interest rates and money in the measurement of monetary policy over the last 25 years a set of influential studies has placed interest rates at the heart of analyses that interpret and evaluate monetary policies in light of this work the federal reserve s recent policy of quantitative easing with its goal of affecting the supply of liquid assets appears to be a radical break from standard practice alternatively one could posit that the monetary aggregates when measured properly never lost their ability to explain aggregate fluctuations and for this reason represent an important omission from standard models and policy discussions in this context the new policy initiatives can be characterized simply as conventional attempts to increase money growth this view is supported by evidence that superlative divisia measures of money often help in forecasting movements in key macroeconomic variables moreover the statistical fit of a structural vector autoregression deteriorates significantly if such measures of money are excluded when identifying monetary

limited commitment and the demand for money understanding money demand is important for our comprehension of macroeconomics and monetary policy its instability has made this a challenge common explications for the instability are financial regulations and financial innovations that shift the money demand function we provide a complementary view by showing that a model where borrowers have limited commitment can significantly improve the fit between the theoretical money demand function and the data limited commitment can also explain why the ratio of credit to m1 is currently so low despite that nominal interest rates are at their lowest recorded levels this article is protected by copyright all rights reserved

the inflation tax in a real business cycle model money is incorporated into a real business cycle model using a cash in advance constraint the model economy is used to analyze whether the business cycle is different in high inflation and low inflation economies and to analyze the impact of variability in the growth rate of money in addition the welfare cost of the inflation tax is measured and the steady state properties of high and low inflation economies are compared

vehicle scrappage and gasoline policy abstract we estimate the sensitivity of scrap decisions to changes in used car values and show how this scrap elasticity produces emissions leakage under fuel efficiency standards a process known as the gruenspecht effect we first estimate the effect of gasoline prices on used vehicle values and scrappage of vehicles with different fuel economies we then estimate the scrap elasticity itself which we find to be 0 7 when applied in a model of fuel economy standards 13 16 percent of the expected fuel savings leak away through the used vehicle market this effect rivals or exceeds the importance of the often cited mileage rebound effect jel h23 l62 l78 q35 q38 q48 q58

impacts of long range increases in the fuel economy cafe standard i introduction and background in 1975 the u s government enacted legislation regulating the fuel efficiency of new motor vehicles the apparent objective of this law is to reduce american dependence on foreign oil after large increases in the price of petroleum in the late 1990s and with continued conflict in the middle east corporate average fuel economy cafe standards once again became a topic of interest a number of proposals for changing the cafe standards were discussed in congress in early 2002 culminating in a defeat in the senate of an amendment that would have required a 50 increase in the relevant cafe standards in place of that increase the senate voted to require the executive branch to examine the impact of further increases in the cafe standard this work evaluates the long term economic implications of raising the standard by 3 0 miles per gallon mpg above current levels in industry parlance this approach is sometimes referred to as technology forcing i choose 3 0 mpg because it reflects the focus of a may 2001 report by the vice president s task force on energy policy and because it reflects several legislative proposals in congress 1 the long term refers to a length of time such that manufacturers can adjust vehicle technologies and powertrain designs to reduce the amount of fuel required to move a given amount of mass or to achieve a given amount of performance or acceleration per gallon of fuel consumed previous work on cafe standards such as kleit 1990 and thorpe 1997 focused on short term responses to higher cafe standards where technology forcing was not an option for manufacturers the analysis is conducted under two different scenarios the first scenario is that cafe standards are not binding in the current marketplace the second scenario takes account of the current impact of cafe standards and then analyzes the costs and benefits of increasing the standards the costs of cafe standards are broken down into two areas the changes in consumer and producer surplus and the increase in externalities caused by the increased driving that higher cafe standards induce the plan of this article is as follows section ii reviews the history of cafe standards and briefly discusses the rationale for the regulation section iii develops a model in which the current cafe standard is assumed to be nonbinding section iv provides estimates of the impacts for a long term 3 0 mpg cafe increase under the assumption that the current standard is not binding section v then revises the model to take into account the arguably more realistic assumption that the existing cafe standard was in fact binding it then reports estimates for a long term 3 0 mpg increase section vi provides a brief cost benefit analysis of cafe increases and section vii provides a summary and conclusion ii background on automobile fuel economy standards a brief history of the cafe program the cafe program as enacted in 1975 called for all manufacturers selling more than 10 000 autos per year in the united states to reach the mandated cafe levels cafe levels rose from 19 0 mpg in 1978 to 27 5 mpg in 1985 and later years a manufacturer s domestic and foreign cars are placed in separate cafe categories based on the domestic context of the vehicle if a car has over 75 american context it is considered domestic and placed in the domestic pool otherwise it is placed in the foreign car pool see kleit 1990 for a discussion light trucks pickup trucks sport utility vehicles suvs and minivans were placed in a different cafe pool than cars when cafe standards were originally passed these vehicles represented a small fraction of the relevant market by 2001 however such vehicles made up approximately one half of the sales of personal vehicles in 2001 light trucks were required to reach 20 7 mpg there is no domestic and foreign division in the cafe regulation for light trucks

measurement matters recent results from monetary economics reexamined inferences about the effects of money on economic activity may depend importantly on the choice of a monetary index because simple sum aggregates cannot internalize pure substitution effects this hypothesis is investigated by replicating five recent studies that have challenged an aspect of the conventional wisdom about the effects of money on aggregate activity in four of the five cases the qualitative inference in the original study is reversed when a simple sum monetary aggregate is replaced by a divisia index of the same asset collection the results are mixed in the fifth case

