nep-ene New Economics Papers
on Energy Economics
Issue of 2018‒05‒28
27 papers chosen by
Roger Fouquet
London School of Economics

  1. Hysteresis and the Welfare Effect of Corrective Policies: Theory and Evidence from an Energy-Saving Program By Costa, Francisco; Gerard, Francois
  2. Simultaneous Pursuit of Discovery and Invention in the US Department of Energy By Goldstein, Anna P.; Narayanamurti, Venkatesh
  3. The Effect of House Energy Efficiency Costs on the Participation Rate and Investment Amount of Lower-Income Households By Drivas, Kyriakos; Rozakis, Stelios; Xesfingi, Sofia
  4. The Geopolitics of Renewable Energy By O'Sullivan, Meghan; Overland, Indra; Sandalow, David
  5. The impact of PVs and EVs on Domestic Electricity Network Charges: a case study from Great Britain By Sinan Küfeoğlu; Michael Pollitt
  6. The green flings: market fluctuations and incumbent energy industries’ engagement in renewable energy By Tuukka Mäkitie; Håkon E. Normann; Taran M. Thune; Jakoba Sraml Gonzalez
  7. The causal links between renewable electricity generation and economic growth in South Africa By Hlalefang Khobai
  8. Can pecuniary and environmental incentives via SMS messaging make households adjust their intra-day electricity demand to a fluctuating production? By Niels Framroze Møller; Laura Mørch Andersen; Lars Gårn Hansen; Carsten Lynge Jensen
  9. Behavior-oriented modeling of electric vehicle load profiles: A stochastic simulation model considering different household characteristics, charging decisions and locations By Harbrecht, Alexander; McKenna, Russell; Fischer, David; Fichtner, Wolf
  10. Simulation and Evaluation of Zonal Electricity Market Designs By Hesamzadeh, M.; Holmberg, P.; Sarfati, M.
  12. A Bibliometric Analysis of the Energy and Fuel Research Field Based on Science Mapping By ANTONIO GARCÍA-AMATE; ALICIA RAMIREZ-ORELLANA; ALFONSO ROJO-RAMIREZ
  13. Vintage-specific driving restrictions By Nano Barahona; Francisco Gallego; Juan-Pablo Montero
  14. Car type preferences among private buyers and company car owners as related to climate and transport policy in Sweden By Engström, Emma; Algers, Staffan; Beser Hugosson, Muriel
  15. A Long-Run Estimation of Natural Gas Demand in Indonesian Manufacturing Sector: Computable General Equilibrium Model Approach By Widodo, Tri; Fitrady, Ardyanto; Alim Rosyadi, Saiful; Erdyas Bimanatya, Traheka
  16. Price regulations and price adjustment dynamics: Evidence from the Austrian retail fuel market By Fasoula, Evanthia; Schweikert, Karsten
  17. Shocks propagation across the futures term structure : evidence from crude oil prices By Delphine Lautier; Franck Raynaud; Michel Robe
  18. A Wavelet Analysis of the Relationship between Oil and Natural Gas Prices By Aviral Kumar Tiwari; Zinnia Mukherjee; Rangan Gupta; Mehmet Balcilar
  19. Neutralizing the Dutch disease By Pereira, Luiz C. Bresser
  20. Directed Technological Change and Technological Congruence: A New Framework for the Smart Specialization Strategy. By Antonelli, Cristiano; Feder, Christophe; Quatraro, Francesco
  21. Crime is in the Air: The Contemporaneous Relationship between Air Pollution and Crime By Bondy, Malvina; Roth, Sefi; Sager, Lutz
  22. Four Case Studies to Explore the Added Value of Oxford AHSN By Marsden, G.; Martin, A.; Zamora, B.; Exley, J.; Sussex, J.; Towse, A.
