democratic processes political risk and foreign exchange markets 3i6 foreign exchange markets are among the deepest and widest financial markets in the world technological innovations and market liberal ization have made currency markets enormous by 1992 the vol ume of transactions topped over 1 trillion each day moreover economic agents can trade currencies with shocking speed during the september 1992 e m s crisis british monetary authorities expended over two billion dollars to support the pegged value of the pound in only a few hours the behavior of these currency markets can affect not only trade flows and in ternational investment key determinants of economic performance but also political outcomes consequently exchange rates have become a highly salient issue both at the domestic and international levels indeed some political economists assert that rapidly adjusting international markets may overwhelm the ability of policymakers to control policy and according to the most extreme view thwart any meaningful democracy understanding how currency markets behave therefore is fundamental step to assess accu rately how the internationalization of economic activity influences demo cratic politics we investigate how democratic political events affect currency markets by focusing on the relationship between the spot and forward exchange rate markets the efficient markets hypothesis implies that the forward ex change rate the price of the currency deliverable thirty days in the fu ture should be an unbiased predictor of the future spot exchange rate that is today s thirty day forward rate should on average accurately pre dict the spot exchange rate one month from today empirical studies how ever conclude that the forward rate is often a biased predictor of future ex change rate changes many economic models attribute this bias to a risk premium where currency traders demand a higher return for holding the currency

comparing systems approaches to innovation and technological change for sustainable and competitive economies an explorative study into conceptual commonalities differences and complementarities this paper makes a distinction between three theoretical frameworks that have been highly influential in the discourse on innovation competitiveness and sustainability sectoral systems of innovation ssi technological innovation systems tis and socio technical systems st systems these frameworks share a common systems approach to innovation but are often positioned as different bodies of literature that correspond to different epistemic communities this paper is explorative and conceptual in nature it presents a systematic comparative review of ssi tis and st systems based on the following analytical dimensions 1 system boundaries 2 actors and networks 3 institutions 4 knowledge 5 dynamics and 6 policy approach in the concluding section commonalities and differences of the three approaches are presented and suggestions for complimentarily are made c 2010 elsevier ltd all rights reserved

polarized business cycles abstract four stylized facts motivate this paper i business cycle movements are wider in emerging countries ec than in developed ones ii ec experience greater economic policy uncertainty iii ec are more polarized and less politically stable and iv epu is positively related to political polarization a standard real business cycle model augmented to incorporate political polarization a polarized business cycle pbc model is shown to be consistent with these facts we first derive our results analytically and then quantify the effects of a permanent increase in polarization to the us economy

legitimizing research technology and innovation policies for transformative change combining insights from innovation systems and multi level perspective in a comprehensive failures framework abstract the recent policy debates about orientating research technology and innovation policy towards societal challenges rather than economic growth objectives only call for new lines of argumentation to systematically legitimize policy interventions while the multi level perspective on long term transitions has attracted quite some interest over the past years as a framework for dealing with long term processes of transformative change but the innovation systems approach is still the dominant perspective for devising innovation policy innovation systems approaches stress the importance of improving innovation capabilities of firms and the institutional settings to support them but they are less suited for dealing with the strategic challenges of transforming systems of innovation production and consumption and thus with long term challenges such as climate change or resource depletion it is therefore suggested to consider insights from transition studies more prominently in a policy framework that is based on the innovation systems approach and the associated notion of failures we propose a comprehensive framework that allows legitimizing and devising policies for transformative change that draws on a combination of market failures structural system failures and transformational system failures

lock in of mature innovation systems the transformation toward clean concrete in the netherlands energy intensive processing industries like the concrete industry form the base of the economy and account for a large part of global greenhouse gas emissions sectoral transformation to cleaner basic materials is therefore crucial and institutional pressure to do so is increasing however socio technical studies have not sufficiently addressed these sectors this paper therefore sets out to analyze the systemic problems that inhibit the transformation of the mature innovation system of the concrete sector toward the development and diffusion of clean concrete innovations for the case of the netherlands a structural functional approach has been frequently applied to identify such systemic problems but has been limited to emerging technological innovation systems consequently the approach tends to overlook the systemic lock in that arises from closed cycles of interdependent systemic problems and vested interests that characterize mature innovation systems and that hamper system transformation this paper analyzes these characteristics to extend the application of the structural functional approach to the transformation of mature innovation systems interviews with 28 stakeholders were conducted and triangulated with reports websites and other documents a list of systemic problems was identified that originate within actors institutions networks technology and infrastructure and that impaired the performance of all system functions except knowledge development systemic problems are indeed found to be sustained through systemic lock in i e closed cycles of interdependent systemic problems through strategic often collective action established firms with vested interests were able to reinforce these interdependent systemic problems to inhibit clean concrete innovation the study concludes that systemic lock in inhibits the sustainability transformation of the mature innovation system of concrete in the netherlands and confirms that the application of the structural functional approach can be extended from emerging to mature innovation systems overcoming systemic lock in requires a series of well coordinated policy measures that should be implemented in a specific order to prevent reverting back to the lock in around the original system configuration

political business cycles 40 years after nordhaus the aim of this article is to survey the huge literature that has emerged in the last four decades following nordhaus s rev econ stud 42 2 169 190 1975 publication on political business cycles pbcs i first propose some developments in history of thought to examine the context in which this ground breaking contribution saw the light of the day i also present a simplified version of nordhaus s model to highlight his key results i detail some early critiques of this model and the fields of investigations to which they gave birth i then focus on the institutional context and examine its influence on pbcs the actual research agenda finally i derive some paths for future research

