This book examines sustainable wealth formation and dynamic decision-making. The global economy experienced a veritable meltdown of asset markets in the years 2007-9, where many funds were overexposed to risky returns and suffered considerable losses. On the other hand, the long-term upswing in the stock market since 2010 has led to asset price booms and some new, but also uneven, wealth formation. In this book a broader set of constraints and guidelines for asset management and wealth accumulation is developed. The authors investigate how wealth formation and the proper management of financial funds can help to adequately buffer income risk and obtain sufficient risk-free income at a later stage of life, while also being socially and environmentally sustainable. The book explores behavioral and institutional rules for decision-making that reflect such constraints and guidelines, without necessarily being optimal in the narrow sense. The authors explain the need for such a dynamic decision-making and dynamic re-balancing of portfolios, by putting forward dynamic programming as an approach to dynamic decision-making that can allow sustainable wealth accumulation and dynamic asset allocation to be successfully integrated. This book provides a clear and comprehensive treatment of asset accumulation and dynamic portfolio models with an emphasis on long term and sustainable wealth formation. An important concern in public debate is the sustainability of our economy and this book employs cutting edge quantitative techniques and models to highlight important facts that cannot be disputed under any reasonable assumptions. It has the potential to become a standard reference for both academic researchers and quantitatively trained practitioners. Eckhard Platen, Professor of Quantitative Finance, University of Technology Sydney, Australia This book should be read by both academics and practitioners alike. The former will find intellectually rigorous discussions and innovative solutions. The latter may find a few of the concepts a bit challenging. Yet, theory and technology are there to help simplify the work of those who worry about what time it is rather than how to make a watch--- but they do need a watch. Jean Brunel, Founder of Brunel Associates and Editor of The Journal of Wealth Management

Given the industrialized world’s historical dependence on fossil fuel-based energy resources and the now-realized perils of moving beyond the earth’s carbon budget, this book explores the myriad challenges of climate change and in reaching a low-carbon economy. Reconciling the medium-term competing, yet frequently complementary, needs for transition policies, the book provides guidelines for complex and often conflicting climate policy tasks. The book presents empirical trends in the use of carbon-emitting resources and evaluates market-driven short-termism and its adverse impact on resource use and the environment; it emphasizes a medium-term macroeconomic perspective for the transition. The authors attempt a paradigm shift towards a framework of sustainable macroeconomics. They survey relevant historical models, conduct empirical and numerical analyses of the climate change-relevant dynamic models, provide empirical illustrations, and evaluate diverse policy options and implementations together with their historical evolution. New analytical issues are also considered, e.g., strategic behavior in the energy and resource sectors, energy competition and the dynamics of market shares in new energy technology, and supporting policies for dealing with the tipping points encountered in climate change. The authors suggest a multitude of market-based strategies and public fiscal, monetary, and financial policies, and longer-run planning for resource extraction -all suitable for driving sustainable growth and a transformation of the energy sector. The book also examines the multiple delaying forces slowing the transition to a low-carbon economy; these typically arise from short-termism, lock-ins, irreversibility, leakages, non-cooperative games, and other political strategies. Thus, they explain the snail’s pace evolution of current national and global climate policies. The book will appeal to scholars and students of economics and environmental science. It is also relevant for policymakers and practitioners in multilateral institutions, research institutions as well as governments and ministries of countries interested in alternative energy sources, climate economists, and those who study the implementation of sustainable and low carbon-based policies.

Zusammenfassung: This highly interdisciplinary volume brings together a carefully curated set of case studies examining complex systems with multiple time scales (MTS) across a variety of fields: materials science, epidemiology, cell physiology, mathematics, climatology, energy transition planning, ecology, economics, sociology, history, and cultural studies. The book addresses the vast diversity of interacting processes underlying the behaviour of different complex systems, highlighting the multiplicity of characteristic time scales that are a common feature of many and showcases a rich variety of methodologies across disciplinary boundaries. Self-organizing, out-of-equilibrium, ever-evolving systems are ubiquitous in the natural and social world. Examples include the climate, ecosystems, living cells, epidemics, the human brain, and many socio-economic systems across history. Their dynamical behaviour poses great challenges in the pressing context of the climate crisis, since they may involve nonlinearities, feedback loops, and the emergence of spatial-temporal patterns, portrayed by resilience or instability, plasticity or rigidity; bifurcations, thresholds and tipping points; burst-in excitation or slow relaxation, and worlds of other asymptotic behaviour, hysteresis, and resistance to change. Chapters can be read individually by the reader with special interest in such behaviours of particular complex systems or in specific disciplinary perspectives. Read together, however, the case studies, opinion pieces, and meta-studies on MTS systems presented and analysed here combine to give the reader insights that are more than the sum of the book's individual chapters, as surprising similarities become apparent in seemingly disparate and unconnected systems. MTS systems call into question naïve perceptions of time and complexity, moving beyond conventional ways of description, analysis, understanding, modelling, numerical prediction, and prescription of the world around us. This edited collection presents new ways of forecasting, introduces new means of control, and - perhaps as the most demanding task - it singles out a sustainable description of an MTS system under observation, offering a more nuanced interpretation of the floods of quantitative data and images made available by high- and low-frequency measurement tools in our unprecedented era of information flows

