is free trade in the interest of exporting countries when there is ecological dumping abstract given conditions of oligopolistic competition the coordinated ban of direct export promoting policies e g in the eu or by gatt increases the income of exporting countries however in the presence of environmental distortions free trade can lead to ecological dumping in exporting countries the question arises if free trade is still in the interest of exporting countries we show that welfare maximizing governments of exporting countries prefer free trade even if countries subsidize their local industries indirectly via ecological dumping the existence of further national policy instruments does not make free trade agreements obsolete

business cycle analysis with a markov switching model this article explores the hamilton markov switching model through an analysis of the business cycles of eight developed market economies forecasting and specification tests suggest only marginal improvements over linear autoregressive models yet filtered and smoothed conditional probabilities indicate turning points in business cycles that closely correlate with turning points from traditional methods tests regarding the asymmetry of business cycles reject the null of symmetry for most countries

determinants of obesity in brazil the effects of trade liberalization and socio economic variables this article aims to evaluate a possible relation between increased brazilian trade openness and increasing observed rates of overweight and obesity during the last 25 years we develop an economic

evidence of nonlinearity in daily stock returns this article applies a newly developed statistical technique to time series of daily rates of return of 15 common stocks the technique involves estimating the bispectrum of the observed time series the bispectrum is defined as the double fourier transform of the third order cumulant function if the process generating rates of return is linear with independent innovations then the skewness of the bispectrum will be constant the article describes a test that can detect nonconstant skewness in the bispectrum hence if the test rejects constant skewness a nonlinear process is implied as a consequence the test can distinguish between white noise and purely random noise the results suggest that daily stock returns are generated by a nonlinear process

conditional eurobonds and the eurozone sovereign debt crisis this paper proposes that all new euro area sovereign borrowing be in the form of jointly guaranteed eurobonds to avoid classic moral hazard problems and to insure the guarantors against default each country would pay a risk premium conditional on economic fundamentals to a joint debt management agency this suggests that these bonds be called euro insurance bonds while the sovereign debt markets have taken increasing account of the economic fundamentals the signal to noise ratio has been weakened by huge market volatility so undercutting incentives for appropriate reforms and obscuring economic realities for voters this paper uses an econometric model to show that competitiveness public and private debt to gdp and the fall out from housing market crises are the most relevant economic fundamentals formula based risk spreads based on these fundamentals would provide clear incentives for governments to be more oriented towards economic reforms to promote long run growth than mere fiscal contraction putting more weight on incentives that come from risk spreads than on fiscal centralization and the associated heavy bureaucratic procedures would promote the principle of subsidiarity to which member states subscribe the paper compares euro insurance bonds incorporating these risk spreads with other policy proposals copyright 2013 oxford university press

environmental taxation in open economies unilateralism or partial harmonization there are two reasons why countries might set weak environmental policies transboundary pollution and concerns for competitiveness this article explores the full interactions between these two features within a unified general equilibrium framework first we show that competitive concerns change the structure of output taxes but not that of emission taxes they lead to a lowering of output taxes lower polluting good prices an increase in emission taxes adoption of less or same polluting technologies increased aggregate emissions and lower overall welfare levels second we show that partially harmonizing commodity taxes above their unrestricted nash equilibrium value can potentially hurt as well as improve the pollution technology overall quality of the environment and welfare the three attributes move positively together on the other hand harmonizing of emission taxes above their nash equilibrium values appear to always lead to improvements in the environment and welfare via adoption of cleaner technologies

measures to enhance the effectiveness of international climate agreements the case of border carbon adjustments abstract actions on climate change which are not supported by all countries are not very effective however full participation in a global climate treaty with meaningful emission reductions is difficult to achieve the non excludability of the public good mitigation provides an incentive to abstain from global action moreover carbon leakage renders it unattractive to join a treaty without full participation we study whether and under which conditions border carbon adjustments bcas can mitigate free riding and reduce carbon leakage in a simple strategic trade model we show that bcas can lead to large stable climate agreements including full participation associated with large global welfare gains if treaties do not restrict membership open membership as this is typical for environmental agreements we caution against restricting accession to treaties exclusive membership as this is typical for trade agreements which may serve individual but not global interests

trade gmos and environmental risk are current policies likely to improve welfare food with inputs from genetically modified organisms gmos has met considerable skepticism among european union eu consumers the eu import ban on gm food has triggered a great deal of controversy and has been partly replaced by a mandatory labeling scheme although there is no measure in the general agreement on tariffs and trade that directly addresses the use of product labeling wto and others have been skeptical to mandatory product labeling on the grounds that they may be used as hidden protectionism hampering global welfare this study has two foci first we examine how different policies for the production and use of gmos might influence the market outcome in consumer food markets second we evaluate the welfare effects of the policy measures we find that mandatory labeling often increases domestic welfare and may also enhance global welfare on the other hand a trade ban is more likely to decrease global welfare

