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.

Fall 2014

September 11, 2014 (3:00 - 4:15 Green Center 215)
Speaker: Corbet Granger, Assistant Professor at the University of Wisconsin, Department of Agriculture and Applied Economics
Topic:  The Incidence of Energy Policy Reform: Fossil Fuel Subsidies in a Small, Open Economy
Abstract: Fossil fuel subsidies amount to over $550bn per year worldwide. In developing countries, these policies are politically popular as they are used to lower or stabilize gasoline or heating prices and to promote growth of energy-intensive industries. Most studies of the distributional and welfare incidence of energy policies focus exclusively on consumer expenditures, and the most prominent analytical general equilibrium models employ assumptions that are unsuitable for most developing economies. This leaves a gap in our understanding where such economies are concerned. In this paper we develop an analytical model of a small open economy with an existing subsidy on fossil fuel imports. We examine the impacts of policy reform on factor prices and income distribution. Our approach takes account of the need for spending on a subsidy to be financed through taxation. Thus the household incidence of subsidy reform depends on three changes: in direct benefits, in tax burden, and in factor earnings. We then characterize the distribution of the benefits and costs of reform across households and sectors.

September 19, 2014 (3:15 - 4:30, Engineering Hall 211)
Speaker: Adrienne Ohler, Assistant Professor at Illinois State University, Department of Economics
Topic: Rate-of-Return, Regulation, Electricity Market Deregulation, and Renewable Energy Technology
Abstract:  Rate-of-return (ROR) regulation provides an incentive for the firm to over invest in capital assets, and specifically capital assets that are relatively cheaper. Typically, the capital costs of renewable energy (RE) technology are more expensive than nonrenewable energy (NR) per MW. Theoretically, market restructuring that removes ROR regulation for generating assets can increase the investment in RE relative to non-RE capacity. However, the process of restructuring from a monopoly to a competitive market can also create greater competition among energy sources, driving down the use of renewable energy. Using a dynamic panel model, I examine the impact of restructuring on generation capacity. The results suggest that the relative use of RE technologies increases with restructuring, but that restructured states began with a greater level of RE capacity before the restructuring process. We find evidence that restructured and traditionally regulated states face different market parameters, emphasizing that a national energy policy, such as a renewable portfolio standard, will have varying impacts depending on the market structure of the state.

October 3, 2014 (3:15 - 4:30 EH 211)
Speaker: Shanjun Li, Assistant Professor at Cornell University, Dyson School of Applied Economics
Topic: Better Lucky Than Rich? Welfare Analysis of Automobile License Allocations in Beijing and Shanghai
Abstract:Economists often favor market-based mechanisms over non-market based mechanisms to allocate scarce public resources on grounds of economic efficiency and revenue generation. When the usage of the resources in question generates type-dependent negative externalities, the welfare comparison can become ambiguous.  Both types of allocation mechanisms are being implemented in China's major cities to distribute limited vehicle licenses as a measure to combat worsening traffic congestion and urban pollution. While Beijing employs non-transferable lotteries, Shanghai uses an auction system. This study empirically quantifies the welfare consequences of the two allocation mechanisms by estimating a random coefficients discrete choice model of vehicle demand to recover consumers' willingness to pay for a license. Rather than relying on the maintained exogeneity assumption on product attributes in the literature, we employ a novel strategy by taking advantage of a control group as well as  information from household surveys to identify structural parameters.  Our analysis finds that although Beijing's lottery system has a large advantage in reducing automobile externalities over auction, the advantage is offset by the significant allocative cost from misallocation. The lottery system foregone nearly 36 billion Yuan ($6 billion)  in social welfare in 2012 and a uniform price auction would have generated 21 billion Yuan to Beijing municipal government, more than covering all the subsidies to the  local public transit system.