  23. Being Stranded on the Carbon Bubble? Climate Policy Risk and the Pricing of Bank Loans By de Greiff, Kathrin; Delis, Manthos; Ongena, Steven
  24. Geographic Environmental Kuznets Curves: The Optimal Growth Linear-Quadratic Case By Raouf Boucekkine; Giorgio Fabbri; Salvatore Federico; Fausto Gozzi
  25. Reducing construction phase greenhouse gas emissions of detached houses through material supply chain management By Jani Laine
  26. Complexity and the economics of climate change : a survey and a look foreward By Tomas Balint; Francesco Lamperti; Antoine Mandel; Mauro Napoletano; Andrea Roventini; Sandro Sapio
  27. Climate in the 21st Century By Julia M. Puaschunder

  1. By: Costa, Francisco; Gerard, Francois
    Abstract: A growing body of evidence documents that policies can affect household behaviors persistently, even if they are no longer in place. This paper studies the importance of such "hysteresis" - the failure of an effect to reverse itself as its underlying cause is reversed - for the welfare evaluation of corrective policies. First, we introduce hysteresis into the textbook framework used to derive canonical sufficient statistics formulas for the welfare effect of corrective policies. We then derive new formulas allowing for hysteresis. We show that, under certain conditions, the persistent effect of a short-run (i.e., temporary) policy becomes a new key statistic for evaluating the welfare effect of such a policy, and also of a long-run (i.e., permanent) version of a similar policy. Second, we estimate the persistent effect of a short-run policy, for which we argue that these conditions are met, in a policy-relevant context: residential electricity use in a developing country setting. We estimate that about half of the dramatic short-run reductions in residential electricity use induced by a 9-month-long policy that was imposed on millions of Brazilian households in 2001 persisted for at least 12 years after the policy ended. Finally, we combine our estimates with our framework to illustrate the implications that hysteresis can have for the welfare evaluation of corrective policies.
    Keywords: corrective policies; energy use; hysteresis
    JEL: D62 H23 Q50
    Date: 2018–05
  2. By: Goldstein, Anna P. (Harvard University); Narayanamurti, Venkatesh (Harvard University)
    Abstract: The division of "basic" and "applied" research is embedded in federal R&D policy, exemplified by the separation of science and technology in the organizational structure of the US Department of Energy (DOE). In this work, we consider a branch of DOE that shows potential to operate across this boundary: the Advanced Research Projects Agency * Energy (ARPA-E). We construct a novel dataset of nearly 4,000 extramural financial awards given by DOE from 2010 to 2015, primarily to businesses and universities. We collect the early knowledge outputs of these awards from Web of Science and the United States Patent and Trademark Office. Compared to similar awards from other parts of DOE, ARPA-E awards are more likely to jointly produce both a publication and a patent, with at least 5 times higher odds. ARPA-E awards have been productive in creating new technology, without a detrimental effect on the production of new scientific knowledge. This observation suggests the unity of research activities which are often considered separate: that which produces discoveries and that which produces inventions.
    Date: 2017–04
  3. By: Drivas, Kyriakos; Rozakis, Stelios; Xesfingi, Sofia
    Abstract: We examine the largest house energy efficiency retrofit support program in Greece that ran during 2011-2015 and approximately fifty thousand households participated. We take advantage of an exogenous change that occurred while the program was running. This change substantially increased the subsidy rate for lower-income households. We find that this effective cost reduction increased the participation rate (extensive margin) and investment amount (intensive margin) of these lower-income households.
    Keywords: Energy efficiency retrofits, subsidy, exogenous change, participation rate, household investment.
    JEL: Q40 Q48 R2
    Date: 2018–05–08
  4. By: O'Sullivan, Meghan (Harvard University); Overland, Indra (Norwegian Institute of International Affairs); Sandalow, David (Columbia University)
    Abstract: For a century, the geopolitics of energy has been synonymous with the geopolitics of oil and gas. However, geopolitics and the global energy economy are both changing. The international order predominant since the end of World War II faces mounting challenges. At the same time, renewable energy is growing rapidly. Nevertheless, the geopolitics of renewable energy has received relatively little attention, especially when considering the far reaching consequences of a global shift to renewable energy.
    Date: 2017–06
  5. By: Sinan Küfeoğlu; Michael Pollitt
    Abstract: Electric power distribution network charges have become a popular area of study for regulators, industry and academia. Increasing use of photovoltaics (PVs) and electric vehicles (EVs) by domestic customers has created concerns about the fairness of the current tariff structure. Proposing a tariff design, which will be cost reflective, transparent, sustainable, economically efficient is socially desirable. Wealth transfer through electricity distribution tariffs is a major concern for energy regulators. This paper aims to analyse the current distribution network tariffs faced by four main household customer groups in Great Britain - defined as those who own a PV and an EV, those with EV but no PV, those with PV but no EV and finally those with neither EV nor PV – under various uptake scenarios for EVs and PVs. We illustrate the impact on household tariffs for the most and least expensive British network operators, namely London Power Networks and Scottish Hydro Electric Power Distribution. The results show that, due to the current network charges calculation structure, as PV penetration increases, the distribution tariffs increase for all customers regardless of whether someone owns a PV or not. On the other hand, as EV penetration increases, the distribution tariffs decrease for all customer groups. Another key finding is that the distribution tariffs in Great Britain are EV dominated and the future EV and PV penetration projections indicate that the distribution tariffs will likely decrease for all customers in Great Britain.
