infonet-economy

This paper focuses on the nature of the Appellate Body's interpretative method in arriving at its decision to read-in that Article 2.1 of the Agreement on Technical Barriers to Trade (TBT Agreement) will not prohibit a detrimental impact on competitive opportunities for imports in cases where such detrimental impact stems exclusively from a legitimate regulatory distinction. This reading-in of the new phrase has been described as having been a contextual and teleological approach to interpretation by the Appellate Body. In this paper I consider what is meant by a teleological approach to interpretation and whether such an interpretation could in fact be another name for judicial law-making in some instances. In doing so, I suggest that a test to determine whether or not law-making has taken place could be to ask whether the Appellate Body's expression of the rights and obligations contained in the provision at issue was predictable. This is then applied to the Appellate Body's reasoning in US - Clove Cigarettes (2012) after an analysis of this reasoning, and from this I conclude that law-making could indeed have taken place in this case under the guise of a teleological approach to interpretation.

This paper considers the intersection of income tax and WTO rules. It defends an interpretation of the non-discrimination obligations in line with customary rules of interpretation as stipulated by the Vienna Convention on the Law of Treaties. It, thus, departs from the historic assumption that income taxes are not or only to a very limited extent covered by the GATT. Subsequently, the reach of the GATS in terms of its non-discrimination obligations and the substantive defenses thereto is assessed. It is analyzed how states may justify their discriminatory income tax measures under the subparagraphs of Article XIV of the GATS. Additionally, the stringency with which measures are assessed under the chapeau of Article XIV is illustrated. The last section of the first part reviews the applicability of the SCM Agreement with respect to income tax measures. It further analyses the scope of the SCM Agreement with respect to transfer price adjustments. Lastly, an interpretation of arm’s length in footnote 59 of the SCM Agreement in accordance with the OECD Transfer Pricing Guidelines is defended. Having established the far-reaching scope of the WTO covered Agreements with respect to income tax measures, the second part analyses the rivalry between the respective dispute settlement mechanisms of tax and trade. It dismisses a narrow understanding of jurisdictional overlap that appears to exclusively focus on conflicting judicial decisions and proposes and approach under which the judicial settlement of disputes may rival with the institutionalized diplomatic dispute resolution procedure under tax agreements. Provisions and legal principles that may allow Panels to find income tax disputes inadmissible under the GATT, GATS and SCM Agreement are assessed. The third part reviews, albeit briefly, the appropriateness of the WTO DSB venturing in the field of international income taxation. Considerations are introduced that go beyond the black letter of the law and may ultimately influence the decision to favor an inclusionary or exclusionary approach to income tax measures.

My dissertation consists of three chapters, each of which focuses on a different area of research in asset pricing. The first chapter's focal point is the measurement of the premium for jump risks in index option markets. The second chapter is devoted to non- parametric measurement of pricing kernel dispersion. The third chapter contributes to the literature on latent state variable recovery in option pricing models. In the first chapter, "Big risk", I show how to replicate a large family of high-frequency measures of realised return variation using dynamically rebalanced option portfolios. With this technology investors can generate optimal hedging payoffs for realised variance and several measures of realised jump variation in incomplete option markets. These trading strategies induce excess payoffs that are direct compensation for second- and higher order risk exposure in the market for (index) options. Sample averages of these excess payoffs are natural estimates of risk premia associated with second- and higher order risk exposures. In an application to the market for short-maturity European options on the S&P500 index, I obtain new important evidence about the pricing of variance and jump risk. I find that the variance risk premium is positive during daytime, when the hedging frequency is high enough, and negative during night-time. Similarly, for an investor taking long variance positions, daytime profits are grater in absolute value than night-time losses. Compensation for big risk is mostly available overnight. The premium for jump skewness risk is positive, while the premium for jump quarticity is negative (contrary to variance, also during the trading day). The risk premium for big risk is concentrated in states with large recent big risk realisations. In the second chapter, "Arbitrage free dispersion", co-authored with Andras Sali and Fabio Trojani, we develop a theory of arbitrage-free dispersion (AFD) which allows for direct insights into the dependence structure of the pricing kernel and stock returns, and which characterizes the testable restrictions of asset pricing models. Arbitrage-free dispersion arises as a consequence of Jensen's inequality and the convexity of the cumulant generating function of the pricing kernel and returns. It implies a wide family of model-free dispersion constraints, which extend the existing literature on dispersion and co-dispersion bounds. The new techniques are applicable within a unifying approach in multivariate and multiperiod settings. In an empirical application, we find that the dispersion of stationary and martingale pricing kernel components in a benchmark long-run risk model yields a counterfactual dependence of short- vs. long- maturity bond returns and is insufficient for pricing optimal portfolios of market equity and short-term bonds. In the third chapter, "State recovery from option data through variation swap rates in the presence of unspanned skewness", I show that a certain class of variance and skew swaps can be thought of as sufficient statistics of the implied volatility surface in the context of uncovering the conditional dynamics of second and third moments of index returns. I interpret the slope of the Cumulant Generating Function of index returns in the context of tradable swap contracts, which nest the standard variance swap, and share its fundamental linear pricing property in the class of Affine Jump Diffusion models. Equipped with variance- and skew-pricing contracts, I investigate the performance of a range of state variable filtering setups in the context of the stylized facts uncovered by the recent empirical option pricing literature, which underlines the importance of decoupling the drivers of stochastic volatility from those of stochastic (jump) skewness. The linear pricing structure of the contracts allows for an exact evaluation of the impact of state variables on the observed prices. This simple pricing structure allows me to design improved low-dimensional state-space filtering setups for estimating AJD models. In a simulated setting, I show that in the presence of unspanned skewness, a simple filtering setup which includes only prices of skew and variance swaps offers significant improvements over a high-dimensional filter which treats all observed option prices as observable inputs.

