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Political Economy Obstacles to Fuel Taxation

Henrik Hammar, Asa Lofgren and Thomas Sterner

Year: 2004
Volume: Volume 25
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol25-No3-1
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Abstract:
Many studies have shown that fuel demand is quite elastic and that the best way to reduce fuel use (to tackle climate issues) is by taxing fuel. Yet it seems almost impossible to do so, particularly in those countries with low prices and high demand. The purpose of this paper is to cast light on the difficulties of raising gasoline taxes by analyzing the determinants of gasoline taxation. We believe that one of the reasons for the difficulties is that political pressure influences the political decisions regarding taxation of gasoline consumption. Not only do low taxes and thus low prices encourage high consumption, but high levels of consumption also lead to considerable pressure against raising the taxes. Our findings also point to the significance of other factors such as government debt (a higher debt leads to a higher gasoline tax rate).



Informational Efficiency and Interchange Transactions in Alberta's Electricity Market

Apostolos Serletis and Mattia Bianchi

Year: 2007
Volume: Volume 28
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No3-7
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Abstract:
This paper aims to investigate the informational efficiency of the Alberta electricity market and also the issue of whether interchange transactions (power flows between markets) are becoming increasingly significant factors in electric power markets. In doing so, we use hourly data for all hours, peak hours, and off-peak hours over the period from January 1st, 1999 to July 31st, 2005. In testing the efficiency of the Alberta power market, we use a statistical physics approach � namely the �detrending moving average (DMA)� technique, introduced by Alessio et al. (2002) and further developed by Carbone et al. (2004a, 2004b), and recently applied to energy futures markets by Serletis and Rosenberg (2007). In analyzing the relationship between power imports and exports and pool prices, we assess whether regulatory changes have modified the causal relationship between import/export volumes and the pool price. According to our results, the electricity market in Alberta is highly inefficient and cross-border trade of electricity between Alberta and neighbouring jurisdictions helps predict the price dynamics in Alberta�s electricity market.



Large Oil Shocks and the US Economy: Infrequent Incidents with Large Effects

Marc Gronwald

Year: 2008
Volume: Volume 29
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No1-7
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Abstract:
This paper considers the macroeconomics of the oil price for the United States. It investigates the impact of large oil price hikes in a standard VAR framework by introducing a new Markov switching based oil price specification. The explanatory power of this new specification is compared to that of a number of prominent non-linear specifications. The key findings are: (1) the new oil price specification is appropriate in both empirical and theoretical terms and allows for a well-founded distinction between �large� and �normal� oil price increases. (2) The observed impact of oil price shocks on real GDP growth is largely attributable to no fewer than three large oil price increases, namely those of 1973-74, 1979 and 1991, while variables such as consumer and import prices are also affected by normal oil price increases.



Energy Consumption and Real Income: A Panel Cointegration Multi-country Study

Roselyne Joyeux and Ronald D. Ripple

Year: 2011
Volume: Volume 32
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol32-No2-5
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Abstract:
The direction of the causality between energy consumption and income is an important issue in the fields of energy economics, economic growth, and policies toward energy use. The seminal work on the relations between energy consumption and aggregate income is Kraft and Kraft (1978). An extensive literature has followed, but the array of findings provide anything but consensus on either the existence of relations or direction of causality between the variables. The work in this paper extends this research by analysing the cointegrating and causal relations between income and three energy consumption series based on panel data and the latest panel methodologies. These relations are analysed for the 30 OECD countries and 26 non-OECD countries. The results support a finding of causality flowing from income to energy consumption for developed and developing economies, alike.



Understanding the Crude Oil Price: How Important Is the China Factor?

Xiaoyi Mu and Haichun Ye

Year: 2011
Volume: Volume 32
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol32-No4-5
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Abstract:
This paper employs monthly data on China's net oil import from January 1997 to June 2010 to assess the role of China's net import in the evolution of the crude oil price. Based on a vector autoregression (VAR) analysis, we find that the growth of China's net oil import has no significant impact on monthly oil price changes and there is no Granger causality between the two variables. The historical decomposition indicates that shocks to China's oil demand have only played a small role in the oil price run-up of 2002-2008. We also calculate the price changes implied by China's net oil import growth from a longer-term supply and demand shift perspective.



Is There Really Granger Causality Between Energy Use and Output?

Stephan B. Bruns, Christian Gross and David I. Stern

Year: 2014
Volume: Volume 35
Number: Number 4
DOI: 10.5547/01956574.35.4.5
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Abstract:
We carry out a meta-analysis of the very large literature on testing for Granger causality between energy use and economic output to determine if there is a genuine effect in this literature or whether the large number of apparently significant results is due to publication or misspecification bias. Our model extends the standard meta-regression model for detecting genuine effects in the presence of publication biases using the statistical power trace by controlling for the tendency to over-fit vector autoregression models in small samples. Granger causality tests in these over-fitted models have inflated type I errors. We cannot find a genuine causal effect in the literature as a whole. However, there is a robust genuine effect from output to energy use when energy prices are controlled for.



