Tom, Author at MetaSD - Page 84 of 90

Greg Mankiw with a letter from Robert Shimer with a nice analysis, including problems with Paulson, the lemons problem, and the Diamond, Kaplan, Kashyap, Rajan & Thaler fix

Update 9/28:

Real Time Economics on securitization

Brad deLong on nationalization (the Swedish model)

Update 9/29:

The Big Picture with Stop Targeting Asset Prices

Marginal Revolution asks, is the Sweden plan better?

Waiter, there's a carpet in my coffee

From the ArXiv blog: researchers have discovered a new fractal, closely matching a Sierpinski Carpet, in the boundary layer dynamics of coffee in milk. I don’t know how Rayleigh-Taylor instabilities work, but I do find occasional cool things in my coffee:

WCI Design Recommendations

Yesterday the WCI announced its design recommendations.

Update 9/26: WorldChanging has another take on the WCI here.
I haven’t read the whole thing, but here’s my initial impression based on the executive summary:

Scope

Major gases, including CO2, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.

What?	In scope?	How/where?
Large Industrial & Commercial, >25,000 MTCO2eq/yr
Combustion Emissions	Yes	Point of emission
Process Emissions	Yes	Point of emission
Electricity	Yes	“First Jurisdictional Deliverer” – includes power generated outside WCI
Small Industrial, Commercial, Residential	Second Compliance Period (2015-2017)	Upstream (“where fuels enter commerce in the WCI Partner jurisdictions, generally at a distributor. The precise point is TBD and may vary by jurisdiction”)
Transportation
Gasoline & Diesel	Second Compliance Period (2015-2017)	Upstream (“where fuels enter commerce in the WCI Partner jurisdictions, generally at a terminal rack, final blender, or distributor. The precise point is TBD and may vary by jurisdiction”)
Biofuel combustion	No
Biofuel & fossil fuel upstream	To be determined	?
Biomass combustion	No, if determined to be carbon neutral
Agriculture & Forestry	No

(See an earlier Midwestern Accord matrix here.)

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End of World Postponed

The LHC has been shut down before it had a chance to destroy the universe. It’ll be back up in a few months though, so as a precaution I’ve raised my discount rate to 1800%. Apparently the failure was caused by a magnet quench, which is a cool positive feedback.

Bailout without Representation

The NYT has the draft text and an explanation of the Bush administration’s $700 billion bailout proposal. It audaciously creates a budget authority almost as big as the federal government’s total discretionary spending and bigger than every on-budget agency, seven times the California state budget, without any checks and balances at all:

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

We used to dump tea in harbors for things like this.

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How To Fix A Carbon Tax

Imagine that you and I live in a place that has just implemented a carbon tax. I, being a little greener than you, complain that the tax isn’t high enough, in that it’s not causing emissions to stabilize or fall. As a remedy, I propose the following:

At intervals, a board will set targets for emissions, and announce them in advance for the next three years.
On a daily basis, the board will review current emissions to see if they’re on track to meet the annual target.
The daily review will take account of such things as expectations about growth, the business cycle, weather (as it affects electric power and heating demand), and changing fuel prices.
Based on its review, the board will post a daily value for the carbon tax, to ensure that the target is met.

Sound crazy? Welcome to cap and trade. The only difference is that the board’s daily review is distributed via a market. The presence of a market doesn’t change the fact that emissions trading has its gains backwards: rapid adjustment of prices to achieve an emissions target that can only be modified infrequently (the latter due to the need to set stable quantity expectations). Willingness to set a cap at a level below whatever a tax achieves is equivalent to accepting a higher price of carbon. Why not just raise the tax, and have lower transaction costs, broader sector coverage, and less volatility to boot?

Certainly cap and trade is a viable second-best policy, especially if augmented with a safety valve or a variable-quantity auction providing some supply-side elasticity. However, I find the scenario playing out in BC quite bizarre.

Update: more detailed thoughts on taxes and trading in this article.

The GAO's Panel of Economists on Climate

I just ran across a May 2008 GAO report, detailing the findings of a panel of economists convened to consider US climate policy. The panel used a modified Delphi method, which can be good or evil. The eighteen panelists are fairly neoclassical, with the exception of Richard Howarth, who speaks the language but doesn’t drink the Kool-aid.

First, it’s interesting what the panelists agree on. All of the panelists supported establishing a price on greenhouse gas emissions, and a majority were fairly certain that there would be a net benefit from doing so. A majority also favored immediate action, regardless of the participation of other countries. The favored immediate action is rather fainthearted, though. One-third favored an initial price range under $10/tonCO2, and only three favored exceeding $20/tonCO. One panelist specified a safety valve price at 55 cents. Maybe the low prices are intended to rise rapidly (or at the interest rate, per Hotelling); otherwise I have a hard time seeing why one would bother with the whole endeavor. It’s quite interesting that panelists generally accept unilateral action, which by itself wouldn’t solve the climate problem. Clearly they are counting on setting an example, with imitation bringing more emissions under control, and perhaps also on first-mover advantages in innovation.

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ScapeToad

Nature had a nice article on a new tool that uses a diffusion algorithm to produce cartograms, maps rescaled in proportion to spatial variables. I know a bit about diffusion algorithms for image processing, and I can’t resist cool, free GIS software, so I downloaded a copy of the tool, ScapeToad, and tried it myself. First I grabbed a shapefile for US states from the Census’ TIGER/Line product. I clipped that to just the lower 48 states, using MapWindow. Also in MapWindow, I added a column to the shapefile’s attribute table to contain state emissions. In Excel, I used a lookup to insert state emissions from the Vulcan project into my emissions column in the attribute dbf. After a minute or two of chugging in ScapeToad (much more if you want higher resolution), I had this cartogram of state CO2 emissions:

Endogenous Energy Technology

I just created an annotated list of links on learning/experience curves, deliberate R&D, and other forms of endogenous energy technology, including a few models and empirical estimates. See del.icio.us/tomfid for details. Comments with more references will be greatly appreciated!