Energy Saving Innovations, Non-Exhaustible Sources of Energy and Long-Run: What Would Happen if we Run Out of Oil?

We formulate and solve a model of factor saving technological improvementconsidering three factors of production: labor, capital and energy.The productive activities have three main characteristics: first, in order to usecapital goods firms need energy; second, there are two sources of energy: nonexhaustibleand exhaustible; third, capital goods can be of different qualitiesand the quality of these goods can be changed along two dimensions-reducingthe need of energy or changing the source of energy used in the productionprocess. The economy goes through three stages of development after industrialization.In the first one, firms make use of exhaustible energy and theefficiency in the use of energy is constant. In the second stage, as the price ofenergy grows the efficiency in its use is increased. In the third stage, the price ofexhaustible sources is so high that firms have incentives to use non-exhaustiblesources of energy. During this stage the price of energy is constant. In this setup, the end of the oil age has level effects on consumption and output but itdoes not cause the collapse of the economic system.**Se formula y resuelve un modelo de cambio tecnológico ahorradorde factores de producción que considera tres factores: capital, trabajo yenergía. El modelo cuenta con características específicas con respecto a la interacción entre la energía (la cual, de acuerdo a su fuente puede ser renovabley no renovable) y el capital. Una vez esta economía se ha definido, se suponeque evoluciona en tres etapas luego de su industrialización, durante las cualesel carácter renovable o no renovable de la energía influye su precio relativo,eficiencia y afecta también el nivel agregado de consumo y producción de laeconomía, sin que esta evolución lleve al colapso del sistema económico.non-exhaustible energy, energy saving innovations, economicgrowth.**energía renovable, innovaciones ahorradoras de energía, crecimientoeconómico.

Tests of the functional form, the substitution effect, and the wealth effect of Mexico´s money demand function

M1, M2, and M3 demands in Mexico are positively influenced by output and stock prices and negatively associated with the saving rate, the U.S. interest rate, and the expected inflation rate. Peso depreciation affects M1 demand negatively and M2 and M3 demands positively. The log-linear form cannot be rejected for M1 demand and can be rejected for M2 and M3 demands, while the linear form can be rejected for M1, M2, and M3 demands. The CUSUMSQ test shows that M1, M2, and M3 demands are stable; while the CUSUM test indicates stability in M1 and M3 demands and instability in M2 demand.Box-Cox transformation, currency substitution, wealth effect,stability tests

Recent macroeconomic performance in colombia: what went wrong?

Al finalizar la d�cada anterior la actividad real en Colombia experiment� la m�s aguda recesi�n de los �ltimos 50 a�os. Para explicar este fen�meno, postulamos un modelo VAR estructural no-triangular que describe la din�mica de la producci�n, los precios, el desempleo y los salarios durante las �ltimas dos d�cadas. La evidencia sugiere que, en el largo plazo, la pol�tica monetaria ha sido neutral con respecto al producto y la desempleo, mientras que la principal raz�n para el incremento de �ste �ltimo se explica por la forma en que se han determinado los salarios (formaci�n de expectativas hacia atr�s) y el incremento de los costos no salariales.structural VAR, unemployment, monetary policy, wages, nonwage labour costs, expectations

A generalized index of market power

This paper analyses two approaches to measuring market power-the commonly used Lerner index and a range of exploitation measures-. Itis argued that the Lerner index is designed to quantify market power fromthe supply side and the exploitation measures are designed to quantify marketpower from the demand side, and that the two approaches do not always behavein a symmetric way, since they do not always have the same bounds. To sortout these potentially undesirable properties, this paper proposes a new generalindex to measure market power, which is symmetrical in the sense that it isbounded between zero and one, regardless of whether the market power comesfrom the supply or the demand side. The index proposed allows for the presenceof more than one firm and for the existence of conjectural variations.*******************************************************************************************************************Este documento analiza dos enfoques para medir poder de mercado-el frecuentemente utilizado índice de Lerner y un conjunto de medidas de explotación-. Se argumenta que el índice de Lerner está diseñado para cuantificarel poder de mercado por el lado de la oferta y que las medidas de explotaciónestán diseñadas para cuantificar el poder de mercado por el lado de la demanda,y que esos dos enfoques no siempre tienen los mismos límites. Paracorregir estas propiedades potencialmente no deseables, este documento proponeun nuevo índice general para medir poder de mercado, que es simétrico-estando restringido a valores entre cero y uno-, independientemente de si elpoder de mercado proviene del lado de la oferta o de la demanda. El índice propuestopermite la presencia de más de una firma y la existencia de variacionesconjeturales.market power, mark up, mark down, Lerner index, exploitation measures, industrial organization, conjectural variations

