reforms of environmental policies in the presence of cross border pollution and public private clean up we construct a two country model where pollution from production is transmitted across borders pollution abatement is undertaken by both private producers and the public sector we characterize nash optimal levels of the policy instruments in the two countries emission taxes and funds allocated for public abatement activities we examine the implications of a number of multilateral policy reforms one of our findings is that the magnitude of the beneficial effect of a reform depends on the scope of the reform if it is restricted to a subset of policy instruments then the efficacy of environmental policy reform can be greatly undermined

can cross border pollution reduce pollution we develop a two country model of foreign aid and cross border pollution result ing from production activities in the recipient country there is both private and public abatement of pollution the latter being financed through emissions tax revenue and foreign aid we characterize a nash equilibrium in which the donor country chooses the amount of aid and the recipient chooses the fraction of aid allocated to pollution abatement and the emission tax rate at this equilibrium an increase in the donor s perceived rate of cross

welfare states in hard times welfare states have been subject to a host of conflicting pressures from high unemployment rising income inequality population aging tax competition rising budget deficits and debts slow growth and fears that economic dynamism was being stifled by excessive taxes and benefit levels nevertheless total spending on welfare has edged up in many countries and cuts in rates of benefit have generally been fairly modest the generosity of the welfare state has an enormous influence on poverty and income inequality and still appears to be popular in most of europe suggestions that society would benefit from reduced working time must reckon with the fact that it is paid work which generates the tax revenue required to fund welfare spending

adjustment costs from environmental change abstract the paper is concerned with the case whereby the distribution of a firm s productivity shocks changes without the knowledge of the firm over time the firm learns about the nature and extent of the change in the distribution of the shock and adjusts incurring adjustment costs in the process the long run loss in profits due to the shift in the distribution we term the equilibrium response the transitory loss in profits incurred while the firm is learning about the distribution shift is termed the adjustment cost the theory is then applied to the problem of measuring adjustment costs in the face of imperfectly observed climate change in agriculture the empirical part of the paper involves estimating a restricted profit function for agricultural land in a five state region of the midwest us as a function of prices land characteristics actual weather realizations and expected weather we then simulate the effect of an unobserved climate shock where learning about the climate shock is by observing the weather and updating prior knowledge using bayes rule we find adjustment costs to climate change are 1 4 of annual land rents

political partisanship and welfare state reform in advanced industrial societies in this article we evaluate two claims made in recent studies of the welfare states of advanced industrial societies first that welfare states have remained quite resilient in the face of demands for retrenchment and second that partisan politics have ceased to play a decisive role in their evolution addressing the first claim we present analysis from a new data set on unemployment insurance and sickness benefit replacement rates for 18 countries for the years 1975 99 we find considerably more evidence of welfare retrenchment during the last two decades than do recent cross national studies second we examine the end of partisanship claim by estimating the effects of government partisanship on changes in income replacement rates in sickness and unemployment programs our results suggest that contrary to claims that partisanship has little impact on welfare state commitments traditional partisanship continues to have a considerable effect on welfare state entitlements in the era of retrenchment

optimal control for transboundary pollution under ecological compensation a stochastic differential game approach abstract to account for previously ignored yet widely observed uncertainty in nature s capability to replenish the natural environment in ways that should inform ideal design of ecological compensation ec regimes this study constructs a stochastic differential game sdg model to analyze transboundary pollution control options between a compensating and compensated region equilibrium strategies in the stochastic two player game inform optimal control theory and reveal a welfare distribution mechanism to form the basis of an improved cooperative game contract a case based numerical example serves to verify the theoretical results and supports three key insights first accounting for various random disturbance factors the probabilistic pollutant stock in stackelberg non cooperative game exceeds that of a cooperative game situation second the ec mechanism provides long term effective incentives only when the marginal losses of environmental damage in the compensating region are more than twice that of the compensated region achieving a pareto optimal equilibrium relies upon the attainment of a dynamic allocation ratio derived from the analysis of a robust welfare allocation mechanism third cross region cooperation reliably outperforms stackelberg non cooperation due to either overwhelming incumbent economic interests or high abatement costs this study illuminates the importance of balancing both parties interests within an ec agreement while reducing uncertainty around unobserved environmental factors during ex ante negotiations

