inefficient credit booms this paper studies the welfare properties of competitive equilibria in an economy with financial frictions hit by aggregate shocks in particular it shows that competitive financial contracts can result in excessive borrowing ex ante and excessive volatility ex post even though from a first best perspective the equilibrium always displays under borrowing from a second best point of view excessive borrowing can arise the inefficiency is due to the combination of limited commitment in financial contracts and the fact that asset prices are determined in a spot market this generates a pecuniary externality that is not internalized in private contracts the model provides a framework to evaluate preventive policies which can be used during a credit boom to reduce the expected costs of a financial crisis copyright 2008 wiley blackwell

prices and investment with collateral and default abstract this paper uses the framework of an olg economy with three period lived agents in which a durable good serves as collateral for loans to study the effect of an unanticipated income shock when the economy is in a steady state equilibrium we focus on the consequence of default on loans when the value of the collateral falls below the value of the debt it secures we analyze the impulse response functions of the price and production of the durable good and show that there is an asymmetry between the response of the price and investment of the durable good to a positive and a negative income shock arising from default on the collateralized loans we show that this asymmetry can be seen in the data on housing prices and construction and is attributable to the default on mortgages in periods of decreasing prices which acts as a turbo mechanism magnifying the decline in investment

a study on the future of unconventional oil development under different oil price scenarios a system dynamics approach abstract fluctuations in the oil global market has been a critical topic for the world economy so that analyzing and forecasting the conventional oil production rate has been examined by many researchers thoroughly however the dynamics of the market has not been studied systematically with regard to the new emerging competitors namely unconventional oil in this paper the future trend of conventional and unconventional oil production and capacity expansion rates are analyzed using system dynamics approach to do so a supply side modeling approach is utilized while main effective loops are modeled mathematically as follows technological learning and progress long and short term profitability of oil capacity expansion and production and oil proved reserve limitations the proposed model is used to analyze conventional and unconventional oil production shares up to 2025 under different oil price scenarios the results show that conventional oil production rate ranges from 79 995 to 87 044 mb day which is 75 80 percent of total oil production rate while unconventional oil production rate ranges from 19 615 to 28 584 mb day simulation results reveal that unconventional oil can gain a considerable market share in the short run although conventional oil will remain as the major source for the market in the long run

modeling technology adoptions for sustainable development under increasing returns uncertainty and heterogeneous agents abstract this paper presents a stylized model of technology adoptions for sustainable development under the three potentially most important stylized facts increasing returns to adoption uncertainty and heterogeneous agents following diverse technology development and adoption strategies the stylized model deals with three technologies and two heterogeneous agents a risk taking one and a risk averse one interactions between the two agents include trade in resources and goods and technological spillover free riding and technology trade with the two heterogeneous agents we run optimizations to minimize their aggregated costs in order to find out what rational behaviors are under different assumptions if the two agents are somehow cooperative by considering uncertain carbon taxes the model also addresses environmental issues as potential driving forces for technology adoptions

the response of firms to eligibility thresholds evidence from the japanese value added tax abstract it is common to define benefit eligibility for small business policies by restrictions on the firm size this paper documents the effects of the value added tax vat threshold in japan focusing on the incentives for a large firm to masquerade as many small firms by separately incorporating business segments a comparison of the corporate size distributions before and after the vat introduction of 1989 shows a clustering of corporations just below the threshold a pattern that is attributable to the behavioral responses to rule out the confounding influences of the changes in the company attributes over the years we applied a semiparametric density decomposition technique developed by dinardo fortin and lemieux dinardo j fortin n m lemieux t labor market institutions and the distribution of wages 1973 1992 a semiparametric approach econometrica 1996 64 1001 1044 this study suggests that the masquerading behavior by firms may be commonplace in other settings

securitized markets international capital flows and global welfare we study the effect of collateralized lending and securitization on the global supply of securitized assets welfare and international net and gross capital flows in a two country general equilibrium model with idiosyncratic investment risk the financial sectors in the two countries home and foreign differ by the collateral requirement for investment loans with home requiring lower margins in autarky home endogenously supplies more assets and enables more risk sharing upon financial integration capital flows from foreign to home leading to lower interest rates and an increase in the global supply of assets foreign enjoys substantial welfare gains through better risk sharing and portfolio reallocation while the welfare experience for home is ambiguous gross capital flows arise when agents face aggregate shocks to the expected payoff to investment projects but can collapse when shocks concern the variance of returns

verifying competitive equilibria in dynamic economies in this paper i examine e equilibria of stationary dynamic economies with heterogeneous agents and possibly incomplete financial markets i give a simple example to show that even for arbitrarily small e 0 allocation and prices can be far away from exact equilibrium allocations and prices that is errors in market clearing or individuals optimality conditions do not provide enough information to assess the quality of an approximation i derive a sufficient condition for an e equilibrium to be close to an exact equilibrium if the economic fundamentals are semi algebraic one can verify computationally whether this condition holds the condition can be interpreted economically as a robustness requirement on the set of e equilibria which form a neighbourhood of the computed approximation i illustrate the main result and the computational method using an infinite horizon economy with overlapping generations and incomplete financial markets copyright 2011 oxford university press

recent trends in the uk income distribution what happened and why the uk income distribution changed its shape dramatically during the 1980s this paper documents the trends and analyses their causes copyright 1996 by oxford university press

endogenous implementation of technology gap in energy optimization models a systematic analysis within times g5 model evaluation of global diffusion potential of learning technologies and their timely specific cost development across regions is always a challenging issue for the future technology policy preparation further the process of evaluation gains interest especially by endogenous treatment of energy technologies under uncertainty in learning rates with technology gap across the regions in global regional cluster learning approach this work devised implemented and examined new methodologies on technology gaps a practical problem using two broad concepts of knowledge deficit and time lag approaches in global learning applying the floor cost approach methodology the study was executed in a multi regional technology rich and long horizon bottom up linear energy system model on the integrated markal efom system times framework global learning selects highest learning technologies in maximum uncertainty of learning rate scenario whereas any form of technology gap retards the global learning process and discourages the technologies deployment time lag notions of technology gaps prefer heavy utilization of learning technologies in developed economies for early reduction of specific cost technology gaps of any kind should be reduced among economies through the promotion and enactment of various policies by governments in order to utilize the technological resources by mass deployment to combat ongoing climate change

