Economic and environmental impacts of the Kyoto Protocol

Abstract In 2003 the Kyoto Protocol, which imposes legally binding greenhouse gas emission constraints on industrialized countries, is likely to enter into force. The Protocol has been celebrated as a milestone in climate protection, but standard economic theory casts doubt that it will go beyond symbolic policy. In this paper, we show that the final concretion of the Kyoto Protocol is consistent with the theoretical prediction: Kyoto more or less boils down to business‐as‐usual without significant compliance costs to ratifying parties. JEL Classification: D58, Q43, Q58
Conséquences économiques et environnementales du protocole de Kyoto En 2003, le protocole de Kyoto, qui impose aux pays industrialisés l'obligation de réduire leurs émissions de gaz à effet de serre, entrera probablement en vigueur. Si le protocole a été accueilli comme un grand pas en avant dans le combat pour protéger l'environnement, la théorie économique jette un regard sceptique sur la portée réelle d'un tel accord et le considére comme un geste symbolique. Dans ce mémoire, on montre que la concrétisation finale de l'accord de Kyoto s'arrime aux prédictions théoriques : Kyoto n'est rien de plus que « business‐as‐usual >> et n'impliquera pas de coûts significatifs pour les parties qui ont signé le protocole.     

Trading Hot-Air. The Influence of Permit Allocation Rules,Market Power and the US Withdrawal from the Kyoto Protocol

After the conferences in Bonn and Marrakech, it is likely that international emissions trading will be realized in the near future. Major influences on the permit market␣are the institutional detail, the participation structure and the treatment of hot-air. Different scenarios not only differ in their implications for the demand and supply of permits and thus the permit price, but also in their allocative effects. In this paper we discuss likely the institutional designs for permit allocation in the hot-air economies and the use of market power and quantify the resulting effects by using the computable general equilibrium model DART. It turns out that the amount of hot-air supplied will be small if hot-air economies cooperate in their decisions. Under welfare maximization, more hot-airis supplied than in the case where governments try to maximize revenues from permit sales.     

Market efficiency and international diversification: Evidence from India

This study evaluates one of the most important emerging markets, India (Bombay Stock Exchange and Indian National Exchange), for its efficiency and for its potential to offer diversification benefits to international investors. Market-wide tests include; 1) contemporaneous relationship, 2) Granger type causality and 3) day-of-the-week effect. Tests on individual Indian stocks include: 1) panel estimation of Granger causality, 2) stock-by-stock estimation of Granger causality and 3) runs test. In sum, Indian markets are well integrated with the international equity markets, a characteristic that lowers the international diversification benefits. While day-of-the-week effect is an international spillover, it may be possible to predict individual Indian stocks' returns through causality with international equity markets and through momentum trading techniques.     

New directions in emissions trading: the potential contribution of new institutional economics

Once an arcane topic even among environmental economists, emissions trading systems have substantially increased during this past decade in the USA. Moreover, the implementation of these systems has necessitated increased involvement of professionals in many fields besides economics. This paper reviews the practical experience of the six major types of emissions trading systems, focusing on credit market development, participation and results, including transaction costs. Five more recent applications of emissions trading also are considered, as well as the possibility of inter-pollutant trading. While inter-pollutant trading has been successfully used for chlorofluorocarbons (CFCs), the applicability of this experience is probably very limited. Additionally, it would be highly premature to attempt an evaluation of these newer emissions trading systems, some of which have yet to be even partially implemented. In order to improve these latter and future programs, the paper considers the potential contribution of the New Institutional Economics (NIE) to emissions trading. The NIE is used to develop theoretical insights and a series of predictions about the performance of a range of emissions trading systems.     

An experiment on emissions trading: the effect of different allocation mechanisms

In theory, efficiency and compliance levels induced by an emission trading system should not depend on the initial allocation mechanism for permits in the absence of transaction costs. In a laboratory experiment we investigate this prediction by comparing frequent and infrequent auctioning as well as two different grandfathering schemes under market rules that closely resemble those of the European Union Emission Trading System. Our experimental results suggest that, contrary to theoretical predictions, the initial allocation procedure has the potential to affect efficiency of the final permit allocation. While we do not identify an effect of the initial allocation procedure itself (auction vs. grandfathering), we observe higher final efficiency after infrequent auctioning of permits than for frequent auctioning. Surprisingly, for a grandfathering scheme that distributes permits proportional to expected needs the high initial efficiency is substantially reduced by secondary market trading. An analysis of behavioral patterns shows that permit prices and abatement levels are initially substantially higher if permits are allocated by auction and we also find more over-banking as compared to the grandfathering treatments. Treatment differences diminish in the course of the experiment.     

