environmental investment and policy with distortionary taxes and endogenous growth abstract recent studies consider public r d spending that affects abatement knowledge and endogenous growth distortionary taxes that affect capital formation pollution taxes that affect environmental degradation and regeneration that restores natural capital our model combines all those elements the combination affects prior results focusing on two parameters the need for distorting taxes and productivity of abatement knowledge relative to pollution first these two extensions can reverse prior findings that pollution tax revenue is always enough to pay for public r d second tax distortions and externalities alter prior findings that the ratio of public to private capital depends only on output elasticities third dynamics affect prior static findings about other public spending crowding out environmental public goods fourth a greater need for public spending can lead to greater increases in distorting taxes or pollution taxes fifth greater environmental regulation can mean growth is higher or lower even if welfare is higher

internal equity financing and the performance of multinational subsidiaries in emerging economies we examine the internal equity financing of the multinational subsidiary which retains and reinvests its own earnings internal equity financing is a type of firm specific advantage fsa along with other traditional fsas in innovation research and development brands and management skills it also reflects subsidiary level financial management decision making here we test the contributions of internal equity financing and subsidiary level financial management decision making to subsidiary performance using original survey data from british multinational subsidiaries in six emerging countries in the south east asia region our first finding is that internal equity financing acts as an fsa to improve subsidiary performance our second finding is that over 90 of financing sources including capital investment by the parent firms in the british subsidiaries come from internal funding our third finding is that subsidiary level financial management decision making has a statistically significant positive impact on subsidiary performance our findings advance the theoretical empirical and managerial analysis of subsidiary performance in emerging economies

can foreign firms bond themselves effectively by renting u s securities laws abstract the study tests the functional convergence hypothesis which states that foreign firms can leapfrog their countries weak legal institutions by listing equities in new york and agreeing to follow u s securities law evidence shows that the sec and minority shareholders have not effectively enforced the law against cross listed foreign firms detailed evidence from mexico further shows that while some insiders exploited this weak legal enforcement with impunity others that issued a cross listing and passed through an economic downturn with a clean reputation went on to receive privileged long term access to outside finance as compared with legal bonding reputational bonding better explains the success of cross listings

economic growth and energy consumption causal nexus viewed through a bootstrap rolling window one puzzling results in the literature on energy consumption economic growth causality is the variability of results particularly across sample periods sample sizes and model specification in order overcome these issues this paper analyzes the causal links between energy consumption and economic growth for g 7 countries using bootstrap granger non causality tests with fixed size rolling subsamples the data used includes annual total energy consumption and real gross domestic product gdp series from 1960 to 2006 for g 7 countries excluding germany for which the sample period starts from 1971 using the full sample bootstrap granger causality test we find that there is predictive power from energy consumption to economic growth only for canada however parameter instability tests show that none of the estimated models have constant parameters and hence the full sample results are not reliable analogous to the full sample results the results obtained from the bootstrap rolling window estimation indicate no consistent causal links between energy consumption and economic growth we however find that causal links are present between the series in various subsamples furthermore these subsample periods correspond to significant economic events indicating that the findings are not statistical artefacts but correspond to real economic changes our results encompass previous findings and offer an explanation to varying findings

effects of carbon taxes in an economy with prior tax distortions an intertemporal general equilibrium analysis abstract this paper analyzes the costs of carbon taxes in a model that recognizes interactions between this tax and pre existing taxes first we examine the extent to which costs of a u s carbon tax are reduced when its revenues finance cuts in income taxes such use of revenues significantly reduces but does not eliminate the overall policy costs the positive overall costs reflect the carbon tax s focus on intermediate inputs and its relatively narrow base in comparison with income taxes we also examine the sensitivity of the carbon tax s costs to the level of pre existing taxes for any given use of revenues welfare costs rise significantly with pre existing tax rates indicating that models disregarding pre existing taxes may substantially understate the costs of new environmental tax initiatives