understanding the reductions in us corn ethanol production costs an experience curve approach the us is currently the world s largest ethanol producer an increasing percentage is used as transportation fuel but debates continue on its costs competitiveness and energy balance in this study technological development of ethanol production and resulting cost reductions are investigated by using the experience curve approach scrutinizing costs of dry grind ethanol production over the timeframe 1980 2005 cost reductions are differentiated between feedstock corn production and industrial ethanol processing corn production costs in the us have declined by 62 over 30 years down to 100 2005 tonne in 2005 while corn production volumes almost doubled since 1975 a progress ratio pr of 0 55 is calculated indicating a 45 cost decline over each doubling in cumulative production higher corn yields and increasing farm sizes are the most important drivers behind this cost decline industrial processing costs of ethanol have declined by 45 since 1983 to below 130 2005 m3 in 2005 excluding costs for corn and capital equivalent to a pr of 0 87 total ethanol production costs including capital and net corn costs have declined approximately 60 from 800 2005 m3 in the early 1980s to 300 2005 m3 in 2005 higher ethanol yields lower energy use and the replacement of beverage alcohol based production technologies have mostly contributed to this substantial cost decline in addition the average size of dry grind ethanol plants increased by 235 since 1990 for the future it is estimated that solely due to technological learning production costs of ethanol may decline 28 44 though this excludes effects of the current rising corn and fossil fuel costs it is also concluded that experience curves are a valuable tool to describe both past and potential future cost reductions in us corn based ethanol production

on non existence of markov equilibria in competitive market economies abstract this paper presents some examples of regular dynamic economies with externalities and taxes that either lack existence of a markov equilibrium or such equilibrium is not continuous these examples pose further challenges for the analysis and computation of these economies journal of economic literature classification numbers c10 c62

informal insurance arrangements with limited commitment theory and evidence from village economies recent work on consumption allocations in village economies finds that idiosyncratic variation in consumption is systematically related to idiosyncratic variation in income thus rejecting the hypothesis of full risk pooling we attempt to explain these observations by adding limited commitment as an impediment to risk pooling we provide a general dynamic model and completely characterise efficient informal insurance arrangements constrained by limited commitment and test the model using data from three indian villages we find that the model can fully explain the dynamic response of consumption to income but that it fails to explain the distribution of consumption across households

the economics of technical change this paper reviews the recent rapidly growing literature on technical change in the economy it concentrates on innovations and their diffusion at firm and industry level since this was the area designated as relatively weak in earlier literature surveys the review argues that the extensive empirical evidence and theoretical analysis now available presents a basic challenge to neoclassical theory after indicating some weaknesses in the neo schumpeterian literature the paper concludes by advocating an experiment with a new form of assessment by neighboring disciplines to economics itself which would take full account of the fundamental issues at stake in this modern methodenstreit c 1994 academic press inc copyright 1994 by oxford university press

u s inequality debt constraints or incomplete asset markets abstract to examine the role of debt constraints and incomplete asset markets lack of insurance markets in explaining u s inequality we run horse races between competing models for a widely used model we decompose inequality into its fundamental driving forces the underlying source of inequality in all models is uninsurable idiosyncratic risk both debt constraints and incomplete asset markets are needed to account for inequality but asset market incompleteness is the key friction it better accounts for the concentration and dispersion of wealth and is the most costly friction in terms of welfare tight debt constraints are important for explaining the lower tail of the wealth distribution

liquidity constrained markets versus debt constrained markets this paper compares two different models in a common environment the first model has liquidity constraints in that consumers save a single asset that they cannot sell short the second model has debt constraints in that consumers cannot borrow so much that they would want to default but is otherwise a standard complete markets model both models share the features that individuals are unable to completely insure against idiosyncratic shocks and that interest rates are lower than subjective discount rates in a stochastic environment the two models have quite different dynamic properties with the debt constrained model exhibiting simple stochastic steady states while the liquidity constrained model has greater persistence of shocks

danish and norwegian wind industry the relationship between policy instruments innovation and diffusion this article compares the role of policy instruments in stimulating long term technological change in danish and norwegian wind industry it concludes that although predictability has periodically been low denmark s broad portfolio of policies and measures has been well adapted to the different stages in the development of its wind industry this has contributed to a high degree of innovation successful establishment in niche markets high degree of diffusion and establishment of domestic and international mass markets and in recent years an increasingly successful replacement of senescent technology with new the motivation of norway s wind energy policies and measures at least up until the late 1990s has been to increase power supply rather than to stimulate industrial development and technological change policies and measures have been weaker than in denmark have been less stable over time and stimulated the demand side much less they have not sufficiently covered the wind industry s perceived needs on different stages in the development of new technology and have not sufficiently stimulated continuous improvement learning and new product development dynamic efficiency in industry this has been part of the reason why there has been only a limited extent of innovation and diffusion of wind technology in norway

the governance of sustainable socio technical transitions a quasi evolutionary model of socio technical transitions is described in which regimes face selection pressures continuously differentiated transition contexts determine the form and direction of regime change in response to these pressures the articulation of pressures and the degree to which responses are coordinated and based on resources available within the regime define the transition context four alternative contexts are described endogenous renewal re orientation of trajectories emergent transformation and purposive transitions agency and power in the governance of regime transformation are analysed power to affect change depends on regime membership the distribution of resources for change and expectations

energy returns and the long run growth of global industrial society abstract the extreme interconnectedness of energy and economic systems will tend to confound any attempt to estimate the energy return on investment at anything other than the global scale here i apply a very simple model of global energy use to specify the dynamic characteristics of global scale energy returns on investment eroig this suggests that the observed long run relative growth rate of 2 5 yr 1 in global primary energy use is associated with an equilibrium return from infrastructure investments of 2 1 with returns accruing with a time constant of 40 years the analysis also attempts to show how growth leads to reductions in the supply efficiency of energy and how this decline is offset by increases in the efficiency with which industrial society can extract useful work from primary energy flows this observed preservation of the overall energy efficiency of the global energy system implicates variations in the decay decommissioning rate of infrastructure in observed long wave like variations in the relative growth rate of global primary energy use and hence eroig

