private values of risk tradeoffs at superfund sites housing market evidence on learning about risk this paper incorporates a bayesian learning model into a hedonic framework to estimate the value that residents place on avoiding cancer risks from hazardous waste sites we show that residents are

evidence on the varying effect of expected inflation on interest rates boskin michael j mark gertler and charles taylor the impact of inflation on u s productivity and international competitiveness washington d c national planning association 1980 carlton dennis w the disruptive effect of inflation on the organization of markets in robert e hall ed inflation causes and effects chicago the university of chicago press 1982 fama eugene short term interest rates as predictors of inflation american economic review 65 june 1975 269 282 freund william c and paul b manchester productivity and inflation in john d hogan ed dimensions of productivity research vol i houston american productivity center 1980 53 71 geweke john richard meese and warren t dent comparing alternative tests of causality in temporal systems analytic results and experimental evidence journal of econometrics 21 feb 1983 161 194 granger c w j investigating causal relations by econometric models and cross spectral methods econometrica 37 july 1969 424 438 guilkey david k and michael k salemi small sample properties of three tests for granger causal ordering in a bivariate stochastic system this review 64 nov 1982 668 680 houthakker hendrik s growth and inflation analysis by industry brookings papers on economic a ctivity 1979 241 256 hsiao cheng autoregressive modelling and money income causality detection journal of monetary economics 7 1981 85 106 autoregressive modeling and causal ordering of economic variables journal of economic dynamics and control 4 1982 243 259 jarrett j peter and jack g selody the productivity inflation nexus in canada 1963 1979 this review 64 aug 1982 361 367 kendrick john w and elliot s grossman productivity in the united states trends and cycles baltimore the johns hopkins university press 1980 sims christopher a money income and causality american economic review 62 sept 1972 540 552 u s department of commerce bureau of economic analysis the national income and product accounts of the united states 1929 76 statistical tables washington d c superintendent of documents 1981 u s department of labor bureau of labor statistics tables headed industry analytical ratios for the business sector all persons indexes 1977 100 and basic industry data for the business sector all persons printout dated april 27 1983

the toxic intensity of industrial production global patterns trends and trade policy this paper exploits a newly developed data set to investigate recent changes in the international distribution of industrial pollution in particular the authors examine three issues 1 the relationship between the toxic intensity of industrial production and the level of economic development 2 the impact of oecd environmental regulation on global changes in toxic intensity and 3 the relationship between trade policy and the toxic intensity of industrial production in ldc s 10 refs

do individual preferences explain the environmental kuznets curve abstract some economists maintain the optimistic view that individual preferences of rich people eventually lead to a virtuous circle relationship between rising income and environmental degradation in this article i review some of the models that establish a relationship between individual preferences and environmental quality these models provide a basis for discussion of the key role played by two factors individual preferences and technology they do not however capture the distributive conflicts that occur between different social groups in the process of defining environmental policy neither do they provide a good basis for distinguishing between environmental costs caused by the decisions of particular consumers and those which affect the same consumers this point is related to the various manners in which environmental costs are displaced displacement often occurs within a country for current costs and is even clearer and more relevant when costs are transferred across a great distance or to a remote future in such cases there are few incentives to reduce consumption or alter its composition displacement moreover can become a strategy pursued more or less consciously for maintaining high and rising levels of consumption without dealing with the associated environmental costs

interest rate policy taxation and risk abstract it is now an established orthodoxy that real interest rates should be positive raising the nominal interest rate above the rate of inflation however does not achieve a positive cost of borrowing if the interest cost of borrowing is tax deductible furthermore high rates of interest and inflation impose heavy risks on borrowers these points are illustrated with data from a sample of countries in eastern and southern africa they strengthen the case for preferring lower inflation to higher nominal interest rates as a way of making real interest rates positive

environmental kuznets curves real progress or passing the buck abstract recent research has examined the hypothesis of an environmental kuznets curve ekc the notion that environmental impact increases in the early stages of development followed by declines in the later stages these studies have focused on the relationship between per capita income and a variety of environmental indicators results imply that ekcs may exist for a number of cases however the measures of environmental impact used generally focus on production processes and reflect environmental impacts that are local in nature and for which abatement is relatively inexpensive in terms of monetary costs and or lifestyle changes significantly more consumption based measures such co2 emissions and municipal waste for which impacts are relatively easy to externalize or costly to control show no tendency to decline with increasing per capita income by considering consumption and trade patterns the author re examines the concept of the ekc and proposes the use of alternative consumption based measures of environmental impact the author speculates that what appear to be improvements in environmental quality may in reality be indicators of increased ability of consumers in wealthy nations to distance themselves from the environmental degradation associated with their consumption

