the impact of the 1992 cable act on household demand and welfare i measure the benefit to households of the 1992 cable act in light of strategic responses by cable systems to the regulations mandated by the act a discrete choice differentiatedproduct model of household demand for all offered cable television services forms the basis of the analysis aggregation over households and service combinations to the level of the data permits estimation on a cross section of cable markets from before and after the act the results indicate that while the regulations mandated price reductions of 10 17 for cable services observed system responses yielded no change in household welfare post act changes in cable prices are responsible for most of the difference

a review of policy drivers and barriers for the use of anaerobic digestion in europe the united states and australia anaerobic digestion ad of biomass has become a common technology used in many european nations and is receiving increased attention in other nations the chief attraction of ad is it generates renewable energy yet it also manages and treats organic waste recycles key nutrients to soil and can create local jobs making ad an attractive technology to governments in this paper we review the role government policy has played in promoting ad use and driving its growth in five developed nations studied australia denmark germany the uk and usa these nations were chosen for review as they provide a breadth of ad use with the number of ad plants in the aforementioned nations totaling 78 114 9545 265 and 1497 this review looks to demonstrate and discuss policy mechanisms introduced by each nation that has helped drive ad use and identify areas where policy can help overcome enduring challenges that face the ad industry focused discussion is given to waste management climate change and energy security policies and to financial incentives made available to ad installations analysis shows that the impact of performance based incentives targeted at small medium capacity ad plants less than 500 kw have a significant positive correlation with the growth of ad use in the uk and germany the relatively new ad industry faces a number of barriers which are also discussed but with the help of supportive government policy for the technology that considers the wide ranging benefits of ad across government portfolios investors will be more likely to show interest in the developing ad industry

tracking the new economy using growth theory to detect changes in trend productivity abstract the acceleration of productivity after 1995 prompted a debate over whether the economy s underlying growth rate would remain high in this paper we draw on growth theory to identify variables other than productivity namely consumption and labor compensation to help estimate trend productivity growth we treat that trend as a common factor with two regimes high and low growth our analysis picks up striking evidence of a return in 1997 to the high growth regime nearly 25 years after a switch from high to low growth we find that both the common factor and regime switching aspects of the model are important for identifying changes in trend productivity and also show that the trend breaks are more difficult to detect with per capita as opposed to per hour based data because of persistent labor supply shifts finally we argue that our methodology is effective in detecting changes in trend in real time in the case of the 1990s the methodology would have signaled the regime switch by 1999 or within roughly six quarters of when it occurred according to the full sample

how the baby boomers retirement wave distorts model based output gap estimates hours per capita measures based on the private sector as usually included in the set of observables for estimating macroeconomic models are affected by low frequent demographic trends and sectoral shifts that cannot be explained by standard models further model based output gap estimates are closely linked to the observable hours per capita series hence hours per capita that are not measured in concordance with the model assumptions can distort output gap estimates this paper shows that sectoral shifts in hours and the changing share of prime age individuals in the working age population lead indeed to erroneous output gap dynamics regarding the aftermath of the global financial crisis model based output gaps estimated using standard hours per capita series are persistently negative for the us economy this is not caused by a permanently depressed economy but by the retirement wave of baby boomers which lowers aggregate hours per capita after adjusting hours for changes in the age composition to bring them in line with the model assumptions the estimated output gap gradually closes in the years following the global financial crisis

skill biased technological change and the business cycle over the past two decades technological progress in the united states has been biased towards skilled labor what does this imply for business cycles we construct a quarterly skill premium from the cps and use it to identify skill biased technology shocks in a var with long run restrictions hours fall in response to skill biased technology shocks indicating that at least part of the technology induced fall in total hours is due to a compositional shift in labor demand investment specific technology shocks reduce the skill premium indicating that capital and skill are not complementary in aggregate production

when do long run identifying restrictions give reliable results many recent articles have identified behavioral disturbances in vector autoregressions by imposing restrictions on the long run effects of shocks this article demonstrates that this approach will be unreliable unless the underlying economy satisfies three types of strong restrictions although many aspects of these issues have been raised before this article draws out and illustrates the implications for inferences under the long run scheme furthermore it provides strategies for dealing with the problems

creative destruction and uncertainty uncertainty rises in recessions but does uncertainty cause downturns or vice versa this paper argues that counter cyclical uncertainty fluctuations are a by product of technology growth in a firm dynamics model with endogenous technology adoption faster technology growth widens the dispersion of firm level productivity shocks a benchmark uncertainty measure moreover faster technology growth spurs a creative destruction process generates a temporary downturn and renders uncertainty counter cyclical estimates from structural vector autoregressions vars on u s data confirm the model s predictions on average 1 4 of the cyclical variation in uncertainty is driven by technology shocks this fraction rises to 2 3 around the dot com bubble

the medium is the measure technical change and employment 1909 1949 abstract new indicators based on technology titles are used to measure the impact of innovative activity on the u s labor market between 1909 and 1949 we find that positive technology shocks raised productivity employment vacancies and labor turnover and lowered unemployment and business failures moreover automotive and electrical innovations quintessential general purpose technologies had a greater positive impact on employment than those in mechanical innovations the overall results compatible with the predictions of the real business cycle model raise questions about the anemic recovery in employment after 1934 since the strong upsurge in technical change failed to be accompanied by vigorous job expansion

