time varying convergence in european electricity spot markets and their association with carbon and fuel prices abstract long run dynamics of electricity prices are expected to reflect fuel price developments since fuels generally account for a large share in the cost of generation as an integrated european market for electricity develops wholesale electricity prices should be converging as a result of market coupling and increased interconnectivity electricity mixes are also changing spurred by a drive to significantly increase the share of renewables consequently the electricity wholesale price dynamics are evolving and the fuel electricity price nexus that has been described in the literature is likely to reflect this evolution this study investigates associations between spot prices from the british french and nordpool markets with those in connected electricity markets and fuel input prices from december 2005 to october 2013 in order to assess the time varying dynamics of electricity spot price series localized autocorrelation functions are used electricity spot prices in the three markets are found to have stationary and non stationary periods when a trend in spot prices is observed it is likely to reflect the trend in fuel prices cointegration analysis is then used to assess co movement between electricity spot prices and fuel inputs to generation the results show that british electricity spot prices are associated with fuel prices and not with price developments in connected markets while the opposite is observed in the french and nordpool day ahead markets

when do firms generate evidence on in house electricity supply in africa this paper attempts to identify the underlying causes and costs of own generation of electric power in africa rigorous empirical analysis of 8483 currently operating firms in 25 african countries shows that the prevalence of own generation would remain high at around 20 even if power supplies were perfectly reliable suggesting that other factors such as firms size emergency back up and export regulations play a critical role in the decision to own a generator the costs of own generation are about three times as high as the price of purchasing subsidized electricity from the public grid however because these generators only operate a small fraction of the time they do not greatly affect the overall average cost of power to industry the benefits of generator ownership are also substantial firms with their own generators report a value of lost load of less than us 50 per hour compared with more than us 150 per hour for those without nevertheless when costs and benefits are considered side by side the balance is not found to be significantly positive

privatization deregulation and capital accumulation author affiliation gerhard glomm department of economics indiana university wylie hall room 105 bloomington in 47405 usa gglomm indiana edufabio mendez department of economics walton college of business room 402 university of arkansas fayetteville ar 72701 usa fmendez uark edu corresponding author acknowledgment we are grateful to b ravikumar rowena pecchenino jeffrey wooldridge felix rioja stefan krause and seminar participants from the economics department at emory university for useful observations we are also grateful to cristian opazo and javier reyes for their assistance and to the editor and two anonymous referees for helpful comments 1 introductionsince the early 1980s many countries have privatized and deregulated intermediate goods industries such as gas electricity or telecommunications that had traditionally been run by public monopolies the european union eu for example has adopted aggressive policies toward the elimination of monopolies in the telecommunication market and conducted a general privatization program whose sales receipts amounted to more than 3 of gdp between 1985 and 1995 constantinou and lagoudakis 1996 parker 1998 in other regions of the world countries like australia chile brazil argentina and the united states have implemented similar policies vickers and yarrow 1991 winston 1993 van der vlies 1996 while there is a large literature studying the microeconomic effects of privatization and deregulation the long run macroeconomic effects of such types of reforms have been subject to relatively less scrutiny in this paper we use a model of capital accumulation in order to investigate the long run effects of privatization and deregulation this paper complements a small literature that includes parente and prescott 1999 2000 schmitz 2001 and herrendorf and teixeira 2004 parente and prescott 1999 2000 and herrendorf and teixeira 2004 study the impact of monopoly rights on long run levels of income and find that the effect is large the latter authors find for example that monopoly rights can reduce aggregate income in the long run by a factor of seven schmitz 2001 uses a two sector model to calculate the impact of government production of investment goods on long run levels of labor productivity he finds that government production can lower labor productivity levels in the long run by about 30 our approach differs from herrendorf and teixeira 2004 who infer the extent of monopoly power from differentials in the relative prices of nontradeables instead we take the approach that monopoly power is likely to arise and exist in the public production of intermediate goods such as public utilities or telecommunication and that the size of these sectors relative to the rest of the economy can be directly estimated see world bank 1995 our approach also differs from schmitz 2001 in a fundamental way because he abstracts completely from the issue of monopoly rights in his model the only difference between the public and private production is that the government is endowed with a less productive technology than the private sector the long run income gains from privatization and deregulation in our paper are similar in magnitude to those found in schmitz 2001 in our base case calculation the long run income gain of changing from a public sector monopoly to a competitive market with private firms is 18 these welfare gains can be larger when there has been relatively low governmental investment in the public sector capital and when the elasticity of substitution between the intermediate input and physical capital is small like schmitz 2001 we view our results as less pertinent for rich economies like the united states where public sector involvement in intermediate good production is relatively small rather we view the results of our model as being applicable mostly to least developed countries ldcs such as egypt where governments typically play a large role in intermediate goods production

path dependency and input substitution implications for energy policy modelling in most policy oriented energy models the effectiveness of energy policy instruments crucially depends both on the values of the substitution elasticities between the various inputs and on the rates of technological progress in this paper we argue that due to the fixed cost nature of adjustments to relative price changes these technological parameters are affected by past developments failing to account for the role of history will result in biased parameter estimates and hence the implication for energy policy modelling is that the estimation period should be carefully selected we provide an empirical illustration using data for the netherlands

fossil fuel subsidy reforms and their impacts on firms abstract while the potential adverse effects of fossil fuel subsidy reform are well documented for households the literature has largely ignored the effect of subsidy reform on firms competitiveness this paper discusses how firms are affected by and respond to energy price increases caused by subsidy reforms it highlights that cost increases both direct and indirect do not necessarily reflect competitiveness losses since firms have various ways to mitigate and pass on price shocks this paper presents and discusses direct and indirect transmission channels for price shocks and firms response measures absorbing cost shocks into profits inter fuel substitution increasing energy and material efficiency and passing on price increases it argues that further micro econometric studies using enterprise surveys are essential for quantifying the role of these mechanisms and for designing policy measures that ensure that competitiveness losses due to subsidy reforms are minimised

the real costs of credit access evidence from the payday lending market using geographic differences in the availability of payday loans i estimate the real effects of credit access among low income households payday loans are small high interest rate loans that constitute the marginal source of credit for many high risk borrowers i find no evidence that payday loans alleviate economic hardship to the contrary loan access leads to increased difficulty paying mortgage rent and utilities bills the empirical design isolates variation in loan access that is uninfluenced by lenders location decisions and state regulatory decisions two factors that might otherwise correlate with economic hardship measures further analysis of differences in loan availability over time and across income groups rules out a number of alternative explanations for the estimated effects counter to the view that improving credit access facilitates important expenditures the results suggest that for some low income households the debt service burden imposed by borrowing inhibits their ability to pay important bills copyright 2011 oxford university press

the effect of inventory record inaccuracy in information exchange supply chains abstract the goal of this paper is to quantify the impact of inventory record inaccuracy on the dynamics of collaborative supply chains both in terms of operational performance i e order and inventory stability and customer service level to do so we model an information exchange supply chain under shrinkage errors in the inventory item recording activity of their nodes present the mathematical formulation of such supply chain model and conduct a numerical simulation assuming different levels of errors results clearly show that inventory record inaccuracy strongly compromises supply chain stability particularly when moving upwards in the supply chain important managerial insights can be extracted from this analysis such as the role of benefit sharing strategies in order to guarantee the advantage of investments in connectivity technologies

endogenous communication among lenders and entrepreneurial incentives if banks have an informational monopoly about their clients borrowers may curtail their effort level for fear of being exploited via high interest rates in the future banks can correct this incentive problem by committing to share private information with other lenders the fiercer competition triggered by information sharing lowers future interest rates and future profits of banks but provided banks retain an initial informational advantage their current profits are raised by the borrowers higher effort this trade off determines the banks willingness to share information their decision affects credit market competition interest rates volume of lending and social welfare article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

