output dynamics in real business cycles models the time series literature reports two stylized facts about output dynamics in the united states gnp growth is positively autocorrelated and gnp appears to have an important trend reverting component this paper investigates whether current real business cycle rbc models are consistent with these stylized facts many rbc models have weak internal propagation mechanisms and must rely on external sources of dynamics to replicate both facts models that incorporate labor adjustment costs are partially successful they endogenously generate positive autocorrelation in output growth but they need implausibly large transitory shocks to match the trend reverting component in output

labor contracts and business cycles this paper investigates the claim often put forth by real business cycle proponents that the poor performance of their models in matching real world aggregate labor market behavior is due to the fact that observed real wage payments do not correspond to the actual marginal productivity of labor but contain an insurance component that cannot be accounted for by the walrasian pricing mechanism to test this idea we dispense with the walrasian description of the labor market and introduce contractual arrangements between employees and employers assuming that employees are prevented from accessing capital markets and are more risk averse than employers we use the theory of optimal contracts to derive an equilibrium relation between aggregate states of the economy and wage labor outcomes this contractual arrangement is then embedded into a standard one sector stochastic neoclassical growth model in order to look at the business cycle implications of the contractual hypothesis the resulting dynamic equi

cost benefit analysis of various california renewable portfolio standard targets is a 33 rps optimal abstract renewable portfolio standards rpss require a certain fraction of the electricity generated for a given region be produced from renewable resources california s rps mandates that by 2020 33 of the electricity sold in the state must be generated from renewables such mandates have important implications for the electricity sector as well as for the whole society in this paper we estimate the costs and benefits of varying 2020 california rps targets on electricity prices greenhouse gas ghg emissions criteria pollutant emissions the electricity generation mix the labor market renewable investment decisions and social welfare we have extended the rps calculator model developed by energy and environmental economics e3 inc to account for distributions of fuel and generation costs to incorporate demand functions and to estimate the effects of rps targets on ghg emissions criteria pollutant emissions and employment the results of our modeling provide the following policy insights 1 the average 2020 electricity price increases as the rps target rises with values ranging between 0 152 and 0 175 kw h 2008 dollars for the 20 rps to 50 rps respectively 2 the 33 and 50 rps targets decrease the ghg emissions by about 17 6 and 35 8 million metric tons of carbon dioxide equivalent mmtco2e relative to the 20 rps 3 the ghg emission reduction costs of the rps options are high 71 94 per ton relative to results from policy options other than rps or prices that are common in the carbon markets and 4 a lower target e g a 27 rps provides higher social welfare than the 33 rps mandate under low and moderate co2 social costs lower than 35 ton while a higher rps target e g 50 is more beneficial when using high co2 social costs or rapid renewable technology diffusion however under all studied scenarios the mandated 33 rps for california would not provide the best cost benefit values among the possible targets and would not maximize the net social benefit objective

what is the cost of a renewable energy based approach to greenhouse gas mitigation energy policies for greenhouse gas ghg mitigation in the united states have set sector specific standards such as the renewable fuel standard rfs and the renewable portfolio standard rps for the transportation and the electricity sectors respectively this paper examines the welfare costs and effectiveness of ghg abatement with these policies and compares them with those under a carbon tax normalized to achieve the same level of abatement over the 2007 2030 period we show that the global welfare cost per ton of ghg abatement with the rfs and rps is 171 while with the carbon tax it is 7

strategic complementarity in business formation aggregate fluctuations and sunspot equilibria the extent to which changes in beliefs can be important factors in initiating economic fluctuations has been a prominent area of investigation for macroeconomists the notion that beliefs about the future influence current decisions is a property of almost all dynamic economic systems the more challenging task is identifying economic environments in which changes in beliefs alone influence current choices in such a way that the variations in beliefs are self fulfilling because the resulting fluctuations arise in the absence of variations in fundamental variables such as preferences and technology they are often termed sunspot equilibria apart from suggesting that instability of expectations may be a distinct source of cyclical volatility sunspot equilibria may also explain why apparently small disturbances in fundamentals lead to large change in macroeconomic aggregates in this study we demonstrate the possibility of sunspot equilibria in an overlappinggenerations economy characterized by a plausible form of strategic complementarity as more agents enter as producers in any particular sector of the economy they create an incentive for agents to enter as producers into other sectors as well 2 the basis for this

feed in or certificates competition or complementarity combining a static efficiency and a dynamic innovation perspective on the greening of the energy industry abstract european policy on the greening of the energy industry has been characterised by a debate between proponents of two apparent polar opposites feed in tariffs and certificate markets different european countries have chosen both mechanisms and as a consequence the european union has maintained a fairly pluralist position abstaining from stricter harmonisation taking a dynamic innovation perspective on european energy industry we argue that feed in tariffs and certificate markets should not be seen as competing alternatives but rather as complementary regulatory instruments targeting subsequent steps in the product cycle on the way from early technology conceptualisation and development towards competitive positioning in mature energy markets we see both policy instruments as necessary to achieve the extensive transformation towards sustainable development that is judged as important tools in the context of the global climate challenge

