price and volatility spillovers across the international steam coal market we examine the degree of integration of the global steam coal market using a variety of measures we show that the australian market remains the dominant force in setting world coal prices followed by mozambique and south africa we find little evidence of asymmetric price and volatility transmission in fact most markets react to both positive and negative shocks in a symmetric manner the coal market displays a significant degree of integration although this effect varies over time while china provides a major source of volatility to the global coal market it is relatively insignificant in terms of price transmission

a panel cointegration analysis of the demand for oil in the middle east this article applies recently developed panel unit root and panel cointegration techniques to estimate the long run income and price elasticities for oil in the middle east the results for the panel indicate that demand for oil is highly price inelastic and slightly income elastic in the middle east there is considerable variation in the results for the income variable across countries with the coefficient on the income variable statistically insignificant for several countries the coefficient on the price variable is statistically significant in all cases with the expected sign and the price elasticity is uniformly low while the results for the income variable differ across countries the results for the panel as a whole suggest that the demand for oil in the middle east is being driven largely by strong economic growth while consumers are largely insensitive to price changes

opium in afghanistan prospects for the success of source country drug control policies abstract recent estimates suggest that in 2007 afghan opiate production accounted for about 93 percent of the world s total this article presents a framework for estimating the potential for source country drug control policies to reduce this production it contains a first pass at estimating the potential for policy to shift the supply of opium upward as well as a range of supply and demand elasticities the estimates suggest that meager reductions in production can be expected through alternative development programs alone reductions are less than 6 5 percent in all but one of the specifications presented they also suggest that substantial increases in crop eradication would be needed to achieve even moderate reductions in production reductions range from 3 0 percent to 19 4 percent for various specifications the results also imply that all else being equal the cessation of crop eradication would result in only modest increases in opiate production with estimates ranging from 1 6 percent to

structural factors in the economic reforms of china eastern europe and the former soviet union reform in china and russia jeffrey sachs and wing thye woo china s experience does not show that gradual reform is superior to the shock therapy undertaken in eastern europe and the former soviet union eefsu differing performance primarily reflects different economic structures prior to reform china was a peasant agricultural society eefsu was urban and overindustrialized in both jobs in state enterprises were so heavily subsidized that workers refused to move to new industries elsewhere even when productivity in the latter was much higher in eefsu the large state sector impeded structural adjustment curtailing subsidies would have produced many losers who used their power to resist this outcome failure to curtail subsidies then cut off the potential supply of labour and other factors to new emerging firms china s state enterprises have not performed as well as the rest of the chinese economy and do not explain its success rapid growth was possible because the large agricultural sector contained vast surplus labour and did not enjoy subsidies and soft budget constraints once constraints on migration across regions and jobs were removed this labour was available to fuel expansion in new industries unlike the distributional conflict in eefsu in china reallocation of labour allowed all groups to gain in both partial liberalization also unleashed macroeconomic pressures manageable in china because of rapid growth and adequate monetary policy but explosive in much of eefsu because of deeper structural problems and gross monetary mismanagement

time series based tests of the convergence hypothesis some positive results abstract using time series based tests proposed by bernard and durlauf 1996 and annual time series data 1900 1987 on several oecd countries the paper identifies bivariate convergence between belgium and the netherlands france and italy australia and the united kingdom and sweden and denmark

a cointegration analysis of petroleum futures prices abstract this paper presents evidence concerning the number of common stochastic trends in a system of three petroleum futures prices crude oil heating oil and unleaded gasoline using daily data from 3 december 1984 to 30 april 1993 johansen s maximum likelihood approach for estimating long run relations in multivariate vector autoregressive models is used the results indicate the presence of only one common trend

uncertainty and disagreement in economic prediction the bank of england survey of external forecasters this article introduces a new source of survey data namely the bank of england survey of external forecasters the survey collects point and density forecasts of inflation and gdp growth and hence offers the opportunity of constructing direct measures of uncertainty we present a simple statistical framework in which to define and interrelate measures of uncertainty and disagreement the resulting measures are compared with other direct measures of uncertainty nationally and internationally a significant sustained reduction in inflation uncertainty followed the 1997 granting of operational independence to the bank of england to pursue a monetary policy of inflation targeting

why has u s inflation become harder to forecast we examine whether the u s rate of price inflation has become harder to forecast and to the extent that it has what changes in the inflation process have made it so the main finding is that the univariate inflation process is well described by an unobserved component trend cycle model with stochastic volatility or equivalently an integrated moving average process with time varying parameters this model explains a variety of recent univariate inflation forecasting puzzles and begins to explain some multivariate inflation forecasting puzzles as well

the relationship between gdp and electricity consumption in 10 asian countries the purpose of this study is to estimate the relationships between gdp and electricity consumption in 10 newly industrializing and developing asian countries using both single data sets and panel data procedures the empirical results from single data set indicate that the causality directions in the 10 asian countries are mixed while there is a uni directional short run causality running from economic growth to electricity consumption and a bi directional long run causality between electricity consumption and economic growth if the panel data procedure is implemented these empirical findings imply that electricity conservation policies through both rationalizing the electricity supply efficiency improvement to avoid the wastage of electricity and managing demand side to reduce the electricity consumption without affecting the end user benefits could be initiated without adverse effect on economic growth the findings on the long run relationship indicate that a sufficiently large supply of electricity can ensure that a higher level of economic growth

potential pitfalls for the purchasing power parity puzzle sampling and specification biases in mean reversion tests of the law of one price the ppp puzzle is based on empirical evidence that international price differences for individual goods loop or baskets of goods ppp appear highly persistent or even nonstationary the present consensus is these price differences have a half life that is of the order of five years at best and infinity at worst this seems unreasonable in a world where transportation and transaction costs appear so low as to encourage arbitrage and the convergence of price gaps over much shorter horizons typically days or weeks however current empirics rely on a particular choice of methodology involving i relatively low frequency monthly quarterly or annual data and ii a linear model specification in fact these methodological choices are not innocent and they can be shown to bias analysis towards findings of slow convergence and a random walk intuitively if we suspect that the actual adjustment horizon is of the order of days then monthly and annual data cannot be expected to reveal it if we suspect arbitrage costs are high enough to produce a substantial band of inaction then a linear model will fail to support convergence if the process spends considerable time random walking in that band thus when testing for ppp or loop model specification and data sampling should not proceed without consideration of the actual institutional context and logistical framework of markets

