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U.S. liquefied natural gas (LNG) export projects have substantially more spot trading of LNG than traditional projects. While this reduces the debt capacity of the projects, it allows project developers to better exploit many types of real options. Exploiting those options greatly increases the positive skewness of project cash flows. While the modal operating profits for a representative U.S. LNG export project are unlikely to cover fixed costs, interest and taxes at usual leverage ratios, the mean real equity return is likely to be positive. Some quarters could return extremely high profits. Understanding determinants of spot trading of LNG matters because increased spot trading will better integrate global natural gas markets. Keywords: LNG exports, Real options, Debt finance, Spot and contract trade, Market integration, 1. INTRODUCTION Compared to previous liquefaction developments, recent U.S. liquefied natural gas (LNG) export projects have more of their output exposed to spot trades. For example, data from the International [...]

We use generalized method of moments to estimate a rational expectations aggregate demand/aggregate supply macroeconomic model for five European economies and the United States. Our aim is to examine whether supply or demand shocks have predominated in these economies during the post-war era, and whether shocks of either type have been primarily temporary or permanent in nature. We find that permanent or temporary demand shocks have been the dominant source of variance in output growth in all six countries, but there is a less consistent pattern for inflation. Permanent supply shocks had the dominant influence on autocorrelations. JEL classification: E32; C32 Keywords: Generalized method of moments; Business cycles

Using a simple model of a small open economy which includes traded and non-traded goods and output in two periods, we demonstrate that changes in real interest rates will be associated with changes in real exchange rates. A high real interest rate will encourage consumers to substitute away from present and toward future consumption. To transfer consumption of non-traded goods intertemporally, intersectoral resource flows are required. In the simplest model, this in turn requires opposite movements in the real exchange rate over two periods. [ABSTRACT FROM AUTHOR]