limited liability and the wealth of uncivilised nations adam smith and the limits to the european enlightenment this paper questions the adequacy of the categories of analysis deployed by adam smith to serve as a basis for a progressive critique of corporate power at the open economy level arguing that if a critique of the principle of limited liability and other aspects of the undue influence of corporate power today is to acquire a truly global character then it must avoid becoming confined within the intellectual horizons of the age of the european commercial and colonial empires and should instead contribute towards constructive interaction between a diversity of intellectual institutional and cultural traditions

using genuine savings for climate policy evaluation with an integrated assessment model there has been a recent increase in efforts to develop broader models to assess the impact of climate change and climate change policies both in terms of impact measures beyond gdp and in terms of modelling complexity beyond dice rice models climate policies aimed at reducing co2 emissions can have impacts in multiple sectors of the economy and can change consumption levels over time we show how the sustainability indicator genuine savings can be endogenised within a general equilibrium model and used as a criterion for judging the impacts of such policies in terms of future well being differences in genuine savings rates between co2 emission reduction scenarios are discussed we show how a broader genuine savings based assessment of climate change can result in a re evaluation of the consequences and costs of inaction in terms of various climate change related policies and how multiple environmental and well being outcomes can be analysed within a unified modelling framework

international oil shocks and household consumption in china abstract we investigate the impacts that oil price shocks have on residential consumption in china while it is well understood that oil prices affect consumption in a multitude of ways the timing and directness of these effects on specific consumption categories is not clear we demonstrate that the most immediate and direct effect passes through transportation consumption as might be expected but we also show that significant effects pass through consumption in other sectors including food and clothes medical expenditure and other general living expenditure with less immediacy given the results particularly observed asymmetries with respect to rises and falls in international oil prices we discuss some implications for future adjustments to domestic price policies in particular the case for removal of domestic price regulation

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

evolution of population resource dynamics models abstract this paper provides a comprehensive analysis of brander and taylor s 1998 model and its descendants from the following perspectives population growth substitutability innovation capital accumulation property rights and institutional designs and modeling approach this survey aims to contribute to a better understanding of population and resource dynamics models in general and facilitate further application of the model framework to relevant circumstances although often treated as exogenous in optimal growth models making population growth an endogenous function allows us to analyze broader effects of economic activities on population the issues of substitutability innovation and capital accumulation are intertwined allowing a model to address the effect of an endogenous technological change on substitutability between natural and man made capital facilitates our analyses of sustainability issues to address internalizing inter generational externalities in resource use incorporating property right changes and institutional designs to this type of model is a useful exercise but careful attention is needed for the consistency between such an arrangement and the mathematical representation of the depicted economy finally although the common criticism regarding convenient mathematical assumptions applies to the existing bt type models the use of computer simulation can relax such assumptions to better represent the intended relationships between the relevant variables

progress along the path evolving issues in the measurement of genuine saving more than 10 years since a practical linkage between sustainable development and a measure of national wealth expanded to include natural and environmental resources was first posited the empirical estimation of adjusted net savings dubbed genuine saving has evolved considerably in this paper we take stock of both progress achieved and the challenges that remain we begin by recalling the key points made in pearce and atkinson 1993 ecol econ 8 103 which presented the first cross country estimates of savings rates adjusted to reflect depletion and degradation of the environment we then briefly summarise the evolution of the theoretical argument linking savings and sustainability however the main focus of this paper is an aspect that concerned david pearce greatly namely the evolution of the measurement of genuine savings we identify and consider the empirical evidence with regard to two particular measurement issues the valuation of exhaustible resources and environmental degradation common to the both issues are concerns about measuring changes in national wealth in real world economies

trust and stock price crash risk evidence from china abstract this paper examines the impact of social trust on stock price crash risk social trust measures the level of mutual trust among the members of a society using a large sample of chinese listed firms for the 2001 2015 period we find that firms headquartered in regions of high social trust tend to have smaller crash risks this result is robust to a battery of sensitivity tests and is more prominent for state owned enterprises soes for firms with weak monitoring and for firms with higher risk taking moreover we observe that firms in regions of high social trust are associated with higher accounting conservatism and fewer financial restatements our study suggests that social trust is an important variable that is omitted in the literature investigating the predictors of stock price crashes