energy paths in the european union a model based clustering approach this paper examines typical energy paths i e the intertemporal development of the energy mixes of the member states of the european union over 1971 2010 we apply model based clustering to detect major energy profiles and their compositional dynamics the seven identified clusters show typical combinations of energy carriers dominating the primary energy consumption of a country we find that countries tend to take a path towards higher quality energy mixes over time however path inertia and dependencies arise from both infrastructure and resource endowments higher energy quality profiles are usually associated with higher national income and energy use per capita providing some evidence of the existence of a national level energy ladder we also find convergence in energy intensity over time and a relationship between a country s own resources and import dependency

environmental performance innovation and spillovers evidence from a regional namea abstract the achievement of positive environmental performance ep at national level could strongly depend on differences in regional features namely productive specialization regulation stringency and innovation capabilities of both public institutions and the private business sector we present empirical evidence for a newly released namea available for the 20 italian regions in order to demonstrate the role played by sector innovation regional spillovers and environmental policies the italian north south divide regarding industrial development and productive specialization patterns seems to affect regional ep nonetheless such a pattern presents some interesting differences revealing a more heterogeneous distribution of emissions which may reflect the role of other driving forces in particular agglomerative effects seem to play a major role and the ep of neighboring regions influences the regional internal ep this means that together with the spatial concentration of specific sectors into restricted areas there is also some convergence in the adoption of cleaner or dirtier production process techniques finally interregional technological spillovers are more important than sector internal innovation for improving ep revealing that accounting for spatial features and linking ecological economics to regional economics are crucial in understanding the key drivers of ep

ranking income distributions a large variety of policy questions involve choices between social states and a consequent ordering of the feasible alternatives when these social states are related to the levels of welfare experienced by individuals or households two central issues stand out in determining the relative desirability of different social outcomes one of these is the essentially positive exercise of achieving comparability between households with different characteristics such as composition or preferences operating in different environments for example facing different price structures the other concerns the normative judgments implicit in the evaluation of alternative allocations of resourcesthe emphasis placed on inequality between households and the extent to which greater inequality can be compensated by higher average living standards this paper focuses on the second of these issues and in doing so we abstract from the problem of household comparability by considering a population of n households identical in all respects except for their incomes the question of ordering social states then becomes one of ranking income distributions over a group of anonymous households or individuals borrowing the usual assumptions imposed on consumer preferences we may suppose that a social ordering of income distributions can be represented by a welfare function 2

a cross national comparison of permanent inequality in the united states and germany traditional cross sectional measures find greater inequality in the united states than in industrialized western european countries but are unable to distinguish transitory from permanent inequality with longitudinal data we measure cross sectional inequality during the 1980s using the shorrocks measure of income stability to find the degree to which single period measures exaggerate permanent inequality surprisingly given the smaller social welfare system and the less restrictive labor markets in the united states we find that both single period inequality and the share of that inequality that persists over time are greater in the united states than in germany

urban energy transition in china insights from trends socioeconomic drivers and environmental impacts of beijing abstract the coal dominated energy structure has not only fueled china s rapid economic development but also brought great pressure on china promoting energy transition is among the great challenges for china as one of the most developed megacities in china beijing promotes energy transition intensively in this study we explored the trends socioeconomic drivers and environmental impacts of the energy transition process in beijing during the decades we found that beijing s energy transition has gone through four typical stages after a parallel growth between the economy and coal dominated energy consumption at beginning the growth rate of energy consumption has gradually slowed down since 1996 between 2000 and 2007 the energy structure became relatively balanced and diversified driven by the changes of energy intensity energy structure and final demand composition along with the economic structure s shift from heavy manufacturing to service thereafter economic development was seriously decoupled from direct energy consumption and the de coal trend had made remarkable achievements so2 and nox emissions have declined significantly since 2007 diversified energy structure based on the de coal trend cleaner energy and economic restructuring promotes energy transition meanwhile the feasibility of implementation also should be considered in other cities energy transition process in china

zero energy homes are they economically viable whilst net zero energy homes are espoused in many policy circles and many bespoke examples have been constructed to demonstrate their technical feasibility there is a scarcity of evidence demonstrating such a standard would be economically rational particularly for large scale housing development where orientation and aspect may not always be optimal drawing on energy monitoring evidence and construction economics associated with a nearly zero energy housing estate in adelaide australia this paper explores the economic feasibility of the net zero energy home policy in warm temperate climates the results demonstrate that using economic tools and assumptions typically applied for building energy regulatory policy changes net societal economic benefits significantly outweigh costs the clear economic outcomes combined with expected health and productivity benefits from improved levels of thermal comfort should provide security to policy makers to progress home energy standards towards net zero energy performance

a model based assessment of the impact of revitalised r d investments on the european power sector abstract this paper presents an analysis of the effect of enhanced research and development r d efforts for a set of low carbon power technologies on the development of the european energy sector it applies a methodology using the concept of two factor learning which quantitatively links trends in technology cost to both accumulated r d investments and production volumes the impacts of the latter on the energy sector are then simulated in a consistent manner with the poles global energy model on this basis it compares the total system costs of an assumed increase in worldwide r d investments that for the eu are in line with proposals made in its european strategic energy technology plan to a baseline development it finds that an increase in research efforts at a global level will contribute to reducing the costs of currently less mature low carbon technologies thus accelerating their market entry when comparing two scenarios that both fulfil the eu s 2020 energy and climate objectives and differing only in their r d investment levels the reduced technology costs allow eu support policies for renewables and carbon values to be reduced and the cumulative discounted benefit of the accelerated research efforts is positive in the long term

