learning to believe in sunspots a number of authors have shown that competitive economies may possess sunspot equilibria that is rational expectations equilibria in which purely extrinsic uncertainty affects equilibrium prices and allocations 2 such results demonstrate that it does not require a lack of faith in the rationality of market participants to believe that competitive markets may be subject to purely speculative fluctuations driven solely by expectations 3 the mere existence of sunspot equilibria as solutions to a system of marketclearing conditions however might not be judged sufficient to indicate that competitive markets with rational participants could ever be subject to speculative instability the sunspot equilibria represent states of affairs in which agents act differently in the case of different realizations of the sunspot variable and it is rational for each agent to do so but it might be thought unlikely that the beliefs of all the participants in the market could ever come to be coordinated so as to bring about an equilibrium of that kind it is rational to believe that sunspots convey information about future states of affairs once the economy is in a sunspot equilibrium but why would rational agents ever begin to believe in such a thing so as to create the conditions under which the belief is rational in order to address such a question one must go beyond the mere statement of the conditions for equilibrium and discussion of what states of affairs satisfy them one must specify an explicit dynamic process according to which the beliefs of agents adjust when out of equilibrium any exercise of this kind is necessarily unsatisfactory as there is no univocal meaning for the postulate of rational behavior outside of an equilibrium it may well be the case that

wind power price trends in the united states struggling to remain competitive in the face of strong growth the amount of wind power capacity being installed globally is surging with the united states the world leader in terms of annual market share for three years running 2005 2007 the rapidly growing market for wind has been a double edged sword however as the resulting supply demand imbalance in wind turbines along with the rising cost of materials and weakness in the u s dollar has put upward pressure on wind turbine costs and ultimately wind power prices two mitigating factors reductions in the cost of equity provided to wind projects and improvements in project level capacity factors have helped to relieve some of the upward pressure on wind power prices over the last few years because neither of these two factors can be relied upon to further cushion the blow going forward policymakers should recognize that continued financial support may be necessary to sustain the wind sector at its current pace of development at least in the near term though this article emphasizes developments in the u s market for wind power those trends are similar to and hold implications for the worldwide wind power market

macroeconomic features of the french revolution this paper describes aspects of the french revolution from the perspective of theories about money and government budget constraints we describe how unpleasant fiscal arithmetic gripped the old regime how the estates general responded to reorganize france s fiscal affairs and how fiscal exigencies impelled the revolution into a procession of monetary experiments ending in hyper inflation

the distributional welfare effects of rising prices in the united states the 1970 s experience this paper presents estimates of the distributional welfare impacts ofthe actual price rises of energy and nonenergy commodities during the1970 80 decade in the united states measures of welfare changes basedon net compensating variations are computed for families that differ with respect to demographic characteristics initial total expenditurelevels and total expenditure growth profiles over the decade for comparison measures of welfare change based solely on the changes inenergy prices are computed the author shows that welfare differencesdue to initial expenditure levels or demographic profiles are minor incomparison to welfare differences due to different expenditure growthprofiles copyright 1986 by american economic association

on the low frequency relationship between public deficits and inflation summary we estimate the low frequency relationship between fiscal deficits and inflation and pay special attention to its potential time variation by estimating a time varying vector autoregression model for us data from 1900 to 2011 we find the strongest relationship neither in times of crisis nor in times of high public deficits but from the mid 1960s up to 1980 employing a structural decomposition of the low frequency relationship and further narrative evidence we interpret our results such that the low frequency relationship between fiscal deficits and inflation is strongly related to the conduct of monetary policy and its interaction with fiscal policy after world war ii copyright 2015 john wiley sons ltd

exchange rate based stabilizations a literature review the exchange rate based stabilizations erbss that have been undertaken in chronic inflation countries have generated a controversial body of literature regarding the effects of disinflation programs especially those on real consumption and output this survey provides an extensive overview of the literature on erbs the paper covers various empirical studies that have attempted to document the macroeconomic regularities associated with erbs discussing both their strengths and their weaknesses it analyzes diverse theoretical models that have been put forward to replicate the business cycles associated with erbs and sheds light on which models perform better using real data the results suggest that durables incorporated weak credibility and sticky price model proves to be most compatible with the empirical regularities observed in the course of erbs

anchoring inflation expectations in the face of oil shocks in the proximity of zlb a tale of two targeters this paper applies a n ardl framework to two longstanding inflation targeting policy regimes in order to assess the relation between oil prices dynamics and inflation expectations and the further consequences created by a proximal zlb situation the application is based on data from january 1994 to june 2018 for new zealand and the uk we focus on oil price shocks as a variable of interest and this was found to have an asymmetric effect on inflation expectations one further key finding is that the real effective exchange rate has significant impacts on inflation expectations and this is indicative of an exchange rate pass through to inflation via an inflation expectations channel in general we find that inflation exchange rate money supply output growth unemployment and fiscal deficit surplus have significant implications for inflation expectations inflation expectations are also influenced by their past behaviour indicating adaptive inflation expectations this study contributes to the debate on the inflation targeting at zlb

inflation volatile public spending and endogenously sustained growth i construct a model of an economy whose government finances volatile public spending via money creation the model jointly accounts for the emergence of some well known empirical observations specifically it predicts a negative correlation between output growth and policy volatility furthermore given that both the mean and the variance of the inflation rate are elevated by fluctuations in public spending the model provides a novel theoretical justification for the simultaneous negative correlation of long run growth with both average inflation and inflation variability the model also supports the view that policy volatility reduces social welfare

small distributed generation versus centralised supply a social cost benefit analysis in the residential and service sectors abstract this paper aims at measuring the social benefits of small chp distributed generation dg in the residential and service sectors we do this by comparing the social costs of decentralised and centralised supplies simulating ideal situations in which any source of allocative inefficiencies is eliminated this comparison focuses on assessing internal and external costs the internal costs are calculated by simulating the optimal prices of the electricity and gas inputs the external costs are estimated by using and elaborating the results of the dissemination process of the externe project one of the most recent and accurate methodologies in this field the analysis takes into account the main sources of uncertainty about the parameter values including uncertainty about external cost estimations despite these sources of uncertainty the paper concludes that centralised supply is still preferable to small dg in fact the overall range of dg social competitiveness is restricted even considering further remarkable improvements in dg electrical efficiency and investment costs the results are particularly unfavourable for the residential sector whereas in the service sector the performance of dg technologies is slightly better

