nep-ene New Economics Papers
on Energy Economics
Issue of 2013‒08‒31
27 papers chosen by
Roger Fouquet
London School of Economics

  1. Forecasting the Real Price of Oil in a Changing World: A Forecast Combination Approach By Christiane Baumeister; Lutz Kilian
  2. Oil shocks and the UK economy: the changing nature of shocks and impact over time By Millard, Stephen; Shakir, Tamarah
  3. Will Additional Federal Enforcement Improve the Performance of Pipelines in the U.S.? By Sarah L. Stafford
  4. Forecasting Crude Oil Price Movements with Oil-Sensitive Stocks By Chen, Shiu-Sheng
  5. Modelling the Effects of Oil Prices on Global Fertilizer Prices and Volatility By Chen, P.Y.; Chang, C.L.; Chen, C.-C.; McAleer, M.J.
  6. Disparue entre les sables du Qatar et l'Amazonie équatorienne. La proposition Daly-Correa de gel du pétrole en terre (Initiative Yasuni-ITT) By Michel Damian
  7. Forecasting Daily Residential Natural Gas Consumption: A Dynamic Temperature Modelling Approach By Ahmet Goncu; Mehmet Oguz Karahan; Tolga Umut Kuzubas
  8. Productivity Analysis in Power Generation Plants Connected to the National Grid: A New Case of Bio Economy in Nicaragua. By Blanco Orozco, Napoleón Vicente; Zuniga Gonzalez, Carlos Alberto
  9. EU Biofuel Policies in Practise - A Carbon Map for the Llanos Orientales in Colombia By Mareike Lange; César Freddy Suarez
  10. Panel analysis of CO2 emissions, GDP, energy consumption, trade openness and urbanization for MENA countries By Farhani, Sahbi; Shahbaz, Muhammad; AROURI, Mohamed El Hedi
  11. Generation Capacity Investments in Electricity Markets: Perfect Competition By Gürkan, G.; Ozdemir, O.; smeers, Y.
  12. Do first mover advantages for producers of energy efficient appliances exist? The case of refrigerators By Cleff, Thomas; Rennings, Klaus
  13. Why crude oil prices are high when global activity is weak? By Ratti, Ronald A; Vespignani, Joaquin L.
  14. Energy intensity developments in 40 major economies: Structural change or technology improvement? By De Cian, Enrica; Schymura, Michael; Verdolini, Elena; Voigt, Sebastian
  15. Strategic Generation Capacity Choice under Demand Uncertainty: Analysis of Nash Equilibria in Electricity Markets By Gürkan, G.; Ozdemir, O.; smeers, Y.
  16. Decomposing patterns of emission intensity in the EU and China: how much does trade matter? By di Cosmo, Valeria; Hyland, Marie
  17. Impact of Sales Constraints and Entry on E85 Demand By Bruce A. Babcock; Sebastien Pouliot
  18. Does the structure of the fine matters? By Marcelo Caffera; Carlos Chávez; Analia Ardente
  19. An empirical comparison of alternate schemes for combining electricity spot price forecasts By Jakub Nowotarski; Eran Raviv; Stefan Trueck; Rafal Weron
  20. The Role of Natural Gas Consumption and Trade in Tunisia’s Output By Farhani, Sahbi; Shahbaz, Muhammad; Arouri, Mohammed
  21. Urbanisation and Green Growth in China By OECD
  22. Local consumption and territorial based accounting for CO2 emissions By Kristinn Hermannsson; Stuart G McIntyre
  23. The Russian gas industry : challenges to the "Gazprom model" By Catherine Locatelli
  24. The Macroeconomics evaluation of Climate Change Model (MECC-Model): The case Study of China By Ruiz Estrada, Mario Arturo
  25. Efficient Approximation of the Spatial Covariance Function for Large Datasets - Analysis of Atmospheric CO2 Concentrations By Patrick Gneuss; Wolfgang Schmid; Reimund Schwarze
  26. Energy, entropy, and arbitrage By Soumik Pal; Ting-Kam Leonard Wong
  27. Consumer Perceptions of Seafood Industries in the Wake of the Deepwater Horizon Oil Spill and Fukushima Daiichi Nuclear Disaster By McKendree, Melissa G.S.; Ortega, David L.; Widmar, Nicole Olynk; Wang, H. Holly

  1. By: Christiane Baumeister; Lutz Kilian
    Abstract: The U.S. Energy Information Administration regularly publishes short-term forecasts of the price of crude oil. Traditionally, such out-of-sample forecasts have been largely judgmental, making them difficult to replicate and justify, and not particularly successful when compared with naïve no-change forecasts, as documented in Alquist, Kilian and Vigfusson (2013). Recently, a number of alternative econometric oil price forecasting models have been introduced in the literature and shown to be more accurate than the nochange forecast of the real price of oil. We investigate the merits of constructing realtime forecast combinations of six such models with weights that reflect the recent forecasting success of each model. Forecast combinations are promising for four reasons. First, even the most accurate forecasting models do not work equally