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Objective: Osteoporotic fractures impose a huge economic burden on society. Though several cost of illness studies from other countries exist, no equivalent study has been conducted in Austria. Our study aims at assessing costs resulting from osteoporotic fractures in Austria in the year 2008 from a societal perspective. Methods: We took both direct and indirect costs into consideration. Direct costs encompass medical costs such as expenses for pharmaceuticals, inpatient and outpatient medical care costs, as well as other medical services (e.g., occupational therapies). Non-medical direct costs include transportation costs and medical devices (e.g., wheel chairs or crutches). Indirect costs refer to costs of productivity losses due to absence of work. Moreover, we included costs for early retirement and opportunity costs of informal care provided by family members. For our analysis, we combined data of official statistics, expert estimates as well as unique patient surveys that are currently conducted in the course of an international osteoporotic fracture study in Austria. Results: For the year 2008, the total annual financial burden incurred by osteoporotic fractures in Austria amounted to approx. €685.2 million, the largest fraction of which was due to the opportunity cost of family care (30.2%), followed by costs for hospitalization (26.6%). Conclusions: The financial burden of osteoporotic fractures in Austria is substantial. Our findings may have implications for future economic analyses, and also support health care authorities in their decision making. Keywords: Burden of illness, Costs of illness, Osteoporosis, Austria

Climate change is an important environmental problem and one whose economic implications are many and varied. This paper starts with the presumption that mitigation of greenhouse gases is a necessary policy that has to be designed in a cost effective way. It is well known that market instruments are the best option for cost effectiveness. But the discussion regarding which of the various market instruments should be used, how they may interact and what combinations of policies should be implemented is still open and very lively. In this paper we propose a combination of instruments: the marketable emission permits already in place in Europe for major economic sectors and a CO(2) tax for economic sectors not included in the emissions permit scheme. The study uses an applied general equilibrium model for the Spanish economy to compute the results obtained with the new mix of instruments proposed. As the combination of the market for emission permits and the CO(2) tax admits different possibilities that depend on how the mitigation is distributed among the economic sectors, we concentrate on four possibilities: cost-effective, equalitarian, proportional to emissions, and proportional to output distributions. Other alternatives to the CO(2) tax are also analysed (tax on energy, on oil and on electricity). Our findings suggest that careful, well designed policies are needed as any deviation imposes significant additional costs that increase more than proportionally to the level of emissions reduction targeted by the EU.

Mining is currently not a statistically significant category of development-induced displacement. Nevertheless, the social costs of exploitation are great, and that is why the topic is worthy of a wider and more profound scientific analysis. The first displacement caused by mining dates back to the late nineteenth century. As pointed out by Walter Fernandes, in the Indian region of Jarkhand alone, mining has led to the displacement of 2.55 million people. Contrary to the opinions of some specialists, the problem of mining-induced displacement and resettlement is a global problem, occurring on all continents. Countries with particularly large-scale MIDR include: India, China, many African countries (e.g. Ghana, Botswana), and even Indonesia and Papua New Guinea. The problem of forced displacement is also a consequence of open-pit coal mining in European countries like Germany and Poland. Although mining-induced displacement is a global phenomenon, problems experienced by the displacees in many parts of the world differ greatly. The largest portion of the displacement is caused by open-pit mining (associated with the extraction of lignite, copper, and diamonds).

This paper analyzes the causes of the 2008 - 2009 global financial crisis together with its manifestations, using a Multiple Indicator Multiple Cause (MIMIC) model. The analysis is conducted on a cross-section of 85 countries. It is found that more financially integrated countries do not seem to have suffered more during the most serious macroeconomic crisis in decades. This strengthens the case for international financial integration; if the costs of international financial integration were not great during the Great Recession, when could we ever expect them to be larger?

We use a unique private data set of about 340,000 invoice positions from 36 smaller and larger customers of German cement producers to study the value of such transaction data for an estimation of cartel damages. In particular, we investigate, first, how structural break analysis can be used to identify the exact end of the cartel agreement and, second, how an application of before-and-after approaches to estimate the price overcharge can benefit from such rich data sets. We conclude that transaction data allows such a detailed assessment of the cartel and its impact on direct customers that its regular application in private antitrust cases is desired as long as data collection and preparation procedures are not prohibitively expensive.

Integrated Assessment Models (IAMs) couple representations of the natural climate system with models of the global economy to capture interactions that are important for the evaluation of potential climate and energy policies. The U.S. federal government currently uses such models to derive the benefits of carbon mitigation policies through estimates of the social cost of carbon (SCC). To remain tractable these models often utilize highly simplified representations of complex natural, social, and economic systems. This makes IAMs susceptible to oversimplification by failing to capture key features of the underlying system that are important for policy analysis. In this paper we focus on one area in which these models appear to have fallen into such a trap. We consider three prominent IAMs, DICE, FUND, and PAGE, and examine the way in which these models represent the transient temperature response to increases in radiative forcing. We compare the highly simplified temperature response models in these IAMs to two upwelling diffusion energy balance models that better reflect the progressive uptake of heat by the deep ocean. We find that all three IAMs are unable to fully capture important characteristics in the temporal dynamics of temperature response, especially in the case of high equilibrium climate sensitivity. This has serious implications given that these models are often run with distributions for the equilibrium climate sensitivity that contain a positive probability for such states of the world. We find that all else equal the temperature response function utilized in the FUND model results in estimates of the expected SCC that are up to 25% lower than those derived with the more realistic climate models, while the functions used in DICE and PAGE lead to expected SCC estimates up to 40% and 50% higher, respectively.

