Capital Rate Research Articles

Dynamic tax evasion and growth with heterogeneous agents

AbstractWe develop a tractable model economy in which public capital improves aggregate productivity, and the taxpayers have heterogeneous evasion opportunities. By issuing bonds, compliant taxpayers supply the evaders with an instrument to hedge against auditing risks, thereby expanding their evasion capacity. The wealth share of tax evaders relates negatively to the economy’s productivity but has a hump-shaped relationship with the growth rate of aggregate capital. The fiscal policy that maximizes welfare differs from the one that maximizes tax revenues because the latter does not account for the redistribution of wealth (and risk) between compliant and evasive taxpayers.

Valuation Standards and Estimation Accuracy in the Appraisal of a Building Housing Vertical Farming

The possibility of carrying out the cultivation of numerous plant species in vertical farming highlights the need for policy makers to determine the cadastral value of the buildings in which these production activities are carried out. In this regard, estimates of buildings intended to host vertical farming are illustrated according to the procedure established by Italian cadastral legislation, which establishes that the fiscal value of buildings intended for vertical farming must be estimated through their market value. Appraisals is carried out using the direct capitalization method but follow two different approaches. One approach is based on the expertise of the appraiser, who acts by making assessments through subjective and arbitrary choices. The other approach is based on the use of best practices, as indicated by international evaluation standards that follow appropriate methodologies. Our comparison between the two approaches focuses on determining the capitalization rate, which determines the estimated value. The market value estimated using the procedures recognized by the valuation standards appears to be more valid methodologically and more reliable. This is demonstrated by applying yield capitalization to the same income cash flow in both formulations. Additionally, through the identification of the conversion cash flow, useful details on financial flow can be obtained and used to determine the value. The obtained results may be useful for public operators for the purposes of determining the value of assets for tax purposes. More generally, they are also useful from a methodological and application point of view in real estate valuation and support the development of tools for making efficient investment choices.

Optimization and performance analysis of a hybrid system for hydrogen production: Thermodynamic, economic, and environmental perspectives

The increasing demand for sustainable energy solutions necessitates innovative systems that generate hydrogen, electricity, heating, and freshwater, addressing resource limitations and fossil fuel impacts. With a focus on green hydrogen for sustainable energy transformation, this study introduces a multi-generation system to enhance hydrogen production. A parametric and sensitivity analysis, including energy, exergy, exergoeconomic, and exergoenvironmental analyses, was conducted alongside a system sustainability analysis. The outputs of the considered basic system include net power, freshwater, and hydrogen production rates of 10.178 MW, 18.67 kg/s, and 1.727 kg/h, respectively. The system achieves an exergy efficiency of 50.30%, an energy efficiency of 42.58%, a capital cost rate of $112.87/h, an exergoenvironmental impact index of 0.9734, and a sustainability index of 2.012. Optimization using a genetic algorithm was performed across three scenarios. In one of these scenarios, specifically aimed at hydrogen production, the system achieved a production rate of 1.72 kg/h and a capital cost rate of $91.32/h.

Bank market power and its determinants: evidence from listed conventional commercial banks from Indonesia

PurposeOver the past three decades, financial deregulation and various reforms have significantly transformed the competitive environment for banks in Indonesia. These changes have introduced new challenges for banks to retain their market power and ensure their survival. In light of this, the article aims to assess the current levels of market power held by Indonesian banks and explore the factors that influence it.Design/methodology/approachThe paper measured the degree of market power and identified its impacting factors for 22 listed commercial banks using the Adjusted Lerner Index (ALI) and appropriate regression technique over a period of 2011–2023.FindingsThe empirical findings reveal that banks in Indonesia enjoy high market power, and factors such as capitalization, diversification, operational inefficiency, asset quality and GDP growth rate significantly impact banks’ market power. Additionally, the findings contradict the structure-conduct-performance paradigm, which advocates that a concentrated banking system impairs competition.Research limitations/implicationsThe study suggests that regulatory authorities should closely monitor the market power levels and promote strategies to enhance competition within the banking sector. Additionally, banks should prioritize implementing measures to reduce operational costs and improve the quality of assets.Originality/valueThis research represents one of the early attempts to gauge the market power of publicly listed conventional commercial banks in Indonesia by employing the Adjusted Lerner Index. Additionally, it introduces “technology adoption” as a novel variable to the analysis alongside other established variables.

