understanding heterogeneous preferences in random utility models a latent class approach a finite mixture approach toconditional logit models is developed in whichlatent classes are used to promoteunderstanding of systematic heterogeneity the model is applied to wilderness recreationin which a branded choice experiment involvingchoice of one park from a demand system wasadministered to a sample of recreationists the basis of membership in the classes orsegments in the sample involved attitudinalmeasures of motivations for taking a trip aswell as their stated preferences overwilderness park attributes the econometricanalysis suggested that four classes of peopleexist in the sample using the model toexamine welfare measures of some hypotheticalpolicy changes identified markedly differentwelfare effects than the standard singlesegment model and provided insight into thedifferential impact of alternative policies

the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

life and work of john richard nicholas stone 1913 1991 sir richard stone knighted in 1978 and nobel laureate in economics in 1984 was one of the pioneering architects of national income and social accounts and one of the few economists of his generation to have faced the challenge of economics as a science by combining theory and measurement within a cohesive framework he was awarded the nobel prize in economics for his fundamental contributions to the development of national accounts but made equally significant contributions to the empirical analysis of consumer behaviour his work on the growth project was also instrumental in the development of appropriate econometric methodology for the construction and the analysis of large disaggregated macroeconometric models this paper provides an analysis of stone s many contributions

applied general equilibrium models of taxation and international trade an introduction and survey we wish to acknowledge the help of three referees and of john pencavel on several earlier drafts as well as the assistance of the modelers whose work is referred to in the paper they corrected our lack of understanding of their work and provided many other helpful comments excellent research and bibliographical assistance have been provided by debbie fretz radwan shaban and janet stotsky helpful comments have been made by charles ballard michael boskin lans bovenberg sylvester damus harvey galper glenn harrison gordon lenjosek jack mutti serena ng t n srinivasan charles stuart and eric toder the authors also acknowledgefinancial support from the national bureau of economic research the national science foundation international business machines and the social sciences and humanities research council ottawa canada

liquidity effects and the monetary transmission mechanism several recent papers provide strong empirical support for the view that an expansionary monetary policy disturbance generates a persistent decrease in interest rates and a persistent increase in output and employment existing quantitative general equilibrium models which allow for capital accumulation are inconsistent with this view there does exist a recently developed class of general equilibrium models which can rationalize the contemporaneous response of interest rates output and employment to a money supply shock however a key shortcoming of these models is that they cannot rationalize persistent liquidity effects this paper discusses the basic frictions and mechanisms underlying this new class of models and investigates one avenue for generating persistence we argue that once a simplified version of the model in christiano and eichenbaum 1991 is modified to allow for extremely small costs of adjusting sectoral flow of funds positive money shocks generate long lasting quantitatively significant liquidity effects as well as persistent increases in aggregate economic activity

does trade liberalization increase national energy use abstract this paper utilises the theoretical principles of antweiler et al antweiler w b r copeland and m s taylor 2001 is free trade good for the environment american economic review 91 4 pp 877 908 to estimate empirically the linkages between trade liberalization and energy use focusing on scale technique and composition effects results suggest that trade will increase energy use for the mean country in the sample

testing for the survey mode effect on contingent valuation data quality a case study of web based versus in person interviews this paper addresses the lack of empirical evaluation of the use of web based surveys in the context of contingent valuation surveys we compare using a case study in person interviews with web based surveys regarding response rate information additivity effects and respondents attitudes towards paying the web based survey had a much lower response 5 1 than the in person interviewing 84 we find the web based contingent valuation surveys to be neither more susceptible to information additivity effects nor more prone to zero protest responses we conclude in favor of the use of web based surveys namely in portugal where the number of internet users is rapidly increasing although further research efforts are required on their use

foreign direct investment as a way to guide the innovative process towards sustainability abstract in 1972 for the first time the term sustainable development was coined at the stockholm conference and in 1987 the brundtland report established the sustainability innovation binomial since then extensive research into sustainability oriented innovation has been conducted focused during the last decade on smes and recognizing these as the main actor of sustainable development for which foreign direct investment fdi is considered from a research and institutional point of view as a vital source although academic literature presents conflicting conclusions in this context this paper aims to perform a microeconomic analysis of how fdi influences the innovative process of smes and how this can lead to a process oriented towards sustainability to this end a panel of 4667 smes has been analyzed spanning a sample period between 2004 and 2013 through a binary logit model which compares and contrasts smes with fdi and equivalent smes without fdi over time and therefore exposed to a changing economy the most significant results are that fdi is attracted mainly by factors associated with technological supply which when coupled with being of medium size and located in a manufacturing sector of medium high technology generates positive spillovers these depend to a large extent on public funding which allows these companies to be more innovative and makes it more likely they focus their innovative process on sustainability

economic valuation of habitat defragmentation a study of the veluwe the netherlands abstract this paper offers an economic value assessment of a nature protection programme in the veluwe the netherlands this programme involves two defragmentation scenarios the first scenario connects the central part of the veluwe with river forelands in a north eastern direction i e the meadows of the ijssel river while the second scenario is focussed on defragmentation in a south western direction i e the meadows of the rhine river the valuation is based on a questionnaire that was administered during face to face interviews in the area and through the internet we employ a contingent valuation approach to assess the respondents willingness to pay for the realisation of the defragmentation scenarios it appears that the mean willingness to pay wtp for the two defragmentation scenarios is 162 2 lognormal distribution per respondent because the veluwe is considered a nature park of national importance we performed an aggregation of individual wtp estimates over dutch households with the resulting aggregate estimates we can compare the total costs and benefits of the two scenarios for habitat defragmentation in the veluwe in addition we test whether respondents value the two scenarios equally we also check whether the methods of data collection face to face interviews and internet questionnaires have distinct influences on the stated wtp responses

james tobin an appreciation of his contribution to economics jim tobin who died on march 11 2002 at the age of 84 was one of giants of economics of the second half of the twentieth century and the greatest macroeconomist of his generation tobin s influence on macroeconomic theory is so pervasive so much part of our professional acquis that many younger economists often are not even aware that it is his ideas they are elaborating testing criticising refuting or re inventing in this appreciation i consider tobin s scholarly contributions made over a period of more than 50 years tobin received the 1981 nobel memorial prize for his analysis of financial markets and their relations to expenditure decisions employment production and prices i consider his contributions to mean variance portfolio demand and asset pricing theory especially the portfolio separation theorem pitfalls in financial model building portfolio balance and flow of funds models and the credit channel the life cycle model and social security econometric methodology including the tobit estimator and his pioneering work using both time series and cross sectional data to estimate food demand functions economic growth tobin s q the tobin tax the monetary and fiscal policy effectiveness debate first with milton friedman and then with the new classical macroeconomics and real business cycle schools and tobin s approach to methodological questions including microfoundations and aggregation