why are stabilizations delayed when a stabilization has significant distributional implications e g tax increases to eliminate a large budget deficit socioeconomic groups may attempt to shift the burden of stabilization onto other groups the process leading to stabilization becomes a war of attrition each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden the authors solve for the expected time of stabilization in a model of rational delay and relate it to several political and economic variables they motivate this approach and its results by comparison to historical and current episodes copyright 1991 by american economic association

an integrated ant colony optimization approach to compare strategies of clearing market in electricity markets agent based simulation in this paper an innovative model of agent based simulation based on ant colony optimization aco algorithm is proposed in order to compare three available strategies of clearing wholesale electricity markets i e uniform pay as bid and generalized vickrey rules the supply side actors of the power market are modeled as adaptive agents who learn how to bid strategically to optimize their profit through indirect interaction with other actors of the market the proposed model is proper for bidding functions with high number of dimensions and enables modelers to avoid curse of dimensionality as dimension grows test systems are then used to study the behavior of each pricing rule under different degrees of competition and heterogeneity finally the pricing rules are comprehensively compared using different economic criteria such as average cleared price efficiency of allocation and price volatility also principle component analysis pca is used to rank and select the best price rule to the knowledge of the authors this is the first study that uses aco for assessing strategies of wholesale electricity market

external costs of energy do the answers match the questions looking back at 10 years of externe abstract while the claim for getting prices right is quite popular in conceptual policy papers the implementation of appropriate internalisation strategies is still hampered by a lack of reliable external cost data great expectations were set into the externe project a major research programme launched by the european commission at the beginning of the 1990s to provide a scientific basis for the quantification of energy related externalities and to give guidance supporting the design of internalisation measures after more than a decade of research the externe label became a well recognised standard source for external cost data looking back into the externe history the paper pursues how emerging new scientific insights and changing background assumptions affected external cost estimates and related recommendations to policy over time based on externe results the usefulness and inherent limitations of external cost estimates for impact categories like climate change or nuclear waste disposal is discussed the paper also gives examples on how external costs in spite of remaining uncertainties are successfully used to support environmental policy

recurrent hyperinflations and learning we use a model of boundedly rational learning to account for the observations of recurrent hyperinflations in the 1980 s in a standard monetary model we replace the assumption of full rational expectations by a formal definition of quasi rational learning the model under learning matches some crucial stylized facts observed during the recurrent hyperinflations experienced by several countries in the 1980 s remarkably well we argue that despite being a small departure from rational expectations quasi rational learning does not preclude falsifiability of the model it does not violate reasonable rationality requirements and it can be used for policy evaluation

review of grid tie micro generation systems without energy storage towards a new approach to sustainable hybrid energy systems linked to energy efficiency abstract this paper reviews the literature on the subject albeit approaching hybrid micro generation power systems from a systems thinking st and cybernetics standpoint viewing them as dynamically complex adaptive systems cas coupled with and supplying to a set of homes termed a sustainable block in a rural setting here homeostatic regulation hr and control play a vital role in reaching efficient equilibrium towards reconciling power supply and demand response management unlike most of the work reviewed in the literature the focus here is on supervisory control of grid connected micro generation systems without energy storage aiming towards building energy efficiency thriftiness and sustainability in energy consumption building on homeostatic control hc principles first introduced by f c schweppe in 1979 the paper explores the concepts of sustainability and sustainable hybrid energy systems shes applied to micro generation focusing on operational aspects rather than on socio economic environmental or regulatory ones a concrete theoretical model for building a shes is presented for a proposed grid connected renewable microgrid the model seeks to reconcile power supply and demand towards efficient equilibrium homeostasis proposing reward based criteria for controlling renewable electricity supply and consumption in rural communities in chile discussion and recommendations are also offered stating that energy sustainability es is essentially a systems issue and one where es is first and foremost a structural organizational and operational property which is in the very nature of the system itself it is built into it rather than explained by exogenous factors

inflationary consequences of anticipated macroeconomic policies budget deficits implying an unbounded present value of government debt are infeasible and hence induce expectations of a future policy change we study how expectations of a policy switch whose timing or mix between expenditure cuts tax increases or increases in money growth rates may be uncertain affect economic dynamics before the switch takes place we are especially concerned with the correlation between changes in the deficit and inflation of particular interest is our finding that timing uncertainty may induce fluctuations in the rate of inflation that seem to be unrelated to the budget deficit at a time when the budget deficit is responsible for inflation

nominal interest rates consumption booms and lack of credibility a quantitative examination abstract exchange rate based stabilization programs in chronic inflation countries have often been accompanied by an initial expansion of private consumption followed by a contraction this consumption cycle has been attributed to lack of credibility in the sense that the public views the reduction in the devaluation rate as temporary this paper assesses the quantitative relevance of the temporariness hypothesis by comparing the predictions of a simple model to the actual figures for seven major programs the paper concludes that nominal interest rates must fall substantially for the temporariness hypothesis to account for an important fraction of the observed consumption booms

evaluation of grid connected rural electrification projects in developing countries extension of the power grid to rural and remote locations in a country has to be considered after detailed evaluation of technical economic and social implications the use of conventional economic analytical techniques to evaluate proposed rural distribution systems in an oil importing developing country environment is discussed the parameters involved in the analyses are described in detail case studies are presented using a typical developing country revalidation of evaluations incorporating socio economic analysis is introduced

testing a theory of exact aggregation this article analyzes the importance of exact aggregation restrictions and the modeling of demographic effects in jorgenson lau and stoker s 1982 model of aggregate consumer behavior these issues are examined at the household level using canadian cross sectional microdata exact aggregation restrictions and some implicit restrictions on household demographic effects are strongly rejected by our data these results do not preclude pooling aggregate time series data with cross sectional microdata to estimate a model of aggregate consumer behavior they do suggest however an alternative basis for the aggregate model

inflation stabilisation and the consumption of durable goods exchange rate based stabilisations in chronic inflation countries have often been characterised by an initial consumption boom which is most evident in the behaviour of durable goods followed by a later contraction this paper provides an explanation for such a boom recession cycle based on the timing of purchases of durable goods the initial fall in inflation results in a wealth effect which induces many consumers to bring forward their purchases of durable goods thus generating an aggregate consumption boom since most consumers replenish their stock of durable goods at the beginning of the programme a later slowdown follows

an empirical analysis of excess interbank liquidity a case study of pakistan we investigate the drivers of excess interbank liquidity in pakistan using the autoregressive distributed lag approach on weekly data for december 2005 to july 2011 we find that the financing of the government budget deficit by the central bank and nonbanks leads to persistence in excess liquidity moreover we identify a structural shift in the interbank market in june 2008 before june 2008 low credit demand was driving the excess liquidity holdings by banks after june 2008 banks precautionary investments in risk free securities drive excess liquidity holdings monetary policy is less effective if banks hold excess liquidity for precautionary reasons

