unit roots and structural change an application to us house price indices this paper employs time series analysis to investigate the price dynamics of the house price indices included in the s p case shiller composite10 index and the validity of the ripple effect following the approach outlined by meen 1999 more specifically the paper first considers the time series properties of the capital gain from the sale of houses that is it examines whether shocks to the capital gain series produce permanent or transitory changes in general the findings lack uniformity and depend upon the assumptions imposed by the testing procedures secondly it considers the time series properties of the ratio of regional house price indices to the composite10 index that is it examines whether shocks to these house price ratios exhibit trend reversion the tests of this ripple effect also display conflicting evidence

testing for the long run relationship between nominal interest rates and inflation using cointegration techniques 1989 testing for the long run relationship between nominal interest rates and inflation using cointegration techniques applied economics vol 21 no 4 pp 439 447

testing intertemporal budget constraints theory and applications to u s federal budget and current account deficits this paper extends previous tests of intertemporal budget balance and present value relationships by expanding the set of allowable deficit processes and by deriving a testable condition that is sufficient to ensure intertemporal budget balance as long as the expected discount rate is strictly positive using these tests the authors find that both the postwar federal budget deficit process and the process governing accumulation of u s assets by foreigners are consistent with intertemporal budget balance copyright 1991 by ohio state university press

common trends the government s budget constraint and revenue smoothing abstract the requirement that the government s budget be balanced in present value terms is shown to be equivalent to the condition that government expenditures inclusive of interest tax receipts and seignorage be cointegrated the condition is in fact stronger requiring that the deficit inclusive of interest be stationary stationarity of the net of interest deficit is neither necessary nor sufficient for intertemporal budget balance however it does have implications for barro s tax smoothing hypothesis data for the period 1890 1986 are consistent with intertemporal budget balance but not with tax smoothing

the privatization of electricity distribution in turkey a legal and economic analysis this paper analyzes the recent regulatory reform in the turkish electricity distribution market from a legal and economic perspective we highlight tensions between the judiciary politicians and bureaucracy and discuss their economic consequences the paper engages in a discussion of economic consequences of legal procedures we stress interactions between legal decisions and economic institutions the historical positions of the constitutional court and danistay council of state on privatizations have been ambivalent and it is hard to qualify them as an incentive for privatization and reform despite some recent liberal decisions we address reasons behind their decisions and offer some suggestions toward improving the privatization process

the sustainability of government deficits implications of the present value borrowing constraint this paper introduces a new methodology for evaluating the sustainability of fiscal policy the new methodology is distinguished from most existing tests in two important respects first it allows for stochastic real interest rates and second it is both necessary and sufficient results from the application of the new test suggest that recent fiscal policy in the united states has not been sustainable the paper contrasts its findings with those of james d hamilton and marjorie a flavin 1986 copyright 1989 by ohio state university press

the role of intergovernmental aid in defining fiscal sustainability at the sub national level the concept of fiscal sustainability has become increasingly used over the last 20 years however much of the literature on fiscal sustainability at the sub national level ignores the role of intergovernmental fiscal relations to address this gap this paper discusses a sufficient condition for sub national fiscal sustainability and examines the importance of intergovernmental aid in determining that sustainability using panel data of counties and municipalities in the us and using unit root and cointegration analytic techniques this paper finds different levels of fiscal sustainability between counties and municipalities we also find that intergovernmental aid plays an important role for fiscal sustainability for both counties and municipalities

global impact of uncertainties in china s gas market abstract this paper examines the uncertainties in chinese gas markets analyze the reasons and quantify their impact on the world gas market a literature review found significant variability among the outlooks on china s gas sector further assessment found that uncertainties in economic growth structural change in markets environmental regulations price and institutional changes contribute to the uncertainties the analysis of china s demand and supply uncertainties with a world gas trading model found significant changes in global production trade patterns and spot prices with pipeline exporters being most affected china s domestic production and pipeline imports from central asia are the major buffers that can offset much of the uncertainties the study finds an asymmetric phenomenon pipeline imports are responding to china s uncertainties in both low and high demand scenarios while lng imports are only responding to high demand scenario the major reasons are higher top levels and the current practice of import only up to the minimum top levels for lng as well as a lack of liberalized gas markets the study shows that it is necessary to create lng markets that can respond to market dynamics through either a reduction of top levels or change of pricing mechanisms to hub indexation

