a dynamic theory of collective goods programs a collective goods program such as an entitlement program distributes benefits and costs according to constituents characteristics this paper presents a dynamic theory of the legislative choice of collective goods programs based on a sequential model of proposal making and voting in a majority rule legislature where the status quo in a session is given by the program last enacted a stationary markov perfect equilibrium is characterized for a unidimensional collective goods program and yields a generalized median voter theorem comparative statics on preferences and legislative procedures and a characterization of the dynamics of such programs equilibrium programs can expand or contract over time but they ultimately converge to the median on the path to that point legislators may act strategically to address the durability problem that a future legislature can undo the actions of the present legislature by strategically positioning the status quo to limit the changes that future legislatures can make

the relationship between gdp and electricity consumption in 10 asian countries the purpose of this study is to estimate the relationships between gdp and electricity consumption in 10 newly industrializing and developing asian countries using both single data sets and panel data procedures the empirical results from single data set indicate that the causality directions in the 10 asian countries are mixed while there is a uni directional short run causality running from economic growth to electricity consumption and a bi directional long run causality between electricity consumption and economic growth if the panel data procedure is implemented these empirical findings imply that electricity conservation policies through both rationalizing the electricity supply efficiency improvement to avoid the wastage of electricity and managing demand side to reduce the electricity consumption without affecting the end user benefits could be initiated without adverse effect on economic growth the findings on the long run relationship indicate that a sufficiently large supply of electricity can ensure that a higher level of economic growth

majority rules and incentives a club s majority rule defines the number of members that must approve a policy proposed to replace the status quo since the majority rule thus dictates the extent to which winners must compensate losers it also determines the incentives to invest in order to become a winner of anticipated projects if the required majority is large members invest too little because of a holdup problem if it is small members invest too much in order to become a member of the majority coalition to balance these opposing forces the majority rule should increase in the project s value and the club s enforcement capacity but decrease in the heterogeneity in preferences externalities can be internalized by adjusting the rule with heterogeneity in size or initial conditions votes should be appropriately weighted or double majorities required

a carrot and stick approach to agenda setting this paper models a legislature in which the same agenda setter serves for two periods showing how he can exploit a legislature completely in the first period by promising future benefits to legislators who support him in equilibrium a large majority of legislators vote for the first period proposal because they thereby maintain the chance of belonging to the minimum winning coalition in the future legislators may therefore approve policies by large majorities or even unanimously that benefit few or even none of them the results are robust but institutional arrangements such as entitlements can reduce the agenda setter s power by reducing his discretion to reward and punish legislators and rules such as sequential voting can increase a legislator s ability to resist exploitation

dynamic bargaining and stability with veto players this note examines the structure of stationary bargaining equilibria in the finite framework of anesi 2010 the main result establishes a tight connection between the set of equilibrium absorbing points and the von neumann morgestern solutions assuming that players are patient that the voting rule is oligarchical and that there is at least one veto player with positive recognition probability a set of alternatives corresponds to the absorbing points of an equilibrium if and only if it is a von neumann morgenstern solution we also apply our analysis of ergodic properties of equilibria to the persistent agenda setter environment of diermeier and fong 2012 we show that all equilibria are essentially pure and we extend their characterization of absorbing sets to allow an arbitrary voting rule and by removing the restriction to pure strategy equilibira

evaluating renewable energy based rural electrification program in western china emerging problems and possible scenarios renewable energy technologies offer an economically viable and environmentally suitable scenario towards addressing energy requirements for rural livelihoods china s renewable energy rural electrification program initiated in 2001 is an effort to employ renewable energy technologies on a large scale for rural electrification the program has been designed with several stages this paper firstly offers an analysis of the problems encountered during the progress of this rural electrification program using data obtained from field survey of representative areas in western china where the first stage of the program was implemented the paper then explores feasible solutions in order to address existing rural energy issues and provide long term reliable energy service for remote communities in support of future course of development of renewable energy application for rural energy demands policy recommendations are provided

bargaining in standing committees with an endogenous default committee voting has mostly been investigated from the perspective of the standard baron ferejohn model of bargaining over the division of a pie in which bargaining ends as soon as the committee reaches an agreement in standing committees however existing agreements can be amended this article studies an extension of the baron ferejohn framework to a model with an evolving default that reflects this important feature of policymaking in standing committees in each of an infinite number of periods the ongoing default can be amended to a new policy which is in turn the default for the next period the model provides a number of quite different predictions i from a positive perspective the key distinction turns on whether the quota is less than unanimity in that case patient enough players waste substantial shares of the pie each period and the size principle fails in some pure strategy markov perfect equilibria in contrast the unique markov perfect equilibrium payoffs in a unanimity committee coincide with those in the corresponding baron ferejohn framework ii if players have heterogeneous discount factors then a large class of subgame perfect equilibria including all markov perfect equilibria are inefficient

causality relationship between electricity consumption and gdp in bangladesh in this paper we examine the causal relationship between the per capita electricity consumption and the per capita gdp for bangladesh using cointegration and vector error correction model our results show that there is unidirectional causality from per capita gdp to per capita electricity consumption however the per capita electricity consumption does not cause per capita gdp in case of bangladesh the finding has significant implications from the point of view of energy conservation emission reduction and economic development

a bargaining model of collective choice we present a general model of legislative bargaining in which the status quo is an arbitrary point in a multidimensional policy space in contrast to other bargaining models the status quo is not assumed to be bad and delay may be pareto efficient we prove existence of stationary equilibria the possibility of equilibrium delay depends on four factors risk aversion of the legislators the dimensionality of the policy space the voting rule and the possibility of transfers across districts if legislators are risk averse if there is more than one policy dimension and if voting is by majority rule for example then delay will almost never occur in one dimension delay is possible if and only if the status quo lies in the core of the voting rule and then it is the only possible outcome this core selection result yields a game theoretic foundation for the well known median voter theorem our comparative statics analysis yield two noteworthy insights i if the status quo is close to the core t hen equilibrium policy outcomes will also be close to the core a moderate status quo produces moderate policy outcomes and ii if legislators are patient then equilibrium proposals will be close to the core legislative patience leads to policy moderation

recognition without replacement in legislative bargaining abstract this paper studies infinite horizon sequential bargaining among n 3 players in which a proposer is randomly selected from the pool of potential proposers if the proposal is rejected the current and previous proposers are excluded from the pool of potential proposers and the game moves on to the next round until every player has had the same number of opportunities to be the proposer to analyze the model with a particular time dependency within each sequence of n rounds a cycle i characterize the stationary equilibrium of a stochastic game which i call cycle stationary subgame perfect cssp equilibrium the cssp equilibrium is unique in payoffs and analogous to the subgame perfect equilibrium of some forms of finite horizon bargaining even when every player is entirely patient the proposer s share in the cssp equilibrium is smaller than that predicted by the stationary equilibrium of the baron ferejohn legislative bargaining model

