the income elasticity of non point source air pollutants revisiting the environmental kuznets curve abstract this paper examines the income pollution relationship for three non point source pollutants in 1990 ambient concentrations reported at monitors throughout the us are regressed on median household income and other socio economic variables for the census tracts in which the monitors were located contrary to earlier studies a u shaped relationship is obtained

openness central bank independence and the sacrifice ratio traditional explanations of the negative correlation between openness and inflation presume that an inverse relationship between the degree of openness and the sacrifice ratio reduces the inflation bias of descretionary monetary policy temple 2002 concludes however that such a relationship fails to emerge in cross country data our analysis of the same cross country data considered by temple indicates that once the degree of central bank independence and its interaction with greater openness and the sacrifice ratio in addition increased openness lessens the positive effect of central bank independence on the sacrifice ratio

the output inflation tradeoff and central bank reform evidence from new zealand the 1989 reserve bank of new zealand act provides a natural experiment in which the effects of institutional change on economic relationships can be studied the act set price stability as the single objective of monetary policy and gave the bank great independence reforms of this nature may lead to a greater short run output inflation tradeoff by altering optimal stabilisation policy and wage indexation allowing for environments where learning about the new regime is assumed to be rapid as well as slow we find that a large rise in the new zealand tradeoff has occurre d since implementation of the act

monetary uncertainty strategic wage setting and equilibrium employment abstract an important recent strand of literature has shown that if wages are set strategically by inflation averse non atomistic unions then equilibrium employment is sensitive to the monetary regime this note demonstrates that such sensitivity need not reflect a direct aversion to inflation by unions but instead may result from union concerns for employment objectives in circumstances in which the variance and mean value of inflation are positively related

the lucas critique and the volcker deflation this paper examines in light of the lucas critique the behavior of the phillips curve and of the term structure of interest rates after october 1979 it starts with an informal account of the policy change and then discusses how we might expect these two relations to shift after such a change it finds little evidence of a direct effect of the policy change on the phillips curve at least until 1982 it finds substantial evidence of a direct effect on term structure this abstract was borrowed from another version of this item

anxiety and technological change explaining the inverted u curve of sulphur dioxide emissions in late 20th century finland abstract this article examines the linkage between per capita gdp and sulphur dioxide emissions for one single country in this case finland the narrow approach together with a combination of a historical and economical approach enables us to cut deeper into the controversial environmental kuznets curve hypothesis we found the main reasons for a downturn in sulphur emissions to be technological development and anxiety about possible environmental damage and economic costs related to that it can be discussed whether our results refute the environmental kuznets curve or just show possible ways in which the environmental kuznets curve is achieved nevertheless our case study casts some serious doubt on the most straightforward assumption coming out from the ekc that economic growth would automatically solve environmental problems we claim that the causal connection might also go in an opposite direction proper environmental standards and conservation comprise a necessary condition for economic growth in the long run

new evidence on the output inflation trade off from developing economies the case of the cfa franc zone this aim of this paper is to give a contribution to the debate on whether output inflation trade offs are negatively influenced by the mean of inflation as postulated by new keynesians or by the variability of inflation as postulated by neo classical economists to remove any concerns about the arbitrariness of the choice of the sample the analysis will focus on a group of countries belonging to the same currency union the franc zone the results do not provide conclusive evidence on either theory as it was found that there existed a negative relation between the output inflation trade offs and the mean of inflation on the one hand and the variability of inflation on the other

renewable energy sources in the spanish electricity market instruments and effects the implementation of directive 2001 77 ec on the promotion of electricity produced from renewable sources sets a target of 22 1 of electricity consumption in the eu in 2010 and establishes various mechanisms that member countries may adopt depending on their needs this paper analyses these mechanisms their implementation in spain by means of rd 661 2007 and the degree of fulfilment of objectives it concludes with an analysis of the effectiveness of the mechanisms adopted and recommendations on market design

nominal wage flexibility wage indexation and monetary union membership in a monetary union implies stronger incentives for nominal wage flexibility in the form of wage indexation and shorter contract length than non membership this counteracts the stabilisation policy cost of giving up monetary independence but more wage flexibility is only an imperfect substitute for an individual monetary policy it is possible that an increase in wage flexibility is welfare decreasing because of the accompanying rise in price variability the interaction between wage setting and central bank behaviour may result in either multiple equilibria or a unique full indexation equilibrium

inflation targeting as a shock absorber abstract we study the characteristics of inflation targeting as a shock absorber using quarterly data for a large panel of countries to overcome an endogeneity problem between monetary regimes and the likelihood of crises we propose to study large natural disasters we find that inflation targeting improves macroeconomic performance following such exogenous shocks it lowers inflation raises output growth and reduces inflation variability compared to alternative monetary regimes this performance is mostly due to a different response of monetary policy and fiscal policy under inflation targeting finally we show that only hard but not soft targeting reaps the rewards deeds not words matter for successful monetary stabilization

