should finland and sweden form a monetary union aims to shed light on the choice of exchange rate system facing finland and sweden by using theories of optimum currency areas as framework review of theories dealing with optimum currency areas relationship of finland and sweden and between these two countries and other industrial countries advantages of a finnish swedish monetary union over membership within the european monetary union

transition towards a low carbon economy a computable general equilibrium analysis for poland in the transition to sustainable economic structures the european union assumes a leading role with its climate and energy package which sets ambitious greenhouse gas emission reduction targets by 2020 among eu member states poland with its heavy energy system reliance on coal is particularly worried on the pending trade offs between emission regulation and economic growth in our computable general equilibrium analysis of the eu climate and energy package we show that economic adjustment cost for poland hinge crucially on restrictions to where flexibility of emission abatement revenue recycling and technological options in the power system we conclude that more comprehensive flexibility provisions at the eu level and a diligent policy implementation at the national level could achieve the transition towards a low carbon economy at little cost thereby broadening societal support

the economics of exchange rate regimes a review essay the exchange rate regime issue has taken centre stage in discussions of international economic policy much of the profession appears to have been converted to the hypothesis of the vanishing middle regime for countries well integrated into world capital markets there is little if any middle ground between floating exchange rates and monetary unification this paper considers the exchange rate regime issue in the context of recent books on the subject by w max corden and morris goldstein both authors prescribe managed floating exchange rates supplemented with inflation targeting for emerging market economies under managed floating and with a credible monetary policy the public finances in order and strengthened debt management and prudential regulation the exchange rate is free to act as a market gauge for assessing policies and as a mode of conflict resolution both authors also argue however that no exchange rate regime is a holy grail ultimately a credible exchange rate regime depends upon the trust evoked by governments there is no exchange rate regime whether of the managed floating or hard fix variety that can eradicate a history of failed stabilisation attempts

the global implications of regional exchange rate regimes abstract we examine the implications of a regional fixed exchange rate regime for global exchange rate volatility the concept of the optimum currency area turns out to play an important role the formation of a regional regime tends to decrease global volatility when countries are symmetric the effects tend to be ambiguous in the case of asymmetries the reduction in global volatility is larger when the rest of the world has more rigid labor markets than the peggers and when the exchange rate management is done mostly by countries with relatively more flexible labor markets and in the presence of a negative correlation in productivity shocks across countries

renewable energy expansion in the chilean power market a dynamic general equilibrium modeling approach to determine co2 emission baselines abstract over the last decade a high dependency on carbon intensive fuels in the chilean power sector has led to environmental concerns particularly regarding rapid growth in co2 emissions more recently the power sector has experienced significant structural changes with a rapid expansion of renewables in the energy matrix and this trend is expected to cause significant variations in future co2 emission baseline scenarios to investigate the economy wide impact of renewable energy expansions in chile s energy mix this research based on a computable general equilibrium cge model examines different co2 emission baseline scenarios however because traditional cge modeling approaches cannot capture the impact of a sector s recent structural changes we present a step by step approach to incorporate different energy matrices from an external engineering bottom up model into the cge model the results indicate that the business as usual bau scenario in which structural changes are not considered significantly overstates expected emissions conversely considering structural changes in our cge model shows chile advancing towards its declared nationally determined contribution ndc to reduce greenhouse gas emissions furthermore the methodology implemented in the study has the advantage of being a simple integrated approach that is coherent with current modeling capacities in many developing contexts

why the middle is unstable the political economy of exchange rate regimes and currency crises the contribution of sticky exchange rates to the rash of currency crises over the past decade has become a major topic of international monetary analysis and policy discussion while there is widespread agreement among economists that the middle of the exchange rate spectrum adjustable pegs is highly crisis prone in a world of substantial capital mobility jeffrey frankel has recently argued that surprisingly we lack a clear theoretical rationale for why this is so this paper attempts to fill that void it argues that frankel is correct in terms of economic analysis alone but that when political economy considerations are introduced then a satisfactory explanation is at hand key aspects of this political economy perspective are laid out and implications for exchange rate policy are considered the analysis suggests that for promoting currency stability the traditionally debated distinctions between crawling bands and managed floats are likely less important than the political environments in which they are operated

environmental investment and policy with distortionary taxes and endogenous growth abstract recent studies consider public r d spending that affects abatement knowledge and endogenous growth distortionary taxes that affect capital formation pollution taxes that affect environmental degradation and regeneration that restores natural capital our model combines all those elements the combination affects prior results focusing on two parameters the need for distorting taxes and productivity of abatement knowledge relative to pollution first these two extensions can reverse prior findings that pollution tax revenue is always enough to pay for public r d second tax distortions and externalities alter prior findings that the ratio of public to private capital depends only on output elasticities third dynamics affect prior static findings about other public spending crowding out environmental public goods fourth a greater need for public spending can lead to greater increases in distorting taxes or pollution taxes fifth greater environmental regulation can mean growth is higher or lower even if welfare is higher

