Hicks meets Hotelling: the direction of technical change in capital-resource economies

We analyze a two-sector growth model with directed technical change where man-made capital and exhaustible resources are essential for production. The relative profitability of factor-specific innovations endogenously determines whether technical progress will be capital- or resource-augmenting. We show that any balanced growth equilibrium features purely resource-augmenting technical change. This result is compatible with alternative specifications of preferences and innovation technologies, as it hinges on the interplay between productive efficiency in the final sector, and the Hotelling rule characterizing the efficient depletion path for the exhaustible resource. Our result provides sound micro-foundations for the broad class of models of exogenous/endogenous growth where resource-augmenting progress is required to sustain consumption in the long run, contradicting the view that these models are conceptually biased in favor of sustainability.

Carbon leakage revisited: unilateral climate policy with directed technical change

Using a stylized theoretical model, we argue that current economic analyses of climate policy tend to over-estimate the degree of carbon leakage, as they abstract from the effects of induced technological change. We analyse carbon leakage in a two-country model with directed technical change, where only one of the countries enforces an exogenous cap on emissions. Climate policy induces changes in relative prices, that cause carbon leakage through a terms-of-trade effect. However, these changes in relative prices also affect the incentives to innovate in different sectors. This leads to a counterbalancing induced-technology effect, which always reduces carbon leakage. We therefore conclude that the leakage rates reported in the literature may be too high, as these estimates neglect the effect of price changes on the incentives to innovate.

"Thought-Tormented Music": Joyce and the Music of the Irish Revival

"In this special issue's opening essay, Martin Dowling devotes almost half of "'Thought-Tormented Music': Joyce and the Music of the Irish Revival" to what he calls "the situation of music in the Irish literary revival." He focuses chiefly on 1904, which was both an intensely productive period for the revival movement and a year chock-full of crucial events and decisions for Joyce. Drawing on the works of Pierre Bourdieu and Jaques Lacan, Dowling explores the revivalists' efforts to "de-anglicize" Irish music, to remove foreign influences that distorted the "pure tradition of Irish song," and to achieve an improbable harmony between the music favoured by the disappearing Anglo-Irish aristocracy and the Irish-speaking peasantry. Inevitably, disputes occurred over what constituted "authentic" Irish music. Factions quarrelled over whether pristine Irish music existed in the Atlantic seaboard or more inland; whether "authentic" songs were sung with or without instrumental accompaniment; and whether the piano, rather than the traditional harp, was a legitimate instrument of accompaniment. Having delineated the historical and theoretical context, Dowling offers a richly detailed analysis of Joyce's story "A Mother." He reveals how almost every element in the story--from the Eire Abu Society to the Antient Concert Rooms, from the conflict between Mrs. Kearney and Hoppy Holohan to the plight of Kathleen Kearney--is charged with meaning by the subtextual conflicts of the revivalists' agenda. Dowling explains also the "authenticity" in Joyce's depiction of vocal performances of "The Lass of Aughrim" in "The Dead" and "The Croppy Boy" in "Sirens," which he calls two "true gems" of authentic Irish music." --Introduction by Charles Rossman and Alan W. Friedman, Guest Editors, pp. 409-410