can futures market data be used to understand the behavior of real interest rates this paper examines whether futures market data can be used to understand the behavior of real interest rates several ways of examining the data indicate that futures market data are not particularly informative about real interest rates not only does this evidence cast some doubt on results in previous research that make use of futures market data to draw inferences about real interest rates but it also indicates that future research on real interest rates may need to turn to a different line of attack understanding the behavior of real interest rates is a central issue in financial economics in previous research on this topic several approaches have been used to measure real interest rates in one approach real interest rates have been calculated by subtracting survey data on inflation expectations such as the livingston data from nominal interest rates the problem with survey based measures of real interest rates is that they are only as good as the survey measure of inflation expectations and there may be little incentive for the survey respondents to answer accurately an even more telling criticism of survey based measures often ignored in the literature is that the behavior of market expectations in driven by economic agents ai the margin who are eliminating unexploited profit opportunities market expectations are unlikely therefore to be well measured by the average expectations of survey respondents 2 because of doubts about survey based measures of real interest rates other

a reexamination of the role of income for the trade and environment debate recent work on the relationship between international trade and the environment has found small but negative effects of increased openness on measures of pollution for the average country on a panel of 128 countries it is shown that like previous studies the trade intensity effect is negative and significant for the average country for emissions of four localized pollutants so2 nox co and vocs however trade intensity effects are not uniform across countries of different income levels in fact a strong non monotonicity exists in trade intensity elasticities it is found that countries with relative world incomes less than 0 5 or greater than 2 5 tend to have positive trade intensity elasticities while countries with relative world incomes between 0 5 and 2 5 tend to have negative trade intensity elasticities the results imply that both factor abundance and pollution haven effects may be at work but that the dominance of one effect over the other depends on a country s level of development

the effects of different taxes on risky and risk free investment and on the cost of capital this paper analyzes the major factors which determine the effects of taxation on the value of risky assets and on the cost of capital and shows how the magnitudes and even the signs of these effects depend on the values assumed for a few key parameters in the model using plausible values for these parameters it is shown that the results obtained are frequently counter intuitive

neoclassical growth the j curve for abatement and the inverted u curve for pollution abstract this paper reexamines the neoclassical environmental growth model of forster to gain insights into the dynamic relationships among pollution abatement effort and economic development whereas the model has heretofore been used to examine steady state levels of capital consumption and environmental quality it also provides a theoretical basis for recent empirical research on j curves for abatement effort and inverted u curves for pollution

measuring welfare changes in settings with imposed quantities abstract an intuitively attractive money metric utility measure is developed which is applicable in settings where individuals receive fixed quantities of one or more goods one use of this measure is in cost benefit analyses of imposed quantity changes the approximate measures typically used are shown to be subject to relatively large approximation errors however techniques are presented which can always be used to numerically evaluate the exact welfare measure provided that one knows the uncompensated demand function s or marginal willingness to pay function s of individuals

stoking the fires co2 emissions and economic growth abstract we examine the relationship between economic development and carbon dioxide emissions a greenhouse gas central to global warming predictions estimates derived from global panel data suggest a diminishing marginal propensity to emit mpe carbon dioxide as gdp per capita rises despite this global carbon dioxide emissions growth will continue at 1 8 percent per annum for the foreseeable future a result that is not sensitive to average output growth instead emissions growth continues because output and population will grow most rapidly in lower income nations with high mpes this latter feature emphasizes the distributional consequences of policies to reduce emissions

property rights protest and the siting of hazardous waste facilities ture since that time no major hwf has been sited anywhere in the united states the epa had anticipated that local opposition would make finding these sites an exceptionally difficult task their pessimism was well founded and if anything understated according to the hazardous waste counsultant s latest state by state review the outlook for siting hwfs in the future is even more bleak than in the past due in large part to what they term a worsening of the emotional atmosphere surrounding siting efforts this failure to site any new hwf has come about in spite of assurances by government and company officials that new facilities built according to the present standards would pose negligible risks to the local residents attempts have been made to break the deadlock by instituting extensive public participation procedures establishing state siting boards with the power to overrule local decision makers and requiring facility owners to compensate local governments for safety services the latter provided in this paper we argue that the ambiguous nature of the present property rights governing the siting of hwfs is an important cause of the stalemate we offer a new approach to siting which recognizes the de facto property rights assumed by local communities we propose a political market via a referendum

money output and the expected real interest rate this paper tests the exclusion of lagged growth rates of money and output from regression equations with serially correlated disturbances for the expected real interest rate the authors empirical approach is an extension of the empirical strategies of eugene f fama 1975 and frederic s mishkin 1981 which invoke the orthogonality of the inflation forecast error to predetermined regressors under the maintained hypothesis of rational expectations they discuss the implications of their tests for simple real business cycle models copyright 1991 by mit press

a consumption based theory of the environmental kuznets curve abstract most theories about the inverted u relationship between pollution and income termed the environmental kuznets curve ekc are production side theories emphasizing pollution and abatement technologies production side theories are implicitly based on the assumption of low factor mobility and the absence of pollution as a variable in the utility function both assumptions are called into question by the empirical evidence of ekcs for i pollutants that are long lived and not easily shiftable and ii regional cross sections with free labor mobility hazardous waste sites are a prime example this paper develops a stylized model of the ekc based on perfect mobility of households and labor it represents the first attempt at developing a consumption side model of the ekc

