an econometric investigation of the monetary neutrality and rationality propositions from an international perspective t he combination of the natural rate of unemployment and the rational expectations hypotheses in macroeconomic models results in the now well known conclusion that anticipated short run monetary stabilization policies do not influence real economic variables this policy ineffectiveness proposition has been named the macro rational expectations mre hypothesis by modigliani 1977 as a result the implicit policy prescription is that a price level stabilization policy should be pursued the empirical validity of this conclusion is perhaps the central issue in modern stabilization theory barro 1977 1978 1981 barro and rush 1980 and leiderman 1980 have presented empirical evidence for the united states supporting this proposition however a number of recent studies have claimed that previous empirical results which support the finding that anticipated policy is neutral are flawed corrections of these problems often result in conflicting conclusions see small 1979 gordon 1979 and mishkin 1982 given the important implications of the mre hypothesis it is curious that almost all formal testing has been focused upon the united states while barro has suggested that a cross country study would be useful as far as we know only darby 1980 attempts to test whether anticipated changes in monetary policy are neutral across countries unfortunately his results suffer from problems caused by using generated regressors in addition he makes no attempt to test the individual implications of the mre hypothesis which encompasses the propositions that expectations are rational lad anticipated monetary policy does not matter in this paper we employ the methodology developed by mishkin to test the mre hypothesis in six countries canada germany italy japan the united kingdom and the united states the paper is divided into three major sections and a conclusion section ii briefly reviews mishkin s testing method in section iii the procedure employed to specify the money growth equation is discussed and these equations specified section iv presents and discusses the results of applying the method introduced in section ii in the conclusion the major findings are restated possible limitations discussed and extensions suggested

economies of vertical integration in the swiss electricity sector over the last two decades several european nations have introduced reforms to their electricity sector generally these reforms require a legal and functional unbundling of vertically integrated companies these unbundling processes may reduce the possibilities that exist to fruitfully exploit the advantages of vertical integration the goal of this paper is to empirically analyze the presence of economies of scale and vertical integration in the swiss electricity sector economies of vertical integration between electricity production and distribution result from reduced transaction costs better coordination of highly specific and interdependent investments and less financial risk different econometric specifications for panel data including a random effects and a random coefficients model have been used to estimate a quadratic multi stage cost function for a sample of electricity companies the empirical results reflect the presence of considerable economies of vertical integration and economies of scale for most of the companies considered in the analysis moreover the results suggest a variation in economies of vertical integration across companies due to unobserved heterogeneity

divide and rule the economic and legal implications of the proposed ownership unbundling of distribution and supply companies in the dutch electricity sector abstract in machiavelli s theory of power the concept of divide and rule forms the main theme the ruler has absolute power and to maintain and increase such power all means are justified when viewed against the background of this theory the current debate in the netherlands on the unbundling of energy electricity gas companies can be observed as an example of divide and rule in which the dutch minister of economic affairs plays a central role yet contrary to machiavelli in his time the dutch government does in fact aim principally at the greater welfare of the dutch people it is therefore noteworthy that while important steps in the decision to unbundled have been taken there is no evidence that the dutch people will indeed benefit from the envisaged unbundling

persistent and transient productive inefficiency in a regulated industry electricity distribution the productive efficiency of a firm can be decomposed into two parts one persistent and one transient this distinction seems to be appealing for regulators during the last decades public utilities such as water and electricity have witnessed a wave of regulatory reforms aimed at improving efficiency through incentive regulation most of these regulation schemes use benchmarking namely measuring companies efficiency and rewarding them accordingly focusing on electricity distribution we sketch a theoretical model to show that an imperfectly informed regulator may not disentangle the two parts of the cost efficiency therefore the regulator may fail to set optimal efficiency targets which also undermines quality we then provide evidence on the presence of persistent and transient efficiency using data on 28 new zealand electricity distribution companies between 2000 and 2011 first we estimate a total cost function by means of traditional stochastic frontier models for panel data these come up with an estimation of the persistent part or the transient part of the cost efficiency finally we use the more recent generalized true random effects model that allows for the simultaneous estimation of both transient and persistent efficiency we also find some evidence that persistent efficiency is associated to higher quality and wrong efficiency targets are associated to lower quality compliance

the finnish power market are imports from russia low cost electricity market integration of high and low price areas is expected to bring benefits to the consumers in a high price area however these potential benefits are highly dependent on the market characteristics and the policy interventions we use simulation to study the effects of different alternatives for the expansion and operation of the interconnector finland russia on the finnish market a high price area our results show that the current trading arrangement where a single trader owns the transmission rights and limits the trade during peak hours to avoid capacity charges in russia is beneficial for finland at the current interconnection capacity however if the interconnector is expanded the behaviour of the trader would create significant distortions in the finnish market we also analyse the pros and cons of maintaining a strategic reserve in finland in combination with the different scenarios of interconnection expansion and trading arrangements we conclude that in the absence of trust in imports the need for a strategic reserve is undeniable this will slightly reduce the economic benefits of integration for finnish consumers but it will significantly improve reliability

disaggregate level evidence on monetary neutrality existing tests of the neutrality hypothesis focus on aggregate level economic activity however failure to examine disaggregate level effects can lead to incorrect inferences concerning anticipated and unanticipated money growth impacts disaggregate level testing of neutrality is limited also receiving inadequate attention is the impact upon test inferences of the use of generated regressors in the widely used two step estimation procedure this research tests neutrality across eleven manufacturing industries and aggregate gnp incorporating a correction for generated regressors into gls estimation the research finds non neutrality of anticipated money at the disaggregate level under two general money forecasting specifications

does anticipated aggregate demand policy matter further econometric results a heated debate has arisen over what modigliani has dubbed the macro rational expections mre hypothesis this hypothesis embodies two component hypotheses 1 rational expectations and 2 short run neutrality i e that anticipated changes in aggregate demand will have already been taken into account in economic agents behavior and will thus evoke no output or employment response together these component hypotheses imply that deterministic feedback policy rules will have no effect on business cycle fluctuations the irrelevance of these types of policy rules is inconsistent with much previous macro theorizing as well as with the views of policymakers it is thus an extremely controversial proposition which requires a wide range of empirical research this paper is a sequel to a previous paper by the author that paper developed a methodology for testing the mre hypothesis and found that anticipated money growth does matter to the business cycle this paper extends the analyses to cases where the rate of nominal gnp growth or the inflation rate rather than money growth is the aggregate demand variable the empirical results are also negative on the mre hypothesis and its corresponding policy ineffectiveness proposition this abstract was borrowed from another version of this item

balancing energy strategies in electricity portfolio management traditional management of electricity portfolios is focused on the day ahead market and futures of longer maturity within limits market participants can however also resort to the balancing energy market to close their positions in this paper we determine strategic positions in the balancing energy market and identify corresponding economic incentives in an analysis of the german balancing energy demand we find that those strategies allow an economically optimal starting point for real time balancing and create a marketplace for flexible capacity that is more open than alternative marketplaces the strategies we proffer in this paper we believe will contribute to an effective functioning of the electricity market

