pricing and investment policies in a system of competitive commuter railways this paper develops a simple spatial equilibrium model of a city served by competing commuter railways and analyses the effects of different transportation policies on their pricing and investment decisions it is shown that a system of competitive railway companies does not achieve the optimal allocation we then examine whether or not three types of government intervention i e subsidies to railway companies a rate of return regulation and the ownership of residential land by railway companies can achieve the optimal allocation

res and risk renewable energy s contribution to energy security a portfolio based approach abstract during the first decade of the 21st century renewable energy sources res had been gaining momentum due to environmental issues concerns about pollution and climate change have raised public awareness encouraging governments to adopt policies to preserve and protect the environment regarding energy res promotion together with energy efficiency measures has been the main policy response to address such concerns as a consequence res development during the first decade of the 21st century has been remarkable although res deployment has been mainly focused on achieving environmental goals its potential contribution to energy security went not unnoticed however it is worth noting that while the trade off between environmental goals and the use of res to accomplish them and competitiveness has been widely explored the relationship between energy security and res has received less attention both at the conceptual and energy policy levels this article tries to address such a relationship the present article focuses on renewable electricity imports as illustrated by the case of the mediterranean solar plan after introducing the energy security energy risk concept and its dimensions the article focuses on the contribution of res in terms of security of supply for a given energy mix using the portfolio theory most of the analyses of the interactions between res and energy security focus on the national level with res being mainly conceived as a substitute for fuel imports to produce electricity and reduce so called energy dependence however new transmission technologies allow the import of electricity directly from neighbouring countries far out of the range of regular electricity lines therefore this article tries to broaden the analysis of energy security to international res trade flows applying the previous discussion to the main project involving significant international green electricity trade the mediterranean solar plan

perception of risks in renewable energy projects the case of concentrated solar power in north africa the world needs to reduce greenhouse gas emissions to prevent climate change while meeting the energy needs of developed and developing economies recent studies suggest that generation of electricity from concentrated solar power in north african countries and its transmission to europe could provide european and north african partners with low carbon electricity the private capital will be likely required to achieve the scale of new investment and yet the north african region experience difficulties with sustaining high levels of foreign direct investment from the private sector the literature identifies a number of risks as barriers to investment and we examine these in the particular context of renewable energy development we conducted three stages of interviews with stakeholders to learn their perceptions of the risks most likely to affect renewable energy projects three class of risks regulatory political and force majeure which includes terrorism stand out as being of high concern of these regulatory risks are perceived as being the most consequential and the most likely to occur this suggests that attention to building the capacities of north african countries to develop implement and enforce sound regulations in a transparent manner could be an important step in promoting renewable energy cooperation with europe

does infrastructure investment stimulate building supply the case of the english regions ball m and nanda a does infrastructure investment stimulate building supply the case of the english regions regional studies policies to improve infrastructure to stimulate regional growth remain common this paper investigates whether increases in infrastructure investment in the english regions lead to subsequent rises in new commercial and residential property using time series modelling both physical roads and harbours and social infrastructure education and health impacts are investigated hardly any infrastructure effects with respect to commercial property investment were found which raises doubts about whether extra infrastructure creates employment though some impact was related to residential building overall these results raise doubts about the supposed direct effects of infrastructure policies on regional jobs and growth

wage expectations in the labor market survey evidence on rationality using a new set of directly observed wage expectations among firms this paper finds that in general firms forecasts fail the unbiasedness and efficiency requirements of weak form rational expectations these market participants consistently underestimate the wages they actually end up paying and their expectations do not efficiently utilize the information in past realizations the mean absolute forecast error of two percent compares with an error of only five percent if static expectations were held the major source of wage fore cast error seems to be errors in predicting demand rather than in predicting supply or the general price level wage forecast errors are positively correlated across fields with distinct supply patterns and are positively correlated with quantity forecast error the properties of stochastically weighted expectations and the effectiveness of the wage and price controls of the early 1970 s are also discussed this abstract was borrowed from another version of this item

