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

monetary policy rule of thumb consumers and external habits a g7 comparison this paper extends the standard new keynesian dynamic stochastic general equilibrium dsge model to agents who cannot smooth consumption i e spenders and are affected by external consumption habits although these assumptions are not new their joint consideration strongly affects some theoretical and empirical results addressed by the recent literature by deriving closed form solutions we identify different demand regimes and show that they are characterized by specific features regarding dynamic stability and monetary policy effectiveness we also evaluate our model by stochastic simulations obtained from the bayesian parameters estimates for the g7 economies from posterior impulse responses we address the empirical relevance of the different regimes and provide comparative evidence on the heterogeneity of monetary policy effects among countries

economic growth and pollutant emissions in tunisia an empirical analysis of the environmental kuznets curve abstract this paper investigates the relationship between economic growth and pollutant emissions for a small and open developing country tunisia during the period 1961 2004 the investigation is made on the basis of the environmental kuznets curve hypothesis using time series data and cointegration analysis carbon dioxide co 2 and sulfur dioxide so 2 are used as the environmental indicators and gdp as the economic indicator our results show that there is a long run cointegrating relationship between the per capita emissions of two pollutants and the per capita gdp an inverted u relationship between so 2 emissions and gdp has been found with income turning point approximately equals to 1200 constant 2000 prices or to 3700 in ppp constant 2000 prices however a monotonically increasing relationship with gdp is found more appropriate for co 2 emissions furthermore the causality results show that the relationship between income and pollution in tunisia is one of unidirectional causality with income causing environmental changes and not vice versa both in the short run and long run this implies that an emission reduction policies and more investment in pollution abatement expense will not hurt economic growth it could be a feasible policy tool for tunisia to achieve its sustainable growth in the long run

environmental kuznets curve hypothesis in pakistan cointegration and granger causality abstract the paper is an effort to fill the gap in the energy literature with a comprehensive country study of pakistan we investigate the relationship between co2 emissions energy consumption economic growth and trade openness in pakistan over the period of 1971 2009 bounds test for cointegration and granger causality approach are employed for the empirical analysis the result suggests that there exists a long run relationship among the variables and the environmental kuznets curve ekc hypothesis is supported the significant existence of ekc shows the country s effort to condense co2 emissions and indicates certain achievement of controlling environmental degradation in pakistan furthermore we find a one way causal relationship running from economic growth to co2 emissions energy consumption increases co2 emissions both in the short and long runs trade openness reduces co2 emissions in the long run but it is insignificant in the short run in addition the change of co2 emissions from short run to the long span of time is corrected by about 10 yearly

the impacts of transport energy consumption foreign direct investment and income on co2 emissions in asean 5 economies abstract in this study we incorporate new variables and assess the impact of transportation sector s energy consumption and foreign direct investment on co2 emissions for asean 5 economies using the cointegration and granger causality methods this study also attempts to validate the environmental kuznets curve ekc hypothesis our results reveal that the co2 emissions and their determinants are co integrated only in indonesia malaysia and thailand the long run elasticity estimation suggests that income and transport energy consumption significantly influence co2 emissions whereas fdi is not significant economic growth plays a greater role in contributing to co2 emission in asean 5 nonetheless we find that the inverted u shape ekc hypothesis is not applicable to the asean 5 economies especially in indonesia malaysia and thailand in the long run the bi directional causality between economic growth and co2 emissions is detected in indonesia and thailand while we find unidirectional causality running from gdp to co2 emissions in malaysia we also observe bi directional causality between transport energy consumption fdi and co2 emissions in thailand and malaysia as an immediate policy option controlling energy consumption in transportation sector may result in a significant reduction in co2 emissions however this may slow the process of economic growth in malaysia and indonesia alternatively we suggest policymakers to place more emphasis on energy efficient transportation system and policies to minimise fossil fuel consumption thus the quality of environment can be improved with less deleterious impact on economic growth

a time series analysis of representative agent models of consumption andleisure choice under uncertainty this paper investigates empirically a model of aggregate consumption and leisure decisions in which utility from goods and leisure is nontime separable the nonseparability of preferences accommodates intertemporal substitution or complementarity of leisure and thereby affects the comovements in aggregate compensation and hours worked these cross relations are examined empirically using postwar monthly u s data on quantities real wages and the real return on the one month treasury bill the estimated values of the parameters governing preferences differ significantly from the values assumed in several studies of real business models several possible explanations of these discrepancies are discussed