The social cost of carbon – or marginal damage caused by an additional ton of carbon dioxide emissions – has been estimated by a U.S. government working group at $21/tCO2 in 2010. That calculation, however, omits many of the biggest risks associated with climate change, and downplays the impact of current emissions on future generations. Our reanalysis explores the effects of uncertainty about climate sensitivity, the shape of the damage function, and the discount rate. We show that the social cost of carbon is uncertain across a broad range, and could be much higher than $21/tCO2. In our case combining high climate sensitivity, high damages, and a low discount rate, the social cost of carbon could be almost $900/tCO2 in 2010, rising to $1,500/tCO2 in 2050. The most ambitious scenarios for eliminating carbon dioxide emissions as rapidly as technologically feasible (reaching zero or negative net global emissions by the end of this century) require spending up to $150 to $500 per ton of reductions of carbon dioxide emissions by 2050. Using a reasonable set of alternative assumptions, therefore, the damages from a ton of carbon dioxide emissions in 2050 could exceed the cost of reducing emissions at the maximum technically feasible rate. Once this is the case, the exact value of the social cost of carbon loses importance: the clear policy prescription is to reduce emissions as rapidly as possible, and cost-effectiveness analysis offers better insights for climate policy than costbenefit analysis.

Drawing upon climate change damage specifications previously proposed in the literature that the authors have calibrated to a common level of damages at 2.5°C, the authors examine the effect upon the social cost of carbon (SCC) of varying damage specifications in a DICE-like integrated assessment model. They find that SCC estimates are highly sensitive to uncertainty in extrapolating damages to high temperatures at moderate-to-high levels of risk aversion, but only modestly so at low levels of risk aversion. While in the absence of risk aversion, all of the SCC estimates but one agree within a factor of two, with a moderate level of risk aversion included, the differences among estimates grow greatly. For example, one composite damage specification, combining elements of different literature-derived specifications and roughly taking into account calibration uncertainty, yields SCC values 32% higher than the standard quadratic DICE damage function in the absence of risk aversion. With a coefficient of relative risk aversion of 1.4, however, the same uncertain specification yields SCC values almost triple those of the standard function. The authors conclude that failure to consider damages uncertainty and risk aversion jointly can lead to significant underestimation of the SCC., This work was supported by the U.S. Climate Change Technology Program.

In 2010, the U.S. government adopted its first consistent estimates of the social cost of carbon (SCC) for government-wide use in regulatory cost-benefit analysis. Here, we examine a number of the limitations of the estimates identified in the U.S. government report and elsewhere and review recent advances that could pave the way for improvements. We consider in turn socioeconomic scenarios, treatment of physical climate response, damage estimates, ways of incorporating risk aversion, and consistency between SCC estimates and broader climate policy.