climate change industrial transformation and environmental growth traps this paper examines the potential interactions in the global economy between the impacts of climate change on productivity with existing technology and increasing returns in the development of less vulnerable and lower emission technology a simple specification is used in which the global economy can produce a single homogeneous consumption good with two different technologies the old technology has global diminishing returns to scale and depends on the use of fossil energy that gives rise to long lived damaging climate change the new technology has convex concave production due to set up cost and is not vulnerable to climate change through simulations we show that if output with the new technology does not grow fast enough to move through the phase of increasing returns then the economy could experience an environmental growth trap lingering at a low level of income indefinitely or achieving some progress but then getting driven back to a lower level of income by productivity reducing environmental degradation we discuss how the prospects of such a trap depend on the productivity and energy intensity of the old technology as well as the magnitude of the set up cost

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

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

input substitution effect in china s chemical industry evidences and policy implications abstract the chemical industry is one of the six high energy consuming and emission intensive sectors in china and the chinese government has focused its attention on energy saving and emissions reduction in the sector with the aim of contributing to the objective of energy saving and emission reduction in the sector this article studies the external substitution relationship of capital energy and labor energy using the translog production function and ridge regression the results are as follow the output elasticities of energy labor and capital are positive the substitution elasticities of capital labor capital energy and labor energy are positive and stable and their values are close to 1 which indicates that the three factors are substitutes for one another furthermore based on the above function we measure the level of energy saving and emissions reduction under different scenarios in 2012 policy implications of the results are provided

short interest and stock price crash risk abstract using a large sample of u s public firms we find robust evidence that short interest is positively related to one year ahead stock price crash risk the evidence is consistent with the view that short sellers are able to detect bad news hoarding by managers additional findings show that the positive relation between short interest and future crash risk is more salient for firms with weak governance mechanisms excessive risk taking behavior and high information asymmetry between managers and shareholders empirical support is provided showing that the relation between short interest and crash risk is driven by bad news hoarding

limited liability and the modern corporation in theory and in practice the catastrophic consequences of a lack of public control over the operations of large private corporations have been thrown into sharp relief by two major events in the recent past the global financial crisis and the deepwater horizon oil spill in the gulf of mexico while these events obviously differ in scope and nature they nevertheless turn the spotlight on a fundamental problem of contemporary capitalism an economic system that facilitates the privatisation of gains in the hands of ever smaller elites while also socialising risk losses in an anarchic manner to the detriment of the many is not politically viable in the long run this is the case in particular if a core element of this system s legitimacy is its claim to promote democracy at home and around the world based on principles of transparency and accountability both the global financial crisis and the deepwater horizon oil spill have already attained the status of watershed events mainly because the social economic and environmental risks inflicted by private actors on very large groups of people were extraordinary and the causes of failure to manage these risks were systemic rather than accidental at the heart of the systemic nature of these watershed failures lies the gradual evolution of the modern corporation into organisations with the power to re shape in their favour a changing and varied history of precarious balancing acts between public and private interests in advanced capitalist economies from its beginnings capitalism has been defined by the primacy of economic over political organisation most famously encapsulated in adam smith s metaphor of the invisible hand much later albert hirschman s insightful account of how the interests gradually came to outweigh the passions hirschman 1977 provides a detailed analysis of such early legitimisation patterns according to which the pursuit of individual freedom and economic selforganisation would be the driving force of political pacification and collective civilisation yet from the beginning such high expectations were curbed by warnings of potential conflicts between private and public interests if the former became too powerful thus adam smith himself pointed out that t o widen the market and to narrow the competition is always the interest of the dealers to widen the market may frequently be agreeable to the interest of the public but to narrow the competition must always be against it and can serve only to enable the dealers by raising their profits above what they naturally would be to levy for their own benefit an absurd tax on the rest

corporate limited liability and cambridge economics in the inter war period robertson keynes and sraffa this article investigates the contribution of three well known cambridge economists dennis robertson john maynard keynes and piero sraffa to the analysis of limited corporate liability in relation to the separation of ownership from control the paper argues that although as is to be expected these economists develop different approaches and overall conclusions on the issue of corporate limited liability and the separation of ownership from control their interpretations converge nevertheless on important points put differently robertson keynes and sraffa raised the same micro and macro economic issues but came up with different answers their shared concerns as well as their varied answers display an undeniable modernity and thus remain very relevant to contemporary considerations on firm governance especially in the context of the present global economic crisis