global economic activity and crude oil prices a cointegration analysis abstract this paper empirically investigates the cointegrating relationship between crude oil prices and global economic activity the kilian economic index is used as an indicator of global economic activity based on a supply demand framework and the cointegration theory we find that real futures prices of crude oil are cointegrated with the kilian economic index and a trade weighted us dollar index and crude oil prices are influenced significantly by fluctuations in the kilian economic index through both long run equilibrium conditions and short run impacts we also develop an empirically stable data coherent and single equation error correction model ecm which has sensible economic properties empirical results based on the ecm show that the adjustment implied by a permanent change in the kilian economic index is a relatively drawn out process

bertrand edgeworth duopoly with linear costs a tale of two paradoxes consider a bertrand edgeworth duopoly with linear cost functions if the firms produce to stock then no nash equilibrium in pure strategies exists if however the firms produce to order then all subgame perfect nash equilibria involve the firms charging a price equal to marginal cost d 2005 elsevier b v all rights reserved

the existence of equilibrium in discontinuous economic games ii applications in part i of this study we established two existence theorems for mixed strategy equilibrium in games with discontinuous payoff functions see theorems 4 4 and 5 5 in dasgupta and maskin 1986 hereafter d m 1986 in this second part we use the second of these two theorems to prove the existence of mixed strategy equilibrium in some wellknown discontinuous economic games that fail to have pure strategy equilibria the models we analyse are the bertrand edgeworth example of price setting duopolists with capacity constraints see section 2 2 price competition among firms producing differentiated products hotelling 1929 and d aspremont gabszewicz and thisse 1979 see section 2 3 spatial competition eaton and lipsey 1975 and shaked 1975 see section 3 and models of market dependent information rothschild and stiglitz 1976 and wilson 1977 section 4 the paper concludes section 5 with a classification of these models

oil prices and the terms of trade abstract the combination of substantial terms of trade variability and unstable correlation patterns of trade prices with output and trade volumes has led some to suggest a break in the link between trade volumes and prices we find that oil accounts for much of the variation in the terms of trade over the last twenty five years and its quantitative role varies significantly over time and since our dynamic general equilibrium model predicts that the economy responds differently to oil supply shocks than to other shocks changes in their relative importance helps to account for the unstable correlations in the data

from the editors common method variance in international business research jibs receives many manuscripts that report findings from analyzing survey data based on same respondent replies this can be problematic since same respondent studies can suffer from common method variance cmv currently authors who submit manuscripts to jibs that appear to suffer from cmv are asked to perform validity checks and resubmit their manuscripts this letter from the editors is designed to outline the current state of best practice for handling cmv in international business research

age analysis of the impact of a carbon energy tax on the irish economy a computable general equilibrium model with specific detail in taxation and energy use is developed in this paper to quantify the impact of the implementation of energy taxation to reduce carbon dioxide emissions in ireland benchmark data combining physical energy and emissions data and economic data in the form of a social accounting matrix sam had to be compiled from various data sources because energy and pollution accounts from the seea are not available for ireland we find that the reduction target for energy related co2 emissions in ireland of 25 8 compared to 1998 levels can be achieved with a carbon energy tax of 10 15 euros per tonne of co2 though fuel switching is important in meeting the target this result is more sensitive to the possibilities for producers to substitute away from energy use welfare would fall but only by small percentages production and consumption patterns would change more significantly with a shift in demand from fuels with a high emission factor to energy sources with a lower carbon intensity and from energy to other commodities this paper confirms that a carbon energy tax leads to greater emission reductions than an equivalent uniform energy tax the latter has a stronger negative impact on the less polluting energy sectors whereas the carbon tax greatly stimulates the use of renewable energy and reduces the use of peat and coal the new sam the model and the application to energy taxes contribute to a better informed debate on environmental policy in ireland

