Economy-wide impacts of zero-rated VAT on exports of business services in Indonesia: A CGE analysis

The Indonesian government expanded the zero-rated VAT regime on exports of services to include information and technology services, research and development services, and professional services and a number of other activities as stipulated in the Minister of Finance Regulation Number 32 Year 2019. This research projects economy-wide impacts of the policy with respect to information and technology services, research and development services, and professional services using the Global Trade Analysis Project (GTAP) model. Both short-run (i.e. fixed labour and capital) and longer-run (fixed labour with variable capital) economic environment is set to compare the results derived from two scenarios: elasticity scenario (i.e. rebating input VAT by 1%) and policy scenario (i.e. rebating input VAT by 4.57%). The main findings are that, although a majority of sectors are likely to contract in the short run due to the relocation of some resources in favour of business services, there is a likely long-run national economic benefit reflected by projected increases in export volume of business services, real wages, particularly for skilled labour, and real income.

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International trade in services and inequalities

Tourism Economics ◽

10.1177/1354816616672361 ◽

2016 ◽

Vol 23 (5) ◽

pp. 1069-1075 ◽

Cited By ~ 1

Author(s):

Sylvain Petit

Keyword(s):

Wage Inequality ◽

Developed Countries ◽

Tourism Industry ◽

Skilled Workers ◽

Business Services ◽

Long Run ◽

Short Run ◽

Unskilled Workers ◽

Tourism Services ◽

The Impact

This study investigates the impact of the international openness in tourism services trade on wage inequality between highly skilled, semi-skilled, and unskilled workers in the tourism industry. The sample covers 10 developed countries and expands over 15 years. A cointegrated panel data model and an error correction model were used to distinguish between the short- and long-run effects. The results are compared to those of openness of business services and manufactured goods. The findings point out that tourism increases wage inequality at the expense of the least skilled workers in the long run and the short run.

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THE IMPACT OF RESEARCH AND DEVELOPMENT INVESTMENT ON AGRICULTURAL SECTOR PERFOMANCE IN KENYA

Journal of Agricultural Policy ◽

10.47941/jap.161 ◽

2017 ◽

Vol 2 (1) ◽

pp. 34-57

Author(s):

John Githii Kimani ◽

Dr. George Ruigu Ruigu

Keyword(s):

Research And Development ◽

Agricultural Sector ◽

Research Policy ◽

Trade Openness ◽

Policy And Practice ◽

Long Run ◽

Short Run ◽

The Government ◽

Parsimonious Model ◽

The Impact

Purpose: The purpose of the study was to assess the impact of research and development investment/expenditure on the agricultural sector performance in Kenya.Methodology: The study took the peoples impact assessment direction. The data for this study was collected from various government agencies such as KARI, ASTI, Kenya Agricultural Sector Data compendium website, FAOSTAT, World Bank among others. Co-integration and error correction modeling methods were used in analyzing the data for this study.Results: Co-integration results for both the parsimonious and non-parsimonious model indicated that that there is a long-run relationship among the variables in the agriculture performance in Kenya. Further, findings in this study indicated that the variables under study were insignificant determinants of the long run Total Factor Productivity of the agricultural sector. Meanwhile, Trade openness was the only significant determinant of the short run agricultural Total Factor Productivity.Unique Contribution to Policy and Practice: This study recommends the institutionalization of policies aimed at ensuring interaction between the various stakeholders in the agricultural sectors. This interaction will ensure that resources are better allocated to reduce duplication of research and dissemination activities. In addition, greater collaboration among the stakeholders will promote and strengthen the connection between research, policy and the application of research findings. The study further advocates that the government should follow a trade liberazation oriented approach to the agricultural sector as opposed to a trade tightening approach.

