixed- or random-effects panel model is considered. Based on the estimates and observed data, being male tends to increase wealth inequality.

Selective attention is a process by which the brain enhances its representation of task relevant, over irrelevant information. This ‘active control’ is essential to normal perception and cognition because it enables information processing to adapt to the immediate goals of the observer. This chapter places the focuses on recent conceptual/empirical developments in four areas that the authors think have significantly advanced the discussion and debate on the mechanistic underpinnings of selective attention: (1) the role of neuronal oscillations, (2) the distinctions between differing modes of dynamic operation, (3) potentially unique roles of specific oscillatory frequencies, (4) the neurochemistry of attention. The authors end by replacing attention within an ‘active sensing’ framework, and posing a set of prime questions for future study.

Abstract The focus in this chapter is on the development of mathematical programming models used to model bilateral forest products trade. Theoretical outlines are provided of a multi-region, single product trade model and of an integrated, multi-region, multi-product trade model. The objective function and constraints are described mathematically, while the analysis takes into account horizontal and vertical chains and the need to calibrate the model using observed trade flows. Data sources are discussed, and the GAMS code is provided for the uncalibrated and calibrated versions of the model. The Canada-U.S. softwood lumber dispute is the raison d'être for much applied work in modeling forest products trade, especially on Canada's side. In this chapter, we examine several spatial price equilibrium (SPE) trade models that are currently used to investigate the implications of trade barriers imposed on Canadian exports of softwood lumber to the United States. The reason we consider bilateral trade is so that we can determine the impacts of trade restrictions on various regions in North America. We begin in the next section by specifying a general but vertically integrated SPE trade model.

Abstract The focus in this chapter is on the development of mathematical programming models used to model bilateral forest products trade. Theoretical outlines are provided of a multi-region, single product trade model and of an integrated, multi-region, multi-product trade model. The objective function and constraints are described mathematically, while the analysis takes into account horizontal and vertical chains and the need to calibrate the model using observed trade flows. Data sources are discussed, and the GAMS code is provided for the uncalibrated and calibrated versions of the model. The Canada-U.S. softwood lumber dispute is the raison d'être for much applied work in modeling forest products trade, especially on Canada's side. In this chapter, we examine several spatial price equilibrium (SPE) trade models that are currently used to investigate the implications of trade barriers imposed on Canadian exports of softwood lumber to the United States. The reason we consider bilateral trade is so that we can determine the impacts of trade restrictions on various regions in North America. We begin in the next section by specifying a general but vertically integrated SPE trade model.

AbstractSeveral behavioral studies show that semantic content influences reach-to-grasp movement responses. However, not much is known about the influence of motor activation on semantic processing. The present study aimed at filling this gap by examining the influence of pre-activated motor information on a subsequent lexical decision task. Participants were instructed to observe a prime object (e.g., the image of a frying pan) and then judge whether the following target was a known word in the lexicon or not. They were required to make a keypress response to target words describing properties either relevant (e.g., handle) or irrelevant (e.g., ceramic) for action or unrelated to the prime object (e.g., eyelash). Response key could be located on the same side as the depicted action-relevant property of the prime object (i.e., spatially compatible key) or on the opposite side (i.e., spatially incompatible key). Results showed a facilitation in terms of lower percentage errors when the target word was action-relevant (e.g., handle) and there was spatial compatibility between the orientation of the action-relevant component of the prime object and the response. This preliminary finding suggests that the activation of motor information may affect semantic processing. We discuss implications of these results for current theories of action knowledge representation.

Life is ubiquitous on the Earth’s surface. Exuberant, fantastical, tough, and very, very persistent, it gets pretty well everywhere. Darwin marvelled at what could be found in a simple tangled thicket by a footpath, while a spadeful of soil can keep a zoologist occupied for weeks—all those mites and worms and springtails and leatherjackets—and a microbiologist busy for months. There is life in the hottest deserts and in Antarctic ice and nestling up against boiling volcanic vents. It flies high through the air too—not just birds and bees, but spores and pollen and aerial bacteria (so abundant that they can make rain fall more copiously by acting as nuclei for the raindrops). In death, too, the organisms can be tough. Not every corpse gets recycled back to form new generations of the living, and not all fossils are such scarcities that each becomes a museum piece or commands a handsome reserve price at an auction of ancient curiosities. The ghosts of the past are all around us, in solid form. Indeed, we owe to them the comfortable contemporary life (not enjoyed by all, admittedly), of centrally heated houses and easy travel and an abundance of food. The remains of dead plants and animals power contemporary human civilization, in the form of oil and gas and coal. At a price, of course, that is still to be paid. The pebble contains a little coaly stuff within it—tiny flecks of what is now essentially carbon, which gives the dark laminae their colour. It probably makes up, today, something over one per cent of the pebble; when the pebble stuff had been layers of mud and sand on that Silurian sea floor, it would have been nearer 10 per cent. That carbon was once living things—but how does one go about finding what kind of living things these once were? The easiest way to release the cornucopia of ancient life locked in the pebble might strike a disinterested bystander as a little harsh. Indeed, it would be quite terminal for the pebble, albeit highly revealing. The procedure is, by now, quite standard.

