The Equity Premium: Explained by GDP Growth and Consistent with Portfolio Insurance

We find that the long-run equity premium is fully explained by GDP growth and that it is consistent with a short-term portfolio insurance motive. We first derive the macroeconomic equivalent of the standard sustainable growth formula to determine the long-run average return on stocks. The average stock market return depends on the GDP/capita growth rate and the retention rate net of share repurchases. Next, we determine the economy’s return on corporate assets and show that the return on corporate debt is related to overall GDP growth. After calibrating key macro economic/finance parameters, we obtain values for expected equity and corporate debt returns that respectively match the S&P 500 and 3- month T-bill historical arithmetic average returns. Our first conclusion is that in the long-run, the equity premium is generated by economic growth. Our second key result is that the equity premium is also closely approximated by the premium paid on a put option to maintain the value of $1 invested in the market when long-term investors wish to insure against downside risk on a year-to-year basis. These results have implications regarding how risk-free debt is priced and about the economy’s capital structure.Equity Premium, GDP Growth, Corporate Debt, T-Bills, Risk-Free Rate, Downside Risk, Options, Protective Puts, Portfolio Insurance, Total Stock Return.

Agriculture versus fish – Norway in WTO

The Norwegian agriculture is highly protected and subsidised. The opposite is the case for fisheries and fish farming which suffer from foreign market restrictions. Using a computational general equilibrium model, the gain for Norway of a complete elimination of food subsidies and tariffs is estimated to be in the range of 1.2 - 2.7 per cent of GDP. Most of this gain stems from domestic farm sector iberalisation. The gain from free market access for seafood is estimated to 4.4 per cent of the seafood export value. Consequently, Norway has much to gain from offering other countries market access for agricultural products. In return, Norway should demand free access for their fish products.general equilibrium model; cost of agricultural policy; trade liberalisation; food industry; fisheries.

EU-Japan: free trade agreement a sign of commitment to economic cooperation. Future Social Market Economy Policy Brief #2017.01

The EU and Japan are important economic partners. They have been negotiating a bilateral free trade agreement since 2013. Both sides could benefit from this. More important than the potential GDP increase, however, would be the strategic value of such an agreement. In this era of Brexit and Trump, it would signal a clear commitment to economic cooperation and free trade

Definitive salvage chemotherapy for the treatment of refractory/relapsed non-Hodgkin lymphoma, a single center experience

Objective: Non Hodgkin Lymphomas (NHL)s are a group of malignancies which affect the lymphatic system. A significant proportion of NHL patients experience either relapse or failure of treatment which is called refractory disease. Relapsed or refractory NHL usually have poor prognosis due to shortage of randomized trials comparing efficacy of different treatment protocols to define the optimal salvage chemotherapy regimen in these cases. In this study, we are trying to define the best salvage chemotherapy regimen with low toxicity and better quality of life for patients by comparing outcome of 2 salvage chemotherapy regimens GDP & DHAP.Patients and methods: 100 patients diagnosed as relapsed or refractory NHL were randomly assigned to receive either Gemcitabine, Dexamethasone and Cisplatin (GDP) or Dexamethasone, Cytarabine and Cysplatin (DHAP) for 4 to 6 cycles. Primary endpoints of the study were overall survival and progression free survival. Secondary endpoints were response to treatment, toxicity profile of each regimen, and quality of life assessment.Results: The overall response rate was 70% in GDP group & 64% in DHAP group with no statistically significant difference between them (p-value 0.5). There was no significant difference between both groups regarding toxicity profile except in febrile neutropenia episodes which was much less in GDP group (p-value 0.04). Quality of life was better in GDP group than DHAP with significant difference (p-value < 0.05). There was no statistical significant difference between both groups regarding OS or PFS.Conclusion: GDP is as effective as DHAP for relapsed or refractory lymphoma with less toxicity and better quality of life.Keywords: DHAP, GDP, NHL, Relapsed, Refractory lymphom

Corporate finance in an interest free economy: An alternate approach to practiced Islamic Corporate Finance

