Heterogeneous treatment and self-selection in a wage subsidy experiment

The Self-Sufficiency Project (SSP) is a research and demonstration project that offered a generous time-limited income supplement to randomly selected welfare applicants under two conditions. The first, the eligibility condition, required that they remain on welfare for at least 12 months. The second, the qualification condition, required that they find a full-time job within 12 months after establishing eligibility. In this paper we focus on a neglected and important feature of the program, namely that the financial reward for becoming qualified is inversely related to the expected wage rate. Under very simple assumptions we show that those who have a low expected wage rate have a clear incentive to establish eligibility.Empirical non-parametric evidence strongly suggests that individuals self-select into eligibility. We jointly estimate a participation equation and a wage equation that are correlated through individual random effects. Our results show that the omission of self-selectivity into qualification translates into slightly underestimated treatment effects.     

An application of Lotka–Volterra model to Taiwan's transition from 200 mm to 300 mm silicon wafers

In this paper, we explore the innovation growth of 200 mm and 300 mm silicon wafers from Taiwan. Using the historic data, we simulate the growth of the area of 200 mm and 300 mm silicon wafers manufactured in Taiwan by the competitive Lotka–Volterra model. The parameters in the Lotka–Volterra model estimated with the realistic data are obtained numerically. The dynamic growth of competitive relationship between 200 mm silicon wafers and 300 mm silicon wafers is then analyzed. To prove the performance of the model, we further compare the famous Bass model and the Lotka–Volterra model. We also perform the equilibrium analysis to determine the long-term stability state in the simulation trajectory. Our research exhibits that 200 mm silicon wafers and 300 mm silicon wafers show a prey–predator relationship under the assumption of natural competition in the global semiconductor market. From a managerial perspective, the coefficients in the Lotka–Volterra model of exponential growth, self-interaction and cross-interaction represent the strength of product attractiveness, niche capacity and interaction for two competition products. We also find that there exists a stable equilibrium state for 200 mm silicon wafers and 300 mm silicon wafers. The prey 200 mm generation does not disappear completely; it finally settles to a constant market alongside the predator 300 mm generation.     

Balance sheet in the REDD +: Are global estimates measuring the wrong costs?

This article challenges some of the assumptions underpinning the UN programme to Reduce Emissions from Deforestation and forest Degradation (REDD +) in developing countries. Firstly, it argues that the cost-effectiveness of REDD + may have been exaggerated as current estimates ignore some cost categories as well as the evolution of drivers. Whilst REDD + remains a ‘low-hanging fruit’ for climate mitigation, if all costs were included estimates would be at the high end of the currently accepted range. Secondly, the article highlights that REDD + will be affected by a large funding gap at least until the entry into force of a new climate protocol in 2020. This gap is due as much to the poor status of public finances in donor countries as to the languishing state of carbon markets, and it calls for a revision of the assumptions regarding the design of the programme. Finally, it is advocated that, in order to contribute to the development of the programme, economic research on REDD + should consider different policy options, assessing their efficiency and identifying measures that increase their cost-effectiveness.     

Tiebout equilibria in local public good economies with spillovers

This paper analyzes the effects of spillovers on the equilibrium population distribution across jurisdictions in a local public good economy with free mobility. Spillovers are parametrized by a matrix [α_ij] where α_ij ∈ [0, 1]. When spillovers are symmetric and close to 0 or 1 (pure local public goods and pure public goods), all equilibrium jurisdiction structures are symmetric. However, any population distribution can be sustained in equilibrium for some value of the spillover parameter α. In the class of utility functions with additive externalities, we identify the unique family of utility functions for which equilibria are symmetric except for an isolated value of α. This is a class of utility functions which are linear in the public good and a power function of the private good, u(c, γ) = − A(1 − c)^β + γ. With this specification of utility, we show that an increase in α results in a more fragmented equilibrium population distribution, and that when spillovers are asymmetric and large, a jurisdiction which is more centrally located (i.e. benefits more from the public goods provided in other jurisdictions) has a larger population in equilibrium.     

