trade openness tax reform and tax revenue in developing countries this article investigates empirically whether the effect of tax reform involving the progressive replacement of trade tax revenue with domestic tax revenue in developing countries tax revenue performance measured by tax revenue to gdp ratio depends on the degree of trade openness of these countries the analysis has used an unbalanced panel data set of 95 developing countries over the period 1981 2015 and the two system gmm approach results suggest that tax reform is positively and significantly associated with tax revenue performance in developing countries with the magnitude of this positive effect increasing as countries experience a higher development level additionally and more importantly countries that further open up their economies to international trade enjoy a higher positive effect of tax reform on tax revenue than countries that experience a lower degree of trade openness therefore these findings should help dissipate the concerns of policymakers in developing countries that greater openness to international trade would further erode their tax revenue including by lowering their international trade tax revenue in fact the implementation of an appropriate tax reform in the context of greater trade openness would generate higher tax revenue while concurrently allowing countries to reap the well known benefits of international trade

aid for the poorest some early lessons of uk experience the paper presents an interim review of recent attempts to reach the poorest people in developing countries through aid policy from the viewpoint of one donor the united kingdom it concludes that the uk has achieved a modest increase in the proportion of aid aimed at the poorest between 1974 and 1979 that poverty focused projects are in general more local cost intensive and have lower rates of return than others and that the principal difficulties in the way of successful implementation of poverty focused projects are excessive size an over rapid rate of disbursement inadequate local cost provisions and failure to specify the target group or the repayment strategy with sufficient precision it is argued that there are political obstacles to removing the second and third of these obstacles in donor countries and to removing the fourth in recipient countries also

carbon tax and opec s rents under a ceiling constraint we study the markov perfect nash equilibrium mpne of a game between oil importing countries who seek to maintain the atmospheric carbon concentration under a given ceiling and oil exporting countries the oil importing countries set a carbon tax and the oil exporting countries control the producer price we obtain implicit feedback rules and explicit non linear time paths of extraction carbon tax and producer price consumers are always able to reap some share of the scarcity and monopoly rents whereas producers partially pre empt the carbon tax only if the marginal damage under the ceiling is small we compare the mpne to the efficient open loop and cartel without tax equilibria

the value relevance of reputation for sustainability leadership this study investigates whether the market valuation of the two summary accounting measures book value of equity and net income is higher for firms with reputation for sustainability leadership when compared to firms that do not enjoy such reputation the results are interpreted through the lens of a framework combining signalling theory and resource based theory according to which firms signal their commitment to sustainability to influence the external perception of reputation a firm s reputation for being committed to sustainability is an intangible resource that can increase the value of a firm s expected cash flows and or reduce the variability of its cash flows our findings are according to expectations and show that the net income of firms with good sustainability reputation has a higher valuation by the market when compared to their counterparts

regression discontinuity analysis of gavi s impact on vaccination rates abstract since 2001 an aid consortium known as gavi has accounted for over half of vaccines purchased in the 75 eligible countries with an initial gni below 1 000 per capita regression discontinuity estimates suggest most aid for cheap existing vaccines like hepatitis b and dpt was inframarginal for instance hepatitis b doses sufficient to vaccinate roughly 75 of infants raised vaccination rates by single digit margins these results are driven by middle income countries near the eligibility threshold and do not preclude larger gains for the poorest countries global externalities via vaccine markets or impacts on newer vaccines such as pneumococcal or rotavirus for which income eligibility rules were relaxed

regulating stock externalities under uncertainty abstract using a simple analytical model incorporating benefits of a stock costs of adjusting the stock and uncertainty in costs we uncover several important principles governing the choice of price based policies e g taxes relative to quantity based policies e g tradable permits for controlling stock externalities as in weitzman rev econom stud 41 4 1974 477 the relative slopes of the marginal benefits and costs of controlling the externality continue to be critical determinants of the efficiency of prices relative to quantities with flatter marginal benefits and steeper marginal costs favoring prices but some important adjustments for dynamic effects are necessary including correlation of cost shocks across time discounting stock decay and the rate of benefits growth applied to the problem of greenhouse gases and climate change we find that a price based instrument generates several times the expected net benefits of a quantity instrument

fungibility and the impact of development assistance evidence from vietnam s health sector how can the impact of aid be estimated in the presence of fungibility and how far does fungibility reduce its benefits these questions are analyzed in a context where a donor wants to target its efforts on a specific sector and specific geographic areas a traditional differences in differences method comparing the change in outcomes between the target and nontarget areas before and after the project risks misestimating the project s benefits the paper develops an alternative estimation method in which intersectoral fungibility reduces project benefits insofar as government spending has a smaller impact in the sector to which the funds leak than in the target sector while intrasectoral fungibility reduces benefits insofar as the donor is able to leverage productivity increases in government spending in the target areas the methods are applied to two contemporaneous world bank health projects that set out to target assistance on approximately one half of vietnam s provinces aid is not apparently fungible between vietnam s health sector and other sectors but is fungible across provinces within the health sector differences in differences yield an insignificant impact on infant mortality while the use of the new method yields a statistically significant impact of around 4 per 1000 live births the results however are ambiguous on the costs associated with intrasectoral fungibility

