nep-sea New Economics Papers
on South East Asia
Issue of 2006‒05‒27
thirteen papers chosen by
Kavita Iyengar
Asian Development Bank

  2. Chicken or egg: financial development and economic growth in China, 1992-2004 By Fan, Xuejun; Jacobs, Jan; Lensink, Robert
  3. Disparity in Factor Contributions between Coastal and Inner Provinces in Post-reform China By Tung Liu; Kui-Wai Li
  4. The Determinants of Pharmaceutical R&D Expenditures: Evidence from Japan By Mahlich, Jörg C.; Roediger-Schluga, Thomas
  5. Dynamic conditional correlation analysis of financial market interdependence: An application to Thailand and Indonesia By Kuper, Gerard H.; Lestano
  6. Assessing Dependence Changes in the Asian Financial Market Returns Using Plots Based on Nonparametric Measures By Param Silvapulle; Xibin Zhang
  7. Technical Change and Total Factor Productivity Growth for Chinese Provinces: A Panel Data Analysis By Alice Shiu; Almas Heshmati
  8. Preferences, Poverty and Politics: Experimental and Survey Data from Vietnam By Tomomi Tanaka; Colin F. Camerer; Quang Nguyen
  9. Mass Attidudes Toward Financial Crisis and Economic Reform in Korea By Bernd Hayo
  10. Developing Foreign Bond Markets: The Arirang Bond Experience in Korea By Jonathan A. Batten; Peter G. Szilagyi
  11. Real-time model uncertainty in the United States: the Fed from 1996-2003 By Robert J. Tetlow; Brian Ironside
  12. Early childhood development through an integrated program : evidence from the Philippines By Lee, Nannette; King, Elizabeth M.; Gultiano, Socorro; Ghuman, Sharon; Duazo, Paulita; Behrman, Jere R.; Armecin, Graeme
  13. An Iteration Procedure for Solving Integral Equations Related to Optimal Stopping Problems By Denis Belomestny; Pavel V. Gapeev

  1. By: Maximilian J B Hall (Dept of Economics, Loughborough University)
    Abstract: Should be added soon
    Keywords: Banking, Japan
    JEL: L11 L13 L93
    Date: 2006–03
  2. By: Fan, Xuejun; Jacobs, Jan; Lensink, Robert (Groningen University)
    Abstract: This paper contributes to the empirical finance-growth literature by examining the relationship between financial depth, banking sector development, stock market development and economic growth in China. After an extensive survey on recent financial reforms in China, we apply Granger (non-)causality tests for non-stationary variables to examine long-run and short-run causality between economic growth and financial development. We find positive relationships between financial depth, banking sector development and growth. However, stock market development does not seem to have a positive effect on long-run economic growth.
    Date: 2005
  3. By: Tung Liu (Department of Economics, Ball State University); Kui-Wai Li (City University of Hong Kong, Hong Kong SAR)
    Abstract: The paper discusses China’s post-reform regional economic growth imbalance relative to input disparity in technology, physical and human capital. Institutional sources of finance and types of ownership are used to construct physical capital. Technology is measured by investment in innovation, and human capital is constructed from schooling years per capita. The results show that domestic bank loans and foreign-owned enterprises are important in coastal provinces, while state appropriation and state-owned enterprises are important in inner provinces. Technology and foreign investment have a larger impact on output growth in coastal provinces. Human capital is endogenous for coastal provinces, but is exogenous for inner provinces.
    Keywords: Mainland China, regional disparity, physical and human capital, productivity
    JEL: C22 I22 O18 O47 O53 P24
    Date: 2005–06
  4. By: Mahlich, Jörg C. (Wirtschaftskammer Österreich); Roediger-Schluga, Thomas (ARC Systems Research)
    Abstract: During the past 20 years, the world pharmaceutical industry has experienced a dramatic increase in R&D intensity. We apply and extend a model developed by Grabowski and Vernon (2000) with a pooled data sample of the 15 publicly listed Japanese drug firms for the period 1987 to 1998. As in the reference paper, we find expected returns to be an important determinant of R&D spending in the Japanese drug industry, albeit considerably smaller than in the U.S., which is particularly obvious in the case of returns from newly introduced drugs. However, our results are sensitive to econometric model specification, in particular to controlling for serial correlation and to a dynamic specification of the baseline model. Likewise, estimates on financial constraints are sensitive to model specification, indicating that Japanese drug firms face small or no financial constraints. Our results are consistent with the general literature on R&D investment behaviour, yet raise some methodological questions with regard to the original study.
