The market for energy in China

Since 1979, China embarked on an economic reform to modernize the country. The reform was so successful that China was able to grow by an impressive rate of 9 percent per anum between 1979 and 1997. The rapid development of the economy leads to a drastic increase in demand for energy. Since China has the largest population in the world, its energy demand is nothing but huge. Each year, for example, China needs to install as much as 10,000 MW of new electricity generation capacity, which equals the curent capacity of Netherlands. This increase in demand for energy, which is likely to continue, wil have implications for global energy markets, the world price of energy and for the global environment as emissions of greenhouse gases grow rapidly. Against this background, there is an urgent need for the country to better manage the energy sector so that the market can function in an orderly manner. To tackle this issue, I single out three important energy problems to study. First, I wil examine the current situation of the energy imbalance in China. Second, I wil forecast how rapid the energy demand wil grow in future so that the deficit between the demand and domestic supply can be identified. Lastly, I wil discuss some methods that can be used to manage the demand. My finding shows that energy-capital and energy-material inputs are complementary, whereas the relationship of energy and labour is insignificant. In addition, the simulation exercises also reveals that a high energy pricing policy might not be effective in mitigating the demand and in encouraging firms to employ labour intensive techniques. Also, rising energy prices may bring spiral inflation and deterioration in the balance of payments and foreign resources. Therefore, government should act cautiously when increasing energy prices

The real impact of financial shocks : evidence from the Republic of Korea

The debates surrounding the recent East Asian crisis have focused not only on causes but also on policy actions in the wake of the initial shock. This has raised questions about the relationship between monetary policy and market confidence. Specifically, would rising interest rates bolster or depress market confidence? To answer this question requires assessing whether, and to what extent, monetary and financial shocks are magnified through the economy via the credit channel. The authors focus on the Republic of Korea - a particularly good case for testing credit channel effects - with two objectives: a) To ascertain whether and to what extent interest rate spreads could help predict subsequent fluctuations in real economic activity. b) To test whether small and medium-size enterprises suffer more than other business do from the adverse effects of the credit channel. The author's empirical findings support the hypothesis that spreads that capture credit channel effects do indeed influence economic activity. Specifically, spreads contain significant information for predicting the future course of industrial production. The effect is, as one might have assumed, disproportionately larger for small and medium-size enterprises. Thus policymakers, in Korea and elsewhere, who neglect credit channel effects might be"overkilling the economy"and altogether overlooking the disproportionate effects of monetary and financial shocks on various segments of the economy.Economic Theory&Research,Financial Intermediation,Environmental Economics&Policies,Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Environmental Economics&Policies,Banks&Banking Reform,Financial Intermediation,Financial Crisis Management&Restructuring,Economic Theory&Research

The probability approach in economic methodology: On the relation between Haavelmo's legacy and the methodology of economics (Revised version)

Economics

Epistemic cultures in the social sciences: the modeling dilemma - dissolved

'In diesem Artikel soll ein spezielles Problemgebiet gelöst werden, das als Modellierungs-Dilemma bezeichnet wird und das den prekären Status vieler Annahmen im Bereich der Modellbildung in der Ökonomie, der Soziologie oder auch der Politikwissenschaft zum Inhalt hat. Mit dem angebotenen Lösungsansatz sollen zudem gleich zwei neuartige Behauptungen verbunden sein. So können, so die erste Behauptung, die Sozialwissenschaften wenigstens durch zwei unterschiedliche und hochgradig ausdifferenzierte Modellierungsweisen charakterisiert werden, welche zudem komplementäre Informationen bereitstellen und jeweils auf ihre Weise einen Beitrag zum Verständnis komplexer sozio-ökonomischer Ensembles leisten. Zweitens gehören diese beiden unterschiedlichen Modellzugänge mittlerweile zu jeweils unterschiedlichen epistemischen Kulturen, welche hinkünftig ko-evolutiv wichtige Ziel- und Brennpunkte für die sozialwissenschaftlichen Forschungen darstellen werden.' (Autorenreferat)'The main purpose of this paper lies in the solution of a specific problem area, referred to as modeling dilemma. In doing so, two major and, hopefully, innovative claims can be made: first, the social sciences can be characterized by at least two pragmatically highly differentiated modeling approaches to the socio-economic ensembles which, in different degrees, offer complementary classes of information and which, moreover, increase the understanding of the complexities of these socio-economic universes. Second, these two major modeling approaches have become, by now, part and parcel of separate epistemic cultures which will, in a process of co-evolution, form major basins of attraction for future practices within the social sciences.' (author's abstract)

French wines on the decline? Econometric evidence from Britain

French wines, differentiated by geographic origin, served for many decades as a basis for the French success in the British wine market. However in the early 1990s, market share began to decline. This article explores the values that market participants placed on labelling information on French wines in Britain in 1994. Results from a parametric hedonic approach indicate that both the lack of a consistently positive valuation of varietal wines and the low valuation of wines with geographical appellation help to explain the overall decline of France's role in the British wine market

Truth and Robustness in Cross-country Growth Regressions

The work of Levine and Renelt (1992) and Sala-i-Martin (1997a, b) which attempted to test the robustness of various determinants of growth rates of per capita GDP among countries using two variants of Edward Leamerâ??s extreme-bounds analysis is reexamined. In a realistic Monte Carlo experiment in which the universe of potential determinants is drawn from those in Levine and Reneltâ??s study, both versions of the extreme-bounds analysis are evaluated for their ability to recover the true specification. Levine and Reneltâ??s method is shown to have low size and extremely low power: nothing is robust; while Sala-i-Martinâ??s method is shown to have high size and high power: it is undiscriminating. Both methods are compared to a cross-sectional version of the generalto-specific search methodology associated with the LSE approach to econometrics. It is shown to have size near nominal size and high power. Sala-i-Martinâ??s method and the general-to-specific method are then applied to the actual data from the original two studies. The results are consistent with the Monte Carlo results and are suggestive that the factors that most affect differences of growth rates are ones that are beyond the control of policymakers.growth, cross-country growth regressions, extreme-bounds analysis, general-to-specific specification search

Predicting the future of China's energy demand in terms of directed technological change

With double-digit economic growth, mounting consumer demand and being roused industry potentialities, China’s ascendancy has been marked “the start of a new age in the history of energy.” Understanding the impacts of technological change and diffusion in a large carbon-intensive country like China is essential for getting acquainted with the future trajectory of global energy demand. In this paper, we examine the evolution of long-run energy demand owing to directed technological change (DTC) and predict the future behaviour of the energy demand in China by setting up a theoretical model of DTC with two inputs, energy and labour, and interactional factoraugmenting knowledge, then simulating the model with data about China since 1980. The modelling of knowledge stocks help us to acquire a new understanding of the interaction among energy, technological change and economic growth