china s energy economy technical change factor demand and interfactor interfuel substitution with its rapid economic growth china s primary energy consumption has exceeded domestic energy production since 1994 leading to a substantial expansion in energy imports particularly of oil china s energy demand has an increasingly significant impact on global energy markets in this paper allen partial elasticities of factor and energy substitution and price elasticities of energy demand are calculated for china using a two stage translog cost function approach the results suggest that energy is substitutable with both capital and labor coal is significantly substitutable with electricity and complementary with diesel while gasoline and electricity are substitutable with diesel china s energy intensity is increasing during the study period 1995 2004 and the major driver appears to be due to the increased use of energyintensive technology

forecasting global developments in the basic chemical industry for environmental policy analysis the chemical sector is the largest industrial energy user but detailed analysis of its energy use developments lags behind other energy intensive sectors a cost driven forecasting model for basic chemicals production is developed accounting for regional production costs demand growth and stock turnover the model determines the global production capacity placement implementation of energy efficient best practice technology bpt and global carbon dioxide co2 emissions for the period 2010 2030 subsequently the effects of energy and climate policies on these parameters are quantified about 60 of new basic chemical production capacity is projected to be placed in non oecd regions by 2030 due to low energy prices while global production increases by 80 between 2010 and 2030 the oecd s production capacity share decreases from 40 to 20 and global emissions increase by 50 energy pricing and climate policies are found to reduce 2030 co2 emissions by 5 15 relative to the baseline developments by increasing bpt implementation maximum bpt implementation results in a 25 reduction further emission reductions require measures beyond energy efficient technologies the model is useful to estimate general trends related to basic chemicals production but improved data from the chemical sector is required to expand the analysis to additional technologies and chemicals

determinants of oil price subsidies in oil and gas exporting countries abstract this paper investigates the implicit subsidization of refined products in oil and gas exporting countries most of these countries as well as some other countries mostly developing countries but one could argue that us gasoline prices do not account for external costs distribute large subsidies subsidies that are offered for a long period are not only inefficient but also dangerous due to gradual increases in the energy demand low domestic prices have led to immense oil demand growth that cannot continue if these countries wish to continue exporting only very high price jumps can stop this development but politically these price jumps are very costly if not suicidal for many governments indeed we argue that the currently low oil prices not only harm oil and gas exporting countries but also provide a unique opportunity to eliminate this costly subsidy policy at manageable political costs this paper begins with theoretical normative and positive explanations of low domestic energy prices and then addresses how to phase out subsidies again from a normative and positive perspective finally we empirically address the obstacles that individual countries may face when attempting to eliminate subsidies by quantifying the factors political economic and social that influence the existing subsidies

does emission permit allocation affect co2 cost pass through a theoretical analysis abstract carbon emissions trading may result in co 2 cost pass through and its rate is influenced by a number of factors this paper theoretically investigates how emission permit allocation affects co 2 cost pass through rate by developing a nash cournot oligopolistic market equilibrium model we find that the derived co 2 cost pass through rates are consistent when grandfathering and auctioning rules are used for permit allocation which are higher than that for benchmarking rule it has also been found that the magnitude of co 2 cost pass through rate is relevant to the type of definition product market structure and average carbon intensity of the industry we suggest that policy makers first use benchmarking rule to attract firms to participate at the early stage of emissions trading system ets and then take auctioning rule when ets is well developed

what happens when information leaves a market evidence from postbankruptcy consumers federal law mandates the removal of personal bankruptcies from credit reports after 10 years the removal s effect is market efficiency in reverse the short term effect is a spurious boost in apparent creditworthiness especially for the more creditworthy bankrupts delivering a substantial increase in both credit scores and the number and aggregate limit of bank cards the longer term effect is lower scores and higher delinquency than initial full information scores predict these findings relate to both the debate over the bankruptcy code and the wisdom of influencing market clearing by removing information

a multiscale analysis for carbon price drivers abstract this study proposes a multiscale analysis model to explore and identify the carbon price drivers at different timescales by introducing the latest multivariate empirical mode decomposition carbon price and its potential drivers are decomposed into several groups of simple modes with specific economic meanings the cointegration techniques error correction model and newey west estimator are combined to capture the carbon price drivers at similar timescales illustrated by the samples of the european union emissions trading system from 2009 to 2016 a few interesting results can be found that at the original data level among the three most important drivers of carbon price electricity price and stock index show positive impacts while coal price shows a negative impact at different timescales the effects of electricity and stock index appear comparatively earlier which drive carbon price from the short timescales and continue to strengthen however the impacts of coal oil and gas prices are lagging behind which respectively drive the carbon price at the medium and long timescales

estimated substitution elasticities of a nested ces production function approach for germany this paper demonstrates an econometric estimation of substitution elasticities of a nested constant elasticity of substitution production function ces between capital energy and labour for the west german industry in the last few years ces production functions have become more important in economic modelling especially for applied general equilibrium models where ces production functions are an important building stone in the literature different results of estimated elasticities can be found this paper investigates three different approaches for nested ces production functions and their estimated substitution elasticities capital energy and labour are estimated as substitutes for the west german industry in the long run

the economic effects of energy price shocks large fluctuations in energy prices have been a distinguishing characteristic of the u s economy since the 1970s turmoil in the middle east rising energy prices in the u s and evidence of global warming recently have reignited interest in the link between energy prices and economic performance this paper addresses a number of the key issues in this debate what are energy price shocks and where do they come from how responsive is energy demand to changes in energy prices how do consumers expenditure patterns evolve in response to energy price shocks how do energy price shocks affect u s real output inflation and stock prices why do energy price increases seem to cause recessions but energy price decreases do not seem to cause expansions why has there been a surge in the price of oil in recent years why has this new energy price shock not caused a recession so far have the effects of energy price shocks waned since the 1980s and if so why as the paper demonstrates it is critical to account for the endogeneity of energy prices and to differentiate between the effects of demand and supply shocks in energy markets when answering these questions

the welfare effects of unprecedented electricity price hikes in zambia abstract this paper simulates the real household expenditure effects of large electricity price increases in zambia first we find that electricity subsidies are highly regressive the richest household quintile receives over 60 of the subsidies while the poorest quintile receives less than 1 second our partial equilibrium simulations of the welfare effects of a 75 electricity price increase show that the poorest households would experience a 3 times larger percentage loss in real expenditure compared to the wealthiest households naturally these adverse effects lead to an increase in poverty however we find that transferring the fiscal savings realised from the complete elimination of electricity subsidies to the poor reduces extreme poverty significantly this budget neutral strategy is particularly attractive for zambia and other sub saharan economies currently battling the twin challenges of widening budget deficits and high extreme poverty

capital stock labor energy substitution and production efficiency study for china abstract this study estimates the elasticities of substitution for china from 1953 to 2006 by the two level constant elasticity of substitution ces production function with three factor inputs capital stock labor and energy a technological change rate and non constant returns to scale are under considered all possible combinations and two other subdivided periods are carried out respectively and their technological change rates elasticities of substitution and returns to scale are found this study also provides an analysis of production efficiency by using marginal productivity of specific factor input according to the estimated results and distinguishes the marginal productivities deriving from the three different combinations it suggests that the decision makers of china need to consider the effects of different factor inputs on gdp growth

financial subsidies to the australian fossil fuel industry abstract a common claim during international greenhouse gas reduction negotiations has been that domestic emissions cuts will harm national economies this argument fails to consider the distorting effect of existing financial subsidies and associated incentives to fossil fuel production and consumption provided by governments in most developed countries these subsidies support a fossil fuel energy sector that is the major contributor to global greenhouse gas emissions and conflict with attempts to expand the role of sustainable energy technologies reform of these types of subsidies has the potential to provide substantial gains in economic efficiency as well as reductions in carbon dioxide emissions a no regrets outcome for the economy and the environment this paper examines financial subsidies to fossil fuel production and consumption in australia and estimates the magnitude of the subsidies subsidies and associated incentives to fossil fuel production and consumption in australia are similar to those in the united states and the other countries that have pushed for increased flexibility during international negotiations

