time orientation and asset prices we analyze a general equilibrium asset pricing model where a small subset of the consumers investors have a short run urge to save that is their attitude toward consumption in the long run is a standard one f they do place zero weight on consumption far enough out in the future f but their short run effective rates of discount may be negative our model which is an elaboration on the framework proposed by faruk gul and wolfgang pesendorfer does not feature time inconsistencies thus we view consumers as fully rational but subject to specific internal frictions in the form of temptation and self control problems the model nests the mehra prescott model and we use it as a way of interpreting the wealth and asset pricing data some aspects of these data we argue can possibly be better understood using our model than the standard one r 2002 published by elsevier science b v

the economics of a blend mandate for biofuels a biofuel blend mandate may increase or decrease consumer fuel prices with endogenous oil prices depending on relative supply elasticities biofuel tax credits always reduce fuel prices tax credits result in lower fuel prices than under a mandate for the same level of biofuel production if tax credits are implemented alongside mandates then tax credits subsidize fuel consumption instead of biofuels this contradicts energy policy goals by increasing oil dependency co 2 emissions and traffic congestion while providing little benefit to either corn or ethanol producers these social costs will be substantial with tax credits costing taxpayers 28 7 billion annually by 2022 copyright 2008 oxford university press

co2 emissions and income dynamics what does the global evidence tell us this paper analyzes the co evolution of two major determinants of social welfare namely income and carbon emissions in particular by using a distribution dynamics approach based on markov chains we investigate the shape and behavior of the joint distribution of per capita income and carbon dioxide emissions we arrive at several interesting conclusions especially in the context of international negotiations on climate change first evidence does not support theoretical models predicting the existence of a poverty environment trap specifically in the long run two main groups of countries will emerge poor versus polluting countries second the typical development path leads initially to high emission levels and subsequently to high income third the convergence process towards the stationary distribution is very slow finally for carbon emissions whenever it is observed the environmental kuznets curve seems to be only a transitory phenomenon

bridging the gaps credits adoption and inequality we examine here the role of credits on technology adoption and inequality from the perspective of developing countries utilizing a model of exogenous growth with heterogeneous labor and technical progress embodied in physical capital we find that credits can contribute to a faster adoption and to reducing income inequality thus a virtuous cycle of credits a shorter technological gap less inequality and economic growth is feasible to be created when there is full liquidity in the market when credits are constrained the cycle loses virtuosity where the economy can lose up to two points in growth due to credit constraints

recent developments in consumer credit and default literature this survey discusses recent contributions to the quantitative literature on unsecured consumer debt and default and some ongoing challenges for the literature key topics include the sources of the rise in personal bankruptcies the importance of asymmetric information and the effects of developments in information technologies on consumer credit markets delinquency and informal bankruptcy debt collection and restructuring of distressed debt the cyclical behavior of consumer debt and default and the insurance role of household debt implications for welfare analysis and policy design are discussed several theoretical contributions and approaches to modeling the consumer credit markets are also highlighted

skill biased technological change and rising wage inequality some problems and puzzles the recent rise in wage inequality is usually attributed to skill biased technical change sbtc associated with new computer technologies we review the evidence for this hypothesis focusing on the implications of sbtc for overall wage inequality and for changes in wage differentials between groups a key problem for the sbtc hypothesis is that wage inequality stabilized in the 1990s despite continuing advances in computer technology sbtc also fails to explain the evolution of other dimensions of wage inequality including the gender and racial wage gaps and the age gradient in the return to education

household debt consumption and inequality abstract this paper examines the link between household credit shocks consumption and income inequality at the national level empirically we use country specific var models to estimate the dynamic responses of aggregate consumption to household credit shocks we then show in cross country regressions that the consumption response is more sensitive to such shocks in countries with higher levels of inequality even after controlling for financial development theoretically we construct and simulate a dynamic model based on the effect of inequality on the incidence of credit constraints to illustrate potential causal mechanisms

income distribution and current account imbalances we develop a three country stock flow consistent macroeconomic model to study the effects of changes in both personal and functional income distribution on national current account balances each country has a household sector and a non household corporate sector the household sector is divided into income deciles and consumer demand is characterized by upward looking status comparisons following the relative income hypothesis of consumption the strength of consumption emulation depends on country specific institutions the model is calibrated for the united states germany and china simulations suggest that a substantial part of the increase in household debt and the decrease in the current account in the united states since the early 1980s can be explained by the interplay of rising top end household income inequality and institutions on the other hand the weak domestic demand and increasing current account balances of germany and china since the mid 1990s are strongly related to shifts in the functional income distribution at the expense of the household sector

trickle down consumption financial deregulation inequality and indebtedness over the last thirty years the u s experienced a surge in income inequality coupled with increasing levels of borrowing we model an olg economy populated by two types of household that care about how their consumption compares to that of their peers in this framework individual debt to income ratios decrease with income increases in consumption of rich households lead to increases in consumption of the rest and aggregate borrowing increases with income inequality we calibrate our model to evaluate the welfare implications of the process of nancial liberalization that began in the 1980s our analysis suggests that some of the nancial developments that lead to the recent expansion of credit may have decreased rather than increased welfare

