war peace and the size of countries this paper studies the relationship between international con ict and the size distribution of countries in a model in which both peaceful bargaining and non peaceful confrontations are possible we show how the size distribution of countries depends on the likelihood bene ts and costs of con ict and war we also study the role of international law and show how better de ned international property rights may lead to country breakup and more numerous local con icts

climate change and africa the impact of climate change on africa is likely to be severe because of adverse direct effects high agricultural dependence and limited capacity to adapt direct effects vary widely across the continent with some areas e g eastern africa predicted to get wetter but much of southern africa getting drier and hotter crop yields will be adversely affected and the frequency of extreme weather events will increase adaptation to climate change is primarily a private sector response and should involve relocation of people changes in the sectoral structure of production and changes in crop patterns the role of government is primarily to provide the information incentives and economic environment to facilitate such changes adaptation will be impeded by africa s fragmentation into small countries and ethnic groups and by poor business environments on the mitigation side there is a need to design emissions trading frameworks that support greater african participation than at present and that include land use change mitigation undertaken elsewhere will have a major impact on africa both positive e g new technologies and negative e g commodity price changes arising from biofuel policies

energy taxes and endogenous technological change abstract this paper studies the effects of a tax on energy use in a growth model where market structure is endogenous and jointly determined with the rate of technological change because this economy does not exhibit the scale effect a positive relation between tfp growth and aggregate r d the tax has no effect on the steady state growth rate it has however important transitional effects that give rise to surprising results specifically under the plausible assumption that energy demand is inelastic there may exist a hump shaped relation between the energy tax and welfare this shape stems from the fact that the reallocation of resources from energy production to manufacturing triggers a temporary acceleration of tfp growth that generates a shaped time profile of consumption if endogenous technological change raises consumption sufficiently fast and by a sufficient amount in the long run and households are sufficiently patient the tax raises welfare despite the fact that in line with standard intuition it lowers consumption in the short run

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

residential energy demand in oecd countries and the role of irreversible efficiency improvements abstract after undergoing substantial changes during a period of high energy prices household energy demand did not rebound in times of declining energy prices as might have been expected hence other factors such as irreversible improvements in technical efficiency must be understood in order to describe both past and future household energy demand in this paper we consider irreversible efficiency improvements as a major reason for the moderate growth in energy demand after the plummeting of the oil price in 1985 we test different econometric models to take into account efficiency indicators the major conclusions of our investigation are i price elasticities are different for rising and falling prices for the latter they are close to zero implying a low rebound effect in the residential sector ii technical efficiency is an important parameter for describing and forecasting energy demand and iii income elasticities turn out to be higher once we incorporate indicators of technological efficiency in the process of estimating energy demand

dynamics of pollution control when damage is sensitive to the rate of pollution accumulation economic models which take into account the long term effects of pollution in the environment specify pollution damage as a function of the accumulated stock several economists have proposed another formulation where damage is a function of the time derivative of the pollution stock this paper considers the intertemporal efficiency implications of this formulation the first specification is qualitative and the objective functional includes both the rate of change and the level of the pollution stock the second specification is a stylized climate change model with a linear damage function where damage depends only on the rate of increase in global temperature the analysis reveals that the efficiency properties of optimal pollution control are very sensitive to this change in the damage function intertemporal efficiency may require higher emissions compared with the level which is optimal from the myopic point of view an increase in the rate of discount typically reduces the optimal emission level

free entry and efficient rent seeking this paper concerns rent seeking and the extent to which rents are dissipated under various circumstances gordon tullock s 1967 insight that expenditures made to capture an artificially created transfer represent a social waste suggested that the cost to the economy of monopoly and regulation is greater than the simple harberger 1954 deadweight loss indeed under tullock s original formulation and in the extensions of his work by krueger 1974 and posner 1975 rents are exactly dissipated at the social level 1 is spent to capture 1 so that the total welfare loss from such activities is equal to the harberger triangle plus the rectangle of monopoly profits

more efficient household electricity use since 1973 the efficiency of most energy uses in homes has improved throughout the oecd 1 this means that to provide a given amount of energy service for example heating cooling locomotion or mechanical force less energy is required today than was needed in the past these improvements have been gained through the introduction of new appliances and for space heating and cooling new homes with more efficient building shells and the retrofitting of the existing building stock in this report we analyse some of the past changes in the efficiency of household appliance electricity use and discuss prospects for and barriers to further increases in the future

