nep-ene New Economics Papers
on Energy Economics
Issue of 2014‒06‒22
25 papers chosen by
Roger Fouquet
London School of Economics

  1. Why has energy efficiency not scaled-up in the industrial and commercial sectors in Ukraine ? an empirical analysis By Hochman, Gal; Timilsina, Govinda R.
  2. Fracking Growth By Thiemo Fetzer
  3. The Danish Agricultural Revolution in an Energy Perspective: A Case of Development with Few Domestic Energy Sources By Sofia Teives Henriques; Paul Sharp
  4. Energy poverty indicators: Conceptual issues. Part I: The ten-percent-rule and double median/mean indicators By Schuessler, Rudolf
  5. What drives changes in carbon emissions? An index decomposition approach for 40 countries By Schymura, Michael; Voigt, Sebastian
  6. From Expert Elicitations to Integrated Assessment: Future Prospects of Carbon Capture Technologies By Elena Claire Ricci; Valentina Bosetti; Erin Baker
  7. Unilateral Climate Policy and Foreign Direct Investment with Firm and Country Heterogeneity By Francesca Sanna-Randaccio; Roberta Sestini; Ornella Tarola
  8. Do Philippine Households Lead a Carbon Intensive Lifestyle? By Moises Neil V. Seriño
  9. Correcting agglomeration economies: How air pollution matters By Marion Drut; Aurélie MAHIEUX
  10. Markov Switching GARCH models for Bayesian Hedging on Energy Futures Markets By Roberto Casarin; Monica Billio; Anthony Osuntuyi
  11. Sharing R&D Investments in Cleaner Technologies to Mitigate Climate Change By Abeer El-Sayed; Santiago J. Rubio
  12. Incentive Regulation and Benchmarking of Network Security By Tooraj Jamasb; Rabindra Nepal
  13. Modelling the world economy at the 2050 horizon By Jean Fouré; Agnès Bénassy-Quéré; Lionel Fontagné
  14. Greenhouse gas intensity of three main crops and implications for low-carbon agriculture in China By Wen Wang; Yuebin Lin; Liping Guo; Yingchun Li; Man Su; Christian de Perthuis; Xiaotang Ju; Erda Lin; Dominic Moran
  15. Dirty and perverse: regulation-induced pollution substitution By Gibson, Matthew
  16. On the effect of social norms to reduce pollution By A. Mantovani; O. Tarola; C. Vergari
  17. Industrial Policy for a Sustainable Growth Path By Karl Aiginger
  18. Forecasting conditional volatility on the RIN market using MS GARCH model By Kakorina, Ekaterina
  19. Dealing with Technological Risk in a Regulatory Context: The Case of Smart Grids By Paulo Moisés Costa; Nuno Bento; Vítor Marques
  20. The impact of the Euro area macroeconomy on energy and non-energy global commodity prices By Papież, Monika; Śmiech, Sławomir; Dąbrowski, Marek A.
  21. Pollution effects on labor supply and growth By Stefano Bosi; David Desmarchelier; Lionel Ragot
  22. Cournot duopoly and environmental R&D under regulator’s precommitment to an emissions tax By Yasunori Ouchida; Daisaku Goto
  23. Cluster-Entwicklung in einem dreistufigen Modell: Das Fallbeispiel des Berlin-Brandenburger Energietechnik-Clusters By Tomenendal, Matthias; Lange, Hans Rüdiger
  24. Averting Catastrophes: The Strange Economics of Scylla and Charybdis By Ian W.R. Martin; Robert S. Pindyck
  25. Gamma discounters are short-termist By Gollier, Christian

  1. By: Hochman, Gal; Timilsina, Govinda R.
    Abstract: Improvement of energy efficiency is one of the main options to reduce energy demand and to reduce greenhouse gas emissions in Ukraine. However, large-scale deployment of energy efficient technologies has been constrained by several financial, technical, information, behavioral, and institutional barriers. This study assesses these barriers through a survey of 500 industrial and commercial firms throughout Ukraine. The results from the survey were used in a cumulative multi-logit model to understand the importance of the barriers. The analysis shows that financial barriers caused by high upfront costs of energy efficient technologies, higher costs of finance, and higher opportunity costs of energy efficiency investment are key barriers to the adoption of energy efficiency measures in Ukraine. Institutional barriers particularly lack government policies, which also contributes to the slow adoption of energy efficient technologies in the country. The results suggest targeted policy and credit enhancements could help trigger adoption of energy efficient measures. The empirical analysis shows strong inter-linkages among the barriers and finds heterogeneity between industrial and commercial sectors on the realization of the barriers.