monopolistic competition increasing returns to scale and the importance of productivity shocks abstract the neoclassical growth model is extended to incorporate monopolistic competition and increasing returns to scale implications for the measurement of productivity change through the solow residual are studied it is found that for this extension productivity fluctuations continue to account for a substantial fraction of output volatility the model cannot account for volatility of employment

the handbook of international macroeconomics preface 1 introduction rick van der ploeg amsterdam 2 quantity constrained models of open economies neil rankin warwick 3 imperfect competition and open economy macroeconomics huw d dixon york 4 relative price movements in dynamic general equilibrium models of international trade david backus nyu patrick kehoe pennsylvania and finn kydland carnegie mellon 5 international fiscal policy coordination and competition assaf razin and efraim sadka tel aviv 6 capital taxation in the world economy a lans bovenberg tilburg 7 history of the international monetary system implications for research in international macroeconomics and finance barry eichengreen berkeley 8 on inflation unemployment and the optimal exchange rate regime george alogoskoufis athens 9 macroeconomic policy speculative attacks and balance of payments crisis pierre richard agenor and robert p flood imf 10 continuous time models of exchange rates and intervention giuseppe bertola princeton 11 stylized facts of nominal exchange rate returns casper g de vries leuven 12 partial versus general equilibrium models of international capital market equilibrium 13 sovereign debt kenneth kletzer santa cruz 14 growth and external debt daniel cohen cepremap 15 growth and deficits in an interdependent world index

trading in networks theory and experiments intermediation is a prominent feature of economic production and exchange two features of intermediation are salient coordination among traders between the source and the destination and competition between alternative combinations of intermediaries we develop a simple model to study these forces and we test the theoretical predictions in experiments our theoretical analysis yields a complete characterization of pricing equilibrium in networks there exist both ecient and inecient equilibria suggesting a key role of coordination among intermediaries strategic interaction leads to either buyer and seller retaining all surplus or intermediaries extracting all surplus we develop conditions on network structure under which these di erent extremal outcomes arise respectively laboratory experiments show that eciency prevails in almost all cases so traders are successful in coordination subjects coordinate on extreme surplus division finally experiments highlight the role of network structure in determining pricing and the

are positional concerns stronger in some domains than in others for more than one hundred years economists have discussed the concept of positional goods that the utility conferred by many perhaps even most goods depends not only on the amount the individual consumes but also on the amount others consume e g thorstein veblen 1899 james duesenberry 1949 john k galbraith 1958 robert frank 1985 while economic interest in positional goods is increasing e g mark pingle and mike mitchell 2002 kenneth arrow et al 2004 ed hopkins and tatiana kornienko 2004 the literature remains largely theoretical rather than empirical if status concerns affect all items in the utility function equally leisure as well as goods the positional effect would operate like a lump sum tax reducing well being without changing the allocation of time or money arrow et al 2004 however if positional concerns are stronger for some things than for others then in order to understand how people can become better off in well being not simply in wealth we must investigate how interpersonal competition interacts with material gains frank 1997 evidence about what goods are more positional than others is essential for correct policy recommendations gregory besharov 2002 but little is actually known about the relative positional rankings of items in the typical consumer s utility function four hypotheses proposed in the literature are

market and welfare effects of renewable portfolio standards in united states electricity markets abstract this study analyzes the market and welfare effects of the introduction of renewable portfolio standards rps while considering the empirically relevant a interaction of compliance with voluntary green power markets b differences in consumer preferences and c imperfect competition among electricity suppliers the study accounts for both the supply and demand effects of rps i e increased costs and a higher consumer valuation for regular power our analysis shows that the regular power price always increases after the introduction of rps while the effect of rps on the equilibrium price of green power the quantities of regular and green power the welfare of consumers and suppliers profits is case specific and dependent on the relative magnitude of the cost and utility effects the strength of consumer preference for green power the suppliers costs before rps the impact of rps on green power costs and the degree of competition among power suppliers while the introduction of rps aims at increasing the use of green energy in electricity production our analysis shows that the introduction of the policy can end up reducing the total quantity of green power used intriguingly this adverse policy impact will occur under seemingly optimal conditions for the green power sector i e a high consumer valuation of green energy and or low cost difference between the green power and its conventional counterpart finally the analysis shows that the policy design can play a key role in determining the incidence of rps while the identification of the winners and losers of the policy can provide insights on the political economy of rps and the positions held by different groups in policy negotiations

network structure and strategic investments an experimental analysis abstract this paper experimentally analyzes the effect of network structures on individuals decisions in a game of strategic substitutes the theoretical basis for our experiment is the model of bramoulle and kranton 2007 as predicted we find that individuals are able to coordinate on equilibria but that coordination strongly depends on the network structure despite frequent coordination failures in graphs of size n 4 equilibrium play seems easier on network architectures with high low density and low high centrality if play converges it almost exclusively does so towards the predicted equilibria theoretical results with respect to welfare are also confirmed next to global graph structural properties we also explore the effects of local and individual factors we find that behavior on networks is affected by the number of direct neighbors but not by individuals risk attitudes apparently the global and the local structure of a network does not leave much explanatory room for individual effects that pertain to risk taking