prospective analysis of technological innovation systems identifying technological and organizational development options for biogas in switzerland abstract in this article we put forward a concept for the identification and analysis of future development options of technological innovation systems the key element of our approach the so called variation analysis is a methodology to identify coherent socio technical and organizational variants within a specific innovation field consistent combinations of these two dimensions may be interpreted as nuclei for alternative future developments of innovation systems the method may be used in discursive foresight processes to inform strategy formulation of firms or policy makers who see a utility in furthering the innovation field the paper has a focus on developing the theoretical background and the analytical structure of the methodology empirically we illustrate the method for the innovation system of biomass digestion in switzerland

duopoly and quality standards abstract in the absence of sunk costs a low quality producer benefits from a mildly restrictive quality standard whereas a high quality producer suffers from it consumers welfare increases if the firm producing the higher quality does not increase its quality significantly in response to the increase in quality by its rival a sufficiently severe standard causes exit from the industry when there are no sunk cost the high quality producer exits first

the effects of permanent technology shocks on hours can the rbc model fit the var evidence abstract i show that a standard rbc model can be used to explain why hours per capita decrease in response to a permanent technology shock when hours enter a vector autoregressive var in first differences and why hours increase when hours enter in levels there are two parts to my argument first empirical evidence suggests that a positive permanent technology shock goes together with a persistent increase in the expected growth rate and the rbc model predicts this increase in the expected growth rate to have a downward effect on hours worked and can even result in a sizeable negative response of hours second first differencing hours in vars results in a considerable downward bias using the estimated parameters for the technology process i find i that the true model response of hours is positive and ii that when the var methodology is used with finite samples of simulated data then the hours response is negative positive when hours enter the var in first differences levels

factor demand linkages technology shocks and the business cycle abstract this paper argues that factor demand linkages can be important for the transmission of both sectoral and aggregate shocks we show this using a panel of highly disaggregated manufacturing sectors together with sectoral structural vars when sectoral interactions are explicitly accounted for a contemporaneous technology shock to all manufacturing sectors implies a positive response in both output and hours at the aggregate level otherwise there is a negative correlation as in much of the existing literature furthermore we find that technology shocks are important drivers of the business cycle

wage rigidity and job creation recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations we use worker level data from the cps to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions the wage of new hires unlike the aggregate wage is volatile and responds almost one to one to changes in labor productivity we conclude that there is little evidence for wage rigidity in the data

on the importance of the supply side in demand side management we discuss how the structure of market supply affects the evaluation of policies to promote energy efficiency in household appliances if competitive markets offer the levels that consumers demand product standards inefficiently restrict choice if suppliers price discriminate minimum standards can restrict the inefficient use of energy intensity to segment consumers we also compare the effects of average intensity standards energy prices and innovation and consider what the different behavioral predictions imply for empirical studies of energy efficiency good policymaking requires knowing not only how consumers value energy efficiency in their decision making but also how producers respond to those values

rule of thumb consumers productivity and hours in this paper we study the transmission mechanism of productivity shocks in a model with rule of thumb consumers in the literature this nancial friction has been studied only with reference to scal shocks we show that the presence of rule of thumb consumers is also very helpful in accounting for recent empirical evidence on productivity shocks rule of thumb agents together with nominal and real rigidities play an important role in reproducing the negative response of hours and the delayed responses of output and

the dynamics of hours worked and technology the response of hours worked to technology shocks in the postwar us economy has increased over time we offer a structural interpretation of this important time varying macroeconomic moment the time varying patterns captured by a structural var are consistent with those obtained from a parsimonious rbc model with a less than unitary elasticity of substitution between capital and labour the observed changes in the response of hours are attributable to increases in the magnitude of the degree of capital labour substitution finally we conjecture that the observed time variation in is related to changes in the skill composition of the work force and biases in technological change

a flexible finite horizon alternative to long run restrictions with an application to technology shocks abstract recent studies using long run restrictions question the validity of the technology driven real business cycle hypothesis we propose an alternative identification that maximizes the contribution of technology shocks to the forecast error variance of labor productivity at a long but finite horizon in small sample monte carlo experiments our identification outperforms standard long run restrictions by significantly reducing the bias in the short run impulse responses and raising their estimation precision unlike its long run restriction counterpart when our max share identification technique is applied to u s data it delivers the robust result that hours worked responds negatively to positive technology shocks

ces technology and business cycle fluctuations we contribute to an emerging literature that brings the constant elasticity of substitution ces specification of the production function into the analysis of business cycle fluctuations using us data we estimate by bayesian maximum likelihood methods a standard medium sized dsge model with a ces rather than cobb douglas cd technology we estimate a elasticity of substitution between capital and labour well below unity at 0 15 0 18 in a marginal likelihood race ces decisively beats the cd production and this is matched by its ability to fit the data better in terms of second moments we show that this result is mainly driven by the implied fluctuations of factor shares under the ces specification the ces model performance is further improved when the estimation is carried out under an imperfect information assumption hence the main message for dsge models is that we should dismiss once and for all the use of cd for business cycle analysis

shocking stuff technology hours and factor substitution the response of hours to technology shocks is a key controversy in macroeconomics we show that differences between rbc and nk models hinge on highly restrictive views of technology we introduce ces production technologies and demonstrate that the response of hours depends on the factor augmenting nature of shocks and the capital labor substitution elasticity in both models we develop analytical expressions to establish the thresholds determining its sign this opens new margins for shock identification combining theory and var evidence we discuss how our models provide new robust restrictions for empirical work especially using the labor income share