Optimal taxation, differential mortality, and endogenous human capital accumulation in China

This paper analyzes the optimal tax combination using a model that incorporates differential mortality and human capital accumulation. We calculate the optimal combinations of the capital income tax, consumption tax, and progressive labor income tax rates for the Chinese economy under four different model settings: a standard life-cycle model without human capital accumulation (NHC), an NHC model with differential mortality (NHC+DM), a life-cycle model with human capital accumulation (HC), and an HC model with differential mortality (HC+DM). Our results of implementing the optimal capital income tax rates in the Chinese economy are 8.1%, 7.9%, 2.6%, and 15.4%, respectively. The optimal labor income tax includes a 41.6% marginal tax rate with a 98,010 yuan fixed deduction, a 21.0% marginal tax rate with a 97,253 yuan deduction, a 3.1% marginal tax rate with a 96,225 yuan deduction, and an 18.5% marginal tax rate with a 97,535 yuan deduction, respectively. In a nutshell, we find that the optimal tax bundles under each model are different for China. It would be better to incorporate both human capital accumulation and differential mortality for a more comprehensive model for optimal taxation analysis in China.

Magnetic Macro Drivers of Trade Openness: A Study of BRICS Economies

The major goal of this study endeavour is to thoroughly evaluate the impact of macro factors on trade openness (TOP). The study was conducted through the examination of numerous trade conceptions, with a specifically emphasis on examining these patterns within the economies of the BRICS nations (Russia, India, China and South Africa) from 1995 to 2020. Stepwise regression for selecting models, Pedroni, Johnson, Granger causality and advance panel regression are some of the techniques used including FMOLS, Panel OLS and FEM. The study’s outcomes reveal the presence of both long-term and short-term associations between TOP and (a) total investment, (b) human capital, (c) trade reserves, (d) trade balance and (e) exchange rate. The study authors found both one-way and two-way causal association between TOP and these five factors. Additionally, trade balance emerges as the most significant factor impacting TOP. Notably, the exchange rate does not exhibit significant economic importance. JEL Classification: F14, F15, F17

The effect of fixed capital formation rate on gross domestic product in Iraq

The total fixed capital formation is one of the main and influential determinants of production function through its impact on production costs, competitiveness, and profits. The Iraqi gross domestic product depends on one sector (the oil sector) in financing the government budget, which may lead to crises in case of oil price collapse. Therefore, the study aims to clarify the imbalance in the production function and the real output of the Iraqi economy and to indicate the role of the total fixed capital formation in this imbalance. The econometric methods were used to measure the degree of influence of the total fixed capital formation (independent variable) on the gross domestic product (dependent variable) from 2004 to 2020. The results showed a robust relationship between fixed capital formation and gross domestic product, where the independent variable affects the dependent variable by 4.5%, while the oil sector dominated the total value added by its acquisition of the total fixed capital formation by 47.45%, and the productive sectors of agriculture and industry achieved value added of 3.8%. The study concluded that the distribution of total capital formation by sector has an impact on the gross domestic product. Therefore, it is necessary to distribute the total fixed capital formation to the productive and production-supporting sectors to achieve economic growth and diversify the structure of the gross domestic product.

4E analysis of novel waste heat-driven combined cooling and power (CCP) systems based on modified Kalina-ejector refrigeration cycles

Global warming and environmental pollution are becoming increasingly severe problems due to the excessive use of fossil fuels. Recovering and utilizing waste heat from different energy systems can considered a sustainable solution to this destructive trend. This study proposes two modified Kalina cycle structures that use ejector refrigeration for combined cooling and power (CCP) generation in low-temperature waste heat. While to recover energy from a lean ammonia solution uses a two-phase expander. Thermodynamic analysis shows that the modified Kalina cycles E and F operate with a thermal efficiency of 0.3066 and 0.2557, respectively, representing a significant improvement of more than 123 % and 86 %, respectively, compared to the base cycle. Also, the exergy efficiency of the improved configurations E and F has been calculated as 0.083 and 0.089, respectively, showing an improvement of 53.8 % and 64.8 %, respectively, compared to the base cycle. The exergoeconomic analysis also revealed that the total capital cost rate for improved cycles E and F is estimated at 2.62 and 2.76 $/h, respectively. In addition, from an environmental perspective, the improved Kalina cycle F has proven to have a more eco-friendly performance with a pollution index of 0.2281 mPts/s. Moreover, a parametric study is conducted to investigate and analyze the effect of changes in significant performance parameters such as ammonia concentration, evaporator temperature, turbine inlet temperature and pressure, and turbine back-pressure for both presented modified cycles.