the innovation potential of new infrastructure development an empirical study of heathrow airport s t5 project abstract we propose a conceptual framework to analyze technology adoption in mega infrastructure projects and assess their potential to innovating large socio technical systems drawing on an in depth empirical analysis of heathrow airport s terminal 5 project we find that innovation hinges on technology adoption decisions that are governed systematically by two intertwined determinants assessment of expected profitability and development of absorptive capacity both of which are distributed across various interdependent actors on an ad hoc basis technological decisions are also affected by other factors namely attitudes toward risk politics and lack of established standards we reveal how a schedule driven project framing creates an underlying boundary condition that constrains the longitudinal process of building a whole collective with capacity to absorb new technologies the innovation potential of mega projects is thus subjected to a fundamental unifying tension on the one hand they offer a one off opportunity to invest in cutting edge technologies and innovate socio technical systems on the other hand project stakeholders have limited time to develop capacity to absorb novel technologies and negotiate differences on assessments of profitability and risk stakeholders may therefore be compelled to agree to adopt proven technologies upfront to reduce uncertainty and mitigate risks thus limiting the innovation potential of new infrastructure development

regulating technological change the strategic reactions of utility companies towards subsidy policies in the german spanish and uk electricity markets abstract this paper focuses on how incumbent electric utilities strategically react to subsidy schemes supporting renewable energy technologies in the uk germany and spain firms coordinate the development of their technological capabilities and their political activities to shape their regulatory environment analysing the diffusion of wind power in these countries we show that the different ways in which firms coordinate their technological and political strategies lead to very different market outcomes both for the firms market share and the size of the overall market although incumbents are usually seen as being resistant to change in energy systems we show that spanish utilities proactively drive the diffusion of wind power we speculate about the relation between the ownership structure of the energy system and its inertia with respect to the integration of new technologies we derive novel policy implications that explicitly take into account the strategic actions of incumbent firms shaping the technological and regulatory system

partisan conflict and private investment abstract american politics have been characterized by a high degree of partisan conflict in recent years combined with a divided government this has led not only to significant congressional gridlock but also to spells of high fiscal policy uncertainty the unusually slow recovery from the great recession during the same period suggests the possibility that the two phenomena may be related in this paper i investigate the hypothesis that political discord depresses private investment to this end i construct a novel high frequency indicator of partisan conflict the partisan conflict index pci uses a semantic search methodology to measure the frequency of newspaper articles reporting lawmakers disagreement about policy i find a negative relationship between the pci and aggregate investment in the us moreover the decline is persistent which may help explain the slow recovery observed since the 2007 recession ended partisan conflict is also associated with lower capital investment rates at the firm level even when economic policy uncertainty and macroeconomic conditions are controlled for i estimate that about 27 of the decline in corporate investment between 2007 2009 can be attributed to a rise in partisan conflict

executive constraint political stability and economic growth previous studies have argued that democracy diminishes the extent to which leadership contests depress economic growth by reducing the violence and uncertainty attendant on such contests we recon

entrapment in large technology systems institutional commitment and power relations abstract large technology systems cannot be developed without social commitments usually including legal especially in the form of contracts organisational involving producers users and financiers and political involving various actors associated with the state commitments without such commitments there can be no innovation and no investment given the high risks that are entailed however embedded commitments can create inertia causing inferior technologies and technology paths to survive long after they should have been abandoned this form of technological lock in may be reinforced when there are close relations between producers and states which prevent markets and democratic processes from operating effectively these phenomena are illustrated through study of the thermal oxide reprocessing plant thorp a nuclear reprocessing plant in the uk the lesson for technology policy is that much more attention needs to be given to the maintenance of reversibility and adaptability in infrastructural development

innovation regimes r d and radical innovations in telecommunications abstract by introducing the concept of innovation regimes the aim of this article is to show how the rapid pace of technological development in the telecom sector may be explained by the close links between the sector s own r d and the creation of numerous innovations many of which are radical in contemporary innovation theory a theoretical antinomy exists whereas the creation of incremental innovations is variously explained in terms of rational responses to markets dynamics of technological regimes dominant design etc radical innovations in contrast are explained in terms of serendipity chance or haphazard scientific discoveries evidence from analysis of innovations in the telecom sector suggests that innovation regimes have provided a capability of coordination direction and leadership in the creation of many of the radical technological innovations that have emerged in the sector thus one may claim that the strong innovation regimes and high r d intensity of the telecom sector at least until recently have provided a capability of creating innovations on purpose for a purpose the policy implications of this contradict some of the assumptions on which the prevailing market oriented r d governance models and policies are based and which are supported by contemporary innovation theories

energy research and r d indicators an lmdi decomposition analysis for the iea big 5 in energy research abstract the literature has always shown that there are two important factors in the improvement of a country s research output gross domestic product gdp and r d expenditures taking the discussion a step further and in an effort to provide policy recommendations on what is needed to boost research capacity this paper aims at decomposing the change in energy research papers of five countries australia canada germany uk and us into four factors gdp r d intensity ratio of total r d to gdp energy r d rate of return or productivity number of energy related papers per unit of energy r d expenditure and energy r d priority share of energy r d to total r d expenditure the findings show a general trend in the sign of the four effects on research for all five countries energy r d productivity energy r d priority and gdp are mostly found to be positive contributors while the r d intensity a negative one this pattern has exceptions that are more prominent during periods where economic growth is constrained for example during 2008 09 the results have policy implications not only for these five countries but also for developing countries low gdp that aim at contributing more to the energy related research output globally

international pollution control cooperative versus noncooperative strategies abstract international pollution control involving two neighboring countries is modeled as a simple two player dynamic game each country produces a good that is consumed by domestic households production of each consumption good results in emissions of pollutants households in each country derive utility from the consumption of the domestically produced good but incur costs through the total stock of pollution stock externality in this setting we characterize cooperative as well as noncooperative pollution control strategies of the governments of the two countries that maximize the discounted stream of net benefits of a representative consumer it turns out that when the governments are restricted to use linear strategies noncooperative behavior results in overall losses for both countries if on the contrary governments use nonlinear markov perfect strategies and the discount rate is small enough a pareto efficient steady state pollution stock can be supported as a differentiable subgame perfect equilibrium thus the emergence of first best solutions cooperative outcomes does not require any institutional arrangements threats retaliation etc but can be brought about through the use of nonlinear markov perfect equilibrium strategies

