nep-ene New Economics Papers
on Energy Economics
Issue of 2017‒02‒05
thirty-two papers chosen by
Roger Fouquet
London School of Economics

  1. Are Consumers Poorly-Informed about Fuel Economy? Evidence from Two Experiments By Hunt Allcott; Christopher Knittel
  2. Do Energy Efficiency Standards Hurt Consumers? Evidence from Household Appliance Sales By Arlan Brucal; Michael Roberts
  3. Systematic literature review of decision support models for energy-efficient production planning. By Biel, K.; Glock, C. H.
  4. Location, location, location. What accounts for regional variation of fuel poverty in Poland? By Maciej Lis; Agata Miazga; Katarzyna Salach
  5. Heterogeneity of the fuel poor in Poland – quantification and policy implications By Maciej Lis; Katarzyna Salach; Konstancja Swiecicka
  6. Cost-effectiveness and incidence of renewable energy promotion in Germany By Böhringer, Christoph; Landis, Florian; Tovar Reaños, Miguel Angel
  7. A Bivariate Modelling of the Electricity Consumption-Financial Development Nexus for Ghana By Yeboah Asuamah, Samuel
  8. Effect of Utility Deregulation and Mergers on Consumer Welfare By Ralph Sonenshine
  9. On an optimal extraction problem with regime switching By Ferrari, Giorgio; Yang, Shuzhen
  10. Statistical Approximation of High-Dimensional Climate Models By Alena Miftakhova; Kenneth L. Judd; Thomas S. Lontzek; Karl Schmedders
  11. A solvable two-dimensional singular stochastic control problem with non convex costs By de Angelis, Tiziano; Ferrari, Giorgio; Moriarty, John
  12. China's post-coal growth By Ye Qi; Nicholas Stern; Tong Wu; Jiaqi Lu; Fergus Green
  13. Energy Consumption and Environmental Pollution: Evidence from the Spatial Panel Simultaneous-Equations Model of Developing Countries By Hezareh, Reza; Shayanmehr, Samira; Darbandi, Elham; Schieffer, Jack
  14. Bivariate modelling of the financial development-fossil fuel consumption nexus in Ghana By Yeboah Asuamah, Samuel
  15. MSEEL Project Context: State of the Region(2001-2014) By Caleb Stair; Sriparna Ghosh; Randall Jackson
  16. Energy Consumption, Financial Development and Economic Growth in India: New Evidence from a Nonlinear and Asymmetric Analysis By Shahbaz, Muhammad; HOANG, Thi Hong Van; Kumar, Mantu; Roubaud, David
  17. Divesting Fossil Fuels: The Implications for Investment Portfolios By Trinks, Arjan; Scholtens, Bert; Mulder, Machiel; Dam, Lammertjan
  18. The Local Economic and Welfare Consequences of Hydraulic Fracturing By Alexander W. Bartik; Janet Currie; Michael Greenstone; Christopher R. Knittel
  19. On the comparative advantage of U.S. manufacturing: evidence from the shale gas revolution By Rabah Arezki; Thiemo Fetzer; Frank Pisch
  20. Oil prices and the global economy: is it different this time around? By Mohaddes, Kamiar; Pesaran, M. Hashem
  21. Can U.S. EIA Retail Gasoline Price Forecasts Be Improved Upon? By Arunanondchai, Panit; Senia, Mark C.; Capps, Oral Jr
  22. On what states do prices depend? answers from ecuador By Benedict, Craig; Crucini, Mario J.; Landry, Anthony E.
  23. OPEC and Demand Response to Crude Oil Prices By Talat S. Genc
  24. Oil Price Shocks and Policy Uncertainty: New Evidence on the Effects of US and non-US Oil Production By Kang, Wensheng; Ratti, Ronald A.; Vespignani, Joaquin L.
