infrastructure investment the cost of capital and regulation an assessment the paper considers the role of infrastructure in improving economic performance and its compar ative neglect relative to traditional macroeconomic and microeconomic policies it explains why infrastructure matters why britain s infrastructure performance has been poor and summarizes the scale of the challenge for the coming decade privatization liberalization and competition have focused on monopoly market failure and private incentives but they have neglected the time inconsistency problem which confronts investors in networks with high fixed and sunk costs the failure to commit which has characterized british approaches to infrastructure has been partially addressed through the creation of regulated asset bases rabs backed up by the duty on regulators to ensure that functions can be financed the paper considers how the rabs can be developed to provide credible long term contracts over a wide range of activities and how the financial regu latory regime can complement this commitment notably through the split cost of capital and the indexation of the cost of debt approaches the paper concludes by setting out the building blocks of a credible regulatory framework for infrastructure together with the impacts on reducing the cost of capital the role of the state in reinforcing this commitment and the associated institutions are also set out

on the impact of shock persistence on the dynamics of a recursive economy abstract the present note relies exclusively on numerical computation of a parametric version of a stochastic version of the one sector neoclassical growth model to derive the qualitative properties of the optimal consumption investment policy functions and of the resultant steady state and to study the manner in which these properties are affected by an increase in the degree of shock persistence in particular we measure the effects of differing degrees of shock persistence on the means and variances of the resulting stationary distributions on output consumption and capital stock furthermore we explore the effects of increasing degrees of shock persistence on the dynamic time path of the economy

government failure rent seeking and capture the design of climate change policy climate change has been described as one of the biggest market failures less attention has been paid to the government failures associated with interventions and the implications for the design of climate change policy this paper sets out the main types of government failure and shows how the processes of rent seeking and capture help to explain both why the choice of targets and instruments has been so inefficient and also why the resulting costs of carbon mitigation are likely to be considerably higher than the estimates provided by the stern review and other recent studies two examples are given emissions trading and renewables policy a number of generic conclusions are drawn about how taking account of government failures can help to improve policy design and limit the impact of the climate change pork barrel which existing policies have created copyright 2010 oxford university press

the sustainable borders of the state economic crises have historically set the stage for the reconfiguration of the economic borders of the state current concerns focus on debt and associated intergenerational issues such as pensions infrastructure and the environment the sustainable state is designed to put in place a framework for integrating these intergenerational issues alongside the traditional focus on macroeconomic policy static market failures and transfers the building blocks include the accounting framework and in particular a national balance sheet setting out assets and liabilities and providing for capital maintenance over time to support these assets and to provide for sufficient investment the sustainable state requires an appropriate level of savings and institutions to translate these savings into investments two components are the deployment of regulatory asset bases to underpin long term sunk and fixed costs given the time inconsistency problem in government s commitments and the development of financial intermediaries such as an infrastructure bank copyright 2011 oxford university press

can technology specific deployment policies be cost effective the case of renewable energy support schemes can technology specific deployment policies be cost effective the case of renewable energy support schemes

stochastic growth with correlated production shocks this paper extends the stochastic growth model of brock and mirman j econ theory 4 1972 497 513 to allow the production shocks to be correlated over time the resultant optimal savings and consumption policies depend not only upon the current level of output but also upon the most recent realization of the random shock the properties of these policy functions are studied and it is shown that the markov process on output capital stock and consumption resulting from the application of these policies converges to a stationary distribution

cap and trade a sufficient or necessary condition for emission reduction influenced by the success of emission trading in the us for sulphur dioxide so 2 some economists have argued for an upstream economy wide cap and trade scheme as the primary tool for achieving the required reduction in greenhouse gas ghg emissions this paper addresses that argument and concludes that cap and trade will need to be accompanied by complementary regulatory measures while it is a necessary component in a climate mitigation programme it is unlikely to be sufficient by itself to accomplish the desired emission reductions the paper reviews the evidence on how so 2 emissions were reduced and the extent to which actual emission trading was responsible for the reduction as opposed to other innovations it also identifies differences between the past regulation of so 2 and other air pollutants and the challenges presented by the regulation of ghg emissions what actually happened in the us with so 2 emission trading deviated in several significant respects from what would be predicted based on the conventional theoretical analysis while there was a dramatic reduction in so 2 emissions it occurred because of several factors some of which are unlikely to apply for ghg emissions and others of which argue for an activist regulatory policy by the government as a complement to the functioning of an emissions market for ghgs copyright 2010 oxford university press

should renewable energy policy be renewable political flexibility brings about trade offs for policy makers aiming to support the deployment of renewable energy sources res on the one hand it allows incorporating new information on ex ante uncertain benefits and costs of res policy on the other hand it may deter res investments this paper scrutinizes how these trade offs play out economically and politically when res policy makers choose the degree of flexibility as well as the instruments to implement flexibility the analysis builds on a theoretical framework distinguishing between flexibility by design and by adjustment it is complemented by a discussion of three case studies res support schemes in germany and the united kingdom and the eu emissions trading scheme theoretical as well as empirical results suggest that the politically chosen degree of flexibility by policy design may be sub optimally low in contrast flexibility by policy adjustment is often excessively high