the reform of electricity power sector in the pr of china deregulation was launched as a concept in the united states more than a decade ago the european union commission has also formally announced that electric deregulation must be completed by the end of 2005 deregulation or reform has already been a popular topic on the electricity power sector this paper will discuss the restructuring and regulatory reforms in the pr china s power sector it begins with a discussion of the characteristics of electricity reform or deregulation in other countries including the us the united kingdom and so on it will be followed by the industry structure and regulatory framework that characterized china s power industry during the latter part of the 20th century and the history of china s reform to restructure the power industry to competitive suppliers of generating services in recent years it discusses the role of the state power corporation in the reform and gives a detailed description of the latest electricity reform in the year 2002 the paper concludes with some thoughts regarding future challenges and trends on the reform for china s power sector

why did the energy intensity fall in china s industrial sector in the 1990s the relative importance of structural change and intensity change there have been a variety of studies investigating the relative importance of structural change and real intensity change to the change in china s energy consumption in the 1980s however no detailed analysis to date has been done to examine whether or not the increased energy efficiency trend in the 1980s still prevailed in the 1990s this article has filled this gap by investigating the change in energy consumption in china s industrial sector in the 1990s based on the data sets of value added and end use energy consumption for the 29 industrial subsectors and using the newly proposed decomposition method of giving no residual our results clearly show that the overwhelming contributor to the decline in industrial energy use in the 1990s was the decline in real energy intensity indicating that the trend of real energy intensity declines in the 1980s at the 2 digit level was still maintained in the 1990s this conclusion still holds even if we lower the growth rate dramatically in line with the belief that the growth rate of china s gdp may be overestimated

a new model of trend inflation this article introduces a new model of trend inflation in contrast to many earlier approaches which allow for trend inflation to evolve according to a random walk ours is a bounded model which ensures that trend inflation is constrained to lie in an interval the bounds of this interval can either be fixed or estimated from the data our model also allows for a time varying degree of persistence in the transitory component of inflation in an empirical exercise with cpi inflation we find the model to work well yielding more sensible measures of trend inflation and forecasting better than popular alternatives such as the unobserved components stochastic volatility model this article has supplementary materials online

effective use of survey information in estimating the evolution of expected inflation the evolution of the term structure of expected u s inflation is modeled using survey data to provide timely information on structural change not contained in lagged inflation data to capture shifts in subjective perceptions the model is adaptive to long horizon survey expectations however even short horizon survey expectations inform shifting endpoint estimates that capture the lag between inflation and the perceived inflation target which anchors inflation expectations results show movements of the perceived target are an important source of inflation persistence and suggest historical u s monetary policy was not fully credible for much of the postwar sample

the impact of electric power on productivity according to the historical record the increased use of energy in general and electric power in particular stands as one of the key factors in productivity growth growth accountants however find little support for this view rejecting claims that the productivity slowdown can be attributed to the lower rate of growth of the energy input in us manufacturing in this study an attempt at reconciling the historical record with the empirical facts is made specifically the commonly used factor income shares in the relevant divisia input growth index are replaced by the estimated output input elasticities the latter attribute a considerably larger role to electric power than previous studies indicated these are then used to reevaluate the sources of growth in us manufacturing

cointegration analysis of spot electricity prices insights on transmission efficiency in the western us abstract the us energy policy act of 1992 promoted the development of spot markets for electric power by requiring utilities to open their transmission systems to wholesale power sales in this paper we specify and estimate a vector error correction model using peak and off peak electricity spot prices during 1994 1996 covering 11 regional markets in the western united states and test these prices for evidence of market integration the results show evidence of an efficient and stable wholesale power market

european market integration for gas volume flexibility and political risk this is a copy of an article originally published by elsevier in energy economics see http www sciencedirect com science journal 03014215 2002 elsevier science b v

a new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the business cycle abstract this paper introduces a general procedure for decomposition of non stationary time series into a permanent and transitory component allowing both components to be stochastic the permanent component is shown to be a random walk with drift and the transitory or cyclical component is a stationary process with mean zero the decomposition methodology which depends only on past data and therefore is computable in real time is applied to the problem of measuring and dating business cycles in the portwar u s economy we find that measured expansions and contractions are of roughly equivalent duration and that our dating of cyclical episodes tends to lead the traditional nber dating and to a lesser extent the growth cycle chronology of zarnowitz and boschan 1977

international narcotics trade foreign aid and enforcement i introduction it is widely accepted that the problems that a country may face as a direct result of narcotics related activities are numerous 1 moreover drug production and trade are intimately tied to other serious international concerns notably the financing of insurgencies and terrorist activities shughart 2006 keefer loayza and soares 2008 intriligator 2010 piazza 2011 a prime example is the involvement of the taliban in afghanistan in the production and trafficking of heroin see blanchard 2009 clemens 2013a 2013b similar issues are observed in colombia and mexico hence the indirect costs of narcotics related activities are also substantial nonetheless the enforcement of prohibitions on the production consumption and movement of narcotics remains among the most controversial issues in international relations not least because the global response has met with somewhat limited success 2 even taking the objective of reducing global consumption of narcotics as given it is unclear which of the available policy tools are likely to be the most effective at meeting the objective the consumption and distribution in narcotics importing countries can be targeted directly although the history of the past one and a half centuries indicates that it is very difficult alternatively and more realistically the supply side can be targeted law enforcement authorities in narcotics exporting countries can be used to eradicate production facilities and to interdict trafficking and alternative production activities can be encouraged by providing technical assistance or by direct subsidization in all cases involving the supply side however it must be recognized that the global production of narcotics is concentrated in developing economies many of these countries lack the enforcement resources to engage effectively against well funded producers and well armed traffickers and their supporting terrorist and rebel groups therefore foreign aid to finance law enforcement activities is essential 3 alternative development policies may also be supported through foreign technical assistance or by directing foreign aid toward alternative production subsidies the effects of these policies on narcotics exporting economies have not however been adequately addressed in the literature our work adds a new dimension to the existing literature on the economics of narcotics 4 we construct a theoretical model that explores the effects of foreign financing of anti narcotics enforcement activities in narcotics producing exporting countries along with other potential policy interventions while previous literature has taken a partial equilibrium approach to analyzing related issues our work differs substantially in adopting general equilibrium methods as martin and symansky 2006 note opium production in afghanistan for example accounted for approximately 27 of economic activity in 2005 2006 given this fact substantial general equilibrium effects must be present and deserve full exploration we focus attention on the consequences of the multitude of severe distortions that narcotics production and enforcement introduce to factor markets we envisage an economy where workers engage in both licit and illicit activities are paid a premium for the risk of incarceration or seizure of their marginal product involved in the latter and a nonproductive law enforcement sector uses real resources to combat illicit activity our work draws on a number of strands of economic theory including tied aid factor market distortions dual economies illicit markets and law enforcement a number of important new results emerge from our analysis foreign aid will increase enforcement activity and will generally lower narcotics production the more market power the narcotics producing country has the less effective foreign aid will be however in fact aid intended for anti narcotics enforcement may effectively be siphoned into the wages of narcotics workers