divorce comes at a price an ex ante welfare analysis of ownership unbundling of the distribution and commercial companies in the dutch energy sector vertical unbundling in the electricity sector is a hot political topic in the european union the european commission has decided that the ownership unbundling of transmission networks from other stages in the value chain is the most effective way to ensure fair network access and infrastructure investment while this european unbundling debate has not ended yet and most countries still do not have an independent transmission system operator tso the dutch government has already taken one step further in 2008 it decided that distribution companies should be completely separated from commercial activities that are part of the same holding generation trade and supply this governmental decision has been fiercely debated although the goal is to improve competition as well as security of supply these benefits are uncertain nevertheless it is certain that ownership unbundling comes at a cost in this paper we present an ex ante cost benefit analysis of the dutch unbundling act we conclude that it is unlikely that this act is welfare enhancing divorce comes at a price

macroeconomics news and the stock market evidence from europe abstract the effects of unexpected variations in many macroeconomic variables on aggregate stock price indices are evaluated for great britain west germany and switzerland quarterly data over the recent flexible exchange rate period are used the results indicate that the effects of macroeconomic news are either very small or obscured by a low signal to noise ratio

social cost benefit analysis of electricity interconnector investment a critical appraisal abstract this paper examines the economic analysis social cost benefit analysis underlying two decisions to build an interconnector norned and the east west interconnector in europe the main conclusion is that current interconnector and transmission investment decisions in europe are unlikely to maximize social welfare the arguments are as follows i it is unclear how much demand for transmission capacity and interconnectors actually exists and thus the benefits of investment are unclear ii both analyses underlying the investments studied are incorrect to the point where in one case even the sign may be wrong iii the main criticism concerns the fact that they do not take the resulting changes in generator investment plans into account and ignore the potential benefits of increased competition iv several smaller issues can be improved such as the discount rate used v decisions at the european level are taken very differently and approval may depend on which authority grants approval vi interconnector decisions receive the most attention although most money goes to transmission investments two research recommendations for future improvements are formulated

a bayesian view of nominal money and real output through a new classical macroeconomic window this study investigates the empirical evidence on the effects of unanticipated changes in nominal money on real output in 47 countries when viewed through a window i e likelihood function that assumes the neutrality of anticipated changes using a bayesian predictivist approach it provides a pedagogical bayesian analysis of generated regressor models in the face of specification uncertainty involving among other things multiple unit roots and trend stationary alternatives

the geopolitics of cross border electricity grids the israeli arab case abstract countries often attempt to establish regional electricity grids however whereas research on natural resources frequently seeks to understand policy outcome through a geopolitical prism when it comes to electricity studies the prism is always economic or technical hence this study is a first attempt to identify the geopolitical dimension of cross border electricity grids the study argues that success in establishing electricity grids requires identifying how the geopolitical dimension interplays with the physical dimension to examine the role of these geopolitical bottlenecks the study examines negotiation protocols spanning over 15 years on establishing ten grid connections between israel and its arab neighbors it finds that electricity geopolitics has been used both as a platform for deeper international cooperation and as a stick against neighboring states when policies are driven by a peace dividend proposals for grid connection appear to evolve and overcome the dependency and the security economy bottlenecks when relations deteriorate proposals for grid connections appear to undergo reconsideration and to be held hostage by higher politics if when and how electricity grids materialize is a function of the nature of the electricity network as a twofold package and of the ability of the planning process to accommodate geopolitical uncertainty

on the determination of european day ahead electricity prices the turkish case abstract day ahead electricity prices in european markets are determined by double blind auctions that is both buyers and sellers may place anonymous orders with different prices and quantities the market operator has to solve an optimization problem within an hour to clear the auction and determine the prices for the day ahead market dam which are used as a reference point for the other electricity contracts all electricity traded at the same time period is traded at the same price called market clearing price the market operator has to end the algorithm with a feasible solution if the algorithm could not find the optimal solution within the time limit in this paper we develop an optimization model to solve the problem with day ahead electricity prices including all the practical considerations in the turkish dam we present a mixed integer formulation and provide methods based on aggregation techniques and variable elimination to solve the problem within the limits of the practical requirements using real market data we show that aggregation reduces the problem size approximately 60 percent whereas variable elimination provides another 30 percent reduction we also propose an ip based large neighborhood search to obtain an initial solution empirical evidences coming from the turkish dam data indicate the heuristic has a substantial solution quality and the overall suggestions deliver remarkable solution time improvements this is the first paper in terms of formulating dam problem in turkey developing new approaches to solve it within the time limits of the market and using real data

policy impacts under rational expectations abstract this paper re examines for the u s the validity of the macro rational expectations mre hypothesis in contrast to most previous studies in this area the paper a considers the potential real effects of both monetary and fiscal policies b allows for possible endogeneity of these policies and c uses a joint non linear estimation methodology to distangle the hypothesis of rationality from that of neutrality the empirical results reject the joint mre hypothesis for both policies the results also indicate that policy non neutrality is the culprit behind such rejection this evidence offers further empirical support for macro rational expectations models where monetary and fiscal policies can due to some rigidities play a key role in stabilizing the real economy

economies of scale and utilization in the swiss electric power distribution industry economies of scale and utilization in the swiss electricity distribution industry are analysed a translog variable cost function was estimated using panel data for a sample of 39 municipal utilities over the period 1988 1991 economies of both scale and utilization appear to exist in the distribution of electricity both for small medium and large sized utilities thus the empirical evidence suggests sub additivity of the cost function over the relevant range of output for the swiss electricity distribution utilities a necessary condition for a natural monopoly to exist

expectations and monetary neutrality an empirical reexamination modern monetary business cycle models feature rational expectations and natural rate assumptions which imply that unanticipated changes in nominal aggregates affect real output but anticipated changes do not initial tests conducted by barro 3 and by barro and rush 4 supported the neutrality of anticipated money growth in a particularly influential study mishkin 21 22 rejected the neutrality of anticipated policy mishkin s paper 21 has become one of the most frequently cited studies in empirical macroeconomics the influence of the study probably derives in large part from the unequivocal nature of the results in particular mishkin showed that i the hypothesis that anticipated policy has no effect on output is strongly rejected ii anticipated nominal changes have a greater estimated effect on output than do unanticipated nominal changes iii lags as long as 17 quarters have significant coefficients implying that barro s eight lag model was underspecified iv in some specifications the estimated sign of the effect of nominal innovations is opposite to the prediction of monetary business cycle theory frydman and rappoport 9 used mishkin s empirical model to provide further evidence against the neutrality hypothesis by showing that the data provide no evidence for distinguishing between the output effects of anticipated policy and those of unanticipated policy although several subsequent studies have supported the neutrality hypothesis 7 12 mishkin s careful study and a small number of additional studies suggest that the neutrality hypothesis is not robust the empirical rejection of the neutrality hypothesis contradicts a wide range of modern monetary models including those based on imperfect information 14 18 19 and those based on imperfect competition 8 20 as a consequence the focus of macroeconomists has in recent years shifted to non monetary models in which money responds passively to changes in aggregate output 16 17 this paper explores the robustness of mishkin s results using an updated data set the model yields results that are more consistent with the neutrality hypothesis than those of mishkin in par