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

institutional investor stability and crash risk monitoring versus short termism this study tests two opposing views of institutional investors monitoring versus short termism we present evidence that institutional investor stability is negatively associated with 1 year ahead stock price crash risk consistent with the monitoring theory of institutional investors but not the short termism theory our findings are shown to be robust to alternative empirical specifications estimation methods and endogeneity concerns in addition we find that institutional ownership by public pension funds bank trusts investment companies and independent investment advisors is significantly negatively positively associated with future crash risk consistent with findings that pension funds more actively monitor management than other types of institutions

beyond gdp an overview of measurement issues in redefining wealth in the last decades a growing quantity of literature has been written about concepts such as quality of life and well being as a proxy for evaluating societal prosperity and progress this paper analyses the theoretical foundations and the empirical validity of multi dimensional technical tools that can be used for well being measurement there is no doubt that there is a lot of complexity and fuzziness inherent in multi dimensional concepts such as well being a possible reduction of this complexity a pre condition for policy making introduces the problem of the descriptors used indicators and indexes in a multi dimensional framework multi criteria evaluation is a consistent approach for the construction of so called composite indicators often some individual indicators improve while others deteriorate this is the classical conflictual situation dealt with in multi criteria evaluation in particular non compensatory methods are quite relevant since compensability implies complete substitutability between different types of capital uncertainty and sensitivity analysis can estimate the robustness of the results obtained and help the framing of the debate around the conceptual framework used that is which representation of reality and thus which societal values and interests has been considered

energy efficiency and economic growth a retrospective cge analysis for canada from 2002 to 2012 abstract the efficiency with which energy is used by firms and households has widespread impacts on economic activity which in turn has implications for environmental quality and energy security using a novel method that could be used for other jurisdictions we estimate the impact of energy efficiency improvements on canadian gdp employment economic structure and welfare from 2002 to 2012 we use a counterfactual back casting method with a sectorally and regionally disaggregated dynamic recursive computable general equilibrium model in effect reverse calibrating the model from observed data to isolate the effects of energy efficiency we estimate that total energy efficiency improvements in canada during this period increased gdp by 2 0 0 19 yr employment by 2 5 0 24 yr and household welfare by about 1 5 0 15 yr additionally energy efficiency improvements reoriented economic structure from capital intense energy supply sectors to relatively labour intense manufacturing and services we find evidence of widespread rebound on an energy expenditure basis across most sectors and backfire where energy efficiency leads to absolute energy use increases in oil sands in situ extraction bitumen upgrading shale gas extraction lime production pulp paper and metal smelting but overall energy use is reduced by energy efficiency improvements over this period

market and political regulatory perspectives on the recent accounting scandals not surprisingly the recent accounting scandals look different when viewed from the perspectives of the political regulatory process and of the market for corporate governance and financial reporting we do not have the opportunity to observe a world in which either market or political regulatory processes operate independently and the events are recent and not well researched so untangling their separate effects is somewhat conjectural this paper offers conjectures on issues such as what caused the scandalous behavior why was there such a rash of accounting scandals at one time who killed arthur andersen the securities and exchange commission or the market did fraudulent accounting kill enron or just keep it alive for too long what is the social cost of financial reporting fraud does the united states in fact operate a principles based or a rules based accounting system was there market failure or was there regulatory failure or both was the sarbanes oxley act a political and regulatory overreaction does the united states follow an ineffective regulatory model

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

limited liability and multinational enterprises a case for reform in the context of corporate groups the legal principles of limited liability and corporate separation can lead to injustice in cases of harmto involuntary creditors by externalising risks that ought to be internalised by the enterprise as the better risk taker the avoidance of responsibility can be achieved by interposing a separate legal entity between the victims and the ultimate controller of the group be it a parent company or its controlling shareholders the resulting lack of legal responsibility could be remedied in a number of ways ranging from adaptations of existing exceptions to the doctrine of limited liability to outright abolition of limited liability preference is given to a statutory principle of enterprise liability for the controlling entity the implications of these doctrines are also discussed in relation to the choice of jurisdiction in which to bring a legal action