international pollution control cooperative versus noncooperative strategies abstract international pollution control involving two neighboring countries is modeled as a simple two player dynamic game each country produces a good that is consumed by domestic households production of each consumption good results in emissions of pollutants households in each country derive utility from the consumption of the domestically produced good but incur costs through the total stock of pollution stock externality in this setting we characterize cooperative as well as noncooperative pollution control strategies of the governments of the two countries that maximize the discounted stream of net benefits of a representative consumer it turns out that when the governments are restricted to use linear strategies noncooperative behavior results in overall losses for both countries if on the contrary governments use nonlinear markov perfect strategies and the discount rate is small enough a pareto efficient steady state pollution stock can be supported as a differentiable subgame perfect equilibrium thus the emergence of first best solutions cooperative outcomes does not require any institutional arrangements threats retaliation etc but can be brought about through the use of nonlinear markov perfect equilibrium strategies

valuing the beneficts of air pollution abatement using a health production function a case study of panipat thermal power station india the indian economy today is highly prone to industrial pollution and ismaking compliance decisions in order to meet environmental standards environmental regulations impose significant costs upon industry that arefairly high and therefore require economic justification this justificationcan be given by estimating the benefits associated with these costs whilethe scientific rationale behind air quality preservation is well understood its economic rationale for a developing country like india has to beverified the objective of the present paper is to estimate the economicvalue that people in an urban area in india panipat thermal power station ptps colony in panipat haryana place upon improving the air quality the dose response method based on the gerking and stanley 1986 model is used to estimate the economic benefits of air quality improvement theseestimates range from one to two percent of monthly income income andhealth status variables were significant determinants of peoples willingness to pay wtp for air quality improvements this lends supportto the neo conventional wisdom act now to protect the environment beforeit is too late these people are ready to pay for environmentalimprovements we do believe however that the relatively successfulapplication of the dose response method at ptps colony suggests that thetechnique can be more widely applied in developing countries like india

measurement error and state dependent pollution control enforcement abstract a two group model of state dependent enforcement is applied to identical firms which minimize the expected present value of costs and fines measurement error affects the probabilities of transitions between groups and the receipt of fines it is shown that state dependent enforcement can reduce social cost below the level attainable with static enforcement and that differentiation in both monitoring probabilities and standards may be optimal however setting fines for both groups at the maximum is likely to be optimal comparisons between models and alternative model interpretations are offered

resistance to reform status quo bias in the presence of individual specific uncertainty comment why do governments so often fail to adopt policies which economists consider to be efficiency enhancing our answer to this question relies on uncertainty regarding the distribution of gains and losses from reform we show that there is a bias towards the status quo and hence against efficiency enhancing reforms whenever some of the individual gainers and losers from reform cannot be identified beforehand there are reforms which once adopted will receive adequate political support but would have failed to carry the day ex ante the argument does not rely on risk aversion irrationality or hysteresis due to sunk costs jel d72 f13 why do governments so often fail to adopt policies that economists consider to be efficiency enhancing this is one of the fundamental questions of political economy the answer usually relies on what may be

assessing the impacts of stochastic trend in crop acreage supply response model this paper demonstrates the need to revisit the way a technical change has been incorporated in a crop acreage supply response model three different versions of technological change were introduced and compared no trend deterministic trend and stochastic trend the results confirm the need to treat a technology variable as a stochastic trend for better results in crop acreage supply response model specifications

the provision of public goods under alternative electoral incentives politicians who care about the spoils of office may underprovide a public good because its benefits cannot be targeted to voters as easily as pork barrel spending we compare a winner take all system where all the spoils go to the winner to a proportional system where the spoils of office are split among candidates proportionally to their share of the vote in a winner take all system the public good is provided less often than in a proportional system when the public good is particularly desirable we then consider the electoral college system and show that it is particularly subject to this inefficiency

international integration risk and the welfare state how does international integration affect the welfare state does it call for a leaner or an expanded welfare state international integration may affect the distortions caused by welfare state activities but also the risks motivating social insurance mechanisms this paper addresses these potentially counteracting effects in a fully specified intertemporal two country stochastic endowment model focusing on the implications when product market integration reduces trade frictions across national product markets it is shown that lower trade frictions may increase the marginal costs of public funds which gives an argument for reducing steady state public consumption however tighter integration of product markets unambiguously leads to more variability in private consumption and this gives a case for expanding the social insurance provided via state contingent public sector activities automatic stabilizers jel classification e30 f10 h11

