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Events

Economics Finance and Seminar Series: Dr Laurence Roope, University of Oxford

Wednesday, 28 November 2018
15:30 to 17:00
Dr Laurence Roope, University of Oxford
Durham University Business School, MHL 453

Dr Laurence Roope, University of Oxford will be talking about Gravitational Allocation Problems.

Abstract: This paper considers the problem of how to apportion a budget among a number of possible investment vehicles, where the return on investment in a given vehicle may depend on the size of investments in other vehicles. There are many economics problems of this type. These include, for example, (i) how a funding body should apportion research funds among different universities, some of which may collaborate to produce research outputs; (ii) government decisions about investment in infrastructure, where there are complementarities between investing in different types of infrastructure; (iii) government decisions about investing in different industries, where the productivity of an industry depends on investment in complementary industries; (iv) how international aid budgets should be allocated among potential recipient countries, taking account of spillover effects between recipient countries. With particular reference to the latter example, we consider some key elements common to many problems of this type. Based on these elements we propose and axiomatically characterize an index of the expected overall return from a given budget allocation. The expected overall return depends on the size of investment in each vehicle and the distances between each investment vehicle. In an empirical illustration, we apply the index to the context of allocating international aid budgets among recipient countries using data from the OECD International Development Statistics database.

Economics Finance and Seminar Series: Dr Laurence Roope, University of Oxford

Wednesday, 28 November 2018
15:30 to 17:00
Dr Laurence Roope, University of Oxford
Durham University Business School, MHL 453

Dr Laurence Roope, University of Oxford will be talking about Gravitational Allocation Problems.

Abstract: This paper considers the problem of how to apportion a budget among a number of possible investment vehicles, where the return on investment in a given vehicle may depend on the size of investments in other vehicles. There are many economics problems of this type. These include, for example, (i) how a funding body should apportion research funds among different universities, some of which may collaborate to produce research outputs; (ii) government decisions about investment in infrastructure, where there are complementarities between investing in different types of infrastructure; (iii) government decisions about investing in different industries, where the productivity of an industry depends on investment in complementary industries; (iv) how international aid budgets should be allocated among potential recipient countries, taking account of spillover effects between recipient countries. With particular reference to the latter example, we consider some key elements common to many problems of this type. Based on these elements we propose and axiomatically characterize an index of the expected overall return from a given budget allocation. The expected overall return depends on the size of investment in each vehicle and the distances between each investment vehicle. In an empirical illustration, we apply the index to the context of allocating international aid budgets among recipient countries using data from the OECD International Development Statistics database.