This contributed volume combines approaches of the current inequality debate with aspects of finance based on profound macroeconomic model analyses. Research on inequality has had a long tradition in economics. With the financial crisis from 2007, not only output decreased tremendously, but also inequality has risen since then. The book presents selected contributions of a workshop held at Bielefeld University in 2016 and features additional papers written by experts in the field. A mixture of established researchers and young scholars presents both theoretical and empirical frameworks to analyze the subject.

This book presents the state of the art in the relatively new field of dynamic economic modelling with regime switches. The contributions, written by prominent scholars in the field, focus on dynamic decision problems with regime changes in underlying dynamics or objectives. Such changes can be externally driven or internally induced by decisions. Utilising the most advanced mathematical methods in optimal control and dynamic game theory, the authors address a broad range of topics, including capital accumulation, innovations, financial decisions, population economics, environmental and resource economics, institutional change and the dynamics of addiction. Given its scope, the book will appeal to all scholars interested in mathematical and quantitative economics.

Academic finance has had a remarkable impact on many financial services. Yet long-term investors have received curiously little guidance from academic financial economists. Mean-variance analysis, developed almost fifty years ago, has provided a basic paradigm for portfolio choice. This approach usefully emphasizes the ability of diversification to reduce risk, but it ignores several critically important factors. Most notably, the analysis is static; it assumes that investors care only about risks to wealth one period ahead. However, many investors—-both individuals and institutions such as charitable foundations or universities—-seek to finance a stream of consumption over a long lifetime. In addition, mean-variance analysis treats financial wealth in isolation from income. Long-term investors typically receive a stream of income and use it, along with financial wealth, to support their consumption. At the theoretical level, it is well understood that the solution to a long-term portfolio choice problem can be very different from the solution to a short-term problem. Long-term investors care about intertemporal shocks to investment opportunities and labor income as well as shocks to wealth itself, and they may use financial assets to hedge their intertemporal risks. This should be important in practice because there is a great deal of empirical evidence that investment opportunities—-both interest rates and risk premia on bonds and stocks—-vary through time. Yet this insight has had little influence on investment practice because it is hard to solve for optimal portfolios in intertemporal models. This book seeks to develop the intertemporal approach into an empirical paradigm that can compete with the standard mean-variance analysis. The book shows that long-term inflation-indexed bonds are the riskless asset for long-term investors, it explains the conditions under which stocks are safer assets for long-term than for short-term investors, and it shows how labor income influences portfolio choice. These results shed new light on the rules of thumb used by financial planners. The book explains recent advances in both analytical and numerical methods, and shows how they can be used to understand the portfolio choice problems of long-term investors.

Achieve sustainable growth with excellence in financial management. This book covers essential strategies and practices for managing finances effectively, making it a valuable resource for financial professionals and business leaders.

Since the mid-1990s, sustainability of large and persistent current account positions have been attracting much attention from policy makers and economists alike. Alongside global imbalances, sustainability of imbalances within the euro area, which started widening shortly after the introduction of the euro, raised much concern. While there exists a large body of theoretical and empirical literature on sustainability of external imbalances, a systematic survey has been lacking so far. Angélique Herzberg fills this gap by examining a broad range of established sustainability measures concerning their applicability to the various global and intra-euro imbalances of the recent past. Furthermore, the author examines the existence of feedback effects from an economy ́s net international investment position to its trade balance.

This timely Handbook draws together insightful analyses of natural resource management challenges and solutions in the face of sustainable development targets and a changing global climate.

This book introduces green bonds and their significance in portfolio management and sustainable finance. It emphasizes the significance of green bonds in terms of two primary factors: environmental sustainability and investor return. The book establishes the definitions, features, and typology of green bonds, and explains the characteristics that separate it from traditional ones. It delves into the benefits and challenges of investing in these financial instruments, and outlines the process by which green bonds are certified, focusing on the widely accepted Climate Bonds Standard. It also covers transparency, reporting, and monitoring measurements of green bonds. In its second section, the book focuses on investor and policy perspectives. The authors discuss asset allocation strategies for investors as well as various methods for integrating ESG issues into investment portfolio design. New estimating methodologies and case studies of successful green bond investments are also provided. Pitched at graduate students and researchers in finance, accounting, as well as related fields of energy and environmental economics, this book will also interest practitioners and investors looking to understand this emerging area in finance.