income inequality equities household debt and interest rates evidence from a century of data abstract using philippon s 2015 recently published historical household debt data this paper uses diebold and yilmaz s 2012 generalized variance decompositions and generalized impulse responses to understand the relationship between interest rates the stock market household debt and the distribution of income in the u s the results indicate that increases in the stock market and household debt increase income inequality moreover the relationship between the interest rate and income inequality is found to be negative and statistically significant we interpret our results as suggesting that high income earners derive a larger portion of their income from interest rate sensitive assets

cyclical dynamics in idiosyncratic labor market risk is individual labor income more risky in recessions this is a difficult question to answer because existing panel data sets are so short to address this problem we develop a generalized method of moments estimator that conditions on the macroeconomic history that each member of the panel has experienced variation in the cross sectional variance between households with differing macroeconomic histories allows us to incorporate business cycle information dating back to 1930 even though our data do not begin until 1968 we implement this estimator using household level labor earnings data from the panel study of income dynamics we estimate that idiosyncratic risk is i highly persistent with an annual autocorrelation coefficient of 0 95 and ii strongly countercyclical with a conditional standard deviation that increases by 75 percent from 0 12 to 0 21 as the macroeconomy moves from peak to trough

inequality and debt in a model with heterogeneous agents we show that to account for the cross sectional divergence in debt to income ratios in us data a dsge model must assume a tax reallocation across the top and bottom income quantile of the population rather than differential productivity growth and low cost of access to financial intermediation

a comparative analysis of electricity generation costs from renewable fossil fuel and nuclear sources in g20 countries for the period 2015 2030 abstract despite the positive momentum achieved by the renewable energy sector in recent years there are substantial challenges that need the attention of the global community and one of the more pressing issues is dealing with the deleterious external costs of power generation one of the parameters to compare costs of energy across various technologies is levelised cost of energy lcoe but it has been conventional practice to neglect the external costs in estimating the lcoe of power generation technologies furthermore as lcoe is a critical indicator for policy and decision makers there is a need to juxtapose actual costs of renewable and conventional power generation technologies this research paper attempts to internalise some of these external and ghg emission costs across various power generation and storage technologies in all the g20 countries as they account for 85 of global power consumption as future investment decisions are largely influenced by costs estimates in this research prove renewables and storage to be far cheaper than fossil and nuclear sources by 2030 even without considering external costs the myth that renewables are way too expensive has been debunked repeatedly and the cost decline of wind and solar photovoltaic pv technologies have outpaced most industry expectations the results of this research not only substantiate this trend but also statistically display that all the g20 countries have the opportunity to decrease their energy costs significantly between now and 2030 renewable energy technologies offer the lowest lcoe ranges across g20 countries in 2030 utility scale solar pv generally shows the lowest values ranging from 16 to 117 mwhel and onshore wind lcoe range is from 16 to 90 mwhel rooftop solar pv generally offers the next lowest lcoe ranging from 31 to 126 mwhel followed by lcoe of offshore wind power ranging from 64 to 135 mwhel solar pv and battery systems are highly competitive on an lcoe basis at utility scale ranging from 21 to 165 mwhel and at residential scale from 40 to 204 mwhel the g20 as well as other countries can continue to develop their economies in a sustainable manner along with substantial co benefits in adjacent policy fields such as higher national welfare better health of citizens lower respective health costs and improved energy security

carbon pricing revenues could close infrastructure access gaps introducing a price on greenhouse gas emissions would not only contribute to reducing the risk of dangerous anthropogenic climate change but would also generate substantial public revenues some of these revenues could be used to cover investment needs for infrastructure providing access to water sanitation electricity telecommunications and transport in this way emission pricing could promote sustainable socio economic development by safeguarding the stability of natural systems which constitute the material basis of economies while at the same time providing public goods that are essential for human well being for a scenario that is consistent with limiting global warming to below 2 c we find that domestic carbon pricing without redistribution of revenues across countries has substantial potential to close existing access gaps for water sanitation electricity and telecommunication however for the majority of countries carbon pricing revenues would not be sufficient to pave all unpaved roads and for most countries in sub saharan africa they would be insufficient to provide universal access to all types of infrastructure except water if some fraction of the global revenues of carbon pricing is redistributed e g via the green climate fund more ambitious infrastructure access goals could be achieved in developing countries our paper also bears relevance for the design of climate finance mechanisms as it suggests that supporting carbon pricing policies instead of project based finance might not only permit cost efficient emission reductions but also leverage public revenues to promote human development goals

inequality leverage and crises theory and evidence revisited rajan points to rising income inequality as a root cause of the recent financial crisis through high household leverage the rajan hypothesis has ignited debate over the relationship between inequality leverage and crises kumhof ranciere and winant prove the validity of this hypothesis with a theoretical formulation but empirical studies provide mixed evidence using different samples and estimators to clarify this controversy we re examine the issue by using the same data as in the literature and provide additional evidence after taking into account the role of asset bubbles and policy interventions our regression is based on a new tractable theoretical model that is supported by key stylised facts and all our analyses confirm the existence of the inequality leverage crisis nexus