aid and the public sector in pakistan evidence with endogenous aid summary aid has been the principal source of development finance for the majority of developing countries over the past few decades this has spawned a large literature on the effectiveness of aid which remains essentially inconclusive the empirical literature has tended to evaluate the impact of aid by including it as a variable in a regression for the determinants of some economic performance indicator this paper follows a different strand of the literature and examines the impact of aid on public sector fiscal behavior aid is in general given to the public sector thus any effect of aid is mediated by that sector we specifically address this behavioral feature by analyzing how aid revenue affects government fiscal behavior with respect to tax borrowing and expenditure decisions unlike previous contributions aid is endogenous in our model which has a number of important implications we estimate an econometric model that differs from previous studies not only in this respect but also by allowing domestic borrowing in addition to aid and tax revenue to finance both capital and recurrent expenditure structural and reduced form equations are derived and estimated using 1956 95 time series data for pakistan results indicate contrary to much of the literature that only half of aid has gone to government consumption that it has had a slightly positive impact on public investment and negative impact on tax effort

what will consumers pay for social product features the importance of ethical consumerism to many companies worldwide has increased dramatically in recent years ethical consumerism encompasses the importance of non traditional and social components of a company s products and business process to strategic success such as environmental protectionism child labor practices and so on the present paper utilizes a random utility theoretic experimental design to provide estimates of the relative value selected consumers place on the social features of products

foreign aid and fiscal governance in melanesia summary recent research suggests that foreign aid is effective at spurring economic growth in recipient countries but its effectiveness is likely to depend upon a number of factors arguably the most important factor determining aid effectiveness is how recipient governments mediate foreign aid inflows this paper investigates this issue for the melanesian countries of fiji papua new guinea the solomon islands and vanuatu for the period 1989 2002 results suggest that foreign aid has led to increases in developmental expenditures and to falls in tax revenues and borrowing results also suggest a very different response to aid grants versus loans

foreign aid taxes and public investment abstract using time series data for india we test the foreign aid public investment hypothesis behavioral equations derived from a maximizing framework are estimated after correcting for econometric and data inadequacies of earlier models the results confirm earlier findings regarding the negative relationship between taxes and government investment in the presence of aid however in contrast to the earlier work we find that grants and loans generally go into development projects with no leakages into consumption moreover bilateral aid actually pulls resources out of consumption and puts them into development projects

computational economics and economic theory substitutes or complements abstract this essay examines the idea and potential of a computational approach to theory discusses methodological issues raised by such computational methods and outlines the problems associated with the dissemination of computational methods and the exposition of computational results we argue that the study of a theory need not be confined to proving theorems that current and future computer technologies create new possibilities for theoretical analysis and that by resolving these issues we will create an intellectual atmosphere in which computational methods can make substantial contributions to economic analysis

structural shifts in aid dependency and fiscal policy in developing countries abstractforeign aid is a sizable source of government financing for several developing countries and its allocation matters for the conduct of fiscal policy this article revisits the fiscal effects of shifts in aid dependency in 59 developing countries from 1960 to 2010 it identifies structural shifts in aid dependency and uses treatment effect methods to assess the fiscal effects of aid it finds that shifts in aid dependency are frequent and have significant fiscal effects in developing countries in addition to the traditional evidences of tax and investment displacement and aid illusion we show that upward shifts and downward shifts in aid dependency have asymmetric effects on fiscal accounts in developing countries large aid inflows undermine tax capacity and public investment while large reductions in aid inflows tend to keep recipients fiscal behaviour intact moreover the tax displacement effect tends to be temporary while the impacts on expenditure items tend to last finally we find tha

renewable resource management with stochastic recharge and environmental threats abstract exploitation diminishes the capacity of renewable resources to withstand environmental stress increasing their vulnerability to extreme conditions that may trigger abrupt changes the onset of such events depends on the coincidence of extreme environmental conditions and on the resource state determining its resilience when the former is uncertain and the latter evolves stochastically the uncertainty regarding the event occurrence is the result of the combined effect of these two uncertain components we study optimal management in this setting the environmental threat renders the single period discount factor policy dependent and as a result the compound discount factor becomes history dependent existence of an optimal markovian deterministic stationary policy is established and the optimal state process is shown to converge to a steady state distribution

a new framework integrating environmental effects into technology evaluation this study aims to propose a framework considering both economic issues and environmental effects in technology evaluation in order to provide firms decision makers a useful reference in adopting technologies that will enable them to fulfill corporate social responsibilities and get competitive advantages at the same time recently the demands for technology evaluation have increased with the flourishing development of technology licensing technology transaction or joint venture on the one hand and with the pressing needs of environmental protection for human beings sustainable development on the other hand under such conditions it thus goes without saying that firms decision makers are propelled to take into account both economic benefits and environmental effects in evaluating technologies by choosing low or nonpolluting technologies for manufacturing products although technology evaluation is not a new and emerging subject currently besetting scholars in the field of management previous research on this topic has unwittingly left behind the pressing issue of environmental effects based on this observation this study purports to develop a new framework for technology evaluation by taking both economic benefits and environmental perspectives into consideration in it we seek to demonstrate that our proposed framework will not only be a workable model but also can serve as a useful point of reference for technology appraisers and firms decision makers

