on the link between exchange rate regimes capital controls and monetary policy autonomy in small european countries 1979 2000 we investigate international monetary policy transmission under different exchange rate and capital account regimes in eleven small open economies during the 1980s and 1990s we find no systematic link between ex post monetary policy autonomy and exchange rate regimes capital controls appear to have provided a degree of temporal insulation from foreign monetary policy shocks though not strict autonomy the results are consistent both with short term autonomy for small countries even under fixed exchange rates and an open capital account and with long term dependence under flexible exchange rates and an independent stability target results also indicate that euro area market interest rates are significantly more responsive to the development of the corresponding us rate than were the previous national rates

do greens drive hummers or hybrids environmental ideology as a determinant of consumer choice this paper uses several california data sets to test for differences in consumption patterns between greens and browns a person s environmentalism is rarely observed in consumer data sets in california a community s share of green party registered voters is a viable proxy for community environmentalism environmentalists are more likely to commute by public transit purchase hybrid vehicles and consume less gasoline than non environmentalists

consumer support for environmental policies an application to purchases of green cars this paper focuses on how consumer motivation can be tapped in order to encourage the adoption of cleaner technologies consumers are heterogeneous they may be guided by intrinsic motivation or extrinsic motivation while information provision policies such as the energy label for cars may be effective in encouraging certain consumers to adopt green cars financial incentive schemes such as subsidies or fines may be more persuasive for extrinsically motivated consumers we develop a dynamic theory of adoption of environmental innovations in which information provision policies are followed by financial incentives first carrot then stick incentives analysis of a survey dataset of swiss households observes considerable heterogeneity in terms of support of information provision or financial incentive policies in line with our conjectures our results will be of particular interest to policymakers interested in guiding consumers towards cleaner technologies

diffusion of green power products in switzerland abstract as in many other european countries green electricity is an emerging product in switzerland as well although the market is yet to be liberalised more than 100 of the 1200 swiss electric utilities offer some sort of green electricity product to their customers successful companies like the municipal utilities of the cities of zurich and berne have reached customer response rates of up to 4 while still maintaining cost based pricing i e charging their customers price premiums of 400 700 per kwh while most of the products still rely on mainly photovoltaics some utilities have started to introduce mixed green electricity products also including wind power with a share of 60 in the swiss generation mix hydropower s role in the green electricity mix was also an issue to emerge causing controversial debate while being renewable hydropower is not considered environmentally benign by all the stakeholders and unlike new renewables solar wind biomass there is little room for new hydropower generation facilities in switzerland the green electricity labelling scheme naturemade tackles that issue the labelling organisation has evolved from a process with broad stakeholder involvement which included environmental ngos scientific institutions green electricity providers renewable energy advocates government bodies and consumer organisations the analysis in this paper is based on a diffusion theory framework it identifies and characterises different phases of past and future market development and stresses the importance of eco labelling as a tool to facilitate the transition from niche to mass market finally we also discuss conclusions that can be drawn from the swiss case towards market development and labelling on a european level

financial incentives to mobilise local citizens as investors in low carbon technologies a systematic literature review abstract mobilising greater levels of private finance through local citizen investment in low carbon technologies can help bridge the capital shortfall to meeting climate objectives while also building societal support for the low carbon transition within this context we undertake a systematic review of literature assessing the impact of technology specific economic and financial incentives promoting greater levels of investment in low carbon technologies from local citizen investors both individuals and community groups we focus in particular on the impact of feed in tariffs compared to quota schemes grants tax incentives and soft loans the analysis suggests that local citizen investors do not necessarily act in an economically rational manner in response to these incentives it underscores the importance of understanding the preferences of target demographics the local context as well as the characteristics of the technologies in question and suggests interventions should be considered as part of wider policy packages while identifying challenges to be overcome through instrument design we find that feed in tariffs grants and tax incentives can be successful in mobilising greater levels of investment from local citizen investors but that soft loans tend to be less effective as a stand alone instrument the review identifies areas meriting further exploration in this emerging field of research

noisy signals in target zone regimes theory and monte carlo experiments abstract previous empirical evidence indicates that uncovered interest parity uip does not hold for target zone exchange rates like those in the european monetary system and in the nordic countries we explore a target zone model where the market infers the probability of a realignment of the band on the basis of a noisy signal we show theoretically and through monte carlo simulations that if the market overrates the information content in the signal then this may explain the empirical results obtained from testing uip for target zone exchange rates

