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on South East Asia |
| By: | Agnes Benassy-Quere; Maylis Coupet; Thierry Mayer |
| Abstract: | In this paper, we contribute to the literature on the determinants of FDI in developing countries and re-evaluate the role of the quality of institutions on FDI. We use a newly available database, with unprecedented detail on institutions of a set of 52 countries, and compare the results with matched variables from more familiar datasets. The paper controls for the correlation between institutions and GDP per capita of the host country, and also accounts for potential endogeneity of institutions. Finally, we evaluate whether proximity of institutions between the host and the origin country raises bilateral FDI. |
| Keywords: | FDI; gravity model; institutions; developing countries; relocation |
| JEL: | F23 R3 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2005-05&r=sea |
| By: | Matías Braun; Claudio Raddatz |
| Abstract: | A well-developed financial system enhances competition in the industrial sector by allowing easier entry. The impact varies across industries, however. For some, small changes in financial development quickly induce entry and dissipate incumbents’ rents, generating strong incentives to oppose improvement of the financial system. In other sectors incumbents may even benefit from increased availability of external funds. The relative strength of promoters and opponents determines the equilibrium level of financial system. This may be perturbed by the effect of trade liberalization on the strength of each group. Using a sample of 41 trade liberalizers, we conduct an event study and show that the change in the strength of promoters vis-à-vis opponents is a very good predictor of subsequent financial development. The result is not driven by changes in demand for external funds or by the success of the trade policy. The relationship is mediated by policy reforms, the kind that induce competition in the financial sector, in particular. Real effects follow not so much from capital deepening but mainly through improved allocation. The effect is stronger in countries with high levels of governance, suggesting that incumbents resort to this costly but more subtle way of restricting entry where it is difficult to obtain more blatant forms of anti-competitive measures from politicians. |
| Keywords: | International trade ; Financial modernization |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:04-3&r=sea |
| By: | Christina Wang; Susanto Basu; John G. Fernald |
| Abstract: | This paper addresses the proper measurement of financial service output that is not priced explicitly. It shows how to impute nominal service output from financial intermediaries’ interest income and how to construct price indices for those financial services. We present an optimizing model with financial intermediaries that provide financial services to resolve asymmetric information between borrowers and lenders. We embed these intermediaries in a dynamic, stochastic, general-equilibrium model where assets are priced competitively according to their systematic risk, as in the standard consumption capital-asset-pricing model. In this environment, we show that it is critical to take risk into account in order to measure financial output accurately. We also show that even using a risk-adjusted reference rate does not solve all the problems associated with measuring nominal financial service output. Our model allows us to address important outstanding questions in output and productivity measurement for financial firms, such as: (1) What are the correct “reference rates” to use in calculating bank output? In particular, should they take account of risk? (2) If reference rates need to be risk-adjusted, does it mean that they must be ex ante rates of return? (3) What is the right price deflator for the output of financial firms? Is it just the general price index? (4) When—if ever—should we count capital gains of financial firms as part of financial service output? |
| Keywords: | Financial services industry ; Financial markets |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:04-7&r=sea |
| By: | Amit Basu; Thomas F. Siems |
| Abstract: | New information technologies and e-business solutions have transformed supply chain operations from mass production to mass customization. This paper assesses the impact of these innovations on economic productivity, focusing on the macroeconomic benefits as supply chain operations have evolved from simple production and planning systems to today's real-time performance-management information systems using advanced e-business technologies. While many factors can influence macroeconomic variables, the impact of IT-enabled supply chains should not be overlooked. We find evidence that the impact of e-business technologies on supply chain operations have resulted in a reduced "bullwhip effect," lower inventory, reduced logistics costs, and streamlined procurement processes. These improvements, in turn, have likely helped to lower inflation, reduce economic volatility, strengthen productivity growth, and improve standards of living. |
| Keywords: | Information technology ; Macroeconomics ; Productivity |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:04-04&r=sea |
| By: | Evan F. Koenig |