the residential demand for electricity in australia an application of the bounds testing approach to cointegration this paper reports estimates of the long and short run elasticities of residential demand for electricity in australia using the bounds testing procedure to cointegration within an autoregressive distributive lag framework in the long run we find that income and own price are the most important determinants of residential electricity demand while temperature is significant some of the time and gas prices are insignificant our estimates of long run income elasticity and price elasticity of demand are consistent with previous studies although they are towards the lower end of existing estimates as expected the short run elasticities are much smaller than the long run elasticities and the coefficients on the error correction coefficients are small consistent with the fact that in the short run energy appliances are fixed

china s changing energy intensity trend a decomposition analysis china experienced a dramatic decline in energy intensity from the onset of economic reform in the late 1970s until 2000 but since then the rate of decline slowed and energy intensity actually increased in 2003 most previous studies found that most of the decline was due to technological change but disagreed on the role of structural change to the best of our knowledge no decomposition study has investigated the role of inter fuel substitution in the decline in energy intensity or the causes of the rise in energy intensity since 2000 in this paper we use logarithmic mean divisia index lmdi techniques to decompose changes in energy intensity in the period 1980 2003 we find that 1 technological change is confirmed as the dominant contributor to the decline in energy intensity 2 structural change at the industry and sector sub industry level actually increased energy intensity over the period of 1980 2003 although the structural change at the industry level was very different in the 1980s and in the post 1990 period 3 structural change involving shifts of production between sub sectors however decreased overall energy intensity 4 the increase in energy intensity since 2000 is explained by negative technological progress 5 inter fuel substitution is found to contribute little to the changes in energy intensity

substitution possibilities and determinants of energy intensity for china abstract this paper measures technological change factor demand and inter factor and inter fuel substitutability measures for china we use individual fuel price data and a two stage approach to estimate total factor cost functions and fuel share equations both inter factor and inter fuel substitution elasticities are calculated and the change in energy intensity is decomposed into its driving forces the results suggest that energy is substitutable for capital regionally and for labor nationally capital substitutes for energy more easily than labor does energy intensity changes vary by region but the major drivers seem to be budget effect and the adoption of energy intensive technologies which might be embodied in high level energy using exports and sectors capital investment and even old technique and equipment imports whether the trend in rising energy intensity continues will be significant for china and the rest of the world

shell shocked the impact of foreign entry on the gasoline retail market in china abstract since joining the wto in 2001 restrictions on foreign entry into china s energy sector have been steadily reduced we investigate the impact of royal dutch shell s entry on the pricing behavior of three varieties of gasoline in the retail market of china using a difference in difference pairwise estimator we show that a year after entry the average absolute price differential of gasoline between two cities increased by around 1 4 before falling the following year in other words shell s entry caused prices to diverge but only for a short period of time the largest price effect was found for highly refined fuels in western cities similar results are found when we examine the effect of entry of the top four foreign retailers policy implications are discussed

a tale of two reforms i identify the absence of well functioning product markets in transition economies as a sufficient condition under which big bang reduces output initially while a chinese style reform increases output big bang dismantles central planning or centralized organization of production permitting monopolistic and vertically interdependent enterprises to pursue their own monopoly profits by restricting output and inter firm trade to the detriment of the economy as a whole the chinese reform by maintaining central planning but allowing enterprises to produce for the emerging product markets after they have fulfilled their output quotas under planning gives enterprises incentives to expand output beyond planned targets

can market oriented economic reforms contribute to energy efficiency improvement evidence from china since china accelerated its market oriented economic reforms at the end of 1992 its energy intensity has declined 3 6 annually over 1993 2005 however its energy intensity declined 4 2 annually during its first reform period 1979 1992 therefore can we conclude that the accelerated marketization since the end of 1992 has made no contribution to its energy efficiency improvement in order to answer this challenging question we examine the changes of energy own price elasticity as well as the elasticities of substitution between energy and non energy capital and labor in china during the periods of 1979 1992 and 1993 2003 generally in transition or developing economies holding the technology and output level fixed if the energy own price elasticity algebraic value declines or the substitution elasticity between factors rises they will contribute to energy efficiency improvement our empirical study finds that 1 during 1979 1992 the energy own price elasticity is positive 0 285 and capital energy labor energy are both morishima complementary which indicates a distorted energy price and inefficient allocation and 2 during 1993 2003 the own price elasticity for energy is negative 1 236 and capital energy and labor energy are both morishima substitute all factor demands become more elastic and all elasticities of substitution increase the implication is that the accelerated marketization contributes substantially to energy efficiency improvement since 1993 c 2006 elsevier ltd all rights reserved

the relationships among expected inflation disagreement and uncertainty evidence from matched point and density forecasts abstract this paper examines matched point and density forecasts of inflation from the survey of professional forecasters to analyze the relationships among expected inflation disagreement and uncertainty we undertake the empirical analysis within a seemingly unrelated regression framework and derive measures of uncertainty using a decomposition proposed by wallis 2004 2005 and by drawing on the concept of entropy the results offer little evidence that disagreement is a useful proxy for uncertainty and mixed evidence that increases in expected inflation are accompanied by heightened uncertainty conversely we document a quantitatively and statistically significant positive association between disagreement and expected inflation

deregulation and growth in china s energy sector a review of recent development dramatic changes have taken place in china s energy sector over the past decade these changes have important implications for energy consumption trade production and regulatory policies in china and beyond the objective of this paper is to review some of the key issues associated with deregulation and growth in china s energy sector specifically the paper presents a survey of recent reforms in this sector it also analyses the impact of deregulation on energy policy ownership foreign investment and trade and sheds some lights on the sources of growth in china s energy sector

evaluating real time var forecasts with an informative democratic prior this paper proposes bayesian forecasting in a vector autoregression using a democratic prior this prior is chosen to match the predictions of survey respondents in particular the unconditional mean for each series in the vector autoregression is centered around long horizon survey forecasts heavy shrinkage toward the democratic prior is found to give good real time predictions of a range of macroeconomic variables as these survey projections are good at quickly capturing endpoint shifts

the transition to a market economy pitfalls of partial reform we present a theory of a partial economic reform of a planned economy similar to the one that took place in russia since 1988 and in china earlier in such a reform some markets are liberalized in the sense that producers can sell output to whomever they want including private firms at free prices but at the same time must sell to state firms at state prices we show that such a reform can result in a substantial diversion of subsidized inputs away from state firms and toward private firms even when state firms value these inputs more the result may be a reduction of total output the simple analysis sheds light on many consequences of the soviet reform such as breakdown of coordination of production increased state policing of delivery quotas prohibitions of trading cooperatives and opposition to privatization the model also explains why partial reform failed in russia but worked in china

