nonrenewable resource scarcity nonrenewable resource theory often is summarized by hotelling s rule this paper reviews theoretical extensions and empirical investigations of resource extraction models observed data are often inconsistent with the hotelling rule suggesting that other characteristics of nonrenewable resource supply including exploration heterogeneous ore quality technological progress and capital investment are important determinants of the dynamic behavior of resource prices given the persistent recurrence of concern about nonrenewable resource scarcity measures of nonrenewable resource scarcity and the empirical evidence for the time trends of those measures are reviewed finally the implications of nonrenewable resource scarcity for economic growth are examined

tariff evasion and rules of origin violations under the canada u s free trade agreement using product level data on trade between canada and the u s this paper presents evidence of tariff evasion and violation of the rules of origin occurring under the canada u s free trade agreement cusfta it shows that more imports go unreported at the destination country when tariffs are higher consistent with the tariff evasion hypothesis this result implies that the trade creation effect of a free trade agreement may in fact be due to less underreporting further this paper shows that the larger canadian tariff preference margin for the u s is associated with more goods originating in third countries being transshipped through the u s territory for re export the preference margin is also positively correlated with the value of excess imports from the u s which qualify for preferential treatment both results suggest the presence of persistent violations of cusfta s rules of origin a l aide de donnees au niveau des produits sur les flux de commerce entre le canada et les etats unis on montre qu il y a evitement de tarif et violation des regles d origine dans les operations de l accord de libre echange canada etats unis on montre que davantage d importations ne sont pas declarees au point de destination quand les tarifs sont eleves dans l esprit meme de l hypothese d evitement de tarif ce resultat implique que l effet de creation de commerce d un accord de libre echange peut en fait etre attribuable a moins de sous declaration de plus le texte montre que les plus grandes marges preferentielles des tarifs avec les etats unis sont associees a davantage de biens en provenance de tiers pays et convoyes a travers le territoire americain pour re exportation la marge preferentielle est aussi positivement co reliee avec la valeur des importations excedentaires en provenance des etats unis qui se qualifient pour un traitement preferentiel ces deux ensembles de resultats suggerent la presence persistante de violations des regles d origine de l accord de libre echange canada etats unis

import price elasticities reconsidering the evidence recent economic geography and trade empirical studies based on monopolistic competition suggest high levels of trade price elasticities between 3 and 1 1 however price elasticity estimations in trade equations using unit values as price proxies usually lead to lower values of around unity we show that those inconclusive results may be due to some misspecification in these equations as well as measurement errors in prices when suit able instrumental variables are used within a panel of industrialized countries we obtain high price elasticities the majority ranging from i to 13 the highest estimates correspond to industries producing homogeneous goods jel classification c2 c3 and f 1

the political economy of opec abstract we develop a conceptual model that captures opec pricing behavior and apply it to explain the large gap observed between domestic fuel prices in opec countries and prices in the rest of the world we model opec as a cartel of nations not firms and assume that politicians use two instruments production quotas and domestic fuel consumption subsidies the cartel of nations model suggests that introduction of alternatives to petroleum products may lead opec to reduce exports and increase domestic fuel consumption the empirical analysis suggests that when opec sets production quotas it places similar weights on consumer and producer surplus but when opec countries set domestic fuel subsidies on average 6 more weight is given to consumer surplus with some of the opec countries pursuing very aggressive domestic cheap fuel policies

terms of trade and global efficiency effects of free trade agreements 1990 2002 this paper infers the terms of trade effects of free trade agreements ftas implemented in the 1990s we estimate large fta effects on bilateral trade volume in 2 digit manufacturing goods from 1990 2002 using panel data gravity methods to resolve two way causality the terms of trade changes implied by these volume effects are deduced for 40 countries plus a rest of the world aggregate using an endowments general equilibrium model some countries gain over 5 of real manufacturing income some lose less than 0 3 global efficiency of manufactures trade rises 0 9 based on a distance function measure of iceberg melting

capital investments and resource extraction from non identical deposits abstract taking account of necessary investments in physical capital we characterize the optimal investment and extraction program for exploiting several non identical deposits of an exhaustible resource under the given technology assumptions capital investments will be concentrated up front if deposits are identical in the case of non identical deposits it may be optimal to have investments spread out over time moreover the smallest deposit is depleted first

paradoxical consumption behavior when economic activity has environmental effects in a model where enhanced economic activity accumulation of produced capital leads to environmental eects depletion of natural capital competitive steady states corresponding to dierent discount rates are compared for positive discount rates the steady state stock of produced capital may exceed the size maximizing sustainable consumption this implies paradoxical consumption behavior that is a lower discount rate may be associated with lower steady state consumption the theoretical significance of this phenomenon for intergenerational equity is discussed and examples indicating the empirical relevance of the underlying assumptions are presented

