inflation and relative price variability in the euro area evidence from a panel threshold model the impact of inflation on relative price variability rpv generates an important channel for real effects of inflation this article provides first evidence on the empirical relation between inflation and rpv in the euro area stirred by the widespread use of inflation caps or target bands in monetary policy practice we are particularly interested in threshold effects of inflation in line with the predictions of monetary search models our results indicate that expected inflation significantly increases rpv only if inflation is either very low below 0 95 per annum p a or very high above 4 96 p a

housing choices and uncertainty the impact of stochastic events abstract in our model a household recognizes that family size is stochastic when making its tenure and housing consumption decisions it also recognizes that initial choices constrain later behavior because they affect the amount of savings simulations of the model show that housing consumption and the duration of stay in a residence are sensitive to whether the realization of the stochastic event is the expected value based on this observation we suggest that empirical housing studies should include both the expected and realized values of stochastic explanatory variables we find few behavioral responses to changes in the variance of an uncertain event even though increased uncertainty is passed through to after tax income and the user cost of owning a notable exception is that if a household knows that a change in an influential variable will occur but it does not know the direction of change it is more likely to rent initially

energy consumption economic growth relationship and carbon dioxide emissions in china this paper applies the panel unit root heterogeneous panel cointegration and panel based dynamic ols to re investigate the co movement and relationship between energy consumption and economic growth for 30 provinces in mainland china from 1985 to 2007 the empirical results show that there is a positive long run cointegrated relationship between real gdp per capita and energy consumption variables furthermore we investigate two cross regional groups namely the east china and west china groups and get more important results and implications in the long term a 1 increase in real gdp per capita increases the consumption of energy by approximately 0 48 0 50 and accordingly increases the carbon dioxide emissions by about 0 41 0 43 in china the economic growth in east china is energy dependent to a great extent and the income elasticity of energy consumption in east china is over 2 times that of the west china at present china is subject to tremendous pressures for mitigating climate change issues it is possible that the gdp per capita elasticity of carbon dioxide emissions would be controlled in a range from 0 2 to 0 3 by the great effort

co firing coal with wood pellets for u s electricity generation a real options analysis abstract in contrast to eu u s electric utilities are not employing the bioenergy technology of co firing wood pellets with coal this difference in employment patterns is explored within a real options analysis roa for possible u s utilization of wood pellets considering fuel price series from 2009 to 2014 for analysis these series are divided into two sub periods based on different market conditions infancy 2009 2011 and substitution 2012 2014 roa indicates co firing wood pellets with coal is feasible considering adoption during wood pellets infancy under low discount rates and long power plant lifespans a portfolio effect of employing multiple fuels underlies this result however co firing is not currently economically feasible the different adoption decisions are likely a consequence of recent cheap and abundant u s natural gas for co fired wood pellets to be feasible government incentives and or a market increase in natural gas prices appear necessary

burning wood pellets for us electricity generation a regime switching analysis abstract applying a regime switching model under the theoretic framework of real options we inspect the optimal timing boundaries for coal and coal mixed wood pellets as two alternative fuels for a power plant in georgia united states results indicate that cofiring wood pellets with coal is generally not a commercially viable option however lower level with wood pellets

economic impacts of biofuels deployment in andalusia this paper aims to estimate the economic impacts of increasing the production capacity of the installed biofuel plants in andalusia southern spain a computable general equilibrium cge approach is used to calculate the changes in the economic sectors activity in employment as well as in gdp and other macroeconomic variables relevant to biofuel plants in andalusia under two distinct scenarios i based on an operating biodiesel plant with 90 ktoe year of installed capacity ii upgrading to 2174 ktoe by 2013 in compliance with the regional plan andaluz de sostenibilidad energetica pasener 2007 2013 results show that compliance with the pasener goal would increase the activity level of the economic sectors considered by 3 04 the total induced employment generated would reach 167 975 equivalent full time jobs lasting one year and the gdp would increase by 9 82

the future price of houses mortgage market conditions and the returns to homeownership the purpose of this paper is to provide a simple framework in which to analyze the impact of a perfectly anticipated increase in the future selling price of houses on current house purchase decisions in the presence of capital market imperfections since implicitly it is the after tax selling price of houses that is considered this analysis is equivalent to one of a decrease in the capital gains tax on houses at retirement in this paper assumptions about homeownership mortgage markets and liquidity constraints are added to a life cycle model of asset accumulation taking the date of house purchase as exogenous it is shown that the impact of an exogenous increase in the expected future price of houses depends on current mortgage market conditions the future price of houses relative to the current price and the ratio of liquid assets to future labor income as well as preferences also a simple model of a market for houses is presented to analyze the impact of an increase in the expected future price of houses on the current market clearing price the mortgage market and the redistribution of the housing stock to consumers according to their wealth and liquidity characteristics in the life cycle model as exposited by franco modigliani and robert brumberg an increase in consumption in one period requires a decrease in consumption in another period when owner occupied housing is added to the model the tradeoff between consumption in different periods becomes more complex purchasing a larger house entails an increase in the consumption of housing services and an increase in assets held in the form of a house but a decrease in either nonhousing consumption or the holdings of an alternative asset or both the response of the consumer to price or income changes is also limited by financial market constraints capital market imperfections have been introduced into the life cycle model by a number of authors see for example lester thurow thayer watkins thomas russell clark wiseman and christopher pissarides and several authors have explicitly considered the impact of capital market imperfections on the house purchase decision see william dolde and james tobin william poole donald lessard and modigliani and dolde most similar to this study although developed independently roland artle and p varaiya s paper includes the theoretical incorporation of the house purchase decision into a life cycle model they consider the problem of choosing the date of house purchase while treating the level of consumption of housing services as exogenous in the life cycle model in this paper the consumer chooses the size of house to purchase at an exogenous date to use the life cycle model in the framework of a market of houses it is assumed that the stock of houses and the prices of all other goods including the rate of return on the alternative asset are fixed all consumers are identical except perhaps for initial wealth as noted by irving fisher p 325 in a world of perfect foresight and perfect markets the rates of return on all assets are equated in equilibrium if markets are perfect with the stock of houses and other prices fixed the present price of houses will rise by an amount equal to the present value of an exogenous increase in a future price of houses when mortgage market imperfections are introduced this relationship no longer holds and a future price increase may result in a redistribution of the current stock assistant professor of economics university of michigan this paper is an extension of a chapter of my doctoral thesis at the university of wisconsin madison the helpful comments of donald d hester charles a wilson hal varian and george borts are gratefully acknowledged