current real business cycle theories and aggregate labor market fluctuations hours worked and the return to working are weakly correlated traditionally the ability to account for this fact has been a litmus test for macroeconomic models existing real business cycle models fail this test dramatically we modify prototypical real business cycle models by allowing government consumption shocks to influence labor market dynamics this modification can in principle bring the models into closer conformity with the data our empirical results indicate that it does

do positional goods inhibit saving evidence from a life cycle experiment abstract we investigate the effect of positional goods goods for which one s consumption relative to others matters on saving based on results from a life cycle consumption saving experiment in a group treatment we allow inter personal comparisons by assigning subjects to groups and displaying rankings based partly on consumption a baseline individual treatment is similar but without the additional information we find more under saving saving less than the optimal amount and lower money earnings for subjects in the group treatment both effects are economically relevant with magnitudes of roughly 6 7 of expected income and 7 8 of average earnings respectively additional analysis shows that the result is driven by those subjects who are not ranked in the top three in their group keeping up with the joneses and males in particular

firm entry markups and the monetary transmission mechanism abstract two business cycle models with endogenous firm and product entry are estimated by matching impulse responses to a monetary policy shock the competition effect implies that entry lowers desired markups and dampens inflation under translog preferences where the substitutability between goods depends on their number we find evidence of such an effect that model generates more countercyclical markups than dixit and stiglitz 1977 monopolistic competition model where price stickiness is the only source of markup fluctuations in contrast a model with strategic interactions between oligopolistic firms cannot generate an empirically relevant competition effect and is statistically equivalent to the dixit stiglitz model

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

peer effects and social networks in education this paper studies whether structural properties of friendship networks affect individual outcomes in education we first develop a model that shows that at the nash equilibrium the outcome of each individual embedded in a network is proportional to her katz bonacich centrality measure this measure takes into account both direct and indirect friends of each individual but puts less weight to her distant friends we then bring the model to the data by using a very detailed dataset of adolescent friendship networks we show that after controlling for observable individual characteristics and unobservable network specific factors the individual s position in a network as measured by her katz bonacich centrality is a key determinant of her level of activity a standard deviation increase in the katz bonacich centrality increases the pupil school performance by more than 7 percent of one standard deviation

national environmental targets and international emission reduction instruments according to the agreed burden sharing within the european union the overall eu emission reduction target as agreed by in the kyoto protocol is converted into national greenhouse gas reduction targets for each of the member states in parallel with national emission reduction initiatives common eu policies for emission reductions are considered currently discussed is the introduction of a market for tradable permits for co2 emissions to achieve emission reductions within the power industry and other energy intensive industries in parallel with this markets for green certificates to deploy renewable energy technologies seem to be appearing in a number of countries among these denmark italy sweden belgium flanders england and australia although these national initiatives for a green certificate market are fairly different they could be a starting point for establishing a common eu certificate market but interactions between national targets for greenhouse gas emissions and these international instruments for emission reduction are not a trivial matter especially not seen in relation to the possible contributions of these instruments in achieving national ghg reduction targets the paper is split into three parts all taking a liberalised power market as starting point the first part discusses the consequences of a general deployment of renewable energy technologies using planning initiatives or national promotion schemes feed in tariffs in the second part an international green certificate market is introduced into the liberalised power market context substituting other national promotion schemes finally in the third part a combination of an international green certificate market tgc and an international emission trading scheme for co2 is analysed within the liberalised international power market set up the main conclusion is that neither the use of national renewable support schemes nor the introduction of a tgc market into a liberalised power market can be recommended if these initiatives efficiently are expected to contribute in achieving the national co2 reduction targets countries most ambitious in implementing renewable energy technologies will only partly be gaining the co2 reduction benefits themselves the ambitious countries will support the less ambitious ones in achieving their ghg reduction targets finally in a tgc market context the most ambitious countries to fulfil their tgc quotas will have to buy certificates from the less ambitious ones although this only contributes to fulfilling a national target for renewable development not in reaching their national co2 reduction targets however a combination of an international tradable permits market and a green certificate market is seen to be efficient in contributing in achieving the national co2 reduction targets if a close co ordination of the two instruments is undertaken at least at the national level when the green power production is increased the tradable permits quota should be decreased correspondingly otherwise the expected co2 reductions will not contribute by the full value in achieving the national targets for greenhouse gas reductions thus if it is a prerequisite that renewable power contributes to achieving national ghg reduction targets then the combination of these two markets might be the right solution

an electricity generation planning model incorporating demand response abstract energy policies that aim to reduce carbon emissions and change the mix of electricity generation sources such as carbon cap and trade systems and renewable electricity standards can affect not only the source of electricity generation but also the price of electricity and consequently demand we develop an optimization model to determine the lowest cost investment and operation plan for the generating capacity of an electric power system the model incorporates demand response to price change in a case study for a u s state we show the price demand and generation mix implications of a renewable electricity standard and of a carbon cap and trade policy with and without initial free allocation of carbon allowances this study shows that both the demand moderating effects and the generation mix changing effects of the policies can be the sources of carbon emissions reductions and also shows that the share of the sources could differ with different policy designs the case study provides different results when demand elasticity is excluded underscoring the importance of incorporating demand response in the evaluation of electricity generation policies

