nep-ene New Economics Papers
on Energy Economics
Issue of 2017‒12‒11
thirty papers chosen by
Roger Fouquet
London School of Economics

  1. What do people ‘learn by looking’ at direct feedback on their energy consumption? Results of a field study in Southern France By Adnane A. Kendel; Nathalie N. Lazaric; Kevin Maréchal
  2. Stacking up the Ladder: A Panel Data Analysis of Tanzanian Household Energy Choices By Johanna Choumert; Pascale Combes Motel; Leonard Le Roux
  3. Perspectives on the Transformation of the Organic Energy System in 19th Century Sweden By Lindmark, Magnus; Olsson Spjut, Fredrik
  4. Fulfilment of National Objectives under the Renewable Energy Directive: State of play and projections By Hassel, Arndt; Nicolescu, Razvan; Egenhofer, Christian; Nica, Andreea; Elisei, Sorin
  5. KWK-Mindest- und Maximaleinspeisung - Die Erzeugung von Zeitreihen fuer die Energiesystemmodellierung Restrictions of the Electricity Generation from CHP Plants - Producing Time Series for Energy System Modeling By Bjoern Felten; Jan Paul Baginski; Christoph Weber
  6. Reliable Electricity: The Effects of System Integration and Cooperative Measures to Make it Work By Hagspiel, Simeon
  7. Social Comparisons in Real Time: A Field Experiment of Residential Electricity and Water Use By Kažukauskas, Andrius; Broberg, Thomas; Jaraite, Jurate
  8. Electricity (De)Regulation and Innovation. By Marianna Marino; Pierpaolo Parrotta; Giacomo Vallettaz
  9. Empirical comparison of three models for determining market clearing prices in Turkish day-ahead electricity market By G\"okhan Ceyhan; Nermin Elif Kurt; H. Bahadir Sahin; K\"ur\c{s}ad Derinkuyu
  10. Market Power and Forward Prices By Ruddell, Keith; Downward, Tony; Philpott, Andy
  11. Cournot Competition in Wholesale Electricity Markets: The Nordic Power Exchange, Nord Pool By Lundin, Erik; Tangerås, Thomas
  12. Modeling Energy Consumption, CO2 Emissions and Economic Growth Nexus in Ethiopia: Evidence from ARDL Approach to Cointegration and Causality Analysis By Kebede, Shemelis
  13. Forecasting GDP with energy series: ADL-MIDAS vs. Linear Time Series Models By Afees A. Salisu; Ahaemefula Ephraim Ogbonna
  14. The Inclusion Of Natural Resource Wealth In The Index Of Economic Well-Being: Results For OECD Countries, 1980-2013 By Richard Beard
  15. Retrospective Evaluation of the Costs Associated with the 2004 Automobile and Light-Duty Truck Surface Coating NESHAP By Ann Wolverton; Ann E. Ferris; Nathalie B. Simon
  16. Asymmetric Cointegration and Causality between Natural Gas Consumption and Economic Growth in Nigeria By Danladi Galadima, Mukhtar; Wambai Aminu, Abubakar
  17. Is the Discretionary Income Effect of Oil Price Shocks a Hoax? By Christiane Baumeister; Lutz Kilian; Xiaoqing Zhou
  18. When Foreign Interventions in Domestic Economy Leads to Exploitation: A Case Study of Oil Production in Nigeria’s Niger Delta By Akpan, Wilson; Dawood, Mamoon
  19. On the Tail Risk Premium in the Oil Market By Reinhard Ellwanger
  20. Saudi Arabia; 2017 Article IV Consultation-Press Release; and Staff Report By International Monetary Fund
  21. Oil and macroeconomic (in)stability By Hilde C. Bjørnland; Vegard Høghaug Larsen; Junior Maih
  22. Are fiscal rules helpful in mitigating the impact of oil market fluctuations? By Fuad Mammadov; Adigozalov Shaig;
  23. US stocks in the presence of oil price risk: Large cap vs. Small cap By Afees A. Salisu; Raymond Swaray; Tirimisyu F. Oloko
  24. Oil and Women: A Re-examination By Astghik Mavisakalyan; Yashar Tarverdi
  25. Climate Change and the Water-Energy- Food Nexus in the MENA Region By Rabi H. Mohtar
  26. Herausforderungen in der Energie- und Klimapolitik By Schaefer, Thilo
  27. Das Kyoto-Protokoll feiert 20. Geburtstag By Karsten Neuhoff; Heiner von Lüpke; Carlotta Piantieri
  28. Flexibility in the market for international carbon credits and price dynamics difference with European allowances By Gavard, Claire; Kirat, Djamel
  29. Economic essays on privacy, big data, and climate change By Dengler, Sebastian
  30. Climate change and monetary policy: Dealing with disruption By Warwick McKibbin; Adele Morris; Augustus J. Panton; Peter J. Wilcoxen

  1. By: Adnane A. Kendel; Nathalie N. Lazaric; Kevin Maréchal