discounting in the presence of scarce ecosystem services abstract the discount rate for cost benefit analysis has to take account of future scarcity of ecosystem services in consumption and production previous literature focuses on the first aspect and shows the importance of the relative price effect for given growth rates of consumption and ecosystem services this paper focuses on intermediate ecosystem services in production and shows that for limited substitutability and a low growth rate of these ecosystem services the growth rate of consumption and thus the discount rate declines towards a low value using a ramsey growth model the paper distinguishes three cases if ecosystem services can be easily substituted the discount rate converges to the usual value in the long term secondly if ecosystem services can be easily substituted in production but not in consumption the relative price effect is important finally and most interestingly if ecosystem services cannot be easily substituted in production the discount rate declines towards a low value and the relative price effect is less important another part of the previous literature has shown that a declining discount rate is the result of introducing several forms of uncertainty but this paper reaches that conclusion from an endogenous effect on the growth rate of the economy

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

why finance ministers favor carbon taxes even if they do not take climate change into account fiscal considerations may shift governmental priorities away from environmental concerns finance ministers face strong demand for public expenditures such as infrastructure investments but they are constrained by international tax competition we develop a multi region model of tax competition and resource extraction to assess the fiscal incentive of imposing a tax on carbon rather than on capital we explicitly model international capital and resource markets as well as intertemporal capital accumulation and resource extraction while fossil resources give rise to scarcity rents capital does not with carbon taxes the rents can be captured and invested in infrastructure which leads to higher welfare than under capital taxation this result holds even without modeling environmental damages it is robust under a variation of the behavioral assumptions of resource importers to coordinate their actions and a resource exporter s ability to counteract carbon policies further no green paradox occurs instead the carbon tax constitutes a viable green policy since it postpones extraction and reduces cumulative emissions

genuine savings and sustainability genuine savings gs has emerged as the leading economic indicator of sustainable economic development at the country level it derives from the literatures on weak sustainability wealth accounting and national income accounting we discuss the theoretical underpinnings of gs focusing on the relationship between changes in a nation s extended capital stock and the future path of consumption the indicator has entered widespread use propelled by the world bank s publications despite its varying performance as a predictor for future consumption notwithstanding the extensive body of literature reviewed promising future research avenues are identified

sustainable development the hartwick rule and optimal growth defining sustainable development as non declining utility the consistency of this concept with the hartwick rule and optimal growth is explored when resources are exhaustible a simple proof that a generalized hartwick rule is necessary and sufficient for constant consumption is derived the existence of a maximal constant consumption path is shown to depend critically on the elasticity of substitution if this is less than 1 consumption declines if it is greater than 1 then consumption is not maximal if it is equal to 1 the cobb douglas case then existence is proved consumption can increase along an optimal path if the pure rate of time preference is 0 if it is non zero then consumption declines

opaque financial reports r2 and crash risk abstract we investigate the relation between the transparency of financial statements and the distribution of stock returns using earnings management as a measure of opacity we find that opacity is associated with higher r2s indicating less revelation of firm specific information moreover opaque firms are more prone to stock price crashes consistent with the prediction of the jin and myers 2006 r2 around the world new theory and new tests journal of financial economics 79 257 292 model however these relations seem to have dissipated since the passage of the sarbanes oxley act suggesting that earnings management has decreased or that firms can hide less information in the new regulatory environment

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

mutual fund herding and stock price crashes abstract we investigate the impact of mutual fund herding behaviours on stock price crashes there are competing hypotheses with respect to how investors herding behaviours are associated with information processing our empirical evidence shows that mutual fund herding is associated with a poor information environment and low disclosure quality more importantly mutual fund herding amplifies stock price crash risk afterwards the main finding is concentrated on buy herding rather than sell herding to mitigate the endogeneity concern we use the 2004 sec mutual fund disclosure regulation change as an exogenous shock and the results hold we further use propensity score matching to alleviate the impact of information asymmetry finally additional analysis reveals that our results are not driven by the price impact hypothesis

limited liability shareholder rights and the problem of corporate irresponsibility there has long been a tendency to see the corporate legal form as presently constituted as economically determined as the more or less inevitable product of the demands of advanced technology and economic efficiency through an examination of its historical emergence focusing in particular on the introduction of general limited liability and the development of the modern doctrine of separate corporate personality this paper takes issue with this view arguing that the corporate legal form was and is in large part a political construct developed to accommodate and protect the rentier investor it is moreover a construct which institutionalises irresponsibility against this backdrop different ways of trying to resolve the problem of corporate irresponsibility are explored the key the paper suggests is to be found in decoupling the privilege of limited liability from rights of control