was the recent downturn in us real gdp predictable this article uses a small set of variables real gdp the inflation rate and the short term interest rate and a rich set of models atheoretical time series and theoretical structural linear and nonlinear as well as classical and bayesian models to consider whether we could have predicted the recent downturn of the us real gdp comparing the performance of the models to the benchmark random walk model by root mean square errors the two structural theoretical models especially the nonlinear model perform well on average across all forecast horizons in our ex post out of sample forecasts although at specific forecast horizons certain nonlinear atheoretical models perform the best the nonlinear theoretical model also dominates in our ex ante out of sample forecast of the great recession suggesting that developing forward looking microfounded nonlinear dynamic stochastic general equilibrium models of the economy may prove crucial in forecasting turning points

energy savings in nigeria is there a way of escape from energy inefficiency abstract this study estimates the transition probabilities for different energy use states in nigeria using the markov switching regression technique according to the results both energy efficient and energy inefficient states are less persistent but comparatively the energy inefficient state is more persistent thus in nigeria it is much difficult to escape from the energy inefficient state than the energy efficient state several reasons may explain this phenomenon and they include inefficient regulatory system poor institutional structure high corruption proliferation of second hand goods undeveloped markets high incidence of poverty and inefficient pricing in the energy sector pricing policies should be combined with institutional improvement and infrastructural development if nigeria wants to achieve a sustainable energy efficient state in the long term

international trade and environmental quality a survey abstract international trade has been incorporating various aspects of environmental issues since 1970 the extent to which environmental problems might affect many facets of trade or vice versa has been the subject of considerable debate over these years in this article we have attempted to establish some of the links between international trade and environmental quality by performing a comprehensive literature review we discuss issues such as establishing direct and indirect effects of international trade on environmental quality effects of trade on economic development environmental quality and energy and their relation with each other and finally the role of governments and international organizations in this context studies have so far revealed some linkages between trade and environment through conventional trade theory however interactions between international trade and types of pollution their sink and assimilative capacity need to be analyzed using a general equilibrium approach currently very little knowledge and agreement on the nature of interactions between trade theories development process and environmental quality exist existing studies have shown that the structure of environmental regulations should be modified to reflect the existence of trade under imperfect competition therefore further research on the interaction between new trade theory and environmental regulation is needed also theoretical and quantitative analysis regarding the effects of environmental regulations on competitiveness and location decision is needed the intensity and type of environmental measures vary across issues and countries therefore harmonizing environmental measures creates an inefficient atmosphere and to assume that trade restrictions will either improve or reverse the environmental damages is a serious mistake given the dynamic and intricate nature of the problem trade and environment debate continues despite vast research and poses a challenge for researchers and policy makers in the foreseeable future

employment creation and green development strategy employment creation has received surprisingly little attention in the literature on environmental economics this paper argues for closer ties between sustainable development and employment creating development at both the global and the national levels of planning and policy the paper briefly reports on the employment challenge confronting indonesia to highlight the jobs versus environment dilemma facing a developing country that is rich in natural resources but densely populated it is argued that the high income countries of the north should take the initiative in raising funds through ecotaxes levies on international trade and other appropriate income policies in order to increase investment flows for job creating development in the south to make sustainability a practical reality

what do the leading indicators lead the authors find that the composite leading index cli is useful for forecasting gross national product gnp both in sample and in an out of sample real time exercise they propose a nonlinear specification in which cyclical shifts of the cli precede those in gnp however the authors find that better forecasts are provided by a simple linear relation between current gnp growth and the growth rate of the cli during the previous quarter along with an error correction term corresponding to the previous quarter s logarithmic difference between the level of the cli and the level of gnp copyright 1996 by university of chicago press

a two country model of stochastic output with changes in regime abstract this paper evaluates the transmission of business cycles between countries and presents evidence that world wide shocks dominate any transmission of business cycles i examine industrial production and look at the relationships of the united states with canada germany and the united kingdom in the process i present a specialized markov switching time series model and evaluate it relative to other more familiar stochastic models i show that for the data sets considered markov switching models have much better goodness of fit but larger forecast variance relative to arma or var models

pollution abatement subsidies and the eco industry this paper considers the combination of pollution taxes and abatement subsidies when some polluting firms procure their abatement goods and services from an oligopolistic eco industry the regulator must here cope with two simultaneous price distortions one that comes from pollution and the other which is caused by the eco industry s market power in this context we show that taxing emissions while subsidizing polluters abatement efforts cannot lead to first best but the opposite occurs provided it is the eco industry s output which is subsidized when public transfers also create distortions welfare can be higher if the regulator uses only an emission tax but subsidizing abatement suppliers while taxing emissions remains optimal when the eco industry is concentrated

