no free ride to zero emissions simulating a region s need to implement its own zero emissions vehicle zev mandate to achieve 2050 ghg targets abstract the adoption of zero emission vehicles zevs is limited by a variety of barriers some are region specific e g availability of charging infrastructure while others are global in nature e g battery prices where improvements spill over between regions this study explores regional spillover effects and ghg impacts of strong zev focused policy specifically the zev mandate in place in ten u s states zev states which requires automakers to sell a minimum amount of zevs each year we use a dynamic technology adoption model to simulate passenger vehicle sectors in north america focusing on the case of one small region british columbia covering 0 7 of the market as potentially free riding off of zev states policy covering 23 of the market results indicate that free ridership is not effective even with the zev mandate driving very high sales in zev states british columbia cannot achieve significant zev adoption without also implementing its own zev mandate further for british columbia to meet its 2050 ghg targets it may need a zev mandate in addition to complementary climate policies pushing zevs to account for 40 93 of new vehicle sales in 2050 in short regions seeking low carbon transportation likely need to implement their own stringent policies

testing the unbiasedness hypothesis in the forward foreign exchange market a specification analysis abstract this paper evaluates two popular regression methods of testing the unbiasedness hypothesis in the forward foreign exchange market for the 30 day canada united states forward foreign exchange market the evidence overwhelmingly indicates that it is inappropriate to treat the structure of the systematic and stochastic components of the test relations as constant over time hence conclusions inferred from parameter significance testing based upon full sample estimation can be very misleading accordingly we argue for a specification analysis of the test relations and more explicit modelling of market fundamentals

on the accuracy of the mean variance approximation for futures markets abstract simple approximate fomulae for the volume and gains from futures trading are derived using the mean variance model the errors involved are exactly quantified and shown to be negligible for the futures price and welfare gains though potentially larger for volumes

spot and futures prices of nonstorable commodities under rational expectations the paper examines the effect of the presence of a commodity futures market upon the price formation process in a stochastic rational expectations framework an optimizing model with price uncertainty and risk aversion is used in order to solve equilibrium distributions of prices for nonstorable commodities the existence of futures trading does not affect the degree of short term spot price fluctuations however if the commodity market disturbance that originates from stochastic consumption demand is serially dependent then the long term price variation is smaller with a futures market than without it futures prices fluctuate less variably over time than spot and expected prices finally there exists a futures intervention rule whereby the authority can stabilize spot prices and raise the overall welfare of society

does public insurance crowd out private insurance the cost of expanding public sector health programs depends critically on the extent to which public eligibility will cover just the uninsured or will crowd out existing private insurance coverage we estimate the extent of crowd out arising from the expansions of medicaid to pregnant women and children over the 1987 1992 period we estimate that approximately 50 percent of the increase in medicaid coverage was associated with a reduction in private insurance coverage this occurred largely because employees took up employer based insurance less frequently there is also some evidence that employers contributed less for insurance and that workers dropped coverage of dependents

methods for selecting the optimal dynamic hedge when production is stochastic a dynamic hedging problem with stochastic production is solved the optimal feedback rules recognize that future hedges will be chosen optimally based on the most current information the resulting distribution of revenue is analyzed numerically this analysis enables the hedger to select his appropriate level of risk aversion

optimal hedging and equilibrium in a dynamic futures market abstract this paper considers an agent maximizing the expected utility of the sum of the terminal value of a fixed portfolio of spot market assets and the terminal value of a margin account on a futures trading position closed form solutions for the optimal hedging strategy are provided in several special cases

transfers in cash and in kind theory meets the data we review theoretical explanations for in kind transfers in light of the limited empirical evidence after reviewing the traditional paternalistic arguments we consider explanations based on imperfect information and self targeting we then discuss the large literature on in kind programs as a way of improving the efficiency of the tax system and a range of other possible explanations including the samaritan s dilemma pecuniary effects credit constraints asymmetric information amongst agents and political economy considerations our reading of the evidence suggests that paternalism and interdependent preferences are leading overall explanations for the existence of in kind transfer programs but that some of the other arguments may apply to specific cases political economy considerations must also be part of the story

welfare analysis meets causal inference we describe a framework for empirical welfare analysis that uses the causal estimates of a policy s impact on net government spending this framework provides guidance for which causal effects are and are not needed for empirical welfare analysis of public policies the key ingredient is the construction of each policy s marginal value of public funds mvpf the mvpf is the ratio of beneficiaries willingness to pay for the policy to the net cost to the government we discuss how the mvpf relates to traditional welfare analysis tools such as the marginal excess burden and marginal cost of public funds we show how the mvpf can be used in practice by applying it to several canonical empirical applications from public finance labor development trade and industrial organization

a multi model study of energy supply investments in latin america under climate control policy in this paper we investigate energy supply investment requirements in latin america until 2050 through a multi model approach as jointly applied in the climacap lamp research project we compare a business as usual scenario needed to satisfy anticipated future energy demand with a set of scenarios that aim to significantly reduce co2 emissions in the region we find that more than a doubling of annual investments in absolute terms occurs in the business as usual scenario between 2010 and 2050 while investments may treble over the same time horizon when climate policies are introduced investment costs as share of gdp however decline over time in the business as usual scenario as well as the climate policy scenarios as a result of the fast economic growth of the region in the business as usual scenario cumulative investments of 1 4 trillion us are anticipated between 2010 and 2050 in electricity supply these investments increase when additional climate policies are introduced under a carbon tax of 50 tco2e in 2020 growing with a rate of 4 yr an additional 0 6 trillion us 45 of cumulative investment is needed climate control measures lead to increased investment in low carbon electricity technologies primarily based on wind and solar resources as well as ccs applied to fossil fuels and biomass our analysis suggests that in comparison to the business as usual case an average additional 21 billion us yr of electricity supply investment is required in latin america until 2050 under a climate policy aiming at 2 c climate stabilisation conversely there is a disinvestment in fossil fuel extraction and transformation for oil production a growth to 130 billion us annual investment by 2050 is anticipated in a business as usual scenario ambitious climate policy reduces this to 28 billion us mobilising the necessary additional investment capital in particular for low carbon energy technologies will be a challenge suitable frameworks and enabling environments for a scale up of public and private investment will be critical to help reach the required low carbon energy deployment levels

