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

separability functional form and regulatory policy in models of interfuel substitution abstract counter intuitive results such as positive own price elasticities have been found in some studies of interfuel substitution this paper examines three possible reasons for this problem first including energy materials in petroleum and coal aggregates is found to contribute to incorrect signs second the mathematical properties of the translog function contribute to concavity violations in contrast the linear logit model of cost shares is found to provide more sensible estimates of own price elasticities across alternative model specifications finally natural gas curtailment policies and environmental regulations are found to be significant factors influencing us industrial fuel demand although omission of these factors does not directly contribute to curvature violations

the case of co firing the market level effects of subsidizing biomass co combustion abstract biomass combustion in co firing power plants has been treated differently in renewable electricity promoting policy schemes some policy schemes subsidize biomass co combustion while some do not in this study we analyze the impacts of a policy choice on the fuel uses investment decisions co 2 emissions and on the values of renewable electricity promoting policy instruments in particular we look at the impacts of feed in tariff and a subsidy to renewable energy both together with co 2 emissions price we present an electricity and heat market model where all the solid fossil fuel power plants are able to co fire biomass and fossil fuel in the numerical application the model is used to analyze the differences caused by the policy instruments the results show that subsidizing biomass combustion in a co firing power plant decreases the investments in pure renewable technology however the use of solid fossil fuels is not increased significantly also the co 2 intensity levels of electricity production are nearly equal whether biomass co combustion is subsidized or not

no fault divorce laws and the labor supply of women with and without children we use a difference in difference in difference estimator to compare changes in labor force participation weeks and hours of work associated with no fault divorce laws allowing for differential responses for married women with and without children although other research has found that the labor supply of women in general does not respond to no fault divorce laws we find that no fault divorce laws are associated with increases in the labor supply of married mothers relative to married nonmothers even after controlling for changes in female labor supply in states without no fault divorce laws and for property division rules associated with the laws

evaluating the impact of three incentive programs on the economics of cofiring willow biomass with coal in new york state abstract plantations of fast growing willow shrubs are being promoted as a source quality biomass feedstock for bioenergy and bioproducts in new york state ny in the near term cofiring of the feedstock in combination with other woody biomass with coal in existing utility power boilers is considered to be the most promising conversion method for energy generation despite the clear technological viability and associated environmental benefits cofiring of willow has not been widely adopted the relatively high production cost of the willow feedstock which is over twice that of coal is the primary reason for this lack of interest taxes that account for some of the social costs of using coal and or incentives that appropriate value for some of the social benefits of using willow are essential for eliminating most or the entire current price differential this paper presents an integrated analysis of the economics of power generation from cofiring willow biomass feedstock with coal from the perspective of the grower aggregator and the power plant emphasis is placed on analyzing the relative impact of a green premium price a closed loop biomass tax credit and payments to growers under the proposed conservation reserve program crp harvesting exemption policy the crp payments reduced the delivered cost of willow by 36 35 to 1 90 gj 1 and 1 70 gj 1 under current and increased yield conditions respectively these prices are still high relative to coal other incentives are required to ensure commercial viability the required levels of green premium price 0 4 1 0 cents kwh 1 and biomass tax credit 0 75 2 4 cents kwh 1 vary depending on whether the incentives were being applied by themselves or in combination and whether current yield or potential increased yields were being considered in the near term cofiring willow biomass and coal can be an economically viable option for power generation in ny if the expected overall beneficial effects associated with the production and use of the biomass is accounted for

income related inequalities in mental health in great britain analysing the causes of health inequality over time using regression techniques this paper estimates the level of income related health inequality in gb in 1992 and 1998 inequality is decomposed to investigate which socio demographic factors are important contributors to health differences the paper includes a range of measured and subjective income variables to control for absolute income a relative deprivation measure is included to test the impact of income inequality on health inequality it is found that subjective financial status is a major determinant of ill health and makes a major contribution to income related inequalities in health relative deprivation is an important contributor for women but not for men

