Fiscal policy under New Labour

This paper seeks to provide an evaluation of fiscal policy underNew Labour in the decade from its election in May 1997 to date.It begins with a brief review of macroeconomic performance overthat period. It outlines the main features of the approach ofthe Labour government to fiscal policy including the ‘goldenrule’ of public finance, and provides a critique of thatrule and the general approach to fiscal policy. It considershow far the policy rules have been observed in practice. Finally,it argues that the relative macroeconomic stability since 1997has not resulted from the fiscal policy pursued, but ratherthat changes in the fiscal stance have fortuitously offset variationsin private expenditure.     

Dynamics of the UK natural gas industry: System dynamics modelling and long-term energy policy analysis

We present a dynamic model of the indigenous natural gas industry in the UK. The model has been built using a system dynamics approach. Using the model several scenarios have been analyzed. We found that management of the supply-side policy alone cannot substantially postpone the discovery, production and consumption peak. We also found that the dynamics of the main variables, namely, exploration, production and consumption, are sensitive to initial demand conditions. Postponing the onset of gas price increases can therefore be achieved more effectively through efforts to reduce demand growth. One might expect that a low taxation policy would encourage more exploration and production of gas and thereby stimulate higher consumption rates. Instead, there was no overall net effect on production and consumption in the long term. The depletion effect on cost of exploration acts as counterbalance to low taxation policy. Depletion effect causes cost and thus price to rise further which depress consumption rate. The advances in exploration and production technology can delay the peak of exploration, production and consumption. Technological improvements mean lower cost of exploration and production which pressure down the long-term pattern of price dynamics.     

The economics of New Labour: policy and performance

This paper reviews the foundations of New Labour's economicpolicies and the performance of the economy since 1997. It arguesthat New Labour's policies have evolved from Thatcherism andthat it has largely embraced the tenets of neo-liberalism. NewLabour has rejected most aspects of Keynesianism and its policieshave eschewed the use of active demand management policies.But it has been the high levels of demand—in particularconsumption expenditure—that have driven economic growthin the UK and which have ensured that (as yet) New Labour hasnot faced the problems of dealing with a major economic downturn.     

Economic Competition,Policy Interdependence,and Labour Rights

Extant scholarship treats national policies concerning labour rights as a function of economic factors and yet neglects influences of policies among economically competing states. Relying on the policy interdependence theory, this study argues that labour rights policy in a state is dependent on its economic competitors’ labour policy decisions. It specifically maintains that the intensifying competition for foreign direct investment and exports as well as against imports channels negative externalities of deteriorating labour protection in competing states which drives expansive downward policy mimicking and leads to a global decline in labour rights – a race to the bottom. Utilising spatial econometric technique to analyse a new data on labour rights for the period 1994–2009, it finds that labour rights practices are interdependent among economic competitors and experience global deteriorations; whereas labour rights laws remain largely independent due to high policy and reputational costs of lowering them and show more fluctuations.     

Neo-liberalism and New Labour policy: economic performance, historical comparisons and future prospects

The paper analyses19760/70s inflation, the replacement of Keynesianwith neo-liberal economic policy, and the post-1979 declinein inflation. It is shown that the fall in inflation is explainedby trends in import prices rather than by switches in economicpolicy. However, New Labour's conversion to neo-liberalism meansthat no alternative to it is on political offer, despite returnsto pre-Keynesian policy-making, the success of which will dependon price policies based on an understanding of the institutionalroots of inflation.     

Competition policy in open economies

Abstract

This paper examines aspects of R&;D spillovers across countries, in particular, the role of international trade and human capital as the catalysts for international diffusion of technology. We present a new way of measuring foreign R&;D stocks embodied in foreign intermediate goods and capital equipment, which we argue is free from the criticism of previous measures. With the pooled panel data spanning 1970 through 1995 for 103 countries, we find that the effects of foreign R&;D on total factor productivity growth of both industrial countries and developing countries are substantial and that human capital is the most influential channel for absorbing foreign R&;D spillovers.     