undesirable facilities and property values a summary of empirical studies abstract undesirable land uses are expected to impose health or amenity risks on surrounding communities these risks are expected to be translated economically into negative effects on adjacent property values these negative effects may be present even when such uses possess offsetting advantages of proximity such as employment opportunities the purpose of this study is to summarize empirical studies completed to date that test whether undesirable land uses have observable negative effects on adjacent property values this information may be useful in assessing minimum valuations of terminating undesirable land uses such as clean up of hazardous sites or compensation necessary to ameliorate the economic impacts of new undesirable uses

increased ecoefficiency and gross rebound effect evidence from usa and six european countries 1960 2002 despite increased efficiency in the use of natural resources the use of these resources continues to increase in most societies this paper examines the discrepancy between the potential decrease of use of natural resources as an effect of increased efficiency and actual use during the period 1960 2002 this difference was found to grow faster in the usa than the mean for six west european countries possible reasons for this difference between the two regions are analysed to reduce the anthropogenic flows of energy and material and the consequent deleterious effects on the biosphere it will become necessary to adapt consumption to degree of efficiency in the use of natural resources based on the comparison between the two regions some economic aspects of this issue are discussed

economic growth and environmental degradation the environmental kuznets curve and sustainable development abstract in this paper we critically examine the concept of the environmental kuznets curve ekc it proposes that there is an inverted u shape relation between environmental degradation and income per capita so that eventually growth reduces the environmental impact of economic activity the concept is dependent on a model of the economy in which there is no feedback from the quality of the environment to production possibilities and in which trade has a neutral effect on environmental degradation the actual violation of these assumptions gives rise to fundamental problems in estimating the parameters of an ekc the paper identifies other econometric problems with estimates of the ekc and reviews a number of empirical studies the inference from some such ekc estimates that further development will reduce environmental degradation is dependent on the assumption that world per capita income is normally distributed when in fact median income is far below mean income we carry out simulations combining ekc estimates from the literature with world bank forecasts for economic growth for individual countries aggregating over countries to derive the global impact within the horizon of the bank s forecast 2025 global emissions of so 2 continue to increase forest loss stabilizes before the end of the period but tropical deforestation continues at a constant rate throughout the period

the determinants of atmospheric so2 concentrations reconsidering the environmental kuznets curve this analysis explores the effects of income and the spatial intensity of economic activity on the atmospheric concentration of sulfur dioxide the results indicate that there is a u shaped relation between income and atmospheric concentration of so2 and an inverted u shaped relation between the spatial intensity of economic activity and so2 concentrations these results suggest that the spatial intensity of economic activity rather than income provides the impetus for policies and technologies that reduce so2 emissions based on this result the atmospheric concentration of so2 in developing nations may decline faster than indicated by previous analyses the potential for this decline depends on the rate at which income grows relative to population the trade off between the effects of income gains and the spatial intensity of economic activity on the atmospheric concentration of so2 is consistent with the notion that some environmental problems can be ameliorated by slowing population growth and increasing income levels

contingent credibility the impact of investment treaty violations on foreign direct investment during the past few decades governments have signed nearly 2 700 bilateral investment treaties bits with one another in an attempt to attract greater levels of foreign direct investment fdi by signing bits which contain strong enforcement provisions investment seeking governments are thought to more credibly commit to protecting whatever fdi they receive which in turn should lead to increased confidence among investors and ultimately greater fdi inflows our unique argument is that the ability of bits to increase fdi is contingent on the subsequent good behavior of the governments who sign them bits should increase fdi only if governments actually follow through on their bit commitments that is if they comply with the treaties bits allow investors to pursue alleged treaty violations through arbitration venues like the international centre for the settlement of investment disputes icsid a heavily utilized and widely observed arbitral institution that is part of the world bank being taken before icsid then conveys negative information about a host country s behavior to the broader investment community which could result in a sizeable loss of future fdi into that country we test these contingent effects of bits using cross sectional time series analyses on all non oecd countries during a period spanning 1984 2007 we find that bits do increase fdi into countries that sign them but only if those countries are not subsequently challenged before icsid on the other hand governments suffer notable losses of fdi when they are taken before icsid and suffer even greater losses when they lose an icsid dispute

the interaction of population growth and environmental quality an important question for policy is whether holding constant per capita income and other relevant factors population pressures have a significant effect upon environmental degradation the authors examine the effect of population pressures upon deforestation in 64 developing countries in an attempt to provide relevant empirical findings data on deforestation were drawn from the food and agriculture organizations production yearbook results suggest that a relationship exists between per capita income and deforestation and that for africa rural population density shifts the relationship upward the increase in the rate of deforestation levels off as income increases the rate of growth in per capita income also has a significant negative impact upon deforestation although the magnitude of the effect is small the authors close in stressing that reducing the rate of population growth is not necessarily the best way to reduce the rate of deforestation deforestation in developing countries is really a problem of market failure since property rights are often neither defined nor enforced there is essentially no private cost of deforestation with no long term stake in the land people have no incentive to use land efficiently this situation must be addressed in conjunction with the problems of poverty and population growth