do property rights promote investment but cause deforestation quasi experimental evidence from nicaragua abstract many policymakers argue that property rights decrease deforestation some theoretical papers also make this prediction arguing that property rights decrease discount rates applied to a long term investment in forestry however the effect is theoretically ambiguous the paper takes a novel instrumental variables approach based on nicaragua s agrarian reform to test for the effect using a new dataset nicaragua s 2001 agricultural census it finds that property rights significantly increase deforestation the model supported by the data suggests a likely mechanism for this relationship property rights increase investment increasing agricultural productivity and therefore the returns to deforestation

the evolution of hyperbolic discounting implications for truly social valuation of the future abstract we explore the standard expected utility model and alternatives to it we then examine the behavioral and neurological evidence for hyperbolic discounting we discuss evidence related to the neurological and behavioral evolution of discounting in non human animals and in humans we explore new findings about the importance of sociality in human behavior and the implications for truly social time preference finally we discuss the implications of the neurological evidence on discounting for social environmental valuation in particular the implications for very long run decisions such as those involved in climate change mitigation and biodiversity preservation

performance measurement expectancy and agency theory an experimental study theoretical analyses of optimal performance measures are typically performed within the realm of the linear agency model this model implies that for a given compensation scheme the agent s optimal effort is unrelated to the amount of noise in the performance measure in contrast expectancy theory as developed by psychologists predicts lower effort levels for noisier performance measures we conduct a real effort laboratory experiment and find that effort levels are invariant to changes in the distribution of the noise term i e to expectancy this suggests that enriching the economic linear agency model commonly applied within this area by including an expectancy parameter is not needed

pay performance sensitivity and production uncertainty abstract the pay performance sensitivity of linear incentive contracts can increase with increasing production uncertainty depending upon the timing and nature of this uncertainty this provides a possible explanation for the failure of empirical tests to yield convincing support for a negative relationship

international corporate tax avoidance a review of the channels magnitudes and blind spots this paper reviews the rapidly growing empirical literature on international tax avoidance by multinational corporations it surveys evidence on main channels of corporate tax avoidance including transfer mispricing international debt shifting treaty shopping tax deferral and corporate inversions moreover it performs a meta analysis of the extensive literature that estimates the overall size of profit shifting we find that the literature suggests that for the most recent year a 1 percentage point lower corporate tax rate compared to other countries will expand before tax income by 1 5 percent an effect that is larger than reported as the consensus estimate in previous surveys and tends to be increasing over time the literature on tax avoidance still has several unresolved puzzles and blind spots that require further research

multiperson tournaments an experimental examination modern hierarchical organizations like corporations must motivate agents to work hard given their pyramid structure it is not surprising that one commonly used motivator is the promotion tournament in such tournaments agents compete to advance to positions at higher organizational levels though these tournaments are common little research has empirically looked at the interface of organizational structure and tournament design this paper aims to take a step in filling this void by comparing the performance of various tournament designs using controlled laboratory techniques

is the wto passe the wto has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements ptas should economists see this as an efficient institutional hand off where the wto has carried trade liberalization as far as it can manage and is now passing the baton to ptas to finish the job this paper surveys a growing economics literature on international trade agreements and argues on this basis that the wto is not passe rather and subject to some caveats this survey of research to date suggests that the wto warrants strong support while a more cautious view of ptas seems appropriate

traditional production communal land tenure and policies for environmental preservation in the south pacific abstract instead of maximizing the expected monetary return of land usage pacific islanders manage land so that it renders an optimal mix of cash income and non monetary cultural goods evidence from cropping patterns in fiji suggests that the production of these cultural goods is linked to traditional agriculture which produces less ecological deterioration than its commercial counterpart the capacity for village land to support traditional activities is highest under a regime of communal land tenure where decision making is centralized a regime of private land tenure lowers this capacity because decentralized decision making raises the coordination costs of preserving special areas of land for traditional purposes this means that if development planners rush to replace traditional regimes of communal land tenure with modern systems of private land ownership they might also observe a correlated increase in land degradation even if new codes of private property are perfectly enforceable a two sector growth model can be used to show that the welfare neutral bribe required from the government to increase the amount of village land preserved in the steady state is lower under a regime of communal land tenure one counterintuitive result is that a high subjective discount rate does not always imply a high level of environmental degradation observations from the south pacific have application for environmental policy in other developing countries

peeling away the layers impacts of durable tariff elimination abstract we demonstrate that durable mfn tariff elimination affects trade patterns through several layers and magnitudes of effects are sizable the wto information technology agreement s ita unique setting allows us to overcome the challenges associated with identifying effects of non discriminatory trade policies due to two reasons i ita constitutes a quasi natural experiment of several passive signatories joining the agreement as an unavoidable part of pursuing a larger policy objective and ii ita s partial coverage of the it sector provides a natural control group for identification based on cross product variation our analysis finds novel nonlinear impacts of tariff liberalization complete tariff elimination results in large additional trade gains over and above tariff reductions especially for intermediate goods the commitment to durable tariff elimination through wto bindings adds another two layers boosting both imports and exports more than equivalent unilateral reforms this commitment spurned development of a downstream it export sector in passive signatories