evaluating renewable portfolio standards and carbon cap scenarios in the u s electric sector this report examines the impact of renewable portfolio standards rps and cap and trade policy options on the u s electricity sector the analysis uses the national renewable energy laboratory s regional energy deployment system reeds model that simulates the least cost expansion of electricity generation capacity and transmission in the u s to examine the impact of a variety of emissions caps and rps scenarios both individually and combined the generation mix carbon emissions and electricity price are examined for various policy combinations simulated in the modeling

reviving manufacturing with a federal cogeneration policy abstract improving the energy economics of manufacturing is essential to revitalizing the industrial base of advanced economies this paper evaluates ex ante a federal policy option aimed at promoting industrial cogeneration the production of heat and electricity in a single energy efficient process detailed analysis using the national energy modeling system nems and spreadsheet calculations suggest that industrial cogeneration could meet 18 of u s electricity requirements by 2035 compared with its current 8 9 market share substituting less efficient utility scale power plants with cogeneration systems would produce numerous economic and environmental benefits but would also create an assortment of losers and winners multiple perspectives to benefit cost analysis are therefore valuable our results indicate that the federal cogeneration policy would be highly favorable to manufacturers and the public sector cutting energy bills generating billions of dollars in electricity sales making producers more competitive and reducing pollution most traditional utilities on the other hand would lose revenues unless their rate recovery procedures are adjusted to prevent the loss of profits due to customer owned generation and the erosion of utility sales from a public policy perspective deadweight losses would be introduced by market distorting federal incentives ranging annually from 30 to 150 million but these losses are much smaller than the estimated net social benefits of the federal cogeneration policy

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

market entry and international propagation of business cycles abstract in this paper pro cyclical market entry acts as an international transmission mechanism for business cycle shocks in an imperfectly competitive dynamic equilibrium model an expansion in one open economy leads to additional business formation in a parallel large open economy through demand spillovers business formation causes a decline in markups leading to an expansion in employment production and investment in both economies the modeling of the entry decision is critical only when the entry game is modelled as sequential with incumbents enjoying a first mover advantage are markups sufficiently elastic to cause international comovement

market structure and cyclical fluctuations in u s manufacturing the relevance of imperfect competition for models of economic fluctuations has received increased attention from researchers in both macroeconomics and industrial organization the authors outline a new methodology for estimating industry markups of price over marginal cost and the influence of market structure on cyclical movements in total factor productivity measures of industry concentration import competition and unionization are important for explaining markups in some industry groups much of the estimated markup of price over marginal cost is accounted for by noncapital fixed costs finally the authors show that their estimated margins fluctuate substantially over the cycle in particular markups are countercyclical especially in concentrated durable goods industries copyright 1988 by mit press

indeterminacy and increasing returns abstract we investigate properties of the one sector growth model with increasing returns under two organizational structures capable of reconciling the existence of aggregate increasing returns with competitive behavior by firms the first involves input externalities the second involves monopolistic competition we show for parameters in close accord with recent literature on real business cycles that the model displays an indeterminate steady state that can be exploited to generate a model of business fluctuations driven by self fulfilling beliefs in our first class of models growth is generated by exogenous increases in factor productivity in the second class the marginal product of capital is large enough for endogenous growth journal of economic literature classification numbers e00 e3 o40

geographic attribution of an electricity system renewable energy target local economic social and environmental tradeoffs the 2014 intergovernmental panel on climate change ipcc report asserts that investment in low carbon electricity production will need to rise by several hundred billion dollars annually before 2030 in order to stabilize greenhouse gas concentrations in the atmosphere by 2100 in recognition of this urgent need to mitigate climate change many governments have already established policies to spur renewable energy investment in the electricity sector one such policy measure is a renewable energy target ret which sets a target percentage of electricity production to be generated from renewable sources by a specified date variations on this policy have been implemented around the world from the eu 20 20 20 to diverse renewable portfolio standards in u s states and municipalities this work analyzes economic environmental and social aspects of a geographic attribution i e isolated regional or country of an ret to gain insights on the associated tradeoffs in the case study of the azores islands portugal the regional geographic attribution of an ret captures the best of all three tradeoffs

do positional concerns destroy social capital evidence from 26 countries research on the effects of positional concerns on individuals attitudes and behavior is sorely lacking to address this deficiency we use the international social survey programme 1998 data on 25 000 individuals from 26 countries to investigate the impact of relative income position on three facets of social capital horizontal and vertical trust as well as norm compliance testing relative deprivation theory we identify a deleterious positional income effect for persons below the reference income particularly for their social trust and confidence in secular institutions also often a social capital lowering effect of relative income advantage occurs while a rise in absolute income almost always contributes positively these results indicate that a rise in income inequality in a society too large is rather detrimental to the formation of social capital jel z130 i300 d310

