inflation real economic growth and unemployment expectations an empirical analysis based on the ecb survey of professional forecasters expectations are at the centre of modern macroeconomic theory and policymakers in this article we examine the predictive ability and the consistency properties of macroeconomic expectations using

quantifying the impacts of energy price reform on living expenses in saudi arabia abstract as part of vision 2030 saudi arabia has initiated a broad based energy reform programme aimed at gradually reducing its dependence on oil this paper assesses the impacts of energy price reforms on living expenses of various household groups in saudi arabia for this purpose the input output table combined with household expenditure data are used to model the impacts results show that the distributional impacts of energy price reforms are regressive with low income households experiencing a higher increase in living expenses compared to high income households the impacts are primarily instigated by rising prices of energy intensive products after decomposing the impacts into direct and indirect effects it was found that indirect effect is not only responsible for a considerable rise in household expenditure on energy intensive products but it is also distributionally regressive it is therefore vital for policymakers to review and fine tune the social protection system to protect poor households against reforms

forecasting and combining competing models of exchange rate determination this article investigates the out of sample forecast performance of a set of competing models of exchange rate determination we compare standard linear models with models that characterize the relationship between exchange rate and the underlying fundamentals by nonlinear dynamics linear models tend to outperform at short forecast horizons especially when deviations from long term equilibrium are small in contrast nonlinear models with more elaborate mean reverting components dominate at longer horizons especially when deviations from long term equilibrium are large the results also suggest that combining different forecasting procedures generally produces more accurate forecasts than can be attained from a single model

fossil fuel subsidy reforms and their impacts on firms abstract while the potential adverse effects of fossil fuel subsidy reform are well documented for households the literature has largely ignored the effect of subsidy reform on firms competitiveness this paper discusses how firms are affected by and respond to energy price increases caused by subsidy reforms it highlights that cost increases both direct and indirect do not necessarily reflect competitiveness losses since firms have various ways to mitigate and pass on price shocks this paper presents and discusses direct and indirect transmission channels for price shocks and firms response measures absorbing cost shocks into profits inter fuel substitution increasing energy and material efficiency and passing on price increases it argues that further micro econometric studies using enterprise surveys are essential for quantifying the role of these mechanisms and for designing policy measures that ensure that competitiveness losses due to subsidy reforms are minimised

fossil fuel subsidy removal and inadequate public power supply implications for businesses abstract we briefly consider the impact of fossil fuel subsidy removal policies in the context of inadequate power supply with a focus on the implications for businesses in doing so we utilize the case of the early 2012 fuel subsidy removal in nigeria the rationale for such subsidy removal policies is typically informed by analysis showing that they lead to an economically inefficient allocation of resources and market distortions while often failing to meet intended objectives however often the realities of infrastructural and institutional deficiencies are not appropriately factored into the decision making process businesses in many developing countries already impaired by the high cost of power supply deficiencies become even less competitive on an unsubsidized basis we find that justifications for removal often do not adequately reflect the specific environments of developing country economies resulting in poor recommendations or ineffective policy

who benefit most from fuel subsidies evidence from nigeria abstract the paper studies the benefit incidence of fuel subsidies in nigeria household sector combining annual subsidy estimates with the households expenditure data from the 2009 10 harmonized living standard survey we investigate how the benefits from fuel subsidies are accrued to each income groups in nigeria the results show that while the kerosene subsidy is more evenly distributed across income groups petrol subsidy is concentrated to high income groups in aggregate the top 20 households enjoy twice as much the benefit of fuel subsidies as the bottom 20 households we also examine the concentration and progressivity of fuel subsidies using gini coefficient measures and lorenz concentration curves and find both fuel subsidies are more regressive than the per capita expenditure

using survey data to test standard propositions regarding exchange rate expectations survey data provide a measure of exchange rate expectations superior to the forward rate in that no risk premium interferes we estimate extrapolative adaptive and regressive models of expectations static or random walk expectations and bandwagon expectations are rejected current appreciation generates the expectation of future depreciation because variables other than the contemporaneous spot rate receive weight in comparing expectations to the process governing the spot rate we find statistically significant bias no variable is as ubiquitous in international financial theory and yet as elusive empirically as investors expectations regarding exchange rates in the past expectations have been modeled in an ad hoc way often by using the forward exchange rate there is however a serious problem with using the forward discount as the measure of the expected change in the exchange rate in that the two may not be equal the gap that may separate the forward discount and expected depreciation is generally interpreted as a risk premium most of the large empirical literature testing the unbiasedness of the forward exchange rate for example has found it necessary either arbitrarily to assume away the existence of the risk premium if the aim

