toward a reconstruction of keynesian economics expectations and constrained equilibria a two period model of temporary equilibrium with rationing is presented paying particular attention to agents expectations of future constraints it is shown that with arbitrary constraint expectations many different types of current equilibrium may be consistent with the same set of current and expected future wages and prices and that constraint expectations exhibit bootstraps properties e g a higher expectation of keynesian unemployment tomorrow increases the probability that it will prevail today in addition the concept of rational constraint expectations i e perfect foresight of future constraints is introduced and shown to enhance rather than reduce the effectiveness of government policy

support systems for the diffusion of renewable energy technologies an investor perspective concern over climate change impacts and the projected depletion of fossil fuels has urged more governments to adopt policies that stimulate the diffusion of renewable energy technologies ret with an increasingly diverse suite of support instruments the question emerges as to which instruments or combinations are able to achieve faster more substantial diffusion results although various support instruments were extensively addressed in policy studies there is still no consensus this is partly because many policy studies take a policy maker approach in comparing support instruments leaving relationships between policy design and policy results as a black box this paper proposes an investor oriented perspective to analyze the diffusion potential of support systems for ret the main argument is that it is not the type of support instrument but rather its risk profitability characteristics that influence investor behavior and the rate of diffusion the two instruments most frequently discussed and compared are the feed in tariff and the quota model the analysis in this paper concludes that policy design is crucial while often feed in tariffs are applauded and quota system feared feed in tariffs may also bring about disappointing diffusion results when poorly designed while quota systems may be also conceived as attractive instruments for independent power producers

fiscal policy coordination with demand spillovers and unionised labour markets we explore the incentives for governments to cooperate by expanding expenditure we have three countries two are in a monetary union the emu the labour markets of both the emu countries are unionised and there is involuntary unemployment in equilibrium we explore the intra and intercountry effects of changes in bargaining power we then examine optimal government expenditures in each emu country we find that there is a positive spillover and that expenditures are strategic complements the coordinated equilibrium involves higher expenditure than the uncoordinated equilibrium

the nonparametric risk adjusted efficiency measurement an application to taiwan s major rural financial intermediaries in this article a nonparametric approach is used to incorporate risk into the measurement of technical efficiencies of the major financial intermediaries in rural taiwan risk is treated as a joint but undesirable output given the fact that various regulatory actions may prevent its free disposability three risk indicators nonperforming loans allowance for loan losses and risky assets are employed alternatively in the empirical work results suggest that all three risk constraints are binding regulations on controlling risky assets and loan loss reserves are effective but more burdensome than those on controlling loan quality

project finance and international energy development this paper explores the preference for and the features unique to project finance one of the favoured vehicles for funding energy development our main focus is on the interests of project sponsors commercial banks and host governments inclusion of the latter reflects the fact host governments are often leading participants in primary energy and energy related projects more recently they have come to use limited recourse structures to finance local infrastructure development traditional analyses whilst providing useful insights into the interests of leading project participants are incapable of isolating a single motive or set of motives that can comprehensively account for all of the features common to this form of debt within an options theoretic framework most of these ambiguities are resolved risk management long recognised as one of the primary reasons for choosing project finance over rival debt structures is affirmed as a key explanatory factor on the other hand options pricing theory provides a radically different perspective on how project finance contributes to the realisation of these objectives

employment policies wage formation and trade union behavior in a small open economy a model of trade union determined wages is developed which provides an explanation of underemployment based on optimizing behavior it is shown that fiscal policy will in general affect employment under perfect foresight and immediate wage flexibility future consequences of short run stabilization policies are discussed ratchet effects with respect to government expenditure and game theoretic interdependence between government and trade union behavior are emphasized if the trade union takes short run policy measures in order to increase employment as an indication of an employment stabilization rule the future behavior of the trade union changes and the result may be a decrease in long run employment

non traded goods and the international transmission of fiscal policy abstract this paper looks at the effect of non traded goods on the international transmission of fiscal policy intertemporal movements in the price of non traded goods affect real interest rates differentially between countries the real interest rate effects of a fiscal expansion depend crucially upon both the composition of fiscal spending and the intertemporal elasticity of substitution with a high intertemporal elasticity of substitution in consumption a temporary fiscal expansion on non traded goods will lead consumer real interest rates to move in opposite directions between countries

international fiscal policy transmission the paper examines international transmission of stochastic fiscal policy disturbances in a two country general equilibrium framework with possible excess supply equilibria with underutilization o

fiscal spending the terms of trade and real interest rates this paper investigates the international movements in real interest rates and investment spending in response to a temporary fiscal expansion in one country it is shown that fiscal expansion may lead investment spending to be negatively correlated across countries this is because real interest rates relevant for investment purposes may move asymmetrically between countries in response to an expansion in fiscal spending the crucial factors which determine whether or not this occurs are a a transfer criterion which depends upon the spending propensities of the government relative to those of private consumers and b the intertemporal elasticity of substitution in consumption

interest rates and currency prices in a two country world abstract this paper is a theoretical study of the determination of prices interest rates and currency exchange rates set in an infinitely lived two country world which is subject both to stochastic endowment shocks and to monetary instability formulas are obtained for pricing all equity claims nominally denominated bonds and currencies and these formulas are related to earlier closely related results in the theories of money finance international trade

an exploration in the theory of exchange rate regimes three exchange rate regimes a float a one sided peg and a cooperative peg are evaluated and compared in terms of efficiency and welfare levels the framework of analysis embodies country specific monies with the money of each country being used to transact in its commodity markets and its currency denominated bonds welfare levels depend only on consumption levels in the presence of perfect foresight all equilibrium allocations are pareto efficient in a floating exchange rate regime the perfect foresight equilibrium allocation coincides with an equilibrium of a costless barter economy the same result holds in a one sided peg if the pegging country s exchange rate stabilizing authority breaks even over time in a cooperative peg regime there is a different equilibrium allocation for each combination of exchange rate levels and monetary policies problems of policy coordination and conflicts in desired monetary policies are discussed

