beyond carbon pricing the role of banking and monetary policy in financing the transition to a low carbon economy it is widely acknowledged that introducing a price on carbon represents a crucial precondition for filling the current gap in low carbon investment however as this paper argues carbon pricing in itself may not be sufficient this is due to the existence of market failures in the process of creation and allocation of credit that may lead commercial banks the most important source of external finance for firms not to respond as expected to price signals under certain economic conditions banks would shy away from lending to low carbon activities even in the presence of a carbon price this possibility calls for the implementation of additional policies not based on prices in particular the paper discusses the potential role of monetary policies and macroprudential financial regulation modifying the incentives and constraints that banks face when deciding their lending strategy through for instance a differentiation of reserve requirements according to the destination of lending may fruitfully expand credit creation directed towards low carbon sectors this seems to be especially feasible in emerging economies where the central banking framework usually allows for a stronger public control on credit allocation and a wider range of monetary policy instruments than the sole interest rate

pollution control and the ramsey problem pollution is an inevitable by product of production and is only gradually dissolved by the environment it can be reduced by producing less and by cleaning up the environment but neither occur when they are left to the market cleaning activities and the optimal emission charges increase with the stock of pollutants when one allows for pollution of the environment in the classical ramsey problem the capital stock is less than in the market outcome and a fortiori less than under the golden rule the analysis distinguishes between stock and flow externalities arising from pollution an increase in impatience can lead to more capital accumulation even though this leaves less room for current consumption

government debt government spending and private sector behavior revisited comment perhaps no issue has generated as much controversy among economists in the past decade as the proposition that an increase in the government deficit induces an equal offsetting increase in private saving the truth of this so called ricardian equivalence proposition is central to whether budget deficits reduce capital accumulation to the feasibility of expansionary tax reductions and to the effects of social security on private saving and aggregate capital accumulation although the basic idea that the future tax liabilities associated with government deficits and debt induce individuals to increase their saving has been around since the time of david ricardo and was treated explicitly by don patinkin 1965 martin bailey 1971 and levis kochin 1974 the current debate was launched by robert barro 1974 the voluminous theoretical literature of recent years has shown that complete ricardian equivalence would be expected to prevail only under very special conditions see douglas bernheim 1987 for an especially useful survey and analysis but the theoretical restrictiveness of the assumptions required for complete ricardian equivalence does not constitute a practical refutation defenders of ricardian equivalence can argue that the theory is only an approximation and can claim that although the stringent conditions required for complete ricardian equivalence do not hold the economy s behavior in practice is close to the predictions of ricardian equivalence there are two key empirical questions the first is whether a higher level of taxes with government spending constant induces individuals to reduce their spending on consumption as traditional theory holds or has no effect on consumer spending as the ricardian equivalence proposition predicts the second deals with the effect of government outlays on goods and services although the absence of a negative effect on consumer spending of such government outlays is clearly contrary to the ricardian equivalence proposition the existence of a moderate negative effect of government outlays on consumer spending is not in itself evidence in favor of the ricardian equivalence proposition that individuals increase their saving to finance anticipated debt service as feldstein 1982 explained consumers may correctly believe that a rise in current government spending is a good indicator of a higher level of future government spending once a program is launched or budgets increased the process is unlikely to be reversed an increase in current government spending is therefore a good indication that future taxes will have to be higher to finance a higher level of future government spending individuals may rationally reduce their own spending when government outlays increase without a concurrent increase in taxes because they anticipate higher future taxes to finance higher future government spending even if they give little or no weight to the debt service implications of the current deficit the strongest direct evidence in favor of ricardian equivalence is roger kormendi s 1983 article in the american economic review he presents consumption regression equations that relate an estimate of consumption to net national product wealth martin feldstein is professor of economics at harvard university and president of the national bureau of economic research douglas elmendorf is assistant professor of economics at harvard university we are grateful to greg mankiw and lawrence summers for comments on an earlier draft the research reported here is part of the nber study of the government budget and the private economy ikormendi defines consumption as the sum of current expenditures on services and nondurables plus 10

technology gap global value chain and carbon intensity evidence from global manufacturing industries abstract the technological progress of a country may mean that its technology gap compared to the frontier has changed which will induce a change in its positioning in the global value chain and affect its carbon intensity using paten data input output database and the global value chain index we employ systematic generalized method of moments quantile regression with panel data and multilevel mediation analysis to measure empirically the impact of the technology gap on carbon intensity and positioning on the global value chain the empirical analysis shows that narrowing the technology gap will reduce significantly a country s carbon intensity further the effect of the technology gap on carbon intensity is more pronounced on industries with higher carbon intensity the mechanism test using the mediation effect model proves that the impact of the technology gap on carbon intensity is achieved by changing in the position of global value chain the findings suggest that a country s carbon intensity performance is not only affected by its own technological progress but also by global frontiers therefore a country should not only pay attention to its own technological progress but also to the development of global frontier technologies and speed of technological progress

