a political economy model of congressional careers our main goal is to quantify the returns to a career in the united states congress we specify a dynamic model of career decisions of a member of congress and estimate this model using a newly collected dataset given estimates of the structural model we assess reelection probabilities estimate the effect of congressional experience on private and public sector wages and quantify the value of congressional seat moreover we assess how an increase in the congressional wage or the imposition of term limits would affect the career decisions of politicians and the returns from a career in congress

environmental policy and international trade when governments and producers act strategically some environmentalists express concern that trade liberalization may damage the environment by giving governments incentives to relax environmental policies to give domestic producers a competitive advantage support for such concern may be given by models of imperfectly competitive trade where there may be rent shifting incentives for governments to relax environmental policies but there are also incentives for producers to act strategically e g through their investment in rd ii allowing governments to act strategically increases the incentive for producers to act strategically iii welfare is lower when both parties act strategically and iv strategic behavior by producers and governments is greater when governments use emission taxes than when they use emission standards

reducing bureaucratic corruption interdisciplinary perspectives on what works abstract this article offers the first comprehensive review of the interdisciplinary state of knowledge regarding anti corruption policies with a particular focus on reducing corruption among civil servants drawing on the work of economists political scientists sociologists and anthropologists we examine seven policy categories 1 rewards and penalties 2 monitoring 3 restructuring bureaucracies 4 screening and recruiting 5 anti corruption agencies 6 educational campaigns and 7 international agreements notably rigorous empirical evaluation is lacking for the majority of commonly prescribed anti corruption policies nevertheless we find growing evidence of the effectiveness of policies based on monitoring including anti corruption audits and e governance in addition adequate civil service wages seem to be a necessary but insufficient condition for control of corruption an emerging skepticism regarding the effectiveness of anti corruption agencies also is apparent in the literature we conclude with broader lessons drawn from our review such as the recognition that when corruption is a systemic problem it cannot be treated in the long term with individual level solutions

trade facilitation and economic development new approach to quantifying the impact this article analyzes the relationship between trade facilitation and trade flows in the asia pacific region country specific data for port efficiency customs environment regulatory environment and e business usage are used to construct indicators for measuring trade facilitation the relationship between these indicators and trade flows is estimated using a gravity model that includes tariffs and other standard variables enhanced port efficiency has a large and positive effect on trade flows regulatory barriers deter trade improvements in customs and greater e business use significantly expand trade but to a lesser degree than improvements in ports or regulations the benefits of specific trade facilitation efforts are estimated by quantifying differential improvements in these four areas among members of the asia pacific economic cooperation apec a scenario in which apec members with below average indicators improve capacity halfway to the average forall members shows that intra apec trade could increase by dollar 254 billion or 21 percent of intra apec trade flows

trade liberalization and environmental taxation in federal systems the literature on trade liberalization and environment has not yet considered federal structures in this paper we show how the design of environmental policy in a federal system has implications for the effects of trade reform trade liberalization leads to a decline in pollution taxes regardless of whether pollution taxes are set at the federal centralized or local decentralized level and it increases social welfare the effect under a decentralized system is smaller than if these taxes are set by the federal government and pollution emissions therefore decline in this case moreover majority bias interacts with trade liberalization if federal taxes are used

is environmental policy a secondary trade barrier an empirical analysis should international trade agreements be extended to include negotiations over environmental policy the answer depends on whether countries distort levels of environmental regulations as a secondary means of providing protection to domestic industries our results suggest that they do previous studies of this relationship have treated the level of environmental regulation as exogenous and found a negligible correlation between environmental regulation and trade flows in contrast we find that when the level of environmental regulation is modelled as an endogenous variable its estimated effect on trade flows is significantly higher than previously reported jel classification fl f14 f18 est ce que la politique environnementale est une barriere commerciale secondaire une analyse empirique est ce que les accords commerciaux internationaux doivent etre etendus pour couvrir la politique environnementale la reponse depend du degre de distorsion que les pays introduisent dans leur politique environnementale pour proteger leurs industries nationales nos resultats suggerent que cet impact est important des etudes anterieures de cette relation ont traite la politique environnementale comme exogene et ont montre qu il existe une co relation negligeable entre politique envir onnementale et flux commerciaux au contraire nous revelons que quand la politique environnementale est consideree comme variable endoge ne son effet sur les flux com merciaux est plus eleve de maniere significative que ce qu on a note anterieurement

crude oil price fluctuations and saudi arabia s behaviour this study attempts to explain why crude oil prices fluctuate the main cause being the quota regime which characterises the opec agreements given that the saudi oil supply is inelastic in the short term a shock in the oil market is accommodated by an immediate price change by contrast a dominant firm behaviour in the long term causes an output change which is accompanied by a smaller price change this explains why oil prices overshoot the results of a general equilibrium model applied to saudi arabia support this analysis they also indicate that saudi arabia does not have any incentive for altering the crude oil market equilibrium with either positive or negative supply shocks as its welfare declines and that it has an incentive disincentive for intervening if a negative positive demand shock hits the crude oil market a second set of simulations is designed to understand what kind of oecd policy might help to bring down prices a tax cut would worsen the situation whereas policies that can increase the price elasticity of demand seem to be very effective