the future of the income tax the federal income tax has been under attack by the economics profession for more than a decade the attack comes from two directions supply siders who believe that progressive income taxation impairs economic incentives and more traditional economists who would substitute a progressive expenditure tax for the income tax 2 at one time support for the expenditure tax was confined to a few members of our profession including such distinguished names as john stuart mill irving fisher nicholas kaldor and james meade today it is fair to say that many if not most economists favor the expenditure tax or a flat rate income tax this group has joined the opponents of progressive taxation in the attack on the income tax despite an incessant barrage from both groups no country in the world is planning to abandon the income tax or is even considering a personal expenditure tax a wave of tax reform beginning with the u s reform in 1986 has been sweeping the world aimed at improving the income tax not at eliminating it tax preferences formerly regarded as sacrosanct are being removed and there is a distinct movement toward comprehensive income taxation 3 however individual income tax rates are being cut tax progressivity has been declining almost everywhere and reliance on the income tax has been diminishing it will come as no surprise to this audience that i approve of the base broadening feature of the current tax reform movement but i believe that the reduction in the redistributive effect of the income tax has gone too far in this paper i shall show that the progressivity of the u s tax system never very pronounced except during and immediately after the two world wars has been declining for more than two decades and that the tax reform act of 1986 reversed this decline but only slightly consequently we have a long way to go to improve the equity of the tax system i believe this can be done without punitive tax rates that will hurt economic incentives i begin with a brief review of recent changes in the u s distribution of income and follow this with an analysis of the effect of taxes on the income distribution i next examine arguments for and against the income tax with particular emphasis on its effects on economic incentives and its merits when compared with the expenditure tax i then evaluate the income tax as it emerged from the 1986 tax reform and conclude with tjoseph pechman passed away on august 19 1989 his presidential address was delivered at the onehundred second meeting of the american economic association december 29 1989 atlanta georgia joseph a pechman economic studies program the brookings institution 1775 massachusetts avenue nw washington dc 20036 i have benefited from the comments and suggestions on an earlier draft of this paper by henry j aaron richard goode jane g gravelle robert w hartman donald w kiefer herbert e klarman robert d reischauer clifford m winston and h peyton young but they should not be held responsible for the views expressed in this paper i am indebted to richard kasten for various simulations i am also grateful to stephen j kastenberg for research assistance and to diane a shugart valerie m owens and sara c hufham for secretarial assistance some of the more extreme supply siders argued that large tax cuts pay for themselves see for example laffer 1981 but i believe it is fair to say that this view has been totally discredited for a more reasonable supply side view see the economic report of the president 1982 2see for example michael j boskin 1978 david e bradford 1980 charles l ballard don fullerton john shoven and john whalley 1985 paul courant and edward gramlich 1982 martin feldstein 1978 robert hall and alvin rabushka 1985 john kay and mervyn king 1983 charles mclure 1987 mieszkowski 1980 and lawrence summers 1981 it is interesting that the recent popularity of the expenditure tax among economists was stimulated by a tax lawyer william d andrews 1974 3see pechman 1988

tortoises and hares choice among technologies of unknown merit recent work in the area of competing technologies and increasing returns has largely been concerned with the effectiveness of the market in delivering optimal outcomes the existence of inefficient market outcomes suggests that there might be a place for intervention in the technology choice process this paper develops a model of sequential choice in which the choice process is subject to centralized control the model is used to show that intervention can increase the expected present value of the technology adoption process it remains however that one technology and not necessarily the best will come to dominate the market copyright 1991 by royal economic society

computerisation and wage dispersion an analytical reinterpretation the rich countries have recently seen a dramatic rise in income inequality all the more surprising because the long term trend had been toward equality this paper examines one of the leading explanations computerisation in the workplace i offer a theory of computers impact on white collar work which goes far toward explaining the timing form and locus of recent labour market changes the theory looks at the bureaucratic and organisational applications of computers that have been first largest and most influential they have two effects on firms demand for labour at different skill levels

ftt power a global model of the power sector with induced technological change and natural resource depletion abstract this work introduces a model of future technology transformations for the power sector ftt power a representation of global power systems based on market competition induced technological change itc and natural resource use and depletion it is the first component of a family of sectoral bottom up models of technology designed for integration into the global macroeconometric model e3mg itc occurs as a result of technological learning produced by cumulative investment and leads to highly nonlinear irreversible and path dependent technological transitions the model uses a dynamic coupled set of logistic differential equations as opposed to traditional bottom up energy models based on systems optimisation such differential equations offer an appropriate treatment of the times and structure of change involved in sectoral technology transformations as well as a much reduced computational load resource use and depletion are represented by local cost supply curves which give rise to different regional energy landscapes the model is explored for a single global region using two simple scenarios a baseline and a mitigation case where the price of carbon is gradually increased while a constant price of carbon leads to a stagnant system mitigation produces successive technology transitions leading towards the gradual decarbonisation of the global power sector

dynamic competitive economies with complete markets and collateral constraints in this article we examine the competitive equilibria of a dynamic stochastic economy with complete markets and collateral constraints we show that provided the sets of asset pay offs and of collateral levels are sufficiently rich the equilibrium allocations with sequential trades and collateral constraints are equivalent to those obtained in arrow debreu markets subject to a series of limited pledgeability constraints we provide both necessary and sufficient conditions for equilibria to be pareto efficient and show that when collateral is scarce equilibria are not only pareto inefficient but also often constrained inefficient in the sense that imposing tighter borrowing restrictions can make everybody in the economy better off we derive sufficient conditions for the existence of markov equilibria and for the case of two agents for the existence of equilibria that have finite support these equilibria can be computed with arbitrary accuracy and the model is very tractable

the demand for environmental quality in driving transitions to low polluting energy sources the purpose of this paper is to understand the long run demand for energy related environmental quality its influence on legislation and on transitions to low polluting energy sources it starts by presenting a simple framework of the relationship between the demand for and supply of environmental quality environmental legislation and energy this forms the structure for presenting a series of episodes in british history where a demand for improvements in energy related environmental quality existed this analysis proposes that markets can drive transitions to low polluting energy sources in specific economic conditions however most probably governments will need to push them and this cannot be expected without strong and sustained demand for environmental improvements yet while demand is a prerequisite it is not enough it must also be spearheaded by strong creative and sustained pressure groups i e powerful lobbying and the weakening of the counter lobby to introduce legislation to enforce it and to avoid it being over turned by future governments

