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Global Value Chains and Trade Elasticities

Previous studies have argued that global value chains (GVCs) have increased the sensitivity of trade to external business cycle shocks. This may occur either because GVC trade is concentrated in durable goods industries, which are known to have high income elasticities (a composition effect), or because, within industries, GVC trade has a higher income elasticity than regular trade (a supply chain effect). Using Chinese trade data across customs regimes and industries during the period 1995-2009, we find evidence for the former, but not the latter.


Hawaii News Now: Dr. Carl Bonham on Raising the Minimum Wage

Posted February 3, 2014 | Categories: Media

UHERO Executive Director and Professor of Economics Carl Bonham appears on Hawaii News Now to weigh in on the topic of minimum wage increase and the research behind it.


The Effect of Plan B on Teen Abortions: Evidence From the 2006 FDA Ruling

An increase in the availability of emergency contraception (EC) may lead to a decrease in the abortion rate. The 2006 FDA ruling, which relaxed the prescription requirement for EC for women 18 and older, allows us to apply the difference-in-difference methodology on the age-by-year-by-state abortion data to test this hypothesis. Contrary to the literature, we find a moderate reduction in abortion rates among women aged 18 and 19 after 2006 in states that were affected by the change, compared to changes in the control group. These results are robust in a number of specifications and pass the event specification test.

Published Version: Cintina, I., M. Johansen. 2014. The Effect of Plan B on Teen Abortions: Evidence from the 2006 FDA Ruling. Contemporary Economic Policy. In Press.


Unemployment and Mortality: Evidence from the PSID

We use micro-data to investigate the relationship between unemployment and mortality in the United States using Logistic regression on a sample of over 16,000 individuals. We consider baselines from 1984 to 1993 and investigate mortality up to ten years from the baseline. We show that poor local labor market conditions are associated with higher mortality risk for working-aged men and, specifically, that a one percentage point increase in the unemployment rate increases their probability of dying within one year of baseline by 6%. There is little to no such relationship for people with weaker labor force attachments such as women or the elderly. Our results contribute to a growing body of work that suggests that poor economic conditions pose health risks and illustrate an important contrast with studies based on aggregate data.


Are Hotel Property Taxes Fully Passed on to Hotel Guests?

Recent research on the excise tax effects of the property tax in small, multi-sector open economies suggests that the property tax may not be fully forward shifted to consumers as previously believed. I adapt this analysis to examine whether local hotel property taxes in Hawaii are fully passed on to hotel guests as lawmakers had intended. We conclude that full forward shifting is unlikely. I argue that an excise/sales tax on hotel occupancy is preferable to the property tax as a tourist tax.

Published Version: Mak, James. "Research Note: Are hotel property taxes fully passed on to hotel guests? Implications from recent research on property tax incidence." Tourism Economics 21.4 (2015): 899-905. Web.


UHERO Asia-Pacific Forecast: Pacific Rim Will Edge Forward After Weak 2013

Posted December 6, 2013 | Categories: Forecasts

The Asia-Pacific region has seen another year of lackluster growth. The global environment for exports— the region’s lifeblood—has remained exceptionally weak, as the European debt crisis has lingered and US fiscal contraction and inaction have slowed the world’s largest economy. Developed economy weakness and a deliberate policy shift have limited the growth impetus from China as well. 2014 promises to be marginally better, now that Europe has begun to emerge from recession and the worst of the US budget drag is hopefully behind us.

A summary of this forecast is available as a service to the public. For more detailed analysis, subscribe to UHERO's Forecast Project.


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Sumner La Croix on NPR: Could Hawaii Become a Same Sex Wedding Destination?

Molly Solomon of Hawaii Public Radio interviews UHERO Research Fellow and Professor of Economics Sumner La Croix, and others, in her piece 'Could Hawaii Become A Same Sex Wedding Destination?'.

"Same sex couples will be attracted to Hawaii for the same reasons that opposite-sex couples are attracted to Hawaii. It's the great weather, it's the warm water, it's the beautiful scenery. And it's also the Aloha spirit."


Integrating Demand-Management with Development of Supply-Side Substitutes

Sustaining water availability at current prices in the face of growing demand and declining resources is not possible, and scarcity is further exacerbated by falling recharge levels due to climate change, urbanization, and watershed depreciation. We discuss an integrated approach to water-resource development based on principles of sustainability science. In addition to demand management such as pricing, we consider supply-side substitutes such as desalination and wastewater recycling. The importance of integrating demand- and supply-side approaches is especially evident in the case of watershed conservation as climate adaptation. Watershed conservation reduces scarcity by improving groundwater recharge. Yet, incorrect pricing can waste those potential gains. We discuss a joint management strategy, wherein block prices for groundwater consumption and co-determined prices for watershed conservation incentivize and finance efficient profiles of both.


Ordering Extraction from Multiple Aquifers

Optimal groundwater extraction satisfies the condition that the marginal benefits of water consumption equal the full marginal cost of extraction in each period, including the opportunity cost of future benefits foregone. But how should this well-known condition be generalized when there are multiple aquifers available? We provide an extension of the “Pearce equation” to guide the optimal ordering of resource extraction and an illustrative application wherein it is optimal to extract from the “leakiest” aquifer first, letting another aquifer increase in volume. This generalized least cost-first principle contrasts strongly with the sustainable yield approach. By including spatial dimensions, the model provides the marginal valuations of water at each time and place, such that full marginal cost pricing can incentivize users to implement the efficient program. While an untrammeled water market would fail to provide the optimal solution, regulators can facilitate efficient water trading by setting appropriate exchange rates.


