intergenerational equity the capital environment trade off abstract this paper examines the trade off between capital accumulation and environmental quality that determines an intergenerationally equitable program according to the rawls maximin criterion this trade off is explored by an analysis of regular maximin programs in the framework developed by brock this results in a constant utility path supported by competitive prices with government imposed effluent charges and environmental rentals sufficient conditions for a regular maximin path to satisfy a hartwick rule in deciding on the combination of capital and environmental quality left to future generations are given

equilibrium valuation of natural resources the purpose of this paper is to provide a theoretical investigation of equilibrium spot and futures price behavior in a nonrenewable commodity market the underlying commodity is nonrenewable in the sense that the reserve level of the commodity is expected to decline over time in the absence of successful discoveries of additional reserves i wish to understand how the nonrenewable nature of the commodity influences the intertemporal extraction of the commodity equilibrium spot price behavior and the prices of derivative assets traded on the nonrenewable commodity there is considerable disagreement among economists whether resources are exhaustible in the sense of resource constraints becoming binding on our society in the foreseeable future some economists have argued that natural resources are being depleted at

market structure and resource depletion a contribution to the theory of intertemporal monopolistic competition a the theory of resource extraction in the model we present there exists a produced substitute to the natural resource the primary question with which we are concerned is the interaction of the resource and its substitute the model we present can thus be thought as providing a link between rent and production based price theories one of the general results in the earlier literature on resource extraction is that deposits with lower extraction costs will be exploited first the analysis

a microeconometric test of the theory of exhaustible resources abstract this paper generalizes extant developments of the economic theory of exhaustible resource production derives and extends a halvorsen and smith 1991 quarterly journal of economics 106 123 140 type test of the theory and applies the test to a sample of natural gas resources to facilitate our empirical test we extend the model developed in chermak and patrick 1995 journal of environmental economics and management 28 174 189 to explicitly account for the fact that the extracted resource gross product must be processed to obtain the final saleable product duality theory is used to derive econometric models with which the theory is statistically tested using panel data from 29 natural gas wells shadow prices of the resource stock through time which are generally unobservable but necessary for the test are estimated via the indirect cost function contrary to the extant literature we find inter alia that i at any point in time ceteris paribus the in situ resource price a decreases with gross production and b increases with final production and ii we cannot reject the theory of exhaustible resources i e producer behavior is consistent with the theory

better monetary control may increase the inflationary bias of policy textabstractexplores the implications of imperfect monetary control and uncertainty about the trade off between output and inflation to discretionary policy impact of imperfect control of money growth on policymakers incentive to create surprises consequences of imperfect control of money growth for optimal monetary policy welfare effects of uncertainty about the extent to which inflation affect output

on r d timing under uncertainty abstract in this paper we analyze the problem of endogenous r d timing when technological breakthrough and innovation are random events in a dynamic framework which involves the substitution of an exhaustible resource oil for instance by an alternative technology the backstop that provides an everlasting source of energy under fairly general assumptions we characterize the pattern of exploitation of both energy sources and study the effect of uncertain technological breakthrough on the r d timing decision on resource prices and on the pattern of resource use in comparison to the certainty case it is shown that uncertainty consideration might delay the undertaking of r d and might lead to a more rapid resource depletion pattern for a considerable range of r d capital costs while the opposite result the conventional wisdom holds only for some other range

monopoly extraction of a nonrenewable resource facing capacity constrained renewable competition abstract this paper studies monopoly extraction of a nonrenewable resource with the presence of a competitively supplied capacity constrained renewable substitute the monopolist staves off the renewable supply when the latter becomes competitive and then lets the resource price jump up

resource pricing and technological innovations under oligopoly a theoretical exploration this article presents a non technical survey of some recent theoretical analyses of the pricing of exhaustible natural resources and the incentives for developing resource substitutes under oligopoly and looks in perspective at what appear to be the central considerations among the main conclusions that are presented are those that bear on the pace of r d activity the phenomenon of sleeping patents oligopolistic pricing before and after the resource substituting invention the timing of innovation and the transition from one resource base to another it concludes with an analysis of a national r d policy for a resource importing country

optimal growth resource amenities and the preservation of natural environments this paper examines the conditions for which it is optimal to permanently preserve natural environments in which a productive natural resource is found the conditions are more restrictive than those previously indicated in the literature on the economics of natural environments increasing consumption and declining commodity prices are not sufficient to warrant permanent preservation the initial capital stock can be an important determinant of the optimal level of preservation in addition resource amenity values will increase the initial resource price and decrease the rate of growth of the resource price the natural world provides a variety of services to the human community natural resources are essential inputs in the production of goods and services in addition the natural world generates a variety of amenity services including the scientific recreational and aesthetic value of preserved natural environments krutilla 1967 krutilla and fisher 1975a this paper examines the impact of resource amenity values on the optimal growth of an economy which depends upon natural resource inputs for the production of goods and services in particular the paper examines the conditions under which it is optimal to permanently preserve some natural environments in which the productive resource is found the conditions which warrant permanent preservation are more restrictive than previously indicated by the literature on the economics of natural environments increasing consumption and declining commodity prices are not sufficient to warrant permanent preservation in addition the initial capital endowment can be an important determinant of the optimal level of preservation