is the budget deficit too large yes specifically we find that recent spending and taxing policies of the government if continued violate the government s intertemporal budget constraint as a result government spending must be reduced and or tax revenues must be increased these conclusions are based on tests of whether government spending and revenue are cointegrated in addition to examining real spending and revenue we also normalize these variables by real gnp and population for a growing economy these normalized measures are perhaps more pertinent we also test and find support for the hypothesis that deficits have become a problem only in recent years

sustainability of the deficit process with structural shifts this article discusses the condition for deficit sustainability and searches for shifts in the structure of u s deficit policy i show that contrary to the current literature cointegration between revenues and expenditures inclusive of debt payment is not a necessary but a sufficient condition for a strict interpretation of deficit sustainability the necessary condition requires that debt grow slower than the borrowing rate for tests on structural shifts i use a test for structural change that searches for shifts in the rank of the cointegrating matrix i find that there is a shift in deficit policy in the early 80s so that cointegration between revenue and expenditure inclusive of interest payments holds only up to 1980 i show however that the deficit process is still sustainable despite the failure of cointegration in the 80s the finding of shifts in the deficit process is more uncertain when i normalize by gross national product or population but the deficit is shown to be sustainable regard

the status of conventional world oil reserves hype or cause for concern the status of world oil reserves is a contentious issue polarised between advocates of peak oil who believe production will soon decline and major oil companies that say there is enough oil to last for decades in reality much of the disagreement can be resolved through clear definition of the grade type and reporting framework used to estimate oil reserve volumes while there is certainly vast amounts of fossil fuel resources left in the ground the volume of oil that can be commercially exploited at prices the global economy has become accustomed to is limited and will soon decline the result is that oil may soon shift from a demand led market to a supply constrained market the capacity to meet the services provided by future liquid fuel demand is contingent upon the rapid and immediate diversification of the liquid fuel mix the transition to alternative energy carriers where appropriate and demand side measures such as behavioural change and adaptation the successful transition to a poly fuel economy will also be judged on the adequate mitigation of environmental and social costs

on the limitations of government borrowing a framework for empiricaltesting this paper seeks to distinguish empirically between two views on the limitations of government borrowing according to one view nothing precludes the government from running a permanent budget deficit paying interest due on the growing debt load simply by issuing new debt an alternative perspective holds that creditors would be unwilling to purchase government debt unless the government made a credible commitment to balance its budget in present value terms we show that distinguishing between these possibilities is mathematically equivalent to testing whether a continuing currency inflation might be fueled by speculation alone or is instead driven solely by economic fundamentals empirical tests which have been developed for this economic question lead us to conclude that postwar u s deficits are largely consistent with the proposition that the government budget must be balanced in present value terms this abstract was borrowed from another version of this item

global oil gas depletion an overview abstract the world s production of conventional hydrocarbons will soon decline hydrocarbon shortages are inevitable unless radical changes occur in demand or in the supply of non conventional hydrocarbons the details are as follows global conventional oil supply is currently at political risk this is because the sum of conventional oil production from all countries in the world except the five main middle east suppliers is near the maximum set by physical resource limits should middle east suppliers decide to substantially curtail supply the shortfall cannot be replaced by conventional oil from other sources world conventional oil supply will soon be at physical risk the middle east countries have only little spare operational capacity and this will be increasingly called upon as oil production declines elsewhere large investments in middle east production if they occur could raise output but only to a limited extent a partial exception is iraq but even here there would be significant delays before prospects are confirmed and infrastructure is in place if demand is maintained and if large investments in middle east capacity are not made the world will face the prospect of oil shortages in the near term even with large investments resource limits will force middle east production to decline fairly soon and hence also global conventional oil production the date of this resource limited global peak depends on the size of middle east reserves which are poorly known and unreliably reported best estimates put the physical peak of global conventional oil production between 5 and 10 years from now the world contains large quantities of non conventional oil and various oil substitutes but the rapidity of the decline in the production of conventional oil makes it probable that these non conventional sources cannot come on stream fast enough to fully compensate the result will be a sustained global oil shortage for conventional gas the world s original endowment is probably about the same in energy terms as its endowment of conventional oil since less gas has been used so far compared to oil the world will turn increasingly to gas as oil declines but the global peak in conventional gas production is already in sight in perhaps 20 years and hence the global peak of all hydrocarbons oil plus gas is likely to be in about 10 or so years

