growth and unemployment this paper analyses the effects of growth on long run unemployment using a search model of equilibrium unemployment where growth arises explicitly from the introduction of new technologies that require labour reallocation for their implementation the analysis uncovers and compares between two competing effects of growth on unemployment the first is a capitalisation effect whereby an increase in growth raises the capitalised returns from creating jobs and consequently reduces the equilibrium rate of unemployment the second is a creative destruction effect whereby an increase in growth reduces the duration of a job match thereby raising the equilibrium level of unemployment both directly by raising the job separation rate and indirectly by discouraging the creation of job vacancies this paper asks the question of how the rate of economic growth affects unemployment in the long run the main consideration that leads us to think that this is an interesting question has to do with the re allocative aspect of growth in the long run faster economic growth must come from a faster increase in knowledge to the extent that the advancement of knowledge is embodied in industrial innovations it is likely to raise the job destruction rate through automation skill obsolescence and the bankruptcy associated with the process of creative destruction in short increased growth is likely to produce an increased rate of job turnover and the search theories of lucas and prescott 1974 and pissarides 1990 imply that an increased rate of job turnover will result in a higher natural rate of unemployment this conclusion is also consistent with the empirical results of davis and haltiwanger 1990 which show that periods of high unemployment tend to be periods of high job turnover at the establishment level it suggests the possibility of a positive longrun tradeoff between growth and unemployment at least over some range there has been relatively little attention paid to our question in the literature on longrun determinants of unemployment for example the recent empirical examination by layard nickell and jackman 1991 of unemployment rates among oecd countries did not even consider the rate of economic growth as a possible explanatory variable this is consistent with the seminal theoretical work of phelps 1968 which implies that the natural rate of unemployment is independent of the rate of productivity growth the only

the role of the trade channel in the propagation of oil supply shocks abstract this paper analyzes when and why idiosyncratic oil supply shocks produce large macroeconomic effects in an analytically tractable two country general equilibrium model we focus on a demand driven mechanism the trade channel which transmits oil shocks across economies through changes in the non oil goods terms of trade when the trade channel is operative we have three main consequences on the transmission of oil shocks first the macroeconomic impact of oil shocks may be large and asymmetric across countries second the magnitude of the effects is nonlinear in the size of the oil shock third terms of trade movements never ensure international risk sharing after an idiosyncratic oil supply shock

vintage capital and the dynamics of the ak model this paper analyzes the equilibrium dynamics of an ak type endogenous growth model with vintage capital the inclusion of vintage capital leads to oscillatory dynamics governed by replacement echoes which additionally influence the intercept of the balanced growth path these features which are in sharp contrast to those from the standard ak model can contribute to explaining the short run deviations observed between investment and growth rates time series to characterize the optimal solutions of the model we develop analytical and numerical methods that should be of interest for the general resolution of endogenous growth models with vintage capital

inter factor inter fuel substitution carbon intensity and energy related co2 reduction empirical evidence from china carbon dioxide co2 reduction which is the central issue in addressing global warming depends on the extent that clean energy can substitute for co2 emitting coal and non energy factors can substitute for energy factor the purposes of this paper are to empirically investigate inter factor inter fuel substitution in china and to evaluate the determinants of china s energy related carbon intensity as well as mitigation effects of carbon tax considering china s rapid increase in energy consumption and the slow adjustment in substitution the two stage estimation method and the dynamic error correction mechanism are employed in this study the empirical results suggest substitutability among different types of energy sources as well as substitutability among energy labor and capital the magnitude of cross price elasticities indicates that the substitutions are inelastic which limits the scope of the chinese government to implement substitution strategy aiming at energy conservation and environmental management china s carbon intensity declined during 1985 2012 most of which can be attributed to labor substitution and energy price increase however carbon intensive technology being embodied in china s capital investment energy consuming equipment has contributed to the increase in carbon intensity a carbon tax of rmb 50 tonne could reduce 332 9 million tonnes co2 emissions on the basis of 2012 in addition if ignoring the feedback between inter factor inter fuel substitutions co2 mitigation potential would be underestimated

externalities property rights and the allocation of resources in major league baseball most economists who have analyzed professional baseball have concluded that two distinctive features of its labor market the reserve clause and player draft influence the distribution of wealth between players and owners but do not affect the allocation of playing talent among teams such conclusions which are strongly at variance with laymen s views of such matters are derived from theoretical considerations rather than empirical examinations our paper examines data from the two decades of major league history and concludes that on the basis of that data the empirical generalizations of previous economists do not appear to be justified

adaptation and mitigation in long term climate policies the paper analytically explores the optimal allocation of investments into mitigation and environmental adaptation against climate change damages at a macroeconomic level the economic environmental model is formulated as a social planner problem where adaptation and abatement investments are separate decision variables the existence of a unique steady state is proven a comparative static analysis of optimal investments leads to essential implications for associated long term environmental policies it is shown that the optimal policy mix between adaptation and mitigation is lower for countries with higher economic efficiency for all applicable parameter ranges data calibration and numerical simulations are provided to estimate practical validity of theoretical outcomes