Who is the entrepreneurial educator? A transferability perspective to tease out antecedents needed to form a signature pedagogy

Purpose Entrepreneurial education (EE) has grown rapidly and become important for how we prepare future generations for work. However, a less addressed piece of the puzzle is: who is the entrepreneurial educator? In this paper, our aim draws upon Palmer’s (1998) idea of wholeness, where we seek to connect the two problem spaces of the role diversity of entrepreneurial educators and how the educator is closely tied to the evolutionary development of the domain in constructing signature pedagogies that could cater for the issue of a low capitalization rate.Design/methodology/approach We problematize on a conceptual level the entry-level personas that have been addressed in prior literature by using the processes of transferability and evolutionary theory to tease out how variability among educators could create antecedents to form a signature pedagogy.Findings We recognize four archetypes: the experienced entrepreneur, the entrepreneurship scholar, the academic scholar and the pedagogical expert. Our problematization on the variance of the four archetypes provides a fertile ground to engage in addressing “the elephants in the room” in EE, the capitalization rate of graduates and the importance of developing a signature pedagogy, acknowledged in other domains, to enhance legitimacy.Originality/value The paper provides a nuanced outlook on who is teaching in the entrepreneurial classroom and problematizes from an evolutionary perspective the potential future paths to continue staying relevant for society as well as justifying our presence as a legit domain in academia.

Model of “secular” cycle of financial capital accumulation

Crises hitting the world economy since the end of the previous century need a deeper explanation than effects of numerous sudden shocks. According to G. Arrighi’s theory, they manifest the final phase of North-American cycle of capital accumulation. Although analytically promising, the theory doesn’t meet broad recognition. A reason could be its weak formalization. This article addresses this problem by developing a mathematical model of capital growth rates. They are measured by nominal yield and interest rates which represent increments of capital in its general, financial form. If capital level follows a logistic path then its growth rate should be described by logistic differential equation. The model is brought to data on government bonds yields in Great Britain in XVIII– XIX centuries and USA — in XX century up to now. The study provides evidence for the pivotal role of financial-capital accumulation in systemic cycles and its S-shaped form. Besides, it reveals importance of trade balance in specifying cycle phases of domestic and global capital expansion.

Firm Characteristics, Interest Rate And Financial Performance Of Microfinance Banks In Kenya

Microfinance Banks gives the forte to improve the economic activity of low-income individuals and eliminate poverty, resulting in economic progress. However, microfinance's Banks financial performance in Kenya has declined over time. The objective of this study is to investigate firm characteristics, interest rate and financial performance of microfinance banks in Kenya. The study was grounded on buffer capital, efficiency structure and interest rate parity theories. The study research methodology rested on positivism research philosophy. Research design was explanatory non-experimental design. Secondary panel data was utilized. 13 microfinance banks in Kenya were target. Information was gathered using secondary data sources from microfinance banks accounting report from 2016 to 2022. Data was analysed using descriptive and inferential statistics. The study used multiple regressions and Pearson’s Product Moment Correlation analysis. All ethical considerations were appropriately observed. Findings indicated that adequacy of capital exerts a notable and direct effect on financial performance, underscoring the importance for microfinance banks in Kenya to prioritize maintaining sufficient capital levels to support their overall stability and financial outcomes. Conversely, quality of asset demonstrates a significant and adverse influence on performance financially, highlighting the need for microfinance banks to enhance their credit assessment processes to ensure the quality of their loan portfolios. The research revealed that efficiency of management has an insignificant direct influence on financial performance of Microfinance banks. To address this, microfinance banks are advised to invest in comprehensive management training programs and capacitybuilding initiatives to improve operational effectiveness and decision-making processes. Earning ability, on the other hand, exhibits a considerable and direct influence on financial performance. Microfinance banks should thus focus on continuous innovation of their products and services to enhance their earning potential and overall financial outcomes. Liquidity levels exhibit an insignificant and inverse effect on the financial performance outcomes. To mitigate potential risks, microfinance banks should establish comprehensive policies and procedures to monitor and manage liquidity effectively. Interestingly, the study reveals that the connection concerning firm-level attributes and financial outcomes for microfinance institutions in Kenya does not appear to be subject to a substantial moderating influence from interest rate movements. Therefore, the survey recommends that microfinance banks concentrate on improving governance structures, operational efficiency, risk management practices, and asset quality. This can be achieved through capacity-building programs, training initiatives, and adopting best practices from successful microfinance institutions. Strengthening these firm characteristics will enable microfinance banks to enhance their financial performance, irrespective of interest rate fluctuations