governance and timber harvests resource economics theory implies that risks associated with weak governance have an ambiguous impact on extraction with the net impact depending on the relative strengths of depletion and investment effects previous empirical studies have found that improved governance tends to reduce deforestation but to raise oil production here we present evidence that the marginal impact of improved governance on timber harvests in developing countries during 1984 2006 was nonmonotonic it tended to raise harvests in countries with weaker governance but to reduce harvests in countries with stronger governance this nonmonotonic impact occurred for both an index of governmental integrity corruption bureaucracy quality law and order and an index of governmental stability a simulation of hypothetical increases in these governance indices to the maximum 2006 values observed in the sample predicted that improved governance would reduce harvests in most countries but could raise harvests in some with large increases occurring in countries with the weakest governance

tenure security private time preference and use of natural resources among lowland bolivian amerindians abstract to estimate the effect of tenure security and private time preference on the use of different types of natural resources such as old growth and fallow forests fish and game we did a survey and a psychological experiment with 443 households in 42 villages of yuracare mojeno tsimane and chiquitano indians in the bolivian lowlands results of multivariate tobit regressions suggest that 1 among the yuracare tsimane and mojeno rates of private time preference had a small economic and statistical effect on the use of natural resources and 2 tenure security proxied by residence duration in the village and by conflict with abutters only affected the consumption of wildlife principally of game results suggest that public policies to improve property rights over natural resources among indigenous people might have greater immediate impact on the conservation of wildlife than on the conservation of forest cover

are regional trading arrangements trade creating an application of extreme bounds analysis in this study we use extreme bounds analysis to test the robustness of the hypothesis that regional trading arrangements rtas are trade creating extreme bounds analysis provides a more rigorous test of specification uncertainty than traditional econometric theory by incorporating prior information and using a systematic approach to testing the fragility of coefficient estimates the results show that the trade creation effect of most rtas is fragile using a least squares estimator where all weight is attached to the sampling distribution eight or more of the twelve rtas considered are found to be trade creating when the relative weight in the estimation is shifted from the sampling to the prior distribution the number of rtas that are trade creating falls to six at the 95 percent likelihood ellipsoid moreover when we specify that not all rtas are trade creating four rtas increase trade at the 95 percent likelihood ellipsoid at the extreme bounds when all weight is attached to the prior distribution none of the rtas are found to be trade creating as a result we conclude that the pervasive trade creation effect found in the literature reflects not the information content of the data but rather the unacknowledged beliefs of the researchers

extraction capacity and the optimal order of extraction the least cost first extraction rule for deposits with different extraction costs previously has been shown to be invalid in general equilibrium this paper demonstrates that this rule also does not hold in partial equilibrium when extraction capacity is limited necessary and sufficient conditions for several surprising extraction orders are presented if extraction from a high cost resource is constrained it may be optimal to begin extraction from a high cost deposit or backstop strictly before extracting from a lower cost deposit if extraction from a low cost resource is limited it may be optimal to exhaust a high cost deposit strictly before the low cost deposit is exhausted or to abandon extraction temporarily from a high cost deposit and then to exhaust it later the analysis demonstrates how extraction constraints affect the order of extraction and shows that certain cost reversals are caused by limited extraction capacity rather than by the general equilibrium definition of extraction costs

a neo austrian five process model with resource extraction and pollution abatement abstract this paper describes a neo austrian approach to analyse long run economy environment interactions the modelling framework incorporates resource use and pollution as integral components of production processes we start our study by reviewing the neo austrian capital theoretic approach a neo austrian model is developed and presented in input output form and the corresponding accounting prices are derived by using this representation an intertemporal simulation approach is embodied by establishing the optimization of an intertemporal social welfare function results from the optimization approach are discussed and also discount rate variations are assessed in terms of their effects on the model economy

motivating employees to act ethically an expectancy theory approach employees face an array of moral issues in their everyday decision making environmental concerns employee and community welfare and the interests of other companies competitors customers and suppliers are only a few examples yet businesses do not always address the issue of how employees should assess the moral import of their actions and incorporate these considerations into their decisions as a result moral considerations are often ignored leading to unethical practices which may hurt the long term interests of the company in this paper we present a model to help eliminate this problem our model uses expectancy theory a process theory of motivation to show that teaching employees to engage in moral reasoning and creating a corporate culture in which ethical behavior is both encouraged and rewarded can increase the likelihood that a company s employees will act ethically

an alternative welfare decomposition for customs unions the authors present a means of evaluating the effects of customs union formation by a decomposition of the overall welfare effect into two components the consequences of induced changes in domestic prices and the effects on income of adjustments in tariff rates and endogenous changes in the pattern and volume of trade a virtue of the proposed decomposition is that it is path independent providing unambiguous results for analyses of both marginal and discrete changes in tariff rates this property means that the decomposition may be numerically implemented to provide better insight into the welfare effects of economic integration

