anticipated monetary policy in canada some new evidence abstract in this note i examine the policy ineffectiveness proposition for canada using monthly income data due to milbourne et al 1988 i find that anticipated monetary policy altered the evolution of real output in canada recent work by ambler and phaneuf 1988 can be used to attribute this result to a purely new keynesian model of the business cycle although this inference is found to be fragile with respect to the choice of the level of significance used in the hypothesis tests

brazilian energy efficiency and energy substitution a road to cleaner national energy system abstract recognizing the need to increase energy efficiency across various sectors of the economy the brazilian government through the national energy efficiency plan adopted in 2011 seeks to avoid 30 million tons of co2 emissions through a reduction in electricity consumption of about 10 by 2030 notwithstanding we believe that a complete realization of such initiative will be dependent on the level of substitutability between different production factors and fuel types using the translog production function method this paper first provides insight on the economic impact of both factor and fuel inputs in brazil most importantly we examine the possibility of substitution among capital labor petroleum and electricity the ridge regression technique was used to estimate the parameters after our data depicted the existence of multicollinearity our results show that capital and labor are positively linked to output however petroleum and electricity contribute negatively to economic output in brazil of which corruption is a plausible reason again all variable inputs are substitutes with their relative technological progress depicting features of convergence this implies that brazil can achieve a cleaner energy system without much challenges due to the possibility of switching from greenhouse gas ghg emitting petroleum to a cleaner energy electricity our findings also highlight the importance of policies that advance merger of enterprises and renewable energy use

central bank design abstract starting with a blank slate how could one design the institutions of a central bank for the united states this paper explores the question of how to design a central bank drawing on the relevant economic literature and historical experiences while staying free from concerns about how the fed got to be what it is today or the short term political constraints it has faced at various times the goal is to provide an opinionated overview that puts forward the trade offs associated with different choices and identifies areas where there are clear messages about optimal central bank design

a public firm in a model of spatial duopoly with price discrimination we visit the role of privatization in the location decision of firms in an industry where no firm can produce all varieties demanded we demonstrate that the nash equilibrium locations are socially optimal in the presence of a publicly owned firm notwithstanding the degree of privatization

allocative inefficiency and the capital energy controversy abstract the purpose of the paper is to estimate a system of input demands for greek manufacturing deviating from the standard practice of assuming strict cost minimization the study allows for the presence of price distortions and allocative inefficiency in the decision process this assumption affects parameter estimates and estimated elasticities materially and throws new light on the capital energy controversy in greek manufacturing

equilibrium in hotelling s model of spatial competition we study hotelling s two stage model of spatial competition in which two firms first simultaneously choose locations in the unit interval then simultaneously choose prices under hotelling s assumptions uniform distribution of consumers travel cost proportional to distance inelastic demand of one unit by each consumer the price setting subgames possess equilibria in pure strategies for only a limited set of location pairs because of this problem pointed out independently by vickrey 1964 and d aspremont et al 1979 hotelling s claim that there is an equilibrium of the two stage game in which the firms locate close to each other is incorrect a result of dasgupta and maskin 1986 guarantees that each price setting subgame has an equilibrium in mixed strategies we first study these mixed strategy equilibria we are unable to provide a complete characterization of them although we show that for a subset of location pairs all equilibria are of a certain type we reduce the problem of finding an equilibrium of this type to that of solving three or fewer highly nonlinear equations at each of a large number of location pairs we have computed approximate solutions to the system of equations next we use our analytical results and computations to study the equilibrium location choices of the firms there is a unique up to symmetry subgame perfect equilibrium in which the location choices of the firms are pure in it the firms locate 0 27 from the ends of the market at this equilibrium the support of the subgame equilibrium price strategy is the union of two short intervals most of the probability weight is in the upper interval so that this strategy is reminiscent of occasional sales by the firms we also find a subgame perfect equilibrium in which each firm uses a mixed strategy in locations in fact in the class of strategy pairs in which the firms use the same mixed strategy over locations and this strategy is symmetric about 0 5 there is a single equilibrium in this equilibrium most of the probability weight of the common strategy is between 0 2 and 0 4 and between 0 6 and 0 8 there is a wide range of pure nash as opposed to subgame perfect equilibrium location pairs the subgame strategies in which each firm threatens to charge a price of zero in response to a deviation support all but those location pairs in which the firms are very close

industrial energy substitution during the 1980s in the greek economy abstract factor substitution in greek manufacturing during the 1980s is examined using pooled data in static and dynamic translog expenditure share models inputs are capital labor electricity and non electrical energy liquid solid gas own price elasticities for capital and labor are inelastic but for electricity more elastic 0 90 results indicate substitutability among factors in the short run in the long run electricity and capital are complements as are labor and non electrical energy greek manufacturing is predicted to continue decreased consumption of liquid fuels to the year 2000 continuing the electrification begun in the 1970s

interruptible electric power service contracts abstract a two period model is considered in period 1 the electric power company offers for sale a set of contracts 1 p 1 2 p 2 each consumer must select one contract k and d units of energy for which she pays p k d the company must deliver d units of energy in period 2 with probability k the service may be interrupted with the complementary probability 1 k the problem is to design the optimal set of contracts to maximize social welfare when demand and supply may be random and when customers suffer a welfare loss due to service interruption the best design is shown to be a solution to an optimal control problem the results contrast sharply with previous work on the problem of pricing electric power in the face of random supply or demand

