price formation in electricity forward markets and the relevance of systematic forecast errors since the liberalisation of the european electricity sector forward and futures contracts have gained significant interest of market participants due to risk management reasons for pricing of these contracts an important fact concerns the non storability of electricity in this case according to economic theory forward prices are related to the expected spot prices which are built on fundamental market expectations in the following article the crucial impact parameters of forward electricity prices and the relationship between forward and future spot prices will be assessed by an empirical analysis of electricity prices at the european energy exchange and the nord pool power exchange in fact price formation in the considered markets is influenced by historic spot market prices yielding a biased forecasting power of long term contracts although market and risk assessment measures of market participants and supply and demand shocks can partly explain the futures spot bias inefficiencies in the analysed forward markets cannot be ruled out

strong sustainability critical natural capital and the capability approach this article is an attempt to conceptually improve the notion of strong sustainability by creating a rapprochement between its core concept critical natural capital and the capability approach we first demonstrate that the capability approach constitutes a relevant framework for analysing the multiple links between human well being and critical natural capital second we demonstrate that the rapprochement between critical natural capital and the capability approach can form both the normative basis and the informational basis for a deliberative approach to human development which embraces a strong sustainability perspective this conceptual rapprochement as illustrated in our case study opens up avenues of research towards the practical implementation of human development projects from a strong sustainability perspective

the place of the capability approach within sustainability economics the connections between the capability approach and sustainability economics have been explored recently i argue here that for engaging in a more substantive study of those connections we must first understand the place of the capability approach within the history of economic thought as a second stage of the revival of classical surplus theory once this is clear we can then use the capability approach in order to specify concepts such as well being surplus scarcity and sustainable reproduction which are essential for the development of sustainability economics

the relevance of epistemic analysis to sustainability economics and the capability approach abstract this paper considers how epistemic analyses birkin and polesie 2011 foucault 1970 foucault 1990a foucault 1990b may assist with the development of sustainability economics bartelmus 2010 baumgartner and quaas 2010a baumgartner and quaas 2010b and soderbaum 2011 and the capability approach ballet et al 2011 martins 2011 rauschmayer and lesmann 2011 scerri 2012 it was the french social theorist michel foucault 1926 1984 who coined the term episteme to refer to the possibility of knowledge that determines the development of thought and knowledge in a given period for foucault epistemes were the buried foundations of knowledge that his epistemic archaeology could unearth in 2007 foucault was identified as the most cited author of books in the humanities by thomson reuters isi web of science this paper begins with a brief definition and description of epistemic analyses a summary analysis of the modern episteme and neoclassical economics is then provided and this is followed by outline evidence for the emerging episteme finally the opportunity is considered for the emerging episteme to reinforce and enhance sustainability economics and the capability approach

the overnight risk premium in electricity forward contracts abstract we analyze the risk premium on electricity forward contracts traded for the nordic and german austrian electricity markets we argue that finding risk premiums by analyzing overnight returns is more relevant than the frequently used ex post approach the derivatives in these markets can be characterized as trading products and hedging products each contract shows a clear increase in trading volume and liquidity when approaching maturity we link this to a testable hypothesis where financial traders are compensated for holding price risk and where the sign and magnitude of the risk premium changes depending on the hedging pattern of producers and retailers incorporating this in regressions we find that there are higher risk premiums in the period before the forwards become front products compared to the risk premiums in the front period quarterly and monthly contracts show the most significant results

forward premia in electricity markets a replication study abstract motivated by mixed empirical evidence for the risk premium theory of bessembinder and lemmon 2002 i perform a replication study by rerunning simulations the risk premium theory links forward premia to the statistical properties of the anticipated distribution of spot power prices in an equilibrium approach my simulations closely following those run in the original paper support the first three hypotheses but not hypothesis 4 an increase in mean demand can thus result in a lower forward premium for some ranges of parameter values the replication results do not explain the mixed empirical support for the theory

inequality sustainability and piketty s capital abstract in this article i address the implications of thomas piketty s book capital in the twenty first century for our understanding of inequality and sustainability drawing upon amartya sen s capability approach and the revival of classical political economy it brings i argue that piketty s contribution is a significant one which has the potential to lead economic analysis in a more fruitful direction but its potential becomes much greater if its empirical analysis is combined with the revival of classical political economy undertaken by sen and other authors rather than with marginalist theory

ecosystems strong sustainability and the classical circular economy abstract in this article i argue that notions such as ecosystem services and strong sustainability can be best understood and developed within the theoretical framework advanced by the classical political economists in which a circular conception of the economy is provided i also argue that the development of notions such as ecosystem services and strong sustainability has been constrained by the dominance of neoclassical economics which provides a linear conception of the economy and leads to an emphasis on weak sustainability which in turn springs from an emphasis on substitutability and aggregate capital when assessing the relevance of classical political economy for studying ecosystem services and strong sustainability i consider not only the contributions of the classical political economists but also more recent contributions which draw upon the classical perspective such as piero sraffa s and amartya sen s

