production lot sizing and carbon emissions under cap and trade and carbon tax regulations cap and trade and carbon tax are two emission regulations widely used to curb the carbon emissions generated from firms based on economic order quantity eoq model this paper examines the production lot sizing issues of a firm under these two regulations respectively the optimal lot size and emissions under the two regulations are achieved we then investigate the impacts of production and regulation parameters on the optimal lot size and emissions furthermore we compare the firm s optimal carbon emissions under the two regulations it is found that under the cap and trade regulation the firm s decisions of the optimal emissions as well as permits trading depend on the differentiated permits trading prices if setup incurs the same cost as holding incurs per unit of generated emissions both regulations always lead to the same optimal emissions which is also equal to that without emission regulation otherwise neither regulation always leads to lower emissions than the other does

anticipated monetary policy in canada some new evidence abstract in this note i examine the policy ineffectiveness proposition for canada using monthly income data due to milbourne et al 1988 i find that anticipated monetary policy altered the evolution of real output in canada recent work by ambler and phaneuf 1988 can be used to attribute this result to a purely new keynesian model of the business cycle although this inference is found to be fragile with respect to the choice of the level of significance used in the hypothesis tests

does it matter how monetary policy is implemented abstract in the u s existing monetary base measures add an adjustment factor for changes in reserve requirement ratios to high powered money implicitly the monetary base assumes that the economic effects of changes in reserve requirements are identical to those due to changes in high powered money theory however does not generally support the prediction that the two policy tools will have the same economic effects structural vars are estimated to compare the short run paths of inflation and output growth under two different types of policy shocks in doing so this analysis gives one a measure of the costs associated with this implicit equivalence assumption the evidence is consistent with the hypothesis that the federal reserve at least partially offsets reserve requirement changes with open market operations and the hypothesis that dynamic explanations of macroeconomic variables are improved by separating reserve requirement changes from other monetary policy moves

optimal control for transboundary pollution under ecological compensation a stochastic differential game approach abstract to account for previously ignored yet widely observed uncertainty in nature s capability to replenish the natural environment in ways that should inform ideal design of ecological compensation ec regimes this study constructs a stochastic differential game sdg model to analyze transboundary pollution control options between a compensating and compensated region equilibrium strategies in the stochastic two player game inform optimal control theory and reveal a welfare distribution mechanism to form the basis of an improved cooperative game contract a case based numerical example serves to verify the theoretical results and supports three key insights first accounting for various random disturbance factors the probabilistic pollutant stock in stackelberg non cooperative game exceeds that of a cooperative game situation second the ec mechanism provides long term effective incentives only when the marginal losses of environmental damage in the compensating region are more than twice that of the compensated region achieving a pareto optimal equilibrium relies upon the attainment of a dynamic allocation ratio derived from the analysis of a robust welfare allocation mechanism third cross region cooperation reliably outperforms stackelberg non cooperation due to either overwhelming incumbent economic interests or high abatement costs this study illuminates the importance of balancing both parties interests within an ec agreement while reducing uncertainty around unobserved environmental factors during ex ante negotiations

transboundary pollution in the black sea comparison of institutional arrangements this paper analyses the transboundary pollution between romania and ukraine coastal states along the black sea and studies the welfare consequences of institutional arrangements for controlling this problem to achieve this goal we use a dynamic and strategic framework we compare in terms of total welfare for two countries a first best case with three different institutional arrangements the non cooperative game of countries the uniform emission policy and the constant emission policy as proposed by the black sea commission our findings indicate that the non cooperative game provides a better level of total welfare than the other rules

monetary policy theory and practice in respect of the theory of monetary policy i am reminded of the comment that jacob viner made many years ago at a meeting of the american economic association about alfred marshall s economics what is new is highly unlikely at this late date also to be true and significant 1 consequently i shall restrict my remarks on theory to trying to summarize what i regard as the present intellectual position

investigation of rfid investment in a single retailer two supplier supply chain with random demand to decrease inventory inaccuracy abstract inventory information inaccuracy is one of the main causes to the inventory waste in supply chain operations which motivates many companies to adopt modern tracing technologies e g radio frequency identification rfid to decrease inventory errors and strengthen the cooperation between the supply chain stakeholders considering different types of rfid possess unequal technique features in tracing items in more practical environment for the first time this paper explores the different effectiveness of rfid in decreasing the inventory inaccuracies in a supply chain containing one retailer and two suppliers firstly a novel scale factor function is introduced to illustrate the relationships between the variable cost of rfid and the non full abilities of rfid in decreasing inventory inaccuracies then under the stochastic demand and inaccurate inventory analytical models are formulated to investigate the cost effectiveness of different rfids to the optimal order quantities and the expected profits in different scenarios uncoordinated and coordinated supply chains hereby the best coordination strategies are addressed at last numerical results obtained from different scenarios on adopting rfid and a practical case level rfid system for recycling packaging cases indicate that rfid can not only decrease inventory inaccuracies but also strengthen the supply chain coordination