    Abstract: The abundant literature on consumer feedback shows that it is an efficient instrument for reducing household energy consumption. However, the reported reductions are strongly dependent on contextual factors and on the type of feedback provided. Given the importance of learning to this respect, this dimension constitutes the core focus of the present study which reports the findings of the TICELEC (i.e. French acronym for information technologies for responsible electricity consumption) project in France. The experiment included a control group (G1: the self-monitoring group) and one equipped group (G2). All participants reduced their consumption and learnt either directly from feedback or indirectly through self-monitoring. The amount of energy savings, which is larger than in similar experiments, can be explained by two factors. First, the specificity of our sample (i.e. high income, high consumption) which allows for potentially large energy savings. Second, high involvement of participants and the building of trust. The quantitative and qualitative dimensions of learning are then discussed. Additionally, we focus on peak-load shifting in G2 with 2 subgroups (G21 and G22). The higher proportion of shifters in G22 and the higher ‘quality’ of their shifting suggest a higher level of learning enabled by the more sophisticated feedback. Although this translated into only a moderately higher rate of energy savings, the higher degree of absorbed knowledge (i.e. through ‘learning by looking through connecting’) might lead to a qualitatively distinctive type of energy saving.
    Keywords: Feedback; Household energy saving; Learning; Residential consumption
    Date: 2017–09
  2. By: Johanna Choumert (Economic Development Initiatives (EDI)); Pascale Combes Motel (CERDI); Leonard Le Roux (School of Economics – Université Clermont Auvergne)
    Abstract: The energy sector in Tanzania reflects its low level of industrialization and development. In 2016, only 16.9% of rural and 65.3% of urban people in Tanzania Mainland were connected to some form of electricity. This paper makes use of a nationally representative three wave panel dataset (2008-2013) to contribute to the literature on household energy use decisions in the context of the stacking and energy ladder hypotheses in Tanzania. We firstly adopt a panel multinomial-logit approach to model the determinants of household cooking and lighting fuel choices. Secondly, we focus explicitly on energy stacking behaviour, proposing various ways of measuring what is inferred when stacking behaviour is thought of in the context of the energy transition, and presenting household level correlates of energy stacking behaviour. We find that while higher household incomes are strongly associated with a transition towards the adoption of more modern fuels, especially in lighting, this takes place in a context of significant fuel stacking. The implications for policy aimed mostly at connecting households to the electric grid are that many of the benefits of the energy transition in terms of public health, environmental and social factors may be subdued.
    Keywords: Fuel choices, Charcoal, Biomass, Electricity, Tanzania
    JEL: O13 Q41 N5
    Date: 2017–11
  3. By: Lindmark, Magnus (CERE and the Department of Geography and Economic History); Olsson Spjut, Fredrik (the Department of Geography and Economic History)
    Abstract: This article discusses the transformation from an organic to a mineral energy system from a Swedish historical perspective. Main arguments are that there was a dynamic interaction between the two systems during the Swedish industrialization process. For one, a diffusion of the mineral energy system contributed to opening previously inaccessible organic resources in the forest of northern Sweden. Secondly, the development of the pulp- and paper industry contributed to the switch from charcoal to coke in the iron industry. Thirdly, the development of hydropower, itself an organic source of energy, further contributed to the emergence of a mixed energy system. One can therefore see the Swedish transition from an organic to a mineral energy system as a shift from a traditional organic energy system to an industrialized organic energy system, which is to say an organic energy system which for its operation was depending on technologies and organizational structures of the mineral energy system.
    Keywords: Organic energy system; energy history; Sweden; forest history; firewood
    JEL: N14 N73
    Date: 2017–10–24
  4. By: Hassel, Arndt; Nicolescu, Razvan; Egenhofer, Christian; Nica, Andreea; Elisei, Sorin
    Abstract: The EU Directive on the promotion of the use of energy from renewable sources contains the main body of the EU's current renewable energy (RE) policy. Adopted in April 2009, the Directive provides a common framework for the promotion of energy from renewable sources in all EU member states. The act specifies binding national targets for the share of renewable energy (as a percent of gross final energy consumption) for each member state, which together amount to an EU-wide target of 20%. This report reviews the progress made to date by each member state towards fulfilling its target and offers projections about possible outcomes in the year 2020.
