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In real estate finance, it is widely understood that the mortgage rates on the ARM, FRM and hybrid loans are normally different and reflecting different exposure to interest rate risk. Specifically, the buyer bears the entire interest rate risk in ARM loans, none in FRM loans, and partially in hybrid loans. This notion predicts an ARM rate lower than the FRM rate with the teaser rate on the hybrid loans inbetween. However, this is fallacious. We analyze this fallacy and make predictions with supporting empirical evidence.

JEL classification: G00, G12, G21

This short paper using simulation techniques studies the effects of increasing the frequency of observation and the data span on the testing the ARCH effects on a time series. According to our simulation results, the power of the Lagrange Multiplier test for detecting ARCH effects depends strongly on the level of temporal aggregation and the number of the available observations. 

Keywords: Monte Carlo; Time Aggregation Span; Power; Arch(p) specifications.

JEL classification codes: C15; C22

As the climate problem is worsening, lowcarbon cities are becoming more popular worldwide. The low carbon city development in China started later than developed countries and thus there is room and need for international collaboration. Shenzhen International Low Carbon City is a flagship project of SinoEU Partnership on Low Carbon and Sustainable Urban Development, which aims at fostering the international cooperation in the field of low carbon city development. After reviewing relevant theories and analyzing the cases of low carbon cities in China and abroad, this research designs an international cooperation model for Shenzhen International Low Carbon City, which is suitable for its own.

Keywords: Shenzhen International Low Carbon City; International Cooperation Model; Low carbon city development;

Based on an extended MundellFleming model, this paper finds that both fiscal expansion and monetary expansion raise output in Malaysia and that a lower real interest rate, a higher stock value, a lower real oil price and a lower expected inflation rate increase output. Hence, a managed floating system with no predetermined path of the exchange rate adopted by Malaysia may lead to better outcomes than the predictions of the MundellFleming model that fiscal expansion does not raise output under a floating exchange rate but increases output under a fixed exchange rate whereas monetary expansion increases output under a floating exchange rate but does not affect output under a fixed exchange rate (Mankiw, 2019). 

Keywords: MundellFleming model, Fiscal policy, Monetary policy, Exchange rates, Stock prices.

JEL Codes: E52, E62, F41

We review the tax reform in developing countries in general and in a representative developing and transition economy of South Asia, Nepal, in particular from four different perspectives: efficiency reforms, equity reforms, institutional reforms, and promotional reforms and see their impacts on responsiveness of major taxes. Using the available macroeconomic data for the period 19902017, the period of major tax reform, we found that the reforms were not adequate in improving the responsiveness of the existing taxes – especially among indirect taxes. Comparing the results with the previous studies that also followed similar method of estimation, responsiveness is all fluctuating for the period 19742017. Moreover, elasticities for all major tax types except that of income tax are all declining after 1995. This signifies the necessity of more effective reforms for the days ahead.

Key words: Tax revenue; efficiency; equity; responsiveness

JEL Classifications: H20, H21, H24, H71