economic analysis of coal price electricity price adjustment in china based on the cge model in recent years coal price has risen rapidly which has also brought a sharp increase in the expenditures of thermal power plants in china meantime the power production price and power retail price have not been adjusted accordingly and a large number of thermal power plants have incurred losses the power industry is a key industry in the national economy as such a thorough analysis and evaluation of the economic influence of the electricity price should be conducted before electricity price adjustment is carried out this paper analyses the influence of coal price adjustment on the electric power industry and the influence of electricity price adjustment on the macroeconomy in china based on computable general equilibrium models the conclusions are as follows 1 a coal price increase causes a rise in the cost of the electric power industry but the influence gradually descends with increase in coal price and 2 an electricity price increase has an adverse influence on the total output gross domestic product gdp and the consumer price index cpi electricity price increases have a contractionary effect on economic development and consequently electricity price policy making must consequently consider all factors to minimize their adverse influence

a cointegration analysis of petroleum futures prices abstract this paper presents evidence concerning the number of common stochastic trends in a system of three petroleum futures prices crude oil heating oil and unleaded gasoline using daily data from 3 december 1984 to 30 april 1993 johansen s maximum likelihood approach for estimating long run relations in multivariate vector autoregressive models is used the results indicate the presence of only one common trend

exploring the core factors and its dynamic effects on oil price an application on path analysis and bvar tvp model abstract as the uncertainty of oil price increases impacts of the influential factors on oil price vary over time it is of great importance to explore the core factors and its time varying influence on oil price in view of this based on the path analysis model this paper obtains the core factors builds an oil price system var model which uses demand supply price and inventory as endogenous variables and china s net imports as well as dollar index as exogenous variables then we set up a bvar tvp time varying parameter model to analyze dynamic impacts of core factors on oil price the results show that 1 oil prices became more sensitive to oil supply changes and the influence delays became shorter 2 the impact of oil inventories on oil prices with a time lag of two quarters but has a downward trend 3 the impact of oil consumption on oil prices with a time lag of two quarters and this effect is increasingly greater 4 the us dollar index is always the important factor of oil price and its control power increases gradually and the financial crisis occurred in 2008 further strengthens the influence of us dollar

the realization effect risk taking after realized versus paper losses abstract understanding how prior outcomes affect risk attitudes is critical for the study of choice under uncertainty a large literature documents the significant influence of prior losses on risk attitudes the findings appear contradictory some studies find greater risk taking after a loss whereas others show the opposite that people take on less risk i reconcile these seemingly inconsistent findings by distinguishing between realized versus paper losses using new and existing data i replicate prior findings and demonstrate that following a realized loss individuals avoid risk if the same loss is not realized a paper loss individuals take on greater risk jel d11 d14 d81 g11

a simple impossibility result in behavioral contract theory abstract this paper studies a contract between an optimistic agent and a realistic principal both risk neutral even with complete contracts and ex ante symmetric information it may be impossible to achieve the first best unless the weight on emotions is sufficiently low

are electricity prices affected by the us dollar to euro exchange rate the spanish case abstract the objective of this paper is to investigate the relationships between spanish electricity spot prices and the us dollar euro usd euro exchange rate during the period 2005 2007 taking into account the study of the association between dollar and oil prices in order to better understand the evolution of the former over time the first finding in this study is that spanish electricity spots prices the usd euro exchange rate and oil prices are cointegrated therefore there is a long run equilibrium relationship between the three variables short run relationships have been detected between oil prices and spanish electricity prices and usd euro exchange rate in the sense that spanish electricity prices and usd euro exchange rate are affected by oil prices in the short run there is a transmission of volatility between usd euro exchange rate and oil prices to spanish electricity prices so although spanish electricity prices are not affected in level by the movements of usd euro exchange rate they are in volatility in this kind of scenario the conclusions confirm that for countries so dependent on external causes as spain one possible solution for guarantying the energy security would be the promotion of the renewable energies therefore we cannot ignore the impact in the internal expenses of the cost of installation and generation of green energies so there must be a balance between the increase in renewables and the reasonable market price of the electricity

