interpreting economic time series this paper explores some of the implications for econometric practice of the principle that people s observed behavior will change when their constraints change in dynamic contexts a proper definition of people s constraints includes among them laws of motion that describe the evolution of the taxes they must pay and the prices of the goods that they buy and sell changes in agents perceptions of these laws of motion or constraints will in general produce changes in the schedules that describe the choices they make as a function of the information that they possess until very recently received dynamic econometric practice ignored this principle the practice of dynamic econometrics should be changed so that it is consistent with the principle that people s rules of choice are influenced by their constraints this is a substantial undertaking and involves major adjustments in the ways that we formulate estimate and simulate econometric models

energy security in asean a quantitative approach for sustainable energy policy abstract we investigate energy security of the association of southeast asian nations asean under the 4 a s framework the asean economic community aec agreement launched in 2015 renewed a regional focus on energy security and sustainability we employ an analytic framework to quantitatively assess progress in different categories including availability acceptability affordability and applicability key metrics include the documentation of co 2 emissions energy access measures and energy supply reserves from 2005 2010 we identify relevant energy indicators using high quality historical data from the iea and world bank we find that asean made little progress toward establishing energy security in the previous five year planning period 2005 2010 as it regressed in most categories except applicability therefore we suggest that increased development of renewable energy and energy efficiency technologies would move asean in a positive direction toward achieving energy security and sustainable energy policy goals

addressing leakage in the eu ets border adjustment or output based allocation the eu ets has been criticised for threatening the competitiveness of european industry and generating carbon leakage i e increasing foreign greenhouse gas emissions two main options have been put forward to tackle these concerns border adjustments and output based allocation i e allocation of free allowances in proportion to current production we compare various configurations of these two options as well as a scenario with full auctioning and no border adjustment against this background we develop a model of the main sectors covered by the eu ets electricity steel cement and aluminium we conclude that the most efficient way to tackle leakage is auctioning with border adjustment which generally induces a negative leakage a spillover this holds even if the border adjustment does not include indirect emissions if it is based on eu rather than foreign specific emissions or for some values of the parameters if it covers only imports another relatively efficient policy is to combine auctioning in the electricity sector and output based allocation in exposed industries especially if free allowances are given both for direct and indirect emissions i e those generated by the generation of the electricity consumed although output based allocation is generally less effective than border adjustment to tackle leakage it is more effective to mitigate production losses in the sectors affected by the ets which may ease climate policy adoption c 2011 elsevier b v all rights reserved

the energy transition of the transition economies an empirical analysis the aggregate manufacturing energy intensity of 28 countries in eastern europe and central asia had declined by 35 percent during 1998 2008 this study reveals strong evidence of convergence less efficient countries improved more rapidly and the cross country variance in energy productivity narrowed over time an index decomposition analysis indicates that energy intensities declined largely because of more efficient energy use rather than shifts from energy intensive to less intensive manufacturing activities income growth and energy price increases were the main drivers of the convergence they dominated the impact of trade which led to specialization in energy intensive industries

dynamics and determinants of energy intensity in the service sector a cross country analysis 1980 2005 we present a detailed analysis of energy intensity developments across 23 service sectors in 18 oecd countries over the period 1980 2005 we find that the shift towards a service economy has contributed to lower overall energy intensity levels in the oecd but this contribution would have been considerably larger if the service sector had realized the same degree of energy efficiency improvements as the manufacturing sector in most oecd countries energy intensity levels in services tend to decrease relatively slow especially after 1995 if we control this trend for the impact of structural changes within the services sector by means of a decomposition analysis we find that in about one third of the oecd countries energy intensity levels in services have increased over time the impact of structural changes on aggregate energy intensity dynamics in services has increased considerably after 1995 highlighting a relatively poor energy efficiency performance within a wide range of service sectors we show that the introduction of information and communication technology ict plays a potentially important role here using panel data regression analysis we find a limited role for energy prices in explaining variation in energy productivity while climate conditions clearly impact energy productivity

energy metrics for driving competitiveness of countries energy weakness magnitude gdp per barrel and barrels per capita abstract energy metrics is the development of a whole new theoretical framework for the conception and measurement of energy and economic system performances energy efficiency and productivity improvements with important political economy implications consistent with the best use of all natural and economic resources the purpose of this research is to present some vital energy indicators based on magnitude and scale of energy weakness gdp per barrel of oil that is an indicator of energy productivity and barrels of oil per capita that is an indicator of energy efficiency energy metrics can support the monitoring of energy and economic system performances in order to design effective energy strategy and political economy interventions focused on the competitive advantage increase of countries in modern economies

monetary anticipations and the demand for money reply to mackinnon and milbourne abstract mackinnon and milbourne 1984 in an extended comment on carr and darby 1981 claim that money supply shocks do not enter the money demand function for the united states this reply discusses the economic and econometric errors which led to this conclusion and presents further empirical evidence in support of our approach

account for sector heterogeneity in china s energy consumption sector price indices vs gdp deflator abstract a common practice in decomposition analyses is to deflate output indicators to purge the impact of inflation by using a general deflator this practice fails to account for sector heterogeneity and can be hazardous although the general identified patterns are largely correct the calculated magnitudes can be misleading or even wrongly signed instead it is strongly recommended that sector heterogeneity is accounted for by using individual sector price indices for all relevant sectors instead of one general gdp deflator this paper analyzes this advanced decomposition using chinese data and compares to the usual method of using only one deflator it is found that while most differences are only of quantitative quality some show even a qualitative difference furthermore the rising energy intensity in the early 2000s which has been discussed by previous studies vanishes completely

