Famous Rejections

In a posthumously published paper, Clive Granger discusses the evolution of the idea of cointegration. It turns out that his famous 1987 paper with Engel in Econometrica was rejected twice (without an invitation to resubmit). The first version was sole authored. The second one was dual authored "but it was also rejected for not being sufficiently original"! That's one of the papers that won Engel and Granger the Nobel Prize in Economics. Eventually, the editor of Econometrica wrote to Granger and asked him to resubmit it because they were receiving other papers on cointegration!

The moral is, just because a journal rejects your paper, it doesn't mean it isn't any good.

Also of interest is another paper exploring the history of cointegration in the same issue of J. Econometrics by Boswijk et al.

Inheritance and Economic Growth

I am reading an interesting paper by Thomas Piketty on inheritance and economic growth. It's a long paper with lots of stuff in it. But here is the key point. They construct time series for inheritance (both bequests and inter-vivos transfers) for France over almost 200 years. One source is French estate tax data and the other a model of demography, saving etc. The gap between the two series (representing tax evasion) is relatively small and constant over time:



Annual flows of inheritance averaged 20% of national income in the 19th century but fell to as low as 5% of national income in the mid-20th century. Since then the share has risen again to around 15%. These numbers are huge - intergenerational transfers are around the same magnitude as the savings rate. Part of the explanation for the U-shaped trajectory is changes in economic growth rates over time. In periods of fast economic growth inheritances from the past poorer generation become less significant. Similarly, savings rates are high in fast growing economies like China partly because the old are not dissaving much compared to what the young are saving. Of course, inequality was also lower in the mid-20th century but was that a result of the low role of inheritances and the high role of current labor income as well as progressive income taxation or also a result of the high economic growth rate? Perhaps progressive income taxation is "easier to get away with" when inequality is lower anyway and growth is faster?

Seminar 26th October

I know this is a long time off, but I just agreed to do a seminar at 2pm on 26th October in Seminar Room B, Coombs Building, ANU. Title is: "The Role of Energy in Long-Run Economic Growth". I will report on my work in collaboration with Astrid Kander at University of Lund on energy and growth in Sweden over a couple of centuries. I also have started supervising a graduate student as part of an applied econometrics class at ANU to work on applying time series techniques to the same data set. Hopefully, we can come up with something interesting.

NOAA State of the Climate 2009

I've been looking for a "state of the world" article for the class I will be teaching in Lund. Today, NOAA released their annual report on the state of the climate. That is an excellent example of the kind of thing I'm looking for. Now, if I could cover energy trends, pollutants, biodiversity etc. as well as the climate in one article that would be great. It's pretty easy to find reports on such topics but as the course is a very short one we can't overload the students with readings.

Here is the summary figure of the report:



Click on the image to get a better view.

Strategic Behavior and the Environment

Another new journal in the environmental economics space. I've never heard of the publisher but the editor is Ariel Dinar (UC Riverside) and they have a bunch of well known people on the editorial board. It's not quite as star studded as the board of Climate Change Economics but still pretty impressive.

Suggest an Article for My Students

They'll only be my students for one guest lecture. They are students in a business masters who are taking an environmental economics class. The textbook for the class is undergrad level and a bit old (they cover the whole book in 3 weeks). I need an overview article about global trends in energy, pollution, climate change, biodiversity, the more the merrier over the last decade at least to supplement/update it. Lots of pretty charts would be great. Any suggestions?

Gillard's Climate Initiative

The main feature of Gillard's climate policy announced today is to run a 150 person citizens' jury on the issue. Strangely most of the green activists quoted are against the idea but many of my colleagues in ecological economics would probably think this was a great idea in principle. Shuang's first reaction was though that: "it will be tough to handle 150 people".

Gillard also said that under a future ETS baselines would be maintained at their CPRS level encouraging energy conservation and emissions reduction in the meantime. And that there will be a ban on "dirty coal fired power stations". In other words, they must be retrofittable with CCS, I presume.

And it seems that the US is also deferring policy to the future. But China announces that it will introduce an ETS within 5 years.

Global Map of Forest Canopy Height

NASA has produced a cool map of world forest heights. Woodlands and savannas are not included so the green areas are a very low end estimate of world forest cover.

IAmScientist

My wife passed on an invitation she got to join a new site called I Am Scientist. Seems to be yet another competitor with ResearchGate, Academia.edu, CoS, ResearcherID and for economists RePEc. This site mainly seems to have medical scientists signed up so far. No-one yet seems to have the momentum of Facebook or LinkedIn in the academic space.

Jobs Websites

VoxEU now has a jobs website. It has a lot of European jobs listed, which nicely complements the U.S. focus of JOE (JObs for Economists). For Australian jobs, UniJobs is pretty comprehensive. Just put the keywords you are interested in into their search engine.