This paper suggests an alternate approach to corporate finance in an interest free economy by looking beyond practiced Islamic finance and suggesting alternatives for corporate finance in sourcing funds i.e. i) Ijara with embedded options, ii) limited liability partnership, iii) equity modes like Musharakah and Mudarabah iv) income bonds and v) convertible income bonds. It also suggests alternatives for corporate finance in using funds i.e. i) Islamic income funds, ii) Islamic REITs, iii) Treasury Bonds, iv) income bonds v) convertible income bonds, vi) foreign currency reserves, vii) making strategic expansion, and viii) equity investments in other companies. It also suggests methods of valuation by suggesting an alternate means of pricing capital in interest free economy and use of appropriate discount rate i.e. Nominal GDP growth rate in public finance and corporate finance in CAPM, dividend discount model, project valuation, calculating NPV, valuing income bonds and stocks. It also discusses how the problems of scarcity of capital will be solved and alternatives for insurance in an interest free economy.Islamic corporate finance, pricing of capital, Islamic public finance, scarcity of capital, Interest free economy, Interest free finance, Zakat, Usury, Time value of money, CAPM, Project evaluation, NPV, FCF

Dampak ACFTA (ASEAN-China Free Trade Area) Terhadap Trade Creation Dan Trade Diversion Indonesia Di Kawasan ACFTA+3

Indonesia actively involves in Free Trade Area (FTA), such as FTA between ASEAN and China or also known as ACFTA. The study aims to analyze the factors influencing the value of Indonesia's imports and determine the impact of ACFTA on Indonesia's possible trade creation and trade diversion. The study employs the panel data model on secondary data, collected from 2000 to 2018, from WITS, WORLD BANK, UNCTAD, and CEPII. The empirical results show that after the ACFTA enacted, the value of Indonesia's imports from ACFTA member countries increased. The value of Indonesia's imports was significantly and positively influenced by Indonesia's GDP per capita, GDP per capita of trading partners (ACFTA + 3 countries), and economic distance. Meanwhile, the real exchange rate between countries negatively affected the value of Indonesia's imports. Overall, Indonesia is expected to suffer losses from the ACFTA due to the occurrence of trade diversion from non-member countries to member countries in the ACFTA +3 region.Indonesia terlibat aktif dalam jejaring kerjasama Free Trade Area (FTA), salah satunya dengan menjadi anggota pada ASEAN-China FTA atau dikenal juga dengan ACFTA. Studi ini bertujuan untuk menganalisis faktor yang memengaruhi nilai impor Indonesia dan mengetahui dampak ACFTA terhadap trade creation dan trade diversion Indonesia. Penelitian menggunakan pendekatan model panel data dengan data sekunder selama periode tahun 2000 hingga 2018 yang dikumpulkan dari WITS, WORLD BANK, UNCTAD, dan CEPII. Hasil empiris menunjukkan bahwa setelah ACFTA diberlakukan, nilai impor Indonesia dari negara-negara anggota ACFTA mengalami kenaikan. Nilai impor Indonesia secara signifikan dipengaruhi secara positif oleh GDP per kapita Indonesia, GDP per kapita mitra dagang (negara ACFTA+3), dan jarak ekonomi antar negara. Sementara nilai tukar riil antar negara berpengaruh negatif terhadap nilai impor Indonesia. Secara keseluruhan Indonesia diduga mengalami kerugian dari adanya ACFTA akibat terjadinya trade diversion dari negara non-anggota ke negara-negara anggota di wilayah ACFTA +3

An equilibrium model for Free Trade Area creation economic impacts estimation

In this paper, we propose a usual strategy in order to estimate the impact of a free trade area agreement between EU and Mediterranean Partner Countries (MPC's). In this frame, a dynamized Input-Output model is developed, obtaining the main economic impacts in each MPC country (employment, Value Added and GDP growth due to the new Free Trade Area).Free Trade Area Creation; Input-Output strategy; EU agricultural trade agreements; EU neighbourhood policy; free trade econometrics models

Monetary Policy & Monetary Regime in an Interest Free Economy: An Alternate Approach In Monetary Economics amidst Great Recession

This paper reviews limited, but precious academic literature on central banking and monetary management in Islamic finance. It discusses the building blocks of an Islamic monetary system. It discusses how savings would feature despite discontinuation of interest, how inflation will be checked with central banks not having at its disposal conventional OMO, how liquidity will be managed in banking sector when central bank wants to inject liquidity or mop up funds. How and to what extent the institution of Zakat would enable the government to meet its fiscal targets and does not crowd out private sector. How balance of payments and exchange rate stability can be managed in an interest free economy. If in the short term, the government or central bank needs alternative source of revenue other than Zakat, they can issue GDP linked bonds. This could replace T-bill and provide a base instrument for OMO and liquidity management in the banking and financial sector.Islamic corporate finance, pricing of capital, interest free finance, Interest, Interest free economy, Usury, Time value of money, Riba, Musharakah, Mudarabah, Ijara, Salam, Istisna, Qard-e-Hasan, Diminishing Musharakah