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

investment specific news shocks and u s business cycles we provide robust evidence that news shocks about future investment specific technology ist constitute a significant force behind u s business cycles positive ist news shocks induce comovement that is raise output consumption investment and hours these shocks account for 70 of the business cycle variation in output hours and consumption and 60 of the variation in investment and have played an important role in 9 of the last 10 u s recessions our findings provide strong support for shifting focus to ist news shocks when investigating the role of news in driving u s business cycles

shadow economies at times of banking crises empirics and theory this paper investigates the response of the shadow economy to banking crises our empirical analysis based on a large sample of countries suggests that the informal sector is a powerful buffer which expands at times of banking crises and absorbs a large proportion of the fall in official output to rationalise our evidence we build a dynamic stochastic general equilibrium model which accounts for financial and labour market frictions and for nominal rigidities in line with the empirical literature on the shadow economy we assume that in the informal sector access to external finance is limited and the production technology is relatively more labour intensive following a banking shock in the official sector the model predicts a large negative transmission to the unofficial economy that substantially dampens the overall effect of the shock

the effects of technology shocks on hours and output a robustness analysis we analyze the effects of neutral and investment specific technology shocks on hours and output long cycles in hours are removed in a variety of ways hours robustly fall in response to neutral shocks and robustly increase in response to investment specific shocks the percentage of the variance of hours output explained by neutral shocks is small large the opposite is true for investment specific shocks news shocks are uncorrelated with the estimated technology shocks copyright 2009 john wiley sons ltd

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

comparing dsge var forecasting models how big are the differences abstract i generate priors for a vector autoregression var from a standard real business cycle rbc model an rbc model with capital adjustment costs and habit formation and a sticky price model with an unaccommodating monetary authority the response of hours worked to a tfp shock differs sharply across these models i compare the accuracy of forecasts made from each of the resulting dynamic stochastic general equilibrium vector autoregression dsge var models despite having different structural characteristics the dsge vars are comparable in terms of forecasting performance as in previous work dsge vars compare favorably with atheoretical vars

measures of per capita hours and their implications for the technology hours debate structural vector autoregressions give conflicting results on the effects of technology shocks on hours the results depend crucially on the assumed data generating process for hours per capita we show that the standard measure of hours per capita and productivity have significant low frequency movements that are the source of the conflicting results hodrick prescott hp filtered hours per capita produce results consistent with those obtained when hours are assumed to have a unit root we show that important sources of the low frequency movements in the standard measure are sectoral shifts in hours and the changing age composition of the working age population when we control for these low frequency components to determine the effect of technology shocks on hours using long run restrictions we get one consistent answer hours decline in the short run in response to a positive technology shock we further extend the analysis by examining the effects of demographic controls on the impulse responses to investment specific technology shocks our results are less conclusive

monopoly with incomplete information recent theoretical research on principal agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other s actions here we concentrate on the former constraint and consider the case of a single principal the monopolist the main contribution is to show that under a separability assumption strong conclusions can be drawn about the nature of optimal incentive schemes although the primary focus is on optimal quantity discounts in a monopolized market the results also shed light on related topics such as optimal income taxation and commodity bundling

technology shocks and monetary policy assessing the fed s performance abstract the purpose of the present paper is twofold first we characterize the fed s systematic response to technology shocks and its implications for u s output hours and inflation second we evaluate the extent to which those responses can be accounted for by a simple monetary policy rule including the optimal one in the context of a standard business cycle model with sticky prices our main results can be described as follows first we detect significant differences across periods in the response of the economy as well as the fed s to a technology shock second the fed s response to a technology shock in the volcker greenspan period is consistent with an optimal monetary policy rule third in the pre volcker period the fed s policy tended to overstabilize output at the cost of generating excessive inflation volatility our evidence reinforces recent results in the literature suggesting an improvement in the fed s performance

can long run restrictions identify technology shocks gali s innovative approach of imposing long run restrictions on a vector autoregression var to identify the effects of a technology shock has become widely utilized in this paper we investigate its reliability through monte carlo simulations using calibrated business cycle models overall gali s methodology appears to be fruitful the impulse responses derived from the artificial data generally have the same sign and qualitative pattern as the true responses and the approach can be informative in discriminating between alternative models however our results reveal some important quantitative shortcomings including considerable estimation uncertainty about the impact of technology shocks on macroeconomic variables more generally the conditions under which the methodology performs well appear considerably more restrictive than implied by the key identifying assumption this underscores the importance of using economic models to guide in the implementation of the approach in interpreting the results and in assessing its limitations jel c32 e32 o33

