Correcting trade distortions in a small open economy

This paper considers the second-best strategy of correcting a wide variety of trade distortions in a small open economy with perfect competition in all markets. Using the tools of duality, we obtain some general properties of the structure and the levels of the optimal taxlsubsidy rates. The paper also analyzes the welfare effects of unilateral piecemeal trade policy reforms when some of the quota distortions—imposed by the foreign countries—are unalterable. It is shown that the merits of unilateral trade policy reforms that are emphasized in the literature crucially depend on the absence of unalterable foreign imposed quotas.

Identifying aggregate demand and supply shocks in a small open economy

The standard Blanchard-Quah (BQ) decomposition forces aggregate demand and supply shocks to be orthogonal. However, this assumption is problematic for a nation with an inflation target. The very notion of inflation targeting means that monetary policy reacts to changes in aggregate supply. This paper employs a modification of the BQ procedure that allows for correlated shifts in aggregate supply and demand. It is found that shocks to Australian aggregate demand and supply are highly correlated. The estimated shifts in the aggregate demand and supply curves are then used to measure the effects of inflation targeting on the Australian inflation rate and level of GDP.

Tax evasion, inequality, and progressive taxes : a political economy perspective

The standard approach to tax compliance applies the economics-of-crime methodology pioneered by Becker (1968): in its first application, due to Allingham and Sandmo (1972) it models the behaviour of agents as a decision involving a choice of the extent of their income to report to tax authorities, given a certain institutional environment, represented by parameters such as the probability of detection and penalties in the event the agent is caught. While this basic framework yields important insights on tax compliance behavior, it has some critical limitations. Specifically, it indicates a level of compliance that is significantly below what is observed in the data. This thesis revisits the original framework with a view towards addressing this issue, and examining the political economy implications of tax evasion for progressivity in the tax structure. The approach followed involves building a macroeconomic, dynamic equilibrium model for the purpose of examining these issues, by using a step-wise model building procedure starting with some very simple variations of the basic Allingham and Sandmo construct, which are eventually integrated to a dynamic general equilibrium overlapping generations framework with heterogeneous agents. One of the variations involves incorporating the Allingham and Sandmo construct into a two-period model of a small open economy of the type originally attributed to Fisher (1930). A further variation of this simple construct involves allowing agents to initially decide whether to evade taxes or not. In the event they decide to evade, the agents then have to decide the extent of income or wealth they wish to under-report. We find that the ‘evade or not’ assumption has strikingly different and more realistic implications for the extent of evasion, and demonstrate that it is a more appropriate modeling strategy in the context of macroeconomic models, which are essentially dynamic in nature, and involve consumption smoothing across time and across various states of nature. Specifically, since deciding to undertake tax evasion impacts on the consumption smoothing ability of the agent by creating two states of nature in which the agent is ‘caught’ or ‘not caught’, there is a possibility that their utility under certainty, when they choose not to evade, is higher than the expected utility obtained when they choose to evade. Furthermore, the simple two-period model incorporating an ‘evade or not’ choice can be used to demonstrate some strikingly different political economy implications relative to its Allingham and Sandmo counterpart. In variations of the two models that allow for voting on the tax parameter, we find that agents typically choose to vote for a high degree of progressivity by choosing the highest available tax rate from the menu of choices available to them. There is, however, a small range of inequality levels for which agents in the ‘evade or not’ model vote for a relatively low value of the tax rate. The final steps in the model building procedure involve grafting the two-period models with a political economy choice into a dynamic overlapping generations setting with more general, non-linear tax schedules and a ‘cost-of evasion’ function that is increasing in the extent of evasion. Results based on numerical simulations of these models show further improvement in the model’s ability to match empirically plausible levels of tax evasion. In addition, the differences between the political economy implications of the ‘evade or not’ version of the model and its Allingham and Sandmo counterpart are now very striking; there is now a large range of values of the inequality parameter for which agents in the ‘evade or not’ model vote for a low degree of progressivity. This is because, in the ‘evade or not’ version of the model, low values of the tax rate encourages a large number of agents to choose the ‘not-evade’ option, so that the redistributive mechanism is more ‘efficient’ relative to the situations in which tax rates are high. Some further implications of the models of this thesis relate to whether variations in the level of inequality, and parameters such as the probability of detection and penalties for tax evasion matter for the political economy results. We find that (i) the political economy outcomes for the tax rate are quite insensitive to changes in inequality, and (ii) the voting outcomes change in non-monotonic ways in response to changes in the probability of detection and penalty rates. Specifically, the model suggests that changes in inequality should not matter, although the political outcome for the tax rate for a given level of inequality is conditional on whether there is a large or small or large extent of evasion in the economy. We conclude that further theoretical research into macroeconomic models of tax evasion is required to identify the structural relationships underpinning the link between inequality and redistribution in the presence of tax evasion. The models of this thesis provide a necessary first step in that direction.

