total factor productivity and the environmental kuznets curve a comment and some intuition abstract chimeli and braden chimeli ariaster b braden john b 2005 total factor productivity and the environmental kuznets curve journal of environmental economics and management 49 366 380 derive a necessary and sufficient condition under which inter country differences in total factor productivity can yield an environmental kuznets curve they argue that their results emphasize the importance of differences in total factor productivity across countries as well as the need for decreasing returns to scale in pollution abating technologies for the existence of an environmental kuznets curve we show that their proposition 1 is equivalent to proposition 2 in lieb lieb christoph m 2002 the environmental kuznets curve and satiation a simple static model environment and development economics 7 429 448 this implies that even in chimeli and braden s model contemporaneous changes in the marginal rate of substitution between environmental quality and consumption on the demand side and the marginal rate of transformation between these goods on the supply side drive the pollution income relationship this is a very general condition that does not rely on either differences in total factor productivity or decreasing returns to scale in abatement and which is widely applicable

limit cycles in intertemporal adjustment models theory and applications this paper starts from well behaved i e concave one state variable optimal control models the crucial feature is that indigenous growth is present the replacement of the control by an adjustment process and presumably penalizing these adjustments may convert stable and only stable fixed point equilibria into limit cycles indeed given positive growth and proper externalities such that discounting exceeds growth one can generate stable limit cycles with ease e g for a separable framework examples from such diverse fields as renewable resources optimal saving and public choice highlight the economic applicability

maximum likelihood estimation of cointegration in exchange rate models for seven inflationary oecd countries abstract we apply the johansen technique to estimate cointegration in a monetary exchange rate model modified for real exchange rate fluctuations and applied to seven inflationary oecd countries we generally find one or more cointegrating vectors and the signs of their coefficients are broadly consistent with the modified monetary model the adjustment coefficients are also examined our statistical testing is based on bootstrapping and generates much more conservative rejection criteria than the use of asymptotic critical values even after a substantial degree of freedom correction power estimates are also presented finally we conclude that the monetary model unmodified for real exchange rate fluctuations would be inadequate

mean reversion in real exchange rates evidence and implications for forecasting abstract the stationarity of real exchange rates over the recent flexible exchange rate period is an issue that has long bedeviled researchers in international finance using a constrained multivariate framework this paper provides the strongest evidence yet that real exchange rates were mean reverting over the 1973 93 period we also investigate shifts in long run real exchange rates which may be important for the purpose of forecasting out of sample forecasting shows that the random walk model is outperformed by a mean stationary model especially at long horizons in addition there are substantial forecasting benefits from using a multivariate approach

robust tests for unit roots in the foreign exchange market abstract empirical studies that have tested for unit roots in foreign exchange rate data have assumed independent and identically distributed errors in order to apply dickey fuller test procedures this assumption ignores the temporal dependence of the error sequence present in many simple efficient market tests as discussed in hansen and hodrick 1980 as well as krasker 1980 in this paper we apply unit root test statistics that allow for heterogeneously distributed and mildly dependent error processes and thus provide superior tests of the unit root hypothesis in the case of foreign exchange rates

strategic trade policy intellectual property rights protection and north south trade abstract in this paper we analyze the issue of optimal tariffs when the northern and southern firms compete in quantities in an imperfectly competitive northern market and there are potentially varying degrees of intellectual property rights ipr violation by the south ipr violation is reflected through the leakage of technological knowledge spillovers from the northern to the southern firm creating unit cost reduction it is shown that optimal tariffs in this framework are always higher than in the simple duopoly model since they serve here not only as profit shifting devices but also as instruments that influence domestic innovative activity generate scale economies and countervail the ipr violation of the south the other notable difference from the standard duopoly model is that positive tariffs may be desirable from the world welfare point of view

preferences technology and the environment understanding the environmental kuznets curve hypothesis we derive a simple expression for the income pollution path using the standard static model of the environmental kuznets curve ekc this expression makes it straightforward to identify the general characteristics of utility and pollution functions that lead to such a curve we show that suitable preferences can always lead to an ekc while there is no technology that yields an ekc for all types of preferences and we derive a sufficient condition for technology that leads to an ekc for almost all types of preferences our results hold for a model with multiple goods with different pollution intensities and for a production economy with nonconstant relative price of consumption and environmental effort we derive our results without assuming specific functional forms and we encompass several other models as special cases

realignment risk and currency option pricing in target zones abstract this paper extends the krugman target zone model by including a realignment mechanism various properties of that realignment mechanism are discussed the movement of the exchange rate is governed both by a wiener process on fundamental and by a poisson jump process with endogenous realignment size the realignment mechanism is such that except in cases where a speculative attack occurs no jump in fundamental is needed to accompany the jump in the exchange rate a risk neutral valuation of currency options is constructed some properties of option values under realignment risk are illustrated by numerical results

german dominance in the ems evidence from interest rates abstract the paper presents an empirical analysis of german dominance and asymmetries in the ems based on a dynamic system of equations explaining national money market interest rates the hypothesis of strict german dominance of the ems is rejected however there are some noticeable asymmetries in the ems germany is a relatively strong player and has been the least dependent country in the early phase of the system since 1983 german independence has diminished in contrast france throughout and italy in the early phase of the ems have been relatively weak players in the system

