the political economy of clientelism in this paper we argue that the political commitment problem provides an explanation for why much income redistribution takes an inefficient form particularly employment in the public sector a job is a credible way of redistributing when it provides rents such as in situations with moral hazard and employment is optimal ex post moreover a job is selective and reversible and thus ties the continuation utility of a voter to the political success of a particular politician we show that the need to make offers of employment incentive compatible leads to inefficiencies in the supply of public goods we also show that such inefficient redistribution becomes relatively attractive in situations with high inequality and low productivity inefficiency is increased when the stakes from politics are high when inequality is high and when money matters less than ideology in politics

drivers and inhibitors of renewable energy a qualitative and quantitative study of the caribbean abstract we explore the factors that affect the development of renewable energy in the caribbean the caribbean region can serve as a laboratory in studying the institutional issues relating to energy development due to the differences in political jurisdictions over a short distance based on 12 case studies and 75 in depth interviews with a variety of stakeholders we identified five factors that appear to be critical for the development of renewable energy in the caribbean entrepreneurship attitudes the role of local champions the electric utility influence informal institutions and the influence of international agencies we built a multiple regression model to test these relationships through a survey of 34 political jurisdictions in the caribbean the statistical analysis we conducted suggests that informal institutions have a significant impact on the extent of renewable energy development while the incumbent electricity utilities influence may impede the development of renewable energy based on these findings we provide recommendations on how best to make use of these factors identified in order to develop effective energy policies throughout the caribbean

behavioural development economics lessons from field labs in the developing world abstract explanations of poverty growth and development depend on the assumptions made about individual preferences and the willingness to engage in strategic behaviour economic experiments especially those conducted in the field have begun to paint a picture of economic agents in developing communities that is at variance with the traditional portrait we review this growing literature with an eye towards preference related experiments conducted in the field we also offer lessons on what development economists might learn from experiments we conclude by sharing our thoughts on how to conduct experiments in the field and then offer a few ideas for future research

it s not just the thought that counts an experimental study on the hidden cost of giving receiving a gift can create an impulse to reciprocate even when doing so may be inefficient and potentially harmful to a third party this paper provides a theoretical framework for a pure gift effect on reciprocity impulses and experimental evidence that such an effect exists that is a gift receiver will favor an actual gift giver over an intended gift giver even if the intended gift giver incurred the same costs and signaled the same intention to give this result contrasts with the predictions of existing theories on social preferences we also show that the pure gift effect is present even when it leads to a less efficient outcome or when the gift is given without the expectation of future returns our findings suggest that when reciprocating a gift becomes socially inefficient it may be more advantageous to guard against gift receiving or to keep donations secret than to try to control the intent to give

buying votes vs supplying public services political incentives to under invest in pro poor policies this paper uses unique survey data to provide for the first time in the literature direct evidence that vote buying in poor economies is associated with lower provision of public services that disproportionately benefit the poor various features of the data and the institutional context allow the interpretation of this correlation as the equilibrium policy consequence of clientelist politics ruling out alternate explanations such as for example poverty driving both vote buying and health outcomes the data come from the philippines a country context that allows for measuring vote buying during elections and services delivered by the administrative unit controlled by winners of those elections the data reveal a significant robust negative correlation between vote buying and the delivery of primary health services in places where households report more vote buying government records show that municipalities invest less in basic health services for mothers and children and quite strikingly as a summary measure of weak service delivery performance a higher percentage of children are severely under weight

imperfect information and the business cycle imperfect information has played a prominent role in modern business cycle theory this paper assesses its importance by estimating the new keynesian nk model under alternative informational assumptions one version focuses on confusion between temporary and persistent disturbances another on unobserved variation in the inflation target of the central bank a third on persistent mis perceptions of the state of the economy measurement error and a fourth assumes perfect information the standard nk dsge version imperfect information is found to contain considerable explanatory power for business fluctuations signal extraction seems to provide a conceptually satisfactory empirically plausible and quantitatively important business cycle mechanism

the quantitative analytics of the basic neomonetarist model this paper constructs a dynamic macroeconomic model with less than perfect price flexibility which has a classical side consistent with real business cycle theory augmented by investment adjustment costs increasing returns to scale and a new flexible formalization of imperfect competition something akin to the classical dichotomy is justified by a mode of approximation appropriate for a model in which one state variable adjusts quickly while another state variable adjusts slowly even with investment adjustment costs monetary expansions are found to raise the real interest rate the determinants of real rigidity and the macroeconomic rate of price adjustment are investigated copyright 1995 by ohio state university press