| Abstract: | In economies with sticky-information wage setting, policymakers legitimately give attention to output stabilization as well as price-level or inflation stabilization. Consistent with Kydland and Prescott (1990), trend deviations in prices are predicted to be negatively correlated with trend deviations in output. A variant of the Taylor rule is optimal if household consumption decisions are forward-looking. Interestingly, it is essential that policy not be made contingent on the most up-to-date estimates of potential output, potential-output growth, or the natural real interest rate. New results on the “persistence problem” and a new rationalization for McCallum’s P-bar inflation equation are also presented. |
| Keywords: | Productivity |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:04-05&r=sea |
| By: | Michele Cavallo |
| Abstract: | This paper distinguishes between two components of government consumption, expenditure on final goods and expenditure on hours, and compares the effects of changes in these two on the current account. I find that changes in government expenditure on hours do not directly affect the current account and that their impact is considerably smaller than the impact produced by changes in government expenditure on final goods. These findings indicate that considering government consumption as entirely expenditure on final goods leads to overestimating its role in accounting for movements in the current account balance. |
| Keywords: | Expenditures, Public ; Trade ; Gross domestic product |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfap:2005-03&r=sea |
| By: | Reuven Glick; Xueyan Guo; Michael Hutchison |
| Abstract: | Are countries with unregulated capital flows more vulnerable to currency crises? Efforts to answer this question properly must control for “self selection” bias since countries with liberalized capital accounts may also have more sound economic policies and institutions that make them less likely to experience crises. We employ a matching and propensity score methodology to address this issue in a panel analysis of developing countries. Our results suggest that, after controlling for sample selection bias, countries with liberalized capital accounts experience a lower likelihood of currency crises. That is, when two countries have the same likelihood of allowing free movement of capital (based on historical evidence and a very similar set of economic and political characteristics)—and one country imposes controls and the other does not-- the country without controls has a lower likelihood of experiencing a currency crisis. This result is at odds with the conventional wisdom and suggests that the benefits of capital market liberalization for external stability are substantial. |
| Keywords: | Financial crises ; Capital |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfpb:2004-15&r=sea |
| By: | John Krainer; Mark Spiegel; Nobuyoshi Yamori |
| Abstract: | We develop an overlapping generations model of the real estate market in which search frictions and a debt overhang combine to generate price persistence and illiquidity. Illiquidity stems from heterogeneity in agent real estate valuations. The variance of agent valuations determines how quickly prices adjust following a shock to fundamentals. We examine the predictions of the model by studying price depreciation in Japanese land values subsequent to the 1990 stock market crash. Commercial land values fell much more quickly than residential land values. As we would posit that the variance of buyer valuations would be greater for residential real estate than for commercial real estate, this model matches the Japanese experience. |
| Keywords: | Real property ; Prices ; Japan |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfpb:2004-16&r=sea |
| By: | Robert Dekle; Kenneth Kletzer |
| Abstract: | An endogenous growth model with financial intermediation is used to show how public deposit insurance and weak prudential regulation can lead to banking crises and permanent declines in economic growth. The impact of regulatory forbearance on investment, saving and asset price dynamics under perfect foresight are derived in the model. The assumptions of the theoretical model are based on essential features of the Japanese financial system and its regulation. The model demonstrates how banking and growth crises can evolve under perfect foresight. The dynamics for economic aggregates and asset prices predicted by the model are shown to be generally consistent with the experience of the Japanese economy and financial system through the 1990s. We also test our maintained hypothesis of rational expectations using asset price data for Japan over the 1980s and 1990s. An implication of our analysis is that delaying the resolution of banking crises adversely affects future economic growth. |
| Keywords: | Financial crises - Japan ; Deposit insurance ; Bank supervision ; Economic development |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfpb:2004-26&r=sea |
| By: | Mark Spiegel; Nobuyoshi Yamori |
