Integrated water and economic modelling of the impacts of water market instruments on the South African economy

A static computable general equilibrium model of South Africa is adapted to compare new taxes on water demand by two industries, namely forestry, and irrigated field crops. Comparisons are made with respect to both the short and the long run, in terms of three target variables, namely (i) the environment; (ii) the economy; and (iii) equity. Since the taxes on the two industries do not raise the same amount of revenue, the target variables are calculated per unit of real government revenue raised by the new taxes (also referred to as the marginal excess burdens of the taxes). The model results are robust for moderate values of the water elasticity of demand in the two industries, in both the long and the short run. The tax on irrigated field crops performs better in terms of all three the target variables in the short run. In the long run the tax on irrigated filed crops is better in terms of water saving, but reduces real GDP and the consumption by poor households.     

Mortgage lending,monetary policy,and prudential measures in small euro‐area economies: Evidence from Ireland and the Netherlands

This paper examines whether the increased use of macroprudential policies since the global financial crisis has affected the impact of (euro‐area and foreign) monetary policy on mortgage lending in Ireland and the Netherlands, which are both small open economies in the euro area. Using quarterly bank‐level data on domestic lending in both countries for 2003–2018, we find that restrictive euro‐area monetary policy shocks reduce the growth of mortgage lending. We find evidence that stricter domestic prudential regulation mitigates this effect in Ireland, but not so in the Netherlands. There is some weak evidence for an international bank lending channel that can be mitigated by stricter lender‐based domestic prudential regulation.     

Country asymmetry,trade agreements,and transfers

Using a standard 2 × 2 trade agreement model, I show that the welfare effects of a free trade agreement (FTA) depend on the asymmetry on supply and demand functions. When countries are sufficiently asymmetric with respect to the size or the demand functions, the small country tends to be better off, while the large country is worse off. Thus, the small country must compensate the large country for the FTA to be incentive‐compatible. However, in the presence of sufficient asymmetry in the supply functions, the small country is worse off, while the bigger is better off. In this case, the transfer must flow from the large to the small country. This last finding helps explain why some FTAs between rich and poor countries provide for adjustment transfers to the latter.     

Firms and wage inequality in Central and Eastern Europe

We use large linked employer-employee data to analyze wage inequality patterns in Central and Eastern European (CEE) countries between 2002 and 2014. We show that, unlike in many other advanced economies, wage inequality levels have decreased in almost all CEE countries. These reductions in wage inequality resulted from disproportionately large increases in wages at the bottom of the wage distribution, and from decreases in between-firm wage inequality. We further find that the declines in wage inequality were driven by large wage structure effects that compensated for changes in the composition of workers.     

Financial amplification of foreign exchange risk premia

Theories of financial frictions in international capital markets suggest that financial intermediaries' balance sheet constraints amplify fundamental shocks. We present empirical evidence for such theories by decomposing the U.S. dollar risk premium into components associated with macroeconomic fundamentals, and a component associated with financial intermediary balance sheets. Relative to the benchmark model with only macroeconomic state variables, balance sheets amplify the U.S. dollar risk premium. We discuss applications to financial stability monitoring.     

Combining biodiversity modeling with political and economic development scenarios for 25 EU countries

In the EURURALIS project, a chain of models was used to predict the changes in sustainable development indicators for European human well-being, ecology and economy issues, for four alternative scenarios of the future socio-economic development. This paper describes the biodiversity analysis of the project. Models based on general relationships between environmental factors and biodiversity loss were combined with socio-economic, land-use and environmental models to derive data that were integrated into an interactive tool for policy makers. The biodiversity analysis takes into account the effects of land-use change, climate change, fragmentation by major roads, area of unfragmented patches, nitrogen deposition, forestry and disturbance. Results show that biodiversity is projected to decrease between now and 2030 in most countries for all scenarios, indicating that it is unlikely that the EU will be able to fulfill its commitment to stop biodiversity loss by 2010. This is mainly due to urbanization and increase in stress factors, and outweighs the area increase of nature arising from land abandonment. Merits, limitations and uncertainties of this approach to biodiversity assessment are discussed.     

E-commerce and the market structure of the recorded music industry

In this article, we study the impact of the development of e-commerce on the concentration of the recorded music industry in France, for the period 2003–2010. First, we find that over the whole period, CD sales, measured at the distributor level, are less concentrated online than offline. Second, we find that sales concentration online has increased between the early period of e-commerce (2003–2006) and the later period (2007–2010).     

Schumpeter and the revival of evolutionary economics: an appraisal of the literature

During the last two decades we have seen a revival of interest in the works of Joseph Schumpeter and “evolutionary” ideas in economics more generally. A professional society honouring Schumpeter's name has been founded, and linked to it we have had for more than fifteen years now a professional journal devoted to this stream of thought. However, it has been argued that, despite these developments, the link between Schumpeter's own work and the more recent contributions to evolutionary economics is in fact rather weak. This paper considers this claim. Based on an analysis of Schumpeter's contribution to economics the paper presents an overview and assessment of the more recent literature in this area. It is argued that although there are important differences between Schumpeter's work and some of the more recent contributions, there nevertheless remains a strong common core that clearly distinguishes the evolutionary stream from other approaches (such as, for instance, so-called “new growth theory”). RID="*" ID="*" Many people have contributed to this paper in various ways. Jon Hekland at the Norwegian Research Council started it all by asking me to make an overview of the contribution from “evolutionary economics” to our understanding of contemporary economies. Several people helped me on the way by supplying written material, comments and suggestions, and I am indebted to all of them. Brian Arthur, Stan Metcalfe, Keith Pavitt, Erik Reinert, Paolo Saviotti and Bart Verspagen may be particularly mentioned. A preliminary version was presented at the conference “Industrial R&D and Innovation Policy Learning – Evolutionary Perspectives and New Methods for Impact Assessment” organised by the Norwegian Research Council (“SAKI”) at Leangkollen, Asker, April 18–19.2002. I wish to thank the discussant, Tor Jakob Klette, and the participants at the conference for useful feedback. Moreover I have benefited from comments and suggestions from the editors and referees of this journal. The final responsibility is mine, however. Economic support from the Norwegian Research Council (“SAKI”) is gratefully acknowledged.     

The Workout of Banking Crises: A Macroeconomic Perspective

This paper provides a macroeconomic perspective for governmentinterventions in banking crisis. Such crisis occur when a largenumber of banks fail to meet capital requirements or are insolvent.Using a macroeconomic model with financial intermediation, ouranalyis suggests that strict enforcement of capital-adequaterules suffices in prosperous periods. Capital requirements serveas an indicator for crises interventions in critical stateswhich may require interest rate intervention and restructuringof the banking industry. These policies can be reinforced byrandom bailouts and temporary financial relief, with a largepercentage of the costs being covered by current and futureowners of banks. (JEL D41, E4, G2)