wealth and sustainable development the role of david pearce green net national product was thought to be one way of measuring sustainable income however david pearce understood that a better measure of sustainable development was to look at what a generation is leaving in form of capital assets to later generations in this article his arguments and insights are highlighted against recent theoretical advances

efficiency and the bear short sales and markets around the world we analyze cross sectional and time series information from 46 equity markets around the world to consider whether short sales restrictions affect the efficiency of the market and the distributional characteristics of returns to individual stocks and market indices we find some evidence that prices incorporate negative information faster in countries where short sales are allowed and practiced a common conjecture by regulators is that short sales restrictions can reduce the relative severity of a market panic we find strong evidence that in markets where short selling is either prohibited or not practiced market returns display significantly less negative skewness

the informational effects of restrictions on short sales some empirical evidence in a world of heterogeneous investors a competitive financial market has two major functions first it is the mechanism by which ownership of the existing supply of risky assets is distributed among investors this is the role which is analyzed in detail by the standard capital asset pricing model capm and its many extensions the second important market function is to aggregate the diverse information held by different investors into a single price most versions of the capm eliminate the information aggregation function by assuming that investors hold homogeneous beliefs with respect to the probability distribution of asset returns exceptions which deal with some aspects of the problem are lintner 7 grossman 4 grossman and stiglitz 5 and figlewski 1 3

price convexity and skewness this paper develops a model in which investors who are prohibited from short selling agree to disagree on the precision of a publicly observed signal the model implies that the equilibrium price is a convex function of the public signal the model predicts that 1 the stock price reacts more to good news than to bad news 2 the skewness of stock returns is positively correlated with contemporaneous returns but negatively correlated with lagged returns 3 short sale constraints increase rather than decrease skewness and 4 disagreement about information precision increases skewness empirical tests conducted find supportive evidence for all these predictions

short interest explanations and tests cross sectional and time series tests are performed to explain levels and changes in short interest explanatory variables and tests are chosen based on tax arbitrage and speculative reasons for going short short interest is found to follow a seasonal pattern that is weakly consistent with tax based trading stocks with high betas and the existence of convertible securities or options tend to have higher levels of short interest which is con sistent with arbitrage efforts for firms with traded options there is a positive association between the month to month changes in option open interest and short interest prior months returns and changes in short interest are positively related but there is no rela tionship between changes in short interest and returns in the subsequent month

short sales and stock price crash risk evidence from an emerging market abstract using a regulatory change in china as an exogenous shock we find that the removal of short sales constraints increases stock price crash risk this relation is attenuated when firms suffer less from information asymmetry highlighting the effect of interaction between uninformed and informed investors

engineering and econometric interpretations of energy capital complementarity comment in a recent paper in this review ernst berndt and david wood provide a useful clarification of gross and net complementarity pointing out that energy and capital can be gross substitutes in a production subfunction and yet net complements in the aggregate production function using this theoretical proposition they attempt to reconcile the econometric findings of energy capital complementarity with other studies finding energy capital substitutability their reconciliation rests on the finding that those studies finding energy capital substitutability considered only capital k labor l and energy e by omitting materials m one obtains only a gross elasticity the net elasticity which allows for the additional substitution between the kle aggregate and m can indicate energy capital complementarity in fact klem studies generally find energy and capital complementarity the purpose of this comment is to question whether the net and the gross elasticity distinction provides such a reconciliation among the econometric results i agree that this explanation tends to reduce the disparity between the original berndt wood elasticity estimate and griffin gregory yet three independent sources of evidence suggest that the omission of m is not a sufficient explanation and probably not even a major explanation for the disparity of findings first the difference between the gross elasticity in a kle submodel and the net elasticity in a klem model depends critically on the elasticity of substitution between m and kle let us adopt the berndt wood notation and consider their mathematical example which demonstrates the possibility of gross capital energy substitutability as in the griffin gregory study with net capital energy complementarity

