liquid biofuels in china current status government policies and future opportunities and challenges abstract china like many other countries is promoting the development of liquid biofuel including bioethanol and biodiesel the chinese government has set biofuel development targets for the coming decade and sanctioned a series of supportive policies this paper provides a comprehensive overview of current liquid biofuel development in china related government policies and the potential opportunities and challenges for its future expansion our assessment is based on two rounds of in depth fieldwork and a thorough literature review the assessment shows that the prevailing concern on food security has pushed china to move from cereal based to non cereal based biofuel production emphasis has also been put on utilizing new marginal land for feedstock production our assessment indicates that the targets of china s biofuel development are cautious and feasible but on the other hand there are still severe challenges for the sustainability of such development a better understanding of china s experience in striking a balance between energy security food security and environmental protection would inform the debates across country boundaries and contribute to the efforts for global sustainability

does market incompleteness matter this paper argues that incompleteness of intertemporal financial markets has little effect on welfare prices or consumption in an economy with a single consumption good provided that traders are long lived and patient a riskless bond is traded shocks are transitory and there is no aggregate risk in an economy with aggregate risk a similar conclusion holds provided traders share the same crra utility function and the right assets are traded examples demonstrate that these conclusions need not hold if the wrong assets are traded or if the economy has multiple consumption goods

capital accumulation in a stochastic overlapping generations model with social security abstract this paper analyzes the impact of pay as you go financed social security on the stochastic process for the capital stock in a stochastic overlapping generations model it is shown that the probability distribution of the capital stock in absence of social security dominates that in a pay as you go system in the sense of stochastic dominance furthermore the study demonstrates that the sufficient conditions ensuring the existence and uniqueness of stationary equilibria in a pay as you go system are more restrictive than in the model without social security journal of economic literature classification numbers c62 h55

on the role of labor supply for the optimal size of social security abstract the paper studies the welfare effects of a social security system in a stylized overlapping generations economy with random production and capital accumulation different welfare concepts including long run optimality social optimality and time consistency are employed to determine the optimal size of the system when labor supply is exogenous a unique contribution level can be identified which is optimal according to all three concepts when labor supply is endogenous however this result generically fails to hold and the long run optimal solution is only constrained socially optimal while the time consistent policy may even lead to an inefficient equilibrium

a characterization of ramsey equilibrium abstract consider a perfect foresight equilibrium model with a single capital good a borrowing constraint and many infinitely lived households with fixed but different discount factors the steady state capital stock is held by the most patient household quart j econ 95 1980 375 382 econ j 38 1928 543 559 an example shows the total capital can exhibit an equilibrium cycle in contrast to the stability property of the one household case in the example only the most patient household saves and his income deceases in capital we give a condition implying income is increasing in capital and use it to show any equilibrium converges to the steady state

a review of the ecological and socioeconomic effects of biofuel and energy policy recommendations abstract many countries have attached great emphasis on biofuel because it is universally acknowledged renewable and sustainable however there remain doubts regarding biofuel s renewability cleanliness and ecological friendliness in addition its impacts on income employment and food security have been widely discussed therefore the effect of developing biofuel as an important method of resolving the energy crisis and climate change is questioned based on the rocketing concern on the multiple effects of biofuel this paper provides a comprehensive and updated review of the literature on biofuel s ecological effects and socioeconomic effects the literature included in this paper is selected english language papers being published since 2004 we find that existing studies have not arrived at a consensus regarding the ecological or the socioeconomic effects of biofuel there remain uncertainty and doubts toward biofuel s renewability and cleanliness biofuel s impacts on water and biodiversity are also questioned although biofuel is widely regarded to have positive impacts on income and employment many studies prove that biofuel influences food security negatively besides biofuel s economic cost is likely to be the barrier to its promotion because of the uncertainty of biofuel s impacts this study recommends cautious attitude toward biofuel development especially for those countries where biofuel development would be inappropriate and suggests that policy makers engage in demand side management instead of unsustainable supply side management