learning theory and the logic of critical mass the oliver marwell theory of critical mass is a prominent solution to the free rider problem that plagues collective action in large groups i reformulate the theory as a stochastic learning model in which cooperative responses are shaped by the social sanctions and cues generated by the responses of others this relaxes four assumptions in the original formulation that the actors are rational decisions are isolated events outcomes are deterministic and public goods have pure jointness of supply and collective profit computer simulations then show how adaptive actors become trapped in a suboptimal equilibrium and how they escape through attainment of critical mass start up problems arise from accommodation to social costs and not from low returns to early contributors as previously believed simulations also identify a new dilemma of group size and show why solidarity tends to emerge in response to crisis finally normative solidarity appears to be a consequence rather than cause of critical mass but may promote recovery from random deviance

the optimal lifetime of capital equipment abstract this article extends the results of malcomson on the optimal replacement problem in vintage models malcomson provided numerical evidence on the fact that the optimal machine life is constant under certain conditions in this article these conditions are made more explicit and an analytical proof of the constancy of the optimal machine life is given

oil price shocks and their short and long term effects on the chinese economy a considerable body of economic literature shows the adverse economic impacts of oil price shocks for the developed economies however there has been a lack of empirical study of this kind on china and other developing countries this paper attempts to fill this gap by answering how and to what extent oil price shocks impact china s economy emphasizing on the price transmission mechanisms to that end we develop a structural vector auto regressive model our results show that an oil price increase negatively affects output and investment but positively affects inflation rate and interest rate however with the differentiated price control policies for materials and intermediates on the one hand and final products on the other hand in china the impact on real economy represented by real output and real investment lasts much longer than that to price monetary variables our decomposition results also show that the short term impact namely output decrease induced by the cut of capacity utilization rate is greater in the first one to two years but the portion of the long term impact defined as the impact realized through an investment change increases steadily and exceeds that of short term impact at the end of the second year afterwards the long term impact dominates and maintains for quite some time

environmental regulation capital output and energy efficiency in china an empirical research based on integrated energy prices abstract how to improve environmental quality and achieve high quality development of economy have become important challenges for china in the new era based on the klems framework this paper analyzes the relationship between environmental regulation factor substitution and energy saving effect by using panel structure vector autoregression model and panel data of china industry from 2004 to 2014 the following conclusions are drawn 1 china s environmental regulation can promote the substitution of capital to energy however benefit of this substitution in the long run is greater than that in the short run 2 only in the long run can china s environmental regulations have significant energy saving effect technological innovation is the main reason for the improvement of energy saving effect of environmental regulation 3 china s environmental regulation will not significantly improve the structure of capital which makes the economic benefits low finally the paper discusses the possible ways to improve china s environmental regulation from the aspects of forming a scientific environmental supervision system improving energy pricing mechanism and capital structure

bank capital and the macroeconomy policy considerations we develop a macroeconomic model in which the balance sheet liquidity condition of financial institutions plays an important role in the determination of asset prices and economic activity the financial intermediaries in our model are required to make investment commitments before a complete resolution of idiosyncratic funding risk that can be addressed only by costly refinancing forcing them to behave in a risk averse manner the model shows that the balance sheet condition of intermediaries can drive asset values away from their fundamentals causing aggregate investment and output to respond to shocks to intermediaries we use this model to evaluate several public policies designed to address balance sheet problems at financial institutions with regard to short run policies we find that capital injections conditioned upon voluntary recapitalization can be a more effective tool than direct lending asset purchases with regard to long run policies we demonstrate that higher capital requirements can have sizable short run effects on economic activity and that a long transition period helps avoid undesirable side effects finally we show that the mariginal effects of policies can be larger during crises because of the nonlinear interactions between some financial frictions and policy actions

why do energy prices matter the role of interindustry linkages in u s manufacturing there is considerable empirical evidence that energy prices had a large effect on the u s economy between world war ii and the 1980s this paper argues that linkages between manufacturing industries amplify the effect of an energy price shock and help explain the large effect in particular energy intensive industries are important input suppliers to other industries when the price of energy increases energy intensive industries contract raising materials prices for other industries because of the reduction in materials supply the downstream industries also contract which i refer to as the supply effect using data from the census of manufactures i find that the supply effect accounted for about one half of the sensitivity of value added to the price of energy i use plant level census data to show that the supply effect caused similar changes in value added per plant as in value added per industry a price increase caused a small although statistically significant decrease in entry and had no effect on exit finally the supply effect reduced plant level labor demand jel e32 q43

path dependency and input substitution implications for energy policy modelling in most policy oriented energy models the effectiveness of energy policy instruments crucially depends both on the values of the substitution elasticities between the various inputs and on the rates of technological progress in this paper we argue that due to the fixed cost nature of adjustments to relative price changes these technological parameters are affected by past developments failing to account for the role of history will result in biased parameter estimates and hence the implication for energy policy modelling is that the estimation period should be carefully selected we provide an empirical illustration using data for the netherlands

variance properties of solow s productivity residual and their cyclical implications abstract for the united states economy 1960 1989 the correlation between the growth rates of the solow residual and the real price of energy government spending is 0 55 0 09 this study develops a model to see if it quantitatively captures the endogenous transmission mechanism underlying the observed solow residual correlations it does the transmission mechanism depends on endogenous capital utilization incorporating shocks to true technology energy prices and government spending the model economy accounts for 76 or 89 percent of u s output volatility and is generally consistent with features of u s business cycles