the dynamics of financially constrained arbitrage we develop a model of financially constrained arbitrage and use it to study the dynamics of arbitrage capital liquidity and asset prices arbitrageurs exploit price discrepancies between assets traded in segmented markets and in doing so provide liquidity to investors a collateral constraint limits their positions as a function of capital we show that the dynamics of arbitrage activity are self correcting following a shock that depletes arbitrage capital profitability increases and this allows capital to be gradually replenished spreads increase more and recover faster for more volatile trades although arbitrageurs cut their positions in these trades the least when arbitrage capital is more mobile across markets liquidity in each market generally becomes less volatile but the reverse may hold for aggregate liquidity because of mobility induced contagion

testing the significance of income distribution changes over the 1980s business cycle a cross national comparison using kernel density estimation we describe the distribution of household size adjusted real income and how it changed over the business cycle of the 1980s in the united states and the united kingdom we confirm previous studies that show income inequality increased in the two countries and the middle of the distribution was squashed down using a series of statistical tests however we find that while the mass in both tails of the distribution increased significantly in both countries over the period by far the greatest gains were in the upper tail copyright 1999 john wiley sons ltd

technological learning in energy environment economy modelling a survey abstract this paper aims at providing an overview and a critical analysis of the technological learning concept and its incorporation in energy environment economy models a special emphasis is put on surveying and discussing through the so called learning curve both studies estimating learning rates in the energy field and studies incorporating endogenous technological learning in bottom up and top down models the survey of learning rate estimations gives special attention to interpreting and explaining the sources of variability of estimated rates which is shown to be mainly inherent in r d expenditures the problem of omitted variable bias the endogeneity relationship and the role of spillovers large scale models survey show that despite some methodological and computational complexity related to the non linearity and the non convexity associated with the learning curve incorporation results of the numerous modelling experiments give several new insights with regard to the analysis of the prospects of specific technological options and their cost decrease potential bottom up models and with regard to the analysis of strategic considerations especially inherent in the innovation and energy diffusion process in particular the energy sector s endogenous responses to environment policy instruments top down models

recounting winners and losers in the 1980s a critique of income distribution measurement methodology abstract studies measuring winners and losers in the 1980s using a cross over methodology are sensitive to years compared income sharing unit chosen and inflation index used we show these and other studies exaggerate losses by mixing cyclical with cross cycle differences

a global and local endogenous experience curve model for projecting future uptake and cost of electricity generation technologies abstract a global and local learning model gallm has been developed to project the cost and global uptake of different electricity generation technologies to the year 2050 this model features three regions endogenous technological learning within and across those regions various government policies to facilitate technological learning and a penalty constraint which is used to mimic the effect market forces play on the capital cost of electricity generation technologies this constraint has been added as market forces have been a strong factor in technology pricing in recent years global regional and component experience curves have been developed for some technologies the model with the inclusion of these features projects a diverse range of technologies contributing to global electricity generation under a carbon price scenario the penalty constraint leads to gradual and continual installations of technologies and because the constraint provides a disincentive to install too much of a technology it reduces the impact of uncertainty in the learning rate alternative forms of the penalty constraint were tested for their suitability it was found that with a zero and lower cost version of the constraint photovoltaics are installed in a boom and bust cycle which is not supported by past experience when the constraint is set at a high level there are fewer installations

prospects for expanded utilization of biogas in germany the prospects for expanded utilization of biogas systems in german was analysed by identifying the operational and policy factors affecting the complete chain of processes from implementation process for biogas plants through to biogas production and utilization it was found that the renewable energies act eeg and energy tax reliefs provide bases for the support of expanded utilization upgrading of biogas to natural gas quality for utilization in the transportation sector was arguably the most promising technology that could support rapid utilization expansion sustainable deployment of biogas systems in light of the unstable feedstock prices and availability and the need for subsidy free operation in the long term requires enhancement of feedstock flexibility and quality characteristics to maximise gas yield and optimisation of the anaerobic digestion process management assessment of energy balance and potential environmental impacts of the integrated process chain provides a holistic assessment of sustainability the results also support the development and foster of policies and framework for development of biogas as environmentally friendly energy resource among a mix of renewable energy sources hence compete favourably with fossil fuels to enhance the prospects for expanded utilization

historical energy price shocks and their changing effects on the economy abstract the purpose of this paper is to identify the changes in the impact of energy shocks on economic activity with an interest in assessing if an economy s vulnerability and resilience to shocks improved with economic development using data on the united kingdom over the last three hundred years the paper identifies supply aggregate demand and residual shocks to energy prices and estimates their changing influence on energy prices and gdp the results suggest that the impacts of supply shocks rose with its increasing dependence on coal and declined with its partial transition to oil however the transition from exporting coal to importing oil increased the negative impacts of demand shocks more generally the results indicate that improvements in vulnerability and resilience to shocks did not progress systematically as the economy developed instead the changes in impacts depended greatly on the circumstances related to the demand for and supply of energy sources if these experiences are transferable to future markets a transition to a diversified mix of renewable energy is likely to reduce vulnerability and increase resilience to energy price shocks

global warming and a potential tipping point in the atlantic thermohaline circulation the role of risk aversion the risk of catastrophes is one of the greatest threats of climate change yet conventional assumptions shared by many integrated assessment models such as dice lead to the counterintuitive result that higher concern about climate change risks does not lead to stronger near term abatement efforts this paper examines whether this result still holds in a refined dice model that employs the epstein zin utility specification and that is fully coupled with a dynamic tipping point model describing the evolution of the atlantic thermohaline circulation thc risk is captured by the possibility of a future collapse of the circulation and it is nourished by fat tailed uncertainty about climate sensitivity this uncertainty is assumed to resolve in the middle of the second half of this century and the near term abatement efforts which are undertaken before that point of time can be adjusted afterwards these modelling choices allow posing the question of whether aversion to this specific tipping point risk has a significant effect on near term policy efforts the simulations however provide evidence that it has little effect for the more likely climate sensitivity values a collapse of the circulation would occur in the more distant future in this case acting after learning can prevent the catastrophe implying the remarkable insensitivity of the near term policy to risk aversion for the rather unlikely and high climate sensitivity values the expected damage costs are not great enough to justify taking very costly measures to safeguard the thc our simulations also provide some indication that risk aversion might have some effect on near term policy if inertia limiting the speed of decarbonisation is accounted for as it is highly uncertain how restrictive this kind of inertia will be future research might investigate the effects of risk aversion if additional uncertainty about inertia is considered

