User:Annihilation00/sandbox

<!-- Suppose a firm (or an investor) is in dispute with a TPP member country over investment. If the dispute is not resolved within 6 months after the firm seeks to deal with the dispute, then the firm can claim that the member country has broken an obligation under Article 9.1 to 9.17, an investment authorisation, or an investment agreement, and that the firm has suffered loss or damage caused directly or indirectly by that breach. Then, under Article 9.19, the firm can submit the claim to arbitration under one of the following:
 * the ICSID Convention and the ICSID Rules of Procedure for Arbitration Proceedings
 * the ICSID Additional Facility Rules
 * the UNCITRAL Arbitration Rules
 * others if the firm and the country agree.

Under Article 9.22, the tribunal consists of 3 arbitrators; the firm appoints one arbitrator and the country does one. The presiding arbitrator is appointed by agreement between the firm and the country. If the tribunal is not constituted within 75 days after the submission of the claim, the Secretary-General of ICSID use his or her discretion to appoints arbitrators not yet appointed.

Under Article 9.29, the tribunal makes a final award. In the case where a final award is made under the ICSID Convention, the firm and the country do not seek enforcement of a final award until 120 days elapse from the date the award is rendered and there is no revision of the award, or revision is completed.

In the case where a final award is made under the ICSID Additional Facility Rules, the UNCITRAL Arbitration Rules, or others, 90 days elapse from the date the award is rendered and there is no revision or annulment of the award, or a court dismisses or allows an application to revise the award and there is no further appeal.

If the tribunal makes a final award, the country must act according to the tribunal's decision without delay. If the country fails to pay compensation, the country of the firm requests that a panel should be established under Article 28.7. The requesting country seeks to determine that the failure to pay the compensation is inconsistent with the obligations of TPP, and recommend, in accordance with Article 28.17, that the country should pay the compensation.

Euroscepticism in the United Kingdom

{{legend|purple|Iceland's Gini coefficient}}

harmonised unemployment rate(%)

IMF's forcast said that Greece's unemployment rate would hit the highest 14.8 percent in 2012 and decrease to 14.1 in 2014.

harmonised unemployment rate (%)

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GDP
Japan's real GDP contracted at an annual rate of 6.8 percent in the second quarter of 2014, after the sales tax hike came into effect in April. This fall is the worst since the devastating earthquake and tsunami disaster hit Japan in the first quarter of 2011 when the GDP shrank by an annualised 6.9 percent.

Economics minister Akira Amari said that the Japanese government would take necessary measures, depending on its economic condition, although he at the moment did not feel that those measures needed to be done. Amari expressed confidence that the effect of the sales tax hike began to wear off and the economy would recover later in 2014.

Kyohei Morita and Yuichiro Nagai said that they believed that Japan's real GDP would return to growth exceeding potential, mentioning economic indicators such as public works and housing construction orders.

trade balance of Japan
As external demand on Japan's goods declines, Japan's export fell 2.7 percent in May 2014 from a year ago. But its imports fell by 3.6 percent from a year ago as well, which narrowed Japan's trade deficit by 8.3 percent. The Japan trade deficit with other countries was over JPY 1tn in April 2014, and it went down to JPY 909bn (USD 8.9bn, GBP 5.2bn) in May 2014. But the country is still running a trade deficit for the 23rd straight month.

Unemployment rate
The unemployment rate slightly rose to 3.8 percent from 3.7 percent in July 2014.

Household spending fell 5.9 percent in July 2014 from the same month a year earlier, more than the median forecast of economists polled by Reuters of a 3 percent drop, because of the higher sales tax and bad weather that kept consumers at home. -->

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reliability on labour market indicators
Compiling job reports is a tough task, and figures in those reports are not perfect. It has become tougher than before, because Americans are more likely to avoid responding to surveys than they used to be. Landlines goes into decline, and Americans less trust their government and the media than before because they are more dubious of a survey's purpose and more worried about intrusion into their privacy than in the past. The response rate to a typical telephone poll was 36 percent in 1997, and the figure has decreased to 9 percent by 2014. In the first half of 2014, the unemployment rate among those who were interviewed in the first month was 7.5 percent, and that among those who were interviewed in the final month was 6.1 percent. The govenrment weights later groups, the unemployment rate in the first half of 2014 was 6.5 percent. Research done by Alan Krueger et al shows that over the last tewnty years the unemployment rate appeared to have become less accurate partly because this responce decreased.

the number of those who leave the labour market has increased. If decrease in unemployment stems from decline of the number, that is not real decrease in unemployment.

