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The Design of Instruments For Government Finance in An Islamic Economy

Author

Listed:
  • Haque, Nadeem ul
  • Mirakhor, Abbas

Abstract

This paper attempts to present a viable approach for the design of an instrument of government finance (and monetary management) in an Islamic economy where conventional transactions based on an ex-ante promise of a risk-free rate of return are forbidden. Resources to finance government infrastructural and development projects can be mobilized through the issuance of a national participation paper (NPP) and this instrument can also serve as an instrument of monetary management. Various conceptional issues underpinning the introduction of such an instrument and methods of calculating a corresponding rate of return are discussed In principle, this approach has been accepted in Iran.

Suggested Citation

  • Haque, Nadeem ul & Mirakhor, Abbas, 1999. "The Design of Instruments For Government Finance in An Islamic Economy," MPRA Paper 56028, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:56028
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    File URL: https://mpra.ub.uni-muenchen.de/56028/1/MPRA_paper_56028.pdf
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    References listed on IDEAS

    as
    1. Mr. Abbas Mirakhor & Mr. Mohsin S. Khan, 1991. "Islamic Banking," IMF Working Papers 1991/088, International Monetary Fund.
    2. Mirakhor, Abbas, 1996. "Cost Of Capital And Investment In A Non-Interest Economy," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 4, pages 35-47.
    3. Choudhry, Nurun N. & Mirakhor, Abbas, 1997. "Indirect Instruments Of Monetary Control In An Islamic Financial System," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 4, pages 28-65.
    4. Mirakhor, Abbas & Zaidi, Iqbal, 1988. "Stabilization and Growth in an Open Islamic Economy," MPRA Paper 56003, University Library of Munich, Germany.
    5. Mirakhor, Abbas, 1993. "Equilibrium in a Non-Interest Open Economy," MPRA Paper 56011, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Shaukat, Mughees & Mirakhor, Abbas & Krichene, Noureddine, 2013. "Fragility Of Interest-Based Debt Financing: Is It Worth Sustaining A Regime Uncertainty?," MPRA Paper 56362, University Library of Munich, Germany.
    2. Shaikh, Salman, 2012. "Interest Based Financial Intermediation: Analysis and Solutions," MPRA Paper 42500, University Library of Munich, Germany.
    3. Mirakhor, Abbas, 2010. "Whither Islamic Finance? Risk Sharing in An Age of Crises," MPRA Paper 56341, University Library of Munich, Germany.
    4. Mirakhor, Abbas, 2007. "Islamic Finance and Globalization: A Convergence?," MPRA Paper 56026, University Library of Munich, Germany.
    5. Shaukat, Mughees & Othman Alhabshi, Datuk, 2015. "Instability of Interest Bearing Debt Finance and the Islamic Finance Alternative By Mughees Shaukat & Datuk Othman Alhabshi," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 23, pages 29-84.
    6. Giorgio Gomel & Angelo Cicogna & Domenico De Falco & Marco Valerio Della Penna & Lorenzo Di Bona De Sarzana & Angela Di Maria & Patrizia Di Natale & Alessandra Freni & Sergio Masciantonio & Giacomo Od, 2010. "Islamic finance and conventional financial systems. Market trends, supervisory perspectives and implications for central banking activity," Questioni di Economia e Finanza (Occasional Papers) 73, Bank of Italy, Economic Research and International Relations Area.
    7. Shaikh, Salman Ahmed, 2010. "Sources of Public Finance in an Islamic Economy," MPRA Paper 22998, University Library of Munich, Germany.
    8. Siddiqi, Mohammad Nejatullah, 2006. "Islamic Banking And Finance In Theory And Practice: A Survey Of State Of The Art," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 13, pages 2-48.
    9. Ms. Faezeh Raei & Mr. Selim Cakir, 2007. "Sukuk vs. Eurobonds: Is There a Difference in Value-at-Risk?," IMF Working Papers 2007/237, International Monetary Fund.
    10. Diaw, Abdou & Bacha, Obiyathulla Ismath & Lahsasna, Ahcene, 2011. "Public Sector Funding and Debt Management: A Case for GDP-Linked Sukuk," MPRA Paper 46008, University Library of Munich, Germany, revised 2011.
    11. Mr. Juan Sole, 2007. "Introducing Islamic Banks into Conventional Banking Systems," IMF Working Papers 2007/175, International Monetary Fund.
    12. Shaikh, Salman Ahmed, 2010. "Proposal for a New Economic Framework Based On Islamic Principles," MPRA Paper 23000, University Library of Munich, Germany.

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    More about this item

    Keywords

    Government finance; monetary management; Islamic economy;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance

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