clearing the air the costs and consequences of higher cafe standards and increased gasoline taxes abstract concerns about energy security and climate change have sparked legislators interest in reducing gasoline consumption by increasing corporate average fuel economy cafe standards using an empirically rich simulation model and cost estimates for anticipated fuel economy technologies we estimate annual costs of reducing long run gasoline consumption by 10 via a 3 8 miles per gallon increase in the standards and the potential cost savings from allowing manufacturers to buy and sell fuel economy credits maximum gasoline savings would be realized only after all existing vehicles were replaced or 14 years in our model a gasoline tax would produce greater immediate savings by encouraging people to drive less and eventually to choose more fuel efficient vehicles we demonstrate the advantage of a tax by comparing the cost of the higher cafe standards over the first 14 years against the cost of a gasoline tax that would save the same amount of gasoline over that time

the export diversifying impact of japanese and us foreign direct investments in the indian manufacturing sector the paper highlights the export diversifying impact of foreign direct investment fdi in a developing country fdi may lead to export diversification in the host country if it positively affects the export intensity of industries that have a low share in world exports indirectly fdi may encourage export diversification through spillover effects that is the presence of fdi in an industry may increase the export intensity of domestic firms the empirical results for the indian economy in the post liberalisation period show that fdi from the us has led to diversification of india s exports both directly and indirectly however japanese fdi has had no significant impact on india s exports

installed base and compatibility innovation product preannouncements and predation a good is often more valuable to any user the more others use compatible goods the authors show that this effect may inhibit innovation if an installed base exists and transition to a new standard must be gradual early adopters bear a disproportionate share of transient incompatibility costs this can produce excess inertia the installed base however is stranded if the new standard is adopted this may create excess momentum these dynamic effects have strategic implications temporary price cutting can permanently prevent entry and product preannouncements can be critical in innovation these strategic actions have ambiguous welfare effects

technological expectations and adoption of improved technology abstract attention is focused upon the adoption demand rather than the creation supply of new technology which improves from time to time based on the expected flow of technological progress over which the firm demander has no control it must decide either to adopt the current best available technology or to postpone adoption the distinguishing features of the model are that more than one technological innovation is anticipated and expectations about the likelihood of such innovations are revised as time passes since the last innovation our analysis shows that the firm will adopt the current best practice if its technological lag exceeds a certain threshold moreover as time passes without new technological advances it may become profitable to purchase a technology that has been available even though it was not profitable to do so in the past

an economic analysis of scrappage this article examines the impact of policies aimed at encouraging the retirement of older high polluting vehicles such as the cash for clunkers policy endorsed by president george bush in 1992 the analysis assesses the likely benefits and costs of vehicle scrappage programs i also address the interaction of a scrappage program with other ongoing policies such as improved inspection and maintenance finally the simulation for los angeles suggests plausible design values for a scrappage program

market equilibrium and welfare effects of a fuel tax in china the impact of consumers response through driving patterns abstract we investigate the market equilibrium and welfare effects of a fuel tax in china relative to an alternative policy instrument that rations the number of new automobile sales through auctioned quotas unlike those of previous studies our modeling approach incorporates both household car purchase and utilization decisions the latter of which have been ignored in previous studies on china s fuel tax ignoring this margin of choice will underestimate the fuel tax s ability to mitigate externalities using detailed household level panel data and a fixed effects econometric specification we estimate the fuel price elasticity of vehicle miles traveled is 0 59 on average the results of the counterfactual analysis suggest that a 51 increase in tax inclusive gasoline prices will reduce car sales by 24 9 but increase social welfare to a degree that depends on vehicles lifetime we find that compared to auctioned quotas the fuel tax results in greater car sales but higher social welfare

what does export diversification do for growth an econometric analysis it is frequently suggested that export diversification contributes to an acceleration of growth in developing countries horizontal export diversification into completely new export sectors may generate positive externalities on the rest of the economy as export oriented sectors gain from dynamic learning activities due to contacts with foreign purchasers and exposure to international competition vertical diversification out of primary into manufactured exports is also associated with growth since primary export sectors generally do not exhibit strong spillovers yet there have been remarkably few empirical investigations into the link between export diversification and growth this paper attempts to examine the hypothesis that export diversification is linked to economic growth via externalities of learning by doing and learning by exporting fostered by competition in world markets the diversification led growth hypothesis is tested by estimating an augmented cobb douglas production function on the bas

impacts of fuel economy improvements on the distribution of income in the u s abstract we estimate the impacts of passenger car and light truck fuel economy improvements in the u s since 1975 on the real monetary incomes of u s households by income quintile over the period 1980 2014 we limit our analysis to the direct monetary impacts fuel savings minus increased vehicle costs and do not attempt a full welfare analysis we include all vehicle purchases new and used household fuel expenditures come from the u s consumer expenditures surveys ces costs of increased new passenger car and light truck fuel economy were obtained from four national research council nrc studies plus a literature review of earlier estimates the nrc cost functions provide a unique time series of technology supply functions constructed by balanced expert panels and comprised of specific technologies proven to increase fuel economy effects of fuel economy improvements on used vehicle prices are based on an analysis of the ces data retrospective analysis indicates that all income quintiles received net savings and that the effect on the distribution of income was progressive a prospective analysis of future fuel economy improvements produced similar results sensitivity analysis indicates that these findings are relatively robust