energy supply security and geopolitics a european perspective the security of energy supply to the eu is examined in the context of two storylines markets and institutions exemplifies an economically and politically integrated multilateral world with effective institutions and markets regions and empires involves a world broken up in rival political and economic blocks competing for resources and markets via political economic and military power it is shown that these storylines have a significant impact on the development of the energy market on the way in which energy supply may be secured and on the effect and applicability of the several types of instruments available the current eu is geared towards enlargement and a deepening of economic integration based on the tenets of the post 1945 multilateral world system the present world tends towards regions and empires and suggests that the eu may have to reorient its energy security policy energy policy must become an integral part of eu external trade and foreign relations and security policy the eu should develop its own strategy actively investing in dialogues with producer countries in the persian gulf and africa and with russia sustainable prosperity and governance in these regions will support eu energy security

seasonality and cointegration of regional house prices in the uk the data generation process underlying regional house prices in the uk is investigated using new statistical tests it is found that causal flows tend to be northwards the south east rather than greater london acts as an exogenous price determinator of the other regions in the south the midland regions have a great influence on prices in the north and flows through the east midlands are characterised by bi directional causality these results are largely independent of assumptions made about the data generation process and tests of these assumptions have low power in any case there are also similarities between this causality and migration patterns particularly in the south of england

cointegration and government borrowing constraints evidence for the united states testable implications are derived in a present value borrowing constraint model for the u s federal government critical values for unit root and cointegration tests are calculated with monte carlo studies cointegration techniques are employed to determine whether the government has been involved in perpetual debt financing in recent years the data reject this assertion

china s natural gas consumption peak and factors analysis a regional perspective abstract china s natural gas consumption usually accounts for a small proportion of total energy consumption but it has increased rapidly in recent years china has a vast territory and the level of economic development varies significantly across regions in this paper a panel unit root and heterogeneous panel cointegration methods are applied to investigate the natural gas consumption of 30 provinces in mainland china the influencing factors of natural gas consumption are also investigated from a long term point of view china s per capita natural gas consumption seems to fit the energy kuznets curve which implies that the current rapid growth rate of natural gas consumption would not be sustained in the long term there is a peak at 200 450 cubic meters which is about 2 4 times the current consumption per capita of china and about 7 16 of russia the specific peak consumption level and peak year depend on the speed of economic development and the pace of pipeline network development in summary gas population rate plays a more important role in gas consumption in the long run and the impact of gdp weakens the potential of gas consumption of the different regions differs greatly

drink what you can pay for financing infrastructure in a fragmented water system the article investigates the relationship between environmental violations and water utility infrastructure investment in the houston metropolitan area through a lens of institutional fragmentation

long term forecasting of natural gas production abstract natural gas is an important energy source for power generation a chemical feedstock and residential usage it is important to analyse the future production of conventional and unconventional natural gas analysis of the literature determined conventional urr estimates of 10 700 18 300 ej and the unconventional gas urr estimates were determined to be 4250 11 000 ej six scenarios were assumed with three static where demand and supply do not interact and three dynamic where it does the projections indicate that world natural gas production will peak between 2025 and 2066 at 140 217 ej y 133 206 tcf y natural gas resources are more abundant than some of the literature indicates

the reform in the turkish natural gas market a critical evaluation turkey is in a strategically advantageous position in terms of its natural gas market being in the middle of europe and energy rich countries of central asia it can be an energy corridor between these two regions it can import gas from a number of countries and diversify its sources this situation may also provide motivation for a competitive gas market the recent reform in the market which began in 2001 was an attempt to strengthen the natural gas market to this end however the reform has not worked out as expected so far this article discusses recent restructuring efforts in the turkish natural gas market we focus on the legal structure and economic consequences of the legal change within the international economic relations after presenting a detailed discussion of the legal framework we draw attention to the problems of the industry and difficulties in the transition to a more competitive market structure in the end we touch upon some regulatory issues and potential conflicts