the meaning of failed replications a review and proposal the welcome rise of replication tests in economics has not been accompanied by a consensus standard for determining what constitutes a replication a discrepant replication in current usage of the term can signal anything from an unremarkable disagreement over methods to scientific incompetence or misconduct this paper proposes a standard for classifying one study as a replication of some other study it is a standard that places the burden of proof on a study to demonstrate that it should have obtained identical results to the original a conservative standard that is already used implicitly by many researchers it contrasts this standard with decades of unsuccessful attempts to harmonize terminology and argues that many prominent results described as replication tests should not be described as such adopting a conservative standard like this one can improve incentives for researchers encouraging more and better replication tests

revisiting the relationship between spot and futures prices in the nord pool electricity market abstract this work discusses potential pitfalls of applying linear regression models for explaining the relationship between spot and futures prices in electricity markets in particular the bias coming from the simultaneity problem the effect of correlated measurement errors and the impact of seasonality on the regression results studying a 13 year long 1998 2010 price series of spot and futures prices at nord pool and employing regression models with garch residuals we show that the impact of the water reservoir level on the risk premium is positive which is to be expected but contradicts the results of botterud et al 2010 we also show that after taking into account the seasonality of the water level the storage cost theory proposed by botterud et al 2010 to explain the behavior of convenience yield has only limited support in the data

viewpoint replication in economics this examination of the role and potential for replication in economics points out the paucity of both pure replication checking on others published papers using their data and scientific replication using data representing different populations in one s own work or in a comment several controversies in empirical economics are used to illustrate how and how not to behave when replicating others work the incentives for replication are examined and proposals aimed at journal editors and authors are advanced that might stimulate an activity that most economists applaud but few perform

storage and the electricity forward premium we develop and test a model describing the influence of natural gas storage inventories on the electricity forward premium the model is constructed by linking the effect of gas storage constraints on the higher moments of the distribution of electricity prices to an established model of the effect of those moments on the forward premium the model predicts a sharply negative effect of gas storage inventories on the electricity forward premium when demand for electricity is high and space heating demand for gas is low empirical results based on pjm data strongly support the model

commitment through renegotiation proof contracts with third parties the paper analyzes contracts as means of strategic commitment that is commitment against outside parties to the agreement it considers the example of an incumbent firm which enters a contractual relationship with its workers in order to deter entry it assumes away the possibility for the parties to precommit not to make pareto improving renegotiations of the agreement once entry has taken place under symmetric information the contract is thus found to be useless for entry deterrence if the incumbent firm or workers possess some private information excessive post entry production levels can however be sustained ex post since output reductions may not be incentive compatible while information asymmetries are usually welfare decreasing when the goal is optimal risk sharing they can thus be welfare improving for the contracting parties when commitment against outsiders is the goal of the contract the role of the renegotiation process as a constraint on sustainable agreements is stressed in the paper and the general relevance of strategic contractual commitment is discussed

issues of paradigm ideology and democracy in sustainability assessment does the challenge of sustainable development sd have implications for our approches to decision making and evaluation do we need specific sustainability assessment models sams and if so what

3 d sustainability an approach for priority setting in situation of conflicting interests towards a sustainable development abstract this paper aims to provide a new approach to objectively assess hierarchies and priority setting in the relationship between environmental social and economic sustainability within sustainable development after a literature review several widely used conceptual figures diagrams describing this relationship were assessed using swot analyses in order to identify the major weaknesses in these pictorial descriptions based on the findings a new concept called 3 d sustainability has been developed and is presented visually as well as is described in the text this concept introduces and ranks criteria for the assessment of hierarchies within and conflicts of interests between social environmental and economic sustainability the three dimensions of sustainability these criteria are applied to several existing hierarchies and solutions to conflicts of interests based on the swot analyses the main shortcomings of the widely used conceptual figures were identified as 1 misinterpretation of embeddings 2 misjudgement of equity between the three dimensions of sustainability 3 a lack of expression of limitations and 4 lack of adequate decision support these shortcomings are overcome theoretically and in practice by 3 d sustainability a slightly more complex but conceptually richer figure than the widely used conceptual figures assessed in particular the shift of the burden of proof within the three sustainability dimensions is argued as a main solution the application of the criteria of 3 d sustainability to several real examples indicates its usefulness in decision support while justifying more sustainable hierarchies and solutions in the settlement of conflicts of interests within the three sustainability dimensions

