Suchergebnisse

The province of Punjab – home to 56 percent of Pakistan's population, is marked by regionaldisparity. This paper argues that the socioeconomic disparity observed today between theSouth-West of Punjab and the rest of the Province is largely owed to the historical differences inregional endowments. During the colonial rule over India, the North and Center of the provincebenefitted from Canals, Cantonments (military garrisons) and enlistment in the Indian army tofight on the side of the Britain in the two world wars. These shocks rested upon endowmentsunique to the two regions. The barren but cultivable land and sparse population of the Centerfacilitated canal colonization. The geo-strategic location of the North allowed the establishmentof military headquarters and smaller garrisons in the region. The hardy men of the North,experienced in warfare since the 12th century, were suitable for the army. The South-West of thePunjab lacking the endowments of interest to the British, failed to benefit. Hence, thesocioeconomic disparity observed today.

This study develops a theoretical a model to examine the
impact of predation on aggregate output and aggregate consumption. Using
game theoretic framework we show that predation, reduces aggregate
output and per capita consumption. Predation occurs when some agents
enjoy comparative advantage in predation. Given predation under
comparative advantage of some agents, a larger part of the aggregate
output accrues to the predators. We also demonstrate that given
inequality of endowments, the poorly endowed enjoys an incentive to
predate. The payoff of the well endowed from production and predation is
the same. Therefore the well endowed has no incentive to predate. If the
well endowed still predates this would be owed to his comparative
advantage in predation rather than the inequality per se. Large
endowments are only one of the numerous sources that afford such
comparative advantage. Good institutions like rule of law and effective
government tame this comparative advantage. It is due to this kind of
taming, that despite significant inequality in some economies, the level
of predation observed is relatively low. Institutional quality thus
determines the level of predation. We also show that redistribution from
well endowed to poorly endowed will not only increase per capita
consumption but will also be a ‗Pareto improvement'. JEL classification:
D03, O43, P14 Keywords: Predation, Institutions, Growth

The transmission of monetary policy through the interest rate
mechanism has been thoroughly discussed in economic literature for quite
some time. The traditional view is that, the change in real interest
rate influences the cost of capital. The change in cost of capital
affects the magnitude of investment and consumption and therefore the
level of, real income and prices [Mishkin (1995)].1 Operationally the
State bank of Pakistan, influences the yield on treasury bills
(T-bills). This is done on the assumption that the yield on treasury
bills influences other interest rates like the Money Market rate (Call
money rate), banks' deposit and banks' Lending rates. The change in
these rates influences the cost of capital and thus level of investment
and consumption in the economy. Given this, the central bank can
influence the yield on T-bills to influence the level of real income and
the level of prices. The foregoing explanation of the monetary
transmission mechanism makes it clear that if the changes in yield on
the T-Bill rate are not passed on to the Call money rate and the bank
deposit and the Lending rate then it becomes difficult for the central
bank to use the channels that involve interest rate, for influencing the
level of output and prices. Hence it is important to test whether the
changes in the treasury bill rate are passed on to money market rate,
bank deposit rate and the bank lending rate and if yes at what speed and
to what extent. Therefore this study examines the pass-through of the
changes in Treasury bill rate to Call Money rate, Banks' deposit rate
and Banks' Lending rate.

The 7th National Finance Commission (NFC) Award has seemingly
put an end to the deadlock over revenue distribution among the
constituents of the federation in Pakistan. This paper argues that
though the 7th NFC Award's use of multiple indicator criteria for the
distribution of resources is a step forward in the right direction, the
distribution design still falls short on various counts. For example,
the weight of 82 percent for the population share is on the higher side
whereas the demographic structure of the population, an important
indicator of the expenditure needs, does not figure up in the
distribution design. Also, the basis of weights assigned to the four
elements of the revenue distribution criteria is unknown and no rigorous
exercise seems to have been undertaken to determine these weights.
Similarly, matching grants, which are a key element of the distribution
design elsewhere, are altogether absent in Pakistan. Furthermore,
provinces still rely on large transfers from the centre which undermines
the incentives of the provinces to generate their own revenues. The
paper emphasises that there is a need to rethink the mechanisms for
resource sharing as well as the institutional structure of the NFC
itself. JEL Classification: H77 Keywords: Intergovernmental
Transfers