Is privatisation good for investment in Australia?

Privatisation was expected to promote investment in the economy as part of improving dynamic efficiency. The relation between aggregate public and private investment in Australia is investigated in an endogeneous ECM framework. Model selection for a simple investment function allows restrictions for neoclassical crowding out or Keynesian crowding in (after Aschauer 1989) in a small open economy. An ECM is estimated including annual aggregate private investment, public investment, income, rate of return, average interest cost, exchange rate and inventories from 1960 to 2005. Public capital appears unresponsive to shocks and crowding out is not evident.

Tariff and environmental policies with product standards

For a small open economy with consumption-based pollution emissions, the first-best optimal policy prescription is free trade along with a Pigouvian tax on emissions. Therefore, a package of coordinated tax reform by replacing tariffs with emission taxes can lower pollution emissions and increase market access and hence improve residents’ welfare and government revenue, as long as the initial tariffs are relatively high. Numerical simulations confirm the results obtained.

Tourism, dutch disease and welfare in an open dynamic economy

This paper examines the effects of an expansion in tourism on capital accumulation, sectoral output and resident welfare in an open economy with an externality in the traded good sector. An expansion of tourism increases the relative price of the nontraded good, improves the tertiary terms of trade and hence yields a gain in revenue. However, this increase in the relative price of nontraded goods results in a lowering of the demand for capital used in the traded sector. The subsequent de-industrialization in the traded good sector may lower resident welfare. This result is supported by numerical simulations.

Tourism, Dutch disease and welfare in an open dynamic economy

This chapter examines the effects of an expansion in tourism on capital accumulation, sectoral output and resident welfare in an open economy with an externality in the traded good sector. An expansion of tourism increases the relative price of the non traded good, improves the tertiary terms-of-trade and hence yields a gain in revenue. However, this increase in the relative price of non traded goods results in a lowering of the demand for capital used in the traded sector. The subsequent de-industrialization in the traded good sector may lower resident welfare. This result is supported by numerical simulations. © 2011 Nova Science Publishers, Inc.

The electricity consumption and GDP nexus for the Fiji Islands

Fiji is a small open island economy dependent on energy for its growth and development; hence, the relationship between energy consumption and economic growth is crucial for Fiji's development. In this paper, we investigate the nexus between electricity consumption and economic growth for Fiji within a multivariate framework through including the labour force variable. We use the bounds testing approach to cointegration and find that electricity consumption, GDP and labour force are only cointegrated when GDP is the endogenous variable. We use the Granger causality F-test and find that in the long-run causality runs from electricity consumption and labour force to GDP, implying that Fiji is an energy dependent country and thus energy conservation policies will have an adverse effect on Fiji's economic growth.

The exchange rate disconnect puzzle: a resolution?

Early empirical studies of exchange rate determinants demonstrated that fundamentals-based monetary models were unable to outperform the benchmark random walk model in out-of-sample forecasts while later papers found evidence in favor of long-run exchange rate predictability. More recent theoretical works have adopted a microeconomic structure; a utility-based new open economy macroeconomic framework and a rational expectations present value model. Some recent empirical work argues that if the models are adjusted for parameter instability, it is a good predictor of nominal exchange rates while others use aggregate idiosyncratic volatility to generate good predictions. This latest research supports the idea that fundamental economic variables are likely to influence exchange rates especially in the long run and further that the emphasis should change to the economic value or utility based value to assess these macroeconomic models.

Is the Genuine Progress Indicator really genuine? Considering well-being impacts of exports and imports

The Genuine Progress Indicator (GPI) is estimated as if nations operate within a closed economy. Therefore, in terms of coverage, the GPI is most analogous to Gross Domestic Product (GDP). Indeed, within the relevant literature, these two indicators are most often contrasted. However, consideration should be given to adapting the GPI, so it has more in common with Gross National Income (GNI). As with GDP, the GPI is concerned only with a particular physical location. Yet, it may be more effective if the GPI was freed from these physical boundaries in a similar manner to GNI. The GPI should be concerned more with the 'ownership' of the costs and benefits associated with economic growth than with the 'location' of those costs and benefits. Those that derive the most benefit from exploitation of the environment are often physically removed from the location of that damage. The GPI does not consider the net consumers of the negative externalities of environmental costs, merely the producers. Currently, however, the structure of the GPI allows a nation to enjoy, without penalty, the benefits of importing goods from countries which bear a disproportionately large cost of environmental degradation. This results in an overstatement of the real progress experienced by the county importing 'dirty goods'. This paper will investigate how certain GPI adjustments may be adapted to overcome this present shortcoming. However, the purpose of this paper is not only to empirically implement this new approach, but also to stimulate debate as to its potential merit.

Sequential technology adoption with asymmetric firms

We analyse the incentives and welfare implications of costly technology adoption in a two-period duopoly model where firms have different amounts of capital. We also extend our framework to an open economy set-up and examine the relationship between trade and technology adoption. Our findings are as follows. First, no monotone relationship exists between the threshold cost of adoption and capital shares. Second, an unequal distribution of capital, despite lessening competition, can increase total surplus. Third, trade generally encourages adoption of modern technology unless the share of capital for the adopters is too low.

