taking stock monetary policy transmission to equity markets this paper analyses the effects of u s monetary policy on stock markets we present evidence that individual stocks react in a highly heterogeneous fashion to u s monetary policy shocks and relate this heterogeneity to financial constraints and tobin s q first we show that there are strong industry specific effects of u s monetary policy second we also find that for the 500 individual stocks comprising the s p500 the firms with low cash flows small size poor credit ratings low debt to capital ratios high price earnings ratios or a high tobin s q are affected significantly more by monetary policy

new measures of monetary policy surprises and jumps in interest rates abstract we propose new surprise measures to characterise two important dimensions of monetary policy our measures outperform the traditional monetary shocks in explaining variation of interest rates in the event study framework we also study the extent to which the ecb caused jumps in euro area interest rates the new surprises still prevail upon the traditional ones jumps play a great role in the variation of interest rates and the ecb induced several jumps with its decisions but its predictability has improved over time we find that although the surprise measures become somewhat distorted due to money market tensions during the financial turmoil our model still provides an interesting insight into interest rate behaviour throughout the crisis

new firm startups technology and macroeconomic fluctuations new firm startup activity is examined within a framework pooling a cross section of 117 industries over six time periods between 1976 and 1986 a model is introduced relating startup activity both to elements of the business cycle in particular the macroeconomic growth rate the cost of capital and the unemployment rate and to industry specific characteristics especially the technological conditions underlying the industry the pooled cross section regression results suggest that macroeconomic fluctuations as well as industry specific elements contribute to startup activity while new firm startups respond positively to macroeconomic growth they are promoted by a low cost of capital and high unemployment rate a somewhat surprising result is that new firm startups are not apparently deterred in capital intensive industries and where r d expenditures play an important role the empirical results suggest that new firms may be able to overcome their inherent size and experience disadvantages in such markets through exploiting university research and pursuing innovative activity

asymmetric effects of federal funds target rate changes on s p100 stock returns volatilities and correlations we study the effects of fomc announcements of federal funds target rate decisions on individual stock returns volatilities and correlations at the intraday level for all three characteristics we find that the stock market responds differently to positive and negative target rate surprises first the average response to positive surprises that is bad news for stocks is larger second in case of bad news the mere occurrence of a surprise matters most whereas for good news its magnitude is more important these new insights are possible due to the use of high frequency intraday data

comparisons between small business data base useem and bureau of labor statistics bls employment data 1978 1986 the bls versus useem comparison generally points out some major classification differences in the data sets particularly in the classification and growth of larger establishments useem and bls data generally agree as to the direction of employment growth over the 1978 to 1986 period differences occur in 7 of the 63 comparisons of employment growth but bls attributes a greater proportion of growth to larger reporting units useem to smaller establishments bls and useem data have concurring positive or negative growth rates for all size classes in the construction wholesale trade services and finance insurance and real estate industries

the short term impact of a domestic cap and trade climate policy on local agriculture a policy simulation with producer behavior this study is intended to develop understanding of possible impact of a domestic cap and trade climate policy on local agriculture we focus the study on the transition period after the policy has raised input prices for production but before establishment of new equilibrium in agricultural commodity markets we construct a policy simulation model based on production economics that explicitly considers producer behavior in the focal period we apply the model to a production region in the us to quantify the impact of different levels of carbon price on production cost production value and farm income our case study shows that 1 producers have ability to alleviate the cost impact 2 producers may benefit by selling carbon credits in the carbon market but the revenue is likely to be limited 3 the economic return of farm production is critical to the impact assessment 4 the impact may vary across producers and 5 regulation on the fertilizer industry is an important policy element that can influence the assessment of the impact this study has important implications for climate policy design

the distributional effects of conventional monetary policy and quantitative easing evidence from an estimated dsge model abstract this paper compares the distributional effects of conventional monetary policy and quantitative easing qe within an estimated open economy dsge model of the euro area the model includes two groups of households i wealthier households who own financial assets and are able to smooth consumption over time and ii poorer households who only receive labor and transfer income and live hand to mouth we use the model to compare the impact of policy shocks on constructed measures of income and wealth inequality net disposable income net asset position and relative per capita income except for the short term expansionary conventional policy and qe shocks tend to mitigate income and wealth inequality between the two population groups in light of the coarse dichotomy of households that abstracts from richer income and wealth dynamics at the individual level the analysis emphasizes the functional distribution of income

carbon subsidies taxes and optimal forest management we consider the effect of carbon credit payment schemes on forest owners land use and harvest decisions we study two possible credit allocation regimes one where credits are allocated according to the actual amount of carbon sequestered by the trees on a piece of land and another where credits are allocated according to the long run potential to sequester carbon on the land using a real options model with uncertain future timber prices we examine the effect on the timing of harvests and the replanting abandonment decision we show that both schemes discourage deforestation compensating growers for actual carbon sequestration leads to longer rotation periods between harvests while basing compensation only on the long run potential level of sequestration induces shorter rotation periods the former scheme leads to greater benefits of carbon sequestration at lower cost than the latter scheme although inducing moderate levels of sequestration is expensive under both schemes the cost falls dramatically when the level of payments climbs above some threshold indeed providing the payments are sufficiently generous carbon credit payment schemes offer an effective means of increasing carbon sequestration

global potential for carbon sequestration geographical distribution country risk and policy implications abstract we have provided a framework for identifying least cost sites for afforestation and reforestation and deriving carbon sequestration cost curves at a global level in a scenario of limited information special attention is given to country risk in developing countries and the sensitivity to spatial datasets our model results suggest that within 20 years and considering a carbon price of us 50 tc tree planting activities could offset 1 year of global carbon emissions in the energy sector however if we account for country risk considerations associated with political economic and financial risks carbon sequestration is reduced by approximately 60 with respect to the geography of supply illustrated by grid scale maps we find that most least cost sites are located in regions of developing countries such as the sub sahara southeast brazil and southeast asia