toward a theoretical model of voluntary overcompliance abstract we explain why some firms voluntarily overcomply with environmental regulation in our model all consumers value environmental quality but differ in their willingness to pay which depends on their income levels publicly available information on environmental performance of firms enables consumers to identify clean firms firms participate in a two stage duopoly game where they first choose their levels of cleaning technology and next engage in price competition the market gets segmented by income levels a minimum standard binding on the dirty firm has the effect of improving the performance of the cleaner firm a subsidy obtains the same competitive outcome

international pollution control cooperative versus noncooperative strategies abstract international pollution control involving two neighboring countries is modeled as a simple two player dynamic game each country produces a good that is consumed by domestic households production of each consumption good results in emissions of pollutants households in each country derive utility from the consumption of the domestically produced good but incur costs through the total stock of pollution stock externality in this setting we characterize cooperative as well as noncooperative pollution control strategies of the governments of the two countries that maximize the discounted stream of net benefits of a representative consumer it turns out that when the governments are restricted to use linear strategies noncooperative behavior results in overall losses for both countries if on the contrary governments use nonlinear markov perfect strategies and the discount rate is small enough a pareto efficient steady state pollution stock can be supported as a differentiable subgame perfect equilibrium thus the emergence of first best solutions cooperative outcomes does not require any institutional arrangements threats retaliation etc but can be brought about through the use of nonlinear markov perfect equilibrium strategies

optimal timing problems in environmental economics abstract because of the uncertainties and irreversibilities that are often inherent in environmental degradation its prevention and its economic consequences environmental policy design can involve important problems of timing i use a simple two period model to illustrate these optimal timing problems and their implications for environmental policy i then lay out and solve a continuous time model of policy adoption in which the policy itself entails sunk costs and environmental damage is irreversible the model generalizes earlier work in that it includes two stochastic state variables one captures uncertainty over environmental change and the other captures uncertainty over the social costs of environmental damage solutions of the model are used to show the implications of these two types of uncertainty for the timing of policy adoption

pigouvian taxation of energy for flow and stock externalities and strategic noncompetitive energy pricing abstract the literature on energy and carbon taxes is by and large concerned about the derivation of globally efficient strategies in contrast this paper considers the dynamic interactions between cartelized energy suppliers and a consumers government that collectively taxes energy carriers for pigouvian motives two different kinds of external costs are associated with energy consumption flow e g acid rain and stock externalities e g global warming the dynamic interactions between a consumers government and a producers cartel are modeled as a differential game with a subgame perfect nash equilibrium in linear and nonlinear markov strategies the major implications are that the nonlinear solutions are pareto inferior to the linear strategies and energy suppliers may preempt energy taxation and thereby may raise the price at front however this effect diminishes over time because the producers price declines while taxes increase

the impact of foreign aid on the fiscal behavior of asian ldc governments a comment on khan and hoshino 1992 abstract khan and hoshino 1992 analyze public sector fiscal behavior in the presence of foreign aid using data for five south and southeast asian countries this paper first questions a critical hypothesis test on which khan and hoshino s conclusions depend it then extends khan and hoshino s analysis making explicit both the direct and indirect effects of aid contained within their fiscal response model it argues that a number of khan and hoshino s conclusions do not hold in the context of this representation

a panel data analysis of the fungibility of foreign aid the donor community has been increasingly concerned that development assistance intended for crucial social and economic sectors might be used directly or indirectly to fund unproductive military and other expenditures the link between foreign aid and public spending is not straightforward because some aid may be fungible this article empirically examines the impact of foreign aid on the recipient s public expenditures using cross country samples of annual observations for 1971 90 for the base sample of 14 developing countries it finds that aid is not fungible at the aggregate level and there is no associated tax relief increasing the number of countries however makes aid fungible moreover results based on the main sample indicate that aid is fungible in three out of five sectors examined developing country governments receiving earmarked concessionary loans for agriculture education and energy reduce their own resources going to these sectors and use them elsewhere only loans to the transport and communication sector are fully spent on the purposes intended by donors because most aid appears to be fungible the rate of return on a specific donor funded project tells little about the impact of that assistance a better approach may be to tie foreign aid to an overall public expenditure program that provides adequate resources to crucial sectors

foreign aid taxes and public investment a further comment abstract the paper in this journal by gang and khan 1991 employed heller s 1975 fiscal response model to demonstrate that aid to india has all been used to finance government investment this conclusion is shown to be a misinterpretation of the model s results which actually suggest that aid has had no impact on government investment at all however the reported parameters are determined by the estimation procedure adopted by gang and khan and not by the indian government s fiscal behaviour

nonlinear strategies in dynamic duopolistic competition with sticky prices abstract we discuss nonlinear strategies in an infinite horizon duopoly game with sticky prices where firms maximize their discounted sum of profit we construct a stationary feedback equilibrium without guessing value functions and feedback strategies that solve the hamilton jacobi equation for this purpose we study the auxiliary equation that is derived from the hamilton jacobi equation we show that the domain of the state space plays an crucial role in characterizing feedback equilibria and discuss several implications of this observation in particular we find that when the upper bound of the state space is not very high previously unknown feedback equilibria emerge

energy prices and carbon taxes under uncertainty about global warming this paper extends the strategic interactions between producers of fossil fuels concerned about their profits and a taxing government concerned about the consumers welfare for uncertainty global warming follows an ito process stochasticity requires to differentiate between reversible and irreversible emissions in contrast to the deterministic version the unconstrained reversible case allows for a closed form solution but not the more realistic and constrained case nevertheless interesting analytical properties e g about when to stop emissions implicit conservation due to monopolistic supply are derived and complemented by a numerical example