assessing the impact of renewable energy deployment on local sustainability towards a theoretical framework renewable energy sources res have a large potential to contribute to the sustainable development sd of specific territories by providing them with a wide variety of socioeconomic and environmental benefits however the existing literature has put much emphasis on the environmental benefits including the reduction of global and local pollutants while socioeconomic impacts have not received a comparable attention these include diversification of energy supply enhanced regional and rural development opportunities creation of a domestic industry and employment opportunities with the exception of the diversification and security of energy supply these benefits have usually been mentioned but their analysis has been too general i e mostly at the national level and a focus on the regional and even more so the local level has been lacking at most studies provide scattered evidence of some of those regional and local benefits but without an integrated conceptual framework to analyse them this paper tries to make a contribution in this regard by developing an integrated theoretical framework which allows a comprehensive analysis of the impact of renewable energy on local sustainability and which can be empirically applied to identify these benefits in different territories

a historical review of promotion strategies for electricity from renewable energy sources in eu countries abstract the core objective of this paper is to elaborate on historically implemented promotion strategies of renewable energy sources and the associated deployment within the european electricity market hence at a first glance the historic development of renewable energy sources in the electricity res e sector is addressed on member state and on sectoral level as well as consequently discussed according to available res e potentials and costs the specific focus of this paper are promotion strategies for res e options as they are the key driver of an efficient and effective res e deployment therefore the paper depicts the main types of different promotion schemes and their properties additionally several cases studies of different european member states show an in depth analysis of the different res e promotion schemes in this context special emphasises are put on the question of effective and efficient promotion scheme designs of different res e technologies generally conducted research led to the conclusion that technology specific financial support measures of res e performed much more effective and efficient than others did hence it is not all about the common question of feed in tariffs vs quota systems based on tradable green certificates but more about the design criteria of implemented res e support schemes

a theory of ambiguity credibility and inflation under discretion and asymmetric information this paper develops a positive theory of credibility ambiguity and inflation under discretion and asymmetric information the monetary policymaker maximizes his own politically motivated objective function that is positively related to economic stimulation through monetary surprises and negatively related to monetary growth the relative importance he assigns to each target shifts stochastically through time his current preference trade off is known to him but not to the public when choosing the state contingent path of money growth for the present and the future the policymaker compares the benefits from current stimulation with the costs associated with higher future inflation expectations current monetary growth conveys information to the public about future money growth because there is persistence in the policymaker s objectives although expectations are rational information is imperfect because monetary control procedures are imprecise as a result the public cannot correctly distinguish persistent changes of emphasis on different policy objectives from transitory monetary control errors the public becomes aware of changes gradually by observing past monetary growth credibility is defined in terms of the speed with which the public recognizes changes in the objectives of the policymaker credibility is lower the noisier monetary control and the more stable the objectives of the policymaker looser monetary control and a higher degree of time preference on the part of the policymaker induce him to produce higher and more variable monetary growth when the policymaker is free to determine the accuracy of monetary control he does not always choose the most effective control available in spite of the fact that monetary surprises always have an expected value of zero the reason is that ambiguous control procedures enable the policymaker to generate positive surprises when he cares more than on average about economic stimulation he leaves the inevitable negative surprises for periods in which he cares more about inflation prevention this result provides an explanation for the fed s preference for ambiguity recently documented by goodfriend 1986 the policymaker is more likely to pick more ambiguous control procedures the more uncertain his objectives and the higher his time preference the paper also provides a theoretical underpinning for the well documented crosscountry positive correlation between the level and the variability of inflation

empirical analysis of national income and so2 emissions in selected european countries the linkage between per capita gdp and sulfur emissions for 12 western european countries was analyzed over a period of more than 150 years the analysis also looked at the impact of air pollution regulations on the shape of the income pollution relationship at both the aggregate and country levels we find an inverted u shaped relationship and the estimated turning points of most countries are plausible in addition environmental regulations are found to lower the ekc and they can also shift the turning point of the curve in some cases the shift is to the left and in a few to the right

inflation targeting does not matter another look at oecd sacrifice ratios recently in this journal goncalves and carvalho 2009 concluded that inflation targeters were able to bring inflation down at less cost than nontargeters p 242 this comment shows that their conclusion is not robust but instead is the result of comparing a particular subset of inflation targeting it disinflations with nonsimultaneous disinflations that occurred under very different macroeconomic conditions in their sample simple extensions such as justifiably varying the treatment group of it disinflations to control for common time varying effects or to control for the maastricht treaty effects suggest that it does not matter