productivity change in taiwan s farmers credit unions a nonparametric risk adjusted malmquist approach this article proposes an extended three stage dea methodology similar to fried et al 2002 to improve the measurement of productivity growth when the assumption of free disposability of undesirable output does not apply a directional distance function is used to construct adjusted malmquist luenberger productivity indexes which simultaneously account for the impacts of undesirable outputs environmental variables and statistical noise panel data for 263 farmers credit unions fcus in taiwan covering the 1998 2000 periods are employed to illustrate the advantages of this method on average the productivity of taiwan s fcus is found to have deteriorated over the 1998 2000 period although an improvement in efficiency has been observed the major reason for the deterioration is found to be due to the regression of technology

capital controls and the real exchange rate capital import taxes lower raise world home interest rates this shifts home expenditure from the present to the future and foreign expenditure from the future to today with identical home and foreign expenditure patterns the change in the composition of world expenditure has no effects on demand for any commodity then capital controls have no effect on the real exchange rate when consumers prefer home goods capital controls cause lower demand today for home goods in this way capital controls lower the real exchange rate today this result is mitigated when the country imposing capital controls is a large debtor

an analysis of australia s large scale renewable energy target restoring market confidence in 2001 australia introduced legislation requiring investment in new renewable electricity generating capacity the legislation was significantly expanded in 2009 to give effect to a 20 renewable energy target ret importantly the policy was introduced with bipartisan support and is consistent with global policy trends in this article we examine the history of the policy and establish that the stop start nature of renewable policy development has resulted in investors withholding new capital until greater certainty is provided we utilise the methodology from simshauser and nelson 2012 to examine whether capital market efficiency losses would occur under certain policy scenarios the results show that electricity costs would increase by between 51 million and 119 million if the large scale ret is abandoned even after accounting for avoided renewable costs our conclusions are clear we find that policymakers should be guided by a high level public policy principle in relation to large scale renewable energy policy constant review is not reform

real exchange rates and macroeconomics a selective survey the paper discusses real exchange rate issues of industrial and of developing countries for real exchange rates among the key industrial countries we ask what is the best conceptual framework to shed light on this question we look at alternative theoretical approaches and at empirical evidence on the relation among interest rates expectations and depreciation the discussion of developing countries real exchange rates focuses on the link between real exchange rates real wages and the profitability of capital the model highlights the discrepancy between the mobility of capital including in the long run physical capital and

the sources of productivity change in spanish banking abstract in this paper we examine the pattern of productivity change in spanish banking over the period 1986 1993 two sectors dominate spanish banking commercial banks and the faster growing savings banks we begin by examining productivity change separately within each sector however since the two sectors are gradually becoming more competitive we continue by merging the two sectors and by examining productivity change in the industry the merging procedure follows a methodology originally proposed by charnes cooper and rhodes 1981 in which intra sectoral managerial inefficiency is eliminated prior to merging this procedure allows us to distinguish differences in managerial efficiency within each sector from differences in the institutional efficiency of the two sectors it also enables us to decompose potential productivity change into institutional efficiency change technical change and the impact of scale economies we find the commercial banks to have had a slightly lower rate of productivity growth but a slightly higher rate of potential productivity growth we attribute this phenomenon to differences in both managerial efficiency and institutional efficiency to differences in the rate of technical progress and to the adverse impact of diseconomies of scale in the commercial banking sector

an investigation in the theory of foreign exchange controls a choice theoretic cash in advance model is constructed to examine foreign exchange controls while foreign exchange controls improve the trade balance and the balance of payments or exchange rate they reduce welfare for a distortion free small open economy this is because foreign exchange controls essentially place a quota on imports shocks to the terms of trade are shown to be transmitted negatively to the domestic economy when exchange controls are in effect devaluations are found not to have real effects finally it is argued that foreign exchange controls are not the optimal policy for attaining trade balance objectives

currency prices terms of trade and interest rates a general equilibrium asset pricing cash in advance approach currency prices terms of trade and interest rates a general equilibrium asset pricing cash in advance approach

electricity in europe exiting fossil fuels there are many options for generating electricity with low carbon emissions and the elec trification of heat and transport can decarbonize energy use across the economy this places the power sector at the forefront of any move away from fossil fuels even though fossil fuelled generators are more dependable and flexible than nuclear reactors or intermittent renewables and vital for the second by second balancing of supply and demand renewables tend to supplement rather than replace fos sil capacity although output from fossil fuelled stations will fall and some will have to retire to avoid depressing wholesale power prices at times of low demand and high renewable output prices can turn negative but electricity storage long distance interconnection and flexible demand may develop to absorb any excess generation simulations for great britain show that while coal may be eliminated from the mix within a decade natural gas has a long term role in stations with or without carbon cap ture and storage depending on its cost and the price of carbon

fiscal policy and the current account deficits and trade jose vinals does the balance of payments act as an external constraint on the design of domestic economic policy in practice most governments believe it does yet popular discussion is sometimes confused this paper begins by evaluating the nature of the external constraint and the extent to which it can adequately be measured by the current account of the balance of payments it is often argued that a fiscal expansion will increase employment it is also widely held that a fiscal expansion necessarily leads to a deterioration of the current account while these propositions may hold in specific circumstances neither is generally true the theoretical basis of the two propositions is examined and compared with recent international experience when important changes in fiscal stance occurred the popular presumptions are confirmed by recent experience in the us the uk and germany but france is a counterexample to the first and spain to the second the important policy implication is that one can identify both in theory and in practice clear circumstances in which expansionary fiscal policy is appropriate and will not be thwarted by external considerations

productivity growth in large us commercial banks the initial post deregulation experience abstract we explore productivity growth for a group of 201 large us commercial banks over the initial post deregulation period from 1984 to 1990 using data envelopment analysis dea we measure productivity growth using malmquist productivity indexes and isolate the contributions of technical change technical efficiency change and scale change to productivity growth we find overall productivity growth at the rate of about 4 5 per year on average but productivity declined by 7 61 between 1984 and 1985 and by 0 33 between 1988 and 1989 our second stage panel regressions reveal that larger asset size and specialization of product mix associate with higher productivity growth while higher equity to assets associates with lower productivity growth