Osteo-Odonto-Keratoprothese (OOKP) Eine Erhebung der Kosten und der Auswirkungen auf die Lebensqualität EINLEITUNG: Eine Keratoprothese mit natürlicher Haptik aus Zahn (OOKP) oder Knochen (Tibia-KPro) kann zur visuellen Rehabilitation hornhautblinder Patienten genutzt werden. In einer ersten Operation wird die Augenoberfläche mit Mundschleimhaut bedeckt, um ein geeignetes Milieu für das Implantat zu schaffen. Während desselben oder eines zweiten Eingriffs wird ein Zahn bzw. ein Stück Tibiaknochen gewonnen und als Haptik für eine PMMA-Optik präpariert. Das Gesamtimplantat wird für 3 Monate zwecks Bildung einer vaskularisierten Hülle in eine subkutane Tasche und in einem letzten Schritt in das Auge implantiert. In dieser Studie wurden die Kosten des Verfahrens und die resultierende Lebensqualität einer deutschen Kohorte mit mindestens 2-jähriger Beobachtungszeit ermittelt. MATERIAL UND METHODEN: Die Behandlungsdaten von 32 Patienten (27 x OOKP, 5 x TK-Pro) zu Personalbindung (z. B. Op-Dauer), Verbrauchsgüter und Infrastruktur wurden basierend auf der Kalkulationsmatrix des InEK ermittelt. Daraus wurden die mittleren Kosten für die regulären Operationsschritte, Vor- und Nachuntersuchungen über 2 Jahre postoperativ sowie kleine und große Eingriffe zum Komplikationsmanagement berechnet. Der prä- und postoperative Visus wurde aus den Akten und einer Selbsteinschätzung der Aktivitäten des täglichen Lebens und der Lebensqualität retrospektiv mittels Fragebogen vom Patienten erhobenen. ERGEBNIS: Die mittleren Kosten pro Patient betrugen für Schleimhautdeckung und Erstellung der Prothese 9.015 € und für die Implantation 7.896 €. Hinzu kamen Kosten für Vor- und Nachuntersuchungen über zwei Jahre beim Operateur von 336 € bzw. 1.947 € sowie für große und kleine Komplikationseingriffe von 5.177 € bzw. 1.579 €. Die Veränderung von Visus und Lebensqualität wurde von den Patienten als substantiell und als nahezu gleich wie vor der Augenerkrankung eingeschätzt. Der Visus lag vor der Operation bei einem Median von 0,001 und nach der Operation bei einem Median von 0,4. Das Lesen von normalem Text, Erkennen von Gesichtern und Orientieren im Raum war postoperativ 58%, 73% und 81% der Patienten wieder möglich. FAZIT: Die Implantation einer Keratoprothese mit natürlicher Haptik ist ein kostenintensives Verfahren, das jedoch in hohem Maße eine weitreichende visuelle Rehabilitation mit entsprechend subjektiv deutlich besser bewerteter Lebensqualität ermöglicht., Osteo-odonto-keratoprosthesis (OOKP) or Tibia-bone prosthesis (TK-Pro) - a costs and quality of life analysis Wahl I., Hille K., Wagner F., Geerling G. INTRODUCTION: OOKP is an extensive procedure for the treatment of severe corneal disease with resulting bilateral blindness. It consists of a number of complex surgical stages with highly trained ophthalmic and maxillofacial surgeons involved. In stage I the keratoprosthesis is prepared from the root of a canine tooth as a haptic and an optic cylinder. Three month later in stage II this prosthesis is implanted into the eye following excision of cornea, lens, iris and vitreous body. If successful this procedure can rehabilitate a patient from blindness to full visual acuity. We calculated the costs of this complex procedure and evaluated the effects on quality of life in a retrospective case series. MATERIAL AND METHODS: The medical records of 32 patients who received an OOKP (N=27) or TK-Pro (N=5) for corneal blindness in a tertiary referral centre were reviewed. The costs for personnel, consumables and infrastructure were calculated for visits to the out-patient clinic, ward (including diagnostic procedures such as x-rays) and surgical theatre of the primary OOKP surgical stages as well as treatment of complications. Vision based daily life activities and quality of life were retrospectively assessed with a questionnaire in 26 out of 32 patients after surgery. RESULTS: The total costs for treatment, including preoperative assessment, stage I and stage II and two years of follow-up were 19.194 €. 336 € for preoperative assessment, 9.015 € for stage I and 7.896 € for stage II. The costs of follow-up visits to the outpatient clinic were 1.947 €. Costs for additional hospital stays to treat complications amounted to 6.756 €. 1.579 € for small operations, such as mucosa membrane revision and 5.177 € for complex operations, including pars plana vitrectomie and pressure relieving operations. At two years follow-up keratoprosthesis surgery was considered morphologically successful in 30 eyes with good kerathoprosthesis integration and position. In two eyes the keratoprosthesis had to be removed during the two years of follow up. Visual acuity in these 30 patients was: >= 0,8 in 20% (N=6); Visus >=0,4 in 53% (N=15); Visus >=0,1 in 70 % (N=21); Visus

I investigate the optimal role of carbon sequestration for mitigation in the presence of a ceiling on atmospheric carbon concentration and consider aspects that have so far only been analyzed in the context of a damage function to measure the consequences of climate change for society. I assume extraction costs to be stock-dependent, replace the proportional decay description of the global carbon cycle by a two-box model, investigate the differences resulting from linear versus convex sequestration costs, and consider oceanic instead of geological carbon storage. Using a two-box model allows the non-renewable aspects of the global carbon cycle to be accounted for and implies that carbon emissions have to decline at the ceiling due to the ongoing saturation of the ocean with respect to anthropogenic carbon. Convex sequestration costs result in a continuous use of such a technology and allow the ceiling to be reached later than without sequestration, whereas linear sequestration costs result in a discontinuous use of such a technology and earlier reaching of the ceiling. Consequently, taking into the account the uncertainties in defining an appropriate ceiling, the policy recommendations with respect to carbon sequestration differ crucially according to the underlying assumptions of sequestration costs. Furthermore, the ocean might be a storage option for captured carbon, but even though its storage capacity is probably not scarce by itself, the ongoing saturation of the complete carbon cycle has to be taken into account.

This note considers the treatment of risk and uncertainty in the recently established social cost of carbon (SCC) for analysis of federal regulations in the United States. It argues that the analysis of the US Interagency Working Group on Social Cost of Carbon did not go far enough into the tail of low-probability, high-impact scenarios, and, via its approach to discounting, it mis-estimated climate risk, possibly hugely. Given the uncertainty about estimating the SCC, the note concludes by arguing that there is in fact much to commend an approach whereby a quantitative, long-term emissions target is chosen, and the price of carbon for regulatory impact analysis is then based on estimates of the marginal cost of abatement to achieve that very target.