currency swaps hedging and the exchange of collateral abstract a model of currency swaps is developed where swaps provide superior hedging capabilities under the swap two parties in effect lease assets that they own to one another for use as collateral creating supewrior loan collateral matching this superior matching is reflected in lower borrowing costs to both agents creating a dominant borrowing and hedging method the swap contract is self enforcing due to a mutual double bonding arrangement where each side has an interest in the continuation of the exchange relationship jel g2 f3

the failure of woodford s model of the channel system in the cashless economy woodford claims to present a cashless and frictionless model of the channel system of interest rate control this note explains why woodford s frictionless model omits an essential feature of channel systems the need for clearing e cash balances at the central bank without the existence of some form of final settlement on the books of the central bank channel systems collapse woodford makes this conceptual error because he assumes that moneyless accounting systems of exchange can be applied to model e cash economies

informal credit markets in india informal financial markets those which are not regulated or monitored by the banking authorities account for much of business credit in developing countries these unregulated informal credit markets icm are important both in their own right as part of each country s financial system and because of their reciprocal relations with growing enterprises and the regulated financial sector in order to study the operations of some of these markets in detail in urban commercial settings we conducted an extended survey of some of the informal credit markets of india 2 based in some cases on centuries of operation these markets proved to be important in the functioning of the contemporary economy indigenous style bankers belonging to particular ethnic communities and castes formerly provided the full range of banking services to their clients 3 with the rise of modern western style banking the indigenous bankers either have transformed themselves to serve sectors such as wholesale trade not well served by the modern sector or provide services which the modern bankers cannot provide though any estimate is very approximate it seems that informal credit markets account for as much as 20 of commercial credit outstanding in the various markets surveyed we began by surveying the gujeratis some of whom still practice their traditional form of full service banking in their homeland of gujerat and adjoining bombay the shikarpuris or multanis originally full service bankers in sind who now provide commercial credit in various other centers the chettiars in south india the rastogis in uttar pradesh and the marwaris especially in eastern india 4 but our surveys revealed that a wide range of ethnic groups were now involved in informal credit markets and the more meaningful differentiations

a hybrid fiat commodity monetary system in this paper i describe a monetary system in which backing is provided for the government s liabilities by way of contingent resort to taxes the system is studied within the context of a one good pure exchange model of two period lived overlapping generations in which aside from various uniform boundedness assumptions considerable diversity is allowed both within and across generations two results are established i the existence of at least one perfect foresight competitive equilibrium and ii the pareto optimality of any such equilibrium the monetary system studied has some of the features of a commodity money system with a large seignorage spread between bid and ask prices one crucial feature of the system is that the government by taxing stands ready at any time to convert its outstanding liabilities into the commodity at an announced price in an important sense the hybrid scheme is a mixture of a fixed supply fiat scheme and a pure tax transfer scheme a social security scheme it makes some use of market pricing of net government indebtedness and some use of taxes and transfers its one advantage vis a vis the fixed supply fiat scheme is that any equilibrium under the hybrid scheme is pareto optimal for the fixed supply fiat scheme one can at best demonstrate that there exists an optimal equilibrium it is well known that there can exist nonoptimal equilibria under that scheme the presumed advantage of the hybrid scheme vis a vis the pure tax transfer scheme is its lesser use of taxes and transfers i say presumed because the framework i set out is not rich enough to imply that less use of taxes and transfers is preferable to more use of taxes and transfers

testing a theoretical model of mortgage demand on uk data mortgage demand is a poorly understood and under researched aspect of the financial behaviour of households this paper tests empirically the basic results of brueckner s model of mortgage demand on uk mortgage market data the choice of mortgage instrument is used to identify impatient debt maximizers and patient borrowers who borrow at intermediate levels thus the research confirms the conditions under which households will use the largest possible mortgage and the circumstances under which savings are invested in the property a unique contribution of the work is the estimation of mortgage demand equations corrected for endogenous housing demand for a single housing finance system where borrowers face different opportunity costs of equity in their owner occupied property allowing a purer test of the theoretical model

sticky price models of the business cycle can the contract multiplier solve the persistence problem we construct a quantitative equilibrium model with firms setting prices in a staggered fashion and use it to ask whether monetary shocks can generate business cycle fluctuations these fluctuations include persistent movements in output along with the other defining features of business cycles like volatile investment and smooth consumption we assume that prices are exogenously sticky for a short time persistent output fluctuations require endogenous price stickiness in the sense that firms choose not to change prices much when they can do so we find that for a wide range of parameter values the amount of endogenous stickiness is small thus we find that in a standard quantitative model staggered price setting alone does not generate business cycle fluctuations