    Keywords: distribution, network, tariff, PV, EV
    JEL: L94
    Date: 2018–05–14
  6. By: Tuukka Mäkitie (Centre for Technology, Innovation and Culture, University of Oslo, UiO.); Håkon E. Normann (Centre for Technology, Innovation and Culture, University of Oslo, UiO.); Taran M. Thune (Centre for Technology, Innovation and Culture, University of Oslo, UiO.); Jakoba Sraml Gonzalez (Centre for Technology, Innovation and Culture, University of Oslo, UiO.)
    Abstract: Reorientation of fossil fuel industries towards renewable energies, and the role of market changes underlying such processes, have not featured strongly in the study of sustainable energy transitions. We contribute to this important policy issue with a case study of diversification of Norwegian oil and gas industry in offshore wind power. We study how the engagement in diversification has changed during 2007-2016, and whether these changes correspond with developments in the industry’s task and institutional environments. By using news, statistical and survey data, our study reveals that despite continuous growth in offshore wind market, the industry engaged more in offshore wind during two market downturn periods in the oil and gas market, and less during an oil and gas boom period. Our results therefore draw attention to the importance of market changes in reorientation of fossil fuel industries towards renewable energies. We conclude by discussing the role of market changes in influencing reorientations towards renewable energies, and implications of results for policies which seek to support sustainable energy transitions.
    Date: 2018–05
  7. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University)
    Abstract: Knowledge of the direction of causality between electricity generation from renewables and economic growth is essential if energy policies which will support economic growth of the country are to be devised. This study explores the causal relationship between electricity generated from the renewables and economic growth in South Africa using carbon dioxide emissions, employment and capital as the additional variables. The study uses the Johansen co-integration model to detect the long run relationship between the variables and the Vector Error Correction Model (VECM) to determine the direction of causality. The findings from Johansen co-integration evidenced a long run relationship between electricity generated from renewables, economic growth, carbon dioxide emissions, employment and capital. The VECM revealed unidirectional causality running from electricity generated from renewables to economic growth. The findings indicate that electricity generation from renewables enhance economic growth. Therefore, the government should make appropriate efforts to select energy policies that do not negatively affect economic growth.
    Keywords: Electricity generation, carbon dioxide emissions, economic growth
    JEL: C32 D04 Q47 Q42 Q01
    Date: 2018–05
  8. By: Niels Framroze Møller (DTU Management Engineering, Technical University of Denmark); Laura Mørch Andersen (Department of Food and Resource Economics, University of Copenhagen); Lars Gårn Hansen (Department of Food and Resource Economics, University of Copenhagen); Carsten Lynge Jensen (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: The increasing deployment of renewables introduces substantial variability into the production of electricity, requiring demand to be more movable across time. We analyze data from a large Danish fi eld experiment (2015-2016) to investigate whether households can be prompted, via SMS messages, to move electricity consumption, and if so, whether these are motivated by pecuniary or environmental motives. To take heterogeneity fully into account we fi rst use general-to-speci c-based automatic model selection which allows for a different time-series regression for each of the 1488 households studied. From this we obtain a cross-section of estimated SMS effects which we then regress on the motive type. Since households can opt out there is a risk of self-selection. We therefore control for the size, income and average consumption of the household, and the age, educational- and labor market status of the SMS recipient. The results suggest that SMS messages can to some extent motivate households to move consumption. A stronger fi nancial motive seems more effective, whereas a purely environmental motive actually reduces the displaced amount. However, mixing financial and environmental motives seems the most effective. Finally, women and elderly people are more inclined to move consumption.