well at all times. Second, some forecasting models work better at short horizons and others at longer horizons. Third, even the forecasting model with the lowest mean-squared prediction error (MSPE) may potentially be improved by incorporating information from other models with higher MSPEs. Fourth, one can think of forecast combinations as providing insurance against possible model misspecification and smooth structural change. We demonstrate that over the past 20 years suitably constructed real-time forecast combinations would have been more accurate than the no-change forecast at every horizon up to two years. Relative to the no-change forecast, forecast combinations reduce the MSPE by up to 18 per cent. They also have statistically significant directional accuracy as high as 77 per cent. We conclude that suitably constructed forecast combinations should replace traditional judgmental forecasts of the price of oil.
    Keywords: Econometric and statistical methods; International topics
    JEL: Q43 C53 E32
    Date: 2013
  2. By: Millard, Stephen (Bank of England); Shakir, Tamarah (Bank of England)
    Abstract: In this paper we examine how the impact of oil price movements on the UK economy differs depending on the underlying source of the shock, that is, whether the oil price has been driven by a supply, or demand, disturbance. In addition we employ an empirical framework with time-varying parameters to allow us to see how the impact of oil price shocks may have developed over time. In line with earlier studies on larger economies, we find that the source of the shock does indeed affect the size and nature of the eventual impact on the UK economy. Oil supply shocks typically lead to larger negative impacts on output and slightly higher increases in inflation relative to oil shocks stemming from shocks to world demand, which typically have smaller and largely positive, impacts on UK output. We find evidence that the nature of shocks in the world oil market has changed over time, with the oil price becoming more sensitive to changes in oil production. There is also evidence that the impact of oil shocks became much smaller from the mid-1980s onwards, although the impact has risen slightly since around 2004.
    Keywords: Oil price shocks; time-varying parameter VARs
    JEL: Q43
    Date: 2013–08–16
  3. By: Sarah L. Stafford (Department of Economics, College of William and Mary)
    Abstract: This paper provides the first empirical analysis of the effectiveness of regulatory enforcement in increasing the environmental and safety performance of U.S. natural gas and hazardous liquid pipeline operators. The analysis combines data on federal regulatory inspections, enforcement actions, and penalties with data on injuries, fatalities, property damage, and barrels of product lost through pipeline "incidents" for 2006-2011 for the 344 largest pipeline operators in the U.S. The results of the analysis do not provide compelling evidence that either federal inspections or civil penalties are particularly effective in increasing performance; however, the number of federal cases initiated against an operator does have a significant effect on many forms of performance, although not for incidents in general. The results also suggest that some targeting of federal enforcement resources is based on past performance, but there may be room for even more effective targeting. Finally, the analysis reveals interesting patterns between state and federal enforcement efforts.
    Keywords: Hazardous Waste, Duration Model, Inspection Timing
    Date: 2013–08–21
  4. By: Chen, Shiu-Sheng
    Abstract: This paper uses monthly data from 1984:M10 to 2012:M8 to show that oil-sensitive stock price indices, particularly those in the energy sector, have strong power in predicting nominal and real crude oil prices at short horizons (one-month-ahead predictions), using both in- and out-of-sample tests. In particular, the forecasts based on oil-sensitive stock price indices are able to outperform significantly the no-change forecasts. For example, using the NYSE Arca (AMEX) oil index as a predictor, the one-month-ahead forecasts for nominal crude oil prices reduce the mean squared prediction error by between 22% (for the West Texas Intermediate oil price) and 28% (for the Dubai oil price). Moreover, we find that the directional forecast based the AMEX oil index is ignificantly better than a 50:50 coin toss. The novelty of this analysis is that it proposes a new and valuable predictor that both reflects timely market information and is readily available for forecasting the spot oil price.
