a fiscal reform for increasing employment and mitigating co2 emissions in europe this article discusses the possibility of promoting a fiscal reform which would at a european level permit a double dividend to be obtained the mitigation of co 2 emissions and stimulation of employment creation in this respect a co2 energy tax is considered in the light of financing cuts in social contributions equivalent to 1 of the european gdp simulations carried out with six european countries reveal that under certain conditions this hypothesis could be verified even if the net impact on unemployment and co 2 is rather limited

retail bank deposits as quasi fixed factors of production neoclassical models of the banking firm for example michael klein 1971 treat all deposit liabilities as fully variable factors of production banks then maximize profits minimize liability costs by equating the marginal costs of all liability types during each period the empirical relevance of these models is difficult to establish because binding deposit rate ceilings regulation q force bank competition for many retail deposits into implicit interest channels that are not readily measured it is therefore noteworthy that during two recent periods when deposit rate ceilings were not binding banks paid retail deposit rates considerably in excess of the rate at which they could borrow via large unregulated certificates of deposit such behavior seems inconsistent with the cost minimization prescribed by neoclassical bank models however if retail deposit accounts are interpreted as quasi fixed gary becker 1962 walter oi 1962 donald parsons 1972 sherwin rosen 1968 inputs to the banking firm these important historical observations can be reconciled with bank profit maximization this paper first describes two historical episodes during which the bank retail deposit rate exceeded the negotiable certificate of deposit rate for substantial periods of time while no profit maximizing cost minimizing bank would pay such a rate differential if retail deposit quantities are costlessly variable interpreting retail deposit accounts as quasi fixed inputs to the bank explains the peculiar rate structures a simple two period model of bank liability selection formalizes the analysis i two puzzling historical episodes

measuring values for environmental resources under uncertainty abstract the relationship between conventional hicksian measures of the benefits from changes in environmental amenities under certainty and corresponding measures of valuation when the conditions of access to an uncertain environmental resource are changed is considered the analysis utilizes a contingent commodity framework with the assumption of state dependent preferences the findings suggest that the valuation of these changes will depend upon the availability of fair markets for diversifying risk moreover conventional measures of compensating or equivalent surplus will not necessarily bound the individual s valuation of a change in access to an uncertain environmental resource

valuing environmental commodities some recent experiments a general model of consumer behavior is proposed to assess six recent experiments that have attempted to reveal preferences for environmental goals each experiment used a mix of both the techniques and the theory of demand for non market commodities and each was designed to estimate a non market attitude associated with the environment and to analyze potential biases in the techniques the six cases show some consistency in results the linkage within the contingent market between the environmental attribute institutional setting and the bidding instrument must be realistic and accepted by the respondent to avoid biased results possibly the most important result is the replication of results using a traditional property value study and a contingent bidding approach all evidence obtained to date suggests that hedonic studies of property values or wages travel costs and survey techniques all yield values well one order of magnitude in accuracy 41 references 2 tables

market structure and the nature of price rigidity evidence from the market for consumer deposits panel data on consumer bank deposit interest rates reveal asymmetric impacts of market concentration on the dynamic adjustment of prices to shocks banks in concentrated markets are slower to raise interest rates on deposits in response to rising market interest rates but are faster to reduce them in response to declining market interest rates thus banks with market power skim off surplus on movements in both directions since deposit interest rates are inversely related to the price charged by banks for deposits the results suggest that downward price rigidity and upward price flexibility are a consequence of market concentration

the eu carbon energy tax effects in a distorted energy market abstract we analyse the impacts of a carbon energy tax as proposed by the european union eu on the western european energy markets simulations on a sectoral european energy model seem show that interfuel substitution is hampered by distortion of fuel prices caused by taxation already in place and by regulation of electricity production we therefore study the effect of introducing more cost based investment behaviour into the thermal power production sector the impact on the co 2 emission level by increased substitution of gas for coal is significant furthermore such investment behaviour enhances the potential effect of a carbon tax and postpones the date when a carbon tax has to be increased in order to meet the stabilization target ie the 1990 level until after the turn of the century finally a deregulation of thermal power production could increase the demand for natural gas in western europe both without and with a eu carbon energy tax