    Keywords: Household-level electricity demand, Automatic general-to-specific model selection, SMS messaging, field experimental data
    JEL: C2 C22 C5 Q4
    Date: 2018–05
  9. By: Harbrecht, Alexander; McKenna, Russell; Fischer, David; Fichtner, Wolf
    Abstract: This paper presents a stochastic bottom-up model to assess electric vehicles' (EV) impact on load profiles at different parking locations as well as their load management potential assuming different charging strategies. The central innovation lies in the consideration of socio-economic, technical and spatial factors, all of which influence charging behavior and location. Based on a detailed statistical analysis of a large dataset on German mobility, the most statistically significant influencing factors on residential charging behavior could be identified. Whilst household type and economic status are the most important factors for the number of cars per household, the driver's occupation has the strongest influence on the first departure time and parking time whilst at work. An inhomogeneous Markov-chain is used to sample a sequence of destinations of each car trip, depending (amongst other factors) on the occupation of the driver, the weekday and the time of the day. Probability distributions for the driven kilometres, driving durations and parking durations are used to derive times and electricity demand. The probability distributions are retrieved from a national mobility dataset of 70,000 car trips and filtered for a set of socio-economic and demographic factors. Individual charging behaviour is included in the model using a logistic function accounting for the sensitivity of the driver towards (low) battery SOC. The presented model is validated with this mobility dataset and shown to have a deviation in key household mobility characteristics of just a few percentage points. The model is then employed to analyse the impact of uncontrolled charging of BEV on the residential load profile. It is found that the absolute load peaks will increase by up to factor 8.5 depending on the loading infrastructure, the load in high load hours will increase by approx. a factor of 3 and annual electricity demand will approximately double.
    Date: 2018
  10. By: Hesamzadeh, M.; Holmberg, P.; Sarfati, M.
    Abstract: Zonal pricing with countertrading (a market-based redispatch) gives arbitrage opportunities to the power producers located in the export-constrained nodes. They can increase their profit by increasing the output in the day-ahead market and decrease it in the real-time market (the inc-dec game). We show that this leads to large inefficiencies in a standard zonal market. We also show how the inefficiencies can be significantly mitigated by changing the design of the real-time market. We consider a two-stage game with oligopoly producers, wind-power shocks and real-time shocks. The game is formulated as a two-stage stochastic equilibrium problem with equilibrium constraints (EPEC), which we recast into a two-stage stochastic Mixed-Integer Bilinear Program (MIBLP). We present numerical results for a six-node and the IEEE 24-node system.
    Keywords: Two-stage game, Zonal pricing, Wholesale electricity market, Bilinear programming
    JEL: C61 C63 C72 D43 L13 L94
    Date: 2018–05–03
  11. By: Djula Borozan (Faculty of Economics in Osijek, Josip Juraj Strossmayer University of Osijek)
    Abstract: Evolution of total final energy consumption in the European Union (EU) exhibits a mild decreasing tendency over the last two decades. Though, it has recently become more volatile due to the economic recession that adversely and unevenly hit energy consumption in most EU countries and their energy end-use sectors. Eurostat?s data unveils the considerable differences that exist in finale energy consumption across the ?old? and post-transition EU countries as well as the major energy end-user sectors. Using random effects panel model, this paper aims to estimate the effect of the Great Recession and the membership status (?old? vs. post-transition groups) on final energy consumption in the major energy end-user sectors for the period 1998 ? 2015. The empirical evidence indicates statistically significant impact of both predictors on final energy consumption of households/services and industry. However, the impact is not uniform which raises several important questions regarding their behavior and reaction to the recession. Since the recession reduced the wealth and income of the European households, it seems that they are not prone to invest in more energy-efficient appliances, technologies and innovations in tough economic times. In contrast, such behavior is a precondition for survival and future growth of industry.
    Keywords: Great Recession, final energy consumption, energy end-user sectors, random effects panel analysis
    JEL: C33 E32 Q43
    Date: 2018–04
    Abstract: This article investigates the conceptual evolution of qualitative research in the field of energy and fuel focus on oil and gas research from 1990 to 2018 identifying the main topics and practical applications which it has been used. The automatic approach was based on a co-word analysis and combines performance analysis and science mapping. The considerable number of studies published according to the journals in energy and fuel field focus on oil and gas research indexed in ISI Web of Science makes it possible to undertake a conceptual analysis of how the field has evolved. To observe the conceptual evolution of energy and fuel, we define three consecutive periods: 1990-2000, 2001-2008, 2009-2018. The results show that energy and fuel focus on oil and gas research are distributed in ten main theoretical areas: VEGETABLE-OILS, BIO-OIL, OIL, DIESEL-FUEL, PERFORMANCE, BIO-DIESEL, BIOMASS, CRUDE-OIL, RENEWABLE-ENERGY, SHALE. The research output could be used by the scientific community to identify thematic areas and to know the evolution of the energy and fuel field.
