business cycle analysis with a markov switching model this article explores the hamilton markov switching model through an analysis of the business cycles of eight developed market economies forecasting and specification tests suggest only marginal improvements over linear autoregressive models yet filtered and smoothed conditional probabilities indicate turning points in business cycles that closely correlate with turning points from traditional methods tests regarding the asymmetry of business cycles reject the null of symmetry for most countries

decomposition analysis of co2 emission intensity between oil producing and non oil producing sub saharan african countries abstract the need to decompose co2 emission intensity is predicated upon the need for effective climate change mitigation and adaptation policies such analysis enables key variables that instigate co2 emission intensity to be identified while at the same time providing opportunities to verify the mitigation and adaptation capacities of countries however most co2 decomposition analysis has been conducted for the developed economies and little attention has been paid to sub saharan africa the need for such an analysis for ssa is overwhelming for several reasons firstly the region is amongst the most vulnerable to climate change secondly there are disparities in the amount and composition of energy consumption and the levels of economic growth and development in the region thus a decomposition analysis of co2 emission intensity for ssa affords the opportunity to identify key influencing variables and to see how they compare among countries in the region also attempts have been made to distinguish between oil and non oil producing ssa countries to this effect a comparative static analysis of co2 emission intensity for oil producing and non oil producing ssa countries for the periods 1971 1998 has been undertaken using the refined laspeyres decomposition model our analysis confirms the findings for other regions that co2 emission intensity is attributable to energy consumption intensity co2 emission coefficient of energy types and economic structure particularly co2 emission coefficient of energy use was found to exercise the most influence on co2 emission intensity for both oil and non oil producing sub saharan african countries in the first sub interval period of our investigation from 1971 1981 in the second subinterval of 1981 1991 energy intensity and structural effect were the two major influencing factors on emission intensity for the two groups of countries however energy intensity effect had the most pronounced impact on co2 emission intensity in non oil producing sub saharan african countries while the structural effect explained most of the increase in co2 emission intensity among the oil producing countries finally for the period 1991 1998 structural effect accounted for much of the decrease in intensity among non oil producers while co2 emission coefficient of energy use was the major force driving the decrease among oil producing countries the dynamic changes in the co2 emission intensity and energy intensity effects for the two groups of countries suggest that fuel switching had been predominantly towards more carbon intensive production in oil producing countries and less carbon intensive production in non oil producing ssa countries in addition to the decomposition analysis the article discusses policy implications of the results we hope that the information and analyses provided here would help inform national energy and climate policy makers in ssa of the relative weaknesses and possible areas of strategic emphasis in their planning processes for mitigating the effects of climate change

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

stylized facts and regime changes are prices procyclical we investigate empirically the stability of the correlation between output growth and inflation using a technique that allows for changes in regime we look at recent quarterly data for the g4 and at historical data for the u s and u k we find evidence of changes both in means and variances in both sources of data in the quarterly data we find that the covariance between output growth and inflation is typically negative in the historical data we find as suggested in previous studies that inflation was procyclical especially in the inter war years but has been countercyclical in the post war period

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

international comparisons of domestic energy consumption abstract governments of many industrialized countries have committed themselves to substantially reduce their domestic emissions of greenhouse gases emission reductions can be achieved through technology and or sector specific policies to decide which part of the economy environmental policy should be concentrated at insight must be gained into the relative importance of the various factors determining domestic aggregate fossil fuel consumption by applying structural decomposition analysis sda across nations the factors causing per capita energy use to differ between countries can be identified which sheds light on where potential energy saving options can be found to demonstrate the usefulness of between country sda we apply the technique to a set of 8 oecd countries

residential energy demand in oecd countries and the role of irreversible efficiency improvements abstract after undergoing substantial changes during a period of high energy prices household energy demand did not rebound in times of declining energy prices as might have been expected hence other factors such as irreversible improvements in technical efficiency must be understood in order to describe both past and future household energy demand in this paper we consider irreversible efficiency improvements as a major reason for the moderate growth in energy demand after the plummeting of the oil price in 1985 we test different econometric models to take into account efficiency indicators the major conclusions of our investigation are i price elasticities are different for rising and falling prices for the latter they are close to zero implying a low rebound effect in the residential sector ii technical efficiency is an important parameter for describing and forecasting energy demand and iii income elasticities turn out to be higher once we incorporate indicators of technological efficiency in the process of estimating energy demand

markov switching causality and the money output relationship the causal link between monetary variables and output is one of the most studied issues in macroeconomics one puzzle from this literature is that the results of causality tests appear to be sensitive with respect to the sample period that one considers as a way of overcoming this difficulty we propose a method for analysing granger causality which is based on a vector autoregressive model with time varying parameters we model parameter time variation so as to reflect changes in granger causality and assume that these changes are stochastic and governed by an unobservable markov chain when applied to us data our methodology allows us to reconcile previous puzzling differences in the outcome of conventional tests for money output causality