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

environmental policy government and the market environmental policy is made in a context of both market failure and government failure on the one hand leaving environmental protection to the free market relying on notions of corporate social responsibility and altruistic consumer and shareholder preferences will not deliver optimal results on the other hand nationalizing the delivery of environmental protection is likely to fail because nation states rarely have the depth and quality of information required to instruct all the relevant agents to make appropriate decisions thus as for many areas of policy appropriate models of environmental intervention will lie between these two extremes while it is impossible to specify general rules concerning the precise form of intervention in part because the type of intervention depends upon value judgements this paper sets out some of the considerations that are particular to environmental policy and explores several principles for policy design including information coordination and principal agent problems with a particular focus on the international context

the assessment financial innovation curse or blessing as financial services go through one of their most radical restructurings of this century this as sessment analyses the factors underlying these changes a picture of the function of different fi nancial institutions emerges which allows the concerns that have been expressed about recent developments in financial markets to be re evaluated the worrying implication is that systems for correcting substantial financial disruption are not yet in place

cap and trade policy challenges a tale of three markets cap and trade policy instruments have been applied to a number of environmental problems with varying success this article examines cap and trade programs for so2 allowances fishery quotas and water rights design and implementation of cap and trade mechanisms involves challenging policy tradeoffs accommodating equity concerns balancing use levels with resource conditions facilitating transactions accounting for externalities assuring adequate monitoring and documenting welfare gains efficient trading mechanisms are more readily implemented when there is a strong political or legal mandate to cap resource use and trades are perceived as a means to ease adjustment to use limits

imperfections in the economics of public policy imperfections in markets and climate change the economics of public policy has suffered from collective amnesia we have forgotten or ignored much of the tradition of public policy in imperfect economies whose foundations were laid by james meade and paul samuelson this has been associated with a period of around two decades from the early 1980s to the early 2000s where the economics of public policy has bent to political winds and has fed arguments for government to get out of the way and leave everything to the markets to self interest and to self regulation this has manifested itself via the choice of models those which imply often directly from assumptions passive government patterns of teaching the marginalisation of public economies in imperfect economics and compartmentalisation examples in climate change where this amnesia has misled include approaches to discounting and the failure to make non marginal change central to analysis on the other hand creative application of modern public economics gives interesting results such as the possibility of making both current and future generations better off and of informed discussion complementing economic instruments there are strong formal analogies between policy on climate change and on behavioural economics indeed there seems to be great potential in the combination of these two fields jel a10 a12 d61 d62 d63

assessment economic policy towards the environment the article presents an overview and assessment of economic policy toward the environment the first part reviews the core theoretical literature a classification of environmental externalities differentiated by institutional contexts is presented conventional economic theory approaches are reviewed with their associated strong informational assumptions these are then relaxed demonstrating why cooperative solutions to global externalities may prove hard to achieve having reviewed the theoretical nature of environmental problems the article then turns to policy options including privatization taxes and marketable permits and presents a number of suggestions for future policy copyright 1990 by oxford university press

the assessment the economics of health care in some countries there is concern about excess from the british viewpoint this diversity raises a spending on medical services whilst in others numberofpolicy considerations most important is under funding is a major political issue certainly the debate about the relative roles of the public and the proportion of gdp devoted to health care varies private sectors should there be a move in the uk significantly from nation to nation as do the to private insurance or indeed to the private provi institutional arrangements for its provision both sion of health care itself at a more specific level with regard to who delivers it and to whether the concern has been expressed about the appropriate consumer pays according to use or indirectly through reward structures for doctors nurses and other taxation at one extreme it is delivered by the staff the efficiency of insurance markets strategies public sector and financed as part of general taxation for cost containment the explanation for the ob at the other it is privately delivered and charged for served variations in medical practice and the in

informal microfinance institutions and development led tourism entrepreneurship this paper explores how informal microfinance institutions imfis support development led tourism entrepreneurship through providing microcredit and development opportunities to small tourism firms stfs as well as undertaking communitarian projects and outreach activities that promote the business activities of stfs drawing on resilience and social capital as central concepts the paper argues that the form of collective action found in imfis can be examined to understand their impact on development led tourism entrepreneurship using cameroon as a case study important policy challenges in destinations where regulatory constrains cause many stfs to become dependent on imfis as opposed to formal regulated financial institutions in development led tourism are highlighted

british infrastructure policy and the gradual return of the state the state of british infrastructure is the source of almost continuous study and criticism there is now a host of new demands in water energy transport and communications which require a step change in investment the coalition government has made a series of reforms to planning finance and the setting of priorities which have been drawn together in national infrastructure plan statements a number of high profile and large scale projects have been advanced this paper sets out the evolution of these policy interventions and explains why government involvement is critical to their success it documents the gradual return of the state as part of a process of underpinning the investment costs in the provision of credible contracts and in closing the gap between public and private costs of capital it suggests that rather than pursue infrastructure policy as a set of priority projects greater use of regulated asset bases and attention to the time inconsistency problem would better achieve the overarching objectives