    Keywords: oil-sensitive stock prices; oil prices; out-of-sample prediction
    JEL: C53 G17 Q43 Q47
    Date: 2013–08–22
  5. By: Chen, P.Y.; Chang, C.L.; Chen, C.-C.; McAleer, M.J.
    Abstract: The main purpose of this paper is to evaluate the effect of crude oil price on global fertilizer prices in both the mean and volatility. The endogenous structural breakpoint unit root test, ARDL model, and alternative volatility models, including GARCH, EGARCH, and GJR models, are used to investigate the relationship between crude oil price and six global fertilizer prices. The empirical results from ARDL show that most fertilizer prices are significantly affected by the crude oil price while the volatility of global fertilizer prices and crude oil price from March to December 2008 are higher than in other periods.
  6. By: Michel Damian (PACTE - Politiques publiques, ACtion politique, TErritoires - Institut d'Études Politiques [IEP] - Grenoble - CNRS : UMR5194 - Université Pierre-Mendès-France - Grenoble II - Université Joseph Fourier - Grenoble I)
    Abstract: Ce texte présente la proposition Daly-Correa de taxe et de compensation internationales pour un gel de l'exploitation pétrolière en Amazonie équatorienne - Initiative Yasuni-ITT -, jusqu'à son abandon par le Président de l'Equateur, Rafael Correa, le 15 août 2013. Les enjeux concernent le développement des peuples autochtones, la politique des pays exportateurs de pétrole, la gouvernance internationale, les négociations climatiques et le maintien du carbone en terre, les luttes internes pour le Buen Vivir, mais également l'économie politique de chacune de ces questions, avec tout particulièrement les positions et engagements d'économistes écologiques. Le texte suggère que la diplomatie française pourrait mettre le projet Yasuni-ITT - ainsi que la proposition Daly-Correa de taxation du pétrole exporté, et il conviendrait d'y ajouter des mesures pour le charbon - à l'agenda de la Conférence climatique qui se tiendra à Paris à la fin de l'année 2015. On peut douter que la compensation de projets de ce type devienne un jour réalité. Il faut cependant parler de cela à Paris en 2015. Pour ne pas évacuer un double défi : 1) celui du maintien d'une partie du carbone en terre et, 2) celui du " développement " - quelle que soit la définition que l'on en donne, sans retomber dans les naïvetés développementistes - respectueux des communautés et des populations. Les conflits et négociations contemporains - c'est aussi vrai pour le climat - se rapprochent des sociétés et des acteurs sociaux, qui en deviennent les principaux protagonistes, il est nécessaire d'intégrer ces acteurs extraétatiques, fussent-ils localisés au cœur de l'Amazonie équatorienne.
    Keywords: Yasuni-ITT ; économie écologique ; post-extractivisme ; OPEP ; changement climatique
    Date: 2013–08–26
  7. By: Ahmet Goncu; Mehmet Oguz Karahan; Tolga Umut Kuzubas
    Date: 2013–11
  8. By: Blanco Orozco, Napoleón Vicente; Zuniga Gonzalez, Carlos Alberto
    Abstract: The purpose of this paper was to study the productivity where renewable energy resources and non-renewable resources for generating electricity in power plants connected to the national grid of Nicaragua were used. This article analyzed the total factor productivity of Bioeconomy for the generation of electricity from plants using sugarcane bagasse (biomass) as a renewable resource and petroleum. The data envelopment analysis (DEA) and the Malmquist index were used to measure the total factor productivity of power generation utilities connected to the national grid of Nicaragua. The results obtained by comparing sugar mills connected to the SIN was that Monte Rosa mill has a higher rate of increase in productivity due to the change of total factor productivity and when comparing thermal plants that employ petroleum products in power generation, the more efficient were ALBANISA, GECSA and TIPITAPA POWER; but when comparing thermal plants and some using renewable energy San Antonio sugar mill and ALBANISA were more efficient.