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

exchange rate based stabilisation durables consumption and the stylised facts in this article we show that a model featuring durable consumer goods imperfect substitution between domestic and foreign assets and weak credibility can explain the qualitative and quantitative aspects of the stylised facts associated with exchange rate based stabilisation including the tremendous increase in real interest rates following a temporary reduction in the crawl total consumption spending rises 14 26 the real exchange rate appreciates 20 37 and the current account deficit swells to 10 15 of gross domestic product despite large capital inflows the real interest rate increases from 10 to 20 100

seigniorage operating rules and the high inflation trap there may be both a high and a low inflation equilibrium when the government finances the deficit through seigniorage under rational expectations the high inflation equilibrium is stable and the low inflation equilibrium unstable under adaptive expectations or lagged adjustment of money balances with rational expectations the low inflation equilibrium may be stable adding bond financing dual equilibria remain if the government fixes the real interest rate but a unique equilibrium is attained when the government sets a nominal anchor for the economy the existence of dual equilibria is thus a result of the government s operating rules

aggregate consumer behaviour and the measurement of inequality this paper presents an approach to inequality measurement based on an econometric model of aggregate consumer behaviour the novel feature of this model is that systems of individual demand functions can be recovered uniquely from the system of aggregate demand functions we present methods for evaluating social welfare based on an explicit social welfare function this social welfare function incorporates measures of individual welfare based on indirect utility functions for all consumer units we develop indexes of inequality based on actual and potential levels of social welfare

fiscal deficits and inflation abstract macroeconomic theory postulates that persistent fiscal deficits are inflationary yet empirical research has had limited success in uncovering this relationship this paper reexamines the issue in light of broader data and a new modeling approach that incorporates two key features of the theory unlike previous studies we model inflation as non linearly related to fiscal deficits through the inflation tax base and estimate this relationship as intrinsically dynamic using panel techniques that explicitly distinguish between short and long run effects of fiscal deficits results spanning 107 countries over 1960 2001 show a strong positive association between deficits and inflation among high inflation and developing country groups but not among low inflation advanced economies

the argentine stabilization plan of december 20th abstract in this paper an analytical model is developed to incorporate the essential characteristics of the stabilization plan implemented in argentina in january 1979 the model is based upon a set of simplifying assumptions that only approximate the complexity of the real world it is assumed that the expectations of inflation and the degree of excess demand or supply in the non traded goods market are the main intermediate determinants of the rate of inflation in that market the rate of change of prices of traded goods being determined by the external inflation together with the rate of devaluation treating thus the external rate of inflation as exogenous the only instrument available for influencing the rate of inflation in the long run is the rate of devaluation since the model assumes a fixed exchange rate regime the money supply is endogenous and hence unsuitable as an instrument of economic policy

backward looking indexation credibility and inflation persistence abstract inflation persistence is a stylized fact after disinflation standard staggered prices models show very little or no inflation persistence and hence are of little use when inflation is sticky in this paper i present a model that on the one hand is consistent with the evidence of sticky inflation and on the other can be directly incorporated into modern intertemporal optimizing models the model modifies calvo s calvo g 1983a staggered contracts and exchange rate policy in j a frenkel ed exchange rates and international economics university of chicage press chicago il calvo g 1983b staggered wages in a utility maximization framework journal of monetary ecomomics 12 3 383 393 exclusively forward looking model and includes a backward looking component it encompasses the two extreme cases of purely forward and backward looking price setting i show how the model can be used in open economy stabilization programs this is not the first model including a form of backward indexation in a staggered prices setting however it has the advantage of keeping the analytical elegance of the calvo model while enhancing its dynamics

consumer behaviour theory and empirical evidence a survey this survey is designed to emphasize the relationship between empirical a nd theoretical considerations in the analysis of consumer behavior a lthough it focuses primarily on analysis at the individual or micro l evel it tries where possible to draw implications for the estimati on of aggregate relationships the importance of micro level analysis stems from the rapid expansion in available panel and survey data se ts this development has generated its own theoretical and empirical issues many of which are raised in this survey copyright 1988 by royal economic society

inflation starts in latin america and the caribbean high rates of inflation are a perennial problem in latin american and caribbean lac countries this article attempts to identify the factors that initiate these inflationary episodes using observations on 31 lac countries between 1970 and 2006 the study finds that the key determinants of inflation starts in the region are demand pressures oil price shocks elections transitions to less repressive political regimes and foreign inflation

temporary stabilization predetermined exchange rates the paper analyzes the impact of a stabilization policy based on a temporary reduction in the rate of devaluation against a background in which a constant rate of devaluation has no real effects it is shown that the temporary policy does and furthermore that the real effects tend to become bigger in absolute value as the horizon of the temporary policy is shortened the central discussion is carried out in terms of a one good cash in advance model with perfect capital mobility and ramsey type consumers results are extended to account for home goods and variable velocity the roles of capital mobility and banking liberalization are briefly discussed

stabilization and growth in transition economies the early experience this paper analyzes the growth and stabilization experience in 26 transition economies in eastern europe the former soviet union and mongolia for the period 1989 1994 inflation rates have declined significantly in most countries following an inflation stabilization program growth resumes after stabilization occurs typically with a lag of about two years reducing inflation thus appears to be a precondition for growth an econometric analysis of the short run determinants of inflation and growth illustrates the key roles of fixed exchange rates improved fiscal balances and structural reforms in spurring growth and lowering inflation and confirms that inflation stabilization programs have been beneficial for growth even after controlling for structural reforms

