The static model for the investment of 10 companies is INV= α + β1V+β2K+ε
How do we define three binary dummy variables, one for each of the three companies you have selected out of the ten.
can you tell me how to solve this questions we have the statistics we need and we are using eviews could you tell me how to present the question and what i might need to answer it
type "genr dummy1=0" then open up the series and edit its first observation to be 1.
repeat for other two firms.
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The Constitution for Dummies (i.e. Ron Paul Supporters)
I will freely admit that I did a bad, bad thing last week. Well, it wasn’t a really “bad” thing unless you were one of those that fell for it I guess. What did I do that was so bad? I set up the Paulbots. Yes, evil rotten me, I know.
When I wrote “Earmarking Our Way to Oblivion” I purposefully left out any mention of Ron Paul even though I knew he was just as dirty as all the rest. See, Mr. Paul’s own earmark fetish was certainly no real secret to anyone paying attention and with enough desire to dig a little. But the Paulbots were quick to comment about how because of the corruption that earmarks bring and how that they many times violate the Constitutional powers of Congress that this is exactly the reason why we needed Ron Paul.
Not a day goes by that supporters of Ron Paul aren’t out in droves proclaiming any conservative that does not support their candidate is an evil neo-con, trumpeting how Mr. Paul is a true “constitutionalist” and is the only man qualified to be President. Well, I guess we now see how accurate their description of their own golden boy really is considering news that has really taken off in the last couple days about his own requests for earmarks.
It is no secret to those of us that are out there everyday taking fire from the Paulbots that when Ron Paul commands them to jump they not only ask how high, but also at what angle, what flavor of Kool Aid Mr. Paul would desire they bring him after they land, how many ice cubes he would like in said drink, what color he would like his house painted, how many gallons of gas he needs them to put in his car, what time he would like his wakeup call for the following morning, how he desires his eggs cooked and whether or not he wants them to polish his fine silver clockwise or counterclockwise. The answer to that last one is that Ron Paul demands they first polish it six times clockwise followed by a single counterclockwise finishing polish. Their loyalty to the illusion of their candidate as a savior of us all and as someone that actually holds the Constitution dear is admirable if not highly misguided and naive.
Now the Wall Street Journal and other sources have what Paulbots are robotically and predictably calling a “hit pieces” on their candidate. Of course I still question whether or not Ron Paul really can be considered a “candidate” when he barely cracks one percent in the polls. But that is another topic for another day. Anyway these “hit pieces” detail how Mr. Paul, supposedly a libertarian, has requested millions of taxpayer dollars for roles not delegated to the federal government by we the people. Hardly a “libertarian” stance. Hardly “hit pieces”. Simply the truth.
Oh ... well ... uh ... Ron Paul 2008! He’s still the man! Right Paulbots?
Last week the Paulbots were flooding me with comments about how we needed Ron Paul and about how I was right about the earmark problem. But this week I have particularly loved the responses by these same hacks to these new revelations and that have again flooded into my mailbox on cue since I blogged about Paul’s own earmarks on Tuesday. They say things like, “Well the money was going to be spent anyway!” and, “It’s ok because he is just serving his constituents like he is supposed to,” or boldly proclaim, “there is nothing unconstitutional about Paul’s earmarks!” or my personal favorite, “Well, yeah he requested the earmarks but he voted against them!”
That last one makes me chuckle. It’s a pathetic having your cake and eating it too argument that no true libertarian would embrace. Anyone with half a brain sees through this tactic as nothing but style over substance worthy of the staunchest liberals. Mr. Paul certainly understands that in the current corrupt Washington culture his earmark requests would pass even as he votes against them. He knows all he has to do is attach them to the spending bill in order to reap the benefits. A true libertarian would not even request them in the first place.
But rather than calling for his impeachment for violating the constitution, something I have done time and again for all politicians, regardless of party, that violate the Constitution, the Paulbots rush out to defend the man they have deemed as “the one.” Truth be damned! He really is a TRUE libertarian! Full ludicrous speed ahead!
It doesn’t matter that they were out there in mass decrying earmarks just a week before. It doesn’t matter that the Constitution is clear in Article I, Section 8 when it limits the powers of Congress to tax and spend on a concise list of things defined as the “general Welfare.” It doesn’t mater if Ron Paul has requested federal money to deal with issues found nowhere in these federal powers from funding for shrimp to building hospitals to maintaining trolleys. None of that matters because ... well ... Ron Paul is da man! Praise the Savior of our Republic! Hallelujah! And how dare I and others take his name in vain!
Blind loyalty is never attractive. And it is often deadly.
The Constitution is simple. It allows for laws and spending on the only a short list of topics which are clearly stated and any libertarian worth their salt knows of James Madison’s discussion of this in Federalist 41. The list that is there is the list. That’s it Mr. Paul. That’s it Paulbots. Nothing about shrimp. Nothing about trolleys. Nothing about most of what Paul’s earmarks are spending money on. No amount of whining about Ron Paul getting caught with his hand in the cookie jar will change the facts. No amount of hurling slurs like “neo-con” or “fascist” or “globalist” at those that exposed Mr. Paul will make a difference in the truth. Such tactics don’t work for liberals and they will not work for you.
I’m sorry I entrapped you last week. But it is something you are going to learn from as you progress on in life. Principles are only principles if you are willing to put your money where your mouth is and always watch your own glass house before you cast the first stone.
It’s so simple even a Paulbot can understand it. And I call on Ron Paul to be a true libertarian and draw up articles of impeachment against himself, convince his fellow Congressmen to approve the action and finally vote in favor of the action when the time comes to pay the piper.
