Subsistence consumption and natural resource depletion: Can resource-rich low-income countries realize sustainable consumption paths?

This contribution is concerned with efficient use of a resource if households are characterized by Stone–Geary preferences with a minimum subsistence level of consumption. Subsistence consumption implies particular minimum requirements for initial endowments with reproducible man-made capital and resources. If these are not met, the economy is not able to cover subsistence consumption such as nutrition. Focusing on the steady state, we find that the equilibrium can be governed by zero or positive growth. The latter occurs if the rate of exogenous technical change exceeds the rate of time preference. In the former case, we can show that Hartwick’s investment rule applies in a steady state. Finally, we calibrate the model for developing but resource-rich countries and trace the full dynamic development of the economy. Furthermore, we evaluate this full adjustment process regarding several sustainability indicators.     

Technological progress and sustainable development: what about the rebound effect?

Sustainability concepts that rest on the idea of resource- or energy-efficiency improvements due to technological progress tend to overestimate the potential saving effects because they frequently ignore the behavioral responses evoked by technological improvements. Efficiency improvements also affect the demand for resources and energy, and often an increase in efficiency by 1% will cause a reduction in resource use that is far below 1% or, sometimes, it can even cause an increase in resource use. This phenomenon is commonly labeled the rebound effect, which is well-known among energy economists, but never attracted much attention in ecological economics. The paper starts with the traditional neoclassical analysis of the rebound effect in a partial equilibrium framework that concentrates on the demand of one particular energy service such as mobility or room temperature. It also provides an overview of some of the main empirical studies based on this model that mostly confirm the existence of the rebound effect, but are controversial about its actual importance. However, we have to go beyond the neoclassical single-service model in order to take care of the variety of possible feedback affecting energy use. The paper presents two important expansions of the single-service model in order to show the potential relevance of the rebound effect to ecological economics. First, it is shown that in a multi-services model it proves to be difficult to make general statements about the relevance of the rebound effect. In this case, the overall effect of an increase in energy efficiency on total energy use depends on the on the assumptions about the substitutability between the services considered and the direction of the income effect. Second, the paper also tries to take care of the fact that changes in resource use or energy use are frequently just ‘side-effects’ of other forms of technological progress. Especially technological change of a time-saving nature can have a large influence on energy use as many time-saving devices (for example, faster modes of transport) require an increase in energy consumption that is frequently reinforced by a ‘rebound effect with respect to time’. This effect will be especially strong when wages are high and, at the same time, energy prices are low, as is currently the case in most industrialized countries. Consequently, the paper also provides a strong argument for the introduction of energy taxes.     

A national or local phenomenon? A comparison of the US and the Chinese housing markets

This article investigates the common movements of house prices across cities as well as the macroeconomic underpinnings of the comovements in the US and China. Our empirical results indicate more differences than similarities between the US and the Chinese housing markets. The results from a Bayesian dynamic latent factor model indicate that the fluctuations of house prices across cities in the US are more a national phenomenon, while the dynamics of house prices across cities in China are mainly driven by the city-specific component. We further use VAR models to compare the roles of the underlying determinants in these two housing markets. The results show that the roles of monetary policy shocks and aggregate fluctuations in driving the common movements of house prices across cities differ substantially between the US and China at both short and long horizons.     

Determinants of the global and regional CO2 emissions: What causes what and where?

Using the Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model and an unbalanced panel dataset of 128 countries covering 1990–2014, this study aims to examine the key impact factors (KIFs) of the global and regional carbon dioxide (CO₂) emissions and analyse the effectiveness of non-renewable and renewable energies. Given the potential cross-sectional dependence and slope heterogeneity, a series of econometric techniques allowing for cross-sectional dependence and slope heterogeneity is applied. The overall estimations imply that the KIFs at the global level are economic growth, followed by population size, non-renewable energy, and energy intensity in order of their impacts on CO₂ emissions; conversely, the KIFs at the regional level vary across different regions and estimators. The results also suggest that renewable energy can lead to a decline in CO₂ emissions at the global level. At the regional level, only for two regions (i.e., S. & Cent. America and Europe & Eurasia) renewable energy has a significant and negative effect on CO₂ emissions, which may be affected by the share of renewable energy consumption in the primary energy mix. Finally, the results indicate varied causality relationships among the variables across regions.

