Contents
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Estimating the size of Underground Economy
in Indonesia
Sasmito H. Wibowo *
and
Subhash C. Sharma**
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The size of the
underground economy in Indonesia is
estimated from 1976 to 1999 by using the
currency demand model. We observe that
during these years, on average the
underground economy is about a quarter of
the reported GDP. We further note that
during transitions, whether transition in
tax law, economy, or in politics, the size
of the underground economy changes
significantly. During normal time, the
size tend to be lower than the average.
Specifically, during the major overhaul of
Indonesia's tax law in 1986 and in 1998's
recession the size of the unreported
economic activities increased
significantly. |
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Impact of Government Agricultural Policy
Changes on Groundnut supply Response
Function in Niger
S.O. Abang, O. E. Akpan, E. Ele
and
O. Atangba*
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The
1980 decade and beyond has witnessed
strong appeals for the reversals of
agricultural policies that were based on
market intervention. This study is
designed to find out the impact of this
policy shift on the groundnut supply
function in Niger using time series data
that span the periods 1976-1989 and
1990-2000. The Cobb-Douglas functional
form provided the lead equation for the
analysis. Estimates of the own price,
cross price and input price elasticities
for the short and long run periods were
similar even though their values were
higher in the earlier period than the
latter. Overall, the results showed that
the policy shift has tended not to affect
groundnut supply significantly because the
farmers were not responsive to the policy
change. Some of the reasons advanced for
the poor response to this policy shift are
the relatively high cost of purchasing the
critical input (fertilizer) and the
extremely small farm holdings of the
farmers. On this basis, the study
advocates for a fertilizer cost reduction policy to enable the farmers benefit from
the new policy. |
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Sustainability of Self-Help Groups: The
Case of Krishna District, Andhra Pradesh
D. Pulla Rao*
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The
importance of SHGs arises rom the fact
that the poor are ill served by the formal
institutional agencies (viz., banks, RRBs,
and even cooperatives). These institutions
refrain from lending to the poor because
of the high transaction costs involved in
lending to them. SHGs also assume
importance in view of the fact that money
lenders subject the poor to severe
exploitation by charging exorbitant
interest charges. By forming into SHGs the
poor can get over these two problems. In
as much as the poor borrow and repay money
to banks as a group, the cost of lending
decreases. Since the members of SHGs are
of homogenous economic class and since
peer monitoring is the rule in the groups,
loans advanced will be recovered promptly.
This makes SHGs sustainable and the ever
increasing number of SHGs has much to do
with this fact. NABARD's role in the
expanding number of SHGs is not to be
belittled either.
SHGs have grown from strength to strength,
particularly in Andhra Pradesh. The
performance of the groups is not, however,
uniform across all districts. Our study
covering 46 randomly selected SHGs of
Krishna district of the state shows that
32 of them have been dissolved soon after
they were set up. This raises the issue of
sustainability of the groups. However,
wherever, the SHGs are functioning well,
they benefited the most disadvantaged -the
poor, the lowly placed in social
hierarchy. SHGs are giving them a new
identity in the society. Saying on a
monthly basis, which was unknown to women
is now a reality. The hitherto untapped
entrepreneurial skills of women are to the
fore. |
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Optimal Bank Interest Margin, Capital
Regulation and Deposit Insurance under a
Cap Valuation
Jyh-Hong Lin* , Peirchyi Lii
and **
Chuen-Ping Chang
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This paper derives the bank's optimal
interest margin and relates it to the
regulatory parameters under a cap
valuation. This valuation helps the bank
handle the volatilities so
characteristic of lending markets. We
find that the bank's interest margin is
an increasing (decreasing) function of
the capital-to-deposits ratio, the
deposit insurance premium, and the
actual number of days during the cap
period if both the bank's marginal
equity effect and the risk effect are
positive (negative). The bank's optimal
interest margin is an increasing
(decreasing) function of the strike
price if its marginal equity with
expiration at the end of the period is
negative (positive). Our findings
demonstrate the important effects that
regulatory parameters and cap pricing
have on the bank's optimal interest
margin.