But he won’t. He won’t because the fact is there are few true libertarians out here in the real world. We are a lonely bunch for sure. Even though lots of people envision themselves as such, when push comes to show they are at best nothing more than a bastard cousin; the liberaltarian. And that is why we are in trouble.
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How to make Solar Panels, Even If You have no Experience. Most people make the mistake of buying brand new solar panels, which cost a fortune! Now with all the kits out there you can make your own, and we found the best and easiest DIY homemade solar panel kit.
The link at the bottom, from SolarPanelHandyMan.com has the best video tutorials, and are without a dout, the most effective
We found a local story (Link at the bottom), where a single mother make her own solar panels, and aved over $350 per month on her electrical bill. It's a great story, and everyone should take a look at it! (At the end of the article, you will see the link)<strong> </strong>
Here are the Materials you will need * 1 foot square sheet of copper flashing * Two alligator clip leads * One electric stove or hotplate * Sheet metal cutters * One micro-ammeter * Water * One 2 liter plastic bottle * Safety Eyewear * Two to three tbsps. of table salt
Now, go to the link at the bottom of the article for the <strong>FULL Video Tutorials. Here are the features of the step by step instructions. We reviewed them, and gave it 5 out of 5 - Simple and FUN!
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How can solar power be used
Solar power can be used in our everyday lives by adopting the following solar power systems:
• Solar cooking system: Solar cooking is about cooking without lighting a fire or using electricity! Before you wonder, let me tell you that solar cooking is not about bland food. You can cook in more ways than one – boil, roast, or bake, cook the way you want! The only demand that solar cooking makes of you is being patient; it is a matter of more than a few minutes. However, it is not asking for too much given that you will get tasteful and healthy food without worrying about paying your gas or electricity bill.
• Solar lighting system: You can now light up the entire house, use every electrical appliance without thinking about cutting down bills. The solar lighting system lights up your house even in the nights, thanks to the power storage feature it has.
The present economic scenario and the ever-shrinking state of the global oil reserves is not good news for everyone. But on a positive note it makes us investigate for alternative energy sources that is become the solution of cutting down present and the future energy consumption, particularly in terms of fossil fuel usage like oil. For example, it has become more and more economical to build home made solar energy system. Building the home made solar panels that utilize deep cell storage batteries produce the electricity upon consumer demand and reduce the their individual dependence on the country's energy grid.
About the Author
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How To Build Your List Your & Profits with Bob Bly Part 1
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Simulated forex trading is a method that forex traders can brush up their skill with. The whole of the trading process does not involve any bit of capital from the trade. A dummy account is create when doing simulated trading. The trader will experiment varies strategies on the simulated account to find out the working ones. A simulated trading is just like a real trading, you are playing base on the real market rates, the process for trades are exactly like what is done in the real trading. The only thing that is fake is the capital. You can suggest a capital from a few amounts options.
Simulated Forex trading can help a beginner to gain confident in their trades because they are playing against the real market. This can get them more exposure to the trading floor and let them practice trade more comfortably. Simulated forex trading not only helps the beginners, they also help the intermediate and professionals to improve or produce their own trading strategies. This is all made possible because you will not need to put in any capital while still can fulfill your goals.
There are many brokers online that provides demo accounts. These demo accounts are what we call simulated account. Were you specifying the capital available inside the account and play with it. Even if it is free, the trading platform given is the exact same as the real account. It can support a lot of advance features and you can trade like the real account. Your analysis skills can be polished with the trading platform while you are trading with the simulation.
However, there is always a difference between simulated forex trading account and a real account. Once you are comfortable with your simulation of trading and consistently profiting from, you can switch to a real account. Once you use a real account, you will be facing a problem of fear of losing your money. When you are overcome by fear of losing, your way of trading can change drastically and that could cost you to lose.
If you are planning on entering the forex market as a beginner, it is best recommended to use the simulated forex trading and get your skills polish before you put a dim into trading.
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Commodity Trading for Dummies
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Can someone explain aggregate demand and aggregate supply macroeconomics equilibrium?
please dummy this down for me
Aggregate just means total
I think macro equilibrium is when ag supply = ag demand.
Don't worry if it doesnt make sense. This theoretical model only makes sense in a "perfect market", which is fundamental to most economic musings, but which ironically at the same time is an impossibility.
Macroeco for Dummies: The Cobb-Douglas Production Function
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The Effect of Monetization on Tax Buoyancy: Evidence From COMESA Using A Panel Data Analysis
Abstract
Countries in Commonwealth Market for Eastern and Southern Africa (COMESA), like many other developing nations face difficulty in raising tax revenue for public purposes. This study uses panel data analysis for nineteen countries during 2000-2009 to analyze empirically the determinants of tax buoyancy. Among the variables identified as affecting annual tax buoyancy is monetization, with empirical results confirming its importance. The results have shown that the way monetization is handled in the developing nations affects annual tax buoyancy negatively. Other variables that have been found to be affecting tax buoyancy include the growth in the agricultural and industrial sector contribution to national income, external aid growth, growth of fiscal deficit and growth of total expenditure. The determinants of tax buoyancy have been suggested following tax handle theory advice. The study yielded such results because quality dimension of tax performance have been considered, which has been neglected by many previous authors.
Introduction
The traditional function of the tax system is to bring in sufficient revenue to meet the growing public sector requirements. Common measures of the ability of the tax system to mobilize revenues are buoyancy and elasticity (Asher 1989). A desirable property of a tax system is that income elasticity and buoyancy should be equal or greater than unity. Such property ensures that revenue growth keeps pace with that of Gross Domestic Product (GDP) without frequent discretionary changes. More important, it imparts build-in stability to the tax system, hence ensuring mitigation of cyclical variations in GDP over the course of the business cycle.