political cycles and exchange rate based stabilization fixed exchange rates implemented to increase credibility and attract foreign investment or as an alternative approach to stabilization in high inflation economies have been shown to be successful in expanding economic activity and correcting inflation in the short term but often lead to undesirable outcomes in the medium to long term although there is a wealth of literature documenting the boom bust cycles associated with the adoption of a nominal anchor no adequate explanation has been proffered as to governments repeatedly choosing policies that are self defeating the authors address this question with a political economy explanation based on the notion of a self interested government for which short term stabilization is attractive in the face of incentives posed by the electoral cycle if the election coincides with the boom phase of an exchange rate based stabilization incumbent governments increase the likelihood of gaining reelection and the bust phase will develop if at all only after the contest the authors thus suggest a modified version of the traditional political business cycle from the standpoint of a self interested office seeking government exchange rate based stabilizations can make good political sense empirical results based on an analysis of eighteen latin american countries from 1970 to 1999 support the insights of the argument movements towards a more fixed exchange rate are greater than three times more likely in a preelection period than in other stages of the electoral cycle

on gradual disinflation the real exchange rate and the current account abstract we study the effects of a credible gradual exchange rate based disinflation program in a two sector economy after an initial exchange rate depreciation the reductions in the rate of devaluation reduce the monetary wedge generated by the cash in advance constraint leading to a gradual increase in absorption that yields progressive real exchange rate appreciations and current account deficits an initial boom in economic activity is not followed by a later contraction as labour supply expands during the whole length of the program many of the model s predictions are in accordance with the stylized facts on disinflation in chronic inflation countries in particular those of the mexican program of 1988 1992

sustainable energy systems role of optimization modeling techniques in power generation and supply a review electricity is conceivably the most multipurpose energy carrier in modern global economy and therefore primarily linked to human and economic development energy sector reform is critical to sustainable energy development and includes reviewing and reforming subsidies establishing credible regulatory frameworks developing policy environments through regulatory interventions and creating market based approaches energy security has recently become an important policy driver and privatization of the electricity sector has secured energy supply and provided cheaper energy services in some countries in the short term but has led to contrary effects elsewhere due to increasing competition resulting in deferred investments in plant and infrastructure due to longer term uncertainties on the other hand global dependence on fossil fuels has led to the release of over 1100 gtco2 into the atmosphere since the mid 19th century currently energy related ghg emissions mainly from fossil fuel combustion for heat supply electricity generation and transport account for around 70 of total emissions including carbon dioxide methane and some traces of nitrous oxide this multitude of aspects play a role in societal debate in comparing electricity generating and supply options such as cost ghg emissions radiological and toxicological exposure occupational health and safety employment domestic energy security and social impressions energy systems engineering provides a methodological scientific framework to arrive at realistic integrated solutions to complex energy problems by adopting a holistic systems based approach especially at decision making and planning stage modeling and optimization found widespread applications in the study of physical and chemical systems production planning and scheduling systems location and transportation problems resource allocation in financial systems and engineering design this article reviews the literature on power and supply sector developments and analyzes the role of modeling and optimization in this sector as well as the future prospective of optimization modeling as a tool for sustainable energy systems

welfare consequences of gradual disinflation in emerging economies emerging economies display considerable inequality in monetary asset holdings rendering the recent disinflation nontrivial using a small open economy model with uninsurable idiosyncratic risk this paper shows that a gradual decline of 12 in the quarterly inflation rate leads to an aggregate welfare gain of 0 40 in consumption equivalent terms the poor gain less than the economy on aggregate despite holding a more inflation prone financial portfolio this is because unequal cash holdings make inflation tax payments of the poor much smaller than those of the rich when inflation tax revenues finance redistributive transfers that provide insurance cross sectional gains become even more dispersed

monetary policy and the twin crises abstract after presenting a brief overview of the recent financial crisis and the european debt crisis that followed in its wake this paper goes on discuss monetary policy in the united states the united kingdom and the euro bloc prior to and during the course of the two crises the paper presents historical evidence for the three areas on the relationships linking the volatilities of output inflation and monetary growth in all three these relations are strongly positive there is therefore no tradeoff between inflation and output volatility the two move up and down together both moreover move up and down with the volatility of monetary growth viewed from this perspective the increased volatilities of money supplies and the monetary base in the united states the united kingdom and the euro bloc over the last half decade pose problems

importing credible monetary policy a way for transition economies to fight inflation abstract in the 1990s transition economies were rearranging their monetary regimes this paper compares the chosen regimes based on the level of discretionary power and the ability to control inflation results show that non discretionary regimes produce lower and more stable inflation

a short run solution to the power crisis of pakistan abstract pakistan is in a deep power crisis since 2008 which the government is trying to control by adding new generation capacity this strategy however will not be helpful in the short run the only way the power crisis can be controlled or mitigated in the short run is to efficiently utilize the available resources government lacks such a strategy at this point the paper provides such a strategy by setting up a power sector model with multiple modules of generation transmission and distribution the model provides an efficient way of utilizing the available resources and can be used to perform simulations at different stages of the supply chain the results of model show that if the given resources are utilized efficiently the power generation increases by 3222 gwh or 5 percent of the current output and the revenue increases by 945 million or 12 percent the extra generated power decrease the cost of power production by 0 52 kwh cents and reduces the power load shedding for 2 3 h these outcomes can significantly relieve the sector and the people of pakistan the results of the model have important policy implications on working of the sector and circular debt reduction

techno economic analysis and environmental impact assessment of a 10 mw biomass based power plant in malaysia abstract considering that renewable energy is the primary energy source in the future this study investigates biomass power for sustainable and secure energy supply biomass fuels in malaysia include empty fruit bunch mesocarp fiber palm kernel shell oil palm frond oil palm trunk from palm oil plantation and woody biomass from forests the moisture content and heating value of palm oil based biomass fuels are analyzed relative to their cost savings in a 10 mw biomass power plant the net present value internal rate of return and payback period for various finance options and at various system efficiencies are also presented results indicate that for an empty fruit bunch priced at myr 20 t without loan the net present values are myr 45 31 million myr 54 32 million and myr 57 74 million with 20 30 and 40 system efficiencies respectively the internal rates of returns are 21 88 22 and 21 11 respectively and the payback periods are 4 16 4 20 and 4 22 y respectively the 10 mw plant releases 50 130 t less co 2 750 t less so 2 218 65 t less nox and 22 83 t less co emissions in the environment compared with the existing energy mix