economic and policy analysis for solar pv systems in indiana in recent years the energy market in the us and globally is expanding the production of renewable energy solar energy for electricity is also expanding in the us indiana is one of the states expanding solar energy with solar photovoltaic pv systems therefore we conduct benefit cost analysis with several uncertain input variables to determine the economics of adopting solar pv systems in indiana based on policy instruments that could increase adoption of solar pv systems the specific objectives are analyses of the cost distribution of solar pv systems compared with grid electricity in homes and estimating the probability that solar can be cheaper than electricity from grids under different policy combinations we first do the analysis under current policy and then the analysis under potential policy options for a variety of scenarios also the results inform government policy makers on how effective the alternative policies for encouraging solar pv systems are the results show that current policies are important in reducing the cost of solar pv systems however with current policies there is only 50 50 chance of solar being cheaper than electricity from grids if potential policies are implemented solar pv systems can be more economical than grid electricity

willingness to pay and price elasticities of demand for energy efficient appliances combining the hedonic approach and demand systems abstract this article proposes a combined approach for estimating willingness to pay for the attributes represented by energy efficiency labels and providing reliable price elasticities of demand own and cross for close substitutes e g those with low energy efficiency and those with higher energy efficiency this is done by using the results of the hedonic approach together with the quantity based demand system qbds model the elasticity results obtained with the latter are then compared with those simulated using the linear almost ideal demand system la aids the methodology is applied to the dishwasher market in spain it is found that 15 6 of the final price is actually paid for the energy efficiency attribute this accounts for about 80 of the average market price the elasticity results confirm that energy efficient appliances are more price elastic than regular ones

modelling probabilities of devaluations i show why when the realized rates of depreciation within the exchange rate band are regressed on a given information set and conditioned on ex post actual no realignment a la drift adjustment a peso problem is still encountered the reason is that the frequency of realignments in the data need not be the same as the frequency of the even small subjective probabilities that a realignment may take place i suggest an alternative approach to solve the peso problem and provide consistent estimates my estimates of the expected realignment rates are greater than the ones obtained using the drift adjustment method

the credibility of a fixed exchange rate how reputation is gained or lost we examine the interest rate differential between each of the four largest nordic countries and the countries of their foreign currency baskets on monthly data for the period 1978 79 92 the interest rate differential is assumed to reflect devaluation expectations which partly depend on government reputation we investigate the formation of the reputation of the government assuming that reputation is updated using bayes s formula it is shown theoretically that when there is no devaluation the improvement in government reputation is larger the larger the prior devaluation expectations for norway the evidence gives support to this assertion

expected and predicted realignments the ff dm exchange rate during the ems an empirical model of time varying realignment risk in an exchange rate target zone is developed expected rates of devaluation are estimated as the difference between interest rate differentials and estimated expected rates of depreciation within the exchange rate band using french franc deutsche mark data during the european monetary system the behavior of estimated expected rates of depreciation accord well with the theoretical model of bertola svensson 1990 we are also able to predict actial realignments with some success

can sustainable consumption be learned a model of cultural evolution abstract this paper shows how sustainable consumption patterns can spread within a population via processes of social learning even though a strong individual learning bias may favor environmentally harmful products we present a model depicting how the biased transmission of different behaviors via individual and social learning influences agents consumption behavior the underlying learning biases can be traced back to evolved cognitive dispositions challenging the vision of a permanent transition toward sustainability we argue that green consumption patterns are not self reinforcing and cannot be locked in permanently

social acceptance of renewable energy innovation an introduction to the concept this paper introduces the special issue on social acceptance of renewable energy innovation it is a collection of best papers presented at an international research conference held in tramelan switzerland in february 2006 while there are ambitious government targets to increase the share of renewable energy in many countries it is increasingly recognized that social acceptance may be a constraining factor in achieving this target this is particularly apparent in the case of wind energy which has become a subject of contested debates in several countries largely due to its visual impact on landscapes this paper introduces three dimensions of social acceptance namely socio political community and market acceptance factors influencing socio political and community acceptance are increasingly recognized as being important for understanding the apparent contradictions between general public support for renewable energy innovation and the difficult realization of specific projects the third dimension market acceptance has received less attention so far and provides opportunities for further research particularly from management scholars

