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on Energy Economics |
| By: | Newbery, David M. G. |
| Abstract: | Given the agreed urgency of decarbonizing electricity and the need to guide decentralized private decisions, an adequate and credible carbon price appears essential. The paper models and quantifies the useful concept of the break-even carbon price for mature zerocarbon electricity investments. It appears an attractive alternative given the difficulty of measuring the social cost of carbon, but modelling shows it extremely sensitive to projected fuel prices, the rate of interest, and the capital cost of generation options, all of which are very uncertain. This has important implications, and justifies combining a carbon price floor with suitable long-term contracts for electricity investments. |
| Keywords: | carbon price,electricity,investment,renewables |
| JEL: | C65 Q42 Q48 Q51 Q54 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201829&r=ene |
| By: | Pereira, Alfredo; Pereira, Rui |
| Abstract: | The objective of this work is to examine the environmental, economic, and distribution effects of carbon taxation and environmental tax reform policies in Portugal. Decarbonization of the Portuguese economy will necessarily be based on an increasing electrification of energy demand and the production of electricity from renewable energy resources. Carbon and energy pricing policies coupled with appropriate recycling of the carbon tax revenues can contribute towards the decarbonization of the Portuguese economy and an increase in the use of renewable energy resources in the production of electric power. In this work we provide full details as to the model, calibration, and simulation results within the economic framework of the DGEP model. |
| Keywords: | economic effects, distributional effects, electrification, decarbonization, carbon taxation, Portugal |
| JEL: | C68 H2 O5 Q43 Q5 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:84782&r=ene |
| By: | Richard Audoly; Adrien Vogt-Schilb; Céline Guivarch; Alexander Pfeiffer |
| Abstract: | This paper covers three policy-relevant aspects of the carbon content of electricity that are well established among integrated assessment models but under-discussed in the policy debate. First, climate stabilization at any level from 2?C to 3?C requires electricity to be almost carbon-free before the end of the century. As such, the question for policy makers is not whether to decarbonize electricity but when to do it. Second, decarbonization of electricity is still possible and required if some of the key zero-carbon technologies — such as nuclear power or carbon capture and storage — turn out to be unavailable. Third, progressive decarbonization of electricity is part of every country’s cost-effective means of contributing to climate stabilization. In addition, this paper provides cost-effective pathways of the carbon content of electricity — extracted from the results of AMPERE, a recent integrated assessment model comparison study, and the IPCC AR5 database. These pathways can be used to benchmark existing decarbonization targets, such as those set by the European Energy Roadmap or the Clean Power Plan in the United States, or inform new policies in other countries. These pathways can also be used to assess the desirable uptake rates of electric and plug-in hybrid vehicles, electric stoves and heat pumps, industrial electric furnaces, or other electrification technologies |
| Keywords: | Zero-Carbon Electricity, Environmental Policy, Electricity, Climate Change Mitigation and Adaptation, environmental policy, climate change |
| JEL: | Q54 Q01 Q4 Q5 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:8498&r=ene |
| By: | Maximilian Auffhammer |
| Abstract: | This paper proposes a simple two-step estimation method (Climate Adaptive Response Estimation - CARE) to estimate sectoral climate damage functions, which account for long- run adaptation. The paper applies this method in the context of residential electricity and natural gas demand for the world's sixth largest economy - California. The advantage of the proposed method is that it only requires detailed information on intensive margin behavior, yet does not require explicit knowledge of the extensive margin response (e.g., technology adoption). Using almost two billion energy bills, we estimate spatially highly disaggregated intensive margin temperature response functions using daily variation in weather. In a second step, we explain variation in the slopes of the dose response functions across space as a function of summer climate. Using 18 state-of-the-art climate models, we simulate future demand by letting households vary consumption along the intensive and extensive margins. We show that failing to account for extensive margin adjustment in electricity demand leads to a significant underestimate of the future impacts on electricity consumption. We further show that reductions in natural gas demand more than offset any climate-driven increases in electricity consumption in this context. |
| JEL: | Q4 Q54 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24397&r=ene |
| By: | Fotis, Panagiotis; Polemis, Michael |
| Abstract: | The aim of this paper is to cast light on the relationship between sustainable development environmental policy and renewable energy use. We utilize a dynamic GMM approach over a panel of 34 European Union (EU) countries spanning the period 2005-2013. Our findings reveal a positive monotonic relationship between development and pollution. Energy saving positively affects environmental degradation, while energy intensity increases air pollution. Our findings imply important policy implications to policy makers toward sustainability. Despite the fact that the Europe “20-20-20” climate and energy package strategy seems to be achieved, the recently adopted Energy Roadmap 2050 must be updated on regular basis in order to be effectively implemented and monitored by government officials and firms’ stakeholders. Therefore, we argue that EU countries must increase the use of new technology and renewable energy capacity in order to align environmental policies towards more efficient energy use and sustainable development among the EU periphery. |