monetary aggregates and output series title working paper frb title monetary aggregates and output date publication federal reserve bank of cleveland working paper no 9813 author s scott freeman finn kydland type working paper frb topics s us economy

technology diffusion and public policy a useful typology of technological change is provided by the schumpeterian trilogy invention the generation of new ideas innovation the development of those ideas through to the first marketing or use of a technology and diffusion the spread of new technology across its potential market until recently policy schemes in most oecd countries have tended to focus predominantly on the invention and innovation or science and r d end of this technology spectrum see e g limpens et al i 992 although it is generally realised that it is the process of diffusion or use of technology that creates productive potential and competitiveness policy initiatives have largely bypassed opportunities to improve the diffusion process if this may seem misplaced emphasis it does in fact reflect the state of the academic literature which is wide ranging and extensive as it relates to policies on r d but small and fragmented as regards policies on diffusion currently a gradual reorientation of policy direction toward diffusion seems to be taking place the us and uk governments for example have recently proposed major technology policy initiatives that despite differences in emphasis both stress the importance of creating an infrastructure conducive to a rapid spread of awareness and knowledge of innovations we argue that although sensible in themselves such policies may be too limited in scope and that a broader policy stance may be needed this paper has two main objectives the first is to provide an overview of why policy intervention in the diffusion process may be desirable and what form it might take this discussion is rather long since to the best of our knowledge there is no published systematic synthesis of the diffusion policy literature though see stoneman i987 for an earlier attempt the second aim is to look at actual diffusion policies and their impacts to make the task manageable we are restricting this paper to a discussion of the diffusion of new process technologies although similar issues apply to new consumer technologies these are not explicitly addressed we also consider diffusion policy only within the context of a given institutional and macroeconomic environment although it may well be that the supply of skilled manpower the nature of the capital market animal spirits and entrepreneurship fiscal and monetary policies will all impact upon the diffusion path improvements in these areas will also impact upon a whole host of other aspects of the economy s performance to use a plea for diffusion policy as a rationale for changes in such areas would be equivalent to the tail wagging the dog and thus they fall outside the remit of this paper

innovation diversity and diffusion a self organisation model a number of features of innovation diffusion are identified appropriability diversity expectations selection learning and spillover externalities a dynamic model is formul ated to embed the diffusion question into a more general framework of disequilibrium competition the model incorporates distinct vintage structures reflecting a change in technological trajectory learning by using a nd expectations driven investment rules of thumb simulation studies reveal robust quasi logistic curves but a complicated pattern of net market share gains and losses uncertainty regarding the rationality of early or late adoption it is argued ensures that the requisite behavioral variety is present to generate these diffusion patterns copyright 1988 by royal economic society

the demand for information and the diffusion of a new product abstract the paper examines the implications of the ability of a consumer to learn about the characteristics of a new product on the diffusion of the product over time the demand for information by the consumer is shown to generate a sigmoid diffusion curve for total sales of the product further it is shown that over time the elasticity of demand along the diffusion curve increases

the determinants of technology adoption the case of the banking firm using data on the adoption of automatic teller machines by firms in the banking industry this study examines the relationship between the decision to adopt new technology and its determinants since banking firms differ considerably in terms of the competitive environments in which they operate focusing on this one innovation in this industry allows a stronger test of the relationship between market structure and the adoption of new technology than has been previously conducted using a failure time estimation procedure we find that larger banks and banks operating in more concentrated local banking markets register a higher conditional probability of adopting this new technology all else equal we also find that other results are consistent with the underlying model and that the bank s regulatory environment shapes its adoption decision in plausible ways

the impact of foreign direct investment on horizontal export diversification empirical evidence using data on stocks of foreign direct investment fdi from 131 countries spanning the years 1984 to 2004 and the number of products exported by each country we examine the effect of fdi on horizontal export diversification to quantify the effects we utilize parametric quantile and semi parametric econometric methods results from both approaches indicate that in general an increase in the stock of fdi enhances the horizontal diversification of exports the actual magnitude of the effect however varies greatly across countries depending on the existing stock of fdi and stage of diversification giving rise to an almost inverted u shaped relationship a further look at our results provides useful insights on the circumstances under which fdi may aid or inhibit the horizontal expansion of exports

from gallons to miles a disaggregate analysis of automobile travel and externality taxes abstract policymakers have prioritized increasing highway revenues as rising fuel economy and a fixed federal gasoline tax have led to highway funding deficits we use a novel disaggregate sample of motorists to estimate the effect of the price of a vehicle mile traveled on vmt and we provide the first national assessment of vmt and gasoline taxes that are designed to raise a given amount of revenue we find that a vmt tax dominates a gasoline tax on efficiency distributional and political grounds when policymakers enact independent fuel economy policies and when the vmt tax is differentiated with externalities imposed per mile

bose einstein dynamics and adaptive contracting in the motion picture industry audiences discover what films they like and spread the word information feedback produces bose einstein dynamics in the motion picture box office revenue distribution information cascades generate box office hits and flops the revenue distribution evolves recursively over the run as a mixture of the opening and a stochastic competition among films the motion picture run is decentralized adaptive and self organizing semistationary admission prices local information and contingency rich contracts match the film rental price and the supply of theatrical engagements to demand copyright 1996 by royal economic society