on the intergenerational allocation of natural resources it is known hartwick and others that under standard assumptions a society that invests in reproducible capital the competitive rents on its current extraction of exhaustible resources will enjoy a consumption stream constant in time it is shown here that this result can be interpreted as saying that an appropriately defined stock of capital including the initial endowment of resources is being maintained intact and that consumption can be interpreted as the interest on that patrimony this seems like a useful rule of thumb for policy

positive freedom markets and the welfare state the comparative merits of market and certain distinguished non market resource allocation mechanisms have continually been at the centre of debate in economics and political philosophy doubtless it will remain there for here one faces the grandest of human concerns embracing as it does issues bearing on liberty and welfare the aspirations of people their potential and re alized capabilities and the fulfillment of their needs it enables us to see individuals in a social context to ask about the possible features of a civil society the obligations that people may have to themselves to one another and to agencies then again we are able to enquire into the obli gations that agencies have to people and to one another the extent to which responsibility needs to be delegated among offices and persons the role that dispersed information may play in an swers to these and so on the debate is central to any discussion of the kind of society we ought to aspire to be members of

the social cost of carbon and its policy implications the shadow price or social cost of carbon is an important indicator of the global incremental damage done by emitting greenhouse gases today cost benefit analysis would set the optimal amount of greenhouse gas emission reduction at the point where this social cost just equals the incremental cost of controlling emissions the higher the value for the social cost of carbon the more control is warranted this comparison assumes that cost benefit analysis is the correct way of determining climate change policy and many believe this is not the case because of the very long term irreversible and potentially catastrophic nature of global warming but in the short run at least a comparison of cost and benefits is required and in any event all decisions imply costs and benefits but what is the right figure for the social cost of carbon this paper reviews the uk government s assessment of the cost and concludes that it has been set far too high because of a misreading of the integrated assessment models used to balance costs and benefits moreover adoption of the uk government s shadow price would have formidable implications for energy policy in the uk and for policies on afforestation copyright 2003 oxford university press

environmental prices uncertainty and learning there is an increasing demand for putting a shadow price on the environment to guide public policy and incentivize private behaviour in practice setting that price can be extremely difficult as uncertainties abound there is often uncertainty not just about individual parameters but about the structure of the problem and how to model it a further complication is the second best nature of real environmental policy making in this paper we propose some practical steps for setting prices in the face of these difficulties drawing on the example of climate change we consider how to determine the overall target for environmental protection how to set shadow prices to deliver that target and how we can learn from the performance of policies to revise targets and prices perhaps most significantly we suggest that estimates of the marginal cost of environmental protection rather than the marginal benefit will often provide the more consistent and robust prices for achieving targets

rationales for technology specific res support and their relevance for german policy in order to achieve cost effective res e deployment it is often argued that technology neutral support schemes for renewables are indispensable against this background res e support policies making widely use of technology differentiation in remuneration settings e g across the eu are frequently criticized from a theoretical point of view however in this paper we provide a systematic critique of the technology neutrality concept as a foundation for designing policy support schemes in the res e technology field specifically the main objective of the paper is to scrutinize the arguments for technology neutrality and discuss three conceptual arguments for why technology specific support schemes could in fact help minimize the societal costs of reaching future res e targets we also briefly address different political economy concerns which could constrain the choice of cost effective policy support schemes and that have to be taken into account for economic policy advice for empirical illustration of the key arguments we refer to the case of german res e policy making the central conclusion from this paper is that technology specific res e support schemes may generate significant economic benefits particularly if technology markets work imperfectly and in second best policy settings with additional non internalized market failures

the consumption based asset pricing model a note on potential tests and applications abstract breeden s demonstration that merton s multi beta capital asset pricing model can be collapsed into a single beta model where betas are computed with respect to aggregate consumption is an important theoretical advance nonetheless breeden s model retains many of the empirical problems that beset merton s earlier version in general the consumption betas will be nonstationary so that the state variables must be observable for the model to be estimated

threshold effects and incentives for the conservation of biodiversity biological diversity is a central component of the stock of natural capital on which all economic development is based other things being equal loss of biologically diversity implies loss of development potential and its conservation through sustainable use or outright protection implies the protection of that potential one characteristics of biodiversity loss of especial importance is that biodiversity loss more than any other current environmental problem is associated with ecological threshold effects the paper explores the implication of this characteristics for the properties of a biodiversity conservation strategy

the assessment economic policy for transport this paper considers the economic principles underlying contemporary british transport policy issues and the contributions that recent theoretical and empirical work can make to assessing policy solutions it discusses two alternative highly stylised approaches to transport policy 1 transport services supplied by privately owned companies and financed by charges to users 2 statutory publicly owned transport monopolies it considers the corresponding problems of market failure and regulatory failure types of market failures include circumstances where competitive solutions are either 1 feasible but not achieved because of actions by companies or 2 achieved but undesirable for various reasons or 3 not feasible because the relevant sectors have natural monopolies and high entry costs the authors conclude that both the stylised approaches that they analysed have serious drawbacks the most important consequence of the nationalisation of uk transport in the late 1940s was significant inefficiency in production and pricing the public transport deregulation of the 1980s resulted in significant product innovation and changes in the level and structure of prices however artificial restriction of competitive outcomes seems to be the most important source of regulatory failure

