A General Equilibrium Analysis of VAT in India

Indian industry is under pricing pressure after the government cut tariffs in a phased manner as per the WTO agreements. In order to be competitive, the consensus opinion in government, academics and industry is the implementation of a VAT in India. The paper evaluates the welfare implications of a VAT in the static and a sequentially dynamic context after accounting for the political and administrative constraints facing the Indian government in implementing a VAT. Replacing the old indirect tax structure with a VAT is welfare worsening. The increase in final consumer prices on account of reduced tax base leads to higher price of essentials, causing welfare loss. Zero rating v/s exemption plays an important role on welfare, with lower welfare loss if essential commodities are exempt from VAT. Agriculture sector unambiguously plays a crucial role in welfare.     

Sources of Bank Interest Rate Risk

We investigate bank stocks'sensitivity to changes in interest rates and the factors affecting this sensitivity. We focus on whether the exposure of commercial banks to interest rate risk is conditioned on certain balance sheet and income statement ratios. We find a significantly negative relation between bank stock returns and changes in interest rates over the period 1991–1996. We also find that bank characteristics measured from basic financial statement information explain bank stocks'sensitivity to interest rate changes. These results suggest that bank managers, analysts, and regulators can use this information to assess the relative risk exposure of banks.     

Initial Margin Requirements, Volatility, and the Individual Investor: Insights from Japan

Initial margin requirements represent: (1) a cost impediment to the wealth constrained investor and (2) a potential way of mitigating excessive volatility. However, prior empirical research finds that margins are not an effective tool in reducing volatility. We consider the possibility that margins primarily affect certain stocks and investors. Specifically, we test whether margins affect individuals who, as a group, we believe to be the investors most affected when margin requirements change. Our initial empirical tests, however, do not support this contention.     

From T-Bills to Stocks: Seasonal Anomalies Revisited

This paper employed eleven data series which consist of stocks, bonds, bills, equity premiums, term premiums, and various default premiums to investigate whether January seasonality reported in existing literature is robust across different states of the economy as this has important trading implications. For the periods 1926–1990, small stocks, small stock premiums, low grade bonds, and default premiums (spread between high grade, low grade and government bonds) reveal January seasonality and that the seasonality is robust across different states of the economy except for low grade bond returns and default premiums. January seasonality for low grade bond returns and low grade bond default premiums are primarily driven by results found during periods of economic expansion. Overall, January seasonality is more evident during the economic expansion periods although the magnitude of default premiums is larger during periods of economic contraction. Furthermore, prior findings of strong summer equity returns are primarily driven by the results found during the periods of economic contraction. It is also found that equity returns are generally higher during periods of economic expansion.     

THE RETURNS TO ENDOGENOUS HUMAN CAPITAL IN PAKISTAN'S RURAL WAGE LABOUR MARKET

This paper estimates the private returns to human capital in Pakistani rural labour markets. The rich data used permit inclusion of several dimensions of human capital and control for endogeneity resulting from investment in human capital. The results suggest that, without data on determinants of human capital, it would not be possible to disentangle the separate effect of each dimension of human capital on wage differentials nor to distinguish human capital explanations for wage differentials from signalling and credentialist models. With control for endogeneity of human capital and selectivity into wage employment, cognitive achievement, but not schooling attainment separate from cognitive achievement nor long-run health status, affects wage differentials.     

Toxicity of Detroit River Sediment-Bound Contaminants to Ultraplankton

Four sites in the Detroit River/Lake Erie western basin were evaluated for their toxicity. The evaluation was based on 1) bulk chemical characterization of the sediments, 2) chemical composition of the sediment elutriates, and 3) toxicity of the elutriates to ultraplankton and microplankton/net plankton. A sequence of decreasing contamination was determined from the chemical composition of the elutriates based on the elutriation release of metals such as Zn, Mn, Cd, Ni, and Co. Bioassessment of elutriate toxicity was determined by carbon-14 Algal Fractionation Bioassays (AFB's) which were conducted with various dilutions of standard and Chelex-100 treated elutriates. Site A (near Windsor, Ontario) and Site D (western Lake Erie) were found to be toxic to ultraplankton. The observed toxicity was attributed to the bioavailability and synergistic impact of elutriated metals on ultraplankton production. A direct relationship between the water soluble metal fraction and toxicity was observed. These results confirmed that sediment toxicity should not be evaluated solely on bulk chemical composition of the sediments. The AFB's have been proven useful in the bioassessment of sediments due to their rapidity/sensitivity and hence could be routinely used for the screening and early detection of contaminants affecting fast growing organisms which form the basis of the aquatic food chain.     

