Cent In Real Terms Research Articles

Bonds for the long run? The rate of return on corporate bonds in Belgium, 1838–1939

AbstractWe investigate corporate bond returns for the period 1838–1939 by compiling a unique new database of 201 000 monthly observations of bonds traded on the Brussels Stock Exchange. The value‐weighted annualized total rate of return, net of coupon defaults and taxes, is 4.35 per cent in nominal terms and 2.81 per cent in real terms. Estimates of average returns show that corporate bonds outperformed equities during the entire nineteenth century. We find that the risk‐adjusted performance of corporate bonds based on Sharpe ratios exceeds that of equities and sovereign bonds during the corporate bond market's first centennial.

Assessing Livestock Sector Development of India in the Era of Global Trade Distortions

In the WTO regime, surging imports have not only affected farm incomes but also employment in many developing countries. Consequent upon cheap imports and absence of adequate protection measures, safeguarding income and livelihood of poor farmers have emerged issues that need to be addressed by policy makers. As rightly pointed out, the developing world have suddenly become the children of a lesser god and they are the neo-poor. Further, though producer milk prices in India stand significantly lower than US and Western Europe, dairy product prices are relatively higher than international market prices owing to domestic processing inefficiencies in India. An earlier study assessed the impact of GATT on dairy products and projected the world dairy product prices to rise by about 2.3 per cent in real terms by the year 2002. The study categorically emphasized on the fact that domestic product prices would remain higher than world market prices despite expected surge in world market prices. This necessitates improvement in production and processing efficiency of livestock sector in India to make it competitive with imports. India is already price competitive in the world market and when subsidies from competitive producers like USA and EU countries are removed, the situation will make India more price competitive. In case India is not able to capture the world market in the event of removal of subsidies from the modern bloc countries, the other competitors like Australia and New Zealand would capture this market and enter in a big way to flood markets with their dairy products, making us loosing our competitiveness and a great opportunity in the new trade regime.

Indian Farm Wages: Trends, Growth Drivers and Linkages with Food Prices

This study looks at trends in Indian farm wages, analyses their linkage with food prices, and identifies factors which drove their growth in real terms. We employ quantitative and qualitative analysis techniques for this purpose. A vector-error correction model (VECM) is used to determine the linkage between farm wage inflation and food inflation, and a pooled mean group (PMG) estimation method, used for dynamic heterogeneous panels, is used to identify the drivers of growth in real farm wages. In last 20 years (1998-99 to 2017-18), wages of India’s farm labourers increased at an average annual rate of 9.3 per cent in nominal and 3.2 per cent in real terms. For an average agricultural labourer, the daily wage rates increased from less than INR 45 in 1998-99 to about INR 229 in 2017-18. In real terms (2004-05 prices), this increase was from INR 50 to about INR 90 per day. The empirical analysis of the monthly wage time series identified a structural break in January 2007. Specifically, the curve is near-flat before this break-point subsequent which it rises sharply. On the relation between food inflation and wage growth, evidence was found of a food-wage spiral where changes in food prices and farm wages were estimated to impact each other. However, the impact of food inflation emerged to be stronger on wages than vice-versa and this impact was observed to strengthen post 2007-08. The panel study (1987-88 to 2015-16) on the drivers of real wage growth was conducted around the January 2007 structural break. Before this break, growth in real wages was estimated to be mostly driven by growth in the agriculture sector. Any influence of non-agricultural sectors (manufacturing and construction) did not emerge significant during this period. However, post the break, the growth witnessed in both- non-agricultural (manufacturing and construction sectors) and agricultural sectors explained the sharp increases in real farm wages. The large public rural employment program, MGNREGA (introduced in 2005) was identified as a third potential force of influence on rural wages; however, among other significant factors, its contribution to farm wage growth was estimated to be low and with a lag. Policy implications based on these findings are that for faster growth in real farm wages, focus needs to be on augmenting labour productivity in agriculture. In order to pursue that, one needs to lead reforms in agriculture that can accelerate agri-GDP growth and ensure that the rest of the economy, especially the manufacturing and construction sector, grow much faster pulling labour out from the agricultural sector to higher productivity jobs in manufacturing, construction, and possibly also services.