| Abstract: | We examine the determinants of Japanese regional bank decisions concerning pricing unrealized losses or gains to market. We also examine the impact of these decisions on the intensity of depositor discipline, in the form of the sensitivity of deposit growth to bank financial conditions. To obtain consistent estimates of depositor discipline, we first model and estimate the bank pricing-to-market decision and then estimate the intensity of depositor discipline after conditioning for that decision. We find that banks were less likely to price to market the larger were their unrealized securities losses. We also find statistically significant evidence of depositor discipline among banks that elected to price their assets to market. Our results indicate that depositor discipline was more intense for the subset of banks that priced-to-market, suggesting that increased transparency may enhance depositor discipline. |
| Keywords: | Banks and banking - Japan ; Accounting |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfpb:2004-27&r=sea |
| By: | Fernando A. Broner; R. Gaston Gelos; Carmen Reinhart |
| Abstract: | One plausible mechanism through which financial market shocks may propagate across countries is through the effect of past gains and losses on investors’ risk aversion. The paper first presents a simple model examining how heterogeneous changes in investors’ risk aversion affects portfolio decisions and stock prices. Second, the paper shows empirically that, when funds’ returns are below average, they adjust their holdings toward the average (or benchmark) portfolio. In other words, they tend to sell the assets of countries in which they were “overweight”, increasing their exposure to countries in which they were “underweight.” Based on this insight, the paper discusses a matrix of financial interdependence reflecting the extent to which countries share overexposed funds. Comparing this measure to indices of trade or bank linkages indicates that our index can improve predictions about which countries are likely to be affected by contagion from crisis centers. |
| Keywords: | Risk ; Investments |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfpb:2004-28&r=sea |
| By: | M. Ayhan Kose; Eswar S. Prasad; Marco E. Terrones |
| Abstract: | The influential work of Ramey and Ramey (1995) highlighted an empirical relationship that has now come to be regarded as conventional wisdom—that output volatility and growth are negatively correlated. We reexamine this relationship in the context of globalization—a term typically used to describe the phenomenon of growing international trade and financial integration that has intensified since the mid-1980s. We employ various econometric techniques and a comprehensive new dataset to analyze the link between growth and volatility. Our findings suggest that, while the basic negative association between growth and volatility has been preserved during the 1990s, both trade and financial integration attenuate this negative relationship. Specifically, countries that are more open to trade appear to face a less severe tradeoff between growth and volatility. We find a similar, although slightly less robust, result for the interaction of financial integration with volatility. We also investigate some of the channels, including investment and credit, through which different aspects of global integration could affect the growth-volatility relationship. |
| Keywords: | Trade ; Economic development ; Econometric models |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfpb:2004-29&r=sea |
| By: | Roberto Chang; Andres Velasco |
| Abstract: | Exchange rate policies depend on portfolio choices, and portfolio choices depend on anticipated exchange rate policies. This opens the door to multiple equilibria in policy regimes. We construct a model in which agents optimally choose to denominate their assets and liabilities either in domestic or in foreign currency. The monetary authority optimally chooses to float or to fix the currency, after portfolios have been chosen. We identify conditions under which both fixing and floating are equilibrium policies: if agents expect fixing and arrange their portfolios accordingly, the monetary authority validates that expectation; the same happens if agents initially expect floating. We also show that a flexible exchange rate Pareto-dominates a fixed one. It follows that social welfare would rise if the monetary authority could precommit to floating. |
| Keywords: | Monetary policy ; Foreign exchange |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfpb:2004-30&r=sea |
| By: | David Cook; Michael B. Devereux |
| Abstract: | This paper provides a quantitative investigation of the East Asian crisis of 1997-99. The two essential features of the crisis that we focus on are a) the crisis was a regional phenomenon; the depth and severity of the crisis was exacerbated by a large decline in regional demand, and b) the practice of setting export goods prices in dollars (which we document empirically) led to a powerful internal propagation effect of the crisis within the region, contributing greatly to the decline in regional trade flows. We construct a model with these two features, and show that it can do a reasonable job of accounting for the response of the main macroeconomic aggregates in Korea, Malaysia, and Thailand during the crisis. |
| Keywords: | Dollar, American ; Financial crises - Asia ; Prices |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfpb:2004-35&r=sea |
| By: | Mark Carey |
| Abstract: | This introductory note summarizes and draws together the work reported in eight research papers written by staff economists of the Board's Division of International Finance as part of a project on global financial integration. The eight papers are also International Discussion Finance Discussion Papers (IFDPs), the numbers of which are specified on the table of contents that appears herein. When viewing this introduction online, the paper titles appearing on the table-of-contents page are web links that may be used to navigate directly to each paper's on-line file. |
