transfers to sustain dynamic core theoretic cooperation in international stock pollutant control international environmental agreements aiming at correcting negative externalities generated by transboundary pollution are difficult to achieve for many reasons important obstacles arise from asymmetry in costs and benefits and instability may occur due to the fact that coalitions of countries may attempt to do better for themselves outside of any proposed agreement in a static context it has already been shown that it is possible to achieve stability in the sense of the core of a co operative game by means of appropriately defined transfers between the countries involved however the transboundary pollution problems that are most important are caused by accumulated pollutants so that a dynamic analysis is required this paper provides a transfer scheme that yields a core property in a dynamic context the possibility of computing such transfers numerically is discussed

renegotiation proof climate agreements with full participation conditions for pareto efficiency recent contributions show that climate agreements with broad participation can be implemented as weakly renegotiation proof equilibria in simple models of greenhouse gas abatement where each country has a binary choice between cooperating i e abate emissions or defecting no abatement here we show that this result carries over to a model where countries have a continuum of emission choices indeed a pareto efficient climate agreement can always be implemented as a weakly renegotiation proof equilibrium for a sufficiently high discount factor this means that one need not trade off a narrow but deep treaty with a broad but shallow treaty

climate policy under technology spillovers we study climate policy when there are technology spillovers between countries as there is no instrument that directly corrects for these externalities without an international climate agreement the non cooperative equilibrium depends on whether countries use tradable quotas or carbon taxes as their environmental policy instruments all countries are better off in the tax case than in the quota case two types of international climate agreements are then studied one is a kyoto type of agreement where each country is assigned a specific number of internationally tradable quotas in the second type of agreement a common carbon tax is used domestically in all countries none of the cases satisfy the conditions for the social optimum even if the quota price is equal to the pigovian level r d investments will be lower than what is socially optimal in the quota case it is also argued that the quota agreement gives higher r d expenditures and more abatement than the tax agreement

the relative importance of foreign and domestic disturbances for aggregate fluctuations in the open economy switzerland 1964 1981 abstract this paper studies whether the advent of floating exchange rates served to insulate switzerland from economic shocks of foreign origin it estimates a vector autoregression comprising four swiss and three world aggregate time series and interprets the results in terms of the properties of the vector moving average representation implied by the estimates the chief finding is that foreign shocks explain most of the systematic variation of the swiss variables in both regimes

the effect of selective ins monitoring strategies on the industrial employment choice and earnings of recent immigrants i introduction recent work explores the labor market impact of employer sanctions embodied in the immigration reform and control act of 1986 1 an emerging consensus in this research suggests that the new law s effect on the number of undocumented workers in the united states has been minimal e g chiswick 1991 indeed the act s main effect may have simply been to redistribute the undocumented from industries closely monitored by immigration authorities to those weakly monitored this view gains credence given the act s provision making alien inspections on farms relatively expensive and that the immigration and naturalization service ins may concentrate its enforcement resources on industries with a high concentration of illegals per establishment hill and pearce 1990 clearly if the law aims to reduce the population of undocumented labor in the united states then a de facto enforcement strategy that targets a subset of industries mitigates the impact and the effectiveness of immigration reform this study examines the consequences of the ins s industry selective enforcement policy we model the effect of this monitoring strategy using a two industry economy where immigration authorities monitor only one sector this theory suggests that the productivity enhancing characteristics of workers belong in models measuring the employment and earnings effects of enforcement induced wage penalties with this in mind we empirically estimate the effects of the new law on the distribution of labor in monitored and unmonitored industries employing a multinomial logit technique pooled earnings functions with data from workers before and after immigration reform are then estimated to determine the act s wage impact in the monitored industry our data set is the 1980 and 1990 public use microdata samples pums the groups used here include mexican and non mexican recent male immigrants those arriving within five years of the census date as well as mexican early male immigrants those residing in this country more than five years before the census date and a sample of non hispanic native white males we distinguish among these groups because of the stylized fact that the recently arrived mexican immigrant group contains the largest share of undocumented workers as such we hypothesize this group would be the most likely to be affected by immigration reform relative to the other groups we find that between 1980 pre act and 1990 post act the likelihood that recent immigrants of both groups joined the manufacturing industry a relatively closely monitored sector declined and the probability that such immigrants participated in the agricultural and service industries weakly monitored sectors increased this trend was more pronounced for recent mexican immigrants despite the fact that their manufacturing wages also declined following passage of the act our findings suggest that the ins s selective enforcement strategy has had a differential impact on industry and immigrant labor markets and that it appears to have shifted the group with the largest share of illegal workers to weakly monitored industries ii background we hypothesize that the act s provisions led the ins to adopt a selective enforcement policy across industries two economic incentives for this monitoring strategy come to mind first the act increased the relative cost of ins farm inspections according to the new law immigration officials cannot inspect a farm without a search warrant or the owner s permission a legal requirement not present for other industries the law also gave illegal aliens working in american agriculture relatively lenient requirements to apply for u s citizenship arguably this facet of the law increased the ins s relative monitoring cost of assessing the legal status of an immigrant farm worker 2 the act s concessions to the farm sector were included in the new immigration law to facilitate a ready supply of immigrant agricultural labor see for example zolberg 1990

