uncertainty and endogenous technical change in climate policy models until recently endogenous technical change and uncertainty have been modeled separately in climate policy models in this paper we review the emerging literature that considers both these elements together taken as a whole the literature indicates that explicitly including uncertainty has important quantitative and qualitative impacts on optimal climate change technology policy

the sustainable borders of the state economic crises have historically set the stage for the reconfiguration of the economic borders of the state current concerns focus on debt and associated intergenerational issues such as pensions infrastructure and the environment the sustainable state is designed to put in place a framework for integrating these intergenerational issues alongside the traditional focus on macroeconomic policy static market failures and transfers the building blocks include the accounting framework and in particular a national balance sheet setting out assets and liabilities and providing for capital maintenance over time to support these assets and to provide for sufficient investment the sustainable state requires an appropriate level of savings and institutions to translate these savings into investments two components are the deployment of regulatory asset bases to underpin long term sunk and fixed costs given the time inconsistency problem in government s commitments and the development of financial intermediaries such as an infrastructure bank copyright 2011 oxford university press

targeted transfers and the fiscal response to the great recession abstract between 2007 and 2009 government expenditures increased rapidly across the oecd countries while economic research on the impact of government purchases has flourished in the data most of the increase in expenditures was in government transfers after documenting this fact we argue that future research should focus on the positive impact of transfers towards this we present a model in which there is no representative agent and ricardian equivalence does not hold because of uncertainty imperfect credit markets and nominal rigidities targeted lump sum transfers are expansionary both because of a neoclassical wealth effect and because of a keynesian aggregate demand effect

consumer response to tax rebates many households received income tax rebates in 2001 of 300 or 600 these rebates represented advance payments of the tax cut from the new 10 percent tax bracket based on a survey of a representative sample of households this paper finds that only 22 percent of households receiving the rebate would spent it instead they would either save it or use it to pay off debt this very low rate of spending represents a striking break with past behavior which would have suggested a much higher rate of spending the low spending rate implies that the tax rebate provided a very limited stimulus to aggregate demand this abstract was borrowed from another version of this item

the ams in agricultural trade negotiations a review abstract this article reviews the role of the aggregate measure of support ams in the agricultural trade negotiations of the uruguay round contrary to expectations at the start of these negotiations the ams only occupies a subsidiary position in the final agreement in order to explain this first an economic analysis is presented of the producer subsidy equivalent pse the basic ams concept in the gatt discussions secondly the political ams debate is described and analysed using information from unpublished gatt documents although the pse concept is based on simple assumptions its measurement already meets a number of difficult problems policy coverage product coverage external reference prices currency once these are solved the concept may offer a brief insight into actual governmental support in agriculture however the calculations do not provide a sound measure of the trade distortions caused by agricultural policies mainly for that reason the idea of a pure aggregated approach based on the ams proved unsuccessful in the negotiations instead the contracting parties accepted the framework of making binding agreements on three separate areas internal support market access and export support while important and very specific commitments were made in the areas of agricultural imports and exports the ams has only found application in the internal support area

firm incentives to promote technological change in pollution control reply abstract the process of technological change in pollution control is broken into three basic steps innovation diffusion and optimal agency response firm incentives to promote these steps are then examined under five regulatory regimes direct controls emission subsidies emission taxes free marketable permits and auctioned marketable permits on a relative basis emission taxes and auctioned permits provide the highest firm incentives to promote technological change at times free permits generate lower incentives direct controls which are common regulatory tools usually provide the lowest relative firm incentives to promote technological change

household debt and fiscal multipliers we study the size of government spending multipliers in a general equilibrium model with search and matching frictions in which we allow for different levels of household indebtedness the main results are a the presence of impatient households and private debt helps to generate government spending multipliers greater than 1 b as financial conditions worsen the size of the government spending multiplier falls c conversely employment vacancies and unemployment multipliers are larger in a credit crunch d the model explains the observed pattern of responses of labour market variables housing prices and private debt to a fiscal shock reasonably well