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

productivity growth and energy consumption in the nigerian manufacturing sector a panel data analysis this paper examines the impact of efficiency in energy consumption on the growth in productivity in the nigerian manufacturing sector the study utilizes a panel data technique covering a period of substantial energy price reviews in nigeria the study shows that for most industries productivity growth has been energy using whereas in a few attempts have been made to switch productivity growth towards energy saving however it will take some time for the effect of current energy pricing policy to permeate the whole manufacturing sector due to the high cost required to invest in energy saving equipment especially in the face of a rapid decline in real income coupled with high product prices

implications of energy subsidy reform in india abstract this paper analyses welfare impact of energy subsidy reform in india based on the data from 1970 71 to 2014 15 to this end auto regressive distributed lag ardl model and error correction model ecm have been estimated to quantify the short run and long run price and the income elasticity of various energy products the results show that the price elasticity of demand for all fossil fuels is low but the respective income elasticity is higher therefore an increase in the general price level caused by the subsidy reform will lead to the erosion of real income and will have related welfare implications in india the results also reveal that energy expenditure will obviously increase and hence energy consumption will decline depending upon the extent of the withdrawal of subsidy therefore policy makers in india while undertaking further reforms must ensure that the subsidy reaches to those who truly deserve so that the socioeconomic casualty of reforms can be minimized along with achieving fiscal goals

what do we know about carbon taxes an inquiry into their impacts on competitiveness and distribution of income abstract the kyoto protocol to the united nations framework convention on climate change unfccc has set legally binding emissions targets for a basket of six greenhouse gases and timetables for industrialised countries it has also incorporated three international flexibility mechanisms however the articles defining the flexibility mechanisms carry wording that their use must be supplemental to domestic actions this has led to the open debates on interpretations of these supplementarity provisions such debates ended at the resumed sixth conference of the parties cop to the unfccc held in bonn july 2001 and at the subsequent cop 7 in marrakesh november 2001 the final wording in the bonn agreement reaffirmed in the marrakesh accords at least indicates that domestic policies will have an important role to play in meeting annex b countries emissions commitments carbon taxes have long been advocated because of their cost effectiveness in achieving a given emissions reduction in this paper the main economic impacts of carbon taxes are assessed based on a review of empirical studies on existing carbon energy taxes it is concluded that competitive losses and distributive impacts are generally not significant and definitely less than often perceived however given the ultimate objective of the framework convention future carbon taxes could have higher rates than those already imposed and thus the resulting economic impacts could be more acute in this context it has been shown that how to use the generated fiscal revenues will be of fundamental importance in determining the final economic impacts of carbon taxes finally we briefly discuss carbon taxes in combination with other domestic and international instruments

who benefit most from fuel subsidies evidence from nigeria abstract the paper studies the benefit incidence of fuel subsidies in nigeria household sector combining annual subsidy estimates with the households expenditure data from the 2009 10 harmonized living standard survey we investigate how the benefits from fuel subsidies are accrued to each income groups in nigeria the results show that while the kerosene subsidy is more evenly distributed across income groups petrol subsidy is concentrated to high income groups in aggregate the top 20 households enjoy twice as much the benefit of fuel subsidies as the bottom 20 households we also examine the concentration and progressivity of fuel subsidies using gini coefficient measures and lorenz concentration curves and find both fuel subsidies are more regressive than the per capita expenditure

fossil fuel subsidies in the pacific island context analysis of the case of kiribati abstract kiribati is highly vulnerable to climate change induced sea level rise at the same time the country is also very dependent on fossil fuel imports kiribati uses price controls and tax exemptions to make fossil fuels more affordable for low income households this study reviews the subsidies on consumption of fossil fuels specifically gasoline diesel and household kerosene in kiribati and investigates their macroeconomic fiscal distributional and environmental impact the subsidies are quantified using price gap approach over a five year period the subsidies were on average aud 4 2 million when using 2011 2015 data with 2015 tax policies this is equivalent to 2 2 per cent of kiribati gdp over 2011 2014 the average fiscal impact would have been equivalent to 3 7 per cent of government revenues and 29 per cent of government health expenditure apart from being a fiscal burden the subsidies increase greenhouse gas emissions and make kiribati even more dependent on fossil fuel imports and more vulnerable to volatility in international fuel prices no evidence was found to support the argument for using the subsidies to support low income households in fact there are signs of considerable leakages to high income households which is consistent with findings from studies in other countries

production functions for climate policy modeling an empirical analysis abstract quantitative models for climate policy modeling differ in the production structure used and in the sizes of the elasticities of substitution the empirical foundation for both is generally lacking this paper estimates the parameters of 2 level ces production functions with capital labour and energy as inputs and is the first to systematically compare all nesting structures using industry level data from 12 oecd countries we find that the nesting structure where capital and labour are combined first fits the data best but for most countries and industries we cannot reject that all three inputs can be put into one single nest these two nesting structures are used by most climate models however while several climate policy models use a cobb douglas function for part of the production function we reject elasticities equal to one in favour of considerably smaller values finally we find evidence for factor specific technological change with lower elasticities and with factor specific technological change some climate policy models may find a bigger effect of endogenous technological change on mitigating the costs of climate policy

the cost of doing business in africa evidence from enterprise survey data summary data from the world bank enterprise surveys show that indirect costs related to infrastructure and services account for a relatively high share of firms costs in poor african countries and pose a competitive burden on african firms we estimate firm level revenue and value added functions for six industries in 17 developing countries demonstrating that firm performance is sensitive to the cost of indirect inputs as indirect inputs are not usually included in estimations of value added we argue that existing estimates understate the relative performance of african manufacturing firms

structural optimization and carbon taxation in china s commercial sector abstract given china s economic transformation and upgrading process the green development of commercial sector is more and more important based on the trans log cost function this paper calculates the inter factor and inter fuel substitution effects in china s commercial sector from 1980 to 2016 besides the paper further analyzes the driving factors of the dynamic changes in energy intensity and the impact of carbon taxation in china s commercial sector the main conclusions are as follows 1 capital labor and energy in china s commercial sector negatively correlate with their prices and the self price elasticities of energy labor and capital decline in turn 2 the relationship between labor and capital is substitutional and the same relationship is found when after considering labor and energy and that between energy and capital is complementary 3 demand for energy sources negatively correlates with their prices and there exist complementary relationships between energy sources 4 technical effects and substitution effects can effectively promote the decline of energy intensity in china s commercial sector 5 implementing a 50 rmb tonne carbon taxation will lead to 5 50 energy savings and 6 21 co2 reduction

