nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2005‒04‒09
two papers chosen by
Angelo Zago
Universitá degli Studi di Veroa

  1. Estimation of marginal abatement costs for undesirable outputs in India's power generation sector: An output distance function approach By Manish Gupta
  2. Deflation and the International Great Depression: A Productivity Puzzle By Harold L. Cole; Lee E. Ohanian; Ron Leung

  1. By: Manish Gupta (National Institute of Public Finance and Policy; National Institute of Public Finance and Policy)
    Abstract: Many production activities generate undesirable byproducts in conjunction with the desirable outputs they produce. The present study uses an output distance function approach and its duality with the revenue function to estimate the marginal abatement cost of CO2 emissions from a sample of thermal plants in India. Two sets of exercises have been undertaken. The marginal abatement cost is first estimated without considering the distinction between the clean and the dirty plants (model-1) and then by differentiating between the two (model-2). The shadow prices of CO2 for the coal fired thermal plants in India for the period 1991-92 to 1999-2000 was found to be Rs. 3,380.59 per ton of CO2 as per model-1 and Rs. 2401.99 per ton of CO2 as per model-2. The wide variation noticed in the marginal abatement costs across plants is explained by the ratio of CO2 emissions to electricity generation, the different vintages of capital used by different plants in the generation of electricity and provisions for abatement of pollution. The relationship between firm specific shadow prices of CO2 and the index of efficiency (ratio of CO2 emission and electricity generation) points to the fact that the marginal cost of abating CO2 emissions increases with the efficiency of the thermal plant.
    Date: 2005–03
    URL: http://d.repec.org/n?u=RePEc:ind:nipfwp:27&r=eff
  2. By: Harold L. Cole; Lee E. Ohanian; Ron Leung
    Abstract: This paper presents a dynamic, stochastic general equilibrium study of the causes of the international Great Depression. We use a fully articulated model to assess the relative contributions of deflation/monetary shocks, which are the most commonly cited shocks for the Depression, and productivity shocks. We find that productivity is the dominant shock, accounting for about 2/3 of the Depression, with the monetary shock accounting for about 1/3. The main reason deflation doesn't account for more of the Depression is because there is no systematic relationship between deflation and output during this period. Our finding that a persistent productivity shock is the key factor stands in contrast to the conventional view that a continuing sequence of unexpected deflation shocks was the major cause of the Depression. We also explore what factors might be causing the productivity shocks. We find some evidence that they are largely related to industrial activity, rather than agricultural activity, and that they are correlated with real exchange rates and non-deflationary shocks to the financial sector.
    JEL: E0 N1
    Date: 2005–04
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:11237&r=eff

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