institutional constraints and deforestation an application to mexico 1 introduction in many tropical regions a key factor influencing deforestation is thought to be the lack of effective property rights and other institutional structures controlling access to and use of forests 1 where such institutions exist they limit access to and conversion of forest land thus acting as a deterrent to deforestation in the absence of formal ownership rules traditional common property regimes in some forested regions have also proven to be effective in controlling the open access deforestation problem gibson 2001 larson and bromley 1990 richards 1997 in short formal and informal institutions can influence the process of forest loss by imposing increased costs of conversion on farmers who clear forest land this article is concerned with analyzing the role of formal and informal institutions as constraints on the conversion of forest land to agriculture in developing countries the perspective on institutions adopted here follows the approach of north 1990 who defines institutions as humanly devised constraints that shape human interaction and that affect the performance of the economy by their effect on the costs of exchange and production in analyzing the relation between institutional constraints and the amount of forest land converted for use by smallholders this article makes several contributions first it demonstrates that if institutions raise the costs of land conversion then it is possible to utilize an agricultural household model to formalize the resulting impacts on the amount of converted land used by all farming households moreover the equilibrium level of land cleared will differ under conditions of no institutional constraints that is the pure open access situation compared to c onditions where effective institutions exist to control land conversion because institutions raise the cost of land clearing more land should be converted under pure open access 2 this in turn implies that the existence of institutional constraints prevents the adjustment of the stock of converted land to the long run equilibrium desired by agricultural households which is the amount of land that could be cleared under open access a dynamic panel analysis is therefore employed to test the hypothesis that the presence of institutions to control agricultural conversion can significantly affect deforestation the model of land expansion is applied to the case of mexico in the pre nafta north american free trade agreement reform era 1960 85 during this period the existence of ejido or communal land ownership for the vast majority of forest land meant that strong institutional controls may have restricted the rate of adjustment in the amount of new land converted and thus limited agricultural expansion sarukhan and larson 2001 the analysis also has direct relevance for the post nafta period particularly because the 1992 land reforms sanction changes in the traditional ejido land ownership structure ii a pure open access model of forest land conversion the following model of forest conversion is based on an approach similar to that of cropper et al 1999 lopez 1997 1998a and panayotou and sungsuwan 1994 assume that the economic behavior of all j rural smallholder households in the agricultural sector of a developing country can be summarized by the behavior of a representative jth household although the representative household is utility maximizing it is a price taker in both input and output markets farm and off farm labor of the household are assumed to be perfect substitutes such that the opportunity cost of the household s time i e its wage rate is exogenously determined the household s behavior is therefore recursive in the sense that the production decisions are made first and then the consumption decisions singh et al 1986 in any time period t let the profit function of the representative agricultural household s production decisions be defined as 1 max pi p w w

property rights externalities and resource degradation locating the tragedy abstract resource degradation in the third world is largely driven by the demands of farm households for fuelwood and land for agriculture since resources are often controlled through indigenous systems of property the tragedy of the commons has been used to explain resource degradation as a result private property is suggested as a solution to resource degradation a dynamic model capable of examining household incentives for resource use under private and common property is developed results of the model reject the conventional wisdom that gives rise to the presumed optimality of private individual property in natural resources and the correlated indictment of group management regimes

international trade and renewable resources under asymmetries of resource abundance and resource management this paper examines the interaction between relative resource abundance and resource management regimes in determining trade patterns and gains from trade in a two country model with a renewable resource a model developed by brander and taylor brander ja taylor ms 1997b resour energy econ 19 267 297 is extended it is shown that relative resource abundance determines trade patterns if resource abundance is similar in both countries and the relative demand for the resource good is moderate or if resource abundance is sufficiently different and the relative demand is not so high otherwise a difference in resource management regimes determines trade patterns even under an open access regime the resource scarce country gains from trade unless resource abundance is similar and the relative demand is low