regulatory reform capture and the regulatory burden this paper provides a critique of broad aggregate proposals to reduce the regulatory burden it argues that the public debate about regulatory reform and red tape is loose and general with little regard for the complex ways in which regulation imposes costs and benefits on the economy although there are theoretical reasons to expect regulation to be in excess supply there is little empirical analysis to link aggregate regulation with productivity and economic growth regulation is itself a public good and many aspects of economic efficiency require regulation to address market failures the main efficiency issues are better addressed through a disaggregated approach focusing on when where and how to regulate rather than on crude aggregate estimates of the total burden the design of regulation needs to take account of regulatory capture and it is argued that market based instruments and independent regulatory bodies tend to reduce the scope for capture the incentives and employment rules governing regulatory institutions are also discussed in ignoring these disaggregated regulatory design problems crude aggregate targets for the reduction of regulation and rules such as one in one out may be counter productive copyright 2006 oxford university press

regulation by prices quantities or both a review of instrument choice choosing appropriate policy instruments is an important part of successful regulation once objectives are agreed and suitable targets adopted policy makers can employ command and control regulation and or economic instruments and choose between fixing a price or a quantity this paper examines the relative advantages of price quantity and hybrid instruments according to their efficiency under uncertainty the trade off between credible commitment and flexibility implementation international considerations and political economy various illustrations of the theory are provided with two detailed applications to climate change and transport policy specifically congestion and safety pricing

clean energy and international oil oil has been the world s dominant fuel for more than 50 years substitution of oil for power generation and heating has progressed since the 1970s but substitution of oil in transport remains elusive this paper examines the progress of clean energy and compares the unfolding co evolution of technologies markets and institutions with what we know about substitution of oil and technological paradigm shifts while the rhetoric in favour of clean energy is strong technologies policies and supportive infrastructure investments are still in a formative stage the transformative process will evolve over the next 10 20 years and change irreversibly the demand dynamics for oil although decline in the demand for oil is not imminent the impact of the clean energy transition on international oil is evident even now high oil prices accelerate commitment policies and market prospects for clean energy options and speed up the market readiness of substitutes for oil while 20 years appears a long time for the development and scale up of alternatives to oil it is a short period in the context of the required paradigm shift for international oil it is well within the time frame for resource rent optimization strategic planning and investment decisions high cost resource developers need to be aware copyright 2011 oxford university press

on the fluctuations in consumption and market returns in the presence of labor and human capital an equilibrium analysis abstract we examine the effects of human capital on consumption stock market and other fluctuations in a general equilibrium continuous time model a representative consumer worker investor derives utility from consumption and leisure a representative firm demands labor as the sole input to a stochastic production technology driven by general possibly nonmultiplicative shocks for cobb douglas utility and multiplicative shocks labor is nonstochastic and consumption and stock market volatility are equated as under no human capital deviations from this are analyzed for logarithmic utility and constant elasticity of substitution production technology cases are identified where the presence of labor causes consumption to be smoother than the stock market

seizing community participation in sustainable development pueblos magicos of mexico despite ten years of strategic focus on growth through sustainable tourism few research projects generated understanding of how development policy initiatives contributed to community benefits locally this article addresses this research gap and explores how the aims of local development and cultural sustainability defined in the mexican national tourism program pueblos magicos are put into practice the analysis is focused on how citizenship local participation and democracy are operationalized and what are the local consequences of this governmental program in the community of alamos by following the constitution and decision making processes in the local pueblos magicos committee we demonstrate how different groups bargain on behalf of the community and how they seize the opportunity to promote different development priorities in particular we address the role of a north american migrant community in shaping sustainable tourism development as cultural brokers social entrepreneurs and mediators of market knowledge the paper criticizes the notion of homogenous local communities as an instrumental condition of sustainable and participatory development

notes on multiperiod valuation and the pricing of options a mean variance risk return tradeoff relationship is derived for the diffusion process limiting case of a state preference model with aggregate consumption serving as a pivotal variable the model is compared to other recent models along the dimensions of generality and tractable implementation the incorporation of stochastic interest rates in general equilibrium and arbitrage based valuation models is examined and an extension to earlier methods is discussed in connection with the implementation of robust general valuation procedures this paper develops an integrative discussion of some recent developments in the theory of multiperiod valuation our aim is not to survey the rapidly burgeoning literature in this area in an exhaustive way instead it is our goal to highlight some results of our own and others that have a bearing on judgments regarding promising and robust directions of enquiry in this area of research in doing so areas that have been particularly empnasized are 1 the incorporation of aggregate consumption as a pivotal variable in general and specialized multiperiod valuation formulae and 2 the incorporation of endogenized dynamics for the riskless rate of interest in black scholes 4 type option pricing methodology throughout our emphasis is on the internal consistency generality and simplicity of different models insofar as full information valuation in a general equilibrium context is concerned rather than on issues pertaining to empirical testing and econometric methodology the starting point for much of our analysis is rubinstein s 28 important paper on multiperiod valuation and hakansson s 15 related contributions in this paper rubinstein considers a multiperiod state preference model of general exchange equilibrium with no explicit modeling of production investment in order to develop pricing relationships linking the prices of elementary arrow

