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on South East Asia |
| By: | Robert Dekle; Kenneth Kletzer |
| Abstract: | A model of the domestic financial intermediation of foreign capital inflows based on agency costs is developed for studying financial crises in emerging markets. In equilibrium, the banking system becomes progressively more fragile under imperfect prudential regulation and public sector loan guarantees until a crisis occurs with a sudden reversal of capital flows. The crisis evolves endogenously as the banking system becomes increasingly vulnerable through the renegotiation of loans after idiosyncratic firm-specific revenue shocks. The model generates dynamic relationships between foreign capital inflows, domestic investment, corporate debt and equity values in an endogenous growth model. The model's assumptions and implications for the behavior of the economy before and after crisis are compared to the experience of five East Asian economies. The case studies compare three that suffered a crisis or near-crisis, Thailand and Malaysia, to two that did not, Taiwan Province of China and Singapore, and lend support to the model. |
| Keywords: | Bank regulations , Asia , Financial crisis , Exchange rate regimes , Capital inflows , Economic models , |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:01/63&r=sea |
| By: | Bulent Unel; Harm Zebregs |
| Abstract: | China's growth record since the start of its economic reforms in 1978 has been extraordinary. Yet, this impressive performance has been associated with an increasing regional income disparity. We use a recently developed nonparametric approach to analyze the variation in labor productivity growth across China's provinces. This approach imposes less structure on the data than the standard growth accounting framework and allows for a breakdown of labor productivity into capital deepening, efficiency gains, and technological progress. Like other studies before us, we do not find strong evidence of convergence in labor productivity across China's provinces during 1978-98. However, our results show that provinces converged in efficiency levels, while they diverged in capital deepening and technological progress. |
| Keywords: | Economic growth , China , Labor productivity , Data analysis , |
| Date: | 2006–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/55&r=sea |
| By: | Alessia Amighini |
| Abstract: | This paper investigates the position of China in the international fragmentation of production in the ICT industry, the most dynamic and globally dispersed sector in the world economy. The evidence shows that during the 1990s China dramatically increased its market shares in ICT products and now ranks among the top three world exporters. Moreover, China has upgraded from mere assembly of imported inputs to the manufacturing of high-tech intermediate goods. As a result, import dependence has declined and the domestic value added of exports has increased. This supports the hypothesis that industrial upgrading occurred in some tradable sectors through technological learning associated with processing trade. Therefore, a pattern of specialization initially dominated by processing trade could be favourable to a country's long-term development, to the extent that entering at the lower end of high-tech sectors is promotive of catching up in more sophisticated technology-intensive production |
| JEL: | F02 F14 L63 N60 |
| Date: | 2005–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:liu:liucej:20&r=sea |
| By: | Dwayne Benjamin; Loren Brandt; John Giles; Sangui Wang |
| Abstract: | This paper provides an overview of the evolution of income inequality in China from 1987 to 2002, employing three series of data sets. Our focus is on both urban and rural inequality, as well as the urban-rural gap, with the objective of summarizing several “first-order” empirical patterns concerning the trajectory of inequality through the reform period. We document significant increases of inequality within China’s urban and rural populations. In rural areas, increased inequality is primarily related to the dis-equalizing role of non-agricultural self-employment income and slow growth in agricultural income from the mid-1990s onward. Poverty persists, and tied in part to slow growth in agricultural commodity prices. In urban areas, the declining role of subsidies and entitlements, the increase in wage inequality and the layoffs during restructuring, have fueled the growth in inequality within urban areas. Poverty levels, however, are very low. We find that spatial (regional) dimensions of inequality are significant, but are much less important than commonly believed for both the urban and rural populations, and for differences between urban and rural areas. Accounting for urban-rural reclassification, which otherwise exaggerates the rising urban-rural gap, we find a relatively stable ratio of urban to rural incomes. This hides some geographical variation, however: The urban-rural gap is increasing more rapidly in interior provinces, where SOE’s had a more dominant role in economic activity in urban areas, than in coastal provinces where the non-state sector was more important earlier in the reform period. |
| Keywords: | China, Income Distribution; Poverty; Inequality; welfare; transition; development |
| JEL: | I3 P2 O1 D3 |
| Date: | 2005–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-238&r=sea |
| By: | Joachim Ahrens; Philipp Mengeringhaus |