what can we learn from the grand policy experiment lessons from so2 allowance trading stable url http links jstor org sici sici 0895 3309 28199822 2912 3a3 3c69 3awcwlft 3e2 0 co 3b2 tthe journal of economic perspectives is currently published by american economic association your use of the jstor archive indicates your acceptance of jstor s terms and conditions of use available athttp www jstor org about terms html jstor s terms and conditions of use provides in part that unless you have obtainedprior permission you may not download an entire issue of a journal or multiple copies of articles and you may use content inthe jstor archive only for your personal non commercial use please contact the publisher regarding any further use of this work publisher contact information may be obtained athttp www jstor org journals aea html each copy of any part of a jstor transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission the jstor archive is a trusted digital repository providing for long term preservation and access to leading academicjournals and scholarly literature from around the world the archive is supported by libraries scholarly societies publishers and foundations it is an initiative of jstor a not for profit organization with a mission to help the scholarly community takeadvantage of advances in technology for more information regarding jstor please contact support jstor org http www jstor orgtue jun 26 16 25 17 2007

surprised or not surprised the investors reaction to the comprehensive assessment preceding the launch of the banking union abstract did the comprehensive assessment ca preceding the single supervisory mechanism ssm launch in europe achieve its aims of producing new valuable information for the market we show that the ca achieved the goal of increasing transparency investors were able to detect weak banks at the announcement of the procedure 23rd october 2013 but gained full information on the amount of the capital shortfall only at the disclosure of the results 26th october 2014 furthermore at the official launch of the ssm 4th november 2014 banks under direct european central bank ecb supervision registered a more negative market reaction with respect to banks maintaining their national supervisors using a regression model including possible confounders and allowing for treatment effect heterogeneity this negative reaction is confirmed these findings suggest that at least in the short run investors penalized banks subject to direct ecb supervision probably because of the fear of regulatory inconsistencies

addressing climate change with a comprehensive us cap and trade system there is growing impetus for a domestic us climate policy that can provide meaningful reductions in emissions of carbon dioxide co2 and other greenhouse gases i describe and analyse an up stream economy wide co2 cap and trade system which implements a gradual trajectory of emissions reductions with inclusion over time of non co2 greenhouse gases and includes mechanisms to reduce cost uncertainty initially half of the allowances are allocated through auction and half through free distribution with the share being auctioned gradually increasing to 100 per cent over 25 years the system provides for linkage with emission reduction credit projects in other countries harmonization over time with effective cap and trade systems in other countries and regions and appropriate linkage with actions taken in other countries in order to establish a level playing field among domestically produced and imported products

creating incentives for the adoption of sustainable agricultural practices in developing countries the role of soil carbon sequestration sustainable agricultural development is widely acknowledged as a critical component in a strategy to combat both poverty and environmental degradation yet sustainable agricultural development remains an elusive goal particularly in many of the poorest regions of the world soil degradation continues to be a key factor in unsustainable production systems despite decades of research on soil conservation and other sustainable practices hudson scherr barrett place and aboud sanchez various studies stress the role played by resource poor farmers in human induced natural resource degradation bruntland commission reardon and vosti barbier the prevailing economic explanation for the continuing trend toward resource degradation in many parts of the world is that economic incentives often encourage degradation and discourage conservation these incentive problems have been attributed to poor farmers high discount rates lack of capital markets high transport costs and other market imperfections adverse government policies insecure property rights and limited availability of fodder for grazing or fuel for cooking and heating e g lutz pagiola and reiche heath and binswanger from this perspective the challenge facing researchers and policy analysts is to understand the factors and processes causing the use

accounting for net entry into greek manufacturing by establishments of varying size adopting the view that size matters in understanding entry exit patterns this research explores the nature and causes of net entry patterns of various size defined groups of establishments in the case of a less industrialised country greece the hypothesis to be tested is that the determinants of entry are not independent of firm size throughout this paper the analysis has had to confront difficulties arising from the use of net entry rates defined at the size class level the degree of size disaggregation used in this paper is considerably finer than used before five employment defined size classes have been used instead of sliding cut off points discriminating between small and large firms unlike other research using pooled models to explain variation in entry exit rates across industries the data used here are characterised by the absence of significant industry specific systematic variation overall the results obtained in this paper indicate that there is a gradation in the responses of different size classes to stimuli defined at the industry level evidence is offered that small firms are different in that they manage to overcome entry barriers perhaps adopting different survival strategies and that large firms are well aware of market conditions and are in an advantageous position to overcome many of the problems imposed by entry barriers size classes in the middle of the size class distribution offer a rather mixed result due to size related advantages and disadvantages

net entry of firms into greek manufacturing the effects of business conditions this research explores the nature and causes of net entry into manufacturing industry in greece previous work has rarely considered these issues in the context of small but open and not particularly industrialised economies the exact nature of the focus of interest net entry is discussed first illustrating that this is a complex variable to account for although arguably still interesting and useful net entry needs to be considered as variable worthy of study in its own right as it reflects an outcome of processes of gross entry and exit certainly it need not be interpreted only as entry as is often the case next comes the question of the degree of variation both temporally and sectorally that net entry exhibits in the context of contemporary greek manufacturing some temporal variation in net entry rates is demonstrated and there follows a discussion of how such variation might be explained potentially in theory the empirical testing of these hypotheses point to findings that are different to those discovered in different contexts for greek manufacturing profitable business opportunities were not shown to be a sufficient condition of higher net entry but the cost advantages of large scale operations did both encourage entry and discourage exit the cost of capital and the overall condition of the economy were negatively related to net entry however the role of industry growth import penetration and export orientation tend to confirm findings in other studies

spatial heterogeneity contract design and the efficiency of carbon sequestration policies for agriculture abstract in this paper we develop methods to investigate the efficiency of alternative contracts for carbon c sequestration in cropland soils taking into account the spatial heterogeneity of agricultural production systems and the costs of implementing more efficient contracts we describe contracts being proposed for implementation in the united states and other countries that would pay farmers for adoption of specified practices per hectare contracts we also describe more efficient contracts that would pay farmers per tonne of soil c sequestered and we show how to estimate the costs of implementing these more efficient contracts in a case study of a major agricultural region in the united states we confirm that the relative inefficiency of per hectare contracts varies spatially and increases with the degree of spatial heterogeneity the results also show that per hectare contracts are as much as five times more costly than per tonne contracts a degree of inefficiency similar to that found in assessments of command and control industrial emissions regulations measurement costs to implement the per tonne contracts are found to be positively related to spatial heterogeneity but are estimated to be at least an order of magnitude smaller than the efficiency losses of the per hectare contract for reasonable error levels this finding implies that contracting parties could afford to bear a significant cost to implement per tonne contracts and achieve a lower total cost than would be possible with the less efficient per hectare contracts

