cleaner energy for sustainable future this special issue of the journal of cleaner production focuses on energy for sustainable future it is designed to mirror the increasing relevance of renewable energy sources and improved efficiency as crucial topics for practitioners in industry for governmental policy makers as well as for civic service providers researchers and educators the purpose of this special issue is to serve as a catalyst for dialogue the global warming related to co2 emissions coupled with steeply rising energy prices and the recent global financial institutional melt down are causing massive societal concerns and give rise to increasing demand for ways to improve societal and individual energy efficiency and for ways to shift increasingly to alternative low or non carbon based energy systems until recently industrial energy efficiency improvements have focused on improvements on efficiency rather than on the integration of renewable sources the aim of this special issue is the identification of policies to support the development and implementation of technologies and management approaches we can employ to make the transition to more sustainable societies the collection of papers in this special issue provide a foundation for students researchers scholars practitioners and policy makers interested in making sustainable development more than a metaphor the papers include focus upon ways for a improving industrial process to achieve improvements in energy efficiency b minimising waste disposals and reducing their impact through better management c reducing co2 emissions by making progress toward lower carbon renewable energy based systems d improving production of biofuels and hydrogen production systems facilitated by employing cleaner production and novel lca tools e improving integration of advanced materials and energy efficient equipment in different industrial sectors current and future developments in national and world economies are closely connected to sustainable efficient and safe usage of raw materials and upon energy based on cleaner production concepts and approaches that are ecologically and economically appropriate for the short and for the long term future of society these challenges have received considerable attention in the media and scientific journals over the last several years the idea of developing a specialised conference focussed upon them was put forward on various occasions focus upon them became reality on the 5th and 6th may 2008 in the historic castle of veszprem hungary the current premises of the hungarian academy of science which hosted the workshop the workshop was a stimulating event and an overwhelming success with nearly 100 contributors from africa north america asia and europe representing 28 countries after a comprehensive selection and thorough reviewing procedure 11 papers were selected for this special issue

habits costly investment and current account dynamics abstract we analyze the current account dynamics for a small country model with habit forming consumers and costly investment the model has several empirical and policy implications i it is consistent with stylized facts regarding the effects of productivity shocks and increases in fiscal spending and regarding the savings investment co movement ii the long run effect of a temporary shock on net foreign assets is often opposite to that of a permanent shock iii under strong habit persistence the welfare dynamics are sluggish so that a beneficial tax financed fiscal policy may have a harmful hangover effect on welfare

germany s dash for coal exploring drivers and factors abstract the german electricity sector has recently seen extensive planning and construction of new coal fired power plants within a period of only a few years new investments amounting to around 15 of the total sector capacity were brought on the way and plans for a multitude of additional projects are pending this dash for coal in germany has raised considerable public concern especially as it risks to undermine recent political attempts to combat global warming yet the question of why the dash for coal has emerged has not yet been addressed in a thorough analysis this article attempts to close this research gap while at the same time contributing as a case study to the general understanding of investment patterns in liberalized electricity markets it finds that the main reasons for the dash have been 1 replacement requirements due to the nuclear phase out 2 the onset of a new investment cycle in the power market 3 favorable economic and technological prospects for coal compared with natural gas in the long run 4 a status quo bias of investors in regard to future renewable deployment 5 explicit political support for coal and 6 the ineffectiveness of public protest in hampering new projects

expropriation and direct investment abstract the paper considers a model in which private foreign investors make direct long lived capital investments in a small developing country that is subject to stochastic shocks to production depending upon the preferences of the host country we find that expropriation can occur because of either desperation or opportunism we show that under reasonable assumptions increased investment makes expropriation less likely to occur and that the level of investment chosen by atomistic foreign investors may be non optimal

trading horizons and the value of money abstract this paper shows that fiat money can be feasible and essential even if the trading horizon is finite and deterministic the result hinges on two features of our model first individual actions can affect the future availability of productive resources so agents may be willing to sell for money even if on that date they have no reason to accept it this makes monetary trade feasible in all preceding dates second agents are anonymous and direct their search for partners so gift giving arrangements may be prevented because agents can misrepresent their consumption needs this makes money essential in exploiting any gains from specialization and trade