green consumption under misperceived prices an application to active transportation we propose a consumption model that captures the impact that perceived price ambiguities may have upon decision making in green markets in general and in active transportation markets in particular the basic intuition for the model is that a consumer who may be misperceiving the price of the green good the active transportation mode would be willing to pay a positive amount from her income in the current period to resolve the misperception going forward we posit that the basis for the price misperception in the active transportation context is misperception of the relative risks involved in taking that mode the compensating variation that aligns perceived and objective risk is derived we show how raising green consumption via price misperception correction can be superior to traditional economic policy instruments the results shed light on the more general family of situations in which agents may consistently misperceive aspects of the decision environment

price premium for high efficiency refrigerators and calculation of price elasticities for close substitutes a methodology using hedonic pricing and demand systems this article uses the hedonic pricing method to estimate the price premium paid for the highest energy efficiency label a in the refrigerators market of the basque autonomous community spain the estimated figure is 8 9 of the final price or about 60 euro which represents one third of the energy savings that a consumer gets during the lifetime of a refrigerator with the highest energy efficiency label this figure is then combined with the linear version of the almost ideal demand system la aids to obtain own and cross price elasticities of demand the information presented here is useful for policy design and analysis the results indicate that the demand for refrigerators with the highest energy efficiency label is highly sensitive to price variations

purchasing intentions of chinese citizens on new energy vehicles how should one respond to current preferential policy in recent years china s environmental pollution and energy security issues have become increasingly more prominent as a result new energy vehicles nevs have been strongly supported by government s policy privilege but at this stage these preferential policies are facing updates and adjustments to meet the current development of nev industry and consumer demand of purchase this means that an understanding of the nev purchasing behavior in china what the current policy is and how to respond to its adjustment are of theoretical and practical significance for china s nev industry to this end a reliable scale is developed in this study to investigate the situation in seven chinese geographical regions and 22 provinces based on application of an extended theory of planned behavior model to the real situation a structural equation model is used to analyze the factors affecting the nev purchasing intentions of residents the results show that financial benefits infrastructure readiness environmental concerns and policy privileges have a positive impact on purchasing intention however the nev s cruising range does not based on the paper s findings we have discussed whether current subsidies and preferential policies reflect consumers potential purchase demand how to make subsidies more tangibly targeted and thereby present some proposals for manufacturing strategy under the influence of policy and demand of consumers

technological diffusion and preference learning in the world of homo sustinens the challenges for politics abstract this article relates agents learning of a preference for a technology competition of technologies and their relative diffusion among potential adopters competitive interactions between two technologies are captured by an extended lotka volterra model to also incorporate preference learning on the part of potential adopters of these technologies we combine it with a model of cultural learning based on role model conformist and hedonistic learning our theoretical analysis is illustrated by a concrete example the competition between electric mobility and conventional forms of individual mobility the model enables an evaluation of specific policy instruments as to the promotion of sustainable technology

anomalies foreign exchange most all behavior can be explained by assuming that agents have stable well defined preferences and make rational choices consistent with those preferences in markets that eventually clear an empirical result qualifies as an anomaly if it is difficult to rationalize or if implausible assumptions are necessary to explain it within the paradigm this column will present a series of such anomalies readers are invited to suggest topics for future columns by sending a note with some reference to or better yet copies of the relevant research comments on anomalies printed here are also welcome the address

political consumerism and public policy good complements against market failures political consumerism has become over the past years an ever growing phenomenon by which citizens express through their consumption their political environmental and ethical opinions this paper discusses political consumerism from an economic science perspective focusing on the link between political consumerism and public policies it wonders to what extent political consumerism may represent an effective and fair instrument against market failures overall it seems that it would be better to consider it as a complement to conventional public policies

how much do incentives affect car purchase agent based microsimulation of consumer choice of new cars part i model structure simulation of bounded rationality and model validation this article presents an agent based microsimulation capable of forecasting the effects of policy levers that influence individual choices of new passenger cars the fundamental decision making units are households distinguished by sociodemographic characteristics and car ownership a two stage model of individual decision processes is employed in the first stage individual choice sets are constructed using simple non compensatory rules that are based on previously owned cars second decision makers evaluate alternatives in their individual choice set using a multi attributive weighting rule the attribute weights are based on a multinomial logit model for cross country policy analysis in european countries additionally prospect theory and the notion of mental accounting are used to model the perception of monetary values the microsimulation forecasts actual market observations with high accuracy both on the level of aggregate market characteristics as well as on a highly resolved level of distributions of market shares the presented approach is useful for the assessment of policies that influence individual purchase decisions of new passenger cars it allows accounting for a highly resolved car fleet and differentiated consumer segments as a result the complexity of incentive schemes can be represented and detailed structural changes can be investigated