    Keywords: Climate Change Economics,Energy Production and Transportation,Environment and Energy Efficiency,Energy and Environment,Climate Change Mitigation and Green House Gases
    Date: 2014–06–01
  2. By: Thiemo Fetzer
    Abstract: This paper estimates the effect of the shale oil and gas boom in the United States on local economic outcomes. The main source of exogenous variation to be explored is the location of previously unexplored shale deposits. These have become technologically recoverable through the use of hydraulic fracturing and horizontal drilling. I use this to estimate the localised effects from resource extraction. Every oil- and gas sector job creates about 2.17 other jobs. Personal incomes increase by 8% in counties with at least one unconventional oil or gas well. The resource boom translates into an overall increase in employment by between 500,000 - 600,000 jobs. A key observation is that, despite rising labour costs, there is no Dutch disease contraction in the tradable goods sector, while the non-tradable goods sector contracts. I reconcile this finding by providing evidence that the resource boom may give rise to local comparative advantage, through locally lower energy cost. This allows a clean separation of the energy price effect distinct from the local resource extraction effects.
    Keywords: Resource boom, fracking, shale, spillovers, natural gas, energy prices
    JEL: Q33 O13 N52 R11 L71
    Date: 2014–06
  3. By: Sofia Teives Henriques (University of Southern Denmark); Paul Sharp (University of Southern Denmark)
    Abstract: Is a lack of domestic energy resources necessarily a limiting factor to growth, as suggested for example by the work of Robert C. Allen? We examine the case of Denmark - a country which historically had next to no domestic energy resources - for which we present new historical energy accounts for the years 1800-1913. Focusing on the period of the first Industrial Revolution, we demonstrate that Denmark’s take off at the end of the nineteenth century was in fact relatively energy dependent. We relate this to her well-known agricultural transformation and development through the dairy industry. The Danish cooperative creameries, which spread throughout the country over the last two decades of the nineteenth century, were dependent on coal – a point which has not been stressed before in the literature. Denmark had next to no domestic coal deposits, but we demonstrate that her geography allowed cheap availability throughout the country through imports. Thus, Denmark might be seen as the exception that proves the rule: although modern energy forms are important for growth, domestic energy resources are not necessary, as long as it is possible to import them cheaply from elsewhere.
    Keywords: Coal, dairying, Denmark, energy transition
    JEL: N5 Q4
    Date: 2014–06
  4. By: Schuessler, Rudolf
    Abstract: Energy poverty, long considered a problem limited to developing countries only, is now widely acknowledged as a challenge for advanced OECD countries as well. How energy poverty is perceived depends on the conceptualization and assessment of the underlying phenomena: inappropriately high costs for the provision of adequate energy services and/or a resulting push into poverty. In Europe, the UK has spearheaded the definition and measurement of such phenomena. The most common way to measure energy poverty is to set a 10 percent threshold of energy-related expenditure relative to net income. At the time this indicator was being developed, it equaled double the median share of energy expenditure relative to the income of all residents. This paper discusses approaches to measuring energy poverty and argues that the double median share threshold endorsed by British researchers is ill-suited for determining energy poverty. A fixed percentage threshold may be more suitable, provided it is empirically confirmed, adequately modified, and regularly updated. --
    Keywords: energy poverty,indicators,social justice
    JEL: I32
    Date: 2014
  5. By: Schymura, Michael; Voigt, Sebastian