the impact of technological change on climate protection and welfare insights from the model mind abstract avoiding dangerous climate change is likely to require policies to mitigate co2 emissions that are substantially more ambitious than those currently being considered for such policies the issue of endogenous technological change becomes important both to estimate the overall costs and to identify the intertemporally cost effective combination of mitigation options in this paper we first discuss the recent literature that evaluates the potential for endogenous technological change to reduce mitigation costs and the efforts to incorporate endogenous technological change into pre existing integrated assessment models then we formulate our own integrated assessment model the model of investment and technological development mind which allows analysis of the relationship between specific mitigation options and the costs of ambitious climate protection objectives our model reveals two important results first the incorporation of technological change in a portfolio of mitigation options can reduce the costs of climate policies substantially achieving the ambitious policy goals necessary to avoid dangerous climate change becomes feasible without significant welfare losses second the different mitigation options are of different importance in achieving climate protection goals improving energy efficiency becomes too costly as a major mitigation option in the long run in the long run fossil fuels have to be substituted by renewable energy sources because a backstop technology with the potential of learning by doing has the strongest impact on reducing the welfare losses due to climate protection furthermore carbon capturing and sequestration can allow for further reduction in the costs of climate protection and can postpone the need to transform the energy system from a fossil fuel based one to a renewables one

technological change and uncertainty in environmental economics abstract technological change is widely believed to play a crucial role in mastering the challenges of man made climate change the drivers and impacts of technological change have therefore become an important research issue in the field of climate economics while models to analyze the interactions between economy energy and the environment initially treated technological change as exogenous more recent modeling approaches often represent technological change as endogenously induced typically models of induced technological change in climate economics are based on perfect foresight in a deterministic world however both technological change and climate impacts are subject to large uncertainties that may substantially affect the design of efficient climate policies against this background the special issue presents five articles contributing to the study of uncertainty and technological change in climate change economics

development of supersmart grids for a more efficient utilisation of electricity from renewable sources abstract if europe is serious about reaching its target to keep global mean temperature increase below 2 c it must strive for a 100 renewable electricity system by 2050 the supersmart grid approach combines what is often perceived as two exclusive alternatives wide area power generation and decentralised power generation we argue that by combining these in fact complementary measures it is possible to address the crucial issue of renewable generation fluctuating supply in a comprehensive as well as in a technologically and economically viable manner thus the supersmart grid simultaneously can contribute to energy security climate security social security and national security

efficient climate policies under technology and climate uncertainty this article explores efficient climate policies in terms of investment streams into fossil and renewable energy technologies the investment decisions maximise social welfare while observing a probabilistic guardrail for global mean temperature rise under uncertain technology and climate parameters such a guardrail constitutes a chance constraint and the resulting optimisation problem is an instance of chance constrained programming not stochastic programming as often employed our analysis of a model of economic growth and endogenous technological change mind suggests that stringent mitigation strategies cannot guarantee a very high probability of limiting warming to 2 c since preindustrial time under current uncertainty about climate sensitivity and climate response time scale achieving the 2 c temperature target with a probability p of 75 requires drastic carbon dioxide emission cuts this holds true even though we have assumed an aggressive mitigation policy on other greenhouse gases from e g the agricultural sector the emission cuts are deeper than estimated from a deterministic calculation with climate sensitivity fixed at the p quantile of its marginal probability distribution 3 6 c we show that earlier and cumulatively larger investments into the renewable sector are triggered by including uncertainty in the technology and climate response time scale parameters this comes at an additional gwp loss of 0 3 resulting in a total loss of 0 8 gwp for observing the chance constraint we obtained those results with a new numerical scheme to implement constrained welfare optimisation under uncertainty as a chance constrained programming problem in standard optimisation software such as gams the scheme is able to incorporate multivariate non factorial probability measures such as given by the joint distribution of climate sensitivity and response time we demonstrate the scheme for the case of a four dimensional parameter space capturing uncertainty about climate and technology