causal modeling and inference for electricity markets abstract how does dynamic price information flow among northern european electricity spot prices and prices of major electricity generation fuel sources we use time series models combined with new advances in causal inference to answer these questions applying our methods to weekly nordic and german electricity prices and oil gas and coal prices with german wind power and nordic water reservoir levels as exogenous variables we estimate a causal model for the price dynamics both for contemporaneous and lagged relationships in contemporaneous time nordic and german electricity prices are interlinked through gas prices in the long run electricity prices and british gas prices adjust themselves to establish the equilibrium price level since oil coal continental gas and eur usd are found to be weakly exogenous

living with risk living with risk can lead to anticipatory feelings such as anxiety or hopefulness such feelings can affect the choice between lotteries that will be played out in the future choice may be motivated not only by the static risks involved but also by the desire to reduce anxiety or to promote savouring this paper provides a model of preference in a three period setting that is axiomatic and includes a role for anticipatory feelings it is shown that the model of preference can accommodate intuitive patterns of demand for information such as information seeking when a favourable outcome is very likely and information aversion when it is more likely that the outcome will be unfavourable behavioural meaning is given to statements such as individual 1 is anxious and 2 is more anxious than 1 finally the model is differentiated sharply from the classic model due to kreps and porteus copyright 2008 wiley blackwell

modeling and forecasting cointegrated relationships among heavy oil and product prices abstract in this paper we investigate heavy crude oil and product price dynamics we present a comparison among ten prices series of heavy crude oils and fourteen price series of petroleum products in two distinct areas europe and americas over the period 1994 2002 we provide a complete analysis of crude oil and product price dynamics using cointegration and error correction models ecm subsequently we use the ecm specification to predict crude oil prices over the horizon january 2002 june 2002 finally we compare the forecasting performance of ecm with a naive model in first differences which does not exploit any cointegrating relation

market integration among electricity markets and their major fuel source markets dynamic price information flows among u s electricity wholesale spot prices and the prices of the major electricity generation fuel sources natural gas uranium coal and crude oil are studied multivariate time series methods applied to weekly price data show that in contemporaneous time peak electricity prices move natural gas prices which in turn influence crude oil in the long run price is discovered in the fuel sources market except uranium as these prices are weakly exogenous in a reduced rank regression representation of these energy prices

the integration of major fuel source markets in china evidence from panel cointegration tests abstract the paper tests for energy price co movement in china over the new regime as part of a strategy to test for the existence of a national energy market panel cointegration test statistics suggest that not all energy commodities are spatially homogenous in prices and the processes of energy price cointegration are different over time and over groups of fuels the statistics demonstrate china s gradual spatially partial and idiosyncratic energy reform process coal and electricity price series have co moved since 2003 while the national panel cointegration test statistics suggest that gasoline and diesel price series have co moved since 1997 regional panel tests also show that there are apparently differences in the emergence of energy price co movement this suggests that regional energy markets have emerged in china one of the important lessons of the research is that an energy market has to some extent already emerged in china and as a consequence energy prices are much less distorted than previously if correct this fact is of major global significance both in terms of future environmental effects and future trade and investment negotiations as china is seen internationally as a market driven economy

affective decision making a theory of optimism bias abstract optimism bias is inconsistent with the independence of decision weights and payoffs found in models of choice under risk and uncertainty such as expected utility theory subjective expected utility and prospect theory we therefore propose an alternative model of risky and uncertain choice where decision weights affective or perceived risk are endogenous affective decision making adm is a strategic model of choice under risk and uncertainty where we posit two cognitive processes the rational and the emotional process the two processes interact in a simultaneous move intrapersonal potential game and observed choice is the result of a pure strategy nash equilibrium in this game we show that regular adm potential games have an odd number of locally unique pure strategy nash equilibria and demonstrate this finding for affective decision making in insurance markets we prove that adm potential games are refutable by axiomatizing the adm potential maximizers

risk management in the oil industry can information on long run equilibrium prices be utilized abstract we analyze co movements between the prices of crude oil and major refined products during the period 1992 1998 specifically we explore the existence of long run equilibrium price relationships and whether deviations from estimated equilibrium can be utilized for predictions of short term price changes and for risk management the econometric evidence strongly supports the hypothesis that crude and product prices are co integrated past deviations from long term equilibrium are significant in an error correction specification of short term product price changes the results represent valuable information for hedging particularly in integrated oil companies for which price risk is related to margin variations