    Abstract: This study analyzes carbon emission trends and drivers in 40 major economies using the WIOD database, a 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 carbon emissions between 1995 and 2009, (2) attribute changes in carbon emissions to either influences of economic activity, changes in technology, changes in the structure of the economy, alterations of the fuel mix, or changes in carbon intensities of specific fuel types, and (3) highlight sectoral and regional differences. We first find that heterogeneity in each country is higher than heterogeneity in sectors. This finding might lead to the conclusion that, in order to abate CO2, structural conditions in sectors prevail over regional circumstances. Regarding our results of the decomposition analysis, the drivers of changes in carbon emissions are very heterogeneous. Among the world's top ten emitters, in only three countries - China, Germany and Canada - the main driver of an improved emissions performance was technological change. Conversely, in Japan and Australia structural change of the economy contributed to less severe increases of emissions. The deployment of cleaner energy sources had a positive in some, mainly developed, economies. Moreover, our results for the global level suggest a general move towards more efficient means of production. --
    Keywords: Carbon emissions,Logarithmic mean Divisia index decomposition,WIOD database
    JEL: Q43 C43
    Date: 2014
  6. By: Elena Claire Ricci (Fondazione Eni Enrico Mattei (FEEM), Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC) and Università degli Studi di Milano, Italy); Valentina Bosetti (Fondazione Eni Enrico Mattei (FEEM) and IEFE, Bocconi University, Italy); Erin Baker (University of Massachusetts at Amherst, USA)
    Abstract: This paper analyzes the future prospects of carbon capture technologies. The first part of the analysis presents and discusses the results of an expert elicitation survey on a broad range of carbon capture options. The survey collected probabilistic estimates on the future values of energy penalty under three different scenarios of R&D investments and climate policies from twelve leading European experts from both academia and industry. In the second part of the analysis, the elicitation results are used as input to an integrated assessment model. This allows us to evaluate the potentials of success of this technology within a broad mitigation portfolio of options and under different policy assumptions, in an intertemporal optimizing setting. Both parts of the work provide results that are of interest to policy-makers, integrated-assessment and energy modelers.
    Keywords: Carbon Capture, Expert Elicitation, Integrated Assessment Modeling
    JEL: Q5 Q55
    Date: 2014–04
  7. By: Francesca Sanna-Randaccio (Department of Computer, Control & Management Engineering, Sapienza University of Rome); Roberta Sestini (Sapienza University of Rome. Department of Computer, Control & Management Engineering); Ornella Tarola (Sapienza University of Rome, DISSE)
    Abstract: We contribute to the debate on the impact of unilateral climate policy with a two-country two-firm international oligopoly model accounting for endogenous plant location and heterogeneity in both country size and firm’s emissions technology. Our results suggest that, if the carbon price differential is moderate as compared to unit transport costs and the relative size of the highly regulated country is big enough, a no relocation equilibrium may prevail also in the long run. A large market asymmetry coupled with a small technology gap emerges as the only configuration in which unilateral climate policy leads to a fall in world emissions irrespective of the optimal location choice. Thus for being effective and not leading to production relocation, unilateral climate policy should be moderate, implemented by a sufficiently large area and complemented by mechanisms for promoting the international transfer of clean technologies. Welfare implications are also discussed.
    Keywords: Foreign Direct Investment. Carbon leakage. Climate Policy, Emissions Technologies
    JEL: F12 F23 Q58
    Date: 2014–05
  8. By: Moises Neil V. Seriño (Georg-August-University Göttingen)
    Abstract: This paper estimates carbon emission from household consumption and investigates its determinants. We derive total household carbon emission by using the mechanism of input-output analysis combine with household expenditure for 2005 and 2006. Our estimation shows that fuel and light followed by transportation are the most carbon intensive goods while nondurable goods are the least carbon intensive. After controlling for household characteristics, the analyses reveal that income has a significant nonlinear relationship with carbon emission depicting an inverted U-shaped. However, when using asset index as proxy for households’ economic status, no turning point is observed and emission increases as households accumulate more assets. Quintile estimates show that there is a huge disparity in emission between households from the poorest quintile and richest quintile. With this, an option for low-carbon consumption is deemed necessary; else it is imminent that households tend to lead a carbon intensive lifestyle as they get more affluent.