time preference and life cycle consumption with endogenous survival we provide a structural theory of time preference and derive a functional form of intertemporal preferences by postulating that individuals make their life cycle consumption choices as if to maximize expected lifetime this yields a nontime separable expected utility representation where the inverse of the coefficient of intertemporal substitution exceeds the coefficient of relative risk aversion the rate of time preference depends on the inverse of expected remaining lifetime and the effect of age on the productivity of consumption in affecting health the preference formulation is applied in a standard intertemporal consumption model to illustrate the implied life cycle consumption choices

north south customs unions and international capital mobility the primary distinction in a north south trade accord is likely to be that the southern nation experiences more capital scarcity than its northern trade partner so the trade accord s impact on the southern trading partner s ability to attract capital may have welfare implications for both nations the authors extend the traditional analysis of customs unions to allow for international capital movements their results indicate that trade accords may affect the ability of southern nations to attract capital and may divert capital between southern nations moreover the welfare implications of north south trade accords may differ from those that predict the north american free trade agreement s nafta minor third country effects holding factor endowments constant the key implications of north south trade accords such as nafta are generally perceived to involve their impact on investment flows the authors try to understand the channels through which trade accords can affect north south investment flows a potential link between trade accords and investment flows may be how the accords affect the ability of the southern partner government to make commitments about the treatment of foreign investment they show that these accords can affect both the magnitude and pattern of inward foreign investment and production implying the possibility that both trade and financial diversion can stem from a bilateral regional trade accord novel effects that emerge under sovereign risk must be addressed when assessing the welfare implications of trade accords the greatest gains from integration are still achieved when integration takes place between the countries with the greatest potential gains from trade but the authors make a distinction these gains now include both current trade and inter temporal trade through foreign investment

electricity capacity investment under risk aversion a case study of coal gas and concentrated solar power the policy instrument many economists favor to reduce greenhouse gas emissions and to shift new investment towards low carbon technologies is the tradable allowance system experience with this instrument has been mixed with a crucial design issue being the choice of whether to auction allowances to firms or to grandfather them based on historical emissions in this paper we examine the changing incentives of investment in different technologies when investors are risk averse and are expecting an allowance system with a certain allocation rule but do not know if the policy is going to take place in the near future investors also cannot fully predict future investment costs for the low carbon technology we apply a game theoretic model to examine the combined effects of uncertainty and risk aversion on the actions of potential investors into high and low carbon generating capacity under both allocation rules and uncertain costs we find that uncertainty and risk aversion do have implications towards investment incentives we discuss policy implications of these findings

energy management on industrial parks in flanders in the race against climate change aiming for low carbon competitiveness flanders has initiated a carbon neutrality strategy on industrial parks building towards energy efficient buildings and processes acting as a stimulus for the production and consumption of green electricity however premises and internal process optimisation on industrial parks is not considered sufficient to limit greenhouse emissions in flanders structural transition is called for aiming for industrial clustering and energy autonomy based on renewables therefore the concept of industrial symbiosis is analysed to determine how it could improve the energy related carbon management on industrial parks this article explores the literature on industrial symbiosis and eco industrial parks searching for specific energy strategies and is illustrated with case studies energy management on industrial parks can be integrated in the entire development process and park management maximising efficiency is a promising local optimisation issue in which business should be engaged stimulated and facilitated by clustering buildings and processes by energy exchange collective production and joint contracting of energy services local synergies can be intensified yet uncertainty and variability in time of energy consumption can keep developers from tailoring industrial park design and utilities instead flexibility and solidity could be gained and the offer of business space could be diversified supported by a persevering issuing procedure to join similar and matching energy profiles energy management on industrial parks in flanders has only recently started but is expected to gain professionalism however further research is needed on this flexible design and thermal planning

