An examination of the effects of government purchases in an open economy

This paper examines the effects of permanent and transitory changes in government purchases in the context of a model of a small open economy that produces and consumes both traded and nontraded goods. The model incorporates an equilibrium interpretation of the business cycle that emphasizes the responsiveness of agents to intertemporal relative price changes. It is demonstrated that transitory increases in government purchases lead to an appreciation of the real exchange rate and an ambiguous change (although a likely worsening) in the current account, while permanent increases have an ambiguous impact on the real exchange rate and no effect on the current account. When agents do not know whether a given increase in government purchases is permanent or transitory the effect is a weighted average of these separate effects. The weights depend on the relative variances of the transitory and permanent components of government purchases. © 1985.

The toxicology of climate change: environmental contaminants in a warming world.

Climate change induced by anthropogenic warming of the earth's atmosphere is a daunting problem. This review examines one of the consequences of climate change that has only recently attracted attention: namely, the effects of climate change on the environmental distribution and toxicity of chemical pollutants. A review was undertaken of the scientific literature (original research articles, reviews, government and intergovernmental reports) focusing on the interactions of toxicants with the environmental parameters, temperature, precipitation, and salinity, as altered by climate change. Three broad classes of chemical toxicants of global significance were the focus: air pollutants, persistent organic pollutants (POPs), including some organochlorine pesticides, and other classes of pesticides. Generally, increases in temperature will enhance the toxicity of contaminants and increase concentrations of tropospheric ozone regionally, but will also likely increase rates of chemical degradation. While further research is needed, climate change coupled with air pollutant exposures may have potentially serious adverse consequences for human health in urban and polluted regions. Climate change producing alterations in: food webs, lipid dynamics, ice and snow melt, and organic carbon cycling could result in increased POP levels in water, soil, and biota. There is also compelling evidence that increasing temperatures could be deleterious to pollutant-exposed wildlife. For example, elevated water temperatures may alter the biotransformation of contaminants to more bioactive metabolites and impair homeostasis. The complex interactions between climate change and pollutants may be particularly problematic for species living at the edge of their physiological tolerance range where acclimation capacity may be limited. In addition to temperature increases, regional precipitation patterns are projected to be altered with climate change. Regions subject to decreases in precipitation may experience enhanced volatilization of POPs and pesticides to the atmosphere. Reduced precipitation will also increase air pollution in urbanized regions resulting in negative health effects, which may be exacerbated by temperature increases. Regions subject to increased precipitation will have lower levels of air pollution, but will likely experience enhanced surface deposition of airborne POPs and increased run-off of pesticides. Moreover, increases in the intensity and frequency of storm events linked to climate change could lead to more severe episodes of chemical contamination of water bodies and surrounding watersheds. Changes in salinity may affect aquatic organisms as an independent stressor as well as by altering the bioavailability and in some instances increasing the toxicity of chemicals. A paramount issue will be to identify species and populations especially vulnerable to climate-pollutant interactions, in the context of the many other physical, chemical, and biological stressors that will be altered with climate change. Moreover, it will be important to predict tipping points that might trigger or accelerate synergistic interactions between climate change and contaminant exposures.

Illicit cigarette consumption and government revenue loss in Indonesia.

BACKGROUND: Illicit cigarettes comprise more than 11% of tobacco consumption and 17% of consumption in low- and middle-income countries. Illicit cigarettes, defined as those that evade taxes, lower consumer prices, threaten national tobacco control efforts, and reduce excise tax collection. METHODS: This paper measures the magnitude of illicit cigarette consumption within Indonesia using two methods: the discrepancies between legal cigarette sales and domestic consumption estimated from surveys, and discrepancies between imports recorded by Indonesia and exports recorded by trade partners. Smuggling plays a minor role in the availability of illicit cigarettes because Indonesians predominantly consume kreteks, which are primarily manufactured in Indonesia. RESULTS: Looking at the period from 1995 to 2013, illicit cigarettes first emerged in 2004. When no respondent under-reporting is assumed, illicit consumption makes up 17% of the domestic market in 2004, 9% in 2007, 11% in 2011, and 8% in 2013. Discrepancies in the trade data indicate that Indonesia was a recipient of smuggled cigarettes for each year between 1995 and 2012. The value of this illicit trade ranges from less than $1 million to nearly $50 million annually. Singapore, China, and Vietnam together accounted for nearly two-thirds of trade discrepancies over the period. Tax losses due to illicit consumption amount to between Rp 4.1 and 9.3 trillion rupiah, 4% to 13% of tobacco excise revenue, in 2011 and 2013. CONCLUSIONS: Due to the predominance of kretek consumption in Indonesia and Indonesia's status as the predominant producer of kreteks, illicit domestic production is likely the most important source for illicit cigarettes, and initiatives targeted to combat this illicit production carry the promise of the greatest potential impact.