| Keywords: | Sustainable Development; Environmental Policy; Renewable Energy Sources; Dynamic Panel Data Analysis |
| JEL: | D23 L16 O11 Q56 |
| Date: | 2018–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:85018&r=ene |
| By: | Eva Lyubich (UC Berkeley); Joseph S. Shapiro (Cowles Foundation, Yale University); Reed Walker (University of California, Berkeley, IZA, & NBER) |
| Abstract: | This paper provides the ?rst estimates of within-industry heterogeneity in energy and CO2 productivity for the entire U.S. manufacturing sector. We measure energy and CO2 productivity as output per dollar energy input or per ton CO2 emitted. Three ?ndings emerge. First, within narrowly de?ned industries, heterogeneity in energy and CO2 productivity across plants is enormous. Second, heterogeneity in energy and CO2 productivity exceeds heterogeneity in most other productivity measures, like labor or total factor productivity. Third, heterogeneity in energy and CO2 productivity has important implications for environmental policies targeting industries rather than plants, including technology standards and carbon border adjustments. |
| JEL: | F18 H23 Q56 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2117r&r=ene |
| By: | François Cohen (CERNA i3 - Centre d'économie industrielle i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris); Matthieu Glachant (CERNA i3 - Centre d'économie industrielle i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris); Magnus Söderberg (NIVA - Norwegian Institute for Water Research - Norwegian Institute for Water Research) |
| Abstract: | Using household-level data from the American Housing Survey, this paper assesses the cost of adapting housing to temperature increases. We account for both energy use adjustments and capital adjustments through investments in weatherization and heating and cooling equipment. Our best estimate of the present discounted value of the cost for adapting to the A2 « business-as-usual » climate scenario by the end of the century is $5,600 per housing unit, including both energy and investment costs. A more intense use of air conditioners will be compensated for by a reduction in heating need, leading to a shift from gas to electricity consumption. |
| Date: | 2017–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01695171&r=ene |
| By: | Hlalefang Khobai (Department of Economics, Nelson Mandela University) |
| Abstract: | This study serves to examine the effects of renewable energy consumption on economic growth in Indonesia. Quarterly time series data was used for the period 1990 – 2014. Applying the autoregressive distributed lag (ARDL) bounds testing approach, the study established that there is a long run relationship between economic growth, renewable energy consumption, carbon dioxide emissions, capital and employment. It is established that renewable energy consumption has a significant positive effect on economic growth both in the long run and short run. The findings from the vector error correction model (VECM) technique suggest that there is a long run causality flowing from renewable energy consumption, carbon dioxide emissions, capital and employment to economic growth. The findings of this study suggest that the government, energy policy makers and associated bodies should act together to improve on the renewable energy infrastructure and lower carbon growth in Indonesia. |
| Keywords: | Renewable energy consumption, Economic growth, Co-integration, Causality, Indonesia. |
| JEL: | D04 Q47 Q42 Q01 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:mnd:wpaper:1806&r=ene |
| By: | Jové Llopis, Elisenda,; Segarra Blasco, Agustí, 1958- |
| Abstract: | This paper empirically investigates the factors driving the adoption of energy efficiency (EE) and renewable energy (RE) measures in a sample of 8,213 Small and Medium-Sized Enterprises (SMEs) in European countries. Using a bivariate probit model we examine their drivers, complementarities, and potential temporal persistence in three European country clusters (Core countries, Mediterranean countries and New EU members). Our results suggest that sustainable energies actions (EE and RE) are highly persistent both at the firm level and across countries and that there are relevant complementarities between EE and RE practices, as well as other resource efficient practices. In addition, strategies for EE seem to rely more on cost saving and regulations, while those for RE are more linked to public support and environmental awareness. This paper ends with some recommendations for policymakers suggesting that Europe needs to design an energy policy for the SMEs firms that jointly pursues both EE and the diffusion of RE according to the technological gap of each member country. Keywords: energy efficiency, renewable energy, European Union, SMEs firms |
| Keywords: | Energies renovables -- Unió Europea, Països de la, Empreses petites i mitjanes -- Aspectes ambientals -- Unió Europea, Països de la, 338 - Situació econòmica. Política econòmica. Gestió, control i planificació de l'economia. Producció. Serveis. Turisme. Preus, |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:urv:wpaper:2072/306520&r=ene |
| By: | Eirik S. Amundsen; Peder Andersen; Jørgen Birk Mortensen |
| Abstract: | Instruments chosen to pursue climate related targets are not always efficient. In this paper we consider an economy with three climate related targets for its electricity generation: a given share of “green” electricity, a given expansion of “green” electricity, and a given reduction of “black” (fossil based) electricity. At its disposal the country has three instruments: an allowance system (tradable green certificates), a subsidy system (feed-in tariffs) and a Pigouvian fossil tax. Each of these instruments may be used to attain any of the given targets. Within the setting of the model it is verified that each kind of the target has only a single efficient instrument under certainty, and that there is a deadweight loss of using other instruments to achieve the target. Similarly, there is also an analysis of instrument choice when several targets are to be attained at the same time. The paper also discusses the case of simultaneous targets as well as the relevance of the various targets. |