emissions reduction scenarios in the argentinean energy sector in this paper the leap tiam ecn and gcam models were applied to evaluate the impact of a variety of climate change control policies including carbon pricing and emission constraints relative to a base year on primary energy consumption final energy consumption electricity sector development and co2 emission savings of the energy sector in argentina over the 2010 2050 period the leap model results indicate that if argentina fully implements the most feasible mitigation measures currently under consideration by official bodies and key academic institutions on energy supply and demand such as the probiomass program a cumulative incremental economic cost of 22 8 billion us 2005 to 2050 is expected resulting in a 16 reduction in ghg emissions compared to a business as usual scenario these measures also bring economic co benefits such as a reduction of energy imports improving the balance of trade a low co2 price scenario in leap results in the replacement of coal by nuclear and wind energy in electricity expansion a high co2 price leverages additional investments in hydropower by way of cross model comparison with the tiam ecn and gcam global integrated assessment models significant variation in projected emissions reductions in the carbon price scenarios was observed which illustrates the inherent uncertainties associated with such long term projections these models predict approximately 37 and 94 reductions under the high co2 price scenario respectively by comparison the leap model using an approach based on the assessment of a limited set of mitigation options predicts an 11 3 reduction the main reasons for this difference include varying assumptions about technology cost and availability co2 storage capacity and the ability to import bioenergy an emission cap scenario 2050 emissions 20 lower than 2010 emissions is feasible by including such measures as ccs and bio ccs but at a significant cost in terms of technology pathways the models agree that fossil fuels in particular natural gas will remain an important part of the electricity mix in the core baseline scenario according to the models there is agreement that the introduction of a carbon price will lead to a decline in absolute and relative shares of aggregate fossil fuel generation however predictions vary as to the extent to which coal nuclear and renewable energy play a role

bankruptcy as implicit health insurance this paper examines the implicit health insurance that households receive from the ability to declare bankruptcy exploiting multiple sources of variation in asset exemption law i show that uninsured households with a greater financial cost of bankruptcy make higher out of pocket medical payments conditional on the amount of care received in turn i find that households with greater wealth at risk are more likely to hold health insurance the implicit insurance from bankruptcy distorts the insurance coverage decision using a microsimulation model i calculate that the optimal pigovian penalties are three quarters as large as the average penalties under the affordable care act

achieving co2 reductions in colombia effects of carbon taxes and abatement targets in this paper we investigate co2 emission scenarios for colombia and the effects of implementing carbon taxes and abatement targets on the energy system by comparing baseline and policy scenario results from two integrated assessment partial equilibrium models tiam ecn and gcam and two general equilibrium models phoenix and meg4c we provide an indication of future developments and dynamics in the colombian energy system currently the carbon intensity of the energy system in colombia is low compared to other countries in latin america however this trend may change given the projected rapid growth of the economy and the potential increase in the use of carbon based technologies climate policy in colombia is under development and has yet to consider economic instruments such as taxes and abatement targets this paper shows how taxes or abatement targets can achieve significant co2 reductions in colombia though abatement may be achieved through different pathways taxes and targets promote the entry of cleaner energy sources into the market and reduce final energy demand through energy efficiency improvements and other demand side responses the electric power sector plays an important role in achieving co2 emission reductions in colombia through the increase of hydropower the introduction of wind technologies and the deployment of biomass coal and natural gas with co2 capture and storage ccs uncertainty over the prevailing mitigation pathway reinforces the importance of climate policy to guide sectors toward low carbon technologies this paper also assesses the economy wide implications of mitigation policies such as potential losses in gdp and consumption an assessment of the legal institutional social and environmental barriers to economy wide mitigation policies is critical yet beyond the scope of this paper

risk aversion liquidity and endogenous short horizons we analyze a competitive model in which different information signals get reflected in value at different points in time if investors are sufficiently risk averse we obtain an equilibrium in which all investors focus exclusively on the short term in addition we show that increasing the variance of informationless trading increases market depth but causes a greater proportion of investors to focus on the short term signal which decreases the informativeness of prices about the long run finally we also explore parameter spaces under which long term informed agents wish to voluntarily disclose their information article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

technology learning for fuel cells an assessment of past and potential cost reductions abstract fuel cells have gained considerable interest as a means to efficiently convert the energy stored in gases like hydrogen and methane into electricity further developing fuel cells in order to reach cost safety and reliability levels at which their widespread use becomes feasible is an essential prerequisite for the potential establishment of a hydrogen economy a major factor currently obviating the extensive use of fuel cells is their relatively high costs at present we estimate these at about 1100 2005 kw for an 80 kw fuel cell system but notice that specific costs vary markedly with fuel cell system power capacity we analyze past fuel cell cost reductions for both individual manufacturers and the global market we determine learning curves with fairly high uncertainty ranges for three different types of fuel cell technology afc pafc and pemfc each manufactured by a different producer for pemfc technology we also calculate a global learning curve characterised by a learning rate of 21 with an error margin of 4 given their respective uncertainties this global learning rate value is in agreement with those we find for different manufacturers in contrast to some other new energy technologies r d still plays a major role in today s fuel cell improvement process and hence probably explains a substantial part of our observed cost reductions the remaining share of these cost reductions derives from learning by doing proper since learning by doing usually involves a learning rate of typically 20 the residual value for pure learning we find for fuel cells is relatively low in an ideal scenario for fuel cell technology we estimate a bottom line for specific 80 kw system manufacturing costs of 95 2005 kw although learning curves observed in the past constitute no guarantee for sustained cost reductions in the future when we assume global total learning at the pace calculated here as the only cost reduction mechanism this ultimate cost figure is reached after a large scale deployment about 10 times doubled with respect to the cumulative installed fuel cell capacity to date

the impact of medicaid on labor market activity and program participation evidence from the oregon health insurance experiment united states dept of health and human services assistant secretary for planning and evaluation

