Permanent Income With Fish Business
Fish exports are a lucrative source of income in emerging economies. Commercial fishermen report their income and expenses on Schedule C and Schedule SE, two parts of the Form 1040. Even though commercial fishing is a form of self-employment, it is still considered a business. In this article, we will discuss how you can maximize your tax benefits. Moreover, we will discuss the long-term bi-directional causality between the fishery and GDP.
Changes in permanent income can lead to changes in the permanent income
The theory behind the change in permanent income with a fish business predicts divergence of two lines from 2000 to 2018: real GDP and consumer spending. Before the financial meltdown in 2007-08, consumer spending was significantly higher than disposable income, due in part to expectations of capital gains in the housing market. However, after the financial meltdown, consumer spending decreased, with the worst years seeing a sharp decline in consumption as many homeowners lost equity.
The theory behind the theory of the change in permanent income has been around since 1957, when Milton Friedman first proposed the idea. It holds that human beings base their consumption on their “normal” income, and try to maintain a constant standard of living. Therefore, while incomes fluctuate substantially month-to-month and year-to-year, these temporary changes have little or no effect on consumption spending.
Long-term bi-directional causality between fishery and GDP
Economic growth and the fishery sector are linked, as the latter provides jobs, export revenues, and protein to many economies. Moreover, fish exports can boost an economy’s growth. In this article, we study the relationship between fish exports and GDP in 23 SIDS, and apply the Blundell-Bond system method to estimate the causality. The results show that the increase in fish exports positively influenced economic growth, indicating a virtuous cycle between the two sectors.
Using panel data, we examined the relationship between energy consumption and GDP. Since energy consumption is a primary factor in GDP, we could conclude that fisheries are highly dependent on energy consumption. However, the results of the Granger causality test revealed that this relationship did not break apart. Moreover, the authors found that the relationship was consistent with the assumption that energy use causes economic growth, and that the fishery sector benefited from energy consumption.
Fish exports are a source of income for people in emerging economies
While the dominance of certain countries in the global fish trade has contributed to a resurgence of the industry, the fact remains that it is an important source of income for people in many developing countries. In the last decade, the import share of fish and seafood in the average household’s budget has increased from 16% to 39% of total expenditure. Consequently, a permanent source of income has emerged for many in these countries, with the sale of frozen fillets and small pelagic fish.
Future demand for fish varies by region, but projections show that the population of many emerging economies will surpass their current levels. In 2050, China is projected to account for more than half of the global growth in freshwater fish consumption. In addition, consumption in emerging economies will double in India, Brazil, and Mexico, and per capita consumption will rise in all regions. For the foreseeable future, fish exports will remain a permanent source of income for people in emerging economies.