A research of green taxation policy for promoting energy saving and emission reduction

It＇s been proved by theory and practice that taxation policy is one of the important means of realizing energy saving and emission reduction. The green taxation system in the Western countries has got better effects in energy saving and environmental protection. In the recent years, China has in succession released some taxation policies promoting energy saving and emission reduction, but still has a huge gap to meet the real needs of energy saving and emission reduction. By analyzing China＇s status quo of the polices of energy saving and emission reduction and drawing upon experiences of the developed countries about green taxation, this paper presents how to perfect ideas of China＇s energy saving and emission reduction taxation policies： adjusting taxes relevant to green taxation in the current taxation system, such as resource tax, consumer tax, and so on; collecting new environmental tax; perfecting the preferential taxation policies for the energy saving and environmental protection industries.     

Plant location and strategic environmental policy with inter-sectoral linkages

In recent debates on trade liberalisation the concern has often been expressed that with more competitive international trade governments will be worried that by setting tougher environmental policies than their trading rivals they will put domestic producers at a competitive disadvantage, and in the extreme case this could lead to firms relocating production in other countries. The response by governments to such concerns will be to weaken environmental policies (‘eco-dumping’). In competitive markets such concerns are ill founded, but there is a small amount of literature which has analysed whether governments will indeed have incentives for eco-dumping in the more relevant case of markets where there are significant scale economies; even here there is no presumption that the outcome will involve eco-dumping.In this paper we extend the analysis of strategic environmental policy and plant location decisions by analysing the location decision of firms in different sectors which are linked through an input-output structure of intermediate production. The reason why we introduce inter-sectoral linkages between firms is that they introduce an additional factor, relative to those already analysed in the literature, in the plant location decision, which is the incentive for firms in different sectors to agglomerate in a single location. This has a number of important effects. First, there is now the possibility of multiple equilibria in location decisions of firms. Following from this there is the possibility of catastrophic effects where a small increase in an environmental tax can trigger the collapse of an industrial base in a country; however there is also the possibility that a country which raises its environmental tax could attract more firms to locate in that country, because of the way the tax affects incentives for agglomeration. Finally, and again related to the previous effects, there is the possibility of a hysteresis effect where raising an environmental tax in one country can cause firms to relocate to another country, but subsequently lowering that tax will not induce firms to relocate back into the original country.We consider a simple model with two countries, two industries, an upstream and a downstream sector, and two firms per industry. The analysis proceeds through a three-stage game: in the first stage the governments of the two countries set their environmental policies; in the second stage the firms in both industries choose how many plants to locate and where; in the third stage firms choose their output levels, with the demand for the upstream firms being determined endogenously by the production decisions of the downstream firms. We assume that there are no limits to production capacity, so that firms do not build more than one plant in any country. However, firms may build plants in different countries because of positive transport costs. Although the model appears very simple, it cannot be solved analytically, so all the conclusions must be drawn from numerical simulations.     

Bioenergy innovation and energy policy

Using panel data on 13 OECD countries between 1979 and 2008 this paper examines the affect climate and energy policies have had on the rate of biotechnology innovations. The explanatory variables include a vector of important determinants of patenting activity for biotechnologies (e.g. specific and general research and development expenditures, energy consumption, energy prices and total number of registered patents). Fixed effects are employed to capture unobservable country-specific heterogeneity using a negative binomial model. The empirical results indicate that policies are important for stimulating innovations in biotechnologies. The development of feed-in-tariffs (FITs) and the implementation of tradable green certificates have had a positive and statistically significant impact on patent activity. The economic impact of green certificates is found to be larger than that of FITs. In addition, R&D activities have also had a positive and statistically significant effect on innovation.     

Competition policy and market leaders

We study the potential loss in social welfare and changes in incentives to invest in R&D that result when the market leading firm is deprived of its position. We show that under plausible assumptions like free entry or repeated market interactions there is a social value of market leadership and its mechanical removal by means of competition policy is likely to be harmful for society.     

