ISSN No: 1608-6627
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Guidelines for Article Submission

Articles for Volume 13

Capital Market Development and Stock Price Behavior in Nepal
[Yogendra Timilsina]

This paper mainly focuses in tracing out the historical events contributing to the development process of capital market in Nepal. Implications of macro-economic fundamentals such as monetary policy, fiscal policy, major financial and economic incidents and/or announcements affecting the market prices of shares are examined in brief. The objective of the study is to find out the fair market prices of equities and test whether the present behaviour of equity prices will remain stable. Coefficients of correlation between the Earning per share and corresponding Market price on the one hand and Dividend per share and corresponding Market price on the other are also computed to know which one EPS or DPS has a higher degree of relationship with the market price. Further, in order to test the degree of explanatory power of the two in influencing the market price of share, Regression Equitions of Market Price (Y) on EPS as well as on DPS are drawn. Regression results are statistically tested to derive the conclusion.

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Corporate Tax in Nepal: Effective Burden (1975-2000)
[Puspa Kandel, Ph.D.]

The paper calculates and examines the effective burden of the corporate tax in Nepal over the period 1975 2000. The paper finds that the statutory tax rate is not the only factor that affects the burden of tax. Rather, inflation and many other variables affect the burden of tax borne by the capital income. Additionally, while the effective tax rate has gone down significantly over the last 25 years, the paper finds that the effect tax rate for debt-financed project have increased.

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Money and Price Relationship in Nepal: A Revisit
[Monetary Devision, Research Department, Nepal Rastra Bank]

This paper examines the money-price relationship in Nepal. The study is a new addition to the studies made on the subject for Nepal in the sense that it estimates the money-price relationship on quarterly data basis. The study makes a short review of literature on money price relationship. Although the theory suggests that money and price have instantaneous relationship, the study shows the delayed impact of money on prices in Nepal. The study shares that the impact of money supply on price is distributed over the third quarter where the Almon lag model is applied to ascertain the sum total effects of money supply on prices over the period. It is found that 10 percent changes in M1 bring about 4.5 percent changes in prices in Nepal. M1 compared to M2 is found to have stronger relationship with prices in Nepal. The empirical results also shows that there is no structural shift in money price relationship during the study period.

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Economic Factors Influencing The Probability of Adjustment in Nepal's Exchange Rate Policy with The Indian Currency (A Binominal Probit Analysis for the Period of 1976-7998)
[Nephil Matangi Maskey, Ph.D.]

A binomial probit analysis, using the monetary model of exchange rate determination, is applied to understand economic influences on the probability for adjustment in Nepals exchange rate policy with the Indian Currency during the period of 1976 - 1998. Empirical results suggest that both relative Nepalese to Indian money and output growth does not have significant effects on probability of exchange rate change but that the relative interest rate growth does. Additionally, the movement of relative interest rate growth variable of Nepal and India is seen to signal changes in real, versus nominal as put forward in the monetary model, rates of return whose divergence increases the probability of appreciation of the Nepalese Currency vis--vis the Indian Currency.

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WTO AND 'NEW ISSUES'
[Amit Dasgupta*]

The paper argues that WTO has not been functioning in a transparent manner and that the benefits of globalisation have not reached all countries. If Seattle is any indication,WTO is in fact 'a rich man's club'. Developed countries have been adopting the strategy of prying open the markets of developing countries while at the same time, erecting barriers that prevent access to markets in their countries to the products emanating from developing countries. In this regard, the paper looks at the 'new issues' that developed countries are keen to introduce into the WTO agenda through a new round of negotiations and argues that these would act as 'disguised protection'. By themselves, each of these issues represents an area of concern and interest for the developing countries, such as, investment, competition policy, environment, electronic commerce, etc. However, their relationship with trade is complex and this needs to be comprehensively examined in the first instance. The paper argues that it would, therefore, be both premature and inappropriate to agree to the inclusion of these so-called 'new issues' into the WTO agenda and that it is important to first implement commitments entered into in earlier rounds before taking on board fresh commitments. Much, in other words, could in fact be lost by overloading the WTO agenda. The paper also looks at the issue of labour standards, better known as 'the social clause', which some developed countries are keen to place on the WTO agenda and argues that such insistence and pressure would be counterproductive to the Multilateral Trading System as it would harm both trade and labour standards. This is not the time to bring more issues into the WTO. This is the time, on the eve of the next millennium, to reflect on our responsibilities to each other and to future generations, a time to review and repair. For too long, trade liberalization has been pursued as a goal in itself, regardless of its impact." "Millennioum Round, Game Over, No Credit Left" Friends of the Earth, 1999, The World Trade Brief, Agenda Publishers, UK.

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