adaptation and mitigation in long term climate policies the paper analytically explores the optimal allocation of investments into mitigation and environmental adaptation against climate change damages at a macroeconomic level the economic environmental model is formulated as a social planner problem where adaptation and abatement investments are separate decision variables the existence of a unique steady state is proven a comparative static analysis of optimal investments leads to essential implications for associated long term environmental policies it is shown that the optimal policy mix between adaptation and mitigation is lower for countries with higher economic efficiency for all applicable parameter ranges data calibration and numerical simulations are provided to estimate practical validity of theoretical outcomes

nonlinear adjustment to purchasing power parity in the post bretton woods era abstract this paper models the dynamics of adjustment to long run purchasing power parity ppp over the post bretton woods period in a nonlinear framework consistent with the presence of frictions in international trade we estimate exponential smooth transition autoregressive estar models of deviations from ppp which are obtained using the johansen cointegration method for both consumer price index cpi and wholesale price index wpi based measures and a broad set of us trading partners in several cases we find clear evidence of a mean reverting dynamic process for sizable deviations from ppp with the equilibrium tendency varying nonlinearly with the magnitude of disequilibrium analysis of impulse response functions also supports a nonlinear dynamic structure but convergence to long run ppp in the post bretton woods era is very slow

purchasing power parity a quantitative reassessment of the 1920s experience abstract the purpose of this paper is to test the hypothesis of purchasing power parity the basic methodology is to start by estimating a general distributed lag equation relating the excchangr rate to its own past and to current and past relative price levels successively more restricted version are then proposed and tested against the general model two interesting facts come out of this one is that the proportionality restrictin is not supported by the data and the other is that all the models estimated by frenkel 1978 are rejected in favor of less restricted models

time consistent collection of optimal seigniorage a unifying framework this paper reviews the existing literature on the time consistency problem of seigniorage collection when monetary policy is determined by optimal taxation considerations it develops a unifying accounting framework and suggests a general measure for seigniorage which encompasses the standard measures employed in the literature in addition the ex ante optimal solution to the optimal taxation problem is derived and interpreted in relation to the ramsey principle we show that the different recommendations of the public finance literature i e the friedman rule of optimal deflation moderately positive inflation and seigniorage maximizing inflation are specific solutions to the optimal taxation problem the paper continues with a formal illustration of the time consistency problem of the ex ante optimal policy and the characterization of the time consistent solution under discretion as possible solutions to the time consistency problem we consider reputational forces institutional reforms that establish central bank independence and specific ways of asset and debt management in particular it is formally shown that a modified version of the asset and debt management scheme suggested by persson persson and svensson is not only necessary but also sufficient for optimality although this did not hold in their model

who cares about biodiversity optimal conservation and transboundary biodiversity externalities the convention on biological diversity s 2010 target to reduce the rate of biodiversity loss was achieved by very few countries why we use the theory of conservation implicit in the hotelling model of non renewable resource pricing to analyze the problem distinguishing between the benefits to countries where conservation takes place and to other countries we estimate models for three taxonomic groups and find that while individual countries value conservation within their borders in poor countries this effect is dominated by the negative impact of income growth international concessional financial contributions to conservation in poor countries are found to be statistically insignificant we conclude that countries care about the biodiversity within their national borders but only when development priorities permit and only when it becomes scarce enough that its value grows more rapidly than the return on alternative assets there is little evidence that high income countries yet care sufficiently about biodiversity in the places where it is most threatened to affect conservation outcomes there

the ems and the dollar the ems and the dollar francesco giavazzi and alberto giovannini this paper examines the behaviour of exchange rates prior to and since the inception of the european monetary system ems movements in bilateral european exchange rates tend to be associated with fluctuations in the dollar in particular the mark tends to appreciate against other european currencies when the dollar depreciates further most realignments of currencies in the ems have generally occurred after sharp movements in the dollar conventional explanations relying on portfolio diversification by investors do not seem to explain the facts fully a more satisfactory explanation is provided by the existence of capital controls these limit the mobility of assets and ensure an asymmetric response by european currencies to movements in the dollar these capital controls are in the absence of coordinated monetary policy essential to the smooth working of the ems however at the same time they limit the scope for the further integration of european capital markets thus the ems is not a step on the road to greater financial integration indeed it is a cul de sac

capital controls and balance of payments crises abstract the theory of balance of payments crises shows that under perfect foresight a system of fixed exchange rate is not sustainable in the presence of diverging economic policies in this paper it is shown how and why capital controls succeed in maintaining the principle of a fixed but adjustable parity both cases of a devaluation and a revaluation are considered and a condition for a parity change to be credible is presented

mean reversion in g 10 nominal exchange rates according to conventional wisdom industrial country floating exchange rates contain unit roots sur tests on panels of monthly group of ten g 10 log nominal rates reject the null of unit roots for various samples over the current float with significance levels from 0 5 to 15 on average in out of sample forecasts mean reversion models beat random walks significantly in some forecast periods for monthly data the range of expected usd dem appreciation rates exceeds 15 per year in the mean reversion model mean reversion places strong restrictions on international models over the sample period the g 10 had to run monetary policies consistent with stable long run nominal rates