linking local business with global growth opportunities the role of infrastructure infrastructure is instrumental when it comes to linking local businesses with their global growth opportunities this paper shows that by making this link the transport network can act as a catalyst for regional economic growth using a novel approach we find that firms in regions with a more developed transport infrastructure are better placed to benefit from positive growth opportunities than those in regions with a less well developed transport network this advantage is most pronounced in times of economic slack making a better transport network a key ingredient for economic recovery it is against this background that the recent slowdown in infrastructure investment in europe is worrisome but it is through this channel among others that the substantial ramp up of activity by the european investment bank is expected to foster growth and enhance competitiveness in europe

taxes federal grants local public spending and growth abstract in a dynamic model with both private and local public capital accumulation this paper examines how federal and local income taxes local consumption tax and federal matching grants for local public consumption and local public investment affect the long run equilibrium equilibria of private consumption private capital accumulation local public consumption and local public capital stock

accommodating public expenditure policies the case of fast growing asian economies abstract it is widely believed that the exceptional economic performances of the east asian economies are attributable as much to the visible hand of the state as to the invisible hand of the market this paper analyzes the experiences of japan south korea singapore and taiwan in implementing a key instrument of state intervention namely public expenditure policy the analysis shows that these economies could achieve high standards of physical and social infrastructure even with relatively low spending the key features of complementary spending policy include emphasis on macroeconomic stability cost effective spending involvement of private sector in providing quasi public goods minimum distortions in the labor markets and human resource development to achieve a broad based development

infrastructure investment a review essay economists try not to be faddists but they often cannot help themselves while work on a topic should mirror the prospective importance of the topic that situation seems to occur with disappointing frequency instead the usual pattern is that some reasonably important topic will be totally ignored for the longest time then recognized and then the subject of a flurry of work all out of proportion to its likely long run importance nowhere has this speculative bubble of economic research been more clearly illustrated than with infrastructure investment macroeconomists havelong felt that the stock of public capital is an important factor input in the production of total output macroeconomists have known that u s productivity growth slowed dramatically in about 1973 and macroeconomists should have known that united states investment in public capital has been down since the late 1960s yet analysis of the u s productivity slowdown completely ignored infrastructure investment for the first fifteen years of this slowdown concentrating instead on energy prices social regulation the composition of the work force research and development different rates of obsolescence of the private capital stock and any number of other matters the public capital stock was hardly ever even mentioned as a potential factor in the productivity slowdown aschauer changed all that he wrote a series of papers 1989a 1989b 1989c that put these two movements together econometrically infrastructure investment turned down and aggregate productivity turned down slightly later both in the united states and in some other developed countries his work hit the magic button those who had worried about the productivity puzzle for fifteen years welcomed a new suspect those who were worried about low rates of u s national saving welcomed a new way to make their argument even more forcefully than with official figures on saving and investment which do not count infrastructure investment as investment political liberals and liberal politicians saw a way to rescue government spending and projects from the assaults of reaganism and even a way to avoid oth

wage expectations of european college students expected earnings and expected returns to education are seen by labor economists as a major determinant of educational attainment in spite of this the empirical knowledge about expectations and their formation is scarce in this paper we report the results of the first systematic study of the wage expectations of european college students our data are based on the replies to the same questionnaire by more than 6000 college students all over europe we study the determinants of wage expectations and expected employment probabilities the variability of these expectations within a field of study and their variation across universities and fields we also examine the trade off between expected starting wages and wage growth in the final section of the paper we contrast expected returns to education with actual returns estimated from country specific micro data in line with u s studies we find that students overestimate returns to education jel j30

how misleading is linearization evaluating the dynamics of the neoclassical growth model this paper investigates the reliability of employing linearization to evaluate the dynamic adjustments to changes in productive government spending in a ramsey growth model if government expenditure is introduced as a flow and the dynamic adjustment is fast linearization may yield a reasonably good approximation to the true dynamics even for fairly large policy shocks if government expenditure assumes the form of a stock leading to more sluggish adjustment linearization may yield misleading predictions these errors occur at the beginning of the transition and weigh heavily in welfare calculations the implications for temporary shocks and the speed of convergence are also considered