efficiency of second generation biofuel crop subsidy schemes spatial heterogeneity and policy design policy schemes that aim to stimulate the cultivation of biofuel crops typically ignore the spatial heterogeneity in costs and benefits associated with their production because of spatial heterogeneity in biophysical and current agricultural production factors potential gains from stimulating biofuel crops are non uniformly distributed across space this paper explores implications of this type of heterogeneity for the net benefits associated with different subsidy schemes we present a simple framework based on discounted cash flows to assess potential gains from introducing the notion of heterogeneity into stimulation schemes we show that agricultural subsidy spending can be reduced in a pareto efficient way and simultaneously improve the total stimulation potential of biofuel policies when schemes 1 are production based instead of land based 2 accommodate differences in opportunity costs and 3 target sites where subsidies for conventional agricultural land use types are high these results are robust for a range of different bioenergy prices and the relative gains of addressing these key elements in policy compared to conventional stimulation schemes increase with lower bioenergy prices and are largest when low prices coincide with high emission reduction ambitions

the relationship between firm growth size and age estimates for 100 manufacturing industries this study uses a sample of all firms operating in 100 manufacturing industries to examine some aspects of firm dynamics it finds that firm growth the variability of firm growth and the probability that a firm will fail decrease with firm age it also finds that firm growth decreases at a diminishing rate with firm size even after controlling for the exit of slow growing firms from the sample gibrat s law therefore fails although the severity of the failure decreases with firm size copyright 1987 by blackwell publishing ltd

does ecological economics have a future contradiction and reinvention in the age of climate change abstract this paper addresses the role of neoclassical methodologies in ecological economics and the contradictions these methodologies pose to the field s critical founding principles we first consider robert costanza s treatment of nicholas stern s global deal and then survey climate change related articles published in this journal over the past five years this survey reveals how mainstream neoclassical methodologies dominate discourse and do so by marginalizing more critical political economy analyses this situation imperils the field s founding vision of a no growth steady state it also fails to address the related growth dynamics of capitalism without such a critical treatment the field s formal embrace of methodological pluralism actually entails an ideological empiricism that renders ecological economics theoretically incoherent this situation undermines the field s historical promise as an alternative economic paradigm ecological economics now faces a problematic future its survival in a form faithful to its founding vision will require an explicit choice to address its internal contradictions and reinvent itself in ways relevant to our contemporary context without such a choice ecological economics will likely succumb to an implicit acceptance of the hegemony of mainstream economic methodologies and their pro growth imperatives

technology and the dynamics of industrial structures an empirical mapping of dutch manufacturing this paper explores the empirical link between on the one hand innovation and on the other hand industrial structure and dynamics in the netherlands we use the concept of technological regimes as the guiding framework to interpret this relationship the data are drawn from the production statistics and the business register of manufacturing firms in the netherlands and the second community innovation survey a classification of technological regimes that refines pavitt s taxonomy is applied to the data our analysis is aimed at identifying the variables that are best able to discriminate between technological regimes for our dutch case we find that a mix of innovation related and market structure related variables account for most variability and broad differences across regimes dynamic market structure variables account for an additional share of variability and finer differences across regimes overall we conclude that the concept of technological regimes provides a useful framework that helps to shed further light on the relationship between innovation and market structure

pre announcement effects news effects and volatility monetary policy and the stock market abstract i examine pre announcement and news effects on the stock market in the context of public disclosure of monetary policy decisions the results suggest that the stock market tends to be relatively quiet conditional volatility is abnormally low on days preceding regularly scheduled policy announcements although this calming effect is routinely reported in anecdotal press accounts it is statistically significant only over the past four to five years a result that i attribute to changes in the federal reserve s disclosure practices in early 1994 the paper also looks at how the actual interest rate decisions of policy makers affect stock market volatility the element of surprise in such decisions tends to boost stock market volatility significantly in the short run and positive surprises higher than expected values of the target federal funds rate tend to have a larger effect on volatility than negative surprises the implications of the results for broader issues in the finance and economics literatures are also discussed

explaining irrational land use risk aversion and marginal agricultural land abstract when land users make dynamic land conversion decisions to maximize profits persistent dedication of marginal land to agricultural uses can be explained as a consequence of risk aversion and expected capital gains land conversion increases in response to cost sharing rental payments and technical assistance that reduces uncertainty about land benefits when correlation between benefits is nonpositive risk aversion leads the land user to diversify land among uses unless subsidy payments outweigh the sum of risk and capital gains costs payments which appear potentially successful may fail when payments succeed the cost of accomplishing acreage targets may be higher than anticipated

the problem of the commons still unsettled after 100 years the problem of the commons is more important to our lives and thus more central to economics than a century ago when katharine coman led off the first issue of the american economic review as the us and other economies have grown the carrying capacity of the planet in regard to natural resources and environmental quality has become a greater concern particularly for commonproperty and open access resources the focus of this article is on some important unsettled problems of the commons within the realm of natural resources there are special challenges associated with renewable resources which are frequently characterized by open access an important example is the degradation of openaccess fisheries critical commons problems are also associated with environmental quality a key contribution of economics has been the development of market based approaches to environmental protection these instruments are key to addressing the ultimate commons problem of the twenty first century global climate change jel q15 q21 q22 q25 q54

options uncertainty and sunk costs an empirical analysis of land use change abstract in a real option model of land conversion incorporating return uncertainty and sunk costs optimal conversion thresholds are significantly higher than those from expected net present value models not accounting for these factors empirical tests of conversion from agriculture to forest suggest that landowners value the option to convert when making conversion decisions higher uncertainty in returns to all potential uses and lower correlation between shocks to agricultural and forest returns decreases the likelihood of conversion estimates indicate a significant impact on conversion decisions with approximations of option values ranging from 7 to 81 of the expected value of the land asset