consumer spending and the economic stimulus payments of 2008 abstract we measure the change in household spending caused by receipt of the economic stimulus payments of 2008 using questions added to the consumer expenditure survey and variation from the ran

environmental innovation and the cost of pollution abatement revisited it is widely assumed in the literature that environmental innovation reduces the marginal cost of pollution abatement in this paper we show that this is not necessarily the case and we provide some unexpected outcomes

monetary policy rules work and discretion doesn t a tale of two eras this lecture examines monetary policy during the past three decades it documents two contrasting eras first a rules based era from 1985 to 2003 and second an ad hoc era from 2003 to the present during the rules based era monetary policy in broad terms followed a predictable systemic approach and economic performance was generally good during the ad hoc era monetary policy is best described as a discretion of authorities approach and economic performance was decidedly poor by considering alternative explanations of this policy performance correlation and examining corroborating evidence the paper concludes that rules based policies have clear advantages over discretion this abstract was borrowed from another version of this item

household expenditure and the income tax rebates of 2001 using questions expressly added to the consumer expenditure survey we estimate the change in consumption expenditures caused by the 2001 federal income tax rebates and test the permanent income hypothesis we exploit the unique randomized timing of rebate receipt across households households spent 20 to 40 percent of their rebates on nondurable goods during the three month period in which their rebates arrived and roughly two thirds of their rebates cumulatively during this period and the subsequent three month period the implied effects on aggregate consumption demand are substantial consistent with liquidity constraints responses are larger for households with low liquid wealth or low income

environmental policy incentives to adopt advanced abatement technology abstract we investigate incentives through environmental policy instruments to adopt advanced abatement technology first we study the case where the regulator makes long term commitments to policy levels and does not anticipate arrival of new technology we show that taxes provide stronger incentives than permits auctioned and free permits offer identical incentives and standards may give stronger incentives than permits second we investigate scenarios where the regulator anticipates new technologies we show that with taxes and permits the regulator can induce first best outcomes if he moves after firms have invested whereas this does not always hold if he moves first

did the 2008 tax rebates stimulate spending in an effort to bolster economic performance in light of a looming downturn in economic activity on february 13 2008 president george w bush signed the economic stimulus act of 2008 more than two thirds of the 152 billion bill consisted of economic stimulus payments to be sent beginning in may to approximately 130 million households to qualify recipients had to have a valid social security number an income tax liability or at least 3 000 of qualifying income that included earned income and some benefits from social security veterans affairs or railroad retirement and have filed a 2007 federal tax return for the most part those who filed as single individuals received between 300 and 600 while those who filed jointly received between 600 and 1 200 additionally parents with children under 17 who were eligible for a child tax credit and had a social security number received an extra 300 per child the tax rebate phased out at higher levels of income as the payment was reduced by 5 percent of the amount of adjusted gross income over 75 000 for singles or over 150 000 for married couples the treasury remitted payments either by direct deposit mainly in the first half of may or by mail mainly from mid may through mid july the effect of these stimulus payments depends on how much was spent this paper reports new survey evidence on the propensity of consumers to spend the 2008 rebate it also relates the survey evidence to aggregate data and to evidence about spending from the 2001 tax rebate

on measuring the effects of fiscal policy in recessions we do not have a good measure of the effects of fiscal policy in a recession because the methods that we use to estimate the effects of fiscal policy both those using the observed outcomes following different policies in aggregate data and those studying counterfactuals in fitted model economies almost entirely ignore the state of the economy and estimate the government multiplier which is presumably a weighted average of the one we care about the multiplier in a recession and one we care less about the multiplier in an expansion notable exceptions to this general claim sug gest this difference is potentially large our lack of knowledge stems significantly from the focus on linear dynamics vector autoregressions and linearized or close to linear dynamic stochastic general equilibrium dsge models our lack of knowledge also reflects a lack of data deep recessions are few and nonlinearities hard to measure the lack of statistical power in the estimation of nonlinear models using aggregate data can be addressed by exploiting estimates of partial equilibrium responses in disaggregated data microeconomic estimates of the partial equilibrium causal effects of a policy can discipline the causal channels inherent in any dsge model of the general equilibrium effects of policy microeconomic studies can also provide measures of the dependence of the effects of a policy on the states of different agents which is a key component of the dependence of the general equilibrium effects of fiscal policy on the state of the