wealth dynamics in a bond economy with heterogeneous beliefs two types of agents have diverse beliefs about the law of motion for an exogenous endowment one knows the true process and the other learns about it via bayes theorem financial market structure affects the dynamics of the wealth distribution when markets are complete the learning agent loses wealth as in blume and easley 2006 the absence of markets for some arrow securities alters the direction in which wealth is transferred when the only traded asset is a risk free bond the learning agent accumulates wealth both agents survive and the more knowledgeable agent is driven to his debt limit

interactions among energy consumption economic development and greenhouse gas emissions in japan after world war ii abstract the long term dynamic changes in the triad energy consumption economic development and greenhouse gas ghg emissions in japan after world war ii were quantified and the interactions among them were analyzed based on an integrated suite of energy emergy and economic indices the results quantitatively showed that two different energy strategy periods one before 1973 using new sources of higher quality energy and one after 1973 focused on improving the efficiency of energy generation methods could explain the linear increase in national economic development in japan over the 66 years from 1946 to 2011 japan benefited both ecologically and economically from importing fossil fuels which accounted for 8 7 of the nominal gdp of japan averaged over the entire study period the total environmental impacts of ghg i e co 2 ch 4 and n 2 o emissions measured by emergy decreased after 1997 and since 2009 they have remained lower than 76 of the emissions in 1990 even though no decrease in the global warming impact based on the weight of co 2 was observed emergy methods and energy systems models revealed aspects of the complicated interactions among energy consumption economic development and the potential environmental impact of ghg emissions which formerly had not been recognized

the dynamics of efficient asset trading with heterogeneous beliefs this paper analyzes the dynamic properties of portfolios that sustain dynamically complete markets equilibrium when agents have heterogeneous priors we argue that the conventional wisdom that belief heterogeneity generates continuous trade and significant fluctuations in individual portfolios may be correct but it needs some qualifications we consider an infinite horizon stochastic endowment economy populated by many bayesian agents with heterogeneous priors over the stochastic process of the states of nature our approach hinges on studying the portfolios that decentralize pareto optimal allocations since these allocations are typically history dependent we propose a methodology to provide a complete recursive characterization when agents believe that the process of states of nature is i i d but disagree about the probability of the states we show that even though heterogeneous priors within that class can indeed generate genuine changes in the portfolios of any dynamically complete markets equilibrium these changes vanish with probability one if the true process consists of i i d draws from a common distribution and the support of some agent s prior belief contains the true distribution finally we provide examples in which asset trading does not vanish because either i no agent learns the true conditional probability of the states or ii some agent does not know the true process generating the data is i i d

intergenerational risk sharing abstract in this paper we examine government debt and tax transfer policies that can be improve the allocation of risk between generations markets cannot allocate risk efficiently between two generations whenever the two generations are not both alive prior to the occurence of a stochastic event this implies that government policies transferring risk between generations have the potential to create first order welfare improvements our model provides a non keynesian justification for the debt finance of wars and recessions as well as an added rationale for social security type tax transfer schemes which aid unlucky generations e g the depression generation at the expense of luckier generations

non existence of recursive equilibria on compact state spaces when markets are incomplete abstract this paper analyzes one good exchange economies with two infinitely lived agents and incomplete markets it is shown that there are no recursive markov equilibria for which borrowing debt constraints never bind if the state space of exogenous and endogenous variables is a compact subset of r n moreover for large enough but finite borrowing limits no recursive equilibrium with compact state space exists these non existence results hold for any economy satisfying the following standard assumptions preferences are additively separable across time and states the one period utility function is time and state independent and unbounded from below endowments are bounded and follow a markov chain with stationary transition matrix there is some idiosyncratic risk and no aggregate risk