    Keywords: Productivity, Malmquist index, Biomass, Bio Economy, Oil fuel, Energy
    JEL: O14 O43 Q20 Q28
    Date: 2013–02–08
  9. By: Mareike Lange; César Freddy Suarez
    Abstract: It is still difficult for biofuel producers to prove the contribution of their biofuels to reducing carbon emissions because the production of biofuel feedstocks can cause land use change (LUC), which in turn causes carbon emissions. A carbon map can serve as a basis to proof such contribution. We show how to calculate a carbon map according to the sustainability requirements for biofuel production adopted by the European Commission (EU-RED) for the Llanos Orientales in Colombia. Based on the carbon map and the carbon balance of the production process we derive maps showing the possible emission savings that would be generated by biofuels based on palm, soy and sugar cane if an area were to be converted to produce feedstock for these biofuel options. We evaluate these maps according to the criterion contained in the EU-RED of 35% minimum emission savings for each biofuel option compared to its fossil alternative. In addition, to avoid indirect LUC effects of the EURED that might offset any contribution of biofuels to reducing carbon emissions, we argue that all agricultural production should be subject to sustainability assessments. In this effort, our carbon map can be the basis for a sustainable land use planning that is binding for all agricultural production in the coun
    Keywords: biofuels, carbon emissions, Renewable Energy Directive, carbon map, land use change, Colombia
    JEL: Q42 Q58 Q56 Q16
    Date: 2013–08
  10. By: Farhani, Sahbi; Shahbaz, Muhammad; AROURI, Mohamed El Hedi
    Abstract: This paper empirically parallels two approaches: The first one follows the studies of Halicioglu (2009), Jalil and Mahmud (2009), and Jayanthakumaran et al. (2012) which attempt to introduce energy consumption and trade into the environmental function (related carbon dioxide ‘CO2’ emissions to Gross Domestic Product ‘GDP’); whereas the second approach extends the single work of Hossain (2011) which attempts to introduce urbanization as a means to circumvent omitted variable bias. For 11 Middle East and North African (MENA) countries over the period 1980-2009, the empirical results appear to be relevant in light of the Environmental Kuznets Curve (EKC) literature based on the cointegrated and causal relationship. Policy implications indicate that: i) more energy use, higher GDP and greater trade openness tend to cause more CO2 emissions; ii) the inclusion of urbanization in the environmental function improves the final results and positively affects the pollution level; and iii) MENA countries should search the best policy which can stabilize the rise of growth GDP and trade openness, and which can also control the continuous increase in the use of energy.
    Keywords: Environmental Kuznets Curve (EKC) literature, Panel data analysis, Middle East and North African (MENA) countries
    JEL: C5
    Date: 2013–08–16
  11. By: Gürkan, G.; Ozdemir, O.; smeers, Y. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: In competitive electricity markets, markets designs based on power exchanges where supply bidding (barring demand-side bidding) is at the sole short run marginal cost may not guarantee resource adequacy. As alternative ways to remedy the resource adequacy problem, we focus on three different market designs in detail when demand is inelastic, namely an energy-only market with VOLL pricing (or a price cap), an additional capacity market, and operating-reserve pricing. We also discuss demand-side bidding (i.e., a price responsive demand) which can be seen as a categorically different alternative to remedy the resource adequacy problem. We consider a perfectly competitive market consisting of three types of agents: generators, a transmission system operator, and consumers; all agents are assumed to have no market power. For each market design, we model and analyze capacity investment choices of firms using a two-stage game where generation capacities are installed in the first stage and generation takes place in future spot markets at the second stage. When future spot market conditions are assumed to be known a priori (i.e., deterministic demand case), we show that all of these two-stage models with different market mechanisms, except operating-reserve pricing, can be cast as single optimization problems. When future spot market conditions are not known in advance (i.e., under demand uncertainty), we essentially have a two-stage stochastic game. Interestingly, an equilibrium point of this stochastic game can be found by solving a two-stage stochastic program, in case of all of the market mechanisms except operating-reserve pricing. In case of operatingreserve pricing, while the formulation of an equivalent deterministic or stochastic optimization problem is possible when operating-reserves are based on observed demand, this simplicity is lost when operatingreserves are based on installed capacities. We generalize these results for other uncertain parameters in spot markets such as fuel costs and transmission capacities. Finally, we illustrate how all these models can be numerically tackled and present numerical experiments. In our numerical experiments, we observe that uncertainty of demand leads to higher total generation capacity expansion and a broader mix of technologies compared to the investment decisions assuming average demand levels. Furthermore for the same VOLL (or price cap) level and under the assumptions of random demand with finite support and no forced outages, energy-onlymarkets with VOLL pricing tend to lead to total generation capacity below the peak load with a certain probability whereas energy markets with a forward capacity market or operating-reserve pricing result in higher investments. Finally, the regulator decisions (e.g., reserve capacity target) in capacity markets and operating-reserve pricing can be chosen in such a way that results in very similar investment levels and fuel mix of generation capacities in b
