Working Paper Series 2000:

Number	Author(s)	Title
2001	Neha Khanna and Duane Chapman	Energy Efficiency and Petroleum Depletion in Climate Change Policy
2002	Duane Chapman and Neha Khanna	An Economic Analysis of Aspects of Petroleum and Military Security in the Persian Gulf
2003	Duane Chapman and Neha Khanna	Crying No Wolf: Why Economists Don't Worry about Climate Change, and Should
2004	Steve Scalet	What Prisoner's Dilemmas Are Good For
2005	T. Nicolaus Tideman and Florenz Plassmann	Fair and Efficient Compensation for Taking Property under Uncertainty
2006	Neha Khanna and Martina Vidovic	Voluntary Pollution Prevention and the Role of Community Characteristics: An Evaluation of the EPA's 33/50 Program
2007	Steve Scalet	Explaining Positive Contributions in Public Goods Experiments
2008	Ronald Britto and Abraham Wender	Committee Decision-Making: The Optimal Number of Categories
2009	Charles W. Bischoff, Halefom Belay, and In-Bong Kang	Bayesian VAR Forecasts, Big Model/Judgmental Forecasts, and Combinations: 1981-1996
2010	In-Bong Kang, Steven C. Hine, and Charles W. Bischoff	Money Matters Some: New Evidence on the New Keynesian Model of the Business Cycle
2011	Charles W. Bischoff and Halefom Belay	The Problem of Identification of the Money Demand Function

Number:	2001
Authors:	Neha Khanna and Duane Chapman
Title:	Energy Efficiency and Petroleum Depletion in Climate Change Policy
Abstract:	This paper examines the validity of standard technology assumptions commonly used in climate economy models for the far future, and explores the consequences of changing them to reflect actual as opposed to postulated trends. This paper presents a model framework and results that combine resource depletion with optimal economic growth and climate change in a macro-geoeconomic model. The authors build upon the Nordhaus DICE model to include the demands for coal, oil, and natural gas which depend on own price, prices of substitute fuels, per capita income, and population. The resource depletion model captures the effect on oil depletion of shifting demand curves which respond to population and income growth. The authors also question the empirical validity of the rapidly declining energy and carbon intensity assumption employed by Nordhaus and others. Model results are significantly more pessimistic than those obtained in other work. The analysis of energy tax regimes yields unrealistically high tax rates necessary to bring the carbon emissions trajectory down to the optimal level. While the alternatives explored here might be interpreted as pessimistic, we consider them highly plausible. The significant policy conclusion is the need for an earlier and more aggressive implementation of climate policies than typically found in other work. Copies of the paper are available upon request.
File:	WP2001.pdf

Number:	2002
Authors:	Duane Chapman and Neha Khanna
Title:	An Economic Analysis of Aspects of Petroleum and Military Security in the Persian Gulf
Abstract:	Geologic estimates of remaining global petroleum resources place about 50% in the Persian Gulf. Production costs are estimated at $5 per barrel there, and $15 per barrel in the North Sea and Alaska. Using mathematical methods derived from depletion theory, the present value of economic rent from oil is on the order of $20 trillion. Game theory is utilized to explain the $15-$20 per barrel price band that existed from 1986 to 1999. New economic forces have displaced this previously stable pattern; a new price range of $22 to $28 may be emerging. International trade in petroleum and conventional weapons are analyzed with econometric methods; the occurrence of nuclear weapons capability in the Persian Gulf region is explored.
File:	WP2002.pdf

Number:	2003
Authors:	Duane Chapman and Neha Khanna
Title:	Crying No Wolf: Why Economists Don't Worry about Climate Change, and Should
Abstract:	This paper identifies and critically examines a set of assumptions and characteristics that together define the standard for climate-economy models currently in use. These are a) low or negative carbon dioxide marginal abatement costs in developing countries, b) declining energy intensity and autonomous energy efficiency improvements, c) concave carbon dioxide emissions trajectory d) high pure rates of time preference. The general apathy toward controlling the growth of CO2 emissions, both at the global level and particularly in high income countries, is derived in part from conclusions based on these assumptions.
File:	WP2003.pdf

Number:	2004
Author:	Steve Scalet
Title:	What Prisoner's Dilemmas Are Good For
Abstract:	Traditionally, prisoner's dilemmas are represented as problems that require a solution. When individual rationality leads agents to interact in ways that create Pareto sub-optimal outcomes, the remedy is to create institutions that help align individual incentives with a Pareto efficient outcome. But we don't always want to eliminate these social dilemmas. Finding prisoner's dilemmas does not mean that we need to find a solution. The essence of the argument is this: the presence of prisoner's dilemmas are important for creating norms of cooperation in society, and these norms are necessary for maintaining efficient economies over the long run.
File:	Not available online