credible carbon policy the paper sets out the credibility problem in carbon policy provides a number of examples of non credibility in recent energy policy and identifies the costs of failing to address it the time inconsistency of carbon policy arising because of multiple objectives the irreversibility of energy investments and the scope for ex post reneging on ex ante commitments to set policy instruments such as carbon taxes or emission permits at appropriate levels is set in a conceptual framework analogies with monetary policy are drawn and a solution to the time inconsistency problem is proposed through the establishment of an energy carbon agency

environmental policy and the economic downturn this paper considers how environmental policies should respond to macroeconomic downturns it first explores the implications of the global economic downturn of 2008 09 for environmental policies focusing in particular on the example of action against climate change the arguments for and against activist fiscal policies in general are then reviewed and the case made that a demand induced downturn provides a very good opportunity to undertake a necessary step change in the public spending component of environmental policies and to start working through a backlog of public investment to improve the environment fiscal policy should be used to improve the allocation of resources across time and space recent fiscal stimuli are considered in the light of this discussion it is also argued that there is little cause to delay the introduction of price signals to internalise environmental externalities but the levels at which such signals should be set requires careful analysis changes over the business cycle may be warranted depending on the nature of the environmental externality and the cause s of the business cycle in question

tourism residents welfare and economic choice a literature review over the past decades tourism development has raised economics social and environmental issues particularly for host communities this paper provides a wide ranging review of the existing literature aimed at underpinning empirical tourism research with a robust economic framework so far tourism research has mostly focused on either quantitative or qualitative approaches that lack a strong economic theoretical setting most of the literature on resident s welfare analysis concentrates on their attitudes and perceptions without taking explicitly into account their preferences about policy development based on a cost benefit assessment hence the purpose of this paper is to draw connections within the current body of research to explain the relationship between residents and tourism activity as well as consumer theory and economic choice in this way it is possible to construct a multidimensional framework that allows one to analyse residents welfare in a systematic and more comprehensive manner

a comparative study of portfolio insurance abstract this paper undertakes a comparative study of portfolio insurance under a variety of modeling strategies specifically we focus on portfolio insurers who derive utility from horizon wealth with marginal utility tending smoothly to infinity at some pre specified floor we solve for the optimal consumption portfolio wealth of these portfolio insurers and compare with constrained portfolio insurers and normal agents general equilibrium conditions are contrasted under pure exchange and production type models while the market price level is unambiguously increased under pure exchange under production the effect on market level is state dependent in both models the market volatility and risk premium are decreased by portfolio insurance the paper also investigates the possible relationship between portfolio insurance type trading strategies and market volatility

boosting solar investment with limited subsidies rent management and policy learning in india in order to avoid irreversible damage to global ecosystems new green technologies are needed some of which are nowhere near commercial maturity in these cases governments may create temporary rents to make investments artificially attractive but the creation of such rents involves risks of faulty allocation and political capture this article first highlights the importance of managing rents effectively in promoting green technologies it then shows how india s national solar mission has been remarkably effective in triggering solar investments and managing the necessary subsidies e g through a process of competitive reverse bidding for tariffs policy design and implementation also reflect considerable experimentation and learning some risks remain especially regarding the enforceability of renewable energy quotas at the level of indian states

voluntary compliance with market based environmental policy evidence from the u s acid rain program the u s acid rain program implemented a nationwide market for electric utilities sulfur dioxide so2 emissions and included voluntary compliance possibilities for nonaffected sources i observe significant voluntary participation albeit with small impact on the so2 market mostly from sources with counterfactual emissions below their allowance allocations an ex post analysis suggests that costs from the resulting higher emissions outweigh savings from shifts in emissions reductions from high cost affected sources to low cost nonaffected sources further utilities voluntary participation is well explained by economic variables which provides new evidence of cost effective compliance strategies and low transaction costs

taking natural capital seriously the paper sets out a pragmatic case for preserving the aggregate level of natural capital in the face of the declines in biodiversity and the rising population and major increases in consumption that economic growth will bring in this century the accounting framework to achieving this objective is considered focused on the role of asset registers particular attention is paid to renewable assets at risk of falling below critical thresholds these assets are key components of the balance sheet capital maintenance expenditures are required to maintain the value of assets intact since renewable natural assets should not be depreciated but rather treated as assets in perpetuity within the aggregate substitutions with other forms of capital are permitted but only if there is compensation for any detriment to natural capital offsetting is one mechanism for achieving this compensation the case for enhancing the aggregate is considered and the paper shows how a broader national plan over a generation could contribute to the policy objective of leaving the next generation with a richer endowment of natural capital the policy instruments for embedding natural capital into public policy are reviewed