growth efficiency and convergence in china s state and collective industry in china as in the soviet union and eastern europe economic reform initiatives seek to increase productivity by introducing elements of market oriented policies and institutions into an economy formerly dominated by state planning efforts to evaluate the impact of reform of chinese industry have focused on the measurement of productivity change in state enterprises this study expands the prior framework of analysis in several directions our investigation of productivity trends is not limited to state enterprises but includes quantitative comparisons with china s fast growing collective industries which contributed 36 of overall industrial output in 1988 1 unlike previous studies our analysis works with gross rather than net output this permits us to investigate changes in the productivity of intermediate inputs which occupy a large portion of total costs in chinese industry as well as labor and capital to do this we develop a quasi frontier estimation procedure which seems appropriate for comparisons of total factor productivity based on chinese industrial data finally we offer a quantitative perspective on the extent to which reform efforts have moved industrial resource allocation toward patterns expected of a market system the analysis confirms our previous finding based on a restricted framework employing only labor fixed capital and net output that multifactor productivity in state industry has risen substantially during

development a study of the indian manufacturing industry if infrastructure tends to generate spillover externalities as has been the assumption in much of the development literature one may reasonably look for evidence of such indirect effects in the accounts of manufacturing industries empirical support for this assumption has so far been ambiguous this analysis of indian data however reveals substantial externality effects from the states infrastructure to manufacturing productivity the analysis separates the direct effects of roads and electricity as mediated by the infrastructure services purchased by manufacturing industries along with other intermediate inputs from the indirect effects as measured by the impact of infrastructure capacity on the solow productivity residual in the 20 years from 1972 to 1992 growth of road and electricity generating capacity seems to have accounted for nearly half the growth of the productivity residual of india s registered manufacturing

analysis of resource potential for china s unconventional gas and forecast for its long term production growth abstract china is vigorously promoting the development of its unconventional gas resources because natural gas is viewed as a lower carbon energy source and because china has relatively little conventional natural gas supply in this paper we first evaluate how much unconventional gas might be available based on an analysis of technically recoverable resources for three types of unconventional gas resources shale gas coalbed methane and tight gas we then develop three alternative scenarios of how this extraction might proceed using the geologic resources supply demand model based on our analysis the medium scenario which we would consider to be our best estimate shows a resource peak of 176 1 billion cubic meters bcm in 2068 depending on economic conditions and advance in extraction techniques production could vary greatly from this if economic conditions are adverse unconventional natural gas production could perhaps be as low as 70 1 bcm peaking in 2021 under the extremely optimistic assumption that all of the resources that appear to be technologically available can actually be recovered unconventional production could amount to as much as 469 7 bcm with peak production in 2069 even if this high scenario is achieved china s total gas production will only be sufficient to meet china s lowest demand forecast if production instead matches our best estimate significant amounts of natural gas imports are likely to be needed

estimating coal production peak and trends of coal imports in china more than 20 countries in the world have already reached a maximum capacity in their coal production peak coal production such as japan the united kingdom and germany china home to the third largest coal reserves in the world is the world s largest coal producer and consumer making it part of the big six at present however china s coal production has not yet reached its peak in this article logistic curves and gaussian curves are used to predict china s coal peak and the results show that it will be between the late 2020s and the early 2030s based on the predictions of coal production and consumption china s net coal import could be estimated for coming years this article also analyzes the impact of china s net coal import on the international coal market especially the asian market and on china s economic development and energy security

the housing led growth hypothesis revisited evidence from the chinese provincial panel data this paper investigates the relationship between housing investment and economic growth in china utilising province level data via recently developed panel unit root tests and panel co integration analysis the empirical results suggest a stable long run relationship between housing investment non housing investment and gdp in china in addition the existence is demonstrated of bi directional granger causality between housing investment and gdp at the national level the panel error correction model supports the hypothesis that housing investment appears to have a dual role acting as both a driver and follower in china s economic fluctuations however the impacts of housing investment on economic growth in three sub regions are found to be strikingly different

