Understanding sources of the change in international business cycles

Macroeconomic activity has become less volatile over the past three decades in most G7 economies. Current literature focuses on the characterization of the volatility reduction and explanations for this so called "moderation" in each G7 economy separately. In opposed to individual country analysis and individual variable analysis, this paper focuses on common characteristics of the reduction and common explanations for the moderation in G7 countries. In particular, we study three explanations: structural changes in the economy, changes in common international shocks and changes in domestic shocks. We study these explanations in a unified model structure. To this end, we propose a Bayesian factor structural vector autoregressive model. Using the proposed model, we investigate whether we can find common explanations for all G7 economies when information is pooled from multiple domestic and international sources. Our empirical analysis suggests that volatility reductions can largely be attributed to the decline in the magnitudes of the shocks in most G7 countries while only for the U.K., the U.S. and Italy they can partially be attributed to structural changes in the economy. Analyzing the components of the volatility, we also find that domestic shocks rather than common international shocks can account for a large part of the volatility reduction in most of the G7 countries. Finally, we find that after mid-1980s the structure of the economy changes substantially in five of the G7 countries: Germany, Italy, Japan, the U.K. and the U.S..

Scenario-based assessment of future land use change on butterfly species distributions

Species distribution models (SDMs) are increasingly used to predict environmentally induced range shifts of habitats of plant and animal species. Consequently SDMs are valuable tools for scientifically based conservation decisions. The aims of this paper are (1) to identify important drivers of butterfly species persistence or extinction, and (2) to analyse the responses of endangered butterfly species of dry grasslands and wetlands to likely future landscape changes in Switzerland. Future land use was represented by four scenarios describing: (1) ongoing land use changes as observed at the end of the last century; (2) a liberalisation of the agricultural markets; (3) a slightly lowered agricultural production; and (4) a strongly lowered agricultural production. Two model approaches have been applied. The first (logistic regression with principal components) explains what environmental variables have significant impact on species presence (and absence). The second (predictive SDM) is used to project species distribution under current and likely future land uses. The results of the explanatory analyses reveal that four principal components related to urbanisation, abandonment of open land and intensive agricultural practices as well as two climate parameters are primary drivers of species occurrence (decline). The scenario analyses show that lowered agricultural production is likely to favour dry grassland species due to an increase of non-intensively used land, open canopy forests, and overgrown areas. In the liberalisation scenario dry grassland species show a decrease in abundance due to a strong increase of forested patches. Wetland butterfly species would decrease under all four scenarios as their habitats become overgrown

Age-related change in melanin-based coloration of Barn owls (Tyto alba): females that become more female-like and males that become more male-like perform better

Ornament expression fluctuates with age in many organisms. Whether these changes are adaptively plastic is poorly known. In order to understand the ultimate function of melanin-based ornaments, we studied their within-individual fluctuations and their covariation with fitness-related traits. In barn owls (Tyto alba), individuals vary from reddish-brown pheomelanic to white and from immaculate to marked with black eumelanic spots, males being less reddish and less spotted than females. During the first molt, both sexes became less pheomelanic, females displayed larger spots and males fewer spots, but the extent of these changes was not associated with reproduction. At subsequent molts, intra-individual changes in melanin-based traits covaried with simultaneous reproduction changes. Adult females bred earlier in the season and laid larger eggs when they became scattered with larger spots, while adults of both sexes produced larger broods when they became whiter. These results suggest that the production of melanin pigments and fitness-related life history traits are concomitantly regulated in a sex-specific way.

The change of behavior of two strains of Leishmania after cultivation in a defined medium

Attempts have been made to characterize two strains of Leishmania that became infective to golden hamsters only after they had been maintained for several years in a chemically defined culture medium. Observations were made on the growth rates of promastigotes in vitro, course of infection in hamsters, morphology of amastigotes, and electrophoretic mobility patterns of eight isoenzymes. Information was obtained about the buoyant densities of n-DNA and k-DNA, and one strain was tested against monoclonal antibodies. The identity of both strains remains obscure.

Subgroups of small index in Aut(Fn) and Kazhdan's property (T)

We give a series of interesting subgroups of finite index in Aut(Fn). One of them has index 42 in Aut(F3) and infinite abelianization. This implies that Aut(F3) does not have Kazhdan’s property (T) (see [3] and [6] for another proofs). We proved also that every subgroup of finite index in Aut(Fn), n &= 3, which contains the subgroup of IA-automorphisms, has a finite abelianization.

First report of Mazocroeoides georgei price, 1936 and Mazocraeoides opisthonema Hargis, 1955 in Brazil with new synonysms (Monogenea, Mazocraeidae)

Mazocraeoides georgei price, 1936 and mazocraeoides opisthonema Hargis, 1955 are reported for the first time in Brazil in Brevoortia aurea (Spix, 1829) and in Harengula clupeola (Cuvier, 1829) respectively, clupeid fishes from the littoral of Rio de janeiro State, which represent new host records. Mazocraeoides olentangiensis Sroufe, 1958 and mazocraeoides hargisi Price, 1961 are considered new synonyms for Mazocraeoides georgei.

The Complete Information First. Price Auction or the Importance of Being Indivisible

Abstract Despite the popularity of auction theoretical thinking, it appears that no one has presented an elementary equilibrium analysis of the first-price sealed-bid auction mechanism under complete information. This paper aims to remedy that omission. We show that the existence of pure strategy undominated Nash equilibria requires that the bidding space is not "too divisible" (that is, a continuum). In fact, when bids must form part of a finite grid there always exists a "high price equilibrium". However, there might also be "low price equilibria" and when the bidding space is very restrictive the revenue obtained in these "low price equilibria" might be very low. We discuss the properties of the equilibria and an application of auction theoretical thinking in which "low price equilibria" may be relevant. Keywords: First-price auctions, undominated Nash equilibria. JEL Classification Numbers: C72 (Noncooperative Games), D44 (Auctions).