the diffusion of clean technologies a review with suggestions for future diffusion analysis abstract this article gives an overview of the literature on clean technology diffusion followed by suggestions for future analysis findings from diffusion analysis are presented in the form of 10 stylised facts helping the reader to see the forest for the trees the overall conclusion is that the diffusion of clean technology same as the diffusion of normal innovations is governed by endogenous mechanism epidemic learning and learning economies and by exogenous mechanisms policy is important for clean technology diffusion but other factors are important too the characteristics of the clean technology absorptive capacities of potential adopters and the age structure of capital it is often overlooked that companies have a choice they can choose between an end of pipe solution a process change adaptation and a change of process substitution this means that the diffusion and evolution of one clean technology will be at the expense of the diffusion of another clean technology something overlooked in studies on clean technology diffusion further research is needed on the influence of public policy on clean technology choice expectations about learning economies and prices adjustment costs network externalities and complementary innovations on clean technology adoption choices

regional income stratification in unified germany using a gini decomposition approach frick j r and goebel j regional income stratification in unified germany using a gini decomposition approach regional studies using representative micro data from the german socio economic panel study soep this paper delivers new insights into the development of income inequality and regional stratification in germany after unification this paper applies a new method for detecting social stratification by a decomposition of the gini index that yields the obligatory between and within group components as well as an overlapping index for the different sub populations it is found that east germany is still a stratum on its own when using post government income but since 2001 no longer is when using pre government income these results remain stable when using alternatively defined regional classifications however there are also indications of some regional variation within west germany frick j r et goebel j les tranches de revenu regional dans l allemagne unifiee employant une decompositi

the ambiguity of innovation drivers the adoption of information and communication technologies by public water utilities abstract information and communication technologies have the potential to increase productivity improving efficiency and eventually raising the quality of water services although this potential is recognized great variation exists in the way water utilities adopt information and communication technologies based on literature review and empirical data drawn from the three case studies a municipality in greece an airport in italy and a water utility in the netherlands developed under the eu funded waternomics project the paper highlights how environmental organizational and individual factors explain technology adoption the paper pays particular attention to the idiosyncrasies of the water services sector which influence this process these include include the social and conomic importance of water supply the monopolistic nature of the sector and increased commercialization of public water utilities our cases suggest that drivers of technology adoption appear to be somewhat ambiguous in the water services sector in that they impact adoption in diverse locations differently our cases also suggest is that the prioritization of the factors that determine adoption are dynamic and change over time

environmental efficiency and labour productivity trade off or joint dynamics a theoretical investigation and empirical evidence from italy using namea in this paper we test an adapted ekc hypothesis to verify the relationship between environmental efficiency namely emissions per unit of value added and labour productivity value added per employee we exploit namea data on italy for 29 sector branches and 6 categories of air emissions for the period 1991 2001 we employ data on capital stock and trade openness to test the robustness of our results on the basis of the theoretical and empirical analyses focusing on innovation firm performances and environmental externalities we would expect a positive correlation between environmental efficiency and labour productivity a negative correlation between the emissions intensity of value added and labour productivity which departs from the conventional mainstream view the hypothesis tested is a critical one within the longstanding debate on the potential trade off or complementarity between environmental preservation and economic performance which is strictly associated with the role of technological innovation we find that for most air emission categories there is a positive relationship between labour productivity and environmental efficiency labour productivity dynamics then seem to be complementary to a decreasing emissions intensity in the production process taking a disaggregate sector perspective we show that the macro aggregate evidence is driven by sector dynamics in a non homogenous way across pollutants services tend always to show a complementary relationship while industry seems to be associated with inverted u shape dynamics for greenhouse gases and nitrogen oxides this is in line with our expectations in any case ekc shapes appear to drive such productivity links towards complementarity the extent to which this evidence derives from endogenous market forces industrial and structural change and policy effects is discussed by taking an evolutionary perspective to innovation and by referring to impure public goods arguments

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

logistic growth curve modeling of us energy production and consumption abstract this research used four parameter multi cycle logistic growth curve models on us energy information agency annual data from 1949 to 2015 to produce fixed condition forecasts of us energy production and consumption to 2040 these models and forecasts were used to assess the ability of us energy production sources to meet demand to anticipate production and technology challenges and to make general policy recommendations the logistic fixed condition forecasts indicated the ongoing increases in total us energy production dominated by crude oil and natural gas production will likely peak in 2017 at 95 0 quadrillion quad btu then rapidly decrease through 2040 at 36 2 quad btu while total us energy consumption indicated an ongoing plateau at 98 1 quad btu new growth cycles not evident in the 2015 data will certainly occur mitigating the decline in energy production before 2040 however without adequate foresight and preemptive action it is possible that new production growth would not be adequate to reverse the decline given historical growth trends therefore in addition to continued increases in energy efficiency reductions in use and implementation of carbon management technologies direct effort towards the sustainable development of substantial new growth cycles in all energy production sources through adequate investment of resources should be a priority of the us energy industry policy makers and the public alike

trends in income and price elasticities of transport demand 1850 2010 the purpose of this paper is to estimate trends in income and price elasticities and to offer insights for the future growth in transport use with particular emphasis on the impact of energy and technological transitions the results indicate that income and price elasticities of passenger transport demand in the united kingdom were very large 3 1 and 1 5 respectively in the mid nineteenth century and declined since then in 2010 long run income and price elasticity of aggregate land transport demand were estimated to be 0 8 and 0 6 these trends suggest that future elasticities related to transport demand in developed economies may decline very gradually and in developing economies where elasticities are often larger they will probably decline more rapidly as the economies develop because of the declining trends in elasticities future energy and technological transitions are not likely to generate the growth rates in energy consumption that occurred following transitions in the nineteenth century nevertheless energy and technological transitions such as the car and the airplane appear to have delayed and probably will delay declining trends in income and price elasticity of aggregate land transport demand