adverse selection and security design this paper studies the problem of optimal security design by a privately informed entrepreneur in the context of a simple parametric model it is shown that the entrepreneur does not find it profitable to float an asset that affords her an informational advantage the reason is that with rational uninformed outside investors the entrepreneur faces adverse selection in the security market which prevents her from exploiting her position as an insider this is true whether or not she has market power in trading the asset consider a risk averse entrepreneur who is contemplating what security to issue the entrepreneur anticipates that during subsequent trading in the secondary market she will have private information on the payoff of her investment as well as on other risks in the economy the design of the asset is therefore influenced not only by a desire to share risk but also by informational considerations involving the potential for insider trading profits this paper studies the problem of optimal security design in the context of a simple parametric model with gaussian risks and cara utility trading in the secondary market is modelled via the static reduced form concept of rational expectations equilibrium in which uninformed outside investors use market prices to try to infer the private information of the entrepreneur or insider as she will sometimes be called it is shown that the entrepreneur does not find it profitable to float an asset that affords her an informational advantage an optimal asset entails a fully revealing rational expectations equilibrium and is perfectly correlated with the issuer s endowment risk the reason is that with rational outside investors the entrepreneur faces adverse selection in the security market which prevents her from exploiting her position as an insider she is better off foregoing her informational advantage and concentrating on her hedging motive alone in the particular setting described in the paper equity2 is an optimal asset since the entrepreneur has no privileged information regarding its payoff and it allows efficient risk sharing the issue of security design when prices have an informational role to play is just beginning to be researched closely related to this paper is the work of demange and laroque 1995 who use a competitive rational expectations model with noise traders to analyse the problem posed above except for some special cases however they are able to get only numerical results in comparison the present paper obtains partially revealing equilibria in a model in which all agents are rational furthermore demange and laroque

rethinking macroeconomics what failed and how to repair it the standard macroeconomic models have failed by all the most important tests of scientific theory they did not predict that the financial crisis would happen and when it did they understated its effects monetary authorities allowed bubbles to grow and focused on keeping inflation low partly because the standard models suggested that low inflation was necessary and almost sufficient for efficiency and growth after the crisis broke policymakers relying on the models floundered notwithstanding the diversity of macroeconomics the sum of these failures points to the need for a fundamental re examination of the models and a reassertion of the lessons of modern general equilibrium theory that were seemingly forgotten in the years leading up to the crisis this paper first describes the failures of the standard models in broad terms and then develops the economics of deep downturns and shows that such downturns are endogenous further the paper argues that there have been systemic changes to the structure of the economy that made the economy more vulnerable to crisis contrary to what the standard models argued finally the paper contrasts the policy implications of our framework with those of the standard models

a structural model of multiple welfare program participation and labor supply work on estimating the labor supply effects of high marginal tax rates in welfare programs has been hindered by the difficulty of estimating the effects of participation in multiple welfare programs simultaneously the authors solve this problem by applying methods of simulation estimation to a model of labor supply and multiple program participation the results show asymmetric wage and tax rate effects with fairly large wage elasticities of labor supply but very inelastic responses to moderate changes in cumulative marginal tax rates implying that high welfare tax rates do not necessarily induce major reductions in work effort copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

climate change policy in brazil and mexico results from the mit eppa model based on an in depth analysis of results from the mit economic projection and policy analysis eppa model of climate policies for brazil and mexico we demonstrate that commitments by mexico and brazil for 2020 made during the un climate meetings in copenhagen and cancun are reachable but they come at different costs for each country we find that brazil s commitments will be met through reduced deforestation and at no additional cost however mexico s pledges will cost 4 billion us dollars in terms of reduced gdp in 2020 we explore short and long term implications of several policy scenarios after 2020 considering current policy debates in both countries the comparative analysis of these two economies underscores the need for climate policy designed for the specific characteristics of each country accounting for variables such as natural resources and current economic structure our results also suggest that both brazil and mexico may face other environmental and economic impacts from stringent global climate policies affecting variables such as the value of energy resources in international trade

the value of medicaid interpreting results from the oregon health insurance experiment we develop frameworks for welfare analysis of medicaid and apply them to the oregon health insurance experiment across different approaches we estimate low income uninsured adults willingness to

an analysis of the stabilizing and welfare effects of intervention in spot and futures markets this paper analyzes the effects of three alternative rules on the long run distributions of both the spot and futures prices ina single commodity market in which the key behavioral relationships are derived from the optimizing behavior of producers and speculators the rules considered include i leaning against the wind in the spot market ii utility maximizing speculative behavior by the stabilization authority in the futures market iii leaning against the wind in the futures market since the underlying model is sufficiently complex to preclude analytical solutions the analysis makes extensive use of simulation methods as a general proposition we find that intervention in the futures market is not as effective in stabilizing either the spot price of the futures price as is intervention in the spot market indeed rule iii while stabilizing the futures price may actually destabilize the spot price furthermore the analogous type of rule undertaken in the spot market will always stabilize the futures price to a greater degree than it does the spot price the welfare implications of these rules are also discussed our analysis shows how these can generate rather different distributions of welfare gains including the overall benefits this abstract was borrowed from another version of this item

estimating marginal returns to medical care evidence from at risk newborns a key policy question is whether the benefits of additional medical expenditures exceed their costs we propose a new approach for estimating marginal returns to medical spending based on variation in medical inputs generated by diagnostic thresholds specifically we combine regression discontinuity estimates that compare health outcomes and medical treatment provision for newborns on either side of the very low birth weight threshold at 1500 grams first using data on the census of us births in available years from 1983 2002 we find that newborns with birth weights just below 1500 grams have lower one year mortality rates than do newborns with birth weights just above this cutoff even though mortality risk tends to decrease with birth weight one year mortality falls by approximately one percentage point as birth weight crosses 1500 grams from above which is large relative to mean infant mortality of 5 5 just above 1500 grams second using hospital discharge records for births in five states in available years from 1991 2006 we find that newborns with birth weights just below 1500 grams have discontinuously higher charges and frequencies of specific medical inputs hospital costs increase by approximately 4 000 as birth weight crosses 1500 grams from above relative to mean hospital costs of 40 000 just above 1500 grams under an assumption that observed medical spending fully captures the impact of the very low birth weight designation on mortality our estimates suggest that the cost of saving a statistical life of a newborn with birth weight near 1500 grams is on the order of 550 000 in 2006 dollars