managing the quality of a resource with stock and flow controls abstract we consider a class of problems which we call sfq problems in which both stocks and flows can be controlled to promote the quality of a valued resource such as environmental quality or public infrastructure under the optimal policy periodic restoration of the stock of quality complements positive but variable abatement of the flow of damages when deterioration is more rapid or highly variable or when abatement is more expensive relative to restoration the optimal policy relies relatively more on restoration when deterioration is due to private firms or individuals a flow tax equal to the present value of marginal damages provides efficient incentives for abatement this tax rises at first as quality worsens but eventually falls as restoration nears the revenues raised by such a tax approximates the cost of restoration with the two quantities converging as the variance of flows goes to zero we discuss the implications of the sfq model for a range of real world problems in the environmental arena and for the management of public infrastructure but the lessons are general and we briefly discuss how they apply to private stocks of physical and human capital

general equilibrium effects of green technological progress this paper demonstrates that technological progress in production of renewable energy can influence the extraction path of fossil fuels indirectly by a change in the equilibrium interest rate we show in a simple model that the indirect effect can be so strong that first period or even aggregate extraction levels rise with green technological progress contrary to popular expectations

model uncertainty learning and the gains from coordination this paper considers gains from international economic policy coordination when there is uncertainty concerning the functioning of the world economy but also learning about the true model on the part of policymakers the paper reports estimates of plausible alternative versions of a standard two country model activist policy either coordinated or uncoordinated may produce large welfare losses in the absence of learning if policymakers behave in the wrong model hence exogenous money targets and freely flexible exchange rates may be best however model learning from observations on macroeconomic variables causes coordinated policies to dominate activist uncoordinated policies or exogenous money targets copyright 1991 by american economic association

a theory of ambiguity credibility and inflation under discretion and asymmetric information this paper develops a positive theory of credibility ambiguity and inflation under discretion and asymmetric information the monetary policymaker maximizes his own politically motivated objective function that is positively related to economic stimulation through monetary surprises and negatively related to monetary growth the relative importance he assigns to each target shifts stochastically through time his current preference trade off is known to him but not to the public when choosing the state contingent path of money growth for the present and the future the policymaker compares the benefits from current stimulation with the costs associated with higher future inflation expectations current monetary growth conveys information to the public about future money growth because there is persistence in the policymaker s objectives although expectations are rational information is imperfect because monetary control procedures are imprecise as a result the public cannot correctly distinguish persistent changes of emphasis on different policy objectives from transitory monetary control errors the public becomes aware of changes gradually by observing past monetary growth credibility is defined in terms of the speed with which the public recognizes changes in the objectives of the policymaker credibility is lower the noisier monetary control and the more stable the objectives of the policymaker looser monetary control and a higher degree of time preference on the part of the policymaker induce him to produce higher and more variable monetary growth when the policymaker is free to determine the accuracy of monetary control he does not always choose the most effective control available in spite of the fact that monetary surprises always have an expected value of zero the reason is that ambiguous control procedures enable the policymaker to generate positive surprises when he cares more than on average about economic stimulation he leaves the inevitable negative surprises for periods in which he cares more about inflation prevention this result provides an explanation for the fed s preference for ambiguity recently documented by goodfriend 1986 the policymaker is more likely to pick more ambiguous control procedures the more uncertain his objectives and the higher his time preference the paper also provides a theoretical underpinning for the well documented crosscountry positive correlation between the level and the variability of inflation

the management of fragile resources a long term perspective excessive exploitation diminishes the capacity of natural resources to withstand environmental stress increasing their vulnerability to extreme conditions that may trigger abrupt changes the onset of such events depends on the coincidence of random environmental conditions and the resource state determining its resilience examples include species extinction ecosystem collapse disease outburst and climate change induced calamities the policy response to the catastrophic threat is measured in terms of its effect on the long term behavior of the resource state to that end the l methodology developed originally to study autonomous systems is extended to non autonomous problems involving catastrophic threats

