Determinants of foreign direct investment of OECD countries 1991–2001

It is the objective of this paper to identify the determinants that led to the increase in worldwide foreign direct investment during the 1990s. The paper also addresses the question of whether these factors influenced exports differently. Therefore, using data from 22 countries reporting to the OECD, gravity models for bilateral FDI stocks/flows and exports are estimated, first in a cross-section setting for 1999 and then as a panel data set for the period 1991–2001. In order to control for EU-specific effects, a distinction is made between intra-EU25 observations and observations outside the EU25 area. Regressions are repeated with exports as a dependent variable in order to elaborate how far determinants of trade flows are identical or how far they differ. In the panel context, the results show that a change in total market size is an important aspect that leads both FDI and exports in the same direction. Only exports are significantly influenced by relative market size. Stock market booms boost FDI but not exports. Political indicators and exchange rate changes suggest that exports are demand-driven while FDI is supply-driven. Overall, FDI and exports tended to flow relatively less abundantly to distant countries than to nearby countries over the period under consideration. This supports the idea of a complementary relationship between investment and trade. However, this trend is reversed for exports within the EU25 area.     

Does a cap on the carbon price have to be a cap on green investments?

Policy makers and economists are discussing a regulatory ceiling for carbon prices, acting as a “safety valve” for the protection of regulated businesses from unexpected price surges. While the pros and cons of such a regulatory feature are widely discussed in the literature, the optimal design of such a cap and the attendant economic and environmental consequences have yet to be subjected to quantitative analyses. We employ a Monte Carlo simulation/dynamic programming approach to investigate the impact of different carbon price cap designs on an individual firm in the energy generation industry. Specifically, we model the firm’s choice between a pulverized coal combustion plant and a combined cycle gas turbine plant, a large hydropower plant, a solid biomass plant and an on-shore wind farm. Our results show that the effects of a maximum carbon price set by the regulator is largely independent of its exact characteristics, albeit not of its level. A higher cap favors low-carbon technologies in general. However, due to differences in their cost structures, a price cap has different impacts on the relative attractiveness of the specific alternative technologies investigated.     

Atsushi Akera. Calculating a Natural World: Scientists, Engineers, and Computers during the Rise of U.S. Cold War Research

This ambitious book retells a familiar story by introducingnew evidence and new perspectives. The story is the originsof American computer development in the middle decades of thetwentieth century. The new evidence includes archival sourcesfrom academia and industry. The new perspective is constructivistand postconstructivist theory. The results are simultaneouslypredictable and illuminating. Akera's book is not so much a revised narrative as it is a successionof case studies, some familiar and some original. Conventional     

Macroeconomic determinants of international housing markets

This paper examines the long-term impact and short-term dynamics of macroeconomic variables on international housing prices. Since adequate housing market data are generally not available and usually of low frequency we apply a panel cointegration analysis consisting of 15 countries over a period of 30 years. Pooling the observations allows us to overcome the data restrictions which researchers face when testing long-term relationships among single real estate time series. This study does not only confirm results from previous studies, but also allows for a comparison of single country estimations in an integrated equilibrium framework. The empirical results indicate house prices to increase in the long-run by 0.6% in response to a 1% increase in economic activity while construction costs and the long-term interest rate show average long-term effects of approximately 0.6% and ?0.3%, respectively. Contrary to current literature our estimates suggest only about 16% adjustment per year. Thus the time to full recovery may be much slower than previously stated, so that deviations from the long-term equilibrium result in a dynamic adjustment process that may take up to 14 years.     

FEDERATION WITH MAJORITY DECISIONS: ECONOMIC LESSONS FROM THE HISTORY OF THE UNITE D STATES, GERMANY AND THE EUROPEAN UNION

This article examines the potential impact of qualified majority voting on decision-making within the EU. It draws on the experience of US federalism, Germany under Bismarck and the UK in the European Union. In each case, it is shown that geographical majorities (nations, states or regions) have used majority decision-making as a means of increasing their rivals' costs. It is argued that to prevent such behaviour in the future in the EU, the proposed Constitutional Treaty should raise, not lower, the decision-making quorum.     

The importance of being at the margin

The fundamental defects of the European Union cannot be overcome unless the Intergovernmental Conference is replaced by an Interparliamentary Conference. Eastern enlargement does not justify a transition to widespread majority voting but it calls for a reform of the Court and the Commission. The marginal members of the European Council have the largest power. Britain's role is to be at the margin, not the heart, of Europe.