Evaluating transfer programs within a general equilibrium framework

The authors set out a general equilibrium model for the evaluation of a domestically financed transfer program, which helps to combine the results from a computable general equilibrium model with disaggregated household data.Using a Mexican cash transfer program as an illustration, they use the approach to show that the substantial welfare gains that result from the switch from universal food subsidies to targeted cash transfers reflect both the improved targeting efficiency of the latter as well as a relaxation of the trade-off between equity and efficiency objectives when designing tax systems.FCND ,Subsidies Mexico. ,Transfer payments. ,Equilibrium (Economics) Models. ,

Justifying the Lindahl Solution as an Outcome of Fair Cooperation

The Lindahl equilibrium is mostly motivated by a rather artificial price mechanism. Even though the analogy to a competitive market has been emphasised by Lindahl himself his approach does not directly explain the normative ideas, which are behind this concept. In the present paper we therefore show how the Lindahl equilibrium can be deduced from some simple equity axioms that in particular are related to the equal sacrifice principle and a non-envy postulate as norms for distributional equity. Fairness among agents with different preferences is taken into account by considering their marginal willingnesses to pay as virtual prices. In this way it might also become more understandable why the Lindahl solution can be perceived as an outcome of fair cooperation.public goods, Lindahl equilibrium, fairness, equity

A model of Cognitive Capitalism: a preliminary analysis

The aim of this paper is to present a first theoretical macro-modelling of cognitive capitalism, by utilizing the French regulation theory approach. With regard to the supply side analysis, we shall emphasize the role played by productivity dynamics: it is mainly affected by two types of dynamics: scale economics, based on learning processes and network activity. Turning to demand-side aspects, aggregate demand takes in account also the role played by distribution effects of financial markets, which operates as a distorsive income multiplier. As, on the one side, it depends upon the trade-off between learning processes diffusion and intellectual property rights and, on the other, upon income polarization (due to precariousness and limited access to capital gains) and demand growth stability. The stability of the system cannot be guaranteed. The need for new rules concerning income distribution process (i.e. basic income policy) will be taken in consideration.Cognitive Capitalism, Knowledge, Learning Processes, Network Economies, General Intellect, Capital Gains, Basic Income

The future of the USO - Economic rationale for universal services and implications for a future-oriented USO

Universal service obligations (USO) in the postal sector currently enjoy considerable attention among politicians, practitioners and academics. The primary areas of interest have been the viability, costing and funding of the USO in a completely liberalized market. However, the purpose and the scope of the USO itself have so far not been questioned fundamentally. In this paper we first analyze the possible rationale for USO from an economic point of view. Then, we discuss the impact of converging postal and telecommunications markets on potential alternative means to provide USO in a more efficient way.Universal service, USO, covergence, postal sector

Unleashing The Growth Potential Of Indian MSME Sector

The MSME sector occupies a position of strategic significance in the Indian economic structure. This sector contributes nearly eight per cent to country’s GDP, employing over 80 million people in nearly 36 million widely-dispersed enterprises across the country; accounting for 45 per cent of manufactured output, 40 per cent of the country’s total export, and producing more than 8000 valueadded products ranging from traditional to high-tech. Furthermore, these enterprises are the nurseries for innovation and entrepreneurship, which will be key to the future growth of India. It is also an acknowledged fact that this sector can help realise the target of the proposed National Manufacturing Policy to enhance the share of manufacturing in GDP to 25 per cent and to create 100 million jobs by the end of 2022, as well as to foster growth and take India from its present two trillion dollar economy to a 20 trillion dollar economy. Despite the sector’s high enthusiasm and inherent capabilities to grow, its growth story still faces a number of challenges. In this light, the present paper examines the role of Indian MSMEs in India’s economic growth and explores various problems faced by the sector. The paper also attempts to discuss various policy measures undertaken by the Government to strengthen Indian MSMEs. Finally, the paper proposes strategies aimed at strengthening the sector to enable it to unleash its growth potential and help make India a 20 trillion dollar economy

Trade liberalization, fiscal adjustment, and exchange rate policy in India

The authors investigate the impact of India's program of economic stabilization and trade liberalization launched in 1991, a year when the country was in the throes of a foreign exchange crisis. The authors address a key policy tradeoff between trade liberalization and fiscal adjustment arising from India's heavy dependence on tariffs for public revenues. They give quantitative expression to how trade liberalization should be coordinated both with fiscal adjustment - that is, a combination of trade-neutral tax increases and expenditure reduction and with a policy of exchange rate changes to restore both internal and external equilibrium. This paper asks: What is the impact of a reduction in the fiscal deficit characteristic of stabilization programs on tax and expenditure levels, on the real exchange rate, and the current account deficit? What is the effect of a significant trade liberalization without additional external financing on macroeconomic variables such as the required degree of fiscal adjustment and change in the real exchange rate, and, at a more disaggregated level, on output levels in different export-oriented and import-substituting sectors of the economy? What would the impact of such trade liberalization look like should substantive external financing become available without the need for domestic fiscal adjustment? The questions are explored using a general equilibrium model of the Indian economy that focuses on the consequences of trade policy reform. Policymakers are, however, also interested in how various import-substituting industries would be adversely affected by trade liberalization and how particular export-oriented industries would gain from it. These objectives are reconciled by the innovative expedient of implementing two models on a common data base: 1) a disaggregated 72-sector (price sensitive) input-output version that makes simplified assumptions regarding certain economywide relationships; and 2) an aggregated 6-sector version that pays attention to those relationships and can suggest what corrections ought to be made to the results of the sectorally disaggregated analysis. The policy questions were answered for the eve of the 1991 economic reform program launched by India's policymakers. Developments in the principal macroeconomic aggregates in the first two years of the liberalization process were then compared with the outcomes of the model and generally found to correspond closely. This finding encouraged an updating of the model for fiscal 1992-93 and its deployment to analyze the consequences of a set of further economic reforms for subsequent years. The authors conclude by suggesting that the approach developed for this paper could provide broad indications of the economywide and sectoral consequences of pursuing the unfinished agenda of reforms facing policymakers not only in India but in other developing countries as well.Payment Systems&Infrastructure,Environmental Economics&Policies,Labor Policies,Economic Theory&Research,Consumption,EnvironmentalEconomics&Policies,Economic Theory&Research,Economic Stabilization,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Consumption