informational frictions and commodity markets this paper develops a model with a tractable log linear equilibrium to analyze the effects of informational frictions in commodity markets by aggregating dispersed information about the strength of the global economy among goods producers whose production has complementarity commodity prices serve as price signals to guide producers production decisions and commodity demand our model highlights important feedback effects of informational noise originating from supply shocks and futures market trading on commodity demand and spot prices our analysis illustrates the weakness common in empirical studies on commodity markets of assuming that different types of shocks are publicly observable to market participants

can position limits restrain rogue trading this paper studies the imposition of position limits on commodity futures from the perspective of curbing excessive speculation and thus manipulation we present a simple general equilibrium model in a static rational expectations framework and agent heterogeneity to illustrate that excessive speculation serves to enrich other agents at the expense of the speculator position limits on the contrary are not only superfluous but also counter productive as they exacerbate market power and lead to a deterioration in efficiency position limits not only reduce social welfare but also cannot restrain market manipulation

the economics of moral hazard revisited pauly s 1968 pauly m 1968 the economics of moral hazard comment american economic review 58 531 537 analysis of the welfare loss from insurance assumes that medical care consumption is not determined by income but recent studies suggest it is this study argues that 1 pauly s analysis overstates the welfare loss because it includes the effect of income on consumption 2 the relevant income effect is derived from income transfer from the healthy to the ill that occur when the probability of illness is less than 1 and 3 the welfare loss can be considered the transaction cost of insurance

a privately revealing rational expectations equilibrium for the futures market abstract this paper develops a model of the futures market with two types of participants farmers and speculators farmers undertake production decisions and face both output and spot price risk as opposed to speculators who face only spot price risk agents have constant absolute risk aversion von neumann morgenstern utility functions and form rational expectations about the future output shock and spot price we assume that traders specialize in information collection in our model the futures price is not a sufficient statistic for the market information we show that the rational expectations equilibrium ree futures price is privately revealing to traders who purchase costly information this ree is efficient in the sense that in equilibrium traders are in possession of all market information we demonstrate that traders a have an incentive to collect costly information and b are better off by specializing in collecting the information in which they have a comparative advantage in terms of the quality of the information that they can obtain finally we show that the futures market stabilizes the spot price

does medicare save lives health insurance characteristics shift at age 65 as most people become eligible for medicare we measure the impacts of these changes on patients who are admitted to hospitals through emergency departments for conditions with similar admission rates on weekdays and weekends the age profiles of admissions and comorbidities for these patients are smooth at age 65 suggesting that the severity of illness is similar on either side of the medicare threshold in contrast the number of procedures performed in hospitals and total list charges exhibit small but statistically significant discontinuities implying that patients over 65 receive more services we estimate a nearly 1 percentage point drop in 7 day mortality for patients at age 65 equivalent to a 20 reduction in deaths for this severely ill patient group the mortality gap persists for at least 9 months after admission

the credit consequences of unpaid medical bills abstract this paper quantifies the costs of leaving medical bills unpaid and what these costs imply for the value of health insurance to beneficiaries we argue that a large fraction of unpaid medical bills is sent to third party collections and reported to credit bureaus with detrimental effects on patients credit outcomes combining a large panel of credit records with data on credit offers we find that the aca medicaid expansion reduced newly reported medical collections by 5 89 billion and led to better terms of credit we find that the financial benefits of medicaid at least double when including this indirect credit channel

health insurance and the consumer bankruptcy decision evidence from expansions of medicaid abstract anecdotal evidence and several observational studies suggest that out of pocket medical costs are pivotal in a large fraction of consumer bankruptcy decisions in this paper we assess the contribution of medical costs to household bankruptcy risk by exploiting plausibly exogenous variation in publicly provided health insurance using cross state variation in medicaid expansions from 1992 to 2004 we find that a 10 percentage point increase in medicaid eligibility reduces personal bankruptcies by 8 with no evidence that business bankruptcies are similarly affected we interpret our findings with a model in which health insurance imperfectly substitutes for other forms of financial protection and we use the model to present simple calibration results which illustrate how our reduced form parameter estimate affects the optimal level of health insurance benefits we conclude with calculations which suggest that out of pocket medical costs are pivotal in roughly 26 of personal bankruptcies among low income households

on intraday risk premia this article presents a framework for analyzing the dynamic effects of anticipated large demand pressures on asset risk premia we show that large institutions who can time their entry into the market will trade either at the open or during periods of unusual demand pressures we show that if these institutions do enter later in the day they trade in the same direction as institutions which provide liquidity continuously institutions therefore appear to exhibit herding behavior we also explore how changing the uncertainty of demand pressures late in the day affects trading costs throughout the day most financial market investors do not continuously monitor intraday fluctuations in stock prices other activities e g outside employment often take precedence over following the stock market and there are limitations to processing information for example a reader of this page is likely to be unaware of current financial market prices in fact for many investors entry into financial markets occurs once a day or even less frequently given these institutional realities it is of interest to explore how asset markets react when it is known that a set of very large predictable demands will arrive during the afternoon does their arrival affect prices only when they arrive or throughout the day if the price impact is spread out then how do trading costs behave during the day if some traders have the flexibility to time their entry into the market when will they arrive during the day and how will their entry decisions affect asset risk premia if market participants anticipate that demands in the afternoon will be unusually volatile how does this affect the intertemporal behavior of prices and expected returns earlier in the day the primary focus of this article is the development of tractable methodologies that can address these issues

the oregon health insurance experiment evidence from the first year in 2008 a group of uninsured low income adults in oregon was selected by lottery to be given the chance to apply for medicaid this lottery provides an opportunity to gauge the effects of expanding access to public health insurance on the health care use financial strain and health of low income adults using a randomized controlled design in the year after random assignment the treatment group selected by the lottery was about 25 percentage points more likely to have insurance than the control group that was not selected we find that in this first year the treatment group had substantively and statistically significantly higher health care utilization including primary and preventive care as well as hospitalizations lower out of pocket medical expenditures and medical debt including fewer bills sent to collection and better self reported physical and mental health than the control group