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

green growth degrowth and the commons the concepts of green growth and degrowth occupy central positions in the public debate on the relationship between economic growth and the environment while proponents of the former approach claim that environmental measures can promote growth by for example more efficient use of natural resources proponents of the latter maintain that environmental integrity can only be upheld by slowing down growth this paper argues that both approaches constitute inadequate foundations for public policy as they fail to appropriately conceptualize social welfare we show how policy aimed at social welfare can be understood as managing a portfolio of capital stocks some of which exhibit the characteristics of commons i e common pool resources and public goods we then propose a programme of welfare diagnostics which aims at establishing minimum thresholds for capital stocks essential to welfare as a guide for real world policy formulation and discuss the role of appropriation of natural resource rents for its practical implementation we conclude by highlighting the central role of scientific policy advice in determining how different conceptions of welfare would be reflected in setting targets and choosing the means to achieve them

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

globalisation corporate legal liability and big business houses in india this paper situates the development of the limited liability partnership in india in the context of the real processes of neoliberal globalisation and liberalisation which will distinguish it from the idealised versions put forward by neoclassical theorists in these processes big business has driven a particular type of liberalisation to expand and enhance its profit opportunities often using unorthodox methods like legal provisions for the hindu undivided family to gain tax exemptions over the years of change in state policy from dirigisme to neoliberalism the support by big business for the limited liability partnership which apparently benefits very small partnerships can be understood by looking at the ways in which this legal form is likely to further enhance profits by helping big business reduce its potential liabilities copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

governance regulation and financial market instability the implications for policy just as the 1929 stock market crash discredited classical economic theory and policy and opened the way for keynesianism a consequence of the collapse of confidence in financial markets and the banking system and the effect that this has had on the global macro economy is currently discrediting the conventional wisdom of neo liberalism this paper argues that at the heart of the crisis is a breakdown in governance that has its roots in the co evolution of political and economic developments and of economic theory and policy since the 1929 stock market crash and the great depression that followed however while many are looking back to the great depression and to the theories and policies that seemed to contribute to recovery during the first part of the twentieth century we argue that the current context is different from the earlier one and there are more recent events that may provide better insight into the causes and contributing factors giving rise to the present crisis and to the implications for theory and policy that follow

the capital energy complementarity debate revisited this paper argues that the empirical disagreement as to whether capital and energy are complements or substitutes is not likely to be reconciled with aggregate data it demonstrates that price induced changes in the composition of output can cause either outcome in the aggregate even if no technical substitution is possible substitution by consumers and changes in the relative incomes of consumers and foreigners are identified as key factors in determining which outcome arises

subsistence substitutability and sustainability in consumption we propose a representation of individual preferences with a subsistence requirement in consumption and examine its implications for substitutability and sustainability specifically we generalize the standard constant elasticity of substitution ces utility specification for manufactured goods and environmental services by adding a subsistence requirement for environmental services we find that the hicksian elasticity of substitution strictly monotonically increases with the consumption of environmental services above the subsistence requirement and approaches the standard ces value as consumption becomes very large whether the two goods are market substitutes depends on the level of income we further show that the subsistence requirement may jeopardize the existence of an intertemporally optimal and sustainable consumption path our results have important implications for growth development and environmental policy

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

the contractual nature of the firm for their helpful comments i am grateful to armen a alchian yoram barzel keith leffler john s mcgee and dean worcester 1 ronald h coase the nature of the firm 4 economica 386 1937 the paper however was written several years earlier see note 3 infra 2 the social sciences citation index provides the following information breaking down the period of 1966 80 into three five year periods the total citations of coase s firm paper for each subperiod are 1966 70 17 citations 1971 75 47 citations and 1976 80 105 citations

energy conservation in china s light industry sector evidence from inter factor and inter fuel substitution following the impressive economic achievements in the past decades china is faced with energy and environmental challenges to carry out more effective and targeted energy policies the heterogeneities of different industrial sectors are of great importance the energy consumption of china s light industry in 2012 was 316 million tons of coal equivalents which is about the energy consumption of south korea the paper explored the substitution relationships between various input factors and fuel sources and showed that electricity price reform is crucial for energy conservation in china s light industry then the dynamics of energy intensity change is examined by decomposing energy intensity into budget effect substitution effect output effect and technology advance effect the result revealed that the substitution effect between input factors is a key driving force however technology progress seems to contribute very little for future energy policy alternatives promoting the implementation of new conservation technology and electricity price reform may be effective measures