gasoline prices fuel economy and the energy paradox abstract policymakers often assert that consumers undervalue future gasoline costs when they buy automobiles we test this by measuring whether relative prices of vehicles with different fuel economy ratings fully adjust to variation in gasoline prices vehicle prices move as if consumers are indifferent between 1 00 in discounted future gas cost and 0 76 in vehicle purchase price we show how corrections for endogenous market shares and utilization measurement error and different gasoline price forecasts affect the results we also provide unique evidence of sticky information vehicle markets respond to changes in gasoline prices with up to a six month delay

adoption and diffusion of an innovation of uncertain profitability the argument has frequently been made that the pattern of diffusion associated with most new innovations will typically have certain characteristics a diffusion curve for an innovation is usually defined as the proportion of its potential users who have already adopted as a function of time measured from the first adoption many empirical studies by both economists and other social scientists have shown that diffusion curves nearly always have two distinct characteristics i they are s shaped the proportion adopted is an increasing function of time which is initially convex but eventually becomes concave and ii they tend to be right hand skewed the inflection point occurs at a time corresponding to a proportion adopted which is less than one half so that the function is concave over the greatest amount of time in fact this skewing is occasionally severe enough to make the diffusion curve appear concave everywhere the focus of most empirical studies of innovation diffusion has centered on identification of either the major determinants of the speed of diffusion or the characteristics of firms which determine how long they delay adoption the seminal contributions are griliches 6 study of hybrid corn and mansfield s 121 study of 12 industrial innovations these studies and most of the similar ones following conclude that diffusion is faster for innovations with higher profitability and that large firms tend to be the earliest adopters some studies e g mansfield 121 herregat 71 have attempted to ascertain

the impact of emissions based taxes on the retirement of used and inefficient vehicles the case of switzerland abstract previous evaluations of emissions based car taxes have estimated their impact on the shares or sales of new vehicles in contrast we ask whether taxes that penalize high emitters induce changes in the retirement of existing and inefficient vehicles we exploit natural experiment conditions in switzerland to analyze the impact of three different bonus malus annual registration fee schemes implemented at the cantonal level in the three schemes the bonus rewards new fuel efficient vehicles the malus is retroactive in canton obwalden i e it is charged on both new and existing high emitting cars but prospective in geneva and ticino we use a difference in difference design within a survival analysis framework to assess direct treatment effects and spillover effects while the bonus malus in obwalden hastens the retirement of existing high emitting vehicles by around 5 the scheme in geneva postpones retirement by some 3 we find no statistically significant effects in ticino these findings have important implications about the desirability of bonus malus schemes and on their design as well as on old car scrappage programs

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

want export diversification educate the kids first this paper uses bayesian model averaging to uncover the true determinants of export diversification among 36 potential factors and thus 236 potential models using data from 2001 to 2010 our results reveal two strong predictors primary school enrollment 99 7 posterior inclusion probability in the true model raises export diversification whereas the share of natural resources in gross domestic product 98 6 lowers diversification levels the importance of basic education coverage offers policymakers an opening toward diversifying exports at least in the long run this result is robust to accounting for the endogeneity of income levels by applying an instrumental variable bma method jel c11 f1 f34 o1 o2 o11

innovation adoption and diffusion when there are competing innovations abstract firms face a choice between two innovations without knowing which of the two is better each firm has a prior that one of the innovations is better which is updated by bayes rule as trials with the innovations are made a simple decision rule indicating which innovation should be tried given any posterior is derived and used to define an expected diffusion curve for the better innovation this curve has the commonly observed ogive shape even in the absence of any external demonstration effect when the distribution of firm priors belongs to a general class

competing networks and proprietary standards the case of quadraphonic sound quadraphonic audio systems failed to replace stereo in the 1970s despite backing from all the major manufacturers and recording houses network externalities played a significant role in this episode and the author uses the installed base model of j farrell and g saloner 1986 to explain quad s failure the author finds that the introduction of competing incompatible quadraphonic systems hindered the development of a viable user base and he argues that the systems sponsors introduced their products in a technologically premature state in order to prevent one another from preemptively establishing the quad standard as a result self fulfilling consumer and retailer expectations doomed quadraphonic sound copyright 1990 by blackwell publishing ltd

gasoline prices gasoline consumption and new vehicle fuel economy evidence for a large sample of countries abstract countries differ considerably in terms of the price drivers pay for gasoline this paper uses data for 132 countries for the period 1995 2008 to investigate the implications of these differences for the consumption of gasoline for road transport to address the potential for simultaneity bias we use both a country s oil reserves and the international crude oil price as instruments for a country s average gasoline pump price we obtain estimates of the long run price elasticity of gasoline demand of between 0 2 and 0 5 using newly available data for a sub sample of 43 countries we also find that higher gasoline prices induce consumers to substitute to vehicles that are more fuel efficient with an estimated elasticity of 0 2 despite the small size of our elasticity estimates there is considerable scope for low price countries to achieve gasoline savings and vehicle fuel economy improvements via reducing gasoline subsidies and or increasing gasoline taxes

do consumers recognize the value of fuel economy evidence from used car prices and gasoline price fluctuations abstract debate about the appropriate design of energy policy hinges critically on whether consumers might undervalue energy efficiency due to myopia or some other manifestation of limited rationality we contribute to this debate by measuring consumers willingness to pay for fuel economy using a novel identification strategy and high quality microdata from wholesale used car auctions we leverage differences in future fuel costs across otherwise identical vehicles that have different current mileage and therefore different remaining lifetimes by seeing how price differences across high and low mileage vehicles of different fuel economies change in response to shocks to the price of gasoline we estimate the relationship between vehicle prices and future fuel costs our data suggest that used automobile prices move one for one with changes in present discounted future fuel costs which implies that consumers fully value fuel economy