testing for indeterminacy an application to u s monetary policy reply this paper considers a prototypical new keynesian model in which the equilibrium is undetermined if monetary policy is passive the likelihood based estimation of dynamic equilibrium models is extended to allow for indeterminacies and sunspot fluctuations we construct posterior weights for the determinacy and indeterminacy region of the parameter space and estimates for the propagation of fundamental and sunspot shocks according to the estimated model u s monetary policy post 1982 is consistent with determinacy whereas the pre volcker policy is not we find that before 1979 indeterminacy substantially altered the propagation of shocks

a dynamic analysis of interfuel substitution in u s industrial energy demand using data for 1960 92 to analyze interfuel substitution in the u s industrial sector a dynamic linear logit model is shown to provide superior global properties than a comparable dynamic translog model confirming earlier static results by t j considine 1989 the linear logit model provides a direct unbiased estimate of the rate of dynamic adjustment indicating a median response lag of less than two years excluding fuels used for nonenergy purposes yields larger estimates of the price elasticities for coal and oil and indicates generally greater potential for interfuel substitution than when using aggregate data

natural rate doubts abstract we study the low frequency comovements in unemployment inflation and the federal funds rate in the u s from 1970 through 1979 all three series trended up together after 1979 they all trended down the conventional explanation for the buildup of inflation in the 1970s is that the fed reacted to an increase in the natural rate of unemployment by conducting an overly passive monetary policy we show that this explanation is difficult to reconcile with the observed comovement of the fed funds rate and inflation we argue instead that the source of the inflation buildup in the 1970s was a downward drift in the real interest rate that was translated into a simultaneous increase in unemployment and inflation by passive fed policy our explanation relies on the existence in the data of a positive long run unemployment inflation relationship this is consistent with non superneutrality of money in the long run and hence the title of our paper natural rate doubts

a dynamic analysis of interfuel substitution for swedish heating plants abstract this paper estimates a dynamic model of interfuel substitution for swedish heating plants we use the cost share linear logit model developed by considine and mount considine t j mount t d 1984 the use of linear logit models for dynamic input demand systems review of economics and statistics 66 434 443 all estimated own price elasticities are negative and all cross price elasticities are positive the estimated dynamic adjustment rate parameter is small however increasing with the size of the plant and time indicating fast adjustments in the fuel mix when changing relative fuel prices the estimated model is used to illustrate the effects of two different policy changes

the danish green certificate system some simple analytical results we formulate a simple static equilibrium model for the electricity market taking account of both green certificates and co2 emission permits the objective is to investigate the relationship between these markets under the existence of upper and lower price bounds on the green certificates both in the short and in the long run we perform various comparative static changes of the parameters of the model and study how these affect the endogenous variables of the model as well as producers and consumers surplus we also investigate the effects of imports and exports of electricity several comparative static results are derived and in particular it is shown that harsher co2 emission constraints and increased import wholesale price both may lead to reduced capacity of green electricity

fossil fuel producing economies have greater potential for industrial interfuel substitution abstract this study analyzes industrial interfuel substitution in an international context using a large unbalanced panel dataset of 63 countries we find that compared to other countries fossil fuel producing economies have higher short term interfuel substitution elasticities this difference increases further in the long run as fossil fuel producing countries have a considerably longer adjustment of their fuel using capital stock these results imply lower economic cost for policies aimed at climate abatement and more efficient utilization of energy resources in energy intensive economies

the role of energy conservation and natural gas prices in the costs of achieving california s renewable energy goals abstract this paper develops an econometric forecasting system of energy demand coupled with engineering economic models of energy supply the framework is used to quantify the energy and environmental impacts of renewable and natural gas based electricity power generation in california considering the role of on going energy conservation efforts and incorporating different natural gas price scenarios over the forecast horizon 2011 2035 the results indicate that relative to a business as usual scenario of continuing to rely on imported electricity to meet future demand california s renewable portfolio standard rps of 33 renewables by 2020 will increase electricity rates by over 10 however the rps will also provide substantial annual savings in carbon dioxide emissions equal to 40 million metric tons in 2020 continuing non price induced energy conservation at the historical rate will only result in a marginal reduction in electricity rates although lower electricity use means that substantial savings are nonetheless achieved in electricity expenditures in addition continuing trend energy conservation leads to substantial savings in carbon dioxide emissions like the rps developing domestic natural gas generation also leads to rate increases and reductions in carbon dioxide emissions relative to the baseline however these impacts are minor compared to the rps scenario