the low skill trap recently it has become popular to argue that certain workers have fallen into a trap in which they have poor skills few job opportunities and a low return on training while others have not this paper demonstrates how such a trap can occur within a simple matching model with rent sharing rent sharing diminishes the worker s incentive to acquire skills however since firms also benefit from training rent sharing likewise induces job creation the subsequent improved matching prospects may offset the initial disincentive to invest however for this mechanism to be effective firms and workers must coordinate their actions if they do not the trap occurs

frontiers and sustainable economic development exploiting new resource frontiers such as agricultural land and mineral reserves is a fundamental feature of economic development in poor economies yet frontier based development is symptomatic of a pattern of economy wide resource exploitation in developing economies that a generates little additional economic rents and b what rents are generated are not being reinvested in other sectors such development is inherently unsustainable the following paper explains this phenomenon and provides evidence that long run expansion of agricultural land and oil and natural gas proved reserves across poor economies is associated with lower levels of real income per capita the paper proposes a frontier expansion hypothesis to explain why the structural economic dependence of these economies on frontier land expansion and resource exploitation is not conducive to sustained long run growth the key to sustainable economic development in poor economies will be improving the economic integration between frontier and other sectors of the economy targeting policies to improved resource management in frontier areas and overcoming problems of corruption and rent seeking in resource sectors

global warming and energy demand list of tables list of figures list of contributors preface 1 global warming and energy elasticities terry barker paul ekins and nick johnstonepart 1 estimating long term energy elasticities 2 alternative approaches to estimating long run energy demand elasticities an application to asian developing countries ron smith and m hashem pesaran 3 a survey of international energy elasticities neil manning and jago atkinson 4 long run demand elasticities for gasoline thomas sterner and mikael franzen 5 responses of energy demand in uk manufacturing to the energy price increases of 1973 and 1979 80 alan ingham 6 elasticities for oecd aggregate final energy demand lakis vouyoukas 7 modelling uk energy demand derek hodgson and keith millerpart ii energy the economy and greenhouse gas abatement 8 endogenous technological progress in fossil fuel demand laurence boone stephen hall david kemball cook and clare smith 9 uk energy price elasticities and their implications for long term co2 abatement terry barker 10 price elasticity and market structure overcoming obstacles to ensure energy efficiency tim jackson 11 rethinking the use of energy elasticities stefan p schleicher 12 revisiting the costs of co2 abatement paul ekins 13 asymmetrical price elasticities of energy demand michael grubb14 conclusions terry barker paul ekins and nick johnstone bibliography index

liberalizing the energy markets of western europe a computable equilibrium model approach using a computable equilibrium model the short run effects of a radical liberalization of the west european natural gas and electricity markets are examined in each model country oil gas coal and electricity are produced traded and consumed there are world markets for oil and coal and well integrated competitive markets for gas and electricity in western europe gas and electricity are transported and traded across markets under the assumption of ideal third party access regimes for transportation and limited capacities in the transportation networks it is found that relative to the data year 1996 radical liberalization reduces the average end user price of natural gas by around 20 and the average end user price of electricity by around 50 the supply of electricity increases by around 20 mainly due to increased coal power production after such liberalization coal power emerges with the largest market share of electricity production in western europe

search theoretic models of the labor market a survey we survey the literature on search theoretic models of the labor market we show how this approach addresses many issues including the following why do workers sometimes choose to remain unemployed what determines the lengths of employment and unemployment spells how can there simultaneously exist unemployed workers and unfilled vacancies what determines aggregate unemployment and vacancies how can homogeneous workers earn different wages what are the tradeoffs firms face from different wages how do wages and turnover interact what determines efficient turnover we discuss various modeling choices concerning wage determination and the meeting process including recent models of directed search

optimal use of labor market policies the role of job search assistance abstract this paper demonstrates how economic theory can be combined with state of the art empirics to make quantitative statements about optimal policy using a large administrative data set for west germany as well as nonparametric and semiparametric estimation techniques i parameterize the model proposed by pavoni and violante 2005 2007 for the optimal choice of different financial and activation measures for unemployed workers the parameterized model is used to study the role of job search assistance in optimal welfare to work programs and assess the optimality of the west german policy in the period 2000 to 2002