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

voluntary environmental agreements vs emission taxes in strategic trade models the purpose of the paper is to narrow the gap between the widespread use of voluntary agreements and research on the rationale of such approaches a topical example are voluntary agreements of many industries to reduce carbon dioxide emissions because of global warming if the industry anticipates that taxes and fees will be introduced in the coming years it seems rational to act in advance in order to mitigate the tax levels

bayes estimates of markov trends in possibly cointegrated series stylized facts show that average growth rates of u s per capita consumption and income differ in recession and expansion periods because a linear combination of such series does not have to be a constant mean process standard cointegration analysis between the variables to examine the permanent income hypothesis may not be valid to model the changing growth rates in both series we introduce a multivariate markov trend model that accounts for different growth rates in consumption and income during expansions and recessions and across variables within both regimes the deviations from the multivariate markov trend are modeled by a vector autoregression var model bayes estimates of this model are obtained using markov chain monte carlo methods the empirical results suggest the existence of a cointegration relation between u s per capita disposable income and consumption after correction for a multivariate markov trend this result is also obtained when per capita investment is added to the var

pollution policy and trade liberalization of environmental goods during the doha round at the world trade organization reductions in trade barriers on environmental goods eg were put forward as a means of helping developed and developing countries alike deal with current environmental problems we examine the potential effectiveness of such a strategy in a developing country that imports all its consumption of eg from an imperfectly competitive foreign eco industry we point out that trade liberalization of eg might in fact lead to less stringent pollution taxes which can result in an actual rise in pollution levels we then show that the environmental effectiveness objective of this trade reform can be achieved when the regulator uses quantitative abatement standards as an alternative pollution policy instrument however this environmental achievement comes at the expense of social welfare

eco dumping capital mobility and international trade a small open economy s optimal environmental policy is studied in a model with international capital mobility and local pollution the country produces traded as well as non traded goods is it in the country s interest to engage in ecological dumping by choosing generous pollution allowances for the traded good sector the answer depends decisively on the policy regime in use dumping is not optimal if the country ensures that the implicit rent on pollution is completely appropriated within the country however if the implicit factor reward on pollution leaves the country because it accrues to foreign owners of mobile capital the local welfare maximizing government tends to discriminate against the traded good sector the opposite of ecological dumping

the signaling effect of emission taxes under international duopoly we analyze equilibrium emission taxes under international cournot duopoly in the presence of asymmetric information between firms when each firm does not know the production cost of its rival located in the other country the government of each country can use its emission tax as a signal of the competitiveness of its domestic firm we show that owing to this signaling effect the equilibrium emission tax and expected welfare of each country can be higher than those under symmetric information between firms or even higher than those obtained if the governments were to non strategically set the tax rate equal to the expected marginal damage from pollution i e the pigouvian tax level our results suggest that the presence of asymmetric information between firms can mitigate a race to the bottom in strategic environmental policymaking

is the business cycle characterized by deterministic chaos abstract tests are conducted on u s macroeconomic data for the presence of low dimensional deterministic chaos where deterministic chaos is defined as in grandmont s 1985 walras bowley lecture or in brock 1986 the idea is to test for evidence of endogenous instability causing the business cycle low order autoregressions are hard to reject with our methods evidence of chaos is weak but our tests may be too weak to detect it evidence of nonlinearity is present in employment 1950 i to 1983 iv unemployment 1949 i to 1982 iv monthly post war industrial production and pig iron production 1877 1937

volatility dependence and contagion in emerging equity markets abstract in this paper we use weekly stock market data for a group of latin american countries to analyze the behavior of volatility through time we are particularly interested in understanding whether periods of high volatility are correlated across countries the analysis uses both on univariate and bivariate switching volatility models our results do not rely on the correlation coefficients but on the co dependence of volatility regimes the results indicate that high volatility episodes are in general short lived lasting from 2 to 12 weeks we find strong evidence of volatility co movements across countries especially among the mercosur countries

an econometric model of serial correlation and illiquidity in hedge fund returns the returns to hedge funds and other alternative investments are often highly serially correlated in sharp contrast to the returns of more traditional investment vehicles such as long only equity portfolios and mutual funds in this paper we explore several sources of such serial correlation and show that the most likely explanation is illiquidity exposure i e investments in securities that are not actively traded and for which market prices are not always readily available for portfolios of illiquid securities reported returns will tend to be smoother than true economic returns which will understate volatility and increase risk adjusted performance measures such as the sharpe ratio we propose an econometric model of illiquidity exposure and develop estimators for the smoothing prole as well as a smoothing adjusted sharpe ratio for a sample of 908 hedge funds drawn from the tass database we show that our estimated smoothing coecien ts vary considerably across hedge fund style categories and may be a useful proxy for quantifying illiquidity exposure