a theory of infrastructure led development abstract this paper proposes a theory of long run development based on public infrastructure as the engine of growth the government in addition to investing in infrastructure spends on health services which in turn raise labor productivity and lower the rate of time preference infrastructure affects the production of both commodities and health services as a result of network effects the degree of efficiency of infrastructure is nonlinearly related to the stock of public capital itself provided that governance is adequate enough to ensure a sufficient degree of efficiency of public investment an increase in the share of spending on infrastructure financed by a cut in unproductive expenditure or foreign grants may facilitate the shift from a low growth equilibrium characterized by low productivity and low savings to a high growth steady state

real asset returns inflation and activity in a small open cash in advance economy abstract the effects of inflation are worked out for a small open economy with cash in advance cia constraints on bond purchases if all transactions are subject to cia constraints an increase in the inflation rate will reduce savings bringing about a current account deficit while the capital stock will be unaffected if investment is not subject to cia constraints an increase in the inflation rate will encourage investment and reduce savings bringing about a current account deficit numerical evaluation of the model gives rise to falls in real interest rates that are in line with recent empirical findings

the impact of investors risk aversion on the performances of capacity remuneration mechanisms abstract this paper analyses the impact of risk aversion on the performances of capacity remuneration mechanisms with investors facing an uncertain peak load three market designs are studied for this purpose a competitive energy only market a capacity market and a strategic reserve mechanism a simulation model based on system dynamics is developed in order to represent investment decisions and analyse the behaviour of each market design risk aversion is modelled through the computation of conditional value at risk the results are discussed in terms of impact on the reliability ability to limit shortages and cost total generation costs of the studied market designs when comparing the three market designs the capacity market seems to be the least affected by the introduction of risk aversion both in terms of cost and reliability this result suggests that implementing a capacity market is preferable in order to deal with the adverse effects of risk aversion given the simulations and parameters that were used

potential capability estimation for real time electricity demand response of sustainable manufacturing systems using markov decision process abstract electricity demand response has been considered as a critical methodology to realize the strategy of sustainable development for manufacturing enterprises by effectively reducing the increasing electricity demand and greenhouse gas emissions most existing studies about the electricity demand response implementation focus on either the supply side management e g policy making price setting or the customer side applications for the end users in residential and commercial building sectors as for the industrial sector only a few papers utilizing the long term scheduling methodology to reduce the electricity consumption during peak periods are available little work has been implemented on the decision making for the real time electricity demand response in industrial manufacturing systems considering system throughput constraint in this paper an analytical model is established to identify the optimal energy control actions and estimate the potential capacity of power demand reduction of typical manufacturing systems during the period of demand response event without compromising system production markov decision process is used to model the complex interaction between the adopted demand control actions and the system state evolutions a numerical case study on a section of an automotive assembly line is used to illustrate the effectiveness of the proposed approach

monetary policy in a small open economy with durable goods and differing cash in advance constraints abstract we consider the effects of inflation in a small open economy when expenditures on non durables are more heavily financed with money than expenditures on durables the distinctions between non durables and durables and asymmetric cash in advance constraints give rise to important dynamics

optimal growth with decreasing marginal impatience abstract this paper analyses the long run dynamics of a continuous time infinite horizon optimal growth model with identical households where the households rate of time preference is endogenously determined however unlike the existing literature we assume that households have decreasing marginal impatience i e the instantaneous discount rate is negatively related to the current consumption with this assumption we analyse the stability and uniqueness of the long run equilibrium we show that contrary to the general belief a negative relationship between the instantaneous discount rate and the household s current consumption does not necessarily result in instability of the dynamic system however even a stable system may be characterized by multiple equilibria so that the initial condition becomes important in determining the long run behaviour of the economy we derive a set of sufficient conditions for stability and uniqueness in this context