reform without losers an interpretation of china s dual track approach to transition this paper develops a simple model to analyze the dual track approach to market liberalization as a mechanism for implementing efficient pareto improving economic reform that is reform achieving efficiency without creating losers the approach based on the continued enforcement of the existing plan while simultaneously liberalizing the market can be understood as a method for making implicit lump sum transfers to compensate potential losers of the reform the model highlights the critical roles of enforcement of the plan for achieving pareto improvement and full liberalization of the market track for achieving efficiency we examine how the dual track approach has worked in product and labor market liberalization in china

measuring inflation expectations uncertainty using high frequency data inflation expectations play a key role in determining future economic outcomes the associated uncertainty provides a direct gauge of how well anchored the inflation expectations are we construct a model based measure of inflation expectations uncertainty by augmenting a standard unobserved components model of inflation with information from noisy and possibly biased measures of inflation expectations obtained from financial markets this new model based measure of inflation expectations uncertainty is more accurately estimated and can provide valuable information for policymakers using u s data we find significant changes in inflation expectations uncertainty during the great recession

the international transmission of volatility shocks an empirical analysis this paper proposes an empirical model which can be used to estimate the international transmission of volatility shocks using this model we estimate that a one standard deviation increase in the volatility of the shock to us real gdp leads to a decline in uk gdp of 1 relative to trend and a 0 7 increase in uk cpi relative to trend at the two year horizon using a nonlinear open economy dsge model we find that these empirical estimates are consistent with the response to a perturbation to the volatility of foreign supply type shocks while an increase in the volatility of demand shocks has a negligible impact

reform of china s electric power industry challenges facing the government abstract china s electrical power industry requires substantial reform if the country s economic growth is to be sustained the 1997 electricity law the creation of a state power company and the abolition of the ministry of electric power are important first steps on the path of reform but it seems that a clear plan is lacking objectives of the reform should include increasing the capacity to deliver power constraining the costs of the power industry increasing end user efficiency and minimising environmental damage efforts should be directed at restructuring the industry in such a way that fair competition may be introduced at least in power generation and at establishing a viable regulatory agency both tasks have the potential to be thwarted by a range of vested interests at different levels of government and industry

electricity consumption and economic growth in china cointegration and co feature analysis abstract this paper applies the cointegration theory to examine the causal relationship between electricity consumption and real gdp gross demostic product for china during 1978 2004 our estimation results indicate that real gdp and electricity consumption for china are cointegrated and there is only unidirectional granger causality running from electricity consumption to real gdp but not the vice versa then hodrick prescott hp filter is applied to decompose the trend and fluctuation component of the gdp and electricity consumption series the estimation results indicate that there is cointegration between not only the trend components but also the cyclical components of the two series which implies that the granger causality is probably related with the business cycle the estimation results are of policy implication to the development of electric sector in china

measuring the level and uncertainty of trend inflation abstract firmly anchored inflation expectations are widely viewed as playing a central role for the conduct of monetary policy this paper presents estimates of trend inflation based on information contained in monthly data on realized inflation survey expectations and the term structure of interest rates in order to assess whether inflation expectations are anchored a timevarying volatility of trend shocks is estimated as well while there is some commonality in inflation and survey based estimates of trend inflation yield based trend estimates embed a highly persistent component orthogonal to trend inflation trimmed mean inflation rates and survey forecasts are most indicative of trend inflation

electricity consumption and economic growth in china abstract this paper applies the error correction model to examine the causal relationship between electricity consumption and real gdp for china during 1971 2000 our estimation results indicate that real gdp and electricity consumption for china are cointegrated and there is unidirectional granger causality running from electricity consumption to real gdp but not vice versa in order to overcome the constraints on electricity consumption the chinese government has to speed up the nation wide interconnection of power networks to upgrade urban and rural distribution grids and to accelerate rural electrification

an imbalanced development of coal and electricity industries in china china s coal and electricity industries have a strong reliance on each other however because of excessive invasion of government it is difficult for these two industries to form a stable reasonable and transaction cost saving relationships but long run disputes and quarrels this paper discusses the pricing policies and transaction relationship between these two industries from the historical perspective it begins with the discussion of coal coal market has become competitive since 1980 due to the system of dual track approach but coal sold to electricity was still tightly controlled by government guided pricing then the paper examines electricity investment and tariff reform unlike coal entry to electricity generation sector was gradually relaxed but generation and retailing tariffs are still strictly regulated as energy demand and prices soared after 2002 coal and electricity enterprises are all unsatisfied with the rule of price setting of coal sold to electricity industry this paper concludes that the deliberate low coal price policy does protect electricity industry from fuel cost fluctuation but harm coal industry allocative and productive efficiency are difficult to achieve in the long run

price regulation and relative price convergence evidence from the retail gasoline market in canada this paper explores price regulation and relative price convergence in the canadian retail gasoline market we use monthly data 2000 2010 on retail gasoline prices in 60 canadian cities to investigate i whether the retail gasoline market in canada has experienced a relative price convergence to the mean which is expected given the increased economic integration across canadian provinces and ii whether the introduction of price regulation mechanisms in new brunswick and nova scotia in july 2006 had any impact on the price convergence in these provinces we use a nonlinear panel unit root test and find solid evidence that canadian retail gasoline markets are well integrated across locales however the share of converging cities reveals a significant decline since july of 2006 the impact of price regulation on price convergence is mixed our results indicate that since the enactment of the regulation in all new brunswick cities 9 included in the dataset gasoline prices converge to the national mean volatility of price is also significantly reduced in contrast in the wake of price regulation in nova scotia all 6 cities of the province are non convergent to the mean with increased volatility and overall price level

plan and market in china s agricultural commerce this article examines interactions between markets and state commercial planning in the context of china s agricultural sector it begins with a discussion of recent trends in agricultural planning and commerce in china and then presents a theoretical model that analyzes the way that a mixed commercial system of the sort observed in china functions the theoretical analysis suggests that a mixed system is sustainable and can have desirable efficiency and distributional effects markets however limit the range of sustainable plans and in the presence of markets state planning may no longer directly influence production and consumption behavior

risk management in the oil industry can information on long run equilibrium prices be utilized abstract we analyze co movements between the prices of crude oil and major refined products during the period 1992 1998 specifically we explore the existence of long run equilibrium price relationships and whether deviations from estimated equilibrium can be utilized for predictions of short term price changes and for risk management the econometric evidence strongly supports the hypothesis that crude and product prices are co integrated past deviations from long term equilibrium are significant in an error correction specification of short term product price changes the results represent valuable information for hedging particularly in integrated oil companies for which price risk is related to margin variations