stimulating the macro economy through state and local governments the economic stimulus program of early 1977 featured a strong dose of what might be termed indirect countercyclical policy rather than altering federal expenditures and taxes directly the stimulus program consisted mainly of three different grant programs for state and local governments a countercyclical revenue sharing crs b public service employment pse c local public works lpw in the parlance of the public finance literature the first of these grants was an unconditional block grant the second was a close ended categorical grant with no local matching for the purpose of stimulating local government employment and the third was a close ended categorical grant with no local matching for the purpose of stimulating local government construction stimulating or attempting to stimulate aggregate spending through state and local governments in this way is fiscal federalism with a vengeance the federal government is not abdicating its stabilization responsibilities and leaving it up to states and localities to do the job but it is placing its own stabilization policy at the mercy of the behavior of state and local governments there are no restrictions at all on the use of the crs grantsthey can be spent used for tax reduction or used to rebuild financial net worth asset stocks less outstanding debt with only the first two uses having any stimulative effect at all there are restrictions on what can be done with the other two grants but the well known displacement phenomenon implies that with these grants it also may be possible for states and localities to frustrate the restrictions and use the grants as they would any other source of revenue sharing what happens to all three grants then is an empirical issue and the timing and magnitude of any stabilization impact depends on how the numbers come out in this paper i briefly describe a model for estimating this stabilization impact and show what it suggests for the three grants only the pse grant will be seen to have any positive short run impact on aggregate spending at all and that impact will prove to be both diluted and short lived indicating that the general idea of stimulating the economy through state and local governments is probably not a very good one plain old permanent federal income tax cuts retain their superiority as a fiscal stabilization device but even though as stimulation devices the three grant programs leave much to be desired as policies they may still be valuable and the paper also suggests how one might do a more complete evaluation of each of the grant programs

does technological innovation really reduce marginal abatement costs some theory algebraic evidence and policy implications the existing literature models innovation in pollution control as a reduction in marginal abatement costs we show that this assumption is inappropriate for production process innovations such as fuel switching algebraically we examine the effects of different innovation types on marginal abatement cost curves showing that some desirable innovations increase marginal abatement costs empirically we estimate marginal abatement costs for sulfur dioxide by measuring the output distance function for electric power in korea regression results confirm that production process innovations did raise marginal abatement costs in this case one policy implication economic instruments do not always provide stronger innovation incentives than command and control policies

pses and the mix of measures to support farm incomes summary and conclusions in summary the mix of support provided to agriculture does matter when pses are to be cut across the board reductions in individual components of pses will have different implications for output exports land values and employment in different countries these differences can be systematically related to the type of instruments used to support agriculture for example cutting subsidies on an input such as fertilizer can result in greater long run reductions in output exports and employment in agriculture than would cuts in output subsidies of equal magnitude these differences may make it attractive for countries engaging in partial liberalization to change the mix of subsidies even as they reduce their aggregate pse in so doing they may be able to lessen or even eliminate some of the deleterious effects of reduced farm support for example the united states could maintain the demand for farm labour while cutting its aggregate pse in half by shifting the mix of farm support towards selected input subsidies by contrast there appears to be little incentive for substituting export subsidies for output subsidies under the pure pse approach proposed by professor tangermann et al this is because such a switch would have to be accompanied by further reductions in budgetary outlays in order to avoid exceeding the pse target agreed in negotiations