    Date: 2017–02
  5. By: Bjoern Felten; Jan Paul Baginski; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen (Campus Essen))
    Abstract: Die gekoppelte Erzeugung von Strom und Waerme in KWK-Anlagen ist eine der brennstoffeffizientesten Erzeugungsformen im Strommarkt. Aus diesem Grund wird sie in vielen europaeischen Laendern gefoerdert und ihr Ausbau ist erklaertes Ziel von Regierungen und Nichtregierungsorganisationen. Durch die gekoppelte Erzeugung richtet sich der Betrieb nicht allein nach dem Strompreis und der Elektrizitaetsnachfrage, sondern auch nach der lokalen Waermenachfrage und den verfuegbaren Erzeugungseinheiten im Waermenetz. Für den KWK-Anlagenbetreiber ergeben sich dadurch Restriktionen fuer die Vermarktung des Stroms im Elektrizitaetsmarkt. Aus dem gleichen Grund ergeben sich Herausforderungen aus Systemsicht: Die Flexibilität des Betriebs von KWK-Anlagen, die beispielsweise zum Ausgleich von Prognosefehlern Erneuerbarer Erzeugung genutzt werden kann, ist begrenzt. Das vorliegende Paper gibt einen Kurzueberblick ueber die Modellierung dieser Restriktionen im Kontext der europaeischen Energiesystemmodellierung und traegt somit zum Verstaendnis der Wirkzusammenhaenge und wesentlichen Treiber bei. The combined generation of electricity and heat in CHP plants is one of the most resource-efficient types of power generation in the electricity market. Therefore many European countries have implemented support schemes and the further deployment is the declared goal of governments and non-governmental organizations. Through the combined generation of electricity and heat, the operation of CHP plants is not only governed by electricity prices and electricity demand, but also depends on the local heat demand and the available heat generators in the heating grid. For CHP plant operators, this fact entails restrictions for trading the electricity on the electricity market. For the same reason, challenges exist from a system perspective: The operational flexibility of CHP plants, which may be used for e.g. balancing forecast errors of renewable-based generation, is limited. This paper provides a summary of how to model these restrictions in the context of modeling the European energy system. Thus it contributes to understanding the interdependencies of electricity and heating markets and their substantial drivers.
    Keywords: Kraft-Wärme-Kopplung (KWK), Must-Run, Strommarktmodellierung, Fernwärme, Combined Heat and Power (CHP), Cogeneration, Electricity Market Modeling, District Heating
    JEL: Q40 Q41 Q43 Q47
    Date: 2017–10
  6. By: Hagspiel, Simeon (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: We investigate the effects of system integration for reliability of supply in regional electricity systems along with cooperative measures to support it. Specifically, we set up a model to contrast the benefits from integration through statistical balancing (i.e., a positive externality) with the risk of cascading outages (a negative externality). The model is calibrated with a comprehensive dataset comprising 28 European countries on a high spatial and temporal resolution. We find that positive externalities from system integration prevail, and that cooperation is key to meet reliability targets efficiently. To enable efficient solutions in a non-marketed environment, we formulate the problem as a cooperative game and study different rules to allocate the positive and negative effects to individual countries. Strikingly, we find that without a mechanism, the integrated solution is unstable. In contrast, proper transfer payments can be found to make all countries better off in full integration, and the Nucleolus is identified as a particularly promising candidate. The rule could be used as a basis for compensation payments to support the successful integration and cooperation of electricity systems.
    Keywords: Electricity; Reliability of Supply; Generation Adequacy; System Integration; Cooperative Game
    JEL: C63 C71 Q42 Q48
    Date: 2017–12–04
  7. By: Kažukauskas, Andrius (CERE and the Department of Economics, Umeå University); Broberg, Thomas (CERE and the Department of Economics, Umeå University); Jaraite, Jurate (CERE and the Department of Economics, Umeå University)
    Abstract: A large body of literature shows that the provision of social comparisons can cause households to reduce residential energy and water use. In this paper, we carry out a field experiment that contributes to this literature in two important ways. First, we study a social comparison treatment that is continuous and communicated via pre-installed in-home displays, which are salient and updated in real time. Second, we estimate the effects of provision of social comparisons on two distinguished resources – electricity and water – in the same experimental setting. We find that, on average, our social comparison reduces daily residential energy consumption by 6.7 percent but has no effect on overall residential water use. The electricity savings are impersistent and occur in the evening hours, which only slightly overlap with peak hours. We argue that electricity conservation due to social comparisons is driven by short-run changes in households’ electricity saving behavior.
