Disaggregation Research Articles

Effect of Federal Funds Rate on CPI and PPI

One of the crucial jobs of central banks is to rein in inflation as it creates uncertainty in the economy and in private investment and ultimately negatively impacts the economy. If the source of inflation is positive demand shock, then raising the federal funds rate target is the right way to rein in inflation. If the source of inflation is negative supply shock, then raising the federal funds rate target will make things worse. In this study, the impact of FFR (federal funds rate) on CPI (consumer price index) and producer price index (PPI) is examined. Findings indicate that raising the federal funds rate will have a negative impact on both CPI and PPI with a 2-period lag. The possible explanation of this finding is that raising federal funds rate lowers aggregate demand, lowers the price level and thereby the CPI. And when CPI falls, it lowers per-unit profit, prompting producers to cut supply, which in turn lowers the demand for producer goods and services, and thereby lowers PPI.

Spatial-temporal Dynamics and Driving Forces of Provincial CO2 Emission Responsibilities in China from Multiple Perspectives

Abstract A comprehensive analysis of the carbon emission profile of Chinese provinces from multiple perspectives is required to develop equitable and effective policies to reduce carbon emissions. This study estimates the carbon dioxide (CO2) emission responsibilities of China’s 30 provinces and 22 sectors from production, consumption, and income-based perspectives from 2012 to 2017. Structural decomposition analysis (SDA) is used to determine the driving forces of changes in CO2 emissions in China from 2012 to 2017. The results indicate the following. (1) The dominant CO2 emission sectors are the Electric Power, Steam, and Hot Water industry and the Smelting and Pressing of Metals industry. (2) The scale effect of the initial input is the dominant factor affecting the growth of CO2 emissions, followed by the scale effect of the final demand from 2012 to 2017. (3) The structural effect of the production output is the primary carbon reduction factor, followed by the structural effect of the intermediate product input and the carbon intensity effect. Based on these results, recommendations are provided to reduce CO2 emissions, such as developing green and low-carbon technologies, revising and optimizing the energy composition, accelerating the green transition, and a science-based approach to investment. Keywords: Multiple perspectives, China’s Provinces, Spatial-temporal evolution, MRIO model, SDA model.

Macroeconomic impact of an international fishery regulation on a small island country

This paper examines the macroeconomic impact of regulating tuna fishing on a small island economy that relies heavily on tourism and fishing for its foreign exchange earnings. While there is scientific consensus to limit the use of drifting fish aggregating devices (dFADs) worldwide, there is no agreement on their optimal number at sea. Resolution 23/02, adopted by the Indian Ocean Tuna Commission (IOTC) in February 2023, proposed a 72-day moratorium on dFADs, but this resolution has met with resistance from many contracting parties, including developing countries. To understand the reasons for this resistance, a recursive, multi-sectoral dynamic general equilibrium model is developed for the Republic of Seychelles, a small tuna-dependent country. The model assesses the short- and medium-term macroeconomic impacts of a seasonal dFAD closure for the Indian Ocean tuna fishery. The analysis suggests that a 12% decline in canned tuna exports would result in a −8.8% deviation from the real gross domestic product trend after seven years. Such an impact would have far-reaching effects on the domestic economy, affecting all components of aggregate demand. Consequently, the economy would become more dependent on tourism, which has shown its vulnerability during the recent pandemic crisis. The study highlights the importance of considering social and economic aspects in sustainable fisheries management and provides insights into the potential consequences of dFAD regulations for small island economies.