modeling linkages between climate policy and land use an overview agriculture and forestry play an important role in emitting and storing greenhouse gases for an efficient and cost effective climate policy it is therefore important to include land use land use change and forestry lulucf explicitly in economy climate models this article gives an overview and assessment of existing approaches to include lulucf into partial and general equilibrium economy climate models for each class of models we describe different examples their treatment of land and their potential for and applicability to policy analysis as well as their shortcomings we identify data requirements and conceptual problems and provide suggestions for future research

dynamic incentives of environmental regulations the effects of alternative policy instruments on technology diffusion abstract we develop a framework for comparing empirically the effects of alternative environmental policy instruments on the diffusion of new technology market based and command and control approaches can he quantitatively compared by estimating the economic penalty that firms through their actions reveal to be associated with violation of standards in the context of concerns about global climate change we empirically examine the likely effects of pigouvian taxes technology adoption subsidies and technology standards we employ state level data on the diffusion of thermal insulation in new home construction comparing the effects of energy prices insulation cost and building codes

macroeconomic news announcements and stock market jump intensity dynamics abstract this paper examines the effect of macroeconomic releases on stock market volatility through a poisson gaussian garch process with time varying jump intensity which is allowed to respond to such information the day of the announcement per se is found to have little impact on jump intensities employment releases are an exception however when macroeconomic surprises are considered inflation shocks show persistent effects while monetary policy and employment shocks reveal only short lived effects also the jump intensity responds asymmetrically to macroeconomic shocks evidence on macroeconomic variables relevance in explaining jump dynamics and improving volatility forecasts on event days is provided

the social costs of second best policies evidence from agricultural ghg mitigation abstract this paper investigates the social costs of second best agricultural greenhouse gas ghg mitigation policies adjustments along the land use and input intensity margins are represented within a regionalized optimization model of california crop production calibrated to economic and agronomic information second best policies relying on spatially aggregated ghg emission factors lead to small abatement efficiency losses while policies targeting a single ghg lead to moderate losses in contrast policies targeting a single input entail large abatement efficiency losses which nonetheless can be reduced by combining instruments

the death of firms exploring the effects of environment and birth cohort on firm survival in sweden this paper investigates the death of firms and seizes a long term perspective it investigates the life spans of nearly 2 200 firms in seven birth cohorts of swedish joint stock companies founded during seven separate years between 1899 and 1950 research has traditionally emphasized individual and micro oriented factors in explaining post entry performance or has often focused on the influence of firm specific structural factors firm age and size a less attended field recognizes environmental forces this paper focuses on the interaction between the micro and macro levels and combines structural and environmental factors employing a cohort approach it relates firm survival to firm age and size as well as to the effect of cohort affiliation and environmental change over time period effects during macroeconomic expansion the risk of death decreases cohort effects are also evident firms founded during times of economic crisis exhibit lower survival rates consequently cohort affiliation and environmental forces i e period effects can explain differences in death rates in different firm populations

designing efficient markets for carbon offsets with distributional constraints abstract this paper presents an assessment of the relative efficacy of three key instruments baselines trade ratios and limits which are under policy discussion in the design of carbon offset programs we rank the instruments by their implications for total emissions economic efficiency and efficiency gain relative to a distributional transfer from capped to uncapped sectors we find that the baseline is the best instrument for maximizing welfare as it directly reduces the share of offsets that are non additional and that second best policies do not sacrifice much welfare relative to the standard first best policy prescription

the costs of carbon sequestration a revealed preference approach increased concem by policy makers with the threat of global climate change has brought with it considerable attention to the possibility of encouraging the growth of forests as a means of sequestering carbon dioxide national academy of sciences nas 1992 james p bruce et al 1996 1 the kyoto protocol to the united nations framework convention on climate change 1997 which establishes emission reduction targets for the united states and other industrialized nations states that carbon sequestration can be used by participating nations to achieve their targets moreover even before the kyoto agreement this approach had become an explicit element of both u s and intemational climate policies u s department of energy 1991 united nations general assembly 1992 william j clinton and albert gore 1993 this high level of interest has been due in part to suggestions that sufficient lands are available to use the approach to mitigate a substantial share of annual carbon dioxide c02 emissions greg marland 1988 daniel a lashof and dennis a tirpak 1989 mark c trexler 1991 and claims that growing trees to sequester carbon is a relatively inexpensive means of combating climate change roger a sedjo and allen m solomon 1989 daniel j dudek and alice leblanc 1990 nas 1992 in other words the serious attention given by policy makers to carbon sequestration can partly be explained by implicit assertions about respective marginal cost functions i develop and demonstrate a method by which the costs of carbon sequestration can be estimated on the basis of evidence from landowners behavior when confronted with the opportunity costs of alternative land uses the simplest of previous economic analyses derived single point estimates of average costs associated with particular sequestration levels marland 1988 sedjo and solomon 1989 dudek and leblanc 1990 edwin s rubin et al 1992 omar masera et al 1995 often it has been assumed that land opportunity costs are zero g van kooten et al 1992 j k winjum et al 1992 new york state energy office 1993 robert k dixon et al 1994 another set of studies essentially engineering costing models has constructed marginal cost schedules by using information on revenues and costs of production for altemative uses on representative types or locations of land and then sorting these in ascending order of cost robert j moulton and kenneth r richards 1990 richards et al 1993 simulation models include a model of the lost profits due to removing land from agricultural production peter j parks and ian w hardie 1995 a mathematical programming model of the agricultural sector and the timber market richard m adams et al 1993 a related model incorporating the effects of agricultural price support programs j m callaway and bruce mccarl 1996 and a dynamic simulation model of forestry susan swinehart 1996 lastly an analysis by andrew j plantinga 1995 adopts land use elasticities from an econometric study to estimate sequestration costs we draw on some of the best features of the previous studies including the carbon levelization method of moulton and richards john f kennedy school of government harvard university 79 john f kennedy street cambridge ma 02138 and resources for the future richard newell supplied excellent research assistance and valuable comments on a previous version were provided by lawrence goulder william nordhaus andrew plantinga kenneth richards two anonymous referees participants in seminars at the universities of california at los angeles and santa barbara the university of maryland the university of michigan the university of texas harvard university stanford university yale university resources for the future and the national bureau of economic research the author alone is resdonsible for any errors 1 after fossil fuel combustion deforestation is the second largest source of carbon dioxide emissions estimates of annual global emissions from deforestation range from 0 6 to 2 8 billion tons compared with slightly less than 6 0 billion tons annually from fossil fuel combustion cement manufacturing and natural gas flaring combined r a houghton 1991 t m smith et al 1993