Tax and Spending in the 2020s

Tax and Spending in the 2020s

A Post-Brexit Framework for Electricity Markets

Electricity charges for households in England and Wales have risen by 50 per cent in real terms since 2001, partly as a result of policies designed to reduce greenhouse gas emissions.The decarbonisation policies adopted have been complex and inefficient, and have also been contradicted by other measures such as the reduced rate of VAT imposed on domestic fuel. Emissions reduction objectives could be achieved at much lower cost. The government should phase out the Climate Change Levy, the Energy Company Obligation, the Warm Homes Discount and the Carbon Price Floor. Utility bills should be taxable at the full VAT rate (20%) rather than the reduced rate (5%). Any help to vulnerable households should be in the form of electricity vouchers. If the goal is to reduce emissions, decarbonisation should be undertaken under a single market-based mechanism such as a cap-and-trade scheme or a carbon tax, which would apply to all CO2 emissions. Climate-change policy should be technology-neutral. The government should establish a decarbonisation target and allow energy markets to adjust to it in the most efficient way.

School Spending in England 2010–15

AbstractSchool spending in England has been relatively protected over the past five years, with day‐to‐day school spending per pupil rising by about 0.6 per cent in real terms. This contrasts with cuts to other areas of education spending and across other areas of government spending more generally. This real‐terms increase has been delivered by an increase in funding going to the most disadvantaged pupils via the pupil premium. (Other types of funding were frozen in cash terms per pupil.) One of the consequences of this reform is that funding is increasingly concentrated on schools catering for the highest proportions of pupils from disadvantaged backgrounds. This is in contrast to school systems in some other countries (for example, the US), where resources tend to be more highly correlated with local property values. Looking forward, rising pupil numbers, together with reforms that will increase the cost of employing staff, will contribute to increasing school costs over the coming years, with school spending needing to increase by at least 20 per cent in cash terms just to keep funding per pupil constant in real terms after accounting for expected cost increases for schools.

Singapore in 2013: The Times They are a-Changin'

Overall, 2013 was certainly annus mirabilis for Singapore owing largely to major socio-political domestic issues seizing newspaper headlines. Domestic events have been so jarring to the Singaporean soul that some have even taken to describing such events as characteristic of a nation undergoing a mid-life crisis. 1 In comparison, issues related to foreign affairs were remarkably steady and tame. Moreover, discussions on economics — customarily at the forefront of Singaporeans’ minds — took a back seat to socio-political issues, with the economy doing better than expected as Gross Domestic Product grew by 3.7 per cent and median salaries increased by 3.9 per cent in real terms. With socio-political domestic issues consuming the attention of most, it is somewhat unsurprising that the year was bookended by a by-election loss for the ruling People’s Action Party (PAP) candidate on 27 January and Singapore’s first riot in forty years by a large group of foreign workers in Little India 2 on 8 December.

Audit Fees and IAS/IFRS Adoption: Evidence from the Banking Industry

The adoption of International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) has two opposite effects on audit fees: on the one hand, greater effort is required from auditors, which is likely to be reflected by higher fees; on the other hand, if IAS/IFRS improve the quality of financial reporting, expected liability costs could decrease and lower fees may be demanded. We consider a large sample of Italian banks and we examine the effect of IAS/IFRS adoption on audit fees. The results show that higher fees (19.29 per cent in real terms) are paid after the switch to the new standards. Using a standard earnings management model, we do not find support for the idea that financial reporting quality is affected by the adoption of IAS/IFRS. The observed increase in fees is positively associated with the presence of financial derivatives held for hedging purposes. This paper extends the findings of prior research on the effect of IAS/IFRS adoption on audit fees; contrary to prior contributions, our analysis concentrates on the banking industry. Furthermore, unlike prior works, we consider both listed and non‐listed firms.