the economics of cooperation over collective bads abstract pollution reciprocated among nations is analyzed graphically as a traded collective bad the model is contrasted to analogous methods of studying trade in public goods the model then is interpreted in terms of pollution taxes equilibrium and optimal outcomes are characterized by the tax policies needed to support them finally obstacles to tax trade solutions are noted and institutional solutions are suggested

welfare state retrenchment the partisan effect revisited this paper aims to shed light on the role of the ideology of political parties in shaping the evolution of the welfare state in 18 developed democracies by providing empirical findings on the determinants of social programs entitlements and social spending over the period 1981 1999 the paper shows that structural change is a major determinant of the extent of social protection our results suggest that overall spending is driven up by structural change on the other hand strong structural change has a negative influence on welfare entitlements measured by net replacement rates of sickness insurance or unemployment benefits partisan influence plays an important role in the dynamics of the welfare state left wing governments strengthen the positive effect of shocks on aggregate social expenditure while right wing governments undertake even stronger cutbacks in replacement rates as a reaction to structural change

a differential oligopoly game for optimal production planning and water savings abstract a production planning single decision problem is extended to a production planning and water saving dual decision problem a differential oligopoly game in which product prices are sticky and water right trading occurs is used to study this problem unlike previous studies appeared in the literature the decisions in this study are affected simultaneously by both the product and the water right prices static open loop closed loop and feedback equilibria are analyzed to show optimal production plans and water saving decisions the impact of oligopoly competition on the social welfare is finally analyzed different optimal solutions as the values of the parameters change are also simulated numerically the results show that the firms optimal production plans and water saving decisions are strongly influenced by the water efficiency initial water right allocations and water right reservation prices

the size and scope of government comparative politics with rational politicians we try to demonstrate how economists may engage in research on comparative politics relating the size and composition of government spending to the political system a downsian model of electoral competition and forward looking voting indicates that majoritarian as opposed to proportional elections increase competition between parties by focusing it into some key marginal districts this leads to less public goods less rents for politicians more redistribution and larger government a model of legislative bargaining and backward looking voting indicates that presidential as opposed to parliamentary regimes increase competition between both politicians and voters this leads to less public goods less rents for politicians less redistribution and smaller government we confront these predictions with cross country data from around 1990 controlling for economic and social determinants of government spending we nd strong and robust support for the prediction that the size of government is smaller under presidential regimes and weaker support for the prediction that majoritarian elections are associated with less public goods

welfare state politics in privatization of delivery linking program constituencies to left and right this article asks whether alleged partisan policy convergence has eradicated differences in relation to privatization of delivery of welfare state services the study utilizes a novel methodologica

sectoral shifts and cyclical unemployment a substantial fraction of cyclical unemployment is better characterized as fluctuations of the frictional or natural rate than as deviations from some relatively stable natural rate shifts of employment demand between sectors of the economy necessitate continuous labor reallocation since it takes time for workers to find new jobs some unemployment is unavoidable this paper presents evidence that most of the unemployment fluctuations of the seventies unlike those in the sixties were induced by unusual structural shifts within the u s economy simple time series models of layoffs and unemployment are constructed that include a measure of structural shifts within the labor market these models are estimated and a derived natural rate series is constructed

electoral systems and public spending we study the effects of electoral institutions on the size and composition of public expenditure in oecd and latin american countries we emphasize the distinction between purchases of goods and services which are easier to target geographically and transfers which are easier to target across social groups we present a theoretical model in which voters anticipating government policymaking under different electoral systems have an incentive to elect representatives more prone to transfer public good spending in proportional majoritarian systems the model also predicts higher total primary spending in proportional majoritarian systems when the share of transfer spending is high low after dee ning rigorous measures of proportionality to be used in the empirical investigation we e nd considerable support for our predictions

sources of increased instability in indian and u s cereal production recent growth in indian and u s cereal production has been accompanied by a more than proportional increase in the standard deviation of production this study applies variance decomposition procedures to state data on crop production to analyze the sources of this increased instability it is found that production has become significantly more covariate between states and crops largely because of increased yield variability and a loss in offsetting patterns of variation between crop yields in different states these changes may be associated with more variable prices with higher yielding technologies and with a narrowing of the genetic base