This paper prices the risk of climate change by calculating a lower bound for the price of a virtual insurance policy against climate risks associated with the business as usual (BAU) emissions path. In analogy with ordinary insurance pricing, this price depends on the current risk to which society is exposed on the BAU emissions path and on a second emissions path reflecting risks that society is willing to take. The difference in expected damages on these two paths is the price which a risk neutral insurer would charge for the risk swap excluding transaction costs and profits, and it is also a lower bound on society's willingness to pay for this swap. The price is computed by (1) identifying a probabilistic risk constraint that society accepts, (2) computing an optimal emissions path satisfying that constraint using an abatement cost function, (3) computing the extra expected damages from the business as usual path, above those of the risk constrained path, and (4) apportioning those excess damages over the emissions per ton in the various time periods. The calculations follow the 2010 US government social cost of carbon analysis, and are done with DICE2009.

In the current economical and financial crisis, the economic evaluation of transport infrastructure investment projects is of most importance. Given the need of most governments to reduce spending and control the deficit, having tools that facilitate decision-making seems to be a key objective. This paper examines several high speed lines in Spain, by using the benefit-cost analysis (BCA), in order to obtain more information and determine the social costs and benefits linked to each project. Such analysis allows determining whether costs are higher than benefits, so the net social benefit is positive. Similarly, an Internal Rate of Return (IRR) per project is determined, in order to classify investments with positive BCA. RESUMEN. En la actual crisis económica y financiera, la evaluación económica de proyectos de inversión en infraestructura de transporte es de mayor importancia. Dada la necesidad de la mayoría de los gobiernos para reducir el gasto y controlar el déficit, contar con herramientas que faciliten la toma de decisiones parece ser un objetivo clave. Este documento examina varias líneas de alta velocidad en España, utilizando el análisis de costo-beneficio (ACB), con el fin de obtener más información y determinar los costos y beneficios sociales relacionados con cada proyecto. Este tipo de análisis permite determinar si los costos son más altos que los beneficios, por lo que el beneficio social neto es positivo. Del mismo modo, a una Tasa Interna de Retorno (TIR) por proyecto se determina, con el fin de clasificar las inversiones con resultados positivos ABC.

The Greek government budget situation plays a central role in the debt crisis in the euro area. The debt to GDP ratio is above 150 percent, while the deficit to GDP ratio exceeds 10 percent. To re-establish the Maastricht criteria, respectively, strong consolidation measures need to be implemented, with potential adverse effects on the Greek economy, and further credit requirements. Therefore, a debt conversion might become a reasonable alternative. The aim of this paper is to provide some simulation-based calculations on the expected fiscal costs for the governments in the large European countries Germany, France, Spain and Italy arising from different policy options - among them a potential second Greek rescue package. Under realistic conditions, a debt conversion may be the less costly strategy for Greece and the euro area partner states. A value-added of these calculations lies in a potential transfer to smaller euro area member countries.

We report the results of an uncertainty decomposition analysis of the social cost of carbon as estimated by FUND, a model that has a more detailed representation of the economic impact of climate change than any other model. Some of the parameters particularly influence impacts in the short run whereas other parameters are important in the long run. Some parameters are influential in some regions only. Some parameters are known reasonably well, but others are not. Ethical values, such as the pure rate of time preference and the rate of risk aversion, therefore affect not only the social cost of carbon, but also the importance of the parameters that determine its value. Some parameters, however, are consistently important: cooling energy demand, migration, climate sensitivity, and agriculture. The last two are subject to a large research effort, but the first two are not.

This paper revises some relevant aspects of The Economics of Climate Change in Mexico (ECCM), one of the most important documents for supporting national decisionmaking regarding the climate change international negotiations. In addition to pointing out some important methodological inadequacies, this paper shows that the ECCM's main results are questionable. Even though this study was inspired on the Stern Review and benefited from the support of original members of the Stern team, the ECCM is not consistent with the world portrayed in the Stern Review in many aspects, particularly regarding the importance of climate change impacts. The estimates of the costs of climate change for Mexico are so low that can hardly be considered to be consistent with the previous studies that have been reported in the literature concerning regional and global scales. Furthermore, it is shown that the document's main conclusion is not supported even by the estimates of the costs of the impacts of climate change and of the mitigation strategies that are presented in it. It is argued that this document has important deficiencies that do not make it adequate for supporting decision-making. In addition, the ECCM has inspired other reports regarding the economics of climate change in Central and Latin America, and as is shown here, their results are also questionable. This raises further reasons for concern because these national documents are building a regional view of what climate change could imply for Latin America that severely underestimates the importance of this phenomenon.

Regulators often set value-at-risk (VaR) constraints to limit the portfolio risk of institutional investors. For some investors, notably pension funds, the VaR constraint is enforced over a horizon which is significantly shorter than the investment horizon of the investor. Our paper aims to investigate the economic costs and benefits of this kind of regulation. Shorter regulatory constraint, on one hand, enables an institutional investor, like a pension fund, to avoid large losses when the investment environment worsens but, on the other hand, also limits the institutionalinvestor's ability to benefit from an increase in stock prices. We show that the cost introduced by the short-term VaR constraints might over weight the benefitsbrought by such constraints.