the effect of conventional and unconventional monetary policy rules on inflation expectations theory and evidence this paper has three parts part 1 constructs a classical economic model of inflation augmented by a complete set of financial markets i call this the core monetary model part 2 develops a series of calibrated examples to illustrate how the core monetary model explains the history of inflation after wwii and part 3 provides evidence to show that the unconventional monetary policy followed in the wake of the 2008 financial crisis was effective in stabilizing inflation expectations the core monetary model provides a unified framework to explain how an interest rule can be used to control inflation in normal times and to explain the purpose of unconventional monetary policy when policy attains the zero lower bound i argue that management of the variation in the composition of the fed s balance sheet is an important tool in a central bank s arsenal that can be used to help prevent deflation in the wake of a financial crisis

swedish industry and kyoto an assessment of the effects of the european co2 emission trading system we assess the effects on swedish industry input demands and output of different climate policy scenarios connected to energy policy induced by the kyoto protocol we use a unique dataset containing

match quality new information and marital dissolution this article investigates the role of surprises in marital dissolution surprises consists of changes in the predicted earning capacity of either spouse data from the national longitudinal study of the high school class of 1972 is used we find that an unexpected increase in the husband s earning capacity reduces the divorce hazard while an unexpected increase in the wife s earning capacity raises the divorce hazard couples sort into marriage according to characteristics that are likely to enhance the stability of the marriage the divorce hazard is initially increasing with the duration of marriage and the presence of children and high levels of property stabilizes the marriage

debt and depression we examine the effect of household financial indebtedness on psychological well being using a large household survey of families with children in britain existing studies that find a link between debt and depression tend to utilise small and highly selective samples of people and only self reported measures of financial stress responses to which are likely to correlate with subjective measures of health from additional household data we can construct a variety of objective quantitative measures of financial stress in order to validate self reported measures we show that although there is a positive association between subjective measures of financial well being and psychological well being individuals differ in their psychological response to objective household financial situations we also examine how the potential simultaneity of financial and psychological health might be handled

borrowing during unemployment unsecured debt as a safety net this paper examines whether unsecured credit markets help disadvantaged households supplement temporary shortfalls in earnings by investigating how unsecured debt responds to unemployment induced earnings losses results indicate that very low asset households those in the bottom decile of total assets do not borrow in response to these shortfalls however other low asset households do borrow increasing unsecured debt by more than 11 cents per dollar of earnings lost in contrast wealthy households do not increase unsecured debt during unemployment the evidence suggests that very low asset households do not have sufficient access to unsecured credit to smooth consumption over transitory unemployment spells

the use of linear logit models for dynamic input demand systems this paper demonstrates that a linear logit model with appropriate constraints can be used to specify a system of cost share equations that satisfy neoclassical economic conditions unlike many other flexible functional forms the logistic function is particularly well suited for incorporating dynamic adjustment mechanisms the empirical results suggest that the use of static models overstates short run own price elasticities and understates the corresponding long run price effects

household finances income shocks and family separation in britain we examine the effect of household financial indebtedness on the incidence of partnership dissolution using a large survey of families with children in britain we use detailed data on household finances to provide a robust statistical analysis of the relationship between indebtedness and partnership dissolution and to avoid the potential simultaneity of financial and psychological health responses that arise when using self reported data on the extent of household financial problems we examine whether the data provides any support for the economic models of divorce and separation developed by gary becker and his colleagues

central banking in the credit turmoil an assessment of federal reserve practice abstract central banking is understood in terms of the fiscal features of monetary credit and interest on reserves policies monetary policy expanding reserves by buying treasuries transfers all revenue from money creation directly to the fiscal authorities credit policy selling treasuries to fund loans or acquire non treasury securities is debt financed fiscal policy interest on reserves frees monetary policy to fund credit policy independently of interest rate policy an ambiguous boundary of responsibilities between the fed and the fiscal authorities contributed to economic collapse in fall 2008 accord principles are proposed to clarify fed credit policy powers and secure its independence on monetary and interest rate policy the fed needs more surplus capital from the fiscal authorities to be fully flexible against both inflation and deflation at the zero interest bound