will policies to promote renewable electricity generation be effective evidence from panel stationarity and unit root tests for 115 countries abstract this study examines whether policies to promote renewable electricity generation are likely to be effective by applying panel unit root and stationarity tests to time series data on renewable electricity generation for 115 countries over the period 1980 2008 we find that for the panel as a whole and almost three quarters of the individual countries renewable electricity generation is characterized by a unit root this result implies that policies to promote renewable electricity generation such as renewable portfolio standards which result in annual increases in renewable energy and as such which represent permanent positive shocks to the long run growth path of renewable electricity generation will be more effective in increasing renewable electricity generation than policies with a pre specified time horizon

lifecycle consumption plans social learning and external habits experimental evidence abstract we report results from a laboratory experiment exploring the extent to which individuals can solve a deterministic intertemporal lifecycle consumption optimization problem and the effect of revealing social information on past average consumption amounts as all individuals have identical induced preferences and lifetime incomes such social information could be useful in solving for the optimal consumption path instead we find that the provision of social information on past average levels of consumption results in a greater deviation of consumption from both the unconditional and the conditionally optimal paths we find some improvement in consumption planning relative to the conditional optimum when social concerns external habits are explicitly incorporated into subject s period utility functions as in external habit formation preference specifications our results on the effects of social information on consumption behavior may help to explain the phenomenon of over consumption and under saving that has been observed in many developed countries in recent decades as social information on the behavior of others has become more readily available

factor hoarding and the propagation of business cycles shocks this paper analyzes the role of variable capital utilization rates in propagating shocks over the business cycle to this end we formulate and estimate an equilibrium business cycle model in which cyclical capital utilization rates are viewed as a form of factor hoarding we find that variable capital utilization rates substantially magnify and propagate the impact of shocks to agents environments the strength of these propagation effects is evident in the dynamic response functions of various economy wide aggregates to shocks in agents environments in the statistics that we construct to summarize the strength of the propagation mechanisms in the model and in the volatility of exogenous technology shocks needed to explain the observed variability in aggregate u s output other authors have argued that standard real business cycle rbc models fail to account for certain features of the data because they do not embody quantitatively important propagation mechanisms these features include the observed positive serial correlation in the growth rate of output the shape of the spectrum of the growth rate of real output and the correlation between the forecastable component of real output and various other economic aggregates allowing for variable capital utilization rates substantially improves the ability of the model to account for these features of the data

running to keep in the same place consumer choice as a game of status if individuals care about their status defined as their rank in the distribution of consumption of one positional good then the consumer s problem is strategic as her utility depends on the consumption choices of others in the symmetric nash equilibrium each individual spends an inefficiently high amount on the status good using techniques from auction theory we analyze the effects of exogenous changes in the distribution of income in a richer society almost all individuals spend more on conspicuous consumption and individual utility is lower at each income level in a more equal society the poor are worse off

when information dominates comparison abstract we propose a micro econometric evaluation of the relation between life satisfaction and income distribution using a balanced panel survey of the russian population russian longitudinal monitoring survey rlms running from 1994 to 2000 covering 4685 individuals we show that in the context of the very volatile russian environment hirschman s q j econ 87 1973 544 tunnel effect conjecture seems to be confirmed variables reflecting income distribution do not influence satisfaction through social comparisons individuals rather seem to use their informational content in order to form their expectations the reference group s income thereby exerts a positive influence on individual satisfaction which contrasts with other studies on the subject inequality indices do not affect individual welfare

federal policies for renewable electricity impacts and interactions abstract three types of policies that are prominent in the federal debate over addressing greenhouse gas emissions in the united states are a cap and trade program ctp on emissions a renewable portfolio standard rps for electricity production and tax credits for renewable electricity producers each of these policies would have different consequences and combinations of these policies could induce interactions yielding a whole that is not the sum of its parts this paper utilizes the haiku electricity market model to evaluate the economic and technology outcomes climate benefits and cost effectiveness of three such policies and all possible combinations of the policies a central finding is that the carbon dioxide co2 emissions reductions from ctp can be significantly greater than those from the other policies even for similar levels of renewable electricity production since of the three policies ctp is the only one that distinguishes electricity generated by coal and natural gas it follows that ctp is the most cost effective among these approaches at reducing co2 emissions an alternative compliance payment mechanism in an rps program could substantially affect renewables penetration and the electricity price effects of the policies hinge partly on the regulatory structure of electricity markets which varies across the country

the cyclical behaviour of wages and profits under imperfect competition the authors build a dynamic model of the business cycle with monopolistically competitive firms with simple assumptions concerning firm entry and exit the model can explain some stylized facts of the business cycle that standard real business cycle models cannot predict they include the cyclical behavior of the shares of capital and labor income in total income and the pattern of net firm creation these predictions are robust to whether the main source of the business cycle is aggregate supply shocks or aggregate demand shocks