| Keywords: | energy policy, green certificates, subsidies, Pigouvian taxes, climate change |
| JEL: | C70 Q28 Q42 Q48 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6926&r=ene |
| By: | Michail Filippidis (Department of Economics and Finance, University of Portsmouth); George Filis (Department of Accounting, Finance and Economics, Bournemouth University); Christos Floros (Department of Accounting & Finance, School of Management and Economics, Technological Educational Institute of Crete); Renatas Kizys (Department of Economics and Finance, University of Portsmouth) |
| Abstract: | This study examines the globalisation-regionalisation hypothesis in the WTI/Brent crude oil futures price differential by considering a set of the potential determinants at 1, 3 and 6 months to maturity contracts. To this end, we employ monthly data over the period 1993:1-2016:12 for a set of crude oil-market specific (convenience yield, consumption, production) and oil-futures market specific (open interest, trading volume) determinants. Our results can be outlined as follows. First, the WTI/Brent convenience yield spread can drive a wedge between the WTI and Brent oil futures prices for the nearby month and 3-month contracts. Second, the WTI/Brent oil production spread is a significant determinant for the 1-month, the 3-month and the 6-month to maturity contracts, while the WTI/Brent oil consumption spread is significant for the 6-month contract. Third, the WTI/Brent open interest spread appears to influence the oil futures price variability between the WTI and Brent for the 3-month and the 6-month contracts, while the WTI/Brent trading volume spread lends predictive power for the 1-month and the 3-month contracts. Fourth, the oil futures market does not appear to be globalised in every time period. We provide evidence of a regionalised oil futures market in the short-run horizon. Fifth, our robustness analysis lends support to the above findings. The findings of this study provide valuable information to energy investors, traders and hedgers. |
| Keywords: | Brent; convenience yield; globalisation-regionalisation hypothesis; oil futures differential; WTI |
| JEL: | C22 C51 G13 G15 Q40 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:bam:wpaper:bafes19&r=ene |
| By: | Hlalefang Khobai (Department of Economics, Nelson Mandela University) |
| Abstract: | The study purposes to investigate the relationship between renewable energy consumption and economic growth in Turkey using annual data covering the period 1990–2014. The Autoregressive Distributed Lag (ARDL) model is applied and the findings suggest existence of a long run relationship among the variables. The ARDL long run estimation results discovered that renewable energy consumption has a positive and significant effect on economic growth. The results from the Vector Error Correction Model (VECM) reveals that there is a unidirectional causality flowing from economic growth to renewable energy consumption without feedback. This findings bring a fresh perspective for policy makers for long run and sustainable economic development in Turkey. |
| Keywords: | Renewable energy consumption, Economic growth, Causality, Turkey |
| JEL: | D04 Q47 Q42 Q01 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:mnd:wpaper:1807&r=ene |
| By: | Sylvain Rossiaud (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Catherine Locatelli (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes) |
| Abstract: | This contribution sets out to clarify the determinants and modalities by which Russian companies played a part in structuring the energy complex of central and eastern European countries. In so doing we seek to supplement state-centred analysis of realist inspiration. The Soviet legacy explains both the incentive for Russian companies to develop operations in downstream oil and gas in these countries and why, given the vulnerability of national energy systems, target countries tend to see such developments as a threat to their security. In this respect the mid-2000s may be seen as a turning point, with the downstream growth strategies of Russian energy suppliers increasingly called into question. |
| Keywords: | energy company,Russia |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01727667&r=ene |
| By: | Mar Reguant |
| Abstract: | Renewable policies have grown in popularity across states in the US, and worldwide. The costs and benefits from renewable policies are unevenly distributed across several margins. The incidence of alternative designs varies substantially across producers and consumers, across types of producers, across types of consumers, and across regions. In particular, the efficiency and distributional implications of large-scale policies crucially depend on the design of wholesale policies and how targets are set, but also on how the costs of such policies are passed-through to consumers. Given that renewable costs are mostly non-marginal, due to the large presence of fixed costs, there are many different ways to implement these policies on both the environmental design and retail pass-through margins. Using data from the California electricity market, I develop a model to illustrate the interaction between large-scale renewable policies (carbon taxes, feed-in tariffs, production subsidies and renewable portfolio standards) and their pricing to final consumers under alternative retail pricing schemes (no pass-through, marginal fees, fixed flat tariffs and Ramsey pricing). I focus on the trade-off between charging residential versus industrial consumers to highlight tensions between efficiency, distributional and environmental objectives. |
| JEL: | Q4 Q5 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24398&r=ene |
| By: | Salomé Bakaloglou; Dorothée Charlier |