an economic analysis of interest rate swaps interest rate swaps a financial innovation in recent years are based upon the principle of comparative advantage an interest rate swap is a useful tool for active liability management and for hedging against interest rate risk the purpose of this paper is to provide a simple economic analysis of interest rate swaps alternative uses of and the appropriate valuation procedure for interest rate swaps are described the significant increase in both the levels and the volatilities of market interest rates since the late 70 s has resulted in substantially higher interest rate risks faced by business firms and financial institutions the problem and consequences of interest rate risk exposure are particularly serious for firms in which the duration of assets does not match the duration of the liabilities for instance most financial institutions and many corporations financed long term fixed rate assets with short term floating rate liabilities such firms lose when the shortterm interest rates in the market rise unexpectedly because for given fixed rates of return on their assets the short term interest costs that they have to pay rise with the market interest rates conversely these firms gain from an unexpected decline in short term market interest rates in recent years the introduction and the development of new financial products in the capital markets such as interest rate futures interest rate options and interest rate swaps represent logical responses to the increased need to reduce firms exposure to interest rate risk

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

a structural model of the demand for owner occupied housing abstract the goal of the analysis in this paper is to estimate a structural model of the demand for owner occupied housing in our framework the buyer selects the value of the house the size of the mortgage and the length of stay in the house we estimate a housing demand equation which includes both the length of stay and the loan to value ratio as endogenous variables one empirical result of interest is that the income elasticity of demand for housing found in the structural housing demand equation is much larger than the value estimated in the reduced form we also point out some occasions when it is important to distinguish between a reduced form and a structural model of housing choices

an econometric analysis of choice of mortgage design in the united kingdom the research seks to better understand the choice of mortgage design by households in the united kingdom family expenditures survey data is used to test the various hypotheses on the determinants of the choice between an endowment and a repayment mortgage a bivariate probit model with sample selection is estimated to detect any likely selectivity bias arising out of tenure choice the theoretical modelling reflects the behaviour of liquidity constrained households comparing comparative periodic mortgage costs and households concerned with the oppurtunity cost of equity in a property actual choices appear to reflect the impact of nominal interest rates income and cash flow considerations there is little direct evidence that the choice of mortgage repayment vehicle is motivated by portfolio design there is some tentative evidence of supply side pressure on endowment mortgage take up

hedging the risks from writing foreign currency options abstract this paper considers the ways in which banks and other financial institutions can hedge their risks when they write non exchange traded foreign currency options key factors affecting the performance of delta hedging are identified and hedging schemes involving the use of exchange traded options are analyzed the schemes are tested using both simulated data and data from trades on the philadelphia exchange between february 1983 and september 1984

cross hedging foreign currency risk abstract this paper provides empirical evidence on the effectiveness of cross hedging to reduce foreign exchange risk simple cross hedges for currencies with and without futures contracts multiple cross hedges portfolio hedges and commodity cross hedges are examined cross hedges are found to be less effective than traditional similar asset hedges in some instances inter temporal instability causes hedged positions to be riskier than unhedged ones although on the whole cross hedging is shown to be a useful risk reduction technique

the regional economic impacts of biofuels a review of multisectoral modelling techniques and evaluation of applications allan g j the regional economic impacts of biofuels a review of multisectoral modelling techniques and evaluation of applications regional studies the regional economic impact of biofuel production depends upon a number of interrelated factors the specific biofuels feedstock and production technology employed the sector s embeddedness in the rest of the economy through its demand for local resources and the extent to which new activity is created these issues can be analysed using multisectoral economic models some studies use input output io and social accounting matrix sam modelling frameworks whilst a nascent computable general equilibrium cge literature has begun to examine the regional impact of biofuel development this paper reviews compares and evaluates these approaches for modelling the regional economic impacts of biofuels

sectoral variability and the foundations of optimal inflation rate abstractthe recent monetary search models argue that the real effects of inflation on economic activity can be gauged through relative price variability rpv our study uses a large panel data of

to reduce energy consumption and to maintain rapid economic growth analysis of the condition in china based on expended ipat model abstract as one of the important driving forces of world economic development china s rapid economic growth has not only supplied the world with a large number of manufactured goods but also caused china s sustained and rapid increase in energy consumption because of the characteristics of china s economic development and overall low productivity derive from them in many years according to the ipat model and its expansion this article figures out china s indicators of economic growth and changes in energy consumption brought by technological progress since 1986 empirical results show that despite many years efforts china s high speed economic growth is still largely dependent on massive energy consumption how to maintain rapid economic growth while reducing energy consumption china has faced the very problem it needs to address

why did china s energy intensity increase during 1998 2006 decomposition and policy analysis abstract despite the fact that china s energy intensity has continuously decreased during the 1980s and mostly 1990s the decreasing trend has reversed since 1998 and the past few years have witnessed rapid increase in china s energy intensity we firstly conduct an index decomposition analysis to identify the key forces behind the increase it is found that 1 the high energy demand in industrial sectors is mainly attributed to expansion of production scale especially in energy intensive industries 2 energy saving mainly comes from efficiency improvement with energy intensive sectors making the largest contribution and 3 a heavier industrial structure also contributes to the increase this study also makes the first attempt to bridge the quantitative decomposition analysis with qualitative policy analyses and fill the gap between decomposition results and policy relevance in previous work we argue that 1 energy efficiency improvement in energy intensive sectors is mainly due to the industrial policies that have been implemented in the past few years 2 low energy prices have directly contributed to high industrial energy consumption and indirectly to the heavy industrial structure we provide policy suggestions in the end

price level determinacy with an interest rate policy rule and rational expectations abstract this paper reconsiders a result obtained by sargent and wallace namely that price level indeterminacy obtains in their model if the monetary authorities adopt a feedback rule for the interest rate rather than the money stock it is shown that the indeterminacy vanishes if the interest rate rule is chosen so as to have a desired effect on the expected quantity of money demanded this holds even if considerable weight is given in the choice of a rule to the aim of smoothing interest rate fluctuations

a review of monetary policy rules this article reviews monetary policy rules edited by john taylor the book evaluates the taylor rule a policy rule that specifies changes in the central bank s interest rate according to what is happening to two variables real output and inflation questions are raised about a how well the models fit the data b the validity of the assumption that there has been clear improvement in monetary policy and c the rule s microfoundations

escaping nash inflation an ordinary differential equation ode gives the mean dynamics that govern the convergence to self confirming equilibria of self referential systems under discounted least squares learning another ode governs escape dynamics that recurrently propel away from a self confirming equilibrium in a model with a unique self confirming equilibrium the escape dynamics make the government discover too strong a version of the natural rate hypothesis the escape route dynamics cause recurrent outcomes close to the ramsey commitment inflation rate in a model with an adaptive government

federal reserve information and the behavior of interest rates this paper tests for the existence of asymmetric information between the federal reserve and the public by examining federal reserve and commercial inflation forecasts it demonstrates that the federal reserve has considerable information about inflation beyond what is known to commercial forecasters it also shows that monetary policy actions provide signals of the federal reserve s information and that commercial forecasters modify their forecasts in response to those signals these findings may explain why long term interest rates typically rise in response to shifts to tighter monetary policy jel e52 e43 d82 asymmetric information between the federal reserve and the public is a phenomenon that is often posited but rarely tested numerous models of central bank behavior for example show that the existence of asymmetric information has important implications for the effectiveness of policy and the consequences of dynamic inconsistency yet there

barriers and opportunities of using the clean development mechanism to advance renewable energy development in china studying the barriers and opportunities of using clean development mechanism cdm to advance renewable energy deployment in china has a practical significance to achieve its ambitious renewable energy plan which affects the global efforts to curb carbon emission this paper analyses the role of cdm in promoting renewable energy development in china by reviewing the cdm activities especially renewable energy cdm activities in china there are three barriers to utilizing cdm for renewable energy deployment namely the dilemma of additionality lower proportional certified emission reduction credit revenues on the investment and the lack of incentive for technology transfer whereas the opportunities of using cdm in promoting renewable energy development include the international carbon market redirection to renewable energy chinese renewable energy boom driven by a series of effective energy policies and additional finance from cdm supporting chinese renewable energy development based on the study on the barriers and opportunities the article considers that cdm is an indispensable incentive and a viable choice to promote renewable energy deployment in china crown copyright c 2010 published by elsevier ltd all rights reserved

land tenure and property rights theory and implications for development policy this article explores the nature of property rights systems their evolution and their effect on resource allocation it is argued that certain institutional arrangements for land rights have evolved in order to reduce uncertainty and increase efficiency in credit as well as in land markets of particular relevance to developing countries the article emphasizes the contribution of public sector infrastructure to effective land rights systems an appendix to the article presents a formal model analyzing the effects of security of land rights on land prices the intensity of cultivation and the use of credit empirical evidence from thailand supports several of the propositions derived from the model

housing appreciation mortgage interest rates and homeowner mobility abstract this paper presents a model of the optimal timing of tradeup which considers consumption and investment motives of homeownership households determine the optimal timing of trading up so as to maximize their intertemporal utility of both housing and nonhousing consumption first we consider current homeowners who already own a house and expect that they trade up to a more valuable house at some point in the future housing appreciation tends to induce an earlier optimal timing of trading up moreover housing appreciation makes current homeowners better off in terms of welfare however current homeowners suffer from a rise in mortgage interest rates second we consider first time home buyers who have decided to buy a house and expect to trade up to a more valuable house in the future their initial housing consumption is determined by an initial downpayment constraint in this case the effect of housing appreciation on the optimal timing of trading up is ambiguous and unlike current homeowners first time home buyers suffer from housing appreciation moreover as current homeowners first time home buyers suffer from a rise in mortgage interest rates most of the theoretical analytic results are ambiguous accordingly we perform numerical simulations based on the theoretical model in order to determine the most likely comparative effects for a stylized set of parameters as is apparent the model captures the recent observations on homewner mobility and suggests that macroeconomic variables such as housing appreciation and mortgage interest rates effect the optimal timing of trading up and homeowner s welfare nevertheless the model in this paper has several shortcomings which should be the subject of future research first transaction costs are ignored if transaction costs are incorporated the lock in effect from a rise in mortgage interest rates is well explained however the general analysis above is not altered in any essential way second multiple moves are not considered in this model therefore we concentrate on the timing of one tradeup as opposed to the timing and frequency of trading up in a different vein it would be interesting to test empirically the importance of the effects of macroeconomic variables on trading up by using microdata

international coordination of fiscal policy in limiting economies we examine the limiting behavior of cooperative and noncooperative fiscal policies as countries market power goes to zero we show that these policies converge if countries raise revenues through lump sum taxation however if there are unremovable domestic distortions such as distorting taxes there can be gains to coordination even when a single country s policy cannot affect world prices these results differ from the received wisdom in the optimal tariff literature the key distinction is that contrary to the tariff literature the spending decisions of governments are explicitly modeled

the theory of collateral abstract this paper develops a model of the loan market noting interrelationships between size of loan collateral arrangements interest rate maturity and repayment schedule collateral quality is explored