valuing amenity resources under uncertainty does the existence of fair contingent claims markets matter abstract alternative welfare measures are evaluated as measures of the value of change in access conditions for environmental resources and it is shown that traditional hicksian surplus estimates systematically underestimate benefits it is further argued that the existence of fair contingent claims markets is a peripheral consideration in benefit estimation that state dependent payments present no significant collection obstacles not already encountered in state independent payment schemes and that risk neutral social decision making requires state dependent benefit measures for situations involving individual risk these findings imply that future research should focus on developing theoretical bounds between the expected value of state dependent benefit measures and conventional measures and that contingent valuations techniques need to be extended to measure contingent payment possibilities for changes in uncertain access conditions to environmental resources

a carbon tax to reduce co2 emissions in europe abstract this paper examines the effects of introducing a tax on carbon dioxide emissions produced by combustion processes in oecd european countries a sectoral model of energy consumption is constructed to examine energy saving and inter fuel substitution effects induced by the introduction of various carbon taxes the simulation period is 1989 1994 our results provide a mild support to the environmental role of a carbon tax energy saving or inter fuel substitution processes that result from the introduction of environmental taxation stabilize emissions at the 1988 level only in the electricity generation sector and only if high tax rates are assumed 100 ton c by contrast total emissions all sectors and all fuels keep growing and the implementation of a tax of 100 ton c can only reduce the emission growth rate these results would recommend the introduction of several coordinated environmental instruments the last part of the paper compares results concerning oecd europe with those obtained when examining a single country italy the comparison does not seem to be in favour of a uniform carbon tax it rather indicates that environmental policy should be designed taking into account the specific economic situation and technological choices of each single country country specific coordinated environmental policies are to be recommended where international coordination ought to concern environmental targets rather than instruments

how do uk financial institutions really price their banking products abstract this paper has several objectives the first is to explore the type or types of imperfect competition that prevailed in the retail banking sector in the 1990s a general linearised pricing model is employed to test for the degree to which competition in certain markets deviated from the competitive ideal the key finding is that with the exception of mortgage products deposit and loan rate setting by uk financial institutions is best described by the salop stiglitz model of monopolistic competition with bargain and rip offs cournot type behaviour is evident in some cases indirectly the presence of perfect contestability is largely ruled out another objective is to compare these findings with the results of a similar study conducted nearly a decade ago when financial reforms introduced to encourage greater competition were relatively recent based on the results of this study the policy lesson is that financial firms exhibit different types of price setting behaviour depending on the banking product the policy implication is to require firms to produce comparable information for consumers thereby helping to contain the loss of consumer surplus in imperfectly competitive markets

modeling the banking firm a survey this paper reports on the status of the literature on micro bank modeling and assesses our understanding of the banking firm s optimal behavior this is no mean task for much has been written on banking broadly defined over the past couple of decades the review is developed in pieces each major subproblem is outlined and the analysis used to deal with the issue explicated this is not the best way to summarize the development of a field it should be immediately recognized one would prefer to have a smooth continuum of development moving the frontier of knowledge evenly through time and across subareas yet this is rarely the way a field develops more likely individual questions attract attention and are the subjects of a substantial number of contributions after a time the field moves on to the new area of interest the banking field is no exception before embarking upon the review however a couple of lines should be devoted to previous attempts there have been essentially three first pyle 1972 analyzes the uncertainty portfolio models at a time when little existed in the literature and hence one finds the review a bit vague and sketchy baltensperger s contributions 1978 1980 are the next serious and rather extensive reviews the quality of these

