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on Central and Western Asia |
| By: | Kawai, Masahiro (Asian Development Bank Institute); Morgan, Peter J. (Asian Development Bank Institute) |
| Abstract: | A key lesson of the 2007–2009 global financial crisis was the importance of containing systemic financial risk and the need for a “macroprudential” approach to surveillance and regulation that can identify system-wide risks and take appropriate actions to maintain financial stability. By virtue of their overview of the economy and the financial system and their responsibility for payments and settlement systems, there is a broad consensus that central banks should play a key role in monitoring and regulating financial stability. Emerging economies face additional challenges because of their underdeveloped financial systems and vulnerability to volatile international capital flows, especially “sudden stops” or reversals of capital inflows. This paper reviews the recent literature on this topic and identifies relevant lessons for central banks, especially those in Asia’s emerging economies. |
| Keywords: | central banking; central banks; financial stability; asia; surveillance and regulation; global financial crisis |
| JEL: | E52 F31 G28 |
| Date: | 2012–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0377&r=cwa |
| By: | Baumeister, Christiane; Kilian, Lutz |
| Abstract: | Recent research has shown that recursive real-time VAR forecasts of the real price of oil tend to be more accurate than forecasts based on oil futures prices of the type commonly employed by central banks worldwide. Such monthly forecasts, however, differ in several important dimensions from the forecasts central banks require when making policy decisions. First, central banks are interested in forecasts of the quarterly real price of oil rather than forecasts of the monthly real price of oil. Second, many central banks are interested in forecasting the real price of Brent crude oil rather than any of the U.S. benchmarks. Third, central banks outside the United States are interested in forecasting the real price of oil measured in domestic consumption units rather than U.S. consumption units. Addressing each of these three concerns involves modeling choices that affect the relative accuracy of alternative forecasting methods. In addition, we investigate the costs and benefits of allowing for time variation in VAR model parameters and of constructing forecast combinations. We conclude that quarterly forecasts of the real price of oil from suitably designed VAR models estimated on monthly data generate the most accurate forecasts among a wide range of methods including forecasts based on oil futures prices, nochange forecasts and forecasts based on models estimated on quarterly data. |
| Keywords: | Central banks; Forecasting methods; Oil futures prices; Out-of-sample forecast; Quarterly horizon; Real price of oil; Real-time data; VAR |
| JEL: | C53 E32 Q43 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9118&r=cwa |
| By: | Park, Yung Chul (Asian Development Bank Institute); Takagi, Shinji (Asian Development Bank Institute) |
| Abstract: | The paper uses the emerging Association of Southeast Asian Nations (ASEAN) Economic Community as a motivation to explore the issue of capital flow management in an economic community. Although there is an increasingly shared view that capital flow management measures should be part of the routine policy toolkit of emerging market economies, the logic of an economic community appears incompatible with extensive controls on capital flows. Substantial, if not complete, capital account liberalization must therefore take place across ASEAN. |
| Keywords: | managing capital flows; economic community: asean; capital account liberalization; emerging market economies |
| JEL: | F33 F36 O53 |
| Date: | 2012–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0378&r=cwa |
| By: | Polterovich, Victor |
| Abstract: | The costs and benefits of privatization are considered, focusing on the current Russian conditions. The experience of many countries, as well as econometric and theoretical studies, a review of which is given in the paper, show that relative efficiency of privatized enterprises in comparison with the state depends on the stage of economic development and quality of institutions. State-owned enterprises may have a number of special functions which are particularly important for developing or resource abundant economies. In particular, they can play the role of agents of modernization to initiate large-scale projects as public-private partnerships. It is shown that the decision on privatization should be considered in the context of a more general problem of finding a rational ownership structure in an economy. Factors affecting the comparative efficiency of public and private enterprises are analyzed. A number of hypotheses are proposed about the shape of dependence of the rational ownership structure on the level of development, the quality of government, and the quality of markets. Recommendations on improvement of the public sector management are formulated. |