    Date: 2013
  12. By: Cleff, Thomas; Rennings, Klaus
    Abstract: Energy efficiency regulation is an important driver for innovations in environmental technologies. Improvements of energy efficiency do not only contribute to reach envi-ronmental policy targets, they can be furthermore economically profitable. E.g. private households can reduce their costs in the long term by using efficient household appli-ances. But how can the specific competitive position on this market be assessed for German producers, and how strong is the competitiveness from firms coming from emerging economies? We analyse - as an example - the global refrigerator market, using the lead market approach for environmental innovations. As our results show, Germany has the most lead market potentials for energy-efficient refrigerators, followed by Korea und Italy. First mover advantages for high-tech energy efficient appliances can be realised on the German market. This is backed by high en-ergy efficiency standards in Europe which diffuse after some years to other countries. Since the pay-off time for energy efficient household appliances is with 7 to 10 years quite long, also a cost strategy with low prices can be successful. Especially in the case when the price of electricity and the national income are low. Markets for such products are for example in Asia and Russia. Producers use the existence of both strategy options to operate with different brands and product lines in different market niches at the same time. For firms in countries that do not have sufficient lead market potentials, innovations in energy efficiency must be targeted to fit the preferences of users in the lead market. The screening of the lead market can take on varying degrees of intensity. A good way for a company to estab-lish ties with a lead market is via producers with long experience on the Lead Market. It can be realised through a simple sales cooperation with local producers or a merger with a local producer of the lead market. --
    Keywords: Household appliances,energy efficiency,refrigerators,lead market,first mover
    JEL: Q55 O33 Q01 Q58
    Date: 2013
  13. By: Ratti, Ronald A (School of Business, University of Western Sydney); Vespignani, Joaquin L. (School of Economics and Finance, University of Tasmania)
    Abstract: There have been substantial increases in liquidity in recent years and real oil prices have almost returned to the high levels achieved before the Global financial crisis. Unanticipated increases in global real M2 lead to statistically significant increases in real oil prices. The cumulative impact of global real M2 on the real price of crude oil is important in the recovery of oil price during 2009 and 2010.
    Keywords: Oil Price, Global Liquidity
    JEL: E31 E32 Q41 Q43
    Date: 2013–03–20
  14. By: De Cian, Enrica; Schymura, Michael; Verdolini, Elena; Voigt, Sebastian
    Abstract: This study analyzes energy intensity trends and drivers in 40 major economies using the WIOD database, a novel harmonized and consistent dataset of input-output table time series accompanied by environmental satellite data. We use logarithmic mean Divisia index decomposition to (1) study trends in global energy intensity between 1995 and 2007, (2) attribute efficiency changes to either changes in technology or changes in the structure of the economy, and (3) highlight sectoral and regional differences. We first show that heterogeneity within each sector across countries is high. These general trends within the sectors are dominated by large economies, first and foremost the United States. In most cases, heterogeneity is lower within each country across the different sectors. Regarding changes of energy intensity at the country level, improvements between 1995 and 2007 are largely attributable to technological change while structural change is less important in most countries. Notable exceptions are Japan, the United States, Australia, Taiwan, Mexico and Brazil where a change in the industry mix was the main driver behind the observed energy intensity reduction. --
    Keywords: Energy intensity,Logarithmic mean Divisia index decomposition,WIOD database
    JEL: Q43 C43
    Date: 2013
  15. By: Gürkan, G.; Ozdemir, O.; smeers, Y. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: We analyze a two-stage game of strategic firms facing uncertain demand and exerting market power in decentralized electricity markets. These firms choose their generation capacities at the first stage while anticipating a perfectly competitive future electricity spot market outcome at the second stage; thus it is a closed loop game. In general, such games can be formulated as an equilibrium problem with equilibrium constraints (EPEC) and examples have been posed in the literature that have multiple or no equilibria. Therefore, it is of interest to define general sets of conditions under which solutions exist and are unique, which would enhance the value of such models for policy andmarket intelligence purposes. In this paper, we consider various types of such a closed loop model regarding the underlying price-demand relations (elastic and inelastic demand), the assumed demand uncertainty with a broad class of continuous distributions, and any finite number of players with symmetric or asymmetric costs. We establish sufficient conditions for the random demand’s probability distribution which guarantee existence and uniqueness of equilibria in most of the cases of this closed loop model. We identify a broad class of commonly used continuous probability distributions satisfying these conditions.