buying greenhouse insurance the economic costs of carbon dioxide emission limits in recent years a growing concern that the increasing accumulation of greenhouse gases will lead to undesirable changes in global climate has resulted in a number of proposals both in the united states and internationally to set physical targets for reducing greenhouse gas emissions but what will these proposals cost based on the authors earlier ground breaking work buying greenhouse insurance outlines a way to think about greenhouse effect decisions under uncertainty it describes an insightful model for determining the economic costs of limiting carbon dioxide emissions produced by burning fossil fuels and provides a solid analytical base for rethinking public policy on the farreaching issue of global warming manne and richels present region by region estimates of the costs that would underlie an international agreement using a computer model known as global 2100 they analyze the economic impacts of limiting c02 emissions under alternative supply and conservation scenarios the results clearly indicate that a reduction in emissions is not the sole policy response to potential climate change following a summary of the greenhouse effect its likely causes and possible consequences manne and richels take up issues that concern the public at large they provide an overview of global 2100 look at how the u s energy sector is likely to evolve under businessas usual conditions and under carbon constraints and describe the concept of greenhouse insurance they consider possible global agreements including an estimate of benefits that might result from trading in an international market in emission rights they conclude with a technical description directed toward modeling specialists alan manne is professor of operations research at stanford university richard richels is director of the energy analysis and planning department at the electric power research institute

inequality and poverty in united states the effects of rising dispersion of men s earnings and changing family behaviour using semiparametric density estimation techniques we analyse the effect of rising dispersion of men s earnings and related changes in family behaviour on increasing inequality in the distribution of family income in the united states for the period 1969 1989 the growing dispersion of men s earnings and changing family structure can account for most of the rise in family income inequality by contrast the increase in labour force participation by women offset this trend inequality grew at a slower rate in the 1990s than in earlier decades largely because of stabilization in the relative earnings of men from low income families

improving the economics of building energy code change a review of the inputs and assumptions of economic models abstract building energy code change in australia and many other developed nations is subject to standardised economic tests with a net present value calculation at the heart of the economic analysis although many nations have introduced minimum energy efficiency standards for residential and commercial buildings increases in stringency have been hindered by limitations to the range of private and societal impacts typically incorporated in regulatory impact assessments given the policy move towards net zero energy homes a more comprehensive set of inputs and robust assumptions are needed to support further regulatory change yet the literature provides substantial evidence of many private and societal costs and benefits not commonly incorporated into the economic assessments that underpin regulatory change drawing on a case study of australian and uk residential regulatory change assessments this paper highlights limitations to the range of inputs and assumptions currently incorporated within the economic arguments applied during residential energy code change processes and presents a more comprehensive economic argument that could support further stringency improvements

the impact of learning by doing on the timing and costs of co2 abatement abstract a particular ceiling on atmospheric co 2 concentrations can be maintained through a variety of emission pathways over the past decade there has been considerable debate over the characteristics of a least cost pathway some have suggested that a gradual departure from the emissions baseline will be the most cost effective because it reduces the pressure for premature retirement of the existing capital stock and it provides valuable time to develop low cost low carbon emitting substitutes others counter that a major flaw in analyses that support this line of reasoning is that they ignore learning by doing lbd in this paper we examine the impact of lbd on the timing and costs of emissions abatement with regard to timing we find that including learning by doing does not significantly alter the conclusions of previous studies that treated technology cost as exogenous the analysis supports the earlier conclusion that for a wide range of stabilization ceilings a gradual transition away from the no policy emissions baseline is preferable to one that requires substantial near term reductions we find that the major impact of including learning by doing is on the costs of emission abatement depending upon the sensitivity of costs to cumulative experience lbd can substantially reduce the overall costs of emissions abatement

do single mothers face greater constraints to workforce participation in non metropolitan areas increasing workforce participation among single mothers is the primary goal of recent welfare reform measures this article shows that increased workforce participation in the mid to late 1990s led to improvements in the economic well being of non metropolitan and metropolitan area families headed by single mothers differential benefits and costs of workforce participation of single mothers in non metropolitan and metropolitan areas are then examined single mothers are found to face lower costs to workforce participation and receive lower hourly earnings in non metropolitan areas than in metropolitan areas young children do however raise workforce participation costs more in non metropolitan areas copyright 2003 oxford university press

asset shortages liquidity and speculative bubbles abstract we study the effect of asset shortages on liquidity in economies with limited enforcement of debt contracts we establish that under a suitable assumption in terms of gains from trade liquidity does not dry up and trading volumes do not disappear as credit conditions worsen the equilibrium outcome becomes arbitrarily close to a purely speculative equilibrium and bubbles occur in the limit the result applies to incomplete markets and more generally to equilibria where collateral constraints interfere with the additivity of the payoff pricing functional

energy environment policy modeling of endogenous technological change with personal vehicles combining top down and bottom up methods abstract the transportation sector offers substantial potential for greenhouse gas ghg emission abatement but widely divergent cost estimates complicate policy making energy economy policy modelers apply top down and bottom up cost definitions and different assumptions about future technologies and the preferences of firms and households our hybrid energy economy policy model is technology rich like a bottom up model but has empirically estimated behavioral parameters for risk and technology preferences like a top down model unlike typical top down models however it simulates technological change endogenously with functions that relate the financial costs of technologies to cumulative production and adjust technology preferences as market shares change we apply it to the choice of personal vehicles to indicate first the effect on cost estimates of divergent cost definitions and second the possible response to policies that require a minimum market share for low emission vehicles

growth cycles and market crashes abstract market booms are often followed by dramatic falls to explain this requires an asymmetry in the underlying shocks a straightforward model of technological progress generates asymmetries that are also the source of growth cycles assuming a representative consumer we show that the stock market generally rises punctuated by occasional dramatic falls with high risk aversion bad news causes dramatic increases in prices bad news does not correspond to a contraction of existing production possibilities but to a slowdown in its expansion this economy provides a model of endogenous growth cycles in which recoveries and recessions are dictated by the adoption of innovations journal of economic literature classification numbers o40 g12 o41 o30