optimal transition to backstop substitutes for nonrenewable resources abstract we analyze the optimal transition from a primary nonrenewable resource to a backstop substitute for a class of problems characterized by the property that the backstop cost decreases continuously as learning from r d efforts accumulates to increase the knowledge base the transition policy consists of the r d process and of the time profiles of the primary and backstop resource supply rates we find that the optimal r d process follows a most rapid approach path mrap the knowledge process associated with r d should approach some endogenously derived target process as rapidly as possible and proceed along it thereafter thus if the initial knowledge level is sufficiently low and the cost structure justifies r d activities the r d efforts should be initiated without delay at the highest affordable rate and slow down later on this pattern contrasts previous findings that typically recommend a single humped r d process with a possible initial delay

differential game models in management science abstract this paper reviews a number of differential games applications to management science and operations research problems published with a few exceptions during the last decade the purpose of the article is to provide the reader with an up to date account of the state of the art within this field after having stated in an introduction the general differential games framework as well as some conceptual problems we proceed to review the models which have been divided into the following functional areas investment consumption and employment production inventories and maintenance marketing advertising pricing and rd bargaining natural resources and pollution the survey concludes with some remarks on applicability solvability and directions for future research

ecological economics and scientific controversies lessons from some recent policy making in the eec abstract contrasting the very limited scientific evidence on the forest dieback issue with the sudden adoption of policies on air pollution decided in the frg 1983 1984 and extended to the european community 1985 we propose an interpretative framework for the real internalization process at work in what was tantamount to a social crisis for public opinion the media and political actors we conclude that open scientific controversies on some environmental issues effects causes solutions pave the way for some actors to use the issue for their own techno industrial strategies quite alien to ecological constraints in cases of very high uncertainties on impacts it becomes impossible to apply conventional social cost benefit analysis scba as an optimizing tool we propose to develop economic analysis as a negotiation language and to give pride of place to the value of learning time and to the crucial role of technological pluralism as a condition for flexibility in the future

market structure and resource extraction under uncertainty this paper compares the rate of extraction of a natural resource under alternative market structures when there is uncertainty about the date of discovery of a substitute or about the date of discovery of a new deposit the analysis shows that imperfectly competitive market structures are excessively conservationist for any value of the initial stock of the natural resource the price is higher than in competitive equilibrium and therefore higher than the socially optimal level but markets with limited competition may have a higher price than markets with pure monopoly the same monopolist controlling the natural resource and its substitute in particular we find that the highest prices are associated with nash quantity setting duopolists the next highest prices occur in markets in which the monopolist controls the resource but the substitute is competitively produced the pure monopolist sets his price lower than this while the market in which a monopolist controls the substitute but the resource is competitvely owned is still lower

deregulation endogenous expectations and the evolution of industry structure this analysis of deregulation as a government directed switch of regime from monopoly to competition treats the incumbent producer as a monopolist who anticipates that deregulation will occur at some future date and result in the deployment of substitutes producing a competitive environment the results suggest that the ceiling for the rise in world gas prices will fall capping any domestic price rise the model indicates that any drop in world prices will be moderated by an incumbent producer e g opec who uses market variables like price to improve his forecast of competitive entry when the incumbent recognizes that higher monopoly prices raise the probability of entry the resulting monopoly path of prices will lie closer to the postulated path of initial competitive prices resulting in a less substantial drop in price when the switch of regime actually occurs 27 references

the costs of uncoordinated regulation patents encourage firms to undertake research and development by protecting innovator revenues from competition controls on pollution of the environment are intended to close the gap between the private and social costs of natural resource use this paper examines the incentives that are created by the interaction of these two separate pieces of regulation a model is developed that shows how an incumbent patent holding firm can take advantage of environmental regulation to exclude rivals from her market

extraction of a resource with a substitute for some of its uses important resources e g oil may be used for several purposes there may exist good substitutes for such a resource in some of its uses but no substitute in other uses the price and extraction paths for the resource are analysed for several market structures some of these paths differ substantially from the corresponding paths for the case of no substitute and for the case of a substitute for all the resource s uses in particular a jump in the resource price may occur l extraction d une ressource quand il existe un substitut pour certains des usages qu on peut en faire certaines ressources importantes comme 1 huile par exemple peuvent etre utilisees a plusieurs fins dans certains cas il se peut qu il existe des substituts pour certains usages qu on peut en faire alors que dans d autres cas il n existe pas de substituts l auteur examine la tarification et les diverse strategies d extraction dans des structure de marches differentes certaines de ces strategies d extraction different substantiellement de celles qui auraient ete utilisees soit dans le cas oiu aucun substitut n existe soit dans le cas ou substitut existe pour tous les usages qu on peut faire de la ressource en particulier on peut observer un saut dans le prix de la ressource