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AID AND GROWTH IN BANGLADESH: A REASSESSMENT

JOURNAL OF EUROPEAN ECONOMY - No 1 (2018) ◽

10.35774/jee2018.04.422 ◽

2018 ◽

pp. 422-440

Author(s):

Sharif Hossain ◽

Rajarshi Mitra ◽

Thasinul Abedin

Keyword(s):

Economic Growth ◽

Foreign Aid ◽

Inflation Rate ◽

Government Expenditure ◽

Real Income ◽

Domestic Investment ◽

Real Gdp ◽

Long Run ◽

Short Run ◽

Per Capita

Although the amount of foreign aid received by Bangladesh as a share of GDP has declined over the years, Bangladesh remains one of the heavily aiddependent countries in Asia. The results of most empirical studies that have examined the effectiveness of foreign aid or other forms of development assistance for economic growth have varied considerably depending on the econometric methodology used and the period of study. As the debate and controversy over aid-effectiveness for economic growth continue to grow, this paper reinvestigates the short-run and long-run effects of foreign aid received on percapita real income of Bangladesh over the period 1972–2015. A vector error correction model is estimated. The results indicate lack of any significant short-run and long-run relation between foreign aid and per-capita real income. Results further indicate short-run unidirectional causalities from per-capita real GDP to domestic investment (in proportion to GDP), from government expenditure (in proportion to GDP) to inflation rate, from inflation rate to domestic investment (in proportion to GDP), and from domestic investment to foreign aid (as percentages of GDP). Short-run bidirectional causality is observed between per-capita electricity consumption and per-capita real GDP, and between per-capita real GDP and government expenditure (in proportion to GDP).

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The Employment –Wage Relationship Was Keynes right after all?

American Review of Political Economy ◽

10.38024/arpe.100 ◽

2008 ◽

Vol 6 (1) ◽

Author(s):

Nicholas Apergis ◽

Keyword(s):

Real Wage ◽

Panel Cointegration ◽

Oecd Countries ◽

Statistical Evidence ◽

Real Wages ◽

Long Run ◽

Short Run

This paper investigates the existence and direction of a relationship between real wages and employment. Using a panel from ten different OECD countries, from 1950 to 2005, it applies panel cointegration and causality methodology. This study finds statistical evidence for a long run relationship between these two variables. However, it firmly rejects the hypothesis that wages cause employment in the short-run. Thus the results support Keynes’s view namely, real wages fall because employment increases, presumably via an increase in demand. The results imply that real wage reduction is not sufficient to induce an expansion of output and employment.

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A Long View of the UK Business Cycle

National Institute Economic Review ◽

10.1177/002795010218200108 ◽

2002 ◽

Vol 182 ◽

pp. 72-89 ◽

Cited By ~ 9

Author(s):

Jagjit S. Chadha ◽

Charles Nolan

Keyword(s):

Business Cycle ◽

Interest Rates ◽

Dominant Role ◽

Real Wages ◽

Long Run ◽

Nominal Interest Rates ◽

Short Run ◽

The Business Cycle ◽

The Uk ◽

External Sector

We outline a number of ‘stylised’ facts on the UK business cycle obtained from analysis of the long-run UK annual dataset. The findings are to some extent standard. Consumption and investment are pro-cyclical, with productivity playing a dominant role in explaining business cycle fluctuations at all horizons. Money neutrality obtains over the long run but there is clear evidence of non-neutrality over the short run, particularly at the business cycle frequencies. Business cycle relationships with the external sector via the real exchange rate and current account are notable. Postwar, the price level is counter-cyclical and real wages are pro-cyclical, as are nominal interest rates. Modern general equilibrium macroeconomic models capture many of these patterns.

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An artificial Wicksell–Keynes economy integrating short-run business cycle and long-term cumulative trend

Journal of Economic Interaction and Coordination ◽

10.1007/s11403-020-00282-6 ◽

2020 ◽

Vol 15 (4) ◽

pp. 953-998 ◽

Cited By ~ 1

Author(s):

Ichiro Takahashi ◽

Isamu Okada

Keyword(s):