the gcc s fixed exchange rate a major anomaly for oca analysis from the standpoint of traditional optimal currency area oca analysis the gulf cooperation council gcc countries are a major anomaly they successfully maintained pegged exchange rates among themselves for two decades while failing to meet a number of major oca criteria contrary to the optimistic predictions of some of the most enthusiastic advocates of endogenous oca analysis intra regional trade has remained low and there is little synchronisation of their business cycles or harmonisation of their fiscal positions we argue that their success in operating a fixed rate regime has been due to a combination of high oil revenue the heavy use of foreign workers and the limited extent to which their economies rely on market forces these are conditions that are not met by most other countries

development of the electricity environmental policy cge model gtap e powers a case of the carbon tax in south africa abstract a new carbon price mechanism with full emission coverage is developed within the framework of a global computable general equilibrium model gtap e powers to enhance the capacity and accuracy for climate change and energy policy assessment the model developed is then used to examine the potential impacts of the carbon tax in south africa results show that incorporation of non co2 emissions in the model significantly alters the results of which the economy of south africa experiences higher costs compared to the case that only has co2 emissions when more sectors are included in the policy it also puts higher costs on the economy as higher levels of emissions are subject to the carbon tax results also show that south africa only experiences small tradeoffs from introducing the carbon tax in all scenarios that is with a tax rate of 9 15 the country is able to reduce its emission levels by 12 25 15 6 at the costs of real gdp reduction by 1 17 1 59 fossil based industrial sectors are particularly worst off while clean and renewable energy sectors strongly expand their production the results indicate that south africa is likely to move to a low carbon and sustainable economy with such a policy

confronting the environmental kuznets curve t he environmental kuznets curve posits an inverted u relationship between pollution and economic development kuznets s name was apparently attached to the curve by grossman and krueger 1993 who noted its resemblance to kuznets s inverted u relationship between income inequality and development in the first stage of industrialization pollution in the environmental kuznets curve world grows rapidly because people are more interested in jobs and income than clean air and water communities are too poor to pay for abatement and environmental regulation is correspondingly weak the balance shifts as income rises leading industrial sectors become cleaner people value the environment more highly and regulatory institutions become more effective along the curve pollution levels off in the middle income range and then falls toward pre industrial levels in wealthy societies the environmental kuznets curve model has elicited conflicting reactions from researchers and policymakers applied econometricians have generally accepted the basic tenets of the model and focused on measuring its parameters their regressions typically fitted to cross sectional observations across countries or regions suggest that air and water pollution increase with development until per capita income reaches a range of 5000 to 8000 when income rises beyond that level pollution starts to decline as shown in the conventional ekc line in figure 1 in developing countries some policymakers have interpreted such results as conveying a message about priorities grow first then clean up numerous critics have challenged the conventional environmental kuznets curve both as a representation of what actually happens in the development process and as a policy prescription some pessimistic critics argue that crosssectional evidence for the environmental kuznets curve is nothing more than a

capital market imperfections and the theory of optimum currency areas this paper studies how within and cross country capital market imperfections affect the welfare effects of forming a currency union the analysis considers a bank only world where intermediaries compete in cournot fashion and monitoring and state verification are costly the first part determines the credit market equilibrium and the optimal number of banks prior to joining the union the second part discusses the benefits from joining a currency union a competition effect is identified and related to the added monitoring costs that banks may incur when operating outside their home country through an argument akin to the brander krugman reciprocal dumping model of bilateral trade however in our framework whether joining a union raises welfare of the home country is ambiguous it depends on the relative strength of investment creation and intermediation diversion effects

the new theory of optimum currency areas highbrow opinion is like a hunted hare if you stand long enough it will come back to the place it started from dennis robertson

capital controls and balance of payments crises abstract the theory of balance of payments crises shows that under perfect foresight a system of fixed exchange rate is not sustainable in the presence of diverging economic policies in this paper it is shown how and why capital controls succeed in maintaining the principle of a fixed but adjustable parity both cases of a devaluation and a revaluation are considered and a condition for a parity change to be credible is presented

neoclassical growth the j curve for abatement and the inverted u curve for pollution abstract this paper reexamines the neoclassical environmental growth model of forster to gain insights into the dynamic relationships among pollution abatement effort and economic development whereas the model has heretofore been used to examine steady state levels of capital consumption and environmental quality it also provides a theoretical basis for recent empirical research on j curves for abatement effort and inverted u curves for pollution