will disruptions in opec oil supply have permanent impact on the global oil market abstract opec has long been a major stakeholder and strong player in the global energy market especially in the petroleum sub sector in recent time however there have been questions over the influence of opec in the sub sector due to changing petroleum production landscape specifically as a result of the discovery of unconventional energy resources in north america and emergence of non opec petroleum producing and exporting countries this development could have significant effect on the global energy market and the macro economy of opec member countries the stationarity or otherwise of opec oil production supply has important implications for determining whether fluctuations in opec market supply has temporary or permanent effect using the zivot andrews structural break stationarity test and production data of opec member countries from 1980 to 2011 this paper investigates whether fluctuations in opec market supply has temporary or permanent effect the empirical analysis shows that for only 5 opec members nigeria saudi arabia ecuador kuwait and uae is the hypothesis of unit root rejected this implies that for the five 5 opec members the effects of shocks to oil production are not permanent and future pattern of oil production can be predicted following past trend the practical implication of this finding is that opec production quota strategy may not have long term impact on the global oil market thus the cartel needs to improve oil production policy coordination among members and ensure strict adherence to production quota while also stressing the need for diversification in member countries

can deployment of renewable energy put downward pressure on natural gas prices abstract high and volatile natural gas prices have increasingly led to calls for investments in renewable energy one line of argument is that deployment of these resources may lead to reductions in the demand for and price of natural gas many recent us based modeling studies have demonstrated that this effect could provide significant consumer savings in this article we evaluate these studies and benchmark their findings against economic theory other modeling results and a limited empirical literature we find that many uncertainties remain regarding the absolute magnitude of this effect and that the reduction in natural gas prices may not represent an increase in aggregate economic wealth nonetheless we conclude that many of the studies of the impact of renewable energy on natural gas prices appear to have represented this effect within reason given current knowledge these studies specifically suggest that a 1 reduction in us natural gas demand could lead to long term average wellhead price reductions of 0 8 2 and that each megawatt hour of renewable energy may benefit natural gas consumers to the tune of at least 7 5 20

does electoral accountability affect economic policy choices evidence from gubernatorial term limits this paper analyzes the behavior of u s governors from 1950 to 1986 to investigate a reputation building model of political behavior we argue that differences in the behavior of governors who face a binding term limit and those who are able to run again provides a source of variation in discount rates that can be used to test a political agency model we find evidence that taxes spending and other policy instruments respond to a binding term limit if a democrat is in office the result is a fiscal cycle in term limit states which lowers state income when the term limit binds

pollution policy and trade liberalization of environmental goods during the doha round at the world trade organization reductions in trade barriers on environmental goods eg were put forward as a means of helping developed and developing countries alike deal with current environmental problems we examine the potential effectiveness of such a strategy in a developing country that imports all its consumption of eg from an imperfectly competitive foreign eco industry we point out that trade liberalization of eg might in fact lead to less stringent pollution taxes which can result in an actual rise in pollution levels we then show that the environmental effectiveness objective of this trade reform can be achieved when the regulator uses quantitative abatement standards as an alternative pollution policy instrument however this environmental achievement comes at the expense of social welfare

active and passive waste in government spending evidence from a policy experiment we propose a distinction between active and passive waste as determinants of the cost of public services active waste entails utility for the public decision maker whereas passive waste does not we analyze purchases of standardized goods by italian public bodies and exploit a policy experiment associated with a national procurement agency we find that i some public bodies pay systematically more than others for equivalent goods ii differences are correlated with governance structure iii the variation in prices is principally due to variation in passive rather than active waste and iv passive waste accounts for 83 percent of total estimated waste

a model for energy pricing with stochastic emission costs we use a supply demand approach to value energy products exposed to emission cost uncertainty we find closed form solutions for a number of popularly traded energy derivatives such as forwards european call options written on spot prices and european call options written on forward contracts our modeling approach is to first construct noisy supply and demand processes and then equate them to find an equilibrium price this approach is very general while still allowing for sensitivity analysis within a valuation setting our assumption is that in the presence of emission costs traditional supply growth will slow down causing output prices of energy products to become more costly over time however emission costs do not immediately cause output price appreciation but instead expose individual projects particularly those with high emission outputs to much more extreme risks through the cost side of their profit stream our results have implications for hedging and pricing for producers operating in areas facing a stochastic emission cost environment

the limits of meritocracy screening bureaucrats under imperfect verifiability abstract does bureaucratic ability predict promotion in governments we show that self reported performance in enforcing the one child policy predicts mayoral promotion in china however misreporting handicaps screening a non manipulated performance measure does not predict promotion we show that this is consistent with a model where a government has a meritocratic objective but underestimates the imperfect verifiability of performance rather than a model where a government is only interested in the illusion of meritocracy thus despite meritocratic intentions we challenge the notion that a successful promotion system effectively substituted for democratic institutions in explaining chinese growth

