Pierre PICARDThe price of silence: tradeable noise permits and airports

This paper presents a market design for the management of noise disturbance created by aircraft traffic around large airports. A market for tradable noise permits allows noise generators to compensate harmed residents. We show that the noise permit markets allow the achievement of the planner’s optimal allocation of flights provided that she/he does not over-weight the benefit of economic activity compared to the disutility of noise disturbances. The fact that zones are likely to be strategic players does not fundamentally alter this finding. Because of the market auctioneer’s information constraints, noise permits are likely to redistribute windfall gains to residents located in non-critical zones. This entices landlords to increase their land/house rents there and to design smaller houses in the long run

THE RACE FOR POLLUTING PERMITS

International markets for tradable emission permits (TEP) co-exist with national energy taxation. A firm trading emission permits in the international market also pays energy taxes in its host country, thus creating an interaction between the international TEP-market and national energy taxes. In this paper we model that interaction in a framework of a perfectly competitive international TEP-market, where heterogeneous firms trade their TEP endowments. National governments set energy taxes non-cooperatively so as to maximize fiscal revenue from energy and profit taxes. We identify the driving forces behind Nash equilibrium taxes. We show how they depend on the total amount of TEPs in the market, on firms ’ TEP-endowment and on the number of participating countries. We also show how energy taxation varies with the introduction of the market on a previously unregulated world. Finally, we highlight the fact that the TEP-market does not achieve abatement cost efficiency, despite its being perfectly competitive. JEL Classification: Q48; Q52; H23; H73

Henry TULKENSClimate coalitions: a theoretical and computational appraisal

Using an updated version of the CWS model (introduced by Eyckmans and Tulkens in Resource and Energy Economics 2003), this paper intends to evaluate with numbers the respective merits of two competing notions of coalition stability in the standard global public goods model as customarily applied to the climate change problem. After a reminder of the model structure and of the definition of the two game theoretical stability notions involved – namely, core stability and internal-external stability, the former property is shown to hold for the grand coalition in the CWS model only if resource transfers of a specific form between countries are introduced. It is further shown that while the latter property holds neither for the grand coalition nor for most large coalitions, it is nevertheless verified in a weak sense that involves transfers (dubbed “potential internal stability”) for most small coalitions. The reason for this difference is brought to light, namely the differing rationale that inspires the transfers in either case. Finally, it is shown that the stable coalitions that perform best (in terms of carbon concentration and global welfare) always are composed of both industrialize

Consistent ranking of multivariate volatility models

A large number of parameterizations have been proposed to model conditional variance dynamics in a multivariate framework. This paper examines the ranking of multivariate volatility models in terms of their ability to forecast out-of-sample conditional variance matrices. We investigate how sensitive the ranking is to alternative statistical loss functions which evaluate the distance between the true covariance matrix and its forecast. The evaluation of multivariate volatility models requires the use of a proxy for the unobservable volatility matrix which may shift the ranking of the models. Therefore, to preserve this ranking conditions with respect to the choice of the loss function have to be discussed. To do this, we extend the conditions defined in Hansen and Lunde (2006) to the multivariate framework. By invoking norm equivalence we are able to extend the class of loss functions that preserve the true ranking. In a simulation study, we sample data from a continuous time multivariate diffusion process to illustrate the sensitivity of the ranking to different choices of the loss functions and to the quality of the proxy. An application to three foreign exchange rates, where we compare the forecasting performance of 16 multivariate GARC

Local taxation of global corporation:

a simple solutio

Trade integration and trade imbalances in the European Union: a network perspective

We study the ever more integrated and ever more unbalanced trade relationships between European countries. To better capture the complexity of economic networks, we propose two global measures that assess the trade integration and the trade imbalances of the European countries. These measures are the network (or indirect) counterparts to traditional (or direct) measures such as the trade-to-GDP (Gross Domestic Product) and trade deficit-to-GDP ratios. Our indirect tools account for the European intercountry trade structure and follow (i) a decomposition of the global trade flow into elementary flows that highlight the long-range dependencies between exporting and importing economies and (ii) the commute-time distance for trade integration, which measures the impact of a perturbation in the economy of a country on another country, possibly through intermediate partners by domino effect. Our application addresses the impact of the launch of the Euro. We find that the indirect imbalance measures better identify the countries ultimately bearing deficits and surpluses, by neutralizing the impact of trade transit countries, such as the Netherlands. Among others, we find that ultimate surpluses of Germany are quite concentrated in only three partners. We also show that for some countries, the direct and indirect measures of trade integration diverge, thereby revealing that these countries (e.g

Simulation based bayesian econometric inference: principles and some recent computational advances.

In this paper we discuss several aspects of simulation based Bayesian econometric inference. We start at an elementary level on basic concepts of Bayesian analysis; evaluating integrals by simulation methods is a crucial ingredient in Bayesian inference. Next, the most popular and well-known simulation techniques are discussed, the Metropolis-Hastings algorithm and Gibbs sampling (being the most popular Markov chain Monte Carlo methods) and importance sampling. After that, we discuss two recently developed sampling methods: adaptive radial based direction sampling [ARDS], which makes use of a transformation to radial coordinates, and neural network sampling, which makes use of a neural network approximation to the posterior distribution of interest. Both methods are especially useful in cases where the posterior distribution is not well-behaved, in the sense of having highly non-elliptical shapes. The simulation techniques are illustrated in several example models, such as a model for the real US GNP and models for binary data of a US recession indicator

A unifying framework for the problem of adjudicating conflicting claims

Clasificación JEL: D63In a recent paper, Thomson and Yeh [Operators for the adjudication of conflicting claims, Journal of Economic Theory 143 (2008) 177-198] introduced the concept of operators on the space of rules for the problem of adjudicating conflicting claims. They focussed on three operators in order to uncover the structure of such a space. In this paper, we generalize their analysis upon presenting and studying a general family of operators inspired by three apparently unrelated approaches to the problem of adjudicating conflicting claims. We study the structural properties of this family and show, in particular, that most of Thomson and Yeh¿s results are specific cases of our study.Universidad Pablo de Olavide. Departamento de Economía, Métodos Cuantitativos e Historia Económic

Oligopolistic competition with general complementarities

In this paper we extend the basic model of Cournot competition to the case where both the demand function and the cost functions of each firm depend on the amounts produced by competitors. In this modified setting, proving existence of equilibria becomes harder. We develop a generalization of the theory of supermodular games in the context where individual decision variables take values in a totally ordered set to prove existence of equilibria in this generalized Cournot setting