liquidity effects monetary policy and the business cycle this paper presents a flexible price quantitative general equilibrium model with the property that a positive money supply shock drives the nominal interest rate down and aggregate employment output and the real wage up these implications are broadly consistent with postwar u s data the two key features of the model that are responsible for its properties are 1 money shocks have a heterogeneous impact on agents and 2 ex post inflexibilities in production give rise to a very low short run interest elasticity of money demand in our model the extent of the drop in the interest rate after a positive money supply shock depends on the degree to which production is ex post inflexible given sufficient ex post inflexibility the model conforms well with the view widely held within the u s federal system that the short run interest rate elasticity for total reserves is very close to zero copyright 1995 by ohio state university press

industrial eco efficiency regional disparity and spatial convergence of china s regions abstract in this study the industrial eco efficiency measures of 30 chinese provinces municipalities and autonomous regions from 2001 to 2015 were estimated based on a proposed data envelopment analysis dea model and the non convex metafrontier undesirable outputs super efficiency slacks based measure ncmeta us sbm which simultaneously incorporates non convex metafrontier technology undesirable outputs and super efficiency into slacks based measure subsequently dynamic spatial econometric models were employed to test the spatial convergence of industrial eco efficiency the empirical results show that 1 the average value of industrial eco efficiency was the highest in the eastern region 0 67 followed by the western region 0 30 and central region 0 27 indicating the existence of a significant regional disparity 2 strong evidence for global and club spatial convergence of industrial eco efficiency was found with regard to regional heterogeneity provinces in the eastern region converged faster than those in the central and western regions while the convergence speed of industrial eco efficiency increased after 2008 with respect to temporal heterogeneity 3 the ownership structure appeared to have a higher impact on industrial eco efficiency than other controls in the presence of spatial conditional convergence these findings are robust with regard to both spatial econometric model and spatial weighting matrix specifications based on the empirical analysis the following policies promote industrial eco efficiency in china have been recommended first relevant authorities must take effective measures to encourage the central western regions to adopt clean energy technologies the energy subsidy policies should strive to break through the technological lock in and turn to regional green development second full advantage of the spatial effects must be taken and technological exchanges and cooperation among neighboring areas must be strengthened to ensure that the industrial eco efficiency of the central and western regions converge with those of the eastern coastal areas policy implications of multidimensional heterogeneity and adjustment of industrial structure should be highlighted while promoting industrial eco efficiency finally it is crucial to emphasize factors such as foreign direct investment fdi ownership and industrial structures to attract fdi and optimize the current industrial structure

why are prices sticky preliminary results from an interview study this paper reports preliminary results from a large research project on business pricing which is currently underway the idea is to use interviews with actual price setters to assess the validity of a dozen theories of price stickiness the rather unorthodox for economists methodology is defended the research design is described briefly and a few results based on the first 72 interviews out of a projected 200 are presented this sample suggests that the median firm changes its price annually and that price adjustments typically lag 3 4 months behind shocks to demand or cost this abstract was borrowed from another version of this item

price flexibility and output stability an old keynesian view in this symposium i shall play the role in which i was cast the unreconstructed old keynesian considering the alternatives i do not mind being billed as a keynesian an old keynesian at that but old keynesians come in several varieties and i speak for no one but myself nor do i defend the literal text of the general theory several generations of economists have criticized amended and elaborated that seminal work i shall argue for the validity of the major propositions that distinguish keynesian macroeconomics from old or new classical macroeconomics

on the welfare macroeconomics of government financial policy is welfare as indicated by per capita private and collective consumption lower in longrun steady states with higher inflation rates on the one hand inflation diverts resources from production to economizing of cash holdings on the other those same economies create extra room for capital in the portfolios of finite horizon savers and seignorage from inflationary money creation permits tax reductions favorable to accumulation of wealth and capital it is shown that the optimal inflation may be positive therefore contrary to feldstein sacrifices of current output and employment may not be justified by the disinflation they bring about

nominal wage rigidity and the rate of inflation using the accurate and extensive data available in the uk new earnings survey this paper investigates the extent to which nominal wages are downwardly rigid and whether such rigidity interferes with necessary real wage adjustments when inflation is low despite the substantial numbers of individuals whose nominal wages fall from one year to the next we find that if long run inflation is one percent higher the number of individuals with negative real pay growth increases by around 1 4 percent this is controlling for the median and dispersion of the real wage change distribution

earmarking conservation further inquiry on scope effects in stated preference methods applied to nature based tourism abstract the way people assign value to nature conservation policies has important implications for management choices economic valuation surveys are affected by individual behavioural patterns that are not exhaustively explained by traditional sources of bias such as embedding flagship species fixed budget commodity misspecification and warm glows through a contingent valuation study of alpine wildlife we use an external scope test to evaluate the difference in willingness to pay among tourists for conservation policies targeted either to the ibex alone or to the four ungulates populating the gran paradiso national park in northwest italy ibex red deer roe deer chamois we find that park users are willing to contribute significantly more to policies protecting one of the four ungulates than all four of them a result that we argue should be ascribed to pure aversion to less specific policy objectives i e to a preference for punctual earmarking of resources devoted to conservation

commodity price stabilization in imperfect or cartelized markets most studies of commodity price stabilization assume that all agents behave competitively however many commodities suitable for stockpiling are produced by countries with a significant share of the world market and commodity agreements themselves often result in cartelization of the market the paper explores the consequences of market power for the choice of storage rule and the degree of price stabilization it finds that with linear demand dominant producers choose more stable prices than under perfect competition and price stability increases with their market share with constant elastic demand the competitive degree of price stabilization is achieved