repeated partnership games with imperfect monitoring and no discounting in a partnership game each player s utility depends on the other players actions through a commonly observed consequence e g output profit price which is itself a function of the players actions and an exogenous stochastic environment if a partnership game is repeated infinitely and each player s payoff in the infinite game supergame is the long run average of his expected one period utilities then efficient combinations of one period actions can be sustained as nash equilibria of the supergame even if the players cannot observe other players actions or information but can only observe the resulting consequences

co2 embodiment in china australia trade the drivers and implications abstract this study focuses on co 2 emissions embodied in the characteristic china australia bilateral trade which refer to the co 2 emissions due to the production of goods traded between the two countries we perform an assessment of the co 2 embodiment in the trade during the period between 2002 and 2010 we find that the scale effect has been a dominant effect contributing to an increase of co 2 emissions embodied in the bilateral trade through the years while the composition effect seems to be a major driver for reducing co 2 embodiment in the exports of australia to china based on an analysis of the difference between the amounts of actual co 2 embodiment and those in a hypothetical no trade scenario we estimate that the net co 2 emissions due to the bilateral trade declined from around 10 mt of co 2 emissions in 2002 to 10 mt in 2010 that is the bilateral trade contributed to a reduction of the global carbon emissions in the recent years this finding suggests that the rapid growth of exports of carbon intensive goods from australia to china has helped in reducing carbon emissions globally because carbon intensity factors of those goods are much lower in australia than those in china

in good times and bad reciprocity in an uncertain world axelrod s work has demonstrated that tit for tat is an extremely robust strategy in the repeated two person prisoner s dilemma however most analyses and experiments of the repeated game have assumed perfect monitoring each player either can observe his partner s choice directly or can infer it perfectly after observing the outcome yet in many real dilemmas outcomes are functions of exogenous events as well as the players moves and it is often difflcult to disentangle intended and unintended effects with certainty in the first model of this paper the performance of tit for tat under uncertainty is compared to the performance of other behaviorally plausible backward looking strategies the second model uses game theory to analyze the equilibrium properties of tit fortat in a game with incomplete information in both models introducing a small amount of uncertainty makes a big difference

what do the leading indicators lead the authors find that the composite leading index cli is useful for forecasting gross national product gnp both in sample and in an out of sample real time exercise they propose a nonlinear specification in which cyclical shifts of the cli precede those in gnp however the authors find that better forecasts are provided by a simple linear relation between current gnp growth and the growth rate of the cli during the previous quarter along with an error correction term corresponding to the previous quarter s logarithmic difference between the level of the cli and the level of gnp copyright 1996 by university of chicago press

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

business cycle non linearities in uk consumption and production this paper develops non linear smooth transition autoregressive star models with two additive smooth transition components to capture the business cycle characteristics of uk real consumers expenditure and industrial production the results indicate consumption has essentially two business cycle regimes recession and expansion industrial production however is characterized by the three regimes of recession normal growth and high growth the transitions describing recovery from recession are very similar for the two variables stochastic simulations illustrate the dynamic responses of these models and emphasize that they are locally linear our results also indicate that the two transition star models have some forecast advantages over other specifications for periods of contraction copyright 2000 john wiley sons ltd

a two country model of stochastic output with changes in regime abstract this paper evaluates the transmission of business cycles between countries and presents evidence that world wide shocks dominate any transmission of business cycles i examine industrial production and look at the relationships of the united states with canada germany and the united kingdom in the process i present a specialized markov switching time series model and evaluate it relative to other more familiar stochastic models i show that for the data sets considered markov switching models have much better goodness of fit but larger forecast variance relative to arma or var models

a nonlinear approach to us gnp a univariate nonlinear model is estimated for us gnp that on many criteria outperforms standard linear models the estimated model is of the threshold autoregressive type and contains evidence of asymmetric effects of shocks over the business cycle in particular the nonlinear model suggests that the post 1945 us economy is significantly more stable than the pre 1945 us economy

decomposition of aggregate carbon intensity for the manufacturing sector comparison of declining trends from 10 oecd countries for the period 1971 1991 abstract as with total energy consumption or aggregate energy intensity changes in aggregate carbon intensity may also be decomposed or attributed to changes in various components including fuel mix for electricity generation final energy mix sub sectoral economic activity and sub sectoral energy intensities the adaptive weighted divisia rolling base year index specification is applied to total carbon emissions from the manufacturing sector of 10 oecd countries for the period 1971 1991 declines in aggregate carbon intensity for these countries range from 70 and may be primarily attributed to decreases in energy intensity i e increases in the average factor productivity of energy however these declines in aggregate carbon intensity appear to have a complex linkage to increases in energy prices as well as changes in other determinants of gross industrial output