Extended Sensitivity Analysis for Applied General Equilibrium Models

Previous sensitivity analysis procedures for applied general equilibrium models have focussed on the values of exogenously assigned elasticity parameters, while the calibrated parameters -those that are obtained from combining elasticity information with flow or stock data- have been largely ignored. Calibrated parameters are central to a model´s specification, and uncertainty surrounding their values affects the credibility of the model´s results. This paper introduces and illustrates a calibrated parameter sensitivity analysis (CPSA) which, when combined with previous elasticity sensitivity analysis procedures in an `extended sensitivity analysis´, allows modelers to undertake sensitivity analysis over the full set of model parameters.Sensitivity Analysis, Calibration

Central Bank Independence and inflation: the case of Greece

This paper discusses the argument for Central Bank Independence (CBI) in the case of Greece. Using a time series approach and the last data available before Greece joined the EMU , the hypothesis that Central Bank Independence is important for controlling inflation is examined. Employing two indices, which serve as proxies for CBI, LegalCBI and TOR, the inverse relationship between CBI and inflation was confirmed. The interactions between the variability of inflation and CBI were also investigated. Furthermore, evidence was found to suggest that the rate of turnover Granger causes inflation.Central Bank Independece, inflation, Greece

Adding one risk to another: generalizing the unavoidable (background) risk

ResumenEste artículo ofrece una generalización del modelo de riezgo subyacente. En primer lugar, se relajan los supuestos de independencia. En segundo lugar, se adopta una forma funcional general. Tercero, se adopta un tipo de riesgo general. Adicionalmente se presenta una nueva forma general de riesgo subyacente.AbstractThis paper provides a complete generalization of the background risk models. In so doing, first, it relaxes the independence assumption. Second, it adopts a general functional form. Third, it adopts a general type of risk. Furthermore, it introduces a new general form of background risk.Background risk, uncertainty

Pricing Options under Telegraph Processes

In this paper we introduce a financial market model based on continuous time random motions with alternating constant velocities and jumps, which occur with velocity switches. Given that jump directions match velocity directions of the underlying random motion properly in relation to interest rates, in this setting will be free of arbitrage. Additionally, we suppose also the interest rate depending on the market state. The replicating strategies for options are constructed in detail, and closed form formulas for option prices are obtained.jump telegraph process, European option pricing, perfect hedging, selffinancing strategy, fundamental equation

Breaks, trends and the attribution of climate change: a time-series analysis

Climate change detection and attribution have been the subject of intense research and debate over at least four decades. However, direct attribution of climate change to anthropogenic activities using observed climate and forcing variables through statistical methods has remained elusive, partly caused by difficulties to correctly identify the time-series properties of these variables and by the limited availability of methods to relate nonstationary variables. This paper provides strong evidence concerning the direct attribution of observed climate change to anthropogenic greenhouse gases emissions by first investigating the univariate time-series properties of observed global and hemispheric temperatures and forcing variables and then by proposing statistically adequate multivariate models. The results show that there is a clear anthropogenic fingerprint on both global and hemispheric temperatures. The signal of the well-mixed Greenhouse Gases (GHG) forcing in all temperature series is very clear and accounts for most of their secular movements since the beginning of observations. Both temperature and forcing variables are characterized by piecewise linear trends with abrupt changes in their slopes estimated to occur at different dates. Nevertheless, their long-term movements are so closely related that the observed temperature and forcing trends cancel out. The warming experimented during the last century was mainly due to the increase in GHG which was partially offset by the effect of tropospheric aerosols. Other forcing sources, such as solar, are shown to only contribute to (shorter-term) variations around the GHG forcing trend.Published versio