    Keywords: Consumer economics; Electricity; Field experiment; Real-time displays; Comparison information; Water
    JEL: D12 D83 L94 Q41
    Date: 2017–11–22
  8. By: Marianna Marino; Pierpaolo Parrotta; Giacomo Vallettaz
    Abstract: In this paper we study the effect of deregulation on innovation in the electricity sector using a sample composed of 31 OECD countries. Exploiting sharp reductions in the level of product market regulation, explicitly linked to changes in the legal framework, we perform a difference-in-difference analysis by matching data retrieved from the OECD International Regulation, OECD Patent Grants, and UN World Development Indicators databases. Our main findings suggest that a decrease in regulation intensity following a significant reform has a negative impact on patents (granted by the European Patent Office), and that this impact is mainly due to the degree of market contestability. Consistent with the results of Aghion et al. [1], we also find evidence of an inverted U-shaped relationship between regulation and innovation. This may imply that the effect of deregulation on innovation depends on the strength of the deregulatory process.
    Keywords: Regulation, patents, innovation, electricity.
    JEL: K23 L51 L94 O31
    Date: 2017
  9. By: G\"okhan Ceyhan; Nermin Elif Kurt; H. Bahadir Sahin; K\"ur\c{s}ad Derinkuyu
    Abstract: Bidders in day-ahead electricity markets want to sell/buy electricity when their bids generate positive surplus and not to take an action when the reverse holds. However, non-convexities in these markets cause conflicts between the actions that the bidders want to take and the actual market results. In this work, we investigate the non-convex market clearing problem of Turkish market operator and propose three different rule sets. The first rule set allows both rejection of bids with positive surplus and acceptance of bids with negative surplus. The second and the third sets only allow one of these conflicted cases. By using total surplus maximization as the objective, we formulate three models and statistically explore their performance with the real data taken from Turkish market operator.
    Date: 2017–12
  10. By: Ruddell, Keith (Research Institute of Industrial Economics (IFN)); Downward, Tony (University of Auckland); Philpott, Andy (University of Auckland)
    Abstract: We construct a model of strategic behavior in sequential markets which exhibits a persistent forward price premium. On the spot market, producers wield market power while purchasers are price takers. Producers with forward commitments have less incentive to raise prices on the spot market. Purchasers are thus willing to pay a premium to producers for forward contracts. We argue that this type of forward premium is not susceptible to arbitrage by speculators on the forward market, since purchasers prefer forward contracts backed by producers.
    Keywords: Forward pricing; Electricity markets; Market power; Arbitrage
    JEL: D43 G13 L12 L13 Q41
    Date: 2017–11–29
  11. By: Lundin, Erik (Research Institute of Industrial Economics (IFN)); Tangerås, Thomas (Research Institute of Industrial Economics (IFN))
    Abstract: Horizontal shifts in bid curves observed in wholesale electricity markets are consistent with Cournot competition. Quantity competition reduces the informational requirements associated with evaluating market performance because the markups of all producers then depend on the same inverse residual demand curve instead of one for each firm. We apply the model to the day-ahead market of the Nordic power exchange, Nord Pool, for the years 2011–2013. Results suggest that mark-ups were 8–11 percent. We find some support for the hypothesis that the division of Sweden into price areas in 2011 increased the exercise of market power.
    Keywords: Cournot competition; Market design; Market performance; Nord Pool; Walrasian auction; Wholesale electricity market
    JEL: D22 D40 D43 D44
    Date: 2017–11–21
  12. By: Kebede, Shemelis
    Abstract: Energy consumption is one of the important inputs to the production process. Energy consumption and energy supplied from fossil fuels in production process cause CO2 emissions and environmental deterioration. Due to this fact achieving economic development and environmental sustainability simultaneously is one of the most significant development challenges for Africa today. Formulation of sound economic development and environmental sustainability policy needs knowing the relationship among energy use, economic growth and environmental quality. This study examines the relationship among economic growth, energy consumption, financial development, trade openness, urbanization, population and CO2 emissions over the period of 1970–2014 in case of Ethiopia. The PP, ADF, KPSS, Zivot-Andrews and Clemente, Montanes and Reyes unit root tests were used to test the stationarity of the variables under consideration. The ARDL cointegration technique for establishing the existence of a long-run relationship and Toda-Yamamoto approach to determine the direction of causality between the variables were used. The results show that cointegration exists among the variables. Energy consumption, population, trade openness and economic growth have statistically significant positive impact on CO2 in the long-run while economic growth squared compacts CO2 emissions. This supports validity of the EKC hypothesis in Ethiopia. In the short-run urbanization and energy consumption intensify environmental degradation. Toda-Yamamoto granger causality results indicate the feedback relationship between energy consumption, CO2 emissions and urbanization. Financial development, population and urbanization cause economic growth while economic growth causes CO2 emissions. Causality runs from energy consumption to financial development, urbanization and population which in turn cause economic growth. Form the result, CO2 emissions extenuation policy in Ethiopia should focus on environmentally friendly growth, enhancing consumption of clean energy, incorporating the impact of population growth, urbanization, trade and financial development.
