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International Monetary Fund. Asia and Pacific Dept

risks of a backlash against high energy prices. Another way to increase price certainty would be to link the Korean ETS with other trading systems (e.g., in the EU), but then prices would be largely determined outside of Korea—it may be preferable to retain discretion over setting the bands for domestic emissions prices (which can be adjusted according to national circumstances and progress on pricing elsewhere). Figure 6. History of Prices in ETSs Source: WBG (2020). Table 1. Selected Carbon Pricing Schemes, 2020 Country/Region Year

Oscar Melhado

R t = τ t T from area tax Proposition 1: Assuming a static model with price certainty, profit and area taxes, being both lump sum taxes, dominate over export taxes, which are distortionary and yield less social welfare than other policies. Area and profit taxes are lump sum taxes that do not distort input demand decisions. Introducing price uncertainty With price uncertainty the willingness of growers and the government to take risks changes results. We first analyze the impact of price uncertainty

Mr. Oscar E Melhado Orellana
This paper reviews forestry reform in the Congo basin, focusing on Gabon. It argues that the key challenge for the Congo basin countries is to manage their forests in a sustainable manner. It presents the current situation of forestry taxation and forestry reform in Gabon. The paper analyzes optimal taxation in the forestry sector using a static model. The model works from the proposition that tax policy should be used exclusively for revenue purposes and resource preservation should be achieved mainly through legislation and enforcement. It argues that when prices are uncertain the best practice is to tax only profits.
Andreas A. Jobst, Juan Solé, and Ms. Laura E. Kodres

sale to be considered valid (sahih) under Islamic contract law distill a number of more specific conditions, which pertain to shari’ah -compliant derivatives: (i) price certainty and balance between borrowers (“protection buyers”) and lenders (“protection sellers”) without manipulation of risk . While the fair value of an asset (and the return from investment) are inherently uncertain, the shari’ah prohibition of maisir stipulates that transactions are tantamount to gambling or speculation if they (i) generate returns from money as a store of value

Mr. Juan Sole and Andreas Jobst
Derivatives are few and far between in countries where the compatibility of financial transactions with Islamic law requires the development of shari'ah-compliant structures. Islamic finance is governed by the shari'ah, which bans speculation and gambling, and stipulates that income must be derived as profits from the shared generation of goods and services between counterparties rather than interest or a guaranteed return. The paper explains the fundamental legal principles underpinning Islamic finance with a view towards developing a cohesive theory of derivatives subject to shari'ahprinciples. After critically reviewing accepted contracts and the scholastic debate surrounding existing financial innovation in this area, the paper offers an axiomatic perspective on a principle-based permissibility of derivatives under Islamic law.
Mr. Ewe-Ghee Lim and Mr. Subramanian S Sriram
The paper examines the experiences of countries in defining monetary aggregates, particularly those countries that have undertaken substantial redefinitions. It finds that both the functional and empirical approaches are important; and that monetary definitions tend to be dynamic in nature, becoming prone to revisions whenever the current definition no longer satisfies both criteria. While countries may adhere to both approaches, monetary definitions may still vary across countries, reflecting specific institutional settings and the requirements of the empirical approach. This finding supports the approach in the IMF's Monetary and Financial Statistics Manual of not prescribing specific definitions of broad money.
Mr. Ewe-Ghee Lim and Subramanian S. Sriram

/units (MMFs), money market paper, and repurchase agreements, and MFI debt securities issued with an original maturity of two years. These were all included because of their liquidity and relative price certainty, which makes them close substitutes for deposits. The inclusion of these instruments tend to make M3 a more stable aggregate. 23 On the empirical side, the ECB met its objective of identifying a monetary aggregate that is a stable and reliable indicator of inflation over the medium term. This was because M3, as defined, was found to have a relatively stable

Mr. Andreas A. Jobst, Juan Solé, and Martin Čihak

specific contractual conditions, which also pertain to shari’ah -compliant financial transactions: Price certainty without manipulation of risk . While the fair value of an asset (and the return from investment) is inherently uncertain, Islamic finance principles prohibit transactions with payment obligations that are incalculable ex ante and divorced from (required) asset performance (and/or the rendering of a service). These transactions would be considered gambling ( maisir or ) if they (i) generate returns from money as a store of value (rather than a medium

Ms. Era Dabla-Norris, Mr. James Daniel, Mr. Masahiro Nozaki, Cristian Alonso, Vybhavi Balasundharam, Mr. Matthieu Bellon, Chuling Chen, David Corvino, and Mr. Joey Kilpatrick

price certainty without explicit emission reduction targets, while an ETS provides certainty in emission target but allows the price to fuctuate with the market. In addition, a carbon tax may be easier to implement through existing tax systems (for example, as an extension of fuel taxes), but an ETS would require new infrastructure to allocate and auction emission allowances. Figure 27. CO 2 Emission by Energy Source and Sector, 2017 Source: IMF staff calculations. Chapter 3 Compensating Households, Industries, and Firms for Higher Carbon Prices