RePEc: Research Papers in Economics
Research Papers in Economics is a collaborative effort of hundreds of volunteers in many countries to enhance the dissemination of research in economics.
School of Economics and Finance Discussion Papers and Working Papers Series
2010
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#263Download full text
- JEL-Codes:
- J11; O21;R10; J38
- Keywords:
- Regional Population forecasting, service provision, Box-Jenkins model
Forecasting population changes and service requirements in the regions: a study of two regional councils in Queensland, Australia
Forecasting population growth to meet the service needs of a growing population is a vexed issue. The task of providing essential services becomes even more difficult when future population growth forecasts are unavailable or unreliable. The aim of this paper is to identify the main methods used in population forecasting and thereby select an approach to demonstrate that such forecasting can be undertaken with certainly and transparency, barring exogenous events. We then use the population forecasts to plan for service needs that arise from changes in population in the future. Interestingly, although there are techniques available to forecast such future population changes and much of this forecasting occurs, such work remains somewhat clouded in mystery. We strive to rectify this situation by applying an approach that is verifiable, transparent, and easy to comprehend. For this purpose we select two regional councils in Queensland, Australia. The experience derived from forecasting shows that forecasts for service needs of larger populations are more easily and accurately derived than for smaller populations. Hence, there is some evidence, at least from a service provision point of view, to justify the benefits of council/ municipality amalgamation in recent times in Australia and elsewhere. The methodology used in this paper for population forecasting and the provision of service needs based on such forecasts will be of particular interest to policy decisionmakers and planners.
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#262Download full text
- JEL-Codes:
- D73; H11; P16
- Keywords:
- Corruption; Democracy; Income inequality; Property rights
Democracy, Property Rights, Income Equalilty, and Corruption
This paper presents theoretical and empirical evidence on the nexus between corruption and democracy. We establish a political economy model where the effect of democracy on corruption is conditional on income distribution and property rights protection. Our empirical analysis with cross-national panel data provides evidence that is consistent with the theoretical prediction. Moreover, the effect of democratization on corruption depends on the protection of property rights and income equality which shows that corruption is a nonlinear function of these variables. The results indicate that democracy will work better as a control of corruption if the property right system works and there is a low level of income inequality. On the other hand if property rights are not secured and there is strong income inequality, democracy may even lead to an increase of corruption. In addition, property rights protection and the mitigation of income inequality contribute in a strong manner to the reduction of corruption.
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#261Download full text
- JEL-Codes:
- K420; D720; D640; O170; J240
- Keywords:
- corruption, social interaction, China
Corruption and Social Interaction: Evidence from China
We explore theoretically and empirically whether social interaction, including local and global interaction, influences the incidence of corruption. We first present an interaction-based model on corruption that predicts that the level of corruption is positively associated with social interaction. Then we empirically verify the theoretical prediction using within-country evidence at the province-level in China during 1998 to 2007. Panel data evidence clearly indicates that social interaction has a statistically significantly positive effect on the corruption rate in China. Our findings, therefore, underscore the relevance of social interaction in understanding corruption.
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#260Download full text
- JEL-Codes:
- Q56; Q57; Q58; Q59; O16
- Keywords:
- Sustainable finance, economic growth, pollution, biodiversity degradation, path dependent systems
Why should sustainable finance be given priority? Lessons from pollution and biodiversity degradation
The concept of sustainable finance is a relatively new concept that is increasingly accepted by the financial industry since the Berne Declaration came together to promote sustainable finance in the commercial sector. Although sustainable finance is very apt and timely, many issues need to be addressed if this concept is to be meaningful and it is to achieve its desired objectives. Some of the issues that need to be clarified and addressed include (1) defining the kind of sustainability that is envisaged (2) examining issues relating to the use of high discount rates and its compatibility with the goals of sustainability (3) the case of excessive pollution due to adverse selection, moral hazard and lobbying and (4) specialisation and path dependent systems that are detrimental to future production.
This paper discusses these issues, providing examples from pollution and biodiversity degradation. The paper also shows why economic growth without considering pollution impacts and path dependent systems is detrimental to future production which violates the concept of sustainable finance. This discussion demonstrates why the concept of sustainable finance is timely and why it is necessary to take into account the potential issues that need to be addressed. The challenges that lie ahead are many, and the sooner they are addressed, the more credible and potent sustainable finance will be. -
#259Download full text
- JEL-Codes:
- Q52;Q56;Q58;Q59
- Keywords:
- Command and control vs market-based instruments, Environmental and health effects, Economic analysis, Policy implications
Why do policy decision-makers opt for command and control environmental regulation? An economic analysis with special reference to Sri Lanka
This chapter examines why policy decision-makers opt for command and control environmental regulation despite the availability of a plethora of market-based instruments which are more efficient and cost-effective. Interestingly, Sri Lanka has adopted a wholly command and control system, during both the pre and post liberalisation economic policies. This chapter first examines the merits and demerits of command and control and market-based approaches and then looks at Sri Lanka’s extensive environmental regulatory framework. The chapter then examines the likely reasons as to why the country has gone down the path of inflexible regulatory measures and has become entrenched in them. The various hypotheses are discussed and empirical evidence is provided. The chapter also discusses the consequences of an environmentally slack economy and policy implications stemming from adopting a wholly regulatory approach. The chapter concludes with a discussion of the main results.