an intertemporal general equilibrium model of asset prices this paper develops a continuous time general equilibrium model of a simple but complete economy and uses it to examine the behavior of asset prices in this model asset prices and their stochastic properties are determined endogenously one principal result is a partial differential equation which asset prices must satisfy the solution of this equation gives the equilibrium price of any asset in terms of the underlying real variables in the economy in this paper we develop a general equilibrium asset pricing model for use in applied research an important feature of the model is its integration of real and financial markets among other things the model endogenously determines the stochastic process followed by the equilibrium price of any financial asset and shows how this process depends on the underlying real variables the model is fully consistent with rational expectations and maximizing behavior on the part of all agents our framework is general enough to include many of the fundamental forces affecting asset markets yet it is tractable enough to be specialized easily to produce specific testable results furthermore the model can be extended in a number of straightforward ways consequently it is well suited to a wide variety of applications for example in a companion paper cox ingersoll and ross 7 we use the model to develop a theory of the term structure of interest rates many studies have been concerned with various aspects of asset pricing under uncertainty the most relevant to our work are the important papers on intertemporal asset pricing by merton 19 and lucas 16 working in a continuous time framework merton derives a relationship among the equilibrium expected rates of return on assets he shows that when investment opportunities are changing randomly over time this relationship will include effects which have no analogue in a static one period model lucas considers an economy with homogeneous individuals and a single consumption good which is produced by a number of processes the random output of these processes is exogenously determined and perishable assets are defined as claims to all or a part of the output of a process and the equilibrium determines the asset prices our theory draws on some elements of both of these papers like merton we formulate our model in continuous time and make full use of the analytical tractability that this affords the economic structure of our model is somewhat similar to that of lucas however we include both endogenous production and

how does foreign direct investment influence energy intensity convergence in china evidence from prefecture level data abstract the huge energy intensity gaps among chinese prefectures make the overall reduction of energy intensity extremely difficult energy intensity convergence eic i e catching up of the high energy intensity prefectures with the low ones is imperative for narrowing these gaps as one of the most important channels for international technology diffusion foreign direct investment fdi has great impact on energy intensity and may be beneficial for the convergence based on pollution haven hypothesis however fdi may result in energy intensity divergence to provide an in depth understanding of the mechanisms of fdi induced convergence divergence this paper employs markov chain approach to examine the impact of fdi on eic for 256 chinese prefectures in the period from 2005 to 2014 moreover we particularly emphasis on the influences of local specific characteristics such as human capital resource endowment and environmental regulation on fdi induced convergence divergence our study on 256 chinese prefectures finds that fdi helps prefectures with higher energy intensity to catch up with lower ones which strengthens eic the impact of fdi on eic varies depending on different local characteristics among all characteristics mentioned above human capital and environmental regulation benefit the convergence driving effect of fdi while this effect is hindered by resource endowment more comprehensive and detailed policies are recommended to address energy intensity gaps in china

menu costs and the neutrality of money a model of endogenous price adjustment under money growth is presented firms follow s s pricing policies and price revisions are imperfectly synchronized in the aggregate price stickiness disappears and money is neutral the connection between firm price adjustment and relative price variability in the presence of monetary growth is also investigated the results contrast with those obtained in models with exogenous fixed timing of price adjustment

valuation of ecotourism resources using a contingent valuation method the case of the korean dmz abstract the korean demilitarized zone dmz which has been untouched by human interference for the last half century has become a sanctuary for rare species of animals and plants conflicts concerning development between communities and environmentalists are arising estimates of the preservation value of the dmz are necessary for society to properly address these issues such estimates will help policy makers address issues of conservation management sustainable development and public financial support given this situation the objectives are two fold the primary objective of this study is to obtain estimates of the preservation value of the korean dmz and civilian control zone ccz a secondary objective is to examine the potential for hypothetic bias in respondents answers in a contingent valuation method framework findings suggest hypothetical bias is present in the survey including a real payment vehicle may reduce hypothetical bias in eliciting willingness to pay wtp best estimates are the mean wtp is us 16 74 per capita aggregate preservation value lies between us 264 and 602 million these findings indicate that conservation of the dmz and ccz is not only important for moral and ecological reasons but the dmz and ccz are of considerable economic value to south koreans any development unfriendly to the environment will degrade the quality of the ecosystem of the dmz as well as decrease its economic value

rules of thumb for social learning this paper studies agents who consider the experiences of their neighbors in deciding which of two technologies to use we analyze two learning environments one in which the same technology is optimal for all players and another in which each technology is better for some of them in both environments players use exogenously specified rules of thumb that ignore historical data but may incorporate a tendency to use the more popular technology in some cases these naive rules can lead to fairly efficient decisions in the long run but adjustment can be slow when a superior technology is first introduced

convergence analysis of regional energy efficiency in china based on large dimensional panel data model abstract with the advent of the era of big data large dimensional spatial panel data is gradually used to do empirical research in the macroeconomic field this paper adopts a data envelopment analysis dea approach to calculate regional energy efficiency based on the perspective of total factor energy efficiency using statistical data of 30 administrative regions in china on basis of spatial effects the paper assesses the convergence of regional energy efficiency in china using large dimensional spatial panel data model our results indicate that 1 there is significant spatial autocorrelation and clear spatial effects in china s regional energy efficiency thus spatial effects should not be ignored when assessing the convergence of regional energy efficiency in china 2 during the period from 2000 to 2014 china s regional energy efficiency not only exhibits absolute convergence but also exhibits conditional convergence the convergence rate is higher than the rate of absolute convergence after controlling for the initial conditions of the level of economic development foreign direct investment and government influence 3 the convergence rate of china s regional energy efficiency from 2004 to 2014 is higher than the convergence rate for the period of 2000 2004 which indicates that industry transfer has contributed to improvement in the convergence of regional energy efficiency in china since 2004

inflation and unemployment the world economy today is vastly different from the 1930s when seymour harris the chairman of this meeting infected me with his boundless enthusiasm for economics and his steadfast confidence in its capacity for good works economics is very different too both the science and its subject have changed and for the better since world war ii but there are some notable constants unemployment and inflation still preoccupy and perplex economists statesmen journalists housewives and everyone else the connection between them is the principal domestic economic burden of presidents and prime ministers and the major area of controversy and ignorance in macroeconomics i have chosen to review economic thought on this topic on this occasion partly because of its inevitable timeliness partly because of a personal interest reaching back to my first published work in 1941

