Private Intergenerational Transfers and Their Ability to Alleviate the Fiscal Burden of Ageing

The ratio of retirees to workers in developed countries is expected to increase sharply in the next few decades. In the presence of unfunded income support policies, this increase in old age dependency is expected to increase the future fiscal burden which is seen as a threat to living standards. This paper quantifies the ability of private intergenerational transfers to alleviate the future fiscal burden of ageing. This is done through developing an extended dynamic overlapping generations simulation model with realistic demographics. Calculation based on steady state simulations suggests that a bequest to GDP ratio of 1% offsets about 33.3 % of the fiscal burden over the lifecycle when measured as a % of simple labour income and 8.9% of the fiscal burden when measured as % of the full income. The model is calibrated for Australia under small open economy assumption such that the optimal solution mimic important cross sectional and time series fundamentals of the Australian Economy. Intergenerational accounting suggests that the empirically plausible intergenerational transfers are strong enough to offset most of the tax burden (81 to 91%) when measured as % of simple labour income and up to 1/4 of the burden when fiscal burden is measured as % of full income. In the endogenous labour supply case, 81 to 91 percent of the fiscal burden of ageing will be alleviated by inheritances in the base case. Due to the calibration strategy adopted, the paper analytically demonstrates that results of the simulations are robust to the introduction of lifetime uncertainty in the model where people discount the future by a rate of time preference and by a survival probability irrespective of whether there are perfect annuity markets or no annuity markets at all.Ageing, Overlapping Generations (OLG) model, bequests, fiscal

Modeling Social Preferences: A Generalized Model of Inequity Aversion

Taking note of the wide variety and growing list of models in the literature to explain patterns of behavior observed in laboratory experiments, this paper identifies two tests, the Variety Test (ability of a model to explain outcomes under variety or alternative scenarios) and the Psychological Test (ability of a model to conform to psychological intuition), that can be used to judge any model of other-regarding behavior. It is argued that for a mathematical model to qualify as a social welfare function, it must simultaneously pass the two tests. It is shown that none of the models proposed to date passes these two tests simultaneously. The paper proposes a generalized model of inequity aversion which parsimoniously explains interior solution in the dictator game and dynamics of outcomes in other games. The paper postulates that one’s idea of equitable distribution is state-dependent, where the state is determined by psychological and structural parameters. The state could be fair, superior or inferior. Individuals in a fair state have zero equity-bias and split the pie evenly. Those in a superior (inferior) state have positive (negative) equity-bias and value more (less) than fair distribution as equitable distribution. Given psychological tendencies of an individual, every experimental design/structure assigns one of the three states to players which lead to individual-specific valuation of equity. Prediction about outcomes across different experiments and designs can be made through predicting their impact on equity-bias. All aspects of an individual’s behavior, such as altruism, fairness, reciprocity, self-serving bias, kindness, intentions etc, manifest themselves in the equity-bias. The model therefore is all-encompassing.Experimental Economics, Social Preferences, Other-regarding Preferences, Inequity aversion.

Explaining Africa's Growth Tragedy: A Theoretical Model of Dictatorship and Kleptocracy

In this paper, we construct a dynamic model of a kleptocratic dictatorship to explain sub-Saharan Africa’s dismal economic performance between the early 1970s and the mid-1990s. The dictator’s objective is to maximize a discounted stream of revenue generated through theft of the economy’s output by choosing the optimal expropriation rate and the size of the security force employed to enforce his rule. The model is used to evaluate alternative intervention options open to developed countries such as unconditional, conditional and selective foreign aid, financial and military assistance to rebel groups, as well as medical relief to combat the HIV/AIDs pandemic.Economic performance, dictatorship, foreign aid, Africa

