does exchange rate variability depress trade flows evidence from error correction models this paper examines the impact of exchange rate volatility on the trade flows of the g 7 countries in the context of a multivariate error correction model the error correction models do not show any sign of parameter instability the results indicate that the exchange rate volatility has a significant negative impact on the volume of exports in each of the g 7 countries assuming market participants are risk averse these results imply that exchange rate uncertainty causes them to reduce their activities change prices or shift sources of demand and supply in order to minimize their exposure to the effects of exchange rate volatility this in turn can change the distribution of output across many sectors in these countries it is quite possible that the surprisingly weak relationship between trade flows and exchange rate volatility reported in several previous studies are due to insufficient attention to the stochastic properties of the relevant time series copyright 1993 by mit press

municipal solid waste market competition and the eu policy two of the main pillars of the eu solid waste policy are the proximity principle and the self sufficiency principle according to those waste should be disposed as close as possible to where it has been produced a likely effect of such provision is to prevent competition from neighbouring areas and increase the market power of local disposers with possible undesirable consequences for other firms in the vertical chain we show through a simple spatial model that one additional effect of the proximity principle and of the self sufficiency principle is to provide an incentive to collectors and waste producers to increase the amount of separated waste

is social capital green cultural features and environmental performance in the european union this paper analyses the relationship between social capital and environmental performance in the european union in a first stage environmental performance is measured by an index of eco efficiency at the country level computed using data envelopment analysis techniques and data for the year 2013 in a second stage the influence of social capital and other relevant control variables on eco efficiency is assessed by means of truncated regressions and bootstrapping as proposed by simar and wilson j econom 136 1 31 64 2007 for several model specifications tests fail to reject the hypothesis of no effect of social capital on environmental performance and the main driver of environmental performance is found to be the level of economic development measured by gdp per capita furthermore this result is robust to different definitions of social capital and sample periods

disentangling the effects of policy and payment consequentiality and risk attitudes on stated preferences abstract incentivizing respondents to truthfully reveal their preferences in stated preference surveys requires that they believe their survey responses can influence decisions related to the outcome in question policy consequentiality and that they will have to bear their share of the coercive cost if the outcome is implemented payment consequentiality we investigate the effects of these two aspects of perceived consequentiality on stated preferences in a field survey concerning renewable energy development in poland we find that beliefs in policy and payment consequentiality strengthen the respondents interest in having the project implemented however policy consequentiality decreases and payment consequentiality increases their sensitivity to the project cost which respectively increases and decreases their willingness to pay for the project we conclude that the two aspects of consequentiality should be addressed separately additionally we inquire the theoretically speculated links between the respondents perceptions of policy and payment consequentiality and their risk attitudes and we find no significant relationship

bridging the gap between the field and the lab environmental goods policy maker input and consequentiality abstract this paper explores the criterion validity of stated preference methods through experimental referenda that capture key characteristics of a stated preference survey for a proposed environmental program in particular we investigate whether advisory referenda where participant votes have either known or unknown weight in the policy decision can elicit values comparable to that of a standard incentive compatible referendum when participants regard their votes as consequential our results suggest there is no elicitation bias with advisory referenda for advisory referenda where participants view their votes as inconsequential and for purely hypothetical referenda we observe elicitation bias

assessing the impact of the exchange rate and its volatility on canadian pork and live swine exports to the united states and japan a model of a representative canadian pork exporter is developed to examine the impacts of the exchange rate and its volatility on pork and live swine exports the pork export supply equation is expressed as a function of the expected level of real exchange rate and a time varying variance of real exchange rate an ar p model is used to represent the expected real exchange rate and a garch p q model is used to generate the time varying variance the same model is used to examine the sensitivity of pork exports to japan from canada the united states and denmark the parameters of all pork and live swine export equations have theoretically consistent signs and many are significant that is the domestic price in the exporting country has a negative effect on exports because it is a major input price in the exporter s cost function while the price in the market of destination has a positive effect the level of the exchange rate has a positive impact on pork exports while the volatility of the exchange rate has a negative impact most of the volatility parameters are not significant