    Keywords: Science mapping analysis, literature review, energy and fuel, co-word analysis, oil and gas.
    JEL: Q40 Q49 C80
    Date: 2018–04
  13. By: Nano Barahona; Francisco Gallego; Juan-Pablo Montero
    Abstract: Local air pollution has led authorities in many cities around the world to impose limits on car use, increasingly by means of driving restrictions or license-plate bans. With some exceptions, these restrictions tend to be poorly designed creating incentives for drivers to buy additional, more polluting cars. We study vintage-specific restrictions that place heavy limits on older, polluting vehicles and none on newer, cleaner ones. A novel model of the car market and evidence from Santiago’s 1992 program, the earliest attempt to use vintage-specific restrictions, are used to show that these restrictions can be welfare enhancing by accelerating fleet turnover toward cleaner cars. These policies compare well to alternative instruments such as scrappage subsidies and pollution-based registration fees.
    Keywords: Driving restrictions, Local Pollution, Car Turnover
    JEL: R41 Q53 Q58
    Date: 2018–05–17
  14. By: Engström, Emma (Folksam Research); Algers, Staffan (CTS - Centre for Transport Studies Stockholm (KTH and VTI)); Beser Hugosson, Muriel (CTS - Centre for Transport Studies Stockholm (KTH and VTI))
    Abstract: Dedicated to show climate leadership, Sweden has committed to cut 70% of greenhouse gas emissions in the domestic transport sector by 2030 as compared to levels in 2010 (except flights). The aim of this study was to quantify car type choice among private buyers and individuals with cars provided as a fringe benefit, and to investigate the impacts of retrospective policy scenarios using Sweden as a case study. Models were developed using revealed preferences data relating to car attributes and buyer socioeconomics. The company car type choice model reflected both company policy restrictions and employee preferences. The results indicated that range and safety were crucial factors for the widespread introduction of electric cars and plug-in hybrids. Company car owners were more inclined to choose cars with climate friendly fuels than private buyers. Average CO2 emissions per car were however similar in the two groups, which might relate to a stronger preference for heavier and larger cars among company car holders, in combination with the weights-based ‘Clean car’ definition in Sweden. A ‘Clean car’ restriction was company policy for 7.5% of employees, among whom the share of diesel cars was 88%. Policy scenario modeling results further indicated that the impact of recent climate and transport policies has been small: the most notable effect was a policy of reduced fringe benefits taxation on alternative fuels, worth up to €1,100 annually, which resulted in 0.7 % lower average CO2/km per car. For private buyers, a ‘Super Clean Car’ premium, worth ca € 2,000 – € 4,000, had a 0.4 % effect on the average emissions per car, according to models. This effect was twice as high as that for a five year tax-exemption for ‘Clean cars’, worth ca €200 annually for private buyers. Apparently, in order to substantially change the fleet of new cars in Sweden there is a need for tougher transport policies related to climate change mitigation.
    Keywords: Public transport; bus; demand model; fares; frequencies; supply; optimization; urban; welfare
    JEL: R41 R42 R48
    Date: 2018–05–22
  15. By: Widodo, Tri; Fitrady, Ardyanto; Alim Rosyadi, Saiful; Erdyas Bimanatya, Traheka
    Abstract: Domestic natural gas utilization in Indonesia suffers from lack of proper infrastructure and high transportation costs. The government might benefit from detailed estimation of demand to anticipate potentially fast-growing natural gas utilization in the future. Using Global Trade Analysis Project - Energy (GTAP-E) model simulation, this paper attempts to present a long-run estimation of natural gas demand in manufacturing sector for year 2025, 2030, and 2035. Chemical industry will remain the largest user of natural gas, followed by electricity, basic metal, and metal industry. To meet these demand, domestic production of natural gas should increase by 36.7 percent and 99.49 percent in 2025 and 2035, respectively. It brings us to the urge of massive investments in natural gas production and distribution.
