Tools Of Economic Analysis Research Articles

Kautilya on principles of taxation

PurposeThe purpose of this paper is to present Kautilya's principles of taxation during the fourth century BCE.Design/methodology/approachModern tools of economic analysis are used to present Kautilya's principles on income taxation.FindingsKautilya implicitly suggests a linear income tax. He emphasizes fairness, stability of tax structure, fiscal federalism, avoidance of heavy taxation, ensuring of tax compliance and subsidies to encourage capital formation.Research limitations/implicationsAccording to Kautilya, some linkage between the ability to pay (i.e. provision of a safety net to the poor, old and the sick) and the benefit principle may be better than the current approaches, which treat the ability to pay and the expenditure side of the taxation separately.Practical implicationEnsuring tax compliance and avoidance of heavy taxation are the most important ingredients of a sound fiscal policy.Originality/valueThe paper presents the very first growth‐oriented fiscal policy along with a provision of a safety net.

Modeling tourism: A fully identified VECM approach

System-based cointegration methods have become popular tools for economic analysis and forecasting. However, the identification of structural relationships is often problematic. Using a theory-directed sequential reduction method suggested by Hall, Henry and Greenslade [Hall, S. G., Henry, S., & Greenslade, J. (2002). On the identification of cointegrated systems in small samples: A modelling strategy with an application to UK wages and prices. Journal of Economic Dynamics and Control, 26, 1517–1537], we estimate a vector error correction model of Hawaii tourism, where both demand and supply-side influences are important. We identify reasonable long-run equilibrium relationships, and Diebold–Mariano tests for forecast accuracy demonstrate satisfactory forecasting performance.

Laboratory Experiments as a Tool in the Empirical Economic Analysis of High-Expectation Entrepreneurship

High-expectation start-ups are firms launched by entrepreneurs with high ambitions for growth. The encounter between new technology and entrepreneurship that characterizes such new ventures has a significant impact on the nature and speed of economic development, driving the growth of high-technology industries and helping to make the economic system open, complex and adaptive. Thus high-expectation entrepreneurship deserves special attention in entrepreneurship education. This paper introduces and explains the importance of high-expectation entrepreneurship. Then, using an approach borrowed from both experimental scientific research and the practice of medicine, the authors propose a form of business idea testing and entrepreneur training in a laboratory environment. The ability to transpose, test and iterate new ideas and models in a business laboratory has significant potential in terms of promoting rapid learning and the preliminary validation of a new business idea – thus cutting risk, reducing cost and maximizing revenue potential. The authors argue that this approach is far more appropriate for entrepreneurship development in the new economic environment than traditional business education models.

Structural Changes in Economics During the Last Fifty Years

This essay portrays the major currents in recent economic thinking against the orthodoxy and dogmatism of neoclassical economics. It places behavioral economics, experimental economics, evolutionary economics, ecological economics, new institutional economics, agent-based computational economics and post-autistic economics vis-a-vis the classical and the neoclassical economics. It concludes that we may expect a synthesis of all these strands of economic thinking in the near future that will replace neoclassical economics from the citadel of mainstream. Teaching of these strands of new economics has already begun in many universities, although in an un-integrated manner. However, until the neoclassical microeconomics and macroeconomics are replaced by their alternatives and necessary as well as convincing tools of economic analysis are developed, neoclassicism would not give way to modern economics.

Mine design selection under uncertainty

Frequently, alternative technically feasible mine designs and production scenarios are available for decision makers to consider. The selection of a mine design is then based on estimating net present values of all possible, technically feasible mine plans so as to select the one with the maximum value. Conventional risk and sensitivity analysis are also performed as decision supporting tools. Given the multiple market and geological uncertainties associated with mining investments, as well as the management flexibility to respond to new future information, the sufficiency of conventional economic analysis tools based on the static discounted cash flow analysis may be questionable. This paper proposes a multicriteria ranking system for selection between alternative mine designs under uncertainty. The system is based on integrating multiple market and geological uncertainties as well as the operating flexibility to revise the ultimate pit limits using a Monte Carlo based real options valuation (ROV) model. To compare the methods, the article applies the proposed system, along with other three ranking methods, to rank possible mine designs for a copper and a gold mine. It has been found that, in addition to the higher value of the mine design selected by the proposed system, its average mis-ranking is significantly lower than the other three ranking methods. For the copper mine, a reduction in the average mis-ranking of 37–58% could be achieved when using the proposed ranking system, while for the gold mine case, a higher reduction of 51–64% in the average mis-ranking is obtained.

