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GDN FUNDED PAPERS
Tax Revenues In Low-Income Pacific Island Countries: The Impact Of Trade Liberalisation And Other Factors
Project :
Author : Teuea Toatu; Wadan Narsey; Ron Duncan
Date : 0
Description : This paper reports the results of a study into the impact of regional trade liberalization being undertaken by the small island countries of the Pacific on government revenues of the five least developed of the Pacific countries. It also considers measures that they might be able to undertake to make up for the losses in tariff revenues due to regional trade liberalization. The Pacific Island countries have recently agreed to a preferential trading arrangement among themselves in the form of the Pacific Island Countries Trade Agreement (PICTA). However, in prospect is a trade agreement with Australia and New Zealand, the Pacific Agreement on Closer Economic Relations (PACER), and an agreement(s) with the EU (Regional Economic Partnership Agreements, or REPAs).
Tax Reforms and Domestic Revenue Mobilization in Uganda
Project :
Author : Milton Ayoki; Marios Obwona; Moses Ogwapus
Date : November 0
Description : This report presents the major areas of research and key findings of the international research project on ‘Macroeconomic Policy Challenges of Low Income Countries’. The project aims to contribute to a better understanding of the macroeconomic problems of low income countries, and facilitate an exchange of views with academics and researchers based in developed economies, including those in the international financial community. In this report, the authors explore the options available for policy makers on revenue mobilization in Uganda. They tackle fundamental policy questions about what measures could result into fast revenue growth for Uganda focusing on the tax reforms and macroeconomic issues. The elasticity and buoyancy indexes computed for the pre and post-reform periods as well as for the combined period provide a framework through which the impact of the reforms on each index between the two periods can be discerned. The approach provides the basis for identifying the sources of fast revenue growth and/or lagging revenue growth in the tax system, and the components of revenue growth which are within or outside the control of authorities.
Shocks, Economic Growth And The Indian Economy
Project :
Author : B.B.Bhattacharya; Sabyasachi Kar
Date : November 0
Description : Evaluating the impact of domestic and external shocks on the growth of developing economies is of utmost importance, as the consequences of these shocks push millions of people into abject poverty and deprivation. It is in this context that we have studied the impact of domestic and external shocks on the Indian economy. Given the objectives of this study, we have developed a macro-modelling framework that allows us to evaluate the impact of two domestic shocks (rainfall shortfall and fiscal profligacy) and three external shocks (oil price hike, world trade shock and capital flow shock) that affect the economy through various channels. Our results show that different shocks have very different impacts on various aspects of the growth process. Plausible rainfall and fiscal profligacy shocks have a stronger growth retarding effect compared to plausible scenarios of the three external shocks, both in the short as well as the long run. We also find that the oil price hike, the capital flow shock and fiscal profligacy show strong pervasiveness, the rainfall shock is moderately pervasive, while the economy is much more resilient to the world trade shock in the long run. Another aspect that is important from the policy point of view is to study whether the shock leads to a stagflationary situation or not. We find that the rainfall shock is strongly stagflationary, the oil price shock is stagflationary only in the short run, fiscal profligacy is stagflationary in the long run, while the two other shocks are not stagflationary at all. Finally, we focus on whether the shock leads to some instability in the growth process by enlarging the disequilibrium in the fiscal or the external sectors. We find from our study that there is some short run instability from the external sector in case of the external shocks. On the other hand, the fiscal profligacy shock and the world trade shock leads to some short run instability from the fiscal sector. However, in the long run we find that none of the shocks have any significant negative impact on either the fiscal deficit or the external reserves.
Public debt sustainability and growth in Sub-Saharan Africa (post-HIPC): The role of domestic debt
Project :
Author : Syed Mohammad Ali Abbas
Date : February 0
Description : The purpose of this paper has been to study the role that domestic debt currently plays in SSA, and the role that it should and could play in the region in the specific contexts of long- term debt sustainability and growth. To that end, the following are undertaken: o qualitative assessment of the merits and demerits of existing approaches to debt sustainability, including the HIPC DSA approach (chapters 1 and 2) o presentation of a simple but robust total debt (or fiscal) sustainability framework, followed by an application of that framework to Ghana, Tanzania and Uganda (chapter 3) o panel econometric study of the effects of domestic debt on growth in 16 SSA countries over the 1981-2000 period (chapter 4) o political economic inquiry into the causes of low domestic debt issuance in SSA and, the ways through which this could be changed and the reasons why such a change would indeed be welcome.
