Jean-Thomas Bernard

The Environmental Kuznets Curve: Tipping Points, Uncertainty and Weak Identification

We consider an empirical estimation of the Environmental Kuznets Curve (EKC) for carbon dioxide and sulphur, with a focus on confidence set estimation of the tipping point. Various econometric – parametric and nonparametric – methods are considered, reflecting the implications of persistence, endogeneity, the necessity of breaking down our panel regionally, and the small number of countries within each panel. In particular, we propose an inference method that corrects for potential weak-identification of the tipping point. Weak identification may occur if the true EKC is linear while a quadratic income term is nevertheless imposed into the estimated equation. Relevant literature to date confirms that non-linearity of the EKC is indeed not granted, which provides the motivation for our work. Viewed collectively, our results confirm an inverted U-shaped EKC in the OECD countries but generally not elsewhere, although a local-pollutant analysis suggest favorable exceptions beyond the OECD. Our measures of uncertainty confirm that it is difficult to identify economically plausible tipping points. Policy-relevant estimates of the tipping point can nevertheless be recovered from a local-pollutant long-run or non-parametric perspective.

L'ouverture du marché d'exportation d'électricité québécoise: réalité ou mirage à l'horizon?

La reorganisation en cours dans lindustrie electrique des Etats-Unis va avoir des impacts sur les exportations dHydro-Quebec vers ces Etats-Unis, Mais la dereglementation du marche de gros aura plus deffet que celle du marche de detail. De plus le potentiel dexportation va etre tres sensible a la facon dont se fera la tarification sur le reseau de transport. Ily a de ce fait des facteurs qui limitent lattrait du marche americain pour lelectricite quebecoise.

The Convenience Yield and the Informational Content of the Oil Futures Price

Recent studies have shown that futures prices do not generally outperform naive no-change forecasts of spot prices, calling into question the usefulness of futures prices for forecasting purposes. However, such usefulness is predicated on the question of whether certain modeling strategies are able to yield more of the information found in futures prices. Applying a forecast-based approach, we study the extent to which alternative ways of modeling futures prices can reveal the extent of the information present in futures prices. Using weekly and monthly data, and futures of maturities of one to four months, we notably examine the out-of-sample predictability of futures prices over various forecast horizons, and in real-time, whereby parameters are updated prior to each sequential forecast. Our results with weekly data are particularly interesting. We find that models allowing for a time-varying convenience yield often produce considerably more precise forecasts over the three forecast horizons considered. Thus, more of the informational content of futures prices is attainable when both the price level and the distance of the latter from spot price are jointly considered, rather than when only the price level is considered. We also document that forecast performances improve with longer date-to-maturity futures, suggesting that the role of the convenience yield is greater when physical oil inventories are held for longer durations. Finally, we show that forecast accuracy is highest at the one year horizon, though the time-varying convenience models have a much higher accuracy than unit-root-based models even over the three and five-year horizons.

Transfer Pricing by the Canadian Oil Industry: A Company Analysis

The Canadian oil industry has been the subject of several debates with respect to charges of transfer pricing. On the basis of a large data set, which includes all oil shipments into the US and Canada from 1974-84, the first direct test of manipulative transfer pricing, based on actual company behaviour, is performed. Particular attention is paid to the multicollinearity problem which arises in this context. Through regression analysis it emerges that the six largest Canadian affiliates of multinational corporations paid crude-oil import prices which were generally equal to or lower than prices of third-party transactions for a country in a given year. This is a fairly robust result which highlights the existence of manipulative transfer pricing. In the present case, the practice was beneficial to Canada.

Energy Use and GHG Emissions in the Quebec Pulp and Paper Industry, 1990–2006

Au Québec, l’industrie des pâtes et papiers a réduit de plus de 30 % ses émissions de gaz à effet de serre (GES) de 1990 à 2006. Dans cet article, nous analysons, à l’aide d’un modèle de la demande d’énergie, les facteurs qui ont contribué à cette réduction : prix de l’énergie, portefeuille de produits, changements technologiques et utilisation de la biomasse. Le portefeuille de produits de cette industrie se compose de pâte, de carton et de papier. Si la pâte est, pour l’industrie considérée dans son ensemble, un produit intermédiaire, ce n’est pas nécessairement le cas pour les usines prises individuellement ; l’intégration verticale, qui varie selon les usines, offre différentes possibilités de transférer la chaleur d’un stade de production à un autre. Nous avons réparti les usines en deux groupes sur la base des procédés chimiques et mécaniques utilisés pour réduire le bois en pâte. Nos résultats montrent que ce sont les changements dans le portefeuille de produits qui ont le plus contribué à la réduction des émissions de GES. L’augmentation du prix du carburant par rapport à celui de l’électricité a joué un certain rôle, mais beaucoup moins important. Enfin, selon l’estimation que nous avons faite, l’élasticité des prix de l’électricité et du carburant est faible, mais il est quand même possible de réduire de manière appréciable les émissions de GES en remplaçant le mazout lourd par l’électricité ; un faible changement des prix relatifs de ces deux types de sources d’énergie peut justifier une telle substitution.

