The diffusion of new technology: adoption subsidies, spillovers, and transaction costs.

We establish the relation between optimal subsidy rates and spillovers from the sequential adoption of a new technology, we find that they evolve in the same direction over time. We show that spillovers, hence the subsidy rates, need not be monotonic. We show that when subsidy rates are increasing, their growth rate has to be paced by the growth rate of the present cost of the adoption of the new technology. We also show that increasing subsidies rates cannot produce the desired effect of accelerating adoption if the social cost of public funds is relatively high; hence first-best subsidy adoptions are not always viable.Adoption subsidies, Adoption spillovers, Technology adoption, Technology diffusion.

Are Unemployment Rates in OECD Countries Stationary? Evidence from Univariate and Panel Unit Root Tests

This paper revisits the dynamics of unemployment rate for 29 OECD countries over the period of 1980-2013. Numerous empirical studies of the dynamics of unemployment rate are carried out within a linear framework. However, unemployment rate can show nonlinear behaviour as a result of business cycles or some idiosyncratic factors specific to labour market (Cancelo, 2007). Thus, as a testing strategy we first perform Harvey et al. (2008) linearity unit root test and then apply the newly ESTAR nonlinear unit root test suggested by Kruse (2011). This test has higher power than conventional unit root tests when time series exhibits nonlinear behaviour. Our empirical findings provide significant evidence in favour of unemployment rate stationarity for 25 countries. For robustness purpose, we have also used panel unit root tests without and with structural breaks. The results show that unemployment hysteresis hypothesis is strongly rejected when taking into account the cross-sectional and structural break assumptions. Thus, unemployment rates are expected to return back to their natural levels without executing any costly macroeconomic labour market policies by the OECD's governments

On the Causal Nexus of Road Transport CO2 Emissions and Macroeconomic Variables in Tunisia: Evidence from Combined Cointegration Tests

This paper investigates the causal relationship between road transportation energy consumption, fuel prices, transport sector value added and CO2 emissions in Tunisia for the period 1980-2012. We apply the newly developed combined cointegration test proposed by Bayer and Hanck (2013) and the ARDL bounds testing approach to cointegration to establish the existence of long-run relationship in presence of structural breaks. The direction of causality between these variables is determined via vector error correction model (VECM). Our empirical exercise reveals that the cointegration is present. Energy consumption adds in CO2 emissions. Fuel prices decline CO2 emissions. Road infrastructure boosts in CO2 emissions. Transport value-added also increases CO2 emissions. The causality analysis indicates the bidirectional casual relationship between energy consumption and CO2 emissions. Road infrastructure causes CO2 emissions and similar is true from opposite side in Granger sense. The bidirectional causality is also found between transport value-added and CO2 emissions. Fuel prices cause CO2 emissions, energy consumption, road infrastructure and transport value-added. This paper provides new insights to policy makers to design a comprehensive energy, transport and environment policies for sustainable economic growth in long run

How Do Carbon Emissions Respond to Economic Shocks? Evidence from Low-, Middle- and High-Income Countries

In this study, we examine the stationarity of CO2 emissions per capita for 98 low-, middle- and high-income countries from 1975 to 2014. To this end, we conduct the nonlinear unit root test developed by Kruse (2011) given that nearly half of the series exhibit nonlinear behaviour over the time period. This empirical evidence provides support for the non-stationarity hypothesis that 50% of CO2 emissions are from middle-income countries. For the robustness check, we use the panel unit root tests described by Carrion-i-Silvestre et al. (2005) and Bai and Carrion-i-Silvestre (2009), which allow for structural breaks and cross-section dependence. The results provide evidence of stationarity for all three income groups

Do gold prices respond to real interest rates? Evidence from the Bayesian Markov Switching VECM model

The goal of this paper is to examine the transmission dynamics between the real interest rate and gold prices in the G7. The methodology follows the Bayesian Markov-Switching Vector Error-Correction (MS-VECM) model, along with regime-dependent impulse response functions, spanning the period 1975–2016. The findings suggest a positive association between gold prices and real interest rates, with the estimates remaining consistently positive and statistically significant across all G7 countries. The results indicate that gold prices can provide hedging services against real interest rate movements mainly during recessionary times. Our results continue to be robust when we extend the bivariate version of our modeling approach to include more drivers for gold prices