supply shocks and the interest rate supply shocks and the interest rate i introduction a new approach to business cycles that stresses intertemporal substitution possibilities and market clearing equilibria has recently gained prominence key models that use this new classical framework include those of lucas 1972 barro 1976 1981b 1987a 1987g kydland and prescott 1980 1982 long and plosser 1983 and king and plosser 1984 although these models share the basic similarity of intertemporal maximization and market clearing they differ about which factors cause business cycle fluctuations however most of them admit a role for supply shocks such as opec oil price shocks and agricultural harvest failures most of the empirical work using the market clearing approach concentrates on quantities such as real gnp and ignores the key price variable of the intertemporal substitutional approach the real interest rate exceptions are the papers by benjamin and kochin 1984 and barro 1987a who use eighteenth and nineteenth century data to examine the effect of government spending on the nominal interest rate this paper extends previous work by studying not only the effects of government spending on the interest rate but also the effects of supply shocks on the interest rate the classic supply shock agricultural harvests is used indeed to the best of our knowledge this is the first paper to investigate how agricultural supply shocks affect the interest rate and as such it provides additional evidence about the factors that influence interest rates although the theory behind this work is cast in the framework of the equilibrium approach keynesian models also concur with the theoretical prediction that supply shocks raise the real interest rate thus this empirical investigation of the impact of harvests on the interest rate will command attention from keynesian as well as new classical macroeconomists section ii reviewers the theory used to motivate the work the third section discusses the data the fourth section presents the empirical results while the last section contains conclusions ii theory the equilibrium approach to macroeconomics emphasizes the role played by intertemporal optimization consumers maximize their intertemporal utility functions while firms maximize their profits as a result an intertemporal relative price the ex ante real interest rate emerges as a crucial variable consider the effect on the ex ante real interest rate from a temporary adverse supply shock such as a harvest failure in an agricultural closed economy consumers faced with a temporary shortfall in income and trying to smooth their consumption generally try to borrow in order to maintain their usual level of consumption thus the ex ante real interest rate increases much the same argument applies to government spending a temporary increase in government spending reduces the resources currently available to the private sector then as in the case of a temporary supply shock the increased demand for borrowing to smooth the reduction in disposable income leads to a higher interest rate an open economy is different when faced with a temporary reduction in resources from either an adverse supply shock or a temporary increase in government spending the private sector in an open economy is able to borrow from abroad by running a balance of trade deficit if the country in question is a small part of the world economy the increased borrowing does not affect the world ex ante real interest rate so the effect on the country s ex ante real interest rate is nil returning to the case of a closed economy supply shocks and changes in government spending affect the ex ante real interest rate only if they are temporary if they were permanent consumers would not have the same incentive to borrow so the interest rate would tend to be constant

monetary policy and long term interest rates an efficient markets approach abstract this paper is an application of efficient markets theory to analyze empirically the relationship of money supply growth and long term interest rates this approach has the advantage over calier research on this subject in that it imposes a theoretical structure on this relationship that flows easier interpretation of the empirical results as well as more powerful statistical tests on the interest of ascertaining the robustness of the results many different empirical tests are carried out in this paper and they uniformly do not support the preposition that increases in the money supply are correlated with declines in long rates

real interest rates anticipated inflation and unanticipated money a multi country study a bstractin this paper we examine real interest rate behavior in canada west germany the united states and the united kingdom using a model that yields a semi reduced form equation linking the real interest rate to monetary growth shocks anticipated inflation and expected inflation variance the estimator used in our analysis accommodates regressors from other regressions ensuring that accurate inferences are obtained in all countries we find that increases in anticipated inflation initially dampen real interest rates in addition a significant and negative relationship between unanticipated money shocks and real interest across all countries is discovered inflation variance typically exhibits little explanatory power

competition and integration among complements and network market structure this article analyzes the competition and integration among complementary products that can be combined to create composite goods or systems the model generalizes the cournot duopoly complements model to the case in which there are multiple brands of compatible components it analyzes equilibrium prices for a variety of organizational and market structures that differ in their degree of competition and integration the model applies to a variety of product networks including automatic teller machines real estate multiple listing services and airlines crs as well as to nonnetwork markets of compatible components such as computer cpus and peripherals hardware and software and long distance and local telephone services copyright 1992 by blackwell publishing ltd

organization and functioning of liberalized electricity markets an overview of the dutch market abstract in this paper we examine the organization and the functioning of the dutch electricity market first we describe the organization of the dutch electricity supply chain and the role of the main market participants including the transmission system operator distribution system operators program responsible parties and metering companies we then describe the organization of financial trading and clearing mechanism of electricity through the organized futures exchange the european energy derivatives exchange and the spot market amsterdam power exchange which includes the day ahead market and intra day markets we also detail the functioning of the imbalance market and reserve capacity management in the netherlands through a set of numerical analysis we provide an exploratory analysis of the apx day ahead spot prices and the real time imbalance prices using electricity price data from 2002 to 2013 we observe the price spikes both in the day ahead and imbalance markets usually occur around 6 10 am and 5 7 pm we also observe that in the imbalance market system overages happen significantly more often than shortages pointing out that the market tends to buy more than what is demanded this could be explained by the risk attitude of the market participants in the imbalance market

testing short run neutrality abstract this paper derives and implements a robust test of the short run neutrality of anticipated policy that is valid when the information set used to form expectations is incorrectly specified and the effect of unanticipated policy on deviations of output from the natural rate varies over time the test is based on the observation that if unanticipated policy affects output with a maximum lag of n quarters then any information prior to n should be uninformative about output movements the test is applied to quarterly data for the united states and the paper concludes that policy is not neutral

differing degree of price flexibilities and the policy ineffectiveness proposition price regulations impart stickiness to prices the degree of response is analysed for three cpi subindex inflations freely determined regulated and mixed prices and of aggregate cpi inflation to anticipated and unanticipated monetary policies freely determined prices and aggregate cpi show similar responses but faster and larger adjustments than regulated prices to anticipated monetary policies the results imply that the extent to which monetary policies can influence prices depends on the degree of price inertia in various sectors for monetary authorities to control inflation effectively they need to focus on price movements in various sectors

effects of fiscal policies on us agriculture according to the macro rational expectation mre hypothesis only unanticipated macroeconomic policy has impacts on real economic variables and anticipated policy changes have no real impacts this study analysis the effects of the anticipated and unanticipated components of fiscal policy on the us farm real gnp by testing the neutrality and rationality propositions of the mre hypothesis the test results show that both the rationality and neutrality propositions are rejected the empirical findings indicate that the anticipated fiscal policy does have significant effects on farm output examination of a specific sector sheds light on the nature of the market and helps ascertain the resons for the non neutrality

revisiting electricity liberalization and quality of service empirical evidence from new zealand abstractwhat effect does the firm structure have on the quality of service delivered by networks and infrastructure industries we answer this question by empirically assessing the impacts of complete vertical separation such as ownership unbundling on the quality of service delivered by a liberalized network industry electricity distribution utilities in new zealand are considered for this purpose and are analysed using panel data econometrics the results show robust evidence that ownership unbundling contributed to a fall in the duration and frequency of supply interruptions in electricity distribution however the results also show that unbundling has no effect on reducing distribution network losses these results overall highlight the nonsimple impacts of ownership unbundling on the quality of electricity distribution we suggest that the quality of service may largely improve when considered in the economic regulation of electricity networks than completely relying on specific reform measures

the impact of news and alternative theories of exchange rate determination over the last decade two of the more important developments in the area of exchange rate determination are the construction of the asset market model and the recognition that news is a key factor affecting exchange rates the asset market model has evolved as an alternative to the traditional flow model of exchange rate determination in contrast to the flow model where the exchange rate is determined by the flow demand for and flow supply of foreign exchange exchange rates adjust to allocate the total stock of foreign exchange in question in the asset market model this model may be presented in one of two forms the monetary approach or the portfolio balance approach the former is summarized in the work of bilson 1978a dornbusch 1976 frenkel 1976 johnson 1976 and mussa 1976 1979 while the latter stems from the efforts of branson 1981 branson halttunen and masson 1977 dooley and isard 1982 kouri 1976 kouri and de macedo 1978 and rodriguez 1980 while the logical consistency of these models has enhanced their popularity empirical support has been limited the importance of unanticipated shocks or news in explaining exchange rate behavior has been suggested by dornbusch 1980 frenkel 1981 isard 1983 and mussa 1979 the basis for this suggestion is the efelcient markets approach that suggests securities prices in a capital market should reflect all available information therefore the predominant cause of exchange rate movements is news that could