potential entrepreneurship in japan the aim of this paper is to investigate the potential for entrepreneurship in japan using the employment status survey which is the only government administered survey that includes questions about the desire to become an entrepreneur we find that there are still a number of potential entrepreneurs in japan despite a recent decline in the number of new firms being established we also find that there is a large regional variation in the distribution of entrepreneurial potential with clustering into a few regions and the level in tokyo being exceptional further using panel data on 47 prefectures from 1982 to 1997 we examine the determinants of entrepreneurial potential the estimation results show that the price cost margin market size market growth and the unemployment rate have positive effects on the potential for entrepreneurship

market reactions to ecb policy innovations a cross country analysis abstract regulators have been paying increasing attention to governing and steering market fluctuations with their role in shaping the economic cycle being ever more crucial the combined effect of the financial and sovereign debt crises as well as the approach to the zero lower bound has made actions even more pressing forcing the european central bank to resort to unconventional instruments to revive the economies and counter deflationary pressures by using a combined event study and panel regression methodology we investigate whether european monetary union equity markets react heterogeneously to standard and non standard european central bank policy innovations our results show that conventional policies unevenly affect financial indices in the eurozone and hence are bound to generate asymmetries that reflect on real economies while unconventional measures albeit with different intensities exercise a homogeneous pressure on all markets our evidence highlights the beneficial impact of unconventional measures and suggests that they can play a useful role even in non crisis times

are renewable energy policies climate friendly the role of capacity constraints and market power abstract this paper studies the impacts of renewable energy support policies on energy prices fossil fuel supply and thus carbon emissions from fossil fuels such supports are climate friendly if the renewables are already competitive against fossil fuels but if the renewables are not yet competitive the climate change impacts are often ambiguous and are sensitive to capacity constraints of renewables production and to the fossil fuel market structure if the renewables do not have capacity constraints then the subsidies are subject to the green paradox under perfect competition but might be climate friendly under monopoly supports for capacity constrained renewables under perfect competition lead to more current fossil fuel supply but delay fossil fuel exhaustion time and these effects are reversed under monopoly our results highlight the importance of considering the long term effects on fossil fuel supply as well as capacity constraints and market power in designing renewable energy policies and evaluating their carbon footprints

the impact of monetary policy announcements on the stock price of large european banks during the financial crisis abstract since 2007 the european central bank responded decisively to the challenges posed by the global financial crisis reducing key policy interest rates to unprecedented low levels and intervening with non standard policy measures i e monetary easing and liquidity provision this paper aims to assess the impact of ecb monetary policy announcements on the stock price of large european banks as a first step an event study is conducted in order to measure cumulated abnormal returns cars around the announcements over june 2007 june 2013 the second step is a regression analysis aimed at identifying the determinants of cars results show that banks were more sensitive to non conventional measures than to interest rate decisions and that the same type of intervention may have a different impact depending on the stage of the crisis in addition banks with weaker balance sheets and operating with high risk were more sensitive to monetary policy interventions

a closer look at the effect of market growth on industries profits everybody talks about the relation of industries profit rates to their markets rates of growth but nobody does anything about it specifically researchers have confirmed the effect of the growth of nominal output on profits in many multivariate studies without specifying closely the hypothesis under test or the measure of demand growth appropriate to test it a profits growth relationship could stem from several mechanisms the lagged adaptation of capacity to unexpected changes in demand reactions of oligopolists to disturbances in their consensus etc these mechanisms how and where they work hold their own normative interest therefore knowing what behavior and what structure lying behind it accounts for the profits growth relationship should do more than improve the specifications of our studies of allocative efficiency it should also expand our knowledge of adaptive processes that are important and hard to observe directly in this paper we shall synthesize the available explanations of why changes in market demand should affect an industry s profits then present a statistical test of the relative significance of the competing explanations

entry and exit on the competitive fringe microeconomic theories of industry evolution reserve key roles for the entry and exit of firms competitive models of industry supply often assume that individual firms have ushaped long run average cost curves in consequence an industry s output adjustment in movement from one long run equilibrium to another is entirely accomplished through the entry and exit of firms rather than through changes in long run equilibrium output of individual firms in empirical applications the speed of movement to new equilibrium levels of output and price measured by the time it takes for profits to return to competitive levels following a demand shock clearly depends upon the ease of entry and exit however the simplest competitive models have a clear theoretical weakness abundant evidence against u shaped long run average cost curves precludes a simple identification of entry with industry expansion and exit with industry contraction expansion of industry supply can be met either by incumbents or entrants and we have little empirical evidence of the division entry conditions are also a staple of oligopoly and monopoly models potential entry constrains the pricing options open to industry leaders and actual entry of new firms and new products erodes at varying rates the market power of incumbent firms if actual entry responds rapidly to profit opportunities then the persistent exercise of monopoly power will be rare however analyses of monopoly and oligopoly models typically approach entry indirectly by inferring that persistent profit differentials reflect high barriers to entry there are few direct tests of the effects of such barriers on actual entry despite their importance very few empirical studies of entry and exit exist severe data limitations restrict both the number of studies and the scope of extant analyses the research reported in this paper provides measures of entry and exit in 46 food manufacturing industries during the 1976 82 period measures of incidence the number of firms as well as extent the size of firms are provided the analysis also distinguishes between diversified firms and specialist producers entry and exit rates vary considerably across industries and the paper reports the results of statistical analyses that account for industry differences in entry and exit rates by specialist firms