economic theories of the break up and integration of nations abstract this paper surveys the recent political economy literature on the size distribution of nations the main themes of this literature are 1 a the spread of democracy leads to the creation of too many sovereign states 2 b the extent of factor mobility plays a key role in determining the incentives towards separation or integration 3 c economic integration through the development of international trade may require greater political integration to create and effectively maintain a level playing field in international trade at the same time economic integration by reducing the economic costs of separation increases the incentives towards political separation

anarchy and its breakdown anarchy defined as a system in which participants can seize and defend resources without regulation from above is not chaos but rather a spontaneous order however anarchy is fragile and may dissolve either into formless amorphy or into a more organized system such as hierarchy under anarchy each contestant balances between productive exploitation of the current resource base and fighting to acquire or defend resources anarchy is sustainable only when there are strongly diminishing returns to fighting effort the decisiveness parameter is sufficiently low and incomes exceed the viability minimum these considerations explain many features of animal and human conflict

the breakup of nations a political economy analysis this paper develops a model of the breakup or unification of nations in each nation the decision to separate is taken by majority voting a basic trade off between the efficiency gains of unification and the costs in terms of loss of control on political decisions is highlighted the model emphasizes political conflicts over redistribution policies the main results of the paper are i when income distributions vary across regions and the efficiency gains from unification are small separation occurs in equilibrium and ii when all factors of production are perfectly mobile all incentives for separation disappear i introduction following the demise of communism the entire map of europe from the atlantic coast to the urals is being redrawn and issues of separation unification and the redrawing of borders are yet again at the forefront of european concerns many of the issues raised by this process are primarily of a political cultural or linguistic nature however there are also economic considerations that bear on this problem the objective of this paper is to analyze some important economic and political determinants of the process of unification and separation of democratic nations the starting point of our analysis is to suppose that from an economic efficiency point of view separation of nations is never desirable a unified nation is always more efficient since free trade among regions is guaranteed duplication costs in defense and law enforcement are avoided and local public goods provision such as transportation and communication networks or common standards can be coordinated furthermore any benefits of decentralization that might be obtained in a world with several nations may also be achieved within a unified nation by replicating the administrative structure of the world with several

war politics an economic rational voter framework the frequency of foreign conflict initiations in the united states is found to be significantly greater following the onset of recessions during a president s first term than in other periods the authors develop an economic theory of the political use of wars which links the election cycle war decisions and economic performance consistent with the observed relationships among these events an incumbent leader with an unfavorable economic performance record may initiate a war to force the learning of his war leadership abilities and thus salvage with some probability his reelection this obtains despite voter rationality and informational symmetry copyright 1995 by american economic association

economic integration and political disintegration in a world of trade restrictions large countries enjoy economic benefits because political boundaries determine the size of the market under free trade and global markets even relatively small cultural linguistic or ethnic groups can benefit from forming small homogeneous political jurisdictions this paper provides a formal model of the relationship between openness and the equilibrium number and size of countries and successfully tests two implications of the model firstly the economic benefits of country size are mediated by the degree of openness to trade secondly the history of nation state creations and secessions is influenced by the trade regime

domestic politics and international conflict this paper explores the interactions between domestic politics and international conflict the analysis shows that electoral uncertainty associated with competition between political parties each representing a specific group of the electorate imparts a negative bias on the nation s military spending given military spending by other nations in turn electoral uncertainty lowers other nations incentive to arm as well in this context democratic institutions can be thought of as a possible precommitment mechanism that reduces the severity of conflict between nations and thereby increases the amount of resources available globally for consumption copyright 1994 by american economic association

sustainable resource use and economic dynamics we argue that the sustainable use of natural resources has to be placed in a dynamic perspective both in theoretical modelling and in applied research this can be achieved by applying endogenous growth theory and other recent advances in dynamic theory in this paper we discuss five contributions that combine the topics of natural resource use and economic dynamics in particular we show the common features of these contributions thereby providing an overview of a very active and promising research area

are there limits to growth a simple theoretical model of pollution is developed that generates an inverted u shape relationship between per capita income and environmental quality this model is then used to study long run growth the same inverted u shape is shown to appear in time series and the prospects for sustained growth are shown to hinge on whether increasingly strict environmental regulation is compatible with a constant rate of return on capital implementation is also studied tax and voucher schemes are shown to have an advantage over direct regulation because they provide the correct incentives for capital accumulation copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

war and democracy we present a general equilibrium model of conflict to investigate whether the prevalence of democracy is sufficient to foster the perpetual peace hypothesized by immanuel kant and whether the world would necessarily become more peaceful as more countries adopt democratic institutions our exploration suggests that neither hypothesis is true the desire of incumbent leaders with unfavorable economic performance to hold on to power generates an incentive to initiate conflict and salvage their position with some probability an equilibrium with positive war frequency is sustained even if all nations were to adopt representative democratic institutions and even in the absence of an appropriative motive for war