rational bias in macroeconomic forecasts do professional forecasters provide their true unbiased estimates or do they behave strategically in our model forecasters have common information confer actively and thus know the true pdf of future outcomes intensive users of economic forecasts monitor forecasters performance closely occasional users are drawn to the forecaster who fared best in the previous period in the resulting nash equilibrium even though economists have identical expectations they make a range of projections that mimics the true probability distribution of the forecast variable those whose wages depend most on publicity produce forecasts that differ most from the consensus empirical evidence supports the model

venture capital in europe and the financing of innovative companies european venture captial venture capital is considered to be the most appropriate form of financing for innovative firms in high tech sectors venture capital has greatly developed over the last three decades in the united states but much less so in europe where policy makers are striving to help channel more funds into this form of financial intermediation in this paper we provide the first assessment of venture capital in europe we document its development in the 1990s and compare it with that of american venture capital we find the wedge between them to be large and growing we then look at the involvement of venture capital with some of europe s most innovative and successful companies those listed on europe s new stock markets venture capital is effective in helping these firms overcome credit constraints and thus to be born in the first place using a unique hand collected data set from the listing prospectuses and annual reports of these companies we find european venture capital to have a limited effect on their ability to raise equity capital grow and create jobs we conclude that public support of the european venture capital industry should look at both its growth and at its maturation laura bottazzi and marco da rin

inflationary expectations and rationality revisited abstract we find evidence indicating cointegration between each of three survey measures of inflation expectations and actual inflation using johansen s framework we confirm weak form rationality for each survey and estimate significant speeds of adjustment for both inflation and inflation expectations

the measurement and characteristics of professional forecasters uncertainty there is increased interest in extracting indicators of macroeconomic risk and uncertainty from forecast surveys that include questions about density forecasts in this paper we consider several statistical issues that arise in the construction and interpretation of measures of uncertainty from such data with application to the bank of england survey of external forecasters we find substantial heterogeneity of individual forecast uncertainty and significant persistence in individual relative uncertainty this is an individual characteristic akin to the individual optimism and pessimism already established among point forecasts and which is seen to be present in the current data in a bivariate sense with respect to forecasts of inflation and output growth whether disagreement among point forecasts is a useful indicator of uncertainty is seen to depend on the underlying macroeconomic environment in an appendix the main findings of the paper are replicated with data from the european central bank survey of professional forecasters

on the consistency of short run and long run exchange rate expectations abstract this paper examines whether short term exchange rate expectations overreact by comparing them with long term expectations we develop a set of nonlinear restrictions linking expectations at different forecast horizons the restrictions impose consistency a property weaker than rationality we use exchange rate survey data to measure expectations and then test whether consistency holds the data show that a current positive exchange rate shock leads investors to expect a higher long run future spot rate when iterating forward their short term expectations than when thinking directly about the long run in this sense short horizon expectations may overreact to current exchange rate changes

economic social and environmental impacts of fuel subsidies a revisit of malaysia abstract subsidizing energy has been widely used but is economically unfavorable the malaysian government has shown strong intention to reduce energy subsidies recently but face challenges to prepare policy instruments to manage the impact this study develops a computable general equilibrium cge model with breakdown of households by income level to evaluate the potential impacts of removing energy subsidies on the malaysian economy it is shown that removing petroleum and gas subsidy would improve economic efficiency and increase gdp up to 0 65 budget deficit would be largely reduced after removing the petroleum subsidies especially when the saved subsidy cost is not budgeted for other expenditure households would be worse off in most scenarios due to higher price level but some compensation policy could make the lowest income group no worse than baseline without harm the economy the reduction in carbon emissions ranges 1 84 6 63 in different scenarios the simulation results suggest malaysia to completely remove all fuel subsidies and use the saved funding to cut budget deficit or spend on education health and other service sector it is also necessary to set a compensation scheme to minimize public resistance and make sure such scheme is affordable