addendum to eleftheriou and michelacakis 2016 abstract following the publication of eleftheriou and michelacakis 2016a it was brought to our attention that the problem identified and corrected in eleftheriou and michelacakis 2016a affects more papers than just the beladi et al 2008 two such instances of published papers that we know of are the beladi et al 2010a and beladi et al 2010b the aim of this short addendum is to warn the reader against the validity of the results in these two papers and perhaps others using the same basic duopoly model as in beladi et al 2008 we look into the origins of the fallacy and make an announcement of corrected versions of some of the affected conclusions referring elsewhere for precise details

the capital energy controversy further results abstract the significance of capital energy k e relationship in manufacturing is important however the available econometric evidence is contradictory in the sense that support can be found for both k e substitutability and k e complementarity moreover the empirical studies are based mainly on production and cost functions few researchers have examined the k e relationship by assuming a profit function approach the objective of this paper is to investigate the k e controversy by estimating both a cost and a profit function the results should provide a better understanding of the relationship between model used and estimated k e elasticities in addition the two models are compared on the basis of their predictive performance

is strike behavior cyclical we examine cyclicality of strike frequency and incidence using canadian data on strikes and contracts total strike frequency exhibits significant procyclicality to which within contract strikes contribute appreciably evidence is weaker for procyclical behavior of contract expiry strikes both in total and disaggregated by issue strike incidence is also procyclical particularly in manufacturing though the procyclicality here is confined to strikes over nonwage issues these results mirror those obtained by analyzing the frequency of strikes in the contract data industry specific cyclical variables positively affect strike incidence in manufacturing but region specific variables have no effect

the european central bank s monetary pillar after the financial crisis abstract we apply a structural topic model stm to analyze european central bank ecb communication regarding the monetary pillar of its monetary policy strategy we do so by quantifying the transcripts of the ecb president s introductory statements at the press conferences that accompany the regular meetings of the ecb governing council our evidence shows that within its monetary pillar the ecb has gradually shifted its focus away from a genuine monetary analysis towards monitoring the stability of the european financial system we go on to augment a standard taylor rule by quantitative indicators obtained from the stm to assess whether the monetary pillar in general and the shift in focus in particular has had a measurable impact on the ecb s monetary policy stance we find that the monetary analysis has had a bearing on the interest rate setting in the early years of the ecb s existence but this influence completely disappears in the latter years of the sample furthermore we find no evidence that financial stability considerations in the ecb communication have influenced interest rate decisions either before or after the financial crisis

ghanaian energy economy inter production factors and energy substitution abstract industries in ghana depend highly on petroleum to fuel their operations which has brought immerse environmental threat from greenhouse emission gas ghg this study tried to investigate potential substitutability of factor inputs and fuel inputs among capital labor petroleum and electricity in ghana by adopting the translog production and cost function approach we used ridge regression technique to estimate the parameters after our data show possibility of multicollinearity our result shows that all inputs are substitutes with their relative technological progress also showing evidence of convergence this suggests that redirecting resources into the improvement of technology towards cleaner energy production like electricity will be a success over time and this will mean that the fueling of the economy will be done in a cleaner environment and mitigating mitigate co2 emissions as well the improvement of electricity production and the promotion of its use require government policies that will enable industries to adjust to the switch from one input to the other through capital subsidies and tax rebates also energy labor and capital energy being substitutes in our findings suggest that removal of all energy subsidies will reduce the use of energy and increase capital and labor intensiveness input switch by industries will promote merger of smaller firms with bigger firms that have cost advantage during the switch period and requires a clear government merger control policies in a nutshell our findings provide an insight into policies to promote the use of renewable energy energy intensity and merger policies

impact of higher energy prices on wage rates return to capital energy intensity and productivity a regional profit specification abstract to take account of the interaction between energy and the aggregate economy a simple neoclassical profit maximizing model is econometrically estimated for the province of ontario canada using this value added specification permits the easy quantification of the impact of higher energy prices on the energy gdp ratio labour productivity and the factor income of labour and capital an empirical evaluation of this profit formulation reveals that rising energy prices have caused all three of these impacts to be depressed significantly particularly in the late 1970s

short run and long run elasticities of import demand for crude oil in turkey abstract the aim of this study is to attempt to estimate the short run and the long run elasticities of demand for crude oil in turkey by the recent autoregressive distributed lag ardl bounds testing approach to cointegration as a developing country turkey meets its growing demand for oil principally by foreign suppliers thus the study focuses on modelling the demand for imported crude oil using annual data covering the period 1980 2005 the bounds test results reveal that a long run cointegration relationship exists between the crude oil import and the explanatory variables nominal price and income but not in the model that includes real price in domestic currency the long run parameters are estimated through a long run static solution of the estimated ardl model and then the short run dynamics are estimated by the error correction model the estimated models pass the diagnostic tests successfully the findings reveal that the income and price elasticities of import demand for crude oil are inelastic both in the short run and in the long run

estimating shocks and impulse response functions this paper examines the issue of how to identify the shocks in a cointegrated var when the following assumptions are made the variables can be classified as endogenous or exogenous there are as many cointegrating relations as endogenous variables the cointegrating vectors are identified and they contain at least one exogenous variable it is shown that with these assumptions it is possible to identify the shocks without the use of further restrictions on the covariance matrix of the disturbances or the short run dynamics if the long run parameters are known the whole model can be estimated by ols the analysis is extended to allow the var to have both stationary and non stationary variables an illustration of the method is provided using the traditional benchmark var model involving us data on output prices interest rates and money a liquidity effect is not found using this var methodology