delegated portfolio management and optimal allocation of portfolio managers in this article we investigate whether the application of the mean variance framework on portfolio manager allocation offers any out of sample benefits compared to a naive strategy of equal weighting based on an exclusive data set of high net worth hnw investors we utilize a wide variety of methodologies to estimate the input parameters including exponentially weighted moving average ewma generalized autoregressive conditional heteroscedasticity garch and bayes stein shrinkage estimation we apply nine different mean variance models but find that none of these present any consistent benefit over a naive strategy of equal weighting

energy embodied in the international trade of china an energy input output analysis abstract growing international trade has not only positively affected the people s republic of china s china s economic development but also expanded the exportation of energy embodied in goods during their production this energy flow out will pose risks to china s rational utilization of natural resources as well as environmental protection in this paper we evaluate the energy embodied in goods produced in china during 1992 2005 and use input output structural decomposition analysis to identify five key factors causing the changes of energy embodied in exports direct primary energy efficiency primary energy consumption structure structure of intermediate inputs structure of exports and scale of exports for the three sub periods of 1992 1997 1997 2002 and 2002 2005 results show that china is a net exporter of energy and the energy embodied in exports tends to increase over time the expanding total volume of exports and increasing exports of energy intensive goods tend to enlarge the energy embodied in exports within all three sub periods but these driving forces were offset by a considerable improvement of energy efficiency and changes in primary energy consumption structure from 1992 to 2002 and the effects of structure of intermediate input only in the sub period from 1992 to 1997 from 2002 to 2005 the sharp augmentation of energy embodied in exports was driven by all the five factors our research has practical implications for the chinese economy results of this study suggest that the energy embodied in trade should receive special attentions in energy policies design to limit the energy resource out flow and pollution generation

portfolio selection with mental accounts and delegation das et al 2010 develop an elegant framework where an investor selects portfolios within mental accounts but ends up holding an aggregate portfolio on the mean variance frontier this investor directly allocates the wealth in each account among available assets in practice however investors often delegate the task of allocating wealth among assets to portfolio managers who seek to beat certain benchmarks accordingly we extend their framework to the case where the investor allocates the wealth in each account among portfolio managers our contribution is threefold first we provide an analytical characterization of the existence and composition of the optimal portfolios within accounts and the aggregate portfolio second we present conditions under which such portfolios are not on the mean variance frontier and conditions under which they are third we show that the aforementioned analytical characterization is also applicable within the framework of das et al and thus improves upon their numerical approach

measuring energy efficiency in the context of an emerging economy the case of indian manufacturing in recent years the indian economy has achieved a rapid growth rate however one of the challenges facing the economy is the large energy supply that would be needed to sustain this growth path hence attaining energy efficiency is crucial for the economy this paper examines the indian manufacturing sector and utilizes a variant of the directional distance function to obtain comprehensive measures of performance of the major manufacturing states given the joint goals of achieving energy conservation and output growth the results of the empirical application reveal that given the prevailing technology the average manufacturing firm across the states could reduce energy input and increase output simultaneously by an annual average of 3 84 by improving technical efficiency to accommodate a larger simultaneous increase in output and reduction in energy use india should adopt superior technologies so as to shift the efficient frontier outward

portfolio optimization with mental accounts we integrate appealing features of markowitz s mean variance portfolio theory mvt 4 and shefrin and statman s behavioral portfolio theory bpt into a new mental accounting 5 ma framework features of the ma framework include an ma structure of portfolios 6 a definition of risk as the probability of failing to reach the threshold level in each mental 7 account and attitudes toward risk that vary by account we demonstrate a mathematical 8 equivalence between mvt ma and risk management using value at risk var the ag9

determinants of energy demand in the french service sector a decomposition analysis abstract this paper analyzes the changes in the energy consumption of the service sector in france over the period 1995 2006 using the logarithmic mean divisia index i lmdi i decomposition method the analysis is carried out at various disaggregation levels to highlight the specifics of each sub sector and end use according to their respective determinants the results show that in this period the economic growth of the service sector was the main factor that led to the increase in total energy consumption structure productivity substitution and intensity effects restricted this growth but with limited effect by analyzing each end use this paper enables a more precise understanding of the impact of these factors the activity effect was the main determinant of the increase in energy consumption for all end uses except for air conditioning for which the equipment rate effect was the main factor structural changes in the service sector primarily impacted energy consumption for space heating and cooking improvements in productivity limited the growth of energy consumption for all end uses except for cooking finally energy efficiency improvements mainly affected space heating energy use

from groundless universalism to grounded generalism improving ecological economic indicators of human environmental interaction abstract ecological economics occasionally makes universal claims about how to understand and measure change in systems of human environmental interaction in terms of environmental policy one of the most influential universal concepts that has come out of the ecological economics literature recently is ecological efficiency or eco efficiency this article uses eco efficiency as a vehicle to illustrate that universal indicators of human environmental interaction are theoretically unfounded and practically problematic population ecology and neo classical economics are identified as two theoretical approaches that have contributed to the emergence of universal concepts such as eco efficiency the limited applicability of the approaches is highlighted by putting them in comparative context with approaches that make less universal claims namely systems ecology and institutional economics investigating indicators of human environmental interaction from disciplinary perspectives that are rarely found in indicator literature offers novel insights on what indicators are for and how they should be applied the article concludes with a call for scale sensitive generalization in the development of future indicators

why did the energy intensity fall in china s industrial sector in the 1990s the relative importance of structural change and intensity change there have been a variety of studies investigating the relative importance of structural change and real intensity change to the change in china s energy consumption in the 1980s however no detailed analysis to date has been done to examine whether or not the increased energy efficiency trend in the 1980s still prevailed in the 1990s this article has filled this gap by investigating the change in energy consumption in china s industrial sector in the 1990s based on the data sets of value added and end use energy consumption for the 29 industrial subsectors and using the newly proposed decomposition method of giving no residual our results clearly show that the overwhelming contributor to the decline in industrial energy use in the 1990s was the decline in real energy intensity indicating that the trend of real energy intensity declines in the 1980s at the 2 digit level was still maintained in the 1990s this conclusion still holds even if we lower the growth rate dramatically in line with the belief that the growth rate of china s gdp may be overestimated