environmental externalities in traditional agriculture and the impact of trade liberalization the case of ghana abstract this paper provides a framework for the evaluation of trade policies that explicitly considers the effects of such policies on the environmental resources biomass in doing this we estimate the effects of biomass as a factor of agricultural production and test the hypothesis that farmers efficiently exploit biomass a resource held in common property the main findings are i biomass is an important factor of production in ghanian agriculture ii the biomass resource is exploited beyond the socially optimal level iii a deepening of trade liberalization is likely to induce further losses of biomass and deforestation and iv national income is likely to fall in response to further trade liberalization

carbon leakage from unilateral environmental tax reforms in europe 1995 2005 abstract studies of the effects of the kyoto protocol have shown carbon leakage typically from tax and permit schemes with lump sum revenues recycling to be in the range of 5 20 using static computable general equilibrium models however in practice researchers have found that carbon leakage from the implementation of the eu ets is unlikely to be substantial because transport costs local market conditions product variety and incomplete information all tend to favour local production this study investigates potential carbon leakage from six eu member states mss that implemented environmental tax reform etrs unilaterally over the period 1995 2005 the study uses the large scale multisectoral integrated energy environment economy e3 model of 27 european countries energy environment economy model of europe e3me to undertake a dynamic comparative analysis to assess any carbon leakage effects over the longer term 1995 2012 a counterfactual reference case is constructed assuming that the six countries did not introduce etrs then alternative scenarios are developed to assess the effects of the etrs including effects on co2 emissions for the eu25 economies most mss recorded a reduction in co2 emissions when comparing the baseline case to the reference case the results show that carbon leakage is very small and in some cases negative due to technological spillover effects

retraining and long term unemployment in a model of unlearning by not doing this paper develops a dynamically consistent model of search matching and bargaining when worker skills decline while unemployed long term unemployment emerges as an endogenous phenomenon even with constant returns to matching multiple pareto rankable equilibria are possible policies to address long term unemployment are best directed toward prevention e g vacancy creation subsidies rather than cure e g retraining subsidies

learning matching and growth we examine an endogenous growth model in which market frictions are an integral part of the economic environment workers invest in education when young which raises their productivity onice employed the level of schooling also acts as a key determinant of the rate of economic growth by influencing workers ability to accumulate additional human capital on the job once schooling is completed workers search for employment the division of the surplus between vacancies and searching workers is characterized as is the optimal level of education the economy may display multiple steady state growth paths

agricultural expansion and deforestation modelling the impact of population market forces and property rights abstract this paper compares four different modelling approaches to agricultural expansion and deforestation and explores the implications of assumptions about the household objectives the labour market and the property rights regime a major distinction is made between population and market based explanations many of the popular policy prescriptions are based on the population approach assuming subsistence behaviour and limited market integration within a more realistic particularly for the long term effects market approach well intentioned policies such as agricultural intensification programmes may boost deforestation many forest frontier contexts are also characterized by forest clearing giving farmers land rights deforestation becomes an investment to the farmer and a title establishment strategy land titling and credit programmes may therefore increase deforestation

differences in skill loss during unemployment across industries and occupations starting with ljungqvist and sargent 1998 and pissarides 1992 the search and matching literature has found that skill loss occurring during unemployment has important effects on macroeconomic models of unemployment this paper presents some evidence that the rate of skill loss varies across occupations and industries occupations and industries that require more skills experience higher rates of human capital decay these findings have important implications for models of equilibrium unemployment in particular for mismatch unemployment and the optimal reallocation of workers across sectors

can skill decay increase search effort abstract we consider the search behaviour of a worker whose expected matching gains are assumed to be decreasing over the spell of unemployment the search effort is linked positively to future earnings and negatively to the reservation wage this may give rise to non monotonous hazard rates

