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The gap between the rich and poor, the advanced economy and developing economy, is expected to grow even bigger if nothing is done about the current financial infrastructure. There are many fundamental flaws in the current system preventing us from making the economy inclusive and sustainable. In this investigation, we present evidence and analysis of some problems deeply rooted in the current financial system and discuss how traditionally marginalized wisdom and FinTech may help us fix the problems, thereby creating an inclusive, sustainable and more fair financial system that better assists the real economy. Specifically, the topics discussed include distorted risk-return relationship, debt products and the flaws, bank crises, insurance structure, etc.

JEL Code: G00, G30, F30

QI, H. (2021). Financial Infrastructure: Challenges and Sustainability. Journal of International Economics and Finance. 1(1), 1-14

This study is an effort to examine whether there exists a potential of the variations in tax efforts of different types in making positive impact on economic growth in a typical developing economy. We take the case of Nepal and analyze 44 years (1975-2018) of time series data of growth and fiscal variables. Our conclusion is that Nepal has already reached its optimal tax GDP ratio and additional efforts to collect more tax revenue are counterproductive; rather it should take some other structural measures for higher GDP growth. Implementation of several scenarios of revenue replacement does not have significant positive impact on GDP; however, minimizing the contribution by excise duties but replacing its contribution by income tax has minimal positive impact on GDP. This refers the need of protection of Nepalese infant industries at this juncture of fiscal-growth discourse of this small developing economy.

Key Words: tax rates; public sector revenue; GDP growth

JEL Classifications: H 21, O 40; H 24

Acharya, S. (2021). Impact of Raising Tax Rates in GDP Growth: The Case of Nepal. Journal of International Economics and Finance. 1(1), 15-26

Globally, heartbeat of any country is depends up on its Gross Domestic Product (GDP). However, inflation is creating resistance to economic development as increase in inflation reduces nominal GDP in most of the Asian countries. In fact, historically all possible combinations were observed inflation with and without growth, no inflation with and without growth. However, nominal GDP is not matter much for understanding economic development. Hence, relationship between Real GDP and Inflation become major concern for most of the developing economy in Asia. In reality, vicious cycle of inflation and real growth was observed many times (Fischer 1993, Barro 1996). Here, in current research paper authors done humble attempt to understand relationship between inflation and Real GDP. For the same, authors have collected panel data of 170 countries and geographical area for 40 years from 1980 to 2019 from International Monetary Fund (IMF). Using panel data regression analysis positive relationships (higher Real GDP reduces Inflation and vise-versa) between two variables are established and shown strong implications to help government in Asian region for most of developing economy to framing growth focused policy making. It also helps international bodies to  understand method for dealing with inflation and Real GDP in Global economic environment.

Keywords: Inflation, GDP, International Policy Framing, Global economy

Abhishek, P., & Tavishi, T. (2021). Does Inflation Leads to GDP Change?: An Empirical Study through Panel Data Analysis using Global Economic Data. Journal of International Economics and Finance. 1(1), 37-44

This paper estimates the effects of FDI, economic growth and energy consumption on carbon emissions in five ASEAN countries for the period 1981 to 2014. The panel quantile regression estimates show that while the effect of FDI is insignificant, economic growth and energy consumption significantly increase carbon emissions in high-emission ASEAN-5 countries. At higher levels of energy consumption, adoption of green renewable energy and emission control technology mitigate the increase in carbon emissions. The quantile estimates of this paper do not lend support to the U-shaped Environmental Kuznets Curve (EKC) hypothesis. At the same time, the insignificant effect of FDI on carbon emissions does not lend sufficient support to the pollution haven hypothesis in lower-emission ASEAN-5 countries. The negative influence of FDI on carbon emissions at the middle quantiles supports the halo effect hypothesis. The estimated quantile results suggest that uniform carbon emissions control policies are unlikely to succeed equally across Lowe missions and high-emissions economies.

Keywords: FDI, energy, growth, emissions, environment, quantile regression.

JEL classification: C23, F43, O13, Q56, R11

Lakshmanasamy, T. (2021). The Differential effects of Foreign Direct Investment, Energy Consumption and Economic Growth on Carbon Emissions: Panel Quantile Regression Estimation. Journal of International Economics and Finance. 1(1), 45-62

With the onset of the Coronavirus disease (COVID-19) pandemic, a number of macro parameters of the Indian economy have been thrown out of gear. The fiscal deficit on the combined account of centre and state government in 2020-21 may increase to 11-12% of estimated GDP. Consequently, the combined debt-GDP ratio of the central and state government may reach close to 81% at the end of 2020-21, more than 20% points above the targeted threshold of 60% as per centre’s 2018 amendment to the Fiscal Responsibility and Budget Management Act (FRBMA). The CPI inflation rate breached the upper tolerance limit of the monetary policy framework (MPF) in the last quarter of 2019-20 and the first quarter of 2020-21. In fact, India’s economic crisis predates the pandemic. The infirmities of the FRBMA and the MPF had already started becoming visible with 2019-20 real and nominal GDP growth rates plummeting to 4.2% and 7.2% respectively. It is high time that we consider recasting India’s fiscal and monetary policy frameworks. In this article, we review these frameworks, identify their inconsistencies, and consider remedial changes so as to serve India’ future needs and compulsions.

Keywords: India’s FRBMA, Fiscal responsibility Legislation, Monetary policy committee, Fiscal council, Debt sustainability, Macro policy coordination council

JEL Classification Codes: H12, H62, H63, E52, E62, E63

Srivastava, D.K., Bharadwaj, M., Kapur, T., & Trehan, R. (2021). Covid’s Economic Impact: Should India Recast its Fiscal and Monetary Policy Frameworks?: Journal of International Economics and Finance. 1(1), 63-81