neoclassical growth the j curve for abatement and the inverted u curve for pollution abstract this paper reexamines the neoclassical environmental growth model of forster to gain insights into the dynamic relationships among pollution abatement effort and economic development whereas the model has heretofore been used to examine steady state levels of capital consumption and environmental quality it also provides a theoretical basis for recent empirical research on j curves for abatement effort and inverted u curves for pollution

the demand for environmental quality and the environmental kuznets curve hypothesis abstract household demand for better environmental quality is the key factor in the long term global applicability of the environmental kuznets curve ekc hypothesis we argue that for given consumer preferences the threshold income level at which the ekc turns downwards or the equilibrium income elasticity changes sign from positive to negative depends on the ability to spatially separate production and consumption we test our hypothesis by estimating the equilibrium income elasticities of five pollutants using 1990 data for the united states we find that the change in sign occurs at lower income levels for pollutants for which spatial separation is relatively easy as compared to pollutants for which spatial separation is difficult our results suggest that even high income households in the united states have not yet reached the income level at which their demand for better environmental quality is high enough to cause the income pollution relationship to turn downwards for all the pollutants that we analyzed

nonhomothetic growth models for the environmental kuznets curve we show the role of the elasticity of substitution between general consumption and the environment in environmental degradation specifically our numerical experiments demonstrate for a wide range of models exponential utility generates the environmental kuznets curve without adding any special assumptions with exponential utility the elasticity of substitution and hence the substitution effect between consumption and the environment are both decreasing in income hence when income is low society the government readily gives up environmental quality in return for more consumption but it does not want to substitute consumption for the environment anymore once it becomes wealthy enough

trips trade and technology transfer a north south model of unintentional technology transfer is developed where the stringency of southern patent protection provides the institutional backdrop for a strategic game in a high tech goods market the appropriability regime is set endogenously and combines elements of imperfect southern patent protection with the protection afforded by market made northern technology masking less stringent protection of northern intellectual property can work much like other strategic trade policies therefore developed countries appear to be right in demanding discussion of intellectual property rights in gatt

a quantitative reassessment of the purchasing power parity hypothesis evidence from norway and the united kingdom summary annual data from norway and the united kingdom from 1874 to 1971 are used to reassess the empirical performance of the purchasing power parity ppp doctrine the simple version of the ppp relationship is supported by the data only if different short run dynamics during a floating rate period 1914 1928 is allowed for two sets of factors were found to be important in amending the simple ppp model these were short run cyclical variables affecting the adjustment towards the ppp equilibrium relationship and long run structural factors such as productivity and terms of trade within this expanded model the proportionality between the exchange rate and relative price levels could not be rejected

a re assessment of the relationship between real exchange rates and real interest rates 1974 1990 abstract this paper uses cointegration techniques and error correction models to re examine the link between real exchange rates and real interest rate differentials the results show that real exchange rates and real interest rates are nonstationary however they are not cointegrated with each other on the other hand the dynamic models indicate that there might be a long run relationship between these variables but this cannot be verified the final conclusion is that there is little empirical evidence in support of a systematic relationship and this result is robust across exchange rates time periods and measures of expected inflation

relationships between water pollutant discharges per capita pdcs and indicators of economic level water supply and sanitation in developing countries abstract water pollutant discharges per capita pdcs as indicators to evaluate quantitatively domestic wastewater pollutant discharges to the ambient water were applied to eight international coastal zones and lakeside regions statistical analyses were conducted to find the relationships between pdcs and water sanitation and economic parameters including purchase power parity based gross national income ppp gni per capita proportions of access to safe drinking water and appropriate sanitation domestic water usage amount and integrated parameters of water sanitation and economic indicators wsei1 2 two of the important findings from the regression analyses results were pdc bod correlated with ppp gni per capita with 3rd order regression and pdc tp correlated with wsei1 positively with 10 significance besides smaller adjusted regression coefficients t values of partial regression coefficients between pdc tp and wsei2 increased in the most analyses cases compared to those between pdc tp and wsei1 which showed improvement of the indices empirical estimations were also conducted based on the regression analyses results and distributions of pdcs and ppp gni per capita on the graphs six components generated by the principle component analysis pca contributed 99 of the parameters the first component represented access to sanitation second one represented household connection of safe drinking water third one represented areal equipment of water supply in urban area fourth one represented domestic water usage amount fifth one represented areal equipment of water supply and sixth one represented income per capita and sanitation although some statistically significances of the multiple linear regression analysis were observed the relationships between pdcs and the water supply parameters were considered as complicated in regards to areal equipment and household connection and in whole country and in urban area possible chronological relationships between pdc bod and water supply equipment were considered based on the results of the multiple linear regression analyses and pca based on the considerations of the water pollutant discharges and the economic related parameters relationships domestic wastewater treatment facility deployments and improvements on pollutant discharges reduction for the water quality improvement in the receiving water bodies were recommended which would lead the relationship curves between the water sanitation and economic related indicators and pdcs to move downward

intellectual property rights and foreign direct investment abstract this paper develops a product cycle model with endogenous innovation imitation and foreign direct investment fdi we use this model to determine how stronger intellectual property rights ipr protection in the south affects innovation imitation and fdi we find that stronger ipr protection keeps multinationals safer from imitation but no more so than northern firms instead the increased difficulty of imitation generates resource wasting and imitation disincentive effects that reduce both fdi and innovation the greater resources absorbed in imitation crowd out fdi reduced fdi then transmits resource scarcity in the south back to the north and consequently contracts innovation