electoral business cycles in oecd countries studies of oecd countries have generally failed to detect real economic expansions in the pre election period casting doubt on the existence of opportunistic political business cycles we develop a theory that predicts a substantial portion of the economy experiences a real decline in the pre election period specifically the political uncertainty created by elections induces private actors to postpone investments with high costs of reversal the resulting declines referred to as reverse electoral business cycles are larger the more competitive the electoral race and the greater the polarization between major parties we test these predictions using quarterly data on private fixed investment in ten oecd countries between 1975 and 2006 the results suggest that reverse electoral business cycles exist and as expected depend on electoral competitiveness and partisan polarization moreover simply by removing private fixed investment from gross domestic product gdp we uncover robust evidence of opportunistic cycles

nonlinear strategies in dynamic duopolistic competition with sticky prices abstract we discuss nonlinear strategies in an infinite horizon duopoly game with sticky prices where firms maximize their discounted sum of profit we construct a stationary feedback equilibrium without guessing value functions and feedback strategies that solve the hamilton jacobi equation for this purpose we study the auxiliary equation that is derived from the hamilton jacobi equation we show that the domain of the state space plays an crucial role in characterizing feedback equilibria and discuss several implications of this observation in particular we find that when the upper bound of the state space is not very high previously unknown feedback equilibria emerge

understanding technology choice in electricity industries a comparative study of france and denmark abstract the ability to predict how national electricity industries will respond to the challenges of competition and the demand for sustainability requires a good understanding of the nature of technological systems and a workable theory of technology choice so far two distinct theoretical perspectives the economic and socio political concepts of technological systems have competed for dominance in policy analysis and policy making this paper is a comparative study of the way in which the electricity industries of denmark and france responded to a series of challenges beginning with the 1973 oil crisis and continuing through the present push to liberalise electricity markets focussing on the forces that directed technological change in these two nations i examine the relative importance of economic and socio political factors my analysis indicates that socio political factors which together can be described as political traditions have shaped technology choice the danish and french electricity industries have pursued several objectives in addition to economic efficiency this has limited the function of free markets thus they should be understood as political structures whose most important characteristic is the distribution of power in this context the economic perspective represents a normative demand for the re arrangement of political values technological choice which radically departs from the status quo implies a significant redistribution of political power and is therefore very difficult

unintended consequences energy r d in a deregulated energy market abstract many advanced industrialized nations are substantially reducing their national public and private investments in energy research and development r d driven in part by changes occurring as a result of the deregulation of these nations energy sectors in particular funding for strategic energy r d aimed at developing future energy supply options eg fusion fission clean fossil energy renewable energy has been decreased substantially in both the public and private sectors in many of these nations these trends are now starting to be seen in the united states as it moves towards the deregulation of the nation s utilities the magnitude of the reductions in support for energy r d in the public and private sectors and the shift towards decidedly shorter term r d has profound implications for nations approaching deregulation though utility customers may be short term winners from the deregulation of utilities by paying less for energy a national failure to invest in energy r d is very likely to have long term negative impacts on national energy sectors the economies and environmental wellbeing

elections and the timing of devaluations this paper presents a rational political budget cycle model where devaluation acts as a tax on consumption due to a cash in advance constraint competent governments can signal their competency by reducing the rate of devaluation prior to elections when voters also ignore the degree to which governments are opportunistic i e the extent to which they are willing to distort the economy for electoral gain an incompetent opportunistic incumbent can reduce the rate of devaluation in the run up to an election the main theoretical implication in either setup that the rate of devaluation is significantly higher in the months following an election is consistent with evidence drawn from 26 countries in latin america d 2003 elsevier b v all rights reserved

analyzing the functional dynamics of technological innovation systems a scheme of analysis various researchers and policy analysts have made empirical studies of innovation systems in order to understand their current structure and trace their dynamics however policy makers often experience difficulties in extracting practical guidelines from studies of this kind in this paper we operationalize our previous work on a functional approach to analyzing innovation system dynamics into a practical scheme of analysis for policy makers the scheme is based on previous literature and our own experience in developing and applying functional thinking it can be used by policy makers not only to identify the key policy issues but also to set policy goals

explaining the role of incumbent utilities in sustainable energy transitions a case study of the smart grid development in china abstract smart grids sgs have been widely recognized as an enabling technology for delivering sustainable energy transitions such transitions have given rise to more complex government utility consumer relationships however these stakeholder relationships remain largely under researched this paper critically examines and explains the role of incumbent utilities in sustainable energy transitions using sg developments in china as a case study we have three major findings first china has developed an incumbent led model for deploying sgs second two incumbents the major state owned grid companies act as enablers of sg deployment they are strategic first movers and infrastructure builders of sgs they have also developed five types of networks as they increasingly reach out to other state actors businesses and electricity consumers thirdly these two grid companies also act as a fundamental block to structural changes in socio technical regimes disincentives to these large existing grid companies coupled with excessive reliance on them to provide public goods have resulted in major weaknesses in china s incumbent led model our findings have clear policy implications innovation in regulating incumbents is needed in order to provide sufficient regulatory incentives for advancing sg developments in china

why environmentalists resist trade liberalization we build a two country differential game model of polluting oligopoly to consider the effects of trade liberalization as in static models the opening of trade promotes competition but expands global pollution characterizing open loop and feedback strategies we derive a sufficient condition for losses from trade this losses from trade proposition could provide a rationale for persistent resistance to globalization by environmentalists

equilibrium political budget cycles political business cycle theories generally rely on nominal rigidities and voter myopia this paper offers an equilibrium theory that preserves some basic insights from earlier models though with significant refinements the political budget cycle emphasized here is in fiscal policy rather than output and inflation it arises via a multidimensional signal process one can consider the welfare implications of proposals to mitigate the cycle and the effects of altering the electoral structure copyright 1990 by american economic association