Concentration of the study will be on tax buoyancy, which indicates whether the tax "keeps up" with growth in the economy. Tax buoyancy measures the total response of tax revenue to changes in national income (Begum, 2007). Year to year buoyancy measures the volatility of the tax and the ability of government to meet the demands of their constituents. As an economy grows, income of taxpayers grows and the demand for public services tends to increase. If tax revenues grow less quickly than the economy, then the public sector will not be able to meet increased demand for better social amenities.
The Commonwealth Market for Eastern and Southern Africa (COMESA), in line with the above indicator (buoyancy), comprises of low tax performance countries with average regional buoyancy that is less than unity (Matshediso, 2004) implying that the tax system is not responsive to the income changes in the region. An effort to improve tax performance has been done over the years mainly noted by various reforms in the taxing system but no significant permanent solutions have been reaped so far. On the other hand, policies relating the monetization to tax performance have not yet received attention in the region.
The study attempts to examine the determinants of tax buoyancy, paying particular attention on the effect of monetization on tax buoyancy. The tax performance analysis aims at finding out whether there is a possibility of increasing tax revenue in developing nations through the monetary policy. Taxation is an important instrument for attaining a proper pattern of resource allocation, income distribution, and economic stability, in order that the benefits of economic development are evenly distributed.
Tax systems should be adequately stable and buoyant in order to enable a country to meet its increasing financial commitments as its gross domestic product (GDP) grows. If the tax revenue of a country is stable and buoyant, there is a high probability that its public expenditure needs will be adequately met over time. If GDP is growing more than tax revenues then it could be one policy indicator that the tax structure needs reform. The study of tax buoyancy is of much importance because it is both a quality and quantity measure of tax performance. Tax buoyancy can also be used to summarize revenue growth over time, (Zolt, 2003:8). Finally, it shows the strength of the tax system in the country when they are subjected to certain environments for example when a certain sector is declining.
The manner in which different countries raise taxes differs as widely as do the amounts they raise. The pattern of taxes found in any country depends upon many factors such as its economic structure, its history, and the tax structures found in neighbouring countries (Bird and Zolt, 2003: 7). According to Zolt (2003:1), developing countries are no different: ideas, interests, and institutions play a central role in shaping tax policy. Basing on this argument the study will be focusing on COMESA countries since they are close to each other and belong to a community. Countries no longer have the luxury to design their tax systems in isolation.
The research problem is derived from the fact that public services in the past years in developing nations have been deteriorating. The level of revenue being raised from taxation is very low in these nations as compared to the tax base which shows their tax potential. Rapid expansions in expenditure and declining or low revenue levels have been the main cause of fiscal imbalances in COMESA countries over the years (Ghura, 1998).
Tax revenues appear to be highly volatile relative to GDP, the tax base (Ghura, 2004; Greenaway, 2005). According to Ghura(2004), the changes include the effects of changes in tax rates, deductions and compliance. Developing countries are characterized by high tax rates (exorbitant tax rates, Matshediso 2004) as compared to developed nations, the obvious effect being decreasing tax revenues collection due to the increased informal sector activities and hence the governments are not able to meet public demand of public goods. The existing persistent budget deficits in developing nations suggest that the tax system is not revenue productive, and in such situations increasing revenue should be the main objective of tax policy.
On the other hand money supply in the COMESA economies has been growing at high levels but has been named inflationary. There are high levels of tax erosion, due to high growth of money supply (RED, 2006). Given the continuous reforms (leading to uncertainty and loss of credibility) that have been happening in the taxing system of developing nations, it still remains a wonder why tax performance is still low and even declining in some countries. The monetary sector has not received attention as far as taxing policies are done in these nations and hence its emphasis should be brought about, since some studies have proposed its importance.
The objective of the study is to establish the main determinants of tax buoyancy in developing countries with special attention to the effect of monetization on the tax buoyancy. The General and Specific research questions of the study can be stated consecutively as follows: What are the main determinants of tax buoyancy in developing nations? How does monetization affect tax buoyancy? The main hypotheses to be tested in this study are that: Monetization have a positive relationship with tax buoyancy. Growth of the industrial sector and agricultural sector, fiscal deficit, external debt, level of economic development, total expenditure and trade openness increases tax buoyancy. Growth in external aid and the concentration of population reduces tax buoyancy.These hypotheses are tested by determining the significance of the regression coefficients of relevant regression equation that will be estimated.
Countries no longer have the luxury to design their tax systems in isolation due to current wave of globalization and regionalization (Bird and Zolt, 2003). With dramatic reduction in trade barriers over the last two decades, taxes have become a more important factor in location decisions. There is increased tax competition for portfolio investment, qualified labor, financial services, business headquarters and foreign direct investment. This means that taxes do matter, and any country with a tax system that differs substantially from other countries, particularly its neighboring countries, may suffer. From this idea, analysis of determinants of tax buoyancy in the SADC region can be undertaken, since the countries trade with each other, share labor services and share national borders.
The previous studies (Harley(1965), Lotz and Morss(1967), Raja(1971), Raja et al.(1975) and Roy(1979)) of tax performance have been dwelling much on quantitative measures of tax performance such as the tax ratio. There is a need to incorporate both a quality and a quantity measure of tax performance, in this case tax buoyancy. There are few studies (for example Teera, 2002 and, Bird and Zolt, 2003) carried out in this area especially for African countries. It is a new area which needs further investigation around the regions of the world. Also the study involves the determination of yearly buoyancy, of which several studies (Quazi(1994), Begum(2007) and Teera(2002)) have been involved in the use of single averages over a period. The main base of this study's approach is that tax buoyancy changes over time even annually because of many factors (discretionary changes) which may include the political environment among others.
