can learning affect exchange rate behavior the case of the dollar in the early 1980 s this paper demonstrates that a change in parameters of the money market that is not immediately understood will affect the behavior of exchange rate forecast errors while the market is learning the analysis is applied to the behavior of u s dollar german mark forecast errors during the early 1980 s when the market appeared to systematically underpredict the strength of the dollar consistent with this observation empirical estimates of implied forecast errors based upon bayesian learning suggest that forecast errors would have been on average negative during the period as the market came to realize the increase in u s money demand

questioning the empirical basis of the environmental kuznets curve for co2 new evidence from a panel stationarity test robust to multiple breaks and cross dependence abstract this paper investigates the time series properties of per capita co2 emissions and per capita gdp levels for a sample of 86 countries over the period 1960 2000 for that purpose we employ a state of the art panel stationarity test which incorporates multiple shifts in level and slope thereby controlling for cross sectional dependence through bootstrap methods our analysis renders clear cut evidence that per capita gdp levels are nonstationary for the world as a whole while per capita co2 is found to be regime wise trend stationary the analysis of country groups shows that for africa and asia per capita co2 is best described as nonstationary while per capita gdp appears stationary around a broken trend in addition we find evidence of regime wise trend stationarity in both variables for the country groups consisting of america europe and oceania the results of our analysis carry important implications for the statistical modelling of the environmental kuznets curve for co2 since the differing order of integration in both variables for the world as a whole and for africa and asia calls into question the validity of panel cointegration techniques which assume that both variables are nonstationary and cointegrated with one another cointegration techniques would not be appropriate either for the case of america europe and oceania which are characterised by per capita gdp and co2 emissions being stationary around a broken trend similar conclusions are reached when we analyse country groups based on levels of development failure to properly characterise the time series properties of the data by not controlling for an unknown number of structural breaks and for cross sectional dependence could be responsible for the fragility and lack of robustness surrounding the estimation of environmental kuznets curves

the economic theory of clubs some clarifications abstract we provide a classification of club models and relate differences in implications to differences in assumptions then we address two main controversies one concerning the optimality of market provisions of public goods and their optimality and the other concerning the desirability of segregation

should congestion tolls be set by the government or by the private sector the knight pigou debate revisited this paper clarifies issues debated by a c pigou and frank knight about correcting inefficient use of congestible resources focusing for concreteness on their original example of road congestion instead of government imposed pigouvian access fees knight favoured access fees set by private toll setters we consider the case of n 2 congestible roads and an uncongestible road of arbitrary speed knight argued that in the case of a single congestible road a private toll setter would always choose the toll that pigou recommended hence the allocation would minimize aggregate commute time without government meddling we find instead that two or more toll setters would never choose pigouvian tolls except in the special case of a sufficiently fast uncongestible road moreover for uncongestible roads of slower speed the allocation of motorists under knight s proposal is almost never efficient whenever it is inefficient motorists are strictly worse off when they pay tolls set by private firms instead of paying government imposed tolls and aggregate toll revenue is also lower nevertheless if the private sector does set tolls then the full cost to motorists can be limited if the government provides an uncongestible alternative such as a train to offer potential competition along the same route

cyclical fluctuation patterns and decoupling towards common eu 28 environmental performance abstract the eu 28 is one of the largest emitters of co2 in the world and the most committed to reducing emissions however the national environmental strategies of the member states are still diverse this study is aimed at evaluating the environmental performance of european economies by analysing the fluctuations of co2 emissions and their links with economic activity over the period 1950 2012 the methodological framework is based on a dynamic factor analysis to determine an index of the eu fluctuation of co2 emissions in parametric form this index can be used to monitor the progress towards common behaviour across member states with a time varying recursive method following this approach we also track the efforts made to decouple co2 emissions from gdp based on these analyses we develop a co2 emissions gdp linkage matrix to attain useful information on the eu member state environmental performance

airport congestion when carriers have market power this paper analyzes airport congestion when carriers are nonatomistic showing how the results of the road pricing literature are modified when the economic agents causing congestion have market power the analysis shows that when an airport is dominated by a monopolist congestion is fully internalized yielding no role for congestion pricing under monopoly conditions under a cournot oligopoly however carriers are shown to internalize only the congestion they impose on themselves a toll that captures the uninternalized portion of congestion may then improve the allocation of traffic the analysis is supported by some rudimentary empirical evidence

uniform versus peak load pricing of a bottleneck with elastic demand abstract this paper considers commuting to work across a bottleneck such as a bridge or tunnel with elastic demand with no toll there is wasteful queueing the optimal peak load toll eliminates queueing and leaves total traffic unchanged the second best uniform toll cannot eliminate queueing but reduces total traffic the second best uniform toll may be larger or smaller than the maximum value of the optimal peak load toll