Number:	2005
Authors:	T. Nicolaus Tideman and Florenz Plassmann
Title:	Fair and Efficient Compensation for Taking Property under Uncertainty
Abstract:	Various authors have shown that efficiency requires lump-sum compensation if there is uncertainty about whether the government will take property under eminent domain, and that compensation equal to the full value of property provides incentives for property owners to overinvest. However, the solutions offered by these authors do not consider the incentive that the government has to announce an inaccurately high probability with which it will take property and thereby avoid paying the full losses of owners. We show that the announcement of a possibility of a taking is itself a taking when this implies that further investments might not be compensated, and that it is both fair and efficient to require the government to compensate owners for the loss in value due to such an announcement. Unlike previous proposals, our mechanism provides incentives for efficient investment while paying neither more nor less than full compensation for expected losses under efficient behavior.
File:	WP2005.pdf

Number:	2006
Authors:	Neha Khanna and Martina Vidovic
Title:	Voluntary Pollution Prevention and the Role of Community Characteristics: An Evaluation of the EPA's 33/50 Program
Abstract:	WP2006ab.pdf
File:	Not available online

Number:	2007
Author:	Steve Scalet
Title:	Explaining Positive Contributions in Public Goods Experiments
Abstract:	Casual observations of our economic life suggest that we sometimes contribute to public goods enterprises even when we recognize the pull to free ride on the contributions of others. Standard economic theory (specifically, Nash equilibrium theory) predicts that agents will not contribute to public goods projects because of this free riding problem. Experimentalists have actively pursued whether the anecdotal observations of economic life withstand carefully controlled replication in a laboratory setting. They do. These public goods experiments, based on a voluntary contributions mechanism (VCM), have consistently yielded positive contributions in the face of dominant strategy Nash equilibrium prediction of zero contributions. As a result experimentalists in public goods have focused their efforts on the question, "Why do agents contribute in the voluntary contribution mechanism?" This paper examines the experimentalist response to this question.
File:	WP2007.pdf

Number:	2008
Author:	Ronald Britto and Abraham Wender
Title:	Committee Decision-Making: The Optimal Number of Categories
Abstract:	When a committee is formed to help a decision-maker make a decision to accept or reject a proposal, or series of proposals, a common practice is to task the committee members to summarize their assessment by selecting one among several categories, like "highly recommend," "recommend," etc. We investigate the determination of the optimal number of categories placed before the committee members, deriving a condition under which an increase in the number increases the expected benefits of the decision. Loosely interpreted, this condition requires that there be an increase in the amount of information with the addition of a category. We also show how the condition can be illustrated with a simple diagram.
File:	Not available online

Number:	2009
Author:	Charles W. Bischoff, Halefom Belay, and In-Bong Kang
Title:	Bayesian VAR Forecasts, Big Model/Judgmental Forecasts, and Combinations: 1981-1996
Abstract:	Forecasts from vector autoregression models, in which the data are combined with Bayesian prior distributions on the coefficients, gained great popularity in the 1980s. The prior distribution known as the "Minnesota Prior" was used to make forecasts starting in 1980. These forecasts seemed for a time to not only equal but even to surpass those of the consulting groups selling forecasts based on large judgmentally adjusted econometric models. Using actual forecasts made by the group then called DRI between 1981 and mid-1996, we find the forecasts based on the "Minnesota Prior" did not continue their early success, even when they are averaged with the DRI forecasts.
File:	Not available online

Number:	2010
Author:	In-Bong Kang, Steven C. Hine, and Charles W. Bischoff
Title:	Money Matters Some: New Evidence on the New Keynesian Model of the Business Cycle
Abstract:	Economic events of the early 1970s led to a widespread re-examination of the Keynesian-neoclassical synthesis and, as a result, a proliferation of new macroeconomic theories. Among these was the New Classical view. One important response involved models with rational expectations and nominal rigidities. First, we test and do not reject an important New Keynesian model. We also investigate the New Keynesian model's ability to forecast out-of-sample movements of real economic activity in comparison with a simple autoregressive model. We also reexamine the recent claim by Thoma and Gray (Economic Inquiry 1998) that multi-variate structural models of the relationship between real economic activity and monetary/financial variables fail to win the "horse race" against a simple autoregressive model. We examine the relative information contents of forecasts from the New Keynesian model versus a 2nd order autoregressive model of the unemployment rate. We find that both the New Keynesian model's forecasts and an AR model's forecasts contain some useful information for forecasting one- to four-quarter-ahead movements of the unemployment rate, and we conclude that money matters but it does so only some. Thoma and Gray have gone further, to argue that money does not matter at all. All we argue is that unanticipated money, when measured properly, affects at least one real variable for some time in the short run.
File:	Not available online

Number:	2011
Author:	Charles W. Bischoff and Halefom Belay
Title:	The Problem of Identification of the Money Demand Function
Abstract:	Cooley and LeRoy (1981) have argued that if random shifts in money demand are at least partially accommodated by the Federal Reserve, then there is no obvious way to identify the money demand function for the purposes of estimation. We argue that this is not correct, and that identification is in fact straightforward, provided that the monetary authority reacts to at least one variable not in the money demand function. If the monetary authority looks at "everything" in making its policy, this condition is likely to be fulfilled.
File:	Not available online

Links to Working Paper Series: 2004, 2003, 2002, 2001, 2000, 1999, 1998, 1997

Page maintained by Andreas D Pape and Andreas D Pape
Revised: August 28, 2003