CORRUPTION AND ECONOMIC GROWTH IN NIGERIA: DOES DATA SUPPORT “GREASE THE WHEELS” OR “SAND THE WHEELS”?

The study investigated the relationship between corruption and economic growth in Nigeria using data from 1996 to 2020. The research employed the Fully Modified Ordinary Least Squares (FMOLS) method and Granger causality tests. The FMOLS results indicated that both gross fixed capital formation and urbanization significantly and positively influence economic growth in Nigeria, whereas the corruption index has a negative and significant effect, aligning with the "sand the wheels" theory. The Granger causality analysis showed a unidirectional relationship, where gross fixed capital formation Granger-causes GDP growth rate, and GDP growth rate Granger-causes both the corruption index and the relative corruption ranking in Nigeria. Based on these results, the study recommends that policymakers prioritise transparency and good governance by implementing e-governance initiatives to reduce bureaucratic hurdles and opportunities for corruption. Furthermore, there should be consistent monitoring and thorough evaluation of the impact of anti-corruption strategies on economic growth and development to ensure their effectiveness.

The Determination of Capitalization Rate by the Remote Segments Approach: The Case of an Agricultural Land Appraisal

In the absence of comparative real estate data in the market segment of the property to be estimated, the appraiser may resort to income capitalization to estimate the market value. Often, however, the choice of which rate to apply is affected by subjective and arbitrary assessments. The estimation result can therefore be inaccurate and rather unclear. However, the Remote Segments Approach (RSA), through appropriate adjustments on the original values, prices, and incomes detected in the remote segments, makes it possible to arrive at an appraisal result consistent with estimative logic and real estate valuation standards. The proposed application illustrates the estimation of the market value of a specialized fruit orchard of avocado, which is to be considered new in relation to other fruit species already present in the reference area. The adjustments required by the RSA are solved with the General Appraisal System (GAS), defining the difference matrix based on relevant characters common to all segments considered. The application is carried out by comparing the segment in which the orchard being estimated falls (subject) with other remote market segments in which prices and incomes constituted by other tree crops are collected. The market value of the subject is derived by making adjustments to the prices and incomes observed in the remote segments of comparison with a comparison function constructed through relevant characters common to the segments considered. The comparison function makes it possible to arrive at the determination of the capitalization rate to be used in estimating the value of the fruit orchard by income approach. While it is based on the comparison of segments, the approach followed allows for a value judgment consistent with the estimation comparison and capable of providing a solution less conditioned by the appraiser’s expertise in the presence of particularly pronounced limiting conditions.

Factors Affecting the Growth of Micro and Small Enterprises: The Case of Daro Lebu and Hawi Gudina Districts of West Hararghe Zone, Oromia, Ethiopia