inefficiency in legislative policymaking a dynamic analysis this paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining the policy space incorporates both productive and distributive public spending and distortionary taxation the productive spending is investing in a public good that benefits all citizens e g national defense and the distributive spending is district specific transfers e g pork barrel spending investment in the public good creates a dynamic linkage across policymaking periods the analysis explores the dynamics of legislative policy choices focusing on the efficiency of the steady state level of

when is it optimal to abandon a fixed exchange rate the influential krugman flood garber kfg model of balance of payment crises assumes that a fixed exchange rate is abandoned if and only if international reserves reach a critical threshold value from a positive standpoint the kfg rule is at odds with many episodes in which the central bank has plenty of international reserves at the time of abandonment we study the optimal exit policy and show that from a normative standpoint the kfg rule is generally suboptimal we consider a model in which the fixed exchange rate regime has become unsustainable due to an unexpected increase in government spending we show that when there are no exit costs it is optimal to abandon immediately when there are exit costs the optimal abandonment time is a decreasing function of the size of the fiscal shock for large fiscal shocks immediate abandonment is optimal our model is consistent with evidence suggesting that many countries exit fixed exchange rate regimes with still plenty of international reserves in the central bank s vault copyright 2008 wiley blackwell

government finance in the wake of currency crises we address three questions i can classical models be reconciled with the fact that many crises are marked by high rates of depreciation and small increases in seignorage revenue ii what are the implications of different financing methods for post crisis rates of inflation and depreciation iii how do governments pay for the fiscal costs associated with currency crises to study these questions we use a general equilibrium model in which prospective government deficits trigger a currency crisis we then use our model in conjunction with fiscal data to interpret government financing in the wake of three recent currency crises korea 1997 mexico 1994 and turkey 2001

do juntas lead to personal rule january 2009although almost half of the world s population lives under nondemocratic regimes thequestions of how policy decisions are made and how power changes hands in nondemocra cies have received relatively little attention in the political economy literature a popularview forcefully articulated by gordon tullock 1987 is that because there are no stronginstitutions ensuring consensus and regulating the election and succession of leaders non democratic regimes rapidly degenerate into personal rule where a single dictator dominatesevery aspect of decision making tullock writes empirically the junta characteristicallyshrinks to one man p 144 and continues to explain this as the result of dynamic in teractions among the members of the junta he suggests that there will typically be anaccumulation of power by one of the junta members if this upstart member succeeds hebecomes the sole ruler if he fails he is eliminated by the other members of the junta this process continues until one member is standing tullock thus concludes it can beseen that this process would tend over time to lead the junta into becoming just one manthrough the gradual exclusion of individuals who had failed in plotting or the success of anindividual who had not p 145 tullock s account like that of many others implicitly recognizes that politics in non democratic and weakly institutionalized societies should be conceptualized as one of thedynamic coalition formations there are no rules that ensure orderly transitions of powerand no checks against some members of the ruling coalition eliminating or sidelining others however formal models of dynamic coalition formation in nondemocratic societies have notbeen developed until recently in this paper we draw on our work on dynamic coalition formation daron acemoglu georgy egorov and konstantin sonin 2008a and investigate tullock s conjecture formally 1

on dynamic compromise abstract most legislatures require the consent of only a simple majority to pass a proposal so why don t legislative outcomes favor only a bare majority we show that compromise can be achieved if legislators are neither too impatient nor too patient and initial allocations are not too unequal the compromise is only sustainable if starting from the unequal allocations there is a possibility of spiraling towards a complete absence of compromise we find that the range of discount factors for which the equilibrium exists increases as the number of legislators increases in this sense compromise is easier in larger legislatures

the survival of the welfare state this paper provides an analytical characterization of markov perfect equilibria in a model with repeated voting where agents vote over distortionary income redistribution a key result is that the future constituency for redistributive policies depends positively on current redistribution since this affects both private investments and the future distribution of voters the model features multiple equilibria in some equilibria positive redistribution persists forever in other equilibria even a majority of beneficiaries of redistribution vote strategically so as to induce the end of the welfare state next period skill biased technical change makes the survival of the welfare state less likely

dynamics and stability of constitutions coalitions and clubs a central feature of dynamic collective decision making is that the rules that govern the procedures for future decision making and the distribution of political power across players are determined by current decisions for example current constitutional change must take into account how the new constitution may pave the way for further changes in laws and regulations we develop a general framework for the analysis of this class of dynamic problems under relatively natural acyclicity assumptions we provide a complete characterization of dynamically stable states as functions of the initial state and determine conditions for their uniqueness we show how this framework can be applied in political economy coalition formation and the analysis of the dynamics of clubs the explicit characterization we provide highlights two intuitive features of dynamic collective decision making 1 a social arrangement is made stable by the instability of alternative arrangements that are preferred by sufficiently many members of the society 2 efficiency enhancing changes are often resisted because of further social changes that they will engender

electoral rules and minority representation in u s cities of minority representation majorities tend to disenfranchise minorities through strategic manipulation of electoral rules with the aim of explaining changes in electoral rules adopted by u s cities particularly in the south we show why majorities tend to adopt winner take all city wide rules at large elections in response to an increase in the size of the minority when the minority they are facing is relatively small in this case for the majority it is more effective to leverage on its sheer size instead of risking conceding representation to voters from minority elected districts however as the minority becomes larger closer to a fifty fifty split the possibility of losing the whole city induces the majority to prefer minority votes to be confined in minority packed districts single member district rules serve this purpose we show empirical results consistent with these implications of the model in a novel data set covering u s cities and towns from 1930 to 2000

bargaining in legislatures over particularistic and collective goods we develop a bargaining model in which a legislature divides a budget among particularistic and collective goods by incorporating both private and public goods in a unified model we uncover nonmonotonic relationships between legislative preferences for collective spending and the amount of the budget actually allocated to collective goods put simply policy proposers can exploit coalition partners strong preferences for public goods to actually provide fewer public goods in equilibrium while directing more private goods to themselves these results explain why policy reforms to limit special interest spending often fail this unified model also sheds new light on when legislatures prefer open or closed amendment rules and when coalitions take different sizes and shapes