    Keywords: natural gas, GTAP-E Model, energy demand
    JEL: Q41 Q47
    Date: 2018–05–01
  16. By: Fasoula, Evanthia; Schweikert, Karsten
    Abstract: After controversial public debates, fuel price regulations were implemented in Austria prohibiting fuel retailers from raising their prices more than once per day. This paper investigates whether these policy measures affected the price transmission dynamics from crude oil prices to retail fuel prices. We estimate different specifications of nonlinear error correction models to quantify a potentially asymmetric adjustment behaviour and compare the results over three subsamples. Particularly, we estimate our models for a pre-regulation period, a between-regulations and a post-regulation period. At first glance, we obtain conflicting results on the efficacy of this policy measure. While the adjustment to the long-run equilibrium seems to be faster if crude oil prices are relatively low, transitory crude oil price decreases are passed through faster than price increases. Only if we consider the combined effect of a crude oil price shock, we can reveal that crude oil price changes are generally passed through faster in the postregulation period. Further, we find that crude oil price decreases are now passed through slightly faster than crude oil price increases. Hence, we conclude that the Austrian fuel price regulation seems to have fostered competition between fuel retailers.
    Keywords: asymmetric price transmission,price regulation,nonlinear error correction model,retail fuel prices,crude oil prices
    JEL: C22 D40 Q41
    Date: 2018
  17. By: Delphine Lautier (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique); Franck Raynaud (Lausanne university - Lausanne university); Michel Robe (University of Illinois - university of Illinois)
    Abstract: To what extent are futures prices interconnected across the maturity curve? Where in the term structure do price shocks originate, and which maturities do they reach? We propose an approach based on information theory to study these cross-maturity linkages and the extent to which connectedness is impacted by market events. We introduce the concepts of backward and forward information flows, and a novel type of directed graph, to investigate the propagation of price shocks across the WTI term structure. Using daily data, we show that the mutual information shared by contracts with different maturities increases substantially starting in 2004, falls back sharply in 2011-2014, and recovers thereafter. Our findings point to a puzzling re-segmentation by maturity of the WTI market in 2012-2014. We document that, on average, short-dated futures emit more information than do backdated contracts. Importantly, however, we also show that significant amounts of information flow backwards along the maturity curve -- almost always from intermediate maturities, but at times even from far-dated contracts. These backward flows are especially strong and far-reaching amid the 2007-2008 oil price boom/bust.
    Keywords: Mutual information,Market integration,Shocks propagation,Information flows,Directed graphs,Term structure,Futures,Crude oil,WTI
    Date: 2017–11
  18. By: Aviral Kumar Tiwari (Montpellier Business School, Montpellier, France); Zinnia Mukherjee (Department of Economics, Simmons College, Boston, USA); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Northern Cyprus, Turkey; Department of Economics, University of Pretoria, Pretoria, South Africa; Montpellier Business School, Montpellier, France.)
    Abstract: In this paper, we aim to explore the relationship between natural gas and crude oil prices for the U.S. economy over the time period 1997 and 2017 in both the unconditional and conditional framework by conditioning the relationship on natural gas production. The time period covers the recent shale gas supply boom. Our results indicate that during the shale gas revolution period of 2007 – 2013, oil and natural gas prices were cyclical and oil prices were leading natural gas prices. Once we control for the natural gas production we find that significant or high wavelet coherency is observed during 2000-2015 for 3 to 4 years scale. These results have implications for cross market policy effects.
    Keywords: Oil and Natural Gas Prices, Shale Gas Revolution, Wavelet Analysis
    JEL: C49 Q31
    Date: 2018–05
  19. By: Pereira, Luiz C. Bresser
    Abstract: This paper discusses the political economy involved in the required neutralization of the Dutch disease – a long-term overvaluation of a national currency originated in exports of commodities that generate Ricardian rents or benefit from commodity booms. The difficulty in dealing with this market failure is associated to two political problems: the natural resource curse, which is the generalized rent-seeking that often takes over a commodity-exporting country, and exchange rate populism, the practice of keeping the currency overvalued, to ensure the reelection of politicians. While the two political problems have cultural and institutional roots that make them resilient to change, this paper shows that there is a relatively simple policy that will effectively turn the currency competitive and the manufacturing industry, a possibility.