rental housing markets the incidence and duration of vacancy and the natural vacancy rate abstract new intermetropolitan and time series data from the bls are used to derive and model the incidence and duration of rental vacancies and to assess their importance to the price adjustment mechanism for rental housing research findings indicate that duration varies with measures of msa housing costs and housing stock heterogeneity while incidence varies with measures of population mobility public housing availability and population growth results support a more general specification of rental price adjustment in which the rate of real rent change reflects deviations in observed vacancy incidence and duration from their equilibrium levels the research provides new estimates of equilibrium vacancy rates for a large set of metropolitan areas over the 1987 1996 period

housing market equilibrium almost without vacancies the swiss housing market is characterised by an extraordinarily low vacancy rate generally in the vicinity of 1 per cent is the swiss housing market permanently in a condition of severe shortage this paper uses both a standard non accelerating rent inflation rate of vacancy approach and a new perception based approach to answer this question the available evidence confirms that a vacancy rate of 1 1 5 per cent is indeed sufficient for the swiss housing market to be in equilibrium provided only dwellings that are not only unoccupied but also actually offered for rent or purchase are counted which makes this rate not easily comparable with other countries the standard equilibrium vacancy rate approach suggests that even lower rates are sufficient in more densely built places whereas the approach based on perceptions makes no difference this suggests that the dwellings listed by people who wish to move reduce the pressure on rents but not the feeling of housing shortage

the economics of controlling stock pollutants an efficient strategy for greenhouse gases abstract optimal control theory is applied to develop an efficient strategy to control stock pollutants such as greenhouse gases and hazardous waste the optimal strategy suggests that at any time the marginal costs of abatement should be equated with the present value of the marginal damage of timely unabated emission the optimal strategy calls for increasingly light abatement over time as the pollutant stock accumulates the optimal policy applied to greenhouse gases suggests moderate abatement efforts at present with the potential for much greater future efforts

do farm workers earn less an analysis of the farm labor problem during the four decades extending from 1950 to 1960 the ratio of the farm to nonfarm wage fluctuated between 0 45 and 0 55 we employ the oaxaca technique and the public use microdata sample of the 1990 census to decompose the farm nonfarm wage differential we also use the american chamber of commerce research association accra cost of living data to measure the impact of the farm nonfarm cost of living index on the wage gap first we find that the observed wage gap is reduced by half when nominal wages are deflated by the accra cost of living index second by applying the oaxaca method separately to a subsample of young employees and a subsample of old employees we find that while for the subsample of employees younger than thirty five years the real wage gap practically vanishes the gap for the subsample of employees who are thirty five years of age and over is higher than that of the total sample this finding lends strong support to the hypothesis that between 1950 and 1970 the process of farm out migration was positively selective

discount shock price rent dynamics and the business cycle the price rent ratio is highly volatile and predicts future returns for commercial real estate price rent variations in commercial real estate also tend to comove with investment and output we develop a general equilibrium model that explicitly introduces a rental market and incorporates collateral constraints on production as a key ingredient our estimation identifies discount rate shocks as the most important factor in 1 driving price rent variations 2 producing the long horizon predictability of real estate returns and 3 linking the dynamics in commercial real estate to those in the production sector

regional versus global cooperation for climate control abstract this paper considers whether international environmental public goods provision such as mitigation of climate change is better dealt with through regional cooperation than through a global treaty previous research suggests that at best a global environmental treaty will achieve very little at worst it will fail to enter into force using a simple dynamic game theoretic model with weakly renegotiation proof equilibrium as solution concept we demonstrate that two agreements can sustain a larger number of cooperating parties than a single global treaty the model provides upper and lower bounds on the number of parties under each type of regime it is shown that a regime with two agreements can pareto dominate a regime based on a single global treaty we conclude that regional cooperation might be a good alternative or supplement to global environmental agreements