prospective deficits and the asian currency crisis this paper argues that a principal cause of the 1997 asian currency crisis was large prospective deficits associated with implicit bailout guarantees to failing banking systems the expectation that these future deficits would be at least partially financed by seigniorage revenues or an inflation tax on outstanding nominal debt led to a collapse of the fixed exchange rate regimes in asia we articulate this view using a simple model whose key feature is that a speculative attack is inevitable once the present value of future government deficits rises we present empirical evidence in support of the key assumptions underlying our interpretation of the crisis

energy vulnerability around the world the global energy vulnerability index gevi abstract vulnerability has garnered an increasing attention from academia international community and industry nonetheless formal definition mainstreaming and measurement of vulnerability are still flawed in the economic literature energy vulnerability intended as the exposure of an energy system to adverse events and change often overlaps with other energy policy concepts such as resilience security poverty justice and sustainability this paper improves understanding of vulnerability in economics energy and sustainability studies by i constructing a dataset on energy vulnerability made of 180 000 observations ii formally defining energy vulnerability while considering the regulatory framework and development agenda iii building a composite indicator on energy vulnerability iv analyzing and ranking the energy vulnerability of a vast number of oecd and non oecd countries v testing for robustness checks the analysis suggests that gdp is not necessarily a leading driver for energy vulnerability whilst resource embedment is since fossil and renewable energy producers are less vulnerable eventually the paper validates that green countries are less vulnerable differently from cold heavily industrialized and highly consuming countries

trilemma stability and international macroeconomic archetypes this paper uses the simple geometry of the classic open economy trilemma to introduce a new gauge of the stability of international macroeconomic arrangements the new stability gauge reflects the simultaneity of a country s choices of exchange rate fixity financial openness and monetary sovereignty so the new gauge is bounded and correspondingly non gaussian we use the new stability gauge in nonlinear panel estimates to examine the post bretton woods period and we find that trilemma policy stability is linked to official holdings of foreign exchange reserves in low income countries we also find that the combination of fixed exchange rates and financial market openness is the most stable arrangement within the trilemma and middle income countries have less stable trilemma arrangements than either low or high income countries the paper also characterizes international macroeconomic arrangements in terms of their semblance to definitive policy archetypes and it uses the trilemma constraint to provide a new gauge of monetary sovereignty

the role of international reserves holding in buffering external shocks an extended literature analyzes the accumulation foreign exchange holding observed in many developing and emerging countries since the 2000s empirical studies on the self insurance motive suggest that high reserves economies are more resilient to financial crises and to international capital inflows volatility they show also that pre crisis foreign reserve accumulation explains post crisis growth however some papers suggest that the relationship between international reserves holding and reduced vulnerability is nonlinear meaning that reserve holding is subject to diminishing returns this paper devotes more attention to the potential nonlinear relationship between the foreign reserves holding and macroeconomic resilience to shocks for a sample of 9 emerging economies we assess to what extent the accumulation of international reserves allows to mitigate negative impacts of external shocks on the output gap while a major part of the literature focuses on the global financial crisis we investigate this question by considering two sub periods 1995 2003 and 2004 2013 we implement threshold var tvar model in which the structure is allow to change if the threshold variable crosses a certain estimated threshold we find that the effectiveness of reserve holding to improve the resilience of domestic economies to shocks has increased over time hence the diminishing returns of foreign reserve holding stressed in the previous literature must be qualified

the power of the last word in legislative policy making we examine legislative policy making in institutions with two empirically relevant features agenda setting occurs in real time and the default policy evolves we demonstrate that these institutions select condorcet winners when they exist provided a sufficient number of individuals have opportunities to make proposals in policy spaces with either pork barrel or pure redistributional politics where a condorcet winner does not exist the last proposer is effectively a dictator or near dictator under relatively weak conditions

dynamic legislative policy making abstract we prove existence of stationary markov perfect equilibria in an infinite horizon model of legislative policy making in which the policy outcome in one period determines the status quo for the next we allow for a multidimensional policy space and arbitrary smooth stage utilities and we assume preferences and the status quo are subject to arbitrarily small shocks we prove that equilibrium continuation values are differentiable and that proposal strategies are continuous almost everywhere we establish upper hemicontinuity of the equilibrium correspondence and we provide weak conditions under which each equilibrium of our model determines an aperiodic transition probability over policies we establish a convergence theorem giving conditions under which the invariant distributions generated by stationary equilibria must be close to the core in a canonical spatial model finally we extend the analysis to sequential move stochastic games and to a version of the model in which the proposer and voting rule are determined by play of a finite perfect information game

sustainable energy security for india an assessment of the energy supply sub system this paper undertakes part of the assessment of the sustainable energy security ses for india ses goes beyond energy supply and is a function of the aggregate energy system of a country including the energy demand and conversion and distribution sub system the supply sub system which consists of eight primary energy sources viz coal oil natural gas biomass hydro solar wind and nuclear has been evaluated for four dimensions of ses viz availability affordability efficiency and environmental acceptability using 16 selected metrics the dimensional indices are calculated for domestic and imported energy sources separately for the years 2002 2007 and 2012 results reveal that the ses index for oil has increased by 10 but it has decreased by 6 for gas from 2002 to 2012 while changes for other energy sources are marginal the overall supply sub system ses index is approximately 0 75 against an ideal value of 1 0 which reveal the shortfall from the desired value a sensitivity analysis reveals that the ses index is relatively robust to variation in weights the assessment provides a comprehensive way to track the performance of the energy supply sub system and can be used to design policy interventions for improving the overall ses index for india

discrete devaluations and multiple equilibria in a first generation model of currency crises the flrst generation models of currency crises have often been criticized because they predict that in the absence of very large triggering shocks currency attacks should be predictable and lead to small devaluations this paper shows that these features of flrst generation models are not robust to the inclusion of private information in particular this paper analyzes a generalization of the krugman flood garber kfg model which relaxes the assumption that all consumers are perfectly informed about the level of fundamentals in this environment the kfg equilibrium of zero devaluation is only one of many possible equilibria in all the other equilibria the lack of perfect information delays the attack on the currency past the point at which the shadow exchange rate equals the peg giving rise to unpredictable and discrete devaluations

comparing structural decomposition analysis and index to analyze and understand historical changes in economic environmental employment or other socio economic indicators it is useful to assess the driving forces or determinants that underlie these changes two techniques for decomposing indicator changes at the sector level are structural decomposition analysis sda and index decomposition analysis ida for example sda and ida have been used to analyze changes in indicators such as energy use co2 emissions labor demand and value added the changes in these variables are decomposed into determinants such as technological demand and structural effects sda uses information from input output tables while ida uses aggregate data at the sector level the two methods have developed quite independently which has resulted in each method being characterized by specific unique techniques and approaches this paper has three aims first the similarities and differences between the two approaches are summarized second the possibility of transferring specific techniques and indices is explored finally a numerical example is used to illustrate differences between the two approaches