welfare and competition effects of electricity interconnection between ireland and great britain this study analyzes the effects of additional interconnection on welfare and competition in the irish electricity market i simulate the wholesale electricity markets of the island of ireland and great britain for 2005 i find that in order for the two markets to be integrated in 2005 additional interconnection would have to be large the amount of interconnection decreases for high costs of carbon since this causes the markets to become more similar this suggests that in the absence of strategic behavior of firms most of the gains from trade derive not from differences in size between countries but from technology differences and are strongly influenced by fuel and carbon costs social welfare increases with interconnection although at a decreasing rate as the amount of interconnection increases there are also positive effects on competition in ireland the less competitive of the two markets finally it is unlikely that private investors will pay for the optimal amount of interconnection since their returns are significantly smaller than the total social benefit of interconnection

tests of rationality neutrality and market efficiency a monte carlo analysis of alternative test statistics abstract this paper examines the small sample properties of three testing strategies used to analyze the rationality monetary neutrality and market efficiency hypotheses we focus on the original two step barro test of the mre hypothesis formed entirely from ols results a test that employs the correct variance covariance formulae for these two step estimates and mishkin s fimle testing framework each test is examined under likely model respecifications the findings highlight the extensive bias incurred by drawing inferences from simple unadjusted two step estimates and reveal the relative power of all tests in identifying alternatives to the null hypotheses

water on fire gains from electricity trade in light of the ongoing liberalization of electricity trade in the nordic countries and perhaps in northern europe we argue that gains from electricity trade may be different from those traditionally associated with comparative advantages and economies of scale in particular we consider gains arising from the exploitation of technological complementarities between hydro and thermal systems our theoretical framework highlights essential features of the two systems and allows for an analysis of effects of trade we study three trading regimes which may arise either endogenously or because of trade regulations day night power exchange seasonal energy banking and unbalanced trade the analysis suggests that gradual trade liberalization may be costly

consumer electricity and gas prices across australian capital cities structural breaks effects of policy reforms and interstate differences abstract we detect and analyze the most significant structural changes in the quarterly growth rate of consumer electricity and gas prices in australia and estimate their corresponding seasonal effects to do so we apply the general modelling framework of the bai perron breaking regression to all available quarterly data for capital cities individually and australia as a whole 1989q3 2017q2 retail energy prices in most australian states were deregulated in the 2000s we find that increases in average quarterly growth rates of electricity and gas prices consistently occurred in the third september quarter and find very few instances of increases in any other quarters of the year in the post deregulation period price increases are significantly higher than in the pre deregulation era results for some capital cities are stark in perth third quarter growth in electricity prices has been five times higher after the structural break in australia as a whole third quarter growth in gas prices has been three times higher after the structural break we discuss several possible explanations for energy price rises in the period since deregulation

toward consilience between biology and economics the contribution of ecological economics abstract during its ten year history ecological economics has made a real difference in the way economists look at the natural world and in the way biologists look at the economy in this survey article we examine the contributions to the journal in terms of e o wilson s concept of consilience that is his argument that the methods and assumptions of any field of study should be consistent with the known and accepted facts in other disciplines in particular we examine the contributions of ecological economics to reconciling the economic theory of the consumer and producer with biophysical reality

the effects of expected inflation on real returns in the argentine indexed bond market abstract a relatively unrestricted market in goverment indexed bonds operated in the high inflation argentine economy from 1975 through 1982 the indexed bond yields from this period provide an interesting opportunity to examine the relation between real interest rates and expected inflation the test results support the hypothesis that expected inflation is a significant source of variation in real interest rates depressing the real yields on indexed bonds

an institutional framework for the development of sustainable and competitive power market in pakistan abstract pakistan is continuously striving for sustainable and competitive power market under the comprehensive power sector reform program pakistan shifted its power market from monopoly model to single buyer model by unbundling water and power development authority wapda and establishing national transmission and dispatch company ntdc current severe power situation in the country is triggering the government of pakistan gop to accelerate the implementation of intended reform program and to readily undertake next planned transformation i e from single buyer model to wholesale market model this research endeavors the future dynamics of power market after the structural spin off by pre assessment of upcoming wholesale power market market power of both public and private electricity generators has been computed using 8 largest firm concentration ratio herfindahl hirschman index hhi and residual supply index rsi the findings suggest that future power market will function with non existence of market power except in the periods of peak electricity demand and maximum hydro generation furthermore insufficient installed capacities and underutilization of public thermal units may enable some players to exercise market power for sustainable and competitive power market an empirically supported framework has been proposed based on the analysis the framework proposes utilization of huge available renewable energy potential for future which will protect the whole infrastructure from market power it recommends respective roles and responsibilities for the smooth transition among market models the framework will be supportive in terms of successful and smooth transition from single buyer model to wholesale market model and potential of wind solar biogas to be properly explored and utilized to reduce energy gap

anticipated money unanticipated money and output 1873 1930 anticipated money unanticipated money and output 1873 1930 i introduction this paper examines the roles of anticipated and unanticipated money in the period between the civil war and the depression 1 such an examination is warranted for at least two reasons first estimation of the impact of anticipated and unanticipated money on output for historical periods can enhance our understanding of the responses of economic activity to these key variables 2 second recent work has shown that traditional historical estimates of output may be faulty see romer 1986a 1986b 1986c 1988 not only do most studies investigating the economic roles played by anticipated and unanticipated money concentrate on the post world war ii era those that discuss the period before world war ii such as rush 1985 1986 use traditional data indeed despite the interesting analyses by rush if the validity of the conventional data on output and unemployment for the era under consideration is rejected then virtually no results on the importance of monetary and real factors for economic activity are available for this important period thus further discussion of this topic is needed to answer two important questions what do the revised data show us about the historical economy do these revisions change the inferences drawn about monetary influences on economic activity the analysis presented here is comprehensive in that a wide range of output measures are employed both in terms of the types of output and in terms of the manner in which the output measures are constructed given this variety in the output measures consistent results on the effects of anticipated and unanticipated money across output measures indicate that conclusions drawn from the analysis are robust in particular the empirical results presented below support the following hypotheses i that anticipated m2 and monetary base growth have no effect on output regardless of the output measure used ii that unanticipated m2 and monetary base growth do effect output regardless of the output measure used and iii that changes in financial intermediation may be important for the evolution of output over time support for hypotheses i and ii is consistent with the monetary explanation of business cycles support for hypotheses iii may be consistent with real explanations of business cycles if exogenous shocks to the monetary production technology subsequently affect output 3 taken together the joint support for hypotheses i iii suggests that at a minimum neither the real nor the monetary explanations for historical u s business cycles can be discounted without additional work the remainder of the paper is organized as follows section ii presents a brief overview of the historical period under consideration along with a discussion of prior work on the effects of anticipated and unanticipated money on output determination during this time period section iii discusses the data and the methodology the empirical results are presented in section iv and the conclusions in section v ii overview the historical period the period under investigation 1873 1930 is one of substantial economic change banking panics the return to the gold standard the founding of the federal reserve system and world war i are some of the more important events occuring during this period we consider the role played by expected and unexpected money in output determination for several major subperiods while data availability largely determined the selection of these subperiods they generally correspond to major economic events despite the structural and institutional changes over the period we also examine the roles of anticipated and unticipated money growth in the determination of output over the entire time period to be valid tests of the impact of money growth on output require a reasonable degree of homogeneity in the economic environment