This chapter explores the “paradox of proof.” This paradox grows out of the interplay of two starting points: deeming agreement to require more than demonstration of successful interdependence—such as by also using certain sorts of communications—and needing to infer the existence of agreement from circumstantial evidence, out of a recognition that parties hide their actions from legal scrutiny. It is assumed that, in adjudication, it frequently will be impossible to observe the communications that the defendant firms employed. Nevertheless, the factfinder must infer whether or not certain means of communication were used, based on what can be observed about market conditions, notably, how conducive they are to successful oligopolistic coordination and whether such successful coordination appears to have occurred.

This chapter is concerned with the idea of scoring at halftime but with a more scientific perspective. It suggests that what happens at halftime in some soccer games scores big in terms of allowing us to test an influential theory in economics: the efficient-markets hypothesis. The theory posits that the stock market processes information so completely and quickly that any relevant news would be incorporated fully into the stock's price before anyone had the chance to act on it. Simply put, unless one knew information that others did not know, no stock should be a better buy than any other. If the theory is correct—that is, if observed changes in stock prices are unpredictable—there is not much we can do to gain an advantage over other traders, except perhaps to try to identify the news that causes stock prices to rise and fall and to understand the size of any likely price jump.

This chapter examines the long swings of employment, investment, and asset prices. It highlights one stylized fact that a model of the natural rate of unemployment should be able to take into account: the relationship among unemployment, investment, and share prices that is observed in the data. Although this relationship is often ignored, it provides a justification for some recent models of the natural rate. The chapter first considers a moving natural rate of unemployment before discussing the relationship between the long swings of employment and asset price swings. It then introduces a stripped-down natural rate model that generates a relationship among the natural rate of unemployment, investment, and asset prices. It also describes how financial crises are linked to changes in asset prices, investment, and employment.

Groundnut, the most important edible oilseed crop in India and is the low priced commodity with valuable source of all the nutrients. It is the sixth most important oilseed crop in the world. It contains 48-50% of oil and 26-28% of protein, and is a rich source of dietary fiber, minerals, and vitamins. More than seventy percent of the area and production is found in Gujarat, Andhra Pradesh, Tamil Nadu and Karnataka. Anantapur district is the largest groundnut producing district The present study was carried out with the objective of exploring movement of produce along the value chain, the Value addition, Price spread and Profit margins incurred and found that there is a wide range of price gap observed from producer of oilseed to the final consumer of edible oil due to the number of stakeholders involved in the value chain.

The basic aims of this paper are: firstly, to create the simple chaotic gold price growth model that is capable of generating stable equilibria, cycles, or chaos; secondly, to analyze the local stability of gold price in the period 2001-2015; and thirdly, to discover the equilibrium gold price with Elliott wave logic in the observed period. This paper confirms the existence of the stable convergent fluctuations of the gold price in the observed period. Also, the golden ratio can be used to define the equilibrium gold price in the presented chaotic model.

Article aims to show an application of regression analysis for qualitative evaluation of companies’ brand competitiveness from a customer point of view. Presented methodology could be applied if only a certain level of competition is observed in the market. We assume that (i) brand competitiveness is embodied into commodities’, that companies are selling, prices and (ii) companies that have more competitive brand are able to sell their commodity at a higher price after controlling for other explicit factors potentially affecting price. For this purpose, we adapt classical linear regression model and provide an example with car companies’ brands in the Italian market.

The rise of algorithmic decision making led to active researches on how to define and guarantee fairness, mostly focusing on one-shot decision making. In several important applications such as hiring, however, decisions are made in multiple stage with additional information at each stage. In such cases, fairness issues remain poorly understood. In this paper we study fairness in k-stage selection problems where additional features are observed at every stage. We first introduce two fairness notions, local (per stage) and global (final stage) fairness, that extend the classical fairness notions to the k-stage setting. We propose a simple model based on a probabilistic formulation and show that the locally and globally fair selections that maximize precision can be computed via a linear program. We then define the price of local fairness to measure the loss of precision induced by local constraints; and investigate theoretically and empirically this quantity. In particular, our experiments show that the price of local fairness is generally smaller when the sensitive attribute is observed at the first stage; but globally fair selections are more locally fair when the sensitive attribute is observed at the second stage – hence in both cases it is often possible to have a selection that has a small price of local fairness and is close to locally fair.