gradual reforms and the emergence of energy market in china evidence from tests for convergence of energy prices this study investigates the emergence of energy markets by testing for convergence of energy prices with a new dataset on energy spot prices in 35 major cities in china both descriptive statistics and unit root are employed to test the convergence of energy prices for each of four fuel price series the whole study period is divided into two sub periods in order to reconcile the gradual energy reforms the results show the steady improvement in energy market performance in china especially during the second sub period which suggests that the market appears to be playing an increasing role in determining energy prices while panel unit root tests show energy markets are integrated in china as a whole city by city univariate unit root tests suggest that there are still many regional energy markets probably because energy reserves especially coal vary widely across regions since china s energy economy is gradually moving towards market oriented mechanisms the existing literature may become obsolete soon

the economic case against drug prohibition this paper discusses the costs and benefits of drug prohibition it offers a detailed outline of the economic consequences of drug prohibition and a systematic analysis of the relevant empirical evidence the bottom line is that a relatively free market in drugs is likely to be vastly superior to the current policy of prohibition

a reason for quantity regulation in a variety of situations governments regulate undesirable activities by controlling quantities rather than charging taxes blue laws prohibit all liquor sales on sundays rather than impose higher taxes on that day zoning restrictions limit commercial construction in residential areas rather than charge for nuisance to neighbors anti smoking and anti trust laws restrict rather than tax particular conduct fishing and hunting rules allow hunting during particular time periods rather than tax the catch pollution controls impose limits rather than tax emissions quantity regulations are common in the financial sphere as well in the united states banking regulations for many years prohibited interstate banking as well as ownership of investment banks by commercial banks in many countries commercial banks are limited in the amount of various activities they can pursue such as real estate investments or borrowing in foreign currency in some countries banking laws prohibit all lending to the parties related to the owners of the bank the so called related lending rather than impose liability rules on loans to related parties that are found to be fraudulent or unsafe rafael la porta et al 2000 despite this common practice economists generally prefer taxes and liability rules to quantity controls and property rights rules robert ellickson 1973 louis kaplow and steven shavell 1996 1997 nathaniel keohane et al 1998 as the instrument for reducing undesirable conduct when explaining why quantity regulations are so pervasive they first make the political economy argument that quantity restrictions are favored by incumbent firms that wish to deter entry james buchanan and gordon tullock 1975 but this argument is not general it does not explain such quantity restrictions as blue laws and hunting and fishing regulations which affect all market participants equally some academics also argue that because certain activities such as smoking are seen as morally wrong by the community their level is regulated at zero in other instances however such as pollution and hunting positive but limited levels of activity are allowed inconsistent with the moral argument that the reason for quantity regulation is the special attraction of zero in this paper we present an alternative reason for quantity regulations one from the perspective of a benevolent government we begin with the observation of gary becker and george stigler 1974 that law enforcement is not free but is fundamentally an economic problem throughout human history and throughout the world today there are chronic problems of under enforcement witness the low level of tax compliance in much of the developing world and over enforcement by politically motivated prosecutors or regulators an analysis of pigouvian taxes versus quantity restrictions must recognize that in reality neither policy is free and automatic to enforce in general the choice of policies itself can facilitate or discourage enforcement in two ways first policies can shape the incentives for enforcement second policies can influence the costs of enforcement in our earlier work glaeser and sheifer 2000 glaeser et al 2001 we have focused on incentives and shown that quantity regulations can be used as an optimal instrument to raise the rewards to law enforcers for identifying violations here we focus not on the incentives for the enforcers but on the costs of finding violations these costs are often lower in the case of quantity restrictions we show that even when quantity regulations unlike taxes restrict some socially efficient conduct the reduced costs of identifying violations can enhance enforcement and overall efficiency such reliance of quantity regulation is especially important when private enforcement is crucial as in the case of enforcing department of economics harvard university cambridge ma 02138 we thank the national science foundation for financial support and louis kaplow for extremely helpful comments

the emergence and evolution of regional convergence clusters in china s energy markets employing the new regression tests for convergence club convergence and clustering proposed by phillips and sul 2007 this paper models and analyses the behaviour of china s energy sectors energy market convergence clusters are identified using new price data and their regional spatial distributions are mapped for four major fuel types coal gasoline diesel and electricity the findings are as follows i as yet there are no fully integrated national energy markets in china as more than one convergence cluster is identified for all four fuels ii some regional energy markets can be regarded as quite mature as evidenced by the existence of some highly concentrated convergence clusters connected geographically iii some regional markets remain in a state of transition as witnessed by convergence clusters that are scattered geographically and that are growing in membership iv it seems that there is more regional based integration for coal and electricity than for gasoline and diesel as more convergent clusters were identified for coal and electricity than for gasoline and diesel and v overall china still appears to be in the process of energy market integration as demonstrated by the number and evolution of convergence clusters over time

a multivariate cointegration analysis of the role of energy in the us macroeconomy abstract this paper extends my previous analysis of the causal relationship of gdp and energy use in the usa in the post war period a majority of the relevant variables are integrated justifying a cointegration analysis the results show that cointegration does occur and that energy input cannot be excluded from the cointegration space the results are plausible in terms of macroeconomic dynamics the results are similar to my previous granger causality results and contradict claims in the literature based on bivariate models that there is no cointegration between energy and output

price ceilings as focal points to reach price uniformity evidence from a chinese gasoline market abstract this paper studies the price uniformity in the chinese gasoline market using station level data of hohhot city inner mongolia we first document that the mode prices of the gasoline stations are consistent with the price ceilings set by the government implying that the price ceiling regulation in the chinese gasoline market may serve as a focal point for the gasoline stations to reach price uniformity we corroborate the focal point hypothesis by providing evidence showing that some stations would jump to the ceilings as their prices approach the ceilings also we find that local market structure distance between stations station capacity market characteristics and past pricing behavior could affect the probability of gas stations to price at the ceilings moreover a higher price ceiling would reduce the probability that stations reach price uniformity our results provide another piece of evidence to the literature regarding the unintended effect of price ceiling regulation

does inflation targeting anchor long run inflation expectations evidence from the u s uk and sweden we investigate the extent to which inflation expectations have been more firmly anchored in the united kingdom a country with an explicit inflation target than in the united states a country with no such target using the difference between far ahead forward rates on nominal and inflation indexed bonds as a measure of compensation for expected inflation and inflation risk at long horizons we show that far ahead forward inflation compensation in the u s exhibits substantial volatility especially at low frequencies and displays a highly significant degree of sensitivity to economic news similar patterns are evident in the uk prior to 1997 when the bank of england was not independent but have been strikingly absent since the bank of england gained independence in 1997 our findings are further supported by comparisons of dispersion in longer run inflation expectations of professional forecasters and by evidence from sweden another inflation targeting country with a relatively long history of inflation indexed bonds our results support the view that an explicit and credible inflation target helps to anchor the private sector s views regarding the distribution of long run inflation outcomes jel e31 e52 e58

