Endogenous cap reduction in Emission Trading Systems

Since its introduction, the European Emissions Trading Scheme (EU ETS) has been struggling with an oversupply of emission allowances and a highly volatile allowance price. One reason for the price decline is technological progress and ist demand-reducing effect, which is only partially taken into account in the system. We propose a simple benchmark approach to endogenously adjust the supply of allowances to technical progress. Using a non-parametric benchmark approach, we measure the required adjustment of the allowance supply to avoid a technologyinduced price decline and to maintain the incentive to invest in low-carbon technologies

Robust Estimation of Marginal Abatement Cost of Water Pollutant: Evidence from Yangtze River Basin

Based on the econometric method of bootstrap for 1000 times, this study estimated the marginal abatement cost of water pollutant, COD and NH3-N, for 9 provinces and 2 municipalities in the Yangtze River Basin from 2001 to 2017 by building a robust estimation model. We found that the marginal abatement cost increases at an average annual rate of 19.47%. The marginal abatement cost in Jiangsu and Sichuan are significantly higher than other regions. Differences in marginal abatement cost make it possible to trade emission rights between regions

Endogenous Dynamic Efficiency in the Intertemporal Optimization Models of Firm Behavior

Existing methods for the measurement of technical efficiency in the dynamic production models obtain it from the implied distance functions without making use of the information about intertemporal economic behavior in the estimation beyond an indirect appeal to duality. The main limitation of such an estimation approach is that it does not allow for the dynamic evolution of efficiency that is explicitly optimized by the firm. This paper introduces a new conceptualization of efficiency that directly enters the firm's intertemporal production decisions and is both explicitly costly and endogenously determined. We build a moment-based multiple-equation system estimation procedure that incorporates both the dynamic and static optimality conditions derived from the firm's intertemporal expected cost minimization. We operationalize our methodology using a modified version of a Bayesian Exponentially Tilted Empirical Likelihood adjusted for the presence of dynamic latent variables in the model, which we showcase using the 1960-2004 U.S. agricultural farm production data. We find that allowing for potential endogenous adjustments in efficiency over time produces significantly higher estimates of technical efficiency, which is likely due to inherent inability of the more standard exogenous-efficiency model to properly credit firms for incurring efficiency-improvement adjustment costs. Our results also suggest material improvements in efficiency over time at an about 2.6% average annual rate, which contrasts with near-zero estimates of the exogenous efficiency change

Endogenous Dynamic Efficiency in the Intertemporal Optimization Models of Firm Behavior

Existing methods for the measurement of technical efficiency in the dynamic production models obtain it from the implied distance functions without making use of the information about intertemporal economic behavior in the estimation beyond an indirect appeal to duality. The main limitation of such an estimation approach is that it does not allow for the dynamic evolution of efficiency that is explicitly optimized by the firm. This paper introduces a new conceptualization of efficiency that directly enters the firm's intertemporal production decisions and is both explicitly costly and endogenously determined. We build a moment-based multiple-equation system estimation procedure that incorporates both the dynamic and static optimality conditions derived from the firm's intertemporal expected cost minimization. We operationalize our methodology using a modified version of a Bayesian Exponentially Tilted Empirical Likelihood adjusted for the presence of dynamic latent variables in the model, which we showcase using the 1960-2004 U.S. agricultural farm production data. We find that allowing for potential endogenous adjustments in efficiency over time produces significantly higher estimates of technical efficiency, which is likely due to inherent inability of the more standard exogenous-efficiency model to properly credit firms for incurring efficiency-improvement adjustment costs. Our results also suggest material improvements in efficiency over time at an about 2.6% average annual rate, which contrasts with near-zero estimates of the exogenous efficiency change

Nonparametric Efficiency Analysis in the Presence of Undesirable Outputs

Diese Dissertation umfasst 4 ökonomische Forschungsarbeiten, die sich mit der Analyse der Effizienz von Entscheidungseinheiten bezüglich der Produktion unerwünschter Outputs befassen. Diese Arbeiten sind durch die Herausforderungen im Rahmen des Phänomens des Klimawandels motiviert. Eine Analyse der Automobile auf dem deutschen Fahrzeugmarkt wird vorgestellt, welche verschiedene Fahrzeuggruppen vergleicht und dabei die Produktion von Kohlenstoffdioxid berücksichtigt. Darüber hinaus wird ein Netzwerkmodell vorgeschlagen, welches die Trennung von Produktions- und Vermeidungsineffizienzen ermöglicht, sowie ein Ansatz zur endogenen Bestimmung der Richtungsvektoren der direktionalen Distanzfunktion entwickelt. Desweiteren wird eine Analyse der Auswirkungen des Kyoto-Protokolls auf die makroökonomische Produktivität europäischer Länder durchgeführt

A Celebration of the Ties That Bind Us: Connections Between Actuarial Science and Mathematical Finance

The articles in this volume are contributed by scholars who are not only experts in areas of Actuarial Science (AS) and Mathematical Finance (MF), but also those who present diverse perspectives from both industry and academia. Topics from multiple areas, such as Stochastic Modeling, Credit Risk, Monte Carlo Simulation, and Pension Valuation, among others, that were maybe thought to be the domain of one type of risk manager, are shown time and again to have deep value to other areas of risk management as well. The articles in this collection, in my opinion, contribute techniques, ideas, and overviews of tools that folks in both AS and MF will find useful and interesting to implement in their work. It is also my hope that this collection will inspire future collaboration between those who seek an interdisciplinary approach to risk management

