Endogenous fiscal policies,environmental quality,and status-seeking behavior

This paper analyzes endogenous fiscal policy in an endogenous growth model where agents care about social status and environmental quality. The quest for a higher status is assimilated to a preference for capital wealth. The government uses income tax to finance infrastructure and environmental protection. We find that accounting for preferences for social status and environmental quality may lead to an allocation of tax revenue in favor of a cleanup effort to the detriment of infrastructure. Economic growth is not necessarily and negatively affected by this allocation as it is partly explained by an excessive accumulation of capital wealth due to the quest of status. Status seeking can however harm economic growth and environmental quality when its motive is important enough. Finally, we show that economic growth may be consistent with environmental preservation but is not necessarily welfare-improving as in the case of absence of status-seeking behavior.     

Precautionary Principle and Robustness for a Stock Pollutant with Multiplicative Risk

The interest shown by policy makers and economists in the precautionary principle indicates the importance of model uncertainty in global warming policy. I show that through robust control, policy makers can implement the precautionary principle to regulate a stock pollutant, and I analyze its effect on expected steady state pollution taxes, stocks and welfare. The paper is broadly comprised of a theoretical part and an application to global warming policy. I find that: (1) an increase in either uncertainty about the model or risk about abatement cost increases expected steady state pollution taxes; (2) a robust policy is preferred for any level of model uncertainty and this preference increases for either higher model uncertainty or higher multiplicative risk and (3) the effect on expected steady state pollution taxes and stock of introducing model uncertainty is relatively small for high levels of model uncertainty. These results advocate using robust policies for a stock pollutant in the presence of model uncertainty.      

Growth, Environment and Uncertain Future Preferences

The attitude of future generations towards environmental assets may well be different from ours, and it is necessary to take into account thispossibility explicitly in the current debate about environmental policy. The question we are addressing here is: should uncertainty about futurepreferences lead to a more conservative attitude towards environment?Previous literature shows that it is the case when society expects that onaverage future preferences will be more in favor of environment than ours,but this result relies heavily on the assumption of a separability betweenconsumption and environmental quality in the utility function. We show thatthings are less simple when preferences are non-separable: the attitude ofthe society now depends not only on the expectation of the change inpreferences but also on the characteristics of the economy (impatience,intertemporal flexibility, natural capacities of regeneration of theenvironment, relative preference for the environment), on its history(initial level of the environmental quality) and on the date at whichpreferences are expected to change (near or far future).     

政策脱轨效应:评估环境政策的新框架

目前我国尚未形成统一的环境政策评估规范体系,而对具体环境政策进行评估时,可能会因不同领域、不同视角、不同评估方法而带来不同的评估结果。针对现有环境政策评估体系存在的局限性,提出可以客观评估环境政策实施效果的框架:政策脱轨效应。从政策脱轨效应的定义、产生原因、分类及评估思路四个方面构建理论体系,同时根据脱轨效应理论框架分析我国不同时期的环境政策。该框架体系的基本特点是:将不同环境政策的评估统一到同一体系之下,以特定的模型和方法,评估环境政策实施是否存在"脱轨效应"。研究表明,环境政策实施后存在发生政策脱轨效应的可能性;消费品之间的替代(或互补)关系、单位环境效益和单位产量排污因子均会影响政策脱轨效应的产生;从脱轨效应角度分析,环境政策制定时的决策目标会影响政策实施效果,只有当环境政策以社会净福利为决策目标时,政策实施才可能避免出现政策脱轨效应,实现环境保护和经济增长的双重红利。     

Climate change—environmental and technology policies in a strategic context

There are a number of features of climate change which make it one of the most challenging problems confronting policy makers and policy analysts. In this paper we consider three such features: (i) climate change is a global pollutant so there are strategic interactions between governments over climate policy; (ii) cutting greenhouse gas emissions can have significant cost effects across a number of sectors of the economy, raising concerns about the implications of climate change policy on competitive advantage; (iii) the long-time scales on which climate change operates means that an important dimension of climate change policy is policy towards R&D to cut the costs of dealing with climate change. In Ulph and Ulph (1996) [Ulph A, Ulph D (1996) In: Carraro C, Katsoulacos Y, Xepapadeas A (eds) Environmental policy and market structure. Kluwer, Dordrecht, pp 181–208] we presented a model to analyse these issues, but considered only environmental policies. In this paper we extend that analysis to allow for both a richer set of policy instruments (environmental and technology policies) and a richer strategic context.     