    Keywords: electricity markets;strategic generation investment modeling;demand uncertainty;existence and uniqueness of equilibrium.
    JEL: C62 C68 C72 D43 L94
    Date: 2013
  16. By: di Cosmo, Valeria; Hyland, Marie
    Abstract: This paper uses data from the World Input Output Database (WIOD) to examine channels through which CO2 emissions are embodied within and imported into the European production process. We apply a metric to calculate sectoral emission intensity and thus rank countries and sectors in the EU in terms of their emission intensity, and look at the evolution of patterns of emission intensity in 2005 and in 2009. We use an input-output price model to simulate the effect that a rise in the price of EU-ETS allowances, from $17 to $25 /tonne, would have on the final price of goods in each EU country and sector. We find that all countries in the EU reduced the emission-intensity of their production processes from 2005 to 2009, and we find that the reduction was greatest in those sectors regulated under the ETS. Comparisons of emission intensity between countries show that industries in Central and Eastern Europe are more emission intensive than those of Northern Europe, where industries import emission-intensive goods rather than producing them domestically. Finally we examine the trade in intermediate goods from China into the EU to examine possible increases in carbon leakage from 2005 to 2009. Results show that while emissions embodied in imported intermediate goods have increased from 2005 to 2009, this increase is not limited to, nor particularly notable in, the sectors regulated by the ETS.
    Keywords: CO2 emissions/data/europe/Trade
    Date: 2013–07
  17. By: Bruce A. Babcock (Center for Agricultural and Rural Development (CARD)); Sebastien Pouliot (Center for Agricultural and Rural Development (CARD))
    Abstract: In a recent paper, we estimated the potential demand for ethanol consumed in E85 using an estimated distribution of E85 acceptance by consumers and by calculating the average distance that owners of flex vehicles would have to drive to find an existing gas station that sells the fuel. Two issues that we did not address that will help determine how much E85 will actually be consumed in the future are: (a) the impact on demand from an increase in the number of gas stations that sell E85, and (b) sales capacity constraints at individual stations. It is reasonable to expect that owners of flex vehicles will seek out E85 if the cost per mile traveled with E85 is lower than with regular gasoline. However, there is a practical limit on how much fuel an individual station can sell in a given period. The quantities of ethanol use that we projected when E85 is discounted would exceed the volume that average gasoline stations can actually sell. Not taking these practical limits into account overstates the amount of ethanol that actually would be sold
    Date: 2013–08
  18. By: Marcelo Caffera; Carlos Chávez; Analia Ardente
    Abstract: We study individual compliance behavior with respect to a legal norm in an experimental setting under two different regulatory instruments: emission standards and tradable pollution permits. Compliance to the same set of standards and expected permit holdings was induced with different structures of the fine schedule, namely: a linear and a strictly convex penalty function. Even though our design induces perfect compliance, we find that there are violations in both emissions standards and tradable permits systems, regardless of the penalty structure. Nevertheless, the extent of violations is affected by the penalty parameters under emissions standards, but not under a tradable pollution permits. Notwithstanding, we find that the penalty design has an effect on the average price of permits traded, its dispersion and the number of trades.
    Keywords: Environmental policy, enforcement, penalty structure, emissions standards, emissions trading, laboratory experiments
    JEL: C91 L51 Q58 K42
    Date: 2013
  19. By: Jakub Nowotarski; Eran Raviv; Stefan Trueck; Rafal Weron
    Abstract: In this paper we investigate the use of forecast averaging for electricity spot prices. While there is an increasing body of literature on the use of forecast combinations, there is only a small number of applications of these techniques in the area of electricity markets. In this comprehensive empirical study we apply seven averaging and one selection scheme and perform a backtesting analysis on day-ahead electricity prices in three major European and US markets. Our findings support the additional benefit of combining forecasts for deriving more accurate predictions, however, the performance is not uniform across the considered markets. Interestingly, equally weighted pooling of forecasts emerges as a viable robust alternative compared with other schemes that rely on estimated combination weights. Overall, we provide empirical evidence that also for the extremely volatile electricity markets, it is beneficial to combine forecasts from various models for the prediction of day-ahead electricity prices. In addition, we empirically demonstrate that not all forecast combination schemes are recommended.
