Three new leaders face the challenge of food and fuel subsidies: Sisi, Modi, and Jokowi

Jeffrey Frankel 09 September 2014

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In few policy areas does good economics conflict so dramatically with good politics as in the practice of subsidies to food and energy. Economics textbooks explain that these subsidies are lose-lose policies. In the political world, that can sound like an ivory tower abstraction. But the issue of unaffordable subsidies happens to be front and centre politically this summer, in a number of places around the world. Three major new leaders in particular are facing this challenge: Sisi in Egypt, Jokowi in Indonesia, and Modi in India.

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Topics:  Development Energy Politics and economics Poverty and income inequality

Tags:  subsidies, fuel subsidies, food subsidies, Agriculture, energy, Egypt, Indonesia, India, Poverty, environment, trade, WTO, Doha Round, Bali

Did the Cash for Clunkers stimulus programme reduce new vehicle spending?

Mark Hoekstra, Steve Puller, Jeremy West 03 September 2014

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Cash for Clunkers as stimulus

There has been significant debate about the role of various federal fiscal and monetary policies during recessions. Among the fiscal stimulus programmes, however, one seemed to hold particular promise. The Car Allowance Rebate System (CARS), better known as Cash for Clunkers, provided subsidies of up to $4,500 to households who scrapped their existing ‘clunker’ and purchased a new, fuel-efficient vehicle. Subsidies totalled nearly $3 billion.

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Topics:  Energy Environment Macroeconomic policy

Tags:  Cash for clunkers, scrapping subsidies, stimulus, environment, fuel efficiency, fiscal policy, cars, Auto industry

Climate tipping requires precautionary accumulation of capital and an additional price for carbon emissions

Rick van der Ploeg, Aart de Zeeuw 31 July 2014

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Climate policy aims to internalise the social cost of carbon by means of a carbon tax or a system of tradable permits such as the Emissions Trading System set up in the EU. But how do we determine the social cost of carbon? Do we take everything into account that should be taken into account? Most integrated assessment models (Nordhaus 2008, Stern 2007) calculate the net present value of estimated marginal damages to economic production from emitting one extra ton of carbon caused by burning fossil fuel.

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Topics:  Environment

Tags:  climate change, environment, global warming, social cost of carbon, regime shifts, tipping points

Sustainable growth requires a long-term focus

Pascal Lamy, Ian Goldin 28 March 2014

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Just when we thought high-frequency trading couldn’t get any faster, a US communications company is developing a high-speed laser network between the New Jersey data centres of the New York Stock Exchange and the NASDAQ stock exchange, to shave an additional few nanoseconds off high-frequency trading times.

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Topics:  Environment Financial markets Global crisis International trade

Tags:  growth, climate change, trade, environment, corporate governance, global crisis, high-frequency trading, short-termism, mark-to-market accounting

Economic analysis of the US unconventional oil and gas revolution

Mathilde Mathieu, Thomas Spencer, Oliver Sartor 22 March 2014

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The recent rapid growth in the production of unconventional oil and gas (shale gas and tight oil) in the US has led to a significant decrease of natural gas prices as well as reduced oil imports. This has raised questions about the impacts of the unconventional oil and gas revolution on the US macroeconomy, industrial competitiveness, and energy sector. It has also raised questions about its implications for the EU (e.g. Beffa and Cromme 2013).

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Topics:  Energy Environment

Tags:  energy, US, environment, oil, gas, shale gas, fracking, tight oil, energy independence

Waste of effort? International environmental agreements

Derek Kellenberg, Arik Levinson 01 March 2014

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To address environmental problems that span national borders, countries have negotiated more than 1,000 international environmental agreements (IEAs). But do they work? According to most theoretical economic models, because of free-rider problems IEAs cannot reduce pollution much below business-as-usual levels (Barrett 1994, 1997; Carraro and Siniscalco 1993; Finus and Maus 2008). Of course, game-theoretic models rarely predict real-world behaviour, which leaves room for hope that IEAs might be effective in practice.

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Topics:  Environment International trade

Tags:  trade, environment, waste

Market mechanisms for regulation: Cap-and-trade and Obamacare

Jeffrey Frankel 27 February 2014

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Markets can fail. But market mechanisms are often the best way for governments to address such failures. This has been demonstrated in areas from air pollution, to traffic congestion, to spectrum allocation, to cigarette consumption.

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Topics:  Environment Politics and economics

Tags:  environment, global warming, pollution, regulation, healthcare, Cap-and-trade, market-based mechanisms, Obamacare, EU ETS

Nuclear expansion or phase-out? Costs and opportunities

Enrica De Cian, Samuel Carrara, Massimo Tavoni 22 December 2013

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"We learned from Fukushima that we have to deal differently with risks… We believe we as a country can be a trailblazer for a new age of renewable energy sources… We can be the first major industrialized country that achieves the transition to renewable energy with all the opportunities – for exports, development, technology, jobs – it carries with it.” Angela Merkel (distinct quotes).

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Topics:  Energy Environment

Tags:  R&D, energy, climate change, environment, climate policy, carbon pricing, energy mix, nuclear power

Identifying the worldwide pollution haven effect

Jean-Marie Grether, Nicole A. Mathys, Jaime de Melo 23 December 2010

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For the environmentally minded, globalisation reflected in rising trade shares in world GDP is worrisome. Globalisation is a direct concern because the activity of trading itself generates pollution through the transport of goods (Hummels 2009 and Grether et al. 2010a), and an indirect concern because lower environmental standards generate a comparative advantage in "dirty" industries for developing countries (Antweiler et al 2001).

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Topics:  Environment International trade

Tags:  globalisation, environment, pollution

On international equity weights and national decision making on climate change

David Anthoff, Richard S J Tol 29 November 2010

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Climate change is a moral problem. The main reason to reduce greenhouse gas emissions is a concern for faraway lands (Schelling 2000), distant futures (Nordhaus 1982), and remote probabilities (Weitzman 2009). The people who emit most are least affected by climate change, and the benefits of their abatement would be dissipated. Carbon dioxide lingers in the atmosphere for decades and the effects on temperature and sea level play out over even longer periods. Central projections have that climate change and its impacts are a nuisance for rich countries and a problem for poor countries.

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Topics:  Environment

Tags:  climate change, externalities, environment, co-operation

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