measuring the international dimension of output volatility abstract this paper studies output fluctuations in a panel of oecd economies with the aim to decompose the evolution in output volatility into domestic and international factors to this end we use a factor augmented dynamic panel model with both domestic and international shocks and spillovers between countries through trade linkages changes in the volatility of output growth can be due to time varying sensitivity to these shocks changes in the propagation mechanism or shifts in the variances of shocks we explicitly model cross sectional dependence in the variance equation by specifying a common factor structure in the volatility of domestic shocks the results show that while the size of international shocks and spillovers does not decrease in most countries the volatilities of domestic shocks share a clear common decreasing trend hence the great moderation appears to be mainly driven by a decline in the volatility of domestic shocks rather than smaller international shocks

the prebisch singer hypothesis four centuries of evidence we employ a unique data set and new time series techniques to reexamine the existence of trends in relative primary commodity prices the data set comprises 25 commodities and provides a new historical perspective spanning the seventeenth to the twenty first centuries new tests for the trend function robust to the order of integration of the series are applied to the data results show that eleven price series present a significant and downward trend over all or some fraction of the sample period in the very long run a secular deteriorating trend is a relevant phenomenon for a significant proportion of primary commodities 2010 the president and fellows of harvard college and the massachusetts institute of technology

on the employment effects of productivity shocks the role of inventories demand elasticity and sticky prices abstract whether technological progress raises or lowers employment in the short run has been the subject of much debate in the recent years we show that cross industry differences in inventory holding costs demand elasticities and price rigidities potentially all affect employment decisions in the face of productivity shocks in particular the employment response to a permanent productivity shock is more likely to be positive the less costly it is to hold inventories the more elastic industry demand is and the more flexible prices are using data on 458 4 digit u s manufacturing industries over the period 1958 1996 we find statistically significant effects of variations in inventory holdings and demand elasticities on short run employment responses but less conclusive evidence pertaining to the effects of measured price stickiness

effects of changes in italian bioenergy promotion schemes for agricultural biogas projects insights from a regional optimization model italy has witnessed an extraordinary growth in biogas generation from livestock effluents and agricultural activities in the last few years as well as a severe isomorphic process leading to a market dominance of 999 kw power plants owned by entrepreneurial farms under the pressure of the economic crisis in the country the italian government has restructured renewable energy support schemes introducing a new program in 2013 in this paper the effects of the previous and current support schemes on the optimal plant size feedstock mix and profitability were investigated by introducing a spatially explicit biogas supply chain optimization model which accounts for different incentive structures by applying the model to a regional case study homogenization observed to date is recognized as a result of former incentive structures considerable reductions in local economic potentials for agricultural biogas power plants without external heat use are estimated new plants are likely to be manure based and due to the lower energy density of such feedstock wider supply chains are expected although optimal plant size will be smaller the new support scheme will therefore most likely eliminate past distortions but also slow down investments in agricultural biogas plants

broken trend stationarity of hours worked the estimated impact of a technology shock on hours worked using structural vector autoregressions svars depends to a great extent on whether or not hours worked is considered to be integrated of first order it is shown in this article that the widely analysed time series of hours worked per capita in the us business sector evolves around a broken linear trend when this fact is taken into account the unit root null is rejected by recently proposed tests therefore it can be stated that empirical specifications with hours in first differences are not recommended it seems more appropriate to control for the presence of this shift in the deterministic component we also draw this conclusion from a bivariate model for both productivity growth and hours worked our results suggest that technology improvements have a negative but nonsignificant effect on hours only in the very short run this impact later becomes positive and statistically significant after five periods

behavior of the firm under regulatory constraint a recent article by akira takayama discusses an earlier paper by harvey averch and leland l johnson on fair rate of return regulation of public utilities although takayama p 255 agrees with averch and johnson s general conclusions that a firm will tend to increase its investment with the introduction of an active constraint on its rate of return he criticizes the a j argument as being confusing ambiguous and in error takayama then attempts a clarification and presents a new formulation which leads to the a j result quoted above this comment will discuss several of takayama s criticisms in addition to showing that the so called a j effect cannot be derived from the basic assumptions made by both averch and johnson and takayama 1 we will show that the very assumptions used to prove the a j effect by defining the region of x require an assumption that the a j effect exists in the first place

the dynamo and the computer an historical perspective on the modern productivity paradox the dynamo and the computer an historical perspective on the modern productivity paradox author s paul a david source the american economic review vol 80 no 2 papers and proceedings of the hundred and second annual meeting of the american economic association may 1990 pp 355 361 published by american economic association stable url http www jstor org stable 2006600 accessed 08 12 2010 01 40

real rigidities productivity improvements and investment dynamics abstract the theoretical literature on business cycles predicts a positive investment response to productivity improvements a prediction we question from theoretical and empirical perspectives we show that a short term negative response of investment to a positive technology shock is consistent with a reasonably parameterized new keynesian dynamic stochastic general equilibrium dsge model in which firm specific capital introduces an additional real rigidity and monetary policy is not fully accommodative employing bayesian techniques we provide evidence that permanent productivity improvements have short term contractionary effects on investment although this result can be obtained from both firm specific and rental capital models only in the case of the former is the average price duration in line with the microeconometric evidence