Gold prices have been one of the most observed financial indicators in the global economy. Various macro dynamics that historically determine the price of gold, as a precious metal have been initiated. In this scope, gold price fluctuations are closely linked to the global economic conjuncture. In this study, the role of gold in the global economy and historical gold prices are examined briefly, and in the course of global finance crisis, the elements Dow- Jones Index, petrol prices and silver prices as assigning gold prices are dealt with. An economic and econometric analysis is carried out for these indicators since it is regarded that they are crucially instrumental in gold prices. Study period is determined monthly and covers between 2007:01 and 2013:02. Johansen co-integration test, VECM and impulse response analyses are used in the econometric analysis. According to VECM analysis, it has been found out that the indicators do not act in unison in the short term, but the results of co-integration analysis reveal that gold prices are associated with the related economic indicators in the long term. As a result of impulse response analysis, it is seen that gold prices are more influenced by the fluctuations in petrol prices than other indicators. Within the frame of findings, it has been revealed that gold prices unsurprisingly increase during the crisis periods and are influenced by the indicators stated above.

This paper presents a dynamic programming approach to optimize energy cost of multiple interacting household appliances such as air conditioning systems and refrigerators with temperature flexibility, under time varying electricity price signals. We adopt a first order differential equation model with a binary (ON-OFF) switching control function for each load. An energy cost minimization problem is then formulated with a pair of constraints on the temperature lower and upper bounds, as well as an equality condition on the initial and final temperature states. We use dynamic programming to compute cost-optimal control inputs and temperature trajectories for a given electricity price profile and ambient temperature condition. To account for temperature deviation from its desired setpoint, a quadratic temperature deviation penalty is added to the cost function. Moreover, to minimize the control input chattering for equipment protection, the cost function is expanded to also minimize the number of on-off switching events. Results for the different weighting combinations of the optimization objectives provide useful insights on the optimal operation of individual and multiple interacting HVAC loads. In particular, we observe that the loads are desynchronized under the cost-optimal operation, in the presence of local (renewable) power generation. The presented optimization algorithm and observed results can lead to the development of novel model predictive and rule-based feedback control policies for optimal energy management in households.

Abstract Nigeria uses the concessionary petroleum fiscal system for onshore investment in the country where the ownership of the hydrocarbon resources belongs to the contractor's. The government then gets her revenue through payment of royalties and taxes. A fixed royalty rate of 20% is specified for onshore petroleum investment in the country. This kind of royalty payment system is regressive in nature and affects the sustainability of E&P firms during period of low oil price. This research considered the incorporation of a delayed royalty framework into the concessionary petroleum fiscal system in Nigeria. Two economic models were built to evaluate upstream petroleum investment in Nigeria onshore environment using the spreadsheet modeling technique. The delayed royalty framework was incorporated into one of the model. The delay in royalty payment was made as a function of the time it takes the contractor to recoup his capital before payment of royalty and taxes. Oil price was varied in the model between $30-$90/bbl to see the impact of the delay in royalty payment on the sustainability of the investment under the delayed royalty framework. It was observed that the delayed royalty framework made the contractor to recoup his capital early during the life of the investment. It also increased the contractor's revenue which will help to increase the sustainability of the investment during period of low oil price.

Diesel Engines have better fuel economy compared to gasoline engines. Society is now aware of various harmful effects of pollution and various researchers are trying to use fuel reformulation method to meet the forthcoming stringent air pollution norms for the diesel engines. This paper presents an experimental investigation on use of three different low price ethanol based oxygenate-diesel blends (oxygenate 4, 8 and 12% in blend) as an oxygen enriched fuel in diesel engine and its effect on brake thermal efficiency, smoke density and emissions of CO, HC, NOx etc is studied. It was observed that there is substantial reduction in the smoke density of exhaust gases and the observed reduction was found proportional to the mass of oxygen present in the blend. Marginal increase in NOx and brake thermal efficiency was observed and there was no significant change in the brake power of the engine.