the effects of monetary policy using structural factor analysis the traditional vector autoregression var method is widely used to trace out the effects of monetary policy innovations on the economy however this method suffers from the curse of dimensionality so that in practice vars are estimated on a limited number of variables leading to a potential missing information problem in this article we use the method of structural factor analysis to evaluate the effects of monetary policy on key macroeconomic variables in a data rich environment this methodology allows us to extract information on monetary policy and its impact on the economy from a much larger data set than is possible with the traditional var method we propose two structural factor models one is the structural factor augmented vector autoregressive sfavar model and the other is the structural factor vector autoregressive sfvar model compared to the traditional var both models incorporate information from hundreds of data series series that can be and are monitored by the central bank in

emissions trading of global and local pollutants pollution havens and free riding abstract in the presence of local sulfur and global carbon pollutants we examine the pollution haven hypothesis and free riding behavior under domestic emissions trading poorer southern countries become pollution havens when free trade opens up whenever sulfur damage functions are linear or when sulfur levels in equilibrium are not higher in the south with global trading of carbon permits the pollution haven effect emerges in equilibrium whenever the convex sulfur damage functions are nonlinear countries that do not participate in a global protocol designed to reduce carbon emissions enjoy double benefits stemming from free riding and cleaner local environments

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

equity development and climate change control the paper analyzes the effects of different equity principles on the decision of developing countries to join a world coalition whose aim is to control greenhouse gas emissions a game theoretic framework is proposed to assess the incentives for different countries to sign an international treaty on climate change control then the effects of different equity rules on these incentives are evaluated by using a dynamic integrated growth and climate model policy proposals based on transfers from developed to developing countries are also analyzed jel c7 h0 h3 q38

money and economic activity revisited abstract recent literature has concluded that money no longer plays a fundamental role in determining us economic activity especially when post 1982 data are included in the analysis we re examine the issue using annual and quarterly data sets ranging back to the civil war cointegration tests show that an equilibrium relationship holds between money and income in all data samples of 35 years or longer but frequently fails to hold for many shorter samples however when the normal monetary lags are explicitly imposed a cointegrating relationship is frequently captured even in quite short samples examining the issue in a standard five variable var model we find that money is the most important variable in explaining real output for the full 1874 1993 as well as 1952 1993 periods even allowing for interest rate effects finally using monthly data over the troublesome 1983 1994 sample we show that when appropriate adjustments are made to capture recent structural changes such as the growing importance of the international economy on us output money still granger causes economic activity

money and output under alternative exchange rate regimes in the usa abstract economic theory suggests that the effects of money on output will depend on the exchange rate regime this paper examines the relationship between money and output under fixed and flexible exchange rates in the usa johansen s maximum likelihood estimation method is utilized to test for cointegration in a system consisting of money the interest rate prices the trade balance and output during 1959 1971 and 1973 1990 with the exchange rate included in the analysis fo the second period the results indicate that the variables are cointegrated suggesting the existence of long run equilibrium relationships between the domestic and external variables vaiance decompositions reveal a much larger role for money in explaining forecast error vaiance of output during the flexible exchange rate period money and the interest rate explain a substantial proportion of the variances of the trade balance and the exchange rate this suggests that effects on the exchange rate and trade balance are an important component of the transmission mechanism of monetary policy jel f41

a reconsideration of sims evidence concerning monetarism abstract in var systems such as those of sims 1980 monetary policy surprises may be more accurately represented by interest rate than money stock innovations especially if the monetary authority uses an interest rate instrument

tests of the relation between money and output in the real business cycle model abstract the paper contains tests of the relation between money and output implied by a real business cycle model the tests control for a variety that may affect economic growth and the growth rates of monetary aggregates using u s data from 1953 1 1984 4 we find almost no evidence that the empirical relations between real growth and measures of monetary policy violate the restrictions imposed by the model changes in a set of real variables explain a majority of the variation in gnp growth however substantial variation in gnp growth remains unexplained by the real factors that we consider

time consistent shapley value allocation of pollution cost reduction we study the problem of allocation over time of total cost incurred by countries in a cooperative game of pollution reduction we compute the characteristic function for all possible coalitions and apply the shapley value to determine a fair distribution of the total cooperative cost among players we design a mechanism for allocation over time of total individual cost so that the initial agreement remains valid for the whole duration of the game