Banking Sector ◽

Full Employment ◽

Aggregate Demand ◽

Real Wages ◽

Fractional Reserve Banking ◽

Investment Funds ◽

Wage Stickiness ◽

Long Run ◽

Short Run ◽

Reserve Banking

Abstract Economists have investigated how price–wage rigidity influences macroeconomic stability. A widely accepted view asserts that increased rigidity destabilizes an economy by requiring a larger quantity adjustment. In contrast, the Old Keynesian view regards nominal rigidity as a stabilizing factor, because it reduces fluctuations in income and thus aggregate demand. To examine whether price–wage stickiness is stabilizing or destabilizing, we build an agent-based Wicksell–Keynes macroeconomic model, which is completely closed and absolutely free from any external shocks, including policy interventions. In the model, firms setting prices and wages make both employment and investment decisions under demand constraints, while a fractional-reserve banking sector sets the interest rate and provides the firms with investment funds. As investment involves a gestation period, it is conducive to overproduction, thereby causing alternate seller’s and buyer’s markets. In the baseline simulation, a stable economy emerges with short-run business cycles and long-run fluctuations. One unique feature of the economy is its remarkable resilience: When afflicted by persistent deflation, it often manages to reverse the deflationary spiral and get back on a growth track, ultimately achieving full or nearly full employment. The virtual experiments demonstrate that prices and wages must both be moderately rigid to ensure long-run stability. The key stabilizing mechanism is a recurring demand-sufficient economy, in which firms are allowed to increase employment while simultaneously cutting real wages.

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Are Banks And Stock Markets Positively Related? Empirical Evidence From South Africa

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v26i6.325 ◽

2010 ◽

Vol 26 (6) ◽

Cited By ~ 1

Author(s):

Nicholas M Odhiambo

Keyword(s):

South Africa ◽

Stock Market ◽

Stock Markets ◽

Real Income ◽

Market Development ◽

Bounds Testing ◽

Critical Question ◽

Stock Market Development ◽

Long Run ◽

Short Run

<a name="OLE_LINK2"></a><a name="OLE_LINK1">In this study, we examine the relationship between banks and stock market development in South Africa.  The study attempts to answer one critical question: Are banks and stock markets positively related in South Africa? The bank development is proxied by the ratio of the domestic credit to the private sector to GDP (DCP/GDP), while the stock market development is proxied by the ratio of the stock market capitalisation to GDP (CAP/GDP).Unlike the majority of the previous studies, the current study uses the newly introduced ARDL-Bounds testing approach, as proposed by Pesaran  et al. (2001), to examine this linkage. The empirical results show that there is a distinct positive relationship between banks and stock markets in South Africa. The results apply irrespective of whether the model is estimated in the short run or in the long run. Other results show that in the short run, the stock market development in South Africa is positively determined by the level of savings, but negatively affected by the rate of inflation and the lagged values of the stock market development. However, in the long run, the stock market is positively determined by real income and the inflation rate.  </a>

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China–Pakistan Economic Corridor, Logistics Developments and Economic Growth in Pakistan

Logistics ◽

10.3390/logistics5020035 ◽

2021 ◽

Vol 5 (2) ◽

pp. 35

Author(s):

Zunaira Khadim ◽

Irem Batool ◽

Muhammad Bilal Lodhi

Keyword(s):

Economic Growth ◽

Time Series Data ◽

Positive Impact ◽

Real Income ◽

Series Data ◽

Data Set ◽

Long Run ◽

Short Run ◽

Factor Inputs ◽

The Impact

The study aims to analyze the impact of China–Pakistan Economic Corridor (CPEC) logistics-related developments on economic growth in Pakistan. The study defined a Cobb–Douglas type of research framework in which the country’s real income level relates to four factor inputs, e.g., employed labor force, logistics development, financial development, and energy consumption in an economy. The study utilized the time series data set for the period 1972–2018. To estimate the long run relationship and short run adjustment mechanism, the study used Johansen’s method of co-integration and error correction model. Estimated results showed that the country’s logistics developments have a significant positive impact on economic growth in both the long run and the short run. It implies that China–Pakistan collaborative efforts for logistics developments will have a strong positive impact on economic growth in Pakistan.

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Peta Jalan (Road Map) dan Kebijakan Pengembangan Industri Gula Nasional

Forum penelitian Agro Ekonomi ◽

10.21082/fae.v23n1.2005.19-37 ◽

2016 ◽

Vol 23 (1) ◽

pp. 19 ◽

Cited By ~ 1

Author(s):

Sudi Mardianto ◽

Pantjar Simatupang ◽

Prajogo Utomo Hadi ◽

Husni Malian ◽

Ali Susmiadi

Keyword(s):

