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.

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.

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

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.

Impacts of experimental warming and fire on phenology of subalpine open-heath species

The present study examined experimentally the phenological responses of a range of plant species to rises in temperature. We used the climate-change field protocol of the International Tundra Experiment (ITEX), which measures plant responses to warming of 1 to 2°C inside small open-topped chambers. The field study was established on the Bogong High Plains, Australia, in subalpine open heathlands; the most common treeless plant community on the Bogong High Plains. The study included areas burnt by fire in 2003, and therefore considers the interactive effects of warming and fire, which have rarely been studied in high mountain environments. From November 2003 to March 2006, various phenological phases were monitored inside and outside chambers during the snow-free periods. Warming resulted in earlier occurrence of key phenological events in 7 of the 14 species studied. Burning altered phenology in 9 of 10 species studied, with both earlier and later phenological changes depending on the species. There were no common phenological responses to warming or burning among species of the same family, growth form or flowering type (i.e. early or late-flowering species), when all phenological events were examined. The proportion of plants that formed flower buds was influenced by fire in half of the species studied. The findings support previous findings of ITEX and other warming experiments; that is, species respond individualistically to experimental warming. The inter-year variation in phenological response, the idiosyncratic nature of the responses to experimental warming among species, and an inherent resilience to fire, may result in community resilience to short-term climate change. In the first 3 years of experimental warming, phenological responses do not appear to be driving community-level change. Our findings emphasise the value of examining multiple species in climate-change studies.

The emerging world of small ORFs

Small open reading frames (sORFs) are an often overlooked feature of plant genomes. Initially found in plant viral RNAs and considered an interesting curiosity, an increasing number of these sORFs have been shown to encode functional peptides or play a regulatory role. The recent discovery that many of these sORFs initiate with start codons other than AUG, together with the identification of functional small peptides encoded in supposedly noncoding primary miRNA transcripts (pri-miRs), has drastically increased the number of potentially functional sORFs within the genome. Here we review how advances in technology, notably ribosome profiling (RP) assays, are complementing bioinformatics and proteogenomic methods to provide powerful ways to identify these elusive features of plant genomes, and highlight the regulatory roles sORFs can play.

Global Business Today 2nd edition

Global Business Today is focused on the fundamentals of international business. Not only does this text provide coverage of the strategic imperatives of operating IB out of a small, dependent economy but it also builds a thorough worldwide orientation. In this edition, international business Graduate Attributes have been integrated throughout and there is topical discussion of issues such as the Doha round of trade negotiation, climate change and the rise of China and India. The authors recognise that case studies reinforce relevance and have therefore included either entirely new or significantly revised cases in every chapter. With a concise treatment of the crucial elements of an IB course, Global Business Today is the ideal text for a first subject in international busines

Learning in and beyond small business advisory programmes

The purpose of this paper is to analyse how participants learn in small business advisory programmes and to explore the impact of these learning programmes on the development of reflective learning dispositions in participants. The research involves two case studies of small business advisory programmes in Queensland, a state of Australia. One involves training in the use of GPS/GIS technology amongst rural SMEs and the other seeks to develop improved management and operational capabilities in regional and metropolitan manufacturing SMEs. Face to face semi-structured interviews were conducted throughout rural, regional and metropolitan Queensland with participants, trainers and senior executives in the administering organisations that ran the programmes. Learning in these programmes occurs through a combination of interaction with others and the adoption of practice-based and learner-centred processes. The impact of the programmes on participants includes the development of reflective learning dispositions, improved confidence in learning and appreciation of the value of new knowledge to their business. The research suggests that small business training programmes have the potential to affect the development of critical reflective learning dispositions in participants which is of fundamental importance to the development of a learning or knowledge economy.