do south south trade agreements increase trade commodity level evidence from comesa south south trade agreements are proliferating yet the impact of these agreements is largely unknown as existing north north and north south micro level studies are likely to yield misleading predictions for south south trade agreements this paper estimates the impact of comesa on uganda s imports between 1994 and 2003 detailed import and tariff data at the 6 digit harmonized system level are used for more than 1 000 commodities based on a difference in difference estimation strategy the paper finds that in contrast to evidence from aggregate statistics comesa s preferential tariff liberalization has not considerably increased uganda s trade with member countries on average across sectors the effect however is heterogeneous across sectors finally the paper finds no evidence of trade diversion effects resultats au niveau des biens pour le comesa les accords commerciaux sud sud proliferent or l impact de ces accords reste largement inconnu car les micro etudes des accords nord nord et nord sud sont susceptibles de mener a des previsions trompeuses quand il s agit d accords sud sud ce texte evalue l impact de comesa sur les importations de l ouganda entre 1994 et 2003 on utilise des donnees detaillees sur les tarifs et les importations au niveau des codes a six chiffres pour plus de 1000 biens a l aide d un modele d ecart dans les differences on decouvre que contrairement a ce que suggerent les statistiques agregees la liberalisation des tarifs preferentiels de comesa n a pas accru considerablement le commerce avec les pays membres en moyenne dans tous les secteurs l effet est different selon les secteurs de plus il appert qu il n y a pas eu diversion du commerce

trade deflection and trade depression this is the first paper to empirically examine whether a country s use of an import restricting trade policy distorts a foreign country s exports to third markets we first develop a theoretical model of worldwide trade in which the imposition of antidumping and safeguard taris or trade remedies by one country causes significant distortions in world trade flows we then empirically test this model by investigating the eect of the united states use of such import restrictions on japanese exports of roughly 4800 products into 37 countries between 1992 and 2001 our estimation yields evidence that us restrictions both deflect and depress japanese export flows to third countries imposition of a us antidumping measure against japan deflects trade as the average antidumping duty on japanese exports leads to a 5 7 increase in japanese exports of the same product to the average third country market the imposition of a us antidumping measure against a third country depresses trade as the average us duty imposed on a third country leads to a 5 19 decrease in japanese exports of that same product to the average third country s market we also document the substantial variation in trade deflection and trade depression across dierent importing countries and exported products

proliferating regional trade arrangements why and whither this paper investigates why regional trade arrangements rtas are proliferating extensively and how the effects of multiple rtas by interacting with each other evolve over time our empirical analysis based on an extended gravity model utilising a large panel dataset of 175 countries from 1948 to 1999 shows that rtas on average increase global trade by raising intra bloc trade without damaging extra bloc trade the net trade effects however heavily depend on the types of rta strategic evolution over time which we categorise as expansionary rtas duplicate rtas or overlapping rtas we find that countries excluded from an rta can benefit more from duplicating a separate rta than from joining an existing rta this result explains why the number of bilateral trade blocs rather than the membership size of existing rtas is currently exploding we also find that the net trade creating effects of rtas are substantially lower for countries participating in overlapping rtas this result suggests that it is less likely that the currently proliferating rtas will completely merge and lead the world economy to global free trade our empirical results are robust to controlling for the characteristics of countries that may influence the impact of rtas

deforestation and seigniorage in developing countries a tradeoff abstract most of countries covered by natural forests are developing countries with limited ability to levy taxes and restrained access to international credit markets consequently they are amenable to draw heavily on two sources of government financing namely seigniorage and deforestation revenues first we develop a theoretical model emphasizing a substitution effect between seigniorage and deforestation revenues second a panel data econometric analysis over the 1990 2010 period confirms our findings consequently a tighter monetary policy hastens deforestation third we extend the theoretical model and show that international transfers dedicated to forest protection can upturn the positive link between tighter monetary policies and deforestation and then discuss the relevance of this finding with respect to recent institutional arrangements

welfare and integration this article argues that the terms of trade and volume of trade taxonomy from the theory of tariffs constitutes an attractive alternative to viner s trade diversion and creation effects for the analysis of preferential trading arrangements in applications of the alternative approach the article establishes that results by lipsey and riezman on large versus small preunion trade flows for choice of partners are not contradictory and that under some conditions a small country s optimal strategy is to seek membership of multiple free trade areas