withering government spending multipliers the empirical literature has documented a weakening of the consumption and output responses to an increase in government spending during the last thirty years we show that a new keynesian model in which real government spending is observed with measurement errors can account for the reduction in the size of government spending multipliers the model implies consistent with empirical evidence presented by ilzeki et al 2009 that the evolution of monetary policy and greater globalization increasing international trade and decreasing capital controls are key factors in this development

you owe me in many cultures and industries gifts are given in order to influence the recipient often at the expense of a third party examples include business gifts of firms and lobbyists in a series of experiments we show that even without incentive or informational effects small gifts strongly influence the recipient s behavior in favor of the gift giver in particular when a third party bears the cost subjects are well aware that the gift is given to influence their behavior but reciprocate nevertheless withholding the gift triggers a strong negative response these findings are inconsistent with the most prominent models of social preferences we propose an extension of existing theories to capture the observed behavior by endogenizing the reference group to whom social preferences are applied we also show that disclosure and size limits are not effective in reducing the effect of gifts consistent with our model financial incentives ameliorate the effect of the gift but backfire when available but not provided

monetary information and monetary neutrality abstract the monetary theory of business fluctuations in market clearing models constructed under the rational expectations assumption as advanced by lucas and others involves the idea that suppliers and demanders will typically misinterpret movements in the general level of prices as representing more or less favorable relative opportunities for real activities the present paper examines the consequences of agents possessing contemporaneous monetary information of a potentially noisy variety for the non neutrality of unanticipated monetary events within such an equilibrium business cycle model this modification of the information structure has the strong testable implication that real activity will be uncorrelated with contemporaneous monetary data

is there reciprocity in a reciprocal exchange economy evidence of gendered norms from a slum in nairobi kenya norms of reciprocity help enforce cooperative agreements in bilateral sequential exchange we examine the norms that apply in a reciprocal exchange economy in our one shot investment game in a nairobi slum people adhered to the norm of balanced reciprocity which obligates quid pro quo returns for any level of trust the norm is gendered with people more likely to comply when confronted with women rather than men and differs from conditional reciprocity prevalent in developed countries according to which greater trust is rewarded with proportionally larger returns balanced reciprocity produces less trust and trustworthiness and smaller gains from trade than conditional reciprocity jel c72 c91

winds of change how high wind penetrations will affect investment incentives in the gb electricity sector abstract wind power is widely expected to expand rapidly in britain over the next decade large amounts of variable wind power on the system will increase market risks with prices more volatile and load factors for conventional thermal plant lower and more uncertain this extra market risk may discourage investment in generation capacity financial viability for thermal plant will be increasingly dependent on price spikes during periods of low wind increased price risk will also make investment in other forms of low carbon generation e g nuclear power more challenging a number of policies can reduce the extent to which generators are exposed to market risks and encourage investment however market risks play a fundamental role in shaping efficient investment and dispatch patterns in a liberalised market therefore measures to improve price signals and market functioning such as a stronger carbon price and developing more responsive demand are desirable however the scale of the investment challenge and increased risk mean targeted measures to reduce although not eliminate risk exposure such as capacity mechanisms and fixed price schemes may have increasing merit the challenge for policy is to strike the right balance between market and planned approaches

testing for indeterminacy an application to u s monetary policy reply this paper considers a prototypical new keynesian model in which the equilibrium is undetermined if monetary policy is passive the likelihood based estimation of dynamic equilibrium models is extended to allow for indeterminacies and sunspot fluctuations we construct posterior weights for the determinacy and indeterminacy region of the parameter space and estimates for the propagation of fundamental and sunspot shocks according to the estimated model u s monetary policy post 1982 is consistent with determinacy whereas the pre volcker policy is not we find that before 1979 indeterminacy substantially altered the propagation of shocks

what matters and what does not in households decision to invest in malaria prevention this paper examines the take up of a new malaria control device by rural households in kenya and tests whether the demand curve for the device varies with the framing of marketing messages and with the gender of the person targeted by the marketing previous research suggests that the demand for malaria prevention is highly price sensitive jessica cohen and dupas 2008 even though the private returns to preventing malaria are very large christian lengeler 2004 in the standard model of investment in human capital individuals invest in a health product if the expected benefits from the product outweigh its costs michael grossman 1972 in this framework the low take up observed at relatively moderate prices by cohen and dupas 2008 could be due to people underestimating the expected benefits of investing in prevention or due to people being credit constrained and unable to pay the cost up front it is also possible that the standard model does not apply because people have time inconsistent preferences or because they are uncertain about their own preferences and rely on external cues to resolve their own uncertainty when they need to make a decision an extensive literature in psychology and marketing suggests that decision making can be affected by frames or cues that do not add information about a product but can be effective at persuading individuals to invest in it for example in a recent field experiment in south africa marianne bertrand et al 2008 found what matters and what does not in households decision to invest in malaria prevention