a pooled dynamic analysis of interfuel substitution in industrial energy demand by the g 7 countries a dynamic version of considine s 1990 linear logit model is used to obtain theoretically consistent estimates of long run price elasticities from pooled intercountry data on industrial energy consumption this model also provides a rare direct estimate of the important rate of dynamic adjustment revealing a median lag of ten years the long run demands for oil and coal are the most elastic and the strongest channels for interfuel substitution are between oil and natural gas with no significant evidence of complementarity between fuels

the cost of solar centric renewable portfolio standards and reducing coal power generation using arizona as a case study abstract this paper develops an econometric forecasting system of energy demand coupled with engineering economic models of energy supply the framework is used to quantify the impact of a state level renewable portfolio standard rps achieved predominately with solar generation we perform the analysis using arizona s rps as a case study over the period 2012 2035 we find if arizona implements its rps when supplying future electricity demand there will be an increase in electricity rates relative to a business as usual scenario of reliance on gas fired generation extending the current regime of tax credits greatly reduces this increase at the taxpayers expense we find that by 2025 arizona s rps will implicitly abate carbon dioxide emissions at a cost between 58 and 82 per metric ton and by 2035 abatement costs are between 22 and 69 per metric ton depending on the future evolution of nature gas prices the rps always leads to a negative impact on social welfare under low gas prices but after 2029 the welfare impact is positive under high gas prices in contrast phasing out arizona s existing coal fired generation always has positive welfare impacts

the economics of fuel choice at us electric utilities abstract this paper compares and contrasts results obtained from estimating fossil fuel cost shares in the generation of electricity in the usa from two models one national and one regional while the national model provides acceptable first order results correct signs and magnitudes of critical parameters it is the regional model that reveals the underlying economics of this fuel choice problem results which hold consistently across regions and across fuels are more plausible than those which are found to be special cases in each region of the country or for each fuel type

the lucas critique policy invariance and multiple equilibria the lucas critique of econometric policy evaluation argues that the parameters of econometric models are subject to theoretical cross equation restrictions which follow from the fact that the endogenous variables of the models are chosen optimally by forward looking agents in this paper i argue that these facts alone are insufficient to generate such restrictions i present an example of a model in which there exist multiple stationary rational expectations equilibria one of which is supported by a process invariant forecast rule immunity to the lucas critique is proposed as a selection criterion in models with multiple equilibria

are children really inferior goods evidence from displacement driven income shocks abstract this paper explores the causal link between income and fertility by analyzing women s fertility response to the large and permanent income shock generated by a husband s job displacement i find that the shock reduces total fertility suggesting that the causal effect of income on fertility is positive a model that incorporates the time cost of children and assortative matching of spouses can simultaneously explain this result and the negative cross sectional relationship i also find that a husband s displacement accelerates childbearing which is consistent with lifecycle models of fertility in which the incentive to delay is driven by expected earnings growth

factor substitution and procurement competition for forest resources in sweden the utilisation of forest resources in the energy sector has been increasing partly caused by economic policies introduced to reduce the emission of greenhouse gases this in turn has led to an in

investments into forest biorefineries under different price and policy structures abstract increasing scarcity of oil reserves and the high co2 emissions from using oil have contributed to the development of renewable biofuels pulp and paper mill integrated forest biorefineries offer one important means to increase biofuel production this study analyzes the effects of policies to support biofuel production in the pulp and paper sector we study the relative effectiveness of three biofuel supporting policy instruments namely production subsidy input subsidy and investment subsidy we present a partial equilibrium pulp and paper market model with a biorefinery investment option a numerical model is used to evaluate the impacts of policy instruments on wood prices as well as input choices and investment strategies of pulp and paper industries the data represent the finnish pulp and paper sector we evaluate the values and direct costs of the policy instruments in a situation of exogenous biofuel production targets the direct costs of input and investment subsidies are higher than those of a production subsidy with all the policy instruments finnish pulp and paper mills would invest in wood gasifying technology instead of black liquor based one the number of biorefinery units is dependent on the subsidy type investment and input subsidies are likely to result in more numerous but smaller biofuel production units than a production subsidy with all the policy instruments the demand for wood increases in finland leading to higher wood prices this in turn could reflect negatively on the profitability of the pulp and paper industries to a significant degree the model and the results can be generalized to other countries and markets where integrated pulp and paper mills are operating