fiscal policy banks and the financial crisis this paper studies the effectiveness of euro area ea fiscal policy during the recent financial crisis using an estimated new keynesian model with a bank a key dimension of policy in the crisis was massive government support for banks that dimension has so far received little attention in the macroeconomics literature we use the estimated model to analyze the effects of bank asset losses of government support for banks and other fiscal stimulus measures in the ea our results suggest that support for banks had a stabilizing effect on ea output consumption and investment increased government purchases helped to stabilize output but crowded out consumption higher transfers to households had a positive impact on private consumption but a negligible effect on output and investment banking shocks and increased government spending explain half of the rise in the public debt gdp ratio since the onset of the crisis

volatility risk and economic welfare this paper examines the effects of time varying volatility on welfare i construct a tractable endogenous growth model with recursive preferences stochastic volatility and capital adjustment costs the model shows that a rise in volatility can decelerate growth in the absence of any level shocks in contrast to level risk which is always welfare reducing for a risk averse household volatility risk can increase or decrease welfare depending on model parameters when calibrated to u s data the model finds that the welfare cost of volatility risk is largely negligible under plausible model parameterizations

spurious welfare reversals in international business cycle models several papers have documented spurious welfare reversals incompletemarkets economy produces a higher level of welfare than the completemarkets economy this paper first demonstrates how conventional linearization can generate approximation errors that can result in welfare reversals using a two country production economy we argue that spurious welfare reversals are not only possible but also plausible under reasonable values for model parameters this paper then proposes an approximation method that modifies the conventional linearization by a bias correction this method can be easily implemented and approximates welfare as accurately as a second order perturbation method

evaluating an estimated new keynesian small open economy model abstract this paper estimates and tests a new keynesian small open economy model in the tradition of christiano et al 2005 nominal rigidities and the dynamic effects of a shock to monetary policy journal of political economy 113 1 1 45 and smets and wouters 2003 an estimated stochastic dynamic general equilibrium model of the euro area journal of the european economic association 1 5 1123 1175 using bayesian estimation techniques on swedish data to account for the switch to an inflation targeting regime in 1993 we allow for a discrete break in the central bank s instrument rule a key equation in the model the uncovered interest rate parity uip condition is well known to be rejected empirically therefore we explore the consequences of modifying the uip condition to allow for a negative correlation between the risk premium and the expected change in the nominal exchange rate the results show that the modification increases the persistence in the real exchange rate and that this model has an empirical advantage compared with the standard uip specification

the welfare cost of macroeconomic uncertainty in the post war period abstract with standard assumptions on preferences and a fully fledged econometric model we computed the welfare costs of macroeconomic uncertainty for post war u s using the beveridge nelson decomposition welfare costs are about 0 9 per capita consumption 175 77 a year and marginal welfare costs are about twice as large

on the aggregate welfare cost of great depression unemployment abstract the potential benefit of policies that eliminate a small likelihood of economic crises is calculated an economic crisis is defined as an increase in unemployment of the magnitude observed during the great depression for the u s the maximum likelihood estimate of entering a depression is found to be about once every 83 years the welfare gain from setting this small probability to zero can range between 1 and 7 of annual consumption in perpetuity for most estimates more than half of these large gains results from a reduction in individual consumption volatility

dynamic complementarities a quantitative analysis abstract this paper considers the importance of dynamic complementarities as an endogenous source of propagation in a dynamic stochastic economy dynamic complementarities link the stocks of human and organizational capital which are influenced by past levels of economic activity to current levels of productivity we supplement an otherwise standard dynamic business cycle model with both contemporaneous and dynamic complementarities the model is calibrated using estimates of these effects from both micro and aggregate data our quantitative analysis identifies empirically relevant dynamic complementarities as a source of propagation for both technology and taste shocks

the welfare cost of business cycles revisited finite lives and cyclical variation in idiosyncratic risk abstract this paper investigates the welfare costs of business cycles in a heterogeneous agent overlapping generations economy which is distinguished by idiosyncratic labor market risk aggregate variation arises both in terms of aggregate productivity shocks and countercyclical variation in the volatility of idiosyncratic shocks based on both aggregate data and microeconomic data from the panel study on income dynamics we find the welfare benefits of eliminating aggregate variation to be large an order of magnitude larger than those originally documented by lucas 1987 the key difference is countercyclical variation in idiosycratic risk which both amplifies the welfare cost of aggregate productivity shocks and imposes a cost of its own the magnitude of these effects increases non linearly in risk aversion our results therefore are consistent with the increasingly popular notion that distributional effects are an important aspect of understanding the welfare cost of business cycles