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

on the efficiency of green trade policy the paper derives conditions for second best environmental policy when there are foreign countries which fail to implement appropriate environmental regulations it is shown that in such cases efficiency in the global economy will not be achieved unless domestic environmental regulations are supplemented by trade provisions the result is independent of whether environmental problems are local or international furthermore when trade provisions are implemented efficiency requires that domestic environmental taxes are fixed at the pigouvian tax rate the results imply that there is an economic rationale for regulating the trade between signatories and non signatories of international environmental agreements efficient trade regulations will either take the form of trade restrictions or trade promotions depending on whether the environmental problem is created by production or consumption activities and whether the net import of the relevant commodity is positive or negative it is argued that an efficient climate agreement signed by a group of fuel importing countries e g the oecd countries should include a subsidy on the import of fossil fuels

endogenous timing in strategic environmental policymaking in this paper we endogenize the timing of policymaking in a simple two country model of strategic environmental policy we consider a timing game in which two policymakers non cooperatively decide their preferred sequence of moves before setting emission tax rates we show that whether the policymakers implement emission tax policies simultaneously or sequentially crucially depends on the magnitude of environmental damages when the damages are insignificant the tax rates are strategic substitutes and the simultaneous move policymaking emerges in equilibrium in contrast when the damages are significant the tax rates are strategic complements and sequential move policymaking emerges we also extend the model by allowing for differences in the vulnerability to environmental damages between countries when the differences are large the unique equilibrium of the game is the situation where the less vulnerable country acts as a leader in the case where multiple equilibrium emerges the risk dominant equilibrium is also that where the less vulnerable country leads

on measuring synchronization of bulls and bears the case of east asia abstract this paper implements estimation and testing procedures for comovements of stock market cycles or phases in asia we extend the harding and pagan harding d pagan a p 2006 synchronization of cycles journal of econometrics 132 1 59 79 test for strong multivariate nonsynchronization smns between business cycles to a test that allows for an imperfect degree of multivariate synchronization between stock market cycles moreover we propose a test for endogenously determining structural change in the bivariate and multivariate synchronization indices upon applying the technique to five asian stock markets we find a significant increase in the cross country comovements of asian bullish and bearish periods in 1997 a power study of the stability test suggests that the detected increase in comovement is more of a sudden nature i e contagion or asian flu instead of gradual i e financial integration it is furthermore argued that stock market cycles and their propensity toward increased synchronization contain useful information for both investors policy makers and financial regulators

is environmental dumping greater when plants are footloose concerns have been expressed that in a global market place with mobile capital national governments will have incentives to set weak environmental policies environmental dumping to protect the international competitiveness of their domestic firms and that these incentives are particularly strong in industries where plants may be relatively footloose so that governments are concerned to prevent capital flight in this paper we investigate whether the mobility of firms does indeed increase incentives for environmental dumping we do this by taking a simple model of imperfect competition and comparing the environmental policies that would be set by non cooperative governments for two different move structures where governments set environmental policies after firms decide where to locate the exogenous location case or market share game and where governments set environmental policies before firms decide where to locate the endogenous location case or location game this raises an important modelling issue for it is natural in the market share game that governments would set different environmental policies depending on the number of firms that locate in their countries and if we are to compare just the effect of different move structures then in the location game we should also allow governments to condition their environmental policies on the number of firms that locate in them contrary to previous models of the location game where governments set a single instrument independent of the number of firms that locate in their countries we show that the extent of environmental dumping in the market share game may be greater or less than in the location game depending in particular on the degree of substitution between products of the firms and hence the intensity of market competition we also show that there is more environmental dumping in the location game when governments use a single instrument than when they condition their instruments on the number of firms that locate in their countries

taxes and subsidies for pollution intensive industries as trade policy abstract this paper constructs a model of international oligopoly with negative externalities in production in which optimal environmental policy responses to foreign emission tax and subsidy programs can be calculated it is shown that by granting subsidies for abatement efforts or for a heavily taxed polluting input domestic net welfare is improved by capturing a greater share of the world market since the subsidy programs are supposed to improve the quality of the global environment they can be justified on environmental grounds in addition we show that a pigouvion emission tax restores efficiency in natural resource allocation whereas subsidy programs are in principle used as instruments in imperfectly competitive international markets

trends and cycles in macroeconomic time series two structural time series models for annual observations are constructed in terms of trend cycle and irregular components the models are then estimated via the kalman filter using data on five u s macroeconomic time series the results provide some interesting insights into the dynamic structure of the series particularly with respect to cyclical behavior at the same time they illustrate the development of a model selection strategy for structural time series models