prospects for expanded utilization of biogas in germany the prospects for expanded utilization of biogas systems in german was analysed by identifying the operational and policy factors affecting the complete chain of processes from implementation process for biogas plants through to biogas production and utilization it was found that the renewable energies act eeg and energy tax reliefs provide bases for the support of expanded utilization upgrading of biogas to natural gas quality for utilization in the transportation sector was arguably the most promising technology that could support rapid utilization expansion sustainable deployment of biogas systems in light of the unstable feedstock prices and availability and the need for subsidy free operation in the long term requires enhancement of feedstock flexibility and quality characteristics to maximise gas yield and optimisation of the anaerobic digestion process management assessment of energy balance and potential environmental impacts of the integrated process chain provides a holistic assessment of sustainability the results also support the development and foster of policies and framework for development of biogas as environmentally friendly energy resource among a mix of renewable energy sources hence compete favourably with fossil fuels to enhance the prospects for expanded utilization

investment shocks and business cycles abstract the origins of business cycles are still controversial among macroeconomists this paper contributes to this debate by studying the driving forces of fluctuations in an estimated new neoclassical synthesis model of the u s economy in this model most of the variability of output and hours at business cycle frequencies is due to shocks to the marginal efficiency of investment imperfect competition and to a lesser extent technological frictions are the key to their transmission although labor supply shocks explain a large fraction of the fluctuations in hours at very low frequencies they are irrelevant over the business cycle this finding is important because the microfoundations of these disturbances are widely regarded as unappealing

what really accounts for the fall in hours after a technology shock abstract the paper asks how state of the art dsge models that account for the conditional response of hours following a positive neutral technology shock compare in a marginal likelihood race to that end we construct and estimate several competing small scale dsge models that extend the standard real business cycle model in particular we identify from the literature six different hypotheses that generate the empirically observed decline in hours worked after a positive technology shock these models alternatively exhibit i sticky prices ii firm entry and exit with time to build iii habit in consumption and costly adjustment of investment iv persistence in the permanent technology shocks v labor market friction with procyclical hiring costs and vi leontief production function with labor saving technology shocks in terms of model posterior probabilities impulse responses and autocorrelations the model favored is the one that exhibits habit formation in consumption and investment adjustment costs a robustness test shows that the sticky price model becomes as competitive as the habit formation and costly adjustment of investment model when sticky wages are included

trend breaks long run restrictions and contractionary technology improvements abstract structural vector autoregressions with long run restrictions are extraordinarily sensitive to low frequency correlations recent literature finds that the estimated effects of technology shocks are sensitive to how one treats hours per capita however after allowing for statistically and economically significant trend breaks in productivity results are much less sensitive hours fall when technology improves the issue is that the common high low high pattern of productivity growth and hours i e the low frequency correlation inevitably leads to a positive estimated response the trend breaks control for this correlation this example suggests a practical need for care in using long run restrictions

what do technology shocks tell us about the new keynesian paradigm abstract researchers have used unanticipated changes to monetary policy to identify preference and technology parameters of macroeconomic models this paper uses changes in technology to identify the same set of parameters estimates based on technology shocks differ substantially from those based on monetary policy shocks in the post world war ii united states a positive technology shock reduces inflation and increases hours worked significantly and rapidly in both cases relative to policy shock identification technology shock identification implies i long duration durability in preferences instead of short duration habit ii built in inflation inertia disappears and price flexibility increases in response to technological improvement consumption durability increases hours worked because households temporarily increase labor supply to accumulate durables towards a new higher steady state level limited nominal rigidities allow inflation to fall because firms are able to immediately cut prices when households labor supply increases finally we consider alternative data constructions and econometric specifications we find that i and or ii hold in nearly every case

nominal and real wage rigidities in new keynesian models a critical survey the labour market is receiving increasing attention in the new keynesian literature in this paper i critically survey this literature in order to highlight the role played by wage rigidities in the explanation of fluctuations caused by technology shocks to this aim i present a dynamic stochastic general equilibrium model with sticky prices nominal wage rigidities and hiring costs the comparison between this model and that of blanchard and gali highlights the non trivial differences which exist in the way nominal wage and real wage rigidities drive the economy s dynamics my conclusion is that models incorporating nominal wage rigidities and some degree of price stickiness provide a better account of macroeconomic dynamics than models with real wage rigidities copyright 2009 blackwell publishing ltd

roads to prosperity assessing the link between public capital and productivity does the positive correlation between infrastructure and productivity reflect causation if so in which direction the author finds that when growth in roads the largest component of infrastructure changes productivity growth changes disproportionately in u s industries with more vehicles that vehicle intensive industries benefit more from road building suggests that roads are productive at the margin however road investments do not appear unusually productive intuitively the interstate system was highly productive but a second one would not be road building thus explains much of the productivity slowdown through a one time unrepeatable productivity boost in the 1950s and 1960s

the response of hours to a technology shock a two step structural var approach the response of hours to a technology shock is a controversial issue in macroeconomics part of the difficulty lies in that the estimated response is sensitive to the specification of hours in structural vector autoregressions svars this paper uses a simple two step approach to consistently estimate the response of hours the first step considers a svar model with a relevant stationary variable but excluding hours given a consistent estimate of technology shocks in the first step the response of hours to this shock is estimated in a second step simulation experiments from an estimated dynamic stochastic general equilibrium dsge model show that this approach outperforms standard svars when applied to u s data the two step approach predicts a short run decrease followed by a hump shaped positive response this result is robust to other specifications and data

