Accounting for the dead in the longitudinal analysis of income-related health inequalities

This paper develops an accounting framework to consider the effect of deaths on the longitudinal analysis of income-related health inequalities. Ignoring deaths or using inverse probability weights (IPWs) to re-weight the sample for mortality-related attrition can produce misleading results, since to do so would be to disregard the most extreme of all health outcomes. Incorporating deaths into the longitudinal analysis of income-related health inequalities provides a more complete picture in terms of the evaluation of health changes in respect to socioeconomic status. We illustrate our work by investigating health mobility in Quality Adjusted Life Years (QALYs) as measured by the SF6D from 1999 till 2004 using the British Household Panel Survey (BHPS). We show that for Scottish males explicitly accounting for the dead, rather than using IPWs to account for mortality-related attrition, changes the direction of the relationship between relative health changes and initial income position, while for other population groups it increases the strength of this relationship by up to 14 times. When deaths are explicitly incorporated into the analysis it is found that over this five year period for both Scotland and England & Wales the relative health changes were significantly regressive such that the poor experienced a larger share of the health losses relative to their initial share of health and a large amount of this was related to mortality.

Dark Clouds or Silver Linings? Knightian Uncertainty and Climate Change

This paper examines the impact of Knightian uncertainty upon optimal climate policy through the prism of a continuous-time real option modelling framework. We analytically determine optimal intertemporal climate policies under ambiguous assessments of climate damages. Additionally, numerical simulations are provided to illustrate the properties of the model. The results indicate that increasing Knightian uncertainty accelerates climate policy, i.e. policy makers become more reluctant to postpone the timing of climate policies into the future.

A balance of questions: what can we ask of climate change economics?

The standard approach to the economics of climate change, which has its best known implementation in Nordhaus's DICE and RICE models (well described in Nordhaus's 2008 book, A Question of Balance) is not well equipped to deal with the possibility of catastrophe, since we are unable to evaluate a risk averse representative agent's expected utility when there is any signi cant probability of zero consumption. Whilst other authors attempt to develop new tools with which to address these problems, the simple solution proposed in this paper is to ask a question that the currently available tools of climate change economics are capable of answering. Rather than having agents optimally choosing a path (that differs from the recommendations of climate scientists) within models which cannot capture the essential features of the problem, I argue that economic models should be used to determine the savings and investment paths which implement climate targets that have been suggested in the physical science literature.

Development Accounting with Intermediate Goods

Do intermediate goods help explain relative and aggregate productivity differences across countries? Three observations suggest they do: (i) intermediates are relatively expensive in poor countries; (ii) goods industries demand intermediates more intensively than service industries; (iii) goods industries are more prominent intermediate suppliers in poor countries. I build a standard multi-sector growth model accommodating these features to show that inefficient intermediate production strongly depresses aggregate labor productivity and increases the price ratio of final goods to services. Applying the model to data, low and high income countries in fact reveal similar relative efficiency levels between goods and services despite clear differences in relative sectoral labor productivity. Moreover, the main empirical exercise suggests that poorer countries are substantially less efficient at producing intermediate relative to final goods and services. Closing the cross-country efficiency gap in intermediate input production would strongly narrow the aggregate labor productivity difference across countries as well as turn final goods in poorer countries relatively cheap compared to services.

How do technical change and technological distance influence the size of the Okun’s Law coefficient?

How does technical change influence the size of the Okun’s Law coefficient? Using a nonlinear version of Okun’s Law augmented with technical change and technological distance, we show that the impact of output movements on unemployment variations is influenced by the imitation or innovation origins of technical change

Local consumption and territorial based accounting for CO2 Emissions

We examine the complications involved in attributing emissions at a sub-regional or local level. Speci cally, we look at how functional specialisation embedded within the metropolitan area can, via trade between sub-regions, create intra-metropolitan emissions interdependencies; and how this complicates environmental policy implementation in an analogous manner to international trade at the national level. For this purpose we use a 3-region emissions extended input-output model of the Glasgow metropolitan area (2 regions: city and surrounding suburban area) and the rest of Scotland. The model utilises data on commuter flows and household consumption to capture income and consumption flows across sub-regions. This enables a carbon attribution analysis at the sub-regional level, allowing us to shed light on the signi cant emissions interdependencies that can exist within metropolitan areas.

From Bretton Woods to inflation targeting: financial change and monetary policy evolution in Europe

Different ‘monetary architectures’ are distinguished, as a background to a discussion of the change in developed country monetary policy frameworks from fixed exchange rates under the Bretton Woods international monetary system to, ultimately, formal or informal inflation targeting. The introduction and experience of monetary targets in the 1970s is considered, followed by an analysis of the changes in countries’ monetary architectures, with particular reference to money and bond markets and to France and Italy, in the 1980s. Exchange rate targeting in Europe in the 1980s and 1990s is examined, followed by the changes in central bank independence in the 1990s. This leads to a discussion of the introduction of inflation targeting, and the issues raised for inflation targeting by the financial crisis of the late 2000s.