Experiences with market-based instruments for environmental management

Consistent with global developments, market-based instruments are increasingly being used for environmental management across Australia. While the use of economic analysis tools by policy makers broadens the inputs to policy formulation, it is important to be realistic about their strengths and limitations. A dearth of thorough evaluations has meant that, to date, there is limited evidence supporting the cost advantages of market-based instruments identified by economic theory. Nevertheless, there has been some verification of these advantages, most notably from evaluations of the US sulphur dioxide tradeable permit scheme. A review of market-based instruments within Australia and overseas reveals that while different environmental problems require tailored solutions, there are many design elements such as monitoring and enforcement that are critical to the performance of all instruments. To reconcile economic and non-economic objectives of market-based instruments, substantial compromises are often made. Thorough and open evaluation is therefore essential for better instrument selection and design.

Examining the Viability of Broadband Wireless Access under Alternative Licensing Models in the TV Broadcast Bands

One application of cognitive radios is to provide broadband wireless access (BWA) in the licensed TV bands on a secondary access basis. This concept is examined to see under what conditions BWA could be viable. Rural areas require long range communication which requires spectrum to be available over large areas in order to be used by cognitive radios. Urban areas have less available spectrum at any range. Furthermore, it is not clear what regulatory model would best support BWA. This paper considers demographic (urban, rural) and licensing (unlicensed, nonexclusive licensed, exclusive licensed) dimensions. A general BWA efficiency and economic analysis tool is developed and then example parameters corresponding to each of these regimes are derived. The results indicate that an unlicensed model is viable; however, in urban areas spectrum needs can be met with existing unlicensed spectrum and cognitive radios have no role. In the densest urban areas, the licensed models are not viable. This is not simple because there is less unused spectrum in urban areas. Urban area cognitive radios are constrained to short ranges and many broadband alternatives already exist. As a result the cost per subscriber is prohibitively high. These results provide input to spectrum policy issues.

EU cohesion policy: the debate on Structural Funds

After 15 years of EU cohesion policy, implemented through National Development Plans (NDPs) and Structural Funds (SFs), economists remain divided on interpretations of policy effectiveness. As new member states prepare for the next programme of EU cohesion aid, it is important to review this debate. Two contrasting empirical approaches are distinguished: 'testing' and 'impact quantification'. We examine views of participants in the debate, and the methodologies and tools of economic analysis that are commonly used to support different conclusions. Having surveyed current methodologies, we conclude that none of them are likely to provide a decisive resolution to the debate.

Limited Amendment Process of Montana's Statewide Long-Range Transportation Plan to Meet SAFETEA-LU Requirements

The Montana Department of Transportation (MDT) uses a limited process to amend its statewide transportation plan and bring it into compliance with the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) regulations. This amendment process is an alternative to a full-scale, long-range transportation plan update. An overview is presented of ongoing business and planning processes that have made this limited amendment possible, followed by discussion about the approach used in Montana. The discussion focuses on specific areas addressed by the limited amendment process, including efficient management of the transportation system, economic development and land use planning, environmental mitigation, safety, and new consultations. Existing processes addressing such areas were in place before the amendment, including the performance programming process, the highway economic analysis tool, and the corridor planning process. The policy basis for these processes was established in earlier statewide transportation policy plans, whereas the specific business processes used evolved over several years. Limited amendments support maturing statewide planning processes because the mechanisms used for initial full-scale plans, once established within a state department of transportation, can become the drivers behind planning processes that advance either opportunistically or as evolutionary business process change. Some of these mechanisms are continuous robust public involvement, routine cyclic strategic environmental scans, and ongoing fiscal and technical analysis.

