the political economy of bilateral bailouts imf loans during times of financial crisis often occur in conjunction with bilateral financial rescues these bilateral bailouts are substantial in size and a central component of international cooperation during financial crises we analyze the political economy of bilateral bailouts and study the trade offs that potential creditor governments experience when other countries find themselves in financial distress creditor governments want to stabilize crisis countries by providing additional liquidity particularly if the crisis country is economically or politically important to them but they are constrained by domestic politics politicians aim to balance these countervailing pressures they provide bailouts when their own economy is exposed to negative spillover effects and when the crisis country is important for geostrategic military or political reasons domestic economic and political constraints on the other hand limit their ability to bail out other countries we test our hypotheses using an original data set on bilateral bailouts by the g7 countries to countries that experienced financial crises between 1975 and 2010 the findings of our statistical analysis support our theoretical argument and contribute to a deeper understanding of international cooperation s complex structure during financial crises

why does the combination of the european union emissions trading scheme and a renewable energy target makes economic sense abstract the european climate and energy mix of targets and policies has been criticised by many economists in particular it is often argued that the renewable energy targets do not make economic sense because they represent an expensive option to reduce co2 emissions within a cap and trade scheme such as the european union emissions trading scheme eu ets in addition it has also been claimed that support for renewable electricity deployment negatively interacts with the eu ets having a dampening effect on the co2 price which favours the dirtiest technologies and is detrimental for the greener ones in this article we argue that this mainstream economic view is short sighted and that a multidisciplinary economic analysis of the climate and energy policy mix is required mainstream economic analysis is based on a narrow approach for the assessment of instrument combinations and neglects relevant insights from several economic disciplines including innovation economics and political economy approaches in reality economic theory supports the combination of an ets and renewable energy targets the existence of different policy goals and market failures the demand pull influence of renewable energy policies on innovation a political economy approach and the different risk exposure of renewable energy technologies call for a policy mix although policy combinations are not a panacea and bring problems on their own the aforementioned negative interaction between renewable energy deployment and the carbon price in the eu ets can be mitigated through appropriate coordination and or instrument choice and design

inequality and endogenous trade policy outcomes abstract an enduring puzzle in international economics is why trade interventions are biased in favor of import competing rather than export sectors and therefore restrict trade in this paper we show that if the government s objective reflects a concern for inequality then trade policy generally exhibits an anti trade bias importantly under neutral assumptions the mechanism that we analyze generates the anti trade bias independently of whether factors are specific or mobile across sectors the mechanism also generates an anti trade bias between large countries even after they sign reciprocal trade agreements that eliminate any terms of trade motivation for the use of trade protection

optimal mix of emissions taxes and cap and trade abstract in practice different emitters of a particular pollutant are sometimes subjected to different control mechanisms this paper focuses on the situation where a part of the economy is regulated by a cap and trade program while the rest is subjected to an emissions tax using an extended version of weitzman s prices vs quantities model m l weitzman prices vs quantities revi econ stud 41 1974 477 491 we analyze the conditions under which this is superior from an efficiency point of view to subjecting the whole economy to either of these control mechanisms the paper addresses a crucial trade off between two sources of efficiency loss one due to cost effectiveness issues and another due to emissions volume this trade off determines the optimal size of each sector it is shown that the size of the taxed sector at an optimum increases with the relative steepness of the aggregate marginal abatement cost function

origins and development of the eu ets the successful creation of the european union emissions trading scheme eu ets was not inevitable countries such as canada and japan which might be thought to have a less complex and more cohesive cultural and institutional context failed to do so europe succeeded for a number of reasons with a single market for the economy the logic of a single market for environment is inexorable the european commission which had failed in its earlier efforts to introduce a carbon energy tax made the case for trading with great skill and persistence on the basis of qualified majority voting which meant no country had a veto the uk and denmark initiated their own national schemes and there was a serious risk of balkanising the market with up to 27 different schemes with the losses of scale and scope this would entail meeting the union s kyoto commitments required a substantive pan european response and eu ets was the most credible and effective way of doing so the european parliament and environmental non governmental organisations played a constructive role pushing for more auctioning of allowances and less of them allocated centrally free allocation managed by member states ms was a necessary condition to achieve the support needed so they failed to achieve these objectives in the initial phase but they characterize the commission s proposals post 2012

good things do not always come in threes on the excess cost of overlapping regulation in eu climate policy since the mid 1990 s the european union eu aims at pushing global climate policy the objective is to promote international cooperation by the adoption of substantial eu wide greenhouse gas emission reduction targets and their least cost implementation our quantitative impact assessment of the eu climate and energy package shows that the myriad of instruments used in the eu to curb greenhouse gas emissions is doomed to generate substantial excess cost we conclude that eu climate and energy policy should better disentangle its choices of objectives targets and policy instruments on rigorous economic grounds in order to improve the coherence and overall cost effectiveness of policy initiatives

