Economics and Business Division Seminars

2014-2015 Academic Year

Spring 2015

January 16, 2015 (3:15 EH 211)
Speaker: James Sallee, Assistant Professor at the Harris School of Public Policy Studies and a Faculty Research Fellow of the National Bureau of Economic Research
Topic: The Economics of Attribute-Based Regulation: Theory and Evidence from Fuel-Economy Standards
Abstract: This paper analyzes “attribute-based regulations,” in which regulatory compliance depends upon some secondary attribute that is not the intended target of the regulation. Such policies have the potential benefit of harmonizing marginal costs of regulatory compliance across firms, but also create perverse incentives to distort the attribute upon which compliance depends. We develop a theoretical framework that characterizes the welfare implications of attribute-basing, including its potential benefits and costs. We then test our theoretical predictions by exploiting quasi-experimental variation in Japanese fuel-economy regulations, which provide key empirical advantages over data from other countries. We exploit the fact that the fuel-economy targets are downward-sloping step functions of vehicle weight. Our bunching analysis reveals large distortions to vehicle weight that were induced by the policy. We then leverage panel data on vehicle redesigns to empirically investigate the welfare implications of attribute-basing, including both potential benefits and likely costs. This latter analysis concerns a “double notched” policy— vehicles are eligible for an incentive if they are above a step function in the two-dimensional fuel economy by weight space. We develop a new method for analyzing such double notched policies and use it to conduct the welfare analysis of alternative policy designs. Our results show that attribute-basing is an imperfect substitute for a fully efficient policy because it only partially equalizes the marginal compliance costs and creates unnecessary distortions to the attribute.

Bio: James M. Sallee is an assistant professor at the Harris School of Public Policy Studies and a Faculty Research Fellow of the National Bureau of Economic Research. His research spans a variety of topics in public economics, including the economics of taxation and environmental economics. His current research is focused on evaluating policy alternatives for increasing the fuel economy of new vehicles in the United States.

March 20, 2015 (3:15 EH 211)
Speaker: Lucija Muehlenbach, Assistant Professor, Department  of Economics at the University of Calgary. Visiting fellow , Resources for the Future, Washington D.C. Her research interests are environmental and energy economics.
Topic: How Do Natural Gas Prices Affect Electricity Prices and the Environment? co-authored with Joshua Linn and Yushuang Wang
Abstract: Between 2008 and 2012, the delivered price of natural gas to the U.S. power sector fell 60 percent. We show, in theory and in practice, the effects of this price shock on electricity prices and the environment.  The pass-through rate of a decrease in gas prices to electricity prices is higher when there is less shifting from high-emission coal-fired generation to lower-emission gas-fired generation. Therefore, areas that experience larger reductions in electricity prices experience smaller reductions in emissions rates.  Using detailed data on electricity prices, fuel consumption, and fuel prices from 2001 to 2012, we confirm this hypothesis. 

April 10, 2015 (3:15 EH 211)
Speaker: Joe Cook, Associate Professor of Public Affairs at the Evans School, University of Washington.
Topic: Measuring Time Savings from Improved Water Supply in Rural Ethiopia
Abstract: Around 800 million people in the world lack adequate water supply.  These households, mainly in rural Africa, spend significant time and effort bringing water to the home, though we have little causal evidence on the impact of reducing water collection times on time use, school attendance and labor outcomes.  We measure changes in time use among water carriers (predominately women and girls) and their household members in 452 households before and after new water systems are installed in three rural villages in the Oromia region of Ethiopia.  We use a quasi-experimental design and innovative approaches to measuring time use in a low-literacy environment. Water projects reduced household water collection times, on average, by 27 minutes per day in one treatment village and 75 minutes in the second, though our results are sensitive to the time use elicitation procedure used. We find a statistically significant increase in time spent in food preparation, household chores and socializing among women who have smaller water collection times.   Non-water collectors who live in households with lower water collection times spent less time farming, and more time on miscellaneous work, socializing and bathing/hygiene.  A companion paper (which will be briefly discussed) finds that improved water access increases childrens' school attendance by 9.6 percent, but that impacts are larger and more statistically robust for boys (14-26% increase) than for girls (0-7.9% increase).
Bio: Joe Cook, Associate Professor, Evans School of Public Affairs, University of Washington, and visiting faculty at University of Colorado 2014-15.   His research interests are in water and sanitation policy, water resources economics and management, non-market valuation, and benefit-cost analysis. 

April 17, 2015 (3:15 EH 211)
Speaker: Nic Rivers, Assistant Professor at the University of Ottawa, Canada. Chairholder of Canada Research Chair in Climate and Energy Policy.
Topic:  Vertical Fiscal Externalities and the Environment
Abstract:  We show that imposition of a state-level environmental tax in a federation crowds out preexisting federal taxes. We explain how this vertical scale externality can lead unilateral state level environmental policy to generate a welfare gain in the implementing state, at the expense of other states, even absent any environmental benefits. Using a computable general equilibrium model of the Canadian federation, we show that vertical scale externalities can be the major determinant of the welfare change following environmental policy implementation by a state government. Our numerical simulations indicate that - as a consequence of vertical scale externalities- state governments can reduce greenhouse gas emissions by over 20 percent without any net cost to themselves.

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