stationary ramsey equilibria under uncertainty abstract deterministic dynamic equilibrium models with borrowing constraints and heterogeneous agents exhibit stationary solutions where the most patient household owns the economy s capital stock an example shows that this result does not carry over to stationary stochastic environments we prove under some conditions the existence of a stationary rational expectations equilibrium in two related setups the first is the existence of a stationary nash equilibrium where each agent s payoff depends on his capital process and the capital processes of the remaining agents the second existence theorem applies to a stationary competitive equilibrium model journal of economic literatureclassification numbers e13 e21 d80

infinite horizon incomplete markets the model of general equilibrium with incomplete markets is a generalization of the arrow debreu model which provides a rich framework for studying problems of macroeconomics this paper shows how the model which has so far been restricted to economies with a finite horizon can be extended to the more natural setting of an open ended future thereby providing an extension of the finite horizon representative agent models of modern macroeconomics to economies with heterogeneous agents and incomplete markets there are two natural concepts of equilibrium over an infinite horizon which prevent agents from entering into ponzi schemes that is from indefinitely postponing the repayment of their debts the first is based on debt constraints which place bounds on debt at each date event the second is based on transversality conditions which limit the asymptotic rate of growth of debt the concept of an equilibrium with debt constraint is a natural concept of equilibrium for macroeconomic analysis however the concept of an equilibrium with transversality condition is more amenable to theoretical analysis since it permits the powerful techniques of arrow debreu theory to be carried over to the setting of incomplete markets in an economy in which agents are impatient expressed by the mackey continuity of their preference orderings and have a degree of impatience at each date event which is bounded below a concept defined in the paper we show that the equilibria of an economy with transversality condition coincide with the equilibria with debt constraints an equilibrium with transversality condition is shown to exist it follows that for each economy there is an explicit bound m such that an equilibrium with explicit debt constraint m exists in which the constraint is never binding this latter property ensuring that the debt constraint whose objective is to prevent ponzi schemes does not in itself introduce a new imperfection into the model over and above the incompleteness of the markets

existence uniqueness and stability of equilibrium in an overlapping generations model with productive capital abstract this paper analyzes the existence uniqueness and stability of a steady state equilibrium in an overlapping generations model with productive capital it is shown that for any feasible set of well behaved preferences there exists a production function that satisfies the inada conditions under which the economy experiences global contraction and the steady state equilibrium is characterized by the absence of production and consumption the study establishes a strengthened inada condition which is necessary to preclude global contraction and sufficient conditions for the existence of a unique and globally stable non trivial steady state equilibrium

biofuels and food security the biofuel market created the linkage between energy and agricultural market prices biofuel policies and energy prices set the floor price of feedstock prices and the energy prices and the upper limit of the biofuel blend ratio can decide the ceiling of feedstock prices on the other hand biofuels can also transmit price volatility from energy to agricultural markets despite not always being the cause of price volatility of feedstock and related agricultural commodity prices brazilian bioethanol can play a crucial role in stabilizing the sugar market one of the most crucial problems for increasing biofuel production is the competition with food and food related demand and agricultural resources the definition of competition between biofuels and food can be divided into two dimensions the competition with food and food related demand and the competition with the agricultural resources the feedstock of the second generation biofuels can compete with food and food related demand and agricultural resources the development of second generation biofuels may not solve the problems associated with the competition between biofuels and food however the competition between biofuels and food doesn t always have a negative impact on food security the competition and food security impact on different dimensions biofuels can contribute to agricultural and rural development and can have a positive impact on a national and sub national level but they can also have a negative impact on household levels in the same country international action is required to monitor whether biofuels can have a negative impact on food security and nutrition security at national sub national and household levels biofuels should be compatible with and must not threaten food security the fao in collaboration with other international organizations will have the responsibility of monitoring the impact of biofuels on food security and proposing policy recommendations to individual countries based on the results of the monitoring