sovereign defaults and liquidity crises abstract sovereign debt crises in emerging markets are usually associated with liquidity and banking crises the conventional view is that the domestic turmoil is the consequence of foreign retaliation although there is no clear empirical evidence on classic default penalties this paper emphasizes instead a direct link between sovereign defaults and liquidity crises building on two natural assumptions i government bonds represent a source of liquidity for the domestic private sector and ii the government cannot discriminate between domestic and foreign creditors in the event of default in this context external debt emerges even in the absence of classic penalties and government default is countercyclical triggers a liquidity crunch and amplifies output volatility in addition a reform that involves a substitution of government bonds with privately sourced liquidity instruments could backfire by restricting governments access to foreign credit

energy security in china a quantitative analysis and policy implications abstract this study aims to examine how china s energy security has changed over 30 years of reform and the opening period it constructs a 4 as quantitative evaluation framework the availability of energy resources the applicability of technology the acceptability by society and the affordability of energy resources the quantitative results show that china s energy security was at its best during the sixth fyp period 1981 1985 but then deteriorated until it hit higher levels between 1995 and 2005 however it was still lower than the level reached during the sixth fyp period during the eleventh fyp period 2006 2010 the energy security situation deteriorated again differences in policy priority over the study period appear to affect the country s energy security status this study suggests that china needs to develop renewable energy resources on a large scale and pay more attention to emissions control to reverse the downward trend in energy security

international reserves and global interest rates abstract in this paper we study the relationship between foreign currency international reserve holdings and global interest rates to guide empirical work we solve a simple small open economy model with money where the central bank manages international reserves to smooth inflation over time this model shows that changes in interest rates are positively related to the target level of reserves as a consequence interest rate hikes increase reserve transfers defined as the change in international reserves net of the interest earned on reserves using quarterly data for 75 countries between 2000 and 2013 we document a positive relationship between interest rate changes and reserve transfers as a share of gdp that is consistent with the model

incomplete social contracts there is a long normative social contract tradition that attempts to characterize ex post income inequalities that are agreeable to all behind a veil of ignorance this paper takes a similar normative approach to characterize social decision making procedures it is shown that quite generally some form of majority voting is preferred to unanimity behind a veil of ignorance whenever society faces deadweight costs in making compensating transfers deviations from unanimity or ex post pareto optimality are ex ante efficient to the extent that they economize on costly compensating transfers put another way the optimal decision rule trades off the benefits of minority protection and those from greater flexibility jel h11 g33 g34 d63 p16 p48

comparative politics and public finance we propose a model with micropolitical foundations to contrast different political regimes compared to a parliamentary regime the institutions of a presidential congressional regime produce fewer incentives for legislative cohesion but more separation of powers these differences are reflected in the size and composition of government spending a parliamentary regime has redistribution toward a majority less underprovision of public goods and more rents to politicians a presidential congressional regime has redistribution toward powerful minorities more underprovision of public goods but less rents to politicians the size of government is smaller under a presidential regime this last prediction is consistent with cross country data

household consumption associated fossil fuel demand and carbon dioxide emissions the case of greece between 1990 and 2006 abstract this paper explores how greece s household consumption has changed between 1990 and 2006 and its environmental implications in terms of fossil fuel demand and carbon dioxide co2 emissions the results show that the 44 increase in greece s household expenditure between 1990 and 2006 was accompanied by a 67 increase in fossil fuel demand of this total indirect demand accounted for approximately 60 throughout the 16 year period increasing by 56 overall whereas direct fossil fuel demand grew by 80 the results also show that associated co2 emissions increased by 60 resulting in a relative decoupling from energy demand this relative decoupling is shown to be due to fossil fuel mix changes from the supply side rather than action from consumers these insights highlight the opportunities for demand side policies to further reduce fossil fuel demand and co2 emissions allowing greece to set more proactive and ambitious post kyoto targets

calculation and decomposition of indirect carbon emissions from residential consumption in china based on the input output model abstract based on the input output model and the comparable price input output tables the current paper investigates the indirect carbon emissions from residential consumption in china in 1992 2005 and examines the impacts on the emissions using the structural decomposition method the results demonstrate that the rise of the residential consumption level played a dominant role in the growth of residential indirect emissions the persistent decline of the carbon emission intensity of industrial sectors presented a significant negative effect on the emissions the change in the intermediate demand of industrial sectors resulted in an overall positive effect except in the initial years the increase in population prompted the indirect emissions to a certain extent however population size is no longer the main reason for the growth of the emissions the change in the consumption structure showed a weak positive effect demonstrating the importance for china to control and slow down the increase in the emissions while in the process of optimizing the residential consumption structure the results imply that the means for restructuring the economy and improving efficiency rather than for lowering the consumption scale should be adopted by china to achieve the targets of energy conservation and emission reduction

fossil fuel dependence and vulnerability of electricity generation case of selected european countries abstract this paper analyses the diversity of fuel mix for electricity generation in selected european countries and investigates how the fuel bill has changed as a share of gdp between 1995 and 2005 the drivers of fuel dependence related vulnerability are determined using laspeyres index decomposition a what if analysis is carried out to analyse the changes in the vulnerability index due to changes in the drivers and a scenario analysis is finally used to investigate the future vulnerability in the medium term the paper finds that the british and the dutch electricity systems are less diversified compared to three other countries analysed the gas dependence of the dutch and italian systems made them vulnerable but the vulnerability increased in all countries in recent years gas price and the level of dependence on gas for power generation mainly influenced the gas vulnerability the united kingdom saw a substantial decline in its coal vulnerability due to a fall in coal price and coal dependence in electricity generation the scenario analysis indicates that uk is likely to face greater gas vulnerability in the future due to increased gas dependence in electricity generation and higher import dependence

the impact of household consumption patterns on emissions in spain abstract the aim of this paper is to analyse the relationship between household consumption patterns and pollution in the spanish economy the analysis was carried using a social accounting matrix sam for the spanish economy prepared for 1999 taking the final demand of households as the exogenous account in the sam framework and combining this with the information provided by the household budget continuous survey on income and consumption ine 1999 we analyse the pollution produced by both the economy and households in order to satisfy consumption requirements we also consider the effects of income inequality on expenditure levels establishing a link between income level consumption patterns propensity to consume and co2 emissions