    Keywords: Growth, Energy, Financial development, Urbanization, CO2 emissions, Ethiopia
    JEL: C1 C18 E2 Q5
    Date: 2017–11–29
  13. By: Afees A. Salisu (Centre for Econometric and Allied Research, University of Ibadan); Ahaemefula Ephraim Ogbonna (Centre for Econometric and Allied Research, University of Ibadan)
    Abstract: In this paper, we offer the following contributions to the extant literature on the energy-growth nexus. First, we test the predictability of energy series in the predictive growth model using autoregressive distributed lag mixed data sample (ADL-MIDAS) approach. Second, we compare the in-sample and out-of-sample forecast performance of the ADL-MIDAS model with the linear time series models involving the first order autoregressive [AR(1)] model and the autoregressive distributed lag (ARDL) model. Third, we consider an array of energy proxies ranging from aggregate data to sectoral data of energy consumption (residential, commercial, industrial and transportation) and those defined by energy sources (petroleum, natural gas, coal, electricity, nuclear electricity and renewable energy). Fourth, we test whether accounting for asymmetries matters in the ADL-MIDAS regression model for the energy-growth nexus. The results support the significant predictability of energy for growth regardless of the measures of energy. In addition, the in-sample and out-of-sample forecast results overwhelmingly favour the ADL-MIDAS over the conventional linear time series models including the restrictive AR model. Thus, allowing for high frequency data for energy in the low frequency growth model will enhance the forecast accuracy of the model. However, we find that accounting for asymmetries may not improve the forecast accuracy of the ADL-MIDAS model in the energy-growth nexus since forecasts of the positive and negative asymmetric models do not differ significantly.
    Keywords: Energy consumption; Growth, ADL-MIDAS; Linear time series models; Forecast evaluation
    JEL: C12 C22 Q42 Q43 Q47
    Date: 2017–11
  14. By: Richard Beard
    Abstract: This report presents augmented estimates of the Index of Economic Well-being (IEWB) for 14 OECD countries for the 1980-2013 period
    Keywords: Index, Economic Well-being, OECD Countries, Canada, Natural resources, wealth, resource wealth
    JEL: E10 F02 I31 C43 Q00
    Date: 2017–07
  15. By: Ann Wolverton; Ann E. Ferris; Nathalie B. Simon
    Abstract: The extent to which ex-ante estimates of the costs of regulation differ from ex-post estimates is an empirical question of considerable interest to policymakers, regulated entities, and the public. This paper examines evidence on the actual costs of compliance with the 2004 Automobile and Light-Duty Truck Surface Coating NESHAP and then compares these estimates to the EPA’s ex-ante cost estimates to identify key drivers of any differences. This regulation is particularly interesting from a cost perspective because at the time of promulgation the EPA considered it to be economically significant (and it was therefore accompanied by an extensive cost analysis), under stood who was likely to be regulated under the NESHAP, and had identified several available technologies that could be used to reduce HAP emissions. Data on ex-post costs are gathered from a subset of the industry via survey and follow-up interview. We find that the EPA overestimated the cost of compliance for these plants and that overestimation was driven primarily by use of estimation methods that did not account for regulatory flexibilities such as the ability to utilize any effective HAPs control method. Thus, we find that differences between ex ante and ex post cost estimates for our sample of facilities are primarily driven by differences in the method of compliance rather than differences in the per-unit cost associated with a given compliance approach. In particular, the EPA expected facilities to install pollution abatement control technologies in their paint shops to reduce emissions of hazardous air pollutants, but instead these plants complied by reformulating their coatings.
    Keywords: retrospective cost analysis, air regulation, benefit-cost analysis, transportation
    JEL: Q52 Q53 Q55 Q58
    Date: 2017–12
  16. By: Danladi Galadima, Mukhtar; Wambai Aminu, Abubakar
    Abstract: This paper investigates non-linear dynamics, asymmetric cointegration and causality between natural gas consumption and economic growth in Nigeria using the momentum threshold autoregressive (M-TAR) model and momentum threshold error correction model (M-TECM). The results revealed evidence of asymmetric cointegration and bidirectional causality between natural gas consumption and economic growth in Nigeria. The implication of the results is that regime shift has influence on the relationship and that the discrepancies from long term equilibrium resulting from low natural gas consumption are eliminated quickly. Hence, the Nigerian policymakers should be cautious in adopting energy conservation policies because it could affect the growth of the economy, more attention should be paid to the shocks from the decrease in natural gas consumption and should take into account asymmetries in the relationship by incorporating asymmetric adjustment in forecasting natural gas-growth nexus.