Deepening China-Taiwan Relations through the Economic Cooperation Framework Agreement

On June 13, 2010, representatives from China and Taiwan held a third round of talks in Beijing on an Economic Cooperation Framework Agreement (ECFA) that would liberalize important aspects of cross-Strait economic relations. It is clear from available details that ECFA will be an ambitious accord that fundamentally changes the game between Taiwan and China and hence affects the regional economy and even the transpacific tempo for the United States. Rosen and Wang's economic projections of the effects of a China-Taiwan ECFA point to significant benefits of cross-Strait economic reform, especially for Taiwan, which would increase its 2020 GDP by about 4.5 percent, or $21 billion, from the current trend line. The authors, however, also conclude that the regional economy around China and Taiwan is not standing still but is extraordinarily dynamic. Other agreements in the region will be negotiated (e.g., ASEAN+3), which will impose costs on Taiwan, if it does not do an ECFA, to the tune of almost -0.8 percent of GDP. So the net effect of ECFA for Taiwan would be some 5.3 percent improvement in GDP by 2020. For China, the net results of ECFA are positive, though far less so than for Taiwan in value terms and of course as a share of GDP. For the United States, the authors project a very modest positive result from ECFA (though statistically marginal) but a more negative impact as the scenarios incorporating further Asian integration (ASEAN + 3) unfold. If the US objective is to maximize Taiwan's economic prospects and hence its freedom of independent action, then ECFA is highly desirable, and Taiwan's involvement in further Asian deepening is to be supported. However, US economic interests per se erode as Asia draws tighter together without US inclusion. That is an econometric reality. More significant still is the geoeconomic, qualitative implication of even long-standing nemeses China and Taiwan drawing together in a free trade pact while the United States watches, unable to ratify already negotiated Asian trade agreements like the US-Korea free trade agreement. While modest in global economic effects, the geoeconomic implications of a China-Taiwan economic pact are significant enough to demand strategic attention from the United States and underscore the importance of securing US economic engagement of the first order in Asia.

Morocco's free trade agreement with the European community : a quantitative assessment

Morocco is interested in developing a reciprocal free trade agreement with the European Community (EC), although it already enjoys free access to EC markets in industrial products and is not obligated to give EC exporters reciprocal access. But Moroccan agricultural exports are impeded by agricultural protection in the European Community. A free trade agreement would require that Morocco lower its moderately high tariffs against its most important trading partner. Tariff reductions against the European Community but not against the rest of the world may provide benefits provided the trade diversion costs of preferential tariff reduction do not dominate. The authors apply a 39 sector general equilibrium model of the Moroccan economy which includes the sectors most likely to be affected by such an agreement. They investigate the economic effects of the prospective free trade agreement as well as five other trade liberalization scenarios for Morocco. Some of their most important findings are: The welfare benefits to Morocco from a free trade agreement with the European Community would be about 1.5 percent GDP. Such substantial welfare gains partly reflect the benefits of reducing dispersion in the tariff regime. Welfare benefits of about 2.5 percent of GDP would accrue from liberalizing trade with the rest of the world - with only slightly higher adjustment costs. Liberalizing trade with the world would provide greater benefits because it would eliminate the trade diversion costs associated with discriminatory trade liberalization. (Although the fact that significant benefits would accrue from discriminatory liberalization against imports from either the European Community or the rest of the world indicates that trade diversion is not dominant.) As a result of improved access to the European Community, employment and output in the vegetable and citrus fruit sectors would expand. But the phosphate sector stands to gain most from the free trade agreement because liberalization wouldinduce a depreciation in the real exchange rate. Morocco's cereal, meat, dairy, and sugar sectors would loose more in terms of employment, because of significantly lower import prices from the European Community. The nontraded goods sector would also contract slightly. The value added tax would have to be increased to compensate for the loss in tariff revenues, on which Morocco depends. Estimates are provided as ranges, with probability assessments, because of the element of uncertainty.Environmental Economics&Policies,Trade Policy,Rules of Origin,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT