The Regulation of Technology, and the Technology of Regulation

Regulation may inhibit or stimulate technological change. The relationship depends on the technology of regulation - the design and instrument choice of regulatory policy. This essay examines the history of economic and social regulations over the last three decades, the explanatory power of theories of regulatory politics, the choice of regulatory instruments, the assessment of regulatory impacts, and the influence of each of these on the innovation and diffusion of technology (and of regulation). It concludes with recommendations for the future of regulation and technology

Radiative Forcing: Climate Policy to Break the Logjam in Environmental Law

This article recommends the key design elements of US climate law. Much past environmental law has suffered from four design problems: fragmentation, insensitivity to tradeoffs, rigid prescriptive commands, and mismatched scale. These are problems with the design of regulatory systems, not a rejection of the overall objective of environmental law to protect ecosystems and human health. These four design defects raised the costs, reduced the benefits, and increased the countervailing risks of many past environmental laws. The principal environmental laws successfully enacted since the 1990s, such as the acid rain trading program in the 1990 Clean Air Act (CAA) Amendments and the 1996 Safe Drinking Water Act amendments, were consciously designed to overcome the prior design defects. New law for climate change should improve on the design of past environmental law, fostering four counterpart solutions to the prior design defects: cross-cutting integration instead of fragmentation, attention to tradeoffs instead of their neglect, flexible incentive-based policy instruments such as emissions trading in place of rigid prescriptive commands, and optimal instead of mismatched scale. This article advocates a design for U.S. climate policy that embodies these four design solutions. It proposes a policy that is comprehensive in its coverage of multiple pollutants (all GHGs), their sources and sinks; multiple sectors (indeed economy-wide); and multiple issues currently divided among separate agencies. It advocates explicit attention to tradeoffs, both benefit-cost and risk-risk (including both ancillary harms and ancillary benefits), in setting the goals and boundaries of climate policy. It advocates the use of flexible market-based incentives through an efficient cap-and-trade system, with most allowances auctioned along multi-year emissions reduction schedules that are reviewed periodically in light of new information. And it advocates matching the legal regime to the environmental and economic scale of the climate problem, starting at the global level, engaging all the major emitting countries (including the U.S. and China), and then implementing at the national and sub-national levels rather than a patchwork bottom-up approach. In so doing it addresses the roles of EPA regulation under the current CAA and of new legislation. It argues that among environmental issues, climate change is ideally suited to adopt these improved policy design features

A Smoothed P-Value Test When There is a Nuisance Parameter under the Alternative

We present a new test when there is a nuisance parameter under the alternative hypothesis. The test exploits the p-value occupation time [PVOT], the measure of the subset of a nuisance parameter on which a p-value test rejects the null hypothesis. Key contributions are: (i) An asymptotic critical value upper bound for our test is the significance level, making inference easy. Conversely, test statistic functionals need a bootstrap or simulation step which can still lead to size and power distortions, and bootstrapped or simulated critical values are not asymptotically valid under weak or non-identification. (ii) We only require the test statistic to have a known or bootstrappable limit distribution, hence we do not require root(n)-Gaussian asymptotics, and weak or non-identification is allowed. Finally, (iii) a test based on the sup-p-value may be conservative and in some cases have nearly trivial power, while the PVOT naturally controls for this by smoothing over the nuisance parameter space. We give examples and related controlled experiments concerning PVOT tests of: omitted nonlinearity; GARCH effects; and a one time structural break. Across cases, the PVOT test variously matches, dominates or strongly dominates standard tests based on the supremum p-value, or supremum or average test statistic (with wild bootstrapped p-value