optimal pricing of environmental and natural resource use with stock externalities abstract underlying some of the most pressing environmental problems are the interlinked resource and environmental stock externalities with threshold effects using a simple dynamic model it is shown how in the face of such externalities the static market based policy instruments such as pigouvian taxes should be modified it is shown that even if for an initial period there is going to be no pollution stock damage the optimal policy still requires that abatement begins immediately and at increasing rates simulation of the model for the case of fossil fuel burning and the consequent global warming shows that the optimal carbon tax and therefore the optimal control strategy is particularly sensitive to changes in the marginal abatement cost and the level of fossil fuel demand policy simulations contrast the optimal control policy with and estimate the welfare losses from alternative policies deriving from arbitrary tax paths the latter include i a no tax policy ii a constant carbon tax rate iii the european community s proposed carbon tax path and iv a delayed optimal tax path

a qualitative characterization of the competitive nonrenewable resource extracting firm abstract using variational differential equations a systematic qualitative analysis is carried out for the competitive nonrenewable resource extracting firm the parameters of interest are the output price variable input price discount rate lease length initial resource stock and various tax rates the effects of changes in these parameters on the entire optimal time paths of the current shadow value of the stock the resource stock and the extraction rate are characterized in the perturbed phase plane

discount rate choice and efficiency in exhaustible resource allocation employing a simple continuous time model j rowse 1990 finds small percentage social welfare losses when using the wrong discount rate to allocate an exhaustible resource this study finds the same result using a discrete time model incorporating several important complexities including rising unit supply costs and demand functions that distinguish among short term medium term and long term price responses certain non efficiency performance measures are found to vary much more in percentage terms than social welfare as the improper rate diverages from the social rate it is argued that these results are general and their implications are briefly discussed

third country effects of regional trade agreements does regionalism negatively impact non members to answer this question we examine the effect of regional trade agreements rtas on imports from non members and the tariffs that they face using data from six rtas in latin america and europe we do not find evidence that implementation of the regional agreements is associated with trade diversion from third countries to regional members using detailed industry data on preference margins and most favoured nation mfn tariffs for three trade agreements in latin america over 12 years we find that greater preference margins do not significantly reduce imports from third countries we also look at the effect of preferences on external tariffs we find evidence that preferential tariff reduction tends to precede the reduction of external mfn tariffs in a given sector offering evidence of tariff complementarity overall the results suggest that regionalism does not significantly harm non members

the tenuous trade off between risk and incentives empirical work testing for a negative trade off between risk and incentives has not had much success the data suggest a positive relationship between measures of uncertainty and incentives rather than the posited negative trade off i argue that the existing literature fails to account for an important effect of uncertainty on incentives through the allocation of responsibility to employees when workers operate in certain settings firms are content to assign tasks to workers and monitor their inputs by contrast when the situation is more uncertain they delegate responsibility to workers but to constrain their discretion base compensation on observed output

the sales agent problem effort leisure allocation under performance pay as behavior towards risk the choice between safe and risky assets represents behavior towards risk more risk averse investors buy more safe assets we develop and test a general model that applies this intuition to the time allocation between risky effort and risk free leisure under linear incentives when risk increases with effort risk averse agents choose less effort but when risk is independent of effort effort choice is unaffected by risk preferences in many incentive contracts income risk is multiplicative with rather than additive to effort sales commissions being one example in such cases lower effort by the risk averse is a hitherto undocumented behavior towards risk jel c91 m52 j33

the conservationist s dilemma it is typically thought that conservation of natural resources is encouraged by low interest rates however when capital goods are used to extract the resource low interest rates may discourage rather than encourage conservation using a model of a capacity constrained extractive industry in competitive equilibrium i find the relationship between the initial rate of exploitation and the interest rate if capital is so important that for sufficiently high interest rates the industry is nonviable the graph of initial quantity versus the interest rate is u shaped the traditional result holds at small interest rates but not at large ones copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

how sensitive are latin american exports to chinese competition in the u s market this paper estimates the elasticity of substitution of u s imports using detailed trade data over the 1990 2003 period the authors use a two stage least squares framework in order to identify the elasticity parameter of interest the authors use the elasticity estimates to assess the extent to which latin american and chinese goods compete in the u s market by providing forecasts of how alternative policy scenarios may affect exports to the united states the analysis considers the following scenarios i currency revaluation in china ii elimination of u s tariffs on latin american exports under a hemispheric free trade agreement and iii the elimination of quotas on apparel and textile exports under the multi fiber agreement the findings show that a 20 percent appreciation of the renminbi reduces chinese exports to the united states by a fifth although since other regions increase sales to that market 0 5 percent for latin america u s imports decline by only 1 7 percent hemispheric free trade would increase latin america s exports to the united states by around 3 percent the removal of the quotas would lead to a sharp increase in chinese sales to the united states 40 percent but latin america would see its share of the u s market decline by around 2 percent 2 5 percentage points china s gains would come mainly at the expense of other regions of the world