a computational approach to the optimal structure of bank input prices abstract most bank deposits contain an embedded option which permits the depositor to withdraw funds at will demand deposits generally allow costless withdrawal while time deposits often require payment of an early withdrawal penalty managing the risk that depositors will exercise their withdrawal option is an important aspect of input pricing this paper acknowledges the threat of deposit withdrawal and then solves for the optimal structure of bank deposit rates

on the evaluation of government programs to reduce environmental risk this paper attempts to identify the correct benefit measure for a government project which might reduce the subjective probability of an environmental risk to health the evaluation of government projects whose costs or benefits are uncertain occupies a considerable literature including arrow and lind fisher and graham the value of reducing the probability of an adverse state outcome has been examined by cook and graham and more recently by gallagher and smith in the latter two papers it was assumed that the individual at risk had access to perfect insurance or contingent claims markets in such a perfect world the value of reducing the probability of an adverse state could be bounded by measures which cook and graham referred to as ransom and compensation and which gallagher and smith show to correspond to the more traditional hicksian notions of compensating and equivalent variation if the assumption of perfect contingent claims markets does not hold it is not possible to set upper and lower bounds on the value of reducing the probability of an adverse state while general forms of health insurance are available to individuals at risk from an environmental hazard specific policies do not allow for the continuous adjustment reallocation of wealth assumed to occur when the individual has access to perfect markets in the next section a more plausible model is constructed it assumes that the individual has a finite set of self protective actions which he or she may take in response to a risk to future health in addition the government may undertake a project to reduce the risk to health it is assumed that both the selfprotective action and the government project have the ability to influence the subjective personal probability of the future states continued good health or ill health there are three major conclusions which emerge from this model a the value of the government project is an option price graham which may be zero or positive if positive the benefits from the project may take the form of cost savings risk probability reduction or both b the value of the government project is dependent on the set of self protective actions and may change as new actions become available or the effectiveness of existing actions is reassessed by the individual c the method of contingent valuation in theory would appear capable of eliciting the proper option price estimates for the project s value to the individual it is even possible to distinguish between the value attributable to cost savings and risk reduction in the next section i present the model and demonstrate the above conclusions in the final section an assessment is made of the in

adaptation and the option value of uncertain environmental resources abstract just as ecology has benefited from the economic theory of optimization economics can benefit from the ecological theory of adaptation we examine the impact of short term non genetic adaptive self protection on the values individuals attach to uncertain prospective environmental resources we demonstrate that collective provision of reductions in supply uncertainty does not necessitate a positive option value given that uncertainty is influenced by the individual s ability to adapt through self protection we conclude that the total value of reducing the supply uncertainty of a natural resource is reflected in both the individual s option price payments for collective provision and in his willingness to pay for adaptation through self protection by ignoring adaptive self protection traditional benefit cost analysis has systematically underestimated the total value of environmental resources that are characterized by uncertain supplies

a general model of the banking firm under conditions of monopoly uncertainty and recourse abstract we develop a stochastic programming model of the monopolistic competition banking firm it assumes the bank faces a downward sloping loan demand curve and is a price taker in securities markets uncertainty and liquidity requirements are incorporated bank decisions are made within a two stage framework where realized disturbances that violate constraints can be rectified ex post at a cost the results are 1 optimal loan and deposit rates are positive functions of the recourse penalty 2 asset liability decisions are interdependent and elastically supplied deposits lower the loan rate 3 the effect of uncertainty depends upon the penalty rate level