| Keywords: | International finance ; International economic integration |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:821&r=sea |
| By: | John W. Schindler; Dustin H. Beckett |
| Abstract: | Hong Kong plays a prominent role as a re-exporter of a large percentage of trade bound for or coming from China. Current reporting practices in China and its trading partners do not fully reflect this role and therefore provide a misleading picture of the origin or ultimate destination of Chinese exports and imports. We adjust bilateral trade data for both China and its trading partners to correct for this problem. We also correct for differences due to markups in Hong Kong and different standards for reporting trade (c.i.f. versus f.o.b.). For 2003, we estimate that China's overall trade surplus was between $53 billion and $126 billion, larger than that reported in official Chinese data, but smaller than that reported by China's trading partners. We also provide evidence that, in general, the actual origin of a good that is transshipped through Hong Kong is correctly reported by the importing country, but the final destination of such goods is not correctly reported by the exporting country. |
| Keywords: | Balance of trade - China |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:831&r=sea |
| By: | Chad Bown; Meredith Crowley |
| Abstract: | This paper examines how US special import restrictions affect the growth of China's exports to countries other than the US. We estimate an empirical model of trade deflection and trade depression of roughly 5100 commodities exported by China to 37 countries between 1992 and 2001. Our estimation yields evidence that US trade restrictions deflect Chinese exports to third, non-US markets. Imposition of a US antidumping duty against China leads the growth rate of targeted commodities to increase approximately 25 percentage points. Our results on the deflection of Chinese exports vary across commodity, with the strongest evidence of trade deflection appearing in the steel, pharmaceuticals and manufactured goods industries. |
| Keywords: | Exports ; Trade |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-04-28&r=sea |
| By: | Bernardino Adão; Isabel Correia; Pedro Teles |
| Abstract: | We consider a standard cash in advance monetary model with flexible prices or prices set in advance and show that there are interest rate or money supply rules such that equilibria are unique. The existence of these single instrument rules depends on whether the economy has an infinite horizon or an arbitrarily large but finite horizon. |
| Keywords: | Monetary policy ; Prices |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-04-30&r=sea |
| By: | Oviedo, P. Marcelo |
| Abstract: | The consensus about the ability of the standard open-economy neoclassical growth model to account for interest-rate driven business cycles has changed over time: whereas early research concluded that business cycles are neutral to interest-rate shocks, more recent investigations suggest that these shocks can explain a large extent of the business cycles of a small open economy when firms borrow to pay for their labor cost before cashing their sales. The first goal of this paper is to show that the recently found effectiveness of interest-rate shocks to cause business cycles rests more on the statistical properties of the shocks than on the working-capital constraint; in particular, recent results are only valid when the level and volatility of the interest rate are high and when the interest rate is negatively correlated with total factor productivity. The paper also shows that interest-rate shocks cannot be the sole driving force of business cycles even when the canonical model is augmented to include a working-capital constraint. The second goal of the paper is to quantitatively explore the dynamic properties of the neoclassical growth model extended to include financial intermediation. It is shown that the extended model with external effects in financial intermediation can match the negative correlation between GDP and a domestic borrowing-lending spread in emerging countries if the economy is subject to productivity shocks but not when the model is subject to both productivity and interest-rate shocks. |
| JEL: | F3 |
| Date: | 2005–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12360&r=sea |
| By: | Barry Eichengreen; Hui Tong |
| Abstract: | We analyze how China's emergence as a destination for foreign direct investment is affecting the ability of other countries to attract FDI. We do so using an approach that accounts for the endogeneity of China's FDI. The impact turns out to vary by region. China's rapid growth and attractions as a destination for FDI also encourages FDI flows to other Asian countries, as if producers in these economies belong to a common supply chain. There is also evidence of FDI diversion from OECD recipients. We interpret this in terms of FDI motivated by the desire to produce close to the market where the final sale takes place. For whatever reason -- limits on their ability to raise finance for investment in multiple markets or limits on their ability to control operations in diverse locations -- firms more inclined to invest in China for this reason are corresponding less inclined to invest in the OECD. A detailed analysis of Japanese foreign direct investment outflows disaggregated by sector further supports these conclusions. |
