Future of the Clean Development Mechanism in Tackling Climate Change

Using a theoretical framework, we explain the impact of the Clean Development Mechanism (CDM) on emissions in Annex I and non-Annex I countries. We show that on one hand, emissions in the non-Annex I country decline because of abatement sponsored by the Annex I country under the CDM; on the other hand, emissions may increase because (i) the Annex I country increases emissions in its own country, and (ii) the non-Annex I country crowds out the bene ts from the CDM projects by increasing its domestic emissions. For the CDM to be e¤ective in reducing global emissions, we show that partial Certi ed Emissions Reduction credits should be given to the Annex I country that sponsors CDM projects in the non-Annex I country. We also suggest that the CDM Executive Board should not allow the CDM projects to be hosted by non-Annex I countries that are too conscious about their emission levels.

Does readiness to change predict subsequent alcohol consumption in medical inpatients with unhealthy alcohol use?

We studied whether readiness to change predicts alcohol consumption (drinks per day) 3 months later in 267 medical inpatients with unhealthy alcohol use. We used 3 readiness to change measures: a 1 to 10 visual analog scale (VAS) and two factors of the Stages of Change Readiness and Treatment Eagerness Scale: Perception of Problems (PP) and Taking Action (TA). Subjects with the highest level of VAS-measured readiness consumed significantly fewer drinks 3 months later [Incidence rate ratio (IRR) and 95% confidence interval (CI): 0.57 (0.36, 0.91) highest vs. lowest tertile]. Greater PP was associated with more drinking [IRR (95%CI): 1.94 (1.02, 3.68) third vs. lowest quartile]. Greater TA scores were associated with less drinking [IRR (95%CI): 0.42 (0.23, 0.78) highest vs. lowest quartile]. Perception of Problems' association with more drinking may reflect severity rather than an aspect of readiness associated with ability to change; high levels of Taking Action appear to predict less drinking. Although assessing readiness to change may have clinical utility, assessing the patient's planned actions may have more predictive value for future improvement in alcohol consumption.

The past, present and future of central banking

The financial crisis, on the one hand, and the recourse to ‘unconventional’ monetary policy, on the other, have given a sharp jolt to perceptions of the role and status of central banks. In this paper we start with a brief ‘contrarian’ history of central banks since the second world war, which presents the Great Moderation and the restricted focus on inflation targeting as a temporary aberration from the norm. We then discuss how recent developments in fiscal and monetary policy have affected the role and status of central banks, notably their relationships with governments, before considering the environment central banks will face in the near and middle future and how they will have to change to address it.

When to Quit Under Uncertainty? A real options approach to smoking cessation

This paper models the decision to quit smoking like an investment decision where the quitter incurs a sunk withdrawal cost today and forgoes their consumer surplus from cigarettes (invests) and hopes to reap an uncertain reward of better health and therefore higher utility in the future (return). We show that a risk-averse mature smoker who expects to benefit from quitting may still rationally choose to delay quitting until they are more confident that quitting is the right decision for them. Such a decision by the smoker is due to the value associated with keeping their option of whether or not to quit open as they learn more about the damage that smoking will have on their future utility. Policies which reduce a smoker’s uncertainty about the damage that smoking with have on their future utility is likely to make them quit earlier.

Predictors of temporary and permanent work disability in patients with inflammatory bowel disease: results of the swiss inflammatory bowel disease cohort study.

BACKGROUND: Inflammatory bowel disease can decrease the quality of life and induce work disability. We sought to (1) identify and quantify the predictors of disease-specific work disability in patients with inflammatory bowel disease and (2) assess the suitability of using cross-sectional data to predict future outcomes, using the Swiss Inflammatory Bowel Disease Cohort Study data. METHODS: A total of 1187 patients were enrolled and followed up for an average of 13 months. Predictors included patient and disease characteristics and drug utilization. Potential predictors were identified through an expert panel and published literature. We estimated adjusted effect estimates with 95% confidence intervals using logistic and zero-inflated Poisson regression. RESULTS: Overall, 699 (58.9%) experienced Crohn's disease and 488 (41.1%) had ulcerative colitis. Most important predictors for temporary work disability in patients with Crohn's disease included gender, disease duration, disease activity, C-reactive protein level, smoking, depressive symptoms, fistulas, extraintestinal manifestations, and the use of immunosuppressants/steroids. Temporary work disability in patients with ulcerative colitis was associated with age, disease duration, disease activity, and the use of steroids/antibiotics. In all patients, disease activity emerged as the only predictor of permanent work disability. Comparing data at enrollment versus follow-up yielded substantial differences regarding disability and predictors, with follow-up data showing greater predictor effects. CONCLUSIONS: We identified predictors of work disability in patients with Crohn's disease and ulcerative colitis. Our findings can help in forecasting these disease courses and guide the choice of appropriate measures to prevent adverse outcomes. Comparing cross-sectional and longitudinal data showed that the conduction of cohort studies is inevitable for the examination of disability.