In order to achieve the international climate goals and to keep the global temperature increase below 2 °C, carbon capture and storage in large point sources of CO2 emissions has received considerable attention. In recent years, mitigation of CO2 emissions from the power sector has been studied extensively whereas other industrial point source emitters such as hydrogen industry have also great potential for CO2 abatement. This study aims to draw an updated comparison between different hydrogen and power cogeneration systems using natural gas and coal as feedstock. The goal is to show the relative advantage of cogeneration systems with respect to CO2 emission reduction costs. Accordingly, the Reference Case is selected as a large-scale H2 production system with CO2 venting using natural gas based on steam methane reforming. In this work, H2 and electricity cogeneration with CO2 capture based on auto-thermal reforming of natural gas has been simulated using ASPEN Plus™, while the cost and performance indicators for the plant based on steam methane reforming of natural gas and the coal-based plants have been adopted from the literature. Using a consistent approach, different plants are compared techno-economically. A sensitivity analysis has also been performed with variation in the most important input parameters including natural gas price (2–8 $/GJ), coal price (1–4 $/GJ), electricity price (30–90 $/MWh) and capacity factors (85–50%) and the results are presented here. The results demonstrate that the total efficiency of the system is slightly higher in natural gas-based systems than in coal-based systems. The results also indicate that although H2 production cost increases with power cogeneration and CO2 capture, cogeneration is a promising and attractive alternative for clean power generation. The highest sensitivity of the results has been observed for the fuel price.

Abstract Globally, there are two types of petroleum fiscal system; the concessionary and the contractual petroleum fiscal system. The main differences between the two types of petroleum fiscal system is the ownership of the resources and some distinct fiscal terms. The contractual petroleum fiscal system specifies a cost recovery option and profit oil split unlike the concessionary petroleum fiscal system that allows the contractor to recoup his capital before payment of tax. This tends to increase the risk associated with the host government revenue as investment in the production of hydrocarbon is filled with uncertainties. There is a need to redesign the concessionary petroleum fiscal to enable it reduce the risk associated with the host government revenue by making the host government to earn revenue early from petroleum investment. This research therefore evaluated a hybrid petroleum fiscal system for investment in the exploration and production of hydrocarbon. The concessionary petroleum fiscal system was adjusted to include a cost recovery option. Petroleum economic model for investment in a typical onshore oil field was built using spreadsheet modelling technique with the fiscal terms in the hybrid petroleum fiscal system embedded in it. The cost recovery option and oil price in the model were varied between 0-100% and $20-$100 per barrel. The NCF, IRR and payout period of the investment were determined. It was observed that the lower the cost recovery option, the higher the host government revenue. From the profitability analysis of the investment in the hybrid petroleum fiscal system, it was observed that when the price of oil was $100/bbl, the NCF of the host government was $9146 and $8426.3 for 0% and 80% cost recovery option. The lower the cost recovery option, the higher the payout period and the lower the internal rate of return. Though lower cost recovery increased the host government revenue more but it may make the hybrid petroleum fiscal system unattractive for investment in periods of low oil price. Hence a higher cost recovery option was recommended for the use of this type of petroleum fiscal system.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.

I study the firm-level dynamic response of a commodity-exporting economy to global cycles in commodity prices. To do so, I develop a heterogeneous-firms model that endogenizes declines in aggregate productivity through reallocation towards less productive firms. Within a given sector, commodity booms reallocate market share away from exporters because of currency appreciation and away from capital-intensive firms because of the increase in capital cost. I provide empirical evidence for these channels using microdata for Chile, the worlds largest copper producer. When fed with the commodity super-cycle of 2003-2012, the calibrated model generates about 50% of the observed productivity decline.

The convergence of a favorable macroeconomic environment and high prices of primary commodities between 2000 and 2011 contributed to the best performance of agriculture in Latin America and the Caribbean (LAC) since the 1980s, with steady growth of total factor productivity (TFP) and output per worker and a reduction in the use of input per worker. The end of the upward phase of the commodity cycle in 2011 together with less favorable external markets and a deterioration of the policy environment in several countries, motivates us to revisit the situation of agriculture in LAC in recent years to analyze how these changes have affected its performance. This study applies a framework that uses index numbers together with data envelopment analysis (DEA) to estimate levels of productivity and efficiency, incorporating technical change together with technical (TE) and environmental efficiency (EE) into the decomposition of TFP. The EE index adjusts the TFP measure for pollution, treating GHG emissions as a by-product of the desired crop or livestock outputs. TFP and efficiency of crop and livestock sub-sectors was calculated for 24 LAC countries from 2000 to 2016. Our results show that the period of fast agricultural growth in LAC, driven by technical change and resource reallocation, transformed agriculture in the region leaving it in a better position to cope with the more unfavorable regional macroeconomic environment and the less dynamic global markets observed after 2011.