Australian Federal Election Called

Joshua Gans is endorsing Labor. Not much of a surprise. Australian economists mostly seem to be left wing though he seems a bit less so than many. John Quiggin is endorsing the Greens. I just posted this on Quiggin's blog:

"Well I expect Andrew Leigh will be my new member of parliament. I do favor voting Green as first preference * as a signal to the major parties. That’s what I usually do. The question is could Greens have a chance to get an ACT Senate seat? I expect we’re stuck with one Liberal, one Labor there too."

Otherwise, though, I don't want to make this blog too political.

* An explanation of the preferential voting system in Australia.

China Update

Yesterday, I attended the China Update at ANU. One of the benefits of attending is getting a copy of the book produced for the conference which I am looking through at the moment. Not all chapters were presented at the conference and not all conference papers are in the book.

I was most interested in three topics discussed at the update and in the conference book: Calls from China-based researchers for more democracy and better governance in China; discussion of China's entry into the "turning period" in the Lewis model of dual economic development; and ZhongXiang Zhang paper on "Assessing China's Energy Conservation and Carbon Intensity".

The need for more democracy was presented as crucial for handling vested interests and relations between local and national government. Papers/chapters by Ross Garnaut, Kong et al. on "The Global Financial Crisis and Rural-Urban Migration", and Tyers among others dealt with the turning point issue. Since 2004 real wages and the real exchange rate have appreciated as surplus labor in the countryside has been exhausted. During 2008-9 wages of migrant workers in cities continued to increase as unemployed workers returned to the countryside and primarily took up part time work in agriculture.

ZhongXiang Zhang largely agrees with Frank Jotzo and myself that China's target of reducing carbon intensity by 40-45% between 2005 and 2020 is ambitious but feasible. He calculates that the target implies a greater reduction in intensity than embodied in the World Energy Outlook 2009 projection. But he argues that China should do even more than this, cutting emissions intensity by 46-50% by 2020. We do not see the WEO 2009 projection as a BAU scenario in any way because, as Zhang points out, it contains all the energy efficiency measures that China had already proposed by 2009 and as Zhang agrees it is unlikely that energy intensity could improve as fast in 2005-2020 as it did between 1980 and 2000. We believe that the 40-45% target could already be quite hard to achieve.

On a related theme, an interesting article from Giles Parkinson on China's climate/clean energy strategy.

New Office

I just moved office. I'm now in Room 4038 in the Coombs Building which is in the area occupied by Resource Management in the Asia Pacific though I'm still attached to the Arndt-Corden Division or Department. My phone number is 6125-1609. But the best way to contact me as usual is by e-mail. I like this office better than my old one actually. It's bigger, has a real wooden desk, and has much more controllable heating. The old one was way hot in winter.

Call for References: The Role of Energy in Economic Growth

Back in April I did a series of posts on energy and economic growth which serialised a review paper I was editing on the topic. A couple of those have been among my post popular posts in the last few months. Now I am revising the paper again for the final version. The referees made a lot of comments but I am also reading some additional papers and seeing if they fit into the story. So if you think there is something I should include please contact me and I'll be happy to consider it and if I use it include you in the acknowledgments. I already have 175 references though and the referees complained about some things I hadn't included so I'm not planning on adding a lot of stuff. But if it is important I will. I will put out a working paper when this revision is complete. Use the search function in Blogger to see if your reference was already included in one of the series.

Climate Spectator

Business Spectator is an Australian financial news website that is today launching a new venture: Climate Spectator. Looks like it will be interesting.

Development and Environment Data

One of these was released last year and the other earlier this year but, I guess, better late than never!

Free Data from the World Bank
The World Bank now offers free access to more than 2,000 financial, business, health, economic and human development statistics that had mostly been previously available only to paying subscribers. The data can be accessed via the data catalog. This includes the World Development Indicators previously only available to subscribers.

EDGAR 4.0
This dataset provides both gridded and annual by country data for 1970-2005 for most greenhouse gases and aerosols. I expect to see some EKC studies for esoteric pollutants :)

New Sulfur Dioxide Dataset

Steve Smith of the Pacific Northwest National Laboratory and his team have completed work on their dataset of sulfur emissions from 1850 to 2005 by country and year. The paper is available for discussion on Atmospheric Chemistry and Physics' website.

I've known for a while that this dataset was under development, which is the main reason why I haven't updated my own estimates of global sulfur emissions available from my website. This new dataset provides the same format of annual data for each country. But the data is updated by five years and is also broken down into different sources of emissions. Estimation uses bottom up methods constrained by official observations where those are available.