    Date: 2018–05
  20. By: Antonelli, Cristiano; Feder, Christophe; Quatraro, Francesco (University of Turin)
    Abstract: Technological congruence implements the analysis of directed technological change showing how the match between the relative size of outputs’ elasticity and the relative abundance and cost of production factors has powerful effects on total factor productivity (TFP). Smart specialization strategies can rely upon technological congruence to support the introduction and diffusion of new directed technologies characterized by the best mix of factors relative cost -as determined by pecuniary externalities in the regional factor markets- and output elasticity. The evidence of 278 European regions in the years 1980-2011 confirms that the levels and the changes in technological congruence, brought about by the introduction of directed technological changes, have significant effects on the levels and the changes of TFP. The key policy implication is that the optimal S3 policy mix should not only look at the history of local industrial or technological specializations, but it should also take into account the pecuniary externalities that characterize local factor markets to promote technological changes directed to augmenting the output elasticity of the cheaper regional production factors.
    Date: 2018–04
  21. By: Bondy, Malvina (London School of Economics); Roth, Sefi (London School of Economics); Sager, Lutz (London School of Economics)
    Abstract: Many empirical studies have examined various determinants of crime. However, the link between crime and air pollution has been surprisingly overlooked despite several potential pathways. In this paper, we study whether exposure to ambient air pollution affects crime by using daily administrative data for the years 2004-05 in London. For identification, we mainly rely on the panel structure of the data to estimate models with ward fixed effects. We complement our main analysis with an instrumental variable approach where we use wind direction as an exogenous shock to local air pollution concentrations. We find that elevated levels of air pollution have a positive and statistically significant impact on overall crime and that the effect is stronger for types of crime which tend to be less severe. We formally explore the underlying mechanism for our finding and conclude that the effect of air pollution on crime is likely mediated by higher discounting of future punishment. Importantly, we also find that these effects are present at levels which are well below current regulatory standards and that the effect of air pollution on crime appears to be unevenly distributed across the income distribution. Overall, our results suggest that reducing air pollution in urban areas may be a cost effective measure to reduce crime.
    Keywords: air pollution, crime, economic incentives
    JEL: H23 K42 Q53
    Date: 2018–04
  22. By: Marsden, G.; Martin, A.; Zamora, B.; Exley, J.; Sussex, J.; Towse, A.
    Abstract: The Oxford Academic Health Science Network (Oxford AHSN) wishes to demonstrate the value of the various projects and programmes that the network has developed and implemented since it was established in 2013. In order to do this, OHE Consulting and RAND Europe conducted analyses of four case study projects - 1. Anxiety & Depression Clinical Network - A targeted 5% improvement in recovery rates 2. Maternity Clinical Network - Improving referral pathways for preterm babies 3. Energy project - Quantifying the value of energy savings and carbon reduction 4. Intermittent Pneumatic Compression - Increasing utilisation of IPCs in immobile stroke patients. The four case studies were chosen as examples of areas in which the Oxford AHSN has played a crucial role in improving patient care, and areas in which analysis of added value is feasible. The analyses were designed to assess the added value of the Oxford AHSN in relation to the case study projects, rather than to assess the 'cost-effectiveness' of the treatments being used. This report presents the methods and results of the four case studies.
    JEL: I1
    Date: 2016–09–01
  23. By: de Greiff, Kathrin; Delis, Manthos; Ongena, Steven
    Abstract: Does neglecting the possibility that fossil fuel reserves become "stranded" result in a "carbon bubble", i.e., an overvaluation of fossil fuel firms? To address this question, we study whether banks price the climate policy risk. We hand collect global data on corporate fossil fuel reserves, match it with syndicated loans, and subsequently compare the loan rate charged to fossil fuel firms - along their climate policy exposure - to non-fossil fuel firms. We find that before 2015 banks did not price climate policy risk. After 2015, however, the risk is priced, especially for firms holding more fossil fuel reserves. We also provide some evidence that "green banks" charge marginally higher loan rates to fossil fuel firms.