exploring the environmental kuznets hypothesis theoretical and econometric problems focussing on the prime example of co2 emissions we discuss several important theoretical and econometric problems that arise when studying environmental kuznets curves ekcs an ekc refers to an inverse u shaped relationship between a pollutant and economic activity the dominant theoretical approach is given by integrated assessment modelling which consists of economic models that are combined with environmental impact models we critically evaluate the aggregation model dynamics and calibration aspects and their implications for the validity of the results we then turn to a discussion of several important econometric problems that go almost unnoticed in the literature the most fundamental problems relate to nonlinear transformations of nonstationary regressors and in a nonstationary panel context to neglected cross sectional dependence we discuss the implications of these two major and some minor problems that arise in the econometric analysis of kuznets curves our discussion shows that ekc modelling as performed to date is subject to major drawbacks at both the theoretical and the econometric level

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

transparency democratic accountability and the economic consequences of monetary institutions debates about the appropriate mix between autonomy and accountability of bureaucrats are relevant to numerous areas of government action i examine whether there is evidence of a tradeoff between transparency democratic accountability and the gains from monetary delegation i begin by presenting a simple theoretical model which suggests that central banks that are transparent in the sense of publishing their macroeconomic forecasts will find it easier to acquire a reputation despite making central banks more subject to outside scrutiny then monetary transparency can lead to improved economic outcomes i also consider arguments about the effect of accountability provisions involving parliamentary oversight and control over central bankers the paper then uses a new data set to examine these issues empirically focusing on a natural experiment involving disinflation costs under different central banking institutions during the 1990s results suggest that countries with more transparent central banks face lower costs of disinflation while accountability provisions have no clear effect on disinflation costs my results also concord with earlier findings that the effect of monetary institutions is conditional on other features of the political environment

status and perspectives of renewable energy policy and deployment in the european union what is needed to reach the 2020 targets abstract this article evaluates the status of current res deployment policies and barriers in the eu 27 member states and compares it to the required to meet the 2020 targets the evaluation relies strongly on the quantitative deployment status and policy effectiveness indicators european res deployment and policy has progressed strongly in recent years but the growth here has been mainly driven by effective policies in a small or medium number of top runner countries across europe the highest average policy effectiveness over six years was reached for onshore wind 4 2 biofuels 3 6 and biomass electricity 2 7 while in the heat sector all technologies score below 2 comparing the recent progress to the required growth for meeting the 2020 target it appears that some countries largely exceed the interim targets of the res directive 2009 28 ec despite this europe will need additional policy effort to reach the 2020 target critical success factors include implementing effective and efficient policies that attract sufficient investments reducing administrative and grid related barriers especially in currently less advanced countries upgrading the power grid infrastructure dismantling financial barriers in the heat sector realising sustainability standards for biomass and lowering energy demand through increased energy efficiency efforts

public policies to support the development of renewable energy in romania a review abstract the aim of this study is to review the public policies used to support the development of renewable energy in romania over the past ten years romania assumed a target of 24 share of renewable energy in consumption in 2020 higher than the average target of the european union and this target has already been reached in the beginning of 2014 as a result of the public policies implemented therefore this study examines firstly the support schemes for the development of renewable energy in the european union underlining the arguments to support the renewable energy as well as the main barriers for its development secondly this study analyses the renewable energy sector in romania in terms of theoretical and economic potential production and consumption of renewable energy and legislation related to the renewable energy thirdly this study discloses the main issues of the public renewable energy policy in romania starting with an overview of the tradable green certificates system and revealing the changes of the romanian support scheme and the possible effects of the policy changes the results of the present study may be useful for further research regarding public policies for the development of renewable energy projects

a test for parameter homogeneity in co2panel ekc estimations this paper casts doubt on empirical results based on panel estimations of an inverted u relationship between per capita gdp and pollution using a new dataset for oecd countries on carbon dioxide emissions for the period 1960 1997 we find that the crucial assumption of homogeneity across countries is problematic decisively rejected are model specifications that feature even weaker homogeneity assumptions than are commonly used furthermore our results challenge the existence of an overall environmental kuznets curve for carbon dioxide emissions

financing investments in renewable energy the impacts of policy design abstract the costs of electric power projects utilizing renewable energy technologies rets are highly sensitive to financing terms consequently as the electricity industry is restructured and new renewables policies are created it is important for policymakers to consider the impacts of renewables policy design on ret financing this paper reviews the power plant financing process for renewable energy projects estimates the impact of financing terms on levelized energy costs and provides insights to policymakers on the important nexus between renewables policy design and financing we review five case studies of renewable energy policies and find that one of the key reasons that ret policies are not more effective is that project development and financing processes are frequently ignored or misunderstood when designing and implementing renewable energy policies the case studies specifically show that policies that do not provide long term stability or that have negative secondary impacts on investment decisions will increase financing costs sometimes dramatically reducing the effectiveness of the program within u s electricity restructuring proceedings new renewable energy policies are being created and restructuring itself is changing the way rets are financed as these new policies are created and implemented it is essential that policymakers acknowledge the financing difficulties faced by renewables developers and pay special attention to the impacts of renewables policy design on financing as shown in this paper a renewables policy that is carefully designed can reduce renewable energy costs dramatically by providing revenue certainty that will in turn reduce financing risk premiums