customer regulatory and competitive pressure as drivers of environmental innovation we develop an economic analysis in order to examine the effects of consumer regulatory and competitive pressure on firm investments in environmentally friendly production specifically we ask why do firms vary in their levels of environmental innovation under what conditions are such pressures effective in bringing about environmental innovation we first consider a monopolist who faces the twin pressures of reduced customer demand and regulatory penalties as a result of its emissions in response to these pressures the firm has the opportunity to make a costly investment in reduction of emissions secondly we consider a competitive scenario in which two firms compete for environmentally sensitive customers solving our model we find that pressure has the intended effect as long as the firm s initial level of emissions is below a certain threshold if the emissions are above this threshold we find that pressure might have an adverse effect on the firm s environmental investment and that subsidies that support environmental innovation can be a better alternative we also show that competition over environmentally sensitive customers can improve the effectiveness of environmental pressures

impact of foreign aid on the fiscal behavior of ldc governments abstract the purpose of this paper is to examine the impact of foreign aid on the behavior of the recipient governments specifically we look at a sample of less developed countries in south and southeast asia and study their response to foreign aid received their response is measured in terms of their public investment and consumption as well as taxation our paper attempts to make two new contributions to the literature first we try to estimate the impact of foreign aid on a sample of five south and southeast asian countries secondly we improve on the earlier method of a combination of single equation and two step least squares by estimating the whole system with a nonlinear three step least squares method the results confirm the hypothesis that aid does affect consumption investment and taxation of these governments but they also show that the relationship is a complex one in particular grants and loans have different effects on investment and taxation

capital grants and regional public investment in spain fungibility of aid or crowding in effect the aim of capital grants to subcentral governments is to increase their investment however recipients may try to allocate additional resources to cut saving or deficit generating a crowding out effect on self financed investment using data from the spanish autonomous communities during the period 1984 to 1999 the effect of capital transfers on regional public investment saving and deficit are estimated econometric results demonstrate that capital grants have no relevance when explaining the dynamics of saving however in deficit regressions they are shown to be both significant and negative both results lead us to a partial long run crowding out effect of grants on self financed investment

reexamining the expected effect of available resources and firm size on firm environmental orientation an empirical study of uk firms an emergent body of literature examined why some firms apply some environmental initiatives while other firms do not take responsibility for their natural environment thus firm environmental orientation responsiveness and performance are linked in the literature to several variables unfortunately the relationship between firm environmental orientation and either available resources or firm size showed mixed results and inconclusive evidence therefore the aim of this paper is to show empirically how available resources and firm size can explain differences in firm environmental responsiveness and environmental performance econometric results of environmental responsiveness using the logistic regression model demonstrated that firm size does appear to add something unique in explaining differences in environmental responsiveness while available resource can be safely dropped from the model however econometric analysis of environmental performance using the maximum likelihood random effects model showed strong evidence that available resources and firm size are significant predictors of firm environmental performance

can carbon tax eat opec s rents abstract we consider the optimal emission tax for a stock pollutant when the pollutant flow is also regulated by a resource exporting cartel we consolidate clarify and generalize a set of previous results to obtain clear isolation of the pigouvian and trade policy components of the tax because of the trade policy component the tax can shift more rents from the cartel than the pollution causes damage related costs this leads to the possibility that the pollution problem accompanied by the coordination of taxation can bring about net benefits at the expense of the cartel

multilateral and bilateral loans versus grants issues and evidence this paper examines a wide range of issues relating to the mix between loans and grants as well as the degree of concessionality of loans a number of empirical tests are carried out based on annual panel data over 1970 to 1999 for 22 donor countries and 72 recipient countries based on the tests we observe that for bilateral donors past grant loan mix and hence reflows from past transfers do not influence the volume of current resource transfers our tests also show that the rate of official borrowing by the recipients and by deduction the extent of their past debt burden is positively influenced by the extent of the concessionality of such loans irrespective of whether it is in the form of subsidised interest rates or longer grace periods the paper concludes with a review of the circumstances in which grants soft loans and non concessional loans might have their respective comparative advantage as well as a discussion of the need so as to overcome the negative incentive problems of soft loans for a typical concessional loan package to be separated into two constituent parts this would enable the recipient to be given the grant component and the option to take from the non concessional loan component as much as desired

does foreign aid promote the expansion of government building on the literature on public finance i seek to advance our understanding of variations in government size by exploring the impact of official development assistance on fiscal policy i hypothesize that foreign aid operates in accordance with the flypaper effect systematically generating incentives and opportunities for the expansion of government spending results from a time series cross sectional regression analysis of growth in government spending over the 1970 99 time period are consistent with the hypothesis for middle and lower income nations aid represents an important determinant of government expansion looking at the tax and revenue side of the equation however reveals a more perverse pattern of response aid promotes not only increased spending but also reduced revenue generation the results have important implications from both a theoretical and policy perspective inter alia they point to the potentially self defeating nature of efforts to promote market oriented programs of state retrenchment via development assistance as well as to the importance of incorporating international transfers into future research on government spending