The purpose of this study was to identify factors affecting the growth of micro and small enterprises operating in Daro Lebu and Hawi Gudina districts of west hararghe zone, oromia region, Ethiopia. The study adopted both Quantitative and Qualitative research designed with arrangement of primary data collection via a cross-sectional survey. Survey Data collected through structured questionnaires from a sample of 197 MSEs selected using stratified sample techniques. The result of regression analysis revealed that access to credit, government support, Education, gender and enterprises’ age were positively significant effects on MSEs' growth. But, Initial capital and infrastructure were negatively associated with capital growth rate of MSEs. However, Recordkeeping, access to technology, access to market and labor found to be insignificant variable in determining enterprises’ growth. More evidence desired on factors affecting the growth of micro and small enterprises before any generalization of the results can be prepared. In addition, the empirical tests conducted only on 197 sampled enterprises employee in Daro Lebu and Hawi Gudina Districts since 2024. Therefore, the results cannot be taken as uniform to generalize for MSEs in the country. The study might help the entrepreneurs, donated to the body of knowledge on the factors affecting the growth of micro and small enterprises to take some corrective action for both planners and policy implementation in government organizations toward developing their performance and in turn contribute to employment creation, poverty alleviation, and economic development. This paper adds to the literature on factors affecting the growth of micro and small enterprises. In particular, it tests the influence of access to credit, government support, Education, gender, enterprises’ age, Initial capital and access to infrastructure on growth of enterprises. The result forward key policy implications to take a corrective action that alleviates the existing challenges of the sector and calls for further MSEs bearing evaluation research.

Farm characteristics and exogenous factors influencing the choice to buy land in Italy

Access to land is one of the key factors of farm growth, while at the same time, related research is characterised by important gaps, in particular facing the change over time in the nature and role of drivers of the land market. The objective of this research is to identify the endogenous and exogenous factors that affect the decision to purchase land in Italy between 2013 and 2020. Five probit regression models were implemented to understand the role of a set of different determinants in land investment decisions. The results show that factors related to capital in machinery and equipment, energy production and the presence of a successor are endogenous factors that positively influence the purchase decision. The ratio of rented land to utilised agricultural area and of family work units to total work units are endogenic factors that negatively influence the purchase decision. Exogenous factors related to the cost of capital and inflation rate affect the purchase of land in an opposite way, negatively and positively respectively. The role of Utilised Agricultural Area and Gross Saleable Production per hectare varies depending on the specialisation considered. The research can support policymakers in designing policies to promote the survival and growth of farms, as well as to facilitate land investment by reducing barriers to land acquisition.

Empirical evidence of Goodwin’s growth cycle in the Indian organised manufacturing sector

PurposeThe aim of the paper is to investigate Goodwin’s growth cycle in the Indian organised manufacturing industries.Design/methodology/approachThe methodology is based on bi-variate differential equation, econometrics model like log-linear regression and Autoregressive Distributed Lag model. An empirical investigation is conducted on data from the Annual Survey of Industries from 1980 to 2018 time period.FindingsThe results indicate that though the original Goodwin model estimates deviated from data estimates, its modified (neo-Goodwin) model are found to be equivalent to the data estimates. Moreover, in contrast to the original model, the capital accumulation rate (investment to profit ratio) is not assumed to be unitary in the modified Goodwin model. Furthermore, the labour market-led and cost effect conditions of the Goodwin cycle are empirically verified by investigating the interdependency between employment rate and wage share. Lastly, the short- and long-run Goodwin cycles are observed to be moving in anti-clockwise direction in the employment rate and wage share bi-dimensional plane, thus confirming the existence of profit-led distribution where wage share continuously reducing with high employment.Research limitations/implicationsThis study opens the discussion on application of capitalistic model in the emerging economy and also suggests to incorporate some theoretical models like Kaldorian, Keynesian, Kaleckian or Schumpetrian into the Goodwin cycle.Originality/valueThis is the first paper which empirically examines the capitalistic nature of Indian organised manufacturing industries through the lens of Goodwin growth cycle and then extend it to the Neo-Goodwin model by relaxing one of the unrealistic assumption regarding unitary investment to profit ratio.