a model of the political economy of the united states we develop and test a model of joint determination of economic growth and national election results in the united states the formal model which combines developments in the rational choice analysis of the behavior of economic agents and voters leads to a system of equations in which the dependent variables are the growth rate and the vote shares in presidential and congressional elections our estimates support the theoretical claims that growth responds to unanticipated policy shifts and that voters use both on year and midterm elections to balance the two parties on the other hand we find no support for rational retrospective voting we do reconfirm in a fully simultaneous framework the naive retrospective voting literature s finding that the economy has a strong effect on presidential voting we find congressional elections unaffected by the economy except as transmitted by presidential coattails

environmental jolts institutional change and the creation of entrepreneurial opportunity in the us electric power industry the relationship between institutional change and entrepreneurship is poorly understood we build the theory in this area by tracing institutional change in the us electric power industry over a 40 year period our analysis shows that environmental jolts mobilize actors to reformulate institutions resulting in increased entrepreneurial opportunity when the institutional environment is stable we find that incumbent organizational forms and embedded logics present formidable obstacles to entrepreneurial activity environmental jolts however catalyze search processes and motivate the evaluation of current institutional logics specifically in the case of the electric power industry environments of abundance and regulation resulted in homogeneity of organizational structures and strategies and few entrepreneurial opportunities environments marked by scarcity and crisis however witnessed heavy scrutiny of existing institutional arrangements that eroded their taken for grantedness and symbolic value resulting in opportunities for entrepreneurial action

the feedback equilibria of a differential game of capitalism abstract the feedback equilibria of a capitalistic game described by kelvin lancaster are derived under concave utility functions with a constant degree of absolute risk aversion and standard production function it is shown that the equilibrium solution is unique if the rate of time preference and the constant degree of absolute risk aversion are sufficiently great some properties of the equilibrium solution are reported

technological transformations in history how the computer regime grew out of existing computing regimes abstract in the article we describe how the digital computer regime grew out of existing computing regimes through a process of transformation this transformation is conceptualised as a regime shift a change in the rule set that underpins technical change guiding innovative activity and output into particular directions examples of such rules are technical standards product standards user requirements design rules and organisational rules of how to produce what to produce the paper describes how the new digital computer regime had to start from structures of the old regimes and only later on developed its own distinctive elements it describes how specific changes in the existing computing regimes particularly the increasing division of labour the growing schematisation of computing activities and the development of more sophisticated punch card machinery contributed to the design and programming methods of the digital computer how the old programming methods constrained the development of the new regime is also discussed the article does not go into the actual processes of diffusion of digital computers into specific domains it does however discuss the role of market demand dynamics for the evolution of digital technology which too often is portrayed as a technology science push phenomenon

dynamic duopolistic competition with sticky prices the authors study duopolistic competition in a homogeneous good through time under the assumption that its current desirability is an exponentially weighted function of accumulated past consumption this implies that the current price of the good does not decline by as much to accommodate any given level of current consumption our an alysis is conducted in terms of a differential game it is found that the equilibrium price corresponding to the open loop nash equilibriu m strategies approaches the static cournot equilibrium price while th e equilibrium price corresponding to the closed loop nash equilibrium strategies which are subgame perfect approaches a price below it copyright 1987 by the econometric society

change actors in the u s electric energy system the role of environmental groups in utility adoption and diffusion of wind power we study the contribution of environmental groups to new technology adoption and diffusion by dominant incumbents building on institutional and social movement theory we develop a theoretical framework that sheds light on environmental groups as change actors we theorize that by approaching embedded key constituents with various strategic actions environmental groups affect taken for granted beliefs build legitimacy for renewable energy technologies and convince skeptical constituents to support the new technology we verify our theoretical framework with a case study of wind power development in colorado we find that environmentalists educate constituents on the benefits of the new technology engage in activities leading to regulatory and legislative decisions for wind while also providing direct assistance to the utility as a result utilities are both pressured and encouraged to adopt and diffuse wind power on a large scale this research directs attention to the role of environmental groups as change actors and the legitimating effects of their actions it highlights their part in creating a more favorable institutional environment for new technologies while directly influencing the incumbent s technology choice this paper contributes to an understanding of bottom up actor initiated changes in energy systems taking into account both the systemic technological infrastructure and the institutional context

creative destruction or mere niche support innovation policy mixes for sustainability transitions recently there has been an increasing interest in policy mixes in innovation studies while it has long been acknowledged that the stimulation of innovation and technological change involves different types of policy instruments how such instruments form policy mixes has only recently become of interest we argue that an area in which policy mixes are particularly important is the field of sustainability transitions transitions imply not only the development of disruptive innovations but also of policies aiming for wider change in socio technical systems we propose that ideally policy mixes for transitions include elements of creative destruction involving both policies aiming for the creation of new and for destabilising the old we develop a novel analytical framework including the two policy mix dimensions creation and destruction by broadening the technological innovation system functions approach and specifically by expanding the concept of motors of innovation to motors of creative destruction we test this framework by analysing low energy policy mixes in finland and the uk we find that both countries have diverse policy mixes to support energy efficiency and reduce energy demand with instruments to cover all functions on the creation side despite the demonstrated need for such policies unsurprisingly destabilising functions are addressed by fewer policies but there are empirical examples of such policies in both countries the concept of motors of creative destruction is introduced to expand innovation and technology policy debates to go beyond policy mixes consisting of technology push and demand pull instruments and to consider a wider range of policy instruments combined in a suitable mix which may contribute to sustainability transitions