Growth-returns nexus: Evidence from three Central and Eastern European countries

Using a sample of monthly data from January 1996 to December 2012, we provide new evidence on the unidirectional Granger causality from real stock market returns to real economic activity in three Central and Eastern European countries: the Czech Republic, Hungary, and Poland. By employing the Granger causality tests of Cheung and Ng (1996) and Hong (2001), we show evidence of short-term (up to 6 months), medium-term (up to 12 months) and long-term (up to 24 months) causality for the Czech Republic and Hungary. In the case of Poland, only medium-term and long-term causality is found. Using rolling-correlation analysis, we find that although the growth–returns relationship is positive during the examined period, there is an apparent variability in the strength of this relationship that is particularly visible during the period of the financial crisis in the late 2000s. Consequently, we find that the predictive power of stock markets in the CEE-3 countries increases during periods of high market volatility and decreases during periods of economic recovery.     

A note on incomplete factor taxation

Optimal capital taxes may be positive in the steady state in Ramsey models with an incomplete set of factor taxes. I show this possibility crucially depends on how fiscal policy is constrained at date t = 0. If the government is barred from manipulating the value of initial assets, the Chamley–Judd result reappears: the optimal capital tax is always zero in the steady state.     

Wind tunnel simulation and evaluation of soil conservation function of alpine grassland in Qinghai–Tibet Plateau

Aiming at studying soil conservation function of alpine grassland in the Qinghai–Tibet Plateau, this paper simulated soil erosion changes under different degrees of human disturbance in a wind tunnel laboratory. Three types of grasslands were selected, which include alpine meadow (QH-1), alpine steppe meadow (QH-2) and alpine steppe (QH-3), and the soil erosion rate was taken as the index to measure soil conservation function. The experimental results show that the soil erosion rates of three grassland samples increase with wind velocity under different treatments but the increment of erosion rate varied greatly. Under original status, soil erosion rates are in turn QH-1 < QH-2 < QH-3, which indicates that the soil conservation services are QH-1 > QH-2 > QH-3. When the aboveground vegetation was cut, the soil erosion rate change of QH-1 is the same as that of QH-3 and compared with the original status both of them changed a little. And when the root system was destroyed the erosion rates range in turn as QH-1 < QH-2 < QH-3. So the data suggest that soil conservation service for the three types of grasslands should be QH-1 > QH-2 > QH-3. The economic values of soil conservation were estimated, which include the values of organic carbon fixation, nutrient retention and reducing soil disuse.     

Improving estimation of the fractionally differencing parameter in the SARFIMA model using tapered periodogram

This paper presents a new method to estimate the fractional differencing parameters in the SARFIMA model. A technique of split cosine bell tapering is suggested to improve the EGPH method. The simulation study shows that the optimal split proportion and bandwidth for the EGPH with split cosine bell tapering method respectively are p = 0.1 and b = 0.9. The new method with the optimal parameters outperforms the EGPH and EGPH with cosine bell tapering. We further applied the EGPH method to estimate intraday volume series and high-frequency absolute return data. The results show that the seasonal fractionally differencing parameters are all estimated to be large, while the nonseasonal fractionally differencing parameters are all very small. This indicates that their long memory property may be mainly caused by the structure of long-range dependence at the seasonal lags instead of dependence at the nonseasonal lags.     

Long-term global water projections using six socioeconomic scenarios in an integrated assessment modeling framework

In this paper, we assess future water demands for the agricultural (irrigation and livestock), energy (electricity generation, primary energy production and processing), industrial (manufacturing and mining), and municipal sectors, by incorporating water demands into a technologically-detailed global integrated assessment model of energy, agriculture, and climate change — the Global Change Assessment Model (GCAM). Base-year water demands – both gross withdrawals and net consumptive use – are assigned to specific modeled activities in a way that maximizes consistency between bottom-up estimates of water demand intensities of specific technologies and practices, and top-down regional and sectoral estimates of water use. The energy, industrial, and municipal sectors are represented in fourteen geopolitical regions, with the agricultural sector further disaggregated into as many as eighteen agro-ecological zones (AEZs) within each region. We assess future water demands representing six socioeconomic scenarios, with no constraints imposed by future water supplies. The scenarios observe increases in global water withdrawals from 3710 km³ year^− 1 in 2005 to 6195–8690 km³ year^− 1 in 2050, and to 4869–12,693 km³ year^− 1 in 2095. Comparing the projected total regional water withdrawals to the historical supply of renewable freshwater, the Middle East exhibits the highest levels of water scarcity throughout the century, followed by India; water scarcity increases over time in both of these regions. In contrast, water scarcity improves in some regions with large base-year electric sector withdrawals, such as the USA and Canada, due to capital stock turnover and the almost complete phase-out of once-through flow cooling systems. The scenarios indicate that: 1) water is likely a limiting factor in meeting future water demands, 2) many regions can be expected to increase reliance on non-renewable groundwater, water reuse, and desalinated water, but they also highlight an important role for development and deployment of water conservation technologies and practices.     

