Local and Regional Economic Impacts of Biofuel Development
Expanded processing of agricultural products in rural areas has been widely pursued as a strategy for rural economic development. By adding value to farm products before they leave the area, new processing plants can create new employment opportunities and generate economic spinoffs in rural areas that have experienced economic stagnation or decline as a result of long term trends of farm consolidation. In addition, farmer owned processing facilities provide a way for producers to integrate forward and capture potential profits from processing and marketing their products. Consequently, the expansion of agricultural processing in rural areas usually receives broad-based support from commodity groups, rural development interests, and state political leaders. In recent years, the most prevalent type of new agricultural processing ventures in the Midwest and Great Plains states has been corn ethanol plants. Like other types of agricultural processing, these biofuel ventures have generally received widespread support, and numerous studies have addressed their contributions to local or regional economies. However, while the methods employed have seemingly been quite similar, the findings have varied widely with the impacts attributed to ethanol development differing as much as ten-fold. The purpose of this paper is to (1) examine reasons why estimates of local or regional economic impacts of biofuel development may vary and (2) compare the economic impacts of corn-based ethanol production with those expected to be associated with cellulosic ethanol production.
Input-Outrageous: The Economic Impacts of Modern Biofuels Production
Measuring the net economic impacts of ethanol plants has been problematical: access to good industrial accounts is limited, the sector has historically gone through volatile swings, regional logistical responses to a plant beyond corn inputs are not well understood, and the sector is currently expanding rapidly. In the current uncertain energy world, the prices paid for inputs and received for outputs are also volatile. There exists quite a bit of confusion about the overall value of this dimension of value added agricultural processing to local, regional, and national accounts. There is a tendency for advocates to overstate, over-describe, and outright double-count economic activity linked to ethanol and other biofuels production. This paper presents the findings of a modeled ethanol plant configuration in a hypothetical three-county region in Iowa. (Modified slightly since first posted in June, 2006, to include language and technical corrections)
When to Cross the Spread? Trading in Two-Sided Limit Order Books
In this paper the problem of optimal trading in illiquid markets is addressed when the deviations from a given stochastic target function describing, for instance, external aggregate client flow are penalized. Using techniques of singular stochastic control, we extend the results of [F. Naujokat and N. Westray, Math. Financ. Econ., 4 (2011), pp. 299--335] to a two-sided limit order market with temporary market impact and resilience, where the bid ask spread is now also controlled. In addition to using market orders, the trader can also submit orders to a dark pool. We first show existence and uniqueness of an optimal control. In a second step, a suitable version of the stochastic maximum principle is derived which yields a characterization of the optimal trading strategy in terms of a nonstandard coupled forward-backward stochastic differential equation (FBSDE). We show that the optimal control can be characterized via buy, sell, and no-trade regions. The new feature is that we now get a nondegenerate no-...