supply of renewable energy sources and the cost of eu climate policy abstract what are the excess costs of a separate 20 target for renewable energy as a part of the eu climate policy for 2020 we answer this question using a computable general equilibrium model worldscan which has been extended with a bottom up module of the electricity sector the model set up makes it possible to base the calibration directly on available estimates of costs and capacity potentials for renewable energy sources in our base case simulation the costs of eu climate policy with the renewables target are 6 higher than those of a policy without this target the uncertainty in this estimate is considerable however and depends on our assumptions about the availability of low cost renewable energy the initial cost level the steepness of the supply curves and share of renewable energy in the baseline within the range we explore the excess costs vary from zero when the target is not a binding constraint to 32 when the cost progression and the initial cost disadvantage for renewable energy are high and its initial share is low

who wants to globalize consumer tastes and labor markets in a theory of trade policy beliefs although the allure of consumption is the engine of globalization political economists have tended to ignore varying consumer tastes as a potential source of beliefs about trade policy this article develops a theory of trade policy preferences that adds the notion of varying consumer tastes to the standard labor market application of the heckscher ohlin trade model the theory which can explain trade preferences both across individuals and countries is supported by an empirical analysis of survey data from 41 nations heavy consumers of exportables are found to be more protectionist than heavy consumers of imports and import competing goods moreover citizens in countries with expensive tradable goods see trade liberalization as a remedy to the rents they pay for protectionism other findings also support the more conventional labor market side of the heckscher ohlin model

who is against immigration a cross country investigation of individual attitudes toward immigrants abstract this paper empirically analyzes economic and noneconomic determinants of individual attitudes toward immigrants within and across countries the two survey data sets used covering a wide range of developed and developing countries make it possible to test for interactive effects between individual characteristics and country level attributes in particular theory predicts that the correlation between pro immigration attitudes and individual skill should be related to the skill composition of natives relative to immigrants in the destination country skilled individuals should favor immigration in countries where natives are more skilled than immigrants and oppose it otherwise results based on direct and indirect measures of the relative skill composition are consistent with these predictions noneconomic variables also are correlated with immigration attitudes but they don t alter significantly the labor market results

inequity aversion and the international distribution of trade protection one important puzzle in international political economy is why lower earning and less skilled intensive industries tend to receive relatively high levels of trade protection this pattern of protection holds across countries with vastly different economic and political characteristics and is not well accounted for in existing political economy models we propose and model one possible explanation that individual inequity aversion leads to systematic differences in support for trade protection across industries we conduct original survey experiments in china and the united states and provide strong evidence that individual policy opinions about sector specific trade protection depend on the earnings of workers in the sector we also present structural estimates that advantageous and disadvantageous inequality influence support for trade protection in the two countries o ne important puzzle in international political economy is why lower earning and less skilled intensive industries tend to receive relatively high levels of trade protection because this pattern of protection holds even in low income countries for which lower earning and less skilled intensive industries are likely to be comparative advantage sectors it is arguably at odds with the common empirical finding that declining comparative disadvantage industries are more likely to receive protection moreover it is at odds with most theoretical political economy models which tend to either predict consistent with most empirical work that losing sectors from international trade receive more protection or that expanding sectors that gain from greater trade should enjoy more government support existing accounts are generally good at explaining support for winners or for losers they are not however good at

learning to love globalization education and individual attitudes toward international trade recent studies of public attitudes toward trade have converged on one central finding support for trade restrictions is highest among respondents with the lowest levels of education this has been interpreted as strong support for the stolper samuelson theorem the classic economic treatment of the income effects of trade that predicts that trade openness benefits those owning factors of production with which their economy is relatively well endowed those with skills in the advanced economies while hurting others low skilled workers we reexamine the available survey data showing that the impact of education on attitudes toward trade is almost identical among respondents in the active labor force and those who are not even those who are retired we also find that while individuals with college level educations are far more likely to favor trade openness than others other types of education have no significant effects on attitudes and some actually reduce the support for trade even though they clearly contribute to skill acquisition combined these results strongly suggest that the effects of education on individual trade preferences are not primarily a product of distributional concerns linked to job skills we suggest that exposure to economic ideas and information among college educated individuals plays a key role in shaping attitudes toward trade and globalization this is not to say that distributional issues are not important in shaping attitudes toward trade just that they are not clearly manifest in the simple broad association between education levels and support for free trade the authors would like to thank james alt jeffry frieden robert lawrence dani rodrik ron rogowski ken scheve andy baker peter gourevitch and beth simmons for helpful comments on earlier drafts

immigration ethnic diversity and political outcomes evidence from denmark i study the impact of immigration and increasing ethnic diversity on political outcomes in immigrant receiving countries focusing on immigration and election outcomes in danish municipalities 1981 2001 a rich set of control variables isolates ethnic diversity eects from those of other immigrant characteristics and a novel iv strategy based on historical housing stock data addresses issues of endogenous location choices of immigrants increases in local ethnic diversity lead to right ward shifts in election outcomes by shifting electoral support away from traditional big government left wing parties and towards anti immigrant nationalist parties in particular these eects appear in both local and national elections

the impact of the 1962 repatriates from algeria on the french labor market this paper uses census data to examine the impact on the french labor market of the 900 000 people repatriated from algeria in 1962 repatriates settled in regions culturally and climatically simil