    Keywords: Electricity price forecasting; Forecasts combination; ARX model; Day-ahead market;
    JEL: C22 C24 C53 Q47
    Date: 2013–08–21
  20. By: Farhani, Sahbi; Shahbaz, Muhammad; Arouri, Mohammed
    Abstract: This paper examines the impact of natural gas consumption, real gross fixed capital formation and trade on the real GDP in case of Tunisia over the period of 1980-2010. We used Auto-Regressive Distributed Lag (ARDL) bounds testing approach to test the existence of long run relationship between the variables. The Vector Error Correction Method (VECM) Granger approach is applied to test the direction of causal relation between the series. Our findings indicate the existence of long-run relationship among the variables. Natural gas consumption, real gross fixed capital formation and trade add in economic growth. Natural gas consumption, real gross fixed capital formation and real trade Granger cause real GDP. These findings open up new insights for policy makers to formulate a comprehensive energy policy to sustain economic growth for long run.
    Keywords: Natural gas consumption, Economic growth, Tunisia, ARDL approach
    JEL: C1
    Date: 2013–08–18
  21. By: OECD
    Abstract: This working paper assesses national policy and governance mechanisms that can influence green growth in Chinese cities. It applies the OECD conceptual framework for urban green growth to examine the potential challenges and opportunities for increasing economic growth through reducing the environmental impact of urban land use, transport and buildings; through improving water and air quality; and through fostering supply and demand of green products and services. The paper first situates the issue of green growth within the nexus of urbanisation and environmental challenges now facing China. This is followed by a review of environmental and quality of life challenges posed by rapid urbanisation. Opportunities for national policies to influence green growth in four key urban policy sectors are then examined. The paper concludes with an assessment of governance challenges and considers potential changes to facilitate economic growth while reducing the environmental impact of cities.
    Keywords: sustainable development, innovation, transport, renewable energy, China, climate change, energy efficiency, urban sustainability, cities, green technologies, green growth, green economy, multi-level governance, urban development, regional clusters, green cities, attractiveness, metro-region
    JEL: O18 O44 Q01 Q55 Q58 R11 R58
    Date: 2013–05–17
  22. By: Kristinn Hermannsson (Department of Economics, University of Strathclyde); Stuart G McIntyre
    Abstract: We examine the complications involved in attributing emissions at a sub-regional or local level. Specifically, we look at how functional specialisation embedded within the metropolitan area can, via trade between sub-regions, create intra- metropolitan emissions interdependencies; and how this complicates environmental policy implementation in an analogous manner to international trade at the national level. For this purpose we use a 3-region emissions extended input-output model of the Glasgow metropolitan area (2 regions: city and surrounding suburban area) and the rest of Scotland. The model utilises data on commuter flows and household consumption to capture income and consumption flows across sub-regions. This enables a carbon attribution analysis at the sub-regional level, allowing us to shed light on the signficant emissions interdependencies that can exist within metropolitan area.
    Keywords: CO2 emissions, environmental accounting, regional interdependencies, metropolitan areas, commuting
    JEL: H73 Q56 R12 R15
    Date: 2013–08
  23. By: Catherine Locatelli (PACTE - Politiques publiques, ACtion politique, TErritoires - Institut d'Études Politiques [IEP] - Grenoble - CNRS : UMR5194 - Université Pierre-Mendès-France - Grenoble II - Université Joseph Fourier - Grenoble I)
    Abstract: The Russian gas sector is undergoing significant changes which is opening the way for an original reform. Because of the particular institutional and economic context of the country, this reorganisation is not taking place along the lines of the de-integrated model of the EU. It is characterised by increasingly significant competitive fringes. Gazprom remains the main actor of the Russian gas industry but the company is facing challenges on its main export market and an increasing competition at home with the arrival of new gas firms, independents and Russian oil companies. For Gazprom, the aim issue is to develop more flexible strategies for export markets but also on its internal market. These internal changes will not be without consequence on the country's export strategy and the implication for international markets could be considerable.