land based greenhouse gas emission offset and leakage discounting this paper examines leakage from agricultural greenhouse gas reduction programs stimulated by reductions in regional commodity supply this paper develops an extension of the leakage discount formula in murray et al 2004 that incorporates changes in input land usage rather than product output crop or forest product quantity additionally the leakage discount developed here allows for land conversion and production replacement involving multiple alternative uses in an empirical application in the southeast texas we compute leakage discounts of 14 8 for the conversion of rice to no till sorghum and 14 9 for rice to pasture program most of the sources of ghg offset leakage come from conversions of cotton to rice and pasture to rice in the other regions

research needs and challenges in the few system coupling economic models with agronomic hydrologic and bioenergy models for sustainable food energy and water systems on october 12 13 a workshop funded by the national science foundation was held at iowa state university in ames iowa with a goal of identifying research needs related to coupled economic and biophysical models within the few system approximately 80 people attended the workshop with about half representing the social sciences primarily economics and the rest from the physical and natural sciences the focus and attendees were chosen so that findings would be particularly relevant to sbe research needs while taking into account the critical connectivity needed between social sciences and other disciplines we have identified several major gaps in existing scientific knowledge that present substantial impediments to understanding the few system we especially recommend research in these areas as a priority for future funding 1 economic models of decision making in coupled systems deliberate human activity has been the dominant factor driving environmental and land use changes for hundreds of years while economists have made great strides in modeling and understanding these choices the coupled systems modeling literature with some important exceptions has not reflected these contributions several paths forward seem fruitful first baseline economic models that assume rationality can be used much more widely than they are currently moreover the current generation of iams that include rational agents have emphasized partial equilibrium studies appropriate for smaller systems to allow this approach to be used to study larger systems the potential for and consequences of general equilibrium effects should be studied as well second it is important to address shortcomings in these models of economic decision making valuable improvements could be gained from developing coupled models that draw insights from behavioral economics many decision makers deviate systematically from actions that would be predicted by strict rationality but very few iams incorporate this behavior potentially leading to inaccurate predictions about the effects of policies and regulations improved models of human adaptation and induced technological change can also be incorporated into coupled models particularly for medium to long run models decisions about adaptation and technological change will have substantial effects on the conclusions and policy implications but more compelling methods for incorporating these changes into modeling are sorely needed in addition some economic decisions are intrinsically dynamic yet few coupled models explicitly incorporate dynamic models economic models that address uncertainty in decision making are also underutilized in coupled models of the few system 2 coupling models across disciplines despite much recent progress established models for one component of the few system often cannot currently produce outcomes that can be used as inputs for models of other components this misalignment makes integrated modeling difficult and is especially apparent in linking models of natural phenomena with models of economic decision making economic agents typically act to maximize a form of utility or welfare that is not directly linked to physical processes and they typically require probabilistic forecasts as an input to their decision making that many models in the natural sciences cannot directly produce we believe that an especially promising approach is the development of bridge models that convert outputs from one model into inputs for another such models can be viewed as application specific reduced form distillations of a richer and more realistic underlying model ideally these bridge models would be developed in collaborative research projects involving economists statisticians and disciplinary specialists and would contribute to improved understanding in the scientific discipline as well 3 model validation and comparison there is little clarity on how models should be evaluated and compared to each other both within individual disciplines and as components of larger iams this challenge makes larger integrated modeling exercises extremely difficult some potential ways to advance are by developing statistical criteria that measure model performance along the dimensions suitable for inclusion in an iam as well as infrastructure and procedures to facilitate model comparisons focusing on the models out of sample distributional forecasting performance as well as that of the iam overall is especially promising and of particular importance moreover applications of iams tend to estimate the effect of hypothetical future policy actions but there have been very few studies that have used these models to estimate the effect of past policy actions these exercises should be encouraged they offer a well understood test bed for the iams and also contribute to fundamental scientific knowledge through better understanding of the episode in question the retrospective nature of this form of analysis also presents the opportunity to combine reduced form estimation strategies with the iams as an additional method of validation

event studies in economics and finance the event study is an important research tool in economics and finance the goal of an event study is to measure the effects of an economic event on the value of firms event study methods exploit the fact that given rationality in the marketplace the effects of an event will be reflected immediately in security prices thus the impact can be measured by examining security prices surrounding the event in this paper event study methods are described including some of the potential complications an example is included to illustrate the approach

improving behavioral realism in hybrid energy economy models using discrete choice studies of personal transportation decisions hybrid energy economy models combine top down and bottom up approaches to explore behaviorally realistic responses to technology focused policies this research uses empirically derived discrete choice models to inform key behavioral parameters in cims a hybrid model the discrete choice models are estimated for vehicle and commuting decisions from a survey of 1150 canadians with the choice models integrated into cims we simulate carbon taxes gasoline vehicle disincentives and single occupancy vehicle disincentives to show how different policy levers can motivate technological change we also use the empirical basis for the choice models to portray uncertainty in technological change costs and emissions

carbon markets 15 years after kyoto lessons learned new challenges abstract carbon markets are substantial and they are expanding there are many lessons from market experiences over the past eight years there should be fewer free allowances better management of market sensitive information and a recognition that trading systems require adjustments that have consequences for market participants and market confidence moreover the emerging market architecture features separate emissions trading systems serving distinct jurisdictions and a variety of other types of policies exist alongside the carbon markets this situation is in sharp contrast to the top down integrated global trading architecture envisioned 15 years ago by the designers of the kyoto protocol and raises a suite of new questions in this new architecture jurisdictions with emissions trading have to decide how whether and when to link with one another stakeholders and policymakers must confront how to measure the comparability of efforts among markets as well as relative to a variety of other polic

the business cycle macroeconomic shocks and the cross section the growth of uk quoted companies we bring to light a significant aspect of firm level heterogeneity over the business cycle analysing the responsiveness of firm growth quoted uk companies to aggregate shocks we find that the effects of aggregate shocks are more pronounced for firms in the middle range of growth rapidly growing and rapidly declining firms are less sensitive to aggregate shocks than firms in the interior of the growth range this is consistent with the fact that the higher moments of the distribution of firm growth rates have significant cyclical patterns these findings throw new light on growth of firms as well as on business cycle dynamics