| Abstract: | The aim of this research is to understand the weight of preference heterogeneity in explaining energy consumption in French homes. Using a discrete-continuous model and the conditional mixed-process estimator (CMP) allows us to tackle two potential endogeneities in residential energy consumption: energy prices and the choice of equipment. As a major contribution, we provide evidence that preferences for comfort over energy savings do have significant direct and indirect impacts on energy consumption, especially for high-income households. Preferring comfort over economy or one additional degree of heating implies an average energy overconsumption of 10% and 7.8% respectively, up to 36% for high-income households. Our results strengthen the belief that household heterogeneity is a substantial factor in explaining energy consumption and could have meaningful implications for the design of public policy tools aimed at reducing energy consumption in the residential sector. |
| Keywords: | Residential energy consumption, Household preferences, Discrete-continuous choice, Conditional mixed-process |
| JEL: | Q41 D12 C26 C21 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:1803&r=ene |
| By: | Christos Kotsogiannis (Department of Economics, University of Exeter, Exeter, UK); Alan Woodland (School of Economics, UNSW Business School, UNSW, Australia) |
| Abstract: | This paper explores the role of multilateral transfers in achieving strict Pareto improvements in welfare, focusing on identifying conditions under which their use is warranted when carbon prices differ internationally and there are impediments to international trade. Using a general equilibrium model of international trade with global emission externalities, it is shown that strict Pareto improvements in welfare may arise from multilateral income transfers when either trade or carbon taxes are constrained away from their Pareto optimal levels. The purpose of transfers is then to account for the impact on emissions of the trade distortions and inappropriate carbon pricing. Such transfers exist if and only if a generalized normality condition is violated. A numerical example illustrates the transfer mechanism. |
| Keywords: | Global emissions, environmental externalities, multilateral income transfers, Pareto-improving reforms |
| JEL: | H23 F18 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2018-04&r=ene |
| By: | Samir, Saidi; Shahbaz, Muhammad; Akhtar, Pervaiz |
| Abstract: | This paper investigates the impact of transport energy consumption and transport infrastructure on economic growth by utilizing panel data on MENA countries (the Middle East and North Africa region) for the period of 2000-2016. The MENA region panel is divided into three sub-groups of countries: GCC panel (containing the Gulf Cooperation Council countries), N-GCC panel (containing countries that are not members of the Gulf Cooperation Council), and North African countries (called MATE — Morocco, Algeria, Tunisia and Egypt). Using the Generalized Method of Moments (GMM), we find that transport energy consumption significantly adds to economic growth in MENA, N-GCC and MATE regions. Transport infrastructure positively contribute to economic growth in all regions. The Dumitrescu-Hurlin panel causality analysis shows the feedback effect of transport energy consumption and transport infrastructure with economic growth. The empirical results add a new dimension to the importance of investing in modern infrastructure that facilitates the use of more energy-efficient modes and alternative technologies that positively affect the economy with minimizing negative externalities. |
| Keywords: | Transport, Energy Consumption, Infrastructure, Economic Growth, GMM, MENA Countries |
| JEL: | A1 |
| Date: | 2018–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:85037&r=ene |
| By: | Hlalefang Khobai (Department of Economics, Nelson Mandela University); Nomahlubi Mavikela (Department of Economics, Nelson Mandela University) |
| Abstract: | This paper investigates the relationship between energy consumption, foreign direct investment and economic growth in Argentina employing annual data covering the period from 1970 to 2016. To determine the long run relationship and the direction of causality among the variables, the Autoregressive Distributed Lag (ARDL) bounds testing approach and Vector Error Correction Model (VECM) technique are applied, respectively. The ARDL bounds tests suggested an existence of a long run relationship between energy consumption, foreign direct investments, economic growth and capital. More specifically, it was established that a 1% increase in foreign direct investments lead to a 0.013% increase in energy consumption, while a 1% increase in economic growth boots energy consumption by 0.35% in the long run. The VECM Granger-causality results suggested a unidirectional causality flowing from foreign direct investments and capital to energy consumption. A bidirectional causality flowing between energy consumption and economic growth was also established. This study brings a fresh perspective for the energy policy makers in Argentina. |
| Keywords: | Energy consumption, Foreign direct investment, Economic growth, ARDL, VECM, Argentina. |
| JEL: | O13 Q43 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:mnd:wpaper:1808&r=ene |
| By: | Curtis, John; McCoy, Daire |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201807&r=ene |
| By: | Fouad El Ouardighi (Operation management Department - Essec Business School); Konstantin Kogan (Bar-Ilan University [Israël]); Raouf Boucekkine (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales) |
| Abstract: | We investigate how the relationship between economic growth and pollution is affected by the source of pollution: production or consumption. We are interested in polluting waste that cannot be naturally absorbed, but for which recycling efforts aim to avoid massive pollution accumulation with harmful consequences in the long run. We distinguish the cases where recycling efforts are capital-improving or capital-neutral. Based on both environmental and social welfare perspectives, we determine how the interaction between growth and polluting waste accumulation is affected by the source of pollution, i.e., either consumption or production, and by the fact that recycling may or may not act as an income generator, i.e., either capital-improving or capital-neutral recycling efforts. Several new results are extracted regarding optimal recycling policy and the Environmental Kuznets Curve. Beside the latter concern, we show both analytically and numerically that the optimal control of waste through recycling allows to reaching larger (resp., lower) consumption and capital stock levels under consumption-based waste compared to production-based waste while the latter permits to reach lower stocks of waste through lower recycling efforts. |