Abbreviations: AMG: Augmented mean group; BP: British Petroleum; BRICS: Brazil, Russia, India, China, and South Africa; CCEMG: Common correlated effects mean group; CD: Cross-section dependence; CIPS: Cross-sectionally augmented Im, Pesaran, and Shin; CO₂: Carbon dioxide; PS: Population size; D-H: Dumitrescu-Hurlin; EI: Energy intensity; EU: European Union; EU-5: Germany, France, Italy, Spain, and the United Kingdom; Europe & Eurasia, Europe and Eurasia; GDP: Gross domestic product; IEA: International Energy Agency; KIF: Key impact factor; LM: Lagrange multiplier; Mtoe, Million tonnes oil equivalent; NRE: Non-renewable energy; RE: Renewable energy; S. & Cent. America, South and Central America; STIRPAT: Stochastic Impacts by Regression on Population, Affluence, and Technology; VECM: Vector error correction model; WDI: World Development Indicators     

Can Chinese aid win the hearts and minds of Africa’s local population?

The vast increase in China’s aid projects has raised mounting concerns about the effectiveness of Chinese aid. To assess Chinese development assistance in Africa from the perspective of local residents’ attitude toward Chinese projects, we geographically match Chinese aid projects in Africa from 2000 to 2012 to the respondents of the Afrobarometer survey. By comparing the attitudes toward China reported by individuals who live close to ongoing Chinese projects at the time of the interview to those of individuals who live near sites where Chinese projects will be implemented in the future, this study establishes that the presence of Chinese projects induces a positive view of Chinese aid within the local population. Our mechanism analysis shows that people from all statuses can benefit from economic infrastructure projects, while the advantaged tend to have a better view of Chinese aid. In contrast, social infrastructure aid inspires a more positive view among disadvantaged people. We thus demonstrate that aid can have a differential impact on local attitudes, depending on aid types and statuses of recipients.     

Mergers and acquisitions as a response to the deregulation of the electric power industry: value creation or value destruction?

Many electric utilities, as a response to the deregulation of the electric power industry, adopted a strategy of acquiring other electric or gas utilities. We examine whether these merger and acquisition strategies create value for the utility shareholders and whether the strategies result in superior post-merger operating and stock-price performance relative to utilities that did not grow through acquisitions. We find little evidence that the mergers and acquisitions created long-term value for a fully diversified investor. Furthermore, the stock price and operating performance of the acquirers under performed the stock price and operating performance of a control portfolio of utilities that did not engage in merger activity.      

The mystery of the Chinese exchange rate regime: basket or no basket?

Economists have taken for granted the claim made by the Chinese government that the policy shift introduced in July 2005 constituted a change in the exchange rate regime from a fixed peg to a basket peg. We demonstrate that neither the stylized facts nor the empirical evidence support the proposition of a basket peg and suggest several reasons as to why China has not adopted this regime. The results could prove useful for identifying the Chinese exchange rate regime in the aftermath of the perceived policy shift following the August 2015 devaluation.     

An econometric analysis of willingness-to-pay for sustainable development: A case study of the Vol?ji Potok landscape area

When the market for a certain good is competitive enough, economic activities can be studied by the market pricing mechanism. Because this is usually not feasible in case of environmental goods with embodied natural and cultural heritage, particular methods for economic valuation of such goods have to be applied. The present article represents the economic valuation of the Landscape Development and Protection Area of Vol?ji Potok, which is an important Slovenian cultural landscape area with internationally recognized qualities. For this purpose we combined classical contingent valuation with a closed-version of discrete choice method, where the protest responses have been removed. By using econometric analysis we obtained the value of willingness-to-pay and established its determinants. We also made an attempt to control for different biases that arise in such analyses. At last, we used the adjusted average individual value of willingness-to-pay to calculate the aggregate willingness-to-pay. The present analysis represents one of the very few applications of the method to Central and Eastern European countries.     

International Transport of Captured \hbox {CO}_2: Who Can Gain and How Much?