| Abstract: | This study introduces a coherent comparative concept of governance, applies it to China, and elaborates to what extent the Chinese institutional matrix exhibits characteristics of a market-enhancing governance structure (MEGS). It is argued that a subtle interplay of political and economic institutions created a stable and viable politico-institutional foundation which made China's unorthodox transition strategy politically feasible and economically effective. The paper concludes with an assessment of the quality of the overall Chinese governance structure and its expected implications for the future transition process. |
| JEL: | H70 H83 P26 P35 |
| Date: | 2006–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:liu:liucej:28&r=sea |
| By: | Dwayne Benjamin; Loren Brandt; John Giles |
| Abstract: | We explore the relationship between the level of village inequality in 1986, and the subsequent growth of household incomes from 1986 to 1999. Using a detailed household-level data set from rural China, we find robust evidence that initial inequality is negatively related to subsequent household income growth. We are able to address a number of econometric issues that affect the use of aggregate data for this exercise, especially measurement error and aggregation: Our results strongly suggest that village inequality has an external adverse impact on household-level income trajectories. However, once we account for possibly fixed village-level unobserved heterogeneity, we find no evidence that changes in inequality are correlated with household income growth: Whatever factor drives the inequality-growth relationship only operates in the “long run.” We explore several possible avenues by which initial inequality – or an unobserved variable correlated with it – affects household income growth. While we do not find the precise mechanism, our findings point toward a class of explanations based on collective choice (like the provision of public goods or determination of local taxes), and away from credit-market based explanations. |
| Keywords: | Inequality; Growth; Rural China; Panel Data |
| JEL: | O12 O15 P20 |
| Date: | 2006–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-237&r=sea |
| By: | Hirofumi Uchida; Gregory F. Udell; Wako Watanabe |
| Abstract: | Current theoretical and empirical research suggests that small banks have a comparative advantage in processing soft information and delivering relationship lending. The most comprehensive analysis of this view found using U.S. data that smaller SMEs borrow from smaller banks and smaller banks have stronger relationships with their borrowers (Berger, Miller, Petersen, Rajan, and Stein 2005) (BMPRS). We employ essentially the same methodology as BMPRS on a unique Japanese data set but our findings are different in interesting ways. Like BMPRS we find that more opaque firms are more likely to borrow from small banks. Unlike BMPRS, however, our methodology allows us to attribute this to the ability of large banks to deliver financial statement lending. Finally, quite unlike BMPRS we do not, on balance, find that small banks have stronger relationships with their SMEs. We offer some speculation on potential explanations for these differences. One possibility is that the credit culture and deployment of SME lending technologies differ in Japan from the U.S. However, we note that strong conclusions cannot be reached without more research. |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:06029&r=sea |
| By: | Barbara E. Baldwin; Charles Enoch; Olivier Frécaut; Arto Kovanen |
| Abstract: | This study looks at the first two years of the banking crisis that erupted in Indonesia in late 1997. It finds that the banking sector was weak at the outset, and that governance problems intensified the crisis and seriously delayed its resolution. Although a strategy was put in place over the initial months, protracted delays in implementation led to an explosion in the costs of resolution. By end-1999, the critical elements to reconstruct the banking system were in place, and the political transition seemed completed; but, in a continuing unsettled environment, the new authorities still faced daunting challenges. This study looks at the first two years of the banking crisis that erupted in Indonesia in late 1997. It finds that the banking sector was weak at the outset, and that governance problems intensified the crisis and seriously delayed its resolution. Although a strategy was put in place over the initial months, protracted delays in implementation led to an explosion in the costs of resolution. By end-1999, the critical elements to reconstruct the banking system were in place, and the political transition seemed completed; but, in a continuing unsettled environment, the new authorities still faced daunting challenges. This study looks at the first two years of the banking crisis that erupted in Indonesia in late 1997. It finds that the banking sector was weak at the outset, and that governance problems intensified the crisis and seriously delayed its resolution. Although a strategy was put in place over the initial months, protracted delays in implementation led to an explosion in the costs of resolution. By end-1999, the critical elements to reconstruct the banking system were in place, and the political transition seemed completed; but, in a continuing unsettled environment, the new authorities still faced daunting challenges. |
| Keywords: | Banking , Indonesia , Financial sector , Financial crisis , Bank supervision , |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:01/52&r=sea |
| By: | Hamid Faruqee; Martin Mühleisen |