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

the multiplier effect of globalization abstract this study uses a three stage common agency model to explore the linkages between trade policy corruption and environmental policy in an imperfect market setting we show that the effect of trade liberalization on the stringency of environmental policy depends critically on the level of corruption in relatively corrupt countries trade openness leads to more stringent environmental policy in such countries this interaction therefore lends trade liberalization a type of multiplier effect raising both economic growth and environmental policy stringency

does oilrig activity react to oil price changes an empirical investigation in this paper we analyze how oilrig activity in different non opec regions is affected by the crude oil price we estimate relationships between oilrig activity and crude oil prices using dynamic regression models augmented with latent components capturing trend and seasonality the results generally show a positive relationship between oilrig activity and the crude oil price but the strength of the relationship differs across regions overall there seems to be a clear relationship between the oil industry structure in the region and the oilrig activity s reaction to price changes on average the long run price elasticity for oilrig activity in non opec countries is around unity

paying politicians theory and evidence this paper looks at the theory behind the idea that paying politicians better will improve their performance the paper lays out a political agency model with adverse selection and moral hazard where politicians are subject to two period term limits this model provides a number of predictions about how the pay of politicians affects agency problems we also consider what happens when the pool of politicians is endogenous the main ideas in the model are confronted with data on u s governors jel d72 j33

why do oil prices jump or fall this paper discusses theories that can explain the zig zags of oil prices in general and in particular the recent jump more precisely the following explanations are discussed homo oeconomicus pure profit maximization if demand is dynamic and convex price reaction function price increases and respectively declines depend on capacity utilization cartelization contingent on output or revenues of which the latter can lead to backward bending supply segments and multiple equilibria statistical descriptions mean reversion homo politicus i e arguments for price hikes that are rational public choice despite the long run economic loss finally two approaches are presented that emphasize demand uncertainty one extending the above mentioned dynamic demand framework and the other considers a dynamic game of non competitive suppliers with lumpy investments summing up a demand shock seems to be the most suitable explanation of today s high prices indeed a shock given that international energy agency iea and department of energy doe were promising just a couple of years ago that we are going to have lots of oil at low prices while others and in particular politics have surprisingly little or no explanatory power

oil price pass through along the price chain in the euro area this paper analyzes how oil price shocks are transmitted downstream to producer and consumer prices in the euro area at the highest disaggregate level in doing so we first generate an appropriate database that identifies each industrial production sector with its corresponding price of consumer goods for the euro area we next estimate a constrained vector autoregressive model our findings show a statistically significant increase in producer prices after an oil price shock for branches with high oil consumption although this statistical pass through is only partial however there is no evidence of a significant oil price pass through to consumer prices for most branches which suggests the adaptability of european producers from the most branches to higher oil price pressures without transmitting them to consumers exceptions chemical and metal

radio s impact on public spending if informed voters receive favorable policies then the invention of a new mass medium may affect government policies since it affects who is informed and who is not these ideas are developed in a voting model the model forms the basis for an empirical investigation of a major new deal relief program implemented in the middle of the expansion period of radio the main empirical finding is that u s counties with many radio listeners received more relief funds more funds were allocated to poor counties with high unemployment but controlling for these and other variables the effects of radio are large and highly significant

exposing corrupt politicians the effects of brazil s publicly released audits on electoral outcomes author s finan frederico ferraz claudio abstract this paper examines the extent to which access to information enhances political accountability based upon the results of brazil s recent anti corruption program that randomly audits municipal expenditures of federally transferred funds it estimates the effect of the disclosure of local government corruption practices upon the re election success of incumbent mayors in municipal elections comparing municipalities which were randomly audited before the elections with those audited after the analysis shows that the disclosure of audit results had a significant impact on the re election rates of mayors found to be corrupt for a one standard deviation increase in reported corruption the audit policy reduced the incumbent s likelihood of re election by 25 percent this effect is more pronounced in municipalities where radio stations are present and higher levels of corruption are identified these findings highlight the value of information and the role of the media in reducing informational asymmetries in the political process thus enabling voters to not only hold corrupt politicians accountable but also to reward non corrupt politicians

the impact of the rebound effect of the use of first generation biofuels in the eu on greenhouse gas emissions a critical review an important objective of the mandated blending of biofuel in conventional gasoline and diesel in the eu is reducing greenhouse gas ghg emissions an important assumption thereby is that biofuels replace the production and consumption of oil however recent literature challenges this assumption because an increased use of biofuels will lower oil prices and therefore result in increase crude oil consumption this so called rebound effect offsets the expected ghg emission saving effects of using biofuels a review of eight studies mainly on current and future us biofuel policies provides insights in the current state of research into this topic showing a wide range of values of the rebound effect of biofuel use depending among others on the biofuel policy the applied method and the model parameter assumptions generally estimated rebound effects are negative in the country where biofuel use is being promoted i e the use of 1 unit of biofuel reduces oil consumption by less than 1 unit units on energy basis the rebound effects in other countries are always positive biofuel use reduces oil consumption by less than 1 unit so the total fuel consumption is increasing the net global rebound effect is usually positive which means that ghg emissions savings are not achieved as much as usually is assumed or emissions may even increase own estimations with the global magnet computable general equilibrium model indicate a global rebound effect of the 10 biofuel blend mandate in the eu in the year 2020 of 22 30 i e the use of 1 unit of biofuel reduces global oil consumption by 0 78 0 70 units this means that ghg emissions will not be reduced as much as usually is assumed or may even increase these results show that rebound effects can significantly lower the effectiveness of biofuel policies in reducing ghg emissions