estimating money demand functions the question of which functional forms of money demand regression equations are useful for empirical work is addressed here specifically it is argued that a functional form that focuses attention on the ability of the growth rate of nominal money to predict the inflation rate is a useful way of summarizing empirical evidence on the existence of a stable money demand function the results of estimating and simulating this functional form as well as standard functional forms are presented in the final part of this paper a typical equation expressing the public s demand for real money balances m is as follows

moral duty warm glow or self interest a choice experiment study on motivations for domestic garbage sorting in italy abstract behavioural and mainstream environmental economics have proposed alternative explanations for individual motivations behind environmentally relevant activities leading to different recommendations for policymakers separate collection of different types of municipal waste represents a popular field of application in this paper we exploit the results of a choice experiment study conducted on a representative sample of 1010 italian households aimed at understanding the relative weights of economic and non economic motivations the results show that the mean willingness to pay for separate waste collection is 77 year per family which is an adequate empirical estimate of the warm glow effect of recycling however the four identified latent classes reveal individuals with fairly opposite motivations this finding can be interpreted as the fact that the two types of motivations economic and non economic do not add up but tend to cancel each other the concept of latent classes applied to environmental economics is novel and suggests distinct typologies of individuals more importantly these groups of individuals are likely to react differently to alternative policy instruments therefore instead of designing waste management policies based on the assumption that behavioural responses are stereotyped policymakers should adopt a more complex set of policy instruments that target different groups of individuals with appropriately chosen incentive schemes

the effects of exchange rate volatility on exports some new estimates investigations of the impact of exchange rate volatility on exports have not allowed for the integrated non stationary of the variables employed in estimation the results reported in this note are suggestive that in the context of an error correction framework real exchange rate volatility has a significant impact on exports

understanding the consequences of consequentiality testing the validity of stated preferences in the field this study pursues the external validation of stated preference methods by comparing survey responses from verified voters with the outcome of a parallel public referendum on a conservation and preservation program to be funded by a local property tax surcharge the majority of respondents were unaware of the upcoming referendum and the experimental design allows us to control for referenda related information effects as well as respondents perceptions regarding the consequentiality i e the potential policy impact of their survey votes we find the survey under predicts yes referendum votes at the precinct level these differences go away however if we focus only on respondents who perceived their survey vote to be consequential negative hypothetical bias among inconsequential survey respondents is also evident in the estimation of willingness to pay and controlling for consequentiality increases construct validity

what are the consequences of consequentiality abstract we investigate the extent to which dichotomous choice referenda responses are shaped by whether the individual believes the survey itself will ultimately impact policy using survey data from the iowa lakes project we test this supposition specifically we employ a bayesian treatment effect model in which the degree of perceived consequentiality measured as an ordinal response is permitted to have a structural impact on willingness to pay wtp for a hypothetical environmental improvement we test whether the estimated wtp distributions are the same for each value of the ordinal response in our survey data a subsample of individuals were randomly assigned supporting information suggesting that their responses to the questionnaires were important and will have an impact on policy decisions in conjunction with a bayesian posterior simulator we use this source of exogenous variation to identify the structural impacts of consequentiality perceptions on willingness to pay while controlling for the potential of confounding on unobservables we find evidence consistent with a knife edge result namely that the willingness to pay distributions are equal among those believing the survey to be at least minimally consequential and different for those believing that the survey is irrelevant for policy purposes

short and long interest rate targets can both short and long term interest rates be targeted independently can the target of the term structure help solve the problem of multiplicity of equilibria that occurs when only the short rate is targeted both questions are addressed and the answer is yes to both