central bank transparency and the volatility of exchange rates abstract we analyze the effect of monetary policy transparency on bilateral exchange rate volatility we test the theoretical predictions of a stylized model using panel data for 62 currencies from 1998 to 2010 we find strong evidence that an increase in the availability of information about monetary policy objectives decreases exchange rate volatility using interaction models we find that this effect is more pronounced for countries with a lower flexibility of goods prices a lower level of central bank conservatism and a higher interest rate sensitivity of money demand

the price responsiveness of the 1demand for labour by skill british mechanical engineering 1963 1978 it is commonplace in labour economics that employment changes in response to exogenous shifts in wages and aggregate demand depend among other factors on the degree of skill since the pioneering work of oi i962 and rosen i968 little work has been done in investigating this issue in the british context and this paper will attempt to remedy this deficiency we estimate a singular dynamic three skill labour demand system using time series data for british mechanical engineering we then calculate substitution wage and output elasticities for the demand for each kind of labour in such an analysis we must decide on two issues first the specification of technology second the modelling of dynamics in tackling the first issue we rely on the theory of duality samuelson i947 shephard i953 diewert i97i in choosing a model based on the cost function a cost function approach is advantageous for the following reasons first shephard s lemma allows us to move conveniently from any cost function to the cost minimising factor demands that underlie it second the cost function has factor prices as explanatory variables which may be regarded as exogenous at the industry level third the elasticities we seek to estimate are linear functions of the parameter estimates fourth the cost function is homogeneous of degree one in prices but this does not imply constant returns to scale see binswanger i974a the use of a cost function approach permits fewer constraints to be imposed on the production process in choosing the functional form we follow binswanger i974 a b berndt and wood i975 kesselman et al i977 and layard i983 in estimating the translog cost function which was first proposed by christensen et al i97i the generality of this functional form lies first in placing no apriori restrictions on the elasticities of substitution and second in that it may be regarded as a secondorder taylor series approximation to any arbitrary cost function near the equilibrium the factor demand system derived from the translog cost function is static and holds only in equilibrium however the existence of convex adjustments costs and of imperfections involved in obtaining information imply that there is some delay in adjusting employment to its desired level following exogenous wage and

a dynamic analysis of japanese energy policies their impact on fuel switching and conservation abstract in 1973 the japanese economy was highly dependent on imported oil after the 1973 oil price shock vigorous policy action was undertaken by the japanese government in an attempt to reduce japan s energy consumption and in particular its dependence on imported oil this study attempts to determine how flexibly the japanese economy has responded to the dramatic changes in relative and absolute fuel prices which occurred since 1973 and to what extent government energy policies may have reinforced or undermined market signals and facilitated fuel switching and conservation to analyse the price and income elasticities of energy component demand a dynamic approach to energy demand modelling is employed the study reveals that japanese energy users have responded quite flexibly to the two major oil price rises in the 1970s the probable impact of energy policies on this response is however somewhat problematic

modeling industrial energy demand in greece using cointegration techniques abstract this paper attempts to shed light on the determinants of industrial energy demand in greece for this purpose we used cointegration analysis in order to capture short run and long run elasticities for oil and electricity industrial demand respectively the sample spans the period 1970 2004 from the empirical analysis and the johansen s maximum likelihood procedure we found cointegration for oil and electricity demand the results suggest that industrial energy demand is inelastic both in the short and the long run while electricity and oil are substitutes also oil and electricity prices are weakly exogenous both in the short and the long run

delphic and odyssean monetary policy shocks evidence from the euro area abstract what drives the reaction of financial markets to central bank communication on the days of policy decisions we highlight the role of two factors that we identify from high frequency monetary surprises news on future macroeconomic conditions delphic shocks and news on future monetary policy shocks odyssean shocks these two shocks move the yield curve in the same direction but have opposite effects on financial conditions and macroeconomic expectations they also have a different impact on macroeconomic outcomes so that central bankers cannot infer the degree of stimulus they provide by looking at the mere reaction of the yield curve

technical change inter factor and inter fuel substitution possibilities in pakistan a trans log production function approach abstract energy consumption in pakistan increased significantly over the last two decades primarily due to industrialization in order to meet the growing energy needs the government adopted short term policies by setting up thermal power projects which are more expensive both in terms of fiscal cost and environmental damages as compared to hydro power projects the former has exposed pakistan to international oil price shocks and environmental degradations this study therefore attempts to analyze technical change using trans log production function by employing non energy factors i e capital and labor and energy factors i e petroleum and natural gas to estimate elasticity of substitution the purpose of the study is to provide policy suggestions to the government on how to achieve high economic growth vis a vis improved energy security and environmental sustainability the results reveal that capital energy and labor energy are substitutes thereby suggesting the need for an increased focus on technological advancement and skilled employment generation to conserve energy and reduce co 2 emission a gradual elimination of energy subsidies which will make energy price reflects its true cost is required to further discourage increased energy consumption and promote capital intensive production methods a scenario analysis based on the elasticity of substitution between capital energy and petroleum gas shows the potential of energy conservation and emission mitigation the results further suggest the importance of a diversified energy supply mix characterized by abundant hydro and other renewable energy resources alongside natural gas