innovation processes in large technical systems market liberalization as a driver for radical change abstract electricity supply is a large technical system which exhibits strong path dependencies and high barriers for radical innovations recent market liberalization however has initiated a fundamental restructuring the paper analyzes how liberalization has altered innovation processes in the field of electricity supply we examine three radical innovations under monopoly conditions and contrast the findings with the results from a survey on the innovation behavior of electric utilities in liberalized markets we argue that the selection environment for innovations has changed in various respects in our sample new options open to innovation activities have emerged at the level of the firm and utility strategies turn out to be more heterogeneous this may be interpreted as an increase in the variety of search processes which may lead to a mid term decrease of path dependencies

the non economics of the nuclear fuel cycle an historical and discourse analysis abstract the development of commercial nuclear power seems irrational while the nature of the nuclear fuel cycle has been well known since the early days of nuclear power the problem of disposing of nuclear waste has only recently become a central area of concern and research also commercial nuclear power has probably never been truly economically competitive as it has received large subsidies it is argued that the rise of nuclear power can be understood through the use of discourse analysis where the discourse of the modernising and interventionist state is well matched to the discourse of nuclear power as offering control and modernity

public policy as a part of transforming energy systems framing bioenergy in finnish energy policy abstract government interventions have been identified as important for energy systems change because they can either facilitate or hinder transitions toward more sustainable energy systems this article analyses how bioenergy options have been framed in finnish policy strategies and how the framing has changed over time the empirical material includes the content of 15 government programmes and nine national energy climate strategies on the basis of this assessment both the link between bioenergy framings in strategies and the actual transformation of finnish bioenergy systems are explored on the basis of bioenergy framings the development of energy policy can be divided into three phases support for domestic energy sources in 1979 1991 support for wood and industry based bioenergy in 1992 1998 and diversified bioenergy in the context of climate change in 1999 2010 for two decades primarily wood based bioenergy was supported despite alternative technological developments occurring elsewhere after the turn of the millennium the importance of climate policy increased and alternative bioenergy sources were raised on the government policy agenda also resulting in some new policy instruments rather than adopting a visionary outlook to guide system transformation climate and energy policy has strengthened those technological options that have been selected elsewhere if public policies are to enhance the shift toward low carbon sustainable energy systems they would need to be more comprehensive be more consistent over time and emphasise energy use more

us presidential elections and real gdp growth 1961 2004 in this paper i show that since 1960 an electoral cycle in us output growth can both be seen by the naked eye in the raw data and confirmed by a statistical analysis that allows for rational partisan effects as well as a wide range of control variables that is controlling for multiple lags of interest rate changes inflation money growth energy prices lagged output growth government spending or its growth and temporary partisan effects the timing of elections exerts a significant influence on quarterly real gdp growth

a dynamic conjectural variations model in the private provision of public goods a differential game approach abstract the purpose of this paper is to provide a reasonable microfoundation to justify the concept of a conjectural variations equilibrium which is often used in the literature on private provision of public goods with the help of the differential game by interpreting the steady state conjectures in a dynamic contribution game as the conjectural variations in the corresponding static game we derive explicit forms of nash or non zero conjectural variations depending on the choice of the strategy spaces furthermore we find that there may be uncountable many conjectural variations and the possibility of matching behavior i e positive conjectural variations when non linear markov perfect strategies are used and when the domain of a state variable is appropriately restricted

political business cycles and endogenous elections empirical research of political business cycles pbcs may suffer from endogeneity bias when incumbent governments have discretion to call for an early election using an instrumental variable iv routine on data from japan and the u k we find strong evidence to support the notion that election timing is a function of the economy rather than the macroeconomy being driven by elections as assumed in pbc in single equation regressions no evidence of political cycles are found but hausman tests suggest elections are endogenous in our regressions a monetary cycle in japan and an inflation cycle in the u k are uncovered through iv estimation

assessing the relationship between economic and ecological performance distinguishing system levels and the role of innovation in this article we critically discuss the different perspectives that are currently in use for assessing the relationship between ecological and economic performance based on a review of the literature we propose that research up till now has made use of four distinct system boundaries the firm markets production and consumption systems and economic systems making these boundaries explicit is helpful in interpreting the mixed results that have been obtained we describe the consequences of the choice for each of these system boundaries and look at implications for innovation we also argue that the production and consumption system boundary offers potential for further advances in the field and deserves more attention in future research

challenges for r d and innovation in energy abstract in recent years there has been a growing interest in the role of r d and innovation in energy efficiency and dealing with climate change to improve our knowledge in these matters a workshop was organized in barcelona spain in january 2014 this introduction to the special issue first presents some insights from the literature on challenges for r d and innovation in energy the second section summarises the articles from this workshop that make up this special issue and that provide new insights into innovation in energy all the articles include energy policy recommendations based on the empirical analyses carried out

deregulation market competition and innovation of utilities evidence from japanese electric sector this paper explores the determinants of electric utility innovation and examines the impact of electric sector deregulation and market competition on it using a balanced panel database of nine japanese utilities from 1978 to 2014 both input r d expenditure and output patent application number and patent quality aspects of innovations are examined the empirical results indicate that deregulation and market competition decrease the former but increase the latter these results are followed by a discussion on why this scenario occurs the results also suggest that after deregulation utilities focus more on short term business oriented r d projects hence we call for governments to support long term public oriented and environmental research in the electric sector

non linear strategies in a linear quadratic differential game abstract we study non linear markov perfect equilibria in a two agent linear quadratic differential game in contrast to the literature owing to tsutsui and mino 1990 nonlinear strategies in dynamic duopolistic competition with sticky prices journal of economic theory 52 136 161 we do not associate endogenous subsets of the state space with candidate solutions instead we use the catching up optimality criterion to address the possibility of infinitely valued value functions applying sufficiency conditions for existence based on those in dockner et al 2000 differential games in economics and management science cambridge university press cambridge yields the familiar linear mpe and a condition under which a continuum of non linear mpes exists these include as their limit a previously unreported piecewise linear mpe the condition relaxes with increasing patience allowing more efficient steady states thus suggesting a folk theorem for differential games as the lower state and control bounds go to the non linear strategies are eliminated