double limit pricing abstract we study oil extraction by a monopolist who faces demand from a climate aware and a climate ignorant region a renewable perfect substitute for oil is available at constant unit cost the climate aware region uses a carbon tax and a renewables subsidy as policy instruments due to heterogeneity in climate policies between regions the oil price path possibly contains two limit pricing phases we specify conditions under which a tightening of climate policies results in lower initial carbon emissions a renewables subsidy and a carbon tax effectively force the monopolist to sell more oil to the climate ignorant region during the stage when demand from the climate aware region has already vanished we calibrate the model and numerically investigate climate damage and welfare effects of the policies of the climate aware region we find that both the carbon tax and a renewables subsidy lower climate damage even though cumulative emissions are fixed

uncertainty in tax reform the case of an extractive firm abstract since as early as adam smith warnings have been issued concerning the possible harmful effects of uncertainty in tax policy this paper attempts to examine the consequences for an extractive monopolist of i perceived future changes in the probability of tax reform and ii perceived future changes in the firm s expected profitability under the new tax structure the results of this analysis suggest that even the threat of future tax changes can have a significant and lasting impact on the present behavior of extractive firms and the markets in which they operate this arises precisely from the firm s attempt to shift the expected burden or gain in an intertemporally optimal manner moreover while the paper focuses on tax policy the model is amenable to interpretation in the case of potential nationalization or in the case of any regulatory scheme that might modify the firm s future profit function as an example of the latter it has recently been suggested that an atmospheric users charge be levied on the carbon content of fuels as they leave the mine or wellhead the potential impact on extractive firms of this proposed tax on coal oil and gas designed to raise revenues to help reduce emissions as well as the u s budget deficit could be examined with the help of a similar model finally the impact on opec of uncertainty surrounding events in the middle east could similarly be modeled

better monetary control may decrease the distortion of stabilisation policy a comment higher uncertainty about the effects of policy instruments reduces a policymaker s inclination to actively engage in shaping economic policy if a credibility problem exists then this is beneficial however in the case where the policymaker has private information about an economic shock higher uncertainty is costly hence the policymaker faces a trade off when he decides on the degree of control of monetary instruments it is shown that the optimal degree of uncertainty about the effects of policy depends on the economic preferences of the policymaker and the magnitude of the variance of the shock which is private information

scarcity growth and r d abstract the limits to economic growth due to resource scarcity can be alleviated only by the development of backstop substitutes this paper combines resource based economic growth with r d to reduce the cost of backstop technologies characterizing the entire dynamics of optimal growth and r d processes we find that an economy s growth prospects depend on its type as determined by its production technology and learning ability and by its knowledge capital endowment a wide variety of growth patterns emerges ranging from cases in which an economy that without r d eventually stagnates converges to a steady state is diverted by r d onto a path of sustained growth to cases in which r d is not warranted resource scarcity is shown to encourage r d due to the increased reliance on the backstop technology

environmental economics an evolutionary critique and a plea for pluralism abstract environmental economics is a contradiction in terms the contradiction is intuitive to the puzzled lay person inquiring about the nature of our subdiscipline it is explicit to those who think of environmental systems in terms of complex evolving interconnectedness and identify the economic model with the atomistic and mechanistic assumptions of classical mechanics within the subdiscipline we try to resolve the contradiction by internalizing externalities by matching market feedbacks with environmental relations while acknowledging that insights can be drawn from the market view of environmental problems i argue in this essay that 1 the contradiction is nerver resolved 2 multiple incongruous perspectives are all we have for understanding the interface between economic and environmental systems and 3 environmental economics will thrive with a return to philosophical pluralism to the open acceptance of the contradiction

deregulation as a switch of regime price effects using a modified hotelling rule abstract concern over rising energy prices has led to support for government intervention to regulate the price of domestic non renewable energy resources however us policy makers appear to be looking more towards competition rather than regulation to decide who will provide energy resources and how these will be priced this paper models possible dynamic price effects occasioned by the removal of a regulatory constraint the analysis focuses on a government decision to eliminate binding price ceilings on a non renewable energy substitute when the incumbent resource is monopolistically controlled using deregulation of natural gas as an illustration under certain conditions it is shown that one will get continuity of marginal revenue and a fall in the world price following decontrol the expiration of a patent or a decision to grant mineral rights on federal land in general however the model suggests that both marginal revenue and prices will be discontinuous and that the discontinuity is likely to result in a fall in price

optimal combination of pollution prevention and abatement policies the case of agricultural drainage the adoption of pollution prevention and abatement practices is examined in the context of a model of exhaustible resource use with a backstop technology for the sake of concreteness the paper focuses on the problem of water logging caused by the subsurface accumulation of agricultural drainwater in modelling this problem a region s underground capacity to store drainwater is considered an exhaustible resource while the installation of subsurface drainage is viewed as the corresponding backstop technology or abatement practice the exhaustible resource is typically over exploited due to common access problems which forces a suboptimally fast adoption of the abatement practice conservationist irrigation technologies such as drip and sprinkler systems tend to reduce drainwater generation and their adoption could increase social welfare by delaying the abatement stage public policies are suggested to increase the adoption of such conservationist technologies data from california is used to illustrate the results and to demonstrate the efficacy of the model for policy purposes while the setting used for the analysis in this paper is quite specific i e water logging the same general modelling ideas may be applied to many other problems of environmental degradation