dual exchange rate systems and capital controls an investigation abstract the welfare aspects of dual exchange rate systems are analyzed in this paper the requirement that domestic financial transactions with the rest of the world be undertaken at a special foreign exchange rate is found to be equivalent to levying a tariff on this class of international transactions hence a dual exchange rate system and capital controls are shown to be essentially identical in light of the above statements the dual exchange rate system should be regarded as a form of commercial policy and be evaluated in this context by applying the applicable standard real trade theorems

future wind and solar power market values in germany evidence of spatial and technological dependencies abstract achieving ambitious climate targets entails an extensive utilisation of renewable energy sources however due to weather dependent fluctuations generation from variable renewable energy vre sources is characterised by significantly lower market values in comparison to conventional technologies reinforced by a decline in electricity prices this development poses interesting questions as to its drivers and to what extent market values of wind and solar power can be influenced by the design of electricity markets against this background a scenario based analysis is conducted to trace the future development of market values using endogenously derived electricity prices considering different regional and technological vre diversification strategies and investments into vre technologies on a myopic basis the results show a continued decline in market values with increasing regional discrepancies indicating a growing importance of interregional interdependencies for assessing the profitability of vre furthermore from a system point of view a more distributed allocation of onshore wind capacities to contend with declining market values does not always prove to stabilise market values by facilitating a more constant feed in pattern contrary to expectation finally replacing onshore with offshore wind energy appears to be beneficial as it can lead to an overall increase in the market values of offshore onshore as well as pv generation technologies compared to other mitigation strategies this result raise interesting questions about the systemic economic value of offshore wind despite its higher lcoe in the context of market integration of vre

the terms of trade and the current account the harberger laursen metzler effect the paper examines the effect of terms of trade changes on a small country s spending and current account assuming optimizing behavior in an intertemporal framework with perfect international capital mobility a temporary future terms of trade deterioration implies a deterioration improvement of the trade balance whereas a permanent terms of trade deterioration has an ambiguous effect depending on the rate of time preference nominal and real variables are considered via exact price indexes two periods and an infinite horizon are examined

budget deficits and the current account an intertemporal disequilibrium approach the objective of the present paper is to develop an intertemporal disequilibrium model of a monetary economy to explain the effects of fiscal policy on the current account we wish to emphasize the role of aggregate demand determined output fluctuations and flexible exchange rates within a microtheoretic optimizing framework furthermore the differing effects of monetary versus non monetary i e tax or bond finance of government expenditures are considered

the real exchange rate the capital stock and fiscal policy abstract this paper studies the joint determination of aggregate supply the real exchange rate and the current account in response to changes in government spending in a model where there is no uncertainty in the aggregate but where individuals are uncertain about their lives duration international capital mobility fixes the steady state capital stock and aggregate supply in a small country whereas in a large country the steady state capital stock is endogenous an increase in government spending is more likely to generate a real exchange rate depreciation in a small country since the loss of wealth associated with cumulated current account deficits does not increase rest of the world spending in the case of a large country current account deficits are wealth transfers to the rest of the world and increase foreign spending thus the normal long run response is an increase in the relative price of domestic output

useful government spending direct crowding out and fiscal policy interdependence this paper introduces perfect substitutability between private and public consumption in a dynamic open economy with imperfect competition and nominal rigidities this implies a direct crowding out effect that generalising to the two country case some well known properties of a closed economy tends to reduce consumption following both domestic and foreign expansions a less expected result is that sub stitutability has a positive effect on the short run output spillover we also show that if we modify the model to allow for home bias in government spending temporary fiscal expansions display a quasi neutrality property

multilateral productivity comparisons when some outputs are undesirable a nonparametric approach multilateral productivity comparisons of firms producing multiple outputs some of which are undesirable are obtained by making two modifications to the standard farrell approach to efficiency measurement the restriction that production technology satisfy strong disposability of outputs is relaxed to allow for the fact that undesirable outputs may be freely disposable and the efficiency measures are modified to allow for an asymmetric treatment of desirable and undesirable outputs performance measures that satisfy these requirements are calculated as solutions to programming problems the methodology is applied to a sample of mills producing paper and pollutants

on the economics of renewable energy sources abstract with the global expansion of renewable energy re technologies the provision of optimal re policy packages becomes an important task we review pivotal aspects regarding the economics of renewables that are relevant to the design of an optimal re policy many of which are to date unresolved we do so from three interrelated perspectives that a meaningful public policy framework for inquiry must take into account first we explore different social objectives justifying the deployment of re technologies and review model based estimates of the economic potential of re technologies i e their socially optimal deployment level second we address pivotal market failures that arise in the course of implementing the economic potential of re sources in decentralized markets third we discuss multiple policy instruments curing these market failures our framework reveals the requirements for an assessment of the relevant options for real world decision makers in the field of re policies this review makes it clear that there are remaining white areas on the knowledge map concerning consistent and socially optimal re policies

is the merchant power producer a broken model deregulated energy markets were founded on the merchant power producer a stand alone generator that sold its production to the spot and short term forward markets underpinned by long dated project finance the initial enthusiasm that existed for investment in existing and new merchant power plant capacity shortly after power system deregulation has progressively dissipated following an excess entry result in this article we demonstrate why this has become a global trend using debt sizing parameters typically used by project banks we model a benchmark plant then re simulate its performance using live energy market price data and find that such financings are no longer feasible in the absence of long term power purchase agreements

on the effectiveness of capital controls the experience of colombia during the 1990s abstract this paper analyzes the effectiveness of capital controls in colombia the evidence presented points towards a relative inability of the measures adopted to reduce the level of capital inflows nonetheless the evidence suggests that non remunerated deposits have been successful in inducing a recomposition of foreign liabilities in favor of long term maturities it is likely that this is a positive result as it has made the country less vulnerable to a reversal in capital flows in this sense controls may be viewed as an effective way of internalizing the negative externality imposed by short term maturities