trade in services and regional trade agreements do negotiations on services have to be specific trade in services has been on a substantial positive trend since the last decades and the number of regional trade agreements rta in force has increased regularly overtime however negotiations on services remain hesitant even at the bilateral level to evaluate the impact of rtas on trade in services a general classi cation as balassa s classi cation is not exactly appropriate to go through the 211 rtas noti ed to the wto permits a data analysis and then to sort rtas according to the own level of liberalization in services of every agreement i estimate a gravity equation using panel data covering the period 1999 2007 adding time varying dummies country and time

understanding international prices customers as capital the article develops a new theory of pricing to market driven by dynamic frictions of building market shares our key innovation is a capital theoretic model of marketing in which relations with customers are valuable we discipline the introduced friction using data on differences between short run and long run price elasticity of international trade flows we show that the model accounts for several pricing puzzles of international macroeconomics jel e13 f14 f31 f41 f44 m31

regionalism within multilateralism the wto trade policy review of canada the world trade organisation published a trade policy review of canada in 2003 in this paper we discuss the wto review and augment the discussion by presenting original data and reviewing the empirical literature the wto concludes that canada s trade regime is open and transparent but maintains barriers in a few important sectors we subject this claim to empirical scrutiny comparing canada s actual imports to a multilateral benchmark based on the gravity equation we show that canada imports about what should be expected given the size of its economy and its location in a second benchmarking exercise we show that canada s anti dumping initiations are in proportion to its imports and that canada s exports are targeted less by other countries anti dumping investigations than what might be expected based on canadian export levels like many other countries canada has pursued trade liberalisation through the world trade organisation while simultaneously signing multiple regional trade agreements our summary of the recent literature indicates that canada s regional trade agreements have generated more trade creation than trade diversion canada has also spurred imports from the least developed countries by unilaterally eliminating tariffs and quota barriers on 48 of the world s poorest countries in january 2003 we also discuss canadian progress in opening its agriculture and clothing industries overall we conclude that canada appears committed to advancing globalisation through multilateral trade liberalisation supplemented by unilateral and bilateral initiatives

ownership risk investment and the use of natural resources the effect of insecure ownership on ordinary investment and natural resource use is examined insecure ownership is postulated to depend on the type of government regime in power and the prevalence of political violence or instability the political determinants of economy wide investment are estimated from cross country data and the results are used to form an index of ownership security when introduced into empirical models of natural resource use this index has a significant and quantitatively important effect on the use of forests and petroleum contrary to conventional wisdom ownership risk slows resource use in some circumstances

the effect of the discount rate on depletion of exhaustible resources this paper argues that despite its widespread acceptance in the literature the basic proposition that a reduction an increase in the discount rate leads to greater conservation faster depletion of an exhaustible resource is not generally valid it shows that the effect of the discount rate on the rate of resource depletion depends on capital requirements for production of the substitute and extraction of the resource and on the size of the resource stock in fact it shows that there always exist at least two ranges of the resource stock size for which the effect is opposite to that conventionally believed

the nafta preference and us mexico trade aggregate level analysis this paper focuses on the us tariff preference afforded to mexico relative to non nafta trading partners and evaluates the trade effects of nafta in a manner consistent with the idea behind a preferential trading agreement the estimation technique exploits the time varying dimension of the tariff preference over 1989 to 2001 this is important because the tariff preference for mexico into the united states market existed prior to nafta further the nafta preference was phased in over time we find that a higher us tariff preference for mexico corresponds to increased us import demand for mexican goods and that a higher mexican tariff preference for the united states corresponds to increased mexican demand for us exports interestingly import demand was more responsive to changes in the tariff preference once nafta was in place than it was on average

should we worry about the failure of the hotelling rule abstract the continuing dependence of the global economy on fossil fuels is worrying because it imposes limits on growth due to the non renewable nature of these resources and also contributes to global climate change resource optimists believe that this is no reason to worry because the economy will always find a way to overcome these constraints their arguments however require that resource prices reflect the scarcity of non renewable resources which implies that they must obey the hotelling rule empirical analyses however show that the hotelling rule does not hold in reality which raises the question does the failure of the hotelling rule imply that social optimality is not achieved this paper argues that the answer depends on the reason for the failure if extraction and exploration costs or technological progress in these activities are the reasons for the failure a market failure is not implied and optimality may still be achieved but if the hotelling rule fails due to uncertain property rights or strategic interaction the market will surely fail to provide an optimal solution a market failure is likely to speed up resource consumption compared to the social optimum

when a high discount rate encourages biodiversity include land in a neoclassical growth model and introduce a standard biogeographic relation between species recliners biodiversity and land assume that species provide utility the optimal constant amount of land preserved for species is obtained from steady state conditions contrary to conventional wisdom a high discount rate preserves more land when the elasticity of substitution between goods and species exceeds unity or when this elasticity is less than unity and technology is such that the output effect of a change in the interest rate exceeds the substitution effect