how does the implementation of the policy of electricity substitution influence green economic growth in china abstract to promote the level of electrification reduce environmental pollution and achieve the goal of clean energy usage and green economic growth in china the national development and reform commission and other eight departments jointly issued and implemented the policy of electricity substitution in 2016 electricity substitution aims to replace traditional fossil fuels such as coal and fuel oil with clean electric energy in different fields e g industry transportation and construction and deal with the pollutants at power generation however we still need to find out the exact impact of the policy of electricity substitution on energy saving and emission reduction in this paper we estimate the economically feasible increment of electricity demand according to different classifications in electricity substitution technology furthermore based on the input output model we discuss the relative influence of the policy of lectricity substitution the main conclusions are first the policy of electricity substitution alone is not adequate to reduce the dependence on fossil energy and environmental pollution under china s current power generation structure we should also increase the use of renewable energy second the power sector plays a leading role in stimulating economic output and the increasing electricity consumption due to the policy of electricity substitution can boost the green development of china s economy

fear of appreciation abstract in recent years the term fear of floating has been used to describe exchange rate regimes that while officially flexible in practice intervene heavily to avoid sudden or large depreciations however the data reveals that in most cases and increasingly so in the 2000s intervention has been aimed at limiting appreciations rather than depreciations often motivated by the neo mercantilist view of a depreciated real exchange rate as protection for domestic industries as a first step to address the broader question of whether this view delivers on its promise we examine whether this fear of appreciation has a positive impact on growth performance in developing economies we show that depreciated exchange rates indeed lead to higher growth but that the effect rather than through import substitution or export booms as argued by the mercantilist view works largely through the deepening of domestic savings and capital accumulation

evaluation of electricity supply sustainability and security multi criteria decision analysis approach abstract electricity supply plays a significantly important role in national economy and society development accordingly the evaluation of electricity supply sustainability and security as an early warning method is beneficial for the decision makers policy makers to take various measures to enhance electricity supply sustainability and security this study aims at developing a multi criteria decision analysis framework for electricity supply sustainability and security evaluation and a total of nine metrics i e shannon weiner index electricity import dependence supply adequacy rural electrification rate electric power losses ratio residential consumption ratio electricity per gross domestic product electric power consumption per capita and fossil fuel dependence in four dimensions including availability and security of supply affordability and reliability energy and economic efficiency and environmental stewardship were employed for electricity supply sustainability and security evaluation fuzzy analytic hierarchy process which allows the users to use linguistic terms to express their opinions was used to determine the weights of the criteria which represent their relative importance in the evaluation of electricity supply sustainability and security grey rational analysis was used to prioritize the status of electricity supply sustainability and security of different countries in different years the electricity supply sustainability and security of the five major emerging national economies brazil russia india china and south africa was studied in chinese perspective by the proposed method

driving forces of residential co2 emissions in urban and rural china an index decomposition analysis abstract there exist many differences between urban and rural china among which residential co 2 emissions arising from energy consumption is a major one in this paper we estimate and compare the energy related co 2 emissions from urban and rural residential energy consumption from 1991 to 2004 the logarithmic mean divisia index decomposition analysis is then applied to investigate the factors that may affect the changes of the co 2 emissions it is found that energy intensity and the income effects respectively contributed most to the decline and the increase of residential co 2 emissions for both urban and rural china in urban china the population effect was found to contribute to the increase of residential co 2 emissions with a rising tendency however in rural china the population effect for residential co 2 emissions kept decreasing since 1998

estimating the value of proposal power this paper investigates the role of proposal power in the allocation of transportation projects across u s congressional districts in 1991 and 1998 the evidence supports the key qualitative prediction of legislative bargaining models members with proposal power those sitting on the transportation authorization committee secure more project spending for their districts than do other representatives support for the quantitative restrictions on the value of proposal power is more mixed i then empirically address several alternative models of legislative behavior including partisan models informational roles for committees models with appropriations committees and theories of committees as preference outliers

the recent growth of international reserves in developing economies a monetary perspective abstract the massive accumulation of international reserves in developing economies is a puzzling recent development in the world economy this paper studies reserve accumulation as the outcome of a simple model in which the central bank smooths inflation i explore the view that central banks accumulate reserves to face large fiscal shocks that need monetary financing central bank revenues are obtained through inflation but inflation is distortionary as a result the central bank optimally accumulates international reserves in order to spread the costs associated with inflation over time a simple numerical exercise for an average developing economy using data between 1970 and 2009 yields fast growth of international reserves

dynamic collective choice with endogenous status quo we analyze a bargaining situation in which preferences evolve over time and the previous agreement becomes the next status quo the endogeneity of the status quo exacerbates the players conflict of interest players disagree more often than under exogenous status quo this leads to inefficiencies and status quo inertia under certain conditions the negotiations can come to a complete gridlock players never reach an agreement gridlock can occur between players with arbitrarily similar preferences provided they are sufficiently patient in legislative settings our model predicts polarization and explains why legislators may fail to react promptly to economic shocks

spending biased legislators discipline through disagreement this paper studies politicians who have a present bias for spending they want to increase current spending and procrastinate spending cuts we argue that legislators bias is more severe in economies with low institutional quality we show that disagreement in legislatures leads to policy persistence and that this attenuates the temptation to overspend depending on the environment legislators decisions to be fiscally responsible may either complement or substitute other legislator s decisions in economies with weak institutions politicians actions are strategic complements thus institutional changes that induce fiscal responsibility are desirable they generate a positive responsibility multiplier and reduce inefficient spending however in economies with better institutions the same institutional change would induce some legislators to free ride on others responsibility and may lead to more inefficient spending

bicameralism and its consequences for the internal organization of legislatures theories of organization of legislatures have mainly focused on the u s congress explaining why committee systems emerge there but not explaining variance in organization across legislatures of different countries to analyze the effects of different constitutional features on the internal organization of legislatures we adopt a vote buying model and consider the incentives to delegate decision rights in a game among legislative chambers we show how presidential veto power and bicameral separation can encourage a legislative chamber to create internal veto players or supermajority rules while a unicameral structure can encourage legislators to delegate power to a leader

predictability and power in legislative bargaining the rules and procedures of legislatures often provide legislators with information bearing on the identities of upcoming proposers for a broad class of legislative bargaining games we establish that markovian equilibria necessarily deliver all economic surplus to the first proposer whenever the information structure permits the legislators to rule out some minimum number of proposers one round in advance this result holds regardless of the recognition process and even if players vary in patience and risk aversion it raises the possibility that procedures adopted in the interest of transparency may contribute to the imbalance of political power