From this edition, the Financial Stability Report will have fewer pages with some changes in its structure. The purpose of this change is to present the most relevant facts of the financial system and their implications on the financial stability. This allows displaying the analysis more concisely and clearly, as it will focus on describing the evolution of the variables that have the greatest impact on the performance of the financial system, for estimating then the effect of a possible materialization of these risks on the financial health of the institutions. The changing dynamics of the risks faced by the financial system implies that the content of the Report adopts this new structure; therefore, some analyses and series that were regularly included will not necessarily be in each issue. However, the statistical annex that accompanies the publication of the Report will continue to present the series that were traditionally included, regardless of whether or not they are part of the content of the Report. In this way we expect to contribute in a more comprehensive way to the study and analysis of the stability of the Colombian financial system. Executive Summary During the first half of 2015, the main advanced economies showed a slow recovery on their growth, while emerging economies continued with their slowdown trend. Domestic demand in the United States allowed for stabilization on its average growth for the first half of the year, while other developed economies such as the United Kingdom, the euro zone, and Japan showed a more gradual recovery. On the other hand, the Chinese economy exhibited the lowest growth rate in five years, which has resulted in lower global dynamism. This has led to a fall in prices of the main export goods of some Latin American economies, especially oil, whose price has also responded to a larger global supply. The decrease in the terms of trade of the Latin American economies has had an impact on national income, domestic demand, and growth. This scenario has been reflected in increases in sovereign risk spreads, devaluations of stock indices, and depreciation of the exchange rates of most countries in the region. For Colombia, the fall in oil prices has also led to a decline in the terms of trade, resulting in pressure on the dynamics of national income. Additionally, the lower demand for exports helped to widen the current account deficit. This affected the prospects and economic growth of the country during the first half of 2015. This economic context could have an impact on the payment capacity of debtors and on the valuation of investments, affecting the soundness of the financial system. However, the results of the analysis featured in this edition of the Report show that, facing an adverse scenario, the vulnerability of the financial system in terms of solvency and liquidity is low. The analysis of the current situation of credit institutions (CI) shows that growth of the gross loan portfolio remained relatively stable, as well as the loan portfolio quality indicators, except for microcredit, which showed a decrease in these indicators. Regarding liabilities, traditional sources of funding have lost market share versus non-traditional ones (bonds, money market operations and in the interbank market), but still represent more than 70%. Moreover, the solvency indicator remained relatively stable. As for non-banking financial institutions (NBFI), the slowdown observed during the first six months of 2015 in the real annual growth of the assets total, both in the proprietary and third party position, stands out. The analysis of the main debtors of the financial system shows that indebtedness of the private corporate sector has increased in the last year, mostly driven by an increase in the debt balance with domestic and foreign financial institutions. However, the increase in this latter source of funding has been influenced by the depreciation of the Colombian peso vis-à-vis the US dollar since mid-2014. The financial indicators reflected a favorable behavior with respect to the historical average, except for the profitability indicators; although they were below the average, they have shown improvement in the last year. By economic sector, it is noted that the firms focused on farming, mining and transportation activities recorded the highest levels of risk perception by credit institutions, and the largest increases in default levels with respect to those observed in December 2014. Meanwhile, households have shown an increase in the financial burden, mainly due to growth in the consumer loan portfolio, in which the modalities of credit card, payroll deductible loan, revolving and vehicle loan are those that have reported greater increases in risk indicators. On the side of investments that could be affected by the devaluation in the portfolio of credit institutions and non-banking financial institutions (NBFI), the largest share of public debt securities, variable-yield securities and domestic private debt securities is highlighted. The value of these portfolios fell between February and August 2015, driven by the devaluation in the market of these investments throughout the year. Furthermore, the analysis of the liquidity risk indicator (LRI) shows that all intermediaries showed adequate levels and exhibit a stable behavior. Likewise, the fragility analysis of the financial system associated with the increase in the use of non-traditional funding sources does not evidence a greater exposure to liquidity risk. Stress tests assess the impact of the possible joint materialization of credit and market risks, and reveal that neither the aggregate solvency indicator, nor the liquidity risk indicator (LRI) of the system would be below the established legal limits. The entities that result more individually affected have a low share in the total assets of the credit institutions; therefore, a risk to the financial system as a whole is not observed. José Darío Uribe Governor