Uncertainty, Learning, and Optimal Technological Portfolios: A Dynamic General Equilibrium Approach to Climate Change

How is the design of efficient climate policies affected by the potentials for induced technological change and for future learning about key parameter uncertainties? We address this question using a new integrated climate-economy model incorporating endogenous technological change to explore optimal technological portfolios against global warming in the presence of uncertainty and learning. We explicitly consider the interplays between induced innovation, the stringency of environmental policies, and possible environmental risks within the general equilibrium framework of probabilistic integrated assessment. We find that the value of resolving key scientific uncertainties would be non-trivial in the face of binding climate limits, but at the same time it can significantly decrease with induced innovation and knowledge spillovers that might otherwise be absent. The results also show that scientific uncertainties in climate change could justify immediate mitigation actions and accelerated investments in new energy technologies, reflecting risk-reducing considerations.Uncertainty; Learning; Optimal technological portfolios; Endogenous technological change; Stochastic growth model; Probabilistic integrated assessment; Carbon-free technology; Expected value of information

Environmental Taxes and Economic Welfare: The Welfare Cost of Gasoline Taxation in the U.S. 1959-1999

The purpose of this paper is to provide reasonable estimates for the welfare cost of environmental tax reform in the U.S. economy. Unlike most previous studies that empirically evaluate the deadweight cost of taxation, the model employed here considers explicitly the joint allocation of leisure and commodity demands where the wage rate plays a role both as a form of income and as the price of leisure time. The estimated results of the consumer behavior model indicate that the existing U.S. gasoline tax regime has induced a decrease of gasoline consumption by approximately 4 percent over the period from 1959 to 1999, while the deadweight cost caused by the tax accounts just for about 0.08 percent of the consumer full income over the sample period 1959-1999. Moreover, in most years of the sample period, the measures of marginal deadweight cost of gasoline taxation (sample average 0.1882) are relatively small compared to those of labor taxation (sample average 0.2175). This implies a larger efficiency gain in the case of labor taxation in shifting from the existing distortionary taxation to lump sum taxation. These empirical results might suggest the modest possibility of social welfare gains from tax reforms that shift some of the burden of taxation off labor onto energy (e.g. gasoline).Environmental taxes, double dividend hypothesis, gasoline taxation, non-separable labor supply effects, AI demand system, marginal deadweight cost

Higher-order relativistic corrections to gluon fragmentation into spin-triplet S-wave quarkonium

We compute the relative-order-v^4 contribution to gluon fragmentation into quarkonium in the 3S1 color-singlet channel, using the nonrelativistic QCD (NRQCD) factorization approach. The QCD fragmentation process contains infrared divergences that produce single and double poles in epsilon in 4-2epsilon dimensions. We devise subtractions that isolate the pole contributions, which ultimately are absorbed into long-distance NRQCD matrix elements in the NRQCD matching procedure. The matching procedure involves two-loop renormalizations of the NRQCD operators. The subtractions are integrated over the phase space analytically in 4-2epsilon dimensions, and the remainder is integrated over the phase-space numerically. We find that the order-v^4 contribution is enhanced relative to the order-v^0 contribution. However, the order-v^4 contribution is not important numerically at the current level of precision of quarkonium-hadroproduction phenomenology. We also estimate the contribution to hadroproduction from gluon fragmentation into quarkonium in the 3PJ color-octet channel and find that it is significant in comparison to the complete next-to-leading-order-in-alpha_s contribution in that channel.Comment: 41 pages, 8 figures, 3 tables, minor corrections, version published in JHE

Trade War: GDP vs GNP Developing vs Developed countries

GDP and GNP both try to measure the market value of all goods and services produced for final sale in an economy. The difference is how each term interprets what constitutes the economy. GDP refers to and measures the domestic levels of production in a country. It represents the monetary value of all goods and services produced within a nation's geographic borders over a specified period of time. GNP measures the levels of production of all the citizens or corporations from a particular country working or producing in any country. Therefore, it includes the compensation and investment income received by nationals working or investing abroad. More closed economy impact negatively more on GDP. We see how New Trade War impact to GDP and GNP on developed and developing countries differently

Gold as Deflation Fighter? Its Past, Present, and Future

Current super-low interest rates and massive money supply in US and Europe may cause inflation in the future. Historically, gold has been used as a hedge against inflation. During the run up in to its peak price in 1980, gold was chasing the inflation rate as investors feared that their purchasing power was going to be destroyed by runaway prices. What they didn`t realize was that the inflation rate had already peaked above 13% at least a year prior to gold and it continued to fall until 1986 where it has remained in a corridor between 0% and 6% ever since