Political alliances and organisational change in political parties: a framework for analysis

This article sets out a theoretical framework for the study of organisational change within political alliances. To achieve this objective it uses as a starting point a series of premises, the most notable of which include the definition of organisational change as a discrete, complex and focussed phenomenon of changes in power within the party. In accordance with these premises, it analyses the synthetic model of organisational change proposed by Panebianco (1988). After examining its limitations, a number of amendments are proposed to adapt it to the way political alliances operate. The above has resulted in the design of four new models. In order to test its validity and explanatory power in a preliminary manner, the second part looks at the organisational change of the UDC within the CiU alliance between 1978 and 2001. The discussion and conclusions reached demonstrate the problems of determinism of the Panebianco model and suggest, tentatively, the importance of the power balance within the alliance as a key factor.

A computable general equilibrium analysis of the relative price sensitivity required to induce rebound effects in response to an improvement in energy efficiency in the UK economy

In recent years there has been extensive debate in the energy economics and policy literature on the likely impacts of improvements in energy efficiency. This debate has focussed on the notion of rebound effects. Rebound effects occur when improvements in energy efficiency actually stimulate the direct and indirect demand for energy in production and/or consumption. This phenomenon occurs through the impact of the increased efficiency on the effective, or implicit, price of energy. If demand is stimulated in this way, the anticipated reduction in energy use, and the consequent environmental benefits, will be partially or possibly even more than wholly (in the case of ‘backfire’ effects) offset. A recent report published by the UK House of Lords identifies rebound effects as a plausible explanation as to why recent improvements in energy efficiency in the UK have not translated to reductions in energy demand at the macroeconomic level, but calls for empirical investigation of the factors that govern the extent of such effects. Undoubtedly the single most important conclusion of recent analysis in the UK, led by the UK Energy Research Centre (UKERC) is that the extent of rebound and backfire effects is always and everywhere an empirical issue. It is simply not possible to determine the degree of rebound and backfire from theoretical considerations alone, notwithstanding the claims of some contributors to the debate. In particular, theoretical analysis cannot rule out backfire. Nor, strictly, can theoretical considerations alone rule out the other limiting case, of zero rebound, that a narrow engineering approach would imply. In this paper we use a computable general equilibrium (CGE) framework to investigate the conditions under which rebound effects may occur in the Scottish regional and UK national economies. Previous work has suggested that rebound effects will occur even where key elasticities of substitution in production are set close to zero. Here, we carry out a systematic sensitivity analysis, where we gradually introduce relative price sensitivity into the system, focusing in particular on elasticities of substitution in production and trade parameters, in order to determine conditions under which rebound effects become a likely outcome. We find that, while there is positive pressure for rebound effects even where (direct and indirect) demand for energy is very price inelastic, this may be partially or wholly offset by negative income and disinvestment effects, which also occur in response to falling energy prices.

Do institutions matter for economic fluctuations? Weak property rights in a business cycle model for Mexico

This paper shows that introducing weak property rights in the standard real business cycle (RBC) model can help to explain economic fluctuations. This is motivated by the empirical observation that changes in institutions in emerging markets are related to the evolution of the main macroeconomic variables. In particular, in Mexico, the movements in productivity in the data are associated with changes in institutions, so that we can explain productivity shocks to a large extent as shocks to the quality of institutions. We find that the model with shocks to the degree of protection of property rights only - without technology shocks - can match the second moments in the data for Mexico well. In particular, the fit is better than that of the standard neoclassical model with full protection of property rights regarding the auto-correlations and cross-correlations in the data, especially those related to labor. Viewing productivity shocks as shocks to institutions is also consistent with the stylized fact of falling productivity and non-decreasing labor hours in Mexico over 1980-1994, which is a feature that the neoclassical model cannot match.

When is Monetary Policy All we Need?

We consider optimal monetary and scal policies in a New Keynesian model of a small open economy with sticky prices and wages. In this benchmark setting monetary policy is all we need - analytical results demonstrate that variations in government spending should play no role in the stabilization of shocks. In extensions we show, rstly, that this is even when true when allowing for in ation inertia through backward-looking rule-of-thumb price and wage-setting, as long as there is no discrepancy between the private and social evaluation of the marginal rate of substitution between consumption and leisure. Secondly, the optimal neutrality of government spending is robust to the issuance of public debt. In the presence of debt government spending will deviate from the optimal steady-state but only to the extent required to cover the deficit, not to provide any additional macroeconomic stabilization. However, unlike government spending variations in tax rates can play a complementary role to monetary policy, as they change relative prices rather than demand.

Optimal Climate Change Policies When Governments Cannot Commit

This paper examines the optimal design of climate change policies in the context where governments want to encourage the private sector to undertake significant immediate investment in developing cleaner technologies, but the carbon taxes and other environmental policies that could in principle stimulate such investment will be imposed over a very long future. The conventional claim by environmental economists is that environmental policies alone are sufficient to induce firms to undertake optimal investment. However this argument requires governments to be able to commit to these future taxes, and it is far from clear that governments have this degree of commitment. We assume instead that governments cannot commit, and so both they and the private sector have to contemplate the possibility of there being governments in power in the future that give different (relative) weights to the environment. We show that this lack of commitment has a significant asymmetric effect. Compared to the situation where governments can commit it increases the incentive of the current government to have the investment undertaken, but reduces the incentive of the private sector to invest. Consequently governments may need to use additional policy instruments – such as R&D subsidies – to stimulate the required investment.