oil prices breaks and trends abstract this paper contributes to the literature of the stationarity of financial time series and the literature on oil and macroeconomics in several ways first it uses kejriwal and perron 2010 sequential procedure to endogenously determine multiple structural changes in real oil prices without facing the circular testing problem between structural changes and stationary assumptions of previous tests second it performs a diagnostic check to detect the significance and magnitude of the potential breaks third it uses the above information to test for the existence of stochastic trends in real oil prices and fourth it speculates about possible explanations for the break dates found in order to encourage further work and discussions the exercise uses monthly data from january 1861 to august 2011

cost efficiency and electricity market structure a case study of oecd countries the oecd electricity sector has witnessed significant institutional restructuring over the past three decades as a consequence many power generation utilities now act as unregulated companies that technically compete to sell power on an open market this paper analyses the performance in term of cost efficiency for electricity generation in oecd power sector while accounting for the impact of electricity market structures we employ the short run cost function in which capital stock is treated as a quasi fixed factor input empirical models are developed for the cost function as a translog form and analysed using panel data of 25 countries during the period 1980 to 2009 we show that it is necessary to model latent country specific heterogeneity in addition to time varying inefficiency the estimated economies of scale are adjusted to take account of the importance of the quasi fixed capital input in determining cost behaviour and long run constant returns to scale are verified for the oecd generation sector the research findings suggest there is a significant impact of electricity market regulatory indicators on cost in particular public ownership and vertical integration are found to have significant and sizable increasing impacts on cost thereby indicating policy lessons on the desirable ways to implement structural electricity generation reforms

limited commitment and crowding out of private transfers evidence from a randomised experiment this paper studies some empirical implications of models with limited risk sharing due to the imperfect enforceability of contracts we test whether the amount by which public transfers reduce private transfers is affected by features of the economy such as the variance of income and its persistence these implications are unique to models with imperfect enforceability we use data from mexico collected to evaluate a public transfer programme it included a randomised component that we exploit as a source of exogenous variation our results support the theoretical model in that the crowding out of private transfers is larger in villages where the variance of income is smaller

how to identify trust and reciprocity this paper uses a three games or triadic design to identify trusting and reciprocating behavior a large literature on single game trust and reciprocity experiments is based on the implicit assumption that subjects do not have altruistic or inequality averse other regarding preferences such experimental designs test compound hypotheses that include the hypothesis that other regarding preferences do not affect behavior in contrast experiments with the triadic design do discriminate between transfers resulting from trust or reciprocity and transfers resulting from other regarding preferences that are not conditional on the behavior of others decomposing trust from altruism and reciprocity from altruism or inequality aversion is critical to obtaining empirical information that can guide the process of constructing models that can increase the empirical validity of game theory

the introduction of formal insurance and its effect on redistribution abstract transfers motivated by altruism guilt and norms of giving play an important role in supporting individuals who suffer losses due to risk we present empirical evidence from an artefactual field experiment in ethiopia in which we introduce formal insurance in a setting where donors make redistributive transfers to recipients who experience losses we find that donors tend to reduce their transfers to recipients who are offered insurance whether or not they take it up when insurance is rejected by a recipient transfer reductions are larger for donors who firmly expect that the recipient would take up insurance the results are consistent with a framework in which the introduction of insurance erodes norms of giving by revealing differences in the extent to which individuals value precautionary behavior with respect to risk taking welfare calculations show that when formal insurance is introduced the welfare of those who fail to take it up may be reduced

why do people rate theory and evidence on online ratings abstract the rapid growth of online retail in the last decade has led to widespread use of consumer generated ratings this paper theoretically and experimentally identifies influences that drive consumers to rate products and examines how those factors can create distortions in product ratings by manipulating payoffs and effectively deactivating either the buyer or seller side of an artificial laboratory market raters behavior is decomposed into buyer centric and seller centric components the cost of providing a rating also plays a major role in influencing rating behavior with high and low quality sellers being rated more often than those of moderate quality

a theory of interlinked rural transactions this paper argues that the interlinking of labor output and credit contracts often observed in rural economies can be regarded as an attempt to improve allocative efficiency in the face of moral hazard it advances an economic explanation of the phenomenon which is rooted in the view that prevalent modes of transaction of which interlinked contracts are an example are shaped by technological considerations interlinking is shown to be an efficient economic response to unequally distributed information arising from the uncertainty which characterizes subsistence agriculture all pareto efficient allocations require a combination of wage cum output sharing with consumption credit contracts the analytical framework set up to demonstrate the results is used to examine the response of the contractual parameters to changes in i the returns to alternative occupations available to tenant laborers ii the cost of credit to the village economy and iii the riskiness of cultivation the analysis concludes that public policy to alleviate rural poverty must recognize the relationships between technological considerations and modes of transaction in the absence of a complete set of markets