Research And Development ◽

Sugar Cane ◽

Ad Hoc ◽

Development Program ◽

State Enterprise ◽

Sugar Factory ◽

Long Run ◽

International Prices ◽

Short Run ◽

On Farm

English There are three major problems encountered by Indonesia in relation with sugar agribusiness. First, the declining sugar productivity, due among others to low on farm technology adoption and sugar factory efficiency. Second, the increasing sugar resulted from among others; the international prices of sugar that do not represent the true production efficiency because it is sold below its production cost; ad-hoc border measure policies; and many illegal sugar imports. Third, the unstable domestic prices of sugar because of inefficient distribution system. To overcome these problems, the future sugar industry development needs to be formulated into short-run development program (3 years), medium-run development program (10 years) and long-run development program (20 years). The short-run development program aims to rehabilitate the sugar factories in Java Island to enable them to produce crystal sugar with “cost of good sold” being competitive with the international prices of sugar. The medium-run development program aims to develop the sugar factories outside Java through utilizing dry land’s formerly allocated to transmigration now being no longer competitive for food crops development. The long-run development program aims to switch the ownership of sugar factory from the state enterprise to sugar cane farmers, and development of sugar cane based industry, such as ethanol, alcohol, etc. Moreover, it is also necessary to revitalize research and development activities through providing more sufficient funds. Indonesian Ada tiga permasalahan utama yang dihadapi Indonesia berkaitan dengan agribisnis pergulaan. Pertama, produktivitas gula yang cenderung terus turun yang disebabkan antara lain karena penerapan teknologi on farm dan efisiensi pabrik gula yang rendah. Kedua, impor gula yang semakin meningkat. Hal ini disebabkan antara lain, karena harga gula di pasar internasional tidak menggambarkan tingkat efisiensi produksi yang sebenarnya, karena dijual di bawah ongkos produksinya; kebijakan border measure yang sifatnya ad-hoc; dan banyaknya impor gula illegal. Ketiga, harga gula di pasar domestik tidak stabil yang disebabkan oleh sistem distribusi yang kurang efisien. Untuk mengatasi permasalahan tersebut, maka pengembangan industri gula di masa yang akan datang perlu disusun dalam Program Jangka Pendek (3 tahun), Program Jangka Menengah (10 tahun) dan Program Jangka Panjang (20 tahun). Program jangka pendek ditujukan untuk melakukan rehabilitasi PG di Jawa, sehingga mampu menghasilkan gula hablur dengan harga pokok yang dapat bersaing dengan harga gula di pasar internasional. Program jangka menengah ditujukan untuk pengembangan PG di Luar Jawa, dengan memanfaatkan lahan kering eks transmigrasi yang kurang kompetitif bagi pengembangan tanaman pangan. Program jangka panjang ditujukan untuk pengalihan pemilikan PG BUMN kepada petani tebu, serta pengembangan industri berbasis tebu, seperti ethanol, alkohol, dan lain-lain. Selain itu, perlu juga dilakukan revitalisasi kegiatan research and development, dengan memberikan dukungan dana yang lebih memadai.

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An Escape from the Malthus Rectangle? Poverty, and Conversion Efficiency (Distinguishedl Lecture)

The Pakistan Development Review ◽

10.30541/v33i4ipp.433-461 ◽

1994 ◽

Vol 33 (4I) ◽

pp. 433-461

Author(s):

Michael Lipton

Keyword(s):

Poverty Reduction ◽

Industrial Revolution ◽

Well Being ◽

Real Income ◽

The Poor ◽

Long Run ◽

Short Run ◽

Marginal Returns ◽

Central Claim

Malthus (1798, 1803, 1824) wrote during the world's first period of sustained and widespread growth in real income per person: the "Northern" agro-industrial revolution of 1740-1970. When he wrote, it was widely believed that not only growth, but also poverty reduction, depended substantially on what he called "schemes of improvement". Malthus's central claim is that these could not reduce poverty in the long run, unless fertility declined. This, he believed, was because any short-run success of "schemes of improvement" in reducing poverty would increase the rate of population growth among the poor. This would raise the supply of labour and the demand for food. Owing to diminishing marginal returns to extra hectares-plus-persons as new, inferior land was brought into cultivation, "the proportion between the price of labour and the price of provisions" would then fall, thus returning the poor to poverty. Unless fertility fell, the long-term well-being of the poor could not improve much. Being largely dependent on the real wage, it was boxed in by the Malthus rectangle (Figure 1) of population, labour supply, land, and food, and the interactions among them.

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