voting technology political responsiveness and infant health evidence from brazil this paper studies the introduction of electronic voting technology in brazilian elections estimates exploiting a regression discontinuity design indicate that electronic voting reduced residual error ridden and uncounted votes and promoted a large de facto enfranchisement of mainly less educated citizens estimates exploiting the unique pattern of the technology s phase in across states over time suggest that as predicted by political economy models it shifted government spending toward health care which is particularly beneficial to the poor positive effects on both the utilization of health services prenatal visits and newborn health low weight births are also found for less educated mothers but not for the more educated

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

are renewable energy subsidies effective evidence from europe abstract we test if policy support for renewable electricity have been effective in promoting renewables in the five largest european countries in the period 2000 2010 we collect data on the exact amount of monetary incentives and the average tariffs granted the econometric analysis reveals a positive correlation between subsidies and the production of incentivized energy as well as the installed capacity we find that a 1 1c increase in the incentive tariff leads to an increase in renewable generation of 0 4 1 18 26 feed in tariffs appear to outperform tradable green certificates overall the analysis shows that these policies have been effective in promoting renewable energy both in the short and in the long run

decentralizing antipoverty program delivery in developing countries we study the effects on accountability in government service delivery of decentralizing administration of an antipoverty program while governments at both central and local levels are vulnerable to antipoor policy biases owing to political capture centralized delivery systems are additionally prone to bureaucratic corruption owing to problems in monitoring bureaucratic performance decentralizing the delivery system promotes cost effectiveness and improves intraregional targeting at low program scales but interregional targeting may deteriorate as central grants to high poverty regions shrink owing to high capture of local governments by local elites in such regions

politician family networks and electoral outcomes evidence from the philippines we demonstrate the electoral importance of politician family networks and provide evidence of the mechanisms behind the relationship we use a 20 million person dataset allowing us to reconstruct intermarriage networks for over 15 000 villages in 709 municipalities in the philippines we show that politicians are disproportionately drawn from more central families and that controlling for candidate fixed e ects candidates receive a higher vote share in villages where their families are more central we present evidence that centrality confers organizational and logistical advantages that facilitate clientelistic transactions such as vote buying and do not operate through popularity name recognition or through the choice of policies more aligned with their constituents preferences

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

the quest for prosperity without inflation abstract in recent years activist monetary policy rules responding to inflation and the level of economic activity have been advanced as a means of achieving effective output stabilization without inflation advocates of such policies suggest that their flexibility may yield substantial stabilization benefits while avoiding the excesses of overzealous discretionary fine tuning such as is thought to characterize the experience of the 1960s and 1970s in this study i present evidence suggesting that these conclusions are misguided using an estimated model i show that when informational limitations are properly accounted for activist policies would not have averted the great inflation but instead would have resulted in worse macroeconomic performance than the actual historical experience the problem can be attributed in large part to the counterproductive reliance of these policies on the output gap the analysis suggests that the dismal economic outcomes of the great inflation may have resulted from an unfortunate pursuit of activist policies in the face of bad measurement specifically overoptimistic assessments of the output gap associated with the productivity slowdown of the late 1960s and early 1970s

indeterminacy and learning an analysis of monetary policy in the great inflation abstract the great inflation of the 1970s can be understood as the result of equilibrium indeterminacy in which loose monetary policy engendered excess volatility in macroeconomic aggregates and prices the federal reserve inadvertently pursued policies that were not anti inflationary enough because it did not fully understand the economic environment it was operating in specifically it had imperfect knowledge about the structure of the economy and was subject to data misperceptions the combination of learning about the economy and the use of mis measured data resulted in policies which the federal reserve believed to be optimal but when implemented led to equilibrium indeterminacy

local inequality and project choice theory and evidence from ecuador this paper provides evidence consistent with elite capture of social fund investment projects in ecuador exploiting a unique combination of data sets on village level income distributions social fund project administration and province level electoral results we test a simple model of project choice when local political power is unequally distributed in accordance with the predictions of the model poorer villages are more likely to receive projects that provide excludable private goods to the poor such as latrines controlling for poverty more unequal communities are less likely to receive such projects consistent with the hypothesis of elite capture these results are sensitive to the specific measures of inequality and elite power used in the empirical analysis and are strongest for expenditure shares at the top of the distribution