the strategic dimension of financing global public goods abstract one challenge in addressing transboundary problems such as climate change is the incentive to free ride transfers from multilateral compensation funds are often used to counteract such incentives albeit with varying success we examine how such funds can change the incentive to free ride in a global public goods game in our game self interested countries choose their own preferred course deciding their voluntary public good provision whether to join a fund that offers compensation for providing the public good and the volume of compensatory payments we show that i total public good provision is higher when those contributing are given more compensation and ii non participation in the fund can be punished if the remaining members decrease their public good provision sufficiently we then examine three specific fund designs in the first the compensation paid to each country is equal to the percentage of above average total costs for public goods provision this design is best able to deter free riding and can establish the social optimum as the equilibrium in the second the compensation paid to each country is a function of the marginal cost of their public good provision here there are significant incentives to free ride in the third case the monetary resources provided by the fund are fixed a design frequently encountered in international funds this design is the one least able to deter free riding

can international environmental cooperation be bought in this paper a two stage game of international environmental agreement formation with asymmetric countries is analytically solved the equilibrium of the game makes it possible to determine the size and composition of a stable agreement two cases are studied in the first case countries differ only in abatement costs while in the second case they differ in environmental damages in both cases two different institutional settings one without transfers and another with transfers are considered the results establish that the asymmetry assumption has no important effects on the scope of cooperation in comparison with the symmetric case if transfers are not used or abatement costs represent the only difference among countries however when the only difference is in environmental damages the level of cooperation that can be bought through a self financed transfer scheme increases with the degree of asymmetry

corporate equity and commercial property market bubbles periodic sharp sustained increases and then reversals in asset prices lead many to posit irrational price bubbles the general case for bubbles is that asset prices simply move too much given the future cash flows the assets are reasonably likely to produce a corollary for property is that observed mean reversion in real cash flows is not reflected in investor valuations resulting in asset values being too high when real cash flows are high and vice versa this paper summarises some evidence on large corporate equity and commercial property price movements and present arguments for and against the existence of irrational bubbles

economic and environmental impacts of the kyoto protocol in 2003 the kyoto protocol which imposes legally binding greenhouse gas emission constraints on industrialized countries is likely to enter into force the protocol has been celebrated as a milestone in climate protection but standard economic theory casts doubt that it will go beyond symbolic policy in this paper we show that the final concretion of the kyoto protocol is consistent with the theoretical prediction kyoto more or less boils down to business as usual without significant compliance costs to ratifying parties jel classification d58 q43 q58 consequences economiques et environnementales du protocole de kyoto en 2003 le protocole de kyoto qui impose aux pays industrialises l obligation de reduire leurs emissions de gaz a effet de serre entrera probablement en vigueur si le protocole a ete accueilli comme un grand pas en avant dans le combat pour proteger l environnement la theorie economique jette un regard sceptique sur la portee reelle d un tel accord et le considere comme un geste symbolique dans ce memoire on montre que la concretisation finale de l accord de kyoto s arrime aux predictions theoriques kyoto n est rien de plus que business as usual et n impliquera pas de couts significatifs pour les parties qui ont signe le protocole

