Terms Of Welfare Loss Research Articles

Determinants of Adaptation Strategies of Agricultural Farmers to Climate Change Vulnerability in Odisha

Climate change poses severe threat to agriculture sector in terms of welfare losses especially for marginal & smallholder farmers whose main source of livelihood derives from agriculture. It is required to neutralize the potential adverse effects of climate change if welfare losses to this vulnerable segment of the society are to be avoided. So this study aims to assess the agricultural farmers’ vulnerability and determine quantitatively the factors that contribute in adaptation strategies. To accomplish the stated objective, primary surveys of agricultural farmers are designed and data are collected to analyse the results using probit regression model. The study is conducted in the Jagatsinghpur district of Odisha, India. For the study, a total of 197 farmers’ households were surveyed and to assess the vulnerability of farmers’ household to climate change, IPCC-LVI approach is used. Then to identify the determinants of adaptation strategies, a regression model is run using probit model. The results reveal that farmers are moderately vulnerable to climate change in the study area. Further, marginal & small farmers are relatively more vulnerable than medium and large farmers to climate change. It is observed that size of the farm, income level, access to credit facilities, extension training and access to climate & weather information are important determinants of adaptation strategies of farmers. Therefore, the study concludes that better credit facilities, extension training facilities and dissemination of climate information may be done through policy intervention for more adaptation strategies by farmers.

Financial vulnerability, fiscal procyclicality and inflation targeting in developing commodity exporting economies

This paper aims to identify a monetary policy framework suitable for a small open economy characterized by financial vulnerability, a high exchange rate pass-through, a procyclical fiscal policy, and terms of trade volatility. Based on a New Keynesian DSGE model adapted to include these characteristics, we compare policy evaluations of two different monetary policy regimes (standard inflation targeting and real exchange rage targeting) to find out which policy regime is superior in terms of welfare loss and macroeconomic stability. Model parameters are estimated through Bayesian methods using quarterly data for the Iranian economy during 1990–2017 period. It is found that under the above setting, inclusion of real exchange rate in a broader inflation-targeting framework is the superior policy arrangement, particularly when fiscal policy is procyclical. We explain why under the presence of financial vulnerability departure from free floating is the appropriate policy and reaction to real exchange rate movements is warranted based on welfare and stability criteria, hence the “fear of floating” is rationalized. It is also shown that implementation of a fiscal rule to control procyclicality presents the monetary authority a less-costly policy trade-off.

Realizing the Intended Nationally Determined Contribution: The Role of Renewable Energies in Vietnam

This study contributes to the realization of intended nationally determined contributions (INDCs) by analyzing their implications for the energy production system and the economy, and determines the role of renewable energies (RE) in reducing the challenge of committing to the INDCs. The Asia-Pacific Integrated Model/Computable General Equilibrium (AIM/CGE) model was used to assess seven scenarios having the same socioeconomic development but different shares of RE in power generation. By comparing different relative reductions caused by the emission constraints vis-a-vis the business-as-usual (BaU) scenario, the mitigation costs can be estimated. Results show that the economic impact could be reduced by around 55% in terms of welfare loss (from 6.0% to 2.7%) and by around 36% in terms of gross domestic product (GDP) loss (from 3.4% to 2.1%) through the incorporation of high levels of renewable energy. Furthermore, the additional double deployment of wind and SPV to 5.4% and 12.0%, respectively, which currently comprise 43.1% of the renewable energies used in electricity generation, could reduce the GDP loss from 2.1% to 1.9% and reduce the welfare loss from 2.7% to 1.5% in order to achieve a 25.0% GHG emissions reduction. These losses are less than those in the pricing-only scenario (2.1% and 2.3%, respectively).

