nep-sea New Economics Papers
on South East Asia
Issue of 2005‒10‒15
25 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Currency crises in Asia: A multivariate logit approach By Jacobs, Jan P.A.M.; Kuper, Gerard H.; Lestano
  2. Financial Sector Reform in China By Michael Thorpe
  3. The Nature and Role of the Civil Service in Japanese Government Decision-making By Kazumasa Okubo
  4. ASEAN Monetary Cooperationation: Issues and Prospects By Arief Ramayandi
  5. The Social Cost of Public Funds: The Case of Japanese Progressive Income Taxation By Shun-ichiro Bessho; Masayoshi Hayashi
  6. The CES Utility Function, Non-linear Budget Constraints and Labour Supply: Results on Prime-age Males in Japan By Shun-ichiro Bessho; Masayoshi Hayashi
  7. East Asian Economic Integration and its Impact on Future Growth By Phillipa Dee
  8. Trade and Structural Adjustment Policies in Selected Developing Countries By Jens Andersson; Federico Bonaglia; Kiichiro Fukasaku; Caroline Lesser
  9. SHA-Based Health Accounts in 13 OECD Countries - Country Studies - Japan: National Health Accounts 2000 By Koki Hayamizu; Sumie Ikezaki; Hiroyuki Sakamaki; Manabu Yamazaki
  10. SHA-Based Health Accounts in 13 OECD Countries - Country Studies – Korea: National Health Accounts 2001 By Hyoung-Sun Jeong
  11. International Licensing and the Strengthening of Intellectual Property Rights in Developing Countries By Douglas C. Lippoldt; Walter Park
  12. Services Trade Liberalisation: Identifying Opportunities and Gains By Julia Nielson; Daria Taglioni
  13. Regional Trading Arrangements and the Multilateral Trading System: Agriculture By OECD
  14. Impact of Changes in Tariffs on Developing Countries' Government Revenue By Przemyslaw Kowalski
  15. The nature of NGO microfinance in Vietnam and stakeholders’ perceptions of effectiveness By James Laurenceson; Hong Son Nghiem
  16. How important is foreign capital to income growth in China and India? By James Laurenceson; Abby Kamalankanthan
  17. "the Extent and Implications of Director Interlocking in the Pre-war Japanese Banking Industry" By Tetsuji Okazaki; Michiru Sawada; Kazuki Yokoyama
  18. "The MDGs and Exit Time: The Case of the Philippines " By Yasuyuki Sawada; Jonna P. Estudillo
  19. "Public Debt and Economic Growth in an Aging Japan" By Toshihiro Ihori; Ryuta Ray Kato; Masumi Kawade; Shun-ichiro Bessho
  20. "The Fall of "Organ Bank" Relationships During the Wave of Bank Failures and Consolidations: Experience in Pre-war Japan" By Tetsuji Okazaki; Michiru Sawada; Ke Wang
  21. "Trade Credit, Bank Loans, and Monitoring: Evidence from Japan" By Yoshiro Miwa; J. Mark Ramseyer
  22. Instrument Choice and the Returns to Education: New Evidence from Vietnam By Jean-Louis Arcand; Béatrice d'Hombres; Paul Gyselinck
  23. Optimal Monetary Policy Rules in A Simple Stochastic Macro Model: China's Evidence By Shengzu Wang; Shen Guo
  24. Earmarking in Theory and Korean Practice By Richard M Bird; Joosung Jun
  25. Who Expects the Municipalities to Take the Initiative in Tourism Development? Residents' Attitudes of Amami Oshima Island in Japan By Noriko Ishikawa; Mototsugu Fukushige

  1. By: Jacobs, Jan P.A.M.; Kuper, Gerard H.; Lestano (Groningen University)
    Abstract: Indicators of financial crisis generally do not have a good track record. This paper presents an early warning system (EWS) for six countries in Asia in which indicators do work. Our binary choice model, which has been estimated for the period 1970:01–2001.12, has the following features. We extract a full list of currency crisis indicators from the literature, apply factor analysis to combine the indicators, and introduce dynamics. The quality of the EWS is assessed both in-sample and out-of-sample. We find that money growth (M1 and M2), national savings, and import growth correlate with currency crises.