institutional reform and technological practice the case of electricity this article proposes a framework for categorizing possible interrelations between technological and institutional change and applies this framework to the case of the restructuring of the electricity sector it is argued that there is a need for coherence between institutions and technological practice so as to safeguard the satisfactory functioning of electricity infrastructure the identification of possible incoherences between institutions and technological practice allows for a better understanding of the potential drivers for change and the evolutionary processes of which they may be part this article attempts to elaborate the nature of this co evolution in somewhat more detail using specific levels of analysis that are exemplified in a four level model in the case of the restructuring of the electricity sector the institutional framework has changed from a public utility oriented towards a market oriented system however the technological practice remained unchanged a system oriented approach that relies on centralized planning control and operation this discrepancy between institutions and technological practice leads to significant frictions in the functioning of the electricity sector but it also offers opportunities for innovation in order to make liberalization a success it might be necessary to stimulate certain technical developments i e distributed generation and intelligent networks

an analysis of cost efficiency in swiss multi utilities this study presents an empirical analysis of the cost efficiency of a sample of swiss multi utilities operating in the distribution of electricity natural gas and water the multi utilities that operate in different sectors are characterized by a strong unobserved heterogeneity therefore the measurement of their performance poses an important challenge for the regulators the purpose of this paper is to study the potential advantages of recently developed panel data stochastic frontier models in the measurement of the level of efficiency for multi utility companies these models are estimated for a sample of 34 multi output utilities operating from 1997 to 2005 the alternative models are compared regarding the cost function slopes and inefficiency estimates for the inefficiency estimates the correlation between different models and the effect of econometric specification have been analyzed the results suggest that the inefficiency estimates are substantially lower when the unobserved firm specific effects are taken into account

econometric issues in macroeconomic models with generated regressors the paper critically reviews the literature on the econometric issues raised by the use of generated regressors gr in empirical models the economic rationale for the use of gr is considered with examples being drawn from several macroeconomic examples including new classical macroeconomic ncm models which postulate monetary neutrality various estimation methods are discussed for models which include surprise or unexpected terms and the strengths and weaknesses of each approach are investigated drawing upon the work of mcaleer and mckenzie 1991 situations where the typically inefficient two step estimation 2se method will be efficient are highlighted problems of model misspecification and measurement errors are also investigated an empirical section highlights some of the dangers of using uncorrected 2se estimation results through a careful consideration of many recent attempts to test the ncm monetary neutrality hypothesis copyright 1993 by blackwell publishers ltd

disaggregate evidence on price stickiness and implications for macro models i introduction fashions that take hold of the field of macroeconomics share important characteristics with the economy its practitioners seek to understand approaches that are in vogue exhibit cycles with varying frequencies and amplitudes during the 1960s theories based on assumptions of widespread wage and price stickiness dominated the landscape the new classical macroeconomics that emerged in the 1970s challenged the preeminence of these keynesian theories and by the mid 1980s real business cycle theories assuming widespread price flexibility received a considerable portion of macroeconomists attention beginning in the early 1990s as reviewed by gordon 1990 mankiw 1990 and mankiw and romer 1991a 1991b a keynesian counterrevolution occurred and by the conclusion of the 1990s sticky price theories had regained much of their luster today as discussed by woodford 2003 price stickiness is a fundamental building block of numerous theories aimed at explaining both movements in domestic variables such as employment and real output and changes in international variables such as the trade balance and the current account there has as we discuss below been empirical work seeking to determine whether real world data might be consistent with the implications of macroeconomic theories with inflexible product prices there has been very little work however to determine whether the most influential approaches to testing the reasonableness of micro based models of price stickiness support the underlying assumption of widespread price rigidities at the micro level instead leading studies in the literature examine only aggregate data we find this quite surprising given that so many modern macroeconomic models consider economies populated with representative producers that establish an array of product prices that are fixed in the short run which in most models is commonly taken to be the current period of analysis are most product prices really sticky bils and klenow 2004 have addressed this question by studying the frequency of price adjustments for 123 categories of consumer goods and services their answer is that most prices in fact change relatively frequently with about half of prices changing roughly every 4 or 5 too although they found that the prices of certain services and what they call processed physical goods adjust more slowly their overall results offer relatively little support for sticky price models in this paper we also examine microeconomic data for the united states in contrast to bils and klenow however we examine industry level data on firm prices and costs we employ the empirical methodology proposed by the highly influential study by gali and gertler 1999 which in turn is based on the micro based analysis of imperfect competition and price stickiness proposed by calvo 1983 nevertheless our conclusions are broadly similar to those of bils and klenow overall we find that across the industries to which we are able to apply the gali gertler style approach no more than 43 of total sales are generated by industries with estimated periods of price adjustment of 6 quarters or more this percentage drops to below 23 when the discount factor is restricted to reasonable values and under these restrictions industries accounting for at least 36 of all sales in the industries we analyze have estimated price adjustment intervals of less than 2 quarters in all empirical approaches we consider unrestricted analyses producing estimates of industry specific discount factors at least 44 of total sales of the industries we consider are generated by industries with estimated price adjustment speeds of less than 1 yr furthermore in most specifications the unweighted average price adjustment interval for all industries is below 1 yr and the weighted average using industry shares of total sales as weights price adjustment interval for all specifications ranges from no higher than 3

welfare distribution effect of a price reduction in the dutch gas transport market a scenario analysis of regulatory policy market form and rent allocation as part of the larger energy market deregulation program the dutch energy authority dte has developed the habit to force the dutch gas transport enterprise gas transport services or gts to lower its prices dte s key argument is that lower gas transport prices will benefit the end user indeed that might well be the case this policy in general is in line with european legislation on the liberalization of the gas market we model and simulate the domestic welfare effects of a 5 percent transport price reduction from this we conclude that at least three observations complicate matters substantially first gts is government owned and the dominant shipper gasunie trade supply or gasterra as it was recoined recently is partly so 50 second shippers enter into the competitive game to make profits third not only is the majority of gas transported in the netherlands exported to foreign end users but also foreign owners have a large stake in dutch shippers as a result part of the rents will always be distributed or will leak away to foreign consumers and shippers or their shareholders these three observations together have three important implications first state ownership implies that much rent allocation is simply a matter of circulating money from one government sub budget to the other second given that the industry is imperfectly competitive part of the rents will not be passed on to the end consumers third it is unavoidable that a substantial part of the rents are transferred abroad a general conclusion for policy makers is that market liberalization might not bring ex post what they expected ex ante

pros and cons of exposing renewables to electricity market risks a comparison of the market integration approaches in germany spain and the uk abstract the article examines how renewable electricity res e producers are integrated into the electricity market under the support legislations and regulatory frameworks of germany spain and the uk focus is on wind power which faces the highest market integration challenge of all res e the analysis shows that the three countries follow contrasting approaches of exposing res e producers to the market risks of forward electricity markets balancing markets and system planning requirements risk exposure is highest in the uk and lowest in germany from a policy maker s perspective there is a trade off between a high risk and a low risk approach when res e face high market risks a higher level of financial support is required to stimulate res e development than in a low risk environment but the exposure to market risks may also give an incentive to make efficient use of the respective market thus limiting the indirect costs to society the special characteristics of wind energy however put natural limits to the response of wind power plants to market prices and locational price signals and will increasingly influence electricity markets and grid infrastructure these interdependencies should be recognised in the design of res e policies and market regulations