the european union enlargement the case of agriculture in slovenia abstract the costs and benefits of eu accession for slovenian agriculture were estimated and discussed by use of comparative and empirical analyses the structural and natural conditions of slovenian agricultural production and policies differ a lot from the european ones the production is small in scale the support is based on price subsidies producer prices are almost at the level of the european prices and hence they are significantly higher than on the world market the pse computed shows that slovenian agricultural support is at the average level of the oecd member states which directly implies the highest agrarian protection level amongst all ceec candidates by using the static deterministic income model for slovenian agriculture the consequences of various scenarios of accession to the common agricultural policy cap have been estimated also indicating the potential policy changes running the present cap the net income in agriculture would increase further changes of cap and restrictive policy towards new member countries would abate the attractiveness of eu for the slovenian agricultural producers the budget benefits of the eu accession could be described as slightly positive their volume depends on negotiations results as well as on the preparation of domestic policy the eu accession and trade liberalisation process by slovenia calls for a reform of domestic agricultural policy

incentives to diffuse advanced abatement technology under environmental liability law polluting firms with advanced abatement technology at their disposal have incentives or disincentives to share this technology with other polluting firms the direction and extent of those incentives depends on the liability rule applicable and the way technical change impacts marginal abatement costs we establish that incentives for diffusion are socially optimal under strict liability and socially suboptimal under negligence if technical change lowers marginal abatement costs for all levels of abatement negligence may however induce better diffusion incentives than strict liability if technical change decreases increases marginal abatement costs for low high levels of abatement

us government deficits and debt amid the great recession what the evidence shows this paper examines three sets of major questions regarding the current u s government s fiscal defi cit and outstanding debt tied to the 2009 economic stimulus program the american recovery and reinvest ment act arra first i consider the claim that high levels of government borrowing drives up interest rates these high rates then produce a heavy burden of government debt as well as heavy inflationary pressures the evidence we review regarding each of these concerns demonstrates that none have emerged as serious matters since the enactment of the arra given this conclusion the paper then questions why the arra did not then succeed in generating a strong economic recovery i first consider the possible impact of ricardian equivalence the position that government stimulus programs by their nature are self defeating after argu ing against this position i advance three reasons for the failure of the arra to achieve a strong recovery 1 the arra relied too heavily on tax cuts as a means of bolstering private spending 2 household wealth de clined dramatically during the recession tied to the collapse of the financial bubble this in turn weakened the willingness of households to increase spending and 3 credit markets were locked up especially for smaller businesses despite the highly expansionary monetary policy stance adopted by the federal reserve building on these findings i then develop a series of policy proposals aimed at promoting both a strong recovery in the short term and at reducing any remaining structural deficit issues in the longer term the short term program focuses on extending loan guarantees especially to small businesses and taxing the excess reserves held by commercial banks the longer term agenda focuses on reducing government costs for health care and the military and on increasing revenue through establishing taxes on financial market transactions

analysing agricultural policy reforms under transition in bulgaria abstract the elaboration of an appropriate incentive system including measures of agricultural price and trade policy has important consequences for bulgarian agriculture this paper offers a brief picture of the process of reform towards the establishment of a market economy in bulgaria as well as of the main developments in its agricultural sector an analysis is then presented of the impact of alternative agricultural price and trade policy scenarios for the period up to 2002 the results show that the impact of price and trade policies is modest when compared to that of technological change and the increase in incomes adoption of the cap will stimulate production decrease demand and have strong adverse effects on consumers and taxpayers and wider negative effects on the competitiveness of the food industry thus the issue of extending financial support for structural policies rather than granting direct aid requires further investigation

technical change and the marginal cost of abatement abstract we address one aspect of the treatment of technical change in the environmental economics literature how technical change impacts the marginal cost of abatement we review a selection of papers that employ a variety of representations of technical change and show that these representations have quite different and sometimes surprising effects on the marginal costs of pollution reductions we argue that these varied representations in fact correspond to a variety of different technology options we then present results indicating that this representation matters the impacts of technical change on the marginal cost of abatement can crucially impact policy analysis