Optimal track access rights allocation for agent negotiation in an open railway market

In open railway access markets, a train service provider (TSP) negotiates with an infrastructure provider (IP) for track access rights. This negotiation has been modeled by a multi-agent system (MAS) in which the IP and TSP are represented by separate software agents. One task of the IP agent is to generate feasible (and preferably optimal) track access rights, subject to the constraints submitted by the TSP agent. This paper formulates an IP-TSP transaction and proposes a branch-and-bound algorithm for the IP agent to identify the optimal track access rights. Empirical simulation results show that the model is able to emulate rational agent behaviors. The simulation results also show good consistency between timetables attained from the proposed methods and those derived by the scheduling principles adopted in practice.

Tariff strategies and small open economies

In this paper we examine the issue of optimal tariffs for a small economy that trades with a large economy. We define ‘small’ and ‘large’ in the sense that the world prices are determined solely by the large country, and, therefore, the small country faces exogenously given world prices. Within this framework it is shown that there exist situations in which the small country has an incentive to behave as a Stackelberg leader by committing itself to a non-zero optimal tariff. Although the small country is unable to directly affect world prices, by pre-committing to a non-zero trade tax it may induce a reduction of the large country's optimal trade tax, thereby indirectly improving its terms of trade and welfare. JEL Classification: F13, F35

Optimal allocation and sizing of DGs in a distribution system using PSO

In this paper, the optimal allocation and sizing of distributed generators (DGs) in a distribution system is studied. To achieve this goal, an optimization problem should be solved in which the main objective is to minimize the DGs cost and to maximise the reliability simultaneously. The active power balance between loads and DGs during the isolation time is used as a constraint. Another point considered in this process is the load shedding. It means that if the summation of DGs active power in a zone, isolated by the sectionalizers because of a fault, is less than the total active power of loads located in that zone, the program start shedding the loads in one-by-one using the priority rule still the active power balance is satisfied. This assumption decreases the reliability index, SAIDI, compared with the case loads in a zone are shed when total DGs power is less than the total load power. To validate the proposed method, a 17-bus distribution system is employed and the results are analysed.

Train service timetabling in railway open markets by particle swarm optimisation

Railway timetabling is an important process in train service provision as it matches the transportation demand with the infrastructure capacity while customer satisfaction is also considered. It is a multi-objective optimisation problem, in which a feasible solution, rather than the optimal one, is usually taken in practice because of the time constraint. The quality of services may suffer as a result. In a railway open market, timetabling usually involves rounds of negotiations among a number of self-interested and independent stakeholders and hence additional objectives and constraints are imposed on the timetabling problem. While the requirements of all stakeholders are taken into consideration simultaneously, the computation demand is inevitably immense. Intelligent solution-searching techniques provide a possible solution. This paper attempts to employ a particle swarm optimisation (PSO) approach to devise a railway timetable in an open market. The suitability and performance of PSO are studied on a multi-agent-based railway open-market negotiation simulation platform.

The future of the internet economy : addressing challenges facing the implementation of the Australian national broadband network

Innovation is vital for the future of Australia.s internet economy. Innovations rely on businesses. ability to innovate. Businesses. ability to innovate relies on their employees. The more these individual end users engage in the internet economy, the better businesses. engagement will be. The less these individual end users engage, the less likely a business is to engage and innovate. This means, for the internet economy to function at its fullest potential, it is essential that individual Australians have the capacity to engage with it and participate in it. The Australian federal government is working to facilitate the internet economy through policies, legislation and practices that implement high-speed broadband. The National Broadband Network will be a vital tool for Australia.s internet economy. Its .chief importance¡® is that it will provide faster internet access speeds that will facilitate access to internet services and content. However, an appropriate infrastructure and internet speed is only part of the picture. As the Organisation for Economic Co-operation and Development identified, appropriate government policies are also needed to ensure that vital services are more accessible by consumers. The thesis identifies essential theories and principles underpinning the internet economy and from which the concept of connectedness is developed. Connectedness is defined as the ability of end users to connect with internet content and services, other individuals and organisations, and government. That is, their ability to operate in the internet economy. The NBN will be vital in ensuring connectedness into the future. What is not currently addressed by existing access regimes is how to facilitate end user access capacity and participation. The thesis concludes by making recommendations to the federal government as to what the governing principles of the Australian internet economy should include in order to enable individual end user access capacity.