convergence analysis of city level energy intensity in china abstract understanding the convergence patterns of energy intensity and the drivers leading to the club convergence are of great significance for local governments to implement targeted policies to improve energy efficiency with this in mind we begin with the collection of energy consumption data of 193 chinese cities at prefecture level or above then we adopt the log t test and clustering algorithm to investigate convergence characteristics of energy intensity besides the ordered probit model is adopted to investigate the drivers that affect the formulation of convergent club we identify four convergent clubs among total 193 cities and these clubs show great differences in energy intensity marketization degree population density foreign direct investment resource endowment and industrial structure are recognized as the drivers of the formation of convergence clubs this paper adds more evidence to understand the energy intensity gap we propose that upgrading the industrial structure exerting economic assemble advantage enhancing the level of opening up and improving the marketization level are favorable measures to reduce energy intensity

overcoming barriers to innovation and diffusion of cleaner technologies some features of a sustainable innovation policy regime despite a deepening understanding of systems and processes by which the innovation and diffusion of cleaner technologies occurs relatively little attention has been given to the development of policy processes that reflect this deeper understanding a set of guiding principles for improving sustainable innovation policy processes has been formulated and disseminated by the authors and colleagues in research drawing on theoretical and empirical analysis including a case study of low carbon energy innovation in the uk and interactions with policy makers and other stakeholders through a series of workshops this paper elaborates on two of the guiding principles 1 stimulating the development of a sustainable innovation policy regime bringing together innovation and environmental policy regimes 2 applying systems thinking engaging with the complexity and systemic interactions of innovation systems and policy making processes to promote a transition to sustainability

choosing between internet and mail survey modes for choice experiment surveys considering non market goods in a choice experiment setup considering a non market good this paper adds to the literature on survey mode effects by providing evidence that internet surveys can be a viable alternative to traditional mail surveys when gathering feedback from a sample of respondents the case study concerns preferences for protecting different types of landscape from road encroachment when building new motorways in denmark two samples of respondents are surveyed one by internet and one by mail the performances of the two samples are compared over six different criteria response rates protest responses demographics preferences and wtp estimation precision and finally certainty in choice differences are observed for some of these criteria implying that analysts should be aware that choosing internet over mail could be accompanied by a survey mode effect however the observed differences do not translate into significant differences in the unconditional wtp estimates in most applied economic valuation studies of non market goods the main objective is in fact estimation of wtp hence in the present case the identified survey mode effects do not severely invalidate the applicability and continued use of the internet as a suitable means of collecting data for choice experiment economic valuation of non market goods

liquidity loanable funds and real activity abstract this paper develops a general equilibrium model of two traditional explanations of the monetary black box linking money and real activity the liquidity effect and the loanable funds effect these effects are modeled with a monetary production economy in which central bank injections of cash are funnelled into the economy through the credit market since only borrowers have direct access to the newly injected cash monetary injections cause nominal interest rates to fall if firms are borrowers then monetary injections also increase current and future real activity

convergence of least squares learning in environments with hidden state variables and private information we study the convergence of recursive least squares learning schemes in economic environments in which there is private information the presence of private information leads to the presence of hidden state variables from the viewpoint of particular agents by applying theorems of ljung we extend some of our earlier results to characterize conditions under which a system governed by leastsquares learning will eventually converge to a rational expectations equilibrium we apply insights from the learning results to formulate and compute the equilibrium of a version of townsend s model

estimating the use and preservation values of national parks tourism resources using a contingent valuation method abstract the korean national parks authority has questioned whether natural resources have enough economic value to justify an increase in admission fee in the case of inadequate assistance from the government alternatively they also question whether the national parks have sufficient value to contribute to citizens welfare in order to receive continuing support from the government hence the purpose of this research is to estimate the use and preservation values of natural and or cultural resources in five distinctive national parks using a dichotomous choice contingent valuation method the empirical results show that natural and or cultural resources of the sample national parks possessed considerable use and preservation values outweighing current admission fees and maintenance costs per visitor thus these values provide enough justification for the national park authority to increase admission fees to maintain the quality of natural environment and avoid degrading natural resources in the event of no assistance by the government the findings may provide guidance to national park managers and practitioners who establish pricing policies the results also show that values of natural and or cultural resources were different across five distinctive national parks indicating the possibility of employing differential admission fees according to park characteristics

a near rational model of the business cycle with wage and price inertia this paper presents a model in which insignificantly suboptimal behavior causes aggregate demand shocks to have significant real effects the individual loss to agents with inertial price wage behavior is second order in terms of the parameter describing the shock while the effect on real economic variables is first order thus significant changes in business activity can be generated by anticipated money supply changes provided that some agents are willing to engage in nonmaximizing behavior which results in small losses

on money as a medium of exchange we analyze economies in which individuals specialize in consumption and production and meet randomly over time in a way that implies that trade must be bilateral and quid pro quo nash equilibria in trading strategies are characterized certain goods emerge endogenously as media of exchange or commodity money depending both on their intrinsic properties and on extrinsic beliefs there are also equilibria with genuine fiat currency circulating as the general medium of exchange we find that equilibria are not generally pareto optimal and that introducing fiat currency into a commodity money economy may unambiguously improve welfare velocity acceptability and liquidity are discussed

did technology shocks cause the 1990 91 recession real business cycle theory has been used to determine the statistical properties of aggregate fluctuations induced by technology shocks the finding is that technology shocks have been an important contributor to fluctuations in the u s economy for example finn e kydland and prescott 1991 estimate that if the only impulses were technology shocks the u s economy would have been 70 percent as volatile as it has been over the postwar period in this paper we employ the theory to answer the question did technology shocks cause the 1990 1991 recession answering this question requires the determination of the effects of technology shocks on the path of the economy the procedure that we use to make this determination is as follows first we construct a model economy and calibrate it so that its steady state matches actual 1987 values data for other years are used to determine the realizations of the shocks and the nature of the stochastic processes generating these shocks given these stochastic processes the equilibrium decision rules for our calibrated economy are computed we then construct the path for the economy implied by the model for the period 1984 1 1992 3 we set 1984 1 model values of the state variables equal to actual 1984 1 values and use the decision rules and the realized shocks to construct this path finally we examine whether the model economy experiences a recession in 1991 as did the u s economy business cycles are variations in output per adult that are in large part accounted for by variation in the per adult time allocated to market production figure 1 plots the time path of the per adult labor input during the 1983 1 1989 1 period there was a remarkable 12 percent increase in the labor input per adult beginning in 1990 2 there has been a decline of nearly 6 percent in this per adult labor input an unusual feature of the recovery subsequent to the 1990 1991 recession is that this labor input variable has continued to decline well into the recovery this unusual behavior leads to a related question did technology shocks cause the slow recovery we found it necessary to modify the standard real business cycle model in four ways in order to answer the posed question first given the enormous changes in the relative prices of durables as depicted in figure 2 we could not treat technology change as being neutral with respect to different types of final goods following john b long and charles plosser 1983 and jeremy greenwood et al 1992 we consider multiple production sectors with technology change differing across sectors second we assume that there is a technology employed within the household sector that produces a consumption flow from the stock of consumer durables third we consider land to be a factor of production in addition to labor and capital our fourth modification is to introduce population growth