inflation level and inflation volatility a seigniorage argument abstract we use a standard dynamic general equilibrium model with flexible prices money in the utility function exogenous fiscal policy and accommodating monetary policy to analytically demonstrate the positive relationship between the steady state level of inflation and business cycle inflation volatility this result holds in the presence of unique as well as multiple equilibria

when is stabilization expansionary evidence from high inflation countries which stabilize from high inflation here defined as an annual rate above 40 usually have output expansions in the first and subsequent years of stabilization these expansions occur in both exchange rate based and money based stabilizations the paper reaches these conclusions after examining a sample of all 28 episodes in the international data that meet a pre defined criterion for stabilization from high inflation the results do not change with alternative growth and stabilization definitions the paper documents similar expansionary stabilizations in historical data and in the recent experience of the former communist economies expansionary stabilizations may be an indirect confirmation of recent theories of political economy that predict that stabilization will not occur until the gains are very large william easterly

relative prices as aggregate supply shocks with trend inflation ball and mankiw 1995 use a static menu cost model to explain the historical behavior of the first and higher moments of commodity price changes in u s producer prices we show that when appropriately modified for a world of positive trend inflation and forward looking behavior by firms the menu cost model predicts a much weaker possibly zero correlation between the mean and the skewness of price changes than that found in the data

terminating hyperinflation in the dismembered habsburg monarchy to assess the validity of thomas sargent s claim that hyperinflation can be terminated without dire employment effects monthly unemploymentpercentage estimates were constructed for poland hungary and austriaover the period both before and after monetary stabilization followingworld war i these data reveal that there were significant effects onemployment in the three territories unemployment peaked in poland at alittle less than 13 percent in hungary at 12 percent and probably higher and in austria at 7 percent an attempt is made to identify those considerations that contributed to the emergence of unemploymentwith the advent of monetary stabilization copyright 1986 by american economic association

exchange rate based inflation stabilization the initial real effects of credible plans abstract this paper studies the initial effects of exchange rate based stabilization programs within a dynamic general equilibrium model of a small open economy in which inflation acts as a tax on intermediate transactions and capital accumulation is subject to convex adjustment costs and gestation lags the model replicates the typical pattern of slow inflation convergence sustained real exchange rate appreciation trade balance deterioration and expansion in domestic spending followed by a deflationary slowdown without resorting to sticky prices imperfect credibility or adaptive expectations calibrated versions of the model are compared with the initial effects of the argentine convertibility plan of april 1991

the effect of expenditure aggregation on hypothesis tests in consumer demand systems in this paper cluster analysis is used to identify stochastic hicksian aggregates sha such aggregates comprise goods for which relative prices are constant up to a random element the need to identify such aggregates arises since inappropriate aggregation could influence subsequent estimation and tests results evidence is found that inappropriate aggregation of expenditures influences the outcome of hypothesis tests furthermore cluster analysis appears to identify goods which can be treated as sha it would thus appear that these methods should be used to identify the appropriate goods to aggregate prior to the estimation or testing of demand models

money demand and disinflation in selected ceecs during the accession to the eu a panel data set for six countries czech republic hungary poland romania slovakia and slovenia is used to estimate money demand with panel cointegration methods over the recent disinflation period the basic money demand model is able to convincingly explain the long run dynamics of m2 in the selected countries however money demand is found to have been significantly determined by the euro area interest rates and the exchange rate against the euro which indicates possible instability of money demand functions in the central and eastern european countries therefore direct inflation targeting is an appropriate monetary regime before the eventual adoption of the euro

inflation and output dynamics with state dependent pricing decisions this paper studies a state dependent pricing model in which firms face a fixed cost of changing their pricing plans a pricing plan specifies an entire sequence of time varying future prices allowing firms to choose a pricing plan rather than a single price generates inflation inertia in the response of the economy to small changes in the growth rate of money allowing firms to choose when to change their pricing plan generates a non linear response of inflation and output to small and large changes in the money growth rate the non linear solution method also reveals that the model generates an asymmetric response of output and inflation to monetary expansions and contractions

tax incentives to promote green electricity an overview of eu 27 countries this paper provides a comprehensive overview of the main tax incentives used in the eu 27 member states mss to promote green electricity sixteen mss use tax incentives to promote green electricity simultaneously with other promotion measures especially quota obligations and price regulation however not all available technologies are promoted for example six mss germany romania slovak republic denmark sweden and poland have included an exemption on the payments of excise duties for electricity when the electricity is generated from renewable energy sources res this tax incentive is the most widely used limited tax incentives in personal income tax are available in belgium france czech republic and luxembourg in corporate tax tax incentives consist mainly of a deduction in the taxable profit belgium greece czech republic and spain lower tax rates in vat are applied in three mss france italy and portugal only spain and italy use effective tax incentives in property tax as a great diversity of tax incentives has been used to promote green electricity this adds another difficulty to the eu objective of providing a renewable energy policy framework but also it offers a useful set of case studies which can be used to inform eu policy development

stabilization policies in developing countries what have we learned abstract the paper reviews the recent experience with stabilization programmes in latin america in the light of traditional and monetarist models of inflation and the exchange rate the traditional model links both inflation and payments problems to budget deficits the monetarist model too believes that inflation is caused by fiscal deficits but it takes a more optimistic view of stabilization full purchasing power parity and perfect capital mobility make stabilization just a question of the appropriate exchange rate policy and the proper rate of domestic credit creation the traditional view is substantially right as a long run model but it fails in the dynamics the monetarist model is as we know now fundamentally wrong as a short run description of the possibilities of inflation control there is need and room for a paradigm that places emphasis on the debt money mix in financing the budget on the stickiness of inflation rates and on the place of short run real exchange rate and real interest rate variations that these are key features of the transition phase is amply borne out by the devasting and unsuccessful experiences with monetarist stabilization in argentina chile and brazil