  25. Revisiting the Effect of Crude Oil Price Movements on US Stock Market Returns and Volatility By Ralph Sonenshine; Michael Cauvel
  26. Time allocation model for fuelwood collection in rural Nepal: An Empirical Analysis By Neupane, Santosh; Clark, Christopher; Lambert, Dayton
  27. Mind the gap: the economic problem as an interplay among desires, matter, and energy By Leiva, Benjamin
  28. Ograniczenie ubostwa energetycznego w Polsce - od teorii do praktyki By Aleksander Szpor; Maciej Lis
  29. Green Investment Banks: Innovative Public Financial Institutions Scaling up Private, Low-carbon Investment By OECD
  30. Stochastic and club convergence of sectoral CO2 emissions in the European Union By Rafael Morales-Lage; Aurelia Bengochea-Morancho; Mariam Camarero; Inmaculada Martínez-Zarzoso
  31. Competition and Regulation as a Means of Reducing CO2 Emissions: Experience from U.S. Fossil Fuel Power Plants. By Christian Growitsch; Simon Paulus; Heike Wetzel
  32. Cooperation in the climate commons By Stefano Carattini; Simon Levin; Alessandro Tavoni

  1. By: Hunt Allcott; Christopher Knittel
    Abstract: It has long been argued that people are poorly-informed about and inattentive to fuel economy when buying cars, and that this causes us to buy low-fuel economy vehicles despite our own best interest. We test this assertion by running two experiments providing fuel economy information to people shopping for new vehicles. We find zero statistical or economic effect of information on average fuel economy of vehicles purchased. In the context of a simple optimal policy model, the estimates suggest that imperfect information and inattention are not valid as significant justifications for fuel economy standards at current or planned levels.
    JEL: D12 D83 L15 L91 Q41 Q48
    Date: 2017–01
  2. By: Arlan Brucal (Department of Economics, University of Hawaii); Michael Roberts (Department of Economics, University of Hawaii)
    Abstract: Since 1987, the Department of Energy has set minimum energy efficiency standards for household appliances. Although the review process considers engineering-based accounting of costs and benefits associated with standards, economists have questioned whether these policies hurt consumers by increasing prices and limiting the scope and nature of product attributes, thereby reducing consumers’ perceptions of product quality. To evaluate whether standard changes affect prices and quality, we develop a constant-quality price index using same-model price changes of appliances sold in the United States between 2001 and 2011, a period over which energy-efficiency standards changed three times for clothes washers and Energy Star thresholds were updated for refrigerators. We use this index to disentangle price changes from perceived quality changes, and develop a welfare index that accounts for both prices and quality changes over time. We then examine how price, quality and welfare changed as energy-efficiency standards became progressively more stringent. We find no indication that more stringent standards increased prices or reduced product quality. Instead, we find prices declined while quality and consumer welfare increased, especially around times when more stringent energy efficiency standards were enforced. Similar price and quality patterns emerge for refrigerators which had only Energy Star R policy changes. We conclude that standards have had at worst a negligible effect on consumer welfare, or at best lowered prices and improved quality for both washers and refrigerators, and perhaps other appliances. Further analysis suggests that standards induce innovation, but have little or no influence on inter-manufacturer competition.
    Keywords: Energy Efficiency Standards, Imperfect Competition, Price Indices
    JEL: D12 H23 L68 Q48
    Date: 2016–12
  3. By: Biel, K.; Glock, C. H.
    Date: 2016–09–26
  4. By: Maciej Lis; Agata Miazga; Katarzyna Salach
    Abstract: The aim of this paper is to explain the regional variation of fuel poverty in Poland. The significant spatial variation of fuel poverty stems from differences in the buildings’ characteristics, income and household composition as well as the diverse advancement of urbanisation processes. The variance analysis permit the conclusion that all these factors influence both energy affordability (LIHC) and thermal comfort (subjective) dimension of fuel poverty. Energy affordability depends mainly on household’s income, whereas lack of thermal comfort is mainly due to low energy efficiency of a building. Even after factoring out the influence of these three factors there still remains a significant unexplained regional variation of lack of thermal comfort. We show that this unexplained variation is linked with the regional disparities of prices and outdoor temperatures.
    Keywords: fuel poverty, LIHC, thermal comfort, energy affordability, regional variation, degrees of urbanisation
    JEL: I32 Q40 R29
    Date: 2016–11
  5. By: Maciej Lis; Katarzyna Salach; Konstancja Swiecicka
    Abstract: The purpose of the paper is to quantify the heterogeneity of causes and symptoms of energy poverty in order to provide guidance for policies aimed at fuel poverty alleviation. We quantify the diversity of the households in Poland in terms of energy efficiency and income using cluster analysis. We have identified twelve types of households. Fuel poverty in terms of either affordability measure (LIHC – Low Income High Costs) or subjective measure concentrates in six of them. Fuel poverty measured with the LIHC concerns mainly lower-income families with children, living in large houses in rural areas. The subjective measure (lack of thermal comfort indoors) points to energy deprivation in city households occupying dwellings in pre-war tenement houses and poor rural inhabitants living in old, run-down houses. We finally link the types of the fuel poor with their behavioural characteristics identified by the qualitative studies. Both the strategies adopted by the poor and insufficient central and local policies mitigating economic transition are highly relevant factors for shaping policies aimed at eradicating fuel poverty.