trickle down consumption abstract we document that nonrich households consume a larger share of their current income when exposed to higher top income and consumption levels permanent income wealth effects and upward local price pressures cannot provide the sole explanation for this finding instead we show that the budget shares that nonrich households allocate to more visible goods and services rise with top income levels consistent with status maintaining explanations for our primary finding nonrich households might have saved up to 3 more annually by the mid 2000s had incomes at the top grown at the same rate as median income since the early 1980s

impulse dynamics and propagation mechanisms in a real business cycle model abstract in a typical real business cycle model we find that output dynamics are determined primarily by impulse dynamics and that endogenous propagation mechanisms are weak consequently the model must rely on external sources of dynamics in order to replicate the univariate dynamics of u s per capita gnp

impacts of a common green certificate market on electricity and co2 emission markets in the nordic countries abstract the purpose of this study is to analyze the effects of introducing a common nordic system for tradable green certificates tgcs on the electricity market and a future market for tradable co 2 emission permits teps in the analysis the energy system model generator markal was used to model the electricity and district heating supply systems in the four nordic countries sweden norway finland and denmark it is shown that the introduction of tgc quotas reduces wholesale electricity and tep prices the impact on the latter is very pronounced retail electricity prices may become lower or higher depending on the tgc quota than if obligations to fulfill tgc quotas were absent the tgc scheme s efficiency in reducing a specific amount of co 2 emissions is also compared to the corresponding efficiency of a tep scheme involving a broader range of technologies furthermore obligations to fulfill tgc quotas affect investment incentives for new non renewable electricity supply this seems especially true for gas fired power plants finally it is indicated that electricity supply based on biomass combustion dominates the tgc scheme at least in the short run

conventions and local interaction structures experimental evidence we present a series of experimental coordination games with a payoff dominant and a risk dominant nash equilibrium we examine in how far local interaction structures have effects on players strategy choices our three major observations are the following first local interaction with open neighborhoods along a circle leads to less coordination on the payoff dominant equilibrium than interaction in closed neighborhoods see also keser ehrhart and berninghaus economics letters 1998 second when players are allocated around a circle the neighborhood size has in the long run no effect on the players strategy choices third with the same neighborhood size players allocated on a lattice tend less than players allocated around a circle to coordinate on the payoff dominant equilibrium this is true although the players are given exactly the same instructions

endogenous markups intensity of competition and persistence of business cycles in order to study the propagation mechanism of business cycles in particular to investigate how the intensity of competition affects market structure and output persistence over business cycles this paper presents a real business cycle model with imperfect competition and increasing returns to scale this analysis considers the markups of price over cost to be endogenous with endogenous markups two standard forms of oligopolistic competition bertrand and cournot are considered results show that 1 the propagation mechanism in the sense of output persistence is greater under cournot 2 the propagation mechanism is unequivocally greater with imperfect competition regardless of whether markups are endogenous or not and 3 under imperfect competition the propagation mechanism is greater with endogenous markups than with exogenous markups overall these results suggest that more intense competition produces lower persistence in output growth and thus a weaker propagation mechanism in a calibration exercise these differences were also found to be quantitatively important

positional concerns and social network structure an experiment abstract we experimentally study the positional concerns of individuals embedded in social networks in the game individuals compete for positional advantage with their direct neighbors by purchasing a positional good the nash equilibrium consumption is determined by the katz bonacich centrality of the individual s network position while the efficient outcome requires a lower consumption level for most network positions the gameplay converged to the nash equilibrium except for local centers that consumed less of the positional good than the nash prediction despite this the consumption of the positional good increased in the individual s centrality the evolution of the gameplay was explained by the myopic best response dynamics model

can the future eu ets support wind energy investments abstract this article discusses how the future emissions trading scheme legislation should be designed to allow the european union to comply with the 20 co 2 emissions reduction target while at the same time promoting wind energy investments we examine whether co 2 prices could eventually replace the existing support schemes for wind and if they adequately capture its benefits the analysis also looks at the effectiveness of the clean development and joint implementation mechanisms to trigger wind projects and technology transfer in developing countries we find out that climate policy is unlikely to provide sufficient incentives to promote wind power and that other policies should be used to internalise the societal benefits that accrue from deploying this technology co 2 prices can only reflect the beneficial impact of wind on climate change but not its contribution to the security of supply or employment creation a minimum price of around 40 tco 2 should be attained to maintain present support levels for wind and this excludes income risks and intermediation costs finally cdm improves the return rate of wind energy projects in third countries but it is the local institutional framework and the long term stability of the co 2 markets that matters the most

imperfect competition underemployment equilibria and fiscal policy it is often claimed that the demand externality created by imperfect competition can provide an analytical basis for keynesian fiscal policy prescriptions here this demand externality is embedded in a model of monopolistic competition where saving and employment are determined by optimizing choices it turns out that underemployment equilibria do exist that there is scope for fiscal intervention but that keynesian fiscal prescriptions are turned on their head thus demand externalities among imperfect competitors do not provide a general theoretical basis for these prescriptions unless supplemented by other deviations from the walrasian standard in the labor or capital market copyright 1990 by royal economic society