| Keywords: | Economic growth,Capital,Consumption,Polluting waste,recycling efforts JEL Classification Q57,C61 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01693488&r=ene |
| By: | Naoya Yamaguchi; Maiya Hori; Yoshinari Ideguchi |
| Abstract: | In this paper, we formulate a method for minimising the expectation value of the procurement cost of electricity in two popular spot markets: {\it day-ahead} and {\it intra-day}, under the assumption that expectation value of unit prices and the distributions of prediction errors for the electricity demand traded in two markets are known. The expectation value of the total electricity cost is minimised over two parameters that change the amounts of electricity. Two parameters depend only on the expected unit prices of electricity and the distributions of prediction errors for the electricity demand traded in two markets. That is, even if we do not know the predictions for the electricity demand, we can determine the values of two parameters that minimise the expectation value of the procurement cost of electricity in two popular spot markets. We demonstrate numerically that the estimate of two parameters often results in a small variance of the total electricity cost, and illustrate the usefulness of the proposed procurement method through the analysis of actual data. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1803.04532&r=ene |
| By: | Lisa Chauvet (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine, FERDI - Fondation pour les Etudes et Recherches sur le Développement International); De Miguel Torres Alvaro (PSE - Paris School of Economics); Alexa Tiemann (OCDE - Département des affaires économiques) |
| Abstract: | We examine the impact of being located in areas with higher availability of electricity on manufacturing firm profits in Myanmar. Using a survey of 497 manufacturing firms conducted in 2014 and covering the whole territory of Myanmar, we investigate whether firms belonging to industries that tend to make more intensive use of electricity show better performance if such firms are located in areas with higher availability of electricity. We find that electricity provided by the national power grid tends to have a positive impact on manufacturing firm profits. Results are robust to reducing the sample to firms that could not have chosen their location endogenously, as well as to the use of an instrumental variable. |
| Keywords: | H4,L60,Myanmar,electricity,firm performance,O13,O14 |
| Date: | 2018–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01715529&r=ene |
| By: | Saker Sabkha (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Christian De Peretti (ISFA - Institut des Science Financière et d'Assurances - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - Université de Lyon); Dorra Hmaied (IHEC - Institut des Hautes Etudes Commerciales de Carthage) |
| Abstract: | The unquenchable thirst of several sectors to crude oil in the recent years makes a common belief regarding its key role towards the acceleration of the recent economic recession and financial instability. This paper aims to examine the impact of oil shocks on the sovereign credit risk for a sample of 38 worldwide oil-producing and non-oil producing countries, over a period ranging from January 2006 to March 2017. In contrast to the existing literature, CDS volatility is employed as a measure for the creditworthiness level, rather than the commonly used CDS spreads first-order moment. The methodological framework used in this paper goes beyond previous studies and takes into account more financial data features (long memory behavior, asymmetric effects and nonlinear-ities) according to a self-exciting regime switching model. Results reveal some dissimilarities in the explanatory power of the exogenous variables between regimes and across countries. Particularly, restricted evidence of oil significant impact on sovereign CDS volatility are detected during the stable regime, whilst during the risky regime credit volatility becomes more sensitive to oil market conditions for most of the studied markets. Generally, the decline in oil price worsens the public finances tenability whether the country is oil-related or not. JEL Classification G1, G15, E44. |
| Keywords: | Sovereign CDS volatility,Oil market,FIAPARCH,SETAR,Threshold regime-switching |
| Date: | 2018–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01698012&r=ene |
| By: | Nikolaos Antonakakis (Economics and Finance Subject Group, University of Portsmouth and Department of Business and Management, Webster Vienna Private University); Juncal Cunado (Department of Economics, University of Navarra); George Filis (Department of Accounting, Finance and Economics, Bournemouth University); David Gabauer (Department of Economics, Johannes Kepler University); Fernando Perez de Gracia (Department of Economics, University of Navarra) |
| Abstract: | This paper investigates the volatility spillovers and co-movements among oil prices and stock prices of major oil and gas corporations over the period between 18th June 2001 and 1st February 2016. To do so, we use the spillover index approach by Diebold and Yilmaz (2009, 2012, 2014, 2015) and the dynamic correlation coefficient model of Engle (2002) so as to identify the transmission mechanisms of volatility shocks and the contagion of volatility among oil prices and stock prices of oil and gas companies, respectively. Given that volatility transmission across oil and major oil and gas corporations is important for portfolio diversification and risk management, we also examine optimal weights and hedge ratios among the aforementioned series. Our results point to the existence of significant volatility spillover effects among oil and oil and gas companies’ stock volatility. However, the spillover is usually unidirectional from oil and gas companies’ stock volatility to oil volatility, with BP, CHEVRON, EXXON, SHELL and TOTAL being the major net transmitters of volatility to oil markets. Conditional correlations are positive and time-varying, with those between each of the aforementioned companies and oil being the highest. Finally, the diversification benefits and hedging effectiveness based on our results are discussed. |
