The approximation capabilities of the minflex-Laurents,translog, and generalized Leontief forms

This paper compares the approximation capabilities of the minflex-Laurents translog and minflex generalized Leontief cost functions with their translog and generalized Leontief counterparts in Monte Carlo experiments. The minflex Laurent specifications generally provided closer approximations to underlying technical and economic parameters. Imposition of nonlinear restrictions on some of the parameters of the minflex Laurent models yielded measurable improvement in estimated elasticities of substitutions, returns to scale, and rates of technical change.The refereeing process of this paper was handled through E. Appelbaum.     

A case study of regional catchment water quality modelling to identify pollution control requirements.

There are four ecologically important river catchments that contain candidate Special Areas of Conservation (cSACs) under the Habitats Directive in the Lake District National Park located in the North of England. These are the rivers Ehen, Kent, Derwent and Eden. For each cSAC, there are defined ecological criteria that include water quality targets to protect the designated species. Stretches of the riverine cSACs in each catchment are failing to meet these and other water quality targets. The Environment Agency commissioned a study of each catchment to provide the underpinning scientific knowledge to allow it to deliver its statutory obligations under the Habitats Directive. SIMCAT river water quality models were produced and used to predict the water quality impacts resulting from a number of water quality planning scenarios aimed at achieving full compliance with the Habitats Directive and other national and EEC water quality targets. The results indicated that further controls on effluent discharges will allow the majority of targets to be met but other sources of pollution will also need to be controlled. The outcome of the study also recognised that water quality improvements alone will not necessarily produce the required improvement to the ecological interest features in each cSAC.     

CAP Reforms in the 1990s and their Price and Welfare Implications: The Case of Wheat

We use a nonlinear commodity market model to assess, theoretically and empirically, the impacts of recent reforms of the CAP on prices and economic welfare in the EU. The empirical analysis is based on an aggregate structural econometric model of the EU wheat economy and its links to the rest of the world. Instability issues are also investigated. Impacts of CAP reforms on the variance of domestic and world prices are analysed and a Monte Carlo simulation is used to evaluate uncertainty in the model's welfare computations. Recent reforms led to a net welfare gain within the EU during the period 1993–2000. Additional budgetary costs are less than the welfare gains of consumers and producers. Producers gained as lower price support was overcompensated by additional direct payments.     

Fixed Exchange Rates and Disinflation in Emerging Markets: How Large Is the Effect?

We examine developing countries which have institutional quality ratings for the effects of exchange rate rigidity on inflation. The level of institutional development exerts no effect on the impact of currency regimes. However, the interaction of institutional quality and exchange rates has, in the most plausible specifications, a negative impact on inflation. This suggests that fixed exchange rates exert at most a contingent effect on inflation, and indicates that countries in Eastern Europe and Latin America contemplating currency pegs would be better off improving institutional quality prior to adopting the euro or dollar and expecting a large subsequent disinflationary effect. JEL no.  F31, O11     

CONSUMER THEORY, HOME PRODUCTION, AND ENERGY EFFICIENCY

Arguments about the existence of the so-called energy efficiency gap are typically based on evaluations of efficiency measures as investments whose end result is to reduce the cost of providing a given level of energy services. This article demonstrates that the investment approach tends to undervalue energy efficiency improvements because it omits the increase in utility that results from the consumer's substitution of energy services for other goods. The substitution occurs because the efficiency measure reduces the marginal cost (implicit price) of energy services. Sample calculations based on a Cobb-Douglas utility function are used to illustrate the potential size of the undervaluation of efficiency investments.     

Who's in charge here? You or your computer?!

To pinpoint problems, look at hardware, software, support training and the user. The problem may reside in any one, or several, of these areas.     

International capital and nontraded goods in the long run

The present paper develops the comparative static properties of a small open economy which produces both traded goods and nontraded goods, and is a price taker in the international market for productive capital. Assumptions of full employment, competitive markets, and international mobility of productive cap ital input capture a long run horizon. Comparative static results associated with the wage, labor, and the price of the nontraded good are independent of factor intensity, factor substitution, and demand for the nontraded good. A tax on the traded good and a capital subsidy together raise national income and the real wage.     

An analysis of some aspects of regulatory risk and the required rate of return for public utilities

This paper uses a modification of the continuous time asset pricing model of Cox, Ingersoll, and Ross to analyze the effect of regulatory risk on the cost of capital. Analysis shows that random errors in setting the allowed rate of return can either increase or decrease the cost of capital depending on other regulatory parameters. However, the analysis suggests that regulatory risk is not material.