index decomposition analysis applied to co2 emission studies index decomposition analysis ida was first extended from energy consumption to energy related co2 emission studies in 1991 since then many studies have been reported covering various countries and emission sectors however unlike the case of energy consumption studies a comprehensive literature survey that focuses specifically on emission studies has so far not been reported in this paper we attempt to fill this gap by reviewing 80 papers appearing in peer reviewed journals from 1991 to 2012 in this application area the first part of this paper deals with the developments with regard to the ida approaches used by researchers and the scope and focus of their studies in the second part the empirical results reported in the surveyed studies are analyzed consolidated and presented by emission sector the objective is to reveal the relative contributions of key effects on changes in the aggregate carbon intensity and this is done by emission sector and by country the findings of both parts are useful in understanding the development of ida in the application area of emission study as well as the key drivers of aggregate carbon intensities in the past and their possible future developments

expected shortfall and beyond financial institutions have to allocate so called economic capital in order to guarantee solvency to their clients and counterparties mathematically speaking any methodology of allocating capital is a risk measure i e a function mapping random variables to the real numbers nowadays value at risk var which is defined as a fixed level quantile of the random variable under consideration is the most popular risk measure unfortunately it fails to reward diversification as it is not subadditive in the search for a suitable alternative to var expected shortfall es or conditional var or tail var has been characterized as the smallest coherent and law invariant risk measure to dominate var we discuss these and some other properties of es as well as its generalization to a class of coherent risk measures which can incorporate higher moment effects moreover we suggest a general method on how to attribute es risk contributions to portfolio components

what drives the change in china s energy intensity combining decomposition analysis and econometric analysis at the provincial level abstract we employ decomposition analysis and econometric analysis to investigate the driving forces behind china s changing energy intensity using a provincial level panel data set for the period from 1995 to 2009 the decomposition analysis indicates that a all of the provinces except for a few experienced efficiency improvement while around three fourths of the provinces economics became more energy intensive or remained unchanged b consequently the efficiency improvement accounts for more than 90 of china s energy intensity change as opposed to the economic structural change the econometric analysis shows that the rising income plays a significant role in the reduction of energy intensity while the effect of energy price is relatively limited the result may reflect the urgency of deregulating the price and establishing a market oriented pricing system in china s energy sector the implementation of the energy intensity reduction policies in the eleventh five year plan fyp has helped reverse the increasing trend of energy intensity since 2002 although the chinese government intended to change the industry led economic growth pattern it seems that most of the policy effects flow through the efficiency improvement as opposed to the economic structure adjustment more fundamental changes to the economic structure are needed to achieve more sustainable progress in energy intensity reduction

manufacturing energy use in oecd countries decomposition of long term trends abstract in this paper we examine manufacturing energy use in 13 oecd countries over the period 1971 1995 we describe changes in aggregate energy intensity using the adaptive weighting divisia decomposition method we contrast the development in the periods after the oil price shocks of 1973 and 1979 with the period of relatively stable energy prices after the oil price crash of 1986 the results show that manufacturing output grew in most countries pushing up energy use the share of electricity increased in almost every sector while there was a clear trend away from oil and coal towards natural gas changes in the structure of output drove up energy use between 1973 and 1994 in some countries and down in others changes in energy intensities had a profound and downward effect on manufacturing energy use in all countries however contrasting the period after oil prices fell in 1986 with earlier years we see that for most countries the rate of energy intensity decline slowed slightly but did not reverse with falling prices in a few countries efficiency improvements continued to have a strong effect this suggests that even without higher prices improvements of energy efficiency seems to take place

the scourge of the monetarists kaldor on monetarism and on money nicolas kaldor s critique of monetarism from 1970 until his death is described and evaluated it is argued that subsequent events as well as empirical research vindicate his critique kaldor s critique of john maynard keynes s monetary theory is then seen as an extension of his radcliffe views and this paper argues that in this matter kaldor was mechanical in his modeling of the endogeneity of money supply it is suggested that the work of hyman minsky and victoria chick has the potential for further work in this area copyright 1989 by oxford university press

monetary anticipations and the demand for money abstract it has recently been argued that unanticipated changes in nominal money supply should affect the real demand for money and empirical results which appear to support this hypothesis have been presented unfortunately the econometric techniques used by previous authors yield severel biased estimates in this paper we show how valid estimates may easily be obtained and present some illustrative empirical results using u s data these results do not support the conclusions of earlier authors we find that unanticipated money supply changes do indeed affect the real demand for money but with the wrong sign and that anticipated changes also have a significant effect a consistency test for all models employing the anticipated unanticipated distinction is also proposed

the lmdi approach to decomposition analysis a practical guide in a recent study ang energy policy 32 2004 compared various index decomposition analysis methods and concluded that the logarithmic mean divisia index method is the preferred method since the literature on the method tends to be either too technical or specific for most potential users this paper provides a practical guide that includes the general formulation process summary tables for easy reference and examples