confidence crashes and animal spirits this article is an attempt to reformulate what i take to be two key insights from keyness general theory keynes 1936 the first is that there is something profoundly different about the labour market from most other markets in the economy the second is that the beliefs of participants in the asset markets have an independent influence on economic activity in the language of modern dynamic general equilibrium theory we would say that there is a continuum of labour market equilibria and that beliefs about the value of the stock market select an equilibrium the general theory contains many ideas some of which are internally inconsistent and keynes did not try to reconcile his theory with walrasian economics that task was carried out by a group of interpreters including hansen 1936 and hicks 1937 the current dominant paradigm new keynesian economics originated with the third edition of samuelson s 1955 undergraduate textbook in which he introduced the idea of the neoclassical synthesis according to this doctrine the economy is keynesian in the short run but classical in the long run the short run is defined as the period over which not all prices have had time to adjust to their walrasian levels this article introduces a different interpretation of the key ideas from the general theory 1 although my work is inspired by keynesian economics this article is not about the history of thought i offer a way of formulating the idea that market economies are not inherently self stabilising without assuming that prices or wages are prevented from adjusting to their equilibrium levels by some kind of friction instead i claim that high persistent unemployment is a potentially permanent feature of a market economy in a steady state equilibrium

heat or power how to increase the use of energy wood at the lowest cost abstract we compute the optimal subsidy level for fuelwood consumption that makes it possible to achieve the french biomass energy consumption target for this purpose we model the competition and trade offs between the consumption of fuelwood for heat fw h and the consumption of fuelwood for electricity fw e to do so we couple a forest sector model with an electricity simulation model and we test different scenarios combining fw h and fw e that account for contrasting potential increases in the carbon price and the potential reduction in the number of nuclear plants we assess the implications of these scenarios on 1 the budgetary costs for the government 2 industrial wood producers profits 3 cost savings in the power sector for the different scenarios tested and 4 the carbon balance we show that the scenario with the highest carbon price and the lowest number of nuclear plants is the least expensive from a budgetary perspective indeed when associated with a high carbon price co firing may increase fw e demand with a lower subsidy level which makes it possible to reduce the cost of reaching the target however in this case fw e crowds out part of fw h which may cause political and economic issues from a carbon balance perspective an fw h only scenario performs better than any other scenario that combines fw h and fw e due to the relatively low emissions factors of alternative technologies for electricity generation and in particular nuclear energy

unilateral divorce and the labor force participation rate of married women revisited two recent articles in this review by h elizabeth peters 1986 and william r johnson and jonathan skinner 1986 address an anomaly recently observed by labor economists james p smith and michael p ward 1985 have noted that real wage growth explains most of the increase in the female labor supply between 1950 and 1980 however in the period after 1970 the female labor supply growth rate rose while the real wage growth rate fell robert t michael 1985 provides a partial explanation by identifying the effect of divorce on the labor market decision of married women in that article a lagged relationship is observed between increases in the divorce rate and increases in the labor force participation rate lfpr of married women with young children during the post world war ii period since the divorce rate rose in the period after 1960 it could explain part of the increase in the growth rate of the lfpr of married women observed after 1970 the articles by peters and by johnson and skinner provide additional insights into this anomaly they recognize that the introduction of no fault grounds for divorce after 1970 may have contributed to the increase in the labor supply of married women after that date the no fault grounds for divorce created what has been called unilateral divorce the shift in female labor supply also could explain the slower real wage growth using 1979 data peters concludes that residence in a unilateral divorce state had a statistically significant positive influence on whether a married woman was in the labor force johnson and skinner use 1972 data to conclude that being in a unilateral divorce state in that year had a negative effect on the labor supply of married women unilateral divorce was introduced in the united states in 1970 when california adopted its no fault divorce statute therefore peters s data are probably more useful for testing the impact of unilateral divorce laws on married women s labor force participation in her article the lack of compensation for marriage specific investment at divorce creates an incentive for married women to increase their more general market capital during marriage by entering the labor force 2 a lack of compensation for marriage specific investment implies that women are not being compensated for being good housewives and mothers given the range of commodities produced by housewives and mothers marriage specific investment should not necessarily vary with characteristics of women such as age race or education if the impact of unilateral divorce on the lfpr of married women is due to the lack of compensation for mar regents professor of management robert 0 anderson schools of management university of new mexico albuquerque nm 87131 i thank michele blazek steve cauley dwight grant ron johnson rod lievano sam peltzman john schatzberg david weeks nelson woodard douglas young and two anonymous referees for their valuable comments the anderson schools of management provided research funding for this project ibefore 1970 most states had grounds for divorce that were based on fault such as adultery or mental cruelty between 1970 and 1985 all the american jurisdictions enacted some form of no fault divorce the no fault divorce statutes generally make either irretrievable breakdown or incompatibility the sole ground for divorce or add one of them to the fault grounds while no fault divorce is often called unilateral divorce that is not technically correct since some states require mutual consent to the no fault grounds see doris j freed and timothy b walker 1990 2while it was recognized by peters p 443 that women who invest in marriage may face lower wages in the future based on gary s becker 1981 p 15 marriage specific investment has value based on its ahilitv to increase houiehold nrodiution