weather shocks coping strategies and consumption dynamics in rural ethiopia summary rural households adopt a broad range of strategies to cope with adverse weather shocks previous studies have examined the effectiveness of individual coping strategies in mitigating the impact of adverse weather shocks but no study to date has presented a comprehensive evaluation of alternative coping strategies we employ household panel data spanning 15 years to estimate the impact of weather shocks on consumption and poverty dynamics in rural ethiopia along with the effectiveness of household coping strategies in alleviating the impact of shocks we find that rainfall increases are positively associated with per adult equivalent consumption while high temperatures are negatively associated with consumption in terms of household coping strategies formal social safety net transfers mitigate the impact of adverse rainfall shocks on consumption and off farm employment mitigates the impact of high temperature shocks simulations suggest that rainfall shocks and formal social safety net transfers significantly influence household poverty dynamics by contrast high temperature shocks and off farm employment have less impact on poverty dynamics the results highlight the need for social protection programs that support existing household coping strategies and that can rapidly respond to weather shocks

carbon capture and storage and transboundary pollution a differential game approach abstract we study the strategic behavior of two countries facing transboundary co2 pollution under a differential game setting in our model the reduction of co2 concentration occurs through the carbon capture and storage process rather than through the adoption of cleaner technologies furthermore we first provide the explicit short run dynamics for this dynamic game with symmetric open loop and a special markovian nash strategy then we compare these strategies at the games steady states and along some balanced growth paths our results show that if the initial level of co2 is relatively high state dependent emissions reductions can lead to higher overall environmental quality hence feedback strategy leads to less social waste

the causes of welfare state expansion deindustrialization or globalization an influential line of argument holds that globalization causes economic uncertainty and spurs popular demands for compensatory welfare state spending this article argues that the relationship between globalization and welfare state expansion is spurious and that the engine of welfare state expansion since the 1960s has been deindustrialization based on cross sectional time series data for fifteen oecd countries the authors show that there is no relationship between globalization and the level of labor market risks in terms of employment and wages whereas the uncertainty and dislocations caused by deindustrialization have spurred electoral demands for welfare state compensation and risk sharing yet while differential rates of deindustri alization explain differences in the overall size of the welfare state its particular character in terms of the share of direct government provision and the equality of transfer payments is shaped by government partisanship the argument has implications for the study and the future of the welfare state that are very different from those suggested in the globalization literature

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

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

leviathan governments and carbon taxes costs and potential benefits abstract this paper addresses positive aspects of the global warming debate that so far has been concerned by and large with normative issues the paper considers a consumers government that appreciates tax revenues as such leviathan in addition to conventional measures of welfare i e carbon taxes serve the dual purpose of correcting for externalities here global warming or more generally a stock externality from energy use and of raising revenues this government faces either a competitive or a perfectly cartelized supply the major findings are 1 i consumers may benefit from a leviathan government that appropriates some of the monopoly rent by deterring preemption to some extent 2 ii the leviathan motive raises initial taxes and thereby lowers initial emissions but increases the long run stock externality in a play with linear strategies 3 iii there exists a continuum of equilibria in nonlinear markov strategies which are however pareto inefficient compared with the linear strategies 4 iv but in case of a binding resource constraint nonlinear strategies are the only feasible ones

pollution accumulation and abatement policy in a supply chain abstract this paper seeks to determine how the double marginalization phenomenon affects the tradeoff between polluting emissions and abatement activities related to pollution accumulation in a supply chain composed of one manufacturer and one retailer the environmental consequence of this inefficiency which emerges in a non cooperative vertical setting governed by a single parameter contract is overlooked in the literature on pollution control in the setup of a two stage game we investigate the impact of double marginalization for non cooperative equilibrium to check whether there are differences between dynamic and strategic effects of double marginalization on pollution accumulation both the open loop and feedback nash equilibria are derived over a finite time horizon with the cooperative solution as a benchmark

the contribution of weather variability to economic sectors every day people make economic decisions based on the weather affecting sales of companies in a wide range of economic sectors in many cases the impact of weather on sales is not constant from