a new test of the relationship between regulatory change in financial markets and the stability of beta risk of depository institutions the us economy experienced major regulatory changes in the banking and finance industry with the passage of five major acts over the period 1980 to 1991 this has generated an extensive literature investigating the effects of these changes on the us banking industry in particular this body of research has examined the share market reaction to regulatory changes as well as their impact on the risk return market value and profitability of banking industry stocks generally it has been found that the regulatory changes have had a substantial impact although the effect has not been uniform across all depository institutions this paper extends this literature by analysing the stability of a sample of eighteen us banking industry stock betas across five periods a pre regulatory change period a monetary experiment period a deregulation period a reregulation period and a post regulatory change period based on an analysis of weekly returns we find that the level of bank risk has increased further we also find a tendency towards greater beta instability in both the monetary experiment and deregulation samples the degree of beta instability is lowest in the pre regulatory change and post regulatory change samples overall the monetary experiment and regulatory change coincided with an increased tendency towards beta instability we also compare our results to a randomly selected control sample of non banks and find some more general effects of regulatory change on individual stock betas

social identification and redistribution in heterogeneous federations evidence from germany and belgium recent evidence of increasing income heterogeneity within developed countries has reignited debates concerning the redistribution of income and wealth in this article we contribute to this debate

the political economy of the euro crisis this article introduces the special issue on the political economy of the euro crisis which aims to improve our understanding of the causes consequences and implications of the highly unusual nature of this crisis a financial crisis among developed countries within a supranational monetary union the article provides a brief chronology of the crisis discusses its underlying causes and reviews the ways in which comparative and international political economy can help us understand the crisis the article then discusses the individual and collective contributions of the articles in the special issue and discusses possible future research paths on the political economy of the euro crisis we conclude with a brief discussion of how a political economy perspective informs our understanding of the long term prospects for the eurozone and european integration

designing an eu energy and climate policy portfolio for 2030 implications of overlapping regulation under different levels of electricity demand abstract the european union s current climate and energy policy has to operate under an ex ante unforeseen economic crisis as a consequence prices for carbon emission allowances in the eu emissions trading system collapsed however this price collapse may be amplified by the interaction of a carbon emission cap with supplementary policy targets such as minimum shares for renewables in the power sector the static interaction between climate and renewable policies has been discussed extensively this paper extends this debate by analysing the efficiency and effectiveness of a policy portfolio containing a cap and trade scheme and a target for a minimum renewable share in different states of aggregate electricity demand making use of a simple partial equilibrium model of the power sector we identify an asymmetric interaction of emissions trading and renewable quotas with respect to different states of aggregate electricity demand the results imply that unintended consequences of the policy interaction may be particularly severe and costly when aggregate electricity demand is low and that carbon prices are more sensitive to changes in economic activity if they are applied in combination with renewable energy targets our analysis of the policy interaction focuses on the eu yet the conclusions may also be of relevance for fast growing emerging economies like china

economic integration and mass politics market liberalization and public attitudes in the european union theory theories of how domestic politics influence international economic policy differ fundamentally in their treatment of the mass public a central issue in this controversy is whether members of the mass public form attitudes about international economics that reflect their economic interests this article examines this assumption using international economic theory to identify variation in economic interests regarding international economic policy hypotheses citizens of the european union eu form attitudes toward eu membership an international economic policy that are consistent with their occupation based economic interests methods individual level heteroskedastic ordered probit analysis of eurobarometer survey data and oecd economic statistics from 1975 to 1992 results while controlling for a variety of potentially confounding factors the likelihood of positive evaluations of eu membership is positively related to intraoccupational differences in economic benefits from eu membership

self centered inequity aversion and the mass politics of taxation the politics of economic crises brings distributive economic conflict to the fore of national political debates how policy should be used to transfer resources between citizens becomes a central p

the political geography of the eurocrisis the european union provided a mixed response to the 2008 financial crisis on the one hand it refused to pursue fiscal integration through a common budget on the other it introduced significant transfers between countries that were designed to produce financial stabilization the authors analyze this response as the outcome of democratic constraints on eu leaders given the eu s current institutional structure citizens preferences pose a binding constraint on what leaders can do as these preferences limit the scope of risk pooling among members and the degree of political tolerance for different courses of action the authors show that citizens preferences reflect differences in the geography of income production regimes and institutional organization the heterogeneity of constituencies redistribution preferences combined with a diverse economic geography helps to explain why political constraints on national governments prevent them from engaging in further fiscal integration by contrast externalities among member states shift the preferences of citizens who may experience negative effects and make international redistribution politically feasible the authors analyze these two mechanisms and present novel empirical results on the determinants of preferences for fiscal integration and international redistribution in the aftermath of the eurocrisis

preferences for international redistribution the divide over the eurozone bailouts why do voters agree to bear the costs of bailing out other countries despite the prominence of public opinion in the ongoing debate over the eurozone bailouts voters preferences on the topic are poorly understood we conduct the first systematic analysis of this issue using observational and experimental survey data from germany the country shouldering the largest share of the eu s financial rescue fund testing a range of theoretical explanations we find that individuals own economic standing has limited explanatory power in accounting for their position on the bailouts in contrast social dispositions such as altruism and cosmopolitanism robustly correlate with support for the bailouts the results indicate that the divide in public opinion over the bailouts does not reflect distributive lines separating domestic winners and losers instead the bailout debate is better understood as a foreign policy issue that pits economic nationalist sentiments versus greater cosmopolitan affinity and other regarding concerns