intertemporal optimizing models of trade and current account balance a survey abstract this study surveys the intertemporal optimizing models of trade and current account balance that were developed calibrated and empirically tested since they came into vogue in the 1980s the implications of these models often differ from those of static and dynamic conventional non optimizing models the literature on optimizing models has not only grown reasonably fast but has also witnessed significant advances in methodology and these models have culminated into a distinct strand of new open economy macroeconomics the studies conducted until the late 1980s have used deterministic perfect foresight models while several studies conducted since the 1990s relax the perfect foresight and certainty equivalence assumptions and develop stochastic dynamic general equilibrium models to account for uncertainty confronting the optimizing agents the future research needs to explore the possibility of tracing any preferred specification of household preferences model the effect of time varying discount factor on household utility function and intertemporal budget constraint examine the role of costs in international trade place a parallel emphasis on the empirical verifications of theoretical propositions examine the relative performance of optimizing vis a vis non optimizing models and rationalize the extreme propositions of perfect and imperfect capital mobility in the wake of moderately open capital accounts

draining the pool the reform of electricity trading in england and wales abstract the british government has decided to abolish the pool the electricity spot market in england and wales and replace it with a series of bilateral markets the government believes that the pool has been biased against coal fired generators and that its price setting rule all generators are paid the bid of the marginal unit has inflated the level of prices in practice many of the perceived problems in the pool are the result of market power not the basic design of the pool which is capable of sending the right price signals to generators efficient bilateral markets could well produce similar results prices could rise however if buyers are more risk averse and less good at trading than sellers

a market approach to long term security of supply the problem of ensuring that there is enough generation capacity to meet future demand has been an issue in market design since the beginning of the deregulation process although ideally the market itself should be enough to provide adequate investment incentives there are several factors that prevent this result from being achieved and some actual markets have already experienced problems related with a lack of generation capacity a regulatory framework to address this question is presented the procedure is based on an organized market where reliability contracts based on financial call options are auctioned so both their price and their allocation among the different plants are determined through competitive mechanisms this results in a stabilization of the income of the generators and provides a clear incentive for new generation investment with a minimum of regulatory intervention additionally the method represents a market compatible mechanism to hedge demand from the occurrence of high market prices

a literature review of economic studies on carbon pricing and australian wholesale electricity markets abstract with the ongoing development of australian anthropogenic climate change mitigation policies there has been a steady increase in modelling studies undertaken to estimate australian carbon prices and their impact on existing electricity markets this article summarises some of the more prominent studies completed by many of australia s foremost economic modelling firms we developed a simple approach for testing the consistency of these studies and their findings in relation to carbon pass through unfortunately we have established that the studies are entirely inconsistent in their estimation of carbon pass through furthermore we were unable to establish why the estimation of carbon pass through varies so significantly this has important implications for policy makers given much of the compensation to be paid to households and businesses under the clean energy future package is predicated on simple assumptions of carbon pass through based upon our analysis of these economic studies our conclusion is that australian policy makers are best guided by relying upon the numerous a posteriori estimations of pass through in the european union emissions trading scheme ets rather than australian a priori studies

performance of wholesale electricity markets with high wind penetration abstract this paper examines the impact of progressively deeper levels of wind generation and or abatement on the performance of a wholesale market and its incumbent thermal generators with non convex unit commitment constraints comparison is made to the result that marginal cost pricing should induce investors to build the least cost capacity mix since it is not clear that this will hold in renewable rich systems it is first found that unit commitment and forecast uncertainty do not cause significant departure from this result when the generator fleet is optimal optimality in this sense is determined in a capacity expansion problem that does not feature unit commitment and which allows thermal generators to be built or retired as greater renewable generation or abatement is mandated in contrast the wholesale market with no retirement of thermal generation experiences progressively greater disparity between total system prices and costs and lower returns to generators simply due to over capacity rather than any form of variability related market failure a carbon price is observed to be far superior to a renewable portfolio standard when the existing set of thermal generators do not retire but this difference is less stark when the generation mix is optimal the implications of these results for market design and system planning are then discussed

mode locking and international business cycle transmission abstract we investigate international business cycle synchronization business cycles in many countries have a tendency to synchronize with one another in what appears to be a world business cycle yet researchers find that trade and capital linkages are not strong enough for one country to drive business cycles in another country how is this world business cycle formed this study suggests that the world business cycle results from a mode locking phenomenon a nonlinear process by which weak coupling between oscillating systems tends to synchronize oscillations in the systems simulations and econometric analyses are performed to attempt to verify this hypothesis

the merit order effect a detailed analysis of the price effect of renewable electricity generation on spot market prices in germany the german feed in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies critics state that the costs for consumers are too high an important aspect to be considered in the discussion is the price effect created by renewable electricity generation this paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in germany the central aspect to be analysed is the impact of renewable electricity generation on spot market prices the results generated by an agent based simulation platform indicate that the financial volume of the price reduction is considerable in the short run this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits in the case of the year 2006 the volume of the merit order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers

sticky goods prices flexible asset prices monopolistic competition and monetary policy a monetary general equilibrium asset pricing model with sticky goods prices is developed goods prices are set by monopolistically competitive firms that maximize stock market value equilibria with underutilization of resources excess capacity in some states result in contrast to previous monetary asset pricing models the degree of competition affects capacity utilization monetary policy can affect output and resource utilization in addition to real asset prices depending upon the amount of information available to the monetary authority