conflict defense spending and the number of nations abstract this paper provides a formal model of endogenous border formation and choice of defense spending in a world with international conflict we examine both the case of democratic governments and of dictatorships the model is consistent with three observations first breakup of countries should follow a reduction in the likelihood of international conflicts second the number of regional conflicts between smaller countries may increase as a result of the breakup of larger countries third the size of the peace dividend the reduction in defense spending in a more peaceful world is limited by the process of country breakup

temperature and income reconciling new cross sectional and panel estimates this paper presents novel evidence and analysis of the relationship between temperature and income first using sub national data from 12 countries in the americas we provide new evidence that the negative cross country relationship between temperature and income also exists within countries and even within states second we provide a theoretical framework for reconciling the substantial negative association between temperature and income in the cross section with the even stronger short run effects of temperature estimated by panel models the theoretical framework suggests that half of the negative short term effects of temperature may be offset in the long run through adaptation this abstract was borrowed from another version of this item

political jurisdictions in heterogeneous communities we investigate whether political jurisdictions form in response to the trade off between economies of scale and the costs of a heterogeneous population we consider heterogeneity in income race ethnicity and religion and we test the model using american school districts school attendance areas municipalities and special districts we find strong evidence of a trade off between economies of scale and racial heterogeneity we also find evidence of a trade off between economies of scale and income heterogeneity conversely we find little evidence that ethnic or religious heterogeneity shapes jurisdictions to clarify the direction of causality between heterogeneity and jurisdictions we exploit shocks to racial heterogeneity generated by the two world wars

luther and suleyman this paper emphasizes that the evolution of religious institutions in europe was influenced by the expansionary threat posed by the ottoman empire between the mid 15th century and the early 17th century various historical accounts have suggested that the ottomans rise helped the protestant reform movement as well as its various offshoots such as zwinglianism anabaptism and calvinism survive their infancy and mature utilizing a comprehensive dataset on violent conflicts for the period between 1451 and 1650 i find strong empirical support for the idea that ottoman military engagements in continental europe lowered the number and extent of violent conflicts among and within the european states ottomans influence in europe extended to the feud between the protestant reformers and the catholic establishment during the time between the birth of lutheranism and the end of the thirty years war the likelihood and timing of military engagements between the protestant reformers and the counter reformation forces depended negatively and statistically significantly on ottomans military activities in europe

federations coalitions and risk diversification we investigate the optimal size of a nation in the context of a portfolio choice model under uncertainty with an equal sharing rule we characterize the equilibrium coali tion structure which is shown to depend on income risks and market correlations specifi cally coalitions are likely to form among regions with similar variance in income and among regions with negative market correlations the conditions that yield a grand coalition two sub coalitions of different sizes and singletons are derived moreover the equilibrium coali tion structures are also examined when geographical contiguity is required

norwegian residential electricity demand a microeconomic assessment of the growth from 1976 to 1993 abstract the norwegian residential electricity consumption increased by an average of 3 annually during the period 1976 1993 political signals indicate that the growth in norwegian residential energy consumption should be reduced and that it may be necessary to increase energy taxes based on data for the sample of households from the annual consumer expenditure survey we study factors that are of importance explaining the growth in norwegian residential electricity demand during this period nearly half of the growth is due to an increase in the number of households while the rest reflects an increase in average consumption per household the increase in average consumption per household is due to an increasing number of households possessing electric household appliances such as dryers and dishwashers an increase in real disposable household income and in the floor space of dwellings

environmental regulation of households an empirical review of economic and psychological factors abstract the literature on sustainable consumption and environmental regulation of household behavior is dominated by conceptual and normative approaches as a result many suggestions lack a firm empirical basis to overcome this deficiency econometric studies in three areas of environmentally relevant activities of households are reviewed residential use of energy generation of solid waste and recycling and residential use of water next to price and income elasticities attention is devoted to individual socio economic features and psychological factors such as attitudes knowledge perceptions and values potential psychological determinants and related insights are further examined by discussing a range of representative and illustrative statistical psychological studies of environmental behavior one important general finding is that there are very few empirical studies that systematically combine socio economic and psychological determinants a range of insights for environmental policy is derived and research recommendations are offered