learning and stock effects in environmental regulation the case of greenhouse gas emissions abstract this paper concerns the optimal regulation of greenhouse gases that lead to global climate change in particular we focus on uncertainty and learning which over time resolves uncertainty we present an empirical stochastic model of climate economy interactions and present results on the tension between postponing control until more is known vs acting now before irreversible climate change takes place uncertainty in our model is in the damage caused by global warming the results suggest that a temporary carbon tax may dominate a permanent one because a temporary tax may induce increased flexibility

debt relief for poor countries conditionality and effectiveness this paper studies the effectiveness of debt relief to stimulate economic growth in the most heavily indebted poor countries we develop a neoclassical framework with a conflict of interest between the altruistic donor and the recipient government and model conditionality as an imperfectly enforceable dynamic contract in contrast to the recent practice of fully cancelling debt optimal incentive compatible conditionality is accompanied by a concessionality level that implies a combination of subsidized loans and outright grants the optimal concessionality level depends on the recipient s access to international financial markets and on the strength of the conflict of interest incentive compatible transfers with optimal concessionality levels generate substantial welfare gains if the donor does not implement the optimal concessionality level and provides subsidized loans only then the effectiveness of transfers decreases in the long run with severe welfare implications in contrast transfers are less effective in the short run if the donor offers outright grants only

combining price and quantity controls to mitigate global climate change abstract uncertainty about compliance costs causes otherwise equivalent price and quantity controls to behave differently and leads to divergent welfare consequences although most of the debate on global climate change policy has focused on quantity controls due to their political appeal this paper argues that price controls are more efficient simulations based on a stochastic computable general equilibrium model indicate that the expected welfare gain from the optimal price policy is five times higher than the expected gain from the optimal quantity policy an alternative hybrid policy combines both the political appeal of quantity controls with the efficiency of prices using an initial distribution of tradeable permits to set a quantitative target but allowing additional permits to be purchased at a fixed trigger price even sub optimal hybrid policies offer dramatic efficiency improvements over otherwise standard quantity controls for example a 50 trigger price per ton of carbon converts the 3 trillion expected loss associated with a simple 1990 emission target to a 150 billion gain these results suggest that a hybrid policy is an attractive alternative to either a pure price or quantity system

the effectiveness of aid on savings and investment in sub saharan africa do volatility and institutional quality matter abstractthe effectiveness of aid is somewhat subject to its volatility this study investigates the impact of aid volatility especially on savings and investment with a particular focus on the role of institutional quality in 45 sub saharan african ssa countries over the period from 1990 to 2013 we used the generalized method of moments gmm technique combined with a measure of volatility namely an averaged data method involving six 4 year sub periods our results suggest that while aid is positively associated with savings and investment its volatility is harmful to savings and investment however when higher quality institutions exist the volatility of aid has a less negative impact on savings and investment the policy implications are diverse first donors and ssa aid dependent countries need to take into account the diversity of shocks to which aid can respond in mitigating its unpredictability secondly ssa countries should be encouraged to establish the conditions for better quality inst

aid the public sector and the market in less developed countries a reply the article in this journal by mosley et al i987 concludes its analysis of aid effectiveness as demonstrating inability of development aid over more than twenty years to provide a net increment to overall growth in the third world p 636 this note purports to show that this conclusion which is ostensibly distressing as the authors claim is not warranted the section of the study which is the basis of the conclusion cited and the subject of this note is a cross section regression analysis full details of which are shown in mosley et al table 3 the note is concerned with the relation between the dependent variable specified as the growth rate of real gdp per cent per annum hereafter gdp and aid specified as a percentage of gdp hereafter aid the aid results with only two significant positive coefficients in one subsample certainly give no basis for claiming aid effectiveness in terms of gdp growth the intention in this note is to interpret the results which are assumed to be valid this is made possible by the fact that the authors have helpfully provided the full input set of mean values derived from the raw data from this it is possible to calculate the gdp aid relationship for each country for the second and third period the procedure for deriving these relationships is as follows for each country the mean values of the time series of gdp and aid are extracted from the data for i 960 70 and for i 970 80 using i 960 70 as the base the signs of the change in the levels of the gdp and aid mean values between periods are recorded this is repeated for i980 4 with i970 80 mean values as the base the relationship between the two signs is an indication of the effect of aid on gdp in the period in which the change in levels is effected thus in the case of an increase in aid being combined with a decrease in gdp the latter must have fallen relatively to the former and aid effectiveness is negative mutatis mutandis for the other three sign combinations thus generating the appropriate gdp aid relationship for each country in each period a frequency distribution of the four sign combinations relating to the full sample is presented in table i since the signs of the changes in the levels of gdp and aid are derived by making explicit the arithmetic relationship implicit in the data they form a valid base from which to draw conclusions without requiring any test of

strategic formulation and communication of corporate environmental policy statements uk firms perspective this paper suggests that most of the ftse listed firms in the united kingdom use corporate environmental policy statements ceps to communicate their strategic intent of what environmental and social targets to attain and broad guidelines of how they will progressively achieve all the required changes and new developments in this paper we link the contents of ceps of a sample of ftse listed firms from the chemical pharmaceutical and food industry that are committed to develop business excellence to the voluntary participation in the environmental benchmarking exercise and the various levels of environmental performance therein the findings suggest that in contrast to their non participating counterparts the strategic focus of the participating firms transcends from simply mitigating any potential damages that their operations might have on the environment to business process reengineering and building new implementation capabilities however not all of the participating firms achieved excellence in their environmental performance the high performing firms outweighed their counterparts on their emphasis on technological competence and competitiveness and interestingly the average performing firms would use the strategic emphasis on social responsibility to compensate for their mediocre technological competence