incidence and impact the regional variation of poverty effects due to fossil fuel subsidy reform since fossil fuel subsidy reforms can induce significant distributional shifts and price shocks effective compensation and social protection programs are crucial based on the statistical simulation model by araar and verme 2012 this study estimates the regional variability of direct welfare effects of removing fuel subsidies in nigeria uncompensated subsidy removal is estimated to increase the national poverty rate by 3 4 on average however uniform cash compensation that appears effective at the national average is found to fail to mitigate price shocks in 16 of 37 states thus putting livelihoods and public support for reforms at risk states that are estimated to incur the largest welfare shocks coincide with hotspots of civil unrest following nigeria s 2012 subsidy reform attempt the study illustrates how regionally disaggregated compensation can be revenue neutral and maintain or reduce pre reform poverty rates in all states overall it highlights the importance of understanding differences in vulnerability and designing tailored social protection schemes which ensure public support for subsidy reforms

coordination mechanisms in decentralized serial inventory systems with batch ordering this paper studies a periodic review serial supply chain in which materials are ordered and shipped according to r nq policies three information scenarios are considered depending on the level of information available echelon local and quasilocal in the echelon scenario each stage can access the inventory and cost information within its echelon comprising the stage itself and all downstream stages in the local scenario each stage only accesses its own local information finally in the quasilocal scenario each stage knows its local information plus the actual customer demands we propose coordination schemes that regulate the stages to achieve the supply chain s optimal cost under each information setting all these coordination schemes fit comfortably within an emerging practice called supply chain finance which includes the organization and technology needed to implement them

opec how to transition from black to green gold global discussions on the reduction of co2 emissions and the increasing interest in alternative energy sources and production technologies have started to concern oil exporting nations international discussions on projects such as desert tec might also have sparked their interest to explore a possible diversification of their energy resource production portfolio however extremely low in country retail prices of fossil fuels to date present a significant economic hurdle to such developments this paper uses a formal model setup accompanied by intuitive graphical illustrations as well as a numerical example to analyze fossil fuel abundant nations potential to transition to a supplier of renewable energy as well as possible pitfalls resulting from their status quo situation

rents in the european power sector due to carbon trading abstract the european union emissions trading scheme eu ets has imposed a price on the allowances for co2 emissions of electricity companies integrating this allowance price into the price of electricity earns a rent for companies who have received these allowances for free during phase i 2005 2007 rents corresponding to the aggregate value of allocated allowances amounted to roughly 13 billion per year however due to the specific price setting mechanism in electricity markets true rents were considerably higher this is due to the fact that companies also that have not received any allowances gain additional infra marginal rents to the extent that their variable costs are below the new market price after inclusion of the allowance price producers with low carbon emissions and low marginal costs thus also benefit substantially from carbon pricing this paper develops a methodology to determine the specific interaction of the imposition of such a co2 constraint and the price setting mechanism in the electricity sector under the assumption of marginal cost pricing in a liberalized european electricity market the article thus provides an empirical estimate of the true total rents of power producers during phase i of the eu ets 2005 2007 the eu ets generated in phase i additional rents in excess of 19 billion per year for electricity producers these transfers are distributed very unevenly between different electricity producers in a second step the paper assesses the impact of switching from free allocation to an auctioning of allowances in 2013 we show that such a switch to auctioning will continue to create additional infra marginal rents for certain producers and will leave the electricity sector as a whole better off than before the introduction of the eu ets

the economic impact of subsidy phase out in oil exporting developing countries a case study of algeria iran and nigeria abstract one of the crucial issues of energy markets in oil exporting developing countries is the high level of subsidies on petroleum products and the low efficiency in energy use the purpose of this paper is to investigate the impacts of a subsidy phase out policy on the energy sector and oil revenues in three countries algeria iran and nigeria by using a standard econometric approach we find that the effects of different deregulation policies are substantial we also analyse the impact of a policy based on autonomous energy efficiency improvement finally a combination of both policies is elaborated and quantified our results show that a policy geared at more rational use of energy would permit these countries to save enough oil to meet future increases in demand while maintaining stable production capacity furthermore such an energy policy could result in additional oil revenues which would enhance their economic development

impact of energy subsidies on energy consumption and supply in zimbabwe do the urban poor really benefit abstract twenty percent of zimbabwe s urban poor households are still to be connected to the grid the majority of these households are poor there are several reasons why the zimbabwe urban poor are still not connected to the grid the most important one being the household incomes and the cost of different sources of energy in order to facilitate wider usage of electricity by the poor the policy makers have introduced a subsidy policy the objective of this paper is to ascertain the extent to which the poor urban households could afford the cost of electricity with or without subsidies this gives an indication on whether contrary to the current thinking subsidies are decisive for the affordability of electricity by the urban households the paper also examines the distribution of the subsidies amongst the different urban household income categories and other economic sectors furthermore the impact of such subsidies on the utility s finances is assessed

the impact of increased efficiency in the industrial use of energy a computable general equilibrium analysis for the united kingdom the conventional wisdom is that improving energy efficiency will lower energy use however there is an extensive debate in the energy economics policy literature concerning rebound effects these occur because an improvement in energy efficiency produces a fall in the effective price of energy services the response of the economic system to this price fall at least partially offsets the expected beneficial impact of the energy efficiency gain in this paper we use an economy energy environment computable general equilibrium cge model for the uk to measure the impact of a 5 across the board improvement in the efficiency of energy use in all production sectors we identify rebound effects of the order of 30 50 but no backfire no increase in energy use however these results are sensitive to the assumed structure of the labour market key production elasticities the time period under consideration and the mechanism through which increased government revenues are recycled back to the economy

the dynamic volatility spillover between european carbon trading market and fossil energy market abstract with the rapid spread of carbon trading in the world the interaction of carbon prices and fossil energy prices has raised growing attention but little research has discussed their time varying correlation and dynamic volatility spillover this paper employs the threshold dynamic conditional correlation dcc generalized autoregressive conditional heteroscedasticity garch model and the full baba engle kraft and kroner bekk garch model to explore these issues for the daily data of european carbon futures prices and the three fossil energy prices coal natural gas and brent oil from january 2 2008 to september 30 2014 the results indicate that first there is significant unidirectional volatility spillover from coal market to carbon market and from carbon market to natural gas market whereas there exists no significant volatility spillover between carbon market and brent oil market second carbon market and fossil energy markets have significantly positive correlation across time specifically among the three fossil fuels coal market has the highest correlation with carbon market followed by natural gas and brent oil markets finally as for the three fossil fuels their price decrease may have stronger impact on carbon price volatility than their price increase with the same degree while there is asymmetric impact of carbon price increase and decrease only on brent oil price volatility these results may help investors to well configure their portfolios and manage their investment risks and help emission trading installations to join in carbon market in a cost effective way

estimating elasticities of substitution with nested ces production functions where do we stand abstract prompt by an increasing interest by climate change modelers a rich literature estimating elasticities of substitution in a nested ces production framework has recently developed this article reviews such literature we critically describe the nesting structures estimation approaches data sources and aggregation econometric techniques and types of substitution elasticities used by previous literature to offer a comprehensive description of the various options available to a researcher attempting this estimation we also provide suggestions for potential improvements to the estimation process in particular we warn researchers to use ces production functions with caution in empirical applications given their restrictive build in assumptions

refined oil import subsidies removal in ghana a triple win abstract in this study claims and counterclaims that fossil fuel subsidies removal yields benefits in terms of budget deficits energy efficiency and mitigation are assessed in order to do this a global computable general equilibrium cge model has been estimated to evaluate the impact of subsidies removal on imported refined oil in ghana on prices carbon dioxide co 2 emissions households demand firm s production and real gdp the simulation experiment points to evidence that subsidy removal raises prices increases the rate of co 2 emissions reduces households demand reduces aggregate output and affects various sectors differently the increased rate of co 2 emissions due to the removal of subsidies is indicative of the existence of the so called green paradox these results underscore the fact that a removal of subsidies on fossil fuels may win in some regards but fail in others a general implication from the applied model therefore is one which supports the assertion that removal of subsidies on fossil fuels removal on energy should be implemented along with policies aimed at stimulating economic activities and reducing the level of co 2 emissions especially where there is evidence of the green paradox