economic consequences of a capacity market implementation the case of poland abstract this paper investigates the potential economic consequences of setting up a capacity market in poland a computable model of the polish power generation system is developed and employed to analyse the impact of this mechanism two scenarios are designed for this study i a reference scenario that reflects the energy only market and ii a capacity market scenario that assumes the implementation of such an instrument to assess the economic consequences the following parameters are estimated i annual electricity prices ii loss of load hours iii expected energy not served and only for the capacity market scenario iv market clearing price v total budget of the capacity market and vi increase in electricity price due to the introduction of the capacity market the findings of the study indicate that the long term maintenance of the energy only market results in higher electricity prices when compared to putting a capacity market into operation introducing a capacity market enables existing resources to be used effectively without excessive capital expenditure the methods and conclusions presented in this paper provide valuable findings and policy insights regarding the potential economic consequences of a capacity mechanism in a power system mostly dominated by coal and undergoing an energy transition

are fiscal deficits inflationary abstract this paper applies the dynamic panel quantile regression dpqr model under the autoregressive distributional lag ardl specification and examines the deficit inflation relationship in 91 countries from 1960 to 2006 the dpqr model estimates the impact of deficits on inflation at various inflation levels and allows for a dynamic adjustment with the ardl specification the empirical results show that the fiscal deficit has a strong impact on inflation in high inflation episodes and has a weak impact in low inflation episodes the results imply that fiscal consolidation would be more effective in price stabilization the higher the inflation rate is and are consistent with the theoretical model of catao and terrones 2005

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

on the complementarity of money and credit i propose a model where agents choose to conduct their business using two payment instruments money and bilateral credit a friction in the timing of transactions rationalizes the use of both instruments and makes it optimal for agents to use money as a means of settlement for credit money and credit complement each other with anticipated inflation complementarity implies that the credit to money ratio decreases with inflation

indeterminacy of equilibria in a hyperinflationary world experimental evidence the authors design and study an olg experimental economy where the government finances a fixed real deficit through seigniorage the economy has continua of nonstationary rational expectations equilibria and two stationary rational expectations equilibria the authors do not observe nonstationary rational expectations paths observed paths tend to converge close to or somewhat below the low inflation stationary state the adaptive learning hypothesis is consistent with the data in selecting the low inflation stationary state rational expectations equilibrium as a long run stationary equilibrium nevertheless simple adaptive learning models do not capture the market uncertainty or the biases observed in the data copyright 1993 by the econometric society

the credibility of monetary reform new evidence the history of monetary policy is characterised by crisis and reform the paper is dedicated to an explanation of what makes monetary reforms successful a cross sectional econometric analysis is chosen to deal with this problem it is based on a standard macroeconomic model of commitment and credibility as the dependent variable we calculate a post reform inflation rate the exogenous variables are the degree of legal commitment the constraining influence of institutions and a new variable for ex ante credibility of the reform the paper allows for the conclusion that monetary commitment the consideration of institutional constraints and abstinence from the money press are crucial for the success of a monetary reform

modern hyper and high inflations since 1947 hyperinflations by cagan s definition in market economies have been rare much more common have been longer inflationary processes with inflation rates above 100 percent per annum based on a sample of 133 countries and using the 100 percent threshold as the basis for a definition of very high inflation episodes this paper examines the main characteristics of such inflations among other things we find that i close to 20 percent of countries have experienced inflation above 100 percent per annum ii higher inflation tends to be more unstable iii in high inflation countries the relationship between the fiscal balance and seigniorage is strong both in the short and long run iv inflation inertia decreases as average inflation rises v high inflation is associated with poor macroeconomic performance and vi stabilizations from high inflation that rely on the exchange rate as the nominal anchor are expansionary

dynamic structural models and the high ination period in brazil modelling the monetary system in this paper we develop a linear structural dynamic econometric model for the high ination period in brazil the main goal is to obtain a parsimonious model that accounts for a complex dynamic present in the monetary system during the period describing therelationships among output ination rate interest rates and real money we start the analysis after the cruzado plan cast in 1986 following a progressive strategy in deriving the econometric model the results show that we can identify a long run money demand equation and the model describes parsimoniously and in detail the relationship among the variables despite all the instability present in the second half of the 1980 s in brazil with special attention to the role played by nominal wage ination in determining the dynamics observed in price ination

speculative hyperinflations and currency substitution abstract we propose a rational expectations framework for understanding speculative hyperinflations that end in response to orthodox stabilization programs motivated by a strong degree of hysteresis in the stock of real balances after the end of hyperinflations we provide a cash and credit model in which the money demand exhibits persistence because individuals can establish long lasting credit relationships we use the model to show that if hysteresis in real balances is possible then a fiscal monetary reform that successfully stops a speculative hyperinflation may fail to prevent it we argue that speculative hyperinflationary equilibria are consistent with some key stylized facts observed in extreme hyperinflations

stochastic modeling of financial electricity contracts abstract we discuss the modeling of electricity contracts traded in many deregulated power markets these forward futures type contracts deliver either physically or financially electricity over a specified time period and is frequently referred to as swaps since they in effect represent an exchange of fixed for floating electricity price we propose to use the heath jarrow morton approach to model swap prices since the notion of a spot price is not easily defined in these markets for general stochastic dynamical models we connect the spot price the instantaneous delivery forward price and the swap price and analyze two different ways to apply the heath jarrow morton approach to swap pricing either one specifies a dynamics for the non existing instantaneous delivery forwards and derives the implied swap dynamics or one models directly on the swaps the former is shown to lead to quite complicated stochastic models for the swap price even when the forward dynamics is simple the latter has some theoretical problems due to a no arbitrage condition that has to be satisfied for swaps with overlapping delivery periods to overcome this problem a practical modeling approach is analyzed the market is supposed only to consist of non overlapping swaps and these are modelled directly a thorough empirical study is performed using data collected from nord pool our investigations demonstrate that it is possible to state reasonable models for the swap price dynamics which is analytically tractable for risk management and option pricing purposes however this is an area of further research

temporary stabilization a stochastic analysis abstract this paper develops a stochastic model of exchange rate based inflation stabilization in which agents have expectations of devaluation driven by a mixed diffusion jump process in a richer stochastic environment where a brownian motion drives the rate of devaluation and a poisson process determines the probability of devaluation we examine consumption and wealth equilibrium dynamics when a stabilization plan is implemented and contingent claims markets are unavailable we also assess the effects of exogenous shocks on consumption and welfare finally we use the proposed model to carry out a simulation experiment of the equilibrium dynamics