handling financial resource mobilisation in technological innovation systems the case of chinese wind power to mitigate climate change a rapid and large scale expansion of sustainable innovations such as renewable energy technologies is crucial china s track record of wind power development shows both speed and scale that can provide valuable knowledge of how to stimulate and maintain transformation of energy systems the growth was made possible partly by ample access to financial capital however the rapid growth also led to growing pains and made the industry face increasing financial constraints while these constraints partly relate to structures and trends that are external to the wind power innovation system they were also a consequence of the particular path taken in chinese wind power development the case demonstrates that if a full fledged industry is to be developed and sustained a balanced growth is required and all innovation system functions need due attention sooner or later conceptually the article contributes by further exploring how mobilisation of financial resources affect and is affected by overall system dynamics

investing in a green transition abstract at the rio 20 conference the world s governments affirmed a need to transition toward green economies and background reports in preparation for the event emphasized the role of investment subsequent authors noted that private investment flows overwhelm public ones arguing that private investment must be mobilized for a transition however the role of private investment in a major economic transition is poorly understood particularly when the investment is not inherently attractive to investors and must be made attractive through policy we present a model representing investment macroeconomic interactions with classical features among its novel features is a distinction between affected sectors which are sensitive to the amount of green capital in the economy because of network effects and forward backward linkages and unaffected sectors which are relatively insensitive we argue that affected sectors are both harder to change and nearer to the base of the economy in model runs we observe that in a green transition the affected sector lags the unaffected sector with possible implications for a transition strategy thus in the model firm and investor behavior postpones deeper and more systemic changes until late in the transition

installed base and compatibility innovation product preannouncements and predation a good is often more valuable to any user the more others use compatible goods the authors show that this effect may inhibit innovation if an installed base exists and transition to a new standard must be gradual early adopters bear a disproportionate share of transient incompatibility costs this can produce excess inertia the installed base however is stranded if the new standard is adopted this may create excess momentum these dynamic effects have strategic implications temporary price cutting can permanently prevent entry and product preannouncements can be critical in innovation these strategic actions have ambiguous welfare effects

normal markets market imperfections and energy efficiency abstract the conventional distinction between economic and engineering approaches to energy analysis obscures key methodological issues concerning the measurement of the costs and benefits of policies to promote the adoption of energy efficient technologies the engineering approach is in fact based upon firm economic foundations the principle of lifecycle cost minimization that arises directly from the theory of rational investment thus evidence that so called market barriers impede the adoption of cost effective energy efficient technologies implies the existence of market failures as defined in the context of microeconomic theory problems of imperfect information and bounded rationality on the part of consumers for example may lead real world outcomes to deviate from the dictates of efficient resource allocation a widely held contrary view that the engineering view lacks economic justification is based on the fallacy that markets are normally efficient

how technological innovations affect urban eco efficiency in china a prefecture level panel data analysis abstract this paper utilizes sbm undesirable model and malmquist index to examine the urban eco efficiency in china and analyzes the regional heterogeneity through the panel data of 273 prefecture level cities during 2007 2017 in china the spatial durbin model is used to examine the influencing factors of urban eco efficiency associated with technological innovations the results show that the average values of urban eco efficiency of the east central and west regions are 0 93 0 88 and 0 90 respectively the moran s i of eco efficiency is around 0 8 which shows a strong spatial heterogeneity it is found that higher innovative ability can increase urban eco efficiency education investment and innovation talents have a u shape relationship with urban eco efficiency while capital investment and innovation performance have an inverted u shape relationship with it this research outlines the relationship between technological innovations and urban eco efficiency offering policy implications for china s eco construction and sustainable urban development

the efficiency paradox bureaucratic and organizational barriers to profitable energy saving investments abstract the paradox of why profitable energy saving investments are not undertaken continues to provoke debate the underlying phenomenon might be called the efficiency paradox because it represents a case in which business firms which are often presumed or taken axiomatically to be economically efficient make decisions that do not maximize profits new data from one of the us environmental protection agency s voluntary pollution prevention programs enables this paradox to be explored statistically the data show that both the level and variation in returns to lighting upgrade investments cannot be explained by standard economic models substantial gains in energy efficiency can be achieved without sacrificing profitability both economic and organizational factors account for some of the variation in observed returns to these investments but the results suggest a need for improved and more comprehensive theories of the investment behavior of firms and other organizations