the role of intratemporal adjustment costs in a multisector economy abstract in this paper we construct a multisector business cycle model which is capable of reproducing the procyclical behavior of cross sector measures of capital employment and output we start by documenting the difficulty that a standard variant of a conventional real business cycle model has in accounting for these facts we then show how the introduction of intratemporal adjustment costs for investment can significantly enhance the performance of such a model these costs make it difficult to alter the composition of production of new capital goods the presence of these costs eliminates many counterfactual observations of the model that would otherwise be present the dynamic response of variables in the model is different from what one would observe in the standard one sector model we also examine the implications of imposing intratemporal adjustment costs for labor the model can also account for the cross sector behavior of employment observed in the data

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

long dark shadows or innovative spirits the effects of smoothing business cycles on economic growth a survey of the literature abstract it is argued that fiscal policy can play a part in preventing a possible downward spiral or be instrumental in achieving a higher long term path of growth never before has this argument been advanced as frequently as in the current economic crisis however the economic literature an overview of which is given here does not provide an unambiguous answer either theoretically or empirically to the question of the relationship between the smoothing of cyclical fluctuations and long term growth in this context two main contrasting explanatory paradigms can be identified schumpeter s concept of creative destruction and the learning by doing hypothesis even if it were possible to identify the relationship more clearly on this basis it is important not to lose sight of the problems associated with the real time assessment of the current economic situation time lags and political economic incentives even in difficult times

time to build and aggregate fluctuations abstract this paper studies the contribution of time to build to the explanation of business cycle phenomena using a simple version of the neoclassical model the analysis shows that it is not evident that multiperiod construction is crucial to the theory of fluctuations

robust control of forward looking models abstract this paper shows how to formulate and compute robust ramsey aka stackelberg plans for linear models with forward looking private agents the leader and the followers share a common approximating model and both have preferences for robust decision rules because both doubt the model since their preferences differ the leader s and followers decision rules are fragile to different misspecifications of the approximating model we define a stackelberg equilibrium with robust decision makers in which the leader and follower have different worst case models despite sharing a common approximating model to compute a stackelberg equilibrium we formulate a bellman equation that is associated with an artificial single agent robust control problem the artificial bellman equation contains a description of implementability constraints that include euler equations that describe the worst case analysis of the followers as an example the paper analyzes a model of a monopoly facing a competitive fringe

co2 emissions energy consumption trade and income a comparative analysis of china and india in order to prevent the destabilisation of the earth s biosphere co2 emissions must be reduced quickly and significantly the causes of co2 emissions by individual countries need to be apprehended in order to understand the processes required for reducing emissions around the globe china and india are the two largest transitional countries and growing economies but are in two entirely different categories in terms of structural changes in growth trade and energy use co2 emissions from the burning of fossil fuels have significantly increased in the recent past this paper compares china and india using the bounds testing approach to cointegration and the ardl methodology to test the long and short run relationships between growth trade energy use and endogenously determined structural breaks the co2 emissions in china were influenced by per capita income structural changes and energy consumption a similar causal connection cannot be established for india with regard to structural changes and co2 emissions because india s informal economy is much larger than china s india possesses an extraordinarily large number of micro enterprises that are low energy consumers and not competitive enough to reach international markets understanding these contrasting scenarios is prerequisite to reaching an international agreement on climate change affecting these two countries

optimal fiscal policy in a small open economy with limited commitment abstract we introduce limited commitment into a standard optimal fiscal policy model in small open economies we consider the problem of a benevolent government that signs a risk sharing contract with the rest of the world and that has to choose optimally distortionary taxes on labor income domestic debt and international transfers both the home country and the rest of the world may have limited commitment which means that they can leave the contract if they find it convenient the contract is designed so that at any point in time neither party has incentives to exit we define a small open emerging economy as an economy where the limited commitment problem is active in equilibrium conversely a small open developed economy is an economy in which the commitment problem is not active our model is able to rationalize some stylized facts about fiscal policy in emerging economies i the volatility of tax revenues over gdp is higher in emerging economies than in developed ones ii fiscal policy is procyclical in emerging economies iii emerging economies may graduate from procyclical fiscal policy and adopt countercyclical policies in the long run