the economic effects of climate change greenhouse gas emissions are fundamental both to the world s energy system and to its food production the production of co2 the predominant gas implicated in climate change is intrinsic to fossil fuel combustion specifically thermal energy is generated by breaking the chemical bonds in the carbohydrates oil coal and natural gas and oxidizing the components to co2 and h2o one cannot have cheap energy without carbon dioxide emissions similarly methane ch4 emissions an important greenhouse gas in its own right are necessary to prevent the build up of hydrogen in anaerobic digestion and decomposition one cannot have beef mutton dairy or rice without methane emissions climate change is the mother of all externalities larger more complex and more uncertain than any other environmental problem the sources of greenhouse gas emissions are more diffuse than any other environmental problem every company every farm every household emits some greenhouse gases the effects are similarly pervasive weather affects agriculture energy use health and many aspects of nature which in turn affects everything and everyone the causes and consequences of climate change are very diverse and those in low income countries who contribute least to climate change are most vulnerable to its effects climate change is also a long term problem some greenhouse gases have an atmospheric life time measured in tens of thousands of years the quantities of emissions involved are enormous in 2000 carbon dioxide emissions alone and excluding land use change were 24 billion metric tons of carbon dioxide tco2

make trade not war this paper analyses theoretically and empirically the relationship between military conflicts and trade we show that the conventional wisdom that trade promotes peace is only partially true even in a model where trade is economically beneficial military conflicts reduce trade and leaders are rational when war can occur because of the presence of asymmetric information the probability of escalation is lower for countries that trade more bilaterally because of the opportunity cost associated with the loss of trade gains however countries more open to global trade have a higher probability of war because multilateral trade openness decreases bilateral dependence to any given country and the cost of a bilateral conflict we test our predictions on a large data set of military conflicts on the 1950 2000 period using different strategies to solve the endogeneity issues including instrumental variables we find robust evidence for the contrasting effects of bilateral and multilateral trade openness for proximate countries we find that trade has had a surprisingly large effect on their probability of military conflict

climate change and uneven development in this paper using a theoretical model with endogenous capital depreciation we study the effects of climate change and adaptation on long run development we show that climate change affects economic growth depending on climate exposure and adaptation efficiency which are asymmetric between different countries poor countries are likely to be hurt more because of the negative effects of climate change on the rate of depreciation of the assets that represent the engine of growth these asymmetries generally induce growth deficits and unsustainability traps in less developed economies

impacts on electricity consumption of household appliances in austria a comparison of time series and cross section analyses abstract in this paper electricity consumption of household appliances in austria is investigated to extract the impact of various parameters two different approaches are compared a time series from 1960 1995 and a cross section analysis these analyses lead to the following results the price elasticity is virtually zero the income elasticity is high but decreasing the major conclusion is that with respect to appliance electricity consumption the rebound effect is low and hence efficiency is the most important slower of electricity consumption therefore standards labelling and other instruments focusing on an increase of efficiency are the most important tools of energy policy for this end use

on the number and size of nations this paper studies the equilibrium determination of the number of countries in different political regimes and in different economic environments with more or less economic integration we focus on the trade off between the benefits of large jurisdictions and the costs of heterogeneity of large and diverse populations our model implies that i democratization leads to secessions ii in equilibrium one generally observes an inefficiently large number of countries iii the equilibrium number of countries is increasing in the amount of economic integration

population size and civil conflict risk is there a causal link does an expansion of the population size expose nation states to a higher risk of suffering from civil conflict obtaining empirical evidence for a causal relationship is difficult due to reverse effects and omitted variable bias this article addresses causality issues by using randomly occurring drought as an instrumental variable to generate exogenous variation in population size for a panel of 37 sub saharan countries over the period 1981 2004 instrumental variable estimates yield that a 5 increase in population size raises the risk of civil conflict by around six percentage points

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

climate change policy why has so little been achieved while the scientific evidence for climate change grows the policy responses have so far had little or no impact on the build up of emissions current trends in emissions are adverse the paper considers why the disconnect between science and policy exists and in particular why the kyoto protocol has achieved so little some contributing factors considered are the focus on carbon production rather than consumption in the architecture of kyoto the flaws in the analysis presented in the stern report notably on the impacts of climate change on economic growth on the costs of mitigation and on discounting and the political economy of the choice of policy instruments the politics of the rents that arise and the technology bias the challenges facing the copenhagen conference are noted and it is concluded that with a recasting of the economics of climate change the prospects for closing the gap between the science and policy are grim

establishing a central bank issues in europe and lessons from the us list of figures list of tables preface list of conference participants 1 introduction part i the design of a central bank 2 designing a central bank for europe a cautionary tale from the early years of the federal reserve system 3 the european central bank reshaping monetary politics in europe 4 the ecb a bank or a monetary policy rule part ii transition from national central banks to a european central bank 5 hard erm hard ecu and european monetary union 6 voting