short selling and common stock prices an analysis of overall market data and of individual companies traded on the nyse amex and otc markets indicates a positive but statistically insignificant relation between changes in short position and stock prices even after accounting for market movements and risk short sellers on average do not earn abnormal returns furthermore the relation between short selling and stock price does not seem to be materially affected by whether the stock is traded on the nyse or amex or over the counter the results provide strong evidence refuting the popular notion that short sellers earn abnormal profits at the expense of less informed traders short sellers do not appear to drive prices down through their short sales in fact if anything short sellers provide market liquidity by shorting into up markets and reducing short positions in down markets

financialisation and the slowdown of accumulation over the past decades financial investment of non financial businesses has been rising and accumulation of capital goods has been declining the first part of the paper offers a novel theory to explain this phenomenon financialization the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus changed management priorities leading to a reduction in the desired growth rate in the second part the link between accumulation and financialization is tested econometrically by means of a time series analysis of aggregate business investment for usa uk france and germany extensive test of robustness are performed for the first three countries evidence that confirms the negative effect of financialization on accumulation is found author s abstract

limits to cba in uk and european environmental policy retrospects and future prospects this paper reviews the contemporary debate and the now long standing role of cba in uk and european environmental policy appraisal epa and looks forward to possible future applications the position taken is that despite its limitations cba still has an important part to play in epa however with the increasingly contested nature of environmental and related public policies and outcomes its role will become less prescriptive and its findings more constrained by social justice and ethical imperatives future cba is more likely to continue to flourish as a component in a wider policy analysis and decision support system whatever decision support system is eventually adopted its value will be judged on how well it aids real policymakers operating iteratively in the non linear real world political economy

making a difference how environmental economists can influence the policy process a case study of david w pearce can environmental economists influence policy if so how this paper addresses these two questions using the late david pearce s career as a case study influence can be exercised but pearce s career shows that certain conditions must be met the first is desire he wanted to influence policy and directed a high proportion of his efforts to doing so he focused particular attention on the power centres of his time the oecd world bank european commission un uk government his influence was aided by his status and location as a professor in a prestige university ucl in a major global city london his messages were consistent and clear theory is important and can be used to frame most environmental challenges as regards both explanation and solution externalities can be valued assessing benefits and costs of options is important market signals taxes etc and incentives generally are powerful shapers of behaviour stock of capital human built natural is a key measure of sustainability he communicated simply and clearly in words and phrases that ministers for finance and journalists could understand all of the broadsheet newspapers in england financial times guardian independent telegraph times were grist to pearce s mill of advocacy for environmental economics he provided the blueprint books that could be read on a commute and summaries to the media that they could fit into a 1 000 word piece he didn t seek out but neither did he shirk controversy he worked with various interest groups and politicians but never to the point were he was co opted he initiated and directed the msc in environmental and resource economics that created an ever widening and influential pool of advocates for his ideas finally he achieved a prodigious academic output that ensures a sort of immortality and provided the intellectual ballast the enabled his policy influence

options short sales and market completeness this paper presents empirical evidence that trading in options contributes to both transactional and informational efficiency of the stock market by reducing the effect of constraints on short sales the significantly higher average level of short interest exhibited by optionable stocks supports the argument that options facilitate short selling we also find significant effects on option prices related to the short interest in the underlying stock we then present evidence that options also increase information efficiency earlier work that is replicated and extended here has suggested that short sale constraints cause stock prices to underweight negative information options appear to reduce that effect

factor substitution and factor augmenting technical progress in the united states a normalized supply side system approach abstract using a normalized ces function with factor augmenting technical progress we estimate a supply side system of the u s economy from 1953 to 1998 avoiding potential estimation biases that

output elasticities and inter factor substitution empirical evidence from the transportation sector of shanghai abstract as a major consumer of fossil fuels the transportation sector in shanghai presents a wide range of problems including air pollution noise and traffic congestion this study aims to explore the energy substitution effect based on a trans log production function to evaluate the contribution of each input factor to sectoral output and reveal the substitution possibilities between capital labor and energy to deal with a multicollinearity problem we adopt ridge regression to obtain the coefficient of each variable under the appropriate penalty value the bootstrap method is used for making statistical inferences and the 95 confidence interval is obtained with 1000 bootstrap samples the empirical results demonstrate the following 1 the output elasticities of capital 0 13 0 15 labor 0 24 0 25 and energy 0 43 0 48 are positive and show an increasing trend over the study period 2 the substitution elasticity between labor and energy is the highest among the input factors around 1 0095 with a slight decreasing trend 3 the substitution elasticity between energy and capital ranges from 1 0018 to 1 0021 and the substitution elasticity between capital and labor is infinitely close to 1