an information rationale for the power of special interests political decisions are often biased in favor of special interests at the expense of the general public and they are frequently inefficient in the sense that the losses incurred by the majority exceed the gains enjoyed by the minority this article explains the bias in terms of information asymmetries and the free rider problem first incumbents increase their reelection prospects by biasing policy toward groups that are better able to monitor their activities second because smaller groups are better able to overcome the free rider problem of costly monitoring policy will be biased in their favor third the effect of asymmetric monitoring on voter welfare is ambiguous the inefficiencies created by the policy bias are offset by a positively valued selection bias incumbents of above average quality are more likely to survive voter scrutiny than are low quality types

corruption and development a review of issues in this paper we start with a discussion of some of the different denotations of the problem of corruption we then consider the ways in which the damaging consequences of corruption operate in a developing economy while not ignoring its possible redeeming features in some cases we pursue the question of why corruption is perceptibly so different in different societies and also persistent finally we examine the feasible policy issues that arise in this context

the political economy of government responsiveness theory and evidence from india the determinants of government responsiveness to its citizens is a key issue in political economy here we develop a model based on the solution of political agency problems having a more informed an politically active electorate strengthens incentives for governments to be responsive this suggests that there is a role both for democratic institutions and the mass media in ensuring that the preferences of citizens are reflected in policy the ideas behind the model are tested on panel data from india we show that public food distribution and calamity relief expenditure are greater controlling for shocks where governments face greater electoral accountability and where newspaper circulation is highest

incumbent performance and electoral control in the pure theory of electoral competition citizens compare the platforms of the candidates and vote for the one whose platform is preferred candidate strategies are identified with promises about future performance in office models of this sort have been developed in both static mckelvey 1975 and dynamic kramer 1977 i settings and all appear to have the property that if the set of alternatives is large enough in some sense equilibrium platforms rarely exist but these models have another feature that is quite as disturbing as their instability in the static setting discussed by mckelvey little attention is paid to the possibility that once in office the politician s preferences may diverge from those of his constituents and that he may therefore choose policies at variance from his platform instead it is simply assumed that promises will be kept whether or not such behavior is congruent with the interest of the officeholder it is sometimes argued that an enforcement mechanism may exist to discipline politicians for failing to keep promises but without a specification of the mechanism it is not obvious that it would be in the interests of the

busting the princelings the campaign against corruption in china s primary land market using data on over a million land transactions during 2004 2016 where local governments are the sole seller we find that firms linked to members of china s supreme political elites the politburo obtained a price discount ranging from 55 4 to 59 9 compared with those without the same connections these firms also purchased slightly more land in return the provincial party secretaries who provided the discount to these princeling firms are 23 4 more likely to be promoted to positions of national leadership to curb corruption president xi jinping stepped up investigations and strengthened personnel control at the province level using a spatially matched sample e g within a 500 meter radius we find a reduction in corruption of between 42 6 and 31 5 in the provinces either targeted by the central inspection teams or whose party secretary was replaced by one appointed by xi accordingly this crackdown on corruption has also significantly reduced the promotional prospects of those local officials who rely on supplying a discount to get ahead

opec behavior a test of alternative hypotheses since interpretations of past and future oil price patterns depends on the model chosen the author tests and compares alternative theories of opec as a first step in validating the choice on any one model the results show that among opec countries the partial market sharing cartel model is the only model not rejected by at least some of the 11 members and gives the best explanation of production in comparison with 11 non opec countries the competitive model could not be rejected for 10 of the 11 non opec producers this raises the question of why if opec is a cartel friedman s predictions have not come true and introduces new questions for future research 19 references 3 tables

labor supply of politicians using data on members of the european parliament meps we examine the impact of salaries on the composition and the behavior of legislators employing a differences in differences approach we exploit the introduction of a law that equalized meps salaries which had previously differed by as much as a factor of 10 increasing salaries raises the fraction of meps who run for re election but decreases the quality of elected meps proxied by college quality salary has no discernible impact on effort or legislation output higher salaries induce more political competition