embedding the drivers of emission efficiency at regional level analyses of namea data abstract this paper provides new empirical evidence on regional national disparities in environmental efficiency based on analyses of namea data referring to italy and the lazio region where rome is the main city shift share analyses provide evidence on the drivers of environmental efficiency and on sector specificity our evidence shows that although the region around rome has achieved higher environmental performance compared to italy mainly thank to its being less industry based some critical points in the energy sector and in some services should be taken into account in shaping the future development of the region in addition the use of regional namea for econometric investigations of emission efficiency drivers at national level shows that though north south disparities favour northern and richer regions in accordance with development oriented dynamics environmental hot spots driven by specialisation and efficiency related issues also appear in some northern industrial regions further the role of public ad private r d is of main relevance in enhancing emission on economic value ratios environmental industrial and sector oriented policy making may derive valuable information from the evidence provided by our study that highlights how analytical exploitation of namea offers rich array of insights for regional policy making

reaping the carbon rent abatement and overallocation profits in the european cement industry insights from an lmdi decomposition analysis we analyse variations of carbon emissions in the european cement industry from 1990 to 2012 at the european level eu 27 and at the national level for six major producers germany france spain the united kingdom italy and poland we apply a log mean divisia index lmdi method cross referencing data from three databases the getting the numbers right gnr database developed by the cement sustainability initiative the european union transaction log eutl and the eurostat international trade database our decomposition method allows seven channels of emission change to be distinguished activity clinker trade clinker share alternative fuels thermal and electrical energy efficiency and electricity decarbonisation we find that apart from a slow trend of emission reductions coming from technological improvements first from a decrease in the clinker share then from an increase in alternative fuels most of the emission change can be attributed to the activity effect using counterfactual scenarios we estimate that the introduction of the eu ets brought small but positive technological abatement 2 2 1 3 between 2005 and 2012 moreover we find that the european cement industry has gained 3 5 billion euros of overallocation profits mostly due to the slowdown of production

structural change and energy efficiency in industry the change in the ratio of energy consumed to industrial production is examined over the years 1968 1980 changes in the composition of industry are analysed creating a better picture of movements in physical efficiency of energy use the medium term trends show the significance of the 1973 oil crisis the effects being contrary to those of intuition the implications of the two recessions for efficiency and industrial structure are described in detail the role of demand often relegated to an incidental consideration is brought to the fore in the years following 1973 it appears more important than ex post substitution in production and with this comes a particular implication for the use of aggregate production functions

structural change and technology choice energy use in mexican manufacturing industry 1970 1981 abstract this paper analyses industrial energy use in a country that has experienced falling instead of rising energy prices mexico subsidizes domestic energy consumption with the avowed purpose of stimulating industrialization methods are developed to distinguish the effects of technology choice from the effects of changing industrial structure and are then used to analyse the increased energy intensity of manufacturing industry 1970 1981 the increase is found to depend entirely on the adoption of more energy using technology whereas the changes in output structure have had little or no effect there has been a slight bias in favour of the less energy intensive sectors

nonlinear portfolio selection using approximate parametric value at risk abstract as the skewed return distribution is a prominent feature in nonlinear portfolio selection problems which involve derivative assets with nonlinear payoff structures value at risk var is particularly suitable to serve as a risk measure in nonlinear portfolio selection unfortunately the nonlinear portfolio selection formulation using var risk measure is in general a computationally intractable optimization problem we investigate in this paper nonlinear portfolio selection models using approximate parametric value at risk more specifically we use first order and second order approximations of var for constructing portfolio selection models and show that the portfolio selection models based on delta only delta gamma normal and worst case delta gamma var approximations can be reformulated as second order cone programs which are polynomially solvable using interior point methods our simulation and empirical results suggest that the model using delta gamma normal var approximation performs the best in terms of a balance between approximation accuracy and computational efficiency

what is the role of openness for china s aggregate industrial so2 emission a structural analysis based on the divisia decomposition method abstract having observed the weaknesses in previous structural analyses on the role of environmental kuznets curve ekc the author proposes a detailed analysis using a rich data set of provincial level production and so2 emission intensity of 13 industrial sectors the latter represent more than 98 of the total industrial production in each chinese province for the period 1991 2001 through the use of the log mean divisia index decomposition method the variations in province level industrial so2 emissions with regard to the 1990 baseline level are decomposed into the contribution from three components scale composition and technical effects the following analysis seeks to explain how trade openness affects aggregate industrial so2 emission through its impact on the structural determinants for these three components of region specific environmental variations

does energy efficiency promote economic growth evidence from a multicountry and multisectoral panel dataset abstract we examine the causal relationship between energy efficiency and economic growth based on panel data for 56 high and middle income economies from 1978 to 2012 using a panel vector autoregression approach we find evidence of a long run granger causality from economic growth to lower energy intensity for all economies we also find evidence of long run bidirectional causality between lower energy intensity and higher economic growth for middle income economies this finding suggests that beyond climate benefits middle income economies may also earn an extra growth dividend from energy efficiency measures

swedish co2 emissions 1993 2006 an application of decomposition analysis and some methodological insights this study undertakes a decomposition analysis to identify the drivers of carbon dioxide emissions change in the swedish business and industry sectors 1993 2006 on aggregate energy intensity decreased but this does not seem to have been very important for reducing emissions rather fuel substitution seems to have been more important which is in line with findings from the decomposition literature on sweden however at the sectoral level we find no clear pattern of the effect of fuel substitution and energy intensity on emissions we also draw some methodological conclusions decomposition analysis should be undertaken at the most disaggregate level possible assessing decomposition results by summing results over several time periods leads to biased results and decomposition analysis should not be based only on some initial and final years of a long time period furthermore we address the problem of double counting energy flows in decomposition analysis of aggregate effects when the energy sector is included and point out potential problems related to output measured in monetary terms