the economic case for low carbon development in rapidly growing developing world cities a case study of palembang indonesia where costs or risks are higher evidence is lacking or supporting institutions are less developed policymakers can struggle to make the case for low carbon investment this is especially the case in developing world cities where decision makers struggle to keep up with the pace and scale of change focusing on palembang in indonesia this paper considers the economic case for proactive investment in low carbon development we find that a rapidly growing industrial city in a developing country can reduce emissions by 24 1 in 2025 relative to business as usual levels with investments of usd405 6 million that would reduce energy expenditure in the city by usd436 8 million emissions from the regional grid could be reduced by 12 2 in 2025 relative to business as usual trends with investments of usd2 9 billion that would generate annual savings of usd175 million these estimates understate the savings from reduced expenditure on energy subsidies and energy infrastructure the compelling economic case for mainstreaming climate mitigation in this developing country city suggests that the constraints on climate action can be political and institutional rather than economic there is therefore a need for more effective energy governance to drive the transition to a low carbon economy

a review of the ecological and socioeconomic effects of biofuel and energy policy recommendations abstract many countries have attached great emphasis on biofuel because it is universally acknowledged renewable and sustainable however there remain doubts regarding biofuel s renewability cleanliness and ecological friendliness in addition its impacts on income employment and food security have been widely discussed therefore the effect of developing biofuel as an important method of resolving the energy crisis and climate change is questioned based on the rocketing concern on the multiple effects of biofuel this paper provides a comprehensive and updated review of the literature on biofuel s ecological effects and socioeconomic effects the literature included in this paper is selected english language papers being published since 2004 we find that existing studies have not arrived at a consensus regarding the ecological or the socioeconomic effects of biofuel there remain uncertainty and doubts toward biofuel s renewability and cleanliness biofuel s impacts on water and biodiversity are also questioned although biofuel is widely regarded to have positive impacts on income and employment many studies prove that biofuel influences food security negatively besides biofuel s economic cost is likely to be the barrier to its promotion because of the uncertainty of biofuel s impacts this study recommends cautious attitude toward biofuel development especially for those countries where biofuel development would be inappropriate and suggests that policy makers engage in demand side management instead of unsustainable supply side management

inequality leverage and crises the paper studies how high leverage and crises can arise as a result of changes in the income distribution empirically the periods 1920 1929 and 1983 2007 both exhibited a large increase in the income share of the rich a large increase in leverage for the remainder and an eventual financial and real crisis the paper presents a theoretical model where these features arise endogenously as a result of a shift in bargaining powers over incomes a financial crisis can reduce leverage if it is very large and not accompanied by a real contraction but restoration of the lower income group s bargaining power is more effective

trends in the transitory variance of earnings in the united states we decompose the rise in cross sectional variance of male annual earnings in the united states from 1969 to 1996 into permanent and transitory components we find that the variance of permanent earnings began rising in the the late 1970s and has continued to rise in the 1980s the variance of transitory earnings also rose in the 1980s but declined in the 1990s there are lags in the earnings process which require a structural model to pinpoint the exact calendar times at which the changes in trends occurred

effects of aspirations and habits on the distribution of wealth we analyze how the introduction of habits and aspirations affects the distribution of wealth when the labor productivity of individuals is subject to idiosyncratic shocks and when bequests arise from a joy of giving motive in the presence of either bequests or aspirations labor income shocks are transmitted intergenerationally and this transmission together with contemporaneous shocks determines the distribution of wealth we show that the introduction of aspirations habits decreases increases the average wealth and increases decreases both its intragenerational variability and the degree of intergenerational mobility therefore a distinction between aspirations and habits is relevant because they involve different implications for the distribution of wealth

is there really a green paradox abstract in the absence of a co2 tax the anticipation of a cheaper renewable backstop increases current emissions of co2 since the date at which renewables are phased in is brought forward and more generally future emissions of co2 will decrease the effect on global warming is unclear green welfare falls if the backstop is relatively expensive and full exhaustion of fossil fuels is optimal but may increase if the backstop is sufficiently cheap relative to the cost of extracting the last drop of fossil fuels plus marginal global warming damages as then it is attractive to leave more fossil fuels unexploited and thus limit co2 emissions we establish these results by analyzing depletion of non renewable fossil fuels followed by a switch to a clean renewable backstop paying attention to timing of the switch and the amount of fossil fuels remaining unexploited we also discuss the potential for limit pricing when the non renewable resource is owned by a monopolist finally we show that if backstops are already used and more backstops become economically viable as the price of fossil fuels rises a lower cost of the backstop will either postpone fossil fuel exhaustion or leave more fossil fuel in situ thus boosting green welfare however if a market economy does not internalize global warming externalities and renewables have not kicked in yet full exhaustion of fossil fuel will occur in finite time and a backstop subsidy always curbs green welfare

did inequality cause the u s financial crisis in his widely discussed book fault lines 2010 raghuram rajan argues that many low and middle income consumers have reduced their saving and increased debt since income inequality started to soar in the united states in the early 1980s this has temporarily kept private consumption and employment high but it also contributed to the creation of a credit bubble this surge in household indebtedness turned out to be unsustainable in the financial crisis starting in 2007 although rajan and others emphasize the role of government in promoting credit to those households with declining relative permanent incomes other strands of the literature have focused more explicitly on the implications of rising inequality for aggregate demand and households demand for credit these differences in emphasis may explain why the literature on the inequality crisis nexus appears somewhat disparate even though the various strands are far from mutually exclusive but rather complement each other we therefore place the rajan hypothesis in the context of competing theories of consumption and survey the empirical literature on the effects of inequality on household behaviour we conclude that the empirical evidence calls for a renaissance of the relative income hypothesis of consumption