clean and secure power supply a system dynamics based appraisal abstract across the world the electricity industry is changing with the advent of renewable energy sources such as solar and wind power as these are exposed to intermittency seasonality and global climate variation policy makers concerns are now shifting towards security of supply in fact the industry confronts three conflicting goals security of supply competitive prices to customers and environmental protection in this context and given the multiple uncertainties of technology transformation this paper uses modelling based scenario analysis to investigate different extreme and plausible futures simulation is used to analyse policies aimed at increasing the penetration of renewables and to explore how these energy sources may affect system reliability this paper explores the effect of incorporating renewables in colombia where a large hydroelectric component has led to insufficient electricity being available during droughts and to high electricity price volatility though not intuitive at first glance this paper shows that renewables may contribute to i increased security of supply through complementarity e g it does not rain when the sun shines ii reduced price volatility in the medium term and iii increased industry sustainability

risk aversion and technology mix in an electricity market this article analyzes the eff ect of risk and risk aversion on the long term equilibrium technology mix in an electricity market it develops a model where fi rms can invest in baseload plants with a fi xed variable cost and peak plants with a random variable cost and demand for electricity varies over time but is perfectly predictable at equilibrium the electricity price is partly determined by the random variable cost and the returns from the two kinds of plants are negatively correlated when the variable cost of the peak technology is high the return of peak plants is low but the return to baseload plants is high risk averse fi rms reduce the capacity of the riskiest technology and develop the capacity of the other compared to risk neutral fi rms in the particular case where a risk neutral fi rm invests heavily in baseload technology and only sparely in peak capacity a risk averse fi rm would invest less in baseload increase peak capacity and increase total installed capacity

solar power investment in north africa reducing perceived risks abstract climate protection targets for mid century imply a need to scale up european renewable power production to a level that may exceed the available land area within europe s borders one attractive solution from a cost and feasibility perspective is the development of large scale concentrating solar power plants in north africa and the middle east however these developments are seen by many people as risky in terms of both european energy security and in terms of the risks faced by project developers in this paper we focus on the latter of theses issues first we examine the risks that project developers are most concerned about and identify these as being associated not with terrorism and rogue state behavior but rather with corruption and inefficient and unpredictable bureaucracies second we identify a range of policy approaches that can reduce these risks either by mitigating their consequences or by seeking to eliminate their underlying causes third we investigate the financial benefits of taking such steps to reduce or eliminate investment risks we find the potential savings to european electricity consumers to exceed 200 billion

habits and time preference this paper proposes a utility function incorporating both habit formation and an endogenous rate of time preference in a manner consistent with the intuition of irving fisher regarding the influence of past consumption on impatience it is shown that the ne w specification is tractable and generates new predictions in the cont ext of three model economies 1 a closed economy with heterogeneous agents 2 a small open economy with one traded good and one nontra ded good and 3 a small open economy with a traded good and domestic money copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

effects of government spending on the current account with endogenous time preference this paper extends a previous model to set up a small open economy with perfect capital mobility and examines the effects of an unanticipated permanent rise in public spending on the optimal rates of private consumption and the current account the novelty of the paper is consideration of the relationship between private and public consumption in the household s utility function as well as endogenous rates of time preference it is found that the key factor determining the adjustment patterns of private consumption and the current account is the marginal utility of private consumption and of public spending which results from endogenous recursive preferences

endogenous trading bloc formation in a north south global economy the majority of the trading blocs to date are between similar countries rather than between developed and developing countries this paper provides a rationale for why trading blocs among similar countries may arise as an equilibrium phenomenon it develops a model of an asymmetric world economy in which there are at least four countries the countries are differentiated with respect to their market size and they choose their trading partners in the coalition proof nash equilibrium either there is global free trade or free trade areas are formed among similar countries la plupart des blocs commerciaux sont formes de pays similaires plutot que de pays developpes et en voie de developpement ce memoire explique pourquoi ce genre de resultat peut emerger en tant que phenomene d equilibre on developpe un modele d economie mondiale asymetrique dans lequel il y a au moins quatre pays les pays different par la taille et la nature de leurs marches et choisissent leurs partenaires commerciaux dans un equilibre libre de coalitions a la nash ou bien il existe un regime global de libre echange ou bien des zones de libre echange entre pays similaires emergent