will policies to promote renewable electricity generation be effective evidence from panel stationarity and unit root tests for 115 countries abstract this study examines whether policies to promote renewable electricity generation are likely to be effective by applying panel unit root and stationarity tests to time series data on renewable electricity generation for 115 countries over the period 1980 2008 we find that for the panel as a whole and almost three quarters of the individual countries renewable electricity generation is characterized by a unit root this result implies that policies to promote renewable electricity generation such as renewable portfolio standards which result in annual increases in renewable energy and as such which represent permanent positive shocks to the long run growth path of renewable electricity generation will be more effective in increasing renewable electricity generation than policies with a pre specified time horizon

the profitability of electricity generating firms and policies promoting renewable energy using a cross country firm level dataset this study empirically analyses how the implemented renewable electricity promotion systems tradable green certificates vs feed in tariffs affected the pro

the political economy of monetary institutions in recent decades countries have experimented with a variety of monetary institutions including alternative exchange rate arrangements and different levels of central bank independence political economists have analyzed the choice of these institutions emphasizing their role in resolving both the time inconsistency problem and dilemmas created by an open economy this first generation work however suffers from a central limitation it studies exchange rate regimes and central bank institutions in isolation from one another without investigating how one monetary institution affects the costs and benefits of the other by contrast the contributors to this volume analyze the choice of exchange rate regime and central bank independence together and in so doing present a second generation of research on the determinants of monetary institutions the articles incorporate both economic and political factors in explaining the choice of monetary institutions investigating how political institutions democratic processes political party competition and interest group pressures affect the balance between economic and distributional policy objectives

renewable energy in south africa potentials barriers and options for support the challenge of transforming entire economies is enormous even more so if a country is as fossil fuel based and emission intensive as south africa however in an increasingly carbon constrained world and already now facing climate change impacts south africa has to reduce greenhouse gas emissions intensity soon and decidedly the south african electricity sector is a vital part of the economy and at the same time contributes most to the emissions problem first steps have been taken by the south african government to enhance energy efficiency and promote renewable energy however they fail to show large scale effects this paper seeks to identify the relevant barriers to renewable energy investments and based on experience from other countries provide policy recommendations the major barrier identified in the paper is based on the economics of renewable energy technologies i e their cost and risk structures two main factors in investment planning as a solution the south african government introduced several renewable energy support measures such as a feed in tariff the paper discusses the potential and possible shortcomings of this and other existing support schemes and identifies complementing measures on a national scale

sacrifice ratio in a medium scale new keynesian model a medium scale macroeconomic model with a number of nominal and real frictions that have be shown to be important for explaining observed aggregate uctuations is capable to quantitatively account for the empirically estimated sacri ce ratio after a disin ationary monetary policy this nding however is sensitive to the degrees of price and wage indexation to past in ation and to a less extent to the price and wage calvo probabilities jel classi cation e31 e5

energy policy and european utilities strategy lessons from the liberalisation and privatisation of the energy sector in romania in the context of energy sector reforms pursued by romanian government since 1990s we compare and contrast the market outcomes of european utilities investment with the host government policy objectives we begin with energy market reform in romania and review governments efforts to attract foreign direct investment fdi and to gradually withdraw from the distribution and supply segments of electricity market subsequently we illustrate the scope european utilities have had market policy and design notwithstanding for consolidating market power through regional dominance we examine the extent to which these utilities have sought to enhance their positions through horizontal and vertical integration counter to the eu plans for a competitive market structure we find that the investments of european incumbents have not been resoundingly successful although market entrance may have been justified on long term strategic grounds in the immediate term segments acquired through competitive auctions have yielded modest regulated returns finally we discuss the extent to which policy makers have achieved their goals although the short term benefits of a competitive market structure have reached some consumers a renewed interest in promoting national champions reflect frustration with market mechanisms as a means of ensuring long term strategic investments in the sector

central bank independence and macroeconomic performance some comparative evidence this note uses information on a sample of sixteen oecd countries to assess the relationship between central bank independence and macroeconomic performance as previous work suggests politically controlled central banks are more likely to pursue policies that lead to high and variable inflation however the authors find little evidence that political control of central bank policy has any impact on measures of the level or variability of growth unemployment or the ex ante real interest rate copyright 1993 by ohio state university press