what is meant by replication and why does it encounter resistance in economics this paper discusses recent trends in the use of replications in economics we include the results of recent replication studies that have attempted to identify replication rates within the discipline these studies generally find that replication rates are relatively low we then consider obstacles to undertaking replication studies and highlight replication initiatives in psychology and political science behind which economics appears to lag

market efficiency and risk premia in short term forward prices abstract using recursive estimation and rolling windows over extended sample periods we examine the time varying relationship between spot and short term forward prices in the pennsylvania new jersey maryland pjm wholesale electricity market we examine theoretical models of forward risk premia in electricity markets and show that recent data do not provide support for existing models the results indicate that short term forward prices have converged towards unbiased predictors of the subsequent spot prices

a note on sustainability economics and the capability approach sustainability economics attempts to reconcile efficiency criteria with those of social justice in a context of environmental concern this article aims at highlighting the fact that the capability approach offers an interesting perspective for the foundation of sustainability in economics it primarily focuses on the major role that freedom brings as a normative basis for well being and adds new insights for our understanding of human and environment relationship through the study of the constraints and opportunities that affect the individual the final section of this article asks us to reconsider our nature conservation choices by acknowledging the restrictive impact that they have on individual freedoms

the relationship between spot and futures prices in the nord pool electricity market abstract we analyze 11 years of historical spot and futures prices from the hydro dominated nord pool electricity market we find that futures prices tend to be higher than spot prices the average convenience yield is therefore negative but varies by season and depends on the storage levels in hydro reservoirs the average realized return on holding a long position in the futures market is also negative the negative convenience yield and risk premium contrast empirical findings in most other commodity markets we argue that differences between the supply and demand sides in terms of risk preferences and the ability to take advantage of short term price variations can contribute to explain the observed relationship between spot and futures prices in addition our analysis shows that the relationship between spot and futures prices is clearly linked to the physical state of the system such as hydro inflow reservoir levels and demand

risk premiums in the german day ahead electricity market this paper conducts an empirical analysis of risk premiums in the german day ahead electricity wholesale market we compare hourly price data of the european energy exchange eex auction and of the continuous over the counter otc market which takes place prior to the eex auction data provided by the energy exchange austria exaa has been used as a snapshot of the otc market two hours prior to the eex auction ex post analysis found market participants are willing to pay both significant positive and negative premiums for hourly contracts the largest positive premiums were paid for high demand evening peak hours on weekdays during winter months by contrast night hours on weekends featuring lowest demand levels display negative premiums additionally ex ante analysis found a strong positive correlation between the expected tightness of the system and positive premiums for this purpose a tightness factor has been introduced that includes expectations of fundamental factors such as power plant availability wind power production and demand hence findings by longstaff and wang 2004 can be supported that power traders in liberalised markets behave like risk averse rational economic agents

ends in view the capabilities approach in ecological sustainability economics while traditional scientific endeavor seeks to avoid the problem ecological economics and the broader emergent field of sustainability economics e se are explicitly grounded in a particular ethico moral assertion one that defines sustainability as a normative notion about the way how humans should act towards nature and how they are responsible towards one another and future generations baumgartner and quaas 2010 p 445 thus e se is neither a purely positive science nor is it a purely normative endeavor but it is what has been called relevant science baumgartner and quaas 2010 p 447 a key objective of e se is therefore said to be to study how ecosystems and human activity interrelate in terms that extend beyond functional and descriptive analysis of this interrelationship and towards explicitly incorporating this normative vision the result that is aimed for is a discipline that is constituted as the best possible approach to the science and management of sustainability

the classical circular economy sraffian ecological economics and the capabilities approach abstract here i provide some further elaborations on the idea of a classical circular economy and its articulation with the capabilities approach this enables addressing some important questions raised by yoann verger 2017 when commenting on the idea of a classical circular economy as outlined in martins 2016 while advancing the basis for a sraffian ecological economics to understand the connections between sraffa s economic theory and the classical circular economy discussed by verger 2017 an essential aspect to be addressed here is sraffa s interpretation of the classical conception of the wage which can be fruitfully addressed in terms of the capabilities approach as suggested by vivian walsh 2000

unraveling the veil of fuzziness a thick description of sustainability economics this article provides a thick description geertz 1973 of sustainability economics baumgartner and quaas 2010a b have proposed as an alternative to ecological economics the new field of sustainability economics which has triggered various replies the purpose here is to order and to review these contributions building upon a literature review of sustainability economics the paper argues that the concept currently has more of a fuzzy and declamatory character the rhetoric mccloskey 1998 of sustainability economics contains general issues of sustainability economics externalities and the capability approach the article argues that it is currently not clear how the solutions for science and policy proposed by sustainability economics differ from those of ecological economics efforts should be directed towards further development of the theory and the operationalization of sustainability principles the systemic view of co evolutionary development social learning and sustainability economics normative underpinning merits more consideration in the debate about sustainability economics