a unified welfare analysis of government policies we conduct a comparative welfare analysis of 133 historical policy changes over the past half century in the united states focusing on policies in social insurance education and job training taxes and cash transfers and in kind transfers for each policy we use existing causal estimates to calculate both the benefit that each policy provides its recipients measured as their willingness to pay and the policy s net cost inclusive of long term impacts on the government s budget we divide the willingness to pay by the net cost to the government to form each policy s marginal value of public funds or its mvpf comparing mvpfs across policies provides a unified method of assessing their impact on social welfare our results suggest that direct investments in low income children s health and education have historically had the highest mvpfs on average exceeding 5 many such policies have paid for themselves as governments recouped the cost of their initial expenditures through additional taxes collected and reduced transfers we find large mvpfs for education and health policies amongst children of all ages rather than observing diminishing marginal returns throughout childhood we find smaller mvpfs for policies targeting adults generally between 0 5 and 2 expenditures on adults have exceeded this mvpf range in particular if they induced large spillovers on children we relate our estimates to existing theories of optimal government policy and we discuss how the mvpf provides lessons for the design of future research

a model of returns and trading in futures markets this paper develops an equilibrium model of a competitive futures market in which investors trade to hedge positions and to speculate on their private information equilibrium return and trading patterns are examined 1 in markets where the information asymmetry among investors is small the return volatility of a futures contract decreases with time to maturity i e the samuelson effect holds 2 however in markets where the information asymmetry among investors is large the samuelson effect need not hold 3 additionally the model generates rich time tomaturity patterns in open interest and spot price volatility that are consistent with empirical findings an issue central to the analysis of futures markets is the relationship between speculation and futures price volatility a long line of models see e g grossman 1977 bray 1981 have tried to understand the effects of speculation on futures price volatility this line of research is economically relevant as speculative trades appear to be an important determinant of volatility in futures markets for instance roll 1984 finds that public information accounts for only a fraction of the movement in orange juice futures prices which suggests that investors bring their own private information into the market through their trades unfortunately existing models of speculation in futures are essentially static ones and cannot speak to a number of interesting aspects of returns and trading in futures markets an example is the relationship between the price volatility and the timeto maturity of a futures contract the analysis of this issue is an important one and has a long history assuming the existence of a representative investor and an exogenous spot price process samuelson 1965 shows that when there is a mean reverting component in the spot price process and no

market response to financial reports abstract a two date rational expectations model is analyzed at the first date traders can privately acquire a costly signal that provides imperfect information about a public report that will be issued at the second date equilibrium characterizations are provided for the fraction of traders that become informed and the informativeness of the first date price as well as the price change variance and the expected trading volume at the second date comparative statics identify how the above variables are influenced by changes in the information content of the public report and in particular how market phenomena at the public release date are influenced by endogenous prior information acquisition and trading in response to the forthcoming public release

experience curve for natural gas production by hydraulic fracturing abstract from 2007 to 2012 shale gas production in the us expanded at an astounding average growth rate of over 50 yr and thereby increased nearly tenfold over this short time period alone hydraulic fracturing technology or fracking as well as new directional drilling techniques played key roles in this shale gas revolution by allowing for extraction of natural gas from previously unviable shale resources although hydraulic fracturing technology had been around for decades it only recently became commercially attractive for large scale implementation as the production of shale gas rapidly increased in the us over the past decade the wellhead price of natural gas dropped substantially in this paper we express the relationship between wellhead price and cumulative natural gas output in terms of an experience curve and obtain a learning rate of 13 for the industry using hydraulic fracturing technology this learning rate represents a measure for the know how and skills accumulated thus far by the us shale gas industry the use of experience curves for renewable energy options such as solar and wind power has allowed analysts practitioners and policy makers to assess potential price reductions and underlying cost decreases for these technologies in the future the reasons for price reductions of hydraulic fracturing are fundamentally different from those behind renewable energy technologies hence they cannot be directly compared and hydraulic fracturing may soon reach or maybe has already attained a lower bound for further price reductions for instance as a result of its water requirements or environmental footprint yet understanding learning by doing phenomena as expressed by an industry wide experience curve for shale gas production can be useful for strategic planning in the gas sector as well as assist environmental policy design and serve more broadly as input for projections of energy system developments

energy technology roll out for climate change mitigation a multi model study for latin america in this paper we investigate opportunities for energy technology deployment under climate change mitigation efforts in latin america through several carbon tax and co2 abatement scenarios until 2050 we analyze what resources and technologies notably for electricity generation could be cost optimal in the energy sector to significantly reduce co2 emissions in the region by way of sensitivity test we perform a cross model comparison study and inspect whether robust conclusions can be drawn across results from different models as well as different types of models general versus partial equilibrium given the abundance of biomass resources in latin america they play a large role in energy supply in all scenarios we inspect this is especially true for stringent climate policy scenarios for instance because the use of biomass in power plants in combination with ccs can yield negative co2 emissions we find that hydropower which today contributes about 800 twh to overall power production in latin america could be significantly expanded to meet the climate policies we investigate typically by about 50 but potentially by as much as 75 according to all models electricity generation increases exponentially with a two to three fold expansion between 2010 and 2050 we find that in our climate policy scenarios renewable energy overall expands typically at double digit growth rates annually but there is substantial spread in model results for specific options such as wind and solar power the climate policies that we simulate raise wind power in 2050 on average to half the production level that hydropower provides today while they raise solar power to either a substantially higher or a much lower level than hydropower supplies at present depending on which model is used also for ccs we observe large diversity in model outcomes which reflects the uncertainties with regard to its future implementation potential as a result of the challenges this co2 abatement technology experiences the extent to which different mitigation options can be used in practice varies greatly between countries within latin america depending on factors such as resource potentials economic performance environmental impacts and availability of technical expertise we provide concise assessments of possible deployment opportunities for some low carbon energy options for the region at large and with occasional country level detail in specific cases