| Keywords: | Oil prices; oil and gas corporations; volatility spillovers; volatility co-movement; hedging; portfolio weights |
| JEL: | C32 F3 G12 Q43 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:bam:wpaper:bafes18&r=ene |
| By: | Aleksandar Vasilev (Independent researcher) |
| Abstract: | We introduce an environmental dimension into a real-business-cycle model augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We investigate the quantitative importance of utility-enhancing environmental quality, and the mechanics of environmental ("carbon") tax on polluting production, as well as the effect of government spending on pollution abatement over the cycle. In particular, a positive shock to pollution emission in the model works like a positive technological shock, but its effect is quantitatively very small. Allowing for pollution as a by-product of production improves the model performance against data, and in addition this ex- tended setup dominates the standard RBC model framework, e.g., Vasilev (2009). |
| Keywords: | Business cycles, pollution, environmental quality, environmental tax, abatement spending |
| JEL: | E32 C68 Q2 Q4 Q54 Q58 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:sko:wpaper:bep-2018-03&r=ene |
| By: | Shoji Haruna; Rajeev K. Goel |
| Abstract: | We study optimal pollution abatement under a mixed oligopoly game when firms engage in emissions-reducing R&D that is imperfectly appropriable. The regulator uses a tax to curb emissions. Results show that in a mixed oligopoly, the public firm has positive emissions reduction in equilibrium; however, emissions reductions of the private firm could be positive or zero. Under certain conditions, the optimal pollution tax is positive; otherwise, the tax reverts to a subsidy. Comparing mixed and private duopolies, privatization leads to reductions in R&D and output, but to an increase in overall emissions, so privatization tends to make the environment worse. |
| Keywords: | mixed oligopoly, R&D, pollution, spillovers, taxation, subsidy |
| JEL: | D43 D62 O33 Q55 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6909&r=ene |
| By: | Al-Riffai, Perrihan; Breisinger, Clemens; Mondal, Md. Hossain Alam; Ringler, Claudia; Wiebelt, Manfred; Zhu, Tingju |
| Abstract: | We use an innovative methodology to model the socioeconomic linkages between water, energy, and food in the East Nile Basin. Based upon a theoretical nexus framework, the methodology is expanded into a quantifiable modeling suite that under-lies the analysis of each of three country case studies. The advantages are that, despite resource shortages being a challenge, the modeling suite aids in devising policies and strategies that formulate these sectoral interdependencies and provide the evidence-based research results necessary for their design in a way that exploits synergies existing across sectors, countries, and regions (Al-Zubari n.d.). This paper lays out the methodology and gives an example of an application and scenarios by focusing on three countries in the East Nile Basin. This methodology paper will be followed by three individual country case studies that highlight the water, energy, and food nexus for each. |
| Keywords: | EGYPT; ARAB COUNTRIES; MIDDLE EAST; NORTH AFRICA; AFRICA; ETHIOPIA; SUDAN; sustainable development; socioeconomic development; food security; models; water; energy; computable general equilibrium (CGE) models; MARKAL/TIMES model; dynamic computable general equilibrium (DCGE) |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:menawp:4&r=ene |
| By: | Gros, Daniel; Di Salvo, Mattia |
| Abstract: | On June 28th, the European Council took a decision to prolong the economic sanctions imposed on Russia until 31 January 2018. These sanctions: 1) limit access to EU capital markets for major Russian state-owned financial institutions and energy and defence companies, 2) ban both the export and import of arms, 3) ban the export of dual-use goods for military use to Russia and 4) curtail Russia’s access to certain sensitive technologies and services that can be used for oil production and exploration. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:12745&r=ene |
| By: | Damien Dussaux (CERNA i3 - Centre d'économie industrielle i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris); Antoine Dechezleprêtre (CERNA i3 - Centre d'économie industrielle i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris); Matthieu Glachant (CERNA i3 - Centre d'économie industrielle i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris) |
| Abstract: | We examine the effect of intellectual property rights (IPRs) protection on the two main channels of international transfer of low-carbon technologies i.e. trade in low-carbon capital goods, and foreign direct investments (FDI) by firms producing low-carbon technologies. Our data describes cross-country transfer through these channels between developing and developed countries in eight climate-related technology fields from 2001 to 2011. At the world level, we find that strengthening IPRs protection increases transfer in six technology fields (hydro power, solar PV, solar thermal, heating, lighting, and cleaner vehicles), while the effect is statistically insignificant in the others. The results slightly change when focusing on non-OECD countries. In particular, we find that a stricter IPRs regime may reduce their imports of solar equipment. These results have important implications for climate negotiations on North-South technology transfer. |