land and power theory and evidence from chile many employment relationships concede rents to workers depending on the political institutions the presence of such rents allows employers to use the threat of withdrawing them to control their workers political behavior such as their votes in the absence of secret ballot we examine the effects of the introduction of the secret ballot in chile in 1958 on voting behavior before the reforms localities with more pervasive patron client relationships tended to exhibit a much stronger support for the right wing parties traditionally associ ated with the landed oligarchy after the reform however this difference across localities completely disappeared jel d72 n46 o13 o15 o17

assessing and managing regulatory risk in renewable energy contrasts between canada and the united states abstact a challenge for energy firms when considering new investments is to balance expected financial gains against potential risks however while investment opportunities in different jurisdictions are often straightforward to identify the policy or regulatory risks for investors are more difficult to accurately ascertain here i provide a novel conceptual framework for how firms can assess regulatory risk that focuses on the institutional processes governing policy making risks are lower and policies will subsequently be more stable in jurisdictions where regulatory agencies have greater autonomy from politicians and where policies are formulated through more rigid policy making processes the contrasting development patterns of renewable energy policies in ontario and texas offer support for the framework i further develop strategies for how firms can successfully manage regulatory risks in different types of environment

probabilistic decision model of wind power investment and influence of green power market this paper presents results from a model of a representative wind power investor s decision making process using a monte carlo simulation of a project financial analysis data in the form of probability distribution functions pdfs for key input variables were collected from interviews with investors and other professionals active in the u s wind power industry using a formal expert elicitation protocol this study presents the first quantitative estimates of the effect of the u s voluntary renewable energy certificate rec market on renewable energy generation the results indicate that the investment decisions of wind power project developers in the united states are unlikely to have been altered by the voluntary rec market the problem with the current voluntary rec market is that it does not offer developers a reliable risk adjusted revenue stream consequently the claims by u s green power retailers and promoters that voluntary market recs result in additional wind power projects lack credibility even dramatic increases in voluntary market rec prices in the absence of long term contracts were found to have only a small effect on investor behavior

exposing corrupt politicians the effects of brazil s publicly released audits on electoral outcomes author s finan frederico ferraz claudio abstract this paper examines the extent to which access to information enhances political accountability based upon the results of brazil s recent anti corruption program that randomly audits municipal expenditures of federally transferred funds it estimates the effect of the disclosure of local government corruption practices upon the re election success of incumbent mayors in municipal elections comparing municipalities which were randomly audited before the elections with those audited after the analysis shows that the disclosure of audit results had a significant impact on the re election rates of mayors found to be corrupt for a one standard deviation increase in reported corruption the audit policy reduced the incumbent s likelihood of re election by 25 percent this effect is more pronounced in municipalities where radio stations are present and higher levels of corruption are identified these findings highlight the value of information and the role of the media in reducing informational asymmetries in the political process thus enabling voters to not only hold corrupt politicians accountable but also to reward non corrupt politicians

temptation in vote selling evidence from a field experiment in the philippines abstract we report the results of a randomized field experiment in the philippines on the effects of two common anti vote selling strategies involving eliciting promises from voters an invitation to promise not to vote sell is taken up by most respondents reduces vote selling and has a larger effect in races with smaller vote buying payments the treatment reduces vote selling in the smallest stakes election by 10 9 percentage points inviting voters to promise to vote your conscience despite accepting money is significantly less effective the results are consistent with a behavioral model in which voters are only partially sophisticated about their vote selling temptation

history institutions and economic performance the legacy of colonial land tenure systems in india we analyze the colonial land revenue institutions set up by the british in india and show that differences in historical property rights institutions lead to sustained differences in economic outcomes areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments and productivity in the post independence period than areas in which these rights were given to the cultivators these areas also have significantly lower investments in health and education these differences are not driven by omitted variables or endogeneity problems they probably arise because differences in historical institutions lead to very different policy choices

fiscal restraints and voter welfare this paper explores the logic of fiscal restraints in a political agency model with both moral hazard and adverse selection the role of the political process is both to discipline incumbents who may act against the public interest and to sort in those politicians who are most likely act in voters interests we use the model to examine the optimality of inefficient taxation limits on the size of government increasing transparency and yardstick competition some conclusions are surprising for example we show that some forms of fiscal restraint can only be desirable when incumbents are sufficiently likely to be benevolent

electricity market price and nuclear power plant shutdown evidence from california abstract japan s fukushima nuclear disaster triggered by the march 11 2011 earthquake has led to calls for shutting down existing nuclear plants to maintain resource adequacy for a grid s reliable operation one option is to expand conventional generation whose marginal unit is typically fueled by natural gas two timely and relevant questions thus arise for a deregulated wholesale electricity market 1 what is the likely price increase due to a nuclear plant shutdown and 2 what can be done to mitigate the price increase to answer these questions we perform a regression analysis of a large sample of hourly real time electricity market price data from the california independent system operator caiso for the 33 month sample period of april 2010 december 2012 our analysis indicates that the 2013 shutdown of the state s san onofre plant raised the caiso real time hourly market prices by 6 mwh to 9 mwh and that the price increases could have been offset by a combination of demand reduction increasing solar generation and increasing wind generation