Economic Experiments for the Management Accounting Classroom

INTRODUCTION This paper presents three management accounting experiments designed for classroom use. Our approach is similar to that in Boylan (2004) and Schwartz et al. (2005), who describe audit experiments that can be administered without the aid of computers in a relatively short amount of time. Further, the experiments employ simplified settings, which facilitate a focus on first-order effects and ease both implementation and interpretation. However, despite their simplicity, we maintain they can be introduced successfully into courses ranging from introductory management accounting through first-year doctoral seminars. The advantage of using an experimental economics approach to instruction, where students assume decision-making roles, is it allows complex material to be introduced intuitively. Role-playing helps students experience both the economic and non-pecuniary aspects of the settings, without much preparatory work on the tools of economic analysis. This approach can be especially helpful when students have not had a lot of real-world business experience to use as a reference. A further advantage of economic experiments is, due to their enjoyable nature, they often stimulate student interest in the material beyond that achieved by traditional instruction alone. Schwartz et al. (2005) cite evidence on the efficacy of classroom experiments in promoting interest and learning. The experiments described herein address the issue of misaligned goals within an organization, a condition that afflicts almost all organizations to some degree. Naturally, organizations attempt to design mechanisms and protocols to alleviate such goal incongruence; these activities are known as management control. Management control is a broad topic, and our intent is to provide experiments especially suited for management accounting courses. Therefore, the experiments concentrate on the role of information in management control settings. Information voids are often at the heart of management control problems,

Modeling the dynamics of nutrient limited consumer populations using constant elasticity production functions

The marginal rate of technical substitution is a well-defined and important concept in economic production theory. It describes the ability of a firm to maintain levels of production while substituting one factor of production for another. Ecological stoichiometry has considered a similar problem—how organismal production is affected when incoming nutrients are not available in ideal proportions. However, the dominant models of analysis have assumed homeostatic nutrient ratios on the part of consumers. This is equivalent to fixed-factor production in economics with no substitutability. This work demonstrates how models of production from economic theory that incorporate factor substitutability provide a more realistic representation of consumer production under nutrient limitation. I demonstrate how economic analysis tools can be used to assess nutrient limited production. I also describe the changes in individual and systems dynamics as the ability to substitute carbon for another nutrient increases. In particular, substitution is shown to promote ecosystem resilience by broadening the threshold element ratio at which a nutrient becomes limiting.

Boron removal in brackish water desalination systems

Boron removal in seawater RO desalination systems is usually done by a second desalination pass, operating at high pH (pH≥10). This method is not economical for reduction of boron content in permeate of brackish water desalination. The most suitable method for this purpose would be through boron selective ion exchange (IX) resins. However, in some cases the use of high boron rejection membranes, especially developed for seawater desalination, is preferred. Alternatively, especially for brackish sources with boron content too high for reduction to the required low concentration (ᐸ0.5 mg/l) by seawater RO membranes alone, a combination of high boron rejection seawater membranes and an IX system can be applied. A case study for reducing of boron in brackish source from 0.62 mg/l to 0.3 mg/l is presented. Optimization tools for a comprehensive economic analysis are presented.

Contabilidad nacional medioambiental para productores de petróleo. Estimaciones para México y Venezuela (1901–1985)

Environmental accounting literature reminds us that prosperity can be ephemeral if it is built on depletion of natural resources. Traditional national accounting practice ignores the loss of natural resources. According to standard environmental accounting, this produces exaggerated income, encourages unsustainable levels of consumption and is misleading when assessing the economic prospects of resource extracting countries. While the historiography of oil-extracting countries departs from entirely different concepts and methods, it contains plenty of arguments that resemble those of the environmental accountants. Nonetheless the arguments in the historiography lack quantitative support for the most part. This article connects these previously disparate literatures and explores the resulting synergies. Doing so, it contributes to the surprisingly small amount of comparative historical studies of the oil industries and the economic histories of Venezuela and Mexico, but overall, this study is an examination of the tractability and usefulness of environmental accounting as a tool of economic analysis over the long run.

Transmission of Shocks and Monetary Policy in the Euro Area' an Exercise With Nigem

Global macroeconometric models can be a powerful tool for economic analysis and forecasting in various scenarios. This paper analyses the NiGEM model and its application to the euro area, placing particular emphasis on the study of the relative situation of the member countries' economies. The findings of the paper show that NiGEM provides for different reactions by the European economies to common exchange- and interest-rate changes, owing to their different economic structures. Notwithstanding the potential interest of these findings, the design and evaluation of shocks in NiGEM may be seen to call for a high degree of caution if NiGEM is to be considered a reliable and useful instrument.