dynamic misspecification in the environmental kuznets curve evidence from co2 and so2 emissions in the united kingdom this study looks at the behaviour of emissions when in disequilibrium with respect to the environmental kuznets curve ekc relationship we use the non linear threshold cointegration and error correction methodology and a long dataset beginning in 1830 in an application to the united kingdom there is significant evidence that not only does the inverse u shape hold between per capita co 2 and so 2 emissions and gdp per capita but we also find that temporary disequilibrium from the long run ekc is corrected in an asymmetric fashion this may be due to the historical pressure of environmental regulation in the uk to reduce emissions that are higher than permitted however further analysis suggests that technological change can partially account for the asymmetric adjustment

estimating demand elasticities under rationing eliminating rationing in the united kingdom following the second world war was a concern for policy makers because of potentially large fluctuations in post war prices and the impact on unrationed goods this study shows that in using virtual prices elasticities can be estimated from a free demand system consistent with observed consumer choices substitution estimates without accounting for rationing are misleading in contrast using virtual prices and estimating a free market system yield results similar to those of the pre war period results show that food rationing affected expenditure across unrationed goods rationing on other services had little effect on expenditure across unrationed goods

adaptive learning and the transition to fiat money this article explores some implications of adaptive learning for monetary evolution using a search theoretic framework that allows for media of exchange network effects adaptive learning precludes any voluntary transition to a fiat standard from a non monetary state of nature and can account for the historically observed tendency for fiat monetary standards to emerge only following the prior appearance of commodity money and the widespread employment of redeemable banknotes adaptive learning can also account for governments frequent resort to coercive measures to force a switch to fiat money and for their ability to affect such a switch even when doing so is not pareto optimal exchange media fall into the general category of products for which the utility that a user of the good derives from use of the good increases with the number of other agents using the good katz and shapiro 1985 p 424 there are two reasons for these positive network effects 1 indirect the more agents who employ a particular medium of exchange the more likely it is that prices will be quoted in terms of that medium of exchange i e that the medium of exchange will also serve as the economy s principle medium of account the costs of exchange are less for a medium of exchange that trades at par this indirect external effect is analogous to one encountered in computer hardware the more purchasers of a particular kind of hardware the more likely manufacturers of software are to supply compatible products 2 direct the more persons who use a particular exchange medium the better its quality or performance this direct network effect is analogous to one encountered in communications technologies such as telephones the analogy is especially close for fiat money which is useless to an isolated individual this article examines some ways in which media of exchange network effects influence the evolution of monetary standards and especially their role in determining both when and how a transition may occur from barter or commodity money to fiat money the approach taken here emphasises the role of adaptive learning where agents select exchange strategies that reflect static expectations concerning other agents preferred strategies although the exchange game agents play generally has multiple nash equilibria including one in which all agents accept fiat money adaptive learning precludes a spontaneous transition from barter to a fiat monetary standard even where a fiat standard would be welfare enhancing yet such learning does not rule out the spontaneous evolution of a commodity money standard or the eventual substitution of redeemable banknotes for commodity money readers familiar with the literature on network effects will recognise this

energy intensity and foreign direct investment a chinese city level study article i nfo in this paper we investigate the relationship between the energy intensity of chinese cities and the location of foreign firms employing a unique dataset of 206 of the largest prefecture level cities between 2005 and 2008 our results reveal a non linearinverted u shaped relationship between energy intensity and city level per capita income with the majority of cities on the downward slope of the curve we also find evidence of a significant and negative relationship between the foreign direct investment fdi flows into a city and energy intensity however this effect varies by geographic location reflecting differences in the ability of regions to absorb and benefit from environmental spillovers the relatively small economic effect of fdi can in part explained by the propensity for foreign firms to invest in energy intensive sectors coupled with the trend for china to invest heavily in capital intensive industries

choice modelling approaches a superior alternative for environmental valuation in this paper we examine some popular choice modelling approaches to environmental valuation which can be considered as alternatives to more familiar valuation techniques based on stated preferences such as the contingent valuation method a number of choice modelling methods are consistent with consumer theory and its focus on an attribute based theory of value permits a superior representation of many environmental management contexts however choice modelling surveys can place a severe cognitive burden upon respondents and induce satisficing rather than maximising behavioural patterns in this framework we seek to identify the best available choice modelling alternative and investigate its potential to solve some of the major biases associated with standard contingent valuation we then discuss its use in the light of policy appraisal needs within the eu an application to the demand for rock climbing in scotland is provided as an illustration

the path of technological progress for china s low carbon development evidence from three urban agglomerations abstract it is widely believed that technological progress is the key driving force for low carbon development based on a panel data of 50 cities during the period 2005 2014 in china s three urban agglomerations beijing tianjin hebei yangtze river delta and pearl river delta this paper presents a comprehensive analysis on the path of technological progress for the low carbon development specifically it firstly estimates the factor biased technological progress by using a translog production function model and then dynamic panel data models are used to investigate the impacts of three sources of technological progress including rd finally we introduce an index to measure the appropriate technical structure and analyze the technological improvement strategy to the low carbon development the main results indicate that technological progress of the three urban agglomerations is biased toward electricity thereby shows a electricity saving effect fdi shows electricity saving and carbon reduction effects but rd the impacts of import and export on the factor biased technological progress are weak furthermore the path of technological progress is highly related to the level of economy when gdp per capita is higher than 37 000 yuan indigenous innovation is the main driver for low carbon development