A variety of studies assess the impact of multinational enterprises (MNE) in developing countries. They mainly focus on the negative externalities of these companies. Therefore, this study focuses on the positive effects emanating from the presence of MNEs in developing countries. It is hypothesised that positive externalities resulting from MNEs have their source in the local embeddedness of the firm. The two case studies presented in this paper assess the embeddedness of Syngenta’s subsidiaries in Kenya and Colombia. The focus is on Syngenta’s potato production and related crop protection business. The study investigates the perspective of the company, the view of experts and the potential impact on smallholder farmers. The results show that in both countries Syngenta is collaborating with universities and other research institutions, governmental institutions, NGOs and the local private sector. Syngenta creates attractive skilled jobs for locals in both countries. The company positively influences its business partners in the area of standards and good business practices. Furthermore, farmers profit from the technologies and trainings provided by the firm or its partners. It can be concluded that through embeddedness, Syngenta understands the needs of farmers and can help to meet these needs, which in turn results in a business case for the company.

The study examines the banana production operations of Chiquita in the remote region of Changuinola in Panama and contrasts it with experiences from Guatemala and Costa Rica. Of particular interest are the local context and the socio-economic framework conditions in which the company is operating. They are essential to assessing the embeddedness of the company in the region. Moreover, they influence the potential of the enterprise to provide positive sustainability effects through its business activities for the local community, the local economy and the local environment. The study analyses how the use of technology, standards and partnerships can help to mitigate the significant social and ecological problems in the indigenous communities in Panama. It also highlights which areas the Chiquita company would need to address to improve its sustainability and further embed the company in Panama. The main recommendations are deduced from interviews with local experts and workers in the banana plantations.

Sustainability remains high on the worldwide agenda in the cocoa sector as numerous problems threaten its viability. This study gives a broad picture of the Ghanaian cocoa sector and examines the initiatives of two Swiss chocolate manufacturers aiming at a more sustainable and future-oriented cocoa production in Ghana.
The study reveals many challenges the Ghanaian cocoa sector is facing. The entire sector is highly regulated and controlled by the Ghana Cocoa Board (COCOBOD); the scope of influence of the private sector is limited. The COCOBOD shows rent-seeking behaviour and patronising attitudes. To attract investments from cocoa farmers, cocoa production would have to become a profitable business for them. The case study reveals that certification helps to increase both yields and income of the farmers. However, certification schemes are by far not sufficient to pull farmers out of poverty. As the projects of the two chocolate manufacturers focus on the diversification of the farmers’ income, they have the potential to improve the livelihoods of farmers. Because chocolate manufacturers, through their core business activities, cannot directly interact with farmers given the state control of the sector, its development is limited. Large-scale improvements of the whole cocoa sector go beyond the sphere of influence of chocolate manufacturers and must come from the Ghanaian government.