assessing energy price induced improvements in efficiency of capital in oecd manufacturing industries to assess how capital stocks adapt to energy price changes it is necessary to account for the impacts on different vintages of capital and to account separately for price induced and autonomous improvements in the energy efficiency of capital stock the results of econometric analysis for five manufacturing industries in 19 oecd countries between 1990 and 2005 indicate that higher energy prices resulted in smaller energy use due to both improved energy efficiency of capital stock and reduced demand for the energy input the investment response to energy prices varied considerably across manufacturing industries being more significant in energy intensive sectors the results of policy simulations indicate that a carbon tax can deliver significant reductions in energy consumption in the medium run with modest declines in energy using capital stock

the role of energy in real business cycle models abstract this paper modifies hansen s 1985 analysis of a real business cycle mode with indivisible labor by explicitly including energy as a productive input and modelling the relative price of energy as an exogenous random process one goal is to determine the extent to which the introduction of energy price shocks reduces the reliance of the real business cycle model on unobserved technology shocks the other goal following christiano and eichenbaum 1991 is to compare the correlation between real wages and hours predicted by the energy inclusive model to that predicted by hansen s model

differential difference equations in economics on the numerical solution of vintage capital growth models we examine techniques for the analytical and numerical solution of state dependent differential difference equations such equations occur in the continuous time modelling of vintage capital growth models which form an important class of models in modern economic growth theory the theoretical treatment of non state dependent differential difference equations in economics was discussed by benhabib and rustichini 1991 in general though the state dependence of a model prevents its analytical solution in all but the simplest of cases we review a numerical method for solving state dependent models using simple examples to illustrate our discussion in addition we apply this numerical method to the solow vintage capital growth model

on the economics of forest vintages abstract we study optimal harvesting of a multiple vintage forest system under discounting discrete time and strictly concave utility it is shown that at the optimal stationary state timber harvest may evolve cyclically over time the cycles occur because in the forest vintage model space is measured continuously and time in discrete units cycles disappear as period length moves toward zero when the faustmann rotation is not unique or when the discount factor approaches unity we develop an equivalent model that can be used to solve the vintage problem numerically from any initial state numerical examples suggest that the optimal solution converges to the stationary cycle from any initial vintage structure

endogenous growth and time to build the ak case abstract in this paper a continuous time ak model is fully analyzed under the time to build assumption the existence and uniqueness of a real balanced growth path as well as oscillatory convergence are proved transversality conditions and capital depreciation are highlighted moreover it has been shown how the introduction of the time to build assumption supports some interesting empirical evidences such as the negative link between mean output growth and output growth volatility finally numerical simulations are provided for different choices of the time to build delay in order to clarify the analytical results

vintage human capital and learning curves abstract i study a vintage human capital model in which long lived workers accumulate human capital following an exogenous learning curve different skill levels inside a vintage are complementary in production this makes the ex ante homogeneous workers enter different vintages the continuous time framework allows me to study the timing decision for the technology phase out differentially and to derive sharp characterization for wages and the distribution of workers in the dying technology i show how to posit and solve a planner s problem and construct equilibrium in this way consistent with empirical evidence i show that the experience premium is always positive but diminishes as a technology ages the connection between workers learning curves and the technology s progress curve is characterized

the dynamics of technological unemployment this article compares the short and long run effects of technological progress on employment it presents a simple model of frictional unemployment capturing the negative creative destruction effects of technological change on employment in the long run faster technological change accelerates job obsolescence which reduces the equilibrium level of employment but it is also shown to have short run positive and potentially important effects on employment this tends to partially reconcile the schumpeterian view of the effects of technological change on labor markets with facts such as the response of most oecd unemployment rates to the 1970s productivity slowdown

are oil shocks permanent or temporary panel data evidence from crude oil and ngl production in 60 countries this paper examines the unit root properties of crude oil production for 60 countries employing a range of panel data unit root tests for the period 1971 to 2003 the study first employs a number of panel data tests that do not accommodate structural breaks and then proceeds to apply the lagrange multiplier lm panel unit root test with one structural break the results of the panel data tests without a structural break are inconclusive with at best mixed support for joint stationarity the findings from the lm panel unit root test with a structural break however are conclusive suggesting that for a world panel and smaller regional based panels crude oil and ngl production are jointly stationary

on the dynamic effects of oil price shocks a study using industry level data abstract this paper analyzes the effects of oil price shocks on demand and supply in various industries the impulse responses of identified var models indicate that for industries that have a large cost share of oil such as petroleum refinery and industrial chemicals oil price shocks mainly reduce supply in contrast for many other industries with the automobile industry being a particularly important example oil price shocks mainly reduce demand the paper suggests that oil price shocks influence economic activities beyond that explained by direct input cost effects possibly by delaying purchasing decisions of durable goods

models of energy use putty putty versus putty clay energy use is inelastic in time series data but elastic in international cross section data two models of energy use reproduce these elasticities a putty putty model with adjustment costs developed by pindyck and rotemberg 1983 and a putty clay model in the pindyck rotemberg model capital and energy are highly complementary in both the short run and the long run in the putty clay model capital and energy are complementary in the short run but substitutable in the long run we highlight the differences in the cross section implications of the models by considering the effect of an energy tax on output in both models in the putty putty model an energy tax that doubles the price of energy leads to a fall in output in the long run of 33 in contrast the same tax in the putty clay model leads to a fall in output of only 5 3