influential listeners an experiment on persuasion bias in social networks abstract this paper presents an experimental investigation of persuasion bias a form of bounded rationality whereby agents communicating through a social network are unable to account for repetitions in the information they receive we find that after repeated communication within a social network social influence depends not only on being listened to by many others but also on listening to many others we show that persuasion bias can be viewed as an extreme case of a generalized boundedly rational updating rule in which agents receive more or less attention depending on how many other agents they listen to the results indicate that behavior in the experiment is consistent with an updating rule according to which agents social influence is proportional to their indegree

expectations network centrality and public good contributions experimental evidence from india do individuals in a position of social influence contribute more to public goods than their less connected partners can we motivate these influential individuals by disclosing how others expect them to act to answer these questions we play a public good game on a star network the experimental design is such that efficiency and equality considerations should motivate central players to contribute more than others using a subject population familiar with contributions to public goods on social networks we find that central players contribute just as much as the average of other players leading to a large loss of efficiency when we disclose the expectations of other players we find that central players often adjust their contributions to meet the expectations of the group expectations disclosure leads to higher contributions in groups that have weak social ties outside of the experiment in groups where ties are strong it has no significant effect this evidence casts doubt on the idea that individuals who by their social position can contribute more effectively to the public good rise to the challenge by contributing more than others in some but not all social groups these individuals can be motivated to increase contributions by disclosing the expectations of others

myths and facts about electricity in the u s south this paper identifies six myths about clean electricity in the southern u s these myths are either propagated by the public at large shared within the environmental advocacy culture or spread imperceptibly between policymakers using a widely accepted energy economic modeling tool we expose these myths as half truths and the kind of conventional wisdom that constrains productive debate in so doing we identify new starting points for energy policy development climate change activists may be surprised to learn that it will take more than a national renewable electricity standard or supportive energy efficiency policies to retire coal plants low cost fossil generation enthusiasts may be surprised to learn that clean generation can save consumers money even while meeting most demand growth over the next 20 years this work surfaces the myths concealed in public perceptions and illustrates the positions of various stakeholders in this large u s region

cost effectiveness of renewable electricity policies we analyze policies to promote renewable sources of electricity a portfolio standard rps raises electricity prices and primarily reduces gas fired generation a knee of the cost curve exists between 15 and 20 goals for 2020 in our central case and higher natural gas prices lower the cost of greater reliance on renewables a renewable energy production tax credit lowers electricity price at the expense of taxpayers which limits its effectiveness in reducing carbon emissions and it is less cost effective at increasing renewables than a portfolio standard neither policy is as cost effective as a cap and trade policy for achieving carbon emission reductions

coordination and local interaction experimental evidence abstract subjects repeatedly played a three player coordination game with a payoff dominant and a risk dominant equilibrium subjects interacting in fixed groups quickly coordinated on the payoff dominant equilibrium while those interacting with their neighbors around a circle eventually coordinated on the risk dominant equilibrium

optimal monetary policy with endogenous entry and product variety deviations from long run price stability are optimal in the presence of endogenous entry and product variety in a sticky price model in which price stability would be optimal otherwise long run inflation deflation is optimal when the benefit of variety to consumers falls short of exceeds the market incentive for creating that variety the desired markup price indexation exacerbates this mechanism plausible preference specifications and parameter values justify positive long run inflation rates however short run price stability around this non zero trend is close to optimal even in the presence of endogenously time varying desired markups that distort the intertemporal allocation of resources

energy efficiency as a resource in state portfolio standards lessons for more expansive policies abstract in this paper state electricity portfolio standards in the u s are analyzed to examine how energy efficiency is being created as a particular kind of resource through this type of climate change governance such policies can incentivize energy efficiency by requiring or encouraging electricity providers to meet a certain percentage of their demand through energy efficiency measures north carolina s portfolio standard is used as an in depth case study to identify factors that are then compared across all 36 states that include energy efficiency as part of a portfolio requirement or goal the main finding of this study is that state portfolio standards tend to emphasize demand side energy efficiency or energy efficiency on the customer s side of the electricity meter and only rarely incentivize a full range of both demand side and supply side efficiency changes as a result the amount of energy efficiency and climate change mitigation benefits that are likely to result from this type of portfolio standard policy tool are limited from this analysis lessons are drawn out for crafting stronger portfolio standards that incentivize a wider range of efficiency changes across electricity networks

firm entry excess capacity and endogenous productivity abstract we show that sluggish firm entry causes productivity to vary endogenously in response to technology shocks the endogenous productivity effect is caused by incumbent firms utilizing excess capacity as entry adjusts we develop a nonparametric model of endogenous sunk costs and monopolistic competition to show that imperfect competition and dynamic entry are necessary and jointly sufficient conditions for endogenous productivity fluctuations quantitatively we show the endogenous productivity effect is as large as that from a traditional capital utilization effect