Determinacy and learnability of equilibrium in a small-open economy with sticky wages and prices

In a small-open economy model with nominal wage and price rigidities, it has been argued that, in terms of welfare losses, the monetary policy rule that responds to consumer price index (CPI) inflation performs better than rules that react to competing inflation measures. From the viewpoint of determinacy and learnability of rational expectations equilibrium (REE), this paper suggests that the rule that responds to CPI inflation does not increase the Central Bank's ability to promote the convergence of an economy to a determinate and learnable REE nor improves the speed of this convergence when compared with rules that react to contending inflation measures.

A Measure of Rationality and Welfare

Evidence showing that individual behavior often deviates from the classical principle of preference maximization has raised at least two important questions: (1) How serious are the deviations? (2) What is the best way to analyze choice behavior in order to extract information for the purpose of welfare analysis? This paper addresses these questions by proposing a new way to identify the preference relation that is closest, in terms of welfare loss, to the revealed choice.

New Zealand households and the 2008/09 recession

This paper quantifies how the welfare of different types of household changed between 2006/07 and 2009/10; a period which included the 2008/09 recession. We use three measures of household welfare: income, expenditure and the EV metric. Using household-level data from the Household Economic Survey (HES), we allocate households into groups, first based on one dimension (e.g. age) and then clusters. The clusters, groups of households that are similar on a number of dimensions, lead to inferences beyond what is available from our one-dimensional groups. Households in low-income groups, with children and/or who rent were particularly impacted by the recession in terms of welfare losses owing to price changes. However, we find that those in low-income groups had strong increases in expenditure; furthermore, the welfare gains from this increased expenditure more than offset the welfare losses from the price changes.

A Multi-Factor Inequality Approach to a Transfer Scheme: The Case of Common Agricultural Policy

The purpose of this paper is to propose theoretical foundations on the impact of transfer scheme, e.g. Community Agricultural Policy, on income inequality within European Countries. First, we show that ex-post inequality (in the after-transfer distribution) may increase if either initial aggregate income or the amount of fiscal contributions are sufficiently high. Second according to welfare ordering, we characterize a multi-factor decomposition of the Atkinson index to gauge the impact of each income source on the inequality profile. Third, we introduce a methodology to construct a cooperative game played by different income factors (as net incomes and/or incoming transfers) explicitly measuring the cost of inequality across the population in terms of welfare loss. We finally rely on Banzhaf and Shapley values to determine the marginal contributions of each factor to overall inequality.

Incentive Regulatory Policies: The Case of Public Transit Systems in France

We assess the empirical relevance of the new theory of regulation, using a principal-agent framework to study the regulatory schemes used in the French urban transport industry. Taking the current regulatory schemes as given, the model of supply and demand provides estimates for the firms’ inefficiency, the effort of managers, and the cost of public funds. It allows us to derive the first-best and second-best regulatory policies for each network and compare them with the actual situation in terms of welfare loss or gain. Fixed-price policies lie between fully informed and uninformed second-best schemes. Cost-plus contracts are dominated by any type of second-best contract. From these results, we may conjecture that fixed-price contracts call for better-informed regulators.

WELFARE EFFECTS OF ALTERNATWE WATER RATIONING SCHEMES: A CASE STUDY1

ABSTRACT: Four alternate schemes often used to deal with a water shortage are: physical rationing, lifeline with increasing block rates, rationing with resale, and pure price rationing. Each of these are analyzed using a supply‐demand framework. The theoretical results are applied to a representative California water district and the welfare loss is calculated for a hypothetical 20 percent reduction in water supply for six different income classes. We find that reliance on schemes using the price mechanism in one form or another is clearly superior, in terms of welfare loss, as a means of dealing with a water shortage.

The allocation of badly needed goods to low-income consumers: A system of central planning without redistributive taxation

A simple planning model is constructed that is designed to deliver more of certain badly needed goods to poor consumers than they would receive under a competitive system. The model increases the supply of the badly needed goods, while minimizing the cost, in terms of welfare losses, of the increased production to those consumers for whom the goods are relatively unimportant. Simulation examples are used to demonstrate the methodology, which is sufficiently general to be used to represent many different central-planning systems.