what goes up recent trends in china s energy consumption since 1996 china s energy output has dropped by 17 while primary energy use has fallen by 4 driven almost entirely by shrinking output from coal mines and declining direct use since china is the world s second largest emitter of greenhouse gases it is important to understand the sources of this apparent transformation and whether it portends a permanent change in patterns of energy use this remarkable reversal of the long term expansion of energy use has occurred even as the economy has continued to grow albeit more slowly than in the early 1990s generation of electric power has risen implying a steep fall in end uses particularly in industry available information points to a variety of forces contributing to this phenomenon including rapid improvements in coal quality structural changes in industry shutdowns of factories in both the state owned and non state segments of the economy improvements in end use efficiency and greater use of gas and electricity in households a combination of slowing economic growth industrial restructuring broader economic system reforms and environmental and energy efficiency policies has apparently led to at least a temporary decline in and perhaps a long term reduction in the growth of energy use and therefore greenhouse gas emissions

renewable energy policy and electricity market reforms in china the article examines the potential effectiveness of the renewable energy policy in china and its regulatory law framework it frames the option of renewable energy technology within the background of the long lasting electricity problems that china has faced including serious supply shortages reliance on coal and severe environmental contamination its dual administrative and ownership system based on state and privately owned industry is discussed together with the market reform measures adopted in the sector current renewable energy policy is analysed and the scope of the 2005 renewable energy promotion law is investigated this is conducted within the context of the electricity sector reform that china adopted and its effects upon the prospects of encouraging as well as expanding the development of renewable energy this study draws upon primary information collected from interviews with stakeholders on the policy adequacy and identifies three main types of shortcomings that have interfered with a more successful expansion of renewable energy in china

rising regional inequality in china fact or artifact summary china s local populations can be counted in two ways people with hukou household registration from each place and people actually residing in each place for most of the first three decades of the reform era the hukou count denominated per capita gdp figures output and living standards were overstated in coastal provinces and understated in the interior the distortion grew bigger as the non hukou migrants increased to over 100 million much of the apparent increase in inter provincial inequality is a statistical artifact caused by this distortion the recent switch to using the resident count to denominate gdp introduced new distortions

rural reforms and agricultural growth in china this paper employs province level panel data to assess the contributions of decollectivization price adjustments and other reforms to china s agricultural growth in the reform period decollectivization is found to improve total factor productivity and to account for about half of the output growth during 1978 84 the adjustment in state procurement prices also contributed positively to output growth its impact came mainly from the responses in input use the effect of other market related reforms on productivity and output growth was very small reasons for slowdown in agricultural growth after 1984 are also analyzed copyright 1992 by american economic association

energy conservation and co2 emission reduction in china s 11th five year plan a performance evaluation in the 11th five year plan fyp 2005 2010 the chinese government initiated a series of energy saving and emission reduction policies in many key fields in response to environmental pollution and climate change this paper quantitatively evaluates the performance of energy conservation and co2 emission reduction in this period the impact of these policies and potentials by integrating the contributions of energy conversion efficiency and energy utilization efficiency improvement industrial restructuring fuel mix shift and renewable energy development in a unified framework as a first attempt to introduce energy conversion efficiency improvement into a decomposition approach comprehensive and specific policies are summarized as a policy list to be investigated the results show that energy intensity and conversion efficiency effects were mainly responsible for driving down energy consumption by 637 4 mtce and 85 4 mtce respectively and they reduced co2 emissions by 1345 3 mt and 243 8 mt respectively due to a significant improvement in the 11th fyp period most of the contributions made by the conversion efficiency effect 94 come from thermal power generation and the emission coefficient effect reduced co2 emissions by 17 4 mt through developing renewable energy economic growth is still the biggest driver of energy consumption and increasing emissions while industrial restructuring and fuel mix shift effects contributed relatively little developing renewable energy and promoting economic restructuring to limit the increase of energy intensive sectors are still the main challenges and the next policy focus to achieve the targets for energy saving and carbon emission reduction in the 12th five year plan

estimating quadratic variation using realized variance this paper looks at some recent work on estimating quadratic variation using realised variance rv that is sums of m squared returns this econometrics has been motivated by the advent of the common availability of high frequency financial return data when the underlying process is a semimartingale we recall the fundamental result that rv is a consistent as m estimator of quadratic variation qv we express concern that without additional assumptions it seems difficult to give any measure of uncertainty of the rv in this context the position dramatically changes when we work with a rather general sv model which is a special case of the semimartingale model then qv is integrated variance and we can derive the asymptotic distribution of the rv and its rate of convergence these results do not require us to specify a model for either the drift or volatility functions although we have to impose some weak regularity assumptions we illustrate the use of the limit theory on some exchange rate data and some stock data we show that even with large values of m the rv is sometimes a quite noisy estimator of integrated variance

trafficking networks and the mexican drug war abstract drug trade related violence has escalated dramatically in mexico since 2007 and recent years have also witnessed large scale efforts to combat trafficking spearheaded by mexico s conservative pan party this study examines the direct and spillover effects of mexican policy toward the drug trade regression discontinuity estimates show that drug related violence increases substantially after close elections of pan mayors empirical evidence suggests that the violence reflects rival traffickers attempts to usurp territories after crackdowns have weakened incumbent criminals moreover the study uses a network model of trafficking routes to show that pan victories divert drug traffic increasing violence along alternative drug routes jel d72 d85 k42 o17 z13

are new tigers supplanting old mammoths in china s banking system evidence from a sample of city commercial banks abstract new tigers including city commercial banks outperform state owned commercial banks burdened with non performing loans from unprofitable state owned enterprises we study whether this is solely due to superior corporate governance multiple shareholders versus total government ownership or also to the favorable environment the new tigers target affluent china while state owned commercial banks operate nationwide using a field survey on 20 city commercial banks from three provinces at different levels of economic development we find better performance at those in the east and worse performance at those controlled by state owned enterprises geography and policy do matter and reform of state owned commercial banks is necessary to bring better banking to china

economic growth regional disparities and energy demand in china abstract using the panel data of 27 provinces between 1978 and 2008 we employed a instrumental regression technique to examine the relationship between economic growth energy demand production and the related policies in china the empirical results show that forming a cross province integrated energy market will in general reduce the response of equilibrium user costs of energy products to their local demand and production through cross regional energy transfer including both energy trade and cross regional reallocation in particular reducing transportation costs and improving marketization level are identified as two important policy instruments to enhance the role of energy market integration the findings support the argument for a more competitive cross province energy transfer policies and calls for more developed energy connectivity and associate institutional arrangements within china these policy implications may also be extended to the east asia summit region where energy market integration is being actively promoted