government deficits capital flows and interest rates 1988 government deficits capital flows and interest rates applied economics vol 20 no 6 pp 753 765

a study of economists consensus forecasts this study examines the ability of economists to forecast ten major economic series the data for this study were provided by j a livingston of the philadelphia inquirer who since 1947 has collected forecasts for the upcoming 6 and 12 months the results reveal that in general for the period from 1947 through 1978 the economists in livingston s sample did not produce efficient forecasts and were not able to outperform simple statistical models it should be noted however that a substantial and consistent improvement in forecasting performance by economists in livingston s sample did occur over this same period these results contain important information for managers who use macro economic consensus forecasts

environment and development theory and international evidence the environmental effects of economic development have significant implications for a wide array of policy questions facing both low and high income countries today internationally agricultural research centers are considering how to incorporate sustainability issues into their research agendas while international lending institutions are taking a close look at the environmental consequences of industrial projects domestically the north american free trade agreement has brought the relationship between economic development and environmental quality to the forefront of u s public policy debate it is surprising that despite the postwar growth of development economics the genesis of environmental economics and the fusion of ideas from both fields into the theme of sustainable development economists have not made much progress in describing the impacts of long term economic growth on environmental quality yet a vigorous public debate has arisen between individuals who maintain that environmental degradation is a necessary outcome of economic growth and those who believe that economic growth and environmental quality go hand in hand this debate was highlighted at the 1992 united nations conference on environment and development in rio de janeiro in part this debate hinges on the properties of the aggregate demand for and supply of environmental quality if the income elasticity of demand for environmental quality or amenities is high then the increased prosperity engendered by economic growth could lead to significantly higher demand for environmental quality proponents of economic growth believe this demand will translate into a higher realized level of quality as both public and private institutions and organi

introduction the global economy fdi and the regime for investment the world economy has maintained or enhanced its integration in the past decade even in the face of the global financial crisis a large part of this globalization has been driven by capital flows this symposium focuses on one element of these capital flows foreign direct investment fdi and on the regime in place to safeguard and promote such investments around the globe the articles by allee and peinhardt and simmons focus on the nature and evolution of the bilateral investment treaties bits that have been developed to protect such investments and that have proliferated since the 1990s the final article by buthe and milner turns its attention to the ways in which international trade agreements affect fdi the comparison between the investment and trade agreements is instructive since they seem to have different effects fdi has become one of the most important economic flows in the global economy it is a critical source of capital for developing countries and remains a significant source of investment in the developed world fdi has grown in part because countries changed their policies toward it dramatically after the 1980s governments in developing countries made unilateral policy changes that opened up markets across the globe and increased competition among countries for fdi

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

new estimates of quality of life in urban areas implicit markets capture compensation for intraurban and interregional differe nces in amenities and yield differences in housing prices and wages these pecuniary differences become preference based weights in a qual ity of life index hedonic equations are estimated using microdata fr om the 1980 census and assembled county based amenity data on climati c environmental and urban conditions ranking of 253 urban counties reveals substantial variation within as well as among the 185 urba n areas the quality of life differences across counties within one s msa is almost one half of the difference between the top and bottom ranked counties in the nation copyright 1988 by american economic association

the diffusion of regime contention in european democratization 1830 1940 this article goes beyond the established literature s focus on domestic conditions by examining the impact of external impulses on european democratization from 1830 to 1940 specifically it analyzes the diffusion of regime conflict that arose from the cross national spread of situational judgments about the feasibility of political change striking precedents of regime collapse such as the overthrow of french kings in 1830 and 1848 tended to produce dramatic waves of political contention across europe but because the actual distribution of power in polities that experienced such externally stimulated episodes of regime contention often differed from the front runner these conflicts produced various types of results the article distinguishes four outcomes of diffusion namely a successful replication b preemptive reform c abortive replication and d blockage of replication efforts the latter two outcomes help explain why in european history not only did political liberalism and democracy

when the claim hits bilateral investment treaties and bounded rational learning using the international investment regime as its point of departure the article applies notions of bounded rationality to the study of economic diplomacy through a multimethod approach it shows that developing countries often ignored the risks of bilateral investment treaties bit s until they themselves became subject to an investment treaty claim thus the behavior of developing country governments with regard to the international investment regime is consistent with that routinely observed for individuals in experiments and field studies they tend to ignore high impact low probability risks if they cannot bring specific vivid instances to mind

economic growth trade and energy implications for the environmental kuznets curve abstract the environmental kuznets curve ekc hypothesis asserts that pollution follows an inverted u path with respect to economic growth the ekc has been explained in terms of structural changes in the composition of economic output and increased environmental regulation at higher income levels while some authors have incorporated the impact of trade policy orientation on the ekc the impact of the actual movement between countries of goods that embody pollution has not been considered this paper attempts to econometrically quantify the effect using pooled cross country and time series data the ekc hypothesis is examined with respect to commercial energy consumption the source of many serious environmental problems it was found that while both industrializing and industrialized countries have added to their energy requirements by exporting manufactured goods the growth has been substantially higher in the former at the same time industrialized countries have been able to reduce their energy requirements by importing manufactured goods exports of manufactured goods by industrialized countries has thus been an important factor in generating the upward sloping portion of the ekc and imports by industrialized countries have contributed to the downward slope