    Keywords: Environmental policy; Climate policy risk; Loan pricing; Loan maturity; Carbon bubble; Fossil fuel firms; Stranded assets
    JEL: G2 Q3 Q50
    Date: 2018–05
  24. By: Raouf Boucekkine (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE; Iméra; and Institut Universitaire de France); Giorgio Fabbri (Univ. Grenoble Alpes, CNRS, INRA, Grenoble INP, GAEL); Salvatore Federico (Università degli Studi di Siena, Dipartimento di Economia Politica e Statistica); Fausto Gozzi (Dipartimento di Economia e Finanza, LUISS Guido Carli)
    Abstract: We solve a linear-quadratic model of a spatio-temporal economy using a polluting one-input technology. Space is continuous and heterogenous: locations differ in productivity, nature self-cleaning capacity and environmental awareness. The unique link between locations is transboundary pollution which is modelled as a PDE diffusion equation. The spatio-temporal functional is quadratic in local consumption and linear in pollution. Using a dynamic programming method adapted to our infinite dimensional setting, we solve the associated optimal control problem in closed-form and identify the asymptotic (optimal) spatial distribution of pollution. We show that optimal emissions will decrease at given location if and only if local productivity is larger than a threshold which depends both on the local pollution absorption capacity and environmental awareness. Furthermore, we numerically explore the relationship between the spatial optimal distributions of production and (asymptotic) pollution in order to uncover possible (geographic) Environmental Kuznets Curve cases.
    Keywords: growth, geography, transboundary pollution, infinite dimensional optimal control problems
    JEL: C61 C69 O44 R11
    Date: 2018–05
  25. By: Jani Laine
    Abstract: Construction phase greenhouse gas emissions are most important emission sources of new buildings from the perspective of climate change targets. Energy efficiency improvements have highlighted the role of such emissions. Although living environment of detached houses have been criticized from the greenhouse gas perspectives, it is shown that this may not be justified. In addition, detached houses offer a great way for major reduction of construction phase emissions of buildings. In the study it is presented that through building material supply chain management of detached houses, it is possible to achieve the construction emission level of below 40%in relationship to average emission level of new buildings.
    Keywords: Construction phase; detached houses; greenhouse gasses; sustainable cities
    JEL: R3
    Date: 2017–07–01
  26. By: Tomas Balint (Université Paris 1 Panthéon-Sorbonne); Francesco Lamperti (Université Panthéon-Sorbonne - Paris 1 (UP1)); Antoine Mandel (Ecole d'Économie de Paris - Paris School of Economics); Mauro Napoletano (Observatoire français des conjonctures économiques); Andrea Roventini (Laboratory of Economics and Management (LEM)); Sandro Sapio (Universita degli studi di Napoli "Parthenope" [Napoli])
    Abstract: Climate change is one of the most daunting challenges human kind has ever faced. In the paper, we provide a survey of the micro and macro economics of climate change from a complexity science perspective and we discuss the challenges ahead for this line of research. We identify four areas of the literature where complex system models have already produced valuable insights: (i) coalition formation and climate negotiations, (ii) macroeconomic impacts of climate-related events, (iii) energy markets and (iv) diffusion of climatefriendly technologies. On each of these issues, accounting for heterogeneity, interactions and disequilibrium dynamics provides a complementary and novel perspective to the one of standard equilibrium models. Furthermore, it highlights the potential economic benefits of mitigation and adaptation policies and the risk of under-estimating systemic climate change-related risks.
    Date: 2017–08
  27. By: Julia M. Puaschunder (The New School, Department of Economics)
    Abstract: Climate justice accounts for the most challenging global governance goal. In the current post- COP21 Paris agreement climate change mitigation and adaptation efforts, the financialization of the ambitious goals has leveraged into a blatant demand. In the weighting of the burden of global warming, the benefits of a warming earth have been neglected since recently. Following the introduction of the gains from climate change, this article proposes a model to distribute the benefits of a warming earth in a fair way based on which countries are losing and which countries are winning from a warming earth until 2100. A macroeconomic cost-benefit analysis thereby aids to find the optimum solution on how to distribute climate change benefits and burden within society. When unidimensionally focusing on estimated GDP growth given a warmer temperature, over all calculated models assuming linear, prospect or hyperbolic gains and losses, the world will be gaining more than losing from a warming earth until 2100.
    Keywords: Climate Change, Climate Change Bonds, Climate Change Gains, Climate Change Losses, Climate Justice, Europe, Macroeconomic Modelling, TaxBonds-Transfer Strategy, Taxation, United States, World
    Date: 2018–04

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