are output fluctuations transitory according to the conventional view of the business cycle fluctuations in output represent temporary deviations from trend the purpose of this paper is to question this conventional view if fluctuations in output are dominated by temporary deviations from the natural rate of output then an unexpected change in output today should not substantially change one s forecast of output in say five or ten years our examination of quarterly postwar united states data leads us to be skeptical about this implication the data suggest that an unexpected change in real gnp of 1 percent should change one s forecast by over 1 percent over a long horizon

are economic time series asymmetric over the business cycle it has long been argued that major cyclical variables such as the unemployment rate display an asymmetric behavior over various phases of the business cycle the paper provides a statistical test for this hypothesis using the framework of finite state markov processes i implement a test to see if the behavior of the unemployment rate is characterized by sudden jumps and slower drops it is argued that the framework provided in the paper can also be used to test other sample path properties of economic time series

the environmental conundrum of rare earth elements clean technologies such as solar panels and wind turbines help to curb global emissions but they require dirty inputs for their production i e mining rare earth elements rees pollutes local environments rees are also the object of rent shifting strategic trade policies as highlighted by a recent wto ruling against china s quotas and tariffs on exports of rees we construct a three country trade model with an environmental damage function in order to examine the effects of three policies with different implications for the equilibrium quantities of dirty inputs and clean technologies a downstream subsidy an upstream export tariff and an upstream pollution tax we relate the welfare implications of the policies to the parameters of the damage function and to the number of downstream competitors the effects of a unilateral policy switch from an export tariff to a domestic pollution tax as suggested by china s reaction to the wto challenge are also examined

which border taxes origin and destination regimes with fiscal competition in output and emission taxes abstract this paper posits a two stage game in tax regime and tax rates to study the property of second best emission and output taxes in a two country world with an atmospheric externality it shows that i either the destination destination or the origin origin tax regime may constitute the subgame perfect nash equilibrium of this game ii either regime may pareto dominate the other iii it is possible to have a prisoner s dilemma game where the origin origin regime pareto dominates but the choice of the destination regime is the dominant strategy for each country other results include iv under origin origin regime the output tax is used for fiscal competition the emission tax is set at a rate equal to the national marginal social damage of emissions and public goods are provided suboptimally v under destination destination regime the output tax is ineffective as an instrument for fiscal competition the emission tax is used not only for combating pollution but also for tax competition the tax is set at a rate below the national marginal social damage of emissions emissions are pushed above their closed economy level the provision of public goods are optimal

strategic environmental policy under incomplete information this paper introduces incomplete information into recent analyses of strategic environmental policy it is shown how asymmetric information between planners and producers affects national incentives to impose strategic environmental standards on domestic industries in international oligopolistic competition relative to the full information case incomplete information is likely to mitigate allocative distortions originating from strategic behaviour a countervailing effect tending to raise distortion is however revealed from the analysis this effect is absent when governments intervene in free trade through direct production subsidies the results suggest that incentives to capture foreign rents are less reduced due to private information when environmental standards rather than direct production subsidies are the strategic instrument

green tax reform in an oligopolistic industry oecd countries reduce or eliminate certain taxes when they introduce new environmental taxes the purpose of this paper is to analyze the incidence of such green tax reform in an oligopolistic industry the paper shows that a rise in taxes could result in the expansion of the aggregate pollution in the presence of a large technology gap the paper further shows that the government loses tax revenue as a result of the green tax reform if it continues to apply the same environmental standard this implies that the government needs to raise environmental standards to keep the existing level of public spending after a green tax reform

stock market cycles financial liberalization and volatility in this paper we analyze the cycles of the stock markets in four latin american and two asian countries and we compare their characteristics we divide our sample in two subperiods in order to account for differences induced by the financial liberalization processes of the early 1990s we find that cycles in emerging countries tend to have shorter duration and larger amplitude and volatility than in developed countries however after financial liberalization latin american stock markets have behaved more similarly to stock markets in developed countries whereas asian countries have become more dissimilar concordance of cycles across markets has increased significantly over time especially for latin american countries after liberalization

political competition rent seeking and the choice of environmental policy instruments this paper investigates the impact of political lobbying on the choice of environmental policy instruments it is argued that the prevalence of pollution emission standards over more efficient policy instruments may result from rent seeking behaviour the model further predicts that when an emission standard is used to control pollution rival political parties have an incentive to set the same standard there is therefore a convergence of policies moreover it is shown that emission taxes are more likely to be supported and proposed by political parties which represent environmental interest groups this feature appears to accord with the observed support for environmental taxes by green parties in europe australia new zealand and elsewhere