getting round the lock in in electricity generating systems the example of the gas turbine abstract the purpose of this paper is to show how in a situation of lock in in the environment of electricity generation a new technology can succeed in overcoming this situation and become competitive our study will show that it is possible to get round the lock in by bringing into play the increasing returns of adoption in particular production niches where the existence of powerful constraints of techno economic consistency leads to a path of increasing specification then a hybridization of the competing technologies will allow the new technology to emerge from the original niche and take advantage of the increasing returns of adoption which were hitherto the reserve of the former technology we shall then draw lessons from the example of the gas turbine in comparison with the basic model of b arthur

energy market reforms in turkey and their impact on innovation and r d expenditures abstract energy sector is encountering serious problems which can be solved by technological innovations and increasing r d expenditures on the other hand energy market reforms notably the establishment of competitive electricity and natural gas markets have resulted in a decrease of government energy r d expenditures in most countries furthermore there are rising concerns that private energy r d expenditures are also declining as a result of energy market reforms and companies are choosing customer oriented innovations which may jeopardize the deployment of sustainable and renewable energy technologies turkey initiated energy market reforms in 2001 and has been trying to establish competitive electricity and natural gas markets since then a survey of electricity and natural gas transmission and distribution companies in turkey showed that nearly all of these companies have refrained r d expenditures and have made organizational innovations mostly moreover government energy r d expenditures are very low compared to developed countries and enterprises are still trying to adapt to new market conditions nonetheless energy market reforms may have positive effects on r d expenditures and innovations as turkey completes privatization of distribution companies eliminates uncertainties in electricity and natural gas markets and take measures to increase collaboration among enterprises universities and government agencies

partisanship and economic behavior do partisan differences in economic forecasts predict real economic behavior survey data regularly show that assessments of current and expected future economic performance are more positive when a respondent s partisanship matches that of the president to determine if this is a survey artifact or something deeper we investigate whether partisanship is associated with behavioral differences in economic decisions we construct a new data set of county level quarterly taxable sales to examine the effect of partisanship on consumption consumption change following a presidential election is correlated with a county s partisan complexion a result consistent with partisans acting outside the domain of politics in accordance with the opinions they express in surveys these results support an expansive view of the role of partisanship in mass politics and help validate surveys as a method for studying political behavior

transparency political polarization and political budget cycles in oecd countries we investigate the effects of fiscal transparency and political polarization on the prevalence of electoral cycles in fiscal balance while some recent political economy literature on electoral cycles identifies such cycles mainly in weak and recent democracies in contrast we show conditioning on a new index of institutional fiscal transparency that electoral cycles in fiscal balance are a feature of many advanced industrialized economies using a sample of 19 oecd countries in the 1990s we identify a persistent pattern of electoral cycles in low er transparency countries while no such cycles can be observed in high er transparency countries furthermore we find in accordance with recent theory that electoral cycles are larger in politically more polarized countries

policy instruments fostering wind energy projects a multi perspective evaluation approach abstract during the last decade a large number of policy instruments have been developed and implemented all over europe aiming at supporting renewable energy project development however the success of the different policy approaches varies significantly given the very different mechanisms of the diverse instruments the design or the selection of appropriate instruments may cause methodological difficulties in order to support instrument selection economists have developed several evaluation criteria however this paper states that most of the typically proposed and applied criteria catalogues still neglect the interests and requirements of important stakeholder groups this paper therefore proposes a more integrated evaluation approach taking into account the different interests of all relevant stakeholder groups in the three fields renewable energy business especially wind industry policy making and conventional power business

estimation of limited dependent variable models with dummy endogenous regressors applied economists have long struggled with the question of how to accommodate binary endogenous regressors in models with binary and nonnegative outcomes i argue here that much of the difculty with limited dependent variables comes from a focus on structural parameters such as index coefcients instead of causal effects once the object of estimation is taken to be the causal effect of treatment several simple strategies are available these include conventional two stage least squares multiplicative models for conditional means linear approximation of nonlinear causal models models for distribution effects and quantile regression with an endogenous binary regressor the estimation strategies discussed in the article are illustrated by using multiple births to estimate the effect of childbearing on employment status and hours of work

political parties and the supply side of the economy the provision of physical and human capital in advanced economies 1960 90 theory partisan tenure of government in contrast to institutionalist and structural approaches is used to explain the nature of governmental strategies to affect the supply side of the economy the provision of the input factors capital and labor hypotheses supply side economic strategies are a function of the party in office left wing governments spend heavily in physical and human capital formation to raise the productivity of factors and the competitiveness of the economy rightwing governments rely instead on private agents to maximize economic growth the organization of the domestic political economy and the international economy which place heavy limits on the capacity of parties to affect the conduct of macroeconomic policies hardly constrain the choice of supply side economic strategies methods regression analysis of data for levels of public spending on gross fixed capital formation and on education in oecd nations from 1960 to 1990 results supply side policies conform to partisan preferences throughout the period examined the institutional configuration of the economy affected policies jointly with government partisanship until the oil shock but not afterwards economic openness does not constrain the choice of supply side policies

government affiliated intermediary organisations as actors in system level transitions the article draws from two theoretical fields innovation intermediation and sustainability transitions to examine the role of government affiliated intermediary organisations in system level transitions the role of intermediaries working between actors producers and users entrepreneurs and adopters idea generators and funders has seldom been specifically addressed in the transitions literature thus the role of intermediary organisations in enacting change in socio technical regimes particularly of intermediaries falling between traditional public sector and private sector actors is of interest in this article empirical analyses of two finnish organisations sitra and motiva show that government affiliated intermediaries are likely to engage in strategic niche management processes in diverse ways each organisation having its own distinct characteristics the analysis also points out that to get from niches to transition sustained systemic intermediaries are crucial in articulating new visions and expectations government affiliated intermediaries may make an important contribution to sustainability transitions by initiating and managing new policy or market processes and by acting as an impartial contact point or voice for new networks of actors while independence from public administration is likely to facilitate networking too neutral a stance or limited temporal engagement may reduce the transition facilitating effects