a test for volatility spillovers abstract this paper proposes a new procedure for analyzing volatility links between different markets based on a bivariate markov switching model an empirical application of this procedure to three emerging markets is examined and discussed

interfuel competition in the industrial sector of seven oecd countries abstract the purpose of this article is to present an analysis of interfuel substitution in the industrial sector of seven major oecd countries the united states canada japan germany france the united kingdom and italy over the 1960 1993 period translog models are used to provide estimates of price elasticities from annual data for each country results outline the weakness of price elasticities and changes in behaviour over the last 35 years and show evidence of asymmetric effects since the collapse of oil prices in 1986 substitution has stopped industrial energy demand and oil consumption have stagnated interfuel substitution is widely induced by events other than relative price changes energy policy political and institutional constraints changes in economic activity characteristics within individual country sectors

decomposition analysis of the variations in residential electricity consumption in brazil for the 1980 2007 period measuring the activity intensity and structure effects abstract introduced at the end of the 1970s to study the impacts of structural changes on electricity consumption by industry index decomposition analysis techniques have been extended to various other areas to help in the formulation of energy policies notably in developed countries however few authors have applied these techniques to study the evolution of energy consumption in developing countries in brazil the few available studies have focused only on the industrial sector in this article we apply the decomposition technique called the logarithmic mean divisia index lmdi to electricity consumption of the brazilian residential sector to explain its evolution in terms of the activity structure and intensity affects over the period from 1980 to 2007 the technique is sufficiently robust and flexible to perform this analysis by disaggregating residential consumers by consumption classes and regions of the country among the main results is measurement of the impact of government programs for income transfer and universal service on variations in residential consumption typical of developing countries

bayes estimates of markov trends in possibly cointegrated series stylized facts show that average growth rates of u s per capita consumption and income differ in recession and expansion periods because a linear combination of such series does not have to be a constant mean process standard cointegration analysis between the variables to examine the permanent income hypothesis may not be valid to model the changing growth rates in both series we introduce a multivariate markov trend model that accounts for different growth rates in consumption and income during expansions and recessions and across variables within both regimes the deviations from the multivariate markov trend are modeled by a vector autoregression var model bayes estimates of this model are obtained using markov chain monte carlo methods the empirical results suggest the existence of a cointegration relation between u s per capita disposable income and consumption after correction for a multivariate markov trend this result is also obtained when per capita investment is added to the var

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

china s changing energy intensity trend a decomposition analysis china experienced a dramatic decline in energy intensity from the onset of economic reform in the late 1970s until 2000 but since then the rate of decline slowed and energy intensity actually increased in 2003 most previous studies found that most of the decline was due to technological change but disagreed on the role of structural change to the best of our knowledge no decomposition study has investigated the role of inter fuel substitution in the decline in energy intensity or the causes of the rise in energy intensity since 2000 in this paper we use logarithmic mean divisia index lmdi techniques to decompose changes in energy intensity in the period 1980 2003 we find that 1 technological change is confirmed as the dominant contributor to the decline in energy intensity 2 structural change at the industry and sector sub industry level actually increased energy intensity over the period of 1980 2003 although the structural change at the industry level was very different in the 1980s and in the post 1990 period 3 structural change involving shifts of production between sub sectors however decreased overall energy intensity 4 the increase in energy intensity since 2000 is explained by negative technological progress 5 inter fuel substitution is found to contribute little to the changes in energy intensity

contributions of weather and fuel mix to recent declines in us energy and carbon intensity a recent 1996 2000 acceleration of declines in energy andcarbon intensity in the u s remains largely unexplained this study usesdivisia decomposition and regression to test two candidate explanations fuel mix and weather the divisia method demonstrates that fuel mix doesnot explain the declines in carbon intensity the fuel mix both overalland for electricity generation became slightly more carbon intensiveover the study period though the slight trend reversed before the end ofthe period a regression based correction to the divisia indices accounting for variation in heating and cooling degree days indicatesthat warmer weather accounts for about 30 percent ofthe total declines this leaves declines of more than 2 percent per year and an accelerationof more than 1 percent over previous decade remaining to beexplained

towards sustainability of energy systems a primer on how to apply the concept of energy services to identify necessary trends and policies virtually all goods and services that characterize modern societies welfare depend on the provision of commercial energy the core objective of this paper is to identify necessary changes in trends for achieving a transition towards more sustainable energy systems and development paths the major conclusions of this analysis are i a rigorous rethinking process has to take place to identify which level of energy services per capita lead to enhancing human welfare and quality of life ii a significant increase in energy conversion efficiency has to be triggered to finally provide energy services with far less input of energy than today iii a continuous increase in the share of renewable energy sources and other low emission options has to be brought about iv however as history has shown this process of technological learning has to be accompanied by proper energy price and regulatory policies otherwise it is very likely that energy conservation gains due to technical efficiency improvements will be outweighed again by increases in energy service demand and straightforward energy consumption and co 2 emissions