a resource based view of opportunities to transform australia s electricity sector abstract proponents of low carbon transformation face an uphill battle to reconfigure incumbent energy systems against powerful interests protecting the status quo australia s electricity sector is an example of such a system wedded to fossil fuels and backed by much of the country s political establishment this paper addresses the potential for low carbon transformation in australia s electricity sector it explores the complex and uncertain dynamics shaping the sector and outlines how these can be understood through the lens of strategic agency with an eye for opportunities to drive a shift to renewables it reviews the dynamics of change and re stability shaping australia s electricity sector between 2006 and 2015 and applies a resource based view of transformative agency to analyse these dynamics results show the sector suffers multiple stressors and emphasise disruptive changes in the pipeline critically many of these transformative dynamics stem from factors outside the influence of the electricity sector and its supporters while results do not point to a clear trajectory or outcome of transformation they indicate the uptake of small scale solar photovoltaic pv systems by households and small business will play a defining role in the sector s future configuration furthermore the exploration of transformative dynamics affecting the electricity sector through a resource based lens shows that many opportunities exist for strategic agents to intervene in support of a disruptive shift to renewables the paper suggests a range of mechanisms that agents could use to undermine the strength of fossil energy in the electricity sector and encourage a shift to renewables

a note on efficiency and productivity growth in the korean banking industry 1992 2002 abstract in this paper we present estimates of korean bank inefficiency and productivity change for the period 1992 2002 that are derived from the directional technology distance function our method controls for loan losses that are an undesirable by product arising from the production of loans and allows the aggregation of individual bank inefficiency and productivity growth to the industry level our findings indicate that technical progress during the period was more than enough to offset efficiency declines so that the banking industry experienced productivity growth

vertical integration credit ratings and retail price settings in energy only markets navigating the resource adequacy problem abstract energy only markets are prone to the resource adequacy problem i e the timely entry of new plant the reason for this is that competitive energy only markets struggle to be remunerative given reliability constraints and market price caps historically australia s 45 000 mw national electricity market has managed to navigate this well understood problem albeit with government entities directly or indirectly responsible for a surprisingly large 73 of all new plant investments to 2007 but government involvement in direct investment has now ceased so what will enable the industry to navigate the resource adequacy problem into the future quite simply industrial organisation the presence of merchant utilities with investment grade credit ratings and setting any regulated retail prices or price to beat with an lrmc floor

the market value of variable renewables the effect of solar wind power variability on their relative price this paper provides a comprehensive discussion of the market value of variable renewable energy vre the inherent variability of wind speeds and solar radiation affects the price that vre generators receive on the market market value during windy and sunny times the additional electricity supply reduces the prices because the drop is larger with more installed capacity the market value of vre falls with higher penetration rate this study aims to develop a better understanding on how the market value with penetration and how policies and prices affect the market value quantitative evidence is derived from a review of published studies regression analysis of market data and the calibrated model of the european electricity market emma we find the value of wind power to fall from 110 of the average power price to 50 80 as wind penetration increases from zero to 30 of total electricity consumption for solar power similarly low value levels are reached already at 15 penetration hence competitive large scale renewable deployment will be more difficult to accomplish than as many anticipate

the role of saving and investment in exchange rate determination under alternative monetary mechanisms abstract we argue that the demand for national currencies depends on existing payment arrangements for imports and exports therefore exchange rate movements depend on these arrangement as a result the relationship between exchange rate movements and various macroeconomic aggregates like saving and investment depend on what we call the monetary mechanism these points are explicitly demonstrated by studying two extreme monetary mechanisms one in which all payments are done with the seller s currency and one in which all payments are done with the buyer s currency

exchange rates and traded goods prices abstract this paper presents a partial equilibrium model of the determination of domestic and export prices by a monopolistic competitive firm the model stresses the role of exchange rate uncertainty and expectations the most important result of the analysis is that the stochastic properties of deviations from the law of one price are crucially affected by the currency of denomination of export prices using data on domestic and dollar export prices of japanese goods i find that deviations from the law of one price are due to exchange rate surprises but also to price staggering and ex ante price discrimination

an ex post analysis of the effect of renewables and cogeneration on spanish electricity prices abstract growing concerns about climate change and energy dependence are driving specific policies to support renewable or more efficient energy sources such as cogeneration in many regions particularly in the production of electricity these policies have a non negligible cost and therefore a careful assessment of their impacts seems necessary in particular one of the most debated impacts is their effect on electricity prices for which there have been some ex ante studies but few ex post studies this article presents a full ex post empirical analysis by looking at use of technologies and hourly electricity prices for 2005 2009 in spain to study the effects that the introduction of renewable electricity and cogeneration has had on wholesale electricity prices it is particularly interesting to perform this study in spain where an active system of public support to renewables and cogeneration has led to a considerable expansion of these energy sources and electricity pricing is at the center of intense debate the paper reports that a marginal increase of 1 gwh of electricity production using renewables and cogeneration is associated with a reduction of almost 2 per mwh in electricity prices around 4 of the average price for the analyzed period

optimal capital structure and project financing abstract we examine the financing and incorporation modes for new projects there are two objectives the first is to provide a theory of optimal capital structure that links risk leverage and value and is particularly applicable to large firms counter to conventional wisdom we show riskier firms acquire more debt pay higher interest rates and have higher values in equilibrium second we provide an economic rationale for project financing which entails organizing a new project legally distinct from the firm s other assets we explain why project financing involves higher leverage than conventional financing and why highly risky assets are project financed

on intermittent renewable generation the stability of australia s national electricity market abstract energy only markets have an inherently unstable equilibrium even under ideal conditions because participants are unable to optimise voll events the addition of intermittent renewable generation is thought to make conditions harder in this article optimal voll events in an islanded nem region is modelled by substituting high price caps for boiteux capacity charges then analysing the impact of adding progressively more variable renewable energy vre up to 35 market share spot market conditions prove stable and tractable provided thermal plant exit and adjust perfectly but vre asset allocation is important absent highly elastic demand or ultra low cost storage solar pv market share has economic limits because the technology rapidly cannibalises itself furthermore as vre rises in imperfectly interconnected regions a tipping point appears to exist where hedge markets enter an unstable zone through shortages of asset backed firm intra regional swaps and caps government initiated cfds for vre need to be designed carefully to ensure any instability is not exacerbated by extracting contracts from an already shortening hedge market