learning from others the diffusion of hospital financing reforms in oecd countries the increase in health care expenditures is a major problem of all welfare states to counter this trend since the early 1980s most oecd countries have changed the way hospitals are financed although these reforms are certainly linked to country specific factors the authors main argument is that they are in part due to a diffusion process policy change in one country is influenced by previous changes in other countries more specifically the authors argue that policy makers learn from the experience of others using an original data set and event history methods to test arguments their results show that policy change is more likely when the existing policy is ineffective and when the experience of other countries suggests that the reform leads to the desired results in addition the authors find that the effects of learning grow over time and that early adopters tend to be countries with few veto players

are tax effects important in the long run fisher relationship evidence from the municipal bond market are nominal bonds appropriately discounted for taxes empirical estimnates of the response of nominal interest rates to changes in inflation the fisher effect have failed to produce a definitive answer four reasons have been put forward as possible explanations i tobin effects ii fiscal illusion iii peso problems and iv different estimators utilizing data on taxable and tax exempt bond interest rates and several different estimators we find that the fisher effect estimates are always larger for the taxable bond relative to the tax exempt bond suggesting that fiscal illusion and different estimators cannot account for the previous results how economic agents respond to the tax burdens of assets with different tax treatment is an important issue at both the level of the individual micro and the aggregate economy macro one clear source of evidence would appear to be the market for high quality debt trading in both taxable and tax exempt debt occurs on a daily basis the response of the rates of return on taxable and tax exempt debt to changes in expected inflation are described by the fisher relationship the fisher relationship is one of the oldest equilibrium relationships in financial economics fisher s original proposition was that if the real rate of interest is relatively constant over time a fully perceived change in the purchasing power of money as proxied by the inverse of the rate of inflation would be accompanied by a proportional increase in the nominal interest rate darby 1975 points out that when nominal interest income is taxed as are interest payments on u s treasury bills the fisher relationship implies a response from nominal interest rates that is greater than the change in expected inflation in order to maintain the constant ex ante real interest rate summers 1983 suggests that given average marginal tax rates in the united states the appropriate value of the fisher effect is 1 3 to 1 5 for tax exempt bonds the original fisher specification should be a good approximation implying a fisher effect close to unity in a seminal paper fama 1975 presents evidence to support the hypothesis that changes in nominal

what fisher knew about his relation we sometimes forget abstract expected consumption growth increases the real interest rate as one tries to smooth consumption over time we demonstrate that placing it in the fisher relation 1 is consistent with the euler equation governing the purchase of nominal bonds 2 explains observed procyclicality of the real interest rate 3 is supported empirically and 4 provides an alternative method for estimating the consumer s degree of relative risk aversion

internal migration and the environmental kuznets curve for us hazardous waste sites abstract in the recent special issue of ecological economics devoted to the environmental kuznets curve ekc hypothesis rothman speculates that what appear to be improvements in environmental quality may in reality be indicators of increased ability of consumers in wealthy nations to distance themselves from the environmental degradation associated with their consumption rothman d 1998 environmental kuznets curves real progress or passing the buck a case for consumption based approaches ecol econ 25 178 consistent with rothman s general hypothesis of distancing as a possible source of ekc results this empirical study advances and tests a line of argument in which internal migration plays a central explanatory role for an observed ekc for us hazardous waste sites two specific hypotheses tested are i proximity to hazardous waste site build up emerges as a factor in the migration decisions of individuals as per capita income increases beyond a threshold level and ii the level of income at which the ekc turns downwards is equal to the threshold level of income in i results provide evidence that migration is a contributing factor to the observed ekc

competing for capital the diffusion of bilateral investment treaties 1960 2000 over the past forty five years bilateral investment treaties bits have become the most important international legal mechanism for the encouragement and governance of foreign direct investment the proliferation of bits during the past two decades in particular has been phenomenal these intergovernmental treaties typically grant extensive rights to foreign investors including protection of contractual rights and the right to international arbitration in the event of an investment dispute how can we explain the widespread adoption of bits we argue that the spread of bits is driven by international competition among potential host countries typically developing countries for foreign direct investment we propose a set of hypotheses that derive from such an explanation and develop a set of empirical tests that rely on network measures of economic competition as well as more indirect evidence of competitive pressures on the host to sign bits the evidence suggests that potential hosts are more likely to sign bits when their competitors have done so we find some evidence that coercion and learning play a role but less support for cultural explanations based on emulation our main finding is that the diffusion of bits is associated with competitive economic pressures among developing countries to capture a share of foreign investment we are agnostic at this point about the benefits of this competition for development for useful comments on earlier drafts of this article we thank bill bernhard bear braumoeller frank dobbin robert franzese jeffry frieden geoffrey garrett tom ginsburg jude hays lisa martin bob pahre mark ramsayer steven ratner susan rose ackerman and john sides for research assistance we thank elizabeth burden raechel groom and alexander noonan