Protecting The Poor From Macroeconomic Shocks In Nigeria: An Empirical Investigation And Policy Options
Project :
Author : Siyanbola Tomori; Olasupo Akano; Adebayo Adebiyi; Wakeel Isola; Olukemi Lawanson; Omolara Quadri
Date : January 0
Description : Poverty in Nigeria is widespread and deep. The country progressively slipped from being one of the middle-income oil producing countries in the late 1970s and early 1980s to one of the low-income countries in the early ‘90s. This study recognizes that other factors, e.g., poor governance and official corruption, can and do aggravate poverty profiles in low-income countries. However, the focus of this study is the effects of macroeconomic shocks on poverty in Nigeria. The objective of this study has been to investigate the effects of macroeconomic shocks on the welfare of the poor in Nigeria. More specifically, the study seeks to estimate the relative effects of changes in key macroeconomic variables such as the degree of openness of the economy, inflation, debt service payments, real petrol prices, real lending interest rates, unemployment rate, primary school enrolment, donor-assisted transfers as well as real exchange rates on poverty in Nigeria between 1986 and 2000. This study is important because it would bridge a yawning gap in the existing state of knowledge about the impact of macroeconomic policy shocks on the conditions of the poor in Nigeria.
Migrant Remittances, Shocks And Poverty In Urban Ethiopia: An Analysis Of Micro Level Panel Data
Project :
Author : Nav Raj Kanel
Date : February 0
Description : With per capita gross national income of a mere USD 100, Ethiopia is among the poorest countries in the world. According to UNDP (2003), Ethiopia’s score of human development (which is 169 out of 175) is among the lowest in the world. Moreover, for decades poverty in Ethiopia has remained pervasive and ever-deepening, in spite of considerable macroeconomic stability achieved1 following the policy reforms of mid-1990s. The country’s per capita income, which is much less than the average of $450 for sub-Saharan Africa, declined from USD 140 in 1982 and $ 110 in 1997 to a mere $USD 100 in 2002. In Ethiopia, many urban people don’t meet their based needs. According to official statistics (FDRE 2002), the proportion of the urban population under food poverty (those persons whose food expenditure per adult equivalent was less than the food poverty line) was 47 percent in 1999/00 as compared to 41 percent in rural areas. Moreover, between 1995 and 1999/00, the urban food poverty head count index increased by 43.7 percent. In Ethiopia, poverty is associated with certain household characteristics. For example, according to FDRE 2002, “poor households tend to have large proportion of dependents than richer households”. Also, “members of poorer households tend to have older household heads compared to rich ones”2. Moreover, urban poverty is associated with household headship. That is, female-headed households are more dominant in urban areas than in rural areas. In the former case, female- headed households account for much as 41 percent of total households as compared to 23 percent in rural areas (FDRE 2002).