asset bubbles and the cost of economic fluctuations lucas 1987 2003 estimates that the cost of economic fluctuations is low a social planner would pay no more than 0 1 of permanent consumption to eliminate all future business cycle fluctuations the current paper extends lucas calculations by studying the costs of fluctuations arising from asset bubbles we estimate two classes of costs consumption volatility due to asset bubbles in a representative agent economy and consumption volatility that arises because households have heterogeneous exposure to the bubble assets we show that the magnitude of welfare costs is primarily driven by the existence of heterogeneity our benchmark calibration implies that the asset bubbles of the last decade generated a social welfare cost equal to a permanent 3 reduction in the level of national consumption if assets are held proportionately across the population these welfare costs fall by an order of magnitude our calculations are sensitive to the details of the calibration including the degree of balance sheet and trading heterogeneity the coefficient of relative risk aversion and the magnitude of the asset bubble our preferred specifications generate welfare costs ranging from 1 to 10 of permanent national consumption

the macroeconomic effects of distortionary taxation abstract prescott 1986 estimates that technology shocks account for 75 of the fluctuations in the postwar u s economy this paper reestimates the contribution of technological change for a standard business cycle model that includes a public sector and fiscal disturbances i find that a significant fraction of the variance of aggregate consumption investment output capital stock and hours of work can be explained by disturbances in labor and capital tax rates and government consumption i also use the model to quantify the welfare costs of capital and labor taxation for both the time series and welfare calculations maximum likelihood estimates of taste technology and policy parameters are used

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

welfare gains from international risksharing abstract this paper uses consumption data to compute yet unexploited welfare gains that can be achieved through risksharing among twenty oecd countries there is both aggregate national consumption risk and nondiversifiable individual specific risk countries engage in an optimal risksharing arrangement to pool risk associated with the aggregate consumption endowment streams welfare gains are associated with reduced consumption variability and with the international pricing of the consumption streams of individual countries the paper considers the standard vnm time additive preferences as well as nonexpected utility and habit formation preferences large unexploited gains are found under all sets of preferences leading to an international risksharing puzzle

volatility and welfare abstract this paper explores the relationship between volatility and welfare even though households prefer smooth streams of consumption and leisure welfare can be increasing in the volatility of an exogenous driving force if factor supply is sufficiently elastic we provide some analytical results for a model without capital and do some quantitative exercises in a model with capital and a variety of shocks welfare is greater in high shock volatility regimes under plausible parameter values augmenting the model with features that increase the elasticity of factor supply extends the range of parameters over which higher volatility results in greater welfare

designing a simple loss function for central banks does a dual mandate make sense yes it makes a lot of sense this paper studies how to design simple loss functions for central banks as parsimonious approximations to social welfare we show both analytically and quantitatively that simple loss functions should feature a high weight on measures of economic activity sometimes even larger than the weight on inflation two main factors drive our result first stabilising economic activity also stabilises other welfare relevant variables second the estimated model features mitigated inflation distortions due to a low elasticity of substitution between monopolistic goods and a low interest rate sensitivity of demand the result holds up in the presence of measurement errors with large shocks that generate a trade o between stabilising inflation and resource utilisation and also when imposing a moderate degree of interest rate volatility

human capital formation and business cycle persistence abstract in this paper we examine the role of the formation of human capital in propagating shocks over the business cycle we show that a two sector equilibrium business cycle model with human capital is able to generate persistence in the growth of output and other aggregate variables comparable to that observed in the post war us data a key feature is the relatively low elasticity of substitution between skilled and unskilled labor in the production of human capital

environmental kuznets curve in an open economy a bounds testing and causality analysis for tunisia the environmental kuznets curve hypothesis posits that in the early stages of economic growth environmental degradation and pollution increase however as a nation reaches a certain level of incom

spectral welfare cost functions if preferences are not time separable economic agents care not only about the magnitude of fluctuations in consumption but also about the persistence and other temporal characteristics of those fluctuations this paper extends and develops the theory of spectral utility functions which measure utility frequency by frequency to illustrate the interaction between consumption volatility and time non separable preferences to highlight the economic implications of the interaction spectral welfare cost functions are developed to provide a quantitative measure of the importance to economic agents of the temporal delivery of consumption volatility