International Environmental Agreement and Trade in Environmental Goods: The Case of Kyoto Protocol

Environmental and Resource Economics - The Kyoto Protocol has received much criticism for its effectiveness as well as the spillover effect (i.e. carbon leakage and competitiveness loss). This...     

从美国次级债危机看中国房地产金融市场的风险

自2007年8月份全面爆发的美国次级债危机愈演愈烈,巳成为继1998年亚洲金融危机以来的最大一场金融风暴.美国次级债危机对我国的房地产金融市场提出了警示.本文认为,目前我国的房地产金融市场与美国次级债危机爆发前有着许多相似之处.同时,我国的房地产金融市场又存在着特殊风险,因而应针对国内房地产金融市场的特殊问题,制定有效对策,化解风险.     

Russian exports of emission permits under the Kyoto Protocol: The interplay with non-competitive fuel markets

The paper analyses optimal strategies for a country that has market power in an international market for emission permits at the same time as a domestic fuel producer participates in a non-competitive fuel export market. In particular, the effects of coordinating fuel and permit exports are explored. We show that such coordination may either increase or reduce the optimal mark-up on permits, depending on the degree of substitution between alternative fuels.When the fuel market is oligopolistic, coordination of permit and fuel exports may lead to a strategic disadvantage in the fuel market, which makes such coordination unprofitable. However, illustrative numerical simulations suggest that Russia will benefit from coordinating its permit exports with its oil and gas exports during the Kyoto commitment period.     

The impacts of advanced information and communication technologies on international actors and the international system

New infomation and communication technologies have the potential to play a significant role in changing today's major international actors and in shaping the international system that is emerging after the end of the Cold War. This paper assesses the impacts that secen different information and communication technologies may have on specific types of actors in the international system, including states international governmental organizations, non-governmental organizations and multinational corporations. The paper then assesses the impact that these technologies might be expected to have on the international system itself.     

Rational Expectations and Price Determination in the US Oats Market

This paper develops a simultaneous rational expectations model of the US oats market Consistent estimates of the structural parameters are obtained by the instrumental variables method and 15 of 16 parameter estimates are significant at the 5 per cent level Estimated elasticities suggest that hedged stocks are more responsive to price changes than unhedged stocks, and that consumption demand for oats is more responsive to income changes than to changes in price. Post-sample forecasts of the spot price derived from this model are employed to test the semi-strong form efficient markets hypothesis (EMH), although the futures price outperforms the model as a predictor of the spot price. Hence the EMH cannot be rejected     

The explanatory power of the market model: an international comparison

The various published studies of the market model and the capital asset pricing model are examined, with the objective of seeing if any pattern emerges in terms of its explanatory power (r ²), and the various circumstances specific to each study. Several factors are identified as being associated with high values of r ²in these studies.     

Liquidity commonality in order-driven trading: evidence from the Athens Stock Exchange

We examine the presence of liquidity commonality in the order-driven Athens Stock Exchange (ASE). Unlike the majority of liquidity commonality studies that focus on the bid–ask spread, our analysis extends deeper in the Limit Order Book, providing insight on the price impact of both small and large trades. We utilize a 6-month FTSE/ATHEX-20 intraday data set to estimate the liquidity factor model of Chordia et al. (2000). To this end, we conduct single-equation analysis as well as panel data analysis with the use of two-way clustered errors, correcting for simultaneous firm and time correlations. Moreover, we apply standard principal component analysis on stock liquidities to extract the marketwide liquidity component. We find that liquidity commonality is low at the bid–ask spread, whereas it increases deeper in the book; consequently, large traders face liquidity risks associated with both individual stock and marketwide illiquidity. Moreover, our empirical evidence hints that liquidity commonality is asynchronous, suggesting that the ASE trading process includes various levels of information speed. Our analysis contributes to the understanding of liquidity commonality in order-driven trading, especially in emerging markets like the ASE where trading activity is limited and information speed is low.     

