Some unfamiliar dynamics of a familiar macro model a note

The idea that for small disturbances the full employment equilibrium is stable while for large disturbances it is unstable was coined by Leijonhufvud in the notion of a corridor. We discuss the existence of a corridor in the standard Keynesian-monetarist textbook macro-model. It turns out that though the full employment steady state of this model may be locally stable — which is the case when the well-known Cagan condition holds — the model is never globally stable. This is due to the inherent non-linearity in the demand for money function, arising from non-negativity of the nominal rate of interest. Thus, perhaps surprisingly, the Cagan condition is both necessary and sufficient for the existence of a corridor in the Keynesian-monetarist model.This note is adapted from a paper presented at the European Meeting of the Econometric Society, Bologna, August 1988. I would like to thank Søren Bo Nielsen and Peter Birch Sørensen (Copenhagen Business School), Thomas Lux (University of Bamberg), and two anonymous referees for helpful comments and suggestions. Remaining errors and shortcomings are mine.     

Potentiale und Risiken der Nutzung von Methan aus Methanhydraten als Energieträger

Marine and permafrost-based methane hydrates are the largest existing fossil carbon resource. Their broad geographic distribution, especially in comparison to oil and conventional gas, make them a promising future source of energy. However, there is a danger of forcing the greenhouse effect in the event of a release of methane into the atmosphere as well as causing the collapse of oceanic slope sediments. Also the technical difficulties in extracting methane from hydrates are not yet fully resolved. Nevertheless, research on methane hydrates has been forced both on political as well as economic considerations in recent years and methane hydrates have several practical advantages, which make them a transitional solution worth looking at on the way to a future renewable-based energy supply. However, the knowledge of the potentials and risks of methane hydrates is still very poor, especially in the German-speaking public, administration and policies. This deficiency hopefully will be eased by this overview dealing with the current state of research and an outlook based on the most important findings.     

Die Pfandpflicht für Einweggetränkeverpackungen

Am 20. Januar 2005 wurde die dritte Novellierung der Verpackungsverordnung vom Bundestag beschlossen und die Pfandpflicht für Einweggetränkeverpackungen neu geregelt. Sind Mehrwegverpackungen immer umweltfreundlicher als Einwegverpackungen? Dient die neue Regelung langfristig als Vorbild für eine europaweite Pfandpflicht?Markus Groth, 29, Dipl.-Ökonom, ist wissenschaftlicher Mitarbeiter am Forschungs- und Studienzentrum Landwirtschaft und Umwelt (ZLU) an der Georg-August-Universität in Göttingen.     

Ist der Fahrplan der Energiewende noch einzuhalten?

The German energy transition represents a policy-driven, sustainability-oriented restructuring of both supply- and demand-side components of the entire energy system by 2050. Whereas the development of renewable energies in the electricity sector is right on track, due to the feed-in tariffs of the German Renewable Energy Sources Act, many other crucial requirements for a successful transition are not, amongst others the improvement of energy effi ciency and the decarbonisation of the transport sector. Contrary to the public discussion, the primary future challenges do not consist in limiting electricity prices or abandoning feed-in support schemes, but rather in coordinating the variety of actors as well as appropriately matching the different system elements (grids, technologies, energy sectors, demand and supply side, etc.). Much remains to be done. By highlighting some examples like the need to take into account future implications of climate change for the energy sector, the consequences of the current crisis in the European Union’s emissions trading scheme and the need for a cautious adjustment of the EEG, the paper argues that the major challenges regarding the German energy transition mainly go beyond the current policy-driven and short-term discussion of energy prices. Germany’s pioneering attempt to integrate steadily increasing share of non-dispatchable electricity from renewable sources is challenging the stability of the system. Several characteristics in the current selfregulating system are identifi ed and analysed, which reveal themselves as potential weaknesses or shortcomings in the upcoming system.     

AN EXAMINATION OF ASKED-BID SPREADS FOR TWO OVER-THE-COUNTER MARKET SEGMENTS

Previous studies of over-the-counter (OTC) asked-bid spread behavior treat the sample stocks as a homogeneous group. Actually, there are several segments of the OTC market, ranging from the recently created National Market System to the pink sheets. We find that although previously proposed independent variables (risk, transaction rate, number of dealers, and price) determine inside spreads for two OTC market segments in ways consistent with the results of others, the models do explain the observed spreads differently.     

Liquidity,exchange listing,and common stock performance

The liquidity of securities—the relationship between volume of trading and changes in market price—has won increasing recognition as an element of investment strategy in recent years. Relatively high liquidity is deemed to be a desirable characteristic of a stock, especially for the institutional investor, who typically trades in large volume. Thus, firms can generally be expected to seek means of enhancing the liquidity of their shares. One of the supposed means of accomplishing this is by listing one's stock on a national securities exchange. This paper examines the relationship of common stock liquidity to both exchange listing and price behavior during major up and down movements in the market. Our conceptual and empirical analyses indicate that liquidity is linked to price behavior; and we suggest that the view held by at least some corporate officers—that exchange listing increases liquidity—may be erroneous. More specifically, it appears that when the amount of firm capitalization is taken into account, exchange listing does not result in greater stock liquidity.