scale congestion and growth this paper explores the relationship between aggregate and relative congestion returns to scale and economic growth aggregate congestion reduces the effective productivity of capital relative congestion reduces the effective productivity of labour both forms of congestion adversely affect the equilibrium growth rate although their relative effects depend upon aggre gate returns to scale the two forms of congestion have contrasting effects on the transitional dynamics relative congestion retards the rate of adjustment aggregate congestion accelerates it the externalities generated by congestion and non optimal expenditure can be fully cor rected both during the transition and in steady state by a time invariant income tax the role of public expenditure as an instrument of economic growth has been a major policy issue as governments throughout the world design stimulus packages as in japan and face difficult choices to meet the emu criteria in europe empirical research investigating the impact of public investment on the productivity of private capital and output was stimulated by aschauer 1989a b who found the effects to be strongly positive the nature of public investment is however diverse in general public goods vary extensively in terms of the nature of their services spanning the range between the polar cases of pure private and pure public goods but the treatment of public expenditures in formal growth models is limited barro 1990 and futagami et al 1993 treat government expenditure as a pure pub lic good and in so doing they fail to take account of the congestion typically associated with public goods however as barro and sala i martin 1992 have argued almost all public services are characterized by some degree of congestion so that the pure public good should be viewed as only a bench mark these considerations suggest that congestion is an important consider ation in assessing the effect of public expenditures on economic growth attempts to analyse the effects of congestion on economic growth have been limited in various dimensions drawing on the public goods literature edwards 1990 proposes a number of specifications of congestion two notions particularly relevant in a growth context are relative congestion and aggregate absolute congestion the former specifies the level of services derived by an individual from the provision of a public good in terms of the usage of his individual capital stock relative to the aggregate capital stock aggregate congestion sometimes called crowding indicates how aggregate usage of the service alone influences the services received by an individual 2 existing applications of congestion to growth theory introduce it into ak models see barro and sala i martin 1992 1995 glomm and ravikumar 1994 1997 and turnovsky 1996 1997 however the ak model features two limitations that restrict its flexibility to examine the relationship between congestion and growth first as solow 1994 pointed out sustained ongoing

valuing rail access using transport innovations this paper uses a powerful empirical method to evaluate the benefits of rail access to consumers we study the effects on house prices of a transport innovation that altered the distance to the nearest station for some households but left others unaffected the transport innovation we study is the construction of new stations in london in the late 1990s using this innovation we implement a quasi experimental approach that allows us to avoid the biases inherent in cross sectional valuation work our evidence on distance station effects on local prices identified through distance changes induced by the transport innovation suggests that households value rail access and that these valuations are large compared to the valuations of other local amenities

interjurisdictional capital mobility fiscal externality and a corrective subsidy abstract recent studies emphasize that local property taxation may result in inefficiently small amounts of local public spending this paper shows that the inefficiency can be traced to a fiscal externality when one jurisdiction increases its taxes it causes a flow of capital to other jurisdictions that increases their tax revenues the inefficiency can be corrected with a subsidy that internalizes the externality key empirical parameters determining the magnitude of the externality are identified illustrative calculations indicate that subsidy rates on the order of 40 might be required to achieve efficiency

ict and transport infrastructure development an empirical analysis of complementarity abstractthis paper provides an empirical framework to assess the nonlinear complementary linkage effects that arise from the interaction between motorway capital and information and communications

public intermediate inputs property values and allocative efficiency abstract this letter shows that when public goods are intermediate inputs as well as final consumption goods stationary of aggregate property value under a marginal change in public spending implies satisfaction of a generalized samuelson efficiency condition this result shows that the empirical test for efficiency of brueckner 1982 remains valid when public goods enter firm production functions