costs and benefits of renewables portfolio standards in the united states lbnl xxxx costs and benefits of renewables portfolio standards in the united states by galen barbose 1 jenny heeter 2 lori bird 2 samantha weaver 1 francisco flores espino 2 and ryan wiser 1 lawrence berkeley national laboratory national renewable energy laboratory corresponding author galen barbose research scientist electricity markets and policy group environmental energy technologies division lawrence berkeley national laboratory 1 cyclotron road ms 90r4000 berkeley ca 94720 phone 510 984 3453 email glbarbose lbl gov abstract as state level renewable portfolio standards rps have driven large increases in u s renewable generation capacity states have sought to quantify the costs and benefits of these policies this paper examines recent costs and benefits of rps implementation focusing on the net or incremental cost to utilities of renewables used for compliance with rps targets during the years 2010 2012 incremental rps cost estimates are developed using a wide variety of methods and assumptions which makes comparisons among states imperfect for states with restructured electricity markets we use a standardized method to calculate incremental costs based on renewable energy certificate prices alternative compliance payment levels and compliance obligations for states with traditionally regulated electricity markets we rely on estimates produced by utilities and regulators whose methods and underlying assumptions vary widely we find that recent estimated incremental rps costs were equivalent to less than 2 of retail rates in 17 states and about 2 4 in eight states or 4 mwh to 48 mwh of renewable energy required across all states for the most recent year available in each state estimated rps costs in most states were well below the respective cost caps although a few states are currently operating at or near their cap 1 introduction twenty nine states washington dc and puerto rico have adopted renewables portfolio standards rps helping drive a roughly eight fold increase in u s renewable generation capacity over the past decade concern over the impact of these policies on electricity prices and economic growth however has spurred recent legislation in at least a dozen states to repeal reduce or freeze existing rps requirements at the same time other recent legislative proposals have sought to expand state rps policies understanding the actual historical costs and benefits of rps policies is critical to informing these legislative debates but the subject is inadequately understood this paper examines historical costs of rps implementation drawing on a recent joint report by lawrence berkeley national laboratory and the national renewable energy laboratory estimating the costs and benefits of complying with renewable portfolio standards reviewing experience to date heeter et al 2014 1 we summarize the methods state agencies and utilities have used to assess rps costs compare incremental rps compliance costs to date and evaluate the potential for increases in rps compliance costs as legislative targets rise and cost caps in some states potentially become binding the aforementioned report also synthesizes recent estimates of broader societal benefits from formal state agency evaluations including estimates of health and emission reduction benefits economic development benefits and wholesale electricity market price reductions though those findings are not included in the present paper compared to the summary of estimated rps costs the summary of rps benefits is more limited as relatively few states have undertaken detailed benefits estimates and then only for a few types of potential policy impacts in some cases the same impacts may be captured in the assessment of costs for these reasons and because methodologies and level of rigor vary widely direct comparisons between the estimates of benefits and costs are challenging 2 methods and data sources for estimating incremental rps compliance costs rps compliance costs may be defined as either gross costs or incremental costs gross costs consist of the total cost of procuring renewables to meet the rps while incremental costs also referred to as net or above market costs represent this report is publically available at http emp lbl gov publications participation by lawrence berkeley national laboratory was supported by the office of energy efficiency and renewable energy solar technologies office of the u s department of energy under lawrence berkeley national laboratory contract no de ac02 05ch1131

the impact of carbon policies on supply chain design and logistics of a major retailer abstract the energy used to move freight comprised about 17 of all the energy consumed in the united states in 2010 this percentage was an increase from 8 7 in 1970 even though fuel efficiency gradually improved over the period one major reason of this phenomenon is that the longer supply chains of many industries caused by globalization increase freight movement various carbon policies have been discussed and even implemented for some industry sectors in the european union to reduce carbon emissions however the emissions of surface transportation have not been well studied this paper investigates three of the most common carbon policies carbon emission tax inflexible cap and cap and trade the impact on a company may include the redesign of its supply chains and different choices of transportation modes truck rail or waterway this paper proposes optimization models for major retailers who make a huge contribution to freight movement to design their supply chains under various carbon policies the results from the models can help policy makers to predict the impact of policies on overall emissions in the freight transportation sector the model may also be incorporated into the integrated assessment models for climate change analyses furthermore a sensitivity analysis is conducted to study the impact of the policy parameters on carbon emissions and logistics cost this research uses the supply chain of a major u s retailer i e wal mart to demonstrate how to use the models and conduct the sensitivity analysis in order to realize significant emission reduction a redesign of supply chains of major retailers is necessary and will be triggered only by a high carbon tax rate a high carbon price or a very strict carbon cap which all may involve high social and or economic complexity numerical experiments show that different policies have different impacts on the costs and the effectiveness of emission reduction how to choose policy parameters is critical to the effectiveness of a carbon policy the different sensitivity also implies different challenges during the implementation of the policies such as the high cost preventing retailers from accepting any carbon taxes and the difficulty of reaching an agreement on the carbon caps between retailers and policy makers

time to enter and business cycles abstract this paper examines a model in which market entry forms a business cycle propagation mechanism during expansionary periods new firms enter previously monopolized markets creating efficiency gains that amplify the effect of technology and fiscal policy shocks on employment market entry is delayed creating a dynamic pattern to output growth closer to that observed in the us economy than the standard rbc model