modeling of industrial energy consumption an introduction and context industrial energy accounts for roughly one third of total global energy consumption and is expected to continue to use a similar share in the foreseeable future however this is one of the hardest end uses to analyze model and forecast the reasons for modeling industrial energy consumption are as varied as the ways in which energy is used in production processes this has led to the application of a broad set of emperical tools from several different disciplines in this article we provide an introduction and context for a compendium or survey of the methods used in this area this special issue of energy economics is designed to provide both newcomers and accomplished researchers with an overview of the current state of development in the are of industrial energy modeling

measuring structural change and energy use decomposition of the us economy from 1997 to 2002 abstract the steadily increasing focus on energy production and consumption has led to growing research attention to patterns of energy use within economies of particular interest has been comparing the driving forces of increasing efficiency and economic structural change input output analysis ioa and decomposition analysis have become critical tools for performing such analyses this study analyzes aggregate energy use in the united states in 1997 and 2002 to discover the causes of changing energy usage and flows results show that rising population and household consumption acted to drive up energy demand but this driving force was offset by considerable structural change within the economy particularly related to a quickly increasing trade deficit in manufacturing goods thus while total energy intensity the ratio of energy use to economic output declined by approximately 12 between 1997 and 2002 changes in the structure of the economy explain this drop more than increased energy efficiency the level of aggregation at which decomposition analyses are run was identified as a crucially sensitive parameter for the determination of structural change and future studies should specifically address the amount of detail necessary to adequately measure changes in economic structure

behavioral portfolio theory we develop a positive behavioral portfolio theory bpt and explore its implications for portfolio construction and security design the optimal portfolios of bpt investors resemble combinations of bonds and lottery tickets consistent with friedman and savage s 1948 observation we compare the bpt efficient frontier with the mean variance efficient frontier and show that in general the two frontiers do not coincide optimal bpt portfolios are also different from optimal capm portfolios in particular the capm twofund separation does not hold in bpt we present bpt in a single mental account version bpt sa and a multiple mental account version bpt ma bpt sa investors integrate their portfolios into a single mental account while bpt ma investors segregate their port folios into several mental accounts bpt ma portfolios resemble layered pyramids where layers are associated with aspirations we explore a two layer portfolio where the low aspiration layer is designed to avoid poverty while the high aspiration layer is designed for a shot at riches

testing for financial buffer stocks in sectoral portfolio models empirical implementation of the buffer stock money notion tends to concentrate either on the shock absorber aspects or the spillover disequilibrium money aspects but rarely combines both moreover a potential buffer role for nonmoney assets is usually precluded without explicit empirical testing this paper examines the role of financial buffers in an ex ante sectoral model of expenditure and portfolio behavior incorporating both the shock absorber and spillover aspects in terms of cross equation parameter restrictions these are tested for a range of different assets and liabilities using quarterly data for the u k personal sector copyright 1990 by mit press

econometric issues in macroeconomic models with generated regressors the paper critically reviews the literature on the econometric issues raised by the use of generated regressors gr in empirical models the economic rationale for the use of gr is considered with examples being drawn from several macroeconomic examples including new classical macroeconomic ncm models which postulate monetary neutrality various estimation methods are discussed for models which include surprise or unexpected terms and the strengths and weaknesses of each approach are investigated drawing upon the work of mcaleer and mckenzie 1991 situations where the typically inefficient two step estimation 2se method will be efficient are highlighted problems of model misspecification and measurement errors are also investigated an empirical section highlights some of the dangers of using uncorrected 2se estimation results through a careful consideration of many recent attempts to test the ncm monetary neutrality hypothesis copyright 1993 by blackwell publishers ltd

factors shaping aggregate energy intensity trend for industry energy intensity versus product mix understanding the mechanisms of change of energy consumption in industry has attracted much attention since the 1973 world oil crisis a popular line of research has been to decompose changes in the aggregate energy intensity of industry to give the relative impacts arising from energy intensity change and product mix change using a decomposition technique many empirical studies covering a large number of countries have been reported the main objective of this paper is to put together the empirical results reported in these studies in a coherent framework and identify possible systematic features of particular interest are the basic trends in this line of research the relative importance of energy intensity change and product mix change possible variations over time and between country groups in the energy impacts of these changes and inconsistencies in findings among studies an overview of the decomposition technique including its strengths weaknesses and role in industrial energy consumption studies is also presented

residential energy consumption in urban china a decomposition analysis abstract residential energy consumption rec is the second largest energy use category 10 in china and urban residents account for 63 of the rec understanding the underlying drivers of variations of urban rec thus helps to identify challenges and opportunities and provide advices for future policy measures this paper applies the lmdi method to a decomposition of china s urban rec during the period of 1998 2007 at disaggregated product activity level using data collected from a wide range of sources our results have shown an extensive structure change towards a more energy intensive household consumption structure as well as an intensive structure change towards high quality and cleaner energy such as electricity oil and natural gas which reflects a changing lifestyle and consumption mode in pursuit of a higher level of comfort convenience and environmental protection we have also found that china s price reforms in the energy sector have contributed to a reduction of rec while scale factors including increased urban population and income levels have played a key role in the rapid growth of rec we suggest that further deregulation in energy prices and regulatory as well as voluntary energy efficiency and conservation policies in the residential sector should be promoted

attribution of changes in divisia real energy intensity index an extension to index decomposition analysis abstract in this paper we extend the methodology of index decomposition analysis ida in energy studies by quantifying the contribution of individual attributes to the percent change of factors such as the real energy intensity index and structural change index we apply the proposed method to the real energy intensity index in the multiplicative logarithmic mean divisia index m lmdi approach a major ida technique since the m lmdi is based on geometric mean type indices and chain computation we need some appropriate method to cope with the difficulties that arise we present a numerical illustration of the proposed method using the energy consumption and real value added data of the us manufacturing industry and compare the results obtained by the fisher real energy intensity index

