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Energy & Climate Change

Carbon Dioxide Emissions: Global and US

From Conversable Economist:

“US emissions of carbon have been falling, while nations in the Asia-Pacific region have already become the main contributors to the rise in atmospheric carbon dioxide. These and other conclusions are apparent from the BP Statistical Review of World Energy (June 2018), a useful annual compilation of global trends in energy production, consumption, and prices.

Here’s a table from the report on carbon emissions (I clipped out columns showing annual data for the years from 2008-2016). The report is careful to note: “The carbon emissions above reflect only those through consumption of oil, gas and coal for combustion related activities … This does not allow for any carbon that is sequestered, for other sources of carbon emissions, or for emissions of other greenhouse gases. Our data is therefore not comparable to official national emissions data.” But the data does show some central plot-lines in the carbon emissions story.”
Continue reading here.

From Conversable Economist:

“US emissions of carbon have been falling, while nations in the Asia-Pacific region have already become the main contributors to the rise in atmospheric carbon dioxide. These and other conclusions are apparent from the BP Statistical Review of World Energy (June 2018), a useful annual compilation of global trends in energy production, consumption, and prices.

Here’s a table from the report on carbon emissions (I clipped out columns showing annual data for the years from 2008-2016). Read the full article…

Posted by at 5:00 PM

Labels: Energy & Climate Change

A carbon tax would be less regressive than energy efficiency standards

From VOXEU:

“When it comes to solving externalities like pollution, efficiency standards are more popular than taxes. The rationale behind this is that the burden of taxes would fall disproportionately on the poor. This column argues that standards are in fact more regressive than taxes. Given their lower cost, the results suggest that tax solutions should be favoured over efficiency standards.”

 

 

From VOXEU:

“When it comes to solving externalities like pollution, efficiency standards are more popular than taxes. The rationale behind this is that the burden of taxes would fall disproportionately on the poor. This column argues that standards are in fact more regressive than taxes. Given their lower cost, the results suggest that tax solutions should be favoured over efficiency standards.”

 

 

Read the full article…

Posted by at 4:57 PM

Labels: Energy & Climate Change

How To Improve Housing Affordability in Canada’s Dynamic Regions?

From the IMF’s latest report on Canada:

“Housing affordability is becoming an increasing social and economic concern in Canada. While Canada’s overall affordability rankings2 are not among the worst in its peer group, its
most dynamic regions, particularly around Vancouver and Toronto are severely unaffordable (Table 1). Moreover, some smaller housing markets are also becoming unaffordable, as demand pressures are spreading from the major markets to nearby markets. Deteriorating affordability raises not only important social concerns, but also economic ones, as it works against attracting and keeping talent in Canada’s most dynamic urban centers. Thus, it can have a negative effect on growth, productivity, and innovation. This note focuses on the housing markets in the Greater Toronto Area (GTA) and Greater Vancouver Area (GVA) where demand pressures have been the most acute.

Driving the deterioration of affordability has been the significant imbalance between housing demand and supply in the most affected regions. House prices nearly doubled between early 2010 and spring 2018 in Vancouver and Toronto as demand from domestic and foreign buyers outstripped the supply of homes. House price appreciation has been slower in other parts of the country, with virtually no appreciation in the resource rich areas in the same period.

Addressing housing supply constraints is a complex exercise. It will require complementary transportation, immigration, and housing strategies at all levels of government. Some of the constraints and bottlenecks can be addressed relatively easily e.g., by streamlining and
modernizing processes, establishing databases and information sharing. Others, such as accelerating rezoning and the delivery of serviced land are more difficult issues, as they reflect deeper structural constraints. Nevertheless, addressing housing supply issues should be handled as a matter of urgency as the social and economic costs of deteriorating affordability are increasing.”

From the IMF’s latest report on Canada:

“Housing affordability is becoming an increasing social and economic concern in Canada. While Canada’s overall affordability rankings2 are not among the worst in its peer group, its
most dynamic regions, particularly around Vancouver and Toronto are severely unaffordable (Table 1). Moreover, some smaller housing markets are also becoming unaffordable, as demand pressures are spreading from the major markets to nearby markets. Deteriorating affordability raises not only important social concerns,

Read the full article…

Posted by at 6:55 AM

Labels: Global Housing Watch

Balancing Financial Stability and Housing Affordability: The Case of Canada

From the IMF’s latest report on Canada:

“Housing market imbalances are prominent in Canada and are a key source of systemic
risk. Rapidly-rising house prices are usually coupled with rising household indebtedness (figure 1). High household debt raises the vulnerability of financial institutions to sharp corrections in house prices, and the interconnectedness of financial institutions make this risk systemic, not merely idiosyncratic. As such, agencies in charge of macroprudential policy/systemic risk oversight typically use macroprudential measures aimed at mitigating these risks to contain the build-up of vulnerabilities over time and enhance the resilience of the financial sector.

In addition to financial stability concerns, the rapid rise in housing prices has led to worsening housing affordability, posing a major problem to some of Canada’s most dynamic
metropolitan regions. Although Canada’s overall affordability indices are not yet among the worst globally, the Toronto and Vancouver regions are becoming severely unaffordable (figure 2). This raises important social and economic concerns.