the ricardian approach to budget deficits persistent budget deficits have increased economists interest in theories and evidence about fiscal policy this paper develops the ricardian approach and contrasts it with standard models the discussion considers from major theoretical objections to ricardian equivalence finite lifetimes imperfect capital markets uncertainty about future taxes and incomes and the distorting effects of taxation the paper then considers empirical evidence on interest rates consumption and saving and current account deficits the conclusion is that the ricardian approach is a useful first order approximation and that this approach will probably become the benchmark model for assessing fiscal policy this abstract was borrowed from another version of this item

understanding carbon lock in abstract this paper narrative argues that industrial economies have been locked into fossil fuel based energy systems through a process of technological and institutional co evolution driven by path dependent increasing returns to scale it is asserted that this condition termed carbon lock in creates persistent market and policy failures that can inhibit the diffusion of carbon saving technologies despite their apparent environmental and economic advantages the notion of a techno institutional complex is introduced to capture the idea that lock in occurs through combined interactions among technological systems and governing institutions while carbon lock in provides a conceptual basis for understanding macro level barriers to the diffusion of carbon saving technologies it also generates questions for standard economic modeling approaches that abstract away technological and institutional evolution in their elaboration the question of escaping carbon lock in is left for a future paper

a model of technological breakthrough in the renewable energy sector abstract models with induced technological change in the energy sector often predict a gradual expansion of renewable energies and a substantial share of fossil fuels remaining in the energy mix through the end of our century however there are historical examples where new products or technologies expanded rapidly and achieved a high output in a relatively short period of time this paper explores the possibility of a technological breakthrough in the renewable energy sector using a partial equilibrium model of energy generation with endogenous r d our results indicate that due to increasing returns to scale a multiplicity of equilibria can arise in the model two stable states can coexist one characterized by a lower and one by higher supply of renewable energy the transition from the low output to the high output equilibrium is characterized by a discontinuous rise in r d activity and capacity investments in the renewable energy sector the transition can be triggered by a rise in world energy demand by a drop in the supply of fossil fuels or by policy intervention under market conditions the transition occurs later than in the social optimum hence we identify a market failure related to path dependence and technological lock in that can justify a strong policy intervention initially paradoxically well intended energy saving policies can actually lead to higher emissions as they reduce the incentives to invest in renewable energies by having a cushioning effect on the energy price hence these policies should be supplemented by other instruments that restore the incentives to invest in renewable energies finally we discuss the influence of monopoly power in the market for innovations we show that market power can alleviate the problem of technological lock in but creates a new market failure that reduces static efficiency

a synthetic stock flow consistent macroeconomic model of financialisation this article is centred around the notions of shareholder value orientation and financialisation shareholder value orientation is reflected by a high dividend payout ratio applied by firms and the reluctance of firms to finance physical investment via new equity issues financialisation is the more general development towards an increased importance of the financial sector of the economy relative to the non financial sector in this article a synthetic stock flow consistent model is developed that attempts to encompass some important recent works on the effects of financialisation this includes contributions from the fields of mainstream information economics and post keynesian economics we conduct simulations reflecting increased shareholder value orientation and show that the results are consistent with important stylised facts copyright the author 2008 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

an empirical analysis of the macroeconomic effects of government debt evidence from canada 1989 an empirical analysis of the macroeconomic effects of government debt evidence from canada applied economics vol 21 no 1 pp 113 124

the impact of environmental policy instruments on innovation a review of energy and automotive industry studies various types of policy instruments have been implemented to reduce local and global emissions but the impact on innovation of different instruments has received less attention this paper reviews empirical studies of the innovation impact of four main types of policy instruments in two high emitting sectors the conclusions are threefold 1 policy plays a key role for the development and diffusion of environmental innovation in the studied sectors 2 different types of instruments promote different types of innovations general economic instruments has primarily encouraged incremental innovation general regulatory instruments has enforced improvements based on modular innovation and technology specific instruments appears to have been needed to support the development and deployment of radically new technologies 3 all types of policy instruments face challenges in design and implementation understanding the selection impact of the chosen instruments implementing increasing stringency levels committing to an appropriate scale and safeguarding policy stability

