Public capital and income inequality: some empirical evidence

Economies vary in their reliance on public or private capital accumulation, and this variation has long been believed to lead to different distribution outcomes. In this paper, we take the share of public capital in total capital stock and public capital per GDP as the main explanatory variables. We then estimate the effect that capital ownership has on income inequality by using a panel data consisting of 145 economies in the period from 1980 to 2015. Our empirical results show that a higher ratio of public capital in total capital stock could lower the Gini coefficients of both original and disposable income distribution. Furthermore, we note that public capital per GDP is a sound measurement of public investment’s accumulative contribution to the economy and find that it reduces income inequality, while private capital per GDP affects income inequality in the opposite direction. Accounting for the heterogeneity in development level, we further find that the negative effect that public capital has on income inequality is much more salient among low- and middle-income countries

Economic analysis of batteries: Impact on security of electricity supply and renewable energy expansion in Germany

Increasing amounts of fluctuating renewable energy lead to decreasing electricity prices and impair security of electricity supply. Consequently, sustainable and economically feasible solutions need to be found to ensure both ongoing renewable energy expansion and stable electricity supply. We examine the impact of batteries on security of the electricity supply and achieving renewable energy expansion. For this purpose we develop an electricity market model that enables the simulation of batteries both as an economic-driven investment option and as a government subsidized option. We present six policy scenarios in which batteries are utilized as an option that is subsidized by the government to secure electricity supply and engender renewable energy expansion. Our simulations, based on empirical data, indicate that, in a free market, battery investments are not profitable for private investors. On the other hand, these six policy scenarios show that by subsidizing investments in batteries governments could ensure a secure electricity supply as well as ongoing renewable energy expansion. A comparison to similar policy scenarios that do not adopt batteries indicates that the total sum of gove

The Extractive Industries Transparency Initiative (EITI) and corruption in Latin America

The Extractive Industries Transparency Initiative (EITI), launched in 2002, has been promoted as an international anti-corruption tool. Several empirical evaluations on the effectiveness of the EITI scheme provide average estimates based on cross-country analysis. However, little empirical work has been conducted on individual case studies, especially in the context of Latin America. Our study uses a Synthetic Control Methodology (SCM) to measure the EITI’s impact on several measures of corruption in the first five Latin American countries to join the initiative: Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago. The method allows us to assess the magnitude and statistical significance of the EITI’s effect on perceived corruption at each stage of implementation. Our results cast doubt on how decisive the scheme has been in combatting corruption. In the vast majority of cases, participation in the scheme either had no statistically significant effect or even coincided with marginally increased corruption levels (only in very few cases it was associated with temporary minor improvements). Taken together, the results indicate that joining EITI did not lead to a substantial decrease of corruption in any of the countries under scrutiny

Corruption and the extractive industries transparency initiative

The Extractive Industries Transparency Initiative (EITI) has received much attention as a scheme that can help reduce corruption in mineral-rich developing economies. To our knowledge, this paper provides the first empirical attempt (using panel data) to explore how EITI membership links to changes in corruption levels. We also examine whether the different stages in EITI implementation (initial commitment, candidature, full compliance) influence the pace of changes in corruption. We find that EITI membership offers, on the whole, a shielding mechanism against the general tendency of mineral-rich countries to experience increases in corruption over time