CESifo Economic Studies - current issue

CESifo Symposium on the Economics of Climate Change: Introduction

Whalley, J. — 2009-05-29

Climate Policy after 2012

Bosetti, V., Carraro, C., Tavoni, M. — 2009-05-29

Discussion over post-2012 climate policy is now entering a crucial phase. Despite the potential great risks of prolonged global warming, the success of an international climate stabilization agreement hinges to a great extent on its economic feasibility. This article makes precise the assumptions that underpin current mainstream estimates of the costs of controlling climate change and provides quantitative estimates of cost differentials under different scenarios. In particular, the article analyses the role of three utmost factors in the economic cost of a climate treaty: energy technology development; the participation rate of developing countries; and the timing of global action. We show that all three factors have a major impact on policy macroeconomic costs. Addressing them effectively is therefore indispensable in ensuring the feasibility of any international agreement to control global warming. Therefore, we propose a series of policy recommendations that can help addressing the issues of technology, timing and participation, and that represent key policy implications for a post-2012 climate policy. (JEL codes: C72, H23, Q25, Q28)

Bringing the Copenhagen Global Climate Change Negotiations to Conclusion

Whalley, J., Walsh, S. — 2009-05-29

In this article we discuss the global negotiations now underway and aimed at achieving new climate change mitigation and other arrangements after 2012 (the end of the Kyoto commitment period). These were initiated in Bali in December 2007 and are scheduled to conclude by the end of 2009 in Copenhagen. As such, this negotiation is effectively the second round in ongoing global negotiations on climate change and further rounds will almost certainly follow. We highlight both the vast scope and vagueness of the negotiating mandate, the many outstanding major issues to be accommodated between negotiating parties, the lack of a mechanism to force collective decision making in the negotiation, and their short time frame. The likely lack of compliance with prior Kyoto commitments by several OECD countries (some to a major degree), the effective absence in Kyoto of compliance/enforcement mechanisms, and growing linkage to non-climate change areas (principally trade) all further complicate the task of bringing the negotiation to conclusion. The major clearage we see that needs to be bridged in the negotiations is between OECD countries on the one hand, and lower wage, large population, rapidly growing countries (China, India, Russia, Brazil) on the other. (JEL codes: F33, F51, F53, Q54, Q56, P28)

Technology, Unilateral Commitments and Cumulative Emissions Reduction

Chatterji, S., Ghosal, S. — 2009-05-29

In this article, we argue that weak property rights over transnational pollution and the limited threat of retaliatory punishments blunts the effectiveness of a broad-based multilateral agreement to deliver the emission reductions required to mitigate climate change. Instead, we propose a policy framework that builds on unilateral commitments, endogenous innovation and technology transfer that could lead to cumulative emissions reduction by altering the participation constraints of nations over time. (JEL codes: Q54, F53, Q50)

On the Impact of Digital Music Distribution

Ahn, I., Yoon, K. — 2009-05-29

We present a framework to evaluate the impact of digital music distribution. We set up a representative model that enables the comparative static analysis. We then interpret two empirical observations about the music industry, the sales decline and the price constancy, and fit the model to these observations. We find that, while the impact of digitalization on the producers’ profits is probably negative, it may not be as severe as the observed impact on the quantity. On the other hand, the impact of digitalization on the consumer surplus is unambiguously positive. The impact on the social welfare is rather ambiguous in general, but the social welfare may increase for plausible parameter values. (JEL codes: K11, L86, O34)

What Can We Learn from Empirical Studies About Piracy?

Dejean, S. — 2009-05-29

The purpose of this article is to make an assessment of the empirical literature dedicated to the consequences of piracy on the cultural industry. The diversity of data collected and methodologies used by empirical studies make it difficult to compare the literature results. On the one hand, some studies seem to have overestimated the impact of digital piracy which may be due, for example, to the use of Internet access as a proxy for piracy. On the other hand, the problem of finding a good instrument to avoid the endogeneity between files illegally downloaded and purchased goods, has probably led to an underestimation of the impact of piracy. As a result, the major finding of empirical works about piracy could be the change in the role of industry stakeholders as well as the way cultural goods are distributed and consumed. We also discuss the different evolutions of the music and the movie industries revenues since the appearance of the first P2P network. (JEL codes: L82, L86, K42)

A Review of Financial Stability Instruments for Emerging Market Economies

Mendoza, R. U. — 2009-05-29

Graduating from their checkered histories of financial instability and debt-related problems is a key policy objective in many emerging market economies. The global financial turmoil that erupted in 2008 underscores the importance of this issue once again. This article maps out some of the key factors that contribute to this challenge, and then uses this map to develop a possible taxonomy for the array of proposed (and some already existing) policy instruments designed to respond to them. By relating each instrument to the particular aspect(s) of the broader policy challenge, the taxonomy helps to clarify some of the differences, similarities, as well as the potential value-added of these instruments. The analysis herein suggests that instruments that could help increase the efficiency of risk management strategies (such as growth- or GDP-indexed bonds) and enhance the effectiveness of debt management, growth and development policies (such as a stability and social investment facility or SIF) deserve further consideration in order to promote more sustained financial stability and enhanced debt tolerance in the emerging markets.