barriers to energy end use efficiency abstract recent findings indicate that some alternative energy promote equity efficiency and self reliance and are both economical and sustainable the asian development bank therefore initiated a case study to formulate energy strategies which could contribute to the solution of both local and global energy problems the study focuses on technical and economic details of energy end uses in india the conclusions some of which are surprising are supported by data from several studies the study recommends a shift to least cost electricity planning improving the available database for and information availability about energy rationalizing energy pricing and related fiscal policies and achieving energy efficiency by judicious investment in and support of energy forms which will be both sustainable and affordable in the long run

assessing and managing regulatory risk in renewable energy contrasts between canada and the united states abstact a challenge for energy firms when considering new investments is to balance expected financial gains against potential risks however while investment opportunities in different jurisdictions are often straightforward to identify the policy or regulatory risks for investors are more difficult to accurately ascertain here i provide a novel conceptual framework for how firms can assess regulatory risk that focuses on the institutional processes governing policy making risks are lower and policies will subsequently be more stable in jurisdictions where regulatory agencies have greater autonomy from politicians and where policies are formulated through more rigid policy making processes the contrasting development patterns of renewable energy policies in ontario and texas offer support for the framework i further develop strategies for how firms can successfully manage regulatory risks in different types of environment

the costs of mitigating carbon emissions a review of methods and findings from european studies abstract conventional wisdom has it that top down studies of mitigation costs are too pessimistic while bottom up studies are too optimistic in examining mitigation cost studies for western europe this paper finds this interpretation to be flawed the paper expands the analytical framework for interpreting mitigation cost studies evaluates the treatment of no regrets options and other input assumptions in the various studies and includes findings from recent integrated top down bottom up modeling assessments not covered in the ipcc report based on these new elements it is found that mitigation costs tend to be overestimated not only in top down studies but also in bottom up studies given this pervasive bias toward pessimism the body of existing mitigation cost assessments for western europe can be read as follows over the next three to four decades a combination of tax shifts market transformation instruments and policies to reform subsidies and internalize non climatic externalities could cut carbon emissions in western europe by 40 50 relative to the base year at no loss or at a gain in gdp averaged over the medium term and including a phase in period an economically optimal rate of implementing western europe s no regrets potentials is found to be in the neighborhood of 2 per year relative to base year levels

empirical studies on the relationship between public and private investment and gdp growth this study performs empirical studies on the interaction between public and private investment and gdp growth for japan and the usa since the data for each country used show features that are quite different from each other empirical methods of gmm generalized method of moments and ols ordinary least squares are accordingly applied to japan and the usa respectively the empirical results suggest that both public and private investment make great contributions to japanese economic growth while the us private investment seems to play a much more significant role than public investment

the eirin flow of funds behavioural model of green fiscal policies and green sovereign bonds abstract fiscal and monetary policies as well as new financial instruments could play a key role to meet the paris agreement however deep uncertainty characterizes their design and their potential effects on growth financial and credit market stability and inequality we develop the eirin flow of funds behavioural model to simulate the introduction of green fiscal policies and green sovereign bonds and we display their effects on firms investments in the brown and green sector on unemployment on the credit and bonds market eirin is stock flow consistent and is rooted on a balance sheet approach it adopts a leontief production function with no substitution of the production factors i e labour capital and raw materials its sectors are endowed with adaptive behaviours and expectations and interact with the others and the foreign sector through a set of markets simulations show that green public policies can promote green growth by influencing firms expectations and the credit market green sovereign bonds represent a short term win win solution while green fiscal measures have higher immediate distributive effects that induce negative feedbacks on the economy these results are influenced by the conditions fiscal budgetary and public debt gdp in which both measures are implemented

barriers within firms to energy efficient investments abstract many investments in energy efficiency fail to be made despite their apparent profitability internal hurdle rates are often set at levels higher than the cost of capital to the firm reasons for these practices include bounded rationality principal agent problems and moral hazard the policy implication is that government can simultaneously improve overall energy efficiency and increase private sector productivity by providing informational and organizational services that go beyond the traditional regulatory framework

government deficits and aggregate demand abstract the evidence presented in this paper indicates that changes in government spending transfers and taxes can have substantial effects on aggregate demand the estimates also indicate that the promise of future social security benefits significantly reduces private saving each the basic implications of the so called ricardian equivalence theorem is contradicted by the data the results are consistent with the more general view of the effects of fiscal actions and fiscal expectations that is described in the paper

interest rates and expected future budget deficits in the united states several recent empirical studies have found no evidence of a positive association between interest rates and current and past budget deficits one possible explanation for this finding is that interest rates are related much more to the expectation of future budget deficits than to current and past budget deficits in this paper i investigate whether this explanation is valid finding no evidence that it is section ii briefly formulates and discusses the hypothesis under consideration stating some of its implications section iii presents the results of regressing the commercial paper rate moody s aaa bond rate and the ex post real commercial paper rate on current and past government spending budget deficits and real money supplies the regressions have been fitted to the entire sample of monthly data spanning the period between june 1908 and march 1984 and to 11