Cetuximab plus chemotherapy in patients with advanced non-small-cell lung cancer (FLEX) : an open-label randomised phase III trial

Background: Use of cetuximab, a monoclonal antibody targeting the epidermal growth factor receptor (EGFR), has the potential to increase survival in patients with advanced non-small-cell lung cancer. We therefore compared chemotherapy plus cetuximab with chemotherapy alone in patients with advanced EGFR-positive non-small-cell lung cancer. Methods: In a multinational, multicentre, open-label, phase III trial, chemotherapy-naive patients (≥18 years) with advanced EGFR-expressing histologically or cytologically proven stage wet IIIB or stage IV non-small-cell lung cancer were randomly assigned in a 1:1 ratio to chemotherapy plus cetuximab or just chemotherapy. Chemotherapy was cisplatin 80 mg/m 2 intravenous infusion on day 1, and vinorelbine 25 mg/m 2 intravenous infusion on days 1 and 8 of every 3-week cycle) for up to six cycles. Cetuximab-at a starting dose of 400 mg/m 2 intravenous infusion over 2 h on day 1, and from day 8 onwards at 250 mg/m 2 over 1 h per week-was continued after the end of chemotherapy until disease progression or unacceptable toxicity had occurred. The primary endpoint was overall survival. Analysis was by intention to treat. This study is registered with ClinicalTrials.gov, number NCT00148798. Findings: Between October, 2004, and January, 2006, 1125 patients were randomly assigned to chemotherapy plus cetuximab (n=557) or chemotherapy alone (n=568). Patients given chemotherapy plus cetuximab survived longer than those in the chemotherapy-alone group (median 11·3 months vs 10·1 months; hazard ratio for death 0·871 [95% CI 0·762-0·996]; p=0·044). The main cetuximab-related adverse event was acne-like rash (57 [10%] of 548, grade 3). Interpretation: Addition of cetuximab to platinum-based chemotherapy represents a new treatment option for patients with advanced non-small-cell lung cancer. Funding: Merck KGaA. © 2009 Elsevier Ltd. All rights reserved.

Resolving the conflicts of sustainable world heritage landscapes in cities : fully open or limited access for visitors?

World Heritage Landscapes (WHLs) are receiving increased attention from researchers, urban planners, managers, and policy makers and many heritage values and resources are becoming irreversibly lost. This phenomenon is especially prominent for WHLs located in cities, where greater development opportunities are involved. Decision making for sustainable urban landscape planning, conservation and management of WHLs often takes place from an economic perspective, especially in developing countries. This, together with the uncertain source of funding to cover WHL operating and maintenance costs, has resulted in many urban managers seeking private sector funding either in the form of visitor access fees or leasing part of the site for high-rental facilities such as five star hotels, clubs and expensive restaurants. For the former, this can result in low-income urban citizens being unable to afford the access fees and hence contradicting the principle of equal access for all; while, for the latter, the principle of open access for all is equally violated. To resolve this conflict, a game model is developed to determine how urban managers should allocate WHL spaces to maximize the combination of economic, social and ecological benefits and cultural values. A case study is provided of the Hangzhou's West Lake Scenic Area, a WHL located at the centre of Hangzhou city, in which several high-rental facilities have recently been closed down by the local authorities due to charges of elitism and misuse of public funds by government officials. The result shows that the best solution is to lease a small space with high rents and leave the remainder of the site to the public. This solution is likely to be applicable only in cities with a strong economy.

Open innovation in small and medium-sized enterprises (SMEs): External knowledge sourcing strategies and internal organizational facilitators

In this paper we explore how small and medium-sized enterprises (SMEs) engage in external knowledge sourcing, a form of inbound open innovation. We draw upon a sample of 1,411 SMEs and empirically conceptualize a typology of strategic types of external knowledge sourcing, namely minimal, supply-chain, technology-oriented, application-oriented, and full-scope sourcing. Each strategy reflects the nature of external interactions and is linked to a distinct mixture of four internal practices for managing innovation. Both full-scope and application-oriented sourcing offer performance benefits and are associated with a stronger focus on managing innovation. However, they differ in their managerial focus on strategic and operational aspects.