    Date: 2005
  2. By: Michael Thorpe
    Abstract: China currently maintains an exchange rate fixed against the US dollar and a (relatively) closed capital account, while exercising an independent, controlled interest rate environment. Domestic and international pressures have been mounting for the Chinese government to re-adjust the currency peg or allow more flexibility in the exchange rate and to free up the capital account to foster greater integration with global markets. Given the need for developing a more mature financial system to meet the needs of a growing market economy and with unrestricted foreign bank entry in 2007, there is also a need for less regulated and more market driven interest rates. To the extent that authorities seek to maintain exchange rate stability while easing capital controls, they must forsake monetary independence. This is the so-called macroeconomic policy "trilemma" constraining macroeconomic policy makers generally. The need for continuing reform of China's currently fragile domestic banking system further influences the nature and timing of policy options. This paper reviews recent macroeconomic management performance in China and assesses the options facing policy makers for reform of the financial system given the current environment and subject to the constraint of existing institutional arrangements.
    Keywords: China, banking, financial repression, exchange rate, capital
    JEL: G2 O16 E44
    Date: 2005
  3. By: Kazumasa Okubo (MOF - Ministry of Finance Japan, Policy research Institute)
    Abstract: The nature and the role of the civil service in Japan are sufficiently elusive that analysis of the governmental policy-making process tends to focus on the extremes of party politics or the bureaucratic policy-making process, neither of which, in isolation, can reveal the real decision-making process. Analysis of governmental decision-making must focus more on the relation between politicians and civil servants. To this end, principal-agent analysis is useful, but questions remain as to who is the principal and who the agent. The prevailing assumption is that the Liberal Democratic Party LDP (currently the ruling coalition party) is the principal, and civil servants the agent1. However, since cabinet members are the masters of civil servants, an argument could be made that the prime minister and cabinet members must necessarily be the principal. This is particularly the case when other members of the LDP oppose the policies of the prime minister and cabinet members. In fact, who is the principal has varied from time to time and from event to event and politicians have always competed with each other to be the real principal to the civil servants agent. Despite this, there has been a prevailing misunderstanding that civil servants have enormous power to influence politicians and are able to neglect their minister's instructions. By providing an analysis of the historical development and the nature of the civil service in Japan, this paper attempts to present a more accurate picture of the relationship between politicians and civil servants and to describe the role of the civil service in the decision-making process. It also seeks to explain why, despite their role as agent for whatever principal, civil servants are widely regarded as powerful and reliable but also, in some cases, as culpable and blameworthy.
    Keywords: Japan, civil service, policy making, decision-making
    JEL: E61 G18
    Date: 2005–07
  4. By: Arief Ramayandi (AJRC - Australia-Japan Research Centre)
    Abstract: Among other things, the 1997–98 East Asian financial crisis has led to questioning within the Association of Southeast Asian Nations (ASEAN) about whether the region needs a common currency. This paper aims to discuss the underlying economic issues and prospects, from both a theoretical and a practical point view. The analysis focuses only on the five largest ASEAN nations. Standard criteria suggested by the theory of Optimal Currency Areas are reviewed and applied to the region. The paper then provides a discussion on possible steps that can be pursued to realise currency union.
    Keywords: East Asian Financial crisis, monetary cooperation, ASEAN, Optimal Currency Areas, currency union
    JEL: E42 E52 E61
    Date: 2005–06
  5. By: Shun-ichiro Bessho (Ministry of Finance Japan - Policy Research Institute); Masayoshi Hayashi (MOF - Ministry of Finance Japan, Policy Research Institute)
    Abstract: This paper operationalizes Dahlby's (1998) theoretical analysis on the social marginal cost of public funds (SMCF) with microdata on Japanese prime-age males. Our exercise however, is more than an application. First, we derive the formula for the SMCF that differenciates every individual. Second, we estimate the labour supply function of Japanese prime-age males which no previous studies have appropriately consdiered. Third, taking advantage of our formula, we also calculate the SMCF for sub-groups among out samples. We provide region-specific SMCF and, following Dahlby and Wilson (1994), discuss the desirable direction of regional transfers. we also present an "individual" MCF.