what determines individual trade policy preferences abstract this article provides new evidence on the determinants of individual trade policy preferences using individual level survey data for the united states there are two main empirical results first we find that factor type dominates industry of employment in explaining support for trade barriers second we find that home ownership also matters for individuals trade policy preferences independent of factor type home ownership in counties with a manufacturing mix concentrated in comparative disadvantage industries is correlated with support for trade barriers this finding suggests that in addition to current factor incomes driving preferences as in standard trade models preferences also depend on asset values

does oilrig activity react to oil price changes an empirical investigation in this paper we analyze how oilrig activity in different non opec regions is affected by the crude oil price we estimate relationships between oilrig activity and crude oil prices using dynamic regression models augmented with latent components capturing trend and seasonality the results generally show a positive relationship between oilrig activity and the crude oil price but the strength of the relationship differs across regions overall there seems to be a clear relationship between the oil industry structure in the region and the oilrig activity s reaction to price changes on average the long run price elasticity for oilrig activity in non opec countries is around unity

individual preferences for political redistribution what drives people s support of governmental reduction of income inequality we employ data from a large international survey in order to evaluate the explanatory power of three competing forces referred to as the homo oeconomicus effect the public values effect and the social rivalry effect the empirical analysis reveals that at the aggregate level all three effects play a significant role in shaping individual preferences for political redistribution attitudes of citizens in formerly socialist countries turn out to differ from those of western citizens in a systematic way 2002 elsevier science b v all rights reserved

individual attitudes towards migration a re examination of the evidence recent economic research has highlighted the importance of labor market and welfarestate mechanisms in the explanation of individual attitudes towards immigration by contrast political scientists argue that attitudes are mostly determined by individual cultural values and beliefs this paper takes a fresh look at this debate and contains the following contributions to the literature first we address the problem that unobserved cultural values and beliefs might be correlated with education a potential source of bias in the estimations second we compile a detailed database on the education levels of immigrants and natives and on the degree of fiscal redistribution in european countries third our econometric estimates rely on a simple structural model taking individual heterogeneity with respect to education explicitly into account the structural model enables us to evaluate quantitatively the importance of the labor market and welfare state channels and of other individual factors such as cultural values and beliefs our results show that the labor market and welfare state mechanisms play a significant role in explaining individual attitudes however the quantitative importance of these two mechanisms turns out to be rather limited compared to other individual factors jel classification f22 j61

explaining mass support for agricultural protectionism evidence from a survey experiment during the global recession why are citizens in advanced industrialized countries willing to accept high prices for agricultural products conventional wisdom suggests that agricul tural interests secure government protection because producers are concentrated and better politically organized than diffused consumers due to its focus on pro ducer capacity for collective action however the literature fails to account for the high levels of mass support for agricultural protectionism in advanced industrial ized nations this article presents new evidence from a survey experiment in japan conducted during the recent global recession december 2008 that accounts for this puzzle using randomly assigned visual stimuli the experiment activates respon dents identification with either producer or consumer interests and proceeds to ask attitudinal questions regarding food imports the results suggest that consumer priming has no reductive or additive effects on the respondents support for liberal izing food imports surprisingly producer priming increases respondents opposi tion to food import particularly among those who fear future job insecurity we further disentangle the puzzling finding that consumers think like producers on the issue of food import along two mechanisms sympathy for farmers and projec tion of their own job insecurity the results lend strong support to the projection hypothesis

ideology and voter preferences as determinants of financial globalization we propose that the global spread of ideas affects international economic openness policies and that to omit ideology as an explanatory variable for economic globalization is to risk omitted variable bias using voting data we create measures of global ideology regarding economic openness and propose that changes in both global and domestic ideology influence how open or closed to international finance an economy is we also test other influences on liberalization including proposed state centered diffusion mechanisms using pcsts and system gmm models we estimate the determinants of change in international capital account regulation for 82 countries 1955 to 1999 we thereby examine diffusion of both liberalizations 1950s and 1990s and closures 1960s and 1970s changes in both global and domestic ideology robustly influence liberalization and closure the capital account policies of neighboring countries positively and of the leading economies negatively also influenced a country s capital account liberalization

doctors with borders occupational licensing as an implicit barrier to high skill migration research on the political economy of immigration overlooks the specificity of human capital in skilled occupations and its implications for immigration preferences and policymaking conclusions that skilled americans are unconcerned about labor market competition from skilled migrants build on a simple dichotomy between high and low skill migrants in this article we show that natives turn to occupational licensing regulations as occupation specific protectionist barriers to skilled migrant labor competition in practice high skill natives face labor market competition only from those high skill migrants who share their occupation specific skills licensure regulations ostensibly serve the public interest by certifying competence but they can simultaneously be formidable barriers to entry by skilled migrants from a collective action perspective skilled natives can more easily secure sub national occupation specific policies than influence national immigration policy we exploit the unique structure of the american medical profession that allows us to distinguish between public interest and protectionist motives for migrant physician licensure regulations we show that over the 1973 2010 period states with greater physician control over licensure requirements imposed more stringent requirements for migrant physician licensure and as a consequence received fewer new migrant physicians by our estimates over a third of all us states could reduce their physician shortages by at least 10 percent within 5 years just by equalizing migrant and native licensure requirements this article advances research on the political economy of immigration and highlights an overlooked dimension of international economic integration regulatory rent seeking as a barrier to the cross national mobility of human capital and the public policy implications of such barriers