multiproduct monopoly a queueing approach using queuing theory to model traditional market structures can provide interesting insights into the underlying mechanisms many characteristics of markets are well known but queuing models often illustrate these in a novel manner a stochastic model of multiproduct monopoly with impatient consumers is developed the model explicitly allows for congestion effects a monopoly that offers two services distinguished only by a time element that is where two distinct service rates apply is considered two different classes of consumer are considered according to their waiting time tolerances given assumptions about dynamic consumer choice behaviour queuing theory techniques are used to derive market share and effective demand details for each class of consumer in terms of the firm s pricing quality and processing speed policy economic analysis is performed allowing for the possibility of offering a reward when the consumer has to face a long queue the economic summary provided forms the basis of a

the ins and outs of unemployment an analysis conditional on technology shocks we analyze how unemployment job finding and job separation rates react to neutral and investment specific technology shocks neutral shocks increase unemployment and explain a substantial portion of it volatility investmentspecific shocks expand employment and hours worked and contribute to hours worked volatility movements in the job separation rates are responsible for the impact response of unemployment while job finding rates for movements along its adjustment path the evidence warns against using models with exogenous separation rates and challenges the conventional way of modelling technology shocks in search and sticky price models

macroeconomic expectations and time varying heterogeneity evidence from individual survey data the goal of this paper is to investigate forecast heterogeneity and time variability in the formation of expectations using disaggregated monthly survey data on macroeconomic indicators provided by

international evidence on time variation in trend labor productivity growth this paper provides international evidence on time variation in trend productivity growth based on the dataset for hours worked constructed by ohanian raffo 2012 applying both the endogenous break tests of bai perron 1998 2003 and the stock watson 1996 1998 tvp mub methodology substantial evidence of time variation in trend productivity growth is detected for most countries for either japan or countries belonging to the eurozone evidence points towards a significant growth decline over the last several decades weaker evidence is reported for the united states for which the 1990 s productivity acceleration is estimated to have been overall mild and of a temporary nature

rate of return regulation and product variety abstract this paper examines the effect of rate of regulation on a monopolist that faces a market of observationally identical but heterogeneous consumers under plausible technological conditions rate of return regulation increases the quality offered to any consumer and expands the variety of products it offers some consumers receive a quality that is greater than the socially optimal quality rate of return regulation unambiguously increases consumers surplus if the allowed rate of return is close to the monopoly rate of return social welfare increases as well

the implementation of decentralised biogas plants in assam ne india the impact and effectiveness of the national biogas and manure management programme abstract the indian government s national biogas and manure management programme nbmmp seeks to deliver renewable energy services to households across the country by facilitating the deployment of family sized 3 anaerobic biogas digesters nbmmp policy is implemented at three levels from government and state nodal agency via private contractors to households creating multiple institutional arrangements we analysed the scheme in assam north east india focusing on how policy was implemented across two districts and interviewing stakeholders in rural households state and non state institutions the top down supply side approach to policy enables government to set targets and require individual states to deploy the scheme which benefits households who can afford to participate nbmmp delivered improved energy service outcomes to a majority of households although the level of knowledge and understanding of the technology amongst users was limited training and education of householders and particularly women is needed in relation to the maintenance of digesters feedstock suitability and the environmental and potential livelihood benefits of digestate a revised bottom up approach to policy which highlights the contextual and demand side issues around adopting the technology may deliver monetary benefits from market competition and enable development of community focused microfinance schemes to improve the affordability of biogas systems

the effect of satellite entry on cable television prices and product quality how has the entry of satellite television affected the pricing and product quality of incumbent cable firms programming packages i estimate a model in which firms compete over both price and product quality as determined by what channels are offered satellite entry typically causes cable firms to raise quality and lower price however in some markets cable optimally responds by raising both price and quality or by lowering both price and quality a counterfactual scenario that eliminates quality competition results in on average softer price competition and lower aggregate consumer surplus but greater surplus for consumers with weaker preferences for quality

structural breaks in international tourism demand are they caused by crises or disasters it is recognised that the tourism industry is vulnerable to some form of crises or disaster however despite the attention given to the nature and consequences of tourism crises and disasters there is a gap in the literature regarding the ex post detection of these events in this article we estimate both the number and date of structural breaks in international tourism arrival series for 25 countries and madeira island using the bai and perron 1998 structural break test we compare the date of tourism crises and disasters to the dating of these structural breaks we observe that tourism crises and disasters are largely consistent with the dates of breaks therefore this method allows us to solve a gap in the tourism industry related to the correct allocation of negative shocks in international tourism arrival demand to crisis or disaster phenomena

the multiproduct firm quality choice and regulation a monopolist facing a market of heterogeneous consumers will distort the quality a rray this paper explores three regulatory remedies minimum quality s tandards mqs maximum price regulation mpr and rate of return re gulation rorr that can counteract this distortion mqs and mpr rais e the quality offered to consumers with a low willingness to pay for quality while mqs have no effect on the quality offered to consumers with a high willingness to pay mpr decreases the quality offered to this group if production of high low quality goods is capital i ntensive rorr increases decreases the quality offered to both grou ps copyright 1988 by blackwell publishing ltd