Coorporation tax cut
Note: Abe also said he would end compulsory overtime payments for workers earning over JPY 10m a year (GBP 57,000), and raise the proportion (7.5 percent in 2013) of female managers to 30 percent by 2020.

But cutting corporate taxes is a bad idea. According to the Congressional budget office, about 80 percent of corporate income is held by households in the top fifth of the income scale. About 50 percent of corporate income is held by the top 1 percent. Lowering the tax rate would just lead to increase in income inequality.

damage to small business (increase of inequality)
Abe cabinet aims at abolishing a special tax break for smaller and midsize companies in March 2015. The tax break was introduced after the US financial crisis 2008 happened, which allows small businesses to be exempt from taxation: the national corporate tax is 25.5 percent on large firms and 15 percent on small businesses. In 2014, the Japanese government plans to lower Japan's corporate tax rate, which is 36 percent in 2014, below 30 percent in several stages starting in 2015. The cabinet wants to abolish the tax break to make up for the corporate tax cuts. According to the Finance Ministry, if the govenrment cuts the corporate tax rate by 1 percent, the tax revenue decreases by 470 billion JPY.

criticism against comparative advantage
Nobel prize winning economist Eric Maskin said that today's globalisation was different from 19th century's globalisation, and that the theory of comparative advantage needed to be supplemented by new theories, suggesting that the theory was no longer correct. Maskin's paper shows that skilled workers in a developing country are attractive to multinational companies and see wage rises, while unskilled workers are ignored and their wages fall. Thus globalisation does not reduce inequality in developing countries.

Maskin suggests that better schooling should be the key to reducing the inequality. In 1970s, fewer than 30 percent of Latain American children enrolled at secondary school, and in 2014 the figure became 88 percent. Brazil, for instance, is one of the countries which bucked the globalisaton treand, and the country introduced a scheme to make conditional money transfer to poor families provided that their children stay in school up to the age of 17 and must be vaccinated. It also built public transport linking the pooerest slum to the place where jobs could be found. Other low-income countries do not reach Latin America's level of enrollment. The Latin America is one of the few regions who achieved lower inequality since 1990s.

James Mirrlees says that capital controls need to be done to right the ship, warning that Europe can have tenatious high unemployment for years to come unless they keep their capital at home for their own use. Mirrlees advocates outright subsidies for poorer workers in the West to stop them falling out of the bottom, saying that housing subsidies worked in the UK as negative taxes.

Massachusetts Institute of Technology
And he credits MIT with helping create that style. “I take the kind of approach that translates economics into plain language,” he says. “Focus on the essence of the story, strip it down to the essentials, and try to avoid complexity to make it a clear exposition. It’s the style I was taught at MIT.” -->

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consumption tax hike
In March 2014, at a conference in Abu Dhabi, Lawrence Summers expressed his concern about the negative effects of the tax hike, saying that the tax hike could damage to the Japanese economy more seriously than early estimates. Although the Japanese government expects the Japanese economy to recover after the economy goes into short recession, Summers suggested that Japan's rebound was overestimated. (He said that risks to Japan’s rebound may be underestimated.)

Haruhiko Kuroda, the governer of Bank of Japan, said that raising Japan's sales tax, as a confidence-buiding measure, could stabilize the social security which would strengthen Japan's economic growth. He stated that the stagnation due to the tax hike would be temporary, while he mentioned the possible scenerio in which BoJ would additionally conduct quantitative eqsing. He warned that the cut of its corporation tax could worsen its fiscal position.

Concerned about the negative effects of the tax hike, Lawrence Summers had told Japanese government not to raise the consumption tax. Ignoring the warning, the govenrment then raised the sales tax in 1997 for the purpose of balancing its budget, but the government revenue decreased by 4.5 trillion yen because consumption stumbled. The country recorded a GDP growth rate of 3 percent in 1996, but after the tax hike the economy sank into recession. Chart 1 shows the government revenue in Japan from FY 1994 to 2007. The tax revenue reached a peak of 53 trillion yen in FY 1997, and declined in subsequent years, being still 42 trillion yen (537 billion US dollars) in 2012.