Olympic Proportions: Cost and Cost Overrun at the Olympics 1960-2012

Do different types of megaprojects have different cost overruns? This apparently simple question is at the heart of research at the University of Oxford aimed at understanding the characteristics of megaprojects, particularly in terms of how they are established, run and concluded. In this study, we set out to investigate cost overruns in the Olympic Games. To do so, we examined the costs of the Games over half a century, including both summer and winter Olympics. We looked at the evolution of final reported costs and compared these to the costs established in the Games bids, submitted to the International Olympic Committee (IOC) up to seven years before the Games occurred. In so doing we established the largest dataset of its kind, and documented for the first time in a consistent fashion the costs and cost overruns for the Olympic Games, from 1960 to 2012. We discovered that the Games stand out in two distinct ways compared to other megaprojects: (1) The Games overrun with 100 per cent consistency. No other type of megaproject is this consistent regarding cost overrun. Other project types are typically on budget from time to time, but not the Olympics. (2) With an average cost overrun in real terms of 179 per cent – and 324 per cent in nominal terms – overruns in the Games have historically been significantly larger than for other types of megaprojects, including infrastructure, construction, ICT, and dams. The data thus show that for a city and nation to decide to host the Olympic Games is to take on one of the most financially risky type of megaproject that exists, something that many cities and nations have learned to their peril. For the London 2012 Games, we find that: (1) With sports-related real costs currently estimated at USD14.8 billion, London is on track to become the most costly Olympics ever. (2) With a projected cost overrun of 101 per cent in real terms, overrun for London is below the historical average for the Games, but not significantly so. (3) The London cost overrun is, however, significantly higher than overruns for recent Games since 1999. London therefore is reversing a positive trend of falling cost overruns for the Games.

The changing architecture of the UK welfare state

This article looks at the way in which the role of the state has evolved within different aspects of welfare activity (broadly defined) in the United Kingdom since 1979 and forward to the possible impacts of the plans of the Coalition government that took office in 2010 for changing that role through reform and fiscal retrenchment. Even as governments restrained the growth of public social spending, total public and private activity grew by more than 150 per cent in real terms between 1979-80 and 2007-8, and from 34 to 42 per cent of GDP. If state services have not grown rapidly enough, some have paid more privately for the services they want, and in other cases governments have ended up financing activity through indirect routes. There has always been a 'mixed economy' of welfare in terms of the balance between public and private provision, finance, and control. Changes in this balance have been slow, with the largest growth being in the 'pure private sector' (with private provision, finance, and control), but with some growth in publicly financed services that are contracted out to the private sector. The experience suggests that the Coalition government's initial ambitions for radically transforming the overall structure of public-private boundaries may be hard to realize.

Who are minimum and sub‐minimum wage workers?

PurposeThe purpose of this paper is to provide a comprehensive portrait of who earns the minimum wage, in terms of the characteristics of the individual that are most important in determining this outcome.Design/methodology/approachThis study uses individual data from the Annual Income Supplements of the New Zealand (NZ) Household Labour Force Surveys between June 1997 and June 2004. This unit record data allows isolation of workers earning the minimum wage or close to it. A more sophisticated quantitative analysis is also carried out, where the probability of earning at or below the minimum wage is modelled to estimate what individual characteristics are most significant in determining minimum wage status.FindingsOne of the key findings was that individual characteristics (such as age) are much more important than household circumstance or industry affiliations, in terms of the probability of earning minimum wage.Originality/valueNZ has substantially increased minimum wages for teenagers and adults since 2000. For example, since the youth minimum was introduced in March 1994, it had increased by 52 per cent in real terms by 2004. Consequently, recent NZ experience offers a rare opportunity to isolate who earns the minimum wage and which subgroups are more likely to be potentially impacted by a rising minimum.

Penalized Labour Reinsertion: The Case of Peru

Going through unemployment or forced inactivity may be a shocking experience for any worker. However, negative consequences might not end with the finding of a new job. This paper shows that a new job implies, in most cases, lower real wages and fewer fringe benefits with respect to the previous job in Peru. The average earnings penalty ranges between 9 and 20 per cent in real terms, and female workers are most affected. Losses in fringe benefits might be even more harmful. Moreover, this paper finds that none of the Peruvian public mechanisms of social protection effectively helps to achieve a better labour reinsertion.

Methods explained: the GDP implied deflator

This article will introduce readers to the concept of the gross domestic product (GDP) implied price deflator. The GDP implied deflator is used to measure changes in the overall level of prices for the goods and services that make up GDP. It is an important indicator in the National Accounts as it distinguishes output growth that comes about due to volume increase and that due to price changes. In effect, the GDP implied deflator illustrates how much of the change in nominal GDP from one year to another reflects changes in the price level. It is referred to as the implied deflator: for example, if GDP increases by 2 per cent in real terms and 5 per cent in nominal terms, the implied economy-wide rate of inflation is 3 per cent.