electricity market reform failures uk norway alberta and california an analysis of electricity market reforms already taken place in the uk norway alberta canada and california usa leads to our overall conclusion that the introduction of a competitive generation market of itself has failed to deliver reliable service at low and stable prices the market reform failures are attributed to market power abuse by few dominant sellers especially at times of transmission congestion poor market design that invites strategic bidding by suppliers the lack of customer response to price spikes capacity shortage caused by demand growth not matched by new capacity and thin trading of forward and futures contracts that are critical for price discovery and risk management the paper then explains why an electricity market reform can easily fail to deliver the promised gains of better service at lower and more stable prices the policy implication is that an electric market reform can be extremely risky and may lead to a disastrous outcome thus it is imprudent to implement such a reform in countries with limited sites for newgeneration and no indigenous fuels e g israel and hong kong these countries should therefore consider introducing performance based regulation that can immediately benefit electricity consumers in terms of lower prices more stable prices improved reliability more choices while encouraging the electric sector to pursue efficient operation and investment r 2003 elsevier science ltd all rights reserved

panel discussion price stability the goal of price stability the debate in canada in the past three years the goal of price stability has been widely discussed in canada the debate has taken place both in the academic community and in the press with the most notable contributions contained in two volumes published by the c d howe institute and staff studies put out by the bank of canada see lipsey l990 york 1990 selody 1990 and cozier and wilkinson 1990 the ongoing debate about price stability as a goal for bank of canada policy was set oft by governor crow s remarks in the hanson lecture of january 1988 in that lecture he made two key points about this issue first that price stability yields a healthier economy than inflation and consequently that the aim of monetary policy should be to achieve a pace of monetary expansion that promotes price stability and second that it is not possible to achieve a predictable stable positive rate of inflation such that the economy behaves in very much the same way as in a world with stable prices much of the subsequent discussion and debate can be divided into three main categories with some contributions falling of course into more than one of the categories first the attempts to delineate and quantify the long term benefits from price stability second the analysis of the transitory costs of achieving price stability and third attempts to search for structural or institutional changes that would reduce these transitional costs a variety of subsidiary technical issues have also played some role in the debate the most important being the appropriateness of the various price indexes as the focus of policy and whether price stability really means

model evaluation based on residual analysis of two similar models models that may appear to have different properties may in fact produce residuals that differ only in subtle ways by analysing the relationships between model residuals the problems in distinguishing between models can perhaps be discovered as illustrated by the econometric examples considered regressing residuals gives the long memory residual which is the difference between two models but this difference is very subtle and deeply hidden which explains why the traditional standard technique does not find this difference

freely determined versus regulated prices implications for the measured link between money and inflation wiley author accepted manuscript can be posted 2 years after official publication date must acknowledge source link to publisher version and include following statement this is the accepted version of the following article dexter a s levi m d and nault b r freely determined versus regulated prices implications for the link between money and inflation journal of money credit and banking 25 2 may 1993 222 231 which has been published in final form at http www jstor org stable 2077838 policy http exchanges wiley com authors self archiving 361 html article deposited according to publisher s policy 05 25 2015

an integrated view of tests of rationality market efficiency and the short run neutrality of monetary policy abstract this paper analyzes an important class of models in which expectations play an important role topics included in the analysis are tests of 1 rationality of forecasts in either market or survey data 2 capital market efficiency 3 the short run neutrality of monetary policy and 4 granger causality in macroeconometric models the common elements of these tests are highlighted in particular cross equation tests for rationality or the short run neutrality of money are shown to be equivalent to more common regression tests in the literature these results demonstrate that the exact specification of the relevant information set used in rational forecasts is not necessary for the cross equation tests to have desirable asymptotic properties also discussed are the conditions for identification of coefficients and testability of hypotheses

a generalized production frontier approach for estimating determinants of inefficiency in u s dairy farms this article investigates farm level efficiency of u s dairy farmers by estimating their technical and allocative efficiency technical inefficiency is assumed to be composed of a deterministic component that is a function of some farm specific characteristics and a random component by doing this we extend the stochastic frontier methodology in which determinants of technicial inefficiency are explicitly introduced in the model given the inputs variations in efficiency of farms are then explained by both deterministic and random components of technical inefficiency the empirical results indicate that a levels of education of the farmer are important factors determining technical inefficiency and b large farms are more efficient technically than small and medium sized farms both technical and allocative inefficiency are found to decrease with increase in the level of education of the farmer

how to benefit from a common european electricity market design abstract the realization of an internal electricity market in europe is currently on the one hand progressing in particular thanks to the wide spread implementation of market coupling solutions for cross border congestion management on the other hand diverging national market designs pose a threat to the continuation of this process given the challenges to electricity market design in a multi regional context we analyze how different design aspects namely cross border congestion management and capacity mechanisms affect welfare and generation adequacy in europe in doing so we rely on an agent based simulation model for electricity wholesale markets which we apply within several numerical computational case studies for the region of central western europe 2012 2030 our results confirm the benefits of market coupling in terms of welfare as well as generation adequacy furthermore we find indications that coordinating market designs across regions supports these targets therefore we recommend that european energy policy forms a stable transparent regulatory framework with cross border market coupling as an integral component in this context energy policy targets should be clearly defined and operationalized which also needs to consider potential conflicts between them finally electricity market designs need to be coordinated among states to benefit most from a common european market

has greater competition restrained u s inflation this paper shows how increased goods market competition affects the behavior of inflation in a multisector economy by raising the price elasticity of demand increased goods market competition theoretically lowers inflation and makes the aggregate price level less sensitive to aggregate demand shocks we find that proxies for the aggregate degree of goods market competition are statistically and economically significant in short run phillips curve models of core inflation evidence indicates that heightened goods market competition has flattened the slope of the short run expectations augmented phillips curve and slightly lowered the nonaccelerating inflation rate of unemployment nairu

the relationship between spot and futures prices in the nord pool electricity market abstract we analyze 11 years of historical spot and futures prices from the hydro dominated nord pool electricity market we find that futures prices tend to be higher than spot prices the average convenience yield is therefore negative but varies by season and depends on the storage levels in hydro reservoirs the average realized return on holding a long position in the futures market is also negative the negative convenience yield and risk premium contrast empirical findings in most other commodity markets we argue that differences between the supply and demand sides in terms of risk preferences and the ability to take advantage of short term price variations can contribute to explain the observed relationship between spot and futures prices in addition our analysis shows that the relationship between spot and futures prices is clearly linked to the physical state of the system such as hydro inflow reservoir levels and demand