Influences of international factors on US Prices: a theoretical and empirical analysis

Employing an open-economy framework, the present article argues that international forces would have important implications for US price behaviour even prior to the 1970s when the US international sector was relatively small. A distributed-lag price equation that declineates between domestic and foreign impulses is derived. The model is estimated using quarterly data over the 1959–1979 period when international reserves as a measure of world liquidty were subject to relatively little noise. The study finds that growths of US import prices and exports positively affected US price inflation over the entire sample period but not during pre- 1971 period. On the other hand, while world liquidity, measured by worldwide international reserves, did not appear to influence US price for the whole period examined, its effect is found to be positive over the fixed-exchange-rate era. The mean lag of this foreign impulse is estimated at 6 quarters, 2 quarters larger than that of domestic liquidity as measured by M1. The findings then suggest inflationary implications ‘world liquidity’ for the US during the fixed-exchange-rate period but not under the managed-floating-rate system.     

《京都议定书》及其清洁发展机制的减排效应——基于中国参与全球环境治理微观项目数据的分析

面对新一届美国政府退出《巴黎协定》,中国政府要不要落实《巴黎协定》的减排承诺,继续投身国际环境合作?作为《巴黎协定》的早期探索版本,2005年生效的《京都议定书》可为相关政策效果评估提供一个较好的"反事实框架"。为此,本文以《京都议定书》唯一的南北国环境合作项目"清洁发展机制"(CDM)为研究对象,手工搜集国内3027个工厂级CDM项目的空间地理信息,构造包含30773个观测点的2001—2012年空间面板数据,以双重差分法实证检验了《京都议定书》的政策效果,并量化出中国在近年全球环境治理中的减排贡献。结果表明:《京都议定书》及其清洁发展机制的实施,对控制中国温室气体排放量产生了显著而积极的政策效果。与国内大部分环境规制文献不同,本文不局限于研究某一次宏观环境政策变动对经济社会的影响,而是使用更微观的工厂级清洁生产项目及其附近的污染物数据,进行较科学而细致的公共政策评估。本文的实证结果可为当前我国政府应对美国退出《巴黎协定》提供部分决策依据,更回应了部分发达国家对《京都议定书》减排效果和发展中国家没有承担减排责任的政治质疑。     

The power of incrementalism: environmental regulation and technological change in pulp and paper bleaching in the US

This article explores environmental regulation as a driver of technological change through a case study ofthe US pulp and paper industry. It analyses two sets of variables that influence the pace and direction of environmentally oriented technological change: industry structure and regulatory design. As would be expecded from a mature productive unit, when confronted with environmental challenges, the US pull, and paper industry demonstrates a strong preference for incremental technological change. The case suggests that the traditional approaches to standard-setting in the US have not challenged this preference. For the pulp and paper industry, there is considerable uncertainty regarding the strategic advantages of alternative technologies, due to uncertainly in further environmental regulation and the relatively small difference in cost between incremental and radical innovations for may mills. This case suggests that an alternative approach for promoting the diffusion of environmental enhancing radical innovations in mature productive units is to long-term goals for environmental improvement.     

False claims in politics: Evidence from the US

In this paper, we use data on 2459 public claims made by 444 politicians from the leading US fact-checking site (PolitiFact) to provide an empirical analysis of false claims in politics, shedding light on their characteristics within an advanced democracy. The frequency of falsehoods differs according to party affiliation and topic, with false claims more likely on such topics as elections, health, labor, taxes and values. For Republican politicians, falsehood pays off in the short run, as it is associated with greater political support.     

Market share instability and stock price volatility during the industry life-cycle: the US automobile industry

Market share instability, during certain stages of the industry life-cycle, has become a stylized fact in the industrial organization literature. In the finance literature, volatility in the form of excess volatility, i.e. the much larger volatility of stock prices than dividends (although stock prices should in theory trace the present value of future dividends), has given rise to controversies regarding stock price determination (Campbell and Shiller, 1988; Shiller, 1989). Recent evolutionary models, both theoretical and empirical, have tied the presence of market share instability to industry specific variables, such as specific periods in the industry life-cycle and specific “technological regimes”. The object of the paper is to explore whether there is a relationship between market share instability and stock price volatility and to what degree this relationship is connected to the concept of the industry life-cycle, and hence to industry specific factors. To do so, we explore the relationship in one particular industry, the US automobile industry. Since neither life-cycle nor finance theories attack this problem directly, we use insights from both approaches to build hypotheses which guide the data analysis. The empirical results confirm many of these hypotheses, suggesting that the degree of excess volatility is indeed partly affected by industry specific factors.