assessing co2 emissions in china s commercial sector determinants and reduction strategies abstract the commercial sector is one of the key sectors in china s economic transformation and carbon emissions control this paper applies var and stirpat models to investigate the major influencing factors of co 2 emissions in china s commercial sector over the period 1980 2014 according to the empirical results per capita gdp urbanization and energy structure have positive effects on co 2 emissions while energy intensity has negative effect on co 2 emissions in the long term besides per capita gdp ranks as the most important driving factors of co 2 in china s commercial sector followed by urbanization energy structure and energy intensity in that order this paper argues that reducing energy intensity and improving energy structure are the means to realize co 2 emission reductions in the commercial sector in the short and long term respectively besides this paper forecasts that co 2 emissions in china s commercial sector will be 1942 mt by 2030 which is huge and about half of the co 2 emissions of the european union in 2014 the findings have important implications for policy makers to enact co 2 emission reduction policies

christopher a sims and vector autoregressions three decades ago christopher a sims suggested that vector autoregressions vars are useful statistical devices for evaluating alternative macroeconomic models his suggestion has stood the test of time well in the early days vars played an important role in the evaluation of alternative models they continue to play that role today

exploiting the medium term biomass energy potentials in austria a comparison of costs and macroeconomic impact the transition to an implicitly solar basedenergy system can make use of various specificbiomass energy systems this paper provideseconomic and environmental indicators forevaluating alternative options the paper proceeds in three empirical steps first an expert survey supplies the primarybiomass potentials available for non food usein austria and their respective costs second an inquiry into investment operating andfinancing costs of 30 different biomass energyuse systems allows a standardized comparisonamong them and their relationship to fossilreference technologies third a computablegeneral equilibrium model of the austrianeconomy is employed to quantify the impacts offostering the use of distinct biomass energytechnologies the results allow us to distinguish betweenthose technologies that tend to lead to anincrease in both gdp and employment e g combined heat and power production from sewagesludge biogas to an increase only inemployment while gdp tends to diminish e g district heating based on agricultural pellets or to a decline in both e g co firing basedon wood chips bark or industrial pellets individual technologies could account for up toone third of austrias kyoto obligation whilecombinations of technologies triggered by acombined co2 tax and biomass energysubsidy for example could almost fully lead toaustrian kyoto compliance

choice of mortgage instrument liquidity constraints and the demand for housing debt in the uk the research uses microdata to estimate reduced form mortgage demand equations based on truncated regressions dissagregated by choice of mortgage instrument the choice is between a standard annuity mortgage and a balloon type mortgage the endowment the estimates are used to indicate the differential impact of credit market rationing and financial liberalization on households the results indicate significant variations in mortgage demand by choice of mortgage instrument econometric testing demonstrates that the choice between an endowment and a repayment mortgage can be used as an exogenous indicator of liquidity and portfolio positions and different user costs of owner occupation

money and interest in a cash in advance economy the authors analyze an aggregative general equilibrium model in which the use of money is motivated by a cash in advance constraint applied to purchases of a subset of consumption goods the system is subject to both real and monetary shocks which are economy wide and observed by all they develop methods for verifying the existence of characterizing and explicitly calculating equilibria copyright 1987 by the econometric society

regional differences in mortgage demand and mortgage instrument choice in the uk koblyakova a hutchison n and tiwari p regional differences in mortgage demand and mortgage instrument choice in the uk regional studies this paper presents empirical evidence of regional variations in mortgage choice decisions within the uk s mortgage sector utilizing british household panel survey bhps data for the years 2001 2007 and 2008 the paper suggests that a household s decision to choose a variable rate mortgage is more likely to occur in areas with lower incomes and affordability rates such as northern england scotland and wales since variable rate mortgages are more sensitive to income and monetary policy shocks the disproportional distribution of variable contracts within the mortgage sector may have a differential impact on the regions

a review of interest and prices foundations of a theory of monetary policy by michael woodford this is a review article of interests and prices foundations of a theory of monetary policy princeton university press 2003 by michael woodford

woody biomass processing potential economic impacts on rural regions abstract this paper estimates the economic and environmental impacts of introducing woody biomass processing wbp into a rural area in central appalachia wbp is among the most promising additions to energy generation portfolios for reducing import dependency while at the same time providing economic opportunity to stimulate regional economies especially in rural regions where economic development options are often limited we use an input output framework to assess wbp under three different pathways fast pyrolysis ethanol and coal biomass to liquids we find that the proposed wbp will increase regional output by 0 5 1 3 of gross regional product it will increase income by 17 32 to 51 31 million dollars each year and regional employment by 218 1 1127 8 jobs depending on the chosen pathway of these impacts the direct portions are 63 77 of the total impact depending on the chosen pathway the economic analysis and the results from the accompanying environmental assessment show that only the ethanol pathway has both economic and environmental benefits we conclude that because long run economic development strategies in rural regions are limited and negative impacts do not alter dramatically the regional environmental profile regional policymakers should include wbp among their development portfolio options

collateral guaranties and rural credit in developing countries evidence from asia abstract the paper reviews the theory of the impact of loan collateral and in particular land collateral in institutional and non institutional rural credit markets evidence from three asian developing countries is presented showing extensive use of land collateral among institutional lenders in countries where such collateral is legal the use of land collateral is more common than other forms of security except in places where legal inhibitions on mortgaging agricultural land exist non institutional lenders are less inclined to use land collateral however lenders who do not have links to borrowers in matters other than finance are more likely to use loan securities estimates of instutional credit supply and demand in rural thailand confirm that the pledging of land collateral affects the supply of credit more than group guaranty it is also shown that larger farmers are more likely to utilize land collateral the conclusion is that land collateral is preferred by institutional lenders as it reduces creditworthiness assessment costs attempts to ban or limit collateral use by decree are motivated by equity cinsiderations but they will cause loss of efficiency simplification of ownership verification and other policies reducing the transaction cost of collateral pledging will mitigate the negative equity implications of collateral