a comparison of the skewness of stock return distributions at earnings and non earnings announcement dates abstract this paper presents evidence that stock return prediction errors are less positively skewed in the time period surrounding accounting earnings report announcements than in a subsequent non announcement period assuming that information available about firms in non announcement periods depends on discretionary disclosure practices of firms and discretionary search for information by investors the results suggest that earnings reports cause more extreme bad news to be reflected in stock prices relative to discretionary sources of information

models of resource markets and the explanation of resource price behaviour abstract much of the recent theoretical work in resource economics has been aimed at relaxing the stringent simplifying assumptions of the basic hotelling model in an attempt to better explain observed resource price behaviour this paper surveys the characteristics of exhaustible resource markets that are likely to be important for the development of successful positive models in particular we discuss exploration and its relationship to production and market price the effects of various forms of uncertainty on price behaviour and for some resources the treatment of durability finally we address the question of whether producer behaviour can properly be viewed as that of dynamic optimization this paper should be seen as an attempt to stimulate discussion over research directions and priorities in resource economics

towards an ecological economics of sustainability abstract persistent disagreement both as to the interpretation to be given to sustainability and as to the relation between ecological and economic sustainability has hindered the development of an ecological economics of sustainable resource use this paper identifies the main concepts of sustainability deriving from the two disciplines in order to explore the difference implied by an ecological approach to the problem it is argued that present economic and ecological approaches are largely disjoint and that they address basically different phenomena by combining the efficiency requirements of what is usually thought of as economic sustainability with the stability requirements of an ecological approach it is shown that an intertemporally efficient allocation of resources that satisfies the conditions for constant levels of consumption is not necessary to assure ecological sustainability ecological sustainability requires that the allocation of economic resources should not result in the instability of the economy environment system as a whole

optimal consumption and the timing of the resolution of uncertainty abstract as is well known consumers want to accumulate precautionary savings in the face of income risks when their marginal utility is convex prudence in this paper we explore the effect of the timing of the resolution of income uncertainty on savings an agent faces uncertainty about his income at date t 2 what is the effect of being informed that the uncertainty will be resolved at date t 1 on the consumption at date t we show that the effect is positive if and only if marginal utility is convex prudence when either the risk free rate is equal to the rate of pure preference for the present or when the utility function is hara the intuition is that an early resolution of uncertainty allows for time diversifying the risk it therefore plays a role similar to a reduction of the income risk whose effect on savings is negative under prudence

the transition to nondepletable energy social planning and market models of capacity expansion as depletable energy becomes increasingly scarce and expensive energy markets will turn to a multitude of nondepletable sources of energy the rate at which this transition occurs will depend on the quantities of fuels available production costs government policies and the choices of major producers in this paper we analyze the transition to nondepletable fuels first in the context of a social planning model then using a stackelberg model to represent the dynamic game between owners of depletable and nondepletable fuels we show that the pace of capacity expansion in the nondepletable sector has a strong influence on socially optimal energy prices and production rates with the stackelberg model we characterize the strategy a market dominating producer of depletable energy will use against the nondepletable sector numerical implementations of this model allow us to compare the socially optimal and market determined outcomes our results show how a dominant depletable energy producer can manipulate the nondepletable sector by pricing at the marginal cost of backstop output during an early phase of resource depletion

a martingale characterization of the price of a nonrenewable resource with decisions involving uncertainty abstract this paper presents a general model of nonrenewable resource consumption and exploration decisions involving uncertainty about the time of occurrence of an event such as exhaustion stock discovery or a substitute development the resulting price process is characterized in terms of necessary and sufficient conditions under which the price is expected to rise at a rate equal to greater than or less than the discount rate the general model is illustrated and the price process and the optimal decisions are characterized by examining the three types of uncertainty indicated above

intertemporal valuation in an unpredictable environment abstract the inherent unpredictability of ecological systems is a vital feature for the development of theories at the interface between economics and ecology such unpredictability is caused by instabilities that are intrinsic parts of ecosystem function succession and evolution the complexity of ecological dynamics undermines the simple probabilistic treatment of uncertainty based on the equilibrium paradigm common in traditional environmental economics we investigate an important alternative by representing the dynamics of the biogeophysical system as an infinite sequence of instabilities this leads to a stochastic process exhibiting an exponentially growing variance our analysis is carried out in a macroeconomic setting in a situation where the value system here formalized in terms of risk averse social welfare functions contains at least two distinct aspects consumption rate and the state of the environment the central variables for intertemporal valuation i e the time dependent expected values of the two welfare function components are calculated using the probability distribution describing the environmental dynamics one result is that if the unpredictability of the environmental dynamics is taken into account then the social discount rate for environmental existence values may well be negative