can we improve the structure of financial systems 1993 the main theme of this paper is that several of the characteristics of our present western monetary and banking systems have been crucially dependent on the particular temporal process of historical development and are not an essential feature of more fundamental preferences or technological conditions they exist in part because we take them for granted it is the purpose of this paper to examine what might change in both theory and practice if some of these inessential characteristics were to be changed

personality and economic choices abstract there is substantial variation in individual preferences for public goods yet much of that variation remains poorly understood however simple measures of personality can help to explain economic values and choices in a systematic way in this paper we examine the effects of personality on individual economic choices over public environmental goods based on three datasets from three separate stated preference studies we use a hybrid choice econometric framework to examine the effects of personality on preferences for the status quo changes in environmental quality and costs of investing in environmental improvements we find effects that are consistent across all datasets personality a stable feature of an individual s character that is simple to measure enriches explanations of why the demand for environmental goods varies across people provides an indication of how different people are likely to react to the introduction of environmental policies and explains substantial differences in willingness to pay

on non uniqueness in rational expectations models an attempt at perspective abstract many macroeconomic models involving rational expectations give rise to an infinity of solution paths even when the models are linear in all variables some writers have suggested that this non uniqueness constitutes a serious weakness for the rational expectations hypothesis one purpose of the present paper is to argue that the non uniqueness in question is not properly attributable to the rationality hypothesis but instead is a general feature of dynamic models involving expectations it is also argued that there typically exists in a very wide class of linear rational expectations models a single solution that excludes bubble or bootstrap effects one that occur only because they are arbitrarily expected to occur a systematic procedure for obtaining solutions free from such effects is introduced and discussed in addition this procedure is used to interpret and reconsider several prominent examples with solution multiplicities including ones developed by fischer black and john b taylor

price level determinacy with an interest rate policy rule and rational expectations abstract this paper reconsiders a result obtained by sargent and wallace namely that price level indeterminacy obtains in their model if the monetary authorities adopt a feedback rule for the interest rate rather than the money stock it is shown that the indeterminacy vanishes if the interest rate rule is chosen so as to have a desired effect on the expected quantity of money demanded this holds even if considerable weight is given in the choice of a rule to the aim of smoothing interest rate fluctuations

addressing empirical challenges related to the incentive compatibility of stated preferences methods abstract an emerging theoretical literature focused on the incentive compatibility of stated preference surveys offers a new lens through which to view extant evidence on external validity and provides guidance for practitioners however critical theoretical assumptions rest on latent respondent beliefs such as the belief that respondents view surveys as potentially influencing policy i e policy consequentiality which gives rise to pressing empirical challenges in this study we develop a hybrid mixed logit model capable of integrating multiple latent beliefs and subjective measures of these beliefs into a discrete choice model of stated preferences planned use of a resource which can also be considered a latent variable is frequently an important consideration when modelling stated preferences for a change in a good and we demonstrate how our framework can be used to incorporate this information simultaneously we further explore whether simple information treatments which vary the degree to which the potential role of surveys in informing policy is emphasized can influence respondent beliefs our results suggest that latent beliefs over consequentiality resource use and to a much lesser extent the information treatments significantly influence elicited willingness to pay

an economic analysis of household recycling of solid wastes the case of portland oregon abstract solid waste is one of the residuals generated by economic activities faced with rising disposal costs communities are implementing programs to encourage recycling activities this paper investigates the role of price incentives and other socio economic factors in household recycling participation in recycling is modeled as an ordered probit choice using a large sample of households from the portland oregon metropolitan area demand for solid waste collection is estimated using two stage least squares results indicate that increases in disposal fees encourage recycling although demand for solid waste collection services is not reduced substantially

one without the other behavioural and incentive policies for household waste management this paper provides a review of economic studies that analyses the use of multiple policies to cope with waste management problems we discuss the factors that influence selective sorting behaviour and the most appropriate policies for their promotion based on the works analysed our survey shows the original features of waste as an environmental problem requiring regulation the traditional approach in which decisions respond to rational behaviour particularly cost savings has some limits although not all public policies seem justified we argue that there might be a need for specific policies to promote recycling preferably based on the provision of information to consumers or on behavioural instruments indeed personal factors specific to each individual such as emotions and the influence of social interaction should be taken into account in the development of public policies we review the literature related to different rationales and identify some avenues for future research