modeling long term dynamics of electricity markets in the last decade many countries have restructured their electricity industries by introducing competition in their power generation sectors although some restructuring has been regarded as successful the short experience accumulated with liberalized power markets does not allow making any founded assertion about their long term behavior long term prices and long term supply reliability are now center of interest this concerns firms considering investments in generation capacity and regulatory authorities interested in assuring the long term supply adequacy and the stability of power markets in order to gain significant insight into the long term behavior of liberalized power markets in this paper a simulation model based on system dynamics is proposed and the underlying mathematical formulations extensively discussed unlike classical market models based on the assumption that market outcomes replicate the results of a centrally made optimization the approach presented here focuses on replicating the system structure of power markets and the logic of relationships among system components in order to derive its dynamical response the simulations suggest that there might be serious problems to adjust early enough the generation capacity necessary to maintain stable reserve margins and consequently stable long term price levels because of feedback loops embedded in the structure of power markets and the existence of some time lags the long term market development might exhibit a quite volatile behavior by varying some exogenous inputs a sensitivity analysis is carried out to assess the influence of these factors on the long run market dynamics

electricity demand analysis using cointegration and arima modelling a case study of turkey in the early 2000s the republic of turkey has initiated an ambitious reform program in her electricity market which requires privatization liberalization as well as a radical restructuring the most controversial reason behind or justification for recent reforms has been the rapid electricity demand growth that is to say the whole reform process has been a part of the endeavors to avoid the so called energy crisis using cointegration analysis and autoregressive integrated moving average arima modelling the present article focuses on this issue by both providing an electricity demand estimation and forecast and comparing the results with official projections the study concludes first that consumers respond to price and income changes is quite limited and therefore there is a need for economic regulation in turkish electricity market and second that the current official electricity demand projections highly overestimate the electricity demand which may endanger the development of both a coherent energy policy in general and a healthy electricity market in particular

the forgotten history of domestic debt there is a rich scholarly literature on sovereign default on external debt comparatively little is known about sovereign default on domestic debt even today cross country data on domestic public debt remains curiously exotic particularly prior to the 1980s we have filled this gap in the literature by compiling a database on central government public debt external and domestic the data span 1914 to 2010 for most countries reaching back into the nineteenth century and earlier for many our findings here on debt sustainability sovereign defaults the temptation to inflate and the hierarchy of creditors only scratch the surface of what the domestic public debt data can reveal first domestic debt is big for the 64 countries for which we have long time series domestic debt accounts for almost two thirds of total public debt for most of the sample this debt carries a market determined interest rate except for the financial repression era between wwii and financial liberalization second the data go a long way toward explaining the puzzle of why countries so often default on their external debts at seemingly low debt thresholds third domestic debt has largely been ignored in the vast empirical work on inflation in fact domestic debt a significant portion of which is long term and nonindexed is often much larger than the monetary base in the run up to high inflation episodes last the widely held view that domestic residents are strictly junior to external creditors does not find broad support

cagan s hypothesis and the first nationwide inflation of paper money in world history more than 25 years ago phillip cagan proposed the hypothesis that the demand for real cash balances depended mainly on the expected rate of inflation provided that the monetary sector was sufficiently isolated from changes in the real sector cagan 1956 to test his hypothesis cagan studied seven hyperinflations in modern europe during which variations in the real variables were negligible compared with the astronomical increases in prices it is well known that he got confirmatory results from his studies however until recently it has not been realized that the same hypothesis is also strongly supported by data from a very different socioeconomic context namely the first nationwide inflation of paper money in world history paper money was invented in china in the northern suing dynasty a d 960 1126 and widely used in the southern sung dynasty a d 1127 1278 the first inflation on a national scale occurred from around 1190 to the end of the dynasty when the monetary system collapsed in this inflation period available historical records do not suggest significant expansion of the economy or important changes in real income modern financial assets such as bonds and equities did

the role of the imf in low income countries the question of whether the imf should effectively engage with its low income member countries has recently generated a wide debate among development economists policymakers and advocates from nongovernmental organizations this note elaborates on the important role that the imf can play in its lowincome member countries points to some current problems with the fund s engagement with these countries and suggests avenues for future improvement

the benefit of crises for economic reforms when expenditures consistently outrun revenue the resulting inflation may have the effect of convincing the public and government that taxes must be raised to finance public investment in the advanced industrial countries income taxation and big spurts in taxation generally have become possible only under the impact of major emergency and crisis mostly in wartime in a number of developing countries in

progress and challenges in utilization of palm oil biomass as fuel for decentralized electricity generation it has been broadly accepted worldwide that global warming indeed is the greatest threat of the time to the environment renewable energy re is expected as a perfect solution to reduce global warming and to endorse sustainable development progressive release of greenhouse gases ghg from increasing energy intensive industries has eventually caused human civilization to suffer realizing the exigency of reducing emissions and simultaneously catering to needs of industries researchers foresee the re as the perfect entrant to overcome these challenges re provides an effective option for the provision of energy services from the technical point of view while biomass a major source of energy in the world until before industrialization when fossil fuels become dominant appears an important renewable source of energy and researches have proven from time to time its viability for large scale production being a widely spread source biomass offers the execution of decentralized electricity generation gaining importance in liberalized electricity markets the decentralized power is characterized by generation of electricity nearer to the demand centers meeting the local energy needs researchers envisaged an increasing decentralization of power supply expected to make a particular contribution to climate protection this article investigates the progress and challenges for decentralized electricity generation by palm oil biomass according to the overall concept of sustainable development

economic growth under money illusion abstract empirical and experimental evidence documents that money illusion is persistent and widespread this paper incorporates money illusion into a stochastic continuous time monetary model of endogenous growth we model an agent s money illusion behavior by assuming that he maximizes nonstandard utility derived from both nominal and real quantities money illusion affects an agent s perception of the growth and riskiness of real wealth and distorts his consumption savings decisions it influences long run growth via this channel we show that the welfare cost of money illusion is negligible whereas its impact on long run growth is noticeable even if the degree of money illusion is low

a further contribution towards explaining why disinflation through currency pegging may cause a boom abstract we revisit the question of why exchange rate based erb disinflation is often expansionary we use an analytical dge model in discrete time with staggered wages if the policy is unanticipated and if the currency is pegged at the level it would have reached under unchanged policies then a boom occurs for preannounced erb disinflation our model also predicts a boom the explanation for both is that when wages are staggered wage setters have to be forward looking anticipating lower future inflation they reduce wages before the change in the exchange rate causing a favourable supply side effect on output