who can adjust to the euro this study estimates potential exchange rate variation among 26 european countries during 1992 1998 as a proxy for the potential magnitude of adjustment they face to euro block membership using the instrumental variable iv method applying least squares cross section regression analysis based on optimal currency area theory a currency union among belgium denmark france germany ireland malta the netherlands and slovenia is found to entail a relatively light burden of adjustment for its members the current membership of other countries in the euro block is potentially very demanding on their societies in the long term this study also compares currency boards and independent central banks as alternative monetary frameworks for disinflation policies based on a pooled time series cross section dataset of the same countries and years currency boards are found to be more effective in reducing inflation in all countries except belgium balancing emu s credibility gains against its adjustment costs finland greece italy portugal and spain seem like unstable members of the euro block for all new eu member states except the czech republic malta slovenia and slovakia the advice is to stay out of the euro block until their economies are liberalised and flexible enough to withstand major adjustments and their societal interest groups supportive enough of these adjustments

an optimum currency area odyssey abstract the theory of optimum currency areas was conceived and developed in three highly influential papers written by mundell 1961 mckinnon 1963 and kenen 1969 those authors identified characteristics that potential members of a monetary union should ideally possess in order to make it feasible to surrender a nationally tailored monetary policy and the adjustment of an exchange rate of a national currency we trace the development of optimum currency area theory which after a flurry of research into the subject in the 1960s was relegated to intellectual purgatory for about 20 years we then discuss factors that led to a renewed interest into the subject beginning in the early 1990s milton friedman plays a pivotal role in our narrative friedman s work on monetary integration in the early 1950s presaged subsequent optimum currency area contributions mundell s classic formulation of an optimal currency area was aimed in part at refuting friedman s strong case for floating exchange rates and friedman s work on the role of monetary policy had the effect of helping to revive interest in optimum currency area analysis the paper concludes with a discussion of recent analytical work using new keynesian models which has the promise of fulfilling the unfinished agenda set out by the original contributors to the optimum currency area literature that is providing a consistent framework in which a country s characteristics can be used to determine its optimal exchange rate regime

an introduction to the wage curve en conomists and policymakers are interested in understanding the forces that determine the level of unemployment and the level of wages this paper describes an empirical discovery made with the help of international microeconometric evidence covering more than a dozen nations about a link between these two variables the connection can be portrayed on a graph with the level of unemployment on the horizontal axis and the level of wages on the vertical axis then the wage curve as shown in figure 1 is a downwardsloping locus this relationship tells us that holding others things constant if a region has a rise in unemployment in a particular year those who live there will have a fall in their wages in that year what does this curve mean how in a field where fully controlled experiments are almost impossible could there be any convincing scientific basis for this wage curve what is the relationship between the wage curve and a phillips curve other than that the curve of figure 1 looks like a phillips curve with the vertical axis mislabeled how does the wage curve fit into existing economic knowledge and is the empirical finding consistent with competitive theory this paper sketches answers to these kinds of questions the discussion draws on our book the wage curve blanchflower and oswald 1994 where the points raised here are investigated more fully it also rests upon work done by other economists whose work is listed in the paper and the bibliography

the effects of energy price technology and disaster shocks on china s energy environment economy system abstract this paper constructs a dynamic stochastic general equilibrium dsge model to analyze the effects of energy price technology and disaster shocks on china s energy environment economy 3e system it also studies stylized facts as well as co integration and error correction dynamic analyses of this system the disaster shock is modeled as a two state markov switching process the results show that both technology and energy price shocks increase the ratio of environmental investment to gdp the improvement in technology and rising energy prices helps to reduce co2 pollution and improve economic restructuring among the three kinds of shocks technology shock is the most important the robustness of the model is tested through statistical methods

a political economic critique on the theory of optimum currency areas and the implications for east asia in recent years dynamic debate has arisen as to the desirability and feasibility of creating a monetary union in east asia while the debate has relied heavily on the theory of optimum currency areas this theory has weaknesses in explaining the actual formation of monetary unions at this point political economy analysis appears to demonstrate stronger explanatory power this paper provides a systematic review of the main developments in the literature on optimum currency area theory and in the political economy literature on monetary union in addition it addresses the feasibility of an east asian monetary union by applying the findings in these two academic strands to the region it finds that even though formation of an east asian monetary union may be to some extent feasible from an economic perspective the region s political situation does not appear favourable for the creation of one

democratic institutions and exchange rate commitments since the collapse of the bretton woods system countries have been able to choose from a variety of exchange rate arrangements we argue that politicians incentives condition the choice of an exchange rate arrangement these incentives reflect the configuration of domestic political institutions particularly electoral and legislative institutions in systems where the cost of electoral defeat is high and electoral timing is exogenous politicians will be less willing to forgo their discretion over monetary policy with a fixed exchange rate in systems where the costs of electoral defeat are low and electoral timing is endogenous politicians are more likely to adopt a fixed exchange rate regime consequently differences in domestic political systems can help account for variations in the choice of exchange rate arrangements we test this argument using constrained multinomial logit and binomial logit on a sample of twenty democracies over the period 1974 95 domestic political institutions have a significant effect on exchange rate regime choice even after controlling for systemic macroeconomic and other political variables