after kyoto alternative mechanisms to control global warming after more than a decade of negotiations and planning under the framework convention on climate change fccc the first binding international agreement to control the emissions of greenhouse gases has come into effect in the kyoto protocol the first budget period of 2008 2012 is at hand moreover the scientific evidence on greenhouse warming strengthens steadily as observational evidence of warming accumulates the institutional framework of the protocol has taken hold solidly in the european union s emissions trading scheme ets which covers almost half of europe s carbon dioxide emissions notwithstanding this apparent success the kyoto protocol is widely seen as somewhere between troubled and terminal early troubles came with the failure to include the major developing countries along with lack of an agreedupon mechanism to include new countries and extend the agreement to new periods the major blow came when the united states withdrew from the treaty in 2001 by 2002 the protocol covered only 30 percent of global emissions while the hard enforcement mechanism in the ets accounts for about 8 percent of global emissions even if the current protocol is extended models indicate that it will have little impact on global temperature change unless there is a dramatic breakthrough or a new design the protocol threatens to be seen as a monument to institutional overreach nations are now beginning to consider the structure of climate change policies for the period after 2008 to 2012 some countries states cities companies and even universities are adopting their own climate change policies are there in fact alternatives to the scheme of tradable emissions permits embodied in the protocol the fact is that alternative approaches have not had a serious hearing among natural scientists or among policymakers what are some alternatives for global public goods there are three potential approaches command and control regulation quantity oriented market approaches and taxor price based regimes of these only the tradable quantity and the price like regimes have any hope of being reasonably efficient under a tradable quantity approach an agreement proceeds by setting limits on emissions by different countries the limits are partially or wholly transferable among countries this is the approach taken under the kyoto protocol this approach has very limited international experience under existing protocols such as the cfc chlorofluorocarbon mechanisms and somewhat broader experience under national trading regimes such as the u s sulfur dioxide regime a radically different approach is to use harmonized prices fees or taxes as a method of coordinating policies among countries this approach has no international experience in the environmental area although it has modest experience nationally in such areas as the u s tax on ozone depleting chemicals on the other hand the use of harmonized price type measures has extensive international experience in fiscal and trade policies such as with the harmonization of taxes in the european union and harmonized tariffs in international trade these thoughts on the structure of international agreements to control global warming should not be regarded as negotiating strategies

increasing wage dispersion and the changes in relative employment and wages in mexico s urban informal sector 1987 1993 this study analyses the role of changes in informal formal relative employment wage levels and wage inequality in explaining increasing wage dispersion in mexico during the 1987 1993 period from 1987 to 1993 the variance of the log of hourly wages for mexican workers increased by more than 50 per cent using data from the encuesta nacional de empleo urbano we find that this increase in the overall wage dispersion was mainly driven by increasing wage dispersion in the formal sector coupled with a faster growth in formal sector employment as a percentage of total employment however compression in the distribution of wages within the informal sector contributed to substantially slowdown the increasing overall wage inequality about 60 per cent of the 1987 1993 4 65 percentage point reduction in the informal sector share of total employment is explained by changes in the structure that determines sectoral employment the rest is explained by changes in the composition of the labour force particularly in

commercial real estate and equity market bubbles are they contagious to reits this paper uses a regime switching approach to determine whether prices in the us stock direct real estate and indirect real estate markets are driven by the presence of speculative bubbles the results show significant evidence of the existence of periodically partially collapsing speculative bubbles in all three markets a multivariate bubble model is then developed and implemented to evaluate whether the stock and real estate bubbles spill over into reits the underlying stock market bubble is found to be a stronger influence on the securitised real estate market bubble than that of the property market furthermore the findings suggest a transmission of speculative bubbles from the direct real estate to the stock market although this link is not present for the returns themselves

time consistent shapley value allocation of pollution cost reduction we study the problem of allocation over time of total cost incurred by countries in a cooperative game of pollution reduction we compute the characteristic function for all possible coalitions and apply the shapley value to determine a fair distribution of the total cooperative cost among players we design a mechanism for allocation over time of total individual cost so that the initial agreement remains valid for the whole duration of the game

a climate agreement with full participation abstract using a repeated game model we demonstrate that by limiting the punishment for non compliance a climate agreement with full participation can be sustained as a weakly renegotiation proof equilibrium even without watering down abatement levels

housing vacancy and rental adjustment evidence from hong kong the traditional rental adjustment equation is flawed in that the equilibrium paths for the adjustment of rents and vacancy rates cannot hold simultaneously over time this paper suggests a two equation model of rental adjustments based on adaptive expectations rather than the single equation model presented in the traditional literature and provides empirical tests annual data from the housing market in hong kong during the 1980 96 period are consistent with the adjustment equation the results also show that the rate of change of real rents is neutral with respect to inflation

the role of economics in climate change policy many policy problems have frustratingly long histories of inefficient regulation that can be difficult or impossible to reverse even where large efficiency gains might be had from doing so climate change is an exception however because little real action has been undertaken to date it presents an unusual opportunity for an efficient economic policy to be employed right from the beginning however the opportunity could easily be lost ongoing negotiations conducted under the auspices of the united nations framework convention on climate change have so far produced the kyoto protocol a deeply flawed agreement that manages to be both economically inefficient and politically impractical in this article we examine the key economic characteristics of climate change and argue that economic theory provides good guidance on the design of an efficient and politically realistic policy because climate change involves vast uncertainties and has potentially enormous distributional effects neither of the standard market based environmental policy instruments is a viable approach a tradable permit system would be inefficient and an emissions tax would be politically unrealistic however a hybrid policy combining the best features of the two would be an efficient and practical approach we then compare our hybrid proposal to the kyoto protocol and argue that it overcomes the protocol s shortcomings