On the Causal Nexus of Road Transport CO2 Emissions and Macroeconomic Variables in Tunisia: Evidence from Combined Cointegration Tests

This paper investigates the causal relationship between road transportation energy consumption, fuel prices, transport sector value added and CO2 emissions in Tunisia for the period 1980-2012. We apply the newly developed combined cointegration test proposed by Bayer and Hanck (2013) and the ARDL bounds testing approach to cointegration to establish the existence of long-run relationship in presence of structural breaks. The direction of causality between these variables is determined via vector error correction model (VECM). Our empirical exercise reveals that the cointegration is present. Energy consumption adds in CO2 emissions. Fuel prices decline CO2 emissions. Road infrastructure boosts in CO2 emissions. Transport value-added also increases CO2 emissions. The causality analysis indicates the bidirectional casual relationship between energy consumption and CO2 emissions. Road infrastructure causes CO2 emissions and similar is true from opposite side in Granger sense. The bidirectional causality is also found between transport value-added and CO2 emissions. Fuel prices cause CO2 emissions, energy consumption, road infrastructure and transport value-added. This paper provides new insights to policy makers to design a comprehensive energy, transport and environment policies for sustainable economic growth in long run

How Do Carbon Emissions Respond to Economic Shocks? Evidence from Low-, Middle- and High-Income Countries

In this study, we examine the stationarity of CO2 emissions per capita for 98 low-, middle- and high-income countries from 1975 to 2014. To this end, we conduct the nonlinear unit root test developed by Kruse (2011) given that nearly half of the series exhibit nonlinear behaviour over the time period. This empirical evidence provides support for the non-stationarity hypothesis that 50% of CO2 emissions are from middle-income countries. For the robustness check, we use the panel unit root tests described by Carrion-i-Silvestre et al. (2005) and Bai and Carrion-i-Silvestre (2009), which allow for structural breaks and cross-section dependence. The results provide evidence of stationarity for all three income groups

Renewable Energy Consumption-Economic Growth Nexus in G7 Countries: New Evidence from a Nonlinear ARDL Approach

The paper investigates the nonlinear pass-through from economic growth to renewable energy consumptionby applying a Nonlinear Auto-Regressive Distributed Lag model (NARDL) for G7 countries. This study covers the period of 1995Q1-2015Q4. The recent approach allows for empirical tests of short-run and long-run asymmetric responses of renewable energy consumption to positive and negative shocks stemming from economic growth. The results reveal that renewable energy consumption responds asymmetrically to economic growth in the long-run for France, Japan, Italy and the UK. However, we find no evidence for a long-run equilibrium between renewable energy consumption and economic growth in Germany, Canada and the US

Environmental Kuznets Curve in an Open Economy: A Bounds Testing and Causality Analysis for Tunisia

The aim of this paper is to investigate the existence of environmental Kuznets curve (EKC) in an open economy like Tunisia using annual time series data for the period of 1971-2010. The ARDL bounds testing approach to cointegration is applied to test long run relationship in the presence of structural breaks and vector error correction model (VECM) to detect the causality among the variables. The robustness of causality analysis has been tested by applying the innovative accounting approach (IAA). The findings of this paper confirmed the long run relationship between economic growth, energy consumption, trade openness and CO2 emissions in Tunisian Economy. The results also indicated the existence of EKC confirmed by the VECM and IAA approaches. The study has significant contribution for policy implications to curtail energy pollutants by implementing environment friendly regulations to sustain the economic development in Tunisia

Dependence Structure between Business Cycles and CO2 Emissions in the U.S.: Evidence from the Time-Varying Markov-Switching Copula Models

The relationship between CO2 emissions and economic growth is well-examined. However, there is a gap in the literature to examine the nexus by regime-switching models. For this purpose, this paper examines the interdependence relations between CO2 emissions and the industrial production index as a measure of business cycles at the monthly frequency in the United States. We use a new approach to modeling dependence between the underlying variables over time, combining the time-varying copula and the Markov switching models. We find that there is a significant dependence structure between business cycles and CO2 emissions, which has a regime-switching feature, for the period from January 1973 to January 2017. Specifically, during the recession episodes, we deduce that until 1982, the high dependence regime with the Gaussian copula is valid. Since the beginning of 1983, the low dependence structure regime becomes prominent