capital controls and fiscal policy in the world economy an intertemporal utility maximization framework is employed to model a world economy with capital controls the effects of fiscal policy in such an environment are examined several results emerge concerning the international transmission of fiscal policy under capital controls and the nature of comovements in macro economic aggregates such as output employment consumption and investment some of the paper s other results concern the implications of capital controls for ricardian equivalence the role of financing decisions in the international transmission process under capital controls and the effect of capital controls on the magnitude of fiscal induced fluctuations throughout the world economy contr6les des mouvements de capitaux et politique fiscale dans l conomie mondiale les auteurs utilisent une approche par la maximisation intertemporelle de l utilite pour modeliser une economie mondiale dans laquelle des controles sur les mouvements de capitaux existent ils examinent les effets de la politique fiscale dans un tel contexte on tire de ces analyses plusieurs resultats quant i la transmission internationale des effets de la politique fiscale et quant aux mouvements lies de certains agregats economiques comme les niveaux de production d emploi de consommation et d investissement certains autres resultats de cette analyse ont trait aux implications des controles des mouvements de capitaux sur l1 quivalence ricardienne au role des decisions de financement dans le processus international de transmission quand il y a controle des mouvements de capitaux et aux effets des controles sur les mouvements de capitaux sur la magnitude des fluctuations induites a travers l economie mondiale par la politique fiscale helpful comments from two anonymous referees are gratefully acknowledged discussion in workshops held at ucla duke university iowa state university queen s university vanderbilt university vpi and the university of western ontario has also been useful canadian journal of economics revue canadienine d economique xviii no 4 november novembre 1985 printed in canada imprime au canada 0008 4085 85 743 65 1 50 canadian economics association this content downloaded from 207 46 13 129 on mon 27 jun 2016 05 25 03 utc all use subject to http about jstor org terms 744 jeremy greenwood and kent p kimbrough

understanding the dynamic effects of government spending on foreign trade abstract using vector autoregressions on u s time series the present paper documents the effects of fiscal policy on foreign trade an increase in government spending significantly depreciates the nominal exchange rate appreciates the terms of trade and increases net exports exposed to the same spending shock a new keynesian general equilibrium model is shown to match qualitatively the response of relative prices the response of net exports in contrast depends on the intra and intertemporal elasticities of substitution and the degree of home bias in private spending an accommodating monetary policy dampens but does not alter the response of net exports

global effects of national stabilization policies under fixed and floating exchange rates this paper deals with international effects of two types of stabilization policies monetary expansion directed towards the demand side and a reduction in payroll taxes directed towards the supply side the analysis focuses on employment relative prices and welfare issues it rests on a simple intertemporal general equilibrium model of two countries that includes a specific micro theory of money under floating exchange rates a country s employment is insulated from both policies abroad but its consumption generally changes under fixed exchange rates no such insulation prevails while monetary expansion is generally expansionary reduced payroll taxes constitute a beggar thy neighbor policy in both systems the welfare of a country may decrease although its employment increases an immiserizing expansion may occur

deregulation and restructuring of the global electricity supply industry and its impact upon power plant suppliers abstract this paper analyses the deregulation and restructuring of the global electricity supply industry and its impact upon fuel usage generation technologies and suppliers of power plant deregulation encouraged the growth of new independent power producers whose business requirements transformed the power plant industry the plant suppliers had to develop new capabilities and services to compete in the global market economies of scale and scope became crucial given the cost of developing the new technologies and providing the services required by the operators this led to the global consolidation of the power plant industry because only large integrated power engineering companies had the necessary resources and capabilities to compete in the new global environment

the large scale solar feed in tariff reverse auction in the australian capital territory australia abstract feed in tariffs fits offer renewable energy developers significant investor certainty but sometimes at the cost of being misaligned with generation costs reverse fit auctions where the fit rights for a predetermined capacity are auctioned can overcome this problem but can be plagued by non delivery risks particularly of competitively priced proposals in 2012 and 2013 the australian capital territory act government in australia conducted a fit reverse auction for 40 mw of large scale solar generating capacity the first such auction undertaken in the country the auction was highly competitive in relation to price and demonstrating low delivery risks proposal capital costs particularly engineering procurement and construction costs as well as internal rates of return were lower than expected the auction process revealed limited land availability for large scale solar developments in the act as well as a significant perceived sovereign risk issue the auction process was designed to mitigate non delivery risk by requiring proposals to be pre qualified on the basis of delivery risk before considering fit pricing the scheme is likely to be used by the act government to support further large scale renewable energy development as part of its greenhouse gas reduction strategy which is underpinned by a 90 per cent by 2020 renewable energy target

determining commercially viable two way and one way contract for difference strike prices and revenue receipts abstract in this article we investigate the role that a contract for difference cfd might play in increasing investment in renewable energy in australia two cfd schemes are investigated two way and one way cfd a financial model is developed that determines commercially viable cfd strike prices account is taken of revenue from wholesale electricity market and renewable energy certificate sales capital and operational costs of the project including distribution of funds to holders of equity and debt are also included findings based on analysis of the solar array located at the university of queensland gatton campus in australia is presented employing a typical meteorological year framework the major finding was that government will prefer a two way cfd scheme and single axis tracking solar pv array technology in contrast project proponents will strongly prefer a one way cfd design

real transfers in fixed exchange rate systems and the international adjustment mechanism abstract fixed exchange rates can be maintained by different types of stabilization schemes this paper takes a look at some alternative institutional settings and shows that there is an inherent redistribution mechanism in some of them that will influence the world allocation of consumption an examination of the global adjustment to monetary disturbances illustrates some interesting implications of the institutional differences between alternative systems the results suggest that the description of the international adjustment mechanism under fixed exchange rates given by the monetary approach to the balance of payments is valid only under quite restrictive assumptions