the role of money supply shocks in the short run demand for money abstract previous money demand models are either inconsistent with contemporaneous adjustment of the price level to expected changes in the nominal money supply or imply implausible interest rate fluctuations in response to innovations in nominal money we propose a shock absorber money demand model in which money supply shocks affect the synchronization of asset transactions and so engender a temporary increase or decrease in desired money holdings expected changes do not engender such fluctuations in real money inventories in simultaneous estimates for eight industrial countries the shock absorber model proved empirically superior

portfolio selection through maslow s need hierarchy theory inspired by maslow s need hierarchy theory we construct a new portfolio selection framework using the bi level optimization technique in which the lower level need relates to safety low risk whi

portfolio selection with mental accounts and background risk abstract das et al 2010 develop a model where an investor divides his or her wealth among mental accounts with motives such as retirement and bequest nevertheless the investor ends up selecting portfolios within mental accounts and an aggregate portfolio that lie on the mean variance frontier importantly they assume that the investor only faces portfolio risk in practice however many individuals also face background risk accordingly our paper expands upon theirs by considering the case where the investor faces background risk our contribution is threefold first we provide an analytical characterization of the existence and composition of the optimal portfolios within accounts and the aggregate portfolio second we show that these portfolios lie away from the mean variance frontier under fairly general conditions third we find that the composition and location of such portfolios can differ notably from those of portfolios on the mean variance frontier

microfoundations and the demand for money the reader should note that i write this piece in a style that aims to be accessible to that much neglected representative agent the woman on the eurostar train hence unlike the man on the clapham omnibus i assume my intrepid traveller has reasonable knowledge of monetary economics and econometrics but not of the details of the demand for money space constraints force me to indulge in a certain amount of poetic licence but i hope this results in poetic justice there have been many wars fought on this particular battlefield some with almost religious zeal on the theoretical side of the debate we sometimes have the equivalent of religious fundamentalists be they muslims jews christians etc who would dismiss almost any evidence unless it were associated with a strong microtheoretic basis as laid down in the koran talmud or bible the empirical side encompasses agnostics atheists as well as born again econometricians pure theorists inhabit the sunlit uplands while applied economists and policymakers flounder in the muddy plain below occasionally gaining solace from their copy of zen and the art of motorcycle maintenance in general in economics we do not have the luxury of controlled experiments as is the case in the natural sciences what distinguishes good microfoundations from bad and how to weight priors and statistical evidence is subject to much dispute leamer i983 hendry et al i990 as in religion sometimes there is the occasional miracle proclaimed after a suitable interval a new saint may be declared and disciples flock to the new shrine later doubts may arise as to whether a miracle really did occur human behaviour is difficult to explain let alone predict so the search for the equivalent of the holy grail ark of the covenant etc is bound to be arduous in scholarly journals we generally read of the success of the demand for money like diplomats who are sent abroad to lie for the good of their country publication may require applied economists to be somewhat economical with the actualite lovell i983 leamer i983 in this article i want to be as honest as possible about our success and failures in this area the prior information an armchair economist would consider when thinking about the demand for money over the past 40 years in western industrialised countries which have experienced moderate inflation might

energy conservation and co2 emission reduction in china s 11th five year plan a performance evaluation in the 11th five year plan fyp 2005 2010 the chinese government initiated a series of energy saving and emission reduction policies in many key fields in response to environmental pollution and climate change this paper quantitatively evaluates the performance of energy conservation and co2 emission reduction in this period the impact of these policies and potentials by integrating the contributions of energy conversion efficiency and energy utilization efficiency improvement industrial restructuring fuel mix shift and renewable energy development in a unified framework as a first attempt to introduce energy conversion efficiency improvement into a decomposition approach comprehensive and specific policies are summarized as a policy list to be investigated the results show that energy intensity and conversion efficiency effects were mainly responsible for driving down energy consumption by 637 4 mtce and 85 4 mtce respectively and they reduced co2 emissions by 1345 3 mt and 243 8 mt respectively due to a significant improvement in the 11th fyp period most of the contributions made by the conversion efficiency effect 94 come from thermal power generation and the emission coefficient effect reduced co2 emissions by 17 4 mt through developing renewable energy economic growth is still the biggest driver of energy consumption and increasing emissions while industrial restructuring and fuel mix shift effects contributed relatively little developing renewable energy and promoting economic restructuring to limit the increase of energy intensive sectors are still the main challenges and the next policy focus to achieve the targets for energy saving and carbon emission reduction in the 12th five year plan

economic reform energy and development the case of mexican manufacturing abstract given increasing concern over global climate change and national security there is a burgeoning interest in examining the relationship between economic growth and energy use in developed and developing countries more specifically decoupling energy use per unit of gross domestic product gdp has fast come to be seen as in the interests of national economies and the world as a whole recent attention has been paid to the dramatic decreases in the energy intensity of the chinese economy which fell by 55 between 1975 and 1995 do other developing economies follow similar trajectories this paper examines the energy intensity of the mexican economy for the period 1988 1998 although the long term trend in mexican energy intensity is rising the energy intensity of the mexican economy began to decline in 1988 this paper explores the factors that have contributed to this reduction diminishing mexican energy use per unit of gdp has been driven by significant decreases in industrial energy intensity we show that these changes have resulted from changes in the composition of mexican industrial structure and technological change

review on integrated strategies for energy policy planning and evaluation of ghg mitigation alternatives abstract this review paper is devoted to elaborating the status of different energy policy planning studies and the evaluation of various ghg mitigation studies it includes some of the major developments in global energy scenario status of green house gas ghg emissions issues in the implementation of kyoto protocol and ghg mitigation clean development mechanism cdm and energy scenario especially pertaining to the residential industrial and commercial energy sector in the initial sections the later part of this paper highlights the salient contributions in various literatures pertaining to energy demand forecasting in residential commercial and industrial sector ghg estimation methodologies and ghg mitigation studies in various sectors the success and difficulties in implementing various policy planning practices were also discussed in the paper most of the prominent literature in the area of energy demand and consumption analysis towards effective implementation of ghg mitigation is described in the end a comprehensive comments and recommendations based on the study were furnished