international evidence on the historical properties of business cycles we contrast properties of real quantities with those of price levels and stocks of money for ten countries over the last century although the magnitude of output fluctuations has varied across countries and periods relations among real quantities have been remarkably uniform properties of price levels however exhibit striking differences between periods inflation rates are more persistent after world war ii than before and price level fluctuations are typically procyclical before world war ii and countercyclical afterward fluctuations in money are less highly correlated with output in the postwar period but are no more persistent than in earlier periods jel e32 e31

exploring the dynamics between terrorism and anti terror spending theory and uk evidence abstract recent years have seen governments restricting civic freedoms and legislating significant increases in spending to combat terrorist activities in this paper we investigate the relationship between anti terror spending and terrorism in line with previous findings in the empirical literature on terrorist activity our game theoretic model of the interaction between a benevolent government and a terrorist organization is suggestive of a non linear relation between terrorism and counter terrorism spending using uk data our empirical markov switching implementation provides evidence in favor of this approach the empirical results also show that the probability of transiting into a state with high terror is smaller if defense spending is high

banking crises and nonlinear linkages between credit and output in this article we analyse the asymmetric causality linkages between credit growth and output growth during banking crises we employ a recently developed procedure based on a bivariate markov switching model to test the hypotheses of independence causality and asymmetric causality between credit and output using a sample of 103 banking crises around the world we find that neither credit nor output takes precedence as a variable in calm and crisis periods although there is evidence of instantaneous interdependence between the banking and real sector during crises the results suggest that shocks propagate mostly within a year between the banking sector and the real economy the linear link between credit growth and output growth is also regime dependent

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

cointegration of consumption and disposable income evidence from twelve oecd countries one of the implications of the rational expectation permanent income hypothesis is that consumption and disposable income are cointegrated campbell 3 using tests that are developed in engle and granger 7 concludes that this implication holds on the quarterly aggregate data of the u s he finds that although a phillips perron test could not reject the nonstationarity of the disposable income and consumption processes an augmented dickey fuller test rejects the existence of a unit root in the residuals obtained from the least square regression of disposable income on consumption campbell and clarida 4 confirm those conclusions with the quarterly aggregate time series data of canada these tests however may yield different conclusions if they are applied to data from other countries this is because the unit root tests in the literature have rather weak power when they are applied to individual time series of moderate length particularly when the alternative is close to the null indeed attfield demery and duck 1 using quarterly aggregate time series data of the u k find that phillips perron test strongly rejects at the 1 level the nonstationarity of the disposable income process they also find no evidence at even the 10 level against a unit root in the residuals of the regression between disposable income and consumption with augmented dickey fuller tests of 1 or 4 lags campbell and clarida 4 indicate that for the united kingdom the unit root hypothesis for the disposable income is rejected at the 5 level and the hypothesis of no cointegration between consumption and disposable income can only be rejected at the 10 level 2

sources of international business fluctuations country specific shocks or worldwide shocks abstract this paper identifies sources of business fluctuations in a two country open economy model with the structural var method focusing on the relative importance of worldwide shocks and country specific shocks unlike previous studies which define country specific shocks as labor supply shocks this study explicitly identifies three kinds of permanent shocks worldwide shocks domestic country specific shocks and foreign country specific shocks with identifying restrictions derived from a theoretical model the main finding is that u s country specific shocks are the most important in explaining u s and foreign output fluctuations except in the short run

cooperation in microcredit borrowing groups identity sanctions and reciprocity in the production of collective goods cooperation to produce collective goods is widespread in society and yet so is its failure theorists have identified competing mechanisms for facilitating group cooperation including group identity sanctions and reciprocity here i use empirical data to explore how these mechanisms influence cooperation in the natural laboratory of microcredit borrowing groups microcredit makes loans to high risk borrowers through borrowing groups in which individuals access to credit is dependent on the behavior of other members of the group thereby creating a social dilemma for members and an opportunity to observe cooperation in real world groups by analyzing both collective goods production loans and compliance repayment i find that the competing mechanisms have differential effects group identity sanctions and reciprocity are all associated with more borrowing in the group only reciprocity however limits loan delinquency and is associated with group longevity suggesting both that collective goods p