rules of thumb in life cycle saving decisions we analyse life cycle saving decisions when households use simple heuristics or rules of thumb rather than solve the underlying intertemporal optimisation problem we simulate life cycle saving decisions using three simple rules and compute utility losses relative to the solution of the optimisation problem our simulations suggest that utility losses induced by following simple decision rules are relatively low moreover the two main saving motives reflected by the canonical life cycle model long run consumption smoothing and short run insurance against income shocks can be addressed quite well by saving rules that do not require computationally demanding tasks such as backwards induction

loss aversion in aggregate macroeconomic time series abstract prospect theory has been the focus of increasing attention in many fields of economics however it has scarcely been addressed in macroeconomic growth models neither on theoretical nor on empirical grounds in this paper we use prospect theory in a stochastic optimal growth model thereafter the focus lies on linking the euler equation obtained from a prospect theory growth model of this kind to real macroeconomic data we will use generalized method of moments gmm estimation to test the implications of such a non linear prospect utility euler equation our results indicate that loss aversion can be traced in aggregate macroeconomic time series

risk aversion and co2 regulatory uncertainty in power generation investment policy and modeling implications abstract we consider a simulation of risk averse producers when making investment decisions in a competitive energy market who face uncertainty about future regulation of carbon dioxide emissions investments are made under regulatory uncertainty then the regulatory state is revealed and producers realize returns we consider anticipated taxes grandfathered permits and auctioned permits and show that some anticipated policies increase investment in the relatively dirty technology beliefs about the policy instrument that will be used to price carbon may be as important as certainty that carbon will be priced more generally a failure to consider risk aversion may bias policy analysis for the power sector

multilateral tariff cooperation during the formation of customs unions abstract we study the implications of customs union formation for multilateral tariff cooperation we model cooperation in multilateral trade policy as self enforcing in that it involves balancing the current gains from deviating unilaterally from an agreed upon trade policy against the future losses from forfeiting the benefits of multilateral cooperation that such a unilateral defection would imply the early stages of the process of customs union formation are shown to alter this dynamic incentive constraint in a way that leads to a temporary honeymoon for liberal multilateral trade policies we find however that the harmony between customs unions and multilateral liberalization is temporary eventually as the full impact of the emerging customs union becomes felt a less favorable balance between current and future conditions re emerges and the liberal multilateral policies of the honeymoon phase cannot be sustained

habit formation adjustment costs and international transmission of fiscal policy abstract the paper studies the effects of fiscal policy in an integrated world economy the setup is one with habit forming endogenous rates of time preference and adjustment costs in investment most of the predictions of the model are in line with the recent empirical literature on fiscal policy for instance in response to a balanced fiscal expansion we obtain positive long run output multipliers long run increases in employment short and medium run increases in wages and decreases in investment our results suggest that short run government spending multipliers are smaller than tax multipliers most importantly we show that the model can generate positive short and medium run consumption responses to a positive fiscal shock this is relevant as negative consumption responses are considered to be one of the main challenges facing neo classical models of fiscal policy

consumption paths under prospect utility in an optimal growth model this paper studies the cass koopmans ramsey model of optimal economic growth in the presence of loss aversion and habit formation the representative agent s preferences for consumption can be gradually varied between the standard constant intertemporal elasticity of substitution cies case and kahneman and tversky s prospect utility we find that the transitional dynamics of optimal consumption paths differ distinctly from the standard model in particular consumption smoothing is more pronounced we also show that prospect utility can cause the economy to remain in a steady state with low consumption and low capital

international capital mobility and commercial policy in an economic region abstract if two small countries are linked by capital movements then at low tariff levels any increase in capital flows induced by the commercial policy of either country will harm that country and benefit the other country while at low levels of international investment a tariff increase always harms the country levying the tariff nevertheless an increase in one country s tariff could benefit both countries by alleviating regional distortions in factor allocation if the countries liberalize factor movements within a customs union then conflicts must arise in choosing the level of the common external tariff