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

political selection and persistence of bad governments we study dynamic selection of governments under different political institutions with a special focus on institutional flexibility a government consists of a subset of the individuals in the society the competence level of the government in office determines collective utilities e g by determining the amount and quality of public goods and each individual derives additional utility from being part of the government e g rents from holding office we characterize the dynamic evolution of governments and determine the structure of stable governments which arise and persist in equilibrium in our model perfect democracy where current members of the government do not have veto power over changes in governments always leads to the emergence of the most competent government however any deviation from perfect democracy to any regime with incumbency veto power destroys this result there is always at least one other less competent government that is also stable and can persist forever and even the least competent government can persist forever in office we also show that there is a nonmonotonic relationship between the degree of incumbency veto power and the quality of government in contrast in the presence of stochastic shocks or changes in the environment a regime with less incumbency veto power has greater flexibility and greater probability that high competence governments will come to power this result suggests that a particular advantage of democratic regimes with a limited number of veto players may be their greater adaptability to changes rather than their performance under given conditions finally we show that royalty like dictatorships may be more successful than junta like dictatorships because in these regimes veto players are less afraid of change

evaluating energy security in the asia pacific region a novel methodological approach this paper establishes an energy security assessment instrument based on a new and expanded conceptualisation of energy security the instrument is a systematic interrogative tool for evaluating energy security of individual states or regions it consists of eleven broad energy security dimensions associated with the current global energy system these energy security dimensions take into account numerous quantitative and qualitative attributes of each country s energy security and policy and include both traditional energy security concerns and many new factors such as environmental socio cultural and technological another dimension largely absent from previous analyses is the existence of and the issues addressed in energy security policy in each country this instrument serves as an assessment system with which to evaluate energy security in the asia pacific region the existing studies on energy security in the asia pacific region suffer from serious limitations no study to date examines regional energy security policies by adopting a more comprehensive energy security definition as a starting point most studies also focus on a single country or issue even if they examine energy security in major regional economies they lack critical comparative analysis the instrument is valuable as it may be utilised to draw a comprehensive map of regional energy security situation which can also include comparative analysis of energy security characteristics across the asia pacific region ultimately it may be utilised to set up a framework for improved regional energy cooperation with the aim of providing regional leaders with a blueprint for improving regional energy security and policy

markovian equilibria in dynamic spatial legislative bargaining existence with three players abstract the paper proves by construction the existence of markovian equilibria in a dynamic spatial legislative bargaining model three players bargain over one dimensional policies in an infinite horizon in each period a sequential protocol of proposal making and voting with random proposer recognitions and a simple majority produces a policy that becomes the next period s status quo an equilibrium exists for any profile of proposer recognition probabilities any profile of players ideal policies and any discount factor in equilibrium policies converge to the median s ideal policy players moderate and propose policies close to the median s ideal in an attempt to constraint future proposers but the tendency to moderate is a strategic substitute as the opponent of a moderating player does not moderate

characterization of the von neumann morgenstern stable set in a non cooperative model of dynamic policy making with a persistent agenda setter abstract we generalize the dynamic bargaining game of diermeier and fong 2011 to arbitrary quota rules to provide a non cooperative characterization of the von neumann morgenstern stable set assuming that players are sufficiently patient and have strict preferences a pure strategy stationary equilibrium exists and in any such equilibrium a policy is a steady state if and only if it is in the stable set the result provides a non cooperative foundation of stable sets in settings with dynamic policy making and a persistent agenda setter

for a few dollars more reserves and growth in times of crises abstract based on a dataset of 112 emerging economies and developing countries this paper addresses the question whether the accumulation of international reserves has effectively protected countries during the 2008 09 financial crisis more specifically the paper investigates the relation between international reserves and the existence of capital controls we find that the level of reserves matters countries with high reserves relative to short term debt suffered less from the crisis particularly when associated with a less open capital account this suggests some degree of complementarity between reserve accumulation and capital controls

the nexus of electricity consumption economic growth and co2 emissions in the brics countries abstract this study reexamines the causal link between electricity consumption economic growth and co 2 emissions in the brics countries i e brazil russia india china and south africa for the period 1990 2010 using panel causality analysis accounting for dependency and heterogeneity across countries regarding the electricity gdp nexus the empirical results support evidence on the feedback hypothesis for russia and the conservation hypothesis for south africa however a neutrality hypothesis holds for brazil india and china indicating neither electricity consumption nor economic growth is sensitive to each other in these three countries regarding the gdp co 2 emissions nexus a feedback hypothesis for russia a one way granger causality running from gdp to co 2 emissions in south africa and reverse relationship from co 2 emissions to gdp in brazil is found there is no evidence of granger causality between gdp and co 2 emissions in india and china furthermore electricity consumption is found to granger cause co 2 emissions in india while there is no granger causality between electricity consumption and co 2 emissions in brazil russia china and south africa therefore the differing results for the brics countries imply that policies cannot be uniformly implemented as they will have different effects in each of the brics countries under study

durable coalitions and communication public versus private negotiations abstract we present a laboratory experiment to study the effect of communication on durable coalitions coalitions that support the same allocation from one period to the next we study a bargaining setting where the status quo policy is determined by the policy implemented in the previous period our main experimental treatment is the opportunity for subjects to negotiate with one another through unrestricted cheap talk communication before a proposal is made and comes to a vote we compare committees with no communication committees where communication is public and messages are observed by all committee members and committees where communication is private and any committee member can send a private message to any other committee member we find that the opportunity to communicate has a significant impact on outcomes and coalitions when communication is public there are more universal coalitions and fewer majoritarian coalitions with private communication there are more majoritarian coalitions and fewer universal coalitions with either type of communication coalitions occur more frequently and last longer than with no communication the volume and content of communication is correlated with coalition type these findings suggest a coordination role for communication that varies with the mode of communication

persistence of power repeated multilateral bargaining with endogenous agenda setting authority abstract we extend a simple repeated multilateral bargaining model to allow successful agenda setters to hold on to power as long as they maintain the support of a majority of other committee members theoretically and experimentally we compare this endogenous power environment with a standard random power environment in which agenda setters are appointed randomly each period although the theoretical analysis predicts that the two environments are outcome equivalent the experimental analysis shows substantial differences in behavior and outcomes across the games the endogenous power environment results in the formation of more stable coalitions less equitable budget allocations the persistence of power across periods and higher long run inequality than the random power environment we present evidence that the stationary equilibrium refinements traditionally used in the literature fail to predict behavior in either game

disinflation and fiscal reform a neoclassical perspective abstract many latin american countries engaged in disinflation programs based on both exchange rate management and fiscal reforms in most of the cases part of the fiscal reform was not implemented and the program had to be abandoned the aftermath of these programs is not encouraging in this paper we show that if the reform process is uncertain and inflation has welfare costs the optimal exchange rate policy indeed implies the initiation of a disinflation program at the announcement of the fiscal reform even if it implies the possibility of a balance of payments crisis finally we show that it is optimal to engage in a sequence of stabilization programs until one of them is successful