dual measures of monopoly and monopsony power an application to regulated electric utilities the inefficiency from monopoly pricing monopsony pricing and other institutional factors should be simultaneously estimated to avoid misspecification estimation of a behavioral profit function where input and output shadow prices may diverge from their market values allows unbiased simultaneous estimation of inefficiencies if its normalized form is employed in an application to electric utilities consuming western coal the authors cannot reject the hypothesis that utilities act as price takers in output markets and find weak and statistically insignificant evidence of fuel adjustment clause bias strong evidence is found of monopsony behavior in the market for western coal and its transportation copyright 1989 by mit press

the effect of incomes wages and afdc benefits on marital disruption this paper uses a choice based model to estimate the effects of a broad set of economic factors including afdc benefit levels husband s earnings and a woman s wage rate on the probability of marital dissolution we find that the probability of divorce is lower for marriages in which the husband s labor income is higher we also find that while afdc income has a substantial effect on welfare receipt by a divorced woman it has a relatively small effect on the probability that a married woman will become divorced finally we find no support for the hypothesis that rising wages for women have increased marital instability

job displacement disability and divorce earnings shocks should affect divorce probability by changing a couple s expected gains from marriage we find that the divorce hazard rises after a spouse s job displacement but does not change after a spousal disability this difference casts doubt on a purely pecuniary motivation for divorce following earnings shocks since both types of shocks exhibit similar long run economic consequences furthermore the increase in divorce is found only for layoffs and not for plant closings suggesting that information conveyed about a partner s noneconomic suitability as a mate due to a job loss may be more important than financial losses in precipitating divorce