income inequality in the united states 1913 1998 this paper presents new homogeneous series on top shares of income and wages from 1913 to 1998 in the united states using individual tax returns data top income and wages shares display a u shaped pattern over the century our series suggest that the large shocks that capital owners experienced during the great depression and world war ii have had a permanent effect on top capital incomes we argue that steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks top wage shares were flat before world war ii dropped precipitously during the war and did not start to recover before the late 1960s but are now higher than before world war ii as a result the working rich have replaced the rentiers at the top of the income distribution

the circular relationship between inequality leverage and financial crises in this paper we put into perspective the recent literature which points to inequality as a possible cause of credit bubbles by reintegrating it into a more general analysis on the two way relationship between inequality and finance we focus more specifically on situations where high inequalities and widespread access to credit coexist and argue that even when institutions maintain more or less equal access to finance there may be a dynamic positive circular relationship between inequality and financial development however even if there is some evidence in the literature of a positive causal impact of inequality on credit this does not preclude other important cofounding factors the conclusions concerning the distributional impact of finance are more ambiguous a survey of the empirical literature highlights several issues that must be tackled first endogeneity reverse causality and coincidental factors are major concerns second the choice of consistent measurements for the key variables both credit and inequality has strong empirical implications and must be grounded on relevant theoretical channels third those circular dynamics have substantial policy implications for emerging economies since an increasing number face a joint increase in inequality and credit

intergenerational income mobility in the united states social scientists and policy analysts have long expressed concern about the extent of intergenerational income mobility in the united states but remarkably little empirical evidence is available the few existing estimates of the intergenerational correlation in income have been biased downward by measurement error unrepresentative samples or both new estimates based on intergenerational data from the panel study of income dynamics imply that the intergenerational correlation in long run income is at least 0 4 indicating dramatically less mobility than suggested by earlier research copyright 1992 by american economic association

accounting for the u s earnings and wealth inequality we show that a theory of earnings and wealth inequality based on the optimal choices of ex ante identical households that face uninsured idiosyncratic shocks to their endowments of efficiency labor units accounts for the u s earnings and wealth inequality almost exactly

relative wage movements and the distribution of consumption we analyze how relative wage movements among birth cohorts and education groups affected the distribution of household consumption and economic welfare our empirical work draws on the best available cross sectional data sets to construct synthetic panel data on u s consumption labor supply and wages during the 1980s we find that low frequency movements in the cohort education structure of pretax hourly wages among men drove large changes in the distribution of household consumption the results constitute a spectacular failure of between group consumption insurance a failure not explained by existing theories of informationally constrained optimal consumption behavior a welfare analysis indicates that the cost of between group consumption variability is larger than the cost of aggregate consumption variability by two orders of magnitude

the challenge of measuring biofuel sustainability a stakeholder driven approach applied to the french case measuring biofuel sustainability requires dealing with a wide variety of complex and conflicting values at stake consequently the biofuel capacity to contribute to one specific value cannot lead to any absolute conclusion about the overall sustainability of biofuel the scope of the sustainability concept may vary depending on individuals preferences the time scale and the geographical region based on the 5 pillars sustainability concept that includes social economic environmental legal and cultural considerations the present study proposes to assess several biofuel sustainability options for france by 2030 through a stakeholder driven approach rather than seeking to reach a consensus our approach allows us to capture the wide diversity of stakeholders perspectives and preferences french stakeholders perceive 22 different sustainability criteria for biofuels with a very low level of agreement between the different segments of professions feedstock producers biofuel producers refining industry fuel distributors car manufacturers end users government and ngos in order to operationalize the sustainability assessment a set of indicators has been identified with stakeholders that allows us to measure the capacity of biofuels to fulfill each of their criteria seventeen biofuel options were assessed with regards to economic social environmental cultural and legal considerations allowing the identification of the strengths and weaknesses of each biofuel

who is credit constrained in the u s economy an important assumption of the life cycle model of consumption is the postulate of perfect capital markets this hypothesis has recently been challenged by substantial empirical evidence hall and mishkin 1982 using the panel study of income dynamics estimate that 20 percent of united states families are liquidity constrained mariger 1986 derives a life cycle model with endogenous liquidity constraints and using a cross section estimates this fraction to be 19 4 percent hubbard and judd 1986 simulate a model with a constraint on net worth which shows that with reasonable assumptions about preferences 19 0 percent of united states consumers are liquidity constrained the emerging consensus points therefore to a fraction of approximately 20 percent of the population behaving in a manner that is inconsistent with the pure life cycle model in addition hayashi 1985 and zeldes 1989 investigate the correlation among consumption wealth and income for various population groups and infer that liquidity constraints are more important for younger families with low levels of wealth and saving the main limitation of these studies is that in their data sets constrained consumers are not observable and have to be identified via indirect evidence thus there is as yet little firm evidence about the characteristics of the consumers who are likely to be credit constrained this paper adopts an approach that differs from previous tests for liquidity constraints because it makes use of data where constrained consumers are observable and explicitly links their existence to credit market imperfections and personal characteristics the data drawn from the 1983 survey of consumer finances scf and described in section ii provide information on individuals whose request for credit has been rejected by financial intermediaries in section iii a model is developed in which consumers and lenders behavior jointly determines the probability that a consumer is rationed in the credit market this probability is then