Development and Consideration of Global Policies for Managing the Future Risks of Poliovirus Outbreaks: Insights and Lessons Learned Through Modeling

The success of the Global Polio Eradication Initiative promises to bring large benefits, including sustained improvements in quality of life (i.e., cases of paralytic disease and deaths avoided) and costs saved from cessation of vaccination. Obtaining and maintaining these benefits requires that policymakers manage the transition from the current massive use of oral poliovirus vaccine (OPV) to a world without OPV and free of the risks of potential future reintroductions of live polioviruses. This article describes the analytical journey that began in 2001 with a retrospective case study on polio risk management and led to development of dynamic integrated risk, economic, and decision analysis tools to inform global policies for managing the risks of polio. This analytical journey has provided several key insights and lessons learned that will be useful to future analysts involved in similar complex decision-making processes.

The double emergence of the Modified Internal Rate of Return: The neglected financial work of Duvillard (1755 – 1832) in a comparative perspective*

This article aims at enhancing current understanding of the history of investment evaluation criteria based on discounting. Their emergence constitutes a challenging issue for scholars devoted to the history of financial economics, as well as to fundamental tools of economic analysis. Their history is analysed in a comparative perspective, starting with the neglected contribution of Duvillard as a reference case. More than two centuries ago, this French language scholar developed, by an optimizing analytical machinery, a financial measure technically similar to Modified Internal Rate of Return (MIRR). In order to assess his theoretical contribution in a comparative perspective, the author will try to briefly account for the different contexts where the financial measure has been invented twice. This approach, indeed, is concerned with the institutional changes and the theoretical developments they fostered. It analyses concepts such as time preference, techniques such as discounting and issues such as the ‘reinvestment problem’. On the one hand, the Past (especially around the eighteenth century) and Duvillard's contribution is explored. On the other hand, the Present is reconstructed (in particular the late Fifties and later), especially the recent debate that re-invented the MIRR. This article will conclude with some comparative results.

A HUMAN CAPITAL METHODOLOGY FOR ESTIMATING THE LIFELONG PERSONAL COSTS OF YOUNG WOMEN LEAVING THE SEX TRADE

This article combines case study interviews with the tools of economic cost-benefit analysis to estimate the lifelong effects for individuals in Manitoba, Canada, who began engaging in prostitution as youths. The empirical findings reveal that sex workers retain only a small portion of their earnings from prostitution after feeding drug addictions and third-parties extortions of net residual earnings. The sex-trade worker typically suffers from debilitating addictions and health conditions that are symptomatic of the stress and danger of engaging in this lifestyle. After leaving prostitution, the former sex worker faces major challenges in rejoining the mainstream labor market. The issues engender multiple reasons for policy-makers to direct their attention to counteracting the conditions of vulnerability that bring youth into this lifestyle and, thereby, effectively disrupting the supply of sex workers.

Governance and Migration in a South-North Partnership

The aim of this paper is to study the relation between governance and migration in the case of a South-North partnership, using the tools of economic analysis. We will analyse both the governance of migratory phenomenon (i.e. the control of South-North migration, as much as the control of rural-urban or internal migration) and the consequences of internal and/or international migrations on a broader problem which is the compatibility of economic liberalization, political stability and other objectives which are pursued by governments (such as avoiding the deterioration of social capital, or a social dumping). In a first section we develop an original Harris-Todaro model in order to resolve the question of the compatibility of different policies. In a second section we will consider four possibilities to enrich the Harris-Todaro model, which are to take into account the cost of migration, the attitude toward risk, the relative deprivation hypothesis, and the relation between migration and social capital. In each case, our attention will be focused on the policy recommendations we can formulate as a result of every approach.