incumbent performance and electoral control in the pure theory of electoral competition citizens compare the platforms of the candidates and vote for the one whose platform is preferred candidate strategies are identified with promises about future performance in office models of this sort have been developed in both static mckelvey 1975 and dynamic kramer 1977 i settings and all appear to have the property that if the set of alternatives is large enough in some sense equilibrium platforms rarely exist but these models have another feature that is quite as disturbing as their instability in the static setting discussed by mckelvey little attention is paid to the possibility that once in office the politician s preferences may diverge from those of his constituents and that he may therefore choose policies at variance from his platform instead it is simply assumed that promises will be kept whether or not such behavior is congruent with the interest of the officeholder it is sometimes argued that an enforcement mechanism may exist to discipline politicians for failing to keep promises but without a specification of the mechanism it is not obvious that it would be in the interests of the

inferring monetary policy objectives with a partially observed state accounting for the uncertainty inherent in real time perceptions of the state of the economy is believed to be critical for the analysis of historical monetary policy we investigate this claim through the lens of a small scale new keynesian model with optimal discretionary policy and partial information about the state the model is estimated using maximum likelihood on us data over the volcker greenspan bernanke regime a comparison of our estimates to those from a version of the model with complete information reveals that under partial information i the federal reserve demonstrates a significant concern for stabilizing fluctuations in the output gap and ii the discrepancy between optimal and observed policy behavior is smaller

anxious periods and bank lending we examine the lending behavior of banks during anxious periods the main characteristic of anxious periods is that the perceptions and expectations about economic conditions worsen for economic agents even though the economy is not in a recession we identify distinct periods of anxiety for consumers ceos firms and analysts subsequently we study the lending behavior of us banks during the anxious quarters from 1985 to 2010 using bank level data the results show that banks lending falls when consumers and analysts are anxious and this effect is more pronounced when banks hold a higher level of credit risk these effects are more pronounced in anxious periods that were followed by recessions and in these periods loan growth also responds negatively to the anxiety of ceos yet these effects are quite less prevalent in the period after 2001

value for money vote buying and politician accountability abstract the prevalence of vote buying is widely identified as a cause of poor governance in the developing world potential mechanisms for this relationship include the selection of lower quality politicians and the reduced accountability experienced by politicians once elected in this paper we present the first experimental evidence in support of the second channel of reduced accountability using data from laboratory experiments conducted in the u s and kenya we find that vote payments reduce voters willingness to hold politicians accountable holding fixed politician identity voters who receive payments are less willing to punish the politician for rent seeking and this reduction in punishment is larger in magnitude when payments are widely targeted unsurprisingly the politician then engages in a higher level of rent seeking a simple model of multi faceted social preferences encompassing reciprocity and inequality aversion is consistent with these findings

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

vote buying general elections we examine the consequences of vote buying assuming this practice were allowed and free of stigma two parties compete in a binary election and may purchase votes in a sequential bidding game via up front binding payments and or campaign promises platforms that are contingent on the outcome of the election we analyze the role of the parties and voters preferences in determining the winner and the payments to voters

merit order effects of renewable energy and price divergence in california s day ahead and real time electricity markets abstract we answer two policy questions 1 what are the estimated merit order effects of renewable energy in the california independent system operator s caiso s day ahead market dam and real time market rtm and 2 what causes the hourly dam and rtm prices to systematically diverge the first question is timely and relevant because if the merit order effect estimates are small california s renewable energy development is of limited help in cutting electricity consumers bills but also has a lesser adverse impact on the state s investment incentive for natural gas fired generation the second question is related to the efficient market hypothesis under which the hourly rtm and dam prices tend to converge using a sample of about 21 000 hourly observations of caiso market prices and their fundamental drivers during 12 12 2012 04 30 2015 we document statistically significant estimates p value 0 01 for the dam and rtm merit order effects this finding lends support to california s adopted procurement process to provide sufficient investment incentives for natural gas fired generation we document that the rtm dam price divergence partly depends on the casio s day ahead forecast errors for system loads and renewable energy this finding suggests that improving the performance of the caiso s day ahead forecasts can enhance trading efficiency in california s dam and rtm electricity markets