the market for sulfur dioxide emissions the 1990 clean air act amendments initiated the first large scale use of the tradable permit approach to pollution control the theoretical case for this approach rests on the assumption of an efficient market for emission rights the authors empirical analysis shows that the emission rights market created by the 1990 amendments had become reasonably efficient by mid 1994 they also show that the auctions specified in the amendments to jump start trading had become a small part of the overall market finally the authors demonstrate that the strategic bidding behavior discussed in the literature has had no effect on market prices copyright 1998 by american economic association

tourism development in ldcs hotel capacity expansion with reference to barbados abstract the rate of expansion in the hotel sector is critical in a tourist oriented developing country yet difficult to plan in the face of rising and uncertain demand this paper proposes a methodology for determining optimal hotel capacity which is applied to the case of barbados for the period 1979 1984 it is concluded that overbuilding did occur among luxury hotels over the period gains to other tourism sectors very likely compensated for losses but the offsetting is not expected to continue in the future due to rising construction costs

can government purchases stimulate the economy this essay briefly reviews the state of knowledge about the government spending multiplier drawing on theoretical work aggregate empirical estimates from the united states as well as cross locality estimates i assess the likely range of multiplier values for the experiment most relevant to the stimulus package debate a temporary deficit financed increase in government purchases i conclude that the multiplier for this type of spending is probably between 0 8 and 1 5 jel e23 e62 h50

time varying technological uncertainty and asset prices within the context of a stochastic growth economy the shocks to technology are modeled as a four state markov process the parameters of this process are chosen so that the implied conditional distributions for the marginal product of capital can be ordered in terms of first and second order stochastic dominance this characterization of time varying uncertainty is then used to analyze numerically the implications for bond and equity prices our primary finding is that the response of asset price to an increase in technological uncertainty may differ substantially in this production economy relative to that observed in an exchange setting as recently studied by barsky 1989 and abel l988 this difference is due to the endogenous behavior of consumption and capital gains and depends critical on technological shocks exhibiting positive autocorrelation

corporate social responsibility business strategy and the environment we examine the concept of firms sacrificing profits in the social interest within the environmental realm with particular focus on the case of the united states by addressing four key questions may they do so within the scope of their fiduciary responsibilities to their shareholders can they do so on a sustainable basis or will the forces of a competitivemarketplace render such efforts and their impacts transient at best do firms in fact frequently or at least sometimes behave this way reducing their earnings by voluntarily engaging in environmental stewardship should firms carryout such profit sacrificing activities i e is this an efficient use of social resources we address these questions through the lens of economics including insights from legal and business scholarship

on the term structure of interest rates abstract this paper tests the one good stochastic growth model with respect to its ability to explain the term structure of real interest rates we undertake both a qualitative and quantitative analysis first we assess the changing shape of the yield curve over the model economy s business cycle and compare our results with what is empirically observed second we employ the model to study various implications of informational and allocative efficiency properties which the artificial economy must possess it is found for example that long term rates are less volatile than short term rates and that holding premia can be highly correlated over time third we study the time varying risk premium implicit in the economy s forward rate structure a purely quantitative assessment of the model s explanatory power is also provided

in search of an appropriate form of tourism for africa lessons from the past and suggestions for the future abstract this paper examines the concepts of leakage tourist dollar flows and social exchange by analyzing historical accounts of conventional processes of tourism development in africa found in the tourism literature it argues that within the context of many sub saharan african economies conventional tourism may actually be more suitable for the developed world than african countries suitable alternative perspectives of development in are suggested

to what extent are eu steel companies susceptible to competitive loss due to climate policy abstract in recognition of their competitive vulnerability a set of special rules have been devised for managing sectors such as iron and steel within the eu ets under these rules the eu steel sector has received free allocations in excess of their compliance needs to now and will continue to receive some free allowances up to 2020 however perceptions of the sector s competitive vulnerability have been largely based on inherently hypothetical analyses which rely heavily on counterfactual scenarios and abatement cost estimates often provided by firms themselves this paper explores how the three largest steel firms in the eu acerlormittal corus and thyssenkrupp have sought to strategically exaggerate their vulnerability to carbon pricing to the effect of an inefficient policy outcome we conduct a qualitative assessment of two of the key narratives underpinning the competitive vulnerability argument of eu steel companies lack of abatement opportunities and inability to pass through cost increases based on interviews case studies and publicly available data we find that these arguments provide only partial and weak justifications for competitive loss and preferential treatment under the eu ets the strategy however remains successful due to information asymmetry and the peculiar political economy of eu climate regulation