wto ministerial conference in singapore environmental diversity versus harmonization 1 introductionin december 1996 a newera of the international trade regime started with the rstwto ministerial conferencein singapore substantialprogress hasbeenachievedin freeing trade in information technology products and a north south collision oninternational labour standards has been averted however these successes over shadow the apparant stagnation in the area of trade and environment at last aftermanyyearsofintensivediscussions manyhadhopedthatthe rstwtoministerialconferencewouldaddressthissensitivepolicy eld outofthewiderangeofissuesthat can be dealt with under this heading two gure prominently trade measurespursuantto multilateral environmentalagreementsandeco labellingschemes thisnote rstly tries to explain why exactly these two issues draw most of the atten tion of policymakers and secondly discusses how these issues can be resolvedagainst the background of established welfare theory it also tries to make clearwhy the ministers in singapore pussyfooted around these issues and only decidedthat the wto committee on trade and environment has to continue its explora tory work to come to grisp with these issues insights from the literature on thetrade environment interface are rst summarized in eight propositions 2 propositions on trade and environmentbefore setting forth the propositions it is good to knowthat in analyticalstudies ontrade and environment the following distinctions are usually made first there areon the one hand local and national environmental problems and on the other handtransboundary i e international and global environmental problems the formerrefer to externalities caused by domestic environmental distortions that do notexpell beyond national borders the latter refer to environmental problems thataffect welfare both in the home country and in one or more foreign countries

a model of carbon price interactions with macroeconomic and energy dynamics abstract this paper develops a model of carbon pricing by considering two fundamental drivers of european union allowances economic activity and energy prices on the one hand economic activity is proxied by aggregated industrial production in the eu 27 as it provides the best performance in a preliminary forecasting exercise vs other indicators on the other hand brent natural gas and coal prices are selected as being the main carbon price drivers as highlighted by previous literature the interactions between the macroeconomic and energy spheres are captured in a markov switching var model with two states that is able to reproduce the boom bust business cycle hamilton 1989 first industrial production is found to impact positively negatively the carbon market during periods of economic expansion recession thereby confirming the existence of a link between the macroeconomy and the price of carbon second the brent price is confirmed to be the leader in price formation among energy markets bachmeier and griffin 2006 as it impacts other variables through the structure of the markov switching model taken together these results uncover new interactions between the recently created eu emissions market and the pre existing macroeconomic energy environment

pollution intensity of gdp and trade policy can the world bank be wrong abstract what are the environmental implications of open trade policies in developing countries economic theory and environmental critics suggest they worsen environmental quality this conventional wisdom has been challenged by several studies which suggest that outward oriented trade policies are likely to be win win enhance economic growth and environmental quality this paper challenges revised conventional wisdom rcw by demonstrating that developing countries with outward oriented trade policies have higher pollution intensities of gdp than those following inward oriented policies the paper examines why the evidence reported here differs so sharply from rcw studies considers the policy implications of these results and identifies reasons why despite them it may not make sense to totally discount future potential win win opportunities

asymmetric tax policy responses in large economies with cross border pollution we build a model of cross border pollution between two large open economies one importing the polluting good and the other exporting it and derive their non cooperative trade and environmental tax policies we show among other things that 1 in response to a bilateral reduction in trade taxes by both countries the former country s optimal policy is to lower its nash emissions tax while the latter s is to raise it and 2 in response to an increase in emissions tax rates by both countries the former country s optimal reaction is to raise its nash import tariff while the latter s is to reduce its nash export tax that is in the present context freer trade leads the exporting country to adopt stricter while the importing country laxer environmental tax policies

long swings in exchange rates are they really in the data several authors have reported evidence of long swings in u s dollar exchange rates by rejecting the random walk in favor of a markov regime switching model we show that this evidence is not robust to an extension of the sample period one should however not conclude that long swings are thus absent because the tests may have insufficient power a possible reason for this is the low data frequency because existing tests are based on quarterly data and we find that the power can be increased substantially by raising the data frequency indeed weekly data reject the random walk so we conclude that long swings are in the data this conclusion is supported by significant superiority of regime switching over random walk out of sample forecasts of the direction of change

the role of mfn under asymmetries in environmental standards abstract we critically examine the implications of the most favored nation mfn clause under asymmetric environmental standards using an oligopolistic intra industry trade model we show that environmentally beneficial trade diversion and higher world welfare obtain under tariff discrimination relative to mfn

the transition between energy efficient and energy inefficient states in cameroon i use a two state energy efficient inefficient markov switching dynamic model to study energy efficiency in cameroon in a novel manner employing yearly data covering 1971 to 2012 i find that th

the hamilton model with a general autoregressive component estimation and comparison with other models of economic time series abstract this paper generalizes the hamilton model to the important case in which the autoregressive component need not contain a unit root using u s quarterly real gnp data the model is estimated and the results are compared to those of hamilton some monte carlo evidence for the model is presented and its in sample forecasting performance is discussed and compared to the original hamilton model the arima model and the deterministic time trend model