the manufacturing sector s environmental motives a game theoretic analysis what motivates manufacturing companies to make costly investments in producing in an environmentally clean manner the traditional argument is that such behaviour is value reducing and that therefore firms must be forced by regulation to invest in green production processes a counter argument is that firms have an incentive to make environmental investments in an attempt to attract green consumers and investors hence gaining competitive advantage over their rivals in this paper we employ a game theoretic approach that demonstrates that competing firms incentives to make voluntary investments in environmental clean up are affected by the size of the investment costs and the extent of consumer and investor green awareness we argue that an increase in green behaviour can be induced by a combination of governmental subsidies for firms that invest in environmentally clean production processes together with an education program that promotes green awareness amongst consumers investors and the managers themselves

accounting for global warming risks resource management under event uncertainty abstract optimal management of atmospheric pollution is discussed with a special emphasis on the uncertainty concerning the occurrence of undesirable events associated with the greenhouse effect the uncertainty considered here stems from our ignorance of the exact pollution level required to trigger the event rather than from the genuinely stochastic nature of the processes involved taking atmospheric pollution level as the state variable it is found that uncertainty implies the existence of an equilibrium interval within which the emission rate of the greenhouse gases should be kept equal to the natural removal rate of these gases processes initiated outside the equilibrium interval must converge monotonically to its nearest endpoint the determination of the interval requires no knowledge of the optimal policy in contrast ignoring event occurrence risk implies a single equilibrium level attracting the optimal process from any initial level

foreign aid and government fiscal behaviour in low income south asian countries the major purpose of this study was to analyse the relationship between foreign aid and government fiscal behaviour using a pooled sample of three low income south asian countries pakistan india and sri lanka a simultaneous equation system was developed and estimated using nonlinear three stage least squares procedure the results confirm the hypothesis that foreign aid affects both the expenditure and the revenue side of the recipient government budgets both grants and loans are used for consumption as well as for investment purposes however grants leak into consumption more than loans thus if the purpose of aid is to generate investment it is more helpful if donors extend loans to the developing countries than by giving grants the results also indicate that both grants and loans increase the taxation effort multilateral aid actually pulls resources out of consumption and places them into investment projects thus the results confirm the assertion that a shift from bilateral to multilateral ai

does economic analysis improve the quality of foreign assistance the world bank undertakes an annual expenditure of around 60 million on country specific economic analysis and advice for its member developing countries what is the impact of this economic and sector work on the quality of world bank lending it will be useful to know whether past analytical work has generated measurable economic benefits that will justify its continued provision in an environment of increasingly scarce resources this article sets out an idealized model of decision making in which a country manager makes a broad allocation of resources between lending services and economic and sector work given that decision the task manager for each project makes project specific decisions with respect to the allocation of resources between preparation and supervision the analysis indicates that economic and sector work has a significant positive impact on the quality of world bank loans the results provide clear evidence of underinvestment in economic and sector work and the analysis shows that resources can be switched from preparation and supervision to economic and sector work to the benefit of both the quality of programs and level of disbursements

the macroeconomic impact of development aid a critical survey the early literature explained aid s macroeconomic impact in the context of the dual gap model showing a clear link between aid and growth many now believe that the empirical evidence shows there to be no such relationship this paper critically reviews the different theoretical perspectives the dual gap model the savings debate recipient fiscal response and aid as dutch disease and the empirical debates on aid savings and growth the basis for denying a relationship between aid and growth is shown to be weak though more recent areas of research offer promising directions for future work

is foreign aid fungible evidence from the education and health sectors this paper adopts a new approach to the issue of foreign aid fungibility in contrast to most existing empirical studies panel data are employed that contain information on the specific purposes for which aid is given this allows linking aid that is provided for education and health purposes to recipient public spending in these sectors in addition aid flows that are recorded on a recipient s budget are distinguished from those that are not recorded on budget and the previous failure to differentiate between on and off budget aid is shown to produce biased estimates of fungibility sector program aid is the measure of on budget aid whereas technical cooperation serves as a proxy for off budget aid the appropriate treatment of off budget aid leads to lower fungibility estimates than those reported in many previous studies specifically in both sectors and across a range of specifications technical cooperation which is the largest component of total education and health aid leads to at most a small displacement of recipient public expenditures

donor preferences and recipient fiscal behavior a simultaneous analysis of foreign aid we theoretically develop and empirically estimate a preference model determining foreign aid donor behavior aid access and levels are separately determined by endogenous budgetary allocations the international economic environment the distribution of income between countries basic human needs the small country effect and regional bias we find fungibility of aid in recipient budgets is due to donor and recipient preferences despite the importance of other economic influences we find a significant pro poor country bias in aid allocations although little aggregate influence of basic human needs or regional bias the small country effect is significant for two of six donors jel f35 o19 h 77