the existence of equilibrium in discontinuous economic games ii applications in part i of this study we established two existence theorems for mixed strategy equilibrium in games with discontinuous payoff functions see theorems 4 4 and 5 5 in dasgupta and maskin 1986 hereafter d m 1986 in this second part we use the second of these two theorems to prove the existence of mixed strategy equilibrium in some wellknown discontinuous economic games that fail to have pure strategy equilibria the models we analyse are the bertrand edgeworth example of price setting duopolists with capacity constraints see section 2 2 price competition among firms producing differentiated products hotelling 1929 and d aspremont gabszewicz and thisse 1979 see section 2 3 spatial competition eaton and lipsey 1975 and shaked 1975 see section 3 and models of market dependent information rothschild and stiglitz 1976 and wilson 1977 section 4 the paper concludes section 5 with a classification of these models

energy investment and economic growth a simplified approach abstract a model is developed to investigate the effect of energy investment on economic growth under a set of simplifying assumptions the economy is treated as a two sector aggregate the energy sector and the rest of the economy whereas the model describing the energy economy interaction is linear to the differential changes of the variables adaptable to structural evolution and requires a modest amount of data for initialization it can be used in a single stage or an iterative mode to produce outcomes for the short and medium run the analysis reveals that energy productive investment has had an impact on the rate of formation of the non energy capital stock and subsequently on economic growth these effects appear amplified under a regime of increasing energy price

interfuel substitution a meta analysis interfuel substitutability has been of longstanding interest to the energy economics and policy community however no quantitative meta analysis has yet been carried out of this literature this paper fills this gap by analyzing a broad sample of studies of interfuel substitution in the industrial sector manufacturing industry or subindustries or macro economy of a variety of developed and developing economies publication bias is controlled for by including the primary study sample size in the meta regression results for the shadow elasticities of substitution between coal oil gas and electricity for forty six primary studies show that at the level of the industrial sector there are easy substitution possibilities between all the fuel pairs with the exception of gas electricity and coal electricity substitution possibilities seem more constrained at the macro level and less constrained in sub industries estimates also vary across countries publication bias does not seem to be present but model and data specification issues very significantly affect the estimates derived by each individual study estimates from cross section regressions are generally largest fixed effects panel estimates intermediate in magnitude and time series estimates are mostly much smaller econometric research suggests that the fixed effects estimates are likely the best among the existing studies though biased downwards

measuring euro area monetary policy abstract we map ecb policy communication into yield curve changes and study the information flow on policy dates a byproduct is the publicly available euro area monetary policy event study database ea mpd containing intraday asset price changes we find that policy target forward guidance and quantitative easing factors capture about all the variation in the yield curve with different factors appearing in the windows covering the policy decision announcement and the press conference and having time varying variance shares we study sovereign yields exchange rates stock prices persistence of effects and response asymmetry our methodology can be implemented for any policy related event

starting from a blank page semantic similarity in central bank communication and market volatility abstract central banks often draft press releases announcing monetary policy decisions starting from the previous release this makes it straightforward to see how the content has evolved but may make substantial updates harder to interpret as markets learn to expect only minor updates using variation in the drafting process at the bank of canada this paper finds that similar press releases reduce market volatility whereas volatility rises when substantial changes occur after sequences of similar statements a comparison over time and across central banks shows that market sensitivity to similarity adjusts to the drafting practice of central banks

symmetric or asymmetric price adjustments in the oil market an empirical analysis of the relations between international and domestic prices in the federal republic of germany 1972 89 abstract this paper investigates how german consumer and wholesale prices for gasoline and light heating oil react to changes in the corresponding rotterdam prices monthly data from 1972 to 1989 are employed and the subperiods of the 1970s 1972 to 1979 and 1980s 1980 1989 are distinguished error correction models are estimated to seperate long run equilibrium relations and short run adjustment processes for the 1980s we find rapid symmetric and full adjustment of the german prices to the rotterdam prices whereas during the 1970s we find some asymmetries and at least for gasoline the adjustment processes took considerably more time

energy substitution effect on transport sector of pakistan based on trans log production function abstract transport sector because of the growing industrialization and urbanization of pakistan is one of fastest growing sector in terms of output energy consumption and co 2 emission its current performance and future outlook has the potential to leave behind problems related to the global issues of energy security and environmental sustainability the extents to which energy and non energy inputs are substitutable are the core issue in planning and designing of energy policies for this purpose we establish a trans log production function for pakistan transport sector and the input factors capital labor and energy are included output elasticities of each factor and the substitution elasticities between these factors have been estimated and analyzed for the sample period of 1980 2013 the results show higher output elasticity and that all pairs of factor inputs are substitutes because of the higher level of substitution elasticities the results suggest that by allocating more capital in the transport sector the relevant energy saving technology could be promoted thereby realizing the substitution between capital and energy and reduction of co 2 emission as a result it further suggest that by continuous upgrading of the capital substitution between energy and labor can also be achieved and the transition of pakistan transport sector from labor intensive to capital intensive can be realized