managing municipal solid waste with unit based pricing policy effects and responsiveness to pricing many municipalities across the united states have turned to unit based pricing also known as pay as you throw payt as a vehicle for reducing municipal solid waste generation increasing recycling and promoting equity in paying for the service in this paper we reevaluate the standard analytical methods used to examine the impact of payt in the literature and illustrate that econometric shortcomings may have led to underestimation of policy effects a two tier analytical approach to examining payt program effects is proposed and is demonstrated in a case study of new hampshire municipalities

recycling social norms and warm glow revisited we examine the role of social norms and warm glow in a theoretical framework and establish that improving the quality of recycling facilities for example through kerbside collection will elicit more recycling effort if warm glow is present drawing on the literature we model the role of social norms with reference to age profile ethnicity and geographical location of the reference group using english local authority data we show that a social norm for recycling does exist we find the expected relationship between the quality of kerbside provision and recycling activity if the household derives warm glow from the activity however it is insignificant amongst the control variables we find evidence that multifamily dwellings recycle less

price risk in supply equations an application of garch time series models to the u s broiler market that risk considerations figure prominently into agents decisions is now widely recognized by both theoretical and applied economists for example much research has focused on extending neoclassical production theory to include agents that maximize expected utility of returns under price and or output uncertainty 37 4 25 35 12 31 concurrent with this theoretical research on risk has been a growing literature on the empirical effects of risk on economic decisions examples include the studies on the role of risk in aggregate agricultural production and

social norms in networks abstract although the linear in means model is the workhorse model in empirical work on peer effects its theoretical properties are understudied in this study we develop a social norm model that provides a microfoundation of the linear in means model and investigate its properties we show that individual outcomes may increase decrease or vary non monotonically with the taste for conformity equilibria are usually inefficient and to restore the first best the planner needs to subsidize tax agents whose neighbors make efforts above below the social norms thus giving more subsidies to more central agents is not necessarily efficient we also discuss the policy implications of our model in terms of education and crime

wealth effects of open market operations and optimal monetary policy abstract equilibrium models of the business cycle such as those developed by lucas 1973 and barro 1976 barro 1980 are often used to analyze the effects of monetary disturbances on the economy these models typically view monetary injections as arising through lump sum transfer payments that are independent of an agent s holdings of money this paper examines the effects caused by misperceptions about money for the more realistic case when money is injected through open market operations the major result is that unperceived open market operations have a negative wealth effect

a century of us central banking goals frameworks accountability several key episodes in the 100 year history of the federal reserve have everal key episodes in the 100 year history of the federal reserve have been referred to in various contexts with the adjective great attached to been referred to in various contexts with the adjective great attached to them the great experiment of the federal reserve s founding the great them the great experiment of the federal reserve s founding the great depression the great infl ation and subsequent disinfl ation the great moderation depression the great infl ation and subsequent disinfl ation the great moderation and the recent great recession here i ll use this sequence of great episodes and the recent great recession here i ll use this sequence of great episodes to discuss the evolution over the past 100 years of three key aspects of federal to discuss the evolution over the past 100 years of three key aspects of federal reserve policymaking the goals of policy the policy framework and accountability reserve policymaking the goals of policy the policy framework and accountability and communication the changes over time in these three areas provide a useful and communication the changes over time in these three areas provide a useful perspective i believe on how the role and functioning of the federal reserve have perspective i believe on how the role and functioning of the federal reserve have changed since its founding in 1913 as well as some lessons for the present and for changed since its founding in 1913 as well as some lessons for the present and for the future the future