fiscal effects of foreign aid in a federal system of governance the case of india abstract this paper models fiscal effects of foreign aid in a federal system of governance our main innovation is to incorporate the inter governmental fiscal link in examining economic fungibility of foreign aid the model is applied to the expenditure decisions of the central government of india the two main findings are i foreign aid merely substitutes for spending that the government would have undertaken anyway funds freed by aid are spent on non development activities and ii in passing earmarked external assistance to states the central government makes a reduction in its transfers to states these findings indicate that the central government s expenditure choices are unaffected by external assistance the implication for donors is that even though their development projects may be associated with very high rates of economic return they could be assisting the central government in financing something very different at the margin for the state governments the finding indicates that they may not be reaping the full benefits of externally procured assistance

taxes and quotas for a stock pollutant with multiplicative uncertainty we compare taxes and quotas when firms and the regulator have asymmetric information about the slope of firms abatement costs damages are caused by a stock pollutant we calibrate the model using cost and damage estimates of greenhouse gasses taxes dominate quotas as with additive uncertainty this model with multiplicative uncertainty allows us to compare expected stock levels under the two policies and to investigate the importance of stock size and the magnitude of uncertainty on the policy ranking

global warming prices versus quantities from a strategic point of view abstract this paper investigates how the choices of the instruments affect the interactions in a stock externality game global warming between cartelized fossil fuel suppliers and consumers more precisely the paper studies the equilibria in markov strategies in a dynamic game with each player choosing either the quantity or the price strategy including short run first mover advantages indeed opec and its opponent iea have tried both instruments in the past and play currently in quantities given such a non competitive setting both players should prefer the price instrument therefore both players are expected to switch back to price and tax policies if global warming will be treated effectively

aid catastrophes and the samaritan s dilemma this paper discusses the impact of foreign aid on the recipient country s preparedness against natural disasters the theoretical model shows that foreign aid can have two opposing eects on a country s level of mitigating activities in order to test the theoretical propositions we analyse the eect of foreign aid dependence on ex ante riskmanagement activity proxied by the death toll from major storms floods and earthquakes occurring worldwide between 1980 and 2002 we find evidence that the crowding out eect of foreign aid outweighs the preventive eect in the case of storms while there is mixed evidence in the case of floods and earthquakes

roads out of poverty assessing the links between aid public investment growth and poverty reduction the authors develop a macroeconomic framework that captures links between aid public investment growth and poverty public investment is disaggregated into education infrastructure and health and affects both aggregate supply and demand dutch disease effects are captured by accounting for changes in the relative price of domestic goods the authors assess the impact of policy shocks on poverty by linking the model to a household survey they calibrate the model for ethiopia and simulate the changes in the allocation of aid and public investment the authors also calculate the amount by which foreign aid should increase to reach the poverty targets of the millennium development goals

strategic pigouvian taxation stock externalities and polluting non renewable resources este trabajo propone una extension del modelo de wirl y dockner 1995 disenado para analizar la interdependencia bilateral a largo plazo entre un cartel exportador de un recurso y una coalicion de paises importadores en primer lugar se incorporan los efectos agotamiento al analisis de las propiedades intertemporales de un impuesto pigouviano en segundo lugar se calculan los equilibrios feedback de stackelberg los resultados muestran que la dinamica del impuesto depende criticamente del nivel del dano medioambiental marginal ademas tambien demuestran que el impuesto definido por el equilibrio de nash perfecto de markov es un impuesto pigouviano neutral en el sentido que solo corrige la ineficiencia causada por la externalidad del stock sin embargo para el equilibrio feedback de stackelberg el impuesto es ventajoso para los paises importadores ya que la imposicion pigouviana estrategica reduce el poder de mercado del cartel

restoring wetlands through wetlands mitigation banks this paper offers the first economic analysis of wetlands mitigation banks the banks are a new alternative for restoration of wetlands by developers before receiving regulatory approval for future development of wetlands in the same watershed a stochastic optimal control model is developed which incorporates ecological uncertainty of wetlands restoration the model helps in examining the decisions of how much to invest in a wetlands mitigation bank the model is calibrated with data from california bioeconomic parameters numerical simulation of the model provides a sensitivity analysis of how model parameters of restoration costs stochastic biological growth interest rate and the market value of credits affect the trajectory of investment and the optimal stopping state of wetlands quality when the investment ends the analysis reveals that restoration of the whole site will occur when there is a reduction in restoration costs an increase in biological uncertainty or an increase in the value of wetlands credits continued restoration is harder to justify with a higher interest rate

taxing incumbent monopoly to foster entry abstract this paper investigates whether it is welfare enhancing to tax the output of a monopoly in order to foster cost inefficient entry this question is of particular concern in the energy markets dominated by cartel like affiliations opec and oil russia s gas exports to europe and the interest and practice to stimulate the development of alternative fuels making the realistic assumption that none of the players can commit to future policies subsidies are not a viable strategy for the government a tax cannot be first best but can be second best if the government cannot force the incumbent monopoly to sell its output at no profit and if the incumbent s profit is discounted however stimulating supply by improving the conditions for entry is not the prime concern of taxation after all it lowers aggregate supplies and may even lower the entrant s supply but to accrue parts of the monopoly rent

exogenous shocks foreign aid and civil war the recent civil war literature suggests that negative economic shocks in low income countries increase the risk of civil war foreign aid can be an effective conflict prevention tool in times of severe economic conditions aid cushions government spending from the downward pressures of economic shocks providing recipient governments with resources they can use to make rebellion a less attractive option for aggrieved domestic groups using official development assistance oda data covering 1990 through 2004 we find that foreign aid appears to be a useful tool for preventing civil wars in the wake of negative economic shocks and as such aid should be assessed by donors with these conflict suppressing aspects in mind