prices technology development and the rebound effect abstract energy efficiency is the critical parameter for policies that aim at reducing energy consumption while maintaining or even boosting economic growth the two main options to influence energy efficiency are changes in relative prices i e raising the price of energy through economic instruments or to introduce new technologies which increase the productivity of each unit of energy this paper is based on the notion that in an equilibrium economy the marginal economic productivity is identical for all factors i e energy labour knowledge and capital from this premise two main conclusions can be drawn first any change in price or technology will have an impact on the whole economy by creating feedbacks through the substitution of factors of production and goods as well as increased wealth second the two policy approaches changing relative prices and technology development are not opposite to each other they are the two faces of the same reality and should be developed and promoted simultaneously and consistently

energy consumption and gdp revisited a panel analysis of developed and developing countries this paper applies a new panel data stationarity testing procedure first developed by carrion i silvestre et al 2005 econometrics journal 8 159 175 with panel vars that employ the generalized method of moment techniques in order to re investigate the dynamic interactions between energy consumption per capita lec and real gdp per capita lry in 22 developed and 18 developing countries when multiple breaks in the series are taken into account there is convincing evidence of panel stationarity for lec and lry in both groups the energy crises evidently had a substantive impact on both lec and lry in all sample countries furthermore our panel vars attest to bidirectional causality between lec and lry in developed countries but there is uni directional causality from lry to lec in developing countries finally from the orthogonalized impulse response functions all of the variables in the panel vars have a positive effect on each other but their impact is greater and more persistent in developing countries some important policy implications do emerge

price relationships in the petroleum market an analysis of crude oil and refined product prices in this paper the relationships between crude oil and refined product prices are investigated in a multivariate framework this allows us to test several partly competing assumptions of earlier studies in particular we find that the crude oil price is weakly exogenous and that the spread is constant in some but not all relationships moreover the multivariate analysis shows that the link between crude oil prices and several refined product prices implies market integration for these refined products this is an example of supply driven market integration and producers will change the output mix in response to price changes

pareto improving economic reforms through dual track liberalization abstract pareto improving economic reforms that also simultaneously achieve efficiency can be implemented through a strategy of dual track liberalization its success requires the feasibility of the original plan and its continued enforcement by the state the chinese experience demonstrates that such a strategy works

a new model of inflation trend inflation and long run inflation expectations a knowledge of the level of trend inflation is key to many current policy decisions and several methods of estimating trend inflation exist this paper adds to the growing literature which uses survey based long run forecasts of inflation to estimate trend inflation we develop a bivariate model of inflation and long run forecasts of inflation which allows for the estimation of the link between trend inflation and the long run forecast thus our model allows for the possibilities that long run forecasts taken from surveys can be equated with trend inflation that the two are completely unrelated or anything in between by including stochastic volatility and time variation in coefficients it extends existing methods in empirically important ways we use our model with a variety of inflation measures and survey based forecasts for several countries we find that long run forecasts can provide substantial help in refining estimates and fitting and forecasting inflation the same evidence indicates it is less helpful to simply equate trend inflation with the long run forecasts

energy consumption in china past trends and future directions abstract in 2003 china s energy consumption amounted to 1678 million tonnes coal equivalent mtce making china the world s second largest consumer behind only the united states china is now also one of the largest oil importers in the world with an economy that is expected to maintain a rate of growth of 7 8 for decades china s role in the world energy market becomes increasingly influential this makes it important to predict china s future demand for energy the objective of this paper is to apply the bayesian vector autoregressive methodology to forecast china s energy consumption and to discuss potential implications the results of this paper suggest that total energy consumption should increase to 2173 mtce in 2010 an annual growth rate of 3 8 which is slightly slower than the average rate in the past decade the slower growth reflects expected slower economic growth and a decline in energy consumption due to structural changes in the chinese economy

estimating the speed of adjustment to target levels the case of energy prices in this paper we propose a model that estimates the speed of energy price adjustment to its target level we also explain the source of price adjustment moreover we extract energy price bubbles and show that bubbles help explain price adjustment since ours is the first paper that develops an energy price adjustment model and links it to bubbles several avenues for future research have emerged from our analysis the first is to provide a theoretical framework for the bubbles and price adjustment mechanism the second direction of research will be to continue the search for other potential determinants of price adjustment

market emergence and transition arbitrage transaction costs and autarky in china s grain markets using trimonthly chinese provincial grain prices from 1988 to 1995 we estimate a parity bounds model of interregional trade for four subperiods to characterize how multiple aspects of market performance change during the process of economic transition for each period we estimate the extent to which arbitrage opportunities are realized by traders the transaction costs between location pairs and the likelihood that regions do not trade trade restrictions cannot explain the pattern of uneven market development over time infrastructure bottlenecks managerial incentive reforms and production specialization policies all were likely important factors affecting market performance

can energy price regulations smooth price fluctuations evidence from china s coal sector abstract due to the dominance of coal in china s energy mix coal prices have always been a challenging part of pricing reform the recent frequent government interventions raise the key research questions what is the actual impact of price policies on coal price fluctuations and how can forward looking pricing policies be made by proposing a novel classification of coal pricing policies and introducing an expectation and forward looking coefficient the paper examines the relationship between coal price fluctuations and pricing policies using the generalized method of moments gmm method it shows that the lagging coal price and coal demand play a positive role in regulating coal prices while coal supply and marketization have significantly negative effects on coal price fluctuations the heterogeneous impacts of price policies are due to differences in market players expectations policy instruments and the methods of policy release in addition china s coal pricing policy portfolio from 2013 to 2016 exerted synergy effects on the restraint of coal price fluctuations as the forward looking coefficient was considerably low the government s intervention behaviors were obviously biased towards ex post facto responses the paper suggests short run and long run policies to advance marketization of coal prices amid the energy transition

inflation expectations and risk premiums in an arbitrage free model of nominal and real bond yields differences between yields on comparable maturity u s treasury nominal and real debt the so called breakeven inflation bei rates are widely used indicators of inflation expectations however better measures of inflation expectations could be obtained by subtracting inflation risk premiums from the bei rates we provide such decompositions using an estimated affine arbitrage free model of the term structure that captures the pricing of both nominal and real treasury securities our empirical results suggest that long term inflation expectations have been well anchored over the past few years and inflation risk premiums although volatile have been close to zero on average