inflation targeting is it to blame for banking system instability abstract in light of the financial crisis the practice of inflation targeting it has been blamed for authorities failure to respond to the increase in financial systemic risk and to the development of asset bubbles however utilizing a rich database containing nearly 5500 commercial banks from 70 countries among which 22 are it for the period 1998 2012 this paper argues that on average inflation targeting national banking systems i are more stable ii possess sounder systemically important banks and iii are less distressed than or at least as distressed as other banks during periods of global liquidity shortages our results are robust to a series of tests such as when we compare countries with the same legal origins or control for the delegation of bank supervision responsibility to bodies other than the central bank overall we conclude that it cannot be blamed for contributing to financial fragility

hybrid modeling to support energy climate policy effects of feed in tariffs to promote renewable energy in portugal abstract feed in tariffs have been the main policy instrument applied in portugal for the promotion of electricity produced from renewable energy sources under the eu directives on energy and climate regulation in this paper we provide an empirical impact assessment of the economic and environmental effects of portugal s fits policy to promote res e generation impact assessment of policy instruments plays a crucial role on decision making process for numerical simulations we make use of a hybrid top down bottom up general equilibrium modeling approach which represents a reliable tool to analyze the complex interactions between economic energy and environmental issues related to energy policies numerical simulations confirm the empirical evidence that the fits policy implemented by portugal was both an effective and a cost efficient way to increase the generation of electricity from renewable energy sources and thus to achieve the national res e target of 45 in 2010 results show relatively modest macroeconomic impacts indicating potentially low economic adjustment costs from an environmental perspective the deployment of renewable energy source results in significant carbon emissions reductions

centralised wage setting inflation contracts and the optimal choice of central banker the paper examines the appropriate design of central banking institutions in an economy in which the nominal wage is set by an inflation averse monopoly union as a positive mark up over its market clearing value the analysis considers both the optimal choice of central banker and the potential role for a linear inflation contract the optimal set of arrangements is a central banker who attaches less significance to inflation than does society combined with an inflation contract where the value of the contract parameter is related to the union s degree of inflationaversion following the important contribution of rogoff 1985 the appointment of a conservative central banker has been widely accepted as a potential albeit partial solution to the time inconsistency problem associated with discretionary policy making in placing a greater weight on inflation than does the government and society as a whole in the setting of monetary policy the central bank s temptation to create inflation surprises is reduced this then leads to a lower inflation rate in equilibrium than would otherwise prevail whilst in rogoff s stochastic framework this reduction in the inflationary bias has to be weighed against an increase in output variability the appropriate choice of central banker ensures a net improvement in welfare an important feature of rogoff s model is the assumption of an atomistic labour market in which nominal wages embodied in single period contracts reflect interaction between agents who hold no market power such a representation of the labour market also characterises most subsequent extensions of rogoff s analysis e g lohmann 1992 and waller 1992 however a number of recent papers in considering the time inconsistency issue have employed the assumption of unionised wage setting assuming either an allencompassing monopoly union or alternatively a number of individual unions each of which has a non negligible impact on macroeconomic variables examples include agell and ysander 1993 bleaney 1996 cubitt 1992 1995 horn and persson 1988 hutchison and walsh 1998 and skott 1997 these contributions have examined the implications of the assumed labour market imperfection from a variety of perspectives but only those of bleaney and skott directly consider its consequences for the appropriate specification of central bank objectives in what follows we explore the significance of unionised wage setting for

inflation targeting matters evidence from oecd economies sacrifice ratios using data from oecd economies we show that inflation targeters suffered smaller output losses during disinflations when compared to nontargeters we also study why some countries choose to inflation target while others do not and find that higher average inflation and smaller debt levels render the adoption of the regime more likely applying heckman s procedure to control for selection bias does not alter the link between inflation targeting and less costly disinflations

inflation targeting and output inflation tradeoffs abstract this article assesses whether the adoption of inflation targeting it helps reduce the output inflation tradeoff we address the self selection problem of it policy adoption by the endogenous switching regressions and show that the output inflation tradeoffs are significantly lower in it countries not only over the whole sample but also across the developed and developing country subsamples in addition we also find strong evidence supporting the positive selection hypothesis i e countries have higher probability of adopting it are exactly those who benefit more larger reduction of output inflation tradeoff from the implementation of it additional results reveal that economies with higher trade openness lower financial openness and less flexible exchange rate regime are associated with larger tradeoff between output and inflation but the effects are only statistically significant in the it regime

partially independent central banks politically responsive governments and inflation theories of central bank independence have more exact implications regarding inflation in different political economic environments than generally understood or empirically examined they imply that inflation in any given country time will be a weighted average of what it would be if the central bank completely controlled monetary policy and what it would be if the government completely controlled it with the degree of central bank independence weighting the former an equation embodying this theoretical expectation is estimated by constrained least squares from a time series cross section of inflation rates in developed democracies since the bretton woods era the results confirm that the antiinflationary benefit of central bank independence is not constant but rather depends on every variable in the broader politicaleconomic environment to which wholly autonomous central banks and governments would respond differently conversely the inflationary impacts of all such political economic variables depend on the degree of central bank independence