macroeconomic effects of ownership structure in oecd countries the paper investigates the impact of ownership concentration on gdp growth for a sample of 18 oecd countries over the period 1980 to 2004 the econometric analysis shows that more concentrated ownership can speed up growth for countries approaching the technological frontier provided that labour market regulation is sufficiently tight in the absence of employment regulation the logic of financial markets discipline applies and dispersed ownership appears as more favorable for growth based on econometric results impact coefficients are calculated allowing to evaluate the growth points gained lost following a given change in ownership concentration this exercise reveals that a reform in the domain of ownership structure can yield sizeable effects in terms of growth importantly these effects are unequally distributed across countries anglo saxon countries would take more advantage of deregulation i e increased dispersion of ownership in a context of deregulated labour markets while continental european countries would benefit more from increased concentration of ownership in a context of reinforced labour regulation

inequality social insurance and redistribution is the political support for welfare policy higher or lower in less egalitarian societies we answer the question using a model of welfare policy as publicly financed insurance that pays benefits in a redistributive manner when voters have both redistributive and insurance motives for supporting welfare spending the effect of inequality depends on how benefits are targeted greater inequality increases support for welfare expenditures when benefits are targeted to the employed but decreases support when benefits are targeted to those without earnings with endogenous targeting support for benefits to those without earnings declines as inequality increases whereas support for aggregate spending is a v shaped function of inequality statistical analysis of welfare expenditures in advanced industrial societies provides support for key empirical implications of the model

economic development and environmental quality a reassessment in light of nature s self regeneration capacity abstract we study the relationship between economic development and consumption of natural resources using a vintage capital model consumption of natural resources is assumed to generate pollution part of which will be absorbed by nature s self regeneration capacity we find that during the transition dynamics the shape of the pollution output relationship will depend on the parameter determining nature s self regeneration capacity using footprint and biological capacity data we show empirically in a repeated cross section of countries that the shape of the pollution output relationship indeed depends on countries capacity to regenerate part of the resources they consume from nature

exclusionary manipulation of markets for pollution rights abstract strategic price manipulation can affect the distribution of transferable pollution rights across polluters and the efficiency of pollution control efforts prior research has concentrated on market manipulation by firms seeking only to minimize the sum of pollution rights costs and pollution abatement costs in this paper we explore the potential for the exclusionary manipulation of pollution permit markets intended to drive up the costs of one s rivals and we distinguish between the resource allocation effects of exclusionary manipulation and cost minimizing manipulation we find that exclusionary manipulation can sometimes worsen and sometimes ameliorate the abatement inefficiency which occurs under cost minimizing manipulation and that an overbuying rule can obviate or at least limit damages from this form of strategic behavior

emission path planning based on dynamic abatement cost curve abstract global climate change is one of the most serious environmental problems that has attracted an unprecedented global attention the scientific community has recognized that human activity is mostly responsible for global climate warming therefore states participating in the united nations framework convention on climate change unfccc have initiated a series of negotiations on how to develop their own emission reduction targets however the realization of these targets is at the expense of economic development to a great extent therefore an abatement plan is necessary to decide how and when to implement emission reduction targets a marginal abatement cost curve macc often used as an important quantitative tool to estimate abatement burden or evaluate abatement performance should be considered carefully in this paper we enrich the traditional macc by introducing the concept of an immediate unit marginal abatement cost to describe its intrinsic incremental abatement difficulty this cost is proved to be agreed with the actual situation in many ways and is therefore very suitable for practical use two factor learning curve are considered in the model which can go some way in improving the performance of the revised macc using a parameterization method the original problem can be converted into a tractable nonlinear programming problem we use an algorithm to search for the approximate global optimal solution the effectiveness and the efficiency of the algorithm are discussed respectively in the results we find that the abatement path distinguishes largely under different abatement targets some plausible reasons and policy advices are given

stochastic trend weather and us corn yield variability regional corn yield models incorporating stochastic trends prices and weather variables are estimated hypothesis tests suggest yield variability has increased because of an increase in error variance and an increase in weather related effects decomposition of the error variance shows much of its increase is due to an increased correlaion between regional yields

openness country size and government abstract this paper shows that smaller countries have a larger share of public consumption in gdp and are also more open to trade these empirical observations are consistent with recent theoretical models explaining country formation and break up and may account for the observed positive empirical relationship between trade openness and government size