fossil fuel subsidy removal and inadequate public power supply implications for businesses abstract we briefly consider the impact of fossil fuel subsidy removal policies in the context of inadequate power supply with a focus on the implications for businesses in doing so we utilize the case of the early 2012 fuel subsidy removal in nigeria the rationale for such subsidy removal policies is typically informed by analysis showing that they lead to an economically inefficient allocation of resources and market distortions while often failing to meet intended objectives however often the realities of infrastructural and institutional deficiencies are not appropriately factored into the decision making process businesses in many developing countries already impaired by the high cost of power supply deficiencies become even less competitive on an unsubsidized basis we find that justifications for removal often do not adequately reflect the specific environments of developing country economies resulting in poor recommendations or ineffective policy

evaluation of cycle count policies for supply chains with inventory inaccuracy and implications on rfid investments inventory record inaccuracy leads to ineffective replenishment decisions and deteriorates supply chain performance conducting cycle counts i e periodic inventory auditing is a common approach to correcting inventory records it is not clear however how inaccuracy at different locations affects supply chain performance and how an effective cycle count program for a multi stage supply chain should be designed this paper aims to answer these questions by considering a serial supply chain that has inventory record inaccuracy and operates under local base stock policies a random error representing a stock loss such as shrinkage or spoilage reduces the physical inventory at each location in each period the errors are cumulative and are not observed until a location performs a cycle count we provide a simple recursion to evaluate the system cost and propose a heuristic to obtain effective base stock levels for a two stage system with identical error distributions and counting costs we prove that it is more effective to conduct more frequent cycle counts at the downstream stage in a numerical study for more general systems we find that location proximity to the customer error rates and counting costs are primary factors that determine which stages should get a higher priority when allocating cycle counts however it is in general not effective to allocate all cycle counts to the priority stages only one should balance cycle counts between priority stages and non priority stages by considering secondary factors such as lead times holding costs and the supply chain length in particular more cycle counts should be allocated to a stage when the ratio of its lead time to the total system lead time is small and the ratio of its holding cost to the total system holding cost is large in addition more cycle counts should be allocated to downstream stages when the number of stages in the supply chain is large the analysis and insights generated from our study can be used to design guidelines or scorecard systems that help managers design better cycle count policies finally we discuss implications of our study on rfid investments in a supply chain

capital energy substitution and the multi level ces production function abstract this paper has clarified a misconception in sato s multi level ces production function and used the function in testing for capital energy substitution in taiwanese manufacturing the empirical results show that capital and energy are substitutes and the aes estimates differ little from those derived from the translog approximation

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

lower bounds for multi echelon stochastic inventory systems we establish lower bounds on the minimum cost of managing certain production distribution networks with setup costs at all stages and stochastic demands these networks include serial assembly and one warehouse multi retailer systems we obtain the bounds through novel cost allocation schemes we evaluate the bounds performance for one warehouse multi retailer systems by comparing them with simple heuristic policies the bounds are quite tight for systems with a small number of retailers we also present simplified proof of known optimality results for serial and assembly systems

atheoretical macroeconometrics a critique abstract the spurious nature of the restrictions used to identify many macroeconometric models has led some researchers to advocate a style of econometric inquiry that is less dependent on prior theoretical restrictions of the sort that were central to the approach of the cowles commission this development which we call atheoretical macroeconometrics is summarized and evaluated in the current paper it is contrasted with an updated version of the cowles commission approach we conclude that while some of the exercises of atheoretical macroeconometrics are valid those that have attracted the most attention and appear the most innovative exogeneity testing impulse response analysis and policy analysis using estimated vector autoregressions are based on incorrect analysis

reducing fuel subsidies and the implication on fiscal balance and poverty in indonesia a simulation analysis abstract there is an urgent need for phasing out fuel subsidies in indonesia due to a severe budget deficit and a worsening of income distribution fuel subsidies of which almost 72 are enjoyed by the 30 of the richest income groups have consumed on average 63 8 of the total subsidies between 1998 and 2013 this paper aims at evaluating the relationship between existing fuel subsidies and fiscal balance and at analysing the poverty impact of phasing out fuel subsidies applying a cge microsimulation this study found that removing 25 of fuel subsidies increases the incidence of poverty by 0 259 percentage points if this money were fully allocated to government spending the poverty incidence would decrease by 0 27 percentage points moreover the 100 removal of fuel subsidies and the reallocation of 50 of them to government spending transfers and other subsidies could decrease the incidence of poverty by 0 277 percentage points however these reallocation policies might not be effective in compensating for the adverse impacts of the 100 removal of fuel subsidies if economic agents try to seek profit through mark up pricing over the increase of production costs

information distortion in a supply chain the bullwhip effect this article originally appeared in management science april 1997 volume 43 number 4 pp 546 558 published by the institute of management sciences consider a series of companies in a supply chain each of whom orders from its immediate upstream member in this setting inbound orders from a downstream member serve as a valuable informational input to upstream production and inventory decisions this paper claims that the information transferred in the form of orders tends to be distorted and can misguide upstream members in their inventory and production decisions in particular the variance of orders may be larger than that of sales and distortion tends to increase as one moves upstream a phenomenon termed bullwhip effect this paper analyzes four sources of the bullwhip effect demand signal processing rationing game order batching and price variations actions that can be taken to mitigate the detrimental impact of this distortion are also discussed

the unequal benefits of fuel subsidies a review of evidence for developing countries summary this paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries on average the burden of subsidy reform is substantial and is approximately neutrally distributed across income groups a 0 25 decrease in the per liter subsidy results in a 5 decrease in income for all groups more than half of this impact arises from the indirect impact on prices of other goods and services consumed by households fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups in absolute terms the top income quintile captures six times more in subsidies than the bottom

good subsidies or bad subsidies evidence from low carbon transition in china s metallurgical industry abstract since the metallurgical industry has become the main source of china s carbon dioxide emissions and energy consumption in recent years low carbon transition in that industry is of great significance for achieving china s carbon reduction targets it is generally believed that phasing out fossil fuel subsidies is an effective way to reduce energy related co2 emissions since it can increase the energy prices and lower its consumption this paper aims to investigate whether the energy subsidy removal can promote the low carbon transition of china s metallurgical industry taking inter fuel and inter factor substitution effects as the link we calculate the co2 mitigation potential on the assumption that the subsidies for each category of fossil energy were eliminated we find that the metallurgical industry has a sluggish reaction to the changes in energy price supposing eliminating the energy subsidies in the period of 2003 2015 the amount of reduced co2 would be 487 286 million tons accounting for a slight proportion of the total emissions in the industry but it is meaningful for the global co2 mitigation since it approximates the whole co2 emissions in norway during the same period these findings can provide some new insights for the energy subsidy issue and suggest that the additional measures are required to promote the low carbon transition in china s metallurgical industry rather than just relying on the removal of fossil fuel subsidies