Determinants of Foreign Direct Investment in Pakistan

The objectives of the study were to analyze the patterns in FDI in Pakistan in recent years, to study the determinants of FDI in Pakistan and to analyze those determinants and develop a model. For analysis purpose secondary data were used and Multiple regression model was estimated through SPSS using past nine years’ data from 2000-2008.From the coefficients it was concluded that foreign direct investment in Pakistan is affected by the Economic condition of Pakistan (GDP). Interest rate was inversely related to foreign direct investment. The exchange rate in a country is inversely related to foreign direct investment. Domestic investment is positively related to foreign direct investment. Foreign investors are more attracted to a certain country, if the level of domestic investment is high in that country. The Foreign direct investment is positively related to labor force that exists in Pakistan. Foreign direct investment is directly related to inflation rate in Pakistan. It is because, inflation in a country points to high supply of money. High inflation rate gives rise to high level of profits, which is why foreign investors are attracted. The infrastructure and foreign direct investment had negative relationship. This might be due to the extension of roads and infrastructure which does not contribute directly to the business activities. In short level of   FDI has great impact on the overall economy of Pakistan. When there is huge amount of inflow of FDI, the level of the employment, production level and foreign revenues will increase. The production level of the country will increase. Hence exports and foreign exchange will increase. Keywords: Foreign Direct Investment, Interest Rate, Exchange Rate, Labors Force

Comments on: "Starting solutions for some unsteady unidirectional flows of a second grade fluid," [Int. J. Eng. Sci. 43 (2005) 781]

A significant mathematical error is identified and corrected in a recent highly-cited paper on oscillatory flows of second-grade fluids [Fetecau & Fetecau (2005). Int. J. Eng. Sci., 43, 781--789]. The corrected solutions are shown to agree identically with numerical ones generated by a finite-difference scheme, while the original ones of Fetecau & Fetecau do not. A list of other recent papers in the literature that commit the error corrected in this Comment is compiled. Finally, a summary of related erroneous papers in this journal is presented as an Appendix.Comment: 8 pages, 2 figures (4 images), elsarticle class; accepted for publication in International Journal of Engineering Scienc

The Impact of Human Capital Investment towards Labour Productivity: Evidence from Malaysia

The economic value of education, in terms of its contribution to social and private returns (Psacharopoulos, 1994), motivates individuals and countries to invest in the education industry. One of the social returns of human capital investment is an increase in productivity that leads to economic growth. This paper studies the contribution of human capital investment towards productivity. In particular, we quantify contribution of different levels of education to productivity growth at industry level in Malaysia during 2005 to 2012. The Arellano-Bond (1991) approach that uses the longitudinal data, produces efficient and reliable estimates in our case. We find that at aggregate level, primary, secondary, and tertiary education levels are all important in terms of its contribution to productivity. The more specific industry analysis however shows that primary education does not play a significant role in productive industries, whereas it is as important as any other level of education in low productive industries. We also study the impact of National Higher Education Strategic Plan (NHESP) 2007 policy during our sample period on productivity growth and subsequent policy change in 2009 due to change in the regime

Modelling molecular processes in weight loss:Regulation of metabolic flexibility

The World Health Organisation has estimated a three-fold increase in global obesity from 1975 to 2018. This is alarming as obesity is associated with several chronic illnesses including cardiovascular diseases, type 2 diabetes, metabolic syndrome, and several forms of cancer. This research utilises multiple types of data from a weight loss study to identify key cellular processes in the cells of the adipose tissue involved in weight loss. The objective is to highlight cellular pathways and genes, which can be targeted to counter obesity and associated illnesses. It was observed that metabolic flexibility, the ability of organisms to switch between metabolic nutrients, was impaired in obese individuals along with an increase in inflammation, indicating possible interactions between the two leading to the development of chronic illnesses in obesity

Commentary: Outbreak of Chikungunya in Pakistan

Rauf et al. in their recent correspondence in “Lancet Infectious Diseases” reported the first chikungunya outbreak in Karachi, Pakistan with 30,000 suspected and 4,000 confirmed cases (1). However, these estimates have been denied in a subsequent report by the National Institute of Health (NIH) indicating 818 suspected and 82 laboratory-confirmed cases of chikungunya (2). Rauf and colleagues have highlighted warm climate and wretched sanitary conditions as contributing factors of current outbreak and urge national and international health-organizations to address these momentous issues (1). We agree that climatic features and sanitation issues potentially lead to vector proliferation and the importance of these concerns cannot be disregarded. However, we felt inclined to share our point of view about the recent outbreak of chikungunya in Pakistan. We believe that there are some more important factors that should be considered as causes of this outbreak and must be addressed by the Government of Pakistan in haste to quell the further disease spillover. One of these factors is unchecked cross-border movements between Pakistan and India