the impact of foresight in a transboundary pollution game abstract we study the impact of foresight in a transboundary pollution game i e the ability of a country to control its emissions taking into account the relationship between current emissions and future levels of pollution and thus on future damages we show that when all countries are myopic i e choose the laisser faire policy their payoffs are smaller than when all countries are farsighted i e non myopic however in the case where one myopic country becomes farsighted we show that the welfare impact of foresight on that country is ambiguous foresight may be welfare reducing for the country that acquires it this is due to the reaction of the other farsighted countries to that country s acquisition of foresight the country that acquires foresight reduces its emissions while the other farsighted countries extend their emissions the overall impact on total emissions is ambiguous moreover our results suggest that incentive mechanisms that involve a very small possibly zero present value of transfers can play an important role in inducing a country to adopt a farsighted behavior and diminishing the number of myopic countries these incentives would compensate the myopic country for the short run losses incurred from the acquisition of foresight and can be reimbursed by that country from the gains from foresight that it enjoys in the long run

unemployment compensation and high european unemployment a reassessment with new benefit indicators generous unemployment benefits lie at the heart of the conventional explanation for persistent high unemployment the effects of benefit generosity on work incentives are more ambiguous in a broader behavioural framework in which workers get substantial disutility from unemployment given income and know that unemployment has scarring effects in the future the micro evidence suggests modest effects of changes in generosity but there are reasons to doubt that the impacts on national unemployment rates are consequential the empirical case for the orthodox prediction comes from cross country regressions on the oecd s gross replacement rate grr but the published evidence is mixed and we find little support in the pattern of annual changes in the grr and the unemployment rate for oecd countries over the last three decades we take advantage of new and much improved net replacement indicators from the oecd which show little correlation with either the grrs or with unemployment and employment rates we conclude that the available evidence does not offer compelling support for the conventional view

existence and properties of equilibria for a dynamic game on productive assets abstract we consider a model in which two agents share access to the same stock of a productive asset and study the implications of non cooperative consumption behavior over time under standard assumptions on the production function we construct infinitely many nash equilibria all of which consist of stationary markovian strategies these equilibria result in overconsumption so that the uniquely determined long run asset stock is too low as compared to the cooperative solution however in the limit as the discount rate becomes sufficiently small the stead states generated by the markovian nash equilibria converge to the efficient steady state journal of economic literatureclassification numbers c73 o41 q22

the effect of employment protection and product market regulation on labour market performance substitution or complementarity this article provides new evidence on the linkages between various forms of market regulation and joblessness and its components unemployment and inactivity one crucial contribution of this article is the analysis of the interdependence across product market regulation pmr and labour markets regulation employment protection legislation epl with the help of a dynamic fixed effect model with an interaction term we estimate the marginal impact of epl and pmr at different levels of the other interacted variable to cope with problems related to the inclusion of time invariant institutional variables in fixed effect models we present results of regressions based on a new procedure specifically designed to treat slowly changing variables we build time series data to account for the annual evolution of epl and use new data for unemployment insurance net replacement rates among other results we find evidence of a positive negative effect of epl pmr on employment performance as well as of subst

structural reforms in europe and the in coherence of institutions the aim of this paper is to analyse the consequences of some structural reforms on the institutional coherence of oecd countries particularly in continental europe and on their economic performance particularly as regards employment because institutions in developed political economies are interrelated through a complex network of complementarities institutional change has consequences beyond the area concerned in a reform this also implies that there are complementarity effects in reforms themselves a challenge of reform programmes is therefore to achieve a new type of complementarity between reformed institutions the paper presents empirical evidence questioning the compatibility of the ongoing structural reforms in product and labour markets with the existing institutional structures in some oecd countries the coherence of the flexicurity strategy i e a combination of labour market flexibility and a generous welfare state is also questioned from the point of view of both economic efficiency and political economy

joining the ccs club the economics of co2 pipeline projects this paper examines the conditions for a widespread adoption of carbon capture transport and storage ccs by a group of emitters that can be connected to a common co2 pipeline it details a modeling framework aimed at assessing the critical value in the charge for the co2 emissions required for each of the emitters to decide to implement capture capabilities this model can be used to analyze how the tariff structure imposed on the co2 pipeline operator modifies the overall cost of co2 abatement via ccs this framework is applied to the case of a real european co2 pipeline project we find that the obligation to use cross subsidy free pipeline tariffs has a minor impact on the minimum co2 price required to adopt the ccs in contrast the obligation to charge non discriminatory prices can either impede the adoption of ccs or significantly raise that price besides which we compared two alternative regulatory frameworks for co2 pipelines a common european organization as opposed to a collection of national regulations the results indicate that the institutional scope of that regulation has a limited impact on the adoption of ccs compared to the detailed design of the tariff structure imposed on pipeline operators

