Effective Promotion of Renewable Energy in the Presence of an Emissions Trading System

This paper contributes to the literature of overlapping regulations as we introduce a model, which gives insights in an efective combination of the EU emissions trading system (ETS) and the promotion of renew- able energy within the electricity sector. Under consideration of EU long term objectives in CO2 mitigation we evaluate the efcient share of renewable energy. Hence, we give rise to the question, if the actual amount of renewable energy production already exceeds this share mak- ing a stop or at least a modification of its promotion necessary. Our approach proves to be robust to a change of pattern of marginal abate- ment costs (MAC), while resulting variances can be narrowed down and quantified. For its application to empirical data, we develop a method to evaluate the performance of the ETS and the promotion of renewable energy. On that basis we suggest modifications of the ETS to uncouple the certificate price from economical fluctuations and the development of renewable energy leading to their better combination and stronger mitigation incentives. For Germany it turns out, that the electricity generation of renewables has not exceeded its optimal share yet, while data is restricted due to low mitigation incentives set by the ETS. There- fore both the suggested improvement of the ETS and the monitoring of the development of renewable energy, referred to our model, is strongly recommended

Factor-Biased Technical Change and Specialization Patterns

We analyze the medium{ and long{run effects of international integra- tion of capital markets on specialization patterns of countries. For that purpose, we incorporate induced technical change into a Heckscher{Ohlin model with a continuum of �nal goods. This provides a comprehensive the- ory that explains the dynamics of comparative advantages based on differ- ences in effective factor endowments. Our model constitutes an appropriate framework for understanding the changes in industrial structure of foreign trade observed, e.g., in the CEE countries over the last two decades. In addition, our approach provides a theoretical foundation for the empirical prospective comparative advantage index (Savin and Winker 2009) with new insights into the future dynamics of comparative advantages. Even- tually, the model may serve as a basis to set development priorities in countries being in the period of transition

International Trade and Unemployment – the Worker-Selection Effect

This paper analyzes how trade liberalization influences the unemploy- ment rate of workers with di¤erent abilities. We refine the Melitz (2003) framework to account for trade unions and heterogeneous workers, who di¤er with respect to their abilities. Our main findings are: (i) high- ability workers profit from trade liberalization in terms of higher wages and higher employment; (ii) the least efficient workers loose their job and switch to long-term unemployment (worker-selection effect); (iii) if a country is endowed with a large fraction of low-skilled workers, trade lib- eralization leads to a rise in aggregate unemployment. In this case, trade liberalization may harm a country's welfare

Central Bank Communication and Correlation between Financial Markets: Canada and the United States

We study the correlation between pairs of bond and stock markets in Canada and the United States between January 1998 and December 2009 in the framework of diagonal-BEKK models. Our research question is whether monetary policy actions and communications by the Bank of Canada and the Federal Reserve significantly affect the conditional co-movement of financial markets (i) within Canada and (ii) between Canada and the United States. We find that central bank communication significantly increases the correlation of financial markets within and across the two countries and is particularly important for the correlation of Canadian and US long-term interest rates

Establishing a Hawkish Reputation: Interest Rate Setting by Newly Appointed Central Bank Governors

In this paper, we explore the interest rate setting behavior of newly appointed central bank governors. We use the Kuttner and Posen (2010) sample, which covers 15 OECD countries, and estimate an augmented Taylor (1993) rule for the period 1974–2008. We find, first, that newly appointed governors fight inflation more aggressively during the first four to eight quarters of their tenure in an effort to establish a reputation for being inflation averse. Second, we find a significantly stronger reaction to inflation by newly appointed governors working within monetary policy frameworks comprised of an at least partly independent central bank and an explicit nominal anchor

Leaders’ Impact on Public Spending Priorities: The Case of the German Laender*

We examine determinants of the composition of public expenditure in the German Laender (states) over the period 1992–2008, as the Laender exhibit a high degree of institutional and political homogeneity and are endowed with extensive fiscal competences. Our prime contribution is an investigation into how political leaders’ socioeconomic background influences public spending priorities. Applying sociological theory, we link preferences for the composition of public spending to social status. In contrast to approaches relying on political budget cycles or partisan theory, we find strong and theory-consistent evidence that prime ministers tend to favour fiscal policies supporting the social class in which they are socialised. Governments led by prime ministers from a poor socioeconomic background spend significantly more on social security, education, health, infrastructure, and public safety

Evidence for the “Suicide by Firearm” Proxy for Gun Ownership from Austria

When attempting to measure gun ownership in the United States, the problem of missing administrative data arises, making it necessary to find a valid proxy. Several such proxies are employed in economic studies, one of which is the fraction of “suicides by firearm” of “all suicides” (FSS). My work validates this proxy from out-of-sample data, namely, Austrian administrative data on firearm licenses. I also reevaluate, with appropriate statistical methods, a result on firearms and suicide from the medical that is often used for public policy advocacy. This result is, unfortunately, heavily biased due to ignoring a well-known fallacy and thus can be only partially confirmed

Amalgamation, free-ride behavior, and regulation

Amalgamation incentivizes municipalities to increase public debt because it allows them to subrogate their repayment and interest burden on the entire municipality after amalgamation. Especially, the smaller municipality tend s to accumula te public debt in order to free ride Previous literature has shown this kind of opportunistic behavior in countries where municipalities can issue bonds freely in the market. However, public borrowing by municipalities is strongly controlled in Japan. T his study examines t he relationship between regulation of local go vernment borrowing and the free ride behavior of Japanese municipalities on amalgamation. Difference in difference regression confirms the free ride effect, which is however wholly counterbalanced by regulatio

Municipality amalgamation in Japan: A survival analysis of the timings of the amalgamation process

This paper uses survival analysis to examine the time taken to carry out municipality amalgamation in Japan in terms of both forming the amalgamation committee and completing amalgamation. The results show that municipalities that depend on localm allocation tax grants as a revenue source, those that have an incentive to become a city that has special administrative discretions, and those that jointly manage local services form a committee and complete amalgamation more quickly. Further, municipalities that have high local public debt tend not to form committees. These findings show that the central government’s “carrot-and-stick” policy has strongly influenced municipality amalgamation

Motives of pro-social behavior in individual versus collective decisions – a comparative experimental study

We investigate the motives of pro-social behavior in collective decisions in an economic experiment. It compares individual behavior in private and collective decisions in a unified experimental setup. Subjects are given an individual endowment and have to decide how much of it to donate to charity. The experiment is combined with two long questionnaires that provide us with background information on subjects and enables us to learn more about the motives driving their behavior. Contrary to theoretical predictions, the distribution of amounts donated individually is remarkably similar to the distribution of amounts proposed for collective donation. In regressions, we find individual donations to be driven by consequentialist motives, social norms and moral convictions. In collective decisions, neither the motiverelated variables nor any of the control variables are found significant. Comparing subjects’ affective state before and after the experiment, we find that individual donations create a feeling of warm glow while collective donations do not. On the other hand, the change in affective state in the collective decision is higher the higher the amount proposed for the collective donation. This pattern is consistent with expressive motives