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

uncertainty of climate policies and implications for economics and finance an evolutionary economics approach the assessment of the socio economic and financial impacts of climate change represents a main source of uncertainty for policy makers and investors however traditional climate economics and financial risk models are not properly equipped to consider the characteristics of climate risks and the opportunities from climate alignment being constrained by equilibrium conditions and linearity of impacts as well as by representative agents and intertemporal optimization given the closing window of opportunity to achieve the 2 c target there is an urgent need for a new wave of models able to embrace uncertainty and complexity deriving not only from climate impacts on socio economic systems but also from their reaction in this regard approaches rooted on evolutionary economics and complexity science could provide complementary insights to traditional climate economics models this special issue contributes to fill in this knowledge gap by collecting nine papers applying evolutionary and complex systems approaches and agent based and network models to climate change economics presented at the special session of the research area environment economics interactions of the european association of evolutionary political economy eaepe s conference 2016 by introducing conceptual and methodological innovations in climate economics and finance the nine articles analyse the conditions for effective climate policies and financial instruments to align countries to the global climate targets compared to the costs of inaction this information is crucial to support decision makers in the analysis of climate finance policies and instruments to foster the transition to a sustainable and inclusive low carbon economy

government debt government spending and private sector behavior a current period tax reduction financed by issuing government debt shifts the timing of tax collection from the current period to the future if the future taxes implied by government debt are not fully perceived and discounted by the private sector there will be a net wealth effect that increases private sector consumption thus reducing capital accumulation and growth if on the other hand the implied future taxes are perceived and discounted by the private sector the current period tax reduction will be used to increase private saving to pay for the future taxes and government debt will be absorbed without any real effects on the economy the effects of government spending financed by current period taxation also depend upon private sector perceptions 2 if the benefits of government spending are ignored private sector consumption will decrease in accordance with the reduction in permanent disposable income to the extent that government spending is on consumption type goods that are perceived as substitutes for privately provided consumption goods there will be a relatively greater reduction in private sector consumption to the extent that government spending is on investment type goods yielding future goods and services that are perceived as substitutes for future privately provided consumption goods there will be a relatively smaller reduction in private sector consumption the standard approach to modeling private sector consumption saving behavior involves a rather asymmetric set of assumptions as to how the private sector perceives the various elements of government fiscal policy 3 current period taxes are assumed to be fully perceived but current period government spending is implicitly assumed to be completely ignored by the private sector in considering permanent personal disposable income the private sector is assumed to be forward looking in its assessment of income and taxation the stock of government debt is nevertheless included as part of the stock of private wealth the implicit assumption associate professor of economics graduate school of business university of chicago 1101 east 58th street chicago il 60637 i thank eugene fama levis kochin michael mussa paul evans and an anonymous referee for helpful comments i am particularly grateful to daniel benjamin for contributing many hours of discussion and laura lahaye who was a research assistant and valuable adviser on earlier drafts the theoretical debate on the burden of the debt has been long standing gerald o driscoll 1977 documents ricardo s nineteenth century position robert barro 1974 reopened the debate by introducing the fundamental issue of intergenerational transfers also discussed in merton miller and charles upton 1974 the empirical side of the debate was initiated by levis kochin s 1974 attempt to test for the effects of deficits on consumption and by martin feldstein s 1974 attempt to test for the effects of social security wealth on consumption other empirical contributions include jess yawitz and laurence meyer 1976 myself 1978 and j earnest tanner 1978 1979 with respect to the effects of government deficits and debt and barro 1978 michael darby 1979 and dean leimer and selig lesnoy 1982 with respect to social security wealth see also interesting recent papers by john seater 1982 who generates detailed tests of the effects of deficits and debt on consumption charles plosser 1982 who explores the effects of government spending and debt shocks on interest rates and feldstein 1982 who attempts tests similar to some in this paper see fn 29 2martin bailey s 1962 1971 development of the effects of government spending on private consumption and aggregate economic activity is the seminal contribution paul david and john scadding 1974 extend bailey s ideas and provide some supporting empirical evidence more recently willem buiter 1977 and myself 1978 developed models based on bailey s earlier work barro 1981 has an interesting paper on related issues see also david aschauer 1982 3the standard approach incorporates fiscal policy through the concept of personal disposable income and by including the stock of government debt as part of personal wealth see for example the empirical specification of albert ando and franco modigliani 1963 which has been the basis of most empirical consumption studies since and feldstein 1974 for one of the more influential papers based on the ando modigliani specification