Applying Optimization Technology in Reservoir Management

Distinguished Author Series articles are general, descriptive representations that summarize the state of the art in an area of technology by describing recent developments for readers who are not specialists in the topics discussed. Written by individuals recognized as experts in the area, these articles provide key references to more definitive work and present specific details only to illustrate the technology. Purpose:to inform the general readership of recent advances in various areas of petroleum engineering. Abstract This paper presents the application of optimization techniques in reservoir management to determine the best development plan that maximizes the economic performance of an asset. A distinguishing characteristic of this approach is that it can evaluate all feasible scenarios for a specific financial objective within a set of well-defined constraints. The output of this integrated workflow is a complete set of decisions that drive capital investment, development scheduling, production, hydrocarbon recovery, and, ultimately, economic performance of the asset. The conventional approach to reservoir management often considers a limited number of development options because of the complexity of the events within an investment plan and the time required for the evaluation. Input into the decision-making process traditionally comes in the form of sensitivity analyses from reservoir simulation, cost engineering, wellbore planning, pipeline networking, and project economic-analysis tools. These technologies are used to simulate performance by examining a specific development scenario, calculating future production, and performing a discounted cash-flow analysis to assess the return on the required investment. The exact scheduling of new infrastructure and production facilities as well as the drilling and stimulation of additional wells is critical to maximizing economic performance, especially if remaining reserves are material in size. These discrete events sometimes receive little attention. While the industry's ability to predict asset performance and assimilate several diverse perspectives together has significantly advanced, many reservoir-management decisions still are based on heuristics, rules of thumb, analogs to other assets, and ease of execution. Use of optimization techniques is not new in the energy business. However, in reservoir management, the technology must cope with more nonlinear phenomena within the physical system, complex and realistic objective functions and constraints, and discrete decisions that occur at distinct points over the asset life. The use of mixed-integer nonlinear programming algorithms can be useful in these situations. These algorithms implicitly construct a tree of all possible development plans and then efficiently prune the branches to eliminate candidates that can be shown to be nonoptimal. The effectiveness of optimization technology is illustrated by applying it to the ongoing expansion of a regional complex of gas reservoirs. The approach is used to determine the development schedule of the different reservoirs and the timing of their wells, the timing and staging of compression, and the development of satellites to meet a contract specification.

Justice and welfare economics

The attempt to specify precisely the criteria to be used by the economist to evaluate economic policy and institutions has led to the development of that specialized branch of analysis known as Bypassing the problem of of utility by invoking the compensation principle, welfare economics proceeds to demonstrate that Pareto optimality--P = MC in all product markets; P = VMP in all factor markets--contributes to maximal efficiency in the use of resources, to maximal real social income. Implicit in this line of reasoning is a fundamental assumption consistent with the conception of economic activity carried along in scholastic social philosophy--i.e, the principle that the key defining function of an economic system is to provide the flow of commodities needed to satisfy human need. Such a conclusion shows how welfare economics can illuminate and clarify Thomistic teaching on (e.g.) the just price; on the principle that privately owned resources must be deployed so as to serve the common good; on the living wage. To deal with the problem of multiple Pareto optima, welfare economics invokes the concept of the Social Welfare Function. With this notion, welfare economics has rediscovered another key principle of scholastic teaching on economic justice--property ownership and income are to be distributed in a pattern that matches share received to the relative status of society's member. Keywords: commutative justice, Pareto optimality, Scholasticism, distributive justice ********** It is remarkable that, although economists have rarely shown themselves reluctant to hand down pronouncements on economic policy--e.g. to condemn monopoly or the tariff--it is mainly within the last quarter-century that specialists in economic science have made a serious attempt to delineate precisely the criteria in terms of which their discipline evaluates economic policy. This attempt has led to the development of that rather specialized body of analysis known as (1) Given the interpretation most common among contemporary economists, welfare economics, however useful it may be as an exercise in economic analysis, is of little practical significance. At most, it merely illustrates how policy analysis which attempts a rigorous exclusion of explicit ethical principles manages surreptitiously to reintroduce and obscure implicit ones. However--and this is one of the issues to be considered in this paper--welfare economics is perhaps susceptible of an alternative interpretation. Given this alternative interpretation, welfare economics seems to be at least consistent with--and at most a carefully-deduced corollary of--Scholastic moral philosophy. (2) Furthermore, if welfare economics can be made to bear such an interpretation, its arguments seem but to re-emphasize, and perhaps clarify, conclusions with which Scholastic economists--i.e. those who consider the practical science of economics as an adjunct of the Thomistic ethical system would heartily agree. For welfare economics, after using the most elegant tools of economic analysis to elucidate precisely the criteria which govern economic policy decisions, establishes normative generalizations. Though the typical present day economist probably does not realize it, these generalizations do in fact imply that the primary concern of public economic policy is, after all, the achievement of justice. Careful consideration of these and related matters requires brief discussion of the origin of the so-called New Welfare Economics. To retell an old story briefly, it was preoccupation with the problem of interpersonal comparisons which, in the latter 1930's, gave rise to the modern, post-Pigovian version of welfare economics. In his searching examination of the methodological problems of economic science, Lionel Robbins had revived the problem. Insisting that there was really no scientific way to compare the amount of one person's satisfaction with that of another, he had concluded that there was no scientific justification for income re-distribution (Robbins 1932). …