An experimental investigation of soft price caps in uniform price auction markets for wholesale electricity

This paper presents the results from an auction experiment using industry professionals and student participants who compete in a simulated wholesale market for electricity. Motivated by the intervention by FERC in response to the “meltdown” of the California spot market, we investigate the effect of including a “soft” price cap in a uniform price auction as a means of mitigating high prices. When prices are driven above the soft cap, offer curves become flat, in contrast to the hockey stick shape observed in a typical uniform price auction for electricity. This flat offer curve leads to market prices that are relatively insensitive to both generation costs and demand reductions.      

Permit markets,carbon prices and the creation of innovation clusters

Innovation clusters combining public and private effort to develop breakthrough technologies promise greater technological advances to slow down climate change. We use a multi-country model with an emission trading system to examine whether and how international climate policy can incentivize countries to create such innovation clusters. We find that a minimal carbon price is needed to attract applied research firms, but countries may nevertheless fail to invest in complementary research infrastructure. We construct a mechanism that leads to innovation clusters when emissions targets are set before uncertainty surrounding technological developments is resolved. It is a combination of low permit endowments for the country with the lowest costs to build the needed infrastructure, compensation for this country by profits from permit trade, and maximal possible permit endowments for the remaining countries. We outline how the EU-ETS can be further refined according to this mechanism.     

The impact of electricity prices on foreign direct investment: evidence from the European Union

We examine the impact of electricity price variation on net FDI (%GDP) inflows in countries of the European Union. We use panel data of 27 EU countries for a period of 2003 – 2013. We show that electricity prices of south-western and north-eastern EU countries did not converge to one price until now. Dynamic panel data analysis using system GMM shows that besides unit labour costs, tax rates and competitive disadvantage in secondary education, also higher electricity prices reduce countries’ ability to attract FDI. The immediate effects are statistically significant across both sub-regions analysed: in the short run, a 10% increase in electricity prices leads to a decrease in net FDI inflows as a share of GDP by 0.4 percentage points for the south-western and 0.33 for the north-eastern region. In the long run, the response is 0.60 percentage points for south-western and 0.48 for north-eastern regions. Policies should aim at reducing electricity market price differences on the European level through investment in transborder transmission capacity; reductions in FDI, when environmental policy increases after-tax electricity prices, should be countered by other tax reductions as well as harmonization of property rights, absence of corruption and labour market regulations at best-practice level.     

An econometric analysis of the effects of market liberalization on price dynamics and price volatility

The paper investigates price dynamics under market liberalization, with a focus on the effects of lowering price floors. We analyze price dynamics by specifying and estimating a dynamic Tobit model under time-varying volatility, where the market price is censored by a government-set support price. The model is applied to the U.S. butter market over the last three decades. The econometric results show how the price support program affects both expected prices and the volatility of prices. It is found that the censoring effects of a price support program can be significant and large even if the price support is set relatively low.

The effects of remittances,foreign direct investment,and foreign aid on economic growth: An empirical analysis

The Sustainable Development Goals have refocused attention on ways of providing external finance to support development. Because they have different motivations and work through different modalities, remittances, foreign direct investment (FDI), and official development assistance may be expected to have different consequences for economic growth. Existing empirical evidence suggests that both positive and negative effects are associated with each source of finance. We use both a dynamic panel model and a fixed effects model to calculate the overall effects of each source of finance in isolation and taken together over the period 1976–2015. We include a range of control variables to allow for other potential influences on economic growth. We disaggregate the effects across geographical regions and income levels to test for heterogeneity. We also undertake a series of robustness checks. Our results suggest that FDI has a significant positive effect on economic growth, whereas remittances have a significant and negative effect. The effect of foreign aid is more ambiguous but is usually insignificant. The article offers an interpretation of the results drawing on ideas from the relevant theory.     

The effects of wind generation capacity on electricity prices and generation costs: a Monte Carlo analysis

We use Monte Carlo analysis to examine the potential of increased renewable generation to provide a hedge against variability in energy prices and costs. Fuel costs, electricity demand and wind generation are allowed to vary and a unit commitment and economic dispatch algorithm is employed to produce cost-minimizing generation schedules under different levels of installed wind capacity. Increased wind capacity reduces the mean and the variance of production costs but only the variance of electricity prices. Wind generators see their market revenues increase while consumer payments and fossil generator profits do not considerably vary as wind capacity increases. Risk aversion is captured by considering the conditional value-at-risk for both consumers and producers. The optimal level of wind generation increases as risk aversion increases due to the potential of wind to act as a hedge against very high electricity prices in high fuel price scenarios.     

