General equilibrium modelling of the direct and indirect economic impacts of water quality improvements in the Netherlands at national and river basin scale

The main objective of the study presented in this paper is to estimate the direct and indirect economic impacts of water quality policy scenarios in the Netherlands focusing on the reduction of emission levels of nutrients and a number of eco-toxicological substances. For this purpose, an Applied General Equilibrium (AGE) model consisting of 27 production sectors is extended to water through the inclusion of substitution elasticities between labour, capital and emissions to water in the sectors' production functions. The macro-economic costs of a 10, 20 and 50% reduction of the emission levels in the year 2000 of ten priority substances in the EU Water Framework Directive vary between 0.2 and 9.4% of Net National Income (NNI). A large share of the total economic costs are borne by important sources of pollution like commercial shipping, the chemical and metal industry. However, important spin-off effects due to adaptation take place in the tertiary service sector. Besides the estimation of the economy-wide impacts of water quality improvements, the novelty of the study presented here is found in the downscaling of national and sector results to river basin level and the estimation of shadow prices for water-polluting substances through the introduction of an emission permits market.     

Do Potential Skilled Emigrants Care about Political Stability at Home?

In this paper, we consider the role of political stability in the source country as a potential reason for skilled emigration. We control for all prospective source country characteristics, and yet skilled emigration is seen to be driven by a relatively better situation of political stability in the home country. Our research clearly shows that government stability, socioeconomic conditions, investment profiles, democratic accountability, internal conflict, and ethnic tensions in source nations have significant impacts on the rate of skilled emigration for a sample of developed and developing countries. The results retain robustness even for a subset of only developing nations.     

Household Satellite Account for France

We estimate in a household satellite account (HHSA) the value of French domestic production in 2010 and 1998, using the input method and following Eurostat's recommendations. In line with previous studies, we find that extending the system of national accounts (SNA) frontier of production to domestic activities (house chores, cooking, care …) has a sizeable effect on key macroeconomic indicators (+33 percent GDP, ?5 p.p. GDP growth, +50 percent disposable income, +58 percent consumption, and ?10 p.p. of purchasing power growth). We conduct a sensitivity analysis to various methodological issues which have not yet been settled by an international benchmark. Quantitatively, the two most important issues are the boundary of household production—we favor a relatively narrow definition—and the use of a gross or a net wage—we prefer gross wage‐. However, estimates are much less sensitive to otherwise greatly debated issues such as which substitute wage to use.     

Entrepreneurship and Unemployment in the UK

The influence of industrial structure, more specifically of entrepreneurship, is investigated on the level of unemployment in the UK. The question is to what extent entrepreneurship, i.e., business ownership can reduce the level of unemployment. The alleged differences between the managed and the entrepreneurial economy will be discussed as well as the links between entrepreneurship and unemployment. It will be concluded that the UK is a relative outlier when using a simple model of the relationship between unemployment and the rate of business ownership. The model is calibrated using recent data of some 23 OECD countries. It underestimates the decrease in unemployment in the UK in the period 1982–1990. Some arguments are brought forward why this might be the case.     

CGE assumptions under scrutiny: uncertainty in the ethanol promotion policy in Mexico

Based on a CGE exercise of a subsidy to initiate ethanol production in Mexico, we use Monte Carlo simulations for consumer demand elasticities and ethanol cost estimates. The analysis provides three conclusions: when markets vary smoothly and predictably, Monte Carlo methods can then help to gauge the actual probability that a given program will achieve a desired outcome. Second, secondary markets may display little or no sensitivity to these parameter variations. Finally, a ‘razor’s edge’ outcome with no positive benefits if a critical parameter falls below some critical value, reveals that an economic policy may not be conducive to ‘fine tuning’ by marginal adjustments.     

The gains from specialization and population size

This note combines three ideas: the association of more people with new goods, the comparative advantages of individuals, and economic happiness. People may not be happier in a larger knowledge economy, but the gains from specialization are necessarily larger.     

Choice Certainty and Consistency in Repeated Choice Experiments

The main objective of this study is to examine how repeated choice affects preference learning in stated preference experiments. We test different hypotheses related to preference learning by analyzing response patterns and asking respondents in a choice experiment to report their experienced certainty when going through the choice tasks. In a split-sample test, we show that follow-up choice certainty questions are procedural invariant. The self-reported certainty results indicate that learning occurs, but econometric testing procedures do not identify any significant impact of learning effects on parameter estimates or variance across choice tasks. Additional tests of choice consistency suggest that preferences in the choice experiment are stable and coherent.     

On Sustained Growth Under Uncertainty

We analyze a stochastic one‐sector model of economic growth and investigate the conditions under which long‐run growth occurs almost surely. In contrast to the deterministic version of the model, the utility function plays a crucial role in determining the long‐run behavior of output.