Property rights,mobile capital,and comparative advantage

Recent papers show that imperfect property rights to a natural resource – a sector-specific factor–can be a source of comparative advantage. In these models, weaker property rights attract labor–the only mobile factor – to the resource sector, increasing the country's comparative advantage for that sector. If capital in addition to labor is mobile, and if the benefits of capital are non-excludable or if the degree of property rights is endogenous, a deterioration of property rights has ambiguous effects on comparative advantage and on the equilibrium wage/rental ratio.     

Modelling transport fuel pathways: Achieving cost-effective oil use reduction in passenger cars in Sweden

Several technology and fuel options could be used to lower the strong oil dependence of the transportation sector. To formulate policies and to cost-effectively meet oil reduction objectives, assessments and comparisons of the long-term economic performances of different technology trajectories are essential. In this work, the energy and technology costs associated with reducing oil consumption in passenger cars in Sweden are calculated for a number of possible future transport fuel pathways and for different energy prices and climate policies. An optimisation model is applied in a simulatory multiple-run approach for this purpose. The model encompasses the transportation sector, as well as the stationary energy system. In terms of results, a methanol-based pathway gives incremental system costs in the range of ? 0.9–3 billion EUR for a complete phase-out of passenger car oil up to 2030. As compared to the methanol pathway, other biomass gasification-based fuel pathways involve additional incremental system costs in the region of 3 billion EUR, whereas ethanol- and electricity-based pathways give additional incremental system costs of 4–5 billion EUR. At lower oil reduction levels, the cost differences between the pathways are smaller and the electricity-based pathway is significantly more cost-competitive.     

Changes in the wage structure,family income,and children's education

We exploit the changes in the distribution of family income to estimate the effect of parental resources on college education. Our strategy exploits the fact that families at the bottom of the income distribution were much poorer in the 1990s than they were in the 1970s, while the opposite is true for families in the top quartile of the distribution.  Our estimates suggest large effects of family income on enrollments.  For example, we find that a 10 percent increase in family income is associated with a 1.4 percent increase in the probability of attending a four-year college.     

How working time reduction affects jobs and wages

In 1996, by law the maximum standard workweek in Portugal was reduced from 44 h to 40 h. We find that for workers involved this change reduced the job separation rate and increased hourly wages, keeping monthly earnings approximately constant. The working hours reduction also affected workers working less than 40 h per week; they were more likely to lose their job.     

Game theory and climate diplomacy

Starting with the “New Periodic Table” (NPT) of 2 × 2 order games introduced by Robinson and Goforth (2005), we provide an exhaustive treatment of the possible game-theoretic characterizations of climate negotiations between two players (e.g., Great Powers or coalitions of states). Of the 144 distinct 2 × 2 games in which the players have strict ordinally ranked utilities, 25 are potentially relevant to climate problem. The negotiations may be characterized as a No-Conflict Game, Prisoner's Dilemma, Coordination Game, Chicken, Type Game, or Cycle, depending on the payoff matrix. Which game corresponds to the actual state of the world depends both on the severity of risks associated with climate change and the perceptions of the governments engaged in the negotiations. Nash equilibrium or Maxi-min equilibrium (or neither) may be the outcome. Achieving universal abatement of greenhouse gas emissions may require side payments or enforcement mechanisms outside the game framework, but we show how the negotiations themselves may offer opportunities to select between Nash equilibria or alter the payoff rankings and strategic choices of the players. In particular, scientific information pointing to the severity of the risks of climate change suggests characterization of the negotiations as a Coordination Game rather than a Prisoner's Dilemma.     

Did Japan's shopping coupon program increase spending?

In March 1999, 31 million “shopping coupons” worth 20,000 yen each were distributed to Japanese families with children and to the elderly. The coupons expired after six months and could only be used within the recipient's local community. We use variation in the number of children across families and in the number of recipients across prefectures to measure the effect of the coupons on spending. We find that coupons had a positive effect on spending on semi-durables, but no effect on spending on nondurables or services. The marginal propensity to consume on semi-durables was 0.1–0.2 when the coupons were distributed in March. The results using regional variation provide stronger evidence that spending did not fall after the coupons had been redeemed.     