| Keywords: | Climate change, Technology transfer, Intellectual property rights, International trade, Foreign direct investment. |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01693539&r=ene |
| By: | Hammond, Peter J (Department of Economics, and CAGE (Competitive Advantage in the Global Economy), University of Warwick,) |
| Abstract: | Whether an economic agent's decision creates an externality often depends on the institutional context in which the decision was made. Indeed, in orthodox economics, a technological or exogenous externality occurs just in case one agent's economic welfare or production possibilities are directly affected by the market decisions of other agents. A pecuniary externality occurs just in case one consumer's economic welfare or producer's profit is affected indirectly by price changes caused by changes in other agents' decisions. Similarly, an institutional or endogenous externality may arise whenever allocations are determined by a mechanism that is not strategyproof for some agent. Then even a resource balance constraint creates an institutional externality except in special cases such as when no individual agent's action can affect market clearing prices - i.e., there are no pecuniary externalities. |
| Keywords: | Externalities ; pecuniary externalities ; strategyproof mechanisms ; institutional externalities |
| JEL: | D63 D70 D90 Q54 Q56 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1162&r=ene |
| By: | Armon Rezai; Lance Taylor; Duncan Foley (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | This paper explores how climate damage affects the long-run evolution of the economy. Climate change induced by greenhouse gas lowers profitability, reducing investment and cutting output in the short and long runs. Short-run employment falls due to deficient demand. In the long run, productivity growth is slower, lowering potential income levels. Climate policy can increase incomes and employment in the short and long runs, while a continuation of business-as-usual leads to a dystopian income distribution with affluence for few and high levels of unemployment for the rest. |
| Keywords: | climate change, economic growth, integrated assessment, demand and distribution, energy productivity, unemployment |
| JEL: | H21 Q51 Q54 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2017-10&r=ene |
| By: | Elkerbout, Milan; Egenhofer, Christian |
| Abstract: | Carbon prices in the EU ETS have been low for a number of years and might remain at relatively low levels for the foreseeable future. That does not mean that the EU ETS, or the price signal it produces, is meaningless. Incentives to abate greenhouse gas emissions exist at any price level (it is just stronger with higher prices). This is true even if the impact is different between the power and industrial sectors, partly but not only because of the difference in allocation rules. What the ETS price signal does not drive, however, is long-term investment decisions, which are more a function of price expectations and expected returns on investment. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:12666&r=ene |
| By: | Baran Doda; Simon Quemin |
| Abstract: | Linkages between emissions trading systems (ETSs) are crucial for the cost-effective implementation of the Paris Agreement. Yet we know little about the determinants of economic gains in a multilaterally linked system, how they are shared among participating jurisdictions and less still about their magnitude. We characterize these gains for an arbitrary linkage group, decompose them into gains in the group's internal bilateral linkages and prove linkage is superadditive. Relative to autarky linkage reduces permit price volatility on average but not necessarily for individual linkage group members. In a quantitative application calibrated to five hypothetical ETSs covering the power sectors in Canada, continental Europe, South Korea, the UK and the USA, linking generates gains of up to $370 million (constant 2005US$) per year relative to autarky. Focusing on linkage groups with two and three members which are themselves not linked, we find that maximum aggregate gains decline by $43-178 million. |
| Keywords: | Climate change policy, International emissions trading systems, Multilateral linking, Effort and risk sharing |
| JEL: | Q58 H23 F15 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:1804&r=ene |
| By: | Wieger Hinderks; Andreas Wagner; Ralf Korn |
| Abstract: | In this paper we introduce a flexible HJM-type framework that allows for consistent modelling of prices of intraday, spot, futures, and options on futures. The link with the intraday market is in particular important, since these markets gain increasing popularity. This framework is based on stochastic processes with economic interpretations and consistent with the initial term structure given in the form of a price forward curve. Furthermore, the framework allows for day-ahead spot price models to be used in an HJM setting. We include several explicit examples of classical spot price models but also show how structural models (i.e. models based on supply and demand) and factor models can be used. |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1803.08831&r=ene |
| By: | Matteo Basei |
| Abstract: | We consider a retailer who buys energy in the wholesale market and resells it to final consumers. The retailer has to decide when to intervene to change the price he asks to his customers, in order to maximize his income. We model the problem as an infinite-horizon stochastic impulse control problem. We characterize an optimal price strategy and provide analytical existence results for the equations involved. We then investigate the dependence on the intervention cost. In particular, we prove that the measure of the continuation region is asymptotic to the fourth root of the cost. Finally, we provide some numerical results and consider a suitable extension of the model. |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1803.08166&r=ene |
| By: | Muhammad Omer (State Bank of Pakistan) |