How to improve the energy-saving performance of China's transport sector? An input–output perspective

The transport sector proves a major energy consumer in China, but improving energy-saving performance in China's provincial transport sector from the lifecycle perspective remains unresolved. Thus, this study employs the environmentally extended multi-region input–output (MRIO) method, structural path analysis, and the newest MRIO table of China from 2017, to investigate how to improve the energy-saving performance from final demand structure, supply chain, and pathway perspectives. The relevant results are threefold. (1) Regarding the final demand structure level, the embodied energy consumption of China's transport sector is predominantly driven by investment from the production side, while that of the consumption side is primarily caused by exports. (2) At the supply chain level, production-side embodied energy consumption primarily occurs along a three-echelon supply chain, while that from the consumption side mostly occurs via a two-echelon supply chain. (3) At the pathway level, the production-side energy-saving performance of China's provincial transport sector is dominated by two pathways along the construction sector, including transport sector → construction sector → final demands, and transport sector → intermediate inputs → construction sector → final demands, while that of the consumption side is chiefly determined by three pathways along internal transportation chains.

Deep learning-based solar power forecasting model to analyze a multi-energy microgrid energy system

Multi-energy microgrids (MEM) are a new class of power grids focusing on the distributed form of generation and integrating different energy sectors. The primary idea of MEM is to increase renewable energy share in the final energy demand while maintaining the energy balance at all times. However, integrating renewable technology into the grid has some technical limitations that must be analyzed before being deployed in the real world. This study examines the impact of increasing renewable penetration and portfolio design on a multi-energy microgrid energy system from a technical standpoint. As the accuracy of the system analysis is primarily a factor of modeling accuracy, an artificial neural network-based model is trained and deployed to develop forecasts for solar power generation. The forecasting model is integrated with the EnergyPLAN simulation tool to analyze the multi-energy microgrid system regarding renewable share in primary energy consumption and import/export of energy from the primary grid. The Norwegian energy system is considered a case study, as the energy generation and consumption patterns are interesting from both renewable energy and demand contexts for a cold country. One interesting conclusion is that the portfolio and capacities of coupling components such as combined heat and power plants negatively impact renewable integration, while heat pumps positively impact renewable integration by increasing renewable energy utilization. Additionally, the photovoltaic system size has a high degree of correlation to imports and exports compared to wind generation systems.

Unraveling the structural sources of oil production and their impact on CO2 emissions

In this study, we examine the structural short- and long-run effects of oil supply and demand shocks on the production of crude oil. Among these, oil supply shocks are the major determinant of oil production. Furthermore, we adopt local projections to elicit that oil supply and aggregate demand shocks are significant drivers of CO2 emissions, whereas oil-specific demand shocks have only limited impact on overall emissions in the short-, mid-, and long-term. These findings underscore the limitations of current demand-side policies within a selected group of countries, emphasizing the necessity for global support and binding commitments to effectively reduce emissions from oil production and meet the climate targets set by the Paris Agreement in 2015.

Flexible coupling and grid-responsive scheduling assessments of distributed energy resources within existing zero energy houses

Technological advancement and supportive government policy have accelerated investments in distributed energy resources (DERs) in buildings, demand-side management has become essential to fully exploit their value, including demand flexibility and grid support. Using high-resolution smart-meter data, this work presents an optimization framework for assessing the flexible scheduling of coupling distributed resources in existing zero energy houses (ZEHs) in Kyushu, Japan. Two price-based energy management programs are investigated for different energy coupling models with associated variables and constraints. Specifically, demand sides are encouraged to adjust energy usage and grid feed-in photovoltaics (PV) generation following a fixed Feed-in Tariff (FiT) value or market-oriented Feed-in Premium (FiP). The scheduling results present the impacts of proposed dispatch strategies on PV consumption and grid interactions. Results show two price-following strategies result in significant differences in dynamic grid feed-in power flows, the trade-off between dynamic PV self-consumption and grid import helps reduce the annual energy cost to feed PV generation by matching real-world spot prices. The improvement of PV self-consumption through coupling strategies has a close relationship with the pattern of household demand profiles. The energy flexibility potential of the heat pump system is constrained by daily hot water demand, flexible scheduling of coupled PV/battery/heat pump systems achieves the highest PV self-consumption ratios. The flexible dispatch of battery storage systems presents reliable performances in increasing on-site PV self-consumption and reducing annual household energy costs, the effects of storage charging rates on cost savings are less, especially for larger capacity batteries. Findings may help design sustainable and equitable pathways for decentralized solar PV system deployment.