the spillover effects of nominal wage rigidity in a multisector economy note although western economies are composed of markets with differing degrees of wage price stickiness most analytical macromodels are not composed of distinct sectors arld do not attempt to analyze how different sectors respond to policy actions and supply or demand shocks blinder and mankiw 1984 investigate how macropolicies and shocks affect a multicontract archipelago economy composed of five sectors islands each characterized by different wage price behavior they convincingly demonstrate how heterogeneous markets pose aggregation problems for policy makers and econometricians because each market reacts differently to common shocks however the blinder mankiw model is not really a model of an economy composed of integrated heterogeneous markets their archipelago model assumes that the workers in each sector island consume only the product produced in their sector a more realistic and analytically more appealing model would integrate the sectors by having each worker consume the same basket of heterogeneous goods under these circumstances conditions in one sector which affect the price of that sector s output can affect wage demands i e labor supply in another sector and thereby the output of this other sector through this channel wage price stickiness in one sector allows aggregate demand policy and shocks to have real effects on a sector with perfectly flexible sectoral wages and prices this result does not occur in the blinder mankiw model because it lacks this type of cpi labor supply linkage between sectors in fact these spillover effects have not been directly addressed by the existing literature for purposes of brevity only aggregate demand shocks will be considered in a closed economy consisting of only two sectors one having goods and labor markets which clear instantaneously henceforth the classical or walrasian sector and the

does contractual wage rigidity play a role in determining real activity interest in nominal wage ridigity as a source of macroeconomic fluctuations has waxed and waned over the past half century the most recent wave of interest was triggered by the rational expectations revolution of the 1970s which inspired an improved sticky wage paradigm the paradigm posits the existence of short term contractual arrangements that in their simplest form fix wage schedules in nominal terms for a predetermined period the life of the contract and leave employment at the discretion of the firm the most influential examples of the paradigm incorporate rational expectations and satisfy the natural rate hypothesis 9 14 thus meeting the new minimum standards for demand driven theories of the business cycle nominal wage contracting models have been vigorously criticized for both a lack of theoretical rigor and an absence of empirical support despite their critics however the models have remained a popular analytical tool and after almost a decade of inattention economists are showing a renewed interest in empirical tests of nominal contracting models the studies produced to date are small in number and offer conflicting conclusions they are perhaps as important for the objections they provoke as for the answers they provide while the work reported in this paper

the nature of supply side effects on electricity prices the impact of water temperature in this paper we show that the impact of water temperatures on electricity prices observed in europe in summer 2003 has prevailed for years we trace its source to technological and regulatory constraints and draw lessons for modelling

does anticipated monetary policy matter an econometric investigation a heated debate has arisen over the policy ineffectiveness proposition associate with the work of lucas sargent and wallace it postulates that anticipated aggregate demand policy will have no effect on business cycle fluctuations so that one deterministic feedback policy rule is as good as any other from the point of view of stabilizing the economy this paper develops a methodology for empirically analyzing rational expectations models displaying this neutrality result and then applies it to the important question of whether anticipated monetary policy matters to the business cycle

pricing of monthly forward contracts in the nord pool market this paper investigates whether the pricing of forward contracts in the nord pool market is efficient monthly forward contracts were introduced in the nord pool market in 2003 likewise quarterly contracts that will replace seasonal contracts were introduced in 2004 for a transition period these contracts together with the pre existing seasonal and yearly contracts constitute the forward market in an efficient forward market the price of a seasonal forward contract should equal the time weighted average of the underlying monthly forward contracts in this paper we use historic forward price information to evaluate whether this relationship holds true and find that there are inefficiencies in the pricing

trends random walks and the expectations augmented phillips curve evidence from six countries two major empirical results are reported first it is shown that time series measuring real activity in major industrialized countries contain nonstationarities of the random walk type second it turns out that the estimated influence of unexpected changes in inflation and monetary growth strongly depends on the chosen approach concerning nonstationarity the popular assumption of a deterministic time trend proxying for growth generally yields the hypothesized positive coefficients the influence of nominal surprises however becomes indistinguishable from zero if the respective equations are estimated in stationary differences of real activity variables copyright 1988 by ohio state university press

on the robustness of barro s new classical unemployment model in this paper the robustness of barro s new classical model of unemployment is examined using both two and three equation systems to various sample periods and methods of estimation the methods of estimation used are two step ols two step ols with correct standard errors using the same and different numbers of observations for the expectations and structural equations full information maximum likelihood and four novel variants of the computationally intensive parametric bootstrap method not surprisingly the empirical results for barro s model change according to the sample period chosen the different methods of estimation and the different ways of computing the covariance matrix for purposes of inference however the empirical results and inferences are generally robust to variations in any or all of these options

the making of economic policy a transaction cost politics perspective economic policymaking as a political process the normative approach to policy analysis the positive view of political economy a synthesis the policy process in real time a theme transaction costs the transaction cost politics framework political outcomes and economic efficiency transaction cost analysis in politics mechanisms to cope with transaction costs in politics national differences two case studies to illustrate transaction cost politics tax and expenditure reform in the united states the gatt and national trade politics some reflections and suggestions some lessons for the policy process the role of the economist concluding comments appendix multiprincipal multitask agencies

the arguments for and against ownership unbundling of energy transmission networks abstract the question this paper addresses is what is the evidence for the superiority of the ownership unbundled transmission models i e uk or nord pool hybrid over other models we assess the theoretical costs and benefits of ownership unbundling and judge these to be generally positive though these may be potentially offset by the actual reorganisation costs of the ownership unbundling process next we assess the empirical evidence this is in two forms econometric evidence from samples of countries and case studies of reforms in particular jurisdictions the econometric evidence is weak due to problems with simultaneity of reform steps and a lack of studies but the case study evidence is compelling we conclude with a discussion of the issues faced by countries considering implementing ownership unbundling we conclude that evidence seems to be that ownership unbundling of transmission is a key part of energy market reform in the most successful reform jurisdictions

the impact of ownership unbundling on cost efficiency empirical evidence from the new zealand electricity distribution sector abstract several countries around the world have introduced reforms to the electric power sector one important element of these reforms is the introduction of an unbundling process i e the separation of the competitive activities of supply and production from the monopole activity of transmission and distribution of electricity there are several forms of unbundling functional legal and ownership new zealand for instance adopted an ownership unbundling in 1998 as discussed in the literature ownership unbundling produces benefits and costs one of the benefits may be an improvement in the level of the productive efficiency of the companies due to the use of the inputs in just one activity and a greater level of transparency for the regulator this paper analyzes the cost efficiency of 28 electricity distribution companies in new zealand for the period between 1996 and 2011 using a stochastic frontier panel data model a total cost function and a variable cost function are estimated in order to evaluate the impact of ownership unbundling on the level of cost efficiency the results indicate that ownership separation of electricity generation and retail operations from the distribution network has a positive effect on the cost efficiency of distribution companies in new zealand the estimated effect of ownership separation suggests a positive average one off shift in the level of cost efficiency by 0 242 in the short run and 0 144 in the long run

a method to estimate the costs and benefits of undergrounding electricity transmission and distribution lines abstract there has been a general shortfall of peer reviewed literature identifying methods to estimate the costs and benefits of strategies employed by electric utilities to improve grid resilience this paper introduces for the first time a comprehensive analysis framework to estimate the societal costs and benefits of implementing one strategy to improve power system reliability undergrounding power transmission and distribution lines it is shown that undergrounding transmission and distribution lines can be a cost effective strategy to improve reliability but only if certain criteria are met before the decision to underground is made

ownership unbundling in electricity distribution the case of the netherlands this paper addresses the merits of ownership unbundling of distribution networks as exemplified in the case of the netherlands in essence this problem concerns the question of whether the operation and management of electricity distribution networks in this country will evolve into a market driven commodity business or remain a genuine public utility task in order to deal with this problem a framework is developed that enables the classification of different institutional regimes depending on the nature of the institutional regime this case of the netherlands illustrates how certain aspects of the liberalisation of the electricity sector can become vitally important to the continuing process of restructuring