The federal government has introduced a raft of macroprudential measures over the
past ten years to tackle growing housing market imbalances and associated risks to financial
stability. Initially, the measures were aimed at the high LTV ratio, government-backed insured mortgage market, helping to reduce the government’s exposure to the housing sector. In early 2018, the Office of the Superintendent of Financial Institutions (OSFI) tightened underwriting requirements for low-ratio mortgages to stem rising risk in the uninsured mortgage market. Low ratio mortgages are now subject to: (i) a stress test for mortgage interest rates; (ii) Loan-to-Value (LTV) measures and limits that reflect housing market risks, to be updated as housing markets and the economic environment evolve; and (iii) restrictions on combining mortgages with other lending products (e.g. co-lending arrangements) that could circumvent LTV limits (…).

The governments of British Columbia and Ontario have also recently deployed property-tax measures to stem speculative activity and improve housing affordability in their major cities. A 15 percent nonresident property-transfer tax was introduced for the Toronto and Vancouver areas between 2016–17. More recently, the British Columbia government increased the property-transfer tax on nonresident homebuyers to 20 percent and expanded its geographic coverage.

The question remains: Which policy—macroprudential policy or property-tax policy—
best satisfies the overall objectives of policymakers? This chapter develops a simple Dynamic Stochastic-General-Equilibrium (DSGE) framework to assess the effectiveness of a specific
macroprudential policy—an LTV limit—against property-tax measures. The model is estimated using Bayesian methods and Canadian data. Operational objectives are specified for the central bank, the macroprudential authority, and the property-tax authority (assumed to be provincial governments). Optimal policy experiments are conducted to assess the overall performance of each policy given the specified objectives.”

From the IMF’s latest report on Canada:

“Housing market imbalances are prominent in Canada and are a key source of systemic
risk. Rapidly-rising house prices are usually coupled with rising household indebtedness (figure 1). High household debt raises the vulnerability of financial institutions to sharp corrections in house prices, and the interconnectedness of financial institutions make this risk systemic, not merely idiosyncratic. As such, agencies in charge of macroprudential policy/systemic risk oversight typically use macroprudential measures aimed at mitigating these risks to contain the build-up of vulnerabilities over time and enhance the resilience of the financial sector.

Read the full article…

Posted by at 6:48 AM

Labels: Global Housing Watch

WEO July 2018: Less Even Expansion, Rising Trade Tensions

From the World Economic Outlook Update, July 2018:

“Global growth is projected to reach 3.9 percent in 2018 and 2019, in line with the forecast of the April 2018 World Economic Outlook (WEO), but the expansion is becoming less even, and risks to the outlook are mounting. The rate of expansion appears to have peaked in some major economies and growth has become less synchronized. In the United States, near-term momentum is strengthening in line with the April WEO forecast, and the US dollar has appreciated by around 5 percent in recent weeks. Growth projections have been revised down for the euro area, Japan, and the United Kingdom, reflecting negative surprises to activity in early 2018. Among emerging market and developing economies, growth prospects are also becoming more uneven, amid rising oil prices, higher yields in the United States, escalating trade tensions, and market pressures on the currencies of some economies with weaker fundamentals. Growth projections have been revised down for Argentina, Brazil, and India, while the outlook for some oil exporters has strengthened.

The balance of risks has shifted further to the downside, including in the short term. The recently announced and anticipated tariff increases by the United States and retaliatory measures by trading partners have increased the likelihood of escalating and sustained trade actions. These could derail the recovery and depress medium-term growth prospects, both through their direct impact on resource allocation and productivity and by raising uncertainty and taking a toll on investment. Financial market conditions remain accommodative for advanced economies—with compressed spreads, stretched valuations in some markets, and low volatility—but this could change rapidly. Possible triggers include rising trade tensions and conflicts, geopolitical concerns, and mounting political uncertainty. Higher inflation readings in the United States,where unemployment is below 4 percent but markets are pricing in a much shallower path of interest rate increases than the one in the projections of the Federal Open Market Committee,could also lead to a sudden reassessment of fundamentals and risks by investors. Tighter financial conditions could potentially cause disruptive portfolio adjustments, sharp exchange rate movements, and further reductions in capital inflows to emerging markets, particularly those with weaker fundamentals or higher political risks.

Avoiding protectionist measures and finding a cooperative solution that promotes continued growth in goods and services trade remain essential to preserve the global expansion. Policies and reforms should aim at sustaining activity, raising medium-term growth, and enhancing its inclusiveness. But with reduced slack and downside risks mounting, many countries need to rebuild fiscal buffers to create policy space for the next downturn and strengthen financial resilience to an environment of possibly higher market volatility.”

From the World Economic Outlook Update, July 2018:

“Global growth is projected to reach 3.9 percent in 2018 and 2019, in line with the forecast of the April 2018 World Economic Outlook (WEO), but the expansion is becoming less even, and risks to the outlook are mounting. The rate of expansion appears to have peaked in some major economies and growth has become less synchronized. In the United States, near-term momentum is strengthening in line with the April WEO forecast,

Read the full article…

Posted by at 11:13 PM

Labels: Forecasting Forum, Inclusive Growth

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