a two level dynamic game of carbon emission trading between russia china and annex b countries this paper proposes a computable dynamic game model of the strategic competition between russia and developing countries dcs mainly represented by china on the international market of emission permits created by the kyoto protocol the model uses a formulation of i a demand function for permits from annex b countries and ii marginal abatement costs mac in russia and china provided by two detailed models gemini e3 is a computable general equilibrium model that provides the data to estimate annex b demand for permits and macs in russia poles is a partial equilibrium model that is used to obtain mac curves for china the competitive scenario is compared with a monopoly situation where only russia is allowed to play strategically the impact of allowing dcs to intervene on the international emission trading market is thus assessed

a political model of monetary policy with application to the real fed funds rate abstract we construct an empirical model of u s monetary policy assuming that the federal reserve is an ordinary federal bureaucracy we use the real federal funds rate as our policy measure and show the existence of significant executive legislative and bureaucratic influence on the real rate of interest from 1961 to 1996 we find that presidential party is an adequate statistical measure of executive influence and that the voting scores of the senate banking committee leadership best represent legislative influence we argue that political changes cause systematic and predictable changes in monetary policy

financial structure and aggregate economic activity an overview this paper surveys literature that explores the possible links between the financial system and aggregate economic behavior the survey is in two parts the first reviews the traditional work and the second discusses new research copyright 1988 by ohio state university press

incentive equilibrium in an overlapping generations environmental game we consider two overlapping generations that want to coordinate their strategies of working consuming and controlling pollution since the cooperative solution is not an equilibrium and hence is not a self enforcing contract a mechanism is required to sustain it we show how incentive strategies and the resulting incentive equilibrium could provide such a mechanism we also derive the conditions that ensure the credibility of these strategies

a cooperative differential game of transboundary industrial pollution between two regions abstract in recent years the transboundary pollution problems in the world are becoming more and more serious the diffusion of pollutants is common and each region which suffers from the pollution wishes that the polluter in neighboring regions would either reduce polluting or compensate for the damages this paper studies a cooperative differential game of transboundary industrial pollution between two asymmetric regions there are two novel features in this paper first there is a stackelberg game between the industrial firms and their local government while the governments can cooperate in pollution reduction second transboundary pollution damages the regions in two ways through a global accumulative pollutant and a regional non accumulative pollutant the paper characterizes the parameter spaces that governments in two neighboring regions can collaborate and gives the feedback nash equilibrium strategies of governments and industrial firms it is found that only when the governments get cooperation the regional impact caused by the neighboring region pollution diffusion could be taken into consideration when the governments develop strategies additionally a payment distribution mechanism is proposed and a subgame consistent cooperative solution is provided with such a payment distribution both governments will receive a higher payoff in a cooperative solution than in a non cooperative solution at any instant of time during the game

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

time consistent side payments in a dynamic game of downstream pollution abstract this note determines a rule to share a surplus gained when two countries or regions agree to coordinate their policies to reduce downstream pollution an intertemporal decomposition scheme for the total side payment is proposed this scheme has the following individual rationality property in each subgame that starts along the cooperative trajectory one country is guaranteed to receive a higher payoff in the cooperative solution than in the disagreement solution for this country another notion of individual rationality obtains this country will at any instant of time during the play of the game receive a higher payoff in the cooperative solution than in the disagreement solution

are house prices in south africa really nonstationary evidence from spsm based panel kss test with a fourier function this study applies the sequential panel selection method spsm to investigate the time series properties of provincial house prices for entire large medium and small middle segments of south africa quarterly time series data were collected from nine provinces in south africa for different house size categories over the period of 1978 q1 to 2012 q4 whereas other panel based unit root tests are joint tests of a unit root for all members of a panel and are incapable of determining the mix of integrated of order zero i 0 series and integrated of order one i 1 series in a panel setting the spsm proposed by chortareas and kapetanios 2009 can clearly identify how many and which series in the panel are stationary processes by classifying a whole panel into a group of stationary and nonstationary series the empirical results from several panel based as well as standard pure time series unit root tests indicate that house prices for the nine provinces studied here are either stationary or nonstati

an efficient mechanism to control correlated externalities redistributive transfers and the coexistence of regional and global pollution permit markets abstract we examine joint tradable permit markets as a self enforcing mechanism to control correlated externality problems by correlated we mean multiple pollutants that are jointly produced by a single source but which simultaneously cause differentiated regional and global externalities e g smog and global warming by self enforcing we mean a mechanism that accounts for the endogeneity that exists between competing jurisdictions in the setting of environmental policy within a federation of regions we find that joint domestic and international permit markets are pareto efficient for a wide class of preferences