The Informational Efficiency of European Natural Gas Hubs: Price Formation and Intertemporal Arbitrage

Sebastian Nick

Year: 2016
Volume: Volume 37
Number: Number 2
DOI: 10.5547/01956574.37.2.snic
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Abstract:
In this study, the informational efficiency of the European natural gas market is analyzed by empirically investigating price formation and arbitrage efficiency between spot and futures markets. Econometric approaches accounting for nonlinearities induced by the low liquidity-framework and by technical constraints of the considered gas hubs are specified. The empirical results reveal that price discovery generally takes place on the futures market. Thus, the futures market seems to be more informationally efficient than the spot market. The theory of storage seems to hold at all hubs in the long run. There is empirical evidence of significant market frictions hampering intertemporal arbitrage. UK's NBP and Austria's CEGH seem to be the hubs at which arbitrage opportunities are exhausted most efficiently, although there is convergence in the degree of intertemporal arbitrage efficiency over time at the hubs investigated.



Economic Growth and Infrastructure Investments in Energy and Transportation: A Causality Interpretation of China’s Western Development Strategy

Alice Shiu, Raymond Li, and Chi-Keung Woo

Year: 2016
Volume: Volume 37
Number: China Special Issue
DOI: 10.5547/01956574.37.SI1.ashi
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Abstract:
Were the large investments in energy and transportation infrastructure effective in fostering economic growth? Or did economic growth trigger these infrastructure developments? To answer these questions, we develop a simple model of production capacity constraints and use China's Western Development Strategy (WDS) as an example to investigate how the relationships among energy investment, transportation infrastructure expansion and economic growth differ in the pre-and post-WDS periods. Our Granger causality analysis uses a panel data sample for China's 30 provinces in the Western and non-Western regions for the period of 1991-2012. We find Granger causality only in the post-WDS period from transportation infrastructure expansion to economic growth and from economic growth to energy investment. These results suggest energy and transportation capacity constraints in the post-WDS period but not the pre-WDS period. Their policy implication is that China should continue its energy and transportation infrastructure investments with improved coordination.



The Role of Continuous Intraday Electricity Markets: The Integration of Large-Share Wind Power Generation in Denmark

Fatih Karanfil and Yuanjing Li

Year: 2017
Volume: Volume 38
Number: Number 2
DOI: 10.5547/01956574.38.2.fkar
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Abstract:
This paper suggests an innovative idea to examine the functionality of an intraday electricity market by testing causality among its fundamental components. Using Danish and Nordic data, it investigates the main drivers of the price difference between the intraday and day-ahead markets, and causality between wind forecast errors and their counterparts. Our results show that the wind and conventional generation forecast errors significantly cause the intraday price to differ from the day-ahead price, and that the relative intraday price decreases with the unexpected amount of wind generation. Cross-border electricity exchanges are found to be important to handle wind forecast errors. Additionally, some zonal differences with respect to both causality and impulse responses are detected. This paper provides the first evidence on the persuasive functioning of the intraday market in the case of Denmark, whereby intermittent production deviations are effectively reduced, and wind forecast errors are jointly handled through the responses from demand, conventional generation, and intraday international electricity trade.



Policy-Induced Expansion of Solar and Wind Power Capacity: Economic Growth and Employment in EU Countries

Jurate Jaraite, Amin Karimu and Andrius Kazukauskas

Year: 2017
Volume: Volume 38
Number: Number 5
DOI: https://doi.org/10.5547/01956574.38.5.jjar
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Abstract:
Given the intensifying debates on whether governments should promote particular renewable energy technologies, the main objective of this study is to investigate the long-and short-run effects of policy-induced expansion of renewable solar and wind technologies on economic growth and employment in 15 European Union (EU) member states during 1990-2013 by using panel-data time-series econometric techniques. Instead of relying on renewable energy consumption or generation as commonly done in the literature, we focus on the capacity for solar and wind power generation, which is largely a consequence of the EU's renewable energy policies. In summary, we find that, to date, renewable energy policy-induced wind and solar power capacity promotes growth and/or employment in the short run, but these capacity increases do not stimulate economic growth in the long run in the EU-15 region. In fact, our results tend to support the opposite relationship: increases in wind and solar power capacity are associated with negative economic growth, at least at the total economy level. Keywords: Economic growth, Employment, European Union, Granger causality, Panel cointegration, Policy, Renewable energy capacity, Solar energy, Wind energy




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