limits to community participation in the tourism development process in developing countries abstract this study deals with a normative concept of participatory development approach which originates in the developed world in particular it analyses and explains the limitations to the participatory tourism development approach in the context of developing countries it was found that there are operational structural and cultural limits to community participation in the tdp in many developing countries although they do not equally exist in every tourist destination moreover while these limits tend to exhibit higher intensity and greater persistence in the developing world than in the developed world they appear to be a reflection of prevailing socio political economic and cultural structure in many developing countries on the other hand it was also found that although these limitations may vary over time according to types scale and levels of tourism development the market served and cultural attributes of local communities forms and scale of tourism developed are beyond the control of local communities it concludes that formulating and implementing the participatory tourism development approach requires a total change in socio political legal administrative and economic structure of many developing countries for which hard political choices and logical decisions based on cumbersome social economic and environmental trade offs are sine qua non alongside deliberate help collaboration and co operation of major international donor agencies ngos international tour operators and multinational companies

how china s current carbon trading policy affects carbon price an investigation of the shanghai emission trading scheme pilot abstract to better establish a unified carbon market in china this study evaluates the effect of current carbon trading policy and further investigates the relationship between such policy that is published during the second phase of shanghai environment and energy exchange seee and shanghai emission allowance shea price we aim to analyze whether these policies can improve the operation efficiency of current carbon market by the mean reversion test cox ingersoll ross cir model and event study method we first analyze the potential price discovery function of shea products thereby describing the transmission channel of current policy to shea price then we examine the effect of carbon policies published in different periods on their corresponding shea price by the auto correlation test and cir simulation we find that 3 4 of all auto correlation values are less than 0 after apr 2017 and the minimum cumulative error is 31 3792 under the supply and demand channel these findings imply that shea price has the discovery function at the middle and end of trading period and the current policy affects shea price through its effect on the fundamentals of supply and demand further more than 60 of all r values r value that reflects the response of price to policy are less than 1 which implies that the published policy will improves future shea price accordingly we argue that seee belongs to a policy oriented market and the change of carbon price is closely related to emission allocation policies in this case china s government should further push forward the smooth operation of current carbon market by the aid of incentive policy in the coming period

are we consuming too much this paper articulates and applies frameworks for examining whether consumption is excessive we consider two criteria for the possible excessiveness or insufficiency of current consumption one is an intertemporal utility maximization criterion actual current consumption is deemed excessive if it is higher than the level of current consumption on the consumption path that maximizes the present discounted value of utility the other is a sustainability criterion which requires that current consumption be consistent with non declining living standards over time we extend previous theoretical approaches by offering a formula for the sustainability criterion that accounts for population growth and technological change in applying this formula we find that some poor regions of the world are failing to meet the sustainability criterion in these regions genuine wealth per capita is falling as investments in human and manufactured capital are not sufficient to offset the depletion of natural capital

the role of markets and policies in delivering innovation for climate change mitigation this paper identifies market incentives and international and domestic policies that could technologically alter energy systems to achieve greenhouse gas stabilization targets while also meeting other societal goals i consider the conceptual basis and empirical evidence on the effectiveness and efficiency of climate technology policies the paper reviews the literature on trends and prospects for innovation in climate change mitigation and examines the evidence on induced innovation and the implications for the choice of technology policy i then consider the impact of technological advances on the environment the role of direct government support for r d and the complementarities between policies internalizing

government failure and market failure on the inefficiency of environmental and energy policy in this article we describe some important themes in energy and environmental policy there are two main reasons for our interest in these policies first such policies will likely be important in the coming decades as issues related to climate change and energy security come to the fore second there are important lessons to be learned from a careful review of the actual performance of energy and environmental policies we undertake a selective survey of the literature to highlight what is known about the efficiency of particular kinds of policies laws and regulations in these areas this paper makes three key contributions the first is to synthesize a large literature on energy and environmental policy in a way that can be easily digested by both non experts and experts the second contribution is to suggest that if history is a guide then we should not expect many interventions in these policy areas to come close to maximizing net economic benefits the third is to suggest what might be needed for the development of more efficient energy and environmental policies copyright 2010 oxford university press

consumer learning and hybrid vehicle adoption we study the effect of differences in product quality on new technology diffusion we propose a model in which heterogeneity in perceived product quality affects consumer adoption if consumers experientially infer the quality of a technology an increase in initial exposure to a low quality product may inhibit subsequent diffusion incentives intended to speed up adoption may in fact have the opposite effect if they propagate low quality signals we examine the predictions of the model using sales data for 11 hybrid vehicle models between 2000 and 2006 consistent with press reports that the first generation insight was perceived to be of lower quality than the first generation prius we find that conditional on overall hybrid vehicle adoption in the first 2 years locations with a relatively high prius market share experienced faster subsequent adoption than states with a relatively high insight market share we estimate the elasticity of new hybrid sales with respect to the prius penetration rate is 0 30 0 58 while the elasticity with respect to the insight penetration rate is 0 14 to 0 44