household debt and income inequality 1963 2003 i construct an economy with heterogeneous agents that mimics the time series behavior of the earnings distribution in the united states from 1963 to 2003 agents face aggregate and idiosyncratic shocks and accumulate real and financial assets i estimate the shocks that drive the model using data on income inequality aggregate income and measures of financial liberalization i show how the model economy can replicate two empirical facts the trend and cyclical behavior of household debt and the diverging patterns in consumption and wealth inequality over time while business cycle fluctuations can account for the short run changes in household debt its prolonged rise of the 1980s and the 1990s can be quantitatively explained only by the concurrent increase in income inequality

inequality credit and financial crises in the three decades leading up to the financial crisis of 2008 09 income inequality rose across much of the developed world this has led to a vigorous debate as to whether widening inequality was somehow to blame for the crisis by driving private sector credit booms despite growing interest empirical evidence on an inequality fragility relationship is limited based on a panel analysis of 18 oecd organisation for economic co operation and development countries for the years 1970 2007 this study provides evidence of a positive relationship between income concentration and private sector indebtedness once other traditional drivers are controlled for if confirmed the implications of this result are as follows i the view that the distribution of income is irrelevant to macroeconomic stability as implicit in mainstream approaches needs further investigation and ii in order to make the financial system more robust policy makers should cast the net wider than monetary policy and regulatory reforms and consider the effects of changes to distributive patterns

house prices borrowing constraints and monetary policy in the business cycle i develop a general equilibrium model with sticky prices credit constraints nominal loans and asset prices changes in asset prices modify agents borrowing capacity through collateral value changes in nominal prices affect real repayments through debt deflation monetary policy shocks move asset and nominal prices in the same direction and are amplified and propagated over time the financial accelerator is not constant across shocks nominal debt stabilises supply shocks making the economy less volatile when the central bank controls the interest rate i discuss the role of equity debt indexation and household and firm leverage in the propagation mechanism finally i find that monetary policy should not target asset prices as a means of reducing output and inflation volatility

leaning against boom bust cycles in credit and housing prices this paper studies the potential gains of monetary and macro prudential policies that lean against house price and credit cycles we rely on a model that features borrowers and savers and allows for over borrowing induced by news shock driven cycles we find that policy that responds to changes in financial variables is socially optimal considering the use of a single policy instrument both types of agents are better off when the interest rate optimally responds to credit growth when we allow for the implementation of both interest rate and ltv policies heterogeneity in the welfare implications is key in determining the optimal use of policy instruments the optimal policy for the borrowers is characterized by a ltv ratio that responds countercyclically to credit growth which most effectively stabilizes credit relative to gdp in contrast the optimal policy for the savers features a constant ltv ratio coupled with an interest rate response to credit growth news shock driven cycles account for most of the gains from a policy response to changes in financial variables

the impact of the rebound effect of the use of first generation biofuels in the eu on greenhouse gas emissions a critical review an important objective of the mandated blending of biofuel in conventional gasoline and diesel in the eu is reducing greenhouse gas ghg emissions an important assumption thereby is that biofuels replace the production and consumption of oil however recent literature challenges this assumption because an increased use of biofuels will lower oil prices and therefore result in increase crude oil consumption this so called rebound effect offsets the expected ghg emission saving effects of using biofuels a review of eight studies mainly on current and future us biofuel policies provides insights in the current state of research into this topic showing a wide range of values of the rebound effect of biofuel use depending among others on the biofuel policy the applied method and the model parameter assumptions generally estimated rebound effects are negative in the country where biofuel use is being promoted i e the use of 1 unit of biofuel reduces oil consumption by less than 1 unit units on energy basis the rebound effects in other countries are always positive biofuel use reduces oil consumption by less than 1 unit so the total fuel consumption is increasing the net global rebound effect is usually positive which means that ghg emissions savings are not achieved as much as usually is assumed or emissions may even increase own estimations with the global magnet computable general equilibrium model indicate a global rebound effect of the 10 biofuel blend mandate in the eu in the year 2020 of 22 30 i e the use of 1 unit of biofuel reduces global oil consumption by 0 78 0 70 units this means that ghg emissions will not be reduced as much as usually is assumed or may even increase these results show that rebound effects can significantly lower the effectiveness of biofuel policies in reducing ghg emissions

recent developments in consumer credit and default literature consumer credit and default literature this survey discusses recent contributions to the quantitative literature on unsecured consumer debt and default and some ongoing challenges for the literature key topics include the sources of the rise in personal bankruptcies the importance of asymmetric information and the effects of developments in information technologies on consumer credit markets delinquency and informal bankruptcy debt collection and restructuring of distressed debt the cyclical behavior of consumer debt and default and the insurance role of household debt implications for welfare analysis and policy design are discussed several theoretical contributions and approaches to modeling the consumer credit markets are also highlighted