energy consumption in china past trends and future directions abstract in 2003 china s energy consumption amounted to 1678 million tonnes coal equivalent mtce making china the world s second largest consumer behind only the united states china is now also one of the largest oil importers in the world with an economy that is expected to maintain a rate of growth of 7 8 for decades china s role in the world energy market becomes increasingly influential this makes it important to predict china s future demand for energy the objective of this paper is to apply the bayesian vector autoregressive methodology to forecast china s energy consumption and to discuss potential implications the results of this paper suggest that total energy consumption should increase to 2173 mtce in 2010 an annual growth rate of 3 8 which is slightly slower than the average rate in the past decade the slower growth reflects expected slower economic growth and a decline in energy consumption due to structural changes in the chinese economy

green accounting for greener energy abstract the first step towards the widespread use of renewable energy sources and preservation of our environment for the people of the future is to adopt the green accounting standards that translate socially and environmentally responsible behavior into monetary terms the only language businesses understand these standards have the potential of switching on the red light for all pollution causing power plants and those depleting the natural capital in any way be it over harvesting the forests or exhausting the underground treasures coal oil natural gas etc this paper will show how green accounting can help in changing the focus from the economic welfare to the total societal welfare acknowledging the fact that human society is an integral part of the natural world the paper will also briefly present the software developed by the authors that introduce the green accounting principles into the investment appraisal process aiming at encouraging investments into renewable energy the tool is also useful as a platform facilitating calibration of economic financial instruments like environmental taxes of governmental incentives that are usually to boost renewable energy sector the comparative analysis of investment into biofuel powered combined heat and power production plant using two types of investment valuation standards one based on conventional cash flow analysis the other based on green accounting standards is detailed in the paper the analysis is performed as a part of the european commission framework program project aftur undertaken by the consortium consisting of respectful european research establishments in renewable energy area as well as major european biofuel powered turbine producers the results show that the wider adoption of green accounting standards would induce the unprecedented growth of the renewable energy sector because it would make the investment into renewable energy attractive for investors

a model of imperfect competition with keynesian features the recent literature on the reappraisal of keynes has viewed keynesian equilibria as arising when prices are fixed and effective demands and supplies are equilibrated through the adjustment of quantities one problem with this approach is that it lacks a theory of price determination in particular of why prices are fixed in the present paper we show that a number of keynesian features arise in a model in which prices are fully flexible but where agents have some monopoly power one advantage of this approach is that it provides a theory of the determination of both prices and quantities

evidence on the role of cash flow for investment abstract recent work in macroeconomics argues that imperfections in capital markets may lead to business cycle fluctuations by propagating relatively modest shocks evidence for such a mechanism also known as the financial accelerator consists largely of firm level studies showing that cash flow is an important predictor of investment but this evidence is often viewed with skepticism because cash flow is also a good indicator of investment opportunities in this paper we develop a framework for estimating the extent to which the predictive power of cash flow can be attributed to its role as a fundamental versus its role in alleviating credit frictions for firms with access to commercial paper and bond markets we find that the perfect capital markets model of investment can fully account for the role of cash flow for firms with only limited access to capital markets as indicated by lack of participation in public debt markets however investment appears to be excessively sensitive to fluctuations in cash flow these results thus clarify the role of cash flow in investment equations and provide support for the existence of a financial accelerator

cost effective policy instruments for greenhouse gas emission reduction and fossil fuel substitution through bioenergy production in austria abstract climate change mitigation and security of energy supply are important targets of austrian energy policy bioenergy production based on resources from agriculture and forestry is an important option for attaining these targets to increase the share of bioenergy in the energy supply supporting policy instruments are necessary the cost effectiveness of these instruments in attaining policy targets depends on the availability of bioenergy technologies advanced technologies such as second generation biofuels biomass gasification for power production and bioenergy with carbon capture and storage beccs will likely change the performance of policy instruments this article assesses the cost effectiveness of energy policy instruments considering new bioenergy technologies for the year 2030 with respect to greenhouse gas emission ghg reduction and fossil fuel substitution instruments that directly subsidize bioenergy are compared with instruments that aim at reducing ghg emissions a spatially explicit modeling approach is used to account for biomass supply and energy distribution costs in austria results indicate that a carbon tax performs cost effectively with respect to both policy targets if beccs is not available however the availability of beccs creates a trade off between ghg emission reduction and fossil fuel substitution biofuel blending obligations are costly in terms of attaining the policy targets