an explanation for accounting income smoothing it is widely believed that corporate managers often engage in income smoothing taking actions to dampen fluctuations in their firms publicly reported net income one reason given for this is that managers think that investors pay more for a firm with a smoother income stream see ronen and sadan 1981 while there have been many empirical studies attempting to document whether or not income smoothing actually occurs there has been little exploration of why a manager might rationally want to smooth his firm s income explaining why smoothing might be observed and how it can result in an increased stock price is the focus of this paper in two recent studies lambert 1984 and dye 1988 demonstrate in agency settings that a risk averse manager who is precluded from borrowing and lending in the capital markets has an incentive to smooth his firm s reported income in this paper in contrast it is shown that within a market setting an incentive exists for a manager to smooth income that is independent of either risk aversion or restricted access to capital markets the market setting is also useful in that it allows for the analysis of the effect of income smoothing on stock prices it is shown here that if a manager can choose which of two periods to recognize certain income he may prefer the choice that is expected to

the rise and fall of money manager capitalism a minskian approach we are in the midst of a global financial crisis accompanied by a deep and probably long lasting economic downturn indeed some analysts are already calling this the first depression of the post world war ii era in this article i argue that this is a systemic crisis a crisis of what hyman minsky called money manager capitalism i link this to the analyses of hilferding and veblen of an earlier period finance capitalism and argue that this is in effect the second failure of this type of capitalism the essential characteristics of early finance capitalism are relatively small government use of external finance for investment and growing concentration of economic power in the hands of trusts or what we might today call megacorporations with varied interests and diverse affiliations across industry finance and insurance unlike the first phase the second phase of finance capitalism took place in the context of a big government neoconservative model minsky s analysis helps us to understand how the new deal and big government created a paternalistic capitalism after world war ii which favoured high consumption high employment greater equality and financial stability however that stability was destabilising because it permitted the rise of managed money over time innovation and deregulation increased fragility which generated increasingly frequent and severe financial crises while previous crises were resolved quickly enough to prevent it another debt deflation from happening again this crisis appears to be sufficiently severe that the very survival of money manager capitalism is thrown into question the article examines the contributing factors to the current crisis including the real estate boom and bust the rise of risky financial instruments such as securitised debts and credit default swaps the commodities market bubble and the fiscal squeeze the article concludes with some suggestions concerning the possible outcome of the failure of this form of finance capitalism copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

impact of a carbon tax on the chilean economy a computable general equilibrium analysis abstract in 2009 the government of chile announced their official commitment to reduce national greenhouse gas emissions by 20 below a business as usual projection by 2020 due to the fact that an effective way to reduce emissions is to implement a national carbon tax the goal of this article is to quantify the value of a carbon tax that will allow the achievement of the emission reduction target and to assess its impact on the economy the approach used in this work is to compare the economy before and after the implementation of the carbon tax by creating a static computable general equilibrium model of the chilean economy the model developed here disaggregates the economy in 23 industries and 23 commodities and it uses four consumer agents households government investment and the rest of the world by setting specific production and consumptions functions the model can assess the variation in commodity prices industrial production and agent consumption allowing a cross sectoral analysis of the impact of the carbon tax the benchmark of the economy upon which the analysis is based came from a social accounting matrix specially constructed for this model based on the year 2010 the carbon tax was modeled as an ad valorem tax under two scenarios tax on emissions from fossil fuels burned only by producers and tax on emissions from fossil fuels burned by producers and households the abatement cost curve has shown that it is more cost effective to tax only producers rather than to tax both producers and households this is due to the fact that when compared to the emission level observed in 2010 a 20 emission reduction will cause a loss in gdp of 2 and 2 3 respectively under the two scenarios the tax value that could lead to that emission reduction is around 26 us dollars per ton of co2 equivalent the most affected productive sectors are oil refinery transport and electricity having a contraction between 7 and 9 analyzing the electricity sector by energy source the production of electricity from fossil fuels will decrease by 11 but electricity from renewables will increase by 43 electricity producers will pass the cost of the carbon tax to the consumer by increasing the price of electricity by 8 the findings of this paper will allow policy makers to take better and more informed decisions by providing a cross sectoral analysis of the impact on the economy of reducing emissions by 20 by implementing a national carbon tax