international business cycles world region and country specific factors the paper investigates the common dynamic properties of business cycle fluctuations across countries regions and the world we employ a bayesian dynamic latent factor model to estimate common components in macroeconomic aggregates output consumption and investment in a 60 country sample covering seven regions of the world the results indicate that a common world factor is an important source of volatility for aggregates in most countries providing evidence for a world business cycle we find that region specific factors play only a minor role in explaining fluctuations in economic activity we also document similarities and differences across regions countries and aggregates jel f41 e32 c11 c32

business cycles for g7 and european countries this article proposes classical business cycle turning points for the g7 and a number of european countries based on industrial production this enables the authors to examine the international nature of cyclical movements free from arbitrary assumptions about the trend in particular they show that cyclical assymetry is common with slopes during declines being generally larger in magnitude than during expansions a binary measure of association for expansion and contradiction regimes indicates a core group of european countries related to each other and apparently linked to the united states and japan through germany copyright 1997 by university of chicago press

some analysis of the long run time series properties of consumption and income in the u k abstract the purpose in this letter is to examine the long run time series behavior of consumption and income in the uk both series are non stationary and exhibit non linearity in conditional mean evidence is provided of cointegration and non linear error correction

impacts of growth and structural change on co2 emissions of developing countries abstract carbon dioxide emissions the most significant greenhouse gas are growing at more rapid rates in developing economies relative to advanced economies this paper estimates the effects of the growth of gdp changes in industrial structure fuel mixes and energy efficiency on the carbon dioxide emissions of nine developing countries using a decomposition model policy implications for reducing emissions in the light of the findings are discussed

the emergence of cooperation among egoists this article investigates the conditions under which cooperation will emerge in a world of egoists without central authority this problem plays an important role in such diverse fields as political philosophy international politics and economic and social exchange the problem is formalized as an iterated prisoner s dilemma with pairwise interaction among a population of individuals results from three approaches are reported the tournament approach the ecological approach and the evolutionary approach the evolutionary approach is the most general since all possible strategies can be taken into account a series of theorems is presented which show 1 the conditions under which no strategy can do any better than the population average if the others are using the reciprocal cooperation strategy of tit for tat 2 the necessary and sufficient conditions for a strategy to be collectively stable and 3 how cooperation can emerge from a small cluster of discriminating individuals even when everyone else is using a strategy of unconditional defection

are economic time series asymmetric over the business cycle it has long been argued that major cyclical variables such as the unemployment rate display an asymmetric behavior over various phases of the business cycle the paper provides a statistical test for this hypothesis using the framework of finite state markov processes i implement a test to see if the behavior of the unemployment rate is characterized by sudden jumps and slower drops it is argued that the framework provided in the paper can also be used to test other sample path properties of economic time series

does the private sector help or hurt the environment evidence from carbon dioxide pollution in developing countries abstract how does the nature of enterprise ownership affect the environment in an economy conventional wisdom and theoretical conjectures are split on this important question in this paper we estimate a reduced form random effects model using data from 44 developing countries over nine years 1987 95 to study for any systematic empirical relationship between the relative level of private sector involvement in an economy and the environmental performance of the economy in terms of its emission of industrial carbon dioxide we control for both observed and unobserved crosscountry heterogeneity along various institutional and structural dimensions such as the scope of financial market industrial sector composition and level of foreign direct investment the regression results indicate that the higher the degree of private sector involvement in a developing economy the lower is its environmental degradation in addition its environmental degradation is likely to be further reduced in presence of a well functioning domestic capital market and through increased participation by developed economies in its private sector development

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

an overview of the driving forces behind energy demand in china s construction industry evidence from 1990 to 2012 abstract the rapid urbanization in china has produced a large demand for energy in the past decades it is therefore urgent to have an understanding of the driving forces behind the energy increase in the construction industry this study applies structural decomposition analysis sda to quantify the effects of driving factors from insight into consumption and production the results show that the energy consumption trajectory of china s construction industry is the result of competition between the effect of increasing final demand and improvement in energy efficiency although the effect of consistent efforts in structure optimization by the central government was significant from 2007 to 2012 the potential to save much energy still lies in structure optimization in energy production and final demand according to the projection structural upgrades in economy would be the most important factor for energy reduction in 2020 scenario analysis further indicated that the percentage change of energy increments in 2020 can be reduced at 22 of 2010 level under the optimistic scenario sector aggregation analysis revealed that more aggregates would increase uncertainty to some extent and result in a misinterpretation of the importance of the underlying factors according to the quantitative analysis in this study the percentage change of total embodied energy consumption in the construction industry should be limited below 25 of 2010 level at the end of the 13th five year plan