Electricity Production and CO2 Emission Reduction: Dancing to a Different Tune Across the Canada-US Border

Canada has ratified the Kyoto Protocol while the United States has not; and Canadian industrial producers have expressed their concern with respect to the negative impact of this on competitiveness. To alleviate this concern, the Government of Canada is proposing to cap the price of greenhouse gas (GHG) emission permits and to allocate emission permits on the basis of output. We analyze how such a scheme could affect electricity production and trade between Ontario, Quebec, New Brunswick, New England, and New York. We find that the approach of the Canadian government has little effect on electricity production and trade; it also fails to reduce GHG emissions. If the allocation and production of emission permits were unbundled and if Canadian electricity producers were facing a permit price of

Electricity exports under financial regulatory constraints: The case of Québec

15 per tonne of CO2, then the effect in Canada would depend on how limiting were the constraints on GHG emission in the US region. The impact on total GHG emissions remains small because of production substitution between the various regions.

Flexible Functional Forms and Curvature Conditions: Parametric Productivity Estimation in Canadian and U.S. Manufacturing Industries

Abstract Hydro-Quebec, the government-owned electric utility of the Province of Quebec, plans to export some 3500 MW of firm power to US north-eastern states after 2000. The rationale for the policy is that electricity exports will make Quebec electricity prices lower in the long run. However, the utility revenue requirements with financial regulatory constraints call for higher prices in the short run as exports expand. Through dynamic simulations which incorporate the financial constraints, it is shown that Quebec electricity consumers would not benefit from more exports and that the main beneficiaries would be the producer in the form of higher quasi-rent and the government in the form of added tax revenues. There is a non-monotonic relationship linking benefit and export levels for society as a whole. It turns out that the official policy yields the poorest result overall.

Changement de l'efficacité énergétique pour fins de chauffage dans Ie secteur résidentiel au Québec, 1989 - 1998

It is well-known that econometric productivity estimation using flexible functional forms often encounters violations of curvature conditions. However, the productivity literature does not provide any guidance on the selection of appropriate functional forms once they satisfy the theoretical regularity conditions. In this paper, we provide an empirical evidence that imposing local curvature conditions on the flexible functional forms affect total factor productivity (TFP) estimates in addition to the elasticity estimates. Moreover, we use this as a criterion for evaluating the performances of three widely used locally flexible cost functional forms—the translog (TL), the Generalized Leontief (GL), and the Normalized Quadratic (NQ)—in providing TFP estimates. Results suggest that the NQ model performs better than the other two functional forms in providing TFP estimates.

La precision de la prevision de la demande d'electricite par Hydro-Quebec: une approche comparative

Levolution de la consommation denergie entre deux periodes peut etre decomposee de maniere a souligner les roles joues par le niveau dactivite economique, le changement structurel a linterieur du secteur etudie, les conditions climatiques et lefficacite energetique. Nous adaptons la methodologie appliquee par lOffice de lefficacite energetique du gouvernement canadien pour prendre en compte une caracteristique particuliere du chauffage de lespace du secteur residentiel quebecois, a savoir lusage predominant de lelectricite. De plus, nous utilisons des informations statistiques qui ont ete specifiquement recueillies par Hydro-Quebec et qui permettent danalyser le changement de la consommation denergie pour fins de chauffage du secteur residentiel quebecois entre 1989 et 1998. La consommation denergie de ce secteur a chute de 20,8% malgre une hausse de 13,3% de lespace a chauffer. La difference de temperature a elle seule explique 15,5% de la baisse de la consommation alors que lefficacite accrue des logements existants avant 1989 contribue a la reduction pour 13,3%; enfin, lefficacite superieure des logements construits depuis 1989 contribue pour 3,5%. La prise en compte de lefficacite energetique des nouveaux et des anciens logements est une dimension nouvelle dans ce type danalyses.