    Keywords: Keywords: Asymmetric cointegration, Adjustment behaviour, Causality
    JEL: Q43
    Date: 2017–11–30
  17. By: Christiane Baumeister; Lutz Kilian; Xiaoqing Zhou
    Abstract: The transmission of oil price shocks has been a question of central interest in macroeconomics since the 1970s. There has been renewed interest in this question after the large and persistent fall in the real price of oil in 2014–16. In the context of this debate, Ramey (2017) makes the striking claim that the existing literature on the transmission of oil price shocks is fundamentally confused about the question of how to quantify the effect of oil price shocks. In particular, she asserts that the discretionary income effect on private consumption, which plays a central role in contemporary accounts of the transmission of oil price shocks to the U.S. economy, makes no economic sense and has no economic foundation. Ramey suggests that the literature has too often confused the terms-of-trade effect with this discretionary income effect, and she makes the case that the effects of the oil price decline of 2014–16 on private consumption are smaller for a multitude of reasons than suggested by empirical models of the discretionary income effect. We review the main arguments in Ramey (2017) and show that none of her claims hold up to scrutiny. Our analysis highlights the theoretical basis of the discretionary income effect. We also discuss improved regression-based estimates of this effect that allow for changes in the dependence on oil and gasoline imports, and we highlight the fact that alternative estimates used by policymakers involve strong simplifying assumptions.
    Keywords: Econometric and statistical methods, International topics
    JEL: C51 Q43
    Date: 2017
  18. By: Akpan, Wilson; Dawood, Mamoon
    Abstract: This paper examines the logic of environmental racism (and its ethnic variant) and places it against some of the main issues in the Niger Delta resistance. Relying on primary ethnographic data obtained in the Niger Delta in 2003 as well as on a close examination of the framework for oil exploitation in Nigeria, and some (recent) actions of the Nigerian government, the paper argues that while environmental ‘recklessness’, poor social remediation, and other ‘excesses’ have been undeniable concomitants of oil production in the Niger Delta, environmental racism provides only a tangential explanation for these problems, if at all. Environmental racism arguments neglect the underlying issue of a dysfunctional state-dictated framework for oil operations, whose devastating impact is felt not just in the Niger Delta, but across the broader Nigerian social fabric, as well as by the state and the multinational oil companies. The paper revisits John Rawls’ concept of ‘background institutions’ in explaining the environmental and social consequences of oil exploration and the Niger Delta crisis.
    Keywords: Colonialism, North South Relationships, Natural Resources
    JEL: Q32
    Date: 2017–12–04
  19. By: Reinhard Ellwanger
    Abstract: This paper shows that changes in market participants’ fear of rare events implied by crude oil options contribute to oil price volatility and oil return predictability. Using 25 years of historical data, we document economically large tail risk premia that vary substantially over time and significantly forecast crude oil futures and spot returns. Oil futures prices increase (decrease) in the presence of upside (downside) fears in order to allow for smaller (larger) returns thereafter. This increase (decrease) is amplified for the spot price because of time varying-benefits from holding physical oil inventories that work in the same direction. We also provide support for view that that time variation in the relative importance of oil demand and supply shocks is an important determinant of oil price fluctuations and their interaction with aggregate outcomes. However, the option-implied tail risk premia are not spanned by traditional macroeconomic and oil market uncertainty measures, suggesting that time-varying oil price fears are an additional source of oil price volatility and predictability.
    Keywords: Asset Pricing, Econometric and statistical methods, Financial markets
    JEL: C53 C58 D84 E44 G12 G13 Q43
    Date: 2017
  20. By: International Monetary Fund
    Abstract: Saudi Arabia has embarked on a bold reform program under Vision 2030. Reform momentum is strong, and good progress is being made in reform implementation. Saudi Arabia has reduced oil production under the OPEC+ agreement. Non-oil growth is expected to pick-up this year, but overall GDP growth will be close to zero given the decline in oil production. Growth is expected to strengthen over the medium-term as structural reforms are implemented. Risks mainly come from uncertainties about future oil prices and how ongoing reforms will impact the economy.