were there regime switches in u s monetary policy working paper 2004 14 june 2004 abstract a multivariate model identifying monetary policy and allowing for simultaneity and regime switching in coefficients and variances is confronted with u s data since 1959 the best fit is with a model that allows time variation in structural disturbance variances only among models that also allow for changes in equation coefficients the best fit is for a model that allows coefficients to change only in the monetary policy rule that model allows switching among three main regimes and one rarely and briefly occurring regime the three main regimes correspond roughly to periods when most observers believe that monetary policy actually differed and the differences in policy behavior are substantively interesting though statistically ill determined the estimates imply monetary targeting was central in the early 80s but was also important sporadically in the 70s the changes in regime were essential neither to the rise in inflation in the 70s nor to its decline in the 80s jel classification e52 e47 c53 key words counterfactuals lucas critique policy rule monetary targeting simultaneity volatility model comparison i the debate over monetary policy change in an influential paper clarida gali and gertler 2000 cgg presented evidence that us monetary policy changed between the 1970 s and the 1980 s indeed that in the 70 s it was drastically worse they found that the policy rule apparently followed in the 70 s was one that when embedded in most stochastic general equilibrium models would imply non uniqueness of the equilibrium and hence vulnerability of the economy to sunspot fluctuations of arbitrarily large size their estimated policy rule for the later period on the other hand eliminated this indeterminacy these results are a possible explanation of the volatile and rising inflation of the 70 s and of its subsequent decline the cgg analysis has two important weaknesses one is that it fails to account for stochastic volatility us macroeconomic variables and particularly the federal funds rate have gone through periods of tranquility and of agitation with forecast error variances varying greatly from period to period ignoring such variation does not lead to inconsistent estimates of model parameters when the forecasting equations themselves are constant but it strongly biases toward a finding of changed parameters tests of the stability of the forecasting equations the other weakness is that the cgg analysis rests on powerful and implausible identifying assumptions they require that we accept that the response of the monetary authority to expected future inflation and output does not depend on the recent history of inflation money growth or output it is hard to understand why this should be so especially in the 70 s when monetarism was a prominent theme in policy debates congress was requiring reports from the fed of projected time paths of monetary aggregates and financial markets were reacting sensitively to weekly money supply numbers the requirement for existence and uniqueness of equilibrium in dynamic models is that the monetary policy rule show a more than unit response of interest rates to the sum of the logs of all nominal variables that appear on the right hand side of the reaction function if we force a particular measure of expected future inflation to proxy for all the nominal variables that actually appear independently in the reaction function we are bound to get distorted conclusions on the one hand because expected future inflation will be a noisy measure of the full set of nominal influences on policy we might get downward bias in our estimates from the usual errorsin variables effect on the other hand to the extent that expected future inflation like most expected future values shows less variation than current nominal variables we could find a mistaken scaling up of coefficients

the stock market crash of 2008 caused the great recession theory and evidence abstract this paper argues that the stock market crash of 2008 triggered by a collapse in house prices caused the great recession the paper has three parts first it provides evidence of a high correlation between the value of the stock market and the unemployment rate in u s data since 1929 second it compares a new model of the economy developed in recent papers and books by farmer with a classical model and with a textbook keynesian approach third it provides evidence that fiscal stimulus will not permanently restore full employment in farmer s model as in the keynesian model employment is demand determined but aggregate demand depends on wealth not on income

labor supply and marital separation panel data are used to estimate the effect of marital separation on labor supply female labor supply increases substantially and male labor supply declines marginally lending support to the theory of specialization within the household the most interesting finding is that women began to increase their labor supply well before the actualsplit occurs suggesting either that shocks to labor supply change divorce probabilities or that women with a higher likelihood of divorcework more this argument is pursued by constructing and estimating a simultaneous model of labor supply and divorce risk copyright 1986 by american economic association

accounting for behavioral effects of increases in the carbon dioxide co2 tax in revenue estimation in sweden in this paper we describe how behavioral responses of carbon dioxide co 2 tax increases are accounted for in tax revenue estimation in sweden the rationale for developing a method for this is a

how do banks adjust to changing input prices a dynamic analysis of u s commercial banks before and after the crisis abstract the 2000 2013 period was characterized by substantial regulatory monetary and technological change especially after the onset of the global financial crisis this study assesses the total impact of these policy shifts and technological changes on u s commercial banks short run and long run substitution elasticities an endogenous break test divides the sample into a pre crisis period and a post crisis period during the former period banks inputs tend to be inelastic substitutes after the onset of the crisis particularly the long run substitutability of most input factors decreases to even lower levels due to changes in both cost technology and economic conditions at the same time banks response to input price changes becomes more sluggish hence especially after the onset of the crisis banks have little flexibility regarding input factor usage and are thus sensitive to input price changes from a cost perspective

the cofiring problem of a power plant under policy regulations cofiring of fossil and renewable fuels can contribute to reaching tightening climate and renewable energy goals the increase in biomass share in cofiring decreases the use of fossil fuel and increases renewable energy production we study how energy and climate policies promote that increase first we present and solve an electricity producer s profit maximization problem with detailed technical description of cofiring we then study the effectiveness of policy instruments e g feed in laws and emission trading on biomass utilization in cofiring the study offers a novel approach to explore the cofiring problem because of the endogenous fuel choice combined with the policy analysis we study two different power plants that are located in two different european electricity market areas our analysis shows that both feed in tariff and feed in premium can have unexpected weaknesses when they are introduced together with emission trading therefore decision makers should be well informed and cautious when introducing these policies