Review of Existing Tools for the Assessment of European Building Stock Energy Demand for Space Heating and Cooling

There is currently a growing interest in lowering energy demand and, consequently, greenhouse gas emissions in all sectors. Several attempts by national governments to reduce energy demand are centered on the residential sector, since it accounts for a significant amount of the final energy demand. In order to estimate its energy demand and to evaluate the techno-economic effects of adopting energy efficiency and renewable energy technologies, there are comprehensive models suited for residential applications, since energy demand characteristics of the residential sector are complicated and interrelated. Based on these models, several tools are nowadays available to support designers and policymakers. These tools are designed to be user-friendly and to include the possibility to develop simulated scenarios for energy demand, production of CO2 emissions, and economic costs. The present study aims to offer an up-to-date extended overview of the most functional and widespread tools for the assessment of the current energy demand of the European building stock for space heating and cooling demand, both regarding open source and commercial licenses. Results highlighted the tools most commonly used by examining real applications, identifying their strengths and weaknesses and pinpointing the primary deficiencies for the benefit of future developers.

Impacts of Global Warming on Regional Energy and Economy: Uneven consequences arising from global warming-induced heating and cooling demand of households

The impacts of global warming vary across regions. This paper studies the distributional implications of global warming impacts on household energy use for heating and cooling and the induced macroeconomic responses under different scenarios. Our research updates the direct impact of global warming on household energy demand in 140 regions worldwide by utilizing existing estimations of damage functions related to temperature changes. Subsequently, the updated direct impact is used in a global static computable general equilibrium (CGE) model to evaluate the macroeconomic responses. We find that at the global level, the market effects cause a reduction in the direct impact on the demand for oil and gas, while that for electricity displays a positive but moderate growth. Whereas the regional effects vary across countries and lead to changes in both directions, in which the autonomous adaptation embodied in the global market plays a vital role. Furthermore, we find strong inequality in the socioeconomic responses to global warming across regions. Notably, low-income countries are most strongly affected by increased primary energy use and decreased gross domestic product (GDP). Disparities in the impacts on carbon-based energy sources yield a near-perfect inequality as per the adjusted Gini index for CO2 emission changes, which potentially intensify the distributional consequences of global climate change.

Asset-Based Money Systems in a Global Context: Implications for Social Inclusion and Economic Development

Fiat money based financial system has disturbed the balance between household demand and firm supply. Further, government monetary intervention to curb inflationary demand is hurting production via the cost of capital and disturbing the functionality of the financial system in terms of capital market misallocation. These aspects are trickling down to cause social disturbance in the economy. Corresponding to it, the gold standard or at least assets-based money promotes social inclusion, empowers marginalized communities, and addresses socio-economic challenges by using tangible assets as a monetary system. The study explores assets-based money’s theoretical foundations, distinguishing it from traditional debt-based models and its potential benefits on social inclusion. It analyzes potential benefits, challenges, and limitations in implementing assets-based money systems. Several empirical studies explored debit cases of Islamic and conventional finance sectors, but this study examines the high power money and social inclusion in the economy. For this determination, the quantitative research approach consisted of selected 143 countries panel data of conventional and Islamic financial statements from 1960-2022. The model contains regression estimates, descriptive analysis, and correlation coefficient analysis. The assets-based money boosts living standards and positively impacts poverty reduction. This money reduces the inflationary effects of monetary expansion, hurting the purchasing power of low-income groups. Further, it is expected to have a growth-promoting effect via risk sharing and resource distribution. Assets-based money can support economic growth, financial stability, and inclusive development through a well-designed implementation strategy, but success depends on thorough research and analysis.