Does Money Matter for Schools?

There is considerable disagreement in the academic literature about whether raising school expenditure improves educational outcomes. Yet changing the level of resources is one of the key policy levers open to governments. In the UK, school expenditure has increased by about 40 per cent in real terms since 2000. Thus, providing an answer to the question as to whether such spending has an impact on educational outcomes (and whether it is good use of public money) is of paramount importance. In this paper we address this issue for England using much better data than what has generally been used in such studies. We are also able to test our identification assumption by use of a falsification test. We find that the increase in school expenditure over recent years has had a consistently positive effect on outcomes at the end of primary school. Back-of-envelope calculations suggest that the investment may well be cost-effective. There is also some evidence of heterogeneity in the effect of expenditure, with higher effects for students who come from economically disadvantaged backgrounds.

Perceptions of economic and financial conditions of households in 2000

'The economy grew by 3,0 per cent in 2000. This was the fastest growth since 1996, buoyed by a strong recovery in household consumption spending and an increase in exports of over 7 per cent in real terms' (Trevor Manuel, Minister of Finance, Budget speech, 21 February 2001). 'Growth won't solve our problems. The faster the economy grows, the faster will be the creation of jobs for the highly skilled. So there will be more, not fewer, problems with income disparity' (Iraj Abedian, Standard Bank Group Economist, cited in Financial Mail , 2001a). The aim of this article is to examine the extent to which economic growth, experienced in 2000, improved the financial and economic conditions of South African households, by analysing a national representative survey of 2 700 adult South Africans conducted by the Human Sciences Research Council in September 2000. The survey results were analysed by disaggregating data by race, gender, area type, province and Living Standard Measure (LSM). The theme emerging from this article is that although the majority of households were negatively affected financially and economically, proportionally more Africans, women, rural residents and poor households were hardest hit. Although South Africa achieved a 3 per cent economic growth rate in 2000, there is limited evidence to suggest that this growth trickled down to the majority of households.

Progress towards continuous cover woodland: Ipsden estate

Increasing interest in continuous cover management of woodlands in Britain indicates the need for more study of the resulting wood production, since sales of wood remain the most important source of finance for established woodlands. Detailed enumeration data by 1 inch quarter girth (1″ QG = 3.23 cm diameter) classes and records of cut are available for 22 compartments of all‐aged woodlands of the Ipsden estate, Oxfordshire, together with accounts compiled on a consistent basis since 1973. Predominant species are beech, oak, ash, cherry with, usually younger, European larch, Scots pine and other conifers managed on an irregular group selection system. Average growing stock volume of material over 5″ QG increased from 1080 hoppus feet per acre (96.3 m 3 ha −1 ) in 1973 to 1800 h.ft per acre (160.4 m 3 ha −1 ) in 2000. Cut amounted to 593 h.ft per acre (52.8 m 3 ha −1 ). Total increment over the 27 years was 1312 h.ft per acre or 48.6 h.ft per acre per year (4.33 m 3 ha −1 a −1 ). An ‘ideal’ stand is defined. The net annual income relative to value of standing timber of this is 1.8 per cent. The current absence of simulations of growth and potential yield in mixed‐age, mixed‐species stands makes forecasts of volume and money yield difficult. A plausible profile of future net income suggests that net present value of the current stock lies between £1450 per acre at 2 per cent and £750 at 3 per cent, both values being substantially lower than the standing value of timber of £1670 per acre: equality occurs at 1.7 per cent. This result should be set alongside the return, without grants, of growing even‐aged broadleaved stands in Britain of a little over 1 per cent in real terms.