the effects on competitiveness of coordinated versus unilateral fiscal policies reducing ghg emissions in the eu an assessment of a 10 reduction by 2010 using the e3me model abstract international competitiveness effects from coordinated and uncoordinated multilateral policies to reduce co 2 emissions from 11 member states of the eu by 2010 are compared with those from unilateral policies to achieve a 10 cut in each member state alone the paper presents the results from four projections using a large scale integrated regionalised e3 model of the eu estimated on time series cross section data 1968 93 with international trade treated as between each member state and a european transport and distribution network the 10 reduction is achieved by additional excise duties incremented every year 1999 to 2010 according to the carbon contents of fuels with special with special treatment of electricity taxed on outputs not inputs with revenues recycled via reductions in employers social security contributions multilateral coordinated policies require a common tax rate of 156 ecu per tonne carbon 1999 prices which rises to an average of 165 ecu per tonne with a wide range between regions when policies are uncoordinated all the tax shift projections show double dividends for emission reduction and employment gain for all member states unilateral policies do not show much carbon leakage but they show smaller gains for output and employment effects for price competitiveness appear to be small and mixed with serious losses appearing only for the netherlands and for metals and chemicals especially for unilateral action

the economics of tropical forest land use options tropical deforestation is generally characterized as conversion of forest land to alternative uses notably agriculture this would suggest the need for rational decision making concerning the optimal allocation of tropical forest land between competing uses the following paper explores this problem by devising rules for determining optimal land use allocation between timber and agriculture at the stand and forest levels a complementary intertemporal model for optimal allocation of forest land to agricultural conversion at the forest level is also developed and used to derive a demand relationship for agricultural conversion which is then approximated through empirical estimation

unemployment vacancies and the long term unemployed this paper is concerned with two related features of the labor market the ratio of long term to total unemployment r and the relat ionship between unemployment and vacancies the u v curve a model is developed to explain r in terms of the average probability that an unemployed person will find a job within a particular time period when the authors add the empirically confirmed hypothesis that this exit probability is lower for the long term than it is for the short term unemployed the n the model is consistent with the observed pattern of unemployment copyright 1988 by royal economic society

poverty policies and deforestation the case of mexico this study examines the determinants and policy implications of deforestation in mexico and includes a brief review of the relevant empirical literature and a description of the theoretical model land use patterns and socioeconomic and physiogeographic factors are determinants data were obtained from digital maps of land use and soils and the 1990 population and 1991 agricultural censuses a simple 2 period equation formalizes the relationship between deforestation and poverty government policies and local land tenure in period 1 representative producers in municipalities have 4 options in allocating labor time wage generation agricultural production deforestation on land without clear property rights and investment in technology during period 2 the options are to farm on available land and deforested areas or work in the wage sector findings reveal that 1 communal land tenure ownership by the ejido did not increase deforestation 2 pricing that favors maize production which is very land intensive increased deforestation and technical assistance reduced deforestation and 3 poverty was related to higher rates of deforestation prices were the most important immediate factor in unsustainable resource use but other factors had an impact the government policy mix did not support sustainable development reduced subsidies would benefit the environment the government should provide safety nets to increase the level of rural investment and reduce poverty and should improve land productivity with technical inputs trade liberalization and elimination of subsidies should be sensitive to the poors need for real wages

agricultural intensification common property resources and the farm household this paper evaluates the impact of agricultural price and intensification policies for common property resources and welfare of rural communities in developing countries in doing so we develop a new model for the farm household that has analytical advantages over the traditional one and that has significant potential for empirical application the major findings are technical assistance that increase productivity of land intensive agricultural outputs cereals livestock etc cause degradation of the communal resources and may cause immiserization policies that increase the prices of these goods cause identical effects by contrast similar policies applied to labor intensive outputs vegetables tubers etc contribute to improve the common resources and to increase the welfare of the rural communities