reassessing discretionary fiscal policy in 1992 president bush proposed legislation intended to speed up the recovery from the 1990 91 recession congress rejected this proposal for countercyclical fiscal policy stimulus in early 1993 president clinton proposed his own stimulus package but congress rejected this proposal too many reasons were given for deciding against these two discretionary fiscal policy proposals but perhaps the most common one was the large federal budget deficit in the early 1990s with the rapid disappearance of budget deficits in recent years this reason to vote against a discretionary fiscal stimulus is unlikely to be mentioned in the next economic cycle discretionary countercyclical fiscal policy again appears to be a politically feasible option but should america use it after so many years of disuse much has happened in macroeconomics since the 1960s and 1970s when discretionary countercyclical fiscal policy was last considered a serious option in the united states first monetary policy making has changed substantially over the last two decades the federal reserve s interest rate decisions have become more explicit more systematic and more reactive to changes in both inflation and output the fed has placed a greater emphasis on keeping inflation low the experience with this new policy has been very favorable inflation has been low since the early 1980s and the real economy has been more stable the 1980s and 1990s saw two lengthy expansions separated by a relatively short and mild recession in terms of the tradeoff between output variability and inflation

dynamic incentives of environmental regulations the effects of alternative policy instruments on technology diffusion abstract we develop a framework for comparing empirically the effects of alternative environmental policy instruments on the diffusion of new technology market based and command and control approaches can he quantitatively compared by estimating the economic penalty that firms through their actions reveal to be associated with violation of standards in the context of concerns about global climate change we empirically examine the likely effects of pigouvian taxes technology adoption subsidies and technology standards we employ state level data on the diffusion of thermal insulation in new home construction comparing the effects of energy prices insulation cost and building codes

the pattern of agricultural price distortions in central and eastern europe abstract nominal and adjusted protection rates for nine agricultural commodities in seven central european and three baltic states are estimated for the transition period 1990 1995 our estimates indicate that agricultural and food price distortions differ strongly between central and east european countries between commodities and varied over time the average level of price distortions decreased in 1991 and 1992 after price and trade liberalization but increased again in 1993 as many of these countries reintroduced protectionist price and trade policy measures since 1994 the average level of price distortions has declined again accounting for exchange rate policy effects further reduces estimates of protection of agricultural producers

r d and abatement under environmental liability law comparing incentives under strict liability and negligence if compensation differs from harm abstract this paper analyzes equilibrium r d in pollution control and equilibrium pollution abatement by polluters who are subject to environmental liability law when the level of compensation differs from the level of environmental harm we contrast the performance of strict liability with that of the negligence rule privately optimal levels necessarily deviate from socially optimal ones under strict liability whereas private decisions are first best under negligence unless compensation is much smaller than harm it is established that the way in which privately optimal r d deviates from the first best level depends on the kind of technical change in pollution abatement counterintuitively polluters might overinvest into r d in pollution control if compensation falls short of harm and may underinvest if compensation exceeds harm

the role of policy in the great recession and the weak recovery it s been nearly five years since the recession of 2007 2009 ended by all accounts this very severe recession was followed by an extremely disappointing recovery economic growth dur ing the recovery has been far too slow to raise the employment to population ratio from the low levels to which it fell during the recession or to close materially the gap between real gdp and potential gdp in marked contrast to the rapid recovery from the previous severe recession in the early 1980s or from earlier severe recessions in us history when you include both the periods of the recession and the slow recovery economic instability has more than tripled according to a common measure of performance used by macroeconomists the standard deviation of the percentage gap between real gdp and potential gdp rose from 1 percent during 1984 2006 to 5 percent during 2007 2012 taylor 2013 in this paper i consider the role of economic policy in this poor economic performance i the shift in policy in evaluating the role of policy it is important to consider actions taken before during and after the financial panic in the fall of 2008 a careful look at the full decade from five years before to five years after the panic reveals that there was a significant shift in policy away from what worked reasonably well in the decades before broadly speaking monetary policy regulatory policy and fiscal policy each became more discretionary more interventionist and less predictable in the years leading up to the