    Keywords: fuel poverty, energy efficiency, cluster analysis, Household Budget Survey, Low Income High Costs
    JEL: I32 Q40
    Date: 2016–11
  6. By: Böhringer, Christoph; Landis, Florian; Tovar Reaños, Miguel Angel
    Abstract: Over the last decade Germany has boosted renewable energy in power production by means of massive subsidies. The flip side are very high electricity prices which raises concerns that the transition cost towards a renewable energy system will be mainly borne by poor households. In this paper, we combine computable general equilibrium and microsimulation analysis to investigate the cost-effectiveness and incidence of Germany's renewable energy promotion. We find that the regressive effects of renewable energy promotion could be ameliorated by alternative subsidy financing mechanisms which achieve the same level of electricity generation from renewable energy sources.
    Keywords: renewable energy policy,feed-in tariffs,CGE,microsimulation
    JEL: Q42 H23 C63
    Date: 2017
  7. By: Yeboah Asuamah, Samuel
    Abstract: The current study modelled the long run and short run links between financial developments and disaggregate energy consumption (electricity consumption) in Ghana for the period 1970 to 2011 using Autoregressive Distributed Lad Model (ARDL). The findings of the study on the cointegration test indicate significant evidence of cointegration between electricity consumption and financial development. The findings seem to suggest that financial development is a key explanatory variable in electricity consumption management in order to attain sustainable energy consumption and economic growth. The issues of structural breaks in unit root and direction of causality should be consider in future studies.
    Keywords: Electricity consumption, financial development; cointegration; long run
    JEL: O13 O16 P28 P34 Q42 Q43
    Date: 2017–01–23
  8. By: Ralph Sonenshine
    Abstract: In the late 1990s many US states deregulated their electric utilities, separating generation from transmission, allowing for competition among power generators. As a result there was a significant merger wave among large utility companies. To date the effect of utility deregulation and mergers on electricity prices, while widely studied, remains ambiguous. This study examines the effects of these events by analyzing statewide electricity price and output changes among deregulated and regulated states from the period 2001 through 2014. The study finds that deregulation appears to have a positive impact on social welfare by lowering prices and output by improving efficiencies in part through retail choice programs. However, mergers appear to have a slightly negative effect on social welfare by raising prices and possibly output in deregulated states.
    Keywords: Abnormal returns, event study, oil shocks
    JEL: G11 G12 G14
    Date: 2016
  9. By: Ferrari, Giorgio (Center for Mathematical Economics, Bielefeld University); Yang, Shuzhen (Center for Mathematical Economics, Bielefeld University)
    Abstract: This paper studies an optimal irreversible extraction problem of an exhaustible commodity in presence of regime shifts. A company extracts a natural resource from a reserve with finite capacity, and sells it in the market at a spot price that evolves according to a Brownian motion with volatility modulated by a two state Markov chain. In this setting, the company aims at finding the extraction rule that maximizes its expected, discounted net cash flow. The problem is set up as a finite-fuel two-dimensional degenerate singular stochastic control problem over an infinite time-horizon. We provide explicit expressions both for the value function and for the optimal control. We show that the latter prescribes a Skorokhod reflection of the optimally controlled state process at a certain state and price dependent threshold. This curve is given in terms of the optimal stopping boundary of an auxiliary family of perpetual optimal selling problems with regime switching. The techniques are those of stochastic calculus and stochastic optimal control theory.
    Keywords: singular stochastic control, optimal stopping, regime switching, Hamilton-Jacobi-Bellman equation, free-boundary, commodity extraction, optimal selling
    Date: 2016–07–20
  10. By: Alena Miftakhova (University of Zurich); Kenneth L. Judd (Stanford University, Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP), and National Bureau of Economic Research (NBER)); Thomas S. Lontzek (University of Zurich; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)); Karl Schmedders (University of Zurich)
    Abstract: In many studies involving complex representation of the Earth's climate, the number of runs for the particular model is highly restricted and the designed set of input scenarios has to be reduced correspondingly. Furthermore, many integrated assessment models, in particular those focusing on intrinsic uncertainty in social decision-making, suffer from poor representations of the climate system ue to computational constraints.In this study, using emission scenarios as input and the temperature anomaly as a predicted response variable, we construct low-dimensional approximations of high-dimensional climate models, as represented by MAGICC. In order to extract as much explanatory power as possible from the high-dimensional climate models, we construct orthogonal emissions scenarios that carry minimum repetitive information. Our method is especially useful when there is pressure to keep the number of scenarios as low as possible. We demonstrate that temperature levels can be inferred immediately from the CO2 emissions data within a one-line model that performs very well on conventional scenarios. Furthermore, we provide a system of equations that is ready to be deployed in macroeconomic optimization models. Thus, our study enhances the methodology applied in the emulation of complex climate models and facilitates the use of more realistic climate representations in economic integrated assessment models.