The distribution of the gender wage gap : an equilibrium model

We develop an equilibrium model of the labor market to investigate the joint evolution of gender gaps in labor force participation and wages. We do this overall and by task-based occupation and skill, which allows us to study distributional effects. We structurally estimate the model using data from Mexico over a period during which women’s participation increased by fifty percent. We provide new evidence that male and female labor are closer substitutes in high-paying analytical task-intensive occupations than in lower-paying manual and routine task-intensive occupations. We find that demand trends favored women, especially college-educated women. Consistent with these results, we see a widening of the gender wage gap at the lower end of the distribution, alongside a narrowing at the top. On the supply side, we find that increased appliance availability was the key driver of increases in the participation of unskilled women, and fertility decline a key driver for skilled women. The growth of appliances acted to widen the gender wage gap and the decline of fertility to narrow it. We also trace equilibrium impacts of growth in college attainment, which was more rapid among women, and of emigration, which was dominated by unskilled men. Our counterfactual estimates demonstrate that ignoring the countervailing effects of equilibrium wage adjustments on labor supplies, as is commonly done in the literature, can be misleading

Performance and optimization of farm certification systems as private institutions of sustainability

The demand for an ecologically and socially more responsible production has increased dramatically. Traditionally, public authorities intervene by means of regulations and economic stimuli, but also private market parties integrate social and ecological concerns into their business objectives. As such they hope to create added value. Consequently, this can result into a win-win for both the private actor and the society. To operationalize these private initiatives in the farm sector, certification schemes with private standards and labels are used. These certification schemes can be considered as an example of Private Institutions of Sustainability, which are sets of rules voluntary followed by private market actors to reach a sustainability target. The doctoral thesis investigates whether these certification schemes and labels, as examples of Private Institutions of Sustainability, are a promising instrument to realize sustainable development. The introductory part focuses on why market actors are interested in these Private Institutions of Sustainability. A first descriptive analysis places PIoS between other sustainable development initiatives. According to different market actors PIoS are promising both from economic and ecological perspective. An important condition for the success of these schemes is consumer interest. By means of ‘choice preference’-modelling it is shown that there are strong consumer preferences for some sustainability claims. Moreover, different types of consumers perceive the same claims differently. A second important precondition for the success of these schemes is retail interest. In a qualitative analysis different retail strategies for sustainable production were identified. The second part of the thesis focuses on whether these private systems deliver what they promise, which is effectively contributing to ecological, economic and social sustainability. First the contribution of PIoS to ecological sustainability is investigated by means of a meta-analysis. The contribution is confirmed, although some question marks can be placed. To assess the economic performance of these systems the sustainable value method is further optimized. The analysis reveals that firms participating in PIoS create more added value by using ecological resources more efficiently. The social performance was investigated by means of a qualitative analysis of social equity within the value chain. PIoS are not automatically a guarantee for social equity within the value chain. In part three of the dissertation changes are modelled in the PIoS to further improve sustainability. By means of ‘choice preference’-modelling the cost experienced by market actors for ecological changes in the certification scheme is estimated. This enables us to estimate the private cost for further ecological sustainability. In a following step it is shown how the ‘choice preference’-methodology can be used to estimate the desired compensations for institutional changes within the certification scheme. This allows to reduce the information asymmetries during negotiations between participants in the value chain. Finally, a methodology is developed to assess the sustainable efficiency of firms and certification schemes when new sustainability targets are introduced. From the analysis it became clear that firms participating in certification schemes have a higher sustainable efficiency compared to firms who do not. The research shows that there is still room for further ecological and economic improvement by removing current inefficiencies in the systems. Given that these institutions are private, a trade off is made between private and social objectives. Although the role of public authorities has shifted from initiator to monitor, it is important that these give the necessary impulses for further improving PIoS’ sustainability. Finally, the contribution of PIoS to internal value chain social sustainability depends on whether specific rules have been incorporated that safeguard the equity between participants

Essays on the political economy of public finance: taxation and debt

The granting of discretionary budgeting powers to policymakers whose utility functions do not match those of the societies they govern, may lead to sub-optimal fiscal outcomes which require the creation of binding and credible commitments to rectify. Past research into the institutional constraints placed upon, and behaviour of, policymakers has shown that these do, in fact, generate real effects on macroeconomic performance. Optimal fiscal systems, in this sense, become reliant on having in place an institutional framework which structurally induces social welfare maximizing outcomes. This thesis provides both a historical overview of the birth of modern public finance as well as an in depth examination of both theoretical and empirical contributions to tax theory with a full statistical analysis of the multidimensional determinants of compositional systems of budget equations from the revenue side, observed across 90 states between 1990-2008. There is also the somewhat neglected area of finite planning horizons in public finance, where policymaker discount factors may lead to sub-optimal dynamic fiscal outcomes; mainly, the accumulation of public debt. Theoretical expectations have been difficult to statistically validate due to unobservable transition likelihoods and endogeneity problems which are overcome in this paper revealing significant discount effects on the accumulation of debt. Lastly, the recent popularity of budget rules in many of the world's economies has led to questions regarding their effectiveness where pro igate governments may be less likely to adopt budget rules that constrain their budgeting powers. Empirical findings suggest that rule adoption is partially determined within the equation of fiscal performance, making it difficult to identify the 'true' effects of budget rule adoption, as well as whether these are of first or second order