rationing rules and bertrand edgeworth equilibria in large markets abstract in a market with concave downward sloping demand and symmetric firms which compete in prices with constant marginal costs and capacity limits it is shown that the supports of the symmetric mixed strategy nash equilibria converge to the unique competitive price provided that unsatisfied demand is allocated according to the surplus maximizing rationing rule

the economic and budgetary impact of climate policy in portugal carbon taxation in a dynamic general equilibrium model with endogenous public sector behavior the objective of this paper is to study hbox co 2 taxation in its dual role as a climate and fiscal policy instrument using a dynamic general equilibrium model of the portuguese economy which highlights the mechanisms of endogenous growth and incorporates a detailed modeling of public sector behavior and accounts in addition to the conventional marginal abatement cost curve we present a pair of complementary marginal abatement cost curves which highlight the impact hbox co 2 taxation has on economic performance and public debt and are therefore directly relevant to the terms of the policy debate these marginal abatement cost curves provide an effective tool for understanding the rate at which the environmental effectiveness economic costs and budgetary effects change with the tax level our results indicate that hbox co 2 taxes can be an important policy instrument for reducing emissions and promoting fiscal consolidation although this will come at a cost in terms of economic performance simulation results suggest that a tax of 17 00 euros per hbox tco 2 can satisfy existing climate policy targets the tax revenue effects together with reductions in public spending yield a 4 8 reduction in public debt these desirable outcomes come at the cost of a 1 3 reduction in gdp over the long term our analysis highlights that limiting public consumption expenditures can contribute to larger reductions in public debt albeit at a marginally greater cost to economic activity in turn reducing public investment although effective in reducing public debt produces a much larger negative economic impact this evokes an important trade off particularly pronounced in the present debates regarding austerity measures in the eu between fiscal consolidation efforts and efforts to promote convergence to eu standards of living these results further highlight that modeling assumptions with respect to public spending decision are not innocuous an exogenous trajectory for public spending suggests substantially smaller gdp effects and substantially larger public debt effects for any given emissions target

views on peak oil and its relation to climate change policy abstract definitions of fossil fuel reserves and resources and assessed stock data are reviewed and clarified semantics explain a large stake of conflict between advocate and critical voices on peak oil from a holistic sources sinks perspective limited carrying capacity of atmospheric sinks not absolute scarcity in oil resources will impose tight constraints on oil use eventually observed peaks in oil production in nearby years will result from politically imposed limits on carbon emissions and not be caused by physical lack of oil resources peak oil belief induces passive climate policy attitudes when suggesting carbon dioxide emissions will peak naturally linked to dwindling oil supplies active policies for reducing emissions and use of fossil fuels will also encompass higher energy end use prices revenues obtained from higher levies on oil use can support financing energy efficiency and renewable energy options but when oil producers charge the higher prices they can pump new oil for many decades postponing peak oil to occur while extending carbon lock in

a new carbon tax in portugal a missed opportunity to achieve the triple dividend in 2014 the portuguese government appointed a commission for environmental tax reform that formulated a carbon tax proposal designed to achieve three dividends to help portugal meet the european union s target for emissions reductions by 2030 to boost long term employment and gdp above their pre carbon tax levels and to strengthen public finances by lowering public indebtedness a key feature of this proposal was a judicious set of mixed strategies to recycle all carbon tax revenues back into the economy in this note we show how the carbon tax that the portuguese parliament eventually approved deviated from such guidelines and ultimately failed to achieve the triple dividend we argue that authorities need to quickly amend the existing legislation to avoid this misguided attempt turning into a missed opportunity to improve environmental macroeconomic and fiscal outcomes

technology and technical change in the mit eppa model potential technology change has a strong influence on projections of greenhouse gas emissions and costs of control and computable general equilibrium cge models are a common device for studying these phenomena using the mit emissions prediction and policy analysis eppa model as an example two ways of representing technology in these models are discussed the sector level description of production possibilities founded on social accounting matrices and elasticity estimates and sub models of specific supply or end use devices based on engineering process data a distinction is made between exogenous and endogenous technical change and it is shown how because of model structure and the origin of key parameters such models naturally include shifts in production process that reflect some degree of endogenous technical change as a result the introduction of explicit endogenous relations should be approached with caution to avoid double counting