have oil and gas prices got separated abstract this paper applies vector error correction models that show that oil and natural gas prices decoupled around 2009 before 2009 us and uk gas prices had a long term equilibrium with crude prices to which gas prices always reverted after exogenous shocks both us and uk gas prices adjusted to the crude oil price individually and departure from the equilibrium gas price on one continent resulted in a similar departure on the other after an exogenous shock the adjustment between us and uk gas prices took approximately 20 weeks on average and the convergence was mediated mainly by crude oil with a necessary condition that arbitrage across the atlantic was possible after 2009 however the uk gas price has remained integrated with oil price but the us gas price decoupled from crude oil price and the european gas price as the atlantic arbitrage has halted the oversupply from shale gas production has not been mitigated by north american export as there has been no liquefying and export capacity

a theory of haste abstract we consider a hyperbolic discounting agent at each period he can undertake an irreversible consumption decision that yields an uncertain current benefit and a delayed cost if he decides to defer consumption for the future some information exogenously flows in we show that the agent may rationally decide to consume with negative expected net present value npv only to prevent himself from consuming in the future which could be profitable from a future perspective but highly detrimental from the current viewpoint comparative statics reveal that the value of information is u shaped

higher prices at canadian gas pumps international crude oil prices or local market concentration an empirical investigation there is little consensus on whether higher retail gasoline prices in canada are the result of international crude oil price fluctuations or local market power exercised by large vertically integrated firms i find that although both increasing local market concentration and higher average monthly wholesale prices are positively and significantly associated with higher retail prices wholesale prices are more important than local market concentration similarly crude oil prices are more important than the number of local wholesalers in determining wholesale prices these results suggest that movements in gasoline prices are largely the result of input price fluctuations rather than local market structure

the supply of information by a concerned expert how much information should a policy maker pass on to a currently ill informed citizen in this paper we address this classic question of crawford and sobel 1983 in a setting in which beliefs impact utility as in kreps and porteus 1978 we show that this simple amendment has far reaching implications in particular our question cannot be answered using a utility function with standard revealed preference foundations revealed preference cannot tell us whether in a particular state s a decision maker prefers to believe incorrectly that the state is t or to know the truth to solve the model we go beyond the classical model in two respects relying on the psychological expected utility model of caplin and leahy 2001 to capture preferences and the psychological game model of geanakoplos pearce and stacchetti 1989 to capture strategic interactions

psychological expected utility theory and anticipatory feelings we extend expected utility theory to situations in which agents experience feelings of anticipation prior to the resolution of uncertainty we show how these anticipatory feelings may result in time inconsistency we provide an example from portfolio theory to illustrate the potential impact of anticipation on asset prices

natural gas prices lng transport costs and the dynamics of lng imports according to the u s energy information administration lng is projected to become a much larger share of u s natural gas consumption rising from current levels of around 2 5 of total natural gas consumption to 12 4 by 2030 because natural gas and lng are substitutes natural gas prices are expected to be an important determinant of lng imports furthermore an increasing share of lng is traded under short term contracts with spot shipments being diverted to markets offering the highest returns netbacks relative natural gas prices as well as lng transportation costs are important determinants of lng netbacks this paper examines the empirical relationship between u s lng imports the henry hub price of natural gas relative to u k and asia gas prices and a proxy for lng transportation costs using monthly data from 1997 to 2007 granger causality tests error variance decomposition and impulse response analyses using a var model are employed to establish granger causality as well as the dynamics of natural gas prices and lng transportation innovations on lng imports

imperfect memory and choice under risk this paper presents a model of choice based on imperfect memory and self deception i assume that people have preferences over their own attributes e g skill knowledge or competence and can manipulate their memories the model provides a prior dependent theory of regret aversion and allows for prior dependent information attitudes it implies that behavior will converge to the one predicted by expected utility theory after a choice has been faced a sufficiently large number of times