Effect of raw coal gangue coarse aggregates on mechanical properties and compressive stress–strain response of concrete

AbstractRaw coal gangue (RCG) as one of the solid wastes can result in serious ecological and environmental pollution. Utilization of RCG as coarse aggregates in concrete can mitigate the demand for natural aggregates in engineering construction to a certain extent. This study aims to assess the impact of utilizing raw coal gangue aggregates (RCGAs) on the mechanical behaviors and compressive stress–strain responses of concrete. For this purpose, a total of 90 concrete specimens were prepared, varying in RCGA replacement ratios of 0, 30%, 50%, 70%, and 100% and water‐to‐cement (w/c) ratios of 0.37 and 0.47. The slump, compressive and splitting tensile strengths in cubes, and complete compressive stress–strain curves of RCGA concrete were obtained and discussed. Results indicated that as RCGA was incorporated, the peak stress and elastic modulus of concretes with 0.37 and 0.47 w/c ratios decreased by 26%–51% and 23%–57%, respectively. In addition, the crack development and microstructural characteristics of RCGA concrete were analyzed by digital image correlation and scanning electron microscopy (SEM), respectively. The SEM analysis indicated that the interface transition zone between RCGAs and mortar was relatively thick and loose compared to that between coarse natural aggregates and mortar, indicating the poor mechanical properties of RCGA concrete. Finally, based on the test data, a normalized stress–strain model for RCGA concrete was proposed, taking into account the influence of RCGA replacement.

Beyond trade statistics: how much do exports actually contribute to domestic value added?

Koopman et al. (2014) and Los et al. (2016) decomposed gross exports into various value-added components by adopting the input–output assumption of disconnection between production and final demand. Such an assumption, however, neglects the ability of production inflows to generate income and consumption, and therefore additional impacts on production. To achieve a more complete understanding of the role played by trade, this article presents a method for quantifying the value added of exports that reflects the linkages between production and private consumption. In the tradition of Miyazawa (1968, 1976) and Sonis and Hewings (1973), the proposed model endogenously defines household consumption in the output determination, thus improving the way in which the interdependencies between income and output generation processes are revealed. The proposal is directly applicable empirically through available world trade databases.

Tracking the consumption-based CO2 emissions of typical Chinese megacities in multiscale economies

Accurately tracking consumption-based CO2 emissions of megacities is crucial for clarifying regional mitigation responsibility. However, without a general emission framework, it's challenging to accomplish comparative studies of multi-megacities by quantitative carbon flow analyses. Here, we constructed a megacity-centred multilevel emission accounting framework and developed a methodology based on the revised multiscale multi-regional input-output model. Our approach integrates in-boundary and trans-boundary carbon flow driven by final demand and thus constructs urban classifications based on self-constructed consumption degree. The results indicate heterogeneity and commonality of megacities' consumption-based emissions in spatial and industrial distribution. Trans-boundary consumption-based emissions account for 81%–93% of the total in megacities, mainly from mainland China. While the majority of megacities are net importers overall, for relatively developed regions, megacities with low consumption degrees remain net exporters. At sector-level, 3 key sectors of other manufacturing, construction and services drive more than 75% of emissions. Inspired by the results, we propose differentiated carbon governance implications based on urban emission pattern classification, exploring priorities for emission reduction. Our research indicated the need for megacities as pioneers to consider consumption-side emission reductions.

Life Cycle Assessment of the Domestic Micro Heat and Power Generation Proton Exchange Membrane Fuel Cell in Comparison with the Gas Condensing Boiler Plus Electricity from the Grid

The energy demand of private households contributes globally to 36.5% of the total CO2 emissions. To analyze the emissions reduction potential, we conducted a comparative life cycle assessment of a proton exchange membrane fuel cell in a residential application and a conventional system with a stand-alone gas condensing boiler and electricity from a grid mix. The period under review was referred to as the service life of the PEMFC and is assumed to be 10 years (83,038 h of PEMFC). The applicability of this in a single-family house built between 1991 and 2000 under German climatic conditions was investigated. The functional unit is set to the thermal energy demand of 16,244 kWh/a and electricity demand of 4919 kWh/a of a single-family house. The impact assessment method “CML 2001–August 2016” was used in this investigation. The manufacturing phase of the proton exchange membrane fuel cell showed disadvantages, whereby the use phase had significant advantages in most of the environmental impact categories as compared to the conventional energy supply system. Considering the whole life cycle, the advantages from the use phase could outperform the disadvantages from the manufacturing phase in most of the impact categories, except for ADP elements and TETP.