how multinational subsidiary mandates are gained and lost a subsidiary mandate is a business or element of a business in which the subsidiary participates and for which it has responsibilities beyond its national market this research studied thirty one mandates in six canadian subsidiaries of u s owned multinational corporations a life cycle framework was proposed and used to explore the factors associated with the gain development and loss of mandates by subsidiaries two key findings emerged first it was shown that there is a risk in having a full scope world product mandate because it is possible to become marginal to the corporate strategy second it was observed that the engine of subsidiary growth is its distinctive capabilities and that for a mandate to be effective it must be built on those capabilities implications for mandate sustainability are proposed on the basis of these two insights

implications of fossil fuel constraints on economic growth and global warming abstract energy security and global warming are analysed as 21st century sustainability threats best estimates of future energy availability are derived as an energy reference case erc an explicit economic growth model is used to interpret the impact of the erc on economic growth the model predicts a divergence from 20th century equilibrium conditions in economic growth and socio economic welfare is only stabilised under optimistic assumptions that demands a paradigm shift in contemporary economic thought and focused attention from policy makers fossil fuel depletion also constrains the maximum extent of global warming carbon emissions from the erc comply nominally with the b1 scenario which is the lowest emissions case considered by the ipcc the ipcc predicts a temperature response within acceptance limits of the global warming debate for the b1 scenario the carbon feedback cycle used in the ipcc models is shown as invalid for low emissions scenarios and an alternative carbon cycle reduces the temperature response for the erc considerably compared to the ipcc predictions our analysis proposes that the extent of global warming may be acceptable and preferable compared to the socio economic consequences of not exploiting fossil fuel reserves to their full technical potential

trade linkages and macroeconomic effects of the price of oil in this paper we assess the impact of oil price shocks on oil producer and oil consuming economies var models for different countries are linked together via a trade matrix as in abeysinghe 2001 as expected we find that oil producers here russia and canada benefit from oil price shocks for example a large oil shock leading to a price increase of 50 boosts russian gdp by about 6 however oil producers are hurt by indirect effects of positive oil price shocks as economic activity in their exporter countries suffers for oil consumers the effects are more diverse in some countries output falls in response to an oil price shock while other countries seem to be relatively immune to oil price changes finally indirect effects are also detected for oil consumer countries those countries which trade more with oil producers gain indirect benefits via higher demand from oil producing countries in general the largest negative total effects from positive oil price shocks are found for japan china the usa finland and switzerland while other countries in our sample seem to have fared quite well during recent positive oil price shocks the indirect effects are negative for russia finland germany and netherlands

existence of pure strategy nash equilibrium in bertrand edgeworth oligopolies abstract this article is searching for necessary and sufficient conditions which are to be imposed on the demand curve to guarantee the existence of pure strategy nash equilibrium in a bertrand edgeworth game with capacity constraints

buying greenhouse insurance the economic costs of carbon dioxide emission limits in recent years a growing concern that the increasing accumulation of greenhouse gases will lead to undesirable changes in global climate has resulted in a number of proposals both in the united states and internationally to set physical targets for reducing greenhouse gas emissions but what will these proposals cost based on the authors earlier ground breaking work buying greenhouse insurance outlines a way to think about greenhouse effect decisions under uncertainty it describes an insightful model for determining the economic costs of limiting carbon dioxide emissions produced by burning fossil fuels and provides a solid analytical base for rethinking public policy on the farreaching issue of global warming manne and richels present region by region estimates of the costs that would underlie an international agreement using a computer model known as global 2100 they analyze the economic impacts of limiting c02 emissions under alternative supply and conservation scenarios the results clearly indicate that a reduction in emissions is not the sole policy response to potential climate change following a summary of the greenhouse effect its likely causes and possible consequences manne and richels take up issues that concern the public at large they provide an overview of global 2100 look at how the u s energy sector is likely to evolve under businessas usual conditions and under carbon constraints and describe the concept of greenhouse insurance they consider possible global agreements including an estimate of benefits that might result from trading in an international market in emission rights they conclude with a technical description directed toward modeling specialists alan manne is professor of operations research at stanford university richard richels is director of the energy analysis and planning department at the electric power research institute

