Capital Inflow into Developing Economies: A Macroeconomic Study

External capital inflow on a massive scale into the emerging market economies is a very significant phenomenon of recent years. Making distinctions between direct investment, real and financial, and portfolio investment and incorporating crowding in or crowding out effects we derive some results about the impact of higher inflow on output, investment and the exchange rare. A formula is suggested for estimating the cost of central bank intervention.

Impact of India-ASEAN Free Trade Agreement: A cross-country analysis using applies general equilibrium modelling

The study attempted to analyse the long-term effects of the FTA on India. It is argued that after full trade liberalization, India’s allocative efficiency will increase, but the terms of trade effect will worsen continuously and remain negative. India will be able to arrest the worsening in terms of trade once the gain in allocative efficiency is used to improve productivity in the export-oriented sectors as well as achieve economies of scale.India-ASEAN Free Trade Agreement, cross-country analysis, general equilibrium model

A MODEL OF CORRUPTION IN AN INVESTMENT PROJECT

The present paper analyzes the phenomenon of corruption in the context of a Public Works Department (PWD) in a developing country city and examines its tenacity in the face of anticorruption measures. Different behaviour patterns of the supervisor (official) of the PWD have been considered. The interesting result to emerge is that corruption may show a high degree of robustness against marginal attacks and such measures may actually be counterproductive in the different cases considered in this paper.Corruption, investment project, supervisor, contractor, bribe, anticorruption measures

Palaeosol Control of Arsenic Pollution: The Bengal Basin in West Bengal, India

Groundwater in the Bengal Basin is badly polluted by arsenic (As) which adversely affects human health. To provide low-As groundwater for As mitigation, it was sought across 235 km2 of central West Bengal, in the western part of the basin. By drilling 76 boreholes and chemical analysis of 535 water wells, groundwater with <10 µg/L As in shallow aquifers was found under one-third of a study area. The groundwater is in late Pleistocene palaeo-interfluvial aquifers of weathered brown sand that are capped by a palaeosol of red clay. The aquifers form two N-S trending lineaments that are bounded on the east by an As-polluted deep palaeo-channel aquifer and separated by a shallower palaeo-channel aquifer. The depth to the top of the palaeo-interfluvial aquifers is mostly between 35 and 38 m below ground level (mbgl). The palaeo-interfluvial aquifers are overlain by shallow palaeo-channel aquifers of gray sand in which groundwater is usually As-polluted. The palaeosol now protects the palaeo-interfluvial aquifers from downward migration of As-polluted groundwater in overlying shallow palaeo-channel aquifers. The depth to the palaeo-interfluvial aquifers of 35 to 38 mbgl makes the cost of their exploitation affordable to most of the rural poor of West Bengal, who can install a well cheaply to depths up to 60 mbgl. The protection against pollution afforded by the palaeosol means that the palaeo-interfluvial aquifers will provide a long-term source of low-As groundwater to mitigate As pollution of groundwater in the shallower, heavily used, palaeo-channel aquifers. This option for mitigation is cheap to employ and instantly available

Strategic environmental policy under free trade with transboundary pollution

We analyze the effects of trade liberalization on environmental policies in a strategic setting when there is transboundary pollution. Trade liberalization can result in a race to the bottom in environmental taxes, which makes both countries worse. This is not due to the terms of trade motive, but rather the incentive, in a strategic setting, to reduce the incidence of transboundary pollution. With command and control policies (emission quotas), countries are unable to influence foreign emissions by strategic choice of domestic policy; hence, there is no race to the bottom. However, with internationally tradable quotas, unless pollution is a pure global public bad, there is a race to the bottom in environmental policy. Under free trade, internationally nontradable quotas result in the lowest pollution level and strictly welfare- dominate taxes. The ordering of internationally tradable quotas and pollution taxes depends, among other things, on the degree of international pollution spilloversEnvironmental Economics and Policy,

Strategic Environmental Policy Under Free Trade with Transboundary Pollution

We analyze the effects of free trade on environmental policies in a strategic setting with transboundary pollution. Trade liberalization can result in a race to the bottom in environmental outcomes, making both countries worse off. With command and control policies (quotas), there is no race to the bottom. However, with internationally tradable permits, unless pollution is a pure global public bad, there is a race to the bottom in environmental policy. In our model carbon leakage alone, and not a terms of trade motive, drives countries to relax domestic environmental policy. Quantity-based tools strictly welfare-dominate price-based tools under free trade.free trade; transboundary pollution; environmental policy; carbon leakage; race to the bottom

Optimal Banking Sector Recapitalization

Government-financed bank restructuring programs, occasionally costing up to 50% of GDP, are commonly used to resolve banking crises. We analyze the Ramsey-optimal paths of bank recapitalization programs that weigh recapitalization benefits and costs under different financing options. In our model bank credit is essential, due to a working capital constraint on firms, and banks are financial intermediaries that borrow from households and lend to firms. A banking crisis produces a disruption of credit and a fall in output equivalent to those in developing countries affected by banking crises. Full recapitalization of the banking system immediately after the crisis is optimal only if international credit is available. One-shot recapitalization is not optimal with domestically-financed programs, even if the government has access to non-distortionary taxes. The welfare cost of a crisis is substantial: the equivalent permanent decline in the no-crisis steady state consumption ranges between 0.51% and 0.65%, depending on the source of financing the recapitalization program.financial intermediation; bank recapitalization; banking crises; banking capital

Strategic Environmental Policy Under Free Trade with Transboundary Pollution

�We analyze the effects of trade liberalization on environmental policies in a strategic setting when there is transboundary pollution. Trade liberalization can result in�a race to the bottom in environmental taxes, which makes both countries worse off.�This is not due to the terms of trade motive, but rather the incentive, in a�strategic setting, to reduce the incidence of transboundary pollution. With command and control policies (emission quotas), countries are unable to influence foreign�emissions by strategic choice of domestic policy; hence, there is no race to the bottom. However, with internationally tradable quotas, unless pollution is a pure global�public bad, there is a race to the bottom in environmental policy. Under free trade,�internationally nontradable quotas result in the lowest pollution level and strictly�welfare-dominate taxes. The ordering of internationally tradable quotas and pollution�taxes depends, among other things, on the degree of international pollution spillovers.Free trade; Transboundary pollution; Strategic environmental policy; Carbon leakage; Race to the bottom.