October 10, 2014 (3:15-4:30, EH 211)
Speaker: Alexander James, Assistant Professor, University of Alaska, Anchorage - Sponsored by the Coulter Foundation
Topic: There Will be Blood: Crime Rates in Shale-Rick U.S. Counties
Abstract: Over the past decade, the production of shale oil and gas significantly increased in the United States.  This paper uniquely examines how this energy boom has affected regional crime rates. We find evidence that from 2000 to 2011, shale-rich counties experienced relatively faster growth rates of both property and violent crimes including rape, assault, murder, robbery, burglary, larceny and grand-theft auto.  These results are moderately robust to a variety of econometric specifications designed to limit unobserved heterogeneity, but particularly so for rates of assault. Policy makers should anticipate these effects and invest in public infrastructure accordingly

October 17, 2014 ((3:15-4:30 EH 211)
Speaker: Aaron Smith, Assistant Professor at UC Davis, Agriculture and Resource Economics
Topic: To be Announced
Abstract: US legislation passed in 2007 requires that 15 percent of the world's corn be used to make ethanol for fuel use. We estimate the price of corn but for this mandate. Using modern time‐ series methods, we estimate that corn prices were 34 percent higher between 2006 and 2012 because of the mandate. Our identification strategy is unique in the literature because it enables estimation of the effects of transitory shocks, such as weather, separately from the effects of persistent shocks, such as the ethanol mandate. This method applies not only to the ethanol mandate, but also to events in other markets.

November 14, 2014 (3:15-4:30, EH 211)
Speaker: Dale Manning, Assistant Professor at Colorado State University, Agriculture and Resource Economics
Topic:  Climate change and Labor Allocation in Rural Mexico: Evidence from Annual Fluctuations in Weather
Abstract:This paper evaluates the effects of annual fluctuations in weather on employment in rural Mexico to gain insight into the potential labor market implications of climate change. We use a 28-year panel of individuals to investigate how people adjust their sector and location of work in response to year-to-year variation in weather. Controlling for state-year and individual fixed effects, we find that individuals are less likely to work locally in years with a high occurrence of extreme heat. This reduction is largely due to a decline in non-farm labor and wage work. Extreme heat increases migration within Mexico from rural to urban areas, particularly at the height of the growing season, and international migration to the U.S.. Using projections from two climate models, our results imply that increased temperatures under a medium emissions scenario will lead to a 0.5-1.8% decrease in local employment and a 0.7-1.4% increase in domestic migration from rural to urban areas. These results provide an example of how climate change could impact rural labor markets in developing countries.

2013-2014 Academic Year

Spring 2014

April 25, 2014  (3:00-4:30)  Marquez 122
Topic: The Housing Market Impacts of Shale Gas Development
Speaker: Christopher D. Timmins is a Professor in the Department of Economics at Duke University, with a secondary appointment in Duke’s Nicolas School of the Environment. He holds a BSFS degree from Georgetown University and a PhD in Economics from Stanford University. Professor Timmins specializes in natural resources and environmental economics, but he also has interests in industrial organization, development, public and regional economics.
Abstract: Using data from Pennsylvania and New York and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from shale gas development that vary with geographic scale, water source, well productivity, and visibility. Results indicate large negative impacts on nearby groundwater-dependent homes, while piped-water-dependent homes exhibit smaller positive impacts, suggesting benefits from lease payments. At a broader geographic scale, we find that new wellbores increase property values, but these effects diminish over time. Undrilled permits cause property values to decrease. Results have implications for the debate over regulation of shale gas development.

April 23, 2014 ( 3:30-4:45) Engineering Hall 211
Topic: Kicking it up a Notch: Home Energy Performance Certificates & Energy Efficiency
Speaker: Dr. Mirko Moro earned his PhD at the University College Dublin and is visiting the Colorado School of Mines for the month of April. His work focuses on the interaction between environment, energy and well-being.
Abstract:From 2007, sellers of residential buildings in the UK were required to publish an energy performance certificate (EPC). The EPC reports energy efficiency as a colour-coded letter grade (from A-G), and also as a score on a linear 0-100 scale (SAP score). Crucially, at certain thresholds, a one point improvement in SAP score moves the home into a higher letter grade. This shift is more salient than a one point shift at other points in the distribution because it changes the colour of the rating on the visual scale. This paper tests whether the public and easily comparable nature of EPCs could incentivize sellers and existing home owners to invest in the energy efficiency of their homes. Using data from the English Housing Survey, over 20,000 homes both before (2002-2004) and after (2008-2010) the introduction of EPCs we test whether there is an effect of EPCs on home energy efficiency by testing whether the distribution of homes changes on either side of each letter grade threshold after the EPCs were required. Results find a statistically smaller number of households just below a grade threshold, though only for thresholds in the middle of the scale. Very high and very low quality houses seem to have been unaffected by the new information.