The impact of taxes on optimal portfolio choice : an Australian study

Taxes are an important component of investing that is commonly overlooked in both the literature and in practice. For example, many understand that taxes will reduce an investment’s return, but less understood is the risk-sharing nature of taxes that also reduces the investment’s risk. This thesis examines how taxes affect the optimal asset allocation and asset location decision in an Australian environment. It advances the model of Horan & Al Zaman (2008), improving the method by which the present value of tax liabilities are calculated, by using an after-tax risk-free discount rate, and incorporating any new or reduced tax liabilities generated into its expected risk and return estimates. The asset allocation problem is examined for a range of different scenarios using Australian parameters, including different risk aversion levels, personal marginal tax rates, investment horizons, borrowing premiums, high or low inflation environments, and different starting cost bases. The findings support the Horan & Al Zaman (2008) conclusion that equities should be held in the taxable account. In fact, these findings are strengthened with most of the efficient frontier maximising equity holdings in the taxable account instead of only half. Furthermore, these findings transfer to the Australian case, where it is found that taxed Australian investors should always invest into equities first through the taxable account before investing in super. However, untaxed Australian investors should invest their equity first through superannuation. With borrowings allowed in the taxable account (no borrowing premium), Australian taxed investors should hold 100% of the superannuation account in the risk-free asset, while undertaking leverage in the taxable account to achieve the desired risk-return. Introducing a borrowing premium decreases the likelihood of holding 100% of super in the risk-free asset for taxable investors. The findings also suggest that the higher the marginal tax rate, the higher the borrowing premium in order to overcome this effect. Finally, as the investor’s marginal tax rate increases, the overall allocation to equities should increase due to the increased risk and return sharing caused by taxation, and in order to achieve the same risk/return level as the lower taxation level, the investor must take on more equity exposure. The investment horizon has a minimal impact on the optimal allocation decision in the absence of factors such as mean reversion and human capital.

The moral economy of social media

In this chapter we take a high-level view of social media, focusing not on specific applications, domains, websites, or technologies, but instead our interest is in the forms of engagement that social media engender. This is not to suggest that all social media are the same, or even that everyone’s experience with any particular medium or technology is the same. However, we argue common issues arise that characterize social media in a broad sense, and provide a different analytic perspective than we would gain from looking at particular systems or applications. We do not take the perspective that social life merely happens “within” such systems, nor that social life “shapes” such systems, but rather these systems provide a site for the production of social and cultural reality – that media are always already social and the engagement with, in, and through media of all sorts is a thoroughly social phenomenon. Accordingly, in this chapter, we examine two phenomena concurrently: social life seen through the lens of social media, and social media seen through the lens of social life. In particular, we want to understand the ways that a set of broad phenomena concerning forms of participation in social life is articulated in the domain of social media. As a conceptual entry-point, we use the notion of the “moral economy��� as a means to open up the domain of inquiry. We first discuss the notion of the “moral economy��� as it has been used by a number of social theorists, and then identify a particular set of conceptual concerns that we suggest link it to the phenomena of social networking in general. We then discuss a series of examples drawn from a range of studies to elaborate and ground this conceptual framework in empirical data. This leads us to a broader consideration of audiences and publics in social media that, we suggest, holds important lessons for how we treat social media analytically.

Facilitating Malaysia towards innovative society : arguing the case for open access policy

The Malaysian National Innovation Model blueprint states that there is an urgent need to pursue an innovation-oriented economy to improve the nation’s capacity for knowledge, creativity and innovation. In nurturing a pervasive innovation culture, the Malaysian government has declared the year 2010 as an Innovative Year whereby creativity among its population is highly celebrated. However, while Malaysian citizens are encouraged to be creative and innovative, scientific data and information generated from publicly funded research in Malaysia is locked up because of rigid intellectual property licensing regimes and traditional publishing models. Reflecting on these circumstances, this paper looks at, and argue why, scientific data and information should be made available, accessible and re-useable freely to promote the grassroots level of innovation in Malaysia. Using innovation theory as its platform of argument, this paper calls for an open access policy for publicly funded research output to be adopted and implemented in Malaysia. Simultaneously, a normative analytic approach is used to determine the types of open access policy that ought to be adopted to spur greater innovation among Malaysians.

A conceptual model of capability learning for the 21st century knowledge economy

This chapter proposes a conceptual model for optimal development of needed capabilities for the contemporary knowledge economy. We commence by outlining key capability requirements of the 21st century knowledge economy, distinguishing these from those suited to the earlier stages of the knowledge economy. We then discuss the extent to which higher education currently caters to these requirements and then put forward a new model for effective knowledge economy capability learning. The core of this model is the development of an adaptive and adaptable career identity, which is created through a reflective process of career self-management, drawing upon data from the self and the world of work. In turn, career identity drives the individual’s process of skill and knowledge acquisition, including deep disciplinary knowledge. The professional capability learning thus acquired includes disciplinary skill and knowledge sets, generic skills, and also skills for the knowledge economy, including disciplinary agility, social network capability, and enterprise skills. In the final part of this chapter, we envision higher education systems that embrace the model, and suggest steps that could be taken toward making the development of knowledge economy capabilities an integral part of the university experience.