| Abstract: | The paper develops a general equilibrium framework to examine the economic implications of population aging in Japan. Particular attention is paid to aggregate saving behavior which is modeled on the basis of empirical age-earnings profiles using a life-cycle approach. The paper's objectives are to (i) estimate the output loss caused by demographic changes and assess the impact of aging on Japan's government finances; and (ii) compare fiscal policy options with respect to their effects on output growth and economic welfare. The paper develops a general equilibrium framework to examine the economic implications of population aging in Japan. Particular attention is paid to aggregate saving behavior which is modeled on the basis of empirical age-earnings profiles using a life-cycle approach. The paper's objectives are to (i) estimate the output loss caused by demographic changes and assess the impact of aging on Japan's government finances; and (ii) compare fiscal policy options with respect to their effects on output growth and economic welfare. The paper develops a general equilibrium framework to examine the economic implications of population aging in Japan. Particular attention is paid to aggregate saving behavior which is modeled on the basis of empirical age-earnings profiles using a life-cycle approach. The paper's objectives are to (i) estimate the output loss caused by demographic changes and assess the impact of aging on Japan's government finances; and (ii) compare fiscal policy options with respect to their effects on output growth and economic welfare. |
| Keywords: | Aging , Japan , Savings , Debt , Fiscal policy , Economic models , |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:01/40&r=sea |
| By: | W. Max Corden (Department of Economics, The University of Melbourne) |
| Abstract: | The international current account imbalance, where the United States has a vast deficit and several countries, notably Japan, China, Germany and the oil exporters have corresponding surpluses, is usually seen as a problem. The argument here is that current account imbalances simply indicate intertemporal trade – the exchange of goods and services for claims. There are likely to be gains from trade of that kind as from ordinary trade. What then are the problems? This paper considers several scenarios, notably one where net savings of the surplus countries decline so that the world real interest rate rises, and another where the US fiscal deficit is reduced, so that the world real interest rate falls and there could be a world wide aggregate demand problem, essentially caused by the high net savings of the surplus countries. |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2006n13&r=sea |
| By: | Tran Ngoc Ca |
| Abstract: | This study looks at the contribution of the university system in Vietnam to the socioeconomic development in general, and their relationship with firms, dynamic actors of the economy in particular. The study uses different methods of research, from reliance on secondary data to interviews with universities and survey of firms. Several case studies of the key universities in four regions have been undertaken: Hanoi in the north, Danang in the center, and Ho Chi Minh City and Cantho in the south of Vietnam. The findings show that the role of Vietnamese universities in research is much weaker than teaching, and that their contribution to the socioeconomic development of the country is limited to the production of an educated labor force rather than innovation. However, in selected universities, innovation did take place to a certain extent and brought benefits for both the universities and firms they served. This situation is explained by both the inherited university system in Vietnam and its shift in behavior in the context of economic renovation and globalization. |
| Keywords: | Tertiary Education,ICT Policy and Strategies,Agricultural Knowledge & Information Systems,Rural Development Knowledge & Information Systems,Access & Equity in Basic Education |
| Date: | 2006–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3949&r=sea |
| By: | Sanjaya Acharya |
| Abstract: | This paper makes an assessment of Nepalese poverty situation during 1977 - 1997 using a comparative static approach. Income and human poverty indices have been estimated using World Bank and UNDP methods, respectively. Moreover, it also makes exploratory analysis to study the causes and nature of Nepalese poverty. It concludes that Nepalese income poverty was drastically reduced during the period 1976/77 - 1984/85, but increased afterwards. However, human poverty has reduced in sustenance during the whole period. Poverty in Nepal is more pervasive, deep and uneven as compared to the rest of the South Asia. Comparing the income and human poverty indices, we conclude that income poverty is volatile as compared to the human poverty. Poverty in Nepal has some economic, demographic, and political origins; and more remote and occupational caste people are poorer as compared to the rest |
| JEL: | D31 D63 I31 I32 O53 |
| Date: | 2004–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:liu:liucej:9&r=sea |
| By: | Raa,Thijs ten (Tilburg University, Center for Economic Research) |