rational asset pricing bubbles this paper provides a fairly systematic study of general economic conditions under which rational asset pricing bubbles may arise in an intertemporal competitive equilibrium framework our main results are concerned with nonexistence of asset pricing bubbles in those economies these results imply that the conditions under which bubbles are possible including some well known examples of monetary equilibria are relatively fragile this paper is concerned with the conditions under which asset prices in an intertemporal competitive equilibrium are equal to the present value of the streams of future dividends to which each asset represents a claim according to a central result of the theory of finance this is very generally true in the case of economies with trading at only a finite sequence of dates as long as there are no restrictions upon transactions other than that associated with possible incom pleteness of the set of securities that are traded the result is sometimes called the fundamental theorem of asset pricing here we consider the extent to which such a result continues to be valid in the case of trading over an infinite horizon it has often been observed in the econometric literature on asset pricing bubbles that it is possible in principle for the price of a perpetuity and the dividends on that security to satisfy at all times a present value relation for one period holding returns while the security s price nonetheless does not equal the present value of the stream of dividends expected over the infinite future in such a case the price of the perpetuity is said to involve a bubble component 2 joint stochastic processes for which this component is nonzero are sometimes argued to characterize existing assets for a recent example see froot and obstfeld 1991 but such an inference depends upon aspects of the stochastic

utility over time the homothetic case the purpose of this paper is to show how the economics of choice over time can be strengthened by introduction of restrictive assumptions namely additivity and homotheticity of utility we consider applications to labor supply 2 savings behavior and long run distribution and welfare measurement labor supply is mainly a function of the ratio of non labor income to the wage rate savings generally increase with increases in the rate of interest in the long run distribution is not much dependent upon initial wealth and instead is mainly determined by attitudes towards time in the long run the as if social utility function is often well measured by consumer surplus the applications appear to be strong therefore it is appropriate to begin with a general argument for the main assumptions to be imposed two early contributions to the economics of time are by becker 1 and koopmans 111 the former presents a general framework without any specific assumptions about utility over time at most there is a homogeneous technology to produce consumption from goods and time pollak and wachter 131 koopmans 1 l adds highly intuitive assumptions to show utility additive and discounted over time koopmans analysis could be extended to cases where utility is additive merely between remote time periods see rader 15 pp 161 1851 this would correspond to the realistic case where the influence of distant consumption on preferences is negligible additivity must be reinterpreted in terms of a shifting environment of current consumption plus consumption sufficiently contiguous in time the analysis following could be adapted to this most compelling case merely adding utility over time does have implications for demand for example if complementaries occur between two goods they must occur between many others e g 15 pp 228 2331 however the results are meager and insufficient for the kind of analysis economists generally want to apply therefore we are led to add the assumption of homotheticity namely 219 0022 0531 81 050219 18 02 00 o

survival with ambiguity we analyze a market populated by expected utility maximizers and smooth ambiguity averse consumers we study conditions under which ambiguity averse consumers survive and affect prices in the limit if ambiguity vanishes with time or if the economy exhibits no aggregate risk ambiguity averse consumers survive but have no long run impact on prices in both scenarios ambiguity averse consumers are fully insured against ambiguity in equilibrium and thus behave as expected utility maximizers with correct beliefs if ambiguity averse consumers are not fully insured against ambiguity their behavior mimics expected utility maximizers with wrong beliefs and a stochastic discount factor which might be consistently higher or lower than their actual discount factor we use this insight to analyze a markov economy with large persistent ambiguity consumers with decreasing absolute ambiguity aversion whose prudence with respect to ambiguity exceeds twice their absolute ambiguity aversion a s survive in the presence of expected utility maximizers with correct beliefs if the economy further exhibits aggregate risk they drive the expected utility maximizers out of the market and determine prices in the limit in contrast consumers with increasing or constant absolute ambiguity aversion only survive in the absence of aggregate risk and have no impact on limit prices