income and wealth heterogeneity in the macroeconomy how do movements in the distribution of income and wealth affect the macroeconomy we analyze this question using a calibrated version of the stochastic growth model with partially uninsurable idiosyncratic risk and movements in aggregate productivity our main finding is that in the stationary stochastic equilibrium the behavior of the macroeconomic aggregates can be almost perfectly described using only the mean of the wealth distribution this result is robust to substantial changes in both parameter values and model specification our benchmark model whose only difference from the representative agent framework is the existence of uninsurable idiosyncratic risk displays far less cross sectional dispersion and skewness in wealth than u s data however an extension that relies on a small amount of heterogeneity in thrift does succeed in replicating the key features of the wealth data furthermore this extension features aggregate time series that depart significantly from permanent income behavior

heteroscedasticity of deviations in market bubble moments how the goods and bads lead to the ugly abstractwe conjecture that market bubbles may be the results of the interplay of goods and bads toxic products which develop through three interlocking moments herding swarming and stampeding with deviations marked by heteroscedasticity we use our stylized model of financial predation the consolidated model of financial predation and data we have accumulated through in the field eight year research and the study of 30 years of u s market history in order to explore the foundations of market crises we find that blind trust or the positivity bias and of the fear to miss out on an opportunity to enter exit a market impacts the investors decisions to invest or retract we show how markets are driven towards a make or break predatory dynamic that creates winners and losers due in part to weak regulations and identify a constant k that permeates market behaviours

implementing a biofuel economy in the eu lessons from the sustoil project and future perspectives for next generation biofuels abstract the aim of this article is to illustrate main economic and environmental ghg emission reductions effects of implementing a biofuel economy and to discuss the potential of establishing advanced biofuels in the european union the study is based on the recently completed eu fp7 sustoil research project the main question addressed is the eu policy objective of achieving 20 ghg emission reductions using 20 of renewables by the year 2020 to contribute to the achievement of this policy we run and execute through a computable general equilibrium model a simulation experiment of implementing a bio based economy using biorefineries in the production process main results suggest that a biorefineries working from oil seeds and their by products will lead to a large increase in the amount of this crop grown particularly in eastern europe b this increase will be accompanied by a decrease in sectoral gdp in several other areas c oil and electricity prices will generally fall in across the eu with a particularly notable trend in eastern europe and d a reduction in carbon emissions is achieved but this will be insufficient to meet the eu 20 target this latter result would suggest to speed the technological process towards the use of next generation biofuels in the eu furthermore these results advocate for a leading role expected to play by eastern eu countries over the next years the expected increase in the cultivation of energy crops could conflict with the availability of land for food crops the potential for establishing next generation biofuels in the eu with adequate support policies would be essential for guaranteeing energy and food security in the long run

oil production responses to price changes an empirical application of the competitive model to opec and non opec countries abstract falling oil prices over the last decade accompanied by over production by some opec members and the growth of non opec supply warrant further empirical investigation of the competitive model to ascertain production behavior a supply function based on a modification of griffin s model is estimated using data from 1973 1997 the sample period unlike griffin s however includes phases of price increase 1970s and price decrease 1980s 1990s thus providing a better framework for examining production behavior using the competitive model the opec results do not support the competitive hypothesis instead a negative and significant price elasticity of supply is obtained this result offers partial support for the target revenue theory for most of the non opec members the estimates support the competitive model opec s loss of market share and the drop in the share of oil based energy should signal adjustments in price and quantity based on a competitive world market for crude oil

comparative analysis of attributional corporate greenhouse gas accounting consequential life cycle assessment and project policy level accounting a bioenergy case study abstract in order to avoid dangerous climate change greenhouse gas accounting methods are needed to inform decisions on mitigation action this paper explores the differences between attributional and consequential greenhouse gas accounting methods focusing on attributional corporate greenhouse gas inventories consequential life cycle assessment and project policy greenhouse gas accounting the case study of a 6 mw bioheat plant is used to explore the different results and information these methods provide the findings show that attributional corporate inventories may not capture the full consequences of the decision in question even with full scope 3 reporting and are therefore not sufficient for mitigation planning although consequential life cycle assessment and the project policy level method both aim to show the full consequences of the decision the project policy level method has a number of advantages including the provision of a transparent baseline scenario and the distribution of emissions removals over time the temporal distribution of emissions removals is important as the carbon debt of the bioheat plant can exceed 100 years making the intervention incompatible with 2050 reduction targets an additional contribution from the study is the use of normative decision theory to further develop the idea that the uncertainty associated with bioenergy outcomes is itself a highly decision relevant finding

effects of us biofuel policies on us and world petroleum product markets with consequences for greenhouse gas emissions abstract us biofuel policy includes greenhouse gas reduction targets regulators do not address the potential that biofuel policy can have indirect impacts on greenhouse gases through its impacts on petroleum product markets and scientific research only partially addresses this question we use economic models of us biofuel and agricultural markets and us and world petroleum and petroleum product markets to show that discontinuing biofuel tax credits and ethanol tariff lower biofuel use could lead to increased us petroleum product use and a reduction in petroleum product use in other parts of the world the net effect is lower greenhouse gas emissions under certain assumptions we show that biofuel use mandate elimination can have positive or negative impacts on greenhouse gas emissions the magnitude and the direction of effects depend on how us biofuel trade affects biofuel in other countries with different emissions context that determines how important use mandates are in the first place who pays mandate costs and the price responsiveness of global petroleum supplies and uses however our results show that counter intuitive effects are possible and discourage broad conclusions about the greenhouse gas impacts of removing these elements of us biofuel policy