imperfect competition and the effects of energy price increases on economic activity the authors show that modifying the standard neoclassical growth model by assuming that competition is imperfect makes it easier to explain the size of the declines in output and real wages that follow increases in the price of oil plausibly parameterized models of this type are able to mimic the response of output and real wages in the united states the responses are particularly consistent with a model of implicit collusion where markups depend positively on the ratio of the expected present value of future profits to the current level of output copyright 1996 by ohio state university press

industry dynamics and the minimum wage a putty clay approach we document two new findings about the industry level response to minimum wage hikes first restaurant exit and entry both rise following a hike second there is no change in employment among continuing restaurants we develop a model of industry dynamics based on putty clay technology that is consistent with these findings in the model continuing restaurants cannot change employment and thus industry level adjustment occurs gradually through exit of labor intensive restaurants and entry of capital intensive restaurants interestingly the putty clay model matches the small estimated short run disemployment effect of the minimum wage found in other studies but produces a larger long run disemployment effect

rebound directed technological change and aggregate demand for energy abstract we analyse the long run role of energy in aggregate production the factor share of energy has been remarkably constant despite the relative decline in the price of energy we analyse possible explanations for this observation ruling out the idea that endogenous directed technological change has led to a failure of energy augmenting technology to keep pace with labour augmenting technology instead we propose a model in which a combination of income and substitution effects has driven both shifts in consumption patterns towards existing energy intensive goods and the emergence of new such goods

vintage human capital growth and the diffusion of new technology we develop a model of vintage human capital in which each technology requires vintage specific skills we examine the properties of a stationary equilibrium for our economy the stationary equilibrium is characterized by an endogenous distribution of skilled workers across vintages the distribution is shown to be single peaked under general conditions there is a lag between the appearance of a technology and its peak usage a phenomenon known as diffusion an increase in the rate of exogenous technological change shifts the distribution of human capital to more recent vintages thereby increasing the diffusion rate

energy price energy efficiency and capital productivity empirical investigations and policy implications abstract the immediate effect of carbon pricing policy is to raise energy costs which in turn reduces energy consumption either through induced capital under utilization or investments in new energy efficient capital the latter mechanism which implies improvements in energy efficiency is realized in the long run while the former which has implications for capital productivity tends to occur in the short run we employ panel vector autoregressions as well as co integration and error correction techniques to identify these short and long run relationships including their differences across canadian industries

the optimal economic lifetime of vintage capital in the presence of operating costs technological progress and learning abstract this paper studies the optimal vintage specific investment and disinvestment decision of a firm the decision is formulated as a distributed optimal control problem with a constraint on the state variable the economic model takes into accounts maintenance and operating costs technological progress and learning it allows firms to purchase not only the latest technology but also previous year vintages and completely disinvest old machines it does not assume that the firms keep machines of all vintages as other similar models do an analytical expression for the optimal economic lifetime of capital is derived and the qualitative dynamics of the optimal investment and disinvestment rules is analyzed

energy substitutability and modernization of energy consuming technologies abstract the paper examines long term strategies of capital modernization under different assumptions about embodied technological change energy regulation and substitutability between energy and capital to describe modernization of physical capital the authors use a vintage capital model with the constant elasticity of substitution between capital and energy the models take into account i availability of new more energy efficient equipment under energy saving technical progress ii possibility of buying new capital with various combinations of energy parameters and prices iii controlled scrapping of obsolete capital and iv energy regulation quotas the paper analyzes how the elasticity of substitution between capital and energy impacts the capital modernization policy in particular it is proven that the optimal lifetime of capital appears to be longer for a larger elasticity

exit voice dynamics in collective action an analysis of emigration and protest in the east german revolution1 what triggers protest in a highly repressive regime do opportunities to exit an unfavorable regime through flight spur collective action aimed to reform or replace it drawing on hirschman s microeconomic theory of exit and voice as responses to organizational decline this article offers a sociological theory of exit voice dynamics that considers the implications of social embeddedness for collective action a unique data set on migration and protest in the east german revolution of 1989 90 is used to analyze county level variations in exit and voice alongside indicators of political loyalty social movement organization and social and economic conditions the analysis finds strong support for the reformulated exit voice model and its prediction of an inverted documentclass aastex usepackage amsbsy usepackage amsfonts usepackage amssymb usepackage bm usepackage mathrsfs usepackage pifont usepackage stmaryrd usepackage textcomp usepackage portland xspace usepackage amsmath amsxtra

historical energy price shocks and their changing effects on the economy abstract the purpose of this paper is to identify the changes in the impact of energy shocks on economic activity with an interest in assessing if an economy s vulnerability and resilience to shocks improved with economic development using data on the united kingdom over the last three hundred years the paper identifies supply aggregate demand and residual shocks to energy prices and estimates their changing influence on energy prices and gdp the results suggest that the impacts of supply shocks rose with its increasing dependence on coal and declined with its partial transition to oil however the transition from exporting coal to importing oil increased the negative impacts of demand shocks more generally the results indicate that improvements in vulnerability and resilience to shocks did not progress systematically as the economy developed instead the changes in impacts depended greatly on the circumstances related to the demand for and supply of energy sources if these experiences are transferable to future markets a transition to a diversified mix of renewable energy is likely to reduce vulnerability and increase resilience to energy price shocks