    Keywords: carbon emission; household consumption; income quintiles; input-output
    JEL: Q56 R15 R20 D12
    Date: 2014–06–18
  9. By: Marion Drut (EQUIPPE - ECONOMIE QUANTITATIVE, INTEGRATION, POLITIQUES PUBLIQUES ET ECONOMETRIE - Université Lille I - Sciences et technologies - Université Lille II - Droit et santé - Université Lille III - Sciences humaines et sociales - PRES Université Lille Nord de France); Aurélie MAHIEUX (IFSTTAR/AME/DEST - Dynamiques Economiques et Sociales des Transports - IFSTTAR - PRES Université Paris-Est)
    Abstract: The aim of the paper is to correct standard measures of agglomeration economies in order to account for air pollution generated by commuting. This paper examines the impact of nitrogen oxide (NOX) on worker productivity. NOX emissions are primarily released by the transportation sector. Literature on agglomeration economies is abundant and highlights the positive role of density on productivity. Nevertheless, this literature does not take into account the environmental impact generated by a better accessibility, namely commuting. We rst develop a general framework to estimate the agglomeration economies for the 304 French employment areas. In line with the literature, we nd an estimate of 0.05 for the elasticity coe cient of productivity with respect to density. Then, we introduce NOX emissions. The estimates suggest that emissions reduce the positive e ect of density on productivity by more 13%. The model con rms that air pollution matters. Agglomeration economies should be corrected by the environmental impacts associated with the enhancement of accessibility such as the implementation of a new transport infrastructure or policy.
    Keywords: agglomeration economies ; accessibility ; atmospheric pollution ; transport policies
    Date: 2014
  10. By: Roberto Casarin (Department of Economics, University of Venice Cà Foscari); Monica Billio (Department of Economics, University of Venice, Cà Foscari); Anthony Osuntuyi (Department of Mathematics, Obafemi Awolowo University)
    Abstract: A new Bayesian multi-chain Markov Switching GARCH model for dynamic hedging in energy futures markets is developed by constructing a system of simultaneous equations for the return dynamics on the hedged portfolio and futures. More specifically, both the mean and variance of the hedged portfolio are assumed to be governed by two unobserved discrete state processes, while the futures dynamics is driven by a univariate hidden state process. The noise in both processes are characterized by a MS-GARCH model. This formulation has two main practical and conceptual advantages. First, the different states of the discrete processes can be identified as different volatility regimes. Secondly, the parameters can be easily interpreted as different hedging components. Our formulation also provides an avenue to analyze the contribution of the volatility dynamics and state probabilities to the optimal hedge ratio at each point in time. Moreover, the combination of the expected utility framework with regime-switching models allows the definition of a robust minimum variance hedging strategy to also account for parameter uncertainty. Evidence of changes in the optimal hedging strategies before and after the financial crisis is found when the proposed robust hedging strategy is applied to crude oil spot and futures markets.
    Keywords: Energy futures; GARCH; Hedge ratio; Markov-switching.
    JEL: C1 C11 C15 C32 F31 G15
    Date: 2014
  11. By: Abeer El-Sayed (Department of Economic Analysis and ERICES, University of Valencia, Spain); Santiago J. Rubio (Department of Economic Analysis and ERICES, University of Valencia, Spain)
    Abstract: This paper examines international cooperation on technological development as an alternative to international cooperation on GHG emission reductions. It is assumed that when countries cooperate they coordinate their investments so as to minimize the agreement costs of controlling emissions and that they also pool their R&D efforts so as to fully internalize the spillover effects of their investments in R&D. In order to analyze the scope of cooperation, an agreement formation game is solved in three stages. First, countries decide whether or not to sign the agreement. Then, in the second stage, signatories (playing together) and non-signatories (playing individually) select their investment in R&D. Finally, in the third stage, each country decides its level of emissions non-cooperatively. For linear environmental damages and quadratic investment costs, our findings show that the maximum participation in a R&D agreement consists of six countries and that participation decreases as the coalition information exchange decreases until a minimum participation consisting of three countries is reached. We also find that the grand coalition is stable if the countries sign an international research joint venture but in this case the effectiveness of the agreement is very low.
    Keywords: International Environmental Agreements, R&D Investment, Technology Spillovers, Coalition Information Exchange, Research Joint Ventures
    JEL: D74 F53 H41 Q54 Q55
    Date: 2014–04
  12. By: Tooraj Jamasb (Durham University Business School); Rabindra Nepal (School of Economics, The University of Queensland)
    Abstract: The incentive regulation of costs related to physical and cyber security in electricity networks is an important but relatively unexplored and ambiguous issue. These costs can be part of a cost efficiency benchmarking or alternatively dealt separately. This paper assesses the issues and options of incorporating network security costs within incentive regulation in a benchmarking framework. The relevant concerns and limitations associated with network security costs accounting and classification, choice of cost drivers, data adequacy and quality and the relevant benchmarking methodologies are discussed. The discussion suggests that the present regulatory treatment of network security costs using benchmarking is rather limited to being an informative regulatory tool than being deterministic. We discuss how alternative approaches outside of the benchmarking framework such as the use of stochastic cost-benefit analysis and cost-effectiveness analysis of network security investments can complement the results obtained from benchmarking.