effects of allocative inefficiency on resource allocation and energy substitution in pakistan s manufacturing empirical economists often ignore that firms may not minimise costs in the presence of allocative inefficiency assuming strict cost minimisation when actually cost is not minimum may produce biased parameter estimates and elasticities we consider a method for estimating effects of allocative inefficiency on resource allocation and factor substitution and apply it to data from pakistan s manufacturing results show strong evidence of allocative inefficiency leading to over utilization of raw material and capital viz a viz energy and labour and increasing cost of production of firms by 1 per annum computed elasticities diverge from their true values in the presence of allocative inefficiency

central bank communication and monetary policy a survey of theory and evidence over the last two decades communication has become an increasingly important aspect of monetary policy these real world developments have spawned a huge new scholarly literature on central bank communication mostly empirical and almost all of it written in this decade we survey this ever growing literature the evidence suggests that communication can be an important and powerful part of the central bank s toolkit since it has the ability to move financial markets to enhance the predictability of monetary policy decisions and potentially to help achieve central banks macroeconomic objectives however the large variation in communication strategies across central banks suggests that a consensus has yet to emerge on what constitutes an optimal communication strategy

communication by central bank committee members different strategies same effectiveness the paper assesses the communication strategies of the federal reserve the bank of england and the european central bank and their effectiveness we find that the effectiveness of communication is not independent from the decision making process the paper shows that the federal reserve has been pursuing a highly individualistic communication strategy amid a collegial approach to decision making while the bank of england is using a collegial communication strategy and highly individualistic decision making the european central bank ecb has chosen a collegial approach both in its communication and in its decision making assessing these strategies we find that predictability of policy decisions and the responsiveness of financial markets to communication are equally good for the federal reserve and the ecb this suggests that there may not be a single best approach to designing a central bank communication strategy

validating energy oriented cge models although cge models have received heavy usage they are often criticized as being insufficiently validated key parameters are often not econometrically estimated and the performance of the model as a whole is rarely checked against historical outcomes as a consequence questions frequently arise as to how much faith one can put in cge results in this paper we employ a novel approach to the validation of a widely utilized global cge model gtap e by comparing the variance of model generated petroleum price distributions driven by historical demand and supply shocks to the model with observed five year moving average price distributions we conclude that energy demand in gtap e is far too price elastic over this time frame after incorporating the latest econometric estimates of energy demand and supply elasticities we revisit the validation question and find the model to perform more satisfactorily as a further check we compare a deterministic global general equilibrium simulation based on historical realizations over the 2001 2006 period during which petroleum prices rose sharply along with growing global energy demands as anticipated by the stochastic simulations the revised model parameters perform much better than the original gtap e parameters in this global general equilibrium context

empirical assessment of the determinants of road energy demand in greece this paper attempts to cast light on the determinants of road energy demand in greece for this purpose we used cointegration techniques and vector autoregression var analysis in order to capture short run and long run dynamics for gasoline and diesel demand respectively from the empirical analysis that covers the period 1978 2003 we find that in the long run gasoline energy demand appears to be price and income inelastic while diesel demand appears to be price inelastic and income elastic we also found that the absence of close substitutes in the road sector denotes the low level of energy switching in greece

the demand for energy in greek manufacturing abstract this paper considers an econometric approach to measuring substitutability of three types of energy i e crude oil electricity and diesel with capital and labour in the manufacturing sector of greek industry during the period 1970 1990 a general dynamic framework is developed under the assumption that the structure of the production process is weakly separable in capital labour and energy aggregates the translog total cost function is used to represent the production technology the main advantages of the proposed dynamic structure are that it is both disaggregated in energy components and consistent with the neo classical theory of production

sequential entry and deterrence with competitive spatial price discrimination abstract this paper analyzes sequential entry with perfect foresight in a competitive spatial price discrimination model with both an exogenous and an endogenous number of firms the spne locations do not coincide with the social cost minimizing locations

interfuel substitution results from several sectors of the greek economy abstract the purpose of this paper is to study interfuel substitution in various sectors of the greek economy an econometric model utilizing the translog cost function is estimated for three major sectors of the economy agriculture industry disaggregated also into three branches and transport fuels are aggregated into three categories solid fuels liquid fuels and electricity the model is estimated using time series data over the period 1960 1980 the results indicate substitutability between liquid fuels and electricity mainly complementarity between liquid and solid fuels and substitutability between electricity and solid fuels

electricity demand of manufacturing sector in turkey a translog cost approach abstract this paper models factor demand for manufacturing sector in turkey we estimated a translog cost function with four factor consist of capital labor intermediate input and electricity over the 1980 2001 our objective taking in the consideration electricity as production input was twofold on the one hand to estimate the price elasticity of electricity demand in manufacturing sector and on the other hand to use cross price and morishima elasticities of substitution results for structural analysis regarding effects of electricity liberalization which initiated in 2001 empirical result shows that electricity demand is relatively price sensitive 0 85 our result in terms of electricity price is consistent with the previous studies while electricity labor and electricity capital inputs are complementary results indicate the existence of substitution possibilities between electricity and intermediate input this means that changes in electricity prices have impact on labor demand and investment demand these results have important implications for public policy

