Subsidy Arrangements Research Articles

Monetary Policy in an Oil-Exporting Emerging Economy with Fuel Subsidies

This paper develops a DSGE model for an emerging oil-exporting economy with a fuel subsidy regime to analyse the stabilising role of alternative monetary policy rules under different subsidy arrangements. The model is estimated via Bayesian methods using data for Nigeria from 2000Q2 to 2019Q4. This paper (i) estimates a domestic fuel pricing rule for an oil-exporting emerging economy of Nigeria with fuel subsidies, (ii) characterizes monetary policy behaviour under such an estimated fuel pricing rule, and (iii) evaluates the appropriateness of alternative monetary policy rules under different assumptions regarding the fuel subsidy regime. The results show that approximately 45 per cent of changes to the global oil price are transmitted to the retail price of fuel. Also, it was found that the behaviour of monetary policy in Nigeria has been characterised by the headline inflation monetary rule. However, the monetary authority is able to reduce policy loss by approximately 11 per cent if it targets core inflation rather than a measure of inflation that includes energy prices. Under a zero-subsidy regime, the core inflation monetary rule outperforms its competitors in achieving overall macroeconomic stability, provided the share of oil in total consumption is relatively low.

Chinese and Australian Neoliberal Policy Responses to Risks in Social Service Purchasing

China adopted neoliberal approaches to improve the supply of quality social services in the early 2000s. How did the Chinese government manage the financial and quality risks of increasing the provision via government purchasing and how did it differ from other countries? The article examines the policy trajectory of early childhood education and care in China and Australia on this question. Policy analysis of the effect of purchasing on the cost to government and quality of services shows how both countries used subsidy arrangements to engage non-profit and private providers to expand supply. When faced with market risks, they both tightened regulations, but China differed in the speed and strength of their response, restricting the proportion of private providers. The findings have implications for understanding the risks of relying on market forces in other social service sectors, and how policy can effectively respond.

Subsidising the Cost of Land for Low Income Housing: Some Evidence from Jos, Nigeria

This study aims to examine the variables that influence the application of land and infrastructure subsidy for low-income housing provision in the city of Jos, Nigeria. Data was collected by conducting interviews with the representatives of the relevant government agencies and those of the house building companies. This was transcribed and examined alongside documentary evidences. The analysis was conducted in line with the study’s objectives: The first was to examine how the policy for subsidising the cost of land applies in the local context in Jos. The data examined in connection to this objective suggest that there is an absence of a uniform approach to the application of the subsidy policy by the three tiers—federal, state and local—of government. The approaches adopted by the federal and state government agencies were seen not to be effective in supplying the subsidies needed by private developers. The second objective was interested in scrutinising the variables influencing the arrangement for subsidising the cost of land in Jos. The data analysed confirms that the lack of proper understanding of land subsidy policy among government officials, the absence of political will on the part of State and Federal government agencies, the absence of transparency and accountability on the part of government officials, the absence of legislation in support of the subsidy policy, and bureaucratic constraints were the key variables influencing the subsidy arrangement in Jos. These findings were examined and some recommendations were proffered.

Integrating ecology and economics in understanding responses in securing land-use externalities internalization in water catchments

Securing sustainable upstream land-use externalities internalization in developing countries' water catchments continues to be a serious challenge. Uluguru water catchment in Tanzania presents a compelling case for analysis. The catchment is currently under downstream–upstream conservation subsidy arrangement. However, lack of information on the long-term impacts of the approach on the functioning and distribution of benefits threatens its sustainability. Based on system dynamics framework, this study developed an integrated ecological-economic model to evaluate the long-term impacts of this arrangement on the functioning and distribution of benefits. The model was also used to compare the arrangement with other economic instruments in the same respect. Simulation results indicate that the scheme has a potential of securing conservation goals without compromising upstream well-being. Taxing crop inputs and outputs also has a potential securing conservation goal, but at the expense of upstream well-being. Tax cuts on inputs to tree fruit and basic domestic goods also secure conservation goals without compromising upstream well-being. These results show that a downstream–upstream subsidy scheme is better for achieving upstream land use externalities internalization without compromising distribution of benefits among beneficiaries and well-being of upstream land holders than taxing crop inputs and outputs.