A dynamic model of tourism, employment and welfare: the case of Hong Kong

The present paper uses a dynamic open-economy model with wage indexation to examine the impact of tourism on employment and welfare. Both short-run and long-run situations are analysed. It is well known that tourism converts non-traded goods into tradable goods. An increase in the demand for a non-traded good raises its relative price, which results in an expansion of the non-traded sector at the expense of the traded goods sector. This output shift raises labour employment in the short run. However, in the long run, the higher relative price leads to higher wages, resulting in a negative impact on labour employment. If the output effect is dominant, the expansion in tourism raises employment and welfare. However, under realistic conditions tourism may lower both labour employment and welfare due to rising costs. These results are demonstrated by simulating a dynamic model for the case of Hong Kong.

Housing markets with foreign buyers

There are cities in the world which have experienced substantial numbers of foreign buyers in the local housing markets, thereby pushing up the real estate prices to the levels beyond the affordability of local residents. To suppress foreign influences in the forming of housing bubbles, governments have resorted to short-term measures of stamp duty or raising the duty rate for non-local buyers, increasing down payments and restricting or even forbidding non-local purchases. These new measures may help contain the demand for housing, but short of being the first-best optimal housing policy for an open economy with significant non-local and foreign buyers. We argue that the first-best policy is to tax non-local and foreign buyers and then use the tax revenue generated to subsidize domestic low- and middle-income buyers. The optimal tax rate under this compensated scheme is smaller than the tax rate under the lump-sum transfer of tax revenue to all residents. © 2014 Springer Science+Business Media New York.

Lamotrigine compared with lithium in mania: a double-blind randomized controlled trial.

Preliminary data from case reports and small open trials suggest a role for lamotrigine in the treatment of bipolar disorder, although controlled data for the manic phase are lacking.

The new Keynesian Phillips curve: an update on recent empirical advances

This paper presents a comprehensive review of the newly emerging literature on the New Keynesian Phillips Curve (NKPC). The theoretical predictions, econometric estimation techniques as well as the corresponding empirical evidence are discussed focusing on both the closed economy and the open economy versions of the NKPC. A number of important findings are reported about the ability of NKPC to explain the process of inflation dynamics. First, there is weak support for the open economy version of the NKPC to be able to track inflation dynamics if imported inputs are used in the production process. Second, the NKPC describes inflation dynamics across sectors if microeconomic and sectoral level data are used. Further, the survey data employed as a proxy for inflation measure in the newer studies provide enhanced support to the closed economy NKPC with the sign, size and statistical significance of coefficients in line with the theoretical predictions. We provide fresh empirical evidence to check the first finding from the review. The deep structural parameters for four different versions of the NKPC, the pure forward looking NKPC, the Gali and Monacelli's (2005) NKPC, the open economy NKPC and the open economy hybrid NKPC, are estimated for Australia, Canada, New Zealand and the United Kingdom. These estimated coefficients show some support that the specifications of open economy NKPC, which incorporate prices of imported goods as opposed to the terms of trade and real exchange rate, seems to be a better, however, weak indicator of the inflation dynamics. These findings may have important policy implications.

Seasonal and diet comparisons of the diets of four dominant fish species within the main channel and flood-zone of a small intermittently open estuary in south-eastern Australia

The diets of four highly-abundant, dominant fish species within the Surrey River, a small intermittently open estuary in south-east Australia, were examined from specimens collected between July 2004 and June 2005. These four, similar-sized species (Atherinosoma microstoma, Galaxias maculatus, Philypnodon grandiceps and Pseudogobius olorum) have limited ability to spatially segregate along the length of the estuary owing to its small size relative to other estuarine habitats. All four species fed on a variety of prey items including crustaceans, insects and detritus. Despite this parity, the four species were demonstrated to occupy differing dietary niches that were concluded to be responsible for reducing interspecific feeding competition. Seasonal variations in the diets were observed for A. microstoma and Philypnodon grandiceps, with these species also exhibiting contrasting diel feeding behaviours. The closure of the estuary mouth led to the flooding of its margins, resulting in an increase in the size of the estuary and providing alternative food resources for the fish to exploit. It appears the inundation of the flood-zone facilitated further significant divergence in the diets of the fish and is likely to be of high ecological value to the estuary.

Presence of fish on the shallow flooded margins of a small intermittently open estuary in South Eastern Australia under variable flooding regimes

Shallow water habitats within estuarine systems are believed to be important areas for small fish. While a wide variety of shallow habitats have been studied, the land that becomes inundated by the damming effect after the closure of intermittently open mouths has previously been overlooked. Fish were sampled monthly from both the main channel and flood zone of an intermittently open estuary between July 2004 and June 2005 using minifyke nets during the day and at night. A total of 7,787 fish were collected during the study representing 13 species and 11 families. Philypnodon grandiceps was the most abundant species and, together with Atherinosoma microstoma, Pseudogobius olorum, and Galaxias maculatus, made up 94% of the total catch. Inundation of the flood zone occurred in two discrete forms associated with mouth condition, which consisted of sporadic flooding while the mouth was open, to long-term flooding for 6 months after its closure. Large numbers of fish were captured on the flood zone, which included nine species; however, A. microstoma dominated the catch. A distinct shift in the flood zone fish assemblage occurred between the two mouth conditions, which is likely associated with changes in hydro-period and food availability of the flood zone and physico-chemical parameters in the main channel. There was no longitudinal variation in the fish assemblage in both the main channel and flood zone; similarly, the diel period was found to have little effect on the fish assemblage. The total catch per unit effort did not vary across seasons and suggests that fish abundance within the estuary is stable throughout the year. Unlike other estuarine systems where shallow water fish assemblages may be structured by variations in tide and elevation within the Surrey, freshwater inflow and, more importantly, mouth condition appear to have the greatest influence in composition of the shallow water flood zone fish assemblage of intermittently open estuaries.