declining discount rates and the fisher effect inflated past discounted future uncertain and persistent real interest rates underpin one argument for using a declining term structure of social discount rates in the expected net present value enpv framework despite being controversial this approach has influenced both the inter agency working group on cost benefit analysis and the uk government s guidelines on discounting we first clarify the theoretical basis of the enpv approach then rather than following previous work which used a single series of u s treasury bond returns we treat nominal interest rates and inflation as co integrated series and estimate the empirical term structure of discount rates via the fisher effect this nests previous empirical models and is more flexible it also addresses an irregularity in previous work which used data on nominal interest rates until 1950 and real interest rates thereafter as we show the real and nominal data have very different time series properties this paper therefore provides a robustness check on previous discounting advice and updated methodological guidance at a time when governments around the world are reviewing their guidelines on social discounting the policy implications are discussed in the context of the social cost of carbon nuclear decommissioning and public health

energy consumption and economic growth assessing the evidence from greece abstract this paper attempts to shed light into the empirical relationship between energy consumption and economic growth for greece 1960 1996 employing the vector error correction model estimation the vector specification includes energy consumption real gdp and price developments the latter taken to represent a measure of economic efficiency the empirical evidence suggests that there is a long run relationship between the three variables supporting the endogeneity of energy consumption and real output these findings have important policy implications since the adoption of suitable structural policies aiming at improving economic efficiency can induce energy conservation without impeding economic growth

a survey of some recent econometric methods this survey is written mainly for the applied economist though we hope that the specialist econometrician will find something of interest too our aim has been to try to bring the applied worker as up to date as possible and in the process to improve the quality of applied work by providing access to the latest ideas in econometrics we have tried to describe and explain in a relatively non technical way the main developments that have taken place in the last ten years partly for reasons of space the survey is by no means exhaustive but it does cover a wide range of topics in both time series and cross section analysis among the subjects covered are the followoing the nature of data including integrated and fractionally integrated data four estimation methods maximum likelihood method of moments m estimators and non parametric estimation inference with stationary and integrated regressors a comparison of various model evaluation principles the formulation of models including dynamic specification cointegration and conditional expectations in mean and variance copyright 1989 by royal economic society

energy and economic growth in industrializing countries the case of greece abstract this paper investigates some aspects of the interrelated paths of economic growth and energy demand in the case of an industrializing economy through the use of numerous econometric models translog functions have helped establish that income and price elasticities of energy two critical parameters in the energy economy interaction exhibit falling trends with time the value share of the industrial sector is strongly associated with both energy demand and energy intensity any increase in the former will lead to amplified increases in the latter rendering the continuation of past trends in industrial expansion questionable under conditions of high energy costs substitution among capital labour and energy does take place though to a limited extent as indicated by the aggregate measure of energy non energy substitution elasticity all findings appear to suggest that energy policymaking in an industrializing country like greece will be of low effectiveness until certain structural changes in the economy are realized

determinants of the expected real long term interest rates in the g7 countries the paper investigates which factors determine the expected real long term interest rates of the g7 countries as a whole within a single equation error correction model inflationary expectations are generated using the low frequency component of inflation provided by the hodrick prescott filter a comparison of the calculated expected inflation rates with those resulting from index linked and conventional uk bonds suggests this approach to be appropriate expected real long term interest rates turn out to be influenced positively by real short term interest rates capacity utilization and structural public borrowing

short and long run electricity demand elasticities at the subsectoral level a cointegration analysis for german manufacturing industries in this paper we use multivariate cointegration analysis to estimate electricity demand elasticities at the subsectoral industry level this enables us to reap the benefits of lower heterogeneity within the electricity consuming sectors investigated and of retaining additional information otherwise blurred by aggregation the annual data set used covers eight subsectors of the german economy for the period 1970 2007 by employing a cointegrated var model specification and accounting for structural breaks we find cointegration relationships for five of the eight subsectors studied the long run elasticities range between 0 70 and 1 90 for economic activity and between 0 52 and zero for the price of electricity the short run elasticities are estimated by single equation error correction modeling and found to be between 0 17 to 1 02 for economic activity and 0 57 to zero for electricity price granger causality tests indicate that in the long term causality runs from both economic activity and electricity price to electricity consumption while granger causality from electricity price and electricity consumption to economic activity is detected in only two subsectors electricity price is found to be granger caused neither in the long nor the short run finally an impulse response analysis yields plausible results confirming the usefulness of the approach adopted

an analysis of the disaggregated manufacturing exports of the asian nies to eec usa and japan this paper examines the export performance of the four asian newly industrialized economics nies by modelling their bilateral export flows to three main oecd blocks the usa japan and the european community our estimated export demand models reveal interesting asymmetries between these three areas of destination which do not emerge from previous aggregate empirical studies of nie export performance

oil price shocks stock market economic activity and employment in greece abstract using a multivariate vector autoregression var approach this paper attempts to shed light into the dynamic relationship among oil prices real stock prices interest rates real economic activity and employment for greece the empirical evidence suggests that oil price changes affect real economic activity and employment oil prices are important in explaining stock price movements stock returns do not lead to changes in real activity and employment

spatial price discrimination and the locations of firms with different product selections or product varieties abstract the equilibrium locations of two firms are partially centralized to the socially optimal extent if there is spatial price discrimination and if each firm has two out of three products or else one variety of a differentiated product with some consumers indifferent between varieties

the reaction of asset markets to swiss national bank communication abstract in this paper we analyze high frequency movements in swiss asset markets in reaction to real time communication by the swiss national bank our analysis of central bank communication encompasses monetary policy announcements speeches and interviews we examine the reactions of the currency market the bond market and the stock exchange the evidence suggests that speeches and interviews along with monetary policy announcements engender a significant price reaction this paper sheds light on the relevance of communications other than monetary policy announcements