liberalizing the energy markets of western europe a computable equilibrium model approach using a computable equilibrium model the short run effects of a radical liberalization of the west european natural gas and electricity markets are examined in each model country oil gas coal and electricity are produced traded and consumed there are world markets for oil and coal and well integrated competitive markets for gas and electricity in western europe gas and electricity are transported and traded across markets under the assumption of ideal third party access regimes for transportation and limited capacities in the transportation networks it is found that relative to the data year 1996 radical liberalization reduces the average end user price of natural gas by around 20 and the average end user price of electricity by around 50 the supply of electricity increases by around 20 mainly due to increased coal power production after such liberalization coal power emerges with the largest market share of electricity production in western europe

labor tying in a poor agrarian economy a theoretical and empirical analysis in this paper we show how tied labor contrary to its common characterization as a feudal relic and as a symptom of economic stagnation may actually be strengthened by capitalist agricultural development we construct a simple two period theoretical model of a two tiered labor market to show how the proportional importance of voluntary labor tying contracts may increase with yield increasing improvements and with a tightening of the labor market we then provide in support of these hypotheses some general historical as well as more detailed econometric evidence from a variety of cross sectional data in rural india

econometric analysis of australian emissions markets and electricity prices emissions trading schemes aim to reduce the emissions in certain pollutants using a market based scheme where participants can buy and sell permits for these emissions this paper analyses the efficiency of the two largest schemes in australia the nsw greenhouse gas abatement scheme and the mandatory renewable energy trading scheme through their effect on the electricity prices from 2004 to 2010 we use a long run structural modelling technique for the first time on this market it provides a practical long run approach to structural relationships which enable the determination of the effectiveness of the theoretical expectations of these schemes the generalised forecast error variance decomposition analysis finds that both schemes emissions prices have little effect on electricity prices generalised impulse response function analysis support this finding indicating that when shocks are applied to electricity by the two schemes it returns to equilibrium very quickly this indicates that these schemes are not having the effect anticipated in their legislation

informal insurance arrangements with limited commitment theory and evidence from village economies recent work on consumption allocations in village economies finds that idiosyncratic variation in consumption is systematically related to idiosyncratic variation in income thus rejecting the hypothesis of full risk pooling we attempt to explain these observations by adding limited commitment as an impediment to risk pooling we provide a general dynamic model and completely characterise efficient informal insurance arrangements constrained by limited commitment and test the model using data from three indian villages we find that the model can fully explain the dynamic response of consumption to income but that it fails to explain the distribution of consumption across households

risk and insurance in a rural credit market an empirical investigation in northern nigeria credit contracts play a direct role in pooling risk between households in northern nigeria repayments owed by borrowers depend on realizations of random shocks by both borrowers and lenders the paper develops two models of state contingent loans the first is a competitive equilibrium in perfectly enforceable contracts the second permits imperfect information and equilibrium default estimates of both models indicate that quantitatively important state contingent payments are embedded in these loan transactions but that a fully efficient risk pooling equilibrium is not achieved the research is based on a year long survey in zaria nigeria conducted by the author

a club convergence analysis of per capita energy consumption across australian regions and sectors we examine convergence in per capita energy consumption across nine sectors and seven states and territories in australia over the period 19902016 using the phillips sul club convergence approach we find evidence of multiple convergence clubs for aggregate energy consumption per capita and for energy consumption per capita in eight of the nine sectors with full club convergence in the case of electricity the presence of multiple equilibria for most sectors reflect that states with similar features in terms of climate economic activities and population size among others tend to exhibit similar energy consumption patterns our results highlight the need to tailor policies designed to reduce energy consumption in specific sectors to the consumption convergence paths unique to particular clusters of states

the crowding out effect of formal insurance on informal risk sharing an experimental study abstract this paper investigates the crowding out effect of formal insurance on informal risk sharing arrangements via theory and laboratory experiment our model and simulation predict that the crowding out of private transfers is often more than one for one and will reduce the total risk coverage furthermore the existence of a moderate degree of altruism exaggerates the crowding out effect especially when there is an ex ante income inequality these predictions are mostly supported by the laboratory experiment except that the crowding out effect is not more than one for one and hence the total risk coverage is not significantly reduced by formal insurance

formal and informal risk sharing in ldcs theory and empirical evidence in village economies limited commitment models have been proposed as theoretical alternatives to the complete markets hypothesis and have been shown to be empirically relevant yet village institutions might be able to enforce some contracts we construct a theoretical model which shows how households can insure through both formal and informal contracts when some verifiable production takes place in an environment of incomplete markets this theoretical setting nests the case of complete markets when all risks can be insured by formal contracts because all states of nature would be verifiable and the case where only informal agreements are available agreements specifying informal transfers that needs to be self enforceable we derive two equations of interest the income equation which is partially determined by the formal contract and an euler type equation where consumption growth is affected by lagged consumption instead of being a martingale using semi parametric specifications we derive testable restrictions of our model we estimate both equations using data of village economies in pakistan empirical results are consistent with the model the estimation and allows to show that the incentive constraints due to selfenforcement bind and that formal contracts are used to reduce the probability of binding the constraint