Screening Through Investment: Evidence from the Chinese Automobile Industry

This paper proposes a competition theory to explain the role of automobile dealers’ investment in a vertical contract with manufacturers. Dealer contracts specify manufacturer-suggested retail prices and elements of dealer quality. Dealer quality investments require minimum financial capital where manufacturers impose these limits on dealers. The required dealer investment screens for qualified dealers and incentivizes the desired dealer quality. The prediction is that promotional services, prices, and gross returns are greater for high-quality brands than that for standard-quality brands. To test the theory, we collected data on auto dealers in China in June 2015 for an empirical analysis. Our findings support these predictions: Dealer investment (registered capital) is positively correlated with brand average product prices. In addition, the registered capital is higher when the aggregate demand is greater since high demand increases returns, which induces dealers to increase their investment.

Macroeconomic effects of a declining wage share: A meta‐analysis of the functional income distribution and aggregate demand

AbstractThis paper reviews the theoretical and empirical literature on the relationship between the functional distribution of income and aggregate demand, which investigates whether declining wage shares increase (“profit‐led”) or decrease (“wage‐led”) demand. It conducts a meta‐regression analysis of 33 studies with 578 estimates for total and domestic demand, covering up to 163 years and 59 countries and regions. Our results suggest that, on average and across all countries, total demand is predominantly profit‐led and domestic demand mainly wage‐led. The effects in the literature range between 0.8 and −0.3 within one standard deviation for domestic demand and between 0.4 and −0.7 for total demand, which are economically significant at the outer bounds. We find mixed evidence for publication selectivity, which may affect the size but not the direction of the results in the literature. If one was to nonetheless correct for this, then total demand would be less profit‐led or statistically insignificant. A set of moderator variables, including publication characteristics, estimation strategies, the covariates included in the studies’ estimation functions, and, in particular, controls for time and space, help explain the variation in the empirical estimates.

The Impact Analysis of Bauxite Downstreaming on the Indonesian Economy: Case Study in PT Bintan Alumina Indonesia

This research analyzes the impact of investment and bauxite downstream activities by PT Bintan Alumina Indonesia (PT BAI) on the Indonesian economy using the input-output method applied to the Riau Islands Province, West Kalimantan Province and Indonesia. The imposition of stimulus on sectors related to the construction phase and operational phase of the alumina and aluminum industry in the Galang Batang SEZ is the concept that underlies how final demand in other sectors is affected. Economic improvement is characterized by increased output, GDRP, people's income, and the creation of job opportunities. During the construction phase of PT BAI (2016-2029), it generally had a positive impact on the increase in output, income, average GRDP, and average job creation in 52 industrial sectors in the Riau Islands Province. During the operational phase, calculated through three scenarios applied to the Riau Islands Province, West Kalimantan, and Indonesia, with the assumption of full downstreaming of PT BAI's products into the domestic market, shows the greatest impact. The impact includes the increase of Indonesia's output value until 2030 reaching IDR 547.07 trillion, an average annual GDP growth of 0.099 percent, a national income increases until 2030 reaching IDR 74.22 trillion, and an average job creation of 107,105 people per year in 52 industrial sectors in Indonesia. To achieve the optimal target of PT Bintan Alumina Indonesia's (BAI) presence in the domestic bauxite value chain, strengthening the downstream process and downstream industries of alumina and aluminum domestically is needed. Fiscal incentives, the establishment of pro-downstream regulations, and investor protection are crucial to implement.