tests of exchange market efficiency fragile evidence from cointegration tests abstract several recent papers have employed engle and granger 1987 cointegration tests to determine whether or not markets are efficient we use a new test for cointegration due to johansen 1988 to examine market efficiency with respect to the us dollar exchange rates for canadian japanese and west german currencies the fragile nature of the test indications suggests that cointegration methodologies cannot be relied upon to provide reliable evidence on market efficiency

shocking language understanding the macroeconomic effects of central bank communication we explore how the multi dimensional aspects of information released by the fomc has effects on both market and real economic variables using tools from computational linguistics we measure the information released by the fomc on the state of economic conditions as well as the guidance the fomc provides about future monetary policy decisions employing these measures within a favar framework we find that shocks to forward guidance are more important than the fomc communication of current economic conditions in terms of their effects on market and real variables nonetheless neither communication has particularly strong effects on real economic variables

decomposing the effects of monetary policy using an external instruments svar we study the effects of monetary policy on economic activity separately identifying the effects of a conventional change in the fed funds rate from the policy of forward guidance we use a structural var identified using external instruments from futures market data the response of output to a fed funds rate shock is found to be consistent with typical monetary var analyses however the effect of a forward guidance shock that increases long term interest rates has an expansionary effect on output this counterintuitive response is shown to be tied to the asymmetric information between the federal reserve and the public

an aggregate model for energy costs national product interdependence abstract a small model is constructed which describes energy economy interactions on an aggregate level the model based on a neo classical approach estimates the impact on net national product and energy demand of changes in the cost of domestic and imported energy if tax and tariff rates as percentages of total price are kept constant a parametric analysis is carried out to investigate the role of structural parameters such as the price and income elasticities among others a key parameter of primary importance in the energy economy interaction is revealed to be the cost to output ratio of the energy sector through this parameter we are able to analyse the interdependence of the tariff rates the relative cost of imported to domestic energy and the energy import share and thereafter assess their combined effect on the energy economy interaction

a comment on vertical mergers and downstream spatial competition with different product varieties abstract the aim of this paper is to revise and correct the results obtained in beladi et al 2008 specifically we prove that in the pre merger case nash equilibrium locations are socially optimal whereas a vertical merger will relocate downstream firms by making them move to the right of their old socially optimal positions while keeping their in between distance intact

principal components at work the empirical analysis of monetary policy with large data sets the empirical analysis of monetary policy requires the construction of instruments for future expected inflation dynamic factor models have been applied rather successfully to inflation forecasting in fact two competing methods have recently been developed to estimate large scale dynamic factor models based respectively on static and dynamic principal components this paper combines the econometric literature on dynamic principal components and the empirical analysis of monetary policy we assess the two competing methods for extracting factors on the basis of their success in instrumenting future expected inflation in the empirical analysis of monetary policy we use two large data sets of macroeconomic variables for the usa and for the euro area our results show that estimated factors do provide a useful parsimonious summary of the information used in designing monetary policy copyright 2005 john wiley sons ltd

price discrimination and equilibrium in monopolistic competition modern theories of monopolistic competition have borrowed extensively from techniques developed in location theory and the theory of spatial pricing the monopolistically competitive firm is assumed to choose a location and price for its product a subject that has been of increasing concern in this corpus of theory is that there exists no free entry price location equilibrium in this paper we demonstrate that free entry price location equilibrium exists provided only that producers are allowed to price discriminate among customers in a reasonable manner equilibrium is modelled as a two stage game using the selten concept of subgame perfect nash equilibrium it is shown that the equilibrium discriminatory price system is one initially identified by hoover in addition we show that equilibrium is not unique the precise nature of equilibrium in a particular market will be dependent upon the history of that market

measuring global gasoline and diesel price and income elasticities abstract price and income elasticities of transport fuel demand have numerous applications they help forecast increases in fuel consumption as countries get richer they help develop appropriate tax policies to curtail consumption help determine how the transport fuel mix might evolve and show the price response to a fuel disruption given their usefulness it is understandable why hundreds of studies have focused on measuring such elasticities for gasoline and diesel fuel consumption in this paper i focus my attention on price and income elasticities in the existing studies to see what can be learned from them i summarize the elasticities from these historical studies i use statistical analysis to investigate whether income and price elasticities seem to be constant across countries with different incomes and prices although income and price elasticities for gasoline and diesel fuel are not found to be the same at high and low incomes and at high and low prices patterns emerge that allow me to develop suggested price and income elasticities for gasoline and diesel demand for over one hundred countries i adjust these elasticities for recent fuel mix policies and suggest an agenda of future research topics

strategic central bank communication discourse analysis of the bank of japan s monthly report abstract we conduct a discourse analysis of the bank of japan s monthly report and examine its characteristics in relation to business cycles we find that ambiguous expressions tend to appear more frequently with negative expressions and this tendency is more pronounced in recessions this suggests that the central bank communicates strategically by obfuscating the reports when their private information is unfavorable

energy demand in greece abstract this paper examines the impact of the two energy crises 1973 74 and 1978 79 on energy demand in greece initially some specific characteristics of energy consumption patterns before and after 1973 are presented and compared then demand parameters for hydroelectric energy liquid fuels and solid fuels were estimated using data for the period 1963 1984 and alternative econometric methods ols 2sls fiml to ensure that estimates do not vary across different estimation methods appropriate tests were used to examine whether a structural change in energy demand has occured following either of the two crises the results indicate that while consumption patterns may be different due to price and income changes after the crises the parameters of energy demand in greece have remained unchanged

