Quantifying the fiscal effects of trade reform

Using a tax model of an open economy, the authors provide a simple but rigorous method for estimating the fiscal impact of trade reform. Both the direction and the magnitude of the fiscal consequences of trade reform depend on the elasticities of substitution and transformation between foreign and domestic goods, so they provide empirical estimates of those elasticities. They also discuss the implications of their analysis for public revenue. In general, they find that it matters what the values of the two elasticities are relative to each other. If only one of the elasticities is low (close to zero), revenue will drop unequivocally as a result of tariff reform, reaching close to the maximum drop whether or not the other elasticity is high. For imports to grow and tariff collection to compensate for the tax cut, the import elasticity has to be high. Because of the balance of trade constraint, however, imports cannot substitute for domestic goods unless supply is able to switch toward exports. Hence, the export transformation elasticity has to be high as well. As substitution possibilities between foreign and domestic goods increase, a tariff reform can theoretically be self-financing. But if the elasticities are less than"large", tax revenue will fall with tariff reduction and further fiscal adjustments will be necessary. The authors provide empirical estimates of the possible range of values for the elasticities of about 60 countries, using various approaches. The elasticties range from 0 to only 3 in most cases - nowhere near the point at which tariff reform can be self-financing.Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade Policy,Achieving Shared Growth

Tax policy to reduce carbon emissions in south Africa

Noting that South Africa may be one of the few African countries that could contribute to mitigating climate change, the authors explore the impact of a carbon tax relative to alternative energy taxes on economic welfare. Using a disaggregate general-equilibrium model of the South African economy, they capture the structural characteristics of the energy sector, linking a supply mix that is heavily skewed toward coal to energy use by different sectors and hence their carbon content. The authors consider a"pure"carbon tax as well as various proxy taxes such as those on energy or energy-intensive sectors like transport and basic metals, all of which achieve the same level of carbon reduction. In general, the more targeted the tax to carbon emissions, the better the welfare results. If a carbon tax is feasible, it will have the least marginal cost of abatement by a substantial amount when compared to alternative tax instruments. If a carbon tax is not feasible, a sales tax on energy inputs is the next best option. Moreover, labor market distortions such as labor market segmentation or unemployment will likely dominate the welfare and equity implications of a carbon tax for South Africa. This being the case, if South Africa were able to remove some of the distortions in the labor market, the cost of carbon taxation would be negligible. In short, the discussion of carbon taxation in South Africa can focus on considerations other than the economic welfare costs, which are likely to be quite low.Environmental Economics&Policies,Transport Economics Policy&Planning,Taxation&Subsidies,Energy Production and Transportation,Environment and Energy Efficiency

Aid, growth, and real exchange rate dynamics

Devarajan, Go, Page, Robinson, and Thierfelder argued that if aid is about the future and recipients are able to plan consumption and investment decisions optimally over time, then the potential problem of an aid-induced appreciation of the real exchange rate (Dutch disease) does not occur. In their paper,"Aid, Growth and Real Exchange Rate Dynamics,"this key result is derived without requiring extreme assumptions or additional productivity story. The economic framework is a standard neoclassical growth model, based on the familiar Salter-Swan characterization of an open economy, with full dynamic savings and investment decisions. It does require that the model is fully dynamic in both savings and investment decisions. An important assumption is that aid should be predictable for intertemporal smoothing to take place. If aid volatility forces recipients to be constrained and myopic, Dutch disease problems become an issue.Economic Theory&Research,Debt Markets,Currencies and Exchange Rates,Emerging Markets,

Policy lessons from a simple open - economy model

The authors show how two-sector models can be used to derive policy lessons about adjustment in developing economies. In the past two decades, changes in the external environment and in economic policies have been the key factors in the performance of developing economies. By and large the shocks have involved the external sector: terms-of-trade shocks or cutbacks in foreign capital. The policy responses most commonly proposed have targeted the external sector: depreciating the real exchange rate or reducing distortionary taxes to make the economy more competitive. The authors provide a starting point for analyzing the relation between external shocks and policy responses. Starting from a small, one-country, two-sector, three-good (1-2-3) model, the authors outline how the effects of a foreign capital inflow and terms-of-trade shock can be analyzed. They derive the assumptions underlying the conventional policy recommendation of real exchange rate depreciation in response to adverse shocks. The implications of such trade and fiscal policy instruments as export subsidies, import tariffs, and domestic indirect taxes can also be studied in this framework. The authors show that the standard advice to depreciate the real exchange rate in the wake of an adverse terms-of-trade shock rests on the condition that the income effect of the external shock dominates its substitution effect. But, depending on the characteristics of the economy (for example, the trade elasticities), policy results may run counter to received wisdom. For example, when the substitution effect ofan adverse external shock dominates, real depreciation is inappropriate. An infusion of foreign capital does not necessarily benefit the nontradable sector, as the results of"Dutch disease"models suggest (for example, in the extreme case of nearly infinite substitution elasticity between imports and domestic goods). When import tariffs are significant sources of public revenue, potential revenue losses from tariff cuts must be offset by other revenue sources to maintain the external current account balance. The paper shows a simple way to calculate the necessary tax adjustment. A major advantage of small models is their simplicity. The example in this paper can be solved analytically - either graphically or algebraically. It also can be solved numerically, using such widely available PC-based spreadsheet programs as Excel. The numerical implementation involves only modest data requirements. The data that governments normally release on national income, fiscal, and balance of payments accounts are sufficient.Environmental Economics&Policies,Economic Theory&Research,Economic Stabilization,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Markets and Market Access