The effect of monetization on tax buoyancy is a crucial issue to consider when making tax performance decisions. This is because policy makers have to critically administer the optimal level of money supply in the economy that will not have adverse effects on economic agents. If money supply grows faster than the growth of the economy, inflation arises and the problem of tax erosion occurs since there is a gap between the time tax are to be paid and when they are actually paid. Increased documentation of the economy can also arise as monetization increases and hence this facilitates the collection of both direct and indirect taxes. From this idea the impact of monetization on tax buoyancy has to be analysed. The results will be used to give necessary policy advice on the link between monetization and tax performance. The incorporation of money supply in taxing decisions of governments is also a contribution, the variable have been left by many authors without any justification.
The study will contribute to existing literature on tax buoyancy for developing nations, this helps in the continuous debate of the effects of various determinants. Analyzing the determinants offers a guide to policy makers on which areas to put more emphasis. According to Teera (2002), a poor tax performance, in terms of raising revenues can mean either deficiencies in tax structure policy or an inadequate effort to collect, on the part of government, both of which are influenced by various factors. Hence the study concentrates on finding factors that affect tax performance.
Therefore there is need for more empirical input and guidance to carry out rational economic decisions. To formulate strategies for achieving sustained increase in tax buoyancy relevant information is necessary. Therefore examining determinants of tax buoyancy is an appropriate way of finding where policies can rightly respond to those issues and as such we would gain better understanding about the determinants. Knowledge of the determinants of tax buoyancy in SADC will help preclude policy makers from (over) emphasizing only few variables to neglect of other important ones in promoting tax performance.
Theoretical and Empirical Literature Review
Theoretically and empirically tax buoyancy can be calculated using the Constant Structure rate, Dummy variable method, Divisia Index and the proportional method. However this study due to its nature will use annual tax buoyancy, as the above methods refers to periodical buoyancy.
The normative bent of the literature on tax policy deals with the questions of why a country develops a particular tax structure and why this tax structure differs among countries and changes during the process of economic growth. This strand of tax literature not only recognizes the importance of administrative constraints on tax policy, but in contrast to the normative literature places administrative factors at the forefront.
The "tax handle" theory offers a sweeping historical explanation of tax structure change. It argues that low-income economies are forced to collect revenue from easy-to-administer taxes (or tax handles), but that this administrative constraint lessens as countries develop and become able to choose "better" taxes as defined by the normative objectives discussed above. Measures of tax handles typically include per capita income, trade taxes and the proportion of people living in urban areas (Liebaman, 2003).
The optimal tax theory, the reigning normative approach to taxation combines information on a country's economic structure, the set of available taxes to the government and the objectives of tax policy to make recommendations on tax mix, structure and incidence (see Slemrod, 1990; Burgess and Stern, 1993). Optimal taxes are those that raise a desired amount of revenue with the lowest marginal efficient cost, with few distortions and that promote the desired amount of wealth. While optimal tax theory tackles the trade off of different taxes, it does not explain the structure of government revenues.
The Ricardian equivalence theory is based on the opinion that when the government borrows instead of levying taxes to finance budget deficit the current generation is under taxed, they are rational and will realize that the loan will have to be repaid from income tax at some time in the future; debt finance is therefore a postponement of the tax burden which will fall on the future generation. The importance of this theory to tax performance is now questionable given the continuous borrowing done in developing nations and continuous budget deficit in the economies. The theory suggests discipline in the monetary sector and also effective borrowing which does not affect generations to come.
Quazi (1994) carried out a study of the determinants of tax buoyancy in developing nations using 35 countries for a period of ten years. The countries were chosen at random all over the world but based on the level of national income. Zambia and Zimbabwe are the only COMESA countries that managed to be selected. He used the ordinary least squares method in the regression of tax buoyancy and its suggested explanatory variables. The model includes average growth of money supply (monetization- M2), import sector output, industrial sector output, service sector output, agricultural sector output, deficit, grant and Gross Domestic Product (GDP). He found monetization to be positively related to tax buoyancy, he commented that an increase in monetisation increases the documentation of the economy which increases tax collection. His conclusion was that increase in the level of monetization through increase in documentation also facilitates the growth of taxes. Other variables found to affect buoyancy include growth of industrial sector, growth of imports and growth of grants.
A study by Begum(2007) of the determinants of tax share and revenue performance (buoyancy) is worth noting. The study of Bangladesh along with ten other developing countries through a panel data analysis span for fifteen years. The results obtained suggest international trade, broad money, external debt and population growth to be significant determinants, with expected signs of the estimated coefficients. The study identifies Bangladesh as the lowest tax effort country in the sample, with an average tax effort index of 0.493. This has important policy implications that Bangladesh and other countries having low tax effort (less than unity) are not utilizing their full capacity of tax revenue, and therefore, have the potential for financing budgetary imbalance through raising tax revenue.
A study carried out by Teera (2000) found that the results of the dynamic measure of tax performance (tax buoyancy) indicate that the high-income OECD group has the least percentage number of countries with a buoyancy ratio below unity, followed by the lower middle-income group. This implies that the lower income groups have made less effort to increase tax revenues over the period as compared to the higher income groups. He mainly hammered on the tax evasion variable. In his regression he included variables like total expenditure and also time trend.