Bayesian estimation of small effects in exercise and sports science

The aim of this paper is to provide a Bayesian formulation of the so-called magnitude-based inference approach to quantifying and interpreting effects, and in a case study example provide accurate probabilistic statements that correspond to the intended magnitude-based inferences. The model is described in the context of a published small-scale athlete study which employed a magnitude-based inference approach to compare the effect of two altitude training regimens (live high-train low (LHTL), and intermittent hypoxic exposure (IHE)) on running performance and blood measurements of elite triathletes. The posterior distributions, and corresponding point and interval estimates, for the parameters and associated effects and comparisons of interest, were estimated using Markov chain Monte Carlo simulations. The Bayesian analysis was shown to provide more direct probabilistic comparisons of treatments and able to identify small effects of interest. The approach avoided asymptotic assumptions and overcame issues such as multiple testing. Bayesian analysis of unscaled effects showed a probability of 0.96 that LHTL yields a substantially greater increase in hemoglobin mass than IHE, a 0.93 probability of a substantially greater improvement in running economy and a greater than 0.96 probability that both IHE and LHTL yield a substantially greater improvement in maximum blood lactate concentration compared to a Placebo. The conclusions are consistent with those obtained using a ‘magnitude-based inference’ approach that has been promoted in the field. The paper demonstrates that a fully Bayesian analysis is a simple and effective way of analysing small effects, providing a rich set of results that are straightforward to interpret in terms of probabilistic statements.

Afatinib versus gefitinib as first-line treatment of patients with EGFR mutation-positive non-small-cell lung cancer (LUX-Lung 7): a phase 2B, open-label, randomised controlled trial

Background The irreversible ErbB family blocker afatinib and the reversible EGFR tyrosine kinase inhibitor gefitinib are approved for first-line treatment of EGFR mutation-positive non-small-cell lung cancer (NSCLC). We aimed to compare the efficacy and safety of afatinib and gefitinib in this setting. Methods This multicentre, international, open-label, exploratory, randomised controlled phase 2B trial (LUX-Lung 7) was done at 64 centres in 13 countries. Treatment-naive patients with stage IIIB or IV NSCLC and a common EGFR mutation (exon 19 deletion or Leu858Arg) were randomly assigned (1:1) to receive afatinib (40 mg per day) or gefitinib (250 mg per day) until disease progression, or beyond if deemed beneficial by the investigator. Randomisation, stratified by EGFR mutation type and status of brain metastases, was done centrally using a validated number generating system implemented via an interactive voice or web-based response system with a block size of four. Clinicians and patients were not masked to treatment allocation; independent review of tumour response was done in a blinded manner. Coprimary endpoints were progression-free survival by independent central review, time-to-treatment failure, and overall survival. Efficacy analyses were done in the intention-to-treat population and safety analyses were done in patients who received at least one dose of study drug. This ongoing study is registered with ClinicalTrials.gov, number NCT01466660. Findings Between Dec 13, 2011, and Aug 8, 2013, 319 patients were randomly assigned (160 to afatinib and 159 to gefitinib). Median follow-up was 27·3 months (IQR 15·3–33·9). Progression-free survival (median 11·0 months [95% CI 10·6–12·9] with afatinib vs 10·9 months [9·1–11·5] with gefitinib; hazard ratio [HR] 0·73 [95% CI 0·57–0·95], p=0·017) and time-to-treatment failure (median 13·7 months [95% CI 11·9–15·0] with afatinib vs 11·5 months [10·1–13·1] with gefitinib; HR 0·73 [95% CI 0·58–0·92], p=0·0073) were significantly longer with afatinib than with gefitinib. Overall survival data are not mature. The most common treatment-related grade 3 or 4 adverse events were diarrhoea (20 [13%] of 160 patients given afatinib vs two [1%] of 159 given gefitinib) and rash or acne (15 [9%] patients given afatinib vs five [3%] of those given gefitinib) and liver enzyme elevations (no patients given afatinib vs 14 [9%] of those given gefitinib). Serious treatment-related adverse events occurred in 17 (11%) patients in the afatinib group and seven (4%) in the gefitinib group. Ten (6%) patients in each group discontinued treatment due to drug-related adverse events. 15 (9%) fatal adverse events occurred in the afatinib group and ten (6%) in the gefitinib group. All but one of these deaths were considered unrelated to treatment; one patient in the gefitinib group died from drug-related hepatic and renal failure. Interpretation Afatinib significantly improved outcomes in treatment-naive patients with EGFR-mutated NSCLC compared with gefitinib, with a manageable tolerability profile. These data are potentially important for clinical decision making in this patient population.