Eunnyeong Heo

Price and inventory dynamics in petroleum product markets

Abstract Unlike many studies of commodity inventory behavior, this paper estimates a model with endogenous spot and forward prices, inventories, production, and net imports. Our application involves markets for refined petroleum products in the United States. Our model is built around the supply and demand for storage. We estimate the model using Generalized Method of Moments and perform dynamic, simultaneous simulations to estimate the impacts of supply and demand shocks. Supply curves for the industry are inelastic and upward sloping. High inventory levels depress prices. Inventories fall in response to higher sales, consistent with production smoothing. Under higher input prices, refiners reduce their stocks of crude oil but increase their product inventories, consistent with cost smoothing. In some cases, imports of products are more variable than production or inventories.

BAYESIAN ESTIMATION OF MULTINOMIAL PROBIT MODELS OF WORK TRIP CHOICE

In this paper, we estimate a multinomial probit model of work trip mode choice in Seoul, Korea, using the Bayesian approach with Gibbs sampling. This method constructs a Markov chain Gibbs sampler that can be used to draw directly from the exact posterior distribution and perform finite sample likelihood inference. We estimate direct and cross-elasticities with respect to travel cost and the value of time. Our results show that travel demands are more sensitive to travel time than travel cost. The cross-elasticity results show that the bus has a greater substitute relation to the subway than the auto (and vice versa) and that an increase in the cost of an auto will increase the demand for bus transport more so than that of the subway.

Technological Progress versus Efficiency Gain in Manufacturing Sectors

This study decomposes the nonparametric Malmquist productivity index for 36 Korean manufacturing sectors into two components: technological change and technical efficiency change. The empirical results show that while each sector displays quite different growth patterns, productivity growth is dominated by technological change. Technological change is found to have a negative correlation with efficiency change. Secondary regression performed in this study identifies the relationship between productivity growth measures and several key policy variables, such as effective protection rate, market concentration, and so forth. The productivity estimates are compared with those of the conventional Tornqvist productivity index.

Causal relationship between renewable energy consumption and economic growth: comparison between developed and less-developed countries

This study aims to analyze and compare the long-run causal relationship between renewable energy consumption and economic growth for developed countries with that for less-developed countries to derive implications for long-term renewable energy policy. This study uses 1990–2010 data on 31 OECD countries (developed countries) and 49 non-OECD countries (less-developed countries) in the multivariate panel vector error correction model. The results show that the conservation hypothesis of a causal relationship between renewable energy consumption and economic growth is valid in the long run for OECD countries, and the feedback hypothesis, for non-OECD countries. This finding indicates that for developed countries, renewable energy has not played an important role in economic growth but has instead been growing by leaning on economic growth. By contrast, for less-developed countries, renewable energy has been playing an important role as a production input; similarly, economic growth has led to increased renewable energy consumption. As their economies grow, renewable energy consumption will increase in both developed countries and less-developed countries. However, policies to increase renewable energy consumption will encourage economic growth only in less-developed countries. Consequently, developed countries need to adopt a selection and concentration strategy, and less-developed countries need to adopt intensive promotion policies for renewable energy.

Sources of structural change in energy use: A decomposition analysis for Korea

ABSTRACT Quantifying the sources of change in energy use by decomposition can provide policymakers with useful information, especially for Korea, which has energy-intensive industries such as steel and petrochemicals. In this article, intermediate energy demand is analyzed using a four-part structural decomposition model. The proposed model can distinguish a structure effect from the Leontief effect. From the results, a noticeable structure effect is observed from 1995 to 2005. Moreover, the results show that the Leontief effect can be estimated oppositely according to energy demand sector. Consequently, this article shows the necessity of investigating intermediate demand when analyzing energy use applying a decomposition analysis method.

Effect of ICT Capital on the Demands for Labor and Energy in Major Industries of Korea, US, and UK

We investigate the effect of ICT capital on the demands for labor and energy in manufacturing and electricity gas water industries of Korea, US, and UK. Assuming ICT capital, non-ICT capital, labor, electricity, fuel, and material as input factors for manufacturing and ICT capital, non-ICT capital, labor and energy material as input factors for electricity gas water industry, we estimate the Morishima elasticities of substitution. Considering the relative price changes of input factors, ICT capital has substituted labor in manufacturing and electricity water gas industries of the three countries. ICT capital has substituted both electricity and fuel in US and UK manufacturing. Although ICT capital has substituted electricity and fuel each other in Korean manufacturing, ICT capital is unlikely to decrease the demands for electricity and fuel when considering their relative price changes. ICT capital has substituted energy material in electricity gas water industries of the three countries.

Effective R&D investment planning based on technology spillovers: the case of Korea

This study was performed to discuss an R&D investment planning method based on the technology spillover among R&D fields, from the point of view of technology convergence. The empirical analysis focused on a particular R&D group, such as university departments and specialized research institutes, since local technology combinations are more effective than distant combinations to create a new technology, according to previous research. In addition, worldwide technology competition is increasing, and with the recent convergence of various technologies and industries, strategies for R&D selection and resources allocation of particular R&D groups are becoming increasingly important. The empirical analysis uses a modified Decision Making Trial and Evaluation Laboratory method combined with information on patent citations to resolve the latent problems of the existing model, using as an empirical example the case of the Korea Institute of Geoscience and Mineral Resources (KIGAM), specialized in the geology and resources development R&D area. Through the empirical analysis, the KIGAM’s current R&D investment status is considered, and a reasonable R&D investment planning is suggested from the perspective of technology spillover. By using this framework, the magnitude of technology spillover from the R&D investment planning within a particular R&D group can be measured based on objective quantitative data, and the current R&D investment can be compared with recent global trends.

Effects of the Middle East conflicts on oil company returns

ABSTRACT This study examines the effects of Middle East conflicts on the returns of national and international oil companies. We apply an event study method to assess the impact of such conflicts on the abnormal returns of 33 oil companies. We categorize 20 conflicts into three types—international, interstate, and intrastate—for the period of 1990–2013. Our results suggest that these conflicts have more positive effects on national oil companies (NOCs) than on international oil companies (IOCs). In addition, the effects on IOCs and NOCs statistically differ by the three conflict types. More specifically, while international and intrastate conflicts have positive and long-lasting effects on NOCs, these affects are not significant for IOCs. Interstate conflicts present higher cumulative abnormal return after the event for NOCs than IOCs. In conclusion, the impact of conflicts manifests differently among the various types of oil companies and depend on conflict type.

A Study on Integration of the World Crude Oil Markets Using Price Asymmetry Model

ABSTRACT The concept and methodology of price asymmetry analyses can be applied to the analysis of the regionalization of international crude oil markets. If markets are unified and properties of crude oils are similar, the price movements of crude oil in each market should be symmetric in the cases of price increases and decreases. Accordingly, in this study, the asymmetric movements of crude oil prices were analyzed to test the degree of market integration of the world crude oil markets using the asymmetric error correction model. As the results, the degrees of market integration were estimated differently in the cases of price increases and decreases.

Estimating Long-Run Relationship among Crude Oil Spot Prices, U.S. Inventory, and OPEC Production—An Error Correction Model Approach -

ABSTRACT This study focuses on how fully-developed international crude oil markets react to production and inventory variances in both short-run and long-run. We present an Error Correction Model (ECM) with for five international crude oil spot market prices, US inventory and OPEC production level. Simulation results are consistent to the usual notions of the economic theory and regionalization issue, indicating that the power of competitive market dominates in international crude oil markets. It is found that crude oil price is more elastic with respect to the OPEC crude oil production in the short-run, and more elastic with respect to the U.S. crude oil inventory in the long-run.