trade spatial separation and the environment we develop a simple two sector dynamic model to show how pollution can provide a motive for trade by spatially separating incompatible industries we assume that the production of smokestack manufactures generates pollution which lowers the prod uctivity of an environmentally sensitive sector farming two identical unregulated countries will gain from trade if the share of world income spent on smokestack goods is high in contrast when the share of world income spent on the dirty good is low trade can usher in a negatively reinforcing process of environmental degradation and real income loss for the exporter of smokestack goods 1999 elsevier science b v all rights reserved

municipal waste kuznets curves evidence on socio economic drivers and policy effectiveness from the eu waste generation and waste disposal are becoming increasingly prominent in the environmental arena from a policy perspective and in the context of delinking analysis in general waste generation is still increasing proportionally with income and economic and environmental costs associated to landfilling are also increasing this paper provides a comprehensive analysis of waste generation incineration and landfill dynamics based on panel data for the eu25 to assess the effects of different drivers economic structural policy and the eventual differences between western and eastern eu countries we show that for waste generation there is still no waste kuznets curve wkc trend although elasticity to income drivers appears lower than in the past landfill and other policy effects do not seem to provide backward incentives for waste prevention and in terms of landfill and incineration as expected they are respectively decreasing and increasing with policy acting as a strong driver eastern countries appear to be performing generally quite well thus benefiting from eu membership and related policies in terms of environmental performance we can conclude that although absolute delinking is far from being achieved for waste generation there are some first positive signs of an increasing relative delinking for waste generation and robust landfill diversion and varying evidence of a significant role of the eu waste policies implemented in the late 1990s and early 2000s our evidence suggests that if while landfill diversion is currently associated to a delinking partly explained by eu policies waste prevention must be the next objective of waste regulation efforts

more flexible use of survey data on expectations in macroeconomic models a flexible procedure is proposed whereby both the random and systematic errors in measurement of survey data on inflation expectations can be appropriately handled when these surveys are used in the estimation of macroeconomic models during the period 1952 1980 livingston s two expectations series and the src series systematically underestimated inflation expectations by nearly 25 the asa nber survey however does not exhibit such underestimation thus the use of the livingston or src data as an unbiased measure of the true expectations of inflation would result in overestimation of the fisher effect and the ex ante real interest rate

government borrowing and tax adjusted real and nominal interest rates the purpose of this paper is to test for the effect of federal government budget deficits on one year tax adjusted nominal and real interest rates in an is lm as model the results suggest that the specification of the dependent variable is a crucial issue in the debate over the linkage between deficits and interest rates the evidence shows a positive and significant effect of various measures of the federal government deficit and debt on the real tax adjusted treasury bill rate in both the levels and the first differenced equations but not on the nominal tax adjusted rate the positive and significant deficit debt coefficients are also confirmed when the first differenced equation is estimated by instrumental variables and when the equation is estimated over various time periods thus there is robust evidence of a positive linkage between federal government borrowing and the tax adjusted real but not nominal interest rates

taxation and inflation a new explanation for capital flows abstract in a world of mobile capital the current system of taxation implies that the after tax cost of capital and return to saving in each country are negatively correlated with the rate of inflation thus a country s net foreign asset position ought to be negatively correlated with its long run inflation rate the magnitude of these effects is shown to be potentially large for oecd countries cross section and time series regressions confirm that inflation rates are good predictors of net foreign assets the existing distribution of net foreign assets may therefore largely reflect tax distortions

income inequality and the development of environmental technologies within rich countries a large dispersion in the capacity of generating environmental innovations appears correlated to the level of inequality previous works analyze the relationship between inequality and environmental quality in a static setting this paper builds a dynamic model more suitable to analyze technological externalities driven by the emergence of a new demand for green products under fairly general assumptions on technology and preferences we show that 1 the relationship between inequality and environmental innovation is highly non linear and crucially depends on per capita income 2 an excessive inequality harms the development of environmental technologies especially in rich countries key to our results is the fact that externalities generated by pioneer consumers of green products benefit the entire population only for relatively low income distances the empirical analysis robustly confirms our theoretical results that is whereas for rich countries inequality negatively affects the diffusion of innovations per capita income is paramount in poorer ones