uncertainty shocks and unemployment dynamics in u s recessions abstract what are the effects of uncertainty shocks on unemployment dynamics we answer this question by estimating non linear smooth transition vars with post wwii u s data the relevance of uncertainty shocks is found to be much larger than that predicted by standard linear vars in terms of i magnitude of the reaction of the unemployment rate to such shocks and ii contribution to the variance of the prediction errors of unemployment at business cycle frequencies the ability of different classes of dsge models to replicate our results is discussed

alaska north slope crude oil price and the behavior of diesel prices in california abstract in this paper we analyze the price dynamics of alaska north slope crude oil and l a diesel fuel prices we employ var methodology and bivariate garch model to show that there is a strong evidence of a uni directional causal relationship between the two prices the l a diesel market is found to bear the majority of the burden of convergence when there is a price spread this finding may be seen as being consistent with the general consensus that price discovery emanates from the larger more liquid market where trading volume is concentrated the contestability of the west coast crude oil market tends to cause it to react relatively competitively while the lack of contestability for the west coast diesel market tends to limit its competitiveness causing price adjustment to be slow but to follow the price signals of crude oil our findings also suggest that the derived demand theory of input pricing may not hold in this case the alaska north slope crude oil price is the driving force in changes of l a diesel price

short and long run effects between oil consumption and economic growth in china this paper examines both the equilibrium relationship and the predictability between oil consumption and economic growth in china time series variables are employed in empirical tests cointegration tests suggest that these two variables tend to move together in the long run in addition granger causality tests indicate that oil consumption could be a useful factor that forecasts changes in the economy in the short run as well as in the long run the oil consumption is found to have great effects on the economy this is because the enormous use of oil in sectors like the industry may have directly pushed the economy however this finding would probably stimulate faster growth in oil consumption and so should be concerned with care conversely economic growth could be used as a predictive factor forecasting oil consumption only in the long run economic growth appears to have small effects on oil use this could be attributed largely to china s energy consumption structure coal constitutes most of the energy consumption and thus the considerable demand for energy resulting from rapid economic growth could be mostly explained by the mass use of coal

an analysis of economic warfare in times of conflict an adversary s resources are a source of potential harm many geopolitical tactics are thus quite explicitly economic as they seek either to deter an adversary s worst intentions or reduce its capacity to inflict damage richardson 1960 tullock 1974 relevant policies include trade limiting sanctions galtung 1967 pape 1997 and direct attacks on an adver sary s military infrastructure or personnel 1 this paper explores a third example namely efforts to undermine an adversary s source of income i focus on us efforts to reduce the resources of taliban loyal insurgents by suppressing the afghan opium trade with additional applications to conflicts involving oil producing nations the taliban historically profited from the opium trade through a 10 percent tax on farmers known locally as ushr and by providing traffickers with protection services this link between opium income and taliban resources coupled with concerns about a narcoticsinsecurity cycle motivates the view that the united states should suppress the afghan opium trade blanchard 2009 caution is warranted

energy consumption and economic growth evidence from china at both aggregated and disaggregated levels using a neo classical aggregate production model where capital labor and energy are treated as separate inputs this paper tests for the existence and direction of causality between output growth and energy use in china at both aggregated total energy and disaggregated levels as coal oil and electricity consumption using the johansen cointegration technique the empirical findings indicate that there exists long run cointegration among output labor capital and energy use in china at both aggregated and all three disaggregated levels then using a vec specification the short run dynamics of the interested variables are tested indicating that there exists granger causality running from electricity and oil consumption to gdp but does not exist granger causality running from coal and total energy consumption to gdp on the other hand short run granger causality exists from gdp to total energy coal and oil consumption but does not exist from gdp to electricity consumption we thus propose policy suggestions to solve the energy and sustainable development dilemma in china as enhancing energy supply security and guaranteeing energy supply especially in the short run to provide adequate electric power supply and set up national strategic oil reserve enhancing energy efficiency to save energy diversifying energy sources energetically exploiting renewable energy and drawing out corresponding policies and measures and finally in the long run transforming development pattern and cut reliance on resource and energy dependent industries

the stochastic volatility in mean model with time varying parameters an application to inflation modeling this article generalizes the popular stochastic volatility in mean model to allow for time varying parameters in the conditional mean the estimation of this extension is nontrival since the volatility appears in both the conditional mean and the conditional variance and its coefficient in the former is time varying we develop an efficient markov chain monte carlo algorithm based on band and sparse matrix algorithms instead of the kalman filter to estimate this more general variant the methodology is illustrated with an application that involves u s u k and germany inflation the estimation results show substantial time variation in the coefficient associated with the volatility highlighting the empirical relevance of the proposed extension moreover in a pseudo out of sample forecasting exercise the proposed variant also forecasts better than various standard benchmarks

how to reform a planned economy lessons from china the countries of eastern europe and the former soviet union have been flooded with advice from the west on how to liberalize their planned econo mies this advice is unfortunately offered in an empirical vacuum no one knows how these econo mies will react to the proposed liberalization meas ures there exists however a neglected source of information china offers a long time series of data over a decade s worth on the effects of reforms on a planned economy china s reforms were gradual but their cumulative effect has been large and they have been remarkably successful china s experiments provide some practical les sons on what kinds of reforms can work elsewhere the dominant school of thought among economists favours the big bang policy of reforming quickly and according to a comprehensive plan partial reforms in this view are useless they will be negated by the remnants of the planning system the proponents of big bang reform have been influential with poland czechoslovakia and rus sia announcing plans for a rapid transition to capi talism

the impacts of energy prices on energy intensity evidence from china in this paper we present a review of the deregulation of energy prices in china between 1985 and 2004 and assess the impacts of changes in energy prices on aggregate energy intensity and coal oil electricity intensity we used time series data to provide estimates of energy price elasticities empirical results showed that 1 the own price elasticities of coal oil and aggregate energy were negative in periods both before and after 1995 implying that higher relative prices of different energy types lead to the decrease in coal oil and aggregate energy intensities however the positive own price elasticity of electricity after 1995 probably indicates that the price effect was weaker than other factors such as income effect and population effect 2 the impacts of energy prices were asymmetric over time 3 sectoral adjustment also drove the decrease in aggregate energy intensity although raising energy prices to boost efficiency of energy use seems to be an effective policy tool other policy implications concerned with energy prices such as energy supply security and fuel poverty must also be considered

the law of one price evidence from the transitional economy of china abstract this paper applies the recently developed econometric methods of panel unit root tests and nonlinear mean reversion to investigate price convergence in china the largest transitional economy in the world we find that prices did converge to the law of one price in china for an overwhelming majority of goods and services based on a large panel data set the finding sheds light on the extent of the market economy in china and casts doubt on young s proposition that the economic reform has led to the fragmentation of chinese domestic markets