    Date: 2017–10–05
  21. By: Hilde C. Bjørnland; Vegard Høghaug Larsen; Junior Maih
    Abstract: We analyze the role of oil price volatility in reducing U.S. macroeconomic instability. Using a Markov Switching Rational Expectation New-Keynesian model we revisit the timing of the Great Moderation and the sources of changes in the volatilityof macroeconomic variables. We find that smaller or fewer oil price shocks did not play a major role in explaining the Great Moderation. Instead oil price shocksare recurrent sources of economic fluctuations. The most important factor reducing overall variability is a decline in the volatility of structural macroeconomic shocks. A change to a more responsive (hawkish) monetary policy regime also played a role.
    Keywords: Oil price, Great Moderation, New-Keynesian model, Markov Switching
    Date: 2017–11
  22. By: Fuad Mammadov (Center for Research and Development); Adigozalov Shaig (Central Bank of Azerbaijan);
    Abstract: In this paper we empirically examined the role of fiscal rules in mitigating the impact of oil market fluctuations in resource-rich economies using a structural panel VAR framework following P. Pedroni (2013) and incorporating identification scheme of Kilian (2009). Our key findings can be summarized as: l) oil exporting developing countries exhibit procyclical respond to positive oil market specific demand shock, 2) there are significant crosscountry differences in the way governments respond to the oil market shocks, 3) fiscal rules mitigate the shocks and generate fiscal discipline only if when all fiscal rules are imposed simultaneously, 4) we couldn’t identify any significant role of wealth funds as a budget stabilization policy.
    Keywords: fiscal rule; structural panel VAR; oil shocks
    JEL: C12 C22 C23 E62
    Date: 2017–11–18
  23. By: Afees A. Salisu (Centre for Econometric and Allied Research, University of Ibadan); Raymond Swaray (Economics Subject Group, University of Hull Business, University of Hull, Cottingham Road, UK); Tirimisyu F. Oloko (Centre for Econometric and Allied Research, University of Ibadan)
    Abstract: This study queries the act of making generalization about the dynamics of returns and volatility spillovers between oil price and U.S. stocks by merely considering only large cap stocks. It argues that this kind of generalization may be misleading, as the reactions of large cap, mid cap and small cap stocks to change in oil prices are not expected to be uniform. Our findings show that it is correct to make generalization about oil-U.S. stock relationship with large cap stocks when analysing return spillovers, but the generalization is incorrect when considering return volatility spillovers, particularly under falling and relatively stable oil prices.
    Keywords: Market capitalization, U.S. stocks, oil price dynamics
    JEL: G11 Q43
    Date: 2017–09
  24. By: Astghik Mavisakalyan (Bankwest Curtin Economic Centre, Curtin University); Yashar Tarverdi (Bankwest Curtin Economic Centre, Curtin University)
    Abstract: In a seminal article, Ross (2008) reports a negative correlation between oil production and women’s representation in the labour force and politics across countries. This article re-examines these relationships exploiting variations in oil endowments to address endogeneity concerns. We confirm that oil production causes decline in women’s representation. Additionally we show that, consistent with Dutch disease effects, oil production decreases women’s employment in the traded sector. However, it also leads to an increase in women’s employment in the nontraded sector. We explore some social consequences of oil production and show that it results in women marrying earlier and having more children.
    Keywords: natural resources; female employment
    JEL: J16 J21 O13
    Date: 2017–11
  25. By: Rabi H. Mohtar
    Abstract: Understanding the interlinkages between Climate Change and the water-energy-food securities is critical for developing effective strategies to adapt to projected changes and ensure sufficient access to these resources for a growing global population. This Policy Brief identifies some of the key factors and specific climate change impact in each of the water, energy and food sectors and possible adaptation strategies will be explored. Climate change is already happening; according the Intergovernmental Panel on Climate Change (IPCC), the Earth’s temperature has warmed faster in the last 3 decades than ever before since 1850; oceans have warmed around 0.11 C per decade in the last 40 years. The rate of sea level rise is now more than 3 mm per year since the 1990s (due to climate change and other aspects) (IPCC, 2014). These and other changes in climate such as precipitation have sever implications for human systems.
    Date: 2017–11
  26. By: Schaefer, Thilo
    Abstract: Die deutsche Klimapolitik agiert im Kontext weltweiter Vereinbarungen und europäischer Steuerungsinstrumente. Der bestehende Mix nationaler Instrumente und Ziele wirkt allerdings inkonsistent, was Zusatzkosten für die nationalen Akteure verursacht. Während im Wirkungsbereich des europäischen Emissionshandelssystems (EU-ETS) zusätzliche Instrumente zum Einsatz kommen, die allerdings keine über die im EU-ETS festgelegte Emissionsobergrenze hinausgehende Treibhausgasreduktion bewirken können, mangelt es in den Sektoren außerhalb des EU-ETS, namentlich im Verkehr und im Wärmebereich, an wirksamen Instrumenten. Der Klimaschutzplanprozess, den die Bundesregierung angestoßen hat, bietet die Chance, Ziele und Instrumente so anzupassen, dass Inkonsistenzen abgebaut werden und die deutsche Klimapolitik sowohl national als auch international an Akzeptanz gewinnt.