inflation and the demand for money in israel abstract this paper examines the impacts of rational price expectations and foreign exchange reform in addition to adaptive price expectations on money demand in israel the regression results are used to determine the upper limit on the amount of seigniorage

business cycle convergence in emu a first look at the second moment we analyse the dynamics of the standard deviation of demand and supply shocks as well as of the demand component of gdp across countries in the european monetary union emu this analysis allows us to evaluate the patterns of cyclical comovement in emu and compare them the cyclical performance of the new members of the eu and other oecd countries we make use of sigma convergence methods to identify synchronization patterns in business cycles the eurozone has converged to a stable lower level of dispersion across business cycles during the end of the 80s and the beginning of the 90s the new eu members have also experienced a strong pattern of convergence from 1998 to 2005 when a strong divergence trend appears an enlargement of the emu to 22 members would not significantly decrease its optimality as a currency area there is evidence for some europe specific characteristics as compared to global comovements in business cycles authors abstract

does more stringent environmental regulation induce or reduce technology adoption when the rate of technology adoption is inverted u shaped abstract we show that for a broad class of technologies the relationship between policy stringency and the rate of technology adoption is inverted u shaped this happens when the marginal abatement cost mac curves of conventional and new technologies intersect which invariably occurs when emissions are proportional to output and technological progress reduces emissions per output this outcome does not result from policy failure on the contrary in social optimum the relationship between the slope of the marginal damage curve and the rate of technology adoption is also inverted u shaped under more general conditions these curves can look even more complicated e g such as inverted w shaped

time consistency and the feasibility of alternative exchange rate regimes abstract in a stochastic cash in advance model of an open economy a fixed exchange rate regime is dynamically inconsistent and hence economically infeasible in a cournot nash equilibrium if there are no exogenous constraints imposed on government behaviour and nominal interest rates are strictly positive on the other hand a perfectly floating exchange rate regime is feasible but it cannot sustain any international asset trade however a noncooperative equilibrium with nonzero asset trade and a fixed exchange rate regime may become feasible when we allow policymakers to employ trigger retaliation strategies

european monetary union adjustment and exchange rate variability abstract this paper uses a three country three good factor specific model of trade with wage rigidities to investigate how european monetary union is likely to affect exchange rate variability focusing on international macroeconomic adjustment under both exogenous and optimizing monetary policies it shows that the relative variability against external currencies of the euro and a basket of predecessor currencies depends on the relative sizes and specialization patterns of countries and the relative importance of different shocks monetary union is likely to decrease increase aggregate european exchange rate variability for shocks to industries in which large small euro area countries specialize

seigniorage and the case for national money in countries with high rates of inflation there is typically movement away from the use of the local currency the paper analyzes the costs and benefits of using a local currency with emphasis on the seigniorage foregone by using a foreign money even if it should be desirable for a country to fix its exchange rate it still loses seigniorage if it does not use its own money the case for using a foreign money then turns largely on the superior discipline imposed on domestic policymakers by removing their control over the money supply alternative methods of imposing discipline are discussed estimates of the amount of seigniorage raised by different governments are presented seigniorage amounts in some cases to about 10 percent of government revenue estimates are also presented of both the annual flow and one time stock costs of giving up use of domestic currencies and instead using the dollar the flow cost is typically about 1 percent of gnp and the stock cost is around 10 percent of gnp

the limits of independence and the policy of the ecb it is argued that the european central bank s independence is not as secure as it seems and that as a result it has appreciable institutional incentives to protect and enhance its position it follows that its behaviour should not be understood as being solely determined by the pursuit of price stability one consequence is that certain points on which it has been criticised on the basis that its approach makes for ineffective monetary policy might be better understood as often effective attempts to protect its position another is that making a central bank or any other institution completely independent may be much harder than it seems and failed attempts which come close are not necessarily to be preferred even by the advocates of independence to less ambitious designs

is a monetary union feasible for east asia the empirical suitability of the east asian economies for potential monetary integration is assessed the structural vector autoregression var method is employed to identify the underlying shocks using a three variable var model across the east asian economies the estimates of the eec are used as a benchmark to compare the size of the underlying shocks and the speed of adjustment to shocks in both regions to determine the feasibility of forming an optimum currency area oca in east asia the empirical results do not display strong support for forming an oca in the east asian region the results do imply however that some small subregions are potential candidates for ocas since their disturbances are correlated and small and these economies adjust rapidly to shocks

real output co movements in east asia any evidence for a monetary union of integration in the region would greatly shape the economic structure of each individual economy an d has direct implications for the effectiveness of domestic stabilisation policy and policy coordination this paper empiricall y examines the feasibility of forming a monetary union in east asia by assessing the real output co movements among these economies as suggested by the optimum curr ency area oca theory that losing monetary independence would be the major cost for adopting