land ownership security and farm investment reply we agree with many of the general points included in the comment by roth barrows carter and kanel rbck but we disagree with rbck on the applicability of their general points to the specific case of thailand which was the topic of our may 1987 article 1 we agree that title does not necessarily imply land ownership security however in the areas of thailand which we have studied the possession or lack of title captures the essence of the difference in ownership security between squatters and legally settled farmers because a there are no other major systematic differences between the squatters and nonsquatters and b practically all of the onsquatters have title to at least part of their legally possessed land and none of the squatters have or can have title to their encroached state land other factors which may affect individual perceptions of ownership security and mentioned by rbck e g wealth land quality market access were incorporated in our econometric work these variables do not vary systematically between squatters and nonsquatters in our study areas our definition of ownership security includes the right to use land as collateral thereby obtaining better access to credit in rbck s terminology this is a broader definition of tenure security the apparent dominance of credit advantages associated with the possession of title in our study areas which we pointed out p 320 is thus compatible with this definition of ownership security because title properly summarizes the difference between squatters and nonsquatters in our case study the presentation in fo which implies a straightforward link between title and ownership security is warranted for the thai case we argue further that there are sufficient cases worldwide where lack of title impairs ownership security broadly defined thus our case is interesting in a general context the qualifications in rbck notwithstanding the characterization of the credit market in rbck is apparently based on the model described by carter this is not a general model of credit supply because it introduces limiting behavioral assumptions one particular specification in that model renders it unsuitable for our discussion it is assumed there that loan amount is fixed a priori i e it is not a decision variable for the lender the model does not deal explicitly with the determination of the aggregate supply of credit to agriculture the statement in rbck that the pledging of collateral only determines a potential borrower s place in the queue of borrowers depends on the above assumption of the carter model the more general case where loan amount is one of the lender s decision variables e g barro plaut yields the result that the amount of credit offered to an individual borrower increases with the value of the collateral especially when the interest rate is fixed furthermore it is not reasonable to assume that the aggregate supply of credit to agriculture is given and will not be affected by the acquisition and offering of collateral assets titled land by a large group of potential borrowers the more general case which underlies our discussion is that the amount of credit an individual will get when providing collateral will be higher than that which he or she will get when not providing collateral 2 furthermore when more farmers provide collateral more credit in the aggregate will be supplied to agriculture either by shifts from other sectors and or through the generation of additional loanable funds it is true that we estimate the impact of titles using a cross sectional approach we have stated elsewhere feder et al p 193 that the applicability of cross sectional numerical results in the aggregate assumes that newly titled farmers receive the same amount of credit as presently titled farmers in fo p 320 we stated clearly that an increased supply of institutional credit to agriculture is required to realize the productivity gains from titling squatters we point out in feder et al pp 200 203 that a market induced increase in the aggregate supply of credit to agriculture is likely because it is observed that a majority of commercial bank loans to farmers in thailand were backed by collateral this may need to be accompanied by policy induced credit shifts given existing government interventions in the credit market the assertions in rbck that no change will occur in the aggregate supply of credit following titling and that the aggregate impact of titles on investment was small are based on an gershon feder is a senior economist at the world bank tongroj onchan is an associate professor of agricultural economics at kasetsart university bangkok thailand in an empirical journal article one focuses on specifics only limited space is available for elaboration on the various qualifications and generalizations which cover all possible scenarios we have provided a more detailed and general discussion in a book manuscript which is available to interested readers feder et al 2 this proposition is supported by the empirical findings in feder et al where the credit supply function estimated from a sample of borrowers is shown to be positively and significantly dependent on the provision of collateral

regional economic impacts of biomass based energy service use a comparison across crops and technologies for east styria austria abstract biomass action plans in many european countries seek to expand biomass heat and fuel supply mainly to be supplied by peripheral agricultural regions we develop a two plus ten region energy focused computable general equilibrium cge model that acknowledges land competition in analysing the sub state local regional economic implications of such a strategy embedded within a global context our model is based on a full cost analysis of selected biomass technologies covering a range of agricultural and forestry crops as well as thermal insulation the local regional macroeconomic effects differ significantly across technologies and are governed by factors such as net labour intensity in crop production the high land intensity of agricultural biomass products crowds out conventional agriculture and thus lowers employment and drives up land prices and the consumer price index the regional economic results show that net employment effects are positive for all forestry based biomass energy and also show for which agriculture based biomass systems this is true even when accounting for land competition when regional consumer price development governs regional wages or when the agricultural sector is in strong enough competition to the international market positive employment and welfare impacts vanish fully for agriculture based bio energy

the impacts of the german biofuel quota on sectoral domestic production and imports of the german economy abstract this study analyses the impacts of the german biofuel quota on sectoral domestic production and imports of the german economy the effects are calculated as net effects i e accounting for the direct and indirect effects of both the additional demand for biofuels and the reduced demand for fossil fuels the analysis uses an input output model and information on quantities production processes import quotas etc to calculate the impacts for the agricultural sector which is obviously of high relevance for biofuel production two cases are differentiated first and in line with classical input output assumptions we propose that agricultural production is not constrained by the availability of agricultural land thus biofuel production is basically added to other agricultural outputs in the second case agricultural land is considered a limiting factor for production as a consequence biofuel production substitutes other agricultural outputs the results indicate a clear increase of domestic production and a decline of net imports in the first case in the second case gains in domestic production are smaller and net imports are in contrast to the first case increasing

evaluating the relationships among economic growth energy consumption air emissions and air environmental protection investment in china abstract this paper analyzed the interactions among china s economic growth and its energy consumption air emissions and air environmental protection investment during 2000 2007 conventional energy and emergy are applied to quantify energy consumption and emissions impact respectively the five indicators based on money energy and emergy including ratio of nonrenewable energy to renewable energy rnr energy use per unit gdp eupg environmental cost per unit gdp ecpg impact of emissions per unit energy consumption iepec and environmental benefit per unit environmental protection investment ebpei are presented to depict the relationships among economic growth and energy consumption and impact of air emissions and air environmental protection investment the results show that energy consumption rapidly rises with china s fast economic growth however energy efficiency and environmental loading intensity from energy consumption are reduced simultaneously but their improvements fall far behind economic growth rate impact of air emissions mainly composed of impact of emissions on human health especially dust is slightly decreased the performance of air environmental protection investment is obviously declined in the study period generally speaking the conflict among economy energy and air environment protection is slightly mitigated but still acute due to great dependence of china s economy on fossil energy and inefficient environmental protection measures finally this paper discusses the corresponding issues and then puts forward some related suggestions