multiobjective optimization for pricing system security in electricity markets this paper proposes a novel technique for representing system security in the operations of decentralized electricity markets with special emphasis on voltage stability an interior point method is used to solve the optimal power flow problem with a multiobjective function for maximizing both social benefit and the distance to maximum loading conditions a six bus system with both supply and demand side bidding is used to illustrate the proposed technique for both elastic and inelastic demand and a 129 bus test system that models the italian hv transmission network is used for testing the practical applicability of the proposed method the results obtained show that the proposed technique is able to improve system security while yielding better market conditions through increased transaction levels and improved locational marginal prices throughout the system

targeting the real exchange rate theory and evidence abstract this paper presents a theoretical and empirical analysis of policies aimed at setting a more depreciated level of the real exchange rate an intertemporal optimizing model suggests that in the absence of changes in fiscal policy a more depreciated level of the real exchange rate can only be attained temporarily this can be achieved by means of higher inflation and or higher real interest rates depending on the degree of capital mobility evidence for brazil chile and colombia supports the model s prediction that undervalued real exchange rates are associated with higher inflation

aggregate consumer behaviour without exact aggregation a model of consumer behavior is estimated by pooling canadian cross sectional and time series data in contrast to a similar study by d w jorgenson l j lau and t m stoker 1982 exact aggregation homogeneity and symmetry are not imposed but are tested exact aggregation is rejected however these data are less sensitive to homogeneity and symmetry restrictions demographic effects appear to be important determinants of demand the model can also be estimated using only cross sectional data these results indicate that exact aggregation should not be imposed and household demographic effects should be modeled homogeneity and symmetry seem relatively less restrictive for these data

towards achieving energy for sustainable development in nigeria the importance of energy availability in the economic growth social and political development of every nation cannot be overemphasized affordable and reliable energy availability is the precondition for sustainable development sustainable development calls for an efficient reliable and decentralized energy economy based on local and clean energy sources in which the price paid by the consumer will reflect the real cost of energy products to the economy there is clear evidence that nigeria is blessed with abundant resources of fossil fuels as well as renewable energy resources the major challenge is inefficient utilization of energy in the country there is no doubt that the present power crisis afflicting nigeria will persist unless the government diversifies her energy sources and adopt new available technologies to reduce energy wastages and save cost this study examines the perspective of energy efficiency and renewable energy in the making of strategies for a sustainable development in nigeria such strategies involve energy savings on the demand side efficiency improvements in the energy production and replacement of fossil fuels by various sources of renewable energy factors that need to be considered in the shift to its sustainable energy future are examined in this article

exchange rate based stabilizations under real frictions the role of endogenous labor supply abstract this paper studies exchange rate based stabilization programs in the context of a model of a small open economy where labor supply is endogenous agents derive utility from both consumption and leisure in environments where consumption is subject to a cash in advance constraint a cut in the rate of devaluation lowers the nominal interest rate and hence alters the optimal mix of consumption and leisure the paper shows that in the presence of adjustment costs of investment a perfectly credible cut in the devaluation rate causes simultaneously a consumption and output boom a cumulative current deficit a sustained real appreciation of the domestic currency and an increase in labor supply over time it is also shown that an imperfectly credible stabilization program in this environment would have effects similar to the perfectly credible program but generate richer dynamics such as an initial boom in output followed by a recession which begins prior to the end of the program the model has clear welfare implications in that permanent reductions in inflation are unambiguously welfare enhancing

information cascades and revolutionary regime transitions we combine acemoglu and robinson s model of the economic origins of democracy with lohmann s model of political mass protest this allows us to analyse the economic causes of political regime change based on the microfoundations of revolution we are able to derive conditions under which democracy arises peacefully when it occurs only after a revolution and when oligarchy persists we model these possibilities in a world of asymmetric information where information cascades are possible and where these cascades may involve errors in the sense that they make everyone worse off

who supports the ecb evidence from eurobarometer survey data this paper contributes empirically to the long debated issue of the legitimacy of the european central bank ecb with regard to european polities using micro level data from the eurobarometer survey we shed light on the socio demographic determinants of public opinion support for the ecb we find that people with higher level of education and income and centre to right wing political orientation tend to support the ecb as well as people with optimistic expectations on the economic situation by contrast the unemployed tend to distrust the ecb the policy relevance of such results is important for ecb s communication strategy with the general public

disinflation programs under policy uncertainty abstract this paper uses a model with endogenous labor supply to study exchange rate based inflation stabilization programs under uncertainty regarding the duration of the program the paper finds that the output and consumption dynamics induced by these programs are extremely sensitive to whether the programs are perceived to have a chance of continuing permanently or whether they are expected to end in finite time it is shown that the business cycle dynamics for output that are typically associated with these programs arise only when the policy is expected to collapse in finite time furthermore for the purposes of rationalizing the stylized facts the uncertain duration channel appears to induce a fundamental tension between the consumption dynamics and the current account dynamics these results raise doubts regarding the explanatory power of the uncertain duration channel in particular and the credibility channel in general

prices inflation and smoking onset the case of argentina this article examines the effect of tobacco prices on the decision to start smoking in argentina argentina is an interesting case to explore given its high smoking rates its recent experience with periods of very high and hyperinflation and the mixed evidence of the effect of prices on smoking onset particularly in low and middle income countries we used data from four cycles of two large national surveys conducted between 2005 and 2011 and discrete time hazard models we found that tobacco prices had a statistically significant and fairly large impact on the hazard of smoking onset and these findings were robust to alternative specifications we also found that prices had little effect on the hazards of smoking onset during periods of hyper and very high inflation which provide some support for the notion that prices lose their informational role in such periods governments need to be cognizant that their most important policy tool to reduce tobacco use taxes that increase real tobacco prices is likely no longer effective during these times jel c41 h20 i12 i18

aggregate consumer behavior and household equivalence scales this article presents estimates of household equivalence scales broken down by demographic characteristics of u s households separate estimates are given by family size age of head region race and urban versus rural residence commodity specific scales are presented for five separate commodity groups energy food consumer goods capital services and other services the estimates are obtained from an econometric model of aggregate consumer behavior the parameters of this model are estimated by combining aggregate time series and individual cross section data