comments by professor james tobin professor tobin was invited to reflect upon the experiment in applied econometrics at the workshop convened to discuss the experiment s results he discussed his education in econometrics and the contexts both economic and technical in which his paper of 1950 on the demand for food was written he outlined the concerns facing econometricians of that time to explain some aspects of his approach and compared these to the worries of the econometricians taking part in the experiment 1997 john wiley sons ltd

monopolistic competition and the effects of aggregate demand how important is monopolistic competition to an understanding of the effects of aggregate demand on output we ask the question at three levels can monopolistic competition by itself explain why aggregate demand movements affect output can it together with other imperfections generate effects of aggregate demand in a way that perfect competition cannot if so can it give an accurate account of the response of the economy to aggregate demand movements the answers are no yes and yes

a trade related pollution trap for economies in transition evidence from china abstract this study argues that economic growth does not necessarily reverse the pollution haven behavior even if one economy shifts from the low income group to the high income one i e the economy in transition the economy in transition can become a convergence of trade related pollution then getting stuck in a pollution trap through investigating the case of china during 2003 2009 this study examines the features and causes of trade related pollution trap supported by the world input output database and the product specific statistics from china customs this study applies the input output analysis to trace the distribution of pollution embodied in china s foreign trade then it constructs a sector country year panel and applies the fixed effect model to examine causes of the pollution trap the results show that china s pollution terms of trade ptt with developing economies increases and exceeds one while the ptt with developed economies keeps larger than one it supports the feature of pollution trap the results also demonstrate that pollution trap is determined by the synergy of environmental regulation inter industry trade and intra industry trade 1 environmental regulations keep china from becoming pollution haven of developed economies rather than relocating pollution intensive production to other developing economies 2 the current intra industry trade of low value added products worsens china s environmental performance 3 the diluting advantage on labor and the accumulating advantage on capital keep china specializing in pollution intensive production overall the pollution trap may alert economies that applies the outward oriented growth model to prepare for sustainability transition our findings imply that going green rather than moving away is essential in response to trade environment effects more stringent regulation should improve the environmental performance of production and encourage the utilization of clean technology the increasing role of intra industry trade requires to upgrade the commodity structure towards one with higher added value

richard stone s contributions to economics richard stone published his first scientific studies in the late 1930s during world war ii he worked on various government assignments his work during this period on national income estimates and more extensive national accounts for england turned out to be of particular importance for future research in economics stone was involved in this work as early as 1940 and carried out pioneering studies in collaboration with j e meade and in contact with j m keynes most of stone s writings are rigorously technical and soberly impersonal however in an article 45 1 on the development and use of national income estimates he added some interesting personal glimpses from this period he also formulated a somewhat more personal creed than is usually found in his works it would seem worthwhile to quote an excerpt anyone who believes in the maintenance of a social economy and the avoidance of the totalitarian direction of all aspects of economic life must be concerned at the present time with the creation of an institutional framework which will permit a social economy with the essential features of free markets free choice of occupations and free choice in the spending of disposable income to function more in accordance with contemporary social ideals in the achievement of this goal and in re drafting the rules of the economic game in such a way that both laissez faire and overall physical control are rejected as a basis for economic organization national income and expenditure studies and their extension to the technique of national budgeting have i believe a great deal to offer stone then went on to discuss how the economy can be made to function more in accordance with contemporary social ideals and referred first and foremost to stabilization of economic activity equalization of income distribution and different forms of intervention in the competitive mechanism

real business cycles a new keynesian perspective the debate over the source and propagation of economic fluctuations rages as fiercely today as it did 50 years ago in the aftermath of keynes s the general theory and in the midst of the great depression today as then there are two schools of thought the classical school emphasizes the optimization of private economic actors the adjustment of relative prices to equate supply and demand and the efficiency of unfettered markets the keynesian school believes that understanding economic fluctuations requires not just studying the intricacies of general equilibrium but also appreciating the possibility of market failure on a grand scale

prices technology development and the rebound effect abstract energy efficiency is the critical parameter for policies that aim at reducing energy consumption while maintaining or even boosting economic growth the two main options to influence energy efficiency are changes in relative prices i e raising the price of energy through economic instruments or to introduce new technologies which increase the productivity of each unit of energy this paper is based on the notion that in an equilibrium economy the marginal economic productivity is identical for all factors i e energy labour knowledge and capital from this premise two main conclusions can be drawn first any change in price or technology will have an impact on the whole economy by creating feedbacks through the substitution of factors of production and goods as well as increased wealth second the two policy approaches changing relative prices and technology development are not opposite to each other they are the two faces of the same reality and should be developed and promoted simultaneously and consistently

trade from resource rich countries avoids the existence of a global pollution haven hypothesis abstract free trade agreements are currently receiving much attention in the media and politics one important question concerning free trade is its effect on the environment for example in carbon dioxide emissions the goal of this paper is to provide evidence on the validity of the pollution haven hypothesis using a multi regional input output approach for six regions and the rest of the world as a whole our findings indicate that in the period from 1995 to 2009 international trade has allowed the global economy to reduce its overall co2 emissions compared to a hypothetical situation without international trade the total amount of emissions saved was 15 06 gt in the period under consideration however not all of the seven regions in our model have been able to reduce their co2 emissions through trade global value chains have led to china becoming a pollution haven for other regions and its exports have increased world emissions to 1 28 gt co2 in 2008 however what allows a net saving of emissions on a global scale is the supply of energy and natural resources from a set of peripheral economies which in our geographical categorization are mostly integrated in the region of the rest of the world

measuring birdwatchers preferences a case for using online networks and mixed mode surveys abstract this paper reports findings derived from a study of birdwatchers in the azores the subject was birdwatchers preferences for given management actions designed to improve the attractiveness of bird watching sites in the absence of official statistics on this market segment use was made of a mixed mode survey incorporating both on site and off site surveys and the use of on line social networks and communications tools the variable willingness to stay more time at the site was used as a welfare measure it has the advantage that it can be used to demonstrate the significant returns of eco tourism to local communities two findings emerge first tourists practicing wildlife viewing and nature based activities are less worried about infrastructures and care more about biodiversity and habitat quality and second the research technique appears to be successful when surveying seasonal recreation communities that are small and socially cohesive