why can t us airlines make money us airlines have lost nearly 60 billion 2009 in domestic markets since the 1978 deregulation most of it in the last decade the dismal financial record challenges the economics of deregulation i examine some of the common explanations among industry participants and researchers including high taxes and fuel costs weak demand and competition from lower cost airlines major drivers seem to be the demand downturn after 9 11 demand remains much weaker today than in 2000 and the large cost differential between legacy and low cost carriers which has persisted even as the price differential between them has greatly declined

capital reallocation and liquidity this paper studies the cyclical properties of capital reallocation and the frictions which inhibit such reallocation we show that the amount of capital reallocation and the benefits to reallocation vary at the business cycle frequency the amount of capital reallocation is procyclical in contrast the benefits to capital reallocation appear countercyclical we measure the amount of reallocation using data on flows of capital across firms and the benefits to capital reallocation using several measures of the cross sectional dispersion of the productivity of capital we then study a calibrated model of an economy where capital reallocation is costly and impute the cost of reallocation which is consistent with the amount of and benefits to reallocation in the data we find that the cost of reallocation needs to be substantially countercyclical to be consistent with the observed joint cyclical properties of reallocation and productivity dispersion the cyclical variation in this cost is interpreted as variation in the liquidity of capital broadly defined since physical costs are unlikely to vary countercyclically

human capital information and the early adoption of new technology when producers are uncertain or have imperfect information about the profitability of adopting new technology their adoption behavior depends on the endowment of human capital and the investment in adoption information this study analyzes the role of education experience and information acquisition in the decision to be an early adopter the findings support the hypothesis that adoption decision making is a human capital intensive activity the econometric evidence presented suggests that education and information reduce adoption costs and uncertainty and thereby raise the probability of early adoption adoption behavior is also shown to vary significantly across firm size

rank stock order and epidemic effects in the diffusion of new process technologies an empirical model in this article we construct a general duration model of technology adoption that incorporates the main factors discussed in different theories of diffusion of new process technologies the model is applied to data on diffusion of cnc in the uk engineering industry although we find strong evidence in support of rank and endogenous learning effects there seems to be little evidence in support of the stock and order effects the main factors affecting the diffusion of cnc are found to be endogenous learning firm size industry growth rates the cost of the technology and expected changes in the cost of the technology

stages of diversification this paper studies the evolution of sectoral concentration in relation to the level of per capita income we show that various measures of sectoral concentration follow a u shaped pattern across a wide variety of data sources countries first diversify in the sense that economic activity is spread more equally across sectors but there exists relatively late in the development process a point at which they start specializing again we discuss this finding in light of existing theories of trade and growth which generally predict a monotonic relationship between income and diversification

the own price of money and a new channel of monetary transmission traditionally the effects of monetary policy actions on output are thought to be transmitted via monetary or credit channels real business cycle theory by contrast highlights the role of real price changes as a source of revisions in spending and production decisions motivated by the desire to focus on the effects of price changes in the monetary transmission mechanism this paper incorporates a direct measure of the real own price of money into an estimated vector autoregression and a calibrated real business cycle model consistent with the rbc view of the monetary transmission mechanism both approaches reveal that movements in the own price of money are strongly related to movements in output

a dynamic analysis of the adoption of a new technology the case of optical scanners two p roportional hazard models are used to investigate the differingeffects of marke t structure variables on the conditional probabilityof a firm initially adoptin g the new technology of optical scanners as the innovation spreads through the f ood store industry during the early stage leading firms with large average sto re size which are not members of chains and which operate in less concentrated m arkets with higher incomes and wage rates tend to adopt scanners sooner later on differences in seller concentration market share and size become less impo rtant as other firms follow prior adoptions copyright 1987 by mit press

differentiated regulation the case of auto emissions standards this paper presents an analysis of automotive emissions regulation that explicitly considers the link between regulation and the composition of the vehicle stock the adoption of more stringent emissions standards for new vehicles is shown to prolong the retention of old high emission rate vehicles in the fleet for this reason tighter new source standards actually increase aggregate emissions in the short run this result is of general as well as specific interest given the widespread use of differentiated regulatory tools incorporating a bias against new sources in many regulatory programs 3 references 1 table

the effect of network structure in industrial diffusion processes abstract the development and diffusion of innovations involves groups of organizations with many different roles who interact with each other suppliers adopters third parties etc this paper examines the nature of the communication networks that exist between adopting organizations and from third parties and suppliers to adopters quantitative models of diffusion often assume that information about innovations flows along pre existing links that this information flows from adopters to non adopters directly and that there is perfect mixing in the population i e every actor has an equal chance of communicating with every other actor these are strong assumptions which should be subject to testing we investigate the impact of differing network topologies of communications and alternative models of social contagion on observed adoption patterns network topologies are also extended beyond the focal industry to include suppliers consultants and other customers we use a simulation model to test the effect of departures from traditional assumptions on the diffusion pattern and undertake an empirical field study to examine the prevalence of those departures in one specific industry our simulation findings suggest that network structure can have a substantial effect on the manner in which innovations diffuse while innovation specific communication links and communication through third parties does not change the shape of the penetration trajectory as much as it alters the places in the process where salesforce effort can offer the most leverage the empirical study shows strong evidence of imperfect mixing that both pre existing and innovation specific communication links are used and that communication through third parties may be as important to the diffusion process as direct links from adopters to potential adopters