financing alternative energy projects an examination of challenges and opportunities for local government abstract local government in australia has a strong collective capacity to reduce ghg emissions through policies funding allocation to renewable energy projects and the delivery of programs and services this study examines the institutional capacity of councils in sydney and how this impacts on decisions to invest in alternative energy projects we find greenhouse gas emission targets of councils are strongly aligned to national targets but do not reflect the local council s institutional capacity political leadership or strategic priorities energy reduction projects are often identified and undertaken by environmental staff without support from financial staff or financial evaluation tools an absence of national guidelines to provide consistency in tracking and reporting limits cross sector benchmarking street lighting contributes to a significant proportion of council s total electricity expenditure and ghg emission profile being highly regulated existing contracts and the current practice of street lighting services limits the councils ability to reduce emissions based on our analysis we recommend a number of measures to overcome these constraints including the use of financial evaluation tools for small scale renewable energy projects a standardised national tracking and reporting platform to facilitate progress reporting and meaningful comparative analysis between councils and policy reform to the regulation of street lighting

the current account and the optimal government debt abstract in this paper we analyze the optimal response of the current account and the government debt to real disturbances permanent and temporary lumpsum taxes are not feasible and the government income is raised according to the ramsey rule for optimum taxation we show that permanent disturbances have no effects on either the private or the government current account if initially there are no deficits starting off from the same initial situation both the private sector and the government develop a deficit on current account in response to a temporary disturbance

excess capacity monopolistic competition and international transmission of monetary disturbances analyzes the excess capacity monopolistic competition and international transmission of monetary policy disturbances in the united states sheds light on the international impact of monetary policy emphasis on the spillover effects of monetary disturbances similarity of framework used with open economy macroeconomics

the effect of wind and solar power generation on wholesale electricity prices in australia abstract our paper investigates the effect of wind and utility scale solar electricity generation on wholesale electricity prices in australia over 2010 2018 we use both high frequency 30 min and daily datasets for the australian national electricity market nem we estimate autoregressive distributed lag models ardl to decompose the merit order effect of wind and utility scale solar pv generation over time and across states we find that an extra gw of dispatched wind capacity decreases the wholesale electricity price by 11 aud mwh at the time of generation while solar capacity by 14 aud mwh the daily merit order effect is lower we show that the wind merit order effect has been increasing as a function of dispatched wind capacity over time despite of this wholesale electricity prices in australia have been increasing predominantly driven by the increase in natural gas prices our findings further strengthen the evidence of the merit order effect of renewable energy sources with important implications for the current energy policy debate in australia

deregulation and productivity decline the case of spanish savings banks abstract during the 1980s many regulatory constraints limiting competition in spanish banking were relaxed or removed although deregulation came later to savings banks than to the rest of the banking sector two consequences of partial deregulation of savings banks have been a rapid growth in branching activity much of it geographically dispersed and a burst of merger activity in this paper we investigate productive efficiency and total factor productivity change in spanish savings banks over the 1986 1991 post deregulation period neither branching nor mergers provide an adequate explanation for the magnitude or the nature of the productivity decline we observe over the period

financial deregulation and total factor productivity change an empirical study of turkish commercial banks abstract in january 1980 a new liberal economic policy was adopted in turkey to promote financial market development and increase the efficiency and productivity of the financial sector by fostering competition among banks as a result of this policy the turkish banking system witnessed a series of legal structural and institutional changes throughout the 1980s to enhance their competitive viability turkish banks responded by streamlining their operations and investing in new technology utilizing a dea type malmquist total factor productivity change index we examine productivity growth efficiency change and technical progress in turkish commercial banks during the deregulation of financial markets in turkey we found that all forms of turkish banks although in different magnitudes have recorded significant productivity gains driven mostly by efficiency increases rather than technical progress efficiency increases however were mostly owing to improved resource management practices rather than improved scales our results also indicate that private banks began to close their performance gap with public banks in the new environment

in the transformation of energy systems what is holding australia back abstract australia has had a strong gdp growth rate is endowed with a diversity of renewable energy resources yet has been unable to unshackle its dependency on fossil fuels our study identifies causes underlying australia s underachievement in its transformation towards a renewable energy economy we apply a combined mixed methods case study and multi criteria analysis to evaluate the greenhouse gas emissions and energy targets policies and programs of four australian prime ministers between 1996 and 2015 we identify four high impact factors that contribute to australia s underachievement the prime minister s political stance on climate and energy is critical in setting the direction of government the absence of target driven policy frameworks results in less effective policy outcomes orderly and cost effective energy system transformation requires bipartisan strategic long term planning and substantial capital investment to provide policy certainty and stability that can induce new investment in renewable technologies and industries energy policy is primarily a political and ideological issue not one driven by underlying economic conditions going forward australia must achieve a bipartisan position on climate and energy policy at both federal and state levels this will provide long term certainty and stability to support investment in renewable energy and so doing achieve international emission reduction obligations

using renewables to hedge against future electricity industry uncertainties an australian case study abstract a generation portfolio modelling was employed to assess the expected costs cost risk and emissions of different generation portfolios in the australian national electricity market nem under highly uncertain gas prices carbon pricing policy and electricity demand outcomes were modelled for 396 possible generation portfolios each with 10 000 simulations of possible fuel and carbon prices and electricity demands in 2030 the lowest expected cost generation portfolio includes 60 renewable energy increasing the renewable proportion to 75 slightly increased expected cost by 0 2 mwh but significantly decreased the standard deviation of cost representing the cost risk increasing the renewable proportion from the present 15 to 75 by 2030 is found to decrease expected wholesale electricity costs by 17 mwh fossil fuel intensive portfolios have substantial cost risk associated with high uncertainty in future gas and carbon prices renewables can effectively mitigate cost risk associated with gas and carbon price uncertainty this is found to be robust to a wide range of carbon pricing assumptions this modelling suggests that policy mechanisms to promote an increase in renewable generation towards a level of 75 by 2030 would minimise costs to consumers and mitigate the risk of extreme electricity prices due to uncertain gas and carbon prices

dynamics of a floating exchange rate regime we study the full equilibrium dynamics of a two country world economy with a floating exchange rate traded and nontraded goods and explicit modeling of the use of money the resulting exchange rate equation depends on several details of the economic structure such as the supply structure and propensities to spend on various goods although real exchange rate movements have the usual association with the current account the ordinary exchange rate may appreciate or depreciate when there are deficits on current account even when the quantities of money do not change deviations from purchasing power parity and the fisher equation are shown to be the rule rather than the exception