sustainable energy development in nigeria current status and policy options abstract sustainable energy development focuses on maintaining the provision of energy in a manner that can enhance the short medium and long term economic development of a country the provision of sustainable energy requires the development and implementation of technologies that can improve the energy situation of a given country such as renewable energy energy efficient technologies and the proper use of conventional energy resources to achieve this effective energy policy options must be instigated that can adjust to changing circumstances in nigeria the development of sustainable clean modern energy is an immense challenge as is the proper use of the country s conventional energy resources this is as due to the lack of effective support policies and poor participation by the government in clean energy development the energy situation in nigeria could be improved by the provision of adequate energy policy options designed to augment existing energy policies this study critically reviews the current status of energy resources in nigeria and the associated policies important policies unavailable under current government strategies are proposed and prioritised based on their likelihood of success in short medium and long term among the most important policies based on priorities are policies to address crude oil theft complete deregulation of the petroleum subsectors utilisation of associated gases creation of favourable business climate for private investors increase attraction for foreign direct investment in clean energy technology renewable portfolio standards development introduction of tendering schemes use of efficient fuel stoves development of demand side bidding and energy efficiency standard law we believe that these proposed policy options could improve the sustainable development of nigeria s energy resources

impacts of energy subsidy reform on the malaysian economy and transportation sector malaysia is paying a high level of subsidies on the consumption of energy about 5 of its gdp therefore reforming the energy subsidies as planned by the government will have a significant impact on household welfare and energy intensive sectors such as the transport sector this study employs a computable general equilibrium cge model to highlight the transmission channels through which the removal of energy subsidies affects the domestic economy the findings show that the shock increases real gdp and real investment while decreasing malaysian total exports and imports the removal of energy subsidies also decreases the aggregate energy demand and consequently decreases the level of carbon emissions in the malaysian economy in addition households experience significant falls in their consumption and welfare the transport sector is significantly influenced through an increase in production costs due to an increase in the prices of intermediate inputs the total output and total exports of the whole transport sector decrease while its imports increase in addition the use of all kinds of transport by households decreases significantly the malaysian energy subsidy reform leads to an initial decrease in co2 emissions and demand for electricity gas and petroleum products in the entire transport sector

information sharing in credit markets we present a model with adverse selection where information sharing between lenders arises endogenously lenders incentives to share information about borrowers are positively related to the mobility and heterogeneity of borrowers to the size of the credit market and to advances in information technology such incentives are instead reduced by the fear of competition from potential entrants in addition information sharing increases the volume of lending when adverse selection is so severe that safe borrowers drop out of the market these predictions are supported by international and historical evidence in the context of the consumer credit market a large body of literature on credit markets has shown that asymmetric information may prevent the efficient allocation of lending leading to credit rationing e g jaffee and russell 1976 stiglitz and weiss 1981 or to a wedge between lending and borrowing rates e g king 1986 in this literature informational asymmetries are taken to be exogenous lenders fail to observe some relevant characteristic or action of potential borrowers and have no way of learning about it in some countries however lenders can improve their knowledge about new customers by exchanging information with other lenders through information brokers generally known as credit bureaus the latter collect file and distribute the information voluntarily supplied by their members and operate on the principle of reciprocity lenders who do not provide data are denied access to the bureau s files in other countries instead these institutions do not exist the literature offers no guide to identify the factors that lead to endogenous communication between lenders this paper is an attempt to fill the gap information sharing is important for a number of reasons it may increase the degree of competitiveness within credit markets vives 1990 improve

first evidence of asymmetric cost pass through of eu emissions allowances examining wholesale electricity prices in germany abstract we test the hypothesis that rising prices of emission allowances have a stronger impact on wholesale electricity prices than falling prices asymmetric cost pass through using an autoregressive distributed lag model we confirm this hypothesis for the german market

energy conservation in electricity generation a case study of the electricity and water industry in kuwait this paper has examined possibilities of energy conservation in the generation of electricity and water in kuwait this has been done through analysing the underlying production structure by employing a translog flexible cost function and using series data the results show that in the absence of changes in factor prices fuel intensity of electricity and water is expected to increase with increase in output furthermore capital and fuel are found to be substitutes overall the evidence suggests that energy conservation can be achieved by using fuel prices as instruments this is likely to induce demand for new capital and hence promote productivity gains

bullwhip effect and supply chain costs with low and high quality information on inventory shrinkage abstract inventory inaccuracy is the mismatch between the recorded inventory and the physical inventory which is severe and widespread in industry a few studies have investigated the bullwhip effect with the existence of inventory inaccuracy the development of information technologies has provided companies with access to accurate inventory information in real time this will surely affect the bullwhip effect and supply chain costs the aim of this paper is to build an analytical model to systematically investigate these effects we consider a retailer manufacturer supply chain in which the retailer faces inventory shrinkage which is the main cause of inventory inaccuracy both the situations with accurate real time inventory information i e high quality information and the situation with statistical inventory information i e low quality information are studied we examine the relationships between the bullwhip effect information distortion and supply chain costs with different levels of information quality the results of our analysis enrich the existing literature on the bullwhip effect first we show that the bullwhip effect is magnified along the chain when higher quality information on inventory shrinkage specifically real time rather than statistical data is obtained second we show that the magnification of the bullwhip effect does not necessarily result in higher costs third we demonstrate that higher quality information increases the benefits of information sharing our paper provides new insights into the causes extent and economic dynamics of order variability in the presence of inventory inaccuracy and may thus suggest ways of more effectively managing the bullwhip effect and inventory

economic performance of flexible functional forms flexible functional forms are well behaved over restricted regions the outer domain and constitute good approximations of a hypothetical true technology set of preferences over only a subregion of the outer domain the inner domain comparison of such forms has been made in terms of outer domain ideally il should also cover the inner domain by definition however the inner domain is unquantifiable instead functions representing producer technology consumer preferences can be characterized and compared in terms of what we call in this paper economic performance focusing on the producer side we demonstrate that relative differences and associated implications for equilibrium modeling can be substantial

estimating petroleum products demand elasticities in nigeria a multivariate cointegration approach this paper formulates and estimates petroleum products demand functions in nigeria at both aggregative and product level for the period 1977 to 2006 using multivariate cointegration approach the estimated short and long run price and income elasticities confirm conventional wisdom that energy consumption responds positively to changes in gdp and negatively to changes in energy price however the price and income elasticities of demand varied according to product type kerosene and gasoline have relatively high short run income and price elasticities compared to diesel overall the results show petroleum products to be price and income inelastic

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

fuel switching as an option for medium term emission reduction a model based analysis of reactions to price signals and regulatory action in german industry abstract the german federal government has set a target for german industry to reduce its ghg emissions by 49 51 by 2030 compared to 1990 fuel switching to electricity and biomass is a potential measure to meet this target in this article we simulate the contribution of fuel switching by applying economic incentives and regulatory measures the policy instruments of a co2 price and technology specific subsidies are applied with varying intensity in addition we simulate accelerated stock replacement and a ban on new fossil based steam generation systems results show that combining fuel switching and energy efficiency could achieve emission reductions of 50 by 2030 compared to 1990 only combined with considerable economic pressure up to 300 tco2 and financial support for electricity based process heating we observe that neither a co2 price nor investment grants for electric process heating equipment are effective instead substantial reductions of electricity prices and accelerated stock replacement are effective levers meeting the german emissions target for industry increases the modelled system costs by 20 compared to a case without additional policies we conclude that an effective policy mix to incentivise fuel switching to electricity needs to address operating costs and stock replacement rather than capital expenditures