Climate Change Policy, and Policy Change in China

Solving the climate change problem by limiting global greenhouse gas (GHG) emissions will necessitate action by the world’s two largest emitters, the United States and China. Neither has so far committed to quantitative emissions limits. Some argue that China cannot be engaged on the basis of its national interest in climate policy, on the ground that China’s national net benefits of limiting greenhouse gas emissions would be negative, as a result of significant GHG abatement costs and potential net gains to China from a warmer world. This premise has led some observers to advocate other approaches to engaging China, such as appeal to moral obligation. This Article argues that appeal to national net benefits is still the best approach to engage China. First, appealing to China’s asserted moral obligation to limit its GHG emissions may be ineffective or even counterproductive. Even if climate change is a moral issue for American leaders, framing the issue that way may not be persuasive to Chinese leaders. Second, the concern that China’s national net benefits of climate policy are negative is based on older forecasts of costs and benefits. More recent climate science, of which the Chinese leadership is aware, indicates higher damages to China from climate change and thus greater net benefits to China from climate policy. Third, the public health co-benefits of reducing other air pollutants along with GHGs may make GHG emissions limits look more attractive to China. Fourth, the distribution of climate impacts within China may be as important as the net aggregate: climate change may exacerbate political and social stresses within China, which the leadership may seek to avoid in order to maintain political stability. Fifth, the costs of abatement may decline as innovation in China accelerates. Sixth, as China becomes a great power in world politics, and as climate change affects China’s allies, leadership on climate policy may look more favorable to China’s elites. Seventh, the design of the international climate treaty regime itself can offer positive incentives to China. Taken together, these factors point to a potential and even ongoing shift in Chinese climate policy. They illustrate how the international law and politics of climate change depend on domestic politics and institutions. And they suggest that the United States, if it too takes effective action, can make the case for enlightened pragmatism as a basis to engage China in a cooperative global climate policy regime

Policy Design for International Greenhouse Gas Control

In this heart-searching, process based thesis, I want to find out who I am in the field of Architecture. Trough my urge to create, I am discovering and searching by making and producing objects by hand to feel and be present with the materiality, construction and art of architecture. My production of objects are divided in three parts based on scale, context and time, giving me a richer understanding about my will, intent and qualities.   "Two truths approach each other, one comes from within, one coming from the outside and where they meet there is a chance to see yourself” Tomas Tranströmer, Preludium II I detta hjärtsökande, processbaserade Xjobb, vill jag ta reda på vem jag är inom området arkitektur. Genom min lust att skapa, upptäcker och söker jag genom att göra och producera objekt för hand för att känna och vara närvarande med materialiteten, konstruktionen och konsten i arkitekturen. Min produktion av objekt är uppdelad i tre delar baserad på skala, kontext och tid, vilket ger mig en rikare förståelse om min vilja, avsikt och kvaliteter.   “Två sanningar närmar sig varann, en kommer inifrån, en kommer utifrån och där de möts har man en chans att få se sig själv”     To­mas Tran­strö­mer, Pre­lu­dium I

A letter to the editor

The goal of this letter is to point out that the fastest way to weaken any society and its business model, including the IEEE and its reader-pays stance, is to lose your professional integrity

Robust estimation and inference for heavy tailed GARCH

We develop two new estimators for a general class of stationary GARCH models with possibly heavy tailed asymmetrically distributed errors, covering processes with symmetric and asymmetric feedback like GARCH, Asymmetric GARCH, VGARCH and Quadratic GARCH. The first estimator arises from negligibly trimming QML criterion equations according to error extremes. The second imbeds negligibly transformed errors into QML score equations for a Method of Moments estimator. In this case, we exploit a sub-class of redescending transforms that includes tail-trimming and functions popular in the robust estimation literature, and we re-center the transformed errors to minimize small sample bias. The negligible transforms allow both identification of the true parameter and asymptotic normality. We present a consistent estimator of the covariance matrix that permits classic inference without knowledge of the rate of convergence. A simulation study shows both of our estimators trump existing ones for sharpness and approximate normality including QML, Log-LAD, and two types of non-Gaussian QML (Laplace and Power-Law). Finally, we apply the tail-trimmed QML estimator to financial data.Comment: Published at http://dx.doi.org/10.3150/14-BEJ616 in the Bernoulli (http://isi.cbs.nl/bernoulli/) by the International Statistical Institute/Bernoulli Society (http://isi.cbs.nl/BS/bshome.htm

Book Review

Reviewing, Richard A. Posner, Catastrophe: Risk and Response (Oxford University Press, 2004) and Jared Diamond, Collapse: How Societies Choose to Fail or Succeed (Viking, 2005