trade diversion under selective preferential market access through its diverse trade preference schemes the european union provides different groups of developing countries with different degrees of market access this paper is the first to demonstrate empirically that such staggered market access induces sizable trade diversion to the detriment of relatively less preferred beneficiary countries in particular preferences granted to african caribbean and pacific economies are shown to impair the export performance of seven developing countries whose products only qualify for basic preferences under the generalized system of preferences exports to the european union decline by about 30 percent if the african caribbean and pacific tariff falls by 10 percentage points in terms of forgone trade volume losses for these relatively disadvantaged countries amount on average to 9 percent of their total trade with the european union depending on the country and its main exports these intra developing country distortions are driven by highly substitutable often labor intensive commodities

aggregation and linearity in the provision of intertemporal incentives we consider the problem of providing incentives over time for an agent with constant absolute risk aversion the optimal compensation scheme is found to be a linear function of a vector of n accounts which count the number of times that each of the n kinds of observable events occurs the number n is independent of the number of time periods so the accounts may entail substantial aggregation in a continuous time version of the problem the agent controls the drift rate of a vector of accounts that is subject to frequent small random fluctuations the solution is as if the problem were the static one in which the agent controls only the mean of a multivariate normal distribution and the principal is constrained to use a linear compensation rule if the principal can observe only coarser linear aggregates such as revenues costs or profits the optimal compensation scheme is then a linear function of those aggregates the combination of exponential utility normal distributions and linear compensation schemes makes computations and comparative statics easy to do as we illustrate we interpret our linearity results as deriving in part from the richness of the agent s strategy space which makes it possible for the agent to undermine and exploit complicated nonlinear functions of the accounting aggregates

trade policy under the gatt wto empirical evidence of the equal treatment rule a fundamental difference between multilateral trade agreements like the gatt and wto and a preferential agreement is the multilateral agreements inclusion of a most favoured nation principle though mfn requires that members implement policies that provide equal treatment to all gatt wto countries how far do members actually follow the mfn principle when so required we empirically investigate a sample of gatt wto trade disputes and the effect of successful dispute settlement negotiations on the disputed product trade of third country exporters to the defendant country we document evidence of trade liberalization consistent with defendant countries successfully applying the equal treatment rule jel classification f13 politique commerciale sous le regime gatt omc resultats empiriques de la regle du traitement equivalent une difference fondamentale entre les accords commerciaux multilateraux comme le gatt ou l omc et un accord preferentiel est que dans le premier cas on fait appel au principe de la nation la plus favorisee meme si ce principe requiert que les membres mettent en place des politiques qui assurent un traitement equivalent a tous les pays de l accord gatt omc reste a savoir jusqu a quel point les membres se soumettent a ce principe quand c est requis ce memoire etudie la question en faisant enquete sur un echantillon de disputes commerciales autour d accords de type gatt omc et sur l effet du succes des negociations dans la resolution de conflit sur le commerce du produit au caeur de la dispute en provenance de pays tiers exportant vers le pays qui se defend on montre que les resultats de la liberalisation du commerce sont consistants avec l application de la regle du traitement equivalent par les pays qui se defendent

using the wrong discount rate to allocate an exhaustible resource what are the social welfare implications of using the wrong discount rate to allocate an exhaustible resource utilizing a simple numerical model it is found that over the real discount rate range of 6 to 9 the welfare losses of employing a rate no more than 3 different from the social rate are small and decline as the social rate rises even for stringent supply circumstances however substantial transfers of surplus between producers and consumers occur as the improper rate deviates from the social rate other issues such as income distribution immediately loom larger when a discount rate is chosen

the hotelling rule in non renewable resource economics a reassessment harold hotelling s 1931 contribution is known for providing a basic principle the hotelling rule to the economics of non renewable resources nearly ninety years later empirical tests conclude the rule lacks empirical validity requiring strong amendments to describe the long term aggregate behavior of its target object on the basis of hotelling s unpublished archival material this paper revisits the place given to the hotelling rule in non renewable resource economics our reconstruction shows that hotelling s 1931 paper has been misinterpreted from the outset the hotelling rule was not valid for mineral resources in contrast the consideration of two inherent geological constraints alongside exhaustibility offered the opportunity for an alternative basic framework capable to generate bell shaped and u shaped equilibrium trajectories for supplies and prices respectively inspired by this unknown aspect of hotelling s work brought to light by our archival investigation we sketch this alternative basic model enabling non renewable resource economics to circumvent the empirical shortfalls of the hotelling rule

trade creation and trade diversion in the canada united states free trade agreement in this paper the changes in trade patterns introduced by the canada united states free trade agreement are examined variation in the extent of tariff liberalization under the agreement is used to identify the impact of tariff liberalization on the growth of trade both with member countries and non member countries data at the commodity level are used and the results indicate that the canada united states free trade agreement had substantial trade creation effects with little evidence of trade diversion jel classification f13 f14