does stronger patent protection increase export variety evidence from us product level data proponents of global intellectual property rights iprs reforms have argued that developing countries weak iprs limit their access to foreign innovative products and technologies central to our understanding of the effects of iprs on product access is the influence of national differences in patent protection on corporate behavior and business strategy of multinational firms using detailed product data on us exports from 1990 to 2000 this research note assesses the impact of strengthening iprs in developing countries on product variety of us exports colonial origin and cross industry variation in patent effectiveness serve to identify the impact the results show that the strengthening of iprs increased exports of new products in patent sensitive industries the expansion in product variety accounted for the entire increase in us exports the findings substantiate claims that ratification of trips by developing countries promotes access to new foreign products and technologies additionally the results demonstrate that patent protection is a significant institutional factor in us firms business decisions over the introduction of new products and processes into a developing country marketplace

seigniorage and the case for national money in countries with high rates of inflation there is typically movement away from the use of the local currency the paper analyzes the costs and benefits of using a local currency with emphasis on the seigniorage foregone by using a foreign money even if it should be desirable for a country to fix its exchange rate it still loses seigniorage if it does not use its own money the case for using a foreign money then turns largely on the superior discipline imposed on domestic policymakers by removing their control over the money supply alternative methods of imposing discipline are discussed estimates of the amount of seigniorage raised by different governments are presented seigniorage amounts in some cases to about 10 percent of government revenue estimates are also presented of both the annual flow and one time stock costs of giving up use of domestic currencies and instead using the dollar the flow cost is typically about 1 percent of gnp and the stock cost is around 10 percent of gnp

loss of monetary discretion in a simple dynamic policy game abstract we analyze a simple policy game featuring monetary credibility problems and argue that loss of monetary discretion is not advantageous two elements form the basis of our analysis firstly we endogenize the source of credibility problems and secondly we consider a dynamic framework where credibility problems are not time invariant by doing this we are able to demonstrate that credibility problems are temporary and in steady state the government has removed these through sound policies a binding policy rule will only serve as an obstacle towards this steady state

the limits of independence and the policy of the ecb it is argued that the european central bank s independence is not as secure as it seems and that as a result it has appreciable institutional incentives to protect and enhance its position it follows that its behaviour should not be understood as being solely determined by the pursuit of price stability one consequence is that certain points on which it has been criticised on the basis that its approach makes for ineffective monetary policy might be better understood as often effective attempts to protect its position another is that making a central bank or any other institution completely independent may be much harder than it seems and failed attempts which come close are not necessarily to be preferred even by the advocates of independence to less ambitious designs

welfare effects of global patent protection this paper uses a simple model of invention and patent protection to examine the welfare effects of extending patent protection from the country where invention takes place to another country that is only a consumer of invented products it is shown that while the welfare of the inventing country certainly rises with the extension of patent protection that of the other country probably falls and may well fall by more than the increase in welfare of the inventing country in particular as patent protection is extended to a larger and larger portion of the world the effect on the welfare of the world as a whole of extending it to the rest of the world becomes negative

trips trade and growth a two country model of endogenous growth is employed to assess the importance of intellectual property rights to trade growth and technology transfer the paper provides theoretical results linking the intellectual property rights regime to trade patterns aggregate r d worldwide growth and aggregate welfare measures failure to provide patent protection for foreign made innovations forces innovators to employ less than the best practice research technologies reduces aggregate r d activities worldwide effectively eliminates technology transfer across countries and reduces worldwide growth copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

inflationary finance under discrepion and rules inflationary finance involves first the tax on cash balances from expected inflation and second a capital levy from unexpected inflation from the standpoint of minimizing distortions these capital levies are attractive ex post to the policymaker in a full equilibrium two conditions hold 1 the monetary authority optimizes subject to people s expectations mechanisms and 2 people form expectations rationally given their knowledge of the policymaker s objectives the outcomes under discretionary policy are contrasted with those generated under rules in a purely discretionary regime the monetary authority can make no meaningful commitments about the future behavior of money and prices under an enforced rule it becomes possible to make some guarantees hence the links between monetary actions and inflationary expectations can be internalized there is a distinction between fully contingent rules and rules of simple form a simple rule allows the internalization of some connections between policy act ion and inflationary expectations but discretion permits some desirable flexibility of monetary growth this abstract was borrowed from another version of this item

are there limits to growth a simple theoretical model of pollution is developed that generates an inverted u shape relationship between per capita income and environmental quality this model is then used to study long run growth the same inverted u shape is shown to appear in time series and the prospects for sustained growth are shown to hinge on whether increasingly strict environmental regulation is compatible with a constant rate of return on capital implementation is also studied tax and voucher schemes are shown to have an advantage over direct regulation because they provide the correct incentives for capital accumulation copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

cointegration how short is the long run abstract when testing for cointegration and faced with short sample periods it is common for researchers to turn to more frequently sampled observations that is to move from annual to quarterly or monthly data in order to increase the number of observations we argue that such a gain in the degrees of freedom is more apparent than real essentially cointegration is a long run concept and hence requires long spans of data to give tests for cointegration much power rather than merely large numbers of observations using monte carlo simulations we demonstrate this for four popular tests for cointegration