| Keywords: | Sappington–Stiglitz theorem; transformation cost; NP- cycles; stationary ownership structure; ownership diversification; industrial policy |
| JEL: | E02 O1 P5 H11 D02 H82 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41069&r=cwa |
| By: | sivakumar, marimuthu |
| Abstract: | After the introduction of Liberalization, Privatization and Globalization by the name of economic reforms Indian economy has been integrated with the global economy. This integration enabled India to move on high growth path but that integration exposed Indian economy to adverse impacts from the world economy. India’s share in the world trade is less than 2 per cent. India’s vision in the world trade is not only earning foreign exchange but also to induce the economic growth and development. To achieve this vision India is trying to increase its exports. But the 2008 global economic crisis has hindered this effort. Since the globalization, it is explicit that the shocks in the world economy may affect the Indian economy also. There is a need to assess those effects on our economy is the need of the hour. |
| Keywords: | Global Economic Crisis; India; Exports; Imports |
| JEL: | E0 F0 A1 F14 |
| Date: | 2012–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40950&r=cwa |
| By: | Majumder, Rajarshi |
| Abstract: | Developing countries attach enormous importance to physical infrastructure for poverty reduction. We contend that this association is different across types of infrastructure and regions. The present paper explores the multidimensional association between infrastructure and poverty in India in a regional framework. Infrastructural availability improves average living standards and lowers the incidence of poverty but the relation between infrastructural situation and inequality indicates higher inequality in regions with better infrastructure, especially for rural areas. Various sub-components of infrastructure have different impacts on poverty reduction and policy formulations should focus on such differentiated roles while drawing up programmes. |
| Keywords: | Poverty; Infrastructure; Inequality; India; Regional Study; Asia; |
| JEL: | H54 D63 I32 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40941&r=cwa |
| By: | Kohei Daido (School of Economics, Kwansei Gakuin University); Ken Tabata (School of Economics, Kwansei Gakuin University) |
| Abstract: | We develop a political economy model of growth to examine economic development led by the interactions between an economic decision concerning a firm’s production technology (CRS vs IRS technology) and a political decision concerning public infrastructures. We show that multiple equilibrium growth paths occur due to differences in expectations regarding the quality of public infrastructures. These multiple paths illustrate why economies with poor initial conditions can catch up to and, furthermore, overtake economies with better initial conditions. Our result could explain the experiences of some East Asian countries where co-evolutions of public infrastructures and industrial transformations spurred economic development. |
| Keywords: | Public Infrastructure, Political Economy, Production Organization, Overlapping Generations Model |
| JEL: | H5 O1 O4 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:93&r=cwa |
| By: | Shutes, Lindsay; Ganesh-Kumar, Anand; Meijerink, Gerdien W. |
| Abstract: | The general perception is that high food prices in India have increased poverty and that trade reforms will further worsen poverty. We compare Foster-Greer-Thorbecke poverty measures for various scenarios of grain price swings with and without trade reform, using price and income effects for 32 representative households computed from a global economic model and a model of India's economy. The results suggest that a rise in the global rice price actually provides strong opportunities for poverty alleviation. Global trade reform reinforces this effect for all rural population groups. An increase in urban poverty partly offsets the overall poverty reduction. While India's trade measures effectively isolate sectors from swings in global markets, they also cause India to miss opportunities to benefit from buoyant global prices. |
| Keywords: | Poverty; food prices; trade; CGE analysis; India; household analysis |
| JEL: | C68 O24 Q11 Q18 I32 |
| Date: | 2012–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40982&r=cwa |
| By: | Suparna Chakraborty; Keisuke Otsu |
