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School of Economics

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https://hdl.handle.net/1853/70712

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Ivan Allen College of Liberal Arts

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https://finding-aids.library.gatech.edu/agents/corporate_entities/1157

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Publication Search Results

Now showing 1 - 10 of 12

Measuring Segregation of the Poor

( 2012-01) Dhongde, Shatakshee

In this paper I propose a poverty segregation curve to measure inequality in the distribution of the poor. Axioms of relative income inequality are reformulated for the poverty segregation curve and a generalized segregation curve is proposed. The segregation analysis is applied to study regional concentration of the poor in India in the last two decades. Various measures of segregation indicate that although poverty has declined over a period of time in almost all regions, there is a significant increase in the segregation of the poor in some regions in India.
Stable International Environmental Agreements for Correlated Pollutants

( 2011-11) Silva, Emilson C. D. ; Zhu, Xie

We examine the stability of international environmental policy schemes when sovereign nations set policies to control both greenhouse gas emissions and traditional air pollutants. An international environmental policy scheme is defined to be stable if no country can obtain higher payoffs under other international environmental policy schemes. We show that when regional transnational air pollution damages are large relative to climate change damages, there are many efficient and stable international environmental policy schemes in which all nations belong to coalitions, the coalitions are completely interconnected and the income transfers promoted within all coalitions follow the Nash bargaining formula.
Prestige Clubs

( 2011-11) Cornes, Richard C. ; Silva, Emilson C. D.

Numerous non-profit organizations that contribute to collective goods also provide prestige to their members. Some of these institutions function as prestige clubs, with prestige levels and member contributions working as club goods and membership fees, respectively. We investigate the endogenous formation of prestige clubs. We show that the competitive equilibrium features prestige clubs and that competing club managers engage in a futile race for institutional aggrandizement. The competition, however, yields coordination benefits produced by internalization of positive and negative externalities within clubs. The competitive equilibrium is inefficient because clubs neglect external benefits and costs associated with their members’ contributions.
Global Poverty Estimates: A Sensitivity Analysis

( 2011-11) Dhongde, Shatakshee ; Minoiu, Camelia

Current estimates of global poverty vary substantially across studies. In this paper we undertake a novel sensitivity analysis to highlight the importance of methodological choices in estimating global poverty. We measure global poverty using different data sources, parametric and nonparametric estimation methods, and multiple poverty lines. Our results indicate that estimates of global poverty vary significantly when they are based alternately on data from household surveys versus national accounts but are relatively consistent across different estimation methods. The decline in poverty over the past decade is found to be robust across methodological choices.
Long-Term Environmental Problems and Strategic Intergenerational Transfers

( 2011-11) Goeschl, Timo ; Heyen, Daniel ; Moreno-Cruz, Juan

The impacts of long-lived stock pollutants and the abatement and technology measures supposed to address them link current and future generations together. Altruism towards successor generations is a prerequisite for resolving the resulting intergenerational equity issues. Preference asymmetry and typical imperfections of altruism, however, introduce the possibility of important strategic conficts between generations. We develop a simple model highlighting the presence and nature of strategic distortions in addressing intergenerational environmental problems. The current generation decides on a combination of abatement and technology- enabling investment leading to an imperfect backstop technology. The future generation decides whether to use the backstop or not. We identify three possible outcomes: (1) Technology denial, in which the current generation deliberately rejects the imperfect backstop in anticipation that the future generation will use the technology in an undesired way. (2) Underabatement, in which the current generation provides the backstop to the future generation but reduces abatement activities; and (3) Overabatement, in which the current generation provides the backstop to the future generation but reduces abatement activities. The outcome depends non-trivially on the environmental preferences of the future generation. Uncertainty over future preferences renders technology denial more likely.
Transnational Coordination Failures in Intertemporal Counterterrorism Games

( 2011-11) Faria, João Ricardo ; Silva, Emilson C. D.