purchasing power parity under the european monetary system abstract using reduced rank cointegration analysis this study examines whether exchange rate realignments are effective in extenuating the deviations from purchasing power parity ppp under the european monetary system ems in contrast to previous studies more positive evidence for the ppp hypothesis is found the difference in findings can be attributed partly to the statistical technique used the correction of the finite sample bias and the adjustment for realignment effects in general the results of this study support that currency realignments of the ems have been effective in maintaining ppp among its member countries

stationarity of the european real exchange rates evidence from panel data this paper employs a panel unit root test for the real exchange rates of 13 eu member countries the estimation period covers the ems period from 1980 1 to 1992 2 in contrast with the earlier panel unit root studies concerning purchasing power parity ppp effective real exchange rates are used as a result the non stationarity of the real exchange rate was rejected however the half life of the real exchange rate adjustment turned out to be long potential reasons for this might be the relatively short estimation period and the nature of the data

systems of bilateral real exchange rates it is agrued that purchasing power partly should not be tested as a series of separate bilateral relationship instead a country s set of bilateral real exchange rates should be tested as a complete system this study implements such an approach on two different datasets for the group of seven major industrial countries the results contrast sharply with the related work carried out by abuaf and jorion 1990 a tentative theoretical framework is sketched against which the results can be interpreted

harmonisation and globalisation of intellectual property culture this paper explores the relationship between the two sides of intellectual property culture in an international context namely the harmonisation of its protection and the globalisation of its creation to this end we explore the role of intellectual property rights ipr protection in the recent surge in the internationalisation of patents that originates from the newly emerging economies the aim is to capture the outreach of the northern intellectual property culture to the south and the south north globalisation of the resulting intellectual property that emerges in the south global bilateral patent data are used to investigate the location specificity of ipr enforcement for the emergence of this phenomenon we find that the harmonisation of ipr protection encourages foreign patenting activities of southern innovators our findings suggest that a global convergence of ipr protection can stimulate the production and the internationalisation of intellectual property in the south as the north and the south grow closer in terms of levels of development a harmonised institutional structure becomes more adequate as they increasingly share similar markets

corruption and the environmental kuznets curve empirical evidence for sulfur abstract we investigate how corruption influences the income level at the turning point of the relationship between sulfur emissions and income using a wide cross national panel of countries at different levels of development and with different degrees of corruption our results support the environmental kuznets curve hypothesis for sulfur we find evidence that the higher the country s degree of corruption the higher the per capita income at the turning point suggesting different income pollution paths across countries due to corruption we build upon a new specification for the ekc developed by bradford et al 2005 that avoids using nonlinear transformations of potentially nonstationary regressors in panel estimation also we account for the indirect impact of corruption on emissions through its impact on per capita income our main findings remain unchanged when we investigate additional heterogeneity allowing for different income slopes across richer and poorer countries

measuring the effect of economic growth on countries environmental efficiency a conditional directional distance function approach using a recently developed probabilistic approach of a conditional directional distance function we measure the effect of economic growth on countries environmental efficiency in carbon dioxide emissions for a sample of 99 countries over the period of 1980 2010 our approach directly accounts for the exogenous factors influencing countries environmental production therefore we do not impose the separability condition on the estimated environmental efficiencies when examining the entire sample as well as the sample of developed countries our results reveal an inverted u shaped relationship between countries gdp per capita and environmental efficiency however when examining the relationship for the sample of developing countries the results reveal an n shaped form moreover our results show that countries ratifying the kyoto protocol tend to have higher efficiency scores implying that their mitigation activity is less costly

the advantage of tying one s hands ems discipline and central bank credibility abstract it is often argued that the ems is an effective disciplinary device for inflation prone countries in europe since it forces the respective policy makers to pursue more restrictive monetary policies than they would otherwise it is not clear however why these countries should submit themselves to such discipline this paper argues that to answer this question appropriately one must consider that ems membership brings potentially large credibility gains policy makers in inflation prone countries the reason is that not only it attaches an extra penalty to inflation in terms of real appreciation but makes the public aware that the policy maker is faced with such penalty and thus helps to overcome the inefficiency stemming from the public s mistrust of the authorities

a jump diffusion model for the european monetary system abstract we propose a general continuous time bivariate jump diffusion representation for the exchange rates of european currencies our model captures key features of the exchange rate mechanism fluctuation within bilateral limits is modeled by appropriate diffusion dynamics while discontinuous variation in the level of the fluctuation band is posited to have a jump structure under specific assumptions the probability distribution of the exchange rate process is derived analytically we also perform an empirical investigation of these exchange rates comparing the fit of alternative models we find some evidence of mean reversion inside the bands for these exchange rates jel f33 c51