incidence and impact the regional variation of poverty effects due to fossil fuel subsidy reform since fossil fuel subsidy reforms can induce significant distributional shifts and price shocks effective compensation and social protection programs are crucial based on the statistical simulation model by araar and verme 2012 this study estimates the regional variability of direct welfare effects of removing fuel subsidies in nigeria uncompensated subsidy removal is estimated to increase the national poverty rate by 3 4 on average however uniform cash compensation that appears effective at the national average is found to fail to mitigate price shocks in 16 of 37 states thus putting livelihoods and public support for reforms at risk states that are estimated to incur the largest welfare shocks coincide with hotspots of civil unrest following nigeria s 2012 subsidy reform attempt the study illustrates how regionally disaggregated compensation can be revenue neutral and maintain or reduce pre reform poverty rates in all states overall it highlights the importance of understanding differences in vulnerability and designing tailored social protection schemes which ensure public support for subsidy reforms

carbon tax incidence on household demand effects on welfare income inequality and poverty incidence in thailand abstract studying the impact of a carbon tax on household demand can be relevant in terms of securing public acceptance of a carbon tax and clarifying the implications for policy design this paper aims to fill a gap in the academic literature by simulating carbon tax scenarios and estimating distributional effects of the tax on household welfare income inequality and poverty rates based on household consumption in thailand the study employs a microsimulation model incorporating the economy wide effects of the tax on prices and consumers behavioral responses to changes in prices the results indicate that a carbon tax is progressive in thailand under revenue recycling scenarios by expanding social transfer programs when carbon tax revenues are recycled through pensions for elderly people the carbon tax could reduce the poverty rate and improve the welfare of households in the lowest quintile the results imply that the distributional impacts of environmental taxes could result in favorable outcomes for income inequality and poverty reduction in developing countries

the unequal benefits of fuel subsidies a review of evidence for developing countries summary this paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries on average the burden of subsidy reform is substantial and is approximately neutrally distributed across income groups a 0 25 decrease in the per liter subsidy results in a 5 decrease in income for all groups more than half of this impact arises from the indirect impact on prices of other goods and services consumed by households fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups in absolute terms the top income quintile captures six times more in subsidies than the bottom

good subsidies or bad subsidies evidence from low carbon transition in china s metallurgical industry abstract since the metallurgical industry has become the main source of china s carbon dioxide emissions and energy consumption in recent years low carbon transition in that industry is of great significance for achieving china s carbon reduction targets it is generally believed that phasing out fossil fuel subsidies is an effective way to reduce energy related co2 emissions since it can increase the energy prices and lower its consumption this paper aims to investigate whether the energy subsidy removal can promote the low carbon transition of china s metallurgical industry taking inter fuel and inter factor substitution effects as the link we calculate the co2 mitigation potential on the assumption that the subsidies for each category of fossil energy were eliminated we find that the metallurgical industry has a sluggish reaction to the changes in energy price supposing eliminating the energy subsidies in the period of 2003 2015 the amount of reduced co2 would be 487 286 million tons accounting for a slight proportion of the total emissions in the industry but it is meaningful for the global co2 mitigation since it approximates the whole co2 emissions in norway during the same period these findings can provide some new insights for the energy subsidy issue and suggest that the additional measures are required to promote the low carbon transition in china s metallurgical industry rather than just relying on the removal of fossil fuel subsidies

impacts of removing fuel import subsidies in nigeria on poverty abstract the petroleum sector contributes substantially to the nigerian economy however the potential benefits are diminished due to the existence of significant subsidies on imports of petroleum products subsidies on imported petroleum products are considered to be an important instrument for keeping fuel prices and hence the cost of living low the costs of these subsidies however has risen dramatically in recent years due to increased volatility in world petroleum and petroleum product prices and increased illegal exportation of subsidized petroleum products into neighboring countries removing the subsidy on fuel is one of the most contentious socio economic policy issues in nigeria today in this paper an economy wide framework is used to identify the impact of removing the fuel subsidy on the nigerian economy and investigates how alternative policies might be used to meet socio economic objectives related to fuel subsidies the results show that while a reduction in the subsidy generally results in an increase in nigerian gdp it can have a detrimental impact on household income and in particular on poor households accompanying the subsidy reduction with income transfers aimed at poor households or domestic production of petroleum products can alleviate the negative impacts on household income