dynamic linkages among energy consumption environment health and wealth in brics countries green growth key to sustainable development abstract the objective of the study is to examine the four pillars of green growth or green environment i e energy environment health and wealth in brics countries namely brazil russia india china and south africa over the period of 1975 2013 the study examines the relationship between energy consumption environment health and its resulting impact on brics economic growth the study used three environmental variables i e agricultural technology carbon dioxide emissions and population density three energy sources i e nuclear energy consumption electricity production from renewable sources and combustible renewable waste two health proxies i e fertility rate total i e births per woman and infant mortality rate and gdp per capita for economic growth these variables were selected due to the vital importance in the brics nations the overall results indicate that environmental variables have a deleterious effect on the brics economic growth while energy sources significantly increases economic growth in the countries health expenditures and infrastructure required proper care of fertility and mortality related health issues in the brics countries the results emphasized the importance of green growth and sustainable developmental policies that help to expedite growth process and welfare of the countries

a three player dynamic majoritarian bargaining game this file contains two sets of calculations first we report the calculations of demands and continuation values of proposition 1 second the mixing probabilities of proposition 1 are shown to be well defined

why a stubborn conservative would run a deficit policy with time inconsistent preferences a conservative government in favor of a low level of public consumption knows that it will be replaced by a government in favor of a larger level of public consumption we show that the resulting level of public consumption is in between the levels the two governments would choose if each were in power both in the present and in the future in particular we show that if the conservative government is more stubborn in a particular sense than the succeeding government the conservative government will borrow more than it would had it remained in power in the future

a dynamic theory of public spending taxation and debt this paper presents a dynamic political economy theory of public spending taxation and debt policy choices are made by a legislature consisting of representatives elected by geographically defined districts the legislature can raise revenues via a distortionary income tax and by borrowing these revenues can be used tofinance a national public good and district specific transfers interpreted as pork barrel spending the value of the public good is stochastic reflecting shocks such as wars or natural disasters in equilibrium policy making cycles between two distinct regimes business as usual in which legislators bargain over the allocation of pork and responsible policy making in which policies maximize the collective good transitions between the two regimes are brought about by shocks in the value of the public good in the long run equilibrium tax rates are too high and too volatile public good provision is too low and debt levels are too high in some environments a balanced budget requirement can improve citizen welfare

dictators and their viziers endogenizing the loyalty competence trade off the possibility of treason by a close associate has been a nightmare of most autocrats throughout history more competent viziers are better able to discriminate among potential plotters and this makes them more risky subordinates for the ruler to avoid this rulers especially those who are weakandvulnerable sacrificethecompetenceoftheiragents hiringmediocrebutloyalsubordinates furthermore any use of incentive schemes by a personalistic dictator is limited by the fact that all punishments are conditional on the dictator s own survival we endogenize loyalty and competence in a principal agent game between a dictator and his viziers in both static and dynamic settings the dynamic model allows us to focus on the succession problem that insecure dictators face jel d72 h00 c72 c82

china s energy security perception and reality abstract china now the world s second largest economy is worried about energy security which underpins the core objectives of beijing and the political legitimacy of the communist party of china the purpose of this study is to explore certain popular myths about china s energy security the study consists of six parts after the introduction it formulates the obscure concept of energy security and attempts to contextualize it with chinese characteristics then it explicitly points out that the largest driver of oil demand by china as the world s factory is transport instead of industry next it explores the effectiveness of transnational pipelines as a measure of energy security and explains why they are less effective than many observers have previously assumed furthermore it investigates the global expansion of chinese national oil companies and questions their actual contribution to energy security a few concluding remarks then follow

sources of inefficiency in a representative democracy a dynamic analysis this paper studies the efficiency of policy choice in representative democracies it extends the citizen candidate model of democratic policy making to a dynamic environment equilibrium policy choices are shown to be efficient in the sense that in each period conditional on future policies being selected through the democratic process there exists no alternative current policy choices which can raise the expected utilities of all citizens however policies that would be declared efficient by standard economic criteria are not necessarily adopted in political equilibrium the paper argues that these divergencies are legitimately viewed as politicalfailures

bilateral bargaining with endogenous status quo abstract we consider a non cooperative bargaining game where in each round if a proposal is rejected with a probability the allocation implemented in the previous round is implemented as a status quo and the game proceeds to the next round and with the complementary probability no allocations are implemented and the negotiations break down we show that there exists a unique stationary subgame perfect equilibrium such that in any round a proposer offers a proposal such that the responder is indifferent between accepting and rejecting it and an agreement is achieved if the probability of breakdown is close to zero the sequence of equilibrium allocations evolves from the initial status quo to an allocation near the equilibrium allocation of the rubinstein bargaining game over time the effect of the initial status quo on the equilibrium allocations vanishes over time

financial instability reserves and central bank swap lines in the panic of 2008 in this paper we connect the events of the last twelve months the panic of 2008 as it has been called to the demand for international reserves in previous work we have shown that international reserve demand can be rationalized by a central bank s desire to backstop the broad money supply to avert the possibility of an internal external double drain a bank run combined with capital flight thus simply looking at trade or short term debt as motivations for reserve holdings is insufficient one must also consider the size of the banking system m2 here we show that a country s reserve holdings just before the current crisis relative to their predicted holdings based on these financial motives can significantly predict exchange rate movements of both emerging and advanced countries in 2008 countries with large war chests did not depreciate and some appreciated meanwhile those who held insufficient reserves based on our metric were likely to depreciate current account balances and short term debt levels are not statistically significant predictors of depreciation once reserve levels are taken into account our model s typically high predicted reserve levels provide important context for the unprecedented u s dollar swap lines recently provided to many countries by the federal reserve this abstract was borrowed from another version of this item

three party competition in parliamentary democracy with proportional representation this article studies the long run dynamics of policy choices government formations and voting behavior under a parliamentary constitution and proportional representation i develop an infinite period game where in each period voters participate in a proportional representation election and three farsighted parties bargain over one dimensional policy programs and government positions the model incorporates the interaction between elections and coalition bargaining which is the essence of politics in most parliamentary systems as well as a dynamic environment of policymaking a policy once implemented remains in effect until another replaces it i find a markov perfect equilibrium in which 1 there is no majority party in any election 2 election results converge over time to a stable vote distribution 3 policy outcomes change over time but eventually stay within a set of three points 4 minimal winning coalitions and minority governments are formed with positive probability and alternate over time