    Keywords: Climate Change, Greenhouse Gas, Single Equation Models
    JEL: Q54 C20
  11. By: de Angelis, Tiziano (Center for Mathematical Economics, Bielefeld University); Ferrari, Giorgio (Center for Mathematical Economics, Bielefeld University); Moriarty, John (Center for Mathematical Economics, Bielefeld University)
    Abstract: In this paper we provide a complete theoretical analysis of a two-dimensional degenerate non convex singular stochastic control problem. The optimisation is motivated by a storage-consumption model in an electricity market, and features a stochastic real-valued spot price modelled by Brownian motion. We find analytical expressions for the value function, the optimal control and the boundaries of the action and inaction regions. The optimal policy is characterised in terms of two monotone and discontinuous repelling free boundaries, although part of one boundary is constant and the smooth fit condition holds there.
    Keywords: finite-fuel singular stochastic control, optimal stopping, free boundary, Hamilton- Jacobi-Bellman equation, irreversible investment, electricity market
    Date: 2016–07–20
  12. By: Ye Qi; Nicholas Stern; Tong Wu; Jiaqi Lu; Fergus Green
    Abstract: Slowing GDP growth, a structural shift away from heavy industry, and more proactive policies on air pollution and clean energy have caused China's coal use to peak. It seems that economic growth has decoupled from growth in coal consumption.
    Keywords: Climate-change mitigation; Energy efficiency; Energy supply and demand; Sustainability
    JEL: N0
    Date: 2016–07–25
  13. By: Hezareh, Reza; Shayanmehr, Samira; Darbandi, Elham; Schieffer, Jack
    Abstract: This research applied a novel method to investigate the relationship between energy use and environmental pollution. We applied Spatial Panel Simultaneous-Equations for a panel of 22 developing countries over the period of 2000-2011. Previous researches indicate that the level of CO2 emissions increases with energy consumption. Also, Energy consumption is likely to have an increase in CO2 emissions. Appling a simultaneous equation model allowed us to estimate the relation between these two variables simultaneously. Identifying this relationship helps policymakers to design appropriate policies for achieving sustainable economic growth. On the other hand, the spatial models explain to what extent each dependent variable in a country depends on neighbors’ characteristics. Empirical results of this method show that energy consumption and environmental pollution in each country is affected by these factors in neighboring countries. Also, results confirm bidirectional causality and positive relation between energy use and environmental pollution. The econometrics estimation indicates that reducing CO2 emission in developing countries is dependent on the reform of energy consumption patterns and using renewable energy to replace fossil fuels in production simultaneously in these countries.
    Keywords: Developing countries, Energy consumption, Renewable energy, Spatial autoregression, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q1, Q5, Q40,
    Date: 2017
  14. By: Yeboah Asuamah, Samuel
    Abstract: The present paper modelled the relationship between financial developments and fossil fuel energy consumption in Ghana for the period 1970-2011 by applying Autoregressive Distributed Lad Model (ARDL). The findings of the paper on the cointegration test indicate significant evidence of cointegration between fossil fuel consumption and financial development. The findings seem to suggest that financial development is an explanatory variable in fossil fuel consumption management in achieving sustainable oil energy consumption for economic growth. The direction of causality between the two variables should be examined in future studies as well as multivariate analysis and structural breaks.