the state of the art of environmental valuation with discrete choice experiments abstract this paper provides with a review of the state of the art of environmental valuation with discrete choice experiments dces the growing body of literature on this field serves to emphasize the increasing role that dces are playing in environmental decision making in the last decade the paper attempts to cover the full process of undertaking a choice experiment including survey and experimental design econometric analysis of choice data and welfare analysis the research on this field is found to be intense although many challenges are put forward e g choice task complexity and cognitive effort experimental design preference and scale heterogeneity endogeneity or model uncertainty reviewing the state of the art of dces serves to draw attention to the main challenges that this methodological approach will need to overcome in the coming years and to identify the frontiers in discrete choice analysis

the fiscal theory of the price level a critique abstract this paper argues that the fiscal theory of the price level ftpl has feet of clay the source of the problem is a fundamental economic misspecification the ftplconfuses two key building blocks of a model of a market economy budgetconstraints which must be satisfied identically and market clearing or equilibriumconditions the ftpl asssumes that the government s intertemporal budgetconstraint needs to be satisfied only in equilibrium this economic misspecification has far reaching implications for the mathematicalproperties of the equilibria supported by models that impose the structure of theftpl it produces a rash of contradictions and anomalies jel classifications e31 e41 e51 e52 e62 e63 key words fiscal theory of the price level ricardian fiscal financial monetaryprogrammes government budget constraint price level indeterminacy author willem h buiter european bank for reconstruction and development oneexchange square london ec2a 2jn uktel 44 20 73386805fax 44 20 73386110 6111e mail buiterw ebrd comweb page http www nber org wbuiter index htm

economic structure development policy and environmental quality an empirical analysis of environmental kuznets curves with chinese municipal data in many cases the relationship between environmental pollution and economic development can be generally depicted by an inverted u shaped curve or an environmental kuznets curve where pollution increases with income at the beginning and decreases after a certain level of income however what determine the shape of an enviornmental kuznets curve such as the height and the turning point of the curve have not been thoroughly studied a good understanding of the determinants is vitally important to the development community especially for the developing world where income growth is a high priority and yet environmental pollution also needs to be carefully controlled this study analyzes the impacts of economic structure development strategy and environmental regulation on the shape of the environmental kuznets curve with a city level panel dataset obtained from china the results show that economic structure development strategy and environmental regulation can all have important implications on the relationship between environmental environmental quality and economic development but the impacts can be different at different development stages

why money growth determines inflation in the long run answering the woodford critique woodford 2007 argues that it is not appropriate to regard inflation in the steady state of new keynesian models as determined by steady state money growth woodford instead argues that the intercept term in the monetary authority s interest rate policy rule determines steady state inflation in this paper i offer an alternative interpretation of steady state behavior according to which it is appropriate to regard steady state inflation as determined by steady state money growth the argument relies on traditional interpretations of the central bank s power in the long run and appeals to model properties that are common to textbook and new keynesian analysis according to this argument the only way the central bank can control interest rates in the long run is via affecting inflation and its only means available for determining inflation is by determining the money growth rate

combining ecological and recreational aspects in national park management a choice experiment application increasing pressure to diversify development of national parks emphasizes the need for new and relevant information for park management decisions in this paper we use choice experiment to value different tradeoffs that evolved in park development scenarios specifically we examine which kind of development profiles are worth considering and which paths not to follow we focus on biodiversity and recreational services provided by oulanka national park in finland which represents a popular recreation site attracting a large number of visitors the increase of biodiversity was the most highly valued feature by the respondent national park visitors thus our results show that the protection of biodiversity and recreational and tourism use of national parks can cause conflicting welfare effects if managed in inappropriate ways increasing the number of visitors expanding present resting places constructing new resting places and an intense increase in information boards especially if combined with shrinking biodiversity are welfare reducing managerial actions in national parks

does foreign direct investment drive environmental degradation in china an empirical study based on air quality index from a spatial perspective abstract a growing literature on the pollution haven hypothesis has surged for decades in this paper we employ a city level data set of 150 chinese cities in 2014 and take spatial spillovers into account by using spatial econometric models to investigate whether foreign capital inflows drive environmental degradation in china the results suggest that foreign direct investment is negatively related to air pollution in china indicating evidence of pollution halo hypothesis moreover foreign direct investment has significant spatial technological spillovers improving air quality in china this study also finds that there is no evidence of an inverted u shaped curve between income and air pollution as income levels increase air quality continues to worsen the development of the tertiary industry is found to have a positive effect on air pollution densely populated cities tend to demand for better environmental quality from the above analysis it follows that policies handles are urgently needed to improve air quality in china

efficiency wage models of unemployment keynesian economists hold it to be self evident that business cycles are characterized by involuntary unemployment but construction of a model of the cycle with involuntary unemployment faces the obvious difficulty of explaining why the labor market does not clear involuntarily unemployed people by definition want to work at less than the going wage rate why don t firms cut wages thereby increasing profits

choice modelling and its potential application to tropical rainforest preservation abstract loss of rainforest occurs in part because of a global market failure problem markets routinely transmit signals about international demands for forest products such as timber but fail to transmit signals about demands for preservation to make efficient resource allocation choices decision makers need some framework to estimate the non use values that might be held by an international community for rainforest preservation non market valuation techniques can be used for this purpose but framing and other problems limit the application of the contingent valuation method cvm an alternative technique choice modelling cm appears to hold some promise because it can be used to model complex situations and to frame choices consistent with real life choices in this paper a cm experiment to assess the values that australians hold for rainforest conservation in vanuatu is reported the experiment disguises effectively the issue of interest rainforest conservation in vanuatu within a pool of other conservation locations also the experiment demonstrates that choice tradeoffs may involve a variety of environmental and socio economic factors rather than be concentrated on some monetary tradeoff the results demonstrate that a variety of predictive and valuation tools can be gained from a cm experiment and suggest that further development is warranted

the superiority of contingent rules over fixed rules in models with rational expectations the paper investigates the robustness of the proposition that in stochastic models contingent or feddback rules dominate fiped or openloop rules four arguments in favour of fixed rules are considere 1 the presence of an incompetent op malevolent policy maker 2 a trade off between flexibility and simplicity or credibility 3 the new classical proposition that only unanticipated stabilization policy has real effects 4 the time inconsistency of optimal plans in non causal models that is models in which the current state of the economy depends on expectations of future states the main conclusion is that the rational expectations revolution represented by arguments 3 and 4 does not affect the potential superiority of time inconsistent closed loop policies over time inconsistent open loop policies the case against conditionality in the design of policy must therefore rest on argument 1 or 2 which predate the new classical macroeconomics