Anatole Kaletsky was an early supporter of Abenomics, but since Japanese government decided to double the country's sales tax, he has been alarmed about Japan's prospects. The IMF forecast that this tax hike would cut Japan's economic growth from 2.5 percent in 2013 to 1.4 percent in 2014, but Kaletsky argues that this economic downturn is underestimated.

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Ricardian equivalence controversy
Research by Chris Carroll, James Poterba and Lawrence Summers shows that the Ricardian equivalence hypothesis is refuted by their results. In the Ronald Reagan era, the US government had a historically large budget deficit due to the Reagan administration introducing several tax cuts and increasing military spending. During 1976-80, the government revenue was 10.01 percent of the potential GNP, and it declined to 8.86 percent during 1981-1985. The ratio of the US government's budget deficit to its potential GNP did not exceed 4 percent from the World war two to 1981, and exceeded 4 percent after 1981. The ratio of an inflation- and cycle-adjusted deficit to the potential GNP was 2.56 percent during 1981-1986, and this ratio was the largest between 1958 and 1986. If the Ricardian equivalence hypothesis is true, the rational consumers, who expect the government to raise taxes, in the country try to reduce their consumption and increase their savings. The reality was that the net private saving as a percentage of GNP was 8.55 in the 1976-1980 period, and it decreased to 7.47 percent in the 1981-1986 period. The ratio of consumption to GNP was 62.96 percent in the 1976-1980 period, and slightly increased to 64.72 percent in the 1981-1986 period.

The facts about private saving, government saving and consumption in the US are shown in Table 1. Their finding is that increases in government deficits is followed by decreases in private saving. They see the increase in the consumption-to-GNP ratio during 1981-86, when the governmental dissaving is accelerated by Reaganomics. Their results refute the Ricardian equivalence hypothesis.

Rafael Domenech, David Taguas and Juan Varela carry out research on the Ricardian equivalence proposition, and their research suggest that the Ricardian equivalence hypothesis can be rejected in major countries.

Using a bivariate model
 * $$ \Delta \mathbf{X}_{t} = \sum^{\infty }_{j=0} A_{j} \mathbf{e}_{t-j} $$

they estimated a structural VAR. -->

<!-- The US immigration reform will increase funding for border security, and allow 11 million illegal immigrants in the country to have a 13-year path to citizenship. According to the Heritage Foundation, immigrants will, in the long run, stretch the country's budget because they tend to draw more benefits than thay pay taxes. The think tank enstimated the cost of the immigration reform at 6.3 trillion USD over 50 years.

In 2014, Switzerland held a referendum to restrict the number of immigrants from other EU countries, and the vote was in favour of limiting the immigration from the EU. The Swiss People's Party (SVP) pushed through a proposal of curbing on immigration, saying that the number of immigrants from the EU was 80,000 every year and it is ten times higher than expected in 2007, and accordingly has been beyond the capacity to give them the education, public transportation and helath system. Toni Brunner, the leader of SVP, said that this was a turning point in the country's immigration policy. Those who are in favour of tighter immigration controls argued that the EU migrants were undercutting the Swiss workers.

The net migration from Romania and Bulgaria to Germany was 75000 in 2013, and it is estimated that the number of those migrants will double in 2014, but Polishs are the largest migrants. The large amount has put pressure on public services such as education and helth sevice. 15 percent of the welfare benefits recipients are migrants. The 15 percent totals 1.2 million people, of whom 290000 are citizens of other EU countries. German government started to discuss on limiting the benefit to migrants in order to prevent them from abusing the benefit system. The plan emvisaged ightening control on child benefits paied to migrants. The Interior Minister Thomas de Maiziere said that immigration sometimes brought us problems, and the rapid increase in the number of migrants from Bulgaria and Romania was alarming in some cities.

Cecilia Malmstrom found no evidece on what is called benefit tourism in Britain, expressing that she did not know why Britain's debate about immigration and its benefit was so encouraged.