coal lumps vs electrons how do chinese bulk energy transport decisions affect the global steam coal market this paper demonstrates the ways in which dierent chinese bulk energy transport strategies aect the future steam coal market in china and in the rest of the world an increase in chinese demand for steam coal will lead to a growing need for additional domestic infrastructure as production hubs and demand centers are spatially separated and domestic transport costs could inuence the future chinese steam coal supply mix if domestic transport capacity is available only at elevated costs chinese power generators could turn to the global trade markets and further increase steam coal imports increased chinese imports could then yield signicant changes in steam coal market economics on a global scale this eect is analyzed in china where coal is mainly transported by railway and in another setting where coal energy is transported as electricity for this purpose a spatial equilibrium model for the global steam coal market has been developed one major nding is that if coal is converted into electricity early in the supply chain worldwide marginal costs of supply are lower than if coal is transported via railway furthermore china s dependence on international imports is signicantly reduced in this context allocation of welfare changes particularly

correlation between chinese and international energy prices based on a hp filter and time difference analysis abstract to establish a reasonable system and mechanism for chinese energy prices we use the granger causality test hodrick prescott hp filter and time difference analysis to research the pricing relationship between chinese and international energy prices we find that chinese and international crude oil prices changed synchronously while chinese refined oil prices follow the changes of international oil prices with the time difference being about 1 month to 2 months further australian coal prices granger causes chinese coal prices and there is a high correlation between them the u s electricity price is influenced by the wti crude oil price the u s gasoline price and the henryhub gas price due to the unreasonable price setting mechanism and regulation from the central government china s terminal market prices for both electricity and natural gas do not reflect the real supply demand situation this paper provides quantitative results on the correlation between chinese and international energy prices to better predict the impact of international energy price fluctuations on china s domestic energy supply and guide the design of more efficient energy pricing policies moreover it provides references for developing countries to improve their energy market systems and trading and to coordinate domestic and international energy markets

china s coal price disturbances observations explanations and implications for global energy economies since china decontrolled coal prices its coal price has risen steadily and been unusually volatile in 2011 in particular high coal prices and capped electricity prices in china discouraged coal fired power generation triggering widespread power shortages we suggest that these coal price disturbances could be symptomatic of a major change in pricing dynamics of global fossil fuel markets with increasing correspondence between coal and oil prices globally historically global coal prices have been more stable and lower than oil and natural gas prices on a per heat basis in recent years however coal prices have been increasingly volatile worldwide and have tracked other fossil fuel prices more closely meanwhile the recent development of unconventional gas has substantially decoupled us natural gas and oil prices technically low us natural gas prices with potential fuel switching could drive us domestic coal prices lower however this effect is unlikely to counteract the overall trend in increasing coal consumption globally china s market size and unique partially controlled energy system make its reform agenda a key force in the global economy policymakers in the us e u and elsewhere should monitor china s economic reform agenda to anticipate and respond to changes accompanying china s increasing importance in the global energy economy

incomplete information models of guilt aversion in the trust game in the theory of psychological games it is assumed that players preferences on material consequences depend on endogenous beliefs most of the applications of this theoretical framework assume that the psychological utility functions representing such preferences are common knowledge however this is often unrealistic in particular it cannot be true in experimental games where players are subjects drawn at random from a population therefore an incomplete information methodology is needed we take a first step in this direction focusing on guilt aversion in the trust game in our models agents have heterogeneous belief hierarchies we characterize equilibria where trust occurs with positive probability our analysis illustrates the incomplete information approach to psychological games and can help to organize experimental results in the trust game this paper was accepted by uri gneezy behavioral economics

electricity prices and fuel costs long run relations and short run dynamics the paper examines the long run relation and short run dynamics between electricity prices and three fossil fuel prices coal natural gas and crude oil using annual data for the u s for 1960 2007 the results suggest 1 a stable long run relation between real prices for electricity and coal 2 bi directional long run causality between coal and electricity prices 3 insignificant long run relations between electricity and crude oil and or natural gas prices and 4 no evidence of asymmetries in the adjustment of electricity prices to deviations from equilibrium a number of implications are addressed