    Keywords: Russia ; reform of the gas organisational model ; institutional analysis ; Gazprom ; gas industry
    Date: 2013–06
  24. By: Ruiz Estrada, Mario Arturo
    Abstract: Global climate change has a potentially large impact on economic growth but measuring their economic impact is subject to a great deal of uncertainty. The central objective of our paper is to set forth a model – the macroeconomics evaluation of climate change (MECC) model – to evaluate the impact of climate change on GNP growth. The model is based on five basic indicators – (i) the climate change growth rates (αi); (ii) the national climate change vulnerability rate (ΩT); (iii) the climate change magnitude rate (Π); (iv) the economic desgrowth rate (δ); (v) and the CC-Surface. In addition, we apply the MECC Model to the case of China to evaluate its impact on the Chinese economy.
    Keywords: Climate change, economic desgrowth, China
    JEL: O4 O40 Q54
    Date: 2013–08–17
  25. By: Patrick Gneuss (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Wolfgang Schmid (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Reimund Schwarze
    Abstract: Linear mixed effects models have been widely used in the spatial analysis of environmental processes. However, parameter estimation and spatial predictions involve the inversion and determinant of the n times n dimensional spatial covariance matrix of the data process, with n being the number of observations. Nowadays environmental variables are typically obtained through remote sensing and contain observations of the order of tens or hundreds of thousand on a single day, which quickly leads to bottlenecks in terms of computation speed and requirements in working memory. Therefore techniques for reducing the dimension of the problem are required. The present work analyzes approaches to approximate the spatial covariance function in a real dataset of remotely sensed carbon dioxide concentrations, obtained from the Atmospheric Infrared Sounder of NASA's 'Aqua' satellite on the 1st of May 2009. In a cross-validation case study it is shown how fixed rank kriging, stationary covariance tapering and the full-scale approximation are able to notably speed up calculations. However the loss in predictive performance caused by the approximation strongly differs. The best results were obtained for the full-scale approximation, which was able to overcome the individual weaknesses of the fixed rank kriging and the covariance tapering.
    Keywords: spatial covariance function, fixed rank kriging, covariance tapering, full-scale approximation, large spatial data sets, mid-tropospheric CO2, remote sensing, efficient approximation
    Date: 2013–08
  26. By: Soumik Pal; Ting-Kam Leonard Wong
    Abstract: We introduce a framework to analyze the relative performance of a portfolio with respect to a benchmark market index. We show that this relative performance has three components: a term that can be interpreted as energy coming from the market fluctuations, a relative entropy term that measures "distance" between the portfolio holdings and the market capital distribution, and another entropy term that can be controlled by the trader by choosing a suitable strategy. The first aids growth in the portfolio value, and the second poses as relative risk of being too far from the market. We give several explicit controls of the third term that allows one to outperform a diverse volatile market in the long run. Named energy-entropy portfolios, these strategies work in both discrete and continuous time, and require essentially no probabilistic or structural assumptions. They are well-suited to analyze a hierarchical portfolio of portfolios and attribute relative risk and reward to different levels of the hierarchy. We also consider functionally generated portfolios (introduced by Fernholz) in the case of two assets and the binary tree model and give a novel explanation of their efficacy.
    Date: 2013–08
  27. By: McKendree, Melissa G.S.; Ortega, David L.; Widmar, Nicole Olynk; Wang, H. Holly
    Abstract: The impact of environmental disasters on consumers’ perceptions and preferences for specific food items has seldom been studied in the applied economics literature. Recent aquatic disasters, namely the Deepwater Horizon Oil Spill and Fukushima Daiichi Nuclear Disaster, have had profound impacts on fisheries serving US consumers and on agribusinesses within the aquaculture industry. This study explores consumer preferences using a nation-wide representative sample, and finds that twenty-nine percent of US consumers sought to reduce their seafood consumption due to the Deepwater Horizon Oil Spill and one-third of respondents indicated they sought to reduce their seafood consumption in the wake of the Daiichi nuclear disaster Additionally, over 50% believed that Asian seafood poses a consumer health risk because of the Japanese nuclear disaster. Understanding key factors that influence consumer behavior in the wake of environmental disasters can make fisheries, seafood industries and agribusiness more resilient when facing such catastrophic events. Our results find that key socio-demographic variables affect consumer behavior including gender, age, food safety concerns, value for country of origin labeling, and geographic location. Careful and efficient response by the seafood supply chain will enable effective communication with consumers and allow for optimal policy decision-making.
    Keywords: Seafood, Consumer perceptions, Deepwater Horizon, Fukushima Daiichi, Aquatic disaster, Agribusiness, Environmental Economics and Policy, Livestock Production/Industries, Marketing, Q00, Q18, Q22,
    Date: 2013–08

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