technology adoption learning spillovers and the optimal duration of patent based monopolies abstract the paper analyses an often overlooked aspect of the patent system namely that a monopoly franchise for production of a new good could lead to a second best welfare optimum event when there was no future prospect of inventions being induced by the patent it is shown that a paten may improve economic welfare relative to a regime of competitive supply when there are learning externalities or spillovers from experience in the process of production comparative statics show that stronger learning effects at low levels of experience tend to strengthen the case for ex post grant of a monopoly franchise

the effects of the corporate average fuel efficiency standards in the us this paper examines the effects of the corporate average fuel economy standards cafe on automobile sales prices and fuel consumption first a discrete choice model of automobile demand and a continuous model of vehicle utilization are estimated using micro data from the consumer expenditure survey for 1984 1990 next the demand side model is combined with a model of oligopoly and product differentiation on the supply side with these elements in place the effects of the cafe regulation are assessed through simulations and compared to the effects of alternative policy instruments such as an increase in gasoline tax

instrument choice and stranded assets in the transition to clean capital abstract this paper compares the impact of different climate mitigation policies mandates feebates performance standards and carbon pricing in a ramsey model with clean and polluting capital irreversible investment and a climate constraint these policy instruments imply different transitions to the same balanced growth path the optimal carbon price minimizes the discounted social cost of the transition to clean capital but may prompt premature retirement of existing polluting capacities and significant private costs in the form of stranded assets second best mandates and feebates affect new investment decisions without providing incentives to under use existing polluting equipment these instruments lead to higher discounted social costs but smoother abatement costs and do not result in premature retirement or stranded assets a phased in carbon price can avoid premature retirement but still result in stranded assets that is in a drop of wealth for the owners of polluting capital we discuss a potential trade off between the political feasibility and cost effectiveness of climate mitigation policies

what do consumers believe about future gasoline prices a full understanding of how gasoline prices affect consumer behavior frequently requires information on how consumers forecast future gasoline prices we provide the first evidence on the nature of these forecasts by analyzing two decades of data on gasoline price expectations from the michigan survey of consumers we find that average consumer beliefs are typically indistinguishable from a no change forecast justifying an assumption commonly made in the literature on consumer valuation of energy efficiency we also provide evidence on circumstances in which consumer forecasts are likely to deviate from no change and on significant cross consumer forecast heterogeneity

the environmental bias of trade policy author s shapiro joseph s abstract this paper documents a new fact then analyzes its causes and consequences in most countries import tariffs and non tariff barriers are substantially lower on dirty than on clean industries where an industry s dirtiness is defined as its carbon dioxide co2 emissions per dollar of output this difference in trade policy creates a global implicit subsidy to co2 emissions in internationally traded goods and so contributes to climate change this global implicit subsidy to co2 emissions totals several hundred billion dollars annually the greater protection of downstream industries which are relatively clean substantially accounts for this pattern the downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized a quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods global co2 emissions would decrease and global real income would change little

flying more efficiently joint impacts of fuel prices capital costs and fleet size on airline fleet fuel economy abstract we investigate the factors that affect airlines choice of fleet fuel economy using aircraft level data for 1267 airlines in 174 countries larger and newer aircraft are usually more fuel efficient controlling for the effect of aircraft size and age we find that the technically achievable fleet fuel economy improves with the size of airlines and the price of fuel and worsens with higher capital costs the elasticity of fuel economy with respect to the price of fuel is between 0 07 and 0 13 we find evidence for regional differences in fleet fuel economy that are attributable to the adoption of distinct groups of technologies

cross hedging jet fuel price exposure abstract this paper investigates the cross hedging performance of several oil forwards contracts using wti brent gasoil and heating oil to manage jet fuel spot price exposure we apply three econometric techniques that have been widely tested and applied in the cross hedging literature on foreign exchange and stock index futures markets using quotes from the financial industry on forward contracts we can show that the optimal cross hedging instrument depends on the maturity of the instrument s forwards contract the results highlight that the standard approach in the literature to use crude oil as a cross hedge is not optimal for time horizons of three months or less by contrast for short hedging horizons our results indicate that gasoil forwards contracts represent the highest cross hedging efficiency for jet fuel spot price exposure while for maturities of more than three months the predominance of gasoil diminishes in comparison to wti and brent

forecasting gasoline prices using consumer surveys this paper analyzes the predictive power of a new data set of consumer gasoline price forecasts taken from the michigan survey of consumers msc msc data generally perform as well as a no change forecast in predicting future gasoline prices and they substantially out perform the no change forecast during the recent economic crisis during which time they track futures market prices finally the cross respondent dispersion of the msc forecasts increases substantially during the economic crisis paralleling the large increase in price volatility at this time

exchange rate volatility and trade a semiparametric approach we use a gravity model to analyse the impact of exchange rate volatility on the volume of bilateral international trade semiparametric regression methods are applied to the pooled data for over 200 countries our results indicate that volatility affects trade negatively although at very high level of volatility the effect diminishes and eventually becomes statistically indistinguishable from zero countries apparently find avenues to mitigate the detrimental impact of exchange rate uncertainty when volatility attains very high levels these results help reconcile the contradictory findings often found in the literature on the impact of exchange rate uncertainty on trade volume

