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ID: 086586

Government budget, public-sector wages and capital taxes in a s: Hong kong case / Chao, Chi-Chur; Yu, Eden S H; Yu, Wusheng

Chao, Chi-Chur	Journal Article
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2009.

Summary/Abstract

This paper examines the welfare implications of adjustments in public-sector wages and capital tax rates for a small open economy in a general equilibrium setting. The individually and jointly optimal wage and tax policies are derived and interpreted. Facing reductions in land sales and falls in foreign interest rates, a cut in public workers' pay is needed to make their wage comparable to the private sector and a hike in capital taxes is recommended for a budgetary consideration. Using a computable general equilibrium model for Hong Kong, we numerically evaluate the various optimal policies which not only confirm the theoretical results but also provide quantitative estimates of the optimal policy variables.

Key Words

Economy ; Hong Kong ; Asian Financial Crisis ; Public-Sector Wages ; Capital Taxes ; Computable General Equilibrium

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ID: 168768

What Determines China's Grain Imports and Self‐sufficiency? the Role of Rising Domestic Costs and Varying World Market Prices / Yu, Wusheng ; Zhu, Jing ; Li, Tianxiang

Zhu, Jing	Journal Article
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Summary/Abstract

China's grain sectors have faced unprecedented challenges in recent years as the ever‐increasing and historically high level of grain output has failed to reduce grain imports. On the contrary, high grain imports and high domestic stock have accompanied historically high domestic output, a situation dubbed the “triple high” phenomenon in current policy discussion. This paper explores the role of widening domestic–world market price gaps in determining the triple high phenomenon. Unlike earlier studies that relied on production capacities, this paper argues that domestic production and demand (hence imports) are functions of domestic and world market prices and proposes an analytical framework to explicitly capture such price gaps under restricted trade linkages in general equilibrium. Following this approach, a set of price scenarios for the 2011–2020 period are constructed and simulated in a computable general equilibrium model. Results from the core scenarios, in which recent domestic and world market price trends are assumed to continue, suggest that further widening price gaps would substantially increase grain imports and reduce domestic output (by 60 million tons) and self‐sufficiency ratios from base levels. In the alternative scenarios with larger (smaller) price gaps, we find higher (lower) imports and larger (smaller) decreases in domestic output and self‐sufficiency ratios. Such results provide important policy implications as China's agricultural policy undergoes significant adjustment.

Key Words

China's Grain Import ; Rising Domestic Costs ; World Market Prices

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