non competitive market behaviour in the international coking coal market in this paper a primal dual programming model of international coking coal trade is constructed to test for non competitive market behaviour world trade in 1996 is simulated under perfect competition and various non competitive market structures statistical tests are used to compare simulated trade flows with actual data assuming cournot nash behaviour an all consumer oligopsony market structure is preferred to alternative models under an all consumer oligopsony world coking coal prices and trade are lower than under perfect competition under an oligopsonistic structure welfare gains from productivity increases in australian coal mines might largely accrue to coal buyers

the politics of trade offs studying the dynamics of welfare state reform with conjoint experiments welfare state reform in times of austerity is notoriously difficult because most citizens oppose retrenchment of social benefits governments thus tend to combine cutbacks with selective benefit

democracy and financial crisis existing scholarship attributes various political and economic advantages to democratic governance these advantages may make more democratic countries prone to financial crises democracy is characterized by constraints on executive authority accountability through free and fair elections protections for civil liberties and large winning coalitions these characteristics bring important benefits but they can also have unintended consequences that increase the likelihood of financial instability and crises using data covering the past two centuries i demonstrate a strong relationship between democracy and financial crisis onset on average democracies are about twice as likely to experience a crisis as autocracies this is an empirical regularity that is robust across a wide range of model specifications and time periods

educated preferences explaining attitudes toward immigration in europe recent studies of individual attitudes toward immigration emphasize concerns about labor market competition as a potent source of anti immigrant senti ment in particular among less educated or less skilled citizens who fear being forced to compete for jobs with low skilled immigrants willing to work for much lower wages we examine new data on attitudes toward immigration available from the 2003 european social survey in contrast to predictions based on conventional argu ments about labor market competition which anticipate that individuals will oppose immigration of workers with similar skills to their own but support immigration of workers with different skill levels we find that people with higher levels of educa tion and occupational skills are more likely to favor immigration regardless of the skill attributes of the immigrants in question across europe higher education and higher skills mean more support for all types of immigrants these relationships are almost identical among individuals in the labor force that is those competing for jobs and those not in the labor force contrary to the conventional wisdom then the connection between the education or skill levels of individuals and views about immigration appears to have very little if anything to do with fears about labor market competition this finding is consistent with extensive economic research show ing that the income and employment effects of immigration in european economies are actually very small we find that a large component of the link between educa tion and attitudes toward immigrants is driven by differences among individuals in cultural values and beliefs more educated respondents are significantly less racist and place greater value on cultural diversity than do their counterparts they are also more likely to believe that immigration generates benefits for the host economy as a whole

repeated shocks and preferences for redistribution abstract a society that believes wealth to be determined by random luck rather than by merit demands more redistribution we present evidence of this behavior by exploiting a natural experiment provided by the l aquila earthquake in 2009 which hit a large area of central italy through a series of destructive shakes over eight days matching detailed information on the ground acceleration registered during each shock with survey data about individual opinions on redistribution we show that the average intensity of the shakes is associated with subsequent stronger beliefs that for a society to be fair income inequalities should be leveled by redistribution the shocks however are not all alike we find that only the last three shakes occurred on the fourth and the eighth day of the earthquake have a statistically significant impact overall we find that the timing and repetition of the shocks play a role in informing redistributive preferences

a shifting regimes approach to the stationarity of the market model parameters of individual securities recent studies indicate that the widespread assumption of parameter stationarity in empir ical applications of asset pricing models may be inappropriate this paper investigates the feasibility of modeling parameter instability as a sequence of persistent stable regimes reeursive residual and log likelihood techniques are combined to detect and locate shift points the results indicate that regime shifts are widespread frequent and often large enough to significantly effect empirical findings the nature of the shifts appears to be a rotation of the regression line indicating that correction of both alpha and beta parameters is required

economic hardship and policy preferences in the eurozone periphery evidence from spain what is the impact of economic suffering on support for euro membership and austerity policies in the eurozone periphery this article uses original public opinion and firm surveys conducted in spain in the midst of the great recession to describe the structure of preferences toward the euro as a common currency and austerity policies focusing on the specific impact of crisis exposure we find that in spite of the depth and the duration of the economic crisis support for spain s membership in the eurozone is strong however while economic suffering divides the electorate on support for the euro and austerity it does not do so for firms surprisingly individuals who have suffered due to the crisis in terms of higher income loss are more skeptical of tax and spend programs but are more critical of the euro moreover individuals who are skeptical of the euro and austerity are demographically distinct groups of people one implication of our joint individual and firm level findings is that a coalition t

why are people more pro trade than pro migration i analyze individual attitudes towards trade and immigration in comparative terms i find that individuals are on average more pro trade than pro immigration across several countries i identify a key source of this difference the cleavage in trade preferences absent in immigration attitudes between individuals working in traded as opposed to non traded sectors