bayesian learning growth and pollution abstract environmental problems such as climate change have great uncertainties current expectations are that uncertainties about climate change will be resolved quickly we examine this hypothesis theoretically and computationally we consider bayesian learning about the relationship between greenhouse gas levels and global mean temperature changes a key uncertainty learning is non trivial because of a stochastic shock to the realized temperature we find theoretically the expected learning time which is related to the variance of the shock and the emissions policy implying a tradeoff between the benefits of controlling emissions and information we imbed the learning model into an optimal growth model with a climate sector and solve the resulting dynamic program we find computationally that learning takes on average over 90 yr far longer than currently believed

trade with polluting nonrenewable resources abstract the paper considers nonrenewable resource extraction in a situation where the resource buyers have formed a government which applies emission taxation for slowing pollution accumulation and the sellers are competitive or a resource cartel the noncompetitive situation is studied as a stackelberg differential game which the cartel leads it is first assumed that extraction costs do not depend on the resource stock level and that the pollution stock does not decay in the time consistent and markov perfect equilibrium the sellers monopoly power vanishes asymptotically the sellers market power reduces the buyers emission tax at each point in time in the stackelberg equilibrium the emission tax is below the marginal present value of pollution damage if pollution decays and extraction costs depend on the resource stock level buyers have monopsony power and the ability of sellers to receive emission tax revenues is weakened when the rate of pollution decay is high the producer price falls below the pareto optimal level

politics and the effectiveness of foreign aid abstract critics of foreign aid programs have long argued that poverty reflects government failure in this paper i test predictions for aid effectiveness based on an analytical framework that relates aid effectiveness to political regimes i find that aid does not significantly increase investment nor benefit the poor as measured by improvements in human development indicators but it does increase the size of government the impact of aid does not vary according to whether recipient governments are liberal democratic or highly repressive but liberal political regimes and democracies ceteris paribus have on average 30 lower infant mortality than the least free regimes this may be due to greater empowerment of the poor under liberal regimes even though the political elite continues to receive the benefits of aid programs an implication is that short term aid targeted to support new liberal regimes may be a more successful means of reducing poverty than current programs

welfare implications of water scarcity higher prices of desalination in this paper we evaluate the welfare implications of shortages in renewable resources and investigate the effects of cross subsidization on these shortages we set up a stochastic dynamic programming model in which a benevolent supplier allocates the resource for multiple user groups subject to revenue and resource constraints the supplier also has access to an external source that can be utilized at a certain cost the solution to the model gives the optimal sectoral prices and demand for the external source we find out that saving budget surplus during periods of scarcity allows the planner to charge prices below average costs when the resource is abundant using data from turkey we simulate our dynamic model to quantify the implications of cross subsidization on water use across user groups

is foreign aid fungible the case of indonesia this paper considers whether foreign aid given for specific categories of expenditure is fungible among them and whether aid reduces tax effort by the recipient government models developed to analyze the fiscal relations among different levels of government in the united states are applied to analysis of the impact of foreign aid econometric analysis of data for indonesia reveals that aid is largely spent as the donors intended that aid does not lead to a reduction in tax effort and that aid is not diverted to nondevelopment current expenditures copyright 1990 by royal economic society

are there lasting impacts of aid to poor areas abstract the paper re visits the site of a large world bank financed rural development program in china 10 years after it began and four years after disbursements ended the program emphasized community participation in multi sectoral interventions including farming animal husbandry infrastructure and social services data were collected on 2000 households in project and non project areas spanning 10 years a double difference estimator of the program s impact on top of pre existing governmental programs reveals sizeable short term income gains that were mostly saved only small and statistically insignificant gains to mean consumption emerged in the longer term though in rough accord with the average gain to permanent income the use of community based beneficiary selection greatly reduced the overall impact given that the educated poor were under covered the main results are robust to corrections for various sources of selection bias including village targeting and interference due to spillover effects generated by the response of local governments to the external aid

environmental marketing a source of reputational competitive and financial advantage corporate reputation is an intangible asset that is related to marketing and financial performance the social economic and global environment of the 1990 shas resulted in environmental performance becoming an increasingly important component of a company sreputation this paper explores the relationship between reputation environmental performance and financial performance and looks at the contingencies that impact environmental policy making

foreign aid and the question of fungibility this paper analyzes whether the foreign assistance provided for specific categories of expenditure is shifted among them contrary to the wishes of donors it also considers whether aid reduces the tax effort of recipient governments econometric results are presented for the dominican republic that show that the fungibility of aid has resulted in a thwarting of the intentions of donors an attempt is made to account for the observed differences in behavior of individual countries in altering expenditures copyright 1993 by mit press

the fungibility of u s military and non military assistance and the impacts on expenditures of major aid recipients abstract this paper examines the impact of u s military and non military assistance on the allocation of public and private sector spending for eight major recipients over the 1972 1987 period the model assumes that an aid recipient s effective post assistance budget constraint is a priori unknown and must be estimated two versions of the model are tested in version a the data is converted into real u s dollars using official exchange rates in version b the data is converted using purchasing power parity exchange rates provided by summers and heston 1991 major findings are the same for both versions u s aid is highly fungible with a significant portion channeled to the private sector where it finances current consumption relatively more than investment