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

the political economy of productivity thai agricultural development 1880 1975 the economic history of thailand between 1880 and 1975 contrasts sharply with the development experiences of other third world countries between the opening of trade in 1850 and 1941 when war halted economic activity thailand became a major exporter of rice in the world market although conditions for further growth seemed highly favourable thailand s rapid integration into the world economy failed to improve living standards and rice yields actually declined in examining the causes of the underdevelopment of thai agriculture over the last 100 years feeny introduces supply and demand models of technical and institutional change to analyse why the rice export boom did not result in more development this book much of which is based on primary research in the thai national archives is one of the few quantitative economic histories of a less developed country

central bank reputation in a forward looking model this paper examines whether reputation concerns can induce the central bank to implement the time inconsistent optimal monetary policy in the standard new keynesian model interestingly the forward looking nature of this model enables us to account for the coordination of the private agents on the punishment length of their trigger strategy our results suggest that both the inflation bias and the stabilization bias can be overcome by a reputation concerned central bank for the calibrations used in the literature these results enable us to endogenize woodford s timeless perspective and tend to weaken the case for recent monetary policy delegation proposals

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

household energy choices and fuelwood consumption an econometric approach using french data this study proposes an econometric analysis of household fuelwood demand in france the choice concerning the energy used for heating is modeled stressing the combination between one type of energy used as a main source and another one used as a back up this endogenous decision has an impact on fuelwood consumption and is taken into account to avoid biased estimates of price and income elasticities the results show that the choice of energy mix is determined by the income and the socio economic characteristics of households and that fuelwood consumption is price sensitive in the case where wood is the main source of energy

state dependent pricing and the general equilibrium dynamics of money and output economists have long suggested that nominal product prices are changed infrequently because of fixed costs in such a setting optimal price adjustment should depend on the state of the economy yet while widely discussed statedependent pricing has proved difficult to incorporate into macroeconomic models this paper develops a new tractable theoretical state dependent pricing framework we use it to study how optimal pricing depends on the persistence of monetary shocks the elasticities of labor supply and goods demand and the interest sensitivity of money demand

geographical and environmental perspectives for the sustainable development of renewable energy in urbanizing china with rapid urbanization and industrialization china has become both the largest energy consumer and co2 emitting country in the world as a clean and low carbon energy source renewable energy is a good choice to substitute for the exhausted fossil energy the chinese central and local governments have made a series of policies and optimistic plans to promote a rapid development of renewable energies china s renewable energy development has become a key to the sustainable development of socioeconomic system unlike most of the current studies which mainly identified the challenges regarding policies and technologies around renewable energy or performed specific analyses for a certain kind of renewable energy this paper summarizes the spatial disparity and consistency among the major renewable energies coal resources energy consumption and its major influencing factors in china and reviews the positive and negative environmental impacts of major renewable energies based on the geographical and environmental perspectives this paper recommends that the chinese government constructs the national energy production bases according to the resource distribution integrates different energies on the basis of their natural features and spatial consistency adjusts the overall layout of socio economic development consistent with renewable energies and promotes a moderate renewable energy development to maximize the environmental benefits c 2013 elsevier ltd all rights reserved

reducing co2 emissions under fiscal retrenchment a multi cohort cge model for austria the stabilization of budget deficit and budget debt ratios by fiscal retrenchment in order to fulfill the maastricht criteria for the emu is of central focus in most eu countries at the same time the national policy dimension of acute environmental problems such as global warming has receded in the public eye the environmental dimension nonetheless remains urgent and a re evaluation of the prospects of co2 policy is needed against the background of fiscal retrenchment required by supranational obligations we shall do this for the small open austrian economy by constructing a dynamic multi cohort cge model enabling us to assess quantitatively the lifetime welfare impacts on the cohorts affected by three different options for using co2 permit revenues the distribution of welfare costs of toronto co2 policy across cohorts significantly differs with use this is explained by income inheritance and price effects

energy consumption and economic growth evidence from china at both aggregated and disaggregated levels using a neo classical aggregate production model where capital labor and energy are treated as separate inputs this paper tests for the existence and direction of causality between output growth and energy use in china at both aggregated total energy and disaggregated levels as coal oil and electricity consumption using the johansen cointegration technique the empirical findings indicate that there exists long run cointegration among output labor capital and energy use in china at both aggregated and all three disaggregated levels then using a vec specification the short run dynamics of the interested variables are tested indicating that there exists granger causality running from electricity and oil consumption to gdp but does not exist granger causality running from coal and total energy consumption to gdp on the other hand short run granger causality exists from gdp to total energy coal and oil consumption but does not exist from gdp to electricity consumption we thus propose policy suggestions to solve the energy and sustainable development dilemma in china as enhancing energy supply security and guaranteeing energy supply especially in the short run to provide adequate electric power supply and set up national strategic oil reserve enhancing energy efficiency to save energy diversifying energy sources energetically exploiting renewable energy and drawing out corresponding policies and measures and finally in the long run transforming development pattern and cut reliance on resource and energy dependent industries

equilibrium credit rationing of small farm agriculture it is often argued that externally imposed contractual restrictions lead to inequitable credit rationing this paper argues that unrestricted laissez faire markets may also inequitably ration credit a formal model which grants borrowers autonomy in credit application and use demonstrates that adverse incentive and selection effects may cause banks to endogenously impose interest rate restrictions and ration small farms out of the credit market consequently liberalization of financial markets may be insufficient to guarantee small farms access to credit