capital requirements screening and interlinked sharecropping and credit contracts this paper provides one more rationale for interlinking credit and tenancy contracts in the context of production loans in an environment characterized by a heterogeneous labor pool and imperfect information landlords will have an incentive to avail themselves of screening devices by linking tenancy and credit contracts a screening device can be implemented the equilibrium set of contracts is characterized by a variety of interest rates some of which might be below the market interest rate the interest rate principal schedule is downward sloping with higher ability tenants choosing larger principals at lower interest rates

jeea fbbva lecture 2019 consumption insurance in networks with asymmetric information evidence from tanzania this paper uses a dataset from tanzania with information on consumption income and income shocks within and across family networks crucially and uniquely it also contains data on the degree of information existing between each pair of households within family networks we use these data to construct a novel measure of the quality of information both at the level of household pairs and at the level of the network we also note that the individual level measures can be interpreted as measures of network centrality we study risk sharing within these networks and explore whether the rejection of perfect risk sharing that we observe can be related to our measures of information quality we show that households within family networks with better information are less vulnerable to idiosyncratic shocks furthermore we show that more central households within networks are less vulnerable to idiosyncratic shocks these results have important implications for the characterisation of the empirical failure of the perfect risk sharing hypothesis and point to the importance of information frictions

renewable and non renewable energy consumption and economic activities further evidence from oecd countries this article examines the dynamic relationship between renewable and non renewable energy consumption and industrial output and gdp growth in oecd countries using data over the period of 1980 2011 the panel cointegration technique allowing structural breaks is used for empirical investigation the results show that there is a long term equilibrium relationship among non renewable and renewable energy sources industrial output and economic growth the panel causality analyses show bidirectional causality between industrial output and both renewable and non renewable energy consumption in the short and long run however there is evidence of bidirectional short run relationship between gdp growth and non renewable energy consumption while unidirectional causality between gdp growth and renewable energy consumption these results indicate that oecd economies still remain energy dependent for their industrial output as well as overall economic growth however expansion of renewable energy sources is a viable solution for addressing energy security and climate change issues and gradually substituting renewable to non renewable energy sources could enhance a sustainable energy economy

separating reputation social influence and identification effects in a dictator game abstract this study explores the ways in which information about other individual s action affects one s own behavior in a dictator game the experimental design discriminates behaviorally between three possible effects of recipient s within game reputation on the dictator s decision reputation causing indirect reciprocity social influence and identification the separation of motives is an important step in trying to understand how impulses towards selfish or generous behavior arise the statistical analysis of experimental data reveals that the reputation effects have a stronger impact on dictators actions than the social influence and identification

does africa need a rotten kin theorem experimental evidence from village economies this paper measures the economic impact of social pressure to share income with kin and neighbors in rural kenyan villages the authors conduct a lab experiment in which they randomly vary the observability of investment returns the goal is to test whether subjects reduce their income in order to keep it hidden the analysis finds that women adopt an investment strategy that conceals the size of their initial endowment in the experiment although that strategy reduces their expected earnings this effect is largest among women with relatives attending the experiment parameter estimates suggest that women behave as though they expect to be pressured to share four percent of their observable income with others and substantially more when close kin can observe income directly although this paper provides experimental evidence from a single african country observational studies suggest that similar pressure from kin may be prevalent in many rural areas throughout sub saharan africa

consumer electricity and gas prices across australian capital cities structural breaks effects of policy reforms and interstate differences abstract we detect and analyze the most significant structural changes in the quarterly growth rate of consumer electricity and gas prices in australia and estimate their corresponding seasonal effects to do so we apply the general modelling framework of the bai perron breaking regression to all available quarterly data for capital cities individually and australia as a whole 1989q3 2017q2 retail energy prices in most australian states were deregulated in the 2000s we find that increases in average quarterly growth rates of electricity and gas prices consistently occurred in the third september quarter and find very few instances of increases in any other quarters of the year in the post deregulation period price increases are significantly higher than in the pre deregulation era results for some capital cities are stark in perth third quarter growth in electricity prices has been five times higher after the structural break in australia as a whole third quarter growth in gas prices has been three times higher after the structural break we discuss several possible explanations for energy price rises in the period since deregulation

international business cycles with endogenous incomplete markets backus kehoe and kydland 1992 baxter and crucini 1995 and stockman and tesar 1995 find two major discrepancies between standard international business cycle models with complete markets and the data in the models cross country correlations are much higher for consumption than for output while in the data the opposite is true and cross country correlations of employment and investment are negative while in the data they are positive this paper introduces a friction into a standard model that helps resolve these anomalies the friction is that international loans are imperfectly enforceable any country can renege on its debts and suffer the consequences for future borrowing to solve for equilibrium in this economy with endogenous incomplete markets the methods of marcet and marimon 1999 are extended incorporating the friction helps resolve the anomalies more than does exogenously restricting the assets that can be traded

revisiting electricity liberalization and quality of service empirical evidence from new zealand abstractwhat effect does the firm structure have on the quality of service delivered by networks and infrastructure industries we answer this question by empirically assessing the impacts of complete vertical separation such as ownership unbundling on the quality of service delivered by a liberalized network industry electricity distribution utilities in new zealand are considered for this purpose and are analysed using panel data econometrics the results show robust evidence that ownership unbundling contributed to a fall in the duration and frequency of supply interruptions in electricity distribution however the results also show that unbundling has no effect on reducing distribution network losses these results overall highlight the nonsimple impacts of ownership unbundling on the quality of electricity distribution we suggest that the quality of service may largely improve when considered in the economic regulation of electricity networks than completely relying on specific reform measures