expected inflation and interest rates reply vito tanzi s comment on my earlier study 1982 is based upon his belief that the mundell effect alone could not likely account for the ex ante negative real rates observed in his simulations his suggestion is that perhaps a mundell effect together with a fiscal illusion provides the best explanation p 502 nowhere did i argue that the mundell effect was all encompassing the nominal interest rate is determined by many factors besides expected inflation x my reducedform nominal interest rate equation includes inflation uncertainty the current and lagged money stock and the lagged price level as well as expected inflation as arguments thus at any point in time the nominal rate will shift with a movement in any of these variables one way of looking at this is that holding s constant i will vary with the other predetermined variables so that the real rate changes since tanzi and previous researchers have used partial equilibrium analysis to highlight the relation between 1t and i we tend to forget that the level of the real rate depends upon all the predetermined variables of the system to concentrate on the partial derivative of i with respect to sr we must take as given some initial i holding constant the other factors influencing i tanzi s simulations set the real rate of interest r initially equal to 03 then by assuming different values for di d7r and v he generates implied values for the after tax real interest rate r since the after tax real rate turns negative at quite low rates of 7r tanzi concludes that fiscal illusion is present as interest rates did not adjust for the effect of taxes p 502 the simple fact that the after tax real rate turns negative need imply nothing regarding whether or not investors are cognizant of taxes there is nothing inherently unusual about negative real rates of interest in the short run during inflationary periods clearly if money can be costlessly stored the nominal rate of interest cannot be negative but this in no way rules out negative real rates in a world of incomplete markets there may be inflationary periods when a negative real rate of interest is the best that optimizing agents can earn if there was a suitable asset available that guaranteed a zero return we would not expect to observe ex ante negative real rates benjamin friedman 1980 emphasizes the limited nature of portfolio substitution possibilities by arguing that if holding goods was a feasible portfolio alternative then the expected rate of inflation could be viewed as simply the return from holding such real assets in such a case higher expected inflation would reduce the lenders supply of loans directly via portfolio substitutions from loans bonds to real goods the problem with this scenario as stated by friedman is in practice however the available opportunities for such portfolio substitutions involving consumption or other real commodities are usually extremely limited purchasing the consumer price index basket of goods is not a feasible portfolio alternative p 34 the lack of such a real asset allows market instruments to offer a negative yield of course with no inflation and costless storage one could hold money so that we don t expect to observe negative rates in noninflationary periods frederic mishkin provides corroborating evidence in this area as he finds the real rate whether adjusted or unadjusted for taxes is negatively correlated with inflation 1981 p 191 emphasis added and the real interest rate appears to have been positive in the 1950s and 1960s but has since turned negative in the midand late 1970s p 192 regarding tanzi s simulations i do not believe that they correctly assess the path of the real rate following an exogenous change in inflationary expectations nw a major theme of my earlier paper was the emphasis arizona state university i thank don schlagenhauf john schroeter and richard l smith for helpful discussions

does inflation affect real behavior the case of housing an important tradition in economics is to assume that demand depends upon relative prices and is homogenous of degree zero for the most part this has been interpreted as meaning inflation changes in the price level leaves demand unchanged recent work by a number of economists has challenged this position for the case of housing demand two arguments have been made that inflation acting in concert with existing institutions alters the quantity of housing demanded and the decision to rent or own a house the first argument states that inflation and the standard fixed payment mortgage combine to reduce the size of the mortgage loan a household can obtain for the purpose of buying a home this works to reduce the quantity of owner occupied housing demanded given the importance of mortgage finance to the demand for owner occupied housing the second argument focuses on the inflation adjusted after tax cost of owner occupied housing it simply states that an increase in the rate of anticipated inflation of the general price level reduces the after tax cost of housing thus increasing the demand for housing and the demand for homeownership there has been little empirical testing of these two arguments the purpose of this paper is to formulate and estimate a model which will give an indication of the quantitative significance of the two arguments a housing demand equation and a tenure choice equation own versus rent are estimated using a sample of about 6000 households from the 1975 annual housing survey 10 the estimates suggest that inflation dampens housing demand and homeownership opportunity for most households even though the inflation adjusted after tax cost of owner occupied housing declines as inflation heats up the paper consists of six sections including the introduction section two examines the ways inflation affects housing choices in more detail the third section contains the specification of the econometric model that forms the basis of the study section four is a discussion of econometric problems and the data used the results of the estimates are discussed in the fifth section the paper concludes with a presentation of the major conclusions and policy implications of the study

paying for permanence an economic analysis of epa s cleanup decisions at superfund sites we analyze epa s cleanup decisions at over 100 superfund sites and examine whether and how epa trades off the cost against the permanence of cleanup epa s decisions reveal both a preference for permanent solutions and an aversion to cost for example epa prefers incinerating soils to isolating and containing them in place but not at any price at larger sites epa appears willing to accept additional costs of as much as 40 million to incinerate with regard to environmental equity we find little evidence that epa s cost permanence tradeoff is affected by socioeconomic characteristics in the communities surrounding the sites

income inequality and pollution a reassessment of the environmental kuznets curve abstract improvements in some measures of air and water quality can accompany rising per capita income as illustrated by the so called environmental kuznets curve for pollution variables which show such a relationship we hypothesize that a more equitable distribution of power contributes to these outcomes by enhancing the influence on policy of those who bear the costs of pollution relative to the influence of those who benefit from pollution generating activities an empirical analysis of international variations in seven indicators of air and water quality supports this hypothesis literacy political rights and civil liberties are found to have particularly strong effects on environmental quality in low income countries