monetary policy in the media just like private companies depend crucially on their ability to reach customers policymakers must communicate with private agents to be successful and much of this communication is channeled through the media this is especially true for central banks which need to build credibility among the general public this paper analyses how favorably the print media report about the european central bank s ecb monetary policy decisions favorableness is inter alia influenced by the amount of information communicated by the ecb there are however also indications of a critical monitoring role of the media which reports more negatively when inflation exceeds the inflation target

spread the word international spillovers from central bank communication abstract we construct a novel text dataset to measure the sentiment component of communications for 23 central banks over the 2002 2017 period our analysis yields three results first comovement in sentiment across central banks is not reducible to trade or financial flow exposures second sentiment shocks generate cross country spillovers in sentiment policy rates and macroeconomic variables and the fed appears to be a uniquely influential generator of such spillovers even among prominent central banks and third geographic distance is a robust and economically significant determinant of comovement in central bank sentiment while shared language and colonial ties have weaker predictive power

asymmetric substitutability between energy and capital evidence from the manufacturing sectors in 10 oecd countries abstract this paper investigates the substitutability between energy and capital in the manufacturing sectors of ten oecd countries since 1980 by applying a cost function approach that has been widely used to analyze industrial energy demand first we attempt to determine the source of the disagreement in the literature on the substitutability between energy and capital and reach a conclusion regarding the substitutability between energy and capital dividing energy and capital into sub inputs we analyze their substitutability the empirical results indicate that fuel tends to complement capital in most countries whereas electricity and capital are substitutes thus this study confirms that heterogeneity in energy sources is a primary component of the systematic variation in the substitutability between energy and capital second we examine asymmetric substitutability between energy and capital by estimating the morishima elasticity of substitution the estimates of the morishima elasticity of substitution demonstrate that the substitution of energy for capital has dominated the substitution of capital for energy this asymmetric substitutability is natural from the producer perspective because capital costs are much greater than energy costs in most countries these results imply that the adoption of energy saving technologies has not been induced in response to increased energy prices

what does monetary policy do to long term interest rates at the zero lower bound this article uses a structural var with daily data to identify the effects of monetary policy shocks on various longer term interest rates since the federal funds rate has been stuck at the zero lower bound the var is identified using the assumption that monetary policy shocks are heteroskedastic monetary policy shocks have especially high variance on days of fomc meetings and certain speeches while there is otherwise nothing unusual about these days a complementary high frequency event study approach is also used i find that stimulative monetary policy shocks lower treasury and corporate bond yields but the effects die off fairly fast

competition of firms discriminatory pricing and location1 two costlessly mobile firms are to be located in a market region a subset of the plane the firms compete by setting locations and delivered price schedules to study this competitive stiuation an appropriate extensive form game is defined along with an appropri ate noncooperative solution concept existence and general properties of the equilibrium are demonstrated among the results are each firm increases its profit by locating so as to decrease total cost to both firms of serving the market firms will never locate coinciden tally if they have identical production costs and transport cost rates or if these are different and the firms are located in a circular market region having a uniform demand distribution this paper studies competition between two profit maximizing firms in space who are costlessly mobile and may discriminate in price we will allow the firms to set locations and delivered price schedules and we will be concerned with the existence and properties of equilibria in location and price starting with hotelling 9 the spatial competition literature has focused on location on bounded linear markets by two or more firms hotelling assumed identical firms that produced a single good with constant cost of production and considered consumers to be uniformly distributed and to have inelastic demand he also assumed that the consumers pay transport cost and purchase the good from the cheapest source hotelling claimed that a nash equilibrium in locations for the two firm market existed and yielded back to back locations at the center of the market many authors most recently d aspremont gabszewicz and thisse 2 have noted that an equilbrium in prices and location does not exist for hotelling s model however if the firms employ identical exogeneously specified prices hotelling s conclusions hold subsequent work by smithies 14 hartwick and hartwick 7 and eaton 3 claimed to show that a nash equi librium in f o b prices and locations can exist in markets with a uniform distribu tion of consumers each of whom have identical elastic demand functions for the two and three firm problems the work of d aspremont et al casts doubt on these conclusions without the adoption of restrictive conditions our work contrasts with these works and related research which has dealt with linear markets with uniform distributions of customers and with identical firms our work will involve markets that are subsets of the plane having nonuniform distributions of customers our firms will be allowed to be different that is have differences in production and transport costs however the fundamental difference in our approach is that our firms will set discriminatory prices and not price f o b in many ways our work will represent the discriminatory pricing

comment on monetary policy communication policy slope and the stock market by andreas neuhierl and michael weber abstract this note discusses the article monetary policy communication policy slope and the stock market by andreas neuhierl and michael weber the authors document that the slope of the fed funds futures curve predicts stock returns one week ahead and is correlated with the tone of fed board member speeches over the period 1994 2007 we show that this return predictability is restricted to the subsample from 1999 to 2001 with no evidence of predictability outside of this period we further point out some issues with the proposed measure of monetary policy tone and show that the positive correlation between tone and the fed funds futures slope is driven by two speeches that when analyzed in detail do not appear particularly hawkish