jump dynamics with structural breaks for crude oil prices this study investigates the joint phenomena of permanent and transitory components in conditional variance and jump intensity along with verification of structural breaks for crude oil prices we adopt a component arji model with structural break analysis utilizing daily data on west texas intermediate crude oil spot and futures contracts the analytical results verify the existence of permanent and transitory components in conditional variance with the permanent component of conditional variance increasing with the occurrence of a sudden major event such as the iraqi invasion of kuwait operation desert storm and the war between the us and iraq and a relatively greater increase in the transitory component over the same period notably jump intensity fluctuates with an increase in the transitory component of conditional variance in response to abnormal events it is the transitory component which serves as the primary influential factor for jumps in returns therefore speculators are willing to take large risks particularly with respect to anticipating future price movements or gambling in the hopes of rapidly making substantial gains thus speculators prefer the temporary volatility component and engage in trade activities however investors prefer the permanent volatility component because they may well be better off relocating their assets into more stable portfolios to outperform the market portfolio over the long run

breaks trends and unit roots in spot prices for crude oil and petroleum products abstract this study examines the trend properties in energy price series using weekly spot price data for crude oil heating oil and regular gasoline in particular the procedures proposed by perron and yabu 2009b are employed to test for a one time break in the trend function of each price series with no prior knowledge of whether the noise component is stationary or has an autoregressive unit root based on the results of the break estimate the unit root test developed by kim and perron 2009 is performed to examine the stationarity of the prices finally we extend the one break analysis to the case with multiple breaks by employing the break test proposed by kejriwal and perron 2010 and the unit root test of carrion i silvestre et al 2009 the results consistently demonstrate evidence of structural breaks and reject the unit root null hypothesis for all the price series suggesting that energy prices are persistently influenced by long term economic fundamentals instead of temporal policy changes

a literature review of economic studies on carbon pricing and australian wholesale electricity markets abstract with the ongoing development of australian anthropogenic climate change mitigation policies there has been a steady increase in modelling studies undertaken to estimate australian carbon prices and their impact on existing electricity markets this article summarises some of the more prominent studies completed by many of australia s foremost economic modelling firms we developed a simple approach for testing the consistency of these studies and their findings in relation to carbon pass through unfortunately we have established that the studies are entirely inconsistent in their estimation of carbon pass through furthermore we were unable to establish why the estimation of carbon pass through varies so significantly this has important implications for policy makers given much of the compensation to be paid to households and businesses under the clean energy future package is predicated on simple assumptions of carbon pass through based upon our analysis of these economic studies our conclusion is that australian policy makers are best guided by relying upon the numerous a posteriori estimations of pass through in the european union emissions trading scheme ets rather than australian a priori studies

credit and sharecropping in agrarian societies this paper considers a model of linkage between land labor and credit transactions in the context of sharecropping the paper s objectives are a to derive and characterize the equilibrium in a model of a land scarce labour abundant economy under sharecropping given an infinitely elastic supply of identical sharecroppers at a reservation utility and b to demonstrate that in an imperfect market a landlord may offer credit to his tenant sometimes even at a subsidized rate of interest without necessarily insisting that the sharecropper borrow only from him precluding an involuntary linkage between credit and land transations it has been demonstrated that regardless of the presence or absence of linkage or any other control by the landlord as long as he can vary the size of the plot given to a tenant and there are enough potential tenants in equilibrium contracts a tenants utility under sharecropping will be the same as that which he could have obtained as a full time wage laborer this result implies that policies other than land reform will not affect the welfare of tenants

ethnic diversity energy poverty and the mediating role of trust evidence from household panel data for australia abstract energy poverty is now a major concern on the public policy agenda in many countries however evidence on the determinants of energy poverty is relatively scant our study contributes to the debate on the determinants of energy poverty by being the first to examine the impact of ethnic diversity on household energy poverty using 12 waves of longitudinal data from the household income and labour dynamics in australia hilda survey we find that in australia ethnic diversity is positively associated with energy poverty our preferred instrumented estimates suggest that a standard deviation increase in ethnic diversity is associated with a 0 103 0 422 standard deviation increase in energy poverty depending on how energy poverty is measured this finding is generally robust to alternative ways of measuring ethnic diversity and energy poverty we identify trust as an important channel through which ethnic diversity operates and point to the need for policies that engender social capital in multicultural societies as a means to harness the benefits of diversity

oportunidades program effect on consumption low participation and methodological issues abstract in this paper we estimate the effect of the mexican conditional cash transfer program oportunidades on consumption and we explore some issues related to participation in the program and to the estimation of treatment effects we discuss the comparability of treatment and control areas provide evidence that the expected transfer may not be sufficiently high to induce many eligible households to participate and find positive effects on consumption