This paper fills an important gap in the literature. It is the first systematic effort of addressing counterterrorism policy coordination failures due to transnational intertemporal externalities. As these externalities involve both spatial and time dimensions, non-cooperative policy coordination failures are better captured in a framework that allows us to consider two types of non-cooperative dynamic games, one in which national authorities are myopic and another in which they are farsighted. We show that the steady state outcomes for both types of non-cooperative games are characterized by larger counterterrorism expenditures than their counterparts in the social optimum. The farsighted equilibrium always yields greater levels of counterterrorism expenditures, terrorist activities and violence than those produced by the myopic equilibrium. Thus, the distortion produced by the farsighted equilibrium is greater than the distortion produced by the myopic equilibrium.
Transboundary Pollution, Tax Competition and Redistribution in Federal Systems

( 2011-11) Aoyama, Naoto ; Silva, Emilson C. D.

We examine the shape of federal policy making in three different policy scenarios, in which regional governments determine regional environmental policies to control correlated transboundary pollutants and the center implements interregional income transfers. We examine policy making under horizontal and hierarchical federal structures. In a horizontal structure, federal and regional governments make simultaneous policy choices. In hierarchical structures, federal and regional governments make sequential policy choices. Sequential choices may feature centralized or decentralized leadership. Our results indicate that hierarchical federal structures characterized by decentralized leadership may be socially superior to horizontal and hierarchical federal structures characterized by centralized leadership.
The Price Elasticity of Supply of Renewable Electricity Generation: Evidence from State Renewable Portfolio Standards

( 2011-10) Johnson, Erik P.

Many states have adopted policies aimed at promoting the growth of renewable electricity within their state. The most salient of these policies is a renewable portfolio standard (RPS) which mandates that retail electricity providers purchase a predetermined fraction of their electricity from renewable sources. Renewable portfolio standards are a policy tool likely to persist for many decades due to the long term goals of many state RPSs and the likely creation of a federal RPS alongside any comprehensive climate change bill. However, there is little empirical evidence about the costs of these RPS policies. I take an instrumental variables approach to estimate the long-run price elasticity of supply of renewable generation. To instrument for the price paid to renewable generators I use the phased-in implementation of RPSs over time. Using this IV strategy, my preferred estimate of the supply elasticity is 2.7. This parameter allows me to measure the costs of carbon abatement in the electricity sector and to compare those costs with the costs of a broader based policy. Using my parameter estimates, I find that a policy to reduce the CO₂ emissions in the northeastern US electricity sector by 2.5% using only an RPS would cost at least six times more than the regional cap-and-trade system (Regional Greenhouse Gas Initiative). The marginal cost of CO₂ abatement is $12 using the most optimistic assumptions for an RPS compared to a marginal cost of abatement of $2 in the Regional Greenhouse Gas Initiative.
Climate Policy Under Uncertainty: A Case for Solar Geoengineering

( 2011-07) Moreno-Cruz, Juan ; Keith, David W.

Solar Radiation Management (SRM) has two characteristics that make it an attractive means for managing climate risk: it is quick and it is cheap. SRM cannot, however, exactly offset CO₂-driven climate change, and its use introduces novel climate and environmental risks. We introduce SRM in a simple economic model of climate change that is designed to explore the interaction between uncertainty in both the climates response to CO2 and the risks of SRM. We find that the fact that SRM can be implemented quickly makes it a valuable tool to manage climate risks, even if it is relatively ineffective at compensating for CO₂-driven climate change or if its costs are large compared to traditional abatement strategies. Uncertainty about SRM is high, and decision makers must decide whether or not to commit to research that might reduce this uncertainty. We find that even modest reductions in uncertainty about the side-effects of SRM can reduce the overall costs of climate change in the order of 10%.
Mitigation and the Geoengineering Threat

( 2011-06) Moreno-Cruz, Juan

Recent scientific advances have introduced the possibility of engineering the climate system to lower ambient temperatures without lowering greenhouse gas concentrations. This possibility has created an intense debate given the ethical, moral and scientific questions it raises. This paper examines the economic issues introduced when geoengineering becomes available in a standard two-period two-country model where strategic interaction leads to suboptimal mitigation. Geoengineering introduces the possibility of technical substitution away from mitigation, but it also affects the strategic interaction across countries: mitigation decisions directly affect geoengineering decisions. With similar countries, I find these strategic effects create greater incentives for free-riding on mitigation, but with asymmetric countries, the prospect of geoengineering can induce inefficiently high levels of mitigation.