us deficit sustainability a new approach based on multiple endogenous breaks recent empirical work has questioned the consistency of us fiscal policy with an intertemporal budget constraint empirical results have tended to indicate that the deficit process has undergone at least one structural shift during recent decades with the deficit becoming either unsustainable or sustainable in only a weak sense in the post shift period in this paper we re examine sustainability using a new approach based on a cointegration model with multiple endogenous breaks a bayesian methodology is applied incorporating markov chain monte carlo simulators in contrast to previous analyses we find evidence of a sustainable deficit process over the 1947 1992 period despite the occurrence of breaks during the 1970s and 1980s copyright 2000 john wiley sons ltd

dirty industries patterns of change in industrial countries this article concerns itself with the environmental role of heavily polluting industries since 1970 analysing its development in 11 basic industries as well as electricity production and road transport in 32 industrial countries it argues for a green industrial policy demonstrating that other mitigations of environmental pressure in industrial countries end of pipe treatment relocation to the third world structural change in the industrial sector and even environmentally oriented modernization have so far been unable to solve the problems of dirty industries although some approaches have shown some promise

a model of carbon price interactions with macroeconomic and energy dynamics abstract this paper develops a model of carbon pricing by considering two fundamental drivers of european union allowances economic activity and energy prices on the one hand economic activity is proxied by aggregated industrial production in the eu 27 as it provides the best performance in a preliminary forecasting exercise vs other indicators on the other hand brent natural gas and coal prices are selected as being the main carbon price drivers as highlighted by previous literature the interactions between the macroeconomic and energy spheres are captured in a markov switching var model with two states that is able to reproduce the boom bust business cycle hamilton 1989 first industrial production is found to impact positively negatively the carbon market during periods of economic expansion recession thereby confirming the existence of a link between the macroeconomy and the price of carbon second the brent price is confirmed to be the leader in price formation among energy markets bachmeier and griffin 2006 as it impacts other variables through the structure of the markov switching model taken together these results uncover new interactions between the recently created eu emissions market and the pre existing macroeconomic energy environment

threshold nonlinearities in output some international evidence the empirical adequacy of linear ar and nonlinear setar models of trend stationary and difference stationary representations of output for canada germany japan the uk and the us are appraised test results suggest the presence of linear model residual structure of some form for all series and nonlinearities of specifically threshold form in trend stationary data for canada germany japan and the us and difference stationary data for germany japan and the us with the exception of canada estimated threshold nonlinear models imply asymmetric dynamics are able to account for all nonlinear structure in the data on the basis of bds statistics and provide sizeable reductions in residual variance in several cases most notably for germany

dutch sectoral energy intensity developments in international perspective 1987 2005 this paper makes use of a new dataset to investigate energy intensity developments in the netherlands over the period 1987 2005 the dataset allows for a comparison with 18 other oecd countries a key feature of our analysis is that we combine a cross country perspective with a high level of sectoral detail covering 49 sectors particularly innovative is our evaluation of energy intensity developments in a wide range of service sectors we find that across sectors energy intensity levels in the netherlands on average decreased only marginally and increased in services this performance is in general worse than the oecd average especially between 1987 and 1995 changes in the sectoral composition of the economy play an important role in explaining aggregate trends in the manufacturing sector about half of the efficiency improvements were undone by a shift towards a more energy intensive industry structure in contrast in the service sector efficiency decreased which was undone for about one third by a shift towards a less energy intensive sector structure

energy intensity in the iron and steel industry a comparison of physical and economic indicators abstract energy consumption of the iron and steel industry is examined in seven countries brazil china france germany japan poland and the united states for the period 1980 1991 using a decomposition analysis based on physical indicators for process type and product mix we decompose intra sectoral structural changes and efficiency improvements specific energy consumption decreased in all countries except poland efficiency improvement played a key role in brazil china germany and the us while structural changes were the main driver for energy savings in france and japan we also compare the use of various economic indicators to physical indicators and find that they do not track physical developments well in poland or the developing countries we studied in the industrialized countries value added based energy intensity indicators generally reflect the specific energy consumption better than other economic indicators although large differences occur in individual years we found a smaller correlation between other economic indicators gross output and value of shipments and specific energy consumption we conclude that use of physical energy intensity indicators improves comparability between countries provides greater information for policy makers regarding intra sectoral structural changes and provides detailed explanations for observed changes in energy intensity