| Abstract: | This study investigates the fuel demand elasticities separately for petrol, diesel, and CNG using data from July 2004 to June 2015 for Pakistan. The results show that fuel demands are generally (own and cross price) inelastic in the short run, but are relatively elastic in the long run. Though these short run estimates are in line with the literature, the long run estimates differ considerably. Administrative intervention in fuel pricing, load management in CNG sector and its close to perfect substitutability with petrol is driving this long run price elasticity result. Moreover, income elasticity estimates suggest that petrol is a normal good while diesel and CNG are inferior goods. The estimates remain robust when lag demands of substitutes, the exchange rate, and real fuel prices are separately included in the model. |
| Keywords: | Fuel Price, Elasticity, Transport Sector |
| JEL: | Q40 L90 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:sbp:wpaper:96&r=ene |
| By: | Bertsch, Valentin |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201808&r=ene |
| By: | Nguyen Thang Dao; Ottmar Edenhofer |
| Abstract: | We consider an overlapping generations (OLG) economy with land as a fixed factor of production and an environmental externality on production in which tax revenue from land rent and/or from other schemes such as labor income, capital income, and production taxation can be used for environmental protection through investment in emission mitigation. We show that, for any given target of stationary stock of pollution, the land rent taxation scheme leads to a higher steady state capital accumulation than the other schemes, and hence the steady state consumption of agents when young under this scheme is also higher than under the others. In addition, under an ambitious mitigation target when the efficiency of the mitigation technology is relatively high compared to the dirtiness of production, the land rent taxation also provides a higher steady state consumption when old, resulting in higher social welfare, than the others. In the second part of the paper, we propose a period-by-period balanced budget policy, which includes land rent and capital income taxes with intergenerational transfers, to decentralize the socially optimal allocation during the transitional phase to the social planner's steady state. |
| Keywords: | overlapping generations economy, land rent, taxation, socially optimal allocation |
| JEL: | H23 I31 Q50 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6937&r=ene |
| By: | Eric W. Djimeu; Luc-Désiré Omgba |
| Abstract: | This paper examines the factors behind export diversification in oil countries. Specifically, by investigating the impact of oil booms on export diversification through a difference-in-difference framework, this paper finds that the economy’s export structure before oil boom determines whether oil windfalls might affect the diversification process. Thus, an oil boom negatively affects export diversification only if countries initially exhibit low levels of diversification. In countries with a high level of diversification before the boom, an oil boom has no impact on diversification. These results are based on a large sample of 134 countries, and are robust to various sensitivity analyses. They are corroborated with data from the manufacturing sector, which show that oil booms only reduce diversification in countries with a small manufacturing sector prior to the boom. The results suggest that the initial constraints, which hampered the emergence of entrepreneurs’ class prior the boom, are key elements of the failure of a diversification process in resource rich countries. |
| Keywords: | Export diversification; Oil resources; Panel data |
| JEL: | F1 Q32 C23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2018-18&r=ene |
| By: | Stanislao Maldonado (Universidad del Rosario) |
| Abstract: | This study uses variation in natural resource rents and mineral production among Peruvian municipalities to analyze the impact of resource booms on local politicians' behavior and citizens' well-being. Although this topic has recently attracted scholarly interest, existing empirical evidence remains inconclusive regarding whether resource booms are beneficial or detrimental to citizens via their effects on public good provision and living standards. Despite many existing theoretical models allowing for the possibility of non-monotonic responses, empirical literature has largely approached this phenomena using linear models, thus misunderstanding the complex nature of resource booms. By examining recent extraordinary mineral price increases along with particular rules for natural resource rent distribution in Peru, I show that the effects of resource booms on reelection outcomes, political competition, public goods provision, clientelism, and well-being are conditional to the size of the rents in a non-monotonic fashion. These results are robust to endogenous production responses and are consistent with recent theoretical scholarship for resource rich economies. |
| Keywords: | Resource booms, political competition, reelection, intergovernmental transfers |
| JEL: | D72 D78 Q33 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:apc:wpaper:121&r=ene |
| By: | Stefania Fabrizio; Alexei Goumilevski; Kangni R Kpodar |
| Abstract: | Increased focus on income inequality and distributional issues has made incidence analysis a crucial input into policy decisions. This note presents the theoretical framework used to conduct incidence analysis of fuel price subsidy reform and presents a user-friendly tool for its application. This new tool requires limited inputs and has the advantage of using the commonly available software program Excel. The note presents an illustration based on the case of Brazil, using the 2005 household survey and input-output table. The results reinforce the typical finding that fuel subsidies benefit well-off households and that their removal would be progressive. |
| Date: | 2016–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imftnm:16/07&r=ene |
| By: | Slednev, Viktor; Bertsch, Valentin; Ruppert, Manuel; Fichtner, Wolf |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201809&r=ene |