Position limits for cash‐settled derivative contracts

Cash settlement of derivative contracts makes them susceptible to manipulation by traders who expect to close large positions upon final settlement. Cash settlement also increases underlying volatility when hedgers unwind their hedges if they have no incentives to control their trading costs. Limits on the positions that traders can carry into final settlement can be used to mitigate associated economic inefficiencies when surveillance is insufficient. This article develops a model that regulators can use to set these limits that is based upon microstructure theory. The empirical findings indicate that existing position limits are largely inconsistent with those suggested by the model. © 2005 Wiley Periodicals, Inc. Jrl Fut Mark 25:945–965, 2005     

Monitoring, removal and risk assessment of cytostatic drugs in hospital wastewater.

Cytostatic agents are applied in cancer therapy and subsequently excreted into hospital wastewater. As these substances are known to be carcinogenic, mutagenic and toxic for reproduction, they should be removed from wastewater at their source of origin.In this study the fate and effects of the cancerostatic platinum compounds (CPC) cisplatin, carboplatin, oxaliplatin, 5-fluorouracil (5-FU) and the anthracyclines doxorubicin, daunorubicin and epirubicin were investigated in hospital wastewater. Wastewater from the in-patient treatment ward of a hospital in Vienna was collected and monitored for the occurrence of the selected drugs. A calculation model was established to spot the correlation between administered dosage and measured concentrations. To investigate the fate of the selected substances during wastewater treatment, the oncologic wastewater was treated in a pilot membrane bioreactor system (MBR) and in downstream advanced wastewater treatment processes (adsorption to activated carbon and UV-treatment). Genotoxic effects of the oncologic wastewater were assessed before and after wastewater treatment followed by a risk assessment.Monitoring concentrations of the selected cytostatics in the oncologic wastewater were in line with calculated concentrations. Due to different mechanisms (adsorption, biodegradation) in the MBR-system 5 - FU and the anthracyclines were removed < LOD, whereas CPC were removed by 60%. In parallel, genotoxic effects could be reduced significantly by the MBR-system. The risk for humans, the aquatic and terrestrial environment by hospital wastewater containing cytostatic drugs was classified as small in a preliminary risk assessment.     

Foodcrop Demand in Indonesia: A Systems Approach

Aggregate agricultural commodity demand parameters are estimated, based on an application of the Deaton and Muellbauer Almost Ideal Demand System to a seventeen year Indonesian time-series data set of prices, expenditures and consumption availability. The statistical results are generally significant and correctly signed. The revealed demand relationships imply that the Indonesian food Staples are normal goods. Expenditure elasticities are higher for the higher value foodstuffs than for the lower value starchy staples. Furthermore, the demand for rice has become highly inelastic to both own and cross-price interventions. This implies that rice price interventions will require a high degree of fine-tuning in order to stabilise prices effectively, and that low urban rice prices cannot be regarded as an appropriate, or even second best policy instrument for improving nutritional status.

A high degree of Substitution between rice and secondary food crops, and amongst groups of secondary food crops, is identified. The significance of the cross-price elasticities for the secondary food crops suggests that single-market interventions will have non-trivial budget-mediated effects in other commodity markets. The management of a multi-commodity food policy requires that the spillover effects from commodity pricing policy must be taken into account in order to optimise the effects of price policy interventions.     

Screening model for assessing ‘cost’ of minimum flow requirements in the Svartå River,Sweden

The minimum flow requirements in the Svartå River in Sweden are directed at maintaining fishlife and providing suitable dilution for waste flows. The implications of varying the minimum flow requirements in the river are examined using a mixed integer optimisation model. The model is formulated as a modified method-of-weights technique with the economic issues of hydro-electricity generation, irrigation and urban water supply placed in the objective function and the minimum flows specified within the constraint set. The integer component of the model is required to model the operating policy at the major flow regulation facility in the system and the restricted validity of the irrigation permits. Application of the model shows that in dry years where competition between minimum flow levels and the other economic uses, is most intense, the levels achieved by the various economic objectives are only slightly reduced even with significant increases in the minimum flow requirements. Variations in minimum flow requirements of up to 45% only produce changes of 10% or less in the economic objectives. The lack of sensitivity of the objective levels is due primarily to the level of control exerted indirectly on the whole system in dry years by the release regulation policy and the restricted validity of the irrigation permits. In normal to wet years these policies are not as restrictive and more choice is available. In such years, however, there is generally sufficient water to satisfy all requirements and allocation is not a critical issue. The model itself is formulated generally so that a range of scenarios beyond those examined specifically in the paper can be considered.