the costs of compliance a cge assessment of canada s policy options under the kyoto protocol canada has committed itself under the kyoto protocol to reduce greenhouse gas emissions between 2008 and 2012 on average by six per cent from the base 1990 level as of 2009 however canada s greenhouse gas emissions are far above its 1990 level which calls for stringent short term policy measures if canada is to meet its legally binding commitment this paper uses a multi region multi commodity static general equilibrium model to quantify the economic impacts of alternative compliance strategies for canada in the context of climate policies undertaken by other kyoto parties the numerical results confirm fears by canadian policymakers of substantial economic adjustment costs should canada fulfill its kyoto commitments solely through domestic action however a rigorous use of the project based cdm on top of international emissions trading could allow canada to live up to its international climate policy commitment at politically much more tolerable costs

the european framework for energy and climate policies european energy and climate change policy rests on two main pillars the internal energy market iem and the climate change package ccp the iem aimed at third party access and unbundling neglecting the physical infrastructure and the basis for asset valuations and hence the harmonisation of network charges the commission plans to complete the iem by 2014 almost a quarter of a century after embarking on the policy yet even if all the iem directives are implemented the eu will remain far from a single competitive market the ccp was grounded on short term targets the 2020 20 20 programme on the assumption that fossil fuel prices would rise making renewables competitive and hence yielding a competitive advantage to the eu the euets was intended to lead the way to a global trading system and an international agreement at copenhagen the eu has reduced the production of carbon emissions but only as a result of de industrialisation and slow growth and at the expense of rising carbon consumption renewables have not led to green growth but rather to a further eroding of competitiveness the euets price has collapsed in order for the eu to put the iem and the ccp back on track both need to be radically reconsidered the iem requires a refocusing on physical infrastructure common accounting rules and an eu wide approach to capacity markets and renewables trading the ccp requires a refocusing on carbon consumption on limiting the dash for coal and on future rather than current renewables

government spending and public support for trade in the oecd an empirical test of the embedded liberalism thesis according to the embedded liberalism thesis governments committed to free trade provide insurance and other transfers to compensate those who lose economically from expanded trade the goal of this spending is to maintain public support for trade liberalization we provide a micro level test of the critical assumption behind the embedded liberalism thesis that government programs designed to protect individuals harmed by imports reduce opposition to free trade our micro results have important implications for the macro relationship between trade and government spending which we also test we find empirical support for the embedded liberalism thesis in both our micro and macro level analyses earlier versions of this article were presented at the midwest political science association s 2002 meeting and at the university of illinois during summer 2003 we thank the respective panel and seminar participants for their feedback in addition we want to acknowledge valuable comments from william bernhard rebecca blank kerwin charles alan deardorff john dinardo john freeman brian gaines jim granato nathan jensen william keech layna mosley robert pahre ken scheve marina whitman two anonymous reviewers and lisa martin they of course are not responsible for any errors

an examination of risk return relationship in bull and bear markets using time varying betas security behavior in bull and bear markets has received some attention in recent years fabozzi and francis 5 first documented evidence that security betas are not influenced by the alternating forces of bull and bear markets their subsequent study of mutual fund betas also indicated that mutual funds generally respond indifferently to bull and bear market conditions using the concept of bull and bear market variations kim and zumwa1t 9 developed and tested the risk premiums associated with the upside and the downside portions of returns variation they concluded that investors expect to receive a risk premium for downside risk and pay a premium for upside variation of returns from their results kim and zumwalt 9 suggested that the down market beta measuring downside risk downside variation of returns may be a more appropriate measure of portfolio risk than the single beta in the market model

a model of redistribution under social identification in heterogeneous federations abstract redistribution of resources to accommodate income heterogeneity within a federation is often fiercely debated e g belgium germany or the european union to help elucidate potential drivers behind such debates this article builds on social identity theory to develop a theoretical framework linking jurisdictional identification and preferences towards intra federation redistributive financial flows we show that federal rather than local identification can lead individuals to shift their redistribution preferences against their narrowly defined personal economic interest in contrast to predictions of standard models the sign and strength of this effect depends crucially not only upon individuals characteristics but also upon the social groups i e regions to which they belong we furthermore illustrate that federal rather than regional identification should be more widespread in poorer and or more populous regions within a federation but less common in regions which are very homogeneous internally or very dissimilar from the rest of the federation