electricity sector liberalisation and innovation an analysis of the uk s patenting activities abstract liberalisation has had a marked effect on innovative activities in the electricity industry in particular electricity reforms have resulted in a reduction in r d spending in the sector r d and patenting activities are respectively regarded as innovative inputs to and outputs from technological progress the present paper examines the effect of the reforms on patenting activity in the uk electricity sector the results indicate that electricity related patents in non nuclear and renewable technologies have increased in the post liberalisation period we attribute this trend to the increased commercialisation of the sector while this development is positive we argue that a lasting decline in r d will in the longer run reduce technological progress and innovation in the sector in order to maintain the pace of innovation we discuss the need to design a new framework for innovation systems that is commensurate with the functioning and incentive mechanisms of a liberalised sector

innovation systems and inertia in r d location norwegian firms and the role of systemic lock in abstract this paper seeks to enquire why firms ceteris paribus tend to concentrate their r d activities at home using a systems of innovation si approach we argue that r d inertia is associated with structural inertia and resultant systemic lock in interaction within an si is a self reinforcing mechanism which may or may not lead to ex post efficiency lock in can be efficient when technologies and institutions maintain the competitiveness of firms on the other hand radical innovations or technological discontinuities may require new institutions and resources but systemic lock in may prevent rapid reaction firms can use a voice strategy by intervening to modify the appropriate institutions in the existing si or an exit strategy by seeking alternative si which more closely fit their needs in the case of norway two groups of firms exist group a benefit from a systemic lock in these are large firms in traditional sectors which are highly embedded and around whom the norwegian si has been built these firms engage in voice and loyalty group b are in science based sectors for whom lock in results in inefficiencies and use exit slowly expanding r d abroad to seek competences in technologies not available domestically

why has us policy uncertainty risen since 1960 we consider two classes of explanations for the rise in policy related economic uncertainty in the united states since 1960 the first stresses growth in government spending taxes and regulation a second stresses increased political polarization and its implications for the policymaking process and policy choices

when outcomes are the reflection of the analysis criteria a review of the tradable green certificate assessments abstract the tradable green certificates tgc framework is a prevalent policy support scheme enacted to stimulate investments in electricity from renewable energy sources res e in several countries including sweden and norway the tgc framework is currently under reevaluation in this process academic literature plays a crucial role in reflecting the outcomes of this policy framework the outcomes however are often limited by the analysis criteria which reflect what has been accounted for or disregarded when assessing the performance of the tgc framework the analysis criteria also stress what is considered as a successful outcome given the importance of such criteria this paper presents an extensive and systemic literature review of academic publications assessing the performance of the tgc framework the findings are to provide an overview of the publications analysis criteria and outline their outcomes we also provide descriptive statistics for the publications and examine the average citation record of the publications that use various analysis criteria in order to explore their relative impact on later studies these findings can help policymakers put the assessments into perspective when reevaluating a country s tgc system they also suggest several intriguing directions for future studies in this field

sectoral systems of innovation and production the concept sectoral system of innovation and production provides a multidimensional integrated and dynamic view of sectors it is proposed that a sectoral system is a set of products and the set of agents carrying out market and non market interactions for the creation production and sale of those products a sectoral systems has a specific knowledge base technologies inputs and demand agents are individuals and organizations at various levels of aggregation they interact through processes of communication exchange co operation competition and command and these interactions are shaped by institutions a sectoral system undergoes change and transformation through the co evolution of its various elements 2002 elsevier science b v all rights reserved

political budget cycles and the civil service evidence from highway spending in us states abstract we study political budget cycles in infrastructure spending that are conditional on bureaucratic organization bureaucrats can facilitate or hinder politicians ability to engage in voter friendly spending around elections to test this idea we use civil service reforms undertaken by us states in the second half of the 20th century to study political budget cycles in highway spending under civil service and patronage we find that under patronage highway spending is 12 higher in election years and 9 higher in the year before an election by contrast under civil service highway spending is essentially smooth over the electoral cycle these findings provide a novel way through which civil service rules can stabilize government activity

firm organization industrial structure and technological innovation abstract the formal and informal structures of firms and their external linkages have an important bearing on the rate and direction of innovation this paper explores the properties of different types of firms with respect to the generation of new technology various archetypes are recognized and an effort is made to match organization structure to the type of innovation the framework is relevant to technology and competition policy as it broadens the framework economists use to identify environments that assist innovation

climate change and the slow reorientation of the american car industry 1979 2012 an application and extension of the dialectic issue lifecycle dilc model abstract this paper uses the dialectic issue lifecycle model dilc model to analyze the co evolution of the climate change problem and strategic responses from the american car industry the longitudinal and multi dimensional analysis investigates the dynamics of the climate change problem in terms of socio political mobilization by social movements scientists wider publics and policymakers it also analyses how u s automakers responded to mounting pressures with socio political economic and innovation strategies oriented towards low carbon propulsion technologies we use a mixed methodology with a quantitative analysis of various time series and an in depth qualitative case study which traces interactions between problem related pressures and industry responses we conclude that u s automakers are slowly reorienting towards low carbon technologies but due to weakening pressures have not yet fully committed to comprehensive development and marketing the paper not only applies the dilc model but also proposes three elaborations a the continued diversity of technical solutions and ups and downs in future expectations creates uncertainty which delays strategic reorientation b firms may develop radical innovations for political and social purposes in early phases of the model c issue lifecycles are also shaped by external influences from other problems and contexts

structural dependence of the state on capital a central claim of both marxist and neoclassical political theory is that under capitalism all governments must respect and protect the essential claims of those who own the productive wealth of society this is the theory of structural dependence of the state on capital using a formal model the internal logic and the robustness of the theory is examined we conclude that in a static sense the theory is false virtually any distribution of consumption between wage earners and owners of capital is compatible with continual private investment once an appropriate set of taxes and transfers is in place yet the state may be structurally dependent in a dynamic sense policies that once in place redistribute income without reducing investment do reduce investment during the period in which they are anticipated but not yet implemented