motivations for market restructuring evidence from u s electricity deregulation abstract the purpose of this paper is to examine whether electricity restructuring was brought about due to the public interest theory that regulatory changes are undertaken to benefit society or the interest group theory that groups hoping to gain from deregulation lobby for regulatory changes from 1996 to 2002 eighteen states developed restructuring programs targeted at improving efficiency through the use of increased wholesale trading abolition of cost of service regulation measures to open electricity production to non utility entities and the unbundling of transmission and distribution results indicate some evidence of the public interest theory and strong evidence of the interest group theory

the limits of equality insights from the israeli kibbutz what limits the capacity of society to redistribute what determines the structure of compensation in organizations striving for income equality this paper addresses these questions by investigating the economic and sociological forces underlying the persistence of the israeli kibbutzim communities based on the principle of income equality to do this i exploit newly assembled data on kibbutzim and a financial crisis in the late 1980s that affected them differentially the main findings are that 1 productive individuals are the most likely to exit and a kibbutz s wealth serves as a lock in device that increases the value of staying 2 higher wealth reduces exit and supports a high degree of income equality and 3 ideology facilitates income equality using a simple model i show that these findings are consistent with a view of the kibbutz as providing optimal insurance when members have the option of leaving more generally these findings contribute to an understanding of how mobility limits redistribution and to an understanding of the determinants of the sharing rule in other types of organizations such as professional partnerships cooperatives and labor managed firms

price discrimination in australia s retail electricity markets an analysis of victoria southeast queensland when capital intensive monopoly industries are restructured and deregulated consumer prices commence a natural drift from regulated uniform average cost tariffs to competitive differential prices and this can raise problems for policymakers deep discounts are welcomed high standing offers are not but price discrimination is unremarkable in economics indeed in industries where fixed sunk costs represent a significant portion of total cost discriminatory pricing is usually welfare enhancing conversely theory predicts and empirical evidence confirms that regulatory efforts to cherry pick differential prices in asymmetric markets will damage consumer welfare in this article we analyse differential retail electricity offer prices in the australian states of victoria and queensland and contrast these with industry average total cost and the marginal cost of retail supply we find deregulated victoria displays high price dispersion with standing offer tariffs 10 above industry average total cost and marginal offers at break even prices i e 20 below average total cost in the semi regulated southeast queensland market where a regulated price cap exists there is lower dispersion but marginal offers include a 6 7 retail mark up efficient pricing requires the marginal unit produced to be priced at marginal cost and victoria meets this criteria but we identify an episode of inter consumer misallocation due to high standing offers we conclude policy initiatives designed to help firms shift vulnerable households from standing offer tariffs is desirable

consumption smoothing in island economies can public insurance reduce welfare abstract in this paper we study the effects of certain types of public compulsory insurance arrangements for aggregate shocks on private allocations in environments with limited commitment we show that this type of insurance can improve the wellbeing of private situations but it can also deteriorate it we also describe how different characteristics of the environment affect the role of public insurance using data on the mexican progresa program we document the impact that some government programs have in crowding out private transfers

can contracts signal social norms experimental evidence we investigate whether incentive schemes signal social norms and thus affect behavior beyond their direct economic consequences a one shot principal agent experiment is studied where prior to contract choice principals are informed about the past actions of other agents and thus have more information about norms of behavior compared with a setting in which principals are uninformed agents exert substantially higher effort under a fixed wage contract when they are aware that an informed principal chose this contract the informed principal s choice apparently signals a norm not to exploit trust which leads to more trustworthy behavior this mechanism s robustness is explored in further experiments data as supplemental material are available at http dx doi org 10 1287 mnsc 2015 2336 this paper was accepted by uri gneezy behavioral economics

group insurance and lending with endogenous social collateral abstract we construct a dynamic model of self enforcing insurance provision and lending to a community of borrowers who are connected by risk sharing arrangements that are themselves subject to enforcement problems as in kocherlakota 1996 we show that an outside lender offering constant consumption contracts can earn a higher profit if he conditions his repeated interactions with each borrower on the history of his interactions with all the group members a joint liability contract rather than on his history with that borrower only individual liability contracts this result holds even in the absence of informational asymmetries the observation driving it is that with individual liability contracts a joint welfare maximizing group may prefer to have one or more group members default on their contracts so that the group can consume a mix of outside funds and the defaulters stochastic income one contribution of our work is to give precise economic content to the concept of social collateral as the per agent surplus from group risk sharing over autarky the group can deter its members from defaulting on their contracts with the principal by threatening to reduce that surplus

revitalising the wind power induced merit order effect to reduce wholesale and retail electricity prices in australia this paper investigates the effect of increasing the number of wind turbine generators on wholesale spot prices in the australian national electricity market s nem given the existing transmission grid from 2014 to 2025 we use a sensitivity analysis to evaluate the effect of five different levels of wind power penetration on prices ranging from scenario a no wind to scenario e that includes existing and planned wind power sufficient to meet australia s original 2020 41twh large scale renewable energy target lret we find divergence in prices between states and similar prices for nodes within states this supports the garnaut climate change review assessment on the prevalence of gold plating the intrastate transmission network and underinvesting in interstate connectivity we find that increasing wind power penetration decreases wholesale spot prices but that retail prices have increased in deregulated south australia and queensland similarly in victoria we argue that there is a pressing need to split the large generator retail companies into separate retail and generator companies and to reassess regulatory rules more generally interconnector congestion limits the potential for wind power to further reduce wholesale prices across the nem so the need for a high capacity transmission backbone in the nem is becoming clearer and will become pressing when australia moves beyond its current 2020 lret