    Date: 2014–06–10
  13. By: Jean Fouré (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Agnès Bénassy-Quéré (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Lionel Fontagné (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Department of Economics - European University Institute)
    Abstract: Economic analysis is increasingly addressing long-term issues (such as global warming) that require a dynamic baseline for the world economy. In this article, we develop a three-factor (capital, energy, labour) macroeconometric (MaGE - Macroeconometrics of the Global Economy) model, and project growth for 147 countries to 2050. We improve on the literature by the following: (i) accounting for the energy constraint through dynamic modelling of energy productivity, (ii) modelling female participation rates consistent with education catch-up, (iii) departing from the assumptions of either a closed economy or full capital mobility (by applying a Feldstein-Horioka type relationship between saving and investment rates), and (iv) offering a fully consistent treatment of the Balassa-Samuelson effect. These innovative features have a sizeable impact on projected GDP.
    Keywords: GDP projections; long run; global economy
    Date: 2013–08–16
  14. By: Wen Wang; Yuebin Lin; Liping Guo; Yingchun Li; Man Su; Christian de Perthuis; Xiaotang Ju; Erda Lin; Dominic Moran
    Abstract: China faces significant challenges in reconciling food security goals with the objective of becoming a low-carbon economy. Agriculture accounts for approximately 11% of China's national greenhouse gas (GHG) emissions with cereal production representing a large proportion (about 32%) of agricultural emissions. Minimizing emissions per unit of product is a policy objective and we estimated the GHG intensities (GHGI) of rice, wheat and maize production in China from 1985 to 2010. Results show significant variations of GHGIs among Chinese provinces and regions. Relative to wheat and maize, GHGI of rice production is much higher owing to CH4 emissions, and is more closely related to yield levels. In general, the south and central has been the most carbon intensive region in rice production while the GHGI of wheat production is highest in north and northwest provinces. The southwest has been characterized by the highest maize GHGI but the lowest rice GHGI. Compared to the baseline scenario, a 2% annual reduction in N inputs, combined with improved water management in rice paddies, will mitigate 17% of total GHG emissions from cereal production in 2020 while sustaining the required yield increase to ensure food security. Better management practices will entail additional gains in soil organic carbon further decreasing GHGI. To realize the full mitigation potential while maximizing agriculture development, the design of appropriate policies should accommodate local conditions.
    Keywords: food security, low-carbon agriculture, greenhouse gas intensity, China
    Date: 2014
  15. By: Gibson, Matthew
    Keywords: Social and Behavioral Sciences
    Date: 2014–06–17
  16. By: A. Mantovani; O. Tarola; C. Vergari
    Abstract: We analyse how market competition in a vertically differentiated polluting industry is affected by product variants that comply at different levels with "green" social norms. A green consumption behaviour is considered as a byword of good citizenship. Consumer preferences depend on a combination of hedonic quality and compliance with the norms. Assuming that the high hedonic quality variant complies less with the norms than the low hedonic quality one, we characterize the different equilibrium configurations, depending on the perceived intensity of such norms. Then, we focus on the role that institutions may have in using these norms to reduce pollution emissions.
    JEL: D62 L13
    Date: 2014–06
  17. By: Karl Aiginger (WIFO)
    Abstract: Industrial policy is back on the agenda and the consensus is that it must be different "this time" from the past. We redefine industrial policy for industrialised countries as a strategy to promote "high-road competitiveness", understood as the ability of an economy to achieve "Beyond-GDP"' Goals. High-road strategies are based on advanced skills, innovation, supporting institutions, ecological ambition and an activating social policy. This "new industrial policy" is systemic, working in alignment with other policy strands and supporting social and environmental goals; it affects the structure of the economy as the whole not only the manufacturing sector. Short-term actions, such as protecting employment in unviable companies, low prices for fossil fuels, or reducing wages in high-income economies are counterproductive. To pursue an industrial policy that targets society''s ultimate goals without public micromanagement will be challenging. It could be achieved 1. by setting incentives, particularly those impacting on technical progress (e.g., to make it less labour-saving and more energy-saving), 2. by the use of the important role governments play in the education and research sectors, 3. by greater public awareness and 4. if consumer preferences will call for socio-ecological transition.