a public choice view on the climate and energy policy mix in the eu how do the emissions trading scheme and support for renewable energies interact abstract in this paper we analyze the rationale for an energy policy mix when the european emissions trading scheme ets is considered from a public choice perspective that is we argue that the economic textbook model of the ets implausibly assumes 1 efficient policy design and 2 climate protection as the single objective of policy intervention contrary to these assumptions we propose that the ets originates from a political bargaining game within a context of multiple policy objectives in particular the emissions cap is negotiated between regulators and emitters with the emitters abatement costs as crucial bargaining variable this public choice view yields striking implications for an optimal policy mix comprising res supporting policies whereas the textbook model implies that the ets alone provides sufficient climate protection our analysis suggests that support for renewable energies 1 contributes to a more effective ets design and 2 may even increase the overall efficiency of climate and energy policy if other externalities and policy objectives besides climate protection are considered thus our analysis also shows that a public choice view not necessarily entails negative evaluations concerning efficiency and effectiveness of a policy mix

economic ideas for a complex climate policy regime abstract the parsimony of economic theory provides general insights into an otherwise complex world however the most straightforward organizing principles from theory have not often taken hold in environmental policy or in the decentralized climate policy regime that is unfolding one reason is inadequate recognition of a variety of institutions this paper addresses three ways that the standard model may inadequately anticipate the role of institutions in the actual implementation of climate policy with a u s focus multilayered authority across jurisdictions the impressionistic rather than deterministic influence of prices through subsidiary jurisdictions and the complementary role of prices and regulation in this context the economic approach is built on the premise that incentives affect behavior we suggest that an important pathway of influence for economic theory is to infuse incentive based thinking into the conventional regulatory framework in a complex policy regime incentives can be shaped by shadow prices as well as market prices

politics and sustainable tourism development can they co exist voices from north cyprus abstract this paper investigates ways in which political obstacles inhibit the formulation and implementation of sustainable tourism development in small island developing states through the example of north cyprus the methodology draws on in depth interviews and participant observation of significant actors in the tourism sector the research findings suggest that understanding the intricate political system and power structure in a society is the key to understanding sustainable tourism policy development planning and implementation in the case of north cyprus policy development was found to be a product of political influence referred to as ego driven politics in the text specifically the use of public resources as an instrument for political power retention and that the politicisation of the public sector is the underlying cause of the weakened progress in sustainable tourism development it is therefore essential to have a clear understanding of political issues key political actors interests and how to mitigate personal interests to facilitate and maintain sustainable tourism development in such small states

the equity premium why is it a puzzle corrected this article takes a critical look at the equity premium puzzle the inability of standard intertemporal economic models to rationalize the statistics that have characterized u s financial markets over the past century a summary of historical returns for the united states and other industrialized countries and an overview of the economic construct itself are provided the intuition behind the discrepancy between model prediction and empirical data is explained after detailing the research efforts to enhance the model s ability to replicate the empirical data i argue that the proposed resolutions fail along crucial dimensions

an empirical analysis of the revival of fiscal activism in the 2000s an empirical review of the three fiscal stimulus packages of the 2000s shows that they had little if any direct impact on consumption or government purchases households largely saved the transfers and tax rebates the federal government only increased purchases by a small amount state and local governments saved their stimulus grants and shifted spending away from purchases to transfers counterfactual simulations show that the stimulus induced decrease in state and local government purchases was larger than the increase in federal purchases simulations also show that a larger stimulus package with the same design as the 2009 stimulus would not have increased government purchases or consumption by a larger amount these results raise doubts about the efficacy of such packages adding weight to similar assessments reached more than thirty years ago jel e21 e23 e32 e62 h50

a review of the stern review on the economics of climate change how much and how fast should we react to the threat of global warming the stern review argues that the damages from climate change are large and that nations should undertake sharp and immediate reductions in greenhouse gas emissions an examination of the review s radical revision of the economics of climate change finds however that it depends decisively on the assumption of a near zero time discount rate combined with a specific utility function the review s unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today s marketplace real interest rates and savings rates

british utility regulation theory practice and reform the paper considers the design and performance of the new regulatory regime for u k utilities it describes the rpi x price caps and considers the scope for regulatory discretion and capture particular attention is paid to the informational requirements for the determination of prices the scope for intervention between periods the independence of regulators and the promotion of competition five arguments for regulatory reform are identified regulatory arbitrage capture administrative costs investment sunk costs and regulatory hold up and political instability a number of reforms are then proposed these include merging regulatory bodies a common set of financial rules a common basis for efficiency comparisons and reforming the mmc and judicial review

the uk economy analysis and prospects world trade and output expanded rapidly in 1984 led by a high rate of growth in the united states however the recovery which started in 1983 has not been evenly spread across countries in the us fiscal policies have been lax and domestic demand has expanded at a breakneck pace japan benefited significantly from rapid growth in the us but europe has done less well partly because fiscal policies remain very tight and domestic demand restrained high real interest rates and the strength of the dollar held down commodity prices and thus stopped the pick up in activity feeding through into inflation rates however unemployment has continued to rise in most countries and in total 30 million people are now out of work in the oecd area

comparative dynamics of an equilibrium intertemporal asset pricing model this paper uses recursive competitive theory to develop a general equilibrium asset pricing model in this framework all prices and rates of return are endogenously determined thus enabling us to analyze the effects of changes in preferences technological uncertainty and expectations on the structure of security prices in particular we focus on how the market risk premium varies with changes in the underlying economic environment an issue which other asset pricing models have chosen not to address