taxation and the tiebout model the differential effects of head taxes taxes on land rents and property taxes on the theory of state and local public finance is the seminal paper by charles tiebout 1956 tiebout constructed a multijurisdictional model in which independent local governments offer a wide variety of expenditure and tax policies and perfectly mobile consumers reveal their preferences for local public goods through their choice of residential community he argued that under such circumstances local public service provision would be efficient the tiebout model has formed the basis of a vast number of subsequent articles in the state and local public finance literature and has also been very influential in urban and regional economics the efficiency properties of various tiebout type models of local public good provision have been examined and the role of politics in these models has been debated at length in this literature of more direct relevance to this paper however is the fact that although tiebout had little to say directly about taxation simply assuming the existence of head taxes subsequent analyses have used adaptations of this model to examine the effects of local head taxes land taxes and property taxes it is the literature on the efficiency and distributional effects of alternative local taxes that is the subject of this survey 1

fruitful symbiosis why an export bundled with wind energy is the most feasible option for north african concentrated solar power abstract the idea of generating electricity in north africa using concentrating solar thermal power csp has been around for some time now but has recently gained momentum through the mediterranean solar plan msp and the formation of the desertec industrial initiative this paper argues that while the large scale deployment of csp in north africa does not seem economically attractive for either european or african institutions or countries on their own at present combining domestic use and electricity exports could be profitable for both parties a detailed economic portfolio covering both solar and wind power plants can achieve competitive price levels which would accelerate the diffusion of solar technology in north africa this portfolio could be financed partially by exporting electricity from solar thermal plants in north africa via hvdc interconnections to european consumers sharing the costs in this way makes it possible to generate solar electricity for the domestic market at a reasonable cost some of the electricity produced from the solar power plants and wind parks in north africa is sold on european energy markets in the form of a long term contracted solar wind portfolio which would qualify for support from the financial incentive schemes of the european member states e g feed in tariffs this transfer of green electricity could help to meet the targets for energy from renewable energy sources res in the eu member states as the new eu directive of 2009 opened the european electricity market to imports from third states

on the effectiveness of private and public capital this study assesses the effectiveness of private and public capital investments in the performance of manufactures within the framework of the duality theory the response of costs of production and input utilization to changes in the stocks of private and public capital is measured by the appropriate elasticities obtained from a cost function instead of considering private capital either as a variable or fixed input on a priori grounds its nature is checked that is the study discriminates between a long and a short run situation the empirical exercise is made for the manufacturing industries in the spanish regions

is all public capital created equal this paper uses a var approach to investigate the effects of public investment on private sector performance in the united states this approach is consistent with the argument that the analysis of

value generation of future csp projects in north africa this paper discusses the value generation potential for local and international industry in different development scenarios of the concentrating solar power csp market in north africa until 2030 it analyzes the economic impact resulting from the participation of north african and european companies during construction and operation of csp plants the assessment is based on a self developed solar technologies market development model stmd that includes economic and technical requirements and constraints for the creation of a local csp market in depth interviews with industry stakeholders provide specific input validate the calculations and complement the quantitative model results and conclusions long term potential for locally generated revenues from csp plant construction are modeled and lead to a share of local revenues of up to 60 potential market size of solar power plants in north africa could reach total revenues of 120 billion euros and thus demand for components and services contribute to national gross domestic products significantly recommendations are given for regional industry cooperation and policy actions for the support of local and international csp industry in north africa in order to improve the investment environment and growth of renewable energies in the region

peer effects in higher education does the field of study matter does the peer effect vary with the field of study using data from a middle sized public university located in southern italy and exploiting the random assignment of first year students to college accommodation we find that roommate peer effects for freshmen enrolled in the hard sciences are positive and significantly larger than for freshmen enrolled in the humanities and social sciences we present a simple theoretical model which suggests that the uncovered differences between fields in the size of the peer effect could plausibly be generated by between field variation in labor market returns which affect optimal student effort jel i21 z13 j24 i introduction understanding the nature and importance of peer group effects in education is crucial for education policy peer effects are relevant for school choice tracking affirmative action selective admissions and the sources of school quality empirical research which seeks to estimate the existence size and non linearity of peer effects has run into several problems including the self selection reflection and correlated effects described by manski 1993 following sacerdote 2001 and zimmerman 2003 a popular approach in this literature has been to investigate roommate peer effects because in a number of universities and colleges the allocation of students to rooms can be argued