If carbon capture and storage (CCS) is to become a viable option for low-carbon power generation, its deployment will require the construction of dedicated CO₂ transport infrastructure. In a scenario of large-scale deployment of CCS in Europe by 2050, the optimal (cost-minimising) CO₂ transport network would consist of large international bulk pipelines from the main CO₂ source regions to the CO₂ sinks in hydrocarbon fields and saline aquifers, which are mostly located in the North Sea. In this paper, we use a Shapley value approach to analyse the multilateral negotiation process that would be required to develop such jointly optimised CO₂ infrastructure. First, we find that countries with excess storage capacity capture 38–45 % of the benefits of multilateral coordination, implying that the resource rent of a depleted hydrocarbon field (when used for CO₂ storage) is roughly $${\$}1$$ per barrel of original recoverable oil reserves, or $${\$}2$$ per boe (barrel of oil equivalent) of original recoverable gas reserves. This adds 25–600 % to current estimates of CO₂ storage cost. Second, countries with a strategic transit location capture 19 % of the rent in the case of national pipeline monopolies. Liberalisation of CO₂ pipeline construction at EU level could eliminate the transit rent and is shown to reduce by two-thirds the differences between countries in terms of cost per tonne of CO₂ exported. Reaching agreement on such liberalisation may be politically challenging, since the payoffs are shown to be strongly divergent across countries.     

Do natural resources help or hinder development? Resource abundance,dependence, and the role of institutions

The resource curse literature presents conflicting evidence on the relationship between natural resources and development. We evaluate the direct effect of resources on developmental outcomes vis-à-vis their indirect effect through the weakening of political institutions using a 3SLS instrumental variable setup that simultaneously estimates development outcomes and institutions. We find that resource abundance and resource dependence affect development outcomes through different channels. While resource abundance generally has a direct positive effect on developmental outcomes, resource dependence has a stronger negative indirect effect that operates through its negative impact on institutional quality. The results also depend on the type of development outcome considered, with more consistent positive direct effects found for physical capital measures and stronger negative indirect effects for human capital development. The use of a simultaneous framework and dual measures of resources reconciles seemingly contradictory findings in earlier work.     

Market Inertia and the Introduction of Green Products: Can Strategic Effects Justify the Porter Hypothesis?

If, according to Porter’s hypothesis, a “greener” strategy is more profitable, why may its implementation need regulatory intervention? We present a repeated Cournot duopoly where the market may exhibit inertia towards the adoption of even cost-efficient environmental goods. With consumers recognizing that a product is green only with a time lag, if a firm unilaterally adopts the green product initially loses profit due to (a) increased costs (direct effect) and (b) reduced market share (strategic effect). By imposing simultaneous adoption, regulation eliminates (b), thus enhancing long-run profitability. Through a similar mechanism a government can increase its domestic firms’ international market share and profits by forcing them to simultaneously adopt the green product.     

Remittances and output growth volatility in developing countries: Does financial development dampen or magnify the effects?

The paper empirically investigated the relationship between remittance flows and output growth volatility for an extensive sample predominated by emerging     

Bitcoin for energy commodities before and after the December 2013 crash: diversifier,hedge or safe haven?

We study the relationship between Bitcoin and commodities by assessing the ability of Bitcoin to act as a diversifier, hedge, or safe haven against daily movements in commodities in general, and energy commodities in particular. We focus on energy commodities because energy, in the form of electricity, is an essential input in the Bitcoin production. For the entire period, results show that Bitcoin is a strong hedge and a safe-haven against movements in both commodity indices. We further examine whether that ability is also present for non-energy commodities and our analysis show insignificant results when energy commodities are excluded from the general commodity index. We also account for the December 2013 Bitcoin price crash and our results reveal that Bitcoin hedge and safe-haven properties against commodities and energy commodities are only present in the pre-crash period, whereas in the post-crash period Bitcoin is no more than a diversifier. In addition to uncovering the time-varying role of Bitcoin, we highlight the dissimilarity in the dynamic correlations between the extreme downward and extreme upward movements.     

CO2 Emissions and Income Dynamics: What Does the Global Evidence Tell Us?

This paper analyzes the co-evolution of two major determinants of social welfare, namely, income and carbon emissions. In particular, by using a distribution dynamics approach based on Markov chains, we investigate the shape and behavior of the joint distribution of per-capita income and carbon dioxide emissions. We arrive at several interesting conclusions, especially in the context of international negotiations on climate change. First, evidence does not support theoretical models predicting the existence of a poverty-environment trap. Specifically, in the long-run two main groups of countries will emerge: poor versus polluting countries. Second, the typical development path leads initially to high emission levels and, subsequently, to high income. Third, the convergence process towards the stationary distribution is very slow. Finally, for carbon emissions, whenever it is observed, the environmental Kuznets curve seems to be only a transitory phenomenon.     

