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Takatoshi Ito

secular stagnation. The “secular” happens because aggregate demand is always below aggregate supply, due to a too-high real interest rate. When the actual real interest remains higher than the natural real rate of interest, stagnation cannot be overcome easily. Secular stagnation can be defined as the natural real rate of interest becoming negative, while the actual rate stays above the natural rate. See Eggertsson and Mehrotra (2014) for formal modeling. Nominal zero bound: i = 0. The third characteristic is that the policy rate, i, is lowered to and stuck at (near

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Andrew Mason and Sang-Hyop Lee

provide a boost to economic growth, which easily dominates the effects of a declining support ratio. Given current patterns of old-age consumption, production, and transfers, the total demand for pension assets will increase very substantially over the coming decades, rising from $26 trillion in 2010 to $157 trillion in 2050. Under these circumstances aging should not depress saving rates. The gross saving rates required to meet the demand for pension assets would increase from 12.2 percent of gross domestic product (GDP) in 2010–2020 to 15.4 percent of GDP in 2040

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Laishram Ladusingh and M.R. Narayana

can be decomposed as: Y/N = (L/N) * (Y/L). (7.2) It is a measure of per capita income adjusted for age variations in consumption and is a product of the ESR and income per worker, that is, labor productivity. Income per effective worker is intended to capture many factors such as level of technology, human and physical capital, natural resources, and political and economic institutions (Lee and Mason, 2007). In growth terms, we have: gr (Y/N) = gr (L/N) 1 gr (Y/L) (7.3) where gr stands for growth rate. Given productivity, the period of the positive growth rate of

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Economic Reform in Asia

China, India, and Japan

Sara Hsu

Economic Reform in Asia compares and analyzes the reform and development patterns of China, India, and Japan from both historical and developmental perspectives. Sara Hsu specifically focuses on China’s reform and opening-up in 1979, India’s accelerated liberalization in 1991, and the outset of the Meiji Restoration in Japan in 1878. This detailed overview of growth patterns in Asia’s largest economies is invaluable, especially in its determination to understand which development policies work, what role institutions play in development, and what issues may arise during said development.
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Sara Hsu

not until the 1960s that Japan was able to build up its road network, and the main form of transportation remained the railways. The country lacks its own energy resources and is the world’s largest importer of coal and liquefied natural gas, and the second-argest importer l of oil. Japan also has little iron ore and insufficient land on which to produce enough food for its population. Japan imports many goods, including raw materials for domestic production. Without natural resources, Japan was induced to export what it did have access to – silk and tea – and

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Sara Hsu

environmental Kuznets curve (EKC), which was coined by Grossman and Krueger (1995) in their work on economic development and pollution rates. The EKC theory describes the progressive relationship between economic development and environmental pollution. Essential to this approach is the idea that the environmental impact of a country is determined based upon what level of income it has attained (Grossman and Krueger 1995). The theory states that countries undergo three general stages of the development process in relation to their environmental repercussions. The base level

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Sara Hsu

arrangement, India agreed to reduce imports, but still non- esident r Indian (NRI) deposit outflows accelerated in the second quarter of 1991, reflecting a crisis of confidence, as mentioned above. A swathe of measures was instituted in 1991 to reform the economy, in response both to industrial stagnation beginning in 1988, and to the balance- f- ayments crisis. o p India implemented this series of reforms under the New Economic Policy to further liberalize the economy to foreign trade. The New Economic Policy focused on devaluing the rupee, increasing interest rates

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Sara Hsu

measures with enthusiasm, upgrading technology, improving managerial efficiency, and engaging in increased competition (A. Mitra 2008). India’s banking system was also reformed, removing interest rate controls, introducing capital adequacy requirements, and allowing expansion of private and foreign banks (Ahluwahlia 2002). The government continues to attempt to reduce its ownership stake in the banking system. A new bankruptcy law has also been introduced to allow creditors to enforce their claims. In 2003, a Special Economic Zones (SEZ) Act was passed to promote exports

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Sara Hsu

the unskilled labor sector is: Yn 5 wn # L n t t (6.6) where Yn and L n are output and unskilled labor, and wn is the marginal t t productivity of unskilled labor. Individuals live two periods in overlapping generations, with utility functions as follows: u 5 a log c 1 (1 2 a) log b (6.7) where c indicates consumption in the second period, b is bequest, and 0 , a , 1. Individuals vary in bequest, and not in abilities or preferences. Capital is assumed to be mobile, and the world interest rate r . 0 and constant. Borrowers can evade repayment by moving, but

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Roy Bahl and Bayar Tumennasan

; Government Finance Statistics, International Monetary Fund. How should revenues from natural resources be shared in Indonesia? 203 centralization. The revenue stakes are high, and countries that can tap natural resources for supporting central government expenditures can avoid imposing high general tax rates on the voting public. Central government officials, and parliaments, might be loath to give up this natural advantage. There are issues of political control over these resources that might discourage decentralization of governance. Finally, there are questions of