Do production managers predict turning points? A directional analysis

This study evaluates the directional accuracy of production managers' forecasts by using a new market-timing test. By extending the directional analysis to the 4 × 4 case, this study investigates whether Japanese production managers' forecasts correctly predict turning points in production across different industries. This fills a gap in the literature that focused on predicting increase/decrease or acceleration/deceleration using directional analysis of the 2 × 2 case. It also illustrates its merit over the 2 × 2 case. This study shows that majority of the forecasts are not useful in predicting turning points in production; however, they are useful in predicting increase/decrease in production. Our findings suggest that the production managers' forecasts serve as early qualitative information of expansion and contraction on the Japanese economy and their accuracy does not differ by phases of business cycles.     

Functional sensitivity of testing the environmental Kuznets curve hypothesis

Conventional tests for the environmental Kuznets curve (EKC) hypothesis mostly apply a quadratic equation in modeling the non-linear relationship between environmental indices (such as air pollutants) and welfare measures (such as income per capita). If their inverted-U shaped pattern is empirically accepted with two significant regressors, the income per capita and its square transformation, the EKC hypothesis is supported. Using an OECD sample, this paper shows that the validity of testing the EKC hypothesis is sensitive to how we transform income non-linearly in sulfur and carbon EKC regressions. This paper carries out experiments on different powers of γ for transforming income non-linearly and concludes that only when 0 < γ < 1 and 1 < γ < 2 will the EKC regression demonstrate a testable non-linear cointegration relationship between the two air pollutants and income per capita. In the generalized EKC regressions estimated in this paper, although we find sulfur and carbon EKC patterns in the OECD sample, none of the EKC regressions using different γ is a cointegrating equation. This finding implies an inside critique to the EKC literature that failure of cointegration of the conventional EKC regression is not because of using the quadratic functional form, but because of the fundamentally spurious relationship between the trends of pollutants and income levels.     

Do bubbles have an explosive signature in markov switching models?

We investigate nine data series previously identified as containing bubbles using Bayesian Markov switching models.  Nearly all series appear to display strong regime switching that could possibly be induced by ‘bubble’ processes, but in each case the type of model that best describes each price differs substantively.  We pay particular attention to whether these series contain transient explosive roots, a feature which has been suggested to exist in several bubble formulations.  Bayesian model averaging is employed which allows us to average across a range of submodels, so that our empirical findings are not based on only one well performing model.  We show that explosive regimes may exist in many submodels, but only when the flexibility of the model is limited in other important respects.  In particular, when Markov switching models allow for switching levels of error variance, explosive root regimes occur in only a minority of the series.     

Functional sensitivity of testing the environmental Kuznets curve hypothesis

Conventional tests for the environmental Kuznets curve (EKC) hypothesis mostly apply a quadratic equation in modeling the non-linear relationship between environmental indices (such as air pollutants) and welfare measures (such as income per capita). If their inverted-U shaped pattern is empirically accepted with two significant regressors, the income per capita and its square transformation, the EKC hypothesis is supported. Using an OECD sample, this paper shows that the validity of testing the EKC hypothesis is sensitive to how we transform income non-linearly in sulfur and carbon EKC regressions. This paper carries out experiments on different powers of γ for transforming income non-linearly and concludes that only when 0 < γ < 1 and 1 < γ < 2 will the EKC regression demonstrate a testable non-linear cointegration relationship between the two air pollutants and income per capita. In the generalized EKC regressions estimated in this paper, although we find sulfur and carbon EKC patterns in the OECD sample, none of the EKC regressions using different γ is a cointegrating equation. This finding implies an inside critique to the EKC literature that failure of cointegration of the conventional EKC regression is not because of using the quadratic functional form, but because of the fundamentally spurious relationship between the trends of pollutants and income levels.     

Would it have paid to be in the eurozone?

Giving up an independent monetary policy and a flexible exchange rate are the key aspects of joining a monetary union. In this paper we analyse how joining the euro area would have affected the Polish business cycle during the recent financial crisis. To this end we construct a small open economy DSGE model and estimate it for Poland and the euro area. Then we run a counterfactual simulation, assuming Poland's euro area accession in 1q2007. The results are striking — volatilities of GDP and inflation increase substantially. In particular, had Poland adopted the euro, GDP growth would have oscillated between − 6% and + 9% (− 9% to + 11% under more extreme assumptions) instead of between 1% and 7%. We conclude that during the analysed period independent monetary policy and, in particular, the flexible exchange rate played an important stabilizing role for the Polish economy.