invention and innovation under alternative market structures the case of natural resources this paper examines the interactions between market structure and resource allocation over time when there is endogenous technical progress the structures considered are a planned economy pure monopoly and competition with patent rights in an efficient allocation the date of invention coincides with the date of innovation the date at which technology is used this is also true with a pure monopoly but monopoly retards technical progress relative to the efficient level competition for patents rights to a new technology results in excessively rapid technical progress if the resource endowment of the economy is sufficiently large also competition may lead to sleeping patents where invention strictly precedes the date of innovation

are renewable energy policies climate friendly the role of capacity constraints and market power abstract this paper studies the impacts of renewable energy support policies on energy prices fossil fuel supply and thus carbon emissions from fossil fuels such supports are climate friendly if the renewables are already competitive against fossil fuels but if the renewables are not yet competitive the climate change impacts are often ambiguous and are sensitive to capacity constraints of renewables production and to the fossil fuel market structure if the renewables do not have capacity constraints then the subsidies are subject to the green paradox under perfect competition but might be climate friendly under monopoly supports for capacity constrained renewables under perfect competition lead to more current fossil fuel supply but delay fossil fuel exhaustion time and these effects are reversed under monopoly our results highlight the importance of considering the long term effects on fossil fuel supply as well as capacity constraints and market power in designing renewable energy policies and evaluating their carbon footprints

caution and conservatism in the making of monetary policy does society benefit from the delegation of monetary policy to cautious and conservative central bankers we offer a critical view on the delegation literature and relax seemingly innocuous assumptions about uncertainty and preferences first caution improves credibility but does not obviate the need for central bank conservatism second previous models of delegation have focused on suboptimal forms of conservatism we derive optimal concepts of conservatism that mitigate or eliminate any residual problem of credibility third we rationalize why credible monetary policy may be conducive to stable inflation and output

multiplicative uncertainty in a model without inflationary bias abstract this paper shows that an increase in the degree of multiplicative uncertainty regarding the effectiveness of monetary policy will reduce social loss when policymaker s preferences are highly uncertain this result is still valid even when there is no distortion in the market

the effect of natural resources on a sustainable development policy the approach of non sustainable externalities abstract the debate about the importance of non renewable resources for economic development between optimists and pessimists shows that the extensive depletion of non renewable resources particularly oil along with a higher level of consumption could have a significant impact on the economic development of future generations based on this debate this paper proposes criteria under which the depletion of non renewable resources would create excess costs for future generations therefore this paper aims to answer the question what will be the impact of the depletion of non renewable resources on sustainable economic development accordingly a sustainable development policy appears feasible by minimizing non sustainable externalities which derive from future externalities that weigh the benefits from a previous employment of natural resources the research based on qualitative analysis clarifies the reasons for and the extents of taking sustainability into account as well as points to difficulties of implementing policies to time the transition towards a sustainable economic development finally the research shows the implications of this approach for environmental degradation the depletion of non renewable resources and energy production

renewable resource management with a backstop substitute and nonautonomous prices abstract policies for managing a renewable resource in the presence of a backstop substitute are analyzed conditions for renewable and backstop resources to be relevant are discussed the extinction issue the role of myopic decision rules and the optimality of singular arc policies are examined with nonautonomous prices

the pre industrial energy crisis and resource scarcity as a source of transition the historical british timber famine of the 18th century is re examined in the light of contemporary concerns about transitions in energy use the alternatives of scarcity induced and opportunity led transition are considered in relation to the economics of sustainable fuel timber production for industrial uses the paper finds that the production of timber was an economically sustainable use of land and that observations of timber shortages may have therefore either been claims made by interests favouring the use of coal or the consequence of abandonment of fuel timber cultivation in favour of coal use the longer term sustainability of domestic uk sources for industrial timber fuel timber is shown to be problematic the consequences of the alternative views of the timber famine for contemporary policies attempting to promote transition to low carbon or sustainable energy use are examined in particular if the present is an echo of the past opportunity rather than crisis may be the more powerful lever of change

the multiperiod information content of accounting earnings confirmations and contradictions of previous earnings reports in this study we propose and test the hypothesis that investors reevaluate earnings announcements in the light of postannouncement information 1 our argument for multiperiod price reactions to earnings news is motivated by the literature linking price responses to earnings persistence 2 when earnings are announced we assume that investors are unable to determine with certainty the persistence of an earnings