keynesian impulses versus solow residuals identifying sources of business cycle fluctuations we employ a neoclassical business cycle model that builds on the greenwood hercowitz and huffman 1988 variable utilization framework to study two sources of business cycl e fluctuations marginal efficiency of investment shocks and total factor productivity shocks the parameters of the model are estimated using a bayesian procedure that accommodates prior uncertainty about their magnitudes from these estimates posterior distributions of the two shocks are obtained the postwar u s experience suggests that both shocks are important in understanding fluctuations but that total factor productivity shocks are primarily responsible for beginning and ending recessions

can a real business cycle model pass the watson test abstract watson 1993 measures of fit for calibrated models journal of political economy 101 6 1011 1041 proposes a procedure for evaluating the fit of a dynamic equilibrium business cycle model under watson s criterion the standard real business cycle rbc model fails dramatically in reconciling the dynamics of the model with the data this inability to account for the dynamics of us aggregate data remains a major challenge to rbc theory this paper demonstrates that reasonable modifications can bring rbc theory into closer conformity with the data the empirical results indicate that when habit formation on leisure choice and employment externality are incorporated into the analysis the striking spectral density differentials documented by watson virtually vanish at business cycle frequencies

the short run volatility of money stock targeting abstract the altered allocations of money market volatility obtained by alternative monetary policy procedures are illustrated by stochastic simulations of a staff monthly model the results indicate the nature of the tradeoff between short run volatility in the money stock and in the funds rate that is available to money stock targeting procedures

real business cycle models and the forecastable movements in output hours and consumption the authors study the movements in output consumption and hours that are forecastable from a vector autoregression and analyze how they differ from those predicted by standard real business cycle models they show that actual forecastable movements in output have a variance about one hundred times larger than those predicted by the model the authors also find that forecastable changes in the three series are strongly positively correlated with each other on the other hand for parameters whose implications are plausible in other respects the model implies that output consumption and hours should not all be expected to move in the same direction copyright 1996 by american economic association

on measuring the welfare cost of business cycles lucas 1987 argues that the gain from eliminating aggregate fluctuations is trivial following lucas a number of researchers have altered assumptions on preferences and found that the gain from eliminating business cycles are potentially very large however in these exercises little discipline is placed on preference parameters this paper estimates the welfare cost of business cycles allowing for potential time non separabilities in preferences where discipline is placed on the choice of preference parameters by requiring that the preferences be consistent with observed fluctuations in a model of business cycles that is a theoretical real business cycle world is constructed and the representative agent is then placed in this world the agent responds optimally to exogenous shocks given the frictions in the economy the agent s preference parameters along with other structural parameters are estimated using a bayesian procedure involving markov chain monte carlo methods two main results emerge from the paper first the form for the time non separability estimated in this paper is very different than the forms suggested and used elsewhere in the literature second the welfare cost of business cycles is close to lucas s estimate

evidence on macroeconomic complementarities this paper provides empirical evidence on macroeconomic complementarities a restriction on the nature of interaction between individuals in a multiagent setting these models imply that activities across agents will be positively correlated that discrete decisions will be synchronized and that disturbances will be magnified and propagated the paper shows that these implications are consistent with aggregate observations as well as some microeconomic evidence further looking at certain historical episodes such as the national industrial recovery act as well as seasonal fluctuations provides additional support for models with macroeconomic complementarities copyright 1996 by mit press

the time series properties of aggregate consumption implications for the costs of fluctuations the properties of the stochastic process followed by aggregate consumption affect the estimates of the costs of fluctuations this paper pursues two approaches to modeling consumption dynamics and measuring how much society dislikes fluctuations one statistical and one economic the statistical approach estimates the properties of consumption and calculates the costs of having consumption fluctuating around its mean growth the paper finds that persistence is a crucial determinant of the costs and that the high persistence in the data severely distorts conventional measures it shows how to compute valid estimates and confidence intervals the economic approach uses a calibrated model of optimal consumption and measures the costs of eliminating income shocks this uncovers a further cost of uncertainty through its impact on precautionary savings and investment the two approaches lead to costs of fluctuations that are higher than the common wisdom between 0 5 and 5 of per capita consumption jel e32 e21 e60

environment kuznets curve for co2 emissions a cointegration analysis for china abstract this study examines the long run relationship between carbon emissions and energy consumption income and foreign trade in the case of china by employing time series data of 1975 2005 in particular the study aims at testing whether environmental kuznets curve ekc relationship between co 2 emissions and per capita real gdp holds in the long run or not auto regressive distributed lag ardl methodology is employed for empirical analysis a quadratic relationship between income and co 2 emission has been found for the sample period supporting ekc relationship the results of granger causality tests indicate one way causality runs through economic growth to co 2 emissions the results of this study also indicate that the carbon emissions are mainly determined by income and energy consumption in the long run trade has a positive but statistically insignificant impact on co 2 emissions