New Zealand patients' understanding of brand substitution and opinions on copayment options for choice of medicine brand.

Objective The aim of the present study was to better understand the views and experiences of New Zealand patients on switching between brands of prescription medicines and on alternative funding options for the provision of medicines, including an increase in copayments. Methods A self-administered questionnaire was offered to selected patients through participating community pharmacies. Pharmacies were stratified according to level of deprivation of the community served before random selection and invitation for involvement in the study. Patient understanding of and rationale for brand substitution was assessed. Preference for different copayment options was elicited, together with demographic and other explanatory information. Results In all, 194 patient-completed questionnaires were returned. Some gaps in patient knowledge and understanding of brand changes were evident. Most respondents indicated a preference for the existing subsidy arrangements with little desire expressed for alternatives. Around half were willing to contribute towards paying for a choice of brand other than the subsidised brand; however, the maximum contribution nominated was disproportionately lower than real cost differences between originator brand and generics. Conclusion The findings of the present study suggest that although most patients have experienced brand changes without any problems occurring, a lack of knowledge about substitution does persist. There may be some additional gain in ensuring New Zealanders are aware of the full cost of their medicines at the point of dispensing to reinforce the benefits of the Pharmaceutical Management Agency (PHARMAC) purchasing model. What is known about the topic? Generic reference pricing is used as a mechanism to make savings to pharmaceutical budgets; however, reticence to the use of generic medicines persists. What does this paper add? Most New Zealand patients experience brand changes without any problems occurring; however, a lack of knowledge about substitution does persist. The dollar value patients indicate they would contribute for brand choice is lower than the true cost difference between brands. What are the implications for practitioners? Opportunities exist for healthcare professionals to reinforce generic policies and there may be some additional gain in ensuring New Zealanders are aware of the full cost of their medicines at the point of dispensing.

Subsidies for Renewable Energy Facilities under Uncertainty

We derive the optimal investment timing and real option value for a facility with price and quantity uncertainty, where there might be a government subsidy proportional to production quantity. Where the subsidy is proportional to the multiplication of the price and quantity, dimensionality can be reduced. Alternatively, we provide quasi‐analytical solutions for different quantity subsidy arrangements: permanent (policy is certain); retractable; suddenly permanent; and suddenly retractable. Whether policy uncertainty acts as a disincentive for early investment depends on the type of subsidy arrangement. The greatest incentive for early investment is an actual retractable subsidy, a ‘flighty bird in hand’.

Assessing The Current Indonesia’s Electricity Market Arrangements and The Opportunities to Reform

Existing subsidy arrangements and institutional settings in the Indonesian electricity sector distort investment decisions and lead to higher cost. Electricity supply is characterized by natural monopoly characteristics, requiring different management by governments than sectors with more straightforward market characteristics. Many countries have undergone significant re-structuring of their electricity sectors, away from one, state owned and vertically integrated monopoly supplier to a setting whereby competition has emerged either at the generation level and/or the retail level. Transmission and distribution networks are typically heavily regulated and transparent access arrangements are put in place as part of the restructuring efforts. The analysis showed that the current structure of Indonesia’s electricity sector firmly within Model 2 (the single buyer model) and highlights that Indonesia is currently towards the less-competitive end of the spectrum of Model 2, identifying significant potential for efficiency enhancing reforms within this structure. Constitutional limitations have hampered previous efforts to restructure the sector in Indonesia but there is significant room for incremental reform to improve incentives in the sector and reduce the cost of generation in the process.