Methodology and Data Analysis
In the hope to improve tax performance COMESA countries have been undertaking several reforms either individually or collectively. The shift from Sales tax to Value added tax (VAT) has seen many countries improving their tax collections and reducing tax burdens of the tax payers. During the period under study VAT has dominated Sales tax and is in use. Furthermore nations have launched Autonomous and semi-Autonomous Revenue authorities (SARAs) to have the duty to collect revenue on behalf of the government. This was done to separate political influence and revenue collection. However the efficiency of these SARAs is debatable, revenue have been seen rising in the few years of introduction of SARAs then they decline.
Panel data methodology is used in the analysis since cross-sectional and time series are combined. The methodology is more common for the comparison of different countries. Nineteen countries in the COMESA region are considered over a sufficient period. Data for analysis is obtained from the African Development Indicators various publications and World Bank/IMF publications. The advantage of these sources is that they allow international comparisons to be made.
Using various theoretical literature and empirical literature many variables have been identified as affecting tax buoyancy. The main variables to be used in the study include monetization, level of economic development, structure of the economy (contribution of agriculture and industrial sectors to GDP), external aid growth, debt, population size, expenditure growth and trade openness.
The following results have been found after regressing tax buoyancy against its determinants using STATA econometric software. Multicollinearity and homoskedasticity have been checked. Panel tests have been done and the best model was the pooled Ordinary least Squares (OLS) and time effects have been taken into account.
Specific Pooled OLS Model [Dependent Variable BUOY]
BUOY Coef. Std. Err. P>|t|
ECON .0055117 .0040867 0.179
AGR .0188142 .0071365 0.009***
IND .0219473 .0067639 0.001***
MS -.0043354 .001639 0.009***
AID -.7558855 .1211132 0.000***
DF -.0165895 .0064552 0.011**
XM .0056362 .0044746 0.210
EXP .8653563 .3776645 0.023**
Trend -.074938 .035562 0.037**
_cons 150.7422 71.12115 0.036**
R-squared = 0.4063 Adj R-squared = 0.3725
F = 12.01 Prob > F = 0.0000***
* denotes statistical significance at 10%, ** at 5% and ***at the 1% level
Discussion of Results
The F statistic 12.01 (0.0000***) shows that the model is correctly specified and that the null hypothesis of variable inclusion is rejected at the 1% level of significance and we therefore conclude that at least one of the variables in the model explain the magnitude of annual tax buoyancy in COMESA economies.
The coefficient of monetization (MS) has a negative value and significant at the 1% level indicating that growth of money supply (M2) seems to negatively affect the tax buoyancy of COMESA states. The results are not in line with the tax handle theory which poses for a positive sign. This means that the growth of money supply does not facilitate the documentation of the economy so as to improve tax administration. The reasons why monetization has a negative influence on tax buoyancy in the COMESA region might be due to the lack of capacity within the tax administrators to take advantage of the growing supply of money to facilitate the tax collection of each tax, over relying on printing money to finance government activities rather than generating revenue elsewhere, the presence of distortions such as trade barriers, weak legal and financial systems. Some COMESA financial markets are not well developed. The region has a narrow range of intermediaries and offers a limited number of financial instruments. This finding is not in line with the result obtained by Quazi (1994) who found a positive and significant effect of monetization and tax buoyancy for a sample of 35 developing countries in a period of 10 years. Begum (2007) obtained a positive significant coefficient for Bangladesh which is a developing nation, the reason being that there is utilization of growing money supply to facilitate the documentation of the economy.
The coefficient of growth of the agricultural sector (AGR) is .0188142, with a p-value of 0.009 showing that the coefficient of domestic investment was positive and significant at 1% level. Thus countries that are able to maintain and improve their agricultural sector will experience an increase in their tax performance.
Growth of the industrial sector (IND) has a positive and significant impact on tax buoyancy at all levels of significance. This shows that it is one of the major variables that explain how the tax system is performing in developing nations. This is in line with the tax handle theory which predicts a positive impact. The possible reason for such results is that the sector is easy to tax, companies keep records of transactions and many are located in urban areas which reduces costs of tax collection. Industry includes mining companies which are very large and also few and hence easy to monitor and audit for tax payment.
External aid (AID) has a negative and significant impact on tax buoyancy at all levels, indicating a major variable. Economic theory (tax handle) predicts a negative impact, which is in line with the results. The findings in this study suggest that high levels of external aid growth in COMESA have influenced the tax performance of developing nations negatively. The reason may come because an increase in foreign resources makes governments in the developing nations relaxed and due to fear of any political unpopularity the governments rely less on domestic resource mobilization. The results are in line with those of Quazi (1994), who found also that it was a major variable significant at all levels with the appropriate sign.
Fiscal deficit (DF) variable is significant at 5% with a negative coefficient of -.0165895 and a p-value of 0.011. The sign is not the expected, and this shows that as the deficit grows big it demotivates the respective authorities from improving their taxing strategies to raise revenue from taxes. The time trend coefficient (Trend) is significant at 5% with a negative sign. Implication is that tax performance is changing over time due to the presence of shocks. The variable explains the presence of time effects and hence economic shocks during the period under study. The possible reasons for such results can be explained by the presence of droughts, civil wars and political instability during the period.
Total expenditure (EXP) is significant at 5% significant level and reports a correct positive sign. This is in line with economic theory. The results for this variable are in line with what Teera (2000) obtained. The results indicate that as the total spending increases, this causes the tax system to be more buoyant, this is due to an extra effort to collect more revenue through taxation to finance the increasing spending.