the merit order effect a detailed analysis of the price effect of renewable electricity generation on spot market prices in germany the german feed in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies critics state that the costs for consumers are too high an important aspect to be considered in the discussion is the price effect created by renewable electricity generation this paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in germany the central aspect to be analysed is the impact of renewable electricity generation on spot market prices the results generated by an agent based simulation platform indicate that the financial volume of the price reduction is considerable in the short run this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits in the case of the year 2006 the volume of the merit order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers

decentralized targeting of an antipoverty program abstract developing country governments often delegate authority over the targeting of antipoverty programs to community organizations while retaining control over how much goes to each community we offer a theoretical characterization of the information structure in such programs and the interconnected behavior of the various players our model motivates an econometric specification for explaining distributional outcomes results for bangladesh s food for education ffe program indicate that within village targeting improved with program size lower land inequality less remoteness fewer shocks and less private redistribution there is no sign that the center took account of village attributes conducive to reaching the poor

assessing the strength and effectiveness of renewable electricity feed in tariffs in european union countries in the last two decades feed in tariffs fit have emerged as one of the most popular policies for supporting renewable electricity res e generation a few studies have assessed the effectiveness of res e policies but most ignore policy design features and market characteristics e g electricity price and production cost that influence policy strength we employ 1992 2008 panel data to conduct the first econometric analysis of the effectiveness of fit policies in promoting solar photovoltaic pv and onshore wind power development in 26 european union countries we develop a new indicator for fit strength that captures variability in tariff size contract duration digression rate and electricity price and production cost to estimate the resulting return on investment we regress this indicator on added res e capacity using a fixed effects specification and find that fit policies have driven solar pv development in the eu however this effect is overstated without controlling for country characteristics and is concealed without accounting for policy design we do not find robust evidence that fit policies have driven wind power development overall we show that the interaction of policy design electricity price and electricity production cost is a more important determinant of res e development than policy enactment alone

endogenous persistence in an estimated dsge model under imperfect information a framework for estimating dynamic stochastic general equilibrium dsge models by bayesian methods and validation under very general information assumptions is applied to a new keynesian model the standard asssumption that private agents have perfect information observing all state variables including shocks whereas the econometrician uses only observable data is compared with both agents having the same imperfect information ii set we also generalise rational expectations to a behavioural composite model that allows some households and firms to form expectations adaptively we find significant empirical support for ii as an endogenous persistence mechanism but this is dominated by that from habit and adaptive learning

clientelism in indian villages abstract we study the operation of local governments panchayats in rural maharashtra india using a survey that we designed for this end elections are freely contested fairly tallied highly p

what drives renewable energy development abstract this viewpoint reviews renewable energy development in 14 markets that differ in market structure restructured vs not restructured use of feed in tariff fit yes vs no transmission planning anticipatory vs reactive and transmission interconnection cost allocated to a renewable generator high vs low we find that market restructuring is not a primary driver of renewable energy development renewable generation has the highest percent of total installed capacity in markets that use a fit employ anticipatory transmission planning and have loads or end users paying for most if not all of the transmission interconnection costs in contrast renewable developers have been less successful in markets that do not use a fit employ reactive transmission planning and have generators paying for most if not all of the transmission interconnection costs while these policies can lead to higher penetration of renewable energy in the short run their high cost to ratepayers can threaten the economic sustainability of renewable energy in the long run

learning from experience the development of the renewables obligation in england and wales 2002 2010 abstract the uk has enviable renewable resources both onshore wind and offshore wind wave and tidal the offshore valuation group 2010 the government has had policy mechanisms in place since 1990 to encourage these resources to be developed the current mechanism the renewables obligation ro was specifically designed to emphasise competition and therefore to fit in with the uk s overall strategic approach to energy policy however as yet it has not delivered the capacity that it was designed to do and as a result the uk faces a difficult challenge in attempting to meet european wide renewable energy targets for 2020 as well as longer term decarbonisation targets this paper explores some of the major reasons why the ro has performed so poorly to date and considers the prospects for improvement up to 2020 it concludes that the strategic emphasis on competition in the support mechanisms has played a key role in limiting renewables development but that the mechanism has changed significantly since it was introduced however these changes together with proposals for electricity market reform still do not address important elements of risk in comparison with a standard feed in tariff