welfare impact of electricity subsidy reforms in pakistan a micro model study abstract electricity subsidies in developing countries have always been debated in economics circles despite their popular appeal of providing relief to the poor the research has proven otherwise they increase the magnitude of deadweight loss and taper consumer welfare however complete withdrawal of a subsidy will make electricity unaffordable for the underprivileged therefore in the context of developing countries there is a need to determine the optimal level of subsidy which will have the least economic impact and benefit the maximum number of users pakistan has been marred by deep energy crises and the government is forced to provide very large subsidies for electricity using pakistan as a case study this study uses a uniform and non uniform price increase to determine the optimal level of electricity subsidies this study employs a micro model technique for the calculation of deadweight and welfare losses when the price of electricity is increased uniformly or non uniformly across different consumption groups this study also introduces a targeted subsidy approach for curbing the mounting deadweight loss due to immense electricity subsidies our research has identified that the targeted subsidy approach not only generates fiscal savings but also improves the welfare of the vulnerable in society

resource rents redistribution and halving global poverty the resource dividend summary this paper considers the proposal that each country distributes its resource rents directly to citizens as a universal and unconditional cash transfer or resource dividend and estimates its potential impact on global poverty for the years 2000 06 using a global dataset on resource rents and the distribution of income i find that if every developing country implemented the policy then the number of people living below 1 a day would be cut by between 27 and 66 depending on the year and the assumptions made looking ahead poverty could be better than halved as long as commodity prices do not drop below their 2004 level

skills or networks success and fundraising determinants in a low performing venture capital market abstract this paper provides a novel interpretation of the factors leading to low performance in venture capital vc markets by using human and social capital perspectives we investigate the relationship between the professional experience and education of vc firm managers and i the success of their portfolio firms on one hand and ii their fundraising activity on the other our study focuses on the french vc market the french business environment is characterized by tight links between businesses and the state and by powerful elite networks while the vc industry has been dominated by government funding and incentives since the global financial crisis we evidence a positive relationship between task specific human capital variables and the exit success of vc backed firms however unlike the research from the us market we find no support for the claim that success determinants impact fundraising activity instead we substantiate the importance of higher social networks for raising larger funds in markets with strong networks

how price inelastic is demand for gasoline in fuel subsidizing economies abstract in recent years governments that have historically subsidized domestic fuel consumption face an ever growing challenge in maintaining fuel subsidies and have embarked on subsidy reform this paper estimates the price and income elasticity of demand for gasoline in countries where fuel prices are government subsidized we make use of biennial panel road sector data for 32 countries over the 1998 2010 period and find demand for gasoline to be price inelastic both in the short run and long run we estimate the short run price and income elasticities at 0 05 and 0 16 and the long run price and income elasticities at 0 25 and 0 81 respectively it is our contention that concerned governments should play an active role in identifying and committing to a road map to progressively abandoning fuel subsidies they should also not be discouraged by relatively small consumption corrections in the short run a reduction in subsidies can eventually release considerable amount of resources for more crucial and potentially growth enhancing public services such as education and health

macroeconomic expectations of households and professional forecasters economists have long emphasized the importance of expectations in determining macroeconomic outcomes yet there has been almost no recent effort to model actual empirical expectations data instead m acroeconomists usually simply assume that expectations are rational this paper shows that while empirical household expectations are not rational in the usual sense expectational dynamics are well captured by a model in which households views derive from news reports of the views of professional forecasters which in turn may be rational the model s estimates imply that people only occasionally pay attention to news reports this inattention generates stickyness in aggregate expectations with important macroeconomic consequences

forecast uncertainty ex ante and ex post u s inflation and output growth survey respondents who make point predictions and histogram forecasts of macro variables reveal both how uncertain they believe the future to be ex ante as well as their ex post performance macroeconomic forecasters tend to be overconfident at horizons of a year or more but overestimate i e are underconfident regarding the uncertainty surrounding their predictions at short horizons ex ante uncertainty remains at a high level compared to the ex post measure as the forecast horizon shortens there is little evidence of a link between individuals ex post forecast accuracy and their ex ante subjective assessments