cred a new model of climate and development this paper describes a new model climate and regional economics of development cred which is designed to analyze the economics of climate and development choices its principal innovations are the treatment of global equity calculation of the optimum interregional flows of resources and use of mckinsey marginal abatement cost curves to project the cost of mitigation the model shows more equitable scenarios have better climate outcomes the challenge of climate policy is to persuade high income countries to accept the need for both international equity and climate protection

a stock flow fund ecological macroeconomic model this paper develops a stock flow fund ecological macroeconomic model that combines the stock flow consistent approach of godley and lavoie with the flow fund model of georgescu roegen the model has the following key features first monetary and physical stocks and flows are explicitly formalised taking into account the accounting principles and the laws of thermodynamics second georgescu roegen s distinction between stock flow and fund service resources is adopted third output is demand determined but supply constraints might arise either due to environmental damages or due to the exhaustion of natural resources fourth climate change influences directly the components of aggregate demand fifth finance affects macroeconomic activity and the materialisation of investment plans that determine ecological efficiency the model is calibrated using global data simulations are conducted to investigate the trajectories of key environmental macroeconomic and financial variables under i different assumptions about the sensitivity of economic activity to the leverage ratio of firms and ii different types of green finance policies

the economics of changing course implications of adaptability and inertia for optimal climate policy this paper reviews evidence that energy technologies and systems adapt over time to accommodate external pressures that technical innovation and systemic change in the energy sector is largely induced by need and restrained by potentially large transitional costs a simple integrated model of optimal greenhouse gas abatement over time is presented in which the abatement cost depends on both fixed and transitional elements it is shown that the optimal current response and long run prospects differ radically between the classical economic case in which the cost of a given cutback in emissions is fixed exogenously and the adaptive case in which the response is ultimately adaptive but heavily constrained by inertia ie low fixed but high transitional cost if energy systems are indeed to a large degree adaptive the results demonstrate that as compared with the classical non adaptive case long run stabilization of atmospheric co2 may be optimal even with moderate damages from climate change greater near term abatement efforts are justified and the cost of a given delay in response may be several times higher neglect of the issue of induced technical change and other adaptive responses may invalidate the policy implications drawn from most integrated assessment models developed to date

u s energy research and development declining investment increasing need and the feasibility of expansion investment in energy research and development in the u s is declining despite calls for an enhancement of the nation s capacity for innovation to address environmental geopolitical and macroeconomic concerns we examine investments in research and development in the energy sector and observe broad based declines in funding since the mid 1990s the large reductions in investment by the private sector should be a particular area of concern for policy makers multiple measures of patenting activity reveal widespread declines in innovative activity that are correlated with research and development r d investment notably in the environmentally significant wind and solar areas trends in venture capital investment and fuel cell innovation are two promising cases that run counter to the overall trends in the sector we draw on prior work on the optimal level of energy r d to identify a range of values which would be adequate to address energy related concerns comparing simple scenarios based on this range to past public r d programs and industry investment data indicates that a five to ten fold increase in energy r d investment is both warranted and feasible

environmental degradation in france the effects of fdi financial development and energy innovations abstract this paper explores the determinants of carbon emissions in france by accounting for the significant role played by foreign direct investment fdi financial development economic growth energy consumption and energy research innovations in influencing co 2 emissions function in this endeavour we employ the novel sor shahbaz et al 2017 unit root test on french time series data over the period 1955 2016 to examine the order of integration in the presence of sharp and smooth structural breaks in the variables we also apply the bootstrapping bounds testing approach recently developed by mcnown et al 2018 to investigate the presence of cointegration and the empirical findings underscore the presence of cointegration among the time series moreover we find that fdi has a positive impact while energy research innovations have a negative impact on french carbon emissions financial development lowers carbon emissions thereby improving the french environmental quality fdi degrades the environment and thus supports the pollution haven hypothesis in france similarly financial development suggests that financial stability is a required condition for improving environmental quality so are energy research innovations contrarily energy consumption is positively linked with carbon emissions however the relationship between economic growth and co 2 emissions is an inverted u which is a validation of the environmental kuznets curve ekc