Dean Baker describes free trade as thing like apple pie, because everyone is supposed to like free trade. He says that in reality free trade agreements are very different from what plenty of economists idealize, citing the fact that nafta (and its successors) was such a deal that it tended to decrease the wages of manufacturing workers because the agreement made outsourcing much easier. He argues that nafta forced US steelworkers and autoworkers to compete with foreign low-wage workers in the developing world and decreased wages of manufacturing workers in the US. These deals are tools for corporations to over-ride the democratic process in the countries. By using them, they can block health, safety and environmental regulations that might otherwise enforced by democratically elected officials. He argues that the same things happen in both the Trans-Pacific Partnership (TPP) and the EU-US trade agreement.

In the US, a patent policy gives unchecked monopolies to drug companies for decades, and people in the country pay twice as much for its prescription drugs as people in other developed countries. (Those developed countries limit the extent to which drug companies can exploit their monopoly.) It could in principle use free trade to bring about the same result.

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Exchange rate expectations
One of the assumptions of the Mundell-Fleming model is that domestic and foreign securities are perfect substitutes. Provided the world interest rate $$i^\star $$ is given, the domestic rate will become the same level of the world rate by arbitrage in money markets. However, in reality, the world interest rate is different from the domestic rate. Rudiger Dornbusch considered how exchange rate expectations made an effect on the exchange rate. Here let us use an approximate formula:
 * $$ i = i^\star + \frac{ e' }{e} - 1 $$

and if the elasticity of expectations $$\sigma$$, is less than unity, then we have
 * $$ \frac{di}{de} = \sigma - 1 < 0 \quad . $$

Since domestic output is $$y = E (i, y) + T(e, y) $$, the differentiation of income with regard to the exchange rate becomes
 * $$ \frac{d y}{d e} = \frac{\partial E}{\partial i} \frac{di}{de} + \frac{\partial E}{\partial y} \frac{dy}{de} + \frac{\partial T}{\partial e} + \frac{\partial T}{\partial y} \frac{dy}{de} $$
 * $$ \frac{dy}{de} = \frac{1}{ 1 - E_{y} - T_{y} } \left( E_{i} \frac{di}{de} + T_{e} \right) \; . $$

The standard IS-LM theory gives us the following basic relations:
 * $$ E_{i} < 0 \;, \quad E_{y} = 1-s > 0 $$
 * $$ T_{e} > 0 \;, \quad T_{y} = - m < 0    \; . $$

Investment and consumption increase as the interest rates decrease, and currency depreciation improves the trade balance.
 * $$ \frac{dy}{de} = \frac{1}{s+m} \left( E_{i} \frac{di}{de} + T_{e}   \right)  $$
 * $$ \frac{dy}{de} = \frac{1}{s+m} \left( E_{i} ( \sigma - 1 ) + T_{e}   \right) \; .  $$

In a similar way, we derive the total differentiations of trade balance and the demand for money,
 * $$ dT = \frac{\partial T}{\partial e} de + \frac{\partial T}{\partial y} dy = T_{e} de + T_{y} dy $$
 * $$ dL = \frac{\partial L}{\partial i} di + \frac{\partial L}{\partial y} dy = L_{i} di + L_{y} dy $$
 * $$ L_{i} < 0 \;, \quad L_{y} > 0 $$

and then, it turns out that
 * $$ \frac{dT}{dL} = \frac{ T_{e} (s+m) + T_{y} ( E_{i} (\sigma -1) + T_{e} ) }{  L_{i} (\sigma - 1) (s+m) + L_{y} (  E_{i} (\sigma - 1) + T_{e}   ) } $$
 * $$ \frac{dT}{dL} = \frac{ T_{e} s + T_{y} E_{i} (\sigma -1) }{  L_{i} (\sigma - 1) (s+m) + L_{y} (  E_{i} (\sigma - 1) + T_{e}   ) }  \; .  $$

The denominator is positive, and the numerator is positive or negative. Thus, a monetary expansion, in the short run, does not necessarily improve the trade balance. This result is not compatible with what the Mundell-Fleming predicts. This is a consequence of introducing exchange rate expectations which the MF theory ignores. Nevertheless, Dornbusch concludes that monetary policy is still effective even if it worsens a trade balance, because a monetary expansion pushes down interest rates and encourages spending. He adds that, in the short run, fiscal policy works because it raises interest rates and the velocity of money.

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