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

are weak patent rights a barrier to u s exports abstract this paper assesses whether how and to what extent u s exports are sensitive to national differences in patent rights i estimate bilateral trade equations that account for trade distortions related to patent rights using data on state to country manufacturing exports in 1992 i find that weak patent rights are a barrier to u s exports but only to countries that pose a strong threat of imitation e g china the stronger patent rights required under the wto agreement increase u s exports to these high threat markets alternatively strengthening patent rights in countries that pose a weak threat of imitation reinforces monopoly power and reduces u s exports to these markets

transparency reputation and credibility under floating and pegged exchange rates this paper shows that if the cost of importing foreign inflation and real exchange rate shocks are not too high then the equilibrium nominal exchange rate regime for a country with a credibility problem is a peg under which credibility is higher and inflation is lower than under a float this holds true although devaluations of the pegged rate are assumed to be costless the reason is that as realized inflation is not perfectly controllable planned inflation under a float is private information in contrast since the exchange rate can be perfectly controlled pegging resolves the private information problem is more transparent and makes reputation more effective

imitation costs and patents an empirical study it has long been recognised that the costs of imitating new products have an important effect on the incentives for innovation in a market economy as arrow i962 and others have pointed out if firms can imitate an innovation at a cost that is substantially below the cost to the innovator of developing the innovation there may be little or no incentive for the innovator to carry out the innovation in their discussions of the innovation process economists frequently have called attention to the major role played by the costs of imitation but there has been little or no attempt to measure these costs to test various hypotheses concerning the factors influencing them or to estimate their effects in this paper we report some findings of what seems to be the first study of this topic in addition we present data regarding the effects of patents on imitation costs and on the rate of innovation

a panel data heterogeneous bayesian estimation of environmental kuznets curves for co2 emissions this article investigates the environmental kuznets curves ekc for co2 emissions in a panel of 109 countries during the period 1959 to 2001 the length of the series makes the application of a heterogeneous estimator suitable from an econometric point of view the results based on the hierarchical bayes estimator show that different ekc dynamics are associated with the different sub samples of countries considered on average more industrialized countries show evidence of ekc in quadratic specifications which nevertheless are probably evolving into an n shape based on their cubic specification nevertheless it is worth noting that the eu and not the umbrella group led by us has been driving currently observed ekc like shapes the latter is associated to monotonic income co2 dynamics the eu shows a clear ekc shape evidence for less developed countries consistently shows that co2 emissions rise positively with income though there are some signs of an ekc analyses of future performance neverthe

total factor productivity and the environmental kuznets curve abstract empirical studies support the environmental kuznets curve hypothesis ekc for some pollutants as income increases pollution increases reaches a peak and eventually decreases while relying mostly on cross sectional data the interpretations assert that the ekc is a by product of economic growth over time in doing so and in neglecting the role of important country specific characteristics these studies overlook potential econometric problems and introduce policy misconceptions differences in total factor productivity tfps account for much of the variation in income across countries with important implications for environmental quality we develop a theoretical model where different tfps produce a cross sectional ekc even if the dynamic path of environmental quality to its steady state in individual countries suggest otherwise the cross sectional ekc depends on diminishing returns to scale in environmental protection on the curvatures of the utility function with respect to consumption and of the environmental protection function and the elasticities of steady state consumption and environmental expenditures with respect to variation in tfps

trade and environment an empirical analysis of the technology effect in the steel industry abstract the objective of this paper is to study the impact of free trade on global environmental quality by focusing on the technology effect that is the relationship between trade openness and the adoption diffusion of clean technologies the paper attempts to empirically verify the existence of the technology effect by looking at the relationship between trade policy regime or openness and the speed of clean technology diffusion in the steel industry focusing on a cleaner steel technology the electric arc furnace eaf in 30 steel producing countries over 25 years the results show that eaf technology is diffused faster in countries that have more open trade policy regimes thereby supporting the existence of the technology effect for the industry considered

how trade related are intellectual property rights abstract there is little empirical evidence about whether differing international levels of patent protection influence trade flows if a nation strengthens its patent laws it could experience higher or lower imports we specify an empirical model in which deviations of bilateral sectoral imports from anticipated levels are related to income trade barriers and patent laws patent regulations in the importing country are corrected for endogeneity through the use of instrumental variables the results of the final equations indicate that increasing patent protection has a positive impact on bilateral manufacturing imports into both small and large developing economies

the environment as a factor of production the authors develop a model of environmental resource use in production with an empirical analysis of how electric power companies consume and bank sulfur dioxide pollution permits the model considers emissions fuels and labor as variable inputs with quasi fixed inputs of permits and capital incorporating information from permit markets allows the authors to distinguish between user costs and asset shadow values their findings indicate that firms are holding stocks of pollution permits for reasons other than short term cost savings the results also reveal substantial substitution possibilities between emissions permits stocks and other factors of production the authors speculate that anticipated secondary markets for carbon offset inventories related to the flexibility mechanisms of the kyoto protocol will have similar effects for greenhouse gas emitting firms

the impact of patent rights on international trade evidence from canada the extent to which canadian manufacturing exports are sensitive to national differences in patent rights are examined the conclusion is that overall canadians tend to export more to those countries where their patent rights are highly safeguarded stronger patent protection induces canadians to export relatively more to high income countries than to low income countries in addition the effect of stronger patent rights is to increase exports to those countries that pose a strong threat of imitation and to reduce exports to those countries that pose the weakest threat of imitation jel classification f13 o34 impact de la propriete des brevets sur le commerce international resultats pour le canada ce memoire examine jusqu a quel point les exportations manufacturieres canadiennes sont sensibles aux differences dans la propriete des brevets entre pays l etude conclut que les canadiens tendent a exporter davantage vers les pays ou la propriete des brevets est hautement protegee il appert que la plus forte protection de la propriete des brevets tend a faire que les canadiens exportent relativement plus vers les pays a hauts revenus que vers ceux a plus faibles revenus de plus il appert que l effet de la plus forte protection des brevets est d accroitre les exportations vers les pays qui posent une forte menace d imitation et de reduire les exportations vers les pays qui posent la plus faible menace d imitation

