Money Illusion in Charitable Giving in the Absence of Market Price Resistance

Money illusion occurs when individuals fail to differentiate nominal from real values when making financial and economic decisions. As a consequence, they do not adjust their consumption behavior according to real variables. We report an economic experiment to study whether money illusion appears in a very simple setting. It is very important to mention that the experiment was conducted in the context of charitable giving. Our experimental results showed the absence of money illusion among the participants. Our study suggests that money illusion is not present in the absence of price stickiness (market price resistance). This finding supports Shafir et al. (1997). The main objective of our study is to develop a better understanding of economic agents’ charitable giving behaviors as influenced by perceptions of nominal income. Charitable institutions could build fundraising strategies based on behavioral tendencies to the perception of income in nominal or real terms.

Regla de productividad y señoreaje: Una crítica al objetivo de estabilización de precios

The aim of the paper is to propose a new version of the productivity norm proposed by Hayek in 1928, as a feasible way to develop monetary policy by actual central banks. With this proposal, we are able both to review the convenience of the stability price objective adopted by most central banks and to permit price variations according to the evolution of productivity in increasingly open and competitive markets. By using a nominal income objective, central banks can distinguish, for example, between unwelcome monetary deflations and falling prices brought about by increases in productivity. With this objective, the degree of competition and of openness of an economy can also be taken into account by central bankers. Key words: Hayek’s productivity norm, price stability, neutral monetary policy, monetary equilibrium. Clasificación JEL: E3, E52. Resumen: Con este trabajo hemos actualizado la regla de estabilización de la renta nominal propuesta por Hayek en 1928 como criterio de emisión válido para los bancos centrales en la actualidad. A partir de su aplicación, la estabilidad de precios deja de ser el objetivo de la política monetaria, permitiéndose en su lugar movimientos de pre-cios a lo largo del tiempo como consecuencia natural de variaciones en las condiciones productivas de la economía, en presencia de mer-cados potencialmente abiertos a la competencia. Con ello estaremos en condiciones de diferenciar la respuesta monetaria óptima del ban-co central ante distintos tipos de deflación. Palabras clave: Regla de productividad de Hayek, estabilización de precios, política monetaria neutral, equilibrio monetario.

Methodological approaches to assessing the level of vulnerability of settlements in Kazakhstan

The aim of the research is to study the factors of development and depression of the territory, the development of a methodological approach to assessing cities and rural settlements of Kazakhstan. The main indicators of selection of localities include population density, industrial production per capita, gross output of agricultural products (services rendered) per capita, retail turnover per capita, nominal income per capita, migration balance, distance up to 50 km from the state border of Kazakhstan. The sample will be formed based on the selected criteria from 88 cities and 6322 rural settlements of Kazakhstan. The developed approach can be applied in further data analysis based on secondary statistical data and conducting an empirical study to collect primary data.

The Environmental Kuznets Curve: Industrial Application For Forecasting Waste Generation And Emissions Of Harmful Substances

Purpose. To determine sustainable development conditions according to the criteria of emissions of harmful substances and waste generation when modelling impact factors of the parameters and general environmental situation in Ukraine. Methods. In the research general scientific (analysis and synthesis, induction and deduction, analytical grouping) and special (abstraction, modelling, etc.) methods of studying economic phenomena and processes have been used. Results. For modelling of national sustainable development parameters by the parameters of emissions of harmful substances and waste generation it has been proposed to apply sectoral approach and the model of the environmental Kuznets curve (EKC). It has been proved that the EKC model should be used not only to model parameters of emissions of harmful substances, but also for waste generation. Besides, it has been proved that it is necessary to take into account not only national level indicators, but also the contribution of the leading sectors driving national economy. Modelling has been carried out for the following industries: processing; mining and quarry development; agriculture, forestry and fisheries; supply of electricity, gas, steam and conditioned air; transport, warehousing, post and courier services. The models are based on correlation between GDP, average nominal income per capita, environmental costs, waste generation and emissions of harmful substances at the national level and by its leading industries. It has been determined that reaching the "turning point" on sectoral EKCs correlates waste generation and emissions with industry`s rate of remuneration, value added (sectoral GDP) and sectoral investment in environmental protection in the context of industry`s specifics. It has been demonstrated that in Ukraine the "turning point" on the EKC has been provided by 20% of economically active population in industries that generate 46% of emissions amid country's average nominal income per employee and steady growth of environmental expenses for at least two years. Conclusions. It has been proved that the EKC for Ukraine should be analyzed by the sectors of national economy. To form effective national environmental policy, sectoral EKCs should be applied to determine emissions of harmful substances and waste generation. It has been determined that the key factor to ensure country`s sustainable development is environmental investment both at the national level and by its driving economic sectors. Thus, the sectoral EKC reflects the progress towards industries` sustainable development that form main revenue receipts of the government and determine the rate of remuneration in the real sector. Modelling of the EKC parameters for waste and emissions of harmful substances fully corresponds to the trends of sustainable economic growth and its transition to the innovative type of development.