    Keywords: R&D, investment, panel data estimation, pharmaceuticals, Japan
    JEL: L65 O31 O33
    Date: 2006
  5. By: Kuper, Gerard H.; Lestano (Groningen University)
    Abstract: This paper examines the dynamic linkages among financial markets in Thailand and Indonesia. In particular, we focus on the cross-border relationship in individual markets and on the relationship between finan- cial markets within each country. We find that while tight monetary policy pursued by Thailand authorities helped to defend the exchange rate at the outbreak of the financial crisis, it had little consequences for Indonesia at the end of 1998. The correlations between countries within each of the financial market reveals a certain degree of interde- pendence among countries, which is lower during crises.
    Date: 2006
  6. By: Param Silvapulle; Xibin Zhang
    Abstract: This paper investigates whether or not there are significant changes in the dependence between the Thai equity market and six Asian markets - namely, Singaporean, Malaysian, Hong Kong, Korean, Indonesian and Taiwanese markets - due to 1997-July financial crisis. If so, this may be an indication that the underlying bivariate joint distributions capturing the dependence between the Thai market and these six markets have changed. We employ the chi-plot proposed by Fisher and Switzer (2001) and the Kendall plot proposed by Genest and Boies (2003) to examine the dependence in these six markets for the pre- and post-1997 financial crisis periods. We find that marginal distributions of all seven markets have notably changed due to this financial crisis, and that the functional forms of the underlying joint distributions generating the dependence in the Korean, Indonesian and Taiwan markets have also changed for the post-crisis period. It appears that the same parametric copula can capture the dependence in the Singapore, Malaysia and Hong Kong markets for both pre- and post-crisis periods, and that only the tail indices of bivariate distributions between the Thai and these three markets have changed. It is interesting to observe that the same conclusions can be drawn using both chi- and Kendall plots.
    Keywords: chi-plot, copula, dependence, Kendall-plot
    JEL: C14 G14
    Date: 2006–05
  7. By: Alice Shiu (Hong Kong Polytechnic University); Almas Heshmati (TEPP, Seoul National University, RATIO Institute and IZA Bonn)
    Abstract: We present in this paper the panel econometrics estimation approach of measuring the technical change and total factor productivity (TFP) growth of 30 Chinese provinces during the period of 1993 to 2003. The random effects model with heteroscedastic variances has been used for the estimation of the translog production functions. Two alternative formulations of technical change measured by the single time trend and the general index approach are used. Based on the measures of technical change, estimates of TFP growth could be obtained and its determinants were examined using regression analysis. The parametric TFP growth measure is compared with the non-parametric Solow residual. TFP has recorded positive growth for all provinces during the sample period. Regional breakdown shows that the eastern and central regions have higher average TFP growth when compared with the western region. Foreign direct investment (FDI) and information and communication technology (ICT) investment are found to be significant factors contributing to the TFP difference. While these two factors are found to have significant influence on TFP, their influence on production is relatively small compared to traditional inputs of production.
    Keywords: technical change, TFP growth, provinces, China, ICT, FDI, infrastructure
    JEL: C23 D24 E22 O18 O47
    Date: 2006–05
  8. By: Tomomi Tanaka; Colin F. Camerer; Quang Nguyen
    Date: 2006–05–14
  9. By: Bernd Hayo (Faculty of Business Administration and Economics, Philipps Universitaet Marburg)
    Abstract: This paper gives an account of the financial crisis that took place in Korea from the point of view of the Korean population using survey data collected in 1998 and 1999. Although both, internal and external factors were blamed as causes, domestic factors were considered to be of greater importance. After identifying respondents as supporting either market-based or statebased reform strategies using factor analysis, various determinants of these alternative views are being analyzed within the framework of regression models. A particularly interesting result is that, contrary to theoretical assumptions and empirical evidence on other regions, it is political ideology and not individual economic determinants that helps to explain the respondents’ attitudes towards reform strategies in Korea.