strategic interaction among nations negotiable and non negotiable trade barriers trade policy is modelled as a two stage game between governments governments choose a negotiable trade barrier in the first stage of the game which is co operative the level of this barrier is treated as a binding commitment in the second stage of the game where the non negotiable trade barrier is chosen non co operatively hence governments choose trade barriers during negotiations with a view to influencing the equilibrium of the non co operative game to follow this proves to be a convenient framework in which to analyse the idea that trade agreements contain loopholes which can be exploited by protectionist governments trade negotiations induce substitution toward less efficient instruments of protection but are nevertheless welfare improving as long as the negotiations are relevant i e the negotiable barrier is actually in use and the two instruments are not perfect substitutes

clustering in crude oil prices and the target pricing zone hypothesis abstract this paper studies the target pricing zone tpz hypothesis for crude oil by examining price clustering in the dollar digit it is hypothesized that price clustering occurs within an established tpz if opec is able to defend the upper and lower bounds through output changes the results show that prices strongly cluster around the dollar digit value of 9 within the tpz sub periods but not outside the sub periods furthermore the degree of clustering declines when production capacity utilization is high and when production significantly exceeds quotas consistent with opec s inability to defend the zone nine centered clustering also results in lower contemporaneous and next day volatility these results support the target pricing zone hypothesis of crude oil

television and voter turnout i use variation across markets in the timing of television s introduction to identify its impact on voter turnout the estimated effect is significantly negative accounting for between a quarter and a half of the total decline in turnout since the 1950s i argue that substitution away from other media with more political coverage provides a plausible mechanism linking television to voting as evidence for this i show that the entry of television in a market coincided with sharp drops in consumption of newspapers and radio and in political knowledge as measured by election surveys i also show that both the information and turnout effects were largest in off year congressional elections which receive extensive coverage in newspapers but little or no coverage on television

power to the people evidence from a randomized field experiment on community based monitoring in uganda this brief summarizes the results of a gender impact evaluation study entitled power to the people evidence from a randomized field experiment on community based monitoring in uganda intervention started in 2004 and consisted of a training and a six month follow up in uganda the study observed that localized nongovernmental organizations encouraged communities to be more involved with the state of health service provision and strengthened their capacity to hold their local health providers to account for performance the community based monitoring project increased the quality and quantity of primary health care provision the program led to a significant increase in the weight of infants by 14 z scores and a significant decrease in child mortality by 33 utilization of outpatient services was significantly higher 20 percent in the treatment group and the overall effect across utilization measures is large and significant funding for the study derived from bank netherlands partnership program world bank research committee world bank africa region division swedish international development agency department for research cooperation

on the economic determinants of oil production theoretical analysis and empirical evidence for small exporting countries abstract in this paper decisions regarding production in oil exporting countries are studied by means of theoretical analysis and empirical investigation in particular we aim at describing the relationship between oil production levels and changes in the world oil demand and prices intertemporal production decisions by a representative oil producer are modeled by means of a partial equilibrium model in this theoretical model oil producers are subject to exogenous shocks in world oil consumption and prices oil companies can change output levels only by incurring a fixed cost results from the simulation of this model show a strong relationship between oil production and changes in world oil consumption on the contrary the effects of changes in real oil prices on oil production decisions seem to be much lower results from the simulation of the theoretical model are then empirically investigated using time series econometric techniques the empirical evidence supports the hypothesis that oil producing countries are characterized by different responses to changes in world oil demand and in real oil prices for many countries production rapidly adjusts to changes in consumption whereas responses of oil production to innovations in real oil prices are found to be not statistically significant in addition when non linearities in the relationship between world oil demand prices and output levels are allowed for evidence of asymmetric effects of shocks to exogenous variables on output levels is found for some countries

the incentive to cheat an empirical analysis of opec relatively little is known about the payoffs to various kinds of strategies facing opec cartel members we propose an empirically tractable procedure to calculate the payoffs to relevant opec strategies fresh insights into the problem of the quota system and deterring cheating are presented stressing the importance of the nonrenewability of the oil stock the short run rigidity of demand short term capacity constraints the presence of a backstop technology and the different discount rates the cartel members are facing we conclude that punishment is a dominant strategy for the saudis and that the finite resource base in the oil industry substantially attenuates the incentive to cheat also the biased market quota system in favor of small producers weakens but does not eliminate their incentive to cheat in addition we compute the price paths and payoffs corresponding to competitive cournot and joint profit maximization solutions and contrast them with the actual historical patterns of opec beha

oil production responses to price changes an empirical application of the competitive model to opec and non opec countries abstract falling oil prices over the last decade accompanied by over production by some opec members and the growth of non opec supply warrant further empirical investigation of the competitive model to ascertain production behavior a supply function based on a modification of griffin s model is estimated using data from 1973 1997 the sample period unlike griffin s however includes phases of price increase 1970s and price decrease 1980s 1990s thus providing a better framework for examining production behavior using the competitive model the opec results do not support the competitive hypothesis instead a negative and significant price elasticity of supply is obtained this result offers partial support for the target revenue theory for most of the non opec members the estimates support the competitive model opec s loss of market share and the drop in the share of oil based energy should signal adjustments in price and quantity based on a competitive world market for crude oil