white certificates for energy efficiency improvement with energy taxes a theoretical economic model in this paper we analyze interactions of two energy policy instruments namely a white certificates whc scheme as an innovative policy instrument for energy efficiency improvement and energy taxation these policy instruments differ in terms of objectives and final impacts on the price of electricity we examine the effect of these policy instruments in the electricity sector focusing on electricity producers and suppliers in a competitive market using microeconomic theory we identify synergies between market players and demonstrate the total effect on the electricity price when suppliers internalize the behaviour of producers in their decisions this model refers to an ideal market situation of full liberalization the cases we examine consist of electricity producers with and without a carbon tax electricity suppliers with and without an electricity tax and with whc obligations furthermore we present a parallel implementation of whc for electricity suppliers with carbon tax on electricity producers and an electricity tax with whc obligations to electricity suppliers we demonstrate differences in optimization behaviour of producers and suppliers based on a couple of cases of whc with carbon and electricity taxes various positive and negative effects of both schemes in terms of target achievement and efficiency are present which can lead to an added value of such schemes in the policy mix although uncertainties of outcomes are quite high a basic finding is that in a merit order several parameters can increase final electricity price after the implementation of different policies demand for electricity and electricity supply cost at a large scale and then follow the level of level of obligation for energy saving level of penalty and price of whc representing the marginal costs of energy saving projects the impact magnitude of parameters depends on the values chosen and on the initial position of suppliers i e if their actual behaviour deviates from full compliance with targets

economic instruments for environmental regulation our knowledge about economic incentive approaches to pollution control has grown rapidly in the two decades in which they have received serious analytical attention not only have the theoretical models become more focused and the empirical work more detailed but we have now had over a decade of experience with emissions trading in the u s and emission charges in europe as the world community becomes increasingly conscious of both the need to tighten environmental controls and the local economic perils associated with tighter controls in a highly competitive global marketplace it seems a propitious time to stand back and to organize what we have learned about this practical and promising approach to pollution control that may be especially relevant to current circumstances this paper draws upon economic theory empirical studies and actual experience with implementation to provide a brief overview of some of the major lessons we have learned about two economic incentive approaches emissions tradi copyright 1990 by oxford university press

deposit rates credit rates and bank capital the klein monti model revisited abstract the paper expands the klein monti model with bankruptcy risk and deposit insurance the well known result of independence between deposit and credit rates is shown to be lost the causal relationship becomes recursive and the direction of the recursivity depends on the existence or the absence of a deposit insurance mechanism

valuing changes in health risks a comparison of alternative measures essential to efficient provision of health safety and the environment is correct valuation of risks to human health in a world of scarcity difficult decisions concerning tradeoffs between health and other desirables are unavoidable in this paper we develop a model of health investment under uncertainty which yields a general expression for values of changes in risks to human health the preference based values of morbidity risks and mortality risks are ex ante dollar equivalents of changes in expected utility associated with risk changes the preference based values are related to two alternative measures costs of illness and preventive expenditures which are thought to be lower bounds on the value of risk reductions we demonstrate that these alternative measures are not even special cases of the more general measure and that the size relationships among the three measures are complex also we derive the relationship between the willingness to pay for risk changes and the consumer surpluses associated with health changes which occur with certainty the next section contains a brief review of the approaches to valuing changes in health

measuring rents and interest rate risk in imperfect financial markets the case of retail bank deposits traditional measures of interest rate risk assume that prices of financial assets and liabilities are set in perfectly competitive markets however evidence suggests that many retail financial markets do not follow the competitive paradigm in this paper we employ a general contingent claims framework to value rents earned by banks in demandable retail deposit markets our analysis provides a natural and economically meaningful measure of interest rate risk for these imperfectly competitive markets using monthly survey data on now accounts and mmdas we estimate the value of retail deposit rents and deposit durations for more than 200 commercial banks

bank deposit rate clustering theory and empirical evidence the market prices of stocks and other assets tend to cluster on round fractions a similar clustering is found in the interest rates paid on retail bank deposits however the theoretical rationales given for asset price clustering are incompatible with the clustering of retail deposit rates this paper proposes a theory based on depositors limited recall it shows that when banks exploit this phenomenon deposit rates will tend to be set at round fractions and will be relatively sticky at these levels the implications of this theoretical model are tested using money market deposit account and retail certificate of deposit interest rate data from a sample of more than 500 banks