A Policy Analysis of Hawaii's Solar Tax Credit Incentive

This study uses Hawaii as an illustrative case study in state level tax credits for PV. We examine the role of Hawaii’s tax credit policy in PV deployment, including distributional and tax payer impacts. Hawaii is interesting because its electricity rates are nearly four times the national average as well as has a 35% tax credit for PV, capped at $5,000 per system. We find that PV is an excellent investment for Hawaii’s homeowners, even without the state tax credit. For the typical household, the internal rate of return with the state tax credit is about 14% and, without it, 10%. Moreover, the vast majority of installations are demanded by households with the median income and higher. We estimate that single-family homeowner’s in Hawaii may demand as much as 1,100 MW of PV. There are, however, significant grid constraints. Policy currently limits PV generation to no more than 15% of peak load for any given circuit, or approximately 3% of aggregate electricity demand. Tax credits are therefore not likely to increase the overall deployment of PV, but rather spread the cost of installation from homeowners to taxpayers and accelerate the rate at which Hawaii reaches grid restrictions.

 Published version:  Coffman, Makena, Sherilyn Wee, Carl Bonham, and Germaine Salim. "A Policy Analysis of Hawaii's Solar Tax Credit." Renewable Energy 85 (2016): 1036-043. Web.

Market, Welfare And Land-Use Implications of Lignocellulosic Bioethanol In Hawaii

This article examines land-use, market and welfare implications of lignocellulosic bioethanol production in Hawaiʻi to satisfy 10% and 20% of the State’s gasoline demand in line with the State’s ethanol blending mandate and Alternative Fuels Standard (AFS). A static computable general equilibrium (CGE) model is used to evaluate four alternative support mechanisms for bioethanol. Namely: i) a federal blending tax credit, ii) a long-term purchase contract, iii) a state production subsidy financed by a lump-sum tax and iv) a state production subsidy financed by an ad valorem gasoline tax. We find that because Hawaii-produced bioethanol is relatively costly, all scenarios are welfare reducing for Hawaii residents: estimated between -0.14% and -0.32%. Unsurprisingly, Hawaii’s economy and its residents fair best under the federal blending tax credit scenario, with a positive impact to gross state product of $49 million. Otherwise, impacts to gross state product are negative (up to -$63 million). We additionally find that Hawaii based bioethanol is not likely to offer substantial greenhouse gas emissions savings in comparison to imported biofuel, and as such the policy cost per tonne of emissions displaced ranges between $130 to $2,100/tonne of CO2e. The policies serve to increase the value of agricultural lands, where we estimate that the value of pasture land could increase as much as 150% in the 20% AFS scenario.


Intergenerational Equity with Individual Impatience in an OLG Model of Optimal and Sustainable Growth

Among the ethical objections to intergenerational impartiality is the violation of consumer sovereignty given that individuals are impatient. We accommodate that concern by distinguishing intra- and inter-generational discounting in an OLG model suitable for analyzing sustainability issues. Under the assumption of constant elasticity of marginal felicity, the optimum trajectory of aggregate consumption is guided, via the Ramsey condition, by the intergenerational discount rate but not the personal discount rate. In an economy with produced capital and a renewable resource, intergenerational neutrality results in a sustained growth path, without the necessity of a sustainability constraint, even in the presence of intragenerational impatience. We also find that green net national product remains constant along the optimal approach path to golden rule consumption.

Published version: Endress, L.H., Pongkijvorasin, S., Roumasset, J., Wada, C.A., 2013. Intergenerational equity with individual impatience in a model of optimal and sustainable growth. Resource and Energy Economics. In Press.


How Have Catch Shares Been Allocated?

 A unique database was created that describes the methods used to allocate shares in nearly every major catch share fishery in the world. Approximately 54% of the major catch share fisheries in the world allocated the Total Allowable Catch (TAC) solely on the basis of historical catch records, 3% used auctions, and 6% used equal sharing rules. The remaining 37% used a combination of methods, including vessel-based rules. These results confirm the widely-held belief that nearly all catch share programs have “grandfathered” private access to fishery resources: 91% of the fisheries in the database allocated some fraction of the TAC on the basis of historical catch. This publicly available database should be a useful reference tool for policymakers, academics, and others interested in catch shares management in Hawai‘i and across the globe.

To suggest edits or additions to the database, please email lynham@hawaii.edu.

Working PaperDATA FILE (XLSX)

UHERO State Forecast Update: No Shutdown For Hawaii Growth

Posted October 25, 2013 | Categories: Forecasts

Growth is holding up in Hawaii, driven by still-strong tourism and rising construction. Recent hints of slowing make Washington worrisome.

A summary of this forecast is available as a service to the public. For more detailed analysis, subscribe to UHERO's Forecast Project.



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Behind-the-counter, but Over-the-border? The Assessment of the Geographical Spillover Effect of Increased Access to Emergency Contraception

Washington was the first state to ease the prescription requirements making emergency contraception (EC) available behind-the-counter at pharmacies to women of any age in 1998. I hypothesize that the increased availability of EC affects fertility rates beyond the borders of the state that allows it. In contrast to the literature, I show that increased access to EC is associated with a statistically significant albeit economically small decrease in abortion rates in Washington counties where women had access to no-prescription EC pharmacies. Yet, there is no effect on pregnancy rates. These results are robust in a number of specifications. Finally, I find some evidence in support of the spillover effects in Idaho, but not Oregon. However, after accounting for changes in the availability of abortion services, the decrease in fertility rates in “treated” Idaho counties is rather small and models lack sufficient power to detect it.


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