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#258Download full text
- JEL-Codes:
- O13;O16;Q41;Q43;Q28
- Keywords:
- Electricity demand, causality, cointegration analysis
Demand for electricity: evidence of cointegration and causality from Sri Lanka
This study examines the cointegration and causality relationship between the demand for residential electricity and real income, average real electricity prices, real kerosene prices and real gas prices using annual data for the period, 1960-2007 in Sri Lanka. Error correction (EC) techniques and the Granger-causality (GC) approaches are employed. The long run income elasticity of demand, price elasticity of demand and kerosene price were estimated to be 0.78, -0.62, and 0.14 respectively. The short run elasticities for the same variables were 0.32, -0.16 and 0.10 respectively. The GC results detect bi-directional causality between electricity consumption and real income as well as electricity prices and its consumption. This suggests that these variables are determined jointly. Furthermore, one-way causality running from kerosene price to electricity demand was also found.
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#257Download full text
- JEL-Codes:
- D730; H110; K420
- Keywords:
- Corruption; China; Government; Decentralization; Deterrence; Social Heterogenity
The Causes of Corruption: Evidence from China
In this study we explore in detail the causes of corruption in China using two different sets of data at the regional level (provinces and cities). We observe that regions with more anti-corruption efforts, histories of British rule, higher openness, more access to media and relatively higher wages of government employees are markedly less corrupt; while social heterogeneity, regulation, abundance of resource and state-owned enterprises substantially breed regional corruption. Moreover, fiscal decentralization is discovered to depress corruption significantly, while administrative decentralization fosters local corruption. We also find that there is currently a positive relationship between corruption and economic development in China that is mainly driven by the transition to a market economy.
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#256Download full text
- JEL-Codes:
- D720; H110; K420
- Keywords:
- Corruption; China; Government; Economic Development; Inequality;
The Consequences of Corruption: Evidence from China
With complementary Chinese data sets and alternative corruption measures, we explore the consequences of corruption. Adopting a novel approach we provide evidence that corruption can have both, positive and negative effects, on economic development. The overall impact of corruption might be the balance of the two simultaneous effects within a specific institutional environment (“grease the wheels†and “sand the wheelsâ€). Corruption is observed to considerably increase income inequality in China. We also find that corruption strongly reduces tax revenue. Looking at things from an expenditure point of view we observe that corruption significantly decreases government spending on education, R&D and public health in China. We also observe that regional corruption significantly reduces inbound foreign direct investment in Chinese regions, which indicates that the pollution haven hypothesis may not hold in China. This finding sheds a new light on the “China puzzle†that China is the largest developing host of FDI while it is appears to be very corrupt. Finally we observe that corruption substantially aggravates pollution probably through loosening environment regulation, and that it modifies the effects of trade openness and FDI on the stringency of environmental policy in a manner opposite to that observed in literature to date.
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#255Download full text
- JEL-Codes:
- A130;K420;L820
- Keywords:
- gambling, legal enforcement, social norms
When the Cat's Away, the Mice Will Play: Gambling Behaviour of Visitors in Australia
What happens if national legal laws or enforcements and social norms are no longer able to directly regulate individual behaviour? According to our knowledge, not much empirical evidence has emerged answering such a seemingly simple question. The challenge is to distinguish between the effects of social norm and of legal enforcement. One way to explore such a question in an almost natural quasi-experimental setting is to focus on tourists’ behaviour. Tourists are visiting another country for a relatively short period of time and are acting in a different (legal) environment where formal and informal rules are different to those found in their own country. Using data from Australia we focus on gambling activities since these are prohibited in some countries. We find that tourists from countries where gambling is prohibited spend a significantly larger share of their entertainment expenditure on gambling than those who come from countries where gambling is legalized. Thus, gambling increases (“mice playâ€) without legal enforcement (“when the cat is awayâ€). It is also noteworthy that there seems to be a lack of internalized social norms that would prevent tourists from partaking in these gambling activities.
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#254Download full text
- JEL-Codes:
- Q40;Q41; Q48; Q50; Q56
- Keywords:
- Electricity demand, Price and income elasticities, Cointegration analysis
(forthcoming)Estimating short and long-term residential demand for electricity: New evidence from Sri Lanka
This study investigates the short-run dynamics and long-run equilibrium relationship between residential electricity demand and factors influencing demand - per capita income, price of electricity, price of kerosene oil and price of liquefied petroleum gas - using annual data for Sri Lanka for the period, 1960-2007. The study uses unit root, cointegration and error correction models. The long-run demand elasticities of income, own price and price of kerosene oil (substitute) were estimated to be 0.78, - 0.62, and 0.14 respectively. The short-run elasticities for the same variables were estimated to be 0.32, -0.16 and 0.10 respectively. Liquefied petroleum (LP) gas is a substitute for electricity only in the short-run with an elasticity of 0.09. The main findings of the paper support the following (1) increasing the price of electricity is not the most effective tool to reduce electricity consumption (2) existing subsidies on electricity consumption can be removed without reducing government revenue (3) the long-run income elasticity of demand shows that any future increase in household incomes is likely to significantly increase the demand for electricity (4) any power generation plans which consider only current per capita consumption and population growth should be revised taking into account the potential future income increases in order to avoid power shortages in the country.