    Keywords: Fossil fuel consumption, financial development; long run; short run
    JEL: O13 O16 P28 P34 Q42 Q43
    Date: 2017–01–31
  15. By: Caleb Stair (Regional Research Institute, West Virginia University); Sriparna Ghosh (Regional Research Institute, West Virginia University); Randall Jackson (Regional Research Institute, West Virginia University)
    Abstract: The Marcellus Shale Energy and Environmental Laboratory, or MSEEL is the nation’s first integrated research initiative on shale gas drilling. An experimental hydraulic fracturing gas well is the centerpiece of the MSEEL project, “which West Virginia University launched in fall 2014 in partnership with Northeast Natural Energy, the National Energy Technology Laboratory of the U.S. Department of Energy and Ohio State University. The five-year, $11 million project is the first-ever long-term, comprehensive field study of shale gas resources in which scientists will study the process from beginning-to-end.” Because one dimension of the MSEEL analysis is the economic impacts and implications of well-drilling activity, this report has been prepared to provide a statistical overview and description of the local and regional economies leading up to the initiation of the MSEEL project, and to set the stage generally for subsequent socioeconomic analyses. The report includes various graphs and tables that describe the local economy during the 2001 to 2014 period, providing a context within which to view the role of gas extraction activities in the economy.
    Keywords: regional economics, regional analysis, energy economics, environmental economics
    JEL: Q41 Q42 Q48 Q55
    Date: 2017–01–31
  16. By: Shahbaz, Muhammad; HOANG, Thi Hong Van; Kumar, Mantu; Roubaud, David
    Abstract: This paper investigates the asymmetric relationship between energy consumption and economic growth by incorporating financial development, capital and labour into a production function covering the Indian economy from 1960Q1–2015Q4. The nonlinear autoregressive distributed lag bounds testing approach is applied to examine the asymmetric cointegration between the variables. An asymmetric causality test is also employed to examine the causal association between the considered variables. The results indicate cointegration between the variables in the presence of asymmetries. The asymmetric causality results show that only negative shocks in energy consumption have impacts on economic growth. In the same vein, only negative shocks in financial development have impacts on economic growth. By contrast, symmetrically, capital formation causes economic growth. Finally, over the study period, a neutral effect exists between the labour force and economic growth in India. The implications of these results for growth policies in India are also discussed.
    Keywords: Financial Development, Energy, Growth, India, Asymmetries
    JEL: C0
    Date: 2017–01–01
  17. By: Trinks, Arjan; Scholtens, Bert; Mulder, Machiel; Dam, Lammertjan
    Abstract: Fossil fuel divestment campaigns urge investors to sell their stakes in companies that supply coal, oil, and gas. However, avoiding investments in such companies can be expected to impose a financial cost on the investor because of reduced opportunities for portfolio diversification. We compare the risk-adjusted return performance of investment portfolios with and without fossil fuel companies over the period 1927-2015. Contrary to theoretical expectations, we find that fossil-free investing does not seem to impair financial performance. These findings can be explained by the fact that fossil fuel company portfolios do not generate above-market performance and provide relatively limited diversification benefits. Significant performance impacts of a divestment strategy, however, are observed over short time frames and when applying divestment to less diversified investment portfolios.
    Keywords: Fossil Fuel Divestment, Socially Responsible Investing, Portfolio Performance, Risk-adjusted returns, Market Capitalization, GARCH
    JEL: G11 Q41
    Date: 2017–01–16
  18. By: Alexander W. Bartik; Janet Currie; Michael Greenstone; Christopher R. Knittel
    Abstract: Exploiting geological variation within shale deposits and timing in the initiation of hydraulic fracturing, this paper finds that allowing fracing leads to sharp increases in oil and gas recovery and improvements in a wide set of economic indicators. At the same time, estimated willingness-to-pay (WTP) for the decrease in local amenities (e.g., crime and noise) is roughly equal to -$1000 to -$1,600 per household annually (-1.9% to -3.1% of mean household income). Overall, we estimate that WTP for allowing fracing equals about $1,300 to $1,900 per household annually (2.5% to 3.7%), although there is substantial heterogeneity across shale regions.