the impact of chinese monetary policy on co movements between money and capital markets from 2010 to 2017 with interest rate liberalization and capital market development in china the impact of monetary policies on china s financial markets underwent continuous evolution using the

typology of the french regional development revealing the refugee versus schumpeter effects in new firm start ups in this article we analyse the relationships between unemployment rates and new firm start up rates in france using a quarterly data basis covering the period 1993 to 2011 we identify thanks to data analysis methods different classes that show different types of development among the french regions for each of these classes the existence of refugee schumpeter effects both in the short run and in the long run is revealed at the national level it appears that the refugee effect explains the dynamics of entrepreneurship in france over the period 2000 to 2011 necessity is the key motivation for new french firms

determinants of firm start up size an application of quantile regression for ireland in this paper we provide empirical evidence on the determinants of firm start up size using data for the manufacturing sector in ireland and compare our results with recent findings for portuguese manufacturing industries mata and machado 1996 to allow for firm heterogeneity between firm entrants we use quantile regression techniques for our empirical estimation we find that the determinants of start up size differ in their importance for small and large scale entrants in particular industry size and industry growth seem to affect large scale entrants only

small firm entry in us manufacturing a cross section empirical analysis examining the entry behavior of small firms is provided in this paper while the authors find that certain traditional market structure characteristics and entry barriers have a strong impact on small firm entry behavior the reliance upon innovative strategy by small firms also explains a significant amount of the variation in the pattern of entry by small firms they conclude that small firm entry is at least partially determined by entry barriers industry specific characteristics facilitating retaliatory conduct by incumbent firms and the reliance upon innovative strategy by small firms copyright 1989 by the london school of economics and political science

biofuel economics in a setting of multiple objectives unintended consequences this paper examines biofuels from an economic perspective and evaluates the merits of promoting biofuel production in the context of the policies multiple objectives life cycle implications pecuniary externalities and other unintended consequences the policy goals most often cited are to reduce fossil fuel use and to lower greenhouse gas emissions but the presence of multiple objectives and various indirect effects complicates normative evaluation to address some of these complicating factors we look at a several combinations of policy alternatives that achieve the same set of incremental gains along the two primary targeted policy dimensions making it possible to compare the costs and cost effectiveness of each combination of policies for example when this approach is applied to u s produced biofuels they are found to be 14 31 times as costly as alternatives like raising the gas tax or promoting energy efficiency improvements the analysis also finds the scale of the potential contributions of biofuels to be extremely small in both the u s and eu mandated u s corn ethanol production for 2025 reduces u s petroleum input use by 1 75 and would have negligible net effects on co2 emissions and although eu imports of brazilian ethanol may look better given the high costs of other alternatives this option is equivalent at most to a 1 20 reduction in eu gasoline consumption

rural land use traditional agriculture or forestry the signing of the kyoto protocol and the official recognition of forestry s capacity to sequester carbon has prompted considerable interest within the european union in forestry as a competing land use application however despite large increases in grants to forestry afforestation rates in certain eu countries are below national targets in this paper we employ a real options model to theoretically explain why farmers may be slow to switch land from traditional agriculture to forestry the theoretical model is then used to motivate an empirical dynamic panel data model and both models are applied to irish data

the economic consequences of substituting carbon payments for crop subsidies in u s agriculture there is a growing body of literature on the costs of sequestering carbon however no studies have examined the interplay between farm commodity programs and carbon sequestration programs this study investigates two dimensions of the interaction between farm commodity programs and afforestation programs using a price endogenous sector model of agriculture in the united states first this study compares the fiscal and welfare costs of achieving specific carbon targets through afforestation with and without current farm programs second it examines the welfare fiscal and carbon consequences of replacing existing farm subsidies wholly or in part with payments for carbon two approaches hicksian and marshallian are investigated in the first the sector model is used to quantify the carbon consequences and fiscal costs associated with various combinations of farm commodity and carbon sequestration programs that leave consumers and producers in the u s agricultural sector no worse off than under existing farm programs the second approach focuses on the carbon and welfare consequences of various farm commodity and carbon sequestration programs that hold total program fiscal costs constant at current levels althouth the methodology and data are applied to the united states the issues addressed are common in a number of developed nations particularly within the european union eu adapting existing sector models in these nations to perform similar analyses would provide policy makers with more precise information about the nature of the trade offs involved with second best policies for replacing farm commodity subsidies with tree planting subsidies

confronting the food energy environment trilemma global land use in the long run economic agronomic and biophysical drivers affect global land use so all three influences need to be considered in evaluating economically optimal allocations of the world s land resources a dynamic forward looking optimization framework applied over the course of the coming century shows that although some deforestation is optimal in the near term in the absence of climate change regulation the desirability of further deforestation is eliminated by mid century although adverse productivity shocks from climate change have a modest effect on global land use such shocks combined with rapid growth in energy prices lead to significant deforestation and higher greenhouse gas emissions than in the baseline imposition of a global greenhouse gas emissions constraint further heightens the competition for land as fertilizer use declines and land based mitigation strategies expand however anticipation of the constraint largely dilutes its environmental effectiveness as deforestation accelerates prior to imposition of the target

permanence discounting for land based carbon sequestration abstract one major concern regarding land based carbon sequestration involves the issue of permanence sequestration may not last forever and may either be released in the future or require expenditures to maintain the practices that keep it sequestered in this paper we investigate the differential value of offsets in the face of impermanent characteristics by forming a price discount that equalizes the effective price per ton between a perfect offset and one possessing some with impermanent characteristics we find this discount to be a function of the future needs to replace offsets in the face of lease expiration quantity or volatilization upon activities such as timber harvest and the magnitude of any needed maintenance costs we investigate the magnitude of the discounts under alternative agricultural tillage and forest management cases in those studies we find that permanence discounts in the range of 50 are not uncommon this means that in the market place an impermanent sequestration offset may only receive payments amounting to 50 of the market carbon price furthermore we find that in the face of escalating carbon prices that offsets may prove to be worthless