Causal effects of the United States and Japan on Pacific-Rim stock markets: nonparametric quantile causality approach

This article adopts a nonparametric quantile causality approach to examine the causal effects of the U.S. and Japan stock markets on the stock markets of the Pacific-Rim region. This approach allows us to detect not only nonlinear causalities in conditional return (mean) and conditional volatility (variance) but also the asymmetries of causalities under extreme market conditions (bullish vs. bearish states). Our results provide significant evidence of causality in return and volatility at different points of the conditional distributions of returns, with the greater effects from the U.S. than from Japan. Asymmetric quantile causality patterns are particularly pronounced in the case of Japan.     

On the asymmetric effects of the real exchange rate on domestic investment in G7 countries

Two studies have assessed the symmetric and asymmetric effects of exchange rate changes on domestic investment. One included six emerging countries and the other one, 18 African nations. Both revealed that using nonlinear models to assess the asymmetric effects yield a more significant outcome compared to symmetric and linear models. We add to this small literature by showing the same using quarterly data from each of the G7 countries. Indeed, nonlinear models produced relatively more short-run and long-run effects of changes in the real effective exchange rate on domestic investment, though in an asymmetric manner.     

外商直接投资和经济增长:国内金融市场作用的实证分析

大多数外商直接投资(FD I)文献都忽略了金融市场和FD I相互作用对经济增长的影响。基于此,本文运用协整分析法分析了国内金融市场在FD I和中国经济增长中的作用;结果表明,国内金融市场在FD I和中国经济增长中没有起到积极作用。     

Regional analysis of the impact of inward foreign direct investment on economic growth in the Chinese electronic industry

This article empirically investigates the impact of inward foreign direct investment (FDI) on regional economic growth in the Chinese electronic industry (CEI). Utilizing a provincial-level panel data spanning the period 1989 to 2009, we specify and estimate an endogenous economic growth model for the CEI. Empirical results indicate that, for the coastal region, FDI inflows have been growth enhancing, while in the central and western regions the impact of FDI on economic growth is mixed, depending on the channel of capital flow. Results also indicate that exports, human capital, science and technology investment and fixed asset investment are growth enhancing, while unemployment and foreign R&D investment are growth impeding in the CEI.     

Information and the operation of markets: tests based on a general equilibrium model of land leasing in India

This paper develops an estimable general equilibrium model of land leasing to test the extent to which information is commonly held in a village and whether village markets are efficient. Information regarding the relative farming skill of households is found to be widespread, but the assumption of perfectly efficient markets within the village is rejected. These results have ramifications for the estimation of agricultural household models and for our understanding of rural institutions. The model is derived from the primitives of the production technology, the extent of information and the distributions of assets and several household unobservables. Simultaneity and selection issues are dealt with explicitly in a two-stage maximum likelihood estimation procedure using panel data from India.     

A macroeconometric analysis of the effects of taxation on financing and real investment in equipment in Canada

This paper analyses the impact of taxation on corporate financing and corporate investment in machinery and equipment in Canada. A coherent macroeconometric model of the firm's real and financial decision process is theoretically developed and empirically tested on Canadian data. Estimates of the impact of taxation in general and of the 1987 Canadian government's White Paper in particular, are analysed. The estimates suggest that income taxation has a negative but relatively small impact on equipment investment in Canada, and that models that ignore the link between the real and financial decisions overestimate the impact of taxation on real investment. With respect to tax reform, the White Paper reduces the incentive to save and invest in equity capital, and is expected to decrease real capital investment in the long run.     

EDGAR on the internet: The welfare effects of wider information distribution in an experimental market for risky assets

Policies such as the SEC’s Fair Disclosure Rule, and technologies such as SEC EDGAR, aim to disseminate corporate disclosures to a wider audience of investors in risky assets. In this study, we adopt an experimental approach to measure whether this wider disclosure is beneficial to these investors. Price-clearing equilibrium models based on utility maximization and non-revealing and fully-revealing prices predict that in a pure exchange economy, an arbitrary trader would prefer that no investors are informed rather than all are informed; non-revealing theory further predicts that an arbitrary trader would prefer a situation in which all traders are informed rather than half the traders are informed. These predictions can be summarized as “None > All > Half”. A laboratory study was conducted to test these predictions. Where previous studies have largely focused on information dissemination and its effects on equilibrium price and insider profits, we focus instead on traders’ expected utility, as measured by their preferences for markets in which none, half, or all traders are informed. Our experimental result contradicts the prediction and indicates “Half > None > All”, i.e. subjects favor a situation where a random half is informed. The implication is that in addition to testing predictions of price equilibrium, experiments should also be used to verify analytical welfare predictions of expected utility under different policy choices. JEL Classification D82, D53, G14, L86 This work was largely completed while this author was at The Hong Kong University of Science and Technology.     