    Keywords: South Korea, financial crisis, public opinion, economic reform strategies institution
    JEL: O5 F3
    Date: 2005
  10. By: Jonathan A. Batten; Peter G. Szilagyi
    Abstract: This study investigates the development of Korea’s foreign bond (Arirang) market for won-denominated foreign bonds. We provide an institutional perspective and discuss the problems, concerns and key issues related to the development of this market. We find no evidence that Arirang issuance either crowded out local debt or had exchange rate implications. Overall, the Korean experience provides valuable lessons for other emerging nations seeking to build bond markets for local and foreign issuers. Instigating market development demands an enabling infrastructure, the nurturing of local and international demand and the deregulation of capital flows. This process is demanding, as the sophistication of the local bond market does not make it appealing to foreign borrowers per se.
    Keywords: Arirang bonds; foreign bonds; bond market development
    Date: 2006–05–23
  11. By: Robert J. Tetlow; Brian Ironside
    Abstract: We study 30 vintages of FRB/US, the principal macro model used by the Federal Reserve Board staff for forecasting and policy analysis. To do this, we exploit archives of the model code, coefficients, baseline databases and stochastic shock sets stored after each FOMC meeting from the model's inception in July 1996 until November 2003. The period of study was one of important changes in the U.S. economy with a productivity boom, a stock market boom and bust, a recession, the Asia crisis, the Russian debt default, and an abrupt change in fiscal policy. We document the surprisingly large and consequential changes in model properties that occurred during this period and compute optimal Taylor-type rules for each vintage. We compare these optimal rules against plausible alternatives. Model uncertainty is shown to be a substantial problem; the efficacy of purportedly optimal policy rules should not be taken on faith. We also find that previous findings that simple rules are robust to model uncertainty may be an overly sanguine conclusion.
    Keywords: Monetary policy ; Uncertainty ; Economic forecasting
    Date: 2006
  12. By: Lee, Nannette; King, Elizabeth M.; Gultiano, Socorro; Ghuman, Sharon; Duazo, Paulita; Behrman, Jere R.; Armecin, Graeme
    Abstract: More attention and resources have been devoted in recent years to early childhood development (ECD) in low- and middle-income countries. Rigorous studies on the effectiveness of ECD-related programs for improving children ' s development in various dimensions in the developing world are scant. The authors evaluate an important ECD initiative of the Philippine government using longitudinal data collected over three years on a cohort of 6,693 children age 0-4 years at baseline in two " treatment " regions and a " control " region that did not receive the intervention. The initiative includes a wide range of health, nutrition, early education, and social services programs. The authors estimate its impact by using " intent-to-treat " difference-in-difference propensity score matching estimators to control for a variety of observed characteristics measured at the municipality, barangay, household, and child level and unobserved fixed characteristics, with differential impacts by age of children and duration of exposure to the program. There has been a significant improvement in the cognitive, social, motor, and language development, and in short-term nutritional status of children who reside in ECD program areas compared to those in non-program areas, particularly for those under age four at the end of the evaluation period. The proportions of children below age four with worms and diarrhea also have been lowered significantly in program compared to non-program areas, but there are effects in the opposite direction for older children so the overall impact on these two indicators is mixed.
    Keywords: Health Monitoring & Evaluation,Early Childhood Development,Youth and Governance,Primary Education,Educational Sciences
    Date: 2006–05–01
  13. By: Denis Belomestny; Pavel V. Gapeev
    Abstract: A new algorithm for finding value functions of finite horizon optimal stopping problems in one-dimensional diffusion models is presented. It is based on a time discretization of the corresponding integral equation. The proposed iterative procedure for solving the discretized integral equation converges in a finite number of steps and delivers in each step a lower or an upper bound for value of discretized problem on the whole time interval. The remarks on the application of the method for solving integral equations related to some optimal stopping problems are given.
    Keywords: Optimal stopping, finite horizon, diffusion process, upper and lower bounds, Black-Scholes model, American put option, Asian option, Russian option, Bayesian sequential testing problem, disorder detection problem
    JEL: C15 G12
    Date: 2006–05

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