driving effect of technology innovation on energy utilization efficiency in strategic emerging industries abstract under the policy of energy saving and emission reduction technological innovation has become the key power driver to improve energy utilization efficiency by using the panel data of 21 industrial segments between 2000 and 2015 this paper investigates the driving effect of technological innovation on energy utilization efficiency in strategic emerging industries and analyzes the critical factors influencing the driving effect of technological innovation by the stochastic frontier analysis method the empirical result shows that technological innovation between 2000 and 2015 has had a significant positive driving effect on the energy utilization efficiency of strategic emerging industries and exhibits a development trend of year by year steady state growth on the whole the greater the value of the development expenditure of new green products and the investment in environmental pollution treatment the greater the technological efficiency the greater the value of the transformation expenditure of energy saving technology the greater the technological inefficiency finally the paper proposes the countermeasures and suggestions for the driving effect of technological innovation on energy utilization efficiency in strategic emerging industries an empirical study is made to analyze the driving effect of technological innovation on energy utilization efficiency the positive and negative factors of technological innovation are forgotten strategic emerging industries can select optimal innovation behavior to improve quality and efficiency of energy utilization based on the results

effects of government spending on private investment this paper investigates the effects of military and non military public expenditures on gross private investment using cointegration and error correction analysis the latter type of public spending is disagreggated into expenditures of infrastructure consumption and other general government expenditures the empirical evidence from four emerging european countries namely greece ireland portugal and spain suggests that in some cases public capital spending stimulates investment while in others it depresses it also the results tentatively indicate that defence spending exerts no influence on private investment thus adding to the ongoing controversy of the economic effects of military spending

ecological macroeconomics an application to climate change ecological economics has not paid sufficient attention to the macroeconomic level both in terms of theory and modeling yet key topics debated in the field of ecological economics such as sustainable consumption reduction in working time the degrowth debate the energy exergy link and the rebound effect require a holistic and macro perspective while this deficiency has been identified before and keynesian economics has been generally suggested as a potent vehicle to establish economic system s thinking very little concrete theorizing and practical suggestions have been put forward we give further credence to this suggestion and demonstrate the value of tackling key concerns of ecological economics within a keynesian growth framework contextualized by an application to climate change we suggest that policy relevant recommendations need to be based on a consistent view of the macroeconomy we end with laying out key building blocks for a keynesian model framework for an ecological macroeconomics authors abstract

recent evolutionary theorizing about economic change this famous passage from marshall s principles of economics it first appeared in the fifth edition which came out in 1907 nicely brings out two issues which are as germane to economics today as they were when marshall wrote the first is the heavy reliance by economists in their formal theorizing on the notion of equilibrium the other is the appeal that biological conceptions3x201d have for many economists particularly when their focus is on economic change

the role of markets and policies in delivering innovation for climate change mitigation this paper identifies market incentives and international and domestic policies that could technologically alter energy systems to achieve greenhouse gas stabilization targets while also meeting other societal goals i consider the conceptual basis and empirical evidence on the effectiveness and efficiency of climate technology policies the paper reviews the literature on trends and prospects for innovation in climate change mitigation and examines the evidence on induced innovation and the implications for the choice of technology policy i then consider the impact of technological advances on the environment the role of direct government support for r d and the complementarities between policies internalizing

new evidence on deficits and interest rates it is generally assumed on theoretical grounds that increases in government borrowing cause interest rates to rise 1 but empirical support for this proposition has been weak at best several recent papers have uncovered no strong relationship between deficits and short terrn interest rates however the research reported here indicates that although the relationship between deficits and short terrn interest rates may be tenuous there is strong evidence that larger deficits are associated with higher long terrn interest rates much of the debate about whether there is a strong relationship between federal borrowing and interest rates concerns the crowding out question this controversy centers on the direct and indirect eilffects of government fiscal actions on private spending these effects have been well documented in the theoretical literature e g buiter 1977 carlson and spencer 1975 blinder and solow 1973 many of the crowding out effects studied in this literature depend on the connection between government borrowing and high interest rates friedman 1978 meyer 1975 silber 1970 this is called short run indirect crowding out and may occur when increases in government spending and borrowing cause interest rates to rise which then may cause private spending to be reduced buiter 1977 pp 310 13

