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The Importance of Revenue Sharing for the Local Economic Impacts of a Renewable Energy Project: A Social Accounting Matrix Approach
Get PDFAs demand for electricity from renewable energy sources grows, there is increasing
interest, and public and financial support, for local communities to become involved
in the development of renewable energy projects. In the UK, “Community Benefit”
payments are the most common financial link between renewable energy projects and
local communities. These are “goodwill” payments from the project developer for the
community to spend as it wishes. However, if an ownership stake in the renewable
energy project were possible, receipts to the local community would potentially be
considerably higher. The local economic impacts of these receipts are difficult to
quantify using traditional Input-Output techniques, but can be more appropriately
handled within a Social Accounting Matrix (SAM) framework where income flows
between agents can be traced in detail. We use a SAM for the Shetland Islands to
evaluate the potential local economic and employment impact of a large onshore wind
energy project proposed for the Islands. Sensitivity analysis is used to show how the
local impact varies with: the level of Community Benefit payments; the portion of
intermediate inputs being sourced from within the local economy; and the level of any local community ownership of the project. By a substantial margin, local ownership confers the greatest economic impacts for the local community
Financial shocks and the US business cycle
Get PDFEmploying the financial accelerator (FA) model of Bernanke, Gertler and Gilchrist (1999) enhanced to include a shock to the FA mechanism, we construct and study shocks to the efficiency of the financial sector in
post-war US business cycles. We find that financial shocks are very tightly
linked with the onset of recessions, more so than TFP or monetary shocks. The financial shock invariably remains contractionary for
sometime after recessions have ended. The shock accounts for a large part
of the variance of GDP and is strongly negatively correlated with the external finance premium. Second-moments comparisons across variants of the model with and without a (stochastic) FA mechanism suggests the stochastic FA model helps us understand the data
Can a Lucas model with habit generate realistic conditional volatility in exchange rate returns?
Get PDFIn this paper, we attempt to give a theoretical underpinning to the well established empirical stylized fact that asset returns in general and the spot FOREX returns in particular display predictable volatility characteristics. Adopting Moore and Roche s habit persistence version of Lucas model we nd that both the innovation in the spot FOREX return and the FOREX return itself follow "ARCH" style processes. Using the impulse response functions
(IRFs) we show that the baseline simulated FOREX series has "ARCH" properties in the
quarterly frequency that match well the "ARCH" properties of the empirical monthly estimations in that when we scale the x-axis to synchronize the monthly and quarterly responses we find similar impulse responses to one unit shock in variance. The IRFs for the ARCH processes we estimate "look the same" with an approximately monotonic decreasing fashion. The Lucas two-country monetary model with habit can generate realistic conditional
volatility in spot FOREX return
A comparison of results from MRIO and interregional computable general equilibrium (CGE) analyses of the impacts of a positive demand shock on the ‘CO2 trade balance’ between Scotland and the rest of the UK
Get PDFIn previous work we have applied the environmental multi-region input-output (MRIO) method proposed by Turner et al (2007) to examine the ‘CO2 trade balance’ between
Scotland and the Rest of the UK. In McGregor et al (2008) we construct an
interregional economy-environment input-output (IO) and social accounting matrix
(SAM) framework that allows us to investigate methods of attributing responsibility for pollution generation in the UK at the regional level. This facilitates analysis of the nature and significance of environmental spillovers and the existence of an
environmental ‘trade balance’ between regions. While the existence of significant data problems mean that the quantitative results of this study should be regarded as
provisional, we argue that the use of such a framework allows us to begin to consider
questions such as the extent to which a devolved authority like the Scottish Parliament can and should be responsible for contributing to national targets for reductions in emissions levels (e.g. the UK commitment to the Kyoto Protocol) when it is limited in the way it can control emissions, particularly with respect to changes in demand
elsewhere in the UK.
However, while such analysis is useful in terms of accounting for pollution flows in the single time period that the accounts relate to, it is limited when the focus is on
modelling the impacts of any marginal change in activity. This is because a
conventional demand-driven IO model assumes an entirely passive supply-side in the
economy (i.e. all supply is infinitely elastic) and is further restricted by the assumption of universal Leontief (fixed proportions) technology implied by the use of the A and
multiplier matrices. In this paper we argue that where analysis of marginal changes in
activity is required, a more flexible interregional computable general equilibrium
approach that models behavioural relationships in a more realistic and theory-consistent manner, is more appropriate and informative.