    JEL: Q5
    Date: 2017–01
  19. By: Rabah Arezki; Thiemo Fetzer; Frank Pisch
    Abstract: This paper provides novel empirical evidence of the effects of a plausibly exogenous change in relative factor prices on United States manufacturing production and trade. The shale gas revolution has led to (very) large and persistent differences in the price of natural gas between the United States and the rest of the world reflecting differences in endowment of difficult-to-trade natural gas. Guided by economic theory, empirical tests on output, factor reallocation and international trade are conducted. Results show that U.S. manufacturing exports have grown by about 10 percent on account of their energy intensity since the onset of the shale revolution. We also document that the U.S. shale revolution is operating both at the intensive and extensive margins
    Keywords: manufacturing; exports; energy prices; shale gas
    JEL: L71 N52 O13 Q33 R11
    Date: 2016–11
  20. By: Mohaddes, Kamiar (University of Cambridge); Pesaran, M. Hashem (University of Southern California)
    Abstract: The recent plunge in oil prices has brought into question the generally accepted view that lower oil prices are good for the US and the global economy. In this paper, using a quarterly multi-country econometric model, we first show that a fall in oil prices tends relatively quickly to lower interest rates and inflation in most countries, and increase global real equity prices. The effects on real output are positive, although they take longer to materialize (around 4 quarters after the shock). We then re-examine the effects of low oil prices on the US economy over different sub-periods using monthly observations on real oil prices, real equity prices and real dividends. We confirm the perverse positive relationship between oil and equity prices over the period since the 2008 financial crisis highlighted in the recent literature, but show that this relationship has been unstable when considered over the longer time period of 1946-2016. In contrast, we find a stable negative relationship between oil prices and real dividends which we argue is a better proxy for economic activity (as compared to equity prices). On the supply side, the effects of lower oil prices differ widely across the different oil producers, and could be perverse initially, as some of the major oil producers try to compensate their loss of revenues by raising production. Taking demand and supply adjustments to oil price changes as a whole, we conclude that oil markets equilibrate but rather slowly, with large episodic swings between low and high oil prices.
    JEL: C32 E17 E32 F44 F47 O51 Q43
    Date: 2016–07–21
  21. By: Arunanondchai, Panit; Senia, Mark C.; Capps, Oral Jr
    Abstract: Perhaps the most widely followed price in the market is the price of crude oil. The volatility of this commodity is evident to consumers through the gasoline prices that consumers see on the retail side. The U.S. Energy Information Agency provides widely followed forecasts for the retail gasoline price (along with other energy products) produced with their short-term energy outlook (STEO) model. The purpose of this research is to compare a number of forecasts using different techniques to the STEO model. This is accomplished through the use of Holt Winters, structural, ARIMA, and vector error-correction models. We also construct a composite forecast by averaging the respective forecasts from the four models. From the empirical analysis, we find evidence from the structural model and the vector error-correction model that the movement in the gasoline prices can be explained by the West Texas Intermediate (WTI) benchmark and the spread between BRENT and WTI benchmarks. In terms of forecasting performance, the additive Holt Winters model outperforms the other models within sample. Out sample, the composite forecast is the best performing model. The composite forecast has a MAPE of 6.3% versus a MAPE of 8.1% from the STEO model.
    Keywords: Retail Gasoline Prices, Forecasting, short-term energy outlook model, Holt-Winters model, ARIMA model, structural model, vector error-correction model, Resource /Energy Economics and Policy, Q47,
    Date: 2017
  22. By: Benedict, Craig (SUNY Oswego); Crucini, Mario J. (Vanderbilt University and NBER); Landry, Anthony E. (Bank of Canada)
    Abstract: In this paper, we argue that differences in the cost structure across sectors play an important role in the decision of firms to adjust their prices. We develop a menu cost model of pricing in which retail firms intermediate trade between producers and consumers. An important facet of our analysis is that the labor-cost share of retail production differs across goods and services in the consumption basket. For example, the price of gasoline at the retail pump is predicted to adjust more frequently and by more than the price of a haircut due to the high volatility in wholesale gasoline prices relative to the wages of unskilled labor, even when both retailers face a common menu cost. This modeling approach allows us to account for some of the cross-sectional differences observed in the frequency of price adjustments across goods. We apply this model to Ecuador to take advantage of inflation variations and the rich panel of monthly retail prices.
    JEL: E3 E5 F3 F33
    Date: 2016–08–12
  23. By: Talat S. Genc (Department of Economics and Finance, University of Guelph)
    Abstract: This paper investigates demand response to crude oil price movements before and during the recent global financial and economic crisis. It employs several market power indices to structurally estimate price elasticities. A newly developed market power index for crude oil markets is implemented. In this approach OPEC is the central player and acts as a dominant producer in the global oil market. Although our price elasticity predictions for pre-crisis period fall in a range reported in the literature, our estimates for post-crisis largely deviate from the ones reported before. In fact, we find that demand for crude oil surprisingly changes behavior and turns out to be elastic during the financial crisis. Furthermore, demand response to crude oil prices have almost doubled during the crisis. This severe change in price response can be associated with record price levels caused by supply shortages and surge in alternative energy resources. The key advantages of this methodology over the existing literature are that it estimates price elasticity using a competition framework without specifying demand/supply function(s), and utilizes commonly observable market variables that can be applied to any admissible data frequency.