    JEL: Q52 Q58 F53
    Date: 2017
  27. By: Karsten Neuhoff; Heiner von Lüpke; Carlotta Piantieri
    Abstract: Am 11 . Dezember 2017 jährt sich die Verabschiedung des Kyoto-Protokolls zum 20. Mal. Grund genug, zurückzublicken auf die Implementierung dieses ersten bedeutenden Klimaschutzabkommens und zu fragen, welche Erfahrungen gemacht und Lehren daraus gezogen wurden. Die wichtigste davon: Die internationale Formulierung von Emissionsminderungszielen reicht für eine effektive Klimapolitik nicht aus. Deswegen wurde im Nachfolgeabkommen von Paris im Jahr 2015 festgeschrieben, dass nun jeder Akteur und jedes Land Verantwortung für seine Treibhausgasemissionen übernehmen und geeignete Maßnahmen umsetzen muss. Internationale Zusammenarbeit kann das unterstützen, ist aber nicht mehr der Eckpfeiler des Klimaschutzes.
    Date: 2017
  28. By: Gavard, Claire; Kirat, Djamel
    Abstract: The Paris Agreement establishes a mechanism to allow a Party to benefit from greenhouse gases emissions reductions conducted in a host Party to fulfil its nationally determined contribution. In this context, the objective of this paper is to improve the understanding of carbon offsets price dynamics, in comparison with regular carbon markets allowances. We combine a cointegration approach with risk premium considerations to compare the price dynamics of European Union Allowances (EUA) and Certified Emission Reductions (CER) in the second phase of the European carbon market. By taking account of breaks identified in the series, we find that, while the EUA and CER returns present comparable dynamics, the long-term relationships between the price of these two types of permits and their drivers differ significantly. Given the impact of energy prices (positive for coal and negative for gas) on the CER price, we suggest the existence of a supply-side effect for credits. We find that the price elasticity of allowances with regard to the coal and gas prices is negative in time periods of low economic activity and positive in the rest of the time. We explain the latter by the fact that the market is not tight and the former by the effect of the economic activity on the price of commodities and energy.
    Keywords: European allowances,international credits,emissions trading,power sector,structural breaks,time series analysis
    Date: 2017
  29. By: Dengler, Sebastian (Tilburg University, School of Economics and Management)
    Abstract: This doctoral thesis aims to advance our understanding of major topics of concern in the 21st century using theoretical as well as empirical economic methodologies. All three topics do and will continue to affect people’s lives as they can substantially shape the functioning of our societies. Thematically linked, Chapter 2 and 3 both focus on privacy choices and their consequences in the context of big data algorithms that target individual consumers. In contrast, Chapter 3 and 4 are linked methodologically as both present results from economic laboratory experiments, where the former focuses on cognitive challenges of individual decision-makers and the latter on challenges to coordination and cooperation between decision-makers. Chapter 2 presents results from a theoretical model where consumers face a monopolistic seller who is not only capable of perfect price discrimination but also more strategically sophisticated than the consumers. The model shows that consumers use a costly privacy-protective sales channel even in the absence of an explicit taste for privacy if they are not too strategically sophisticated. Chapter 3 presents results from an economic laboratory experiment related to the model developed before. Finding substantial deviations from Nash equilibrium predictions. Addressing cognitive constraints often present in privacy choices, some evidence for two alternative explanations is found: level-k thinking and reinforcement learning. A policy treatment resembling privacy-by-default mechanisms leads to a strong increase in hiding behavior. Chapter 4 presents results from an economic laboratory experiment of a dynamic resource extraction game that mimics the global multi-generation planning problem for climate change and fossil fuel extraction. The findings from this experiment suggest that successful cooperation does not only need to overcome a gap between individual incentives and public interests. There is also a fundamental heterogeneity between subjects with respect to beliefs and preferences about the way in which this should be achieved.
    Date: 2017
  30. By: Warwick McKibbin; Adele Morris; Augustus J. Panton; Peter J. Wilcoxen
    Abstract: This paper explores the interaction of monetary policy and climate change as they jointly influence macroeconomic outcomes. In bringing together the literatures on climate change and monetary policy, we seek to alert policymakers in each realm to the implications of the other.
    Date: 2017–12

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