how to decarbonize the transport sector this article investigates possible evolution pathways for the transport sector during the 21st century globally and in europe under a climate change control scenario we attempt to shed light on the question how the transport sector should best be decarbonized we perform our study with the global bottom up energy systems model tiam ecn a version of the tiam model that is broadly used for the purpose of developing energy technology and climate policy scenarios which we adapted for analyzing in particular the transport sector given the global aggregated perspective of tiam ecn that in its current version yields at every point in time a single co2 price for different forms of energy use across geographic regions and economic sectors it generates a decarbonization process that for the transport sector occurs later in time than for the power sector this merely reflects that emission reductions are generally cheaper for electricity production than for transportation and that it is thus cost minimizing to spend limited financial resources available for co2 emissions abatement in the power sector first in our scenarios the use of hydrogen in internal combustion engines and fuel cells rather than electricity as energy carrier and batteries to store it gradually becomes the dominant transport technology this outcome is in agreement with some recent publications but is at loggerheads with the current popularity of the electric car based on sensitivity analysis we conclude that even if the establishment of a hydrogen infrastructure proves about an order of magnitude more costly than modeled in our base case electricity based transportation only broadly emerges if simultaneously also the costs of electric cars go down by at least 40 with respect to our reference costs one of the explanations for why the electric car is today by e g entrepreneurs often considered the supposed winner amongst multiple future transportation options is that the decision horizon of many analysts is no more than a few decades instead of a full century electric cars fit better the current infrastructure than hydrogen fueled vehicles so that from a short time perspective covering the next decade or two investments are not optimally spent by establishing an extensive hydrogen distribution network hence the path dependency created by the present existence of a vast power transmission and distribution network can make electricity the most efficient choice for transportation but only if the time frame considered is short electric transportation generally proves the more expensive alternative in our long term perspective except when electric car costs are assumed to drop substantially

the insurance value of state tax and transfer programs abstract this paper estimates the total value that individuals derive from their state s tax and transfer program and shows how this value varies by income the paper decomposes this total value into two components redistributive value which is due to predictable changes in income and family circumstances and insurance value which occurs when taxes and transfers compensate for unexpected income shocks our approach is a forward looking one where we examine income and transfers net of taxes over a 10 year period we model state taxes personal income taxes the eitc and sales taxes and state means tested transfers afdc tanf and medicaid schip the calculations are made using the panel study of income dynamics and allow for analysis of the role of changes in tax and transfer programs demographics and income in the value of state net benefits over a period of more than 30 years we find that the redistributive value of state tax and transfer programs sharply declines with income but that the insurance value is increasing in income the resulting total value still declines with income but not nearly as sharply as the redistributive value hence the insurance value mitigates the incentives for mobility that would undo state redistributive spending

herding in delegated portfolio management when is comparative performance information desirable abstract we address the issue of investors asset allocation decisions when portfolio management is delegated to an agent contrary to predictions from traditional financial theory it is shown that investors may not induce their manager to allocate funds to the asset with the highest return instead they may herd in their asset allocation decision and induce trade in a particular asset because another manager is trading in it and despite the presence of a more profitable alternative doing so allows investors to write an efficiency improving relative performance contract on the other hand herding leads investors to design wage contracts strategically resulting in more aggressive and thus less profitable trade in equilibrium we show that herding occurs when the cost of information is high information precision is low and when managers are sufficiently risk averse moreover when investors can decide whether or not to disclose information about their manager s performance they will not do so

the effect of medicaid premiums on enrollment a regression discontinuity approach abstract this paper estimates the effect that premiums in medicaid have on the length of enrollment of program beneficiaries whether and how low income families will participate in the exchanges and in states medicaid programs depends crucially on the structure and amounts of the premiums they will face i take advantage of discontinuities in the structure of wisconsin s medicaid program to identify the effects of premiums on enrollment for low income families i use a 3 year administrative panel of enrollment data to estimate these effects i find an increase in the premium from 0 to 10 dollars per month results in 1 4 fewer months enrolled and reduces the probability of remaining enrolled for a full year by 12 percentage points but other discrete changes in premium amounts do not affect enrollment or have a much smaller effect i find no evidence of program enrollees intentionally decreasing labor supply in order to avoid the premiums

what did medicare do the initial impact of medicare on mortality and out of pocket medical spending abstract we study the impact of the introduction of one of the major pillars of the social insurance system in the united states the introduction of medicare in 1965 our results suggest that in its first 10 years the establishment of universal health insurance for the elderly had no discernible impact on elderly mortality however we find a substantial reduction in the elderly s exposure to out of pocket medical expenditure risk specifically we estimate that the introduction of medicare was associated with a 40 decline in out of pocket spending for the top quartile of the out of pocket spending distribution a stylized expected utility framework suggests that the welfare gains from such reductions in risk exposure alone may be sufficient to cover almost two fifths of the costs of medicare these findings underscore the importance of considering the direct insurance benefits from public health insurance programs in addition to any indirect benefits from an effect on health

long term abatement potential and current policy trajectories in latin american countries abstract this paper provides perspectives on the role of latin american and latin american countries in meeting global abatement goals based on the scenarios developed through the climacap lamp modeling study abatement potential in latin america among other things is influenced by its development status the large contributions of non co2 and land use change co2 emissions and energy endowments in most scenarios in this study the economic potential to reduce fossil fuel co2 as well as non co2 emissions in latin america in 2050 is lower than in the rest of the world in total when measured against 2010 emissions due largely to higher emission growth in latin america than in the rest of the world in the absence of abatement the potential to reduce land use change co2 emissions is complicated by a wide range of factors and is not addressed in this paper land use emissions are largely addressed in a companion paper the study confirms the results of previous research that the variation in abatement costs across models may vary by an order of magnitude or more limiting the value of these assessments and supporting continued calls for research on the degree to which models are effectively representing key local circumstances that influence costs and available abatement options finally a review of policies in place in several latin american countries at the time of this writing finds that they would be of varying success in meeting the emission levels proposed by the most recent ipcc reports to limit global temperature change to 2 c