    Keywords: New industrial policy, climate change, competitiveness, innovation strategy
    Date: 2014–06–10
  18. By: Kakorina, Ekaterina
    Abstract: In the recent years the topic about pollution of environment is quite popular. Many countries organize the government policy taking into account environmentally friendly policy. Maybe because of big share of the world pollution the USA organized not only the emission market, but also the RIN market where RIN is a 38-digit serial number, tax, security and investment. All actors of the RIN market can be divided into six groups: farmers, refiners, blenders, owners of fuel stations, EPA and private agencies. Models which can forecast are ARMA, ARMA-GARCH, GARCH-M and MS ARMA-GARCH. We identify that non-path-dependent MS AR(1)-GARCH-M(1,1) model cannot forecast better than AR(1)-t-GARCH(1,1) model, because it cannot forecast zero returns. Additionally, according to White’s test we identify than standard normal distribution is better then Student-t. At the same time our forecast of volatility using MS GARCH with standard normal distribution does not work the right way. In other words, forecasted volatility and returns are not fluctuated and also forecasted returns differ significantly from the real returns, especially, after the fourth period. Futhermore, we compare our price forecast with data which are presented by EPA (bid and ask prices). Using White test again, we find that the statistic is less in our case. In addition, the price does not change the way it should do, in other words, maybe we do not include a significant factor in our analysis.
    Keywords: RIN market, Renewable Identification Number, ecology, security, volatility forecast, price forecast, MS GARCH
    JEL: C5 C58 G17 Q28
    Date: 2014–07
  19. By: Paulo Moisés Costa (ESTG, Instituto Politécnico de Viseu and INESC TEC, Portugal); Nuno Bento (ISCTE, Instituto Universitário de Lisboia and Dinâmia'CET-IUL, Portugal); Vítor Marques (Entidade Reguladora dos Serviços Energéticos, Portugal)
    Abstract: This paper aims to analyze the implementation of innovations, featuring technological risk, in network industries through the development of a suitable regulatory scheme. In particular, Smart grid (SG) technologies which have the potential to save operational costs and reduce the need for further investments in the grid, but are still surrounded by many uncertainties which discourage the investment. Therefore, a suitable regulatory scheme should be developed in order to incentivize network operators to invest in SG technologies, besides of conventional investments that yield the regulatory and warranted revenue. Through a decision model, it is shown that incentive regulation encourages the adoption of innovations that enhance efficiency. Yet the consideration of technological risk into the analysis reduces the set of investment opportunities. In addition, the model assesses the impact on firm’s decision of different types of projects that can displace more or less conventional capital and reduce more or less operational costs. Therefore, this paper provides a new tool that can be used to evaluate the effect of different regulatory designs in a wide range of investments with the characteristics of SG.
    Keywords: Economics of regulation; Price-cap; Cost-plus, Technological change; Smart grids.
    JEL: O33 L51 L94
    Date: 2014–06
  20. By: Papież, Monika; Śmiech, Sławomir; Dąbrowski, Marek A.
    Abstract: The aim of the paper is the analysis of the links between the real and financial processes in the euro area and energy and non-energy commodity prices. Monthly data spanning from 1997:1 to 2013:12 and the structural VAR model are used to analyse the relations between global commodity prices and the euro area economy. The analysis is performed for three sub-periods in order to capture potential changes in these relations in time. The main finding of the study reveals that commodity prices in the euro area do not respond to impulses from production (the economic activity), while commodity prices strongly react to impulses from financial processes, that is, the interest rates in the euro area and the dollar exchange rate to the euro (especially in the period before the global financial crisis). The study also indicates tightening the relations between energy and non-energy commodity prices.
    Keywords: commodity prices, real economy, financial market, SVAR
    JEL: C3 E3 E4 Q1 Q4
    Date: 2014–06–14
  21. By: Stefano Bosi; David Desmarchelier; Lionel Ragot
    Abstract: Some recent empirical contributions have pointed out a significant negative impact of pollution on labor supply. These impacts have been largely ignored in the theoretical literature, which, instead, focused on the case of pollution effects on consumption demand. In this paper, we study the short and long-run effects of pollution in a Ramsey model where pollution and labor supply are nonseparable arguments in households’ preferences. We determine sufficient conditions for existence and uniqueness of a longterm equilibrium and we show how large (negative) effects of pollution on labor supply may promotes macroeconomic volatility (deterministic cycles near the steady state) through a flip bifurcation.