risk decomposition and portfolio diversification when beta is nonstationary a note the process of diversification and the subsequent reduction in portfolio risk have received considerable attention in the financial literature 5 7 9 10 14 16 25 king 9 in his pioneering work on diversification used multivariate statistical methods to decompose risk on a sample of 63 nyse firms from six industries over the period 1927 to 1960 from this sample he concluded that on the average about half of a stock s variance could be explained by market behavior later evans and archer 5 examined the effect of naive diversification on portfolio risk using semi annual data for the period 1958 to 1967 they examined diversification among 470 securities listed in the standard and poor s index by constructing 60 randomly selected portfolios which varied in size from 1 to 40 stocks they then calculated the portfolio return s mean standard deviation and estimated the level of systematic or undiversifiable risk by estimating the asymptote to which the mean standard deviation decreased the results of heir study showed that the majority of risk reduction is accomplished through randomly diversifying among only 10 securities while these studies served to define the speed and limits of random diversification other studies 7 10 14 16 have shown that systematic attempts to select stocks can result in inefficiencies in diversification as the capm has gained in popularity it has become increasingly common to examine the level of diversification and decompose risk through the use of ordinary least squares o l s regressions in which the variability explained by the market is designated systematic risk and the variability of the error term is used as a measure of unsystematic risk inherent in this dichotomization is the assumption that the beta or relationship between the market s returns and the individual stock s returns is stationary in the present study we shall show that while the use of o l s to partition risk is commonplace it can lead to incorrect conclusions due to error introduced by the violation of this assumption that is the nonstationarity of security betas the existence of instability of beta coefficients has been pointed out in studies by altman jacquillat and levasseur 1 baesel 2 fabozzi and francis 6 levitz 11 levy 12 and roenfelt griepentrog and pflaum 19 fabozzi and francis 6 for example found that many beta coefficients move randomly through time rather than remaining stable as assumed by the o l s model the result of this nonstationarity is that the o l s technique not only provides an inefficient estimate of systematic risk but it also allows the nonstationarity of beta to be reflected in the estimate of unsystematic risk thus the o l s

do concerns about labor market competition shape attitudes toward immigration new evidence abstract are concerns about labor market competition a powerful source of anti immigrant sentiment several prominent studies have examined survey data on voters and concluded that fears about the negative effects of immigration on wages and employment play a major role generating anti immigrant attitudes we examine new data from a targeted survey of u s employees in 12 different industries in contrast with previous studies the findings indicate that fears about labor market competition do not appear to have substantial effects on attitudes toward immigration and preferences with regard to immigration policy among this large and diverse set of voters

sensitivity of energy system investments to policy regulation changes too many too fast abstract in this paper we argue that the interaction of energy policy regulations in the european electricity sector may be described by the slow fast class of dynamical systems such systems may exhibit drastic changes in their dynamics known as bifurcations one important being the so called blue sky catastrophe once reaching such a state the slow system becomes unresponsive to the changes in the fast system for the energy policy nexus this translates into the energy system becoming unresponsive to policy interventions leading to a freeze in the system dynamics application of this result allows us to argue that caution is needed when updating economic policies to achieve a faster transition towards a low carbon energy supply structure to avoid this risk the policy design should be aimed at long term incentive structures with less frequent but more consistent interventions

indirect double regulation and the carbon etss linking the case of coal fired generation in the eu and china abstract double regulation of carbon emissions is a key policy concern in the context of climate change mitigation the existing literature on double regulation in an emissions trading system ets context has largely focused on the direct type when e g an ets and a carbon tax cover the same entity and has not yet discussed the indirect type when e g the ets and carbon tax cover two related entities in the same production consumption chain this paper seeks to contribute to the literature by identifying indirect double regulation ets tax on the coal fired generation in the eu and china specifically we scrutinized legal documents associated with the coal fired power and further presented the quantitative evidence of double carbon costs from the law economics analysis of indirect double regulation we derived implications of indirect double regulation for the abatement of coal fired power sector in its own jurisdiction and after a hypothetic linkage between the eu ets and chinese national ets for its linked partner in response policy suggestions are provided to mitigate potential competitive distortions but should differentiate distortions by sources

who supports global economic engagement the sources of preferences in american foreign economic policy in this article we bring together opposing international relations theories to better understand u s foreign policy in particular foreign trade and aid using votes in the u s house of representatives from 1979 2004 we explore different theoretical predictions about preferences for foreign economic policy we assess the impact of domestic factors namely political economy and ideological preferences versus foreign policy pressures our three main results highlight the differential effect of these factors in the two issue areas first aid preferences are as affected by domestic political economy factors as are trade preferences second trade preferences but not economic aid ones are shaped by the president s foreign policy concerns for economic aid domestic political economy factors matter more than foreign policy ones third aid preferences are shaped more by ideological factors than are trade ones but ideology plays a different substantive role in each different constituencies support aid and trade this finding has implications for foreign policy substitutability the internationalist coalition in u s foreign policy statist theories of foreign policy and the connection between public opinion and legislative voting

preferences for redistribution in the land of opportunities this paper explores how individual preferences for redistribution depend on future income prospects in addition to estimating the impact of individuals socioeconomic background and of their subjective perceptions of future mobility we employ panel data to construct dobjectivet measures of expected gains and losses from redistribution for different categories of individuals we find that such measures have considerable explanatory power and perform better than dgeneral mobilityt indexes we also find that preferences for redistribution respond to individual beliefs on what determines one s position in the social ladder ceteris paribus people who believe that the american society offers equal opportunities are more averse to redistribution d 2004 published by elsevier b v

tackling the european migration problem this paper will begin by examining the historical pattern of migration and the empirical dimension of western europes migration problem a next step examines the labor market issues and impacts on natives as western europe perceives them the paper concludes with a discussion of policy issues and options excerpt

is the new immigration really so bad this article reviews the recent evidence on us immigration focusing on two key questions 1 does immigration reduce the labour market opportunities of less skilled natives 2 have immigrants who arrived after the 1965 immigration reform act been successfully assimilated overall evidence that immigrants have harmed the opportunities of less educated natives is scant on the question of assimilation the success of the us born children of immigrants is a key yardstick by this metric post 1965 immigrants are doing reasonably well even children of the least educated immigrant origin groups have closed most of the education gap with the children of natives