the applicability of marginal abatement cost approach a comprehensive review abstract the marginal abatement cost mac methodology is widely used in climate change policies policy makers rely on mac to assess feasible strategies and related costs to achieve emission reduction goals this paper introduces a variety of mac methodologies aiming at solving diverse problems which utilizes various calculable logic thus producing different results and implications this study applies a mind mapping method to capture differentiation of mac methods and systematically classify mac methodologies the applicability path analysis was proposed based on principles such as stakeholder type decision making objectives cost concept strategy mode and information scope our goal is to assess the applicability of different methodologies to reduce misuse by policy makers and to serve as a guide for subsequent research which might prompt and lead to the derivation of more consequential results in future studies the results of this study suggest that the complex method is not always better than the simplified method because policy makers are required to select the appropriate method according to the type of information needed it may even be suggested that mac could be reliable by ranking relative value of options compared with baseline rather than focusing on the absolute value of individual measures

an introduction to the theory of rational expectations under asymmetric information every good economics textbook contains the cliche that market prices provide signals which facilitate the allocation of resources to their best use in a world not subject to random shocks consumers and producers when faced with competitive prices need look no further than their own preferences or production technology to be able to make a decision they need give no thought to the tastes endowments or technology of other agents however in a world subject to random shocks this is no longer the case agents are faced with the problem of forecasting future states of nature and more importantly of forecasting the impact of these states on the actions of other agents rational expectations theories provide a model of how agents make those forecasts in a world subject to random shocks it will be the case that agents acquire or at least attempt to acquire information about the future realization of the shocks it will in general be the case that different agents have access to different information the fact that information is dispersed throughout the economy has the potential to cause a misallocation of resources relative to what would be the case if all agents knew everything an efficient allocation of resources will in general require the transfer of information from consumers who have some information about their future demands to producers who can take current actions to mitigate avoidable scarcities or surpluses though many classical and neo classical writers emphasize the informational role of prices the standard marshallian or walrasian model of competitive equilibrium does not involve prices transferring information across traders the purpose of this paper is to show that rational expectations models are radically different from walrasian models in an economy where traders have diverse information this is demonstrated by showing that unlike what occurs in a walrasian equilibrium of an economy with heterogeneous information if there is a complete set of insurance markets and utility is additively separable over time then there exists a rational expectations equilibrium which gives consumers the same allocation as if each consumer has access to all of the economy s information this implies that under the above assumptions a central planner with all the economy s information could not pareto dominate the competitive allocation achieved when traders have diverse information and rational expectations this paper makes no attempt to survey the literature on rational expectations the reader is referred to shiller 1978 barro 1981 for a survey of macroeconomics and rational expectations and radner 1980 for a survey of the microeconomics and mathematical theory of rational expectations this paper will however try to outline the evolution of the rational expectations concept from a notion of optimal forecasting to a virtually complete departure from the walrasian model of equilibrium the rest of this section is devoted to a discussion of pre rational expectations ideas

the interaction of public and private insurance medicaid and the long term care insurance market a long tradition in public finance examines how public programs can crowd out private activ ity in areas as diverse as education savings and insurance among others these studies typi cally focus on aggregate economic implications particularly for government expenditures and national savings in this paper we demonstrate that crowd out can also have an important effect on individual welfare specifically we show that the provision of even very incomplete public insurance can crowd out more comprehensive private policies by imposing a large implicit tax on private insurance benefits thus potentially increasing overall risk exposure for individuals we examine the interaction of public and private insurance for one of the largest uninsured financial risks facing the elderly in the united states long term care expenditures at 135 bil lion in 2004 long term care expenditures represented over 8 5 percent of total health expendi tures or all ages or roughly 1 2 percent of gdp moreover real long term care expenditures are projected to triple over the next 35 years due to rising medical costs and the aging of the baby boomers only 10 percent of the elderly however have any private long term care insurance and one third of expenditures are paid for out of pocket congressional budget office cbo 1999 cbo 2004 brown and finkelstein 2007 one potential explanation for the small size of the private market is that the public insurance provided by medicaid may crowd out demand for private insurance medicaid was designed to provide long term care insurance for the poor elderly mark v pauly 1989 1990 has established the qualitative result that as an incomplete but publicly funded source of long term care insur ance medicaid has the potential to reduce substantially demand for private long term care insur ance even among the nonpoor our work builds on this insight by quantifying the magnitude of medicaid s crowd out effect and the incomplete nature of medicaid coverage we also illustrate the mechanism behind medicaid s crowd out effect and are therefore able to assess the likely impact of alternative policies on private insurance demand we develop a utility based model of a 65 year old risk averse individual who chooses an opti mal intertemporal consumption path in the presence of uncertainty about long term care expen ditures we calibrate the model using data on the distribution of long term care expenditure risk common state medicaid rules and the prices and coverage of typical private long term care insurance policies

production uncertainty and the input decision of the competitive firm facing the futures market abstract production uncertainty is introduced into the model of the competitive firm facing the futures market the firm s input decision is shown to be highly sensitive to the nature of the production uncertainty

market efficiency and natural selection in a commodity futures market while the literature usually justifies informational efficiency in the context of rationality this article shows informational efficiency by applying the evolutionary idea of natural selection in a dynamic futures market speculators are assumed to merely act upon their predetermined trading types buyer or seller their predetermined fractions of wealth allocated for speculation and their inherent abilities to predict the spot price reflected in their distributions of prediction errors with respect to the spot price this article shows that the proportion of time that the futures price equals the spot price converges to one with probability 1 article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

pricing home mortgages and bank collateral a rational expectations approach the efficiency of the housing finance system is of interest to homeowners financial intermediaries and policy makers we study the design of optimal mortgage contracts for risk averse economic agents with access to symmetric information on the payoffs of a risky home our non linear framework helps demonstrate the pareto efficiency of a risk free loan over its risky counterpart it also allows us to evaluate the unique equilibrium interest rate loan amount and home price in contrast to the capital structure theorems finally we conduct numerical simulations in lieu of comparative statics to shed some light on the complex causal relationship between mortgage pricing parameters and the underlying collateral i e home value