    Keywords: pollution, endogenous labor supply, Ramsey model.
    JEL: E32 O44
    Date: 2014
  22. By: Yasunori Ouchida (Department of Economics, Hiroshima University); Daisaku Goto (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: This paper presents examination of environmental R&D of Cournot duopolists with end-of-pipe technology under a regulator’s precommitment to an emissions tax. Results show that, in the presence of technological spillover effect, the government invariably prefers environmental R&D cartelization to environmental R&D competition. In addition, this paper, in stark contrast to those presenting earlier studies, reveals that consumer surplus is not necessarily maximized by environmental research joint venture (ERJV) cartelization, although there invariably exist private incentives to firms for ERJV cartelization as well as social incentives for it.
    Keywords: R&D coordination; Environmental R&D; End-of-pipe technology; Precommit- ment ability; Emission tax
    JEL: O32 L13 Q55 Q58
    Date: 2014–06
  23. By: Tomenendal, Matthias; Lange, Hans Rüdiger
    Abstract: Die Entwicklung von Clustern ist ein komplexer Prozess, in dem sowohl zentral und formal initiierte als auch dezentrale und selbst organisierte Aktivitäten der Cluster-Teilnehmer eine Rolle spielen. Untersuchungen zur Clusterentwicklung, die beides betrachten, sind selten. An dieser Stelle setzt der vorliegende Beitrag an, der auf eine strukturationstheoretische Fundierung von Clustern rekurriert und diese mit dem Konstrukt der Netzwerkidentität kombiniert. Auf Basis von Beobachtungen und rezipierten Narrationen im Berlin-Brandenburger Energietechnik-Cluster wird ein dreistufiges Clusterentwicklungs-Modell aus Cluster-Potenzialen, Cluster-Initiativen und Cluster-Projekten entworfen, das im Kern einen identitätsbasierten Strukturationsprozess darstellt. -- Cluster development is a complex process of centrally and formally initiated activities as well as decentral and self-organized processes. Only few authors strive to reconcile the central with the decentral perspective in this context. Here, our paper aims to make a contribution by applying the concept of network identity to the structuration of clusters. Based on observations and collected narratives in the Berlin-Brandenburg Energy Technology Cluster, we develop an identity based model of cluster development with the three stages of cluster potentials, cluster initiatives and cluster projects.
    Date: 2014
  24. By: Ian W.R. Martin; Robert S. Pindyck
    Abstract: How should we evaluate public policies or projects to avert, or reduce the likelihood of, a catastrophic event? Examples might include inspection and surveillance programs to avert nuclear terrorism, investments in vaccine technologies to help respond to a "mega-virus," or the construction of levees to avert major flooding. A policy to avert a particular catastrophe considered in isolation might be evaluated in a cost-benefit framework. But because society faces multiple potential catastrophes, simple cost-benefit analysis breaks down: Even if the benefit of averting each one exceeds the cost, we should not necessarily avert all of them. We explore the policy interdependence of catastrophic events, and show that considering these events in isolation can lead to policies that are far from optimal. We develop a rule for determining which events should be averted and which should not.
    JEL: D81 H56 Q54
    Date: 2014–06
  25. By: Gollier, Christian
    Abstract: Weitzman (1998, 2001) proposed a simple “gamma discounting” method to characterize the term structure of discount rates today from the sole distribution of future spot interest rates. This rule which justifies using a smaller discount rate for longer maturities is now used for long-term policy evaluations in the UK, France, Norway, and potentially in the US. But we show that there is no social preference within the discounted expected utility framework that generically supports this pricing model and its underlying criterion, the expected net present value rule. Considering a standard Lucas tree economy, we characterize the term structure from the joint distribution of future spot interest rates and future consumption levels. When future growth rates are serially correlated, efficient discount rates today are decreasing with maturity, and the gamma discounting rule yields discount rates that are larger than the efficient ones.
    Keywords: decreasing discount rates, term structure, uncertain growth, Weitzman-Gollier puzzle.
    JEL: E43 G11 G12 Q54
    Date: 2014–06

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