monopolistic resource extraction and limit pricing the market penetration of competitively produced synfuels this paper analyzes the market penetration of a competitively produced synfuel e g solar energy in a market that is initially dominated by a resource extracting monopoly the availability of the renewable substitute depends not only on the price cost ratio but also on the installed capacities which reflect historical investments as a consequence the resource monopoly faces a discontinuous residual demand schedule the dynamic interactions between the resource cartel and the synfuel industry are modelled as a differential game the open loop nash equilibrium is applied to this game it will be shown that the commodity price will exceed the production costs of the backstop and that the transition from the periods of resource dependence to the backstop technology will be gradual

alternative approaches to economic environmental interactions abstract the key questions raised by recent developments in resource and environmental economics have been what useful economic functions does the environment provide and how are these functions affected by the process of economic environmental interaction this paper distinguishes between two different formal approaches to answering these questions the more conventional approach which is concerned with the optimal allocation of economically valuable exhaustible resources and an alternative analysis that considers the trade off between on the one hand environmental quality and on the other resource depletion and waste generation by the economic process to illustrate and extend the latter approach a model is constructed to show how this trade off might lead to continuously declining environmental quality and a future ecological constraint society must therefore optimally allocate output between consumption and services to improve the environment and choose between increased capital accumulation and environmental degradation although strict application of such a model may be limited it has wider implications for the role of technological change and the value of the environment in any system experiencing deteriorating environmental quality

sustainable management of fossil fuels a dynamic stochastic optimization approach with jump diffusion abstract this paper deals with a relevant aspect of energy modeling i e fossil fuels management the issue is faced by using purely operational research techniques which are suitable in this context in particular a dynamic stochastic optimization model is developed to optimally determine use and stock of resources to be employed in consumption and investments in a wide economic sense human and physical capital r d etc it is assumed that a sustainability criterion drives the optimality rules i e decisions are also grounded on the well being of future generations the policymaker maximizes an aggregated intergenerational expected utility under the dilemma of present consumption conservation of natural resources for the future in reference to standard environmental economic theory jump diffusion dynamics for the stock of natural resources and infinite time horizon are assumed extensive numerical experiments complete the analysis and contribute to determine fossil fuels management policies showing that long term investments make the difference for the well being of present and future generations

how naive is the market s use of firm specific earnings information recent studies suggest the apparent delay in the stock price response to earnings announcements i e post earnings announcement drift is caused by investors who underestimate the autocorrelation of seasonally differenced earnings persistence i present results that suggest 1 a firm s future persistence is predictable on the basis of its past persistence 2 the immediate stock price response to earnings is positively related to historical persistence 3 post earnings announcement drift is independent of historical persistence and 4 consistent with 2 and 3 the difference between a firm s current observed persistence and that implied in stock prices is independent of its historical persistence these results extend prior research by demonstrating that investors are aware not only that seasonally differenced earnings are autocorrelated but that investors recognize firm specific differences in the magnitude of the autocorrelation

optimal timing of technology adoption abstract in a dynamic programming framework this paper investigates the optimal timing of technology adoption by a competitive firm when technology choice is irreversible and the firm faces a stochastic innovation process with uncertainties about both the speed of the arrival and the degree of improvement of new technologies a numerical example illustrates how the optimal timing decision is affected by changes in parameter values reflecting market conditions the firm s initial technological attributes and the characteristics of the stochastic innovation process some of these effects turn out to be in sharp contrast to common intuition contrasting the optimal decision rule derived here with the rule obtained under the net present value shows that the former implies a slower pace of adoption than implied by the latter the optimal decision rule is generalized for the case of multiple technology switches and it is shown that for all the switching decisions except the last one the optimal rule satisfies the net present value criterion

embargo threats and the management of emergency reserves this paper develops a model of a country that can import oil in normal times but is subject to random trade disruptions to mitigate the effects of these disruptions some of the imported oil is stockpiled there are two kinds of uncertainty involved the date at which an embargo will be imposed is not known in advance and given that an embargo has been imposed the date at which it will end is uncertain optimal behavior is analyzed by means of dynamic programming 13 references

innovation and natural resources a dynamic game with uncertainty we analyze a dynamic game between a resource exporting country and an importing country that is seeking to invent a substitute technology the time of innovation is an uncertain function of the importer s r d efforts which cannot be committed in advance the game has a unique equilibrium in markov strategies the importer s r d efforts grow over time the exporter s output often decreases with time before innovation occurs but strategic factors imply that the opposite can happen the output path is characterized by a simple modification of hotelling s rule to account for uncertainty and strategic behavior