Trade openness (XM) variable is not significant but has the correct sign, it has a probability value of 0.210. A positive sign was also obtained by Teera (2000) but significant at 5 % and 10% for low income group and SSA countries respectively. The possible reasons for such results include the undervaluation of imported goods which applies to most own-funds imports (Fjelstad, 1995). This is due to the fact that the importer has access to foreign exchange without going through central bank records. Administrative constraints and corruption at entry points increase the problem of undervaluation of imported goods (Basu and Morrissey, 1993: 22)
The overall model reported Adjusted R-squared of 0.3725. This tells us that approximately 37.25% variation in the annual tax buoyancy is explained by the explanatory variables included in the model. The obtained Adjusted R-squared by Begum (2007) reports a value 0.51 for total tax buoyancy regression and 0.46 for indirect tax buoyancy regression using pooled OLS, no justification was given for such results. It automatically reports to us that there are some variables that explain buoyancy that have been omitted. Some variables have been omitted such as the shadow variable (tax evasion) due to the problem of measuring it.
Conclusion and Policy Recommendation
Introduction
This chapter contains a detailed conclusion to the study and also some policy lessons drawn from the empirical results of the previous chapter. In addition, the chapter also gives possible areas of future research.
Conclusion
The study has attempted to examine empirically the determinants of tax buoyancy in the developing nations using COMESA countries information for the period 2000-2009. The motivation of the study sort to address the neglected quality dimension of tax performance leading to biased policies, low tax revenue collection against potential revenue that can be raised from national income, deterioration and shortage of public goods, continuous changes in tax rates that are also high as compared to developed nations leading to the rapid expansion of the hidden economy, persistent fiscal deficits and high growing rates of money supply.
Using a panel data, pooled OLS methodology we found out that monetization negatively affects tax buoyancy. This result suggests that monetization seem not to increase tax performance, instead it retards buoyancy levels. Possible reasons of this result may be due to the inability to utilize the growth of money supply to increase the documentation of the economies to increase the collection of each tax. The abuse of the printing of discretionary paper money to finance government activities in developing nations is a possible reason for such results. This reduces effort to raise adequate revenue from collecting taxes. Poor tax administration and also underdeveloped infrastructure may be possible reasons.
Apart from monetization, the study found that growth of agricultural sector, growth of industrial sector, external aid growth, fiscal deficit growth and total expenditure growth to be the determinants. The agricultural sector is still contributing positively to revenue generation processes despite the industrialization going on in developing nations. The industrial sector is worth to be noted, it contributes significantly to tax performance. Respective countries can increase their tax buoyancy by actively encouraging growth in the agricultural and industrial sectors; they should not undermine one sector since both have positive impacts. Fiscal deficit growth and external aid growth have indicated a negative impact on tax performance.
Impact (negative) of economic shocks to tax performance has been found in the study. Economic shocks have been shown by the presence of time effects and their significance in the regressions undertaken. The main causes have been severe droughts due to inadequate rainfall, civil wars and political instability.
Policy Recommendation
Since our findings suggest a negative relationship between monetization and tax buoyancy, maybe for COMESA countries to reap benefits from monetization they need to have strong link between fiscal and monetary sectors, improve tax administration through appropriate reforms, invest in the improvement of infrastructure to facilitate the collection of taxes and stable macroeconomic environment. A strong link between fiscal and monetary sectors facilitates the utilization of the growth in money supply to improve tax performance through increased documentation of the economy. Improvement in tax administration will produce efficient taxing systems which discourages tax evasion and the growth of the hidden economy. Most of all there should be central bank independence from political authorities, the government activities should be financed not from discretionary paper money printing rather they should use other noninflationary ways such as tax collection until the potential level of the economy has been reached.
Policies aimed at developing the domestic taxing systems are beneficial. The policies should be aiming at taking special considerations of the findings in the study. Factors aimed at taking appropriate decisions on variables like fiscal deficits and external deficits since they have been found to have a negative impact on tax buoyancy. In some COMESA countries there are a few numbers of financial intermediaries and stock markets are not well developed, an effort to improve their significance will be an appropriate measure to be undertaken.
Development policies should not be biased towards the growth of one sector rather it has to be across all sectors. Both the agricultural sector and the industrial sectors have proved to be of significance in defining the level of tax performance, and hence they have to be treated without disparity.
Developing nations should however consider maintaining their taxing systems or improve them positively over time. The time trend variable have shown us that over time there is negative effect on tax buoyancy, there is actually a decline and this is to be prevented. Policies aimed at avoiding declining tax performance over time should be developed. Economic shocks like drought should be avoided through forecasting and mitigation strategies developed.
References
Begum Lutfunnahar (2007), "A Panel Study on Tax Effort and Tax Buoyancy with Special Reference to Bangladesh. Policy Analysis Unit(PAU). Working Paper Series: WP 0715. Research Department, Bangladesh Bank. Bangladesh.
Fjeldstad, O.-H. (2003). "Fighting fiscal corruption. Lessons from the Tanzania Revenue Authority." Public Administration and Development, Vol. 23, No. 2, pp. 165-175 (May).
Ghura, D. (1998), "Tax revenue in Sub-Saharan Africa: Effects of economic policies and corruption." IMF Working Paper 98/135, Washington, DC: International Monetary Fund.
Hsiao, Cheng, (1986), "Analysis of Panel Data," (Cambridge University Press).
International Monetary Fund, Government Financial Statistics, 2001.
Osoro N. E. (1993). "Tax reform in Tanzania." Paper presented at the CREDIT-CSAE Workshop on trade and fiscal reforms in sub-Saharan Africa, Oxford, 6-8 January.
Quazi Masood Ahmed (1994), "The Determinants of Tax Buoyancy: An Experience from the Developing Countries." The Pakistan Development Review. 33:4 Part II (Winter 1994) pp. 1089- 1098.
RED, (2006), "Integrated Paper on Recent Economic Development," Bank of Namibia. December 1.