Labour markets, liquidity, and monetary policy regimes

Abstract.  We develop an equilibrium model of the monetary policy transmission mechanism that highlights information frictions in the market for money and search frictions in the labour market. The information friction increases the persistence in the response of interest rates following monetary policy regime shifts. This occurs because agents have incomplete information about the nature of the shifts and optimally update their inflation forecasts using an 'adaptive' expectations rule. The search friction transmits the interest rate movements to the labour market by affecting job creation activities; together, the two frictions imply that unemployment reacts very gradually to monetary policy shocks. JEL Classification: E4, E5     

A new energy security paradigm for the twenty-first century

Conventional energy security has been focused on the depletion of natural resources, particularly oil, natural gas and coal. More recently, the link between energy security and the military has been made, focused on the defence of international oil tanker chokepoints and the free flow of oil through these trade routes. This paper considers a possible future in which, the impacts of climate change have been realized far earlier than most experts have previously expected. This has promoted a transition to cleaner energy technologies long before the depletion of fossil fuel resources. In this scenario, the peak in demand for fossil fuels occurs before the peak in supply and some nations are strongly promoting the development and deployment of clean energy technologies. Some private companies developing and deploying these technologies benefit from sudden market expansion, fuelled largely by the world's richest nations struggling to reduce their carbon footprint.In this scenario the countries of the world would fall into one of the three categories: (1) the countries willing and readily able to adjust in response to rapid and serious climate change, (2) the countries willing to adjust, but facing significant economic hardship without external assistance and protection, (3) and those countries unwilling and, perhaps to their perception at least, unable to play a part in combating climate change. In this scenario, the Western Economies will likely fall under the first category while the BRIC countries (Brazil, Russia, India, China) might fall into the second category. These nations together are needed to achieve a viable, powerful, and effective formal or informal “Clean Energy Alliance”. Some countries however will probably fall into the third category. This paper considers how countries in the first two categories could respond by adjusting their foreign, trade and even military policies.If climate change is as severe and as pressing as some fear, leadership will be needed from those nations who are most capable of responding to the crisis. Within a generation, the great powers might find themselves shifting from keeping trade routes open to constraining the same trade. Severe climate change impacts could even approach the timescale of technological innovation needed to respond to this crisis. This paper proposes that our world may need new military and foreign policy options as well as new energy technology options in the years to come. Parallels are drawn between the challenge of decarbonising the global energy systems in the early twenty-first century and the ethical imperative of ending slavery in the early nineteenth century.     

A study of zoning for energy security in China

As a result of more and more serious energy risks, the study of national energy security zoning is not only the basic requirement of energy risk management but also the new demand of economic development for the energy industry. Firstly, this paper analyzes the basic situation of energy resources and production and consumption of primary. energy from 1996 to 2005 in China. Secondly; this paper founds an Energy Security Index System formed by six indices including the percentage of energy reserves, interlocal dependent degree, energy elasticity coefficient and so on. It subsequently calculates the weight of these indices with the factor analysis rating method Lastly, the paper evaluates and zones the abilities of energy security of 30 provinces in China with the grey chuster method According to their security; the 30 provinces are classified into three different levels： high, medium, and low levels. The regions at low energy security level include Beijing, Shanghai, Zhejiang, Fujian, Guangdong, Guangxi and Hainan. They are mainly littoral and short of primary energy production while mostly dependent on other provinces. Those at medium energy security level include 15 provinces （cities or districts）, such as Liaoning, Tianjin, Hebei, Shandong, Henan, Hunan and so on. These provinces are in the northeast, north, east of and central China. Those at high energy security level contain Shanxi. lnner Mongolia, Heilongjiang, Jilin, Chongqing, Sichuan, Shaanxi. Xinjiang. These provinces are the main primary energy production bases.     