technological change in economic models of environmental policy a survey this paper provides an overview of the treatment of technological change in economic models of environmental policy numerous economic modeling studies have confirmed the sensitivity of mid and long run climate change mitigation cost and benefit projections to assumptions about technology costs in general technical progress is considered to be a noneconomic exogenous variable in global climate change modeling however there is overwhelming evidence that technological change is not an exogenous variable but to an important degree endogenous induced by needs and pressures hence some environmenteconomy models treat technological change as endogenous responding to socio economic variables three main elements in models of technological innovation are i corporate investment in research and development ii spillovers from r d and iii technology learning especially learning by doing the incorporation of induced technological change in different types of environmental economic models tends to reduce the costs of environmental policy accelerates abatement and may lead to positive spillover and negative leakage

agreeing on efficient emissions reduction we propose a simple contest based mechanism providing incentives to reduce harmful emissions to their efficient level without infringing upon productive efficiency participation in the most stylized form of the scheme is voluntary and individually rational all rules are mutually agreeable and are unanimously adopted if proposed the scheme balances its budget and requires no principal in a perhaps more realistic stochastic output version which could potentially inform policy decisions we show that the transfers required by the efficient mechanism create a mutual insurance motive that can serve as an effective rationale for the gradual formation of international environmental agreements

global refunding and climate change abstract we design a global refunding scheme as a new international approach to address climate change participating in the global refunding system requires an initial payment it allows each country to set its carbon emission tax while aggregate tax revenues are partially refunded to member countries in proportion to the relative emission reductions they achieve within a given period the refunding scheme reduces the intertemporal climate change problem into a static public goods problem in a simple model we show that a suitably designed global refunding scheme achieves the social global optimum provided that all countries participate we discuss several procedures to achieve initial participation

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

spatial variation in office rents within the atlanta region hedonic office rent models are estimated using data for atlanta that span the years 1990 96 controlling for typical building characteristics and lease terms we find that variables measuring locational differences in wage rates transport rates and proximity to concentrations of support services and office workers play an important role in explaining spatial variation in office rents no evidence is found in support of the hypothesis that technological advances in telecommunications have diminished the role played by face to face agglomeration economies in determining the intra metropolitan location of office firms

international emission permit markets with refunding we propose a blueprint for an international emission permit market such as the eu trading scheme each country decides on the amount of permits it wants to offer a fraction of these permits is grandfathered the remainder is auctioned revenues from the auction are collected in a global fund and reimbursed to member countries in fixed proportions we show that international permit markets with refunding lead to outcomes in which all countries tighten the issuance of permits and are better off compared to standard international permit markets if the share of grandfathered permits is sufficiently small we obtain approximately socially optimal emission reductions

swimming upstream trends in the gender wage differential in the 1980s using michigan panel study of income dynamics data for 1979 and 1988 we analyze how a falling gender wage gap occurred despite changes in wage structure unfavorable to low wage workers the decrease is traced to gender specific factors which more than counterbalanced changes in measured and unmeasured prices working against women supply shifts net of demand were unfavorable for women generally and hurt high skilled more than middle and low skilled women by analyzing wages we find support for the notion of a gender twist in supply and demand having its largest negative effect on high skilled women

the short term and long term deterrence effects of ins border and interior enforcement on undocumented immigration abstract this paper analyzes the short term and long term deterrence effects of ins border and interior enforcement utilizing fy1983 fy1997 border and interior apprehensions and patrol hours data from the ins we estimate a four variable var model and find that border patrol enforcement has significant short term deterrence effects these effects are short lived as undocumented migrants seemingly adjust to new information moreover the non existent long term effects are apparently the consequence of basic economic fundamentals our analysis employing microdata from both mexico and the us suggests that the wage gap between mexico and the us is sufficiently large to maintain the illegal migratory flow

stable coalition structures with externalities this paper argues that the sign of external effects of coalition formation provides a useful organizing principle in examining economic coalitions in many interesting economic games coalition formation creates either negatie externalities or posi tie externalities for nonmembers examples of negative externalities are research coalitions and customs unions examples of positive externalities include output cartels and public goods coalitions i characterize and compare stable coalition structures under the following three rules of coalition formation the open