An urban emergy footprint: Comparing supply- and use-extended input-output models for the case of Vienna, Austria

Urban activities currently consume 75% of global final energy demand, which is expected to increase given absolute and relative population growth in cities. Assessments of both producer (upstream) and consumer (downstream) ecological and socioeconomic impacts of urban inter-industry exchanges are needed to reduce energy consumption and resource use behind the industrial footprints of cities. Environmental extensions in the input-output analysis are designed from the user side perspective, focusing only on commercial energy supply and use. This study introduced emergy-evaluated supply-extended and use-extended carbon footprint models for Vienna and compared their empirical and conceptual implications. Emergy-evaluated footprints of Vienna's urban consumption were estimated by combining industrial and systems ecology approaches as per the research question, based on previous investigations of GHG emissions and energy supply- and use-extensions. Results showed that the ranking of footprints of final product categories is sensitive to the evaluation method, with products of extractive and manufacturing industries differing by more than 10% depending on whether emergy or carbon evaluation is chosen. The emergy-based comparison further reveals that for products of extractive industries, the difference between use and supply extension results can be more than 20% as opposed to carbon-based comparison with the difference between supply and use extension results for services not even amounting to 5%. Future studies could address the over-estimation of direct energy supply to the economy, under-estimation of product and service, inconsistency in standard use-extension design, and challenges in assembling emergy-evaluated supply and use extensions. Fundings are relevant for unified responsibility assessment of upstream and downstream sectors without prioritising structural features.

Modelling long-term industry energy demand and CO2 emissions in the system context using REMIND (version 3.1.0)

Abstract. This paper presents an extension of industry modelling within the REMIND integrated assessment model to industry subsectors and a projection of future industry subsector activity and energy demand for different baseline scenarios for use with the REMIND model. The industry sector is the largest greenhouse-gas-emitting energy demand sector and is considered a mitigation bottleneck. At the same time, industry subsectors are heterogeneous and face distinct emission mitigation challenges. By extending the multi-region, general equilibrium integrated assessment model REMIND to an explicit representation of four industry subsectors (cement, chemicals, steel, and other industry production), along with subsector-specific carbon capture and sequestration (CCS), we are able to investigate industry emission mitigation strategies in the context of the entire energy–economy–climate system, covering mitigation options ranging from reduced demand for industrial goods, fuel switching, and electrification to endogenous energy efficiency increases and carbon capture. We also present the derivation of both activity and final energy demand trajectories for the industry subsectors for use with the REMIND model in baseline scenarios, based on short-term continuation of historic trends and long-term global convergence. The system allows for selective variation of specific subsector activity and final energy demand across scenarios and regions to create consistent scenarios for a wide range of socioeconomic drivers and scenario story lines, like the Shared Socioeconomic Pathways (SSPs).

Robust optimisation for vertiport location problem considering travel mode choice behaviour in urban air mobility systems

With the rapid development of novel vehicle technologies, air taxis are becoming a new transport servicing model to achieve better urban air mobility (UAM) systems. The UAM system can mitigate severe traffic congestion problems on the ground in many metropolitan areas effectively. This research aims to design a robust UAM network to serve broader mobility needs in the future. In this study, we consider the two main competition transportation modes of air taxis (luxury ground taxis and ordinary ground taxis) and establish a travel mode choice behaviour model based on the multinomial logit choice approach to determine the aggregate air taxi demand flow. Furthermore, we account for the varying temporal preferences of different UAM passengers by incorporating different time values for heterogeneous passengers, such as leisure and business passengers, into the travel mode choice behaviour model. Additionally, to address uncertainties in user demand, we introduce a robust optimisation model for vertiport location under a budget uncertainty set. This model is then reformulated as a mixed-integer linear programming model to address computational challenges. Ultimately, we conduct a series of numerical experiments to showcase the effectiveness of our proposed mathematical model. The outcomes of this research offer valuable managerial insights and implications, aiding governments and UAM operators in scientifically designing UAM networks and making strategic decisions regarding infrastructure investments.