are there limits to growth a simple theoretical model of pollution is developed that generates an inverted u shape relationship between per capita income and environmental quality this model is then used to study long run growth the same inverted u shape is shown to appear in time series and the prospects for sustained growth are shown to hinge on whether increasingly strict environmental regulation is compatible with a constant rate of return on capital implementation is also studied tax and voucher schemes are shown to have an advantage over direct regulation because they provide the correct incentives for capital accumulation copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

inflationary finance under discrepion and rules inflationary finance involves first the tax on cash balances from expected inflation and second a capital levy from unexpected inflation from the standpoint of minimizing distortions these capital levies are attractive ex post to the policymaker in a full equilibrium two conditions hold 1 the monetary authority optimizes subject to people s expectations mechanisms and 2 people form expectations rationally given their knowledge of the policymaker s objectives the outcomes under discretionary policy are contrasted with those generated under rules in a purely discretionary regime the monetary authority can make no meaningful commitments about the future behavior of money and prices under an enforced rule it becomes possible to make some guarantees hence the links between monetary actions and inflationary expectations can be internalized there is a distinction between fully contingent rules and rules of simple form a simple rule allows the internalization of some connections between policy act ion and inflationary expectations but discretion permits some desirable flexibility of monetary growth this abstract was borrowed from another version of this item

non competitive market behaviour in the international coking coal market in this paper a primal dual programming model of international coking coal trade is constructed to test for non competitive market behaviour world trade in 1996 is simulated under perfect competition and various non competitive market structures statistical tests are used to compare simulated trade flows with actual data assuming cournot nash behaviour an all consumer oligopsony market structure is preferred to alternative models under an all consumer oligopsony world coking coal prices and trade are lower than under perfect competition under an oligopsonistic structure welfare gains from productivity increases in australian coal mines might largely accrue to coal buyers

a view from the macro side rebound backfire and khazzoom brookes abstract this paper attempts to delineate a few key insights extracted from theoretical macroeconomic considerations of the rebound issue the goal has been to reduce these thoughts to a clear set of assertions that if true would be useful points of reference in the ongoing discussion despite their non empirical nature

application of computable general equilibrium cge to climate change mitigation policy a systematic review abstract with the growing literature related to climate change mitigation measures and policy interventions a systematic review of the application of computable general equilibrium cge model is inevitable therefore this article aims to characterise the relevant studies define a comparative framework to identify the current state of the art and the gaps in applied general equilibrium models firstly the systematic review found a total of 301 research articles from scopus and web of science databases and finally analysed 154 articles based on inclusion and exclusion criteria from 67 refereed journals the review analysis found that application of cge model is very vital in addressing climate change mitigation issues at the national regional and global levels however china attracted the most substantial research interests followed by the usa india and australia among others which are in line with their share of greenhouse gas emissions in the world most of the research themes focus on the carbon tax emission reduction target emission trading renewable energy energy efficiency and carbon capture and storage as primary drivers of low carbon economy nevertheless there is a trend of employing more static cge model compared to the dynamic cge although application of the latter has a limitation of providing right inputs to the macroeconomic policy finally research directions and gaps envision other complementary models such as dynamic stochastic general equilibrium dsge and agent based model abm for proper policy interventions

phoenix risen the resurrection of global finance of all the many changes of the world economy since world war ii few have been nearly so dramatic as the resurrection of global finance a review of five recent books suggests considerable diversity of opinion concerning both the causes and the consequences of financial globalization leaving much room for further research competing historical interpretations stressing the contrasting roles of market forces and government policies need to be reexamined for dynamic linkages among the variables they identify likewise impacts on state policy at both the macro and micro levels should be explored more systematically to understand not just whether constraints may be imposed on governments but also how and under what conditions and what policymakers can do about them finally questions are also raised about implications for the underlying paradigm conventionally used for the study of international political economy and international relations more generally