vintage capital investment and growth abstract we study the dynamics of growth and investment in a continuous time model with vintage capital vintage capital models may be characterized by non exponential rates of depreciation and technical change and can incorporate gestation lags as well as learning by using we investigate the effect of such features on the dynamics of investment and growth and show how they can contribute to explaining the volatile nature of investment time series

chains of cooperation threshold effects in collective action granovetter s threshold model of collective action shows how each new participant triggers others until the chain reaction reaches a gap in the distribution of thresholds hence outcomes depend on the network of social ties that channel the chain reactions however structural analysis is encumbered by the assumption that thresholds derive from changing marginal returns on investments in public goods a learning theoretic specification imposes less stringent assumptions about the rationality of the actors and is much better suited to a structural analysis computer simulations suggest that threshold effects may be the key to solving the coordination problem when individual choices are contingent on participation by others this interdependence facilitates the coordination of contributions needed to shift the bistable system from a noncooperative equilibrium to a cooperative one further simulations with low density networks show that these chain reactions require bridges that link socially distant actors supporting granovetter s case for the strength of weak ties

the impact of oil prices on gdp in european countries an empirical investigation based on asymmetric cointegration this paper investigates the existence of a long term relationship between oil prices and gdp in 12 european countries to account for the fact that economic activity responds asymmetrically to oil price shocks we propose an approach based on asymmetric cointegration our results show that while standard cointegration is rejected there is evidence for asymmetric cointegration between oil prices and gdp in the majority of the considered european countries

solving optimal growth models with vintage capital the dynamic programming approach this paper deals with an endogenous growth model with vintage capital and more precisely with the ak model proposed in r boucekkine o licandro l a puch f del rio vintage capital and the dynamics of the ak model j econ theory 120 1 2005 39 72 in endogenous growth models the introduction of vintage capital allows to explain some growth facts but strongly increases the mathematical difficulties so far in this approach the model is studied by the maximum principle here we develop the dynamic programming approach to the same problem by obtaining sharper results and we provide more insight about the economic implications of the model we explicitly find the value function the closed loop formula that relates capital and investment the optimal consumption paths and the long run equilibrium the short run fluctuations of capital and investment and the relations with the standard ak model are analyzed finally the applicability to other models is also discussed

declining effects of oil price shocks in recent years output responses to oil price shocks have not only been weaker but have also reached their trough earlier this paper builds a model that incorporates a realistic structure of u s petroleum consumption and explores three possible explanations for the changes the possible factors considered are i deregulation in the transportation industry ii improved energy efficiency and iii a lower degree of persistence of oil price shocks under realistic parameter values the three factors play an important role quantitatively accounting for half of the reduction in the largest impact on output of an oil price shock over time

replacement echoes in the vintage capital growth model this paper is concerned with a non standard source of fluctuations called echo effects i e the ability of an economy to reproduce its own past history in the 1960s growth theorists believed that this property could arise in vintage capital models taking the form of replacement echoes this line of research was stopped after the publication of solow et al 15 who showed that echoes should vanish in a solow growth model with vintage capital however the fundamental reason for this result has nothing to do with vintages rather it comes directly from the main assumption in a solow growth model i e at equilibrium investment is a constant fraction of output and does not depend on any optimal replacement rule we claim that in a more general ramsey model replacement echoes do not necessarily vanish and we show this in the case when instantaneous utility is linear c 1997 academic press

the child is father of the man implications for the demographic transition we propose a new theory of the demographic transition based on the evidence from natural sciences that physical development during childhood affects adult life expectancy positively this theory is embodied in a continuous time olg framework where fertility longevity and education all result from individual decisions we conclude that a sustained improvement in physical development is at the basis of the observed demographic transition in today s developed countries and may be an important factor in explaining the slow transition from the malthusian towards the modern era the dynamics of the proposed model reproduce the key features of the demographic transition including sustained improvements in child physical development permanent increase in life expectancy a hump shaped evolution of both population growth and fertility and late increases in secondary educational attainments

economic development and environmental quality a reassessment in light of nature s self regeneration capacity abstract we study the relationship between economic development and consumption of natural resources using a vintage capital model consumption of natural resources is assumed to generate pollution part of which will be absorbed by nature s self regeneration capacity we find that during the transition dynamics the shape of the pollution output relationship will depend on the parameter determining nature s self regeneration capacity using footprint and biological capacity data we show empirically in a repeated cross section of countries that the shape of the pollution output relationship indeed depends on countries capacity to regenerate part of the resources they consume from nature

renewable resources with endogenous age classes and allocation of land it is shown that if it is optimal to allocate all land to forestry the long run stationary state is a cyclical solution around an equilibrium with an even timber flow the equilibrium cycles vanish when it is optimal to allocate some fraction of land outside forestry we present numerical examples on the transitional dynamics and long and short run timber supply when land conversion is costly the cycles do not vanish and the long run equilibrium between forestry and agriculture is represented by a continuum

economic growth energy intensity and the energy mix abstract this paper explores how changes in energy intensity and the switch to renewables can boost economic growth to do so we implement a dynamic panel data approach on a sample of 134 countries over the period 1960 to 2010 we incorporate a set of control variables related to human and physical capital socio economic conditions policies and institutions which have been widely used in the literature on economic growth given the current state of technology improving energy intensity is growth enhancing at the worldwide level moreover conditional to energy intensity moving from fossil fuels to frontier renewables wind solar wave or geothermic is also positively correlated with growth our results are robust to the specification of the dynamic panel with respect to alternative approaches pooled ols within group or system gmm and to alternative specifications accounting for heterogeneity across countries a set of institutional factors and other technical aspects