study on china s low carbon development in an economy energy electricity environment framework abstract emissions mitigation is a major challenge for china s sustainable development we summarize china s successful experiences on energy efficiency in past 30 years as the contributions of energy usage management and integrated resource strategic planning which are essential for low carbon economy in an economy energy electricity environment e4 framework the paper studies the low carbon development of china and gives an outlook of china s economy growth energy electricity demand renewable power generation and energy conservation and emissions mitigation until 2030 a business as usual scenario is projected as baseline for comparison while low carbon energy and electricity development path is studied it is defined as low carbon energy electricity when an economy body manages to realize its potential economic growth fueled by less energy electricity consumption which can be characterized by indexes of energy electricity intensity and emissions per unit of energy consumption electricity generation results show that with eum china could save energy by 4 38 billion ton oil equivalences toes and reduce co2 emission by 16 55 billion tons with irsp china could save energy by 1 5 btoes and reduce co2 emission by 5 7 btons during 2010 2030 to realize the massive potential china has to reshape its economic structure and rely much on technology innovation in the future

stochastic carbon sinks for combating carbon dioxide emissions in the eu abstract this paper carries out numerical calculations on the potential of carbon sinks in the eu emissions trading scheme ets and national commitments under conditions of stochastic carbon dioxide emissions from fossil fuels and carbon sequestration by forests chance constraint programming is used to analyze the role of stochastic carbon sinks for national and eu wide compliance costs the analytical results show that the inclusion of the carbon sink option can reduce costs for low enough marginal cost and risk discount but also that costless carbon sinks as by products from forestry are not part of a cost effective solution under a high reliability concern cost savings are reduced due to risk discounting under a reliability concern in particular when assigning chebyshev s inequality as compared with a normal probability distribution it is also shown that the supply of forest sinks on the market depends on the differences in marginal abatement cost between the trading and the non trading sectors and in risk discounting between achievements of the ets cap and the national commitment relatively low marginal abatement cost in the non trading sector and high risk discounting of national commitment achievements increase the supply of sinks in the market and hence reduces the equilibrium price the empirical application illustrates the importance of risk discounting for the magnitude of cost savings obtained from introducing forest carbon sinks in the eu ets and national commitments

on the existence of balanced growth equilibrium the authors characterize the class of dynamic models that allow for the most commonly used types of sustained economic growth balanced and asymptotically balanced they show that under a constant returns to scale technology asymptotically constant discount rate and asymptotically constant elasticity of marginal felicity are not only necessary but also sufficient conditions for the existence of a n asymptotically balanced growth equilibrium path the authors provide examples of recursive utility models that accept a n asymptotically balanced growth equilibrium and discuss their implications on cross country differences in growth rates as well as on savings behavior and wealth distribution copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

incentives to diffuse advanced abatement technology under the formation of international environmental agreements we analyse the incentives for polluting firms to diffuse and adopt advanced abatement technology in a framework in which governments negotiate an international environmental agreement these incentives crucially depend on whether the underlying environmental policy instrument is an emission tax or an emission quota the results for the international setting fundamentally differ from those for the national setting that have been elaborated upon in the earlier literature in particular equilibrium diffusion and adoption of advanced abatement technology are not necessarily optimal under the tax regime and may be even lower than those under the quota regime

government spending and capital accumulation with endogenous time preference this paper extends s djajic 1987 to allow for an endogenous rate of time preference and reexamines djajic s experiment how the optimal rates of private consumption and capital accumulation will respond to an unanticipated temporary expansion in government spending the key factors determining the adjustment patterns are the difference between the marginal utility of private consumption and that of public spending the timing of policy reversion and the relationship between private and public consumption in household utility if private and public consumption are edgeworth independent whether investment increases with the length of fiscal expansion depends on whether the marginal utility of private consumption exceeds that of public consumption