Suburbanizing Disadvantage in Australian Cities: Sociospatial Change in an Era of Neoliberalism

ABSTRACT:This article analyses the shifting locations of social disadvantage in Australian cities based on data from the 1986 and 2006 censuses with Sydney as a case example. This 20-year period is highly significant because it represents the period over which the impacts of neoliberal economic policies introduced by the Federal Labor government in 1986, and maintained by successive Australian governments regardless of party, have fed through the Australian economy with a resulting increase in socioeconomic restructuring, including increased income polarization. This in turn has been reflected in a highly distinctive locational shift in concentrations of disadvantage in Australian cities as housing markets, largely left to their own devices (albeit supported by taxation and subsidy arrangements), have acted to realign the social structure of the city. The net result has been a marked suburbanization of the locations of disadvantage away from the “traditional” inner cities and into the middle, and in some cases outer, suburbs. In many respects, the locations identified are analogous to the first suburbs of U.S. cities that are now the focus of urban policy concerns. The article explores the impact of the “neoliberal turn” on the changing spatial structure of the Australian city and provides evidence of the changing nature of urban disadvantage in the postindustrial and increasingly fragmenting Australian city. In doing so, the article touches on the emergence of new geographies of underprivilege.

Artistic freedom through subsidy: The British model of reviving American musicals

In the last two decades, a host of British-directed revivals of American musicals have opened in London and on Broadway, in many cases to great acclaim. These productions have received critical praise for their fresh staging and dark psychological character exploration. This article suggests that British government subsidizing of the arts has opened the doors for not-for-profit theatres to explore radical reinterpretations of classic American musicals, without the pressures of having to cater to audience expectations in order to back the shows financially. Because of government support, British directors have been free to experiment with staging, physical design, cross-racial casting and character interpretation to get at the emotional core of the material. In many cases, the shows have generated enough critical support to allow them to transfer into the commercial sector – the West End, Broadway, or both – and the original producing theatres benefit from the transfer. This article examines two subsidized theatres in England that have produced some of the most influential musical revivals of the last fifteen years: the Royal National Theatre and the Donmar Warehouse. Through an overview of their histories, subsidy arrangements, and a few of the musical revivals they mounted and later transferred to Broadway, this article illustrates how not having to focus on the box office take can lead to innovation and creativity in musical theatre staging, and how theatrical experimentation in turn creates more opportunities for public funding.

Recent changes in Spanish housing policies: subsidized owner-occupancy dwellings as a new tenure sector?

The conventional model of social housing in Spain is a peculiarity within European housing policy, in that it is almost entirely owner-occupied. Subsidized owner-occupancy housing maintains the status of social housing for a set number of years, during which time it cannot be sold against market prices. After that period, its status changes, and the housing concerned becomes part of the free housing market. However, recent developments in Spanish housing policy suggest that this model might change in the future. In some Spanish regions, subsidized owner-occupancy housing is now considered as a separate and permanent tenure category and not as a temporal subsidy arrangement. This paper discusses the background and the possible implications of this new policy perspective.

