CARBON REDUCTION COSTS IN NEW ENGLAND'S POWER SECTOR

This paper examines the cost of reducing carbon emissions in New England's power sector. The analysis relies on detailed sectoral studies of costs and resource potentials for demand-side efficiency, cogeneration, renewables, and conventional resource options. Sectoral studies' results were integrated using a production-cost model to estimate the total cost and rate impacts of carbon reduction strategies relative to a business-as-usual forecast. To capture potential uncertainties, the analysis takes into account variations in capital costs, fuel prices, resource utilization levels, and base case retirements of existing power plants. Results show that New England's power sector can freeze carbon emissions at current levels or reduce carbon emissions while simultaneously decreasing customers' total electricity bills.     

A Re-examination of Traditional Hypotheses about the Term Structure of Interest Rates

The term structure of interest rates is an important subject to economists, and has a long history of traditions. This paper re-examines many of these traditional hypotheses while employing recent advances in the theory of valuation and contingent claims. We show how the Expectations Hypothesis and the Preferred Habitat Theory must be reformulated if they are to obtain in a continuous-time, rational-expectations equilibrium. We also modify the linear adaptive interest rate forecasting models, which are common to the macroeconomic literature, so that they will be consistent in the same framework.     

INCOME REDISTRIBUTION AND PUBLIC GOOD PROVISION: AN EXPERIMENT

We experimentally investigate the impact of income redistribution on voluntary contributions by groups of four subjects. We compare equalizing and unequalizing redistribution. Our data are consistent with the neutrality theorem: Redistribution does not affect the amount of voluntarily provided public good at the group level. However, at the individual level, subjects tend to underadjust with respect to the Nash prediction. We also observe an insignificant adjustment asymmetry between the poor and the rich: Subjects who become poorer adjust their contribution by a larger absolute amount than subjects who become richer. Finally, poor subjects tend to overcontribute significantly more than rich subjects.     

THE EFFECT OF UNEMPLOYMENT BENEFITS, WELFARE BENEFITS, AND OTHER INCOME ON PERSONAL BANKRUPTCY

Personal bankruptcy, unemployment insurance, and Aid to Families with Dependent Children provide income and wealth insurance. Because they have similar purposes, it should not be surprising that some households use more than one of these programs or that the programs are substitutes. This study contributes to the personal bankruptcy literature by examining this interaction and finds that increases in unemployment benefits decrease the probability of bankruptcy. (JEL D12 , K35 )     

Marginal Subsidies in Tullock Contests

In a general Tullock contest, we examine a situation where a limited resource can be used to provide marginal subsidies to either player (weak or strong), or to increase the prize directly. We show that to maximize total effort, subsidizing the weak/strong player is preferred when the contest is sufficiently accurate/inaccurate. This result generalizes to n‐player lottery contests. In a lottery contest (Tullock contest with ), we derive the optimal scheme for a full range of resource: when the resource is small, it is optimal to only subsidize the weak player; when it is large, both players should be subsidized simultaneously.