ghg reduction potential of changes in consumption patterns and higher quality levels evidence from swiss household consumption survey abstract an effective consumer oriented climate policy requires knowing the ghg reduction potential of sustainable consumption the aim of this study is to draw lessons from differences in consumption between households with high and low ghg emissions we evaluate a survey of 14 500 households and use a method that allows measuring changes in price level of consumption comparing the 10 of households with the highest ghg emissions per capita with the lowest 10 controlling for differences in expenditure level and household structure we find a range 5 17 tons of co2 equivalent per capita and year the observed differences stem mainly from heating electricity use car use and travel by aircraft consumption patterns with low ghg emissions are characterized by less spending on mobility but more on leisure and quality oriented consumption leading to higher prices per unit further characteristics are a higher share of organic food low meat consumption and fewer detached single family houses our findings imply that a significant reduction in ghg emissions would be possible by adopting real world consumption patterns observable in society the twin challenge is to shift consumption towards more climate friendly patterns and to prevent any trend towards high emitting consumption patterns

a test for speculative bubbles in the sterling dollar exchange rate 1981 84 the u s dollar price of the u k pound sterling is tested for a speculative bubble defined as a period with a nonzero median in excessreturns a nonparametric procedure is developed which controls for data mining over the period of flexible exchange rates and finds a negative bubble in the excess return to holding sterling rather than dollar assets during the period 1981 84 possible interpretations arebootstrap equilibria rational bubbles nonsym metric fundamentals and nonrational expectations copyright 1986 by american economic association

stochastic devaluation risk and the empirical fit of target zone models in the model of this paper an exchange rate fluctuates between given boundaries for random lengths of time and jumps discretely when devaluation occur we provide explicit solutions for the stochastic processes followed by the exchange rate and by the expected rate of depreciation when the likelihood and the size of devaluations vary stochastically over time the model produces realistic patterns of covariation between exchange rates and interest rate differentials and provides interesting interpretations of available empirical evidence we also specify how to infer devaluation risk from target zone data

how much do incentives affect car purchase agent based microsimulation of consumer choice of new cars part ii forecasting effects of feebates based on energy efficiency abstract in this paper we simulate the car market in order to forecast the effects of feebate systems based on an energy labeling scheme using categories a to g very fuel efficient a cars receive a cash incentive highly inefficient g cars pay additional fees consumers have different price elasticities and behavioral options to react to feebates they can switch to a smaller sized car but as energy efficiency varies widely within size segments they can also stick to the preferred size class and choose a more efficient smaller engine in addition previously owned cars influence the next car to be chosen we use an agent based microsimulation approach particularly suited to predict environmental and market effects of feebates heteorogenous agents choose from a choice set drawn from a detailed fleet of new cars incentives of 2000 for a labeled cars induce an additional rated co 2 emission decrease of new car registrations between 3 4 and 4 3 with co 2 abatement costs between 6 and 13 per ton and otherwise little undesired market disturbance the risk of rebound effects is estimated to be low after adopting the frequencies of consumer segments to a given country the model presented is applicable to all european car markets

consumers evaluation of national new energy vehicle policy in china an analysis based on a four paradigm model abstract the chinese government has issued numerous policies to promote the development and adoption of new energy vehicles nevs to address the problem of excessive energy consumption and environmental pollution in this study we divided these policies into seven categories macroscopic demonstration subsidization preferential tax technical support industry management and infrastructure since consumers opinions affect the policy choices of government based on questionnaire data we use a four paradigm model to analyze the consumers evaluation of each policy in terms of perceptions of importance and satisfaction the results show that macroscopic policies are perceived to be of high importance and satisfaction whereas for industry management policies they are perceived to be of low importance and satisfaction the importance perceptions of preferential tax and demonstration policies are low whereas perceptions of their satisfaction are high perceptions of the importance of subsidization technical support and infrastructure policies are high whereas perceptions of their satisfaction are low we find that the subsidization technical support and infrastructure policies need urgent improvement finally we put forward several suggestions to improve the current policies and increase the consumers intention to adopt nevs