biofuel and food security in china and japan the chinese government is promoting the national biofuel program to deal with energy security and excessive grain stocks the japanese government is promoting a biofuel program to deal with climate change and energy security and to promote rural development this study is an economic analysis of the competition between biofuel and food and the relationship between biofuel and food security in china and japan the definition of competition between biofuel and food can be divided into food and food related demand and agricultural production this analysis shows that not only the feedstock of agricultural product based biofuel but also cellulose based biofuel competes with food and food related demand and agricultural production in china and japan it is assumed that non food based biofuel and cellulosic based biofuel do not have a serious impact on food security on a country and sub country level in china and japan because the amount of feedstock used for non food and cellulose based biofuels is small however such use could have a negative impact on undernourished households in china in its promotion of biofuel development the chinese government has to pay full attention to nutrition levels of households in 2010 the japanese government released draft sustainable criteria for biofuel but did not cover food security in partner countries such criteria should consider food security in partner countries

social security taxation and intergenerational risk sharing the life cycle hypothesis has become the dominant mode used to analyze the effects of a social security system on private saving the labor leisure choice and social welfare as both barro and samuelson indicate a fully funded social security program in a world of certainty would drive out an equivalent amount of private saving if the interest rate is r the effects of a payment of a dollar into the social security pool while young would just offset the effects of receiving 1 r dollars as a transfer when retired papers by diamond hi and samuelson among others have examined the effects of non fully funded social security schemes in a growing economy a non fully funded program can be used to alter the private sector s saving rate and hence the capital labor ratio social security then can be used as a policy tool for achieving the or some variant of the golden rule growth path this abstract was borrowed from another version of this item

precautionary saving and accidental bequests this paper presents a simple general equilibrium model of precautionary saving and accidental bequests this model is used to analyze the implications of individual lifetime uncertainty for aggregate consumption and capital accumulation a precautionary demand for saving arises because an individual consumer does not know in advance the date at which he will die and he wants to avoid low levels of consumption in the event that he lives longer than expected an implication of this precautionary saving is that when death does occur the consumer is generally holding some wealth which is then passed on to his heirs in the form of an accidental bequest even if all consumers have the same ex ante mortality probabilities there will be some intracohort variation in the date of death consequently there will be a nondegenerate distribution of bequests left by consumers in a cohort this nondegenerate distribution of bequests left by one generation induces variation in the distributions of wealth consumption and bequests of subsequent generations the importance of bequests in aggregate saving has been established by laurence kotlikoff and lawrence summers 1981 who reported that 80 percent of u s household wealth is inherited wealth one interpretation of this finding is that the simple life cycle model without bequest motives is an inadequate description of saving behavior in the united states but the model i present demonstrates that accidental bequests by selfish consumers can account for a potentially sizeable fraction of aggregate wealth although some part of bequests especially by the wealthy undoubtedly results from an explicit bequest motive accidental bequests also play a role in the intergenerational transfer of wealth as well as in the intragenerational variation in wealth in order to focus on the role of accidental bequests i purposely exclude a bequest motive from the specification of the utility function the effects of lifetime uncertainty on individual consumption behavior were first examined formally in a seminal paper by menachem yaari 1965 yaari s model provided the basic framework for virtually all subsequent work on uncertain lifetimes including well known papers by nils hakansson 1969 stanley fischer 1973 robert barro and james friedman 1977 david levhari and leonard mirman 1977 and kotlikoff and avia spivak 1981 however all of these papers focused on the consumption decision of an individual and ignored the effect of accidental bequests on the behavior of the recipients of these accidental bequests 2 as will be shown at various points in this paper changes in the economic environment can have effects on aggregate behavior which differ sharply from the effects on individual behavior because of the endogenous adjustment of bequests the effects of department of economics harvard university cambridge ma 02138 this paper is a revised version of bequests and social security with uncertain lifetimes nber working paper no 1372 june 1984 i thank olivier blanchard john burbidge christopher cavanagh robert clower stanley fischer benjamin friedman elhanan helpman mervyn king nobuhiro kiyotaki laurence kotlikoff robert mcdonald james pesando julio rotemberg lawrence summers lars svensson mark watson and jeffrey wolcowitz for valuable conversations and correspondence i also thank the participants in seminars at boston university columbia university cornell university federal reserve board harvard university university of iowa mit university of minnesota university of montreal national bureau of economic research north carolina state university the wharton school and yale university and two anonymous referees for their helpful comments i also thank the national science foundation for financial support 1 in the presence of perfect annuity and life insurance markets there may or may not be bequests depending on the presence or absence of a bequest motive but there would be no accidental bequests 2 kotlikoff and spivak focus on the role of the family in providing an incomplete annuities market but stop short of a full scale overlapping generations model in which the distribution of bequests is determined endogenously