| Abstract: | If more productive firms grow relatively fast, an industry performs better, even when no firm exhibits technical or efficiency change. In other words, the two well-known sources of productivity growth-technology and efficiency-can be augmented by a third one, namely the industrial organization effect. In this paper the efficiency of an industrial organization and its contribution to performance are measured by benchmarking all firms on the industry. More precisely, efficiency is measured by the proximity between a firm and the best practices. Aggregation of firm efficiencies is imperfect. The bias is used to measure the efficiency of the industrial organization. In benchmarking, change transmitted by a firm represents productivity growth and change transmitted by the best practices represents technical change. Although I use a nonparametric framework, which requires only input and output information, duality analysis reveals the Solow residual. In discrete time Malmquist indices capture the measurement of the industrial organization effect, efficiency changes, and technical change. The industrial organization of Japanese banking is analyzed. |
| Keywords: | Industrail organization;Efficiency;Aggregation;Productivity |
| JEL: | L10 D24 O47 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200653&r=sea |
| By: | M. Ayhan Kose; William Blankenau |
| Abstract: | This paper studies stylized business cycle properties of household production in four industrialized countries (Canada, the United States, Germany, and Japan). We employ a dynamic small open economy business cycle model that incorporates a household production sector. We use the model to generate data on home output, hours worked in the home sector, and hours spent on leisure. We find that in each country, home output is more volatile than market output while home sector hours are about as volatile as those in the market sector. In each country, leisure is the least volatile series. Leisure hours and home hours are countercyclical in all countries, and home output is not highly correlated with market output. Home sector variables are generally less persistent than market variables, and cross-country correlations related to home production tend to be lower than those related to market production. These findings demonstrate that despite some well-known structural differences in labor markets, the cyclical features of home sector variables are similar across the countries we consider. |
| Keywords: | Business cycles , Canada , United States , Germany , Japan , Production , Labor markets , Economic models , |
| Date: | 2006–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/46&r=sea |
| By: | Thomas I. Palley |
| Abstract: | The stability of the international financial system is in doubt. Analysis of the system has focused mainly on the sustainability of financing the U.S. trade deficit and has failed to understand the microeconomics of transactions within the system. According to this brief by Thomas I. Palley, the international financial system is unsustainable for reasons of demand, not supply. He recommends a global system of managed exchange rates to replace the current system before it crashes, along with the U.S. economy. East Asian economies are pursuing export-led growth and running huge trade surpluses with the United States by actively pursuing policies aimed at maintaining undervalued exchange rates. Their governments continue to accumulate U.S. financial assets in order to support and stabilize the international financial system.While East Asian policymakers are correct in their belief that they can improve economic outcomes through exchange rate intervention, the system is undermining the structure of income and aggregate demand and eroding U.S. manufacturing capacity. |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levppb:ppb_85&r=sea |
| By: | Merih Uctum (Brooklyn College - [City University of New York], Graduate Center - [City University of New York]); Thom Thurston (Graduate Center - [City University of New York], Queen's College - [City University of New York]); Remzi Uctum (EconomiX - [CNRS : UMR7166] - [Université de Paris X - Nanterre]) |
| Abstract: | We assess fiscal performances in G7 and selected Latin American and Asian countries. We analyze two questions: (i) have public finances been sustainable? (ii) do countries follow more restrictive fiscal policies when debt starts to rise? We find that: (i) The traditional unit root tests often overlook the corrective actions taken by many governments. Controlling for structural breaks changes the nonstationarity results dramatically among the three groups; (ii) Estimation of a reaction function for governments, expanded by incorporating structural breaks, provides further evidence for significant active anti-debt policies among the G7 and to a lesser extent in the other regions. |
| Keywords: | fiscal policy; sustainability; government reaction function; structural breaks |
| Date: | 2006–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00081527_v1&r=sea |
| By: | Li Cui; Inci Ötker; Shogo Ishii |
| Abstract: | Several Asian emerging market economies have recently adopted measures to limit the offshore trading of their currencies. This paper provides a general overview of such measures and evaluates the experiences of selected countries that resorted to such measures. It concludes that the measures could be effective if they were comprehensive and effectively enforced, and were accompanied by consistent macroeconomic policies and structural reforms. Such measures, however, could adversely affect investor confidence, financial market development, and nonspeculative economic and financial activities, and impose administrative burden on all parties involved. |
| Keywords: | Offshore financial centers , Currencies , Exchange restrictions , Capital controls , |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:01/43&r=sea |