ADOS: an educational primary prevention programme for preventing excess body weight in adolescents.

OBJECTIVE: The prevalence of adolescent obesity has increased considerably over the past decade in Switzerland and has become a serious public health problem in Europe. Prevention of obesity using various comprehensive programmes appears to be very promising, although we must admit that several interventions had generally disappointing results compared with the objectives and target initially fixed. Holistic programmes including nutritional education combined with promotion of physical activity and behaviour modification constitute the key factors in the prevention of childhood and adolescent obesity. The purpose of this programme was to incorporate nutrition/physical education as well as psychological aspects in selected secondary schools (9th grade, 14-17 years). METHODS: The educational strategy was based on the development of a series of 13 practical workshops covering wide areas such as physical inactivity, body composition, sugar, energy density, invisible lipids, how to read food labels, is meal duration important? Do you eat with pleasure or not? Do you eat because you are hungry? Emotional eating. For teachers continuing education, a basic highly illustrated guide was developed as a companion booklet to the workshops. These materials were first validated by biology, physical education, dietician and psychologist teachers as well as school medical officers. RESULTS: Teachers considered the practical educational materials innovative and useful, motivational and easy to understand. Up to now (early 2008), the programme has been implemented in 50 classes or more from schools originating from three areas in the French part of Switzerland. Based on the 1-week pedometer value assessed before and after the 1 school-year programme, an initial evaluation indicated that overall physical placidity was significantly decreased as evidenced by a significant rise in the number of steps per day. CONCLUSION: Future evaluation will provide more information on the effectiveness of the ADOS programme.

The added value from a general equilibrium analyses of increased efficiency in household energy use

The aim of the paper is to identify the added value from using general equilibrium techniques to consider the economy-wide impacts of increased efficiency in household energy use. We take as an illustrative case study the effect of a 5% improvement in household energy efficiency on the UK economy. This impact is measured through simulations that use models that have increasing degrees of endogeneity but are calibrated on a common data set. That is to say, we calculate rebound effects for models that progress from the most basic partial equilibrium approach to a fully specified general equilibrium treatment. The size of the rebound effect on total energy use depends upon: the elasticity of substitution of energy in household consumption; the energy intensity of the different elements of household consumption demand; and the impact of changes in income, economic activity and relative prices. A general equilibrium model is required to capture these final three impacts.

Empirical testing of genuine savings as an indicator of weak sustainability: a three-country analysis of long run trends

Genuine Savings has emerged as a widely-used indicator of sustainable development. In this paper, we use long-term data stretching back to 1870 to undertake empirical tests of the relationship between Genuine Savings (GS) and future well-being for three countries: Britain, the USA and Germany. Our tests are based on an underlying theoretical relationship between GS and changes in the present value of future consumption. Based on both single country and panel results, we find evidence supporting the existence of a cointegrating (long run equilibrium) relationship between GS and future well-being, and fail to reject the basic theoretical result on the relationship between these two macroeconomic variables. This provides some support for the GS measure of weak sustainability. We also show the effects of modelling shocks, such as World War Two and the Great Depression.

Genuine savings and future well-being in Germany, 1850-2000

Genuine Savings (GS), also known as ‘net adjusted savings’, is a composite indicator of the sustainability of economic development. Genuine Savings reflects year-on-year changes in the total wealth or capital of a country, including net investment in produced capita, investment in human capital, depletion of natural resources, and damage caused by pollution. A negative Genuine Savings rate suggests that the stock of national wealth is declining and that future utility must be less than current utility, indicating that economic development is non-sustainable (Hamilton and Clemens, 1999). We make use of data over a 150 year period to examine the relationship between Genuine Savings and a number of indicators of well-being over time, and compare the relative changes in human, produced, and components of natural capital over the period. Overall, we find that the magnitude of genuine savings is positively related to changes in future consumption, with some evidence of a cointegrating relationship. However, the relationships between genuine savings and infant mortality or average heights are less clear.