a lower vat rate on electricity in portugal towards a cleaner environment better economic performance and less inequality abstract this article addresses the budgetary economic distributional and environmental impact of increasing the vat on electricity in portugal the analysis is carried out in the context of a new multi sector multi household dynamic general equilibrium model simulation results suggest that a permanent increase from 6 to 23 improves the public budget and albeit marginally co2 emissions but it leads to detrimental economic and distributional effects as the economy in portugal begins to recover after the great financial crisis and the budgetary situation becomes less constraining pressure is mounting for this vat increase to be reversed this mixed bag of results is an important element for the debate reverting to a lower vat is desirable as it would improve economic performance and have positive distributional effects the question is how to compensate for the loss of tax revenues to offset the adverse budgetary effects of a lower vat we consider several revenue raising strategies our simulation results suggest that an offsetting increase in either the general vat tax rate or the tax on petroleum products would yield more favorable effects from all relevant perspectives economic distributional and environmental while mostly keeping intact the budgetary benefits

a macroeconomic analysis of energy subsidies in a small open economy we construct a dynamic model of a small open economy to analyze the effects of large energy subsidies the model includes domestic energy production and consumption trade in energy at world market prices as well as private and public sector production the model is calibrated to egypt and used to study reforms such as reductions in energy subsidies with corresponding reductions in various tax instruments or increases in infrastructure investment we calculate the new steady states transition paths to the new steady state and the size of the associated welfare losses or gains our main results for a 15 cut in energy subsidies are 1 steady state gross domestic product drops in most of our experiments as less energy is used in production 2 steady state consumption rises in most of our experiments 3 welfare can rise by as much as 0 6 in consumption equivalent terms 4 the largest gains in terms of output and of welfare can be obtained when savings from energy subsidy cuts are used to fund additional infrastructure investment jel e21 e63 h55 j26 j45 to understand the effects of subsidies and taxes on an energy sector and on consumption in a given country requires establishing a complete picture of the market in which it operates and of the various policies past and present that have applied to it iea 2010c 11 1 introduction a report by the international energy agency iea 2010a in 2010 identified 37 countries that together account for 95 of global subsidized fossil fuel consumption and found that total fuel consumption subsidies were about 557 billion in 2008 a stark increase from 342 billion in 2007 countries with the highest subsidies for energy turn out to be smaller oil producing countries like iran 65 billion in subsidies in 2009 20 of gross domestic product gdp saudi arabia venezuela and egypt iea 2010b the underpricing of energy can lead to excess consumption of energy that together with the need to finance these subsidies can have adverse economic effects both intra and intertemporally energy subsidies may therefore have large adverse effects on capital accumulation economic growth and hence welfare especially for future generations the iea estimates that many countries forgo faster growth of up to 2 6 by subsidizing energy iea 2010c since 2008 many major oil subsidizing countries have started to bring their prices in line with world market prices among them china russia india and indonesia many of the concerns about the inefficiency of energy subsidies have focused on environmental aspects and green house gas ghg emissions in particular the iea 2010c estimates that a world wide reduction of fuel subsidies could decrease ghg emissions in the long run by around 10 there are relatively few studies of the short term and long term macroeconomic effects of reductions in energy subsidies these effects are complex and require an explicit dynamic modeling approach there are many interrelated effects 1 phasing out energy subsidies alters the price of energy relative to other consumption goods and hence not only the quantity demanded for energy but also the demand for other goods 2 the degree of complementarity substitutability between these consumption goods together with the expectations of the time path for the phase out influences savings behavior and thus capital accumulation of households 3 changing energy subsidies influences use of energy in production whether energy is a complement or a substitute to other factors of production influences total output and marginal products of all factors of production 4 changes in factor payments influence household income and thus consumption and savings behavior 5 phasing out energy subsidies allows for other changes in the government budget such as changes in tax rates or other government expenditures which in turn will influence firm and household behavior