corrigendum to congestible public goods and local indeterminacy a two sector endogenous growth model journal of economic dynamics control 31 7 2007 2486 2518

infrastructure provision and macroeconomic performance this paper studies the differences between private and government provision of infrastructure capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy a subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed the case for private provision is much stronger in economies characterized by high levels of congestion the choice between private and government provision also has a crucial effect on the design of optimal fiscal policy 2011 elsevier b v all rights reserved

urban economic theory land use and city size this book examines the economic reasons why people choose to live where they live and develops through analysis of the bid rent function a unified theory of urban land use and city size the first part of the book explicates the basic theory of urban land use and optimal city size residential location behavior of households is examined in a microeconomic framework and equilibrium and optimal patterns of residential land use are discussed the corresponding equilibrium and optimal city sizes are studied in a variety of contexts part two extends the classical theories of von thunen and alonso with the addition of externality factors such as local public goods crowding and congestion and racial prejudice the rigorous mathematical approach and theoretical treatment of the material make urban economic theory of interest to researchers in urban economics location theory urban geography and urban planning

financing productive local public goods public economics typically assumes that local public goods only affect the utility of consumers we analyze the case of purely productive local public goods within standard growth models investment in the public good enhances productivity only in the jurisdiction where it takes place capital as well as people is perfectly mobile after characterizing the first best equilibrium we show that its decentralization to fiscally independent jurisdictions is more demanding than with local public consumer goods in particular efficient decentralization cannot be obtained with competitive land developers providing the public good through a simple land capitalization scheme

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

the intertemporal elasticity of substitution an analysis based on japanese data this paper investigates whether the intertemporal elasticity of substitution ies for japan possesses similar properties to that found for the united states in the literature as the existing empirical findings are mixed there is no clear consensus this paper uses a model with both production and non separability between nondurables and durables in order to control for possible factors that cause a bias in the ies we present the empirical results demonstrating that the ies is quite similar between the two countries

capital utilization economic growth and convergence abstract optimal decisions by economic agents regarding the utilization of capital lead to empirically plausible speeds of convergence in one sector models of economic growth the relationship between depreciation and capital utilization plays a crucial role in slowing down convergence to the steady state cross country differences in the extent to which the capital utilization decision is internalized along the transition path may lead to differences in convergence rates even for countries with similar initial and terminal conditions finally by assuming a constant depreciation rate and full capital utilization standard growth models may be overstating the magnitude of the steady state equilibrium

public infrastructure and the productive performance of canadian manufacturing industries this article examines the effects of public infrastructure on the productive performance of 12 two digit canadian manufacturing industries a flexible cost function incorporating public capital infrastructure is estimated for each industry separately using annual time series data for 1961 1995 the effects of public infrastructure on productivity are measured in terms of both cost saving dual and output augmenting primal measures we also investigate how public capital influences the input demand and cost structure in each industry and calculate the rate of return to public capital the empirical results provide strong evidence of the important role public infrastructure plays in the productivity of manufacturing industries the public capital serves as a substitute for both private capital and labor in most industries the rates of return to public capital are significant and vary over the years

the impact of educational standards on the level and distribution of earnings the goal of this paper is to present the following finding an egalitarian policy maker might prefer higher standards than would a policy maker whose goal was to maximize the sum of earnings the result is based on the observation that if workers are differentiated with respect to ability an increase in educational standards will increase the earnings of both the most able and the least able workers the only workers whose earnings fall are those workers who after the increase fail to continue meeting the standard