increasing returns and the foundations of unemployment theory current approaches to macroeconomic theory divide roughly into two basic schools of thought one approach typically associated with rational expectations views the economy as basically at or near walrasian market clearing equilibrium in which case it becomes very difficult to explain away convincingly the undeniable persistence at times of involuntary unemployment another approach views the underemployed economy as being in a state of temporary fixed price disequilibrium in which case aside from having to repress suspicions that the essence of effective demand failure might not have to do with prices fixed at wrong values there is a lot of rationalising to be done about why profitable adjustments are so slow this paper argues that something like an internally consistent theory of steady state involuntary unemployment is possible and even plausible the cornerstone of this third approach is increasing returns to scale which blocks unemployed agents from breaking out of a low level equilibrium trap unless there is overall coordination or stimulation a simple model is presented which contains the basic ideas

the spillovers of foreign direct investment and the convergence of energy intensity abstract the imbalance and insufficiency of china s regional economic development has led to huge differences in regional energy efficiency reducing the differences in regional energy efficiency has become an urgent energy issue in china the constant absorption of foreign direct investment fdi has brought advanced technologies to china which has an important impact on china s energy efficiency to explore whether fdi can reduce regional energy efficiency differences this paper investigates the existence of energy intensity convergence while incorporating foreign direct investment fdi since existing research on regional energy intensity convergence lacks of consideration of the data spatial dependence we focus on spatial econometric model to test energy intensity convergence we use panel data of 30 provinces in china over the period of 2005 2014 to test energy intensity convergence by convergence model the empirical results show that considering the spatial dependence of the data fdi can promote the formation of conditional energy intensity convergence further analysis found that the spillover effect of fdi plays an important role in this formation in addition the convergence speed accelerates after considering the spatial dependence finally the spillover effect of fdi which is global inhibits the declining speed of energy intensity during the research period the scale effect of fdi and energy rebound effect plays an important role in the effect of fdi on energy intensity these results show that guiding foreign investment more reasonably in each province in china can make contributions to the reduction of energy efficiency differences

identifying the impacts of human capital on carbon emissions in pakistan abstract at present carbon emissions reduction is a very important challenge all over the world improvement of human capital helps to reduce carbon emissions this paper studies the long and short term effects of human capital on carbon emissions in pakistan from 1971 to 2014 we employ an autoregressive distributed lag model and the vector error correction model to analyze the co integration and direction of causalities between human capital and carbon emissions respectively results show that a significant long term relationship exists between human capital and carbon emissions improvement of human capital will reduce carbon emissions without decreasing economic growth granger causality test results describe the bidirectional causality that exists between human capital and carbon emissions in the long term and no causality in the short term human capital and economic growth have feedback effects in the long term and no effect in the short term the results of this study show that improvement in human capital through education will help carbon emissions reduction in the long term this study will help policymakers devise a comprehensive strategy to reduce carbon emissions through improvement of human capital

the optimal cash balance proposition maurice allais priority maurice allais well deserved nobel prize fortuitously brought to our attention an injustice inadvertently done him to which we were unknowing accessories for years the literature has ascribed to us the parentage of the transactions cost model of optimal cash balances with its notorious square rootformula derivedfrom inventory theory recently we found that its essence is contained in allais 1947 economie et interet pp 238 41 as jacob viner used to say no matter to what source the origin of an economic proposition is ascribed someone is sure to come up with an earlier one in any event here is a translation of the pertinent passages allais describes the model in footnotes 11 and 12 to the following text pp 238 41

test retest reliability of the contingent valuation method a comparison of general population and visitor responses the reliability of the contingent valuation method is evaluated by resurveying the same general households and visitors nine months after their original survey test retest correlations on willingness to pay are statistically significant and ranged from 422 for the general population sample to 782 for the visitor sample using a paired t test there was no statistical difference between an individual s first and second reported willingness to pay chow tests comparing the original and resurvey willingness to pay functions showed no statistical difference at the 01 level reported willingness to pay is reasonably stable over the time period surveyed

understanding real business cycles he 1 960s were a time of great optimism for macroeconomists many economists viewed the business cycle as dead the keynesian model was the reigning paradigm and it provided all the necessary instructions for manipulating the levers of monetary and fiscal policy to control aggregate demand inflation occurred if aggregate demand was stimulated excessively and unemployment arose if demand was insufficient the only dilemma faced by policymakers was determining the most desirable location along this inflation unemployment tradeoff or phillips curve the remaining intellectual challenge was to establish coherent microeconomic foundations for the aggregate behavioral relations posited by the keynesian framework but this was broadly regarded as a detail that should not deter policymakers in their efforts to stabilize the economy the return of the business cycle in the 1970s after almost a decade of economic expansion and the accompanying high rates of inflation came as a rude awakening for many economists it became increasingly apparent that the basic keynesian framework was not the appropriate vehicle for understanding what happens during a business cycle nor did it seem capable of providing the empirically correct answers to questions involving changes in the economic environment or changes in monetary or fiscal policy the view that keynesian economics was an empirical success even if it lacked sound theoretical foundations could no longer be taken seriously the essential flaw in the keynesian interpretation of macroeconomic phenomenon was the absence of a consistent foundation based on the choice theoretic framework of microeconomics two important papers one by milton friedman 1968 and the other by robert lucas 1976 forcefully demonstrated examples of

rational choice the contrast between economics and psychology rational choice the published record of a conference on economics and psychology frames the issues as a contest between economic theory and the falsifying evidence from psychology according to a third perspective that of experimental economics most standard theory provides a correct first approximation in predicting motivated behavior in laboratory experimental markets but the theory is incomplete particularly in articulating convergence processes in time and in ignoring decision cost this view has roots in the work of herbert simon and sidney siegel but it is not plainly represented in contemporary research in economic pyschology

the abatement of carbon dioxide intensity in china factors decomposition and policy implications to deal with the challenges brought about by climate changes china decided to reduce the carbon dioxide co2 intensity by 40 45 per cent from 2005 to 2020 using the decomposition technique this study finds that energy intensity is the most important force to drive the decline of co2 intensity between 1980 and 2008 followed by structural factors such as the adjustment of energy and industrial structure therefore any environmental policy to promote energy efficiency will play the biggest role in achieving the target of abating co2 intensity in 2020