impacts of increasing renewable energy subsidies and phasing out fossil fuel subsidies in china abstract subsidies to fossil fuel consumption have made china s energy system fragile and unsustainable it is necessary for china to reform fossil fuel subsidies and reflect the resource cost and environmental cost in energy prices considering the life cycle external costs this paper estimates the scale of fossil fuel subsidy and the true cost of renewable energy in 2010 and evaluates impacts of increasing renewable energy subsidies and phasing out fossil fuel subsidies on macro economy and energy system in china based on scenario analysis simulation results show that the negative impacts on economic growth can be reduced from 4 460 to 0 432 if only 10 of fossil fuel subsidies were removed increasing subsidies for renewable energy has positive impacts on macroeconomic variables although the economic benefits per unit of subsidies for renewable energy are lower than those for fossil fuels by 0 06 0 19 cny the revenue gap can be narrowed by shifting more subsidies from fossil fuels to renewables increasing subsidies for renewable energy helps optimize china s energy system in three ways the first is making energy consumption structure cleaner the second is improving energy efficiency and the third is addressing the problem of imbalanced distribution and consumption of energy

causalities between co2 electricity and other energy variables during phase i and phase ii of the eu ets the topic of this article is the analysis of the interplay between daily carbon electricity and gas price data with the european union emission trading system eu ets for co2 emissions in a first step we have performed granger causality tests for phase i of the eu ets january 2005 until december 2007 and the first year of phase ii of the eu ets 2008 the analysis includes both spot and forward markets given the close interactions between the two sets of markets the results show that during phase i coal and gas prices through the clean dark and spark spread impacted co2 futures prices which in return granger caused electricity prices during the first year of the phase ii the short run rent capture theory in which electricity prices granger cause co2 prices prevailed on the basis of the qualitative results of the granger causality tests we obtained the formulation testable equations for quantitative analysis standard ols regressions yielded statistically robust and theoretically coherent results

how competitive are eu electricity markets an assessment of ets phase ii this paper studies the interactions between electricity and carbon allowance prices in the year ahead energy markets of france germany united kingdom and the nordic countries during phase ii of the eu ets var and granger causality methods are used to analyze causal interfaces whereas the volatility of electricity prices is studied with basic and asymmetric ar garch models among the main results the marginal rate at which carbon prices feed into electricity prices is shown to be ca 135 in the eex and nord pool markets where electricity and carbon prices display bidirectional causality and 109 in the uk therefore generators in these markets internalized the cost of freely allotted emission allowances into their electricity prices considerably more than the proportionate increase in costs justified by effective carbon intensity moreover electricity prices in france are found to granger cause the carbon price this study also shows how european electricity prices are deeply linked to coal prices among other factors both in terms of levels and volatility regardless of the underlying fuel mix and that coal was marginally more profitable than gas for electricity generation eu policies aimed at increasing the carbon price are likely to be crucial in limiting the externalities involved in the transition to a low carbon system

quantifying the impacts of energy price reform on living expenses in saudi arabia abstract as part of vision 2030 saudi arabia has initiated a broad based energy reform programme aimed at gradually reducing its dependence on oil this paper assesses the impacts of energy price reforms on living expenses of various household groups in saudi arabia for this purpose the input output table combined with household expenditure data are used to model the impacts results show that the distributional impacts of energy price reforms are regressive with low income households experiencing a higher increase in living expenses compared to high income households the impacts are primarily instigated by rising prices of energy intensive products after decomposing the impacts into direct and indirect effects it was found that indirect effect is not only responsible for a considerable rise in household expenditure on energy intensive products but it is also distributionally regressive it is therefore vital for policymakers to review and fine tune the social protection system to protect poor households against reforms

a reexamination of the role of thermodynamics for environmental economics abstract as the discussion about the role of thermodynamics in environmental economics has not led to a conclusion yet a more fundamental approach seems to be necessary which also takes into consideration the relationship between economics and the natural sciences in general to this end value theory is chosen as a starting point because it is the centerpiece of every economic theory it is shown that neoclassical environmental economics suffers from serious deficiencies because of its value concept heedlessly copied from classical mechanics thermodynamics can be expected to be helpful to redress these defects because the economy can be thought of as a dissipative structure dependent on its environment the obvious way to integrate thermodynamics consists in the formulation of thermodynamic constraints to complement neoclassical environmental economics but this approach remains unsatisfactory because the neoclassical mechanical hardcore is incompatible with the entropy law and its implications evidently the neoclassical paradigm and its value concept have to be given up but the alternative of the energy theory of value must be rejected because its determinism cannot be reconciled with the richness of human behaviour as thermodynamic analogies offer no solution either there is a dilemma between the necessity and the apparent impossibility of adequately integrating thermodynamic concepts it turns out that a normative inconsistency is responsible which is due to the demand for intergenerational justice therefore the integration of thermodynamics into environmental economics hinges on a meta economic value decision if sustainability is adopted as the guiding principle the insights of thermodynamics call for a macro economic environmental policy setting absolute limits to the economy but this macro policy is incompatible with neoclassical economics so that a social reconstruction of economics based on a social theory of value becomes necessary in sum thermodynamics is important for environmental economics besides fulfilling a general heuristic function it also fulfils a decisive conceptual and an analytical function insofar as it helps to justify sustainability and to operationalize macro economic environmental policy

the structure of periodic review policies in the presence of random yield this work provides a comprehensive analysis of a general periodic review production inventory model with random variable yield existence of an order point whose value does not depend on yield being random is proved in the single period case without specifying the yield model and using a very general cost structure when yield is a random multiple of lot size the nonorder up to optimal policy is characterized for a finite horizon model the finite horizon value functions are shown to converge to the solution of an infinite horizon functional equation and the infinite horizon order point is shown to be no smaller than when yield is certain

sharing default information as a borrower discipline device abstract creditors often share information about their customers credit records besides helping them to spot bad risks this acts as a disciplinary device if creditors are known to inform one another of defaults borrowers must consider that default on one lender would disrupt their credit rating with all the other lenders this increases their incentive to perform however sharing more detailed information can reduce this disciplinary effect borrowers incentives to perform may be greater when lenders only disclose past defaults than when they share all their information in some instances by fine tuning the type and accuracy of the information shared lenders can raise borrowers incentives to their first best level

how substitutable is natural capital one of the recurring themes in the sustainability literature has been the extent to which a loss of natural capital can be made up for in welfare terms by an increase in other forms of capital this issue was raised early on in the debate on sustainability by pearce and has never really been resolved this paper is an empirical attempt to measure the degree of substitutability between different forms of capital a nested ces production function is used to allow flexibility in the estimated elasticities of substitution also within this specification natural resources and other inputs are combined in different levels of the function thus allowing for different levels of substitutability institutional and economic indicators are also incorporated in the production function estimated results show that the elasticities derived from functions involving land resources were generally around one or greater implying a fairly high degree of substitutability furthermore changes in trade openness and private sector investment have a statistically significant and direct relationship on the efficiency of production and hence on income generation no statistically significant relationship between income and any of the institutional indicators was found

a nested ces approach to capital energy substitution abstract this paper uses the nested constant elasticity of substitution ces production function to estimate elasticities of substitution between capital labour energy and materials over the 1971 1976 period around the initial energy crisis elasticities are estimated for each of the two digit sic industries within us manufacturing using more disaggregate four digit sic data the nested ces function makes it possible to distinguish between engineering and economic elasticities of substitution capital and energy are estimated to be slight engineering substitutes and economic complements labour energy and materials are estimated economic substitutes

reducing subsidies on household fuels in india how will it affect the poor kerosene and lpg are widely used in households in india for lighting and cooking these fuels have historically been subsidized as part of the restructuring of the energy sector the government is committed to limiting these subsidies this paper examines the impact of reducing energy subsidies on the welfare of the poor the paper uses data from nationally representative surveys of over 100 000 households the paper concludes that the case for reducing lpg subsidies is strong although the kerosene subsidy is an inefficient means of subsidizing fuel use by the poor reduction in it will need to be supported by other policies that would limit the adverse impacts