To illustrate our analysis, we compare the results of introducing a positive demand
stimulus in the UK economy using both IO and CGE interregional models of Scotland
and the rest of the UK. In the case of the latter, we demonstrate how more theory
consistent modelling of both demand and supply side behaviour at the regional and
national levels affect model results, including the impact on the interregional CO2
‘trade balance’
Communication for Public Goods
Get PDFThis paper studies information transmission between multiple agents with di¤erent preferences and a welfare maximizing decision maker who chooses the quality or quantity of a public good
(e.g. provision of public health service; carbon emissions policy; pace of lectures in a classroom) that is consumed by all of them. Communication in such circumstances suffers from the agents' incentive to "exaggerate" their preferences relative to the average of the other agents, since the
decision maker's reaction to each agent's message is weaker than in one-to-one communication.
As the number of agents becomes larger the quality of information transmission diminishes.
The use of binary messages (e.g. "yes" or "no") is shown to be a robust mode of communication when the main source of informational distortion is exaggeration
On the Relationship between Market Power and Bank Risk Taking
Get PDFWe analyse risk-taking behaviour of banks in the context of spatial competition. Banks
mobilise unsecured deposits by offering deposit rates, which they invest either in a
prudent or a gambling asset. Limited liability along with high return of a successful gamble induce moral hazard at the bank level. We show that when the market power is low, banks invest in the gambling asset. On the other hand, for sufficiently high levels of market power, all banks choose the prudent asset to invest in. We further show that a merger of two neighboring banks increases the likelihood of prudent behaviour.
Finally, introduction of a deposit insurance scheme exacerbates banks’ moral hazard
problem
Econometric Estimation of Armington import elasticities for regional CGE models of the Chicago and Illinois economies
Get PDFRecruitment and retention incentives in health labour markets: an analysis of participation in NHS Scotland following Dental Vocational
Get PDFThis paper uses a unique individual level administrative data set to analyse the participation of health professionals in the NHS after training. The data set contains information on over 1,000 dentists who received Dental Vocational Training in Scotland between 1995 and 2006. Using a dynamic nonlinear panel data model, we estimate the determinants of post-training participation. We nd there is signi cant persistence in these data and are able to show that the persistence arises from state dependence and individual heterogeneity. This finding has implications for the structure of policies designed to increase
participation rates. We apply this empirical framework to assess the accuracy of predictions for workforce forecasting, and to provide a preliminary estimate of the impact of one of the recruitment and retention policies available to dentists in Scotland
Bayesian Inference in the Time Varying Cointegration Model
Get PDFThere are both theoretical and empirical reasons for believing that the parameters of macroeconomic models may vary over time. However, work with time-varying parameter models has largely involved Vector autoregressions (VARs), ignoring cointegration. This is despite the fact that cointegration plays an important role in informing macroeconomists on a range of issues.
In this paper we develop time varying parameter models which permit cointegration. Time-varying parameter VARs (TVP-VARs) typically use state space representations to model the evolution of parameters. In this paper, we show that it is not sensible to use straightforward extensions of TVP-VARs
when allowing for cointegration. Instead we develop a specification which allows for the cointegrating space to evolve over time in a manner comparable to the random walk variation used with TVP-VARs. The properties
of our approach are investigated before developing a method of posterior
simulation. We use our methods in an empirical investigation involving a
permanent/transitory variance decomposition for inflation
Firms in Scottish High Technology Clusters: software, life sciences, microelectronics, optoelectronics and digital media – preliminary evidence and analysis on firm size, growth and optimality
Get PDFThis paper reports on: (a) new primary source evidence on; and (b) statistical and econometric analysis of high technology clusters in Scotland. It focuses on the following sectors: software, life sciences, microelectronics, optoelectronics, and digital media. Evidence on a postal and e-mailed questionnaire is presented and discussed under the headings of:
performance, resources, collaboration & cooperation, embeddedness, and innovation. The sampled firms are characterised as being small (viz. micro-firms and SMEs), knowledge
intensive (largely graduate staff), research intensive (mean spend on R&D GBP 842k), and
internationalised (mainly selling to markets beyond Europe).
Preliminary statistical evidence is presented on Gibrat’s Law (independence of growth and size) and the Schumpeterian Hypothesis (scale economies in R&D). Estimates suggest a short-run equilibrium size of just 100 employees, but a long-run equilibrium size of 1000 employees. Further, to achieve the Schumpeterian effect (of marked scale economies in R&D), estimates suggest that firms have to grow to very much larger sizes of beyond 3,000 employees. We argue that the principal way of achieving the latter scale may need to be by
takeovers and mergers, rather than by internally driven growth