Macroeconomic Policies, Shocks and Poverty Reduction in Nepal
Project :
Author : Dilli Raj Khanal; Nav Raj Kanel
Date : February 0
Description : Nepal is one of the least developed countries in the world despite being one of the most liberalized countries in the South Asia region. Poverty is still widespread at 38 to 42 percent. The economy also faces the problems of wider fluctuations in both agricultural and non-agricultural output. Studies carried out so far to examine the outcome of reforms or assess the effectiveness of policies derive diverse conclusions for such a phenomenon. At the same time, they provide little idea about the main instrumental factors and their transmission mechanism through which both growth and poverty are affected in Nepal. The present study through analytical descriptions, regression analysis and macro model based policy simulations has tried to assess the role of macroeconomic policies in minimizing the economic fluctuations emanating from external or internal exogenous shocks. It has also additionally attempted to examine the role of remittance income in minimizing the effect of shocks or augmenting long-term growth. The macro model based simulation exercise has also enabled to examine the effect of alternative policies in minimizing shocks, augmenting growth, and reducing poverty during the period 2004 to 2013. More particularly, this study has tried to get answer of the six questions. The six research questions set for the study are: i) Have the deregulation and liberalization policies in agriculture generated incentive to the producers? ii) Have financial sector reforms reduced cost of capital and increased access to credit among farmers and private investors? iii) Is the pegged exchange rate policy with India appropriate to ensure realignment of domestic vis-à-vis external prices? Is it helping to stimulate the growth in exports? iv) Is the taxation policy suitable to broaden revenue, maintain macroeconomic stability and spur government expenditure? v) Can the reformed economy manage the shocks (shocks for instance emanating from adverse weather conditions and sudden rise in the prices of petroleum products in the international market) better than old system? vi) Has remittance income minimized the effects of economic fluctuations, especially on consumption, income and the balance of payments
Macroeconomic Policies, Shocks And Economic Growth In South Africa
Project :
Author : Yohane Khamfula
Date : December 0
Description : Economic growth, in the world or in a particular region or country, depends to a large extent on the nature and quality of economic policy (Collier and Dollar, 2001). For example, if there is a good environment for households and firms to save and invest in the developing world, economic growth is generally observed. The International monetary Fund (2000) also claims that where sound macroeconomic policies have been sustained, they have raised growth. When South Africa emerged from the apartheid era in 1994 it had an urgent need to complement its political liberation and its openness to global trade and investment with economic growth that would benefit all members of the population. Realising this outcome will basically require increasing employment, since unemployment is concentrated to a large extent among the poor. This will require action on many fronts; including efforts to make labour markets function more efficiently while at the same time assuring more equity in the distribution of benefits. It will also demand reducing distortions in capital markets that require more capital-intensive activities. It will require improved education and training so as to make the workforce become more employable and productive. Lastly, it will require a macroeconomic-policy framework that influences economic growth. In this study, we start with a review of the problems faced by South Africa since it emerged from the period of apartheid and tries to wrestle with the multiple objectives of reducing poverty, increasing employment, restructuring employment, increasing international trade and increasing the rate of economic growth. The study then briefly looks at the macroeconomic goals and policies introduced in Growth, Employment and Redistribution (GEAR) strategy and how these have been fulfilled. Macroeconomic policies were incorporated in 1996 by the new government into a strategy to promote GEAR.
Macroeconomic Policies and Poverty Reduction in Malawi: Can we Infer from Panel Data
Project :
Author : Ephraim W. Chirwa
Date : January 0
Description : Malawi is one of the early adopters of structural adjustment reforms in which various macroeconomic policies have been implemented since 1981. In spite of the many reforms Malawi remains one of the poorest nations and about 65 percent of the population live below the poverty line. This study exploits recent household panel data between 1998 and 2002 to infer macroeconomic policies that can effectively reduce poverty. The results reveal that macroeconomic policies that facilitate the redistribution of land, creation of salaried employment opportunities and accumulation of assets have the greatest potential in reducing poverty in rural Malawi. Although, trade policies have been actively pursued in Malawi, the rural poor have not benefited from trade liberalisation and falling agricultural prices reduced the probability of the poor to escape poverty.
Linkages between Macroeconomic Reform Policies, Shocks, and Poverty Reduction: The Indonesian Case
Project :
Author : Tulus Tambunan
Date : January 0
Description : The aim of this study was to analyze the impacts of economic reform policies, i.e. external trade, investment and financial sector liberalizations, as three most important economic reforms in the 1970s and 1980s, and the 1997 crisis, known as the currency crisis (and latter it became the financial or economic crisis) on poverty and long-run economic growth in Indonesia. The main findings are the following: 1) the relationship between the depreciation of the rupiah against the US dollar (defined in this study as the “crisis” variable) and the growth of per capita real GDP is negative (as expected) and significant, which may suggest that the currency crisis in Indonesia is a type of economic shock which is strongly associated with negative economic growth; 2) although the estimated regression coefficients of the policy variables and inflation have the expected signs, only those of the total domestic investment-GDP ratio and the inflation rate are statistically significant, suggesting that the specific channels through which macroeconomic reform policies influence long-term economic growth in Indonesia
 
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