Stotsky, J.G. and WoldeMariam, A. (1997), "Tax Effort in Sub-Saharan Africa," IMF Working Paper, WP/97/107, September.
Teera J. M (2000), "Tax Performance: A Comparative Study." University of Bath, Department of Economics, BATH BA2 7AY. Bath
Wawire Nelson Were H. (2000), "The Determinants of Tax Revenue in Kenya." Kenyatta University, Nairobi.
World Bank. (2006). World Development Indicators. Washington
About the Author
Bonga Wellington Garikai
MSc Economics (UZ), BSc (Hons) Economics (UZ)
Researcher/Policy Analyst/ Business Analyst/Economist
Alan Johnson's no credible VAT hike alternative (04Jan11)
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Read Economics for Dummies book in Under 24 hours is it possible?
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[simpleaffiliate source="chitika" results="0"][/simpleaffiliate] I want to learn Calculus so badly.?
MIT has a open courseware(ocw.mit.edu) and have a whole complete class on single variable calculus, complete with lecture videos,assignments,mathlets,exams and to top it all off, recitation videos.
But the only thing is, I didn't finish Algebra 2, even though I,m home schooled(10th grade), and it won't immediately reflect on any test(s),I do want to master sing variable calculus some way, somehow by the end of my junior year, so I can take a real calculus course at a community college.
I understand the idea behind derivatives, somethings about integrals, etc. Functions are ok only logarithms I haven't done,but I can pick it up quickly.
You think it's possible to connect the dots with only algebra 1,geometry,basic trig and half of algebra 2 for dummies?
Ha,I,m obsessed with learning and understanding calculus.
The better you are at pre-calculus topics, the easier calculus will come. You sound motivated to the point that you will be able to learn it regardless, but it might be annoying to have to look up things you didn't learn previously which could result in a less smooth learning experience. I'd recommend at least *skimming* a decent alg 2/trig/precalc book so that you can be familiar with the general topics, even if you haven't learned everything in depth.
How to Connect Slopes and Derivatives For Dummies
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How Does A Reverse Mortgage Work - Different Kinds of Reverse Mortgage Rates
Unless you have been fortunate enough to be born to an extremely wealthy family, you would have to face the reality of having to go through the process of taking out a mortgage to provide you and your family the needed financial help to meet basic financial obligations and responsibilities. There is a proliferation of different mortgage plans and programs that are available to the average American citizen to choose from. One type of mortgage plans that is gaining popularity is the reverse mortgage program.
Apart from looking at the reputation of the financial institution offering reverse mortgage housing plans, it is also important to look into the rates that are applied to each reverse mortgage programs. The reverse mortgage rates are determined by a number of different factors ranging from the period of time of the reverse mortgage plan to the amount that would be taken out and the frequency f the payment schedule.
Below is a review of some of the most popular reverse mortgage housing plans and the interest rates that are applied to them.
Home Keeper Reverse Mortgage
The interest rates that are applied on the different reverse mortgage housing plans offered by Home Keeper have been primarily based on the weekly average one-month secondary market CD index following a margin that has been set by Fannie Mae. These averages have been published in the Federal Reserve’s H-15 Bulletin. The initial interest rate and subsequent adjustments that may be made on the reverse mortgage plan rounded to the nearest 1/8 percent. Over the course of the life of the reverse mortgage plan, the margin implemented would remain constant. As such, it does not fluctuate based on the age of the individual applying for the reverse mortgage plan. This means that the same interest rate would be implemented on the reverse mortgage plan whether the applicant is a young professional or a senior citizen. The drawback of this reverse mortgage plan, however, is that since it is based on a monthly published margin, there is a possibility that the interest rate applied on the reverse mortgage taken out could fluctuate on a monthly basis. While Home Keeper has placed a cap on the increase of the interest rate applied on the reverse mortgage taken out, the borrower should anticipate the increase of the interest to be as high as 17% on a monthly basis.
Home Equity Conversion Mortgage (HECM)
For this kind of reverse mortgage plan, the financial institution may opt to implement to utilize an initial rate or to use the current reverse mortgage rate to be applied on the reverse mortgage that is being taken out by a borrower. Once the selected reverse mortgage rate is applied to the reverse mortgage plan taken out, this can no longer be changed. This particular reverse mortgage program only provides an annual or monthly repayment schedule. The interest rates implemented, whether it is the initial rate or the current reverse mortgage rates are set annually by the US Treasury. It is advisable that the borrower would utilize the funds provided by this type of reverse mortgage plan since the repayment schedule would be based on the actual amount that is applied for, whether it is used or not.
Expected Reverse Mortgage
Expected reverse mortgage are very much similar to HECM reverse mortgage plans in that the interest rates are set annually by the US Treasury. In the expected reverse mortgage plan the interest rate is one of the things that are taken into consideration when computing for the amount of the reverse mortgage that a borrower may be eligible to take out. The maturity of expected reverse mortgages is approximately ten years.
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But it is a sin because the Church says it is a sin
I see myself not a sinner,
But a psychologist observing human behaviour,
Not any human but myself.
But the sacred truth remains
I am a sinner
I accept I am
A wretched sinner for that matter
Lord Jesus my love
Have mercy on me
POLITICS OF SEX
All about sex is politics
The exercise of power
And struggle for supremacy.
Men go into sex potently
And come out impotently
Women go into sex impotently
And come out potently.
The man becomes less a man
The woman becomes more a woman
Because the man emittes
But the woman admittes.
During sex the man's organ enters a prison
The prison which is the woman's organ
So the man is imprisoned
In the cell of the executor
At the mercy of the woman.