environmental liability law and induced technical change the role of discounting we analyse the incentives of environmental liability law for inducing progress to emission abatement technology we consider three liability rules strict liability a negligence rule with an emission norm as the due care standard and a double negligence rule which combines the emission standard with an abatement technology norm in the case of distortive discounting i e where the private discount rate deviates from the social one we show how the level of distortion influences the ranking of liability rules according to the criterion of generated social cost

the failure of stabilization policy balanced budget fiscal rules in the presence of incompressible public expenditures abstract we consider an infinite horizon neoclassical model with a government that i balances its budget at each point in time ii faces unavoidable incompressible public expenditures and iii further uses a fiscal rule for the share of variable government spending in output with the purpose of stabilizing the economy we show that insulating this economy from belief driven fluctuations is not possible if the government finances these two components of public spending using a distortionary proportional income tax in this case we always have steady state multiplicity two steady states and global indeterminacy while local indeterminacy is also possible more precisely even if a sufficiently procyclical share of the variable government spending component in output is still able to eliminate local indeterminacy two saddle steady states prevail so that depending on expectations the economy may either converge to the low steady state or to the high steady state this implies that a regime switching rational expectation equilibrium where the economy switches between paths converging to the two different steady states easily arises as expectations influence long run outcomes our model is able to generate large and sudden expansions and contractions in response to expectation shocks

investment in risky r d programs in the face of climate uncertainty we analyze how the socially optimal technology rd and that uncertainty in damages interacts with uncertainty in the returns to rd and r d that reduces the emissions to output ratio and argue that this is a good representation of r d into fossil fuel technologies for r d programs into non carbon technologies optimal investment is higher in riskier programs our empirical model indicates that the optimal investment in a risky program is about 3 1 2 times larger than in a program with certain returns for r d programs aimed at reducing emissions in fossil fuel based technologies our results show that qualitatively investment is higher in less risky programs under most uncertain damage scenarios our empirical model shows however that the risk profile of fossil fuel based r d programs generally has little quantitative impact on optimal investment the exception is that when the probability of a catastrophe inducing full abatement is very high investment is about twice as high in risky programs compared to programs with certain returns

can government purchases stimulate the economy this essay briefly reviews the state of knowledge about the government spending multiplier drawing on theoretical work aggregate empirical estimates from the united states as well as cross locality estimates i assess the likely range of multiplier values for the experiment most relevant to the stimulus package debate a temporary deficit financed increase in government purchases i conclude that the multiplier for this type of spending is probably between 0 8 and 1 5 jel e23 e62 h50

government policies and financial crises mitigation postponement or prevention in the aftermath of the great recession governments have implemented several policy measures to counteract the collapse of the financial sector and the downswing of the real sector within a framework of minsky veblen cycles where relative consumption concerns a debt led growth regime and financial sector confidence constitute the main causes of economic fluctuations we use computer simulations to assess the effectiveness of such measures we find that the considered policy measures help mitigate the impact of financial crises though they do so at the cost of shortening the time between financial crises this result is due to a relatively fast recovery of solvency and confidence induced by the policy measures under study which contribute to an increase in private credit and thereby effective demand our results suggest that without the strengthening of financial regulation any policy intervention remains incomplete

a political economy theory of fiscal policy and unemployment this paper presents a political economy theory of fiscal policy and unemployment the underlying economic model is one in which unemployment can arise but can be mitigated by tax cuts and public spending increases such policies are fiscally costly but can be financed by issuing government debt policy decisions are made by a legislature consisting of representatives from different political districts the theory provides a positive account of the simultaneous determination of fiscal policy and unemployment the most important implication of the theory is that debt and unemployment levels should be positively correlated some evidence in support of this prediction is provided using data from a panel of developed countries