the transmission of monetary policy and technology shocks in the euro area this article analyses the response of a set of euro area macroeconomic variables to monetary policy and technology shocks based on structural vector auto regressions vars the data set runs from 1970 1 until 2006 4 and includes a novel long run series for hours worked per capita in the euro area we find that real macroeconomic variables follow a hump shaped response after monetary policy shocks and jump on impact after technology shocks we also provide evidence that hours worked fall after a positive technology shock these conclusions are robust to different sample periods and specifications of the variables

do technology shocks lead to a fall in total hours worked this paper contributes to the debate initiated by gali in 1999 i provide a theory with capital income taxation labor hoarding as well as long run shifts in the social attitudes to the workplace modelled as leisure at the workplace to argue that there are other shocks that may influence labor productivity in the long run i introduce medium run identification and show it to be superior to long run identification or standard short run identification when applied to artificial data with u s data and medium run identification i find the robust result that technology shocks lead to a hump shaped response of total hours worked which is mildly positive following a near zero initial response jel e32 e24 c32 c15 copyright c 2004 the european economic association

learning and shifts in long run productivity growth abstract an extensive literature has analyzed the macroeconomic effects of shocks to the level of aggregate productivity however there has been little corresponding research on sustained shifts in the growth rate of productivity in this paper we examine the effects of shocks to productivity growth in a dynamic general equilibrium model where agents do not directly observe whether shocks are transitory or persistent we show that an estimated kalman filter model using real time data describes economists long run productivity growth forecasts in the united states extremely well and that filtering has profound implications for the macroeconomic effects of shifts in productivity growth

renewable energy sector in belarus a review abstract belarus by faces broad needs for energy security enhancement energy diversification and improvements in the state of the environment being the 13th largest importer of natural gas for energy by has very limited energy resources of its own maximum reduction of energy imports is among the strategic tasks of raising the efficiency of belarus economy the task fulfillment is possible through creation of a national infrastructure conductive to increasing the share of local and renewable sources of energy res in heat and power energy production by s geographic location has several advantages for extensive use of most of the renewable energy re and bioenergy sources however information on existing re sector for the second largest landlocked country in europe is still hardly awailable for a wider audience of researchers working in the field of economic environmental political planning and social aspects of energy supply in global proportions the review on the renewable energy sector in by so far has tried to give the background for res to describe their occurrence and conditions for using them leading up to a discussion of the role of renewable energy in current and future energy systems depending on a path of economic transition social values availability and economic rules used to judge the viability of competing solutions to ensure a simple comprehensible and transparent presentation of the different available options of using re for the provision of heat and power the individual chapters describing the various renewable energy potentials and contribution options have been similarly structured whenever possible and sensible

the new keynesian phillips curve and staggered price and wage determination in a model with firm specific labor we develop a dsge model with rm speci c labor where rm level wage bargaining and price setting are subject to calvo type staggering this is in general an intractable problem due to complicated intertemporal dependencies between price and wage decisions however the problem is signi cantly simpli ed if we in line with empirical evidence assume that prices can be changed whenever wages are we show that the price and wage setting relationships are substantially altered by the introduction of rm speci c labor speci cally the in ation response is substantially dampened whereas the wage in ation response is increased as compared to models with freely mobile labor these distinctive features of the model with rm speci c labor is supported by empirical evidence from a structural var

time of use based electricity cost of manufacturing systems modeling and monotonicity analysis traditionally manufacturing enterprises pay flat rates for each kilowatt hour kwh of electricity consumed newly available electric tariffs that charge both energy consumption in kwh and peak demand in kilowatts i e kw with varying time of use tou rates have started to gain popularity in this paper the per product electricity cost as a function of manufacturing system parameters and the tou rates is modeled the contributions of both electricity energy consumption and peak demand are combined to formulate the electricity cost of manufacturing systems with multiple machines and buffers new knowledge of the effects of various modeling parameters on the electricity cost is acquired through monotonicity analysis the formulated model is utilized to answer the following two questions facing manufacturers with the availability of tou rates in mind is switching from the flat rates to the tou rates economically sound what changes can be made on electric use routines to take advantage of the tou rates the findings based on case studies show that with appropriate adjustment of production routines a significant saving of up to 24 8 of the per product electricity cost can be achieved by adopting the tou rates

neutral technology shocks and the dynamics of labor input results from an agnostic identification this article studies the dynamic response of labor input to neutral technology shocks it uses benchmark dynamic stochastic general equilibrium models enriched with labor market search and matching frictions and investment specific technological progress that enables a new agnostic identification scheme based on sign restrictions on a structural vector autoregression svar the estimation supports an increase of labor input in response to neutral technology shocks this finding is robust across different perturbations of the svar model

commodity price shocks and the business cycle structural evidence for the u s this paper evaluates the relative importance of commodity price shocks in the u s business cycle therefore we extend the standard set of business cycle shocks to include unexpected changes in commodity prices the resulting svar shows that commodity price shocks are a very important driving force of macroeconomic fluctuations second only to investment specific technology shocks particularly with respect to inflation neutral technology shocks and monetary policy shocks on the other hand seem less relevant at business cycle frequencies neutral technology shocks rather play an important role at low frequencies

hours per capita and productivity evidence from correlated unobserved components models recent studies debate the effect of a permanent productivity shock on hours per capita within a structural var context this paper examines the issue using a correlated unobserved components uc framework the estimates show that permanent shocks to productivity are negatively correlated with transitory shocks to hours this result is robust for non stationary or levels stationary specifications of hours model comparisons indicate that the data do not favor imposing var type restrictions on the uc models copyright 2008 john wiley sons ltd