bridging the trade environment divide protection for free traders this word represents the consummate evil for environmentalists it is the ultimate good of course for the trade community protection conjures up dark images of smoot and hawley while the environmental camp sees clear mountain streams lush green forests and piercing blue skies one cannot blame all of the tensions at the trade environment interface on linguistic differences but these competing perspectives are emblematic of a deep clash of cultures theories and assumptions trade officials often seek to limit efforts to link trade and environmental policy making and sometimes to prohibit such efforts altogether in this regard the narrow focus and modest efforts of the world trade organization s committee on trade and environment are illustrative 1 the launch of negotiations for a free trade area of the americas with an express decision to exclude environmental issues from the agenda provides an even starker example of the trade community s hostility toward serious environmental engagement economists have been prominent among those arguing that pollution control and natural resource management issues are best kept out of the trade policy making process cooper 1994 bhagwati 1999 other economists however have tried to set trade policy making in a broader context and to build environmental sensitivity into the international trading system runge 1994 rodrik 1997 summers 2000

food energy and environment is bioenergy the missing link abstract we study price linkages between the food energy and bioenergy markets a vertically integrated multi input multi output market model allows us to derive testable hypothesis which we test by applying time series analytical mechanisms to nine major traded food commodity prices along with one weighted average world crude oil price the data consists of 939 weekly observations from january 1993 to december 2010 the empirical findings confirm the theoretical hypothesis that the prices for crude oil and food commodities are interdependent a usd 1 barrel increase in oil prices and food commodity prices increase by between usd 0 09 tonne and usd 1 65 tonne

heterogeneous noncompliance with opec s oil production cuts abstract in this study we explore the heterogeneous noncompliance behavior among ten member nations of the organization of the petroleum countries opec overall we find that the three top oil producers saudi arabia iran and venezuela and the four relatively low oil producers libya indonesia algeria and qatar exhibit higher cheating frequencies and magnitudes while they tend to offset their peers conduct conversely the three mid oil producers uae nigeria and kuwait display much lower frequencies and magnitudes of noncompliance with opec s administered quotas while they largely demonstrate herding behavior among their peers the volatilities of the respective cheating magnitudes are rather similar across the three clusters though this study contributes to the economic literature by further illuminating the operational mode of opec and by exposing its three main subsets its interdependent structure and its members customary behavioral patterns

effects of us biofuel policies on us and world petroleum product markets with consequences for greenhouse gas emissions abstract us biofuel policy includes greenhouse gas reduction targets regulators do not address the potential that biofuel policy can have indirect impacts on greenhouse gases through its impacts on petroleum product markets and scientific research only partially addresses this question we use economic models of us biofuel and agricultural markets and us and world petroleum and petroleum product markets to show that discontinuing biofuel tax credits and ethanol tariff lower biofuel use could lead to increased us petroleum product use and a reduction in petroleum product use in other parts of the world the net effect is lower greenhouse gas emissions under certain assumptions we show that biofuel use mandate elimination can have positive or negative impacts on greenhouse gas emissions the magnitude and the direction of effects depend on how us biofuel trade affects biofuel in other countries with different emissions context that determines how important use mandates are in the first place who pays mandate costs and the price responsiveness of global petroleum supplies and uses however our results show that counter intuitive effects are possible and discourage broad conclusions about the greenhouse gas impacts of removing these elements of us biofuel policy

the political economy of dynamic elections accountability commitment and responsiveness we survey the literature on dynamic elections in the traditional settings of spatial preferences and rent seeking under perfect and imperfect monitoring of politicians we define stationary electoral equilibrium which encompasses notions used by barro 1973 ferejohn 1986 banks and sundaram 1998 and others we show that repeated elections mitigate the commitment problems of politicians and voters and that a responsive democracy result holds under general conditions term limits however attenuate the responsiveness finding we also touch on related applied work and we point to areas for fruitful future research including the connection between dynamic models of politics and economics

investment and operating choice oil and natural gas futures prices and drilling activity abstract we present evidence that changes in oil and natural gas field investment measured by drilling rig use respond positively to changes in the futures prices of oil and natural gas consistent with predictions based upon value maximizing behavior these results hold for world regions dominated by private independent oil companies but not national oil companies in those cases where futures price changes are identified as drivers the role of spot prices is either absent or weak the results are robust to several alternative specifications including controls for changes in rig productivity

the political economy of trade liberalization and environmental policy a pressure group model where environmental and industry lobby groups offer political support in return for favorable pollution tax policies is used to explain and predict the equilibrium pollution tax in sectors protected by tariffs the political economy effects of trade liberalization are investigated the pollution tax is shown to decrease if the lobbying effort by the environmental lobby decreases more rapidly than by the industry lobby ceteris paribus the level of political conflict falls with trade liberalization pollution may increase because of a reduction of the pollution tax and tax revenues may fall simultaneously as pollution increases the global trading system is currently undergoing another round of multilateral trade liberalization and regional economic integration is occurring in several parts of the world the trade environment link has become an important part of trade liberalization talks it is commonplace for industry representatives to argue that less stringent environmental regulations give less developed countries ldcs a comparative advantage in pollution intensive goods and that industries with high abatement costs will migrate to ldcs environmentalists argue that international differences in environmental laws and regulations may be reduced to their lowest common denominator through political pressure this is not a fear of trade liberalization itself but of the effects of lower trade barriers on the political determination of environmental regulation