irreversible capital and the stock market response to shocks in profitability this paper develops a vintage model of capital accumulation to identify the structural linkage between shocks to input or output prices and a firm s stock market value the model accounts for a substantial part of the sample variation in excess returns thus providing evidence for a systematic link between the stock market valuation of firms and the economic factors that affect their profitability the 1973 74 oil shock is shown to have had a strong impact on excess returns firms whose capital consisted of vintages built when energy was relatively cheap were hit the hardest in value copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

monetary compensations in climate policy through the lens of a general equilibrium assessment the case of oil exporting countries this paper investigates the compensations that major oil producers have claimed for since the kyoto protocol in order to alleviate the adverse impacts of climate policy on their economies the amount of these adverse impacts is assessed through a general equilibrium model which endogenizes both the reduction of oil exportation revenues under international climate policy and the macroeconomic effect of carbon pricing on middle east s economy we show that compensating the drop of exportation revenues does not offset gdp and welfare losses because of the time profile of the general equilibrium effects when considering instead compensation based on gdp losses the effectiveness of monetary transfers proves to be drastically limited by general equilibrium effects in opened economies the main channels of this efficiency gap are investigated and its magnitude proves to be conditional upon strategic and policy choices of the middle east this leads us to suggest that other means than direct monetary compensating transfers should be discussed to engage the middle east in climate policies

a dynamic equilibrium of electricity consumption and gdp in hong kong an empirical investigation abstract public debates on electricity policy in hong kong focus on the regulation regime but seldom discuss the macroeconomic impact in this paper we use the novel dataset on electricity consumption and report the following findings 1 there is a long run equilibrium relationship between real gdp and electricity consumption 2 a one way causal effect exists from electricity consumption to real gdp 3 a significant adjustment process occurs when equilibrium is interrupted 4 there exists possible structural change in the relationship between electricity consumption and economic activities in 1990s

a computational general equilibrium model with vintage capital abstract this paper presents a vintage capital model assuming putty clay investment and perfect foresight the model is written in discrete time and is simulated by using a second order relaxation algorithm by computing the eigenvalues of the dynamic system we have checked the conditions of existence and uniqueness of a solution blanchard and kahn s conditions and identified the echo effect that characterizes vintage capital models and the related dynamics of creation and destruction by calibrating the model on french data it has been proved useful to explain the medium term movements in the distribution of income in france during the last three decades

to build or not to build capital stocks and climate policy abstract we investigate i the impact of emission reduction policy on investment in polluting infrastructure such as coal fired power stations and ii optimal subsidies for clean alternatives with learning spillovers we build a general theoretical model and embed it in a fully calibrated integrated assessment model because emission reduction policy reduces investments in polluting assets short term emission reductions are enhanced our irreversibility effect thus stranded assets in this fuel using sector have distinctive properties we also provide a simple formula for how the optimal subsidy to deployment of a clean sector depends on its rate of learning by doing and on its socially optimal growth so if the sector should grow faster for other reasons its optimal subsidy is increased showing that its optimal growth rate is faster still our acceleration effect our calibrations show that to limit global climate change to 2 c warming investments in coal fired power stations must end very soon considering second best settings we show that carbon taxes achieve stringent policy targets more efficiently but subsidies to the clean sector deliver higher welfare and are more efficient when policy targets are more mild

anticipation effects of technological progress on capital accumulation a vintage capital approach abstract due to embodied technological progress new generations of capital goods are more productive therefore in order to study the effects of technological progress a model must be analyzed in which different generations of capital goods can be distinguished we determine in what way the firm adjusts current investments to predictions of technological progress in the presence of market power we show that a negative anticipation effect occurs i e current investments in recent generations of capital goods decline when faster technological progress will take place in the future because then it becomes more attractive to wait for new generations of capital goods in case that only investments in new machines are possible actually a whole wave of anticipation phases arises

nonlinear response of firm investment to q abstract abel and eberly 1994 study optimal investment behavior in the presence of flow fixed costs proportional costs and convex costs a clear prediction is that investment will alternate between regimes of insensitivity and responsiveness to q separated by unknown threshold levels of q at the firm level we find evidence for different regimes of sensitivity to q but not for a regime of zero sensitivity our finding that investment has a nonlinear relationship to q is important because it implies an elasticity of aggregate investment to q and fundamentals that is high and variable over time