hedge disclosures future prices and production distortions in this paper we identify social benefits to hedge accounting disclosures that have not previously been examined we show that from the perspective of price efficiency in the futures market the key information that is provided by hedge accounting is information about firms underlying risk exposures without this information the futures price confounds information regarding firms hedge motivated trades with their speculative trades making the futures price inefficient our model shows that an inefficient futures price causes significant externalities by distorting the production choices of an entire industry in the presence of hedge disclosures the futures price appropriately informs production decisions in the whole industry in addition to distortion in production choices we also investigate the effect of an inefficient futures price on the risk sharing role of the futures market we find that arijit mukherji passed away in october 2000 he was our colleague mentor advisor and friend we dedicate this paper to his memory and his contributions to the field of accounting he will be missed university of minnesota tuniversity of minnesota and federal reserve bank of minneapolis university of chicago we thank workshop participants at the 1998 accounting mini conference at minnesota the 2000 journal of accounting research conference berkeley columbia chicago the lse financial markets group northwestern ohio state penn state stanford ucla and the european and american accounting association annual meetings in particular we have benefited from the comments of regina anctil stan baiman mary barth margaret bray robert bushman ron dye frank gigler dan gode charles goodhart rachel hayes thomas hemmer jack hughes jim jordan bjorn jorgensen young kwon richard leftwich nobu kiyotaki rick lambert maureen mcnichols nahum melumad john o brien jim patell jim peck madhav rajan abbie smith phil stocken brett trueman igor vaysman robert verrecchia amir ziv and an anonymous referee the views expressed herein are those of the authors and not necessarily those of the federal reserve bank of minneapolis or the federal reserve system

does welfare inhibit success the long term effects of removing low income youth from the disability rolls i estimate the effects of removing low income youth with disabilities from supplemental security income ssi on their earnings and income in adulthood using a regression discontinuity design based on a 1996 policy change in age 18 medical reviews i find that youth who are removed from ssi at age 18 recover one third of the lost ssi cash income in earnings ssi youth who are removed and stay off ssi earn on average 4 400 annually and they lose 76 000 in present discounted observed income over the 16 years following removal relative to those who do not receive a review jel i30 i38 j14 supporters of welfare programs defend them as vital lifelines for those who face barriers to work while critics charge that these programs create perverse incentives to qualify and perpetuate dependency encapsulating this debate is the controversy over the us supplemental security income ssi program a program that provides cash payments and medicaid eligibility to low income children and adults with disabilities and the aged elderly after three decades of rapid expansion ssi is now the largest nonwork based cash welfare program in the united states paying about 50 billion each year to 8 million recipients including 1 3 million children 1 ssi has been singled out by policymakers and the media for potential perverse incentives

dynamics of energy technologies and global change technological choices largely determine the long term characteristics of industrial society including impacts on the natural environment however the treatment of technology in existing models that are used to project economic and environmental futures remains highly stylized based on work over two decades at iiasa we present a useful typology for technology analysis and discuss methods that can be used to analyze the impact of technological changes on the global environment especially global warming our focus is energy technologies the main source of many atmospheric environmental problems we show that much improved treatment of technology is possible with a combination of historical analysis and new modeling techniques in the historical record we identify characteristic l such network e ects yield high barriers to entry even for superior competitors these simple observations allow three improvements to modeling of technological change and its consequences for global environmental change one is that the replacement of long lived infrastructures over time has also replaced the fuels that power the economy to yield progressively more energy per unit of carbon pollution from coal to oil to gas such replacement has d they also include endogenous generation of s we show that doing so can yield projections with lessened environmental impacts without necessarily incurring negative e ect on the economy arriving on that path by the year 2100 depends on intervening actions such as incentives to promote greater diversity in technology and lower barriers to entry for new infrastructures that could accelerate historical trends of decarbonization 1999 elsevier science ltd all rights reserved

the impact of nearly universal insurance coverage on health care utilization evidence from medicare the onset of medicare eligibility at age 65 leads to sharp changes in the health insurance coverage of the u s population these changes lead to increases in the use of medical services with a pattern of gains across socioeconomic groups that varies by type of service while routine doctor visits increase more for groups that previously lacked insurance hospital admissions for relatively expensive procedures like bypass surgery and joint replacement increase more for previously insured groups that are more likely to have supplementary coverage after 65 reflecting the relative generosity of their combined insurance package under medicare

health insurance eligibility utilization of medical care and child health two economists applied data from the current population survey and the national health interview survey and state level data on child mortality to a simulation model of utilization of medical care that varies only with the states legislative environment to examine the utilization of medical care and health effects of medicaid eligibility on low income children the models took into consideration the recent expansions of medicaid to low income children 38 of those ineligible for medicaid in 1984 who became eligible due to changes during 1984 1992 were uninsured between 1984 and 1992 expansions of the medicaid program increased the proportion of children eligible for medicaid almost two fold 16 1 vs 31 2 yet coverage rates were always lower than eligibility rates 13 2 vs 16 1 in 1984 and 20 3 vs 31 2 in 1992 and the increase in coverage rates was only about 50 of the increase in eligibility rates during 1984 1992 the probability that a child was eligible for medicaid increased the probability of health insurance coverage by 29 77 when the model considered bias in variables e g a recession in a state the take up rate was only 22 73 nevertheless medicaid markedly increased use of medical care for example eligibility for medicaid increased the likelihood of making a visit to a physicians office in the last two weeks by about 50 it also increased the probability of a child visiting the hospital suggesting inefficiency in the way that providers deliver care to medicaid enrollees medicaid eligibility had a significant effect on reducing child mortality the 15 1 percentage point increase in eligibility during 1984 1992 reduced child mortality by 4 5 when the researchers examined parent assessed subjective health measures medicaid eligibility had no effect on child health medicaid eligibility reduced race and education based disparities in the number of visits and racial differences in mortality yet it may actually intensify current disparities in health care delivery site

public health insurance labor supply and employment lock we study the effect of public health insurance on labor supply by exploiting a large public health insurance disenrollment in 2005 approximately 170 000 tennessee residents abruptly lost medicaid coverage using both across and within state variation in exposure to the disenrollment we estimate large increases in labor supply primarily along the extensive margin the increased employment is concentrated among individuals working at least 20 hours a week and receiving private employer provided health insurance we explore the dynamic effects of the disenrollment and find an immediate increase in job search behavior and a steady rise in both employment and health insurance coverage following the disenrollment our results are consistent with a significant degree of employment lock workers who are employed primarily to secure private health insurance coverage jel codes i1 j22 h75