impacts of unconventional gas development on china s natural gas production and import abstract china has become a net importer of natural gas as a result of rapidly increasing consumption in recent years a production peak would exist since natural gas is an exhaustible resource as conventional natural gas production peak approaches the development of unconventional natural gas is attracting increasing attention china s unconventional natural gas reserves are abundant but exploration is still in its infancy stage thus with the increasing quest for low carbon development and china s natural gas price reform studying the impacts of unconventional gas development on china s natural gas supply and price reform under different scenarios has practical significance in this paper we predict china s natural gas production trends in different scenarios and forecast natural gas demand this paper concludes that the exploitation of unconventional natural gas will greatly improve china s annual natural gas production and delay the production peak year this is important for china s natural gas supply security as it can decrease dependence on imported gas furthermore as the cleanest fossil fuel it will enable more time and space for renewable energy development given the many costs and controversies surrounding its development in china

are stationarity and cointegration restrictions really necessary for the intertemporal budget constraint abstract time series related to fiscal and external deficits are commonly subjected to stationarity and cointegration tests to assess if the deficits are sustainable such tests are incapable of rejecting sustainability the intertemporal budget constraint proves to be satisfied if either the debt series or the revenue and with interest spending series are integrated of arbitrarily high order i e stationary after differencing arbitrarily often revenues and spending do not have to be cointegrated rejections of low order difference stationarity and of cointegration are thus consistent with the intertemporal budget constraint error correction type policy reaction functions are suggested as more promising for understanding deficit problems

the politics of regulation in the turkish electricity market abstract turkey began reforming the electricity market in 2001 the regulatory reform aimed to liberalize the market however the institutional and political structure was not ready for creating an efficiently working competition the independent regulator did not have both experience and will to direct the industry to a more competitive environment currently the reform has slowed down and political preferences drive the industry this paper studies the reasons for the slowdown in the reform efforts by focusing on the relationships between the government judiciary and the independent regulator we conclude that strategic behaviors of players in the market including the judiciary the government and the regulator have made the introduction of competition to the market more costly

forecasting natural gas supply in china production peak and import trends china s natural gas consumption has increased rapidly in recent years making china a net gas importer as a nonrenewable energy the gas resource is exhaustible based on the forecast of this article china s gas production peak is likely to approach in 2022 however china is currently in the industrialization and urbanization stage and its natural gas consumption will persistently increase with china s gas production peak china will have to face a massive expansion in gas imports as the largest developing country china s massive imports of gas will have an effect on the international gas market in addition as china s natural gas price is still controlled by the government and has remained at a low level the massive imports of higher priced gas will exert great pressure on china s gas price reform

policy recommendations to promote shale gas development in china based on a technical and economic evaluation because of its resource potential and clean burning advantages the development of shale gas can significantly increase the supply of cleaner energy while offering the associated benefits to foster shale gas development many policy incentives have been introduced in china however the current incentives have not been sufficiently aggressive and the shale gas industry has been slow to develop existing policies thus need to be further improved to provide effective support for decision makers in china a technical and economic evaluation is performed in this study to explore the profitability of shale gas production in pilot zones the results show that shale gas production is subeconomic under the current technical and economic conditions based on this evaluation a policy analysis is conducted to investigate the profitability improvement offered by the major policies available in china to elucidate a path toward improving incentive policies the results indicate that policy instruments related to gas prices financial subsidies corporate income taxes or combinations thereof could be used as priority options to improve policy incentives based on these results recommendations are presented to improve the current incentive polices aimed at accelerating shale gas development

output fluctuations and fiscal policy u s state and local governments 1978 1994 abstract we study the cyclical properties of u s state and local government fiscal policy the budget surpluses of both are procyclical over short and medium term horizons procyclical surpluses are the result of strongly procyclical revenue and weakly procyclical expenditure these results hold whether aggregate u s wide fluctuations are controlled for or not federal grants to state and local governments are procyclical but this is due to aggregate output fluctuations with respect to state level output fluctuations federal grants are countercyclical the budget surpluses of trust funds and utilities are also procyclical but there is no evidence that this effect is stronger in states where balanced budget rules are tighter the cyclical patterns of state and local budget surpluses are affected by various political institutions for example budget surpluses are less procyclical in conservative states in an election year that occurs in good times state governments refrain from accumulating a larger surplus in bad times no such asymmetry between election and non election years is apparent