entry exit and diffusion with learning by doing early entry has the advantage of higher revenues per unit of output early on late entry has the benefit of learning from the experience of earlier entrants and hence lower production costs the advantages are balanced off in a continuous time perfect foresight equilibrium competition generates s shaped diffusion and staggered entry and exit a monopolist will innovate less than a competitive industry but the innovation that he does do he will do sooner copyright 1989 by american economic association

supply elasticity matters for the rebound effect and its impact on policy comparisons abstract we develop a model of the rebound effect which explicitly accounts for both the demand and supply sides of the energy sources we consider a transportation sector originally using a dirty fossil fuel and examine the relative effectiveness of alternative policies efficiency improvements in the dirty fuel technology sector e g cafe standards and technology shifts by partial adoption of a new clean technology e g low carbon fuel standards the model generates endogenous equilibrium quantities and prices for the dirty and clean fuels we characterize the magnitude of the rebound effect as a function of demand and supply elasticities and use the equilibrium values to compare policy options when the supply of the dirty fuel is inelastic we find that introducing a new technology with non zero emissions may actually increase the total level of emissions similar to the leakage effect a technology shift policy can perform better than an efficiency improvement policy in the dirty fuel sector only when the dirty fuel supply is sufficiently elastic the emission intensity of the new technology very low and the technology shift is greater than a threshold value using data for gasoline as a proxy for the dirty technology and several other cleaner technologies we show that these conditions are satisfied by a hypothetical zero emission technology but not by electric vehicles using the average us generation mix or the current us corn based e85 our results demonstrate the importance of accounting for the supply side in estimating the magnitude of the rebound effect and its impact on fuel consumption in a large scale policy implementation

the diffusion of new technology and the market for an innovation this article shows that the diffusion of a capital embodied process innovation results from a pattern of decreasing incremental benefits and adoption costs for later adoptions strategic behavior is inessential to this finding we develop a method for comparing diffusion rates for different market structures in the capital equipment market we consider cases with market power on the seller s side of the market and on the buyers side of the market a case with no market power and the welfare optimal case we find that a joint venture adopts an innovation more slowly than other market regimes to protect existing capital investments and that the adoption rate is slower than is socially optimal a monopoly supplier on the other hand adopts at a rate faster than is socially optimal this result is usually also the case when there is no market power finally we show that the monopoly supplier accelerates adoptions faster than in the case where there is no market power but retards later adoptions market power thus makes a difference in diffusion rates and on which side of the market that power lies makes a considerable difference

models of technology diffusion abstract the literature on new technology diffusion is vast and it spills over many conventional disciplinary boundaries this paper surveys the literature by focusing on alternative explanations of the dominant stylized fact that the usage of new technologies over time typically follows an s curve the most commonly found model which is used to account for this model is the so called epidemic model which builds on the premise that what limits the speed of usage is the lack of information available about the new technology how to use it and what it does the leading alternate model is often called the probit model which follows from the premise that different firms with different goals and abilities are likely to want to adopt the new technology at different times in this model diffusion occurs as firms of different types gradually adopt it there are actually many ways to generate an s curve and the third class of models which we examine are models of density dependence popularized by population ecologists in these models the twin forces of legitimation and competition help to establish new technologies and then ultimately limit their take up finally we look at models in which the initial choice between different variants of the new technology affect the subsequent diffusion speed of the chosen technology such models often rely on information cascades which drive herd like adoption behaviour when a particular variant is finally selected

on the diffusion of new technology a game theoretic approach this paper is an attempt at a rigorous albeit not exceedingly general analysis of the diffusion of new technology in particular consider an industry composed of two firms each using the current best practice technology the firms are assumed to be operating at nash equilibrium output levels generating a market price given demand and profit allocations when a cost reducing innovation is announced each firm must determine when if ever to adopt it based in part upon the discounted cost of implementing the new technology and in part upon the behavior of the rival firm if either firm adopts before the other it can expect to make substantial profits at the expense of the other firm on the other hand the discounted sum of purchase price and adjustment costs may decline with the lengthening of the adjustment period as various quasi fixed factors become more easily variable therefore although waiting costs the firm more in terms of foregone profits it may save money on the cost of purchasing the new technology thus the firm must weigh the costs and benefits of delaying adoption as well as take account of its rival s strategic behavior

the effects of fiscal stimulus evidence from the 2009 cash for clunkers program we evaluate the impact of the 2009 cash for clunkers program on short and medium run auto purchases our empirical strategy exploits variation across u s cities in ex ante exposure to the program as measured by the number of clunkers in the city as of summer 2008 we find that the program induced the purchase of an additional 370 000 cars in july and august 2009 however we find strong evidence of reversal high clunker counties bought fewer autos in the 10 months after the program expired which offset most of the initial purchases we find no evidence of an effect on employment house prices or household default rates in cities with higher exposure to the program jel codes h20 e62 copyright 2012 oxford university press

the interactions among foreign direct investment economic growth degree of openness and unemployment in taiwan the vector autoregression method of variance decomposition and impulse response function analysis are applied to analyse various relationships among foreign direct investment fdi economic growth unemployment and degree of openness in taiwan the analysis results show that these five variables have a long run equilibrium relationship however unemployment rate and fdi outflow have weak exogeneity we also found that there exist three unidirectional causalities from fdi outflow to fdi inflow from economic growth to degree of openness and from economic growth to unemployment in short run furthermore the shocks of economic growth and degree of openness have positive effects on fdi inflow on the contrary the shocks in economic growth and fdi inflow have negative effects on unemployment rate