innovation in pollution control comparisons of the various institutional arrangements for controlling pollutant emissions from individual sources effluent fees effluent control subsidies marketable permits and direct command and control regulation have usually focused on their static efficiency properties and institutional feasibility e g dales 1968 zerbe 1970 baumol and oates 1975 kneese and schultze 1975 marin 1978 mills and white 1978 spence and weitzman 1978 russell 1979 a relatively neglected area has been the study of how each arrangement influences innovation in pollution control a few studies e g kneese and schultze 1975 marin 1978 mills and white 1978 russell 1979 have casually claimed that the control methods that rely on economic incentives provide superior incentives for innovation but there have been few systematic studies of the question this paper provides a simple model of pollution control innovation by a profitmaximizing polluter who is subject to the various control methods the consequences of the methods will be explored in three major contexts first we assume that the polluter and the innovation is a small enough part of the overall pollution problem so that none of the important marginal conditions are changed by the innovation second we assume that the polluter and the innovation are important enough so that marginal conditions are changed by the innovations but that the governmental authority determining pollution control incentives or levels fails to make the appropriate adjustments third we again assume that the innovation causes marginal conditions to change but in this case the governmental authority makes the appropriate adjustments we use the term ratcheting to describe this last phenomenon in all cases we assume that the innovating polluter correctly predicts the reactions of the governmental authority and bases his innovation decisions on that prediction a profit maximizing entrepreneur would normally be expected to adopt any innovation that promised gains present discounted value to him in excess of initial

dynamic incentives by environmental policy instruments a survey abstract in this paper i survey and discuss recent developments on the incentives provided by environmental policy instruments for both adoption and development of advanced abatement technology a main conclusion to be drawn from the literature is that under competitive conditions market based instruments usually perform better than command and control moreover taxes may provide stronger long term incentives than tradable permits if the regulator is myopic if the government can anticipate new technology or is able to react on it optimally regulatory policies by virtue of administered prices taxes and policies by setting quantities issuing tradable permits are almost equivalent the literature also shows that under competitive conditions there is no difference between auctioning permits and grandfathering moreover timing and commitment of environmental policy is not crucial for adoption under competitive conditions commitment has positive incentive effects however if an r d sector has market power in the presence of market imperfections the ranking of the different policy instruments is ambiguous

participation games and international environmental agreements a non parametric model abstract we examine the size of stable coalitions in a participation game that has been used to model international environmental agreements cartel formation rd based on these examples a consensus has emerged that in this kind of game the equilibrium coalition size is small except possibly when the potential benefits of cooperation are also small in this paper we develop a non parametric approach to the problem and demonstrate that the conventional wisdom is not robust in a general setting we identify conditions under which the equilibrium coalition size can be large even when potential gains are large contrary to previously examined leading special cases we show that reductions in marginal abatement costs in an international environmental game can increase equilibrium membership and we provide a measure of the smallest reduction in costs needed to support a coalition of arbitrary size

an empirical analysis of the revival of fiscal activism in the 2000s an empirical review of the three fiscal stimulus packages of the 2000s shows that they had little if any direct impact on consumption or government purchases households largely saved the transfers and tax rebates the federal government only increased purchases by a small amount state and local governments saved their stimulus grants and shifted spending away from purchases to transfers counterfactual simulations show that the stimulus induced decrease in state and local government purchases was larger than the increase in federal purchases simulations also show that a larger stimulus package with the same design as the 2009 stimulus would not have increased government purchases or consumption by a larger amount these results raise doubts about the efficacy of such packages adding weight to similar assessments reached more than thirty years ago jel e21 e23 e32 e62 h50

timing and commitment of environmental policy adoption of new technology and repercussions on r d we investigate the interplay between environmental policy incentives to adoptnew technology and repercussions on r d we study a model where a monopolistic upstream firm engages in r d and sells advanced abatement technology to polluting downstream firms we consider four different timing and commitment regimes of environmental tax and permit policies ex post taxation or issuing permits interim commitment to a tax rate a quota of permits after observing r d success but before adoption and finally two types of ex antecommitment before r d activity one with a unique tax rate quota of permits the other one with a menu of tax rates permit quotas we study the second best tax and permit policies and rank these with respect to welfare in particular we find that commitment to a menu of tax rate dominates all other policy regimes