Deciphering Genetic Diversity in Spathodea campanulata Beauv. from South India Based On Randomly Amplified Polymorphic DNA Markers

The African tulip (Spathodea campanulata) is a monophyletic species native to tropical forests of sub-Saharan Africa belonging to family Bignoniaceae. Although its endemism in sub-Saharan Africa, it is listed as potential alien invasive species in Pacific, Indian and Caribbean, but also Singapore, Papua New Guinea and Australia. The expansion of its range from ornamental to invasive is being observed in South India. In this study, RAPD based DNA markers have been used to determine genetic diversity of the monophyletic species. About 14 populations were studied from 6 states of South India using 41 random decamer primers. The total number of 517 bands were scored which are generated by 41 primers producing 12.6 bands on an average per primer, of these 517 bands produced 379 were polymorphic showing 73% polymorphism revealing higher level of genetic polymorphism in the study population. The similarity coefficient ranged from 0.312 to 0.837 and the dendrogram constructed by the UPGMA based on Jaccard\u27s similarity matrix farmed two clusters. In the present study, results showed the high degree of genetic diversity within the populations of S. campanulata supporting high degree of adaptation and its range expansion from ornamental to possible invasive species in South India

Association of urinary uromodulin with kidney function decline and mortality: the health ABC study .

BackgroundUrine uromodulin (uUMOD) is a protein secreted by the kidney tubule. Recent studies have suggested that higher uUMOD may be associated with improved kidney and mortality outcomes.MethodsUsing a case-cohort design, we evaluated the association between baseline uUMOD levels and ≥ 30% estimated glomerular filtration rate (eGFR) decline, incident chronic kidney disease (CKD), rapid kidney function decline, and mortality using standard and modified Cox proportional hazards regression.ResultsThe median value of uUMOD was 25.8 µg/mL, mean age of participants was 74 years, 48% were women, and 39% were black. Persons with higher uUMOD had lower prevalence of diabetes and coronary artery disease (CAD), and had lower systolic blood pressure. Persons with higher uUMOD also had higher eGFR, lower urinary albumin to creatinine ratio (ACR), and lower C-reactive protein (CRP). There was no association of uUMOD with > 30% eGFR decline. In comparison to those in the lowest quartile of uUMOD, those in the highest quartile had a significantly (53%) lower risk of incident CKD (CI 73%, 18%) and a 51% lower risk of rapid kidney function decline (CI 76%, 1%) after multivariable adjustment. Higher uUMOD was associated with lower risk of mortality in demographic adjusted models, but not after multivariable adjustment.ConclusionHigher levels of uUMOD are associated with lower risk of incident CKD and rapid kidney function decline. Additional studies are needed in the general population and in persons with advanced CKD to confirm these findings.


An unusual congregation of organisms in the catches off Kovalam, Madras

The fishermen belonging to Kovalam had a hectic activity in harvesting huge quantities of fish from the Kovalam bay from 26-8-'87 to 4-9-'87. Fishermen employed all available gears for catching the fish and prawns. According to them, this was due to the appearance of 'Vandal thanneer' or turbid water close to the shore. The present account embodies the results of the observations made on this unusual phenomenon

Financial crises and the attainment of the SDGs: an adjusted multidimensional poverty approach

This paper analyses the impact of financial crises on the Sustainable Development Goal of eradicating poverty. To do so, we develop an adjusted Multidimensional Poverty Framework (MPF) that includes 15 indicators that span across key poverty aspects related to income, basic needs, health, education and the environment. We then use an econometric model that allows us to examine the impact of financial crises on these indicators in 150 countries over the period 1980–2015. Our analysis produces new estimates on the impact of financial crises on poverty’s multiple social, economic and environmental aspects and equally important captures dynamic linkages between these aspects. Thus, we offer a better understanding of the potential impact of current debt dynamics on Multidimensional Poverty and demonstrate the need to move beyond the boundaries of SDG1, if we are to meet the target of eradicating poverty. Our results indicate that the current financial distress experienced by many low-income countries may reverse the progress that has been made hitherto in reducing poverty. We find that financial crises are associated with an approximately 10% increase of extreme poor in low-income countries. The impact is even stronger in some other poverty aspects. For instance, crises are associated with an average decrease of government spending in education by 17.72% in low-income countries. The dynamic linkages between most of the Multidimensional Poverty indicators, warn of a negative domino effect on a number of SDGs related to poverty, if there is a financial crisis shock. To pre-empt such a domino effect, the specific SDG target 17.4 on attaining long-term debt sustainability through coordinated policies plays a key role and requires urgent attention by the international community