time varying macroeconomic effects of energy price shocks a new measure for china abstract in this paper we examine the effects of world energy price shocks on china s macroeconomy over the past two decades we begin by showing that the use of oil prices as a proxy for more general energy price dynamics is not appropriate for the case of china having established this fact we propose a new energy price index which accurately reflects the structure of china s energy expenditure shares and intertemporal fluctuations in international energy prices we then employ a sufficiently rich set of time varying vars identified through a new set of agnostic sign restrictions to estimate the effects of energy price shocks on china s macroeconomy our main result is that positive energy price shocks generate statistically significant reductions in real gdp growth and increases in inflation interestingly both the sets of responses have consistently declined over the sample period next the interest rate responses are found to be consistently positive over the sample period given the aforementioned stagflation result this suggests that the pboc is more focused on inflation stabilization as compared to facilitating output growth all presented results are shown to be robust under both official national data and those developed by chang et al 2015 thus strengthening our conclusion that energy price shocks have significant time varying effects on china s macroeconomy

genetic testing in competitive insurance markets with repulsion from chance a welfare analysis a central theme in the international debate on genetic testing concerns the extent to which insurance companies should be allowed to use genetic information when offering insurance contracts we provide a welfare analysis of this issue within a model of an insurance market with asymmetric information having the following crucial feature in addition to a state contingent consumption profile a person s well being depends on her attitude towards resolution of future health uncertainty and this attitude varies across the population we present stylized facts that motivate this approach in the formal analysis we find that both tested high risks and untested individuals are equally well off whether or not test results can be used by insurers individuals who test for being low risks on the other hand are made worse off by not being able to verify this to insurers this implies that in terms of welfare a regulatory regime in which the use of genetic information by insurers is allowed is better than one in which it is not allowed

guilt in games a clear conscience is a good pillow why does this old proverb contain an insight the emotion of guilt holds a key psychologists report that the prototypical cause of guilt would be the infliction of harm loss or distress on a relationship partner roy baumeister arlene m stillwell and todd f heatherton 1994 245 june price tangney 1995 moreover guilt is unpleasant and may affect behavior to render the associated pangs counterfactual baumeister stillwell and heatherton state if people feel guilt for hurting their partners and for failing to live up to their expectations they will alter their behavior to avoid guilt in ways that seem likely to maintain and strengthen the relationship avoided guilt is the down of the sound sleeper s bolster how can guilt be modeled how are human interaction and economic outcomes influenced we offer a formal approach for providing answers start with an extensive game form which associates a monetary outcome with each end node say that player i lets player j down if as a result of i s choice of strategy j gets a lower monetary payoff than j expected to get before play started player i s guilt may depend on how much he lets j down player i s guilt may also depend on how much j believes i believes he lets j down we develop techniques to analyze equilibria when players are motivated in part by a desire to avoid guilt the intellectual home for our exercise is what has been called psychological game theory this framework originally developed by john geanakoplos david pearce and ennio stacchetti 1989 and recently extended by battigalli and dufwenberg 2005 henceforth b d allows players utilities to depend on beliefs about choices states of nature

co integration of ice gas oil and crude oil futures abstract in this paper the relationship between gas oil and brent crude oil futures prices is investigated the analysis is based on daily price series for five different contract lengths traded on ice futures europe the price series and their first differences are tested for stationarity linear relationships between the pair wise gas oil and crude oil contracts are then tested for co integration a co integrated relationship is found for the 1 and 2 month contracts covering data from 1994 to 2009 and error correction models are established to estimate the relationships no co integrated relationships are found for the 3 6 and 12 month contracts covering the period 2002 2009 nor for the 1 and 2 month contracts for this period the futures prices for this period are collected from a volatile market including hurricane katrina the economic boom and the following financial crises which might explain these results thus in such volatile periods the spread between gas oil and crude oil is likely to deviate and it might take several years until it reverts to its equilibrium value for energy traders and hedgers this will imply that exposures to the crack spread should be treated with great care in such market environments

reference dependent consumption plans we develop a rational dynamic model in which people are loss averse over changes in beliefs about present and future consumption because changes in wealth are news about future consumption preferences over money are reference dependent if news resonates more when about imminent consump tion than when about future consumption a decision maker might to generate pleasant surprises overconsume early relative to the optimal committed plan increase immediate consumption following surprise wealth increases and delay decreasing consumption following surprise losses since higher wealth mitigates the effect of bad news people exhibit an unambiguous first order precautionary savings motive