Pengaruh Perputaran Modal Kerja Terhadap Profitabilitas Pada Usaha Mikro Sembako Mitra Indo Grosir Di Karawang

The objectives of this study are (1) To know, analyze and explain how the turnover of working capital and profitability in micro businesses of Indo Grosir partners in Karawang. (2) To find out, analyze and explain how the effect of working capital turnover on profitability in micro grocery businesses of Indo Grosir partners in Karawang. Through descriptive verifiability, simple regression analysis as the method with the use of quantitative research as the type of research where a total of 61 micro business partners, basic necessities, and wholesale partners in Karawang are the population of this study. 30 samples of micro food businesses were obtained by the purposive sampling method used for sampling. The results of the Descriptive Test in this study show that the working capital turnover rate in micro grocery enterprises of Indo Wholesale partners in Karawang has a fast period with the highest working capital turnover rate of 1.12. Meanwhile, the highest profitability level in micro grocery businesses of Indo Wholesale partners in Karawang is 16.93%. This is due to the low profits obtained in running the business, which affects the turnover of working capital and profitability. Partially, the results show that the profitability of micro grocery enterprises of Indo Wholesale partners in Karawang is not affected by the turnover of working capital, where the results are based on the output of verifiable tests that have been carried out on problems that have been formulated with simple linear regression analysis. The absence of influence is due to the low profits of micro-food businesses with fast working capital turnover.

Agricultural subsidies and land rental prices: New evidence from meta-analysis

The capitalization of agricultural subsidies is highly relevant to sustainable agricultural development. This study applies meta-analysis to systematically investigate the overall mean effects of capitalization of agriculture subsidies in China, the EU, and the USA. We explore capitalization rates across different types and recipients, including potential sources of heterogeneity. Our primary objective is to address the debate of whether agricultural subsidies are ultimately capitalized into land rental prices. Results show that the overall mean effect of subsidies on land capitalization in the European Union (5.5%) is greater than that in the United States (2.9%), with no significant and positive effects observed in Chinese markets. Additionally, we conclude that decoupled payments may not reduce the capitalization of agricultural subsidies in the European Union and the USA. Notably, agricultural subsidies received by landowners/contractors tend to be lower than those received by tenants. Finally, the capitalization of agricultural subsidies is influenced by several potential sources of heterogeneity, including farmland scales, aggregated data, sample sizes, lagged subsidies, and the starting and ending dates of publications. These findings provide comprehensive insights into the capitalization of agricultural subsidies and offer practical policy recommendations for the effective mitigation of capitalization rates.

PERCEIVED EFFECT OF PALM OIL COOPERATIVES IN CREDIT DELIVERY TO MEMBERS IN AKWA IBOM STATE

The study assessed the perceived effect of palm oil cooperatives in credit delivery to members in Akwa Ibom State, Nigeria. Specifically, the study described the socio-economic characteristics of the cooperators, examined the perceived effect of cooperatives on economic activities of members, assessed the benefits members derived from cooperative societies, and examined the challenges faced by the cooperators. Sample size of 201 palm oil cooperators were randomly selected using Taro Yamane formula from the list of palm oil cooperative societies in the study area. Data collected were analyzed using percentages, mean, Pearson product-moment correlation, analysis of variance (ANOVA) and t-test. The finding shows mean age of cooperators was 46.2 years, the majority (69.2%) were female, married (71.6%), a larger portion (97.0%) had formal education. The mean household size, farming experience and annual income were 6 persons, 9 years and N159,145 respectively. The results showed a positive and significant relationship between cooperative societies and the economic activities of members. Also, the cooperative societies benefit their members by having access to loans. Challenges affecting the cooperative were grouped into socio-economic, organizational and institutional problems. The study recommended among others; that the organization seek better strategies of building their capital, more avenues of internally generated revenue should be exploited to improve on their capital formation rates. Moreso, cooperatives should devise better channel of credit delivery to members in terms of the ability to sustain the loan delivery function.

The Ramsey steady-state conundrum in heterogeneous-agent economies

This paper makes two fundamental contributions: (i) We prove that the interior Ramsey steady state commonly assumed in the literature may not exist in a standard Aiyagari model—in particular, a steady state with the modified golden rule and a positive capital tax is shown to be feasible but not optimal under conventional parameter values for the intertemporal elasticity of substitution. (ii) We design a modified, analytically tractable version of the standard Aiyagari model to reveal the necessary and/or sufficient conditions for the existence of a Ramsey steady state. We characterize the basic properties of both interior and non-interior Ramsey steady states and show that researchers may draw fundamentally misleading conclusions about optimal fiscal policy (such as the optimal capital tax rate) from their analysis if an interior Ramsey steady state is incorrectly assumed.