    Keywords: Price elasticity of demand, crude oil, global financial/economic crisis, Brent benchmark, market power, GMM estimation
    JEL: D22 L13 Q35 Q41
    Date: 2017
  24. By: Kang, Wensheng (Kent State University); Ratti, Ronald A. (Western Sydney University); Vespignani, Joaquin L. (University of Tasmania)
    Abstract: Important interaction has been established for US economic policy uncertainty with a number of economic and financial variables including oil prices. This paper examines the dynamic effects of US and non-US oil production shocks on economic policy uncertainty using a structural VAR model. Such an examination is motivated by the substantial increases in US oil production in recent years with implications for US political and economic security. Positive innovations in US oil production are associated with decreases in US economic policy uncertainty. The economic forecast interquartile ranges about the US CPI and about federal/state/local government expenditures are particularly sensitive to innovations in US oil supply shocks. Shocks to US oil supply disruption causes rises in the CPI forecast uncertainty and accounts for 21% of the overall variation of the CPI forecaster disagreement. Dis-aggregation of oil production shocks into US and non-US oil production yield novel results. Oil supply shocks identified by US and non-US origins explain as much of the variatio in economic policy uncertainty as structural shocks on the demand side of the oil market.
    Date: 2017–01–01
  25. By: Ralph Sonenshine; Michael Cauvel
    Abstract: From mid-2014 to 2016, oil prices plunged rapidly causing significant volatility in the US and global equity markets. This change in crude oil prices occurred after a significant run up in oil prices three to four years earlier. Each change in the growth trajectory of oil prices affects stock market returns. How and why do oil price shocks affect the expected stock market returns among key sectors of the economy? This paper explores this issue by examining how the magnitude of crude oil price changes affect the stock market returns and variances of key producing, banking and consuming segments of the US economy. Our findings provide some explanations for the asymmetric responses to positive and negative oil shocks found in these key sectors of the economy.
    Keywords: Deregulation, mergers, regulated industries, natural monopoly
    JEL: L94 L98 G34 G14
    Date: 2017
  26. By: Neupane, Santosh; Clark, Christopher; Lambert, Dayton
    Abstract: Forest resources are the most prominent source of fuelwood in Nepal i.e., around 70% of residential energy comes from this sector (MOF, 2015). The survival of rural households in Nepal is directly linked to forest resources as many of these households are subsistence users of forest products (FAO, 2009). Women were found to be the predominant labor force involved in fuelwood collection in our study area. The sampled household in our study were found to be reliant in fuelwood and other energy sources for energy. Private tree plantation for fodder and fuelwood purposes can act as substitute to fuelwood collected from community forest areas.
    Keywords: Labor and Human Capital, Resource /Energy Economics and Policy, J, Q,
    Date: 2017
  27. By: Leiva, Benjamin
    Abstract: There is a rich literature on the economic importance of energy. Yet, little has been achieved to harmonize core economic theory with energetic principles. This paper proposes a theoretical framework that might prove valuable to do so, based on a slight conceptual modification of the neoclassical economic problem. By conceiving its necessary condition not as desires but as gaps between desired and spontaneous states of material reality, an extension of economic imperialism towards the realm of energetics is enabled. When the origin of the economic problem is placed on physical divergences, goods are exposed as specific material configurations that close gaps. And as material rearrangements can only be achieved through energy transferred by prime movers (e.g. workers, horses, engines), such transfers are revealed as the essence of economic activity. Thus, whenever energy and power constrained agents are analyzed, the derivation of optimization procedures follows intuitively: consumer’s constraints are energetic, where economic energies play the role of prices, and firm’s profits are energy surpluses, where prime movers play the role of factors of production. This leads to familiar refutable hypothesis expressed in energy terms. Furthermore, equilibrium is characterized by the schedule of energy assignments that lead to utility maximization, for any set of economic energies and energy contents of goods. Although only autarchic and single-period agents are analyzed, the stage is set to analyze exchanging and multi-period agents, which could allow for a general interpretation of economic fundamentals (e.g. prices, capital) as visible social expressions of invisible energetic dynamics.