During this fierce battle for power
The man is the vanquished
The woman is the victor
After this fierce battle of domination
The man loses arsenals
For his armory shrinks
The woman gains missiles
For her armory expands.
So like a valiant fool
The man is conquered
Like a shrewd dummy
The woman is the conqueror.
Men who don't seek this battle
Are wise and more powerful
Because they know the victory are not theirs.
About the Author
The Truth About the Tax Cuts - Leeches, Parasites and the End of Us All
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Stock Markets For Dummies - A Beginner's Introduction to Stock Markets
Whether you want a quick re-cap of the facts of stock markets or a beginner's primer, this article gives you a basic understanding of stock market for dummies. There are many reasons you might be interested in learning about the stock market from a beginner’s perspective. You might want a quick and dirty low-down on what stock markets are and how they can earn you money. You might be confused about all the stock market investing jargon out there and want someone to clear it all up for you. You might want to learn about the stock market but haven’t a clue where to begin. Whatever your reason, you’re on the right track in wanting to learn how the stock market works because it is one of the surest ways of multiplying your money. Here is the most basic stuff about stock market investing that you need to know to get started (think of this as stock market for dummies): What is the Stock Market? A stock market is essentially like any other market: a place to buy and sell something, which in this case are stocks. Stocks are instruments of ownership in a company. In other words, owning stock in a corporation means you own a part of that organization. Owning stock also generally gives you the right to vote on important decisions in that company. How Does a Stock Market Work? A stock market works on the same economic principles of supply and demand that any other market works on. When demand is high and supply is limited, the price of stocks goes up; and when demand is low and stocks are aplenty, it drives down the price of stocks. The price of a stock is an important indicator of a company’s viability: if the stock price goes up consistently over a long period of time (a year or two), then the stock is generally deemed a good investment. What are the Financial Benefits of Stock Market Investing? Most people invest for two reasons: to maintain their wealth or to increase their wealth. If you’re like most people, you fall in the latter category because you want to make money by investing in stock. The way to earn an income from stocks is through dividends. Companies pay out dividends to its stock holders as a way of thanking them for investing in the company. Dividends are a percentage of the profit that the company has earned. Since you are a part-owner of the company (through your stock investment), you are entitled to a part of the earnings. Your dividend amount generally represents the value of stock you hold in the company. How Soon Can I Make Money with Stocks? Stock market investing is a long-term game plan so be ready to have a long term investment strategy. Short term investing (anything less than a year) is called “speculating” and is considered risky. Long term investing is better because stocks tend to fluctuate (sometimes wildly) on a daily basis but become stable over time and it is generally easier to spot (and utilize data from) stock market trends over the long term. What are Stock Market Trends? If you’ve ever watched financial news and analysis you’d have heard of the bull market and the bear market. Essentially the stock market is called bullish when the economy is looking good and more people are buying stock than selling it. The stock market is called bearish when more stock selling than buying is going on and the economic outlook is looking towards a downturn or perhaps even a recession. Since stock market trends gradually become apparent over time it is useful to analyze past market data combined with future economic outlooks to predict which direction the stock market will take. Understanding when a bull or bear market is about to hit is the key to understanding when to get in or out of the stock market. Doing your market research is vital to understanding how the stock market functions. And once you understand how it functions, making money from stock investing can be a great way to generate income for the years to come. So whether you want to save up for retirement, set up an income stream or become a major player in the stock market, remember to follow the advice given here to understanding the stock market. If you’re a beginner, start by reading up as much as you can on stock market for dummies. About the Author
Kelly Clifford from StockMarketsMadeSimple.com has put together a complimentary report titled "Stock Market Basics: A Beginners Guide To Understanding The Stock Market" that will likely prove invaluable in putting you on the fast track to becoming a knowledgable and successful Stock Market investor. To download your copy now instantly.. visit http://www.stockmarketsmadesimple.com/index.php
How to Read Stock Tables For Dummies
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[simpleaffiliate source="chitika" results="0"][/simpleaffiliate] Books on GAUSS program?
I am looking for an easy guide book for using the GAUSS program. I am thinking something along the lines of
'the complete idiots guide to GAUSS' (unfortunately it doesn't exist)
Is there a smart phd student out there, who's studying Statistics or Economics who knows a good reference book for GAUSS?
Thanks !!
My recommendation would be start with the manual. There are two parts to it. One part just describes the functions that are available, and how to write proper code syntax. The second, however, gives you examples of Gauss code that you can use to learn the bigger picture.
On a another note, why learn Gauss? You might also consider MatLab, which has become my favorite language.
How To Build Your List Your & Profits with Bob Bly Part 2
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[simpleaffiliate source="chitika" results="0"][/simpleaffiliate] getting political knowledge?
I'm thinking about a career in politics and I want to get started reading books about politics and government, etc. Not something like "Politics for Dummies" but books written by the great political thinkers in the past, like reading Wealth of Nations to learn fundamentals of economics.
Does anyone have any suggestions for must read books for going into politics?
You need to read "The Republic" by Plato.
Discusses the basic fundamental concepts of politics, such as what exactly a government is, what the purpose of a government should be, and the different types of governments that existed at the time, and how they measure up to the established criteria.
You might also be interested to know that Plato was the mentor who taught Socrates, who went on to teach a bunch of great philosophers, including Aristotle.
You should also pick up "The Prince" by Niccolo Macchiavelli.
It is an interesting treatise on the application of ethics in politics, especially as concerns issues of morality, immorality and amorality.
You really should also look at the collected writings of Han Fei-zi, the Legalist scholar from the Qin Dynasty of Classical China.
Economics for Dummies
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