John Weyland on Encouragements to Population Increase

Population and Development ReviewVolume 32, Issue 1 p. 163-168 John Weyland on Encouragements to Population Increase First published: 23 March 2006 https://doi.org/10.1111/j.1728-4457.2006.00110.xAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Abstract Modern worries about the economic and social consequences of low fertility and eventual population decline have led to numerous proposals for subsidy arrangements aimed in effect at “buying” healthy and potentially productive children. The most innocuous of such schemes, typically with welfare rather than population goals in mind, is the institution of the family wage—paying labor based on family size. The passage reproduced below, from John Weyland's Principles of Population and Production (1816), offers an early instance of such a scheme being argued for on demographic grounds. Weyland's account of the “artificial” encouragement of population increase begins with an artless analogy to managing a stud-farm, but the stance is mercantilist rather than totalitarian and is leavened by a strong concern for the health and morals of the future citizens. That the state might wish to raise its population growth was of course contrary to Malthusian doctrine. The long and contentious debates on Britain's Poor Laws gave more prominence to the opposite goal: that of preventing births that threatened to become a charge on the community. Weyland, however, asserted that the tendency of population was to “keep within the powers of the soil to afford it subsistence.” A prior population increase (to a level “just beyond the plentiful supply of the people's want”) was a necessary stimulant to productivity—indeed, was “the cause of all public happiness, industry, and prosperity.” (Modern versions of this view are found in the writings of Ester Boserup and Julian Simon.) Moreover, he argued, with urbanization came an inevitable fall-off in population growth—reaching “a point of non-reproduction” when around a third of the population lived in towns. Malthus responded to Weyland in an appendix to the fifth (1817) edition of the Essay: Weyland's premise, he wrote, is “just as rational as to infer that every man has a natural tendency to remain in prison who is necessarily confined to it by four strong walls.” Weyland's book as a whole he dismissed in unusually intemperate terms: “It is quite inconceivable how a man of sense could bewilder himself in such a maze of futile calculations, and come to conclusions so diametrically opposite to experience.” More concisely, and specifically on the subject of the extract below, an entry in the Essay's highly distinctive index reads “Encouragements, direct, to population, futile and absurd.” John Weyland (1774–1854) was an English rural magistrate of independent means. He took an active part in the Poor Law debates of the early nineteenth century, arguing for payments under them to include child allowances. The full title of his major work is: The Principles of Population and Production as they are affected by the Progress of Society with a View to Moral and Political Consequences (London, 1816). There are modern reprints by A. M. Kelley and Routledge/Thoemmes Press. The excerpt is from pp. 167–175. Volume32, Issue1March 2006Pages 163-168 RelatedInformation

Public subsidies for water‐conserving irrigation investments: Hydrologic, agronomic, and economic assessment

Public subsidies for promoting the adoption of water‐conserving on‐farm irrigation technologies are frequently cited as means for making additional water available for higher‐valued uses in the water‐scarce western United States. On the basis of an agroeconomic model reflecting conditions in northeastern Colorado, hypothetical conservation subsidy policies are analyzed with regard to their effects on hydrologic and agronomic factors such as irrigation water delivery, consumptive use, and return flows, as well as on economic factors including crop mix, input use, irrigation technology choice, and agricultural net returns to water. The cost‐effectiveness of different subsidy arrangements for generating delivery reductions is also assessed, and implications for their implementation are derived. In contrast to assumptions underlying federal policies, the results confirm and extend earlier academic findings that subsidy policies are unlikely to provide real water conservation under many frequently encountered river basin conditions.

Relevance and Need for International Regulatory Standards

IN PRODUCING FINANCIAL services, reliance on transactional and informational networks makes strategic complementarities commonplace. These complementarities mean that coordinating the actions of competing institutions can manifestly increase their aggregate marginal return. However, increased coordination may or may not improve social welfare. Cooperative behavior can improve the industry's marginal return in two very different ways: (1) by increasing the perceived quality of regulatee products by enhancing at low cost the confidence and convenience they offer to consumers or (2) by fostering cartel or subsidy arrangements that increase industry revenues at the expense of the welfare of parties in other sectors of the economy.

Asset Management Programmes for Financial Planning and Management in Irrigation and Drainage

This paper presents a framework for the use of asset management programs for short, medium and long-term financial planning and management of irrigation and drainage systems. Asset management plans provide decision-makers the information on costs of infrastructure and their management in different stages of the financial management cycle. Their use is clarified for defining service levels and their associated costs, allocation of cost to specific services, defining charges and service fees and preparing budgets and subsidy arrangements for operation, maintenance, rehabilitation or modernisation of infrastructure.

A survey of the Swiss public transport system and policy

This paper surveys Swiss public transport structure and policy. The regulatory regime is explained with the division between the two operators working under federal monopoly — the State railways (SBB) and the postbuses (PTT) — and the rest of the system. The rather complicated Swiss subsidy arrangements are described. The federal government's emphasis on introducing cheap public transport fares on environmental grounds through the federal transport measures (BTM) and the use of cheap fares in urban areas are discussed. The paper notes the Swiss people's rejection by a referendum of a federal commission's proposal for an integrated transport policy, though some of the solutions were introduced in their own right: the division of SBB into two parts, and the creation of the concept Rail 2000, later developed into Rail + Bus 2000. Finally, the paper reviews problems of the Swiss policy, including the future of cheap fares, making some comparisons with developments in Scandinavia.