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US
Tariff Policy and the Smooth-Hawley Tariff
Act of 1930
Kishore G. Kulkarni*
and
Christopher Evans**
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This
paper takes a historical view of changes
in tariff policy of US. It summarizes main
changes in US tariff since 1789 and
concentrates specifically on the
Hawley-Smoot Act. Historically, while US
tariff rates have been pretty small (less
than 12%), in Great Depression era they
reached to the highest level. Some
economists refer to this act as Holy-Smoke
Act and further point out that this
increase in tariff was one of the prime
reasons for Great Depression to get
prolonged. The paper discusses the reasons
behind the Hawley-Smoot tax and the
consequences of it. |
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Growth of Derivatives in the Indian Stock
Market: Hedging V/S Speculation
Dheeraj Misra* and
Sangeeta D. Misra**
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This
paper aims at anlyzing the growth of
derivatives market in the Indian stock
market and to find out whether in the
Indian stock market investors trade in
derivative products for hedging or for
speculation. The total turnover of
derivative products was Rs. 4,39,863
crores in 2002-03 as against Rs. 1,01,925
crores in 2001-02 and Rs. 2365 crores
during 2000-01. The trading volumes
indicate that near month contracts are
more popular than not-so- near month
contracts; futures are more popular than
options; contracts on securities are more
popular than those on indexes; and call
options are more popular than put options.
The results show that investors generally
use futures contracts and call options for
speculative purposes and they invest in
put option contracts for hedging. The
results also show the popularity of
straddle strategy in the Indian stock
market. |
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A
Study for Insolvency in the life Insurance
Industry of Taiwan
James C. Hao*
and
Lin- Yhi Chou**
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The
study employs factor analysis and logistic
regression (FAST approach) to estimate the
probabilities of insolvency of Taiwan's
life insurers. Our findings show that
changes in the fixed asset ratio, changes
in the liquid asset ratio, and changes in
loan ratio are important factors for
Taiwanese life insurers' insolvency.
Therefore, the commissioner should focus
on these financial ratios. This study
presents that almost 10 percent of life
insurers in Taiwan have a problem of
insolvency. |
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Cointegration
and Market Integration: An Analysis of Tea
Markets in India
Vijay Intodia*
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Tea
growers and traders are facing crisis due
to falling exports and slow down in the
consumption growth leading to surplus
supply and falling prices in the market.
Thus it is imperative that different tea
markets are efficient and integrated so as
to minimise the market surplus. The paper
analyses the extent of market efficiency
and spatial market integration of tea
markets in India using cointegration and
error correction methodology. Results
showed that eastern markets of the country
were integrated. There was no integration
found in the markets of the southern
India. Although eastern markets were
integrated but it took a long time i.e.
four weeks for the complete transfer of
the price signals. Therefore there seemed
to be inefficient markets in the tea
sector. Analyses have important policy
implications as domestic market is having
a oversupply situation where volatility in
prices has been a major concern for the
industry. |
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Aspects
of Linkage between Environment and
Economic Development
G. Mohapatra*, P.
Mishra**
and
A. K. Giri***
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| This paper surveys a selected number of
studies that deals with theoretical and
empirical contributions on the linkages
between environment aqd economic
development. It reviews the different
issues relevant for modeling atld
estimating the above-mentioned economic
relationship. The survey throws light on
different aspects of linkage, which
provides guidelines for many important
aspects of empirical research on the area
of environmental economics. |
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Forecasting
Volatility Using Spreadsheet Tools
Samir Kamat* and
Rakesh Sah**
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| Extensive research has been done on stock
price volatility. One of the results of
this research is that volatility changes
over time. However, because of its
mathematical and statistical complexity
the results are beyond the reach of most
users. This paper gives investors and
classroom users the option of using four
forecasting models using Excel
spreadsheets. The paper starts with the
simpler historical volatility model and
moves on to the more complex single
exponential smoothing model, the first
order autoregressive error model, and the
generalized autoregressive conditional
heteroskedasticity model. |
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