inflation targeting in emerging economies panel evidence abstract this paper shows there is no evidence that the inflation targeting regime it improves economic performance as measured by the behavior of inflation and output growth in developing countries the control of common time effects results in less negative and less significant it impacts on inflation inflation volatility and output growth volatility than previously found in the literature additionally our analysis shows robust evidence of lower output growth during it adoption on balance although lower long run mean inflation signals that the central banks of emerging economies with inflation targeting are more inflation averse the costs of disinflation have not been lower than under other monetary regimes

inflation targeting in colombia 2002 2012 proquest denotes formulae omitted over the last twenty years nearly thirty countries have adopted inflation targeting regimes to conduct monetary policy in addition to the announce ment of specific inflation targets inflation targeting regimes have been characterized by increased transparency enhanced communication with the public and explicit accountability mechanisms moreover their policy strategy is based on setting short run interest rates rather than on targeting monetary aggregates in principle inflation targeting regimes also increase exchange rate flexibility the performance of inflation targeting regimes has been a matter of exten sive research for instance ball and sheridan and lin and ye conclude that in industrialized countries inflation targeting did not make a difference in inflation and output behavior 1 the spirit of these conclusions is echoed in two recent surveys on the performance of inflation targeting 2 another line of research on inflation targeting in industrialized countries studies its impact on sacrifice ratios output losses per point of inflation during monetary driven disinflations according to proponents inflation targeting anchors inflation expectations and it should thus allow for less costly disinflation processes while goncalves and carvalho find strong evidence supporting this hypoth esis in developed countries brito shows that the results are not robust to the inclusion of time effects 3 de roux and hofstetter conclude that inflation targeting allows for less costly disinflations even when controlling for time effects but only if disinflations are slow 4 for fast disinflations it does not yield less costly disinflations for developing countries the evidence is less conclusive goncalves and salles find that inflation targeting allows for a greater reduction in inflation and lower output volatility a result confirmed by lin and ye 5 brito and bystedt however suggest that the greater inflation reduction came at the expense of poorer output growth 6 in the surveys walsh concludes that evidence on inflation targeting in developing countries is clearly favorable to the regime while ball is more skeptical calling the outcomes inconclusive 7more recently de carvalho filho shows that during the recent global finan cial crisis inflation targeting nations outperformed non inflation targeting nations on several dimensions for both developed and developing economies their policy response was more aggressive they allowed the exchange rate to more effectively absorb the shocks and they recorded a stronger macro economic performance output industrial production and unemployment 8the vast empirical literature comparing performance across different mon etary regimes stands in contrast to the relatively scant research on the tools strategies goals and dilemmas faced by inflation targeting central banks espe cially in developing countries while there is good information on the overall comparative performance of these regimes little information is available on the political economy dimensions the increasing variety of instruments and goals of inflation targeting central banks and the challenges that lie ahead for them in this paper we fill part of this gap by examining the experience of the cen tral bank of colombia banco de la republica over the last decade a period of consolidation and innovation of its inflation targeting strategy colombia is one of five large latin american economies that have well established inflation targeting regimes along with brazil chile mexico and peru all of these countries adopted inflation targeting more than ten years ago yet their performance tools and goals have not been extensively studied cen tral banks in the region have used a variety of tools beyond short run policy interest rates including liquidity and reserve requirements credit provisions capital controls and interventions in the foreign exchange markets

factors influencing the likelihood of regulatory changes in renewable electricity policies abstract the renewable electricity literature has expanded in recent years from the analysis of policies focused on research and development rd the coherence of the policies the size and variety of the coalitions supporting and opposing renewable electricity and the brussels effect the importance of these factors is evaluated in the case of three major markets of renewable electricity germany the netherlands and denmark

to peg or not to peg a simple model of exchange rate regime choice in small economies abstract the choice of an exchange rate peg often points to a trade off between gaining credibility and losing flexibility we show that the flexibility loss may be reduced if domestic and foreign shocks are correlated and more volatile allowing for a plausible structural change after a peg a flexibility gain may result

is new zealand s reserve bank act of 1989 an optimal central bank contract this paper evaluates the reserve bank of new zealand act of 1989 from a principal agent perspective arguing that the act represents a dismissal rule the optimal dismissal rule requires that the central banker be dismissed whenever inflation exceeds a critical level that depends on aggregate supply disturbances and measurement error in the inflation index this is essentially the structure established by the act the scope for renegotiating the target rate however creates an incentive for the government to set the critical rate too high consequently the inflation bias of discretion is reduced but not completely eliminated copyright 1995 by ohio state university press