energy security and renewable electricity trade will desertec make europe vulnerable to the energy weapon abstract solar power imports to europe from the deserts of north africa as foreseen in the desertec concept is one possible way to help decarbonising the european power sector by 2050 however this approach raises questions of threats to european energy security in such an import scenario particularly in the light of increasing import dependency and russia s use of the energy weapon in recent years in this paper we investigate the threat of north african countries using the desertec electricity exports as an energy weapon we develop and use a new model to assess the interdependence the bargaining power symmetry operationalised as costs of a disruption in a future renewable electricity trade between north africa and europe if europe maintains current capacity buffers some demand response capability and does not import much more than what is described in the desertec scenario it is susceptible to extortion and political pressure only if all five exporter countries unite in using the energy weapon europe is not vulnerable to extortion by an export cut from only one country as the european capacity buffers are sufficient to restore the power supply no single exporter country would have sustained bargaining power over europe

the energy and co2 emissions impact of renewable energy development in china the authors are grateful for the support provided by the national key technology r d program from ministry of science and technology of grant no 2012bac20b07 we acknowledge the support of the national key technology r d program and the institute for energy environment and economy at tsinghua university which is supporting tianyu qi s doctoral research as a visiting scholar at the massachusetts institute of technology we acknowledge the support of eni icf and shell initial founding sponsors of the china energy and climate project this consortium of sponsors has provided support for researchers in the mit joint program to engage in a five year program of research focused on china none of the sponsoring organizations played a role in the study design collection analysis or interpretation of the data used for this study nor did they influence our decisions to submit the article for publication and all errors are our own

balance of payments crises in a cash in advance economy the author shows that a flexible prices sidrauski type model with a cash in advance constraint is capable of depicting some of the phenomena associated with a balance of payments crisis like the onesrecently observed in argentina and mexico current accounts deficits and appreciation of the real exchange rat e it is also shown that these phenomena become exacerbated as the rate of devaluation before the crisis occurs becomes smaller copyright 1987 by ohio state university press

government turnover in parliamentary democracies in this paper we consider a dynamic model of government formation and termination in parliamentary democracies that accounts for the following phenomena 1 cabinet terminations due to replacement or early election 2 cabinet reshuf es 3 minority and surplus governments 4 the relative instability of minority governments

committees as substitutes for commitment in this article policies are negotiated in a committee by playing a dynamic voting game with an endogenous default or status quo policy i show that joining a committee by maintaining a strong agenda setting power is a way for a decision maker to commit to a policy that in absence of committees is not time consistent the disciplinary role of the endogenous status quo and the heterogeneity of preferences within the committee are two crucial ingredients to obtain this result as a motivating example this article focuses on the time consistency of monetary policy

bureaucrats voters and public investment abstract this paper explores the provision of a durable public good in romer and rosenthal s agenda setter model it identifies a type of equilibrium called a romer rosenthal equilibrium in which in every period the bureaucrat proposes the maximum level of public investment the voter will support the paper establishes that such an equilibrium exists for a variety of public good benefit functions equilibrium public good levels converge or almost converge to a steady state these steady states can involve a unique public good level being provided each period or may exhibit a two period cycle steady state public good levels exceed the voter s optimal level more surprisingly steady state equilibrium reversion levels can exceed the voter s optimal steady state level meaning that reversion levels cannot be used to bound the optimal level reflecting the inability of the agents to commit to their future proposing and voting behavior equilibrium paths are pareto inefficient

a model of farsighted voting i present a new method of interpreting voter preferences in settings where policy remains in effect until replaced by new legislation in such settings voters consider not only the utility they receive from a given policy today but also the utility they will receive from policies likely to replace that policy in the future the model can be used to characterize both long term preferences and distributions over policy outcomes in situations where policy is ongoing and voters are farsighted

noncooperative foundations of stable sets in voting games abstract this short note studies the noncooperative foundations of von neumann morgenstern stable sets in voting games to do so we study stationary markov equilibria smes of a noncooperative legislative bargaining game based on underlying simple games the following result emerges from such an exercise every stable set of the underlying simple game is the limit set of pure strategy stage undominated smes of the bargaining game when voters are sufficiently farsighted

enhancing power supply adequacy in spain migrating from capacity payments to reliability options there has been total unanimity about the vital importance of reliability of supply since the beginning of the electricity sector deregulation process this paper describes the procedure proposed by perez arriaga et al 2005 white paper for the reform of the regulatory scheme of the power generation in spain for the ministry of industry tourism and trade of spain in spanish to improve upon the current scheme to guarantee a reasonable reserve margin the capacity payment mechanism this alternative design introduces improvements aimed at guaranteeing at least a minimum capacity reserve margin as well as at providing a strong incentive for generating units to be available when needed namely in situations when supply is likely to be insufficient to meet the total demand

legislative bargaining with reconsideration we present a dynamic model of legislative bargaining with an endogenously evolving default policy and a persistent agenda setter policy making proceeds until the agenda setter can no longer pass a new policy to replace an approved bill we prove existence and necessary conditions of pure strategy stationary equilibria for any finite policy space any number of players and any preference profile in equilibrium the value of proposal power is limited compared to the case that disallows reconsideration as voters are induced to protect each other s benefits to maintain their future bargaining positions the agenda setter in turn would prefer to limit his ability to reconsider the lack of commitment due to the possibility of reconsideration however enhances policy efficiency

collapsing exchange rate regimes some linear examples abstract we construct a pair of linear examples to study the collapse time of a fixed exchange rate regime the first example is a perfect foresight continuous time model which allows calculation of the exact collapse time and the tracking of reserves the second example is a discrete time stochastic model which yields an endogenous probability distribution over the collapse time and produces a forward discount of the exchange rate

voting on the budget deficit this paper analyzes a model in which a group of rational individuals votes over the composition and time profile of public spending all voters agree that a balanced budget is ex ante optimal however if there is disagreement between current and future majorities a balanced budget is not a political equilibrium under majority rule under certain conditions a majority of the voters favors a budget deficit and the equilibrium deficit is larger the greater is the polarization among voters copyright 1990 by american economic association

mandatory versus discretionary spending the status quo eect do mandatory spending programs such as medicare improve eciency we analyze a model with two parties allocating a xed budget to a public good and private transfers each period over an innite horizon we compare two institutions that dier in whether public good spending is discretionary or mandatory we model mandatory spending as an endogenous status quo since it is enacted by law and remains in eect until changed mandatory programs result in higher public good spending furthermore they ex ante pareto dominate discretionary programs when parties are patient persistence of power is low and polarization is low