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

the hamilton model with a general autoregressive component estimation and comparison with other models of economic time series abstract this paper generalizes the hamilton model to the important case in which the autoregressive component need not contain a unit root using u s quarterly real gnp data the model is estimated and the results are compared to those of hamilton some monte carlo evidence for the model is presented and its in sample forecasting performance is discussed and compared to the original hamilton model the arima model and the deterministic time trend model

monetary policy in a markov switching vector error correction model monetary policy vector autoregressions vars typically presume stability of the long run outcomes we introduce the possibility of switches in the long run equilibrium in a cointegrated var by allowing both the covariance matrix and weighting matrix in the error correction term to switch we find that monetary policy alternates between sustaining long run growth and disinflationary regimes allowing state changes can also help explain the price puzzle and justify the use of commodity prices as a corrective measure finally we show that regime switching has implications for disinflationary monetary policy and can explain the variety of sacrifice ratio estimates that exist in the literature

cointegration and changes in regime the japanese consumption function in this paper we examine a model of cointegration where long run parameters are subject to switching between several different cointegrating regimes these shifts are allowed to be governed by the outcome of an unobserved markov chain with unknown transition probabilities we illustrate this approach using japanese data on consumption and disposable income and find that the data favour a markov switching long run relationship over a standard temporally stable formulation 1997 by john wiley sons ltd

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

the impact of leadership turnover on trading relations between states we test how domestic political institutions moderate the effect of lead ership turnover on relations between states deriving hypotheses from recent theo retical work bueno de mesquita et al and mcgillivray and smith we examine how leader change affects trading relations between states using dyadic trade data con sistent with hypotheses we find that large winning coalition systems such as democ racies are relatively immune from the vagaries of leadership change in such systems trade remains relatively constant whether leader change occurs or not in contrast when winning coalition size is small as in autocratic states leadership change pro foundly alters relations causing a decline in trade finally we examine instances of poor relations measured by a significant decline in trade compared to historical lev els as predicted instances of poor relations are less common between pairs of democ racies than other dyadic pairings further leadership turnover in autocratic systems restores trading relations between states the effect of leadership change in democ racies is much less pronounced since first drafting this article the united states has invaded iraq and deposed its leader saddam hussein for more than a decade iraq experienced harsh economic sanctions with hussein s removal these sanctions have been lifted and iraq is in the processes of being reinstated into the international community although it was the iraqi people who bore the costs of the sanctions the sanctions were aimed at hussein s regime with hussein removed the prospects for improved relations between iraq and western states look strong while iraq offers an extreme example this article assesses how the turnover of leaders affects relations between states as measured by trade flows in partic ular drawing on recent theoretical developments we examine how domestic insti tutions and leadership turnover affect dyadic trade flows consistent with the theoretical arguments we find that trade flows between states depend on the inter action of institutions and leader turnover

business cycle durations and postwar stabilization of the u s economy average postwar expansions are twice as long as prewar expansions and contractions are one half as long this paper investigates three possible explanations the first explanation is that shocks to the economy have been smaller in the postwar period the second explanation is that the composition of output has shifted from very cyclical sectors to less cyclical sectors the third explanation is that the apparent stabilization is largely spurious and is caused by differences in the way that prewar and postwar business cycle reference dates were chosen by the national bureau of economic research the evidence presented in this paper favors this third explanation copyright 1994 by american economic association

taiwan s financial holding companies an empirical investigation based on markov regime switching model though the financial holding company act in taiwan permits banks securities firms and insurance companies to affiliate identifying the influence on taiwan s financial holding companies hasn t been discussed rigorously yet this paper presents a formal methodology using two state markov regime switching approach to allow for the uncertainty event date of financial holding companies stock return and risk this study serves as one of the first studies that adopt a markov regime switching model to estimate financial holding companies stock behaviour the evidence shows that 12 of 13 financial holding companies have regime switching and one has no regime switching in taiwan therefore the stock behaviours of taiwan s financial holding companies follow two regimes and the traditional linear model cannot be descriptive however the levels of 12 financial holding companies risk are significantly low of state 1 and stock returns are indifferent between two states hence there are diversification benefits

environment adjusted total factor energy efficiency of taiwan s service sectors this study computes the pure technical efficiency pte and energy saving target of taiwan s service sectors during 2001 2008 by using the input oriented data envelopment analysis dea approach with the assumption of a variable returns to scale vrs situation this paper further investigates the effects of industry characteristics on the energy saving target by applying the four stage dea proposed by fried et al 1999 we also calculate the pre adjusted and environment adjusted total factor energy efficiency tfee scores in these service sectors there are three inputs labor capital stock and energy consumption and a single output real gdp in the dea model the most energy efficient service sector is finance insurance and real estate which has an average tfee of 0 994 and an environment adjusted tfee eatfee of 0 807 the study utilizes the panel data random effects tobit regression model with the energy saving target est as the dependent variable those service industries with a larger gdp output have greater excess use of energy the capital labor ratio has a significantly positive effect while the time trend variable has a significantly negative impact on the est suggesting that future new capital investment should also be accompanied with energy saving technology in the service sectors