    Keywords: taxation, Dahlby, social marginal cost, public funds ,Japan, prime-age males,
    JEL: E62
    Date: 2005–08
  6. By: Shun-ichiro Bessho (Ministry of Finance Japan - Policy Research Institute); Masayoshi Hayashi (Ministry of Finance Japan - Policy Research Institute)
    Abstract: When the labour supply is elastic with respect to the net wage, labour income taxation generates economic distortion and welfare loss. The substitute effect is a key determinant of the magnitude of such deadweight loss; thus, evaluating the elasticity of the labour supply has broad and significant implications for assessing the effects of changes in public policy. We estimate the labout supply function based on the CES utility function, using large microdata sets in Japan and treating the complex Japanese income tax system carefully. The results of this chapter suggest that the uncompensated elasticity of the labour supply of prime-age males is at most 0.1.
    Keywords: piecewise linear budget constraint, labout supply, CES utility function
    JEL: D31 D61 D63 H21 H31 J22
    Date: 2005–08
  7. By: Phillipa Dee (Australia–Japan Research Centre)
    Abstract: Two propositions appear to be gaining wide currency, given the revealed preference for preferential trade agreements (PTAs) in the East Asian region and elsewhere. The first is that economic integration is a good way to promote economic growth. The second is that PTAs, particularly ones that go beyond goods trade, are an effective way to promote economic integration. Yet both propositions are empirical questions. In this paper, a partial evaluation of the evidence suggests caution is called for. Current PTAs appear to be doing little to remove the important impediments to growth in the region. Far greater income gains would come from comprehensive reform of nondiscriminatory impediments to competition, as part of a thorough-going program of unilateral domestic regulatory reform. It may be time to rethink East Asian economic integration as a policy priority, or at least review the way in which it might be pursued.
    Keywords: East Asia, economic integration, growth, preferencial trade agreements, PTA,
    JEL: O16 O19 O24
    Date: 2005–01
  8. By: Jens Andersson; Federico Bonaglia; Kiichiro Fukasaku; Caroline Lesser
    Abstract: The experience of the five examined industries (agro-food in Chile, cut flowers in Kenya, garment in Lesotho and in Mauritius and seafood in Thailand) demonstrates that non-traditional industries can emerge and achieved strong growth rates in very diverse settings in terms of geography and initial economic and social conditions. In most of these cases, the government adopted a relatively export-oriented, business-friendly attitude and adapted its policies as the industries developed. Hence, a key factor for successful structural adjustment has been the pro-active role of government in establishing an enabling economic and policy environment that allows local firms to operate on a level-playing field and strengthen their competitive edge in international markets. This highlights the importance of implementing trade policies in the framework of comprehensive development strategies and establishing a consultative national policy-making process for ensuring a coherent approach to trade and structural adjustment. The case studies also underscore that countries (government and industry) are compelled to constantly adapt in light of new sources of competition, growing wage levels, environmental constraints, technological advances and demanding product and process standards. Policy-makers in most countries under review are aware of this challenge. As a consequence, some of them have taken the initiative to set up specific mechanisms or programmes for further enhancing the competitiveness of existing export sectors and/or promoting emerging non-traditional export industries. L’expérience des cinq filières étudiées (agro-alimentaire au Chili, fleurs au Kenya, vêtements au Lesotho et à Maurice, et fruits de mer en Thaïlande) démontre que des industries non traditionnelles peuvent naître et générer de solides taux de croissance dans les contextes les plus variés de géographie ou de fondamentaux économiques et sociaux. Dans la plupart de ces cas, les pouvoirs publics ont adopté une approche relativement favorable à l’exportation et aux affaires, et adapté leurs politiques au développement de ces activités. Partant, le facteur clé d’un ajustement structurel bénéfique a été la détermination des gouvernements à adapter leur économie et le cadre politique pour permettre aux entreprises d’opérer à un stade approprié et de renforcer leurs avantages comparatifs sur les marchés internationaux. Ce qui souligne l’importance d’inscrire la politique commerciale dans le cadre des stratégies de développement global et de mettre en place, pour assurer une approche cohérente de l’ajustement commercial et structurel, une procédure consultative nationale d’adoption des politiques. Les études de cas soulignent aussi que les pays (pouvoirs publics et entreprises) sont condamnés à s’adapter constamment en fonction des nouvelles sources de concurrence, de la charge salariale croissante, des contraintes de l’environnement, des avancées technologiques, et des exigences de la demande et des progrès. Les décideurs politiques de la plupart des pays passés en revue sont conscients de ce défi. Et c’est pourquoi plusieurs d’entre eux ont pris l’initiative de mettre en oeuvre des mécanismes ou des programmes spécifiques pour renforcer la compétitivité des actuelles filières d’export et/ou pour favoriser l’émergence d’activités exportatrices non traditionnelles.