In this paper we do a couple of things: discussing a way to measure the welfare cost of country risk, and measuring it for Argentina in the period 1875-2006. There are two conclusions: a) the welfare cost of Argentine risk has been huge: for example, in the period 1976-2006 it was around 20% of GDP, several times larger than the welfare cost of any conventional distortion; b) this cost would be wholly paid by labor. These fascinating results deserve further investigation.

The social cost of carbon is an estimate of the benefit of reducing CO2 emissions by one ton today. As such it is a key input into cost-benefit analysis of climate policy and regulation. We provide a set of new estimates of the social cost of carbon from the integrated assessment model FUND 3.5 and present a regional and sectoral decomposition of our new estimate. China, Western Europe and the United States have the highest share of harmful impacts, with the precise order depending on the discount rate. The most important sectors in terms of impacts are agriculture and increased energy use for cooling. We present an extensive sensitivity analysis with respect to the discount rate, equity weights, different socio economic scenarios and values for the climate sensitivity parameter.

Reducing greenhouse gas emissions not only lowers expected damages from climate change but also reduces the risk of catastrophic impacts. However, estimates of the social cost of carbon, which measures the marginal value of carbon dioxide abatement, often do not capture this risk reduction benefit. Risk-averse individuals are willing to pay a risk premium, an additional amount beyond the difference in expected damages, to reduce risks. The authors review methods used and estimates obtained for calculating a risk premium to be included in the social cost of carbon. While more research is needed in this area, work to date suggests a positive risk premium on the social cost of carbon is warranted.

Ocean acidification is increasingly recognized as a major global problem. Yet economic assessments of its effects are currently almost absent. Unlike most other marine organisms, mollusks, which have significant commercial value worldwide, have relatively solid scientific evidence of biological impact of acidification and allow us to make such an economic evaluation. By performing a partial-equilibrium analysis, we estimate global and regional economic costs of production loss of mollusks due to ocean acidification. Our results show that the costs for the world as a whole could be over 100 billion USD with an assumption of increasing demand of mollusks with expected income growths. The major determinants of cost levels are the impacts on the Chinese production, which is dominant in the world, and the expected demand increase of mollusks in today's low-income countries, which include China, in accordance with their future income rise.

Last April, European air traffic was heavily disrupted by the volcanic ash cloud generated by the eruption of the Icelandic volcano Eyjafjallajokull. A (partial) shortcut to the all but impossible task of estimating all those impacts is an analysis of financial markets. In this paper, we will provide a first basic estimate of some of the economic effects of the Eyjafjallajokull volcano’s eruption, focusing on the airline industry, together with some evaluations of potential gainers, namely alternative transport industries.

Estimates of the welfare costs of inflation based on Bailey (1956) are typically computed using aggregate money demand models. Yet, the behavior of money demand may vary across sectors. Thus, the impact on welfare of inflation regime shifts may differ between households and firms. We specifically investigate the sectoral welfare implications of the shift from the Great Inflation to the present regime of low and stable inflation. For this purpose, we estimate different functional specifications of money demand for US households and non-financial firms using flow-of-fund data covering four decades. We find that the benefits were significant for both sectors.

Land-use conflicts arise if land is scarce, land-use types are mutually exclusive, and vary in their effects with regard to more than one incongruent policy objective. If these effects depend on the spatial location of the land-use measures the conflict can be mediated through an appropriate spatial allocation of land use. An example of this conflict is the welfare-optimal allocation of wind turbines (WT) in a region in order to achieve a given energy target at least social costs. The energy target is motivated by the fact that wind power production is associated with relatively low CO2 emissions and is currently the most efficient source of renewable energy supply. However, it is associated with social costs which comprise energy production costs as well as external costs caused by harmful impacts on humans and biodiversity. We present a modelling approach that combines spatially explicit ecological-economic modelling and choice experiments to determine the welfare-optimal spatial allocation of WT in Western Saxony, Germany. We show that external costs are significant. The welfare-optimal sites are therefore not those with the highest energy output (i.e., lowest production costs). However, they show lower external costs than the most productive sites. A sensitivity analysis reveals that the external costs represent about seven percent of the total costs (production costs plus external costs). Increasing the energy production target increases both production and external costs. The absolute (percentage) increase of production costs is higher (lower) than that of external costs.

This paper engages in an interdisciplinary survey of the current state of knowledge related to the theory, determinants and consequences of occupational safety and health (OSH). First, it synthesizes the available theoretical frameworks used by economists and psychologists to understand the issues related to the optimal provision of OSH in the labour market. Second, it reviews the academic literature investigating the correlates of a comprehensive set of OSH indicators, which portray the state of OSH infrastructure (social security expenditure, prevention, regulations), inputs (chemical and physical agents, ergonomics, working time, violence) and outcomes (injuries, illnesses, absenteeism, job satisfaction) within workplaces. Third, it explores the implications of the lack of OSH in terms of the economic and social costs that are entailed. Finally, the survey identifies areas of future research interests and suggests priorities for policy initiatives that can improve the health and safety of workers.