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

putty clay technology and stock market volatility abstract firms first order conditions imply that stock returns equal investment returns from the production technology much applied work uses the adjustment cost technology which implies that the realized return is high when the investment capital ratio is high this paper derives for an arbitrary stochastic discount factor the investment return implied by the putty clay technology the combination of capital heterogeneity and irreversibility creates a novel channel for return volatility the investment return is high when the ratio of investment to gross job creation is low empirically the putty clay feature helps account for u s stock market data

energy price shocks and the macroeconomy the role of consumer durables so far the literature on dynamic stochastic general equilibrium models with energy price shocks uses energy on the production side only in these models energy shocks are responsible for only a negligible share of output fluctuations we study the robustness of this finding by explicitly modeling private consumption of energy at the household level in addition to energy use at the firm level to account for total energy use in the economy additionally we distinguish between investment in consumer durables and investment in capital goods the model economy is calibrated to match total energy use and durable goods consumption as observed in the u s data simulation results indicate that despite higher total energy use this economy has an even smaller proportion of output fluctuations attributable to energy price shocks productivity shocks continue to be the primary force behind business cycle fluctuations the driving force behind our results is that the household now has the flexibility to rebalance its investment portfolio specifically the energy price hike is absorbed by reducing durable goods investment more than investment in capital goods thereby cushioning the hit to future production at the expense of current consumption hence our model better matches the consumption volatility observed in the data jel classification e32 q43

life expectancy and endogenous growth we consider an overlapping generations model with uncertain lifetime and endogenous growth individuals have to choose the length of time devoted to schooling before starting to work we show that it depends positively on life expectancy but that the positive effect of a longer life on growth could be offset by a decrease in the participation rate dynamics are characterized by a delay differential equation and human capital converges with oscillations to a balanced growth path

sustainable economic development and the environment theory and evidence the relationship between growth and pollution is studied through a vintage capital model where new technologies are more environmentally friendly we find that once the optimal scrapping age of technologies is reached an economy may achieve two possible cases of sustainable development one in which pollution falls and another in which it stabilizes or a catastrophic outcome where environmental quality reaches its lower bound the outcome will depend on countries investment path and their propensity to innovate in environmentally clean technologies both of which are likely to differ across economies empirical results using long time series for a number of developed and developing countries indeed confirm heterogenous experiences in the pollution output relationship

common currencies vs monetary independence we study the optimal monetary policy in a two country open economy model under two monetary arrangements a multiple currencies controlled by independent policy makers b common currencies with a centralized policy maker our findings suggest that i monetary policy competition leads to higher long term inflation and interest rates with large welfare losses ii the inflation bias and the consequent losses are larger when countries are unable to commit to future policies iii the welfare losses from higher long term inflation dominates the welfare costs of losing the ability to react optimally to shocks

factor price uncertainty technology choice and investment delay abstract this paper develops a theory of putty clay investment under factor price uncertainty using a brownian motion framework ex ante the firm faces a choice of technologies that differ by their relative factor intensities but ex post technologies are leontief the presence of competing technologies and factor price uncertainty can cause delay of profitable investments for a monopolist firm facing a one time investment decision furthermore uncertainty can cause an existing firm to wait for more extreme operating cost differentials before switching technologies these delays in investment are present even without considering the effect of uncertainty on the firm s choice of scale

monetary policy response to oil price shocks how should monetary authorities react to an oil price shock this paper shows that in a noncompetitive economy policies that perfectly stabilize prices entail large welfare costs hence explaining the reluctance of policymakers to enforce them the policy trade off is nontrivial because oil energy is an input to both production and consumption as welfare maximizing policies are hard to implement and communicate i derive a simple interest rate rule that depends only on observables but mimics the optimal plan in all dimensions the optimal rule is hard on core inflation but accommodates oil price changes

the economic determinants of technology shocks in a real business cycle model abstract creative destruction due to new technologies causes both long run growth and short run business fluctuations new technologies push the economy on a higher productivity level but also imply partial obsolescence of old production units obsolescence induces an adjustment period during which growth rates gradually fall at some endogenously determined point research for the next technology starts once the new technology is discovered a technology shock occurs and the next cycle starts this is shown in a continuous time rbc model with risk averse agents where savings can be used for financing deterministic capital accumulation and stochastic r d for new technologies

slow oil shocks and the weakening of the oil price macroeconomy relationship abstract many papers have been documenting and analysing the asymmetry and the weakening of the oil price macroeconomy relationship as off the early eighties while there seems to be a consensus about the factors causing the asymmetry namely adjustment costs which offset the benefits of low energy prices the debate about the weakening of the relationship is not over yet moreover the alternative oil price specifications which have been proposed by mork 1989 lee et al 1995 and hamilton 1996 to restore the stability of the relationship fail to granger cause output or unemployment in post 1980 data by using the concept of accelerations of the oil price we show that the weakening of this relationship corresponds to the appearance of slow oil price increases which have less impact on the economy when filtering out these slow oil price variations from the sample we manage to rehabilitate the causality running from the oil price to the macroeconomy and show that far from weakening the oil price accelerations gdp relationship has even been growing stronger since the early eighties

allocation of co2 emissions permits a general equilibrium analysis of policy instruments what are the effects of different ways of allocating co2 emissions permits under a tradable permit scheme numerical simulations show that using the permit revenue to lower existing taxes implies by far the lowest welfare cost but also a large reduction in employment in energy intensive sectors and substantial stranded costs grandfathering the permits compensates owners for losses on stranded investments but comes at a welfare cost and does not mitigate the adjustment imposed on the economy finally distributing the permits according to market shares reduces the degree of sectoral adjustment but also comes at a high welfare cost