projecting eu demand for natural gas to 2030 a meta analysis abstract gas demand projections for the eu27 from a variety of sources are compared projected demand varies widely between sources even when similar rates of economic growth and policy strength are assumed the divergence is shown to result from differing assumptions concerning future energy intensity on the one hand and the future contribution of nuclear power and renewables res to electricity generation on the other the variation with time of some of these projections is also examined it is found that the gas demand projected by both the international energy agency iea and the european commission ec for 2020 and for 2030 has tended to decrease with each successive projection this is understandable since the penetration of res e has continued to exceed expectations however in an economically depressed post fukushima europe estimates of future growth in both res and nuclear generation may need significant revision the energy efficiency directive as agreed by the council of the european union and the european parliament in april 2012 council of the european union 2012 will also impact significantly on future gas demand even though the measures incorporated are weaker than the original proposal the analysis presented here shows that a nuclear decline due to the fukushima disaster is seen to moderate rather than reverse projected demand decay a significant shortfall in projected res capacity if it were to occur constitutes a potential source of additional gas demand although the emphasis in this paper is on the eu27 as a whole consideration is given to the regional heterogeneity of each of these impacts hence although aggregate demand growth for the next decade or two is likely to be moderate or more probably negative local demand growth in some regions may be significant ensuring adequate access to these specific regions via interconnection to their eu27 neighbours and or directly from extra eu sources will therefore be essential hence implementation of the third energy plan should remain a priority

state and development the need for a reappraisal of the current literature this essay tries to bring out some of the complexities that are overlooked in the usual treatment of the state in the institutional economics literature and supplement the latter with a discussion of some alternative approaches to looking at the possible developmental role of the state it refers to a broader range of development goals including the structural transformation of the economy and focuses on problems like the resolution of coordination failures and collective action problems the conflicting issues of commitment and accountability and the need for balancing the trade offs they generate some ingredients of state capacity and political coalition building usually missed in the literature the possible importance of rent sharing in a political equilibrium the advantages and problems of political centralization and decentralization and the multidimensionality of state functions that may not be addressed by markets or private firms

information variables for monetary policy in an estimated structural model of the euro area a small scale new keynesian model for the euro area is estimated with maximum likelihood under the assumptions of imperfect information and discretionary monetary policy the estimated parametrization of this widely used dynamic stochastic model unveils the monetary authorities objectives and the information content of two indicator variables monetary aggregates and real unit labour costs the results highlight a significant policy concern about interest rate smoothing and inflation almost no concern for output gap stabilization emerges regarding indicator variables unit labour costs provide information on potential output that is helpful for stabilization policy no useful information role emerges for monetary aggregates

a theory of demand shocks this paper presents a model of business cycles driven by shocks to consumer expectations regarding aggregate productivity agents are hit by heterogeneous productivity shocks they observe their own productivity and a noisy public signal regarding aggregate productivity the public signal gives rise to noise shocks which have the features of aggregate demand shocks they increase output employment and inflation in the short run and have no effects in the long run numerical examples suggest that the model can generate sizable equilibrium dsge models of the business cycle include a large number of shocks to technol ogy monetary policy preferences etc but typically do not include expectational shocks as independent drivers of short run fluctuations 1 this paper explores the idea of expectation driven cycles looking at a model where technology determines equilibrium output in the long run and consumers receive noisy signals about technology in the short run the presence of noisy signals produces expectational errors this paper studies the role of these expectational errors in gener ating volatility at business cycle frequencies the model is based on two ingredients first consumers take time to recognize permanent changes in aggregate fundamentals although they may have good information on the current state of the individual firm or sector where they operate they have only limited information regarding the long run determinants of aggregate activity second consumers have access to public information that is relevant to estimate long run productivity this includes news about technological innovations publicly released macroeconomic and sectoral statistics financial market prices and public statements by policy makers however these signals provide only a noisy forecast of the long run effects of technological innovations this opens the door to noise shocks which induce consumers to temporarily overestimate or underestimate the productive capacity of the economy

texas s operating reserve demand curve s generation investment incentive abstract faced with reserve margin projections well below the adopted target of 13 75 of the system peak forecast the public utility commission of texas on 01 17 2019 ordered the state s grid operator the electric reliability council of texas to right shift the operating reserve demand curve ordc to increase generators revenue from energy sales in ercot s real time market rtm using a large sample of 15 min data for the backcast period of 01 01 2015 through 12 31 2018 we calculate the ordc shift s impact on rtm prices and investment incentives for natural gas fired generation ngfg had the ordc shift been in effect in the backcast period the resulting rtm price increases in 2018 could suffice to justify ngfg investment though not in the prior years of 2015 2016 and 2017 while the actual ordc shift occurred on 03 01 2019 had a large impact on rtm prices in the ensuing six month period of march august 2019 texas s planned renewable generation is expected to erode ngfg s operating profit thus diminishing the ordc s investment incentive over time hence texas s energy only market design will likely need further refinements to solve the missing money problem of inadequate ngfg investment incentive