transmission of prices and price volatility in australian electricity spot markets a multivariate garch analysis this paper examines the transmission of spot electricity prices and price volatility among the five regional electricity markets in the australian national electricity market namely new south wales queensland south australia the snowy mountains hydroelectric scheme and victoria a multivariate generalised autoregressive conditional heteroskedasticity model is used to identify the source and magnitude of price and price volatility spillovers the results indicate the presence of positive own mean spillovers in only a small number of markets and no mean spillovers between any of the markets this appears to be directly related to the physical transfer limitations of the present system of regional interconnection nevertheless the large number of significant own volatility and cross volatility spillovers in all five markets indicates the presence of strong autoregressive conditional heteroskedasticity and generalised autoregressive conditional heteroskedasticity effects this indicates that shocks in some markets will affect price volatility in others finally and contrary to evidence from studies in north american electricity markets the results also indicate that australian electricity spot prices are stationary

australian retail electricity prices can we avoid repeating the rising trend of the past abstract after a stable or declining real trend that persisted for more than half a century australian retail electricity prices have experienced a substantial increase in real terms since 2007 this has mainly been driven by increases in the cost of electricity distribution and to a lesser degree in the cost of electricity generation reducing greenhouse gas emissions which is a bipartisan political goal in australia will likely deliver further increases in generation costs due to the expected higher cost of low emission technology participating in global negotiations on emission reduction targets and designing efficient policy mechanisms have been a major focus of governments over the last several decades in contrast managing distribution system costs has received less attention while there were a number of factors which drove historical increases in distribution costs management of peak demand growth could help contain or reduce the extent to which consumers particularly households experience further increases in distribution costs the paper demonstrates how different combinations of carbon price and peak demand scenarios could impact future residential and industrial retail electricity prices to 2050 and discusses some behavioural and technological solutions to manage peak demand and potential barriers to their deployment

implicit interest rates usury and isolation in backward agriculture the unusually high interest rates in many backward agricultural regions have been a source of some puzzlement to economists adding to this puzzle is the fact that these rates can take on a wide range of values often within the same region one important question is why arbitrage between sectors does not lead to more homogeneous and lower interest rates the traditional answer to this is in terms of lender s risk it is argued that moneylenders in backward regions face a great risk of default and once this is taken into account the effective interest rate turns out to be no higher than its counterpart in the organised sector consequently there is no real room for arbitrage and the high interest rates are equilibrium prices while this explanation may be of use in some situations it is in general inadequate and can even be misleading the reason which novelists describing rural india have repeatedly written about is that in these financial transactions the lender s risk frequently ranges from minimal to non existent because the personalised relation between the borrower and the lender enables the latter to extract the defaulted loan in the form of asset transfers from the borrower in a somewhat stylised manner these deals could be thought of as follows a peasant takes a loan from his employer keeping some of his assets like land a standing crop or even the promise of labour services as security or collateral a collateral price is then fixed this is the conversion price used to calculate the amount of collateral that has to be relinquished to the lender given a certain amount of default clearly the lower the collateral price the larger the quantity of collateral that the peasant has to forfeit hence the underpricing of collateral amounts to the charging of an implicit interest a widespread feature of rural credit markets reported in many diverse studies bardhan and rudra 1978 myint 1964 raj 1981 roth 1979 and sivakumar 1978 to mention just a few is the underpricing of collateral an interesting attempt to bring collateral explicitly into a model of usury was made by bhaduri 1977 see also 1983 who argued that one of the reasons why landlords raise interest rates is in fact to encourage default and to claim ownership of the asset kept as collateral a sharp contrast to the lender s risk model this hypothesis has deservedly received much attention 1

consumer welfare effects of increased food and energy prices in this study the authors evaluated how much price changes in food and energy two basic living expenditures competing for consumers budgets would affect consumer welfare we first estimated a us complete demand system to quantify the interdependent demand relationships among 11 categories of consumption expenditures among the estimates the own price elasticities of both food and energy are relatively inelastic a finding that explains the dynamics of the recent soaring food and energy prices the estimated demand elasticities were then incorporated into the measurement of hicksian compensating variation to analyse the consumer welfare effects of price changes in food and energy the results indicated that an increase in food and energy prices would increase compensated expenditures or incur a substantial consumer welfare loss creating an especially heavy burden for low income households