Shifting subsidy from bricks and mortar to people: Experiences in Britain and West Germany

Abstract Since the early 1970s there has been a very similar shift in the balance of public spending on housing in Britain and Germany from general supply subsidies to demand subsidies (income related housing allowances and tax expenditures). This paper compares and contrasts the structures of those subsidy systems, the problems associated with them and current directions of change. Although there are close parallels in the shift of policy in both countries towards ‘targeting’ of explicit subsidies and in favour of greater profit‐making private provision, the environments in which this has occurred are very different. In particular, the lack of a functioning market for private rental housing in Britain—itself in part a function of tax and subsidy arrangements—severely limits the freedom of manoeuvre of British policy makers compared with their German counterparts.

The Defunct Housing Allowance Experiment: Some Assumptions and Oversights

The Australian Housing Allowance Experiment (HAE) was discontinued in June 1978. The experiment (and any ensuing scheme) seemed destined for trouble because of difficulties unforeseen by its administrators. Some of these problems are alluded to in Albon (1977b) and are here reconsidered. Other potential difficulties are suggested. Specifically, the following issues are considered: can a tied subsidy arrangement be justified?; how does tieing create a possible difference between the dollar value and recipient's valuation of a housing allowance?; what are the implications of moving costs? and what is the likelihood of landlord-tenant coalitions? These are all questions overlooked by the Department of Environment, Housing and Community Development (EHCD).

Validation of data on demand and need for dental treatment in an elderly population

The present paper intended (1) to validate some key variables employed in a survey of a representative sample of 241 persons aged 65-79 in Troms in Northern Norway, and (2) to discuss aspects of social policy related to dental programs for pensioners. The participants were asked questions focused on potential demand for dental services, and oral problems. Treatment need was assessed professionally. It was explained to the subjects that pensioners were entitled to dental care at half price, and referral to a dentist was arranged if wanted. Validity was studied in terms of sensitivity and specificity. Using referral as a criterion, the question related to potential demand displayed a sensitivity of only 53%, probably because of the imprecise wording, while the specificity appeared to be 82%. Ninety-five persons reported oral problems. The existing subsidy arrangements operating in a traditional service setting did not seem to cope adequately with this problem group. Treatment need was a sensitive (88%), but not a specific (43%), indicator of oral problems. Viewed socio-politically, these findings may be interpreted as a need for visiting services and for an upgrading of the value of self-assessment. It was concluded that this method of validation provided additional information on the practical usefulness of the test methods employed.

Information Imperfections: The Achilles' Heel of Entitlement Plans

Entitlements have been proposed as a mechanism for financing an expanded national program of postsecondary education (e.g., Levin 1977; Kurland 1977; Nolfi 1977; Barton 1977). In theory, entitlement plans achieve greater economic efficiency and more social equity in access to education than current subsidy arrangements do because they cast suppliers and consumers of educational services in market relationships. That is, instead of giving direct subsidies to postsecondary schools, entitlement plans award vouchers-limited authorizations to spend public funds-to individuals so that they can purchase educational services from competing suppliers. Suppliers accept the vouchers as payment for services rendered, and the issuing agency redeems them for cash.

The Randwick Asylum: Organizational Resistance to Social Change

The Society for the Relief of Destitute Children began at a meeting held in 1852.1 It was legislated out of existence in 1916.2 In the sixty-four years of its existence it became the doyen of the voluntary charities of Sydney, attracted more favourable subsidy arrangements from the government than any of its competitors and suffered a rapid decline when it was unable to adapt to changing views of child care. This paper demonstrates how the rigidity of the organization combined with the effects of favourable subsidies to produce the forcible dissolution of the Society and the confiscation of its assets.