modelling and forecasting exchange rates with a bayesian time varying coefficient model this paper employs a multivariate bayesian time varying coefficients tvc approach to model and forecast exchange rate data it is shown that if used as a data generating mechanism a tvc model induces nonlinearities in the conditional moments and leptokurtosis in the unconditional distribution of the series it is also shown that leptokurtic behavior disappears under time aggregation as a forecasting device a bayesian tvc model improves over a random walk model the improvements are robust to several changes in the forecasting environment

participation rules for pareto optimal clubs abstract this paper presents a unifying framework for the club participation problem using compensating variation measures of willingness to pay for membership with more prospective club members than the equilibrium club population pareto efficient participation rules are derived which depend upon whether or not individuals are assured of club access sale of lottery tickets offering club membership is shown to be a socially superior club participation allocation mechanism to sale of vouchers guaranteeing membership the willingness to pay format readily encompasses the buchanan case where all prospective club members are assured of club participation

competitive equilibrium and the core in club economies with anonymous crowding in club economies with anonymous crowding competitive equilibrium states of the economy are efficient and coincide with the core when there is only one private good anonymous admission prices permit consumers with different tastes to share facilities consumers might do so when their demands for facility size and crowding coincide in which case sharing is efficient thus similarity of demands is the relevant consideration for efficiently grouping consumers with different tastes

per capita carbon dioxide emissions convergence or divergence understanding and considering the distribution of per capita carbon dioxide co2 emissions is important in designing international climate change proposals and incentives for participation i evaluate historic international emissions distributions and forecast future distributions to assess whether per capita emissions have been converging or will converge i find evidence of convergence among 23 member countries of the organisation for economic co operation and development oecd whereas emissions appear to be diverging for an 88 country global sample over 1960 2000 forecasts based on a markov chain transition matrix provide little evidence of future emissions convergence and indicate that emissions may diverge in the near term i also review the shortcomings of environmental kuznets curve regressions and structural models in characterizing future emissions distributions

airport and airline competition for passengers departing from a large metropolitan area abstract in this paper an airport and airline choice model based on a nested multinomial logit model is developed to investigate both airport competition and airline competition in a metropolitan area with multiple departure airports the model can be used to analyze the effects of e g an improvement in accessibility of a specific airport in a metropolitan area it is shown analytically that if the frequency elasticity of demand is smaller than 1 unique airfare frequency and passenger charge equilibria exist next symmetric equilibria are derived analytically their properties are also examined finally asymmetric equilibria are derived numerically while their properties are discussed as well

second best congestion pricing the case of an untolled alternative abstract this paper deals with second best one route congestion pricing in case of an untolled alternative using a two link network simulation model the effects of various demand and cost parameters on the relative efficiency of one route tolling are analyzed it is investigated whether the existence of costs of congestion charging may be a reason for one route tolling to be more overall efficient than two route tolling finally the efficiency of revenue maximizing one route and two route tolling is discussed

let s get real a factor analytical approach to disaggregated business cycle dynamics this paper develops a method for analysing the dynamics of large cross sections based on a factor analytic model we use law of large numbers arguments to show that the number of common factors can be determined by a principal components method the economy wide shocks can be identified by means of simple structural var techniques and that the parameters of the unobserved factor model can be estimated consistently by applying ols equation by equation we distinguish between a technological and a non technological shock identification is obtained by minimizing the negative realizations of the technology shock empirical results on 4 digit industrial output and productivity for the u s economy from 1958 to 1986 show that 1 at least two economy wide shocks both having a long run effect on sectoral output are needed to explain the common dynamics 2 although the technological shock accounts for at least 50 of the aggregate dynamics of output it cannot by itself explain dynamics at business cycle frequencies 3 sector specific shocks explain the main bulk of total variance but generate mainly high frequency dynamics 4 both the technological and the non technological component of output show a peak for positive sectoral comovements of output at business cycle frequencies 5 technological shocks are strongly correlated with the growth rates of the investment in machinery and equipment sectors and their inputs many interesting questions about cyclical fluctuations and economic growth can be answered only by studying the dynamic behaviour of sectoral variables when data contain information on time for a large cross section of sectors traditional econometric techniques used in the macroeconomic literature such as vector autoregressive var and vector autoregressive moving average varma models are not appropriate since they require the estimation of too many parameters this is why new methods which allow for the reduction of the parameter space need to be developed the objective of this paper is both methodological and descriptive at the methodological level we develop a simple framework for the dynamic analysis of large cross sections the basic model is a dynamic factor analytic model as in sargent and sims 1977 the sectoral variables are decomposed into two unobservable components a common component driven by macroeconomic shocks and a purely sectoral component when