government responses to fiscal austerity the effect of institutional fragmentation and partisanship how does the institutional context affect government responses to fiscal austerity despite the institutional turn in political science we still possess an incomplete understanding of the relati

constraining ministerial power the impact of veto players on labor market reforms in industrial democracies 1973 2000 this article investigates how veto players affect the reform of labor market policies in advanced industrial democracies complementing tsebelis s veto player model with the assumption of ministerial agenda control within the cabinet the argument is that the constitutional and partisan distribution of veto power affects the capability of ministers to change the status quo in line with their partisan goals this claim is tested with panel data on unemployment insurance entitlements and employment protection legislation in 20 oecd countries between 1973 and 2000 the central finding is that veto players constrain the power of ministers cabinet ministers and prime ministers alike to pursue their partisan interests the partisanship of ministers shapes reforms only if the ideological distance between veto players is relatively small and the influence of ministerial partisanship declines as ideological distance increases

electoral institutions and the politics of coalitions why some democracies redistribute more than others standard political economy models of redistribution notably that of meltzer and richard 1981 fail to account for the remarkable variance in government redistribution across democracies we develop a general model of redistribution that explains why some democratic governments are more prone to redistribute than others we show that the electoral system plays a key role because it shapes the nature of political parties and the composition of governing coalitions hence redistribution our argument implies 1 that center left governments dominate under pr systems whereas center right governments dominate under majoritarian systems and 2 that pr systems redistribute more than majoritarian systems we test our argument on panel data for redistribution government partisanship and electoral system in advanced democracies w hy do some countries redistribute more than others most work on the politics of redistribution starts from the premise that democratic institutions empower those who stand to benefit from redistribution the basic logic is succinctly captured in the meltzer richard 1981 model where the voter with the median income is also the decisive voter with a typical right skewed distribution of income the median voter will push for redistributive spending up to the point where the benefit of such spending to the median voter is outweighed by the efficiency costs of distortionary taxation this argument implies that redistibution is much greater in democracies than in nondemocracies at least of the right authoritarian variety and that among the latter inegalitarian societies redistribute more than egalitarian ones there is some evidence to supportthefirstimplication althoughitisdisputed see ross 2005 but most of the variance in redistribution is probably within the same regime type according to datafromtheluxembourgincomestudy forexample the reduction in the poverty rate in united states as a result of taxation and transfers was 13 in 1994 whereas the comparable figure for sweden was 82 thepovertyrateisthepercentageofhouseholdsbelow 50 of the median income to explain this variance we have to look at political and economic differences

the role of carbon capture and sequestration policies for climate change mitigation this paper takes the policy failure in establishing a global carbon price for efficient emissions reduction as a starting point and analyzes to what extent technology policies can be a reasonable second best approach from a supply side perspective carbon capture and storage ccs policies differ substantially from renewable energy policies they increase fossil resource demand and simultaneously lower emissions we analyze ccs and renewable energy policies in a numerical dynamic general equilibrium model for settings of imperfect or missing carbon prices we find that in contrast to renewable energy policies ccs policies are not always capable of reducing emissions in the long run if feasible ccs policies can carry lower social costs compared to renewable energy policies in particular when second best policies are only employed temporally in case fossil resources are abundant and renewable energy costs low renewable energy policies perform better our results indicate that a pure ccs policy or a pure renewable energy policy carry their own specific risks of missing the environmental target a smart combination of both however can be a robust and low cost temporary second best policy

the dynamics of lobbying a differential game this paper presents a dynamic model on lobbying the interactions between two competing lobbies who attempt to influence regulations and legislation are modelled as a differential game we consider for this game first a time consistent and then a subgame perfect equilibrium in linear markov strategies the subgame perfect equilibrium lowers considerably lobbying activity and expenses this provides a partial explanation of the puzzle that rent seeking expenses are often small compared with the prize sought