| JEL: | F0 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11335&r=sea |
| By: | Jianping Mei; Jose Scheinkman; Wei Xiong |
| Abstract: | The market dynamics of technology stocks in the late nineties has stimulated a growing body of theories that analyze the joint effects of short-sales constraints and heterogeneous beliefs on stock prices and trading volume. This paper examines implications of these theories using a unique data sample from China, a market with stringent short-sales constraints and perfectly segmented dual-class shares. The identical rights of the dual-class shares allow us to control for stock fundamentals. We find that trading caused by investors' speculative motive can help explain a significant fraction of the price difference between the dual-class shares. |
| JEL: | G0 G1 F3 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11362&r=sea |
| By: | Ryoichi Ikeda (Graduate School of Economics, University of Tokyo); Takao Kobayashi (Faculty of Economics, University of Tokyo); Akihiko Takahashi (Faculty of Economics, University of Tokyo) |
| Abstract: | This paper proposes a structural model to price credit risk of firms with short-term and long-term debts. This enables one to distinguish between default probabilities in the short run and in the long run, and to identify how the composition of debts affects credit risk. We endogenize the banks' decision to bankrupt or save firms in insolvency, and analyze the influence of the governance structure on credit risk valuation. |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:tky:jseres:2005cj131&r=sea |
| By: | Esther Bruegger |
| Abstract: | While empirical studies which analyze large cross section country data find that corruption lowers investment and thereby economic growth, this result cannot be established for certain subsamples of countries. We argue that one reason for these mixed findings may be that a country's corruption and growth rates are tightly linked as variables of a dynamic process which can have several equilibria or have different sets of equilibria. In order to understand the circumstances in which a country converges towards a certain equilibrium, we model the individual decisions to invest and corrupt as an evolutionary game. In this model the quality of government institutions is an endogenous variable, depending on the corruption rate, the population income, and the type of institutions; the quality of institutions itself then determines the future incentives to corrupt. The comprehension of these feedback effects allows us to study the role of the type of institutions for the dynamics of corruption. We present the equilibria for different types of institutions and discuss the resulting dynamics. The results suggest that cross country studies may significantly underestimate the impact of corruption on growth for certain countries. Depending on how the quality of institutions depends on corruption and income, corruption can either lower growth, suppress it entirely, or be positively correlated with growth in some special situations |
| Keywords: | Corruption; Institutions; Feedback Effects; Evolutionary Game |
| JEL: | C73 D73 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:ube:dpvwib:dp0504&r=sea |
| By: | John Bryant |
| Abstract: | This paper considers three groups of children affected by international migration: (i) children left behind by international labour migrants from the Philippines, Indonesia, and Thailand; (ii) children of Thai nationals in Japan; and (iii) children brought along by irregular migrants in Malaysia and Thailand. Based on the limited data available from published sources, the paper constructs preliminary estimates of numbers of children involved. It then synthesizes available evidence on problems and opportunities faced by the children, and on policies towards them. [...more] |
| JEL: | F22 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ucf:inwopa:inwopa05/32&r=sea |
| By: | Norihiro KASUGA (Faculty of Economics, Nagasaki University); Manabu Shishikura (Institute for Information & Communications Policy) |
| Abstract: | The operating areas of each terrestrial broadcasting station in Japan are geographically divided by a licensing system and form oligopolies in each of their respective markets. These institutional constraints define the market structure, and as a result, affect the business performance of the broadcasting industry. The primary purpose for regulation is based on the gMedia Ownership Rule,h a rule designed for preserving gplurality,h gdiversityh and hlocalismh of stations. Similar rules exist in many countries, but benchmarks differ. To this end, if the regulative authority introduced a new regulation framework, it might be useful to improve the financial foundation of the licensed stations, thus preserving the original purpose of the rule. With the rapid progress of digital technology and the increasingly diversified selection of media types, the government needs to urgently review Japanfs old regulations with the aim of giving more freedom in the operation of terrestrial stations and so