In recent years, many developing countries have sought to implement more decentralized governmental systems. Despite efforts toward fiscal federalism, assessment of decentralization activity has been hampered by lack of consistent cross-country measures of effectiveness. Since governments play a central role in the management of catastrophic events, disaster impact data provide an opportunity to evaluate whether government structure is important in limiting disaster losses. We use cross-country data over the 1970–2005 period to estimate the relationship between decentralization and disaster casualties; countries with more decentralized governments experience fewer disaster-induced fatalities. ( JEL H73, Q54 )

Recent research has shown that optimal monetary policy may display considerable price-level drift. Proponents of price-level targeting have argued that the costs of eliminating the price-level drift may be reduced if the central bank responds flexibly by returning the price level only gradually to the target path (Gaspar et al., 2010). We revisit this argument in two variants of the New Keynesian model. We show that in a two-sector version of the model which allows for changes in relative prices across sectors, the costs of stabilisation under price-level targeting remain much higher than under inflation targeting for all policy-relevant horizons. Our conclusion is that extending the policy horizon is not a panacea to reduce the costs of eliminating pricelevel drift.

This paper focuses on the impact of maritime piracy on international trade. Piracy increases the cost of international maritime transport through an increase in insecurity regarding goods deliveries. Bilateral trade flows between the main European and Asian countries over the 1999 to 2008 period are used to estimate an augmented gravity model that includes various measures of piracy acts. We found robust evidence indicating that maritime piracy reduces the volume of trade; the effect of ten additional vessels hijacked being associated to an 11% decrease in exports. Using these results, the international cost of piracy in terms of trade destruction is estimated to be 28 billion dollars. Finally, we compare the cost of low intensity conflict like Somalia, to the cost of a full scale conflict (Afghanistan) and to the cost of an autarkic state (North Korea) for the international community in the year 2008.The results indicate that the cost of war more than doubles the cost of low intensity conflict.

This paper critically reviews a vast array of literature on the costs of crime and common violence. Using a simple economic model of crime as a theoretical benchmark, we conceptually discuss the estimates available and their potential use as inputs for public policy. We present current methodologies, explore their main results, discuss their limitations, and suggest directions for further research.

It is standardly assumed that individuals adjust to perceived unfairness or norm violations in precisely the same area or relationship where the original offense has occurred. However, grievances over being exposed to injustice may have even broader consequences and also spill over to other contexts, causing non-compliant behaviour there. We present evidence that such 'fairness spillovers' can incur large economic costs: A belief that there is unfairness in taxation in the sense that the rich don't pay enough taxes is associated with a twenty percent higher level of paid absenteeism from work.

Road safety forms a fundamental prerequisite for sustainable mobility. Road accidents have an effect on the performance of the road traffic system and also bind resources. Therefore, apart from ethical aspects, road accidents have an enormous influence on the social acceptability of road traffic as well as on a country's economic progress. In 2004, the costs of road accidents in Germany amounted to approximately 30 billion Euro. Nevertheless, the improvements in road safety that have been achieved in the past are encouraging - the number of road traffic fatalities is at its lowest since WWII. This development seems even more astounding when one accounts for the vehicle mileage that has been increasing continuously over the past decades. Still, the number of road accidents and fatalities is high and incompatible with sustainable mobility. Therefore, the aim of improving road safety has to continue to have paramount importance in traffic and transport policy. These improvements will result in a higher acceptance of a growing mobility, relieve the national economy and free resources that can be utilized otherwise. Verkehrssicherheit ist eine Grundvoraussetzung für nachhaltige Mobilität. Verkehrsunfälle haben - neben originären ethischen Aspekten - sowohl Einfluss auf die wirtschaftliche Entwicklung, da sie Ressourcen binden und die Leistungsfähigkeit des Verkehrssystems beeinflussen als auch auf die Sozialverträglichkeit des Straßenverkehrs. Im Jahr 2004 betrugen die volkswirtschaftlichen Kosten durch Straßenverkehrsunfälle in Deutschland insgesamt rund 30 Milliarden Euro. Gleichwohl sind die großen Erfolge hinsichtlich der Verbesserung der Verkehrssicherheit ermutigend. Die Zahl der im Straßenverkehr getöteten Personen ist heute auf ihrem niedrigsten Stand seit dem zweiten Weltkrieg. Besonders erfreulich ist diese positive Entwicklung vor dem Hintergrund der seit Jahrzehnten ansteigenden Fahrleistungen von Kraftfahrzeugen. Nachhaltiger Straßenverkehr ist nicht mit hohen Unfallopferzahlen vereinbar. Verbesserungen der Straßenverkehrssicherheit sind deswegen auch weiterhin eine der dringlichsten verkehrspolitischen Aufgaben. Mehr Sicherheit im Straßenverkehr bedeutet eine höhere Akzeptanz für die weiter wachsende Mobilität und zugleich auch eine deutliche Kostenentlastung der Volkswirtschaft und die Freisetzung von Ressourcen für andere produktive Verwendungen.