intermediate monetary targets and macroeconomic fluctuations it is investigated whether the choice of intermediate target has altered macroeconomic fluctuations and whether the observed changes are consistent with predictions from economic theory since implications from the theoretical literature focus on the effects of structural disturbances an empirical analysis must identify these effects the structural vector autoregressive var technique estimates structural disturbances using restrictions from standard macroeconomic theory based on descriptions of actual targeting procedures by insiders to federal reserve policy decisions the intermediate target for the united states is identified as the interest rate from 1951 to 1969 and money from 1970 to 1986 var models are estimated over each subsample to assess whether the estimated structural disturbances cause endogenous variables to behave as economic theory predicts tests are also performed to assess whether or not the targeting rule affects the variance of endogenous variables attributable to structural sh

money s role in the monetary business cycle a small structural model of the monetary business cycle implies that real money balances enter into a correctly specified forward looking is curve if and only if they enter into a correctly specified forward looking phillips curve the model also implies that empirical measures of real balances must be adjusted for shifts in money demand to accurately isolate and quantify the dynamic effects of money on output and inflation maximum likelihood estimates of the modelos parameters take both these considerations into account but still suggest that money plays a minimal role in the monetary business cycle

interest rate innovations and the business cycle abstract recent evidence from vector autoregressions points towards the importance of interest rate innovations in explaining output variations we show that this evidence supports an interpretation of business cycles based on nominal contractual rigidities rather than cotinuous market clearing

no man is an island social coordination and the environment humans are fundamentally social social activities require coordination possibly leading to multiple equilibria in the form of self reinforcing patterns of herd behavior when alternative equilibria differ substantially with respect to environmental damage they represent virtuous and vicious cycles from an environmental perspective such cycles can be sustained by network effects social pressure to conform or other mechanisms directly or indirectly yielding coordination benefits breaking the vicious cycles can be an important task for environmental policies i present a stylized model of social coordination with environmental externalities using it to discuss how environmental policies may help agents coordinate in more environment friendly ways

the cold shiver of not giving enough on the social cost of recycling campaigns governments sometimes try to increase individuals contributions to public goods through appeals to consumer responsibility rather than by economic incentives for example in recycling campaigns using standard consumer theory one would hardly expect such campaigns to work at all but if consumers are motivated by norms appeals may work through changing consumers perception of the normrequirement however increasing voluntary contributions through appeals may come at a social cost the reason is that appeals work through imposing a heavier perceived responsibility on consumers this represents a welfare loss which is not necessarily outweighed by warm glow benefits

income effects and the inconvenience of private provision of public goods for bads the case of recycling in finland abstract absent or weak income effects reported in many contingent valuation studies have cast doubt on the reliability of the survey method we find that the income effect depends on the type of public good in question there is a negative income effect for willingness to pay for recycling which requires time and effort for sorting but a positive effect for the more convenient incineration hence high income low income individuals may display less more effort on environmental behavior this stresses the importance of comprehensive distributional analyses when assessing alternative environmental policies

global stability and the choice of policy targets under rational expectations abstract it is shown that if the supply of capital is properly incorporated in a macromodel with rational expectations the government cannot peg its expenditures wholly in real terms since otherwise the economy will be globally unstable

interest rate rules and transitional dynamics in an endogenously growing open economy abstract this paper sets up an endogenous growth model of an open economy in which the monetary authority implements a gradualist interest rate rule with targets for both inflation and economic growth we show that under a passive rule a monetary equilibrium exists and is unique moreover the equilibrium is locally determinate by contrast an active rule implies either two equilibria one high growth and one low growth or none in the case of two equilibria the high growth equilibrium is locally determinate while the low growth equilibrium is a source besides the stabilization and growth effects of alternative target policies are also explored in this study moreover in departing from the existing literature we turn to focus on the analysis of transition with a particular emphasis on the case of imperfect credibility