inflation targeting in brazil chile and mexico performance credibility and the exchange rate inflation targeting it has been adopted by a growing number of countries and latin america has been part of this world trend this paper reviews the recent it experiences of brazil chile and mexico applying a common empirical framework to the three country cases inflation performance under it and its associated output costs are reported and compared favorably to a control group of other countries the paper analyzes ways by which it has contributed to strengthen credibility the effect of targets on inflation expectations and on actual inflation the low influence of inflation shocks on core inflation and the decline in inflation forecast errors do the three inflation targeters exhibit fear of floating no considering their relatively large exchange rate volatility and moderate international reserve holdings no considering strongly declining inflation to devaluation passthrough coefficients and little evidence for monetary policy reaction to exchange rate shocks yes considering the frequency and intensity of sterilized exchange interventions in comparison to other inflation targeters that float more cleanly

re evaluating the effectiveness of inflation targeting abstract this paper estimates the treatment effect of inflation targeting on macroeconomic variables using a semiparametric single index method by taking into account the model misspecification of parametric propensity scores our study uses a broader set of preconditions for inflation targeting and macroeconomic outcome variables than the existing literature the results suggest no significant difference in the inflation level and inflation volatility between targeters and non targeters after the adoption of inflation targeting we find that inflation targeting reduces sacrifice ratio and interest rate volatility in the developed economies and that it enhances fiscal discipline in both the industrial and developing countries

union wage settlements during a disinflation this paper examines the role of union wage contracts in the persistence of inflation and the implication of these contracts for the problem of disinflation in the united states a quantitative model of overlapping con tracts explicitly oriented toward the major union sector is developed the model takes account of expectations of future wage price and employment conditions as in more aggregated models that have been used in macroeconomic research in addition the distribution of workers according to contract length as well as deferred wage increases and escalator clauses are explicitly used in the model the main aim of the model is to determine the constraints which these contracts impose on disinflation paths the model indicates that the maximum speed of disinflation is extremely slow in the early phases if a rise in unemployment is to be avoided but increases considerably before the new lower rate of inflation is reached the disinflation path is considerably slower than that observed after hyperinflation periods however the existence of a path of inflation reduction raises questions about whether the institution of union wage con tracts is really the direct cause of costly disinflations or whether their influence works indirectly by raising credibility problems about a monetary disinflation this abstract was borrowed from another version of this item

the effect of financial constraints technological progress and long term contracts on tradable green certificates tradable green certificates tgcs have recently become a diffuse instrument to support renewable electricity in oecd countries although it is perhaps too early to draw a conclusive judgement on the effectiveness of this instrument in increasing renewable capacity and decreasing the price of certificates one view in the literature maintains that long term contracts are of particular importance for tgcs to be effective this paper contributes to this debate by analysing how financial constraints and technological progress can induce investors to hold pessimistic expectations of their ability to sell green certificates and still make a profit clearly these expectations will prevent investors from building new capacity to fulfil the quota comprised in tgcs and will keep the price of certificates traded in the market high as this kind of expectation is not influenced by most design features of tgcs one can conclude that long term contracts are particularly important in determining the effectiveness and cost effectiveness of these instruments some attention should therefore be paid to the features of the tgcs which induce obliged parties to offer long term contracts to renewable generators

a public choice view on the climate and energy policy mix in the eu how do the emissions trading scheme and support for renewable energies interact abstract in this paper we analyze the rationale for an energy policy mix when the european emissions trading scheme ets is considered from a public choice perspective that is we argue that the economic textbook model of the ets implausibly assumes 1 efficient policy design and 2 climate protection as the single objective of policy intervention contrary to these assumptions we propose that the ets originates from a political bargaining game within a context of multiple policy objectives in particular the emissions cap is negotiated between regulators and emitters with the emitters abatement costs as crucial bargaining variable this public choice view yields striking implications for an optimal policy mix comprising res supporting policies whereas the textbook model implies that the ets alone provides sufficient climate protection our analysis suggests that support for renewable energies 1 contributes to a more effective ets design and 2 may even increase the overall efficiency of climate and energy policy if other externalities and policy objectives besides climate protection are considered thus our analysis also shows that a public choice view not necessarily entails negative evaluations concerning efficiency and effectiveness of a policy mix

an ekc pattern in historical perspective carbon dioxide emissions technology fuel prices and growth in sweden 1870 1997 the environmental kuznets curve ekc has been subject to research and debate since the early 1990s this articleexamines the inverted u trajectory of swedish co2 emissions during an extended time