    Date: 2005–07
  9. By: Koki Hayamizu; Sumie Ikezaki; Hiroyuki Sakamaki; Manabu Yamazaki
    Abstract: A project aimed at presenting initial results from the implementation of the System of Health Accounts has been carried by the Health Policy Unit at the OECD and experts from thirteen member countries. The results are presented in the form of a comparative study (OECD Health Working Papers No. 16) and a set of OECD Health Technical Papers presenting individual country studies. This volume is the sixth in this series, presenting the Japanese SHA-based health accounts. L’Unité des politiques de santé de l’OCDE et des experts originaires de treize pays Membres ont mené un projet visant à rendre compte des premiers résultats de la mise en œuvre du Système de comptes de la santé (SCS). Ces résultats se présentent sous la forme d’une étude comparative (document de travail sur la santé n° 16 de l’OCDE) et d’un ensemble de rapports techniques sur la santé contenant des études par pays. Ce volume est le sixième de la série, il examine les comptes de la santé fondés sur le SCS au Japon.
    JEL: H51 I10
    Date: 2004–08–31
  10. By: Hyoung-Sun Jeong
    Abstract: A project aimed at presenting initial results from the implementation of the System of Health Accounts has been carried by the Health Policy Unit at the OECD and experts from thirteen member countries. The results are presented in the form of a comparative study (OECD Health Working Papers No. 16) and a set of OECD Health Technical Papers presenting individual country studies. This volume is the seventh in this series, presenting the Korean SHA-based health accounts. L’Unité des politiques de santé de l’OCDE et des experts originaires de treize pays Membres ont mené un projet visant à rendre compte des premiers résultats de la mise en œuvre du Système de comptes de la santé (SCS). Ces résultats se présentent sous la forme d’une étude comparative (document de travail sur la santé n° 16 de l’OCDE) et d’un ensemble de rapports techniques sur la santé contenant des études par pays. Ce volume est le septième de la série, il examine les comptes de la santé fondés sur le SCS en Corée.
    JEL: H51 I10
    Date: 2004–08–17
  11. By: Douglas C. Lippoldt; Walter Park
    Abstract: This study presents an empirical analysis of the extent to which stronger intellectual property rights promote international technology transfer through licensing activities. The analysis focuses on licensing activities of U.S. multinationals as well as on international licensing alliances between firms in developing and developed nations. Both aggregate level data and firm level data are examined. The study provides general support for the proposition that the strengthening of intellectual property rights - as measured by selected indicators - has had a net positive effect on technology transfer via licensing during the 1990s. The general implication of this study for developing economies is that IPR reform should be one part of a general strategy for promoting economic development in combination with other complementary policy reforms. In particular, patent rights and effective enforcement can be instrumental in enabling firms in developing nations to access and exploit technologies and know-how through licensing agreements with parties in developed nations. Overall, the analysis presented here indicates that where developing countries have moved to address weaknesses in these areas in recent years, they have tended to experience enhanced access to technology through licensing.