promote voluntary restructuring. Based on the above viewpoints, we implemented an econometric analysis with respect to factors that affect on the business performance (especially on profit) of each station. We focus on the terrestrial broadcasting industry because it plays a central role in the Japanese broadcasting system. As a result, we ascertained the following points. (1) Structural parameters: market share of each station has a positive correlation with profit, although market concentration appears to have no correlation. (2) Geographical parameters: the number of households per station and the income per household have positive correlations. (3) Business parameters: the aired ratio of self-produced TV programs has a positive correlation with revenue, although it has a negative correlation with profit. It is said that geographical environment is quite important for business performance in the broadcasting industry. This hypothesis is strongly supported by our results. Therefore deregulation and subsequent voluntary rearrangement may reinforce the operating basis of each station. |
| Keywords: | Terrestrial Broadcasting Station, Determinants of profit, Principle of Media Ownership Rule, Audience Share, Oligopoly |
| JEL: | D43 L13 L82 |
| Date: | 2005–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpio:0505006&r=sea |
| By: | Norihiro KASUGA (Faculty of Economics, Nagasaki University); Katsumi Matsuura (Department of Economics, Hiroshima University) |
| Abstract: | In this paper, we analyze the financial asset selection behavior of Japanese households. Especially, we focus on whether or not liquidity constraint decreases the amount of a householdfs risky assets. To investigate this, we first empirically examine which types of household suffer from liquidity constraint. Then, based on the probability obtained from this first stage, we use the Tobit model to estimate the risky asset ratio (=risky asset/total financial asset), and examine the relationship between liquidity constraint and household portfolio. Our results show that the more households suffer from liquidity constraint, the less the households hold risky assets. This is consistent with previous empirical research on Italian households, implemented by Guiso et al.(1996). Our research suggests that the Japanese post-war financial system, which has provided money primarily to the industrial sector rather than the household sector (e.g. consumer loans), might lower the amount of risky assets held by Japanese households. |
| Keywords: | risky asset ratio, liquidity constraint, household portfolio, saving rate |
| JEL: | D12 E2 |
| Date: | 2005–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpot:0505010&r=sea |
| By: | Christopher Edmonds (Economics Study Area, East-West Center); Manabu Fujimura (Economics Department, Aoyama Gakuin University, Tokyo) |
| Abstract: | The paper examines the long-run relationship between demographic and macroeconomic development trends in the Philippines, and compares trends observed in that country to trends in eight regional neighbors in East and Southeast Asia. The Philippines stands out from these countries in that available data suggests the country has completed its demographic transition to a much lesser extent than comparison countries. Analysis of trends shows that the Philippine economy has lost ground to the country's neighbors over the past 50 years, and that its unfulfilled demographic transition has played a key role in explaining the country's relative economic decline. The paper reviews established economic theory and a few simple counter-factual simulations to explain and support this conclusion. The authors also consider the relationship between demographic trends and associated economic developments, and the political situation in the country. Despite discouraging findings regarding the Philippines' relative economic decline, the paper notes the country's more favorable performance in social development vis-à-vis its neighbors. The paper ends on an optimistic note, pointing to: recent economic reforms, the unrealized potential of a 'demographic dividend,' rising demand and use of modern family planning among Philippine households, and the favorable long run outlook for Philippine Overseas Contract Workers, as causes for optimism regarding future demographic change and the country's economic prospects. |
| JEL: | J13 J18 N35 O15 D13 E66 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:ewc:wpaper:wp77&r=sea |
| By: | Edward Teo (Ministry of Manpower, Singapore); Shandre M. Thangavelu (Department of Economics, National University of Singapore); Elizabeth Quah (Ministry of Manpower, Singapore) |
| Abstract: | This paper explores the relationship between unemployment (U) and job vacancies (V) in the Singapore labour market. Empirical analysis using the framework of the UV Curve (also known as the Beveridge Curve) indicates that Singapore’s labour market appears to have improved in its matching efficiency as compared to other East-Asian countries. However, detailed study of Beveridge Curve for the Singapore economy reveals that it has become more inelastic since the Asian crisis, thereby suggesting that the labour market is less responsive in recent years. This might suggest the possibility that employers are now more cautious and selective in their employment decisions. |
| URL: | http://d.repec.org/n?u=RePEc:sca:scaewp:0508&r=sea |