efficiency of investment in human and physical capital in a model of bilateral search and bargaining a matching model is used to analyze the effect of search frictions on incentives to invest in human and physical capital equilibrium involves inefficient low levels of investment the source of the inefficiency cannot be attributed solely to either search or bargaining schemes that assist matching are pareto improving while the ratio of workers to firms remains fixed intermediaries that pay owners according to the amount of capital carried into the market are able to generate efficient outcomes such intervention may not eliminate inefficiencies when the ratio is endogenized policy implications include encouragement of investment even while abstracting from growth this paper examines investment in human and physical capital in an environment with explicit frictions in particular i analyze a random matching model where workers must search for employers and vice versa but one that is generalized beyond the previous literature to include ex ante investments on both sides of the market 2 the model generates equilibria with inefficiently low levels of investment to identify the source of the inefficiency its robustness to variations in the environment is considered i also analyze a generalized version of the model in which individuals can choose whether to invest in physical or human capital i e whether to become employers or workers the model predicts that the

training and search during unemployment displaced workers often experience large losses in earnings even a long time after reemployment training programs during unemployment mitigate these losses but also affect the unemployed s willingness to search this paper analyzes how mandatory training programs affect the optimal design of unemployment insurance and how the training intensity should evolve during the unemployment spell the introduction of training reverses the optimal consumption dynamics during the unemployment spell and makes it optimal to incentivize the long term unemployed to find employment despite the depreciation of their human capital targeting training programs towards the long term unemployed however is optimal only if the fall in human capital upon displacement is small relative to the depreciation during unemployment

the assessment international competitiveness the concept of international competitiveness as applied to national economies is a popular one politicians businessmen and economists alike re fer to it in day to day discussion when looking at the external export import market share or trade balance performance of different countries indi cators are produced showing changes in or levels of various countries competitiveness e g the relative price or cost indices regularly published by the imf and the oecd or the absolute measures produced by organizations such as the geneva world economic forum and the lausanne institute for management development governments of ten instigate research on the matter as for instance in the case of the 1993 us competitiveness policy council orthe 1995 eu competitiveness advisory group yet it has recently been argued by paul krugman that competitiveness is a meaningless word when applied to national economies and the obsession with competitiveness is both wrong and dangerous krugman 1994 p 44 apositionkrugman forcefully reaffirms in his contribution to this issue of the oxford review of economic policy

environmental taxes on fuels and electricity some experiences from the nordic countries in economic theory environment based energy taxation provides a direct financial incentive for environmentally sound economic behaviour in the energy field in practice only a few countries have implemented such taxes unilaterally in the 1990s to be effective environment based energy taxes seem to need international implementation the eu commission has made three proposals in 1992 1995 and 1997 but so far none of them has proceeded in the negotiations in this article we focus on implemented environmental taxes on fuels and electricity in the nordic countries firstly the idea of environment based taxes as a part of sustainable energy policy is presented secondly we review the impacts of this kind of taxes on the environment energy production and consumption income distribution and competitiveness via estimates presented in the literal sources thirdly we review comparative studies of environmental taxes on energy from a methodological perspective and finally we analyse the use of energy tax comparisons in political decision making a recent energy tax reform in finland is used as an example

divergence in economic performance transitional dynamics with multiple equilibria abstract special pairs of the utility functions and the production functions are used in this paper to uncover the transitional dynamics in a lucas model of growth the main findings are as follows a continuum of equilibria exists if the external effect of human capital in goods production is sufficiently large the process of lagging behind catching up with and overtaking that we often observe in the world economy can be explained finally some equilibrium paths are shown to have such complicated patterns that the dynamics conjectured by lucas are too simple to be correct journal of economic literature classification numbers o41 c61

bargaining in a non stationary environment we study an alternating offers bargaining model in which the set of possible utility pairs evolves through time in a non stationary but smooth manner in general there exists a multiplicity of subgame perfect equilibria however we show that in the limit as the time interval between two consecutive offers becomes arbitrarily small there exists a unique subgame perfect equilibrium furthermore we derive a powerful characterization of the unique limiting subgame perfect equilibrium payoffs we then explore the circumstances under which nash s bargaining solution implements this bargaining equilibrium finally we extend our results to the case when the players have time varying inside options 2003 elsevier science usa all rights reserved