income uncertainty and optimal redistribution 1 introduction redistribution policy under a utilitarian criterion aims to transfer dollars from one group in the population to another if the weighted utility gain to the recipients exceeds the utility cost to the donors under diminishing marginal utility of income part of any exogenous change in one group s income should be shared with the other group for example if taxpaying workers suffer a negative shock to their mean earnings then part of this utility shock should be spread to nonworkers in the form of lower transfer payments and vice versa for the case of a positive shock this article demonstrates the counterintuitive result that under reasonable preference representations a policymaker may respond optimally to a negative utility shock by redistributing income away from the harmed group thus exacerbating the group s utility loss in particular under risk aversion a mean preserving increase in the variance of income typically has an effect on well being analogous to a decrease in mean income 1 it may nevertheless be welfare enhancing to transfer income away from those suffering an increase in income uncertainty even though this policy compounds their welfare loss the main ideas can be demonstrated in a simple framework for illustration the analysis will focus on redistribution from taxpaying workers to nonworkers the central result is that a meanpreserving increase in earnings uncertainty among taxpayers can increase optimal transfer amounts to nonworkers increasing optimal income replacement rates even though the redistribution exacerbates the taxpayers utility loss from the increase in uncertainty 2 model footnote 1 many factors in the economy affect earnings uncertainty even conditional on being employed such as the form of compensation e

on the welfare costs of business cycle fluctuations and economic growth variation in the 20th century and beyond lucas 1987 has shown a surprising result in business cycle research the welfare cost of business cycles are very small our paper has several original contributions first in computing welfare costs we propose a novel setup that separates the eects of uncertainty stemming from business cycle uctuations and economic growth variation second we extend the sample from which to compute the moments of consumption the whole of the literature chose primarily to we gratefully acknowledge the comments of caio almeida carlos e da costa robert f engle pedro c ferreira antonio fiorencio rodolfo manuelli samuel pessoa and octavio tourinho on this or on earlier versions of this paper all errors are ours we thank cnpq brazil faperj and inct for nancial support y corresponding author

bounds testing approach to analysis of the environment kuznets curve hypothesis abstract this paper examines the long run and the dynamic temporal relationships between economic growth energy consumption population density trade openness and carbon dioxide co 2 emissions in brazil china egypt japan mexico nigeria south korea and south africa based on the environment kuznets curve ekc hypothesis we employ the ardl bounds test to cointegration and cusum and cusumsq tests to ensure cointegration and parameter stability the estimated results show that the inverted u shaped ekc hypothesis holds in japan and south korea in the other six countries the long run relationship between economic growth and co 2 emissions follows an n shaped trajectory and the estimated turning points are much higher than the sample mean in addition the results indicate that energy consumption granger causes both co 2 emissions and economic growth in all the countries our results are consistent with previous studies that show that there is no unique relationship between energy consumption population density economic growth trade openness and the environment across countries

has fiscal policy helped stabilize the postwar u s economy abstract in this paper i consider whether postwar fiscal policy has helped stabilize the u s economy i do this by adding to the stochastic growth model fiscal policy feedback rules estimated from postwar data these rules allow fiscal policies to respond to current and lagged output and labor hours i use the estimated policy rules to see if postwar fiscal policy reduces output volatility and or lengthens expansions and shortens recessions i find that fiscal policy in general provides little stability on either count i also find that the endogenous feedback links by themselves can provide some stabilization

co2 emissions energy consumption economic and population growth in malaysia abstract this study investigates the dynamic impacts of gdp growth energy consumption and population growth on co2 emissions using econometric approaches for malaysia empirical results from ardl bounds testing approach show that over the period of 1970 1980 per capita co2 emissions decreased with increasing per capita gdp economic growth however from 1980 to 2009 per capita co2 emissions increased sharply with a further increase of per capita gdp this is also supported by the dynamic ordinary least squared dols and the sasabuchi lind mehlum u slm u test tests consequently the hypothesis of the ekc is not valid in malaysia during the study period the results also demonstrate that both per capita energy consumption and per capita gdp has a long term positive impacts with per capita carbon emissions but population growth rate has no significant impacts on per capita co2 emission however the study suggests that in the long run economic growth may have an adverse effect on the co2 emissions in malaysia thus significant transformation of low carbon technologies such as renewable energy and energy efficiency could contribute to reduce the emissions and sustain the long run economic growth