consumption and investment in resource pooling family networks this paper examines a novel motive for resource pooling in family networks in rural economies to relax credit constraints and facilitate investment in non collateralizeable assets for which credit market imperfections are most binding we thus complement established literatures examining risk sharing motives for resource transfers within family networks as well as motives based on kinship tax obligations we do so exploiting the progresa program data in which family networks can be identified households are subject to large exogenous resource inflows and detailed responses on consumption and an array of investments can be tracked in a household panel over five years we find that for every dollar that accrues to the family network through progresa transfers food consumption expenditures increase by around 65c for both households eligible for progresa and ineligible members of the same family network hence the marginal propensity of families to invest save out of every dollar is around 35 and we document how this is channelled towards easing credit constraints poorer network members face in financing non collateralizable investments into their children s human capital we show these consumption and investment benefits of being embedded within a family network are sustained five years after households first experience resource transfers from progresa hence the interplay between resource inflows and resource pooling by family networks can place network members on sustained paths out of poverty this article is protected by copyright all rights reserved

sharecropping and the interlinking of agrarian markets one of the often noted features of less developed agrarian economies is the existence of interlinkages among the land labor credit and product markets the landlord is often the supplier of credit he frequently purchases and markets the output of the tenant farmers and often sells raw materials and even consumption goods to his tenant farmers how can this phenomenon be explained what are the welfare consequences of attempts to restrict these practices which often seem to constitute restraints on free trade these are the questions to which this paper is addressed a general set of arguments applicable to both competitive and noncompetitive environments are presented to situations where all the terms of the contract are determined in an optimal way as well as to situations where many of the terms are specified institutionally section i examines interlinked credit and tenancy contracts section ii examines interlinked marketing and tenancy contracts section iii points out the possible interlinking between labor contracts and consumption goods markets and section iv presents the different equilibrium frameworks discussed in the paper such as monopoly monopsony competition and equilibria with surplus labor

family networks and school enrolment evidence from a randomized social experiment we present evidence on whether and how a household s behavior is influenced by the presence and characteristics of its extended family using data from the progresa program in mexico we exploit information on the paternal and maternal surnames of heads and spouses in conjunction with the spanish naming convention to identify the inter and intra generational family links of each household to others in the same village we then exploit the randomized research design of the progresa evaluation data to identify whether the treatment effects of progresa transfers on secondary school enrolment vary according to the characteristics of extended family we find progresa only raises secondary enrolment among households that are embedded in a family network eligible but isolated households do not respond the mechanism through which the extended family influences household schooling choices is the redistribution of resources within the family network from eligibles that receive de facto unconditional cash transfers from progresa towards eligibles on the margin of enrolling children into secondary school

conditional cash transfers adult work incentives and poverty conditional cash transfer cct programs aim to alleviate poverty through monetary and in kind benefits as well as reduce future levels of poverty by encouraging investments in education health and nutrition the success of cct programs at reducing poverty depends on whether and the extent to which cash transfers affect adult work incentives the authors examine whether the progresa program of mexico affects adult participation in the labor market and overall adult leisure time and they link these effects to the impact of the program on poverty using the experimental design of progresa s evaluation sample the authors find that the program does not have any significant effect on adult labor force participation and leisure time their findings on adult work incentives are reinforced further by the result that progresa leads to a substantial reduction in poverty the poverty reduction effects are stronger for the poverty gap and severity of poverty measures

does human capital matter for energy consumption in china this article investigates the dynamic relationship between human capital and energy consumption using chinese provincial data over the period 1990 2010 considering for cross sectional dependence and parameter heterogeneity across space and over time we identify a significant and negative human capital energy consumption relationship in china specifically we find that a 1 increase in human capital reduces energy consumption by a range between 0 18 and 0 45 furthermore this negative relationship can be attributed to stronger accumulation of post school human capital in eastern china this finding suggests that energy conservation in china could be achieved by improving post school human capital components such as on the job training experience and learning by doing

conditional cash transfers the case of progresa oportunidades conditional cash transfer cct programs innovate by conditioning transfers to poor families on investments in the human capital of children and other family members the mexican cct program progresa oportunidades began in 1997 and has served as a model for many of the now over sixty countries with ccts around the world in large part due to its initial evaluation with an experimental design and numerous follow up studies this article reviews the literature on the development evaluation and findings of progresa oportunidades summarizing what is known about program effects taking into account corrections for multiple hypothesis testing

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

theft gift giving and trustworthiness honesty is its own reward in rural paraguay in developing countries lacking legal enforcement villagers may use implicit contracts to minimize crime i construct a dynamic limited commitment model in which a thief cannot commit to forego stealing but is induced to steal less by the promise of future gifts combining survey data on production theft gifts and trust with experiments measuring trustworthiness i provide supporting evidence farmers living near more relatives or with plots that are difficult to steal from give fewer gifts and trust more and those living near more relatives also experience less theft giving increases when trust is lower and the threat of theft is greater