外国直接投资与我国的国际收支风险问题

在我国目前银行存款大于贷款,外汇资金亦比较充裕的情况下,我国吸收外国直接投资的现实基础是否发生了改变?2004年3月,中国社科院世界经济研究所组织了一场题为“中国利用外资的回顾与反思”的座谈会。会议纪要称,“到2003年底,我国银行存款大于贷款49059亿元人民币,比1994年放大了近13.2倍,并且我国目前的外汇资金也比较充裕”,得出了“我国为弥补资金短缺而引资的现实基础已经改变,引资理论亟待修正”的主要结论,以此为导火索,引发了新一轮关于利用外资的争论。作为争论的焦点之一,利用外资与我国的国际收支风险问题再度引起了大家的关注…     

An experimental analysis of cooperation and productivity in the trust game

In the standard trust game the surplus is increased by the risk taking first mover while cooperation by the second mover is a one-to-one transfer. This paper reports results from experiments in which the reverse holds; the first mover’s risky trust is not productive and the second mover’s cooperation is productive. This subtle difference significantly lowers the likelihood of trust but increases the likelihood of cooperation conditional on trust. Evidence is presented that the change in trust is consistent with first movers failing to anticipate the later result. Drawing upon the analogy that the trust game represents a model of exchange, the results suggest that markets should be organized so that the buyer moves first and not the seller as in the original trust game.

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Electronic Supplementary Material  The online version of this article () contains supplementary material, which is available to authorized users.      

河南省城乡居民财产性收入实证分析

从党的十七大到十八大,中央政策对居民财产性收入的关注愈加强烈。数据显示,近十年,河南省城乡居民财产性收入增长迅速,但在总收入中的比重仍然偏低,且收入渠道较为集中,城乡二元特征显著,不同收入群体、不同区域之间的财产性收入差距也长期存在。为进一步增加居民财产性收入,既要努力扩大居民财产规模,又要优化投资理财环境,还要提升居民理财水平,同时努力缩小居民财产性收入差距。     

构建河北农村多元化投融资体系的路径探讨

资金投入是新农村建设的物质基础和财力保障,健全完善多元化的农村投融资体系,对支持新农村建设具有深远的意义。本文从财政支农重点投向、深化农村金融体制改革、调动农民自主投资、引导社会资本、证券直接融资与吸引外资等几个方面阐述了健全农村投融资体系的路径选择,以期为河北新农村建设提供充足的资金支持。     

Deficit sustainability and inflation in EMU: An analysis from the Fiscal Theory of the Price Level

Price determination theory typically focuses on the role of monetary policy, while the role of fiscal policy is usually neglected. From a different point of view, the Fiscal Theory of the Price Level takes into account monetary and fiscal policy interactions and assumes that fiscal policy may determine the price level, even if monetary authorities pursue an inflation targeting strategy. In this paper we try to test empirically whether the time path of the government budget in EMU countries would have affected price level determination. Our results point to the sustainability of fiscal policy in all the EMU countries but Finland, although no firm conclusions can be drawn about the prevalence of either monetary or fiscal dominance.     

The long-run effects of the real exchange rate on employment and wages in Canadian manufacturing

ABSTRACT

The literature on real exchange rate effects on the labour market is dominated by short-run analysis showing that there is heterogeneity in the responses of firms or industries to a real exchange rate shock. Analysing data on Canadian manufacturing industries, I conclude that there is a common long-run equilibrium across all manufacturing industries controlling for their openness to trade after varying adjustments to a real exchange rate shock have taken place. This conclusion is important from the perspective of policy making because it helps to form expectations about the effects of a real exchange rate movement on the labour market. The results suggest that real appreciation leads to economically significant reductions in employment in manufacturing in the long run. Real wages decrease in industries that are highly engaged in international trade and somewhat increase in industries that are relatively closed to international trade. Both employment and real wages converge quickly to the long-run equilibrium.