on the imperfect substitutability of policy regimes exchange rate targetting vs policy coordination abstract exchange rate targetting is always an imperfect substitute for explicit policy coordination but succeeds when economies are either structurally dissimilar with symmetric shocks or structurally symmetric with dissimilar shocks a joint commitment then generates economies of scale in interventions

do stronger patent rights raise high tech exports to the developing world abstract despite over 20 years of debate the trips agreement remains very contentious this paper evaluates the impact of strengthening patent rights prs in developing countries on developed countries exports over the 1962 2000 period colonial origin is used to isolate exogenous variation in prs the impact is then identified by examining the cross industry difference in sensitivity to prs i find that the increase in prs made in response to the trips agreement added about 35 billion 2000 us dollars to the value of developed countries patent sensitive exports into 18 developing countries this amount is equivalent to an 8 6 increase in these developing countries annual value of patent sensitive imports the increase in the value of exports was driven by a quantity rather than a price increase

cointegration and tests of purchasing power parity nonstationarity in the levels of spot exchange rates and domestic and foreign price indices makes the use of conventional tests of the absolute version of purchasing power parity ppp inappropriate if ppp is true inter country commodity arbitrage ensures that deviations from a linear combination of spot exchange rates and domestic and foreign price levels should be stationary under these conditions exchange rates and price levels should form a cointegrated system we find the null hypothesis of no cointegration cannot be rejected for all five countries thus violating the long run absolute version of ppp

growth and the environment are we looking at the right data abstract time series evidence on growth and the environment suggests an environmental kuznets curve ekc whereas longitudinal studies fail to produce robust estimates for the ekc this paper offers a theoretical explanation for these apparently contradicting findings and theoretical guidance for future empirical work

income inequality and pollution a reassessment of the environmental kuznets curve abstract improvements in some measures of air and water quality can accompany rising per capita income as illustrated by the so called environmental kuznets curve for pollution variables which show such a relationship we hypothesize that a more equitable distribution of power contributes to these outcomes by enhancing the influence on policy of those who bear the costs of pollution relative to the influence of those who benefit from pollution generating activities an empirical analysis of international variations in seven indicators of air and water quality supports this hypothesis literacy political rights and civil liberties are found to have particularly strong effects on environmental quality in low income countries

international protection of intellectual property we study the incentives that governments have to protect intellectual property in a trading world economy we consider a world economy with ongoing innovation in two countries that differ in market size and in their capacities for innovation after describing the determination of national patent policies in a non cooperative regime of patent protection we ask why is intellectual property better protected in the north than in the south we also study international patent agreements by deriving the properties of an efficient global regime of patent protection and asking whether harmonization of patent policies is necessary or sufficient for global efficiency jel o34 f13 during the 1980 s and early 1990 s the united states and several european countries expressed strong dissatisfaction with what they deemed to be inadequate protection of intellectual property in many developing countries the developed countries made the upgrading of intellectual property rights iprs one of their highest priorities for the uruguay round of trade talks their efforts bore fruit in the agreement on traderelated aspects of intellectual property rights trips which was approved as part of the final act of the uruguay round trips establishes minimum standards of protection for several categories of intellectual property for example in the area of new technology it essentially harmonizes

a long run view of the european monetary system abstract this papaer analyzes the exchange rates and consumer price indices of six countries participating in the european monetary system ems during the entire period of floating exchange rates the analysis shows that most of these real exchange rates have unit roots even when one allows for the possibility of a structural break at the time of the advent of the ems further proces and exchange rates are not co integrated during the ems period the data suggest that the 12 realignments of the ems have not served fully too offset the member countries inflation differentials

asian pacific real exchange rates real exchange rate behaviour is investigated for 11 asian pacific countries between 1976 and 1990 using a modified version of principal components analysis the standard principal component analysis is changed such that the results are independent of the numeraire currency for the full sample period the dominant asian exchange rate movements are relative to indonesia japan and the united states significant changes in the convariance structure have taken place since 1986 it appears that asian pacific real exchange rate movements since september 1986 are dominated by australia korea new zealand and japan this contradicts the popular notion of an emerging yen block in the asian pacific region

testing purchasing power parity under the null hypothesis of co integration this paper analyzes monthly data on the exchange rates and price indices of the eleven major industrial countries over the modern period of floating exchange rates it presents tests that are based upon the null hypothesis of cointegration the paper finds evidence that most country pairs not involving north american currencies have exchange rates and price indices that are cointegrated it estimates the error correction representation for the series that are cointegrated and it shows that the dynamic adjustment of the relationship between exchange rates and prices is accomplished almost entirely in the market for foreign exchange copyright 1991 by royal economic society