This paper addresses two basic issues related to technological innovation and climate stabilisation objectives: i) Can innovation policies be effective in stabilising greenhouse gas concentrations? ii) To what extent can innovation policies complement carbon pricing (taxes or permit trading) and improve the economic efficiency of a mitigation policy package? To answer these questions, we use an integrated assessment model with multiple externalities and an endogenous representation of technical progress in the energy sector. We evaluate a range of innovation policies, both as a stand-alone instrument and in combination with other mitigation policies. Even under fairly optimistic assumptions about the funding available for, and the returns to R&D, our analysis indicates that innovation policies alone are unlikely to stabilise global concentration and temperature. The efficiency gains of combining innovation and carbon pricing policies are found to reach about 10% for a stabilisation target of 535 ppm CO2eq. However, such gains are reduced when more plausible (sub-optimal) global innovation policy arrangements are considered.

This paper provides a brief analysis of three major questions raised in the context of the recent global financial crisis. First, how similar is the crisis to previous episodes? We argue that the crisis featured some close similarities to earlier ones, including the presence of credit and asset price booms fueled by rapid debt accumulation. Second, how different is it from earlier episodes? We show that, as much as it displayed some similarities with previous cases, it also featured some significant differences, such as the explosion of opaque and complex financial instruments in a context of highly integrated global financial markets. Third, how costly are recessions that followed these types of crises? Although the latest episode took a very heavy toll on the real economy, we argue that this was not a surprising outcome. In particular, historical comparisons indicate that recessions associated with periods of deep financial disruptions result in much larger declines in real economic activity. We discuss the implications of these findings for economic and financial sector policies and future research.

International audience

This paper aims to quantify some of the costs associated with ill health in New Zealand. The main focus is in estimating indirect costs as opposed to direct health care expenditure costs. In particular, it estimates the cost of absenteeism, presenteeism, working less and not working at all owing to ill health. Around 1,196,200 working age, non-students are estimated to contribute to one or more of the components of indirect costs estimated. That is 61.8% of all working age, non-students. Evaluated at the average full-time pay rate, the estimated hours lost equate to $4.127 billion to $11.563 billion in 2004/05; 2.7% to 7.6% of Gross Domestic Product (GDP). The considerable range in the cost estimate is owing to the large range of the presenteeism estimate as a result of having to use a variety of methods and assumptions to obtain estimates. This illustrates what a difficult concept presenteeism is to estimate, and how sensitive estimates are to the assumptions made. Owing to the assumptions made, the estimate of absenteeism is likely to miss a large group of absenteeism and thus the estimate is likely to be at most a lower bound. Despite this under-coverage, and in line with other research, it seems likely that absenteeism will be generally smaller in size than presenteeism. Working fewer hours, or not working at all, owing to ill health are estimated to affect widely different numbers of people; 458,500 and 42,300 respectively. However, in terms of costs their impact is more similar; $1.442 billion and $1.755 billion respectively. Taking the estimate of presenteeism nearest the mid-point of the range, indirect costs are estimated to be $7.483 billion; 4.9% of GDP. Presenteeism accounts for 55% of this cost, not working 23%, working less 19% and absenteeism just 3%. The only component of direct costs estimated is hospital inpatient appointments, owing to data limitations and the particular focus of this study. Around 1,301,700 people are estimated to be affected by hospital inpatient costs or indirect costs. In monetary terms the total cost of the considered components is estimated to be $5.417 to $12.853 billion; 3.6% to 8.5% of GDP.

This paper provides estimates of the costs of organic agriculture (OA) programs, and sets them in the context of the costs of attaining the United Nations' Millennium Development Goals (MDGs). It analyzes the costs of OA programs in four case studies: Wanzai, PRC; Wuyuan, PRC; Kandy, Sri Lanka; and Ubon Ratchathani, Thailand. The results show considerable variation across the case studies, suggesting that there is no clear structure to the costs of adopting OA. Costs do depend on the efficiency with which the OA adoption programs are run. The lowest cost programs were more than ten times less expensive than the highest cost ones. A further analysis of the gains resulting from OA adoption reveals that the costs per person taken out of poverty was much lower than the World Bank's estimates, based on income growth in general or based on the detailed costs of meeting some of the more quantifiable MDGs (e.g., education, health, and environment).

In diesem kurzen Aufsatz werden die Kosten des Terrors für den internationalen Handel diskutiert. Unstrittig ist, dass Unsicherheit und Gewalt die wirtschaftliche Aktivität lähmen können. Ob auch terroristische Aktionen, die häufig isolierte Ereignisse darstellen, selten auf direkte Zerstörung zielen, und sich einer Vielzahl von unterschiedlichen Methoden bedienen, die Wirtschaftsaktivität spürbar beeinflussen, ist zuletzt zum Gegenstand zahlreicher Untersuchungen geworden. Bei der Identifikation (und insbesondere der Quantifizierung) der Auswirkungen von Terrorismus auf den Handel treten allerdings eine Reihe methodischer Probleme auf; die Bandbreite der Schwierigkeiten reicht von der Erfassung und Kodifizierung terroristischer Aktivitäten bis hin zu möglichen Endogenitätsproblemen. Vor dem Hintergrund dieser ökonometrischen Schätzprobleme scheint es bemerkenswert, dass eine Reihe von Studien mit unterschiedlichem Untersuchungsdesign einen signifikanten negativen Zusammenhang zwischen Terrorismus und Handel dokumentieren.