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

risk based assessment of the cost efficiency and the effectivity of renewable energy support schemes certificate markets versus feed in tariffs the introduction of renewable energy sources in the electricity generation mix has the potential to reduce power sector s emissions and countries dependence on imported oil climate change concerns and highly volatile oil prices have attracted governments interest and support to sustain investments in renewable energy capacity and different support policies have been implemented in many countries around the world this paper analyzes the effects of investors risk aversion on the performance of support schemes the analysis compares two policy options a feed in tariff mechanism with a certificate market system results show that while a tariff mechanism could obtain better results than a certificate market its performance is strictly dependent on regulator choices a certificate market instead permits to obtain the desired level of renewable energy market share with good cost efficiency as long as investors risk aversion is moderate moreover discounting future cash flows with higher social discount rates further benefits a certificate system making it preferable to feed in tariffs

pesticide use environmental spillovers and efficiency a dea risk adjusted efficiency approach applied to dutch arable farming pesticides are widely used by crop producers in developed countries to combat risk associated with pests and diseases however their indiscriminate use can lead to various environmental spillovers that may alter the agricultural production environment thus contributing to production risk this study utilises a data envelopment analysis dea approach to measure performance of arable farms incorporating pesticides environmental spillovers and output variance as undesirable outputs in the efficiency analysis and taking explicitly into account the effect of pesticides and other inputs on production risk the application focuses on panel data from dutch arable farms over the period 2003 2007 a moment approach is used to compute output variance providing empirical representations of the risk increasing or decreasing nature of the used inputs finally shadow values of risk adjusted inputs are computed we find that pesticides are overused in dutch arable farming and there is a considerable evidence of the need for decreasing pesticides environmental spillovers

electricity market design for facilitating the integration of wind energy experience and prospects with the australian national electricity market abstract australia has been an early and enthusiastic adopter of both electricity industry restructuring and market based environmental regulation the australian national electricity market nem was established in 1999 and australia also implemented one of the world s first renewable energy target schemes in 2001 with significant recent growth in wind generation australia provides an interesting case for assessing different approaches to facilitating wind integration into the electricity industry wind project developers in australia must assess both potential energy market and tradeable green certificate income streams when making investments wind farm energy income depends on the match of its uncertain time varying output with the regional half hourly market price a price that exhibits daily weekly and seasonal patterns and considerable uncertainty such price signals assist in driving investments that maximize project value to the electricity industry as a whole including integration costs and benefits for other participants recent nem rule changes will formally integrate wind generation in the market s scheduling processes while a centralized wind forecasting system has also been introduced this paper outlines experience to date with wind integration in the nem describes the evolution of market rules in response and assesses their possible implications for facilitating high future wind penetrations

overcoming barriers to wind project finance in australia the wind power industry in australia is expected to grow rapidly over the next decade primarily due to a forthcoming expanded national renewable energy target ret which will mandate that renewable sources provide approximately 20 of australia s electricity production by 2020 however development of new wind generation in australia has stalled as a result of several barriers to project finance the mechanism through which most wind farms have been developed historically this paper provides an overview of wind power financing in australia in light of recent political and financial trends drawing upon existing literature and a series of stakeholder interviews it identifies three primary barriers to project finance regulatory risk surrounding legislation of the ret semi privatization of electricity retailers in new south wales and limited capital availability resulting from the recent global credit crisis the paper concludes that the confluence of these barriers limits the availability of long term contracts that provide revenue certainty for pre construction wind projects while simultaneously making these contracts a necessity in order to obtain project finance in an attempt to mitigate these effects this paper identifies four alternative development strategies that can be pursued

channels of international policy transmission abstract four channels of international budgetary and monetary policy transmission are analysed within the context of nominal wage sluggishness the first is based on capital gains on holdings of foreign assets spill over effects arising through the second and third channels depend on whether home and foreign goods are gross substitutes or gross complements and on whether the elasticity of intertemporal substitution is less or greater than one the final channel assumes finite lifetimes and no bequest motive it departs from debt neutrality in order to give a non trivial role to wealth effects and current account dynamics

comparing the costs of intermittent and dispatchable electricity generating technologies economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected life cycle production costs per unit of electricity supplied the standard life cycle cost metric utilized is the levelized cost per mwh supplied this paper demonstrates that this metric is inappropriate for comparing intermittent generating technologies like wind and solar with dispatchable generating technologies like nuclear gas combined cycle and coal levelized cost comparisons are a misleading metric for comparing intermittent and dispatchable generating technologies because they fail to take into account differences in the production profiles of intermittent and dispatchable generating technologies and the associated large variations in the market value of the electricity they supply levelized cost comparisons overvalue intermittent generating technologies compared to dispatchable base load generating technologies they also overvalue wind generating technologies compared to solar generating technologies integrating differences in production profiles the associated variations in the market value of the electricity supplied and life cycle costs associated with different generating technologies is necessary to provide meaningful comparisons between them this market based framework also has implications for the appropriate design of procurement auctions created to implement renewable energy procurement mandates the efficient structure of production tax credits for renewable energy and the evaluation of the additional costs of integrating intermittent generation into electric power networks

the international ramifications of tax reforms supply side economics in a global economy this paper studies tax reforms in a dynamic model of a global economy calibrated to current u s and european tax policies world capital markets add consumption smoothing and income redistribution effects that alter closed economy predictions in the absence of taxes on foreign interest welfare gains of eliminating u s income taxes are enlarged by up to 34 percent at the expense of european losses caused by transitional declines in consumption and leisure and a permanent capital outflow in contrast if foreign interest is taxed the same tax reform reduces u s welfare 0 7 percent and increases european welfare 1 8 percent copyright 1998 by american economic association