energy environment policy modeling of endogenous technological change with personal vehicles combining top down and bottom up methods abstract the transportation sector offers substantial potential for greenhouse gas ghg emission abatement but widely divergent cost estimates complicate policy making energy economy policy modelers apply top down and bottom up cost definitions and different assumptions about future technologies and the preferences of firms and households our hybrid energy economy policy model is technology rich like a bottom up model but has empirically estimated behavioral parameters for risk and technology preferences like a top down model unlike typical top down models however it simulates technological change endogenously with functions that relate the financial costs of technologies to cumulative production and adjust technology preferences as market shares change we apply it to the choice of personal vehicles to indicate first the effect on cost estimates of divergent cost definitions and second the possible response to policies that require a minimum market share for low emission vehicles

animal spirits technology shocks and the business cycle the last few years have witnessed a revival of business cycle models in which beliefs of agents have played a leading role in explaining economic fluctuations 1 most of these models involve strong economy wide increasing returns to scale in order for sunspot equilibria to exist in a recent paper however basu and fernald 1996 present evidence that returns to scale are far from evenly distributed across the u s economy in particular they report that scale economies are present mainly in the domain of durable goods production in the nondurable goods sector of the u s economy evidence of increasing returns to scale cannot be found

market response to policy initiatives during the global financial crisis abstract this paper examines the impact of macroeconomic and financial sector policy announcements in the united states the united kingdom the euro area and japan on interbank credit and liquidity risk premia during the recent crisis overall policy interventions were associated with a reduction in interbank risk premia most significantly for recapitalization programs by contrast decisions to bail out individual banks in an ad hoc manner or let them fail were accompanied by a significant rise in interbank risk premia most policy announcements had international spillovers these results are broadly robust to using alternative measures of financial distress and varying the size of the event window

bank sovereign risk spillovers in the european debt crisis this paper investigates contagion between bank risk and sovereign risk in europe over the period 2006 2011 since this period covers various stages of the banking and sovereign crisis it oers a fertile ground to analyze bank sovereign risk spillovers we de ne contagion as excess correlation i e correlation between banks and sovereigns over and above what is explained by common factors using cds spreads at the bank and at the sovereign level moreover we investigate the determinants of contagion by analyzing bank speci c as well as country speci c variables and their interaction we provide empirical evidence that various contagion channels are at work including a strong home bias in bank bond portfolios using the eba s disclosure of sovereign exposures of banks we nd that banks with a weak capital and or funding position are particularly vulnerable to risk spillovers at the country level the debt ratio is the most important driver of contagion

the causes of tropical deforestation in ecuador a statistical analysis abstract this paper reports a statistical analysis of the causes of agricultural colonization and land clearing in eastern ecuador the results bolster many of the arguments that have been made about the social forces driving tropical deforestation in general the prospect of capturing agricultural rents stimulates settlement of tree covered hinterlands accordingly the presence of roads and urban centers attracts rural settlement colonists also prefer to go where soils are suitable for crop or livestock production all else remaining the same in addition to being a function of population pressure the extent of land clearing is shown to be a consequence of tenure insecurity these results suggest that institutional reform is needed to encourage conservation of tropical forests

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

incentives for carbon sequestration using forest management this research uses an econometric model to analyze the factors affecting non industrial private forest landowners choice of intermediate forest management practices and to examine how these choices might change in response to incentives for carbon sequestration we also use parameter estimates to simulate the carbon sequestration potential for different combinations of management practices and compare the effectiveness and costs of carbon sequestration based and practice based incentive payment schemes our results suggest that incentive payments increase the probability that desirable combinations of management practices are adopted simulation results indicate that incentives targeting fertilization yield the highest carbon sequestration potential and that a carbon based payment scheme produces higher carbon sequestration than a practice based payments scheme

technological regimes and sources of entrepreneurship this paper concerns the technological determinants of entrepreneurial behaviour by applying a typology of technological regimes which describes the nature of the technological environment in which firms operate this paper examines the sources and obstacles to entrepreneurial entry related to the process of technical change two major points are suggested first innovation in technologies of high or increasing opportunities is not always associated with entrepreneurial behaviour but can enhance the competitive advantage of existing firms second opportunities for entrepreneurship are shaped by the nature of knowledge underlying different technologies these points are illustrated using u s patent statistics classified by technical field and sector of firm s principal product activity different combinations of sources of technological entry barriers and technological opportunity are identified in science based technologies chemical technologies core technologies in complex systems product engineering technologies and process engineering technologies this paper argues that such a characterisation of the dynamics of knowledge accumulation is important for interpreting the variety of dynamics of industrial competition

unintended impacts of public investments on private decisions the depletion of forested wetlands by affecting relative economic returns infrastructure investments can induce major changes in private land use the authors find that 30 percent of forested wetland depletion in the mississippi valley has resulted from private decisions induced by federal flood control projects despite explicit federal policy to preserve wetlands the model aggregates individual land use decisions using a parametric distribution of unobserved land quality dynamic simulations are used to quantify the impacts on wetlands of federal projects and other factors copyright 1990 by american economic association

carbon sequestration or abatement the effect of rising carbon prices on the optimal portfolio of greenhouse gas mitigation strategies abstract existing projections of the optimal share of carbon sequestration in an overall portfolio of greenhouse gas mitigation strategies almost all assume the carbon price to be constant over time this paper shows analytically that if the price instead increases over time consistent with projections from integrated assessment models it becomes optimal to delay certain sequestration projects whereas the optimal timing of energy based abatement projects remains unchanged as a result the optimal share of sequestration falls and significantly so calibrating our analytical model we find that a modest 3 rate of price increase results in about a 60 reduction in the optimal sequestration share relative to constant price projections numerical simulations based on predicted carbon price paths from nordhaus rice01 model indicate quantitatively similar reductions under an economically efficient scenario and much larger reductions 80 100 for up to 80 years under a scenario that aims to limit the atmospheric co 2 concentration to double its pre industrial level