the roles of inter fuel substitution and inter market contagion in driving energy prices evidences from china s coal market abstract coal has been dominating energy supply and consumption in china with the country becoming the largest energy supplier and consumer worldwide due to inter fuel substitution of crude oil and inter market contagion of international coal market china s coal price might be interrelated with crude oil price and international coal price however the precise roles of these two effects in determining china s coal price are unknown this paper contributes to previous literature by investigating this issue we find that co movements between china s coal price and crude oil price largely hinge on the shares of oil and coal in china s energy mix while its co movements with international coal price depend on scales of coal trade inter fuel substitution dominated the interaction of china s coal market with other energy types but the importance of inter market contagion has been increasing we also find that china might have become an originator for driving the returns of crude oil and international coal in particular after 2008 furthermore china s coal market is still a net volatility recipient for shocks from both crude oil market and international coal market given the increased integration of global energy markets we anticipate this paper to provide a better understanding on the dynamic changes in china s coal prices

oil prices and economic activity an asymmetric cointegration approach the aim of this paper is to study the long term relationship between oil prices and economic activity proxied by gdp to account for asymmetries existing in the links between the two variables we propose an approach based on asymmetric cointegration our empirical analysis concerns the u s economy but also the g7 europe and euro area economies results indicate that while standard cointegration is rejected there is evidence for asymmetric cointegration between oil prices and gdp

vintage human capital demographic trends and endogenous growth we study how economic growth is affected by demographics in an overlapping generations model with a realistic survival law individuals optimally chose the dates at which they leave school to enter the labor market and at which they retire endogenous growth arises thanks to the accumulation of generation specific human capital favorable shifts in the survival probabilities always induce longer schooling and later retirement but have an ambiguous effect on growth the relationship between the growth of population and per capita growth is hump shaped increases in longevity can be responsible for a switch from a no growth regime to a sustained growth regime and for a positive relationship between fertility and growth to vanish

the cleansing effect of recessions the authors investigate industry response to cyclical variations in demand production units that embody the newest process and product innovations are continuously being created and outdated units are being destroyed although outdated units are the most likely to turn unprofitable and be scrapped in a recession they can be insulated from the fall in demand by a reduction in creation the structure of adjustment costs plays a determinant role in the responsiveness of those two margins the calibrated model matches the relative volatilities of the observed manufacturing job creation and destruction series and their asymmetries over the cycle copyright 1994 by american economic association

net energy analysis in a ramsey hotelling growth model this article presents a dynamic growth model with energy as an input in the production function the available stock of energy resources is ordered by a quality parameter based on energy accounting the energy return on energy invested eroi in our knowledge this is the first paper where eroi fits in a neoclassical growth model with individual utility maximization and market equilibrium establishing the economic use of net energy analysis on a firmer theoretical ground all necessary concepts to link neoclassical economics and eroi are discussed before their use in the model and a comparative static analysis of the steady states of a simplified version of the model is presented

endogenous vs exogenously driven fluctuations in vintage capital models in this paper we present a particular case of the creative destruction model of caballero and hammour quart j econ 111 1996 805 851 in which both exogenous and endogenous fluctuation sources are present we show that job creation follows a delayed differential equation with periodic coefficients the delay is equal to the optimal age of capital goods the period of the coefficients is equal to the period of an exogenous profitability cycle we mathematically show that job creation is asymptotically periodic with the same period as the profitability cycle furthermore using an explicit numerical method we find that replacement echoes generally dominate the short run dynamics finally we find that the combination of the two fluctuations sources favors the appearance of asymmetries in job creation and job destruction patterns

public order and private payments evidence from the swedish soccer league abstract should organizers of events share the associated costs of maintaining public order we address this question by using unique data from the swedish soccer league where co payment for police were introduced for some clubs only the difference in differences analysis shows that co payments increased private guards by 40 and suggests a reduction of unruly behavior by 20 the results are consistent with our model where co payments alleviate under provision in efforts by organizers to combat problems such as hooliganism due to externalities and free riding on police services the model also sheds light on the critique that co payments could lead financially constrained organizers to provide less security

sport as business there is both a popular and academic literature suggesting that owners of sports teams do not profit maximize the alternative formulation entails either win or utility maximization usually subject to a breakeven constraint another line of economic analysis holds that team owners do fundamentally profit maximize or that profit maximization provides a useful benchmark against which to assess actual performance there has been some empirical work attempting to decipher the true objective function of team owners these results are inconclusive objective functions however remain important because they affect both owner behaviour and league performance in practice owners objectives vary by team league and country and are strongly affected by how the team relates to an owner s other assets the next task for modelling the behaviour and performance of sports leagues is to take fuller account of the diversity of ownership objectives within a given league copyright 2003 oxford university press

expectations learning and the changing relationship between oil prices and the macroeconomy this paper estimates a structural general equilibrium model to investigate the changing relationship between the oil price and macroeconomic variables the oil price through the role of oil in production and consumption affects aggregate demand and supply in the model the assumption of rational expectations is relaxed in favor of learning oil prices therefore affect the economy through an additional channel i e through their effect on the formation of agents beliefs the estimated learning dynamics indicates that economic agents perceptions about the effects of oil prices on the economy have changed over time oil prices were perceived to have large effects on output and inflation in the 1970s but only milder effects after the mid 1980s since expectations play a large role in the determination of output and inflation the effects of oil price increases on expectations can magnify the response of macroeconomic variables to oil price shocks in the estimated model in fact the implied responses of output and inflation to oil price shocks were much more pronounced in the 1970s than in 2008 therefore through the time variation in the impact of oil prices on beliefs the paper can successfully explain the observed weakening of the effects of oil price shocks on real activity and inflation