technological progress and sustainable development what about the rebound effect abstract sustainability concepts that rest on the idea of resource or energy efficiency improvements due to technological progress tend to overestimate the potential saving effects because they frequently ignore the behavioral responses evoked by technological improvements efficiency improvements also affect the demand for resources and energy and often an increase in efficiency by 1 will cause a reduction in resource use that is far below 1 or sometimes it can even cause an increase in resource use this phenomenon is commonly labeled the rebound effect which is well known among energy economists but never attracted much attention in ecological economics the paper starts with the traditional neoclassical analysis of the rebound effect in a partial equilibrium framework that concentrates on the demand of one particular energy service such as mobility or room temperature it also provides an overview of some of the main empirical studies based on this model that mostly confirm the existence of the rebound effect but are controversial about its actual importance however we have to go beyond the neoclassical single service model in order to take care of the variety of possible feedback affecting energy use the paper presents two important expansions of the single service model in order to show the potential relevance of the rebound effect to ecological economics first it is shown that in a multi services model it proves to be difficult to make general statements about the relevance of the rebound effect in this case the overall effect of an increase in energy efficiency on total energy use depends on the on the assumptions about the substitutability between the services considered and the direction of the income effect second the paper also tries to take care of the fact that changes in resource use or energy use are frequently just side effects of other forms of technological progress especially technological change of a time saving nature can have a large influence on energy use as many time saving devices for example faster modes of transport require an increase in energy consumption that is frequently reinforced by a rebound effect with respect to time this effect will be especially strong when wages are high and at the same time energy prices are low as is currently the case in most industrialized countries consequently the paper also provides a strong argument for the introduction of energy taxes

pollution income dynamics this paper integrates the scale composition and technique effects of economic growth on pollution using a multi output endogenous growth framework under certain empirically verifiable parameter conditions economic growth is not sustainable even under an optimal pollution tax

erratum to will technological change save the world the rebound effect in international transfers of technology technological change and its transfer to developing countries is often portrayed by policy makers as a critical part of the solution to a resource problem such as climate change based on the assumption that the transfer of resource conserving technologies to developing countries will result in reduced use of natural capital by those countries we demonstrate here in a capital conversion based model of development that the free transfer of resource conserving technologies to developing countries will increase the options available to those countries but that the way that they expend these options need not be in the direction of conserving resources this is another example of the potential for a rebound effect to determine ultimate outcomes here in the context of international technology transfer policy the transfer of technologies is as likely to simply move developing countries more rapidly down the same development path as it is to alter the choices they make along that path for this reason the transfer of resource conserving technologies without incentives provided to alter development priorities may not result in any resource conservation at all

spatially uneven development and low carbon transitions insights from urban and regional planning the ageing of existing energy system infrastructure the threat of climate change and uncertainty in the movement of energy prices have resulted in a widespread agreement on the need for a transition to a low carbon energy system yet the nature of this transition i e what when how and where and its socio economic outcomes at different scales are not well understood the interdependence of the energy sector and economic growth has been mostly studied at the national level via some general equilibrium or econometric models whilst sub national studies at community or urban levels mostly focus on the governance of transitions hence we suggest that a regional perspective to energy policy and research promises to integrate these two approaches by providing a more robust and comprehensive understanding of the implications of low carbon transitions as well as contributing to the development of more effective policies by building on recent ideas on geographical aspects of energy transitions this article offers insights on the changing relationship between the spatial organisation of economic activities and energy systems and identifies tools and methods from urban and regional planning to help with the delivery of efficient and equitable policy outcomes

the advantage of tying one s hands ems discipline and central bank credibility abstract it is often argued that the ems is an effective disciplinary device for inflation prone countries in europe since it forces the respective policy makers to pursue more restrictive monetary policies than they would otherwise it is not clear however why these countries should submit themselves to such discipline this paper argues that to answer this question appropriately one must consider that ems membership brings potentially large credibility gains policy makers in inflation prone countries the reason is that not only it attaches an extra penalty to inflation in terms of real appreciation but makes the public aware that the policy maker is faced with such penalty and thus helps to overcome the inefficiency stemming from the public s mistrust of the authorities

transitional impacts of environmental policy in an endogenous growth model to explore the link between a tighter environmental policy and economic growth the authors employ an endogenous growth model with endogenous technological progress in abatement technologies the environment which is modelled as a renewable resource acts both as a public consumption good and as a public input into production the entire transition towards a new balanced growth path after a tightening of environmental policy is computed analytically the authors find sharp contrasts between short run and long run effects whereas the level and the growth rate of output may decline in the short run income growth may improve in the long run copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the costs of compliance a cge assessment of canada s policy options under the kyoto protocol canada has committed itself under the kyoto protocol to reduce greenhouse gas emissions between 2008 and 2012 on average by six per cent from the base 1990 level as of 2009 however canada s greenhouse gas emissions are far above its 1990 level which calls for stringent short term policy measures if canada is to meet its legally binding commitment this paper uses a multi region multi commodity static general equilibrium model to quantify the economic impacts of alternative compliance strategies for canada in the context of climate policies undertaken by other kyoto parties the numerical results confirm fears by canadian policymakers of substantial economic adjustment costs should canada fulfill its kyoto commitments solely through domestic action however a rigorous use of the project based cdm on top of international emissions trading could allow canada to live up to its international climate policy commitment at politically much more tolerable costs