Research on low-carbon development of electric power industry: from the perspectives of public policy

It is a fundamental way to achieve sustainable development and inclusive growth that China takes the low-carbon development path.And low-carbon development is an effective way to respond to many threats,including global climate anomalies,environmental degradation,and energy shortage.Low-carbon economy is policy economy to a large extent.Although the external environment demands low-carbon development of electric power industry,enterprises lack intrinsic motivation.Electric power industry is the pillar industry of China,and is one of the key industries for China＇s low-carbon development.The government needs to ensure its dominant position in the low-carbon development of electric power industry,and reform the government performance management system and promote the planning and management of electric power industry through appropriate public policy,in order to adjust the structure of the electric power industry and take a low-carbon development road with Chinese characteristics.     

Does diversity matter? A fresh inquiry into the energy,economy and environment nexus

ABSTRACT

The article extends the literature on the nexus among economy, environment and energy by incorporating an index of electricity generation diversity in production and emission functions. The index is mathematically equivalent to Herfindahl–Hirschman index. The index captures substantial information regarding the ongoing energy transition at the global level. The results obtained through pooled mean group estimation, on a dataset of fairly diversified group of countries, indicate that if diversity index increases by a percentage point, per capita income increases by 2.4% and per capita emissions are reduced by 0.71%. This is against the conventional wisdom in favour of specialization. The study has found some interesting long-run causal pathways. Firstly, the causality runs from diversification to income. Secondly, there is a causality running from electricity consumption to specialization. Thirdly, bi-directional causality runs between emissions and specialization. The results have interesting policy implications. The study supports the growth hypothesis that the electricity consumption drives the economy. As this inevitably increases emissions, a better pathway is through diversification. The fossil fuel intensive pathway may have been the preferred choice in the past for countries with low electricity consumption; the diversified portfolio appears to be prudent in the future.     

The rhetorical fantasy of energy transitions: implications for energy policy and analysis

This article explores the rhetoric of four energy transitions. It begins by summarising research on the intersection of fantasy, technology and the sociology of expectation. It then looks at how ideas of progress, modernity, cheapness, abundance and hope influence the way society perceives new energy technologies, causing them to overestimate benefits and underestimate challenges. Our rhetorical analysis finds in case studies of steam engines, gasoline automobiles, hydroelectric dams and nuclear reactors that newly ‘discovered’ sources of energy or newly invented technologies are always assumed to provide infinitely abundant energy and to have the potential to create positive utopian changes in society. We conclude by noting the salient implications of these rhetorical themes for energy planners, analysts and scholars.     

Monetary policy,fiscal policy and cross signal jamming

This paper considers the issue of rule versus discretion when the central bank and the government share private information but have different preferences over inflation and output. We demonstrate that if the monetary policy is rule-based, Intuitive Criterion selects the unique separating equilibrium in which the central bank signals a low supply shock by a low interest rate. Interestingly, discretion may be better than the rule for the central bank, contrary to the case of complete information. Also, we examine the effect of information asymmetry on the monetary and fiscal policy mix. We show that cross signal jamming whereby the monetary authority and the fiscal authority successfully jams an unfavorable signal of each other does not occur in equilibrium.     

Harnessing rivers of wind: A technology and policy assessment of high altitude wind power in the U.S.

This paper provides an assessment of the commercialization potential for high altitude wind power (HWP). Several technological and policy barriers are identified that may affect the development and deployment of the technology in the US. Technical barriers include electrical transmission from high altitudes and the development of viable methods of energy storage to address intermittency. Non-technical barriers include the lack of a carbon price in the US, which provides an advantage to embedded technologies and widens the ‘valley of death.’ A variety of stakeholders are analyzed in order to understand potential impacts upon the development of HWP. Many fossil fuel producers and utility companies have been leveraging political authority to lobby against a carbon tax, which could be crucial for broad deployment of renewable energy technologies. The combination of technical and non-technical barriers indicates that commercialization of HWP is unlikely in the short term. Commercialization would require major policy shifts at the federal level and advances in S&T. Recommendations are provided to increase federal investment in applied research through additional funding for the Advanced Research Projects Agency—Energy (ARPA-E). It is also recommended that ARPA-E create a matching fund to assist in the commercialization of renewable energy technologies.