measuring business cycle time the business cycle analysis of arthur f burns and wesley c mitchell and the national bureau of economic research presumed that aggregate economic variables evolve on a time scale defined by business cycle turning points rather than by months or quarters do macroeconomic variables appear to evolve on an economic rather than a calendar time scale evidence presented here suggests that they do however the estimated economic time scales are only weakly related to business cycle time scales providing evidence against the view underlying traditional business cycle analysis copyright 1987 by university of chicago press

the causal link between energy and output growth evidence from markov switching granger causality abstract in this paper we empirically investigate the causal link between energy consumption and economic growth employing a markov switching granger causality analysis we carry out our investigation using annual u s real gdp total final energy consumption and total primary energy consumption data which cover the period between 1968 and 2010 we find that there are significant changes in the causal relation between energy consumption and economic growth over the sample period under investigation our results show that total final energy consumption and total primary energy consumption have significant predictive content for real economic activity in the u s economy furthermore the causality running from energy consumption to output growth seems to be strongly apparent particularly during the periods of economic downturn and energy crisis we also document that output growth has predictive power in explaining total energy consumption furthermore the power of output growth in predicting total energy consumption is found to diminish after the mid of 1980s

globalisation and obesity he externalities arising as a consequence of trade liberalisation have rarely been a topicof much public debate a possible exception would be the relationship between the inter national trade and resulting environmental degradation markusen 1975 conrad 1993 ludema and wooton 1994 even then the mechanisms that link the volume of internationaltrade and the rate of environmental degradation are seldom adequately explained part of theproblem is that the environmental problems that are faced are extremely varied both in char acter and severity and it is fruitless to attempt to provide a single remedy for all of them but environmental degradation is hardly the only externality caused by trade liberalisation ifone considers a broader process such as globalisation de ned as a process by which national regional economies societies and cultures have become integrated through a global networkof economic technological socio cultural political and biological factors croucher 2004 rather than the trade liberalisation only the possibility of its resulting externalities increasessigni cantly there is for example a growing literature addressing possible adverse impact ofglobalisation including trade liberalisation on cultural diversity within in particular non wes tern countries castells 1997 cowen 2002 segerstrom 2003 in addition the relevance ofthe topic is underscored by the unesco 2001 universal declaration on cultural diversity which emphasises the role of cultural goods as vectors of identity and is concerned aboutcurrent trade imbalances in related sectors furthermore one can easily imagine the adverseimpact of globalisation with its free ow of people goods and in turn the lifestyle on spread ing of infectious diseases such as aids altman 1999 attawell 2004 according to the world health organization who 2006 approximately 1 6 billionadults were overweight and at least 400 million were obese in 2005 all around the world more recent statistics show that just in the united states 33 3 percentage of the total popula tion is obese and about 60 percentage is overweight or obese wyatt et al 2006 who 2009 these numbers set the united states among top three countries in the world with thehighest obesity rate who 2009 shared with egypt and saudi arabia obesity has not onlyincreased in developed countries but more surprisingly in developing countries as well according to the food and agriculture organization of the united nations fao 2008 obesity increases rapidly in developing countries even in those where hunger still exists forinstance the number of overweight people increased from less than 10 to 15 percentage inchina during the last two decades in sub saharan countries where hunger rates are the high est obesity is increasing as well some developing countries such as brazil and colombia have 40 percentage of overweight or obesity rate a number comparable to those in developedcountries due to this rapid and continuous global increase of obesity the who describesobesity as a global epidemic

markov switching and stochastic volatility diffusion models of short term interest rates this article empirically compares the markov switching and stochastic volatility diffusion models of the short rate the evidence supports the markov switching diffusion model estimates of the elasticity of volatility parameter for single regime models unanimously indicate an explosive volatility process whereas the markov switching models estimates are reasonable itis found that either markov switching or stochastic volatility but not both is needed to adequately fit the data a robust conclusion is that volatility depends on the level of the short rate finally the markov switching model is the best for forecasting a technical contribution of this article is a presentation of quasi maximum likelihood estimation techniques for the markov switching stochastic volatility model

inferring the private information content of trades a regime switching approach this paper presents an empirical model for inferring the private information content of trades at the transaction level the trade indicator model of glosten and harris 1988 is extended to a two state regime switching setting and the model is estimated using tick by tick data from the new york stock exchange nyse the specialist is found to react in accordance with the proposed model bid ask quotes set after the execution of a trade reflect the conjectured information content of that particular trade based on the estimated model four empirical results emerge a the suggested regime switching model fit data well b the reverse j shaped pattern of intra daily quoted spreads is shown to agree with the clustering of costs incurred by the specialist through trading with better informed agents c on average 9 of all trades are found to reveal private information to the specialist d results regarding the trading volume of informed traders support the stealth trading hypothesis suggested by barclay and warner 1993 copyright 2003 john wiley sons ltd