why are some people and countries more protectionist than others we analyze two cross country data sets that contain information on attitudes toward trade as well as a broad range of socio demographic and other indicators we nd that pro trade preferences are signi cantly and robustly correlated with an individual s level of human capital in the manner predicted by the factor endowments model preferences over trade are also correlated with the trade exposure of the sector in which an individual is employed individuals in non traded sectors tend to be the most pro trade while individuals in sectors with a revealed comparative disadvantage are the most protectionist third an individual s relative economic status has a very strong positive association withpro trade attitudes finally non economic determinants in the form of values identities and attachments play an important role in explaining the variation in preferences over trade high degrees of neighborhood attachment and nationalism patriotism are associated withprotectionist tendencies c

attitudes toward highly skilled and low skilled immigration evidence from a survey experiment past research has emphasized two critical economic concerns that appear to generate anti immigrant sentiment among native citizens concerns about labor market competition and concerns about the fiscal burden on public services we provide direct tests of both models of attitude formation using an original survey experiment embedded in a nationwide u s survey the labor market competition model predicts that natives will be most opposed to immigrants who have skill levels similar to their own we find instead that both low skilled and highly skilled natives strongly prefer highly skilled immigrants over low skilled immigrants and this preference is not decreasing in natives skill levels the fiscal burden model anticipates that rich natives oppose low skilled immigration more than poor natives and that this gap is larger in states with greater fiscal exposure in terms of immigrant access to public services we find instead that rich and poor natives are equally opposed to low skilled immigration in general in states with high fiscal exposure poor rich natives are more less opposed to low skilled immigration than they are elsewhere this indicates that concerns among poor natives about constraints on welfare benefits as a result of immigration are more relevant than concerns among the rich about increased taxes overall the results suggest that economic self interest at least as currently theorized does not explain voter attitudes toward immigration the results are consistent with alternative arguments emphasizing noneconomic concerns associated with ethnocentrism or sociotropic considerations about how the local economy as a whole may be affected by immigration

world crude oil and natural gas a demand and supply model abstract this paper examines world markets for crude oil and natural gas over the period 1918 1999 it analyzes the time series properties of output and prices and estimates demand and supply elasticities during 1918 1973 and 1973 1999 oil and gas prices were stable during the first period they became volatile afterwards reflecting deep changes in the market structure following the oil shock in 1973 demand price elasticities were too low however demand income elasticities were high supply price elasticities were also too low the elasticity estimates help to explain the market power of the oil producers and price volatility in response to shocks and corroborate elasticity estimates in energy studies

support for free trade self interest sociotropic politics and out group anxiety although it is widely acknowledged that an understanding of mass attitudes about trade is crucial to the political economy of foreign commerce only a handful of studies have addressed this topic these studies have focused largely on testing two models both of which emphasize that trade preferences are shaped by how trade affects an individual s income the factor endowments or heckscher ohlin model posits that these preferences are affected primarily by a person s skills the specific factors or ricardo viner model posits that trade preferences depend on the industry in which a person works we find little support for either of these models using two representative national surveys of americans the only potential exception involves the effects of education initial tests indicate that educational attainment and support for open trade are directly related which is often interpreted as support for the heckscher ohlin model however further analysis reveals that education s effects are less representative of skill than of individuals anxieties about involvement with out groups in their own country and beyond furthermore we find strong evidence that trade attitudes are guided less by material self interest than by perceptions of how the u s economy as a whole is affected by trade

trade wages and the political economy of trade protection evidence from the colombian trade reforms abstract worker industry affiliation plays a crucial role in how trade policy affects wages in many trade models yet most research has focused on how trade policy affects wages by altering the economy wide returns to a specific worker characteristic i e skill or education rather than through worker industry affiliation this paper exploits drastic trade liberalizations in colombia in the 1980s and 1990s to investigate the relationship between protection and industry wage premiums we relate wage premiums to trade policy in an empirical framework that accounts for the political economy of trade protection accounting for time invariant political economy factors is critical when we do not control for unobserved time invariant industry characteristics we find that workers in protected sectors earn less than workers with similar observable characteristics in unprotected sectors allowing for industry fixed effects reverses the result trade protection increases relative wages this positive relationship persists when we instrument for tariff changes our results are in line with short and medium run models of trade where labor is immobile across sectors or alternatively with the existence of industry rents that are reduced by trade liberalization in the context of the current debate on the rising income inequality in developing countries our findings point to a source of disparity beyond the well documented rise in the economy wide skill premium because tariff reductions were proportionately larger in sectors employing a high fraction of less skilled workers the decrease in the wage premiums in these sectors affected such workers disproportionately

an examination of event dependency and structural change in security pricing models this paper considers two aspects of the tendency for systematic risk to change during the period surrounding a firm specific event first a statistic allowing for heteroskedasticity is presented as a means of more precisely testing for the incidence of structural change in the market model secondly the bias resulting from the imposition of a single arbitrary event period on every firm in a market efficiency study is formally demonstrated using a sample based upon stock splits the switching regression technique of quandt is then adapted to show that event intervals are more appropriately considered on a case by case basis a comparison of alternative residual measures illustrates these procedures