Boosting the spread of new technologies: an integrative propositional analysis of diffusion policies

ABSTRACT

Although many studies have recognised the importance of defining specific public policies to encourage technology diffusion, many authors fail to provide a clear view about either the policies that affect the diffusion of technologies or the effect of the different political instruments. Adopting a content analysis of papers that directly or indirectly refer to the diffusion of a new technology, this study applies the integrative propositional analysis (IPA) methodology to: (a) identify the repertoire of the different diffusion policies identified by previous studies; (b) classify these policies according to the type of instruments that they use; (c) analyse the impact of each policy on the different adoption factors that may inhibit or foster the diffusion of a new technology; and (d) evaluate the scope of each type of policy in terms of the number of affected adoption factors.     

Environmental Policy in Developing Countries: A Dynamic Analysis

A dynamic model is constructed of the environmental policy formulation process in a stylized developing country (DC). The paper analyzes the employment and output effects of three pollution control policies. These policies embody different assumptions about the DC government's ability to commit to its announced course of action. The timepath of the government's policy variable is characterized. Optimality calls for an activist policy, irrespective of the length of time to which the government can commit to its announced policy. However, the effects of this activist policy depend fundamentally on the government's period of commitment.     

Distributional Preferences and the Incidence of Costs and Benefits in Climate Change Policy

We explore the relationship between willingness to pay (WTP) for climate change mitigation and distributional preferences, by which we mean individuals’ opinions about who should be responsible for climate change prevention and whether the share of climate change impacts borne by the poor is a cause for concern. We use 1,770 responses to an online stated preference survey. The domestic costs in our survey’s policy choice scenarios are expressed as a set of randomized shares across four different payment vehicles, and the international cost shares are randomized across four groups of countries. We also elicit respondents’ perceptions of the likely regressivity of climate change impacts under a policy of business-as-usual. WTP is higher when larger cost shares are borne by parties deemed to bear a greater responsibility for mitigation, and when respondents believe (and care) that the impacts of climate change may be borne disproportionately by the world’s poor. That WTP for an environmental policy depends on the distributional consequences of the policy is an unsettling result: efficiency assessments are typically assumed to be separate from equity considerations in most benefit-cost analyses.     

Globalization, Lobbying, and International Environmental Governance

Globalization may require supranational coordination of environmental policies to prevent strategic policy competition weakening environmental standards. This raises concerns about a democratic deficit at the supranational level, and the possibility of capture by special interest groups. The authors develop a model in which environmental policy can be set at the national or supranational level. Governments at each level act in the interests of the group they represent, and interest groups lobby to influence the probability of getting their type of government elected. Using asymmetries in lobbying costs, the authors analyze the effects of a democratic deficit and differential access to influence by different interest groups on the welfare of groups and nations. The paper shows: (i) asymmetries may have unexpected effects; (ii) asymmetries have greater effect when policy is set at the national rather than supranational level; and (iii) despite asymmetries groups and nations are better off when policy is coordinated at the supranational level.     

Monetary policy in open economies

The recent literature on monetary policy in open economies has produced a strong presumption in favor of activistic policy and flexible exchange rates. We argue that this result may owe much to the combination of two commonly made assumptions: That nominal goods prices are rigid. And that the monetary authorities have a lot of information about the economy. When the source of nominal rigidity is found in wages and monetary policy is conducted according to less information demanding rules (such as a standard interest rate rule) policies that stabilize the money supply or the nominal exchange rate may perform better.     