contagious energy prices we develop an empirical model of the determinants of end use energy prices in 28 organisation for economic co operation and development countries for this we construct a unique panel data set and formulate a spatial panel econometric model with fixed country effects for the period of 1980 2009 a special feature of the proposed empirical model is that cross country interdependence in energy prices surfaces through two channels a metric of similarity towards energy policy and a metric of trade in energy goods we estimate the parameters of that model and conduct several comparative static experiments we find that higher income per capita and lower efficiency in energy distribution tend to raise energy prices whereas higher net imports of energy and more abundant energy resource endowments reduce them we also find that bilateral trade in energy goods is an important channel of transmission of shocks in energy prices across countries the estimation results suggest that countries that use the same types of resources to generate energy are likely to transmit energy price shocks to each other through competition effects

decomposition analysis for assessing the progress in decoupling industrial growth from co2 emissions in the eu manufacturing sector decomposition analysis is used in this paper not only to explain changes in industrial co2 emissions but also to comparatively evaluate the progress made in 14 eu countries in decoupling emissions from industrial growth the analysis is performed for the period 1990 2003 by distinguishing two time intervals for assessing progress prior to and following the agreement on the kyoto protocol the refined laspeyres model is used to determine the impact of 5 explanatory factors output energy intensity structure fuel mix and utility mix the obtained results are further elaborated in order to assess the real efforts undertaken in each country and their effectiveness in dissociating the economic and environmental dimensions of development moreover a rescaling procedure is implemented in order to adjust efforts to the average progress in the eu and proceed to a fair comparative evaluation it is found that most eu countries made a considerable but not always sufficient decoupling effort while no significant acceleration is observed in the post kyoto period

the decomposition of co2 emissions from energy use in greece before and during the economic crisis and their decoupling from economic growth abstract greece recorded a significant decline in co 2 emissions from energy use from 2003 to 2013 accompanied by a reduction in energy consumption particularly during the economic recession this study attempts to identify the driving forces of co 2 emissions related to energy consumption through the use of the complete decomposition technique developed by jw sun the decomposition analysis focuses on the four factors responsible for co 2 emissions the carbon intensity effect the energy intensity effect the structural effect and the economic activity effect the analysis covers all the major productive sectors of the greek economy the study covers the period 2003 2013 and is divided into two subperiods 2003 2008 and 2008 2013 in order to assess changes in the contribution of the examined factors during the economic crisis 2008 2013 the analysis is extended to examine the decoupling relationship between co 2 emissions and economic growth in greece with the use of the decoupling index

trade interdependence and the international business cycle a stochastic general equilibrium model of the world economy is developed to analyze the contribution of trade interdependence to international business cycles we test some of the implications of the model using data from ten major industrial countries and a variety of detrending techniques to calculate the cyclical component of output we find that the significance of trade in the transmission of economic disturbances across countries is not robust to the choice of the detrending method in general the role of trade interdependence is moderate and seem to have been stronger in the period before 1973

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

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

modeling the forms of international cooperation distribution versus information the problems of distribution and information impede international cooperation they arise when actors select how they will cooperate an exploration of the interaction between these problems using a limited information model of cooperation leads to six conclusions first leadership solutions to coordination problems always exist but leadership here is very different from hegemonic provision of public goods second actors can cooperate in the face of anarchy even without a shadow of the future third diffuse reciprocal strategies arise naturally in coordination problems fourth norms and institutions are intertwined within successful cooperation fifth the form of cooperation on an issue varies with the relative importance of distribution and information finally and most important distributional and informational problems interfere with each other arrangements to cooperate can successfully address one but not both of these problems

new index of coincident indicators a multivariate markov switching factor model approach abstract this paper extends the univariate markov switching unobserved component model to the multivariate markov switching factor model of coincident economic indicators an approximate ml method is developed to estimate the model the extracted markov switching factor may be interpreted as the coincident index and is comparable to the stock watson index which differs only by the markov switching component using four constituent series of the doc coincident index for the period january 1960 to june 1992 the proposed model generates recessionary and expansionary periods which are remarkably consistent with the nber chronology of the business cycles from the noisy monthly data this paper also finds that duration dependence does matter

real business cycles and the test of the adelmans abstract this paper conducts a modern variant of the test proposed and carried out by adelman and adelman 1959 using the methods developed by burns and mitchell 1946 we see if we can distinguish between the economic series generated by an actual economy and those analogous artificial series generated by a stochastically perturbed economic model in the case of the adelmans the model corresponded to the klein goldberger equations in our case the model corresponds to a simple real business cycle model the results indicate a fairly high degree of coincidence in key economic aggregates between the business cycle characteristics identified in actual data and those found in our simulated economy

international real business cycles we ask whether a two country real business cycle model can account simultaneously for domestic and international aspects of business cycles with this question in mind we document a number of discrepancies between theory and data the most striking discrepancy concerns the correlations of consumption and output across countries in the data outputs are generally more highly correlated across countries than consumptions in the model we see the opposite

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