Ajit Karnik

Valuing Cricketers Using Hedonic Price Models

This article is concerned with estimating hedonic price equations for cricketers. The 2008 auction in India for cricketers to play in the Indian Premier League (IPL) of Twenty20 cricket has revealed the bids made for 75 players. Using the information on the bids, the author has estimated hedonic price equations. The author finds that the usual way of judging cricketers—in terms of runs scored and wickets taken—is reflected in the estimated equations. In addition, young players command a substantial premium over other players as do players from India and Australia. The author extends the analysis to evaluate the performance of players in the IPL tournament of 2008 and estimates the rates of return to the owners of the teams. The estimated models are checked for robustness by incorporating the results of the IPL Auction of 2009. The author finds that the models are robust to the inclusion of additional cricketers bought during the latest IPL auction.

Natural resource dependence: a macroeconometric model for the United Arab Emirates

This study constructs a macroeconometric model to analyse the problems of regions that exhibit dependence on nonrenewable resources (e.g. oil). The role of the oil sector in the UAE and the extent to which it subsidizes the rest of the economy is evaluated. The macroeconometric model constructed consists of four sectors, has 25 equations and is evaluated and calibrated employing dynamic simulation techniques. Counter–factual and policy experiments are carried out and the instruments–targets approach is used to analyse the impact of the oil sector. The article highlights the continued dependence of the UAE economy on oil and the urgency to diversify the economy and securing more nonhydrocarbon sources of revenue.

Estimating elasticity of demand for tourism in Dubai.

This study estimates the elasticity of demand for inbound tourism from 24 countries to Dubai with a view to understand the factors that influence this demand. The variables tourist arrivals, real per capita income, relative prices, and accommodation costs were tested for panel unit roots, and panel cointegration was employed to determine the specification of the models to be used. These models were estimated employing Fixed Effects and Random Effects approaches. The choice between Fixed and Random Effects models was made using the Hausman Test. Determinants of the elasticity of demand for the entire panel are consistent with theory. Within the subgroups there are differences. Arab countries and countries of the Indian subcontinent have an income elasticity of demand >1. Tourists from the developed countries seem to be the most sensitive to relative prices and the cost of accommodation is significant only for tourists from the Arab and Indian subcontinent countries. Income elasticity of tourism especially from Arab countries and countries of the Indian subcontinent is high, indicating that marketers should tailor their strategies accordingly. Accommodation costs have negative impact on demand, highlighting the need for more budget hotels. Relative increase in prices has a negative impact on tourism demand, highlighting the need to control domestic inflation.

Assessing UAE's oil dependence: an optimal control approach

Purpose – The main purpose of this paper is to understand the impact on the United Arab Emirates (UAE) economy of the objective of reducing its dependence on oil, trying to achieve the Gulf Cooperation Council (GCC) fiscal convergence criterion and the inevitable depletion of oil resources.Design/methodology/approach – An 18 equation compact macro‐econometric model is constructed and is evaluated and calibrated employing dynamic simulation techniques. Optimal control techniques are used to analyze the economic impact of the three objectives listed above.Findings – Each of the optimal control experiments that has been carried out has served to reinforce the fact that the UAE is still critically dependent on oil. An increase in the share of the non‐oil sector, adhering to the GCC fiscal criterion and any reduction in oil output production will affect government finances adversely.Research limitations/implications – The macro‐econometric model developed is for the UAE and further research is needed to see if...

STATE FISCAL CAPACITY AND TAX EFFORT: EVIDENCE FOR INDIAN STATES

This study analyzes the tax effort of 17 Indian states as a means of creating fiscal space. Four individual state-level taxes—stamp duty and registration fees, state sales tax, state excise duty and motor vehicles tax—are studied as well as the total own-tax revenue of states. Stochastic frontier analysis (SFA) models have been estimated for each of the taxes and for own-tax revenue in order to obtain a measure of inefficiency in tax collection. The data used for the SFA models span the time period 2000–2001 to 2010–2011. The results of the estimation exercises point to technical inefficiency as being the primary reason for states being unable to achieve their potential for revenue collection. Possible reasons for this inefficiency are examined. The estimated tax effort points to large budgetary room that states potentially enjoy for the purpose of raising revenues from existing taxes. Rather disconcertingly, the article notes that the average tax effort seems to be declining over time. JEL Classification: H21, H71

State Finances after Fiscal Responsibility Legislation: Genuine Improvement or Illusion?

ABSTRACT Getting subnational governments to behave in a fiscally responsible manner is a challenge in federations. Fiscal Responsibility Legislation (FRL), which binds subnational governments to fiscal prudence, has been seen as a way of meeting this challenge. We examine this issue in the context of states in the Indian federation. We seek to investigate the extent to which states have tried to improve their fiscal health in the post-FRL period.The fiscal performance of 15 Indian states, both before and after the enactment of FRLs, is examined. Initially, we compare a measure of fiscal performance (e.g., gross fiscal deficit as percentage of each state’s output) for specified number of years after enacting the FRL with the performance over the same number of years prior to enacting the FRL. We then employ GMM estimation approach to estimate a dynamic panel data model to study the impact of the FRLs. Our analysis suggests that federal transfers have likely played a much more important role in the process of restoring states’ fiscal health as compared to their own-efforts at such improvement. This paper thus signals the need to re-look at the quantum and design of intergovernmental transfer such that states are encouraged to boost their own-revenue collection efforts.

Heterogeneity in Growth Processes: Estimating Growth Regressions using Panel Data

This paper is concerned with estimating growth regressions for a panel of 104 countries with data spread over a 24-year period. The paper employs panel data estimation techniques. An important concern is whether growth regressions estimated for a large group can be replicated for smaller sub-groups of countries. The problem of parameter heterogeneity is investigated, and the results of the paper show that there is considerable parameter heterogeneity in the growth equations across groups. The major conclusion of the paper is that growth processes appear to be widely divergent across sub-groups of countries making the task of prescribing policy far more challenging and, hence, pointing to the need to incorporate country-specific institutional and political factors while recommending policies for growth.