social acceptance of renewable energy sources a review of contingent valuation applications abstract this paper presents a literature review addressing the public acceptance of renewable energy as a replacement for fossil fuels in electricity production this review was motivated by the global tendency for a substitution of conventional fuels by renewable energy sources res during the global financial crisis it studies research on the preferences and attitudes of local communities towards investments in renewable energy projects and their perception of the use of new energy technologies in their daily lives through various case studies worldwide an effort is made to identify the parameters that influence consumers energy behaviour together with their interest or lack thereof in the environmental impact of using fossil fuels to produce energy and their willingness to reduce it applications of contingent valuation are examined which are employed to analyse public attitudes towards the use of res for electricity production willingness to pay is observed to be correlated to socioeconomic characteristics including education interest in environmental issues and knowledge of res finally the profile of a typical green energy consumer and appropriate policy paths for the penetration of res into the energy market are outlined

disinflation credibility and price inertia a danish exposition this paper analyses the disinflationary policy pursued in denmark since october 1982 focusing on the phillips curve trade off and the credibility of this disinflationary policy the overall conclusion confirms no significant indication of the disinflationary policy being credible

risk based assessment of the cost efficiency and the effectivity of renewable energy support schemes certificate markets versus feed in tariffs the introduction of renewable energy sources in the electricity generation mix has the potential to reduce power sector s emissions and countries dependence on imported oil climate change concerns and highly volatile oil prices have attracted governments interest and support to sustain investments in renewable energy capacity and different support policies have been implemented in many countries around the world this paper analyzes the effects of investors risk aversion on the performance of support schemes the analysis compares two policy options a feed in tariff mechanism with a certificate market system results show that while a tariff mechanism could obtain better results than a certificate market its performance is strictly dependent on regulator choices a certificate market instead permits to obtain the desired level of renewable energy market share with good cost efficiency as long as investors risk aversion is moderate moreover discounting future cash flows with higher social discount rates further benefits a certificate system making it preferable to feed in tariffs

the policy implications of the different interpretations of the cost effectiveness of renewable electricity support abstract the cost effectiveness of support for renewable electricity is a main criterion to assess the success of policy instruments together with effectiveness the costs of support are also a source of significant concern for governments all over the world however significant confusion exists in the literature on the cost effectiveness of public support for renewable electricity while some authors define the concept of cost effectiveness as that which complies with the equimarginality principle many others including documents from relevant organisations european commission international energy agency intergovernmental panel on climate change define it as the lowest costs of support generally equating it with the minimisation of consumer costs the aim of this paper is to clarify the differences between both approaches and their policy implications regarding the choice of instruments and design elements it is shown that they partly overlap and that their policy implications clearly differ leading to very different policy prescriptions while the former favours technology neutral instruments and design elements the minimisation of consumer costs approach favours instruments and design elements which adjust support levels to the costs of the technologies

maintaining a reputation when strategies are imperfectly observed this paper studies reputation effects in games with a single long run player whose choice of stage game strategy is imperfectly observed by his opponents we obtain lower and upper bounds on the long run player s payoff in any nash equilibrium of the game if the long run player s stage game strategy is statistically identified by the observed outcomes then for generic payoffs the upper and lower bounds both converge as the discount factor tends to 1 to the long run player s stackelberg payoff which is the most he could obtain by publicly committing himself to any strategy

disinflations in a model of imperfectly anchored expectations abstract we study disinflations under imperfect credibility of the central bank we propose a framework to model imperfectly credible announcements and use it to study the distribution of the output cost for a given disinflation imperfect credibility is modeled as the extent to which agents rely on adaptive learning to form expectations lower credibility increases the mean variance and skewness of the distribution of the sacrifice ratio when credibility is low disinflations become very costly for adverse realizations of the shocks but an opportunistic disinflation a disinflation implemented after a period of below trend inflation can significantly lower the sacrifice ratio with simulated data we reinterpret the reduced form evidence in sacrifice ratio regressions coefficient estimates from these regressions can be misleading for policymakers considering the cost of disinflation

competing commitments technocracy and democracy in the design of monetary institutions in this article i refine and expand the agenda for research on monetary institutions first i evaluate the analyses and research designs presented in this special issue of international organization out of this evaluation several ideas about how to produce a third generation of research on this topic emerge specific ideas include how to create a better synthesis with certain branches of economics such as information economics broaden the welfare criteria on which institutional choices are made deepen the analyses of coalitional and other political processes on which the choice of institutions are based and strengthen the tests that are offered in support of these choices in the second part of this article i explore questions of how popular sovereignty over economic policy and institutional choice are achieved i show that the institutional regimes proposed in the special issue are in a sense democratic as long as the public s perceived consensus about economic policies and macroeconomic outcomes is real however if as new work suggests there is genuine dissensus about policy and macroeconomic objectives it is no longer clear that the regimes proposed in the special issue are democratic in the conclusion i briefly discuss a possible crisis of imagination in institutional design