socio technical barriers to the use of energy efficient timber drying technology in new zealand abstract this study of industrial energy behaviours identifies barriers to the use of energy efficient drying technology in the new zealand timber industry and explores these barriers through the energy cultures lens vented kiln dryers were preferred by larger firms and heat pump kiln dryers were used by smaller firms although few firms could specify all their costs we found no significant differences in the average operating costs drying costs or commercial success of the larger and smaller firms we found that socio technical barriers create energy cultures at the level of both the firm and the sector supporting the dominance of vented kiln dryers the prevailing technologies practices and norms at the sector level strongly support vented kilns the status quo being embedded in the socio technical context hindering technological learning improved energy efficiency and innovation influential stakeholders in the industry were thus part of and locked into the industry wide energy culture and were not in a position to effect change we conclude that actors external to the prevailing industry energy culture need to leverage change in the industry norms practices and or technologies in order to reap the advantages of energy efficient drying technology assist its continued evolution and avoid the risks of path dependency

on the global economic potentials and marginal costs of non renewable resources and the price of energy commodities a model is presented in this work for simulating endogenously the evolution of the marginal costs of production of energy carriers from non renewable resources their consumption depletion pathways and timescales such marginal costs can be used to simulate the long term average price formation of energy commodities drawing on previous work where a global database of energy resource economic potentials was constructed this work uses cost distributions of non renewable resources in order to evaluate global flows of energy commodities a mathematical framework is given to calculate endogenous flows of energy resources given an exogenous commodity price path this framework can be used in reverse in order to calculate an endogenous marginal cost of production of energy carriers given an exogenous carrier demand using rigid price inelastic assumptions independent of the economy these two approaches generate limiting scenarios that depict extreme use of natural resources this is useful to characterise the current state and possible uses of remaining non renewable resources such as fossil fuels and natural uranium the theory is however designed for use within economic or technology models that allow technology substitutions in this work it is implemented in the global power sector model ftt power policy implications are given

stationary equilibria in asset pricing models with incomplete markets and collateral we consider an infinite horizon exchange economy with incomplete markets and collateral constraints as in the two period model of geanakoplos and zame 2002 households can default on their liabilities at any time and financial securities are only traded if the promises associated with these securities are backed by collateral we examine an economy with a single perishable consumption good where the only collateral available consists of productive assets in this model competitive equilibria always exist and we show that under the assumption that all exogenous variables follow a markov chain there also exist stationary equilibria these equilibria can be characterized by a mapping from the exogenous shock and the current distribution of financial wealth to prices and portfolio choices we develop an algorithm to approximate this mapping numerically and discuss ways to implement the algorithm in practice a computational example demonstrates the performance of the algorithm and shows some quantitative features of equilibria in a model with collateral and default

diffusion paths for micro cogeneration using hydrogen in the netherlands we estimate the diffusion of micro cogeneration systems micogen using hydrogen produced from natural gas in the netherlands for the 2000 2050 period on the basis of economical factors the diffusion is important for the transition to a hydrogen economy based on renewables with natural gas paving the way for hydrogen from renewables for three scenarios full diffusion takes place in the period 2020 2050 the most important factors behind the diffusion are 1 growing energy demand resulting in lower hydrogen costs and higher energy costs in the reference case and 2 lower costs of micogen stemming from learning economies the model is advanced by considering all costs components for heterogeneous users which have been calculated for the entire diffusion period it is the first threshold diffusion model that is being applied to the diffusion of technological clusters involving new or adapted infrastructures 2007 elsevier ltd all rights reserved

debt constrained asset markets we develop a theory of general equilibrium with endogenous debt limits in the form of individual rationality constraints similar to those in the dynamic consistency literature if an agent defaults on a contract he can be excluded from future contingent claims markets trading and can have his assets seized he cannot be excluded from spot markets trading however and he has some private endowments that cannot be seized all information is publicly held and common knowledge and there is a complete set of contingent claims markets since there is complete information an agent cannot enter into a contract in which he would have an incentive to default in some state in general there is only partial insurance variations in consumption may be imperfectly correlated across agents interest rates may be lower than they would be without constraints and equilibria may be pareto ranked

dynamics of energy technologies and global change technological choices largely determine the long term characteristics of industrial society including impacts on the natural environment however the treatment of technology in existing models that are used to project economic and environmental futures remains highly stylized based on work over two decades at iiasa we present a useful typology for technology analysis and discuss methods that can be used to analyze the impact of technological changes on the global environment especially global warming our focus is energy technologies the main source of many atmospheric environmental problems we show that much improved treatment of technology is possible with a combination of historical analysis and new modeling techniques in the historical record we identify characteristic l such network e ects yield high barriers to entry even for superior competitors these simple observations allow three improvements to modeling of technological change and its consequences for global environmental change one is that the replacement of long lived infrastructures over time has also replaced the fuels that power the economy to yield progressively more energy per unit of carbon pollution from coal to oil to gas such replacement has d they also include endogenous generation of s we show that doing so can yield projections with lessened environmental impacts without necessarily incurring negative e ect on the economy arriving on that path by the year 2100 depends on intervening actions such as incentives to promote greater diversity in technology and lower barriers to entry for new infrastructures that could accelerate historical trends of decarbonization 1999 elsevier science ltd all rights reserved

from government to market and from producer to consumer transition of policy mix towards clean mobility in china abstract this paper proposes a new typology that classifies innovation policy instruments into two dimensions government selection versus market selection and producer orientation versus consumer orientation such a typology articulates the importance of consumer behavior in the policy design for a transition and the relevance for the market to select target subjects of policy during the deployment stage of clean technology innovation we apply this typology to policy instruments of china s new energy vehicle nev industry between 1991 and 2015 in order to explain the industry s rapid growth the focus of china s policy mix has transited from government selection to market selection and from producer orientation to consumer orientation other than the new typology this paper traces the entire history of policy transition within china s nev industry and finds the transition to be a result of policy learning thus contributing to future empirical studies of this industry