    Keywords: economic development, intellectual property rights, licensing
    Date: 2004–12–21
  12. By: Julia Nielson; Daria Taglioni
    Abstract: This study has two components: identification of concrete examples of services exports by developing countries, and quantitative studies on the gains from services liberalisation. While the study is by no means comprehensive, and is subject to many limitations, two fundamental findings emerge. The first of these findings, documented in Part I of the study, is that there is clear evidence that developing countries have important service sector export interests beyond mode 4 (temporary movement of services supplying personnel), being global or regional players in sectors such as business services (out-sourcing), port and shipping services, audiovisual services, telecommunications, construction services and health services. The second of these findings, documented in Part II of the study, is that for most countries, including many developing countries, export-related gains from services liberalisation are neither the only nor the largest basis of expected gains. A large portion of benefits from services liberalisation derive, not from seeking better market access abroad, but from the increased competitiveness and efficiency of the domestic market. Together, the study’s two findings underscore the potential benefits of services liberalisation, both for developed and for developing countries.
    Keywords: exports, services, liberalisation, sector, developing countries, computable general equilibrium, barriers, benefits
    Date: 2004–02–06
  13. By: OECD
    Abstract: Following up a 2003 publication by the Trade Committee, this paper examines the treatment of agriculture in regional trading arrangements (RTAs) against the background of treatment under the multilateral trading system (MTS). This paper describes 18 RTAs and its findings may not be generalizeable to the 169 RTAs that have been notified to the WTO. The relationship between the treatment of agriculture in RTAs and that within the MTS is complex. This paper contains illustrates the topography of agricultural treatment within RTAs under four separate headings including: coverage, domestic support, contingency protection and sanitary and phytosanitary regulations. This descriptive analysis is prepared both as a basis for assessing progress on agriculture in RTAs and as frame of reference for considering the treatment of agriculture at the multilateral level.
    Keywords: regionalism, trade and agriculture
    Date: 2005–03–22
  14. By: Przemyslaw Kowalski
    Abstract: This paper addresses tariff revenue concerns that some countries have been expressing in the context of the current multilateral trade negotiations under the Doha Development Agenda. This paper: discusses methodological issues associated with estimating revenue impacts; provides impact estimates for a sample of developing countries; links the differences in impacts to cross-country differences in existing tariff regimes as well as properties of formulas for tariff cuts; and, discusses efficient tax replacement policies and past experiences. Additionally, the paper presents results of a simulation of the welfare effects of reducing tariffs and simultaneously replacing lost tariff revenues with revenues from consumption tax. It concludes with some policy implications.
    Keywords: tariffs, CGE simulation, government revenue, multilateral trade negotiations, tariff reductions formulas
    JEL: C68 E61 E62 F13 F14 H20
    Date: 2005–04–18
  15. By: James Laurenceson; Hong Son Nghiem (EAERG - School of Economics, The University of Queensland)
    Abstract: The microfinance industry in Vietnam, particularly those sponsored by non-government organisations (NGOs), has experienced rapid expansion in recent years. While there have been anecdotal reports alluding to their contribution in alleviating poverty, a systematic analysis of this issue has been lacking. In a bid to help address this shortcoming, this paper reports on data that was obtained during a survey and interview process that incorporated various stakeholders including financial donors, NGO-sponsored microfinance institutions (NMPs), village leaders and NMP members and non-members. Firstly, the nature of NMPs is described - their objectives, target groups and the financial products they offer. Secondly, perceptions of NMPs effectiveness are discussed from the standpoint of various stakeholders. NMPs are found to be at a critical juncture. While their activities are widely perceived to contribute to poverty alleviation, their future viability is clouded by donor requirements that they become financially self-sufficient. At the same time, certain government policies make achieving this goal very difficult.
  16. By: James Laurenceson; Abby Kamalankanthan (EAERG - School of Economics, The University of Queensland)
    Abstract: The picture often painted is that foreign capital inflows in China and India are prominently linked to rapid growth at the national level, and contribute to widening income disparities at the provincial/state level. In this paper we revisit Krugman’s (1993) contention that foreign capital can hardly be considered an important income growth driver, when in most developing countries it only accounts for a fractional share of gross capital formation. In the case of contemporary China and India, the data suggests that Krugman’s critique holds largely true, even in the coastal regions that are considered magnets for foreign investment. Thus, domestic factors, rather than the driving forces of globalization, appear to be the more important determinants of income growth in both countries.