evolutionary economics and technology policy in this brief paper i propose to explore the economics of technology policy from an evolutionary perspective as with any evolutionary argument the central concern is with the mechanisms of economic change in this case in relation to the development of new technologies and patterns of organisation and their spread into the wider economic system in this sense we build upon one of the major stylized facts of modern growth structural change at all levels from the microeconomic to the macroeconomic to any observer of the policy making process let alone a practitioner the contrast between the theory which underpins policy and the implementation of policy will seem acute as nelson and winter i982 have rightly insisted research into policy is shaped by policy questions not by an agenda relating to how economic theory can be developed to deal with innovation setting priorities designing instruments and evaluating outcomes do not link easily with the general ideas dealt with below among the general points we will stress two will be of critical importance first that the innovation activities of firms involve a wider range of other institutions supplying the knowledge and skills which underpin the efforts of individual firms we term this the systems perspective on innovation nelson i993 secondly it is not helpful to treat innovation and the diffusion of innovation as separate categories in fact they are inseparable with feedback from diffusion being one of the critical elements shaping how a technology is developed we begin with a brief review of the familiar market failure perspective on policy and build from this into a brief overview of the evolutionary approach the paper concludes with an outline of the systems perspective on technology policy it is taken as read that virtually any economic policy can have implications in principle for the process of innovation however we treat technology policy in a narrow sense even though it spills over into questions of education policy science policy and competition policy

systems competition and network effects this paper discusses firm behavior market performance and the public and private institutions that arise in systems markets i e markets where consumers use compatible components together to generate benefits in such markets which include communications networks and hardware software networks popular products are inherently more valuable these network effects can drive corporate strategies and are critical in understanding innovation in many high technology markets the discussion here emphasizes the dynamics of consumer adoption decisions in the presence of network effects competition between incompatible systems and how suppliers choose which components are compatible and which are not

the role of energy technology innovation in reducing greenhouse gas emissions a case study of canada abstract understanding the influence of energy technology innovation in reducing a country s greenhouse gas emissions requires a systematic review to characterize the existing system a comprehensive data review of available financing mechanisms and investments by government and industry is undertaken for the case of canada coupled with an organized examination of existing international federal and regional climate policies that advance innovation results indicate that investments from early research and development through to capital expenditures are heavily weighted towards fossil fuels though federal efforts to meet international commitments have been unsuccessful regions implementing high carbon fuel phase out renewable portfolio standards and feed in tariffs were found to be successful in reducing emissions financing for clean energy projects is readily available however there is no complete database available for investors to discover these opportunities to enhance clean energy innovation in canada and enable success in emissions reductions we suggest that investments from research and development to capital expenditures and regional policies should be aligned with federal commitments along with clear communication of available financing to attract clean energy investors our approach to a systematic review is broadly applicable to other regions where there is interest in understanding and improving the role of innovation in reducing greenhouse gas emissions particularly in countries with federalist political systems and large fossil fuel reserves

fiscal policy and private investment expenditure a study of australia and the united states the effect of government spending on private sector s investment and profitability is examined within the context of an open economy macro model the empirical results of the study indicate that the private investment expenditure in australia and the united states is crowed out by government investment and government consumption respectively these results are in conflict with the hypothesis of fiscal neutrality in addition the empirical results of corporate profitability provide no support for the complementary relationship between public and private investment expenditure

government financing decisions and asset returns abstract this paper presents an empirical investigation of the relation between government financing decisions and asset returns in particular the focus is on whether a substitution of debt financing for tax financing of a given level of expenditures is associated with an increase in interest rates the paper brings a different perspective to empirical investigations of government fiscal policies by examining the response of asset prices in an efficient capital market to such policies rather than focusing on aggregate consumption behavior the results are consistent with the idea that asset prices are unrelated to how the government finances its expenditures the results however also indicate that the capital market is not indifferent with respect to the level of government expenditures as higher interest rates are associated with increases in government purchases

uncertainties in macroeconomic assessments of low carbon transition pathways the case of the european iron and steel industry abstract the climate targets agreed in paris 2015 render deep decarbonization of energy and emission intensive industries crucial policy makers are interested in the macroeconomic consequences of such decarbonization pathways and often rely on integrated modelling studies however the underlying modelling assumptions and uncertainties often remain unquestioned or invisible although they may govern the models results for the case of a zero process emission pathway of the european iron and steel industry we demonstrate how different assumptions on different layers of uncertainty influence results we show that effects strongly depend on technology choice prevailing macroeconomic states as well as regional characteristics the underlying socio economic development and the climate policy trajectory seem to play a less important role particularly we find that the choice of model i e which macroeconomic theory strand it arises from influences the sign and magnitude of macroeconomic effects and thus should be well understood in terms of appropriate interpretations by both modelers and policy makers we emphasize that model assumptions should be transparent results sought as to be robust across a range of possible contexts and presented together with the conditions under which they are valid to that end co design and co production in research would support its relevance and applicability

do budget deficits raise nominal interest rates evidence from six countries abstract it is widely believed that budget deficits raise nominal interest rates this paper shows that the belief has no empirical support for six countries ricardian equivalence may explain the lack of a positive association between budget deficits and nominal interest rates