Policy measures to promote mid-summer drainage in paddy fields for a reduction in methane gas emissions: the application of a dynamic, spatial computable general equilibrium model

Rice production is affected by climate change, while climate change is simultaneously accelerated by methane gas (CH4) emissions from paddy fields. The rice sector must take suitable mitigation measures, such as prolonging mid-summer drainage (MSD) before the rice flowering period. To propose a mitigation policy, this study aims to demonstrate the environmental and economic effects of MSD in Japanese paddy fields by using a dynamic, spatial computable general equilibrium (CGE) model and crop model; the study also considers environmental subsidies with a carbon tax scheme to promote MSD measures. The results demonstrate that climate change under the 8.5 representative concentration pathway (RCP) scenario will reduce rice prices and rice farmers’ nominal income due to bumper harvests until the 2050s. Promoting MSD in paddy fields can prevent a decrease in farmers’ nominal income and effectively reduce CH4 emissions if all farmers adopt this measure. However, some farmers can potentially increase their own yield by avoiding MSD under high rice prices, which would be maintained through other farmers’ participation. A strong motivation exists for some farmers to gain a “free ride,” and an environmental subsidy with a carbon tax can help motivate farmers to adopt MSD. Therefore, the policy mix of prolonging MSD and environmental subsidies can increase all farmers’ incomes by preventing “free rides” and decrease greenhouse gas emissions with a slight decrease in Japan’s GDP.

Strategies for Conducting Monetary Policy

This chapter appraises strategies for conducting monetary policy with the objective of evaluating how these strategies are likely to work in the real world of policymaking. The chapter examines policies that are tied to a specific channel of monetary policy (money supply targeting, interest-rate targeting, and forward guidance) and strategies that are not directly tied to a specific channel of monetary policy (inflation targeting, nominal income targeting, and quantitative easing). The strategies are evaluated in terms of the strength of theory on which they are based and their practicality. From this perspective, many of these strategies seem much less feasible than when they are evaluated in the context of abstract and highly stylized economic models. The chapter ends with a new approach to conducting monetary policy—economic reality-based monetary policy—that will make policy more effective and more predictable.

Optimizing Government Policies On Profession Zakat

The significant potential of zakat on profession needs to be actualized through a clear regulation. The targets of zakat on profession are: Ministry or State Institutions, Local Government, State-owned Enterprises, Local Government Owned Enterprises, even other professions that have a high income. The government's efforts to facilitate zakat on profession are solely aimed at making the mechanism of zakat management to be good, transparent and integrated into a system. However, zakat levies should have a specific rule that is binding all citizens, especially all Muslim Civil State Apparatus (henceforth called as ASN) who certainly meets the applicable regulations. For those who have income and already reach nishab or nominal income limit must pay zakat, while the ones whose incomes do not reach nishab are not obliged to do such a thing. Gorontalo province is one of the regions whose population is predominantly Muslim and has potential in terms of Islamic values-based economic development. Therefore, there needs to be a strict regulation to regulate zakat on profession, so that the utilization of zakat can help to alleviate the burden of the poor. By the existence of regulation, people who pay and receive zakat are equally having the benefits of zakat. This is to say that government has a prominent role and responsibility in optimizing the enactment of zakat on profession since the reality of the most significant zakat received by BAZNAS (Islamic board which oversees the collection of Zakat) in Gorontalo province is from ASN and other professions income.