interest rate rules vs money growth rules a welfare comparison in a cash in advance economy abstract this paper considers the welfare consequences of two particularly simple rules for monetary policy an interest rate peg and a money growth peg the model economy consists of a real side that is the standard real business cycle model and a monetary side that amounts to imposing cash in advance constraints on certain market transactions the paper also considers the effect of assuming a rigidity in the typical household s cash savings choice the competitive equilibrium of the economy is not pareto efficient partly because of two distortions a distortion on the capital accumulation decision and a distortion on portfolio choice that arises from the assumed rigidity the principal result of the paper is that the interest rate rule but not the money growth rule entirely eliminates these two distortions and is thus the benevolent central banker s policy choice

heterogeneous preferences for community recycling programs this paper examines household preferences for community recycling programs which have both public and private good dimensions the data come from a survey conducted in seattle wa which elicited stated preference contingent ratings for different recycling programs relative to status quo with experimental variation in the overall community recycling rate achieved and expected household cost the recycling rate is interpreted as capturing the public benefits of recycling programs and constitutes the most common measure used by policy agencies for setting waste management objectives and evaluating policy initiatives the analysis begins with fixed parameter models that explore different ways of handling rating data and mixed logit estimations that capture household preference heterogeneity both within and across different recycling programs this analysis yields unique estimates of willingness to pay for an increase in the community recycling rate predicted individual specific utility parameters are then regressed on household background information to explicitly examine the nature of preference heterogeneity overall this paper generates interpretable policy relevant insights into the public and private good dimensions of community recycling programs

optimal monetary policy endogenous supply and rational expectations abstract in this paper we demonstrate that the choice of monetary policy regime will affect the variability of output when private agents in forming their supply decisions take into account the authority s selection of a policy rule a striking feature of the analysis is that the choice between policy rules in sargent wallace 1975 framework but with endogenous aggregate supply depends only on the variability of aggregate demand under each rule and not on the variability of aggregate supply it follows that the choice of monetary policy rules reduces to the problem analyzed by poole 1970 in the stochastic keynesian structure

social norms morals and self interest as determinants of pro environment behaviours the case of household recycling this paper considers the role which selfish moral and social incentives and pressures play in explaining the extent to which stated choices over pro environment behaviours vary across individuals the empirical context is choices over household waste contracts and recycling actions in poland a theoretical model is used to show how cost based motives and the desire for a positive self and social image combine to determine the utility from alternative choices of recycling behaviour we then describe a discrete choice experiment designed to empirically investigate the effects such drivers have on stated choices a hybrid logit model is used to link statements over attitudes to recycling to choices dealing with a potential endogeneity problem caused by the joint effects of un observables on attitudes and choices we find that a substantial share of our respondents prefer to sort their waste at home rather than in a central sorting facility this preference is associated with a moral intrinsic motivation involving a belief that sorting at home is more thorough than central sorting

the incredible volcker disinflation abstract the reduction in inflation that occurred in the early 1980s when the federal reserve was headed by paul volcker is arguably the most widely discussed and visible macroeconomic event of the last 50 years of u s history inflation had been dramatically rising but under volcker the fed first contained and then reversed this process using a simple modern macroeconomic model we argue that the real effects of the volcker disinflation were mainly due to its imperfect credibility in our view the observed upward volatility and subsequent stubborn elevation of long term interest rates during the disinflation are key indicators of that imperfect credibility studying transcripts of the federal open market committee recently released to the public we find to our surprise that volcker and other fomc members likewise regarded the long term interest rates as indicative of inflation expectations and of the credibility of their disinflationary policy drawing from the transcripts and other contemporary sources we consider the interplay of monetary targets operating procedures and credibility during the volcker disinflation

exchange rate variability and trade why is it so difficult to find any empirical relationship this paper discusses why previous literature has found little evidence of any effect of exchange rate variability on international trade methodological and statistical issues are discussed in particular comparisons are made of estimations based on different specifications or using different data sets and changes in the results depending on the method used are shown