The Emperor Has New Clothes: Empirical Tests of Mainstream Theories of Economic Growth

Modern macroeconomic theory utilises optimal control techniques to model the maximisation of individual well-being using a lifetime utility function. Agents face choices over current and future consumption (with resultant implied savings decisions) seeking to maximise the present value of current plus future well-being. However, such inter-temporal welfare-maximising assumptions remain empirically untested. In the work presented here we test whether welfare was in (historical) fact maximised in the US between 1870-2000 and find empirical support for the optimising basis of growth theory, but only once a comprehensive view of what constitutes a country’s wealth or capital is taken into account.

Consumption Decisions When People Value Conformity

In this paper we assume that for some commodities individuals may wish to adjust their levels of consumption from their normal Marshallian levels so as to match the consumption levels of a group of other individuals, in order to signal that they conform to the consumption norms of that group. Unlike Veblen’s concept of conspicuous consumption this can mean that some individuals may reduce their consumption of the relevant commodities. We model this as a three-stage game in which individuals first decide whether or not they wish to adhere to a norm, then decide which norm they wish to adhere to, and finally decide their actual consumption. We present a number of examples of the resulting equilibria, and then discuss the potential policy implications of this model.

Modeling Dependence Structure and Forecasting Portfolio Value-at-Risk with Dynamic Copulas

We study the asymmetric and dynamic dependence between financial assets and demonstrate, from the perspective of risk management, the economic significance of dynamic copula models. First, we construct stock and currency portfolios sorted on different characteristics (ex ante beta, coskewness, cokurtosis and order flows), and find substantial evidence of dynamic evolution between the high beta (respectively, coskewness, cokurtosis and order flow) portfolios and the low beta (coskewness, cokurtosis and order flow) portfolios. Second, using three different dependence measures, we show the presence of asymmetric dependence between these characteristic-sorted portfolios. Third, we use a dynamic copula framework based on Creal et al. (2013) and Patton (2012) to forecast the portfolio Value-at-Risk of long-short (high minus low) equity and FX portfolios. We use several widely used univariate and multivariate VaR models for the purpose of comparison. Backtesting our methodology, we find that the asymmetric dynamic copula models provide more accurate forecasts, in general, and, in particular, perform much better during the recent financial crises, indicating the economic significance of incorporating dynamic and asymmetric dependence in risk management.

Modelling Housing Prices using a Present Value State Space Model

This paper introduces a State Space approach to explain the dynamics of rent growth, expected returns and Price-Rent ratio in housing markets. According to the present value model, movements in price to rent ratio should be matched by movements in expected returns and expected rent growth. The state space framework assume that both variables follow an autoregressive process of order one. The model is applied to the US and UK housing market, which yields series of the latent variables given the behaviour of the Price-Rent ratio. Resampling techniques and bootstrapped likelihood ratios show that expected returns tend to be highly persistent compared to rent growth. The Öltered expected returns is considered in a simple predictability of excess returns model with high statistical predictability evidenced for the UK. Overall, it is found that the present value model tends to have strong statistical predictability in the UK housing markets.

Fractional Integration of the Price-Dividend Ratio in a Present-Value Model of Stock Prices

We re-examine the dynamics of returns and dividend growth within the present-value framework of stock prices. We find that the finite sample order of integration of returns is approximately equal to the order of integration of the first-differenced price-dividend ratio. As such, the traditional return forecasting regressions based on the price-dividend ratio are invalid. Moreover, the nonstationary long memory behaviour of the price-dividend ratio induces antipersistence in returns. This suggests that expected returns should be modelled as an AFIRMA process and we show this improves the forecast ability of the present-value model in-sample and out-of-sample.

Modelling Housing Prices using a Present Value State Space Model

This paper introduces a State Space approach to explain the dynamics of rent growth, expected returns and Price-Rent ratio in housing markets. According to the present value model, movements in price to rent ratio should be matched by movements in expected returns and expected rent growth. The state space framework assume that both variables follow an autoregression process of order one. The model is applied to the US and UK housing market, which yields series of the latent variables given the behaviour of the Price-Rent ratio. Resampling techniques and bootstrapped likelihood ratios show that expected returns tend to be highly persistent compared to rent growth. The filtered expected returns is considered in a simple predictability of excess returns model with high statistical predictability evidence for the UK. Overall, it is found that the present value model tends to have strong statistical predictability in the UK housing markets.