on the ideological foundations of environmental policy abstract this paper is an investigation into the philosophies of science inherent in the development of two schools of thought in environmental economics neoclassical and steady state analysis it attempts to gain clearer insight into the direction of inquiry and the policy options of each by contrasting their perspective metaeconomic structures the sets of first principles shaping theoretical development the ontology of steady state analysis while accepting the general principle of rationality differs from neoclassicism by including the ecological interaction of people with nature as an element of spicies being the cosmology of the two schools differs in the steady statists take the laws of thermodynamics and the principle of biospheric assimilation of first principles questions of absolute scarcity take primacy over the neoclassical focus on problems of relative scarcity in policy analysis consequently steady state theorists view the environment problem in its global dimensions over a longer time continuum the result is that steady state policy prescriptions are not necessarily market bound and may transcend the intstitutional arrangements common in western capitalist societies

energy transition under irreversibility a two sector approach in this paper we analyze the optimal energy transition of a two sector economy energy and final goods with exhaustible oil reserves a renewable source of energy and a pollution threat the latter corresponds to a pollution threshold above which a part of the capital is lost following flooding for instance we show that the optimal energy transition path may correspond to a corner regime in which the economy starts using both resources then crosses the pollution threshold and therefore loses a part of its capital at the end the sole adoption of the renewable energy is optimal only in the long run this result is in line with the asymptotic energy transition arguments stating that the transition to clean energy may happen only in the long run we also show that economy reduces the use of energy resource as long as the productivity of capital and energy services is high therefore public policies should promote investments in energy innovation that targets productive sector home appliances and buildings and helps to save both money and energy we extend the present model to allow for additional investment in energy saving technologies our main results show that this additional investment favours the energy transition in the sense that it increases the time within which the economy may experience the catastrophe and the welfare of the society for policy implications economic instruments such as taxes on dirty energy subsidies on clean energy or incentives for energy saving technologies need to be implemented in order to promote the energy transition this is particularly important for developing countries that mostly rely on polluting energy resources and are the most vulnerable to climate change but those economic instruments should be carefully designed in line with the asymptotic energy transition result

information and exhaustible resources a bayesian analysis abstract we develop a continuous time bayesian model of investment in information about an exhaustible resource because of the way that information affects expectations the deterministic hotelling rule turns out to be more appropriate as a description of how resource owners forecast the value of their stocks than as a predictor of observed changes in the resource price a flow of information generates both unanticipated changes in expectations which cause the mean rate of change in the resource price to deviate systematically from the deterministic hotelling rule and reductions in uncertainty which do not affect the hotelling prediction

joint production of substitutable exhaustible resources or is flaring gas rational this paper studies the optimal extraction of finite resources which are substitutes and the joint output from a monopolist s production facilities the investigation is motivated by the real world example of the production of oil and associated gas additionally the analysis extends the commonly applied paradigm of perfect substitutes for oil and compares it with the more general description of imperfect substitutes thereby it is shown that wasting one of the finite resources e g flaring natural gas could be optimal to support the revenues from the other commodity furthermore the traditional declining sale policies need not hold over the entire planning horizon because it is optimal at least for some time to increase the sales of the byproduct this result has important consequences on the world energy markets since it suggests that pegging the price of natural gas to the price for crude oil is suboptimal and hence most likely subject to downward revisions

innovation and the dynamics of global warming global warming and the carbon cycle are a dynamic system with positive feedbacks fossil fuels are exhaustible resources these two facts mean that innovation in clean energy technology rather than mitigating global warming can lead to a permanently higher temperature path this paper explores the impact of innovation in the simplest model linking the economic theory of exhaustible resources with positive feedback dynamics in the carbon cycle

the conditions for achieving environmentally sustainable development this paper is interested in the narrower interpretation the relationship between environmental quality and sustainable economic activity the latter is interpreted as that level of economic activity which leaves the environmental quality level intact with the policy objective corresponding to this notion being the maximization of net benefits of economic development subject to maintaining the services and quality of natural resources over time 3

resource extraction of imperfect substitutes abstract the recent literature about exhaustible resource extraction emphasized the analysis of perfect substitutes backstop but overlooked the important case of imperfect substitutes this paper introduces imperfect substitutes and investigates whether properties which are robust in one commodity case carry over to the case of limited substitution in particular the proposition of strict sequential exploitation of reservoirs of a certain resource from the cheapest to the more costly grades and the validity of declining extraction are investigated for the more general case of imperfect substitutes it will be shown that these properties are not robust against variations in the assumption of the degree of competition of the resource types contained in the difference pools

optimal saving policy for exhaustible resource economies abstract the paper examines the optimal saving policy for a small exhaustible resource exporting economy ere that has an exhaustible asset and a reproducible capital stock it shows that both in magnitude and time profile the optimal saving policy for an ere sharply differs from a that of a nonextractive economy and b that derived from the conventional models of growth with exhaustible resources these differences arise from the specific economic features that distinguish the small resource exporting developing economies both from other developing economies and from mature industrial ones for a wide range of plausible parameter values comparisons of computed optimal saving paths with actual savings rates of selected eres suggest substantial deficiencies in their savings rates