ideas institutions and interests in the politics of cross border electricity interconnection greenlink britain and ireland abstract increasing electricity interconnection is necessary for both closer market integration and facilitating more renewable generation across the european union however progress on the ground has been slow this paper adds to the literature on the politics of interconnection through a case study of a proposed link between ireland and great britain we analyse how the institutional setting for investment has evolved at eu and member state level and how the influence of stakeholders is mediated by the ability of actors to define their interests and by institutional points of entry using this framework we examine the greenwire greenlink project we find first that developments in the institutional context especially the adoption of a new cap and floor regime for merchant investment by the gb regulator have had both positive and negative impacts on the project second we find that regulators and governments in the two markets have found it hard to define their interests in the project and its net social benefit due to informational complexities and changes in information over time third the project has met with local public opposition that is strong but which has little leverage due to a lack of institutional entry points

aggregation and stabilization policy in a multi contract economy abstract this paper presents a model of a multi sector economy in which each sector is characterized by a different type of wage or price stickness the various sectors experience the same exogenous shocks and have the same money supply the analysis shows that demand shocks pose no serious problems for stabilization policy in contrast supply shocks may force the policymaker to choose between stability in one sector and stability in another the analysis also shows that the economist as to the economy s underlying structure and obscures the tradeoffs the policymaker must confront in particular a feedback rule chosen on the basis of an aggregate model could be either better or worse than a passive policy

equity and tradeoffs in a tax based incomes policy a tax based incomes policy tip is a tax incentive that tries to induce employers and or workers to reduce wage and or price increases it is intended as a complement to the basic anti inflation policy of gradual monetary deceleration and fiscal restraint its purpose is to reduce the capital stock and output loss that would otherwise accompany such a policy see my 1978 1979a articles this article is divided into two sections section i examines the capital stock and output loss under monetary deceleration that is uncomplemented by tip this loss is due primarily to wage growth inertia a central feature of modern capitalist economies such inertia provides not only the rationale for a tip on wage increases but also implies that special effort is required to assure that the design of a complete tip package is fair to labor section ii analyzes the tradeoffs confronting two alternative methods of making tip more equitable to labor profit and or price restraint insurance and a tip on price increases of the largest firms the original tip limited to wage increases at first glance is often perceived as unbalanced and inequitable this section tries to contribute to the development of a balanced equitable tip

interconnections and market integration in the irish single electricity market interconnections can be an effective way to increase competition and improve market integration in concentrated wholesale electricity markets with limited number of participants this paper examines the potential for interconnections and increasing market integration in the irish single electricity market sem we use a time varying kalman filter technique to assess the degree of market integration between sem and other large mature and interconnected wholesale electricity markets in europe including great britain gb the results indicate no market integration between sem and other european markets except for elspot and gb we show that the current state of market integration between sem and gb is just 17 indicating potential to improve market integration via increased interconnector capacity the results indicate that liquidity of wholesale markets might be a crucial factor in the market integration process while our results remain inconclusive in determining whether increased trade of renewables can improve market integration

distributed generation and distribution market diversity in europe the unbundling of the electricity power system will play a key role on the deployment of distributed generation dg in european distribution systems evolving towards smart grids the present paper firstly reviews the relevant european union eu regulatory framework specific attention is paid to the concept of unbundling of power distribution sector in europe afterwards the focus is on the current state of penetration of dg technologies in the eu member states and the corresponding interrelations with distribution features a comparison between the unbundling of the distribution and supply markets using econometric indicators such as the herfindahl hirschmann ihh and the shannon wiener isw indices is then presented finally a comparative analysis between these indices and the current level of penetration of distributed generation in most eu is shown policy recommendations conclude the paper

a test of steady state government debt neutrality a test of steady state government debt neutrality this paper investigates whether in the steady state the real interest rate is an increasing function of both the government debt and government spending using data from the period between january 1981 and march 1986 the paper finds no evidence of such a relationship these data afford an especially powerful test because the ratio of federal debt to trend output which had fallen from 93 to 33 percent between january 1948 and december 1980 reversed course after the enactment of the economic recovery tax act reaching 47 percent in march 1986 i introduction in conventional macroeconomic analysis government debt is not neutral because households view it as contributing to their net wealth as a result the larger the government debt is the wealthier households feel and the more they consume more consumption in turn spells less investment over time and thus a lower steady state capital stock as a result output is ultimately lower and the real interest rate higher in principle however households need not view government debt as net wealth 1 if households accurately foresee the future taxes that will service the government debt if they face perfect capital markets if taxes do not distort their decisions and if they internalize future generations then they treat the future taxes servicing the government debt as an exact offset consequently government debt is neutral since it does not make households feel wealthier and hence affects nothing 2 nevertheless because most macroeconomists doubt that households accurately foresee future servicing taxes have access to perfect capital markets and internalize future generations they do not model government debt as neutral like perfect competition however government debt neutrality may be a good approximation in many applications even if the assumptions underlying it are unrealistic therefore empirical analysis rather than introspection should determine how one models government debt this paper provides such an empirical analysis the empirical analysis focuses on the steady state relationship between government debt and the real interest rate 3 in the steady state a larger government debt leads to a smaller capital stock and hence a higher marginal product of capital if households view government debt as net wealth consequently the real interest rate is also higher if instead government debt is neutral nothing should happen to the real interest rate u s data from the period between january 1981 and march 1986 have been used here to investigate whether a larger government debt leads to a higher real interest rate in the steady state and hence whether government debt is neutral these data afford an especially powerful test because the ratio of federal debt to trend output which had fallen from 94 to 33 percent between january 1948 and december 1980 reversed course after the enactment of the economic recovery tax act reaching 47 percent by march 1986 moreover this upward trend is likely to continue well beyond 1986 such an enormous increase in federal debt should have raised by steady state real interest rate appreciably if households view government debt as net wealth to any important extent in the absence of evidence that the steady state real interest rate did rise government debt is judged to be neutral in the steady state section ii formulates the model which is estimated in sections iii and iv section v summarizes the paper and then briefly reviews an extensive literature consistent with government debt neutrality ii formulation of the econometric model the appendix demonstrates that if households view government debt as net wealth the real interest rate should be an increasing function of both the government debt and government spending in the steady state see also evans 1988 for this analysis

sizing the earth recognition of economic carrying capacity abstract this paper argues that the biophysical properties of a finite earth and the realities of economic transformation determine the economic carrying capacity of our planet economic carrying capacity takes the form of maximum global economic welfare derivable from the sustainable throughput flows of the ecosphere this is fleshed out by development of a welfare return curve plotted as a function of economic scale the latter is measured by entropic throughput the economic ecological connection is made by employing the ehrlichs equation pat impact as the dual entity being measured on the abscissa this curve shows an initial acceleration which eventually flattens reaches a maximum carrying capacity and is followed by declining welfare the shape of this curve is determined by the rising costs associated with the ecosystemic impact of increasing throughput rates as required by a growing economy the primary thrust of the argument is that not only are economic scales that exceed throughput sustainability definitionally impossible to maintain in the long run but because of declining welfare they are not even desirable in the short run historical movement along this curve is discussed reflecting growth in the global economy an analysis of rising impact costs and the serious mistake of advocating growth to meet these costs is given employing the notion of a social trap also investigated are several additional causes and likely results of pending economic overshoot among these are inter generational penalties of reduced welfare potential from a planet degraded by economic overgrowth several overshoot avoidance prescriptions are offered as well as a discussion of stasis and contraction