the demand for earmarking results from a focus group study abstract environmental taxes might be efficient but plans to impose new taxes are often met with fierce public resistance in order to design environmental taxes that are both efficient and acceptable to the public so that they can be politically feasible it is important to understand public attitudes towards environmental taxes we conduct a focus group study in norway to extend the current knowledge on this issue we find less general resistance to taxation as a policy instrument and seemingly more trust in government than what has been reported in similar studies from other countries the participants are however very skeptical and do not see the point of using the revenues from an environmental tax to reduce other taxes such as the payroll tax instead they express a very strong preference for earmarking the revenues for environmental purposes they also call for more information about environmental taxes in particular on how the revenues are spent providing more information including what the revenues are spent on irrespective of whether they are earmarked or not would seem to provide a relatively cheap and possibly effective way to increase the public acceptability of new or increased environmental taxes

a test of policy labels in environmental choice modelling studies abstract a question that arises in the application of environmental choice modelling cm studies is whether to present the choice sets in a generic or labelled form the former involves labelling the policy options to be presented to respondents in a generic way for example as option a option b etc the labelled approach assigns alternative specific descriptors to each option these may relate to the names of proposed policies different locations or any other policy relevant details both approaches have their advantages a potential advantage of using alternative specific labels is that respondents may be better able to base their choices on the true policy context this can increase predictive validity whilst at the same time reducing the cognitive burden of the cm exercise a potential advantage of the generic labelling approach is that respondents may be less inclined to base their choices wholly or largely on the labels and as a consequence may provide better information regarding trade offs among attributes the two approaches to choice set design are compared in the context of a cm study of the values of remnant vegetation in the desert uplands of central queensland results indicate a difference in the cognitive processes generated by choice models using the different approaches this difference is reflected in both the alternative specific constants and the taste parameters and cannot be accounted for by differences in error variance across the two treatments the implications for environmental valuation are discussed

devaluation risk in target zones evidence from the nordic countries in this paper the authors estimate devaluation risk in denmark finland norway and sweden the target exchange ra te is modeled as a censored variable a shadow peg that is only observed when the equilibrium floating rate is too far from the prevailing peg using a two step procedure the authors are able to calculate time series of the probability and expected size of devaluations th e probability as well as the size of devaluations seem to be systematically related to a relation between the money stock industrial production foreign exchange reserves and the prevailing central parity copyright 1993 by royal economic society

interest rates in the nordic countries evidence based on devaluation expectations over the period 1979 92 investments in danish and norwegian kroner in the euromarket have had an annual excess return of about 2 and 1 1 per cent compared to investments in the euromarket in foreign currencies assuming risk neutrality the subjective probability of a devaluation within the next month is derived from the excess returns on the euromarket these derived probabilities are found to be inconsistent with the actual number of devaluations that have taken place over this period so that the probability of devaluation has been significantly overrated for denmark and norway

what is a fair co2 tax increase on fair emission reductions in the transport sector we examine how individual preferences for fair reductions of carbon dioxide co2 emissions affect the support for increases in the co2 tax on gasoline and diesel we assume that people not only care about their own material welfare but also have preferences for fairness in policy design and we explore the implications using original data from a mail questionnaire sent to a representative sample of the swedish population the main result is that fairness in policy design does matter those respondents who adhere to a fairness principle tend to be relatively more positive to increases in the co2 tax one possible explanation for this result is that there is a relatively high degree of reciprocity regarding the origin of emissions and the fairness regarding who should bear the burden of co2 reductions via a split sample analysis we also find that the relative importance of fairness principles is dependent upon whether one uses a car often or not this sheds light on the potential goal conflict between the importance of fairness principles and self interest in the form of a need for private car transportation

new product pricing in quality sensitive markets this paper considers the problem of pricing a new product in a market having competing products of different qualities and market penetration levels as measured by the cumulative number of units sold each customer type selects his optimal product based on maximizing consumer surplus pricing policies for a new product are determined for the seller based on cumulative profit maximization without discounting an example is solved in detail for two demand function forms

the foreign exchange risk premium in a target zone with devaluation risk abstract the foreign exchange risk premium in an exchange rate target zone is derived when the exchange rate is heteroskedastic within the band and there is a separate devaluation risk the risk premium is then the sum of two separate risk premia arising from uncertainty about exchange rate movements within the band and from uncertainty about devaluations both real and nominal risk premia are considered real and nominal risk premia from movements within the band are very small real and nominal risk premia from devaluations are larger but still relatively small proportions of the interest rate differential