determinants of opec production implications for opec behavior we estimate models that identify the economic and organizational determinants of crude oil production by individual opec nations to clarify the interpretation of econometric results we model production with specifications that resolve the statistical ordering of variables and estimate models with techniques that can cope with stochastic trends in the time series we also analyze the short run dynamics for asymmetries that may carry important insights about opec behavior results indicate that quotas are an important determinant of production and their effects generally are symmetric which implies that opec is an organization that influences production and ultimately prices real prices generally have a positive effect on production and the size of this effect may depend on spare capacity which implies that opec behaviors also embody competitive elements finally all nations other than saudi arabia show some form of production sharing behavior which may imply that opec shares mismatches between the call for opec production and opec quotas

monitoring corruptible politicians does monitoring politicians corrupt activities induce a sustained reduction in corruption we use longitudinal data on publicly released audits of municipal governments in puerto rico to answer this question we find that corruption is considerably lower in municipalities with timely audits before an election however these municipalities do not exhibit decreased levels of corruption in subsequent audits in spite of this mayors in municipalities audited preceding the previous election have higher re election rates suggesting that audits enable voters to select more competent politicians we conclude that audit programs must be timely sustained and long term commitments in order to be effective

fighting corruption to improve schooling evidence from a newspaper campaign in uganda what are the most effective ways to increase primary school enrollment and student learning we argue that innovations in governance of social services may yield the highest return since social service delivery in developing countries is often plagued by inefficiencies and corruption we illustrate this by using data from an unusual policy experiment a newspaper campaign in uganda aimed at reducing capture of public funds by providing schools parents with information to monitor local officials handling of a large education grant program the campaign was highly successful and the reduction in capture had a positive effect on enrollment and student learning jel d73 i22 o12

opec and demand response to crude oil prices abstract this paper investigates demand response to crude oil price movements before and after the recent global financial and economic crisis it employs several market power indices to structurally estimate price elasticities a newly developed market power index for crude oil markets is implemented in this approach opec is the central player and acts as a dominant producer in the global oil market we quantify how a change in market structure such as changes in marginal cost of production would contribute to market power exercise of opec and have an ultimate impact on price elasticity of demand for oil our price elasticity predictions fall in a range reported in the literature however estimates for pre crisis deviate from the post crisis ones in fact demand response to crude oil prices has almost doubled during the crisis this severe change in price response can be associated with record price levels caused by supply shortages and surge in alternative renewable energy resources the key advantages of this methodology over the existing literature are that it is simple to use and estimates price elasticity using a competition framework without specifying demand supply function s and utilizes commonly observable market variables that can be applied to any admissible data frequency

the market power of opec 1973 2001 we apply a multi equation dynamic econometric model on monthly data to test if the behaviour of opec as a whole or different sub groups of the cartel is consistent with the characteristics of dominant producers on the world crude oil market in the period 1973 2001 our results indicate that the producers outside opec can be described as competitive producers taking the oil price as given and maximizing profits the opec members do not fit the behaviour of price taking producers our findings of low residual demand price elasticities for opec underpin the potential market power of the producer group and are in line with the results in some recent energy studies on the other hand our findings indicate that neither opec nor different sub groups of the cartel can be characterized as a dominant producer in the period 1973 1994 however we find that the characteristics of a dominant producer to some extent fit opec core as from 1994 thus although opec clearly has affected the market price the producer g

do better paid politicians perform better disentangling incentives from selection the wage paid to politicians affects both the choice of citizens to run for office and the performance of those who are appointed first if skilled individuals shy away from politics because of higher opportunities in the private sector an increase in politicians pay may change their mind second if the re election prospects of incumbents depend on their in office deeds a higher wage may foster performance we use data on all italian municipal governments from 1993 to 2001 and test these hypotheses in a quasi experimental setup in italy the wage of mayors depends on population size and sharply rises at different thresholds we apply a regression discontinuity design to the only threshold that uniquely identifies a wage increase 5 000 inhabitants exploiting the existence of a two term limit we further disentangle the composition from the incentive component of the effect of the wage on performance our results show that a higher wage attracts more educated candidates and that better paid politicians size down the government machinery by improving efficiency importantly most of this effect is driven by the selection of competent politicians rather than by the incentive to be re elected

the political economy of pollution taxes in a small open economy abstract this paper develops a positive theory explaining pollution tax policy outcomes in a small open economy the equilibrium tax rate depends on lobby group membership the relative importance of lobbying activities and the tax elasticity of pollution the equilibrium properties are investigated the model is extended to incorporate pollution abatement and a pollution abatement subsidy we show that total pollution may be increasing in the pollution abatement subsidy rate this effect arises because the equilibrium pollution tax rate may be decreasing in the subsidy rate due to altered political influence of the lobby groups in the political equilibrium