to be or not to be in monetary union a synthesis article i nfo monetary union can benefit countries suffering from policy credibility problems if it eliminates the inflation bias and also allows for more efficient management of certain shocks but it also carries costs as some stabilization may be feasible even in the absence of credibility and this may be more than what an individual country can hope for in a monetary union in this paper we combine the stabilization and credibility branches of the currency union literature and construct a simple welfare criterion that can be used to evaluate alternative monetary arrangements we produce examples where monetary union may be welfare improving even for low modest levels of inflation bias 2 3 as long as business cycles are not too a synchronized across countries

the benefits and costs of monetary union in southern africa a critical survey of the literature with the 14 members of the southern african development community sadc having set the objective of adopting a common currency for the year 2018 an expanding empirical literature has emerged evaluating the benefits and costs of a common currency area in southern africa this paper reviews that literature focusing on two categories of studies 1 those that assume that a country s characteristics are invariant to the adoption of a common currency and 2 those that assume that a monetary union alters an economy s structure resulting in trade creation and credibility gains the literature reviewed suggests that a relatively small group of countries typically including south africa satisfies the criteria necessary for monetary unification the literature also suggests that in a monetary union comprising all sadc countries and a regional central bank that sets monetary policy to reflect the average economic conditions e g fiscal balances in the region the potential losses i e higher inflation from giving up an existing credible national central bank a relevant consideration for south africa could outweigh any potential benefits of trade creation resulting from a common currency

one money for europe lessons from the us currency union currency union barry eichengreen the creation of a monetary union in europe is often justified by the desire to reap the full benefits of economic integration the complete removal of capital controls raises a large number of issues the case for free capital mobility is strong but not overwhelming it hinges on issues of technology transport costs market structure and labour mobility and in the end is an empirical matter for which us experience may provide useful information policy making institutions differ in important respects however the us tradition of fiscal federalism for example has no ec wide counterpart yet its functions seem a desirable feature of a monetary union in particular it is shown to play an important role in absorbing regional disturbances mostly via the tax system us experience also suggests that a currency union creates pressure for fiscal policy harmonization affecting both taxes and spending although a currency union fundamentally alters the balance of payments adjustment process the potential problem of depressed regions remains a serious one given the increased tightness of the external constraint the limited extent of labour mobility and other features of european labour markets solutions based on us experience include extensive swap facilities and a european version of fiscal federalism

evaluating policy interventions with general equilibrium externalities abstract we report on the results of analytical and numerical models that describe the effects of non separable externalities or public goods on public policies with important general equilibrium consequences in the numerical exercise we calibrate a general equilibrium model with non separable air quality benefits in order to measure the excess burden and total net benefits of transportation and energy taxes in the 1995 u s economy the change in the physical level and the economic value in air quality associated with a given policy is a function of the substitution patterns between air quality and market goods that we assume the size of the deadweight loss due to pre existing distortions such as a tax on labor income is substantially affected by these substitution patterns

technological change in economic models of environmental policy a survey this paper provides an overview of the treatment of technological change in economic models of environmental policy numerous economic modeling studies have confirmed the sensitivity of mid and long run climate change mitigation cost and benefit projections to assumptions about technology costs in general technical progress is considered to be a noneconomic exogenous variable in global climate change modeling however there is overwhelming evidence that technological change is not an exogenous variable but to an important degree endogenous induced by needs and pressures hence some environmenteconomy models treat technological change as endogenous responding to socio economic variables three main elements in models of technological innovation are i corporate investment in research and development ii spillovers from r d and iii technology learning especially learning by doing the incorporation of induced technological change in different types of environmental economic models tends to reduce the costs of environmental policy accelerates abatement and may lead to positive spillover and negative leakage

the eu 20 20 2020 targets an overview of the emf22 assessment three computable general equilibrium models are used to estimate the economic implications of a stylized version of eu climate policy if implemented at the lowest possible cost the 20 emissions reduction would lead to a welfare loss of 0 5 2 0 by 2020 second best policies increase costs a policy with two carbon prices one for the ets one for the non ets could increase costs by up to 50 a policy with 28 carbon prices one for the ets one each for each member state could increase costs by another 40 the renewables standard could raise the costs of emissions reduction by 90 overall the inefficiencies in policy lead to a cost that is 100 125 too high the models differ greatly in the detail of their results the ets non ets split may have a negligible impact on welfare while the renewables standard may even improve welfare the models agree however that the distortions introduced by total eu package imply a substantial welfare loss over and above the costs needed to meet the climate target the marginal total and excess costs reported here are notably higher than those in the impact assessment of the european commission

on the imperfect substitutability of policy regimes exchange rate targetting vs policy coordination abstract exchange rate targetting is always an imperfect substitute for explicit policy coordination but succeeds when economies are either structurally dissimilar with symmetric shocks or structurally symmetric with dissimilar shocks a joint commitment then generates economies of scale in interventions