the impact of ownership unbundling on cost efficiency empirical evidence from the new zealand electricity distribution sector abstract several countries around the world have introduced reforms to the electric power sector one important element of these reforms is the introduction of an unbundling process i e the separation of the competitive activities of supply and production from the monopole activity of transmission and distribution of electricity there are several forms of unbundling functional legal and ownership new zealand for instance adopted an ownership unbundling in 1998 as discussed in the literature ownership unbundling produces benefits and costs one of the benefits may be an improvement in the level of the productive efficiency of the companies due to the use of the inputs in just one activity and a greater level of transparency for the regulator this paper analyzes the cost efficiency of 28 electricity distribution companies in new zealand for the period between 1996 and 2011 using a stochastic frontier panel data model a total cost function and a variable cost function are estimated in order to evaluate the impact of ownership unbundling on the level of cost efficiency the results indicate that ownership separation of electricity generation and retail operations from the distribution network has a positive effect on the cost efficiency of distribution companies in new zealand the estimated effect of ownership separation suggests a positive average one off shift in the level of cost efficiency by 0 242 in the short run and 0 144 in the long run

good volatility bad volatility what drives the asymmetric connectedness of australian electricity markets efficient delivery of network services and the electricity infrastructure to meet the long term consumer s interests are the main objectives and the strategies of a national electricity market while the main interests of generators are to maximize their profit through pricing strategies therefore the objective of this study is to explore whether electricity prices across the four australian states display symmetric price volatility connectedness the study is the first attempt in the literature to make use of intraday 5 min australian dispatch electricity prices spanning the period december 8th 1998 to may 5th 2016 to quantify asymmetries in volatility connectedness emerging from good and bad volatility the results provide supportive evidence that the australian electricity markets are connected asymmetrically implying the presence of some degree of market power that is exercised by generators across regional electricity markets

renewable energy regulation and structural breaks an empirical analysis of spanish electricity price volatility abstract international experience proves that electricity prices have undergone major changes in volatility since the entry of green technologies the intermittency of renewable sources is one of the reasons for these changes as it leads to higher volatility in periods of higher participation by renewables we argue that the development of the regulatory system promoting renewable electricity also plays a crucial role we raise a question that deserves attention could an incentive scheme induce higher share of renewables and lower volatility simultaneously in this paper we conduct an empirical analysis with spanish data we analyze possible ensuing structural changes in spanish electricity spot price volatility from january 2002 to december 2017 we identify two structural breaks linked to important measures related to renewable electricity i the abolishment of the feed in tariff scheme and ii the establishment of a more market oriented regulation based on investment and operating costs we conclude that stable regulatory policies reduce volatility even though the presence of renewable sources is greater furthermore market based policy measures achieve lower volatility encouraging good integration of intermittent renewable electricity

an inquiry into quasi credit contracts the role of reciprocal credit and interlinked deals in small scale fishing communities in agrarian village societies beset with many hazards and uncertainties people evolve various means of coping with risk what is perhaps less known is that credit transactions can sometimes serve the function of reducing risk in such societies this article is concerned with examining several insurance motivated credit arrangements in small scale fishing communities a hunger insurance mechanism of reciprocal credit and a system of interlinked contracts aimed at insuring against risks in the spheres of labour and marketing relations will be extensively dealt with moreover the concept of triadic relationships will be shown to have special relevance in the case of traditional insurance arrangements aiming at controlling problems of moral hazard

imperfect commitment altruism and the family evidence from transfer behavior in low income rural areas in this paper we examine empirically whether risk pooling is more advantageous among altruistic compared to selfish agents in a framework where individuals cannot make binding commitments in particular we incorporate altuism into a model of risk sharing under imperfect commitment and use simulation methods to establish tests of the roles of both altruism and commitment problems in determining the extent of insurance and the intertemporal movements in interhousehold transfers the tests are carried out using three panel data sets from two countries of rural south asia that provide detailed information on transfers and enable the measurement of income shocks the estimates provide strong support for the notion that imperfect commitment substantially constrains informal transfer arrangements whether kin based or not but also provide evidence that altruism plays an important role in ameliorating commitment constraints and thus in increasing the gains from income pooling

energy price uncertainty energy intensity and firm investment this paper examines the effect of energy price uncertainty on firm level investment an error correction model of capital stock adjustment is estimated with data on u s manufacturing firms higher energy price uncertainty is found to make firms more cautious by reducing the responsiveness of investment to sales growth the result is robust to consideration of energy intensity by industry the effect is greater for high growth firms it must be emphasized that the direct effect of uncertainty is not estimated conditional variance of energy price is obtained from a garch model findings suggest that stability in energy prices would be conducive to greater stability in firm level investment

structural breaks and electricity prices further evidence on the role of climate policy uncertainties in the australian electricity market the primary objectives and the strategies of a national electricity market are the efficient delivery of network services and the electricity infrastructure to meet the long term consumer s interests therefore the objective of this study is to explore whether electricity prices across the six australian states display instability such instability is closely associated with the presence of structural breaks in relevance to policy events on australian carbon policies the study makes use of weekly australian wholesale electricity prices spanning the period from june 8th 2008 to march 30th 2014 along with linear and non linear unit root testing methodologies the results provide supportive evidence that the australian electricity market can be described as a less stable electricity market which implies that a high degree of market power is exercised by generators across regional markets these findings are expected to have substantial consequences for the effectiveness of carbon dioxide mitigating policies especially when there is uncertainty as to whether the planned environmental policy is put in place for the lifespan of undertaken investments