the role of automatic stabilizers in the u s business cycle most countries have automatic rules in their tax and transfer systems that are partly intended to stabilize economic uctuations this paper measures how eective they are at lowering the volatility of u s economic activity we identify seven potential stabilizers in the data and include four theoretical channels through which they may operate in a business cycle model calibrated to the u s data the model is used to compare the volatility of output in the data with counterfactuals where some or all of the stabilizers are shut down our rst nding is that proportional taxes like sales property and corporate income taxes contribute little to stabilization our second

indivisible toxic torts the economics of joint and several liability cost effective or efficient pollution control has traditionally devoted most of its attention to analyzing the effects of legislative or regulatory policy instruments such as emission taxes or marketable emission permits recent contributions have expanded this focus to include the effects of monitoring and enforcement policies 2 with a few noteworthy exceptions 3 however the role of the court system in general and liability law in particular have not received analytical attention among environmental economists in proportion to their importance in resource allocation

the strategic use of innovation to influence regulatory standards this paper investigates the welfare consequences of strategic behavior by firms to affect the amount of environmental regulation they face environmental regulation often attempts to force an industry to develop cleaner technology but the regulator may have no means to commit to a specific standard this lack of regulatory commitment induces firms to choose innovation strategically it is well known that firms have incentives to suppress innovation to induce the regulator to ratchet down the standard and this strategic behavior lowers welfare this paper explores a countervailing incentive in oligopoly settings firms have heightened incentives to innovate so as to increase regulation and raise rivals costs in equilibrium the incentive to raise rivals cost can mitigate the welfare loss arising from no regulatory commitment also a regulator who is unable to commit ex ante to the stringency of a regulatory standard can induce more clean technology than a regulator with a commitment mechanism

economic science and political influence when policymakers and private agents use models the economists who design the model have an incentive to alter it in order to influence outcomes in a fashion consistent with their own preferences i discuss some consequences of the existence of such ideological bias in particular i analyze the role of measurement infrastructures such as national statistical institutes the extent to which intellectual competition between different schools of thought may lead to polarization of views over some parameters and at the same time to consensus over other parameters and finally how the attempt to preserve influence can lead to degenerative research programs

new keynesian versus old keynesian government spending multipliers renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy because of modelling uncertainty it is essential that policy evaluations be robust to alternative assumptions we find that models currently being used in practice to evaluate fiscal policy stimulus proposals are not robust government spending multipliers in an alternative empirically estimated and widely cited new keynesian model are much smaller than in these old keynesian models the estimated stimulus is extremely small with gdp and employment effects only one sixth as large and with private sector employment impacts likely to be even smaller we investigate the sensitivity of our findings with regard to the response of monetary policy the zero bound on nominal interest rates and the inclusion of an empirically relevant degree of rule of thumb behaviour in the new keynesian model in addition we relate our findings using estimated structural macroeconomic models to the recent literature using reduced form regression techniques

the effect of universal child benefits on labour supply using a difference in differences estimator i find the canadian universal child care benefit has significant negative income effects on the labour supply of married individuals the likelihood of lower educated mothers to participate in the labour force is reduced 3 2 percentage points when receiving the benefit median hours worked per week among lower educated mothers is reduced by 1 9 hours the effects on higher educated mothers are substantial with median hours worked among higher educated mothers reduced by nearly one hour per week for men the evidence suggests small but significant income effects on labour supply consistent with the literature on labour supply elasticities

the role of investment in environmental lobbying contests this paper establishes that a lobbying stage following investment decisions regarding abatement technology may imply a positive strategic effect of investment pointing to relatively more investment in pollution abatement technologies than without lobbying the intuition is that polluting firms may choose to implement more advanced abatement technology as a credible commitment device in order to lower the investment of environmentalists in the lobbying contest that will ultimately determine whether or not an emissions tax is introduced