monetary anticipation and the demand for money in the u k testing rationality in the shock absorber hypothesis the carr darby shock absorber hypothesis that unanticipated changes in the money supply cause changes in real balances but anticipated changes have a unit impact on the price level and therefore leave real balances unchanged is tested using two step and joint estimation techniques for the u k two step methods appear to support the shock absorber hypothesis but the superior joint estimation technique decisively rejects the hypothesis particularly the implicit rational expectations cross equation restrictions

structural change and convergence of energy intensity across oecd countries 1970 2005 abstract this paper uses new and unique data derived from a consistent framework of national accounts to compute and evaluate energy intensity developments across 18 oecd countries and 50 sectors over the period 1970 2005 we find that across countries energy intensity levels tend to decrease in most manufacturing sectors in the service sector energy intensity decreases at a relatively slow rate with diverse trends across sub sectors a decomposition analysis reveals that changes in the sectoral composition of the economy explain a considerable and increasing part of aggregate energy intensity dynamics a convergence analysis reveals that only after 1995 cross country variation in aggregate energy intensity levels clearly tends to decrease driven by a strong and robust trend break in manufacturing and enhanced convergence in services moreover we find evidence for the hypothesis that across sectors lagging countries are catching up with leading countries with rates of convergence that are on average higher in services than in manufacturing aggregate convergence patterns are almost exclusively caused by convergence of within sector energy intensity levels and not by convergence of the sectoral composition of economies

the time frequency dependence of unemployment on real input prices a wavelet coherency and partial coherency approach abstractwhile the dependence of unemployment on real oil price and real interest rate is an important issue that has been addressed only in the time dimension little is known about the movements o

analysis and decomposition of energy consumption in the chilean industry abstract with rising energy costs and climate change concerns energy efficiency will be important in maintaining competitiveness and reducing the environmental impact of industrial activities in this paper we study the chilean industrial sector which is the largest consumer of energy within the country energy demand and co 2 emissions in chile have grown rapidly in recent years while energy supply is mostly imported and subject to disruption therefore it is important to understand energy consumption in this sector and determine which sub sectors have the greatest potential to reduce energy consumption we used the index decomposition analysis ida applying the logarithmic mean divisia index method i lmdi i to quantify the impact of diverse driving factors on energy consumption furthermore a panel data analysis was used to determine whether there are differences in energy intensity across firms with different characteristics our results show that energy intensity has risen over time although energy consumption remains stable this fact supports the idea that energy efficiency policies could play an important role for the industrial sector additionally energy consumption and energy intensity follow different patterns in each sub sector therefore we conclude that the application of differentiated sectoral policies is preferable over a single global policy

energy intensity and firm growth abstract using micro level data we attempt to identify the causal relationship between improvement decline in energy intensity and firm growth in six countries namely france germany japan korea the u k and the u s and 21 manufacturing industries during the period 1991 to 2005 we run a panel regression of firm growth using the inverse of a country and industry specific relative energy intensity rei measure with the corresponding industrial sector in the reference case the u s industry in addition to the inverse of the traditional energy intensity measure ei after controlling several firm industry and country variables we find that ei and rei may have somewhat different impacts on firm growth in terms of profits and capital accumulation when we control the heterogeneity in industrial dependence on energy firm profits in the industry club with lower rei grow faster than the six country average compared to the six country case we find that the efficient use of energy inputs has made a smaller contribution to firm growth in korea

structural change and energy use the case of the manufacturing sector in taiwan abstract this paper examines the role of sectoral shift and improvements in energy intensity of individual industries in aggregate manufacturing sector energy intensity changes in taiwan during 1971 1985 the divisia index approach is employed to decompose sectoral shift and energy intensity effects a major finding of this analysis is that changes in energy intensities of individual industries were the main influence in changes in aggregate manufacturing sector fuel and electricity intensities during the period sectoral shifts were found to contribute very little to the energy intensity changes

consistent multi level energy efficiency indicators and their policy implications in order to cope with the global warming issue most of the asia pacific economic cooperation apec economies have made energy conservation policy a top priority in terms of their energy policies the energy efficiency indicators included in the present paper focus on the micro foundation aspects there are basically two types of energy efficiency indicators namely the economic thermodynamic energy efficiency indicators that use real gdp as the denominator and the physical thermodynamic energy efficiency indicators that are based on the output volume index while the common definitions and consistent methodology used in the present paper fulfill the iea pyramid eei concept the new methodology in this paper compares the decomposition effects between upstream and downstream industries when aggregating efficiency changes these decomposition effects can thereby provide valuable explanations for the energy conservation policy needed by energy policy and government administrators

disequilibrium buffer stock models a survey abstract this paper surveys the growing literature on buffer stock models of the monetary transmission process the first part indicates the basic issue of how assumed exogenous changes in the money supply work their way through the economic system via disequilibrium in the money market after a brief historical development buffer stock models are divided into four types depending upon whether the disequilibrium arises in stocks and or flows and to whether changes in the money stock are purely exogenous the empirical implications including how buffer stock models explain the recent behaviour of money demand functions are given theoretical and empirical criticisms of the models are presented in terms of the classification system the survey concludes that whilst the buffer stock notion is an interesting idea the current models do not lend themselves to empirical testing and those models which do have performed poorly