Shell Petroleum Exploration and Production 1980 to 1997: Reserves Analysis and Key Financial Statistics in Money and in Real Terms

An analysis of Shell's petroleum exploration activities over an eighteen year period is presented Key findings include; - the cost of finding oil decreased by a factor of four over the period 1981 to 1997. - revision to oil reserves have shown no trend - improved recovery estimates of oil reserves have shown no trend - well analysis shows that whilst in 1980 only one exploration well in four was successful, in 1997 more exploration wells were productive than dry. There is now only a few per cent chance that a development well will be dry compared with a 5 to 10 percent chance of a dry development well in the early 1980s. - depreciation depletion and amortisation (DDA) changes on Shell's reserves have increased substantially in money and in real terms over the last eighteen years. DDA changes are now sometimes equal to capex whilst in 1980 they were only 30 per cent of capex. - from 1982 to 1997, capex per b.o.e. reserves has increased by 60 per cent in real terms. - for crude oil and NGLs, Shell has dropped the reserves to production (RIP) ratio from 13 years in the 1980s to 11 years since 1994. - production costs for oil and gas have fallen from $11.0 per b.o.e. in 1981 to $2.9 per b.o.e.£. in 1997. whilst the net proceeds (selling price of crude oil and natural gas) have fallen from $48.6 b.o.e. in 1981 to $17.0 b.o.e. in 1997, net earnings (profits after tax and all expenses) have fallen from $7.1 b.o.e. in 1980 to $3.5 b.o.e. in 1997 both expressed in (1997) real US$ terms.

The ETUC's role in the EU's new economic and monetary architecture

The trade union debate about EMU is moving on: the issue is no longer why or how, but what to do with it once we've got it. For the ETUC the answer is clear: convergence and stability are not ends but means of achieving better jobs and living standards. To try to ensure that this will be the case, the ETUC will have to influence the other post-EMU players: the European Central Bank, which will be responsible for monetary policy, and the economic authority(ies) which will be responsible for budgetary policy. Initial discussions with the "bankers" have been promising, but who is to be the 'champion' of the real economy of jobs, investment and growth? EcoFin with its mantra of 'stability oriented policies' has seemed to be more central bankist than the central bankers. Perhaps this has partly reflected the lost national room for manoeuvre that market-driven integration produced, but EMU, with its convergence and its stability, and with its new institutional possibilities - including the Employment Chapter and the Euro X Council - will create new opportunities for active macroeconomic management. A first test of the post-EMU architecture is already upon us - the Asian crisis. No one wants to talk this up, but nor do we want the European recovery to be aborted, unnecessarily, again. We therefore need to monitor demand and not just supply conditions in the European economy so that we can act swiftly, on a coordinated basis, if demand looks like falling below 3-3.5 per cent in real terms or 5-5.5 per cent in nominal terms. These are the levels of growth required to put unemployment on to a firmly downward path. In terms of recent history the figures may appear high, but we've got a lot of leeway to make up - and EMU is giving us the potential to do it. To repeat, that's what EMU, and the sacrifices made to achieve it, has all been about.

Evaluating Airline Deregulation in Australia

It has frequently been claimed that the cost of air travel in Australia has fallen by around 20 per cent in real terms since the end of the Two Airline agreement. However, this claim rests on a misinterpretation of price data. In this article, an analysis based on the theory of price indexes is presented. It is concluded that the representative passenger has probably experienced a small reduction in the cost of air travel since deregulation. Some additional benefits have flowed from the expansion of frequent flyer schemes, and from increased frequency of service. The distributional effects of deregulation are unclear, but are probably favourable on balance. The Australian airline industry is a natural duopoly and the market is not contestable. Therre is no evidence of dynamic efficiency gains arising from deregulation. The observed effects of deregulation are consistent with the predictions of neoclassical microeconomic theory.

Social Policy Digest

A study by the Institute for Fiscal Studies (IFS) found that whilst the income of the poorest tenth of society fell by 18 per cent in real terms between 1979 and 1992 (after housing costs), their expenditure rose by 14 per cent. In a separate report on changes in individuals' incomes over time, the IFS found significant movement in and out of the poorest sections of society between 1991 and 1992. The latest edition ofHouseholds Below Average Incomeshowed that real net income rose by an average of 38 per cent (after housing costs) between 1979 and 1992/93, but fell by 17 per cent for the bottom tenth of the population (24:3/95,1.1). The narrowing of the gap in the north–south divide has halted, but a report on the geography of poverty explores many other divisions between and within areas of the UK. The report of the Commission headed by Lord Dahrendorf called for a new investment strategy and benefits structure, as well as measurement of social and environmental conditions as part of an annual audit of ‘wealth’. Tony Blair, the Labour Party leader, promised a fundamental review of the social security system once in power.