bertrand edgeworth equilibrium with a large number of firms abstract we examine a model of price competition with strictly convex costs where the firms simultaneously decide on both price and quantity are free to supply less than the quantity demanded and there is discrete pricing if firms are symmetric then for a large class of residual demand functions there is a unique equilibrium in pure strategies whenever for a fixed grid size the number of firms is sufficiently large moreover this equilibrium price is within a grid unit of the competitive price the results go through to a large extent when the firms are asymmetric or they are symmetric but play a two stage game and the tie breaking rule is weakly manipulable

bertrand edgeworth oligopoly in large markets the relation between perfectly competitive and monopolistically competitive equilibria is analysed for a bertrand edgeworth model of a single market in which capacity constrained firms choose prices as strategies the market always has a nash equilibrium in pure or mixed strategies as the number of firms increases the corresponding equilibria converge in distribution to a perfectly competitive price this result provides a justification for perfect competition that is based on an explicit account of price formation however monopoly prices persist with a positive but vanishing probability regularity or well defined inverse demand functions are not required

on the environmental economic and budgetary impacts of fossil fuel prices a dynamic general equilibrium analysis of the portuguese case abstract this paper examines the influence of fossil fuel prices on carbon dioxide emissions economic activity and the public sector account in portugal it uses a dynamic general equilibrium model which highlights the mechanisms of endogenous growth and includes a detailed modeling of the public sector fuel price scenarios are based on forecasts by the us department of energy doe us the international energy agency iea oecd and ihs global insight inc the differences in relative fuel prices among the three scenarios lead to substantially different environmental impacts higher fuel prices in the doe us scenario lead to a 10 2 reduction in the policy effort required to meet the eu 2020 emission targets while relative price changes in the iea oecd scenario result in a 19 2 increase in the required policy effort and decreasing fuel prices increase the emissions deficit by 95 9 under the ihs scenario in terms of the long term economic impacts our results suggest a 2 2 reduction in gdp in the doe us scenario and 1 9 in the iea oecd scenario and an increase of 1 4 in the ihs scenario as to the budgetary impact higher fuel prices lead to lower tax revenues which coupled with a reduction in public spending translates to lower public deficits from a methodological perspective our results highlight the importance of the mechanisms of endogenous growth a scenario of higher fuel prices would under exogenous economic growth assumptions result in larger baseline emissions growth substantially smaller economic effects and rather different budgetary effects from a policy perspective our results highlight the importance of fossil fuel prices in defining the level of policy intervention required for compliance with international and domestic climate change legislation

from the editors endogeneity in international business research this essay builds on the exposition by thomas et al and focuses on analyzing cause and effect in international business research we attempt to explain how endogeneity problems occur and why they are so prevalent in international business research in a non technical fashion we then discuss the importance of explicitly identifying how the chosen research design best approximates a randomized controlled experiment finally we provide some guidelines on achieving this goal and emphasize the practices that seem most relevant to jibs reviewers in evaluating high quality international business research

endogenous technological change in climate change modelling this article investigates the impact on optimal co2 abatement and carbon tax levels of introducing endogenous technological change in a macroeconomic model of climate change we analyse technological change as a function of cumulative capacity as incorporated recently in energy systems models our calculations confirm that including endogenous innovation implies earlier emission reduction to meet atmospheric carbon concentration constraints however the effect is stronger than suggested in the literature moreover the development of non fossil energy technologies constitutes the most important opportunity for emission reductions optimal carbon tax levels reducing fossil energy use are lower than usually advocated