My key finding was that a historic reversal in the trend of global sulfur emissions occurred in the 1980s and 1990s with the steep upward trend being replaced by a flattening out in the 1980s and a substantial decline in emissions in the 1990s. The new dataset shows the beginning of a possible renewed increase in emissions though it's still a relatively small fluctuation:



This largely appears to be driven by increasing emissions in East Asia:



and to a lesser extent in other developing regions. The paper does, however, note that there is a lot of uncertainty associated with East Asian and, in particular, Chinese emissions. The data shows a similar pattern to my estimates:



The main difference is that emissions in the plateau of the 1970s and 1980s are estimated to be lower than in most previous studies largely because of lower estimates for the former Soviet Union and China in those years.

Gittins Enters the Economics Consensus Debate

Ross Gittins agrees with Ken Henry that academic economists need to get behind "reforms". I don't understand this presumption that economists should all be in agreement about all policies that the government happens to come up with. I disagreed with the basic rationale for the RSPT as presented in the Henry Review. I see royalties as a charge by the resource owner not as a priori a "distorting tax". I don't, therefore, accept the basic argument that the Brown tax is neccessarily "more efficient" and I could certainly see the differences between that ideal Brown tax and the tax proposed by the government. Proponents of "rent taxes" apparently believe that inefficient mining companies should use Australia's resources for free just because they can't make a profit.

Now a profits based tax may in the long-run get the government more total returns on its minerals or maybe it will either encourage too much early exploitation of resources or discourage too much investment in the long-run. Or some combination of both. Additionally, my understanding is that the resources belong to the states and the Rudd government was obsessed with centralization - see the hospital/health policy. But lets see some more balanced debate around these issues rather than everyone rushing headlong after whatever the Treasury Department comes up with. Just because the economists there thought it was a good idea doesn't mean it is. Similarly, my ideas may not be good either, that's why we have peer review in academia.

EERH Research Reports: June 2010

Downloads of EERH Research Reports crept up a bit more last month as we brought more papers online. We now have 64 papers in the series. Additions to RePEc in the last month include:

EERH46: Testing construct validity of verbal versus numerical measures of preference uncertainty in contingent valuation, Sonia Akter and Jeff W Bennett.

EERH55: Prerequisites and limits for economic modelling of climate change impacts and adaptation, Frank Jotzo.

EERH56: Restricted versus unrestricted choice in labelled choice experiments: exploring the tradeoffs of expanding choice dimensions, Jill Windle and John Rolfe.

EERH57: Valuing protection of the Great Barrier Reef with choice modelling by management policy options, John Rolfe and Jill Windle.

EERH58: Tradable Green Certificates as a Policy Instrument? A Discussion on the Case of Poland, Christoph Heinzel and Thomas Winkler.

EERH59: Initial Allocation Effects in Permit Markets with Bertrand Output Oligopoly, Evan Calford, Christoph Heinzel, and Regina Annette Betz.

EERH60: The Value of Tropical Waterways and Wetlands: does an increase in knowledge change community preferences, Abbie McCartney, Jonelle Cleland, and Michael Burton.

EERH61: Inducing Strategic Bias: and its implications for Choice Modelling design, Michael Burton.

EERH62: Climate Change and Game Theory, Peter John Wood.

EERH63: Where is it Cheapest to Cut Carbon Emissions?, David I. Stern and N. Ross Lambie.

EERH64: A systems approach to livability and sustainability: defining terms and mapping relationships to link desires with ecological opportunities and constraints, Jacqueline de Chazal.

The RSPT is Dead Long Live the MRRT!

The Commonwealth Government * is announcing changes to the RSPT. The interest rate is 7% above the government long-term bond rate, the rate of the tax is 30% no refunds of losses and it only applies to iron ore and coal. It is being rebadged the "Minerals Resource Rent Tax". The existing Petroleum Resource Rent Tax will be extended to onshore coal seam gas production.

These are changes which the industry argued for. It will be hard for them to argue against this tax. A rough guess is that it will collect no more than the existing state royalties at the moment. Corporation tax will be cut to 29% (from 30%) in 2013-14. And the government is still proposing to raise compulsory superannuation contributions to 12% from 9%, a policy that only seems to have the support of the superannuation management industry. I think these are sensible moves (though why shouldn't gold mining say pay the tax?) though as someone who thinks we either should have a federal form of government for real or just go ahead and abolish the states I still don't like the idea of the federal government taxing resources which according to the Constitution belong to the states. And I don't have a problem with the nature of state royalties in the first place.

These are of course still just proposals. This tax is going to have to survive the federal election, the Senate, and possible court action on the constitutional issue.

* I know they call themselves the Australian Government, which I see as a sign of Ruddist centralization.