April 11, 2014  (3:30-4:45) Engineering Hall 211
Topic: Unconventional Oil and Gas Production and its Impact on the Energy Business
Speaker: William Fleckenstein, Professor of Petroleum Engineering-Colorado School Mines
Abstract:The conventional wisdom is that the “easy oil” to be discovered worldwide has been discovered and that world oil production will peak, or may have peaked and is beginning a period of unstoppable decline.However, in the US and Canada, unconventional sources of hydrocarbons are challenging the conventional wisdom that “Peak Oil” is upon us. Currently approximately 70% of the rigs drilling in the US are pursuing unconventional targets. This has reversed the decline in US production, and last year added nearly 1 million BOPD to the US oil and gas production. This presentation will discuss unconventional oil and gas production techniques, and its impact, on both the US and worldwide energy business.

April 4, 2014 ( 3:30-4:45) Engineering Hall 211
Topic:Photovoltaics and the Benefits and Challenges of Solar Energy
Speaker: P.Craig Taylor is a Professor of Physics at the Colorado School of Mines and is the Associate Director of the Colorado Energy Research Institute.

March 28, 2014  (3:30-4:45) Engineering Hall 211
Topic: Public Incentives for Conservation Easements on Private Land
Speaker: Dr. Jorcdan Suter is an Assistant Professor at Colorado State University  in the department of Agriculture and Resource Economics. His research focuses on land use policy, water resource economics and the analysis of pollution control regulations.
Abstract: Habitat destruction and fragmentation resulting from land development has motivated considerable public expenditures on land conservation initiatives. In addition to direct expenditures related to the procurement of conservation land, public entities have also put in place generous incentives aimed at encouraging private landowners to voluntarily donate conservation easements on their property. Many landowners have taken advantage of these incentives, as privately held land under conservation easement has increased nearly five-fold between over the last decade. This research seeks to inform the design and implementation of public incentives for conservation easements by reviewing the broad range of incentives currently in place and analyzing how these incentives have influenced the nature and distribution of conservation easements throughout the United States

March 21, 2014 ( 3:30-4:45) Engineering Hall 211
Topic: China's Export Restrictions on Rare Earth Elements: Motivations, Effects, and Persistence
Speaker: Frank Pothen is a visiting scholar to the Colorado School of Mines from the Centre for European Economic Research in Germany

February 28, 2014 (3:30 - 4:45)  Engineering Hall 211
Topic: Subsidies and Investments in the Solar Power Markets
Speaker: Dr. Burr is an assistant professor at CU Boulder in their department of Economics. Her research focuses on Solar PV policy analysis, renewable energy technologies, corruption and R&D. Dr. Burr has her PhD in Economics from the University of Arizona
Abstract: Over the last 10 years, the solar photovoltaic (PV) market has experienced tremendous growth due in part to government incentive programs. This paper estimates a dynamic model to understand the impact of these programs on residential solar installations and evaluate the impact of alternative incentive policies. The model separately evaluates the effect of system costs, capacity-based subsidies, tax credits and production revenues using a 51=4 year data set collected by the California Solar Initiative program, which subsidized solar installations in California. The results indicate that capacity-based subsidies are equally effective as production-based subsidies, but that the latter are more efficient. With a $100 social cost of carbon, the total subsidies in California would be welfare neutral. If California were only as sunny as Frankfurt, Germany and to maintain the current amount of solar electricity production, this value would have to be $730 to be welfare neutral. I find that without subsidies, 40% to 60% of the installations would not occur.


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