determinants of official opec crude prices the hypothesis of this paper is that crude oil like any other unfinished commodity is valued for the products derived from it the purpose is to offer an empirical explanation for changes in the crude price charged by the members of opec the model results show that the market clearing prices reported to prevail for petroleum products on the principal petroleum spot market at rotterdam are the primary determinants of changes in official crude prices a systematic relationship between offical and spot prices is argued to have prevailed since 1974 an appendix clarifies five types of data required for the model 13 references 4 tables

electoral accountability and corruption evidence from the audits of local governments we show that political institutions affect corruption levels we use audit reports in brazil to construct new measures of political cor ruption in local governments and test whether electoral account ability affects the corruption practices of incumbent politicians we find significantly less corruption in municipalities where mayors can get reelected mayors with reelection incentives misappropriate 27 percent fewer resources than mayors without reelection incentives these effects are more pronounced among municipalities with less access to information and where the likelihood of judicial punish ment is lower overall our findings suggest that electoral rules that enhance political accountability play a crucial role in constraining politician s corrupt behavior jel d72 k42 017

the political resource curse this paper studies the effect of additional government revenues on political corruption and on the quality of politicians both with theory and data the theory is based on a political agency model with career concerns and endogenous entry of candidates the data refer to brazil where federal transfers to municipal governments change exogenously at given population thresholds allowing us to implement a regression discontinuity design the empirical evidence shows that larger transfers increase observed corruption and reduce the average education of candidates for mayor these and other more specific empirical results are in line with the predictions of the theory jel d72 d73 h77 o17 o18

popularity shocks and political selection abstract we observe that popularity shocks are crucial for electoral accountability beyond their effects on voters behaviors by focusing on brazilian politics we show that the disclosure of audit reports on the mis use of federal funds by local administrators affects the type of candidates who stand for election when the audit finds low levels of corruption the parties supporting the incumbent select less educated candidates on the contrary parties pick more educated candidates when the audit reveals a high level of corruption these effects are stronger in municipalities that have easier access to local media

energy capital substitutability complementarity the dichotomy abstract changes in the price of energy affect not only the demand for energy but also the rates of capital formation and labour utilization these changes depend on the functional relationship between energy and the primary factor inputs in particular the relationship between energy and capital has been characterized by major conflicting evidence time series data classify the two inputs as complements by contrast pooled cross section studies conclude that capital and energy aresubstitutes in the production process in this case higher priced energy will stimulate the demand for investment while several reconciliation attempts on this disparity deserve marked attention the most prominent explanation is that time series studies reflect short term relationships and cross section analyses capture long term effects

spatially variable taxation and resource extraction the impact of state oil taxes on drilling in the us abstract we estimate the responsiveness of nonrenewable resource firms to taxes on output using spatially explicit data from the oil sector in the united states using a model of resource firm capital allocation over space we show that responses to spatially varying taxes differ from responses to equivalent changes in the common output price a larger response to tax rates occurs because the tax change only affects the returns to drilling in a single state whereas a price change affects both the returns to drilling in a state and the opportunity cost of not drilling in other states econometrically we estimate the effect of severance taxes on oil drilling we find that the response to a one dollar increase in tax per unit of production has an effect at least eight times as large as the effect of an equivalent decrease in output price the tax response is inelastic implying that an increase in state tax rate would increase revenue we do not find evidence of spillovers between states in the local areas near state borders

the political economy linkage between trade liberalization and domestic environmental regulations this paper considers the political economy linkage between trade liberalization and domestic environmental regulations in a duopolistic product market we investigate the environmental consequences and welfare implications of a home country s unilateral tariff reduction on a polluting good in a framework where the domestic environmental tax is subject to the influence of the home firm we find that a tariff reduction on a good producing a consumption type externality will improve the home country s environmental quality moreover we find that the home country s tariff reduction will unambiguously enhance the home country s welfare and it will damage the foreign firm s profits and thus the foreign country s welfare provided that the weight that the home government attaches to its social welfare is sufficiently small this result also suggests the possibility that a unilateral tariff reduction will achieve a pareto improvement

interest groups trade liberalization and environmental standards in considering a country that imposes a minimum standard on an imported polluting good which generates negative consumption externalities we construct a common agency model in which a domestic environmental group and a foreign industrial lobby can influence the formation of the minimum standard by providing political contributions to the government this paper investigates the effects of trade liberalization on the political equilibrium environmental standard the pattern of trade environmental disutility and social welfare we find that trade liberalization tightens the minimum standard decreases imports of the polluting good and reduces environmental disutilities the importing country s social welfare however does not necessarily increase with trade liberalization the weaker the environmental group s lobbying efficiency or the stronger the foreign firm s lobbying efficiency the more likely it is that trade liberalization will enhance the importing country s welfare