the current impasse in research on optimum currency areas abstract the only visible advance in the theory of the optimum currency area oca since mundell wrote in 1961 is the proposal of new criteria for determining the optimal size of a currency area the paper first tries to substantiate this general assessment and then argues that the fault lies in the profession s unwillingness to adopt a formal analysis of the subject divorced from the policy aspects we could make considerable progress in analysing the oca by merely following our usual procedure of defining a general welfare function to be compared if not maximised under different well specified conditions furthermore any move in this direction would take us far beyond the current enumeration of criteria for an oca

wage rigidity and monetary union we compare monetary union to flexible exchange rates in an asymmetric threecountry model with active monetary policy unlike the traditional oca literature we find that countries with a high degree of nominal wage rigidity benefit from monetary union specially when they join other similarly rigid countries countries with relatively more flexible wages tend to be worse off in unions with countries that have more rigid wages we examine france germany and the uk and find that the welfare implications of alternative monetary arrangements depend more on the degree of wage asymmetry than on other types of asymmetries in shocks monetary policy etc and that higher degree of wage flexibility in the uk relative to france and germany would make its participation in emu costly

the role of technological change for a sustainable development technological change has become a major focus in environmental policy as well as in energy and climate policy indeed there is a growing body of knowledge about how and in which direction technological change might have an impact on environmental resource constraints and how environmental policy might have an impact on this direction in this article we introduce the contributions to this special issue showing how they add to recent developments in the field of economics of technological change and sustainability we also discuss potential avenues for future research

what do demand and supply shocks say about caribbean monetary integration this study seeks to ascertain whether the member states of the caribbean community caricom share similar supply and demand shocks if so an argument can be made for the suitability of said countries being part of a currency union the results show that no significant correlation exists for the majority of countries studied and as such no economic justification for the monetary union can be made based on the methodology used however the eastern caribbean currency union eccu whose members are a part of caricom is supported by the results

is environmental degradation an inevitable consequence of economic growth tunneling through the environmental kuznets curve abstract economywide reforms often contribute simultaneously to economic social and environmental gains however unintended adverse side effects occur in many cases when such growth inducing reforms are undertaken while neglecting other policy market or institutional imperfections the remedy does not generally require reversal of the original economywide reforms but rather the ex ante implementation of additional complementary measures that remove such imperfections the ekc approach seeks to relate the state of the environment to the stage of development developing countries could learn from the experiences of industrialized nations and restructure growth and development to tunnel through any potential ekc thereby avoiding going through the same stages of growth that involve relatively high and even irreversible levels of environmental harm an environmentally adjusted measure of national income could significantly change the shape of the development environment relationship recommendations for decision making include actively seeking win win policies that simultaneously yield both economic and environmental gains pre empting environmental harm through ex ante remedial measures and fine tuning reform policies to avoid severe environmental damage the adoption of more sustainable policies will facilitate the attainment of higher levels of development at a lower environmental cost

coherence causality and effectiveness of the eu environmental policy system results of complementary statistical and econometric analyses this paper presents the first empirical test of coherence i e consistency of policies within a framework causality i e logical priority of objectives over policies and effectiveness i e ability of policies to tackle challenges as defined by objectives of the overall eu environmental policy system to do so i applied complementary statistical cross sectional and time series and econometric dynamic tri probit analyses to an original panel dataset based on addressed issues i e pollution vs resource trans boundary vs domestic flow vs stock rather than on implemented policies i e eu legislation aiming at optimal pollution production optimal resource use and market competition it would be impossible to perform similar analyses by referring to realized policies rather than tackled issues due to the unbalanced sample characterizing the former with respect to the latter as well as due to overlapping objectives interrelated policies and non univocal relationships between objectives and policies in contrast with previous studies of single eu environmental policies characteristics of the eu environmental policy or eu environmental objectives i found that the overall eu environmental policy system is internally coherent dynamically causal and ex ante effective moreover the evidence suggests that many issues are correlated trans boundary issues became more relevant in 2012 pollution production was more significant than resource use and flow issues were more important than stock issues from 1995 to 2010 finally i show that few objectives overlapped a safe environment objective 1987 1997 was preferred to a greenhouse gas ghg reduction objective 2003 2012 but pursued with a 2 year lag although the latter has recently become preferred to the former in addition a ghg reduction objective was preferred to a sustainable development objective 1998 2002

world crude oil and natural gas a demand and supply model abstract this paper examines world markets for crude oil and natural gas over the period 1918 1999 it analyzes the time series properties of output and prices and estimates demand and supply elasticities during 1918 1973 and 1973 1999 oil and gas prices were stable during the first period they became volatile afterwards reflecting deep changes in the market structure following the oil shock in 1973 demand price elasticities were too low however demand income elasticities were high supply price elasticities were also too low the elasticity estimates help to explain the market power of the oil producers and price volatility in response to shocks and corroborate elasticity estimates in energy studies