an overlapping generations model of growth and the environment this article analyzes the potential conflict between economic growth and the maintenance of environmental quality in an overlapping generations model short lived individuals make decisions which have long lasting effects on both factor productivity and the environment the model provides a theoretical explanation of observed correlations between environmental quality and income whereby economic growth is associated first with declines then improvements in environmental quality it suggests circumstances in which multiple pareto ranked steady state equilibria may arise and in which sustained growth of both capital and environmental quality may occur overmaintenance of the environment analogous to dynamically inefficient overaccumulation of capital may emerge copyright 1994 by royal economic society

understanding the empirical literature on purchasing power parity the post bretton woods era abstract this paper argues that the empirical failure of statistical tests of ppp in post bretton woods data is largely due to the low power of the tests employed this result is demonstrated using monte carlo experiments on the size and power of different testing procedures a new procedure based on horvath and watson econometric theory 11 pp 984 1014 1995 has greater power than previous approaches using the horvath watson procedure we find moderate evidence in favor of ppp in the post bretton woods era

intellectual property protection and the industrial composition of multinational activity in a north south model with endogenous fdi we examine the impact of southern ipr protection on the mode and industrial composition of international technology transfer a novel feature of the model is that due to technological reasons industries differ with respect to their susceptibility to imitation in equilibrium licensing occurs in industries where the risk of imitation is low and fdi where it is of intermediate magnitude stronger iprs in the south i alter the industrial composition of multinational activity towards licensing at the expense of fdi ii reduce local imitation and iii increase licensing and to a lesser extent fdi

the phillips curve the persistence of inflation and the lucas critique evidence from exchange rate regimes comment we present evidence from the united states and the united kingdom that the persistence of price inflation is significantly higher under managed exchange rate regimes than under gold based fixed exchange rate regimes these differences are also reflected in expectations augmented phillips curves we use a two country macro model with forward looking price setters to demonstrate that higher monetary accommodation of inflation and exchange rate accommodation of inflation differentials increase inflation persistence the evidence does not contradict this hypothesis it supports the hypothesis of forward looking price setters and highlights the empirical significance of the lucas critique jel e31 e42 f33

patent protection and the industrial composition of multinational activity evidence from u s multinational firms using data on u s firms technology licensing to local agents in developing countries this paper examines the impact of patent protection on internal and arms length technology transfer the effects of protection vary across products according to their complexity consistent with theories of internalization we find that patent reforms enable local firms to attract more arms length technology transfer especially of simple products which are relatively easy to imitate affiliated licensing also rises among simple products but falls among complex products the results withstand several robustness checks including controlling for endogeneity by using colonial origin as an instrument and are equally strong whether patent protection is measured by its intensity or by the timing of reforms the results have significance for patent policy in the developing world where access to knowledge is critical through arms length technology contracts proprietary knowledge diffuses beyond firm boundaries enabling local agents to access not only the protected technology but also know how

intellectual property rights product complexity and the organization of multinational firms this paper studies how the intellectual property right ipr regime in destination countries influences the way multinationals structure the international organization of their production in particular we explore how multinationals divide tasks of dierent complexities across countries with dierent levels of ipr protection the analysis studies the decision of firms between procurement from related parties and outsourcing to independents suppliers at the product level it also breaks down outsourcing into two types by distinguishing whether or not they involve technology sharing between the two parties we combine data from a french firm level survey on the mode choice for each transaction with a newly developed complexity measure at the product level our results confirm that firms are generally reluctant to source highly complex goods from outside firm boundaries by studying the interaction between product complexity and the ipr protection we obtain that i for technology sharing outsourcing iprs promote outsourcing of more complex goods to a destination country by guaranteeing the protection of their technology ii for non technology related outsourcing iprs attract the outsourcing of less complex products that are more prone to reverse engineering and simpler to decodify and imitate

trade related intellectual property rights industry variation and technology diffusion the wto inspired strengthening of intellectual property rights iprs in developing countries remains highly controversial even more than 15 years after the 1994 trips agreement this paper assesses how a strengthening of iprs aects international technology diusion by altering the volume of high tech exports into developing countries a simple north south general equilibrium model in which industries dier in their imitation rates is developed stronger iprs encourage northern rms in a wider range of industries to start exporting exports in industries with the highest risk of imitation rise while exports in other industries may fall international technology diusion does not necessarily fall with stronger iprs more technology diuses to the south because new high tech products are introduced in the southern market this works against the reduction in technology diusion caused by limited imitation

is there a long term relationship between agricultural ghg emissions and productivity growth a dynamic panel data approach the paper adopts a single country regional panel dataset to analyse the long term relationship between agricultural greenhouse gases ghg emissions and productivity growth and consequently to assess emissions sustainability the hypothesis of emission sustainability is assessed by estimating alternative panel model specifications with conventional and gmm estimators applied to the highly heterogeneous italian regional agriculture whose methane and nitrous oxide emissions are properly reconstructed for the periods 1951 2008 and 1980 2008 the modelling approach and the empirical specification include the environmental kuznets curve ekc as one of the possible outcomes results suggest that when a significant relationship between agricultural ghg emissions and productivity growth occurs it is often monotonic and though sustainability is accepted for some ghg no univocal robust evidence of the ekc emerges across the different specifications estimators and periods policy implications of this empirical evidence are finally drawn