consumption dynamics in general equilibrium a characterisation when markets are incomplete we introduce a methodology for analysing infinite horizon economies with two agents one good and incomplete markets we provide an example in which an agent s equilibrium consumption is zero eventually with probability one even if she has correct beliefs and is marginally more patient we then prove the following general result if markets are effectively incomplete forever then on any equilibrium path on which some agent s consumption is bounded away from zero eventually the other agent s consumption is zero eventually so either some agent vanishes in that she consumes zero eventually or the consumption of both agents is arbitrarily close to zero infinitely often later we show that a for most economies in which individual endowments are finite state time homogeneous markov processes the consumption of an agent who has a uniformly positive endowment cannot converge to zero and b the possibility that an agent vanishes is a robust outcome since for a wide class of economies with incomplete markets there are equilibria in which an agent s consumption is zero eventually with probability one even though she has correct beliefs as in the example in sharp contrast to the results in the case studied by sandroni 2000 29 and blume and easley 2006 8 where markets are complete our results show that when markets are incomplete not only can the more patient agent or the one with more accurate beliefs be eliminated but there are situations in which neither agent is eliminated c 2010 elsevier inc all

social security and demographic shocks an overlapping generations model of social security with shocks to the productivity of labor and capital and demographic shocks is studied we focus attention on stationary long run allocations an allocation is interim optimal if there does not exist another feasible allocation that improves the expected welfare of all generations computed conditionally on the state of the world when they are born we characterize the set of interim optimal allocations and study the equilibria associated with various institutional forms of social security from the point of view of this optimality criterion we obtain the analogs of the two traditional welfare theorems of microeconomic theory assume that there exists a financial asset in fixed quantity which supports some non null intergenerational transfers then the rational expectations equilibrium allocation of this economy is interim optimal conversely any stationary interim optimal allocation can be supported by such an equilibrium with adequate lump sum transfers

stationary equilibria in an overlapping generations economy with stochastic production abstract this paper generalizes the analyses of the existence uniqueness and stability of a non trivial steady state equilibrium in galor and ryder j econ theory49 1989 360 375 to an overlapping generations economy with stochastic production the study establishes sufficient conditions for the existence of a non trivial stationary equilibrium as well as for the existence of a globally unique and stable non trivial stationary equilibrium it is shown that the existence of a non trivial stationary equilibrium is not assured by conventional regularity conditions on the production function and preferences furthermore multiplicity and indeterminacy of long run equilibria appear to be commonplace journal of economic literature classification numbers c62 e13 o41

supply push or demand pull strategic recommendations for the responsible development of biofuel in china this study investigates china s biofuel industry the third largest in the world by combining a strength weakness opportunity and threats swot analysis with a method known as fuzzy analytic hierarchy process fahp more specifically the study employs swot analysis to identify the influential factors affecting the development of the biofuel industry in china it then prioritizes their importance using the fahp method the study finds that high production costs competition with other renewable energy resources inconsistent policy and legislation support and poor technical standards are impeding the growth of the biofuel industry of china the study concludes by proposing strategic recommendations for how the industry can be made both leaner more efficient and effective and greener more socially and environmentally sustainable some of these options focuses on improving technical perform adhering to a supply push mentality others focus on improving affordability and consumer awareness adhering to a demand pull mentality