monopoly and quality distortion effects and remedies a monopolist that sells in a market in which consumers differ in their willingness to pay for quality will distort and enlarge the range of products offered for sale we examine the positive and normative impacts of remedies used to counteract such distortions for the case of a price ceiling the monopolist improves quality at the low quality end of the market offsetting the distortion induced by the unregulated exercise of monopoly power social welfare can be shown to increase for a sufficiently slight degree of price regulation for minimum quality standards the social welfare implications are ambiguous because the standards may exclude some consumers from the market

the role of technology and nontechnology shocks in business cycles this article proposes a method to identify technology and nontechnology shocks that permanently affect labor productivity and applies this method to data for the g7 countries in most cases whereas technology improvements have negative or weak effects on hours worked positive permanent nontechnology shocks are expansionary permanent nontechnology shocks play an important role in business cycles particularly in the united states and japan and account for 71 of a large reduction in japan s detrended output from 1991 to 2002 credit conditions are likely to be an important driver of variations in permanent nontechnology shocks

the cost of business cycles under endogenous growth robert e lucas jr argued that the welfare gains from reducing aggregate consumption volatility are negligible subsequent work that revisited his calculation continued to find small welfare benefits further reinforcing the perception that business cycles do not matter this paper argues instead that fluctuations can affect welfare by affecting the growth rate of consumption i show that fluctuations can reduce growth starting from a given initial consumption which can imply substantial welfare effects as lucas himself observed empirical evidence suggests the welfare effects are likely to be substantial about two orders of magnitude greater than lucas original estimates

sensitivity of impulse responses to small low frequency comovements reconciling the evidence on the effects of technology shocks this article clarifies the empirical source of the debate on the effect of technology shocks on hours worked we find that the contrasting conclusions from levels and differenced vector autoregression specifications documented in the literature can be explained by a small low frequency comovement between hours worked and productivity growth that gives rise to a discontinuity in the solution for the structural coefficients identified by long run restrictions whereas the low frequency comovement is allowed for in the levels specification it is implicitly set to 0 in the differenced vector autoregression consequently even when the root of hours is very close to 1 and the low frequency comovement is quite small removing it can give rise to biases of sufficient size to account for the empirical difference between the two specifications

the dynamic effects of neutral and investment specific technology shocks the neoclassical growth model is used to identify the short run effects of neutral technology shocks which affect the production of all goods homogeneously and investment specific shocks which affect only investment goods the real equipment price crucial for identifying the investment shocks experiences an abrupt increase in its average rate of decline in 1982 so the analysis is based on a split sample on the basis of the preferred specification the two technology shocks account for 73 percent of hours and 44 percent of output s business cycle variation before 1982 and 38 percent and 80 percent afterward the shocks also account for more than 40 percent of hours and 58 percent of output s forecast errors over a three to eight year horizon in both samples the majority of these effects are driven by the investment shocks

disinflation shocks in the eurozone a dsge perspective we investigate the effects of disinflation policies on key macroeconomic variables using euro area data and structural vector autoregressions svars we identify disinflation shocks as the only shocks that drive nominal variables to a lower long run level we find that in the immediate aftermath of a disinflation shock the euro area enters in a persistent recession we use these dynamic responses to estimate a dsge model with imperfect information about the disinflation shock we find that both nominal and real frictions and monetary policy gradualism have played a prominent role in the recessionary effect of disinflation shocks conversely allowing for imperfect credibility does not yield a better fit except when we shut key model s frictions down

identifying the sources of instabilities in macroeconomic fluctuations abstract this paper investigates the sources of the substantial decrease in output growth volatility in the mid 1980s by identifying which of the structural parameters in a representative new keynesian and structural var models changed overturning conventional wisdom we show that the great moderation was due not only to changes in shock volatilities but also to changes in monetary policy parameters as well as in the private sector s parameters the great moderation was previously attributed to good luck because the alternative sources of instabilities appear to have offsetting effects on output volatility and therefore were impossible to detect using existing techniques

dynamics of energy technologies and global change technological choices largely determine the long term characteristics of industrial society including impacts on the natural environment however the treatment of technology in existing models that are used to project economic and environmental futures remains highly stylized based on work over two decades at iiasa we present a useful typology for technology analysis and discuss methods that can be used to analyze the impact of technological changes on the global environment especially global warming our focus is energy technologies the main source of many atmospheric environmental problems we show that much improved treatment of technology is possible with a combination of historical analysis and new modeling techniques in the historical record we identify characteristic l such network e ects yield high barriers to entry even for superior competitors these simple observations allow three improvements to modeling of technological change and its consequences for global environmental change one is that the replacement of long lived infrastructures over time has also replaced the fuels that power the economy to yield progressively more energy per unit of carbon pollution from coal to oil to gas such replacement has d they also include endogenous generation of s we show that doing so can yield projections with lessened environmental impacts without necessarily incurring negative e ect on the economy arriving on that path by the year 2100 depends on intervening actions such as incentives to promote greater diversity in technology and lower barriers to entry for new infrastructures that could accelerate historical trends of decarbonization 1999 elsevier science ltd all rights reserved