Green Tax Reform and Competitiveness

This paper studies a revenue-neutral green tax reform that substitutes energy for wage taxes in an open economy with unemployment. As long as the labour tax rate exceeds the energy tax rate, such a reform will increase employment, reduce the domestic firms' unit cost of production and hence increase international competitiveness and output of the economy. The driving force behind these results is the technological substitution process that a green tax reform will bring about. The resulting reduction in unemployment is welfare increasing since energy, which the country has to buy at its true national opportunity cost, is replaced with labour, whose price is above its social opportunity cost.     

From voice to choice: lessons from a regional capacity development initiative to strengthen social and gender analysis in participatory natural resource management research

Doing practical biodiversity and natural resources management research that is socially and gender sensitive remains a challenge. Most of the relevant literature is primarily at the conceptual level. There are few learning programmes that focus on systematic capacity development for gender and social analysis in applied research in this field. Efforts that systematically document and analyse this kind of capacity development process are also hard to find. This paper summarizes the main research and capacity development achievements and challenges of a novel, Asian-regional initiative that aimed to address these gaps. It is suggested that the success of capacity-building strategies for the integration of social and gender analysis can be enhanced by combining a mix of elements, including a ‘learning by doing’ approach, participatory (action) research methodologies, a diverse group of participants, regular peer review, flexible networking and strong personal and organizational commitment. These kinds of strategies will require a long(er) time horizon and sufficient resources.     

Outsourcing of Unionized Firms and the Impact of Labor Market Policy Reforms

This paper shows that outsourcing of parts of the workforce in unionized firms leads to wage moderation both in the case of strategic and flexible outsourcing. As long as the share of the outsourced workforce is not too large, this wage‐moderation effect on domestic employment outweighs the direct substitution effect so that domestic employment increases in unionized firms as outsourcing costs fall. With respect to the impact of labor tax reform changes in the wage tax rate, the tax exemption and the unemployment benefit payments affect domestic wage setting in the same way as in the absence of outsourcing. Furthermore, increasing the degree of tax progression by keeping the relative tax burden per worker constant continues to be good for employment. However, except for low outsourcing activities, the impact of these policy measures will become smaller as outsourcing costs fall.     

Injecting incentives into the solution of social problems: Social Policy Bonds

There seems little chance of achieving many social objectives, given that the ways in which they are being pursued fail to harness self-interest. A way forward is to create a new financial instrument - Social Policy Bonds - which would be auctioned by government. The bonds would be tradable and would be redeemed only when a specified social objective had been achieved.     

Ecological Tax Reforms and the Environment: A Note

There is widespread agreement on the ability of ecological tax reforms to improve the environmental quality. This paper, however, points out that a negative marginal impact on the environment cannot be ruled out for revenue-neutral ecological tax reforms in both first-best and second-best frameworks. Therefore, sufficient conditions are derived which ensure the improvement of the environmental quality.     

"Many a Long Day": HSBC and Its Note Issue in Republican China, 1912-1935

This article utilizes the local banknote circulation volumesof HSBC, the largest foreign bank in China, as a gauge withwhich to explore political stability and state-building duringthe Republican era (1912–1935). It will challenge theprevailing view that British banks faced little resistance inChina through the 1920s–1930s, and expose new archivalevidence on the perception of, and mobilization against, foreignbanks.     

PARTIAL HEDGING IN A STOCHASTIC VOLATILITY ENVIRONMENT

We consider the problem of partial hedging of derivative risk in a stochastic volatility environment. It is related to state-dependent utility maximization problems in classical economics. We derive the dual problem from the Legendre transform of the associated Bellman equation and interpret the optimal strategy as the perfect hedging strategy for a modified claim. Under the assumption that volatility is fast mean-reverting and using a singular perturbation analysis, we derive approximate value functions and strategies that are easy to implement and study. The analysis identifies the usual mean historical volatility and the harmonically averaged long-run volatility as important statistics for such optimization problems without further specification of a stochastic volatility model. The approximation can be improved by specifying a model and can be calibrated for the leverage effect from the implied volatility skew. We study the effectiveness of these strategies using simulated stock paths.