the effect of decentralized governance on timber extraction in european russia good governance is often promoted for economic growth but its impact on natural resource use in developing and transitional economies is not well understood for example many scholars promote improved governance as a means to slow resource use whereas others have found that better governance increases extractive resource activities in this paper we use within country variation in russia to test the impact of governance on timber harvesting using a reduced form fixed effects model and satellite based estimates of forest cover we find a statistically significant and non linear effect of governance on the area of timber harvested for a marginal improvement in governance timber harvesting increases but this effect decreases at high levels of governance these results are robust to alternative specifications and when instrumenting for economic growth governance could impact timber harvesting in russia through ownership risk i e tenure security through the costs of doing business i e bribes or both nonparametric regressions and qualitative evidence suggest that both factors are at play in russia this analysis provides additional evidence that improving governance may increase natural resource extraction this has important implications for policy prescriptions that suggest good governance will slow resource use in developing and transitional economies

signaling in secret pay for performance and the incentive and sorting effects of pay secrecy although the vast majority of u s firms follow a policy of pay secrecy research provides a limited understanding of its overall utility to organizations building on signaling theory we develop

energy backstop endogeneity and the optimal use of groundwater to meet the growing demand for freshwater many regions have increased groundwater pumping in recent years resulting in declining groundwater levels worldwide a promising development to address these declines is technical change regarding groundwater substitutes such as desalination and wastewater recycling however because these technologies are energy intensive optimal implementation also depends on future energy price trends we provide an operational model for the case of reverse osmosis seawater desalination in an application to the pearl harbor aquifer in hawaii we find that allowing the cost of desalination to increase at an average annual rate of 2 4 over the next century results in a substantially steeper efficiency price path for water the higher prices decrease optimal groundwater extraction and induce a slower head drawdown over a longer period of time thereby delaying the transition to desalination by over 30 years because the rise in energy costs exacerbates efficiency losses from under pricing any delay in implementing efficiency pricing will cause either a greater future increase in prices or the need for rationing reforming prices sooner rather than later may be more politically feasible given that consumers may be more amenable to a gradual rise in prices today than a sudden doubling or tripling of prices ten years from now using this as a foundation we outline a research agenda for extending the framework to other groundwater substitutes and for adapting to climate change

when patience leads to destruction the curious case of individual time preferences and the adoption of destructive fishing gears abstract the use of destructive fishing methods is a serious problem especially for tropical and developing countries due to inter temporal nature of fisheries extraction activities standard economic theory suggests that an individual s time preference can play a major role in determining the gear choice decision based on earlier theoretical work we identify two ways in which individual time preferences can impact the adoption of destructive extraction methods i the conservation effect which posits that patient individuals as indicated by relatively high discount factor are less likely to use destructive extraction methods since they are more likely to account for the loss of future income that is accompanied by using these methods ii the disinvestment effect which argues that patient individuals are more likely to use destructive extraction methods since they have greater investment capability using an agent based model we clarify the conditions under which one of these effects is more dominant than the other one our model suggests that the nature of destructive gear along with the level of social dilemma determines whether patient or impatient individuals relatively lower discount factor are more likely to adopt such a gear additionally agent s beliefs regarding future resource condition and other agent s extraction level can have a major influence in some cases

trade liberalization comparative advantage and scale economies stock market evidence from canada abstract the canada united states free trade agreement fta provides an excellent opportunity to analyze the impact of a comprehensive trade liberalization in this paper a stock market event study is employed to capture investors expectations about the consequences of this agreement for manufacturing firms in canada the primary question addressed is whether abnormal stock market returns corresponding to news about the fta are consistent with hypotheses based on comparative advantage and economies of scale the results indicate that both comparative advantage and scale economies played a role in determining investors perceptions of the impact of the fta

incentive systems in a real effort experiment in the reported experiment different payment schemes are examined on their incentive effects payments based on individual team and relative performance are compared subjects conducted computerized tasks that required substantial effort the results show that individual and team payment induced the same effort levels in team production free riding occurred but it was compensated by many subjects providing more effort than in case of individual pay effort was higher but more variable in tournaments while in case of varying abilities workers with relatively low ability worked very hard and drove up effort of the others finally attitudes towards work and other workers differed strongly between conditions

a north american free trade agreement analytical issues and a computational assessment abstractthe following sections are included introductionissues in analyzing the economic impact of the naftathe computational modelcomputational resultsconclusionsstudy questionsreferencessuggested further reading this abstract was borrowed from another version of this item

optimal saving policy for exhaustible resource economies abstract the paper examines the optimal saving policy for a small exhaustible resource exporting economy ere that has an exhaustible asset and a reproducible capital stock it shows that both in magnitude and time profile the optimal saving policy for an ere sharply differs from a that of a nonextractive economy and b that derived from the conventional models of growth with exhaustible resources these differences arise from the specific economic features that distinguish the small resource exporting developing economies both from other developing economies and from mature industrial ones for a wide range of plausible parameter values comparisons of computed optimal saving paths with actual savings rates of selected eres suggest substantial deficiencies in their savings rates