assessing the role of energy in development and climate policies conceptual approach and key indicators summary the paper discusses a number of key conceptual issues related to the role of energy in development and its potential synergies and tradeoffs with climate change the relationship between economic development and energy over time is discussed and illustrated by data from china india and south africa and some other countries it concludes that energy plays an important role as a productivity enhancing factor in economic development and in human well being several policy goals related to sustainable development energy and climate can be integrated however meeting all these policy goals requires a special effort and has significant cost implications

endogenous borrowing constraints with incomplete markets this article develops ways to endogenize the borrowing constraints used in a class of computable incomplete markets models we allow the constraints to depend on an investor s characteristics such as time preference risk aversion and income streams the proposed constraint can be interpreted as a borrowing limit within which an investor has no incentive to default using a numerical algorithm we find that for an array of structural parameters the endogenous borrowing constraints can be much less stringent than the ad hoc borrowing constraints adopted by the existing studies

are we consuming too much this paper articulates and applies frameworks for examining whether consumption is excessive we consider two criteria for the possible excessiveness or insufficiency of current consumption one is an intertemporal utility maximization criterion actual current consumption is deemed excessive if it is higher than the level of current consumption on the consumption path that maximizes the present discounted value of utility the other is a sustainability criterion which requires that current consumption be consistent with non declining living standards over time we extend previous theoretical approaches by offering a formula for the sustainability criterion that accounts for population growth and technological change in applying this formula we find that some poor regions of the world are failing to meet the sustainability criterion in these regions genuine wealth per capita is falling as investments in human and manufactured capital are not sufficient to offset the depletion of natural capital

a review of optimal energy policy instruments on industrial energy efficiency programs rebound effects and government policies abstract industrial energy efficiency programs ieeps are defined as one of the most popular government policies that aim to reduce energy consumption in industrial energy intensive sectors in this paper we review and classify the most important academic studies that have addressed the environmental and economic aspects of ieeps using a systematic review the classification of energy policy instruments has been developed based on an analytical approach we discuss also the outputs benefits and barriers of ieeps besides a comprehensive argument about the restrictive policies on the rebound effects made after the implementation of these programs the results disclose that china usa and sweden are the most addressed countries on ieeps and their applications in this regard incentive energy policies e g voluntary agreements and subsidies have been applied more than others in the last decade furthermore most of the reviewed studies emphasize energy price reform as an effective practical policy while a few analytical methods can be seen to help policy makers determine the optimal levels of decision variables finally according to the state of the art analysis the authors provide some novel recommendations to improve the performance of ieeps using some restrictive policies on the negative impacts of rebound effects

discount rate heterogeneity and social security reform abstract as many countries consider the privatization of existing pay as you go social security systems the option to make participation in the new system voluntary may appeal to policy makers who need to obtain the political support of their workers a critical issue in evaluating such a reform and its economic consequences is the unobserved heterogeneity in households preferences for consumption this paper estimates the distribution of rates of time preference from the wealth data in the survey of consumer finances 1992 and a flexible life cycle model of consumption under income uncertainty the estimated distribution is then applied to a variety of reform proposals that incorporate a voluntary choice of how much to contribute to a dedicated retirement account and a rebate of the existing payroll tax that increases with the magnitude of the contribution the main finding is that an appropriate menu of reform plans can induce the voluntary buy out of 84 of existing payroll taxes at an immediate cost to national saving of less than 0 25 percentage point

modelling approaches for consequential life cycle assessment c lca of bioenergy critical review and proposed framework for biogas production abstract conventional life cycle inventories lcis are static models not considering any mechanism of revenue maximisation and price equilibrium under external constraints an additional demand of a given commodity irrespective of the amount can always be supplied by the average supplier under fully elastic market assumption this constitutes a recognised limitation for the application of lca to the assessment of the environmental consequences of changes applied to complex systems like agro systems in the so called consequential lci c lci the relationships between the activities and processes of a life cycle are no longer seen as essentially technical connections based on average data instead the determining socio economic mechanisms are considered via market information and eventually economic models partial or computable general equilibrium the practical implementation of c lci is however still obscure to many practitioners and the complementarities and overlaps between the different c lci modelling approaches have not been completely clarified so far this paper aims at filling this gap the first part of the paper provides a survey of a number of applications using different equilibrium models afterwards we critically review the main variables and parameters supporting the definition and implementation of the c lci modelling approaches in the last part of the paper we propose a methodology to integrate economic modelling and lca in order to perform a c lca of biogas production specifically addressing the indirect land use change iluc issue finally we describe the application of this methodology to a case study dealing with the production of biogas in luxembourg

the impacts of the german biofuel quota on sectoral domestic production and imports of the german economy abstract this study analyses the impacts of the german biofuel quota on sectoral domestic production and imports of the german economy the effects are calculated as net effects i e accounting for the direct and indirect effects of both the additional demand for biofuels and the reduced demand for fossil fuels the analysis uses an input output model and information on quantities production processes import quotas etc to calculate the impacts for the agricultural sector which is obviously of high relevance for biofuel production two cases are differentiated first and in line with classical input output assumptions we propose that agricultural production is not constrained by the availability of agricultural land thus biofuel production is basically added to other agricultural outputs in the second case agricultural land is considered a limiting factor for production as a consequence biofuel production substitutes other agricultural outputs the results indicate a clear increase of domestic production and a decline of net imports in the first case in the second case gains in domestic production are smaller and net imports are in contrast to the first case increasing