monetary shocks and inflation dynamics in the new keynesian model this paper demonstrates that imperfect information and gradual learning is a plausible and promising mechanism for generating realistic inflation and output dynamics in the standard new keynesian model

trend inflation indexation and inflation persistence in the new keynesian phillips curve purely forward looking versions of the new keynesian phillips curve nkpc generate too little inflation persistence some authors add ad hoc backward looking terms to address this shortcoming we hypothesize that inflation per sistence results mainly from variation in the long run trend component of inflation which we attribute to shifts in monetary policy we derive a version of the nkpc that incorporates a time varying inflation trend and examine whether it explains the dynamics of inflation when drift in trend inflation is taken into account a purely forward looking version of the model fits the data well and there is no need for backward looking components jel e12 e31 e52 in this paper we consider the extent to which guillermo calvo s 1983 model of nominal price rigidities can explain inflation dynamics without relying on arbitrary backward looking terms in its baseline formulation the calvo model leads to a purely forward looking new keynesian

managing beliefs about monetary policy under discretion in models of monetary policy discretionary policymaking is typically constrained in its ability to manage public beliefs however when a policymaker possesses private information policy actions serve as signals to the public about unobserved economic conditions and belief management becomes an integral part of optimal discretion policies this article derives the optimal time consistent policy for a general linear quadratic setting the optimal policy is illustrated in a simple new keynesian model where analytical solutions can be derived as well in this model imperfect information about the policymaker s output target leads to lower policy losses

information rigidities in survey data evidence from dispersions in forecasts and forecast revisions abstract predictable forecast errors in survey data documented in the existing literature suggest a deviation from the rational expectations hypothesis and are in favor of imperfect information models such as sticky and noisy information models this article assesses the validity of the imperfect information models by establishing a linkage between dispersions in survey forecasts and survey forecast revisions we find that the dynamics of dispersion in survey forecasts are consistent with the prediction of sticky information models but at odds with that of conventional noisy information models as well as full information rational expectations models both of which assume agents continuous updating of their information sets

the political resource curse this paper studies the effect of additional government revenues on political corruption and on the quality of politicians both with theory and data the theory is based on a political agency model with career concerns and endogenous entry of candidates the data refer to brazil where federal transfers to municipal governments change exogenously at given population thresholds allowing us to implement a regression discontinuity design the empirical evidence shows that larger transfers increase observed corruption and reduce the average education of candidates for mayor these and other more specific empirical results are in line with the predictions of the theory jel d72 d73 h77 o17 o18

what wins votes why some politicians opt out of clientelism in a context where clientelism is widespread why do some politicians choose not to condition the delivery of goods and services to citizens on individual political behavior i argue that the answer to this question lies in the heretofore unexamined electoral costs of clientelism clientelism decreases support from nonpoor constituents even while it generates votes from among the poor taking into account these costs and other factors that shape politician incentives i posit that the interaction between political competition and poverty will explain variation in clientelism i test this claim using an original measure of clientelism that assesses mayoral involvement in social policy implementation in argentine municipalities the results of statistical analysis suggest that high levels of political competition are compatible with clientelism when poverty is also high only when high competition is coupled with low rates of poverty does clientelism decline

devising renewable heat policy overview of support options renewable energy sources of heat offer the substantial economic environmental and social benefits associated with renewable electricity but policy to support their expansion is considerably less advanced the potential for applying various support instruments to renewable heat is considered with advantages and disadvantages discussed c 2012 published by elsevier ltd

chiefs economic development and elite control of civil society in sierra leone we study the effect of constraints on chiefs power on economic outcomes citizens attitudes and social capital a paramount chief in sierra leone must come from a ruling family originally recognized by british colonial authorities in chiefdoms with fewer ruling families chiefs face less political competition and development outcomes are significantly worse today variation in the security of property rights over land is a potential mechanism paradoxically with fewer ruling families the institutions of chiefs authority are more highly respected and measured social capital is higher we argue that these results reflect the capture of civil society organizations by chiefs

clientelism and vote buying lessons from field experiments in african elections electoral clientelism and vote buying are widely perceived as major obstacles to economic development this is because they may limit the provision of public goods in this paper we review the literature on clientelism and vote buying and propose the use of field experiments to evaluate empirically the consequences of these phenomena we provide an overview discuss implementation and interpret the main results of recent field experiments conducted by the authors in west african countries clientelism and vote buying seem to be effective and to enjoy widespread electoral support the results suggest that increased access to information and political participation by women may limit clientelism in addition voter education campaigns may undermine the effects of vote buying on voting behaviour we argue that our findings may inform the design of development aid interventions as a way effectively to increase public good political accountability we also discuss directions for fruitful future research copyright 2009 oxford university press