| Abstract: | What are the economic mechanisms that account for sudden growth spurts? Are these mechanisms similar across episodes? Focusing on the economic resurgence of the BRICs over the last decade, we employ the Business Cycle Accounting methodology developed by Chari, Kehoe and McGrattan (2007) to address these questions. Our results highlight that while efficiency wedges do contribute in a large part to growth, especially in Brazil and Russia, there is an increasing importance of investment wedge especially in the late 2000s, noted in China and India. The results are typically related to the stages of development with Brazil and Russia coming off a crisis to grow in the 2000s, while India and China were already on a stable growth path. Our conclusions are robust to alternative methodological extensions where we allow shocks to the trend component of efficiency as opposed to traditional shocks to the cyclical component, as well as to standard modifications where we allow for investment adjustment costs. Relating improvements in wedges to institutional and financial reforms, we find that financial development and improvements in effective governance in BRICs are consistent with improvements in investment and efficiency wedges that led to growth. |
| Keywords: | BRIC; business cycle accounting; efficiency; market frictions; trend shocks; investment adjustment costs |
| JEL: | E32 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:1212&r=cwa |
| By: | Mazhar MUGHAL; Amar Iqbal ANWAR |
| Abstract: | Remittances, Inequality and Poverty in Pakistan: Macro and Microeconomic Evidence |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:tac:wpaper:2012-2013_2&r=cwa |
| By: | Franz Hubert (Humboldt–Universitat zu Berlin); Onur Cobanli (Humboldt–Universitat zu Berlin) |
| Abstract: | We use cooperative game theory to analyze the impact of three controversial pipeline projects on the power structure in the Eurasian trade of natural gas. Two of them, Nord Stream and South Stream, allow Russian gas to bypass transit countries, Ukraine and Belarus. Nord Stream’s strategic value turns out to be huge, justifying the high investment cost for Germany and Russia. The additional leverage obtained through South Stream, in contrast, appears small. The third project, Nabucco, aims at diversifying Europe’s gas imports by accessing producers in Middle East and Central Asia. It curtails Russia’s power, but the benefits accrue mainly to Turkey, while the gains for the EU are negligible. |
| Keywords: | Bargaining Power, Network, Trade links, Natural Gas |
| JEL: | L5 L9 O22 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1224&r=cwa |
| By: | Muhammad, Shahbaz; Lean, Hooi Hooi; Abdul, Farooq |
| Abstract: | Natural gas is a dominant fuel in Pakistan. It offers the cheapest and a cleaner alternative source of energy. This paper examines the relationship of natural gas consumption and economic growth in Pakistan. We include capital, labor and exports in the model with multivariate framework. The ARDL bounds testing approach to cointegration and innovative accounting approach are employed to investigate the dynamic causality relationships among the variables. We find the existence of long-run relationship among the variables. Natural gas consumption, real capital, labor and real exports are positively affecting the economic growth in Pakistan. Furthermore, we support the natural gas consumption-led-growth hypothesis and suggest that the natural gas conservation policies may retard the rate of economic growth. |
| Keywords: | Gas Consumption; Economic Growth |
| JEL: | Q4 |
| Date: | 2012–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40959&r=cwa |
| By: | Andreas Fuchs; Axel Dreher; Peter Nunnenkamp |
| Abstract: | What determines the foreign aid effort of donor countries? We review the existing literature on donors’ aid budgets and examine which of the suggested variables robustly determine aid effort, measured as Official Development Assistance (ODA) as a share of gross national income. More specifically, we empirically test 16 hypotheses using panel econometric methods for member countries of the Development Assistance Committee (DAC) in the 1976-2008 period. To test for the robustness of our results, we extend our dataset to 48 possible determinants of aid budgets and apply an Extreme Bounds Analysis (EBA). In our fixed effects regressions, we find that aid inertia, the donor country’s GDP per capita, the existence of an independent aid agency, and colonial history have a robust and quantitatively relevant impact on countries’ aid efforts. Among the potential substitutes for aid, remittances exert a robust effect. Excluding year fixed effects, political globalization, Russian military capacity, peer effects, aid effectiveness, and government debt also play a significant role |
| Keywords: | Foreign aid, Official Development Assistance, Aid budget, Extreme Bounds Analysis |
| JEL: | F35 H81 H87 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1789&r=cwa |