aid allocation and poverty reduction the authors derive a poverty efficient allocation of aid and compare it with actual aid allocations they build the poverty efficient allocation in two stages first they use new world bank ratings of 20 different aspects of national policy to establish the current relationship between aid policies and growth onto that they add a mapping from growth to poverty reduction which reflects the level and distribution of income they compare the effects of using headcount and poverty gap measures of poverty they find the actual allocation of aid to be radically different from the poverty efficient allocation in the efficient allocation for a given of poverty aid tapers in with policy reform in the actual allocation aid tapers out with reform in the efficient allocation aid is targeted disproportionately to countries with severe poverty and adequate polices the type of country where 74 percent of the world s poor live in the actual allocation such countries receive a much smaller share of aid 56 percent than their share of the world s poor with the present allocation aid is effective in sustainably lifting about 30 million people a year out of absolute poverty with a poverty efficient allocation this would increase to about 80 million people even with political constraints introduced to keep allocations for india and china constant poverty reduction would increase to about 60 million reallocating aid is politically difficult but it may be considerably less difficult than quadrupling aid budgets which is what the authors estimate would be necessary to achieve the same impact on poverty reduction with existing aid allocations

can africa industrialize by processing primary commodities the case of mozambican cashew nuts abstract industrialization strategies based on vertical diversification into processing of primary commodities have long been appealing to low income countries the performance of such strategies is mixed an aggregate level literature is divided on the advisability of low income countries processing commodities for export especially for countries relatively poor in human capital while this general literature usefully illuminates the policy debate over processing cashew nuts in mozambique commodity and country specific factors reveal the weaknesses of conducting debate at too aggregated a level it may be that the most significant constraints on processing industrialization are political rather than purely technical or economic

the economics of attribute based regulation theory and evidence from fuel economy standards in many countries fuel economy standards mandate that vehicles meet a certain fuel economy but heavier or larger vehicles are allowed to meet a lower standard this has the perverse implication of allowing automakers to meet standards either by improving fuel economy or by increasing weight which lowers fuel economy and increases externalities related to accidents this is but one example of an attribute based regulation in which the regulation imposed on a product depends on both the externality it creates and some other attribute attribute basing potentially motivates rms and individuals to strategically alter the attribute thereby endogenously altering the stringency of the regulation this paper develops a theory of attribute basing to demonstrate the costs and benets of its use the paper then empirically examines the consequences of attribute based fuel economy standards in japan where fuel economy standards are a notched attribute based function of vehicle weight we use cross sectional and panel techniques to demonstrate that attribute based regulation has signicantly altered the distribution of vehicle weight in japan where 10 of vehicles bunch at weight notches for cars whose weight is altered in response to the policy we estimate that the alteration generates a welfare loss from the exacerbation of weight related externalities of 1 500 per unit sold which translates into a 700 million annual loss across the japanese auto market

are consumers myopic evidence from new and used car purchases abstract we investigate whether car buyers are myopic about future fuel costs we estimate the effect of gasoline prices on short run equilibrium prices of cars of different fuel economies we then compare the implied changes in willingness to pay to the associated changes in expected future gasoline costs for cars of different fuel economies in order to calculate implicit discount rates using different assumptions about annual mileage survival rates and demand elasticities we calculate a range of implicit discount rates similar to the range of interest rates paid by car buyers who borrow we interpret this as showing little evidence of consumer myopia jel d12 h25 l11 l62 l71 l81

effect of gasoline prices on car fuel efficiency evidence from lebanon abstract this paper explores how gasoline prices affect the sales of new and used cars in lebanon using a rich dataset on monthly imported cars from 2000 to 2016 a vector autoregressive analysis is used to model different consumer choices between fuel efficient cars midsize cars and fuel inefficient cars we report the first empirical evidence on this question from the middle east and north africa mena region using individual automobile data we use within sample and out of sample tests to examine whether gasoline prices influence the sale of fuel efficient cars our results show evidence against the hypothesis that rising gasoline prices shift consumers demand toward the most fuel efficient cars

demand and supply in new markets diffusion with bilateral learning i explore the endogenous joint evolution of demand and supply in new markets firms and consumers learn in a bayesian fashion by observing the behavior of other firms and consumers respectively as a result endogenous information diffusion takes place on both sides of the market in equilibrium entry occurs in waves and its level depends on two distinct informational effects the model identifies an externality that provides a natural explanation for s shaped diffusion paths entry reveals information to the consumers about the value of the new product and thus early waves of entry affect the expected profitability of subsequent entry

anticipation and environmental regulation abstract when agents expect a change in regulation to change the relative price of new durable goods they may shift purchases forward to avoid compliance costs in the context of new vehicle emission standards prior analyses have not considered this adjustment margin we model the effects of anticipation on sales and retirements of durable goods and test our theory s predictions empirically using the 2007 implementation of heavy duty emission standards we find evidence that anticipation caused a sales spike just before the policy took effect and a symmetric sales slump after implementation which resulted in 31 164 more freight truck sales ahead of the new standard and as much as 118 million in environmental damages over the lifetimes of those vehicles