On the rationalizability of observed consumers’ choices when preferences depend on budget sets: comment

In a recent article, Bilancini (J Econ 102:275–286, 2011) demonstrates that assuming either price-dependent preferences or preferences that depend on the choices of other individuals can render the theory of revealed preference effectively unusable. Some readers might be tempted to infer that economists had better avoid such assumptions. In this note, we argue against that conclusion in favor of a less categorical and more pragmatic approach. In several domains, we identify fundamental weaknesses in revealed preference theory and argue that in those domains, nontraditional assumptions about preferences significantly enhance our ability to explain and predict behavior.     

Encouraging Environmentally Sustainable Growth: Experience in OECD Countries

This paper presents an overview of OECD analysis of progress and policies in ``enhancing environmentally sustainable growth' in a number ofcountries. The focus of the paper is on how countries succeed in conducting cost-effective and consistent policies in the environmental and natural resource areas, not on environmental policy or outcomes per se. The chapters were tailored to focus on a small number of interesting or important themes in each country, rather than aiming at a comprehensive coverage. Four common themes nevertheless emerged: a definite trend in recent years towards the use of market-based instruments; competitiveness and distributional issuesas obstacles to policy implementation; certain sectors where policies make environmental objectives harder or more costly to achieve; attempts to design institutions or processes to achieve co-ordination across policies and sectors. These arediscussed and illustrated in turn in the paper.     

Fossil fuel subsidies and environmental constraints

Fossil fuel subsidies are applied in many countries for different policy reasons such as maintaining jobs in fossil fuel sectors, securing national energy supply or lowering the energy costs of selected industries to strengthen competitiveness. The current economic costs of fossil fuel subsidy policies can be substantially increased by future environmental constraints. We illustrate this point in the framework of a general equilibrium analysis for Germany where we quantify the economic costs of alternative hard coal subsidy policies at different CO₂ reduction levels. Our calculations show that German hard coal subsidies as a means of retaining jobs can get very expensive with additional specific costs of up to annual 70 000 DM per job for a given CO₂ reduction target of 35%. Though the empirical analysis is focused on Germany the general conclusion that current subsidy policies of fossil fuels must be fundamentally reconsidered in view of forthcoming environmental constraints is also relevant for other countries.     

Climate Policy,Learning, and Technology Adoption in Small Countries

A significant reduction in global greenhouse gas emissions requires international cooperation in emission abatement as well as individual countries’ investment in the adoption of abatement technology. The existing literature on climate policy pays insufficient attention to small countries, which account for a substantial proportion of global emission. In this study, we investigate how climate policy and learning about climate damage affect investment in abatement technology in small countries. We consider three alternative climate policy instruments: emission standards, harmonized taxes and auctioned permits. We say that learning is feasible if an international environmental agreement (IEA) is formed after the resolution of uncertainty about climate damage. We find that, either with learning and quadratic abatement costs or without learning, harmonized taxes outperform emission standards and auctioned permits in terms of investment efficiency. Without learning, a large cost of nonparticipation (that a country incurs) in the IEA can be beneficial to the country. Whether learning improves investment efficiency depends on the size of this nonparticipation cost.     

Willingness to pay for improved air quality in Sweden

The aim of the paper is to quantify individual willingness-to-pay measures of improved air quality in Sweden by using the Contingent Valuation Method (CVM). Such measures are important for policy makers when deciding about public investments and policy instruments in order to regulate environmental impacts, e.g. from road transportation and industry. The mean willingness to pay (WTP) for a 50% reduction of harmful substances where the respondents live and work was about 2000 SEK/year, which is of the same order of magnitude as earlier stated preference studies in Nordic countries. Most parameters in the econometric analysis had the expected sign. WTP was increasing in income, wealth and education; it was larger for men, members of environmental organizations, people living in big cities (which are on average more polluted), and people who own their house or apartment. It was lower for retired people. However, the additional WTP for people in big cities, although significantly higher than for other people, was lower than expected, indicating a possible insensitivity-to-scope effect.     