infrastructure and education as instruments of regional policy evidence from spain regional policy and spain infrastructure and education as instruments of regional policy evidence from spain governments have often tried to influence the regional distribution of economic activity through supply side measures such as investment in training and infrastructure using evidence from spain we examine whether such policies can have an impact and whether they have done so in the past our results indicate that disparities in the stocks of human and public capital account for a third of observed regional inequality about evenly split between the two factors hence public investment can in principle be used to reduce regional disparity its actual impact however will depend both on its overall volume and on the extent to which its regional allocation does indeed vary with regional need in spain investment in infrastructure has made only a small contribution to regional convergence primarily because it has not in practice been allocated to redistribute across regions to any great extent in contrast efrd transfers have clearly been allocated among regions with redistribution in mind the impact of the fund has been significant but it has been limited by the relatively small size of the programme angel de la fuente and xavier vives

reprint to infrastructure provision and macroeconomic performance abstract this paper studies the differences between private and government provision of infrastructure capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy a subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed the case for private provision is much stronger in economies characterized by high levels of congestion the choice between private and government provision also has a crucial effect on the design of optimal fiscal policy

efficiency adjusted public capital and growth summary this paper constructs an efficiency adjusted public capital stock series and re examines the public capital and growth relationship the paper also examines the effects of four specific stages of the public investment process appraisal selection implementation and evaluation on capital accumulation and growth the results show that public capital is a significant contributor to economic growth the quality of public investment as measured by variables capturing the adequacy of project selection and implementation is statistically significant in explaining variations in economic growth a result mainly driven by low income countries

the provision of local public goods and factors in the presence of firm and household mobility abstract this paper studies the efficiency properties of allocations when firms and households are mobile and when local governments provide local public goods and local public factors the analysis differentiates between immobile land owners and perfectly mobile workers and concludes that an efficient allocation is obtained if there is no outflow of land rents to absentee owners if rents flow out only local public goods are supplied in accordance with the samuelson rule the provision of local public factors is inefficiently low however and jurisdictions tax mobile firms and mobile households inefficiently high in order to restrict the outflow of rents an optimal intervention scheme is derived in this case we also analyze the distortions that result when the non availability of local head taxes makes it impossible to internalize crowding costs

services sector and economic growth in india this study examines the long run equilibrium and short run dynamic relationship between services sector and gross domestic product gdp and between services and nonservices sectors in india the model is estimated using the optimal single equation and the maximum likelihood system estimators all the estimators consistently suggest the cointegrating relationship between services sector and gdp as well as between services and nonservices sectors the estimates of long run elasticity parameters are statistically significant and dimensionally consistent across the estimators the conventional cumulative sum cusum and the new cusum and moving sum mosum tests suggest the stability of the equilibrium residuals and reinforce the cointegrating relationship between the model series the error correction model provides some support for unidirectional granger causality from services sector to gdp the impulse response and variance decomposition analyses instead suggest the bidirectional causality between servic

the demand for and return to education when education outcomes are uncertain this article treats education as a sequential choice that is made under uncertainty a simple model is used to explore the effects of ability high school preparation preferences for schooling the borrowing rate and ex post payoffs to college on the probability of various post secondary college outcomes and the ex ante return to starting college the model motivates an empirical method of accounting for uncertainty about educational outcomes and for nonlinearity in the relationship between years of education and earnings when estimating the expected return to the first year of college

public infrastructure and regional economic development a simultaneous equations approach an analysis of how central bank exchange market intervention can affect both the level of exchange rates and the risk premium in asset returns showing how the risk premium is related to the conditional variances of intervention and other exogenous processes

public capital and private productivity this paper uses three different approaches to investigate whether the declining provision of public capital is a major cause of declining labor productivity the juxtaposition of approaches removes

on the price of land and the value of amenities a house represents not only a bundle of structural characteristics but also a set of location specific characteristics adding locational coordinates and site area to other house characteristics makes it possible to estimate a land rent surface as well as thle hedonic prices attached to local patterns of land use and other neighbourhood characteristics one can then estimate how the value of such location specific characteristics are capitalized into land prices this analysis illustrated with estimates based on data from two british towns has a number of wider implications it generates a more parsimonious method of estimating amenity values it also reveals likely systematic biases produced by conventional hedonic studies which exclude land and location finally it clarifies the conceptual definition of land and suggests that monocentric models can perform well despite recent criticism