politics and social costs estimating the impact of collective action on hazardous waste facilities firms that generate negative externalities may consider the effects of their location on the surrounding environment because of the right of their prospective neighbors to demand compensation for pollution and raise the transaction costs of location since communities vary both in the value individuals place on the environment and in the ability of residents to organize politically locations that generate the least political opposition may not be the locations that result in the lowest externalities this article tests whether the degree to which firms internalize their externalities depends on the ability of affected communities to engage in collective action the results indicate that firms processing hazardous waste when deciding where to expand capacity do take into account variations in the potential for collective action to raise their costs

an empirical study of income growth and manufacturing industry pollution in new england 1980 1990 abstract this paper is an empirical examination of how a community s income growth is affected by polluting manufacturing activity the hypothesis i test is that this activity has two conflicting effects first industrial investment encourages economic growth through the creation of employment and other positive economic spillover effects and second the associated pollution causes out migration of residents i hypothesize that a community that is initially relatively wealthy will experience relatively more out migration of its higher income residents who are assumed to have a lower tolerance for pollution thus such communities will grow less in response to such investment compared to its poorer neighbors therefore in my econometric model the marginal effect of pollution on income growth is allowed to vary with initial incomes i use a unique data set that incorporates toxics release inventory tri and census tract level data for new england for the years 1980 and 1990 the estimated effect of pollution on growth is negative on average and is more negative in initial incomes in an effort to measure the out migration effects of pollution i use a separate measure of toxic pollution i find that holding constant total pollution toxic pollution has a more negative effect on growth for wealthier communities these results are consistent with the above hypotheses

taking the u out of kuznets a comprehensive analysis of the ekc and environmental degradation unlike most environmental kuznets curve ekc studies which focus on narrow measures of pollution as proxies for environmental quality we test the validity of the ekc using the ecological footprint ef a more comprehensive measure of environmental degradation we find no empirical evidence of an ekc relationship between the ef and economic development and only limited support for such a relationship among the components of the ef in addition we discover that energy is largely responsible for the lack of an ekc relationship and that energy consumption levels would have to be cut by over 50 in order for a statistically significant ekc relationship to emerge from the data overall these results suggest that growth alone will not lead to sustainable development

the environmental kuznets curve does one size fit all abstract this paper uses a new panel data set on state level sulfur dioxide and nitrogen oxide emissions from 1929 1994 to test the appropriateness of the one size fits all reduced form regression approach commonly used in the environmental kuznets curve literature empirical results provide initial evidence that an inverted u shape characterizes the relationship between per capita emissions and per capita incomes at the state level parameter estimates suggest however that previous studies which restrict cross sections to undergo identical experiences over time may be presenting statistically biased results

an overlapping generations model of growth and the environment this article analyzes the potential conflict between economic growth and the maintenance of environmental quality in an overlapping generations model short lived individuals make decisions which have long lasting effects on both factor productivity and the environment the model provides a theoretical explanation of observed correlations between environmental quality and income whereby economic growth is associated first with declines then improvements in environmental quality it suggests circumstances in which multiple pareto ranked steady state equilibria may arise and in which sustained growth of both capital and environmental quality may occur overmaintenance of the environment analogous to dynamically inefficient overaccumulation of capital may emerge copyright 1994 by royal economic society

the effects of inflation and income taxes on interest rates some new evidence this paper reexamines the empirical relation between inflation and interest rates concentrating on the tax effect proposed by darby and feldstein using the random walk intercept model relative responses of taxable yields and tax exempt yields to expected infla tion are estimated the results show that for the sample period 1953 1982 the nominal yields on treasury bills rise at a rate greater than one for one with expected inflation while the nominal yields on default free municipal bonds rise approximately one for one with expected inflation thus the tax adjusted fisher hypothesis by darby and feldstein is empirically supported the components of treasury bills are also extracted and their variances are compared it is shown that variation of expected inflation is not overwhelmingly larger than that of the after tax real rate therefore on an after tax basis changes in the real rate explain a substantial portion of changes in the nominal rate of interest

evidence of the fisher effect from u k indexed bonds newly available data from the u k market for indexed securities are used to test the fisher hypothesis for monthly observations of interest rates at 14 maturities the hypothesis that the after tax nominal interest rate is a constant plus anticipated inflation proves to be a reasonable approximation of reality for longer maturities the coefficients on the expected rate of inflation are approximately equal to one the mundell tobin effect is in evidence for shorter maturities the inverted fisher effect is in evidence for shorter maturities the inverted fisher effect is decisively rejected the evidence suggests that past difficulties encountered in trying to prove the fisher effect have been due to the lack of a direct measure of inflation expectations and real interest rates copyright 1992 by mit press

preferences technology and the environment understanding the environmental kuznets curve hypothesis we derive a simple expression for the income pollution path using the standard static model of the environmental kuznets curve ekc this expression makes it straightforward to identify the general characteristics of utility and pollution functions that lead to such a curve we show that suitable preferences can always lead to an ekc while there is no technology that yields an ekc for all types of preferences and we derive a sufficient condition for technology that leads to an ekc for almost all types of preferences our results hold for a model with multiple goods with different pollution intensities and for a production economy with nonconstant relative price of consumption and environmental effort we derive our results without assuming specific functional forms and we encompass several other models as special cases