the risk free rate in heterogeneous agent incomplete insurance economies abstract why has the average real risk free interest rate been less than one percent the question is motivated by the failure of a class of calibrated representative agent economies to explain the average return to equity and risk free debt i construct an economy where agents experience uninsurable idiosyncratic endowment shocks and smooth consumption by holding a risk free asset i calibrate the economy and characterize equilibria computationally with a borrowing constraint of one year s income the resulting risk free rate is more than one percent below the rate in the comparable representative agent economy

inequality saving and global imbalances a new theory with evidence from oecd and asian countries global imbalances are attributable to savings deficiency in some economies and savings glut in others the recent global crisis has triggered widespread social conflict over income inequality the inequality saving link has again become a pressing issue needing serious attention we present a new theory to explain why the link between inequality and saving is negative in oecd countries but positive in emerging asia we also offer an econometric analysis of differences in inequality saving links between those economies we find that aggressive financial services lead to a negative link by creating income illusion for overconsumption but imperfect financial markets contribute to a positive link by interacting with industrial policies as part of growth strategies while ignoring liquidity constraints on consumption

income inequality consumption credit and credit risk in a data driven agent based model abstract the issue of income inequality occupies a prominent position in the research agenda of academic and policy circles alike especially after the crisis of 2008 due to its potential causal link with the development of credit bubbles and therefore the emergence of financial crises this paper examines the long run effect of income inequality on consumption consumer credit and non performing loans through the means of a data driven agent based model the data driven nature of the model enhances its ability to match historical series and thus makes it suitable for policy simulations tailored for specific economies the analysis indicates that higher income inequality has a detrimental impact on consumption and is associated with lower volumes of consumer credit however the ratio of non performing loans as a share of total loans seems to be independent of income inequality

the personal discount rate evidence from military downsizing programs the military drawdown program of the early 1990s provides an opportunity to obtain estimates of personal discount rates based on large numbers of people making real choices involving large sums the program offered over 65 000 separatees the choice between an annuity and a lump sum payment despite break even discount rates exceeding 17 percent most of the separatees selected the lump sum saving taxpayers 1 7 billion in separation costs estimates of discount rates range from 0 to over 30 percent and vary with education age race sex number of dependents ability test score and the size of payment

the risk of financial crises is there a role for income inequality abstract could macroeconomic factors such as income inequality be the real root cause of financial crises we explore a broad variety of financial and macroeconomic variables and employ a general to specific model selection process to find the most reliable predictors of financial crises in developed countries over a period of more than 100 years our in sample results indicate that income inequality has predictive power beyond loan growth and several other financial variables out of sample forecasts for individual predictors show that their predictive power tends to vary considerably over time but income inequality has predictive power in each forecasting period

enabling mini grid development in rural india summary rural electrification rates in india lag behind government goals in part due to the inability of distribution companies discoms to fund central grid expansion in the absence of central grid electrification mini grids offer significant potential for an immediate pathway toward rural electrification and the attendant gains in economic growth and productivity yet private investment in mini grids has been virtually absent in india using a comprehensive life cycle cost analysis we find that mini grids based on solar pv power and storage are more economical than incumbent energy services available to households without central grid connection under current law a prospective entrepreneur in india does not require a license or certification in order to build a mini grid and subsequently provide electricity services in the area covered by said installation conversely there is no legal or regulatory framework that specifies what is to happen if the central grid were to be extended to an area that is already covered by a mini grid we report detailed survey evidence from interviews with entrepreneurs analysts and policymakers whose assessments converge on the same point mini grid investments would be jeopardized in the event of central grid extension precisely because discoms would by regulatory order provide electricity services at highly subsidized rates well below their full economic cost our fieldwork suggests that the threat of central grid extension is a gateway barrier preventing mini grid development in india the issues associated with the gateway barrier have common elements with the so called holdup problem as identified in the economics of organizations there have been two recent federal policy guidelines and one actual state level policy addressing the regulatory status of mini grids we examine the effectiveness of these policies proposals in terms of an entrepreneur s willingness to develop mini grids in the future

climate consequences of low carbon fuels the united states renewable fuel standard abstract a common strategy for reducing greenhouse gas ghg emissions from energy use is to increase the supply of low carbon alternatives however increasing supply tends to lower energy prices which encourages additional fuel consumption this fuel market rebound effect can undermine climate change mitigation strategies even to the point where efforts to reduce ghg emissions by increasing the supply of low carbon fuels may actually result in increased ghg emissions here we explore how policies that encourage the production of low carbon fuels may result in increased ghg emissions because the resulting increase in energy use overwhelms the benefits of reduced carbon intensity we describe how climate change mitigation strategies should follow a simple rule a low carbon fuel with a carbon intensity of x that of a fossil fuel must displace at least x of that fossil fuel to reduce overall ghg emissions we apply this rule to the united states renewable fuel standard rfs2 we show that absent consideration of the fuel market rebound effect rfs2 appears to reduce ghg emissions but once the fuel market rebound effect is factored in rfs2 actually increases ghg emissions when all fuel ghg intensity targets are met