Foreign Exchange Accumulation and the Entrapment of Chinese Monetary Power: Towards a Balanced Growth Regime?

This article criticises the notion that China's foreign exchange reserves have strengthened its monetary power. While some scholars have argued that China's international monetary influence has been ‘entrapped’ by the domestic interests of its export sector, a one-sided focus on the export sector fails to identify the significant constraints on its macroeconomic autonomy. This article proposes an extension of the concept of entrapment that draws attention to the key role of state-owned enterprises (SOEs) and their domestic fixed-asset investment in its growth regime: China's external monetary dependency – which is understood as both export dependency and the need to maintain foreign exchange accumulation – has been caused by a disparity between fixed-asset investment and private consumption that reflects a redistribution of income from the household sector to the SOE sector. In particular, I expose the SOE sector's rising interests in foreign exchange accumulation by uncovering a mutually reinforcing dynamic between China's external monetary dependence and the financial repression of its banking system. By entrenching an investment-led growth regime that provides key benefits the SOE sector, this dynamic is found to have seriously constrained the macroeconomic policy autonomy of Chinese authorities to rebalance growth away from investments and exports towards private consumption.     

Energy conservation,emission reduction and win–win development of China’s industry: 2013–2050 – MDI analysis framework based on directional distance function

As the biggest developing country, China faces the heavy pressure of energy conservation and emission reduction (ECER). China’s industry takes first place in energy consumption and pollution emission among the industrial entities. How to get rid of China’s industrial stagnant growth under the restriction of resources and environment, and find out the optimal path between ECER and industrial development is the main task of this study. The article adopts the historical data of China’s industry from 2003 to 2012, establishes a managerial disposability intensity analysis framework based on the directional distance function, and designs four energy conservation scenarios and nine CO₂ emission paths for a total of 36 kinds of alternative policy combinations to predict the win–win development and find the optimal path of industrial ECER from 2013 to 2050. Research shows that on the whole, industry will fail to achieve a win–win development in the future, while 6% growth rate of industrial output, 2.8% growth rate of energy consumption, and the peak of CO₂ in 2040 is the most optimum path. At the same time, the feedbacks of ECER constraints on specific industrial sectors are different, there are 16 industrial sectors that can achieve win–win development in the future.     

Is productive inefficiency a fatal disease? The effects of technical and scale efficiency in firm exit: the case of the Greek rubber and plastic industry

This article presents an integrated framework for testing the effects of productive efficiency, i.e. technical efficiency (TE) and scale efficiency (SE), on firm exit, facilitating the identification of the effects, causing a firm's operation at increasing or decreasing returns to scale. A panel data set of firms in the plastics and rubber industry of the Greek manufacturing sector is used to study the effect that TE and SE may have on a firm's probability to exit. Results reveal that technical efficiency is the most critical factor influencing firm exit, while SE exerts a quadratic effect on the probability to exit.     

The impact of American depositary receipts on the Japanese index: Do industry effect and size effect matter?

This paper explores whether American Depositary Receipts (ADRs) affect the underlying local index (LD) for Japanese market, and such a phenomenon is considered as an adverse influence. Nonlinear Granger causality and Bayesian factor analysis are employed to investigate the nonlinear relationship between ADR and LD. The results indicate the existence of a nonlinear relationship between ADR and LD by employing Bayesian factor analysis, which has never been employed in the related issues. Next, the linear Granger causality findings reveal that the ADRs, which influence Japanese index, are not affected by industry effect rather than by size effects. Overall, most relationships between ADR and LD are nonlinear while the specific turning points of different firms influence LD. Ultimately, we also provide the related policy and economic implications.     

International Trade and Manufacturing Employment: Is India following the Footsteps of Asia or Africa?

The Indian manufacturing sector has rapidly increased its integration with the world economy since the 1991 trade reforms. We examine whether trade integration created or destroyed jobs in the Indian manufacturing sector, and compare India's employment outcomes with four other countries—Bangladesh, Kenya, South Africa, and Vietnam. We find that the impact of international trade on manufacturing employment seems to be similar to those found for the two African countries rather than the two Asian countries, a surprising result for a country with an apparent comparative advantage in labor-intensive manufacturing goods, and a large excess supply of unskilled labor.