环境规制科技政策对科技进步与经济增长的影响

基于事件系统理论构建系统性、多层次性和综合性的政策量化分析框架,从政策属性、政策目标和政策工具3个维度对我国1985—2015年制定的198条环境规制科技政策进行量化研究。基于政策评估中的工具理性和价值理性两个层面,从环保科技进步效果和经济增长效应两个维度对环境规制科技政策有效性进行评估。研究发现,我国环境规制科技政策工具及政策工具协同对环保科技进步和经济增长的影响存在显著方向性差异。为此,进一步讨论了我国环境规制科技政策工具及工具协同的政策有效性评估结果,可为我国环境规制科技政策的完善和有效实施提供决策依据。     

Domestic and international strategic interactions in environment policy formation

Summary. In this paper, we establish the most possilbe general formulation of the technology governing carbon-gas emission, giving rise to global external diseconomies, and ty to explore into the strategic interactions,both domestic and international, when an individual country decides on the environmental policies. Through the comparison among emission taxes, quotas, and standard in the perfectly competitive private economies, we find that the first two policies are equivalent but they are different in effects by virtue of what we may call the tax-exemption effect of emission standards. Such a difference in the policy effect further affects the other country's welfare through the global externalities, amplified through whether the government can precommit to either the emission tax or the emission standard. Received: January 16, 2001; revised version: April 16, 2002 RID="*" ID="*" The authors thank the valuable comments by an anonymous referee. Ministry of Education and Science for its financial support is also greatly acknowledged. Correspondence to:K. Kiyono     

Local Transportation Policy and the Environment

The paper introduces a simple framework for analyzing the environmental effects of local transportation policies, and it reviews some evidence. In several cases, subsidies for local public transportation have led to substantial reductions in road transportation and have thereby reduced externalities. Some but not all estimates suggest positive overall welfare effects of such policies. In the rare cases where road pricing has been applied, it has helped to reduce automobile transportation, and it has led to environmental improvements. The experience with specific driving restrictions like “days without cars” and “low emission zones” has been mixed. Local transportation policy can have a useful role to play as a complement to national policy instruments, but neither efficiency nor effectiveness can be taken for granted.     

Scientific Numerology,Preference Anomalies,and Environmental Policymaking

Recently an abundance of experimental evidence has been gathered that is consonant with the notion that individual preferences are inconsistent and unstable. These empirical results potentially undermine the theoretical foundation of welfare economics, as the degree of preference lability claimed suggests that perhaps no optimization principles underlie even the most straightforward of choices. Yet policymakers in the environmental arena continue to prescribe policies based on economics-based methods that are constructed on the very principles that have been directly refuted. Are policymakers creatures of habit that move at glacial speed or is there something deeper behind their inertness? In this study, I explore this issue within the U.S. context and argue that there is some rationality behind current public policy decisionmaking. I then explore whether the empirical evidence supports the view that policymakers should take preference anomalies seriously. As a case study, I focus on some of my recent findings on preference inconsistencies in the marketplace.     

Ambiguity of scientific probability predictions and willingness-to-pay for climate change mitigation policies

We estimate a smooth ambiguity preference function, wherein an individual faces multiple probability predictions of policy outcomes, and then empirically measure their willingness-to-pay for the policy, ambiguity attitude, and ambiguity premium. Climate change mitigation policy is used as the example. The estimation results reveal that most people have ambiguity-seeking attitudes, but that these attitudes are heterogeneous across individuals. People who are older, are university graduates, have higher income, or trust more in science show stronger ambiguity-seeking attitudes. Their willingness-to-pay can be underestimated if ambiguity is not considered. Moreover, individuals with stronger ambiguity-seeking attitudes support aggressive mitigation policies more strongly. Our estimation strategy is generally applicable to policy evaluations wherein policy outcomes are ambiguous.