    Keywords: Desires, matter, energy, prime movers, Resource /Energy Economics and Policy, O13, Q40, D11, D21,
    Date: 2017
  28. By: Aleksander Szpor; Maciej Lis
    Abstract: W niniejszym artykule konfrontujemy rozne sposoby pomiaru zakresu i glebokosc ubostwa energetycznego w Polsce. Nastepnie dokonujemy przegladu i oceny krajowych polityk i instrumentow, ktore bezposrednio lub posrednio obejmuja ubogich energetycznie. Przeglad doswiadczen innych krajow oraz przeprowadzone mikrosymulacje dla polskich gospodarstw domowych pozwalaja nam sformulowac podstawowe reguly dla prowadzenia dzialan majacych na celu organicznie ubostwa energetycznego. W szczegolnosci proponujemy laczenie i ukierunkowanie wybranych instrumentow, ktore przy niewielkich modyfikacjach i bez dodatkowych kosztow moglyby skuteczniej przeciwdzialac ubostwu energetycznemu w Polsce.
    Keywords: ubostwo energetyczne, polityki publiczne, pomoc spoleczna
    JEL: I32 Q40
    Date: 2016–11
  29. By: OECD
    Abstract: This Policy Paper describes the relatively new phenomenon of publicly-capitalised green investment banks and examines why they are being created and how they are mobilising private investment. It draws on the OECD report “Green Investment Banks: Scaling up Private Investment in Low-carbon, Climate-resilient Infrastructure".
    Date: 2017–01–31
  30. By: Rafael Morales-Lage (Department of Economics, Universitat Jaume I, Castellón, Spain); Aurelia Bengochea-Morancho (Department of Economics, Universitat Jaume I, Castellón, Spain); Mariam Camarero (Department of Economics, Universitat Jaume I, Castellón, Spain); Inmaculada Martínez-Zarzoso (Dept of Economics and Center for Statistics, Georg-August Universitaet Goettingen, Göttingen, Germany & Dept of Economics, Universitat Jaume I)
    Abstract: Understanding the evolution of sectoral CO2 emissions of all EU countries in the past decades should be useful for political authorities when designing future environmental policies, as greater efforts must be done both in sectors with higher potential for reduction in order to reach the EU reduction targets. This paper focuses on the process of convergence in sectoral per capita CO2 emissions to ascertain whether the measures taken within the EU to meet its commitments have had the desirable impact. We apply time series techniques to CO2 data for the 28 member countries over the period 1960-2012 to test whether stochastic and club convergence has occurred. We only find evidence of weak club convergence as some EU countries are increasing their emissions whereas others are in a process of controlling them significantly but, at the same time, we observe major differences among the sectors and subsectors considered.
    Keywords: Convergence, CO2 emissions, European Union
    JEL: C22 O47 Q53
    Date: 2017
  31. By: Christian Growitsch (University of Hamburg); Simon Paulus (University of Cologne); Heike Wetzel (University of Kassel)
    Abstract: Levels of CO2 emissions from electricity generation in the U.S. have changed considerably in the last decade. This development can be attributed to two factors. First, the shale gas revolution has reduced gas prices significantly, leading to a crowding out of the more CO2-intensive coal for electricity generation. Secondly, environmental regulations have been tightened at both the federal and the state level. In this article, we analyze the relative CO2 emission performance across 48 states in the U.S. using a two-stage empirical approach. In the first stage, we identify the states that followed best practice between 2000 and 2013, by applying nonparametric benchmarking techniques. In the second stage, we regress our CO2 emission performance indicators on the state-specific national gas prices, the states’ CO2 regulatory policies and a number of other state-specific factors in order to identify the main drivers of the developments. We find that the CO2 emission performance improved on average by 15% across all states from 2000 to 2013. Furthermore, our second-stage results support the argument that decreasing natural gas prices and stringent regulatory measures, such as cap-and-trade programs, have a positive impact on the state-specific CO2 emission performance.
    Keywords: Carbon dioxide emission performance, data envelopment analysis, global Malmquist index, environmental regulation
    JEL: C61 D24 L94 Q58
    Date: 2017
  32. By: Stefano Carattini; Simon Levin; Alessandro Tavoni
    Abstract: This paper surveys the existing empirical evidence on the scope for cooperation in the climate commons and on the effectiveness of possible interventions to spur it. Given the global public good properties of climate change mitigation, mitigation efforts have to rely on the willingness of individuals to contribute voluntarily to this public good, by reducing the demand on the environmental commons either in the form of ‘green’ consumer behaviour or through the acceptance of costly climate policy. Both are likely to be necessary. The authors survey evidence that suggests a central role for local social norms in the provision of global public goods. They discuss the importance of the visibility of norms and the role of beliefs when such visibility is lacking, concluding that some actors may behave as conditional cooperators when confronted with global dilemmas, similarly to what takes place in the local commons.
    Date: 2017–01

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