dynamic multiscale interactions between european carbon and electricity markets during 2005 2016 this study explores the dynamic multiscale interactions between carbon and electricity markets during phases i 2005 2007 ii 2008 2012 and ongoing iii 2013 2016 by introducing the bivariate empirical mode decomposition bemd linear and nonlinear granger causality tests firstly bemd is used to decompose the european carbon and electricity prices into several pairs of simple modes with different timescales secondly causality tests are performed at each pair of modes with a similar timescale significant but asymmetric causalities can be found that the bidirectional linear causality turns to a unidirectional one running from the electricity price to the carbon price from phase i to phase iii whereas the nonlinear interaction enhances from insignificance to significance during the three phases the causality at short timescale is consistent with that of the original data while the causalities at mid and long timescales are more diversified the findings obtained show that the effect of carbon market on the electricity market is weakening which indicates that it is needed to increase its efficiency by raising the carbon price moreover a dynamic adjusting mechanism of emission allowances will be called for as well as the guidance aimed at different timescales in the future

what happens to the relationship between eu allowances prices and stock market indices in europe abstract the stock market may reflect the economic conditions of an economy and a positive economic situation is expected to improve the companies profits which makes company shares more attractive since the expected dividends to shareholders will be larger theoretically higher economic activity leads to higher energy demand and consequently higher carbon emissions which give rise to higher eu allowances eua prices therefore the stock market and eua prices seem to be connected with causality going from the stock markets to eua prices this paper formally tests for it showing that the causality effectively runs from the stock market to the european climate exchange market furthermore the paper studies the effects of the evolution of european stock markets on the eua spot prices

household heterogeneity impact of removing energy subsidies in china direct and indirect effect abstract reforming subsidies for fossil fuels is a challenging prospect for many governments the impact of such a reform on households is a major concern for the government this paper investigates the heterogeneous impacts of eliminating energy subsidies on households in china from direct and indirect perspectives the results of the direct effects show that the removal of energy subsidies particularly for removing electricity and gas subsidies has a greater negative impact on the poor than on the rich from an indirect perspective this article shows that the lower the per capita disposable income the higher the proportion of consumption to disposable income and the greater the indirect impact of eliminating subsidies meanwhile the impact is not only related to household income but consumer goods moreover the indirect effects of eliminating subsidies on households differ across energy types specifically eliminating electricity subsidies has the greatest effect on households followed by transportation fuel and gas we suggest that targeted supportive measures need to be taken towards the implementation of subsidy reform particularly in countries with greater inequality to minimize the negative effects on the poor

impacts of removing fuel import subsidies in nigeria on poverty abstract the petroleum sector contributes substantially to the nigerian economy however the potential benefits are diminished due to the existence of significant subsidies on imports of petroleum products subsidies on imported petroleum products are considered to be an important instrument for keeping fuel prices and hence the cost of living low the costs of these subsidies however has risen dramatically in recent years due to increased volatility in world petroleum and petroleum product prices and increased illegal exportation of subsidized petroleum products into neighboring countries removing the subsidy on fuel is one of the most contentious socio economic policy issues in nigeria today in this paper an economy wide framework is used to identify the impact of removing the fuel subsidy on the nigerian economy and investigates how alternative policies might be used to meet socio economic objectives related to fuel subsidies the results show that while a reduction in the subsidy generally results in an increase in nigerian gdp it can have a detrimental impact on household income and in particular on poor households accompanying the subsidy reduction with income transfers aimed at poor households or domestic production of petroleum products can alleviate the negative impacts on household income

distributional effects of reducing energy subsidies evidence from recent policy reform in argentina abstract we analyze the distributional effects of the reduction in energy subsidies in argentina since 2016 as the policy reform also includes the introduction of a scheme to protect less well off families social tariff we also review how well the targeting mechanism works we apply traditional benefit incidence analysis using household surveys and administrative data focusing on residential subsidies to piped natural gas and electricity in the buenos aires metropolitan area we find that the social tariff is relatively pro poor with significantly higher coverage among the poorest households there are some exclusion errors in the low income deciles and large inclusion errors in the medium and high income deciles the distributive incidence of subsidies does not appear to have changed substantially energy subsidies in argentina albeit lower in aggregate terms continue to be although progressive pro rich this is in large part due to the prevalence of the general flat subsidy rate mechanism over the social tariff mechanism regarding energy budget shares monthly spending on electricity has increased from 1 1 of total household income to 3 4 monthly spending on piped natural gas rose from 1 3 to 3 3 these shares are in line with many other countries in the region naturally there has been a convergence of tariffs towards service provision costs which becomes central in order to incentive sectoral investment and stimulate a good provision of services

household welfare implications of fossil fuel subsidy reforms in developing countries abstract with over 200 countries reaching an agreement with the stated aim of restricting global warming to well below 2 c above pre industrial levels the most comprehensive climate change agreement was recently signed though most of the hard work lies ahead it marks an important first step for the collective global community to address climate change fossil fuels continue to remain one of the largest contributors to greenhouse gas emissions and for many developing countries high levels fossil fuels continues to enable an overconsumption of fossil fuels given the sensitivity of governments to subsidy reforms this study examines the household welfare implications of the removal of fossil fuel subsidies it finds that while welfare implications are unambiguously positive for government the results are mixed for private households although in an overwhelming majority of cases the results are positive however even in the cases where the welfare implications are negative for private households we find that it is possible for governments to carry out the reforms in such a way as to be welfare improving to households incomes by compensating them with some of the fiscal savings gained from the subsidy reform

energy price variation and competitiveness firm level evidence from indonesia abstract this paper uses firm survey data from the manufacturing and mining sectors in indonesia and investigates the extent to which energy prices affect competitiveness proxied by profitability persistent regional price differences due to indonesia s insular geography enable this study to show that energy prices have a small but statistically significant adverse long run effect on competitiveness though different energy types matter in different sectors by estimating cross and own price elasticities and uzawa allen partial elasticities of inter fuel substitution this study also shows that firms have the ability to respond to higher energy prices by adjusting their energy mix i e substituting certain energy goods for others moreover this study shows that firms also respond to higher energy prices by increasing energy efficiency and by passing on costs to end users nevertheless these response measures are not sufficient to fully mitigate the adverse effect of energy prices on firms based on these results policy recommendations are offered which are of immediate relevance for the design of energy pricing reforms

germany s nuclear power plant closures and the integration of electricity markets in europe this paper examines the potential implications of national policies that lead to a sudden increase of wind power in the electricity mix for interconnected european electricity markets more specifically it examines market integration before and after the closures of eight nuclear power plants that occurred within a period of a few months in germany during 2011 the short and long run interrelationships of daily electricity spot prices from november 2009 to october 2012 in apx endex belpex epex de epex fr nordpool omel and swissix and wind power in the german system are analysed two mgarch multivariate generalized autoregressive conditional heteroscedasticity models with dynamic correlations are used to assess spot market behaviour in the short run and a fractional cointegration analysis is conducted to investigate changes in the long run behaviour of electricity spot prices results show positive time varying correlations between spot prices in markets with substantial shared interconnector capacity a negative association between wind power penetration in germany and electricity spot prices in the german and neighbouring markets and for most markets a decreasing speed in mean reversion

what happens when we forget the effect of removing adverse information on access to credit in a world with asymmetric information past information helps borrowers establish reputation and credibility however can less information be beneficial using a panel of nationally representative sample of borrowers credit bureau information we investigate the impact of the removal of adverse credit information for long time delinquent borrowers in thailand on their access to credit the removal is a deliberated effort by policymakers to allow borrowers to reenter formal credit markets contrary to theoretical prediction we find no evidence of a subsequent expansion in credit