a bridge between east and west turkey s natural gas policy abstract world energy demands have been increasing rapidly so natural gas sources in the world play significant role in order to meet those demands the fastest consumption growth rate of the world s primary energy sources belongs to natural gas in addition it has the highest consumption growth rate among the developing countries based on supply demand models declining domestic gas production in some regions will lead to a growing supply demand gap in fact industrial countries which are also the largest natural gas consumers will lose their key roles in the global natural gas supply in the next two decades middle east countries with considerable increase in gas production and due to their economical political and geopolitical situations could be the best players in the future demand supply scenarios this paper deals with natural gas policy of turkey as a bridge for energy to connect europe to asia and middle east because of its geographical and strategic location turkey is in an important position to vary european countries supply therefore turkey s role for energy security of european union has increased with current and planned natural gas pipelines that cross over anatolia

interjurisdictional competition and local public finance assessing the modifying effects of institutional incentives and fiscal constraints analysts have sought for years to explain the variations in municipal expenditures across communities with only modest success however recent efforts combining core propositions from the leviat

persistent deficits and the market value of government debt summary this paper investigates whether postwar canadian public financial policy satisfies a borrowing constraint direct tests of the present value relation suggested by this constraint shed light on the sustainability of current policy we examine monthly data on canadian federal government finances using tests for cointegration the finding is that the joint behaviour of real debt and real surpluses is inconsistent with intertemporal budget balance for the government one interpretation of this finding is that the government is systematically paying real returns to bondholders by issuing further debt alternatively bondholders may expect the government to finance future interest payments from a source other than primary surpluses e g the sale of physical assets much empirical macroeconomics is concerned with the effects of public financial policies numerous studies have examined whether such policies affect interest rates inflation or national income and its components these examinations raise the question of the efficacy of government budget deficits they generally assume that a borrowing constraint holds in the public finances some positive theories of public debt creation also make this assumption examples include barro s 1979 history of us federal deficits and sargent s 1986 rationalizations of recent us budgetary policy lucas and stokey s 1983 discussion of optimal taxation also involves this assumption hansen roberds and sargent 1987 outline the testable implications of present value budget balance and hamilton and flavin 1986 investigate the feasibility of recurring deficits by directly testing the us federal government s borrowing constraint such tests seem natural given both the recent boom is testing more complicated first order difference equations in macroeconomics and the widespread discussion of current deficits this paper tests the present value borrowing constraint using recently constructed data on the market value of outstanding canadian federal government debt we use monthly rather than annual as in hamilton and flavin data and conduct tests of univariate integration and of bivariate cointegration to investigate the joint time series properties of debt and deficits one finding is that real debt and real surpluses are integrated processes evidence of their cointegration is mixed and point estimates of the cointegrating vector suggest that the expected real rate of return on debt is negative moreover the surplus measured to include interest payments as government spending is nonstationary these findings are inconsistent

open access and the evolution of the u s spot market for natural gas federal regulations promoting open access transportation dramatically altered the organizational structure of the u s market for natural gas in the 1980s generally unbundling the merchant and transport functions of interstate pipelines an empirical analysis of wellhead spot prices is undertaken to examine the effect of open access on the geographic scope of the spot market using monthly spot price data from 1984 91 three statistical tests are applied and compared price correlations granger causality and cointegration we find that open access integrated the regional wellhead markets into a national competitive market for natural gas the effects of unbundling on contracts for natural gas are then investigated incentives for long term contracts between pipelines and producers are shown to be effectively removed by the introduction of competitive buying and selling of gas at the wellhead through open access

infrastructure externalities and regional industrial productivity in china a spatial econometric approach this paper evaluates infrastructure s impact on regional industrial productivity in china and distinguishes between within and cross region effects three infrastructure assets are examined elect