trade policy reform endogenous lobby group formation and environmental policy abstract this paper explores the effects of trade liberalization on environmental policy outcomes when collective action is endogenous the polluting industry s ability to undertake lobbying is shown to depend on the degree of competition in the product market establishing a new link between trade and environmental policies if trade liberalization causes industry collective action to become harder to sustain the stringency of the environmental policy is likely to rise these results highlight the role of trade liberalization on product market competition and its consequent impact on the incentive to lobby for less stringent environmental policies

the cyclical component of u s economic activity quarterly data on industrial production and deflated gross national product in the united states from 1947 through 1985 are decomposed into independent nonstationary trend and stationary cycle components using kalman filtering and smoothing techniques estimates of the model parameters imply that at least half of the quarterly innovation in u s economic activity can be attributed to a stationary cyclical component that persists over periods of time as long as five years this finding is inconsistent with the hypothesis that most of the apparent variation in u s economic activity can be attributed to a nonstationary trend component

optimal prediction of cyclical downturns abstract in the conventional way of visualizing economic time series the prediction problem does not dichotomize into predicting turning points and predicting conditional means yet the prediction of turning points has always been considered a separate issue in business cycle literature the paper first discusses these issues and then describes a model where the prediction of turning points does separate from the prediction of conditional means using the model an optimal way of predicting turning points is derived and applied to u s data the paper uses time series methodology and the theory of optimal stopping times

the effect of emission taxes and abatement subsidies on market structure abstract emission taxes and abatement subsidies are considered to be efficient measures for environment protection the purpose of this paper is to quantify their effects on industry output firm output and on the number of firms in the industry three types of market structure are under discussion perfect competition oligopoly and a dominant firm with a competitive fringe it turns out that emission taxes and abatement subsidies affect the structure of the polluting industry in opposite ways while the effects on industry s emissions are similar in direction but different

a nonparametric investigation of duration dependence in the american business cycle does the termination probability of a business expansion or contraction increase with age this question may be formally addressed by analyzing the nature of duration dependence in aggregate economic activity our null hypothesis is that there is no duration dependence which we test via intentionally nonparametric procedures we also argue that common notion of business cycle periodicity can be usefully interpreted in terms of whole cycle duration dependence we find some evidence for duration dependence in whole cycles and in prewar expansions but little evidence elsewhere

evaluating the impact of specific environmental regulations on exports there is clear concern in developing and transition economies that new and proposed changes in environmental policies and regulations will reduce exports the existing trade and environment literature however provides little empirical guidance for policy makers to evaluate sector specific trade impacts of environmental regulatory changes to assist with such analysis this paper develops a microeconomic framework that can be used to evaluate the impact of changed environmental regulations on exports the results provide clear empirical guidance to understand when the impact of such changes are likely to be relatively small and when the impacts are larger

when the weak win the role of investment in environmental lobbying abstract old and environmentally damaging industries often lobby effectively for less stringent regulations and are slow to adopt new and cleaner technologies this paper explains the lobbying success of these industries in terms of the strategic role of investment as a credible commitment device it is demonstrated that if governments are predisposed to special interest groups underinvestment in new technology enables firms to lobby more effectively such industries are shown to be better placed to extract policy concessions despite contributing less to the government in political donations the analysis therefore suggests that political considerations may provide a significant incentive for firms to reject environmentally beneficial investments even when these lower production costs

business cycle asymmetry a deeper look this paper distinguishes two types of asymmetry in business cycles deepness and steepness deepness is defined as the characteristic that troughs are further below trend than peaks are above most previous research has focused exclusively on steepness which refers to cycles in which contractions are steeper than expansions a test for deepness is proposed and applied to u s post war quarterly unemployment real gnp and industrial production evidence of deepness is found for unemployment and industrial production while the evidence for real gnp is weaker previous evidence of steepness in unemployment is confirmed

an information diffusion based model of oil futures price abstract inspired by the increasing evidence of financialization speculation in commodity pricing this paper constitutes a first attempt to build an information diffusion based asset pricing framework for the oil futures market with gradual information dissemination slowly decaying uncertainty about the asset s future fundamentals generates persistent conditional volatility and a drift in asset return volatility based proxies for information flows are proposed to examine empirically the asset pricing implications the results confirm a significant intertemporal relationship between return on the price of oil futures information diffusion and volatility components an important implication of our study is that the slow diffusion of information generates predictability in price dynamics a forecasting model is then constructed and tested in relation to our theory it is found that the lagged series of the pricing factors possess significant predicting power for returns

analyzing business cycle asymmetries in a multi level factor model abstract we study the business cycle in the us over 1959 2011 using a large dimensional multi level factor model we find notable asymmetries over the business cycle but the bulk of common dynamics is stable over time the comovement among variables is larger in recessions compared to expansions the recession factor is highly correlated with monetary and financial variables whereas expansion and symmetric factors are mainly related to real activity variables