This paper in applied theory argues that there is a loose chain of reasoning connecting the following three basic links in the economics of climate change: 1) additive damages may be more appropriate for analyzing the impacts of global warming than multiplicative damages; 2) an uncertain feedback-forcing coefficient, which might be near one with infinitesimal probability, can cause the distribution of the future time trajectory of global temperatures to have fat tails and a high variance; 3) when highvariance additive damages are discounted at an uncertain rate of pure time preference, which might be near zero with infinitesimal probability, it can make expected present discounted disutility very large. Some possible implications for welfare analysis and climate-change policy are briefly noted.

A new paradigm for transport economists has been established: revenues of a welfare-maximising road tax should be employed to reduce the level of a distortionary income tax. An essential modelling assumption to reach this conclusion is that the number of workdays is optimally chosen, whereas daily workhours are fixed, implying that given a road tax, workers may only reduce their commuting costs by reducing total labour supply. However, a labour supply model which also allows for optimally chosen daily hours implies that commuting costs increase daily hours, whereas the effect on total labour supply is ambiguous. This paper addresses this issue empirically by analysing the relationship between labour supply patterns and commuting distance using the socio-economic panel data for Germany between 1997 and 2007. Endogeneity of commuting distance is accounted for by using employer-induced changes in commuting distance. In line with the theoretical model developed, we find that commuting distance has a positive effect on daily hours. Our analysis does not find a negative effect of commuting distance on total labour supply, suggesting that a reduction in the income tax, as advocated in the literature, may not be necessary.

Rapid urbanization could have positive and negative health effects, such that the net impact on population health is not obvious. It is, however, highly pertinent to the human welfare consequences of development. This paper uses community and individual level longitudinal data from the China Health and Nutrition Survey to estimate the net health impact of China’s unprecedented urbanization. We construct an index of urbanicity from a broad set of community characteristics and define urbanization in terms of movements across the distribution of this index. We use difference-in-differences estimators to identify the treatment effect of urbanization on the self-assessed health of individuals. The results reveal important, and robust, negative causal effects of urbanization on health. Urbanization increases the probability of reporting fair or poor health by 5 to 15 percentage points, with a greater degree of urbanization having larger health effects. While people in more urbanized areas are, on average, in better health than their rural counterparts, the process of urbanization is damaging to health. Our measure of self-assessed health is highly correlated with subsequent mortality and the causal harmful effect of urbanization on health is confirmed using more objective (but also more specific) health indicators, such as physical impairments, disease symptoms and hypertension.

The estimation of the costs of conflict is currently receiving a lot of attention in the literature. This paper aims to give a thorough overview of the existing literature, first by addressing the history of case studies that address conflict costs and second by looking at the existing body of cross-country analyses for conflict costs. In addition to the existing cross-country literature, a number of studies that only concern themselves with particular elements of conflict costs are included as well. In the end, this paper combines the insights from these previous analyses to explore how much room there is to further improve the existing studies. Specific recommendations are given how to proceed with the development of the field of conflict cost measurement.

Der Staat fördert auf vielfältige Art und Weise den vorzeitigen Ausstieg aus dem Erwerbsleben. Ein Verzicht auf diese Maßnahmen käme den Steuer- und Beitragszahler günstiger. Zwar würde ein Teil der bislang geförderten Personen in anderer Form Transfers beanspruchen, zum Beispiel Arbeitslosengeld II oder eine vorgezogene Rente. Insgesamt resultieren aber auch dann noch Einsparungen von 2,9 bis 4,0 Milliarden Euro. Darüber hinaus verzichtet die deutsche Volkswirtschaft auch auf die Wertschöpfungspotenziale der älteren Menschen. Würden nur 20 Prozent der über die gesetzliche Altersteilzeit und den erleichterten oder verlängerten Arbeitslosengeldbezug geförderten Personen in den Arbeitsmarkt integriert, hätte das nominale Bruttoinlandsprodukt im Jahr 2007 zusätzlich um 0,44 Prozent zugelegt – selbst wenn deren Produktivität nur bei 80 Prozent des Durchschnitts liegt.

A new paradigm for transport economists has been established: revenues of a welfare-maximising road tax should be employed to reduce the level of a distortionary income tax. An essential assumption to reach this conclusion is that the number of workdays is optimally chosen, whereas daily workhours are fixed, implying that given a road tax, workers may only reduce their commuting costs by reducing total labour supply. However, a labour supply model which also allows for optimally chosen daily hours implies that commuting costs increase daily hours, whereas the effect on total labour supply is ambiguous. This paper addresses this issue empirically by analysing the relationship between labour supply patterns and commuting distance using the socio-economic panel data for Germany between 1997 and 2007. Endogeneity of commuting distance is accounted for by using employer-induced changes in commuting distance. In line with the theoretical model developed, we find that commuting distance has a positive effect on daily hours. Our analysis does not find a negative effect of commuting distance on total labour supply, suggesting that a reduction in the income tax, as advocated in the literature, may not be necessary.