  17. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo); Michiru Sawada (Nagoya Gakuin University); Kazuki Yokoyama (Faculty of Economics, Nagoya City University)
    Abstract: In pre-war Japan, many banks were controlled by industrial companies through capital and personal relationships. Those banks are known as "organ banks" (kikan ginko). Organ banks engaged in unsound lending to their related companies, which resulted in damage to the banks' financial positions and consequently destabilized the financial system. This is a popularly held view of the financial history of pre-war Japan (organ bank hypothesis). However, this view has been based largely on case studies and casual observations. In this paper we examine the organ bank hypothesis using quantitative data and econometric methodology. To measure the extent of connections between banks and non-banking companies, we compiled a comprehensive database of directors and auditors of banks and non-banking companies in 1926. It was found that interlocking of directors and auditors between banks and non-banking companies was very pervasive. More than 80% of ordinary banks had at least one director or auditor who was at the same time a director or auditor of at least one non-banking company. Also, regression analyses confirmed that director interlocking had a negative effect on bank performance, especially for smaller banks.
    Date: 2005–07
  18. By: Yasuyuki Sawada (Faculty of Economics, University of Tokyo); Jonna P. Estudillo (School of Economics, University of Philippines)
    Abstract: This paper evaluates whether the Philippines will be able to halve the incidence of poverty between 1990 and 2015. Using the concept of exit time and household-level data, we found that the Philippines will be unlikely to do so.
    Date: 2005–08
  19. By: Toshihiro Ihori (Faculty of Economics, University of Tokyo); Ryuta Ray Kato (Graduate School of International Relations, International Univesity of Japan); Masumi Kawade (Faculty of Economics, Niigata University); Shun-ichiro Bessho (Policy Research Institute, Ministry of Finance, Japanese Government)
    Abstract: This@paper@examines@the@effects of the demographic change and the government debt policy in Japan on economic growth and economic welfare, particularly by taking into account the existing public pension scheme as well as national medical expenditure through the existing public health insurance, wherea computational overlapping generations model is used within a general equilibrium context. One of the main results of this paper is that the tax burden (GDP) ratio will increase up to about 36%, and the social security burden (GDP) ratio will increase up to 23.3% in 2050, even though the government tries to have a positive primary balance by 2010. The ratio of public health insurance bene?ts to GDP is expected to increase at 1% every 10years, and the ratio will be around 9.6%in 2050. The 2004 public pension reform will successfully result in a 13 point decrease in the contribution rate from 36.44% to 23.53%, and reduce the social security burden (GDP) ratio by about 8 points from 23.27% to 15.02% in 2050, compared with the benchmark case.
    Date: 2005–09
  20. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo); Michiru Sawada (Faculty of Economics, Nagoya Gakuin University); Ke Wang (Faculty of Economics, University of Tokyo)
    Abstract: This paper examines how the close ties between banks and non-banking firms-the so-called "organ bank" relationship in Japanese banking literature-declined through bank failures and banking consolidations in pre-war Japan. With a unique dataset compiled from 1,007 Japanese banks that were doing business between 1926 and 1936, we measure the degree of the "organ bank" relationship by the number of people who worked as directors or auditors for both a bank and a non-banking firm at the same time. We found that the number of "interlocking directors" declined in our sample period, when there were many bank failures and bank mergers and acquisitions. Furthermore, the remaining interlocked directors, after the wave of bank failures and consolidations, no longer demonstrated negative effects on the performance of the banks, as measured by their profitability. Our findings suggest, based on experience in Japan, that banking consolidations and selection through failure may help eliminate the detrimental connections between banks and non-banking firms.