economic impacts of the 1997 eu energy tax simulations with three eu wide models in march 1997 the european commission adopted aproposal that increases existing minimum levels oftaxation on mineral oils by around 10 to 25 andintroduces excises for other energy products thispaper analyses the macroeconomic impacts of theproposal it employs three models hermes gem e3 ande3me all models confirm that the proposal will havepositive macroeconomic impacts when the tax revenuesare used to reduce social security contributions paidby employers for the eu as a whole both gdp andemployment are expected to be higher and co2emissions are 0 9 to 1 6 percent lower the positiveeu wide effects can be observed in practically allmember states the sector impacts are modest with theenergy sector expected to face the most negativeimpacts differences between model results are due tothe model type general equilibrium ormacro econometric the eu countries covered and theway tax exemptions were handled crucial assumptionsto obtain the double dividend are the modelling ofthe labour market and the impacts on eu externaltrade the sensitivity of the results for the use oftax revenues tax exemptions and tax rate increases isassessed

trade tragedy and the commons we develop a theory of resource management where the degree to which coun tries escape the tragedy of the commons and hence the de facto property rights regime is endogenously determined three forces determine success or failure in resource management the regulator s enforcement power the extent of har vesting capacity and the ability of the resource to generate competitive returns without being extinguished the model can explain heterogeneity across coun tries and resources in the effectiveness of resource management and it predicts that changes in prices population and technology can cause transitions to better or worse management regimes jel p14 q21 q22 q23 q32 many of the world s major renewable resource stocks are in a state of decline this is true for capture fisheries for forests in developing countries and for many measures of the biosphere s health other renewable resources including many species of wildlife marine mammals and coral reefs are also under threat while poverty and government corruption are surely respon sible for some of this record particular emphasis is often placed on the potentially damaging role played by international trade this emphasis is not surprising given that natural resource products are a key export for much of the developing world and property rights over renewable resources are both difficult to define and poorly enforced but property rights are not an immutable country characteristic such as weather mineral deposits or topography they are instead market institutions developed to facilitate transactions and protect scarce resources consequently changes in prices technology and other effects of market integration may alter the de facto property rights regime and lead to impacts quite dif ferent from those predicted by existing analyses the purpose of this paper is to examine renew able resource use within a framework where the enforcement of property rights and hence the efficacy of resource management is endogenously determined we develop a theory where an existing government regulates the use of a renewable resource by a set of agents who have a right to harvest the resource could be a fishery forest stock aquifer etc and we assume it is local and therefore contained within one country the govern ment sets rules limiting harvests but agents may cheat on these allocations and risk punishment property rights are endogenous in this framework because the government must account for agents incentive to cheat as a result the effective protection for the resource or what we refer to as the de facto property rights regime may be far from perfect even though property rights would be perfectly enforced if there was no monitoring problem

a dynamic equilibrium model of search bargaining and money abstract this paper considers dynamic equilibria in a model with random matching strategic bargaining and money equilibrium in the bargaining game is characterized in terms of a simple differential equation when we embed this characterization into the monetary economy the model can generate outcomes such as limit cycles that never arise if one imposes a myopic nash bargaining solution as has been done in the past journal of economic literature classification numbers c78 d83 e31

unemployment history and frictional wage dispersion abstract recent evidence shows that baseline search models struggle to match the observed levels of wage dispersion this paper studies a random matching search model with human capital losses during unemployment wage dispersion increases as workers accept lower wages to avoid long unemployment spells the model explains between a third and half of the observed residual wage dispersion when adding on the job search the model accounts for all of the residual wage dispersion and generates substantial dispersion even for high values of non market time the paper thus addresses the trade off between explaining frictional wage dispersion and the cyclical behavior of unemployment