clubs local public goods and transportation models a synthesis abstract clubs local public goods and transportation models are analyzed within a unified model the emphasis is on the derivation of optimal allocation pricing and the size of the sharing group we derive the conditions under which optimal prices will yield surplus or deficit as well as those under which competitive provision will be efficient given heterogeneous tastes we prove that segregation according to tastes is generally efficient although several cases where this result does not hold are also discussed we show that the existing literature is unnecessarily restrictive and that the unified approach suggested here considerably extends the existing analysis of clubs local public goods and the transportation problems

global unemployment shocks in this paper we use oecd unemployment data 1960 2002 to infer the nature of shocks to unemployment using factor analysis we find that two principal components can account for a large part of the variance of unemployment between and within countries

bootstrap inference in econometrics the astonishing increase in computer performance over the past two decades has made it possible for economists to base many statistical inferences on simulated or bootstrap distributions rather than on distributions obtained from asymptotic theory in this paper i review some of the basic ideas of bootstrap inference the paper discusses monte carlo tests several types of bootstrap test and bootstrap confidence intervals although bootstrapping often works well it does not do so in every case

the fable of the bees an economic investigation ever since a c pigou wrote his books on welfare a divergence between private and social costs has provided the main argument for instituting government action to correct allegedly inefficient market activities the analysis in such cases has been designed less to aid our understanding of how the economic system operates than to find flaws in it to justify policy recommendations both to illustrate the argument and to demonstrate the nature of the actual situation the quest has been for real world examples of such defects

the optimal distribution of population across cities abstract we develop an urban model that incorporates 1 heterogeneous sites 2 fiscal and urban externalities and 3 an endogenous number of cities i e the extensive margin of urban development within and across city decreasing returns to scale cause agents to perceive their city as being too large in the socially optimal allocation as a consequence in equilibrium the largest cities on the most amenable sites are undersized whereas the smaller cities on less amenable sites are oversized we propose a test for optimal city size with heterogeneous sites extending the henry george theorem

peak load pricing of a transportation route with an unpriced substitute abstract this paper considers two routes to work which could be two bridges a freeway and a tollroad or roadway travel and subway travel both routes are subject to pure bottleneck and queue congestion if peak load pricing can be imposed on both routes the first best solution is attained however if one route is unpriced then the other route should have a second best time varying toll that is negative at the tails of the rush hour positive near the peak of the rush hour and zero on average if the two routes have the same capacities and if the parameter g is 1 then two thirds of the total traffic should use the priced route and the efficiency gain of second best pricing is two thirds of the efficiency gain of first best pricing

short run fluctuations in foreign exchange rates evidence from the data 1973 1979 abstract the paper examines the statistical properties of daily changes in foreign exchange fx rates for nine currencies it finds that these changes are leptokurtotic i e have long tailed and sharp peaked histograms the evidence suggests that this leptokurtosis does not arise from an underlying paretian stable distribution nor from a stationary mixture of normal distributions but rather from normal processes with time varying parameters this finding casts doubt on the validity of many standard techniques t stats arima methods some moving statistics for estimating the time varying parameters are also presented

are co2 emission levels converging among industrial countries time paths of carbon dioxide emissions intwenty one industrial countries are examinedfrom 1960 1997 to test for stochastic andconditional convergence both panel unit roottests and cross section regressions areperformed overall we find significantevidence that co2 emissions haveconverged

clubs and the market this paper defines a general equilibrium model with exchange and club formation agents trade multiple private goods widely in the market can belong to several clubs and care about the characteristics of the other members of their clubs the space of agents is a continuum but clubs are finite it is shown that i competitive equilibria exist and ii the core coincides with the set of equilibrium states the central subtlety is in modeling club memberships and expressing the notion that membership choices are consistent across the population

co fluctuation patterns of per capita carbon dioxide emissions the role of energy markets abstract this paper applies principal component analysis to investigate the linkages or dominant co fluctuation patterns of per capita carbon dioxide emissions across countries for the time period 1950 2000 energy resource world markets are investigated as an offsetting mechanism possibly coordinating emission fluctuations between countries the results of the analysis provide evidence that world energy resource markets are acting as a coordinating mechanism for emission fluctuations in most cases the results also suggest that until recently the dominant emission co fluctuation pattern for developed countries differs from the dominant emission co fluctuation pattern for developing countries the common fluctuation pattern found in the 1984 2000 time period suggests that an offsetting mechanism does exist and will help contain global per capita emissions into the future the strong degree that emissions are linked between countries and energy markets acting as an offsetting mechanism suggests that to be successful a global agreement to address climate change must require emission reductions by all major emitters not just the developed countries

distribution dynamics of co2 emissions this paper uses nonparametric methods to examine the convergence in co2 emissions per capita on a sample of 100 countries for the period 1966 1996 industrial countries show a convergence pattern however there is little evidence of convergence for the whole sample