elections and the fed is there a political monetary cycle to understand the political causes of macroeconomic policy it is necessary to examine the institutions that actually make such policy and the incentives those institutions face an explanation of the political causes of united states monetary policy must treat the various institutions that are influential in the monetary policy process which are at a minimum the federal reserve fed and the executive including the president the treasury department and other advisors in the executive office of the president the reelection motive has proven useful in modeling presidential incentives in this article i investigate whether electoral incentives associated with the theory of the political business cycle pbc can help to explain the behavior of the fed over the last quarter century the political business cycle has had a curious hold on modern political economy while the empirical evidence in favor of the cycle is far from overwhelming its theoretical importance leads to continuing empirical

the impact of central bank independence on political monetary cycles in advanced and developing nations this paper examines the extent to which monetary policy is manipulated for political purposes during elections we do not detect political monetary cycles in advanced countries or developing nations with independent central banks we do find evidence however in developing countries that lack central bank independence furthermore we find some evidence that these cycles are not caused by monetization of election related fiscal expansions this suggests that pressure by politicians on the central bank to exploit the phillips curve may be an important factor in generating political monetary cycles

political parties and the variable duration of business cycles a number of recent studies explore how political factors influence real economic activity with electoral models economic performance peaks near the election as in the retrospective model of nordhaus 30 electoral cycles also emerge at least in fiscal policy in the rational expectations model of rogoff and sibert 34 and rogoff 33 with partisan models economic activity differs systematically by party as in both the ideological model of hibbs 26 and the rationalexpectations model of alesina 1 economic activity surges after election of democratic presidents and recedes after election of republican presidents although recent tests of the electoral approach are supportive 21 22 24 25 the partisan approach enjoys the more compelling support 2 3 9 10 23 26 27 the electoral and partisan views are not mutually exclusive as the possibility of conflict between ideology and the desire to be reelected as the election approaches is well recognized indeed our evidence here is consistent with a combined electoralpartisan model the macroeconomic literature at large however has been slow to absorb accumulating evidence that the party affiliation of the incumbent president together with the timing of the electoral period are linked to real economic activity in this study we gauge the significance of these links for the united states and relate them to two important strands of the macroeconomic literature one strand the time series literature investigates the statistical properties of measures of real economic activity finding that these measures often exhibit nonconstant means and heteroscedastic variances in autoregressive integrated moving average arima models the conditional mean is a function of past innovations while the conditional variance is constant applications of arima and related models beginning with nelson and plosser 29 suggest that real economic activity for the united states exhibits near random walk behavior in autoregressive conditional heteroscedastic arch models the conditional variance is a function of past squared innovations while the conditional mean is constant applications of arch and related models beginning with engle 17 suggest that real activity exhibits heteroscedastic variances

technology and growth in oecd countries 1970 1990 this paper investigates the empirical regularities and differences in the relationship between technology and growth across 20 oecd countries from 1970 to 1990 while the broad association between gdp per capita and technology indicators is confirmed the relationships change over time and a variety of national patterns is found most countries have mainly relied upon one on the two engines of growth offered by technology either disembodied innovative activity proxied by r d intensity or technology embodied in investment proxied by capital formation per employee however with decreasing scope for catching up growth appears stronger where it is sustained by a more balanced use of the two engines of growth c 1995 academic press inc copyright 1995 by oxford university press

multi regime dynamics in the analysis of sectoral transformation potentials evidence from german utility sectors abstract network bound infrastructure systems as electricity gas water and telecommunications are currently undergoing transformations on various levels and dimensions liberalization technological innovations and socio cultural dynamics are part of this for analyzing these ongoing transformation dynamics as well as exploring future developments of utility systems a theoretical concept is necessary which spans production consumption and governance different levels and also different sectors this paper argues that the multi level perspective is a fruitful starting point allowing the identification of interrelated transformation dynamics in production consumption and governance but that multi regime dynamics need more emphasis particularly in a future oriented analysis

the perils of polarization economic performance in the postcommunist world perhaps the most striking feature of the postcommunist transformation is the tremendous variation in rates of economic growth across countries to account for these differences this article develops an alternative to the j curve and partial reform views that currently dominate discussions of the politics of economic reform this approach treats economic performance as a political struggle between ex communist and anticommunist factions engaged in a war of attrition over economic and political resources using a pooled time series analysis of economic growth across twenty five postcommunist countries for the period 1990 98 it finds that political polarization between ex communist and anticommunist factions has had a devastating effect on economic growth where these competing factions have had roughly equal power and have struggled over the economic rules of the game as in bulgaria or ukraine economic growth has been slow in contrast where either ex communist or anticommunist factions have dominated the political scene as in estonia or uzbekistan economic performance has been much better in addition economic growth has followed the electoral calendar in polarized countries as elections approach and the odds of a change in economic policy increase growth rates have plummeted in polarized countries these findings have implications for studies of the postcommunist transformation the political business cycle and the politics of economic reform more generally

meso level factors in technological transitions the development of td scdma in china this paper uses an industry case study of technological transition from second generation 2g to third generation 3g networks in china to unfold how meso level factors drove the development of td scdma china s home born 3g standard in this purposive transitional process under the coordination of a central authority multiple regime actors government agencies engaged in bargaining negotiation and consensus building that determined the developmental directions and outcome of td scdma td scdma proved to be a political success but an economic failure the policy implications are profound in particular as the silo regulatory model of policy making which focuses on a single industry is gradually replaced by a collective model involving interindustry players issues about how to manage the collective model pose a serious challenge to policy makers in china and other emerging countries the paper provides evidence for the importance of meso level factors in the multi level perspective mlp framework of sociotechnical transitions