growth trends cyclical fluctuations and welfare with non expected utility preferences abstract using standard time separable discounted expected utility eu models lucas models of business cycles 1987 and others argue that growth trends have a crucial and cyclical fluctuations a trivial effect on individuals utility these conclusions are drastically altered if instead non eu preferences are assumed

the investigation of environmental kuznets curve hypothesis in the advanced economies the role of energy prices the aim of this research is to examine the effect of energy prices on pollution and investigate the existence of environmental kuznets curve ekc hypothesis in 27 advanced economies the panel non stationary techniques were used to examine the selected economies taking the period of 1990 2012 the panel kao and fisher cointegration results showed that co2 emission co2 gross domestic product gdp renewable energy consumption re non renewable energy consumption nr trade openness td urbanization ur and energy prices pc are cointegrated moreover the panel fully modified ordinary least square and the vector error correction granger causality results revealed that gdp nr and ur increase co2 emission while re td and pc reduce it furthermore the inverted u shaped relationship between gdp and co2 emission was confirmed which signifies the presence of the ekc hypothesis from the obtained results multiple policy implications were provided for the investigated countries to help them control and reduce air pollution without harming their economic growth and development

co2 emissions energy consumption income and foreign trade a south african perspective abstract the effect of trade liberalisation on environmental conditions has yielded significant debate in the energy economics literature although research on the relationship between energy consumption emissions and economic growth is not new in south africa no study specifically addresses the role that south africa s foreign trade plays in this context a surprising fact given trade is one of the most important factors that can explain the environmental kuznets curve this study employs recent south african trade and energy data and modern econometric techniques to investigate this the main finding of interest in this paper is the existence of a long run relationship between environmental quality levels of per capita energy use and foreign trade in south africa as anticipated per capita energy use has a significant long run effect in raising the country s co 2 emission levels yet surprisingly higher levels of trade for the country act to reduce these emissions granger causality tests confirm the existence of a positive bidirectional relationship between per capita energy use and co 2 emissions whilst the study also finds positive bidirectional causality between trade and income per capita and between trade and per capita energy use it appears however that trade liberalisation in south africa has not contributed to a long run growth in pollution intensive activities nor higher emission levels

on the welfare cost of economic fluctuations in developing countries macroeconomic fluctuations are much stronger in developing countries than in the united states yet while a large literature debates the welfare cost of economic fluctuations in the united states it remains an open question how large that cost is in developing countries using several models we provide such a measure we find that the welfare cost of consumption volatility per se is far from trivial and averages a substantial multiple of the corresponding u s estimate moreover in many poor countries the welfare gain from eliminating volatility may in fact exceed the welfare gain from an additional percentage point of growth forever

lending constraints real estate prices and business cycles in emerging economies abstract we investigate a small open economy with constraints in both the domestic and the international credit market the informational opaqueness of the domestic market hinders foreign lenders activity so that entrepreneurs face looser borrowing constraints vis a vis domestic financiers however limited capitalization constrains domestic lenders calibrating the model to data from argentina we find that the interaction between lending and borrowing constraints is a channel through which real interest rate shocks generate fluctuations in output real estate prices and consumption external financial liberalization increases volatility and affects welfare more than domestic liberalization but also mitigates the destabilizing impact of domestic deregulation

the cost of business cycles under endogenous growth robert e lucas jr argued that the welfare gains from reducing aggregate consumption volatility are negligible subsequent work that revisited his calculation continued to find small welfare benefits further reinforcing the perception that business cycles do not matter this paper argues instead that fluctuations can affect welfare by affecting the growth rate of consumption i show that fluctuations can reduce growth starting from a given initial consumption which can imply substantial welfare effects as lucas himself observed empirical evidence suggests the welfare effects are likely to be substantial about two orders of magnitude greater than lucas original estimates

cross country evidence on the link between volatility and growth this paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations in a sample of ninety two countries as well as a sample of oecd countries the authors find that countries with higher volatility have lower growth the addition of standard control variables strengthens the negative relationship the authors also find that government spending induced volatility is negatively associated with growth even after controlling for both time and country fixed effects copyright 1995 by american economic association