estimating petroleum products demand elasticities in nigeria a multivariate cointegration approach this paper formulates and estimates petroleum products demand functions in nigeria at both aggregative and product level for the period 1977 to 2006 using multivariate cointegration approach the estimated short and long run price and income elasticities confirm conventional wisdom that energy consumption responds positively to changes in gdp and negatively to changes in energy price however the price and income elasticities of demand varied according to product type kerosene and gasoline have relatively high short run income and price elasticities compared to diesel overall the results show petroleum products to be price and income inelastic

networks or neighborhoods correlations in the use of publicly funded maternity care in california abstract this study focuses on network effects in the utilization of publicly funded prenatal care using vital statistics data from california for 1989 2000 networks are defined using 5 digit zip codes and a woman s racial or ethnic group like others we find evidence that the use of public programs is highly correlated within groups defined using race ethnicity and neighborhoods these correlations persist even when we control for many unobserved characteristics by including zip code year fixed effects and when we focus on the interaction between own group behavior and measures of the potential for contacts with other members of the group contact availability however the richness of our data allows us to go further and to conduct several tests of one important hypothesis about networks that the estimated effects represent information sharing within groups the results cast doubt on the idea that the observed correlations can be interpreted as evidence of information sharing in particular we find estimated effects to be as large or larger among women who have previously used the program as among first time users

diversification effects of energy subsidy reform in oil exporters illustrations from kuwait abstract for oil exporters energy subsidy reform and economic diversification are critical policy responses to recent fundamental changes in the global oil market and oil price declines yet the relationship between them is little understood this article investigates linkages between energy subsidy reform and accelerating economic diversification away from hydrocarbons in a low oil price environment using illustrations from kuwait it employs an economy wide general equilibrium model with oligopolistic industrial structure the first of its kind for an economy in the middle east and north africa that embodies unique elements of the country s economic structure oil dependence public sector dominance subsidies sovereign wealth funds industrial collusive pricing behaviour and guest workers the article argues that contrary to common popular discourse kuwait s economy has a diversified economic base but this base fails to diversify export or government revenue needed for economic sustainability results show that weak economic diversification in oil exporters with a similar economic structure is not primarily due to dutch disease as dominant in the literature but to economic constraints and distortions that impair structural change and exacerbate overdependence on hydrocarbons labour and competition reforms relax some constraints achieving large efficiency gains that extend economy wide and can expand non energy tradable sectors the analysis has important policy implications first the potential role of pricing regulation in small economies in moderating economic impacts of negative oil shocks second in oil economies characterized by pervasive oligopolies microeconomic reform can be a channel to achieve efficiency and better diversification effects of subsidy reform

kuwait s energy subsidy reduction examining economic and co2 emission effects with or without compensation abstract this paper examined economy wide impacts of reducing energy subsidy in kuwait a social accounting matrix sam was constructed and a computable general equilibrium cge model was developed the cge model was used to simulate separate and combined effects of a 25 reduction of subsidy to three energy products natural gas oil and electricity this policy shock was applied to the model in two scenarios in each round the subsidy reductions were applied to each energy product separately in turn and then finally simultaneously to all energy products in the first scenario subsidy reductions were applied and results were compared with the baseline scenario given in the sam this yielded adverse effects across a range of endogenous variables it leads to large energy price increases as high as 255 for electricity gross domestic product gdp marginally declined by 0 28 in scenario 2 the subsidy reduction was accompanied with cash transfers to energy users a compensation for welfare loss the amount of transfer was equivalent to the sum of the amount of subsidy reductions the results indicated that such transfers would reduce the adverse effects of the policy reform the effects on gdp was reversed it rose by 1 01 the price effect was slightly lower electricity price rose by 245 finally sensitivity of the model results was examined by varying the elasticity of the substitution of composite energy and capital in production greater possibility of substitution seems to cause subsidy reform to have much larger positive or smaller adverse economy wide effects the simulation experiments suggest that subsidy reform would need to be accompanied by demand side stimulus or supply side initiatives to encourage energy conservation