    Date: 2005–09
  21. By: Yoshiro Miwa (Faculty of Economics, University of Tokyo); J. Mark Ramseyer (Harvard University)
    Abstract: Firms in modern developed economies can choose to borrow from banks or from trade partners. Using first-difference and difference-in-differences regressions on Japanese manufacturing data, we explore the way they make that choice. Whether small or large, they do borrow from their trade partners heavily, and apparently at implicit rates that track the explicit rates banks would charge them. Nonetheless, they do not treat bank loans and trade credit interchangeably. Disproportionately, they borrow from banks when they anticipate needing money for relatively long periods, and turn to trade partners when they face short-term exigencies they did not expect. This contrast in the term structures of bank loans and trade credit follows from the fundamentally different way bankers and trade partners reduce the default risks they face. Because bankers seldom know their borrowers' industries first-hand, they rely on guarantees and security interests. Because trade partners know those industries well, they instead monitor their borrowers closely. Because the costs to creating security interests are heavily front-loaded, bankers focus on long-term debt. Because the costs of monitoring debtors are on-going, trade creditors do not. Despite the enormous theoretical literature on bank monitoring, banks apparently monitor very little.
    Date: 2005–09
  22. By: Jean-Louis Arcand (CERDI-CNRS, University of Auvergne & European Development Network); Béatrice d'Hombres (CERDI-CNRS, University of Auvergne & University of Padua); Paul Gyselinck (CERDI-CNRS, University of Auvergne)
    Abstract: This paper focuses on instrument choice while consistently estimating the returns to education in Vietnam. Using data culled from the 2 rounds of the Vietnam Living Standards Survey (VLSS), we explore different sets of exogenous instruments that rely on demand and supply side sources of variation in schooling as well as the matrix of instruments proposed by Hausman and Taylor (1981). Instrument validity tests suggest that many variables do not satisfy the necessary conditions allowing them to be used as instruments. As in several studies, we find that IV estimates of the returns to education are substantially higher than the corresponding OLS estimate. We show how the Hausman-Taylor matrix of instruments, when combined with other instruments, may be a useful way of consistently estimating an average return to education rather than a local average treatment effect (Angrist, 1994).
    Keywords: ate of return, instrumental variables procedures, Instrument choice, Hausman-Taylor estimator, Hahn-Hausman test, Vietnam
    JEL: J31 I21 C30
    Date: 2005–10–11
  23. By: Shengzu Wang (McGill University); Shen Guo (Concordia University)
    Abstract: In this paper we apply a simple macro model to explore and evaluate certain optimal monetary policy rules for China's economy. To be more consistent with the central bank (the People's Bank of China)'s behaviour, we use money supply as a monetary policy instrument rather than the commonly used interest rate. Policy rules are optimal in terms of minimizing the predetermined loss functions, and the parameters of these rules are determined by stochastic simulation. Different forms of policy rule and loss function are considered, especially for exchange rate volatility and money supply volatility. The optimality of monetary policy rules is evaluated by comparing the shifts of policy frontiers.
    Keywords: Monetary Policy Rule, Loss Function, Stochastic Simulation, Policy Frontier, China
    JEL: C15 E47 E52
    Date: 2005–10–08
  24. By: Richard M Bird (Rotman School of Management, University of Toronto); Joosung Jun (Ehwa University)
    Abstract: In the first part of this paper we present a non-technical analysis of earmarking. We then briefly review some international experience with earmarking and its apparent results. The main new contribution of the paper is the concluding description and evaluation of the nature, efficacy, and effects of earmarking in Korea.
    Keywords: Keywords: earmarking; benefit taxation; Korea
    JEL: H29 H59
    Date: 2005–06
  25. By: Noriko Ishikawa (Graduate School of Science and Technology, Kobe University); Mototsugu Fukushige (Graduate School of Economics, Osaka University)
    Abstract: Regional tourism policies in Japan have been undergoing major structural changes. We investigate the extent to which residents of the Amami Islands expect the municipality to take the initiative in implementing or financing tourism development policies. A binary choice approach is used to model individual survey responses in terms of respondents' socioeconomic characteristics. Residents who expect the municipality to promote tourism and industrial development have a significantly different socioeconomic status. Respondents most likely to expect the municipality to take the lead in policy making include executive officers or employees of a private company, the unemployed, the self-employed, or part-time workers. Government employees are not likely to have this expectation. In terms of the funding authority, the likelihood that a resident expects the municipality to take an industrial development initiative increases as the annual income per resident increases.
    Keywords: Tourism Development, Industrial Development, Residents' Attitudes
    JEL: O23 R58 Q56 L83
    Date: 2005–10

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