does anticipated monetary policy matter an econometric investigation a heated debate has arisen over the policy ineffectiveness proposition associate with the work of lucas sargent and wallace it postulates that anticipated aggregate demand policy will have no effect on business cycle fluctuations so that one deterministic feedback policy rule is as good as any other from the point of view of stabilizing the economy this paper develops a methodology for empirically analyzing rational expectations models displaying this neutrality result and then applies it to the important question of whether anticipated monetary policy matters to the business cycle

energy decomposition analysis iea model versus other methods abstract in energy decomposition analysis the international energy agency iea model which is based on the laspeyres index method is included in a recent international collaborative initiative on energy indicators for sustainable development for possible adoption iaea 2005 energy indicators for sustainable development guidelines and methodology international atomic energy agency vienna www pub iaea org mtcd publications pdf pub1222 web pdf from an empirical analysis using the data of the united states we found that the residual term given by the iea model could be significant and that the estimates of the impacts of structure and intensity changes given by the model could be quite different from those given by other decomposition methods the residual term tends to be large when changes in structure and or energy intensity variables are significant since changes in these variables over time are generally larger in the developing countries than in the iea countries there is the question about whether the iea model is an appropriate decomposition method for the developing countries

disaggregated analysis of us energy consumption in the 1990s evidence of the effects of the internet and rapid economic growth abstract this paper decomposes us energy use from 1988 to 1998 and attributes the changes in energy use to three underlying factors activity structure and intensity for this study we use a bottom up methodology by separately decomposing delivered energy use in six sectors travel freight manufacturing industries non manufacturing industries residential and services the most commonly used indicator of energy efficiency in the total economy the ratio of energy consumed to unit of gdp e gdp created can often be misleading the rapid decline in the e gdp ratio in recent years has been used to support assertions that the internet and information technologies in general have enabled improvements in energy efficiencies however our disaggregate analysis suggests that energy intensities on average are falling more slowly than ever before while actual energy use increased faster than at any time since 1970 the decline in the e gdp ratio in the mid to late 1990s owes much more to structural changes in the demand for energy services than to falling energy intensities

the buffer stock notion in monetary economics not the least of harry johnson s contributions to our discipline was the series of survey papers on aspects of monetary economics which he produced during the 1960s and 1970s it is no exaggeration to say that the way in which the literature of monetary economics is organised even now follows the design which johnson first set out in 1962 and built on in the subsequent decade nevertheless the subject has not stood still and one of the more interesting developments of the last few years has involved the introduction of what has been variously described as the disequilibrium money shock absorber or as i prefer to call it the buffer stock notion into monetary economics the development of this line of thought was getting underway before johnson s untimely death much of it indeed under the auspices of his own research programme at the lse even so this did not happen early enough for the relevant ideas to be put in their proper niche by johnson himself and the buffer stock approach is not yet fully integrated into the mainstream of monetary economics much of the relevant literature is empirical concerned with modelling particular aspects of the monetary experience of specific countries hence it is fragmented and contains few papers which attempt a coherent account of just what this approach is and how it relates to other approaches to monetary analysis although essays by goodhart 1982a b and judd and scadding 1982a contain important discussions of these issues to the best of my knowledge only jonson 1976a and knoester 1979a have devoted entire papers solely to this central issue and these are relatively inaccessible and hence less widely known than they deserve to be in this lecture i shall attempt to give a brief account of the essentials of this approach first i shall sketch out its microeconomic background and then i shall discuss those theoretical characteristics which differentiate it from the neo austrian analysis of robert e lucas jr and his associates as well as from the conventional keynesian approach to monetary economics last but by no means least i shall argue that it yields simple theoretical insights into important empirical and policy related issues which are troublesome for alternative approaches in short my tribute to harry

industry energy use and structural change a case study of the people s republic of china abstract this paper examines the effects of structural change and improvements in energy intensities of individual industries in aggregate industry energy intensity changes in china during 1980 88 the divisia index is used to decompose the energy intensity effect and structural effect a major finding of this analysis is that the main contribution to changed aggregate energy intensity was from the changes in energy intensities of individual industries during the period structural effects were found to contribute little to the aggregate energy intensity changes

energy use in a transitional economy the case of poland abstract this paper provides a sectoral analysis of how energy use has changed in poland since the 1970s with particular emphasis on changes since the country began its transition from a centrally planned to a market economy in 1990 total final energy use in 1991 was 25 below that in 1988 and the lowest since the mid 1970s the most important factors behind the large decline in polish energy use in 1990 were a sharp fall in industrial output and a huge drop in residential coal use driven by higher prices energy use declined by only 2 in 1991 which was less than the fall in gdp of 8 key factors that lessened the decrease in energy use after 1989 were a rise in energy intensity in many heavy industries and a shift toward greater use of cars and trucks in passenger and freight transport higher energy prices have had an evident impact on residential coal use but in industry there was relatively little sign of energy conservation in 1991

manufacturing energy use in eight oecd countries decomposing the impacts of changes in output industry structure and energy intensity this paper examines trends in manufacturing energy use in eight oecd countries decomposing the changes that occured between 1973 and 1987 into the effects of changes in aggregate manufacturing activity industry structure and energy intensities measured at the industry group level while manufacturing production grew in every country except the uk the rate of growth was variable from nation to nation structural change led to modest reductions in energy use in most countries although in norway structural change led to substantial growth in energy use the reduction in energy intensities was strikingly uniform across all nations ranging from 20 norway to 36 japan over the period of the analysis while other studies have used divisia decomposition techniques we use an alternative method based on laspeyres indices a comparison of the two techniques shows that they yield closely similar empirical results although the laspeyres approach is more easily interpreted while the interactions between changes in structure and intensity are arbitrarily assigned to the two factors by the divisia approach the lapeyres method yields interaction terms that explicitly account for such effects